<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 33-27038
JPS TEXTILE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 57-0868166
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
555 North Pleasantburg Drive, Suite 202, Greenville, SC 29607
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 239-3900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par
Value $0.01 per share, 22,000,000 shares authorized; 10,000,000 shares issued
and outstanding
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of January 29, 1999, the aggregate market value of the common stock of the
registrant held by non-affiliates, based upon the closing price of the common
stock on January 29, 1999, as reported by the Nasdaq National Market, was
approximately $34,183,830.
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court: [X]
As of February 16, 1999, 10,000,000 of the registrant's common stock $.01 par
value per share, were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
1
<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K of JPS
Textile Group, Inc. ("JPS" or the "Company"), amends and restates in their
entirety Items 10, 11, 12, 13 and 14 of Part III.
PART III
Item 10. Directors and Executive Officers of the Registrant
The following table sets forth certain information with respect to the
persons who are members of the Board of Directors or executive officers of JPS.
Each director will serve until a successor is elected and qualified or until his
earlier resignation or removal.
<TABLE>
<CAPTION>
Name Age Position(s) Held
<S> <C> <C>
Robert J. Capozzi 34 Director
Jeffrey S. Deutschman 41 Director
Nicholas P. DiPaolo 57 Director
Michael L. Fulbright 49 Director
Jerry E. Hunter 61 Chairman of the Board, President,
Chief Executive Officer and Director
John M. Sullivan, Jr. 53 Director
John W. Sanders, Jr. 44 Executive Vice President - Finance and Chief
Financial Officer
Carl Rosen 69 President, Marketing and Sales for the Apparel
Group of JPS Converter and Industrial Corp.
Bruce R. Wilby 48 President, JPS Elastomerics Corp.
James H. Gully 49 Vice-President-Operations, JPS Converter and
Industrial Corp.
</TABLE>
The business experience of each of the directors and executive officers
during the past five years is as follows:
Mr. Capozzi became a director of JPS on October 9, 1997, the date on
which JPS's plan of reorganization became effective (the "Effective Date"), and
is a Managing Director of Magten Asset Management Corp. ("Magten"), an
investment advisory firm established in 1978. Magten, a registered investment
adviser under the Investment Advisers Act of 1940, as amended, beneficially owns
approximately 17.82% of JPS's common stock, par value $.01 per share (the
"Common Stock") as of January 19, 1999. 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.
Mr. Deutschman became a director of JPS on the Effective Date and 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.
2
<PAGE>
Mr. DiPaolo became a director of JPS on the Effective Date and has been
a consultant to Cynthia Steffe, a women's apparel manufacturer, since 1998. From
March 1991 until his retirement in May 1997, Mr. DiPaolo was Chairman of the
Board, President and Chief Executive Officer of Salant Corporation, a
diversified apparel company listed on the New York Stock Exchange. From 1985 to
1991, Mr. DiPaolo served as President of Manhattan Industries, which was merged
into Salant Corporation in 1988. Prior to that, he was Chairman and President of
the Villager, a women's sportswear company, from 1979 to 1985. 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 Bernard Chaus, a women's apparel
manufacturer, in addition to other industry associations.
Mr. Fulbright became a director of JPS on the Effective Date and is
currently a director of Buster Brown Apparel, Inc., a children's apparel
company. Mr. Fulbright served as Chief Executive Officer and a director of The
Bibb Company, a diversified textile company, from August 1996 until October
1998. 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, Inc., a textile manufacturer, serving as
President of the Greige Manufacturing Division from August 1986 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 was employed by M.
Lowenstein Corporation and WestPoint Pepperell.
Mr. Hunter was appointed as a director of JPS on April 6, 1993 and as
Chief Executive Officer of JPS on November 29, 1994 and subsequently appointed
as Chairman of the Board. Mr. Hunter has served as President of JPS since
September 1988. Prior to that time, from May 1988 to September 1988, he was
Executive Vice-President--Operations. In addition, on January 18, 1994, Mr.
Hunter was appointed as Chief Operating Officer of JPS Converter and Industrial
Corp., a wholly-owned subsidiary of JPS, and he also serves as Vice-President of
each of JPS's other subsidiaries. From April 1986 to May 1988, he was
Vice-President--Technical Services at J.P. Stevens. From March 1983 to March
1986, he was Senior Vice-President at Cannon Mills, Inc., a textile
manufacturer. Prior to March 1983, he was employed by Springs Industries, Inc.,
for 21 years.
Mr. Sullivan became a director of JPS on the Effective Date and has
served as President of American Silk Mills Corp. since 1985, and as President of
Gerli & Co., Inc. since 1987. 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 of Gerli & Co., Inc. from 1979-1982, and as Sales Manager of
American Silk Mills from 1974 to 1979.
Mr. Sanders has served as Executive Vice President-Finance and Chief
Financial Officer of JPS since November 1998. From 1993 to 1998, Mr. Sanders
served as Chief Financial Officer of Spartan Mills and in addition to these
duties developed partnerships and strategic alliances to create Spartan's
European businesses based in Germany, Netherlands and Poland. From 1989 to 1993,
Mr. Sanders served as a financial and operations consultant to companies both in
senior management roles and as an independent consultant in the areas of
turnaround management, strategic repositioning and maximization of shareholder
value. From 1977 to 1989, Mr. Sanders was employed by Deloitte Haskins & Sells,
specializing in audit, SEC compliance/reporting, and strategic alliance, merger
and acquisition services.
Mr. Rosen became President of marketing and sales for the apparel group
of JPS Converter and Industrial Corp. in 1993. He was Vice-President of sales
for the apparel and home furnishings group of JPS Converter and Industrial Corp.
from 1991 to 1993. Prior to that, he was President and founder of Loomtex
Corporation, a New York converting company, for 31 years.
Mr. Wilby became President of JPS Elastomerics Corp., a wholly-owned
subsidiary of JPS, in 1993 and has served in that capacity during the past six
years. He was Vice-President of marketing and sales for Construction Products
for the Company from 1991 to 1993. Prior to that, he served in a variety of
technical and managerial positions with the Company, for 25 years.
