<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 August 2, 1997
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.
(DEBTOR-IN-POSSESSION)
(Exact name of registrant as specified in its charter)
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)
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 8, 1997.
<PAGE> 2
JPS TEXTILE GROUP, INC.
(DEBTOR-IN-POSSESSION)
INDEX
<TABLE>
<CAPTION>
Page
PART I. FINANCIAL INFORMATION Number
<S> <C> <C>
Item 1. Condensed Consolidated Balance Sheets
August 2, 1997 (Unaudited) and November 2, 1996.................. 3
Condensed Consolidated Statements of Operations
Three Months and Nine Months Ended August 2, 1997 and
July 27, 1996 (Unaudited)........................................ 4
Condensed Consolidated Statements of Cash Flows
Nine Months Ended August 2, 1997 and
July 27, 1996 (Unaudited)........................................ 5
Notes to Condensed Consolidated Financial Statements (Unaudited)..... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................ 13
PART II. OTHER INFORMATION.................................................... 20
</TABLE>
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<PAGE> 3
Item 1. Financial Statements
JPS TEXTILE GROUP, INC.
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
August 2, November 2,
1997 1996
(Unaudited)
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 1,229 $ 1,460
Accounts receivable 63,565 75,166
Inventories (Note 4) 54,091 48,374
Prepaid expenses and other 2,685 1,967
--------- ---------
Total current assets 121,570 126,967
Property, plant and equipment, net 117,188 124,004
Excess of cost over fair value of net assets acquired, net 29,782 30,506
Other assets (Note 6) 53,757 54,450
--------- ---------
Total $ 322,297 $ 335,927
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Liabilities not subject to compromise:
Current liabilities:
Accounts payable $ 20,621 $ 24,708
Accrued interest 234 9,608
Accrued salaries, benefits and withholdings 9,628 10,440
Other accrued expenses 11,916 13,987
Senior credit facility, revolving line of credit (Note 5) 84,729 85,639
Current portion of long-term debt 2,150 240,451
--------- ---------
Total current liabilities 129,278 384,833
Long-term debt 2,876 4,226
Deferred income taxes 3,665 3,665
Other long-term liabilities 19,828 19,513
--------- ---------
Total liabilities not subject to compromise 155,647 412,237
--------- ---------
Liabilities subject to compromise (Note 3) 271,082 --
--------- ---------
Total liabilities 426,729 412,237
Senior redeemable preferred stock subject to compromise (Note 7) 36,503 32,676
--------- ---------
Shareholders' deficit:
Junior preferred stock 250 250
Common stock 10 10
Additional paid-in capital 21,280 25,108
Deficit (162,475) (134,354)
--------- ---------
Total shareholders' deficit (140,935) (108,986)
--------- ---------
Total $ 322,297 $ 335,927
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 4
JPS TEXTILE GROUP, INC.
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------- --------------------------
August 2, July 27, August 2, July 27,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 95,883 $ 110,266 $ 301,188 $ 333,444
Cost of sales 80,682 95,908 258,654 294,635
----------- ----------- ----------- -----------
Gross profit 15,201 14,358 42,534 38,809
Selling, general and administrative expenses 10,256 9,888 29,863 30,601
Other expense, net 102 129 485 2,078
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) 4,843 (25,714) 12,186 (23,925)
Valuation allowance on Gulistan securities (Note 8) (2,982) (1,395) (5,070) (5,463)
Interest income 761 714 2,232 2,102
Interest expense (Note 1) (10,086) (10,082) (30,309) (29,647)
Debt restructuring fees and expenses (Note 1) (3,332) (727) (6,476) (902)
----------- ----------- ----------- -----------
Loss before income taxes, discontinued
operations and extraordinary gain (10,796) (37,204) (27,437) (57,835)
Income tax expense (benefit) 275 (582) 684 (374)
----------- ----------- ----------- -----------
Loss before discontinued operations
and extraordinary gain (11,071) (36,622) (28,121) (57,461)
Loss on sale of discontinued operations,
net of taxes -- -- -- (1,500)
----------- ----------- ----------- -----------
Net loss (11,071) (36,622) (28,121) (58,961)
Senior redeemable preferred stock in-kind
dividends and discount accretion 1,285 1,109 3,827 3,301
----------- ----------- ----------- -----------
Loss applicable to common stock $ (12,356) $ (37,731) $ (31,948) $ (62,262)
=========== =========== =========== ===========
Weighted average common shares outstanding 1,000,000 1,000,000 1,000,000 1,000,000
=========== =========== =========== ===========
Loss per common share:
Loss before discontinued operations
and extraordinary gain $ (12.36) $ (37.73) $ (31.95) $ (60.76)
Loss on sale of discontinued operations -- -- -- (1.50)
----------- ----------- ----------- -----------
Net loss $ (12.36) $ (37.73) $ (31.95) $ (62.26)
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 5
JPS TEXTILE GROUP, INC.
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------
August 2, July 27,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(28,121) $(58,961)
-------- --------
Adjustments to reconcile net 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 on sale of discontinued operations -- 1,500
Depreciation and amortization, except amounts included
in interest expense 14,470 17,444
Interest accretion and debt issuance cost amortization 7,181 7,219
Valuation allowance on Gulistan securities 5,070 5,463
Deferred income taxes (500) (500)
Other, net (1,724) 3,061
Changes in assets and liabilities:
Accounts receivable 11,601 16,915
Inventory (5,717) (8,821)
Prepaid expenses and other assets (2,939) (184)
Accounts payable (4,087) (2,139)
Accrued expenses and other liabilities 14,494 (13,262)
-------- --------
Total adjustments 37,849 56,751
-------- --------
Net cash provided by (used in) operating activities 9,728 (2,210)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment additions (6,959) (7,391)
Cash provided by discontinued operations, net -- 364
Proceeds from sales of discontinued operations, net -- 16,778
-------- --------
Net cash provided by (used in) investing activities (6,959) 9,751
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Financing costs incurred (100) (301)
Revolving credit facility repayments, net (910) (5,494)
Proceeds from issuance of long-term debt -- 29
Repayment of long-term debt (1,990) (1,931)
-------- --------
Net cash used in financing activities (3,000) (7,697)
-------- --------
Net decrease in cash (231) (156)
Cash at beginning of period 1,460 1,352
-------- --------
Cash at end of period $ 1,229 $ 1,196
======== ========
Supplemental cash flow information:
Interest paid $ 5,960 $ 28,217
Income taxes paid 147 680
Non-cash financing activity - Senior redeemable preferred
stock dividends-in-kind -- 2,319
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 6
JPS TEXTILE GROUP, INC.
(DEBTOR-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
JPS Textile Group, Inc. ("JPS" or the "Holding Company") and
subsidiaries (collectively with JPS, the "Company") have prepared,
without audit, the interim condensed consolidated financial statements
and related notes. In the opinion of management, all adjustments (which
consist of normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at August
2, 1997 and for all periods presented have been made.
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.
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
November 2, 1996. The results of operations for the interim period are
not necessarily indicative of the operating results for the full year.
As discussed in Note 2, JPS filed on August 1, 1997 its voluntary
petition for relief under chapter 11 of title 11 of the United States
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for
the Southern District of New York (Case No. 97-45133). This petition
was filed at the Holding Company level only. The Company's operating
subsidiaries are not a party to and are not debtors in the chapter 11
case and their operations are unaffected thereby. The financial
statements of the Company are prepared on a going concern basis which
contemplates continuity of operations, realization of assets and
satisfaction of liabilities in the ordinary course of business.
The Company's financial statements as of August 2, 1997 have been
prepared in accordance with Statement of Position 90-7, "Financial
Reporting By Entities in Reorganization Under the Bankruptcy Code",
issued by the American Institute of Certified Public Accountants ("SOP
90-7"). In accordance with SOP 90-7, all prepetition liabilities of JPS
that are subject to compromise under the plan of reorganization are
segregated in the Company's condensed consolidated balance sheet as
liabilities subject to compromise. These liabilities are recorded at
the amounts expected to be allowed as claims in the chapter 11 case
rather than as estimates of the amounts for which those allowed claims
may be settled as a result of the Plan of Reorganization (as defined in
Note 2). As of the effective date of the Plan of Reorganization, the
Company will adopt "fresh start" reporting as defined in SOP 90-7. In
accordance with "fresh start" reporting, the reorganization value of
the Company will be allocated to the emerging entity's specific
tangible and identified intangible assets. Any excess reorganization
value will be reported as "reorganization value in excess of amounts
allocable to identifiable assets". The Company intends to amortize such
excess, if any, over a twenty-year period. As a result of the adoption
of such "fresh start" reporting, the Company's post-emergence financial
statements ("successor") will not be comparable with its pre-emergence
financial statements ("predecessor"), including the historical
financial statements included in this quarterly report.
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<PAGE> 7
The accompanying statements of operations reflect certain restructuring
fees and expenses consisting of professional fees and expenses directly
related to the debt restructuring and reorganization. Interest expense
on the Holding Company's Old Debt Securities (as defined in Note 2) has
been reported to August 1, 1997, the petition date. Such interest
expense was not reported subsequent to that date because it will not be
paid during the bankruptcy case and will not be an allowed claim under
the Plan of Reorganization. The difference between reported interest
expense and stated contractual interest expense is approximately
$178,000 for this two-day period.
In accordance with SOP 90-7, a significant portion of the Company's
outstanding debt and related accrued interest are classified as
"liabilities subject to compromise" at August 2, 1997. Comparable items
in the prior year have not been reclassified to the presentation
required by SOP 90-7. See Note 3 for a complete description of
liabilities subject to compromise.
The accompanying condensed consolidated financial statements include
the financial position and results of operations of the operating
subsidiaries of the Company which are not parties to the chapter 11
filing. The following condensed financial statements of JPS have been
prepared using the equity method of accounting for reporting the
results of operations of all wholly-owned subsidiaries of the Company
which are not debtors in the chapter 11 case.
JPS Textile Group, Inc. (Holding Company)
Debtor-in-Possession
Condensed Balance Sheet (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
August 2, 1997
--------------
<S> <C>
ASSETS
Current assets $ 144
Property, plant and equipment, net 14
Prepaid pension costs 52
Investment in subsidiaries, net 168,919
---------
Total $ 169,129
=========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Liabilities not subject to compromise:
Current liabilities $ 2,380
Long term liabilities 99
---------
Total liabilities not subject to compromise 2,479
Liabilities subject to compromise 271,082
Redeemable preferred stock subject to compromise 36,503
Shareholders' deficit (140,935)
Total $ 169,129
=========
</TABLE>
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<PAGE> 8
JPS Textile Group, Inc. (Holding Company)
Debtor-in-Possession
Condensed Statement of Operations (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
August 2, 1997 August 2, 1997
------------------ -----------------
<S> <C> <C>
Selling, general and administrative expenses $ 715 $ 2,362
Equity in earnings of subsidiaries (976) (4,770)
Interest expense 8,000 24,053
Debt restructuring fees and expenses 3,332 6,476
-------- --------
Net loss (11,071) (28,121)
Preferred stock dividends-in-kind and discount accretion 1,285 3,827
-------- --------
Net loss applicable to common stock $(12,356) $(31,948)
======== ========
</TABLE>
2. Financial Restructuring and Chapter 11 Case
On May 16, 1997, JPS, JPS Capital Corp., a wholly-owned subsidiary of
JPS ("JPS Capital"), and an informal committee (the "Unofficial
Bondholder Committee") of institutions that owned, or represented
beneficial holders that owned, approximately 60% of the Company's
outstanding 10.85% senior subordinated discount notes, 10.25% senior
subordinated notes and 7% subordinated debentures (collectively, the
"Old Debt Securities"), reached an agreement in principle on the terms
of a restructuring to be accomplished pursuant to a joint plan of
reorganization for JPS proposed by JPS and JPS Capital (the "Plan of
Reorganization") under chapter 11 of the Bankruptcy Code. Pursuant to a
disclosure statement, dated June 25, 1997 (the "Disclosure Statement"),
on June 26, 1997, JPS and JPS Capital commenced a prepetition
solicitation of votes by the holders of Old Debt Securities and the
Series A Senior Preferred Stock (the "Old Senior Preferred Stock") to
accept or reject the Plan of Reorganization. Under the Plan of
Reorganization, the holders of Old Debt Securities and Old Senior
Preferred Stock were the only holders of impaired claims and impaired
equity interests entitled to receive a distribution, and therefore,
pursuant to section 1126 of the Bankruptcy Code, were the only holders
entitled to vote on the Plan of Reorganization. At the conclusion of
the 32-day solicitation period, the Plan of Reorganization had been
accepted by holders of more than 99% of the Old Debt Securities that
voted on the Plan of Reorganization and by holders of 100% of the Old
Senior Preferred Stock that voted on the Plan of Reorganization.
On August 1, 1997, JPS commenced its voluntary reorganization case
under chapter 11 of the Bankruptcy Code in the Bankruptcy Court, and
filed the Plan of Reorganization and the Disclosure Statement. None of
JPS's subsidiaries, including JPS Capital which is a co-proponent of
the Plan of Reorganization, has commenced a case under the Bankruptcy
Code. Pursuant to orders of the Bankruptcy Court entered on September
9, 1997, after notice and hearings thereon, the Bankruptcy Court
approved the Disclosure Statement and the solicitation of votes on the
Plan of Reorganization, and confirmed the Plan of Reorganization. JPS
anticipates that the Plan of Reorganization will become effective
before the end of September 1997 (the date of such effectiveness being
the "Effective Date").
Through the implementation of the Plan of Reorganization on and after
the Effective Date, JPS's most significant financial obligations will
be restructured. As a result of the restructuring: $240,091,318 in face
amount of outstanding Old Debt Securities will be converted to, among
other things, $14 million in cash, 99.25% of the shares of JPS's new
common stock to be issued on the Effective Date and $34 million in
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<PAGE> 9
aggregate principal amount (subject to adjustment on the maturity date)
of contingent payment notes to be issued by JPS Capital on the
Effective Date (the "Contingent Notes"); the Old Senior Preferred
Stock, the Series B Junior Preferred Stock and the old common stock
will be canceled; warrants to purchase up to 5% of the new common stock
(the "New Warrants') will be issued to holders of Old Senior Preferred
Stock; and the obligations of the Company under its working capital
facility will be satisfied and a new working capital facility will be
obtained. JPS's senior management will receive approximately 0.75% of
the new common stock in lieu of payment under the contractual retention
bonus agreements described in Note 9 to the Consolidated Financial
Statements in the Company's Annual Report on Form 10-K. As a result of
the restructuring, the Company's only significant debt obligation will
be its obligations under the new working capital facility.
3. Liabilities Subject to Compromise
Liabilities included in the accompanying condensed consolidated balance
sheet at August 2, 1997, which are subject to compromise under the
terms of the Plan of Reorganization are as follows:
<TABLE>
<CAPTION>
<S> <C>
10.85% Senior Subordinated Discount Notes $109,247
10.25% Senior Subordinated Notes 76,773
7% Subordinated Debentures 54,071
Unamortized reorganization discount (9,489)
Accrued interest 40,480
--------
Total liabilities subject to compromise $271,082
========
</TABLE>
4. Inventories (In Thousands):
<TABLE>
<CAPTION>
August 2, November 2,
1997 1996
--------- -----------
<S> <C> <C>
Raw materials and supplies $ 12,973 $ 13,155
Work-in-process 16,866 16,912
Finished goods 24,252 18,307
-------- --------
Total $ 54,091 $ 48,374
======== ========
</TABLE>
5. Long-Term Debt
As a result of the Holding Company's commencement of a chapter 11 case
on August 1, 1997, the Company's existing senior credit facility, which
was scheduled to expire on August 8, 1997, was by its terms
automatically extended to the earlier of November 1, 1997 or the
effective date of the chapter 11 reorganization. The Company has
classified amounts outstanding under its senior credit facility as a
current liability in the accompanying condensed consolidated balance
sheet.
Because of the restrictions on the use of borrowings under the existing
credit facility as described in Note 6 to the consolidated financial
statements in the Company's annual report on Form 10-K, JPS did not
make scheduled November 15, 1996 and May 15, 1997 interest payments of
approximately $1.9 million each on its subordinated debentures and did
not make scheduled December 1, 1996 and June 1, 1997 interest payments
of approximately $5.4 million each on its senior subordinated discount
notes and approximately $3.6 million each on its senior subordinated
notes. In addition, JPS failed to mandatorily redeem, on June 1, 1997,
approximately $37.8 million in aggregate principal amount of its senior
subordinated discount notes and approximately $31.2 million in
aggregate principal amount of its senior subordinated notes.
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<PAGE> 10
The indentures governing the notes and debentures provide for the
payment of interest on overdue installments of interest and principal,
payable on demand at the rate of 1% per annum in excess of the interest
rate then in effect. In the three months and nine months ended August
2, 1997, the Company accrued approximately $0.6 million and $1.1
million under these provisions, all of which remained unpaid as of
August 2, 1997. All such interest is subject to being restructured
pursuant to the Plan of Reorganization. Such amounts are included in
liabilities subject to compromise in the accompanying condensed
consolidated balance sheet.
