<PAGE>
Exhibit (e)(3)
George K. Baum & Company
Investment Bankers
MEMBER TWELVE WYANDOTTE PLAZA
NEW YORK STOCK EXCHANGE, INC. 120 WEST 12TH STREET
CHICAGO STOCK EXCHANGE, INC. KANSAS CITY, MISSOURI 64105
TELEPHONE (816) 474-1100
August 22, 2000
SENT VIA FEDERAL EXPRESS
PERSONAL & CONFIDENTIAL
-----------------------
Mr. Leo Benatar
Chairman of the Board
JPS Packaging Company
121 Burdett Road, N.E.
Atlanta, Georgia 30327
Dear Mr. Benatar:
We are pleased to confirm the arrangement, as more specifically set forth
in this letter agreement, under which George K. Baum & Company ("GKB") is
engaged by JPS Packaging Company (the "Company") for the purpose of undertaking
a study to enable us to render our opinion (the "Opinion") as to the fairness,
from a financial point of view, of the consideration to be received by the
Company or by the stockholders of the Company, as the case may be (the "Purchase
Consideration"), in connection with the sale of 50% or more of outstanding
common stock of the Company (the "Transaction").
Section 1. Services.
(a) GKB shall render and deliver the Opinion to the Company. The
nature and scope of GKB's investigation with respect to the
Opinion, as well as the scope, form and substance of the
Opinion shall be as GKB deems appropriate, in its sole
discretion, after consultation with the Company. The Opinion
may state, in substance, among other things, that it is given
in reliance upon the accuracy and completeness of all
information furnished to GKB by the Company and/or its outside
professional advisors.
(b) GKB shall render such other financial advisory and valuation
services as, from time to time, may mutually be agreed upon in
writing by GKB and the Company.
(c) The Company acknowledges that GKB has been engaged solely to
render the Opinion. The Company also acknowledges that GKB has
not been engaged as an advisor or agent of any other person or
entity and that the Company's engagement of GKB is not intended
to confer any rights upon any persons or entities not a party
hereto (including stockholders,
<PAGE>
Mr. Leo Benatar
Page 2
August 22, 2000
employees or creditors of the Company) as against GKB, GKB's
affiliates or their respective directors, officers, employees
or agents.
Section 2. Fees for Services. In consideration of rendering the Opinion, the
Company shall pay to GKB a cash fee of Two Hundred Fifty Thousand
Dollars ($250,000). The fee shall be payable as follows: (i) Fifty
Thousand Dollars ($50,000) due and payable upon the Company's
receipt of a definitive offer, (ii) One Hundred Fifty Thousand
Dollars ($150,000) due and payable at the time of delivery of the
Opinion to the Company, and (iii) Fifty Thousand Dollars ($50,000)
due and payable upon the earlier of the consummation of the
Transaction or the mailing to the Company's stockholders of a proxy
statement or other communication containing the Opinion or any
reference thereto.
Section 3. Sharing and Use of Information; Confidentiality.
(a) GKB shall familiarize itself to the extent it deems appropriate
and feasible with the business, operations, properties,
financial condition, and profits of the Company. In order to
permit GKB to obtain such familiarity, the Company agrees (i)
to provide GKB with all financial and other information in its
possession or reasonably available to it that is material with
respect to it or its business and financial condition, (ii) to
provide all financial and other information requested by GKB
for purposes of issuing the Opinion, and (iii) to continuously
update GKB in a timely manner of all developments that may be
material to the foregoing. GKB shall, under all circumstances,
including without limitation the rendering of the Opinion, have
the right to rely, without independent investigation or
verification on the accuracy and completeness of all publicly
available information and of all information furnished to GKB
by the Company and their respective outside professional
advisors.
In connection with GKB's Opinion, GKB plans, among other
things, to:
(i) Review relevant financial and other information relating
to the Company furnished to GKB by the Company, including
internal financial analyses, forecasts and projections,
as well as publicly available information relating to the
Company;
(ii) Visit the executive offices of the Company; and
(iii) Meet with selected members of management of the Company
regarding their assessment of the impact of the proposed
transaction, as well as other matters relevant to the
fairness of the Purchase Consideration to be received by
the Company's stockholders pursuant to the Transaction.
(b) All nonpublic information furnished to GKB by the Company shall
be treated as confidential and shall be used by GKB exclusively
for the
<PAGE>
Mr. Leo Benatar
Page 3
August 22, 2000
purposes contemplated by this letter agreement. It is
understood that the foregoing does not apply to information (i)
that is or becomes publicly available through no disclosure by
GKB in violation of the foregoing or is received or becomes
lawfully available to GKB from any third party not previously
known to GKB to be prohibited from making such disclosure, or
(ii) that is required by law or legal process to be made
available to third parties.
(c) It is understood that the Opinion may be included in any proxy
statement or communication distributed to the Company's
stockholders in connection with the Transaction; provided,
however, the Opinion, any summary of the Opinion, any excerpts
from the Opinion, and any reference to GKB's services to the
Company may be used in such proxy statement, or otherwise, only
with prior written consent of GKB, which consent shall not be
unreasonably withheld.
(d) Except as expressly set forth in subsection (c) of this
Section, the Company acknowledges that all opinions and advice
(written or oral) given by GKB to the Company in connection
with GKB's engagement are intended solely for the benefit and
use of the Company (including its management, directors,
stockholders, and attorneys) in considering the potential
transaction to which they relate, and the Company agrees that
no such opinion or advice shall be used for any other purpose
or reproduced, disseminated, quoted or referred to at any time,
in any manner or for any purpose, nor shall any public
references to GKB be made by the Company (or such person),
without the prior written consent of GKB, which consent shall
not be unreasonably withheld.