3
<PAGE>
Mr. Gully became Executive Vice-President of Operations for JPS
Converter and Industrial Corp. in 1995. He was Executive Vice-President of
Nazareth Century Mills, Inc. from 1994 to 1995. Prior to that, he was President
of Delta Apparel, a division of Delta Woodside Mills, Inc. Prior to that, he
has served in various capacities with Riegel Textile Corp., Milliken and Company
and with Hanes Corporation for 28 years.
None of the directors or executive officers listed herein is related to
any other such director or executive officer.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of holdings and transactions in JPS's stock with the SEC. Officers,
directors and persons who own more than ten percent of the Company's equity
securities are required by regulation to furnish the Company with copies of all
Section 16(a) forms they file. Based on the Company's records and other
information, the Company believes that in 1998 the directors and executive
officers met all applicable SEC filing requirements, except that Forms 3 were
inadvertently filed late by each of the directors and officers.
Item 11. Executive Compensation
The following table sets forth a summary of all compensation awarded or
paid to or earned by the chief executive officer and five other most highly
compensated executive officers of the Company in the last fiscal year for
services rendered in all capacities to the Company (including its subsidiaries)
for the fiscal years ended October 31, 1998, November 1, 1997 and November 2,
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
------------------------------
Securities
Annual Compensation Underlying
Name and --------------------------- Options/ All Other
Principal Position Year Salary Bonus SAR's Payouts Compensation(1)
- ------------------ ---- ------- ----- ----- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jerry E. Hunter 1998 $387,729 -- -- -- $ 9,263
Chairman of the Board, 1997 361,218 $137,052 115,000(2) -- 9,059
President and Chief 1996 332,025 -- -- 3,371
Executive Officer
Carl Rosen 1998 283,554 10,376 -- -- 3,351
President, JPS 1997 267,650 43,195 30,000(2) -- 3,178
Converter & Industrial 1996 251,875 -- -- 3,131
Corp.
David H. Taylor (3) 1998 225,000 -- -- 3,012
Executive Vice 1997 209,973 79,566 75,000(2) -- 8,025
President - Finance 1996 204,783 -- -- 2,291
and Secretary
Monnie L. Broome 1998 181,331 -- -- -- 8,019
Vice President-Human 1997 167,040 63,272 30,000(2) -- 8,016
Resources 1996 162,775 -- -- 2,295
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Bruce R. Wilby 1998 173,250 -- -- -- 5,572
President, JPS 1997 165,000 78,779 30,000(2) $ 27,751 6,205
Elastomerics 1996 161,474 57,761 -- 6,040
Corp.
James H. Gully 1998 176,800 6,657 -- -- 1,952
Vice President- 1997 171,133 27,710 30,000(2) -- 1,980
Operations, 1996 161,667 -- -- 1,539
JPS Converter and
Industrial Corp.
</TABLE>
(1) Employer-matching 401(k) plan contribution, employer-provided life
insurance premiums and imputed lease value of company-provided
automobiles.
(2) One-third of the performance-based options (one-sixth of the total
options) granted to employees of the Company during fiscal year 1997
were cancelled because the Company did not meet performance goals for
such year. Accordingly, 19,167 options granted to Mr. Hunter, 12,500
options granted to Mr. Taylor, and 5,000 options granted to each of
Messrs. Rosen, Broome, Wilby and Gully were cancelled.
(3) David Taylor voluntarily resigned as Executive Vice-President, Chief
Financial Officer and Secretary of the Company on November 11, 1998.
AGREEMENTS WITH EXECUTIVE OFFICERS
On the Effective Date, JPS entered into an employment agreement with
Jerry E. Hunter. The agreement, which provides that Mr. Hunter will serve as
President and Chief Executive Officer of JPS until the third anniversary of the
Effective Date (the "Termination Date"), shall automatically be extended on an
annual basis following the Termination Date unless either party elects in
advance not to extend the employment period. The initial base salary under the
agreement is $380,000 and may be increased but not reduced over the term of the
agreement. In addition, under the employment agreement on the Effective Date
Mr. Hunter received a retention grant cash payment of $256,274 and 32,852 shares
of Common Stock. Mr. Hunter is eligible for an annual bonus up to 50% of base
salary based upon the Company's attainment of certain performance goals
specified in the Company's annual Management Incentive Bonus Plan (the
"Management Incentive Bonus Plan"). If JPS terminates Mr. Hunter's employment
for reasons other than for cause (as defined in the agreement), he will be
entitled to severance benefits equal to (i) his annual base salary continued
through the Termination Date or for one year from the date of termination, if
later, (ii) his target annual bonus continued through the Termination Date or
for one year, if greater and (iii) continuation of all health and life insurance
benefit for up to twenty-four months following the termination of employment. In
the event JPS reduces Mr. Hunter's base salary or bonus, materially changes the
requirements of his position or requires that he relocate his principal
residence, or in the event Mr. Hunter elects to termination his employment no
earlier than six months following a change in control (as defined in the
agreement), Mr. Hunter may voluntarily terminate his employment with JPS with
such termination being treated, for purposes of severance benefits, as a
termination by JPS.
On the Effective Date, JPS entered into substantially similar
employment agreements with David H. Taylor and Monnie L. Broome, with Mr. Taylor
serving as Executive Vice President--Finance and Secretary of JPS and Mr. Broome
serving as Vice President--Human Resources of JPS. Under the agreements, base
salary for Mr. Taylor was $225,000 and for Mr. Broome is $180,000. In addition,
under the new employment agreements, Mr. Taylor received a retention grant cash
payment of $163,694 and 20,984 shares of Common Stock and Mr. Broome
5
<PAGE>
received a retention grant cash payment of $115,531 and 14,810 shares of Common
Stock. Each of Mr. Taylor and Mr. Broome is also eligible for an annual bonus
of up to 50% of his salary based upon the Company's attainment of certain
performance goals specified in the Management Incentive Bonus Plan.
Mr. Taylor voluntarily resigned from JPS, effective November 11, 1998.
