1
Exhibit 10.6
SH HOLDINGS CORP.
1801 RUTHERFORD ROAD
GREENVILLE, SOUTH CAROLINA 29609
April 21, 1998
Bob Dillon
12 Red Fox Court
Greenville, South Carolina 29615
Dear Bob:
As you know, on the date hereof, SH Holdings Corp. (the "Company")
intends to enter into a Stock Purchase Agreement (the "Stock Purchase
Agreement") among the Company, all holders of the Company's shares, options,
warrants and rights (collectively, the "Sellers") and Steel Heddle Group, Inc.
(the "Buyer"). This letter (the "Agreement") is being furnished to you to
provide you with reasonable compensation for prior services rendered to the
Company and Steel Heddle Mfg. Co. ("Steel Heddle") and their subsidiaries in
excess of previous salary and compensation paid to you, subject to the terms
and conditions specified herein. Accordingly, you (the "Key Employee") hereby
agree with the Company and Steel Heddle as follows:
1. Sale Bonus. Subject to Section 6, upon the consummation of the sale
transaction pursuant to the terms of the Stock Purchase Agreement (the "Sale
Transaction") the Key Employee shall be entitled to a bonus (the "Sale Bonus")
of $1,275,000.00, subject to adjustment as provided in Section 2. The Sale
Bonus shall be paid at the closing of the Sale Transaction (the "Closing").
2. Adjustment to Sale Bonus. In the event of any claim for
indemnification by the Buyer under clauses (ii), (iv) and (v) of Section 11.1.1
of the Stock Purchase Agreement, the Key Employee shall be obligated to repay a
portion of the Sale Bonus by paying to the Butler Capital Corporation, as
Sellers' Representative (the "Sellers' Representative"), for deposit to the
"Indemnification Account" under the Sellers' Representative Agreement of even
date herewith (the "Sellers' Representative Agreement"), an amount equal to (i)
5.0% of the aggregate amount requested for deposit to the Indemnification
Account, up to a maximum repayment pursuant to this clause (i) of $737,500.00
(e.g., up to an aggregate of $14,750,000 requested for deposit), plus (ii) 4.0%
of any additional amount requested for deposit to the Indemnification Account,
up to a maximum prepayment pursuant to this clause (ii) of $400,000.00 (e.g.,
up to an aggregate of $24,750,000 requested for deposit).
3. Cooperation. The Key Employee agrees that he shall, in his capacity
as a Seller, officer, manager and otherwise, take or cause to be taken all such
actions as may be
2
reasonably requested by the Company in order to promptly consummate the Sale
Transaction, including without limitation the tendering of stock, stock options
or stock rights to the Buyer in the Sale Transaction.
4. Proprietary Information. The Key Employee agrees that he shall not,
while employed by the Company and/or Steel Heddle and thereafter, except as
expressly authorized by the Board of Directors of the Company or a person duly
authorized thereby, disclose to any person, other than an employee or adviser
of the Company or Steel Heddle, any trade secrets, proprietary or other
confidential information of the Company or Steel Heddle including without
limitation information in any way relating to the Stock Purchase Agreement or
transactions contemplated thereunder. The Key Employee understands and agrees
that this restriction shall continue to apply after his employment terminates,
regardless of the reason for such termination.
5. Withholding. All payments made or benefits provided by the Company or
Steel Heddle pursuant to this Agreement shall be reduced by the amount of any
tax or other amounts required to be withheld by the Company or Steel Heddle
under applicable law in connection with the Agreement or the transactions
contemplated hereby, and the Key Employee agrees to reimburse the Company or
Steel Heddle for any such withholding tax to the extent not so deducted.
6. Conditions and Vesting. Notwithstanding any other provision of this
Agreement, the Key Employee's right to the Sale Bonus is contingent upon (i)
the prior approval of the Sale Bonus by the stockholders of the Company in
accordance with Section 280G of the Code, (ii) the consummation of the Sale
Transaction pursuant to the Stock Purchase Agreement (the "Closing"), and (iii)
the Key Employee's compliance with the terms and conditions of this Agreement.
