Preview of our top selling Executive Purchase Agreement
Raytheon / Alliance Laundry - Ira & Executive Unit Purchase Agreement
EXHIBIT 10.10
RCL ACQUISITIONS, L.L.C.
IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT
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THIS IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT (this "Agreement") is
--------- made as of May 5, 1998, by and between RCL Acquisitions, L.L.C., a Delaware limited liability company (the "Company"), R. Scott Gaster ("Executive") and
------- --------- Robert W. Baird & Co. Inc. TTEE FBO R. Scott Gaster IRA (the "IRA"). Any
--- capitalized terms used herein and not otherwise defined shall have the meanings 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 Bain/RCL,
---------------- L.L.C., a Delaware limited liability company ("Bain"), the Company, Raytheon
---- Commercial Laundry LLC, a Delaware limited liability company ("RCL") and
--- Raytheon Company, a Delaware corporation ("Raytheon"), pursuant to which, as of
-------- the date hereof and simultaneously with the execution of this Agreement, the Company has merged with and into RCL (such merger, the "Merger") with RCL as the
------ surviving entity (as such, the "Surviving Entity");
----------------
WHEREAS, in connection with the Merger and the transactions related thereto, the Company, the IRA and Executive desire to enter into this Agreement (i) to provide for the sale to Executive by the Company of 131.7 of the Company's Class A Common Units (the "Class A Units"), 28.584 of the Company's
------------- Class L Common Units (the "Class L Units," and collectively with the Class A
------------- Units, the "Purchased Units"), 387.92 of the Company's Class B Common Units (the
--------------- "Class B Units") and 412.681 of the Company's Class C Common Units (the "Class C ------------- ------- Units," and collectively with the Class B Units, the "Incentive Units" ), (ii) - ----- --------------- to provide for the sale to the trustee or custodian of the IRA (the "Trustee"),
------- for the benefit of the IRA, by the Company of 197 of the Class A Units and 7.938 of the Class L Units (the "IRA Purchased Units," and collectively with the
------------------- Purchased Units and the Incentive Units, the "Executive Units") and (iii) to
--------------- provide for certain rights and obligations of the parties with respect to the Executive Units; and
WHEREAS, as a result of the Merger, each of Executive and the IRA will become a unitholder of the Surviving Entity and will receive his, her or its pro rata share of the common units of the Surviving Entity in exchange for the Executive Units.
NOW THEREFORE, in consideration for the premises contained herein and the mutual obligations of the parties hereto, the receipt and sufficiency of which are hereby acknowledged, the Company, Executive and the Trustee for the benefit of the IRA hereto agree as follows:
1. PURCHASE AND SALE OF EXECUTIVE UNITS.
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(a) Upon execution of this Agreement, Executive shall (i) purchase, and the Company shall sell, 131.7 Class A Units at a price of $100 per unit, 28.584 Class L Units at a price of $8,100 per unit, 387.92 Class B Units at a price of $0.01 per unit and 412.681 Class C Units at a price of $0.01 per unit and (ii) cause the Trustee for the benefit of the IRA to purchase, and the Company shall sell, 197 Class A Units at a price of $100 per unit, 7.938 Class L Units at a price of $8,100 per unit, 0 Class B Units at a price of $0.01 per unit and 0 Class C Units at a price of $0.01 per unit. The Company shall deliver to each of Executive and the Trustee for the benefit of the IRA an executed copy of the Company's limited liability company agreement (the "Operating Agreement") indicating each of Executive's and the IRA's ownership of - -------------------- such Class A Units, Class L Units, Class B Units and Class C Units, and Executive shall (y) deliver to the Company a cashier's or certified check, or by wire transfer of immediately available funds, in an aggregate principal amount of $113,078 and a promissory note in the form of Annex A attached hereto in an
------- aggregate principal amount of $131,700 (the "Executive Note") and (z) cause the
-------------- Trustee for the benefit of the IRA to deliver to the Company a cashier's or certified check, or by wire transfer of immediately available funds, in an aggregate principal amount of $83,922. Executive's obligations under the Executive Note shall be secured by a pledge of all of the Executive Units to the Company, and in connection therewith, Executive shall enter into a pledge agreement in the form of Annex B attached hereto (the "Pledge Agreement").
