<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
-----------------
Date of Report (Date of Earliest Event Reported): June 26, 1997
----------------
JPS Textile Group, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
33-27038 57-0868166
- ----------------------------------- --------------------------------------
(Commission File Number) (I.R.S. Employer Indentification No.)
555 North Pleasantburg Drive,
Suite 202 Greenville, South Carolina 29607
- ----------------------------------- --------------------------------------
(Zip Code)
(864) 239-3900
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
================================================================================
<PAGE>
Item 5. Other Events
On June 26, 1997, JPS Textile Group, Inc. ("JPS") commenced a
solicitation of votes by the holders, as of the 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 and its wholly owned subsidiary, JPS Capital Corp.
(the "Plan") under chapter 11 of title 11, United States Code (the "Bankruptcy
Code"). The Plan is attached as Exhibit 1 to the Disclosure Statement, dated
June 25, 1997 (the "Disclosure Statement"), being filed herewith.
Votes on the Plan are being solicited pursuant to the Disclosure
Statement under section 1126(b) of the Bankruptcy Code, before the commencement
by JPS of a chapter 11 case. JPS does not anticipate that any of its
subsidiaries, including JPS Capital Corp., will commence chapter 11 cases.
Also filed herewith is a copy of the JPS Press Release, dated June 26,
1997, announcing the commencement of the solicitation and describing briefly the
terms of the Plan.
Item 7. Exhibits
(c) Exhibit:
2.1 Disclosure Statement, dated June 25, 1997 (including Joint Plan of
Reorganization (and the exhibits attached thereto) attached as Exhibit
1 thereto).
99 Press Release, dated June 26, 1997.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned duly authorized.
JPS TEXTILE GROUP, INC.
By: /s/ David H. Taylor
--------------------------
Name: David H. Taylor
Title: Executive Vice President--
Financial and Secretary
Date: July 2, 1997
2
<PAGE>
Exhibit Index
Exhibit No. Description of Exhibit
- ----------- ----------------------
2.1 Disclosure Statement, dated June 25, 1997 (including
Joint Plan of Reorganization (and exhibits attached
thereto) attached as Exhibit 1 thereto).*
99 Press Release, dated June 26, 1997.*
- --------------------------
* Filed herewith
3
<PAGE>
JPS TEXTILE GROUP, INC.
555 North Pleasantburg Drive
Suite 202
Greenville, SC 29607
June 25, 1997
To: Securityholders of JPS Textile Group, Inc.:
We are pleased to deliver to you the attached Disclosure Statement and
Ballots so that you may vote to accept or reject JPS's proposed chapter 11
plan of reorganization (the "Plan"). JPS intends to use the votes returned to
its Voting Agent by 5:00 p.m. Eastern Time on July 28, 1997 in connection with
the approval of the Plan in a chapter 11 case which it intends to file shortly
after that date. JPS's subsidiaries will not be filing for bankruptcy
protection.
The Plan and its related documents are the product of negotiations over the
past several months between JPS and an unofficial committee of bondholders
owning over 60% of JPS's public bonds.
The Plan provides for a major financial restructuring. Specifically, the
holders of JPS's 10.25% senior subordinated notes and 10.85% senior
subordinated discount notes will receive $14 million in cash, contingent notes
issued by JPS Capital Corp. (a wholly owned subsidiary of JPS) providing
payment of up to $34 million plus interest on the occurrence of certain
events, and approximately 93.29% of the new common stock. The holders of JPS's
7% subordinated debentures will receive approximately 5.95% of the new common
stock. The holders of JPS's senior preferred stock will receive warrants to
purchase new common stock in exchange for their equity interests. All other
existing preferred and common equity interests in JPS will be cancelled. The
result will be a reorganized company which, on a consolidated basis, has
virtually no debt other than the working capital facility for its
subsidiaries.
The financial restructuring represented by the Plan is essential to the
success of JPS and its subsidiaries. JPS does not have the resources to repay
its existing public bond debt. By eliminating that debt, the Plan will both
improve JPS's financial condition and overall creditworthiness and enhance
JPS's ability to make the necessary capital expenditures to compete more
effectively.
JPS is seeking your vote to accept or reject the Plan prior to the
commencement of its chapter 11 case. By using the "prepackaged bankruptcy"
method, JPS anticipates that its chapter 11 case will be significantly
shortened and the administration of such case will be simplified and less
costly. Please review the attached disclosure statement carefully for details
about voting, recoveries, JPS and its financial performance, and other
relevant matters. JPS has established the following Record Date (for
determining who is entitled to vote on the Plan) and deadline for its Voting
Agent to receive votes:
RECORD DATE: June 20, 1997
DEADLINE FOR JPS'S VOTING July 28, 1997
AGENT TO RECEIVE VOTES: 5:00 p.m. Eastern Time
Sincerely,
Jerry E. Hunter
Chairman of the Board of Directors,
President, and Chief Executive Officer
LOGO
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THIS SOLICITATION IS BEING CONDUCTED TO OBTAIN SUFFICIENT ACCEPTANCES OF A
PLAN OF REORGANIZATION BEFORE THE FILING OF A VOLUNTARY REORGANIZATION CASE
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE. BECAUSE A CHAPTER 11 CASE HAS NOT YET
BEEN COMMENCED, THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY THE
BANKRUPTCY COURT AS CONTAINING ADEQUATE INFORMATION WITHIN THE MEANING OF
SECTION 1125(A) OF THE BANKRUPTCY CODE. FOLLOWING THE COMMENCEMENT OF ITS
CHAPTER 11 CASE, JPS TEXTILE GROUP, INC. EXPECTS TO PROMPTLY SEEK ORDERS OF
THE BANKRUPTCY COURT (I) APPROVING THIS DISCLOSURE STATEMENT AS CONTAINING
ADEQUATE INFORMATION AND THE SOLICITATION OF VOTES AS BEING IN COMPLIANCE WITH
SECTION 1126(B), AND (II) CONFIRMING ITS JOINT PLAN OF REORGANIZATION.
DISCLOSURE STATEMENT, DATED JUNE 25, 1997
SOLICITATION OF VOTES ON THE JOINT PLAN OF REORGANIZATION OF
JPS TEXTILE GROUP, INC.
AND ITS WHOLLY OWNED SUBSIDIARY, JPS CAPITAL CORP., FROM THE HOLDERS OF JPS
TEXTILE GROUP, INC.'S OUTSTANDING
10.85% SENIOR SUBORDINATED DISCOUNT NOTES DUE JUNE 1, 1999
10.25% SENIOR SUBORDINATED NOTES DUE JUNE 1, 1999
7% SUBORDINATED DEBENTURES DUE MAY 15, 2000
AND SERIES A SENIOR PREFERRED STOCK
- -------------------------------------------------------------------------------
THE VOTING DEADLINE TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION IS
5:00 P.M., EASTERN TIME, ON JULY 28, 1997, UNLESS EXTENDED
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RECOMMENDATION BY THE COMPANY
The Boards of Directors of JPS Textile Group, Inc. and JPS Capital Corp.
have unanimously approved the solicitation, the Joint Plan of
Reorganization, and the transactions contemplated thereby, and recommend
that all security holders whose votes are being solicited submit Ballots
to accept the Joint Plan of Reorganization.
RECOMMENDATION BY THE UNOFFICIAL BONDHOLDER COMMITTEE
The Unofficial Bondholder Committee urges holders of the 10.85% Senior
Subordinated Discount Notes due June 1, 1999, the 10.25% Senior
Subordinated Notes due June 1, 1999, and the 7% Subordinated Debentures
due May 15, 2000 to vote in favor of the Joint Plan of Reorganization. The
Joint Plan of Reorganization is the product of negotiations over the past
several months between JPS Textile Group, Inc. and its advisors and the
members of the Unofficial Bondholder Committee, with the assistance of
their financial advisors, Houlihan, Lokey, Howard & Zukin, Inc., and their
legal advisors, Fried, Frank, Harris, Shriver & Jacobson.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
(Cover Page Continued)
HOLDERS SHOULD NOT CONSTRUE THE CONTENTS OF THIS DISCLOSURE STATEMENT AS
PROVIDING ANY LEGAL, BUSINESS, FINANCIAL, OR TAX ADVICE AND SHOULD CONSULT
WITH THEIR OWN ADVISORS.
THIS OFFER OF NEW COMMON STOCK, CONTINGENT NOTES, AND NEW WARRANTS IN
EXCHANGE FOR CERTAIN EXISTING SECURITIES ISSUED BY JPS TEXTILE GROUP, INC. HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR SIMILAR STATE SECURITIES OR "BLUE SKY" LAWS. THE OFFER IS
BEING MADE IN RELIANCE ON THE EXEMPTION FROM REGISTRATION SPECIFIED IN SECTION
3(A)(9) OF THE SECURITIES ACT. THE ISSUANCE OF THE NEW COMMON STOCK,
CONTINGENT NOTES, AND NEW WARRANTS WILL BE PURSUANT TO SECTION 1145 OF THE
BANKRUPTCY CODE.
NONE OF THE NEW COMMON STOCK, NEW WARRANTS, OR CONTINGENT NOTES TO BE ISSUED
ON THE EFFECTIVE DATE HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION OR SIMILAR PUBLIC,
GOVERNMENTAL, OR REGULATORY AUTHORITY, AND NEITHER THE SECURITIES AND EXCHANGE
COMMISSION NOR ANY SUCH AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT OR UPON THE MERITS OF
THE JOINT PLAN OF REORGANIZATION. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
CERTAIN STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT, INCLUDING
PROJECTED FINANCIAL INFORMATION AND OTHER FORWARD-LOOKING STATEMENTS, ARE
BASED ON ESTIMATES AND ASSUMPTIONS. THERE CAN BE NO ASSURANCE THAT SUCH
STATEMENTS WILL BE REFLECTIVE OF ACTUAL OUTCOMES. FORWARD-LOOKING STATEMENTS
ARE PROVIDED IN THIS DISCLOSURE STATEMENT PURSUANT TO THE SAFE HARBOR
ESTABLISHED UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND
SHOULD BE EVALUATED IN THE CONTEXT OF THE ESTIMATES, ASSUMPTIONS,
UNCERTAINTIES, AND RISKS DESCRIBED HEREIN.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS OF THE
DATE HEREOF UNLESS OTHERWISE SPECIFIED.
THE TERMS OF THE PLAN GOVERN IN THE EVENT OF ANY INCONSISTENCY WITH THE
SUMMARIES IN THIS DISCLOSURE STATEMENT.
THE INFORMATION IN THIS DISCLOSURE STATEMENT IS BEING PROVIDED SOLELY FOR
PURPOSES OF VOTING TO ACCEPT OR REJECT THE PLAN OR OBJECTING TO CONFIRMATION.
NOTHING IN THIS DISCLOSURE STATEMENT MAY BE USED BY ANY ENTITY FOR ANY OTHER
PURPOSE.
ALL EXHIBITS TO THE DISCLOSURE STATEMENT ARE INCORPORATED INTO AND ARE A
PART OF THIS DISCLOSURE STATEMENT AS IF SET FORTH IN FULL HEREIN.
<PAGE>
________________________________________________________________________________
INTRODUCTION
IMPORTANT -- PLEASE READ
Through this Disclosure Statement, JPS Textile Group, Inc. ("JPS") and its
wholly owned subsidiary, JPS Capital Corp. ("JPS Capital"), are soliciting
acceptances of the joint chapter 11 plan of reorganization (the "Plan")
attached as Exhibit 1 to this Disclosure Statement. This solicitation is being
conducted at this time in order to obtain (prior to the commencement of a
chapter 11 case by JPS) sufficient votes to enable the Plan to be confirmed by
the Bankruptcy Court. JPS anticipates that by conducting the solicitation in
advance of commencing its chapter 11 case, the pendency of the case will be
significantly shortened and its administration will be simplified and less
costly. JPS DOES NOT ANTICIPATE THAT ANY OF ITS SUBSIDIARIES, INCLUDING JPS
CAPITAL, WILL COMMENCE CHAPTER 11 CASES.
WHO IS ENTITLED TO VOTE: The creditors and shareholders that beneficially
own, AS OF THE JUNE 20, 1997 RECORD DATE, any of the following securities
issued by JPS, are entitled to vote on the Plan:
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
SERIES A SENIOR PREFERRED STOCK
Holders of JPS's Series B Junior Preferred Stock and holders of JPS's Common
Stock will not receive any distribution under the Plan and are deemed to reject
the Plan.
JPS and JPS Capital are commencing this solicitation after more than seven
months of discussions with an unofficial committee of bondholders, consisting
of Magten Asset Management Corp., CS First Boston Corporation, Merrill Lynch,
Pierce, Fenner & Smith, Incorporated, and Trust Company of the West (the
"Unofficial Bondholder Committee"). The members of that group have been
represented by Fried, Frank, Harris, Shriver & Jacobson and Houlihan, Lokey,
Howard & Zukin, Inc.
THE PLAN IS THE PRODUCT OF NEGOTIATIONS WITH THE MEMBERS OF THE UNOFFICIAL
BONDHOLDER COMMITTEE. JPS'S BOARD OF DIRECTORS AND THE UNOFFICIAL BONDHOLDER
COMMITTEE STRONGLY URGE YOU TO VOTE TO ACCEPT THE PLAN.
________________________________________________________________________________
JPS's legal and financial advisors are Weil, Gotshal & Manges LLP and The
Blackstone Group L.P., respectively. They can be contacted at:
Weil, Gotshal & Manges LLP The Blackstone Group L.P.
767 Fifth Avenue 345 Park Avenue
New York, New York 10153 New York, New York 10154
(212) 310-8000 (212) 935-2626
Attn: Michael F. Walsh, Esq. Attn: Mr. Timothy R. Coleman
Sharon Youdelman, Esq. Mr. Barry Korn
<PAGE>
The following table summarizes the treatment for creditors and shareholders
under the Plan. For a more precise explanation, please refer to the discussion
in Section IV, below, entitled "THE JOINT PLAN OF REORGANIZATION" and to the
Plan itself.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
ESTIMATED
CLASS DESCRIPTION TREATMENT RECOVERY
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Priority Non-Tax Claims Paid in full 100%
- --------------------------------------------------------------------------------------
2 Secured Bank Guaranty Unimpaired 100%
Claims
- --------------------------------------------------------------------------------------
3 Other Secured Claims Unimpaired 100%
- --------------------------------------------------------------------------------------
4*+ Senior Note Claims If Plan is consensual: Pro rata 58.49%(Yen)
share of (i) $14 million in cash,
(ii) 9,329,146 shares of New
Common Stock, and (iii) $34
million in initial principal
amount of Contingent Notes
- --------------------------------------------------------------------------------------
5*+ Subordinated Debenture If Plan is consensual: Pro rata 12.55%
Claims share of 595,477 shares of New
Common Stock
- --------------------------------------------------------------------------------------
6 General Unsecured Claims Unimpaired 100%
- --------------------------------------------------------------------------------------
7 Affiliate Claims No distribution --
- --------------------------------------------------------------------------------------
8* Senior Preferred Stock If Plan is consensual: Pro rata --**
Interests share of New Warrants to purchase
526,316 shares of New Common Stock
- --------------------------------------------------------------------------------------
9 Junior Preferred Stock No distribution --
Interests
- --------------------------------------------------------------------------------------
10 Common Stock Interests No distribution --
- --------------------------------------------------------------------------------------
</TABLE>
________
*: The distributions to Classes 4, 5, and 8 are subject to change, as follows:
If Class 5 rejects the Plan, Classes 5 and 8 will receive no distribution,
and Class 4 will receive the property that would have been distributed to
Class 5. If Class 8 rejects the Plan, it will receive no distribution. See
Section IV, below, entitled "THE JOINT PLAN OF REORGANIZATION," for
details.
+: In addition to the property distributions to be made to holders of claims
in Class 4 and Class 5, Reorganized JPS will pay the reasonable fees and
expenses of the Unofficial Bondholder Committee, including those of its
counsel and financial advisor, incurred in connection with the debt
restructuring and the negotiation of the Plan and related documents.
(Yen): Estimated recovery excludes any value for the Contingent Notes.
**: The value of the New Warrants depends on a significant increase in the
value of the New Common Stock beyond the values specified in this
Disclosure Statement. Accordingly, JPS has not assigned a value to the New
Warrants in this Disclosure Statement.
For detailed historical and projected financial information and valuation
estimates, see Section V, below, entitled "PROJECTIONS AND VALUATION
ANALYSIS." ADDITIONAL FINANCIAL INFORMATION IS CONTAINED IN THE MOST RECENT
ANNUAL REPORT ON FORM 10-K AND QUARTERLY REPORT ON FORM 10-Q, ATTACHED AS
EXHIBITS 2 AND 3, RESPECTIVELY, TO THIS DISCLOSURE STATEMENT.
<PAGE>
SUMMARY OF VOTING PROCEDURES
To be counted, your vote must be received by JPS's Voting Agent at the
following address, before the Voting Deadline of 5:00 p.m. (Eastern Time) on
July 28, 1997:
JPS TEXTILE GROUP, INC.
c/o The Altman Group,
Inc.60 East 42nd Street, Suite 1241
New York, New York 10165
IF YOU ARE, AS OF THE JUNE 20, 1997 RECORD DATE, THE BENEFICIAL OWNER OF
10.85% NOTES OR 10.25% NOTES (CLASS 4), 7% SUBORDINATED DEBENTURES (CLASS 5),
OR OLD SENIOR PREFERRED STOCK (CLASS 8):
IF THE NOTES, DEBENTURES, OR SHARES ARE REGISTERED IN YOUR OWN NAME: Please
complete the information requested on the Ballot, sign, date, and indicate
your vote on the Ballot, and return the Ballot in the enclosed pre-
addressed, postage-paid envelope so that it is actually received by the
Voting Agent before the Voting Deadline.
IF THE NOTES, DEBENTURES, OR SHARES ARE REGISTERED IN "STREET NAME":
IF YOUR BALLOT HAS ALREADY BEEN SIGNED (OR "PREVALIDATED") BY YOUR
NOMINEE (YOUR BROKER, BANK, OTHER NOMINEE, OR THEIR AGENT): Please
complete the information requested on the Ballot, indicate your vote on
the Ballot, and return your completed Ballot in the enclosed pre-
addressed postage-paid envelope so that it is actually received by the
Voting Agent before the Voting Deadline;
OR
IF YOUR BALLOT HAS NOT BEEN SIGNED (OR "PREVALIDATED") BY YOUR NOMINEE
(YOUR BROKER, BANK, OTHER NOMINEE, OR THEIR AGENT): Please sign the
Ballot, complete the information requested on the Ballot, date and
indicate your vote on the Ballot, and return the Ballot to your nominee
in sufficient time for your nominee to then forward your vote to the
Voting Agent so that it is actually received by the Voting Agent before
the Voting Deadline.
IF YOU ARE THE NOMINEE for a beneficial owner, as of the June 20, 1997 record
date, of 10.85% Notes or 10.25% Notes (Class 4), 7% Subordinated Debentures
(Class 5), or Old Senior Preferred Stock (Class 8): Please forward a copy of
this Disclosure Statement and the appropriate Ballot to each beneficial owner,
AND:
ALL BALLOTS THAT YOU HAVE SIGNED (OR "PREVALIDATED") should be completed by
the beneficial owners and returned by the beneficial owners directly to the
Voting Agent so that such Ballots are received by the Voting Agent before
the Voting Deadline.
ALL BALLOTS THAT YOU HAVE NOT SIGNED (OR "PREVALIDATED") must be collected
by you, and you should complete the appropriate Master Ballot, and deliver
the completed Master Ballot to the Voting Agent so that it is actually
received by the Voting Agent before the Voting Deadline.
IF YOU ARE A SECURITIES CLEARING AGENCY: Please arrange for your respective
participants to vote by executing an omnibus proxy in their favor.
For detailed voting instructions, see Section VII, below, entitled "VOTING
PROCEDURES AND REQUIREMENTS" and the instructions on your Ballot or Master
Ballot.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY........................................................... iv
I. DESCRIPTION OF THE BUSINESS........................................ 1
II. KEY EVENTS LEADING TO THE SOLICITATION AND DECISION TO COMMENCE A
CHAPTER 11 CASE................................................... 2
A. The Leveraged Buyout........................................... 2
B. The 1991 Restructuring......................................... 2
C. Business Initiatives and Economic Trends....................... 2
D. The 1996-97 Negotiations....................................... 3
1. The Unofficial Bondholder Committee........................ 3
2. The Banks and the Credit Agreement......................... 4
III. ANTICIPATED EVENTS DURING THE CHAPTER 11 CASE...................... 5
A. Chapter 11 Financing........................................... 5
B. Bar Date....................................................... 5
C. Disclosure Statement/Confirmation Hearings..................... 5
IV. THE JOINT PLAN OF REORGANIZATION................................... 6
A. Introduction................................................... 6
B. Classification and Treatment of Claims and Equity Interests
Under the Plan................................................ 6
C. Securities to Be Issued Pursuant to the Plan................... 12
1. New Common Stock........................................... 12
2. Contingent Notes........................................... 13
3. New Warrants............................................... 14
4. Incentive and Capital Accumulation Plan.................... 15
5. Securities Law Matters..................................... 18
6. Hart-Scott-Rodino Act Filing Requirements.................. 19
D. Plan Provisions Governing Distributions........................ 19
1. Date and Delivery of Distribution.......................... 19
2. Surrender and Cancellation of Instruments.................. 20
3. No Fractional Shares....................................... 20
4. Disputed Administrative Expenses, Claims, and Equity
Interests................................................. 20
E. Other Plan Provisions.......................................... 20
1. Executory Contracts and Unexpired Leases................... 20
2. Employee Benefit Plans..................................... 21
3. Waiver of Claims........................................... 22
4. Officers and Directors..................................... 22
5. Limited Release............................................ 22
6. Dissolution of Committee................................... 22
7. Compliance with Tax Requirements........................... 22
8. Guaranty Rights............................................ 22
9. Vesting and Liens.......................................... 22
10. Retention of Jurisdiction.................................. 22
11. Management of Reorganized JPS.............................. 23
12. Modification/Revocation of Plan............................ 23
13. Preservation of Causes of Action........................... 23
14. Exculpation................................................ 23
15. Votes Solicited in Good Faith.............................. 23
F. Implementation of the Plan..................................... 23
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
V. PROJECTIONS AND VALUATION ANALYSIS................................ 25
A. Projections................................................... 25
1. Pro Forma Condensed Consolidated Balance Sheet
(Unaudited).............................................. 26
2. Condensed Consolidated Projected Balance Sheets
(Unaudited).............................................. 29
3. Condensed Consolidated Projected Statements of Operations
(Unaudited).............................................. 30
4. Condensed Consolidated Projected Cash Flow Statements
(Unaudited).............................................. 31
5. Operating Assumptions..................................... 32
B. Valuation..................................................... 33
VI. CERTAIN FACTORS AFFECTING JPS..................................... 34
A. Certain Bankruptcy Law Considerations......................... 34
1. Failure to Satisfy Vote Requirement....................... 34
2. Risk of Non-Confirmation of the Plan...................... 34
3. Nonconsensual Confirmation................................ 34
4. Risk of Non-Occurrence of the Effective Date.............. 34
5. Effect of JPS's Chapter 11 Case on the Subsidiaries....... 34
B. Factors Affecting the Value of the Securities to Be Issued
Under the Plan............................................... 35
1. Competitive Conditions.................................... 35
2. Capital Requirements...................................... 35
3. Variances from Projections................................ 35
4. Disruption of Operations.................................. 36
5. Lack of Trading Market.................................... 36
6. Dividend Policies......................................... 36
7. Holding Company Structure................................. 36
8. Contingent Notes.......................................... 36
C. Certain Tax Matters........................................... 36
D. Pending Litigation or Demands Asserting Prepetition
Liability.................................................... 37
VII. VOTING PROCEDURES AND REQUIREMENTS................................ 37
A. Voting Deadline............................................... 37
B. Holders of Claims and Equity Interests Entitled to Vote....... 38
C. Vote Required for Acceptance by a Class....................... 38
D. Voting Procedures............................................. 38
1. Holders of Class 4 Senior Note Claims, Class 5
Subordinated Debenture Claims, and Class 8 Senior
Preferred Stock Interests................................ 38
2. Withdrawal of Ballot or Master Ballot..................... 40
VIII. CONFIRMATION OF THE PLAN.......................................... 41
A. Confirmation Hearing.......................................... 41
B. Requirements for Confirmation of the Plan..................... 41
1. Consensual Confirmation................................... 41
2. Nonconsensual Confirmation................................ 46
C. Effectiveness of the Plan..................................... 47
1. Conditions Precedent to Effectiveness..................... 47
2. Effect of Failure of Conditions........................... 47
3. Effect of Confirmation.................................... 48
IX. FINANCIAL INFORMATION............................................. 48
A. General....................................................... 48
B. Selected Financial Data....................................... 48
C. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 48
D. Recent Performance............................................ 48
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
X. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN.......... 49
A. Liquidation Under Chapter 7.................................... 49
B. Alternative Plan of Reorganization............................. 49
XI. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN................ 50
A. Consequences to JPS............................................ 50
1. Cancellation of Debt....................................... 50
2. Limitations on NOL Carryforwards and Other Tax
Attributes................................................ 51
3. Alternative Minimum Tax.................................... 51
4. Treatment of Contingent Notes.............................. 52
B. Consequences to Holders of Claims in Classes 4, 5, and 6 and
Equity Interests in Class 8................................... 52
1. Holders of Claims in Classes 4 and 5....................... 52
2. Holders of Claims in Class 6............................... 53
3. Holders of Equity Interests in Class 8..................... 53
4. Additional Tax Considerations for All Holders of Claims.... 54
C. Consequences to Holders of Equity Interests in Classes 9 and
10............................................................ 54
D. Incentive Plan................................................. 55
1. Incentive Options.......................................... 55
2. Non-Qualified Options...................................... 56
3. Change in Control.......................................... 57
4. Certain Limitations on Deductibility of Executive
Compensation.............................................. 57
XII. CONCLUSION......................................................... 57
EXHIBITS
Joint Plan of Reorganization............................................ 1
JPS Textile Group, Inc. Annual Report on Form 10-K...................... 2
JPS Textile Group, Inc. Quarterly Report on Form 10-Q................... 3
Board of Directors, Management Compensation, and Related Information for
Reorganized JPS........................................................ 4
</TABLE>
iii
<PAGE>
GLOSSARY
The following glossary contains certain important terms used throughout the
Disclosure Statement:
7% Subordinated the 7% Subordinated Debentures due May 15, 2000, as
Debentures amended from time to time in accordance with the terms
thereof, issued by JPS pursuant to the Indenture, dated
as of April 2, 1991, as amended from time to time in
accordance with the terms thereof, by and between JPS and
First Bank National Association, as trustee.
10.25% Notes the 10.25% Senior Subordinated Notes due June 1, 1999, as
amended from time to time in accordance with the terms
thereof, issued by JPS pursuant to the Indenture, dated
as of April 2, 1991, as amended from time to time in
accordance with the terms thereof, by and between JPS and
First Trust National Association, as trustee.
10.85% Notes the 10.85% Senior Subordinated Discount Notes due June 1,
1999, as amended from time to time in accordance with the
terms thereof, issued by JPS pursuant to the Indenture,
dated as of April 2, 1991, as amended from time to time
in accordance with the terms thereof, by and between JPS
and First Trust National Association, as trustee.
Bankruptcy Code title 11, United States Code, as amended from time to
time, as applicable to JPS's chapter 11 case.
Bankruptcy Court the United States District Court for the Southern
District of New York having jurisdiction over JPS's
chapter 11 case, and to the extent of any reference made
pursuant to 28 U.S.C. (S) 157, the United States
Bankruptcy Court for the Southern District of New York,
and any other court having jurisdiction over the chapter
11 case.
Bankruptcy Rules the Federal Rules of Bankruptcy Procedure and the local
rules and orders of the Bankruptcy Court, all as amended
from time to time and applicable to JPS's chapter 11
case.
Business Day any day on which commercial banks are open for business,
and not authorized to close, in the City of New York.
Claim see section 101(5) of the Bankruptcy Code.
Company collectively, JPS Textile Group, Inc. and its wholly
owned subsidiaries, JPS Elastomerics Corp. and JPS
Converter and Industrial Corp.
Confirmation Date the date on which an order of the Bankruptcy Court
confirming the Plan is entered on the docket of the Clerk
of the Bankruptcy Court.
Contingent Note the Indenture, dated on or about the Effective Date, set
Indenture forth on Exhibit C to the Plan.
Contingent Notes the unsecured, contingent notes to be issued by JPS
Capital and described in Article II of the Plan,
substantially in the form of Exhibit A to the Contingent
Note Indenture.
Credit Agreement the Fourth Amended and Restated Credit Agreement, dated
as of June 24, 1994, by and among JPS, Elastomerics, C&I,
the Secured Lenders, and the agents for the Secured
Lenders, as amended through May 15, 1997 (subject to the
requested extension described in Section II.D.2 of this
Disclosure Statement).
Effective Date the first Business Day on which the conditions precedent
specified in Section V.A of the Plan have been satisfied
or waived in accordance with Section V.B of the Plan;
provided, that if a stay of the order confirming the Plan
is in effect on such date, the Effective Date will be the
first Business Day after such stay is no longer in
effect.
iv
<PAGE>
Equity Interest any interest in JPS represented by Old Senior Preferred
Stock, Old Junior Preferred Stock, or Old Common Stock,
and any options, warrants, calls, subscriptions, or any
other similar rights or other agreements or commitments,
contractual or otherwise, obligating JPS to acquire,
issue, transfer, or sell any shares of capital stock of
JPS or any other equity interest of JPS.
Incentive Plan the JPS Textile Group, Inc. 1997 Incentive and Capital
Accumulation Plan.
Indentures the Indenture, dated as of April 2, 1991, by and between
JPS and the First Trust National Association, as trustee,
the Indenture, dated as of April 2, 1991, by and between
JPS and the First Trust National Association, as trustee,
and the Indenture, dated as of April 2, 1991, by and
between JPS and First Bank National Association, as
trustee, each as amended from time to time in accordance
with its terms, pursuant to which the 10.85% Notes,
10.25% Notes, and 7% Subordinated Debentures,
respectively, were issued.
Management Group Jerry E. Hunter, David H. Taylor, Monnie L. Broome,
William Ellis Jackson, and L. Allen Ollis.
New Common Stock all the shares of common stock of Reorganized JPS, par
value $0.01 per share, authorized pursuant to Article
IV.A of the Plan.
Old Common Stock the authorized class A common stock and class B common
stock, par value $0.01 per share, issued by JPS.
Old Junior the Series B Junior Preferred Stock of JPS as specified
Preferred Stock in the Certificate of Designations of Series B Junior
Preferred Stock, dated April 2, 1991.
Old Senior the Series A Senior Preferred Stock of JPS as specified
Preferred Stock in the Certificate of Designations of Series A Senior
Preferred Stock, dated April 2, 1991.
Petition Date the date on which JPS commences its chapter 11 case.
Pro Rata Share a proportionate share, so that the ratio of the amount of
property distributed on account of an allowed claim or
allowed equity interest in a class, is the same as the
ratio such claim or equity interest bears to the total
amount of all claims or equity interests (including
disputed claims or disputed equity interests until
disallowed) in such class.
Reorganized JPS JPS Textile Group, Inc., or any successor thereto by
merger, consolidation, or otherwise, on and after the
Effective Date.
Schedules the schedules of assets and liabilities, statement of
financial affairs, and lists of holders of claims and
equity interests to be filed by JPS as required by
section 521 of the Bankruptcy Code and Bankruptcy Rule
1007, including any amendments and supplements thereto.
Secured Lender any of the financial institutions party to the Credit
Agreement, including Citibank, N.A., as agent and
administrative agent, and General Electric Capital
Corporation, as collateral agent and co-agent.
Voting Deadline 5:00 p.m. Eastern Time on July 28, 1997.
v
<PAGE>
I.
DESCRIPTION OF THE BUSINESS
JPS and its operating subsidiaries are among the largest diversified
domestic manufacturers of textile and textile-related products for the
consumer apparel, home fashion, and industrial markets. Their products include
(i) greige goods (unfinished woven fabrics) and yarn used in the manufacture
of blouses, dresses, sportswear, undergarments, draperies, curtains, and
lampshades, (ii) single-ply membrane roofs, (iii) fabrics made from glass and
synthetic fibers used in various applications in the building construction
industry, (iv) specialty fabrics used in the manufacture of flame-retardant
clothing, filtration products, tarpaulins, awnings, athletic tapes, printed
circuit boards, and advanced composites, and (v) urethane products for use in
the manufacture of athletic footwear, bulletproof glass, disposable
intravenous bags, seamless welded drive belts, and tubing.
JPS and its wholly owned subsidiaries are all Delaware corporations. JPS's
common stock is owned as follows:
.33% by Odyssey Partners, L.P.
.18% by DLJ Capital Corp.
.49% by the public
JPS's wholly owned operating subsidiaries include JPS Elastomerics Corp.
("Elastomerics") and JPS Converter and Industrial Corp. ("C&I"). The remaining
wholly owned subsidiaries do not have any significant operations: JPS Capital,
International Fabrics, Inc. ("Fabrics"), JPS Auto, Inc. ("Auto"), and JPS
Carpet Corp. ("Carpet").
The operating subsidiaries each have independent administrative,
manufacturing, and marketing capabilities for all material aspects of their
operations, including product design, customer service, purchasing, and
collections. JPS provides all finance and strategic planning services and
handles the legal, tax, and regulatory affairs for all the subsidiaries.
JPS and its subsidiaries operate from 10 manufacturing plants in 5 states
and employ approximately 3,700 nonunion employees, of whom approximately 3,200
are hourly and 500 salaried. Of these employees, 8 are employed directly by
JPS. The Company's headquarters are located in Greenville, South Carolina.
JPS Capital was formed in 1994 as a special purpose subsidiary to hold (and
invest) $39.5 million, representing a portion of the proceeds received from
the sale of the assets of the Company's automotive division in June 1994,
including the assets of Auto. These funds were set aside to satisfy possible
contingent tax liabilities incurred in connection with that sale. The funds
held by JPS Capital currently aggregate approximately $47.5 million and are
expected to aggregate approximately $48 million by the Effective Date.
Auto and Carpet formerly owned and operated JPS's automotive products and
carpet businesses, respectively. The assets of those businesses were sold in
1994 and 1995, respectively.
In addition to its direct ownership interest in the foregoing domestic
corporations, JPS has an indirect ownership interest in a foreign corporation.
Specifically, in 1996, JPS's wholly owned subsidiary, Fabrics, acquired a 50%
ownership interest in the Mexican corporation, Ingeneria Textil Mexicano, S.A.
de C.V. ("ITM"), which is engaged in the manufacture and sale of textile
products for the apparel industry in Mexico.
<PAGE>
II.
KEY EVENTS LEADING TO THE SOLICITATION
AND DECISION TO COMMENCE A CHAPTER 11 CASE
A. THE LEVERAGED BUYOUT
On May 9, 1988, JPS acquired substantially all the assets of certain
operating divisions of J.P. Stevens & Co., Inc. in exchange for approximately
$579 million in cash and reorganized the newly acquired divisions into wholly
owned subsidiaries. At that time, JPS raised $100 million by issuing certain
public debt and equity securities in order to partially finance the
acquisition. In June 1989, JPS raised $323.6 million by issuing certain public
debt and equity securities to refinance certain outstanding notes and a
portion of the indebtedness incurred in connection with the acquisition. Due
to prevailing market conditions, the securities were priced for sale at higher
rates than JPS anticipated would be necessary at the time of the acquisition.
As a result of the high interest rates and a weak business environment for
certain of the subsidiaries, JPS realized lower than expected operating
earnings and cash flow which, in turn, materially impaired its ability to
service its outstanding debt and fund capital expenditures.
B. THE 1991 RESTRUCTURING
In 1990, JPS negotiated the terms of a recapitalization proposal with a
steering committee comprised of institutional holders of a substantial amount
of the then-outstanding securities, which culminated in JPS's prepetition
solicitation of votes to accept or reject a chapter 11 plan of reorganization.
The plan was overwhelmingly accepted. On February 7, 1991, JPS filed a
petition for relief under chapter 11 of the Bankruptcy Code, and approximately
42 days thereafter, JPS's plan was confirmed by the bankruptcy court and JPS
emerged from chapter 11.
Pursuant to that plan, in exchange for its outstanding debt securities, JPS
issued $100 million in principal amount of senior secured notes due June 1,
1995 and June 1, 1996 (the "Senior Secured Notes"), $151.1 million in
principal amount of 10.85% Notes, $125 million in principal amount of 10.25%
Notes, $75 million in principal amount of 7% Subordinated Debentures, and
490,000 shares of class A Old Common Stock. In addition, JPS issued 10,000
shares of Old Junior Preferred Stock in exchange for its outstanding junior
preferred, 390,719 shares of Old Senior Preferred Stock in exchange for its
outstanding senior preferred, cancelled its outstanding common stock, and
issued 510,000 shares of class B Old Common Stock in exchange for a $7.5
million contribution to JPS. In 1994, the Senior Secured Notes were fully
redeemed by JPS in accordance with their terms and the provisions of the
governing indenture.
C. BUSINESS INITIATIVES AND ECONOMIC TRENDS
Since the initial restructuring, JPS has adopted and implemented various
strategies aimed at improving and realizing value in its operating
subsidiaries. These strategies have involved capital investments aimed at cost
reduction and capacity expansion in certain of the market segments in which
the operating subsidiaries compete, expansion of the channels of distribution
to include export sales and new markets, and the exit, through asset sales or
otherwise, of certain unprofitable product lines. In connection with these
strategies, the Company sold its carpet business in 1995, sold its rubber
products business in 1996, and closed its Dunean plant in Greenville, South
Carolina in 1996. In addition, the Company sold its automotive business in
1994. For a detailed description of these transactions, reference is made to
Item 1 "Business" and to footnotes 3 and 4 to Item 8 "Financial Statements and
Supplementary Data" in the Annual Report on Form 10-K annexed as Exhibit 2 to
this Disclosure Statement. The Company is not currently engaged in selling any
other parts of its business and does not have plans to do so.
During the last several years, the apparel markets have experienced
difficult competitive conditions and the Company's results of operations have
been significantly lower than anticipated. Such business conditions, coupled
with JPS's substantial debt service requirements on its bonds, resulted in
continued losses and prohibited
2
<PAGE>
the Company from undertaking certain capital improvements consistent with its
business strategy which it believes are necessary to improve profitability.
At this time, the Company is implementing its plan to expand its
distribution and markets to include export sales to Mexico, Europe, and other
continents. Specifically, in furtherance of the Company's expansion into the
apparel industry in Mexico, which is the largest U.S. textile and apparel
export nation, ITM was formed in May 1996 as a joint venture between Grupo
Santa Fe, a Mexican corporation owned by members of the Cohen family of Mexico
City, and Fabrics, each as a 50% owner. Pursuant to a series of supply,
processing, and finishing agreements, C&I provides to ITM greige apparel
fabrics which, in turn, are dyed, printed, or finished by Acabodos Textiles
Mexicanos, S.A. de C.V., a Mexican corporation that is wholly owned by the
Cohen family and one of the leading dyers, finishers, and printers of greige
textile products in Mexico.
D. THE 1996-97 NEGOTIATIONS
Based on the downturn in the apparel fabrics market, increased foreign
competition, and falling margins, JPS determined that its financial resources
would be insufficient to satisfy the mandatory principal payments of
approximately $69 million on the 10.85% Notes and 10.25% Notes due on June 1,
1997. Accordingly, in 1996, JPS commenced negotiations with the Unofficial
Bondholder Committee to restructure those obligations. In addition, JPS began
discussions with its bank lenders to extend the term of its revolving credit
facility that was scheduled to expire on November 1, 1996.
1. The Unofficial Bondholder Committee
In April 1996, approximately 14 institutions owning approximately 71% of
JPS's bonds met in person or by phone to discuss the formation of an informal
bondholder committee, among other things. The following institutions, that
beneficially own, or represent holders that beneficially own, approximately
60% of JPS's bonds, agreed to serve on such a committee and receive
confidential information about JPS:
Magten Asset Management Corp.
CS First Boston Corporation
Merrill Lynch, Pierce, Fenner & Smith, Incorporated
Trust Company of the West
At the request of the Unofficial Bondholder Committee, JPS agreed to finance
the retention by the Unofficial Bondholder Committee of Houlihan, Lokey,
Howard & Zukin, Inc. and Fried, Frank, Harris, Shriver & Jacobson to advise
the Unofficial Bondholder Committee in connection with a possible debt
restructuring. JPS subsequently engaged The Blackstone Group L.P. as its own
financial advisor.
The financial advisor to the Unofficial Bondholder Committee can be
contacted at:
Houlihan, Lokey, Howard & Zukin, Inc.
31 W. 52nd Street
New York, New York 10019
(212) 582-5000
Attn: Mr. Irwin Gold
Mr. David Hilty
Counsel to the Unofficial Bondholder Committee can be contacted at:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
(212) 859-8000
Attn: Brad Eric Scheler, Esq.
Lawrence A. First, Esq.
3
<PAGE>
Over a period of several months, JPS negotiated the terms of its financial
restructuring with the Unofficial Bondholder Committee. During this time, JPS
failed to make approximately $12.8 million of interest payments on its public
bonds which resulted in the occurrence of events of default under the
respective Indentures. Nevertheless, negotiations between JPS and the
Unofficial Bondholder Committee continued, and on May 15, 1997, the parties
reached an agreement in principle on the terms of a restructuring to be
accomplished pursuant to a plan under chapter 11 of the Bankruptcy Code. As
anticipated, JPS subsequently failed to make approximately $69 million of
mandatory principal redemptions and approximately $9 million of additional
interest payments on its public bonds.
2. The Banks and the Credit Agreement
Since 1988, a group of banks has provided a working capital facility for
JPS's and its subsidiaries' operations. The working capital facility is
governed by the Credit Agreement. The lending institutions under the Credit
Agreement include Citibank, N.A., General Electric Capital Corporation, Heller
Financial, Inc., The Bank of New York Commercial Corporation, and NationsBank
of Georgia, N.A. Citibank, N.A. is the agent and administrative agent, and
General Electric Capital Corporation is the co-agent and collateral agent.
Elastomerics and C&I are the borrowers under the Credit Agreement. Their
obligations are guarantied by JPS as well as by each other and each of JPS's
non-operating subsidiaries other than JPS Capital. The borrowings under the
Credit Agreement, together with revenues generated by Elastomerics and C&I,
constitute the principal sources of liquidity for JPS's and its subsidiaries'
operations.
Under the Credit Agreement, Elastomerics and C&I may borrow up to $118
million, up to $15 million of which may be used for letters of credit. All
borrowings bear interest at a base rate plus 1.0% per annum or a eurodollar
rate plus 2.5% per annum and are made or repaid daily in amounts equal to the
Company's net cash requirements for that day. Borrowings are secured by the
assets of all the subsidiaries except JPS Capital. JPS's guaranty obligations
are secured by the stock of the subsidiaries other than JPS Capital. The
Credit Agreement is essential for JPS's and its subsidiaries' continued
operations.
JPS anticipates that as of the Petition Date, approximately $87 million in
principal amount of borrowings and face amount of letters of credit will be
outstanding under the Credit Agreement.
In 1996 and 1997, JPS sought and obtained several amendments to the Credit
Agreement. In summary, the amendments extended the maturity of the Credit
Agreement several times, restricted capital expenditures, eased certain
financial covenants, prohibited additional borrowings for, among other things,
dividends or advances to JPS to pay interest on the bonds, and restricted
certain other dividends to be paid from the operating subsidiaries to JPS to
amounts needed to meet the expenses of the restructuring negotiations. These
expenses included the fees of the advisors to the Unofficial Bondholder
Committee.
Most recently, the Credit Agreement's expiration date was extended to July
16, 1997 to enable JPS to complete this solicitation of votes on its Plan.
Under the current extension, if JPS commences its chapter 11 case by July 16,
1997, the Credit Agreement, by its terms, will be automatically extended to
the earlier of November 1, 1997 or the Effective Date of the Plan. JPS has
requested, and expects to receive, another short extension (to August 8, 1997)
of the Credit Agreement so that it may complete the solicitation and tabulate
votes prior to the commencement of its chapter 11 case.
In view of the scheduled expiration of the Credit Agreement on November 1,
1997 (assuming JPS's chapter 11 case is commenced by July 16, 1997), JPS
intends to arrange a new post-chapter 11 working capital facility either with
the Secured Lenders or other financial institutions. Obtaining such a facility
is a condition precedent to the occurrence of the Effective Date of the Plan.
See Section VIII.C.1, below, entitled "CONFIRMATION OF THE PLAN--Effectiveness
of the Plan--Conditions Precedent to Effectiveness." JPS will seek proposals
from potential lenders at the same time it is soliciting acceptances of the
Plan. JPS anticipates (although there can be no assurance) that a new working
capital facility will be in place at the time the existing Credit Agreement
expires.
For a detailed description of the existing Credit Agreement, see Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" in the Annual Report on Form 10-K
annexed as Exhibit 2 to this Disclosure Statement.
4
<PAGE>
III.
ANTICIPATED EVENTS DURING THE CHAPTER 11 CASE
A. CHAPTER 11 FINANCING
The eighth amendment to the Credit Agreement, dated September 6, 1996,
permits the commencement of JPS's chapter 11 case without causing an
acceleration of the borrowing subsidiaries' obligations under the Credit
Agreement and without impairing their ability to borrow and re-borrow
thereunder. In accordance with such amendment, JPS anticipates entering into a
stipulation with Citibank, N.A., as agent for the Secured Lenders, enabling
JPS to use the proceeds of the subsidiaries' borrowings under the Credit
Agreement, constituting the Secured Lenders' cash collateral, and granting to
the Secured Lenders, adequate protection for such use. JPS anticipates that
the stipulation, which will be subject to approval of the Bankruptcy Court,
will authorize JPS's use of the cash collateral in the ordinary course of its
business and in connection with the administration of its chapter 11 case in
accordance with the terms of the Credit Agreement and the stipulation.
B. BAR DATE
In accordance with the provisions of the Bankruptcy Code and Bankruptcy
Rules, JPS will request the Bankruptcy Court to issue an order (the "Bar Date
Order") establishing a date and time by which proofs of claims (other than
claims of governmental units, including the Pension Benefit Guaranty
Corporation (the "PBGC") and taxing authorities), and proofs of equity
interests (other than equity interests represented by Old Junior Preferred
Stock and Old Common Stock) against JPS are to be filed (the "Bar Date").
Additionally, JPS expects it will request that the Bar Date Order provide
that, unless otherwise ordered by the Bankruptcy Court, claims arising from
the rejection of executory contracts and unexpired leases subsequent to the
Bar Date are to be filed no later than thirty days after the later to occur of
(a) issuance of an order authorizing rejection and (b) the Confirmation Date.
JPS anticipates that a notice of the Bar Date will be published in The
Greenville News and The Wall Street Journal (National Edition), and that a
proof of claim form or proof of equity interest form, as the case may be, and
instructions for its completion will be mailed to all known holders of claims
and equity interests subject to the Bar Date Order, at least twenty days
before the Bar Date.
JPS's non-debtor subsidiaries would be co-liable with JPS for substantially
all amounts (if any) determined to be owed to taxing authorities and to the
PBGC, and because the subsidiaries are non-debtors, the Bar Date would not be
binding with respect to the assertion of claims against them. Accordingly, the
Plan exempts such claims from discharge and JPS will propose that the Bar Date
Order exclude the holders of such claims (i.e., governmental units, including
the PBGC) from the requirement of filing a proof of claim in JPS's case. In
addition, because holders of Old Junior Preferred Stock and Old Common Stock
are to receive no distributions under the Plan, JPS will propose that the Bar
Date Order exclude the holders of such equity interests from the requirement
as well.
The Plan also contemplates that the trustees under the Indentures may, but
are not required to, file proofs of claims on behalf of the respective holders
of 10.85% Notes and 10.25% Notes in Class 4 and 7% Subordinated Debentures in
Class 5, and provides that any claims filed by the holders themselves will be
disallowed and expunged as duplicative of the claims filed by the trustees,
but only to the extent that the trustees in fact file such claims. The Plan
provides that the claims in Class 4 will be deemed allowed in the aggregate
amount of $220,655,136 plus $81,786 for each day after July 7, 1997 through
the Petition Date, and that the claims in Class 5 will be deemed allowed in
the aggregate amount of $58,520,685 plus $11,015 for each day after July 7,
1997 through the Petition Date. The daily amounts represent interest which is
continuing to accrue under the bonds.
C. DISCLOSURE STATEMENT/CONFIRMATION HEARINGS
JPS anticipates that as soon as practicable after commencing its chapter 11
case, it will seek an order of the Bankruptcy Court scheduling hearings to
consider (i) the adequacy of this Disclosure Statement and JPS's solicitation
of votes and (ii) confirmation of the Plan. JPS anticipates that notice of
these hearings will be published in The Greenville News and The Wall Street
Journal (National Edition), and will be mailed to all known holders of claims
and equity interests, at least twenty-five days before the date by which
objections must be filed with the Bankruptcy Court. See Section VIII.A, below,
entitled "CONFIRMATION OF THE PLAN--Confirmation Hearing."
5
<PAGE>
IV.
THE JOINT PLAN OF REORGANIZATION
A. INTRODUCTION
The Plan provides for a major restructuring of JPS's financial obligations.
In essence, the Plan (i) converts $240,091,318 in face amount of publicly held
bonds (representing $279,175,821 in claims as of the assumed July 7, 1997
Petition Date) to $14 million in cash, 99.25% of JPS's New Common Stock, and
$34 million in aggregate principal amount (subject to adjustment on the
maturity date) of JPS Capital's Contingent Notes, (ii) issues New Warrants to
purchase up to 5% of JPS's New Common Stock in place of its Old Senior
Preferred Stock, and (iii) cancels JPS's Old Junior Preferred Stock and Old
Common Stock. The New Common Stock, Contingent Notes, and New Warrants are
described in detail in subsection C, below, entitled "Securities to Be Issued
Pursuant to the Plan."
The Plan provides for the waiver by Odyssey Partners, L.P., DLJ Capital
Corp., and each of their affiliates of all administrative expenses, priority
claims, and prepetition claims against JPS and its subsidiaries, including
claims arising under the prepetition management agreement between JPS and
Odyssey Investors, Inc. The Plan also releases all claims and causes of action
held by JPS or any of its subsidiaries against their officers and directors,
Odyssey Partners, L.P., DLJ Capital Corp., and each of their affiliates, as
well as against the members of the Unofficial Bondholder Committee and any
official committee of unsecured creditors appointed in the chapter 11 case.
See subsections E.3 and E.5, below, respectively entitled "Other Plan
Provisions--Waiver of Claims" and "Other Plan Provisions--Limited Release."
The result of the restructuring will be a Reorganized JPS whose only
significant debt obligations will be its guaranties of the bank debt of the
subsidiaries. JPS believes that such a drastic reduction is necessary to
permit the Company to compete effectively in today's economic environment.
JPS and the members of the Unofficial Bondholder Committee believe that the
acceptance of the Plan is essential for JPS's continued survival and that the
Plan provides the best opportunity for enhanced recoveries for the holders of
its outstanding bonds. JPS believes and will demonstrate to the Bankruptcy
Court that creditors and shareholders will receive at least as much, if not
more, in value under the Plan than they would receive in a chapter 7
liquidation.
The following is a nontechnical discussion of the important provisions of
the Plan. The Plan is attached as Exhibit 1 to this Disclosure Statement. The
terms of the Plan govern in the event of any discrepancies with the following
discussion.
B. CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS UNDER THE PLAN
One of the key concepts under the Bankruptcy Code is that only claims and
equity interests that are "allowed" may receive distributions under a chapter
11 plan. The term is used throughout the Plan and the descriptions below. In
general, an "allowed" claim or "allowed" equity interest simply means that the
debtor agrees, or in the event of a dispute, that the Bankruptcy Court
determines, that the claim or equity interest, including the amount, is in
fact a valid obligation of the debtor; in other words, that the "claim" or
equity interest exists. Section 502(a) of the Bankruptcy Code provides that a
timely filed claim or equity interest is automatically "allowed" unless the
debtor or other party in interest objects. However, section 502(b) of the
Bankruptcy Code specifies certain claims that may not be "allowed" in
bankruptcy even if a proof of claim is filed. These include claims that are
unenforceable under the governing agreement or applicable nonbankruptcy law,
claims for unmatured interest, property tax claims in excess of the debtor's
equity in the property, claims for services that exceed their reasonable
value, lease and employment contract rejection damage claims in excess of
specified amounts, late-filed claims, and contingent claims for contribution
and reimbursement. In addition, Bankruptcy Rule 3003(c)(2) prohibits the
allowance of any claim or equity interest that either is not listed on the
debtor's schedules or is listed as disputed, contingent, or unliquidated, if
the holder has not filed a proof of claim or equity interest before the
established deadline.
6
<PAGE>
The Bankruptcy Code also requires that, for purposes of treatment and
voting, a chapter 11 plan divide the different claims against, and equity
interests in, the debtor into separate classes based upon their legal nature.
Claims of a substantially similar legal nature are usually classified
together, as are equity interests of a substantially similar legal nature.
Because an entity may hold multiple claims and/or equity interests which give
rise to different legal rights, the "claims" and "equity interests"
themselves, rather than their holders, are classified. As a result, under
JPS's Plan, for example, an entity that holds both 7% Subordinated Debentures
and Old Common Stock would have its claims classified in Class 5 and its
equity interests classified in Class 10. To the extent of this holder's
claims, the holder would then be entitled to the voting and treatment rights
that the Plan provides with respect to Class 5, and to the extent of the
holder's equity interests, the voting and treatment rights that the Plan
provides with respect to Class 10.
Under a chapter 11 plan, the separate classes of claims and equity interests
must be designated either as "impaired" (affected by the plan) or "unimpaired"
(unaffected by the plan). If a class of claims is "impaired," the Bankruptcy
Code affords certain rights to the holders of such claims, such as the right
to vote on the plan (unless the plan provides for no distribution to the
holder, in which case, the holder is deemed to reject the plan), and the right
to receive under the chapter 11 plan, no less value than the holder would
receive if the debtor were liquidated under chapter 7. Under section 1124 of
the Bankruptcy Code, a class of claims or interests is "impaired" unless the
plan (i) does not alter the legal, equitable, and contractual rights of the
holders or (ii) irrespective of the holders' acceleration rights, cures all
defaults (other than those arising from the debtor's insolvency, the
commencement of the case, or nonperformance of a nonmonetary obligation),
reinstates the maturity of the claims or interests in the class, compensates
the holders for actual damages incurred as a result of their reasonable
reliance upon any acceleration rights, and does not otherwise alter their
legal, equitable, and contractual rights. Typically, this means the holder of
an unimpaired claim will receive on the later of the effective date or the
date on which amounts owing are due and payable, payment in full, in cash,
with postpetition interest to the extent appropriate and provided under the
governing agreement (or if there is no agreement, under applicable
nonbankruptcy law), and the remainder of the debtor's obligations, if any,
will be performed as they come due in accordance with their terms. Thus, other
than its right to accelerate the debtor's obligations, the holder of an
unimpaired claim will be placed in the position it would have been in had the
debtor's case not been commenced.
Consistent with these requirements, the Plan divides the allowed claims
against, and allowed equity interests in, JPS into the following classes:
<TABLE>
<S> <C> <C>
Unclassified Administrative Expenses
Unclassified Priority Tax Claims
Class 1 Priority Non-Tax Claims Unimpaired
Class 2 Secured Bank Guaranty Claims Unimpaired
Class 3 Other Secured Claims Unimpaired
Class 4 Senior Note Claims Impaired
Class 5 Subordinated Debenture Claims Impaired
Class 6 General Unsecured Claims Unimpaired
Class 7 Affiliate Claims Impaired
Class 8 Senior Preferred Stock Interests Impaired
Class 9 Junior Preferred Stock Interests Impaired
Class 10 Common Stock Interests Impaired
</TABLE>
For purposes of computing distributions under the Plan, allowed claims do
not include postpetition interest unless otherwise specified in the order of
the Bankruptcy Court confirming the Plan, or required by section 506(b) or
section 1124 of the Bankruptcy Code.
Administrative Expenses
Administrative expenses are the actual and necessary costs and expenses of
JPS's chapter 11 case that are allowed under sections 503(b) and 507(a)(1) of
the Bankruptcy Code. Those expenses will include the
7
<PAGE>
postpetition salaries and other benefits for its eight employees, postpetition
rent for its headquarters, amounts owed to vendors providing goods and
services to JPS during the chapter 11 case, tax obligations incurred after the
Petition Date, and certain statutory fees and charges assessed under section
1930, chapter 123, title 28, United States Code. Other administrative expenses
include the actual, reasonable fees and expenses of JPS's advisors and the
advisors to any official committees appointed in, and incurred during, the
chapter 11 case.
Administrative expenses representing liabilities incurred in the ordinary
course of business, consistent with past practice, by JPS or liabilities
arising under loans or advances to JPS after the Petition Date, whether or not
incurred in the ordinary course of business, will be paid by JPS in accordance
with the terms and conditions of the particular transaction and any related
agreements and instruments. All other administrative expenses will be paid, in
full, in cash, on the Effective Date or as soon thereafter as is practicable,
or on such other terms to which JPS and the holder of such administrative
expense agree.
JPS is a holding company whose direct operating expenses are relatively
small. Accordingly, JPS anticipates that most administrative expenses will be
paid as they come due during the chapter 11 case and that the administrative
expenses to be paid on the Effective Date of the Plan will, for the most part,
comprise the allowed fees and expenses incurred by professionals retained in
the case and the costs attendant to JPS's assumption of executory contracts
and unexpired leases under the Plan. JPS estimates that, assuming the
Effective Date occurs thirty days after the commencement of the chapter 11
case, allowed administrative expenses will approximate $650,000 (of which
approximately $500,000 is estimated for the fees and expenses of JPS's
professionals). In the event an official committee of unsecured creditors is
appointed, that estimate would be increased by approximately $100,000. The
reasonable professional fees and expenses incurred by the Unofficial
Bondholder Committee during the chapter 11 case will be paid by JPS as part of
the treatment afforded Class 4 and Class 5 claims, and accordingly, are not
reflected in the foregoing estimate of administrative expense claims.
All payments to professionals for compensation and reimbursement of expenses
and all payments to reimburse expenses of members of statutory committees will
be made in accordance with the procedures established by the Bankruptcy Court
and Bankruptcy Rules relating to the payment of interim and final compensation
and expenses. The Bankruptcy Court will review and determine all such
requests.
In addition to the foregoing, section 503(b) of the Bankruptcy Code provides
for payment of compensation to creditors, indenture trustees, and other
persons making a "substantial contribution" to a chapter 11 case, and to
attorneys for, and other professional advisors to, such persons. Requests for
such compensation must be approved by the Bankruptcy Court after notice and a
hearing at which JPS and other parties in interest may participate, and if
appropriate, object to the allowance thereof.
Priority Tax Claims
Priority tax claims essentially consist of unsecured claims by federal and
state governmental units for taxes specified in section 507(a)(8) of the
Bankruptcy Code, such as certain income taxes, property taxes, excise taxes,
and employment and withholding taxes. These unsecured claims are given a
statutory priority in right of payment. JPS estimates that on the Effective
Date, the allowed amount of such claims will aggregate no more than $2,000.
Each allowed priority tax claim that is due and payable on or before the
Effective Date will be paid in full, in cash, on the Effective Date, except to
the extent the holder of such claim agrees to a different treatment.
Under applicable law, JPS's tax returns are subject to review for at least
three years after filing. This means that JPS and its subsidiaries may have
contingent tax obligations which have not been determined at the time of the
Petition Date or the Bar Date. The Plan provides that each priority tax claim
that is not payable on or before the Effective Date will survive confirmation
of the Plan, remain unaffected thereby, and not be discharged. In addition,
JPS will request that the Bar Date Order issued by the Bankruptcy Court
exclude governmental units from its scope (and from the scope of the statutory
bar date set forth in section 502(b)(9) of the Bankruptcy Code) and exempt
them from the requirement of filing proofs of claims in JPS's case. These are
important to JPS's restructuring for two reasons. First, obtaining a final
determination of any contingent priority tax claims
8
<PAGE>
may significantly delay the confirmation of the Plan. Such delay could be
adverse to the continued operations of the subsidiaries. Second, each of JPS's
subsidiaries is severally liable for any such claims. Because the subsidiaries
are not in chapter 11, obtaining a final determination of the tax liabilities
as to JPS would not necessarily bind the taxing authorities with respect to
JPS's non-debtor subsidiaries.
CLASS 1--PRIORITY NON-TAX CLAIMS
(Unimpaired. Therefore, presumed to accept Plan and not entitled
to vote.)
Priority non-tax claims include certain allowed employee compensation and
benefit claims of JPS's 8 employees incurred within 90 days and 180 days,
respectively, prior to the Petition Date in aggregate amounts up to $4,000 per
employee. These claims are granted priority in payment under section 507(a) of
the Bankruptcy Code. JPS estimates that the allowed claims in Class 1 that are
due and payable on or before the Effective Date will aggregate no more than
$50,000. Each allowed priority non-tax claim will be paid either in full, in
cash, on the Effective Date and otherwise rendered unimpaired under section
1124 of the Bankruptcy Code, or on such other terms to which the holder of
such claim may agree.
CLASS 2--SECURED BANK GUARANTY CLAIMS
(Unimpaired. Therefore, presumed to accept Plan and not entitled
to vote.)
Class 2 consists of the allowed secured guaranty claims arising under the
Credit Agreement. JPS estimates that such claims will aggregate approximately
$87 million. On the Effective Date, each allowed claim in Class 2 will be
rendered unimpaired as provided in section 1124 of the Bankruptcy Code, except
to the extent that any holder of a claim in Class 2 agrees to a different
treatment.
CLASS 3--OTHER SECURED CLAIMS
(Unimpaired. Therefore, presumed to accept Plan and not entitled
to vote.)
Class 3 consists of allowed secured claims, other than the Class 2 secured
guaranty claims arising under the Credit Agreement and secured Class 7
affiliate claims, to the extent of the value of the holder's interest in JPS's
interest in the collateral which secures the claim. Such claims generally
would include claims arising under agreements relating to the financing of
JPS's office equipment. At the present time, JPS does not believe there are
any Class 3 claims, and therefore, estimates that the allowed claims in Class
3 will aggregate $0. However, to the extent there are allowed claims in Class
3 as of the Petition Date, on the Effective Date they will be reinstated and
rendered unimpaired as provided in section 1124 of the Bankruptcy Code, except
to the extent that any holder of a claim in Class 3 agrees to a different
treatment.
CLASS 4--SENIOR NOTE CLAIMS
(Impaired. Entitled to vote.)
Class 4 consists of the allowed claims of the holders of 10.85% Notes and
10.25% Notes. The aggregate claims in Class 4 will be deemed allowed pursuant
to the Plan in the amount of $220,655,136 plus $81,786 for each day after July
7, 1997 through the Petition Date, and is divided between the 10.85% Notes and
the 10.25% Notes, as follows:
<TABLE>
<S> <C>
10.85% Notes -- $129,086,803 plus $48,065 for each day
after July 7, 1997 through the
Petition Date
10.25% Notes -- $91,568,333 plus $33,721 for each day
after July 7, 1997 through the
Petition Date
</TABLE>
The difference between the face amount of the 10.85% Notes and the allowed
amount of the claims represented by the 10.85% Notes represents interest that
is accrued and unpaid as of the Petition Date. The difference between the face
amount of the 10.25% Notes and the allowed amount of the claims represented by
the 10.25% Notes represents the face amount of the notes, less the amount of
original issue discount which is not yet accreted as of the Petition Date
(approximately $1.44 per $1,000 note assuming a July 7, 1997 Petition
9
<PAGE>
Date), plus interest that is accrued and unpaid as of the Petition Date.
Original issued discount is treated as unmatured interest and is not allowed
under section 502(b)(2) of the Bankruptcy Code.
The holders of allowed claims in Class 4 will receive their Pro Rata Shares
of (i) $14 million in cash, (ii) the Contingent Notes, and (iii) 9,329,146
shares of New Common Stock. The 10.85% Notes and the 10.25% Notes will be
cancelled. Distributions to this class will be to the indenture trustees under
the applicable Indentures. Holders may obtain their distributions from the
trustees by surrendering their notes. In addition, on the Effective Date,
Reorganized JPS will pay, in cash, the reasonable unpaid fees and expenses
incurred by the Unofficial Bondholder Committee in connection with the
restructuring of JPS and in negotiating the Plan and related documents,
including the reasonable fees and expenses incurred by the Unofficial
Bondholder Committee's counsel and financial advisor. Based upon estimates
provided to JPS, such amounts are anticipated to aggregate (in respect of
Class 4 and Class 5) approximately $400,000.
The recovery for the holders in Class 4 depends significantly on the value
of the Contingent Notes and the New Common Stock on the Effective Date. JPS
estimates that the overall recovery for Class 4 will be approximately 58.49%
under a consensual Plan. This estimate is based on Class 4 receiving $14
million in cash and New Common Stock valued at $115.1 million (based on a
projected mid-point value of approximately $12.33 per share). The estimate
makes no adjustment to the value of the New Common Stock due to the issuance
of the New Warrants and does not take into account any payments that may be
received by the holders in Class 4 under the Contingent Notes. For a
discussion of the Contingent Notes, see subsection C.2, below, entitled
"Securities to Be Issued Pursuant to the Plan--Contingent Notes." For a
discussion of the New Common Stock, see subsection C.1, below, entitled
"Securities to Be Issued Pursuant to the Plan--New Common Stock," and Section
V, below, entitled "PROJECTIONS AND VALUATION ANALYSIS."
Alternative Nonconsensual Treatment. In order to reach an overall consensual
plan, a portion of the value that might otherwise go to Class 4 if the
subordination provisions of the Indentures relating to Class 4 and Class 5
were strictly enforced, has been allocated to Class 5. Similarly, a portion of
the value that would otherwise go to Class 4 if the absolute priority rule
(i.e., claims are fully satisfied before any distribution is made on account
of equity) were strictly enforced, has been allocated to Class 8. However, in
the event Class 5 rejects the Plan, JPS will ask the Bankruptcy Court to
confirm the Plan without any waiver of the subordination provisions, and if
Class 5 or Class 8 rejects the Plan, JPS will ask the Bankruptcy Court to
confirm the Plan in accordance with section 1129(b) of the Bankruptcy Code
which, through the "fair and equitable test," incorporates the absolute
priority rule. This means that (i) if Class 5 rejects the Plan, it will
receive no distribution and the property that would otherwise go to Class 5
pursuant to the Plan will instead be distributed to holders of allowed claims
in Class 4, resulting in Class 4 receiving approximately 99.25% (9,924,623
shares) of the New Common Stock in addition to $14 million in cash, the
Contingent Notes, and JPS's payment of the reasonable expenses of the
Unofficial Bondholder Committee, and (ii) if Class 5 or Class 8 rejects the
Plan, Class 8 will receive no distribution and the New Warrants that would
otherwise go to Class 8 pursuant to the Plan will not be issued. For a
discussion of the "fair and equitable test," see Section VIII.B.2, below,
entitled "CONFIRMATION OF THE PLAN--Requirements for Confirmation of the
Plan--Nonconsensual Confirmation."
Voting. Holders of claims in Class 4 should vote the aggregate face amount
of their notes as of the June 20, 1997 record date. In order to calculate the
precise vote for the class, interest will be added by JPS (or its Voting
Agent) and a minor adjustment to the face amount of the 10.25% Notes will be
made to account for the remaining original issue discount.
CLASS 5--SUBORDINATED DEBENTURE CLAIMS
(Impaired. Entitled to vote.)
Class 5 consists of the allowed claims of the holders of 7% Subordinated
Debentures. The aggregate claims in Class 5 will be deemed allowed pursuant to
the Plan in the amount of $58,520,685 plus $11,015 for each day after July 7,
1997 through the Petition Date.
10
<PAGE>
The holders of allowed claims in Class 5 will receive their Pro Rata Shares
of 595,477 shares of New Common Stock. The 7% Subordinated Debentures will be
cancelled. Distributions to this class will be to the indenture trustee under
the Indenture governing the debentures. Holders of these debentures may obtain
their distributions from the trustee by surrendering their debentures. In
addition, on the Effective Date, Reorganized JPS will pay, in cash, the
reasonable unpaid fees and expenses incurred by the Unofficial Bondholder
Committee in connection with the restructuring of JPS and in negotiating the
Plan and related documents, including the reasonable fees and expenses
incurred by the Unofficial Bondholder Committee's counsel and financial
advisor. Based upon estimates provided to JPS, such amounts are anticipated to
aggregate (in respect of Class 4 and Class 5) approximately $400,000.
The recovery for the holders in Class 5 depends significantly on the value
of the New Common Stock on the Effective Date. JPS estimates that the overall
recovery for Class 5 will be approximately 12.55% under a consensual Plan.
This estimate is based on Class 5 receiving New Common Stock valued at $7.3
million (based on a projected mid-point value of approximately $12.33 per
share). This estimate makes no adjustment to the value of the New Common Stock
due to the issuance of the New Warrants. For a discussion of the New Common
Stock, see subsection C.1, below, entitled "Securities to Be Issued Pursuant
to the Plan--New Common Stock," and Section V, below, entitled "PROJECTIONS
AND VALUATION ANALYSIS."
Alternative Nonconsensual Treatment. In order to reach an overall consensual
plan, a portion of the value that might otherwise go to Class 4, if the
subordination provisions of the Indentures relating to Class 4 and Class 5
were strictly enforced, has been allocated to Class 5. However, in the event
Class 5 rejects the Plan, JPS will ask the Bankruptcy Court to confirm the
Plan without any waiver of the subordination provisions. This means that Class
5 will receive no distribution and the property that would otherwise go to
Class 5 pursuant to the Plan will instead be distributed to the holders of
allowed claims in Class 4.
Voting. Holders of claims in Class 5 should vote the aggregate face amount
of their notes as of the June 20, 1997 record date. In order to calculate the
precise vote for the class, interest will be added by JPS (or its Voting
Agent).
CLASS 6--GENERAL UNSECURED CLAIMS
(Unimpaired. Therefore, presumed to accept Plan and not
entitled to vote.)
Class 6 consists of allowed general unsecured nonpriority claims which
generally include the claims of trade creditors for goods and services
provided to JPS prior to the Petition Date, claims for prepetition fees and
expenses incurred by the trustees under any of the Indentures, claims for
breach of contract, and damage claims. Class 6 also includes the pension
funding deficit claims of the PBGC, if, and to the extent, allowed, which
claims JPS will seek to have excluded from the scope of the Bar Date Order due
to, among other things, their contingent nature. See Section VI.D, below,
entitled "CERTAIN FACTORS AFFECTING JPS--Pending Litigation or Demands
Asserting Prepetition Liability." JPS estimates that on the Effective Date,
allowed claims in Class 6 will aggregate no more than $250,000. On the
Effective Date, each claim in Class 6 will be paid in full, in cash, or will
be reinstated and rendered unimpaired in accordance with section 1124(1) or
1124(2) of the Bankruptcy Code, except to the extent that any holder of a
claim in Class 6 agrees to a different treatment.
CLASS 7--AFFILIATE CLAIMS
(Impaired, but as insiders, presumed to accept Plan. Therefore,
not entitled to vote.)
Class 7 consists of the secured and unsecured claims of JPS's affiliates,
including without limitation, those of JPS's subsidiaries relating to the
transfers or dividends of property from the subsidiaries to JPS without (or
for inadequate) consideration, such as amounts advanced or dividended to JPS
by subsidiaries for the purpose of providing JPS with funds to pay its
expenses and make payments on its bonds and debentures, the claims of Odyssey
Investors, Inc. (and any of its affiliates) arising under its management
agreement with JPS, and the claims of DLJ Capital Corp., if any. No
distributions will be made to Class 7 and the claims in such class will be
treated as dividends or capital contributions, as the case may be.
11
<PAGE>
CLASS 8--SENIOR PREFERRED STOCK INTERESTS
(Impaired. Entitled to vote.)
Class 8 consists of allowed equity interests evidenced by Old Senior
Preferred Stock and any options, warrants, calls, subscriptions, or any other
similar rights or other agreements or commitments, contractual or otherwise,
obligating JPS to acquire, issue, transfer, or sell any shares of Old Senior
Preferred Stock. The Old Senior Preferred Stock will be cancelled, and
assuming a consensual Plan, each holder of an allowed Old Senior Preferred
Stock equity interest will receive its Pro Rata Share of New Warrants,
representing rights to purchase 5% (approximately 526,316 shares) of New
Common Stock, at $98.76 per share. The actual value of the New Warrants
depends on a significant appreciation in the value of the New Common Stock,
and therefore, due to the uncertainties of such appreciation, the New Warrants
have not been assigned a value in this Disclosure Statement. In general, the
New Warrants will have little or no value until the value of the New Common
Stock distributed to Class 5 equals the allowed claims in such class. For a
discussion of the New Warrants, see subsection C.3, below, entitled
"Securities to Be Issued Pursuant to the Plan--New Warrants."
Alternative Nonconsensual Treatment. If Class 5 or Class 8 votes to reject
the Plan, holders of Class 8 equity interests will not receive any property
under the Plan or retain any equity interest in Reorganized JPS.
CLASS 9--JUNIOR PREFERRED STOCK INTERESTS
(Impaired; no distribution. Therefore, deemed to reject Plan and
not entitled to vote.)
Class 9 consists of equity interests evidenced by Old Junior Preferred Stock
and any options, warrants, calls, subscriptions, or any other similar rights
or other agreements or commitments, contractual or otherwise, obligating JPS
to acquire, issue, transfer, or sell any shares of Old Junior Preferred Stock.
The Old Junior Preferred Stock will be cancelled. Holders of Class 9 equity
interests will not receive any property under the Plan or retain any equity
interest in Reorganized JPS.
CLASS 10--COMMON STOCK INTERESTS
(Impaired; no distribution. Therefore deemed to reject Plan
and not entitled to vote.)
Class 10 consists of equity interests evidenced by class A Old Common Stock,
class B Old Common Stock, and any options, warrants, calls, subscriptions, or
any other similar rights or other agreements or commitments, contractual or
otherwise, obligating JPS to acquire, issue, transfer, or sell any shares of
Old Common Stock. The Old Common Stock will be cancelled. Holders of Class 10
equity interests will not receive any property under the Plan or retain any
equity interest in Reorganized JPS.
C. SECURITIES TO BE ISSUED PURSUANT TO THE PLAN
1. New Common Stock
Pursuant to the Plan, on the Effective Date, 22 million shares of New Common
Stock will be authorized. Of such authorized shares, approximately 11,379,801
shares will be issued and distributed, or reserved, as follows: approximately
9,924,623 shares will be distributed to the holders of allowed claims in
Classes 4 and 5, approximately 526,316 shares will be reserved to satisfy the
obligations of Reorganized JPS under the New Warrants, approximately 75,377
shares will be issued to members of the Management Group pursuant to the terms
of their amended and restated employment agreements with Reorganized JPS, and
approximately 853,485 shares will be reserved for distribution pursuant to the
Incentive Plan. For a discussion of the amended and restated agreements with
the Management Group, see subsection E.1, below, entitled "Other Plan
Provisions--Executory Contracts and Unexpired Leases." For a discussion of the
Incentive Plan, see subsection 4, below, entitled "Incentive and Capital
Accumulation Plan."
Each share of New Common Stock will entitle its holder to one vote. Holders
of New Common Stock will have the right to participate proportionately in any
dividends distributed by Reorganized JPS.
12
<PAGE>
2. Contingent Notes
On the Effective Date, Reorganized JPS will cause JPS Capital to issue the
Contingent Notes pursuant to the terms of the Contingent Note Indenture in the
form of Exhibit C to the Plan. The Contingent Notes will represent unsecured
obligations of JPS Capital that are contingent as to timing and amount.
Reorganized JPS will not be obligated to make any payments with respect to the
Contingent Notes, although it will have certain responsibilities under the
Contingent Note Indenture.
The timing and amount of payments due pursuant to the Contingent Notes will
depend upon the amount of cash on hand at JPS Capital at maturity, which in
turn will depend on the ultimate resolution of certain possible contingent tax
liabilities of the Company. JPS Capital was established in 1994 at the time of
the Company's sale of its former automotive division. During fiscal year 1994,
the Company utilized approximately $141 million of tax net operating loss
carryforwards to offset the gain recognized on such sale. Although the Company
believes that the use of such carryforwards to offset such gain more likely
than not will be sustained under existing tax laws, uncertainty existed at the
time of such sale and continues to exist. Therefore, in accordance with
provisions of the Indentures, the Company set aside in JPS Capital a portion
of the net proceeds from such sale to satisfy, if necessary, these possible
contingent tax liabilities. See Item 7 "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Inflation and Tax Matters"
in the Annual Report on Form 10-K annexed as Exhibit 2 to this Disclosure
Statement. Such amounts were invested in United States Treasury Securities by
JPS Capital. As of the Effective Date, pursuant to the Plan, JPS Capital will
hold funds of approximately $34 million. Pursuant to the Plan, JPS Capital
will continue to hold those funds on behalf of the JPS tax affiliates, and
following the final resolution of such possible contingent tax liability,
provide to them from such funds the amounts with which they will satisfy their
finally determined liabilities (if any) for Taxes (as defined in the
Contingent Note Indenture).
The Contingent Notes will be issued in an aggregate initial principal amount
of $34 million, subject to adjustment in the following circumstances: In the
event the aggregate funds held by JPS Capital is less than $34 million
following the date on which the possible contingent tax liability in respect
of the Company's 1994 fiscal year is finally resolved, and to the extent of
any such liability, satisfied, the aggregate principal amount of the
Contingent Notes will be reduced to equal the aggregate funds held by JPS
Capital. Interest will be payable under the Contingent Notes to the extent the
aggregate funds held by JPS Capital on the date of the principal payment (if
any) thereon as provided above exceeds $34 million. If, on such date, the
aggregate principal amount, reduced as provided above, is $0 or less, the
Contingent Notes will be deemed automatically cancelled and no longer an
obligation of JPS Capital.
The Contingent Notes will mature and be payable on the 45th day following
the date on which the possible contingent tax liability in respect of fiscal
year 1994 is finally resolved, and to the extent of any such liability,
satisfied. The Contingent Note Indenture will state JPS Capital's projection
of the expected maturity date of the Contingent Notes (although such projected
date cannot be assured). Under the Contingent Note Indenture, on each January
25, April 25, July 25, and October 25, commencing on October 25, 1997, JPS
Capital will be required to notify the trustee under the Contingent Note
Indenture of its then-current projection of when the Contingent Notes will
mature. The projection will be based on the facts known by JPS Capital and the
law in effect at the time of such notice. In the event the projected maturity
date is later than September 10, 1998, the notice will also include the
reasons for such delay.
JPS Capital will be prohibited from redeeming any portion of the Contingent
Notes prior to maturity, except that the Board of Directors of Reorganized JPS
may (but under no circumstances will it be required to), from time to time, in
its discretion, give notice of its intent to deposit funds to be used by JPS
Capital to redeem all or a portion of the Contingent Notes, and such deposits
will constitute capital contributions to JPS Capital. Upon the giving of such
notice, Reorganized JPS will be obligated to deposit such funds, and following
the making of that deposit, JPS Capital will be required to use the same to
redeem a portion of the Contingent Notes. However, JPS has been informed by
the administrative agent under the Credit Agreement that if the Secured
Lenders were to provide the post-reorganization working capital facility to
the Company, they would require that the facility
13
<PAGE>
contain restrictions that would affect the ability of Reorganized JPS to make
such deposits. Accordingly, there can be no assurance that any such early
redemptions of the Contingent Notes will occur.
No interest will be paid upon the redemption of any portion of the
Contingent Notes prior to maturity. On the maturity date, however, interest
will be payable on the portions of Contingent Notes redeemed prior to the
maturity date as well as on the portions of the Contingent Notes redeemed upon
maturity, in the amounts specified above. The Contingent Note Indenture
provides that the Contingent Notes will be treated as equity of JPS Capital
solely for tax purposes and for all other purposes shall be deemed to be
indebtedness of JPS Capital.
The certificate of incorporation of Reorganized JPS will restrict
Reorganized JPS from entering into any transaction that would, directly or
indirectly, prohibit, restrict, delay, or hinder the payment of any amounts
due under the Contingent Notes upon maturity, without the unanimous consent of
the holders of New Common Stock. Neither Reorganized JPS, JPS Capital, nor any
other entity will have the power or authority to, directly or indirectly,
prohibit, restrict, delay, or hinder the payment of any amounts due under the
Contingent Notes upon maturity. However, nothing in the Plan or any related
documents may restrict the actions taken by Reorganized JPS or its tax
affiliates in connection with their resolution of their liabilities (if any)
for Taxes (as defined in the Contingent Note Indenture).
Except as specifically provided in the Contingent Note Indenture, neither
JPS Capital, Reorganized JPS, nor the trustee under the Contingent Note
Indenture may amend or waive compliance by JPS Capital or Reorganized JPS with
any provision of the Contingent Notes or the Contingent Note Indenture without
the requisite consent of the holders of the Contingent Notes and a final order
of the Bankruptcy Court. In addition, until the date following the Maturity
Date (as defined in the Contingent Note Indenture), (i) Reorganized JPS may
not transfer, pledge, or otherwise dispose of any shares of capital stock of
JPS Capital, (ii) the certificate of incorporation and bylaws of JPS Capital
may not be amended, and (iii) JPS Capital may not declare any dividends, make
any distributions to Reorganized JPS or any other entity, incur or cause the
incurrence of any consensual obligations or liens, or make any transfer or
disposition of property not permitted by JPS Capital's certificate of
incorporation (as set forth in Exhibit F to the Plan). These restrictions do
not affect the ability of shareholders to sell the capital stock of
Reorganized JPS or a sale of Reorganized JPS.
No acceleration of obligations under the Contingent Notes and the Contingent
Note Indenture may occur prior to maturity. The exercise of remedies will be
limited to the following: (i) a suit seeking damages against Reorganized JPS
for failing to deposit sufficient funds for a redemption in accordance with
its prior notice thereof or for breach by Reorganized JPS of any covenant made
by Reorganized JPS under the Contingent Note Indenture, (ii) a suit to compel
JPS Capital to make a redemption for which it has received funds from
Reorganized JPS, (iii) a suit against JPS Capital seeking to recover unpaid
principal and interest at maturity, and (iv) a suit seeking to enforce by
means of specific performance any provision of the Contingent Notes or the
Contingent Note Indenture. The rights of the individual holders of the
Contingent Notes to pursue remedies with respect to such notes and the
Contingent Note Indenture will be limited to instances in which the trustee
has failed to pursue a remedy within sixty days after receipt of the request
and offer of indemnity (if any) of holders made in compliance with the
provisions of the Contingent Note Indenture.
Due to the uncertainties in connection with the contingent tax liabilities
described above, JPS has not assigned a value to the Contingent Notes for
purposes of calculating the overall recoveries for Class 4.
3. New Warrants
If Class 5 and Class 8 vote to accept the Plan, on the Effective Date,
Reorganized JPS will issue an aggregate number of New Warrants to purchase
526,316 shares of New Common Stock at a price equal to $98.76 per share. The
New Warrants will expire on the third anniversary of the Effective Date. If
either Class 5 or Class 8 does not accept the Plan, the New Warrants will not
be issued. The purpose of the issuance of the New Warrants is to provide value
to the holders of the Old Senior Preferred Stock in the event the value of the
New Common Stock appreciates significantly. Specifically, the New Warrants
will have no significant value until the New Common Stock appreciates
sufficiently to provide a full recovery for the holders of allowed claims in
Class 5. The likelihood of such appreciation cannot be determined at this time
and there can be no assurance that it will occur.
14
<PAGE>
4. Incentive and Capital Accumulation Plan
The purpose of the Incentive Plan is to align the interests of key employees
and non-employee directors with those of Reorganized JPS's stockholders. The
Incentive Plan is also intended to provide incentives that will attract,
retain, and motivate highly competent individuals as key employees of
Reorganized JPS and its subsidiaries by providing them with opportunities to
acquire shares of New Common Stock or monetary payments based on the value of
such shares. JPS anticipates that its Board of Directors will adopt the
Incentive Plan prior to the commencement of its chapter 11 case; however,
benefits under the Incentive Plan, which may be granted to salaried, key
employees and non-employee directors of Reorganized JPS or its subsidiaries as
any one or combination of stock options, stock appreciation rights, stock
awards, performance awards, and stock units, cannot be effective until after
the Effective Date. The Incentive Plan will terminate on the tenth anniversary
of its adoption.
