EXHIBIT 10.16
DEFERRED COMPENSATION AGREEMENT
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THIS DEFERRED COMPENSATION AGREEMENT (this "Agreement") is made and
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entered into as of May 5, 1998, by and among ▇▇▇▇▇▇ ▇. L'Esperance (the
"Executive"), Raytheon Company, a Delaware corporation ( "Raytheon"), Alliance
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Laundry Holdings LLC (f/k/a Raytheon Commercial Laundry LLC), a Delaware limited
liability company ("Holdings") and Alliance Laundry Systems LLC, a wholly-owned
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subsidiary of Holdings and a Delaware limited liability company (the "Company").
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Any capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in Section 5 hereof.
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Holdings,
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Raytheon, Bain/RCL, L.L.C., a Delaware limited liability company, and RCL
Acquisitions, L.L.C., a Delaware limited liability company ("MergeCo"), pursuant
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to which MergeCo merged with and into Holdings (the "Merger") with Holdings
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being the surviving entity;
WHEREAS, in connection with the Merger and transactions related
thereto, Executive and the Company will enter into an Employment Agreement,
dated as of the date hereof (the "Employment Agreement");
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WHEREAS, (i) Executive and Holdings are parties to a certain Letter
Agreement (the "Letter Agreement"), dated as of September 30, 1997, pursuant to
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which Holdings agreed to pay Executive, upon certain terms and conditions,
various bonus payments and (ii) Executive and Raytheon are parties to a
Voluntary-Deferment Bonus Plan, dated November 20, 1963, as amended on November
21, 1988 (the "Deferment Bonus Plan"), pursuant which Raytheon agreed to pay
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Executive certain deferred bonus payments; and
WHEREAS, Executive, Raytheon, Holdings and the Company wish to declare
null and void (i) paragraph 2 of the Letter Agreement, and all other provisions
of the Letter Agreement relating to such paragraph 2, and (ii) all provisions of
the Deferment Bonus Plan, and replace the provisions thereto in their entirety
with the terms and provisions described herein, which such provisions are
intended to provide deferred compensation to the Executive.
NOW THEREFORE, in consideration for the continued employment of the
Executive by the Company on and after the date hereof and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Deferred Compensation Benefit. Subject to the provisions in
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paragraphs 2 and 3 hereof, as of the date ten (10) years after the date hereof
(the "Deferred Date"), the Company will pay the Executive (or his beneficiary in
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the event of his death) a lump sum (the "Benefit Amount") equal to (i) the Bonus
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Amount plus (ii) the Deferred Compensation Amount plus (iii) an interest factor
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of 5.94% per annum, compounding annually, from the date hereof until payment
hereunder, regardless of whether the Executive is employed by the Company as of
such date; provided that, with respect to the Bonus Amount, the interest factor
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shall accrue regarding the amounts in clauses (ii) and (iii) of the definition
thereof only as of the date such amounts are earned.
2. Sale of Holdings or Death or Total Permanent Disability. If (i)
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there is a consummation of a Sale of Holdings or (ii) the Executive dies or
becomes totally and permanently disabled (certified to the satisfaction of the
Company) at such time that the Executive is employed by the Company, then the
Benefit Amount otherwise payable under paragraph 1 above shall become
immediately due and payable as of the date of the consummation of a Sale of
Holdings or such Executive's death or total disability.
3. Termination of Employment. If prior to the Deferred Date
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Executive ceases to be employed by the Company for any reason, then the Benefit
Amount otherwise payable under paragraph 1 above shall become due and payable on
the 45th day after the Termination Date.
4. Designation of Beneficiaries. The Executive may name any Person
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(who may be named concurrently, contingently or successively) to whom the
Benefit Amount under this Agreement is to be paid if the Executive dies before
the Benefit Amount is fully distributed. Each such beneficiary designation will
revoke all prior designations by the Executive, shall not require the consent of
any previously named beneficiary, shall be in a form prescribed by the Company
and will be effective only when filed with the Company during the Executive's
lifetime. If the Executive fails to designate a beneficiary before his death,
as provided in this paragraph, or if the beneficiary designated by the Executive
dies before the date of the Executive's death or before complete payment of the
Benefit Amount, the Company, in its discretion, may pay the Benefit Amount to
either (i) one or more of the Executive's relatives by blood, adoption or
marriage and in such proportions as the Company determines, or (ii) the legal
representative or representatives of the estate of the last to die of the
Executive and his designated beneficiary. Notwithstanding the foregoing, if the
Executive is married, the Executive's spouse must consent in writing to the
designation of any Person as beneficiary other than the spouse.
5. Definitions.
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"Board" means the Board of Directors of the Company.
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"Bonus Amount" shall equal (i) $94,571, plus (ii) $94,571 upon the
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earlier of the occurrence of a Sale of Holdings, the death or total and
permanent disability of Executive or October 20, 1998, if the Executive is
still employed by the Company on any such date, and plus (iii) $529,991
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upon the earlier of the occurrence of a Sale of Holdings, the death or
total and permanent disability of Executive or October 20, 1999, if
Executive is still employed by the Company on any such date.
"Class A Units" means the Class A Common Units of Holdings.
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"Class B Units" means the Class B Common Units of Holdings.
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"Class C Units" means the Class C Common Units of Holdings.
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"Class L Units" means the Class L Common Units of Holdings.
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"Cause" shall have the meaning assigned to it in the Employment
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Agreement.
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"Common Units" means, collectively, Class A Units, Class L Units, the
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Class B Units, the Class C Units and any other common units authorized by
Holdings.
"Deferred Compensation Amount" shall equal $340,849.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended, and the rules and regulations promulgated thereunder.
