EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), February 1, 1999 (the
"Commencement Date"), between SALANT CORPORATION, a Delaware corporation,
(the "Corporation") and Awadhesh Sinha (the "Employee").
WHEREAS, the Employee and Corporation are parties to a Letter
Agreement, dated May 1, 1997 (the "Letter Agreement"), and
WHEREAS, the Employee and the Corporation desire to enter into a new
agreement of employment between them.
NOW THEREFORE, in consideration of the respective premises, mutual
covenants and agreements of the parties hereto, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. NATURE OF EMPLOYEE'S SERVICES. The Corporation agrees to
employ the Employee and the Employee agrees to serve the Corporation as the
senior executive officer of the Corporation, having the title, Executive
Vice President and Chief Financial Officer of the Corporation. The Employee
shall perform such services and duties as shall be assigned to him or
delegated to him from time to time by the Chief Executive Officer of the
Corporation, the Board of Directors or the Executive Committee of the Board
of Directors during the Employment Period (as hereinafter defined)
provided, however, that such duties shall be consistent with those
customarily performed by the senior executive officer of other entities
doing business in the industries in which the Corporation is primarily
engaged.
The Employee's duties shall include, without additional compensation,
the performance of similar services for any subsidiaries of the
Corporation. The Employee agrees that, except as otherwise provided herein,
he shall devote substantially all of his business time, attention and
energy to the business of the Corporation and its subsidiaries in the
advancement of the best interests of the Corporation and its subsidiaries.
The Employee will perform his duties hereunder principally in the New York
metropolitan area.
During the Employment Period it shall not be a violation of this
Agreement for the Employee to (a) serve on corporate, civic or charitable
boards or committees or otherwise engage in charitable activities and
community affairs, (b) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (c) manage personal investments, so
long as such activities do not materially interfere with the performance of
Employee's responsibilities as an employee of the Corporation in accordance
with this Agreement.
SECTION 2. TERM OF EMPLOYMENT. The term of Employee's employment under
this Agreement shall commence on the Commencement Date and end on January
31, 2001 (the "Employment Period").
The Employment Period shall be automatically renewed for successive
one-year terms (the "Renewal Terms") on the same terms set forth herein
(except salary which shall be at the annual rate immediately prior to the
Renewal Term) unless at least 180 days prior to the expiration of the
original Employment Period or any Renewal Term, either Party notifies the
other Party in writing that he or it is electing to terminate this
Agreement at the expiration of the then current Employment Period.
"Employment Period" shall mean the original Employment Period (i.e. the
Commencement Date to January 31, 2001) and all Renewal Terms.
In the event that this Agreement is not renewed because the
Corporation has given the 180-day notice prescribed in the preceding
paragraph on or before the expiration of the original Employment Period or
any Renewal Term, such non-renewal shall be treated as a termination
following non-renewal pursuant to Section 6 (f) below.
SECTION 3. ANNUAL COMPENSATION. Subject to the terms hereof, the
Corporation agrees to pay to the Employee, subject to all applicable laws
and requirements, including, without limitation, laws with respect to
withholding of federal, state or local taxes, the annual compensation set
forth below.
(a) Salary. As annual salary for the services to be rendered by the
Employee the Corporation shall pay a salary at the rate of $300,000 per
annum until December 31, 1999, $325,000 for the next twelve month period of
the Employment Period and $350,000 for the final twelve month period of the
Employment Period, payable in equal bi-weekly installments during the
Employment Period (the "Salary").
(b) Incentive Compensation. Employee shall be entitled to receive a
bonus (the "Bonus") in accordance with the schedule annexed hereto as
Exhibit 1 comparing the Corporation's performance during each fiscal year
which ends within a particular Employment Year, to operating targets for
each such fiscal year. The Employee shall not receive a minimum or
guaranteed bonus for any year. Each bonus shall be paid by the Corporation
to the Employee within ninety (90) days after the end of the fiscal year to
which such bonus relates. If, however, the employment of the Employee is
terminated or if the Employment Period terminates on a day other than the
last day of a fiscal year, the bonus amount payable with respect to such
fiscal year shall be determined by comparing the Corporation's performance
during the period closes to a fiscal month end and the Termination Date (as
defined below) with the operating targets for such period, prorated by the
proportion that the number of months of employment completed by the
Employee during that fiscal year bears to twelve (12) (the "Earned Bonus").
