<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 27, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------ ------------.
Commission File Number 33-27038
JPS TEXTILE GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 57-0868166
- ---------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
555 North Pleasantburg Drive, Suite 202, Greenville, South Carolina 29607
- ------------------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number (864) 239-3900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 490,000 shares of the
Company's Class A Common Stock and 510,000 shares of Class B Common Stock were
outstanding as of September 6, 1996.
1
<PAGE> 2
JPS TEXTILE GROUP, INC.
INDEX
<TABLE>
<CAPTION>
Page
PART I. FINANCIAL INFORMATION Number
<S> <C> <C>
Item 1. Condensed Consolidated Balance Sheets
July 27, 1996 (Unaudited) and October 28, 1995 . . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations
Three Months and Nine Months Ended July 27, 1996 and
July 29, 1995 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows
Nine Months Ended July 27, 1996 and
July 29, 1995 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements (Unaudited) . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 11
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
2
<PAGE> 3
Item 1. Financial Statements
JPS TEXTILE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
July 27, October 28,
1996 1995
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 1,196 $ 1,352
Accounts receivable 71,271 88,186
Inventories 57,549 48,729
Prepaid expenses and other 779 2,545
Net assets held for sale - 28,932
---------- ----------
Total current assets 130,795 169,744
Property, plant and equipment, net 126,139 161,436
Excess of cost over fair value of net assets acquired, net 30,766 31,489
Other assets (Note 4) 53,093 50,153
---------- ----------
Total $ 340,793 $ 412,822
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 27,616 $ 29,754
Accrued interest 4,106 9,895
Accrued salaries, benefits and withholdings 10,285 11,503
Other accrued expenses 15,095 12,699
Senior credit facility, revolving line of credit (Note 3) 86,232 -
Current portion of long-term debt (Note 3) 238,054 2,770
---------- ----------
Total current liabilities 381,388 66,621
Long-term debt (Note 3) 5,087 327,668
Deferred income taxes 3,665 4,165
Other long-term liabilities 18,489 23,242
---------- ----------
Total liabilities 408,629 421,696
---------- ----------
Senior redeemable preferred stock 31,472 28,171
---------- ----------
Shareholders' equity (deficit):
Junior preferred stock 250 250
Common stock 10 10
Additional paid-in capital 26,311 29,613
Deficit (125,879) (66,918)
---------- ----------
Total shareholders' deficit (99,308) (37,045)
---------- ----------
Total $ 340,793 $ 412,822
========== ==========
</TABLE>
Note: The condensed consolidated balance sheet at October 28, 1995 has
been extracted from the audited financial statements.
See notes to condensed consolidated financial statements.
3
<PAGE> 4
JPS TEXTILE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------- ----------------------------
July 27, July 29, July 27, July 29,
1996 1995 1996 1995
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales $ 110,266 $ 109,117 $ 333,444 $ 349,532
Cost of sales 95,908 93,805 294,635 299,039
----------- ----------- ----------- ------------
Gross profit 14,358 15,312 38,809 50,493
Selling, general and administrative expenses 9,888 9,633 30,601 30,856
Other expense, net 129 216 2,078 876
Charges for plant closing, loss on sale of
certain operations and write down of
certain long-lived assets 30,055 - 30,055 -
----------- ----------- ----------- ------------
Operating profit (loss) (25,714) 5,463 (23,925) 18,761
Valuation allowance on Gulistan securities (Note 4) (1,395) - (5,463)
Interest income 714 776 2,102 2,127
Interest expense (10,082) (9,754) (29,647) (29,820)
Debt restructuring fees and expenses (Note 3) (727) - (902) -
----------- ----------- ----------- ------------
Loss before income taxes, discontinued
operations and extraordinary gain (37,204) (3,515) (57,835) (8,932)
Income tax expense (benefit) (582) 64 (374) 1,000
----------- ----------- ----------- ------------
Loss before discontinued operations
and extraordinary gain (36,622) (3,579) (57,461) (9,932)
Loss from discontinued operations, net of taxes - (2,593) - (5,279)
Gain (loss) on sale of discontinued operations,
net of taxes - 423 (1,500) 1,463
Extraordinary gain on early extinguishment of debt,
net of taxes - - - 20,120
----------- ----------- ----------- ------------
Net income (loss) (36,622) (5,749) (58,961) 6,372
Senior redeemable preferred stock in-kind
dividends and discount accretion 1,109 959 3,301 2,859
----------- ----------- ----------- ------------
Income (loss) applicable to common stock $ (37,731) $ (6,708) $ (62,262) $ 3,513
=========== =========== =========== ============
Weighted average common shares outstanding 1,000,000 1,000,000 1,000,000 1,000,000
=========== =========== =========== ============
Earnings (loss) per common share:
Loss before discontinued operations
and extraordinary gain $ (37.73) $ (4.54) $ (60.76) $ (12.79)
Loss from discontinued operations - (2.59) (5.28)
Gain (loss) on sale of discontinued operations - .42 (1.50) 1.46
Extraordinary gain on early
extinguishment of debt - - - 20.12
----------- ----------- ----------- ------------
Net income (loss) $ (37.73) $ (6.71) $ (62.26) $ 3.51
=========== =========== =========== ============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
JPS TEXTILE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
----------------------
July 27, July 29,
1996 1995
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (58,961) $ 6,372
--------- --------
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Charges for plant closing, loss on sale of certain operations
and write down of certain long-lived assets 30,055 -
Loss from discontinued operations - 5,279
Loss (gain) on sale of discontinued operations 1,500 (1,463)
Extraordinary gain on early extinguishment of debt - (20,120)
Depreciation and amortization, except amounts included
in interest expense 17,444 16,438
Interest accretion and debt issuance cost amortization 7,219 6,607
Valuation allowance on Gulistan securities 5,463 -
Deferred income taxes (500) -
Other, net 3,061 (401)
Changes in assets and liabilities:
Accounts receivable 16,915 12,885
Inventory (8,821) (9,254)
Prepaid expenses and other assets (184) (535)
Accounts payable (2,139) (7,601)
Accrued expenses and other liabilities (13,262) (11,244)
--------- --------
Total adjustments 56,751 (9,409)
--------- --------
Net cash used in operating activities (2,210) (3,037)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions (7,391) (12,500)
Cash provided by (used in) discontinued operations, net 364 (348)
Proceeds from sales of discontinued operations, net 16,778 1,463
--------- --------
Net cash provided by (used in) investing activities 9,751 (11,385)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs incurred (301) (25)
Revolving credit facility borrowings (repayments), net (5,494) 52,109
Proceeds from issuance of long-term debt 29 5,000
Repayment and purchases of long-term debt (1,931) (43,773)
--------- --------
Net cash provided by (used in) financing activities (7,697) 13,311
--------- --------
Net decrease in cash (156) (1,111)
Cash at beginning of period 1,352 1,844
--------- --------
Cash at end of period $ 1,196 $ 733
========= ========
Supplemental cash flow information:
Interest paid $ 28,217 $ 30,893
Income taxes paid 680 3,459
Non-cash financing activities:
Senior redeemable preferred stock dividends-in-kind 2,319 2,185
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
JPS TEXTILE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. JPS Textile Group, Inc. (the "Company") has prepared, without audit,
the interim condensed consolidated financial statements and related
notes. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at July 27,
1996 for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the fiscal year ended
October 28, 1995. The results of operations for the interim period
are not necessarily indicative of the operating results of the full
year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues
and expenses during the reporting period. Actual results could differ
from those estimates (see Notes 5 and 7).
In the 1995 nine-month period, the Company estimated that the open
market purchases of certain of its debt securities would result in
additional tax liabilities of approximately $3.2 million. Such amount
was recorded as a reduction of the extraordinary gain from early
extinguishment of debt in the 1995 nine-month period. This amount of
tax was based on management's best estimate at that time of
alternative minimum taxable income for Fiscal 1995. During the fourth
quarter of Fiscal 1995, management's estimate of Fiscal 1995
alternative minimum taxable income was revised downward. Accordingly,
the Company reduced the $3.2 million tax estimate by $2.6 million to
$0.6 million during the fourth quarter of Fiscal 1995. The Company
has restated the extraordinary gain in the 1995 nine-month period for
this report on Form 10-Q to give effect to the revised amount of tax
on the extraordinary gain.
The Company has reclassified $1.5 million in the October 28, 1995
balance sheet from property, plant and equipment to other current
assets. The reclassified amount represents the Company's progress
payments in 1995 on equipment which was subsequently financed under an
operating lease in the 1996 first quarter. The Company had the
operating lease agreement in place in 1995, however this particular
equipment had not been designated to be financed under that agreement
until the first quarter of 1996. The reclassification treats the $1.5
million as a temporary deposit on the October 28, 1995 balance sheet,
subsequently reimbursed to the Company from the proceeds of the
operating lease. In the 1996 nine-month period, the $1.5 million is
treated in the statement of cash flows as a reduction of other current
assets which results in cash provided by operating activities.
Certain other 1995 amounts have been reclassified to conform to the
1996 presentation. In addition, see Note 3 of the Notes to
Consolidated Financial Statements in the Company's Annual Report on
Form 10-K for the fiscal year ended October 28, 1995 regarding
reclassifications of 1995 amounts for discontinued operations.
6
<PAGE> 7
2. Inventories (In Thousands):
<TABLE>
<CAPTION>
July 27, October 28,
1996 1995
--------- -----------
<S> <C> <C>
Raw materials $ 14,339 $ 13,909
Work-in-process 18,725 18,334
Finished goods 24,485 16,486
--------- -----------
TOTAL $ 57,549 $ 48,729
========= ===========
</TABLE>
3. Long-Term Debt
As discussed in Note 12 of the Notes to Consolidated Financial Statements
in the Company's Annual Report on Form 10-K for the fiscal year ended
October 28, 1995, the senior credit facility (or a similar credit facility)
is essential for the Company's continued operations. The existing senior
credit facility was scheduled to expire on November 1, 1996. Accordingly,
the Company has negotiated an extension of that facility. On September 6,
1996, the senior credit facility was amended to, among other things, extend
its expiration date and reduce the interest rate by 0.25%. Under the terms
of the amended credit agreement, the senior credit facility expires on
March 1, 1997 if the Company has not commenced a case under chapter 11 of
the Bankruptcy Code. If such a case is commenced on or prior to March 1,
1997, the senior credit facility will expire on the earlier of November 1,
1997 or the effective date of a reorganization under chapter 11 of the
Bankruptcy Code. The Company has classified the $86.2 million outstanding
under its senior credit facility revolving line of credit as a current
liability because the facility may terminate on March 1, 1997 as noted
above. In addition, the loan covenants were amended to be based upon the
activities of the consolidated operating subsidiaries (JPS Converter and
Industrial Corp. and JPS Elastomerics Corp.) rather than the consolidated
Company (i.e. excludes the assets and liabilities of the parent company and
other non-operating subsidiaries). The amended credit agreement does not
permit additional borrowings by the operating subsidiaries for, among other
things, payment of the parent company's interest on its notes and
debentures. As a result of the aforementioned restriction on the use of
proceeds of revolving loans, the Company does not expect to have the
ability to make the interest payments of approximately $1.9 million on its
subordinated debentures on November 15, 1996. The terms of the indentures
governing all of the Company's subordinated debt provide that such a
failure to pay interest when due will result in an event of default on all
such indebtedness. Because such an event of default is foreseeable and
would result in such obligations becoming immediately due and payable, all
of the Company's notes and debentures are classified as current liabilities
in the accompanying consolidated balance sheet as of July 27, 1996.
As discussed in the Company's 1995 Annual Report, it was the Company's
intention to engage advisors in order to expeditiously reach an
understanding with its bondholders about an extension, replacement or
refinancing of its debt securities. On May 8, 1996, the Company engaged
The Blackstone Group L.P. to act as its financial advisor in connection
with a potential financial restructuring. In addition, at the request of
the holders of a substantial majority of its outstanding bonds, the Company
engaged Houlihan, Lokey, Howard & Zukin, Inc., effective April 10, 1996,
to act as financial advisor to the holders of such debt securities in
connection with such a financial restructuring. Fees for these advisors
and other fees and expenses associated with this matter are classified in
the statement of operations as debt restructuring fees and expenses.
The Company's ability to accomplish a restructuring of the terms of its
debt securities or any refinancing will depend on a number of factors,
including its operating performance, market conditions and the terms of any
extension, replacement or refinancing. Management is unable to predict the
Company's ability to accomplish the foregoing extension, replacement or
refinancing of its debt securities.
7
<PAGE> 8
4. Discontinued Operations
On November 16, 1995, pursuant to the terms of an Asset Transfer Agreement
dated as of November 16, 1995, by and among the Company, JPS Carpet Corp.
("Carpet"), a wholly-owned subsidiary of the Company, Gulistan Holdings
Inc. and Gulistan Carpet Inc., a wholly-owned subsidiary of Gulistan
Holdings Inc. (collectively, with Gulistan Holdings Inc., "Gulistan"), the
Company and Carpet consummated the sale of substantially all of the assets
of Carpet used in the business of designing and manufacturing tufted
carpets for sale to residential, commercial and hospitality markets (the
"Carpet Business"). Pursuant to the Asset Transfer Agreement, Gulistan
agreed to assume substantially all of the liabilities and obligations
associated with the Carpet Business. Gulistan was formed and its common
stock is owned by certain members of the former management team at Carpet.
The Company and its subsidiaries have agreed, for a three-year period, not
to compete directly or indirectly with the business that was sold. The
Consolidated Statements of Operations and Cash Flows for 1995 have been
reclassified to reflect the Carpet Business as discontinued operations.
The consideration for the Carpet Business consisted of approximately $22.5
million in cash, subject to certain post-closing adjustments based on the
audited amount of working capital transferred on November 16, 1995, and
other debt and equity securities of Gulistan as follows: a $10 million
Promissory Note due in November 2001, $5 million of preferred stock
redeemable in November 2005 and warrants to purchase 25% of the common
stock of Gulistan. Based on an independent valuation, the Company
determined the fair value of these debt and equity securities to be
approximately $11.3 million. These debt and equity securities are included
in other non-current assets on the April 27, 1996 balance sheet. Since the
disposal of the Carpet Business occurred subsequent to the end of Fiscal
1995, the net assets of the Carpet Business (adjusted to estimated net
realizable value) have been classified as "net assets held for sale" on the
October 28, 1995 balance sheet. As of October 28, 1995, the Company
adjusted the net assets of the Carpet Business to their estimated net
realizable value, which resulted in a charge to the 1995 Consolidated
Statement of Operations of $30.7 million, classified as loss on sale of
discontinued operations. The loss on the sale is not currently
recognizable for tax purposes and the Company has recorded no net tax
benefit as a result of this loss due to uncertainties regarding the ability
to utilize these losses in future years.
In May 1996, the Company and Gulistan agreed on the amount of the
post-closing adjustment. As a result, the Company paid a post-closing
adjustment of $3.5 million and has recognized in fiscal 1996 an additional
loss of $1.5 million on the sale of discontinued operations. The final
amount of net cash proceeds applied by the Company to reduce outstanding
borrowings under its senior credit facility was approximately $16.7 million
(net of fees, expenses and the post-closing adjustment resulting from the
level of working capital transferred at the closing date).
Net sales from the discontinued operations of the Carpet Business were
$31.0 million and $89.8 million in the third quarter and nine-month period
of 1995, respectively. The Company has allocated to the discontinued
operations a pro-rata portion of the interest expense of its senior credit
facility, which pro-rata portion of interest expense was approximately $0.5
million and $1.4 million in the third quarter and nine-month period of
1995, respectively.
In the 1996 nine-month period, Gulistan reported net losses of
approximately $5.8 million before interest expense on the promissory note
held by the Company. Accordingly, the Company did not record interest
income on the $10 million promissory note or income from the accretion of
the discounts recorded to adjust the promissory note and the $5 million
redeemable preferred stock of Gulistan to their fair value on November 16,
1995. Also, in accordance with relevant accounting literature, the Company
has recorded a valuation allowance against its investment in the Gulistan
securities and a corresponding charge to income of $5.5 million as a result
of the net loss ($5.8 million reduced by the $0.3 million of common equity
held by Gulistan management) incurred by Gulistan during the 1996 nine-
month period. The relevant accounting literature requires the Company to
record the loss incurred by Gulistan as a valuation allowance reducing the
carrying value of the Gulistan securities held by the Company. The
valuation allowance will be increased or reduced (but not below zero) with
a corresponding charge or credit to income to give effect to future losses
or earnings of Gulistan as those losses or earnings occur.
8
<PAGE> 9
5. Contingencies
The Company has provided for all estimated future costs associated with
certain defective roofing products sold by the Predecessor Stevens Division
operations. The liability for future costs associated with these defective
roofing products is subject to management's best estimate, including
factors such as expected future claims by geographic region and roofing
compound applied; expected costs to repair or replace such roofing
products; estimated remaining length of time that such claims will be made
by customers; and the estimated costs to litigate and settle certain claims
now in litigation and those that may result in future litigation. Based on
warranties that were issued on the roofs, the Company estimates that the
defective roofing product claims will be substantially settled by 2000.
The liability for such defective products was $9.3 million at October 28,
1995 and $6.5 million at July 27, 1996. The Company records the costs of
meeting these obligations as a reduction of the balance of the recorded
liability and, accordingly, such costs are not reflected in results of
operations. Management updates its assessment of the adequacy of the
remaining reserve for defective roofing products quarterly and if it is
deemed that an adjustment to the reserve is required, it will be charged to
operations in the period in which such determination is made.
The Company estimates that, as of July 27, 1996, it would have net
operating loss carryforwards for tax regular federal income purposes of
approximately $82 million. The net operating losses expire in years 2005
through 2008. The Company's ability to utilize its net operating losses
may be significantly limited under the income tax laws should there be
changes in the ownership of the Company's stock which constitute an
ownership change for tax purposes. The effect of such an ownership change
would be to significantly limit the annual utilization of the net operating
loss carryforwards and certain built-in losses to an amount equal to the
value of the Company immediately prior to the time of the change (subject
to certain adjustments) multiplied by the Federal long-term tax exempt
rate. The Company does not believe that its losses are currently subject
to this limitation on utilization of the loss carryforwards. However,
there can be no assurance that this limitation will not apply in the
future. Due to the Company's operating history, it is uncertain that it
will be able to utilize all deferred tax assets. Therefore, a valuation
allowance has been provided equal to the deferred tax assets remaining
after deducting all deferred tax liabilities, exclusive of those related to
certain deferred state tax liabilities.
6. Early Retirement Offer
On February 15, 1996, the Company extended an offer of special early
retirement termination benefits to approximately 50 salaried employees who
met certain criteria as of that date. Approximately $2.2 million of
pension benefits were paid in lump-sums by the Company's defined benefit
pension plan to the 28 employees who accepted the offer. Other expense for
the second quarter of 1996 includes a charge of $1.1 million representing
the actuarial cost to the pension plan of such early retirement at the time
such offers were accepted by the employees. The expense reduced prepaid
pension costs which are classified as other non-current assets.