A revolving credit facility similar to the existing senior credit
facility under the restated credit agreement is essential for the
Company's continued operations. On the Effective Date, the Company
expects to obtain a new revolving credit facility. On August 11, 1997,
the Company accepted a proposal from Citicorp Securities, Inc. for a
$135 million secured revolving credit facility with a five-year term.
Availability under the new facility would be subject to a borrowing
base comprised of eligible receivables and inventory and a portion of
fixed assets. A letter of credit subfacility in an amount of $20
million would be available as part of the new facility with undrawn
face amount of outstanding letters of credit reserved against the total
availability under the new facility.
The new credit facility is subject to completion of Citicorp's
collateral review, the approval of the terms and conditions thereof by
the Unofficial Bondholder Committee, and the occurrence of the
Effective Date of the Plan of Reorganization.
6. Contingencies
Warranty Liabilities - 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 roofing products, the Company estimates that
substantially all the defective roofing product claims will be resolved
by 2000. The liability for such defective products was approximately
$4.8 million at August 2, 1997 and $6.2 million at November 2, 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 current year 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 is charged to
operations in the period in which such determination is made.
Net Operating Loss Carryforwards - At August 2, 1997, the Company
estimates it had regular net operating loss carryforwards for tax
purposes of approximately $100.0 million. However, these losses will be
substantially reduced and limited in use as a result of the
implementation of the Company's Plan of Reorganization (discussed in
Note 2). In general, the Internal Revenue Code provides that a debtor
in a bankruptcy case, such as the Company's, must reduce its tax
attributes--such as its NOL carryforwards and current year NOLs, tax
credits, and tax basis in certain assets--by any cancellation of
indebtedness ("COD"). COD is the amount by which the indebtedness
discharged exceeds any consideration given in exchange therefor. Any
reduction in tax attributes generally occurs on a separate company
basis. The Company anticipates that it will recognize significant COD,
which will result in significant attribute reduction as a result of the
exchanges occurring under the Plan of Reorganization. Such attribute
reduction will substantially reduce the NOL carryforwards that might
otherwise be available to offset future income.
Page -10-
<PAGE> 11
In addition, any NOLs and carryforwards and certain other tax
attributes remaining after the attribute reduction outlined above will
be subject to the limitations imposed by Section 382 of the Internal
Revenue Code. Such limitations apply on certain changes in ownership,
including changes such as those occurring under the Plan of
Reorganization. The effect of these limitations is to limit the
utilization of the net operation loss carryforwards and certain
built-in losses to an amount equal to the value of the Company
immediately prior to the ownership change (subject to certain
adjustments) multiplied by the Federal long-term tax exempt rate. Even
before giving effect to the limitations occurring under the Plan of
Reorganization, 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.
Sale of Automotive Division/Contingent Notes - In connection with the
sale of its Automotive business in June 1994, the Company invested
$39.5 million of the sale proceeds in long-term securities (principally
United States Treasury Securities) designated by management to be
available to satisfy possible contingent tax liabilities. The
investments are classified as "held-to-maturity" and recorded at
amortized cost. As of August 2, 1997 and November 2, 1996, the
aggregate fair value of the United States Treasury Securities was
approximately $48.0 million and $46.2 million, respectively. As
described in Note 2, under the terms of the Plan of Reorganization, the
holders of the Holding Company's 10.25% senior subordinated notes and
10.85% senior subordinated discount notes will receive $14 million in
cash from these investments and Contingent Notes with an aggregate
principal amount of $34 million (subject to adjustment on the maturity
date), payable from these investments upon the occurrence of certain
events. The respective amounts of the cash distribution and the initial
principal amount of the Contingent Notes was determined based on the
assumptions used to determine the original amount set aside for
contingent tax liabilities related to the 1994 sale of the Company's
automotive business with adjustments for certain events arising
subsequent to the sale and such original determination.
7. Senior Preferred Stock
Dividends on the Company's Old Senior Preferred Stock are cumulative
and calculated based on an annual rate of 6% of the liquidation
preference and are paid quarterly. Under the terms of various credit
agreements, dividends must be in the form of additional shares until
1998. The Company did not declare and accordingly has not distributed
the scheduled November 15, 1996, February 15, 1997 and May 15, 1997
preferred stock dividends of 8,079 shares, 8,203 shares and 8,326
shares, respectively. Under the terms of the Plan of Reorganization
discussed in Note 2, on the Effective Date, Old Senior Preferred Stock
will be exchanged for warrants to purchase new common stock of the
reorganized Holding Company.
8. Subsequent Events
On August 12, 1997, pursuant to an agreement between JPS Converter and
Industrial Corp., a wholly-owned subsidiary of JPS, and Safety
Components Fabrics Technologies, Inc. ("Safety Components"), the
Company sold its Dunean manufacturing facility to Safety Components.
This facility was closed by the Company in October 1996 and all
production equipment and capacity was transferred to other plants. The
proceeds from the sale, after expenses and other costs, were
approximately $1.0 million.
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<PAGE> 12
On August 28, 1997, pursuant to an agreement between JPS Carpet Corp.,
a wholly-owned subsidiary of JPS, Gulistan Holdings, Inc. ("Gulistan")
and Gulistan Carpet, Inc., the Company sold its debt and equity
securities of Gulistan consisting of 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.
Proceeds from the sale were $2 million. As of August 2, 1997, the
carrying value of these securities was reduced to the net realizable
value of $2 million resulting in a writedown of the carrying value of
the Gulistan securities of approximately $3.0 million. This writedown
of the carrying value of the Gulistan securities and writedowns
recorded in prior periods during the year are reflected in the
accompanying statements of operations for the three months and nine
months ended August 2, 1997.
Pursuant to orders of the Bankruptcy Court entered on September 9, 1997
after notice and hearings thereon, the Bankruptcy Court approved the
Disclosure Statement and the solicitation of votes on the Plan of
Reorganization and confirmed the Plan of Reorganization. JPS
anticipates that the Plan of Reorganization will become effective
before the end of September 1997.
Page -12-
<PAGE> 13
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 November
2, 1996. 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 complete its financial restructuring and otherwise meet its
debt service obligations and other liquidity needs.
<TABLE>
<CAPTION>
(In Thousands)
Three Months Ended Nine Months Ended
---------------------- ----------------------
August 2, July 27, August 2, July 27,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES
Apparel Fabrics and Products $ 36,813 $ 51,227 $ 131,693 $ 167,213
Industrial Fabrics and Products 50,836 51,618 141,584 141,074
Home Fashion Textiles 8,234 7,421 27,911 25,157
--------- --------- --------- ---------
Net Sales $ 95,883 $ 110,266 $ 301,188 $ 333,444
========= ========= ========= =========
OPERATING PROFIT (LOSS)
Apparel Fabrics and Products
Before charges for plant closing and
loss on sale of certain operations $ (428) $ 576 $ 1,376 $ (707)
Charges for plant closing and loss
on sale of certain operations -- (20,421) -- (20,421)
Industrial Fabrics and Products
Before charge for writedown of certain
long-lived assets and loss on sale of
certain operations 5,899 4,730 12,393 11,123
Charge for writedown of certain
long-lived assets and loss on sale of
certain operations -- (9,634) -- (9,634)
Home Fashion Textiles 380 335 1,649 603
Indirect Corporate Expenses, net (1,008) (1,300) (3,232) (4,889)
--------- --------- --------- ---------
Operating Profit (Loss) 4,843 (25,714) 12,186 (23,925)
Valuation allowance on Gulistan securities (2,982) (1,395) (5,070) (5,463)
Interest income 761 714 2,232 2,102
Interest expense (10,086) (10,082) (30,309) (29,647)
Restructuring fees and expenses (3,332) (727) (6,476) (902)
--------- --------- --------- ---------
Loss before income taxes, discontinued
operations and extraordinary gain $ (10,796) $ (37,204) $ (27,437) $ (57,835)
========= ========= ========= =========
</TABLE>
Page -13-
<PAGE> 14
RESULTS OF OPERATIONS
Three Months Ended August 2, 1997 (the "1997 Third Quarter") Compared to the
Three Months Ended July 27, 1996 (the "1996 Third Quarter")
Consolidated net sales in the 1997 third quarter decreased 13.0% to $95.9
million from $110.3 million in the 1996 third quarter. Net sales in the Apparel
Fabrics and Products segment decreased 28.1% to $36.8 million in the 1997 third
quarter from $51.2 million in the 1996 third quarter principally as a result of
the sale of the Company's rubber products business in September 1996 and lower
unit volume especially for certain commodity-type fabrics woven from spun and
filament yarns. Overall, the apparel market was very soft for the 1997 third
quarter with both selling prices and unit volume declining from the 1996 third
quarter. The rubber products business, which produced and sold elastic apparel
products, generated sales of $3.0 million in the 1996 third quarter. Because of
a generally weak market environment, increased competition from abroad
(particularly in commodity-type fabrics) and decreasing margins, the Company
closed its Dunean facility in Greenville, South Carolina in October 1996 and
curtailed production at other facilities. The Dunean facility, which produced
unfinished woven apparel fabrics, generated net sales in the 1996 third quarter
of $4.2 million. The Company has taken a number of steps to improve
profitability in the apparel fabrics and products segment, including equipment
modernization programs designed to reduce manufacturing cost and the asset sale
and plant shutdown described above. In addition, the Company has seen
improvement in its open order position for apparel fabrics in recent weeks and
expects its operating results in this segment to improve in the future.
Net sales in the Industrial Fabrics and Products segment decreased 1.4% to $50.8
million in the 1997 third quarter from $51.6 million in the 1996 third quarter
due to a variety of factors affecting the various industrial product lines.
Sales of fiberglass fabrics increased 7.3% to $20.6 million in the 1997 third
quarter from $19.2 million in the 1996 third quarter principally due to the
increase in sales of electrical composite fabrics used in circuit boards. Demand
for these products has increased steadily for the last several years as global
requirements for electronic products has grown. Management expects this demand
to continue in the foreseeable future. Sales of roofing membrane decreased 7.1%
to $15.7 million in the 1997 third quarter from $16.9 million in the 1996 third
quarter due to a lower priced mix of products sold in the 1997 third quarter.
The volume of yards shipped in the 1997 third quarter remained constant with the
1996 third quarter. Sales of cotton industrial products increased 2.4% to $8.4
million in the 1997 third quarter from $8.2 million in the 1996 third quarter
due to an increase in average selling prices. Sales of extruded products
increased 35.8% to $7.2 million in the 1997 third quarter from $5.3 million in
the 1996 third quarter due primarily to higher demand and new product offerings
for certain urethane products used in applications such as athletic footwear and
blown film products used in the food processing industry. Sales of industrial
rubber products decreased $1.3 million due to the sale of the Company's rubber
products business in September 1996.
Net sales for the Home Fashion Textile segment increased 10.8% to $8.2 million
in the 1997 third quarter from $7.4 million in the 1996 third quarter
principally due to a stronger retail market, development of new products and
expansion of the Company's customer base.
Operating results in the 1997 third quarter improved to a profit of $4.8 million
from a loss of $25.7 million in the 1996 third quarter. The Apparel Fabrics and
Products segment operated at a loss of $0.4 million in the 1997 third quarter
compared to a loss of $19.8 million in the 1996 third quarter. Included in the
1996 third quarter are charges of $14.2 million for plant closing and $6.2
million for loss on sale of certain operations. Excluding the effects of these
charges, the operating profit decreased to a loss of $0.4 million in the 1997
third quarter from $0.6 million in the 1996 third quarter. Such decrease is
attributable to lower selling prices and unit volume and to a $0.5 million
increase to the Company's allowances for doubtful accounts.
The Industrial Fabrics and Products segment operated at a profit of $5.9 million
in the 1997 third quarter compared to a loss of $4.7 million in the 1996 third
quarter. Included in the 1996 third quarter are charges of $8.1 million for
writedown of certain long-lived assets and $1.5 million for loss on sale of
certain operations.
Page -14-
<PAGE> 15
Excluding the effects of these charges, the operating profit increased to $5.9
million in the 1997 third quarter from $4.9 million in the 1996 third quarter
principally due to improved manufacturing and operating efficiencies and a more
profitable product mix.
The Home Fashion Textile segment improved to an operating profit of $0.4 million
in the 1997 third quarter up slightly from $0.3 million in the 1996 third
quarter principally due to the increase in sales volume and improving margins
resulting from a more favorable product mix.
Indirect corporate expenses decreased to $1.0 million in the 1997 third quarter
compared to $1.3 million in the 1996 third quarter principally due to lower
professional and management fees.
As of August 2, 1997, the Company held various securities from the sale, in a
prior year, of the assets and business of JPS Carpet Corp., its wholly-owned
subsidiary, to Gulistan Holdings, Inc. The Company has not recorded interest
income on any of the Gulistan securities and, in accordance with relevant
accounting literature, has recorded a valuation allowance against its investment
in the securities. As discussed in Note 8 to the condensed consolidated
financial statements, the Company subsequently sold these securities to Gulistan
Carpet, Inc. for $2.0 million on August 28, 1997. Accordingly, the valuation
allowance was increased by approximately $3.0 million in the 1997 third quarter
to reduce the carrying value of the securities to the net realizable value of
$2.0 million as of August 2, 1997.
Interest expense in the 1997 second quarter was $10.1 million which was
consistent with the 1996 third quarter. As discussed in Note 5 to the condensed
consolidated financial statements, the Company accrued default interest expense
in the 1997 third quarter of approximately $0.6 million. As discussed in Note 1
to the condensed consolidated financial statements, the Company did not record
interest expense after August 1, 1997 (the petition date) on its old debt
securities. The difference between the reported interest and stated contractual
interest on the old debt securities was approximately $178,000 for this two-day
period.
Debt restructuring fees and expenses totaled $3.3 million in the 1997 third
quarter compared to $0.7 million in the 1996 third quarter. Such expenses
represent fees and expenses of the Company's financial advisor, the financial
advisor and legal counsel for the Unofficial Bondholder Committee, the Company's
legal counsel, and other professionals associated with the Company's financial
restructuring. The increase in such expenses in the 1997 third quarter is
attributable to the higher level of activity associated with completion of the
agreement with the Company's bondholders, solicitation of votes to approve the
Plan of Reorganization and commencement of the chapter 11 case on August 1,
1997.
Nine Months Ended August 2, 1997 (the "1997 Nine-Month Period") Compared To The
Nine Months Ended July 27, 1996 (the "1996 Nine-Month Period")
Consolidated net sales for the 1997 nine-month period decreased 9.7% to $301.2
million from $333.4 million in the 1996 nine-month period with all the decline
occurring in apparel fabrics and products. Net sales in the Apparel Fabrics and
Products segment decreased 21.2% to $131.7 million in the 1997 nine-month period
from $167.2 million in the 1996 nine-month period principally due to the sale in
September 1996 of the Company's rubber products division and a decline in unit
volume especially for certain commodity-type products. Overall, the apparel
industry has declined in the 1997 nine-month period resulting in lower selling
prices and unit volumes for the Company's products. The rubber products division
generated sales of $10.2 million in the 1996 nine-month period. The closing of
the Dunean facility in October 1996 and the curtailment of certain production at
other facilities accounted for decreased sales of approximately $17.1 million in
the 1997 nine-month period.
Page -15-
<PAGE> 16
Net sales in the Industrial Fabrics and Products segment increased 0.4% to
$141.6 million in the 1997 nine-month period from $141.1 million in the 1996
nine-month period. Sales of fiberglass fabrics increased 4.0% to $57.5 million
in the 1997 nine-month period from $55.3 million in the 1996 nine-month period
due to the strong demand for electrical composite fabrics used in circuit
boards. Sales of roofing membrane increased 3.8% to $41.4 million in the 1997
nine-month period from $39.9 million in the 1996 nine-month period due to the
increased demand for the Company's "Hi-Tuff/EP" roofing products. Sales of
cotton industrials increased 5.7% to $24.1 million in the 1997 nine-month period
from $22.8 million in the 1996 nine-month period due to an increase in average
selling prices and an expanded customer base. Sales of extruded products
increased 21.6% to $19.7 million in the 1997 nine-month period from $16.2
million in the 1996 nine-month period as a result of increased demand and new
product offering for certain urethane products used in athletic footwear and in
the food processing industry. Sales of industrial rubber products decreased $3.4
million in the 1997 nine-month period due to the sale of the Company's rubber
products business in 1996.
Net sales for the Home Fashion Textile segment increased 10.7% to $27.9 million
in the 1997 nine-month period from $25.2 million in the 1996 nine-month period
due to the stronger retail market, expanded customer base and enhanced product
offerings.
Consolidated operating results in the 1997 nine-month period improved to a
profit of $12.2 million from a loss of $23.9 million in the 1996 nine-month
period. The Apparel Fabrics and Products segment operated at a profit of $1.4
million in the 1997 nine-month period compared to a loss of $21.1 million in the
1996 nine-month period. Included in the 1996 nine-month period are charges of
approximately $14.2 million for plant closing and $6.2 million for loss on sale
of certain operations. Excluding the effects of these charges, the Apparel
Fabrics and Products segment operated at a profit of $1.4 million in the 1997
nine-month period compared to a loss of $0.7 million in the 1996 nine-month
period. This improvement is attributable to the sale of the rubber products
business which generated a $1.7 million operating loss in the 1996 nine-month
period and the closing of the Dunean facility.
