1
EXHIBIT (d)(xii)
SEVERANCE, CHANGE OF CONTROL AND NONCOMPETITION AGREEMENT
THIS SEVERANCE, CHANGE OF CONTROL AND NONCOMPETITION AGREEMENT (the
"Agreement") is made and entered into as of April 13, 2000, by and between
Jasdrew Acquisition Corp. ("Jasdrew"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Employee").
W I T N E S S E T H:
WHEREAS, the Employee is an officer and a key employee of PlayCore
Wisconsin, Inc. ("PlayCore Wisconsin");
WHEREAS, PlayCore, Inc. intends to enter into an Agreement and Plan of
Merger (the "Merger Agreement") with Jasdrew contemporaneously with the
execution hereof pursuant to which Jasdrew will merge (the "Merger") into
PlayCore, Inc. (after which PlayCore, Inc. is to merge into PlayCore Wisconsin);
WHEREAS, the Employee, in consideration of the agreement of Jasdrew
contained herein that Employee will receive payment of a cash bonus from
PlayCore Wisconsin in an amount of $150,000 (the "Closing Amount") promptly
following the effective date of the Merger and a grant of phantom common stock
of PlayCore Holdings, Inc. ("Holdings") to be set forth in a separate phantom
stock grant agreement, desires to enter into this Agreement to provide for the
payment of certain benefits to the Employee if the Employee's employment with
PlayCore Wisconsin is terminated under certain circumstances, including a
termination following a change of control of PlayCore Wisconsin other than the
transactions contemplated in the Merger Agreement;
WHEREAS, the Employee acknowledges and agrees that the terms of this
Agreement shall supersede all prior agreements between the parties as set forth
in Section 13. c. hereof;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and as an inducement for Jasdrew
to enter into, and to proceed with the transactions contemplated in, the Merger
Agreement, the parties hereto agree as follows:
1. Definition. The capitalized terms used in this Agreement shall
have the following meanings (unless otherwise expressly provided herein):
a. "Change of Control" shall have the meaning set forth in
Exhibit A hereto.
b. "Good Reason" means any of the following:
(1) The removal of the Employee from, or any failure to
reelect or reappoint the Employee to, any of the positions held with
PlayCore Wisconsin on the date of the Change of Control or any other
positions with PlayCore Wisconsin to which the Employee shall
thereafter be elected, appointed or assigned, except in the event that
such removal or failure to reelect or reappoint
2
relates to the termination by PlayCore Wisconsin of the Employee's
employment for Just Cause or by reason of Permanent Disability; or
(2) A good faith determination by the Employee that there
has been a significant adverse change, without the Employee's written
consent, in the Employee's working conditions or status with PlayCore
Wisconsin from such working conditions or status in effect during the
180-day period immediately prior to the Change of Control, or the
effective date of this Agreement for purposes of Section 3.c. hereof,
including but not limited to (A) a significant change in the nature or
scope of the Employee's authority, powers, functions, duties or
responsibilities, or (B) a significant reduction in the level of
support services, staff, secretarial and other assistance, office
space and accoutrements, or for purposes of Section 2 hereof alone,
(C) relocation of the Employee's primary place of employment with
PlayCore Wisconsin on the effective date of the Merger to a location
more than thirty-five (35) miles from such primary place of
employment.
c. "Just Cause" means, prior to a Change in Control, willful
and gross misconduct on the part of the Employee that is materially and
demonstrably detrimental to PlayCore Wisconsin, as determined in good faith
by the Board of Directors of PlayCore Wisconsin. "Just Cause" means,
following a Change in Control, the commission by the Employee of one or
more acts for which the Employee is convicted (as evidenced by binding and
final judgment. order or decree of a court of competent jurisdiction) of a
felony under United States federal, state, or local criminal law which
substantially impairs the Employee's ability to perform his duties or
responsibilities; the engaging in by the Employee of intentional conduct
not taken in good faith which has caused demonstrable and serious financial
injury to the Employer, as evidenced by a determination in a binding and
final judgment, order, or decree of a court or administrative agency of
competent jurisdiction, in effect after exhaustion or lapse of all rights
of appeal, in an action, suit, or proceeding. whether civil, criminal,
administrative, or investigative; or the continuing willful and
unreasonable refusal by the Employee to perform the Employee's duties or
responsibilities (unless significantly changed without the Employee's
consent).
d. "Permanent Disability" means that the Employee is unable by
reason of accident or illness (including mental illness) to perform the
material duties of his regular position with PlayCore Wisconsin and not
expected to recover from his disability within a period of six (6) months
from the commencement of the disability. If at any time the Employee claims
or is claimed to have a Permanent Disability, a physician acceptable to
both the Employee, or his personal representative, and PlayCore Wisconsin
(which acceptances shall not be unreasonably withheld) shall be retained by
PlayCore Wisconsin and shall examine the Employee. The Employee shall
cooperate fully with the physician. If the physician determines that the
Employee has a Permanent Disability the physician shall deliver to PlayCore
Wisconsin a certificate certifying both that the Employee has a Permanent
Disability and the date upon which the condition of Permanent Disability
commenced. The determination of the physician shall be conclusive.