On December 23, 1991, the Company entered into an employment agreement
with Bruce R. Wilby. This agreement provides severance benefits in the event
that Mr. Wilby is terminated prior to December 23, 1999 other than (a) for Cause
(as defined in the agreement) or (b) if Mr. Wilby leaves without good reason.
Such severance benefits shall be an amount equal to his annual base salary in
effect at the time of such termination including normal fringe benefits payable
in the normal course as if employment had not been terminated.
On May 1, 1993, the Company entered into an employment agreement with
Carl Rosen. This agreement, as amended, provides that Mr. Rosen will serve as
President of marketing and sales for the apparel group of JPS Converter and
Industrial Corp. until April 30, 2001. Base salary under the agreement is
currently $265,000 and may be increased but not reduced over the term of the
agreement. Mr. Rosen is eligible for an annual bonus with target level equal to
50% of base salary. If the Company terminates Mr. Rosen's employment for reasons
other than (a) for cause (as defined in the agreement) or (b) if Mr. Rosen
leaves for good reason, he is entitled to severance benefits equal to his annual
base salary including fringe benefits plus a pro rata bonus amount up to the
date of termination. In the event the Company reduces Mr. Rosen's base salary or
bonus or materially changes the requirements of his position, Mr. Rosen may
voluntarily terminate his employment with the Company with such termination
being treated, for purposes of severance benefits, as a termination by the
Company.
On January 26, 1998, JPS Converter and Industrial Corp. entered
into an employment agreement with James H. Gully. This agreement provides
severance benefits in the event that Mr. Gully is terminated prior to January
26, 2001 other than (a) for Cause (as defined in the agreement) or (b) if Mr.
Gully leaves without good reason. Such severance benefits shall be an amount
equal to his annual base salary in effect at the time of such termination
including normal fringe benefits payable in the normal course as if employment
had not been terminated.
On November 11, 1998, the Company entered into an employment agreement
with John W. Sanders, Jr. This agreement provides that Mr. Sanders will serve as
Executive Vice President-Finance and Chief Financial Officer of the Company
commencing on November 11, 1998 and ending on the first anniversary thereof,
provided that the employment period shall be extended automatically on each such
anniversary date, unless the Company or Mr. Sanders gives written notice to the
other not to extend the employment period. Under the agreement, the base salary
for Mr. Sanders is $225,000 per year and may be increased annually by the board
of directors. In addition, Mr. Sanders is eligible to participate in the
Management Incentive Bonus Plan and receive a bonus thereunder, as well as
participate in any incentive compensation or plan adopted and approved by the
board of directors. Mr. Sanders may terminate this agreement for Good Reason (as
defined in the agreement). In the event that the Company terminates Mr. Sander's
employment other than for Cause (as defined in the agreement) or Mr. Sanders
terminates for Good Reason, the Company shall (i) continue to pay Mr. Sanders'
base salary for one year from such termination of employment, (ii) pay Mr.
Sanders an amount equal to the sum of (a) any accrued but unpaid bonus earned
under the Management Incentive Bonus Plan, (b) the pro rata portion of the
target bonus (not in excess of fifty percent (50%) of base salary) payable under
the Management Incentive Bonus Plan (assuming all targets are met) and (c) an
amount equal to the target bonus (not in excess of fifty percent (50%) of base
salary) under the Management Incentive Bonus Plan (assuming all targets are
met), and (iii) continue to provide all health and life insurance benefits for
up to twenty-four months following the termination of employment. In addition,
pursuant to a separate employment letter agreement entered into between Mr.
Sanders and the Company on November 9, 1998, Mr. Sanders was guaranteed
one-half of his target bonus amount for the plan year 1999.
6
<PAGE>
EMPLOYEE BENEFIT AND LONG-TERM COMPENSATION PLANS
RETIREMENT PENSION PLAN
The Company maintains a Retirement Pension Plan for all employees (the
"Pension Plan"), including its salaried employees. The Pension Plan is a defined
benefit pension plan providing a formula benefit with contributions determined
on an actuarial basis. The Pension Plan generally covers all employees 21 years
of age or older who have completed one year of service with the Company. The
Pension Plan generally takes into account annual compensation earned under
certain predecessor plans of J.P. Stevens.
The following table indicates the approximate amounts of annual
retirement income that would be payable to a salaried employee under the Pension
Plan based on the compensation levels and years of credited service shown. There
would be no social security or other offset deducted from the amounts shown.
PENSION PLAN TABLE*
<TABLE>
<CAPTION>
Years of Service
------------------------------------------------------------------------------------------------------
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $19,698 $26,265 $32,831 $39,397 $45,963
150,000 24,198 32,265 40,331 48,397 56,463
160,000 and above 25,998 34,665 43,331 51,997 60,663
</TABLE>
* Assumes individual retires at age 65 in 1998 with the indicated years
of service and compensation. The social security integration level of
such individuals would be $31,128. The social security integration
level is adjusted annually.
Credited years of service for benefit accrual under the Pension Plan as of
November 1, 1998 for the following executive officers are:
Jerry E. Hunter 12 years
Carl Rosen 7 years
David H. Taylor 10 years
Monnie L. Broome 10 years
Bruce R. Wilby 23 years
James H. Gully 3 years
Annual retirement benefits for salaried employees are generally
computed as the sum of 0.6% of a participant's average compensation (the annual
average of five consecutive, complete plan years of highest compensation during
the last 10 plan years of service) multiplied by the years of benefit service
plus 0.6% of a participant's compensation which exceeds the Participant's Social
Security Integration Level (equal to $31,128 in 1998) multiplied by the
participant's years of benefit service. The Pension Plan provides that each
participant's benefits fully vest after five years of service or the attainment
of age 55.
This table may understate the benefits available to certain
participants because salaried employees who were covered by the Pension Plan
before July 1, 1989 are entitled to the greater of the benefit formula noted
above or the prior benefit formula, plus additional accrued benefits under the
new formula since July 1, 1989. Under the prior formula, a participant's annual
pension payable as of normal retirement age was equal to 1% of the portion of
"final average compensation" which was equal to the "social security integration
level" in effect
7
<PAGE>
for the year of retirement, plus 1.5% of the portion of the participant's final
average compensation in excess of the social security integration level, the sum
of which was multiplied by the number of years of credited service not exceeding
35. In addition, as noted below, the table assumes that covered compensation was
limited to the current allowable amount for all years while benefits may have
been accrued in years when limitations were higher.