The Earned Bonus, if any shall be paid to the Employee within twenty (20)
days of the Termination Date. Notwithstanding anything contained herein to
the contrary, no bonus shall be payable to the Employee (i) if the
Employment Period is terminated pursuant to Section 6(c) or (ii) if the
Employee terminates the Employment Period other than pursuant to Section
6(e).
SECTION 4. EMPLOYEE BENEFIT PLANS. The Employee shall, during the
Employment Period, be eligible to participate in and receive benefits under
and in accordance with the provisions of any pension plan, welfare plan or
other similar plan or policy of the Corporation maintained for the benefit
of the Corporation's senior level executives or its employees generally
(together, the "Benefit Plans"). In the event any new Benefit Plan is
established which is in addition to, and not an alternative to, any
existing Benefit Plan, the Employee shall also be entitled to participate
in such Benefit Plan to the extent permitted by the terms thereof. The
Corporation shall have the right, however, to make changes in Benefit Plans
applicable to its senior executives or employees generally and the Employee
agrees that such changes shall also be applicable to the Employee.
SECTION 5. EXPENSES AND OTHER PERQUISITES.
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(a) Subject to compliance by the Employee with such policies regarding
expenses and expense reimbursement as may be adopted from time to time by
the Corporation, the Employee is authorized to incur reasonable expenses in
the performance of his duties hereunder in the furtherance of the business
of the Corporation and its subsidiaries, and the Corporation shall
reimburse the Employee for all such reasonable expenses.
(b) During the Employment Period, the Corporation will provide the
Employee with an automobile allowance in the amount of $680 per month,
payable with the first pay period of each month.
SECTION 6. TERMINATION.
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(a) Definition of the Termination Date. The "Termination Date" shall
be the date which is earlier of (i) the last day of the Employment Period,
(ii) the effective date of termination of employment as set forth in the
notice which Corporation delivers to the Employee indicating that the
Employee's employment hereunder is terminated, or (iii) the date on which
Employee delivers written notice to the Corporation that he is terminating
his employment hereunder.
(b) Termination Due to Death or Disability. In the event the
Employee's employment is terminated due to his death or Disability (as
hereinafter defined), he, his estate or his beneficiaries, as the case may
be shall be entitled to:
(i) Salary through the date of death or disability and any Bonus
for any fiscal year earned but not yet paid;
(ii) pro-rated Bonus through the date of death or Disability,
payable in accordance with Section 3(b);
(iii) in the case of death only, a lump sum payment equal to
three months Salary at the annual rate in effect at the date of death, paid
promptly after his death;
(iv) the right to exercise all stock options granted to Employee
at the time of his death or Disability (whether or not then vested) for a
period of one year following such event or for the remainder of the
exercise period, if shorter;
(vi) any amounts earned, accrued or owing to the Employee but not
yet paid under Sections 4 or 5;
(vii) the right to receive all applicable benefits pursuant to
the Corporation's Employee Long Term Disability Coverage plan (the "Plan")
as if he were fully covered thereunder, provided however, if the Employee
is precluded from receiving such benefits (e.g. due to the fact that he is
no longer employed by the Corporation), the Corporation shall pay to
Employee cash payments equal, on an after-tax basis, to the amount of
benefits he would have received had he continued to be eligible to
participate in the Plan; and
(viii) other or additional benefits then due or earned in
accordance with applicable plans and programs of the Corporation.
For purposes of this Agreement, "Disability" shall mean any physical
or mental illness which as a result thereof, the Employee is unable to
discharge his duties for a period of six (6) consecutive months or for a
total of 180 days during any twelve month period.
(c) Termination by the Corporation for Cause.