7. Sale of Certain Operations, Plant Closing and Write Down of Certain
Long-Lived Assets
The Company has entered into negotiations to sell a division which
accounted for $20.7 million of sales and a $2.0 million loss from operations
in fiscal 1995 and $13.6 million in sales and a $2.0 million loss from
operations through July 27, 1996. The contract for the sale of the
division has not yet been completed; however, management expects that
contract negotiations will be completed and the sale will close in
September 1996. Under the terms of the proposed agreement, the buyer will
pay the Company approximately $5 million in cash, subject to certain
adjustments based on the audited amount of working capital transferred on
the closing date. The net proceeds after fees and expenses are expected to
be approximately $4.8 million. The accompanying consolidated statement of
operations for the three months ended July 27, 1996 includes a charge,
"loss on sale of certain operations", of $7.9 million, which is the
estimated loss for the expected sale of this division.
9
<PAGE> 10
On August 28, 1996, the Company announced its intention to close a plant in
Greenville, South Carolina within 60 days. This closing results from what
management believes is a permanent decline in the Company's spun apparel
business. This plant has been operating on a reduced production schedule
as a result of poor market conditions and will continue to do so until its
closure on approximately October 28, 1996. The accompanying consolidated
statement of operations for the three months ended July 27, 1996 includes a
charge, "charge for plant closing", of approximately $14.0 million related
principally to the estimated loss on the impairment of the plant in
accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of", employee severance
costs and estimated costs for equipment relocation.
Also, in connection with the Company's review of present and expected
conditions in the markets which it serves, management believes that its
plant in Kingsport, Tennessee, which manufactures 100% cotton fabrics, is
impaired under the criteria of SFAS No. 121. SFAS No. 121 requires a write
down to fair value in circumstances in which the expected future net cash
flows from the operation of the plant are less than its carrying value.
The accompanying consolidated statement of operations for the third quarter
ended July 27, 1996 includes a charge, "write down of certain long-lived
assets", of $8.1 million for the excess of the carrying amount of the plant
over its estimated fair value.
10
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
- ------------------------------------------------------------------------------
The following should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing in Item 7
of the Company's Annual Report on Form 10-K for the fiscal year ended October
28, 1995. The statements contained herein that are not historical facts may be
forward-looking statements subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. The Company cautions readers of this
Quarterly Report on Form 10-Q that a number of important factors could cause
the Company's actual results in future periods to differ materially from those
expressed in any such forward-looking statements. These factors include,
without limitation, the general economic and business conditions affecting the
textile industry, competition from other existing or new textile manufacturers
and the Company's ability to meet debt service obligations and other liquidity
needs.
<TABLE>
<CAPTION>
(In Thousands)
Three Months Ended Nine Months Ended
-------------------------- -------------------------
July 27, July 29, July 27, July 29,
1996 1995 1996 1995
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES
Apparel Fabrics and Products $ 51,227 $ 53,789 $ 167,213 $ 182,948
Industrial Fabrics and Products 51,618 48,412 141,074 141,405
Home Fashion Textiles 7,421 6,916 25,157 25,179
----------- ----------- ---------- ----------
Net Sales $ 110,266 $ 109,117 $ 333,444 $ 349,532
=========== =========== ========== ==========
OPERATING PROFIT
Apparel Fabrics and Products:
Before charges for plant closing and
loss on sale of certain operations $ 576 $ 2,957 $ (707) $ 13,486
Charges for plant closing and loss on
sale of certain operations (20,421) - (20,421) -
Industrial Fabrics and Products:
Before charge for write down of certain
long-lived assets and loss on sale of
certain operations 4,730 3,451 11,123 8,137
Charge for write down of certain
long-lived assets and loss on sale of
certain operations (9,634) - (9,634) -
Home Fashion Textiles 335 420 603 1,287
Indirect Corporate Expenses, net (1,300) (1,365) (4,889) (4,149)
----------- ----------- ---------- ----------
Operating Profit (loss) (25,714) 5,463 (23,925) 18,761
Valuation allowance on Gulistan securities (1,395) - (5,463) -
Interest income 714 776 2,102 2,127
Interest expense (10,082) (9,754) (29,647) (29,820)
Restructuring fees and expenses (727) - (902) -
----------- ----------- ---------- ----------
Loss before income taxes, discontinued
operations and extraordinary gain $ (37,204) $ (3,515) $ (57,835) $ (8,932)
=========== =========== ========== ==========
</TABLE>
11
<PAGE> 12
RESULTS OF OPERATIONS
Three Months Ended July 27, 1996 (the "1996 Third Quarter") Compared To The
Three Months Ended July 29, 1995 (the "1995 Third Quarter"):
- -------------------------------------------------------------------------------
Consolidated net sales for the 1996 third quarter increased 1.1% to $110.3
million from $109.1 million in the 1995 third quarter. Net sales in the
Apparel Fabrics and Products segment decreased 4.8% to $51.2 million for the
1996 third quarter from $53.8 million for the 1995 third quarter principally
due to lower average selling prices for the Company's greige apparel fabric.
Apparel unit volume was relatively flat with the 1995 third quarter.
Industrial Fabrics and Products sales increased 6.6% to $51.6 million for the
1996 third quarter from $48.4 million for the 1995 third quarter as sales
increases for construction products and fiberglass industrial fabrics were
partially offset by sales decreases in cotton and synthetic industrial fabrics.
Net sales of fiberglass fabrics increased $2.0 million to $16.5 million for the
1996 third quarter due to increased demand and stronger pricing for fabrics
used in the manufacture of electronic circuit boards and filtration systems.
Sales of single-ply roofing and environmental containment membrane ("liner")
products increased $4.5 million to $18.3 million for the 1996 third quarter due
to the continued increase in demand for the Company's roofing products and
improved demand during the 1996 third quarter for liner products. Sales of
cotton industrial fabric decreased $2.4 million to $8.2 million in the 1996
third quarter due to significantly lower product demand. Synthetic industrial
fabric sales declined $1.5 million to $2.0 million for the 1996 third quarter
due to lower demand and the Company's decision to exit the markets for certain
unprofitable types of fabrics. Home Fashion Textiles sales increased 7.3% to
$7.4 million for the 1996 third quarter from $6.9 million for the 1995 third
quarter due to an increased demand for yarn sold to other manufacturers.
Operating profit or loss in the 1996 third quarter fell to a loss of $25.7
million from a profit of $5.5 million for the 1995 third quarter generally due
to $30.1 million in special charges for plant closing, loss on the sale of one
of the Company's divisions and the write down of the Company's plant in
Kingsport, Tennessee to its fair value. Operating profit before the special
charges fell $1.1 million to $4.3 million for the 1996 third quarter generally
due to a less favorable apparel fabric market environment. Operating profit
before special charges in the Apparel Fabrics and Products segment was $0.6
million for the 1996 third quarter as compared to a $3.0 million profit for the
1995 third quarter due to a less favorable product mix and lower selling prices
and higher raw material costs. The product mix in the 1996 third quarter
included a higher ratio of commodity-type fabrics with lower margins than was
experienced in the 1995 third quarter. This represents the continuation of the
trend the Company has experienced since the second half of Fiscal 1995. The
apparel market has been marked by poorer retail apparel sales, increased
competitive pressures from abroad (particularly in commodity-type fabrics) and
generally lower margins. Management does not expect the weak markets for its
commodity apparel fabrics to strengthen in the near term. As a result, the
Company announced its intention to close one of its plants which was engaged in
the manufacture of such apparel fabrics, thereby reducing its participation in
these markets. The Company anticipates that this action will improve
profitability in the Apparel Fabrics and Products segment in the future.
Operating profits before the write down of long-lived assets for Industrial
Fabrics and Products increased 37% to $4.7 million in the 1996 third quarter
from $3.5 million in the 1995 third quarter as a result of a more profitable
product mix, increased selling prices for electrical composite and filtration
fabrics and increased roofing sales volume. Home Fashion Textiles experienced
a $0.1 million decrease in operating profits in the 1996 third quarter to $0.3
million from $0.4 million in the 1995 third quarter due to a less favorable
product mix of fabrics sold in 1996.
12
<PAGE> 13
The Company has entered into negotiations to sell a division which accounted
for $20.7 million of sales and a $2.0 million loss from operations in fiscal \
1995 and $13.6 million in sales and a $2.0 million loss from operations through
July 27, 1996. The contract for the sale of the division has not yet been
completed; however, management expects that contract negotiations will be
completed and the sale will close in September 1996. Under the terms of the
proposed agreement, the buyer will pay the Company approximately $5 million in
cash, subject to certain adjustments based on the audited amount of working
capital transferred on the closing date. The net proceeds after fees and
expenses are expected to be approximately $4.8 million. The accompanying
consolidated statement of operations for the three months ended July 27, 1996
includes a charge, "loss on sale of certain operations", of $7.9 million, which
is the estimated loss for the sale of this division.
On August 28, 1996, the Company announced its intention to close a plant in
Greenville, South Carolina within 60 days. This closing results from what
management believes is a permanent decline in the Company's spun apparel
business. This plant has been operating on a reduced production schedule as a
result of poor market conditions and will continue to do so until its closure
on approximately October 28, 1996. The accompanying consolidated statement of
operations for the three months ended July 27, 1996 includes a charge, "charge
for plant closing", of approximately $14.0 million related principally to the
estimated loss on the impairment of the plant in accordance with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of", employee severance costs and estimated costs for equipment
relocation.
Also, in connection with the Company's review of present and expected
conditions in the markets which it serves, management believes that its plant
in Kingsport, Tennessee, which manufactures 100% cotton fabrics, is impaired
under the criteria of SFAS No. 121. SFAS No. 121 requires a write down to
fair value in circumstances in which the expected future net cash flows from
the operation of the plant are less than its carrying value. The accompanying
consolidated statement of operations for the third quarter ended July 27, 1996
includes a charge, "write down of certain long-lived assets", of $8.1 million
for the excess of the carrying amount of the plant over its estimated fair
value.
Indirect corporate expenses for the 1996 third quarter were consistent with the
1995 third quarter, decreasing slightly less than $0.1 million to $1.3 million.
In the third quarter of 1996, Gulistan reported net losses of approximately
$1.4 million before interest expense on the promissory note held by the
Company. Accordingly, the Company did not record interest income on the $10
million promissory note due in November 2001 from Gulistan or income from the
accretion of the discounts recorded to adjust the promissory note and the $5
million redeemable preferred stock of Gulistan to their fair value on November
16, 1995. Also, in accordance with relevant accounting literature, the Company
has recorded a valuation allowance against its investment in the Gulistan
securities and a corresponding charge to income of $1.4 million as a result of
the net loss incurred by Gulistan during the 1996 third quarter. The relevant
accounting literature requires the Company to record the loss incurred by
Gulistan as a valuation allowance reducing the carrying value of the Gulistan
securities held by the Company. The valuation allowance will be increased or
reduced (but not below zero) with a corresponding charge or credit to income to
give effect to future losses or earnings of Gulistan as those losses or
earnings occur.
Interest expense for the 1996 third quarter of $10.1 million was $0.3 million
higher than the 1995 third quarter due to higher non-cash charges for
amortization of financing costs and accretion of subordinated debt discounts.
Lower interest rates on the revolving credit facility were mostly offset by
higher borrowings.
Restructuring fees and expenses in the 1996 third quarter represent amounts
paid to financial advisors and counsel involved in the Company's potential
financial restructuring.
13
<PAGE> 14
Nine Months Ended July 27, 1996 (the "1996 Nine-Month Period") Compared To The
Nine Months Ended July 29, 1995 (the "1995 Nine-Month Period"):
- -------------------------------------------------------------------------------
Consolidated net sales for the 1996 nine-month period decreased 4.6% to $333.4
million from $349.5 million in the 1995 nine-month period primarily as a result
of weaker markets for the Company's apparel fabrics and products. Net sales in
the Apparel Fabrics and Products segment decreased 8.6% to $167.2 million for
the 1996 nine-month period from $182.9 million for the 1995 nine-month period
principally due to lower demand resulting in lower pricing and a less favorable
product mix. Competitive pressures and a lackluster retail environment have
caused this lower demand for apparel fabrics, continuing a sales decline which
began in the second half of 1995. Industrial Fabrics and Products sales of
$141.1 million for the 1996 nine-month period were generally flat with the 1995
nine-month period sales of $141.4 million as increases in certain product lines
were offset by decreases in others. Net sales of fiberglass fabrics increased
$6.1 million to $48.0 million due to increased demand and stronger pricing for
electrical composite and filtration fabrics.
Single-ply roofing product sales increased 17.9% ($6.1 million) to $39.9
million for the 1996 nine-month period due to the continued increase in demand
for the Company's roofing products and slightly higher average selling prices
for such roofing products. Cotton industrial fabric sales decreased $8.9
million to $22.8 million due to significantly lower product demand for
bookbinding and laminating fabrics combined with increased foreign imports of
athletic tape fabrics. Synthetic industrial fabric sales declined $5.6 million
to $6.8 million for the 1996 nine-month period due to lower demand and the
Company's decision to exit the markets for certain unprofitable types of
fabrics. Improved demand resulted in a $0.6 million increase in extruded
urethane product sales to $16.2 million for the 1996 nine-month period. Home
Fashion Textiles sales of $25.2 million for the 1996 nine-month period were
flat with the 1995 nine-month period.
Operating profit or loss in the 1996 nine-month period fell to a loss of $23.9
million from a profit of $18.8 million for the 1995 nine-month period. The
1996 loss includes $30.1 million in special charges for plant closing, loss on
sale of certain operations and write down of certain long-lived assets. The
Apparel Fabrics and Products segment operated at a loss of $0.7 million before
special charges for the 1996 nine-month period as compared to a $13.5 million
profit for the 1995 nine-month period due to lower sales volume, lower selling
prices and a less favorable product mix. The product mix in the 1996
nine-month period included a higher ratio of commodity-type fabrics than was
experienced in the 1995 nine-month period. This represents the continuation of
the trend the Company experienced during the second half of Fiscal 1995. This
period, including the 1996 nine-month period, has been marked by poorer retail
apparel sales, increased competitive pressures from abroad (particularly in
commodity-type fabrics), falling margins and higher raw material costs. In
addition, the Company curtailed production in many of its apparel fabric
manufacturing plants during the 1996 nine-month period in response to lower
customer demand. Operating profits for Industrial Fabrics and Products before
special charges increased 37% to $11.1 million in the 1996 nine-month period
from $8.1 million in the 1995 nine-month period as a result of a more
profitable product mix, increased selling prices for electrical composite
fabrics, increased sales of roofing product and manufacturing improvements.
Home Fashion Textiles experienced a $0.7 million decrease in operating profits
in the 1996 nine-month period to $0.6 million from $1.3 million in the 1995
nine-month period due to weaker demand for home furnishing fabrics and a less
favorable product mix of fabrics sold in 1996. The special charges for plant
closing, loss on sale of certain operations and write down of certain
long-lived assets were explained above in the discussion of the 1996 third
quarter compared to the 1995 third quarter.
Indirect corporate expenses increased $0.7 million to $4.9 million for the 1996
nine-month period as compared to the 1995 nine-month period due to the $1.1
million cost of the early retirement offer accepted by certain employees net of
lower employee compensation costs in 1996.
14
<PAGE> 15
In the first nine months of 1996, Gulistan reported net losses of approximately
$5.8 million before interest expense on the promissory note held by the
Company. Accordingly, the Company did not record interest income on the $10
million promissory note due from Gulistan or income from the accretion of the
discounts recorded to adjust the promissory note and the $5 million redeemable
preferred stock of Gulistan to their fair value on November 16, 1995. Also, in
accordance with relevant accounting literature, the Company has recorded a
valuation allowance against its investment in the Gulistan securities and a
corresponding charge to income of $5.5 million as a result of the net loss
($5.8 million reduced by the $0.3 million of common equity held by Gulistan
management) incurred by Gulistan during the 1996 nine-month period.
Interest expense decreased 0.6% to $29.6 million for the 1996 nine-month period
from $29.8 million for the 1995 nine-month period principally due to the
reduction in debt resulting from the reductions in outstanding principal
amounts of the Company's notes and debentures as the Company purchased a
portion of its debt securities during the 1995 first quarter on the open
market. These securities were purchased at prices less than their carrying
values using loan proceeds from the revolving credit facility. A lower average
interest rate on the revolving credit facility in the 1996 nine-month period
was offset by higher average revolver borrowings.
LIQUIDITY AND CAPITAL RESOURCES
As discussed in Note 12 of the Notes to Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the fiscal year ended October 28,
1995, the senior credit facility (or a similar credit facility) is essential
for the Company's continued operations. The existing senior credit facility
was scheduled to expire on November 1, 1996. Accordingly, the Company has
negotiated an extension of that facility. On September 6, 1996, the senior
credit facility was amended to, among other things, extend its expiration date
and reduce the interest rate by 0.25%. Under the terms of the amended credit
agreement, the senior credit facility expires on March 1, 1997 if the Company
has not commenced a case under chapter 11 of the Bankruptcy Code. If such a
case is commenced on or prior to March 1, 1997, the senior credit facility will
expire on the earlier of November 1, 1997 or the effective date of a
reorganization under chapter 11 of the Bankruptcy Code. The Company has
classified the $86.2 million outstanding under its senior credit facility
revolving line of credit as a current liability because the facility may
terminate on March 1, 1997 as noted above. In addition, the loan covenants
were amended to be based upon the activities of the consolidated operating
subsidiaries (JPS Converter and Industrial Corp. and JPS Elastomerics Corp.)
rather than the consolidated Company (i.e. excludes the assets and liabilities
of the parent company and other non-operating subsidiaries). The amended
credit agreement does not permit additional borrowings by the operating
subsidiaries for, among other things, payment of the parent company's interest
on its notes and debentures. As a result of the aforementioned restriction on
the use of proceeds of revolving loans, the Company does not expect to have the
ability to make the interest payments of approximately $1.9 million on its
subordinated debentures on November 15, 1996. The terms of the indentures
governing all of the Company's subordinated debt provide that such a failure
to pay interest when due will result in an event of default on all such
indebtedness. Because such an event of default is foreseeable and would result
in such obligations becoming immediately due and payable, all of the Company's
notes and debentures are classified as current liabilities in the accompanying
consolidated balance sheet as of July 27, 1996.
Working capital decreased from $103.1 million at October 28, 1995 to a working
capital deficiency of $250.8 million at July 27, 1996 principally due to the
classification of the $86.2 million outstanding under the senior credit
facility and the $235.2 million carrying value of notes and debentures as
current liabilities at July 27, 1996 and the sale in November 1995 of the net
assets held for sale (see below). A 19.2% decline in accounts receivable
reduced working capital $16.9 million principally due to lower sales in July
1996 than in October 1995. Inventories increased $8.8 million (18.1%) from
October 28, 1995 to July 27, 1996 principally due to an increase in finished
goods, also resulting from the lower level of sales in July 1996 than in
October 1995.
15
<PAGE> 16
On November 16, 1995, pursuant to the terms of an Asset Transfer Agreement
dated as of November 16, 1995, by and among the Company, JPS Carpet Corp.
("Carpet"), a wholly-owned subsidiary of the Company, Gulistan Holdings Inc.
and Gulistan Carpet Inc., a wholly-owned subsidiary of Gulistan Holdings Inc.
(collectively, with Gulistan Holdings Inc., "Gulistan"), the Company and Carpet
consummated the sale of substantially all of the assets of Carpet used in the
business of designing and manufacturing tufted carpets for sale to residential,
commercial and hospitality markets (the "Carpet Business"). Pursuant to the
Asset Transfer Agreement, Gulistan agreed to assume substantially all of the
liabilities and obligations associated with the Carpet Business. Gulistan was
formed and its common stock is owned by certain members of the former
management team at Carpet. The Company and its subsidiaries have agreed, for a
three-year period, not to compete directly or indirectly with the business that
was sold. Certain amounts in the Consolidated Statements of Operations and
Cash Flows for 1995 have been reclassified to reflect the Carpet Business as
discontinued operations.