Compensation covered by the Pension Plan consists of all payments made
to a participant for personal services rendered as an employee of the Company
which are subject to federal income tax withholding, excluding imputed income
attributable to certain fringe benefit programs. In accordance with the Revenue
Reconciliation Act of 1933 with respect to salaried employees, plan compensation
covers up to an adjusted maximum of $160,000 per individual for the plan year
beginning November 1, 1998. Plan compensation was subject to substantially
higher limits in previous years ($235,840 for 1994). The amounts shown are also
subject to possible maximum limitations under Section 415 of the Internal
Revenue Code of 1986, as amended, and are subject to possible reduction for
amounts payable under other JPS qualified plans.
1998 MANAGEMENT INCENTIVE BONUS PLAN
The Company's 1998 Management Incentive Bonus Plan provides incentives
for key management employees of the Company and its subsidiaries based on 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 annually 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 and for each operating subsidiary. If actual
operating earnings and net assets employed are equal to the target, 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 bonuses are paid to
each participant. Likewise, operating earnings lower than target result in a
bonus payment that is less then the targeted bonus. A participant's bonus is
reduced to zero if actual operating earnings are 80% (or 65% in the case of one
subsidiary) 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. Targeted bonus amounts expressed as a
percentage of salary for participants in the plan range from 15% to 50%.
Individuals listed on the Summary Compensation Table have targeted bonus amounts
equal to 50% of salary.
1997 INCENTIVE AND CAPITAL ACCUMULATION PLAN
The Company's 1997 Incentive and Capital Accumulation Plan (the
"Incentive Plan") is intended to provide incentives that will attract, retain,
and motivate highly competent individuals as key employees of the Company and
its subsidiaries, by providing them with opportunities to acquire shares of
Common Stock or monetary payments based on the value of such shares. Pursuant to
the Incentive Plan, 853,485 shares of Common Stock are reserved for issuance to
salaried key employees and non-employee directors of the Company 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 the Company's Board of
Directors. The Incentive Plan will terminate on the tenth anniversary of its
adoption.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN 1998 AND OPTION VALUES AT OCTOBER 31, 1998
No executive officer of JPS and its subsidiaries exercised options
in 1998. The following table provides information with respect to the value of
options held by the executive officers of JPS and its subsidiaries at year-end
measured in terms of the closing price per share of Common Stock on October 31,
1998 ($5.50 per share).
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised In-the-Money
Unexercised Options Options at
Name at October 31, 1998 October 31, 1998 ($)1
- ---- ------------------- ---------------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
<S> <C> <C>
Jerry E. Hunter 19,167/76,666 0/0
Carl Rosen 5,000/20,000 0/0
David H. Taylor 12,500/50,000 0/0
Monnie L. Broome 5,000/20,000 0/0
Bruce R. Wilby 5,000/20,000 0/0
James H. Gully 5,000/20,000 0/0
</TABLE>
(1) Value of unexercised "in-the-money" options is the difference
between the market price of a share of Common Stock on October 31,
1998 and the exercise price of the option, multiplied by the number
of shares of Common Stock underlying the option.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Based upon information known to JPS as of February 15, 1999, the
following table sets forth the ownership of the shares of Common Stock issued
and outstanding as of such date by (a) each person or group that is the
beneficial owner of more than 5% of such shares on such date, (b) each director
of JPS on such date and (c) all directors of JPS as a group on such date.
<TABLE>
<CAPTION>
Common Stock (1)
------------------------------------------
Name and Address of Beneficial Owners Number of Shares Percent of Class
----------------- -----------------
<S> <C> <C>
Magten Asset Management Corp. (2) 1,897,738 17.82%
35 East 21st Street
New York, New York 10010
Northeast Investors Trust 1,038,823 9.75%
50 Congress Street, 10th Floor
Boston, Massachusetts 02109
The TCW Group, Inc. (3) 645,023 6.01%
865 South Figueroa Street
Los Angeles, California 90017
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C>
UBS AG 1,027,214 9.64%
299 Park Avenue
31st Floor
New York, New York 10171
Merrill Lynch, Pierce, Fenner & 925,685 8.67%
Smith Incorporated
250 Vesey Street
World Financial Center-North Tower
New York, New York 10281
Daystar L.L.C. 1,679,360 15.75%
411 Theodore Fremd Avenue
Rye, New York 10580
Robert J. Capozzi (5) 1,897,738 17.82%
Magten Asset Management Corp.
35 East 21st Street
New York, New York 10010
Jeffrey S. Deutschman 10,000(4) 0.09%
Crown Capital
660 Madison Ave. - 15th Floor
New York, New York 10021
Nicholas P. DiPaolo 10,000(4) 0.09%
4 Powder Hill
Saddle River, New Jersey 07458
Michael L. Fulbright 10,000(4) 0.09%
1940 Dinsmore Road
Alpharetta, Georgia 30004
Jerry E. Hunter 52,019 0.49%
JPS Textile Group, Inc.
555 North Pleasantburg Drive
Suite 202
Greenville, South Carolina 29607
John M. Sullivan 10,000(4) 0.09%
American Silk Mills Corp.
41 Madison Avenue
41st Floor
New York, New York 10010
David H. Taylor (7)
105 Holbrook Trail
Greenville, South Carolina 29605 20,984 0.20%
Carl Rosen
JPS Converter and Industrial Corp. 5,000 0.05%
1185 Avenue of the Americas
New York, NY 10036
Monnia L. Broome
JPS Textile Group, Inc. 5,000 0.05%
555 North Pleasantburg Dr., Suite 202
Greenville, SC 29607
Bruce R. Wilby
JPS Elastomerics Corp. 5,000 0.05%
Nine Sullivan Road
Holyoke, MA 01040-2800
James H. Gully
JPS Converter and Industrial Corp. 5,000 0.05%
33 Stevens Street
Greenville, SC 29602
Directors and executive officers as a group 2,030,741(6) 19.07%
</TABLE>
10
<PAGE>
(1) After giving effect to (i) the exercise in full of the new warrants
issued on the Effective Date (as defined herein) and (ii) the exercise
in full of all options to purchase shares of Common Stock which are
vested.