2
3
e. "Person" means (other than with respect to the definition of
"Change of Control") any individual or any partnership, limited liability
company, corporation, joint venture, trust, or other entity (as defined in
Rule l3d-5 under the Securities Exchange Act of 1934), together with its
affiliates and the heirs, personal representatives, successors, and assigns
of the "Person" when the context so permits.
f. "Severance Period" means the applicable period of time
beginning with the Termination Date. If the Termination Date is within
eighteen (18) months after a Change of Control and the termination of
employment is either by PlayCore Wisconsin other than with Just Cause or by
the Employee for Good Reason, the Severance Period shall be eighteen (18)
months (the "18-month Severance Period"). If the Termination Date occurs
other than within such 18-month period following a Change of Control then
the Severance Period, if applicable, shall be twelve (12) months ("the
12-month Severance Period").
g. "Termination Date" means the date upon which the Employee's
employment with PlayCore Wisconsin is terminated.
h. "Transaction Benefit" means the amount that is the greater
of: (i) the value of Employee's grant of phantom common stock on the date
this Agreement becomes effective, or (ii) the value of such grant of
phantom common stock on the Termination Date (such value to be determined
by multiplying the "equity value" of Holdings (as defined in the next
sentence) by a fraction, the numerator of which shall be the number of
shares represented by such grant and the denominator of which shall be the
total number of fully diluted shares of Holdings common stock (assuming
that all options, warrants or other securities which are convertible or
exchangeable for common stock are outstanding). The equity value of
Holdings on a Termination Date shall be determined by the Board of
Directors of PlayCore Wisconsin in good faith by selecting an appropriate
multiple and then multiplying the consolidated EBITDA for the latest four
fiscal quarters by such multiple and then subtracting from such amount all
debt, preferred stock and other obligations on a consolidated basis of
Holdings, if any.
2. Termination After Change of Control. If, within eighteen (18)
months after the occurrence of a Change of Control, the Employee's employment
with PlayCore Wisconsin is terminated either (i) by PlayCore Wisconsin (a) other
than with Just Cause or (b) due to Permanent Disability or, (ii) by the Employee
for Good Reason, then the Employee shall be entitled to receive the following
severance benefits from PlayCore Wisconsin:
a. continuation of the Employee's salary during the applicable
18-month Severance Period; and
b. continuation of coverage for the Employee and any dependents
previously covered under the group health, group life, group long-term
disability, and similar group insurance plans, if any, maintained by
PlayCore Wisconsin, at the active employee discounted cost, until
expiration of the 18-month Severance Period (provided, that if such
continued participation is precluded by the provisions of such plans or by
applicable law, PlayCore Wisconsin shall provide the Employee with
comparable benefits of equal value at no increase in cost to the Employee),
and execution of this
3
4
Agreement by the Employee shall not be considered a waiver of any rights or
entitlements he may have under applicable law to continuation of coverage
under the group health plan maintained by PlayCore Wisconsin.
3. Other Termination. If the Employee's employment with PlayCore
Wisconsin is terminated by PlayCore Wisconsin (a) other than with Just Cause or
(b) due to Permanent Disability and Section 2, above, is not applicable because
such termination is not within the eighteen (18) month period following a Change
of Control, then the Employee shall be entitled to receive the following
severance benefits from PlayCore Wisconsin:
a. continuation of the Employee's salary during the applicable
12-month Severance Period; provided, however, if such termination occurs
prior to a Change of Control, the total salary continuation shall be
reduced by the value of any Transaction Benefit; and
b. continuation of coverage for the Employee and any dependents
previously covered under the group health, group life, group long-term
disability, and similar group insurance plans, if any, maintained by
PlayCore Wisconsin, at the active employee discounted cost, until
expiration of the 12-month Severance Period (provided, that if such
continued participation is precluded by the provisions of such plans or by
applicable law, PlayCore Wisconsin shall provide the Employee with
comparable benefits of equal value at no increase in cost to the Employee),
and execution of this Agreement by the Employee shall not be considered a
waiver of any rights or entitlements he may have under applicable law to
continuation of coverage under the group health plan maintained by PlayCore
Wisconsin.