In addition, the Key Employee's rights to the Sale Bonus will be forfeited
under the following circumstances: (A) the Key Employee, other than for Good
Reason (as defined below), resigns or otherwise voluntarily terminates his
employment with the Company or Steel Heddle prior to the Closing, or (B) the
Key Employee's employment with the Company or Steel Heddle is terminated for
Cause (as defined below) prior to the Closing. Without limiting the foregoing,
but subject to the first sentence of this Section 6, the Key Employee shall be
100% vested in his Sale Bonus upon the occurrence, prior to the Closing, of
either of the following events: (A) termination of employment by the Key
Employee for Good Reason, or (B) termination of the Key Employee by the Company
other than for Cause.
For purposes of this Agreement "Good Reason" means the material
diminution of any of the Key Employee's positions, authority, duties or
responsibilities with respect to his employment by the Company or Steel Heddle
as in effect on the date of this Agreement, provided, that no change in
position, authority, duties or responsibilities shall be deemed to constitute
Good Reason unless the Key Employee provides written notice of any such Good
Reason to the Company at least thirty (30) days in advance of termination of
employment and gives the Company the opportunity to remedy or cure the asserted
basis for Good Reason termination.
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3
For purposes of this Agreement, "Cause" means (a) the material failure
or refusal by any Key Employee to perform and discharge, or material breach of,
his duties and responsibilities with respect to his employment by the Company
or Steel Heddle, including any duties or responsibilities hereunder, (b) the
material breach of his fiduciary duties as an officer or member of the Board of
Directors of the Company, Steel Heddle or any of their subsidiaries, or (c)
conviction of a felony or any other crime involving the personal dishonesty or
moral turpitude of the Key Employee which in either case materially and
adversely reflects on the Company, Steel Heddle or any of their subsidiaries;
provided, that in the event a Key Employee is terminated for Cause as described
in (a) or (b) above, the Company shall provide written notice to the Key
Employee at least thirty (30) days in advance of such termination, describing
the Key Employee's failure to perform or misconduct, as the case may be, in
reasonable detail and shall give the Key Employee the opportunity to respond to
such allegations and to remedy or cure such failure to perform or misconduct.
7. Assignment. This Agreement shall continue for the benefit of and be
binding upon (i) the Key Employee and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees and (ii) the Company and any successor of the Company by
reorganization, merger, consolidation or liquidation and any assignee
specifically assigned this Agreement in connection with an assignment of all or
substantially all of the business or assets of the Company.
8. Termination of Prior Agreement. The provisions of this Agreement shall
be effective with respect to the Sales Transaction described above and shall
amend and replace in whole the rights and obligations owed under the Sale Bonus
Agreement dated January 12, 1998, between the Company, Steel Heddle Mfg. Co.
and the Key Employees (the "January 12th Agreement"). In the event that the
Sales Transaction shall not be consummated pursuant to the terms of the Stock
Purchase Agreement, then all rights and obligations provided herein shall
terminate and the January 12th Agreement shall continue in full force and
effect.
9. Miscellaneous. This Agreement, together with the Sellers'
Representative Agreement, constitutes the entire agreement of the parties with
respect to the subject matter hereof, and supersedes and replaces all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.
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4
If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and return a copy to the Company, whereupon it shall
become a binding agreement among the Company, Steel Heddle and you.
Very truly yours,
STEEL HEDDLE MFG. CO.
By: /s/ Benjamin G. Team
------------------------------
Title: President
SH HOLDINGS CORP.
By:/s/ Benjamin G. Team
------------------------------
Title: President
Accepted and agreed to:
/s/ Robert Dillon
- --------------------------------------
Bob Dillon
BUTLER CAPITAL CORPORATION,
in its capacity as Sellers' Representative as
aforesaid
By:/s/ Gilbert Butler
-----------------------------------
Title:
-4-
5
SH HOLDINGS CORP.