"Investors" means Bain/RCL, L.L.C.
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"Operating Agreement" means the limited liability company agreement of
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Holdings.
"Person" means an individual, a partnership, a corporation, a limited
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liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Public Sale" means any sale pursuant to a registered public offering
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under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of Holdings" means (i) any sale of all or substantially all (as
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defined in the Model Business Corporation Act) of the assets of Holdings
and its subsidiaries on a consolidated basis in one transaction or series
of related transactions, (ii) any sale of all or substantially all of the
Common Units in one transaction or series of related transactions,
excluding any sales of Common Units in a Public Sale or (iii) a merger or
consolidation which accomplishes one of the foregoing; provided that the
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transactions contemplated by the Merger Agreement do not constitute a Sale
of Holdings.
"Securities Act" means the Securities Act of 1933, as amended from
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time to time.
"Subsidiary" means, with respect to any Person, any corporation,
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partnership, limited liability company, association or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association
or other business entity if such Person or Persons shall be allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or shall be or control the managing
director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business
entity.
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"Termination Date" means the date that Executive ceases to be employed
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by the Company for any reason.
6. Administration of this Deferred Compensation Arrangement. The
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deferred compensation arrangement set forth under this Agreement shall be
administered by the Company. The Company's duties and authority under this
arrangement shall include (i) the interpretation of the provisions of this
Agreement, (ii) the adoption of any rules and regulations which may become
necessary or advisable in the operation of this arrangement, (iii) the making of
such determinations as may be permitted or required pursuant to this
arrangement, and (iv) the taking of such other actions as may be required for
the proper administration of this arrangement in accordance with its terms. Any
decision of the Company with respect to any matter within the authority of the
Company shall be final, binding and conclusive upon the Executive, beneficiary,
and each Person claiming under or through the Executive, and no additional
authorization or ratification by the unitholders or the Executive shall be
required. Any action by the Company with respect to any one or more other
executives under similar agreements shall not be binding on the Company as to
any action to be taken with respect to the Executive. Each determination
required or permitted under this Agreement shall be made by the Company in the
sole and absolute discretion of the Company.
7. Action by Company. Any action required or permitted by the
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Company under this Agreement shall be by resolution of the Board or by a duly
authorized committee of the Board, or by a person or persons authorized by
resolution of the Board or such committee.
8. Amendment. This Agreement may not be canceled, changed,
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modified, or amended orally, and no cancellation, change, modification or
amendment hereof shall be effective or binding unless in a written instrument
signed by Raytheon, Holdings, the Company and Executive. A provision of this
Agreement may be waived only by a written instrument signed by the party against
whom or which enforcement of such waiver is sought.
9. No Waiver. The failure at any time of Raytheon, Holdings, the
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Company or Executive to require the performance by the other of any provision of
this Agreement shall in no way affect the full right of such party to require
such performance at any time thereafter, nor shall the waiver by Raytheon,
Holdings, the Company or Executive of any breach of any provision of this
Agreement be taken or held to constitute a waiver of any succeeding breach of
such or any other provision of this Agreement.
10. Withholding for Taxes. Notwithstanding anything contained in
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this Agreement to the contrary, the Company shall withhold from any distribution
made pursuant to this Agreement such amount or amounts as may be required for
purposes of the Company complying with the tax withholding provisions of the
Internal Revenue Code of 1986, as amended, or any state tax act for purposes of
paying any income, estate, inheritance or other tax attributable to any amounts
distributable under this Agreement.
11. Assignment. This Agreement is binding on and for the benefit of
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Raytheon, Holdings, the Company and Executive and their respective successors,
heirs, executors, administrators, and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be sold, transferred,
assigned, or pledged by Raytheon, Holdings, the Company or by the Executive
without the prior written consent of the other parties hereto.
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12. Interpretation and Severability. In the event any provision of
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this Agreement, or any portion thereof, is determined by any or court of
competent jurisdiction to be unenforceable or void, the remaining provisions of
this Agreement shall nevertheless be binding upon Raytheon, Holdings, the
Company and Executive with the same effect as though the void provision or
portion thereof had never been set forth therein.
13. No Conflict. The Executive represents and warrants that the
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Executive is not subject to any agreement, order, judgment or decree of any kind
which would prevent the Executive from entering into this Agreement.
14. Employment Relationship. This Agreement shall not in any way
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affect the right and power of the Company to dismiss or otherwise terminate the
employment or change the terms of the employment or amount of compensation of
the Executive at any time for any reason with or without cause or in accordance
with any applicable employment contract.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
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IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF WISCONSIN, WITHOUT
APPLICATION OF ITS CONFLICT OR CHOICE OF LAW PROVISIONS. THE COMPANY AND THE
EXECUTIVE AGREE THAT THIS IS NOT AN ERISA PLAN OR PART OF AN ERISA PLAN.
16. No Setoff. There shall be no right to setoff any amounts which
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are owed by the Company to the Executive hereunder with any amounts that are
owed by the Executive to Holdings under that certain Promissory Note, dated as
of the date hereof, issued by the Executive to Holdings.
17. Execution. This Agreement may be executed in counterparts, each
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of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. Headings. The headings contained in this Agreement are for
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reference purposes only, and shall not affect the meaning or interpretation of
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Deferred
Compensation Agreement to be executed as of the date first written above.
RAYTHEON COMPANY
By:_______________________________________
Its:_______________________________________
ALLIANCE LAUNDRY HOLDINGS LLC
By:_______________________________________
Its:_______________________________________
ALLIANCE LAUNDRY SYSTEMS LLC
By:_______________________________________
Its:_______________________________________
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▇▇▇▇▇▇ ▇. L'ESPERANCE