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EXHIBIT (d)(viii)
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 ▇▇▇▇▇▇ van der Meulen (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 $50,000 (the "Closing Amount") promptly
following the effective date of the Merger and a grant of phantom common stock
of PlayCore Holdings, Inc. ("Holdings") to be set forth in a separate phantom
stock grant agreement, desires to enter into this Agreement to provide for the
payment of certain benefits to the Employee if the Employee's employment with
PlayCore Wisconsin is terminated under certain circumstances, including a
termination following a change of control of PlayCore Wisconsin other than the
transactions contemplated in the Merger Agreement;
WHEREAS, the Employee acknowledges and agrees that the terms of this
Agreement shall supersede all prior agreements between the parties as set forth
in Section 13. c. hereof;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and as an inducement
for Jasdrew to enter into, and to proceed with the transactions contemplated in,
the Merger Agreement, the parties hereto agree as follows:
1. Definition. The capitalized terms used in this Agreement shall have
the following meanings (unless otherwise expressly provided herein):
a. "Change of Control" shall have the meaning set forth in
Exhibit A hereto.
b. "Good Reason" means any of the following:
(1) The removal of the Employee from, or any failure to
reelect or reappoint the Employee to, any of the positions held with
PlayCore Wisconsin on the date of the Change of Control or any other
positions with PlayCore Wisconsin to which the Employee shall
thereafter be elected, appointed or assigned, except in the event that
such removal or failure to reelect or reappoint
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relates to the termination by PlayCore Wisconsin of the Employee's
employment for Just Cause or by reason of Permanent Disability; or
(2) A good faith determination by the Employee that there
has been a significant adverse change, without the Employee's written
consent, in the Employee's working conditions or status with PlayCore
Wisconsin 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.
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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
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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 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 June 22, 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 installments on each regular payroll date of PlayCore Wisconsin after
the Termination Date.
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5. Deduction and Withholding. All amounts payable to or on behalf of
the Employee pursuant to this Agreement shall be subject to such deductions and
withholding as may be agreed to by the Employee but not less than required by
applicable law.
6. Death and Permanent Disability. In the event of the Employee's
death, any amount payable or distributable to the Employee pursuant hereto from
rights and benefits accrued to and through the date of his death shall be paid
at the time or times indicated in such Section to the beneficiary designated by
the Employee for purposes of his group term life insurance coverage with
PlayCore Wisconsin and, if no beneficiary is designated for such purposes or if
no group term life insurance is then in effect, to the Employee's estate. In the
event that Employee's employment is terminated due to Permanent Disability,
Employee shall be entitled to accrued compensation through the Termination Date
and any other benefits (if any) to which Employee may be entitled under PlayCore
Wisconsin's benefit plans, programs and policies as then in effect.
7. Other Benefits. The benefits provided under this Agreement shall be
in addition to, and not in derogation or diminution of, any benefits that the
Employee may be entitled to receive under any other plan or program now or
hereafter maintained by PlayCore Wisconsin other than any severance pay plan.
8. Stock Options and Other Equity. Notwithstanding anything contained
in this Agreement to the contrary, the treatment of any stock options and other
equity held by the Employee on the Termination Date shall be subject to the
terms and conditions of the applicable plan documents and agreements in
accordance with the terms set forth in Schedules A, B and C attached hereto
("Applicable Equity Agreements") and the terms of the Applicable Equity
Agreements shall govern the treatment of such options and equity in the event of
Employee's termination.
9. Covenant Not to Compete. The Employee hereby agrees that he will
not, during the period of his employment with PlayCore Wisconsin and for a
period of two (2) years thereafter, as proprietor, partner, member, shareholder
(directly or indirectly owning or controlling five percent (5%) or more of any
class of stock), employee, consultant, agent, or otherwise, on his own behalf or
on behalf of another person, do any of the following in competition with
PlayCore Wisconsin, without the prior written consent of PlayCore Wisconsin:
a. solicit or assist in the solicitation of customers of PlayCore
Wisconsin or its affiliates;
b. render or assist in rendering services to customers of
PlayCore Wisconsin or its affiliates; or
c. divert or attempt to divert any customer's business from
PlayCore Wisconsin or its affiliates, or otherwise interfere with the
business relationship between PlayCore Wisconsin or its affiliates and any
of their respective customers, employees, or suppliers.
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Notwithstanding the foregoing, this Agreement shall not in any event
be construed to prevent the Employee from earning a living utilizing his skills
in any businesses which may, as an incident to a business or activity
significantly different from the business of PlayCore Wisconsin, make or sell
some products or provide some services which may in some degree compete with the
business of PlayCore Wisconsin. However, nothing in this Section 9 shall be
deemed to permit the Employee to accept employment with companies or a division
thereof which then or thereafter will directly compete in a major way with the
business of PlayCore Wisconsin or its affiliates with which the Employee was
involved or had access to information while employed by PlayCore Wisconsin.