(2) Includes shares of the Common Stock held by Magten in accounts managed
by Magten on behalf of various investment advisory clients, including
the City of Los Angeles Fire and Police Pension Systems (719,411
shares, or 6.82%, of the Common Stock) and Hughes Retirement Plans
Trust (575,617 shares, or 5.46%, of the Common Stock). Certain of such
shares are held for the benefit of family interests of Talton R. Embry,
the Chairman, a director and controlling shareholder of Magten, or in
employee plans with respect to which Mr. Embry serves as a trustee.
Magten has shared voting and investment power over all of such
1,897,738 shares.
(3) Ownership includes 76,647 warrants to purchase shares of common stock.
Various persons other than included above, including the TCW Shared
Opportunities Fund II, L.P., have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of,
the Common Stock. The general partner and investment advisor of TCW
Shared Opportunity Fund II, L.P. ("SHOP II") is TCW Investment
Management Company. Messrs. Mark L. Attanasio, Robert D. Beyer,
Jean-Marc Chapus and Mark L. Gold are portfolio managers of SHOP II and
exercise voting and dispositive power on its behalf. Messrs. Attanasio,
Beyer, Chapus and Gold disclaim any beneficial ownership of the capital
stock of JPS.
(4) Represents options granted to non-employee directors of JPS (other than
Robert J. Capozzi) on the Effective Date. See "EXECUTIVE COMPENSATION
-- Compensation of Directors."
(5) By virtue of 1,897,738 shares of Common Stock of JPS beneficially owned
by Magten, of which Mr. Capozzi is Managing Director. Mr. Capozzi
disclaims beneficial ownership of all of these shares. Mr. Capozzi has
informed JPS that he has waived his entitlement to receive any options
to purchase shares of Common Stock of JPS to which each non-employee
director will be entitled on the Effective Date. See "EXECUTIVE
COMPENSATION -- Compensation of Directors."
(6) Includes 1,897,738 shares of Common Stock of JPS beneficially owned by
Magten. See Note 5.
(7) David H. Taylor served as Executive Vice-President, Chief Financial
Officer and Secretary of the Company until November 11, 1998.
Item 13. Certain Relationships and Related Transactions
None.
11
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.
(a) (1) The following financial statements are included in Item 8:
(i) Independent Auditors' Report.
(ii) Consolidated Balance Sheets as of October 31, 1998
and November 1, 1997.
(iii) Consolidated Statements of Operations for the fiscal
year ended October 31, 1998 (Reorganized Company),
the periods from October 10, 1997 to November 1, 1997
(Reorganized Company) and November 3, 1996 to October
9, 1997 (Predecessor Company) and the fiscal year
ended November 2, 1996 (Predecessor Company).
(iv) Consolidated Statements of Senior Redeemable
Preferred Stock and Shareholders' Equity (Deficit)
for the fiscal year ended October 31, 1998
(Reorganized Company), the periods from October 10,
1997 to November 1, 1997 (Reorganized Company) and
November 3, 1996 to October 9, 1997 (Predecessor
Company) and the fiscal year ended November 2, 1996.
(v) Consolidated Statements of Cash Flows for the fiscal
year ended October 31, 1998 (Reorganized Company),
the periods from October 10, 1997 to November 1, 1997
(Reorganized Company) and November 3, 1996 to October
9, 1997 (Predecessor Company) and the fiscal year
ended November 2, 1996 (Predecessor Company).
(vi) Notes to Consolidated Financial Statements.
The registrant is primarily a holding company and all direct subsidiaries are
wholly owned.
(2) The financial statement schedule required by Item 8 is listed
on Index to Financial Statement Schedule, starting at page S-1
of this report.
(3) The exhibits required by Item 601 of Regulation S-K are listed
in the accompanying Index to Exhibits. Registrant will furnish
to any securityholder, upon written request, any exhibit
listed in the accompanying Index to Exhibits upon payment by
such securityholder of registrant's reasonable expenses in
furnishing any such exhibit.
(b) No reports on Form 8-K were filed during the quarter ended October 31,
1998.
(c) Reference is made to Item 14(a)(3) above.
(d) Reference is made to Item 14(a)(2) above.
-12-
<PAGE>
INDEX TO EXHIBITS
The following is a complete list of Exhibits filed as part of this report, which
are incorporated herein:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
2.1(i) Joint Plan of Reorganization for JPS Textile Group, Inc., a
Delaware corporation ("JPS"), proposed by JPS and JPS Capital
Corp., a Delaware corporation, pursuant to chapter 11 of title 11
United States Code (the "Bankruptcy Code"), dated August 1, 1997
(as amended, the "Plan").(K)
2.1(ii) Revised Technical and Conforming Amendment to the Plan, dated
September 4, 1997.(L)
3.1 Restated Certificate of Incorporation of JPS, filed with the
Secretary of State of the State of Delaware on October 9, 1997.(P)
3.2 Amended and Restated By-laws of JPS.(P)
4.1 Indenture, dated as of October 9, 1997 (the "Contingent Note
Indenture"), between JPS Capital Corp. ("Capital") and First Trust
National Association ("First Trust"), as Trustee, relating to
Capital's Contingent Notes (the "Contingent Notes").(K)
4.2 Form of Contingent Note, incorporated by reference to Exhibit A to
the Contingent Note Indenture.(K)
10.1 Loan and Security Agreement, dated as of October 30, 1991, (the
"CIT Loan Agreement"), between JPS Converter and Industrial Corp.,
a Delaware corporation ("JCIC") and The CIT Group/Equipment
Financing, Inc. ("CIT").(A)
10.2 First Amendment to the CIT Loan Agreement, dated as of June 26,
1992, by and between JCIC and CIT.(A)
10.3 Second Amendment to the CIT Loan Agreement, dated as of December
22, 1992, by and between JCIC and CIT.(A)
10.4 Agreement of Lease, dated as of June 1, 1988, by and between 1185
Avenue of the Americas Associates ("1185 Associates") and JCIC.(A)
10.5 Lease Modification and Extension Agreement, dated as of April 2,
1991, by and between 1185 Associates and JCIC.(A)
10.6 Third Amendment to the CIT Loan Agreement, dated as of August 6,
1993, by and between JCIC and CIT.(B)
10.7 Trademark License Agreement, dated as of May 9, 1988, by and
between J.P. Stevens and JPS Acquisition Corp. (predecessor to the
Company.)(B)
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
10.8 Omnibus Real Estate Closing Agreement, dated as of May 9, 1988, by
and among J.P. Stevens, JPS Acquisition Corp., JPS Acquisition
Automotive Products Corp., JPS Acquisition Carpet Corp., JPS
Acquisition Industrial Fabrics Corp., JPS Acquisition Converter
and Yarn Corp. and JPS Acquisition Elastomerics Corp.(B)
10.9 Purchase Agreement, dated as of April 24, 1988, by and among JPS
Holding Corp., the Company, Odyssey Partners, West
Point-Pepperell, Inc., STN Holdings Inc., Magnolia Partners, L.P.
