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Exhibit 10.5
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is made as of
May 26, 1998 by and among Steel Heddle Group, Inc., a Delaware corporation
("Group"); Steel Heddle Mfg. Co. (the "Corporation"); Heddle Capital Corp.,
Steel Heddle International, Inc., Steel Heddle International, Ltd., Steel
Heddle (Canada) Ltee/Ltd (collectively, the "Subsidiaries"); and American
Industrial Partners Corporation, a Delaware corporation ("AIP").
Background
Subject to the terms and conditions of this Agreement, the Corporation
desires to retain AIP to provide certain management services to the
Corporation.
Terms and Conditions
In consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the parties agree as follows:
1. Management Services: During the term of this Agreement, AIP
shall provide general management, financial and other corporate advisory
services to the Corporation. Such management services shall be performed by
the qualified officers, employees or agents of AIP, and AIP shall at all times
direct, monitor and supervise the performance of such services by such
officers, employees or agents.
2. Fees and Expenses.
(a) The Corporation shall pay to AIP an annual management
fee (the "Management Fee") of Eight Hundred Ninety-five Thousand Dollars
($895,000). The Management Fee shall be payable semi-annually in arrears on
each May 30 and November 29 occurring during the term of this Agreement,
beginning May 30, 1998, or at such other times as the Corporation and AIP shall
otherwise agree; provided that if any date on which payment of the Management
Fee is required hereunder is not a business day, the Corporation shall pay such
Management Fee on the first business day following the date on which payment
was otherwise due.
(b) In addition to the Management Fees, the Company
agrees to promptly reimburse AIP for all out-of-pocket expenses incurred by AIP
in providing the services contemplated by this Agreement, including fees and
expenses paid to consultants, subcontractors and other third parties in
connection with such services.
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(c) Group and the Subsidiaries (collectively, the
"Guarantors"), jointly and severally, hereby guarantee the Corporation's
payment of all amounts owing to AIP.
(d) Notwithstanding anything to the contrary contained
herein, (i) the Corporation shall not be required to pay the Management Fee if
and for so long as any such payment would violate, breach or otherwise
constitute a default (or any event which might with the lapse of time or the
giving of notice or both, constitute a default) under any of the Corporation's
financing agreements, and (ii) none of the Guarantors shall be required to make
any payments pursuant to Section 2(c) of this Agreement if any such payment
would violate, breach or otherwise constitute a default (or any event which
might with the lapse of time or the giving of notice or both, constitute a
default) under any of the Guarantors' financing agreements.
(e) Interest will accrue on all due and unpaid Management
Fees at the rate per annum equal to ten percent (10%) until such time as such
Management Fees are paid, and such interest shall compound annually.
(f) Notwithstanding the provisions of Section 2(a)
hereof, the liability of the Corporation for any semi-annual Management Fee
payment hereunder shall not accrue, and AIP shall have no right for payment in
respect thereto, unless AIP continues to perform the management services
described in Section 1 through the end of the applicable semi-annual period
(except for any partial semi-annual period ending on the termination of this
Agreement, whereupon the Management Fee shall be pro rated, and shall be
payable, for such period).
3. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns. This Agreement may not be transferred or
assigned by any party without the written consent of each other party;
provided, however, that AIP may assign its obligations hereunder to any of its
affiliates.
4. Entire Agreement; Amendment. This Agreement constitutes the
entire agreement and understanding between the parties with respect to the
subject matter hereof. This Agreement may be amended or modified, or any
provision hereof may be waived, provided that such amendment or waiver is set
forth in a writing executed by the parties. No courses of dealing between or
among any persons having any interest in this Agreement will be deemed
effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any person under or by reason of this Agreement.
5. Term. Except as provided for herein, this Agreement shall
commence on the date hereof and shall terminate on the earlier of (i) the tenth
anniversary of the date hereof and (ii) such other date as to which AIP and the
Corporation mutually agree. The provisions of Section 6 shall survive the
termination of this Agreement.
6. Indemnification. The Company and the Guarantors hereby
jointly and severally indemnify and hold harmless AIP and its partners,
employees, agents, representatives and affiliates (each being an "Indemnified
Party") from and against any and all losses, claims, damages
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and liabilities to which such Indemnified Party may become subject under any
applicable federal or state law, any claim made by any third party or
otherwise, relating to or arising out of the engagement of AIP pursuant to, and
the performance by AIP of the services contemplated by, this Agreement, and the
Company and the Guarantors jointly and severally will reimburse any Indemnified
Party for all costs and expenses (including attorneys' fees and expenses) as
they are incurred in connection with the investigation of, preparation for or
defense of any pending or threatening claim, or any action or proceeding
arising therefrom, whether or not such Indemnified Party is a party hereto.
None of the Company and the Guarantors will be liable under this Section 6, and
an Indemnified Party shall reimburse the Company or Guarantor for any related
payments made by the Company or any Guarantor under this Section 6, to the
extent that any loss, claim, damage, liability, cost or expense is determined
by a court, in a final judgment from which no further appeal may be taken, to
have resulted primarily from the gross negligence or willful misconduct of such
Indemnified Party. No Indemnified Party shall be liable to the Company or any
of the Guarantors for honest mistakes of judgment, or for any action or
inaction, taken in good faith in the performance of management services under
this Agreement to the extent such action would satisfy the standards for
indemnification set forth in this Section 6.
7. Permissible Activities. Subject to all applicable provisions
of Delaware law that impose fiduciary duties upon AIP or its partners or
affiliates, nothing herein shall in any way preclude AIP, its partners or
affiliates from engaging in any business activities or from performing services
for its or their own account or for the account of others.
8. Governing Law. The validity, performance, construction and
effect of this Agreement shall be governed by and construed in accordance with
the internal law of the State of New York.
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Management Services Agreement to be executed as of the day and year first above
written.
STEEL HEDDLE GROUP, INC.
By: /s/ Benjamin G. Team
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Its: President
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STEEL HEDDLE MFG. CO.
By: /s/ Benjamin G. Team
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Its: President
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HEDDLE CAPITAL CORP.
By: /s/ Jerry B. Miller
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Its: President
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STEEL HEDDLE INTERNATIONAL, INC.
By: /s/ Benjamin G. Team
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Its: President
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STEEL HEDDLE INTERNATIONAL, LTD.
By: /s/ Benjamin G. Team
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Its: President
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STEEL HEDDLE (CANADA) LTEE/LTD
By: /s/ Benjamin G. Team
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Its: President
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AMERICAN INDUSTRIAL PARTNERS, a
Delaware general partnership
By: American Industrial Partners
Management Corporation II, a general partner
By: /s/ Theodore Rogers
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Theodore C. Rogers, President
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