1801 RUTHERFORD ROAD
GREENVILLE, SOUTH CAROLINA 29609
April 21, 1998
Benjamin G. Team
Greenville, South Carolina 29615
Dear Bennie:
As you know, on the date hereof, SH Holdings Corp. (the "Company")
intends to enter into a Stock Purchase Agreement (the "Stock Purchase
Agreement") among the Company, all holders of the Company's shares, options,
warrants and rights (collectively, the "Sellers") and Steel Heddle Group, Inc.
(the "Buyer"). This letter (the "Agreement") is being furnished to you to
provide you with reasonable compensation for prior services rendered to the
Company and Steel Heddle Mfg. Co. ("Steel Heddle") and their subsidiaries in
excess of previous salary and compensation paid to you, subject to the terms
and conditions specified herein. Accordingly, you (the "Key Employee") hereby
agree with the Company and Steel Heddle as follows:
10. Sale Bonus. Subject to Section 6, upon the consummation of the sale
transaction pursuant to the terms of the Stock Purchase Agreement (the "Sale
Transaction") the Key Employee shall be entitled to a bonus (the "Sale Bonus")
of $1,275,000.00, subject to adjustment as provided in Section 2. The Sale
Bonus shall be paid at the closing of the Sale Transaction (the "Closing").
11. Adjustment to Sale Bonus. In the event of any claim for
indemnification by the Buyer under clauses (ii), (iv) and (v) of Section 11.1.1
of the Stock Purchase Agreement, the Key Employee shall be obligated to repay a
portion of the Sale Bonus by paying to the Butler Capital Corporation, as
Sellers' Representative (the "Sellers' Representative"), for deposit to the
"Indemnification Account" under the Sellers' Representative Agreement of even
date herewith (the "Sellers' Representative Agreement"), an amount equal to (i)
5.0% of the aggregate amount requested for deposit to the Indemnification
Account, up to a maximum repayment pursuant to this clause (i) of $737,500.00
(e.g., up to an aggregate of $14,750,000 requested for deposit), plus (ii) 4.0%
of any additional amount requested for deposit to the Indemnification Account,
up to a maximum prepayment pursuant to this clause (ii) of $400,000.00 (e.g.,
up to an aggregate of $24,750,000 requested for deposit).
12. Cooperation. The Key Employee agrees that he shall, in his capacity
as a Seller, officer, manager and otherwise, take or cause to be taken all such
actions as may be
6
reasonably requested by the Company in order to promptly consummate the Sale
Transaction, including without limitation the tendering of stock, stock options
or stock rights to the Buyer in the Sale Transaction.
13. Proprietary Information. The Key Employee agrees that he shall not,
while employed by the Company and/or Steel Heddle and thereafter, except as
expressly authorized by the Board of Directors of the Company or a person duly
authorized thereby, disclose to any person, other than an employee or adviser
of the Company or Steel Heddle, any trade secrets, proprietary or other
confidential information of the Company or Steel Heddle including without
limitation information in any way relating to the Stock Purchase Agreement or
transactions contemplated thereunder. The Key Employee understands and agrees
that this restriction shall continue to apply after his employment terminates,
regardless of the reason for such termination.
14. Withholding. All payments made or benefits provided by the Company or
Steel Heddle pursuant to this Agreement shall be reduced by the amount of any
tax or other amounts required to be withheld by the Company or Steel Heddle
under applicable law in connection with the Agreement or the transactions
contemplated hereby, and the Key Employee agrees to reimburse the Company or
Steel Heddle for any such withholding tax to the extent not so deducted.
15. Conditions and Vesting. Notwithstanding any other provision of this
Agreement, the Key Employee's right to the Sale Bonus is contingent upon (i)
the prior approval of the Sale Bonus by the stockholders of the Company in
accordance with Section 280G of the Code, (ii) the consummation of the Sale
Transaction pursuant to the Stock Purchase Agreement (the "Closing"), and (iii)
the Key Employee's compliance with the terms and conditions of this Agreement.