THE PLAN WILL BE DEEMED A SOLICITATION OF THE HOLDERS OF NEW COMMON STOCK
FOR APPROVAL OF THE INCENTIVE PLAN. JPS BELIEVES THAT THE ORDER CONFIRMING THE
PLAN SHOULD CONSTITUTE SUCH APPROVAL OF THE INCENTIVE PLAN FOR PURPOSES OF
SECTIONS 422 AND 162(M) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"TAX CODE"). THERE CAN BE NO ASSURANCE, HOWEVER, THAT THE INTERNAL REVENUE
SERVICE WILL AGREE WITH SUCH POSITION. The form of the Incentive Plan is
attached as Exhibit J to the Plan.
Specifically, on the Effective Date, 853,485 shares of New Common Stock,
representing, on a fully diluted basis (inclusive of the New Warrants),
approximately 7.5% of the aggregate shares of New Common Stock to be issued
and reserved on the Effective Date, will be reserved for benefits to be
granted to salaried, key employees and non-employee directors of Reorganized
JPS or its subsidiaries. These benefits will be granted by the committee of
the Board of Directors of Reorganized JPS (the "Compensation Committee")
comprised solely of two or more "non-employee directors" within the meaning of
Rule 16b-3(b)(3) (or any successor rule) of the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), and unless otherwise determined by the
Board of Directors of Reorganized JPS, "outside directors" within the meaning
of Treasury Regulation Section 1.162-27(e)(3) and Section 162(m) of the Tax
Code, which will administer the Incentive Plan. No individual may be granted
benefits with respect to more than a total of 325,000 shares during the term
of the Incentive Plan. Shares of New Common Stock subject to the Incentive
Plan may either be authorized and unissued shares or previously issued shares
acquired or to be acquired by Reorganized JPS and held in its treasury.
a. Benefits.
(1) Stock Options. Stock options granted pursuant to the Incentive Plan
may either be incentive stock options within the meaning of Section 422 of the
Tax Code ("ISOs"), or non-qualified stock options ("NQSOs"). The exercise
price for each share of New Common Stock subject to an option will be an
amount that the Compensation Committee determines, in its good faith judgment,
to be not less than the fair market value of the New Common Stock on the date
the option is granted. The option exercise price may be paid in cash, or in
the discretion of the Compensation Committee on the date of grant, by the
delivery of shares then owned by the participant, by delivery of a promissory
note, by any combination of the foregoing, or as otherwise determined by the
Compensation Committee.
ISOs will not be issuable to a participant in tandem with a NQSO, and no
stock option will be exercisable later than ten years after the date on which
it is granted. To the extent the aggregate market value of the shares of New
Common Stock with respect to which options exercisable for the first time by a
participant in any calendar year exceeds $100,000, such options will be
treated as NQSOs. ISOs may not be granted to any participant who owns stock
possessing (after application of the attribution rules of Section 424(d) of
the Tax Code) more than 10% of the total combined voting power of all
outstanding classes of stock of Reorganized JPS or any of its subsidiaries,
unless the option price is at least 110% of the fair market value at the date
of grant and the option is not exercisable after five years from the date of
grant.
15
<PAGE>
Options to acquire approximately 5% (approximately 568,900 shares) of the
New Common Stock reserved on the Effective Date for benefits under the
Incentive Plan will be granted to the senior members of the management of
Reorganized JPS and its subsidiaries. The allocation of such grants will be
subject to the approval of the Board of Directors of Reorganized JPS and such
grants will be made no later than the last date of the Company's fiscal year
1997. There may be different types of stock options, including among other
types, performance options, which vest upon achievement of specified corporate
performance goals, time-vesting options, which vest solely on the lapse of
time, or a combination of the two. The options will be exercisable according
to the vesting schedule set forth in the individual grant letters approved by
the Compensation Committee.
In the event the employment of any member of the Management Group is
terminated by his employer without "Cause" or by the employee for "Good
Reason," such employee's rights immediately will be fully vested in 100% of
the shares granted to him. "Cause" and "Good Reason" are defined in the
amended and restated employment agreements with the members of the Management
Group, substantially in the forms of Exhibit H to the Plan.
(2) Stock Appreciation Rights. Under the Incentive Plan, a stock
appreciation right in respect of a share of New Common Stock represents the
right to receive payment in cash and/or New Common Stock in an amount equal to
the excess of the fair market value of such share of New Common Stock on the
date the right is exercised over the fair market value of such share of New
Common Stock on the date the right is granted. The Compensation Committee may
grant stock appreciation rights to the holders of any stock options under the
Incentive Plan. Such rights may also be granted independently of stock
options.
(3) Stock Awards. The Compensation Committee may grant stock awards
(which may include mandatory payment of bonus incentive compensation in shares
of New Common Stock) consisting of shares of New Common Stock issued or
transferred to participants as additional compensation for services to
Reorganized JPS or its subsidiaries. Stock awards may or may not provide the
participant with the rights to receive dividends and vote the shares.
(4) Performance Awards. Performance awards, in the form of shares of New
Common Stock or stock units, may be granted as performance-based awards and
non performance-based awards, at the discretion of the Compensation Committee.
With respect to awards intended to be performance-based, the Compensation
Committee will set performance targets which will determine the number and/or
value of awards paid to participants. Such targets may be based upon, among
other things, company-wide, divisional, and/or individual performance. With
respect to awards not intended to be performance-based, the Compensation
Committee may adjust performance targets as it deems appropriate.
(5) Stock Units. A stock unit granted by the Compensation Committee
represents the entitlement to one share of New Common Stock. The Compensation
Committee will determine the criteria for vesting of stock units and whether a
participant granted a stock unit will also be granted the right to receive the
amount of any dividend paid on the underlying share. The stock unit, with the
consent of the participant, may provide for payment in New Common Stock and/or
cash upon vesting (unless the participant has agreed to defer payment).
At the discretion of the Compensation Committee, stock awards, performance
awards, and stock units may be granted in a manner which is intended to
qualify for the performance-based compensation exemption of Section 162(m) of
the Tax Code. In such event, either the granting or vesting of such awards
will be based upon one or more of the following factors: net sales, pretax
income before allocation of corporate overhead and bonus, budget, earnings per
share, net income, return on shareholders' equity, return on assets,
appreciation in and/or maintenance of the price of New Common Stock or any
other publicly-traded securities of Reorganized JPS, market share, gross
profits, earnings before interest and taxes, earnings before interest, taxes,
depreciation and amortization, and comparisons with various stock market
indices, reductions in costs, or any combination of the foregoing.
16
<PAGE>
b. Fair Market Value. "Fair market value" means (i) if the New Common
Stock is readily tradeable on a national securities exchange or other market
system, the closing price of the New Common Stock on the date of calculation
(or on the last preceding trading date if New Common Stock was not traded on
such date), or (ii) if the New Common Stock is not readily tradeable, the fair
market value as determined in good faith by the Compensation Committee.
c. Change in Capital Structure. In the event of any change in the New
Common Stock through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, reverse stock split, split-up, spin-off,
combination of shares, exchange of shares, dividend in kind, or other like
change in capital structure of Reorganized JPS or distribution (other than
normal cash dividends) to stockholders of Reorganized JPS, an adjustment will
be made to each outstanding stock option and stock appreciation right so that
such option and right thereafter is exercisable for such securities, cash,
and/or property as the holder of such option or right would have had
immediately after such change or distribution, had such option or right been
exercised in full immediately prior to such change or distribution. An
adjustment will be made successively each time any such change occurs.
d. Change in Control. In the event of a "change in control," the
Compensation Committee, in its discretion, may take such actions as it deems
appropriate with respect to outstanding benefits, including without
limitation, accelerating the exercisability or vesting of such benefits. It is
intended that the stock options for the Management Group will provide for 100%
vesting in the stock options granted upon a "change in control." Upon the
occurrence of a change in control, each outstanding stock option and stock
appreciation right will terminate within a specified number of days after
notice to the holder, and such holder will receive with respect to each share
of New Common Stock subject to an outstanding stock option or stock
appreciation right, an amount equal to the excess of the fair market value of
such share of New Common Stock immediately prior to the change in control over
the exercise price per share, with such amount to be payable in cash, in one
or more kinds of property (including the property, if any, payable in the
transaction) or in a combination thereof, as the Compensation Committee, in
its discretion, determines.
Under the Incentive Plan, a "change in control" of Reorganized JPS will
result when (i) any person or other entity (other than any subsidiary of
Reorganized JPS), including any person, as defined in Section 13(d)(3) of the
Exchange Act, becomes the beneficial owner (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of more than 50% of the total combined
voting power of all classes of capital stock of Reorganized JPS ordinarily
entitled to vote for the election of directors of Reorganized JPS, (ii) a
change in the Board of Directors of Reorganized JPS occurs with the result
that the members of the Board of Directors on the Effective Date (the
"Incumbent Directors") no longer constitute a majority of such Board of
Directors, provided that any person becoming a director whose election or
nomination for election was supported by a majority of the Incumbent Directors
shall be considered as Incumbent Directors for purposes hereof, (iii) all or
substantially all the property or assets of Reorganized JPS is sold (other
than a sale to any of the subsidiaries of Reorganized JPS), or (iv) a
consolidation or merger of Reorganized JPS with another corporation occurs
(other than with any subsidiaries of Reorganized JPS or in which Reorganized
JPS is the surviving corporation), the consummation of which would result in
the shareholders of Reorganized JPS immediately before the occurrence of the
consolidation or merger owning, in the aggregate, less than 50% of the voting
stock of the surviving entity immediately following the occurrence of such
consolidation or merger.
e. Transferability. Benefits under the Incentive Plan will not be
transferable except by will or the laws of descent or distribution. Benefits
will only be exercisable during the lifetime of a participant by such
participant only. However, at the discretion of the Compensation Committee,
any award, other than an ISO, may permit the transfer of a benefit by a
participant to certain family members or trusts for the benefit of such family
members by such persons.
17
<PAGE>
5. Securities Law Matters
a. The Solicitation. JPS and JPS Capital are relying on Section 3(a)(9) of
the Securities Act to exempt from the registration requirements of such act
(and of any equivalent state securities or "blue sky" laws) the offer of New
Common Stock, Contingent Notes, and New Warrants which may be deemed to be
made by JPS or JPS Capital, as the case may be, pursuant to the solicitation
of votes on the Plan.
JPS and JPS Capital have no contract, arrangement, or understanding relating
to, and will not, directly or indirectly, pay any commission or other
remuneration to any broker, dealer, salesperson, agent, or any other person
for soliciting votes to accept or reject the Plan or for soliciting any
exchanges of 10.85% Notes, 10.25% Notes, 7% Subordinated Debentures, or Old
Senior Preferred Stock. JPS and JPS Capital have received assurances that no
person will provide any information to holders of 10.85% Notes, 10.25% Notes,
7% Subordinated Debentures, or Old Senior Preferred Stock relating to the
solicitation or the Plan other than to refer the holders of such securities to
the information contained in this Disclosure Statement and in the Ballots
delivered with it. In addition, none of the financial advisors to JPS or the
Unofficial Bondholder Committee, the Voting Agent, the trustees under the
Indentures, the trustee under the Contingent Note Indenture, and no broker,
dealer, salesperson, agent, or any other person, has been engaged or
authorized to express any statement, opinion, recommendation, or judgment with
respect to the relative merits and risks of the solicitation, the value and
terms of the Contingent Notes, New Common Stock, and New Warrants, or the Plan
(and the transactions contemplated thereby).
b. Issuance and Resale of New Securities Under the Plan. Section 1145 of
the Bankruptcy Code generally exempts from such registration the offer or sale
of a debtor's securities under a chapter 11 plan if such securities are
offered or sold in exchange for a claim against, or equity interest in, such
debtor. In reliance upon this exemption, the New Common Stock, Contingent
Notes, and New Warrants (if any) to be issued on the Effective Date as
provided in the Plan generally will be exempt from the registration
requirements of the Securities Act, and state and local securities laws.
Accordingly, such securities may be resold without registration under the
Securities Act or other federal securities laws pursuant to the exemption
provided by Section 4(l) of the Securities Act, unless the holder is an
"underwriter" with respect to such securities, as that term is defined in the
Bankruptcy Code. In addition, such securities generally may be resold without
registration under state securities laws pursuant to various exemptions
provided by the respective laws of the several states. However, recipients of
securities issued under the Plan are advised to consult with their own counsel
as to the availability of any such exemption from registration under state law
in any given instance and as to any applicable requirements or conditions to
such availability.
Section 1145(b) of the Bankruptcy Code defines "underwriter" for purposes of
the Securities Act as one who (a) purchases a claim with a view to
distribution of any security to be received in exchange for the claim, or (b)
offers to sell securities issued under a plan for the holders of such
securities, or (c) offers to buy securities issued under a plan from persons
receiving such securities, if the offer to buy is made with a view to
distribution, or (d) is a control person of the issuer of the securities.
Notwithstanding the foregoing, statutory underwriters may be able to sell
securities without registration pursuant to the resale limitations of Rule 144
under the Securities Act which, in effect, permits the resale of securities
received by statutory underwriters pursuant to a chapter 11 plan, subject to
applicable volume limitations, notice and manner of sale requirements, and
certain other conditions. Parties which believe they may be statutory
underwriters as defined in section 1145 of the Bankruptcy Code are advised to
consult with their own counsel as to the availability of the exemption
provided by Rule 144.
c. Registration Rights; Listing. The Plan requires Reorganized JPS to use
its best efforts to maintain its status as a reporting company under the
Exchange Act and to cause to be filed with the Securities and Exchange
Commission a registration statement on Form 10 under the Exchange Act with
respect to the New Common Stock. The Plan also requires that Reorganized JPS
enter into, on the Effective Date, a registration rights agreement in the form
of Exhibit K to the Plan. Under this agreement, Reorganized JPS will be
required to use commercially reasonable efforts to register the New Common
Stock pursuant to a "shelf registration," and to
18
<PAGE>
keep such shelf registration continuously effective for three years, subject
to the right to suspend the use of the prospectus constituting part of such
registration statement for designated corporate purposes. Thereafter, holders
who did not resell New Common Stock during the three-year period, but whose
resales would have been covered by the registration statement, will be
entitled to exercise, over a two-year period, up to three demand registrations
and will be entitled to piggyback registration rights as well during such
period. In the event that the shelf registration does not become effective
within sixty-five days after the date of the registration statement, holders
of the New Common Stock whose resales would have been covered by the
registration statement will be entitled to exercise, over a two-year period,
up to four demand registrations and will be entitled to piggyback registration
rights as well during such period.
Such registration under the Exchange Act will facilitate the trading of the
New Common Stock on a national securities exchange or on the National Market
System of the National Association of Securities Dealers' Inc. Automated
Quotation System ("NASDAQ"), as applicable. The Plan requires Reorganized JPS
to use its best efforts to effectuate such a listing as of the Effective Date.
6. Hart-Scott-Rodino Act Filing Requirements
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), requires the parties to certain business combination, acquisition,
and/or change-in-control related transactions to provide the United States
Federal Trade Commission and Antitrust Division of the Department of Justice
with certain information about the business of the parties involved and the
proposed transaction. Any entity which will receive a distribution of New
Common Stock under the Plan that satisfies the tests outlined below may be
required, prior to the receipt of such shares, to file a Premerger
Notification and report pursuant to the HSR Act. In general, in the absence of
an available exemption, if (i) an entity entitled to a distribution of New
Common Stock under the Plan would own, at the Effective Date, New Common Stock
that exceeds $15 million in value (i.e., the statutory size of transaction
threshold), and (ii) certain jurisdictional tests are satisfied relating to
the amount of sales or assets (i.e., the size) of the acquiring person, the
HSR Act would require that such entity file a Premerger Notification and
Report Form and delay completion of the acquisition of New Common Stock
pursuant to the Plan until the expiration of the applicable waiting periods
under the HSR Act. The staff of the Premerger Notification Office of the
Federal Trade Commission has taken the position that the "debt workout"
exemption to the HSR Act, codified at 16 C.F.R. (S) 802.63(a), is not
available to entities who desire to exchange debt claims for voting securities
of an issuer if such entities acquired the debt claims after the issuer has
filed for bankruptcy or after it otherwise becomes virtually certain that the
debt of the issuer would be converted into voting securities. Accordingly,
such exemption would not apply to such entities and such entities may be
required to observe the notification and waiting period requirements of the
HSR Act. If such waiting periods have not expired or been terminated as of the
Effective Date, the indenture trustees may retain, or be required to deliver,
such entities' shares of New Common Stock into an escrow account, pending the
expiration or termination of such waiting period. Holders of 10.85% Notes,
10.25% Notes, and 7% Subordinated Debentures are urged to consult with their
legal counsel to determine whether the requirements of the HSR Act will apply
to the distribution to such entities of shares of New Common Stock under the
Plan.
D. PLAN PROVISIONS GOVERNING DISTRIBUTIONS
1. Date and Delivery of Distribution
Except as otherwise ordered by the Bankruptcy Court or provided in the Plan,
distributions to be made on a specified date will be deemed to have been made
on that date if actually made on the later of that date or the date on which
such administrative expense, claim, or equity interest is allowed, or as soon
thereafter as practicable.
Cash payments to be made by Reorganized JPS will, at Reorganized JPS's
option, be made by check drawn on a domestic bank or by wire transfer from a
domestic bank.
All distributions will be made to the addresses set forth on JPS's Schedules
unless superseded by the proofs of claims or equity interests filed by such
holders (or at the last known addresses of such holders if no proof of claim
or equity interest is filed or if JPS has been notified in writing of a change
of address), or in the case of allowed claims in Class 4 and Class 5, at the
addresses last known to the respective indenture trustees.
19
<PAGE>
Checks issued in respect of distributions under the Plan will be null and
void if not negotiated within 60 days after the date of issuance. Requests for
reissuance of any check should be made directly to Reorganized JPS by the
holder of the allowed claim with respect to which such check originally was
issued. Any claim in respect of such a voided check or any other unclaimed
property distributable under the Plan must be made before the later to occur
of (i) the second anniversary of the Effective Date and (ii) six months
following the date such holder's claim is allowed. After such date, all claims
in respect of void checks and the underlying distributions and all other
unclaimed property will be discharged and forever barred from assertion
against Reorganized JPS and its property, and all such unclaimed property
shall revert to, and become property of, Reorganized JPS, notwithstanding any
state escheat laws.
2. Surrender and Cancellation of Instruments
As a condition to receiving any distribution under the Plan, each holder of
a promissory note, share certificate, or other instrument evidencing a claim
or equity interest must surrender such promissory note, share certificate, or
other instrument to Reorganized JPS, the respective indenture trustee, or
other designee of Reorganized JPS, as the case may be. Any holder of a claim
or an equity interest that fails to (a) surrender such instrument or (b)
execute and deliver an affidavit of loss and/or indemnity reasonably
satisfactory to Reorganized JPS and furnish a bond in form, substance, and
amount reasonably satisfactory to Reorganized JPS before the later to occur of
(i) the second anniversary of the Effective Date and (ii) six months following
the date such holder's claim is allowed, will be deemed to have forfeited all
rights, claims, and/or equity interests and will not participate in any
distribution under the Plan.
3. No Fractional Shares
No fractional shares of New Common Stock, or New Warrants for fractional
shares of New Common Stock, will be issued under the Plan. No cash in lieu of
fractional shares will be distributed. For purposes of distributions under the
Plan, fractional shares of New Common Stock and New Warrants will be rounded
up to the next whole number of stock or warrants, as the case may be.
4. Disputed Administrative Expenses, Claims, and Equity Interests
On and after the Effective Date, Reorganized JPS will have the exclusive
right to object to the allowance of administrative expenses, claims, and
equity interests with respect to which liability is disputed in whole or in
part. Unless otherwise ordered by the Bankruptcy Court or provided in the
Plan, all objections to administrative expenses, claims, and equity interests
must be filed and served upon the holders thereof on or before 120 days after
the Effective Date or 120 days after the administrative expense, claim, or
equity interest is filed, whichever is later. No distribution of property will
be made on account of any administrative expense, claim, or equity interest
which is disputed. To the extent a disputed administrative expense or disputed
claim is allowed after the Effective Date, such holder will receive interest
on such allowed administrative expense or allowed claim, calculated from the
Effective Date to the date of payment.
Under the Bankruptcy Code, an indenture trustee may file a proof of claim on
behalf of all holders of securities issued under an indenture. Accordingly,
any proof of claim filed by the direct, indirect, or beneficial holder of a
claim in Class 4 or Class 5 will be disallowed as duplicative of a timely
proof of claim in respect of such holder's claim filed by the indenture
trustee under the Indenture governing such holder's claim.
E. OTHER PLAN PROVISIONS
1. Executory Contracts and Unexpired Leases
General. Subject to the approval of the Bankruptcy Court, the Bankruptcy
Code empowers JPS to assume or reject executory contracts and unexpired
leases. Under the Plan, the executory contracts and unexpired leases listed on
Exhibit L to the Plan will be rejected as of the Effective Date, and all
executory contracts and unexpired leases that are not so listed or otherwise
the subject of a motion to reject pending on the Confirmation Date, will be
assumed as of the Effective Date. Entry by the Clerk of the Bankruptcy Court
of the order
20
<PAGE>
confirming the Plan will constitute approval, pursuant to section 365(a) of
the Bankruptcy Code, of such rejections and assumptions by JPS pursuant to the
Plan. Claims created by the rejection of executory contracts and unexpired
leases must be filed with the Bankruptcy Court no later than thirty days after
the Confirmation Date.
Employment, Retention Bonus, and Severance Agreements. On the Effective
Date, each of JPS's employment, retention bonus, and severance agreements with
the members of the Management Group will be assumed, as amended, restated, and
superseded, substantially in the forms of Exhibit H to the Plan. Subject to
the occurrence of the Effective Date, entry by the Clerk of the Bankruptcy
Court of the order confirming the Plan will constitute approval, pursuant to
section 365(a) of the Bankruptcy Code, of such assumptions by JPS pursuant to
the Plan. The fact that JPS's current employment, retention bonus, and
severance agreements with Management Group members will be superseded by such
new employment agreements means that all claims of the Management Group
members under their current agreements will, as of the Effective Date, be
governed by, and completely satisfied in accordance with, the terms and
conditions of the new agreements.
The amended and restated employment agreements are for three-year terms,
subject to automatic one-year renewals after the initial term, absent advance
written notice by either party. If employment of the employee is terminated by
the employee for "Good Reason" or by Reorganized JPS without "Cause" (as "Good
Reason" and "Cause" are defined in such agreements), the employee will receive
cash compensation and benefits of a value equal to the greater of (i) the
compensation and benefits to which the employee would be entitled for the
remaining term of the agreement, or (ii) one year's salary and bonus.
Under the amended and restated agreements, members of the Management Group
waive any claims they may have under their current severance agreements,
including any claims that may arise due to a change in control as a result of
the restructuring under the Plan. Such severance claims could total as much as
$1.34 million. The amended and restated agreements also provide that the
members of the Management Group will receive, in lieu of retention bonus cash
payments aggregating approximately $1.84 million, (i) 75,377 shares of New
Common Stock (representing approximately .75% of the New Common Stock on a
fully diluted basis) having an approximate value of $929,625, assuming that
the value of the New Common Stock is the mid-point value of approximately
$12.33 per share projected by JPS (without a value having been assigned to the
New Warrants), plus (ii) approximately $588,000 in cash.
For a discussion of the Company's existing key employee agreements,
reference is made to Note 10 "Retirement Plans" to Item 8 "Financial
Statements and Supplementary Data" and to Item 10 "Directors and Executive
Officers of the Registrant" in the Annual Report on Form 10-K annexed as
Exhibit 2 to this Disclosure Statement. Compensation to be paid to executive
officers by Reorganized JPS is set forth on Exhibit 4 to this Disclosure
Statement, entitled "Board of Directors, Management Compensation, and Related
Information for Reorganized JPS."
2. Employee Benefit Plans
Subject to the occurrence of the Effective Date, all employee benefit plans,
policies, and programs of JPS, and JPS's obligations under each of the
foregoing, will survive confirmation of the Plan, remain unaffected thereby,
and not be discharged. Employee benefit plans, policies, and programs include,
without limitation, all savings plans, retirement pension plans, health care
plans, disability plans, severance benefit plans, life, accidental death and
dismemberment insurance plans (to the extent not executory contracts assumed
under the Plan), and JPS's 1997 Management Incentive Bonus Plan, but exclude
all employee equity or equity-based incentive plans. JPS anticipates that all
employee equity or equity-based incentive plans for the Company, other than
the Incentive Plan (which will be in effect on the Effective Date), will be
terminated prior to the commencement of JPS's chapter 11 case. All equity or
equity-based incentive plans for the Company, other than the Incentive Plan,
that are not terminated before the Petition Date (if any), will be terminated
as of the Effective Date pursuant to the Plan.
21
<PAGE>
A description of the material terms and conditions of the 1997 Management
Incentive Bonus Plan is set forth in Exhibit 4 to this Disclosure Statement,
entitled "Board of Directors, Management Compensation, and Related Information
for Reorganized JPS." For a discussion of the Company's retirement plans and
pension plans, reference is made to Note 10 "Retirement Plans" to Item 8
"Financial Statements and Supplementary Data" and to Item 11 "Executive
Compensation" in the Annual Report on Form 10-K annexed as Exhibit 2 to this
Disclosure Statement.
3. Waiver of Claims
The Plan provides that, on the Effective Date, Odyssey Partners, L.P.,
Odyssey Investors, Inc., DLJ Capital Corp., and their respective affiliates
will be deemed to have waived any and all administrative expenses, priority
claims, and other prepetition claims against JPS and its subsidiaries. Such
claims include, without limitation, claims for approximately $550,000 that as
of the Petition Date, are estimated to be due and owing to Odyssey Partners,
L.P. under its management agreement with JPS.
4. Officers and Directors
The Plan provides that JPS's obligations as of the Petition Date to
indemnify those directors or officers who were directors or officers of JPS,
respectively, as of the commencement of the chapter 11 case, against any
obligation pursuant to JPS's certificate of incorporation, bylaws, or
applicable state law will survive confirmation of the Plan, remain unaffected
thereby, and not be discharged.
5. Limited Release
All claims and causes of action held by JPS or any of its subsidiaries
against (a) any individual serving as an officer or director of JPS or any of
its subsidiaries at any time prior to the Effective Date, (b) any member of
any official committee of unsecured creditors in the chapter 11 case or the
Unofficial Bondholder Committee, (c) Odyssey Partners, L.P., DLJ Capital
Corp., and each of their respective affiliates, in their capacities as
shareholders and/or managers of JPS, as applicable, and (d) any of the
respective agents, employees, advisors, and representatives of the foregoing,
for actions taken in those capacities, are released under the Plan. In
addition, any rights of setoff and recoupment JPS has against holders of
allowed claims in Class 4 and Class 5 are released under the Plan.
6. Dissolution of Committee
Any statutory committees appointed in JPS's chapter 11 case will be
dissolved on the Effective Date.
7. Compliance with Tax Requirements
JPS and Reorganized JPS will comply with all withholding and reporting
requirements imposed by any taxing authority of appropriate jurisdiction, and
all distributions hereunder will be subject to such requirements.
8. Guaranty Rights
The secured claims arising under the Credit Agreement will be satisfied in
the manner set forth in the Plan. All other claims against JPS based upon any
guaranties or other joint obligations of JPS with any of its subsidiaries will
be discharged by the jointly obligated subsidiary in the ordinary course of
business and each holder of a claim will not be entitled to receive more than
a single satisfaction of its allowed claims.
9. Vesting and Liens
On the Effective Date, Reorganized JPS will be vested with the assets of
JPS, free and clear of all claims, liens, security interests, and equity
interests, subject only to outstanding claims, liens, and security interests
that are authorized under the Plan. On the Effective Date, all liens against,
and security interests in, any assets and properties of JPS, except to the
limited extent provided in the Plan, will be extinguished.
10. Retention of Jurisdiction
The Bankruptcy Court will retain jurisdiction over the chapter 11 case for,
among other things, the purpose of determining all disputes relating to
claims, equity interests, and other issues presented by or arising under the
interpretation, implementation, or enforcement of the Plan, and to determine
matters pending on the Effective Date.
22
<PAGE>
11. Management of Reorganized JPS
The initial Board of Directors of Reorganized JPS will consist of the seven
individuals identified in Exhibit I to the Plan. The executive officers of JPS
on the Confirmation Date will continue to serve as such executive officers of
Reorganized JPS. The identities and business experience of JPS's current
officers and directors and the cash compensation paid to them by JPS in fiscal
year 1996, are set forth in Item 10 "Directors and Executive Officers of the
Registrant" and Item 11 "Executive Compensation" in the Annual Report on Form
10-K, annexed as Exhibit 2 to this Disclosure Statement. The identities of the
officers and directors of Reorganized JPS (and their business experience, to
the extent not otherwise set forth in the Annual Report on Form 10-K) and the
cash compensation to be paid to them as of the Effective Date are set forth in
Exhibit 4 to this Disclosure Statement and in the forms of the amended and
restated employment agreements between JPS and members of the Management
Group, attached as Exhibit H to the Plan.
12. Modification/Revocation of Plan
Modifications of the Plan may be proposed by JPS at any time in accordance
with section 1127 of the Bankruptcy Code. A holder of a claim or equity
interest that has accepted the Plan will be deemed to have accepted the Plan
as modified if the proposed modification does not adversely change the
treatment of such claim or equity interest.
JPS reserves the right to revoke and withdraw the Plan at any time prior to
entry of the order confirming the Plan, in which event it will be deemed null
and void in all respects.
13. Preservation of Causes of Action
All rights and causes of action held by JPS (other than those released
pursuant to Article IV of the Plan) will remain assets of Reorganized JPS and
may be pursued.
14. Exculpation
JPS, Reorganized JPS, the members of any official committee of unsecured
creditors appointed in the chapter 11 case, the members of the Unofficial
Bondholder Committee, and each of their respective officers, directors,
employees, and agents (including any professionals retained by such persons)
will have no liability to any holder of an administrative expense, claim, or
equity interest for any act or omission in connection with, or arising out of,
the pursuit of approval of this Disclosure Statement, the solicitation of
votes on the Plan, confirmation of the Plan, consummation of the Plan, or the
administration of the Plan or the property to be distributed under the Plan,
except for acts constituting willful misconduct or gross negligence as
determined by a final order of a court of competent jurisdiction, and in all
respects, shall be entitled to rely upon the advice of counsel with respect to
their duties and responsibilities under the Plan.
15. Votes Solicited in Good Faith
The Plan provides that upon entry of the order confirming the Plan, JPS and
JPS Capital will be deemed to have solicited votes on the Plan in good faith
and in compliance with the Bankruptcy Code, and pursuant to section 1125(e) of
the Bankruptcy Code, JPS, JPS Capital, the members of any official committee
of creditors appointed in the chapter 11 case, the members of the Unofficial
Bondholder Committee, and each of their respective affiliates, agents,
officers, directors, employees, advisors, and attorneys will be deemed to have
participated in good faith and in compliance with the Bankruptcy Code in the
offer, issuance, sale, and purchase of securities offered and sold under the
Plan, and therefore, will have no liability for the violation of any
applicable law, rule, or regulation governing the solicitation of votes on the
Plan or the offer, issuance, sale, or purchase of the securities offered and
sold under the Plan.
F. IMPLEMENTATION OF THE PLAN
On the Effective Date, the 10.85% Notes, 10.25% Notes, 7% Subordinated
Debentures, Old Senior Preferred Stock, Old Junior Preferred Stock, and Old
Common Stock will be cancelled. The cancellation will also apply to
23
<PAGE>
any options, warrants, calls, subscriptions, or other similar rights or other
agreements or commitments, contractual or otherwise, obligating JPS to issue,
transfer, or sell any shares of Old Senior Preferred Stock, Old Junior
Preferred Stock, Old Common Stock, or any other equity interest of JPS. The
Indentures will also be cancelled, except for purposes of effectuating
distributions under the Plan. Finally, JPS's obligations under the foregoing
agreements and instruments, as well as under the agreements and certificates
of designations for its Old Senior Preferred Stock and Old Junior Preferred
Stock, will be discharged.
In accordance with the Plan, on the Effective Date, the Contingent Notes
will be issued by JPS Capital and the New Common Stock and New Warrants (if
any) will be issued by Reorganized JPS. Reorganized JPS (or its designee) will
distribute the Contingent Notes, New Common Stock, New Warrants (if any), and
the cash distributions required under the Plan to be made on the Effective
Date. In addition, the amended and restated employment agreements with
Management Group members, substantially in the forms of Exhibit H to the Plan,
the Contingent Note Indenture, the registration rights agreement,
substantially in the form of Exhibit K to the Plan, the restated certificate
of incorporation and amended and restated bylaws of JPS Capital, substantially
in the forms of Exhibits F and G to the Plan, and the restated certificate of
incorporation and amended and restated bylaws of Reorganized JPS,
substantially in the forms of Exhibits B and A to the Plan, will be executed
and delivered or filed, as the case may be. The restated certificate of
incorporation of Reorganized JPS, substantially in the form of Exhibit B to
the Plan, will prohibit the issuance of nonvoting equity securities.
In addition to providing for the issuance of the New Common Stock,
Contingent Notes, and New Warrants, the restated certificate of incorporation
of Reorganized JPS will authorize 3 million shares of preferred stock, par
value $0.01. After the Effective Date, the Board of Directors of Reorganized
JPS may authorize the issuance of one or more series of such preferred stock
and fix the voting powers, designations, preferences, and other rights to the
full extent permitted by law.
24
<PAGE>
V.
PROJECTIONS AND VALUATION ANALYSIS
JPS and its advisors developed a set of financial projections (summarized
below) to assess the value of Reorganized JPS generally, and specifically, the
value of the New Common Stock to be distributed to Classes 4 and 5. Each
business unit of the Company responsible for a specific product or groups of
products prepared its own projections of sales volume, selling prices, and
manufacturing costs for such products. Selling, general and administrative
expenses, and other overhead costs were aggregated at various levels of the
organization and deducted from the product contribution projections to develop
a set of operating projections for the consolidated Company. The projections
and valuations set forth below are based on a number of significant
assumptions, including the successful reorganization of JPS, an assumed
Petition Date of July 7, 1997, an assumed Effective Date of August 1, 1997,
and no significant downturn in the specific markets in which the Company
operates.
THE PROJECTIONS, AND THEREFORE, THE VALUATIONS, ARE BASED UPON A NUMBER OF
SIGNIFICANT ASSUMPTIONS. ACTUAL OPERATING RESULTS AND VALUES MAY VARY.
A. PROJECTIONS
Set forth below are financial projections with respect to the estimated
effect of the transactions contemplated by the Plan on the Company's
capitalization, results of operations, and cash flow for the period ending
October 2000. The Company does not, as a matter of course, publicly disclose
projections as to its future revenues, earnings, or cash flow. In connection
with JPS's consideration of the Plan, certain projections of the future
financial performance of the Company's operating businesses were prepared.
Accordingly, after the Effective Date, Reorganized JPS does not intend to
update or otherwise revise the projections to reflect circumstances existing
since their preparation in mid-fiscal year 1997 to reflect the occurrence of
unanticipated events, even in the event that any or all of the underlying
assumptions are shown to be in error. Furthermore, Reorganized JPS does not
intend to update or revise the projections to reflect changes in general
economic or industry conditions. However, Reorganized JPS's regular quarterly
and annual financial statements, and the accompanying discussion and analysis,
contained in Reorganized JPS's Quarterly Reports on Form 10-Q and Annual
Reports on Form 10-K, will contain disclosure concerning Reorganized JPS's
actual financial condition and results of operations during the period covered
by the projections. Significant assumptions underlying the financial
projections are set forth below and should be read in conjunction therewith
(together with the Company's historical financial information set forth below,
in the most recent Annual Report on Form 10-K and Quarterly Report on Form
10-Q, attached as Exhibits 2 and 3, respectively, to this Disclosure
Statement).
The projections were prepared by JPS to assist each holder of a Claim in
Class 4, 5, or 8 in determining whether to accept or reject the Plan. The
projections have not been compiled, or prepared for examination or review, by
the Company's independent auditors (who accordingly assume no responsibility
for them), and were not prepared to conform to the guidelines established by
the American Institute of Certified Public Accountants regarding financial
forecasts. While presented with numerical specificity, these projections are
based upon a variety of assumptions (which the Company believes are
reasonable), and are subject to significant business, economic, and
competitive uncertainties and contingencies, many of which are beyond the
control of the Company. Consequently, the inclusion of the projections herein
should not be regarded as a representation by the Company (or any other
person, including any member of the Unofficial Bondholder Committee) that the
projections will be realized, and actual results may vary materially from
those presented below. Due to the fact that such projections are subject to
significant uncertainty and are based upon assumptions which may not prove to
be correct, neither the Company nor any other person (including any member of
the Unofficial Bondholder Committee) assumes any responsibility for their
accuracy or completeness.
Moreover, the industries in which the Company competes are highly
competitive and the Company's earnings may be significantly adversely affected
by the actions of its competitors, either through competitive influx, price
pressure, modernization of facilities, or business expansion. Many of the
products which the Company produces are subject to changes in fashion demands
and technological obsolescence. In addition, the
25
<PAGE>
products of the Company are sold to companies whose businesses are cyclical in
nature and are subject to changes in general economic conditions which affect
market demand. The projections generally assume that no material change in the
competitive environment which presently exists will occur and that no
significant changes in the product mix will occur as a result of shifting
consumer demand.
1. Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
<TABLE>
<CAPTION>
ESTIMATED REORGANIZATION FRESH START RESTATED
AUGUST 1, 1997 ADJUSTMENTS ADJUSTMENTS(E) AUGUST 1, 1997
-------------- -------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash.................... $ 696 -- -- $ 696
Accounts receivable..... 76,216 -- -- 76,216
Inventories............. 47,545 -- -- 47,545
Other current assets.... 2,119 -- -- 2,119
-------- -------- ------- --------
Total current assets.... 126,576 -- -- 126,576
-------- -------- ------- --------
Property, plant and
equipment, net......... 120,123 -- -- 120,123
Deferred financing
costs.................. 98 $ 1,729 (b) -- 1,827
Prepaid (accrued)
pension cost........... 3,289 -- $(7,496)(f) (4,207)
Existing goodwill of
acquired assets........ 29,783 -- (29,783) --
Other assets............ 53,312 (19,359)(c) -- 33,953
Excess reorganization
value.................. -- -- 31,098 31,098
-------- -------- ------- --------
Total assets............ $333,181 $(17,630) ($6,181) $309,370
======== ======== ======= ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Accounts payable........ $ 23,405 -- -- $ 23,405
Accrued interest........ 26,470 $(25,397)(a) -- 1,073
Accrued salaries,
benefits
and withholdings....... 10,443 (1,518)(a) -- 8,925
Other accrued expenses.. 11,659 (300)(b) -- 11,359
-------- -------- ------- --------
Total current
liabilities............ 71,977 (27,215) -- 44,762
-------- -------- ------- --------
Debt obligations........ 334,527 (239,353)(a)(b) -- 95,174
Contingent notes
payable................ -- 33,907 (a) -- 33,907
Deferred income tax
liability (asset)...... 3,665 (9,745)(d) -- (6,080)
Other long-term
liabilities............ 19,841 -- $(1,564)(g) 18,277
Senior preferred stock.. 36,086 (36,086)(a) -- --
Capital stock........... 21,957 101,373 (a) -- 123,330
Retained earnings....... (154,872) 159,489 (a)(b)(c)(d) (4,617) --
-------- -------- ------- --------
Total liabilities and
shareholders' equity... $333,181 $(17,630) $(6,181) $309,370
======== ======== ======= ========
</TABLE>
26
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED)
(a) The Plan provides for a deleveraging of JPS through an exchange of the
10.25% Notes, the 10.85% Notes, and the 7% Subordinated Debentures for $14
million in cash, 9,924,623 shares of New Common Stock, and the Contingent
Notes. In addition, the Old Senior Preferred Stock is expected to be exchanged
for New Warrants, and the Old Junior Preferred Stock and Old Common Stock are
to be canceled. As part of the reorganization, retention bonuses payable to
members of the Management Group will, pursuant to the amended and restated
agreements set forth in Exhibit H to the Plan, be paid in a combination of
cash and New Common Stock. The impact of the foregoing on the Company's
balance sheet is as follows:
<TABLE>
<CAPTION>
ACCRUED
SALARIES, CONTINGENT SENIOR
ACCRUED BENEFITS & DEBT NOTES PREFERRED CAPITAL RETAINED
INTEREST WITHHOLDINGS OBLIGATIONS PAYABLE STOCK STOCK EARNINGS
-------- ------------ ----------- ---------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(1) ($25,397) ($243,941) $33,907 $122,400 $113,031
(2) ($36,086) 36,086
(3) (21,957) 21,957
(4) ($1,518) 588 930
-------- ------- --------- ------- -------- -------- --------
($25,397) ($1,518) ($243,353) $33,907 ($36,086) $101,373 $171,074
</TABLE>
- --------
(1) Reflects the exchange of the 10.25% Notes, the 10.85% Notes, and the 7%
Subordinated Debentures for $14 million in cash, 9,924,623 shares of New
Common Stock, and Contingent Notes. In addition, prepaid trustee fees will
be expensed. The accrued interest and carrying values of the various note
issues are expected to be as follows on the Effective Date:
<TABLE>
<CAPTION>
INTEREST
DUE AT REORGANIZATION CARRYING ACCRUED
FACE VALUE MATURITY DISCOUNT VALUE INTEREST
---------- -------- -------------- -------- --------
<S> <C> <C> <C> <C> <C>
10.25% Notes............ $ 76,773 $ 6,517 ($1,477) $ 81,813 $ 8,365
10.85% Notes............ 109,247 7,182 (1,995) 114,434 12,623
7% Subordinated
Debentures............. 54,071 (6,377) 47,694 4,455
-------- ------- ------- -------- -------
Total................. $240,091 $13,699 ($9,849) $243,941 $25,443
</TABLE>
(2) Reflects the cancellation of Old Senior Preferred Stock. For purposes of
this Disclosure Statement, the New Warrants have not been assigned a
value.
(3) Reflects the cancellation of Old Junior Preferred Stock and Old Common
Stock.
(4) Reflects payment of management retention bonuses in a combination of cash
and 75,377 shares of New Common Stock.
(b) On the Effective Date, Reorganized JPS is expected to obtain a new
working capital facility, pay fees and expenses related thereto and pay fees
and expenses of professionals for services rendered during the pendency of the
chapter 11 case. The impact of such costs on the Company's balance sheet is as
follows:
<TABLE>
<CAPTION>
DEFERRED OTHER
FINANCING ACCRUED DEBT RETAINED
COSTS EXPENSES OBLIGATIONS EARNINGS
--------- -------- ----------- --------
<S> <C> <C> <C> <C>
(1) ($ 71) ($ 71)
(2) 1,800 $1,800
(3) ($300) 2,200 (1,900)
------ ----- ------ -------
$1,729 ($300) $4,000 ($1,971)
</TABLE>
- --------
(1) Reflects the write-off of deferred financing fees related to the existing
Credit Agreement.
(2) Reflects the payment of new financing fees in connection with the Company
obtaining a post-reorganization working capital facility. The Company
expects to amortize such fees over three years.
(3) Reflects the Effective Date payment of fees and expenses to professionals
retained in the chapter 11 case with borrowings under the post-
reorganization working capital facility.
27
<PAGE>
(c) Pursuant to the Plan, as a condition to the occurrence of the Effective
Date, JPS or its subsidiaries will have sold all the securities of Gulistan
Holdings Inc. received as part of the consideration for the sale of the assets
of the Company's former carpet business in 1995 (the "Gulistan Securities").
Due to uncertainties regarding valuation, no estimate of proceeds from such
sale has been made. This adjustment reflects the elimination of these assets
from the Company's balance sheet and the $14 million cash distribution to
Class 4. Proceeds from the sale of the Gulistan Securities, constituting the
Secured Lenders' collateral under the Credit Agreement, will be applied to
reduce the amounts outstanding under the Credit Agreement, unless otherwise
agreed by the Secured Lenders.
(d) The Plan is expected to substantially deleverage Reorganized JPS.
Accordingly, the reserve established against the Company's deferred tax
assets, consisting primarily of net operating loss carryforwards, will be
reduced by $9,745.
(e) The Company proposes to account for the reorganization and the related
transactions using the principles of fresh start accounting as required by
Statement of Position 90-7 ("SOP 90-7") issued by the American Institute of
Certified Public Accountants (the "AICPA"). The Company has estimated a range
of reorganization value, excluding any amounts related to the assets or
liabilities of JPS Capital, between $194 million and $238 million. For
purposes of determining reorganization value, the Company used the midpoint of
that range ($216 million), $123.3 million of which value is attributable to
shareholders' equity. In accordance with SOP 90-7, the reorganization value
has been allocated to specific tangible and identifiable intangible assets and
liabilities. The unallocated portion of the reorganization value is classified
as Excess Reorganization Value and is amortized over a specified period. Based
upon preliminary discussions, the Company expects to amortize the Excess
Reorganization Value over 20 years. For the purposes of this presentation,
book values have been assumed to equal fair values except for specific items
in which quantifiable data is currently available. Such differences are
detailed in footnotes (f) and (g) below. The Company is currently performing
independent appraisals of various assets, including its fixed assets, which
could lead to additional pro forma adjustments to book values and result in a
different Excess Reorganization Value as of the Effective Date. The amount of
shareholders' equity in the fresh start balance sheet is not an estimate of
the trading value of the New Common Stock and the New Warrants after
confirmation of the Plan, which value is subject to many uncertainties and
cannot be reasonably estimated at this time. The Company does not make any
representation as to the trading value of shares or warrants to be issued
pursuant to the Plan.
(f) As of the Effective Date, unamortized gains and losses related to the
Company's pension plan will be fully recognized.
(g) As of the Effective Date, unamortized gains and losses related to the
Company's non-pension post-retirement employee benefit plans will be fully
recognized.
28
<PAGE>
2. Condensed Consolidated Projected Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
PROJECTED
-------------------------------------------------------------------
NOVEMBER 1, 1997 OCTOBER 31, 1998 OCTOBER 30, 1999 OCTOBER 28, 2000
---------------- ---------------- ---------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash.................... $ 696 $ 591 $ 591 $ 591
Accounts receivable..... 76,465 79,678 82,585 84,216
Inventories............. 45,944 47,898 49,511 49,996
Other current assets.... 2,093 2,154 2,205 2,247
-------- -------- -------- --------
Total current assets.... 125,198 130,321 134,892 137,050
-------- -------- -------- --------
Property, plant and
equipment, net......... 128,926 133,196 137,346 140,476
Deferred financing
costs.................. 1,669 1,051 463 13
Prepaid (accrued)
pension cost........... (4,127) (281) 2,403 5,649
Other assets............ 34,281 35,605 36,995 38,439
Excess reorganization
value.................. 30,709 29,154 27,599 26,045
-------- -------- -------- --------
Total assets............ $316,656 $329,046 $339,698 $347,672
======== ======== ======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Accounts payable........ $ 25,292 $ 26,449 $ 27,341 $ 27,825
Accrued interest........ 1,087 1,135 1,072 961
Accrued salaries,
benefits and
withholdings........... 10,712 11,687 12,438 13,014
Other accrued expenses.. 11,270 9,542 9,075 8,963
Current portion of long-
term debt.............. 2,164 689 632 632
-------- -------- -------- --------
Total current
liabilities............ 50,525 49,502 50,558 51,395
-------- -------- -------- --------
Long-term debt.......... 94,825 97,411 91,960 82,165
Contingent notes
payable................ 34,238 35,575 36,965 38,409
Deferred income tax
liability (asset)...... (5,859) (3,104) 507 3,074
Other long-term
liabilities............ 18,172 18,298 18,996 19,852
Capital stock........... 123,330 123,330 123,330 123,330
Retained earnings....... 1,425 8,034 17,382 29,447
-------- -------- -------- --------
Total liabilities and
shareholders' equity... $316,656 $329,046 $339,698 $347,672
======== ======== ======== ========
</TABLE>
See operating assumptions in subsection 5, below.
29
<PAGE>
3. Condensed Consolidated Projected Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
PROJECTED
------------------------------------------------------------------------
FISCAL YEAR ENDING
THIRTEEN WEEKS ENDING --------------------------------------------------
NOVEMBER 1, 1997 OCTOBER 31, 1998 OCTOBER 30, 1999 OCTOBER 28, 2000
--------------------- ---------------- ---------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales............... $112,783 $442,846 $458,374 $467,025
Cost of sales........... 95,441 377,986 387,823 391,410
-------- -------- -------- --------
Gross profit............ 17,342 64,860 70,551 75,615
% of sales.............. 15.38% 14.65% 15.39% 16.19%
Selling, general and
administrative
expenses............... 10,427 44,052 45,625 46,910
-------- -------- -------- --------
Operating income........ 6,915 20,808 24,926 28,705
Other expenses, net..... (275) (400) -- --
-------- -------- -------- --------
Income before interest
and taxes.............. 6,640 20,408 24,926 28,705
Interest expense, net of
investment income...... 4,103 8,795 8,896 8,293
-------- -------- -------- --------
Income before taxes..... 2,537 11,613 16,030 20,412
Income taxes............ 1,112 5,004 6,682 8,347
-------- -------- -------- --------
Net income.............. $ 1,425 $ 6,609 $ 9,348 $ 12,065
======== ======== ======== ========
EBITDA.................. $ 11,918 $ 42,776 $ 45,466 $ 47,344
======== ======== ======== ========
</TABLE>
See operating assumptions in subsection 5, below.
30
<PAGE>
4. Condensed Consolidated Projected Cash Flow Statements (Unaudited)
<TABLE>
<CAPTION>
PROJECTED
------------------------------------------------------------------------
FISCAL YEAR ENDING
THIRTEEN WEEKS ENDING --------------------------------------------------
NOVEMBER 1, 1997 OCTOBER 31, 1998 OCTOBER 30, 1999 OCTOBER 28, 2000
--------------------- ---------------- ---------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income............. $ 1,425 $ 6,609 $ 9,348 $ 12,065
Depreciation and
amortization.......... 4,889 20,813 18,985 17,084
Amortization of excess
reorganization value.. 389 1,555 1,555 1,555
Interest accretion and
amortization.......... 158 618 588 450
Payments on warranty
and product
liability claims...... (750) (1,250) (750) (182)
Other, net............. 126 (2,971) (1,804) (2,393)
Changes in working
capital:
Accounts receivable... (249) (3,213) (2,907) (1,631)
Inventory............. 1,601 (1,954) (1,613) (485)
Other assets.......... 29 (251) (276) (255)
Accounts payable...... 1,887 1,157 892 484
Accrued expenses and
other liabilities.... 2,372 2,551 4,400 3,102
-------- -------- -------- --------
Subtotal............. 11,877 23,664 28,418 29,794
CASH FLOWS FROM
INVESTING ACTIVITIES:
Property additions..... (13,692) (24,880) (22,910) (20,000)
-------- -------- -------- --------
Subtotal............. (13,692) (24,880) (22,910) (20,000)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Long term debt
borrowings
(repayments), net..... 1,815 1,111 (5,508) (9,794)
-------- -------- -------- --------
Decrease in cash during
period................. $ 0 $ (105) $ 0 $ 0
======== ======== ======== ========
</TABLE>
See operating assumptions in subsection 5, below.
31
<PAGE>
5. Operating Assumptions
The projections are based upon a detailed build-up by product line and
division. The following summarizes the impact of the underlying divisional
assumptions on the consolidated results.
a. Projected Statements of Operations
Sales. Sales, in 1999 and 2000, are projected to grow by 3.5% and 1.9%,
respectively. The growth is driven by Elastomerics and the glass fabrics
division of C&I ("Glass"), while sales by the apparel fabrics division of C&I
("Converter") are projected to remain relatively flat.
Gross Margin. Gross margin is projected to improve from 14.7% in 1998 to
16.2% in 2000. A portion of this increase is due to a decrease in depreciation
expense as assets purchased in the 1988 buyout become fully depreciated. For
purposes of these projections, depreciation expense under the fresh start
principles of SOP 90-7 issued by the AICPA is assumed to equal depreciation
expense expected if such fresh start principles were not applied. Gross margin
before depreciation expense, which eliminates the depreciation run-off effect,
is expected to increase from 19.4% in 1998 to 19.9% in 2000. This improvement
is attributable to certain cost savings that are expected to be realized from
projected capital expenditures.
Selling, General and Administrative. Selling, general and administrative
expenses are projected to remain stable at approximately 10.0% of sales over
the projection period. For the projection period, S,G&A expenses exclude non-
recurring restructuring charges but include amortization of excess
reorganization value over a 20-year period.
Interest Expense. Interest expense is associated with borrowings under
the post-reorganization working capital facility and miscellaneous equipment
financings at an average interest rate of 8.5%. Deferred financing fees on the
post-reorganization working capital facility are amortized over three years
and included in interest expense.
Income Tax. Income tax expense is calculated assuming a 38% effective
tax rate. Book income taxes are calculated as the effective tax rate times
taxable income before amortization of excess reorganization value. Cash tax
expense is calculated after giving effect to certain differences in taxable
income for tax purposes, including the amortization of excess reorganization
value and differences in depreciation expense and pension expense. In
addition, the Company anticipates utilizing its NOL carryforward, subject to
limitation under Section 382 of the Tax Code and any adjustments required by
reason of an examination by any taxing authority, to partially offset its tax
liability. See Section XI.A, below, entitled "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE PLAN--Consequences to JPS."
b. Projected Balance Sheets and Statements of Cash Flow
Working Capital. Working capital items are projected based on the
Company's experience and expectation of the marketplace during the projection
period. Working capital trends, including seasonal impacts, are projected to
approximate such trends in 1996 and 1997. The factors driving the projections
(i.e., days receivable, days payable, inventory turns) are assumed to remain
relatively constant throughout the projection period.
Capital Expenditures. Capital expenditures are projected on a project-
by-project basis as identified by management in long range capital budgets.
The capital expenditures give rise to significant cost savings, directly
improving margins. Based on the project build-up, capital expenditures at the
consolidated level are expected to decrease from 5.6% of sales in 1998 to 4.3%
of sales, which is comparable to other publicly traded textile companies, in
2000.
Contingent Notes Payable. The Contingent Notes payable and the assets of
JPS Capital which are included as Other assets in the accompanying Condensed
Consolidated Projected Balance Sheets reflect no assumption as to the maturity
date for the Contingent Notes.
32
<PAGE>
B. VALUATION
Two methodologies were used to derive the value of Reorganized JPS based on
the projections: (i) a comparison of the Company and its projected performance
to how the market values companies in comparable lines of business, and (ii) a
calculation of the present value of the free cash flows under the projections,
including an assumption for a terminal value.
The market-based approach involves identifying a group of publicly traded
companies whose businesses or product lines are comparable to the Company as a
whole or significant portions of the Company's operations, and then
calculating ratios of various financial results to the public market values of
the companies. The ranges of ratios derived are then applied to the Company's
projected financial results (on a consolidated basis) to derive a range of
implied values. The discounted cash flow approach involves deriving the
unleveraged free cash flows that the Company (on a consolidated basis) would
generate assuming the projections were realized. These cash flows and an
estimated value of the Company (on a consolidated basis) at the end of the
projected period are discounted to the present at the Company's estimated
post-restructuring weighted average cost of capital to determine the Company's
enterprise value (on a consolidated basis). In addition, the Company estimates
that it will retain certain net operating loss carryforwards through the
restructuring. Subject to certain limitations, the Company believes that it
will be able to offset taxable income in determining its cash tax liability.
The value of these cash tax savings has been added to the Company's estimated
enterprise value.
ESTIMATES OF VALUE DO NOT PURPORT TO BE APPRAISALS NOR DO THEY NECESSARILY
REFLECT THE VALUES WHICH MAY BE REALIZED IF ASSETS ARE SOLD. THE ESTIMATES OF
VALUE REPRESENT HYPOTHETICAL REORGANIZED ENTERPRISE VALUES ASSUMING THE
IMPLEMENTATION OF MANAGEMENT'S BUSINESS PLAN AS WELL AS OTHER SIGNIFICANT
ASSUMPTIONS. SUCH ESTIMATES WERE DEVELOPED SOLELY FOR PURPOSES OF FORMULATING
AND NEGOTIATING A PLAN OF REORGANIZATION AND ANALYZING THE PROJECTED
RECOVERIES THEREUNDER.
Based upon the methods described above, the estimated enterprise value for
Reorganized JPS is between $194.0 million and $238.0 million, with a mid-point
value of $216.0 million. After deducting the estimated long-term indebtedness
of the Company of $92.7 million, the estimated total value of the New Common
Stock is between $101.3 million and $145.3 million, with a mid-point value of
$123.3 million. Based upon the uncertainties attendant to the appreciation in
the value of the New Common Stock which, in turn, will affect the actual value
of the New Warrants, JPS has not assigned a value to the New Warrants for
purposes of calculating either the value of the New Common Stock or the value
of the New Warrants. Therefore, assuming 10 million shares of New Common Stock
will be issued on the Effective Date, the New Common Stock is estimated to be
valued at the mid-point value of approximately $123.3 million, or
approximately $12.33 per share. The foregoing analysis also excludes the funds
in JPS Capital as well as the value, if any, of the Contingent Notes because
under the Plan, such notes are to be satisfied only to the extent of funds in
JPS Capital upon maturity.
THE ESTIMATED ENTERPRISE VALUE IS HIGHLY DEPENDENT UPON ACHIEVING THE FUTURE
FINANCIAL RESULTS SET FORTH IN THE PROJECTIONS AS WELL AS THE REALIZATION OF
CERTAIN OTHER ASSUMPTIONS WHICH ARE NOT GUARANTEED.
THE VALUATIONS SET FORTH HEREIN REPRESENT ESTIMATED REORGANIZATION VALUES
AND DO NOT NECESSARILY REFLECT VALUES THAT COULD BE ATTAINABLE IN PUBLIC OR
PRIVATE MARKETS. THE EQUITY VALUE ASCRIBED IN THE ANALYSIS DOES NOT PURPORT TO
BE AN ESTIMATE OF THE POST-REORGANIZATION MARKET VALUE. SUCH TRADING VALUE, IF
ANY, MAY BE MATERIALLY DIFFERENT FROM THE REORGANIZATION EQUITY VALUE RANGES
ASSOCIATED WITH THE VALUATION ANALYSIS.
33
<PAGE>
VI.
CERTAIN FACTORS AFFECTING JPS
A. CERTAIN BANKRUPTCY LAW CONSIDERATIONS
1. Failure to Satisfy Vote Requirement
If votes are received in number and amount sufficient to enable a Bankruptcy
Court to confirm the Plan, JPS intends to file a voluntary petition for
reorganization under chapter 11 of the Bankruptcy Code and to seek, as
promptly as practicable thereafter, confirmation of the Plan. In the event
that sufficient votes are not received, JPS may nevertheless file a petition
for relief under chapter 11 of the Bankruptcy Code. In such event, JPS may
seek to accomplish an alternative restructuring of its capitalization and its
obligations to creditors and equity holders. There can be no assurance that
the terms of any such alternative restructuring would be similar to or as
favorable to JPS's bondholders, other creditors, and Old Senior Preferred
Stock equity holders, as those proposed in the Plan.
2. Risk of Non-Confirmation of the Plan
Although JPS believes that the Plan will satisfy all requirements necessary
for confirmation by the Bankruptcy Court, there can be no assurance that the
Bankruptcy Court will reach the same conclusion. Moreover, there can be no
assurance that modifications of the Plan will not be required for confirmation
or that such modifications would not necessitate the resolicitation of votes.
3. Nonconsensual Confirmation
In the event any impaired class of claims or equity interests does not
accept a plan of reorganization, a bankruptcy court may nevertheless confirm
such plan at the proponent's request if at least one impaired class has
accepted the plan (with such acceptance being determined without including the
vote of any "insider" in such class), and as to each impaired class that has
not accepted the plan, the bankruptcy court determines that the plan "does not
discriminate unfairly" and is "fair and equitable" with respect to the
dissenting impaired classes. See Section VIII.B.2, below, entitled
"CONFIRMATION OF THE PLAN--Requirements for Confirmation of the Plan--
Nonconsensual Confirmation." JPS believes that the Plan satisfies these
requirements, and reserves the right to request such nonconsensual
confirmation in accordance with subsection 1129(b) of the Bankruptcy Code. In
the event of a nonconsensual confirmation, holders of claims in Class 4 and
Class 5, and holders of equity interests in Class 8, will receive the
alternative treatment specified for such classes. See Section IV.B, above,
entitled "THE JOINT PLAN OF REORGANIZATION--Classification and Treatment of
Claims and Equity Interests Under the Plan."
4. Risk of Non-Occurrence of the Effective Date
Although JPS believes that the Effective Date may occur as soon as eleven
days after the Confirmation Date, there can be no assurance as to such timing.
Moreover, if the conditions precedent to the Effective Date have not occurred
or been waived within six months after the Confirmation Date, the Bankruptcy
Court may vacate the order confirming the Plan, in which event, the Plan would
be deemed null and void, and JPS may propose and solicit votes on an
alternative plan of reorganization that may not be as favorable to parties in
interest as the Plan.
5. Effect of JPS's Chapter 11 Case on the Subsidiaries
The commencement of a chapter 11 case by JPS may adversely affect the
businesses of its operating subsidiaries. JPS believes that any such adverse
effects may worsen during the pendency of a protracted chapter 11 case. JPS
does not anticipate the commencement of a chapter 11 case for any of its
subsidiaries. Certain creditors may have the legal right to take actions with
respect to the subsidiaries due to the commencement of a case by JPS. In the
event such creditors seek to do so, the subsidiaries will not have the benefit
of the "automatic
34
<PAGE>
stay." Although there can be no assurance, JPS believes that such actions
would not have a material adverse effect on the business or financial
condition of the subsidiaries, and therefore, on JPS. In addition, although
JPS believes it will obtain a new working capital facility for the Company
prior to the expiration of the Credit Agreement, there can be no assurance
that in the event of a protracted chapter 11 case it will be able to do so. If
the case is protracted and JPS is unable to obtain a new facility, JPS
believes that the business and financial condition of its subsidiaries, and
therefore of JPS, would be materially adversely affected.
B. FACTORS AFFECTING THE VALUE OF THE SECURITIES TO BE ISSUED UNDER THE PLAN
1. Competitive Conditions
The textile industry is highly competitive and includes a number of
participants with aggregate sales and financial resources greater than those
of JPS and its subsidiaries. However, at present, most market segments are
dominated by a small number of competitors with no single company dominating
the industry. Although no customer accounts for more than 10% of the Company's
sales, the loss of certain customers could have a material adverse effect on
sales. In addition, JPS's business plan is premised upon the existence of
certain conditions in the largest of these markets in which the Company
participates, including women's apparel, roofing, and fiberglass products for
electrical circuitboards, as well as the Company's ability to expand into the
Mexican, European, and Asian markets. There are no assurance that such
conditions will be maintained or occur or that the Company's expansion into
new markets will be successful.
The Company has, where possible, diversified its supplier base to avoid a
disruption of supply. In most cases, its raw materials are staple goods that
are readily available from numerous domestic fiber and chemical manufacturers.
For several products, however, branded goods or other circumstances prevent
such diversification, and an interruption of the supply of these raw materials
could have a significant negative impact on the Company's ability to produce
certain products.
2. Capital Requirements
The business of Reorganized JPS and its subsidiaries is expected to have
substantial capital expenditure needs. While JPS's projections assume that the
Company will generate sufficient funds to meet its capital expenditure needs
for the foreseeable future, the Company's ability to gain access to additional
capital, if needed, cannot be assured, particularly in view of competitive
factors and industry conditions.
3. Variances from Projections
The fundamental premise of the Plan is the deleveraging of JPS and the
implementation and realization of JPS's business plan, as reflected in the
projections contained in this Disclosure Statement. The projections reflect
numerous assumptions concerning the anticipated future performance of
Reorganized JPS and its subsidiaries, some of which may not materialize. Such
assumptions include, among other items, assumptions concerning the general
economy, the ability to make necessary capital expenditures, the ability to
establish market strength, consumer purchasing trends and preferences, and the
ability to increase gross margins and control future operating expenses. JPS
believes that the assumptions underlying the projections are reasonable.
However, unanticipated events and circumstances occurring subsequent to the
preparation of the projections may affect the actual financial results of
Reorganized JPS. Therefore, the actual results achieved throughout the periods
covered by the projections necessarily will vary from the projected results,
and such variations may be material and adverse.
Moreover, the estimated percentage recoveries by holders of allowed claims
in Classes 4 and 5 and allowed equity interests in Class 8 are based upon
JPS's estimate of the value of the New Common Stock. Because the market and
economic conditions upon which such value is based are beyond the control of
JPS, the actual results achieved necessarily will vary from the estimate. Such
variations may be material and adverse.
35
<PAGE>
4. Disruption of Operations
The commencement and pendency of JPS's chapter 11 case could adversely
affect the Company's relationships with its customers and suppliers, as well
as the Company's ability to retain or attract high quality employees. In such
event, weakened operating results may occur that could give rise to variances
from JPS's projections.
5. Lack of Trading Market
Reorganized JPS will enter into, on the Effective Date, a registration
rights agreement under which it will seek to register the New Common Stock
pursuant to a "shelf registration." The Plan requires Reorganized JPS to use
its best efforts to effectuate a listing of the New Common Stock on a national
securities exchange or NASDAQ as of the Effective Date. In addition, the Plan
provides that Reorganized JPS will use its best efforts to cause to be filed
with the Securities and Exchange Commission on the Effective Date a
registration statement on Form 10 under the Exchange Act with respect to the
New Common Stock and to maintain its status as a reporting company under the
Exchange Act. While such registration is expected to facilitate the trading of
the New Common Stock on a national securities exchange or NASDAQ, there can be
no assurance that any such securities would be so listed or included or that
an active trading market for the securities would develop and continue. In
addition, there can be no assurance as to the degree of price volatility in
the market for any of the new securities that does develop. Accordingly, no
assurance can be given that a holder of New Common Stock will be able to sell
such securities in the future or as to the price at which any such sale may
occur. If such markets were to exist, the securities could trade at prices
higher or lower than the value ascribed to them in this Disclosure Statement,
depending upon many factors, including prevailing interest rates, markets for
similar securities, industry conditions, and the performance of, and investor
expectations for, Reorganized JPS and its subsidiaries.
6. Dividend Policies
JPS does not anticipate that any dividends will be paid on the New Common
Stock in the foreseeable future. In addition, the covenants in the post-
reorganization credit facility may limit the ability of Reorganized JPS to pay
dividends. Certain institutional investors may only invest in dividend-paying
equity securities or may operate under other restrictions which may prohibit
their ability to invest in New Common Stock.
7. Holding Company Structure
The Company presently operates, and after consummation of the Plan will
continue to operate, exclusively through its subsidiaries. The subsidiaries
are the primary obligors under the existing Credit Agreement, and JPS
anticipates that after the Effective Date, the subsidiaries will be the
primary obligors under the post-reorganization working capital facility.
Accordingly, subsequent to consummation of the Plan, claims of the post-
reorganization working capital facility lenders and claims of trade and other
creditors of Reorganized JPS's subsidiaries will have a priority over the
creditors of Reorganized JPS with respect to the subsidiaries' earnings.
8. Contingent Notes
The principal amount of the Contingent Notes, the amount of interest
payable, and the date of maturity are dependent upon the occurrence of the
events discussed in Section IV.C.2, above, entitled "THE JOINT PLAN OF
REORGANIZATION--Securities to Be Issued Pursuant to the Plan--Contingent
Notes." There is no assurance as to the extent to which the contingencies will
occur. Depending upon the ultimate resolution of such contingencies, the value
of the Contingent Notes will vary, and under certain circumstances, the
Contingent Notes may have no value. Given the fact that the value of the
Contingent Notes is directly dependent upon the outcome of the possible
contingent tax liabilities, and in light of the uncertainty that exists with
respect to such outcome, there can be no assurance as to the actual value of
the Contingent Notes. The Contingent Notes will be treated by JPS Capital and
the holders thereof as equity solely for tax purposes and for all other
purposes shall be deemed to be indebtedness of JPS Capital.
C. CERTAIN TAX MATTERS
For a summary of certain federal income tax consequences of the Plan to
holders of claims and equity interests and to JPS, see Section XI, below,
entitled "CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN."
36
<PAGE>
D. PENDING LITIGATION OR DEMANDS ASSERTING PREPETITION LIABILITY
As of the date of this Disclosure Statement, there were no pending demands
or litigation asserting prepetition liability which JPS believes will have a
material adverse effect upon the operations or financial position of JPS,
Reorganized JPS, or its subsidiaries if determined unfavorably to the Company.
Warranties with respect to roofing products sold by Elastomerics and JPS's
predecessor, J.P. Stevens & Co., Inc., will continue to be honored by
Elastomerics in the ordinary course of business. The reserves established for
such claims are updated quarterly, and in JPS's belief, are reasonable. For
further discussion, see Note 9 "Commitments and Contingencies" to Item 8
"Financial Statements and Supplementary Data" in the Annual Report on Form 10-
K attached as Exhibit 2 to this Disclosure Statement.
JPS sponsors a pension plan that is covered by the Plan Termination
Insurance Program administered by the PBGC under Title IV of the Employee
Retirement Income Security Act of 1974. Prior to the commencement of JPS's
solicitation, the PBGC informed JPS that its pension plan was underfunded by
approximately $45 million on a PBGC termination basis. The PBGC asserts that
the amount of its contingent claim is determined by statute and PBGC
regulations, and is subject to change based on many factors. JPS and its
counsel disagree with the PBGC's estimate of its contingent claim, which the
pension plan's actuary estimates to be approximately $27 million. In any
event, however, the PBGC's claim is entirely contingent upon circumstances
which, under the Plan, are not intended to occur. Specifically, the Plan
provides that JPS's pension plan will continue and be unaffected by
confirmation. Therefore, if the Plan is confirmed and consummated, the pension
plan will not be terminated and no amounts will be owing to the PBGC by JPS or
any of its non-debtor subsidiaries therefor.
VII.
VOTING PROCEDURES AND REQUIREMENTS
A. VOTING DEADLINE
IT IS IMPORTANT THAT THE HOLDERS OF CLAIMS IN CLASS 4 AND CLASS 5, AND THE
HOLDERS OF EQUITY INTERESTS IN CLASS 8, EXERCISE THEIR RIGHTS TO VOTE TO
ACCEPT OR REJECT THE PLAN. All known holders of claims and equity interests
entitled to vote on the Plan have been sent a Ballot together with this
Disclosure Statement. Such holders should read the Ballot carefully and follow
the instructions contained therein. Please use only the Ballot that
accompanies this Disclosure Statement.
JPS has engaged The Altman Group, Inc. as its Voting Agent to assist in the
transmission of voting materials and in the tabulation of votes with respect
to the Plan. FOR YOUR VOTE TO COUNT, YOUR VOTE MUST BE RECEIVED AT THE
FOLLOWING ADDRESS BEFORE THE VOTING DEADLINE OF 5:00 P.M., EASTERN TIME, ON
JULY 28, 1997:
JPS TEXTILE GROUP, INC. C/O THE ALTMAN GROUP, INC.60 EAST 42ND STREET, SUITE
1241NEW YORK, NEW YORK 10165
IF YOU HAVE BEEN INSTRUCTED TO RETURN YOUR BALLOT TO YOUR BANK, BROKER, OR
OTHER NOMINEE, OR TO THEIR AGENT, YOU MUST RETURN YOUR BALLOT TO THEM IN
SUFFICIENT TIME FOR THEM TO PROCESS IT AND RETURN IT TO THE VOTING AGENT AT
THIS ADDRESS BEFORE THE VOTING DEADLINE.
IF A BALLOT IS DAMAGED OR LOST, OR FOR ADDITIONAL COPIES OF THIS DISCLOSURE
STATEMENT, YOU MAY CONTACT JPS'S VOTING AGENT, THE ALTMAN GROUP, INC. ANY
BALLOT WHICH IS EXECUTED AND RETURNED BUT WHICH DOES NOT INDICATE AN
ACCEPTANCE OR REJECTION OF THE PLAN WILL NOT BE COUNTED. IF YOU HAVE ANY
QUESTIONS CONCERNING VOTING PROCEDURES, YOU MAY CONTACT THE VOTING AGENT AT
THE ADDRESS SPECIFIED ABOVE OR BY TELEPHONING: (212) 681-9600.
37
<PAGE>
B. HOLDERS OF CLAIMS AND EQUITY INTERESTS ENTITLED TO VOTE
The claims and equity interests in the following classes are impaired under
the Plan and entitled to receive a distribution; consequently, each holder of
such claim or equity interest, as of the June 20, 1997 record date established
by JPS for purposes of this solicitation, may vote to accept or reject the
Plan:
Class 4 -- Senior Note Claims
(Holders of 10.85% Notes and 10.25% Notes)
Class 5 -- Subordinated Debenture Claims
(Holders of 7% Subordinated Debentures)
Class 8 -- Senior Preferred Stock Interests
(Holders of Old Senior Preferred Stock)
C. VOTE REQUIRED FOR ACCEPTANCE BY A CLASS
The Bankruptcy Code defines acceptance of a plan by a class of claims as
acceptance by holders of at least two-thirds in dollar amount and more than
one-half in number of the claims of that class which cast ballots for
acceptance or rejection of the plan. Thus, acceptance by a class of claims
occurs only if at least two-thirds in dollar amount and a majority in number
of the holders of claims voting cast their Ballots in favor of acceptance.
HOLDERS OF CLAIMS IN CLASS 4 AND CLASS 5 SHOULD VOTE THE AGGREGATE FACE AMOUNT
OF THEIR NOTES OR DEBENTURES. In order to calculate the precise vote for those
classes, interest on the principal amounts voted will be added by JPS (or its
Voting Agent), and a minor adjustment will be made to the principal amount of
the 10.25% Notes voted to account for unaccreted original issue discount which
is unmatured interest and is disallowed under the Bankruptcy Code.
The Bankruptcy Code defines acceptance of a plan by a class of equity
interests as acceptance by holders of at least two-thirds in amount of
interests of that class which cast ballots for acceptance or rejection of the
plan. Thus, acceptance by a class of equity interests occurs only if the
holders of at least two-thirds in amount of equity interests voting cast their
Ballots in favor of acceptance.
A vote may be disregarded if the Bankruptcy Court determines, after notice
and a hearing, that such acceptance or rejection was not solicited or procured
in good faith or in accordance with the provisions of the Bankruptcy Code.
D. VOTING PROCEDURES
JPS is providing copies of this Disclosure Statement, Ballots, and where
appropriate, Master Ballots, to all registered holders (as of the June 20,
1997 record date) of 10.85% Notes or 10.25% Notes in Class 4, 7% Subordinated
Debentures in Class 5, and Old Senior Preferred Stock in Class 8. Registered
holders may include brokers, banks, and other nominees. If such registered
holders do not hold for their own accounts, they or their agents (collectively
with such registered holders, "Nominees") should provide copies of this
Disclosure Statement and appropriate Ballots to their customers and to
beneficial owners. Any beneficial owner who has not received a Ballot should
contact his, her, or its Nominee, or the Voting Agent.
1. Holders of Class 4 Senior Note Claims, Class 5 Subordinated Debenture
Claims, andClass 8 Senior Preferred Stock Interests
Beneficial Owners. Any beneficial owner, as of the June 20, 1997 record
date, of 10.85% Notes, 10.25% Notes, 7% Subordinated Debentures, or Old Senior
Preferred Stock in his, her, or its own name can vote by completing and
signing the enclosed Ballot and returning it directly to the Voting Agent
(using the
38
<PAGE>
enclosed pre-addressed postage-paid envelope) so as to be received by the
Voting Agent before the Voting Deadline. If no envelope was enclosed, contact
the Voting Agent for instructions.
Any beneficial owner holding, as of the June 20, 1997 record date, 10.85%
Notes, 10.25% Notes, 7% Subordinated Debentures, or Old Senior Preferred Stock
in "street name" through a Nominee can vote by completing and signing the
Ballot (unless the Ballot has already been signed, or "prevalidated," by the
Nominee), and returning it to the Nominee in sufficient time for the Nominee
to then forward the vote so as to be received by the Voting Agent before the
Voting Deadline of 5:00 p.m. (Eastern Time) on July 28, 1997. Any Ballot
submitted to a Nominee will not be counted until such Nominee properly
completes and timely delivers a corresponding Master Ballot to the Voting
Agent. IF YOUR BALLOT HAS ALREADY BEEN SIGNED (OR "PREVALIDATED") BY YOUR
NOMINEE, YOU MUST COMPLETE THE BALLOT AND RETURN IT DIRECTLY TO THE VOTING
AGENT SO THAT IT IS RECEIVED BY THE VOTING AGENT BEFORE THE VOTING DEADLINE.
Nominees. A Nominee which is the registered holder for a beneficial owner,
as of the June 20, 1997 record date, of 10.85% Notes, 10.25% Notes, 7%
Subordinated Debentures, or Old Senior Preferred Stock, can obtain the votes
of the beneficial owners of such securities, consistent with customary
practices for obtaining the votes of securities held in "street name," in one
of the following two ways:
The Nominee may "prevalidate" a Ballot by (i) signing the Ballot, (ii)
indicating on the Ballot the name of the registered holder, the amount of
securities held by the Nominee for the beneficial owner, and the account
numbers for the accounts in which such securities are held by the Nominee,
and (iii) forwarding such Ballot, together with the Disclosure Statement,
return envelope, and other materials requested to be forwarded, to the
beneficial owner for voting. The beneficial owner must then indicate his,
her or its vote in Item 2 (and as to beneficial owners of 10.85% Notes,
10.25% Notes, and 7% Subordinated Debentures, complete the information
requested in Item 3, if appropriate) of the Ballot, review the
certifications contained in the Ballot, and return the Ballot directly to
the Voting Agent in the pre-addressed, postage-paid envelope so that it is
received by the Voting Agent before the Voting Deadline. A list of the
beneficial owners to whom "prevalidated" Ballots were delivered should be
maintained by Nominees for inspection for at least one year from the Voting
Deadline.
OR
If the Nominee elects not to "prevalidate" Ballots, the Nominee may
obtain the votes of beneficial owners by forwarding to the beneficial
owners the unsigned Ballots, together with the Disclosure Statement, a
return envelope provided by, and addressed to, the Nominee, and other
materials requested to be forwarded. Each such beneficial owner must then
indicate his, her or its vote in Item 2 (and as to beneficial owners of
10.85% Notes, 10.25% Notes, and 7% Subordinated Debentures, complete the
information requested in Item 3, if appropriate) of the Ballot, review the
certifications contained in the Ballot, execute the Ballot, and return the
Ballot to the Nominee. After collecting the Ballots, the Nominee should, in
turn, complete a Master Ballot compiling the votes and other information
from the Ballots, execute the Master Ballot, and deliver the Master Ballot
to the Voting Agent so that it is received by the Voting Agent before the
Voting Deadline. All Ballots returned by beneficial owners should be
retained by Nominees for inspection for at least one year from the Voting
Deadline. Please note: The Nominee should advise the beneficial owners to
return their Ballots to the Nominee by a date calculated by the Nominee to
allow it to prepare and return the Master Ballot to the Voting Agent so
that the Master Ballot is received by the Voting Agent before the Voting
Deadline.
Securities Clearing Agencies. JPS expects that each of The Depository
Trust Company and The Philadelphia Depository Trust Company, as the nominee
holder of 10.85% Notes, 10.25% Notes, 7% Subordinated Debentures, and Old
Senior Preferred Stock will arrange for its respective participants to vote by
executing an omnibus proxy in favor of such participants. As a result of the
omnibus proxy, each participant will be authorized to vote its June 20, 1997
record date positions held in the name of such securities clearing agencies.
39
<PAGE>
Other. If a Ballot is signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations, or others acting in a
fiduciary or representative capacity, such persons should indicate such
capacity when signing, and unless otherwise determined by JPS, must submit
proper evidence satisfactory to JPS of their authority to so act.
For purposes of voting to accept or reject the Plan, the beneficial owners
of such securities will be deemed to be the "holders" of such claims or equity
interests, as the case may be, represented by such securities.
All claims in a Class that are voted by a beneficial owner must be voted
either to accept or to reject the Plan and may not be split by the beneficial
owner within such Class. In addition, because the Plan classifies the 10.85%
Notes and the 10.25% Notes together in Class 4, any holder of both 10.85%
Notes and 10.25% Notes must vote all such notes either to accept or reject the
Plan, and may not split a vote between them. Unless otherwise ordered by the
Bankruptcy Court, Ballots or Master Ballots which are signed, dated, and
timely received, but on which a vote to accept or reject the Plan has not been
indicated, will not be counted. JPS, in its discretion, may request that the
Voting Agent attempt to contact such voters to cure any such defects in the
Ballots or Master Ballots.
Except as provided below, unless the Ballot or Master Ballot is timely
submitted to the Voting Agent before the Voting Deadline together with any
other documents required by such Ballot or Master Ballot, JPS may, in its sole
discretion, reject such Ballot or Master Ballot as invalid, and therefore,
decline to utilize it in connection with seeking confirmation of the Plan by
the Bankruptcy Court.
In the event of a dispute with respect to a claim or equity interest, any
vote to accept or reject the Plan cast with respect to such claim or equity
interest will not be counted for purposes of determining whether the Plan has
been accepted or rejected, unless the Bankruptcy Court orders otherwise.
JPS IS NOT AT THIS TIME REQUESTING THE DELIVERY OF, AND NEITHER JPS NOR THE
VOTING AGENT WILL ACCEPT, CERTIFICATES REPRESENTING ANY NOTES OR EQUITY
SECURITIES. PRIOR TO THE EFFECTIVE DATE, JPS WILL FURNISH ALL SUCH HOLDERS
WITH APPROPRIATE LETTERS OF TRANSMITTAL TO BE USED TO REMIT SUCH SECURITIES IN
EXCHANGE FOR THE DISTRIBUTION UNDER THE PLAN. INFORMATION REGARDING SUCH
REMITTANCE PROCEDURE (TOGETHER WITH ALL APPROPRIATE MATERIALS) WILL BE
DISTRIBUTED BY JPS AFTER CONFIRMATION OF THE PLAN.
2. Withdrawal of Ballot or Master Ballot
Any voter who has delivered a valid Ballot or Master Ballot may withdraw its
vote by delivering a written notice of withdrawal to the Voting Agent before
the Voting Deadline. To be valid, the notice of withdrawal must (a) describe
the claim or equity interest to which it relates, (b) be signed by the party
who signed the Ballot or Master Ballot to be revoked, and (c) be received by
the Voting Agent before the Voting Deadline. JPS may contest the validity of
any withdrawals.
Any holder who has delivered a valid Ballot or Master Ballot may change its
vote by delivering to the Voting Agent a properly completed subsequent Ballot
or Master Ballot so as to be received before the Voting Deadline. In the case
where more than one timely, properly completed Ballot or Master Ballot is
received, only the Ballot or Master Ballot that bears the latest date will be
counted.
40
<PAGE>
VIII.
CONFIRMATION OF THE PLAN
A. CONFIRMATION HEARING
Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court, after
notice, to hold a hearing on confirmation of a plan. As promptly as
practicable after the commencement by JPS of its chapter 11 case, JPS will
request the Bankruptcy Court to schedule a confirmation hearing. Notice of the
confirmation hearing will be provided to all known creditors and equity
holders or their representatives. The confirmation hearing may be adjourned
from time to time by the Bankruptcy Court without further notice except for an
announcement of the adjourned date made at the confirmation hearing or any
subsequent adjourned confirmation hearing.
Section 1128(b) of the Bankruptcy Code provides that any party in interest
may object to confirmation of a plan. Any objection to confirmation of the
Plan must be in writing, must conform to the Bankruptcy Rules, must set forth
the name of the objectant, the nature and amount of claims or interests held
or asserted by the objectant against JPS's estate or property, and the basis
for the objection and the specific grounds therefor, and must be filed with
the Bankruptcy Court, with a copy to Chambers, together with proof of service
thereof, and served upon (i) Weil, Gotshal & Manges LLP, Attorneys for JPS,
767 Fifth Avenue, New York, New York 10153, Attention: Michael F. Walsh, Esq.
and Sharon Youdelman, Esq., (ii) The United States Trustee for the Southern
District of New York, 80 Broad Street, Third Floor, New York, New York 10004,
Attention: Carolyn S. Schwartz, Esq., (iii) Fried, Frank, Harris, Shriver &
Jacobson, Attorneys for the Unofficial Bondholder Committee, One New York
Plaza, New York, New York 10004, Attention: Brad Eric Scheler, Esq. and
Lawrence A. First, Esq., and (iv) the attorneys for any official committee of
unsecured creditors that may be appointed in JPS's chapter 11 case, so as to
be received no later than the date and time designated in the notice of the
confirmation hearing.