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(b) Within 30 days after Executive and/or Trustee for the benefit of the IRA purchases any Executive Units from the Company, Executive shall, and shall cause the Trustee on behalf of the IRA to, make an effective election with the Internal Revenue Service under Section 83(b) of the Internal Revenue Code and the regulations promulgated thereunder in the form of Annex C attached
------- hereto.
2. REPRESENTATIONS AND WARRANTIES; ACKNOWLEDGMENTS.
-----------------------------------------------
(a) Representations and Warranties by Executive. In connection with
------------------------------------------- the purchase and sale of the Executive Units hereunder, Executive represents and warrants to the Company that:
(i) The Executive Units to be acquired by each of Executive and
the Trustee for the benefit of the IRA pursuant to this Agreement shall be
acquired for Executive's own account and not with a view to, or intention
of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Units shall not be
disposed of in contravention of the Securities Act or any applicable state
securities laws.
(ii) Executive is an executive officer of Alliance, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Units.
(iii) Executive is able to bear the economic risk of his or her
investment in the Executive Units for an indefinite period of time because
the Executive Units have not
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been registered under the Securities Act and, therefore, cannot be sold
unless subsequently registered under the Securities Act or an exemption
from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Units and has had full access to such other information
concerning the Company as he or she has requested. Executive has also
reviewed, or has had an opportunity to review, the following documents: (A)
the Operating Agreement; (B) the loan agreements, notes and related
documents with the senior and subordinated lenders of the Company; and (C)
the Company's audited and unaudited financial statements.
(v) The execution, delivery and performance of this Agreement by
each of Executive and the Trustee for the benefit of the IRA do not and
shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which either
Executive or the Trustee is a party or by which he, she or it is bound and
upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the legal, valid and binding obligation of each of
Executive and the Trustee for the benefit of the IRA, enforceable in
accordance with its terms.
(vi) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any
person or entity other than Alliance.
(vii) Executive has consulted with independent legal counsel
regarding his or her rights and obligations under this Agreement and that
he or she fully understands the terms and conditions contained herein.
(b) Acknowledgments.
---------------
(i) As an inducement to the Company to issue the Executive Units
to each of Executive and the IRA, as a condition thereto, Executive
acknowledges and agrees that:
(A) neither the issuance of the Executive Units to either of
Executive or the IRA nor any provision contained herein shall entitle
Executive to remain in the employment of Alliance or affect the right
of Alliance to terminate Executive's employment at any time; and
(B) the Company shall not have any duty or obligation to
disclose to Executive or the Trustee for the benefit of the IRA, and
neither Executive or the Trustee for the benefit of the IRA shall have
the right to be advised of, any material information regarding the
Company and its Subsidiaries at any time prior to, upon or in
connection with the repurchase of Executive Units upon the termination
of Executive's employment with Alliance or as otherwise provided
hereunder.
(ii) The Company and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Units have
been issued
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hereunder, in connection with and as a part of the compensation and
incentive arrangements between Alliance and Executive.
3. RIGHT TO PURCHASE EXECUTIVE UNITS UPON TERMINATION OF EMPLOYMENT.
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(a) Repurchase Option. In the event that Executive is no longer
----------------- employed by Alliance for any reason (the date of such termination being referred to herein as the "Termination Date"), the Executive Units, whether held by
---------------- Executive, the Trustee for the benefit of the IRA or one or more Permitted Transferees, will be subject to repurchase by the Company and the Investors pursuant to the terms and conditions set forth in this Section 3 (the
--------- "Repurchase Option"). - ------------------
(b) Termination Other than for Cause or Voluntary Termination. If
--------------------------------------------------------- Executive is no longer employed by Alliance as a result of Executive's death or permanent disability (as determined by the Board in its good faith judgment) or Executive's termination by Alliance without Cause, then on or after the Termination Date, the Company may elect to purchase all or any portion of (1) the Purchased Units and the Vested Incentive Units at a price per unit equal to the Fair Market Value thereof (x) as determined on the Termination Date, if the Repurchase Notice (as defined in paragraph (d) below) has been delivered within three months after the Termination Date, or (y) as determined as of a date determined by the Board within thirty (30) days prior to the delivery of the Repurchase Notice, if the Repurchase Notice is delivered after the third month following the Termination Date and (2) the Unvested Incentive Units at a price per unit equal to the lower of their Original Value or the Fair Market Value thereof determined as described in clause (b)(1) above.