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(i) "Cause" shall mean:
(A) the Employee is convicted of a felony or engages in
conduct which is determined by a court to constitute an act involving moral
turpitude; or
(B) the Employee engages in conduct that constitutes (i)
willful gross neglect, (ii) willful gross misconduct in carrying out his
duties under this Agreement or (iii) a violation of the Company's Code of
Conduct, resulting, in each case, in material harm to the financial
condition or reputation of the Corporation.
(iii) In the event the Corporation terminates the Employee's
employment for Cause he shall be entitled to:
(A) Salary through the Termination Date;
(B) any amounts earned, accrued or owing to the Employee but
not yet paid under Sections 4 or 5; and
(C) other or additional benefits then due or earned in
accordance with applicable plans or programs of the Corporation.
(d) Termination by the Corporation Without Cause.
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In the event the Employee's employment is terminated by the
Corporation without Cause (which termination shall be effective as of the
date specified by the Corporation in a written notice to the Employee),
other than due to death or Disability the Employee shall be entitled to and
his sole remedies under this Agreement shall be:
(i) Salary through the Termination Date;
(ii) Salary, at the annualized rate in effect on the Termination
Date for a period which is the longer of twelve (12) months following such
termination or the balance of the then existing Employment Period (the
"Severance Period");
(iii) pro-rated Bonus for the fiscal year in which termination
occurs, payable in accordance with Section 3(b);
(iv) the right to exercise any stock option held by the Employee
at the Termination Date (whether or not then vested), such option to remain
exercisable for six (6) months after the Termination Date, or for the
remainder of the exercise period, if shorter;
(v) Any amounts earned, accrued, or owing to the Employee but not
yet paid under Sections 4 or 5; and
(vi) continued participation in all medical, dental, health and
life insurance plans and in other employee benefit plans or programs at the
same benefit level at which he was participating on the Termination Date
until the earlier of:
(A) the end of the Severance Period; or
(B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such
coverage and benefits to be determined on a coverage-by-coverage, or
benefit-by-benefit, basis); provided that if the Employee is precluded from
continuing his participation in any benefit plan or program as provided in
this clause (vi) of this Section 6(d) as a matter of law or in the case of
life insurance, as a result of the requirements of such benefit plan or
program, the Corporation shall have no obligation to continue to provide
such benefits; and
(vii) other or additional benefits then due or earned in
accordance with applicable plans and programs of the Corporation.
"Termination Without Cause" shall mean the Employee's employment
is terminated by the Company for any reason other than death, Disability or
Cause (as defined in Section 6(c).
(e) Termination by Employee for Good Reason. The Employee shall have
the right to terminate the Employment Period for "good reason" (as
hereinafter defined), provided that the Employee shall have given the
Corporation written notice of the Employee's decision to terminate his
employment (specifying the alleged "good reason" in reasonable detail) and,
if it is possible to cure, the Corporation shall not have cured the same
within thirty (30) days after receipt of such notice, or, if cure cannot be
fully accomplished within thirty (30) days, the Corporation shall not have
commenced cure within thirty (30) days after receipt of such notice and
cured the alleged "good reason" as soon as possible thereafter. For
purposes of the foregoing, "good reason" shall mean (i) the assignment to
the Employee of duties inconsistent with, or the diminution of, the
Employee's positions, titles, offices, duties, responsibilities or status
with the Corporation as a senior executive officer, or a change without
good cause in the Employee's reporting responsibilities, or any removal of
the Employee from, or any failure to elect the Employee to any positions,
titles or offices specified in this Agreement and held by the Employee,
(ii) a reduction in the Employee's Salary, (iii) a material reduction in
the Employee's benefits or perquisites (other than a reduction pursuant to
the second to last sentence of Section 4 hereof); or (iv) a requirement
that Employee change his place of principal employment to a location other
than the metropolitan New York area.
In the event that the Employment Period is terminated by the Employee
for "good reason", the Employee shall be entitled to, and his sole remedies
shall be, the same benefits provided for in Section 6(d) "Termination by
the Corporation Without Cause".