Operating profit for the Industrial Fabrics and Products segment improved to
$12.4 million in the 1997 nine-month period from $1.5 million in the 1996
nine-month period. Included in the 1996 nine-month period are charges of
approximately $8.1 million for writedown of certain long-lived assets and $1.5
million for loss on sale of certain operations. Excluding the effects of these
charges, the Industrial Fabrics and Products segment operated at a profit of
$12.4 million in the 1997 nine-month period compared to $11.1 million in the
1996 nine-month period principally due to improved manufacturing and operating
efficiencies and a more favorable mix of products sold.
Operating profit for the Home Fashion Textile segment improved to $1.6 million
in the 1997 nine-month period from $0.6 million in the 1996 nine-month period
due to the increase in sales volume and improving margin from a more favorable
product mix.
Indirect corporate expenses decreased to $3.2 million in the 1997 nine-month
period from $4.9 million in the 1996 nine-month period principally due to the
$1.1 million charge to other expense in the 1996 six-month period for an early
retirement offer accepted by certain employees and lower professional and
management fees in the 1997 nine-month period.
The valuation allowance against the Gulistan securities in the nine-month period
was $5.1 million compared to $5.5 million in the 1996 nine-month period. As
discussed in Note 8 to the condensed consolidated financial statements, these
securities were subsequently sold on August 28, 1997 for $2.0 million and the
valuation allowance at August 2, 1997 was adjusted to the net realizable value
of the securities.
Page -16-
<PAGE> 17
Interest expense in the 1997 nine-month period was $30.3 million or $0.7 million
higher than the 1996 nine-month period due to the compounding effects of
accretion of debt discounts and non-cash interest and the interest on overdue
installments of interest and principal. As discussed in Note 1 to the condensed
consolidated financial statements, the Holding Company did not report interest
expense, totaling approximately $178,000, on its Old Debt Securities subsequent
to August 1, 1997, since such interest will not be paid during the bankruptcy
case and will not be an allowed claim.
Debt restructuring fees and expenses were $6.5 million in the 1997 nine-month
period compared to $0.9 million in the 1996 nine-month period due to the
increased activity of professionals associated with the Company's financial
restructuring and chapter 11 case.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity for operations and expansion are
funds generated internally and borrowings under its Revolving Credit Facility
(as defined below). At August 2, 1997, the Company had $9.7 million available
for borrowing under the Revolving Credit Facility. Borrowings under the
Revolving Credit Facility are made or repaid on a daily basis in amounts equal
to the net cash requirements or proceeds for that business day. The working
capital deficit at November 2, 1996 of $257.9 million reflects the
classification of the amount outstanding under the Revolving Credit Facility
($85.6 million) and the carrying value of notes and debentures ($237.7 million)
as current liabilities. The working capital deficit at August 2, 1997 of $7.2
million reflects the classification of the amount outstanding under the
Revolving Credit Facility as a current liability. As discussed in Notes 1 and 3
to the condensed consolidated financial statements, the carrying value of the
notes and debentures and related accrued interest as of August 2, 1997 is
classified as liabilities subject to compromise.
JPS and its operating subsidiaries (being hereinafter collectively referred to
as the "Borrowing Subsidiaries") are parties to the Fourth Amended and Restated
Credit Agreement, dated as of June 24, 1994, as amended (the "Restated Credit
Agreement"), by and among the financial institutions party thereto, Citibank,
N.A. ("Citibank"), as administrative agent and co-agent, and General Electric
Capital Corporation ("GECC"), as collateral agent and co-agent. The Restated
Credit Agreement, as amended, provides for a revolving credit loan facility and
letters of credit (the "Revolving Credit Facility") in a maximum principal
amount equal to the lesser of (a) $118 million and (b) a specified borrowing
base, which is based upon eligible receivables and inventory of the Borrowing
Subsidiaries (the "Borrowing Base"), except that (i) no Borrowing Subsidiary may
borrow an amount greater than the Borrowing Base attributable to it, (ii)
letters of credit may not exceed $15 million in the aggregate, and (iii) $20
million of the Revolving Credit Facility is available, not subject to the
Borrowing Base, to purchase property, plant and equipment or to finance or
refinance such purchases ("Capex Loans"), provided that the aggregate of all
revolving credit loans, including Capex Loans, and letters of credit may not
exceed the lesser of (A) $118 million and (B) the sum of the Borrowing Base plus
$25 million (subject to certain reductions).
Based on the downturn in the apparel fabrics market, increased foreign
competition and falling margins, the Company determined that its financial
resources would be insufficient to satisfy mandatory redemption requirements of
certain of its debt securities due on June 1, 1997. Accordingly, 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 of its debt obligations. In
addition, at the request of the Unofficial Bondholder Committee, the Company
agreed to finance the retention of financial and legal advisors to advise the
Unofficial Bondholder Committee in connection with such a financial
restructuring.
Page -17-
<PAGE> 18
The Company also had discussions with its bank lenders regarding the extension
of the term of its revolving credit facility, which had been scheduled to expire
on November 1, 1996. In 1996 and 1997, the Company obtained several amendments
to its existing credit agreement, which extended the expiration date to August
8, 1997 if the Company had not commenced a case under chapter 11 of the
Bankruptcy Code or to the earlier of November 1, 1997 or the effective date of a
reorganization under chapter 11 if a case under chapter 11 had been commenced
prior to August 8, 1997 (as described below, the Holding Company commenced a
case under chapter 11 of the Bankruptcy Code on August 1, 1997). These
amendments also restricted capital expenditures, eased certain financial
covenants, and prohibited additional borrowings for, among other things,
dividends or advances to the Company to pay interest on its notes and
debentures. Accordingly, the Holding Company did not make scheduled November 15,
1996 and May 15, 1997 interest payments of approximately $1.9 million each on
its subordinated debentures and did not make scheduled December 1, 1996 and June
1, 1997 interest payments of approximately $5.4 million each on its senior
subordinated discount notes and approximately $3.6 million each on its senior
subordinated notes. In addition, the Holding Company failed to mandatorily
redeem, on June 1, 1997, approximately $37.8 million in aggregate principal
amount of its senior subordinated discount notes and approximately $31.2 million
in aggregate principal amount of its senior subordinated notes. The failure to
make these scheduled payments constituted an event of default under the
indentures governing these debt securities.
On May 16, 1997, JPS, JPS Capital Corp., a wholly-owned subsidiary of JPS ("JPS
Capital"), and an informal committee (the "Unofficial Bondholder Committee") of
institutions that owned, or represented beneficial holders that owned,
approximately 60% of the Company's outstanding 10.85% senior subordinated
discount notes, 10.25% senior subordinated notes and 7% subordinated debentures
(collectively, the "Old Debt Securities"), reached an agreement in principle on
the terms of a restructuring to be accomplished pursuant to a joint plan of
reorganization for JPS proposed by JPS and JPS Capital (the "Plan of
Reorganization") under chapter 11 of the Bankruptcy Code. Pursuant to a
disclosure statement, dated June 25, 1997 (the "Disclosure Statement"), on June
26, 1997, JPS and JPS Capital commenced a prepetition solicitation of votes by
the holders of Old Debt Securities and the Series A Senior Preferred Stock (the
"Old Senior Preferred Stock") to accept or reject the Plan of Reorganization.
Under the Plan of Reorganization, the holders of Old Debt Securities and Old
Senior Preferred Stock were the only holders of impaired claims and impaired
equity interests entitled to receive a distribution, and therefore, pursuant to
section 1126 of the Bankruptcy Code, were the only holders entitled to vote on
the Plan of Reorganization. At the conclusion of the 32-day solicitation period,
the Plan of Reorganization had been accepted by holders of more than 99% of the
Old Debt Securities that voted on the Plan of Reorganization and by holders of
100% of the Old Senior Preferred Stock that voted on the Plan of Reorganization.
On August 1, 1997, JPS commenced its voluntary reorganization case under chapter
11 of the Bankruptcy Code in the Bankruptcy Court, and filed the Plan of
Reorganization and the Disclosure Statement. None of JPS's subsidiaries,
including JPS Capital which is a co-proponent of the Plan of Reorganization, has
commenced a case under the Bankruptcy Code. Pursuant to orders of the Bankruptcy
Court entered on September 9, 1997, after notice and hearings thereon, the
Bankruptcy Court approved the Disclosure Statement and the solicitation of votes
on the Plan of Reorganization, and confirmed the Plan of Reorganization. JPS
anticipates that the Plan of Reorganization will become effective before the end
of September 1997 (the date of such effectiveness being the "Effective Date").
Page -18-
<PAGE> 19
Through the implementation of the Plan of Reorganization on and after the
Effective Date, JPS's most significant financial obligations will be
restructured. As a result of the restructuring: $240,091,318 in face amount of
outstanding Old Debt Securities will be converted to, among other things, $14
million in cash, 99.25% of the shares of JPS's new common stock to be issued on
the Effective Date and $34 million in aggregate principal amount (subject to
adjustment on the maturity date) of contingent payment notes to be issued by JPS
Capital on the Effective Date (the "Contingent Notes"); the Old Senior Preferred
Stock, the Series B Junior Preferred Stock and the old common stock will be
canceled; warrants to purchase up to 5% of the new common stock (the "New
Warrants') will be issued to holders of Old Senior Preferred Stock; and the
obligations of the Company under its working capital facility will be satisfied
and a new working capital facility will be obtained. JPS's senior management
will receive approximately 0.75% of the new common stock in lieu of payment
under the contractual retention bonus agreements described in Note 9 to the
Consolidated Financial Statements in the Company's Annual Report on Form 10-K.
As a result of the restructuring, the Company's only significant debt obligation
will be its obligations under the new working capital facility.
Page -19-
<PAGE> 20
JPS TEXTILE GROUP, INC.
PART II - OTHER INFORMATION
Item
1. Legal Proceedings
JPS is currently a debtor-in-possession in a chapter 11 reorganization
case (No. 97-45133) pending in the Bankruptcy Court and has been
involved in routine proceedings attendant thereto. At a hearing held on
September 9, 1997, the Bankruptcy Court confirmed the Plan of
Reorganization. JPS anticipates (but can give no assurances) that the
Plan of Reorganization will become effective near the end of September
1997. In addition, the Company is involved in various legal proceedings
which are routine litigations incidental to the conduct of its
business. Management believes that none of this litigation, if
determined adversely to the Company, would have a material adverse
effect on the financial condition or results of operations of the
Company.
2. Changes in Securities
As of the effective date of the Company's chapter 11 reorganization, an
amended and restated certificate of incorporation will provide that the
total number of all classes of stock which the Company shall have
authority to issue is 25 million shares, of which 22 million will be
shares of new common stock and 3 million will be shares of preferred
stock, having a par value of $0.01 per share. All of the Company's
current outstanding shares of Class A Common Stock (490,000 shares),
Class B Common Stock (510,000 shares), Old Senior Preferred Stock
(538,176 shares) and Old Junior Preferred Stock (10,000 shares) will be
canceled on the effective date.
3. Defaults Upon Senior Securities
(a) The Company did not make scheduled November 15, 1996 and May 15,
1997 interest payments of approximately $1.9 million each on its
subordinated debentures and did not make scheduled December 1,
1996 and June 1, 1997 interest payments of approximately $5.4
million each on its senior subordinated discount notes and
approximately $3.6 million each on its senior subordinated notes.
In addition, the Company failed to mandatorily redeem, on June 1,
1997, approximately $37.8 million in aggregate principal amount of
its senior subordinated discount notes and approximately $31.2
million in aggregate principal amount of its senior subordinated
notes. The failure to make these scheduled payments constitutes an
event of default under the indentures governing these debt
securities. As a result, the holders of these debt securities are
entitled to accelerate the debt represented thereby. On May 16,
1997, the Company announced it had reached an agreement in
principle with the Unofficial Bondholder Committee.
(b) Dividends on the Company's Old Senior Preferred Stock are
cumulative and calculated based on an annual rate of 6% of the
liquidation preference and are paid quarterly. Under the terms of
various credit agreements, dividends must be in the form of
additional shares until 1998. The Company did not declare
and accordingly has not distributed the scheduled November 15,
1996, February 15, 1997 and May 15, 1997 Old Senior Preferred
Stock dividends of 8,079 shares, 8,203 shares and 8,326 shares,
respectively.
4. Submission of Matters to a Vote of Security Holders
On June 26, 1997, JPS and JPS Capital commenced a solicitation of votes
with respect to the Plan of Reorganization. On July 28, 1997, JPS and
JPS Capital completed such solicitation. See Note 2 to the condensed
consolidated financial statements for a description of the terms of the
Plan of Reorganization. The holders of JPS's Old Senior Subordinated
Discount Notes, Old Senior Subordinated Notes, Old Subordinated
Debentures and Old Senior Preferred Stock voted to accept the Plan by
the requisite majorities required by the Bankruptcy Code. Following is
a summary of the voting:
Page -20-
<PAGE> 21
4. Submission of Matters to a Vote of Security Holders (Continued)
<TABLE>
<CAPTION>
# of # of $Par $Par # of # of
Holders Holders Securities Securities Shares Shares
Voting in Voting Voting Voting Voting in Voting
Favor of Against in Favor of Against Favor of Against
the Plan the Plan the Plan the Plan the Plan the Plan
--------- -------- ----------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Old Senior 176 0 $122,081,420 0 -- --
Subordinated
Discount Notes
Old Senior 134 1 $ 82,996,256 $10,654 -- --
Subordinated
Notes
Old 28 3 $ 52,723,380 $583,717 -- --
Subordinated
Debentures
Old Senior -- -- -- -- 366,409 0
Preferred Stock
</TABLE>
5. Other Information None
6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
(10.1) Twelfth amendment to the Fourth Amended & Restated Credit
Agreement, dated as of June 27, 1997, by and among the
Company, JPS Elastomerics Corp., JPS Converter &
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) Asset Purchase Agreement dated as of August 12, 1997
between JPS Converter and Industrial Corp. a Delaware
Corporation and wholly-owned subsidiary of the Company and
Safety Components Fabrics Technologies, Inc. a Delaware
Corporation.
(10.3) Securities Purchase Agreement dated as of August 28, 1997,
by and among Gulistan Holdings, Inc., a Delaware
Corporation, Gulistan Carpet Inc., a Delaware Corporation
and JPS Carpet Corp., a Delaware Corporation and
wholly-owned subsidiary of the Company.
(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
(99) Order Confirming Amended Joint Plan of Reorganization of
JPS Textile Group, Inc. and JPS Capital Corp. Under
Chapter 11 of The Bankruptcy Code.
Page -21-
<PAGE> 22
6. Exhibits and Reports on Form 8-K: (Continued)
(b) Current Reports on Form 8-K:
(1) Report on Form 8-K dated May 16, 1997, containing disclosure
of the Company's agreement in principle with an unofficial
committee of bondholders, representing more than 60% of its
outstanding public debt, to convert 100% of its public bond
debt to equity.
(2) Report on Form 8-K dated June 26, 1997, containing disclosure
of the Company's commencement of a solicitation of votes by
the holders, as of June 20, 1997 record date, of JPS's 10.25%
Senior Subordinated Notes due June 1, 1999, 10.85% Senior
Subordinated Discount Notes due June 1, 1999, 7% Subordinated
Debentures due May 15, 2000, and Series A Senior Preferred
Stock, to accept or reject the Joint Plan of Reorganization of
JPS Textile Group and its wholly-owned subsidiary, JPS Capital
Corp.
(3) Report on Form 8-K dated August 1, 1997, containing disclosure
of the filing, on August 1, 1997, of the Joint Plan of
Reorganization of JPS Textile Group and its wholly-owned
subsidiary, JPS Capital Corp., with the United States
Bankruptcy Court for the Southern District of New York under
chapter 11, title 11, of the United States Code.
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.
(DEBTOR-IN POSSESSION)
Date: September 16, 1997 /s/ David H. Taylor
------------------- ----------------------------------------
David H. Taylor
Executive Vice President - Finance,
Secretary and Chief Financial Officer
Page -22-
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
TWELFTH AMENDMENT TO FOURTH AMENDED
AND RESTATED CREDIT AGREEMENT
This Twelfth Amendment to Fourth Amended and Restated Credit
Agreement dated as of June 27, 1997 (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- 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 Sixth Amendment to
Fourth Amended and Restated Credit Agreement dated as of May 15, 1996, the
Seventh Amendment to Fourth Amended and Restated Credit Agreement dated as of
July 22, 1996, the Eighth Amendment to Fourth Amended and Restated Credit
Agreement dated as of September 6, 1996, the Ninth Amendment to Fourth Amended
and Restated Credit Agreement dated as of February 21, 1997, the Tenth
Amendment to Fourth Amended and Restated Credit Agreement dated as of April 29,
1997 and the Eleventh Amendment to Fourth Amended and Restated Credit Agreement
dated as of May 15, 1997 (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.