Objections to confirmation of the Plan are governed by Bankruptcy Rule 9014.
UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED, IT MAY NOT BE
CONSIDERED BY THE BANKRUPTCY COURT.
B. REQUIREMENTS FOR CONFIRMATION OF THE PLAN
1. Consensual Confirmation
a. General Requirements. At the confirmation hearing, the Bankruptcy Court
will determine whether the following confirmation requirements specified in
section 1129 of the Bankruptcy Code have been satisfied:
(1) The Plan complies with the applicable provisions of the
Bankruptcy Code.
(2) JPS has complied with the applicable provisions of the Bankruptcy
Code.
(3) The Plan has been proposed in good faith and not by any means
proscribed by law.
(4) Any payment made or promised by JPS or by a person issuing
securities or acquiring property under the Plan for services or for
costs and expenses in, or in connection with, the chapter 11 case, or
in connection with the Plan and incident to the chapter 11 case, has
been disclosed to the Bankruptcy Court, and any such payment made
before confirmation of the Plan is reasonable, or if such payment is to
be fixed after confirmation of the Plan, such payment is subject to the
approval of the Bankruptcy Court as reasonable.
(5) JPS has disclosed the identity and affiliations of any individual
proposed to serve, after confirmation of the Plan, as a director,
officer, or voting trustee of JPS, an affiliate of JPS participating in
the Plan with JPS, or a successor to JPS under the Plan, and the
appointment to, or continuance in, such office of such individual is
consistent with the interests of creditors and equity holders and with
public policy, and JPS has disclosed the identity of any insider that
will be employed or retained by JPS, and the nature of any compensation
for such insider.
(6) With respect to each class of claims or equity interests, each
holder of an impaired claim or impaired equity interest either has
accepted the Plan or will receive or retain under the Plan on account
41
<PAGE>
of such holder's claim or equity interest, property of a value, as of
the Effective Date of the Plan, that is not less than the amount such
holder would receive or retain if JPS were liquidated on the Effective
Date under chapter 7 of the Bankruptcy Code. See discussion of "Best
Interests Test," in subsection 1.b, below.
(7) Except to the extent the Plan meets the "Nonconsensual
Confirmation" standards discussed in subsection 2 below, each class of
claims or equity interests has either accepted the Plan or is not
impaired under the Plan.
(8) Except to the extent that the holder of a particular claim has
agreed to a different treatment of such claim, the Plan provides that
administrative expenses and priority claims other than priority tax
claims will be paid in full on the Effective Date and that priority tax
claims will receive on account of such claims deferred cash payments,
over a period not exceeding six years after the date of assessment of
such claims, of a value, as of the Effective Date, equal to the allowed
amount of such claims.
(9) At least one class of impaired claims has accepted the Plan,
determined without including any acceptance of the Plan by any insider
holding a claim in such class.
(10) Confirmation of the Plan is not likely to be followed by the
liquidation or the need for further financial reorganization of JPS or
any successor to JPS under the Plan, unless such liquidation or
reorganization is proposed in the Plan. See discussion of
"Feasibility," in subsection 1.c, below.
(11) The Plan provides for the continuation after the Effective Date
of payment of all Retiree Benefits (as defined in section 1114 of the
Bankruptcy Code), at the level established pursuant to subsection
1114(e)(1)(B) or 1114(g) 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.
JPS believes that each of the foregoing elements will be satisfied.
b. Best Interests Test. As described above, the Bankruptcy Code requires
that each holder of an impaired claim or equity interest either (a) accepts
the plan or (b) receives or retains under the plan property of a value, as of
the effective date of the plan, that is not less than the value such holder
would receive or retain if JPS were liquidated under chapter 7 of the
Bankruptcy Code on the effective date.
The first step in meeting this test is to determine the dollar amount that
would be generated from the liquidation of JPS's assets and properties in the
context of a chapter 7 liquidation case. The total cash available would be the
sum of the proceeds from the disposition of JPS's assets and the cash held by
JPS at the time of the commencement of the chapter 7 case. The next step is to
reduce that total by the amount of any claims secured by such assets, the
costs and expenses of the liquidation, and such additional administrative
expenses and priority claims that may result from the termination of JPS's
business and the use of chapter 7 for the purposes of liquidation. Next, any
remaining cash would be allocated to creditors and shareholders in strict
priority in accordance with section 726 of the Bankruptcy Code (see discussion
below). Finally, the present value of such allocations (taking into account
the time necessary to accomplish the liquidation) is compared to the value of
the property that is proposed to be distributed under the Plan on the
Effective Date.
JPS's costs of liquidation under chapter 7 would include the fees payable to
a trustee in bankruptcy, as well as those which might be payable to attorneys
and other professionals that such a trustee may engage, plus any unpaid
expenses incurred by JPS during a chapter 11 case and allowed in the chapter 7
case, such as compensation for attorneys, financial advisors, appraisers,
accountants and other professionals, and costs and expenses of members of any
statutory committee of unsecured creditors appointed by the United States
Trustee pursuant to section 1102 of the Bankruptcy Code and any other
committee so appointed. In addition, claims would arise by reason of the
breach or rejection of obligations incurred and executory contracts entered
into by JPS both prior to, and during the pendency of, the chapter 11 case.
The foregoing types of claims, costs, expenses, and fees and such other
claims which may arise in a liquidation case or result from a pending chapter
11 case would be paid in full from the liquidation proceeds before the balance
of those proceeds would be made available to pay pre-chapter 11 priority and
unsecured claims.
42
<PAGE>
In applying the "best interests test," it is possible that claims and equity
interests in the chapter 7 case may not be classified according to the
seniority of such claims and equity interests as provided in the Plan. In the
absence of a contrary determination by the Bankruptcy Court, all pre-chapter
11 unsecured claims which have the same rights upon liquidation would be
treated as one class for purposes of determining the potential distribution of
the liquidation proceeds resulting from JPS's chapter 7 case. The
distributions from the liquidation proceeds would be calculated ratably
according to the amount of the claim held by each creditor. Therefore,
creditors who claim to be third-party beneficiaries of any contractual
subordination provisions might be required to seek to enforce such contractual
subordination provisions in the Bankruptcy Court or otherwise. Section 510 of
the Bankruptcy Code specifies that such contractual subordination provisions
are enforceable in a chapter 7 liquidation case.
JPS believes that the most likely outcome of liquidation proceedings under
chapter 7 would be the application of the rule of absolute priority of
distributions. Under that rule, no junior creditor receives any distribution
until all senior creditors are paid in full, with interest, and no equity
holder receives any distribution until all creditors are paid in full with
interest. Consequently, and because the creditors of JPS are structurally
subordinated to the prior payment of obligations owed by JPS's subsidiaries,
JPS believes that in a chapter 7 case, holders of 7% Subordinated Debentures,
Old Senior Preferred Stock, Old Junior Preferred Stock, and Old Common Stock
would receive no distributions of property.
After consideration of the effects that a chapter 7 liquidation would have
on the ultimate proceeds available for distribution to creditors in a chapter
11 case, including (i) the increased costs and expenses of a liquidation under
chapter 7 arising from fees payable to a trustee in bankruptcy and
professional advisors to such trustee, (ii) the erosion in value of assets in
a chapter 7 case in the context of the expeditious liquidation required under
chapter 7 and the "forced sale" atmosphere that would prevail, (iii) the
adverse effects on the salability of the capital stock of the subsidiaries as
a result of the departure of key employees and the loss of major customers and
suppliers, and (iv) substantial increases in claims which would be satisfied
on a priority basis or on a parity with creditors in a chapter 11 case, JPS
has determined that confirmation of the Plan will provide each creditor and
equity holder with a recovery that is not less than it would receive pursuant
to a liquidation of JPS under chapter 7 of the Bankruptcy Code.
Moreover, JPS believes that the value of any distributions from the
liquidation proceeds to each class of allowed claims in a chapter 7 case would
be the same or less than the value of distributions under the Plan because
such distributions in a chapter 7 case may not occur for a substantial period
of time. In this regard, it is possible that distribution of the proceeds of
the liquidation could be delayed for a year or more after the completion of
such liquidation in order to resolve the claims and prepare for distributions.
In the event litigation were necessary to resolve claims asserted in the
chapter 7 case, the delay could be further prolonged.
43
<PAGE>
THE FOLLOWING LIQUIDATION ANALYSIS IS AN ESTIMATE OF THE PROCEEDS THAT MAY
BE GENERATED AS A RESULT OF A HYPOTHETICAL CHAPTER 7 LIQUIDATION OF THE ASSETS
OF JPS WHICH CONSIST OF THE STOCK OF ITS SUBSIDIARIES. THE ANALYSIS IS BASED
UPON A NUMBER OF SIGNIFICANT ASSUMPTIONS WHICH ARE DESCRIBED. THE LIQUIDATION
ANALYSIS DOES NOT PURPORT TO BE A VALUATION OF THE COMPANY'S ASSETS AND IS NOT
NECESSARILY INDICATIVE OF THE VALUES THAT MAY BE REALIZED IN AN ACTUAL
LIQUIDATION.
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Estimated Disposition Value of the Operating Subsidiaries of
JPS(a)......................................................... $133,020
Less: Credit Agreement.......................................... (85,777)
--------
Estimated Liquidation Proceeds from Operating Subsidiaries... 47,243
Plus: Proceeds from JPS Capital(b).............................. 49,432
Less: Chapter 7 Trustee Fees(c)................................. (5,474)
Less: Other Chapter 7 Administrative Expenses(d)................ (3,130)
Less: Chapter 11 Administrative Expenses........................ (2,200)
--------
Net Liquidation Proceeds..................................... 85,871
Present Value of Net Liquidation Proceeds As of Assumed
August 1, 1997 Effective Date(e)............................ 81,875
Less: Priority Claims........................................... 0
--------
NET PROCEEDS DISTRIBUTABLE TO HOLDERS OF IMPAIRED CLAIMS AND
IMPAIRED EQUITY INTERESTS................................... $ 81,875
========
</TABLE>
FOOTNOTES TO LIQUIDATION ANALYSIS
(a) The Estimated Disposition Value of Operating Subsidiaries of JPS assumes
that Elastomerics, Glass, and Converter are sold as going concerns. The
estimated sales proceeds from Elastomerics and Glass are each based upon a
multiple of estimated fiscal year 1997 EBITDA reduced by an allocation for
corporate expenses, representing the overhead expenses a purchaser would
incur, adjusted for a liquidation discount. The multiples take into account
(i) the current market valuation of comparable companies, (ii) certain
company-specific information provided by senior management regarding the
industry and the business and (iii) other relevant company and industry
information. The liquidation discount takes into account the effect the
liquidation process would have on the operations of the businesses including
the impact on employees, suppliers and customers of the Company and the
resulting impact on sales and cash flow. Given the current industry
environment in which Converter competes and the significant capital
expenditures the Company's operating plan assumes are needed to be made in
that area, it is unlikely that a purchaser would evaluate a bid on the basis
of an EBITDA multiple. Instead such purchaser may be willing to pay an amount
approximately equal to the amount of debt an asset-based lender would loan in
a borrowing base facility. Estimated liquidation proceeds from Converter were
evaluated using both of these methods. If the Company were unable to find a
party willing to purchase Converter as a going concern, it would likely
liquidate the assets and pay off the liabilities with the proceeds. If the
Company were to follow a true asset liquidation strategy, it would be required
to pay shutdown, severance, and other costs which would arise at Converter
likely resulting in significantly lower net liquidation proceeds from
Converter.
(b) Estimated value of the assets held by JPS Capital as of assumed January
31, 1998 end of liquidation period.
(c) Trustee fees have been estimated at 3% of the sum of Estimated
Disposition Value of Operating Subsidiaries of JPS and Proceeds from JPS
Capital.
(d) Includes fees for certain accounting, legal, and other professionals,
including investment banking professionals, who would likely be required to
assist the Trustee in case administration.
(e) The Net Liquidation Proceeds have been discounted back to the Effective
Date.
44
<PAGE>
DISTRIBUTION OF NET PROCEEDS
The following table sets forth an estimated distribution of the $81,875,000
in net proceeds distributable to holders of nonpriority unsecured claims and
equity interests in a hypothetical chapter 7 liquidation of JPS on the
Effective Date and a comparison to estimated recoveries under the proposed
chapter 11 Plan. The distribution in such liquidation gives effect to strict
enforcement of all contractual subordination provisions.
<TABLE>
<CAPTION>
CHAPTER 7 CHAPTER 11
------------------------------ ------------------------------
CLAIM OR CLAIM
EQUITY RECOVERY RECOVERY OR EQUITY RECOVERY RECOVERY
CLASS INTEREST ($) (%) INTEREST ($) (%)
- ----- --------- -------- -------- --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
4 $ 220,655 $74,170 33.61% $ 220,655 $129,056(a) 58.49%(a)
5 $ 58,521 $ 0 0% $ 58,521 $ 7,344 12.55%
6 $ 29,000(b) $ 7,705 26.57% $ 250 $ 250 100.00%
7 $ 0 $ 0 -- $ 0 $ 0 --
8 Senior 0 -- Senior --(c) --(c)
Preferred Preferred
Stock Stock
9 Junior 0 -- Junior 0 --
Preferred Preferred
Stock Stock
10 Common 0 -- Common 0 --
Stock Stock
</TABLE>
FOOTNOTES TO DISTRIBUTION OF NET PROCEEDS
(a) Estimated recovery is based upon distribution of $14 million in cash and
New Common Stock (as valued in Section V.B. of this Disclosure Statement), and
excludes any value for the Contingent Notes.
(b) JPS believes that the PBGC would hold a claim of approximately $27
million in the event of a chapter 7 liquidation of JPS. The pension funding
requirement reflects the Company's estimate of the funding requirement upon
the termination of the Company's pension plan. Additional claims of $2 million
represent the Company's estimate of severance and other employee claims, lease
rejection claims, and other general unsecured claims which would arise if the
Company were to convert its case to a chapter 7 liquidation.
(c) The value of the New Warrants depends on a significant increase in the
value of the New Common Stock beyond the values specified in this Disclosure
Statement. Accordingly, JPS has not assigned a value to the New Warrants in
this Disclosure Statement.
As illustrated by the foregoing, JPS believes that under the Plan, each
holder of an impaired claim in Class 5 and each holder of an impaired equity
interest will receive on account of such claim or equity interest, property of
a value, as of the Effective Date, that is not less than the value such holder
would receive if JPS were liquidated under chapter 7 of the Bankruptcy Code on
the Effective Date. Accordingly, JPS believes the Plan satisfies the
requirements of the best interests test set forth in section 1129(a)(7) of the
Bankruptcy Code.
c. Feasibility. The Bankruptcy Code requires that confirmation of a plan
is not likely to be followed by the liquidation or the need for further
financial reorganization of a debtor unless so provided by the plan. For
purposes of determining whether the Plan meets this requirement, JPS has
analyzed its ability to meet its obligations thereunder. As part of this
analysis, JPS has prepared the projections contained in Section V.A, above,
entitled "PROJECTIONS AND VALUATION ANALYSIS--Projections." These projections
are based upon the assumption that the Plan will be confirmed by the
Bankruptcy Court, and for projection purposes, that the Effective Date of the
Plan and its substantial consummation will take place as of August 1, 1997.
The
45
<PAGE>
projections include (i) Pro Forma Condensed Consolidated Balance Sheet, (ii)
Condensed Consolidated Projected Balance Sheets, (iii) Condensed Consolidated
Projected Statements of Operations, and (iv) Condensed Consolidated Projected
Cash Flow Statements, and (v) Operating Assumptions. Based upon the
projections, JPS believes it will be able to make all payments required to be
made pursuant to the Plan.
2. Nonconsensual Confirmation
The Bankruptcy Court may confirm the Plan over the dissent of any impaired
class if the Plan "does not discriminate unfairly" and is "fair and equitable"
with respect to such dissenting class. In the event Class 4 accepts the Plan,
JPS intends to seek confirmation of the Plan notwithstanding the nonacceptance
of one or more other impaired classes.
No Unfair Discrimination. This test applies to classes of claims or equity
interests that are of equal priority and are receiving different treatment
under a plan of reorganization. The test does not require that the treatment
be the same or equivalent, but that such treatment be "fair." In the event
Class 5 votes to reject the Plan, this test would require an analysis of the
treatment afforded Class 5 under the Plan and an analysis of the treatment
afforded Classes 4 and 6. Specifically, if Class 5 votes to reject the Plan,
the property that would have been distributed to such class pursuant to the
Plan will be distributed instead to Class 4. This alternative treatment is
appropriate because the Bankruptcy Code would require the enforcement of the
contractual subordination provisions between Class 4 and Class 5. Based on the
value of the New Common Stock (and even if the Contingent Notes were to be
valued at face (see discussion in Section IV.C.2, above, entitled "THE JOINT
PLAN OF REORGANIZATION--Securities to Be Issued Pursuant to the Plan--
Contingent Notes," and Section V.B, above, entitled "PROJECTIONS AND VALUATION
ANALYSIS--Projections")), Class 5 would receive no value if the subordination
to Class 4 were strictly enforced. Accordingly, the Plan does not discriminate
unfairly against Class 5 in favor of Class 4. Similarly, the treatment of
Class 6 is also appropriate because the amount by which the recoveries by
Class 6 holders under the Plan exceeds the recoveries by Class 6 holders in a
liquidation represents value that would go entirely to Class 4 if the
subordination provisions between Class 4 and Class 5 were strictly enforced.
Accordingly, the Plan also does not discriminate unfairly against Class 5 in
favor of Class 6.
Fair and Equitable Test. This test applies to classes of different priority
(e.g., unsecured versus secured) and includes the general requirement that no
class of claims receive more than 100% of the allowed amount of the claims in
such class. As to the dissenting class, the test sets different standards,
depending on the type of claims or interests in such class:
Secured Claims. Each holder of an impaired secured claim either (i)
retains its liens on the property (or if sold, on the proceeds thereof) to
the extent of the allowed amount of its secured claim and receives deferred
cash payments having a value, as of the effective date of the plan, of at
least the allowed amount of such claim or (ii) receives the "indubitable
equivalent" of its allowed secured claim.
Unsecured Claims. Either (i) each holder of an impaired unsecured claim
receives or retains under the plan property of a value equal to the amount
of its allowed unsecured claim, or (ii) the holders of claims and interests
that are junior to the claims of the dissenting class will not receive or
retain any property under the plan.
Equity Interests. Either (i) each equity interest holder will receive or
retain under the plan property of a value equal to the greater of (a) the
fixed liquidation preference or redemption price, if any, of such stock and
(b) the value or the stock, or (ii) the holders of interests that are
junior to the equity interests of the dissenting class will not receive or
retain any property under the plan.
JPS believes the Plan will satisfy the "fair and equitable" test in the
event Class 5 or Class 8 votes to reject the Plan, and notwithstanding that
Class 9 and Class 10 are deemed to reject the Plan, because, in each case, no
class that is junior to such a dissenting class will receive or retain any
property on account of the claims or equity interests in such class.
46
<PAGE>
C. EFFECTIVENESS OF THE PLAN
1. Conditions Precedent to Effectiveness
The Plan will be consummated, and the Effective Date will occur, on the
first Business Day (or as soon thereafter as is practicable) after the date on
which the following conditions have been satisfied or waived:
a. The order confirming the Plan shall have become final;
b. Reorganized JPS or its operating subsidiaries shall have executed an
agreement for a working capital facility on terms reasonably satisfactory
to the official committee of unsecured creditors appointed in the chapter
11 case (or if no such committee is appointed, the Unofficial Bondholder
Committee);
c. The Contingent Note Indenture shall have been duly qualified under the
Trust Indenture Act of 1939;
d. The restated certificates of incorporation for Reorganized JPS and JPS
Capital, in the forms of Exhibits B and F, respectively, to the Plan, shall
have been filed with the Secretary of State of the State of Delaware, in
accordance with sections 101 and 303 of the Delaware General Corporation
Law;
e. All authorizations, consents, and regulatory approvals required (if
any) in connection with the Plan's effectiveness shall have been obtained;
f. As of the Effective Date, the aggregate prepetition claims against
JPS, including all allowed claims and disputed claims (but excluding claims
under the 10.85% Notes, 10.25% Notes, 7% Subordinated Debentures, the
Credit Agreement, the existing agreements set forth on Exhibit M to the
Plan, the employee benefit plans, programs, and policies of JPS in effect
as of June 13, 1997, and any claims for which a bar date has not been set
by the Bankruptcy Court), does not exceed $300,000;
g. As of the Effective Date, the aggregate outstanding principal amount
of long-term debt (as such term is defined under generally accepted
accounting principles) of JPS's subsidiaries (excluding amounts owed under
the post-reorganization working capital facility and Contingent Notes) does
not exceed $6 million;
h. JPS and/or its subsidiaries shall have sold all Gulistan Securities
held by them;
i. JPS shall have received approval from each of the Unofficial
Bondholder Committee and any official committee of unsecured creditors
appointed in the chapter 11 case or their counsel for any changes to the
forms of those documents attached to the Plan that are necessary to
consummate the transactions contemplated by the Plan; and
j. All obligations outstanding as of the Effective Date under the Credit
Agreement shall have been paid in full, in cash, or such other arrangement
with respect to such obligations shall have been agreed to among JPS, the
Secured Lenders, the Unofficial Bondholder Committee, and any official
committee of unsecured creditors appointed in the chapter 11 case.
Pursuant to the Plan, the conditions precedent described in items b and j of
this subsection C.1 (relating to the Company's post-reorganization working
capital facility and to payment of outstanding obligations under the Credit
Agreement, respectively) may not be waived. However, with the prior written
consent of the official committee of unsecured creditors (if one is appointed
in the chapter 11 case) and the Unofficial Bondholder Committee, which
pursuant to the Plan may not be unreasonably withheld, JPS may waive one or
more of the other foregoing conditions to effectiveness, by a writing signed
by an authorized representative and filed with the Bankruptcy Court.
2. Effect of Failure of Conditions
Pursuant to the Plan, if each of the conditions precedent to effectiveness
has not been satisfied or duly waived by JPS before the first Business Day
that is more than 179 days after the Confirmation Date, or such later date as
is proposed and approved, the Bankruptcy Court may, after notice and a
hearing, vacate the order confirming the Plan. In such event, the Plan will be
null and void in all respects, and nothing contained in the Plan will (a)
constitute a waiver or release of any claims against or equity interests in
JPS or (b) prejudice in any
47
<PAGE>
manner the rights of JPS and the holders of claims against or equity
interests. If, however, the conditions precedent to effectiveness are
satisfied or duly waived prior to entry of such order of vacatur, then
notwithstanding the filing of a motion therefor, the order confirming the Plan
shall not be vacated.
3. Effect of Confirmation
Except as otherwise expressly provided in the Plan or in the order
confirming the Plan, the rights afforded in the Plan and the treatment of all
creditors and equity interest holders thereunder will be in complete
satisfaction, discharge, and release of all claims and equity interests of any
nature whatsoever, including any interest accrued thereon from and after the
Petition Date, against JPS, its estate, its assets, and its properties and
interests in property. Except as otherwise provided in the Plan, on the
Effective Date, all such claims against and equity interests in JPS will be
deemed satisfied, discharged, and released in full. All entities will be
precluded from asserting against JPS, its successors, or its assets or
properties, any other or further claims or equity interests based upon any act
or omission, transaction, or other activity of any kind or nature that
occurred prior to the Confirmation Date.
As of the Effective Date, all persons and entities will be permanently
enjoined and precluded from asserting against JPS, Reorganized JPS, and their
respective assets and properties, any other claims based upon any act or
omission, transaction, or other activity of any kind or nature that occurred
prior to the Effective Date. Upon confirmation of the Plan, its provisions
will bind JPS and its creditors and equity interest holders, whether or not
they have filed proofs of claims or equity interests, have accepted the Plan,
or are entitled to receive distributions thereunder.
IX.
FINANCIAL INFORMATION
A. GENERAL
The audited consolidated balance sheets for the fiscal years ended November
2, 1996 and October 28, 1995 and the related consolidated statements of
operations, statements of senior redeemable preferred stock and shareholders'
equity (deficit), and cash flows for each of the three years ended November 2,
1996, October 28, 1995, and October 29, 1994, of JPS and its subsidiaries are
contained in Item 8 "Financial Statements and Supplementary Data" in the
Annual Report on Form 10-K, a copy of which is annexed as Exhibit 2 to this
Disclosure Statement, and the full text of which is incorporated herein by
reference. This financial information is provided to permit the holders of
claims and equity interests to better understand the Company's historical
business performance and the impact of the chapter 11 case on the Company's
businesses.
JPS will be required to file monthly operating reports with the Bankruptcy
Court. Such financial information will be on file with the Bankruptcy Court
and publicly available for review.
B. SELECTED FINANCIAL DATA
See Item 6 "Selected Historical Financial Data" set forth in the Annual
Report on Form 10-K annexed as Exhibit 2 to this Disclosure Statement.
C. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
For a detailed discussion by management of JPS's financial condition, most
recent results of operations, liquidity, and capital resources, see Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Annual Report on Form 10-K annexed as Exhibit 2 to this
Disclosure Statement.
D. RECENT PERFORMANCE
See the Quarterly Report on Form 10-Q for the fiscal quarter ended May 3,
1997, annexed as Exhibit 3 to this Disclosure Statement.
48
<PAGE>
X.
ALTERNATIVES TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
If the Plan is not confirmed and consummated, the alternatives to the Plan
include (i) liquidation of JPS under chapter 7 of the Bankruptcy Code and (ii)
an alternative plan of reorganization.
A. LIQUIDATION UNDER CHAPTER 7
If no plan can be confirmed, JPS's chapter 11 case may be converted to a
case under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would
be elected to liquidate the assets of JPS for distribution in accordance with
the priorities established by the Bankruptcy Code. A discussion of the effects
that a chapter 7 liquidation would have on the recoveries of holders of claims
and equity interests and JPS's liquidation analysis are set forth in Section
VIII.B.1.b, above, entitled "CONFIRMATION OF THE PLAN--Requirements for
Confirmation of the Plan--Consensual Confirmation--Best Interests Test." JPS
believes that liquidation under chapter 7 would result in (i) smaller
distributions being made to creditors than those provided for in the Plan
because of (a) the likelihood that the assets of JPS would have to be sold or
otherwise disposed of in a less orderly fashion over a shorter period of time,
(b) additional administrative expenses involved in the appointment of a
trustee, and (c) additional expenses and claims, some of which would be
entitled to priority, which would be generated during the liquidation and from
the rejection of leases and other executory contracts in connection with a
cessation of JPS's operations, and (ii) no distributions being made to holders
of 7% Subordinated Debentures or to holders of equity interests.
B. ALTERNATIVE PLAN OF REORGANIZATION
If the Plan is not confirmed, JPS (or if JPS's exclusive period in which to
file a plan of reorganization has expired, any other party in interest) could
attempt to formulate a different plan. Such a plan might involve either a
reorganization and continuation of JPS's business or an orderly liquidation of
its assets. With respect to an alternative plan, JPS has explored various
alternatives in connection with the formulation and development of the Plan.
JPS believes that the Plan, as described herein, enables creditors and equity
holders to realize the most value under the circumstances. In a liquidation
under chapter 11, JPS's assets would be sold in an orderly fashion over a more
extended period of time than in a liquidation under chapter 7, possibly
resulting in somewhat greater (but indeterminate) recoveries than would be
obtained in chapter 7. Further, if a trustee were not appointed, because such
appointment is not required in a chapter 11 case, the expenses for
professional fees would most likely be lower than those incurred in a chapter
7 case. Although preferable to a chapter 7 liquidation, JPS believes that any
alternative liquidation under chapter 11 is a much less attractive alternative
to creditors and equity interest holders than the Plan because of the greater
return provided by the Plan.
49
<PAGE>
XI.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The following discussion summarizes certain federal income tax consequences
of the implementation of the Plan to JPS and its subsidiaries and certain
holders of claims and equity interests. The following summary does not address
the federal income tax consequences to holders whose secured or priority
claims are entitled to reinstatement or payment in full in cash under the Plan
(e.g., holders of priority non-tax claims, the secured claims of the Secured
Lenders under the Credit Agreement, and other secured claims), or affiliate
claims.
The following summary is based on the Tax Code, Treasury regulations
promulgated and proposed thereunder, judicial decisions and published
administrative rules and pronouncements of the Internal Revenue Service
("IRS") as in effect on the date hereof. Changes in such rules or new
interpretations thereof may have retroactive effect and could significantly
affect the federal income tax consequences described below.
The federal income tax consequences of the Plan are complex and are subject
to significant uncertainties. JPS has not requested a ruling from the IRS or
an opinion of counsel with respect to any of the tax aspects of the Plan.
Thus, no assurance can be given as to the interpretation that the IRS will
adopt. In addition, this summary does not address foreign, state, or local tax
consequences of the Plan, and it does not purport to address the federal
income tax consequences of the Plan to special classes of taxpayers (such as
foreign taxpayers, broker-dealers, banks, mutual funds, insurance companies,
financial institutions, small business investment companies, regulated
investment companies, tax-exempt organizations, and investors in pass-through
entities).
ACCORDINGLY, THE FOLLOWING SUMMARY OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT A SUBSTITUTE FOR
CAREFUL TAX PLANNING AND ADVICE BASED UPON THE INDIVIDUAL CIRCUMSTANCES
PERTAINING TO A HOLDER OF A CLAIM OR EQUITY INTEREST. ALL HOLDERS OF CLAIMS OR
EQUITY INTERESTS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS FOR THE FEDERAL,
STATE, LOCAL, AND OTHER TAX CONSEQUENCES APPLICABLE UNDER THE PLAN.
A. CONSEQUENCES TO JPS
JPS and those of its subsidiaries that have joined in the filing of its
consolidated federal income tax return (collectively, the "Consolidated
Subsidiaries") have reported for federal income tax purposes a consolidated
net operating loss ("NOL") carryforward of approximately $68.4 million as of
October 28, 1995, and expect to report a consolidated NOL for the taxable year
ended November 2, 1996 of approximately $24 million. Additional losses may be
recognized prior to the Effective Date. The amount of such NOL carryforwards
and other losses, and the extent to which they are available to offset income
of JPS and its Consolidated Subsidiaries for past and future taxable years, is
subject to adjustment by the IRS. See Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Inflation and Tax
Matters" in the Annual Report on Form 10-K annexed as Exhibit 2 to this
Disclosure Statement. In addition, JPS has substantial tax basis in its
assets. As discussed below, certain tax attributes of JPS, such as any NOLs
and tax basis, will be subject to substantial reduction and limitation as the
result of implementation of the Plan.
1. Cancellation of Debt
In general, the Tax Code provides that a debtor in a bankruptcy case must
reduce its tax attributes--such as its NOL carryforwards and current year
NOLs, tax credits, and tax basis in its 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, even though JPS and
its Consolidated Subsidiaries file a consolidated federal income tax return.
As a result of the discharge of Claims pursuant to the Plan, JPS will suffer
attribute reduction, except to the extent that one or more statutory
exceptions to COD and attribute reduction apply (such as where the payment of
the cancelled debt would have given rise to a tax deduction). JPS believes
that it will recognize significant COD, which will result in significant
attribute reduction, by reason of the exchange of the 10.25% Notes, the 10.85%
Notes, and
50
<PAGE>
the 7% Subordinated Debentures for cash, New Common Stock, and Contingent
Notes pursuant to the Plan. The extent of such COD and resulting attribute
reduction will depend on the fair market value of such New Common Stock and
Contingent Notes as of the Effective Date. Such attribution reduction will
substantially reduce or eliminate NOL carryforwards that otherwise might be
available to JPS and its Consolidated Subsidiaries.
2. Limitations on NOL Carryforwards and Other Tax Attributes
Following the implementation of the Plan, any consolidated NOLs (and
carryforwards thereof) and certain other tax attributes of JPS and its
Consolidated Subsidiaries allocable to periods prior to the Effective Date
will be subject to the limitations imposed by Section 382 of the Tax Code.
Under Section 382 of the Tax Code, if a corporation undergoes an "ownership
change," the amount of its pre-change losses that may be utilized to offset
future taxable income generally will be subject to an annual limitation.
Similarly, such limitation also may apply to losses or deductions which are
"built-in" (i.e., economically accrued but unrecognized) as of the Effective
Date that are subsequently recognized. The issuance of New Common Stock
pursuant to the Plan will constitute an ownership change of JPS and its
Consolidated Subsidiaries.
The amount of the annual limitation to which JPS and its Consolidated
Subsidiaries would be subject generally should be equal to the product of (i)
the lesser of the value of the outstanding New Common Stock immediately after
the ownership change or the value of JPS and its Consolidated Subsidiaries'
consolidated gross assets immediately before such change (with certain
adjustments) and (ii) the "long-term tax exempt rate" in effect for the month
in which the ownership change occurs (5.64% for ownership changes occurring in
June 1997). However, if JPS and its Consolidated Subsidiaries do not continue
their historic business or use a significant portion of their assets in a new
business for two years after the ownership change, the annual limitation would
be zero.
As stated above, Section 382 of the Tax Code also can operate to limit
built-in losses recognized subsequent to the date of the ownership change. If
a loss corporation has a net unrealized built-in loss at the time of an
ownership change (taking into account most assets and all items of "built-in"
income and deductions), then any built-in losses recognized during the
following five years (up to the amount of the original net built-in loss)
generally will be treated as a pre-change loss and similarly will be subject
to the annual limitation. Conversely, if the loss corporation has a net
unrealized built-in gain on the change date, any built-in gains recognized
during the following five years (up to the amount of the original net built-in
gain) generally will increase the annual limitation in the year recognized,
such that the loss corporation would be permitted to use its pre-change losses
against such built-in gain income in addition to its regular annual allowance.
In general, a loss corporation's net unrealized built-in gain or loss will be
deemed to be zero unless it is greater than the lesser of (i) $10 million or
(ii) 15% of the fair market value of its assets (with certain adjustments)
before the ownership change. It is not known whether JPS and its subsidiaries
will be in a net unrealized built-in gain or a net unrealized built-in loss
position on the Effective Date.
Although an exception to the foregoing annual limitation rules generally
applies where so-called "old and cold" creditors of the debtor receive at
least 50% of the vote and value of the stock of the reorganized debtor, JPS
has not determined whether the ownership change that will occur pursuant to
the Plan will qualify for this exception or whether such exception would be
availed of if the transaction were to so qualify.
3. Alternative Minimum Tax
In general, an alternative minimum tax ("AMT") is imposed on a corporation's
alternative minimum taxable income at a 20% rate to the extent such tax
exceeds the corporation's regular federal income tax. For purposes of
computing taxable income for AMT purposes, certain tax deductions and other
beneficial allowances are modified or eliminated. In particular, even though a
corporation otherwise might be able to offset all of its taxable income for
regular tax purposes by available NOL carryforwards, only 90% of a
corporation's taxable income for AMT purposes may be offset by available NOL
carryforwards (as recomputed for AMT purposes).
51
<PAGE>
In addition, if a corporation undergoes an "ownership change" within the
meaning of Section 382 of the Tax Code and is in a net unrealized built-in
loss position (as determined for AMT purposes) on the date of the ownership
change, the corporation's aggregate tax basis in its assets would be reduced
for certain AMT purposes to reflect the fair market value of such assets as of
the change date.
Any AMT that a corporation pays generally will be allowed as a nonrefundable
credit against its regular federal income tax liability in future taxable
years when the corporation is no longer subject to the AMT.
4. Treatment of Contingent Notes
JPS and JPS Capital intend to treat the Contingent Notes as an equity
interest in JPS Capital for federal income tax purposes because the payments
thereunder are wholly contingent on the cash on hand, and the market value of
certain permitted investments of JPS Capital, at the Contingent Notes'
maturity date. As a result, as of the Effective Date, JPS Capital will cease
to be treated as a member of JPS's affiliated group for federal income tax
purposes and no longer will join in the filing of JPS's consolidated federal
income tax return. No deduction for interest will be claimed by JPS Capital in
respect of any payments made thereunder. By acquiring the Contingent Notes,
and pursuant to the Plan, all holders thereof will be required to consistently
treat the Contingent Notes as equity for tax purposes. The balance of this
discussion (including the description of certain federal income tax
consequences to the holders of Contingent Notes of the acquisition, ownership,
and disposition thereof) is based on the assumption that the Contingent Notes
will be treated as equity for federal income tax purposes.
B. CONSEQUENCES TO HOLDERS OF CLAIMS IN CLASSES 4, 5, AND 6 AND EQUITY
INTERESTS IN CLASS 8
Pursuant to the Plan, holders of claims in Class 4 will receive, in
discharge of their allowed claims, a combination of cash, Contingent Notes,
and New Common Stock; holders of claims in Class 5 will receive, in discharge
of their allowed claims, New Common Stock (unless Class 5 rejects the Plan);
and holders of equity interests in Class 8 will receive, in discharge of their
allowed equity interests, New Warrants (unless Class 5 or Class 8 rejects the
Plan).
1. Holders of Claims in Classes 4 and 5
The federal income tax consequences of the Plan to a holder of claims in
Classes 4 and 5 depend on whether such holder's claims constitute "securities"
of JPS for federal income tax purposes. The term "security" is not defined in
the Tax Code or in the regulations issued thereunder and has not been clearly
defined by judicial decisions. The determination whether a particular claim or
debt constitutes a "security" depends upon an overall evaluation of the nature
of the claim or debt. One of the most significant factors considered in
determining whether a particular debt is a security is its original term. In
general, debt obligations issued with a weighted average maturity at issuance
of five years or less (e.g., trade debt and revolving credit obligations) do
not constitute securities, whereas debt obligations with a weighted average
maturity at issuance of 10 years or more constitute securities. Each holder is
urged to consult its tax advisor regarding the status of its claim.
a. Holders of Claims not Constituting "Securities." In general, each
holder of a claim in Class 4 or 5 that does not constitute a "security" for
federal income tax purposes will recognize gain or loss upon implementation of
the Plan in an amount equal to the difference between (i) the "amount
realized" in respect of its claim (other than any claim for accrued interest)
and (ii) the tax basis in its claim (other than any claim for accrued
interest). See also the discussion in subsection 4, below, entitled
"Additional Tax Considerations for All Holders" (including Distributions in
Discharge of Accrued Interest). A holder's "amount realized" in respect of its
claim will equal the sum of (i) the amount of any cash, (ii) the fair market
value of any New Common Stock, and (iii) the fair market value of any
Contingent Notes received. See subsection A.4, above, entitled "Consequences
to JPS--Treatment of Contingent Notes," for a discussion of the treatment of
the Contingent Notes as equity of JPS Capital for tax purposes.
The character of any gain or loss recognized as long-term or short-term
capital gain or loss or as ordinary income or loss will be determined by a
number of factors, including the tax status of the holder, whether the
52
<PAGE>
claim constitutes a capital asset in the hand of the holder, whether the claim
has been held for more than one year or was purchased at a discount, and
whether and to what extent the holder has previously claimed a bad debt
deduction. In this regard, Section 582(c) of the Tax Code provides that the
sale or exchange of a bond, debenture, note, certificate, or other evidence of
indebtedness by certain financial institutions shall be considered the sale or
exchange of a non-capital asset. Accordingly, any gain or loss recognized by
such financial institutions as a result of the implementation of the Plan will
be ordinary gain or loss, regardless of the nature of their claims.
A holder's tax basis in any New Common Stock received will be the fair
market value of such stock, and the tax basis in any Contingent Notes received
will be the fair market value of such notes. The holding period for both the
New Common Stock and Contingent Notes received will begin on the day following
their issuance.
b. Holders of Claims Constituting "Securities." In general, each holder of
a claim in Class 4 or Class 5 that constitutes a "security" for federal income
tax purposes will not recognize any loss upon implementation of the Plan, and
will recognize gain (computed as described in the prior section), if any, but
only to the extent of any consideration other than stock or securities of JPS
received in satisfaction of its claim. Accordingly, a holder of a claim in
Class 4 would recognize gain to the extent of the amount of cash and the fair
market value of the Contingent Notes received. (See subsection A.4, above,
entitled "Consequences to JPS--Treatment of Contingent Notes," for a
discussion of the treatment of the Contingent Notes as equity of JPS Capital
for tax purposes.) The character of such gain also would be determined in
accordance with the principles discussed in the prior section. See subsection
4, below, entitled "Additional Tax Considerations for All Holders" (including
Distributions in Discharge of Accrued Interest).
A holder's aggregate tax basis in the New Common Stock received in
satisfaction of its claim will equal the holder's adjusted tax basis in its
claim (including any claim for accrued interest), decreased by the amount of
cash and the fair market value of any Contingent Notes received, and increased
by any gain or interest income recognized in respect of its claim. A holder's
tax basis in the Contingent Notes received pursuant to the Plan will be equal
to their fair market value at the Effective Date. The holder's holding period
for the New Common Stock received will include the holder's holding period for
the claim, except to the extent that such New Common Stock was issued in
respect of a claim for accrued interest. A holder's holding period for the
Contingent Notes and such portion of the New Common Stock as is issued in
respect of a claim for accrued interest will begin on the day after the
issuance thereof.
2. Holders of Claims in Class 6
In general, each holder of a claim in Class 6 will recognize gain or loss
for federal income tax purposes upon implementation of the Plan in an amount
equal to the difference between (i) the amount of cash received in respect of
its claim (other than in respect of accrued interest) and (ii) the tax basis
of the holder in such claim (other than in respect of accrued interest).
The character of any gain or loss recognized as long-term or short-term
capital gain or loss or as ordinary income or loss will be determined by a
number of factors, including the tax status of the holder, whether the claim
constitutes a capital asset in the hand of the holder, whether the claim has
been held for more than one year or was purchased at a discount, and whether
and to what extent the holder has previously claimed a bad debt deduction.
3. Holders of Equity Interests in Class 8
Under current law, a holder of Old Senior Preferred Stock generally will
recognize gain or loss in an amount equal to the difference between (i) the
fair market value of the New Warrants received by such holder and (ii) the tax
basis in its Old Senior Preferred Stock. The character of any gain or loss
recognized as long-term or short-term capital gain or loss or as ordinary
income or loss will be determined by a number of factors, including the tax
status of the holder, whether the Old Senior Preferred Stock constitutes a
capital asset in the hand of the holder, and whether the Old Senior Preferred
Stock has been held for more than one year.
53
<PAGE>
Regulations have been proposed which would change the federal income tax
treatment of warrants received in reorganization exchanges. It is unclear how
such regulations would apply to an exchange in which warrants are the sole
consideration received. Moreover, it is not clear whether the proposed
regulations will be finalized in their current form or whether they would be
effective with respect to the exchanges occurring pursuant to the Plan.
Holders of Old Senior Preferred Stock should consult with their own tax
advisors as to the consequences of the exchange of Old Senior Preferred Stock
for New Warrants pursuant to the Plan.
4. Additional Tax Considerations for All Holders of Claims
a. Distribution in Discharge of Accrued Interest. To the extent any amount
received (whether stock or other property) by a holder of a claim is received
in discharge of a claim for interest accrued during its holding period, such
amount will be taxable to the holder as interest income (if not previously
included in the holder's gross income). A holder will recognize a deductible
loss (or, possibly, a write-off against a reserve for bad debts) to the extent
any accrued interest claimed was previously included in its gross income and
is not paid in full. Pursuant to the Plan, all distributions in respect of
allowed claims will be allocated first to the stated principal amount of such
claims with any excess allocated to interest. However, there is no assurance
that such allocation would be respected by the IRS for federal income tax
purposes.
b. Subsequent Sale of New Common Stock. Any gain recognized by a holder
upon a subsequent taxable disposition of New Common Stock received pursuant to
the Plan in satisfaction of a claim (or any stock or other property received
for it in a later tax-free exchange) will be treated as ordinary income to the
extent of (i) any bad debt deductions (or additions to a bad debt reserve)
claimed with respect to its claim and any ordinary loss deduction incurred
upon satisfaction of its claim, less any income (other than interest income)
recognized by the holder upon satisfaction of its claim, and (ii) with respect
to a cash-basis holder, also any amounts which would have been included in its
gross income if the holder's claim had been satisfied in full but which was
not included by reason of the cash method of accounting.
In addition, the Treasury Department is expected to promulgate regulations
that will provide that any accrued "market discount" not treated as ordinary
income upon a tax-free exchange of market discount bonds would carry over to
the nonrecognition property received in the exchange. If such regulations are
promulgated and applicable to the Plan, any holder that holds a claim which
constitutes a "security" of JPS for federal income tax purposes and which has
accrued market discount would carry over such accrued market discount to any
New Common Stock received pursuant to the Plan, such that any gain recognized
by the holder upon a subsequent disposition of such New Common Stock also
would be treated as ordinary income to the extent of any accrued market
discount not previously included in income. In general, a claim will have
accrued "market discount" if such claim was acquired after its original
issuance at a discount to its adjusted issue price.
c. Withholding. All distributions to holders of allowed claims under the
Plan are subject to any applicable withholding (including employment tax
withholding). Under federal income tax law, interest, dividends, and other
reportable payments may, under certain circumstances, be subject to "backup
withholding" at a 31% rate. Backup withholding generally applies if the holder
(a) fails to furnish its social security number or other taxpayer
identification number ("TIN"), (b) furnishes an incorrect TIN, (c) fails
properly to report interest or dividends, or (d) under certain circumstances,
fails to provide a certified statement, signed under penalty of perjury, that
the TIN provided is its correct number and that it is not subject to backup
withholding. Backup withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an overpayment of
tax. Certain persons are exempt from backup withholding, including, in certain
circumstances, corporations and financial institutions.
C. CONSEQUENCES TO HOLDERS OF EQUITY INTERESTS IN CLASSES 9 AND 10
A holder of Old Junior Preferred Stock or Old Common Stock will recognize a
loss as of the Effective Date for federal income tax purposes in an amount
equal to such holder's adjusted tax basis in stock. Any such loss normally
will be a capital loss, and will be either a short-term or long-term capital
loss depending upon whether such holder has a holding period in such stock of
more than one year at the time of the Effective Date.
With respect to taxpayers other than corporate taxpayers, capital losses for
a particular tax year are allowed as a deduction for federal income tax
purposes to the extent of such taxpayer's capital gains for such tax year,
54
<PAGE>
plus $3,000. A noncorporate taxpayer is allowed to carry over excess capital
losses for use in succeeding tax years. With respect to corporate taxpayers,
capital losses may be deducted only to the extent of capital gains. Corporate
taxpayers generally pay carry back net capital losses to each of the three
years preceding the year in which such capital losses arise; any excess
capital losses may be carried forward by a corporate taxpayer to the five
years following the tax year in which such capital losses arise.
THE FOREGOING SUMMARY HAS BEEN PROVIDED FOR INFORMATIONAL PURPOSES ONLY. ALL
CREDITORS AND EQUITY INTEREST HOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL, AND OTHER TAX CONSEQUENCES
APPLICABLE UNDER THE PLAN.
D. INCENTIVE PLAN
1. Incentive Options
ISOs under the Incentive Plan are intended to meet the definitional
requirements of Section 422(b) of the Tax Code for "incentive stock options,"
including the requirement that a stock option plan be approved by the
shareholders of the issuing corporation within 12 months of the adoption of
the plan.
Under the Tax Code, the grantee of an ISO, limited to employees, generally
is not subject to regular income tax upon the receipt or exercise of such ISO
(except that the alternative minimum tax may apply). If, after exercising an
ISO, an employee disposes of the shares of New Common Stock so acquired after
the longer of two years from the date of grant or one year from the date of
transfer of shares of New Common Stock pursuant to the exercise of such ISO
(the "applicable holding period"), the employee normally will recognize a
long-term capital gain or loss equal to the difference, if any, between the
amount received for the shares of New Common Stock and the exercise price. If
an employee does not hold the shares of New Common Stock so acquired for the
applicable holding period, the disposition is normally a "disqualifying
disposition," and the employee would recognize ordinary income in the year of
the disqualifying disposition equal to the excess of the fair market value of
the shares at the time the ISO was exercised over the exercise price; the
amount, if any, by which the amount realized upon such disposition differs
from such fair market value would be long-term or short-term capital gain or
loss (depending on whether the holding period for the shares of New Common
Stock exceeded one year and provided that the employee held such shares as a
capital asset at such time). If, however, the employee sells the shares of New
Common Stock acquired upon exercise of an ISO in a disqualifying disposition
in which a loss would be permitted to be recognized for federal income tax
purposes (whether or not a loss is actually recognized) and at a price that is
below the fair market value of the shares of New Common Stock at the time the
ISO was exercised, the amount of ordinary income will be limited to the amount
by which the amount realized on the sale exceeds the exercise price. An ISO is
treated in a manner similar to a NQSO (discussed below) for purposes of
determining an employee's liability (if any) for federal alternative minimum
tax.
An employee who exercises an ISO by delivering shares previously acquired
pursuant to the exercise of an ISO is treated as making a "disqualifying
disposition" of such shares if the employee delivers such shares before the
expiration of the applicable holding period with respect to such shares. Upon
the exercise of an ISO with previously acquired shares as to which no
disqualifying disposition occurs, it would appear that the employee would not
recognize gain or loss with respect to such previously acquired shares.
A deduction will not be allowed to Reorganized JPS or any of its
subsidiaries for federal income tax purposes with respect to the grant or
exercise of an ISO or the disposition, after the applicable holding period, of
the shares of New Common Stock acquired upon exercise of an ISO. In the event
of a disqualifying disposition, a federal income tax deduction will be allowed
to Reorganized JPS in an amount equal to the ordinary income included in gross
income by the optionee, provided that such amount constitutes an ordinary and
necessary business expense to Reorganized JPS and is reasonable and the
limitations of Sections 162(m) and 280G of the Tax Code (discussed below) do
not apply.
55
<PAGE>
2. Non-Qualified Options
A NQSO is an option that does not qualify as an "incentive stock option"
under Section 422(b) of the Tax Code. To the extent that an ISO is exercised
more than 3 months after termination of employment with Reorganized JPS or a
subsidiary (or more than 1 year after termination of employment by reason of
disability or death), such option would be treated as if it were a NQSO. An
individual who receives a NQSO will not recognize any taxable income upon the
grant of such NQSO. Generally, upon exercise of a NQSO, an individual will be
treated as having received ordinary income in an amount equal to the excess of
the fair market value of the shares of New Common Stock at the time of
exercise over the exercise price.
In view of Section 16(b) of the Exchange Act and related rules and
regulations, any optionee who is an officer of Reorganized JPS or a beneficial
owner of more than ten percent (10%) of any class of registered equity
securities of Reorganized JPS should consult with his or her tax advisor as to
whether the timing of income recognition is deferred for any period following
the exercise of a NQSO (i.e., the "Deferral Period"). If there is a Deferral
Period, absent a written election (pursuant to Section 83(b) of the Tax Code
filed with the IRS within 30 days after the date of transfer of the shares of
New Common Stock pursuant to the exercise of the options to include in income,
as of the transfer date, the excess (on such date) of the fair market value of
such shares of New Common Stock over their exercise price, recognition of
income by the individual will be deferred until the expiration of the Deferral
Period (if any).
The ordinary income recognized with respect to the transfer of shares of New
Common Stock upon exercise of a NQSO under the Incentive Plan will be subject
to both wage withholding and employment taxes. In addition to the customary
methods of satisfying the withholding tax liabilities that arise upon the
exercise of a NQSO, an individual may satisfy the liability in whole or in
part by directing Reorganized JPS to withhold shares of New Common Stock from
those that would otherwise be issuable to the individual or by tendering other
shares of New Common Stock owned by the individual. The withheld shares of New
Common Stock and other tendered shares will be valued at their fair market
value as of the date that the tax obligation arises. Individuals who, by
virtue of their positions with Reorganized JPS, are subject to Section 16(b)
of the Exchange Act may elect this method of satisfying the withholding
obligation only during certain restricted periods.
An individual's tax basis in the shares of New Common Stock received on
exercise of a NQSO will be equal to the amount of any cash paid on exercise,
plus the amount of ordinary income recognized by such individual as a result
of the receipt of such shares of New Common Stock. The holding period for such
shares would begin just after the transfer of shares of New Common Stock or,
in the case of an officer or beneficial owner of more than 10% of any class of
registered equity securities of Reorganized JPS who does not elect to be taxed
as of the exercise date, just after the expiration of the Deferral Period, if
any. A deduction for federal income tax purposes will be allowed to
Reorganized JPS or a subsidiary thereof in an amount equal to the ordinary
income included in gross income by the individual in connection with the
exercise of such option, provided that such amount constitutes an ordinary and
necessary business expense and is reasonable and the limitations of Sections
162(m) and 280G of the Tax Code do not apply.
If an individual exercises a NQSO by delivering to Reorganized JPS shares of
Reorganized JPS, other than shares previously acquired pursuant to the
exercise of an ISO the delivery of which is treated as a "disqualifying
disposition" as described above, the individual will not recognize gain or
loss with respect to the exchange of such shares, even if their then fair
market value is different from the individual's tax basis. The individual,
however, will be taxed as described above with respect to the exercise of the
NQSO as if he or she had paid the exercise price in cash, and Reorganized JPS
likewise generally will be entitled to an equivalent tax deduction. So long as
the individual receives a separate identifiable stock certificate therefor,
the tax basis and the holding period for that number of shares of New Common
Stock received on such exercise that is equal to the number of shares
surrendered on such exercise will be equal to the tax basis and include the
holding period of those shares surrendered. The individual's tax basis and
holding period for the additional shares received on exercise of a NQSO paid
for, in whole or in part, with shares will be the same as if the individual
had exercised the NQSO solely for cash.
56
<PAGE>
3. Change in Control
As described above, upon a "change in control" of Reorganized JPS, the
Compensation Committee, in its discretion, may take such actions as it deems
appropriate with respect to the then outstanding benefits, including without
limitation, accelerating the exercisability or vesting of such benefits. In
general, if the total amount of payments to optionees that are contingent upon
a "change of control" of Reorganized JPS (as defined in Section 280G of the
Tax Code), including payments upon the exercise of options under the Incentive
Plan that vest upon a "change in control," equals or exceeds three times the
recipient's "base amount" (generally, such recipient's average annual
compensation for the five years preceding the change in control), then,
subject to certain exceptions, the payments may be treated as "parachute
payments" under the Tax Code, in which case a portion of such payments would
be non-deductible to Reorganized JPS and the recipient would be subject to a
20% excise tax on such portion of the payments.
4. Certain Limitations on Deductibility of Executive Compensation
With certain exceptions, Section 162(m) of the Tax Code denies a deduction
to publicly held corporations for compensation paid to certain executive
officers in excess of $1 million per executive per taxable year (including any
deduction with respect to the exercise of a NQSO or the disqualifying
disposition of stock purchased pursuant to an ISO). One such exception applies
to certain performance-based compensation, including stock options, provided
that such compensation has been approved by stockholders in a separate vote
and certain other requirements are met. The stockholder approval requirement
is not satisfied if the compensation payable under the Incentive Plan would be
paid regardless of whether such stockholder approval is obtained. Another
exception applies to certain compensation paid pursuant to plans in existence
while a company is privately held. It is intended that compensation payable
under the Incentive Plan will qualify for an exception to the Section 162(m)
limitations. However, no assurance can be given that compensation under the
Incentive Plan will qualify for any such exception.
XII.
CONCLUSION
JPS believes the Plan is in the best interests of all creditors and equity
holders and urges the holders of impaired claims in Classes 4 and 5, and
impaired equity interests in Class 8, to vote to accept the Plan and to
evidence such acceptance by returning their Ballots so they will be received
not later than 5:00 p.m. (Eastern Time) on July 28, 1997.
Dated: New York, New York
June 25, 1997
JPS Textile Group, Inc.
By: _________________________________
Name: Jerry E. Hunter
Title: President & Chief
Executive Officer
JPS Capital Corp.
By: _________________________________
Name: Jerry E. Hunter
Title: President
LOGO
57
<PAGE>
EXHIBIT 1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- ------------------------------------------ x
In re
Chapter 11
JPS TEXTILE GROUP, INC., Case No. 97 B ______ ( )
Debtor
- ------------------------------------------ x
JOINT PLAN OF REORGANIZATION OF
JPS TEXTILE GROUP, INC. AND JPS CAPITAL CORP.
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
[DATE], 1997
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
MICHAEL F. WALSH [MW 8000]
212-310-8000
COUNSEL TO JPS TEXTILE GROUP, INC.
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- ------------------------------------------ x
In re
Chapter 11
JPS TEXTILE GROUP, INC., Case No. 97 B ______( )
Debtor
- ------------------------------------------ x
JOINT PLAN OF REORGANIZATION OF
JPS TEXTILE GROUP, INC. AND JPS CAPITAL CORP.
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
JPS Textile Group, Inc., as debtor, and JPS Capital Corp., its wholly owned
subsidiary, propose the following chapter 11 plan pursuant to subsection
1121(a) of title 11 of the United States Code:
I. INTRODUCTION
A. PLAN DEFINED TERMS. Unless the context otherwise requires, the terms
specified below have the following meanings (such meanings to be equally
applicable to both the singular and plural):
1. 7% Subordinated Debenture Indenture means the Indenture, dated as of
April 2, 1991, as amended from time to time in accordance with the terms
thereof, by and between JPS and First Bank National Association, as trustee,
pursuant to which the 7% Subordinated Debentures were issued.
2. 7% Subordinated Debentures means the 7% Subordinated Debentures due May
15, 2000 issued by JPS, as amended from time to time in accordance with the
terms thereof.
3. 10.25% Note Indenture means the Indenture, dated as of April 2, 1991, as
amended from time to time in accordance with the terms thereof, by and between
JPS and First Trust National Association, as trustee, pursuant to which the
10.25% Notes were issued.
4. 10.25% Notes means the 10.25% Senior Subordinated Notes due June 1, 1999
issued by JPS, as amended from time to time in accordance with the terms
thereof.
5. 10.85% Note Indenture means the Indenture, dated as of April 2, 1991, as
amended from time to time in accordance with the terms thereof, by and between
JPS and First Trust National Association, as trustee, pursuant to which the
10.85% Notes were issued.
6. 10.85% Notes means the 10.85% Senior Subordinated Discount Notes due June
1, 1999 issued by JPS, as amended from time to time in accordance with the
terms thereof.
7. Affiliate means any entity that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, a specified entity; for purposes of the definition of "Affiliate," any
entity that owns, controls, or holds with power to vote 10% or more of the
outstanding voting securities of, or controls or directs the management of,
the entity specified shall be deemed to be an Affiliate of such entity;
provided, that the Affiliates of JPS shall include, but shall not be limited
to, the Nondebtor Subsidiaries, Odyssey Partners, L.P., Odyssey Investors,
Inc., DLJ Capital Corp., and all Affiliates of such entities.
Ex. 1-1
<PAGE>
8. Allowed administrative expense, allowed claim, or allowed equity interest
means an administrative expense, claim, or equity interest, as the case may
be, that is allowed or deemed allowed pursuant to the Plan or sections 502,
503, or 1111 of the Bankruptcy Code.
9. Bankruptcy Code means title 11 of the United States Code, as amended from
time to time, as applicable to the Reorganization Case.
10. Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure, as
amended from time to time, as applicable to the Reorganization Case, including
the Local Rules of the Court.
11. Business Day means any day on which commercial banks are open for
business, and not authorized to close, in the City of New York.
12. Bylaws means the amended and restated bylaws of Reorganized JPS in the
form set forth in Exhibit A to the Plan.
13. Certificate of Incorporation means the Restated Certificate of
Incorporation of Reorganized JPS in the form set forth in Exhibit B to the
Plan.
14. Contingent Note Indenture means the Indenture, dated on or about the
Effective Date, in the form of Exhibit C to the Plan.
15. Contingent Notes means the Contingent Notes, described in Article II of
the Plan. Each Contingent Note shall be substantially in the form of Exhibit A
to the Contingent Note Indenture.
16. Court means (a) the United States District Court for the Southern
District of New York having jurisdiction over the Reorganization Case, (b) to
the extent of any reference made pursuant to section 157 of title 28 of the
United States Code, the unit of such District Court pursuant to section 151 of
title 28 of the United States Code, and (c) any other court having
jurisdiction over the Reorganization Case.
17. Credit Agreement means the Fourth Amended and Restated Credit Agreement,
dated as of June 24, 1994, by and among JPS, JPS Converter and Industrial
Corp., JPS Elastomerics Corp., the financial institutions listed on the
signature pages thereof, and Citibank, N.A., as Agent and Administrative Agent
and General Electric Capital Corporation, as Co-Agent and Collateral Agent, as
amended through [May 15, 1997].
18. Creditors' Committee means (i) the statutory committee of unsecured
creditors appointed in the Reorganization Case or (ii) if no such statutory
committee is appointed, the Unofficial Committee.
19. Disputed administrative expense, disputed claim, or disputed equity
interest means any administrative expense, claim, or equity interest, to the
extent not allowed pursuant to the Plan or a Final Order, and (a) which is
listed on the Schedules as disputed, unliquidated, or contingent and as to
which a proof of such administrative expense, claim, or equity interest
designating such administrative expense, claim, or equity interest as
liquidated in amount and not disputed or contingent was not timely and
properly filed, or (b) to the extent any party in interest has interposed a
timely objection or request for estimation in accordance with the Plan, the
Bankruptcy Code, and the Bankruptcy Rules, which objection or request for
estimation has not been withdrawn or determined by a Final Order.
20. Effective Date means the first Business Day on which all the conditions
specified in Section V.A hereof shall have been satisfied or waived in
accordance with Section V.B hereof; provided, that if a stay of the
confirmation order is in effect on such date, the Effective Date shall be the
first Business Day after such stay is no longer in effect.
Ex. 1-2
<PAGE>
21. Final Order means an order of the Court that is in effect and is not
stayed, and as to which the time to appeal, petition for certiorari, or move
for reargument or rehearing has expired and as to which no appeal, petition
for certiorari, or other proceedings for reargument or rehearing shall then be
pending or as to which any right to appeal, petition for certiorari, reargue,
or rehear shall have been waived in writing in form and substance satisfactory
to JPS, or in the event that an appeal, writ of certiorari, or reargument or
rehearing thereof has been sought, such order of the Court shall have been
affirmed by the highest court to which such order was appealed, or certiorari,
reargument, or rehearing has been denied, and the time to take any further
appeal, petition for certiorari, or move for reargument or rehearing shall
have expired.
22. Incentive Plan means the JPS Textile Group, Inc. 1997 Incentive and
Capital Accumulation Plan, a copy of which is set forth as Exhibit J to the
Plan.
23. JPS means JPS Textile Group, Inc., a Delaware corporation, the debtor or
debtor in possession, as the context requires, in the Reorganization Case.
24. JPS Capital means JPS Capital Corp., a Delaware corporation, Nondebtor
Subsidiary, and co-proponent of the Plan.
25. New Common Stock means all the shares of common stock of Reorganized JPS
authorized pursuant to Section IV.A. of the Plan.
26. New Warrants means the warrants to purchase New Common Stock, as
described in Article II of the Plan and substantially in the form set forth on
Exhibit D to the Plan.
27. Nondebtor Subsidiary means any of the wholly owned, direct or indirect
subsidiaries of JPS, set forth on Exhibit E to the Plan.
28. Old Common Stock means the authorized class A and class B common stock,
par value $0.01 per share, issued by JPS.
29. Old Junior Preferred Stock means the Series B Junior Preferred Stock of
JPS as specified in the Certificate of Designations of Series B Junior
Preferred Stock, dated April 2, 1991.
30. Old Senior Preferred Stock means the Series A Senior Preferred Stock of
JPS as specified in the Certificate of Designations of Series A Senior
Preferred Stock, dated April 2, 1991.
31. Petition Date means the date on which JPS commences the Reorganization
Case.
32. Plan means this chapter 11 plan of reorganization, either in its present
form or as it may be altered, amended, or modified from time to time in
accordance with the terms and conditions hereof.
33. Priority tax claim means any unsecured claim held by a governmental unit
entitled to a priority in right of payment under subsection 507(a)(8) of the
Bankruptcy Code.
34. Pro Rata Share means a proportionate share, so that the ratio of the
amount of property distributed on account of an allowed claim or allowed
equity interest in a class is the same as the ratio such claim or equity
interest bears to the total amount of all claims or equity interests
(including disputed claims or disputed equity interests until disallowed) in
such class.
35. Registration Rights Agreement means a registration rights agreement in
the form of Exhibit K hereto, by and among Reorganized JPS and the holders of
the New Common Stock designated by the Creditors' Committee.
36. Related Documents means all documents necessary to consummate the
transactions contemplated by this Plan, including, without limitation, the
Contingent Notes, the Contingent Note Indenture, the Registration Rights
Agreement, and the certificates of incorporation of Reorganized JPS and JPS
Capital substantially in the forms attached as Exhibits to the Plan.
Ex. 1-3
<PAGE>
37. Reorganization Case means the above-captioned chapter 11 case.
38. Reorganized JPS means JPS, or any successor thereto by merger,
consolidation, or otherwise, on and after the Effective Date.
39. Schedules means the schedules of assets and liabilities, statements of
financial affairs, and lists of holders of claims and equity interests filed
by JPS as required by section 521 of the Bankruptcy Code and Bankruptcy Rule
1007, including any amendments and supplements thereto.
40. Unofficial Committee means the unofficial committee of holders of the
10.25% Notes, the 10.85% Notes, and the 7% Subordinated Debentures, consisting
of Magten Asset Management Corp., Merrill Lynch, Pierce, Fenner & Smith,
Incorporated, CS First Boston Corp., and Trust Company of the West, which
committee was formed prior to the Petition Date.
B. BANKRUPTCY CODE TERMS. "Allowed," "case," "claims," "confirm,"
"confirmation," "debtor," "debtor in possession," "governmental unit,"
"impaired," and other uncapitalized terms defined (either explicitly or
implicitly) in the Bankruptcy Code are used herein with such defined meanings.
C. OTHER TERMS. The words "herein," "hereof," "hereto," "hereunder," and
others of similar import refer to the Plan as a whole and not to any
particular section, subsection, or clause contained in the Plan.
D. EXHIBITS. All Exhibits to the Plan are incorporated into and are a part
of the Plan as if set forth in full herein.
II. PROPERTY DISTRIBUTIONS
In addition to the cash distributions required by the Plan, Reorganized JPS
shall distribute (or cause the distribution of) the following property to the
holders of allowed claims and allowed equity interests (as set forth herein):
A. CONTINGENT NOTES. The Contingent Notes shall be issued by JPS Capital
under the Plan pursuant to the terms of the Contingent Note Indenture in an
initial principal amount of $34 million. The Contingent Notes and all accrued
interest payable thereunder shall mature and be payable as provided in the
Contingent Note Indenture. Reorganized JPS may, in its discretion, fund the
redemption by JPS Capital of all or a portion of the Contingent Notes prior to
maturity and any such prepayments shall be deemed to be capital contributions
to JPS Capital (which in no event shall use its assets for any such
redemption). In the event Reorganized JPS gives notice of such a redemption,
it will be obligated to provide the necessary funds to complete such
redemption. The principal amount of the Contingent Notes shall be reduced on
the Maturity Date (as such term is defined in Section 1 of the Contingent Note
Indenture) to an amount equal to the lesser of $34 million and the aggregate
cash and cash equivalents held by JPS Capital on such Maturity Date. The
interest payable on the Contingent Notes shall equal the excess, if any, of
the amount of cash and cash equivalents held by JPS Capital on such Maturity
Date over the stated principal amount of $34 million. No acceleration of the
Contingent Notes or exercise of remedies against JPS Capital under the
Contingent Notes or the Contingent Note Indenture shall occur prior to such
Maturity Date, except for remedies (i) to enforce a redemption which has been
funded by Reorganized JPS or (ii) seeking specific performance of particular
provisions of the Contingent Note Indenture. Remedies may be exercised against
Reorganized JPS for failure to provide the funds for a redemption for which it
has become obligated and for breaches of other covenants of Reorganized JPS
thereunder. As specified in Article III of the Plan, the Contingent Notes are
to be distributed to the holders of allowed claims in class 4. As of the
Effective Date, the Contingent Notes shall be valid, enforceable, and binding
obligations of JPS Capital in accordance with the Contingent Notes and the
Contingent Note Indenture.
B. NEW COMMON STOCK. The New Common Stock shall consist of 22,000,000
authorized shares of new common stock of Reorganized JPS, par value $0.01 per
share. 9,924,623 shares shall be issued to the holders of allowed claims in
classes 4 and 5 and 75,377 shares shall be distributed to certain members of
management in accordance with the amended and restated agreements described in
Section IV.L. Approximately 853,485 shares
Ex. 1-4
<PAGE>
shall be reserved for future employee incentive stock options as specified in
Section IV.N of the Plan. The remaining authorized shares shall be reserved
for future corporate purposes as determined by the Board of Directors of
Reorganized JPS (but subject to the restrictions, if any, set forth in the
Certificate of Incorporation of Reorganized JPS).
C. NEW WARRANTS. The New Warrants shall consist of warrants to purchase
526,316 shares of New Common Stock at a price equal to $98.76 for each share
of New Common Stock. The New Warrants shall be distributed to the holders of
allowed equity interests in class 8 and shall expire on the third anniversary
of the Effective Date. The New Warrants shall not be issued if either class 5
or class 8 does not vote to accept the Plan.
III. CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS
A. SUMMARY. The categories of claims and equity interests listed below
classify allowed claims and allowed equity interests for all purposes,
including voting, confirmation, and distribution pursuant to the Plan. Except
as otherwise provided in the Plan, the order of the Court confirming the Plan,
or required by subsection 506(b) or section 1124 of the Bankruptcy Code,
allowed claims do not include interest on such claims after the Petition Date.
<TABLE>
<CAPTION>
CLASS STATUS
----- ------
---------------------------------------------------------------------
<S> <C> <C>
Unclassified Administrative Expenses Paid in full
Unclassified Priority Tax Claims Unaffected by the Plan
Class 1 Priority Non-Tax Claims Unimpaired--Not entitled to vote
Class 2 Secured Bank Guaranty Claims Unimpaired--Not entitled to vote
Class 3 Other Secured Claims Unimpaired--Not entitled to vote
Class 4 Senior Note Claims Impaired--Entitled to vote
Class 5 Subordinated Debenture Claims Impaired--Entitled to vote
Class 6 General Unsecured Claims Unimpaired--Not entitled to vote
Class 7 Affiliate Claims Impaired--Deemed to Accept
Class 8 Senior Preferred Stock Interests Impaired--Entitled to vote
Class 9 Junior Preferred Stock Interests Impaired--Deemed to reject
Class 10 Common Stock Interests Impaired--Deemed to reject
---------------------------------------------------------------------
</TABLE>
B. ADMINISTRATIVE EXPENSES. JPS shall pay each allowed administrative
expense in full, in cash, on the Effective Date (or as soon thereafter as is
practicable), except to the extent that the holder of an allowed
administrative expense agrees to a different treatment; provided, however,
that allowed administrative expenses representing obligations incurred 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.
C. TAX CLAIMS. Allowed priority tax claims which are due and payable on or
before the Effective Date shall be paid in full, in cash, on the Effective
Date (or as soon thereafter as practicable), except to the extent the holder
of such claim agrees to a different treatment. All priority tax claims which
are not due and payable on or before the Effective Date shall (i) survive
confirmation of the Plan, (ii) remain unaffected thereby, and (iii) not be
discharged.
D. CLASSIFICATION, TREATMENT, AND VOTING. The allowed claims against and
equity interests in JPS shall be classified and receive the treatment
specified below.
1. CLASS 1: PRIORITY NON-TAX CLAIMS.
a. Classification: Class 1 consists of claims entitled to priority
pursuant to subsection 507(a) of the Bankruptcy Code, other than
administrative expenses and priority tax claims.
Ex. 1-5
<PAGE>
b. Treatment: On the Effective Date, the allowed claims in class 1 shall
be paid in full, in cash, and rendered unimpaired in accordance with
section 1124 of the Bankruptcy Code, except to the extent that any holder
of such allowed claim agrees to a different treatment.
c. Voting: Class 1 is not impaired, and the holders of claims in class 1
are not entitled to vote to accept or reject the Plan.
2. CLASS 2: SECURED BANK GUARANTY CLAIMS.
a. Classification: Class 2 consists of the claims evidenced by the
secured guaranties by JPS of the obligations of the Nondebtor Subsidiaries
(other than JPS Capital) under the Credit Agreement.
b. Treatment: On the Effective Date, the allowed claims of each holder of
a claim in class 2 shall be unimpaired in accordance with section 1124 of
the Bankruptcy Code, except to the extent that such holder agrees to a
different treatment.
c. Voting: Class 2 is not impaired, and the holders of claims in class 2
are not entitled to vote to accept or reject the Plan.
3. CLASS 3: OTHER SECURED CLAIMS.
a. Classification: Class 3 consists of all allowed secured claims held by
any entity, other than claims classified in class 2 or class 7.
b. Treatment: On the Effective Date, the allowed claims of each holder of
a claim in class 3 shall be unimpaired in accordance with section 1124 of
the Bankruptcy Code, except to the extent that such holder agrees to a
different treatment.
c. Voting: Class 3 is not impaired and the holders of claims in class 3
are not entitled to vote to accept or reject the Plan.
4. CLASS 4: SENIOR NOTE CLAIMS.
a. Classification: Class 4 consists of the allowed claims evidenced by
the 10.25% Notes, the 10.25% Note Indenture, the 10.85% Notes, and the
10.85% Note Indenture.
b. Treatment: Each holder of an allowed claim in class 4 shall receive
its Pro Rata Share of (i) $14 million in cash, (ii) the Contingent Notes,
and (iii) 9,329,146 shares of New Common Stock. In addition, on the
Effective Date, (a) Reorganized JPS will pay, in cash, the reasonable
expenses of the Unofficial Committee incurred in connection with the
restructuring of JPS and negotiating the terms of the Plan and the Related
Documents, including, without limitation, the reasonable fees, expenses,
and disbursements owed by JPS or the Unofficial Committee to the Unofficial
Committee's financial consultants, Houlihan, Lokey, Howard & Zukin, Inc.,
and the Unofficial Committee's legal advisor, Fried, Frank, Harris, Shriver
& Jacobson and (b) if class 5 does not vote to accept the Plan, each holder
of an allowed claim in class 4 shall receive its Pro Rata Share of the
property that would otherwise be distributed to the holders of allowed
claims in class 5.
c. Manner of Distribution: On the Effective Date, Reorganized JPS shall
make all distributions required under the Plan with respect to class 4 to
the trustees under the 10.25% Note Indenture (with respect to distributions
made on account of the claims evidenced by the 10.25% Notes) and the 10.85%
Note Indenture (with respect to distributions made on account of the claims
evidenced by the 10.85% Notes). Such distributions shall be in complete
satisfaction and discharge of JPS's obligations under the 10.25% Notes, the
10.25% Note Indenture, the 10.85% Notes, and the 10.85% Note Indenture. The
indenture trustees shall make the distributions to the holders of the
10.25% Notes and the 10.85% Notes as such holders surrender such securities
in accordance with Section IV.C.
Ex. 1-6
<PAGE>
d. Voting: Class 4 is impaired and the holders of claims in class 4 are
entitled to vote to accept or reject the Plan.
5. CLASS 5: SUBORDINATED DEBENTURE CLAIMS.
a. Classification: Class 5 consists of the allowed claims evidenced by
the 7% Subordinated Debentures and the 7% Subordinated Debenture Indenture.
b. Treatment: If class 5 votes to accept the Plan, each holder of an
allowed claim in class 5 shall receive its Pro Rata Share of 595,477 shares
of New Common Stock. In addition, on the Effective Date, Reorganized JPS
will pay, in cash, the reasonable expenses of the Unofficial Committee
incurred in connection with the restructuring of JPS and negotiating the
terms of the Plan and the Related Documents, including, without limitation,
the reasonable fees, expenses, and disbursements owed by JPS or the
Unofficial Committee to the Unofficial Committee's financial consultants,
Houlihan, Lokey, Howard & Zukin, Inc., and the Unofficial Committee's legal
advisor, Fried, Frank, Harris, Shriver & Jacobson. If class 5 does not vote
to accept the Plan, the holders of allowed claims in class 5 shall receive
no property under the Plan.
c. Manner of Distribution: On the Effective Date, Reorganized JPS shall
make all distributions required under the Plan with respect to class 5 to
the trustee under the 7% Subordinated Debenture Indenture. Such
distributions shall be in complete satisfaction and discharge of JPS's
obligations under the 7% Subordinated Debentures and the 7% Subordinated
Debenture Indenture. The indenture trustee shall make the distributions to
the holders of the 7% Subordinated Debentures as such holders surrender
such securities in accordance with Section IV.C.
d. Voting: Class 5 is impaired and the holders of claims in class 5 are
entitled to vote to accept or reject the Plan.
6. CLASS 6: GENERAL UNSECURED CLAIMS.
a. Classification: Class 6 consists of all allowed, nonpriority unsecured
claims not otherwise classified in class 4, 5, or 7.
b. Treatment: On the Effective Date, the allowed claims of each holder of
a claim in class 6 shall be unimpaired in accordance with section 1124 of
the Bankruptcy Code, except to the extent that such holder agrees to a
different treatment.
c. Voting: Class 6 is not impaired and the holders of claims in class 6
are not entitled to vote to accept or reject the Plan.
7. CLASS 7: AFFILIATE CLAIMS.
a. Classification: Class 7 consists of all the secured and unsecured
claims of all Affiliates of JPS.
b. Treatment: Holders of claims in class 7 shall receive no property
under the Plan.
c. Voting: The claims in class 7 are impaired, but as insiders, the
holders of such claims shall be deemed to accept the Plan.
8. CLASS 8: SENIOR PREFERRED STOCK INTERESTS.
a. Classification: Class 8 consists of the allowed equity interests
evidenced by all the issued and outstanding Old Senior Preferred Stock and
any options, warrants, calls, subscriptions, or other similar rights or
other agreements or commitments, contractual or otherwise, obligating JPS
to issue, transfer, or sell any shares of Old Senior Preferred Stock.
Ex. 1-7
<PAGE>
b. Treatment: If classes 5 and 8 vote to accept the Plan, on the
Effective Date, each holder of an allowed equity interest in class 8 shall
receive its Pro Rata Share of the New Warrants. If class 5 or 8 does not
vote to accept the Plan, the holders of interests in class 8 shall not
receive any distribution of property under the Plan or retain any equity
interest in JPS or Reorganized JPS.
c. Voting: Class 8 is impaired and the holders of equity interests in
class 8 are entitled to vote to accept or reject the Plan.
9. CLASS 9: JUNIOR PREFERRED STOCK INTERESTS.
a. Classification: Class 9 consists of the equity interests evidenced by
all the issued and outstanding Old Junior Preferred Stock and any options,
warrants, calls, subscriptions, or other similar rights or other agreements
or commitments, contractual or otherwise, obligating JPS to issue,
transfer, or sell any shares of Old Junior Preferred Stock.
b. Treatment: Each holder of an equity interest in class 9 shall not
receive any property under the Plan or retain any equity interest in JPS or
Reorganized JPS.
c. Voting: Class 9 is impaired and the holders of equity interests in
class 9 are deemed to reject the Plan.
10. CLASS 10: COMMON STOCK INTERESTS.
a. Classification: Class 10 consists of the equity interests evidenced by
all the issued and outstanding Old Common Stock and any options, warrants,
calls, subscriptions, or other similar rights or other agreements or
commitments, contractual or otherwise, obligating JPS to issue, transfer,
or sell any shares of Old Common Stock.
b. Treatment: Each holder of an equity interest in class 10 shall not
receive any property under the Plan or retain any equity interest in JPS or
Reorganized JPS.
c. Voting: Class 10 is impaired and the holders of equity interests in
class 10 are deemed to reject the Plan.
E. DISPUTED ADMINISTRATIVE EXPENSES, CLAIMS, AND EQUITY INTERESTS. No
distributions shall be made with respect to administrative expenses, claims,
or equity interests which are disputed. Except as otherwise ordered by the
Court or provided herein, each distribution to be made on a specific date
shall be deemed to have been made on such date if actually made on the later
of such date or the date on which such administrative expense, claim, or
equity interest is allowed, or as soon thereafter as is practicable.
F. ALLOWANCE OF CLAIMS IN CLASSES 4 AND 5. The aggregate claims in class 4
shall be deemed allowed in the amount of $220,655,136 plus $81,786 for each
day after July 7, 1997, until and including the Petition Date, consisting of
an aggregate allowed claim of $91,568,333 plus $33,721 for each day after July
7, 1997, until and including the Petition Date in respect of the 10.25% Notes
and an aggregate allowed claim of $129,086,803 plus $48,065 for each day after
July 7, 1997, until and including the Petition Date in respect of the 10.85%
Notes. The aggregate claims in class 5 shall be deemed allowed in the amount
of $58,520,685 plus $11,015 for each day after July 7, 1997, until and
including the Petition Date. The indenture trustees for the 10.25% Notes and
the 10.85% Notes may file proofs of claim with respect to the claims in class
4 but are not required to file such proofs of claim in order for such claims
to be allowed pursuant to the Plan. The indenture trustee for the 7%
Subordinated Debentures may file proofs of claim with respect to the claims in
class 5 but are not required to file such proofs of claim in order for such
claims to be allowed pursuant to the Plan. Any other claims filed with respect
to classes 4 and 5 shall be disallowed as duplicative of the claims filed by
the respective indenture trustees but only to the extent such claims are in
fact filed by the indenture trustees.
IV. IMPLEMENTATION OF THE PLAN
A. ISSUANCE OF NEW SECURITIES. The issuance of the Contingent Notes by JPS
Capital and the New Common Stock and the New Warrants by Reorganized JPS is
hereby authorized without the need for any further corporate action.
Ex. 1-8
<PAGE>
B. CANCELLATION OF EXISTING SECURITIES AND AGREEMENTS. On the Effective
Date, the 10.25% Notes, the 10.85% Notes, the 7% Subordinated Debentures, the
Old Senior Preferred Stock, the Old Junior Preferred Stock, the certificates
of designations for the Old Senior Preferred Stock and the Old Junior
Preferred Stock, and the Old Common Stock, and any options, warrants, calls,
subscriptions, or other similar rights or other agreements or commitments,
contractual or otherwise, obligating JPS to issue, transfer, or sell any
shares of Old Senior Preferred Stock, Old Junior Preferred Stock, Old Common
Stock, or any other capital stock of JPS shall be cancelled. Except for
purposes of effectuating the distributions under the Plan, on the Effective
Date, the 10.25% Note Indenture, the 10.85% Note Indenture, and the 7%
Subordinated Debenture Indenture shall be cancelled.
C. SURRENDER OF EXISTING SECURITIES. As a condition to receiving any
distribution under the Plan, each holder of a promissory note, share
certificate, or other instrument evidencing a claim or equity interest must
surrender such promissory note, share certificate, or other instrument to
Reorganized JPS or its designee. Reorganized JPS appoints the indenture
trustees under the 10.25% Note Indenture, the 10.85% Note Indenture, and the
7% Subordinated Debenture Indenture as its designees to receive the 10.25%
Notes, the 10.85% Notes, and the 7% Subordinated Debentures, respectively. Any
holder of a claim or equity interest that fails to (a) surrender such
instrument or (b) execute and deliver an affidavit of loss and/or indemnity
reasonably satisfactory to Reorganized JPS and furnish a bond in form,
substance, and amount reasonably satisfactory to Reorganized JPS before the
later to occur of (i) the second anniversary of the Effective Date and (ii)
six months following the date such holder's claim becomes an allowed claim,
shall be deemed to have forfeited all rights, claims, and/or equity interests
and may not participate in any distribution under the Plan.
D. WAIVER OF ENFORCEMENT OF SUBORDINATION. The Plan takes into account the
relative priority of the claims in each class in connection with any
contractual subordination provisions relating thereto. Accordingly, if class 5
votes to accept the Plan, (i) the distribution to the holders of class 5
claims shall not be subject to levy, garnishment, attachment, or other legal
process by any holder of Senior Indebtedness (as such term is defined in the
7% Subordinated Debenture Indenture) by reason of claimed contractual
subordination rights, (ii) on the Effective Date, all holders of Senior
Indebtedness shall be deemed to have waived any and all contractual
subordination rights which they may have with respect to such distribution to
holders of class 5 claims pursuant to the Plan, and (iii) the confirmation of
the Plan shall permanently enjoin, effective as of the Effective Date, all
holders of Senior Indebtedness from enforcing or attempting to enforce any
such rights with respect to the distributions under the Plan to the holders of
claims in class 5. If class 5 votes to reject the Plan, all such contractual
subordination provisions shall be enforceable.