(f) Termination following Non-renewal. In the event that the
Corporation notifies the Employee in writing at least 180 days prior to the
expiration of the original Employment Period or any Renewal Term that it is
electing to terminate this Agreement at the expiration of the then current
Employment Period and the Employee's employment terminates upon such
expiration, whether at the Corporation's initiative or the Employee's
initiative, the Employee shall be entitled to:
(i) Salary through the Termination Date;
(ii) Salary, at the annualized rate in effect on the Termination
Date for a period of six (6) months following the Termination Date (the
"Non-renewal Severance Period");
(iii) pro-rated Bonus for the fiscal year in which termination
occurs payable in accordance with Section 3(b) and any Bonus for any fiscal
year earned but not yet paid, payable in a lump sum within fifteen (15)
days after the Termination Date;
(iv) the right to exercise any stock option held by the Employee
at the date of his termination, to the extent vested at such date, during
the Non-renewal Severance Period and for sixty (60) days thereafter, or for
the remainder of the exercise period, if shorter;
(v) any amounts earned, accrued or owing to the Executive but not
yet paid under Sections 4 or 5; and
(vi) continued participation in all medical dental health and
life insurance plans at the same benefit level at which he was
participating on the Termination Date until the earlier of:
(A) the end of the Non-renewal Severance Period; or
(B) the date, or dates, he receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such
coverage and benefits to be determined on a coverage-by-coverage, or
benefit-by benefit, basis); provided that if the Employee is precluded from
continuing his participation in any benefit plan or program as provided in
this clause (vi) of this Section 6(f), as a matter of law or in the case of
life insurance, as a result of the requirements of such benefit plan or
program, the Corporation shall have no obligation to continue to provide
such benefits; and
(vii) other or additional benefits then due or earned in
accordance with applicable plans and programs of the Corporation.
(g) Voluntary Termination. In the event of a termination of employment
by the Employee on his own initiative, other than a termination due to
death, Disability or Good Reason, the Employee shall have the same
entitlement as provided in Section 6 (c) above for a termination for Cause.
(i) Condition to Receipt of Severance Payments. The Employee hereby
acknowledges that the "Severance Payment" (as hereinafter defined) is
greater than the amount provided by the Corporation's normal severance
policy and is being offered to the Employee in reliance upon the Employee's
agreement to release the Corporation from any liability and to waive any
claims the Employee may have against the Corporation, including, without
limitation, any claims relating to the Employment or separation from
employment. Notwithstanding anything to the contrary contained herein,
nothing shall impair the Employee's (i) right to enforce the obligations of
the Corporation as set forth in this Agreement, or (ii) right to seek
indemnification or contribution from the Corporation in the event the
Employee is the subject of any third-party claim arising out of or relating
to any act or omission by the Employee during the course of his employment
by the Corporation, to the extent such right would have otherwise existed.
For purposes of this Agreement, Severance Payment shall mean any amount
paid to the Employee during a Severance Period or a Non-renewal Severance
Period, as the case may be.
SECTION 7. COVENANT NOT TO COMPETE. The Employee covenants and agrees
that he will not, at any time during the Restriction Period (as defined
below), whether as owner, principal, agent, partner, director, officer,
employee, independent contractor, consultant, shareholder, licensor or
otherwise, alone or in association with any other person, either directly
or indirectly , carry on, be engaged or take part in, render services to
own, or share in the earnings of, or invest in the stocks, bonds or other
securities of, or be interested in any way in any business competing with,
or similar to, the business in which the Corporation, or any of its
subsidiaries are primarily engaged, including, without limitation, any
retail customer of the Corporation that accounts for 5% or more of the
Company's net sales on an annualized basis, without the written consent of
the Board of Directors, provided that the Employee may hold a passive
investment in a business which is competitive with or similar to any of the
businesses of the Corporation if the investment is in securities which are
listed on a national securities exchange and the investment in any class of
securities does not exceed 1% of the outstanding shares of such class or 1%
of the aggregate outstanding principal amount of such class, as the case
may be. In addition, for one year after the end of the Restriction Period,
the Employee covenants and agrees that he will not, directly or indirectly,
hire any person who is employed by the Corporation on the Termination Date
whose annual salary on such date is equal to or greater than $100,000, or
solicit, induce, entice or hire any such person to leave the employment of
the Corporation. For purposes of this Section 7, the "Restriction Period"
shall mean the period beginning on the Commencement Date and ending on the
last day of either (i) the Employment Period (determined without giving
effect to any termination of employment), (ii) the Severance Period or
(iii) the Non-renewal Severance Period, whichever is longer.