The consideration for the Carpet Business consisted of approximately $22.5
million in cash, subject to certain post-closing adjustments based on the
audited amount of working capital transferred on November 16, 1995, and other
debt and equity securities of Gulistan as follows: a $10 million Promissory
Note due in November 2001, $5 million of preferred stock redeemable in November
2005 and warrants to purchase 25% of the common stock of Gulistan. Based on an
independent valuation, the Company determined the fair value of these debt and
equity securities to be approximately $11.3 million. These debt and equity
securities are included in other non-current assets on the April 27, 1996
balance sheet. Since the disposal of the Carpet Business occurred subsequent
to the end of Fiscal 1995, the net assets of the Carpet Business (adjusted to
net realizable value) have been classified as "net assets held for sale" on the
October 28, 1995 balance sheet.
In May 1996, the Company and Gulistan agreed on the amount of the post-closing
adjustment. As a result, the Company paid a post-closing adjustment of $3.5
million to Gulistan and has recognized an additional loss of $1.5 million on
the sale of discontinued operations. The final amount of net cash proceeds
applied by the Company to reduce outstanding borrowings under the credit
agreement for the senior credit facility was approximately $16.7 million (net
of fees, expenses and the post-closing adjustment resulting from the level of
working capital transferred at the closing date).
The Company's principal sources of liquidity for operations and expansion are
funds generated internally and borrowings by its subsidiaries, JPS Converter
and Industrial Corp. and JPS Elastomerics Corp., under a revolving credit
facility, which facility (the "Senior Credit Facility") provides for revolving
credit loans and letters of credit in a maximum principal amount of $118
million, subject to a specified borrowing base based upon the sum of (a) a
specified percentage of eligible accounts receivable and (b) the lesser of (i)
$22 million and (ii) a specified percentage of eligible inventory, except that
(A) neither borrower may borrow an amount greater than the borrowing base
attributable to it, (B) letters of credit may not exceed $15 million in the
aggregate and (C) $20 million of the revolving credit facility is available,
not subject to such borrowing base, to purchase property, plant and equipment
or to finance or refinance such purchases, provided that the aggregate of all
revolving credit loans may not exceed the lesser of (a) $118 million and (b)
the sum of the borrowing base plus $25 million (subject to certain reductions).
All loans borrowed under the Senior Credit Facility, subsequent to the
application of sales proceeds from the sale of the Carpet business to reduce
the outstanding balance under the Senior Credit Facility, were used to provide
funds needed for the operations and capital expenditures to the extent such
funds were not provided for by the net cash flow from operations during the
1996 nine-month period. All loans under the Senior Credit Facility (after
giving effect to the above-referenced amendment), bear interest at a Base Rate,
as defined, plus 1.0% per annum (9.25% at July 27, 1996, based on the
post-amendment interest rates) or at the Eurodollar Rate, as defined, plus 2.5%
per annum (approximately 7.94% at July 27, 1996, based on the post-amendment
interest rates). $17.2 million of the Senior Credit Facility was available for
borrowing on July 27, 1996. Loans made under the Senior Credit Facility are
made or repaid on a daily basis in amounts equal to the net cash requirements
for that business day, thereby reducing net borrowings to the maximum extent
possible.
16
<PAGE> 17
Management continually reviews various options for enhancing liquidity and its
cash flow to cash requirements coverage, both operationally and financially.
Such options include strategic dispositions and financing and refinancing
activities aimed at increasing cash flow and reducing cash requirements, the
principal items of which are interest and capital expenditures. Management
believes that the Company's capital resources and expected cash flows will be
adequate to meet its operating and working capital needs during Fiscal 1996 and
beyond, however, because of restrictions in the amended credit agreement as to
the use of proceeds of revolving loans, the Company does not expect to have the
resources to satisfy its existing obligations to pay scheduled interest and
principal payments on its subordinated notes and debentures. Management
expects to discuss appropriate modifications to the terms of its subordinated
indebtedness with its securityholders in the near future. In that regard, on
May 8, 1996, the Company engaged The Blackstone Group L.P. to act as its
financial advisor in connection with a potential financial restructuring. In
addition, at the request of the holders of a substantial majority of its
outstanding bonds, the Company engaged Houlihan, Lokey, Howard & Zukin, Inc.,
effective April 10, 1996, to act as financial advisor to the holders of such
debt securities in connection with such a financial restructuring.
The Company's ability to accomplish a restructuring of the terms of its debt
securities or any refinancing will depend on a number of factors, including its
operating performance, market conditions and the ability of the Company and its
bondholders to come to an agreement as to the appropriate terms of any
extension, replacement or refinancing. Management is unable to predict the
Company's ability to accomplish the foregoing extension, replacement or
refinancing of its debt securities.
17
<PAGE> 18
JPS TEXTILE GROUP, INC.
PART II - OTHER INFORMATION
<TABLE>
<CAPTION>
Item
- ----
<S> <C> <C>
1. Legal Proceedings None
2. Changes in Securities None
3. Defaults Upon Senior Securities None
4. Submission of Matters to a Vote of Securityholders None
5. Other Information None
6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
</TABLE>
<TABLE>
<S> <C> <C>
(10.1) Seventh Amendment totheFourth Amended and Restated Credit
Agreement, dated as of July 22, 1996, by and among the
Company, JPS Elastomerics Corp., JPS Converter and
Industrial Corp., JPS Auto Inc., JPS Carpet Corp.,
International Fabrics, Inc., the financial institutions
listed on the signature pages thereof, Citibank, N.A. as
agent and Administrative Agent and General Electric
Capital Corporation as Co-Agent and Collateral Agent.
(10.2) Eighth Amendment to the Fourth Amended and Restated
Credit Agreement, dated as of September 6,1996, by and
among the Company, JPS Elastomerics Corp., JPS Converter
and Industrial Corp., JPS Auto Inc., JPS Carpet Corp.,
International Fabrics, Inc., the financial institutions
listed on the signature pages thereof, Citibank, N.A. as
agent and Administrative Agent and General Electric
Capital Corporation as Co-Agent and Collateral Agent.
(10.3) Retention Bonus Agreement, dated July 12, 1996, between
the Company and Jerry E. Hunter.
(10.4) Retention Bonus Agreement, dated July 12, 1996, between
the Company and David H. Taylor.
(10.5) Retention Bonus Agreement, dated July 12, 1996 between
the Company and Monnie L. Broome.
(10.6) Employment Agreement, dated October 30, 1995, between the
Company and Jerry E. Hunter.
(10.7) Employment Agreement, dated October 30, 1995 between the
Company and David H. Taylor.
(10.8) Employment Agreement, dated October 30, 1995 between the
Company and Monnie L. Broome.
(10.9) Employment Agreement, dated May 1, 1993 and amended
September 11, 1995 between the Company and Carl Rosen
(11) Statement re: Computation of Per Share Earnings - not
required since such computation can be clearly determined
from the material contained herein.
(27) Financial Data Schedule
</TABLE>
(b) Current Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JPS TEXTILE GROUP, INC.
Date: September 10, 1996 /s/ David H. Taylor
-----------------------------
David H. Taylor
Executive Vice President - Finance,
Secretary and Chief Financial Officer
18
<PAGE> 1
EXHIBIT 10.1
SEVENTH AMENDMENT TO
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
This Seventh Amendment to Fourth Amended and Restated Credit
Agreement dated as of July 22, 1996 (this "Amendment"), is entered into among
JPS TEXTILE GROUP, INC., a Delaware corporation (the "Company"), JPS
ELASTOMERICS CORP., a Delaware corporation ("JEC"), and JPS CONVERTER AND
INDUSTRIAL CORP., a Delaware corporation ("JCIC", and together with JEC, the
"Borrowing Subsidiaries"), JPS AUTO INC., a Delaware corporation, JPS CARPET
CORP., a Delaware corporation, INTERNATIONAL FABRICS, INC., a Delaware
corporation, the FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(collectively referred to herein, together with their respective successors and
assigns, as the "Senior Lenders" and individually as a "Senior Lender"),
CITIBANK, N.A., in its separate capacities as agent and administrative agent
for the Senior Lenders (in such capacities, the "Agent") and GENERAL ELECTRIC
CAPITAL CORPORATION, in its separate capacities as co-agent and collateral
agent for the Senior Lenders (in such capacities, the "Collateral Agent"), and
amends the Fourth Amended and Restated Credit Agreement dated as of June 24,
1994, as amended by the First Amendment to Fourth Amended and Restated Credit
Agreement dated as of November 4, 1994, the Second Amendment to Fourth Amended
and Restated Credit Agreement dated as of December 21, 1994, the Third
Amendment to Fourth Amended and Restated Credit Agreement dated as of May 31,
1995, the Fourth Amendment to Fourth Amended and Restated Credit Agreement
dated as of October 28, 1995, the Fifth Amendment to Fourth Amended and
Restated Credit Agreement dated as of May 6, 1996 (the "Fifth Amendment") and
the Sixth Amendment to Fourth Amended and Restated Credit Agreement dated as of
May 15, 1996 (as so amended, the "Credit Agreement"), entered into among the
Company, the Borrowing Subsidiaries, the Senior Lenders, the Agent and the
Collateral Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Borrowing Subsidiaries have requested the
Requisite Senior Lenders (i) to amend Section 8.02(A) of the Credit Agreement
to reduce the minimum Total Interest Coverage Ratio required to be obtained by
the Company and its Subsidiaries for the third fiscal quarter of Fiscal Year
1996 and (ii) to amend Section 2.03(g) of the Credit Agreement to permit the
issuance of Letters of Credit with an expiration date after the Revolving
Credit Termination Date;
<PAGE> 2
NOW, THEREFORE, in consideration of the above premises, the
Company, the Borrowing Subsidiaries, the other Subsidiaries of the Company
party hereto, the Senior Lenders party hereto, the Agent and the Collateral
Agent agree as follows:
SECTION 1. Amendment to the Credit Agreement. The Credit
Agreement is, effective as determined pursuant to Section 3 hereof, hereby
amended as follows:
1.01 Section 2.03(g)(ii)(C) of the Credit Agreement is amended
in its entirety as follows:
(C) such Letter of Credit shall have a tenor of no
longer than one (1) year; provided, however, if on the Revolving
Credit Termination Date any Letter of Credit Obligations remain
outstanding, each Borrowing Subsidiary with outstanding Letter of
Credit Obligations shall deposit in the Cash Collateral Account cash
(proportionately based on the relative amount of the Letter of Credit
Obligations of each such Borrowing Subsidiary) in an amount equal to
105% of such Letter of Credit Obligations; and
1.02 Section 2.03(g)(iii)(C) of the Credit Agreement is
amended in its entirety as follows:
(C) the date of which such Letter of Credit is to expire (which date
shall be a Business Day),
1.03 Section 8.02(A) of the Credit Agreement is hereby amended
by replacing the ratio "1.54:1" opposite "The third fiscal quarter of Fiscal
Year 1996" with the ratio "1.33:1".
SECTION 2. Consent and Acknowledgment of the Requisite Senior
Lenders. By their execution of this Amendment, the undersigned, which
constitute the Requisite Senior Lenders, hereby acknowledge that (i) certain
Letters of Credit issued by the Issuing Bank pursuant to Section 2.03(g) of the
Credit Agreement prior to the date hereof may have an expiration date after the
Revolving Credit Termination Date and (ii) that the amendment of the Credit
Agreement set forth in Sections 1.01 and 1.02 of this Amendment shall be deemed
to have become effective retroactively as of the earliest date of issuance of
such Letters of Credit.
SECTION 3. Conditions Precedent to the Effectiveness of this
Amendment. This Amendment shall become effective as of the date hereof on the
date (the "Seventh Amendment Effective Date") when the following conditions
precedent have been satisfied (unless waived by the Requisite Senior Lenders or
unless the deadline for delivery has been extended by the Agent):
-2-
<PAGE> 3
3.01 Certain Documents. The Agent shall have received on or
before the Seventh Amendment Effective Date all of the following, all of which,
except as otherwise specifically described below, shall be in form and
substance satisfactory to the Requisite Senior Lenders and in sufficient copies
for each of the Senior Lenders:
(i) this Amendment, executed by the Company, each
Borrowing Subsidiary, JPS Auto, JCC and International Fabrics and
Senior Lenders constituting the Requisite Senior Lenders; and
(ii) Such additional documentation as the Agent,
the Collateral Agent or the Requisite Senior Lenders may reasonably
require.
3.02 Each of the representations and warranties made by the
Company or the Borrowing Subsidiaries in or pursuant to the Credit Agreement,
as amended by this Amendment, the Collateral Documents and the other Loan
Documents to which the Company or any of the Borrowing Subsidiaries is a party
or by which the Company or any of the Borrowing Subsidiaries is bound, shall be
true and correct in all material respects on and as of the Seventh Amendment
Effective Date (except any such representations and warranties stated to be
given as of a specific date other than the Seventh Amendment Effective Date and
except the matters referenced in Section 2.02 of the Fifth Amendment).
3.03 All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Amendment shall be satisfactory in all respects in form
and substance to the Agent, the Collateral Agent and the Requisite Senior
Lenders.
3.04 No Event of Default or Potential Event of Default shall
have occurred and be continuing on the Seventh Amendment Effective Date.
SECTION 4. Representations and Warranties. Each Loan Party
hereby represents and warrants to the Senior Lenders that (a) as of the date
hereof no Event of Default or Potential Event of Default under the Credit
Agreement shall have occurred and be continuing and (b) all of the
representations and warranties of the Loan Parties contained in subsections
4.01(a) through (dd) of the Credit Agreement and in any other Loan Document
continue to be true and correct as of the date of execution hereof in all
material respects, as though made on and as of such date (unless stated to
relate to a specific earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date, and except the
matters referenced in Section 2.02 of the Fifth Amendment).
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<PAGE> 4
SECTION 5. Reference to and Effect on the Loan Documents.
5.01 Upon the effectiveness of this Amendment, on and
after the date hereof, each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof" or words of like import, and each reference
in the other Loan Documents to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby.
5.02 Except as specifically amended above, all of the
terms of the Credit Agreement and all other Loan Documents shall remain
unchanged and in full force and effect.
5.03 The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of any Senior Lender, the Agent or the Collateral
Agent under the Credit Agreement or any of the Loan Documents, nor constitute a
waiver of any provision of the Credit Agreement or any of the Loan Documents.
SECTION 6. Costs and Expenses. Each Loan Party agrees to pay
on demand in accordance with the terms of Section 11.03 of the Credit Agreement
all costs and expenses of the Agent and the Collateral Agent in connection with
the preparation, reproduction, execution and delivery of this Amendment and all
other Loan Documents entered into in connection herewith, including the
reasonable fees and out-of-pocket expenses of Sidley & Austin, counsel for the
Agent and the Collateral Agent with respect thereof.
SECTION 7. Execution in Counterparts. This Amendment may be
executed and delivered in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original and all of which taken together shall constitute
one and the same original agreement.
SECTION 8. Release of Lender Parties. Each of the Loan
Parties, JPS Auto, JCC and International Fabrics, for itself and on behalf of
each of its Subsidiaries and Affiliates and each of its employees, officers and
directors, and each of their respective predecessors, successors and assigns
(collectively, the "Releasors"), does hereby forever and unconditionally (i)
release, discharge and acquit the Agent, the Collateral Agent and each of the
Lenders, and each of their respective parent corporations, Subsidiaries and
Affiliates, and each of their respective officers, directors, shareholders,
employees, attorneys, agents and servants, and each their respective
predecessors, successors, heirs and assigns (collectively, the
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<PAGE> 5
"Lender Parties"), of and from any and all claims of every type, kind, nature,
description or character, known and unknown, whensoever arising out of any
actions or omissions of the Lender Parties, or any of them, occurring at any
time up to and through the date hereof, which in any way arise out of, are
connected with or relate to the Loan Documents (collectively, "Claims"), and
(ii) agree not to bring any action in any judicial, administrative or other
proceeding against the Lender Parties, or any of them, alleging any such Claim
or otherwise arising in connection with any such Claim, or support any
shareholder of any Releasor in any such action brought by such shareholder.
SECTION 9. Consent. By its signature below, each of JPS Auto,
JCC and International Fabrics consents to this Amendment in its capacity as a
guarantor under the JPS Auto Guaranty, the Carpet Guaranty and the
International Fabrics Guaranty, respectively, and each hereby affirms its
obligations under such guaranties and under each of the other Loan Documents to
which it is a party.
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<PAGE> 6
SECTION 10. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, this Amendment has been duly executed on
the date set forth above.
JPS TEXTILE GROUP, INC.
By:/s/ David H. Taylor
--------------------------
Title:EVP - Finance & Secretary
JPS ELASTOMERICS CORP.
By:/s/ David H. Taylor
--------------------------
Title: Vice President
JPS CONVERTER AND INDUSTRIAL CORP.
By:/s/ David H. Taylor
--------------------------
Title: Vice President
JPS AUTO INC.
By:/s/ David H. Taylor
--------------------------
Title: Vice President
JPS CARPET CORP.
By:/s/ David H. Taylor
--------------------------
Title: Vice President
INTERNATIONAL FABRICS, INC.
By:/s/ David H. Taylor
--------------------------
Title: Vice President
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<PAGE> 7
Senior Lenders:
CITIBANK, N.A., as Agent and as a
Senior Lender
By:/s/ Brenda Cotsen
------------------------------------
Title:
GENERAL ELECTRIC CAPITAL CORPORATION, as
Collateral Agent and as a Senior Lender
By:/s/ Rick Luck
------------------------------------
Title: Vice President GE Capital Commerical
Finance Inc., Being Duly Authorized
HELLER FINANCIAL, INC.
By:/s/ Frank Ross
------------------------------------
Title:
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By:/s/ Michael Lustbader
------------------------------------
Title: VP
NATIONSBANK OF GEORGIA, N.A.
By:/s/ Brian R. O'Falla
------------------------------------
Title: SVP
-7-
<PAGE> 1
EXHIBIT 10.2
EIGHTH AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
This Eighth Amendment to Fourth Amended and Restated Credit
Agreement dated as of September 6, 1996 (this "Amendment"), is entered into
among JPS TEXTILE GROUP, INC., a Delaware corporation (the "Company"), JPS
ELASTOMERICS CORP., a Delaware corporation ("JEC"), and JPS CONVERTER AND
INDUSTRIAL CORP., a Delaware corporation ("JCIC" and, together with JEC, the
"Borrowing Subsidiaries"), JPS AUTO INC., a Delaware corporation ("JPS Auto"),
JPS CARPET CORP., a Delaware corporation ("JCC"), INTERNATIONAL FABRICS, INC.,
a Delaware corporation ("International Fabrics"), the FINANCIAL INSTITUTIONS
LISTED ON THE SIGNATURE PAGES HEREOF (collectively referred to herein, together
with their respective successors and assigns, as the "Senior Lenders" and
individually as a "Senior Lender"), CITIBANK, N.A., in its separate capacity as
agent for the Senior Lenders hereunder (in such capacity, the "Agent"), and
GENERAL ELECTRIC CAPITAL CORPORATION, in its separate capacity as co-agent and
collateral agent for the Senior Lenders (in such capacity, the "Collateral
Agent"), and amends the Fourth Amended and Restated Credit Agreement dated as
of June 24, 1994, as amended by the First Amendment to Fourth Amended and
Restated Credit Agreement dated as of November 4, 1994, the Second Amendment to
Fourth Amended and Restated Credit Agreement dated as of December 21, 1994, the
Third Amendment to Fourth Amended and Restated Credit Agreement dated as of May
31, 1995, the Fourth Amendment to Fourth Amended and Restated Credit Agreement
dated as of October 28, 1995, the Fifth Amendment to Fourth Amended and
Restated Credit Agreement dated as of May 6, 1996 (the "Fifth Amendment"), the
Sixth Amendment to Fourth Amended and Restated Credit Agreement dated as of May
15, 1996 and the Seventh Amendment to Fourth Amended and Restated Credit
Agreement dated as of July 22, 1996 (as so amended, the "Credit Agreement"),
entered into among the Company, the Borrowing Subsidiaries, the Senior Lenders,
the Agent and the Collateral Agent. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Credit
Agreement. References in this Agreement to lines and words in the Credit
Agreement are references to the Conformed/Composite Copy of the Credit
Agreement attached hereto as Exhibit A.