c. To compensate the Employee for relinquishing certain rights
with PlayCore Wisconsin in order to facilitate the acquisition of the
PlayCore, Inc. by Holdings, and notwithstanding the foregoing or any
provision contained herein to the contrary, if the Employee's employment
with PlayCore Wisconsin is terminated either (x) by PlayCore Wisconsin
other than with Just Cause or (y) by the Employee for Good Reason, and the
termination of employment occurs within the period that begins on the
effective date of the Merger and ends eighteen (18) months thereafter, then
the Employee shall be entitled to receive the greater of: (i) the severance
benefits set forth above in this Section 3, or (ii) the severance benefits
that would have accrued to the Employee as a result of the acquisition of
PlayCore, Inc. by Holdings pursuant to that certain Severance, Change of
Control and Noncompetition Agreement, dated February 18, 1999, by and
between the Employee and PlayCore, Inc. (the "Old Severance Agreement")
attached hereto as Exhibit B, in either case, less the value of any
Transaction Benefit.
4. Payments.
a. Promptly following the effectiveness of the Merger, Jasdrew
(or its successor) shall pay to Employee the Closing Amount.
b. Except as otherwise provided in this Agreement, any salary
continuation amounts due to the Employee hereunder shall be payable in
equal
4
5
installments on each regular payroll date of PlayCore Wisconsin after the
Termination Date.
5. Deduction and Withholding. All amounts payable to or on behalf of
the Employee pursuant to this Agreement shall be subject to such deductions and
withholding as may be agreed to by the Employee but not less than required by
applicable law.
6. Death and Permanent Disability. In the event of the Employee's
death, any amount payable or distributable to the Employee pursuant hereto from
rights and benefits accrued to and through the date of his death shall be paid
at the time or times indicated in such Section to the beneficiary designated by
the Employee for purposes of his group term life insurance coverage with
PlayCore Wisconsin and, if no beneficiary is designated for such purposes or if
no group term life insurance is then in effect, to the Employee's estate. In the
event that Employee's employment is terminated due to Permanent Disability,
Employee shall be entitled to accrued compensation through the Termination Date
and any other benefits (if any) to which Employee may be entitled under PlayCore
Wisconsin's benefit plans, programs and policies as then in effect.
7. Other Benefits. The benefits provided under this Agreement shall
be in addition to, and not in derogation or diminution of, any benefits that the
Employee may be entitled to receive under any other plan or program now or
hereafter maintained by PlayCore Wisconsin other than any severance pay plan.
8. Stock Options and Other Equity. Notwithstanding anything
contained in this Agreement to the contrary, the treatment of any stock options
and other equity held by the Employee on the Termination Date shall be subject
to the terms and conditions of the applicable plan documents and agreements in
accordance with the terms set forth in Schedules A, B and C attached hereto
("Applicable Equity Agreements") and the terms of the Applicable Equity
Agreements shall govern the treatment of such options and equity in the event of
Employee's termination.
9. Covenant Not to Compete. The Employee hereby agrees that he will
not, during the period of his employment with PlayCore Wisconsin and for a
period of two (2) years thereafter, as proprietor, partner, member, shareholder
(directly or indirectly owning or controlling five percent (5%) or more of any
class of stock), employee, consultant, agent, or otherwise, on his own behalf or
on behalf of another person., do any of the following in competition with
PlayCore Wisconsin, without the prior written consent of PlayCore Wisconsin:
a. solicit or assist in the solicitation of customers of
PlayCore Wisconsin or its affiliates;
b. render or assist in rendering services to customers of
PlayCore Wisconsin or its affiliates; or
c. divert or attempt to divert any customer's business from
PlayCore Wisconsin or its affiliates, or otherwise interfere with the
business relationship between PlayCore Wisconsin or its affiliates and any
of their respective customers, employees, or suppliers.
5
6
Notwithstanding the foregoing, this Agreement shall not in any event be
construed to prevent the Employee from earning a living utilizing his skills in
any businesses which may, as an incident to a business or activity significantly
different from the business of PlayCore Wisconsin, make or sell some products or
provide some services which may in some degree compete with the business of
PlayCore Wisconsin. However, nothing in this Section 9 shall be deemed to permit
the Employee to accept employment with companies or a division thereof which
then or thereafter will directly compete in a major way with the business of
PlayCore Wisconsin or its affiliates with which the Employee was involved or had
access to information while employed by PlayCore Wisconsin.