SECTION 8. NON-DISCLOSURE COVENANT. The Employee further agrees that
during the Employment Period and thereafter without limit, he will not,
either directly or indirectly, communicate or divulge to any person, firm
or corporation other than the Corporation and its subsidiaries, any
information (except that which is generally known to the public) relating
to the business, customers and suppliers, or other affairs of the
Corporation or its subsidiaries ("Confidential Information") except (a) for
the purpose of, or in connection with, the advancement of the business of
the Corporation, or (b) in the event that the Employee is required (by oral
questions, interrogatories requests for information or documents, subpoena,
civil investigative demand or similar legal process) to disclose
Confidential Information, and the Employee is compelled to disclose such
Confidential Information or else stand liable for contempt or suffer other
censure, penalty or violation in a court proceeding. In the event that the
Employee is required to disclose such Confidential Information in the
circumstances described in clause (b) above, the Employee will, to the
extent legally permissible either (i) give the Corporation at least ten
days' written notice (or shorter, but prompt, notice to the extent the
Employee is required to respond to legal process in fewer than ten days )
so that the Corporation may seek an appropriate protective order, or (ii)
make such disclosure to a court under seal.
The provisions of this Section 8, shall not be applicable to
information which
(i) was at the time of the disclosure by the Corporation to the
Employee, in the public domain;
(ii) has subsequent, to the disclosure by the Corporation, become
part of the public domain, through no fault, act or omission of the
Employee, directly or indirectly, in violation of such obligation;
(iii) was, at the time of the disclosure by the Corporation to
the Employee, in the Employee's possession and was not otherwise, directly
or indirectly acquired from the Corporation;
(iv) was received by the Employee from any third party, provided
that such information was not obtained by said third party from the
Corporation improperly, directly or indirectly, and was not improperly
disclosed by the third party.
SECTION 9. INDEMNIFICATION. On the same terms and conditions
applicable to other directors and officers of the Corporation, the
Corporation shall continue to indemnify the Employee against all liability
and loss with respect to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation or any of its subsidiaries or Affiliates (as hereinafter
defined), against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that he did not act
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful. Notwithstanding any other provision of this
Agreement, the Corporation's obligation to indemnify the Employee shall
survive the expiration of this Agreement, provided that in the event that
the Employee is terminated pursuant to Section 6(c) of this Agreement, the
Corporation shall have no obligation to indemnify the Employee under this
Section 9 against any liability, loss or expense arising from conduct that
constitutes grounds for the Corporation to terminate the Employment Period
pursuant to Section 6(c) of this Agreement. At all times during the
Employment Period, the Corporation shall pay for and maintain professional
liability insurance for the benefit of the Employee to the extent provided
on the Commencement Date.
SECTION 10. VACATIONS. The Employee shall be entitled to paid
vacations in accordance with the policies of the Corporation in effect from
time to time, but not less than four weeks in any of the fiscal years
during which the Employee is employed. To the extent the Employee does not
use the full vacation period during a fiscal year the unused balance shall
accrue and be carried over into subsequent fiscal years; provided, however,
that no more than an aggregate of two weeks of unused vacation time may be
carried forward from one fiscal year to the next fiscal year.
SECTION 11. LEGAL EXPENSES. The Corporation shall pay all legal fees
and related expenses incurred by the Employee as a result of (i) the
Employee's termination of employment (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination to
employment) if the Corporation has been found to be in breach of its
obligations hereunder or (ii) the Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement, if the Employee prevails
against the Corporation in any proceeding in which rights hereunder are
contested.