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 the
definition of "Revolving Credit Termination
<PAGE> 2
Date" to extend the Revolving Credit Termination Date (in the absence of a
commencement of the Case or a termination of the Commitments pursuant to
Sections 9.02(a) or 11.13 of the Credit Agreement) from July 16, 1997 to August
8, 1997;
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 by deleting
the definition of "Revolving Credit Termination Date" in its entirety and
substituting the following definition therefor:
"Revolving Credit Termination Date" shall mean the earlier
of (i) August 8, 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.
1.02 Section 8.06 of the Credit Agreement is amended by deleting
the proviso to such section added pursuant to the Tenth Amendment to Fourth
Amended and Restated Credit Agreement dated as of April 29, 1997 and replacing
it with the following:
; and Provided, further, that Capital Expenditures made or incurred by
the Company and its Subsidiaries on a consolidated basis for the
period beginning on the first day of Fiscal Year 1997 through August
8, 1997 shall not exceed $12,000,000
SECTION 2. Conditions Precedent to the Effectiveness of this
Amendment. This Amendment shall become effective as of the date hereof on the
date (the "Twelfth Amendment Effective Date") when following conditions
precedent have been satisfied:
2.01 The Agent shall have received this Amendment (executed by
the Company, the Borrowing Subsidiaries, the Senior Lenders, the Agent and the
Collateral Agent), and 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.
-2-
<PAGE> 3
2.02 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 Twelfth Amendment Effective Date (except for (i) any
such representations and warranties which expressly speak only as of a
different date, (ii) changes permitted or contemplated by the Credit Agreement
and (iii) those representations and warranties applicable to the Company
contained in clauses (e), (k), (l) and (o) of Section 4.01 of the Credit
Agreement solely as a result of the Company's inability to make any payments
under the Subordinated Indebtedness when due).
2.03 No Event of Default or Potential Event of Default shall
have occurred and be continuing on the Twelfth Amendment Effective Date (other
than an Extension Event of Default).
2.04 The Borrowing Subsidiaries shall have paid any fees due and
payable to the Agent, the Collateral Agent and/or the Senior Lenders on or
prior to the Twelfth Amendment Effective Date.
SECTION 3. Representation 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 (other than an Extension Event
of Default) 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 (except for (i) any
such representations and warranties which expressly speak only as of a
different date, (ii) changes permitted or contemplated by The Credit Agreement
and (iii) those representations and warranties referred to in clause (iii) of
Section 2.02 hereof).
SECTION 4. Reference to and Effect on the Loan Documents.
4.01 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.
4.02 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.
-3-
<PAGE> 4
4.03 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 5. 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 6. 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 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 to be an original and all of which taken together shall
constitute one and the same original agreement.
SECTION 8. 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.
-4-
<PAGE> 5
SECTION 9. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York
SECTION 10. 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 forth above.
JPS TEXTILE GROUP, INC.
By:/s/ David H. Taylor
---------------------------------------
Title: Vice President
JPS ELASTROMERICS 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
-5-
<PAGE> 6
Senior Lenders:
CITIBANK, N.A., as Agent and as a
Senior Lender
By:/s/ Brenda J. Cotsen
---------------------------------------
Atrorney-in-Fact
GENERAL ELECTRIC CAPITAL
CORPORATION, as Collateral Agent
and as a Senior Lender
By:/s/ Rick Luck
---------------------------------------
Vice President, being duly
authorized
HELLER FINANCIAL, INC.
By:/s/Frank J. Ross
---------------------------------------
Title: Vice President
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By:/s/ Frank Imperato
---------------------------------------
Title: Vice President
NATIONSBANK OF GEORGIA, N.A.
By:/s/ Donald Sapp
---------------------------------------
Title: Vice President
-6-
<PAGE> 1
EXHIBIT 10.2
PURCHASE AND SALE AGREEMENT
I. DATE AND PARTIES
AGREEMENT, made and entered into as of this ___ day of August, 1997,
by and between JPS Converter and Industrial Corp., a Delaware corporation,
having its usual place of business at 555 North Pleasantburg Drive, Greenville,
South Carolina 29607 (hereinafter the "Seller"), and Safety Components Fabrics
Technologies, Inc., a Delaware corporation, having its usual place of business
at 30 Emory Street, Greenville, South Carolina 29605 (hereinafter the "Buyer"),
upon the terms hereinafter set forth.
II. PROPERTY
1. Seller agrees to sell and convey to Buyer, and Buyer agrees to
purchase from Seller the following (collectively, the "Property"):
(a) Those certain parcels of land located in Greenville County,
South Carolina and more particularly described in Exhibit B, C-1, and C-2
attached hereto and incorporated herein (the "Land");
(b) All rights, privileges, and easements appurtenant to the Land,
including all water rights, rights of way, roadways, roadbeds and reversions or
other appurtenances used in connection with the beneficial use of the Land;
(c) All improvements located on the Land, including without
limitation, an approximately 400,000 square foot building, and all other
buildings, improvements and structures presently located on the Land (the
"Improvements");
(d) All fixtures and the following machinery and equipment
presently located on the Land;
(1) Boilers and boiler equipment;
(2) Heating, ventilating and air conditioning
equipment and chillers (except for a certain
1000 ton chiller and supporting equipment);
(3) Lighting;
(4) Plumbing;
<PAGE> 2
(5) Electrical equipment;
(6) Fire pumps and fire extinguisher;
(7) Chemical feed systems (except for those belonging to NALCO
Water Treatment Co.)
(8) Heat exchangers and pumps;
(9) Telephones and related equipment (except for the PBX which is
located in Seller's corporate office); and
(10) Security systems.
(e) All of Seller's right, title and interest in any plans and
specifications, surveys, warranties, licenses, permits, guaranties and other
documents relating to the location, construction or use of the Land or the
Improvements to the extent same are transferable (provided Seller may retain
copies of such Documents for its files) (the "Documents"); and
(f) All of Seller's rights, title and interest in any intangible
property now or hereafter owned by Seller in connection with the Land or the
Improvements, including without limitation any contract or lease rights, escrow
deposits, utility agreements or other rights related to the ownership or use
and operation of the Property.
2. The Property does not include land and improvements constituting
the Seller's corporate offices on Stevens Street, shown on Exhibit B-1 hereto
("Seller's corporate offices"). Except as provided in Par. 1 (d) above, the
Property also does not include any manufacturing machinery and equipment,
machine shop equipment, spare parts and supplies or office equipment, furniture
or file cabinets, all of which remain the property of Seller and shall be
removed by Seller from the Improvements within sixty (60) days after the
Closing Date (as hereinafter defined) other than the 1000 ton chiller and
supporting equipment, which shall be removed within 180 days after the Closing
Date.
3. The parties hereto acknowledge and agree that, from and after the
Closing Date, the portion of the Land described on Exhibit C-1 annexed hereto
(the "Common Area") shall be used and enjoyed by both Seller and Buyer, and
their respective successors and/or assigns, provided however, Seller's use and
enjoyment thereof shall be limited to ingress and egress and parking. Seller
shall reserve such rights with respect to the Common Area in the deed delivered
to Buyer at Closing.
2
<PAGE> 3
III. TITLE AND DEED
1. The Land and Improvements are to be conveyed by a Special Warranty
Deed of the Seller running to the Buyer, in recordable form, conveying a good
and clear fee simple title to the same, free from all encumbrances, except:
a. Provisions of local building, zoning and subdivision laws;
b. Such taxes for the then current fiscal year as are not due and
payable on the date of the delivery of such deed;
c. Encroachments of fences and hedges upon any street or highway
and minor variations between record lines and such fences and
hedges;
d. Any liens for municipal betterment assessed after the date of this
Agreement;
e. usual public utilities servicing the Property, if any;
f. additional items noted as exceptions on Schedule B-II, #7-19 shown
on title commitment #CEM-6/24/97, file #4281-11(a) CEM dated June
13, 1997, issued by First American Title Insurance Company; and
g. Such state of facts as are shown by a survey of the Land prepared
by Dalton & Neves Co., Inc. Engineers dated August 11, 1997.
2. At Closing, Seller shall deliver a bill of sale to Buyer for that
portion of the Property that constitutes personal property, delivering such
personal property free and clear of all liens and encumbrances.
3. Buyer's obligations hereunder shall in all respects be conditioned
upon the delivery by its title company of an original owner's policy of title
insurance in the amount of the Purchase Price, subject only to the exceptions
set forth above or such additional exceptions as to which Buyer will accept,
without abatement of the Purchase Price.
IV. PURCHASE PRICE AND PAYMENT
The purchase price (the "Purchase Price") of this conveyance shall be
One Million Two Hundred Thousand ($ 1,200,000) Dollars. Subject to the
provisions of Section XIV below with respect to $185,000.00 to be held in
Escrow following the Closing Date, the Purchase Price amount shall be paid by
the Buyer to the Seller upon delivery of the deed either by wiring the purchase
funds to the Seller (or as Seller may otherwise direct) or by certified,
non-endorsed check payable to the Seller (or as Seller may otherwise direct).
3
<PAGE> 4
V. ADJUSTMENTS AND CLOSING COSTS
1. Water rates, sewer use charges (if any), and real property taxes
shall be apportioned as of the day of delivery of the deed. The parties
acknowledge and agree that at the time of closing the actual taxes for fiscal
1997 are not known,and that the apportionment for real property taxes is being
made on the basis of the taxes for the prior year. To facilitate the payment of
real property taxes when same become due and payable, each party has paid its
share of said taxes to Purchaser's title company, to be held in escrow until
such taxes are due and owing. As soon as the taxes are known, the apportionment
shall be recalculated, and a further adjustment, if needed, shall then be made
between the parties and the parties shall pay any additional monies required to
pay the taxes, in full, to Purchaser's title company. This provision shall
survive delivery of the deed for 365 days.
2. Buyer shall pay for title examination and the premium for Buyer's
owner's title policy. Seller shall pay for preparation of the survey,
preparation and recording of the Deed and any and all transfer taxes. Each
party shall pay its own attorney's fees and any other costs and expenses that
it may incur in connection with the transaction contemplated hereby.
VI. DATE AND PLACE OF CLOSING
The deed is to be delivered and the consideration paid at 10:00 a.m.
on or about Thursday, August 14, 1997 (the "Closing Date"), at the offices of
Seller's counsel, Weil Gotshal & Manges LLP, 767 Fifth Avenue, New York, New
York.
VII. ADDITIONAL DOCUMENTS
The Seller and the Buyer each agree to execute at or prior to the
closing such documents as may be reasonably required to effectuate the herein
described transaction, provided that such documents do not in any way adversely
affect, or otherwise enlarge the liability of such parties.
VIII. WARRANTIES
The Buyer acknowledges that they have not been influenced to enter
into this Agreement, nor have they relied upon any warranties or
representations not set forth or incorporated herein. The Property sold
hereunder is to be conveyed (i) in its current "as is" condition and state of
repair, subject to reasonable use, erosion and
4
<PAGE> 5
natural deterioration between the date hereof and date of closing and (ii)
without representation or warranty as to any matters, including, without
limitation, matters relating to the environmental condition of the Property.
Buyer has fully inspected the Property and is entering this Agreement based
solely upon inspection and investigation, and not upon any information, data,
statements, written or oral, as to the physical condition, state of repair,
use, cost of operation, or other matter related to the Property given or made
by the Seller, or its representatives.
IX. PRIOR AGREEMENTS
Each party hereto agrees that this Agreement supersedes and terminates
any and all prior understandings, offer forms, oral representations and
agreements of any kind between the parties relative to the purchase and sale
described herein, and it is mutually agreed and understood that the terms
hereof constitute the entire agreement between the parties.
X. APPLICABLE LAW AND PRACTICES
This Agreement shall be governed by and construed solely in accordance
with the laws of South Carolina.
XI. NO BROKER
Seller and Buyer each represent and warrant to the other that it has
not dealt with any broker in connection with this sale and each party shall
indemnify and defend the other against any costs, claims and expenses arising
out of a breach of their respective parts of their representations contained in
this paragraph. The provisions of this paragraph shall survive the closing or
the earlier termination of this contract.
XII. ACCEPTANCE OF DEED
The acceptance by Buyer of the delivery of the deed at the closing
shall be and be deemed to be full performance and discharge of every agreement
and obligation (either express or implied) on the part of Seller to be
performed pursuant to this contract, except those, if any, which are herein
specifically stated to survive the closing.
5
<PAGE> 6
XIII. TRANSITION SERVICES
1. Following the Closing, Buyer shall cause the following services
(the "Transition Services") to be provided to Seller's corporate offices shown
on Exhibit B-1 on the following basis:
(a) Electrical power;
(b) Steam;
(c) Fire protection system;
(d) Water; and
(e) Security services.
With respect to the electric power, Seller shall reimburse Buyer or
its designee one hundred percent (100%) of the costs of the same charged by
Duke Power Company, as determined by the separate meter for Seller's corporate
offices. With respect to water, Seller shall pay to Buyer or its designee
Seller's pro rata share of all operating, fixed and capital costs incurred by
Buyer or its affiliates in connection with providing the same. All payments for
electric power and water shall be made on such dates as Buyer shall hereafter
reasonably specify in written invoices delivered to Seller. Seller agrees that,
as soon as reasonably practicable after the Closing, it shall undertake to
separate the electric power and water and arrange for separate billing of those
services directly by the utility service provider.
With respect to steam service and fire protection, these shall be
provided to Seller without charge. With respect to security services, Seller
shall pay to Buyer or its designee Seller's pro rata share of costs incurred by
Buyer or its affiliates in connection with providing the same. All payments for
security services shall be made monthly pursuant to written invoices delivered
to Seller.
Either party shall have the right to terminate the Transition Services
at any time on 180 days' prior written notice to the other, except that Buyer
cannot terminate the fire protection system so long as they provide fire
protection to themselves.
6
<PAGE> 7
The parties recognize and agree that Buyer will use reasonable efforts
to provide the Transition Services as a convenience to Seller and that Buyer
makes no warranty or representation, express or implied in connection with the
same. The parties further recognize and agree that the facilities existing as
of the Closing Date on the Property will be utilized in providing the
Transition Services and that Buyer has neither any knowledge of, nor any
responsibility for determining the suitability of, said facilities for such
purposes. Buyer shall not be liable for any indirect, incidental, special or
consequential damages of any kind or nature. Buyer's liability for any direct
damages shall arise only out of acts or omissions of Buyer constituting gross
negligence or wilful misconduct and in no event shall any such liability exceed
the total fees payable by Seller to Buyer in connection with such Transition
Services.
2. From and after the Closing Date, Seller shall be under no
obligation whatsoever to provide any services to Buyer or to the Property that
are currently being, or have in the past been, provided by Seller under the
Dunean Reciprocal Easement Agreement dated as of June 28, 1994 (the "REA").
Upon completion of the Closing, the REA and Seller's obligations thereunder
shall be deemed terminated and neither party thereunder shall have any further
responsibility thereunder to provide services to the other, provided, however,
such termination of services under the REA shall not affect any obligation
hereunder to provide the Transition Services set forth hereinabove. This
paragraph shall survive delivery of the deed.
XIV. ENVIRONMENTAL ESCROW
At Closing, the sum of $185,000 from and out of the Purchase Price
(the "Escrowed Funds") shall be deposited into an Escrow Account maintained by
Shereff, Friedman, Hoffman & Goodman, attorneys for Buyer ("Escrowee"). The
Escrowed Funds shall be held and disbursed in accordance with the terms and
provisions of an Escrow Agreement which the parties hereto agree to execute at
or prior to Closing. Such Escrow Agreement shall be substantially in the form
annexed hereto as Exhibit Y and made a part hereof by reference. Seller shall
have no obligations or liabilities to Buyer that survive the delivery of the
deed with respect to the environmental condition of the Property. This
paragraph shall survive delivery of the deed.
7
<PAGE> 8
XV. BANKRUPTCY
Seller hereby agrees to indemnify Buyer and hold Buyer harmless from
and against any and all claims, costs, losses, damages or expenses which are
reasonably and actually incurred by Buyer (including, without limitation, the
reasonable fees and expenses incurred by its attorneys) as a result of any
action by the debtor, a creditor or any party in interest in the pending
chapter 11 case of JPS Textile Group, Inc. ("JPS"), case no. 97-45133 (Bankr.
S.D.N.Y.) or in any bankruptcy case commenced or pending with respect to any
subsidiary or affiliate of JPS (each of the foregoing, a "Case") to challenge,
avoid or unwind the sale of the Property to Buyer, or any aspect of the sale of
the Property, including, without limitation, any challenge to any of the terms
of the sale of the Property or the adequacy of the consideration paid by Buyer.
The provisions of this paragraph shall survive delivery of the deed but shall
terminate upon the later of (a) the closing of JPS's Case and (b) the closing
of the last open Case of any subsidiaries or affiliates of JPS pending on the
date the JPS Case is closed.
8
<PAGE> 9
XVI. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the said parties hereto set their hands and seals
as of the day and year above written.