10. Confidential Information. The Employee agrees that he will not,
while he is employed by PlayCore Wisconsin or for a period of five (5) years
thereafter, disclose to any person to whom he is not otherwise authorized to do
so by PlayCore Wisconsin (an "Unauthorized Person"), or use for his own account,
any information (the "Confidential Information"), whether or not reduced to
written or other tangible form, in which PlayCore Wisconsin or its affiliates
has a legally protectible interest by virtue of the following:
a. such information is not generally known in the industry;
b. the Employee has had access to (or, either alone or in
cooperation with others, originated or developed) such information during
his employment with PlayCore Wisconsin;
c. such information has been treated by PlayCore Wisconsin or
its affiliates as confidential;
d. such information relates to the business of PlayCore
Wisconsin or any of its affiliates; or
e. such information is of competitive advantage to PlayCore
Wisconsin or its affiliates.
Confidential Information for which the Employee has first secured the
written consent of PlayCore Wisconsin for its disclosure or use, and
Confidential Information which becomes generally known in the industry, or which
otherwise ceases to be legally protectible (other than by the Employee's breach
of this Agreement), shall cease to be subject to the restriction set forth in
this Section 10. Notwithstanding anything contained herein to the contrary, this
Section 10 prohibits only the use and disclosure of Confidential Information and
shall not be construed as limiting the Employee's right to undertake any other
employment or business activity. The Employee shall be prohibited from competing
with PlayCore Wisconsin only as provided in Section 9 above.
11. Termination With Just Cause. Notwithstanding any provision
contained herein to the contrary, in the event that the Employee's employment
with PlayCore Wisconsin is terminated by PlayCore Wisconsin with Just Cause the
Employee shall not be entitled to any of the benefits identified in Sections 2
and 3 of this Agreement, and shall be entitled to receive only those benefits
that the Employee would otherwise be entitled to receive under any other
agreements entered into by the Employee and PlayCore Wisconsin or under
applicable law.
6
7
12. Rights in the Event of Dispute.
a. If a claim or dispute arises concerning the rights of the
Employee or his beneficiary (either or both of whom are hereinafter
referred to as the "claimant") to amounts or benefits described in Section
2 of this Agreement (pertaining to benefits upon termination of employment
following a Change of Control), regardless of the party by whom such claim
or dispute is initiated, PlayCore Wisconsin shall, upon presentation of
appropriate vouchers, pay all legal expenses, including reasonable
attorneys' fees, court costs and ordinary and necessary out-of-pocket costs
of attorneys' billed to and payable by the claimant in connection with the
bringing, prosecuting, defending, litigating, negotiating, or settling such
claim or dispute; provided, however, that PlayCore Wisconsin shall not be
obligated to pay such expenses unless and until final resolution of such
claim or dispute with the claimant being entitled to a substantial part of
the rights claimed by him.
b. If a claim or dispute arises concerning the rights of the
Employee or his beneficiary (either or both of whom are hereinafter
referred to as the "claimant") to amounts or benefits described in Section
3 of this Agreement (pertaining to termination of employment by PlayCore
Wisconsin other than as described in Section 2), regardless of the party by
whom such claim or dispute is initiated, each party shall pay its own legal
expenses, including reasonable attorneys' fees, court costs and ordinary
and necessary out-of-pocket costs in connection with the bringing,
prosecuting, defending, litigating, negotiating, or settling such claim or
dispute; provided, however, that the prevailing party in any court action
shall be entitled to recover from the other party, to the fullest extent
permitted by law, all such legal expenses that the prevailing party may
reasonably incur as a result of such action. Any payment pursuant to this
subsection shall include interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue
Code.
13. General Provisions.
a. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given (i) when delivered
in person or (ii) when telecopied (at the date and time indicated on the
receipt of transmission if such day is a business day, and if not, at 9
a.m. on the following business day) with hard copy delivered by hand or
deposited in the United States mail postage prepaid, registered or
certified mail, on or before two (2) business days after its delivery by
telecopy, or (iii) three (3) business days after being deposited in the
United States mail, postage prepaid, registered or certified mail, or (iv)
two (2) business days after delivery to a nationally recognized express
courier, expenses prepaid, addressed to the appropriate party as follows:
to the Employee at his address on file with PlayCore Wisconsin; or to
Jasdrew or PlayCore Wisconsin, c/o PlayCore, Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier number (608)
741-7191, Attention: Chairman; and with a copy to Akin, Gump, Strauss,
▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
7
8
b. Nothing herein shall be construed as an agreement to
continue the employment by PlayCore Wisconsin of the Employee.
c. This Agreement constitutes the entire agreement between the
parties and PlayCore Wisconsin with respect to the subject matter contained
herein and, as of the effective date of the Merger, supersedes any and all
prior understandings, representatives, negotiations, and agreements with
respect thereto (including, without limitation, the Old Severance
Agreement).
d. No modification or amendment of any provision of this
Agreement shall be effective unless in a written instrument executed by
both parties. Either party's failure to insist upon strict compliance with
any provision hereof shall not be deemed to be a waiver of such provision
or any other provision hereof.
e. This Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of Jasdrew and PlayCore Wisconsin.