SECTION 12. SUCCESSORS AND ASSIGNS. In the event that the Corporation
shall at any time be merged or consolidated with any other corporation or
shall sell or otherwise transfer substantially all of its assets or
business to another corporation or entity, the provisions of this Agreement
shall be binding upon and inure to the benefit of such corporation or
entity surviving or resulting from such merger or consolidation or to which
such assets or business shall be so sold or transferred; provided, however,
that nothing contained in this Section 12 shall in any way limit, or be
construed to limit, the obligations to the Employee under this Agreement or
the obligations of the Corporation or the Corporation's successors or
assigns. This Agreement shall not be assignable by the Employee.
SECTION 13. NOTICE. Any notice or other communication which is
required or permitted by this Agreement shall be in writing and shall be
deemed to have been duly given when delivered in person, transmitted by
telecopy or five (5) days after being mailed by registered or certified
mail, postage prepaid, return receipt requested, to such party at the
address shown below:
If to the Corporation, care of the following:
Salant Corporation
1114 Avenue of the Americas
New York New York 10036
Attention: Todd Kahn
Chief Operating Officer and
General Counsel
If to the Employee, then to the following:
Awadhesh Sinha
c/o Salant Corporation
1114 Avenue of the Americas
New York, New York 10036
Each party may, by notice or other party, change the above address.
SECTION 14. ENTIRE AGREEMENT; AMENDMENTS. This Agreement embodies the
entire agreement and understanding between the parties and supersedes all
prior agreements and understandings as to the employment of the Employee,
including, without limitation, the Letter Agreement. No amendment, waiver,
modification or discharge of any of the terms of this Agreement shall be
valid unless in writing and signed by the party against which enforcement
is sought.
SECTION 15. WAIVER. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach thereof.
SECTION 16. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original.
SECTION 17. GOVERNING LAW; RESOLUTION OF DISPUTES. This Agreement
shall be governed by, and construed in accordance with, the laws of the
State of New York. The Employee hereby acknowledges that irreparable damage
will occur in the event that Sections 7 and 8 of this Agreement are not
performed in accordance with their specific terms or are otherwise breached
by the Employee. It is accordingly agreed that the Corporation shall be
entitled to an injunction or injunctions to prevent breaches or such
provisions in any Court of the United States or any states having
jurisdiction, this being in addition to any other remedy to which the
Corporation may be entitled to at law or in equity. Except in the event the
Corporation is attempting to seek injunctive or other equitable relief for
a breach by the Employee of Sections 7 and 8 of this Agreement, the parties
agree that as a condition precedent to the filing of any claim as set forth
below, the parties and their attorneys must attempt to confer at least
twice, in person, in an effort to resolve any dispute. Should such efforts
not be successful, such dispute shall be resolved by binding arbitration,
to be held in New York City in accordance with the rules and procedures of
the American Arbitration Association. Judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof.
Each party shall bear his or its own costs of the arbitration or
litigation, including, without limitation, attorneys' fees. Pending the
resolution of any arbitration or court proceeding, the Corporation shall
continue payment of all amounts and benefits due the Employee under this
Agreement.
SECTION 18. CERTAIN DEFINITIONS.
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"Apollo" shall mean Apollo Apparel Partners, L.P.
"Affiliate" shall mean any person, firm, corporation, partnership or
other legal entity that, directly or indirectly, controls, is controlled by
or is under common control with the Corporation, Apollo or Magten
Management Corp., as the case may be.
"Change of Control" shall mean an event or series of events by which
(i) any Person is or becomes the "beneficial owner" (as defined in rules
13d-3 and 13d-5 under the Securities and Exchange Act of 1934, as amended,
except that a person shall be deemed to have "beneficial ownership" of all
shares that any such Person has the right to acquire, whether such right is
exercisable immediately or after the passage of time), directly or
indirectly, of a majority of the aggregate Voting Stock of the Corporation;
or (ii) the Corporation consolidates with or merges into another Person or
conveys, transfers or leases all or substantially all of its assets to any
Person, or any Person consolidates with or merges into the Corporation, in
either event pursuant to a transaction in which the outstanding Voting
Stock of the Corporation is changed into or exchanged for cash, securities
or other properties, other than any such transaction where the holders of
the Voting Stock of the Corporation immediately prior to such transaction
own, directly or indirectly, immediately after such transaction Voting
Stock of such surviving corporation entitling them to not less than 50% of
the aggregate voting power of all Voting Stock of such surviving
corporation. Notwithstanding the foregoing, a Change of Control shall not
be deemed to occur if the Person described in clause (i) or (ii) is (x)
Apollo or is an Affiliate of Apollo (y) Magten Asset Management Corp. or is
an Affiliate of Magten Asset Management Corp.