SIGNED and sealed in the presence of:
SAFETY COMPONENTS FABRICS
TECHNOLOGIES, INC., BUYER
By: /s/ Jeffery J. Kaplan
-------------------------------
Its: Executive Vice President
---------------------------
JPS CONVERTER and INDUSTRIAL
CORP., SELLER
By: /s/ Jerry E. Hunter
-------------------------------
Its: Vice President
--------------------------
9
<PAGE> 10
Exhibit B, C-1 and C-2
(the "Land")
<PAGE> 11
LEGAL DESCRIPTION
EXHIBIT B
BEGINNING AT AN IRON PIN (P.O.B. NO. 3) ON THE WESTERN RIGHT OF WAY OF EMERY
AVENUE AND BEING THE JOINT CORNER OF EXHIBIT C-1 (COMMON ELEMENT OF JPS
CONVERTER AND INDUSTRIAL CORP. AND JPS AUTOMOTIVE PRODUCTS CORP.), THENCE
RUNNING WITH THE WESTERN RIGHT OF WAY EMERY AVENUE THE FOLLOWING COURSES AND
DISTANCES: N26-14E 54.24 FEET TO AN IRON PIN, THENCE N69-39E 310.87 FEET TO AN
IRON PIN, THENCE N67-10E 79.75 FEET TO AN IRON PIN, THENCE N62-50E 78.72 FEET
TO AN IRON PIN, THENCE N58-26E 71.07 FEET TO AN IRON PIN AT THE WESTERN
INTERSECTION OF EMERY AVENUE AND ALLEN STREET, THENCE LEAVING SAID
INTERSECTION AND RUNNING WITH THE WESTERN RIGHT OF WAY OF ALLEN STREET N26-12E
579.46 FEET TO AN IRON PIN AT THE WESTERN INTERSECTION OF ALLEN STREET AND
HENRY STREET, THENCE LEAVING SAID INTERSECTION OF RUNNING WITH THE WESTERN
RIGHT OF WAY OF HENRY STREET N24-57W 163.0 FEET TO AN IRON PIN AT THE
SOUTHWEST INTERSECTION OF HENRY STREET AND MADDEN AVENUE, THENCE LEAVING SAID
INTERSECTION AND RUNNING WITH THE SOUTHERN RIGHT OF WAY OF MADDEN AVENUE
N88-45W 529.68 FEET TO AN IRON PIN AT A BEND IN MADDEN AVENUE, THENCE RUNNING
WITH THE WESTERN RIGHT OF WAY OF MADDEN AVENUE N12-10W 92.87 FEET TO AN IRON
PIN ON THE NORTHERN SIDE OF AN ASPHALT DRIVE, THENCE LEAVING SAID WESTERN
RIGHT OF WAY OF MADDEN AVENUE AND RUNNING ALONG LINES NORTH OF ASPHALT DRIVE
THE FOLLOWING COURSES AND DISTANCES: N81-36W 189.04 FEET TO AN IRON PIN,
THENCE N87-49W 48.23 FEET TO AN IRON PIN CORNER OF EXHIBIT A (JPS AUTOMOTIVE
PRODUCTS CORP.) THENCE RUNNING WITH THE LINES OF SAID EXHIBIT A THE FOLLOWING
COURSES AND DISTANCES: S10-24-26W 114.49 FEET TO AN IRON PIN, THENCE
S74-59-26E 24.10 FEET TO AN IRON PIN, THENCE S01-23-32W 70.00 FEET TO AN IRON
PIN, THENCE S39-05-18E 40.03 FEET TO AN IRON PIN CORNER OF EXHIBIT C-2 (COMMON
ELEMENT OF JPS AUTOMOTIVE PRODUCTS CORP. AND JPS CONVERTER AND INDUSTRIAL
CORP.) THENCE RUNNING ALONG LINE OF SAID EXHIBIT C-2 THE FOLLOWING COURSES AND
DISTANCES: S88-33-00E 143.54 FEET TO AN IRON PIN, THENCE S01-27-00W 98.50 FEET
IN AND THROUGH A BUILDING TO FACE OF WALL OF BUILDING, THENCE CONTINUING ALONG
FACE OF WALL OF BUILDING THE FOLLOWING COURSES AND DISTANCES: N88-33-00W 16.05
FEET TO A POINT, THENCE S01-27-00W 16.60 FEET TO A POINT, THENCE S88-33-00E
13.20 FEET TO A POINT, THENCE S01-27-OOW 63.70 FEET TO A POINT, THENCE RUNNING
THROUGH THE BUILDING THE FOLLOWING COURSES AND DISTANCES: N88-33-00W 40.59
FEET TO A POINT, THENCE S01-27-00W 58.33 FEET TO OUTSIDE FACE OF BUILDING
WALL, THENCE RUNNING WITH THE FACE OF BUILDING THE FOLLOWING COURSES AND
DISTANCES: N88-33-00W 10.80 FEET TO A POINT, THENCE S01-27-00W 7.00 FEET TO A
POINT, THENCE N88-33-00W 38.90 FEET TO A POINT, THENCE N01-27-00E 7.00 FEET TO
A POINT, N88-33-OOW 11.05 FEET TO A POINT, THENCE LEAVING SAID FACE OF
BUILDING WALL AND RUNNING ALONG JOINT PROPERTY LINE OF JPS AUTOMOTIVE PRODUCTS
CORP. AND JPS CONVERTER AND INDUSTRIAL CORP. THE FOLLOWING COURSES AND
DISTANCES: S01-27-00E 155.71 FEET TO A NAIL, THENCE N81-33-05W 7.74 FEET TO AN
IRON PIN, THENCE S01-08-01W 50.19 FEET TO AN IRON PIN, THENCE S88-42-27E 7.21
FEET TO AN IRON PIN, THENCE S01-23-50W 243.72 FEET TO AN IRON PIN, THENCE
N88-27-28W 12.06 FEET TO NAIL, THENCE S01-24-10W 152.55 FEET TO AN IRON PIN ON
LINE OF EXHIBIT C-1 (COMMON ELEMENT FOR JPS AUTOMOTIVE PRODUCTS CORP. AND JPS
CONVERTER AND INDUSTRIAL CORP.), THENCE RUNNING ALONG LINE OF EXHIBIT C-1
S87-57-52E 45.39 FEET TO THE POINT OF BEGINNING CONTAINING 12.593 ACRES
ACCORDING TO A PLAT ENTITLED JPS CONVERTER AND INDUSTRIAL CORP. DATED APRIL
14, 1994 PREPARED BY DALTON & NEVES CO. INC. ENGINEERS, GREENVILLE, .S.C.
<PAGE> 12
LEGAL DESCRIPTION
EXHIBIT C-1
BEGINNING AT AN IRON PIN (P.O.B. NO. 3) ON THE WESTERN RIGHT OF WAY OF EMERY
AVENUE AND BEING THE JOINT CORNER OF JPS CONVERTER AND INDUSTRIAL CORP.
PROPERTY, THENCE LEAVING SAID WESTERN RIGHT OF WAY OF EMERY AVENUE AND RUNNING
ALONG LINE OF JPS CONVERTER AND INDUSTRIAL CORP. PROPERTY AND EXTENDING TO FACE
OF BUILDING N87-57-52W 45.39 FEET TO AN IRON PIN, THENCE S88-28-25E 7.99 FEET
TO FACE OF BUILDING, THENCE RUNNING ALONG LINES OF JPS AUTOMOTIVE PRODUCTS
CORP. AND ALONG FACE OF BUILDING THE FOLLOWING COURSES AND DISTANCES:
S01-29-20W 5.49 FEET TO A POINT, THENCE N88-30-40W 4.80 FEET TO A POINT, THENCE
S01-29-20W 19.00 FEET TO A POINT, THENCE N88-18-14W 11.00 FEET TO A POINT,
THENCE N01-32-13E 3.57 FEET TO A POINT, THENCE N88-16-14W 38.77 FEET TO A
POINT, THENCE LEAVING SAID FACE OF BUILDING AND RUNNING ALONG LINE OF EXHIBIT A
(JPS AUTOMOTIVE PRODUCTS CORP.) AND EXHIBIT B-1 (JPS CONVERTER AND INDUSTRIAL
CORP.) SO1-32-13W 22.37 FEET TO AN IRON PIN, THENCE RUNNING WITH LINE OF
EXHIBIT B-1 (JPS CONVERTER AND INDUSTRIAL CORP.) S63-40-14E 71.44 FEET TO AN
IRON PIN ON THE WESTERN RIGHT OF WAY OF EMERY AVENUE N28-14E 80.00 FEET TO THE
POINT OF BEGINNING CONTAINING 0.0903 ACRES AS SHOWN ON PLAT ENTITLED JPS
AUTOMOTIVE PRODUCTS CORP. AND JPS CONVERTER AND INDUSTRIAL CORP. DATED APRIL
14, 1994 PREPARED BY DALTON & NEVES CO. INC., ENGINEERS, GREENVILLE, S.C.
<PAGE> 13
LEGAL DESCRIPTION
EXHIBIT C-2
BEGINNING AT AN IRON PIN (P.O.B. NO. 4) AND BEING THE JOINT CORNER OF JPS
AUTOMOTIVE PRODUCTS CORP., JPS CONVERTER AND INDUSTRIAL CORP. AND EXHIBIT C-2,
THENCE RUNNING WITH THE LINE OF JPS CONVERTER AND INDUSTRIAL CORP. PROPERTY
THE FOLLOWING COURSES AND DISTANCES: S88-33-00E 143.54 FEET TO AN IRON PIN,
THENCE S01-27-00W 98.5 FEET IN AND THROUGH A BUILDING TO FACE OF WALL OF
BUILDING, THENCE CONTINUING ALONG FACE OF WALL OF BUILDING THE FOLLOWING COURSES
AND DISTANCES: N88-33-00W 16.05 FEET TO A POINT, THENCE S01-27-00W 16.60 FEET
TO A POINT, THENCE S88-33-00E 13.20 FEET TO A POINT, THENCE S01-27-00W 63.70
FEET TO A POINT, THENCE RUNNING THROUGH THE BUILDING THE FOLLOWING COURSES AND
DISTANCES: N88-33-00W 40.59 FEET TO A POINT, THENCE S01-27-00W 58.33 FEET TO
OUTSIDE FACE OF BUILDING WALL, THENCE RUNNING WITH THE FACE OF BUILDING THE
FOLLOWING COURSES AND DISTANCES: N88-33-00W 10.80 FEET TO A POINT, THENCE
S01-27-00W 7.00 FEET TO A POINT, THENCE N88-33-00W 38.90 FEET TO A POINT,
THENCE N01-27-00E 7.00 FEET TO A POINT, THENCE RUNNING WITH FACE AND THROUGH
BUILDING N88-33-00W 50.40 FEET TO A POINT, THENCE RUNNING THROUGH BUILDING AND
EXITING TO FACE OF WALL OF BUILDING AND LEAVING FACE OF WALL N01-27-00E 237.13
FEET TO THE POINT OF BEGINNING CONTAINING 0.719 ACRES ACCORDING TO A PLAT
ENTITLED JPS AUTOMOTIVE PRODUCTS CORP. AND JPS CONVERTER AND INDUSTRIAL CORP.
DATED APRIL 24, 1994 PREPARED BY DALTON & NEVES CO. INC., ENGINEERS,
GREENVILLE, S.C.
<PAGE> 14
EXHIBIT B - 1
(Seller's corporate offices)
<PAGE> 15
LEGAL DESCRIPTION
JPS CONVERTER AND INDUSTRIAL CORP.
DUNEAN PLANT, GREENVILLE COUNTY, S.C.
EXHIBIT B-1
BEGINNING AT IRON PIN (P.O.B. NO. 1) AT THE NORTHWEST RIGHT OF WAY OF STEVENS
STREET AND EMERY AVENUE, THENCE RUNNING WITH THE WESTERN RIGHT OF WAY EMERY
AVENUE THE FOLLOWING COURSES AND DISTANCES: N69-20E 19.38 FEET TO AN IRON PIN,
THENCE N26-29E 65.14 FEET TO AN IRON PIN, THENCE N13-38W 23.51 FEET TO AN IRON
PIN CORNER OF EXHIBIT C-1 (COMMON ELEMENT JOINTLY FOR JPS AUTOMOTIVE PRODUCTS
CORP. AND JPS CONVERTER AND INDUSTRIAL CORP.) THENCE LEAVING SAID WESTERN RIGHT
OF WAY OF EMERY AVENUE AND RUNNING ALONG LINES OF SAID EXHIBIT C-1 THE
FOLLOWING COURSES AND DISTANCES: N63-40-14W 71.44 FEET TO AN IRON PIN, THENCE
N01-32-13E 11.81 FEET TO AN IRON PIN, THENCE LEAVING SAID EXHIBIT C-1 AND
RUNNING WITH THE LINES OF JPS AUTOMOTIVE PRODUCTS CORP. EXHIBIT A PROPERTY THE
FOLLOWING COURSES AND DISTANCES: N88-16-24W 77.18 FEET TO AN IRON PIN, THENCE
N02-21-10E 9.01 FEET TO AN IRON PIN, THENCE N88-34-43W 115.14 FEET TO AN IRON
PIN, THENCE N01-23-44E 74.56 FEET TO AN IRON PIN, THENCE N64-40-40W 88.56 FEET
TO AN IRON PIN, THENCE N01-32-30E 57.51 FEET TO AN IRON PIN, THENCE N88-34-41W
87.21 FEET TO AN IRON PIN, THENCE SO2-15-50W 26.86 FEET TO AN IRON PIN, THENCE
S73-46-25E 26.92 FEET TO A NAIL & CAP, THENCE S25-55-53W 99.62 FEET TO A NAIL
IN SIDEWALK ON THE NORTHERN RIGHT OF WAY OF STEVENS STREET, THENCE RUNNING
WITH THE NORTHERN RIGHT OF WAY OF STEVENS STREET S63-58E 441.47 FEET TO THE
POINT OF BEGINNING CONTAINING 0.9995 ACRES ACCORDING TO A PLAT ENTITLED JPS
CONVERTER AND INDUSTRIAL CORP. DATED APRIL 14, 1994 PREPARED BY DALTON & NEVES
CO. INC., ENGINEERS, GREENVILLE, S.C.
<PAGE> 16
SKADDEN, ARPS, SLATE, MEAGHER & FIOMIIP AND AFFILIATES
EXHIBIT 1
M E M O R A N D U M
July 30, 1997
TO: Jerry Hunter
FROM: Don J. Frost, Jr.
Re: JPS Converter and Industrial Corporation:
Environmental Matters of Concern
-----------------------------------------
As you requested, I have prepared the following list of the
environmental matters of concern that we have identified through our phase II
environmental investigations at the Site. We have also included the estimated
potential costs for addressing such matters.
ENVIRONMENTAL MATTERS OF CONCERN
1. Correct existing deficiencies in asbestos compliance regarding
inadequate labelling and areas of damaged asbestos.
Cost: $5,000
*2. Removal and disposal of non-insulation asbestos containing
material located at the cooling towers and the carpentry shop.
Cost: $23,000
*3. The drains in the boiler house discharge into the stormwater
system. The boilers operate on fuel oil, and there have been
historic spills associated with such operation. This situation
should be corrected by re-routing the boiler house drains so
that they discharge into the sanitary sewer system or installing
an oil/water separator sufficient to collect significant spills.
Cost: $20,000
* The cost of remediation of these items (2 and 3) shall be borne
exclusively by the Buyer.
<PAGE> 17
4. Significant, localized petroleum contamination is present in
the loading dock and parking lot areas. The contaminated
soils should be removed.
Cost: $10,000
5. Several contaminants were found at levels equalling or
exceeding drinking water standards in the ground water
samples collected. This condition may require the
installation of several groundwater monitoring wells and
periodic monitoring.
Cost: $25,000
6. Petroleum related contamination is present in the area
north of the boiler house. The contaminated soils should
be removed.
Cost: $100,000
7. Petroleum related contamination is present in the area near
the eastern edge of the former coal pile. The contaminated
soils should be removed.
Cost: $10,000
8. Petroleum/VOC related contamination is present in the area
northwest of the fire pond. The contaminated soils should
be removed.
Cost: $35,000
TOTAL ESTIMATED COSTS FOR ADDRESSING ENVIRONMENTAL
MATTERS OF CONCERN: $228,000
cc: Richard Goldberg
Richard Cohen
2
<PAGE> 18
Exhibit Y
(Escrow Agreement)
<PAGE> 19
ESCROW AGREEMENT
AGREEMENT made as of this ___ day of August 1997, by and between
Shereff, Friedman, Hoffman & Goodman, LLP ("Escrowee"), JPS Converter and
Industrial Corp., a Delaware corporation (hereinafter referred to as "Seller"),
and Safety Components Fabrics Technologies, Inc., a Delaware corporation
(hereinafter referred to as "Purchaser").