Without limiting the foregoing, Jasdrew and PlayCore Wisconsin will require
any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of PlayCore Wisconsin, to expressly assume and agree to
perform PlayCore Wisconsin's obligations under this Agreement in the same
manner and to the same extent that Jasdrew and PlayCore Wisconsin are
required to perform them if no such succession had taken place. As used in
this Agreement, "Company" shall mean PlayCore Wisconsin and any successor
to its business and/or assets which executes and delivers the agreement
provided for in this Section 13.e. or which otherwise becomes bound by all
the terms and provisions of this Agreement as a matter of law. This
Agreement shall inure to the benefit of, and shall be enforceable by, the
Employee's heirs, legal representative or other successors in interest, but
shall not otherwise be assignable or transferable.
f. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
g. The validity, interpretation, construction and
enforceability of this Agreement shall be governed by the laws of the State
of Wisconsin, without regard to conflicts of laws principles.
14. Failure to Consummate. This Agreement shall be null and void if the
Merger is not consummated.
- SIGNATURE PAGE FOLLOWS -
8
9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
COMPANY: EMPLOYEE:
JASDREW ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- ---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, President ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
10
SCHEDULE A
OPTION TERMS
AMOUNT OF INITIAL GRANT: A nonqualified option grant (the "Initial
Grant") of 5,800 shares of common stock of
PlayCore Holdings, Inc. ("Holdings"). The
Initial Grant shall be pursuant to an option
plan (and underlying option grant agreement)
established by Holdings with an initial
reserve equal to 10% of the outstanding
common shares of Holdings as of the closing
date (post transaction).
EXERCISE PRICE: The per share exercise price of the
option shall be the common stock's fair
market value on the date of grant (which
shall be equal to the fair market value of
the equivalent number of shares of common
stock as of the closing date).
TERM: Options, or any portion thereof, not
previously exercised or terminated will
expire ten years from the date of grant.
METHOD OF EXERCISE: Prior to an "initial public offering",
cash only; provided, however, the Board of
Directors or Compensation Committee
of Holdings may authorize cashless
exercises. An option may only be exercised
with respect to whole shares.
VESTING: TIME OPTIONS: 50% of the total number of
shares subject to the Initial Grant shall
vest ratably (25% a year) on each of the
first through fourth anniversaries of the
date of grant ("A Options"), provided the
Employee is in the employ of PlayCore
Wisconsin, Inc. or an affiliate ("PlayCore
Wisconsin") on each such date.
If there is a Change in Control (as defined
in the option plan) prior to the fourth
anniversary of the date of grant, and the
Employee is still in the employ of PlayCore
Wisconsin, all unvested Time Options shall
vest.
PERFORMANCE OPTIONS: The remaining 50% of
the total number of shares subject to the
Initial Grant shall vest if the net Internal
Rate of Return ("IRR") realized by PlayCore
Holdings, L.L.C. ("Holdings L.L.C.") on its
total investment in Holdings (after dilution
from options on shares held by management)
is 25% or more ("Target IRR") as of the
"Determination Date," ("Performance
Options") and the Employee is still in the
employ of PlayCore Wisconsin on the
Determination Date.
11
The Determination Date regarding the
attainment of the IRR shall be the closing
date or such other time as Holdings L.L.C.
receives cash payments for its interests in
Holdings.
TERMINATION OF EMPLOYMENT:
BY PLAYCORE WISCONSIN
WITHOUT CAUSE OR
BY THE EMPLOYEE
FOR GOOD REASON OR
UPON DEATH OR DISABILITY: TIME OPTIONS: All vested Time Options remain
outstanding and exercisable for a period of
90 days and if not exercised by end of
business on the 90th day shall terminate.
All unvested Time Options shall be
immediately terminate on the Termination
Date.
PERFORMANCE OPTIONS: Performance Options
shall vest if the Target IRR would have been
achieved based upon the fair market value of
Holdings L.L.C.'s investment in Holdings as
of the Termination Date and Employee will
receive the applicable value of the
Performance Option as determined at the
Termination Date by the Board of Directors
of Holdings at such time as Holdings L.L.C.
receives cash payments for its interests in
Holdings. If the Target IRR is not achieved
on both the Termination Date and the
Determination Date, then all Performance
Options shall be terminated with no payment
to or value to Employee.
BY PLAYCORE WISCONSIN FOR
CAUSE OR BY THE
EMPLOYEE WITHOUT
GOOD REASON: TIME OPTIONS: All vested Time Options shall
remain exercisable for 90 days and if not
exercised by the end of business on the 90th
day shall terminate. All nonvested Time
Options shall terminate on the Termination
Date.