and J.P. Stevens.(B)
10.10 Asset Purchase Agreement, dated as of May 25, 1994, by and among
the Company, JAPC, JCIC, JPS Auto Inc., a Delaware corporation,
and Foamex International Inc., a Delaware corporation.(C)
10.11 Fourth Amended and Restated Credit Agreement (the "Existing Credit
Agreement"), dated as of June 24, 1994, by and among the Company,
JCIC, JPS Elastomerics Corp., a Delaware corporation ("JEC"), JPS
Carpet Corp., a Delaware corporation ("JCC"), the financial
institutions listed on the signature pages thereof, Citibank, N.A.
("Citibank") as Agent and Administrative Agent, and General
Electric Capital Corporation ("GECC") as Co-Agent and Collateral
Agent.(D)
10.12 First Amendment to the Existing Credit Agreement, dated as of
November 4, 1994, by and among the Company, JCIC, JEC, JCC, the
financial institutions listed on the signature pages thereof,
Citibank, as Agent and Administrative Agent, and GECC, as Co-Agent
and Collateral Agent.(E)
10.13 Second Amendment to the Existing Credit Agreement, dated as of
December 21, 1994, by and among the Company, JCIC, JEC, JCC, the
financial institutions listed on the signature pages thereof,
Citibank, as Agent and Administrative Agent, and GECC as Co-Agent
and Collateral Agent.(E)
10.14 Fourth Amendment to CIT Loan Agreement, dated as of December 29,
1994, by and between JCIC and CIT.(E)
10.15 Lease Modification and Extension Agreement, dated as of April 30,
1993, by and between 1185 Associates and JCIC.(E)
10.16 Third Amendment to Existing Credit Agreement, dated as of May 31,
1995 by and among the Company, JCIC, JEC, JCC, the financial
institutions listed on the signature pages thereof, Citibank, as
Agent and Administrative Agent, and GECC, as Co-Agent and
Collateral Agent.(F)
10.17 Fourth Amendment to Existing Credit Agreement, dated as of October
28, 1995 by and among the Company, JCIC, JEC, JCC, the financial
institutions listed on the signature pages thereof, Citibank, as
Agent and Administrative Agent, and GECC, as Co-Agent and
Collateral Agent.(G)
10.18 Lease Modification and Extension Agreement, dated as of November
17, 1994, by and between 1185 Associates and JCIC.(G)
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
10.19 Asset Transfer Agreement, dated as of November 16, 1995, by and
among the Company, JPS Carpet Corp., a Delaware corporation,
Gulistan Holdings Inc. ("GHI"), a Delaware corporation and
Gulistan Carpet Inc., a Delaware Corporation and wholly-owned
subsidiary of GHI.(H)
10.20 Fifth Amendment to the Fourth Amended & Restated Credit Agreement,
dated as of May 6, 1996, by and among the Company, JPS
Elastomerics Corp., JPS Converter and Industrial Corp., JPS Auto
Inc., JPS Carpet Corp., International Fabrics, Inc., the financial
institutions listed on the signature pages thereof, Citibank, N.A.
as agent and Administrative Agent and General Electric Capital
Corporation as Co-Agent and Collateral Agent.(I)
10.21 Sixth Amendment to the Fourth Amended & Restated Credit Agreement,
dated as of May 15, 1996, by and among the Company, JPS
Elastomerics Corp., JPS Converter and Industrial Corp., JPS Auto
Inc., JPS Carpet Corp., International Fabrics, Inc., the financial
institutions listed on the signature pages thereof, Citibank, N.A.