W I T N E S S E T H:
WHEREAS, the Company and the Borrowing Subsidiaries have
requested the Agent, the Collateral Agent and the Senior Lenders to amend
certain terms of the Credit Agreement, in particular to extend the Revolving
Credit Termination Date as currently provided for under the Credit Agreement;
<PAGE> 2
WHEREAS, to induce the Agent, the Collateral Agent and the
Senior Lenders to enter into this Amendment, the Company and each of the
Borrowing Subsidiaries have agreed, among other things, in their capacities as
guarantors under the Company Guaranty and the Subsidiary Guaranties, as the
case may be, to amend the above Guaranties and/or to reaffirm their respective
obligations under such guaranties;
WHEREAS, JEC has requested the Senior Lenders (i) to consent
to the sale by JEC of the fixed assets, Receivables and Inventory (net of
account payables) of its Rubber Products Group division which is engaged in the
design, production and marketing of rubber and synthetic elastic used in
apparel products, diaper products and specialty applications (the "Rubber
Products Sale") and (ii) to amend, among other things, the provisions of
Section 2.06(b)(iii) of the Credit Agreement to provide that the Commitments
will not be permanently reduced by the amount of Net Cash Proceeds arising from
the Rubber Products Sale;
NOW, THEREFORE, in consideration of the above premises, the
Company, the Borrowing Subsidiaries, the other Subsidiaries of the Company
party hereto, the Senior Lenders party hereto, the Agent and the Collateral
Agent agree as follows:
SECTION 1. Amendment to the Credit Agreement. The Credit
Agreement is, effective as determined pursuant to Section 3 hereof, hereby
amended as follows:
1.01 Section 1.01 of the Credit Agreement is amended to
add the following definitions thereto:
(a) "Bankruptcy Court" shall mean the bankruptcy court
exercising competent jurisdiction over the Case or a particular
proceeding in the Case, as the case may be.
(b) "Case" shall mean any proceeding commenced by the
Company under chapter 11 of the Bankruptcy Code.
(c) "Debt Holders" shall mean the holders of the
Subordinated Indebtedness of the Company.
(d) "Effective Date of Reorganization" shall mean the
first date on which the Plan of Reorganization shall have become
effective in accordance with its terms.
(e) "Extension Amendatory Agreement" shall mean the
Amendatory Agreement dated as of September 6, 1996 among the Company,
the Borrowing Subsidiaries, JPS Auto, JCC, International Fabrics, the
Senior Lenders, the Agent and the Collateral Agent, providing, among
other things, for the amendment and/or affirmation of the obligations
under certain of the Loan Parties and certain Subsidiaries of the Loan
Parties under certain of the Collateral Documents.
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<PAGE> 3
(f) "Extension Amendment" shall mean the Amendment to the
Credit Agreement dated as of September 6, 1996 among the Company, the
Borrowing Subsidiaries, JPS Auto, JCC, International Fabrics, the
Senior Lenders, the Agent and the Collateral Agent.
(g) "Extension Event of Default" shall mean any of the
following Events of Default (x) occurring upon the commencement and
during the continuation of the Case: (i) an Event of Default solely
with respect to the Company (and not the Borrowing Subsidiaries) (a)
under Section 9.01(a), (b) under Sections 9.01(b) or 9.01(d) arising
solely as a result of the Company's compliance with a direction or
order of the Bankruptcy Court made at any time during the continuation
of the Case (but not including directions or orders of the Bankruptcy
Court made in response to motions initiated or otherwise supported by
the Company) and (c) arising solely as a result of the Company's
failure to comply with any covenant contained in Articles VI (other
than Section 6.16) and VII or in the Company's other Loan Documents
due to the operation of the provisions of the Bankruptcy Code (and the
rules promulgated in connection therewith) to the extent the effect of
such provisions is (1) to prohibit the Company from complying with
such covenants or (2) to permit the Company to take action or actions
which may be in violation of such covenants, which, in each case,
would not, in the aggregate, in the judgment of the Agent and the
Requisite Senior Lenders, have a material adverse effect upon (A) the
condition (financial or otherwise), operations, performance,
properties or prospects of any of the Borrowing Subsidiaries, (B) the
ability of any of the Borrowing Subsidiaries to perform under the Loan
Documents or (C) the rights and remedies of the Senior Lenders, the
Agent or the Collateral Agent under the Loan Documents against the
Borrowing Subsidiaries or their respective assets, (ii) any Event of
Default under Section 9.01(e) (a) arising in respect of a
cross-default to other Indebtedness of the Company or (b) arising in
respect of a cross-default to other Indebtedness of any of the
Borrowing Subsidiaries under any of the leases listed in subsection
(A) of Schedule 4.01(e) hereto, but only to the extent that the
exercise of remedies by the other parties to such leases as a result
of such cross-default or cross-defaults does not, in the aggregate, in
the judgment of the Agent and the Requisite Senior Lenders, have a
material adverse effect upon (1) the condition (financial or
otherwise), operations, performance, properties or prospects of any of
the Borrowing Subsidiaries, (2) the ability of any of the Borrowing
Subsidiaries to perform under the Loan Documents or (3) the rights and
remedies of the Senior Lenders, the Agent or the Collateral Agent
under the Loan Documents against the Borrowing Subsidiaries or their
respective assets, (iii) an Event of Default with respect to the
Company (and not the
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<PAGE> 4
Borrowing Subsidiaries) under Section 9.01(f) arising solely from the
filing of an involuntary petition against the Company under the
Bankruptcy Code, which petition has not been either dismissed or
converted to a voluntary petition within 30 days, (iv) an Event of
Default with respect to the Company (and not the Borrowing
Subsidiaries) under Section 9.01(g) arising solely as a result of the
commencement or continuation of the Case, and (v) an Event of Default
under Section 9.01(q) to the extent such Event of Default (a) arises
solely as a result of the commencement and continuation of the Case or
(b) relates solely to a material adverse effect upon (1) the condition
(financial or otherwise), operations, performance, properties or
prospects of the Company, (2) the ability of the Company to perform
under the Loan Documents or (3) the rights and remedies of the Senior
Lenders, the Agent or the Collateral Agent under the Loan Documents
against the Company or (y) at any time, an Event of Default under
Section 9.01(e) resulting from the failure of the Company to make any
payment when due on the Subordinated Indebtedness.
(h) "Extension Potential Event of Default" shall mean an
event which, with the giving of notice or the lapse of time, or both,
would constitute an Extension Event of Default.
(i) "Rubber Products Sale" shall mean the sale by JEC of
the fixed assets, Receivables and Inventory (net of account payables)
of its Rubber Products Group division to an Affiliate of M-TEC
Corporation.
(j) "Stipulation" shall have the meaning ascribed to such
term in Section 6.16.
1.02 Section 1.01 of the Credit Agreement is further amended
as follows:
(a) the definition of "Claim" is deleted in its entirety and
the following definition is substituted therefor:
"Claim" shall mean, as to any Person, (a) any right
to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or
unsecured; or (b) any right to an equitable remedy for breach
of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured.
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<PAGE> 5
(b) the definition of "Consolidated Operating Company Fixed
Charges" is deleted in its entirety and the following definition is
substituted therefor:
"Consolidated Operating Company Fixed Charges" shall
mean, for any period, the amounts for such period of (i)
Consolidated Operating Company Cash Interest Expense, plus
(ii) scheduled payments of principal on Other Indebtedness of
the Borrowing Subsidiaries (including the principal component
of Capital Lease obligations), plus (iii) cash dividends paid
by any of the Borrowing Subsidiaries (except for dividends
permitted pursuant to Section 7.05).
(c) the definition of "Current Ratio" is deleted in its
entirety and the following definition is substituted therefor:
"Current Ratio" shall mean, at any time, the ratio of
(i) Current Assets to (ii) Current Liabilities minus
liabilities in respect of management fees payable to Odyssey
Investors, Inc. and/or Odyssey, minus accrued interest on the
Subordinated Indebtedness.
(d) the definition of "EBITDA" is deleted in its entirety and
the following definition is substituted therefor:
"EBITDA" shall mean, for any period, (i) the sum of
the amounts for such period of (A) Consolidated Net Income,
(B) depreciation, amortization expense and other non-cash
charges, (C) consolidated interest expense (including fees for
Letters of Credit), (D) Federal, state, local and foreign
income taxes, (E) warranty receipts to the extent not included
in Consolidated Net Income and (F) expenses of the Company for
management fees payable to Odyssey Investors, Inc. and/or
Odyssey and advisor fees described in Section 7.05 (a) through
(e); minus (ii) gains (or plus losses) from asset sales
calculated pursuant to GAAP for such period; plus (iii)
increases (or minus decreases) in the valuation allowance on
Investments in the Capital Stock of Holdco and the Holdco
Note.
(e) the definition of "Loan Documents" is amended to add
the words ", the Extension Amendment, the Extension Amendatory
Agreement" prior to the word "and" in the third line thereof.
(f) the definition of "Net Worth" is deleted in its
entirety and the following definition is substituted therefor:
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<PAGE> 6
"Net Worth (Adjusted)" shall mean, at any time, (i)
total consolidated assets of the Company and its Subsidiaries;
plus (ii) impairment losses in respect of long-lived assets
recorded in accordance with Financial Accounting Standards
121, plus (iii) costs not in excess of $5,000,000 associated
with the closing of the Dunean plant, minus (iv) total assets
of Newsub, minus (v) Investment of the Company in the Capital
Stock of Holdco and the Holdco Note, minus (vi) Investment in
the ITM Joint Venture, minus (vii) goodwill, minus (viii)
total consolidated liabilities of the Company and its
Subsidiaries; plus (ix) Subordinated Indebtedness (including,
without limitation, accrued interest); plus (x) liabilities in
respect of management fees payable by the Company to Odyssey
Investors, Inc. and/or Odyssey, minus (xi) cumulative gains
from asset sales; minus (xii) cumulative extraordinary gains.
(g) the definition of "Operating Company Fixed Charge
Coverage Ratio" is deleted in its entirety and the following
definition is substituted therefor:
"Operating Company Fixed Charge Coverage Ratio" shall
mean, with respect to any period, the ratio of (i) cumulative
EBITDA for such period, minus Capital Expenditures, excluding
Financed Capital Expenditures (as defined in Section 8.06),
made or incurred by the Borrowing Subsidiaries and their
respective Subsidiaries during such period, minus cash
payments (other than any such payments made by or on behalf of
Newsub) for income taxes to (ii) Consolidated Operating
Company Fixed Charges for such period.
(h) the definition of "Permitted Dispositions" is deleted
in its entirety and the following definition is substituted therefor:
"Permitted Dispositions" shall mean (i) Permitted
Financings and (ii) sales of fixed assets other than in the
ordinary course of business permitted pursuant to the first
sentence of Section 7.02(a), including sales that occur in
connection with sale and leaseback transactions; provided,
however, the Net Cash Proceeds of the transactions in both
clauses (i) and (ii) above collectively shall not exceed
Thirty Five Million Dollars ($35,000,000) in the aggregate
since March 18, 1993 without the prior written consent of the
Requisite Senior Lenders; provided, further, a Permitted
Disposition shall not include the Auto Sale, the Carpet Sale,
the Rubber Products Sale or any transaction prohibited by
Section 7.07(a) and shall only include those dispositions with
respect to which each of the
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<PAGE> 7
following conditions shall have been met: (A) the Agent and
the Collateral Agent shall have received such landlord or
mortgagee waivers, documents and agreements as the Agent and
the Collateral Agent have reasonably deemed necessary to
permit the Agent and the Collateral Agent to protect and
enforce their respective Liens on Collateral; (B) all
representations and warranties set forth in subsection (a)
through (dd) of Section 4.01 (except for (1) representations
and warranties which expressly speak only as of a different
date, (2) changes permitted or contemplated by this Agreement,
(3) during the pendency of the Case, those representations and
warranties applicable to the Company (and in the case of
clause (u), the Company and its Subsidiaries) contained in (a)
clauses (a), (b)(i), (e), (f), (g), (k), (l), (m), (o) and (u)
of Section 4.01, (b) clauses 5(c), 5(d) and 5(f) of the
Company Pledge Agreement, and (c) clause 3(f)(ii) of the
Company Security Agreement, to the extent that such
representations and warranties are not true and correct solely
as a result of the commencement and continuation of the Case
and the events and transactions contemplated thereby) and (4)
from and after the effective date of the Extension Amendment,
those representations and warranties applicable to the Company
contained in clauses (e), (k), (l) and (o) of Section 4.01,
solely as a result of the Company's inability to make any
payments under the Subordinated Indebtedness when due) shall
have been true, correct and complete in all material respects
as of the date of such disposition; (C) on the date of such
disposition, no Event of Default or Potential Event of Default
(other than an Extension Event of Default or Extension
Potential Event of Default) shall have occurred and be
continuing or would result from the consummation of such
disposition; and (D) the Net Cash Proceeds of such disposition
shall have been applied to the repayment of the Obligations
pursuant to Section 2.06(b); provided, further, (a) in the
event any Loan Party would receive Net Cash Proceeds in excess
of an aggregate amount of Ten Million Dollars ($10,000,000)
from the sale of any fixed assets pursuant to the first
sentence of Section 7.02(a) (other than in connection with a
sale and leaseback transaction) in a single transaction or
series of related transactions, such Loan Party shall have
submitted the documentation for such disposition to the Senior
Lenders and shall have obtained the prior written consent of
the Requisite Senior Lenders to such disposition and (b) in
the event of a Permitted Financing or a sale of fixed assets
in connection with a sale and leaseback transaction by a
Borrowing Subsidiary, such Borrowing Subsidiary shall have
submitted the documentation for such disposition to the
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<PAGE> 8
Senior Lenders and shall have obtained the prior written
consent of the Requisite Senior Lenders to such disposition,
but only if the Net Cash Proceeds of such disposition and all
prior dispositions of such type (other than the Auto Sale and
the Carpet Sale) received by such Borrowing Subsidiary since
March 18, 1993 exceed in the aggregate (I) for JEC, Ten
Million Dollars ($10,000,000) and (II) for JCIC, Twenty-Five
Million Dollars ($25,000,000).
(i) the definition of "Plan of Reorganization" is deleted in
its entirety and the following definition is substituted therefor:
"Plan of Reorganization" shall mean a plan of
reorganization for the Company filed in connection with the
Case, as amended or modified from time to time.
(j) the definition of "Revolving Credit Termination Date"
is deleted in its entirety and the following definition is substituted
therefor:
"Revolving Credit Termination Date" shall
mean the earlier of (i) March 1, 1997 and (ii) the date of
termination of the Commitments pursuant to Section 9.02(a) or
Section 11.13; provided, however, that in the event the
Company commences the Case, the "Revolving Credit Termination
Date" shall mean the earliest to occur of (x) November 1,
1997, (y) the Effective Date of Reorganization and (z) the
date of termination of the Commitments pursuant to Section
9.02(a) or Section 11.13.
(k) the definition of "Transaction Costs" is deleted in
its entirety and the following definition is substituted therefor:
"Transaction Costs" shall mean the fees,
costs and expenses payable by the Company or any Borrowing
Subsidiary, pursuant hereto or in connection herewith or in
respect hereof and the fees, costs and expenses payable by the
Company or any Borrowing Subsidiary in connection with (i) the
preparation, negotiation and execution of the Extension
Amendment and the other Loan Documents executed in connection
therewith, (ii) the commencement and continuation of the Case,
(iii) any restructuring of the Company pursuant to the terms
of the Plan of Reorganization or otherwise and (iv) the
preparation, filing and confirmation of the Plan of
Reorganization pursuant to section 1129 of the Bankruptcy
Code.
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<PAGE> 9
1.013 Section 2.03(d) of the Credit Agreement is deleted
in its entirety and the following is substituted therefor:
(d) Use of Proceeds of Revolving Loans and Use of Letters
of Credit. The proceeds of the Revolving Loans shall be used by each
Borrowing Subsidiary for the payment of Transaction Costs and other
fees and expenses permitted to be paid pursuant to Section 7.05
incurred by the Company (but only to the extent such payments are made
from the proceeds of dividends made by the Borrowing Subsidiaries to
the Company in accordance with Section 7.05) and the Borrowing
Subsidiaries, for working capital in the ordinary course of business
and for other lawful and permitted corporate purposes, in each case to
the extent not otherwise prohibited hereunder. Letters of Credit may
be used for the purpose of supporting certain Permitted Existing
Indebtedness and in support of working capital in the ordinary course
of business and for other lawful and permitted corporate purposes to
the extent not otherwise prohibited hereunder; provided, however,
Letters of Credit shall not be used for the purpose of providing
credit support for Indebtedness or Operating Leases of the Company and
its Subsidiaries other than those Letters of Credit set forth on
Schedule 2.03(d). The proceeds of Capex Loans shall be used solely for
the purposes specified in the definition of "Capex Loan".
1.04 Section 2.04(a)(i) of the Credit Agreement is deleted in
its entirety and the following section is substituted therefor:
(a) Rate of Interest. (i) All Loans shall bear
interest on the unpaid principal amount thereof from the date made
until paid in full at a fluctuating rate determined from time to time
by reference to the Base Rate or the Eurodollar Rate. The Loans shall
bear interest, subject to Section 2.04(d) and paragraph (ii) below, as
follows:
(A) If a Base Rate Loan, then at a rate per annum
equal to the sum of (I) 1.0% plus (II) the Base Rate as in effect from
time to time as interest accrues; and
(B) If a Eurodollar Rate Loan, then at a rate per
annum equal to the sum of (I) 2.5% plus (II) the Eurodollar Rate
determined for the applicable Eurodollar Interest Period.
1.015 Section 2.04(c)(i) of the Credit Agreement is amended to
add the words "(other than an Extension Event of Default or Extension Potential
Event of Default)" after the words "Potential Event of Default" in the last
line thereof.
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<PAGE> 10
1.016 Section 2.04(d) of the Credit Agreement is amended to add
the words "Extension Events of Default and" following the words "except for" in
the parenthetical in the fourth line thereof.
1.017 Section 2.06(b)(iii) of the Credit Agreement is amended
to add the words ", Rubber Products Sale" following the words "Auto Sale" in
the seventh line thereof.
1.018 Section 2.07(b) of the Credit Agreement is amended to add
the words "(other than an Extension Event of Default)" after the words "Event
of Default" (i) in the second line thereof and (ii) in the eighth line thereof.