E. JPS CORPORATE ACTION.
1. New Certificate of Incorporation and Bylaws. On the Effective Date or as
soon thereafter as is practicable, Reorganized JPS shall file with the
Secretary of State of the State of Delaware, in accordance with sections 103
and 303 of the Delaware General Corporation Law, the Certificate of
Incorporation and such certificate shall be the certificate of incorporation
for Reorganized JPS. The Certificate of Incorporation, provides, among other
things, for the authorization of 22,000,000 shares of the New Common Stock and
a prohibition on the issuance of nonvoting equity securities. The Bylaws
provide, among other things, that the Board of Directors of Reorganized JPS
shall initially consist of seven members and, on the Effective Date, the
Bylaws shall become the bylaws of Reorganized JPS.
2. Restriction Concerning Contingent Notes. The Certificate of Incorporation
shall restrict Reorganized JPS from entering into any transaction or taking
any other action that would, directly or indirectly, prohibit, restrict,
delay, or otherwise hinder the payment of any and all amounts due under the
Contingent Notes in accordance with the terms thereof and the Contingent Note
Indenture without the unanimous consent of holders of the New Common Stock.
Neither JPS, Reorganized JPS, JPS Capital, nor any other entity shall have the
power or authority to, directly or indirectly, prohibit, restrict, delay, or
otherwise hinder the payment of any and all amounts due under the Contingent
Notes when due and payable thereunder. Notwithstanding the foregoing,
Ex. 1-9
<PAGE>
nothing in the Plan, the Certificate of Incorporation, or any of the other
Related Documents shall restrict the actions taken by Reorganized JPS or its
Tax Affiliates (as defined in the Contingent Note Indenture) in connection
with the resolution of their liabilities (if any) for Taxes (as defined in the
Contingent Note Indenture).
3. Board of Directors of Reorganized JPS. On the Effective Date, the
operation of Reorganized JPS shall become the general responsibility of its
Board of Directors, subject to, and in accordance with, the Certificate of
Incorporation and the Bylaws. The initial Board of Directors shall consist of
the individuals identified on Exhibit I hereto. Such directors shall be deemed
elected or appointed, as the case may be, pursuant to the order confirming the
Plan, but shall not take office and shall not be deemed to be elected or
appointed until the occurrence of the Effective Date. Those directors and
officers not continuing in office shall be deemed removed therefrom as of the
Effective Date pursuant to the order confirming the Plan.
4. Restriction on Disposition of JPS Capital. Reorganized JPS shall not
transfer, pledge, or otherwise dispose of any of the capital stock of JPS
Capital until after the occurrence of the Maturity Date referred to in the
Contingent Note Indenture, as in effect on the Effective Date, and the payment
in full of all obligations of JPS Capital arising under the Contingent Notes.
Nothing contained in the Plan or the Certificate of Incorporation shall be
deemed to restrict the sale of Reorganized JPS.
5. Restriction of Disposition of Other Assets. Reorganized JPS shall not
sell, transfer, or otherwise dispose of any of its assets or the assets of its
subsidiaries prior to November 1, 1997, other than inventory, receivables, or
equipment in the ordinary course of business or except as required by the Plan
(including, without limitation, Section V.A.8).
F. JPS CAPITAL CORPORATE ACTION.
1. New Certificate of Incorporation and Bylaws. JPS and Reorganized JPS
shall take all necessary action to ensure that, as of the Effective Date, the
certificate of incorporation and bylaws of JPS Capital are substantially in
the forms of Exhibits F and G to the Plan, respectively. The certificate of
incorporation and bylaws of JPS Capital shall not be amended or modified in
any way until the occurrence of the Maturity Date referred to in the
Contingent Note Indenture, as in effect on the Effective Date, and the payment
in full of all obligations of JPS Capital arising under the Contingent Notes.
To the extent and in the manner set forth in the certificate of incorporation
of JPS Capital, JPS Capital shall continue to hold those assets in its
possession on behalf of the Tax Affiliates (as defined in the Contingent Note
Indenture) and to provide them with the funds to satisfy their liabilities (if
any) for Taxes (as defined in the Contingent Note Indenture).
2. Board of Directors. The initial board of directors of Reorganized JPS
shall select the officers and directors of JPS Capital.
3. Limitation on Prepayment or Redemption of the Contingent Notes. JPS
Capital shall not prepay or redeem any portion of the Contingent Notes prior
to the Maturity Date referred to in the Contingent Note Indenture, as in
effect on the Effective Date; provided, however, that JPS Capital shall be
required to redeem Contingent Notes from (and only from) the amount of any JPS
Funded Deposit (as defined in the Contingent Note Indenture) made by
Reorganized JPS, which amounts shall be treated as capital contributions to
JPS Capital.
4. No Dividends or Distributions. JPS Capital shall not declare any
dividends, make any distributions to Reorganized JPS or any other entity, or
incur or cause the incurrence of any consensual obligations or liens or make
any transfer or disposition of its assets not permitted by Articles Sixth and
Seventh of the restated certificate of incorporation of JPS Capital, attached
hereto as Exhibit F, until the occurrence of the Maturity Date referred to in
the Contingent Note Indenture, as in effect on the Effective Date.
G. METHOD OF DISTRIBUTION UNDER THE PLAN.
1. In General. Distributions under the Plan shall be made by Reorganized JPS
or its designee to the holders of claims or interests at addresses set forth
on the Schedules unless superseded by proofs of claims or transfers of claims
pursuant to Bankruptcy Rule 3001 (or at the last known addresses of such
holders if JPS
Ex. 1-10
<PAGE>
has been notified in writing of a change of address) and by the indenture
trustees under the 10.25% Note Indenture, the 10.85% Note Indenture, and the
7% Subordinated Debenture Indenture to the holders of class 4 and class 5
claims at the addresses last known to the respective indenture trustees.
2. Setoffs and Recoupments. Except for distributions to holders of class 4
and class 5 claims (as to which JPS and Reorganized JPS shall have no right of
setoff and/or recoupment), JPS and Reorganized JPS may, but shall not be
required to, set off against or recoup from any claim and the payments to be
made pursuant to the Plan in respect of such claim, any claims of any nature
whatsoever JPS or Reorganized JPS may have against the claimant, but neither
the failure to do so nor the allowance of any claim hereunder shall constitute
a waiver or release by JPS of any such claim JPS or Reorganized JPS may have
against such claimant.
3. Distribution of Unclaimed Property. Any distribution of property (cash or
otherwise) under the Plan which is unclaimed after the later to occur of (a)
two years following the Effective Date or (b) six months after the date on
which such claimant's claim is allowed shall be transferred to Reorganized
JPS, notwithstanding state or other escheat or similar laws to the contrary.
In the event that any securities are returned to Reorganized JPS as unclaimed
property, then such securities shall be canceled.
4. Saturday, Sunday, or Legal Holiday. If any payment or act under the Plan
is required to be made or performed on a date that is not a Business Day, then
the making of such payment or the performance of such act may be completed on
the next succeeding Business Day, but shall be deemed to have been completed
as of the required date.
5. Fractional Shares. No fractional shares of New Common Stock or cash in
lieu thereof shall be distributed. No New Warrants shall be issued for
fractional shares of New Common Stock. For purposes of distribution,
fractional shares of New Common Stock and fractional New Warrants shall be
rounded up to the next whole number of stock or warrants, respectively.
H. VESTING OF ASSETS. On the Effective Date, the estate of JPS shall vest in
Reorganized JPS free and clear of all claims, security interests, liens, and
equity interests, except as provided herein. As of the Effective Date,
Reorganized JPS may operate its businesses, and may use, acquire, and dispose
of property free of any restrictions of the Bankruptcy Code or the Bankruptcy
Rules, subject to the terms and conditions of the Plan.
I. ALLOCATION OF CONSIDERATION. The aggregate consideration to be
distributed to the holders of allowed claims in each class under the Plan
shall be treated as first satisfying an amount equal to the stated principal
amount of the allowed claim for such holders and any remaining consideration
as satisfying accrued, but unpaid, interest, if any.
J. EXECUTORY CONTRACTS AND UNEXPIRED LEASES. As of the Effective Date, all
executory contracts and unexpired leases that exist between JPS and any person
are hereby specifically assumed, except for any executory contracts or
unexpired leases which are the subject of a motion to reject which is pending
on the date the Plan is confirmed and the executory contracts and unexpired
leases listed on Exhibit L hereto, which are specifically rejected pursuant to
the Plan. Entry of the order confirming the Plan by the Clerk of the Court
shall constitute approval, pursuant to subsection 365(a) of the Bankruptcy
Code, of such assumptions and such rejections pursuant to the Plan. Claims
created by the rejection of executory contracts or unexpired leases must be
filed with the Court no later than thirty (30) days after the entry of an
order authorizing such rejection. Any claims not filed within such time will
be forever barred from assertion against JPS and the estate of JPS. All such
allowed claims arising from the rejection of executory contracts or unexpired
leases shall be classified in class 6 of the Plan.
K. RETIREE BENEFITS. After the Effective Date, the payment of retiree
benefits (as defined in section 1114 of the Bankruptcy Code), at the level
established pursuant to section 1114 of the Bankruptcy Code, shall continue
for the duration of the period JPS has obligated itself to provide such
benefits.
Ex. 1-11
<PAGE>
L. MANAGEMENT EMPLOYMENT AGREEMENTS. All 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 shall be amended
and restated in full as of the Effective Date in the forms of Exhibits H1
through H5 hereto, respectively, and as of the Effective Date are hereby
assumed as amended. Such amended and restated agreements supercede all
employment, severance, and retention bonus agreements in effect prior to the
Effective Date. On the Effective Date, all claims of such individuals against
JPS under their prepetition employment, severance, and retention bonus
agreements will be governed by, and completely satisfied in accordance with,
the terms and conditions of their new employment agreements in the forms of
Exhibits H1 through H5 hereto. Entry of the order confirming the Plan by the
Clerk of the Court shall constitute approval of such assumptions pursuant to
subsection 365(a) of the Bankruptcy Code, subject to the occurrence of the
Effective Date.
M. EMPLOYEE BENEFIT PLANS. Subject to the occurrence of the Effective Date,
all employee benefit plans, policies, and programs of JPS, and JPS's
obligations thereunder, shall survive confirmation of the Plan, remain
unaffected thereby, and not be discharged. Employee benefit plans, policies,
and programs shall include, without limitation, all savings plans, retirement
pension plans, health care plans, disability plans, severance benefit plans,
life, accidental death, and dismemberment insurance plans (to the extent not
executory contracts assumed under the Plan), and the 1997 Management Incentive
Bonus Plan (in effect on June 13, 1997, and as described on Exhibit 4 to the
disclosure statement for this Plan), but shall exclude all employee equity or
equity-based incentive plans.
N. EMPLOYEE INCENTIVE PLAN. The solicitation of votes on the Plan shall be
deemed a solicitation of the holders of New Common Stock for approval of the
Incentive Plan. Entry of the order confirming the Plan shall constitute such
approval and the order confirming the Plan shall so provide. Grants under the
Incentive Plan shall not be effective until after the Effective Date. In
accordance therewith, on the Effective Date, Reorganized JPS shall reserve
approximately 853,485 shares of the New Common Stock for issuance to salaried
key employees of Reorganized JPS and its Nondebtor Subsidiaries pursuant to
benefits in the form of stock options, stock appreciation rights, stock
awards, performance awards, and stock units that may be granted by the
compensation committee comprised of disinterested members of Reorganized JPS's
Board of Directors. Options to acquire approximately 568,990 of such shares
shall be granted to members of the senior management of JPS and the Nondebtor
Subsidiaries prior to the last day of JPS's 1997 fiscal year. All employee
equity or equity-based incentive plans for JPS or its subsidiaries in
existence on the Petition Date (other than the Incentive Plan) shall be
terminated as of the Effective Date.
O. OFFICERS AND DIRECTORS. Subject to the occurrence of the Effective Date,
the obligations of JPS as of the Petition Date to indemnify directors or
officers who were directors or officers of JPS, respectively, as of the
Petition Date, against any obligation pursuant to JPS's certificate of
incorporation, bylaws, or applicable state law (to the extent not an executory
contract assumed under the Plan), shall survive confirmation of the Plan,
remain unaffected thereby, and not be discharged.
P. LIMITED RELEASE. On the Effective Date, JPS, on behalf of itself and the
Nondebtor Subsidiaries, hereby releases the officers and directors of such
companies holding office at any time prior to the Effective Date, Odyssey
Partners, L.P., Odyssey Investors, Inc., DLJ Capital Corp. and their
respective affiliates, the members of the Creditors' Committee, the members of
the Unofficial Committee, and their respective agents, employees, advisors,
and representatives from any and all claims or liability arising from actions
taken in their respective capacities described above or, with respect to
Odyssey Partners, L.P., Odyssey Investors, Inc., DLJ Capital Corp. and their
respective affiliates, in their capacities as shareholders and/or managers of
JPS, as applicable.
Q. LISTING OF NEW COMMON STOCK; REGISTRATION OF SECURITIES. Reorganized JPS
shall use its best efforts to (i) maintain its status as a reporting company
under the Securities and Exchange Act of 1934, as amended (the "Exchange Act")
and cause, on the Effective Date, the shares of New Common Stock issued
hereunder to be listed on a national securities exchange or, as to the New
Common Stock, quoted in the national
Ex. 1-12
<PAGE>
market system of the National Association of Securities Dealers' Automated
Quotation System, (ii) in accordance with the terms of the Registration Rights
Agreement, file and have declared effective as soon as possible thereafter a
registration statement or registration statements under the Securities Act of
1933, as amended (the "Securities Act"), for the offering on a continuous or
delayed basis in the future of the shares of New Common Stock (the "Shelf
Registration"), (iii) cause to be filed with the Securities and Exchange
Commission on the Effective Date a registration statement on Form 10 under the
Exchange Act with respect to the New Common Stock, (iv) keep the Shelf
Registration effective for a three-year period, and (v) supplement or make
amendments to the Shelf Registration, if required under the Securities Act or
by the rules or regulations promulgated thereunder or in accordance with the
terms of the Registration Rights Agreement, and have such supplements and
amendments declared effective as soon as practicable after filing. In
addition, on the Effective Date, Reorganized JPS shall enter into the
Registration Rights Agreement in the form of Exhibit K hereto.
R. WAIVER OF CERTAIN CLAIMS. Upon the occurrence of the Effective Date,
Odyssey Partners, L.P., Odyssey Investors, Inc., DLJ Capital Corp. and each of
their respective Affiliates, shall be deemed to have waived any and all
administrative expenses, priority claims, and prepetition claims against JPS
and the Nondebtor Subsidiaries.
V. EFFECTIVENESS OF THE PLAN
A. CONDITIONS PRECEDENT. The Plan shall not become effective unless and
until it has been confirmed and the following conditions shall have been
satisfied in full or waived in accordance with the provisions specified below:
1. The order confirming the Plan shall have become a Final Order;
2. Reorganized JPS or its operating subsidiaries shall have executed an
agreement for a working capital facility on terms reasonably satisfactory to
the Creditors' Committee;
3. The Contingent Note Indenture shall have been duly qualified under the
Trust Indenture Act of 1939;
4. The certificates of incorporation for Reorganized JPS and JPS Capital, in
the form of Exhibits B and F, respectively, to the Plan, shall have been filed
with the Secretary of State of the State of Delaware, in accordance with
sections 103 and 303 of the Delaware General Corporation Law;
5. All authorizations, consents, and regulatory approvals required (if any)
in connection with the Plan's effectiveness shall have been obtained;
6. As of the Effective Date, the aggregate prepetition claims against JPS,
including all allowed claims and disputed claims (but excluding claims under
the 10.25% Notes, the 10.85% Notes, the 7% Subordinated Debentures, the Credit
Agreement, the existing agreements set forth on Exhibit M hereto, the employee
benefit plans, policies, and programs referred to in Section IV.M, as in
effect on June 13, 1997, and any claims for which a bar date has not been set
by the Court), do not exceed $300,000;
7. As of the Effective Date, the aggregate outstanding principal amount of
long term debt (as such term is defined under generally accepted accounting
principles) of the Nondebtor Subsidiaries (excluding any amounts owed pursuant
to the working capital facility referred to in Section V.A.2 and the
Contingent Note Indenture ) does not exceed $6,000,000;
8. JPS and/or the Nondebtor Subsidiaries shall have sold all the securities
held by such entities which were issued by Gulistan Holdings Inc.;
9. JPS shall have received approval from each of the Unofficial Committee,
the Creditors' Committee, or their counsel for any modifications to the
Related Documents from the forms attached to the Plan; and
10. All obligations outstanding as of the Effective Date under the Credit
Agreement shall have been paid in full, in cash, or such other arrangement
with respect to such obligations shall have been agreed to among JPS, the
other parties to the Credit Agreement, the Creditors' Committee, and the
Unofficial Committee.
B. WAIVER OF CONDITIONS. With the prior written consent of the Creditors'
Committee and the Unofficial Committee (which consent shall not be
unreasonably withheld), JPS may waive, by a writing signed by an authorized
representative and subsequently filed with the Court, one or more of the
conditions precedent to the effectiveness of the Plan, except for the
conditions precedent set forth in Sections V.A.2. and V.A.10.
Ex. 1-13
<PAGE>
C. EFFECT OF FAILURE OF CONDITIONS. If each of the conditions to
effectiveness and the occurrence of the Effective Date has not been satisfied
or duly waived on or before the first Business Day that is more than 179 days
after the date the Court enters an order confirming the Plan, or by such later
date as is proposed and approved, after notice and a hearing, by the Court,
then upon motion by JPS or any party in interest made before the time that
each of the conditions has been satisfied or duly waived, the order confirming
the Plan may be vacated by the Court; provided, however, that notwithstanding
the filing of such a motion, the order confirming the Plan shall not be
vacated if each of the conditions to consummation is either satisfied or duly
waived before the Court enters an order granting the relief requested in such
motion. If the order confirming the Plan is vacated pursuant to this section,
the Plan shall be null and void in all respects, and nothing contained in the
Plan shall (a) constitute a waiver or release of any claims against or equity
interests in JPS or (b) prejudice in any manner the rights of the holder of
any claim or equity interest in JPS.
VI. ADMINISTRATIVE PROVISIONS
A. DISCHARGE.
1. Scope. Except as otherwise expressly specified in the Plan, entry of the
order confirming the Plan acts as a discharge of all debts of, claims against,
liens on, and equity interests in each of JPS, its assets, and its properties,
arising at any time before the entry of the order confirming the Plan,
regardless of whether a proof of claim or equity interest therefor was filed,
whether the claim or equity interest is allowed, or whether the holder thereof
votes to accept the Plan or is entitled to receive a distribution thereunder.
On the date the Court enters an order confirming the Plan, any holder of such
discharged claim or equity interest shall be precluded from asserting against
JPS, Reorganized JPS, or any of their respective assets or properties, any
other or further claim or equity interest based on any document, instrument,
act, omission, transaction, or other activity of any kind or nature that
occurred before the date the Court enters the order confirming the Plan.
2. Injunction. In accordance with section 524 of the Bankruptcy Code, the
discharge provided by this section and section 1141 of the Bankruptcy Code,
inter alia, acts as an injunction against the commencement or continuation of
any action, employment of process, or act to collect, offset, or recover the
claims discharged hereby.
B. ADMINISTRATIVE EXPENSE, CLAIM, AND EQUITY INTEREST OBJECTIONS. Unless
otherwise ordered by the Court, all objections to administrative expenses,
claims, and equity interests shall be filed and served on the applicable
claimant or equity interest holder on or before the date that is 120 days
after the Effective Date or 120 days after such administrative expense, claim,
or equity interest is filed, whichever is later. On and after the Effective
Date, only Reorganized JPS shall have the authority to file, settle,
compromise, withdraw, or litigate to judgment objections to administrative
expenses, claims, or equity interests.
C. PRESERVATION OF CAUSES OF ACTION. Except as specified in Section IV.P,
all rights and causes of action held by JPS against any other entity shall
remain assets of Reorganized JPS and may be pursued.
D. ADMINISTRATIVE EXPENSES INCURRED AFTER THE CONFIRMATION DATE.
Administrative expenses incurred by JPS or Reorganized JPS (other than
administrative expenses incurred by any entity deemed to have waived such
administrative expenses pursuant to Section IV.R hereof) after the date and time
of the entry of the order confirming the Plan, including (without limitation)
claims for professionals' 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 Court approval.
E. RETENTION OF JURISDICTION. The Court shall have exclusive jurisdiction of
all matters arising out of, and related to, the Reorganization Case and the
Plan pursuant to, and for the purposes of, subsection 105(a) and section 1142
of the Bankruptcy Code and for, among other things, the following purposes:
1. To hear and determine applications for the assumption or rejection of
executory contracts or unexpired leases, pending on the date the Plan is
confirmed, and the allowance of claims resulting therefrom;
Ex. 1-14
<PAGE>
2. To determine any other applications, adversary proceedings, and contested
matters pending on the Effective Date;
3. To ensure that distributions to holders of allowed claims and allowed
equity interests are accomplished as provided herein;
4. To resolve disputes as to the ownership of any claim or equity interest;
5. To hear and determine timely objections to administrative expenses,
claims, and equity interests;
6. To enter and implement such orders as may be appropriate in the event the
order confirming the Plan is for any reason stayed, revoked, modified, or
vacated;
7. To issue such orders in aid of execution of the Plan, to the extent
authorized by section 1142 of the Bankruptcy Code;
8. To consider any modifications of the Plan, to cure any defect or
omission, or to reconcile any inconsistency in any order of the Court,
including, without limitation, the order confirming the Plan;
9. To resolve disputes concerning nondebtor releases, exculpations, and
injunctions contained herein;
10. To hear and determine all applications for compensation and
reimbursement of expenses of professionals under sections 330, 331, and 503(b)
of the Bankruptcy Code;
11. To hear and determine disputes arising in connection with the
interpretation, implementation, or enforcement of the Plan and the Related
Documents;
12. To hear and determine any issue for which the Plan or any Related
Document requires a Final Order of the Court;
13. To hear and determine matters concerning state, local, and federal taxes
in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;
14. To hear any other matter not inconsistent with the Bankruptcy Code; and
15. To enter a final decree closing the Reorganization Case.
F. PAYMENT OF STATUTORY FEES. All fees payable pursuant to section 1930 of
title 28 of the United States Code, as determined by the Court at the hearing
pursuant to section 1128 of the Bankruptcy Code, shall be paid on or before
the Effective Date.
G. EXCULPATION. JPS, Reorganized JPS, the members of the Creditors'
Committee, the members of the Unofficial Committee, and their respective
members, officers, directors, employees, and agents (including any
professionals retained by such persons) shall have no liability to any holder
of an administrative expense, claim, or equity interest for any act or
omission in connection with, or arising out of, the pursuit of approval of the
disclosure statement for the Plan or the solicitation of votes for or
confirmation of the Plan, the consummation of the Plan, or the administration
of the Plan or the property to be distributed under the Plan, except for
willful misconduct or gross negligence as determined by a Final Order of the
Court, and in all respects, shall be entitled to rely upon the advice of
counsel with respect to their duties and responsibilities under the Plan.
H. DISSOLUTION OF STATUTORY COMMITTEES. All statutory committees appointed
in the Reorganization Case pursuant to section 1102 of the Bankruptcy Code
shall be dissolved on the Effective Date.
I. HEADINGS. Headings are used in the Plan for convenience and reference
only, and shall not constitute a part of the Plan for any other purpose.
Ex. 1-15
<PAGE>
J. BINDING EFFECT. The Plan shall be binding upon and inure to the benefit
of JPS, its creditors, the holders of equity interests, and their respective
successors and assigns.
K. NOTICES. Any notice required or permitted to be provided under the Plan
shall be in writing and served by either (a) certified mail, return receipt
requested, postage prepaid, (b) hand delivery, or (c) reputable overnight
delivery service, freight prepaid, to be addressed as follows:
To JPS or Reorganized JPS:
JPS TEXTILE GROUP, INC.
555 North Pleasantburg Drive, Suite 202
Greenville, South Carolina 29607
Attention: David H. Taylor
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Michael F. Walsh, Esq.
Sharon Youdelman, Esq.
L. GOVERNING LAW. Unless a rule of law or procedure is supplied by federal
law (including the Bankruptcy Code and Bankruptcy Rules) or the Delaware
General Corporation Law, the laws of the State of New York shall govern the
construction and implementation of the Plan and any agreements, documents, and
instruments executed in connection with the Plan.
M. FILING OR EXECUTION OF ADDITIONAL DOCUMENTS. On or before the Effective
Date, JPS or Reorganized JPS shall file with the Court or execute, as
appropriate, such agreements and other documents as may be necessary or
appropriate to effectuate and further evidence the terms and conditions of the
Plan.
N. WITHHOLDING AND REPORTING REQUIREMENTS. In connection with the Plan and
all instruments issued in connection therewith and distributions thereon,
Reorganized JPS shall comply with all withholding and reporting requirements
imposed by any federal, state, local, or foreign taxing authority and all
distributions hereunder shall be subject to any such withholding and reporting
requirements.
Ex. 1-16
<PAGE>
O. SECTION 1125(E) OF THE BANKRUPTCY CODE. (i) JPS and JPS Capital have, and
upon confirmation of the Plan shall be deemed to have, solicited acceptances
of the Plan in good faith and in compliance with the applicable provisions of
the Bankruptcy Code and (ii) JPS and JPS Capital, each of the members of the
Creditors' Committee, and each of the members of the Unofficial Committee (and
each of their respective affiliates, agents, directors, officers, employees,
advisors, and attorneys) have participated in good faith and in compliance
with the applicable provisions of the Bankruptcy Code in the offer, issuance,
sale, and purchase of the securities offered and sold under the Plan, and
therefore are not, and on account of such offer, issuance, sale, solicitation,
and/or purchase will not be, liable at any time for the violation of any
applicable law, rule, or regulation governing the solicitation of acceptances
or rejections of the Plan or the offer, issuance, sale, or purchase of the
securities offered and sold under the Plan.
Dated: New York, New York
[date], 1997
Respectfully submitted,
JPS TEXTILE GROUP, INC.
Debtor and Debtor in Possession
By: _________________________________
Jerry E. Hunter
President and Chief Executive
Officer
JPS CAPITAL CORP.
By: _________________________________
Jerry E. Hunter
President
_____________________
Michael F. Walsh
MW 8000
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
212-310-8000
Ex. 1-17
<PAGE>
VII. EXHIBITS TO THE PLAN
A.Exhibit A: Bylaws of Reorganized JPS
B.Exhibit B: Certificate of Incorporation of Reorganized JPS
C.Exhibit C: Contingent Note Indenture
D.Exhibit D: New Warrants
E.Exhibit E: List of Nondebtor Subsidiaries
F.Exhibit F: Certificate of Incorporation of JPS Capital
G.Exhibit G: Bylaws of JPS Capital
H.Exhibit H: New Employment Agreements for Management Group
I.Exhibit I: Directors of Reorganized JPS
J.Exhibit J: Incentive Plan
K.Exhibit K: Registration Rights Agreement
L.Exhibit L: List of Rejected Contracts
M.Exhibit M: List of Existing Agreements
Ex. 1-18
<PAGE>
EXHIBIT A
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
JPS TEXTILE GROUP, INC.
(A DELAWARE CORPORATION)
ARTICLE I
Stockholders
Section 1. Fixing Date for Determination of Stockholders of Record. In order
that the Corporation may determine the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled
to receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion, or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors and which record date: (1) in the case of
determination of stockholders entitled to vote at any meeting of stockholders
or adjournment thereof, shall, unless otherwise required by law, not be more
than sixty nor less than ten days before the date of such meeting; (2) in the
case of determination of stockholders entitled to express consent to corporate
action in writing without a meeting, shall not be more than ten days after the
date upon which the resolution fixing the record date is adopted by the Board
of Directors; and (3) in the case of any other action, shall not be more than
sixty days prior to such other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
of the Board of Directors is required by law, shall be the first date on which
a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation in accordance with applicable law, or,
if prior action by the Board of Directors is required by law, shall be at the
close of business on the day on which the Board of Directors adopts the
resolution taking such prior action; and (3) the record date for determining
stockholders for any other purpose shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
Section 2. Annual Meetings. The annual meeting of stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year at such date and
time, and at such place within or without the State of Delaware, as shall be
designated by the Board of Directors and set forth in the notice or in a duly
executed waiver of notice thereof.
Section 3. Special Meetings. Special meetings of stockholders for the
transaction of such business as may properly come before the meeting may be
called by order of the Board of Directors or by stockholders holding together
at least 25% in voting power of all the shares of the Corporation entitled to
vote at the meeting, and shall be held at such date and time, and at such
place within or without the State of Delaware, as may be specified in the
notice or in a duly executed waiver of notice of such meeting. Whenever the
directors shall fail to fix such place, the meeting shall be held at the
principal executive office of the Corporation. Only such business as is stated
in the written notice of special meeting may be acted upon thereat.
Ex. 1.A-1
<PAGE>
Section 4. Notice of Meetings. Except as otherwise provided by law, written
notice of all meetings of the stockholders, stating the place, date and hour
of the meeting and the place within the city or other municipality or
community at which the list of stockholders may be examined, shall be mailed
or delivered to each stockholder not less than 10 nor more than 60 days prior
to the meeting. Notice of any special meeting shall state in general terms the
purpose or purposes for which the meeting is to be held. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at such stockholder's address as
it appears on the records of the Corporation. If, prior to the time of
mailing, the Secretary shall have received from any stockholder entitled to
vote a written request that notices intended for such stockholder are to be
mailed to an address other than the address that appears on the records of the
Corporation, notices intended for such stockholder shall be mailed to the
address designated in such request.
Notice of a special meeting may be given by the person or persons calling
the meeting, or, upon the written request of such person or persons, by the
Secretary of the Corporation on behalf of such person or persons. If the
person or persons calling a special meeting of stockholders gives notice
thereof, such person or persons shall forward a copy thereof to the Secretary.
Every request to the Secretary for the giving of notice of a special meeting
of stockholders shall state the purpose or purposes of such meeting.
Section 5. Waiver of Notice. Notice of any annual or special meeting of
stockholders need not be given to any stockholder entitled to vote at such
meeting who files a written waiver of notice with the Secretary, duly executed
by the person entitled to notice, whether before or after the meeting. Neither
the business to be transacted at, nor the purpose of, any meeting of
stockholders need be specified in any written waiver of notice. Attendance of
a stockholder at a meeting, in person or by proxy, shall constitute a waiver
of notice of such meeting, except as provided by law.
Section 6. Adjournments. When a meeting is adjourned to another date, hour
or place, notice need not be given of the adjourned meeting if the date, hour
and place thereof are announced at the meeting at which the adjournment is
taken. If the adjournment is for more than 30 calendar days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the adjourned meeting. At the adjourned meeting any business may be
transacted which might have been transacted at the original meeting.
When any meeting is convened the presiding officer may adjourn the meeting
if (a) no quorum is present for the transaction of business or (b) the Board
of Directors determines that adjournment is necessary or appropriate to enable
the stockholders (i) to consider fully information which the Board of
Directors determines has not been made sufficiently or timely available to
stockholders or (ii) otherwise to exercise effectively their voting rights.
Section 7. Stockholder Lists. The officer who has charge of the stock ledger
of the Corporation shall prepare and make, at least 10 days before every
meeting of stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or, if not so specified, at the place where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by this section or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 8. Quorum. Except as otherwise provided by law or the Corporation's
Restated Certificate of Incorporation, a quorum for the transaction of
business at any meeting of stockholders shall consist of the holders of record
of a majority in voting power of the issued and outstanding shares of the
capital stock of the Corporation entitled to vote at the meeting, present in
person or by proxy. If there be no such quorum, the holders of a majority in
voting power of such shares so present or represented may adjourn the meeting
from time to time, without further notice, until a quorum shall have been
obtained. When a quorum is once present it is not broken by the subsequent
withdrawal of any stockholder.
Ex. 1.A-2
<PAGE>
Section 9. Organization. Meetings of stockholders shall be presided over by
the Chairman, if any, or if none or in the Chairman's absence the Vice-
Chairman, if any, or if none or in the Vice-Chairman's absence the President,
if any, or if none or in the President's absence a Vice-President, or, if none
of the foregoing is present, by a chairman to be chosen by the stockholders
entitled to vote who are present in person or by proxy at the meeting. The
Secretary of the Corporation, or in the Secretary's absence an Assistant
Secretary, shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present, the presiding officer of the
meeting shall appoint any person present to act as secretary of the meeting.
Section 10. Voting; Proxies; Required Vote. (a) At each meeting of
stockholders, every stockholder shall be entitled to vote in person or by
proxy (but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period), and, unless the
Restated Certificate of Incorporation provides otherwise, shall have one vote
for each share of stock entitled to vote registered in the name of such
stockholder on the books of the Corporation on the applicable record date
fixed pursuant to these By-laws. At all elections of directors the voting may
but need not be by ballot. Except as otherwise required by law or the Restated
Certificate of Incorporation, any action other than the election of directors
shall be authorized by a majority in voting power of the shares present in
person or represented by proxy at the meeting.
(b) Any action required or permitted to be taken at any meeting of
stockholders may, except as otherwise required by law or the Restated
Certificate of Incorporation, be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of record of the issued and outstanding
capital stock of the Corporation having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted, and the
writing or writings are filed with the permanent records of the Corporation.
Prompt notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
(c) Where a separate vote by a class or classes, present in person or
represented by proxy, is required by law or the Restated Certificate of
Incorporation, the affirmative vote of the majority in voting power of shares
of such class or classes present in person or represented by proxy at the
meeting shall be the act of such class, unless otherwise provided in the
Corporation's Restated Certificate of Incorporation.
Section 11. Inspectors. The Board of Directors, in advance of any meeting,
may, but need not, unless required by law, appoint one or more inspectors of
election to act at the meeting or any adjournment thereof. If an inspector or
inspectors are not so appointed, the person presiding at the meeting may, but
need not, unless required by law, appoint one or more inspectors. In case any
person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his or her duties, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting, the inspector or inspectors,
if any, shall make a report in writing of any challenge, question or matter
determined by such inspector or inspectors and execute a certificate of any
fact found by such inspector or inspectors.
ARTICLE II
Board of Directors
Section 1. General Powers. The business, property and affairs of the
Corporation shall be managed by, or under the direction of, the Board of
Directors, which may exercise all such powers of the Corporation and do
Ex. 1.A-3
<PAGE>
all such lawful acts and things as are not by law or by the Restated
Certificate of Incorporation directed or required to be exercised or done by
the stockholders.
Section 2. Qualification; Number; Term; Remuneration. (a) Each director
shall be at least 18 years of age. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
number of directors constituting the entire Board shall initially consist of 7
members and henceforward shall consist of not less than 3 nor more than 10
members, the exact number of which shall be fixed from time to time by action
of the Board of Directors, one of whom may be selected by the Board of
Directors to be its Chairman. The use of the phrase "entire Board" herein
refers to the total number of directors which the Corporation would have if
there were no vacancies or unfilled newly created directorships. Except as
provided in Section 11 of this Article II, directors shall be elected by a
plurality of the votes cast at annual meetings of stockholders, and each
director so elected shall hold office as provided by the Restated Certificate
of Incorporation. None of the directors need be stockholders of the
Corporation.
(b) Directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal.
(c) Directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance
at each meeting of the Board of Directors or a stated salary as director. No
such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
Section 3. Quorum and Manner of Voting. Except as otherwise provided by law,
a majority of the entire Board shall constitute a quorum. A majority of the
directors present, whether or not a quorum is present, may adjourn a meeting
from time to time to another time and place without notice. The vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 4. Places of Meetings. Meetings of the Board of Directors may be
held at any place within or without the State of Delaware, as may from time to
time be fixed by resolution of the Board of Directors, or as may be specified
in the notice of meeting.
Section 5. Annual Meeting. Following the annual meeting of stockholders, the
newly elected Board of Directors shall meet for the purpose of the election of
officers and the transaction of such other business as may properly come
before the meeting. Such meeting may be held without notice immediately after
the annual meeting of stockholders at the same place at which such
stockholders' meeting is held.
Section 6. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as the Board of Directors shall from
time to time by resolution determine. Notice need not be given of regular
meetings of the Board of Directors held at times and places fixed by
resolution of the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board, President, Vice-
Chairman or a majority of the directors then in office.
Section 8. Notice of Special Meetings. A notice of the place, date and time
and the purpose or purposes of each special meeting of the Board of Directors
shall be given to each director by mailing the same at least two days before
the special meeting, or by telegraphing or telephoning the same or by
delivering the same personally not later than the day before the day of the
meeting.
Section 9. Organization. At all meetings of the Board of Directors, the
Chairman, if any, or if none or in the Chairman's absence or inability to act
the President, or in the President's absence or inability to act any Vice-
President who is a member of the Board of Directors, or in such Vice-
President's absence or inability to
Ex. 1.A-4
<PAGE>
act a chairman chosen by the directors, shall preside. The Secretary of the
Corporation shall act as secretary at all meetings of the Board of Directors
when present, and, in the Secretary's absence, the presiding officer may
appoint any person to act as secretary.
Section 10. Resignation. Any director may resign at any time upon written
notice to the Corporation and such resignation shall take effect upon receipt
thereof by the President or Secretary, unless otherwise specified in the
resignation. Any or all of the directors may be removed, with or without
cause, by the holders of a majority in voting power of the shares of stock
outstanding and entitled to vote for the election of directors.
Section 11. Vacancies. Unless otherwise provided in these By-laws, vacancies
on the Board of Directors, whether caused by resignation, death,
disqualification, removal, an increase in the authorized number of directors
or otherwise, may be filled by the affirmative vote of a majority of the
remaining directors, although less than a quorum, or by a sole remaining
director, or at a special meeting of the stockholders, by the holders of
shares entitled to vote for the election of directors.
Section 12. Action by Written Consent. Any action required or permitted to
be taken at any meeting of the Board of Directors may be taken without a
meeting if all the directors consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors.
Section 13. Meetings by Conference Telephone, etc. Any one or more members
of the Board of Directors, or of any committee thereof, may participate in a
meeting of the Board of Directors, or of such committee, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
a meeting by such means shall constitute presence in person at such meeting.
ARTICLE III
Committees
Section 1. Appointment. From time to time the Board of Directors by
resolution may appoint any committee or committees for any purpose or
purposes, to the extent lawful, which shall have powers as shall be determined
and specified by the Board of Directors in the resolution of appointment. In
the absence or disqualification of a member of a committee, the member or
members present at any meeting and not disqualified from voting, whether or
not such member or members constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Section 2. Procedures, Quorum and Manner of Acting. Each committee shall fix
its own rules of procedure and shall meet where and as provided by such rules
or by resolution of the Board of Directors. Except as otherwise provided by
law, the presence of a majority of the then appointed members of a committee
shall constitute a quorum for the transaction of business by that committee,
and in every case where a quorum is present the affirmative vote of a majority
of the members of the committee present shall be the act of the committee.
Each committee shall keep minutes of its proceedings, and actions taken by a
committee shall be reported to the Board of Directors.
Section 3. Action by Written Consent. Any action required or permitted to be
taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if all the members of the committee consent thereto in
writing and the writing or writings are filed with the minutes of proceedings
of the committee.
Section 4. Term; Termination. In the event any person shall cease to be a
director of the Corporation, such person shall simultaneously therewith cease
to be a member of any committee appointed by the Board of Directors.
Ex. 1.A-5
<PAGE>
ARTICLE IV
Officers
Section 1. Election and Qualifications. The Board of Directors shall elect
the officers of the Corporation, which shall include a President and a
Secretary, and may include, by election or appointment, one or more Vice-
Presidents (any one or more of whom may be given an additional designation of
rank or function), a Treasurer and such Assistant Secretaries, such Assistant
Treasurers and such other officers as the Board of Directors may from time to
time deem proper. Each officer shall have such powers and duties as may be
prescribed by these By-laws and as may be assigned by the Board of Directors
or the President. Any two or more offices may be held by the same person
except the offices of President and Secretary.
Section 2. Term of Office and Remuneration. The term of office of all
officers shall be one year and until their respective successors have been
elected and qualified, but any officer may be removed from office, either with
or without cause, at any time by the Board of Directors. Any vacancy in any
office arising from any cause may be filled for the unexpired portion of the
term by the Board of Directors. The remuneration of all officers of the
Corporation may be fixed by the Board of Directors or in such manner as the
Board of Directors shall provide.
Section 3. Resignation; Removal. Any officer may resign at any time upon
written notice to the Corporation and such resignation shall take effect upon
receipt thereof by the President or Secretary, unless otherwise specified in
the resignation. Any officer shall be subject to removal, with or without
cause, at any time by vote of a majority of the entire Board of Directors.
Section 4. Chairman of the Board. The Chairman of the Board of Directors, if
there be one, shall preside at all meetings of the Board of Directors and
shall have such other powers and duties as may from time to time be assigned
by the Board of Directors.
Section 5. President. The President shall have general management and
supervision of the property, business and affairs of the Corporation and over
its other officers; may appoint and remove assistant officers and other agents
and employees, other than any Vice-President, the Secretary, the Treasurer,
any Assistant Secretaries or Assistant Treasurers or any officers which the
Board of Directors may from time to time appoint; and may execute and deliver
in the name of the Corporation powers of attorney, contracts, bonds and other
obligations and instruments.
Section 6. Vice-President. A Vice-President may execute and deliver in the
name of the Corporation contracts and other obligations and instruments
pertaining to the regular course of the duties of said office, and shall have
such other authority as from time to time may be assigned by the Board of
Directors or the President.
Section 7. Treasurer. The Treasurer shall in general have all duties
incident to the position of Treasurer and such other duties as may be assigned
by the Board of Directors or the President.
Section 8. Secretary. The Secretary shall in general have all the duties
incident to the office of Secretary and such other duties as may be assigned
by the Board of Directors or the President.
Section 9. Assistant Officers. Any assistant officer shall have such powers
and duties of the officer such assistant officer assists as such officer or
the Board of Directors shall from time to time prescribe.
ARTICLE V
Books and Records
Section 1. Location. The books and records of the Corporation may be kept at
such place or places within or outside the State of Delaware as the Board of
Directors or the respective officers in charge thereof may
Ex. 1.A-6
<PAGE>
from time to time determine. The record books containing the names and
addresses of all stockholders, the number and class of shares of stock held by
each and the dates when they respectively became the owners of record thereof
shall be kept by the Secretary as prescribed in the By-laws and by such
officer or agent as shall be designated by the Board of Directors.
Section 2. Addresses of Stockholders. Notices of meetings and all other
corporate notices may be delivered personally or mailed to each stockholder at
the stockholder's address as it appears on the records of the Corporation.
ARTICLE VI
Certificates Representing Stock
Section 1. Certificates; Signatures. The shares of the Corporation shall be
represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any
or all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall
be entitled to have a certificate, signed by or in the name of the Corporation
by the Chairman or Vice-Chairman of the Board of Directors, or the President
or Vice-President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, representing the
number of shares registered in certificate form. Any and all signatures on any
such certificate may be facsimiles. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with
the same effect as if he were such officer, transfer agent or registrar at the
date of issue. The name of the holder of record of the shares represented
thereby, with the number of such shares and the date of issue, shall be
entered on the books of the Corporation.
Section 2. Transfers of Stock. Upon compliance with contractual or other
provisions, if any, restricting the transfer or registration of transfer of
shares of stock, shares of capital stock shall be transferable on the books of
the Corporation only by the holder of record thereof in person, or by duly
authorized attorney, upon surrender and cancellation of certificates for a
like number of shares, properly endorsed, and the payment of all taxes due
thereon.
Section 3. Fractional Shares. The Corporation may, but shall not be required
to, issue certificates for fractions of a share where necessary to effect
authorized transactions, or the Corporation may pay in cash the fair value of
fractions of a share as of the time when those entitled to receive such
fractions are determined, or it may issue scrip in registered or bearer form
over the manual or facsimile signature of an officer of the Corporation or of
its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a stockholder except as therein
provided.
The Board of Directors shall have power and authority to make all such rules
and regulations as it may deem expedient concerning the issue, transfer and
registration of certificates representing shares of the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. The Corporation may issue
a new certificate of stock in place of any certificate theretofore issued by
it alleged to have been lost, stolen or destroyed, and the Board of Directors
may require the owner of any lost, stolen or destroyed certificate, or his
legal representative, to give the Corporation a bond sufficient to indemnify
the Corporation against any claim that may be made against it on account of
the alleged loss, theft or destruction of any such certificate or the issuance
of any such new certificate.
Ex. 1.A-7
<PAGE>
ARTICLE VII
Dividends
Section 1. Dividends. Subject to the provisions of applicable law and the
Corporation's Restated Certificate of Incorporation, dividends upon the shares
of capital stock of the Corporation may be declared by the Board of Directors
at any regular or special meeting. Dividends may be paid in cash, in property
or in shares of stock of the Corporation, unless otherwise provided by
applicable law or the Corporation's Restated Certificate of Incorporation.
Section 2. Reserves. Before payment of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or sums
as the Board of Directors may, from time to time, in its absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation or
for such other purpose as the Board of Directors may think conducive to the
interests of the Corporation. The Board of Directors may modify or abolish any
such reserve in the manner in which it was created.
ARTICLE VIII
Indemnification of Directors and Officers
Section 1. Nature of Indemnity. (a) To the fullest extent permitted by
applicable law, including the provisions of the General Corporation Law of the
State of Delaware, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to, or testifies in, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), other than an
action by or in the right of the Corporation, by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise (hereinafter an "indemnitee"), whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
such a director, officer, employee or agent. The indemnitee shall be
indemnified and held harmless by the Corporation to the full extent authorized
by the General Corporation Law of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment), or by other applicable law as then in effect,
against all expense, liability and loss (including attorneys' fees, judgments,
fines, excise taxes under the Employee Retirement Income Security Act of 1974,
as amended from time to time ("ERISA"), penalties and amounts to be paid in
settlement) actually and reasonably incurred or suffered by such indemnitee in
connection therewith.
(b) The Corporation shall indemnify any person who was or is a party to or
is threatened to be made a party to, or testifies in, any proceeding by or in
the right of the Corporation to procure a judgment in its favor by reason of
the fact that such person is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, employee benefit plan, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if
such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Corporation,
provided that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 2. Procedure. Any indemnification under this Article VIII (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the
Ex. 1.A-8
<PAGE>
present or former director, officer, employee or agent is proper in the
circumstances because he or she has met the applicable standard of conduct set
forth in the General Corporation Law of Delaware, as the same exists or
hereafter may be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment). Such determination shall be made with respect to a
person who is a director or officer at the time of such determination (A) by a
majority vote of the directors who were not parties to such action, suit or
proceeding (the "Disinterested Directors"), even though less than a quorum, or
(B) by a committee of Disinterested Directors designated by a majority vote of
such directors, even though less than a quorum, or (C) if there are no
Disinterested Directors or if the Disinterested Directors so direct, by
independent legal counsel in a written opinion, or (D) by the stockholders.
Section 3. Advances for Expenses. Costs, charges and expenses (including
attorneys' fees) incurred by a director, officer, employee or agent of the
Corporation in defending a civil or criminal action, suit or proceeding shall
be paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay all amounts so advanced in the
event that it shall ultimately be determined that such director, officer,
employee or agent is not entitled to be indemnified by the Corporation as
authorized in this Article VIII. The majority of the Disinterested Directors
may, in the manner set forth above, and upon approval of such director,
officer, employee or agent of the Corporation, authorize the Corporation's
counsel to represent such person, in any action, suit or proceeding, whether
or not the Corporation is a party to such action, suit or proceeding.
Section 4. Procedure for Indemnification. Any indemnification or advance of
costs, charges and expenses under this Article VIII shall be made promptly,
and in any event within 60 days upon the written request of the director,
officer, employee or agent. The right to indemnification or advances as
granted by this Article VIII shall be enforceable by the director, officer,
employee or agent, as the case may be, in any court of competent jurisdiction,
if the Corporation denies such request, in whole or in part, or if no
disposition thereof is made within 60 days. Such person's costs and expenses
incurred in connection with successfully establishing his or her right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of costs,
charges and expenses under this Article VIII where the required undertaking
has been received by the Corporation) that the claimant has not met the
standard of conduct set forth in the General Corporation Law of Delaware, as
the same exists or hereafter may be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation (including
its Board of Directors, its independent legal counsel and its stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the General
Corporation Law of Delaware, as the same exists or hereafter may be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
that said law permitted the Corporation to provide prior to such amendment),
nor the fact that there has been an actual determination by the Corporation
(including its Board of Directors, its independent legal counsel and its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 5. Other Rights; Continuation of Right to Indemnification. The
indemnification and advancement of expenses provided by this Article VIII
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any law
(common or statutory), by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding office or while
employed by or acting as agent for the Corporation, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the estate, heirs, executors and administers of such
person. All rights to indemnification under this Article VIII shall be deemed
to be a contract between the Corporation
Ex. 1.A-9
<PAGE>
and each director, officer, employee or agent of the Corporation who serves or
served in such capacity at any time while this Article VIII is in effect. Any
repeal or modification of this Article VIII shall not in any way diminish any
rights to indemnification of such director, officer, employee or agent or the
obligations of the Corporation arising hereunder with respect to any action,
suit or proceeding arising out of, or relating to, any actions, transactions
or facts occurring prior to the final adoption of such modification or repeal.
For purposes of this Article VIII, references to "the Corporation" include all
constituent corporations absorbed in a consolidation or merger as well as the
resulting or surviving corporation, so that any person who is or was a
director, officer, employee or agent of such a constituent corporation or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the
provisions of this Article VIII, with respect to the resulting or surviving
corporation, as he or she would if he or she had served the resulting or
surviving corporation in the same capacity.
Section 6. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was or has agreed to
become a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her or on his or her behalf in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of this
Article VIII, provided, however, that such insurance is available on
acceptable terms, which determination shall be made by a vote of a majority of
the Board of Directors.
Section 7. Savings Clause. If this Article VIII or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each person entitled to
indemnification under the first paragraph of this Article VIII as to all
expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes, penalties and amounts to be paid in settlement) actually
and reasonably incurred or suffered by such person and for which
indemnification is available to such person pursuant to this Article VIII to
the full extent permitted by any applicable portion of this Article VIII that
shall not have been invalidated and to the full extent permitted by applicable
law.
ARTICLE IX
Corporate Seal
The corporate seal shall have inscribed thereon the name of the Corporation
and the year of its incorporation and shall be in such form and contain such
other words and/or figures as the Board of Directors shall determine. The
corporate seal may be used by printing, engraving, lithographing, stamping or
otherwise making, placing or affixing, or causing to be printed, engraved,
lithographed, stamped or otherwise made, placed or affixed, upon any paper or
document, by any process whatsoever, an impression, facsimile or other
reproduction of said corporate seal.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE XI
Waiver of Notice
Whenever notice is required to be given by these By-laws or by the Restated
Certificate of Incorporation or by law, a written waiver thereof, signed by
the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent to notice.
Ex. 1.A-10
<PAGE>
ARTICLE XII
Bank Accounts, Drafts, Contracts, Activities, Etc.
Section 1. Bank Accounts and Drafts. In addition to such bank accounts as
may be authorized by the Board of Directors, the primary financial officer or
any person designated by said primary financial officer, whether or not an
employee of the Corporation, may authorize such bank accounts to be opened or
maintained in the name and on behalf of the Corporation as he or she may deem
necessary or appropriate, payments from such bank accounts to be made upon and
according to the check of the Corporation in accordance with the written
instructions of said primary financial officer, or other person so designated
by the Treasurer.
Section 2. Contracts. The Board of Directors may authorize any person or
persons, in the name and on behalf of the Corporation, to enter into or
execute and deliver any and all deeds, bonds, mortgages, contracts and other
obligations or instruments, and such authority may be general or confined to
specific instances.
Section 3. Proxies; Powers of Attorney; Other Instruments. The Chairman, the
President or any other person designated by either of them shall have the
power and authority to execute and deliver proxies, powers of attorney and
other instruments on behalf of the Corporation in connection with the rights
and powers incident to the ownership of stock by the Corporation. The
Chairman, the President or any other person authorized by proxy or power of
attorney executed and delivered by either of them on behalf of the Corporation
may attend and vote at any meeting of stockholders of any company in which the
Corporation may hold stock, and may exercise on behalf of the Corporation any
and all of the rights and powers incident to the ownership of such stock at
any such meeting, or otherwise as specified in the proxy or power of attorney
so authorizing any such person. The Board of Directors, from time to time, may
confer like powers upon any other person.
Section 4. Financial Reports. The Board of Directors may appoint the primary
financial officer or other fiscal officer and/or the Secretary or any other
officer to cause to be prepared and furnished to stockholders entitled thereto
any special financial notice and/or financial statement, as the case may be,
which may be required by any provision of law.
ARTICLE XIII
Amendments
The Board of Directors shall have power to adopt, amend or repeal By-laws.
By-laws adopted by the Board of Directors may be repealed or changed, and new
By-laws made, by the stockholders.
Ex. 1.A-11
<PAGE>
EXHIBIT B
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RESTATED
CERTIFICATE OF INCORPORATION
OF
JPS TEXTILE GROUP, INC.
1. The name of the Corporation is JPS Textile Group, Inc.
2. The original Certificate of Incorporation was filed with the Secretary of
State of the State of Delaware on December 31, 1986 under the name Grambling,
Inc. IV and was amended by Certificates of Amendment filed with the Secretary
of State on March 14, 1988, April 7, 1988 and May 12, 1988. In addition, a
Restated Certificate of Incorporation was filed with the Secretary of State on
April 1, 1991 and a Certificate of Correction was filed with the Secretary of
State on April 2, 1991.
3. This Restated Certificate of Incorporation, which restates and further
amends the Restated Certificate of Incorporation as currently in effect, is
made and filed pursuant to the order of the United States Bankruptcy Court
(the "Bankruptcy Court"), Southern District of New York in [(In re JPS Textile
Group, Inc., No. [ ] ( ))], and the Plan of Reorganization confirmed
therein (the "Plan of Reorganization") in connection with the reorganization
of the Corporation under Title 11 of the United States Code and in accordance
with Sections 103 and 303 of the General Corporation Law of the State of
Delaware.
4. This Restated Certificate of Incorporation shall become effective at 9:00
a.m. on , 1997.
5. The Corporation's Restated Certificate of Incorporation, as currently in
effect, is hereby restated and further amended so as to read in its entirety
as follows:
FIRST: The name of the Corporation is:
JPS TEXTILE GROUP, INC.
SECOND: The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware, as from time to time amended.
FOURTH: (a) The total number of shares of capital stock which the
Corporation shall have authority to issue is 25,000,000 shares. Of these, (i)
22,000,000 shares shall be shares of Common Stock having a par value of $0.01
per share (the "Common Stock"), and (ii) 3,000,000 shares shall be shares of
Preferred Stock, having a par value of $0.01 per share (the "Preferred
Stock"). Except as otherwise provided by law, the shares of capital stock of
the Corporation regardless of class, may be issued by the Corporation from
time to time in such amounts, for such lawful consideration and for such
corporate purpose(s) as the Board of Directors may from time to time
determine.
(b) Preferred Stock may be issued in one or more series as may be determined
from time to time by the Board of Directors. Authority is hereby expressly
granted to the Board of Directors to authorize the issuance of one or more
series of Preferred Stock, and, subject to Article FIFTH, to fix by resolution
or resolutions providing for the issue of each such series the voting powers,
designations, preferences, and relative,
Ex. 1.B-1
<PAGE>
participating, optional, redemption, conversion, exchange or other special
rights, qualifications, limitations or restrictions of such series, and the
number of shares in each series, to the full extent now or hereafter permitted
by law.
FIFTH: The Corporation shall not create, designate, authorize or cause to be
issued any class or series of nonvoting stock. For purposes of this Article
FIFTH, any class or series of stock, including any series of Preferred Stock,
that has only such voting rights as are mandated by the General Corporation
Law of the State of Delaware, shall be deemed to be nonvoting stock subject to
the restrictions of this Article FIFTH.
SIXTH: In furtherance and not in limitation of the powers conferred by law,
subject to any limitations contained elsewhere in this Restated Certificate,
by-laws of the Corporation may be adopted, amended or repealed by a majority
of the board of directors of the Corporation, but any by-laws adopted by the
board of directors may also be amended or repealed by the stockholders
entitled to vote thereon. Election of directors need not be by written ballot.
SEVENTH: (a) Without the approval of the Board of Directors and the
approval, given by written consent or by vote at any regular or special
meeting of stockholders, of the holders of record of not less than 100% of the
shares of Common Stock at the time outstanding, voting together as a single
class, the Corporation shall not enter into any single transaction or series
of related transactions, or take any other action that would have the effect
of, whether directly or indirectly, prohibiting, restricting, delaying or
otherwise hindering the payment of any and all amounts due under the
Contingent Notes (as defined below) issued by JPS Capital Corp. ("Capital") in
accordance with the terms thereof. Notwithstanding the foregoing, nothing
contained in this Restated Certificate of Incorporation shall restrict (i) the
actions taken by the Corporation or its Tax Affiliates (as defined below) in
connection with the resolution of their liabilities (if any) for Taxes (as
defined below) or (ii) a sale of the Corporation.
(b) Until after the occurrence of the later of (i) the Maturity Date (as
defined below), and (ii) the payment in full of the obligations of Capital
arising under the Contingent Notes, the Corporation shall not Transfer (as
defined below) or permit the Transfer of all or any portion of the outstanding
shares of capital stock of Capital owned by the Corporation to any person or
entity.
(c) For purposes of this Restated Certificate of Incorporation, the
following terms are defined as follows:
(i) "Contingent Note Indenture" means the indenture, dated as of [ ],
1997, among Capital, the Corporation and [ ] as trustee (the "Trustee");
(ii) "Contingent Notes" means the Contingent Payment Notes due on the
Maturity Date issued pursuant to the Contingent Note Indenture;
(iii) "Maturity Date," "Tax Affiliate," and "Taxes" have the meanings
ascribed to such terms in the Contingent Note Indenture; and
(iv) "Transfer" means (A) any direct or indirect, whether voluntary or
involuntary, knowing or unknowing, by operation of law or otherwise,
disposition of any assets or property, whether by sale, exchange, merger,
consolidation, transfer, conveyance, distribution, inheritance, gift or
otherwise, or (B) any consensual security interest in, pledge or assignment
of, mortgage of, encumbrance upon, lien in or any other preferential
arrangement with respect to, any assets or property. Notwithstanding any
understandings or agreements to which a holder of Capital's capital stock
is a party, any arrangement, the effect of which is to Transfer any or all
of the rights arising from ownership of Capital's capital stock, shall be
treated as a Transfer of such capital stock for purposes of this Article
SEVENTH.
EIGHTH: (a) A director of the Corporation shall not be personally liable
either to the Corporation or to any of its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (i) any
breach of the director's duty of loyalty to the Corporation or its
stockholders, or (ii) acts or omissions which are not in good faith or which
involve intentional misconduct or knowing violation of the law, or (iii) any
matter
Ex. 1.B-2
<PAGE>
in respect of which such director shall be liable under Section 174 of Title 8
of the General Corporation Law of the State of Delaware or any amendment
thereto or successor provision thereto, or (iv) any transaction from which the
director shall have derived an improper personal benefit. Neither amendment
nor repeal of this paragraph (a) nor the adoption of any provision of the
Restated Certificate of Incorporation inconsistent with this paragraph (a)
shall eliminate or reduce the effect of this paragraph (a) in respect of any
matter occurring, or any cause of action, suit or claim that, but for this
paragraph (a) of this Article EIGHTH, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision. If the General
Corporation Law of Delaware is hereafter amended to permit further elimination
or limitation of the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the General Corporation Law of Delaware as so amended.
(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to, or testifies in, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (hereinafter, a "proceeding"), other than an action by or in
the right of the Corporation, by reason of the fact that such person is or was
a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise (hereinafter, an "indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
such a director, officer, employee or agent. The indemnitee shall be
indemnified and held harmless by the Corporation to the full extent authorized
by the General Corporation Law of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment), or by other applicable law as then in effect,
against all expense, liability and loss (including attorneys' fees, judgments,
fines, excise taxes under the Employee Retirement Income Security Act of 1974,
as amended from time to time ("ERISA"), penalties and amounts to be paid in
settlement) actually and reasonably incurred or suffered by such indemnitee in
connection therewith. The Corporation may adopt By-laws or enter into
agreements with any such person for the purpose of providing for such
indemnification.
(c) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to, or testifies in, any proceeding by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, employee benefit plan, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if
such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Corporation,
provided that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(d) Any indemnification under this Article EIGHTH (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the present or former
director, officer, employee or agent is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in the General
Corporation Law of Delaware, as the same exists or hereafter may be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment).
Such determination shall be made with respect to a person who is a director or
officer at the time of such determination (A) by a majority vote of the
directors who were not parties to such action, suit or proceeding (the
"Disinterested Directors"), even though less than a quorum, or (B) by a
Ex. 1.B-3
<PAGE>
committee of Disinterested Directors designated by a majority vote of such
directors, even though less than a quorum or (C) if there are no Disinterested
Directors or if the Disinterested Directors so direct, by independent legal
counsel in a written opinion, or (D) by the stockholders.
(e) Costs, charges and expenses (including attorneys' fees) incurred by a
director, officer, employee or agent of the Corporation in defending a civil
or criminal action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director, officer, employee
or agent to repay all amounts so advanced in the event that it shall
ultimately be determined that such director, officer, employee or agent is not
entitled to be indemnified by the Corporation as authorized in this Article
EIGHTH. The majority of the Disinterested Directors may, in the manner set
forth above, and upon approval of such director, officer, employee or agent of
the Corporation, authorize the Corporation's counsel to represent such person,
in any action, suit or proceeding, whether or not the Corporation is a party
to such action, suit or proceeding.
(f) Any indemnification or advance of costs, charges and expenses under this
Article EIGHTH shall be made promptly, and in any event within 60 days upon
the written request of the director, officer, employee or agent. The right to
indemnification or advances as granted by this Article EIGHTH shall be
enforceable by the director, officer, employee or agent, as the case may be,
in any court of competent jurisdiction, if the Corporation denies such
request, in whole or in part, or if no disposition thereof is made within 60
days. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce
a claim for the advance of costs, charges and expenses under this Article
EIGHTH where the required undertaking has been received by the Corporation)
that the claimant has not met the standard of conduct set forth in the General
Corporation Law of Delaware, as the same exists or hereafter may be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment),
but the burden of proving such defense shall be on the Corporation. Neither
the failure of the Corporation (including its Board of Directors, its
independent legal counsel and its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the General Corporation Law of Delaware, as
the same exists or hereafter may be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), nor the fact that there has been an
actual determination by the Corporation (including its Board of Directors, its
independent legal counsel and its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
(g) The indemnification and advancement of expenses provided by this Article
EIGHTH shall not be deemed exclusive of any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under any
law (common or statutory), by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding office or while
employed by or acting as agent for the Corporation, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the estate, heirs, executors and administrators of
such person. All rights to indemnification under this Article EIGHTH shall be
deemed to be a contract between the Corporation and each director, officer,
employee or agent of the Corporation who serves or served in such capacity at
any time while this Article EIGHTH is in effect. Any repeal or modification of
this Article EIGHTH shall not in any way diminish any rights to
indemnification of such director, officer, employee or agent or the
obligations of the Corporation arising hereunder with respect to any action,
suit or proceeding arising out of, or relating to, any actions, transactions
or facts occurring prior to the final adoption of such modification or repeal.
For the purposes of this Article EIGHTH, references to "the Corporation"
include all constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporation, so that any person who is or
was a director, officer, employee or agent of such a constituent
Ex. 1.B-4
<PAGE>
corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article EIGHTH, with respect to the
resulting or surviving corporation, as he or she would if he or she had served
the resulting or surviving corporation in the same capacity.
(h) The Corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him or her and incurred by him or her
or on his or her behalf in any such capacity, or arising out of his or her
status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of this
Article EIGHTH, provided, however, that such insurance is available on
acceptable terms, which determination shall be made by a vote of a majority of
the Board of Directors.
(i) If this Article EIGHTH or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each person entitled to indemnification under the first
paragraph of this Article EIGHTH as to all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes, penalties
and amounts to be paid in settlement) actually and reasonably incurred or
suffered by such person and for which indemnification is available to such
person pursuant to this Article EIGHTH to the full extent permitted by any
applicable portion of this Article EIGHTH that shall not have been invalidated
and to the full extent permitted by applicable law.
NINTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation in the
manner now or hereafter prescribed by statute, and all rights conferred by the
stockholders herein are granted subject to this reservation. Notwithstanding
the foregoing, none of the provisions of Article SEVENTH of this Restated
Certificate of Incorporation or this sentence of Article NINTH may be amended,
altered, changed or repealed without the prior approval of the Bankruptcy
Court pursuant to a Final Order (as defined in the Plan of Reorganization).
TENTH: The Corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, JPS Textile Group, Inc. has caused this Restated
Certificate of Incorporation to be signed by [ ], its [ ], and attested by
[ ], its [ ], this [ ] day of [ ], 1997.
JPS Textile Group, Inc.
By___________________________________
Name:
Title:
Attest:
By___________________________________
Name:
Title:
Ex. 1.B-5
<PAGE>
EXHIBIT C
TO JOINT PLAN OF
REORGANIZATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JPS CAPITAL CORP.
AS ISSUER,
[ ]
AS TRUSTEE,
AND
JPS TEXTILE GROUP, INC.
________________
INDENTURE
________________
DATED AS OF [ ], 1997
CONTINGENT PRINCIPAL AND INTEREST
DUE ON THE MATURITY DATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
- --------------------------- -----------------
<S> <C>
310(a)(1).................................................... 6.10
(a)(2).................................................... 6.10
(a)(3).................................................... N.A.
(a)(4).................................................... N.A.
(a)(5).................................................... 6.10
(b)....................................................... 6.08; 6.10; 9.02
(c)....................................................... N.A.
311(a)....................................................... 6.11
(b)....................................................... 6.11
(c)....................................................... N.A.
312(a)....................................................... 2.05
(b)....................................................... 9.03
(c)....................................................... 9.03
313(a)....................................................... 6.06
(b)(1).................................................... 6.06
(b)(2).................................................... 6.06
(c)....................................................... 6.06; 9.02
(d)....................................................... 6.06
314(a)....................................................... 4.03; 4.04; 9.02
(b)....................................................... N.A.
(c)(1).................................................... 9.04
(c)(2).................................................... 9.04
(c)(3).................................................... N.A.
(d)....................................................... N.A.
(e)....................................................... 9.05
(f)....................................................... N.A.
315(a)....................................................... 6.01
(b)....................................................... 6.05; 10.02
(c)....................................................... 6.01
(d)....................................................... 6.01
(e)....................................................... 5.08
316(a)(last sentence)........................................ 2.10
(a)(1)(A)................................................. 5.02
(a)(1)(B)................................................. N.A.
(a)(2).................................................... N.A.
(b)....................................................... 5.04
(c)....................................................... 5.02
317(a)(1).................................................... 5.05
(a)(2).................................................... 5.06
(b)....................................................... 2.04
318(a)....................................................... 9.01
</TABLE>
________
N.A. means not applicable.
* This Cross-Reference Table shall not, for any purpose, be deemed to be a part
of the Indenture.
Ex. 1.C-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE...................... 1
Section 1.01. Definitions............................................... 1
Section 1.02. Incorporation by Reference of Trust Indenture Act......... 5
Section 1.03. Rules of Construction..................................... 5
ARTICLE 2 THE SECURITIES.................................................. 5
Section 2.01. Form and Dating........................................... 5
Section 2.02. Execution and Authentication.............................. 5
Section 2.03. Registrar and Paying Agent................................ 6
Section 2.04. Paying Agent to Hold Money in Trust....................... 6
Section 2.05. Holder Lists.............................................. 7
Section 2.06. Transfer and Exchange..................................... 7
Section 2.07. Replacement Securities.................................... 7
Section 2.08. Outstanding Securities.................................... 8
Section 2.09. Treasury Securities....................................... 8
Section 2.10. Temporary Securities...................................... 8
Section 2.11. Cancellation.............................................. 8
Section 2.12. CUSIP Numbers............................................. 9
ARTICLE 3 REDEMPTION AND PAYMENT ON MATURITY DATE......................... 9
Section 3.01. Redemption................................................ 9
Section 3.02. Payment on Maturity Date.................................. 10
Section 3.03. Notice of Redemption or Repayment......................... 10
Section 3.04. Effect of Notice of Redemption or Repayment............... 11
Section 3.05. Deposit of Redemption Amount or Repayment Amount.......... 11
Section 3.06. Automatic Cancellation.................................... 11
ARTICLE 4 COVENANTS....................................................... 12
Section 4.01. Corporate Existence....................................... 12
Section 4.02. Maintenance of Office or Agency........................... 12
Section 4.03. SEC Reports; Reports to Securityholders................... 12
Section 4.04. Compliance Certificate.................................... 12
Section 4.05. Special Notice Concerning Maturity Date................... 13
Section 4.06. Determination of Maturity Date............................ 13
Section 4.07. JPS Textile Obligation.................................... 13
ARTICLE 5 REMEDIES........................................................ 13
Section 5.01. Remedies.................................................. 13
Section 5.02. Control by Majority....................................... 13
Section 5.03. Limitation on Suits....................................... 14
Section 5.04. Rights of Holders to Receive Payment...................... 14
Section 5.05. Collection Suit by Trustee................................ 14
Section 5.06. Trustee May File Proofs of Claim.......................... 15
Section 5.07. Priorities................................................ 15
Section 5.08. Undertaking for Costs..................................... 15
ARTICLE 6 TRUSTEE......................................................... 16
Section 6.01. Duties of Trustee......................................... 16
Section 6.02. Rights of Trustee......................................... 16
Section 6.03. Individual Rights of Trustee.............................. 17
Section 6.04. Trustee's Disclaimer...................................... 17
Section 6.05. Notice of Non-Payment..................................... 17
Section 6.06. Reports by Trustee to Holders............................. 17
Section 6.07. Compensation and Indemnity................................ 18
</TABLE>
Ex. 1.C-ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 6.08. Replacement of Trustee.................................... 18
Section 6.09. Successor Trustee by Merger, Etc. ........................ 19
Section 6.10. Eligibility; Disqualification............................. 19
Section 6.11. Preferential Collection of Claims Against Company......... 20
ARTICLE 7 DISCHARGE OF INDENTURE.......................................... 20
Section 7.01. Termination of Company's Obligations...................... 20
Section 7.02. Repayment to the Company.................................. 20
ARTICLE 8 AMENDMENTS...................................................... 20
Section 8.01. Without Consent of Holders................................ 20
Section 8.02. With Consent of Holders................................... 21
Section 8.03. Compliance with Trust Indenture Act....................... 21
Section 8.04. Revocation and Effect of Consents......................... 21
Section 8.05. Notation on or Exchange of Securities..................... 22
Section 8.06. Trustee to Sign Amendments, Etc. ......................... 22
ARTICLE 9 MISCELLANEOUS................................................... 22
Section 9.01. Trust Indenture Act Controls.............................. 22
Section 9.02. Notices................................................... 22
Section 9.03. Communication by Holders with Other Holders............... 23
Section 9.04. Certificate and Opinion as to Conditions Precedent........ 23
Section 9.05. Statements Required in Certificate or Opinion............. 23
Section 9.06. Rules by Trustee and Agents............................... 24
Section 9.07. Legal Holidays............................................ 24
Section 9.08. Duplicate Originals....................................... 24
Section 9.09. Governing Law............................................. 24
Section 9.10. No Adverse Interpretation of Other Agreements............. 24
Section 9.11. Successors................................................ 24
Section 9.12. Counterpart Originals..................................... 24
Section 9.13. Table of Contents, Headings, Etc. ........................ 25
EXHIBIT A (FACE OF SECURITIES)............................................ A-1
</TABLE>
Ex. 1.C-iii
<PAGE>
INDENTURE, dated as of [ ], 1997, among JPS Capital Corp., a Delaware
corporation (the "Company"), JPS Textile Group, Inc., a Delaware corporation
("JPS Textile"), and [ ] as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of the Company's Contingent
Payment Notes Due on the Maturity Date referred to below (the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
Section 1.01. Definitions.
"Accrued Interest" means, as to each Security outstanding on the Maturity
Date, Accrued Interest (as defined therein) payable thereunder and as
calculated thereunder.
"Affiliate" of any specified Person means any other Person, directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Aggregate Accrued Interest" means the aggregate Accrued Interest payable
under all Securities outstanding on the Maturity Date.
"Aggregate Principal Amounts" means the sum of the Principal Amounts of all
Securities outstanding on the Maturity Date.
"Bankruptcy Court" means the United States District Court having
jurisdiction over the Case.
"Bankruptcy Event" means the occurrence of any of the following:
(i) the Company, pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case, or
(B) consents to the entry of an order for relief against it in an
involuntary case, or
(C) consents to the appointment of a custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors, or
(E) is unable to pay its debts as the same become due; or
(ii) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case, or
(B) appoints a custodian of the Company or for all or substantially
all of its property, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 60 days.
"Bankruptcy Law" means title 11 of the United States Code, or any successor
statute.
"Board of Directors" of a Person means the board of directors of such Person
or any committee of such board of directors duly authorized to act hereunder.
Ex. 1.C-1
<PAGE>
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means, with respect to a Person, any and all shares,
interests, participations, rights or other equivalents (however designated) of
such Person.
"Case" means [the case captioned United States Bankruptcy Court Southern
District of New York In re JPS Textile Group, Inc., Debtor (Chapter 11 Case
No. 97 B [ ] ([ ]))].
"Company" means JPS Capital Corp., a Delaware corporation, and its
successors.
"Corporate Trust Office" shall be at the address of the Trustee specified in
Section 9.02 or such other address as the Trustee may give notice of to the
Company and to JPS Textile.
"Deposit Date" has the meaning set forth in Section 3.01(b).
"Deposit Notice" has the meaning set forth in Section 3.01(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Final Determination" means the final resolution of liability of each and
every Tax Affiliate for any and all Taxes (i) pursuant to Internal Revenue
Service Form 870 or 870-AD (or any successor forms thereto), on the date of
acceptance thereof by or on behalf of the Internal Revenue Service, or by a
comparable form under the laws of other jurisdictions; provided, however, that
a Form 870 or 870-AD or comparable form that reserves (whether by its terms or
by operation of law) the right of the taxpayer to file a claim for refund or
the right of the taxing authority to assert a further deficiency, or both,
shall not constitute a Final Determination in respect of such taxable year of
such Tax Affiliate; (ii) by a decision, judgment, decree, or other order by a
court of competent jurisdiction, which shall have become final and
unappealable; (iii) by a closing agreement or accepted offer in compromise
under Section 7121 or 7122 of the Internal Revenue Code of 1986, as amended,
or comparable agreements under the laws of other jurisdictions; (iv) by any
allowance of a refund or credit in respect of an overpayment of Tax, but only
after the expiration of all periods during which such refund may be recovered
(including by way of offset) by the jurisdiction imposing such Tax; or (v) by
the expiration of the applicable statute of limitation on assessment and
collection of the federal income Taxes of such Tax Affiliate for its taxable
year ended October 29, 1994, based on the assumptions that (a) the federal
income tax return for the taxable year ended October 29, 1994 shall have been
filed on July 15, 1995, (b) as of [ ], none of the exceptions set forth in
Sections 6501(c) or (e) of the Internal Revenue Code of 1986, as in effect on
[ ], shall apply, and (c) for purposes of this definition, the statute of
limitations on assessment and collection for any state or local income Tax or
any franchise Tax based on income shall be deemed to expire at the same time
as the statute of limitation on assessment and collection of the federal
income Taxes of such Tax Affiliate for its taxable year ended October 29,
1994.
"Final Order" means an order of the Bankruptcy Court in connection with the
Case as to which the time to appeal, petition for certiorari, or move for
reargument or rehearing has expired and as to which no appeal, petition for
certiorari, or other proceedings for reargument or rehearing shall then be
pending or as to which any right to appeal, petition for certiorari, reargue,
or rehear shall have been waived in writing in form and substance satisfactory
to JPS Textile, or in the event that an appeal, writ of certiorari, or
reargument or rehearing thereof has been sought, such order of the Bankruptcy
Court shall have been affirmed by the highest court to which such order was
appealed, or certiorari, reargument, or rehearing has been denied, and the
time to take any further appeal, petition for certiorari, or move for
reargument or rehearing shall have expired.
"Holder" means a Person in whose name a Security is registered.
"Indenture" means this Indenture as amended, supplemented or otherwise
modified from time to time.
Ex. 1.C-2
<PAGE>
"Initial Amount" means, at any time, as to each Security outstanding at such
time, the Initial Amount (as defined in such Security) of such Security, the
aggregate of which Initial Amounts of all Securities outstanding on the Issue
Date is $34,000,000.
"Issue Date" means [ ], 1997.
"JPS Funded Deposit" has the meaning set forth in Section 3.01(b).
"JPS Textile" means JPS Textile Group, Inc., a Delaware corporation, and its
successors.
"JPS Textile Deposit" has the meaning set forth in Section 3.05.
"Legal Holiday" has the meaning set forth in Section 9.07.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, encumbrance or other
preferential arrangement of any kind intended to assure payment of any
indebtedness or other obligation or to assure any performance by any Person
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, and any agreement to give any security interest).
"Maturity Date" means the date that occurs 45 days after (but not including)
the Satisfaction Date, provided that if such date is not a Business Day, the
Maturity Date will be on the Business Day immediately succeeding such date.
"Officer" means the Chairman of the Board, the President, the Chief
Financial Officer, the Treasurer, any Vice President, the Assistant Treasurer,
the Secretary, the Assistant Secretary or the Controller of the Company or JPS
Textile, as the context requires.
"Officers' Certificate" means a certificate signed by two Officers of the
Company or JPS Textile, as the context requires, delivered to the Trustee, and
which shall include the statements set forth in Section 9.05.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee.
"Paying Agent" has the meaning set forth in Section 2.03(a).
"Permitted Investments" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by an
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one (1) year after the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within ninety (90) days after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or
Moody's Investors Service, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Moody's Investors Service, Inc. shall be rating such
obligations, then from such other nationally recognized rating services
acceptable to the Trustee and not listed in Credit Watch published by Standard
& Poor's Corporation); (iii) commercial paper, other than commercial paper
issued by the Company or any of its Affiliates, maturing no more than ninety
(90) days after the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 or P-1 from either Standard & Poor's
Corporation or Moody's Investors Service, Inc. (or, if at any time neither
Standard & Poor's Corporation nor Moody's Investors Service, Inc. shall be
rating such obligations, then the highest rating from such other nationally
recognized rating services acceptable to the Trustee); and (iv) domestic and
eurodollar certificates of deposit or time deposits or bankers' acceptances
maturing within ninety (90) days after the date of acquisition thereof issued
by any commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia or Canada having
combined capital and surplus of not less than U.S. $250,000,000.
Ex. 1.C-3
<PAGE>
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Principal Amount" means, as to each outstanding Security, the Principal
Amount thereof as defined therein.
"Proposed Amount" has the meaning set forth in Section 3.01(b).
"Redeemed Portion" has the meaning set forth in Section 3.01(f).
"Redemption" has the meaning set forth in Section 3.01(b).
"Redemption Date" has the meaning set forth in Section 3.01(b).
"Registrar" has the meaning set forth in Section 2.03(a).
"Related Surrendered Security" has the meaning set forth in Section 3.01(f).
"Satisfaction Date" means the latest to occur of (a) the date that the Final
Determination occurs, and (b) the date of satisfaction of all liabilities for
Taxes (if any) owing as a result of the occurrence of the Final Determination.
"SEC" means the Securities and Exchange Commission.
"Stated Amount" has the meaning set forth in Section 3.01(f).
"Subsidiary" means, as to the Company, any corporation, partnership, or
other business entity of which an aggregate of more than 50% of the
outstanding Capital Stock having ordinary voting power to elect a majority of
the board of directors or other controlling Persons is owned by the Company or
one or more of its Subsidiaries.
"Surrendered Security" has the meaning set forth in Section 3.01(f).
"Tax" or "Taxes" means any and all federal, state and local income taxes and
franchise taxes based on income payable by any Tax Affiliate or for which any
Tax Affiliate is liable (and any interest, penalties, additions to tax, or any
other additional amounts incurred in connection therewith) in respect of the
taxable year ended October 29, 1994 of any Tax Affiliate incurred in
connection with the sale of the assets of JPS Auto Inc. (f/k/a JPS Automotive
Products Corp.), the assets comprising the synthetic industrial fabric
division of JPS Converter and Industrial Corp., and JPS Textile's interest in
Cramerton Management Corp. and such other transactions as shall have been
effected pursuant to that certain Asset Purchase Agreement, dated as of May
25, 1994, in each case determined by taking into account allowed carrybacks of
losses to such taxable year of any Tax Affiliate.
"Tax Affiliate" means each of JPS Textile, JPS Auto Inc. (f/k/a JPS
Automotive Products Corp.), JPS Converter and Industrial Corp., and any
corporation that filed or was eligible to file a consolidated, combined, or
unitary tax return with any of the foregoing entities (including, without
limitation, the Company) for the taxable year ended October 29, 1994 (or any
portion thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA,
except as provided in Sections 8.01 and 8.03.
"Trustee" means [ ] until a successor replaces it in accordance with the
applicable provisions of this Indenture and thereafter means the successor
serving hereunder.
"Trust Officer" means any officer within the corporate trust administration
(or any successor group of the Trustee) including any Vice President,
Assistant Vice President, Secretary, Assistant Secretary or any other officer
or assistant officer of the Trustee customarily performing functions similar
to those performed by the
Ex. 1.C-4
<PAGE>
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred at the Trustee's Corporate Trust Office
because of his/her knowledge of and familiarity with the particular subject.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Securities means the Company or any other obligor on the
Securities.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
Section 1.03. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular; and
(e) provisions apply to successive events and transactions.
ARTICLE 2
The Securities
Section 2.01. Form and Dating.
The Securities, and the Trustee's certificate of authentication in respect
thereof, shall be substantially in the form of Exhibit A, the terms of which
are incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
dated the Issue Date. The Securities shall be issuable only in registered
form.
Section 2.02. Execution and Authentication.
(a) An Officer of the Company shall sign the Securities for the Company by
manual or facsimile signature. Such signature shall be attested to by the
Secretary of the Company. The Company's seal shall be reproduced on the
Securities. If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
(b) A Security shall not be valid until authenticated by the manual
signature of a Trust Officer on behalf of the Trustee. The signature of such
Trust Officer shall be conclusive evidence, and the only evidence, that the
Security has been authenticated under this Indenture.
Ex. 1.C-5
<PAGE>
(c) The Trustee shall authenticate Securities for original issue up to the
aggregate Initial Amounts of Securities issued on the Issue Date minus the
aggregate Redeemed Portions of all Surrendered Securities, upon a written
order of the Company signed by two Officers, which order shall set forth the
amount and the date of the Securities to be authenticated. The aggregate
Initial Amounts of Securities outstanding at any time may not exceed the
aggregate Initial Amounts of Securities outstanding on the Issue Date minus
the aggregate Redeemed Portions of all Surrendered Securities. The aggregate
Redeemed Portions stated on all Securities outstanding at any time may not
exceed the aggregate JPS Funded Deposits applied to Redemptions pursuant to
Article 3.
(d) The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the term of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the
Company.
Section 2.03. Registrar and Paying Agent.
(a) The Company shall maintain or cause to be maintained an office or agency
where Securities may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Securities may be presented or
surrendered for payment ("Paying Agent"). The Registrar shall keep a register
of the Securities and of their transfer and exchange, which register shall
also set forth the Initial Amount of each Security on the Issue Date, the
Redeemed Portion of each Surrendered Security, the issuance date of each
Surrendered Security and the Redemption Date of the Redeemed Portion of each
Surrendered Security. The Company may appoint one or more co-registrars and
one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent, Registrar or
co-registrar without notice to any Holder. The Company shall notify the
Trustee of the name and address of any Agent not a party to this Indenture. If
the Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company may act as Paying Agent,
Registrar or co-registrar, except as otherwise provided in this Indenture.
(b) The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall give prompt written notice to the
Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, or fails to give the foregoing notice,
the Trustee shall act as such, and shall be entitled to appropriate
compensation in accordance with Section 6.07.
(c) The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the
Securities.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of or interest on the Securities (whether such money has been paid
to it by the Company or, pursuant to Section 3.05, by JPS Textile), and shall
notify the Trustee of any default by the Company (or, pursuant to Section
3.05, by JPS Textile) in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it
to the Trustee. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee. Upon payment over to the Trustee, the Paying
Agent (if other than the Company) shall have no further liability for the
money delivered to the Trustee. If the Company acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent.