as agent and Administrative Agent and General Electric Capital
Corporation as Co-Agent and Collateral Agent.(I)
10.22 Seventh Amendment to the Fourth Amended and Restated Credit
Agreement, dated as of July 22, 1996, by and among the Company,
JPS Elastomerics Corp., JPS Converter and Industrial Corp., JPS
Auto Inc., JPS Carpet Corp., International Fabrics, Inc., the
financial institutions listed on the signature pages thereof,
Citibank, N.A. as agent and Administrative Agent and General
Electric Capital Corporation as Co-Agent and Collateral Agent.(J)
10.23 Eighth Amendment to the Fourth Amended and Restated Credit
Agreement, dated as of September 6, 1996, by and among the
Company, JPS Elastomerics Corp., JPS Converter and Industrial
Corp., JPS Auto Inc., JPS Carpet Corp., International Fabrics,
Inc., the financial institutions listed on the signature pages
thereof, Citibank, N.A. as agent and Administrative Agent and
General Electric Capital Corporation as Co-Agent and Collateral
Agent.(J)
10.24 Employment Agreement dated October 9, 1997, between the Company
and Jerry E. Hunter. (P)
10.25 Employment Agreement dated October 9, 1997, between the Company
and David H. Taylor. (P)
10.26 Employment Agreement dated October 9, 1997, between the Company
and Monnie L. Broome.(P)
10.27 Employment Agreement, dated May 1, 1993 and amended September 11,
1995 between the Company and Carl Rosen.(J)
10.28 Employment Agreement, dated December 23, 1991 and amended August
20, 1996 and December 23, 1996 between the Company and Bruce
Wilby.(G)
10.29 Asset Purchase Agreement, dated as of September 30, 1996 between
Elastomer Technologies Group, Inc. a Delaware Corporation, and JPS
Elastomerics Corp., a Delaware Corporation and wholly- owned
subsidiary of the Company.(G)
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
10.30 Receivables Purchase Agreement dated as of September 30, 1996
between The Bank of New York Commercial Corporation, a New York
Corporation and JPS Elastomerics Corp., a Delaware Corporation and
wholly-owned subsidiary of the Company.(G)
10.31 Registration Rights Agreement, dated as of October 9, 1997, by and
among JPS and the holders of JPS's Common Stock.(P)
10.32 Ninth Amendment to Existing Credit Agreement, dated as of February
21, 1997, by and among JPS, JCIC, JEC, JCC, the financial
institutions listed on the signature pages thereof, Citibank, as
agent and Administrative Agent and GECC as Co-Agent and Collateral
Agent.(N)
10.33 Tenth Amendment to the Existing Credit Agreement, dated as of
April 29, 1997, by and among JPS, JCIC, JEC, JCC, the financial
institutions listed on the signature pages thereof, Citibank, as
agent and Administrative Agent and GECC as Co-Agent and Collateral
Agent.(O)
10.34 Eleventh Amendment to the Existing Credit Agreement, dated as of
May 15, 1997, by and among JPS, JCIC, JEC, JCC, the financial
institutions listed on the signature pages thereof, Citibank, as
agent and Administrative Agent and GECC as Co-Agent and Collateral
Agent.(O)
10.35 Credit Facility Agreement, dated as of October 9, 1997, by and
among JPS, C&I, Elastomerics, the financial institutions listed on
the signature pages thereto, and the agent and co-agent party
thereto.(M)
10.36 1997 Incentive and Capital Accumulation Plan dated as of October
9, 1997.(P)
10.37 Warrant Agreement dated as of October 9, 1997.(P)
10.38 First Amendment to the Credit Facility Agreement, dated as of
October 30, 1998, by and among JPS, C&I, Elastomerics, the
financial institutions listed on the signature pages thereto, and
the agent and co-agent party thereto.(Q)
10.39 Asset Purchase Agreement, dated as of January 11, 1999, by and
between C&I and Belding Hausman Incorporated.(Q)
10.40 Amendment No. 1 to Asset Purchase Agreement, dated as of February
8, 1999, by and between C&I and Belding Hausman Incorporated. (Q)
10.41 JPS Guaranty Letter, dated as of January 11, 1999, by and between
JPS and Belding Hausman Incorporated. (Q)
10.42 Employment Agreement dated November 11, 1999, between the Company
and John W. Sanders, Jr. (Q)
10.43 Employment Agreement dated January 26, 1998, between JPS
Converter and Industrial Corp. (a wholly-owned subsidiary of
JPS) and James H. Gully. (Q)
11.1 Statement re: Computation of Per Share Earnings - not required
since such computation can be clearly determined from the material
contained herein.
12.1 Computation of Ratio of Earnings to Fixed Charges - not required
for Form 10-K per Item 503(d) of Regulation S-K.
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
12.2 Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends--not required for Form 10-K per Item
503(d) of Regulation S-K.
21.1 List of Subsidiaries of the Company.(E)
24.1 Power of Attorney relating to JPS (included as part of the
signature page hereof).(M)
27.1 Financial data schedule (for SEC use only).(Q)
</TABLE>
- -------------------------------------
(A) Previously filed as an exhibit to Registration Statement No. 33-58272
on Form S-1, declared effective by the SEC on July 26, 1993, and
incorporated herein by reference.
(B) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended October 30, 1993.
(C) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended April 30, 1994.
(D) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended July 30, 1994.
(E) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended October 29, 1994.
(F) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended April 29, 1995.
(G) Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended November 2, 1996.
(H) Previously filed as an exhibit to the Company's Current Report on Form
8-K dated December 1, 1995.
(I) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended April 27, 1996.
(J) Previously filed as an exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended July 27, 1996.
(K) Previously filed as an exhibit to JPS's Current Report on Form 8-K
dated July 2, 1997.
(L) Previously filed as an exhibit JPS's Registration Statement on Form 8-A
filed on September 8, 1997.
(M) Previously filed.
(N) Previously filed as an exhibit to JPS's Quarterly Report on Form 10-Q
for the quarter ended February 1, 1997.
(O) Previously filed as an exhibit to JPS's Quarterly Report on Form 10-Q
for the quarter ended May 3, 1997.
(P) Previously filed as an exhibit to JPS's Annual Report on Form 10-K for
the year ended November 1, 1997.
(Q) Filed herewith.
-17-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
JPS TEXTILE GROUP, INC.
By: /s/ Jerry E. Hunter
-------------------------------
Jerry E. Hunter,
Chairman of the Board, President
and Chief Executive Officer
Date: February 26, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Jerry E. Hunter Director, Chairman of the Board, February 26, 1999
- ------------------------------------ President and Chief Executive
JERRY E. HUNTER Officer
/s/ John W. Sanders, Jr. Executive Vice President-Finance & February 26, 1999
- ------------------------------------ Chief Financial Officer
JOHN W. SANDERS, JR.
/s/ Robert J. Capozzi Director February 26, 1999
- ------------------------------------
ROBERT J. CAPOZZI
/s/ Jeffrey S. Deutschman Director February 26, 1999
- ------------------------------------
JEFFREY S. DEUTSCHMAN
/s/ Nicholas P. DiPaolo Director February 26, 1999
- ------------------------------------
NICHOLAS P. DIPAOLO
/s/ Michael L. Fulbright Director February 26, 1999
- ------------------------------------
MICHAEL L. FULBRIGHT
/s/ John M. Sullivan, Jr. Director February 26, 1999
- ------------------------------------
JOHN M. SULLIVAN, JR.