PERFORMANCE OPTIONS: All Performance Options
shall immediately terminate.
12
CALL ON SHARES ACQUIRED In the event of the Employee's termination
ON EXERCISE OF OPTION: of employment for any reason, all shares in
Holdings held by Employee as a result of
exercising Options shall be subject to a
"call" by Holdings or its designee (the
"Company Call") at the fair market value on
the Termination Date. The Company Call must
be exercised within six months of the
Termination Date. The purchase price as
determined above will be paid one-half in
cash within 30 days of the exercise of the
Company Call and the remaining one-half
payable within two years of the date of
exercise of the Company Call (the "Deferred
Call Payments"). Any Deferred Call Payments
shall be credited with an appropriate
interest rate or dividend rate. In the event
that Holdings is restricted from purchasing
such shares for cash under any applicable
financing or other agreements, Holdings may
issue the Employee a note or such other
permissible security (which shall contain
commercially reasonable terms) in full
satisfaction of such call. In no event shall
the Employee be paid less cash at the time
of the exercise of the Company Call than the
Employee's income tax liability resulting
from the sale of the shares.
EMPLOYEE PUT: In the event of Employee's termination of
employment by PlayCore Wisconsin without
Cause, by the Employee for Good Reason, or
as a result of death or Permanent
Disability, the Employee or his estate as
the case may be, may exercise a "put" to
Holdings (the "Employee Put") at fair market
value on the Termination Date, subject to
Holdings' ability under its financing
documents. The Employee Put must be
exercised within six months of the
Termination Date. The purchase price as
determined above will be paid one-half in
cash within 30 days of the exercise of the
Employee Put and the remaining one-half will
be payable within two years of the date of
exercise of the Employee Put (the "Deferred
Put Payments"). Any Deferred Put Payments
shall be credited with an appropriate
interest rate or dividend rate. All payments
made by Holdings with respect to its
exercise of the Executive Put are subject to
Holdings' financing agreements. In the event
that Holdings is restricted from purchasing
such shares for cash under any applicable
financing or other agreements, Holdings may
issue the Employee a note or such other
permissible security (which shall contain
commercially reasonable terms) in full
satisfaction of such put.
REALIZATION: Except in the case of the exercise of the
Company Call or Employee Put as set forth
above, Employee shall be
13
required to hold the shares or Options until
such time Holdings L.L.C. sells or otherwise
exits from its equity interest in Holdings.
TAG-ALONG RIGHTS: In the event of a sale of Holdings by
Holdings, L.L.C., the Employee will have the
same tag-along rights as other investors.
RESTRICTIONS ON TRANSFER: The Options and shares will be
non-transferable, except with respect to a
transfer to a trust or partnership, the only
beneficiaries or partners (as the case may
be) of which are immediate family member of
Employee, or in accordance with the terms of
any applicable operating agreement or
shareholders agreement and the laws of
descent and distribution.
Other than with respect to transfers
pursuant to the preceding sentence, no third
party shall have any direct or indirect
beneficial interest in the Options.
REGISTRATION RIGHTS: Employee will have the same piggyback
registration rights as other investors.
FAIR MARKET VALUE: Fair market value of vested shares on a
Termination Date shall be determined by
multiplying the "equity value" of Holdings
by a fraction, the numerator of which shall
be the number of vested shares and the
denominator of which shall be the total
number of fully diluted shares of Holdings
common stock (assuming that all options,
warrants or other securities which are
convertible or exchangeable for common stock
are outstanding). The equity value of
Holdings on a Termination Date shall be
determined by the Board of Directors of
Holdings in good faith by selecting an
appropriate multiple and then multiplying
the consolidated EBITDA for the latest four
fiscal quarters by such multiple and then
subtracting from such amount all debt,
preferred stock and other obligations on a
consolidated basis of Holdings, if any.
14
SCHEDULE B
EQUITY PURCHASE TERMS
AMOUNT OF EQUITY: A percentage equity interest in PlayCore
Holdings, L.L.C. ("Holdings L.L.C.") equal
to $110,000 and determined based on the
value paid by Chartwell Investments II,
L.L.C. or its affiliates ("Chartwell") for
its interest in Holdings L.L.C. (the
"Interest"). Upon execution of the
applicable subscription documents relating
to the Interest, Employee shall make a cash
payment to Holdings L.L.C. of $110,000.
COMPANY CALL ON INTERESTS: In the event of Employee's termination of
employment for any reason, the Interest held
by the Employee shall be subject to a "call"
by Holdings L.L.C. or its designee (the
"Company Call") at the fair market value on
the Termination Date. The Company Call must
be exercised within six months of the
Termination Date. The purchase price as
determined above will be paid as follows:
the lesser of the Employee's original
investment or fair market value of the
Interest within 30 days of the exercise of
the Company Call and the remaining amount,
if any, payable within two years of the date
of exercise of the Company Call (the
"Deferred Call Payments"). Any Deferred Call
Payments shall be credited with an
appropriate interest rate or dividend rate.