1.019 Section 2.07 of the Credit Agreement is further amended
by adding the following paragraph to the end thereof:
(f) Payments by Borrowing Subsidiaries. During the
pendency of the Case, any payment of principal, interest, fees or
other amounts required to be paid by the Company under the Loan
Documents (including amounts payable under Section 2.06(b)) that is
not paid, may be paid by one or more of the Borrowing Subsidiaries in
respect of such Subsidiary's obligations under its Subsidiary
Guaranty.
1.10 Subsection 3.02(b)(i) of the Credit Agreement is deleted
in its entirety and the following subsection is substituted therefor:
(i) Representations and Warranties. All
of the representations and warranties of the Loan Parties contained in
Sections 4.01(a) through (dd) and in any other Loan Document (except
for (A) representations and warranties which expressly speak only as
of a different date, (B) changes permitted or contemplated by this
Agreement, (C) during the pendency of the Case, those representations
and warranties applicable to the Company (and in the case of clause
(u), the Company and its Subsidiaries) contained in (1) clauses (a),
(b)(i), (e), (f), (g), (k), (l), (m), (o) and (u) of Section 4.01, (2)
clauses 5(c), 5(d) and 5(f) of the Company Pledge Agreement, and (3)
clause 3(f)(ii) of the Company Security Agreement, to the extent that
such representations and warranties are not true and correct solely as
a result of the commencement and continuation of the Case and the
events and transactions contemplated thereby) and (D) from and after
the effective date of the Extension Amendment, those representations
and warranties applicable to the Company contained in clauses (e),
(k), (l) and (o) of Section 4.01, solely as a result of the Company's
inability to make any payments under the Subordinated Indebtedness
when due) shall be true and correct in all
-10-
<PAGE> 11
material respects on and as of such Funding Date, as though made on
and as of such date;
1.11 Subsection 3.02(b)(ii) of the Credit Agreement is amended
to add the phrase "(other than an Extension Event of Default or Extension
Potential Event of Default)" after the words "Event of Default" in the second
line thereof.
1.12 Section 3.02(b)(iv) of the Credit Agreement is amended to
add the phrase ", it being hereby acknowledged, understood and agreed that the
commencement and continuation of the Case shall not in and of themselves be
deemed material by the Agent or the Collateral Agent" immediately after the
words "taken as a whole" at the end thereof.
1.13 Section 4.01(i) of the Credit Agreement is amended to
delete such Section in its entirety and substitute the following therefor:
(i) Commencement and Continuation of the Case. Except as
set forth in Schedule 4.01(i), the commencement and continuation of
the Case (and the transactions and events contemplated thereby) do not
and will not contravene, conflict with, or result in a breach of,
constitute (with or without notice, or lapse of time or both) a
default under, or require the termination of, or require the approval
or consent of any Person under, any Transaction Document or any other
Contractual Obligation to which the Company or any Borrowing
Subsidiary may be bound.
1.14 Section 4.01(r) of the Credit Agreement is amended to add
the following words immediately prior to the period at the end thereof: "or, in
the case of the Company during the pendency of the Case, where the failure to
comply with any Requirement of Law results from the Company's compliance with
the Bankruptcy Code or an order of the Bankruptcy Court".
1.15 Section 4.01(x) of the Credit Agreement is amended to
delete such Section in its entirety and substitute the words "(x)
[Intentionally Omitted]" therefor.
1.16 Section 4.01(bb) of the Credit Agreement is amended to
add the words "and Schedule 4.01(i)" after the phrase "Schedule 4.01(e)" on the
second line thereof.
1.17 Section 4.02 of the Credit Agreement is amended to delete
the parenthetical phrase beginning in the seventh line thereof in its entirety
and substitute the following parenthetical phrase therefor:
(except for (a) representations and warranties which expressly
speak only as of a different date, (b) changes permitted or
contemplated by this Agreement, (c) during the
-11-
<PAGE> 12
pendency of the Case, those representations and warranties applicable
to the Company (and in the case of clause (u), the Company and its
Subsidiaries) contained in (1) clauses (a), (b)(i), (e), (f), (g),
(k), (l), (m), (o) and (u) of Section 4.01, (2) clauses 5(c), 5(d) and
5(f) of the Company Pledge Agreement, and (3) clause 3(f)(ii) of the
Company Security Agreement, to the extent that such representations
and warranties are not true and correct solely as a result of the
commencement and continuation of the Case and the events and
transactions contemplated thereby) and (d) from and after the
effective date of the Extension Amendment, those representations and
warranties applicable to the Company contained in clauses (e), (k),
(l) and (o) of Section 4.01, solely as a result of the Company's
inability to make any payments under the Subordinated Indebtedness
when due);
1.18 Section 5.01(c) of the Credit Agreement is amended to add
the words "or, if the Case has been commenced, qualified solely by reference to
the Case and indicating that Extension Events of Default or Extension Potential
Events of Default have occurred" after the last word thereof.
1.19 Section 5.01(d) of the Credit Agreement is amended to add
the words "(other than any event or condition that constitutes an Extension
Event of Default or Extension Potential Event of Default)" after the phrase
"existed or exists" on the seventeenth line thereof.
1.20 Section 5.01(f) of the Credit Agreement is amended to add
the following immediately prior to the period at the end thereof:
; provided, however, in the case of any event or condition that
constitutes an Extension Event of Default or Extension Potential Event
of Default, such Loan Party need only provide an Officer's Certificate
setting forth the existence of such event or condition.
1.21 Subsection 5.02(c) of the Credit Agreement is amended to
add the phrase "(other than an Extension Event of Default)" after the words
"Event of Default" in the fifth line thereof.
1.22 Section 5.03 of the Credit Agreement is amended to delete
such Section in its entirety and substitute the following therefor:
5.03. Shareholders and Debt Holders. The Company shall deliver
or cause to be delivered to the Agent and the Collateral Agent (with
copies to the Agent sufficient for each Senior Lender) updates of
Schedule 4.01(j)-2 and, to the extent known to the Company, lists of
the Debt Holders
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<PAGE> 13
at such times as the Agent, the Collateral Agent or the Requisite
Senior Lenders may reasonably request.
1.23 Article V of the Credit Agreement is amended to add the
following sections to the end thereof:
5.05 Information During the Case. During the pendency of the
Case, the Company shall (a) provide the Agent and the Collateral Agent
and counsel thereto with (i) copies of all reports provided by the
Company to the United States Trustee with jurisdiction over the Case,
or to any official committee appointed in the Case, simultaneously
with the Company's delivery of such reports to the United States
Trustee or any such committee, as the case may be, and (ii) copies of
the Plan of Reorganization and any related disclosure statement or
solicitation materials and (b) use reasonable efforts to provide
drafts of all pleadings to be filed by the Company at least five (5)
Business Days prior to the filing thereof.
5.06 Restricted Junior Payments. Together with the delivery of
the financial statements referred to in Section 5.01(a), the Borrowing
Subsidiaries shall deliver to the Agent and the Collateral Agent (with
copies to the Agent sufficient for each Senior Lender), an Officer's
Certificate setting forth the total amount of the Restricted Junior
Payments made by the Borrowing Subsidiaries to the Company pursuant to
Section 7.05 since the effective date of the Extension Amendment (with
such additional information relating to such payments as may
reasonably be requested by the Agent and the Collateral Agent).
1.24 Article VI is amended to add the following section to the
end thereof:
6.16 Stipulation. Immediately upon commencement of the Case,
the Company and the Agent shall jointly file with the Bankruptcy Court
a stipulation and application to grant to the Senior Lenders adequate
protection pursuant to sections 361 and 363 of the Bankruptcy Code
(the "Stipulation"), which Stipulation shall be in form and substance
mutually acceptable to the Company, the Agent and the Collateral
Agent. The Company agrees to request a hearing to approve the
Stipulation immediately upon the filing thereof and agrees to support
vigorously and in good faith the entry of an order of the Bankruptcy
Court approving the Stipulation. So long as no Event of Default or
Potential Event of Default (other than an Extension Event of Default
or Extension Potential Event of Default) has occurred and is
continuing, the Agent and the Collateral Agent agree to support
vigorously and in good faith the entry of an order of the Bankruptcy
Court approving the Stipulation.
-13-
<PAGE> 14
1.25 Section 7.01(ix) of the Credit Agreement is deleted in
its entirety and replaced with the following:
(ix) Indebtedness of any Loan Party to any other Loan Party;
provided, however, that (A) the maker of any loan resulting in the
incurrence of such Indebtedness shall not be insolvent at the time
such loan was made or rendered insolvent as a result of the making of
such loan, (B) such loan shall have been made in compliance with all
Requirements of Law and (C) the proceeds of such loan, if made to the
Company, shall be used solely for the purposes permitted by Section
7.05; and
1.26 Section 7.05 of the Credit Agreement is deleted in its
entirety and the following is substituted therefor:
7.05. Restricted Junior Payments. Neither Borrowing Subsidiary
nor any of their respective Subsidiaries, nor any other Subsidiary
party hereto, shall declare or make any Restricted Junior Payment,
except dividends or other distributions from the Borrowing
Subsidiaries to the Company, but only to the extent that such amounts
are used by the Company solely for the purpose of paying (a) the
reasonable fees and expenses of counsel to the Company, (b) the
reasonable fees, expenses and customary indemnities of a financial
advisor of the Company, if engaged, (c) the reasonable fees, expenses
and customary indemnities of a financial advisor to the Debt Holders
of the Company (or an informal committee thereof), if engaged with
respect to a possible financial restructuring of the Company, (d) the
reasonable fees and expenses of a single counsel to such Debt Holders
(or such committee) incurred in connection with such restructuring,
(e) other reasonable fees and expenses incurred in connection with
such restructuring, (f) ordinary course operating expenses of the
Company, including, without limitation, management fees payable to
Odyssey Investors, Inc. and/or Odyssey to the extent permitted to be
paid pursuant to Section 7.06, and (g) taxes (including interest,
penalties and legal expenses relating to such payments); provided,
however, that in no event shall the aggregate amount of dividends or
distributions made pursuant to clauses (b), (c), (d), (e), (f) and,
solely after the commencement of the Case, (g) of this Section 7.05,
together with any loans for the purposes specified in such clauses
made by the Borrowing Subsidiaries to the Company pursuant to Section
7.01(ix), exceed $7,200,000 during the term of the Revolving Credit
Facility.
1.27 Section 7.06 is amended to delete clause (i) of the
proviso thereto in its entirety and substitute the following therefor:
-14-
<PAGE> 15
(i) Odyssey Investors, Inc. and/or Odyssey and their respective
successors and assigns a management fee not to exceed One Million
Dollars ($1,000,000) for each Fiscal Year (prorated for any portion of
any Fiscal Year), payable annually in arrears, so long as at the time
of each such payment there exists no Event of Default or Potential
Event of Default (other than an Extension Event of Default or an
Extension Potential Event of Default) and no Event of Default or
Potential Event of Default (other than an Extension Event of Default
or an Extension Potential Event of Default) would be caused as a
result of the making of such payment; provided, however, after the
effective date of the Extension Amendment, the Company shall be only
permitted to pay up to $450,000 of the management fee payable in
respect of Fiscal Year 1996 when such fee becomes due and payable and
shall not be permitted to pay any remaining portion of such fee until
the earlier to occur of (A) the second Business Day after the Agent's
and the Collateral Agent's receipt of the financial statements
referred to in Section 5.01(b) in respect of the second fiscal quarter
of Fiscal Year 1997 and (B) the consummation of a financial
restructuring of the Company on terms acceptable to the Agent and the
Collateral Agent
1.28 Section 7.11(a) is amended to add the words ", except for
changes to the Subordinated Indebtedness approved by the Requisite Senior
Lenders in connection with an overall financial restructuring of the Company"
after the final word thereof.
1.29 Section 7.17 of the Credit Agreement is amended to add
the words "or, in the event the Case is commenced, the settlement or payment of
Claims of the Company in the Case, as approved by the Bankruptcy Court and the
Requisite Senior Lenders" after the final word thereof.
1.30 Article VII of the Credit Agreement is further amended to
add the following section to the end thereof:
7.20 Bank Accounts. Neither Borrowing Subsidiary will, or will
permit its respective Subsidiaries to, deposit or transfer the
proceeds of any Revolving Loan into a bank account maintained by the
Company, except for the purpose of making payments to the Company
permitted under Section 7.05 and, prior to the commencement of the
Case, as contemplated in that letter dated July 29, 1996 addressed to
the Company from Wachovia Bank of South Carolina, N.A. (the "Wachovia
Letter"). Prior to the commencement of the Case, the Loan Parties
shall either terminate the Wachovia Letter or amend the terms thereof
so that the Loan Parties will be in compliance with this Section 7.20.
In the event the Wachovia Letter is terminated and the Loan Parties
desire to open similar bank accounts at another financial institution,
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<PAGE> 16
Schedule 4.01(cc) shall be deemed amended to include such additional
accounts provided such additional accounts are at financial
institutions acceptable to the Agent and the Collateral Agent.
1.31 Section 8.01 of the Credit Agreement is deleted in its
entirety and the following paragraph is substituted therefor:
8.01. Minimum Net Worth. The Net Worth (Adjusted) of the
Company and its Subsidiaries on a consolidated basis on the last day
of each month of each fiscal quarter set forth below shall not be less
than the minimum amount set forth opposite such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Amount
-------------- --------------
<S> <C>
The fourth fiscal quarter
of Fiscal Year 1996 $100,000,000
The first fiscal quarter
of Fiscal Year 1997 100,000,000
The second fiscal quarter
of Fiscal Year 1997 100,000,000
The third fiscal quarter
of Fiscal Year 1997 100,000,000
The fourth fiscal quarter
of Fiscal Year 1997 105,000,000
</TABLE>
1.32 Section 8.02 of the Credit Agreement is deleted in its
entirety and the following paragraph is substituted therefor:
8.02. Minimum Total Operating Company Interest Coverage Ratio.
Total Operating Company Interest Coverage Ratio of the Borrowing
Subsidiaries on a consolidated basis, as determined as of the last day
of each fiscal quarter set forth below for the twelve month period
ending on such day (or if the period beginning on July 28, 1996 and
ending on the last day of such fiscal quarter is less than
twelve months, such shorter period), shall not be less than the
minimum ratio set forth opposite such fiscal quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
-------------- -------------
<S> <C>
The fourth fiscal quarter
of Fiscal Year 1996 3.40:1
The first fiscal quarter
</TABLE>
-16-
<PAGE> 17
<TABLE>
<S> <C>
of Fiscal Year 1997 3.50:1
The second fiscal quarter
of Fiscal Year 1997 3.85:1
The third fiscal quarter
of Fiscal Year 1997 3.90:1
The fourth fiscal quarter
of Fiscal Year 1997 4.00:1
</TABLE>
1.33 Section 8.03 of the Credit Agreement is deleted in its
entirety and the following paragraph is substituted therefor:
8.03. Minimum Operating Company Fixed Charge Coverage Ratio.
The Operating Company Fixed Charge Coverage Ratio of the Borrowing
Subsidiaries and their respective Subsidiaries on a consolidated
basis, as determined as of the last day of each fiscal quarter set
forth below for the twelve month period ending on such day (or if the
period beginning on July 28, 1996 and ending on the last day of such
fiscal quarter is less than twelve months, such shorter period), shall
not be less than the minimum ratio set forth opposite such fiscal
quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
-------------- -------------
<S> <C>
The fourth fiscal quarter
of Fiscal Year 1996 1.45:1
The first fiscal quarter
of Fiscal Year 1997 1.45:1
The second fiscal quarter
of Fiscal Year 1997 1.25:1
The third fiscal quarter
of Fiscal Year 1997 1.15:1
The fourth fiscal quarter
of Fiscal Year 1997 1.20:1
</TABLE>
1.34 Section 8.05 of the Credit Agreement is deleted in its
entirety and the following paragraph is substituted therefor:
8.05. Minimum Current Ratio. The Current Ratio shall not be
less than the minimum ratio set forth opposite such fiscal quarter:
-17-
<PAGE> 18
Fiscal Quarter Minimum Ratio
<TABLE>
<S> <C>
The fourth fiscal quarter
of Fiscal Year 1996 0.80:1
The first fiscal quarter
of Fiscal Year 1997 0.80:1
The second fiscal quarter
of Fiscal Year 1997 0.80:1
The third fiscal quarter
of Fiscal Year 1997 0.80:1
The fourth fiscal quarter
of Fiscal Year 1997 0.80:1
</TABLE>
1.35 Section 8.06 of the Credit Agreement is deleted in its
entirety and the following paragraph is substituted therefor:
8.06. Maximum Capital Expenditures. Capital Expenditures made
or incurred by the Company and its Subsidiaries on a consolidated
basis for any Fiscal Year shall not exceed in the aggregate the
maximum amount set forth below opposite such Fiscal Year:
<TABLE>
<CAPTION>
Fiscal Year Maximum Amount
<S> <C>
1996 $13,000,000
1997 24,000,000;
</TABLE>
provided, however, that, notwithstanding anything contained in this
Agreement to the contrary, in Fiscal Years 1996 and 1997 the Company
and its Subsidiaries shall not be permitted to make or incur Capital
Expenditures which are financed with the proceeds of external
financing ("Financed Capital Expenditures") in an aggregate amount
which exceeds $10,000,000 on a consolidated basis in any such Fiscal
Year; and provided, further, that the terms of any external financing
the proceeds of which are used by the Company and/or its Subsidiaries
to make or incur Capital Expenditures (other than the loan and
security agreement dated as of October 30, 1991, as amended through
the Effective Date, between The CIT Group/Equipment Financing, Inc.
and JCIC) shall be in form and substance satisfactory to the Requisite
Senior Lenders.
1.36 Section 8.07 of the Credit Agreement is deleted in its
entirety and the following paragraph is substituted therefor:
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<PAGE> 19
8.07. Maximum Cash Payments of Warranty Liabilities. Cash
payments for Warranty Liabilities made by the Borrowing Subsidiaries
and their respective Subsidiaries on a consolidated basis for any
Fiscal Year shall not exceed in the aggregate the maximum amount set
forth below opposite such Fiscal Year:
<TABLE>
<CAPTION>
Fiscal Year Maximum Amount
----------- --------------
<S> <C>
1996 $4,300,000
1997 4,000,000
</TABLE>
1.37 Section 9.01 of the Credit Agreement is amended to add
the proviso "; provided, however, that the Borrowing Subsidiaries shall not be
deemed to be in default under this Agreement or any of the other Loan Documents
solely as a result of the occurrence and continuance of an Extension Event of
Default or Extension Potential Event of Default" after the word "Agreement" in
the third line thereof.
1.38 Section 9.01(g) of the Credit Agreement is amended to add
the following parenthetical immediately after the final word thereof:
(other than a resolution adopted by the Board of Directors of the
Company authorizing the commencement of the Case and the transactions
contemplated thereby)
1.39 Section 9.01(r) of the Credit Agreement is deleted in its
entirety.
1.40 Section 9.01 of the Credit Agreement is further amended
by renaming paragraph "(s)" of such section paragraph "(r)" and adding the
following new paragraphs following renamed paragraph (r) at the end thereof:
(s) Violation of Stipulation. Any violation of the
Stipulation (other than as a result of a modification thereof as
approved by the Bankruptcy Court which modification, if initiated or
supported by the Company, shall have been approved by the Requisite
Senior Lenders) occurs during the pendency of the Case.