(c) Voluntary Termination or Termination for Cause. If Executive is
---------------------------------------------- no longer employed by Alliance as a result of Executive's termination for Cause or voluntary termination, then on or after the Termination Date, the Company may elect to purchase all or any portion of the Executive Units at a price per unit equal to the lower of the Original Value thereof or the Fair Market Value thereof determined as described in clause (b)(1) above; provided, however, that
-------- ------- on and after the seven and one-half anniversary of the date hereof, if the Executive is no longer employed by Alliance as a result of Executive's voluntary termination, then on or after such Termination Date, the Company may elect to purchase all or any portion of the Executive Units at a price per unit equal to the Fair Market Value thereof determined as described in clause 3(b)(1) above.
(d) Repurchase Procedures. The Company may elect to exercise the
--------------------- right to purchase all or any portion of the Executive Units pursuant to the Repurchase Option by delivering written notice (the "Repurchase Notice") to the
----------------- holder or holders of Executive Units within 180 days after Executive's Termination Date. The Repurchase Notice will set forth the number of Executive Units to be acquired from such holder(s), the aggregate consideration to be paid for such units and the time and place for the closing of the transaction. The Company may elect to purchase all or any portion of the Unvested Incentive Units without or before purchasing any Vested Incentive Units. If any of the Executive Units are held by Permitted Transferees of Executive, the Company shall purchase the units elected to be purchased from such holder(s) of Executive Units pro rata according to the number of Executive Units held by such holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest unit). If both Unvested Units and Vested Units are to be purchased by the Company and Executive Units are held by Permitted Transferees
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of Executive, the number of Unvested Units and Vested Units to be purchased will be allocated among such holders pro rata according to the total number of Executive Units to be purchased from such person.
(e) Investors' Rights.
-----------------
(i) If for any reason the Company does not elect to purchase
all of the Executive Units pursuant to the Repurchase Option prior to the
180th day following the Termination Date, the Investors will be entitled to
exercise the Repurchase Option, in the manner set forth in this Section 3,
---------
for the Executive Units the Company has not elected to purchase (the
"Available Units"). As soon as practicable, but in any event within thirty
----------------
(30) days after the Company determines that there will be any Available
Units, the Company will deliver written notice (the "Option Notice") to the
-------------
Investors setting forth the number of Available Units and the price for
each Available Unit.
(ii) Each of the Investors will initially be permitted to
purchase up to its pro rata share (based upon the number of Class L Units
and Class A Units then held by such Investors) of the Available Units by
delivering written notice to the Company within twenty (20) days after
receipt of the Option Notice from the Company (such 20-day period being
referred to herein as the "Investor Election Period").
------------------------
(iii) As soon as practicable but in any event within five (5)
days after the expiration of the Investor Election Period, the Company
will, if necessary, notify the Investors electing to purchase Available
Units of any Available Units which Investors have not elected to purchase
and each of the electing Investors will be entitled to purchase any number
of the remaining Available Units (the "Second Option Notice"); provided,
--------------------
that if in the aggregate such Investors elect to purchase more than the
remaining Available Units, such remaining Available Units purchased by each
such Investor will be reduced on a pro rata basis based upon the number of
Class L Units and Class A Units then held by such Investors. Each Investor
may elect to purchase any of the remaining Available Units available to
such Investor by delivering written notice to the Company within five (5)
days after the delivery of the Second Option Notice (such 5-day period
being referred to herein as the "Second Period").
-------------
(iv) As soon as practicable but in any event within five (5)
business days after the expiration of the Investor Election Period or the
Second Period (if any), the Company will, if necessary, notify the
holder(s) of Executive Units as to the number of Executive Units being
purchased from the holder(s) by the Investors (the "Supplemental Repurchase
-----------------------
Notice"). The Supplemental Repurchase Notice will set forth the number of
------
Executive Units the Company and each Investor will acquire from such
holder(s), the aggregate consideration to be paid for such units and the
time and place of the closing of the transaction.
(f) Closing. The closing of the transactions contemplated by this
------- Section 3 will take place on the date designated by the Company in the - --------- Repurchase Notice or the Supplemental Repurchase Notice, as the case may be, which date will not be more than ninety (90) days after the
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delivery of such notice. The Company and/or the Investors, as the case may be, will pay for the Executive Units to be purchased pursuant to the Repurchase Option by...
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