In the event that Holdings L.L.C. is
restricted from purchasing the Interest for
cash under any applicable financing or other
agreements to which Holdings L.L.C. or any
of its subsidiaries is a party which prevent
Holdings L.L.C. from obtaining cash, then
Holdings L.L.C. may issue the Employee a
note or such other permissible security
(which shall contain commercially reasonable
terms) in full satisfaction of such call.
EMPLOYEE PUT: In the event of Employee's termination of
employment by PlayCore Wisconsin, Inc. or an
affiliate ("PlayCore Wisconsin") without
Cause, by the Employee for Good Reason, or
as a result of death or Permanent
Disability, the Employee or his estate as
the case may be, may exercise a "put" to
Holdings L.L.C. (the "Employee Put") of the
Interest at fair market value on the
Termination Date, subject to compliance with
the financing documents of Holdings L.L.C.
or of any of its subsidiaries. The Employee
Put must be exercised within six months of
the Termination Date. The purchase price as
determined above
15
will be paid as follows: the lesser of the
Employee's original investment or fair
market value of the Interest within 30 days
of the exercise of the Employee Put and the
remaining amount, if any, subject to the
Company Call, will be held by Employee until
such time as Holdings L.L.C. sells or
otherwise exits from its equity interest in
PlayCore Holdings, Inc. ("Holdings"). All
payments by Holdings L.L.C. with respect to
the exercise of the Employee Put are subject
to the financing agreements of Holdings
L.L.C. or any of its subsidiaries. In the
event that Holdings L.L.C. is restricted
from purchasing the Interest for cash under
any applicable financing or other agreements
to which Holdings L.L.C. or any of its
subsidiaries is a party which prevent
Holdings L.L.C. from obtaining cash, then
Holdings L.L.C. may issue Employee a note or
such other permissible security (which shall
contain commercially reasonable terms) in
full satisfaction of such put.
REALIZATION: Except in the case of the exercise of
Company Call or Employee Put as set forth
above, Employee shall be required to hold
the Interest until such time as Chartwell
sells or otherwise exits from its equity
interest in Holdings L.L.C.
TAG-ALONG RIGHTS: In the event of a sale of Holdings L.L.C. by
Chartwell, the Employee will have the same
tag-along rights as other investors.
RESTRICTIONS ON TRANSFER: The Interest will be non-transferable,
except with respect to a transfer to a trust
or partnership, the only beneficiaries or
partners (as the case may be) of which are
immediate family member of Employee, or in
accordance with the terms of any applicable
operating agreement or shareholders
agreement and the laws of descent and
distribution.
Other than with respect to transfers
pursuant to the preceding sentence, no third
party shall have any direct or indirect
beneficial interest in the Interest.
REGISTRATION RIGHTS: Employee will have the same piggyback
registration rights as other investors.
FAIR MARKET VALUE: Fair market value of Employee's Interest on
a Termination Date shall be determined in
three steps as follows. (1) The equity value
of Holdings on a Termination Date shall be
determined by the Board of Directors of
Holdings in good
16
faith by selecting an appropriate multiple
and then multiplying the consolidated EBITDA
for the latest four fiscal quarters by such
multiple and then subtracting from such
amount all debt, preferred stock and other
obligations on a consolidated basis of
Holdings, if any. (2) Holdings L.L.C's
interest in Holdings shall be determined by
multiplying the equity value of Holdings (as
determined under step number (1)) on the
Termination Date by a fraction, the
numerator of which shall be the number of
shares of common stock of Holdings that are
owned by Holdings L.L.C., and the
denominator of which shall be the total
number of fully diluted shares of Holdings
common stock (assuming that all options,
warrants or other securities which are
convertible or exchangeable for common stock
are outstanding). (3) Finally, the
percentage representing Employee's Interest
shall be multiplied by the dollar amount of
Holdings L.L.C.'s interest in Holdings as
determined under step number (2).
17
SCHEDULE C
PHANTOM STOCK TERMS
AMOUNT OF INITIAL GRANT: A grant of 594 shares of phantom common
stock of PlayCore Holdings, Inc.
("Holdings") (the "Phantom Shares") pursuant
to a grant by Holdings.
VESTING: One third of the total number of Phantom
Shares shall vest on each anniversary of the
date of the grant. In the event that the
Employee's employment with PlayCore
Wisconsin, Inc. or an affiliate ("PlayCore
Wisconsin") is terminated for any reason,
all non-vested shares shall be forfeited.