In addition, the Key Employee's rights to the Sale Bonus will be forfeited
under the following circumstances: (A) the Key Employee, other than for Good
Reason (as defined below), resigns or otherwise voluntarily terminates his
employment with the Company or Steel Heddle prior to the Closing, or (B) the
Key Employee's employment with the Company or Steel Heddle is terminated for
Cause (as defined below) prior to the Closing. Without limiting the foregoing,
but subject to the first sentence of this Section 6, the Key Employee shall be
100% vested in his Sale Bonus upon the occurrence, prior to the Closing, of
either of the following events: (A) termination of employment by the Key
Employee for Good Reason, or (B) termination of the Key Employee by the Company
other than for Cause.
For purposes of this Agreement "Good Reason" means the material
diminution of any of the Key Employee's positions, authority, duties or
responsibilities with respect to his employment by the Company or Steel Heddle
as in effect on the date of this Agreement, provided, that no change in
position, authority, duties or responsibilities shall be deemed to constitute
Good Reason unless the Key Employee provides written notice of any such Good
Reason to the Company at least thirty (30) days in advance of termination of
employment and gives the Company the opportunity to remedy or cure the asserted
basis for Good Reason termination.
-6-
7
For purposes of this Agreement, "Cause" means (a) the material failure
or refusal by any Key Employee to perform and discharge, or material breach of,
his duties and responsibilities with respect to his employment by the Company
or Steel Heddle, including any duties or responsibilities hereunder, (b) the
material breach of his fiduciary duties as an officer or member of the Board of
Directors of the Company, Steel Heddle or any of their subsidiaries, or (c)
conviction of a felony or any other crime involving the personal dishonesty or
moral turpitude of the Key Employee which in either case materially and
adversely reflects on the Company, Steel Heddle or any of their subsidiaries;
provided, that in the event a Key Employee is terminated for Cause as described
in (a) or (b) above, the Company shall provide written notice to the Key
Employee at least thirty (30) days in advance of such termination, describing
the Key Employee's failure to perform or misconduct, as the case may be, in
reasonable detail and shall give the Key Employee the opportunity to respond to
such allegations and to remedy or cure such failure to perform or misconduct.
16. Assignment. This Agreement shall continue for the benefit of and be
binding upon (i) the Key Employee and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees and (ii) the Company and any successor of the Company by
reorganization, merger, consolidation or liquidation and any assignee
specifically assigned this Agreement in connection with an assignment of all or
substantially all of the business or assets of the Company.
17. Termination of Prior Agreement. The provisions of this Agreement shall
be effective with respect to the Sales Transaction described above and shall
amend and replace in whole the rights and obligations owed under the Sale Bonus
Agreement dated January 12, 1998, between the Company, Steel Heddle Mfg. Co.
and the Key Employees (the "January 12th Agreement"). In the event that the
Sales Transaction shall not be consummated pursuant to the terms of the Stock
Purchase Agreement, then all rights and obligations provided herein shall
terminate and the January 12th Agreement shall continue in full force and
effect.
18. Miscellaneous. This Agreement, together with the Sellers'
Representative Agreement, constitutes the entire agreement of the parties with
respect to the subject matter hereof, and supersedes and replaces all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.
-7-
8
If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and return a copy to the Company, whereupon it shall
become a binding agreement among the Company, Steel Heddle and you.
Very truly yours,
STEEL HEDDLE MFG. CO.
By: /s/ Jerry B. Miller
--------------------------------
Title: Secretary
SH HOLDINGS CORP.
By:/s/ Benjamin G. Team
------------------------------
Title: President
Accepted and agreed to:
/s/ Benjamin G. Team
- ------------------------------------
Benjamin G. Team
BUTLER CAPITAL CORPORATION,
in its capacity as Sellers' Representative as
aforesaid
By:/s/ Gilbert Butler
---------------------------------
Title:
-8-
9
SH HOLDINGS CORP.