(t) Case Status. The Case, if commenced, is converted to
a proceeding under chapter 7 of the Bankruptcy Code, or is terminated
or dismissed prior to the Effective Date of Reorganization.
(u) Substantive Consolidation. Any motion or pleading is filed
or supported by the Company or, if filed by any other party in
interest, is granted, (i) seeking to substantively consolidate the
Company with the Borrowing
-19-
<PAGE> 20
Subsidiaries or (ii) the granting of which would materially adversely
affect the rights and remedies of the Agent, the Collateral Agent or
the Senior Lenders under the Loan Documents against the Borrowing
Subsidiaries or their respective assets.
(v) Senior Lenders' Claims. The claim of the Senior Lenders in
respect of the Company Guaranty, or the Lien of the Company Pledge
Agreement or the Company Security Agreement or any other Collateral
Document to which the Company is a party, is disallowed, subordinated,
avoided or determined to be void by the Bankruptcy Court, or any
motion or other pleading seeking such relief is filed by the Company
or supported by the Company, except for the disallowance of
duplicative claims or claims of the Senior Lenders resulting from the
incorrect calculation of amounts owing to the Senior Lenders under the
Credit Agreement.
1.41 Section 9.02(a) of the Credit Agreement is amended (i) to
add the words "(other than an Extension Event of Default)," after the words "of
Default" in the second line thereof, and (ii) to add the words "(other than an
Extension Event of Default)," after the words "Event of Default" in the
sixteenth line thereof.
1.42 Section 9.02(b) of the Credit Agreement is amended to add
the words "(other than an Extension Event of Default)" after the words "Event
of Default" in the third line thereof.
1.43 Section 10.08(a) of the Credit Agreement is amended to
add the words "or after" after the words "prior to" in the fourth line thereof.
1.44 Section 11.03(b) of the Credit Agreement is amended to
add the words "(other than an Extension Event of Default") after the words
"Event of Default" in the seventh line thereof.
1.45 Section 11.04 of the Credit Agreement is amended to add
the words ", the Extension Amendment, the Extension Amendatory Agreement and
any other document or instrument executed in connection therewith," after the
parenthetical phrase ending on the thirty-first line thereof.
1.46 Section 11.06 of the Credit Agreement is amended to add
the words "(other than an Extension Event of Default") after the words "Event
of Default" in the fifth line thereof.
1.47 Section 11.23 of the Credit Agreement is amended to add
the following proviso after the words "of such Borrowing Subsidiary" in the
seventh line thereof:
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<PAGE> 21
; provided, however, that, from and after the date the Case is
commenced, all notices of a Borrowing Subsidiary to be delivered
hereunder shall be delivered by such Borrowing Subsidiary and not by
the Company.
1.48 Schedule 2.03(d) of the Credit Agreement is deleted in
its entirety and replaced with Schedule 2.03(d) attached hereto.
1.49 A new Schedule 4.01(i), in the form of Schedule 4.01(i)
attached hereto, shall be added to the Credit Agreement.
1.50 Each of Exhibit 3 (Form of Notice of Borrowing), Exhibit
4 (Form of Notice of Continuation/Conversion) and Exhibit 10 (Form of Request
for Release of Receivables) is amended to (a) add the words "other than an
Extension Event of Default" after the words "Event of Default" in each place
where such words appear in such Exhibit, and (b) add the words "other than an
Extension Event of Default or an Extension Potential Event of Default" after
the words "Event of Default or Potential Event of Default" in each place where
such words appear in such Exhibit.
SECTION 2. Consent of the Senior Lenders. The Senior Lenders
(i) hereby consent pursuant to Section 7.02 of the Credit Agreement, to the
Rubber Products Sale, and (ii) hereby authorize, pursuant to Section
10.08(b)(vi) of the Credit Agreement, the Collateral Agent in connection with
the Rubber Products Sale to release its Lien on the fixed assets, Receivables
and Inventory being sold pursuant to the Rubber Products Sale; provided,
however, the consents provided for in this Section 2, of this Amendment shall
only become effective upon the satisfaction of the following conditions
precedent (in addition to the conditions precedent contained in Section 3
below):
(A) the Agent shall have received, concurrently with the
consummation of the Rubber Products Sale, at least $4,000,000 in Net
Cash Proceeds arising from the consummation of such sale for
application to the Obligations in accordance with Section 2.06(b)(iii)
of the Credit Agreement;
(B) the Agent and the Collateral Agent shall have received
copies of all documentation evidencing the Rubber Products Sale and
such documentation shall be in form and substance satisfactory to the
Agent and the Collateral Agent; and
(C) the Rubber Products Sale shall have been consummated on or
prior to October 31, 1996.
In the event that the Rubber Products Sale shall not have been consummated by
October 31, 1996, then the amendments made to the
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<PAGE> 22
Credit Agreement in Section 1.01(i) and 1.07 hereof and the addition of the
words ", Rubber Products Sale" in the definition of "Permitted Dispositions"
amended pursuant to Section 1.02(h) hereof shall in each case be deleted in
their entirety.
SECTION 3. Conditions Precedent to the Effectiveness of this
Agreement. This Amendment shall become effective as of the date hereof on the
date (the "Extension Amendment Effective Date") when the following conditions
precedent have been satisfied (unless waived by the Requisite Senior Lenders or
unless the deadline for delivery has been extended by the Agent):
3.1 The Agent shall have received all of the following, each
fully executed and in form and substance satisfactory to the Agent and the
Requisite Senior Lenders (except where otherwise indicated), in sufficient
copies for each Senior Lender:
(a) this Amendment (executed by the Company, the
Borrowing Subsidiaries, the Senior Lenders, the Agent and the
Collateral Agent);
(b) the Extension Amendatory Agreement (executed
by the Company, the Borrowing Subsidiaries, JPS Auto, JCC,
International Fabrics, the Senior Lenders, the Agent and the
Collateral Agent);
(c) a certificate of the Secretary or Assistant
Secretary of the Company dated the Extension Amendment Effective Date
certifying (A) the names and true signatures of the incumbent officers
of the Company authorized to sign this Amendment, (B) the resolutions
of the Company's Board of Directors approving and authorizing the
execution, delivery and performance of this Amendment and the
transactions contemplated hereby, it being understood that the
commencement and continuation of the Case is not a transaction
contemplated hereby, and (C) that there have been no changes in the
Certificate of Incorporation or By-Laws of the Company since the
Effective Date;
(d) a certificate of the Secretary or Assistant
Secretary of each Borrowing Subsidiary dated the Extension Amendment
Effective Date certifying (A) the names and true signatures of the
incumbent officers of such Borrowing Subsidiary authorized to sign
this Amendment and the other documents to be executed in connection
with this Amendment, (B) the resolutions of such Borrowing
Subsidiary's Board of Directors approving and authorizing the
execution, delivery and performance of this Amendment and the
transactions contemplated hereby and (C) that there have been no
changes in the Certificate of Incorporation or By-Laws of such
Borrowing Subsidiary since the Effective Date;
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<PAGE> 23
(e) a certificate of the Secretary or Assistant
Secretary of each other Subsidiary of the Company party hereto dated
the Extension Amendment Effective Date certifying (A) the names and
true signatures of the incumbent officers of such Person authorized to
sign this Amendment, (B) the resolutions of such Person's Board of
Directors approving and authorizing the execution, delivery and
performance of this Amendment and the transactions contemplated hereby
and (C) that there have been no changes in the Certificate of
Incorporation or By-Laws of such Person since the Effective Date;
(f) amendments to the Real Property Collateral
Documents, and such other related documents and agreements, including,
without limitation, title endorsements, as the Agent may reasonably
request;
(g) a written opinion of Weil, Gotshal & Manges,
LLP, special counsel to the Company and the Borrowing Subsidiaries, in
form and substance reasonably satisfactory to the Agent and the
Requisite Senior Lenders and their respective counsel;
(h) such other notices, documents and agreements
as are reasonably requested by the Agent or any of the Senior Lenders
relating to the transactions contemplated by this Amendment.
3.2 The Company shall have delivered to the Agent and the
Collateral Agent, and the Agent, the Collateral Agent and the Requisite Senior
Lenders shall have approved, (a) updated monthly financial projections for the
Company and its Subsidiaries through the end of fiscal year 1996 and for fiscal
year 1997 (as updated from time to time, the "Projections"), (b) a business
plan of the Company and its Subsidiaries for fiscal years 1996 and 1997, (c)
such assurances as may be requested to confirm the tax, legal and business
assumptions made in the Projections, and (d) such other financial information
as the Agent, the Collateral Agent or the Senior Lenders may reasonably
request.
3.3 The Agent, the Collateral Agent and the Requisite Senior
Lenders shall have been satisfied that (i) the Company and its Subsidiaries
have made adequate provision for the payment of all fees, expenses, indemnities
and other liabilities to be incurred by the Company and its Subsidiaries in
connection with the transactions contemplated by this Amendment, including,
without limitation, the commencement and continuation of the Case (the
"Transactions"), and (ii) the Maximum Amount of Obligations exceeds the
Revolving Credit Accommodations outstanding on the Extension Amendment
Effective Date by no less than $15,000,000.
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<PAGE> 24
3.4 The Liens of the Agent and the Collateral Agent securing
the Obligations for the benefit of the Senior Lenders shall be or continue to
be perfected and of first priority.
3.5 Each of the representations and warranties made by the
Company or any of the Borrowing Subsidiaries in or pursuant to the Credit
Agreement, as amended by this Amendment, this Amendment, the Collateral
Documents and the other Loan Documents to which the Company or any of the
Borrowing Subsidiaries is a party or by which the Company or any of the
Borrowing Subsidiaries is bound, shall be true and correct in all material
respects on and as of the Extension Amendment Effective Date (except any such
representations and warranties stated to be given on a specific date other than
the Extension Amendment Effective Date).
3.6 The Agent, the Collateral Agent and the Requisite Senior
Lenders shall be satisfied as to compliance by the Company and the Borrowing
Subsidiaries and the other parties to the Transactions with applicable laws,
regulations and orders (including all securities laws) and applicable
Contractual Obligations (other than obligations arising under those agreements
and instruments evidencing the Subordinated Indebtedness) deemed material by
the Agent, the Collateral Agent and the Requisite Senior Lenders.
3.7 There shall exist no action, suit, investigation,
litigation or proceeding pending or threatened in any court or before any
arbitrator or governmental instrumentality that (i) could have a Material
Adverse Effect or (ii) purports to affect any of the Transactions.
3.8 All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Amendment shall be satisfactory in all respects in form
and substance to the Agent and the Requisite Senior Lenders.
3.9 The Agent and the Senior Lenders shall be satisfied that
all documents and instruments set forth on Schedule 4.01(i) attached hereto,
including, without limitation, the loan and security agreement dated as of
October 30, 1991, as amended through the Extension Amendment Effective Date,
between The CIT Group/Equipment Financing, Inc. and JCIC, will not be
negatively impacted by any Extension Event of Default.
3.10 No Event of Default or Potential Event of Default shall
have occurred and be continuing on the Extension Amendment Effective Date
(other than an Extension Potential Event of Default).
3.11 The Company shall have paid to the Agent for the benefit
of the Senior Lenders all fees and expenses due and
-24-
<PAGE> 25
payable under the Credit Agreement and in connection with the this Amendment,
including, without limitation, an amendment fee of 0.25% of each Senior
Lender's Revolving Credit Commitment payable to each such Senior Lender on the
date of execution of this Amendment by each of the Senior Lenders.
3.12 No Senior Lender shall have withdrawn or otherwise
terminated its Revolving Credit Commitment.
3.13 There shall be no material adverse change in the
condition (financial or otherwise), performance, operations, properties or
prospects of the Borrowing Subsidiaries, individually, or the Company and its
Subsidiaries, taken as a whole, in the judgment of the Agent, the Collateral
Agent and the Requisite Senior Lenders, from the date of the most recent
audited financial information delivered to the Agent, the Collateral Agent and
the Senior Lenders pursuant to the Credit Agreement, except for those matters
referenced in Section 2.02 of the Fifth Amendment.
SECTION 4. Representations and Warranties. Each Borrowing
Subsidiary hereby represents and warrants to the Senior Lenders that (a) as of
the date hereof no Event of Default or Potential Event of Default shall have
occurred and be continuing (after giving effect to the amendment to the Credit
Agreement contained in Section 1 hereof) and (b) all of the representations and
warranties of the Borrowing Subsidiaries contained in subsections 4.01(a)
through (dd) of the Credit Agreement and in any other Loan Document continue to
be true and correct as of the date of execution hereof in all material
respects, as though made on and as of such date (unless stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct as of such earlier date, and except the matters referenced
in Section 2.02 of the Fifth Amendment).
SECTION 5. Reference to and Effect on the Loan Documents.
5.1 Upon the effectiveness of this Amendment, on and after the
date hereof, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import, and each reference in
the other Loan Documents to the Credit Agreement, shall mean and be a reference
to the Credit Agreement as amended hereby.
5.2 Except as specifically amended above, all of the
terms of the Credit Agreement and all other Loan Documents shall remain
unchanged and in full force and effect.
5.3 The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of any Senior Lender, the Agent or the Collateral
Agent under the Credit Agreement or
-25-
<PAGE> 26
any of the Loan Documents, nor constitute a waiver of any provision of the
Credit Agreement or any of the Loan Documents.
SECTION 6. Releases. In further consideration of the Senior
Lenders' execution of this Amendment, each of the Company, the Borrowing
Subsidiaries and each of the other Subsidiaries of the Company party hereto
hereby releases the Agent, the Collateral Agent and the Senior Lenders and
their respective affiliates, officers, employees, directors, agents and
attorneys (collectively, the "Releasees") from any and all claims, demands,
liabilities, responsibilities, disputes, causes of action (whether at law or
equity) and obligations of every nature whatsoever, whether liquidated or
unliquidated, known or unknown, matured or unmatured, fixed or contingent, that
the Company or any of the Borrowing Subsidiaries may have against the Releasees
which arise from or relate to any actions or inactions that the Releasees may
have taken prior to the date hereof with respect to the Obligations, any
Collateral, the Credit Agreement, any Loan Document and any third parties
liable in whole or in part for the Obligations. For purposes of the release
contained in this section, the terms "Company," and "Borrowing Subsidiary"
shall mean and include the Company's and each Borrowing Subsidiary's respective
successors and assigns, including, without limitation, any trustees acting on
behalf of such parties.
SECTION 7. GE Notice Address. The notice address for General
Electric Capital Corporation, in its individual capacity and in its capacity as
the Collateral Agent, is hereby changed to the following:
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attention: Rick Luck
Telecopy: (203) 316-7893
with a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: Daniel S. Dokos, Esq.
Telecopy: (212) 906-2021
SECTION 8. Certification of Conformed/Composite Copy of Credit
Agreement. The parties hereto each acknowledge and agree that the
Conformed/Composite Copy of the Credit Agreement attached to this Amendment as
Exhibit A accurately reflects the Credit Agreement as amended through July 22,
1996, and adopts such Conformed/Composite Copy as the operative agreement of
the parties thereto, as amended by this Amendment.
-26-
<PAGE> 27
SECTION 9. Costs and Expenses. Each Borrowing Subsidiary
agrees to pay on demand in accordance with the terms of Section 11.03 of the
Credit Agreement all costs and expenses of the Agent and the Collateral Agent
in connection with the preparation, reproduction, execution and delivery of
this Amendment, including the reasonable fees and out-of-pocket expenses of
Sidley & Austin, counsel for the Agent with respect thereto.
SECTION 10. Execution in Counterparts. This Amendment may be
executed and delivered in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute one and the same original agreement.
SECTION 11. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
-27-
<PAGE> 28
SECTION 12. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
IN WITNESS WHEREOF, this Amendment has been duly executed on
the date set forth above.
JPS TEXTILE GROUP, INC.
By:/s/ David H. Taylor
--------------------------
Title: EVP - Finance & Secretary
JPS ELASTOMERICS CORP.
By:/s/ David H. Taylor
--------------------------
Title: Vice President
JPS CONVERTER AND INDUSTRIAL CORP.
By:/s/ David H. Taylor
---------------------------
Title: Vice President
JPS AUTO INC.
By:/s/ David H. Taylor
----------------------------
Title: Vice President
JPS CARPET CORP.
By:/s/ David H. Taylor
-----------------------------
Title: Vice President
INTERNATIONAL FABRICS, INC.
By:/s/ David H. Taylor
-----------------------------
Title: Vice President
-28-
<PAGE> 29
Senior Lenders:
CITIBANK, N.A., as Agent and as a
Senior Lender
By:/s/ Brenda Cotsen
--------------------------------
Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION, as Collateral Agent
and as a Senior Lender
By:/s/ Rick Luck
-------------------------------------------
Title: Vice President GE Capital Commercial
Finance, Inc., Being Duly Authorized
HELLER FINANCIAL, INC.
By:/s/ Frank Ross
---------------------------------
Title:
THE BANK OF NEW YORK COMMERCIAL CORPORATION
By:/s/ Michael Lustbader
--------------------------------
Title: VP
NATIONSBANK OF GEORGIA, N.A.
By:/s/ Brian R. O'Falla
--------------------------------
Title: SVP
-29-
<PAGE> 1
EXHIBIT 10.3
RETENTION BONUS AGREEMENT
JPS Textile Group, Inc. ("JPS") has begun a financial
restructuring that would involve at a minimum restructuring the public debt of
JPS on terms acceptable to the Board of Directors of JPS (said financial
restructuring being hereinafter referred to as the "Restructuring").
In connection with the Restructuring, JPS desires to enter
into retention bonus agreements with certain of its key executives. This
Retention Bonus Agreement sets forth the retention bonus that will be available
to you if you continue active employment with JPS for at least six months
following the completion of the Restructuring or as otherwise provided in this
Retention Bonus Agreement.
The retention bonus described herein is in addition to any
other entitlement you might have under any other plan or individual employment
arrangement or agreement. Our hope is that you will find the benefit provided
under this Retention Bonus Agreement enough incentive to cause you to stay with
JPS through the Restructuring and beyond.
CIRCUMSTANCES OF INELIGIBILITY
You will not be eligible to receive either a portion or all of
your retention bonus under this Retention Bonus Agreement in any one or more of
the following situations as provided below:
1. VOLUNTARY TERMINATION: If you elect to voluntarily
terminate your employment, including termination due to retirement,
with JPS prior to the completion of the Restructuring, you will not be
eligible to receive any portion of the Retention Bonus (as
hereinafter defined). If you elect to voluntarily terminate your
employment, including termination due to retirement, with JPS prior to
the end of six months following the completion of the Restructuring,
you will not be eligible to receive the remaining fifty (50%) percent
of the Retention Bonus.
2. TERMINATION FOR CAUSE: If your employment with JPS
is terminated for Cause, you will not be eligible to receive (or
retain any payments previously made of) any portion of the Retention
Bonus. Cause shall mean (i) fraud, embezzlement, theft,
misappropriation of any property of JPS or any of its related entities
(the "JPS Group"), intentional misconduct or any other form of
dishonesty (financial or otherwise), a breach of any term of any
employment, severance or termination agreement, participation in any
other activity or enterprise or willful refusal to perform
responsibilities (any of which is detrimental in any material respect
to the business, property and interests of any member of the JPS
Group), conviction of (or plead nolo contendere to) any felony or any
misdemeanor involving moral turpitude or which might, in the
reasonable opinion of JPS, cause embarrassment to any member of the
JPS Group, and (ii) as defined otherwise in any employment, severance
or termination agreement with the JPS Group.