"Voting Stock" shall mean securities of any class or classes (or
equivalent interests) of any entity, if the holders of the securities of
such class or classes (or equivalent interests) are ordinarily, in the
absence of contingencies, entitled to vote for the election of the
directors (or natural persons or entities performing similar functions) of
such entity, even though the right to so vote has been suspended by the
happening of such a contingency.
"Control" shall mean the power to direct the affairs of any person,
firm, corporation, partnership or other legal entity by reason of ownership
of voting stock, by contract or otherwise.
"Person" shall mean any natural person, corporation, partnership,
trust, association, governmental authority or unit, or any other entity,
whether acting in an individual, fiduciary or other capacity, or any group
of Persons acting in concert.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates set forth below.
SALANT CORPORATION
By:
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Michael J. Setola
Chairman of the Board
and Chief Executive Officer
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Awadhesh Sinha
EXHIBIT 1
INCENTIVE COMPENSATION SCHEDULE
(a) If the Corporation's "Pre-tax Income", as shown on its audited
financial statements for any fiscal year during the Employment
Period ("Actual Annual Pre-tax Income"), is equal to or greater
than 100% of the amount of Pre-tax Income provided for in the
Corporation's annual business plan for that fiscal year ("Planned
Annual Pre-tax Income"), the Employee shall receive a cash bonus
equal to 50% of his annual Salary at the end of the applicable
fiscal year ("Annual Salary").
(b) If Actual Annual Pre-tax Income is less than 100% of Planned
Annual Pre-tax Income, the Employee's cash bonus shall be reduced
by 1% for each full 1% decrease (after rounding to the nearest
1/100th of a percent) by which Actual Annual Pre-tax Income is
less than 100% of Planned Annual Pre-tax Income. For example, if
Actual Annual Pre-tax Income was 95% of Planned Annual Pre-tax
Income, the Employee would receive a cash bonus equal to 45% of
his Annual Salary. In no event shall the Employee receive a cash
bonus if the Actual Annual Pre-tax Income is less than 90% of the
Planned Annual Pre-tax Income.
(c) If Actual Annual Pre-tax Income exceeds 100% of Planned Annual
Pre-tax Income, then in addition to the bonus specified in
paragraph (a) above, the Employee shall receive additional cash
bonuses, each equal to 1% of his Annual Salary, for each full 1%
increment (after rounding to the nearest 1/100th of a percent) by
which Actual Annual Pre-tax Income exceeds 100% of Planned Annual
Pre-tax Income.
(d) The following principles shall apply in calculating the "Pre-tax
Income" which term shall mean the aggregate income of the
Corporation before provisions for all Federal, State and local
income taxes thereon. In calculating such "Pre-tax Income", all
items of income and deductions shall be determined in accordance
with generally accepted accounting principles applied on a
consistent basis, subject, however, to the provisions of the
following subparagraphs:
(i) There shall be excluded from income: all extraordinary
items of income such as gains and losses on the sale of fixed
assets or intangible assets; all insurance recoveries other than
for business interruption; non-recurring gains or losses
including, without limitation, gains or losses on the termination
of any employee benefit plans or gains or losses realized on the
sale of permanent quota.
(ii) Deductions from income shall include all interest
expenses, fixed charges and reasonable provisions for
depreciation,amortization and obsolescence, inventory write-offs
and the salary and bonus payable to all of the employees of the
Corporation and the Employee hereunder.
(iii) The amount of "Planned Annual Pre-tax Income" for each
fiscal year shall be determined by the Corporation's Board of
Directors.