10. Confidential Information. The Employee agrees that he will not,
while he is employed by PlayCore Wisconsin or for a period of five (5) years
thereafter, disclose to any person to whom he is not otherwise authorized to do
so by PlayCore Wisconsin (an "Unauthorized Person"), or use for his own account,
any information (the "Confidential Information"), whether or not reduced to
written or other tangible form, in which PlayCore Wisconsin or its affiliates
has a legally protectible interest by virtue of the following:
a. such information is not generally known in the industry;
b. the Employee has had access to (or, either alone or in
cooperation with others, originated or developed) such information during
his employment with PlayCore Wisconsin;
c. such information has been treated by PlayCore Wisconsin or its
affiliates as confidential;
d. such information relates to the business of PlayCore Wisconsin
or any of its affiliates; or
e. such information is of competitive advantage to PlayCore
Wisconsin or its affiliates.
Confidential Information for which the Employee has first secured the
written consent of PlayCore Wisconsin for its disclosure or use, and
Confidential Information which becomes generally known in the industry, or which
otherwise ceases to be legally protectible (other than by the Employee's breach
of this Agreement), shall cease to be subject to the restriction set forth in
this Section 10. Notwithstanding anything contained herein to the contrary, this
Section 10 prohibits only the use and disclosure of Confidential Information and
shall not be construed as limiting the Employee's right to undertake any other
employment or business activity. 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.
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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: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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b. Nothing herein shall be construed as an agreement to continue
the employment by PlayCore Wisconsin of the Employee.
c. This Agreement constitutes the entire agreement between the
parties and PlayCore Wisconsin with respect to the subject matter contained
herein and, as of the effective date of the Merger, supersedes any and all
prior understandings, representatives, negotiations, and agreements with
respect thereto (including, without limitation, the Old Severance
Agreement).
d. No modification or amendment of any provision of this
Agreement shall be effective unless in a written instrument executed by
both parties. Either party's failure to insist upon strict compliance with
any provision hereof shall not be deemed to be a waiver of such provision
or any other provision hereof.
e. This Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of Jasdrew and PlayCore Wisconsin.
Without limiting the foregoing, Jasdrew and PlayCore Wisconsin will require
any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of PlayCore Wisconsin, to expressly assume and agree to
perform PlayCore Wisconsin's obligations under this Agreement in the same
manner and to the same extent that Jasdrew and PlayCore Wisconsin are
required to perform them if no such succession had taken place. As used in
this Agreement, "Company" shall mean PlayCore Wisconsin and any successor
to its business and/or assets which executes and delivers the agreement
provided for in this Section 13.e. or which otherwise becomes bound by all
the terms and provisions of this Agreement as a matter of law. This
Agreement shall inure to the benefit of, and shall be enforceable by, the
Employee's heirs, legal representative or other successors in interest, but
shall not otherwise be assignable or transferable.
f. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
g. The validity, interpretation, construction and enforceability
of this Agreement shall be governed by the laws of the State of Wisconsin,
without regard to conflicts of laws principles.
14. Failure to Consummate. This Agreement shall be null and void if
the Merger is not consummated.
- SIGNATURE PAGE FOLLOWS -
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
COMPANY: EMPLOYEE:
JASDREW ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ VAN DER MUELEN
--------------------------- ------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, President ▇▇▇▇▇▇ van der Meulen
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SCHEDULE A
OPTION TERMS
AMOUNT OF INITIAL GRANT: A nonqualified option grant (the "Initial Grant")
of 4,350 shares of common stock of PlayCore
Holdings, Inc. ("Holdings"). The Initial Grant
shall be pursuant to an option plan (and
underlying option grant agreement) established by
Holdings with an initial reserve equal to 10% of
the outstanding common shares of Holdings as of
the closing date (post transaction).
EXERCISE PRICE: The per share exercise price of the option shall
be the common stock's fair market value on the
date of grant (which shall be equal to the fair
market value of the equivalent number of shares of
common stock as of the closing date).
TERM: Options, or any portion thereof, not previously
exercised or terminated will expire ten years from
the date of grant.
METHOD OF EXERCISE: Prior to an "initial public offering", cash only;
provided, however, the Board of Directors or
Compensation Committee of Holdings may authorize
cashless exercises. An option may only be
exercised with respect to whole shares.
VESTING: TIME OPTIONS: 50% of the total number of shares
subject to the Initial Grant shall vest ratably
(25% a year) on each of the first through fourth
anniversaries of the date of grant ("A Options"),
provided the Employee is in the employ of PlayCore
Wisconsin, Inc. or an affiliate ("PlayCore
Wisconsin") on each such date.