W I T N E S S E T H
WHEREAS, Seller and Purchaser will simultaneously with the execution
and delivery of this Agreement consummate the transaction described in that
certain contract of sale dated August , 1997 (the "Contract") for the sale by
Seller to Purchaser of the premises known as The Dunean Plant, located in
Dunean, Greenville County, South Carolina (the "Premises"), as more
particularly described in the Contract; and
WHEREAS, Seller and Purchaser have agreed with each other to place a
portion of the purchase price payable to Seller pursuant to the Contract, in
the sum of $185,000.00 (the "Escrow Sum"), in escrow with Escrowee upon the
closing of the sale of the Premises to Purchaser, to be used by Purchaser to
pay for certain environmental remediation at the Premises; and
WHEREAS, Escrowee is willing to hold the Escrow Sum in escrow on the
terms and conditions hereinafter set forth.
NOW THEREFORE, the parties hereto agree as follows:
1. (a) Purchaser hereby delivers to Escrowee its check of even date
herewith, subject to collection, for the Escrow Sum in the amount of
$185,000.00, made payable to the order of "Shereff, Friedman, Hoffman &
Goodman, LLP, as escrow agent." Receipt of such check by Escrowee, subject to
collection, is hereby acknowledged. Following collection, Escrowee shall use
reasonable efforts to invest the Escrow Sum in a Citi-Escrow Account with
Citibank, N.A., having an address at: 153 East 53rd Street, New York, New York
10043, at such a yield as shall be available. Escrowee shall bear no liability
for any loss occasioned by investment of the Escrow Sum or by any failure to
achieve the maximum possible yield from the Escrow Sum so long as the Escrow
Sum has been invested in a Citi-Escrow Account or otherwise invested in a
prudent manner.
(b) The Escrow Sum, plus any interest earned from the investment
thereof in accordance with the terms of this Agreement, less any and all
transaction or account fees, costs, expenses or charges, including, without
limitation, brokerage and custodial fees, attributable to such investment (such
sum hereinafter called the "Invested Escrow Sum"), shall be delivered by
Escrowee to Seller, to Purchaser or, if pursuant to paragraph 3 hereof, to a
substitute
<PAGE> 20
impartial party or a court having appropriate jurisdiction, in accordance with
the terms of this Agreement. Delivery of the Invested Escrow Sum in accordance
with the terms of this Agreement shall be made by uncertified, unendorsed check
of Escrowee or by cashier's check, at Escrowee's option. Escrowee agrees, upon
request, to provide the parties with its computation of the Invested Escrow
Sum. Without limiting paragraphs 5 and 6 hereof, it shall be conclusively
presumed that: (i) any and all investments made by Escrowee in Citi-Escrow
Accounts of Citibank, N.A. are authorized and permitted under the terms of this
Agreement; (ii) the parties hereto have agreed to and concurred in all such
investments; (iii) by so investing the Escrow Sum, Escrowee has complied with
its investment obligations pursuant to this Agreement; and (iv) Escrowee's
computation of the Invested Escrow Sum is correct in the absence of manifest
error so long as the Escrow Sum was invested in a Citi-Escrow Account or
otherwise invested in a prudent manner.
2. (a) After the sale contemplated in the Contract shall be
consummated, Purchaser shall cause the remediation of the environmental
concerns at the Premises which are listed in that certain Memorandum dated July
30, 1997 from Don J. Frost, Jr. to Jerry Hunter, a copy of which is attached
hereto as Exhibit 1 and made a part hereof (the "Environmental Memo").
Purchaser agrees to provide Seller with a copy of each bid proposal it receives
for the remediation of the environmental concerns at the Premises as are listed
in the Environmental Memo (other than items 2 and 3). The company or companies
selected by Purchaser to perform such remediation work shall be reasonably
acceptable to Seller. Seller shall be periodically advised of the progress of
such work and an authorized representative of Seller shall be entitled to visit
the Premises to monitor such progress and ascertain that the work is being
performed substantially in compliance with the bid(s) for the work. Upon the
completion of each item of concern listed in the Environmental Memo, except for
items 2 and 3 (or earlier if required by Purchaser's environmental
contractor(s)) Purchaser shall notify Escrowee in writing of the completion of
such item (or the proposed commencement of such work), and include with such
written notification a request for reimbursement of the completed work (or for
a retainer or progress payment) in a sum equal to the actual cost to Purchaser
of the completion of such work (or of a retainer or progress payment). Upon
receipt of such request, Escrowee is hereby authorized to deliver to Purchaser
a portion of the Invested Escrow Sum equal to the amount requested.
Alternatively, Purchaser may request that Escrowee pay such portion of the
Invested Escrow Sum directly to Purchaser's environmental contractor(s).
Escrowee shall send to Seller a copy of each such payment, along with a copy of
each of Purchaser's requests for payment.
(b) Upon receipt by Escrowee of written notification from Purchaser
that all of the environmental remediation listed in the Environmental Memo has
been completed, excluding items 2 and 3 therein set forth, and that all
payments required to be made in connection with such work have been made,
Escrowee shall promptly deliver the remaining balance of the Invested Escrow
Sum, if any, to the Seller.
(c) In the event that the cost of Purchaser's environmental
remediation in accordance with the Environmental Memo exceeds the Invested
Escrow Sum, Purchaser shall
2
<PAGE> 21
pay all such costs, and Seller shall have no liability whatsoever to pay any
portion of such excess costs.
(d) Notwithstanding the provisions of paragraph 2(a) above, if
Escrowee shall receive written instructions signed by both Purchaser and
Seller, specifying the party to whom any portion of the Invested Escrow Sum is
to be delivered (the "Designated Party"), Escrowee shall deliver the same in
accordance with such written instructions, such delivery to be made against a
signed receipt therefor from the Designated Party.
(e) Upon the delivery of the final balance of the Invested Escrow
Sum in accordance with this paragraph 2, Escrowee shall thereupon be relieved
of and discharged and released from any and all liability hereunder and with
respect to the Invested Escrow Sum.
(f) Other than as expressly set forth herein with respect to
allocating $185,000 of the purchase price payable for the Premises to certain
environmental remediation, Seller has and shall have no obligations or
liabilities to Purchaser that survive delivery of the deed for the Premises
with respect to the environmental condition of the Premises.
3. In the event that: (i) any dispute shall arise as to any matter
arising under this Agreement; or (ii) there shall be any uncertainty as to the
meaning or applicability of any of the provisions hereof, Escrowee's duties,
rights or responsibilities hereunder or any written instructions received by
Escrowee pursuant hereto, Escrowee may, at its option at any time thereafter,
deposit the Invested Escrow Sum or remaining portion thereof then being held by
it in escrow into any court having appropriate jurisdiction, or take such
affirmative steps as it may elect in order to substitute an impartial party to
hold any portion or all of the Invested Escrow Sum, and upon making such
deposit, shall thereupon be relieved of and discharged and released from any
and all liability hereunder and with respect to the Invested Escrow Sum or any
portion thereof so deposited.
4. Escrowee shall be entitled to rely upon the authenticity of any
signature and the genuineness and/or validity of any writing received by
Escrowee pursuant to or otherwise relating to this Agreement.
5. Seller and Purchaser recognize and acknowledge that Escrowee is
serving without compensation and solely as an accommodation to the parties
hereto, and they each agree that Escrowee shall not be liable to either of the
parties for any error of judgment, mistake or act or omission hereunder or any
matter or thing arising out of its conduct hereunder, except for Escrowee's
willful misfeasance or gross negligence.
6. Seller and Purchaser jointly and severally agree to indemnify and
hold harmless Escrowee from and against any and all costs, claims, damages or
expenses (including, without limitation, reasonable attorneys' fees and
disbursements, whether paid to retained attorneys or representing the fair
value of legal services rendered to itself) howsoever occasioned
3
<PAGE> 22
that may be incurred by Escrowee acting under this Agreement (including,
without limitation, any costs incurred by Escrowee pursuant to paragraph 3
hereof) or to which Escrowee may be put in connection with Escrowee acting
under this Agreement, except for costs, claims or damages arising out of
Escrowee's willful misfeasance or gross negligence. Escrowee may charge against
the Invested Escrow Sum any amounts owed it under the foregoing indemnity or
may withhold payment of the Invested Escrow Sum as security for any
unliquidated claim, or both.
7. All notices, certificates and other communications permitted
hereunder shall be in writing and shall be deemed duly served and given five
(5) days after mailed by registered or certified mail, return receipt
requested, postage prepaid, at a regularly maintained branch of the United
States Postal Service and addressed as follows:
If to Purchaser:
Safety Components Fabrics Technologies, Inc.
30 Emory Street
Greenville, South Carolina 29605
With a copy to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Richard N. Cohen, Esq.
If to Seller:
JPS Converter and Industrial Corp.
555 North Pleasantburg Drive
Greenville, South Carolina 29607
With a copy to:
Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, New York 10193
Attn: Alan A. Lascher, Esq.
If to Escrowee: Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Richard N. Cohen, Esq.
Each party may, by notice as aforesaid, designate such other person or persons
and/or such other address or addresses for the receipt of notices. Copies of
all notices, certificates or other
4
<PAGE> 23
communications relating to this Agreement in respect to which Escrowee is not
the addressee or sender shall be sent to Escrowee in the manner hereinabove set
forth.
8. Escrowee is acting, and may continue to act, as counsel to
Purchaser in connection with the subject transaction, whether or not the
Invested Escrow Sum is being held by Escrowee or has been delivered to a
substitute impartial party or a court of competent jurisdiction.
9. Seller and Purchaser agree that Escrowee is to act as the parties'
nominee investing the Escrow Sum pursuant to this Agreement and in collecting
the interest earned on the Invested Escrow Sum on behalf of the parties. Seller
and Purchaser each agree to complete the forms necessary to comply with the
backup withholding and interest reporting regulations under the Internal
Revenue Code of 1986, as amended, or any successor thereto, including, without
limitation, Form W-9, a separate copy of which is to be completed by Seller and
Purchaser and delivered to Escrowee contemporaneously with the execution and
delivery of this Agreement.
10. This Agreement shall be binding on and inure to the benefit of all
parties hereto and their respective successors and permitted assigns and may
not be modified or amended orally, but only in writing signed by all parties
hereto.
11. The undersigned hereby submit to personal jurisdiction in the
State of New York for all matters, if any, which shall arise with respect to
this Agreement, and waive any and all rights under the law of any other state
or country to object to jurisdiction within the State of New York or to
institute a claim of forum non conveniens with respect to any court in the
State of New York for the purposes of litigation with respect to this
Agreement.
12. If any term, condition or provision of this Agreement, or the
application thereof to any circumstance or party hereto, shall ever be held to
be invalid or unenforceable, then in each such event the remainder of this
Agreement or the application of such term, condition or provision to any other
circumstance or party hereto (other than those as to which it shall be invalid
or unenforceable) shall not be thereby affected, and each term, condition and
provision hereof shall remain valid and enforceable to the fullest extent
permitted by law.
5
<PAGE> 24
13. This Agreement may be executed in any number of counterparts, each
counterpart for all purposes being deemed an original, and all such
counterparts shall together constitute only one and the same agreement.
SELLER: PURCHASER:
JPS Converter and Industrial Corp. Safety Components Fabrics
Technologies, Inc.
By: By:
---------------------------------- -----------------------------------
Name: Name:
Title: Title:
------------------------------------ --------------------------------------
Federal Taxpayer Identification Number Federal Taxpayer Identification Number
ESCROWEE:
SHEREFF, FRIEDMAN, HOFFMAN
& GOODMAN, LLP
By:
----------------------------------
Partner
6
<PAGE> 1
EXHIBIT 10.3
================================================================================
SECURITIES PURCHASE AGREEMENT
Dated as of August 28, 1997
By and Among
GULISTAN HOLDINGS INC.,
GULISTAN CARPET INC.,
and
JPS CARPET CORP.
================================================================================
<PAGE> 2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August
28, 1997, by and among GULISTAN HOLDINGS INC., a Delaware corporation
("Holdings"), GULISTAN CARPET INC., a Delaware corporation (the "Purchaser"),
and JPS CARPET CORP., a Delaware corporation (the "Seller").
W I T N E S S E T H :
WHEREAS, the Seller is the holder of 5,000 shares of Series A
preferred stock, par value $0.01 per share, of Holdings evidenced by
certificate no. 101 (the "Stock"), which constitute all of the issued
outstanding Series A preferred shares of the capital stock of Holdings;
WHEREAS, the Seller is the holder of a promissory note issued by
Holdings in the original principal amount of $10,000,000 and made payable to
the order of Seller, dated November 16, 1995 (the "Note");
WHEREAS, the Seller is the holder of a warrant to purchase common
stock of Holdings dated November 16, 1995 (the "Warrant", collectively with the
Stock and the Note, the "Securities");
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, the Securities pursuant to this
Agreement; and
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
PURCHASE OF SECURITIES
ss.1.1 Purchase of Securities Subject to the terms and conditions set
forth in this Agreement, the Purchaser agrees to purchase from the Seller and
the Seller agrees to sell, assign, transfer and deliver to the Purchaser the
Securities. The certificate representing the Stock shall be accompanied by a
stock power duly executed in blank by the Seller transferring the same to the
Purchaser with all necessary transfer tax and other revenue stamps, acquired at
the Seller's expense, affixed and canceled. The Seller agrees to cure any
deficiencies with respect to the endorsement of the certificate representing
the Stock owned by the Seller or with respect to the stock power accompanying
such certificate. The original Note, which shall have been duly endorsed by
Seller as payable to the order of Purchaser, without recourse to the Seller,
and the original Warrant shall be delivered to the Purchaser accompanied by a
warrant power duly executed by the Seller. The delivery by the Seller of the
Securities and the acceptance of such Securities by the Purchaser pursuant to
this Agreement shall constitute satisfaction or a waiver of all conditions with
respect to
<PAGE> 3
the sale, transfer, repayment, redemption or other disposition of such
Securities set forth in the Warrant, the Note, the Stockholders Agreement dated
as of November 16, 1995 by and among the Seller, Holdings and the Stockholders
listed therein, as amended (the "Stockholders Agreement"), or the Certificate
of Designations, Rights and Preferences of Series A Preferred Stock of Holdings
filed with the Secretary of State of the State of Delaware on November 14,
1995.
ss.1.2 Price. In full consideration for the sale by the Seller of the
Securities to the Purchaser, the Purchaser shall deliver at the Closing an
aggregate cash amount equal to $2,000,000 (the "Closing Payment") by wire
transfer in immediately available funds in accordance with wire instructions
provided by the Seller at least two days prior to the Closing.
ss.1.3 Closing. The consummation of the purchase and sale referred to
in Section 1.1 (the "Closing") shall take place at 10:00 A.M. on August 28,
1997.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
ss.2. Representations and Warranties of the Seller. The Seller
represents and warrants to the Purchaser as follows:
ss.2.1 Ownership of Securities. Except as set forth on Schedule 2.1,
the Seller is the lawful owner of the Stock, the Note and the Warrant, free and
clear of all liens, charges, encumbrances, restrictions and claims of every
kind and character ("Encumbrances"). The delivery to the Purchaser of the
Securities pursuant to the provisions of this Agreement will transfer to the
Purchaser good title thereto, free and clear of all Encumbrances.
ss.2.2 Authorization and Validity of Agreement. The Seller has the
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. This Agreement has been duly executed
and delivered by the Seller and, assuming the due execution of this Agreement
by the Purchaser, is a valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization and similar laws affecting the enforcement of creditors' rights
generally and to general equitable principles.
ss.2.3 Restrictive Documents. Except as set forth on Schedule 2.1, the
Seller is not subject to any mortgage, lien, lease, agreement, instrument,
order, law, rule, regulation, judgment or decree, or any other restriction of
any kind or character which would prevent consummation by the Seller of the
transactions contemplated by this Agreement.
ss.2.4 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Seller is, or will be, entitled to any commission or
broker's or finder's fees from the Purchaser, or
2
<PAGE> 4
from any Person controlling, controlled by or under common control with the
Purchaser, in connection with any of the transactions contemplated by this
Agreement.
ss.2.5 Third Party Consents: Government Approvals. Except as disclosed
on Schedule 2.1 attached hereto, no consents, approvals or waivers are required
of Seller in connection with the consummation of the transactions contemplated
by this Agreement.
ss.2.6 Bankruptcy Matters. None of the pendency of the bankruptcy case
of JPS Textile Group, Inc. ("JPST") under Chapter 11 of the United States
Bankruptcy Code (the "Chapter 11 Case") on the date hereof, the terms of the
plan of reorganization filed in the Chapter 11 Case on August 1, 1997, or any
order entered as of the date hereof by the court administering the Chapter 11
Case precludes consummation on the date hereof of the purchase and sale of the
Securities as provided in this Agreement or impairs the validity of said
transaction. As of the date hereof, Seller is not a debtor in the Chapter 11
Case and there is no motion pending in the Chapter 11 Case as of the date
hereof seeking to substantively consolidate Seller with JPST.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
ss.3. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Seller as follows:
ss.3.1 Authorization and Validity of Agreement. The Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and perform its obligations hereunder. This Agreement has been duly executed
and delivered by the Purchaser and, assuming the due execution of this
Agreement by the Seller, is a valid and binding obligation of the Purchaser
enforceable against it in accordance with its terms, except to the extent that
its enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
ss.3.2 Restrictive Documents. The Purchaser is not subject to any
mortgage, lien, lease, agreement, instrument, order, law, rule, regulation,
judgment or decree, or any other restriction of any kind or character which
would prevent consummation by it of the transactions contemplated by this
Agreement.
ss.3.3 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Purchaser is, or will be, entitled to any commission or
broker's or finder's fees from the Seller, or from any person controlling,
controlled by or under common control with the Seller, in connection with any
of the transactions contemplated by this Agreement.
ss.3.4 Third Party Consents: Government Approvals. No consents,
approvals or waivers are required of Purchaser in connection with the
consummation of the transactions contemplated by
3
<PAGE> 5
this Agreement other than any such consents, approvals or waivers required in
connection with the financing referred to in Section 4.1(b) that have been
obtained on or prior to the date hereof.