Ex. 1.C-6
<PAGE>
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably practicable
the most recent list available to it of the names and addresses of the Holders
and shall otherwise comply with TIA (S) 312(a). If the Trustee is not the
Registrar, the Company shall cause to be furnished to the Trustee at such
times as the Trustee may request in writing, within 30 days of such request, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of the Holders and the Company shall otherwise comply
with TIA (S) 312(a).
Section 2.06. Transfer and Exchange.
(a) When Securities are presented to the Registrar or a co-registrar with a
request to register, transfer or exchange them for an equal principal amount
of Securities of other authorized denominations, the Registrar shall register
the transfer or make the exchange if its requirements for such transactions
are met; provided, however, that any Security presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar and
the Trustee, duly executed by the Holder thereof or his attorney duly
authorized in writing. To permit registrations of transfers and exchanges, the
Company shall issue and the Trustee shall authenticate Securities which the
Holder making the transfer or exchange is entitled to receive at the
Registrar's written request, subject to such rules as the Trustee may
reasonably require.
(b) The Company shall not be required to issue, register the transfer of or
exchange Securities during a period beginning at the opening of business on a
Business Day 30 days before the Maturity Date and ending at the close of
business on the Maturity Date.
(c) No service charge shall be made to the Holder for any registration of
transfer or exchange (except as otherwise expressly permitted herein), but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than such
transfer tax or similar governmental charge payable upon exchanges (without a
transfer to another Person) pursuant to Section 2.10 or 8.05, in which event
JPS Textile shall be responsible for the payment of any such taxes).
(d) Prior to due presentment for registration of transfer of any Security,
the Trustee, any Agent and the Company may deem and treat the Person in whose
name any Security is registered as the absolute owner of such Security for the
purpose of receiving payment of principal of and interest on such Security and
for all other purposes whatsoever, whether or not such Security is overdue,
and none of the Trustee, any Agent or the Company shall be affected by notice
to the contrary.
Section 2.07. Replacement Securities.
(a) If any mutilated Security is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction,
loss or theft of any Security, then, in the absence of notice to the Company
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall issue and the Trustee, upon the written order of the Company
signed by two Officers, shall authenticate a replacement Security of like
tenor, like Initial Amount (as defined in such Security), and like amount set
forth opposite the caption "Redeemed Portion, Issuance Date and Redemption
Date of each Related Surrendered Security" on the face of such Security,
bearing a number not contemporaneously outstanding, in exchange for any such
mutilated Security or in lieu of any such destroyed, lost or stolen Security,
if the Trustee's requirements for replacement of Securities are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company
to protect the Company, the Trustee, any Agent or any authenticating agent
from any loss that any of them may suffer if a Security is replaced. The
Company and the Trustee may charge for their or JPS Textile's expenses in
replacing a Security.
(b) Every replacement Security is an obligation of the Company, and shall be
entitled to the benefits of this Indenture equally and proportionately with
any and all other Securities issued and outstanding hereunder.
Ex. 1.C-7
<PAGE>
(c) The provisions of this Section 2.07 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.08. Outstanding Securities.
(a) The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation, those redeemed or purchased by the Company pursuant to
Article 3, and those described in this Section as not outstanding. If a
Security is replaced pursuant to Section 2.07, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced
Security is held by a bona fide purchaser.
(b) If the Principal Amount of any Security is considered paid under Section
3.02 or any Security is deemed to have been cancelled under Section 3.06, such
Security ceases to be outstanding.
(c) A Security ceases to be outstanding if the Company holds the Security.
Section 2.09. Treasury Securities.
(a) In determining whether the Holders of the required Initial Amounts of
Securities have given or concurred in any request, demand, authorization,
notice, direction, waiver or consent, Securities owned by an Affiliate of the
Company shall be disregarded and considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such request, demand, authorization, notice, direction, waiver
or consent, only Securities that a Trust Officer knows are so owned shall be
so disregarded.
(b) In determining whether the Holders of the required Initial Amounts of
Securities have (i) directed the time, method or place of conducting any
proceeding for any remedy available to the Trustee hereunder, or exercising
any trust or power conferred upon the Trustee; or (ii) consented to the
postponement of any interest payment, Securities owned by a Holder shall be
disregarded and considered as though not outstanding only if such Holder is an
Affiliate of the Company, except that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction or consent,
only Securities that a Trust Officer knows are so owned shall be so
disregarded.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may prepare
and, upon written request from the Company signed by two Officers of the
Company, the Trustee shall authenticate temporary Securities. Temporary
Securities shall be in any authorized denomination, substantially in the form
of definitive Securities and with other variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee, upon receipt of the written order of the
Company signed by two Officers, shall authenticate definitive Securities in
exchange for temporary Securities. Until such exchange, temporary Securities
shall be entitled to the same rights, benefits and privileges as definitive
Securities.
Section 2.11. Cancellation.
The Company at any time may deliver Securities previously authenticated
hereunder to the Trustee for cancellation. The Registrar and Paying Agent
shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee shall cancel all
Securities surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall destroy canceled Securities (subject to
the record-retention requirement of the Exchange Act), and certification of
their destruction shall be delivered to the Company unless the Company shall
direct that canceled Securities be returned to it; provided, however, that no
Surrendered Securities shall be destroyed, each such Surrendered Security
shall be stamped by the Paying
Ex. 1.C-8
<PAGE>
Agent with a legend stating "This Security Is No Longer Outstanding" and all
Surrendered Securities shall be returned to the Company. The Company may not
reissue or issue new Securities to replace Securities that it has redeemed or
paid or that have been delivered to the Trustee for cancellation except as
specifically provided in Section 3.01(f).
Section 2.12. CUSIP Numbers.
The Company, in issuing the Securities, may use "CUSIP" numbers (if then
generally in use), and the Trustee shall use CUSIP numbers in notices of
redemption or exchange as a convenience to the Holders; provided, however,
that any such notice shall state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as
contained in any notice of redemption or exchange, and that reliance may be
only on the other identification numbers printed on the Securities, and any
redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE 3
Redemption and Payment on Maturity Date
Section 3.01. Redemption.
(a) The Company may not redeem all or any portion of the Initial Amounts of
or any other amount of any of the Securities prior to the Maturity Date except
as specifically provided in subsection (b) of this Section 3.01 and, in any
event, the Company shall not use any funds for any Redemption unless such
funds constitute a JPS Funded Deposit.
(b) Each time that JPS Textile, in its sole discretion, furnishes an
Officers' Certificate to the Company and the Trustee stating that, on the date
therein specified (a "Deposit Date"), which Deposit Date shall be a Business
Day, JPS Textile will make a JPS Textile Deposit (as defined in Section 3.05)
in the amount therein specified (such amount being the "Proposed Amount" for
such Redemption), the Company shall, on the Business Day immediately
succeeding such Deposit Date (such Business Day being the "Redemption Date"),
redeem (a "Redemption"), in accordance with Sections 3.01, 3.03, 3.04, and
3.05, from the amount of such JPS Textile Deposit, a portion of the aggregate
Initial Amounts of the Securities then outstanding equal to the amount of such
JPS Textile Deposit (such amount of such JPS Textile Deposit actually made on
such Deposit Date by JPS Textile being the "JPS Funded Deposit" for such
Redemption); provided, however, that (i) any such Officers' Certificate shall
be furnished to the Company and the Trustee at least 30 days but no more than
60 days before the Deposit Date referred to therein (any such Officers'
Certificate being a "Deposit Notice"), (ii) no Redemption shall be made with
any funds of the Company and shall only be made from amounts constituting a
JPS Funded Deposit, and (iii) no accrued interest will be paid on any
Redemption Date or at any time thereafter or on any portion of the Initial
Amounts of any Security redeemed in any Redemption unless such interest
constitutes Accrued Interest payable pursuant to the new Security issued upon
surrender of such redeemed Security.
(c) If the Registrar is not the Trustee, the Company shall, concurrently
with each notice of any Redemption, cause the Registrar to deliver to the
Trustee a certificate (upon which the Trustee may conclusively rely) setting
forth the aggregate Initial Amounts of the Securities then outstanding and
identifying the Securities held by each Holder.
(d) If less than the aggregate Initial Amounts of all outstanding Securities
are to be redeemed in any Redemption, the Trustee shall select the Securities
to be partially redeemed therein pro rata or by a method that complies with
applicable legal and stock exchange requirements, if any, taking into account
the provisions of the next paragraph. The aggregate amount of the Initial
Amounts of the Securities to be so redeemed shall be selected, unless
otherwise provided herein, not less than 15 nor more than 50 days prior to the
specified Deposit Date, by the Trustee from the outstanding Securities.
Ex. 1.C-9
<PAGE>
(e) The Trustee shall promptly notify the Company in writing of the
Securities selected for Redemption in any partial Redemption and the portion
of the Initial Amount thereof to be redeemed in such Redemption. Each portion
of the Initial Amount of any Security selected for any such partial Redemption
shall be in an amount of $100 or a whole multiple of $100. Except as provided
above in this subsection (e), provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption.
(f) Upon surrender to the Paying Agent of a Security that is redeemed in
whole or in part in any Redemption (a "Surrendered Security"), the Company
shall issue and the Trustee shall authenticate for the Holder at the expense
of the Company a new Security (such Surrendered Security and each prior
Surrendered Security whose Redeemed Portion is set forth opposite the caption
"Redeemed Portion, Issuance Date and Redemption Date of each Related
Surrendered Security" on the face of such Surrendered Security each being a
"Related Surrendered Security" with respect to such new Security), which new
Security shall (i) be equal in Initial Amount to (A) the Initial Amount stated
on such Surrendered Security (the "Stated Amount") minus (B) the portion of
such Stated Amount redeemed in such Redemption (such portion of such Stated
Amount of such Surrendered Security being the "Redeemed Portion" thereof), and
(ii) state opposite the caption "Redeemed Portion, Issuance Date and
Redemption Date of each Related Surrendered Security" on the face of such new
Security the aggregate of (A) such Redeemed Portion plus (B) the aggregate of
the amounts, if any, stated on such Surrendered Security opposite the caption
"Redeemed Portion, Issuance Date and Redemption Date of each Related
Surrendered Security" on the face of such Surrendered Security.
Section 3.02. Payment on Maturity Date.
The Company shall pay the Principal Amount of and Accrued Interest payable
under each Security outstanding on the Maturity Date in accordance with the
provisions of Sections 3.03 through 3.06 hereof. The Aggregate Principal
Amounts of and Aggregate Accrued Interest payable under the Securities
outstanding shall be considered paid on the Maturity Date if the Paying Agent
holds on the Maturity Date money deposited by the Company in immediately
available funds designated for and sufficient to pay the Aggregate Principal
Amounts and Aggregate Accrued Interest then due.
Section 3.03. Notice of Redemption or Repayment.
(a) At least 30 days but not more than 60 days before any Redemption Date,
and at least 30 days but not more than 45 days before the Maturity Date, as
applicable, the Company shall mail or cause to be mailed a notice of
redemption or repayment, as applicable, by first-class mail, postage prepaid,
to each Holder whose Securities are to be redeemed or repaid therein at the
Holder's last address, as it shall appear on the register of the Securities. A
copy of such notice shall be mailed to the Trustee in the same manner and on
the same day that the notice is mailed to the Holders.
(b) The notice shall specify the Proposed Amount for such Redemption or the
Aggregate Principal Amounts and Aggregate Accrued Interest to be paid on the
Maturity Date, as applicable, and shall state:
(i) the Redemption Date or the Maturity Date, as applicable;
(ii) in the case of any Redemption on any Redemption Date, (A) the
portion of the Initial Amount of each Security being redeemed on such
Redemption Date and (B) that upon surrender to the Paying Agent of such
Security (which will thereafter constitute a Surrendered Security), a new
Security will be issued (including in any Redemption in whole of the
Initial Amount of any Security) in an Initial Amount equal to the Stated
Amount of such Surrendered Security minus the Redeemed Portion of such
Surrendered Security, and that such new Security will state, opposite the
caption "Redeemed Portion, Issuance Date and Redemption Date of each
Related Surrendered Security" on the face of such new Security, the
aggregate amount of (x) the Redeemed Portion of such Surrendered Security
plus (y) the amount set forth opposite the caption "Redeemed Portion,
Issuance Date and Redemption Date of each Related Surrendered Security" on
the face of such Surrendered Security;
Ex. 1.C-10
<PAGE>
(iii) in the case of any repayment on the Maturity Date, the Principal
Amount of each Security being repaid and the amount of Accrued Interest
payable thereunder;
(iv) the name and address of the Paying Agent;
(v) that Securities called for redemption on a Redemption Date or
repayment on the Maturity Date must be surrendered to the Paying Agent to
collect the portion of the Initial Amount thereof being redeemed on a
Redemption Date or the Principal Amount thereof being repaid;
(vi) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the
Securities; and
(vii) that, in the case of a repayment on the Maturity Date, the
Satisfaction Date has occurred.
At the Company's request, the Trustee shall give the notice of redemption or
repayment in the Company's name and at its expense; provided, however, that
the Company shall deliver to the Trustee, at least 45 days prior to a
Redemption Date or the Maturity Date, as applicable, an Officers' Certificate
requesting that the Trustee give such notice and setting forth the text of the
information to be stated in such notice as provided in this Section 3.03(b),
and the Trustee shall have no responsibility whatsoever with regard to such
notice being accurate or correct.
Section 3.04. Effect of Notice of Redemption or Repayment.
Once notice of any Redemption is mailed, the portion of the Initial Amount
of each Security called for Redemption becomes due and payable on the
specified Redemption Date, subject, in any event, to clause (ii) of the
proviso to Section 3.01(b), and once notice of repayment is mailed, the
Principal Amount of and Accrued Interest on each Security outstanding on the
Maturity becomes due and payable on the Maturity Date.
Section 3.05. Deposit of Redemption Amount or Repayment Amount.
On the Deposit Date therefor, in the case of any Redemption, and on or prior
to the Business Day immediately preceding the Maturity Date, as applicable,
JPS Textile (and only JPS Textile), in the case of any Redemption, and the
Company, in the case of payment on the Maturity Date, shall deposit (any such
deposit by JPS Textile being a "JPS Textile Deposit"), in immediately
available funds, with the Trustee or with the Paying Agent (or, if the Company
or a Subsidiary of the Company is the Paying Agent, shall segregate and hold
in trust), (i) in the case of any Redemption, money in an amount equal to the
Proposed Amount set forth in the Deposit Notice for such Redemption (the
amount of such Proposed Amount so deposited constituting the JPS Funded
Deposit for such Redemption), or (ii) in the case of repayment on the Maturity
Date, money in an amount equal to the aggregate of the Aggregate Principal
Amounts and Aggregate Accrued Interest. The Trustee or the Paying Agent (a)
shall, with respect to any Redemption, return to JPS Textile any money
deposited by it with the Trustee or the Paying Agent by JPS Textile in excess
of the Proposed Amount set forth in the Deposit Notice for such Redemption,
and (b) shall, with respect to payment on the Maturity Date, return to the
Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the Aggregate Principal Amounts and Aggregate Accrued
Interest then payable. All amounts deposited by JPS Textile pursuant hereto
and not returned to it pursuant hereto shall be deemed to be capital
contributions by it to the Company.
Section 3.06. Automatic Cancellation.
Notwithstanding any other provision of this Indenture or the Securities, if
on the Satisfaction Date the Aggregate Principal Amounts and the Aggregate
Accrued Interest equal $0, then, upon written notice to the Trustee by the
Company to such effect, the Securities shall, without any payment (including
principal or interest) or further action on the part of the Company or any
other Person, be deemed to have been cancelled and no longer an obligation of
the Company.
Ex. 1.C-11
<PAGE>
ARTICLE 4
Covenants
Section 4.01. Corporate Existence.
The Company shall do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence in accordance with
the organizational documents, as they may be from time to time amended, of the
Company.
Section 4.02. Maintenance of Office or Agency.
(a) The Company shall maintain in the [Borough of Manhattan, The City of New
York], an office or agency (which may be an office of the Trustee, Registrar
or co-registrar) where Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
(b) The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in [the
Borough of Manhattan, The City of New York] for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
(c) The Company hereby designates the Corporate Trust Office of [ ], in
[the Borough of Manhattan, the City of New York], as one such office or agency
of the Company in accordance with Section 2.03.
Section 4.03. SEC Reports; Reports to Securityholders.
(a) The Company shall comply with the provisions of TIA (S) 314(a).
(b) So long as any of the Securities are outstanding, the Company shall
cause its annual and quarterly reports, including any notes thereto and, with
respect to annual reports, an auditors' report by an accounting firm of
established national reputation and a "Management's Discussion and Analysis of
Financial Condition and Results of Operations," comparable to that which would
have been required to appear in annual or quarterly reports filed under
Section 13 or 15(d) of the Exchange Act, to be mailed to the Trustee and to
each of the Holders of the Securities within 50 days after the close of each
of the first three fiscal quarters of each fiscal year (commencing with the
first quarter commencing after the Issue Date) and within 95 days after the
close of each fiscal year commencing with the 1997 fiscal year, at such
Holder's address appearing on the register of the Securities.
Section 4.04. Compliance Certificate.
The Company shall deliver to the Trustee, within 105 days after the end of
each fiscal year of the Company commencing with the 1997 fiscal year and
within 60 days after the end of each fiscal quarter of the Company commencing
with the first quarter commencing after the Issue Date, a certificate of the
principal executive officer, the principal financial officer or the principal
accounting officer of the Company stating, as to the officer signing such
certificate, that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal period has been made under the
supervision of such signing officers with a view to determining whether
Ex. 1.C-12
<PAGE>
each of the Company and such Subsidiaries has kept, observed, performed and
fulfilled its obligations under this Indenture.
Section 4.05. Special Notice Concerning Maturity Date.
The Company hereby acknowledges that it has projected that, based on the
facts in existence and the applicable law as in effect on the date hereof, the
Maturity Date will occur on or before [September 10, 1998,] it being
understood that the foregoing shall not constitute a representation or
warranty of the Company. The Company shall deliver to the Trustee no less
frequently than each January 25, April 25, July 25, and October 25, commencing
on October 25, 1997, a notice stating the date on which the Company has
projected the Maturity Date will occur based on the facts in existence and the
applicable law as in effect on such date, it being understood that the
statements in any such notice shall not constitute a representation or
warranty of the Company. In the event the Maturity Date specified in any such
notice shall be later than September 10, 1998, such notice shall also specify
the reasons for the delay in the Maturity Date. The Trustee shall distribute a
copy of such notice to each Holder within 15 days after receipt by the
Trustee.
Section 4.06. Determination of Maturity Date.
The Company shall have the obligation, no less frequently than each January
20, April 20, July 20, and October 20, commencing on April 20, 1998, to
determine whether or not the expiration of the statute of limitations referred
to in clause (v) of the definition of "Final Determination" shall have
occurred.
Section 4.07. JPS Textile Obligation.
In addition to its other obligations hereunder, JPS Textile shall cause the
Company to comply with all of the obligations of the Company hereunder.
ARTICLE 5
Remedies
Section 5.01. Remedies.
(a) Notwithstanding any other provision of this Indenture or any applicable
law, the only remedies available to the Trustee and the Holders are as
follows: (i) to collect from the Company the payment of the Aggregate
Principal Amounts and Aggregate Accrued Interest if the same shall not have
been paid on the Maturity Date, (ii) to enforce by means of specific
performance any provision of the Securities or this Indenture, (iii) to
collect from JPS Textile any Proposed Amount specified in any Deposit Notice
to the extent a JPS Textile Deposit thereof is not made on the Deposit Date
specified in such Deposit Notice, (iv) to enforce the performance of any
Redemption by the Company from the amount of the JPS Funded Deposit with
respect to such Redemption, or (v) to pursue any remedy against JPS Textile
for breach of any covenant made by JPS Textile hereunder other than a claim
against JPS Textile for the Company's failure to repay any Aggregate Principal
Amount or any Aggregate Accrued Interest on the Maturity Date. The Trustee, on
behalf of itself and the Holders, hereby waives any right, claim, or action
for damages hereunder or under the Securities against the Company, whether
arising under law or equity, except as specifically provided herein or in the
Securities.
(b) The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy shall
not impair the right or remedy. All remedies are cumulative to the extent
permitted by law.
Section 5.02. Control by Majority.
(a) The Holders of at least a majority of the aggregate Initial Amounts of
the then outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. The Trustee may refuse,
however, to follow any direction that
Ex. 1.C-13
<PAGE>
conflicts with law or this Indenture, may be unduly prejudicial to the rights
of other Holders, or would subject the Trustee to personal liability.
(b) The Company may set a record date for purposes of determining the
identity of Holders entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture, which record date shall
be the later of 10 days prior to the first solicitation of such consent or the
date of the most recent list of Holders furnished to the Trustee pursuant to
Section 2.05 of this Indenture prior to such solicitation. If a record date is
fixed, those persons who were Holders of Securities at such record date (or
their duly designated proxies), and only those persons, shall be entitled to
take such action by vote or consent or to revoke any vote or consent
previously given, whether or not such persons continue to be Holders after
such record date. No such vote or consent shall be valid or effective for more
than 120 days after such record date.
Section 5.03. Limitation on Suits.
(a) A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:
(i) the Holder gives to the Trustee written notice that five Business
Days has elapsed since the Maturity Date;
(ii) the Holders of at least 25% in aggregate Initial Amounts of the then
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(iii) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(v) during such 60-day period the Holders of a majority in aggregate
Initial Amounts of the then outstanding Securities do not give the Trustee
a direction inconsistent with the request.
(b) A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
Section 5.04. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of any Security (i) to receive payment of the portion of any Security
being redeemed in connection with a Redemption or to bring suit for the
enforcement of such payment or to pursue any claim against JPS Textile for
such payment shall not be impaired or affected without the consent of such
Holder, provided that such right to receive payment from the Company or bring
suit against the Company shall be limited to receiving funds from the JPS
Funded Deposit for such Redemption and no other claim against the Company
shall be pursued for such Redemption and (ii) to receive payment on or after
the Maturity Date of the Principal Amount of and Accrued Interest on such
Security or to bring suit for the enforcement of any such payment on or after
such Maturity Date, shall not be impaired or affected without the consent of
such Holder.
Section 5.05. Collection Suit by Trustee.
If (a) any of the Aggregate Principal Amounts or Aggregate Accrued Interest
are not paid on the Maturity Date, (b) JPS Textile fails to make a JPS Textile
Deposit of a Proposed Amount on the Deposit Date therefor, or (c) the Company
fails to redeem on the Redemption Date therefor Initial Amounts of Securities
with the amount of the JPS Funded Deposit made on the related Deposit Date,
the Trustee is authorized to recover judgment in its own name and as trustee
of an express trust against (i) the Company in the case of any such payment
not made on the Maturity Date or any such Redemption not made on a Redemption
Date, and (ii) JPS Textile in the case of any such failure to make a JPS
Textile Deposit, in each case for the whole unpaid amounts thereof and, to the
extent lawful, interest and such further amount as shall be sufficient to
cover the costs and expenses of
Ex. 1.C-14
<PAGE>
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, provided that any recovery
against the Company with respect to a Redemption shall be limited to the JPS
Funded Deposit for such Redemption.
Section 5.06. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claims and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Securities) or JPS Textile or their respective
creditors or their property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on
any such claims, and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the
event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 6.07. To the
extent that the payment of any such compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 6.07 out of the estate in any such proceeding shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding except to vote for the election of a trustee in bankruptcy or
similar Person.
Section 5.07. Priorities.
(a) If the Trustee collects any money pursuant to this Article it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 6.07, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: if collected from JPS Textile, to the Holders for any portion of
Initial Amounts of Securities called in any Redemption to the extent any
such portion was unpaid on any Redemption Date, and, in the case of amounts
collected after the Maturity Date, to the Holders for any unpaid Aggregate
Principal Amount or Aggregate Accrued Interest, in each case ratably,
without preference or priority of any kind, according to the amount of such
unpaid portion or of such unpaid Aggregate Principal Amounts and Aggregate
Accrued Interest; and
Third: to the Company.
(b) The Trustee may fix a record date and payment date for any payment to
Holders and give whatever notice to the Holders the Trustee deems appropriate.
Section 5.08. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a
Ex. 1.C-15
<PAGE>
suit by the Trustee, a suit by a Holder pursuant to Section 5.03, or a suit by
Holders of more than 10% of the Initial Amounts of the then outstanding
Securities.
ARTICLE 6
Trustee
Section 6.01. Duties of Trustee.
(a) If the Maturity Date has occurred and any payment due on the Securities
is not made when due, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) Except under the circumstances set forth in subsection (a) above, if
such circumstances are known to the Trustee:
(i) The duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. The
Trustee shall, however, examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct,
except that:
(i) This clause (c) does not limit the effect of clause (a) or (b) of
this Section 6.01.
(ii) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by
it pursuant to Section 5.02.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to clause (a),
(b), (c) and (e) of this Section 6.01.
(e) Notwithstanding anything to the contrary herein, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or incur
any liability. The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any
loss, liability or expense that may be incurred thereby, including, but not
limited to, liability relating to any environmental laws, rules or
regulations.
(f) The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 6.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon and shall be protected from
acting or refraining from acting based upon any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
Ex. 1.C-16
<PAGE>
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate (which shall conform to the provisions of Section 9.05)
or an Opinion of Counsel, or both. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with counsel and
the written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take
in good faith that it believes to be authorized or within its rights or powers
conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in the Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
the Trustee reasonable security and indemnity against the costs, expenses and
liabilities which may be incurred by it in compliance with such request or
direction.
Section 6.03. Individual Rights of Trustee.
The Trustee, in its individual or any other capacity, may become the owner
or pledgee of Securities and may otherwise deal with the Company, or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. The Trustee is subject,
however, to Sections 6.10 and 6.11.
Section 6.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Securities; it shall not be
accountable for any money paid to the Company or JPS Textile or upon the
Company's direction under any provision hereof; it shall not be responsible
for the use or application of any money received by any Paying Agent other
than the Trustee; and it shall not be responsible for any statement or recital
herein or any statement in the Securities or any other document in connection
with the sale of the Securities or pursuant to this Indenture other than its
certificate of authentication.
Section 6.05. Notice of Non-Payment.
If the Trustee knows that any payment due on the Securities was not made on
the Maturity Date or any Redemption was not made on the date specified for
such Redemption, the Trustee shall mail to the Holders, as their names and
addresses appear on the register of the Securities, a notice of such event
within 30 days after the occurrence thereof.
Section 6.06. Reports by Trustee to Holders.
(a) Within 60 days after each [ ], beginning with the [ ] following
the date of this Indenture, the Trustee shall mail to the Holders, in the
manner and to the extent required by TIA (S) 313(c), a brief report dated as
of such reporting date that complies with TIA (S) 313(a). The Trustee shall
also comply with TIA (S) 313(b). The Trustee shall also transmit by mail all
reports as required by TIA (S) 313(c).
(b) Commencing at the time this Indenture is qualified under the TIA, a copy
of each report at the time of its mailing to Holders shall be filed with the
SEC and each stock exchange on which the Securities are listed. The Company
shall promptly notify the Trustee when the Securities are listed on any stock
exchange.
Ex. 1.C-17
<PAGE>
Section 6.07. Compensation and Indemnity.
(a) JPS Textile agrees that it shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. JPS Textile agrees that it
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
(b) JPS Textile shall indemnify the Trustee for, and hold it harmless
against, any and all loss, liability or expense incurred by it arising out of
or in connection with the acceptance or administration of its duties under
this Indenture, except as set forth in Section 6.07(c). The Trustee shall
notify the Company and JPS Textile promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company or JPS Textile
shall not relieve JPS Textile of its obligations hereunder. JPS Textile shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee
may have separate counsel and JPS Textile shall pay the reasonable fees and
expenses of such counsel. JPS Textile need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld. The
obligation of JPS Textile under this Section 6.07 shall survive the
satisfaction and discharge of this Indenture.
(c) JPS Textile need not reimburse any expense or indemnify against any loss
or liability incurred by the Trustee through its own negligence or willful
misconduct.
(d) To secure JPS Textile's payment obligations in this Section, the Trustee
shall have a claim and Lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal
of and interest on particular Securities. Such Lien shall survive the
satisfaction and discharge of the Indenture.
(e) When the Trustee incurs expenses or renders services after a Bankruptcy
Event, the expenses and the compensation for the services are intended to
constitute expenses of administration under the Bankruptcy Law.
Section 6.08. Replacement of Trustee.
(a) A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
(b) The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company in writing. The Holders of a
majority in aggregate Initial Amounts of the then outstanding Securities may
remove the Trustee by so notifying the Trustee and the Company in writing. The
Company may remove the Trustee if:
(i) the Trustee fails to comply with Section 6.10;
(ii) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(iii) a custodian or public officer takes charge of the Trustee or its
property; or
(iv) the Trustee becomes incapable of acting.
(c) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in aggregate Initial Amounts of the then outstanding
Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
(d) If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of at least 10% in aggregate Initial Amounts of the
Ex. 1.C-18
<PAGE>
then outstanding Securities may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(e) If the Trustee after written request by any Holder who has been a Holder
for at least six months fails to comply with Section 6.10, such Holder may
petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
(f) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company and JPS Textile.
Thereupon the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to the Holders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 6.07. Notwithstanding replacement of the Trustee
pursuant to this Section 6.08, JPS Textile's obligations under Section 6.07
shall continue for the benefit of the retiring Trustee.
Section 6.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee,
provided such successor is eligible and qualified under Section 6.10.
Section 6.10. Eligibility; Disqualification.
(a) There shall at all times be one or more Trustee(s) hereunder at least
one of whom shall be at all times either:
(i) a corporation organized and doing business under the laws of the
United States of America or of any state or the District of Columbia,
authorized under such laws to exercise corporate trust powers and subject
to supervision or examination by federal or state authority and having a
combined capital and surplus of at least $50,000,000; or
(ii) a corporation or other Person organized and doing business under the
laws of a foreign government that is permitted to act as Trustee pursuant
to a rule, regulation or order of the SEC, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination
by authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees, and having a combined capital and surplus of
at least $50,000,000.
(b) If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 6.10, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.10, it shall resign immediately in the
manner and with the effect hereinafter specified in this Article 6. Neither
the Company nor any person directly or indirectly controlling, controlled by,
or under common control with the Company, shall serve as Trustee hereunder.
(c) The Trustee shall be subject to the provisions of TIA (S) 310(b) during
the period of time provided for therein. Nothing herein shall prevent the
Trustee from filing with the SEC the application referred to in the second to
last paragraph of TIA (S) 310(b).
(d) Notwithstanding the provisions of clause (a) of this Section 6.10, no
obligor upon the Securities or any Affiliate of such obligor shall serve as
Trustee hereunder.
Ex. 1.C-19
<PAGE>
Section 6.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 7
Discharge of Indenture
Section 7.01. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 6.07 and the Company's, Trustee's and
Paying Agent's obligations under Section 7.02 shall survive) (a) when all
outstanding Securities theretofore authenticated and issued have been
delivered (other than destroyed, lost or stolen Securities that have been
replaced or paid) to the Trustee for cancellation and the Company has paid all
sums payable hereunder, or (b) upon the occurrence of an automatic
cancellation of all outstanding Securities pursuant to Section 3.06.
Section 7.02. Repayment to the Company.
(a) The Trustee and the Paying Agent shall promptly pay to the Company, upon
written request, any excess money or securities held by them at any time after
the termination of the Company's obligations in accordance with Section 7.01.
(b) The Trustee and the Paying Agent shall pay to the Company, upon written
request, any money held by them for the payment of principal or interest that
remains unclaimed for two years after the Maturity Date; provided, however,
that the Company shall have caused notice of such payment to be mailed to each
Holder entitled thereto not less than 30 days prior to such repayment. After
payment to the Company, the Holders entitled to the money must look to the
Company for payment as general creditors unless an applicable abandoned
property law designates another person, and all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
ARTICLE 8
Amendments
Section 8.01. Without Consent of Holders.
(a) Subject to the provisions of Section 8.02(b), the Company, JPS Textile
and the Trustee may amend or supplement this Indenture or the Securities
without the consent of any Holder:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to comply with any requirements of the SEC in connection with the
qualification of this Indenture under the TIA as then in effect;
(iii) to provide for uncertificated Securities in addition to
certificated Securities; or
(iv) to make any change that does not adversely affect the rights of any
Holder hereunder or under any Security.
(b) Upon the written request of the Company and JPS Textile, accompanied by
a resolution of the Board of Directors of each of the Company and JPS Textile
authorizing the execution of any such supplemental Indenture, and upon receipt
by the Trustee of the documents described in Section 8.06, the Trustee shall
join with the Company and JPS Textile in the execution of any supplemental
Indenture authorized or permitted by the terms of this Indenture and to make
any further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into any such
supplemental Indenture that affects its own rights,
Ex. 1.C-20
<PAGE>
duties or immunities under this Indenture or otherwise, in which case the
Trustee may, in its discretion, but shall not be obligated to, enter into such
supplemental Indenture.
Section 8.02. With Consent of Holders.
(a) Subject to the provisions of Section 8.02(b), the Company, JPS Textile
and the Trustee may amend any of the provisions of this Indenture or the
Securities or waive compliance in a particular instance by the Company or JPS
Textile with any provision of this Indenture or the Securities with the
written consent of the Holders of at least a majority in aggregate Initial
Amounts of the then outstanding Securities; provided that, without the consent
of each Holder affected, an amendment or waiver under this Section may not:
(i) reduce the Initial Amounts of Securities the Holders of which must
consent to an amendment or waiver;
(ii) reduce the Accrued Interest on any Security;
(iii) reduce the Principal Amount of or change the Maturity Date of any
Security or alter the redemption provisions with respect thereto;
(iv) make any Security payable in money other than that stated in the
Security;
(v) make any change in Section 5.04 or in this Section 8.02(a); or
(vi) waive a failure to make any payment of principal of or interest on,
or redemption payment with respect to, any Security.
(b) No amendment or waiver under this Section 8.02 or under Section
8.01(a)(iv) shall be effective until approval thereof by a Final Order of the
Bankruptcy Court.
(c) Upon the request of the Company and JPS Textile, accompanied by a
resolution of the Company's and JPS Textile's respective Board of Directors
authorizing the execution of any such supplemental Indenture, and upon the
filing with the Trustee of evidence satisfactory to the Trustee of the consent
of the Holders as aforesaid, and upon receipt by the Trustee of the documents
described in Section 8.06, the Trustee shall join with the Company and JPS
Textile in the execution of such supplemental Indenture unless such
supplemental Indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may, in its
discretion, but shall not be obligated to, enter into such supplemental
Indenture.
(d) It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
(e) After an amendment or waiver under this Section becomes effective, the
Company shall mail to the Holders of each Security affected thereby a notice
briefly describing the amendment or waiver. Any failure of the Company to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental Indenture or waiver.
(f) The Company shall give the Holders of the Securities notice of the
effectiveness of any amendment under this Section 8.02.
Section 8.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities at a time when this
Indenture shall be qualified under the TIA shall be set forth in a
supplemental Indenture that complies with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a Holder
is a continuing consent by the Holder and every subsequent Holder of a
Security or portion of a Security that evidences the same indebtedness
Ex. 1.C-21
<PAGE>
as the consenting Holder's Security, even if notation of the consent is not
made on any Security. Any such Holder or subsequent Holder may, however,
revoke the consent as to his Security or portion of a Security if the Trustee
receives written notice of revocation before the date the amendment or waiver
becomes effective. An amendment or waiver becomes effective in accordance with
its terms and thereafter binds every Holder. The Company may fix a record date
for determining which Holders must consent to such amendment or waiver.
Section 8.05. Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment or waiver
on any Security thereafter authenticated. The Company, in exchange for all
Securities, may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver. Failure to make the appropriate notation or
issue a new Security shall not affect the validity and effect of such
amendment or waiver.
Section 8.06. Trustee to Sign Amendments, Etc.
The Trustee shall sign any amendment or supplemental Indenture authorized
pursuant to this Article 8 if the amendment does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental Indenture, the Trustee shall be entitled to receive,
if requested, an indemnity reasonably satisfactory to it and to receive, and,
subject to Section 6.01, shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that
such amendment or supplemental Indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms. Neither the Company nor
JPS Textile may sign an amendment or supplemental Indenture until its Board of
Directors approves it.
ARTICLE 9
Miscellaneous
Section 9.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the TIA through
operation of Section 318(c) thereof, such imposed duties shall control.
Section 9.02. Notices.
(a) Any notice or communication by the Company, JPS Textile, or the Trustee
to the other or others is duly given if in writing and delivered in person or
mailed by first-class mail (registered or certified, return receipt
requested), postage prepaid, telex, telecopier or overnight air courier
guarantying next day delivery, to the other's address:
If to the Company:
JPS Capital Corp.
300 Delaware Ave.
Suite 1704
Wilmington, Delaware 19801
Attention: David H. Taylor, Secretary
Telecopier No.: (864) 271-9939
If to JPS Textile:
JPS Textile Group, Inc.
555 North Pleasantburg Drive, Suite 202
Greenville, South Carolina 29607
Attention: David H. Taylor, Executive Vice President
Telecopier No.: (864) 271-9939
Ex. 1.C-22
<PAGE>
If to the Trustee:
[NAME]
[ADDRESS]
Attention:
Telecopier No.:
(b) The Company, JPS Textile, or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(c) If the Company mails a notice or communication to Holders, it shall mail
a copy to the Trustee, each Agent, and JPS Textile at the same time.
Section 9.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders with
respect to their rights under this Indenture or the Securities. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
(S) 312(c). Any notice or communication given to a Holder shall be mailed to
the Holder at the Holder's address as it appears on the registration books of
the Registrar and shall be sufficiently given if so mailed within the time
prescribed. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above, it is
duly given, whether or not received by the addressee.
Section 9.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or JPS Textile to the Trustee
to take any action under this Indenture, the Company or JPS Textile, as
applicable, shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance satisfactory to the
Trustee (which shall include the statements set forth in Section 9.05)
stating that, in the opinion of the signers, all conditions precedent and
covenants (including any covenants compliance with which constitutes a
condition precedent), if any, provided for in this Indenture relating to
the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section
9.05) stating that, in the opinion of such counsel, all such conditions
precedent and covenants (including any covenants compliance with which
constitutes a condition precedent) have been complied with.
Section 9.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(a) a statement that the person making such certificate or opinion has
read such condition or covenant;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such condition or covenant has been
complied with; and
(d) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with.
Ex. 1.C-23
<PAGE>
Section 9.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 9.07. Legal Holidays.
A "Legal Holiday" is a Saturday, Sunday or day on which banking institutions
or trust companies in the City of New York or at a place of payment are
authorized or obligated by law, regulation or executive order to remain
closed. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday.
Section 9.08. Duplicate Originals.
The parties may sign any number of copies of this Indenture. One signed copy
is enough to prove this Indenture.
Section 9.09. Governing Law.
The internal laws of the State of New York shall govern and be used to
construe this Indenture and the Securities, without regard to the conflicts of
law rules thereof.
Section 9.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or JPS Textile or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 9.11. Successors.
All agreements of the Company and JPS Textile in this Indenture and the
Securities shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successor.
Section 9.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Ex. 1.C-24
<PAGE>
Section 9.13. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
SIGNATURES
JPS Capital Corp.
By: _________________________________
Title:
JPS Textile Group, Inc.
By: _________________________________
Title:
[NAME] as Trustee
By: _________________________________
Title:
Ex. 1.C-25
<PAGE>
EXHIBIT A
(FACE OF SECURITIES)
No.
JPS CAPITAL CORP.
Contingent Payment Notes Due on the Maturity Date
JPS Capital Corp., a corporation organized and existing under the laws of
the State of Delaware (the "Company"), promises to pay to or
registered assigns, on the Maturity Date (such term and the other capitalized
terms used in this Security being used as defined in the below-referenced
Indenture or in paragraph 1 or 2 of this Security), as set forth herein, and
in any event subject to the provisions of paragraph 7 herein, the principal
sum of (the "Initial Amount" of this Security) minus the Reduction
Amount, if any, of this Security as specified in paragraph 1 herein (such
amount, as reduced, being the "Principal Amount" of this Security).
Interest Payment Date: The Maturity Date.
Record Dates: 30 days prior to each JPS Funded Redemption Date and the
Maturity Date.
Redeemed Portion, Issuance Date and Redemption Date of each Related
Surrendered Security:
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
JPS CAPITAL CORP.
By:
Title:
[SEAL]
By:
Title:
Dated:
Certificate of Authentication: This is one
of the Securities referred to in the
within-mentioned Indenture.
[ ]
as Trustee
By:
Authorized Officer
Ex. 1.C.A-1
<PAGE>
(Back of Securities)
JPS CAPITAL CORP.
Contingent Payment Notes
Due on the Maturity Date
1. Reduction of Principal Amount. On the Maturity Date, the Initial Amount
shall be reduced by an amount (the "Reduction Amount") equal to the product of
(a) a fraction, the numerator of which is the Initial Amount and the
denominator of which is the aggregate Initial Amounts of all Securities
outstanding on the Maturity Date (such fraction being the "Applicable
Percentage" for this Security), and (b) the excess, if any, of (i) the
aggregate Initial Amounts of all Securities outstanding on the Maturity Date
over (ii) the aggregate amount of cash on hand at the Company plus the market
value of the Permitted Investments owned by the Company on such date.
2. Interest. The Company promises to pay interest on the sum of the Initial
Amount of this Security plus the Redeemed Portion of each Related Surrendered
Security listed under the caption "Redeemed Portion, Issuance Date and
Redemption Date of each Related Surrendered Security" stated on the face of
this Security, in an amount equal to the Applicable Percentage for this
Security multiplied by the Available Excess Cash (the aggregate amount of such
interest, as so calculated, being the "Accrued Interest" on this Security),
payable as set forth in paragraph 3 below. The term "Available Excess Cash"
means the excess, if any, of (x) the aggregate amount of cash on hand at the
Company and the market value of the Permitted Investments owned by the Company
on the date interest is paid pursuant to this section over (y) the total of
the Initial Amounts of all Securities outstanding on the Issue Date.
3. Method of Payment. Holders must surrender Securities to a Paying Agent to
collect principal and interest payments. Any Initial Amount of this Security
redeemed in any Redemption and any Principal Amount and Accrued Interest shall
be paid in money of the United States of America that at the time of payment
is legal tender for payment of public and private debts, which payment may be
made by check payable in such money.
4. Paying Agent and Registrar. [ ] as Trustee (the "Trustee"), shall act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or Co-Registrar without prior notice. The Company may act in any
such capacity.
5. Indenture. The Company issued the Securities under an Indenture dated as
of [ ], 1997 (the "Indenture") among the Company, JPS Textile, and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. (S)(S) 77aaa-77bbbb) as in effect on the date of the
Indenture. The Securities are subject to, and qualified by, all such terms,
certain of which are summarized herein, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Securities are
obligations of the Company and each Security is limited to an aggregate
principal amount equal to the Principal Amount specified on the face thereof,
as limited by Article 3 of the Indenture and Sections 1, 2, and 7 of the
Securities.
6. Redemption. The Company shall not redeem any portion of the aggregate
Initial Amounts of or any other amount of any of the Securities prior to the
Maturity Date except in accordance with Article 3 of the Indenture and from,
and only from, funds constituting a JPS Funded Deposit. No interest shall be
paid at any time on any Initial Amounts of the Securities or any aggregate
Principal Amounts except as provided in Section 2 of the Securities.
7. Automatic Cancellation. Notwithstanding any other provision of the
Indenture or this Security, if, on the Satisfaction Date, the Principal Amount
and Accrued Interest equals $0, then, upon written notice to the Trustee by
the Company to such effect, the Securities shall, without any payment
(including of any principal or interest) or further action on the part of the
Company or any other Person, be deemed to have been redeemed and cancelled and
no longer an obligation of the Company.
Ex. 1.C.A-2
<PAGE>
8. Notice of Redemption or Payment. Notice of redemption pursuant to
paragraph 6 of this Security shall be mailed at least 30 days but not more
than 60 days prior to a Redemption Date, and notice of payment of the
Principal Amount hereof shall be mailed at least 30 days but no more than 45
days before the Maturity Date, in each case, to each Holder whose Securities
are to be redeemed or repaid, at the registered address of such Holder.
9. Denominations, Transfer, Exchange. Subject to certain exceptions set
forth in the Indenture, the Securities are in registered form without coupons.
The transfer of Securities may be registered and Securities may be exchanged
as provided in the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Security or
portion of a Security selected for Redemption. Also, it need not exchange or
register the transfer of any Securities for a period of 15 days before a
selection of Securities to be redeemed.
10. Persons Deemed Owners. The registered Holder of a Security shall be
treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, including the
last sentence of this paragraph 11, the Indenture or the Securities may be
amended (a) with the consent of the Holders of at least a majority in
aggregate Initial Amounts of the then outstanding Securities and (b) without
the consent of any Holder, the Indenture or the Securities may be amended to
cure any ambiguity, defect or inconsistency, to provide for assumption of the
Company's obligations to Holders or to make any change that does not adversely
affect the rights of any Holder. Except as specified in the Indenture, in no
event shall any amendment to the Indenture or the Securities be effective
until approval thereof by a Final Order of the Bankruptcy Court.
12. Remedies. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or Securities. Subject to certain limitations, Holders
of a majority in aggregate Initial Amounts of the then out-standing Securities
may direct the Trustee in its exercise of any trust or power. The Company must
furnish an annual compliance certificate to the Trustee.
13. Unclaimed Money. If money for the payment of the Aggregate Principal
Amounts or Aggregate Accrued Interest remains unclaimed for two years and six
months after the Maturity Date, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment unless an abandoned property law
designates another person and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
14. Trustee Dealings with the Company and its Affiliates. The Trustee, in
its individual or any other capacity, may make loans to, accept deposits from,
and perform services for the Company or its Affiliates, and may otherwise deal
with the Company or its Affiliates, as if it were not Trustee.
15. Authentication. This Security shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act.)
17. Binding Indenture. Each Holder, by accepting a Security, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee
on Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Securities and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
Ex. 1.C.A-3
<PAGE>
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed hereon.
19. Tax Treatment. The Holder of the Notes agrees to treat the Security as
equity of the Company solely for tax purposes and for all other purposes shall
be deemed to be indebtedness of the Company.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to: JPS Capital Corp., 300
Delaware Ave., Suite 1704, Wilmington, Delaware 19801, Attention: Secretary.
Ex. 1.C.A-4
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
__________________________________________________
(insert assignee's social security or tax
I.D. no.)
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
(Print or type assignee's name, address and zip code) and irrevocably ________
appoint _______________ agent to transfer this Security on the books of
the Company. The agent may substitute another to act for him.
Date: ____________ Your signature: _____________
(Sign exactly as your name appears on the other
side of this Security)
Signature Guaranty: ______________________________
Ex. 1.C.A-5
<PAGE>
EXHIBIT D
TO JOINT PLAN OF
REORGANIZATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JPS TEXTILE GROUP, INC.
AND
AS WARRANT AGENT
________________
WARRANTS TO PURCHASE UP TO 526,316 SHARES OF COMMON STOCK
________________
WARRANT AGREEMENT
DATED AS OF , 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. DEFINITIONS........................................................... 1
2. APPOINTMENT OF WARRANT AGENT.......................................... 3
2.1. Appointment........................................................ 3
3. REGISTRATION, FORM AND EXECUTION OF WARRANTS.......................... 3
3.1. Registration....................................................... 3
3.2. Form of Warrant.................................................... 3
3.3. Countersignature of Warrants....................................... 4
4. EXERCISE OF WARRANTS.................................................. 4
4.1. Manner of Exercise................................................. 4
4.2. Payment of Taxes................................................... 4
4.3. Fractional Shares.................................................. 4
5. TRANSFER, DIVISION AND COMBINATION.................................... 5
5.1. Transfer........................................................... 5
5.2. Division and Combination........................................... 5
5.3. Maintenance of Books............................................... 5
6. ADJUSTMENTS........................................................... 5
6.1. Stock Dividends, Subdivisions and Combinations..................... 5
6.2. Reorganization, Reclassification, Merger or Consolidation.......... 6
6.3. Certain Limitations................................................ 6
7. NOTICES TO WARRANT HOLDERS............................................ 6
7.1. Notice of Adjustments.............................................. 6
7.2. Notice of Corporate Action......................................... 6
8. NO IMPAIRMENT......................................................... 7
9. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY................................ 7
10. STOCK AND WARRANT TRANSFER BOOKS...................................... 7
11. LOSS OR MUTILATION.................................................... 8
12. OFFICE OF COMPANY..................................................... 8
13. REPURCHASE BY COMPANY OF WARRANTS..................................... 8
13.1 Option to Repurchase Warrants...................................... 8
13.2 Payment of Repurchase Price........................................ 8
14. WARRANT AGENT......................................................... 8
14.1 Merger or Consolidation or Change of Name of Warrant Agent......... 8
14.2 Certain Terms and Conditions Concerning the Warrant Agent.......... 9
14.3 Change of Warrant Agent............................................ 10
14.4 Disposition of Proceeds on Exercise of Warrants, Inspection of
Warrant Agreement.................................................. 11
15. MISCELLANEOUS......................................................... 11
15.1 Notice Generally................................................... 11
15.2 Successors and Assigns............................................. 12
15.3 Amendment.......................................................... 12
15.4 Third-Party Beneficiaries.......................................... 12
15.5 Severability....................................................... 12
15.6 Headings........................................................... 12
15.7 Governing Law...................................................... 12
15.8 Counterparts....................................................... 12
EXHIBITS
Exhibit A--Form of Warrant Certificate
Exhibit B--Warrant Agent Fees
</TABLE>
Ex. 1.D-i
<PAGE>
THIS WARRANT AGREEMENT (the "Warrant Agreement"), dated as of , 1997,
is made by and between JPS Textile Group, Inc., a Delaware corporation (the
"Company"), and , a corporation, as warrant agent (the "Warrant
Agent").
WITNESSETH:
WHEREAS, the Company proposes to issue, to holders of allowed equity
interests in class 8, warrants, as hereinafter described (the "Warrants"), to
purchase up to an aggregate of 526,316 shares of its Common Stock pursuant to
Section III.D.8 of the Plan, as confirmed by the United States Bankruptcy
Court for the Southern District of New York (the "Court"), by order entered
, 1997, under title 11 of the United States Code; and
WHEREAS, the Company has requested the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, division, transfer, exchange and exercise of Warrants;
NOW, THEREFORE, in consideration of the foregoing and for the purpose of
defining the terms and provisions of the Warrants and the respective rights
and obligations thereunder and hereunder of the Company, the Warrant Agent,
and the Holders, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and affirmed, the Company and
the Warrant Agent hereby agree as follows:
1. Definitions
As used in this Warrant Agreement, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common Stock
issued by the Company after the Effective Date, other than Warrant Stock.
"Book Value" shall mean, in respect of any share of Common Stock on any date
herein specified, the consolidated book value of the Company as of the last
day of any month immediately preceding such date, divided by the number of
Fully Diluted Outstanding shares of Common Stock as determined in accordance
with GAAP as consistently applied by the Company in the preparation of its
financial statements.
"Business Day" shall mean any day that is not a Saturday or Sunday or a day
on which banks are required or permitted to be closed in the State of New
York.
"Common Stock" shall mean (except where the context otherwise indicates) the
Common Stock, $.01 par value per share, of the Company as constituted on the
Effective Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (1) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of the
Company and which is not subject to redemption and (2) shares of common stock
of any successor or acquiring corporation received by or distributed to the
holders of Common Stock of the Company in the circumstances contemplated by
Section 6.2.
"Company" shall have the meaning assigned to such term in the first
paragraph of this Warrant Agreement.
"Court" shall have the meaning assigned to such term in the recitals to this
Warrant Agreement.
"Current Warrant Price" shall mean, in respect of a share of Common Stock at
any date herein specified, the price at which a share of Common Stock may be
purchased pursuant to this Warrant Agreement on such date. The initial Current
Warrant Price is $98.76, as specified in the second paragraph of the Warrant
Certificate.
Ex. 1.D-1
<PAGE>
"Daily Market Price" shall mean, in respect of any share of Common Stock on
any Trading Day, (1) the last sale price on such day on the principal stock
exchange on which such Common Stock is then listed or admitted to trading or
(2) if no sale takes place on such day on any such exchange, the average of
the last reported closing bid and asked prices on such day as officially
quoted on any such exchange. If the Common Stock is not then listed or
admitted to trading on any stock exchange, the Daily Market Price shall be the
average of the last reported closing bid and asked prices on such day in the
over-the-counter market, as furnished by the National Association of
Securities Dealers Automatic Quotation System or the National Quotation
Bureau, Inc.; provided, that if neither such corporation at the time is
engaged in the business of reporting such prices, the Daily Market Price shall
be as furnished by any similar firm then engaged in such business, or if there
is no such firm, as furnished by any member of the NASD selected mutually by
the Majority Holders and the Company or, if they cannot agree upon such
selection, as selected by two such members of the NASD, one of which shall be
selected by the Majority Holders and one of which shall be selected by the
Company. If the Common Stock is not reported in the over-the-counter market
and no member of the NASD selected pursuant to the preceding sentence will
furnish the Daily Market Price, then the Daily Market Price shall be the Book
Value per share of Common Stock at such date.
"Effective Date" shall have the meaning set forth in the Plan.
"Expiration Date" shall mean _________, __.
"Fully Diluted Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of any Warrants and any other options or
warrants to purchase, or securities convertible into or exchangeable for,
shares of Common Stock outstanding on such date.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as from time to time in effect.
"Holder" shall mean the Person in whose name a Warrant is registered in the
warrant register of the Company maintained by or on behalf of the Company for
such purpose.
"Majority Holders" shall mean the Holders of Warrants exercisable for in
excess of 50% of the aggregate number of shares of Common Stock then
purchasable upon exercise of all Warrants.
"NASD" shall mean the National Association of Securities Dealers, Inc., or
any successor corporation thereto.
"Other Property" shall have the meaning set forth in Section 6.2.
"Outstanding" shall mean, when used with reference to Common Stock, at any
date as of which the number of shares thereof is to be determined, all issued
shares of Common Stock, except shares then owned or held by or for the account
of the Company or any subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, incorporated organization, association, corporation, limited
liability company, limited liability partnership, institution, public benefit
corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean the Company's and JPS Capital Corp.'s Joint Plan of
Reorganization Under Chapter 11 of the United States Bankruptcy Code, as it
may be amended or modified.
"Pricing Period" shall have the meaning set forth in Section 13.1.
"Repurchase Price" shall have the meaning set forth in Section 13.1.
Ex. 1.D-2
<PAGE>
"Trading Day" shall mean any day on which the principal stock exchange on
which the Common Stock is listed or admitted to trading is open or, if the
Common Stock is not then listed or admitted to trading on any stock exchange,
any day on which the National Association of Securities Dealers Automatic
Quotation System or the National Quotation Bureau Inc. reports prices in
respect of securities or, if neither such corporation is then engaged in such
business, any day on which the member of the NASD selected as specified in the
proviso set forth in the definition of "Daily Market Price" furnishes prices
for securities.
"Warrant Agent" shall have the meaning assigned to such term in the first
paragraph of this Warrant Agreement and shall include any successor Warrant
Agent hereunder.
"Warrant Agent's Principal Office" shall mean the principal office of the
Warrant Agent in [New York City, New York] (or such other office of the
Warrant Agent or any successor thereto hereunder acceptable to the Company as
set forth in a written notice provided to the Company and the Holders).
"Warrant Agreement" shall have the meaning assigned to such term in the
first paragraph of this Warrant Agreement.
"Warrant Price" shall mean an amount equal to (1) the number of shares of
Common Stock being purchased upon exercise of a Warrant pursuant to Section
4.1, multiplied by (2) the Current Warrant Price as of the date of such
exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by the
Holders of the Warrants upon the exercise thereof.
"Warrants" shall have the meaning assigned to such term in the recitals to
this Warrant Agreement, and shall include all warrants issued upon transfer,
division or combination of, or in substitution for, any thereof. All Warrants
shall at all times be identical as to terms and conditions and date, except as
to the number of shares of Common Stock for which they may be exercised.
2. Appointment of Warrant Agent
2.1. Appointment. The Company hereby appoints the Warrant Agent to act as
agent for the Company in accordance with the instructions set forth in this
Warrant Agreement, and the Warrant Agent hereby accepts such appointment.
3. Registration, Form and Execution of Warrants
3.1. Registration. All Warrants shall be numbered and shall be registered in
a warrant register maintained at the Warrant Agent's Principal Office by the
Warrant Agent as they are issued. The Company and the Warrant Agent shall be
entitled to treat a Holder as the owner in fact for all purposes whatsoever of
each Warrant registered in such Holder's name.
3.2. Form of Warrant. The text of each Warrant and of the Election to
Purchase Form and Assignment Form shall be substantially as set forth in
Exhibit A attached hereto. Each Warrant shall be executed on behalf of the
Company by its President or one of its Vice Presidents, under its corporate
seal reproduced thereon or facsimile thereof attested by its Secretary or an
Assistant Secretary. The signature of any of such officers on the Warrants may
be manual or facsimile.
Warrants bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrants or did not hold such
offices on the date of this Warrant Agreement.
Warrants shall be dated as of the date of countersignature thereof by the
Warrant Agent either upon initial issuance or upon division, exchange,
substitution or transfer.
Ex. 1.D-3
<PAGE>
3.3. Countersignature of Warrants. Each Warrant shall be manually
countersigned by the Warrant Agent (or any successor to the Warrant Agent then
acting as warrant agent under this Warrant Agreement) and shall not be valid
for any purpose unless so countersigned. Warrants may be countersigned,
however, by the Warrant Agent (or by its successor as warrant agent hereunder)
and may be delivered by the Warrant Agent, notwithstanding that the persons
whose manual signatures appear thereon as proper officers of the Company shall
have ceased to be such officers at the time of such countersignature, issuance
or delivery. The Warrant Agent shall, upon written instructions of the
President, a Vice President, the Secretary, or an Assistant Secretary of the
Company, countersign, issue and deliver Warrants entitling the Holders thereof
to purchase not more than 526,316 shares of Common Stock (subject to
adjustment as set forth herein) and shall countersign and deliver Warrants as
otherwise provided in this Warrant Agreement.
4. Exercise of Warrants
4.1. Manner of Exercise. From and after the Effective Date and until 5:00
p.m., ________, ____ time, on the Expiration Date, a Holder may exercise any of
its Warrants, on any Business Day, for all or any part of the number of shares
of Common Stock purchasable thereunder.
In order to exercise a Warrant, in whole or in part, a Holder shall deliver
to the Company at the Warrant Agent's Principal Office, (1) a written notice
of such Holder's election to exercise such Warrant, which notice shall include
the number of shares of Common Stock to be purchased, (2) payment of the
Warrant Price for the account of the Company and (3) such Warrant. Such notice
shall be substantially in the form of the Election to Purchase Form set forth
on the reverse side of the form of Warrant Certificate attached as Exhibit A
hereto, duly executed by such Holder or its agent or attorney. Upon receipt
thereof, the Warrant Agent shall, as promptly as practicable, and in any event
within five Business Days thereafter, deliver or cause to be delivered to such
Holder an executed certificate or certificates representing the aggregate
number of full shares of Common Stock issuable upon such exercise. The stock
certificate or certificates so delivered shall be, to the extent possible, in
such denomination or denominations as such Holder shall request in the notice
and shall be registered in the name of such Holder or such other name as shall
be designated in such notice. A Warrant shall be deemed to have been exercised
and such certificate or certificates shall be deemed to have been issued, and
such Holder or any other Person so designated to be named therein shall be
deemed to have become a holder of record of such shares for all purposes, as
of the date such notice, together with the check or checks and such Warrant,
is received by the Warrant Agent as described above and all taxes required to
be paid by such Holder, if any, pursuant to Section 4.2 prior to the issuance
of such shares have been paid. If any Warrant shall have been exercised in
part, the Warrant Agent shall, at the time of delivery of the certificate or
certificates representing Warrant Stock, deliver to the Holder a new Warrant
evidencing the rights of such Holder to purchase the unpurchased shares of
Common Stock called for by such Warrant, which new Warrant shall in all other
respects be identical with the Warrant exercised in part, or, at the request
of such Holder, appropriate notation may be made on such exercised Warrant and
the same returned to such Holder. Notwithstanding any provision herein to the
contrary, the Warrant Agent shall not be required to register shares in the
name of any Person who acquired a Warrant (or part thereof) or any Warrant
Stock otherwise than in accordance with such Warrant and this Warrant
Agreement.
Payment of the Warrant Price shall be made at the option of the Holder by
certified or official bank check or any combination thereof, duly executed by
such Holder or by such Holder's attorney duly authorized in writing.
4.2. Payment of Taxes. All shares of Common Stock issuable upon the exercise
of any Warrant pursuant to the terms hereof shall be validly issued, fully
paid and nonassessable and without any preemptive rights. The Holder shall pay
all expenses in connection with, and all taxes and other governmental charges
that may be imposed with respect to, the issuance or delivery thereof.
4.3. Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. Whenever any
distribution of Warrants exercisable into fractional shares of
Ex. 1.D-4
<PAGE>
Common Stock would otherwise be called for, the actual distribution thereof
will reflect a rounding up to the next whole number of Common Stock.
5. Transfer, Division, and Combination
5.1. Transfer. Transfer of any Warrant and all rights hereunder, in whole or
in part, shall be registered in the warrant register of the Company to be
maintained for such purpose at the Warrant Agent's Principal Office, upon
surrender of such Warrant at the Warrant Agent's Principal Office, together
with a written assignment of such Warrant substantially in the form set forth
on the reverse side of the form of Warrant Certificate attached as Exhibit A
hereto duly executed by the Holder or its agent or attorney and payment of all
funds sufficient to pay any taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, and subject to Section 9,
the Company shall execute and the Warrant Agent shall countersign and deliver
a new Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to
the assignor a new Warrant evidencing the portion of such Warrant not so
assigned, and the surrendered Warrant shall promptly be cancelled. A Warrant,
if properly assigned, may be exercised by a new Holder for the purchase of
shares of Common Stock without having a new Warrant issued.
5.2. Division and Combination. Any Warrant may be divided or combined with
other Warrants upon presentation thereof at the Warrant Agent's Principal
Office, together with a written notice specifying the names and denominations
in which new Warrants are to be issued, signed by the Holder or its agent or
attorney. Subject to compliance with Section 5.1, as to any transfer which may
be involved in such division or combination, the Company shall execute and the
Warrant Agent shall countersign and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
5.3. Maintenance of Books. The Warrant Agent agrees to maintain, at the
Warrant Agent's Principal Office, the warrant register for the registration of
warrants and the registration of transfer of the Warrants.
6. Adjustments
The number of shares of Common Stock for which a Warrant is exercisable, and
the price at which such shares may be purchased upon exercise of a Warrant,
shall be subject to adjustment from time to time as set forth in this Section
6.
6.1. Stock Dividends, Subdivisions, and Combinations. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend payable in, or other distribution of,
Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger number
of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller number
of shares of Common Stock,
then (i) the number of shares of Common Stock for which a Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock that a record holder of
the same number of shares of Common Stock for which a Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by the
number of shares of Common Stock for which a Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which a Warrant is exercisable immediately after such adjustment.
Ex. 1.D-5
<PAGE>
6.2. Reorganization, Reclassification, Merger or Consolidation. In case the
Company shall reorganize its capital, reclassify its capital stock,
consolidate or merge with or into another corporation (where the Company is
not the surviving corporation or where there is a change in or distribution
with respect to the Common Stock of the Company), and, pursuant to the terms
of such reorganization, reclassification, merger or consolidation, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu
of common stock of the successor or acquiring corporation ("Other Property"),
are to be received by or distributed to the holders of Common Stock of the
Company, then each Holder shall have the right thereafter to receive, upon
exercise of a Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger or consolidation by a holder of the
number of shares of Common Stock for which a Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger or consolidation, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and condition
of this Warrant Agreement and the Warrants to be performed and observed by the
Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of
shares of the Common Stock for which a Warrant is exercisable which shall be
as nearly equivalent as practicable to the adjustments provided for in this
Section 6. For purposes of this Section 6.2, "common stock of the successor or
acquiring corporation" shall include stock of such corporation of any class
which is not preferred as to dividends or assets over any other class of stock
of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities
which are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or purchase
any such stock. The foregoing provisions of this Section 6.2 shall similarly
apply to successive reorganizations, reclassifications, mergers or
consolidations.
6.3. Certain Limitations. Notwithstanding anything herein to the contrary,
the Company agrees not to enter into any transaction which, by reason of any
adjustment hereunder, would cause the Current Warrant Price to be less than
the par value per share of Common Stock.
7. Notices to Warrant Holders
7.1. Notice of Adjustments. Whenever the number of shares of Common Stock
for which a Warrant is exercisable, or whenever the price at which a share of
such Common Stock may be purchased upon exercise of the Warrants, shall be
adjusted pursuant to Section 6, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company
setting forth, in reasonable detail, the event requiring the adjustment and
the method by which such adjustment was calculated, specifying the number of
shares of Common Stock for which a Warrant is exercisable and describing the
number and kind of any other shares of stock or Other Property for which a
Warrant is exercisable, and any change in the purchase price or prices
thereof, after giving effect to such adjustment or change. The Company shall
promptly cause a signed copy of such certificate to be delivered to each
Holder in accordance with Section 15.1. The Company shall keep at its office
or agency designated by the Company pursuant to Section 12 copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours by any Holder or any prospective purchaser of a
Warrant designated by a Holder thereof.
7.2. Notice of Corporate Action. If at any time
(a) The Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend (other than a cash
dividend payable out of earnings or earned surplus legally available for
the payment of dividends under the laws of the jurisdiction of
incorporation of the Company) or other distribution of Additional Shares of
Common Stock, or
Ex. 1.D-6
<PAGE>
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale, transfer or
other disposition of all or substantially all the property, assets or
business of the Company to another corporation, or
(c) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company,
then, in any one or more of such cases, the Company shall give to each Holder
(i) prompt written notice of the date on which a record date shall be selected
for such dividend, distribution or right or for determining rights to vote in
respect of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or
winding up, prior written notice of the date when the same shall take place.
Such notice in accordance with the foregoing clause also shall specify (i) the
date on which any such record is taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date and time on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up takes place. Each such
written notice shall be sufficiently given if addressed to such Holder at the
last address of such Holder appearing on the books of the Company and
delivered in accordance with Section 15.1.
8. No Impairment
The Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant Agreement or any Warrant. Without limiting
the generality of the foregoing, the Company will (1) not increase the par
value of any shares of Common Stock receivable upon the exercise of a Warrant
above the amount payable therefor upon such exercise immediately prior to such
increase in par value and (2) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of any Warrant.
9. Reservation and Authorization of Common Stock; Registration with or
Approval of any Governmental Authority
From and after the Effective Date, the Company shall at all times reserve
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and
payment therefor in accordance with the terms of this Warrant Agreement and
such Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of the Warrants, the Company shall take
any corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Current Warrant Price.
10. Stock and Warrant Transfer Books
The Company will not at any time, except upon dissolution, liquidation or
winding up of the Company, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise or transfer of
any Warrant.
Ex. 1.D-7
<PAGE>
11. Loss or Mutilation
Upon receipt by the Company and the Warrant Agent from any Holder of
evidence reasonably satisfactory to them of the ownership of and the loss,
theft, destruction or mutilation of such Holder's Warrant and indemnity
reasonably satisfactory to them, and in case of mutilation upon surrender and
cancellation thereof, the Company will execute and the Warrant Agent will
countersign and deliver in lieu hereof a new Warrant of like tenor to such
Holder; provided, in the case of mutilation, no indemnity shall be required if
such Warrant in identifiable form is surrendered to the Company or the Warrant
Agent for cancellation.
12. Office of Company
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant Agreement. The
Company shall initially maintain such an agency at the Warrant Agent's
Principal Offices.
13. Repurchase by Company of Warrants
13.1. Option to Repurchase Warrants. If the Daily Market Price for Common
Stock has been at least 140% of the Current Warrant Price on each of the 30
consecutive Trading Days ending on the third Business Day prior to the date on
which notice of the repurchase is given (the "Pricing Period"), the Company
shall have the right, upon prior written notice to any Holder to repurchase
from such Holder, from any source of funds legally available therefor, on the
10th day following delivery of such notice (or, if such day is not a Business
Day, the next succeeding Business Day) and in the manner set forth in Section
13.2 below, each Warrant then held by such Holder for an amount equal to one
dollar ($1.00) (the "Repurchase Price"); provided, however, that nothing
herein shall preclude the exercise by such Holder of any portion of such
Warrant exercisable at any time prior to such repurchase.
13.2. Payment of Repurchase Price. On the date of any repurchase of Warrants
pursuant to this Section 13, each Holder shall assign to Company such Holder's
Warrant being repurchased, without any representation or warranty, by the
surrender of such Holder's Warrant to the Company at the Warrant Agent's
Principal Office against payment therefor of the Repurchase Price by check
issued by the Company.
14. Warrant Agent
14.1. Merger or Consolidation or Change of Name of Warrant Agent. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided that such
corporation must be eligible for appointment as a successor Warrant Agent
under the provisions of Section 14.3 hereof. If at the time such successor to
the Warrant Agent shall succeed to the agency created by this Warrant
Agreement any of the Warrants shall have been countersigned but not delivered,
any such successor to the Warrant Agent may adopt the countersignature of the
predecessor Warrant Agent and deliver such Warrants so countersigned; and if
at that time any of the Warrants shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrants either in the
name of the predecessor Warrant Agent or in the name of the successor Warrant
Agent; and in all such cases Warrants shall have the full force provided in
the Warrants and in this Warrant Agreement. If at any time the name of the
Warrant Agent shall be changed and at such time any of the Warrants shall have
been countersigned but not delivered, the Warrant Agent may adopt the
countersignatures under its prior name and deliver such Warrants so
countersigned; and if at that time any of the Warrants shall not have been
countersigned, the Warrant Agent may countersign such Warrants either in its
prior name or in its changed name; and in all such cases such Warrants shall
have the full force provided in the Warrants and in this Warrant Agreement.
Ex. 1.D-8
<PAGE>
14.2. Certain Terms and Conditions Concerning the Warrant Agent. The Warrant
Agent undertakes the duties and obligations imposed by this Warrant Agreement
upon the following terms and conditions, by all of which the Company and the
Holders, by their acceptance of Warrants, shall be bound:
(a) Correctness of Statements. The statements contained herein and in the
Warrants shall be taken as statements of the Company and the Warrant Agent
assumes no responsibility for the correctness of any of the same except
such as describe the Warrant Agent or action taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrants
except as herein otherwise provided.
(b) Breach of Covenants. The Warrant Agent shall not be responsible for
any failure of the Company to comply with any of the covenants contained in
this Warrant Agreement or in the Warrants to be complied with specifically
by the Company.
(c) Performance of Duties. The Warrant Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents (which shall not
include its employees) and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(d) Reliance on Counsel. The Warrant Agent may consult at any time with
legal counsel satisfactory to it (who may be counsel for the Company) and
the Warrant Agent shall incur no liability or responsibility to the Company
or to any Holder in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or the advice of
such counsel provided that such counsel shall have been selected with due
care.
(e) Proof of Actions Taken. Whenever in the performance of its duties
under this Warrant Agreement the Warrant Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed conclusively to be proved and established by a
certificate signed by the President, a Vice President, the Secretary or an
Assistant Secretary of the Company and delivered to the Warrant Agent; and
such certificate shall be full authorization to the Warrant Agent for any
action taken or suffered in good faith by it under the provisions of this
Warrant Agreement in reliance upon such certificate.
(f) Compensation. The Company agrees to pay the Warrant Agent reasonable
compensation as set forth in the fee schedule attached hereto as Exhibit B
for all services rendered by the Warrant Agent in the performance of its
duties under this Warrant Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the performance of its duties under
this Warrant Agreement, and to indemnify the Warrant Agent and save it
harmless against any and all liabilities, including judgments, costs and
counsel fees, for anything done or omitted by the Warrant Agent in the
performance of its duties under this Warrant Agreement except as a result
of the Warrant Agent's negligence or bad faith.
(g) Legal Proceedings. The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more Holders shall
furnish the Warrant Agent with reasonable security and indemnity for any
costs and expenses that may be incurred, but this provision shall not
affect the power of the Warrant Agent to take such action as the Warrant
Agent may consider proper, whether with or without any such security or
indemnity. All rights of action under this Warrant Agreement or under any
of the Warrants may be enforced by the Warrant Agent without the possession
of any of the Warrants or the production thereof at any trial or other
proceeding relative thereto, and any such action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant
Agent, and any recovery of judgment shall be for the ratable benefit of the
Holders, as their respective rights or interests may appear.
(h) Other Transactions in Securities of the Company. The Warrant Agent
and any stockholder, director, officer or employee of the Warrant Agent may
buy, sell or deal in any of the Warrants or other securities of the Company
or become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though
Ex. 1.D-9
<PAGE>
it were not Warrant Agent under this Warrant Agreement. Nothing herein
shall preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) Liability of Warrant Agent. The Warrant Agent shall act hereunder
solely as agent, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything that
it may do or refrain from doing in connection with this Warrant Agreement
except for its own negligence or bad faith.
(j) Reliance on Documents. The Warrant Agent will not incur any liability
or responsibility to the Company or to any Holder for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument reasonably believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(k) Validity of Agreements. The Warrant Agent shall not be under any
responsibility in respect of the validity of this Warrant Agreement or the
execution and delivery hereof (except the due execution and delivery hereof
by the Warrant Agent) or in respect of the validity or execution of any
Warrant (except its countersignature and delivery thereof); nor shall the
Warrant Agent by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Warrant Stock (or
other stock) to be issued pursuant to this Warrant Agreement or any
Warrant, or as to whether any Warrant Stock (or other stock) will, when
issued, be validly issued, fully paid and nonassessable, or as to the
Warrant Price or the number or amount of Warrant Stock or other securities
or other property issued upon exercise of any Warrant.
(l) Instructions from Company. The Warrant Agent is hereby authorized and
directed to accept instructions with respect to the performance of its
duties hereunder from the President, a Vice President, the Secretary or any
Assistant Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer or officers.
14.3. Change of Warrant Agent. The Warrant Agent may resign and be
discharged from its duties under this Warrant Agreement by giving to the
Company 30 days' advance notice in writing. The Warrant Agent may be removed
by like notice to the Warrant Agent from the Company. If the Warrant Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent, then any Holder may apply to the
Court for the appointment of a successor to the Warrant Agent. Pending the
appointment of the successor warrant agent, the Company shall perform the
duties of the Warrant Agent. Any successor warrant agent, whether appointed by
the Company or the Court, shall be a bank or trust company, in good standing,
incorporated under the laws of the United States of America or any state
thereof and having at the time of its appointment as warrant agent a combined
capital and surplus of at least $50,000,000. After appointment, the successor
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer
to the successor warrant agent any property at the time held by it hereunder,
and execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Failure to file any notice provided for in this
Section 14.3, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of the successor warrant agent, as the case may be. In the event of such
resignation or removal, the successor warrant agent shall mail, first class,
to each Holder, written notice of such removal or resignation and the name and
address of such successor warrant agent.
14.4. Disposition of Proceeds on Exercise of Warrants; Inspection of Warrant
Agreement. The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently pay to the Company all
immediately available funds received by the Warrant Agent for the purchase of
the Warrant Stock through the exercise of such Warrants. The Warrant Agent
shall, upon request of the Company from time to time, deliver to the Company
such complete reports of registered ownership of the Warrants and such
complete records or transactions with respect to the Warrants and the shares
of Common Stock as the Company may
Ex. 1.D-10
<PAGE>
request. The Warrant Agent shall also make available to the Company for
inspection by the Company's agents or employees, from time to time as the
Company may request, such original books of accounts and records maintained by
the Warrant Agent in connection with the issuance and exercise of Warrants
hereunder, such inspections to occur at the Warrant Agent's Principal Office.
The Warrant Agent shall keep copies of this Warrant Agreement and any notices
given or received hereunder available for inspection by the Company or the
Holders at the Warrant Agent's Principal Office. The Company shall supply the
Warrant Agent from time to time with such numbers of copies of this Warrant
Agreement as the Warrant Agent may request.
15. Miscellaneous
15.1. Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant Agreement shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid or
by telecopy and confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last known
address appearing on the warrant register of the Company maintained for
such purpose.
(b) If to the Company at
JPS Textile Group, Inc.
555 North Pleasantburg Drive, Suite 202
Greenville, South Carolina 29607
Attention: David H. Taylor
Telecopy Number: (864) 271-9939
(c) If to the Warrant Agent at
[To come]
Attention:
Telecopy Number:
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder
shall be deemed to have been duly given or served on the date on which
personally delivered, with receipt acknowledged, telecopied and confirmed by
telecopy answerback or three Business Days after the same shall have been
deposited in the United States mail, whichever is earlier. Failure or delay in
delivering copies of any notice, demand, request, approval, declaration,
delivery or other communication to the Person designated above to receive a
copy shall in no way adversely affect the effectiveness of such notice,
demand, request, approval, declaration, delivery or other communication.
15.2. Successors and Assigns. All covenants and provisions of this Warrant
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
15.3. Amendment. This Warrant Agreement and the Warrants may only be
modified or amended or the provisions hereof and thereof waived with the
written consent of the Company, at least 90% of the holders of the then issued
and outstanding Common Stock, the Warrant Agent and the Majority Holders,
provided that no Warrant may be modified or amended to reduce the number of
shares of Common Stock for which such Warrant is exercisable or to increase
the price at which such shares may be purchased upon exercise of such Warrant
(before giving effect to any adjustment as provided herein and therein)
without the prior written consent of the Holder thereof.
Ex. 1.D-11
<PAGE>
15.4. Third-Party Beneficiaries. All covenants and provisions of this
Warrant Agreement shall inure to the benefit of each holder from time to time
of Common Stock.
15.5. Severability. Wherever possible, each provision of this Warrant
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Warrant Agreement.
15.6. Headings. The headings used in this Warrant Agreement are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant Agreement.
15.7. Governing Law. This Warrant Agreement and the Warrants shall be
governed by the laws of the State of New York, without regard to the
provisions thereof relating to conflict of laws.
15.8. Counterparts. This Warrant Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one
and the same instrument.
IN WITNESS WHEREOF, each of the Company and the Warrant Agent has caused
this Warrant Agreement to be duly executed by its duly authorized officers as
of the date first above written.
JPS Textile Group, Inc.
By: _________________________________
Name:
Title:
, as Warrant Agent
By: _________________________________
Name:
Title:
Ex. 1.D-12
<PAGE>
EXHIBIT A
JPS TEXTILE GROUP, INC.
WARRANT TO PURCHASE COMMON STOCK, PAR VALUE $0.01 PER SHARE,
OF JPS TEXTILE GROUP, INC.
- --------------------------------------------------------------------------------
WARRANT CERTIFICATE NO.: NUMBER OF WARRANTS:
CUSIP NO. ___________
- --------------------------------------------------------------------------------
SEE REVERSE FOR CERTAIN DEFINITIONS
Exercisable from and after , until 5:00 p.m., , time
on , .
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of the number of Warrants set forth above expiring at 5:00
p.m., , time, on , or, if such date is not a business day,
the next succeeding business day (the "Warrants") to purchase Common Stock,
par value $0.01 per share (the "Common Stock"), of JPS Textile Group, Inc., a
Delaware corporation (the "Company"). The Common Stock issuable upon exercise
of Warrants is hereinafter referred to as the "Warrant Stock." Subject to the
immediately succeeding paragraph, each Warrant entitles the holder upon
exercise to purchase from the Company on or before 5:00 p.m., ,
time, on , or, if such date is not a business day, the next
succeeding business day, one share of Common Stock, subject to adjustment as
set forth herein and in the Warrant Agreement dated as of , (the
"Warrant Agreement") by and between the Company and , a corporation,
as warrant agent (the "Warrant Agent"), in whole or in part, at the initial
purchase price of $98.76 per share, on and subject to the terms and conditions
set forth herein and in the Warrant Agreement. Such purchase shall be payable
in lawful money of the United States of America by certified or official bank
check or any combination thereof to the order of the Warrant Agent for the
account of the Company at the principal office of the Warrant Agent, but only
subject to the conditions set forth herein and in the Warrant Agreement. The
number of shares of Common Stock for which each Warrant is exercisable, and
the price at which such shares may be purchased upon exercise of each Warrant,
are subject to adjustment upon the occurrence of certain events as set forth
in the Warrant Agreement. Whenever the number of shares of Common Stock for
which a Warrant is exercisable, or the price at which a share of such Common
Stock may be purchased upon exercise of the Warrants, is adjusted pursuant to
the Warrant Agreement, the Company shall cause to be given to each of the
registered holders of the Warrants at such holders' addresses appearing on the
Warrant register written notice of such adjustment by first class mail postage
pre-paid.
No Warrant may be exercised before p.m., , time, on ,
, or after 5:00 p.m., , , time, on , or, if such date
is not a business day, the next succeeding business day, and to the extent not
exercised by such time such Warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse side hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO THE PROVISIONS THEREOF RELATING TO CONFLICT OF
LAWS.
Ex. 1.D.A-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its President and has caused its corporate seal to be affixed
hereunto or imprinted hereon.
Dated:
(Seal)
Attest: JPS Textile Group, Inc.
_____________________________________ By: _________________________________
Name: Name:
Title: Secretary Title: President
COUNTERSIGNED:
, as Warrant Agent
By: _________________________________
Name:
Title:
[Authorized Signature]
Ex. 1.D.A-2
<PAGE>
[FORM OF REVERSE OF WARRANT CERTIFICATE]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of up to 526,316 Warrants expiring at 5:00 p.m., ,
time, on , or, if such date is not a business day, the next
succeeding business day, entitling the holder on exercise to purchase shares
of Common Stock, par value $0.01 per share, of the Company, and are issued or
to be issued pursuant to the Warrant Agreement, which Warrant Agreement is
hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the
Company and the Holders (the words "Holders" or "Holder" meaning the
registered holders or registered holder of the Warrants). A copy of the
Warrant Agreement may be obtained by the Holder hereof upon written request to
the Company.
Warrants may be exercised at any time on and after p.m., ,
time, on , and on or before 5:00 p.m., , time, on
, or, if such date is not a business day, the next succeeding business
day. The Holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with
payment of the purchase price by certified or official bank check or any
combination thereof to the order of the Warrant Agent for the account of the
Company and the other required documentation. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall
be less than the total number of Warrants evidenced hereby, there shall be
issued to the Holder hereof or his assignee a new Warrant Certificate
evidencing the number of Warrants not exercised.
The Warrant Agreement provides that the number of shares of Common Stock for
which each Warrant is exercisable, and the price at which such shares may be
purchased upon exercise of each Warrant, are subject to adjustment upon the
occurrence of certain events as set forth in the Warrant Agreement. The
Company shall not be required to issue any fractional share of Common Stock
upon the exercise of any Warrant, but the Company shall round up or down to
the nearest share of Common Stock as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant Agent by
the registered Holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of
like tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement without charge except for any tax imposed in connection therewith.
Ex. 1.D.A-3
<PAGE>
[ELECTION TO PURCHASE FORM]
[TO BE EXECUTED ONLY UPON EXERCISE OF WARRANT]
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for the purchase of Shares of Common Stock of JPS TEXTILE GROUP,
INC. and herewith makes payment therefor, all at the price and on the terms
and conditions specified in this Warrant and the Warrant Agreement and
requests that certificates for the shares of Common Stock hereby purchased
(and any securities or other property issuable upon such exercise) be issued
in the name of and delivered to whose address is and, if such
shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and
date for the balance of the shares of Common Stock issuable hereunder be
delivered to the undersigned.
_____________________________________
(NAME OF REGISTERED OWNER)
_____________________________________
(SIGNATURE OF REGISTERED OWNER)
_____________________________________
(STREET ADDRESS)
_____________________________________
(CITY) (STATE)(ZIP CODE)
NOTICE: THE SIGNATURE ON THIS ELECTION TO PURCHASE MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE WITHIN WARRANT IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATSOEVER.
Ex. 1.D.A-4
<PAGE>
[ASSIGNMENT FORM]
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights
of the undersigned under this Warrant, with respect to the number of shares of
Common Stock set forth below:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF ASSIGNEE NO. OF SHARES OF COMMON STOCK
---------------------------- -----------------------------
<S> <C>
</TABLE>
and does hereby irrevocably constitute and appoint attorney-in-fact to
register such transfer on the books of JPS TEXTILE GROUP, INC. maintained for
the purpose, with full power of substitution in the premises.