COMPANY CALL: In the event of Employee's termination of
employment for any reason, the vested
Phantom Shares held by the Employee shall be
subject to a "call" by Holdings or its
designee (the "Company Call") at the fair
market value on the Termination Date. The
Company Call must be exercised within six
months of the Termination Date. The purchase
price shall be the equivalent of the fair
market value of an equivalent number of
common shares of Holdings on the Termination
Date. It will be paid one-half in cash
within 30 days of the exercise of the
Company Call and the remaining one-half will
be payable within two years of the date of
exercise of the Company Call (the "Deferred
Call Payments"). Any Deferred Call Payments
shall be credited with an appropriate
interest rate or dividend rate. In the event
that Holdings is restricted from purchasing
such shares for cash under any applicable
financing or other agreements, Holdings may
issue the Employee a note or such other
permissible security (which shall contain
commercially reasonable terms) in full
satisfaction of such call. In no event shall
the Employee be paid less cash at the time
of the exercise of the Company Call than the
Employee's income tax liability resulting
from the sale of the Phantom Shares.
EMPLOYEE PUT: In the event of Employee's termination of
employment by PlayCore Wisconsin without
Cause, by the Employee for Good Reason, or
as a result of death or Permanent
Disability, the Employee or his estate as
the case may be, may exercise a "put" to
Holdings (the "Employee Put") of the vested
Phantom Shares at fair market value on the
Termination Date. The Employee Put must be
exercised
18
within six months of the Termination Date.
The purchase price as determined above will
be paid one-half in cash within 30 days of
the exercise of the Employee Put and the
remaining one-half will be payable within
two years of the date of exercise of the
Employee Put (the "Deferred Put Payments").
Any Deferred Put Payments shall be credited
with an appropriate interest rate or
dividend rate. All payments by Holdings with
respect to its exercise of the Employee Put
are subject to Holdings' financing
agreements. In the event that Holdings is
restricted from purchasing such shares for
cash under any applicable financing or other
agreements, Holdings may issue the Employee
a note or such other permissible security
(which shall contain commercially reasonable
terms) in full satisfaction of such put.
REALIZATION: Except in the case of the exercise of the
Company Call or Employee Put as set forth
above, Employee shall be required to hold
the Phantom Shares until such time as
PlayCore Holdings, L.L.C. sells or otherwise
exits from its equity interest in Holdings
(any such occurrence, a "Realization
Event").
TAX GROSS-UP PAYMENT: Upon exercise of the Company Call or
Employee Put or any other Realization Event
hereunder, Holdings shall make a tax
gross-up payment to the Employee to
compensate the Employee for the difference
between ordinary income tax treatment and
capital gains tax treatment with respect to
the appreciated value ("Appreciated Value")
of the Phantom Shares from the date of
vesting to the earlier of: (i) the
Termination Date (in the case of an Employee
Put or Company Call), or (ii) the date of
the occurrence of a Realization Event;
provided, however, that in no event shall
such tax gross-up payment exceed the tax
benefit to Holdings actually realized for
such tax year, if any, related to the
deduction for (a) the tax gross-up payment
and (b) the appreciated value of the Phantom
Shares from the date of vesting to the
earlier of: (i) the Termination Date (in the
case of an Employee Put or Company Call), or
(ii) the date of the occurrence of a
Realization Event.
TAG-ALONG RIGHTS: In the event of a sale of Holdings by
PlayCore Holdings, L.L.C., the Employee will
have the same tag-along rights as other
investors.
RESTRICTIONS ON TRANSFER: The Phantom Shares will be non-transferable,
except with respect to a transfer to a trust
or partnership, the only
19
beneficiaries or partners (as the case may
be) of which are immediate family member of
Employee, or in accordance with the terms of
any applicable operating agreement or
shareholders agreement and the laws of
descent and distribution.
Other than with respect to transfers
pursuant to the preceding sentence, no third
party shall have any direct or indirect
beneficial interest in the Phantom Shares.
FAIR MARKET VALUE: Fair market value of vested Phantom Shares
on a Termination Date shall be determined by
multiplying the "equity value" of Holdings
by a fraction, the numerator of which shall
be the number of vested Phantom Shares and
the denominator of which shall be the total
number of fully diluted shares of Holdings
common stock (assuming that all options,
warrants or other securities which are
convertible or exchangeable for common stock
are outstanding). The equity value of
Holdings on a Termination Date shall be
determined by the Board of Directors of
Holdings in good faith by selecting an
appropriate multiple and then multiplying
the consolidated EBITDA for the latest four
fiscal quarters by such multiple and then
subtracting from such amount all debt,
preferred stock and other obligations on a
consolidated basis of Holdings, if any.