If there is a Change in Control (as defined in the
option plan) prior to the fourth anniversary of
the date of grant, and the Employee is still in
the employ of PlayCore Wisconsin, all unvested
Time Options shall vest.
PERFORMANCE OPTIONS: The remaining 50% of the
total number of shares subject to the Initial
Grant shall vest if the net Internal Rate of
Return ("IRR") realized by PlayCore Holdings,
L.L.C. ("Holdings L.L.C.") on its total investment
in Holdings (after dilution from options on shares
held by management) is 25% or more ("Target IRR")
as of the "Determination Date," ("Performance
Options") and the Employee is still in the employ
of PlayCore Wisconsin on the Determination Date.
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The Determination Date regarding the attainment of
the IRR shall be the closing date or such other
time as Holdings L.L.C. receives cash payments for
its interests in Holdings.
TERMINATION OF EMPLOYMENT:
BY PLAYCORE WISCONSIN
WITHOUT CAUSE OR
BY THE EMPLOYEE
FOR GOOD REASON OR
UPON DEATH OR DISABILITY: TIME OPTIONS: All vested Time Options remain
outstanding and exercisable for a period of 90
days and if not exercised by end of business on
the 90th day shall terminate. All unvested Time
Options shall be immediately terminate on the
Termination Date.
PERFORMANCE OPTIONS: Performance Options shall
vest if the Target IRR would have been achieved
based upon the fair market value of Holdings
L.L.C.'s investment in Holdings as of the
Termination Date and Employee will receive the
applicable value of the Performance Option as
determined at the Termination Date by the Board of
Directors of Holdings at such time as Holdings
L.L.C. receives cash payments for its interests in
Holdings. If the Target IRR is not achieved on
both the Termination Date and the Determination
Date, then all Performance Options shall be
terminated with no payment to or value to
Employee.
BY PLAYCORE WISCONSIN FOR
CAUSE OR BY THE
EMPLOYEE WITHOUT
GOOD REASON: TIME OPTIONS: All vested Time Options shall remain
exercisable for 90 days and if not exercised by
the end of business on the 90th day shall
terminate. All nonvested Time Options shall
terminate on the Termination Date.
PERFORMANCE OPTIONS: All Performance Options shall
immediately terminate.
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CALL ON SHARES ACQUIRED In the event of the Employee's termination of
ON EXERCISE OF OPTION: employment for any reason, all shares in Holdings
held by Employee as a result of exercising Options
shall be subject to a "call" by Holdings or its
designee (the "Company Call") at the fair market
value on the Termination Date. The Company Call
must be exercised within six months of the
Termination Date. The purchase price as determined
above will be paid one-half in cash within 30 days
of the exercise of the Company Call and the
remaining one-half payable within two years of the
date of exercise of the Company Call (the
"Deferred Call Payments"). Any Deferred Call
Payments shall be credited with an appropriate
interest rate or dividend rate. In the event that
Holdings is restricted from purchasing such shares
for cash under any applicable financing or other
agreements, Holdings may issue the Employee a note
or such other permissible security (which shall
contain commercially reasonable terms) in full
satisfaction of such call. In no event shall the
Employee be paid less cash at the time of the
exercise of the Company Call than the Employee's
income tax liability resulting from the sale of
the shares.
EMPLOYEE PUT: In the event of Employee's termination of
employment by PlayCore Wisconsin without Cause, by
the Employee for Good Reason, or as a result of
death or Permanent Disability, the Employee or his
estate as the case may be, may exercise a "put" to
Holdings (the "Employee Put") at fair market value
on the Termination Date, subject to Holdings'
ability under its financing documents. The
Employee Put must be exercised within six months
of the Termination Date. The purchase price as
determined above will be paid one-half in cash
within 30 days of the exercise of the Employee Put
and the remaining one-half will be payable within
two years of the date of exercise of the Employee
Put (the "Deferred Put Payments"). Any Deferred
Put Payments shall be credited with an appropriate
interest rate or dividend rate. All payments made
by Holdings with respect to its exercise of the
Executive Put are subject to Holdings' financing
agreements. In the event that Holdings is
restricted from purchasing such shares for cash
under any applicable financing or other
agreements, Holdings may issue the Employee a note
or such other permissible security (which shall
contain commercially reasonable terms) in full
satisfaction of such put.
REALIZATION: Except in the case of the exercise of the Company
Call or Employee Put as set forth above, Employee
shall be
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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.
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SCHEDULE B
EQUITY PURCHASE TERMS
AMOUNT OF EQUITY: A percentage equity interest in PlayCore Holdings,
L.L.C. ("Holdings L.L.C.") equal to $55,000 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 $55,000.
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
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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
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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).
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SCHEDULE C
PHANTOM STOCK TERMS
AMOUNT OF INITIAL GRANT: A grant of 765 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
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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.