1801 RUTHERFORD ROAD
GREENVILLE, SOUTH CAROLINA 29609
April 21, 1998
Jerry B. Miller
Greenville, South Carolina 29615
Dear Jerry:
As you know, on the date hereof, SH Holdings Corp. (the "Company")
intends to enter into a Stock Purchase Agreement (the "Stock Purchase
Agreement") among the Company, all holders of the Company's shares, options,
warrants and rights (collectively, the "Sellers") and Steel Heddle Group, Inc.
(the "Buyer"). This letter (the "Agreement") is being furnished to you to
provide you with reasonable compensation for prior services rendered to the
Company and Steel Heddle Mfg. Co. ("Steel Heddle") and their subsidiaries in
excess of previous salary and compensation paid to you, subject to the terms
and conditions specified herein. Accordingly, you (the "Key Employee") hereby
agree with the Company and Steel Heddle as follows:
19. Sale Bonus. Subject to Section 6, upon the consummation of the sale
transaction pursuant to the terms of the Stock Purchase Agreement (the "Sale
Transaction") the Key Employee shall be entitled to a bonus (the "Sale Bonus")
of $1,275,000.00, subject to adjustment as provided in Section 2. The Sale
Bonus shall be paid at the closing of the Sale Transaction (the "Closing").
20. Adjustment to Sale Bonus. In the event of any claim for
indemnification by the Buyer under clauses (ii), (iv) and (v) of Section 11.1.1
of the Stock Purchase Agreement, the Key Employee shall be obligated to repay a
portion of the Sale Bonus by paying to the Butler Capital Corporation, as
Sellers' Representative (the "Sellers' Representative"), for deposit to the
"Indemnification Account" under the Sellers' Representative Agreement of even
date herewith (the "Sellers' Representative Agreement"), an amount equal to (i)
5.0% of the aggregate amount requested for deposit to the Indemnification
Account, up to a maximum repayment pursuant to this clause (i) of $737,500.00
(e.g., up to an aggregate of $14,750,000 requested for deposit), plus (ii) 4.0%
of any additional amount requested for deposit to the Indemnification Account,
up to a maximum prepayment pursuant to this clause (ii) of $400,000.00 (e.g.,
up to an aggregate of $24,750,000 requested for deposit).
21. Cooperation. The Key Employee agrees that he shall, in his capacity
as a Seller, officer, manager and otherwise, take or cause to be taken all
such actions as may be
10
reasonably requested by the Company in order to promptly consummate the Sale
Transaction, including without limitation the tendering of stock, stock options
or stock rights to the Buyer in the Sale Transaction.
22. Proprietary Information. The Key Employee agrees that he shall not,
while employed by the Company and/or Steel Heddle and thereafter, except as
expressly authorized by the Board of Directors of the Company or a person duly
authorized thereby, disclose to any person, other than an employee or adviser
of the Company or Steel Heddle, any trade secrets, proprietary or other
confidential information of the Company or Steel Heddle including without
limitation information in any way relating to the Stock Purchase Agreement or
transactions contemplated thereunder. The Key Employee understands and agrees
that this restriction shall continue to apply after his employment terminates,
regardless of the reason for such termination.
23. Withholding. All payments made or benefits provided by the Company or
Steel Heddle pursuant to this Agreement shall be reduced by the amount of any
tax or other amounts required to be withheld by the Company or Steel Heddle
under applicable law in connection with the Agreement or the transactions
contemplated hereby, and the Key Employee agrees to reimburse the Company or
Steel Heddle for any such withholding tax to the extent not so deducted.
24. Conditions and Vesting. Notwithstanding any other provision of this
Agreement, the Key Employee's right to the Sale Bonus is contingent upon (i)
the prior approval of the Sale Bonus by the stockholders of the Company in
accordance with Section 280G of the Code, (ii) the consummation of the Sale
Transaction pursuant to the Stock Purchase Agreement (the "Closing"), and (iii)
the Key Employee's compliance with the terms and conditions of this Agreement.