Dated: ______________________________ Print Name: _________________________
Signature: __________________________
Witness: ____________________________
NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN WARRANT IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
Ex. 1.D.A-5
<PAGE>
EXHIBIT B
,
AS WARRANT AGENT
SCHEDULE OF FEES
Ex. 1.D.B-1
<PAGE>
EXHIBIT E
TO JOINT PLAN OF
REORGANIZATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NONDEBTOR SUBSIDIARIES
JPS Elastomerics Corp.
JPS Converter and Industrial Corp.
JPS Capital Corp.
International Fabrics, Inc.
JPS Carpet Corp.
JPS Auto, Inc.
Ex. 1.E-1
<PAGE>
EXHIBIT F
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RESTATED
CERTIFICATE OF INCORPORATION
OF
JPS CAPITAL CORP.
1. The name of the Corporation is JPS Capital Corp.
2. The original Certificate of Incorporation was filed with the Secretary of
State of the State of Delaware on April 22, 1994.
3. This Restated Certificate of Incorporation has been duly adopted by the
Board of Directors of the Corporation and the Stockholders of the Corporation
in accordance with the provisions of Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware.
4. This Restated Certificate of Incorporation shall become effective at 9:00
a.m. on , 1997.
5. The Corporation's Certificate of Incorporation, as heretofore amended,
shall be restated and further amended so as to read in its entirety as
follows:
FIRST: The name of the Corporation is:
JPS CAPITAL CORP.
SECOND: The address of the Corporation's registered office in the State of
Delaware is c/o The Corporation Trust Company, 1209 Orange Street, in the City
of Wilmington, County of New Castle, State of Delaware. The name of the
registered agent of the Corporation at such address is The Corporation Trust
Company.
THIRD: Subject to the provisions of Article SEVENTH below, the purpose of
the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State
of Delaware, as from time to time amended (the "DGCL").
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is 1000, all of which shares shall be Common
Stock having a par value of $0.01.
FIFTH: For purposes of Articles FIFTH through TENTH of this Restated
Certificate of Incorporation, the following terms are defined as follows:
(i) "Aggregate Accrued Interest," "Aggregate Principal Amount,"
"Bankruptcy Court," "Case," "Final Order," "Initial Amount," "Initial
Amounts," "JPS Funded Deposit," "Maturity Date," "Redemption," and
"Redemption Date" have the meanings ascribed to such terms in the
Contingent Note Indenture;
(ii) "Contingent Note Indenture" means the indenture, dated as of
[ ], 1997, among the Corporation, JPS and [ ] as trustee (the
"Trustee");
(iii) "Contingent Notes" means the Corporation's Contingent Payment Notes
due on the Maturity Date issued pursuant to the Contingent Note Indenture;
(iv) "JPS" means JPS Textile Group, Inc., a Delaware corporation, and its
successors;
Ex. 1.F-1
<PAGE>
(v) "Plan of Reorganization" means the Plan of Reorganization in the
reorganization of JPS under title 11 of the United States Code which has
been confirmed by the Bankruptcy Court pursuant to a Final Order; and
(vi) "Transfer" means (A) any direct or indirect, whether voluntary or
involuntary, knowing or unknowing, by operation of law or otherwise,
disposition of any assets or property, whether by sale, exchange, merger,
consolidation, transfer, conveyance, distribution, inheritance, gift or
otherwise, or (B) any consensual security interest in, pledge or assignment
of, mortgage of, encumbrance upon, lien in or any other preferential
arrangement with respect to, any assets or property. Notwithstanding any
understandings or agreements to which a holder of the Corporation's capital
stock is a party, any arrangement, the effect of which is to Transfer any
or all of the rights arising from ownership of the Corporation's capital
stock, shall be treated as a Transfer of such capital stock for the
purposes of Article SIXTH.
SIXTH: (a) Without the prior approval of the Bankruptcy Court pursuant to a
Final Order, the Corporation shall not have the power or authority to,
directly or indirectly, prohibit, restrict, delay or otherwise hinder (i) the
Redemption of any and all of the Initial Amounts due under the Contingent
Notes on any Redemption Date from the amount of (but only from the amount of)
any JPS Funded Deposit made in connection with such Redemption, or (ii) the
payment on the Maturity Date of any Aggregate Principal Amounts or Aggregate
Accrued Interest then due. Notwithstanding the foregoing, nothing contained in
this Restated Certificate of Incorporation shall restrict the actions taken by
the Corporation or its Tax Affiliates (as defined below) in connection with
the resolution of their liabilities (if any) for Taxes (as defined below).
(b) The Corporation shall not, other than as specifically contemplated by
Article SEVENTH hereof, at any time (i) declare, make, set aside funds for the
payment of, or pay any dividends on shares of its capital stock, or (ii) make
any distributions of cash or other property to any entity, or incur, create or
cause or permit the incurrence or creation of, or suffer to exist, any
consensual obligations or any liens with respect to any of its assets, or
(iii) make any Transfer of any of the assets in its possession.
(c) The Corporation shall not, other than as specifically contemplated by
Article SEVENTH hereof, at any time liquidate or dissolve or permit any
Transfer, or recognize any Transfer of all or any portion of the outstanding
shares of its capital stock or issue any additional shares of its capital
stock to any person or entity.
SEVENTH: (a) The Corporation shall not be permitted to engage in any
activities other than (i) those actions or activities necessary or desirable
to maintain its corporate existence, including the payment of all franchise
taxes, fees and expenses related thereto, (ii) the payment of all costs and
expenses related to the activities of the Corporation which are permitted
hereunder (including, without limitation, the payment of any income taxes
imposed in respect of any earnings from investments made by the Corporation),
(iii) the making of the investments specified in subsection (b) of this
Article SEVENTH, (iv) the holding of assets on behalf of its Tax Affiliates
(as defined below) and the application of such assets in accordance with
subsection (c) of this Article SEVENTH, (v) the Redemption of Contingent Notes
on each Redemption Date from the amount of the JPS Funded Deposit for such
Redemption, (vi) the payment of any Aggregate Principal Amounts and Aggregate
Accrued Interest due on the Maturity Date and the deposit of such amounts (at
the time specified in Article 3 of the Contingent Note Indenture) with the
Paying Agent referred to therein, (vii) the giving of certificates and
notices, and the taking of actions, specified in the Contingent Note Indenture
and the payment of any other amounts specifically stated therein to be paid by
the Corporation, (viii) the hiring of, and payment to, advisors to the
Corporation (including counsel, accountants and other experts), and (ix) the
dissolution and winding-up of the Corporation at the time specified in
paragraph (c) of this Article SEVENTH.
(b) The Corporation shall not make any investments other than in (i) cash,
(ii) marketable direct obligations issued or unconditionally guaranteed by the
United States Government or issued by an agency thereof and backed by the full
faith and credit of the United States, (iii) marketable direct obligations
issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof which, at
the time of acquisition, have one of the two highest ratings obtainable from
either Standard & Poor's
Ex. 1.F-2
<PAGE>
Corporation or Moody's Investors Service, Inc. (or, if at any time neither
Standard & Poor's Corporation nor Moody's Investors Service, Inc. shall be
rating such obligations, then from such other nationally recognized rating
services) and not listed in Credit Watch published by Standard & Poor's
Corporation, (iv) commercial paper, other than commercial paper issued by the
Corporation or any of its affiliates, which, at the time of acquisition, have
a rating of at least A-1 or P-1 from either Standard & Poor's Corporation or
Moody's Investors Service, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Moody's Investors Service, Inc. shall be rating such
obligations, then the highest rating from such other nationally recognized
rating services), and (v) domestic and Eurodollar certificates of deposit or
time deposits or bankers' acceptances maturing within ninety (90) days after
the date of acquisition thereof issued by any commercial bank organized under
the laws of the United States of America or any state thereof or the District
of Columbia or Canada having combined capital and surplus of not less than
$250,000,000.
(c) Upon a Final Determination (as defined below) of the liability of any
Tax Affiliate for any Tax (as defined below) in respect of its taxable year
ended October 29, 1994, the Corporation shall provide such Tax Affiliate (or
JPS, on behalf of and as agent for such Tax Affiliate and any other Tax
Affiliate(s) similarly liable) with an amount equal to such liability for the
sole purpose of satisfying such liability. Upon a Final Determination of the
liability of each and every Tax Affiliate for any and all Taxes in respect of
the taxable year ended October 29, 1994 of each and every Tax Affiliate, the
Corporation shall (i) first, apply the assets held by the Corporation to
satisfy its obligations (if any) pursuant to the preceding sentence, and (ii)
second, after the Corporation's application of the assets held by the
Corporation as provided in clause (i) above and after taking into account all
costs and expenses of the Corporation, apply such assets, on the Maturity
Date, to the payment of the Aggregate Principal Amounts and Aggregate Accrued
Interest payable under the Contingent Note Indenture. In addition, the
Corporation may provide a Tax Affiliate with funds to permit (i) any Tax
Affiliate to pay any such Taxes in respect of which an assessment shall have
been made and a refund is to be sought by any Tax Affiliate and (ii) any Tax
Affiliate to post any bond required to stay assessment and collection of any
such Taxes, whether under Section 7485 of the Internal Revenue Code of 1986,
as amended (the "Code"), or any successor provision, or any comparable
provision of state or local law or otherwise; provided, however, that if there
results a refund of any Taxes so paid or a remittance of any amounts posted as
a bond, the Tax Affiliate shall return to the Corporation an amount equal to
such refund or remittance, together with any interest actually received
thereon (reduced by the amount of any Taxes payable by reason of the receipt
of such interest), which amount shall continue to be held by the Corporation
in furtherance of its obligations under this Article SEVENTH. After satisfying
its obligations as provided in the first two sentences of this subsection (c),
the Corporation shall, in accordance with the DGCL, liquidate and dissolve
(whether by merger or otherwise) and distribute its remaining assets (if any)
to JPS. The obligations of the Corporation pursuant to the first sentence of
this subsection (c) shall be enforceable by a Tax Affiliate whose Tax
liability shall have been subject to a Final Determination (as described
herein).
(d) For purposes of Article SIXTH and this Article SEVENTH:
(i) "Tax Affiliate" means each of JPS, JPS Auto Inc. (f/k/a JPS
Automotive Products Corp.), JPS Converter and Industrial Corp. and any
corporation that filed or was eligible to file a consolidated, combined, or
unitary tax return with any of the foregoing entities (including, without
limitation, the Corporation).
(ii) "Tax" or "Taxes" means any and all federal, state and local income
taxes and franchise taxes based on income payable by any Tax Affiliate or
for which any Tax Affiliate is liable (and any interest, penalties,
additions to tax or other additional amounts incurred in connection with
any such taxes) incurred by a Tax Affiliate for its taxable year ended
October 29, 1994 in connection with the sale of the assets of JPS Auto Inc.
(f/k/a JPS Automotive Products Corp.), the assets comprising the synthetic
industrial fabric division of JPS Converter and Industrial Corp. and JPS's
interest in Cramerton Management Corp. and such other transactions as shall
have been effected pursuant to that certain Asset Purchase Agreement, dated
as of May 25, 1994, in each case determined by taking into account allowed
carrybacks of losses to such taxable year of any Tax Affiliate.
Ex. 1.F-3
<PAGE>
(iii) "Final Determination" shall mean, in respect of any Tax Affiliate
and as to any Tax, the final resolution of liability of such Tax Affiliate
for such Tax, (A) pursuant to Internal Revenue Service Form 870 or 870-AD
(or any successor forms thereto), on the date of acceptance thereof by or
on behalf of the Internal Revenue Service, or by a comparable form under
the laws of other jurisdictions; provided, however, that a Form 870 or 870-
AD or comparable form that reserves (whether by its terms or by operation
of law) the right of the taxpayer to file a claim for refund or the right
of the taxing authority to assert a further deficiency, or both, shall not
constitute a Final Determination in respect of such taxable year of such
Tax Affiliate; (B) by a decision, judgment, decree, or other order by a
court of competent jurisdiction, which shall have become final and
unappealable; (C) by a closing agreement or accepted offer in compromise
under Section 7121 or 7122 of the Code or comparable agreements under the
laws of other jurisdictions; (D) by any allowance of a refund or credit in
respect of an overpayment of Tax, but only after the expiration of all
periods during which such refund may be recovered (including by way of
offset) by the jurisdiction imposing such Tax; or (E) by the expiration of
the applicable statute of limitation on assessment and collection of the
federal income Taxes of such Tax Affiliate for its taxable year ended
October 29, 1994, based on the assumptions that (x) the federal income tax
return for the taxable year ended October 29, 1994 shall have been filed on
July 15, 1995, (y) as of [ ], none of the exceptions set forth in
Sections 6501(c) or (e) of the Internal Revenue Code of 1986, as in effect
on [ ], shall apply and (z) for purposes of this definition, the statute
of limitations on assessment and collection for any state or local income
Tax or any franchise Tax based on income shall be deemed to expire at the
same time as the statute of limitation on assessment and collection of the
federal income Taxes of such Tax Affiliate for its taxable year ended
October 29, 1994.
EIGHTH: In furtherance and not in limitation of powers conferred by law,
subject to any limitations contained elsewhere in this Restated Certificate of
Incorporation, By-laws of the Corporation may be adopted, amended or repealed
by a majority of the Board of Directors of the Corporation, but any By-laws
adopted by the Board of Directors may also be amended or repealed by the
stockholders entitled to vote thereon. Election of directors need not be by
written ballot.
NINTH: (a) A director of the Corporation shall not be personally liable
either to the Corporation or to any of its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, or (ii) for acts or omissions which are not in good faith or
which involve intentional misconduct or knowing violation of the law, or (iii)
for any matter in respect of which such director shall be liable under Section
174 of Title 8 of the General Corporation Law of the State of Delaware or any
amendment thereto or successor provision thereto, or (iv) for any transaction
from which the director shall have derived an improper personal benefit.
Neither amendment nor repeal of this paragraph (a) nor the adoption of any
provision of the Restated Certificate of Incorporation inconsistent with this
paragraph (a) shall eliminate or reduce the effect of this paragraph (a) in
respect of any matter occurring, or any cause of action, suit or claim that,
but for this paragraph (a) of this Article NINTH, would accrue or arise, prior
to such amendment, repeal or adoption of an inconsistent provision. If the
General Corporation Law of Delaware is hereafter amended to permit further
elimination or limitation of the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the General Corporation Law of Delaware as so
amended.
(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to, or testifies in, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (hereinafter, a "proceeding"), other than an action by or in
the right of the Corporation, by reason of the fact that such person is or was
a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise (hereinafter, an "indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
such a director, officer, employee or agent. The indemnitee shall be
indemnified and held harmless by the Corporation to the full extent authorized
by the General
Ex. 1.F-4
<PAGE>
Corporation Law of Delaware, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment),
or by other applicable law as then in effect, against all expense, liability
and loss (including attorneys' fees, judgments, fines, excise taxes under the
Employee Retirement Income Security Act of 1974, as amended from time to time
("ERISA"), penalties and amounts to be paid in settlement) actually and
reasonably incurred or suffered by such indemnitee in connection therewith.
The Corporation may adopt By-laws or enter into agreements with any such
person for the purpose of providing for such indemnification.
(c) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to, or testifies in, any proceeding by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, employee benefit plan, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if
such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Corporation,
provided that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(d) Any indemnification under this Article NINTH (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon
a determination that indemnification of the present or former director,
officer, employee or agent is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the General
Corporation Law of Delaware, as the same exists or hereafter may be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment).
Such determination shall be made with respect to a person who is a director or
officer at the time of such determination (A) by a majority vote of the
directors who were not parties to such action, suit or proceeding (the
"Disinterested Directors"), even though less than a quorum, or (B) by a
committee of Disinterested Directors designated by a majority vote of such
directors, even though less than a quorum or (C) if there are no Disinterested
Directors or if the Disinterested Directors so direct, by independent legal
counsel in a written opinion, or (D) by the stockholders.
(e) Costs, charges and expenses (including attorneys' fees) incurred by a
director, officer, employee or agent of the Corporation in defending a civil
or criminal action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director, officer, employee
or agent to repay all amounts so advanced in the event that it shall
ultimately be determined that such director, officer, employee or agent is not
entitled to be indemnified by the Corporation as authorized in this Article
NINTH. The majority of the Disinterested Directors may, in the manner set
forth above, and upon approval of such director, officer, employee or agent of
the Corporation, authorize the Corporation's counsel to represent such person,
in any action, suit or proceeding, whether or not the Corporation is a party
to such action, suit or proceeding.
(f) Any indemnification or advance of costs, charges and expenses under this
Article NINTH shall be made promptly, and in any event within 60 days upon the
written request of the director, officer, employee or agent. The right to
indemnification or advances as granted by this Article NINTH shall be
enforceable by the director, officer, employee or agent, as the case may be,
in any court of competent jurisdiction, if the Corporation denies such
request, in whole or in part, or if no disposition thereof is made within 60
days. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
Ex. 1.F-5
<PAGE>
part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce
a claim for the advance of costs, charges and expenses under this Article
NINTH where the required undertaking has been received by the Corporation)
that the claimant has not met the standard of conduct set forth in the General
Corporation Law of Delaware, as the same exists or hereafter may be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment),
but the burden of proving such defense shall be on the Corporation. Neither
the failure of the Corporation (including its Board of Directors, its
independent legal counsel and its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the General Corporation Law of Delaware, as
the same exists or hereafter may be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), nor the fact that there has been an
actual determination by the Corporation (including its Board of Directors, its
independent legal counsel and its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
(g) The indemnification and advancement of expenses provided by this Article
NINTH shall not be deemed exclusive of any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under any
law (common or statutory), by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding office or while
employed by or acting as agent for the Corporation, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the estate, heirs, executors and administrators of
such person. All rights to indemnification under this Article NINTH shall be
deemed to be a contract between the Corporation and each director, officer,
employee or agent of the Corporation who serves or served in such capacity at
any time while this Article NINTH is in effect. Any repeal or modification of
this Article NINTH shall not in any way diminish any rights to indemnification
of such director, officer, employee or agent or the obligations of the
Corporation arising hereunder with respect to any action, suit or proceeding
arising out of, or relating to, any actions, transactions or facts occurring
prior to the final adoption of such modification or repeal. For purposes of
this Article NINTH, references to "the Corporation" include all constituent
corporations absorbed in a consolidation or merger as well as the resulting or
surviving corporation, so that any person who is or was a director, officer,
employee or agent of such a constituent corporation or is or was serving at
the request of such constituent corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under the provisions of this
Article NINTH, with respect to the resulting or surviving corporation, as he
or she would if he or she had served the resulting or surviving corporation in
the same capacity.
(h) The Corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him or her and incurred by him or her
or on his or her behalf in any such capacity, or arising out of his or her
status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of this
Article NINTH, provided, however, that such insurance is available on
acceptable terms, which determination shall be made by a vote of a majority of
the Board of Directors.
(i) If this Article NINTH or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each person entitled to indemnification under the first
paragraph of this Article NINTH as to all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes, penalties
and amounts to be paid in settlement) actually and reasonably incurred or
suffered by such person and for which indemnification is available to such
person pursuant to this
Ex. 1.F-6
<PAGE>
Article NINTH to the full extent permitted by any applicable portion of this
Article NINTH that shall not have been invalidated and to the full extent
permitted by applicable law.
TENTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation, in the
manner now or hereinafter prescribed by statute, and all rights conferred by
the stockholders herein are granted subject to this reservation.
Notwithstanding the foregoing, none of the provisions of this sentence of
Article TENTH or of Articles FIFTH, SIXTH, SEVENTH or NINTH of this Restated
Certificate of Incorporation may be amended, altered, changed or repealed
without the prior approval of the Bankruptcy Court pursuant to a Final Order
(as defined in the Plan of Reorganization).
IN WITNESS WHEREOF, JPS Capital Corp. has caused this Restated Certificate
of Incorporation to be signed by [ ], its [ ], and attested by
[ ], its [ ], this [ ] day of [ ], 1997.
JPS Capital Corp.
By: _________________________________
Name:
Title:
Attest:
By: _________________________________
Name:
Title:
Ex. 1.F-7
<PAGE>
EXHIBIT G
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMENDED AND RESTATED
BY-LAWS
OF
JPS CAPITAL CORP.
(A DELAWARE CORPORATION)
ARTICLE I
Stockholders
Section 1. Fixing Date for Determination of Stockholders of Record. In order
that the Corporation may determine the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled
to receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors and which record date: (1) in the case of
determination of stockholders entitled to vote at any meeting of stockholders
or adjournment thereof, shall, unless otherwise required by law, not be more
than sixty nor less than ten days before the date of such meeting; (2) in the
case of determination of stockholders entitled to express consent to corporate
action in writing without a meeting, shall not be more than ten days after the
date upon which the resolution fixing the record date is adopted by the Board
of Directors; and (3) in the case of any other action, shall not be more than
sixty days prior to such other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
of the Board of Directors is required by law, shall be the first date on which
a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation in accordance with applicable law, or,
if prior action by the Board of Directors is required by law, shall be at the
close of business on the day on which the Board of Directors adopts the
resolution taking such prior action; and (3) the record date for determining
stockholders for any other purpose shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
Section 2. Annual Meetings. The annual meeting of stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year at such date and
time, and at such place within or without the State of Delaware, as shall be
designated by the Board of Directors and set forth in the notice or in a duly
executed waiver of notice thereof.
Section 3. Special Meetings. Special meetings of stockholders for the
transaction of such business as may properly come before the meeting may be
called by order of the Board of Directors or by stockholders holding together
at least 25% in voting power of all the shares of the Corporation entitled to
vote at the meeting, and shall be held at such date and time, and at such
place within or without the State of Delaware, as may be specified in the
notice or in a duly executed waiver of notice of such meeting. Whenever the
directors shall fail to fix such place, the meeting shall be held at the
principal executive office of the Corporation. Only such business as is stated
in the written notice of special meeting may be acted upon thereat.
Ex. 1.G-1
<PAGE>
Section 4. Notice of Meetings. Except as otherwise provided by law, written
notice of all meetings of the stockholders, stating the place, date and hour
of the meeting and the place within the city or other municipality or
community at which the list of stockholders may be examined, shall be mailed
or delivered to each stockholder not less than 10 nor more than 60 days prior
to the meeting. Notice of any special meeting shall state in general terms the
purpose or purposes for which the meeting is to be held. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at such stockholder's address as
it appears on the records of the Corporation. If, prior to the time of
mailing, the Secretary shall have received from any stockholder entitled to
vote a written request that notices intended for such stockholder are to be
mailed to an address other than the address that appears on the records of the
Corporation, notices intended for such stockholder shall be mailed to the
address designated in such request.
Notice of a special meeting may be given by the person or persons calling
the meeting, or, upon the written request of such person or persons, by the
Secretary of the Corporation on behalf of such person or persons. If the
person or persons calling a special meeting of stockholders give notice
thereof, such person or persons shall forward a copy thereof to the Secretary.
Every request to the Secretary for the giving of notice of a special meeting
of stockholders shall state the purpose or purposes of such meeting.
Section 5. Waiver of Notice. Notice of any annual or special meeting of
stockholders need not be given to any stockholder entitled to vote at such
meeting who files a written waiver of notice with the Secretary, duly executed
by the person entitled to notice, whether before or after the meeting. Neither
the business to be transacted at, nor the purpose of, any meeting of
stockholders need be specified in any written waiver of notice. Attendance of
a stockholder at a meeting, in person or by proxy, shall constitute a waiver
of notice of such meeting, except as provided by law.
Section 6. Adjournments. When a meeting is adjourned to another date, hour
or place, notice need not be given of the adjourned meeting if the date, hour
and place thereof are announced at the meeting at which the adjournment is
taken. If the adjournment is for more than 30 calendar days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the adjourned meeting. At the adjourned meeting any business may be
transacted which might have been transacted at the original meeting.
When any meeting is convened the presiding officer may adjourn the meeting
if (a) no quorum is present for the transaction of business or (b) the Board
of Directors determines that adjournment is necessary or appropriate to enable
the stockholders (i) to consider fully information which the Board of
Directors determines has not been made sufficiently or timely available to
stockholders or (ii) otherwise to exercise effectively their voting rights.
Section 7. Stockholder Lists. The officer who has charge of the stock ledger
of the Corporation shall prepare and make, at least 10 days before every
meeting of stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or, if not so specified, at the place where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by this section or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 8. Quorum. Except as otherwise provided by law or the Corporation's
Restated Certificate of Incorporation, a quorum for the transaction of
business at any meeting of stockholders shall consist of the holders of record
of a majority in voting power of the issued and outstanding shares of the
capital stock of the
Ex. 1.G-2
<PAGE>
Corporation entitled to vote at the meeting, present in person or by proxy. If
there be no such quorum, the holders of a majority in voting power of such
shares so present or represented may adjourn the meeting from time to time,
without further notice, until a quorum shall have been obtained. When a quorum
is once present it is not broken by the subsequent withdrawal of any
stockholder.
Section 9. Organization. Meetings of stockholders shall be presided over by
the Chairman, if any, or if none or in the Chairman's absence the Vice-
Chairman, if any, or if none or in the Vice-Chairman's absence the President,
if any, or if none or in the President's absence a Vice-President, or, if none
of the foregoing is present, by a chairman to be chosen by the stockholders
entitled to vote who are present in person or by proxy at the meeting. The
Secretary of the Corporation, or in the Secretary's absence an Assistant
Secretary, shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present, the presiding officer of the
meeting shall appoint any person present to act as secretary of the meeting.
Section 10. Voting; Proxies; Required Vote. (a) At each meeting of
stockholders, every stockholder shall be entitled to vote in person or by
proxy (but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period), and, unless the
Restated Certificate of Incorporation provides otherwise, shall have one vote
for each share of stock entitled to vote registered in the name of such
stockholder on the books of the Corporation on the applicable record date
fixed pursuant to these By-laws. At all elections of directors the voting may
but need not be by ballot. Except as otherwise required by law or the Restated
Certificate of Incorporation, any action other than the election of directors
shall be authorized by a majority in voting power of the shares present in
person or represented by proxy at the meeting.
(b) Any action required or permitted to be taken at any meeting of
stockholders may, except as otherwise required by law or the Restated
Certificate of Incorporation, be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of record of the issued and outstanding
capital stock of the Corporation having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted, and the
writing or writings are filed with the permanent records of the Corporation.
Prompt notice of the taking of corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
(c) Where a separate vote by a class or classes, present in person or
represented by proxy, is required by law or the Restated Certificate of
Incorporation, the affirmative vote of the majority in voting power of shares
of such class or classes present in person or represented by proxy at the
meeting shall be the act of such class, unless otherwise provided in the
Corporation's Restated Certificate of Incorporation.
Section 11. Inspectors. The Board of Directors, in advance of any meeting,
may, but need not, unless required by law, appoint one or more inspectors of
election to act at the meeting or any adjournment thereof. If an inspector or
inspectors are not so appointed, the person presiding at the meeting may, but
need not, unless required by law, appoint one or more inspectors. In case any
person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his or her duties, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting, the inspector or inspectors,
if any, shall make a report in writing of any challenge, question or matter
determined by such inspector or inspectors and execute a certificate of any
fact found by such inspector or inspectors.
Ex. 1.G-3
<PAGE>
ARTICLE II
Board of Directors
Section 1. General Powers. The business, property and affairs of the
Corporation shall be managed by, or under the direction of, the Board of
Directors, which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by law or by the Restated Certificate
of Incorporation directed or required to be exercised or done by the
stockholders.
Section 2. Qualification; Number; Term; Remuneration. (a) Each director
shall be at least 18 years of age. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
number of directors constituting the entire Board shall initially consist of 7
members and henceforward shall consist of not less than 3 nor more than 10
members, the exact number of which shall be fixed from time to time by action
of the Board of Directors, one of whom may be selected by the Board of
Directors to be its Chairman. The use of the phrase "entire Board" herein
refers to the total number of directors which the Corporation would have if
there were no vacancies or unfilled newly created directorships. Except as
provided in Section 11 of this Article II, directors shall be elected by a
plurality of the votes cast at annual meetings of stockholders, and each
director so elected shall hold office as provided by the Restated Certificate
of Incorporation. None of the directors need be stockholders of the
Corporation.
(b) Directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal.
(c) Directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors and may be paid a fixed sum for attendance
at each meeting of the Board of Directors or a stated salary as director. No
such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
Section 3. Quorum and Manner of Voting. Except as otherwise provided by law,
a majority of the entire Board shall constitute a quorum. A majority of the
directors present, whether or not a quorum is present, may adjourn a meeting
from time to time to another time and place without notice. The vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 4. Places of Meetings. Meetings of the Board of Directors may be
held at any place within or without the State of Delaware, as may from time to
time be fixed by resolution of the Board of Directors, or as may be specified
in the notice of meeting.
Section 5. Annual Meeting. Following the annual meeting of stockholders, the
newly elected Board of Directors shall meet for the purpose of the election of
officers and the transaction of such other business as may properly come
before the meeting. Such meeting may be held without notice immediately after
the annual meeting of stockholders at the same place at which such
stockholders' meeting is held.
Section 6. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as the Board of Directors shall from
time to time by resolution determine. Notice need not be given of regular
meetings of the Board of Directors held at times and places fixed by
resolution of the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board, President, Vice-
Chairman or by a majority of the directors then in office.
Section 8. Notice of Special Meetings. A notice of the place, date and time
and the purpose or purposes of each special meeting of the Board of Directors
shall be given to each director by mailing the same at least
Ex. 1.G-4
<PAGE>
two days before the special meeting, or by telegraphing or telephoning the
same or by delivering the same personally not later than the day before the
day of the meeting.
Section 9. Organization. At all meetings of the Board of Directors, the
Chairman, if any, or if none or in the Chairman's absence or inability to act
the President, or in the President's absence or inability to act any Vice-
President who is a member of the Board of Directors, or in such Vice-
President's absence or inability to act a chairman chosen by the directors,
shall preside. The Secretary of the Corporation shall act as secretary at all
meetings of the Board of Directors when present, and, in the Secretary's
absence, the presiding officer may appoint any person to act as secretary.
Section 10. Resignation. Any director may resign at any time upon written
notice to the Corporation and such resignation shall take effect upon receipt
thereof by the President or Secretary, unless otherwise specified in the
resignation. Any or all of the directors may be removed, with or without
cause, by the holders of a majority in voting power of the shares of stock
outstanding and entitled to vote for the election of directors.
Section 11. Vacancies. Unless otherwise provided in these By-laws, vacancies
on the Board of Directors, whether caused by resignation, death,
disqualification, removal, an increase in the authorized number of directors
or otherwise, may be filled by the affirmative vote of a majority of the
remaining directors, although less than a quorum, or by a sole remaining
director, or at a special meeting of the stockholders, by the holders of
shares entitled to vote for the election of directors.
Section 12. Action by Written Consent. Any action required or permitted to
be taken at any meeting of the Board of Directors may be taken without a
meeting if all the directors consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors.
Section 13. Meetings by Conference Telephone, etc. Any one or more members
of the Board, or of any committee thereof, may participate in a meeting of the
Board, or of such committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such means
shall constitute presence in person at such meeting.
ARTICLE III
Committees
Section 1. Appointment. From time to time the Board of Directors by
resolution may appoint any committee or committees for any purpose or
purposes, to the extent lawful, which shall have powers as shall be determined
and specified by the Board of Directors in the resolution of appointment. In
the absence or disqualification of a member of a committee, the member or
members present at any meeting and not disqualified from voting, whether or
not such member or members constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Section 2. Procedures, Quorum and Manner of Acting. Each committee shall fix
its own rules of procedure, and shall meet where and as provided by such rules
or by resolution of the Board of Directors. Except as otherwise provided by
law, the presence of a majority of the then appointed members of a committee
shall constitute a quorum for the transaction of business by that committee,
and in every case where a quorum is present the affirmative vote of a majority
of the members of the committee present shall be the act of the committee.
Each committee shall keep minutes of its proceedings, and actions taken by a
committee shall be reported to the Board of Directors.
Section 3. Action by Written Consent. Any action required or permitted to be
taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if all the members of the committee consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the committee.
Ex. 1.G-5
<PAGE>
Section 4. Term; Termination. In the event any person shall cease to be a
director of the Corporation, such person shall simultaneously therewith cease
to be a member of any committee appointed by the Board of Directors.
ARTICLE IV
Officers
Section 1. Election and Qualifications. The Board of Directors shall elect
the officers of the Corporation, which shall include a President and a
Secretary, and may include, by election or appointment, one or more Vice-
Presidents (any one or more of whom may be given an additional designation of
rank or function), a Treasurer and such Assistant Secretaries, such Assistant
Treasurers and such other officers as the Board of Directors may from time to
time deem proper. Each officer shall have such powers and duties as may be
prescribed by these By-laws and as may be assigned by the Board of Directors
or the President. Any two or more offices may be held by the same person
except the offices of President and Secretary.
Section 2. Term of Office and Remuneration. The term of office of all
officers shall be one year and until their respective successors have been
elected and qualified, but any officer may be removed from office, either with
or without cause, at any time by the Board of Directors. Any vacancy in any
office arising from any cause may be filled for the unexpired portion of the
term by the Board of Directors. The remuneration of all officers of the
Corporation may be fixed by the Board of Directors or in such manner as the
Board of Directors shall provide.
Section 3. Resignation; Removal. Any officer may resign at any time upon
written notice to the Corporation and such resignation shall take effect upon
receipt thereof by the President or Secretary, unless otherwise specified in
the resignation. Any officer shall be subject to removal, with or without
cause, at any time by vote of a majority of the entire Board.
Section 4. Chairman of the Board. The Chairman of the Board of Directors, if
there be one, shall preside at all meetings of the Board of Directors and
shall have such other powers and duties as may from time to time be assigned
by the Board of Directors.
Section 5. President. The President shall have general management and
supervision of the property, business and affairs of the Corporation and over
its other officers; may appoint and remove assistant officers and other agents
and employees, other than any Vice-President, the Secretary, the Treasurer,
any Assistant Secretaries or Assistant Treasurers or any officers which the
Board of Directors may from time to time appoint; and may execute and deliver
in the name of the Corporation powers of attorney, contracts, bonds and other
obligations and instruments.
Section 6. Vice-President. A Vice-President may execute and deliver in the
name of the Corporation contracts and other obligations and instruments
pertaining to the regular course of the duties of said office, and shall have
such other authority as from time to time may be assigned by the Board of
Directors or the President.
Section 7. Treasurer. The Treasurer shall in general have all duties
incident to the position of Treasurer and such other duties as may be assigned
by the Board of Directors or the President.
Section 8. Secretary. The Secretary shall in general have all the duties
incident to the office of Secretary and such other duties as may be assigned
by the Board of Directors or the President.
Section 9. Assistant Officers. Any assistant officer shall have such powers
and duties of the officer such assistant officer assists as such officer or
the Board of Directors shall from time to time prescribe.
Ex. 1.G-6
<PAGE>
ARTICLE V
Books and Records
Section 1. Location. The books and records of the Corporation may be kept at
such place or places within or outside the State of Delaware as the Board of
Directors or the respective officers in charge thereof may from time to time
determine. The record books containing the names and addresses of all
stockholders, the number and class of shares of stock held by each and the
dates when they respectively became the owners of record thereof shall be kept
by the Secretary as prescribed in the By-laws and by such officer or agent as
shall be designated by the Board of Directors.
Section 2. Addresses of Stockholders. Notices of meetings and all other
corporate notices may be delivered personally or mailed to each stockholder at
the stockholder's address as it appears on the records of the Corporation.
ARTICLE VI
Certificates Representing Stock
Section 1. Certificates; Signatures. The shares of the Corporation shall be
represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any
or all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall
be entitled to have a certificate, signed by or in the name of the Corporation
by the Chairman or Vice-Chairman of the Board of Directors, or the President
or Vice-President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, representing the
number of shares registered in certificate form. Any and all signatures on any
such certificate may be facsimiles. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with
the same effect as if he were such officer, transfer agent or registrar at the
date of issue. The name of the holder of record of the shares represented
thereby, with the number of such shares and the date of issue, shall be
entered on the books of the Corporation.
Section 2. Transfers of Stock. Upon compliance with provisions contained in
the Corporation's Restated Certificate of Incorporation restricting the
transfer or registration of transfer of shares of stock, shares of capital
stock shall be transferable on the books of the Corporation only by the holder
of record thereof in person, or by duly authorized attorney, upon surrender
and cancellation of certificates for a like number of shares, properly
endorsed, and the payment of all taxes due thereon.
Section 3. Fractional Shares. The Corporation may, but shall not be required
to, issue certificates for fractions of a share where necessary to effect
authorized transactions, or the Corporation may pay in cash the fair value of
fractions of a share as of the time when those entitled to receive such
fractions are determined, or it may issue scrip in registered or bearer form
over the manual or facsimile signature of an officer of the Corporation or of
its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a stockholder except as therein
provided.
The Board of Directors shall have power and authority to make all such rules
and regulations as it may deem expedient concerning the issue, transfer and
registration of certificates representing shares of the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. The Corporation may issue
a new certificate of stock in place of any certificate, theretofore issued by
it, alleged to have been lost, stolen or destroyed, and the Board of Directors
may require the owner of any lost, stolen or destroyed certificate, or his
legal representative, to give the Corporation a bond sufficient to indemnify
the Corporation against any claim that may be made against it on account of
the alleged loss, theft or destruction of any such certificate or the issuance
of any such new certificate.
Ex. 1.G-7
<PAGE>
ARTICLE VII
Dividends
The Corporation shall not declare, make, set aside funds for the payment of,
or pay any dividends on shares of its capital stock other than as specifically
permitted by the Restated Certificate of Incorporation.
ARTICLE VIII
Indemnification of Directors and Officers
Section 1. Nature of Indemnity. (a) To the fullest extent permitted by
applicable law, including the provisions of the General Corporation Law of the
State of Delaware, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to, or testifies in, any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), other than an
action by or in the right of the Corporation, by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise (hereinafter an "indemnitee"), whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
such a director, officer, employee or agent. The indemnitee shall be
indemnified and held harmless by the Corporation to the full extent authorized
by the General Corporation Law of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment), or by other applicable law as then in effect,
against all expense, liability and loss (including attorneys' fees, judgments,
fines, excise taxes under the Employee Retirement Income Security Act of 1974,
as amended from time to time ("ERISA"), penalties and amounts to be paid in
settlement) actually and reasonably incurred or suffered by such indemnitee in
connection therewith.
(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to, or testifies in, any proceeding by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, employee benefit plan, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if
such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Corporation,
provided that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 2. Procedure. Any indemnification under this Article VIII (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of Delaware, as the same exists or hereafter may be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment).
Such determination shall be made with respect to a person who is a director or
officer at the time of such determination (A) by a majority vote of the
directors who were not parties to such action, suit or proceeding (the
"Disinterested Directors"), even though less than a quorum, or (B) by a
committee of Disinterested Directors designated by a majority vote of such
directors, even though less than a
Ex. 1.G-8
<PAGE>
quorum, or (C) if there are no Disinterested Directors or if the Disinterested
Directors so direct, by independent legal counsel in a written opinion, or (D)
by the stockholders.
Section 3. Advances for Expenses. Costs, charges and expenses (including
attorneys' fees) incurred by a director, officer, employee or agent of the
Corporation in defending a civil or criminal action, suit or proceeding shall
be paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay all amounts so advanced in the
event that it shall ultimately be determined that such director, officer,
employee or agent is not entitled to be indemnified by the Corporation as
authorized in this Article VIII. The majority of the Disinterested Directors
may, in the manner set forth above, and upon approval of such director,
officer, employee or agent of the Corporation, authorize the Corporation's
counsel to represent such person, in any action, suit or proceeding, whether
or not the Corporation is a party to such action, suit or proceeding.
Section 4. Procedure for Indemnification. Any indemnification or advance of
costs, charges and expenses under this Article VIII shall be made promptly,
and in any event within 60 days upon the written request of the director,
officer, employee or agent. The right to indemnification or advances as
granted by this Article VIII shall be enforceable by the director, officer,
employee or agent, as the case may be, in any court of competent jurisdiction,
if the Corporation denies such request, in whole or in part, or if no
disposition thereof is made within 60 days. Such person's costs and expenses
incurred in connection with successfully establishing his or her right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of costs,
charges and expenses under this Article VIII where the required undertaking
has been received by the Corporation) that the claimant has not met the
standard of conduct set forth in the General Corporation Law of Delaware, as
the same exists or hereafter may be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation (including
its Board of Directors, its independent legal counsel and its stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the General
Corporation Law of Delaware, as the same exists or hereafter may be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
that said law permitted the Corporation to provide prior to such amendment),
nor the fact that there has been an actual determination by the Corporation
(including its Board of Directors, its independent legal counsel and its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 5. Other Rights; Continuation of Right to Indemnification. The
indemnification and advancement of expenses provided by this Article VIII
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any law
(common or statutory), by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding office or while
employed by or acting as agent for the Corporation, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the estate, heirs, executors and administers of such
person. All rights to indemnification under this Article VIII shall be deemed
to be a contract between the Corporation and each director, officer, employee
or agent of the Corporation who serves or served in such capacity at any time
while this Article VIII is in effect. Any repeal or modification of this
Article VIII shall not in any way diminish any rights to indemnification of
such director, officer, employee or agent or the obligations of the
Corporation arising hereunder with respect to any action, suit or proceeding
arising out of, or relating to, any actions, transactions or facts occurring
prior to the final adoption of such modification or repeal. For the purposes
of this Article VIII, references to "the Corporation" include all constituent
corporations absorbed in a consolidation or merger as well as the resulting or
surviving corporation, so that any person who is or was a
Ex. 1.G-9
<PAGE>
director, officer, employee or agent of such a constituent corporation or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the
provisions of this Article VIII, with respect to the resulting or surviving
corporation, as he or she would if he or she had served the resulting or
surviving corporation in the same capacity.
Section 6. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was or has agreed to
become a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her or on his or her behalf in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of this
Article VIII; provided, however, that such insurance is available on
acceptable terms, which determination shall be made by a vote of a majority of
the Board of Directors.
Section 7. Savings Clause. If this Article VIII or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each person entitled to
indemnification under the first paragraph of this Article VIII as to all
expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes, penalties and amounts to be paid in settlement) actually
and reasonably incurred or suffered by such person and for which
indemnification is available to such person pursuant to this Article VIII to
the full extent permitted by any applicable portion of this Article VIII that
shall not have been invalidated and to the full extent permitted by applicable
law.
ARTICLE IX
Corporate Seal
The corporate seal shall have inscribed thereon the name of the Corporation
and the year of its incorporation, and shall be in such form and contain such
other words and/or figures as the Board of Directors shall determine. The
corporate seal may be used by printing, engraving, lithographing, stamping or
otherwise making, placing or affixing, or causing to be printed, engraved,
lithographed, stamped or otherwise made, placed or affixed, upon any paper or
document, by any process whatsoever, an impression, facsimile or other
reproduction of said corporate seal.
ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE XI
Waiver of Notice
Whenever notice is required to be given by these By-laws or by the Restated
Certificate of Incorporation or by law, a written waiver thereof, signed by
the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent to notice.
Ex. 1.G-10
<PAGE>
ARTICLE XII
Bank Accounts, Drafts, Contracts, Activities, Etc.
Section 1. Bank Accounts and Drafts. In addition to such bank accounts as
may be authorized by the Board of Directors, the primary financial officer or
any person designated by said primary financial officer, whether or not an
employee of the Corporation, may authorize such bank accounts to be opened or
maintained in the name and on behalf of the Corporation as he may deem
necessary or appropriate, payments from such bank accounts to be made upon and
according to the check of the Corporation in accordance with the written
instructions of said primary financial officer, or other person so designated
by the Treasurer.
Section 2. Contracts. The Board of Directors may authorize any person or
persons, in the name and on behalf of the Corporation, to enter into or
execute and deliver any and all deeds, bonds, mortgages, contracts and other
obligations or instruments, and such authority may be general or confined to
specific instances.
Section 3. Proxies; Powers of Attorney; Other Instruments. The Chairman, the
President or any other person designated by either of them shall have the
power and authority to execute and deliver proxies, powers of attorney and
other instruments on behalf of the Corporation in connection with the rights
and powers incident to the ownership of stock by the Corporation. The
Chairman, the President or any other person authorized by proxy or power of
attorney executed and delivered by either of them on behalf of the Corporation
may attend and vote at any meeting of stockholders of any company in which the
Corporation may hold stock, and may exercise on behalf of the Corporation any
and all of the rights and powers incident to the ownership of such stock at
any such meeting, or otherwise as specified in the proxy or power of attorney
so authorizing any such person. The Board of Directors, from time to time, may
confer like powers upon any other person.
Section 4. Financial Reports. The Board of Directors may appoint the primary
financial officer or other fiscal officer and/or the Secretary or any other
officer to cause to be prepared and furnished to stockholders entitled thereto
any special financial notice and/or financial statement, as the case may be,
which may be required by any provision of law.
ARTICLE XIII
Amendments
The Board of Directors shall have power to adopt, amend or repeal By-laws.
By-laws adopted by the Board of Directors may be repealed or changed, and new
By-laws made, by the stockholders.
Ex. 1.G-11
<PAGE>
EXHIBIT H1
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JPS TEXTILE GROUP, INC.
555 NORTH PLEASANTBURG DRIVE, SUITE 202
GREENVILLE, SOUTH CAROLINA 29607
[ ], 1997
Mr. Jerry E. Hunter
111 Sanderling Drive
Greenville, South Carolina 29607
Dear Jerry:
We are writing with respect to your employment by JPS Textile Group, Inc.
(the "Company") as President and Chief Executive Officer of the Company. The
Company acknowledges and recognizes the value of your experience and abilities
to the Company since the beginning of your employment with the Company, and
desires to continue to retain and make secure for itself such experience and
abilities on the terms and subject to the conditions set forth in this
agreement (the "Agreement").
1. Employment. The Company agrees to employ you and you agree to be employed
by the Company commencing on the consummation of the Joint Plan of
Reorganization of the Company and its wholly owned subsidiary, JPS Capital
Corp., dated [INSERT DATE] (the "Effective Date") and ending on the third
anniversary thereof (unless sooner terminated as hereinafter provided) (the
"Employment Period"), on the terms and subject to the conditions set forth in
this Agreement; provided, however, that commencing on the third anniversary of
the Effective Date and each anniversary thereafter, the Employment Period
shall automatically be extended for one additional year (the "Extended
Employment Period") unless not later than the end of the Employment Period or
the Extended Employment Period, as the case may be, the Company or you shall
have given written notice to the other not to extend the Employment Period or
any Extended Employment Period. Unless specifically provided to the contrary,
the Employment Period shall be deemed to include any Extended Employment
Period.
2. Duties. (a) You shall continue to be nominated as a director of the
Company, subject to your election thereto by the Board of Directors of the
Company (the "Board") or the stockholders of the Company. In addition, you
shall be employed as the President and Chief Executive Officer of the Company.
In such capacities, you shall serve as a senior executive officer of the
Company and shall have the duties and responsibilities prescribed for such
positions by the By-Laws of the Company, and shall have such other duties and
responsibilities as may from time to time be prescribed by the Board and are
customarily performed by someone in your position, provided that such duties
and responsibilities are consistent with your positions as President and Chief
Executive Officer of the Company. In the performance of your duties, you shall
be subject to the supervision and direction of the Board.
(b) Subject to the terms of your employment hereunder, you shall devote such
time as is reasonably necessary to the proper performance of your duties and
responsibilities as President and Chief Executive Officer of the Company. You
hereby represent and warrant to the Company that, except as described above,
you have no obligations under any existing employment or service agreement and
that your performance of the services required of you hereunder will not
conflict with your other existing obligations described above.
Ex. 1.H1-1
<PAGE>
Mr. Jerry E. Hunter
[ ], 1997
Page 2
3. Compensation.
(a) (i) Base Salary. During the term of your employment hereunder, the
Company shall pay you, and you shall accept from the Company for your
services, a salary at the rate of not less than $380,000 per year (the "Base
Salary"), payable in accordance with the Company's policy with respect to the
compensation of executives. The Board shall annually review your performance
and determine, in its sole discretion, whether or not to increase your Base
Salary and, if so, the amount of such increase.
(ii) Bonus. In addition to your Base Salary, unless you voluntarily
terminate your employment for other than Good Reason (as hereinafter
defined), or are terminated by the Company for Cause (as hereinafter
defined), you will be eligible to participate in the 1997 Management
Incentive Bonus Plan (the "1997 Bonus Plan") and receive a bonus in an
amount and based upon the attainment of the performance goals specified
therein. The Board shall establish a performance-based annual bonus program
for senior executives of the Company including you for fiscal years after
1997 (a "Future Bonus Plan") and award you an annual bonus opportunity
thereunder which is not less favorable than the opportunity provided
pursuant to the 1997 Bonus Plan without restricting the discretion of the
Board to set reasonable targets and criteria for such incentive
compensation.
(iii) Retention Grant. In addition to your Base Salary, you will receive
on the Effective Date a cash payment in the amount of $256,274 and 32,852
shares of common stock of the Company.
(iv) Incentive Compensation and Other Plans. During the term of your
employment hereunder, you shall participate in any incentive compensation
(including stock options, restricted stock and/or other long-term incentive
compensation), deferred compensation, savings and retirement plans,
practices, policies and programs as adopted and approved by the Board from
time to time.
(b) Reimbursement of Expenses. During your employment, you will be entitled
to receive prompt reimbursement for all reasonable expenses incurred by you in
performing your services hereunder, provided that you properly account
therefor in accordance with Company policy.
4. Vacations. During your employment, you shall be entitled to reasonable
vacations from time to time in accordance with the regular procedures of the
Company governing senior executives. You shall also be entitled to all paid
holidays given by the Company to its senior executives.
5. Participation in Benefit Plans; Automobile.
(a) Benefit Plans. You shall be entitled to participate in and to receive
benefits under all the Company's employee benefit plans and arrangements in
effect on the date hereof, and you shall also be entitled to participate in or
receive benefits under any pension or retirement plan, savings plan, or
health-and-accident plan made available by the Company in the future to its
senior executives and other key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements and provided that you meet the eligibility requirements
thereof.
(b) Automobile. You shall be entitled to the use of an automobile supplied
by the Company. If you choose to use such automobile, the cost of insurance,
repair and maintenance shall be borne by the Company. If you elect not to
accept a Company automobile, you shall receive an annual payment of Five
Thousand Six Hundred Dollars ($5,600) in lieu of such automobile.
6. Other Offices. You further agree to serve without additional
compensation, if elected or appointed thereto, as an officer or director of
any of the Company's subsidiaries or affiliates.
7. Termination.
(a) Death. Your employment hereunder shall terminate upon your death.
Ex. 1.H1-2
<PAGE>
Mr. Jerry E. Hunter
[ ], 1997
Page 3
(b) Disability. In the event of your permanent disability (as hereinafter
defined) during the term of your employment hereunder, the Company shall have
the right, upon written notice to you, to terminate your employment hereunder,
effective upon the giving of such notice. For the purposes hereof, "permanent
disability" shall be defined as any physical or mental disability or
incapacity which renders you incapable of fully performing the services
required of you in accordance with your obligations hereunder for a period of
150 consecutive days or for shorter periods aggregating 150 days during any
period of twelve (12) consecutive months.
(c) Cause. The Company may terminate your employment hereunder for "Cause."
For purposes hereof, termination for "Cause" shall mean termination after:
(i) your violation of any of the provisions of paragraph 9 hereof;
(ii) your commission of an intentional act of fraud, embezzlement, theft
or dishonesty against the Company or its affiliates;
(iii) your conviction of (or pleading by you of nolo contendere to) any
crime which constitutes a felony or misdemeanor involving moral turpitude
or which might, in the reasonable opinion of the Company, cause
embarrassment to the Company; or
(iv) the gross neglect or willful failure by you to perform your duties
and responsibilities in all material respects as set forth in paragraph 2
hereof, if such breach of duty is not cured within 30 days after written
notice thereof to you by the Board.
For purposes of clause (iv), no act, or failure to act, on your part shall be
deemed "willful" unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your act, or failure to act, was in the
best interest of the Company.
(d) Termination by You. You may terminate your employment hereunder for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean (A) any
assignment to you of any duties (other than incident to a promotion)
materially different than or in addition to those contemplated by, or any
limitation of your powers in any respect not contemplated by, paragraph 2
hereof, provided that you first deliver written notice thereof to the Board
and the Company shall have failed to cure such non-permitted assignment or
limitation within thirty (30) days after receipt of such written notice, (B) a
reduction in your rate of base salary or the failure to maintain incentive
bonus arrangements substantially similar in earnings potential to those in
effect on the Effective Date, or a material reduction in your fringe benefits
or any other material failure by the Company to comply with paragraphs 3
through 5 hereof, provided that you first deliver written notice thereof to
the Board and the Company shall have failed to cure such reduction or failure
within thirty (30) days after receipt of such written notice, (C) your being
required to relocate your principal residence from its existing location
without your consent, or (D) you elect to terminate your employment no earlier
than six months following a Change in Control (as hereinafter defined),
provided that you first deliver written notice thereof to the Board.
For purposes of this Agreement, a "Change in Control" means the
occurrence of any one of the following events following the Effective Date
(other than the consummation of the Joint Plan of Reorganization of the
Company and its wholly owned subsidiary, JPS Capital Corp.): (a) any person
or other entity (other than any of the Company's subsidiaries), including
any person as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), becoming the beneficial owner, as
defined in Rule 13d-3 of the Exchange Act, directly or indirectly, of more
than fifty percent (50%) of the total combined voting power of all classes
of capital stock of the Company ordinarily entitled to vote for the
election of directors of the Company, (b) the sale of all or substantially
all of the property or assets of the Company (other than a sale to any of
the Company's subsidiaries), (c) the consolidation or merger of the Company
with another corporation (other than with any of the Company's
Ex. 1.H1-3
<PAGE>
Mr. Jerry E. Hunter
[ ], 1997
Page 4
subsidiaries or in which the Company is the surviving corporation), the
consummation of which would result in the shareholders of the Company
immediately before the occurrence of the consolidation or merger owning, in
the aggregate, less than 50% of the voting stock of the surviving entity
immediately following the occurrence of such consolidation or merger, or
(d) a change in the Board occurring with the result that the members of the
Board on the Effective Date (the "Incumbent Directors") no longer
constitute a majority of such Board, provided that any person becoming a
director whose election or nomination for election was supported by a
majority of the Incumbent Directors (other than you if you are a Director)
shall be considered an Incumbent Director for purposes hereof.
(e) Notice. Any termination by the Company pursuant to paragraphs 7(b) or
7(c) above or by you pursuant to paragraph 7(d) above shall be communicated by
written Notice of Termination to the other party hereto. For the purposes
hereof, a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so indicated.
(f) Date of Termination. "Date of Termination" shall mean (i) if your
employment is terminated by your death, the date of your death, and (ii) if
your employment is terminated for any other reason, the date on which a Notice
of Termination is given.
8. Compensation Upon Termination of Employment or During Disability.
Subject to paragraph 8(f) below:
(a) Death. If your employment shall be terminated by reason of your death,
the Company shall pay or grant, to such person as you shall designate in a
notice filed with the Company, or, if no such person shall be designated, to
your estate as a lump sum death benefit, (i) an amount equal to any accrued
but unpaid Base Salary at the time of your death, plus an additional payment
equal to your Base Salary for the period from such date through the end of the
month following the month in which you die, (ii) an amount equal to any
accrued but unpaid bonus under the 1997 Bonus Plan or any bonus payable
pursuant to any Future Bonus Plans, to the extent earned but not paid with
respect to any year prior to the year in which your death occurs, and (iii) a
pro rata portion (based on the number of days worked) of the bonus payable
under the 1997 Bonus Plan or any Future Bonus Plan in effect for the year in
which your death occurs based upon the assumption that the performance goals
established under the applicable program with respect to the entire year in
which your death occurs are met. In addition, you shall retain all stock
options that are vested in accordance with the terms of the stock option plan
and grant letter controlling such stock options, with such options remaining
exercisable for six months from the date of your death and you shall receive
such additional benefits as may be provided by the then existing plans,
programs and/or arrangements of the Company. This amount and these benefits
shall be exclusive of and in addition to any payments your widow,
beneficiaries or estate may be entitled to receive pursuant to any pension or
employee benefit plan maintained by the Company. Your designated beneficiary
or the executor of your estate, as the case may be, shall accept the payment
provided for in this paragraph 8 in full discharge and release of the Company
of and from any further obligations under this Agreement.
(b) Disability. During any period that you fail to perform your duties
hereunder as a result of incapacity due to physical or mental illness, you
shall continue to receive your full Base Salary until your employment is
terminated pursuant to paragraph 7(b) hereof. If your employment is terminated
by the Company pursuant to paragraph 7(b), the Company shall pay to you in a
lump sum payment, an amount equal to (i) any accrued but unpaid bonus under
the 1997 Bonus Plan or any bonus payable pursuant to any Future Bonus Plans,
to the extent earned but not paid with respect to any year prior to the year
in which your disability occurs; and (ii) a pro rata portion (based on the
number of days worked) of the bonus payable under the 1997 Bonus Plan or any
Future Bonus Plan in effect for the year in which your disability occurs based
upon the assumption that the performance goals established under the
applicable program with respect to the entire year in which your disability
occurs are met.
Ex. 1.H1-4
<PAGE>
Mr. Jerry E. Hunter
[ ], 1997
Page 5
In addition, you shall retain all stock options that are vested in accordance
with the terms of the stock option plan and grant letter controlling such
stock options, with such options remaining exercisable for six months from the
date of your disability and you shall receive such additional benefits as may
be provided by the then existing plans, programs and/or arrangements of the
Company. During any such period and thereafter you shall continue to bear the
obligations provided for in paragraph 9 below in accordance with the terms of
such paragraph 9.
(c) Cause or Other Than Good Reason. If your employment shall be terminated
for Cause or you shall terminate your employment other than for Good Reason,
the Company shall be discharged and released of and from any further
obligations under this Agreement except for any Base Salary through the Date
of Termination or the date on which you terminate your employment at the rate
in effect at the time Notice of Termination is given or the date on which you
terminate your employment, to the extent required by law. Thereafter you shall
continue to have the obligations provided for in paragraph 9 below. Nothing
contained herein shall be deemed to be a waiver by the Company of any rights
that it may have against you in respect of your actions which gave rise to the
termination of your employment for Cause or for any reason other than for Good
Reason.
(d) Other Than for Cause or For Good Reason. If the Company shall terminate
your employment other than pursuant to paragraphs 7(b) or 7(c) hereof or if
you shall terminate your employment for Good Reason, then:
(i) The Company shall continue to pay you your Base Salary, at the rate
in effect at the time that the Notice of Termination is given in accordance
with paragraph 7(e) hereof, without interest through the later of (A) the
third anniversary of the Effective Date and (B) one year from the Date of
Termination, in accordance with normal payroll practices; provided,
however, that in the event of your death prior to the expiration of payment
hereunder your estate or beneficiary shall receive the remaining amount
hereunder in a lump sum payment;
(ii) The Company shall pay you an amount equal to the sum of (A) any
bonus earned as of the Date of Termination under the 1997 Bonus Plan or any
Future Bonus Plan for a fiscal year ending prior to the Date of Termination
but not paid as of such date, (B) a pro rata portion (based on the number
of days worked) of the target bonus (not in excess of fifty percent (50%)
of your Base Salary) payable under the 1997 Bonus Plan or any Future Bonus
Plan in effect for the fiscal year in which your Date of Termination occurs
(determined without regard to whether the performance goals established
under the applicable program are met) and (C) an amount equal to your
target bonus (not in excess of fifty percent (50%) of your Base Salary)
under the 1997 Bonus Plan or any Future Bonus Plan in effect for the fiscal
year in which your Date of Termination occurs (determined without regard to
whether the performance goals established under the applicable program are
met), multiplied by (1) if the Date of Termination is during the initial
three year Employment Period, the greater of (x) the number (not in excess
of three) of years and fractions of years remaining in the initial three
year Employment Period or (y) one or (2) if the Date of Termination is
during any Extended Employment Period, one;
(iii) You shall become fully vested in any stock options, with such
options remaining exercisable for six months from the date of your
termination of employment; and
(iv) The Company shall maintain in full force and effect, for your
continued benefit for twenty-four months after termination of employment,
all employee benefit plans and programs providing health and/or life
insurance benefits in which you were entitled to participate immediately
prior to the Date of Termination provided that your continued participation
is possible under the general terms and provisions of such plans and
programs. In the event that your participation in any such plan or program
is barred, the Company shall provide you with comparable benefits under a
mirror benefit plan. Notwithstanding the above, if you are employed by a
new employer and are eligible to receive comparable coverage from such
employer (including the waiver of any pre-existing condition limitation) at
a comparable cost to you, you shall no longer be eligible to receive
coverage under this praragraph.
Ex. 1.H1-5
<PAGE>
Mr. Jerry E. Hunter
[ ], 1997
Page 6
(e) Pension Eligible Retirement. If during the initial three year Employment
Period with the prior written consent of the Board or at any time after such
Employment Period you retire and are eligible to receive an immediate benefit
under the Retirement Pension Plan for Employees of JPS Textile Group, Inc.,
the Company shall pay to you as a lump sum payment, (i) an amount equal to any
accrued but unpaid Base Salary at the time of your retirement, (ii) an amount
equal to any accrued but unpaid bonus under the 1997 Bonus Plan or any bonus
payable pursuant to any Future Bonus Plans, to the extent earned but not paid
with respect to any year prior to the year in which your retirement occurs;
(iii) a pro rata portion (based on the number of days worked) of the bonus
payable under the 1997 Bonus Plan or any Future Bonus Plan in effect for the
year in which your retirement occurs based upon the assumption that the
performance goals established under the applicable program with respect to the
entire year of your retirement occurs are met; and (iv) the Company shall
maintain in full force and effect, for your continued benefit for twenty-four
months after termination of employment, all employee benefit plans and
programs providing health and/or life insurance benefits in which you were
entitled to participate immediately prior to the Date of Termination provided
that your continued participation is possible under the general terms and
provisions of such plans and programs; provided, that in the event that your
participation in any such plan or program is barred, the Company shall provide
you with comparable benefits under a mirror benefit plan. In addition, you
shall retain any stock options vested, such vesting having been determined as
a ratio the numerator of which is the time elapsed from the Effective Date
through the date of your retirement and the denominator of which is three (3)
years, with such options remaining exercisable for six months from the date of
your retirement and you shall receive such additional benefits as may be
provided by the then existing plans, programs and/or arrangements of the
Company.
(f) Parachute Payment. Notwithstanding anything herein to the contrary, if
any of the payments or benefits received or to be received by you in
connection with a Change in Control or your termination of employment (whether
such payments or benefits are provided pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person whose
actions result in a Change in Control or any person affiliated with the
Company or such person) (such payments or benefits being hereinafter referred
to as the "Total Payments") would be subject to the excise tax (the "Excise
Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), then the payments under this paragraph 8 hereof shall be
reduced (by the minimal amount necessary) so that no portion of the Total
Payments is subject to the Excise Tax.
For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) all of the
Total Payments shall be treated as "parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (the
"Tax Counsel") selected by the Company and reasonably acceptable by you, such
payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code, (ii) all
"excess parachute payments" within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject to the Excise Tax unless, in the opinion of
Tax Counsel, such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the "base amount" (as defined
in Section 280G(b)(3) of the Code) allocable to such payment, or are otherwise
not subject to the Excise Tax, and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by Tax Counsel in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
9. Restrictive Covenants and Confidentiality; Injunctive Relief.
(a) You agree, as a condition to the performance by the Company of its
obligations hereunder, particularly its obligations under paragraph 3 hereof,
that during the term of your employment, except for a termination of
employment without Cause or for Good Reason, hereunder and during the further
period of one (1) year after the termination of such employment, you shall
not, without the prior written approval of the Board, directly or indirectly
through any other person, firm or corporation:
Ex. 1.H1-6
<PAGE>
Mr. Jerry E. Hunter
[ ], 1997
Page 7
(i) Solicit, raid, entice or induce any person, firm or corporation that
presently is or at any time during the term of your employment hereunder
shall be a customer of the Company, or any of its subsidiary companies, to
become a customer of any other person, firm or corporation, and you shall
not approach any such person, firm or corporation for such purpose or
authorize or knowingly approve the taking of such actions by any other
person;
(ii) Solicit, raid, entice or induce any person that presently is or at
any time during the term of your employment hereunder shall be an employee
of the Company, or any of its subsidiary companies, to become employed by
any person, firm or corporation, and you shall not approach any such
employee for such purpose or authorize or knowingly approve the taking of
such actions by any other person; or
(iii) Engage, participate, make any financial investment in, or become
employed by any person, firm, corporation or other business enterprise in
the United States which is engaged, directly or indirectly, during the term
of your employment or at the time of your termination of employment, as the
case may be, which (x) derives in excess of 20% of its gross revenues from
the sale of products substantially the same as the products of the Company
and/or any of its subsidiary companies or (y) has substantially the same
customer base for the same products as the Company and/or any of its
subsidiary companies. The foregoing covenant shall not be construed to
preclude you from making any investments in the securities of any company,
whether or not engaged in competition with the Company and/or any of its
subsidiary companies, to the extent that such securities are actively
traded on a national securities exchange or in the over-the-counter market
in the United States or any foreign securities exchange and, after giving
effect to such investment, you do not beneficially own securities
representing more than 5% of the combined voting power of the voting
securities of such company.
(b) Recognizing that the knowledge, information and relationship with
customers, suppliers, and agents, and the knowledge of the Company's and its
subsidiary companies' business methods, systems, plans and policies which you
shall hereafter establish, receive or obtain as an employee of the Company or
its subsidiary companies, are valuable and unique assets of the respective
businesses of the Company and its subsidiary companies, you agree that, during
and after the term of your employment hereunder, you shall not (otherwise than
pursuant to your duties hereunder) disclose or use, without the prior written
approval of the Board, any such knowledge or information pertaining to the
Company or any of its subsidiary companies, their business, personnel or
policies, to any person, firm, corporation or other entity, for any reason or
purpose whatsoever. The provisions of this paragraph 9 shall not apply to
information which is or shall become generally known to the public or the
trade (except by reason of your breach of your obligations hereunder),
information which is or shall become available in trade or other publications,
information known to you prior to entering the employ of the Company, and
information which you are required to disclose by law or an order of a court
of competent jurisdiction (provided that prior to your disclosure of any such
information you shall provide the Company with reasonable notice and a
reasonable opportunity to seek a protective order to prevent such disclosure).
(c) The provisions of paragraph 9(b) above shall survive the termination of
your employment hereunder, irrespective of the reason therefor.
(d) You acknowledge that the services to be rendered by you are of a
special, unique and extraordinary character and, in connection with such
services, you will have access to confidential information vital to the
Company's and its subsidiary companies' businesses. By reason of this, you
consent and agree that if you violate any of the provisions of this Agreement
with respect to diversion of the Company's or its subsidiary companies'
customers or employees, or confidentiality, the Company and its subsidiary
companies would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or otherwise,
the Company shall be entitled to an injunction restraining you from committing
or continuing any such violation of this Agreement.
Ex. 1.H1-7
<PAGE>
Mr. Jerry E. Hunter
[ ], 1997
Page 8
10. Deductions and Withholdings. The Company shall be entitled to withhold
any amounts payable under this Agreement on account of payroll taxes and
similar matters as are required by applicable law, rule or regulation of
appropriate governmental authorities.
11. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
reasonably satisfactory to you, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled to hereunder if you terminated your employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall include any successor
to the Company's business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 11 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation
of law.
(b) This Agreement and all your rights hereunder shall inure to the benefit
of and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you hereunder if you
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your devisee,
legatee, or other designee or, if there be no such designee, to your estate.
Your obligations hereunder may not be delegated, and except as otherwise
provided herein relating to the designation of a devisee, legatee or other
designee, you may not assign, transfer, pledge, encumber, hypothecate or
otherwise dispose of this Agreement or any of your rights hereunder, and any
such attempted delegation or disposition shall be null and void and without
effect.
12. Notice. For purposes of this Agreement, notices and all other
communications provided for shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to you:
Mr. Jerry E. Hunter
111 Sanderling Drive
Greenville, South Carolina 29607
If to the Company:
JPS Textile Group, Inc.
555 North Pleasantburg Drive, Suite 202
Greenville, South Carolina 29607
Attention: Board of Directors
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by you and by the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement constitutes the
complete
Ex. 1.H1-8
<PAGE>
Mr. Jerry E. Hunter
[ ], 1997
Page 9
understanding between the parties with respect to your employment and
supersedes any other prior oral or written agreements, arrangements or
understandings between you and the Company. This Agreement amends, restates
and supersedes any existing employment, retention, severance and change-in-
control agreements (collectively, the "Prior Agreements") between you and the
Company and/or any of its subsidiary companies upon the Effective Date, and
any and all claims under or in respect of the Prior Agreements that you may
have or assert shall, as of the Effective Date, be governed by, and completely
satisfied and discharged in accordance with, the terms and conditions of this
Agreement. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement may
not be changed or terminated orally but only by an agreement in writing signed
by the parties hereto. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
South Carolina.
14. Arbitration. All differences, claims or matters in dispute arising out
of this Agreement, the breach hereof or otherwise arising between the Company
or any of its affiliates and you shall, at the election of either party, by
notice to the other, be submitted to arbitration by the American Arbitration
Association or its successor, in Greenville, South Carolina. Such arbitration
shall be governed by the then existing rules of the American Arbitration
Association and the laws of the State of South Carolina as then in effect. The
expenses, including your reasonable attorneys' fees, in connection with such
arbitration shall be borne by the Company.
15. Validity; Effectiveness. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
If the foregoing is satisfactory, please so indicate by signing and
returning to the Company the enclosed copy of this letter whereupon this will
constitute our agreement on the subject.
JPS TEXTILE GROUP, INC.
By: _________________________
NAME: [INSERT NAME]
TITLE: [BOARD MEMBER]
ACCEPTED AND AGREED TO:
_____________________________
Jerry E. Hunter
Ex. 1.H1-9
<PAGE>
EXHIBIT H2
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JPS TEXTILE GROUP, INC.
555 NORTH PLEASANTBURG DRIVE, SUITE 202
GREENVILLE, SOUTH CAROLINA 29607
[ ], 1997
Mr. David H. Taylor
105 Holbrook Trail
Greenville, South Carolina 29605
Dear David:
We are writing with respect to your employment by JPS Textile Group, Inc.
(the "Company") as Executive Vice President--Finance and Secretary of the
Company. The Company acknowledges and recognizes the value of your experience
and abilities to the Company since the beginning of your employment with the
Company, and desires to continue to retain and make secure for itself such
experience and abilities on the terms and subject to the conditions set forth
in this agreement (the "Agreement").
1. Employment. The Company agrees to employ you and you agree to be employed
by the Company commencing on the consummation of the Joint Plan of
Reorganization of the Company and its wholly owned subsidiary, JPS Capital
Corp., dated [insert date] (the "Effective Date") and ending on the third
anniversary thereof (unless sooner terminated as hereinafter provided) (the
"Employment Period"), on the terms and subject to the conditions set forth in
this Agreement; provided, however, that commencing on the third anniversary of
the Effective Date and each anniversary thereafter, the Employment Period
shall automatically be extended for one additional year (the "Extended
Employment Period") unless not later than the end of the Employment Period or
the Extended Employment Period, as the case may be, the Company or you shall
have given written notice to the other not to extend the Employment Period or
any Extended Employment Period. Unless specifically provided to the contrary,
the Employment Period shall be deemed to include any Extended Employment
Period.
2. Duties. (a) You shall continue to be nominated as a director of the
Company, subject to your election thereto by the Board of Directors of the
Company (the "Board") or the stockholders of the Company. In addition, you
shall be employed as the Executive Vice President--Finance and Secretary of
the Company. In such capacities, you shall serve as a senior executive officer
of the Company and shall have the duties and responsibilities prescribed for
such positions by the By-Laws of the Company, and shall have such other duties
and responsibilities as may from time to time be prescribed by the Board and
are customarily performed by someone in your position, provided that such
duties and responsibilities are consistent with your positions as Executive
Vice President--Finance and Secretary of the Company. In the performance of
your duties, you shall be subject to the supervision and direction of the
Chief Executive Officer of the Company.
(b) Subject to the terms of your employment hereunder, you shall devote such
time as is reasonably necessary to the proper performance of your duties and
responsibilities as Executive Vice President--Finance and Secretary of the
Company. You hereby represent and warrant to the Company that, except as
described above, you have no obligations under any existing employment or
service agreement and that your performance of the services required of you
hereunder will not conflict with your other existing obligations described
above.
3. Compensation.
(a) (i) Base Salary. During the term of your employment hereunder, the
Company shall pay you, and you shall accept from the Company for your
services, a salary at the rate of not less than $225,000 per year (the "Base
Salary"), payable in accordance with the Company's policy with respect to the
compensation of
Ex. 1.H2-1
<PAGE>
Mr. David H. Taylor
[ ], 1997
Page 2
executives. The Board shall annually review your performance and determine, in
its sole discretion, whether or not to increase your Base Salary and, if so,
the amount of such increase.
(ii) Bonus. In addition to your Base Salary, unless you voluntarily
terminate your employment for other than Good Reason (as hereinafter
defined), or are terminated by the Company for Cause (as hereinafter
defined), you will be eligible to participate in the 1997 Management
Incentive Bonus Plan (the "1997 Bonus Plan") and receive a bonus in an
amount and based upon the attainment of the performance goals specified
therein. The Board shall establish a performance-based annual bonus program
for senior executives of the Company including you for fiscal years after
1997 (a "Future Bonus Plan") and award you an annual bonus opportunity
thereunder which is not less favorable than the opportunity provided
pursuant to the 1997 Bonus Plan without restricting the discretion of the
Board to set reasonable targets and criteria for such incentive
compensation.
(iii) Retention Grant. In addition to your Base Salary, you will receive
on the Effective Date a cash payment in the amount of $163,694 and 20,984
shares of common stock of the Company.
(iv) Incentive Compensation and Other Plans. During the term of your
employment hereunder, you shall participate in any incentive compensation
(including stock options, restricted stock and/or other long-term incentive
compensation), deferred compensation, savings and retirement plans,
practices, policies and programs as adopted and approved by the Board from
time to time.
(b) Reimbursement of Expenses. During your employment, you will be entitled
to receive prompt reimbursement for all reasonable expenses incurred by you in
performing your services hereunder, provided that you properly account
therefor in accordance with Company policy.
4. Vacations. During your employment, you shall be entitled to reasonable
vacations from time to time in accordance with the regular procedures of the
Company governing senior executives. You shall also be entitled to all paid
holidays given by the Company to its senior executives.
5. Participation in Benefit Plans; Automobile.
(a) Benefit Plans. You shall be entitled to participate in and to receive
benefits under all the Company's employee benefit plans and arrangements in
effect on the date hereof, and you shall also be entitled to participate in or
receive benefits under any pension or retirement plan, savings plan, or
health-and-accident plan made available by the Company in the future to its
senior executives and other key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements and provided that you meet the eligibility requirements
thereof.
(b) Automobile. You shall be entitled to the use of an automobile supplied
by the Company. If you choose to use such automobile, the cost of insurance,
repair and maintenance shall be borne by the Company. If you elect not to
accept a Company automobile, you shall receive an annual payment of Five
Thousand Six Hundred Dollars ($5,600) in lieu of such automobile.
6. Other Offices. You further agree to serve without additional
compensation, if elected or appointed thereto, as an officer or director of
any of the Company's subsidiaries or affiliates.
7. Termination.
(a) Death. Your employment hereunder shall terminate upon your death.
(b) Disability. In the event of your permanent disability (as hereinafter
defined) during the term of your employment hereunder, the Company shall have
the right, upon written notice to you, to terminate your
Ex. 1.H2-2
<PAGE>
Mr. David H. Taylor
[ ], 1997
Page 3
employment hereunder, effective upon the giving of such notice. For purposes
hereof, "permanent disability" shall be defined as any physical or mental
disability or incapacity which renders you incapable of fully performing the
services required of you in accordance with your obligations hereunder for a
period of 150 consecutive days or for shorter periods aggregating 150 days
during any period of twelve (12) consecutive months.
(c) Cause. The Company may terminate your employment hereunder for "Cause."
For purposes hereof, termination for "Cause" shall mean termination after:
(i) your violation of any of the provisions of paragraph 9 hereof;
(ii) your commission of an intentional act of fraud, embezzlement, theft
or dishonesty against the Company or its affiliates;
(iii) your conviction of (or pleading by you of nolo contendere to) any
crime which constitutes a felony or misdemeanor involving moral turpitude
or which might, in the reasonable opinion of the Company, cause
embarrassment to the Company; or
(iv) the gross neglect or willful failure by you to perform your duties
and responsibilities in all material respects as set forth in Paragraph 2
hereof, if such breach of duty is not cured within 30 days after written
notice thereof to you by the Board.
For purposes of clause (iv), no act, or failure to act, on your part shall be
deemed "willful" unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your act, or failure to act, was in the
best interest of the Company.
(d) Termination by You. You may terminate your employment hereunder for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean (A) any
assignment to you of any duties (other than incident to a promotion)
materially different than or in addition to those contemplated by, or any
limitation of your powers in any respect not contemplated by, paragraph 2
hereof, provided that you first deliver written notice thereof to the Chairman
of the Board and the Company shall have failed to cure such non-permitted
assignment or limitation within thirty (30) days after receipt of such written
notice, (B) a reduction in your rate of base salary or the failure to maintain
incentive bonus arrangements substantially similar in earnings potential to
those in effect on the Effective Date, or a material reduction in your fringe
benefits or any other material failure by the Company to comply with
paragraphs 3 through 5 hereof, provided that you first deliver written notice
thereof to the Chairman of the Board and the Company shall have failed to cure
such reduction or failure within thirty (30) days after receipt of such
written notice, (C) your being required to relocate your principal residence
from its existing location without your consent, or (D) upon notice by the
Company as set forth in paragraph 1 hereof not to extend the Employment
Period.
For purposes of this Agreement, a "Change in Control" means the
occurrence of any one of the following events following the Effective
Date (other than the consummation of the Joint Plan of Reorganization
of the Company and its wholly owned subsidiary, JPS Capital Corp.): (a)
any person or other entity (other than any of the Company's
subsidiaries), including any person as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
becoming the beneficial owner, as defined in Rule 13d-3 of the Exchange
Act, directly or indirectly, of more than fifty percent (50%) of the
total combined voting power of all classes of capital stock of the
Company ordinarily entitled to vote for the election of directors of
the Company, (b) the sale of all or substantially all of the property
or assets of the Company (other than a sale to any of the Company's
subsidiaries), (c) the consolidation or merger of the Company with
another corporation (other than with any of the Company's subsidiaries
or in which the Company is the surviving corporation), the consummation
of which would result in the shareholders of the Company immediately
before the occurrence of the consolidation or merger owning, in the
aggregate, less than 50% of the voting stock of the surviving entity
immediately following the occurrence of such consolidation or merger,
or (d) a
Ex. 1.H2-3
<PAGE>
Mr. David H. Taylor
[ ], 1997
Page 4
change in the Board occurring with the result that the members of the
Board on the Effective Date (the "Incumbent Directors") no longer
constitute a majority of such Board, provided that any person becoming
a director whose election or nomination for election was supported by a
majority of the Incumbent Directors (other than you if you are a
Director) shall be considered an Incumbent Director for purposes
hereof.
(e) Notice. Any termination by the Company pursuant to paragraphs 7(b) or
7(c) above or by you pursuant to paragraph 7(d) above shall be communicated by
written Notice of Termination to the other party hereto. For the purposes
hereof, a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so indicated.
(f) Date of Termination. "Date of Termination" shall mean (i) if your
employment is terminated by your death, the date of your death, and (ii) if
your employment is terminated for any other reason, the date on which a Notice
of Termination is given.
8. Compensation Upon Termination of Employment or During Disability.
Subject to paragraph 8(e) below:
(a) Death. If your employment shall be terminated by reason of your death,
the Company shall pay or grant, to such person as you shall designate in a
notice filed with the Company, or, if no such person shall be designated, to
your estate as a lump sum death benefit, (i) an amount equal to any accrued
but unpaid Base Salary at the time of your death, plus an additional payment
equal to your Base Salary for the period from such date through the end of the
month following the month in which you die, (ii) an amount equal to any
accrued but unpaid bonus under the 1997 Bonus Plan or any bonus payable
pursuant to any Future Bonus Plans, to the extent earned but not paid with
respect to any year prior to the year in which your death occurs, and (iii) a
pro rata portion (based on the number of days worked) of the bonus payable
under the 1997 Bonus Plan or any Future Bonus Plan in effect for the year in
which your death occurs based upon the assumption that the performance goals
established under the applicable program with respect to the entire year in
which your death occurs are met. In addition, you shall retain all stock
options that are vested in accordance with the terms of the stock option plan
and grant letter controlling such stock options, with such options remaining
exercisable for six months from the date of your death and you shall receive
such additional benefits as may be provided by the then existing plans,
programs and/or arrangements of the Company. This amount and these benefits
shall be exclusive of and in addition to any payments your widow,
beneficiaries or estate may be entitled to receive pursuant to any pension or
employee benefit plan maintained by the Company. Your designated beneficiary
or the executor of your estate, as the case may be, shall accept the payment
provided for in this paragraph 8 in full discharge and release of the Company
of and from any further obligations under this Agreement.
(b) Disability. During any period that you fail to perform your duties
hereunder as a result of incapacity due to physical or mental illness, you
shall continue to receive your full Base Salary until your employment is
terminated pursuant to paragraph 7(b) hereof. If your employment is terminated
by the Company pursuant to paragraph 7(b), the Company shall pay to you in a
lump sum payment, an amount equal to (i) any accrued but unpaid bonus under
the 1997 Bonus Plan or any bonus payable pursuant to any Future Bonus Plans,
to the extent earned but not paid with respect to any year prior to the year
in which your disability occurs; and (ii) a pro rata portion (based on the
number of days worked) of the bonus payable under the 1997 Bonus Plan or any
Future Bonus Plan in effect for the year in which your disability occurs based
upon the assumption that the performance goals established under the
applicable program with respect to the entire year in which your disability
occurs are met. In addition, you shall retain all stock options that are
vested in accordance with the terms of the stock option
Ex. 1.H2-4
<PAGE>
Mr. David H. Taylor
[ ], 1997
Page 5
plan and grant letter controlling such stock options, with such options
remaining exercisable for six months from the date of your disability and you
shall receive such additional benefits as may be provided by the then existing
plans, programs and/or arrangements of the Company. During any such period and
thereafter you shall continue to bear the obligations provided for in
paragraph 9 below in accordance with the terms of such paragraph 9.
(c) Cause or Other Than Good Reason. If your employment shall be terminated
for Cause or you shall terminate your employment other than for Good Reason,
the Company shall be discharged and released of and from any further
obligations under this Agreement except for any Base Salary through the Date
of Termination or the date on which you terminate your employment at the rate
in effect at the time Notice of Termination is given or the date on which you
terminate your employment, to the extent required by law. Thereafter you shall
continue to have the obligations provided for in paragraph 9 below. Nothing
contained herein shall be deemed to be a waiver by the Company of any rights
that it may have against you in respect of your actions which gave rise to the
termination of your employment for Cause or for any reason other than for Good
Reason.