Section 4. Expenses. In addition to any fees that may be payable to GKB
hereunder, the Company hereby agrees, from time to time, upon
request (but in any event, upon the earlier of the consummation of
the Transaction, the mailing to the Company's stockholders of a
proxy statement or other communication containing the Opinion or any
reference thereto, or the termination of GKB's engagement) and upon
receipt of a reasonably detailed statement, to reimburse GKB for all
of GKB's reasonable travel and other out-of-pocket expenses in
connection with GKB's engagement hereunder and, if necessary, all
fees and disbursements of GKB's counsel in connection with GKB's
engagement hereunder. The fees and disbursements of counsel retained
pursuant to the immediately preceding sentence shall not exceed
$5,000 and all fees, disbursements and expenses shall not exceed
$10,000 without the prior consent of the Company, such consent not
to be unreasonably withheld; provided, however, this sentence shall
in no way affect the Company's obligations as set forth in Annex A
to this letter agreement.
Section 5. Indemnity. In connection with engagements such as this, it is GKB's
policy to receive indemnification. The Company agrees to the
provisions with respect to the indemnity and other matters set forth
in Annex A, which is incorporated herein by reference to this
letter.
<PAGE>
Mr. Leo Benatar
Page 4
August 22, 2000
Section 6. Termination of Engagement. GKB's engagement hereunder may be
terminated by either the Company or GKB at any time, with or without
cause, upon written advice to that effect to the other party. The
provisions of Sections 2, 3, 4, 5, and 6 hereof shall survive such
termination and shall remain in full force and effect.
Section 7. Acknowledgment Regarding GKB. As you know, GKB is a full-service
securities firm and as such may from time to time effect
transactions, for its own account or the accounts of its customers,
and hold positions in securities or options on securities of the
Company and other companies that may be the subject of the
engagement contemplated by this letter agreement.
Please confirm that the foregoing is in accordance with your understandings
and agreements with GKB by signing and returning to GKB the duplicate of this
letter agreement enclosed herewith. We are delighted to accept this engagement
and look forward to working with you on this assignment.
Very truly yours,
GEORGE K. BAUM & COMPANY
/s/John R. Martin
---------------------------------------
John R. Martin
Managing Director, Investment Banking
Confirmed:
JPS PACKAGING COMPANY
By/s/Leo Benatar
-----------------------------
Leo Benatar
Chairman of the Board
Date: 8/30/00
-------------------------
<PAGE>
Annex A
In the event that GKB becomes involved in any capacity in any action, proceeding
or investigation brought by or against any entity or person, including
stockholders of the Company, in connection with, or as a result of, either GKB's
engagement or any matter referred to in this letter agreement, the Company
agrees to periodically reimburse GKB for its legal and other expenses incurred
in connection therewith including the cost of any investigation of, preparation
for, or defense of, any pending or threatened claim or any action or proceeding
arising therefrom, regardless of whether GKB is a party and regardless of
whether such claim, action or proceeding is initiated or brought by or on behalf
of the Company. The Company also agrees to indemnify and hold GKB harmless
against any and all losses, claims, damages or liabilities, joint or several, to
any such person or entity in connection with, or as a result of, either GKB's
engagement or any matter referred to in this letter agreement, except to the
extent that any such loss, claim, damage or liability results from the gross
negligence or willful misconduct of GKB in performing the services that are the
subject of this letter agreement. If, for any reason, the foregoing
indemnification is unavailable to GKB or insufficient to hold it harmless, then
the Company shall contribute to GKB that amount paid or payable by GKB as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect (i) the relative economic interests of the Company and
its stockholders (on the one hand) and GKB (on the other hand) in the matters
contemplated by this letter agreement, (ii) the relative fault of the Company
and GKB with respect to such loss, claim, damage or liability and (iii) any
other relevant equitable considerations. The reimbursement, indemnity and
contribution obligations of the Company under this Annex A shall be in addition
to any liability that the Company may otherwise have and shall extend upon the
same terms and conditions to any affiliate of GKB and the stockholders,
partners, directors, agents, employees and controlling persons (if any), as the
case may be, of GKB and any such affiliate (along with GKB, each an "Indemnified
Party"). The terms and conditions shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company and GKB. The Company also agrees that neither GKB nor any other
Indemnified Parties shall have any liability to the Company or any person or
entity asserting claims by, on behalf of, or in right of, the Company in
connection with, or as a result of, either GKB's engagement or any matter
referred to in this letter agreement, except to the extent that any losses,
claims, damages, liabilities or expenses incurred by the Company result from the
gross negligence or willful misconduct of GKB in performing the services that
are the subject of this letter agreement. Prior to entering into any agreement
or arrangement with respect to, or effecting, any proposed sale, exchange,
dividend or other distribution or liquidation of all or a significant portion of
its assets in one or a series of transactions or any significant
recapitalization or reclassification of its outstanding securities that does not
directly or indirectly provide for the assumption of the obligations of the
Company set forth in this Annex A, the Company shall arrange in connection
therewith alternative means of providing for the obligations of the Company set
forth in this Annex A upon terms and conditions reasonably satisfactory to GKB.
Any right to trial by jury with respect to any action or proceeding arising in
connection with, or as a result of, either GKB's engagement or any matter
referred to in this letter agreement is hereby waived by the parties hereto.
The provisions of this Annex A shall survive any termination or completion of
the engagement provided by this letter agreement, and this letter agreement
shall be governed by and construed in accordance with the laws of the State of
Missouri without regard to principles of conflicts of laws.