<PAGE> 2
3. CONFIDENTIALITY: If you intentionally disclose,
directly or indirectly, this Retention Bonus Agreement or any of its
terms to any person(s) at the JPS Group, unless required by law or a
court of competent jurisdiction or without authorization of the Chief
Executive Officer of JPS, you will not be eligible to receive (or
retain any payments previously made of) any portion of the Retention
Bonus.
TERMINATION UPON DEATH, DISABILITY OR WITHOUT CAUSE
1. DEATH OR DISABILITY: In the event of death or
Disability (as hereinafter defined), your estate will be paid a
proportionate allocation of the Retention Bonus pro-rated for the
period through the date of your death or Disability. For purposes of
determining proration hereunder, the Retention Bonus shall be
multiplied by a fraction the numerator of which shall be the number of
whole months from and including the date hereof until the date of
death or Disability and the denominator of which shall be the whole
number of months from and including the date hereof through the date
when the Restructuring is confirmed by the Board of Directors of JPS
and/or the creditors of JPS, or a court of competent jurisdiction,
whichever is appropriate depending upon the final form of
Restructuring. Disability shall mean the permanent inability to
perform the services contemplated under this Agreement or any
employment agreement then in effect, as determined by the insurance
carrier providing long term disability coverage to the employee by JPS.
2. TERMINATION WITHOUT CAUSE: In the event your
employment with JPS is terminated by JPS without Cause, you will be
paid the Retention Bonus upon the effective date of your termination
of employment. For purposes of this paragraph, your employment will
be deemed terminated without cause if, during the Restructuring or
after the completion of the Restructuring, you are assigned duties or
responsibilities materially inconsistent with those customarily
performed by you or your compensation or benefits are materially
reduced without your consent prior to or after the Restructuring.
AMOUNT AND FORM OF RETENTION BONUS
As long as none of the "Circumstances of Ineligibility,"
above, apply to you, you will be entitled to receive a retention bonus which
will be paid in two components as follows: (i) an amount equal to fifty (50%)
percent of the sum of (x) your annual base salary, plus (y) an additional
amount equal to the average of your bonuses with JPS for the years 1989 through
1995 will be paid on the completion of the Restructuring, and (ii) an amount
equal to one hundred (100%) percent of the sum of (x) your annual base salary,
plus (y) an additional amount equal to the average of your bonuses with JPS for
the years 1989 through 1995 will be paid six (6) months following the
completion of the Restructuring (the payments referred to in clauses (i) and
(ii) being the "Retention Bonus").
<PAGE> 3
This Retention Bonus Agreement does not constitute a contract
of employment or impose on JPS any obligation to retain you as an employee.
Nothing in this Retention Bonus Agreement is intended as, or
shall be construed to, confer upon any person, other than the parties hereto
and their successors and permitted assigns, any rights or remedies by reason of
this Retention Bonus Agreement.
No party may amend, modify or terminate this Retention Bonus
Agreement without the express written consent of the other party.
This Retention Bonus Agreement shall be governed and construed
in accordance with the laws of the State of New York without regard to the
conflicts of law principles of such state.
This Agreement may be executed and delivered in separate
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which taken together shall constitute one and the same
agreement.
JPS Textile Group, Inc.
By: /s/ David H. Taylor
-------------------------
David H. Taylor
EVP - Finance
AGREED TO AND ACCEPTED
By: /s/ Jerry E. Hunter
------------------------
Jerry E. Hunter
Date: July 12, 1996
<PAGE> 1
EXHIBIT 10.4
RETENTION BONUS AGREEMENT
JPS Textile Group, Inc. ("JPS") has begun a financial
restructuring that would involve at a minimum restructuring the public debt of
JPS on terms acceptable to the Board of Directors of JPS (said financial
restructuring being hereinafter referred to as the "Restructuring").
In connection with the Restructuring, JPS desires to enter
into retention bonus agreements with certain of its key executives. This
Retention Bonus Agreement sets forth the retention bonus that will be available
to you if you continue active employment with JPS for at least six months
following the completion of the Restructuring or as otherwise provided in this
Retention Bonus Agreement.
The retention bonus described herein is in addition to any
other entitlement you might have under any other plan or individual employment
arrangement or agreement. Our hope is that you will find the benefit provided
under this Retention Bonus Agreement enough incentive to cause you to stay with
JPS through the Restructuring and beyond.
CIRCUMSTANCES OF INELIGIBILITY
You will not be eligible to receive either a portion or all of
your retention bonus under this Retention Bonus Agreement in any one or more of
the following situations as provided below:
1. VOLUNTARY TERMINATION: If you elect to voluntarily
terminate your employment, including termination due to retirement,
with JPS prior to the completion of the Restructuring, you will not be
eligible to receive any portion of the Retention Bonus (as
hereinafter defined). If you elect to voluntarily terminate your
employment, including termination due to retirement, with JPS prior to
the end of six months following the completion of the Restructuring,
you will not be eligible to receive the remaining fifty (50%) percent
of the Retention Bonus.
2. TERMINATION FOR CAUSE: If your employment with JPS
is terminated for Cause, you will not be eligible to receive (or
retain any payments previously made of) any portion of the Retention
Bonus. Cause shall mean (i) fraud, embezzlement, theft,
misappropriation of any property of JPS or any of its related entities
(the "JPS Group"), intentional misconduct or any other form of
dishonesty (financial or otherwise), a breach of any term of any
employment, severance or termination agreement, participation in any
other activity or enterprise or willful refusal to perform
responsibilities (any of which is detrimental in any material respect
to the business, property and interests of any member of the JPS
Group), conviction of (or plead nolo contendere to) any felony or any
misdemeanor involving moral turpitude or which might, in the
reasonable opinion of JPS, cause embarrassment to any member of the
JPS Group, and (ii) as defined otherwise in any employment, severance
or termination agreement with the JPS Group.
<PAGE> 2
3. CONFIDENTIALITY: If you intentionally disclose,
directly or indirectly, this Retention Bonus Agreement or any of its
terms to any person(s) at the JPS Group, unless required by law or a
court of competent jurisdiction or without authorization of the Chief
Executive Officer of JPS, you will not be eligible to receive (or
retain any payments previously made of) any portion of the Retention
Bonus.
TERMINATION UPON DEATH, DISABILITY OR WITHOUT CAUSE
1. DEATH OR DISABILITY: In the event of death or
Disability (as hereinafter defined), your estate will be paid a
proportionate allocation of the Retention Bonus pro-rated for the
period through the date of your death or Disability. For purposes of
determining proration hereunder, the Retention Bonus shall be
multiplied by a fraction the numerator of which shall be the number of
whole months from and including the date hereof until the date of
death or Disability and the denominator of which shall be the whole
number of months from and including the date hereof through the date
when the Restructuring is confirmed by the Board of Directors of JPS
and/or the creditors of JPS, or a court of competent jurisdiction,
whichever is appropriate depending upon the final form of
Restructuring. Disability shall mean the permanent inability to
perform the services contemplated under this Agreement or any
employment agreement then in effect, as determined by the insurance
carrier providing long term disability coverage to the employee.
2. TERMINATION WITHOUT CAUSE: In the event your
employment with JPS is terminated by JPS without Cause, you will be
paid the Retention Bonus upon the effective date of your termination
of employment. For purposes of this paragraph, your employment will
be deemed terminated without cause if, during the Restructuring or
after the completion of the Restructuring, you are assigned duties or
responsibilities materially inconsistent with those customarily
performed by you or your compensation or benefits are materially
reduced without your consent prior to or after the Restructuring.
AMOUNT AND FORM OF RETENTION BONUS
As long as none of the "Circumstances of Ineligibility,"
above, apply to you, you will be entitled to receive a retention bonus which
will be paid in two components as follows: (i) an amount equal to fifty (50%)
percent of the sum of (x) your annual base salary, plus (y) an additional
amount equal to the average of your bonuses with JPS for the years 1989 through
1995 will be paid on the completion of the Restructuring, and (ii) an amount
equal to the sum of (A) fifty (50%) percent of the sum of (x) your annual base
salary, plus (y) an additional amount equal to the average of your bonuses with
JPS for the years 1989 through 1995, and (B) TWO HUNDRED THOUSAND DOLLARS
($200,000), will be paid six (6) months following the completion of the
Restructuring (the payments referred to in clauses (i) and (ii) being the
"Retention Bonus").
This Retention Bonus Agreement does not constitute a contract
of employment or impose on JPS any obligation to retain you as an employee.
<PAGE> 3
Nothing in this Retention Bonus Agreement is intended as, or
shall be construed to, confer upon any person, other than the parties hereto
and their successors and permitted assigns, any rights or remedies by reason of
this Retention Bonus Agreement.
No party may amend, modify or terminate this Retention Bonus
Agreement without the express written consent of the other party.
This Retention Bonus Agreement shall be governed and construed
in accordance with the laws of the State of New York without regard to the
conflicts of law principles of such state.
This Agreement may be executed and delivered in separate
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which taken together shall constitute one and the same
agreement.
JPS Textile Group, Inc.
By: /s/ Jerry E. Hunter
-------------------------
Jerry E. Hunter
President and CEO
AGREED TO AND ACCEPTED
By: /s/ David H. Taylor
------------------------
David H. Taylor
Date: July 12, 1996
<PAGE> 1
EXHIBIT 10.5
RETENTION BONUS AGREEMENT
JPS Textile Group, Inc. ("JPS") has begun a financial
restructuring that would involve at a minimum restructuring the public debt of
JPS on terms acceptable to the Board of Directors of JPS (said financial
restructuring being hereinafter referred to as the "Restructuring").
In connection with the Restructuring, JPS desires to enter
into retention bonus agreements with certain of its key executives. This
Retention Bonus Agreement sets forth the retention bonus that will be available
to you if you continue active employment with JPS for at least six months
following the completion of the Restructuring or as otherwise provided in this
Retention Bonus Agreement.
The retention bonus described herein is in addition to any
other entitlement you might have under any other plan or individual employment
arrangement or agreement. Our hope is that you will find the benefit provided
under this Retention Bonus Agreement enough incentive to cause you to stay with
JPS through the Restructuring and beyond.
CIRCUMSTANCES OF INELIGIBILITY
You will not be eligible to receive either a portion or all of
your retention bonus under this Retention Bonus Agreement in any one or more of
the following situations as provided below:
1. VOLUNTARY TERMINATION: If you elect to voluntarily
terminate your employment, including termination due to retirement,
with JPS prior to the completion of the Restructuring, you will not be
eligible to receive any portion of the Retention Bonus (as
hereinafter defined). If you elect to voluntarily terminate your
employment, including termination due to retirement, with JPS prior to
the end of six months following the completion of the Restructuring,
you will not be eligible to receive the remaining fifty (50%) percent
of the Retention Bonus.
2. TERMINATION FOR CAUSE: If your employment with JPS
is terminated for Cause, you will not be eligible to receive (or
retain any payments previously made of) any portion of the Retention
Bonus. Cause shall mean (i) fraud, embezzlement, theft,
misappropriation of any property of JPS or any of its related entities
(the "JPS Group"), intentional misconduct or any other form of
dishonesty (financial or otherwise), a breach of any term of any
employment, severance or termination agreement, participation in any
other activity or enterprise or willful refusal to perform
responsibilities (any of which is detrimental in any material respect
to the business, property and interests of any member of the JPS
Group), conviction of (or plead nolo contendere to) any felony or any
misdemeanor involving moral turpitude or which might, in the
reasonable opinion of JPS, cause embarrassment to any member of the
JPS Group, and (ii) as defined otherwise in any employment, severance
or termination agreement with the JPS Group.
<PAGE> 2
3. CONFIDENTIALITY: If you intentionally disclose,
directly or indirectly, this Retention Bonus Agreement or any of its
terms to any person(s) at the JPS Group, unless required by law or a
court of competent jurisdiction or without authorization of the Chief
Executive Officer of JPS, you will not be eligible to receive (or
retain any payments previously made of) any portion of the Retention
Bonus.
TERMINATION UPON DEATH, DISABILITY OR WITHOUT CAUSE
1. DEATH OR DISABILITY: In the event of death or
Disability (as hereinafter defined), your estate will be paid a
proportionate allocation of the Retention Bonus pro-rated for the
period through the date of your death or Disability. For purposes of
determining proration hereunder, the Retention Bonus shall be
multiplied by a fraction the numerator of which shall be the number of
whole months from and including the date hereof until the date of
death or Disability and the denominator of which shall be the whole
number of months from and including the date hereof through the date
when the Restructuring is confirmed by the Board of Directors of JPS
and/or the creditors of JPS, or a court of competent jurisdiction,
whichever is appropriate depending upon the final form of
Restructuring. Disability shall mean the permanent inability to
perform the services contemplated under this Agreement or any
employment agreement then in effect, as determined by the insurance
carrier providing long term disability coverage to the employee by
JPS.
2. TERMINATION WITHOUT CAUSE: In the event your
employment with JPS is terminated by JPS without Cause, you will be
paid the Retention Bonus upon the effective date of your termination
of employment. For purposes of this paragraph, your employment will
be deemed terminated without cause if, during the Restructuring or
after the completion of the Restructuring, you are assigned duties or
responsibilities materially inconsistent with those customarily
performed by you or your compensation or benefits are materially
reduced without your consent prior to or after the Restructuring.
AMOUNT AND FORM OF RETENTION BONUS
As long as none of the "Circumstances of Ineligibility,"
above, apply to you, you will be entitled to receive a retention bonus which
will be paid in two components as follows: (i) an amount equal to fifty (50%)
percent of the sum of (x) your annual base salary, plus (y) an additional
amount equal to the average of your bonuses with JPS for the years 1989 through
1995 will be paid on the completion of the Restructuring, and (ii) an amount
equal to one hundred (100%) percent of the sum of (x) your annual base salary,
plus (y) an additional amount equal to the average of your bonuses with JPS for
the years 1989 through 1995 will be paid six (6) months following the
completion of the Restructuring (the payments referred to in clauses (i) and
(ii) being the "Retention Bonus").
This Retention Bonus Agreement does not constitute a contract
of employment or impose on JPS any obligation to retain you as an employee.
<PAGE> 3
Nothing in this Retention Bonus Agreement is intended as, or
shall be construed to, confer upon any person, other than the parties hereto
and their successors and permitted assigns, any rights or remedies by reason of
this Retention Bonus Agreement.
No party may amend, modify or terminate this Retention Bonus
Agreement without the express written consent of the other party.
This Retention Bonus Agreement shall be governed and construed
in accordance with the laws of the State of New York without regard to the
conflicts of law principles of such state.
This Agreement may be executed and delivered in separate
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which taken together shall constitute one and the same
agreement.
JPS Textile Group, Inc.
By: /s/ David H. Taylor
-------------------------
David H. Taylor
EVP - Finance
AGREED TO AND ACCEPTED
By: /s/ Monnie L. Broome
------------------------
Monnie L. Broome
Date: July 12, 1996
<PAGE> 1
Exhibit 10.6
October 30, 1995
JPS Textile Group, Inc.
Suite 202
555 North Pleasantburg Drive
Greenville, South Carolina 29607
Gentlemen:
This letter confirms my agreement with JPS Textile Group, Inc.
(the "Company"), for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, with respect to the following:
1. If the Company terminates my employment other than
for "cause" (as defined in Paragraph 2 below), or there is a change in control
or ownership; or in the event of my death; I shall be entitled to receive as
severance my annual base salary in effect at the time of such termination,
payable for a one year period, as if my employment had not been terminated
(this shall include fringe benefits accorded all active employees, except
L.T.D., provided all contributions are made, in addition, I shall receive after
the date of my termination a one-time bonus payment which shall be calculated
on the basis of the average of all prior years annual bonuses from 1989 until
the date of termination.
If at any time during the one year severance period I
elect to take a lump sum payment, it would equal the remaining equivalent of my
remaining salary and bonus amount and I would waive all other benefits outlined
above. In the event of my death, a lump sum payment would be mandatory and
payable to my estate.
2. For the purposes hereof, the term "cause" shall mean
any of the following:
(i) I shall have violated the provisions of Paragraph 3
hereof; or
(ii) I shall have committed an act of fraud, embezzlement,
theft or dishonesty against the Company; or
(iii) I shall have been convicted of (or plead nolo
contendere to) any felony or any misdemeanor involving moral turpitude
or which might, in the reasonable opinion of the Company, cause
embarrassment to the Company.
<PAGE> 2
JPS Textile Group, Inc
October 30, 1995
Page 2
In the event that the Company elects to terminate my
employment for "cause", the Company shall send me written notice thereof
terminating my employment and describing the action constituting "cause", and
thereupon the Company shall have no further obligations pursuant to this letter
agreement, but I shall have the obligations provided for in Paragraph 3 below.
In the event that I leave the employ of the Company of my own accord other than
for the reasons in paragraph 1 above, the Company shall have no further
obligations pursuant to this letter agreement.
3. Recognizing that the knowledge, information and
relationship with customers, suppliers, and agents, and the knowledge of the
Company's and its subsidiary companies' business methods, systems, plans and
policies which I have established, received or obtained during my employment or
hereafter shall establish, receive or obtain as an employee of the Company or
its subsidiary companies, are valuable and unique assets of the respective
businesses of the Company and its subsidiary companies, I agree that, during my
employment and at all times thereafter, I shall not (otherwise than pursuant to
my duties) disclose or use, without the prior written approval of the Company,
any such knowledge or information pertaining to the Company or any of its
subsidiary companies, their business, personnel or policies, to any person,
firm, corporation or other entity, for any reason or purpose whatsoever. The
provisions of this Paragraph 3 shall not apply to information which is or shall
become generally known to the public or the trade (except by reason of the
breach of my obligations hereunder), information which is or shall become
available in trade or other publications, information known to me prior to
entering the employ of the Company, and information which I am required to
disclose by law or an order of a court of competent jurisdiction. If I am
required by law or a court order to disclose such information, I shall notify
the Company of such requirement prior to disclosing such information and
provide the Company an opportunity (if the Company so elects) to contest such
law or court order.
4. If any provision of this letter agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this letter agreement or the
application of such provision to such person or circumstances other than those
to which it is so determined to be invalid and unenforceable, shall not be
affected thereby, and each provision hereof shall be validated and shall be
enforced to the fullest extent permitted by law.
<PAGE> 3
JPS Textile Group, Inc.
October 30, 1995
Page 3
5. This letter agreement (i) is in lieu of any other
provision for severance payments by the Company which are hereby waived, (ii)
contains the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
with respect thereto, with the exception of my rights under the Key Executive
Phantom Stock Plan to which I will retain under this agreement, (iii) may be
executed and delivered in one or more counterparts, all of which taken together
shall constitute but one and the same original instrument, and (iv) shall be
governed and construed in accordance with the laws of the State of South
Carolina without regard to the conflicts of law principles of such state.
Very truly yours,
By: /s/ Jerry E. Hunter (Signature)
-----------------------
Print Name: Jerry E. Hunter
Print Title: President and C.E.O.
ACCEPTED AND AGREED TO:
JPS TEXTILE GROUP, INC.
By: /s/ Steve Friedman
---------------------------------
Member JPS Compensation Committee
<PAGE> 1
Exhibit 10.7
October 30, 1995
JPS Textile Group, Inc.
Suite 202
555 North Pleasantburg Drive
Greenville, South Carolina 29607
Gentlemen:
This letter confirms my agreement with JPS Textile Group, Inc.