/s/ L. Allen Ollis Controller February 26, 1999
- ------------------------------------
L. ALLEN OLLIS
</TABLE>
18
<PAGE>
January 26, 1998
JPS Converter & Industrial Corp.
P. O. Box 208
Greenville, SC 29602-0208
Gentlemen:
This letter confirms my agreement with JPS Converter & Industrial Corp.
(the "Company"), for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, with respect to the following:
1. If the Company terminates my employment prior to the third
anniversary of the date hereof (the "Three-Year Period" ) other than for "cause"
(as defined in Paragraph 2 below), I shall be entitled to receive as severance
an amount equal to my annual base salary in effect at the time of such
termination payable in the ordinary course, as if my employment had not
been terminated (this shall include continued participation in the life and
health plan and optional AD&D plan, provided appropriate contributions are made
as required); provided, however, that in no event shall any payment be made
pursuant to this Paragraph 1 to the extent such payment would
constitute an "excess parachute payment" as defined in Section 280G(b) of the
Internal Revenue Code of 1986, as amended, or the corresponding provisions of
any successor statute.
2. For the purposes hereof, the term "cause" shall mean any of the
following:
(i) My failure to perform any material obligations of my employment
and which I shall have failed to cure within ten (10) days after receiving
written notice thereof from the Company: or
(ii) I shall have violated the provisions of Paragraph 3 hereof: or
(iii) The Company shall reasonably believe that I have committed an
act of fraud, embezzlement, theft or dishonesty against the Company; or
<PAGE>
JPS Converter & Industrial Corp.
January 26, 1998
Page 2
(iv) I shall have been convicted of (or plead nolo contendere to) any
felony or any misdemeanor involving moral turpitude or which might, in the
reasonable opinion of the Company, cause embarrassment to the Company.
In the event that during the Three-Year Period, the Company elects to
terminate my employment for "cause", the Company shall send me written notice
thereof terminating my employment and describing the action constituting
"cause", and thereupon the Company shall have no further obligations pursuant to
this letter agreement, but I shall have the obligations provided for in
Paragraph 3 below. In the event that during the Three-Year Period, I leave the
employ of the Company of my own accord, the Company shall have no further
obligations pursuant to this letter agreement but I shall have the obligations
provided for in Paragraph 3 below.
3. (a) I hereby agree that during my employment and during the
period from the date of termination of my employment through and including the
date which is one year from the date of the termination of my employment, I
shall not, without the prior written approval of the Company, directly or
indirectly through any other person, firm or corporation, (i) engage or
participate in or become employed by or render advisory or other services to or
for any person, firm or corporation, or in connection with any business
enterprise, which is, directly or indirectly, in competition with any of the
business operations or activities of the Company, (ii) hire, solicit, raid,
entice or induce any person or organization who on the date of termination of
employment is, or within the last six (6) months of my employment was a customer
of the Company, to become a customer of any person, firm or corporation, and I
shall not approach any such customer for such purpose or knowingly approve the
taking of such actions by other persons, or (iii) solicit, raid, entice or
induce any such person who on the date of termination of my employment is, or
within the last six (6) months of my employment by the Company was, an employee
of the Company, to become employed by any person, firm or corporation, and I
shall not approach any such employee for such purpose or authorize or knowingly
approve the taking of such actions any other person; provided, however, that I
shall not be bound by the restrictions contained in clause (i) of this Paragraph
3 (a) if the Company terminates employment prior to the third anniversary of the
date hereof other than for "cause" (as defined in Paragraph 2 hereof). For the
purposes hereof, a person, firm, corporation or other business enterprise shall
be deemed to be in competition with the Company if it is a textile manufacturer
or seller which sells
<PAGE>
JPS Converter & Industrial Corp.
January 26, 1998
Page 3
and/or manufacturers, as the case may be, products of the kind manufactured and
sold by the Company, within any geographic area in which the Company operates or
sells its products.
(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 I have
established, received or obtained during my employment or hereafter shall
establish, receive or obtain as an employee of the Company or its subsidiary
companies, are valuable and unique assets of the respective businesses of the
Company and its subsidiary companies, I agree that, during my employment and at
all times thereafter, I shall not (otherwise than pursuant to my duties)
disclose or use, without the prior written approval of the Company, any such
knowledge or information pertaining to the Company or any of its subsidiary
companies, their business, personnel or policies, to any person, firm,
corporation or other entity, for any reason or purpose whatsoever. The
provisions of this Paragraph 3(b) shall not apply to information which is or
shall become generally known to the public or the trade (except by reason of the
breach of my obligations hereunder), information which is or shall become
available in trade or other publications, information known to me prior to
entering the employ of the Company, and information which I am required to
disclose by law or an order of a court of competent jurisdiction. If I am
required by law or a court order to disclose such information, I shall notify
the Company of such requirement prior to disclosing such information and provide
the Company an opportunity (if the Company so elects) to contest such law or
court order.
4. If any provision of this letter agreement or the application of any
such provision to any party or circumstances shall be determined by any court of
competent jurisdiction to be invalid and unenforceable to any extent, the
remainder of this letter agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable, shall not be affected thereby, and each provision
hereof shall be validated and shall be enforced to the fullest extent permitted
by law.
5. This letter agreement (i) is in lieu of any other provision for
severance payments by the Company which are hereby waived, (ii) contains the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements with respect
thereto, (iii) may be executed and delivered in one or more counterparts, all of
which
<PAGE>
JPS Converter & Industrial Corp.
January 26, 1998
Page 4
taken together shall constitute but one and the same original instrument, and
(iv) shall be governed and construed in accordance with the laws of the State of
New York without regard to the conflicts of law principles of such state.
Very truly yours,
By: (Signature)
---------------------------
Print Name:
Print Title:
ACCEPTED and AGREED TO:
JPS CONVERTER & INDUSTRIAL CORP.
By:
--------------------------------
Name:
Title:
