-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BtWUijfNF3k09Dt3926SQCRt0R4nB4UfjNsMuaW9xGgxApAMNGzvIoMiVynN9sxQ qk+/7iAsm0bheOds+aS5Tw== 0000889812-99-000688.txt : 19990302 0000889812-99-000688.hdr.sgml : 19990302 ACCESSION NUMBER: 0000889812-99-000688 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19990301 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JPS TEXTILE GROUP INC /DE/ CENTRAL INDEX KEY: 0000846615 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILLS, COTTON [2211] IRS NUMBER: 570868166 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 033-27038 FILM NUMBER: 99554665 BUSINESS ADDRESS: STREET 1: 555 N PLEASANTBURG DR STE 202 CITY: GREENVILLE STATE: SC ZIP: 29607 BUSINESS PHONE: 8642393900 MAIL ADDRESS: STREET 1: 555 N PLEASANTBURG DR STREET 2: SUITE 202 CITY: GREENVILLE STATE: SC ZIP: 29607 10-K/A 1 AMENDMENT NO. 1 TO ANNUAL REPORT 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 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.
Name Age Position(s) Held 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.
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 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 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
Long-Term Compensation Awards ------------------------------ Securities Annual Compensation Underlying Name and --------------------------- Options/ All Other Principal Position Year Salary Bonus SAR's Payouts Compensation(1) - ------------------ ---- ------- ----- ----- ------- --------------- 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
4 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.
(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 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 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*
Years of Service ------------------------------------------------------------------------------------------------------ Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years - ------------ -------- -------- -------- -------- -------- $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
* 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 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 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 ($5.50 per share).
Number of Value of Securities Underlying Unexercised In-the-Money Unexercised Options Options at Name at October 31, 1998 October 31, 1998 ($)1 - ---- ------------------- --------------------- Exercisable/ Exercisable/ Unexercisable Unexercisable 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
(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.
Common Stock (1) ------------------------------------------ Name and Address of Beneficial Owners Number of Shares Percent of Class ----------------- ----------------- 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
9 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%
10 (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 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- INDEX TO EXHIBITS The following is a complete list of Exhibits filed as part of this report, which are incorporated herein:
Exhibit Number Description - ------- ----------- 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)
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Exhibit Number Description - ------- ----------- 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)
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Exhibit Number Description - ------- ----------- 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)
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Exhibit Number Description - ------- ----------- 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.
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Exhibit Number Description - ------- ----------- 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)
- ------------------------------------- (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- 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.
SIGNATURE TITLE DATE - --------- ----- ---- /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
18 EX-10.43 2 EMPLOYMENT AGREEMENT 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 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 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 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: -----END PRIVACY-ENHANCED MESSAGE-----