(the "Company"), for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, with respect to the following:
1. If the Company terminates my employment other than
for "cause" (as defined in Paragraph 2 below), or there is a change in control
or ownership; or in the event of my death; I shall be entitled to receive as
severance my annual base salary in effect at the time of such termination,
payable for a one year period, as if my employment had not been terminated
(this shall include fringe benefits accorded all active employees, except
L.T.D., provided all contributions are made, in addition, I shall receive after
the date of my termination a one-time bonus payment which shall be calculated
on the basis of the average of all prior years annual bonuses from 1989 until
the date of termination.
If at any time during the one year severance period I
elect to take a lump sum payment, it would equal the remaining equivalent of my
remaining salary and bonus amount and I would waive all other benefits outlined
above. In the event of my death, a lump sum payment would be mandatory and
payable to my estate.
2. For the purposes hereof, the term "cause" shall mean
any of the following:
(i) I shall have violated the provisions of Paragraph 3
hereof; or
(ii) I shall have committed an act of fraud, embezzlement,
theft or dishonesty against the Company; or
(iii) I shall have been convicted of (or plead nolo
contendere to) any felony or any misdemeanor involving moral turpitude
or which might, in the reasonable opinion of the Company, cause
embarrassment to the Company.
<PAGE> 2
JPS Textile Group, Inc
October 30, 1995
Page 2
In the event that the Company elects to terminate my
employment for "cause", the Company shall send me written notice thereof
terminating my employment and describing the action constituting "cause", and
thereupon the Company shall have no further obligations pursuant to this letter
agreement, but I shall have the obligations provided for in Paragraph 3 below.
In the event that I leave the employ of the Company of my own accord other than
for the reasons in paragraph 1 above, the Company shall have no further
obligations pursuant to this letter agreement.
3. Recognizing that the knowledge, information and
relationship with customers, suppliers, and agents, and the knowledge of the
Company's and its subsidiary companies' business methods, systems, plans and
policies which I have established, received or obtained during my employment or
hereafter shall establish, receive or obtain as an employee of the Company or
its subsidiary companies, are valuable and unique assets of the respective
businesses of the Company and its subsidiary companies, I agree that, during my
employment and at all times thereafter, I shall not (otherwise than pursuant to
my duties) disclose or use, without the prior written approval of the Company,
any such knowledge or information pertaining to the Company or any of its
subsidiary companies, their business, personnel or policies, to any person,
firm, corporation or other entity, for any reason or purpose whatsoever. The
provisions of this Paragraph 3 shall not apply to information which is or shall
become generally known to the public or the trade (except by reason of the
breach of my obligations hereunder), information which is or shall become
available in trade or other publications, information known to me prior to
entering the employ of the Company, and information which I am required to
disclose by law or an order of a court of competent jurisdiction. If I am
required by law or a court order to disclose such information, I shall notify
the Company of such requirement prior to disclosing such information and
provide the Company an opportunity (if the Company so elects) to contest such
law or court order.
4. If any provision of this letter agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this letter agreement or the
application of such provision to such person or circumstances other than those
to which it is so determined to be invalid and unenforceable, shall not be
affected thereby, and each provision hereof shall be validated and shall be
enforced to the fullest extent permitted by law.
<PAGE> 3
JPS Textile Group, Inc.
October 30, 1995
Page 3
5. This letter agreement (i) is in lieu of any other
provision for severance payments by the Company which are hereby waived, (ii)
contains the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
with respect thereto, (iii) may be executed and delivered in one or more
counterparts, all of which taken together shall constitute but one and the same
original instrument, and (iv) shall be governed and construed in accordance
with the laws of the State of South Carolina without regard to the conflicts of
law principles of such state.
Very truly yours,
By: /s/ David H. Taylor (Signature)
------------------------
Print Name: David H. Taylor
Print Title: EVP-Finance & Secretary
ACCEPTED AND AGREED TO:
JPS TEXTILE GROUP, INC.
By: /s/ Jerry E. Hunter
--------------------------------------
Jerry E. Hunter
President and Chief Executive Officer
<PAGE> 1
Exhibit 10.8
October 30, 1995
JPS Textile Group, Inc.
Suite 202
555 North Pleasantburg Drive
Greenville, South Carolina 29607
Gentlemen:
This letter confirms my agreement with JPS Textile Group, Inc.
(the "Company"), for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, with respect to the following:
1. If the Company terminates my employment other than
for "cause" (as defined in Paragraph 2 below), or there is a change in control
or ownership; or in the event of my death; I shall be entitled to receive as
severance my annual base salary in effect at the time of such termination,
payable for a one year period, as if my employment had not been terminated
(this shall include fringe benefits accorded all active employees, except
L.T.D., provided all contributions are made, in addition, I shall receive after
the date of my termination a one-time bonus payment which shall be calculated
on the basis of the average of all prior years annual bonuses from 1989 until
the date of termination.
If at any time during the one year severance period I
elect to take a lump sum payment, it would equal the remaining equivalent of my
remaining salary and bonus amount and I would waive all other benefits outlined
above. In the event of my death, a lump sum payment would be mandatory and
payable to my estate.
2. For the purposes hereof, the term "cause" shall mean
any of the following:
(i) I shall have violated the provisions of Paragraph 3
hereof; or
(ii) I shall have committed an act of fraud, embezzlement,
theft or dishonesty against the Company; or
(iii) I shall have been convicted of (or plead nolo
contendere to) any felony or any misdemeanor involving moral turpitude
or which might, in the reasonable opinion of the Company, cause
embarrassment to the Company.
<PAGE> 2
JPS Textile Group, Inc
October 30, 1995
Page 2
In the event that the Company elects to terminate my
employment for "cause", the Company shall send me written notice thereof
terminating my employment and describing the action constituting "cause", and
thereupon the Company shall have no further obligations pursuant to this letter
agreement, but I shall have the obligations provided for in Paragraph 3 below.
In the event that I leave the employ of the Company of my own accord other than
for the reasons in paragraph 1 above, the Company shall have no further
obligations pursuant to this letter agreement.
3. Recognizing that the knowledge, information and
relationship with customers, suppliers, and agents, and the knowledge of the
Company's and its subsidiary companies' business methods, systems, plans and
policies which I have established, received or obtained during my employment or
hereafter shall establish, receive or obtain as an employee of the Company or
its subsidiary companies, are valuable and unique assets of the respective
businesses of the Company and its subsidiary companies, I agree that, during my
employment and at all times thereafter, I shall not (otherwise than pursuant to
my duties) disclose or use, without the prior written approval of the Company,
any such knowledge or information pertaining to the Company or any of its
subsidiary companies, their business, personnel or policies, to any person,
firm, corporation or other entity, for any reason or purpose whatsoever. The
provisions of this Paragraph 3 shall not apply to information which is or shall
become generally known to the public or the trade (except by reason of the
breach of my obligations hereunder), information which is or shall become
available in trade or other publications, information known to me prior to
entering the employ of the Company, and information which I am required to
disclose by law or an order of a court of competent jurisdiction. If I am
required by law or a court order to disclose such information, I shall notify
the Company of such requirement prior to disclosing such information and
provide the Company an opportunity (if the Company so elects) to contest such
law or court order.
4. If any provision of this letter agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this letter agreement or the
application of such provision to such person or circumstances other than those
to which it is so determined to be invalid and unenforceable, shall not be
affected thereby, and each provision hereof shall be validated and shall be
enforced to the fullest extent permitted by law.
<PAGE> 3
JPS Textile Group, Inc.
October 30, 1995
Page 3
5. This letter agreement (i) is in lieu of any other
provision for severance payments by the Company which are hereby waived, (ii)
contains the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
with respect thereto, (iii) may be executed and delivered in one or more
counterparts, all of which taken together shall constitute but one and the same
original instrument, and (iv) shall be governed and construed in accordance
with the laws of the State of South Carolina without regard to the conflicts of
law principles of such state.
Very truly yours,
By: /s/ Monnie L. Broome (Signature)
-----------------------
Print Name: Monnie L. Broome
Print Title: Vice President of
Human Resources
ACCEPTED AND AGREED TO:
JPS TEXTILE GROUP, INC.
By: /s/ Jerry E. Hunter
-------------------------------------
Jerry E. Hunter
President and Chief Executive Officer
<PAGE> 1
Exhibit 10.9
As of May 1, 1993
And Amended on Sepember 11, 1995
JPS Textile Group, Inc.
Suite 202
555 North Pleasantburg Drive
Greenville, South Carolina 29607
Gentlemen:
Recognizing that I have been employed in the textile
manufacturing business for more than thirty years and by JPS Converter and
Industrial Corp. (a wholly owned subsidiary of JPS Textile Group, Inc. (the
"Company")), since February, 1991, most recently as Vice President, Director of
Sales of the Apparel Group, and that you desire that I enter into the following
agreement in connection with my promotion as set forth below, this letter
confirms my agreement with the Company, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, with respect to
the following:
1. Except as provided in paragraph 2 or 3, the Company
shall employ me for the period commencing May 1, 1993 and ending on April 30,
1997 (the "Four-Year Period") as President of Marketing and Sales for the
Apparel and Home Furnishings Group of JPS Converter and Industrial Corp. I
shall have the powers, duties, responsibilities and authority that have
traditionally been accorded such position, which I shall exercise in accordance
with the goals and objectives established from time to time by senior
management. It is understood, agreed and accepted by me that the management
responsibilities of this new position will require additional travel over and
above my previous position. It is accepted and agreed that senior management
will require my presence a minimum of two (2) days per month for reviews in
Greenville, S.C. and one (1) to two (2) days per month for mangement reviews in
New York or other locations as may be specified. In addition, it is
understood, agreed and accepted that I will be required to travel to the extent
required to perform my job both in the U.S. and internationally either at my
discretion or at the request of senior management. The frequency and timing of
these travels may from time to time be close together or may be spread out over
several months. My annual base salary shall initially be $200,000, and I shall
have a bonus opportunity target of 50% of such salary. My base salary shall be
reviewed annually by senior management and may be increased but not decreased.
Factors that shall be taken into account in reviewing my salary shall include
but shall not be
<PAGE> 2
JPS Textile Group, Inc. 2 As of May 1, 1993
And Amended on September 11, 1995
limited to my personal performance, the performance of JPS Converter and
Industrial Corp., changes in the cost of living and changes in my
responsibilities or duties. My bonus shall be calculated for each fiscal year
of the Company, commencing with the fiscal year beginning November 1, 1992.
Senior management shall establish my bonus goals prior to the beginning of each
fiscal year, [except that bonus goals for the current fiscal year are attached
hereto]. My bonus shall be payable within 90 days after the end of each fiscal
year. I shall also be entitled to receive all fringe benefits provided for
active employees.
2. If the Company terminates my employment prior to the
end of the Four-Year Period other than for "cause" (as defined in Paragraph 3
below), I shall be entitled to receive as severance (a) an amount equal to my
annual base salary in effect at the time of such termination payable in the
ordinary course, as if my employment had not been terminated (this shall
include fringe benefits accorded all active employees, except L.T.D., provided
appropriate contributions are made by me as required), and (b) a pro-rata bonus
amount up to date of termination for the plan year in which such termination
occurs, according to the terms of the Plan; provided, however, that in no event
shall any payment be made pursuant to this Paragraph 2 to the extent such
payment would constitute an "excess parachute payment" as defined in Section
280G(b) of the Internal Revenue Code of 1986, as amended, or the corresponding
provisions of any successor statute. If the Company reduces my base salary or
bonus opportunity, diminishes my power, authority or responsibilities as
described in paragraph 1, requires me to relocate outside of New York City or
materially increases the amount of my travel to such an extent that I am unable
to perform the duties of my position as stated in paragraph 1, and provided
that I have communicated and discussed such with my immediate superior and
allowed a reasonable time for a resolution of the material increase in travel
or otherwise breaches its obligations to me hereunder and such action shall not
be cured within (30) days of my giving written notice to the company thereof, I
may terminate my employment and such termination shall be treated for the
purposes of this letter agreement as a termination by the Company other than
for cause.
3. Should I be terminated by the Company for cause, I
will receive only my base salary through the date of termination. For the
purposes hereof, the term "cause" shall mean any of the following:
(i) My failure to perform any material obligations of my
employment, which are generally recognized as required of the above
defined position and which I shall have failed to cure within thirty
(30) days after receiving written notice thereof from the Company; or
(ii) I shall have violated the provisions of Paragraph 4
hereof; or
<PAGE> 3
JPS Textile Group, Inc. 3 As of May 1, 1993
And Amended on September 11, 1995
(iii) I have committed an act of fraud, embezzlement,
theft, or dishonesty against the Company; or
(iv) I shall have been convicted of (or plead nolo
contendere to) any felony or any misdemeanor involving moral turpitude
or which might, in the reasonable opinion of the Company, cause
embarrassment to the Company.
In the event that during the Four-Year Period, the Company
elects to terminate my employment for "cause", the Company shall send me
written notice thereof terminating my employment and describing the action
constituting "cause", and thereupon the Company shall have no further
obligations pursuant to this letter agreement, but I shall have the obligations
provided for in Paragraph 4 below. In the event that during the Four-Year
Period, I leave the employ of the Company of my own accord (other than pursuant
to Paragraph 2), the Company shall have no further obligations pursuant to this
letter agreement but I shall have the obligations provided for in Paragraph 4
below.
4. (a) I hereby agree that during my employment and
during the period from the date of termination of my employment through and
including the date which is one year from the date of the termination of my
employment, I shall not, without the prior written approval of the Company,
directly or indirectly through any other person, firm or corporation, (i)
engage or participate in or become employed by or render advisory or other
services to or for any person, firm or corporation, or in connection with any
business enterprise, which is, directly or indirectly, in competition with any
of the business operations or activities of the JPS Converter and Industrial
Corp., (ii) solicit, raid, entice or induce any person or organization who on
the date of termination of employment is, or within the last six (6) months of
my employment was a customer of the JPS Converter and Industrial Corp., to
become a customer of any person, firm or corporation, and I shall not approach
any such customer for such purpose or knowingly approve the taking of such
actions by other persons, or (iii) solicit, raid, entice or induce any such
person who on the date of termination of my employment is, or within the last
six (6) months of my employment by the JPS Converter and Industrial Corp. was,
an employee of the JPS Converter and Industrial Corp., to become employed by
any person, firm or corporation, and I shall not approach any such employee for
such purpose or authorize or knowingly approve the taking of such actions by
any other person; provided, however, that I shall not be bound by the
restrictions contained in clause (i) of this Paragraph 4(a) if the Company
terminates my employment prior to the third anniversary of the date hereof
other than for "cause" (as defined in Paragraph 3 hereof) and the restrictions.
For the purposes hereof, a person, firm, corporation or other business
enterprise shall be deemed to be in competition with the JPS Converter and
Industrial Corp. if more than 5% of its revenues are derived from the
manufacture or sale of
<PAGE> 4
JPS Textile Group, Inc. 4 As of May 1, 1993
And Amended on September 11, 1995
products of the kind manufactured and sold by the JPS Converter and Industrial
Corp., within any geographic area in which the JPS Converter and Industrial
Corp. operates or sells its products.
(b) Recognizing that the knowledge, information and
relationship with customers, suppliers, and agents, and the knowledge of the
JPS Converter and Industrial Corp.'s business methods, systems, plans and
policies which I have established, received or obtained during my employment or
hereafter shall establish, receive or obtain as an employee of the JPS
Converter and Industrial Corp., are valuable and unique assets of the JPS
Converter and Industrial Corp., I agree that, during my employment and at all
times thereafter, I shall not (otherwise than pursuant to my duties) disclose
or use, without the prior written approval of the Company, any such knowledge
or information pertaining to the JPS Converter and Industrial Corp., its
business, personnel or policies, to any person, firm, corporation or other
entity, for any reason or purpose whatsoever. The provisions of this Paragraph
4(b) shall not apply to information which is or shall become generally known to
the public or the trade (except by reason of the breach of my obligations
hereunder), information which is or shall become available in trade or other
publications, information known to me prior to entering the employ of the JPS
Converter and Industrial Corp., and information which I am required to disclose
by law or an order of a court of competent jurisdiction. If I am required by
law or a court order to disclose such information, I shall notify the Company
of such requirement prior to disclosing such information and provide the
Company an opportunity (if the Company so elects) to contest such law or court
order.
5. If any provision of this letter agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this letter agreement or the
application of such provision to such person or circumstances other than those
to which it is so determined to be invalid and unenforceable, shall not be
affected thereby, and each provision hereof shall be validated and shall be
enforced to the fullest extent permitted by law.
6. Any claims or disputes arising under this letter
agreement, including any action to enforce payment of any amounts payable under
Paragraph 2 or 3 or the covenants set forth in Paragraph 4, shall be resolved
by binding arbitration under the rules of the American Arbitration Association
then in effect in the State of New York, by an arbitrator acceptable to both
the Company and me. If we cannot agree on an acceptable arbitrator within ten
(10) days, the dispute shall be heard by a panel of three arbitrators, one
appointed by each of us and the third appointed by the other two arbitrators.
Each of us shall appoint our arbitrator within ten (10) days, and the two
arbitrators shall agree on a third arbitrator within an additional ten (10)
days. Any such
<PAGE> 5
JPS Textile Group, Inc. 5 As of May 1, 1993
And Amended on September 11, 1995
arbitration shall be held in New York, New York (or in such other location as
may be agreed to by the parties) and shall be completed within a further ninety
(90) days. Each party shall bear its own costs of such arbitration. The
judgment of the arbitrators may be enforced in any court having jurisdiction
over the party against whom the award is made. If I prevail in asserting any
claim the Company shall pay interest on the amount determined to be due from
the date payment of such amount should otherwise have been paid to the date of
payment, at the rate of 8% compounded annually.
7. This letter agreement (i) is in lieu of any other
provision for severance payments by the Company which are hereby waived, (ii)
contains the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements
with respect thereto, (iii) may be executed and delivered in one or more
counterparts, all of which taken together shall constitute but one of the same
original instrument, and (iv) shall be governed and construed in accordance
with the laws of the State of New York without regard to the conflicts of law
principles of such state.
Very truly yours,
By: /s/ Carl Rosenbluth
----------------------------------
Carl Rosen
President of Marketing and
Sales for the Apparel and
Home Furnishings Group
ACCEPTED AND AGREED TO:
JPS TEXTILE GROUP, INC.
By: /s/ Jerry E. Hunter
-----------------------------
Name: Jerry E. Hunter
Title: President and Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-02-1996
<PERIOD-END> JUL-27-1996
<CASH> 1,196
<SECURITIES> 0
<RECEIVABLES> 71,271
<ALLOWANCES> 0
<INVENTORY> 57,549
<CURRENT-ASSETS> 130,795
<PP&E> 245,364
<DEPRECIATION> 119,225
<TOTAL-ASSETS> 340,793
<CURRENT-LIABILITIES> 381,388
<BONDS> 5,087
31,472
250
<COMMON> 10
<OTHER-SE> (99,568)
<TOTAL-LIABILITY-AND-EQUITY> 340,793
<SALES> 333,444
<TOTAL-REVENUES> 333,444
<CGS> 294,635
<TOTAL-COSTS> 294,635
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,647
<INCOME-PRETAX> (57,835)
<INCOME-TAX> (374)
<INCOME-CONTINUING> (57,461)
<DISCONTINUED> (1,500)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,961)
<EPS-PRIMARY> (62.26)
<EPS-DILUTED> (62.26)
</TABLE>