(d) Other Than for Cause or For Good Reason. If the Company shall terminate
your employment other than pursuant to paragraphs 7(b) or 7(c) hereof or if
you shall terminate your employment for Good Reason, then:
(i) The Company shall continue to pay you your Base Salary, at the rate
in effect at the time that the Notice of Termination is given in accordance
with paragraph 7(e) hereof, without interest through the later of (A) the
third anniversary of the Effective Date and (B) one year from the Date of
Termination, in accordance with normal payroll practices; provided,
however, that in the event of your death prior to the expiration of payment
hereunder your estate or beneficiary shall receive the remaining amount
hereunder in a lump sum payment;
(ii) The Company shall pay you an amount equal to the sum of (A) any
bonus earned as of the Date of Termination under the 1997 Bonus Plan or any
Future Bonus Plan for a fiscal year ending prior to the Date of Termination
but not paid as of such date, (B) a pro rata portion (based on the number
of days worked) of the target bonus (not in excess of fifty percent (50%)
of your Base Salary) payable under the 1997 Bonus Plan or any Future Bonus
Plan in effect for the fiscal year in which your Date of Termination occurs
(determined without regard to whether the performance goals established
under the applicable program are met) and (C) an amount equal to your
target bonus (not in excess of fifty percent (50%) of your Base Salary)
under the 1997 Bonus Plan or any Future Bonus Plan in effect for the fiscal
year in which your Date of Termination occurs (determined without regard to
whether the performance goals established under the applicable program are
met), multiplied by (1) if the Date of Termination is during the initial
three year Employment Period, the greater of (x) the number (not in excess
of three) of years and fractions of years remaining in the initial three
year Employment Period or (y) one or (2) if the Date of Termination is
during any Extended Employment Period, one;
(iii) You shall become fully vested in any stock options, with such
options remaining exercisable for six months from the date of your
termination of employment; and
(iv) The Company shall maintain in full force and effect, for your
continued benefit for twenty-four months after termination of employment,
all employee benefit plans and programs providing health and/or life
insurance benefits in which you were entitled to participate immediately
prior to the Date of Termination provided that your continued participation
is possible under the general terms and provisions of such plans and
programs. In the event that your participation in any such plan or program
is barred, the Company shall provide you with comparable benefits under a
mirror benefit plan. Notwithstanding the above, if you are employed by a
new employer and are eligible to receive comparable coverage from such
employer (including the waiver of any pre-existing condition limitation) at
a comparable cost to you, you shall no longer be eligible to receive
coverage under this paragraph.
Ex. 1.H2-5
<PAGE>
Mr. David H. Taylor
[ ], 1997
Page 6
(e) Parachute Payment. Notwithstanding anything herein to the contrary, if
any of the payments or benefits received or to be received by you in
connection with a Change in Control or your termination of employment (whether
such payments or benefits are provided pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person whose
actions result in a Change in Control or any person affiliated with the
Company or such person) (such payments or benefits being hereinafter referred
to as the "Total Payments") would be subject to the excise tax (the "Excise
Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), then the payments under this paragraph 8 hereof shall be
reduced (by the minimal amount necessary) so that no portion of the Total
Payments is subject to the Excise Tax.
For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) all of the
Total Payments shall be treated as "parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (the
"Tax Counsel") selected by the Company and reasonably acceptable by you, such
payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code, (ii) all
"excess parachute payments" within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject to the Excise Tax unless, in the opinion of
Tax Counsel, such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the "base amount" (as defined
in Section 280G(b)(3) of the Code) allocable to such payment, or are otherwise
not subject to the Excise Tax, and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by Tax Counsel in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
9. Restrictive Covenants and Confidentiality; Injunctive Relief.
(a) You agree, as a condition to the performance by the Company of its
obligations hereunder, particularly its obligations under paragraph 3 hereof,
that during the term of your employment, except for a termination of
employment without Cause or for Good Reason, hereunder and during the further
period of one (1) year after the termination of such employment, you shall
not, without the prior written approval of the Board, directly or indirectly
through any other person, firm or corporation:
(i) Solicit, raid, entice or induce any person, firm or corporation that
presently is or at any time during the term of your employment hereunder
shall be a customer of the Company, or any of its subsidiary companies, to
become a customer of any other person, firm or corporation, and you shall
not approach any such person, firm or corporation for such purpose or
authorize or knowingly approve the taking of such actions by any other
person;
(ii) Solicit, raid, entice or induce any person that presently is or at
any time during the term of your employment hereunder shall be an employee
of the Company, or any of its subsidiary companies, to become employed by
any person, firm or corporation, and you shall not approach any such
employee for such purpose or authorize or knowingly approve the taking of
such actions by any other person; or
(iii) Engage, participate, make any financial investment in, or become
employed by any person, firm, corporation or other business enterprise in
the United States which is engaged, directly or indirectly, during the term
of your employment or at the time of your termination of employment, as the
case may be, which (x) derives in excess of 20% of its gross revenues from
the sale of products substantially the same as the products of the Company
and/or any of its subsidiary companies or (y) has substantially the same
customer base for the same products as the Company and/or any of its
subsidiary companies. The foregoing covenant shall not be construed to
preclude you from making any investments in the securities of any company,
whether or not engaged in competition with the Company and/or any of its
subsidiary companies, to the
Ex. 1.H2-6
<PAGE>
Mr. David H. Taylor
[ ], 1997
Page 7
extent that such securities are actively traded on a national securities
exchange or in the over-the-counter market in the United States or any
foreign securities exchange and, after giving effect to such investment,
you do not beneficially own securities representing more than 5% of the
combined voting power of the voting securities of such company.
(b) Recognizing that the knowledge, information and relationship with
customers, suppliers, and agents, and the knowledge of the Company's and its
subsidiary companies' business methods, systems, plans and policies which you
shall hereafter establish, receive or obtain as an employee of the Company or
its subsidiary companies, are valuable and unique assets of the respective
businesses of the Company and its subsidiary companies, you agree that, during
and after the term of your employment hereunder, you shall not (otherwise than
pursuant to your duties hereunder) disclose or use, without the prior written
approval of the Board, any such knowledge or information pertaining to the
Company or any of its subsidiary companies, their business, personnel or
policies, to any person, firm, corporation or other entity, for any reason or
purpose whatsoever. The provisions of this paragraph 9 shall not apply to
information which is or shall become generally known to the public or the
trade (except by reason of your breach of your obligations hereunder),
information which is or shall become available in trade or other publications,
information known to you prior to entering the employ of the Company, and
information which you are required to disclose by law or an order of a court
of competent jurisdiction (provided that prior to your disclosure of any such
information you shall provide the Company with reasonable notice and a
reasonable opportunity to seek a protective order to prevent such disclosure).
(c) The provisions of paragraph 9(b) above shall survive the termination of
your employment hereunder, irrespective of the reason therefor.
(d) You acknowledge that the services to be rendered by you are of a
special, unique and extraordinary character and, in connection with such
services, you will have access to confidential information vital to the
Company's and its subsidiary companies' businesses. By reason of this, you
consent and agree that if you violate any of the provisions of this Agreement
with respect to diversion of the Company's or its subsidiary companies'
customers or employees, or confidentiality, the Company and its subsidiary
companies would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or otherwise,
the Company shall be entitled to an injunction restraining you from committing
or continuing any such violation of this Agreement.
10. Deductions and Withholdings. The Company shall be entitled to withhold
any amounts payable under this Agreement on account of payroll taxes and
similar matters as are required by applicable law, rule or regulation of
appropriate governmental authorities.
11. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
reasonably satisfactory to you, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled to hereunder if you terminated your employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall include any successor
to the Company's business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 11 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation
of law.
Ex. 1.H2-7
<PAGE>
Mr. David H. Taylor
[ ], 1997
Page 8
(b) This Agreement and all your rights hereunder shall inure to the benefit
of and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you hereunder if you
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your devisee,
legatee, or other designee or, if there be no such designee, to your estate.
Your obligations hereunder may not be delegated, and except as otherwise
provided herein relating to the designation of a devisee, legatee or other
designee, you may not assign, transfer, pledge, encumber, hypothecate or
otherwise dispose of this Agreement or any of your rights hereunder, and any
such attempted delegation or disposition shall be null and void and without
effect.
12. Notice. For purposes of this Agreement, notices and all other
communications provided for shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to you:
Mr. David H. Taylor
105 Holbrook Trail
Greenville, South Carolina 29605
If to the Company:
JPS Textile Group, Inc.
555 North Pleasantburg Drive, Suite 202
Greenville, South Carolina 29607
Attention: Chairman of the Board
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by you and by the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement constitutes the
complete understanding between the parties with respect to your employment and
supersedes any other prior oral or written agreements, arrangements or
understandings between you and the Company. This Agreement amends, restates
and supersedes any existing employment, retention, severance and change-in-
control agreements (collectively, the "Prior Agreements") between you and the
Company and/or any of its subsidiary companies upon the Effective Date, and
any and all claims under or in respect of the Prior Agreements that you may
have or assert shall, as of the Effective Date, be governed by, and completely
satisfied and discharged in accordance with, the terms and conditions of this
Agreement. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement may
not be changed or terminated orally but only by an agreement in writing signed
by the parties hereto. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
South Carolina.
14. Arbitration. All differences, claims or matters in dispute arising out
of this Agreement, the breach hereof or otherwise arising between the Company
or any of its affiliates and you shall, at the election of either
Ex. 1.H2-8
<PAGE>
Mr. David H. Taylor
[ ], 1997
Page 9
party, by notice to the other, be submitted to arbitration by the American
Arbitration Association or its successor, in Greenville, South Carolina. Such
arbitration shall be governed by the then existing rules of the American
Arbitration Association and the laws of the State of South Carolina as then in
effect. The expenses, including your reasonable attorneys' fees, in connection
with such arbitration shall be borne by the Company.
15. Validity; Effectiveness. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
If the foregoing is satisfactory, please so indicate by signing and
returning to the Company the enclosed copy of this letter whereupon this will
constitute our agreement on the subject.
JPS Textile Group, Inc.
By: _________________________________
Name: Jerry E. Hunter
Title: Chief Executive Officer
Accepted and Agreed to:
_____________________________________
David H. Taylor
Ex. 1.H2-9
<PAGE>
EXHIBIT H3
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JPS TEXTILE GROUP, INC.
555 NORTH PLEASANTBURG DRIVE, SUITE 202
GREENVILLE, SOUTH CAROLINA 29607
[ ], 1997
Mr. Monnie L. Broome
11 Doyle Drive
Greenville, South Carolina 29615
Dear Monnie:
We are writing with respect to your employment by JPS Textile Group, Inc.
(the "Company") as Vice President--Human Resources of the Company. The Company
acknowledges and recognizes the value of your experience and abilities to the
Company since the beginning of your employment with the Company, and desires
to continue to retain and make secure for itself such experience and abilities
on the terms and subject to the conditions set forth in this agreement (the
"Agreement").
1. Employment. The Company agrees to employ you and you agree to be employed
by the Company commencing on the consummation of the Joint Plan of
Reorganization of the Company and its wholly owned subsidiary, JPS Capital
Corp., dated [insert date] (the "Effective Date") and ending on the third
anniversary thereof (unless sooner terminated as hereinafter provided) (the
"Employment Period"), on the terms and subject to the conditions set forth in
this Agreement; provided, however, that commencing on the third anniversary of
the Effective Date and each anniversary thereafter, the Employment Period
shall automatically be extended for one additional year (the "Extended
Employment Period") unless not later than the end of the Employment Period or
the Extended Employment Period, as the case may be, the Company or you shall
have given written notice to the other not to extend the Employment Period or
any Extended Employment Period. Unless specifically provided to the contrary,
Employment Period shall be deemed to include any Extended Employment Period.
2. Duties. (a) You shall be employed as the Vice President--Human Resources
of the Company. In such capacity, you shall serve as a senior executive
officer of the Company and shall have the duties and responsibilities
prescribed for such position by the By-Laws of the Company, and shall have
such other duties and responsibilities as may from time to time be prescribed
by the Board and are customarily performed by someone in your position,
provided that such duties and responsibilities are consistent with your
position as Vice President--Human Resources of the Company. In the performance
of your duties, you shall be subject to the supervision and direction of the
Chief Executive Officer of the Company.
(b) Subject to the terms of your employment hereunder, you shall devote such
time as is reasonably necessary to the proper performance of your duties and
responsibilities as Vice President--Human Resources of the Company. You hereby
represent and warrant to the Company that, except as described above, you have
no obligations under any existing employment or service agreement and that
your performance of the services required of you hereunder will not conflict
with your other existing obligations described above.
3. Compensation.
(a) (i) Base Salary. During the term of your employment hereunder, the
Company shall pay you, and you shall accept from the Company for your
services, a salary at the rate of not less than $180,000 per year (the "Base
Salary"), payable in accordance with the Company's policy with respect to the
compensation of executives. The Board shall annually review your performance
and determine, in its sole discretion, whether or not to increase your Base
Salary and, if so, the amount of such increase.
Ex. 1.H3-1
<PAGE>
Mr. Monnie L. Broome
[ ], 1997
Page 2
(ii) Bonus. In addition to your Base Salary, unless you voluntarily
terminate your employment for other than Good Reason (as hereinafter
defined), or are terminated by the Company for Cause (as hereinafter
defined), you will be eligible to participate in the 1997 Management
Incentive Bonus Plan (the "1997 Bonus Plan") and receive a bonus in an
amount and based upon the attainment of the performance goals specified
therein. The Board shall establish a performance-based annual bonus program
for senior executives of the Company including you for fiscal years after
1997 (a "Future Bonus Plan") and award you an annual bonus opportunity
thereunder which is not less favorable than the opportunity provided
pursuant to the 1997 Bonus Plan without restricting the discretion of the
Board to set reasonable targets and criteria for such incentive
compensation.
(iii) Retention Grant. In addition to your Base Salary, you will receive
on the Effective Date a cash payment in the amount of $115,531 and 14,810
shares of common stock of the Company.
(iv) Incentive Compensation and Other Plans. During the term of your
employment hereunder, you shall participate in any incentive compensation
(including stock options, restricted stock and/or other long-term incentive
compensation), deferred compensation, savings and retirement plans,
practices, policies and programs as adopted and approved by the Board from
time to time.
(b) Reimbursement of Expenses. During your employment, you will be entitled
to receive prompt reimbursement for all reasonable expenses incurred by you in
performing your services hereunder, provided that you properly account
therefor in accordance with Company policy.
4. Vacations. During your employment, you shall be entitled to reasonable
vacations from time to time in accordance with the regular procedures of the
Company governing senior executives. You shall also be entitled to all paid
holidays given by the Company to its senior executives.
5. Participation in Benefit Plans; Automobile.
(a) Benefit Plans. You shall be entitled to participate in and to receive
benefits under all the Company's employee benefit plans and arrangements in
effect on the date hereof, and you shall also be entitled to participate in or
receive benefits under any pension or retirement plan, savings plan, or
health-and-accident plan made available by the Company in the future to its
senior executives and other key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements and provided that you meet the eligibility requirements
thereof.
(b) Automobile. You shall be entitled to the use of an automobile supplied
by the Company. If you choose to use such automobile, the cost of insurance,
repair and maintenance shall be borne by the Company. If you elect not to
accept a Company automobile, you shall receive an annual payment of Five
Thousand Six Hundred Dollars ($5,600) in lieu of such automobile.
6. Other Offices. You further agree to serve without additional
compensation, if elected or appointed thereto, as an officer or director of
any of the Company's subsidiaries or affiliates.
7. Termination.
(a) Death. Your employment hereunder shall terminate upon your death.
(b) Disability. In the event of your permanent disability (as hereinafter
defined) during the term of your employment hereunder, the Company shall have
the right, upon written notice to you, to terminate your employment hereunder,
effective upon the giving of such notice. For purposes hereof, "permanent
disability" shall be defined as any physical or mental disability or
incapacity which renders you incapable of fully
Ex. 1.H3-2
<PAGE>
Mr. Monnie L. Broome
[ ], 1997
Page 3
performing the services required of you in accordance with your obligations
hereunder for a period of 150 consecutive days or for shorter periods
aggregating 150 days during any period of twelve (12) consecutive months.
(c) Cause. The Company may terminate your employment hereunder for "Cause."
For purposes hereof, termination for "Cause" shall mean termination after:
(i) your violation of any of the provisions of paragraph 9 hereof;
(ii) your commission of an intentional act of fraud, embezzlement, theft
or dishonesty against the Company or its affiliates;
(iii) your conviction of (or pleading by you of nolo contendere to) any
crime which constitutes a felony or misdemeanor involving moral turpitude
or which might, in the reasonable opinion of the Company, cause
embarrassment to the Company; or
(iv) the gross neglect or willful failure by you to perform your duties
and responsibilities in all material respects as set forth in paragraph 2
hereof, if such breach of duty is not cured within 30 days after written
notice thereof to you by the Board.
For purposes of clause (iv), no act, or failure to act, on your part shall be
deemed "willful" unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your act, or failure to act, was in the
best interest of the Company.
(d) Termination by You. You may terminate your employment hereunder for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean (A) any
assignment to you of any duties (other than incident to a promotion)
materially different than or in addition to those contemplated by, or any
limitation of your powers in any respect not contemplated by, paragraph 2
hereof, provided that you first deliver written notice thereof to the Chairman
of the Board and the Company shall have failed to cure such non-permitted
assignment or limitation within thirty (30) days after receipt of such written
notice, (B) a reduction in your rate of base salary or the failure to maintain
incentive bonus arrangements substantially similar in earnings potential to
those in effect on the Effective Date, or a material reduction in your fringe
benefits or any other material failure by the Company to comply with
paragraphs 3 through 5 hereof, provided that you first deliver written notice
thereof to the Chairman of the Board and the Company shall have failed to cure
such reduction or failure within thirty (30) days after receipt of such
written notice, (C) your being required to relocate your principal residence
from its existing location without your consent, or (D) upon notice by the
Company as set forth in paragraph 1 hereof not to extend the Employment
Period.
For purposes of this Agreement, a "Change in Control" means the
occurrence of any one of the following events following the Effective Date
(other than the consummation of the Joint Plan of Reorganization of the
Company and its wholly owned subsidiary, JPS Capital Corp.): (a) any person
or other entity (other than any of the Company's subsidiaries), including
any person as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), becoming the beneficial owner, as
defined in Rule 13d-3 of the Exchange Act, directly or indirectly, of more
than fifty percent (50%) of the total combined voting power of all classes
of capital stock of the Company ordinarily entitled to vote for the
election of directors of the Company, (b) the sale of all or substantially
all of the property or assets of the Company (other than a sale to any of
the Company's subsidiaries), (c) the consolidation or merger of the Company
with another corporation (other than with any of the Company's subsidiaries
or in which the Company is the surviving corporation), the consummation of
which would result in the shareholders of the Company immediately before
the occurrence of the consolidation or merger owning, in the aggregate,
less than 50% of the voting stock of the surviving entity immediately
following
Ex. 1.H3-3
<PAGE>
Mr. Monnie L. Broome
[ ], 1997
Page 4
the occurrence of such consolidation or merger, or (d) a change in the
Board occurring with the result that the members of the Board on the
Effective Date (the "Incumbent Directors") no longer constitute a majority
of such Board, provided that any person becoming a director whose election
or nomination for election was supported by a majority of the Incumbent
Directors (other than you if you are a Director) shall be considered an
Incumbent Director for purposes hereof.
(e) Notice. Any termination by the Company pursuant to paragraphs 7(b) or
7(c) above or by you pursuant to paragraph 7(d) above shall be communicated by
written Notice of Termination to the other party hereto. For the purposes
hereof, a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so indicated.
(f) Date of Termination. "Date of Termination" shall mean (i) if your
employment is terminated by your death, the date of your death, and (ii) if
your employment is terminated for any other reason, the date on which a Notice
of Termination is given.
8. Compensation Upon Termination of Employment or During Disability.
Subject to paragraph 8(e) below:
(a) Death. If your employment shall be terminated by reason of your death,
the Company shall pay or grant, to such person as you shall designate in a
notice filed with the Company, or, if no such person shall be designated, to
your estate as a lump sum death benefit, (i) an amount equal to any accrued
but unpaid Base Salary at the time of your death, plus an additional payment
equal to your Base Salary for the period from such date through the end of the
month following the month in which you die, (ii) an amount equal to any
accrued but unpaid bonus under the 1997 Bonus Plan or any bonus payable
pursuant to any Future Bonus Plans, to the extent earned but not paid with
respect to any year prior to the year in which your death occurs; and (iii) a
pro rata portion (based on the number of days worked) of the bonus payable
under the 1997 Bonus Plan or any Future Bonus Plan in effect for the year in
which your death occurs based upon the assumption that the performance goals
established under the applicable program with respect to the entire year in
which your death occurs are met. In addition, you shall retain all stock
options that are vested in accordance with the terms of the stock option plan
and grant letter controlling such stock options, with such options remaining
exercisable for six months from the date of your death and you shall receive
such additional benefits as may be provided by the then existing plans,
programs and/or arrangements of the Company. This amount and these benefits
shall be exclusive of and in addition to any payments your widow,
beneficiaries or estate may be entitled to receive pursuant to any pension or
employee benefit plan maintained by the Company. Your designated beneficiary
or the executor of your estate, as the case may be, shall accept the payment
provided for in this paragraph 8 in full discharge and release of the Company
of and from any further obligations under this Agreement.
(b) Disability. During any period that you fail to perform your duties
hereunder as a result of incapacity due to physical or mental illness, you
shall continue to receive your full Base Salary until your employment is
terminated pursuant to paragraph 7(b) hereof. If your employment is terminated
by the Company pursuant to paragraph 7(b), the Company shall pay to you in a
lump sum payment, an amount equal to (i) any accrued but unpaid bonus under
the 1997 Bonus Plan or any bonus payable pursuant to any Future Bonus Plans,
to the extent earned but not paid with respect to any year prior to the year
in which your disability occurs; and (ii) a pro rata portion (based on the
number of days worked) of the bonus payable under the 1997 Bonus Plan or any
Future Bonus Plan in effect for the year in which your disability occurs based
upon the assumption that the performance goals established under the
applicable program with respect to the entire year in which your disability
occurs are met. In addition, you shall retain all stock options that are
vested in accordance with the terms of the stock option plan and grant letter
controlling such stock options, with such options remaining exercisable for
six months from the date of your disability and you shall receive such
additional benefits as may be provided by the then existing
Ex. 1.H3-4
<PAGE>
Mr. Monnie L. Broome
[ ], 1997
Page 5
plans, programs and/or arrangements of the Company. During any such period and
thereafter you shall continue to bear the obligations provided for in
paragraph 9 below in accordance with the terms of such paragraph 9.
(c) Cause or Other Than Good Reason. If your employment shall be terminated
for Cause or you shall terminate your employment other than for Good Reason,
the Company shall be discharged and released of and from any further
obligations under this Agreement except for any Base Salary through the Date
of Termination or the date on which you terminate your employment at the rate
in effect at the time Notice of Termination is given or the date on which you
terminate your employment, to the extent required by law. Thereafter you shall
continue to have the obligations provided for in paragraph 9 below. Nothing
contained herein shall be deemed to be a waiver by the Company of any rights
that it may have against you in respect of your actions which gave rise to the
termination of your employment for Cause or for any reason other than for Good
Reason.
(d) Other Than for Cause or For Good Reason. If the Company shall terminate
your employment other than pursuant to paragraphs 7(b) or 7(c) hereof or if
you shall terminate your employment for Good Reason, then:
(i) The Company shall continue to pay you your Base Salary, at the rate
in effect at the time that the Notice of Termination is given in accordance
with paragraph 7(e) hereof, without interest through the later of (A) the
third anniversary of the Effective Date and (B) one year from the Date of
Termination, in accordance with normal payroll practices; provided,
however, that in the event of your death prior to the expiration of payment
hereunder your estate or beneficiary shall receive the remaining amount
hereunder in a lump sum payment;
(ii) The Company shall pay you an amount equal to the sum of (A) any
bonus earned as of the Date of Termination under the 1997 Bonus Plan or any
Future Bonus Plan for a fiscal year ending prior to the Date of Termination
but not paid as of such date, (B) a pro rata portion (based on the number
of days worked) of the target bonus (not in excess of fifty percent (50%)
of your Base Salary) payable under the 1997 Bonus Plan or any Future Bonus
Plan in effect for the fiscal year in which your Date of Termination occurs
(determined without regard to whether the performance goals established
under the applicable program are met) and (C) an amount equal to your
target bonus (not in excess of fifty percent (50%) of your Base Salary)
under the 1997 Bonus Plan or any Future Bonus Plan in effect for the fiscal
year in which your Date of Termination occurs (determined without regard to
whether the performance goals established under the applicable program are
met), multiplied by (1) if the Date of Termination is during the initial
three year Employment Period, the greater of (x) the number (not in excess
of three) of years and fractions of years remaining in the initial three
year Employment Period or (y) one or (2) if the Date of Termination is
during any Extended Employment Period, one;
(iii) You shall become fully vested in any stock options, with such
options remaining exercisable for six months from the date of your
termination of employment; and
(iv) The Company shall maintain in full force and effect, for your
continued benefit for twenty-four months after termination of employment,
all employee benefit plans and programs providing health and/or life
insurance benefits in which you were entitled to participate immediately
prior to the Date of Termination provided that your continued participation
is possible under the general terms and provisions of such plans and
programs. In the event that your participation in any such plan or program
is barred, the Company shall provide you with comparable benefits under a
mirror benefit plan. Notwithstanding the above, if you are employed by a
new employer and are eligible to receive comparable coverage from such
employer (including the waiver of any pre-existing condition limitation) at
a comparable cost to you, you shall no longer be eligible to receive
coverage under this paragraph.
Ex. 1.H3-5
<PAGE>
Mr. Monnie L. Broome
[ ], 1997
Page 6
(e) Parachute Payment. Notwithstanding anything herein to the contrary, if
any of the payments or benefits received or to be received by you in
connection with a Change in Control or your termination of employment (whether
such payments or benefits are provided pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person whose
actions result in a Change in Control or any person affiliated with the
Company or such person) (such payments or benefits being hereinafter referred
to as the "Total Payments") would be subject to the excise tax (the "Excise
Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), then the payments under this paragraph 8 hereof shall be
reduced (by the minimal amount necessary) so that no portion of the Total
Payments is subject to the Excise Tax.
For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) all of the
Total Payments shall be treated as "parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (the
"Tax Counsel") selected by the Company and reasonably acceptable by you, such
payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code, (ii) all
"excess parachute payments" within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject to the Excise Tax unless, in the opinion of
Tax Counsel, such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the "base amount" (as defined
in Section 280G(b)(3) of the Code) allocable to such payment, or are otherwise
not subject to the Excise Tax, and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by Tax Counsel in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
9. Restrictive Covenants and Confidentiality; Injunctive Relief.
(a) You agree, as a condition to the performance by the Company of its
obligations hereunder, particularly its obligations under paragraph 3 hereof,
that during the term of your employment, except for a termination of
employment without Cause or for Good Reason, hereunder and during the further
period of one (1) year after the termination of such employment, you shall
not, without the prior written approval of the Board, directly or indirectly
through any other person, firm or corporation:
(i) Solicit, raid, entice or induce any person, firm or corporation that
presently is or at any time during the term of your employment hereunder
shall be a customer of the Company, or any of its subsidiary companies, to
become a customer of any other person, firm or corporation, and you shall
not approach any such person, firm or corporation for such purpose or
authorize or knowingly approve the taking of such actions by any other
person;
(ii) Solicit, raid, entice or induce any person that presently is or at
any time during the term of your employment hereunder shall be an employee
of the Company, or any of its subsidiary companies, to become employed by
any person, firm or corporation, and you shall not approach any such
employee for such purpose or authorize or knowingly approve the taking of
such actions by any other person; or
(iii) Engage, participate, make any financial investment in, or become
employed by any person, firm, corporation or other business enterprise in
the United States which is engaged, directly or indirectly, during the term
of your employment or at the time of your termination of employment, as the
case may be, which (x) derives in excess of 20% of its gross revenues from
the sale of products substantially the same as the products of the Company
and/or any of its subsidiary companies or (y) has substantially the same
customer base for the same products as the Company and/or any of its
subsidiary companies. The foregoing covenant shall not be construed to
preclude you from making any investments in the securities of any company,
whether or not engaged in competition with the Company and/or any of its
subsidiary companies, to the
Ex. 1.H3-6
<PAGE>
Mr. Monnie L. Broome
[ ], 1997
Page 7
extent that such securities are actively traded on a national securities
exchange or in the over-the-counter market in the United States or any
foreign securities exchange and, after giving effect to such investment,
you do not beneficially own securities representing more than 5% of the
combined voting power of the voting securities of such company.
(b) Recognizing that the knowledge, information and relationship with
customers, suppliers, and agents, and the knowledge of the Company's and its
subsidiary companies' business methods, systems, plans and policies which you
shall hereafter establish, receive or obtain as an employee of the Company or
its subsidiary companies, are valuable and unique assets of the respective
businesses of the Company and its subsidiary companies, you agree that, during
and after the term of your employment hereunder, you shall not (otherwise than
pursuant to your duties hereunder) disclose or use, without the prior written
approval of the Board, any such knowledge or information pertaining to the
Company or any of its subsidiary companies, their business, personnel or
policies, to any person, firm, corporation or other entity, for any reason or
purpose whatsoever. The provisions of this paragraph 9 shall not apply to
information which is or shall become generally known to the public or the
trade (except by reason of your breach of your obligations hereunder),
information which is or shall become available in trade or other publications,
information known to you prior to entering the employ of the Company, and
information which you are required to disclose by law or an order of a court
of competent jurisdiction (provided that prior to your disclosure of any such
information you shall provide the Company with reasonable notice and a
reasonable opportunity to seek a protective order to prevent such disclosure).
(c) The provisions of paragraph 9(b) above shall survive the termination of
your employment hereunder, irrespective of the reason therefor.
(d) You acknowledge that the services to be rendered by you are of a
special, unique and extraordinary character and, in connection with such
services, you will have access to confidential information vital to the
Company's and its subsidiary companies' businesses. By reason of this, you
consent and agree that if you violate any of the provisions of this Agreement
with respect to diversion of the Company's or its subsidiary companies'
customers or employees, or confidentiality, the Company and its subsidiary
companies would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or otherwise,
the Company shall be entitled to an injunction restraining you from committing
or continuing any such violation of this Agreement.
10. Deductions and Withholdings. The Company shall be entitled to withhold
any amounts payable under this Agreement on account of payroll taxes and
similar matters as are required by applicable law, rule or regulation of
appropriate governmental authorities.
11. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
reasonably satisfactory to you, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled to hereunder if you terminated your employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall include any successor
to the Company's business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 11 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation
of law.
Ex. 1.H3-7
<PAGE>
Mr. Monnie L. Broome
[ ], 1997
Page 8
(b) This Agreement and all your rights hereunder shall inure to the benefit
of and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you hereunder if you
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your devisee,
legatee, or other designee or, if there be no such designee, to your estate.
Your obligations hereunder may not be delegated, and except as otherwise
provided herein relating to the designation of a devisee, legatee or other
designee, you may not assign, transfer, pledge, encumber, hypothecate or
otherwise dispose of this Agreement or any of your rights hereunder, and any
such attempted delegation or disposition shall be null and void and without
effect.
12. Notice. For purposes of this Agreement, notices and all other
communications provided for shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to you:
Mr. Monnie L. Broome
11 Doyle Drive
Greenville, South Carolina 29615
If to the Company:
JPS Textile Group, Inc.
555 North Pleasantburg Drive, Suite 202
Greenville, South Carolina 29607
Attention: Chairman of the Board
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by you and by the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement constitutes the
complete understanding between the parties with respect to your employment and
supersedes any other prior oral or written agreements, arrangements or
understandings between you and the Company. This Agreement amends, restates
and supersedes any existing employment, retention, severance and change-in-
control agreements (collectively, the "Prior Agreements") between you and the
Company and/or any of its subsidiary companies upon the Effective Date, and
any and all claims under or in respect of the Prior Agreements that you may
have or assert shall, as of the Effective Date, be governed by, and completely
satisfied and discharged in accordance with, the terms and conditions of this
Agreement. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement may
not be changed or terminated orally but only by an agreement in writing signed
by the parties hereto. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
South Carolina.
14. Arbitration. All differences, claims or matters in dispute arising out
of this Agreement, the breach hereof or otherwise arising between the Company
or any of its affiliates and you shall, at the election of either party, by
notice to the other, be submitted to arbitration by the American Arbitration
Association or its successor, in Greenville, South Carolina. Such arbitration
shall be governed by the then existing rules of the American Arbitration
Association and the laws of the State of South Carolina as then in effect. The
expenses, including your reasonable attorneys' fees, in connection with such
arbitration shall be borne by the Company.
Ex. 1.H3-8
<PAGE>
Mr. Monnie L. Broome
[ ], 1997
Page 9
15. Validity; Effectiveness. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
If the foregoing is satisfactory, please so indicate by signing and
returning to the Company the enclosed copy of this letter whereupon this will
constitute our agreement on the subject.
JPS TEXTILE GROUP, INC.
By: _________________________________
Name: Jerry E. Hunter
Title: Chief Executive Officer
ACCEPTED AND AGREED TO:
_____________________________________
Monnie L. Broome
Ex. 1.H3-9
<PAGE>
EXHIBIT H4
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JPS TEXTILE GROUP, INC.
555 NORTH PLEASANTBURG DRIVE, SUITE 202
GREENVILLE, SOUTH CAROLINA 29607
[ ], 1997
Mr. Wm. Ellis Jackson
221 Wycliffe Drive
Greer, South Carolina 29650
Dear Ellis:
We are writing with respect to your employment by JPS Textile Group, Inc.
(the "Company") as Director of Taxes of the Company. The Company acknowledges
and recognizes the value of your experience and abilities to the Company since
the beginning of your employment with the Company, and desires to continue to
retain and make secure for itself such experience and abilities on the terms
and subject to the conditions set forth in this agreement ("the Agreement").
1. Employment. The Company agrees to employ you and you agree to be employed
by the Company commencing on the consummation of the Joint Plan of
Reorganization of the Company and its wholly owned subsidiary, JPS Capital
Corp. dated [INSERT DATE] (the "Effective Date") and ending on the third
anniversary thereof (unless sooner terminated as hereinafter provided) (the
"Employment Period"), on the terms and subject to the conditions set forth in
this Agreement; provided, however, that commencing on the third anniversary of
the Effective Date and each anniversary thereafter, the Employment Period
shall automatically be extended for one additional year (the "Extended
Employment Period") unless not later than the end of the Employment Period or
the Extended Employment Period, as the case may be, the Company or you shall
have given written notice to the other not to extend the Employment Period or
any Extended Employment Period. Unless specifically provided to the contrary,
the Employment Period shall be deemed to include any Extended Employment
Period.
2. Duties. (a) You shall be employed as the Director of Taxes of the
Company. In such capacity, you shall serve as a senior executive officer of
the Company and shall have the duties and responsibilities prescribed for such
position by the By-Laws of the Company, and shall have such other duties and
responsibilities as may from time to time be prescribed by the Board and are
customarily performed by someone in your position, provided that such duties
and responsibilities are consistent with your position as Director of Taxes of
the Company. In the performance of your duties, you shall be subject to the
supervision and direction of the Chief Executive Officer of the Company.
(b) Subject to the terms of your employment hereunder, you shall devote such
time as is reasonably necessary to the proper performance of your duties and
responsibilities as Director of Taxes of the Company. You hereby represent and
warrant to the Company that, except as described above, you have no
obligations under any existing employment or service agreement and that your
performance of the services required of you hereunder will not conflict with
your other existing obligations described above.
3. Compensation.
(a)(i) Base Salary. During the term of your employment hereunder, the
Company shall pay you, and you shall accept from the Company for your
services, a salary at the rate of not less than $103,000 per year (the "Base
Salary"), payable in accordance with the Company's policy with respect to the
compensation of executives. The Board shall annually review your performance
and determine, in its sole discretion, whether or not to increase your Base
Salary and, if so, the amount of such increase.
Ex. 1.H4-1
<PAGE>
Mr. Wm. Ellis Jackson
[ ], 1997
Page 2
(ii) Bonus. In addition to your Base Salary, unless you voluntarily
terminate your employment for other than Good Reason (as hereinafter
defined), or are terminated by the Company for Cause (as hereinafter
defined), you will be eligible to participate in the 1997 Management
Incentive Bonus Plan (the "1997 Bonus Plan") and receive a bonus in an
amount and based upon the attainment of the performance goals specified
therein. The Board shall establish a performance-based annual bonus program
for senior executives of the Company including you for fiscal years after
1997 (a "Future Bonus Plan") and award you an annual bonus opportunity
thereunder which is not less favorable than the opportunity provided
pursuant to the 1997 Bonus Plan without restricting the discretion of the
Board to set reasonable targets and criteria for such incentive
compensation.
(iii) Retention Grant. In addition to your Base Salary, you will receive
on the Effective Date a cash payment in the amount of $38,129 and 4,888
shares of common stock of the Company.
(iv) Incentive Compensation and Other Plans. During the term of your
employment hereunder, you shall participate in any incentive compensation
(including stock options, restricted stock and/or other long-term incentive
compensation), deferred compensation, savings and retirement plans,
practices, policies and programs as adopted and approved by the Board from
time to time.
(b) Reimbursement of Expenses. During your employment, you will be entitled
to receive prompt reimbursement for all reasonable expenses incurred by you in
performing your services hereunder, provided that you properly account
therefor in accordance with Company policy.
4. Vacations. During your employment, you shall be entitled to reasonable
vacations from time to time in accordance with the regular procedures of the
Company governing senior executives. You shall also be entitled to all paid
holidays given by the Company to its senior executives.
5. Participation in Benefit Plans. You shall be entitled to participate in
and to receive benefits under all the Company's employee benefit plans and
arrangements in effect on the date hereof, and you shall also be entitled to
participate in or receive benefits under any pension or retirement plan,
savings plan, or health-and-accident plan made available by the Company in the
future to its senior executives and other key management employees, subject to
and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements and provided that you meet the
eligibility requirements thereof.
6. Other Offices. You further agree to serve without additional
compensation, if elected or appointed thereto, as an officer or director of
any of the Company's subsidiaries or affiliates.
7. Termination.
(a) Death. Your employment hereunder shall terminate upon your death.
(b) Disability. In the event of your permanent disability (as hereinafter
defined) during the term of your employment hereunder, the Company shall have
the right, upon written notice to you, to terminate your employment hereunder,
effective upon the giving of such notice. For purposes hereof, "permanent
disability" shall be defined as any physical or mental disability or
incapacity which renders you incapable of fully performing the services
required of you in accordance with your obligations hereunder for a period of
150 consecutive days or for shorter periods aggregating 150 days during any
period of twelve (12) consecutive months.
(c) Cause. The Company may terminate your employment hereunder for "Cause."
For purposes hereof, termination for "Cause" shall mean termination after:
(i) your violation of any of the provisions of paragraph 9 hereof;
Ex. 1.H4-2
<PAGE>
Mr. Wm. Ellis Jackson
[ ], 1997
Page 3
(ii) your commission of an intentional act of fraud, embezzlement, theft
or dishonesty against the Company or its affiliates;
(iii) your conviction of (or pleading by you of nolo contendere to) any
crime which constitutes a felony or misdemeanor involving moral turpitude
or which might, in the reasonable opinion of the Company, cause
embarrassment to the Company; or
(iv) the gross neglect or willful failure by you to perform your duties
and responsibilities in all material respects as set forth in paragraph 2
hereof, if such breach of duty is not cured within 30 days after written
notice thereof to you by the Board.
For purposes of clause (iv), no act, or failure to act, on your part shall
be deemed "willful" unless done, or omitted to be done, by you not in good
faith and without reasonable belief that your act, or failure to act, was in
the best interest of the Company.
(d) Termination by You. You may terminate your employment hereunder for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean (A) any
assignment to you of any duties (other than incident to a promotion)
materially different than or in addition to those contemplated by, or any
limitation of your powers or in any respect not contemplated by, paragraph 2
hereof, provided that you first deliver written notice thereof to the Chairman
of the Board and the Company shall have failed to cure such non-permitted
assignment or limitation within thirty (30) days after receipt of such written
notice, (B) a reduction in your rate of base salary or the failure to maintain
incentive bonus arrangements substantially similar in earnings potential to
those in effect on the Effective Date, or a material reduction in your fringe
benefits or any other material failure by the Company to comply with
paragraphs 3 through 5 hereof, provided that you first deliver written notice
thereof to the Chairman of the Board and the Company shall have failed to cure
such reduction or failure within thirty (30) days after receipt of such
written notice, (C) your being required to relocate your principal residence
from its existing location without your consent, or (D) upon notice by the
Company as set forth in paragraph 1 hereof not to extend the Employment
Period.
For purposes of this Agreement, a "Change in Control" means the
occurrence of any one of the following events following the Effective Date
(other than the consummation of the Joint Plan of Reorganization of the
Company and its wholly owned subsidiary, JPS Capital Corp.): (a) any person
or other entity (other than any of the Company's subsidiaries), including
any person as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), becoming the beneficial owner, as
defined in Rule 13d-3 of the Exchange Act, directly or indirectly, of more
than fifty percent (50%) of the total combined voting power of all classes
of capital stock of the Company ordinarily entitled to vote for the
election of directors of the Company, (b) the sale of all or substantially
all of the property or assets of the Company (other than a sale to any of
the Company's subsidiaries), (c) the consolidation or merger of the Company
with another corporation (other than with any of the Company's subsidiaries
or in which the Company is the surviving corporation), the consummation of
which would result in the shareholders of the Company immediately before
the occurrence of the consolidation or merger owning, in the aggregate,
less than 50% of the voting stock of the surviving entity immediately
following the occurrence of such consolidation or merger, or (d) a change
in the Board occurring with the result that the members of the Board on the
Effective Date (the "Incumbent Directors") no longer constitute a majority
of such Board, provided that any person becoming a director whose election
or nomination for election was supported by a majority of the Incumbent
Directors (other than you if you are a Director) shall be considered an
Incumbent Director for purposes hereof.
(e) Notice. Any termination by the Company pursuant to paragraphs 7(b) or
7(c) above or by you pursuant to paragraph 7(d) above shall be communicated by
written Notice of Termination to the other party hereto. For purposes hereof,
a "Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so indicated.
Ex. 1.H4-3
<PAGE>
Mr. Wm. Ellis Jackson
[ ], 1997
Page 4
(f) Date of Termination. "Date of Termination" shall mean (i) if your
employment is terminated by your death, the date of your death, and (ii) if
your employment is terminated for any other reason, the date on which a Notice
of Termination is given.
8. Compensation Upon Termination of Employment or During Disability.
Subject to paragraph 8(e) below:
(a) Death. If your employment shall be terminated by reason of your death,
the Company shall pay or grant, to such person as you shall designate in a
notice filed with the Company, or, if no such person shall be designated, to
your estate as a lump sum death benefit, (i) an amount equal to any accrued
but unpaid Base Salary at the time of your death, plus an additional payment
equal to your Base Salary for the period from such date through the end of the
month following the month in which you die, (ii) an amount equal to any
accrued but unpaid bonus under the 1997 Bonus Plan or any bonus payable
pursuant to any Future Bonus Plans, to the extent earned but not paid with
respect to any year prior to the year in which your death occurs; and (iii) a
pro rata portion (based on the number of days worked) of the bonus payable
under the 1997 Bonus Plan or any Future Bonus Plan in effect for the year in
which your death occurs based upon the assumption that the performance goals
established under the applicable program with respect to the entire year in
which your death occurs are met. In addition, you shall retain all stock
options that are vested in accordance with the terms of the stock option plan
and grant letter controlling such stock options, with such options remaining
exercisable for six months from the date of your death and you shall receive
such additional benefits as may be provided by the then existing plans,
programs and/or arrangements of the Company. This amount and these benefits
shall be exclusive of and in addition to any payments your widow,
beneficiaries or estate may be entitled to receive pursuant to any pension or
employee benefit plan maintained by the Company. Your designated beneficiary
or the executor of your estate, as the case may be, shall accept the payment
provided for in this paragraph 8 in full discharge and release of the Company
of and from any further obligations under this Agreement.
(b) Disability. During any period that you fail to perform your duties
hereunder as a result of incapacity due to physical or mental illness, you
shall continue to receive your full Base Salary until your employment is
terminated pursuant to paragraph 7(b) hereof. If your employment is terminated
by the Company pursuant to paragraph 7(b), the Company shall pay to you in a
lump sum payment, an amount equal to (i) any accrued but unpaid bonus under
the 1997 Bonus Plan or any bonus payable pursuant to any Future Bonus Plans,
to the extent earned but not paid with respect to any year prior to the year
in which your disability occurs; and (ii) a pro rata portion (based on the
number of days worked) of the bonus payable under the 1997 Bonus Plan or any
Future Bonus Plan in effect for the year in which your disability occurs based
upon the assumption that the performance goals established under the
applicable program with respect to the entire year in which your disability
occurs are met. In addition, you shall retain all stock options that are
vested in accordance with the terms of the stock option plan and grant letter
controlling such stock options, with such options remaining exercisable for
six months from the date of your disability and you shall receive such
additional benefits as may be provided by the then existing plans, programs
and/or arrangements of the Company. During any such period and thereafter you
shall continue to bear the obligations provided for in paragraph 9 below in
accordance with the terms of such paragraph 9.
(c) Cause or Other Than Good Reason. If your employment shall be terminated
for Cause or you shall terminate your employment other than for Good Reason,
the Company shall be discharged and released of and from any further
obligations under this Agreement except for any Base Salary through the Date
of Termination or the date on which you terminate your employment at the rate
in effect at the time Notice of Termination is given or the date on which you
terminate your employment, to the extent required by law. Thereafter you shall
continue to have the obligations provided for in paragraph 9 below. Nothing
contained herein shall be deemed to be a waiver by the Company of any rights
that it may have against you in respect of your actions which gave rise to the
termination of your employment for Cause or for any reason other than for Good
Reason.
Ex. 1.H4-4
<PAGE>
Mr. Wm. Ellis Jackson
[ ], 1997
Page 5
(d) Other Than for Cause or For Good Reason. If the Company shall terminate
your employment other than pursuant to paragraphs 7(b) or 7(c) hereof or if
you shall terminate your employment for Good Reason, then:
(i) The Company shall continue to pay you your Base Salary, at the rate
in effect at the time that the Notice of Termination is given in accordance
with paragraph 7(e) hereof, without interest through the later of (A) the
third anniversary of the Effective Date and (B) one year from the Date of
Termination, in accordance with normal payroll practices; provided,
however, that in the event of your death prior to the expiration of payment
hereunder your estate or beneficiary shall receive the remaining amount
hereunder in a lump sum payment;
(ii) The Company shall pay you an amount equal to the sum of (A) any
bonus earned as of the Date of Termination under the 1997 Bonus Plan or any
Future Bonus Plan for a fiscal year ending prior to the Date of Termination
but not paid as of such date, (B) a pro rata portion (based on the number
of days worked) of the target bonus (not in excess of twenty-five percent
(25%) of your Base Salary) payable under the 1997 Bonus Plan or any Future
Bonus Plan in effect for the fiscal year in which your Date of Termination
occurs (determined without regard to whether the performance goals
established under the applicable program are met) and (C) an amount equal
to your target bonus (not in excess of twenty-five percent (25%) of your
Base Salary) under the 1997 Bonus Plan or any Future Bonus Plan in effect
for the fiscal year in which your Date of Termination occurs (determined
without regard to whether the performance goals established under the
applicable program are met), multiplied by (1) if the Date of Termination
is during the initial three year Employment Period, the greater of (x) the
number (not in excess of three) of years and fractions of years remaining
in the initial three year Employment Period or (y) one or (2) if the Date
of Termination is during any Extended Employment Period, one;
(iii) You shall become fully vested in any stock options, with such
options remaining exercisable for six months from the date of your
termination of employment; and
(iv) The Company shall maintain in full force and effect, for your
continued benefit for twenty-four months after termination of employment,
all employee benefit plans and programs providing health and/or life
insurance benefits in which you were entitled to participate immediately
prior to the Date of Termination provided that your continued participation
is possible under the general terms and provisions of such plans and
programs. In the event that your participation in any such plan or program
is barred, the Company shall provide you with comparable benefits under a
mirror benefit plan. Notwithstanding the above, if you are employed by a
new employer and are eligible to receive comparable coverage from such
employer (including the waiver of any pre-existing condition limitation) at
a comparable cost to you, you shall no longer be eligible to receive
coverage under this paragraph.
(e) Parachute Payment. Notwithstanding anything herein to the contrary, if
any of the payments or benefits received or to be received by you in
connection with a Change in Control or your termination of employment (whether
such payments or benefits are provided pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person whose
actions result in a Change in Control or any person affiliated with the
Company or such person) (such payments or benefits being hereinafter referred
to as the "Total Payments") would be subject to the excise tax (the "Excise
Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), then the payments under this paragraph 8 hereof shall be
reduced (by the minimal amount necessary) so that no portion of the Total
Payments is subject to the Excise Tax.
For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) all of the
Total Payments shall be treated as "parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (the
"Tax Counsel") selected
Ex. 1.H4-5
<PAGE>
Mr. Wm. Ellis Jackson
[ ], 1997
Page 6
by the Company and reasonably acceptable by you, such payments or benefits (in
whole or in part) do not constitute parachute payments, including by reason of
Section 280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within
the meaning of Section 280G(b)(1) of the Code shall be treated as subject to
the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in
excess of the "base amount" (as defined in Section 280G(b)(3) of the Code)
allocable to such payment, or are otherwise not subject to the Excise Tax, and
(iii) the value of any noncash benefits or any deferred payment or benefit
shall be determined by Tax Counsel in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
9. Restrictive Covenants and Confidentiality; Injunctive Relief.
(a) You agree, as a condition to the performance by the Company of its
obligations hereunder, particularly its obligations under paragraph 3 hereof,
that during the term of your employment, except for a termination of
employment without Cause or for Good Reason, hereunder and during the further
period of one (1) year after the termination of such employment, you shall
not, without the prior written approval of the Board, directly or indirectly
through any other person, firm or corporation:
(i) Solicit, raid, entice or induce any person, firm or corporation that
presently is or at any time during the term of your employment hereunder
shall be a customer of the Company, or any of its subsidiary companies, to
become a customer of any other person, firm or corporation, and you shall
not approach any such person, firm or corporation for such purpose or
authorize or knowingly approve the taking of such actions by any other
person;
(ii) Solicit, raid, entice or induce any person that presently is or at
any time during the term of your employment hereunder shall be an employee
of the Company, or any of its subsidiary companies, to become employed by
any person, firm or corporation, and you shall not approach any such
employee for such purpose or authorize or knowingly approve the taking of
such actions by any other person; or
(iii) Engage, participate, make any financial investment in, or become
employed by any person, firm, corporation or other business enterprise in
the United States which is engaged, directly or indirectly, during the term
of your employment or at the time of your termination of employment, as the
case may be, which (x) derives in excess of 20% of its gross revenues from
the sale of products substantially the same as the products of the Company
and/or any of its subsidiary companies or (y) has substantially the same
customer base for the same products as the Company and/or any of its
subsidiary companies. The foregoing covenant shall not be construed to
preclude you from making any investments in the securities of any company,
whether or not engaged in competition with the Company and/or any of its
subsidiary companies, to the extent that such securities are actively
traded on a national securities exchange or in the over-the-counter market
in the United States or any foreign securities exchange and, after giving
effect to such investment, you do not beneficially own securities
representing more than 5% of the combined voting power of the voting
securities of such company.
(b) Recognizing that the knowledge, information and relationship with
customers, suppliers, and agents, and the knowledge of the Company's and its
subsidiary companies' business methods, systems, plans and policies which you
shall hereafter establish, receive or obtain as an employee of the Company or
its subsidiary companies, are valuable and unique assets of the respective
businesses of the Company and its subsidiary companies, you agree that, during
and after the term of your employment hereunder, you shall not (otherwise than
pursuant to your duties hereunder) disclose or use, without the prior written
approval of the Board, any such knowledge or information pertaining to the
Company or any of its subsidiary companies, their business, personnel or
policies, to any person, firm, corporation or other entity, for any reason or
purpose whatsoever. The provisions of this paragraph 9 shall not apply to
information which is or shall become generally known to the
Ex. 1.H4-6
<PAGE>
Mr. Wm. Ellis Jackson
[ ], 1997
Page 7
public or the trade (except by reason of your breach of your obligations
hereunder), information which is or shall become available in trade or other
publications, information known to you prior to entering the employ of the
Company, and information which you are required to disclose by law or an order
of a court of competent jurisdiction (provided that prior to your disclosure
of any such information you shall provide the Company with reasonable notice
and a reasonable opportunity to seek a protective order to prevent such
disclosure).
(c) The provisions of paragraph 9(b) above shall survive the termination of
your employment hereunder, irrespective of the reason therefor.
(d) You acknowledge that the services to be rendered by you are of a
special, unique and extraordinary character and, in connection with such
services, you will have access to confidential information vital to the
Company's and its subsidiary companies' businesses. By reason of this, you
consent and agree that if you violate any of the provisions of this Agreement
with respect to diversion of the Company's or its subsidiary companies'
customers or employees, or confidentiality, the Company and its subsidiary
companies would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or otherwise,
the Company shall be entitled to an injunction restraining you from committing
or continuing any such violation of this Agreement.
10. Deductions and Withholdings. The Company shall be entitled to withhold
any amounts payable under this Agreement on account of payroll taxes and
similar matters as are required by applicable law, rule or regulation of
appropriate governmental authorities.
11. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
reasonably satisfactory to you, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled to hereunder if you terminated your employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall include any successor
to the Company's business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 11 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation
of law.
(b) This Agreement and all your rights hereunder shall inure to the benefit
of and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you hereunder if you
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your devisee,
legatee, or other designee or, if there be no such designee, to your estate.
Your obligations hereunder may not be delegated and except as otherwise
provided herein relating to the designation of a devisee, legatee or other
designee, you may not assign, transfer, pledge, encumber, hypothecate or
otherwise dispose of this Agreement or any of your rights hereunder, and any
such attempted delegation or disposition shall be null and void and without
effect.
12. Notice. For purposes of this Agreement, notices and all other
communications provided for shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
Ex. 1.H4-7
<PAGE>
Mr. Wm. Ellis Jackson
[ ], 1997
Page 8
If to you:
Mr. Wm. Ellis Jackson
221 Wycliffe Drive
Greer, South Carolina 29650
If to the Company:
JPS Textile Group, Inc.
555 North Pleasantburg Drive, Suite 202
Greenville, South Carolina 29607
Attention: Chairman of the Board
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by you and by the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement constitutes the
complete understanding between the parties with respect to your employment and
supersedes any other prior oral or written agreements, arrangements or
understandings between you and the Company. This Agreement amends, restates
and supersedes any existing employment, retention, severance and change-in-
control agreements (collectively, the "Prior Agreements") between you and the
Company and/or any of its subsidiary companies upon the Effective Date, and
any and all claims under or in respect of the Prior Agreements that you may
have or assert shall, as of the Effective Date, be governed by, and completely
satisfied and discharged in accordance with, the terms and conditions of this
Agreement. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement may
not be changed or terminated orally but only by an agreement in writing signed
by the parties hereto. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
South Carolina.
14. Arbitration. All differences, claims or matters in dispute arising out
of this Agreement, the breach hereof or otherwise arising between the Company
or any of its affiliates and you shall, at the election of either party, by
notice to the other, be submitted to arbitration by the American Arbitration
Association or its successor, in Greenville, South Carolina. Such arbitration
shall be governed by the then existing rules of the American Arbitration
Association and the laws of the State of South Carolina as then in effect. The
expenses, including your reasonable attorneys' fees, in connection with such
arbitration shall be borne by the Company.
15. Validity; Effectiveness. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
Ex. 1.H4-8
<PAGE>
Mr. Wm. Ellis Jackson
[ ], 1997
Page 9
If the foregoing is satisfactory, please so indicate by signing and
returning to the Company the enclosed copy of this letter whereupon this will
constitute our agreement on the subject.
JPS Textile Group, Inc.
By: _________________________________
Name: Jerry E. Hunter
Title: Chief Executive Officer
ACCEPTED AND AGREED TO:
_____________________________________
Wm. Ellis Jackson
Ex. 1.H4-9
<PAGE>
EXHIBIT H5
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JPS TEXTILE GROUP, INC.
555 NORTH PLEASANTBURG DRIVE, SUITE 202
GREENVILLE, SOUTH CAROLINA 29607
[ ], 1997
Mr. L. Allen Ollis
406 Keenan Orchard Drive
Mauldin, South Carolina 29662
Dear Allen:
We are writing with respect to your employment by JPS Textile Group, Inc.
(the "Company") as Controller of the Company. The Company acknowledges and
recognizes the value of your experience and abilities to the Company since the
beginning of your employment with the Company, and desires to continue to
retain and make secure for itself such experience and abilities on the terms
and subject to the conditions set forth in this agreement (the "Agreement").
1. Employment. The Company agrees to employ you and you agree to be employed
by the Company commencing on the consummation of the Joint Plan of
Reorganization of the Company and its wholly owned subsidiary, JPS Capital
Corp., dated [insert date] (the "Effective Date") and ending on the third
anniversary thereof (unless sooner terminated as hereinafter provided) (the
"Employment Period"), on the terms and subject to the conditions set forth in
this Agreement; provided, however, that commencing on the third anniversary of
the Effective Date and each anniversary thereafter, the Employment Period
shall automatically be extended for one additional year (the "Extended
Employment Period") unless not later than the end of the Employment Period or
the Extended Employment Period, as the case may be, the Company or you shall
have given written notice to the other not to extend the Employment Period or
any Extended Employment Period. Unless specifically provided to the contrary,
the Employment Period shall be deemed to include any Extended Employment
Period.
2. Duties. (a) You shall be employed as the Controller of the Company. In
such capacity, you shall serve as a senior executive officer of the Company
and shall have the duties and responsibilities prescribed for such position by
the By-Laws of the Company, and shall have such other duties and
responsibilities as may from time to time be prescribed by the Board and are
customarily performed by someone in your position, provided that such duties
and responsibilities are consistent with your position as Controller of the
Company. In the performance of your duties, you shall be subject to the
supervision and direction of the Chief Executive Officer of the Company.
(b) Subject to the terms of your employment hereunder, you shall devote such
time as is reasonably necessary to the proper performance of your duties and
responsibilities as Controller of the Company. You hereby represent and
warrant to the Company that, except as described above, you have no
obligations under any existing employment or service agreement and that your
performance of the services required of you hereunder will not conflict with
your other existing obligations described above.
3. Compensation.
(a)(i) Base Salary. During the term of your employment hereunder, the
Company shall pay you, and you shall accept from the Company for your
services, a salary at the rate of not less than $95,000 per year (the "Base
Salary"), payable in accordance with the Company's policy with respect to the
compensation of executives. The Board shall annually review your performance
and determine, in its sole discretion, whether or not to increase your Base
Salary and, if so, the amount of such increase.
Ex. 1.H5-1
<PAGE>
Mr. L. Allen Ollis
[ ], 1997
Page 2
(ii) Bonus. In addition to your Base Salary, unless you voluntarily
terminate your employment for other than Good Reason (as hereinafter
defined), or are terminated by the Company for Cause (as hereinafter
defined), you will be eligible to participate in the 1997 Management
Incentive Bonus Plan (the "1997 Bonus Plan") and receive a bonus in an
amount and based upon the attainment of the performance goals specified
therein. The Board shall establish a performance-based annual bonus program
for senior executives of the Company including you for fiscal years after
1997 (a "Future Bonus Plan") and award you an annual bonus opportunity
thereunder which is not less favorable than the opportunity provided
pursuant to the 1997 Bonus Plan without restricting the discretion of the
Board to set reasonable targets and criteria for such incentive
compensation.
(iii) Retention Grant. In addition to your Base Salary, you will receive
on the Effective Date a cash payment in the amount of $14,372 and 1,843
shares of common stock of the Company.
(iv) Incentive Compensation and Other Plans. During the term of your
employment hereunder, you shall participate in any incentive compensation
(including stock options, restricted stock and/or other long-term incentive
compensation), deferred compensation, savings and retirement plans,
practices, policies and programs as adopted and approved by the Board from
time to time.
(b) Reimbursement of Expenses. During your employment, you will be entitled
to receive prompt reimbursement for all reasonable expenses incurred by you in
performing your services hereunder, provided that you properly account
therefor in accordance with Company policy.
4. Vacations. During your employment, you shall be entitled to reasonable
vacations from time to time in accordance with the regular procedures of the
Company governing senior executives. You shall also be entitled to all paid
holidays given by the Company to its senior executives.
5. Participation in Benefit Plans. You shall be entitled to participate in
and to receive benefits under all the Company's employee benefit plans and
arrangements in effect on the date hereof, and you shall also be entitled to
participate in or receive benefits under any pension or retirement plan,
savings plan, or health-and-accident plan made available by the Company in the
future to its senior executives and other key management employees, subject to
and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements and provided that you meet the
eligibility requirements thereof.
6. Other Offices. You further agree to serve without additional
compensation, if elected or appointed thereto, as an officer or director of
any of the Company's subsidiaries or affiliates.
7. Termination.
(a) Death. Your employment hereunder shall terminate upon your death.
(b) Disability. In the event of your permanent disability (as hereinafter
defined) during the term of your employment hereunder, the Company shall have
the right, upon written notice to you, to terminate your employment hereunder,
effective upon the giving of such notice. For purposes hereof, "permanent
disability" shall be defined as any physical or mental disability or
incapacity which renders you incapable of fully performing the services
required of you in accordance with your obligations hereunder for a period of
150 consecutive days or for shorter periods aggregating 150 days during any
period of twelve (12) consecutive months.
(c) Cause. The Company may terminate your employment hereunder for "Cause."
For purposes hereof, termination for "Cause" shall mean termination after:
(i) your violation of any of the provisions of paragraph 9 hereof;
Ex. 1.H5-2
<PAGE>
Mr. L. Allen Ollis
[ ], 1997
Page 3
(ii) your commission of an intentional act of fraud, embezzlement, theft
or dishonesty against the Company or its affiliates;
(iii) your conviction of (or pleading by you of nolo contendere rto) any
crime which constitutes a felony or misdemeanor involving moral turpitude
or which might, in the reasonable opinion of the Company, cause
embarrassment to the Company; or
(iv) the gross neglect or willful failure by you to perform your duties
and responsibilities in all material respects as set forth in paragraph 2
hereof, if such breach of duty is not cured within 30 days after written
notice thereof to you by the Board.
For purposes of clause (iv), no act, or failure to act, on your part shall be
deemed "willful" unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your act, or failure to act, was in the
best interest of the Company.
(d) Termination by You. You may terminate your employment hereunder for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean (A) any
assignment to you of any duties (other than incident to a promotion)
materially different than or in addition to those contemplated by, or any
limitation of your powers or in any respect not contemplated by, paragraph 2
hereof, provided that you first deliver written notice thereof to the Chairman
of the Board and the Company shall have failed to cure such non-permitted
assignment or limitation within thirty (30) days after receipt of such written
notice, (B) a reduction in your rate of base salary or the failure to maintain
incentive bonus arrangements substantially similar in earnings potential to
those in effect on the Effective Date, or a material reduction in your fringe
benefits or any other material failure by the Company to comply with
paragraphs 3 through 5 hereof, provided that you first deliver written notice
thereof to the Chairman of the Board and the Company shall have failed to cure
such reduction or failure within thirty (30) days after receipt of such
written notice, (C) your being required to relocate your principal residence
from its existing location without your consent, or (D) upon notice by the
Company as set forth in paragraph 1 hereof not to extend the Employment
Period.
For purposes of this Agreement, a "Change in Control" means the
occurrence of any one of the following events following the Effective Date
(other than the consummation of the Joint Plan of Reorganization of the
Company and its wholly owned subsidiary, JPS Capital Corp.): (a) any person
or other entity (other than any of the Company's subsidiaries), including
any person as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), becoming the beneficial owner, as
defined in Rule 13d-3 of the Exchange Act, directly or indirectly, of more
than fifty percent (50%) of the total combined voting power of all classes
of capital stock of the Company ordinarily entitled to vote for the
election of directors of the Company, (b) the sale of all or substantially
all of the property or assets of the Company (other than a sale to any of
the Company's subsidiaries), (c) the consolidation or merger of the Company
with another corporation (other than with any of the Company's subsidiaries
or in which the Company is the surviving corporation), the consummation of
which would result in the shareholders of the Company immediately before
the occurrence of the consolidation or merger owning, in the aggregate,
less than 50% of the voting stock of the surviving entity immediately
following the occurrence of such consolidation or merger, or (d) a change
in the Board occurring with the result that the members of the Board on the
Effective Date (the "Incumbent Directors") no longer constitute a majority
of such Board, provided that any person becoming a director whose election
or nomination for election was supported by a majority of the Incumbent
Directors (other than you if you are a Director) shall be considered an
Incumbent Director for purposes hereof.
(e) Notice. Any termination by the Company pursuant to paragraphs 7(b) or
7(c) above or by you pursuant to paragraph 7(d) above shall be communicated by
written Notice of Termination to the other party
Ex. 1.H5-3
<PAGE>
Mr. L. Allen Ollis
[ ], 1997
Page 4
hereto. For the purposes hereof, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.
(f) Date of Termination. "Date of Termination" shall mean (i) if your
employment is terminated by your death, the date of your death, and (ii) if
your employment is terminated for any other reason, the date on which a Notice
of Termination is given.
8. Compensation Upon Termination of Employment or During Disability.
Subject to paragraph 8(e) below:
(a) Death. If your employment shall be terminated by reason of your death,
the Company shall pay or grant, to such person as you shall designate in a
notice filed with the Company, or, if no such person shall be designated, to
your estate as a lump sum death benefit, (i) an amount equal to any accrued
but unpaid Base Salary at the time of your death, plus an additional payment
equal to your Base Salary for the period from such date through the end of the
month following the month in which you die, (ii) an amount equal to any
accrued but unpaid bonus under the 1997 Bonus Plan or any bonus payable
pursuant to any Future Bonus Plans, to the extent earned but not paid with
respect to any year prior to the year in which your death occurs; and (iii) a
pro rata portion (based on the number of days worked) of the bonus payable
under the 1997 Bonus Plan or any Future Bonus Plan in effect for the year in
which your death occurs based upon the assumption that the performance goals
established under the applicable program with respect to the entire year in
which your death occurs are met. In addition, you shall retain all stock
options that are vested in accordance with the terms of the stock option plan
and grant letter controlling such stock options, with such options remaining
exercisable for six months from the date of your death and you shall receive
such additional benefits as may be provided by the then existing plans,
programs and/or arrangements of the Company. This amount and these benefits
shall be exclusive of and in addition to any payments your widow,
beneficiaries or estate may be entitled to receive pursuant to any pension or
employee benefit plan maintained by the Company. Your designated beneficiary
or the executor of your estate, as the case may be, shall accept the payment
provided for in this paragraph 8 in full discharge and release of the Company
of and from any further obligations under this Agreement.
(b) Disability. During any period that you fail to perform your duties
hereunder as a result of incapacity due to physical or mental illness, you
shall continue to receive your full Base Salary until your employment is
terminated pursuant to paragraph 7(b) hereof. If your employment is terminated
by the Company pursuant to paragraph 7(b), the Company shall pay to you in a
lump sum payment, an amount equal to (i) any accrued but unpaid bonus under
the 1997 Bonus Plan or any bonus payable pursuant to any Future Bonus Plans,
to the extent earned but not paid with respect to any year prior to the year
in which your disability occurs; and (ii) a pro rata portion (based on the
number of days worked) of the bonus payable under the 1997 Bonus Plan or any
Future Bonus Plan in effect for the year in which your disability occurs based
upon the assumption that the performance goals established under the
applicable program with respect to the entire year in which your disability
occurs are met. In addition, you shall retain all stock options that are
vested in accordance with the terms of the stock option plan and grant letter
controlling such stock options, with such options remaining exercisable for
six months from the date of your disability and you shall receive such
additional benefits as may be provided by the then existing plans, programs
and/or arrangements of the Company. During any such period and thereafter you
shall continue to bear the obligations provided for in paragraph 9 below in
accordance with the terms of such paragraph 9.
(c) Cause or Other Than Good Reason. If your employment shall be terminated
for Cause or you shall terminate your employment other than for Good Reason,
the Company shall be discharged and released of and from any further
obligations under this Agreement except for any Base Salary through the Date
of Termination or the date on which you terminate your employment at the rate
in effect at the time Notice of Termination is
Ex. 1.H5-4
<PAGE>
Mr. L. Allen Ollis
[ ], 1997
Page 5
given or the date on which you terminate your employment, to the extent
required by law. Thereafter you shall continue to have the obligations
provided for in paragraph 9 below. Nothing contained herein shall be deemed to
be a waiver by the Company of any rights that it may have against you in
respect of your actions which gave rise to the termination of your employment
for Cause or for any reason other than for Good Reason.
(d) Other Than for Cause or For Good Reason. If the Company shall terminate
your employment other than pursuant to paragraphs 7(b) or 7(c) hereof or if
you shall terminate your employment for Good Reason, then:
(i) The Company shall continue to pay you your Base Salary, at the rate
in effect at the time that the Notice of Termination is given in accordance
with paragraph 7(e) hereof, without interest through the later of (A) the
third anniversary of the Effective Date and (B) one-year from the Date of
Termination, in accordance with normal payroll practices; provided,
however, that in the event of your death prior to the expiration of payment
hereunder your estate or beneficiary shall receive the remaining amount
hereunder in a lump sum payment;
(ii) The Company shall pay you an amount equal to the sum of (A) any
bonus earned as of the Date of Termination under the 1997 Bonus Plan or any
Future Bonus Plan for a fiscal year ending prior to the Date of Termination
but not paid as of such date, (B) a pro rata portion (based on the number
of days worked) of the target bonus (not in excess of twenty-five percent
(25%) of your Base Salary) payable under the 1997 Bonus Plan or any Future
Bonus Plan in effect for the fiscal year in which your Date of Termination
occurs (determined without regard to whether the performance goals
established under the applicable program are met) and (C) an amount equal
to your target bonus (not in excess of twenty-five percent (25%) of your
Base Salary) under the 1997 Bonus Plan or any Future Bonus Plan in effect
for the fiscal year in which your Date of Termination occurs (determined
without regard to whether the performance goals established under the
applicable program are met), multiplied by (1) if the Date of Termination
is during the initial three year Employment Period, the greater of (x) the
number (not in excess of three) of years and fractions of years remaining
in the initial three year Employment Period or (y) one or (2) if the Date
of Termination is during any Extended Employment Period, one;
(iii) You shall become fully vested in any stock options, with such
options remaining exercisable for six months from the date of your
termination of employment; and
(iv) The Company shall maintain in full force and effect, for your
continued benefit for twenty-four months after termination of employment,
all employee benefit plans and programs providing health and/or life
insurance benefits in which you were entitled to participate immediately
prior to the Date of Termination provided that your continued participation
is possible under the general terms and provisions of such plans and
programs. In the event that your participation in any such plan or program
is barred, the Company shall provide you with comparable benefits under a
mirror benefit plan. Notwithstanding the above, if you are employed by a
new employer and are eligible to receive comparable coverage from such
employer (including the waiver of any pre-existig condition limitation) at
a comparable cost to you, you shall no longer be eligible to receive
coverage under this paragraph.
(e) Parachute Payment. Notwithstanding anything herein to the contrary, if
any of the payments or benefits received or to be received by you in
connection with a Change in Control or your termination of employment (whether
such payments or benefits are provided pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person whose
actions result in a Change in Control or any person affiliated with the
Company or such person) (such payments or benefits being hereinafter referred
to as the "Total Payments") would be subject to the excise tax (the "Excise
Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), then the payments under this paragraph 8 hereof shall be
reduced (by the minimal amount necessary) so that no portion of the Total
Payments is subject to the Excise Tax.
Ex. 1.H5-5
<PAGE>
Mr. L. Allen Ollis
[ ], 1997
Page 6
For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) all of the
Total Payments shall be treated as "parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (the
"Tax Counsel") selected by the Company and reasonably acceptable by you, such
payments or benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code, (ii) all
"excess parachute payments" within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject to the Excise Tax unless, in the opinion of
Tax Counsel, such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the "base amount" (as defined
in Section 280G(b)(3) of the Code) allocable to such payment, or are otherwise
not subject to the Excise Tax, and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by Tax Counsel in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
9. Restrictive Covenants and Confidentiality; Injunctive Relief.
(a) You agree, as a condition to the performance by the Company of its
obligations hereunder, particularly its obligations under paragraph 3 hereof,
that during the term of your employment, except for a termination of
employment without Cause or for Good Reason, hereunder and during the further
period of one (1) year after the termination of such employment, you shall
not, without the prior written approval of the Board, directly or indirectly
through any other person, firm or corporation:
(i) Solicit, raid, entice or induce any person, firm or corporation that
presently is or at any time during the term of your employment hereunder
shall be a customer of the Company, or any of its subsidiary companies, to
become a customer of any other person, firm or corporation, and you shall
not approach any such person, firm or corporation for such purpose or
authorize or knowingly approve the taking of such actions by any other
person;
(ii) Solicit, raid, entice or induce any person that presently is or at
any time during the term of your employment hereunder shall be an employee
of the Company, or any of its subsidiary companies, to become employed by
any person, firm or corporation, and you shall not approach any such
employee for such purpose or authorize or knowingly approve the taking of
such actions by any other person; or
(iii) engage, participate, make any financial investment in, or become
employed by any person, firm, corporation or other business enterprise in
the United States which is engaged, directly or indirectly, during the term
of your employment or at the time of your termination of employment, as the
case may be, which (x) derives in excess of 20% of its gross revenues from
the sale of products substantially the same as the products of the Company
and/or any of its subsidiary companies or (y) has substantially the same
customer base for the same products as the Company and/or any of its
subsidiary companies. The foregoing covenant shall not be construed to
preclude you from making any investments in the securities of any company,
whether or not engaged in competition with the Company and/or any of its
subsidiary companies, to the extent that such securities are actively
traded on a national securities exchange or in the over-the-counter market
in the United States or any foreign securities exchange and, after giving
effect to such investment, you do not beneficially own securities
representing more than 5% of the combined voting power of the voting
securities of such company.
(b) Recognizing that the knowledge, information and relationship with
customers, suppliers, and agents, and the knowledge of the Company's and its
subsidiary companies' business methods, systems, plans and policies which you
shall hereafter establish, receive or obtain as an employee of the Company or
its subsidiary companies, are valuable and unique assets of the respective
businesses of the Company and its subsidiary companies, you agree that, during
and after the term of your employment hereunder, you shall not (otherwise than
pursuant to your duties hereunder) disclose or use, without the prior written
approval of the Board, any
Ex. 1.H5-6
<PAGE>
Mr. L. Allen Ollis
[ ], 1997
Page 7
such knowledge or information pertaining to the Company or any of its
subsidiary companies, their business, personnel or policies, to any person,
firm, corporation or other entity, for any reason or purpose whatsoever. The
provisions of this paragraph 9 shall not apply to information which is or
shall become generally known to the public or the trade (except by reason of
your breach of your obligations hereunder), information which is or shall
become available in trade or other publications, information known to you
prior to entering the employ of the Company, and information which you are
required to disclose by law or an order of a court of competent jurisdiction
(provided that prior to your disclosure of any such information you shall
provide the Company with reasonable notice and a reasonable opportunity to
seek a protective order to prevent such disclosure).
(c) The provisions of paragraph 9(b) above shall survive the termination of
your employment hereunder, irrespective of the reason therefor.
(d) You acknowledge that the services to be rendered by you are of a
special, unique and extraordinary character and, in connection with such
services, you will have access to confidential information vital to the
Company's and its subsidiary companies' businesses. By reason of this, you
consent and agree that if you violate any of the provisions of this Agreement
with respect to diversion of the Company's or its subsidiary companies'
customers or employees, or confidentiality, the Company and its subsidiary
companies would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or otherwise,
the Company shall be entitled to an injunction restraining you from committing
or continuing any such violation of this Agreement.
10. Deductions and Withholdings. The Company shall be entitled to withhold
any amounts payable under this Agreement on account of payroll taxes and
similar matters as are required by applicable law, rule or regulation of
appropriate governmental authorities.
11. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
reasonably satisfactory to you, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled to hereunder if you terminated your employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall include any successor
to the Company's business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 11 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation
of law.
(b) This Agreement and all your rights hereunder shall inure to the benefit
of and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you hereunder if you
had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your devisee,
legatee, or other designee or, if there be no such designee, to your estate.
Your obligations hereunder may not be delegated, and except as otherwise
provided herein relating to the designation of a devisee, legatee or other
designee, you may not assign, transfer, pledge, encumber, hypothecate or
otherwise dispose of this Agreement or any of your rights hereunder, and any
such attempted delegation or disposition shall be null and void and without
effect.
Ex. 1.H5-7
<PAGE>
Mr. L. Allen Ollis
[ ], 1997
Page 8
12. Notice. For purposes of this Agreement, notices and all other
communications provided for shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to you:
Mr. L. Allen Ollis
406 Keenan Orchard Drive
Mauldin, South Carolina 29662
If to the Company:
JPS Textile Group, Inc.
555 North Pleasantburg Drive, Suite 202
Greenville, South Carolina 29607
Attention: Chairman of the Board
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by you and by the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement constitutes the
complete understanding between the parties with respect to your employment and
supersedes any other prior oral or written agreements, arrangements or
understandings between you and the Company. This Agreement amends, restates
and supersedes any existing employment, retention, severance and change-in-
control agreements (collectively, the "Prior Agreements") between you and the
Company and/or any of its subsidiary companies upon the Effective Date, and
any and all claims under or in respect of the Prior Agreements that you may
have or assert shall, as of the Effective Date, be governed by, and completely
satisfied and discharged in accordance with, the terms and conditions of this
Agreement. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. This Agreement may
not be changed or terminated orally but only by an agreement in writing signed
by the parties hereto. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
South Carolina.
14. Arbitration. All differences, claims or matters in dispute arising out
of this Agreement, the breach hereof or otherwise arising between the Company
or any of its affiliates and you shall, at the election of either party, by
notice to the other, be submitted to arbitration by the American Arbitration
Association or its successor, in Greenville, South Carolina. Such arbitration
shall be governed by the then existing rules of the American Arbitration
Association and the laws of the State of South Carolina as then in effect. The
expenses, including your reasonable attorneys' fees, in connection with such
arbitration shall be borne by the Company.
15. Validity; Effectiveness. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
Ex. 1.H5-8
<PAGE>
Mr. L. Allen Ollis
[ ], 1997
Page 9
If the foregoing is satisfactory, please so indicate by signing and
returning to the Company the enclosed copy of this letter whereupon this will
constitute our agreement on the subject.
JPS Textile Group, Inc.
By: _________________________________
Name:Jerry E. Hunter
Title:Chief Executive Officer
ACCEPTED AND AGREED TO:
_______________________________________
L. Allen Ollis
Ex. 1.H5-9
<PAGE>
EXHIBIT I
TO JOINT PLAN OF
REORGANIZATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIRECTORS OF REORGANIZED JPS
Chairman: Jerry E. Hunter
Directors: Robert J. Capozzi
Jeffrey S. Deutschman
Nicholas P. DiPaolo
Michael L. Fulbright
John M. Sullivan, Jr.
David H. Taylor
Ex. 1.I-1
<PAGE>
EXHIBIT J
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
JPS TEXTILE GROUP, INC.
1997 INCENTIVE AND CAPITAL ACCUMULATION PLAN
1. Purpose. The JPS Textile Group, Inc. 1997 Incentive and Capital
Accumulation Plan (the "Plan") is intended to align the interests of the
Company's key employees and non-employee directors to those of its
stockholders. The Incentive Plan is also intended to provide incentives which
will attract, retain and motivate highly competent persons as key employees of
JPS Textile Group, Inc. (the "Company") and of any subsidiary corporation now
existing or hereafter formed or acquired, by providing them opportunities to
acquire shares of the common stock, par value $1.00 per share, of the Company
("Common Stock") or to receive monetary payments based on the value of such
shares pursuant to the Benefits (as defined below) described herein.
2. Administration.
(a) The Plan will be administered by a committee of the Board of Directors
of the Company (the "Board") or a subcommittee of a committee of the Board
(which may be the Company's Compensation Committee), appointed by the Board
from among its members (the "Committee"), and shall be comprised solely of not
less than two members who shall be (i) "Non-Employee Directors" within the
meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and (ii)
unless otherwise determined by the Board of Directors, "outside directors"
within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The
Committee is authorized, subject to the provisions of the Plan, to establish
such rules and regulations as it deems necessary for the proper administration
of the Plan and to make such determinations and interpretations and to take
such action in connection with the Plan and any Benefits (as defined below)
granted hereunder as it deems necessary or advisable. All determinations and
interpretations made by the Committee shall be binding and conclusive on all
participants and their legal representatives. No member of the Board of
Directors, no member of the Committee and no employee of the Company shall be
liable for any act or failure to act hereunder, except in circumstances
involving his or her bad faith, gross negligence or willful misconduct, or for
any act or failure to act hereunder by any other member or employee or by any
agent to whom duties in connection with the administration of this Plan have
been delegated. The Company shall indemnify members of the Committee and any
agent of the Committee who is an employee of the Company against any and all
liabilities or expenses to which they may be subjected by reason of any act or
failure to act with respect to their duties on behalf of the Plan, except in
circumstances involving such person's bad faith, gross negligence or willful
misconduct.
(b) The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the
Committee, or any person to whom it has delegated duties as aforesaid, may
employ one or more persons to render advice with respect to any responsibility
the Committee or such person may have under the Plan. The Committee may employ
such legal or other counsel, consultants and agents as it may deem desirable
for the administration of the Plan and may rely upon any opinion or
computation received from any such counsel, consultant or agent. Expenses
incurred by the Committee in the engagement of such counsel, consultant or
agent shall be paid by the Company, or the subsidiary or affiliate whose
employees or non-employee directors have benefitted from the Plan, as
determined by the Committee.
3. Participants. Participants will consist of such key employees and non-
employee directors of the Company and any subsidiary corporation of the
Company as the Committee in its sole discretion determines to be in a position
to impact the success and future growth and profitability of the Company and
whom the Committee may designate from time to time to receive Benefits under
the Plan. Designation of a participant in any year shall not require the
Committee to designate such person to receive a Benefit in any other year or,
once
Ex. 1.J-1
<PAGE>
designated, to receive the same type or amount of Benefit as granted to the
participant in any other year. The Committee shall consider such factors as it
deems pertinent in selecting participants and in determining the type and
amount of their respective Benefits.
4. Type of Benefits; Vesting. Benefits under the Plan may be granted in any
one or a combination of (a) Stock Options, (b) Stock Appreciation Rights, (c)
Stock Awards, (d) Performance Awards, and (e) Stock Units (each as described
below, and collectively, the "Benefits"). Stock Awards, Performance Awards,
and Stock Units may, as determined by the Committee in its discretion,
constitute Performance-Based Awards, as described in Section 11 hereof.
Benefits shall be evidenced by agreements (which need not be identical) in
such forms as the Committee may from time to time approve (the "Agreements");
provided, however, that in the event of any conflict between the provisions of
the Plan and any such agreements, the provisions of the Plan shall prevail.
To the extent not otherwise provided for in a participant's Agreement and
subject to provisions and limitations to the contrary contained herein, at the
Committee's discretion, Benefits may vest based upon the achievement of
performance-related goals, elapsed time or a combination of the achievement of
performance-related goals and elapsed time.
5. Common Stock Available Under the Plan. The aggregate number of shares of
Common Stock that may be subject to Benefits, including Stock Options, granted
under this Plan shall be 853,485 shares of Common Stock, which may be
authorized and unissued or treasury shares, subject to any adjustments made in
accordance with Section 12 hereof. The maximum number of shares of Common
Stock with respect to which Benefits may be granted or measured to any
individual participant under the Plan during the term of the Plan shall not
exceed 853,485, provided, however, that the maximum number of shares of Common
Stock with respect to which Stock Options and Stock Appreciation Rights may be
granted to an individual participant under the Plan during the term of the
Plan shall not exceed 325,000 (in each case, subject to adjustments made in
accordance with Section 12 hereof). Other than those shares of Common Stock
subject to Benefits that are cancelled or terminated as a result of the
Committee's exercise of its discretion with respect to Performance-Based
Awards as provided for in Section 11 hereof, any shares of Common Stock
subject to a Stock Option or Stock Appreciation Right which for any reason is
cancelled or terminated without having been exercised, any shares subject to
Stock Awards, Performance Awards or Stock Units which are forfeited, any
shares subject to Performance Awards settled in cash or any shares delivered
to the Company as part or full payment for the exercise of a Stock Option or
Stock Appreciation Right shall again be available for Benefits under the Plan.
The preceding sentence shall apply only for purposes of determining the
aggregate number of shares of Common Stock subject to Benefits but shall not
apply for purposes of determining the maximum number of shares of Common Stock
with respect to which Benefits (including the maximum number of shares of
Common Stock subject to Stock Options and Stock Appreciation Rights) that may
be granted to any individual participant under the Plan.
6. Stock Options. Stock Options will consist of awards from the Company that
will enable the holder to purchase a specific number of shares of Common
Stock, at set terms and at a fixed purchase price. Stock Options may be
"incentive stock options" ("Incentive Stock Options"), within the meaning of
Section 422 of the Code, or Stock Options which do not constitute Incentive
Stock Options ("Nonqualified Stock Options"). The Committee will have the
authority to grant to any participant one or more Incentive Stock Options,
Nonqualified Stock Options, or both types of Stock Options (in each case with
or without Stock Appreciation Rights). Each Stock Option shall be subject to
such terms and conditions consistent with the Plan as the Committee may impose
from time to time, subject to the following limitations:
(a) Exercise Price. Each Stock Option granted hereunder shall have such
per-share exercise price as the Committee may determine at the date of
grant; provided, however, subject to subsection (d) below, that the per-
share exercise price shall not be less than 100% of the Fair Market Value
(as defined below) of the Common Stock on the date the option is granted.
(b) Payment of Exercise Price. The option exercise price may be paid in
cash or, in the discretion of the Committee determined at the date of
grant, by the delivery of shares of Common Stock of the Company
Ex. 1.J-2
<PAGE>
then owned by the participant, by delivering to the Company an executed
promissory note (or such other form of indebtedness) on such terms and
conditions as the Committee shall determine in its sole discretion at the
date of grant, or by a combination of these methods. In the discretion of
the Committee determined at the date of grant, payment may also be made by
delivering a properly executed exercise notice to the Company together with
a copy of irrevocable instructions to a broker to deliver promptly to the
Company the amount of sale or loan proceeds to pay the exercise price. To
facilitate the foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms. The Committee may
prescribe any other method of paying the exercise price that it determines
to be consistent with applicable law and the purpose of the Plan,
including, without limitation, in lieu of the exercise of a Stock Option by
delivery of shares of Common Stock of the Company then owned by a
participant, providing the Company with a notarized statement attesting to
the number of shares owned, where, upon verification by the Company, the
Company would issue to the participant only the number of incremental
shares to which the participant is entitled upon exercise of the Stock
Option. In determining which methods a participant may utilize to pay the
exercise price, the Committee may consider such factors as it determines
are appropriate.
(c) Exercise Period. Stock Options granted under the Plan shall be
exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Committee; provided, however, that no Stock
Option shall be exercisable later than ten years after the date it is
granted. All Stock Options shall terminate at such earlier times and upon
such conditions or circumstances as the Committee shall in its discretion
set forth in such option agreement at the date of grant.
(d) Limitations on Incentive Stock Options. Incentive Stock Options may
be granted only to participants who are employees of the Company or any
subsidiary corporation of the Company at the date of grant. The aggregate
market value (determined as of the time the option is granted) of the
Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by a participant during any calendar year (under all
option plans of the Company) shall not exceed $100,000. For purposes of the
preceding sentence, Incentive Stock Options will be taken into account in
the order in which they are granted. Incentive Stock Options may not be
granted to any participant who, at the time of grant, owns stock possessing
(after the application of the attribution rules of Section 424(d) of the
Code) more than 10% of the total combined voting power of all outstanding
classes of stock of the Company or any subsidiary corporation of the
Company, unless the option price is fixed at not less than 110% of the Fair
Market Value of the Common Stock on the date of grant and the exercise of
such option is prohibited by its terms after the expiration of five years
from the date of grant of such option. Notwithstanding anything to the
contrary contained herein, no Incentive Stock Option may be exercised later
than ten years after the date it is granted. In addition, no Incentive
Stock Option shall be issued to a participant in tandem with a Nonqualified
Stock Option.
7. Stock Appreciation Rights. The Committee may, in its discretion, grant
Stock Appreciation Rights to the holders of any Stock Options granted
hereunder. In addition, Stock Appreciation Rights may be granted independently
of, and without relation to, options. A Stock Appreciation Right means a right
to receive a payment, in cash, Common Stock or a combination thereof, in an
amount equal to the excess of (x) the Fair Market Value, or other specified
valuation, of a specified number of shares of Common Stock on the date the
right is exercised over (y) the Fair Market Value, or other specified
valuation (which shall be no less than the Fair Market Value), of such shares
of Common Stock on the date the right is granted, all as determined by the
Committee. Each Stock Appreciation Right shall be subject to such terms and
conditions as the Committee shall impose from time to time.
8. Stock Awards. The Committee may, in its discretion, grant Stock Awards
(which may include mandatory payment of bonus incentive compensation in stock)
consisting of Common Stock issued or transferred to participants with or
without other payments therefor as additional compensation for services to the
Company. Stock Awards may be subject to such terms and conditions as the
Committee determines appropriate, including, without limitation, restrictions
on the sale or other disposition of such shares, the right of the Company to
re-acquire such shares for no consideration upon termination of the
participant's employment or directorship
Ex. 1.J-3
<PAGE>
within specified periods, and may constitute Performance-Based Awards, as
described below. The Committee may require the participant to deliver a duly
signed stock power, endorsed in blank, relating to the Common Stock covered by
such an award. The Committee may also require that the stock certificates
evidencing such shares be held in custody or bear restrictive legends until
the restrictions thereon shall have lapsed. The Stock Award shall specify
whether the participant shall have, with respect to the shares of Common Stock
subject to a Stock Award, all of the rights of a holder of shares of Common
Stock of the Company, including the right to receive dividends and to vote the
shares. The participant may elect to defer, or the Committee may require or
permit the deferral of, the receipt of Stock Awards upon such terms as the
Committee deems appropriate.
9. Performance Awards.
(a) Performance Awards may be granted to participants at any time and from
time to time, as shall be determined by the Committee. Performance Awards may,
as determined by the Committee in its sole discretion, constitute Performance-
Based Awards. The Committee shall have complete discretion in determining the
number, amount and timing of awards granted to each participant. Such
Performance Awards may be in the form of shares of Common Stock or Stock
Units. Performance Awards may be awarded as short-term or long-term
incentives. With respect to those Performance Awards that are intended to
constitute Performance-Based Awards, the Committee shall set performance
targets at its discretion which, depending on the extent to which they are
met, will determine the number and/or value of Performance Awards that will be
paid out to the participants, and may attach to such Performance Awards one or
more restrictions. Performance targets may be based upon, without limitation,
Company-wide, divisional and/or individual performance.
(b) With respect to those Performance Awards that are not intended to
constitute Performance-Based Awards, the Committee shall have the authority at
any time to make adjustments to performance targets for any outstanding
Performance Awards which the Committee deems necessary or desirable unless at
the time of establishment of goals the Committee shall have precluded its
authority to make such adjustments.
(c) Payment of earned Performance Awards shall be made in accordance with
terms and conditions prescribed or authorized by the Committee. The
participant may elect to defer, or the Committee may require or permit the
deferral of, the receipt of Performance Awards upon such terms as the
Committee deems appropriate.
10. Stock Units.
(a) The Committee may, in its discretion, grant Stock Units to participants
hereunder. Stock Units may, as determined by the Committee in its sole
discretion, constitute Performance-Based Awards. The Committee shall determine
the criteria for the vesting of Stock Units. A Stock Unit granted by the
Committee shall provide payment in shares of Common Stock at such time as the
award agreement shall specify. Shares of Common Stock issued pursuant to this
Section 10 may be issued with or without other payments therefor as may be
required by applicable law or such other consideration as may be determined by
the Committee. The Committee shall determine whether a participant granted a
Stock Unit shall be entitled to a Dividend Equivalent Right (as defined
below).
(b) Upon vesting of a Stock Unit, unless the Committee has determined to
defer payment with respect to such unit or a participant has elected to defer
payment under subsection (c) below, shares of Common Stock representing the
Stock Units shall be distributed to the participant unless the Committee
provides for the payment of the Stock Units in cash or partly in cash and
partly in shares of Common Stock equal to the value of the shares of Common
Stock which would otherwise be distributed to the participant.
(c) Prior to the year with respect to which a Stock Unit may vest, the
participant may elect not to receive Common Stock upon the vesting of such
Stock Unit and for the Company to continue to maintain the Stock Unit on its
books of account. In such event, the value of a Stock Unit shall be payable in
shares of Common Stock pursuant to the agreement of deferral.
Ex. 1.J-4
<PAGE>
(d) A "Stock Unit" means a notational account representing one share of
Common Stock. A "Dividend Equivalent Right" means the right to receive the
amount of any dividend paid on the share of Common Stock underlying a Stock
Unit, which shall be payable in cash or in the form of additional Stock Units.
11. Performance-Based Awards. Certain Benefits granted under the Plan may be
granted in a manner such that the Benefits qualify for the performance-based
compensation exemption of Section 162(m) of the Code ("Performance-Based
Awards"). As determined by the Committee in its sole discretion, either the
granting or vesting of such Performance-Based Awards are to be based upon one
or more of the following factors: net sales, pre-tax income before allocation
of corporate overhead and bonus, budget, earnings per share, net income,
return on stockholders' equity, return on assets, appreciation in and/or
maintenance of the price of the Common Stock or any other publicly-traded
securities of the Company, market share, gross profits, earnings before
interest and taxes, earnings before interest, taxes, depreciation and
amortization, and comparisons with various stock market indices, reductions in
costs or any combination of the foregoing. With respect to Performance-Based
Awards, (i) the Committee shall establish in writing (x) the objective
performance-based goals applicable to a given period and (y) the individual
employees or class of employees to which such performance-based goals apply no
later than 90 days after the commencement of such period (but in no event
after 25% of such period has elapsed) and (ii) no Performance-Based Awards
shall be payable to or vest with respect to, as the case may be, any
participant for a given period until the Committee certifies in writing that
the objective performance goals (and any other material terms) applicable to
such period have been satisfied. With respect to any Benefits intended to
qualify as Performance-Based Awards, after establishment of a performance
goal, the Committee shall not revise such performance goal or increase the
amount of compensation payable thereunder (as determined in accordance with
Section 162(m) of the Code) upon the attainment of such performance goal.
Notwithstanding the preceding sentence, the Committee may reduce or eliminate
the number of shares of Common Stock or cash granted or the number of shares
of Common Stock vested upon the attainment of such performance goal.
12. Adjustment Provisions; Change in Control.
(a) If there shall be any change in the Common Stock of the Company, through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, reverse stock split, split up, spinoff, combination of shares, exchange
of shares, dividend in kind or other like change in capital structure or
distribution (other than normal cash dividends) to stockholders of the
Company, an adjustment shall be made to each outstanding Stock Option and
Stock Appreciation Right such that each such Stock Option and Stock
Appreciation Right shall thereafter be exercisable for such securities, cash
and/or other property as the holder of such Stock Option or Stock Appreciation
Right would have had immediately after such change or distribution had such
Stock Option or Stock Appreciation Right been exercised in full immediately
prior to such change or distribution, and such an adjustment shall be made
successively each time any such change shall occur. In addition, in the event
of any such change or distribution, in order to prevent dilution or
enlargement of participants' rights under the Plan, the Committee will have
authority to adjust, in an equitable manner, the number and kind of shares
that may be issued under the Plan, the exercisability and vesting pensions of
such Benefits, the number and kind of shares subject to outstanding Benefits,
the exercise price applicable to outstanding Benefits, and the Fair Market
Value of the Common Stock and other value determinations applicable to
outstanding Benefits. Appropriate adjustments may also be made by the
Committee in the terms of any Benefits under the Plan to reflect such changes
or distributions and to modify any other terms of outstanding Benefits on an
equitable basis, including modifications of performance targets and changes in
the length of performance periods. In addition, other than with respect to
Stock Options, Stock Appreciation Rights and other awards intended to
constitute Performance-Based Awards, the Committee is authorized to make
adjustments to the terms and conditions of, and the criteria included in,
Benefits in recognition of unusual or nonrecurring events affecting the
Company or the financial statements of the Company, or in response to changes
in applicable laws, regulations, or accounting principles. Notwithstanding the
foregoing, (i) any adjustment with respect to an Incentive Stock Option shall
comply with the rules of Section 424(a) of the Code, and (ii) in no event
shall any adjustment be made which would render any Incentive Stock Option
granted hereunder other than an incentive stock option for purposes of Section
422 of the Code.
Ex. 1.J-5
<PAGE>
(b) In the event of a Change in Control (as defined below), the Committee,
in its discretion, may take such actions as it deems appropriate with respect
to outstanding Benefits, including, without limitation, accelerating the
exercisability or vesting of such Benefits.
The Committee, in its discretion, may determine that, upon the occurrence of
a Change in Control of the Company, each Stock Option and Stock Appreciation
Right outstanding hereunder shall terminate within a specified number of days
after notice to the holder, and such holder shall receive, with respect to
each share of Common Stock subject to such Stock Option or Stock Appreciation
Right, an amount equal to the excess of the Fair Market Value of such shares
of Common Stock immediately prior to the occurrence of such Change in Control
over the exercise price per share of such Stock Option or Stock Appreciation
Right; such amount to be payable in cash, in one or more kinds of property
(including the property, if any, payable in the transaction) or in a
combination thereof, as the Committee, in its discretion, shall determine.
For purposes of this Section 12(b), unless otherwise provided for in a
participant's Agreement, a "Change in Control" of the Company shall be deemed
to have occurred upon any of the following events:
(A) Any person or other entity (other than any of the Company's
subsidiaries), including any person as defined in Section 13(d)(3) of the
Exchange Act, becoming the beneficial owner, as defined in Rule 13d-3 of
the Exchange Act, directly or indirectly, of more than fifty percent (50%)
of the total combined voting power of all classes of capital stock of the
Company ordinarily entitled to vote for the election of directors of the
Company; or
(B) A change in the Board occurring with the result that the members of
the Board on the date of consummation of the confirmed Joint Plan of
Reorganization of the Company and its wholly owned subsidiary JPS Capital
Corp. under Chapter 11 of the Bankruptcy Code (the "Incumbent Directors")
no longer constitute a majority of such Board, provided that any person
becoming a director whose election or nomination for election was supported
by a majority of the Incumbent Directors shall be considered an Incumbent
Director for purposes hereof; or
(C) The sale of all or substantially all of the property or assets of the
Company (other than a sale to any of the Company's subsidiaries); or
(D) The consolidation or merger of the Company with another corporation
(other than with any of the Company's subsidiaries or in which the Company
is the surviving corporation), the consummation of which would result in
the shareholders of the Company immediately before the occurrence of the
consolidation or merger owning, in the aggregate, less than 50% of the
voting stock of the surviving entity immediately following the occurrence
of such consolidation or merger.
13. Transferability. Each Benefit granted under the Plan to a participant
(other than a Benefit that is no longer subject to any restrictions, including
vesting, and that has been exercised or otherwise is wholly-owned by a
participant) shall not be transferable otherwise than by will or the laws of
descent and distribution, and shall be exercisable, during the participant's
lifetime, only by the participant. In the event of the death of a participant,
each Stock Option or Stock Appreciation Right theretofore granted to him or
her shall be exercisable during such period after his or her death as the
Committee shall in its discretion set forth in such option or right at the
date of grant and then only by the executor or administrator of the estate of
the deceased participant or the person or persons to whom the deceased
participant's rights under the Stock Option or Stock Appreciation Right shall
pass by will or the laws of descent and distribution. Notwithstanding the
foregoing, at the discretion of the Committee, an award of a Benefit other
than an Incentive Stock Option may permit the transferability of a Benefit by
a participant solely to the participant's spouse, siblings, parents, children
and grandchildren or trusts for the benefit of such persons.
14. Other Provisions. The award of any Benefit under the Plan may also be
subject to such other provisions (whether or not applicable to the Benefit
awarded to any other participant) as the Committee determines, at the date of
grant, appropriate, including, without limitation, for the installment
purchase of Common Stock under Stock Options, for the installment exercise of
Stock Appreciation Rights, to assist the participant in financing the
acquisition of Common Stock, for the forfeiture of, or restrictions on resale
or other
Ex. 1.J-6
<PAGE>
disposition of, Common Stock acquired under any form of Benefit, for the
acceleration of exercisability or vesting of Benefits in the event of a change
in control of the Company, for the payment of the value of Benefits to
participants in the event of a change in control of the Company, or to comply
with federal and state securities laws, or understandings or conditions as to
the participant's employment or directorship in addition to those specifically
provided for under the Plan.
15. Fair Market Value. For purposes of this Plan and any Benefits awarded
hereunder, Fair Market Value shall be the closing price of the Company's
Common Stock on the date of calculation (or on the last preceding trading date
if Common Stock was not traded on such date) if the Company's Common Stock is
readily tradeable on a national securities exchange or other market system,
and if the Company's Common Stock is not readily tradeable, Fair Market Value
shall mean the amount determined in good faith by the Committee as the fair
market value of the Common Stock of the Company.
16. Withholding. All payments or distributions of Benefits made pursuant to
the Plan shall be net of any amounts required to be withheld pursuant to
applicable federal, state and local tax withholding requirements. If the
Company proposes or is required to distribute Common Stock pursuant to the
Plan, it may require the recipient to remit to it or to the corporation that
employs such recipient an amount sufficient to satisfy such tax withholding
requirements prior to the delivery of any certificates for such Common Stock.
In lieu thereof, the Company or the employing corporation shall have the right
to withhold the amount of such taxes from any other sums due or to become due
from such corporation to the recipient as the Committee shall prescribe. The
Committee may, in its discretion and subject to such rules as it may adopt
(including any as may be required to satisfy applicable tax and/or non-tax
regulatory requirements), permit an optionee or award or right holder to pay
all or a portion of the federal, state and local withholding taxes arising in
connection with any Benefit consisting of shares of Common Stock by electing
to have the Company withhold shares of Common Stock having a Fair Market Value
equal to the amount of tax to be withheld, such tax calculated at rates
required by statute or regulation.
17. Tenure. A participant's right, if any, to continue to serve the Company
as a director, officer, employee, or otherwise, shall not be enlarged or
otherwise affected by his or her designation as a participant under the Plan.
18. Unfunded Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it in
meeting its obligations under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company
and any participant, beneficiary, legal representative or any other person. To
the extent that any person acquires a right to receive payments from the
Company under the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company. All payments to be made hereunder
shall be paid from the general funds of the Company and no special or separate
fund shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan. The Plan is
not intended to be subject to the Employee Retirement Income Security Act of
1974, as amended.
19. No Fractional Shares. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Benefit. The Committee shall
determine whether cash, or Benefits, or other property shall be issued or paid
in lieu of fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
20. Duration, Amendment and Termination. No Benefit shall be granted more
than ten years after the Effective Date; provided, however, that the terms and
conditions applicable to any Benefit granted prior to such date may thereafter
be amended or modified by mutual agreement between the Company and the
participant or such other persons as may then have an interest therein. The
Committee may amend the Plan from time to time or suspend or terminate the
Plan at any time. However, no action authorized by this Section 20 shall
reduce the amount of any existing Benefit or change the terms and conditions
thereof without the participant's consent. No amendment of the Plan shall,
without approval of the stockholders of the Company, (i) increase the total
number
Ex. 1.J-7
<PAGE>
of shares which may be issued under the Plan or the maximum number of shares
with respect to Stock Options, Stock Appreciation Rights and other Benefits
that may be granted to any individual under the Plan or (ii) modify the
requirements as to eligibility for Benefits under the Plan; provided, however,
that no amendment may be made without approval of the stockholders of the
Company if the amendment will disqualify any Incentive Stock Options granted
hereunder.
21. Governing Law. This Plan, Benefits granted hereunder and actions taken
in connection herewith shall be governed and construed in accordance with the
laws of the State of Delaware (regardless of the law that might otherwise
govern under applicable Delaware principles of conflict of laws).
22. Effective Date. (a) The Plan shall be effective on the date on which it
is adopted by the Board (the "Effective Date") without further corporate
action by the Board or any of its subsidiaries or the holders of Common Stock.
The Committee shall not grant any Benefits under the Plan until the date of
consummation of the confirmed Joint Plan of Reorganization of the Company and
its wholly owned subsidiary, JPS Capital Corp., under chapter 11 of the
Bankruptcy Code.
(b) This Plan shall terminate on the ten-year anniversary of the Effective
Date (unless sooner terminated by the Committee).
Ex. 1.J-8
<PAGE>
EXHIBIT K
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT, dated as of , 1997, by and among JPS
TEXTILE GROUP, INC., a Delaware corporation (the "Company"), and the parties
listed on Annex A hereto (the "Initial Holders").
This Agreement is being entered into pursuant to Article IV of the Joint
Plan of Reorganization of the Company and JPS Capital Corp. under Chapter 11
of the Bankruptcy Code (the "Plan of Reorganization"). The Plan of
Reorganization provides for the issuance of Common Stock (as hereinafter
defined).
The parties hereto desire to provide certain registration rights to the
Initial Holders with respect to the shares of Common Stock.
Accordingly, the parties hereto agree as follows:
1. Definitions
As used herein, unless the context otherwise requires, the following terms
have the following respective meanings:
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means any shares of Common Stock, par value $.01 per share,
of the Company now or hereafter authorized to be issued, and any and all
securities of any kind whatsoever of the Company which may be issued on or
after the date hereof in respect of, or in exchange for, shares of Common
Stock pursuant to a merger, consolidation, stock split, stock dividend,
recapitalization of the Company or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
"Holder" means a registered holder of Registrable Common Stock.
"Initial Holders" has the meaning assigned to it in the preamble hereof.
"Material Disclosure Event" means any pending or imminent event relating to
the Company which, based on (i) the good faith, reasonable opinion of the
Board of Directors of the Company and (ii) the advice of competent outside
counsel to the Board of Directors of the Company, (x) requires disclosure of
material, non-public information relating to such event in the Shelf
Registration so that such registration statement would not be materially
misleading, (y) is otherwise not required to be publicly disclosed at that
time (e.g., on Form 8-K or Form 10-Q) under applicable federal or state
securities laws, and (z) if publicly disclosed at the time of such event,
would have a material adverse effect on the business and financial condition
of the Company.
"Other Holder" means any person or entity to whom the Company has granted or
does grant registration rights.
"Other Holder Registrable Common Stock" means the shares of Common Stock
held by any Other Holder.
"Person" means a corporation, an association, a partnership, an
organization, a business, a trust, an individual, or any other entity or
organization, including a government or political subdivision or an
instrumentality or agency thereof.
"Registrable Common Stock" means (i) the shares of Common Stock issued to an
Initial Holder pursuant to the Plan of Reorganization or (ii) any Common Stock
issued with respect to the Common Stock referred to in
Ex. 1.K-1
<PAGE>
clause (i) hereof by way of a stock dividend, stock split or reverse stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or otherwise. As to any particular Registrable Common Stock,
such securities shall cease to be Registrable Common Stock when (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (ii) they shall
have been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
disposition of them shall not require the registration under the Securities
Act, or (iv) they shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to the registration and
disposition of the Registrable Common Stock pursuant to Section 2 hereof,
including, without limitation, all registration, filing and applicable
national securities exchange fees; all fees and expenses of complying with
state securities or blue sky laws (including fees and disbursements of counsel
to the underwriters or the Holders in connection with "blue sky" qualification
of the Registrable Common Stock and determination of their eligibility for
investment under the laws of the various jurisdictions); all duplicating and
printing expenses; all messenger and delivery expenses; the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of "cold comfort" letters or, in
connection with a registration pursuant to Section 2.3 only, any special
audits required by, or incident to, such registration; all fees and
disbursements of underwriters (other than underwriting discounts and
commissions); all transfer taxes; and the reasonable fees and expenses of one
counsel to the Holders; provided, however, that Registration Expenses shall
exclude and the Holders shall pay underwriting discounts and commissions in
respect of the Registrable Common Stock being registered.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar federal statute.
2. Shelf Registration; Registration Under Securities Act, Etc.
2.1 Shelf Registration
Within 5 days following the date hereof, the Company shall file with the
Commission, at the Company's expense, a "shelf" registration statement on any
appropriate form pursuant to Rule 415 under the Securities Act covering all
Registrable Common Stock (the "Shelf Registration"). The Company shall use its
reasonable commercial efforts to have the Shelf Registration declared
effective as promptly as practicable after such filing (but not later than 65
days after the date hereof) and to keep the Shelf Registration continuously
effective three years following the date on which the Shelf Registration is
declared effective (subject to Suspension Periods (as hereinafter defined) and
extensions coincident with the length of such Suspension Periods) (the "Shelf
Registration Period"). The Company shall, to the extent necessary, supplement
or amend the Shelf Registration (in each case, at the Company's expense) to
keep the Shelf Registration effective during the Shelf Registration Period.
The Company further agrees to supplement or amend any Shelf Registration, as
required by the registration form utilized by the Company, by the instructions
applicable to such registration form or by the Securities Act or the rules and
regulations thereunder or as reasonably requested by any Holder. The Company
shall furnish to the Holders copies, in substantially the form proposed to be
used and/or filed, of any such supplement or amendment at least 30 days prior
to its being used and/or filed with the Commission. The Company hereby
consents to the use (in compliance with applicable law) of the prospectus or
any amendment or supplement thereto by each of the selling Holders of
Registrable Common Stock in connection with the offering and sale of the
Registrable Common Stock covered by the prospectus or any amendment or
supplement thereto. The Company shall pay all Registration Expenses incurred
in connection with the Shelf Registration, whether or not it becomes
effective. In no event shall the Shelf Registration include securities other
than Registrable Common Stock, unless the Holders of all Registrable Common
Stock consent to such inclusion. Nothing herein shall obligate the Company to
incur or pay for fees and disbursements of underwriters in connection with a
distribution under the Shelf Registration.
Ex. 1.K-2
<PAGE>
For purposes hereof, "Suspension Period" shall mean a period of time
commencing on the date on which the Company provides notice that the Shelf
Registration is no longer effective, that the prospectus included in the Shelf
Registration no longer complies with the requirements therefor prescribed by
Section 10(a) of the Securities Act, or there is a Material Disclosure Event
and the Board of Directors of the Company has elected (in its good faith
reasonable judgment) to require the suspension of the sale by the Holder of
Registrable Common Stock pursuant to the Shelf Registration, and shall end on
the date when the Holder either receives copies of the supplemented or amended
prospectus contemplated by Section 2.4(g) or such earlier time that the Holder
is otherwise advised in writing by the Company that use of the prospectus may
be resumed. The Holder agrees that it will not sell any Registrable Common
Stock pursuant to the Shelf Registration during any Suspension Period. The
Company agrees (i) that the Company will use its best efforts to ensure that
there is not more than one Suspension Period in any 12-month period, (ii) to
cause each Suspension Period to end as soon as reasonably practicable and
(iii) that no Suspension Period shall exceed 30 consecutive days. The Company
further agrees that no other holder of any shares of the Company's capital
stock will be permitted to sell any such shares of the Company's capital stock
pursuant to a registration statement during a Suspension Period. If one or
more Suspension Periods occur, the Shelf Registration Period shall be extended
by such number of days coincident with the aggregate number of days included
in all Suspension Periods.
2.2 Registration on Request
(a) Request
Subject to the provisions of Section 2.2(h) below, (i) if the Shelf
Registration remains continuously effective during the Shelf Registration
Period in accordance with the terms hereof, at any time or from time to time
after the expiration of the Shelf Registration Period and until the fifth
anniversary hereof, or (ii) if for any reason the Shelf Registration does not
become effective within 65 days after the date hereof or ceases to be
effective at any time prior to the expiration of the Shelf Registration
Period, at any time or from time to time after the date which is 65 days from
the date hereof (if the Shelf Registration fails to become effective) or the
date on which the Shelf Registration ceases to be effective, as the case may
be, and until the fifth anniversary hereof, the Holders, individually and
jointly, of more than 10% of issued and outstanding shares of Common Stock
(the "Initiating Holders") shall have the right to require the Company to
effect the registration under the Securities Act of all or part of the
Registrable Common Stock held by such Initiating Holders, by delivering a
written request therefor to the Company specifying the number of shares of
Registrable Common Stock and the intended method of distribution. The Company
shall promptly give written notice of such requested registration to all other
Holders, and thereupon the Company shall, as expeditiously as possible, use
its best efforts to (A) effect the registration under the Securities Act
(including by means of a shelf registration pursuant to Rule 415 under the
Securities Act if so requested in such request and if the Company is then
eligible to use such a registration) of the Registrable Common Stock which the
Company has been so requested to register by the Initiating Holders, and all
other Registrable Common Stock which the Company has been requested to
register by any other Holder (together with the Initiating Holders, the
"Selling Holders") by written request given to the Company within 10 days
after the giving of written notice by the Company, all to the extent necessary
to permit distribution in accordance with the intended method of distribution
set forth in the written request or requests delivered by the Selling Holders,
and (B) if requested by the Selling Holders, obtain acceleration of the
effective date of the registration statement relating to such registration.
(b) Registration of Other Securities
Whenever the Company shall effect a registration pursuant to this Section
2.2, no securities (other than Registrable Common Stock) shall be included
among the securities covered by such registration (i) if, in connection with
an underwritten offering by any Selling Holders of Registrable Common Stock,
the managing underwriter of such offering shall have advised the Company and
the Selling Holders in writing that the inclusion of such other securities
would adversely affect such offering or (ii), if such offering is not an
underwritten offering, unless the Selling Holders of not less than 5% of the
Registrable Common Stock to be covered by such registration shall have
consented (which consent shall not be unreasonably withheld or delayed) in
writing to the inclusion of such other securities.
Ex. 1.K-3
<PAGE>
(c) Registration Statement Form
Registrations under this Section 2.2 shall be on such appropriate
registration form of the Commission as shall be selected by the Company and as
shall be reasonably acceptable to the Selling Holders. The Company agrees to
include in any such registration statement all information which, in the
opinion of counsel to the Selling Holders and counsel to the Company, is
required to be included.
(d) Expenses
The Company shall pay all Registration Expenses in connection with any
registration requested pursuant to this Section 2.2.
(e) Effective Registration Statement
A registration requested pursuant to this Section 2.2 shall not be deemed to
have been effected (including for purposes of paragraph (h) of this Section
2.2) (i) unless a registration statement with respect thereto has become
effective and has been kept continuously effective for a period of at least
120 days (or such shorter period which shall terminate when all the
Registrable Common Stock covered by such registration statement have been sold
pursuant thereto), (ii) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason not
attributable to the Selling Holders and has not thereafter become effective,
or (iii) if the conditions to closing specified in the underwriting agreement,
if any, entered into in connection with such registration are not satisfied
for any reason not attributable to the Selling Holders or waived.
(f) Selection of Underwriters
The underwriters of each underwritten offering of the Registrable Common
Stock to be registered shall be selected by the Selling Holders and shall be
reasonably satisfactory to the Company.
(g) Priority in Requested Registration
If the managing underwriter of any underwritten offering shall advise the
Company in writing (with a copy to each Selling Holder) that, in its opinion,
the number of shares of Registrable Common Stock requested to be included in
such registration exceeds the number of shares which can be sold in such
offering within a price range acceptable to the Selling Holders of Registrable
Common Stock, the Company will include in such registration that number of
shares of Registrable Common Stock which the Company is so advised can be sold
in such offering. The Registrable Common Stock requested to be included in
such registration shall be reduced pro rata among the Selling Holders
requesting such registration of Registrable Common Stock on the basis of the
percentage of Registrable Common Stock of such Selling Holders requesting such
registration. In connection with any such registration to which this Section
2.2(g) is applicable, no securities other than Registrable Common Stock shall
be covered by such registration.
(h) Limitations on Registration on Request
Notwithstanding anything to the contrary contained herein, the registration
rights granted to the Holders in Section 2.2(a) are subject to the following
limitations: (i) the Holders shall be entitled to require the Company to, and
the Company shall be required to, effect no more than three registrations
pursuant to Section 2.2(a)(i) hereof and no more than four registrations
pursuant to Section 2.2(a)(ii) hereof, (ii) the Company shall not be required
to effect a registration pursuant to Section 2.2(a) if, with respect thereto,
the managing underwriter, the Commission, the Securities Act or the rules and
regulations thereunder, or the form on which the registration statement is to
be filed, would require the conduct of an audit other than the regular audit
conducted by the Company at the end of its fiscal year, but rather the filing
may be delayed until the completion of such regular audit (unless the Holders
agree to pay the expenses of the Company in connection with such an audit
other than the regular audit) and (iii) the Holders shall not be entitled to
require the Company to, and the Company shall not be required to, effect a
registration pursuant to Section 2.2(a) within three (3) months following the
effective date of another registration pursuant to Section 2.2(a).
Ex. 1.K-4
<PAGE>
(i) Postponement
The Company shall be entitled once in any 12-month period to postpone for a
reasonable period of time (but not exceeding 45 days) (the "Postponement
Period") the filing of any registration statement required to be prepared and
filed by it pursuant to this Section 2.2 if the Company determines, in its
reasonable judgment, that such registration and offering would materially
interfere with any material financing, corporate reorganization or other
material transaction involving the Company or any subsidiary, or would require
premature disclosure thereof, and promptly gives the Selling Holders written
notice of such determination, containing a general statement of the reasons
for such postponement and an approximation of the anticipated delay. If the
Company shall so postpone the filing of a registration statement, the Selling
Holders of not less than 50% of the shares of Registrable Common Stock to be
registered shall have the right to withdraw the request for registration in
respect of the Registrable Common Stock by giving written notice to the
Company at any time and, in the event of any such withdrawal, such request
shall not be counted for purposes of the requests for registration to which
the Holders are entitled pursuant to this Section 2.2.
2.3 Incidental Registration
(a) Right to Include Registrable Common Stock
If the Company at any time prior to the expiration of the Holders' right to
request the registration of Registrable Common Stock pursuant to Section
2.2(a) hereof proposes to register any of its securities under the Securities
Act by registration on Form S-1, S-2 or S-3 or any successor or similar
form(s) (except registrations on such Form or similar form(s) solely for
registration of securities in connection with an employee stock option, stock
purchase, stock bonus or similar plan, pursuant to a dividend reinvestment
plan, pursuant to a merger, exchange, offer or transaction of the type
specified in Rule 145(a) under the Securities Act or pursuant to a "shelf"
registration), whether or not for sale for its own account, it will each such
time give prompt written notice to the Holders of its intention to do so and
of the Holders' rights under this Section 2.3 and the Holders shall be
entitled to include, subject to the provisions of this Agreement, Registrable
Common Stock on the same terms and conditions (if any) as apply to other
comparable securities of the Company sold in connection with such
registration. Upon the written request of any Holder (a "Requesting Holder"),
specifying the maximum number of shares of Registrable Common Stock intended
to be disposed of by such Requesting Holder, made as promptly as practicable
and in any event within 15 days after the receipt of any such notice, the
Company shall use its best efforts to effect the registration under the
Securities Act of all Registrable Common Stock which the Company has been so
requested to register by the Requesting Holders; provided, however, that if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the
Company shall give written notice of such determination and its reasons
therefor to the Holders and (i) in the case of a determination not to
register, shall be relieved of its obligation under this Section 2.3 to
register any Registrable Common Stock in connection with such registration
(but not from any obligation of the Company to pay the Registration Expenses
in connection therewith), without prejudice, however, to the rights of the
Holders to request that such registration be effected as a registration under
Section 2.2, and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Common Stock, for the
same period as the delay in registering such other securities. No registration
effected under this Section 2.3 shall relieve the Company of its obligation to
effect any registration upon request under Section 2.2. The Company will pay
all Registration Expenses in connection with any registration of Registrable
Common Stock requested pursuant to this Section 2.3.
(b) Right to Withdraw
Any Requesting Holder shall have the right to withdraw its request for
inclusion of Registrable Common Stock in any registration statement pursuant
to this Section 2.3 at any time by giving written notice to the Company of its
request to withdraw.
(c) Priority in Incidental Registrations
If the managing underwriter of any underwritten offering shall inform the
Company by letter of its opinion that the number of shares of Registrable
Common Stock and Other Holder Registrable Common Stock when
Ex. 1.K-5
<PAGE>
added to the number of other securities to be offered in such registration,
would materially adversely affect such offering, then the Company shall
include in such registration that number of shares of Registrable Common Stock
and Other Holder Registrable Common Stock which the Company is so advised by
the managing underwriter can be sold in (or during the time of) such offering
without materially adversely affecting such offering in the following order of
priority:
First: the holder or holders of securities (including the Company in
the case of a primary offering) originally requesting such registration
shall be entitled to participate in accordance with the relative
priorities, if any, that shall exist among them; and then
Second: the holder or holders of Registrable Common Stock shall be
entitled to participate in such offering, pro rata among themselves in
accordance with the number of shares of Registrable Common Stock which
each such holder shall have requested be registered; and then
Third: all other holders (including the Company, if such registration
shall have been originally requested by a person other than the
Company) of securities having the right to include shares of Common
Stock in such registration shall be entitled to participate pro rata in
accordance with the number of shares proposed to be registered by them.
(d) Plan of Distribution
Any participation by the Holders in a registration by the Company shall be
in accordance with the Company's plan of distribution.
2.4 Registration Procedures
If and whenever the Company is required to use its best efforts to effect
the registration of any Registrable Common Stock under the Securities Act as
provided in Sections 2.1, 2.2 and 2.3 hereof, the Company shall as
expeditiously as possible:
(a) prepare and file with the Commission as soon as practicable the
requisite registration statement to effect such registration (and shall
include all financial statements required by the Commission to be filed
therewith) and thereafter use its best efforts to cause such registration
statement to become effective; provided, however, that before filing such
registration statement (including all exhibits) or any amendment or
supplement thereto or comparable statements under securities or blue sky
laws of any jurisdiction, the Company shall furnish such documents to each
Holder selling Registrable Common Stock covered by such registration
statement and each underwriter, if any, participating in the offering of
the Registrable Common Stock and their respective counsel, which documents
will be subject to the review and comments of each such Holder, each
underwriter and their respective counsel; and provided further, that (i) as
to registration pursuant to Section 2.1 or 2.2 hereof, the Company may
discontinue any registration of its securities which are not Registrable
Common Stock and (ii) as to registration pursuant to Section 2.3 hereof,
the Company may discontinue any registration of its securities, in each
case, at any time prior to the effective date of the registration statement
relating thereto;
(b) notify each Holder selling Registrable Common Stock covered by such
registration statement of the Commission's requests for amending or
supplementing the registration statement and the prospectus, and prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Common Stock covered by such registration
statement for such period as shall be required for the disposition of all
of such Registrable Common Stock in accordance with the intended method of
distribution thereof; provided that, except with respect to the Shelf
Registration and any other such registration statement filed pursuant to
Rule 415 under the Securities Act, such period need not exceed 120 days;
(c) furnish, without charge, to each Holder selling Registrable Common
Stock covered by such registration statement and each underwriter such
number of conformed copies of such registration statement
Ex. 1.K-6
<PAGE>
and of each such amendment and supplement thereto (in each case including
all exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as such Holders and such underwriters may
reasonably request;
(d) use its best efforts (i) to register or qualify all Registrable
Common Stock and other securities covered by such registration statement
under such securities or blue sky laws of such States of the United States
of America where an exemption is not available and as any Holder or Holders
selling Registrable Common Stock covered by such registration statement or
any managing underwriter shall reasonably request, (ii) to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and (iii) to take any other action which may
be reasonably necessary or advisable to enable the Holders to consummate
the disposition in such jurisdictions of the securities to be sold by such
Holder or Holders; provided, however, that the Company shall not for any
purpose be required to execute a general consent to service of process or
to qualify to do business as a foreign corporation in any jurisdiction
where it is not so qualified;
(e) use its best efforts to cause all Registrable Common Stock covered by
such registration statement to be registered with or approved by such other
Federal or state governmental agencies or authorities as may be necessary
in the opinion of counsel to the Company and counsel to any Holder or
Holders selling Registrable Common Stock covered by such registration
statement to consummate the disposition of such Registrable Common Stock;
(f) furnish to each Holder selling Registrable Common Stock covered by
such registration statement and each underwriter, if any, participating in
the offering of the securities covered by such registration statement, a
signed counterpart of (i) an opinion of counsel for the Company, and (ii) a
"comfort" letter signed by the independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such registration statement, covering substantially the same
matters with respect to such registration statement (and the prospectus
included therein) and, in the case of the accountants' comfort letter, with
respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
comfort letters delivered to the underwriters in underwritten public
offerings of securities (and dated the dates such opinions and comfort
letters are customarily dated) and, in the case of the legal opinion, such
other legal matters, and, in the case of the accountants' comfort letter,
such other financial matters, as such Holder or Holders, or the
underwriters, may reasonably request;
(g) immediately notify the Holders selling Registrable Common Stock
covered by such registration statement and each managing underwriter, if
any, participating in the offering of the securities covered by such
registration statement (i) when such registration statement, any pre-
effective amendment, the prospectus or any prospectus supplement related
thereto or post-effective amendment to such registration statement has been
filed, and, with respect to such registration statement or any post-
effective amendment, when the same has become effective; (ii) of any
request by the Commission for amendments or supplements to such
registration statement or the prospectus related thereto or for additional
information; (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the
initiation of any proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of any of the Registrable Common Stock for sale under the
securities or blue sky laws of any jurisdiction or the initiation of any
proceeding for such purpose; and (v) at any time when a prospectus relating
thereto is required to be delivered under the Securities Act or, in the
case of the Shelf Registration, at any time during the Shelf Registration
Period, upon discovery that, or upon the happening of any event as a result
of which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, in the light of the circumstances
under which they were made, and in the case of this clause (v), at the
request of any Holder or Holders selling Registrable Common Stock covered
by such registration statement promptly prepare and
Ex. 1.K-7
<PAGE>
furnish to such Holder or Holders and each managing underwriter, if any,
participating in the offering of the Registrable Common Stock, a reasonable
number of copies of a supplement to or an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made.
(h) otherwise comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least twelve months beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder, and promptly furnish to the Holders a copy
of any amendment or supplement to such registration statement or
prospectus;
(i) cause to be maintained a transfer agent and registrar (which, in each
case, may be the Company) for the Common Stock from and after the date of
such registration;
(j) use its commercially reasonable efforts to cause all Registrable
Common Stock covered by such registration statement to be quoted on the
National Market System ("National Market System") of the National
Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") within the meaning of Rule 11Aa2-1 of the Commission if the
quoting of such Registrable Common Stock is then permitted under NASDAQ
rules; or (ii) if no similar securities of the Company are then so quoted,
use its best efforts to (x) secure designation of all such Registrable
Common Stock as a NASDAQ National Market System security or (y) failing
that, cause all such Registrable Common Stock to be listed on a national
securities exchange or (z) failing that, to secure NASDAQ authorization for
such shares and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register as such with respect to
such shares with the National Association of Securities Dealers, Inc.;
(k) deliver promptly to counsel to the Holders selling Registrable Common
Stock covered by such registration statement and each underwriter, if any,
participating in the offering of the Registrable Common Stock, copies of
all correspondence between the Commission and the Company, its counsel or
auditors and all memoranda relating to discussions with the Commission or
its staff with respect to such registration statement;
(l) use its best efforts to obtain the withdrawal of any order suspending
the effectiveness of the registration statement;
(m) provide a CUSIP number for all Registrable Common Stock, no later
than the effective date of the registration statement;
(n) make available its employees and personnel and otherwise provide
reasonable assistance to the underwriters (taking into account the needs of
the Company's businesses) in their marketing of Registrable Common Stock;
and
(o) in the case of a Shelf Registration, upon the occurrence of any event
or the discovery of any facts, each as contemplated by Section 2.4(g)(v)
hereof, use its best efforts to prepare a supplement or post-effective
amendment to the registration statement or the related prospectus or any
document incorporated therein by reference or file any other required
documents so that, thereafter, such prospectus will not contain at the time
of such delivery any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
The Company may require the Holders selling Registrable Common Stock covered
by such registration statement to furnish the Company such information
regarding the Holders and the distribution of the Registrable Common Stock as
the Company may from time to time reasonably request in writing. In the event
of a registration effected pursuant to Section 2.1, 2.2(a) or 2.3(a) hereof,
if a Holder fails to provide such information and the failure by such Holder
to furnish such information would prevent or unreasonably delay the
registration statement relating to such registration from being declared
effective by the Commission, the Company may exclude such Holder's
Ex. 1.K-8
<PAGE>
Registrable Common Stock from such registration, which right of the Company
shall, in the case of a registration effected pursuant to Section 2.1 or
2.2(a) hereof, be subject to the consent of the Holders of not less than 50%
of the shares of Registrable Common Stock to be included in such registration
(other than such Holder's Registrable Common Stock).
The Holders agree that upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (g)(iii) or (v) of
this Section 2.4, each of the Holders will discontinue its disposition of
Registrable Common Stock pursuant to the registration statement relating to
such Registrable Common Stock until, in the case of paragraph (g)(v) of this
Section 2.4, its receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (g)(v) of this Section 2.4 and, if so
directed by the Company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in its possession,
of the prospectus relating to such Registrable Common Stock current at the
time of receipt of such notice. If the disposition by the Holders of their
securities is discontinued pursuant to the foregoing sentence, the Company
shall extend the period of effectiveness of the registration statement by the
number of days during the period from and including the date of the giving of
notice to and including the date when the Holders shall have received copies
of the supplemented or amended prospectus contemplated by paragraph (g)(v) of
this Section 2.4; and, if the Company shall not so extend such period, the
Holders' request pursuant to which such registration statement was filed shall
not be counted for purposes of the requests for registration to which the
Holders are entitled pursuant to Section 2.2 hereof.
2.5 Underwritten Offerings
(a) Requested Underwritten Offerings
If requested by the underwriters for any underwritten offering by the
Selling Holders pursuant to a registration requested under Section 2.1 or 2.2,
the Company shall enter into a customary underwriting agreement with such
underwriter or underwriters. Such underwriting agreement shall be reasonably
satisfactory in form and substance to the Selling Holders and shall contain
such representations and warranties by, and such other agreements on the part
of, the Company and such other terms as are generally prevailing in agreements
of that type, including, without limitation, such customary provisions
relating to indemnification and contribution by the Company. The Selling
Holders shall be parties to such underwriting agreement and may, at their
option, require that any or all of the representations and warranties by, and
the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of the Selling
Holders and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement be conditions precedent to
the obligations of the Selling Holders. No Selling Holder shall be required to
make any representations or warranties to or agreements with the Company or
the underwriters other than representations, warranties or agreements
regarding such Selling Holder, its ownership of and title to the Registrable
Common Stock, and its intended method of distribution; and any liability of
any Selling Holder to any underwriter or other Person under such underwriting
agreement shall be limited to liability arising from misstatements in or
omissions from its representations and warranties and shall be limited to an
amount equal to the net proceeds that it derives from such registration.
(b) Incidental Underwritten Offerings
In the case of a registration pursuant to Section 2.3 hereof, if the Company
shall have determined to enter into any underwriting agreements in connection
therewith, all of the Requesting Holders' Registrable Common Stock to be
included in such registration shall be subject to such underwriting
agreements. The Requesting Holders may, at their option, require that any or
all of the representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of the Requesting Holders and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Requesting Holders. No Requesting Holder shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
such Requesting Holder, its ownership of and title to the Registrable Common
Stock, and its intended method of
Ex. 1.K-9
<PAGE>
distribution; and any liability of any Requesting Holder to any underwriter or
other Person under such underwriting agreement shall be limited to liability
arising from misstatements in or omissions from its representations and
warranties and shall be limited to an amount equal to the net proceeds that it
derives from such registration.
2.6 Preparation; Reasonable Investigation
In connection with the preparation and filing of each registration statement
under the Securities Act pursuant to this Agreement, the Company will give the
participating Holders, their underwriters, if any, and their respective
counsel, accountants and other representatives and agents the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and, to the extent practicable,
each amendment thereof or supplement thereto, and give each of them such
access to its books and records and such opportunities to discuss the business
of the Company with its officers and employees and the independent public
accountants who have certified its financial statements, and supply all other
information reasonably requested by each of them, as shall be necessary or
appropriate, in the opinion of the participating Holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
2.7 Indemnification
(a) Indemnification by the Company
The Company agrees that in the event of any registration of any securities
of the Company under the Securities Act, the Company shall, and hereby does,
indemnify and hold harmless each Holder, its respective directors, officers,
partners, agents and affiliates and each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person,
if any, who controls such Holder or any such underwriter within the meaning of
the Securities Act, against any losses, claims, damages, or liabilities, joint
or several, to which such Holder or any such director, officer, partner, agent
or affiliate or underwriter or controlling Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities, joint or several (or actions or proceedings, whether commenced or
threatened, in respect thereof), arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, (ii) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, or (iii) any violation
by the Company of any federal, state or common law rule or regulation
applicable to the Company and relating to action required of or inaction by
the Company in connection with any such registration, and the Company shall
reimburse such Holder and each such director, officer, partner, agent or
affiliate, underwriter and controlling Person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by or
on behalf of the Holders or underwriter, as the case may be, specifically
stating that it is for use in the preparation thereof; and provided, further,
that the Company shall not be liable to any Person who participates as an
underwriter in the offering or sale of Registrable Common Stock or any other
Person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
arises out of such Person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to the Person
asserting an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of
Registrable Common Stock to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
regardless of any investigation made by or on behalf of either Holder
Ex. 1.K-10
<PAGE>
or any such director, officer, partner, agent or affiliate or controlling
Person and shall survive the transfer of such securities by such Holder.
(b) Indemnification by the Holders
As a condition to including any Registrable Common Stock in any registration
statement, the Company shall have received an undertaking reasonably
satisfactory to it from each Holder so including any Registrable Common Stock
to indemnify and hold harmless (in the same manner and to the same extent as
set forth in paragraph (a) of this Section 2.7) the Company, and each director
of the Company, each officer of the Company and each other Person, if any, who
controls the Company within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto,
but only to the extent such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by
such Holder specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that the liability of
such indemnifying party under this Section 2.7(b) shall be limited to the
amount of net proceeds received by such indemnifying party in the offering
giving rise to such liability. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling Person and shall survive the
transfer of such securities by such Holder.
(c) Notices of Claims, Etc.
Promptly after receipt by an indemnified party of notice of the commencement
of any action or proceeding involving a claim referred to in the preceding
subsections of this Section 2.7, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action or proceeding;
provided, however, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under the preceding subsections of this Section 2.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice,
and shall not relieve the indemnifying party from any liability which it may
have to the indemnified party otherwise than under this Section 2.7. In case
any such action or proceeding is brought against an indemnified party, the
indemnifying party shall be entitled to participate therein and, unless in the
opinion of outside counsel to the indemnified party a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, to assume the defense thereof, jointly with any other indemnifying
party similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party; provided, however, that if
the defendants in any such action or proceeding include both the indemnified
party and the indemnifying party and if in the opinion of outside counsel to
the indemnified party there may be legal defenses available to such
indemnified party and/or other indemnified parties which are different from or
in addition to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to defend
such action or proceeding on behalf of such indemnified party or parties and
the indemnifying party shall be obligated to pay the fees and expenses of such
separate counsel or counsels. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and
approval by the indemnified party of such counsel, the indemnifying party
shall not be liable to such indemnified party for any legal expenses
subsequently incurred by the latter in connection with the defense thereof
other than reasonable costs of investigation (unless the proviso in the
preceding sentence shall be applicable). No indemnifying party shall be liable
for any settlement of any action or proceeding effected without its written
consent which shall not be unreasonably withheld. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
Ex. 1.K-11
<PAGE>
(d) Contribution
If the indemnification provided for in this Section 2.7 shall for any reason
be held by a court to be unavailable to an indemnified party under subsection
(a) or (b) hereof in respect of any loss, claim, damage or liability, or any
action in respect thereof, then, in lieu of the amount paid or payable under
subsection (a) or (b) hereof, the indemnified party and the indemnifying party
under subsection (a) or (b) hereof shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating the same), (i) in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand, and the indemnified party on the other, which resulted in such loss,
claim, damage or liability, or action in respect thereof, with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or if the allocation provided in this
clause (ii) provides a greater amount to the indemnified party than clause (i)
above, in such proportion as shall be appropriate to reflect not only the
relative fault but also the relative benefits received by the indemnifying
party and the indemnified party from the offering of the securities covered by
such registration statement as well as any other relevant equitable
considerations. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 2.7(d) were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in the
preceding sentence of this Section 2.7(d). No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute as
provided in this subsection (d) are several and not joint and shall be in
proportion to the relative value of their respective Registrable Common Stock
covered by such registration statement. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for any settlement of
any action or claim effected without such Person's consent, which consent
shall not be unreasonably withheld. Notwithstanding anything in this
subsection (d) to the contrary, no indemnifying party (other than the Company)
shall be required to contribute any amount in excess of the net proceeds
received by such party from the sale of the Registrable Common Stock in the
offering to which the losses, claims, damages or liabilities of the
indemnified parties relate.
(e) Other Indemnification
Indemnification and contribution similar to that specified in the preceding
subsections of this Section 2.7 (with appropriate modifications) shall be
given by the Company and the Holders with respect to any required registration
or other qualification of securities under any federal, state or blue sky law
or regulation of any governmental authority other than the Securities Act. The
indemnification agreements contained in this Section 2.7 shall be in addition
to any other rights to indemnification or contribution which any indemnified
party may have pursuant to law or contract and shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any indemnified party and shall survive the transfer of any of the Registrable
Common Stock by any of the Holders.
(f) Indemnification Payments
The indemnification and contribution required by this Section 2.7 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred; provided, however, that such periodic
payments shall only be made upon delivery to the indemnifying party of an
agreement by the indemnified party to repay the amounts advanced to the extent
it is ultimately determined that the indemnified party is not entitled to
indemnification pursuant to this Section 2.7 or otherwise. The parties hereto
agree that for each of them such agreement shall be deemed to be contained
herein.
2.8 Limitation on Sale of Securities
If any registration of Registrable Common Stock or Other Holder Registrable
Common Stock shall be in connection with an underwritten public offering, each
of the Holders or the Other Holders, as the case may be, and the Company
agrees (x) not to effect any public sale or distribution of any issue of the
same class or series as the Registrable Common Stock or Other Holder
Registrable Common Stock being registered in an
Ex. 1.K-12
<PAGE>
underwritten public offering (other than pursuant to an employee stock option,
stock purchase or similar plan, pursuant to a dividend reinvestment plan,
pursuant to a merger, exchange offer or a transaction of the type specified in
Rule 145(a) under the Securities Act), any securities of the Company similar
to any such issue or any securities of the Company or of any security
convertible into or exchangeable or exercisable for any such issue of the
Company during the 15 days prior to, and during the 45 day period (or such
longer period, not in excess of 90 days, as may be reasonably requested by the
underwriter of such offering) beginning on the effective date of such
registration statement (except as part of such registration) and (y) that any
agreement entered into after the date of this Agreement pursuant to which the
Company issues or agrees to issue any privately placed securities shall
contain a provision under which holders of such securities agree not to effect
any public sale or distribution of any such securities during the period
referred to in the foregoing clause (x), including any sale pursuant to Rule
144 under the Securities Act (except as part of such registration, if
permitted).
2.9 No Required Sale
Nothing in this Agreement shall be deemed to create an independent
obligation on the part of any of the Holders to sell any Registrable Common
Stock pursuant to any effective registration statement.
3. Rule 144
The Company shall take all actions reasonably necessary to enable holders of
Registrable Common Stock to sell such securities without registration under
the Securities Act within the limitation of the exemptions provided by (a)
Rule 144, or (b) any similar rule or regulation hereafter adopted by the
Commission including, without limiting the generality of the foregoing, filing
on a timely basis all reports required to be filed by the Exchange Act. Upon
the request of any Holder, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
4. Amendments and Waivers
This Agreement may not be modified or amended, or any of the provisions
hereof waived, temporarily or permanently, except pursuant to the written
consent of the Holders of not less than 50% of the shares of Registrable
Common Stock and the Company.
5. Adjustments
In the event of any change in the capitalization of the Company as a result
of any stock split, stock dividend, reverse split, combination,
recapitalization, merger, consolidation, or otherwise, the provisions of this
Agreement shall be appropriately adjusted.
6. Notice
All notices and other communications hereunder shall be in writing and,
unless otherwise provided herein, shall be deemed to have been given when
received by the party to whom such notice is to be given at its address set
forth below, or such other address for the party as shall be specified by
notice given pursuant hereto:
(a) If to any Holder, the address of such Holder set forth on Annex A
attached hereto;
(b) If to the Company, to it at:
JPS Textile Group, Inc.
555 North Pleasantburg Drive, Suite 202
Greenville, South Carolina 29607
Attn: David H. Taylor
7. Assignment
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned by the Company.
Ex. 1.K-13
<PAGE>
Any Holder may, at its election, at any time or from time to time, assign its
rights under this Agreement, in whole or in part, to any transferee of
Registrable Common Stock.
8. Remedies
The parties hereto agree that money damages or any other remedy at law would
not be sufficient or adequate remedy for any breach or violation of, or a
default under, this Agreement by them and that, in addition to all other
remedies available to them, each of them shall be entitled to an injunction
restraining such breach, violation or default or threatened breach, violation
or default and to any other equitable relief, including, without limitation,
specific performance, without bond or other security being required. In any
action or proceeding brought to enforce any provision of this Agreement
(including the indemnification provisions thereof), the successful party shall
be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
9. No Inconsistent Agreements
The Company will not, on or after the date of this Agreement, enter into any
agreement with respect to its securities which is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof, other than any customary lock-up agreement with the
underwriters in connection with any registration and offering by the Company
of its securities to the public (an "Offering") effected hereunder, pursuant
to which the Company shall agree not to register for sale, and the Company
shall agree not to sell or otherwise dispose of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, as
applicable, for a specified period following such Offering. The Company hereby
represents and warrants that the rights granted to the Holders hereunder do
not in any way conflict with and are not inconsistent with any other
agreements to which the Company is a party or by which it is bound. The
Company further agrees that if any other registration rights agreement entered
into after the date of this Agreement with respect to any of its securities
contains terms which are more favorable to, or less restrictive on, the other
party thereto than the terms and conditions contained in this Agreement are
(insofar as they are applicable) to the Holders, then the terms and conditions
of this Agreement shall immediately be deemed to have been amended without
further action by the Company or the Holders so that the Holders shall be
entitled to the benefit of any such more favorable or less restrictive terms
or conditions.
10. Headings
Headings of the sections and paragraphs of this Agreement are for
convenience only and shall be given no substantive or interpretive effect
whatsoever.
11. Governing Law; Jurisdiction
(a) This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York, without giving effect to the
conflicts of law principles thereof.
(b) Each of the parties hereto irrevocably and unconditionally consents to
the jurisdiction of the federal courts and courts of the state of New York
situated in New York County, New York in respect of the interpretation and
enforcement of the provisions of this Agreement, and hereby agrees that
service of process in any such action, suit or proceeding against the other
party with respect to this Agreement may be made upon it in any manner
permitted by the laws of New York or the federal laws of the United States.
12. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
13. Invalidity of Provision
The invalidity or unenforceability of any provision of this Agreement in any
jurisdiction shall not affect the validity or enforceability of the remainder
of this Agreement in that jurisdiction or the validity or enforceability
Ex. 1.K-14
<PAGE>
of this Agreement, including that provision, in any other jurisdiction. If any
restriction or provision of this Agreement is held unreasonable, unlawful or
unenforceable in any respect, such restriction or provision shall be
interpreted, revised or applied in a manner that renders it lawful and
enforceable to the fullest extent possible under law.
14. Further Assurances
Each party hereto shall do and perform or cause to be done and performed all
further acts and things and shall execute and deliver all other agreements,
certificates, instruments, and documents as any other party hereto reasonably
may request in order to carry out the intent and accomplish the purposes of
this Agreement and the consummation of the transactions contemplated hereby.
15. Entire Agreement; Effectiveness
This Agreement and the other writings referred to herein or delivered in
connection herewith contain the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or understandings with respect thereto.
Ex. 1.K-15
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
JPS Textile Group, Inc.
By: _________________________________
Name:
Title:
[INITIAL HOLDERS]
[___________________________________]
By: _________________________________
Name:
Title:
[___________________________________]
By: _________________________________
Name:
Title:
[___________________________________]
By: _________________________________
Name:
Title:
[___________________________________]
By: _________________________________
Name:
Title:
Ex. 1.K-16
<PAGE>
ANNEX A
Ex. 1.K.A-17
<PAGE>
EXHIBIT L
TO JOINT PLAN OF
REORGANIZATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REJECTED CONTRACTS
1. Management Agreement, dated as of April 2, 1991, between Odyssey
Investors, Inc. and JPS.
Ex. 1.L-1
<PAGE>
EXHIBIT M
TO JOINT PLAN OF
REORGANIZATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
EXISTING AGREEMENTS
1. Service Agreement, dated May 31, 1993, among Hewitt, Coleman &
Associates, Inc., JPS, JPS Carpet Corp., JPS Automotive Products Corp., JPS
Elastromerics Corp., and JPS Converter and Industrial Corp.
2. Agreement, dated May 31, 1993, among American Yarn Spinners Self-
Insurers Fund, JPS, JPS Carpet Corp., JPS Automotive Products Corp., JPS
Elastromerics Corp., and JPS Converter and Industrial Corp.
3. Lease Agreement, dated August 20, 1989, between Financial Enterprises
III (as successor to First Greenville Joint Venture) and JPS, as amended
October 1993 and executed by JPS on December 1, 1993, and as amended October
23, 1996./1/
4. Certificate of Appointment of American Stock Transfer & Trust Company as
Transfer Agent and Registrar, dated July 8, 1996, between American Stock
Transfer & Trust Company and JPS.
5. Master Agreement for Treasury Management Accounts and Services, dated as
of June 1, 1993, between Nationsbank and JPS.
6. Retention Agreement, dated April 10, 1996, between Houlihan Lokey Howard
& Zukin and JPS.
7. Letter Agreement, dated May 8, 1996, between The Blackstone Group L.P.
and JPS, and Indemnification Agreement, dated May 8, 1996, between The
Blackstone Group L.P. and JPS.
8. Engagement Letter Agreement, dated October 30, 1996, among Fried, Frank,
Harris, Shriver & Jacobson, Magten Asset Management Corp., Merrill Lynch,
Pierce, Fenner & Smith, Inc., CS First Boston, and JPS, as amended November
22, 1996.
9. Letter Agreement, dated May 21, 1997, between The Altman Group, Inc. and
JPS.
10. Letter Agreement, dated March 27, 1997, between American Appraisal
Associates and JPS.
11. Maintenance Agreement, dated September 1, 1996, between Lanier
Worldwide, Inc. and JPS.
12. Equipment Agreement, dated October 14, 1988, between Lucent Technologies
Inc. (as assignee of AT&T) and JPS.
13. Service Agreement, dated August 5, 1993, between Modern Office Machines
and JPS.
14. Renewal of Service, dated April 16, 1996, between Xerox Corporation and
JPS.
15. License Agreement, dated as of July 18, 1988, between Sysgen, Inc. and
JPS.
16. Master Lease Agreement, dated May 25, 1990, among Equipment Credit
Services, Inc. (as successor to LB Credit Corporation), JPS, and JPS Converter
and Industrial Corp., as amended on May 25, 1990.
17. Sublease Agreement, dated as of June 28, 1994, between JPS, JPS
Converter and Industrial Corp., and JPS Automotive Products Corp.
18. Consent to Sublease, dated June 2, 1994, between Equipment Credit
Services, Inc., JPS, and JPS Converter and Industrial Corp.
________
1. In May 1997, the property leased under this agreement was sold to Koger
Equity Inc.
Ex. 1.M-1
<PAGE>
19. Postage Meter Rental Agreement, dated May 23, 1988, between Pitney Bowes
and JPS.
20. Trademark License Agreement, dated May 9, 1988, between J.P. Stevens &
Co., Inc. and JPS.
21. Asset Purchase Agreement, dated April 24, 1988, among J.P. Stevens &
Co., Inc., West Point-Pepperell, Inc., STN Holdings Inc., Magnolia Partners,
L.P., Odyssey Partners, JPS Holding Corp., and JPS (and all agreements and
obligations assumed thereunder, including, without limitation, those
agreements with J.P. Stevens & Co., Inc. listed herein).
22. Omnibus Real Estate Closing Agreement, dated May 9, 1988, among J.P.
Stevens & Co., Inc., West Point-Pepperell Inc., JPS Acquisition Corp., JPS
Acquisition Carpet Corp., JPS Acquisition Automotive Products Corp., JPS
Acquisition Industrial Fabrics Corp., JPS Acquisition Converter and Yarn
Corp., and JPS Acquisition Elastomerics Corp.
23. Asset Transfer Agreement, Promissory Note, and Warrant, dated as of
November 16, 1995, among JPS, JPS Carpet Corp., Gulistan Holdings Inc., and
Gulistan Carpet Inc.
24. Agreement of Assignment and Assumption (under Term Lease Master
Agreement), dated April 3, 1996, among IBM Credit Corporation, JPS, and
Gulistan Carpet Inc.
25. Term Lease Master Agreement, dated August 3, 1988, between IBM Credit
Corporation and JPS.
26. Master Lease Agreement, dated August 26, 1988, between Southern Bell
Advanced Systems, JPS, and JPS Elastomerics Corp., as amended October 13,
1988.
27. Master Lease Agreement, dated August 26, 1988, between Southern Bell
Advanced Systems, JPS, and JPS Converter and Industrial Corp., as amended
October 13, 1988.
28. Renewal of Service, dated August 16, 1993, between Southern Bell and
JPS.
29. Letter of Election for Digital ESSX Service (Digital ESSX Term Payment
Plan), dated August 19, 1993, between Southern Bell Telephone and Telegraph
Company and JPS.
30. Sprint Business Sense Term Plan/Usage Agreement, dated April 12, 1996,
between Sprint and JPS.
31. Cellular Service Order, dated July 9, 1996, between Bell Atlantic NYNEX
Mobile and JPS.
32. Cellular Service Order, dated August 13, 1996, between Bell Atlantic
NYNEX Mobile and JPS.
33. Maintenance Agreement, dated as of January 31, 1995, between Racal-
Datacom, Inc. and JPS.
34. Transfer of Lease, dated as of June 28, 1994, between WestPoint Stevens,
Inc. and JPS.
35. General Agreement of Indemnity, dated April 25, 1996, between Employers
Mutual Casualty Company, Illinois EMCASCO Insurance Company, EMCASCO Insurance
Company, Dakota Fire Insurance Company, Union Mutual Insurance Company of
Providence, American Liberty Insurance Company, JPS Elastomerics Corp., and
JPS.
36. Agreement Appointing Brinson Trust Company as Investment Manager Under
the JPS Textile Group, Inc. Master Trust Agreement, dated October 23, 1992,
between the Named Fiduciary for JPS and Brinson Trust Company.
37. Master Trust Agreement, effective as of June 1, 1991, between Mellon
Bank, N.A. and JPS.
Ex. 1.M-2
<PAGE>
38. Custodial Services Agreement, effective as of June 1, 1991, between
AEGON Life Insurance Company (as successor to Mutual Life Insurance Company of
New York) on behalf of Separate Account Textile and Mellon Bank, N.A., and
Authorization of Separate Account Textile Custodial and Investment Fees, dated
September 4, 1991, between JPS and Mellon Bank, N.A.
39. Investment Management Agreement, effective June 1, 1991, between AEGON
Life Insurance Company (as successor to Mutual Life Insurance Company of New
York) and Mellon Bank, N.A.
40. Agreement, dated April 1, 1990, between AEGON Life Insurance Company (as
successor to Mutual Life Insurance Company of New York) and the Trustees or
Successor Trustees of the JPS Textile Group, Inc. Master Retirement Trust.
41. Memorandum of Understanding, effective April 1, 1990, among AEGON Life
Insurance Company (as successor to Mutual Life Insurance Company of New York),
JPS, and the Trustees or Successor Trustees of the JPS Textile Group, Inc.
Master Retirement Trust.
42. Investment Management Agreement, dated as of September 22, 1994, between
TCW Asset Management Company and JPS.
43. Investment Management Agreement, dated as of September 30, 1994, between
National Asset Management Corporation and JPS.
44. Investment Counsel Agreement for Employee Benefit Plans, dated as of May
26, 1995, between Loomis, Sayles & Company, L.P., and JPS.
45. Letter Agreement, effective August 31, 1990, between State Street Bank
and Trust Company and Pension Committee of the Retirement Pension Fund for
Salaried Employees of JPS and Pension Committee of the Retirement Fund for
Hourly Employees of JPS.
46. Trust Agreement, dated as of December 31, 1993, between Fidelity
Management Trust Company and JPS, as amended June 1, 1994, October 1, 1994,
November 20, 1995, and January 1, 1997.
47. Asset Purchase Agreement, dated as of May 25, 1994, among Foamex
International Inc., JPS, JPS Auto, Inc., JPS Converter and Industrial Corp.,
and JPS Automotive Products Corp.
48. Lease Agreement, dated as of August 3, 1984, between The Bank of New
York and J.P. Stevens & Co., Inc.
49. Participation Agreement, dated as of August 3, 1984, among The Bank of
New York, The Equitable Life Assurance Society of the United States, and J.P.
Stevens & Co., Inc.
50. Tax Indemnity Agreement, dated as of August 3, 1984, between The Bank of
New York and J.P. Stevens & Co., Inc.
51. Asset Purchase Agreement, dated September 30, 1996, between Elastomer
Technologies Group, Inc. and JPS Elastomerics Corp.
52. Trademark Agreement, dated September 30, 1996, between Elastomer
Technologies Group, Inc. and JPS.
53. Workers' Compensation and Employers' Liability Deductible Reimbursement
and Security Agreement, dated as of June 1, 1995, between Zurich Insurance
Company and JPS, as amended June 1, 1995.
54. Incurred Loss Retrospective Premium Agreement, dated as of June 1, 1995,
between Zurich Insurance Company and JPS, as amended June 1, 1995.
Ex. 1.M-3
<PAGE>
55. Workers' Compensation and Employers Liability Insurance Policy, No. WC
8343937-00, between Zurich Insurance Company and JPS.
56. Workers' Compensation and Employers Liability Insurance Policy, No. WC
8343938-00, between American Guarantee and Liability Insurance Company and
JPS.
57. Specific Excess and Aggregate Excess Workers' Compensation and Employers
Liability Indemnity Policy, No. 4764-SA-SC, between Midwest Employers Casualty
Company and JPS, extended by Binder dated May 23, 1997.
58. Workers' Compensation Insurance Policy, Nos. WC UOO9530 and WC UOO9531,
between Zurich Insurance Company and JPS.
59. Workers' Compensation Insurance Policy (Retrospective Program), Nos.
WC2-651-004084-028, WC2-651-004084-088, and WC1-651-004084-018, between
Liberty Mutual and JPS.
60. Workers' Compensation Insurance Policy (Retrospective Program), Nos.
WC2-651-004084-029, WC2-651-004084-089, WC2-651-004084-080, between Liberty
Mutual and JPS.
61. Workers' Compensation and Employers Liability Insurance Policy
(Retrospective Program), Nos. WC2-651-004084-020 and WC2-651-004084-110,
between Liberty Mutual and JPS.
62. Commercial General Liability Insurance Policy, No. GLO8343942-00,
between Zurich Insurance Company and JPS, extended by Binder No. 18273.
63. Automobile Liability Insurance Policy, No. BAP 8343939-00, between
Zurich Insurance Company and JPS.
64. Business Automobile Insurance Policy, No. MA 8343940-00, between Zurich
Insurance Company and JPS.
65. Commercial Auto Insurance Policy, No. TAP 8343941-00, between Zurich
Insurance Company and JPS.
66. Umbrella Liability Insurance Policy, No. UMB8799671, between American
Alliance Insurance Co. and JPS, extended by Binder No. 18281.
67. Excess Third Party Liability Insurance Policy, No. CXU157336384, between
Continental Insurance Company and JPS, extended by Binder No. 18284.
68. Excess Liability Insurance Policy, No. EXX9889315-00, between American
National Fire Ins. Co. and JPS.
69. Medical Professional Liability Insurance Policy, No. EMO6689874, between
St. Paul Fire & Marine Insurance Company and JPS.
70. International Liability Insurance Policy, Binder No. 17696, between
Federal Insurance Co. and JPS.
71. Property Insurance Policy, No. 31363668, between Industrial Risk
Insurers and JPS, extended by Binder No. 011777.
72. Crime Insurance Policy, No. B248 44 62, between Reliance Insurance
Company and JPS, extended by Binder No. 54501.
73. Directors' and Officers' Liability Insurance Policy Including Company
Reimbursement, No. NSP210768, between AESIC and JPS.
Ex. 1.M-4
<PAGE>
74. Excess Directors and Officers Liability and Company Reimbursement
Policy, No. GU5840509, between Gulf Underwriters Insurance Co. and JPS.
75. General Liability Insurance Policy (Retrospective Program), No. RG1-651-
004084-048, between Liberty Mutual and JPS.
76. General Liability Insurance Policy (Retrospective Program), No. RG1-651-
004084-049, between Liberty Mutual and JPS.
77. General Liability Insurance Policy (Retrospective Program), No. RG1-651-
004084-040, between Liberty Mutual and JPS.
78. Registration Rights Agreement, dated as of April 2, 1991, among JPS and
the Holders of JPS's Senior Secured Notes due June 1, 1995, the Holders of the
10.85% Notes, the Holders of the 10.25% Notes, the Holders of the 7%
Subordinated Debentures, the Holders of the Old Senior Preferred Stock, and
the Holders of the Old Class A Common Stock.
79. 1997 Incentive and Capital Accumulation Plan.
80. Contingent Terminal Liability Minimum Premium Agreement, effective
November 1, 1992, between JPS and Provident Life and Accident Insurance
Company.
81. Letter Agreement, dated August 21, 1996, between JPS and Kekst and
Company, Incorporated.
82. Administrative Services Agreement, effective November 1, 1992, between
JPS and Provident Life and Accident Insurance Company, as amended from time to
time.
83. Death, Dismemberment, or Specific Losses and Total Disability Insurance
Policy, No. GTA 7034, between JPS and Commercial Life Insurance Company.
84. Group Long Term Disability Insurance Policy Nonparticipating, No 336415,
between JPS and UNUM Life Insurance Company of America.
85. Master Lease Agreement, dated as of December 28, 1995, between JPS
Elastomerics Corp. and El Camino Resources, Ltd.
86. Master Lease Agreement, dated as of December 28, 1995, between JPS
Converter & Industrial Corp. and El Camino Resources, Ltd.
87. Stop-Loss Coverage Agreement, No. M-4455L, between JPS and Provident
Life and Accident Insurance Company.
88. 1997 Management Incentive Bonus Plan.
Ex. 1.M-5
<PAGE>
EXHIBIT 4
BOARD OF DIRECTORS, MANAGEMENT COMPENSATION,
AND RELATED INFORMATION FOR REORGANIZED JPS
Composition of Board of Directors of Reorganized JPS:
The Board of Directors of Reorganized JPS initially will be comprised of the
following seven members:
CHAIRMAN
Jerry E. Hunter. For a description of Mr. Hunter's recent business
experience, see Item 10 "Directors and Executive Officers of the Registrant"
set forth in the Annual Report on Form 10-K annexed as Exhibit 2 to this
Disclosure Statement.
DIRECTORS
Robert J. Capozzi. Mr. Capozzi is a Managing Director of Magten Asset
Management Corp., an investment advisory firm established in 1978. Mr. Capozzi
has been with Magten since 1986. Currently, Mr. Capozzi serves as a member of
the Board of Directors of Magten Offshore Fund Ltd.
Jeffrey S. Deutschman. Mr. Deutschman is a private investor and merchant
banker. From 1992 to 1995, he was a Managing Director with Aurora Capital
Partners, L.P. Prior to that, he was a Managing Director and principal of
Deutschman Clayton & Company. Mr. Deutschman has been Co-Chairman of the Board
of Directors of The Cherokee Group, a designer, manufacturer, and marketer of
casual apparel, and an officer and director of Fair Holdings Corporation and
Fair Lanes, Inc., a manager and operator of bowling centers.
Nicholas P. DiPaolo. In May 1997, Mr. DiPaolo retired as Chairman of the
Board, President and Chief Executive Officer of Salant Corporation, a
diversified apparel company listed on the New York Stock Exchange. He held
those positions since March 1991. Prior to that, Mr. DiPaolo served as
President and Chief Operating Officer of Salant Corporation since June 1988.
From 1985 to 1988, Mr. DiPaolo served as President and Chief Operating Officer
of Manhattan Industries, which was merged into Salant Corporation in 1988.
Prior to that he was Chairman and Chief Executive Officer of the Villager, a
women's sportswear company, from 1979 to 1984. Mr. DiPaolo has served on the
Board of Directors of Manhattan Far East, a trading company based in Hong
Kong. He is also a member of the Board of Directors of the American Apparel
Manufacturers Association and other industry associations.
Michael L. Fulbright. Mr. Fulbright has served as President and Chief
Executive Officer of The Bibb Company, a diversified textile company, since
September 1996. Prior to that, he served as President of the Denim Division of
Cone Mills, Inc. from December 1994 to August 1996. Prior to that, Mr.
Fulbright was employed with Springs Industries, serving as President of the
Greige Manufacturing Division from August 1992 to November 1994, as President
of Wamsutta/Pacific Home Products from July 1986 to July 1992, and as
Executive Vice President of Wamsutta/Pacific Home Products from December 1985
to July 1986. Prior to that, Mr. Fulbright has been employed by M. Lowenstein
Corporation and WestPoint Pepperell.
John M. Sullivan, Jr. Mr. Sullivan has served as President of American Silk
Mills Corp. since 1985, as President and Chief Executive Officer of Gerli &
Co., Inc. since 1987, as President of International Silk Association (USA),
N.Y., N.Y. since 1988, and as Co-Chairman Home Furnishings Committee, I.S.A.,
Lyons France, since 1995. From 1987 to 1991, Mr. Sullivan served as President
of Cheney Brothers Inc. Prior to that, he served as Executive Vice President
(Merchandising, Marketing & Sales) of Gerli & Co., Inc. from 1984 to 1987.
Prior to that, Mr. Sullivan served as President of A.H. Rice Company Inc.,
Pittsfield, Massachusetts from 1982 to 1989, as Vice President of Marketing
and Sales for Gerli & Co., Inc. from 1979-1982, and as Sales Manager of
American Silk Mills Corp. from 1974 to 1979.
David H. Taylor. For a description of Mr. Taylor's recent business
experience, see Item 10 "Directors and Executive Officers of the Registrant"
set forth in the Annual Report on Form 10-K annexed as Exhibit 2 to this
Disclosure Statement.
Ex. 4-1
<PAGE>
Compensation of Directors of Reorganized JPS:
Each director who is not an employee of Reorganized JPS will be paid $20,000
annually for his services as a director, $1,200 for attendance at each meeting
of the Board of Directors and each committee meeting which does not occur in
conjunction with a directors' meeting, and $1,000 annually for his or her
services as the chairman of any committee. In addition, each non-employee
director will receive on the Effective Date a grant of options to purchase
25,000 shares of New Common Stock at an exercise price based on the per share
price of the New Common Stock as of the Effective Date. With respect to the
options granted to each non-employee director on the Effective Date, options
to purchase 5,000 shares of New Common Stock will vest on the Effective Date
and with respect to the balance of the options so granted, options to purchase
5,000 shares of New Common Stock will vest on each of the first, second, third
and fourth anniversaries of the Effective Date. In addition, each non-employee
director appointed subsequent to the Effective Date will receive on the date
such director is appointed (the "Appointment Date") a grant of options to
purchase 25,000 shares of New Common Stock at an exercise price based on the
per share price of the New Common Stock as of the Appointment Date. With
respect to the options granted to each non-employee director appointed
subsequent to the Effective Date, options to purchase 5,000 shares of New
Common Stock will vest on the applicable Appointment Date and with respect to
the balance of the options so granted, options to purchase 5,000 shares of New
Common Stock will vest on each of the first, second, third and fourth
anniversaries of such Appointment Date.
In addition, non-employee directors are eligible to participate in the
Incentive Plan. Under the terms of the Incentive Plan, no grants may be made
until the Effective Date has occurred.
Identity and Compensation of Executive Officers of Reorganized JPS and
members of the Management Group:
<TABLE>
<CAPTION>
POST-EFFECTIVE
DATE ANNUAL
NAME AGE POSITION BASE SALARY
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Jerry E. Hunter 60 President & CEO $380,000
David H. Taylor 42 Executive V.P. Finance & Secretary $225,000
Monnie L. Broome 55 V.P. Human Resources $180,000
Wm. Ellis Jackson 40 Director of Taxes $103,000
L. Allen Ollis 37 Controller $ 95,000
</TABLE>
In addition, JPS's 1997 Management Incentive Bonus Plan, which will continue
in effect post-Effective Date, provides incentives for key management
employees of JPS and its subsidiaries based upon the financial performance of
the Company. The plan is designed to provide incentives to maximize operating
earnings while minimizing the net assets required to generate those earnings.
Targets are set for operating earnings (defined as EBITDA before bonus expense
and restructuring and reorganization expenses) and net assets employed
(defined as average total assets less average current liabilities other than
debt-related liabilities such as accrued interest) for each fiscal year. If
actual operating earnings and net assets employed are equal to the targets, a
targeted bonus is paid to each participant. To the extent actual operating
earnings are greater than the target, amounts in excess of the targeted bonus
are paid to each participant. Likewise, operating earnings lower than target
result in a bonus payment that is less than the targeted bonus. A
participant's bonus is reduced to zero if actual operating earnings are 80% of
target or less. The operating earnings target is adjusted up or down by 12.5%
of the excess or deficiency of actual net assets employed compared to the
target for net assets employed. For fiscal 1997, the target for operating
earnings is $44,341,000 and the target for net assets employed is
$250,000,000. For each $1,000,000 in actual operating earnings in excess of
the target (as adjusted for any difference in net assets as described above),
the aggregate amount of bonuses for the members of the Management Group would
increase by $30,000. There is no maximum bonus under the plan. The targeted
bonus expressed as a percentage of base salary as of the beginning of the
fiscal year for each member of the Management Group is as follows: Jerry E.
Ex. 4-2
<PAGE>
Hunter: 50% ($180,000); David H. Taylor: 50% ($104,500); Monnie L. Broome: 50%
($83,100); Wm. Ellis Jackson: 25% ($24,625); and L. Allen Ollis: 25%
($22,500). Based on the projected 1997 operating earnings, the actual bonuses
for the individuals listed above are expected to be approximately 90% of the
targeted bonuses. An employee is eligible for a pro rata share of the targeted
bonus if employment is terminated during the fiscal year for death,
disability, retirement with notice acceptable to JPS, or job elimination; an
employee is not eligible for any part of the targeted bonus if employment is
terminated during the fiscal year for cause or upon resignation. Similar
incentive bonus plan arrangements are established for the members of the
management of each of JPS's operating subsidiaries.
Ex. 4-3
<PAGE>
CONTACT: Wendi Kopsick
Jim Fingeroth
Kekst and Company
(212) 521-4800
FOR IMMEDIATE RELEASE
---------------------
EXHIBIT 99
JPS TEXTILE COMMENCES SOLICITATION OF BALLOTS
---------------------------------------------
FOR RESTRUCTURING PLAN
----------------------
GREENVILLE, SC, June 26, 1997 - JPS Textile Group announced today that it has
commenced a solicitation for approval of its previously announced restructuring
plan.
The restructuring plan is the product of several months of negotiations and is
based on an agreement in principle, announced on May 16, 1997, between the
Company and an unofficial committee of bondholders, representing over 60% of the
Company's outstanding public debt. A disclosure statement and ballots have been
mailed to all securityholders of record as of June 20, 1997, who are entitled to
vote on the restructuring plan. The disclosure statement provides relevant
information about the Company and includes both a description and a copy of the
restructuring plan.
In order for their votes to be counted, holders of the Company's public
securities must return their ballots no later than July 28, 1997. Requests for
copies of the disclosure statement should be directed to the Company's voting
agent, The Altman Group, at (212) 681-9600.
Jerry E. Hunter, Chairman, President and Chief Executive Officer, commented,
"The mailing of the disclosure statement and ballots to our public
securityholders brings us a step closer to creating a new capital structure that
will position JPS Textile for long-term profitability and growth. By enabling
us to eliminate the public debt incurred at the time of the 1988 leveraged
buyout, our plan will strengthen the Company's balance sheet significantly and
provide us with the financial resources and flexibility to make strategic
capital investments in our operating businesses to enhance competitiveness and,
in turn, our long-term prospects."
<PAGE>
Under the proposed plan, JPS Textile will convert 100% of its long-term debt to
equity. The restructuring will take place at the holding company level only and
will not effect the Company's operating subsidiaries, JPS Converter &
Industrial Corp. and JPS Elastomerics Corp.
The plan provides for the restructuring to be effected through a voluntary
"prepackaged" chapter 11 case, which the Company would file shortly after July
28, 1997, the deadline for returning ballots on the plan. JPS Textile's
operating subsidiaries will not file for chapter 11 and will continue to conduct
business as usual. In addition, the plan provides for a new revolving credit
facility for JPS Textile's operating subsidiaries, with provisions expected to
be no less favorable than those of the existing facility, to ensure significant
working capital for JPS Textile's operating businesses.
JPS Textile, with consolidated annual revenues of approximately $450 million, is
one of the largest domestic manufacturers of textile and textile related
products for the apparel fabric, industrial and home fashion markets.