In addition, the Key Employee's rights to the Sale Bonus will be forfeited
under the following circumstances: (A) the Key Employee, other than for Good
Reason (as defined below), resigns or otherwise voluntarily terminates his
employment with the Company or Steel Heddle prior to the Closing, or (B) the
Key Employee's employment with the Company or Steel Heddle is terminated for
Cause (as defined below) prior to the Closing. Without limiting the foregoing,
but subject to the first sentence of this Section 6, the Key Employee shall be
100% vested in his Sale Bonus upon the occurrence, prior to the Closing, of
either of the following events: (A) termination of employment by the Key
Employee for Good Reason, or (B) termination of the Key Employee by the Company
other than for Cause.
For purposes of this Agreement "Good Reason" means the material
diminution of any of the Key Employee's positions, authority, duties or
responsibilities with respect to his employment by the Company or Steel Heddle
as in effect on the date of this Agreement, provided, that no change in
position, authority, duties or responsibilities shall be deemed to constitute
Good Reason unless the Key Employee provides written notice of any such Good
Reason to the Company at least thirty (30) days in advance of termination of
employment and gives the Company the opportunity to remedy or cure the asserted
basis for Good Reason termination.
-10-
11
For purposes of this Agreement, "Cause" means (a) the material failure
or refusal by any Key Employee to perform and discharge, or material breach of,
his duties and responsibilities with respect to his employment by the Company
or Steel Heddle, including any duties or responsibilities hereunder, (b) the
material breach of his fiduciary duties as an officer or member of the Board of
Directors of the Company, Steel Heddle or any of their subsidiaries, or (c)
conviction of a felony or any other crime involving the personal dishonesty or
moral turpitude of the Key Employee which in either case materially and
adversely reflects on the Company, Steel Heddle or any of their subsidiaries;
provided, that in the event a Key Employee is terminated for Cause as described
in (a) or (b) above, the Company shall provide written notice to the Key
Employee at least thirty (30) days in advance of such termination, describing
the Key Employee's failure to perform or misconduct, as the case may be, in
reasonable detail and shall give the Key Employee the opportunity to respond to
such allegations and to remedy or cure such failure to perform or misconduct.
25. Assignment. This Agreement shall continue for the benefit of and be
binding upon (i) the Key Employee and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees and (ii) the Company and any successor of the Company by
reorganization, merger, consolidation or liquidation and any assignee
specifically assigned this Agreement in connection with an assignment of all or
substantially all of the business or assets of the Company.
26. Termination of Prior Agreement. The provisions of this Agreement shall
be effective with respect to the Sales Transaction described above and shall
amend and replace in whole the rights and obligations owed under the Sale Bonus
Agreement dated January 12, 1998, between the Company, Steel Heddle Mfg. Co.
and the Key Employees (the "January 12th Agreement"). In the event that the
Sales Transaction shall not be consummated pursuant to the terms of the Stock
Purchase Agreement, then all rights and obligations provided herein shall
terminate and the January 12th Agreement shall continue in full force and
effect.
27. Miscellaneous. This Agreement, together with the Sellers'
Representative Agreement, constitutes the entire agreement of the parties with
respect to the subject matter hereof, and supersedes and replaces all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.
-11-
12
If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and return a copy to the Company, whereupon it shall
become a binding agreement among the Company, Steel Heddle and you.
Very truly yours,
STEEL HEDDLE MFG. CO.
By: /s/ Benjamin G. Team
------------------------------
Title: President
SH HOLDINGS CORP.
By:/s/ Benjamin G. Team
------------------------------
Title: President
Accepted and agreed to:
/s/ Jerry B. Miller
- --------------------------------------
Jerry B. Miller
BUTLER CAPITAL CORPORATION,
in its capacity as Sellers' Representative as
aforesaid
By:/s/ Gilbert Butler
-----------------------------------
Title:
-12-