ARTICLE IV
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
ss.4.1 Conditions to the Purchaser's Obligations. The obligation of
the Purchaser to purchase the Securities contemplated by this Agreement are
conditioned upon satisfaction, at or prior to the Closing, of the following
conditions:
(a) Termination of Security Interests. All security interests,
liens, mortgages, claims or other Encumbrances of any kind in, to or
secured by any of the Securities shall be released.
(b) Financing. The Purchaser shall have received financial
accommodations reasonably acceptable to it enabling it to consummate the
transactions contemplated by this Agreement.
(c) Third Party Consents; Governmental Approvals. All consents,
approvals or waivers, if any, disclosed on Schedule 2.1 attached hereto or
required of Seller in connection with the consummation of the transactions
contemplated by this Agreement shall have been received.
ARTICLE V
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
ss.5.1 Survival of Representations. The representations and warranties
contained in this Agreement shall survive shall survive for eighteen months
from the date hereof.
ss.5.2 Indemnification.
(a) The Seller hereby agrees to indemnify and hold the Purchaser and
Holdings and their respective officers, directors, affiliates and agents, and
any successors thereto, harmless from damages, losses, costs or expenses
(including, without limitation, reasonable attorneys' and consultants' fees and
expenses) ("Damages") reasonably and actually incurred or suffered as a result
of or arising out of (i) the failure of any representation or warranty made by
the Seller in this Agreement to be true and correct as of the date hereof or
(ii) the breach of any covenant or agreement made or to be performed by the
Seller pursuant to this Agreement.
(b) The Purchaser hereby agrees to indemnify and hold the Seller
harmless from Damages incurred or suffered as a result of or arising out of (i)
the failure of any representation or warranty made by the Purchaser in this
Agreement to be true and correct as of the date hereof, or (ii) the breach of
any covenant or agreement made or to be performed by the Purchaser or Holdings
pursuant to this Agreement.
4
<PAGE> 6
(c) Absent fraud, the foregoing indemnification provisions shall be
the exclusive remedy for any breach of the covenants, obligations,
representations or warranties set forth in this Agreement.
ss.5.3 Indemnification Procedure.
(a) Any party seeking indemnification (the "Indemnified Party") from
any other party (the "Indemnifying Party") with respect to any claim, demand,
action, proceeding or other matter pursuant to this Agreement (the "Claim")
shall promptly notify the Indemnifying Party of the existence of the Claim,
setting forth in reasonable detail the facts and circumstances pertaining
thereto and the basis for the Indemnified Party's right to indemnification.
(b) If any third party shall notify any Indemnified Party with
respect to any matter which may give rise to a Claim for indemnification
against the Indemnifying Party under this Agreement, then the Indemnified
Party shall promptly notify the Indemnifying Party thereof; provided, however,
that no delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any liability or
obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is materially prejudiced by such failure to give notice. In the
event that any Indemnifying Party notifies the Indemnified Party within 30 days
after the Indemnified Party has given notice of the matter that the
Indemnifying Party would be required to indemnify the Indemnified Party in full
against any such Claim and is assuming the defense thereof:
(i) the Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice reasonably satisfactory
to the Indemnified Party;
(ii) the Indemnified Party may retain separate co-counsel at
its sole cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel (a)
to the extent the Indemnified Party concludes reasonably based upon
advice of counsel that a conflict of interest exists between the
Indemnified Party and Indemnifying Party or (b) the named parties to
any such action (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party and such Indemnified
Party shall have been advised by counsel that there may be one or more
legal defenses available to the Indemnified Party which are not
available to the Indemnifying Party, or available to the Indemnifying
Party, but the assertion of which would be adverse to the interest of
the Indemnified Party);
(iii) the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the matter
without the written consent of the Indemnifying Party (not to be
withheld unreasonably); and
5
<PAGE> 7
(iv) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement, without the written consent
of the Indemnified Party (not to be withheld unreasonably).
(c) If no Indemnifying Party notifies the Indemnified Party within
30 days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then the Indemnified Party
may defend against, or enter into any settlement with respect to, the matter in
any manner it reasonably may deem appropriate, without prejudice to any of its
rights hereunder.
(d) The Indemnified Party shall be entitled to reimbursement of
reasonable expenses included in Damages with respect to any Claim (including,
without limitation, the cost of defense, preparation and investigation relating
to such Claim) as such expenses are incurred by the Indemnified Party.
ARTICLE VI
INTENTIONALLY LEFT BLANK
ARTICLE VII
MISCELLANEOUS
ss.7.1 Expenses. The parties hereto shall pay their own expenses
relating to the transactions contemplated by this Agreement, including, without
limitation, the fees and expenses of their respective counsel and financial
advisers.
ss.7.2 Governing Law. THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS EXECUTED AND TO BE PERFORMED
SOLELY WITHIN SUCH STATE.
ss.7.3 Publicity. Except as otherwise required by law or pursuant to
the Plan, none of the parties hereto shall issue, prior to the Closing, any
press release or make any other public statement, in each case relating to,
connected with or arising out of this Agreement or the matters contained
herein, without obtaining the prior approval of the Seller, on the one hand,
and the Purchaser, on the other hand, to the contents and the manner of
presentation and publication thereof.
ss.7.4 Notices. Any notice or other communication required or
permitted under this Agreement shall be sufficiently given if delivered in
person or sent by telecopy or by registered or certified mail, postage prepaid,
addressed as follows: if to the Purchaser or Holdings, to Gulistan Carpet Inc.,
P.O. Box A, Highway 5, Aberdeen, North Carolina 28315 (Facsimile Number
910-944-
6
<PAGE> 8
6359)Attention: Executive Vice President and Chief Financial Officer, with a
copy to its counsel, Womble Carlyle Sandridge & Rice, PLLC, Suite 300, 25095
Meridian Parkway, Durham, North Carolina, 27713 (Facsimile Number (919)
484-2361), Attention: Deborah H. Hartzog, Esq.; and if to the Seller, to JPS
Textile Group, Inc. 555 N. Pleasantburg Drive, Suite 202, Greenville, South
Carolina 29607 (Facsimile Number (803) 271-9939), Attention: David H. Taylor,
with a copy to its counsel, Weil Gotshal & Manges, LLP, 767 Fifth Avenue, New
York, New York, 10153 (Facsimile Number (212) 310-8007), Attention: Simeon
Gold, Esq., or such other address or number as shall be furnished in writing by
any such party, and such notice or communication shall be deemed to have been
given as of the date so delivered, sent by facsimile or mailed.
ss.7.5 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto, other than by operation
of law and except as otherwise provided in Section 7.10. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
ss.7.6 Counterparts. This Agreement may be executed in two or more
counterparts, all of which taken together shall constitute one instrument.
ss.7.7 Entire Agreement. This Agreement, including the other documents
referred to herein and therein which form a part hereof and thereof, contain
the entire understanding of the parties hereto with respect to the subject
matter contained herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
ss.7.8 Amendments. This Agreement may not be changed orally, but only
by an agreement in writing signed by the Purchaser and the Seller.
ss.7.9 Severability. In case any provision in this Agreement, other
than Section 1.2, shall be held invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions hereof will
not in any way be affected or impaired thereby.
ss.7.10 Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto, provided, however that
nothing herein shall prohibit the collateral assignment by Purchaser and
Holdings of their respective rights under this Agreement to Congress Financial
Corporation, a California corporation.
[This space intentionally left blank]
7
<PAGE> 9
IN WITNESS WHEREOF, each of the parties hereto has caused this
SECURITIES PURCHASE AGREEMENT to be executed on its behalf by its respective
officer thereunto duly authorized, all as of the day and year first above
written.
GULISTAN HOLDINGS INC.
By: /s/ Charles E. Farrell
-----------------------------
Name: Charles E. Farrell
Title: Executive Vice President
GULISTAN CARPET INC.
By: /s/ Charles E. Farrell
-----------------------------
Name: Charles E. Farrell
Title: Executive Vice President
JPS CARPET CORP.
By: /s/ David H. Taylor
-----------------------------
Name: David H. Taylor
Title: Vice President
<PAGE> 10
SCHEDULE 2.1
Agreements creating liens, charges, encumbrances, etc. on the Securities:
(1) Fourth Amended and Restated Credit Agreement, dated as of June
24, 1994 (the "Credit Agreement"), among JPS Textile Group, Inc.,
JPS Converter and Industrial Corp., JPS Elastomerics Corp., the
financial institutions listed on the signature pages, Citibank, N.A.
and General Electric Capital Corporation.
The pledge of Securities created in connection with the Credit Agreement has
been released, as evidenced by the following document:
(2) Letter, dated August 25, 1997 from Citibank, N.A., General Electric
Capital Corporation, Heller Financial, Inc., The Bank of New York
Commercial Corporation and Nationsbank of Georgia, N.A., to JPS
Textile Group, Inc. and the Borrowing Subsidiaries defined therein.
<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> AUG-02-1997
<CASH> 1,229
<SECURITIES> 0
<RECEIVABLES> 65,574
<ALLOWANCES> 2,009
<INVENTORY> 54,091
<CURRENT-ASSETS> 121,570
<PP&E> 247,014
<DEPRECIATION> 129,826
<TOTAL-ASSETS> 322,297
<CURRENT-LIABILITIES> 129,278
<BONDS> 2,876
36,503
250
<COMMON> 10
<OTHER-SE> (141,195)
<TOTAL-LIABILITY-AND-EQUITY> 322,297
<SALES> 301,188
<TOTAL-REVENUES> 301,188
<CGS> 258,654
<TOTAL-COSTS> 258,654
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,309
<INCOME-PRETAX> (27,437)
<INCOME-TAX> 684
<INCOME-CONTINUING> (28,121)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,121)
<EPS-PRIMARY> (31.95)
<EPS-DILUTED> (31.95)
</TABLE>
<PAGE> 1
EXHIBIT 99
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- -------------------------------------x
In re :
Chapter 11 Case No.
97-45133 (CB)
JPS TEXTILE GROUP, INC., :
Debtor. :
Tax ID No.
555 N. Pleasantburg Drive, Suite 202 : 57-0868166
Greenville, SC 29607
:
- -------------------------------------x
ORDER CONFIRMING AMENDED JOINT PLAN OF REORGANIZATION
OF JPS TEXTILE GROUP, INC. AND JPS CAPITAL CORP.
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
The Joint Plan of Reorganization of JPS Textile Group, Inc. and JPS
Capital Corp. Under Chapter 11 of the Bankruptcy Code, dated August 1, 1997
(the "August Plan") having been jointly proposed by JPS Textile Group, Inc.
("JPS"), debtor and debtor in possession, and its wholly owned nondebtor
subsidiary, JPS Capital Corp. ("JPS Capital," and together with JPS, the
"Proponents"), and filed with this Court on August 1, 1997; and the Technical
and Conforming Amendment to Joint Plan of Reorganization of JPS Textile Group,
Inc. and JPS Capital Corp. Under Chapter 11 of the Bankruptcy Code, dated
September 4, 1997 (the "Technical Amendment," and together with the August
Plan,
<PAGE> 2
the "Plan" (1), amending the August Plan, having been jointly proposed by the
Proponents and filed with this Court on September 4, 1997; and the
Certification by the Altman Group, Inc., Voting Agent, Acceptances of Joint
Plan of Reorganization Pursuant to Fed. R. Bankr. P. 3018(b) and Local
Bankruptcy Rule 3018-1(a) and two supplements thereto having been filed with
the Court on August 1, 1997, August 19, 1997, and September 4, 1997,
respectively; and the Court having entered an order on August 1, 1997 (the
"Scheduling Order") fixing September 9, 1997, at 2:00 p.m. as the date and time
of a hearing (the "Disclosure Statement Hearing") pursuant to sections 1125 and
1126(b) of title 11, United States Code (the "Bankruptcy Code") and Fed. R.
Bankr. P. 3017 and 3018 to consider approval of the Disclosure Statement
Pursuant to Sections 1125 and 1126(b) of the Bankruptcy Code, dated June 25,
1997 (the "Disclosure Statement"), the solicitation of votes by the Proponents
pursuant thereto, and the forms of Ballots and Master Ballots used in
connection therewith; and the Court having found the Disclosure Statement and
the August Plan, or the form of the August Plan, to have been transmitted to
all or substantially all creditors and equity interest holders of each class,
and having approved the Disclosure Statement,
- --------
(1.) Capitalized terms used herein and not otherwise defined herein have the
meanings ascribed to them in the Plan.
2
<PAGE> 3
the voting and tabulation procedures, and the forms of Ballots and Master
Ballots at the conclusion of the Disclosure Statement Hearing, all as more
fully set forth in the order of this Court, dated September 9, 1997; and the
Court having scheduled in the Scheduling Order the confirmation hearing
pursuant to sections 1128 and 1129 of the Bankruptcy Code (the "Confirmation
Hearing") to immediately follow the conclusion of the Disclosure Statement
Hearing; and the affidavits of service of the notice of the Confirmation
Hearing having been filed with the Court on August 8, 1997; and the Certificate
of Service of Non-Voting Documents having been filed with the Court on August
19, 1997; and the affidavit of service of notice of the Technical Amendment
having been filed with the Court on September 4, 1997; and the Affidavit of
Kenneth L. Altman of Publication Notices having been filed with the Court on
August 8, 1997; and the Affidavit of David H. Taylor in Support of Confirmation
of the Amended Joint Plan of Reorganization of JPS Textile Group, Inc. and JPS
Capital Corp. Under Chapter 11 of the Bankruptcy Code, sworn to on September 4,
1997 having been filed with the Court on September 4, 1997; and the
Confirmation Hearing having been held on September 9, 1997; and the Court
having considered the August Plan, the Technical Amendment, the Plan, and all
objections thereto, if any; and the appearances of all
3
<PAGE> 4
interested parties having been noted in the record of the Confirmation Hearing;
and based on the August Plan, the Technical Amendment, the Plan, and the papers
filed in support thereof, and upon the record of the Confirmation Hearing and
all the evidence adduced and arguments of counsel made at the Confirmation
Hearing; and after due deliberation and sufficient cause appearing therefor,
the Court hereby FINDS, DETERMINES, AND CONCLUDES that:
Findings and Conclusions
A. The findings and conclusions set forth herein constitute the
Court's findings of fact and conclusions of law pursuant to Fed. R. Bankr. P.
7052, made applicable to this proceeding pursuant to Fed. R. Bankr. P. 9014.
B. To the extent any of the following findings of fact constitute
conclusions of law, they are adopted as such. To the extent any of the
following conclusions of law constitute findings of fact, they are adopted as
such.
Jurisdiction and Venue
C. This Court has jurisdiction over JPS's chapter 11 case and to
confirm the Plan pursuant to 28 U.S.C. ss. 1334.
D. Confirmation of the Plan is a core proceeding pursuant to 28 U.S.C.
ss. 157(b) and this Court has jurisdiction to enter a final order with respect
thereto.
4
<PAGE> 5
E. JPS is a proper debtor under section 109 of the Bankruptcy Code.
Notice
F. All parties required to receive notice of the Technical Amendment
and the Confirmation Hearing have received due, proper, timely, and adequate
notice in accordance with the Scheduling Order, the Bankruptcy Code, the
Federal Rules of Bankruptcy Procedure, and the Local Bankruptcy Rules, and have
had an opportunity to appear and be heard with respect thereto. No other or
further notice need be given.
Voting
G. Votes to accept and reject the August Plan have been tabulated in
good faith and in a manner consistent with the Bankruptcy Code and the Federal
Rules of Bankruptcy Procedure. The Amendment
H. The August Plan, as modified by the Technical Amendment,
constitutes the Plan.
I. The Proponents have complied with section 1125 of the Bankruptcy
Code with respect to the Technical Amendment and the Plan.
J. The Technical Amendment does not change the treatment of the claim
of any creditor or the interest of any equity interest holder.
5
<PAGE> 6
K. Any holder of a claim or interest that has accepted or rejected the
August Plan is hereby deemed to have accepted or rejected the Plan.
The Plan Satisfies the Requirements
of the Bankruptcy Code
L. The Plan complies with all applicable provisions of the Bankruptcy
Code.
M. The Plan designates and classifies claims and equity interests. The
classification of claims and equity interests under the Plan complies with
section 1122 of the Bankruptcy Code. Each claim and equity interest placed in a
particular class pursuant to the Plan is substantially similar to the other
claims or equity interests, as the case may be, in such class.
N. The Plan specifies each class of claims or equity interests that is
not impaired under the Plan.
O. The Plan specifies the treatment of each class of claims or equity
interests that is impaired under the Plan.
P. The Plan provides the same treatment for each claim or equity
interest of a particular class, unless the holder of a particular claim or
equity interest agrees to a less favorable treatment of such particular claim
or equity interest.
6
<PAGE> 7
Q. The Plan provides adequate means for its implementation.
R. The Plan provides for the inclusion in the charter of Reorganized
JPS of a provision prohibiting the issuance of nonvoting equity securities, and
providing, as to the class of securities possessing voting power, an
appropriate distribution of such power among such class.
S. The Plan contains only provisions that are consistent with the
interests of creditors and equity interest holders and with public policy with
respect to the manner of selection of officers and directors under the Plan and
any successors to such officers and directors.
T. The Proponents have complied with all applicable provisions of the
Bankruptcy Code.
U. The Plan has been proposed in good faith and not by any means
forbidden by law. The Proponents and their officers and directors, the
Unofficial Committee and its members, the agents and lenders under the Credit
Agreement, and the representatives and advisors of each of the foregoing have
acted in good faith in the negotiation and formulation of the Plan.
V. The Plan is the product of arm's length negotiations among the
Proponents, the Unofficial Committee, the agents and lenders under the Credit
Agreement, and other parties in interest in JPS's chapter 11 case.
7
<PAGE> 8
W. Any payment made or to be made by JPS, JPS Capital, or by a person
issuing securities or acquiring property under the Plan, for services or for
costs and expenses in or in connection with JPS's chapter 11 case, or in
connection with the Plan and incident to JPS's chapter 11 case, has been
approved by, or is subject to the approval of, the Court as reasonable.
X. The identity, qualifications, and affiliations of the persons
proposed to serve as directors (the "New JPS Directors") or officers (the "New
JPS Officers") of Reorganized JPS as of the Effective Date have been fully
disclosed, and the appointment to, or continuance in, such offices is
consistent with the interests of creditors and equity interest holders and with
public policy.
Y. The persons proposed to serve as directors (the "New Capital
Directors") or officers (the "New Capital Officers") of JPS Capital as of the
Effective Date shall be selected by the New JPS Directors from among the New
JPS Directors and New JPS Officers. The identity, qualifications, and
affiliations of the persons proposed to serve as the New Capital Directors or
New Capital Officers as of the Effective Date have been fully disclosed, and
the appointment to, or continuance in, such offices is
8
<PAGE> 9
consistent with the interests of creditors and equity interest holders and with
public policy.
Z. The identity of any insider proposed to be employed or retained by
Reorganized JPS as of the Effective Date and the nature of such insider's
compensation have been fully disclosed.
AA. No rate changes are provided for in the Plan that would require
governmental regulatory commission approval.
BB. With respect to each impaired class of claims or equity interests,
each holder of a claim or equity interest has accepted the Plan or will receive
or retain under the Plan on account of such claim or equity interest property
of a value, as of the Effective Date, that is not less than the amount that
such holder would so receive or retain if JPS were liquidated under chapter 7
of the Bankruptcy Code on the Effective Date.
CC. Each impaired class of claims has accepted, or is deemed to have
accepted, the Plan.
DD. Class 8 has accepted the Plan.
EE. Except to the extent that the holder of a particular claim has
agreed to a different treatment of such claim, the Plan provides that with
respect to a claim of a kind specified in section 507(a)(1) of the Bankruptcy
Code, on the later of the Effective Date or the date on which such
9
<PAGE> 10
claim is allowed, the holder of such claim will receive on account of such
claim cash equal to the allowed amount of such claim, except that such claims
representing obligations incurred by JPS in the ordinary course of business,
consistent with past practice, or assumed by JPS shall be paid in full or
performed by JPS or Reorganized JPS in the ordinary course of business,
consistent with past practice.
FF. Except to the extent that the holder of a particular claim has
agreed to a different treatment of such claim, the Plan provides that with
respect to a claim of a kind specified in section 507(a)(3), 507(a)(4), and
507(a)(6) of the Bankruptcy Code, on the later of the Effective Date or the
date on which such claim is allowed, the holder of such claim will receive on
account of such claim cash equal to the allowed amount of such claim.
GG. Except to the extent that the holder of a particular claim has
agreed to a different treatment of such claim, the Plan provides that with
respect to a claim of a kind specified in section 507(a)(8) of the Bankruptcy
Code, (a) the holder of each such claim that is due and payable on or before
the Effective Date will receive on account of such claim cash equal to the
allowed amount of such claim, and (b) each such claim that is not due and
payable on or before the Effective Date will survive confirmation of the Plan,
remain unaffected thereby, and not be discharged.
10
<PAGE> 11
HH. Classes 4, 5, and 8 are impaired under the Plan and have accepted
the Plan in writing, determined without including any acceptance of the Plan by
any insider.
II. Confirmation of the Plan is not likely to be followed by the
liquidation, or the need for further financial reorganization, of JPS or
Reorganized JPS.
JJ. The Plan provides for the payment, on the Effective Date, of all
fees payable under section 1930 of title 28, United States Code, as determined
by the Court at the Confirmation Hearing.
KK. The Plan provides for the continuation after the Effective Date of
payment of all retiree benefits, as that term is defined in section 1114 of the
Bankruptcy Code, at the level established pursuant to subsection (e)(1)(B) or
(g) of section 1114 of the Bankruptcy Code, at any time prior to confirmation
of the Plan, for the duration of the period JPS has obligated itself to provide
such benefits.
LL. All applicable requirements of section 1129(a) of the Bankruptcy
Code, other than the requirement in subsection 1129(a)(8) that all impaired
classes accept or be unimpaired under the Plan, have been met. The Proponents
have requested the Bankruptcy Court confirm the Plan under Section 1129(b)
notwithstanding such requirement.
MM. Each holder of an equity interest in Class 9 or Class 10 shall not
receive or retain any property under
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the Plan on account of such equity interest. Classes 9 and 10 are deemed to
reject the Plan. The Plan does not discriminate unfairly against the holders of
equity interests in such classes.
NN. No holder of any equity interest that is junior to the equity
interests in Class 9 or Class 10 will receive or retain any property under the
Plan on account of such junior interest.
OO. All applicable requirements of section 1129(b) of the Bankruptcy
Code have been met.
For all of the foregoing reasons, and after due deliberation, the
Court ORDERS, ADJUDGES, AND DECREES THAT:
Confirmation of the Plan
1. The Plan is confirmed. A copy of the confirmed Plan is attached as
Exhibit "A" to this Order.
2. Fed. R. Bankr. P. 7062 shall not apply to this Order.
3. All objections, if any, to confirmation of the August Plan or to
the Technical Amendment that have not been withdrawn prior to entry of this
Order or are not cured by the relief granted herein, are overruled in all
respects. All withdrawn objections, if any, are deemed withdrawn with
prejudice.
4. The issuance of the New Common Stock, the Contingent Notes, and the
New Warrants pursuant to the Plan
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is exempt from the registration requirements of the Securities Act and relevant
state securities laws under section 1145 of the Bankruptcy Code.
Discharge and Injunctions
5. Except as otherwise provided herein or in the Plan, on the
Effective Date:
a. The provisions of the Plan bind JPS, JPS Capital, any
entity issuing securities under the Plan, any entity acquiring property under
the Plan, and any creditor or equity interest holder of JPS, whether or not the
claim or equity interest of such creditor or equity interest holder is impaired
under the Plan and whether or not such creditor or equity interest holder has
accepted the Plan;
b. All the property of JPS's estate and all property dealt
with by the Plan is vested in Reorganized JPS, free and clear of all liens,
claims, encumbrances, and interests of creditors and equity interest holders
of JPS;
c. JPS is hereby discharged from any and all debts and
claims that arose before the date and time of entry of this Order, including
without limitation, any debt or claim of a kind specified in section 502(g),
502(h), or 502(i) of the Bankruptcy Code, whether or not (i) a proof of claim
based on such debt is filed or deemed filed under section 501 of the Bankruptcy
Code, (ii) such claim is
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allowed under section 502 of the Bankruptcy Code, or (iii) the holder of such
claim has accepted the Plan;
d. The rights and interests of all equity
interest holders provided for by the Plan and all rights and interests under
all employee equity and equity-based incentive plans for JPS and its
subsidiaries in existence on the Petition Date (other than the Incentive Plan)
are hereby terminated.
e. Any judgment at any time obtained, to the extent that
such judgment is a determination of the personal liability of JPS with respect
to any debt or claim discharged hereunder is hereby rendered null and void;
f. The commencement or continuation of an action, the
employment of process, or an act to collect, recover, or offset any debt
discharged hereunder as a personal liability of JPS, or from property of JPS,
is hereby permanently enjoined, stayed, and restrained; and
g. All holders of Senior Indebtedness (as such term is
defined in the 7% Subordinated Debenture Indenture) are hereby permanently
enjoined, stayed, and restrained from enforcing or attempting toenforce any
claimed contractual subordination rights with respect to the distributions
under the Plan to the holders of allowed claims in Class 5.
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Retention of Jurisdiction
6. The Court shall retain jurisdiction in accordance with Section VI.E
of the Plan.
Executory Contracts and Unexpired Leases
7. The assumption on the Effective Date of all executory contracts and
unexpired leases, other than any executory contracts and unexpired leases which
are identified on Exhibit L to the Plan or the subject of a motion to reject
pending on the date of entry of this Order, is hereby approved in all respects.
8. The rejection on the Effective Date of all executory contracts and
unexpired leases identified on Exhibit L to the Plan is hereby approved in all
respects.
9. The assumption on the Effective Date of the employment, severance,
and retention bonus agreements between JPS and Jerry E. Hunter, David H.
Taylor, Monnie L. Broome, William Ellis Jackson, and L. Allen Ollis
(collectively, the "Prepetition Management Agreements"), as amended, restated,
and superseded by agreements, the forms of which are annexed to the Plan as
Exhibits H1 through H5, respectively (the "New Management Agreements"), is
hereby approved in all respects.
Benefit Plans
10. The solicitation of votes to accept or reject the Plan is hereby
deemed a solicitation of the holders of
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New Common Stock for approval of the Incentive Plan. Entry of this Order
constitutes the approval of the Incentive Plan by the holders of New Common
Stock.
11. As of the Effective Date, all employee equity or equity-based
incentive plans for JPS or its subsidiaries in existence on the Petition Date
(other than the Incentive Plan) are terminated.
Certain Claims
12. Subject to consummation of the Plan, all claims in Class 2 (i)
shall be allowed claims secured by valid and duly perfected, first priority
security interests in all property of JPS described as securing such claims in
the Credit Agreement or in any security agreement executed by the Debtor in
connection therewith, and (ii) shall not be subject to any counterclaim,
offset, recoupment or defense by JPS against the agents or lenders under the
Credit Agreement.
13. Claims arising in connection with the Prepetition Management
Agreements shall be governed by, and completely satisfied in accordance with,
the New Management Agreements.
14. Except as otherwise provided herein, in the Plan, or other order
of the Court, all objections to administrative expenses, claims, and equity
interests shall be filed by JPS and served upon the holders thereof on or
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before 120 days after the Effective Date or 120 days after the administrative
expense, claim, or equity interest is filed, whichever is later. Implementation
15. JPS or Reorganized JPS, as the case may be, is hereby authorized
and directed to take all actions necessary or appropriate to consummate the
transactions contemplated by the Plan.
16. The issuance of the Contingent Notes by JPS Capital and the New
Common Stock and New Warrants by Reorganized JPS is hereby authorized without
the need for any further corporate action.
17. Each of the Proponents is hereby authorized and empowered to
issue, execute, deliver, file, or record any document or instrument, including,
without limitation, those securities referred to in Section II of the Plan, and
any agreements, bylaws, or charters, whether or not specifically referred to in
the Plan or any exhibit to the Plan, and to take any action necessary or
appropriate to implement, effectuate, and consummate the Plan in accordance
with its terms, all without further application to or order of this Court.
18. JPS is hereby authorized and empowered to issue, execute, deliver,
file, and record any and all documents, instruments, agreements (including
without
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limitation, pledge agreements and security agreements), and guaranties, whether
or not specifically referred to in the Plan or any exhibit to the Plan, and to
take any action necessary or appropriate to obtain, implement, effectuate, and
consummate the working capital facility contemplated by Section V.A. of the
Plan, all without further application to or order of this Court.
19. Each federal, state, and local governmental agency or department
is hereby directed to accept any and all documents and instruments necessary
and appropriate to consummate the Plan.
20. Effective as of the Effective Date, the New JPS Directors and New
JPS Officers are hereby deemed elected, and those directors and officers of JPS
not continuing in office are hereby deemed removed therefrom. Compensation and
Reimbursement
21. On or before October 20, 1997, each professional and other entity
requesting compensation or reimbursement of expenses pursuant to sections 327,
328, 330, 503(b), and 1103 of the Bankruptcy Code for services rendered up to
the date and time of entry of this Order (including compensation requested
pursuant to subsection 503(b)(3), 503(b)(4), or 503(b)(5) of the Bankruptcy
Code by any professional or other entity for making substantial contribution in
JPS's chapter 11 case) shall file an
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application for final allowance of compensation and reimbursement of expenses
with the Court (a "Final Fee Application"), with a copy to Chambers, together
with proof of service thereof, and shall serve such application on JPS, counsel
for JPS, the United States Trustee, counsel for the Unofficial Committee, and
such other entities designated by the Federal Rules of Bankruptcy Procedure,
the Local Bankruptcy Rules, and all other orders, rules, and guidelines
applicable in this Court. Final Fee Applications shall show and reflect the
application of any retainers received in connection with JPS's chapter 11 case.
22. A hearing shall be held before the Court at 10:00 a.m. on November
17, 1997, or as soon thereafter as counsel may be heard (the "Final Fee
Hearing"), to consider all Final Fee Applications. Notice of the Final Fee
Hearing shall be given by JPS on or before October 27, 1997 in accordance with
the Federal Rules of Bankruptcy Procedure, Local Bankruptcy Rules, and other
orders and guidelines applicable in this Court. Objections, if any, to any
Final Fee Application shall be filed with the Court, with a copy to Chambers,
together with proof of service thereof, and served upon JPS, counsel for JPS,
the United States Trustee, counsel for the Unofficial Committee and each party
identified in the Final Fee Hearing notice, so as to be received not later than
5:00 p.m. on November 12, 1997.
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23. Except as otherwise set forth herein or in the Plan,
administrative expenses incurred by JPS or Reorganized JPS after the date and
time of entry of this Order, including without limitation, claims for
professional fees and expenses, shall not be subject to application and may be
paid by JPS or Reorganized JPS, as the case may be, in the ordinary course of
business and without further order or approval of the Court. Any unresolved
dispute as to professional compensation and reimbursement of expenses shall be
submitted to, and determined by, this Court. Notice of Entry
24. On or before ten (10) days after entry of this Order, JPS shall
(a) serve by hand delivery, first class mail, or reputable overnight delivery
service, a notice of the entry of this Order, in substantially the form annexed
hereto as Exhibit "B" (the "Confirmation Notice") to each of the following at
their respective addresses last known to JPS: (i) the Office of the United
States Trustee, (ii) attorneys for the Unofficial Committee, (iii) attorneys
for Citibank, N.A., as agent under the Credit Agreement, (iv) each of the
financial institutions party to the Credit Agreement, (v) the Indenture
Trustees, (vi) attorneys for the Indenture Trustees, (vii) Odyssey Investors,
Inc., (viii) all parties that have filed requests for notices in JPS's chapter
11 case pursuant to Fed. R. Bankr. P. 2002,
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(ix) the Internal Revenue Service, (x) state and local taxing authorities
having jurisdiction over JPS, (xi) the Securities and Exchange Commission,
(xii) the Pension Benefit Guaranty Corporation, (xiii) all parties having filed
a proof of claim in JPS's chapter 11 case, (xiv) participants in the employee
equity or equity-based incentive plans that are terminated on the Effective
Date, (xv) all other known holders of claims reflected on the lists and
schedules filed by JPS pursuant to Fed. R. Bankr. 1007; and (xvi) all
professionals retained in the chapter 11 case; and (b) publish the Confirmation
Notice once in each of The Wall Street Journal (National Edition) and the
Greenville News. Such service and publication shall constitute good and
sufficient notice pursuant to Fed. R. Bankr. P. 2002(f)(7) and 2002(i)-(l) of
the confirmation of the Plan and the entry of this Order, and no other or
further notice need be given.
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Efficacy of Plan
25. The failure to specifically include any particular provision of
the Plan in this Order shall not diminish or impair the efficacy of such
provision, it being understood the intent of this Court that the Plan be
confirmed and approved in its entirety.
Dated: New York, New York
September 9, 1997
at __:__ __.m.
/s/ Cornelius Blackshear
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United States Bankruptcy Judge
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