EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of August 24, 1999
(the "Commencement Date"), between SALANT CORPORATION, a Delaware corporation,
(the "Corporation") and Howard Posner (the "Employee").
WHEREAS, this Agreement will confirm the understanding between the
Employee and the Corporation concerning the Employee's employment with the
Corporation.
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 Employees Services . The Corporation agrees to
employ the Employee and the Employee agrees to serve the Corporation as
Executive Vice President of Global Sourcing. The Employee shall perform such
services and duties as shall be assigned to him or delegated to him from time to
time by Chief Executive Officer of the Corporation, or at the direction of the
Chief Executive Officer, in conjunction with the President, Chief Operating
Officer or Chief Financial Officer provided, however, that such duties shall be
consistent with those customarily performed by a senior executive 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.
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. 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 $275,000 per annum
payable in equal bi-weekly installments, (the "Salary"), such Salary shall be
reviewed for increase annually while employed by the Corporation.
(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 on or about the
succeeding March 31 following the end of the fiscal year to which such bonus
relates. If the employment of the Employee is terminated on a day other than the
last day of a fiscal year, the bonus amount payable with respect to such fiscal
year shall be the amount to which the Employee would have been entitled had his
employment continued for all of that fiscal year, prorated by the proportion
that the number of days of employment completed by the Employee during that
fiscal year bears to 360. Notwithstanding anything contained herein to the
contrary, no bonus or Minimum Bonus shall be payable to the Employee (i) if the
Employee is terminated pursuant to Section 5(c) or (ii) if the Employee
terminates his/her employment other than pursuant to Section 5(e).
Section 3. Employee Benefit Plans . The Employee, while employed by the
Corporation, shall 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 4. Expenses and Other Perquisites.
(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) While the Employee is employed by the Corporation, the Corporation
will provide the Employee with an automobile allowance in the amount of $500 per
month, payable in equal bi-weekly installments.
Section 5. Termination.
(a) Definition of the Termination Date The "Termination Date" shall be
the date which is earlier of (i) 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 (ii) the final date
of employment worked by such employee after he or she delivers written notice to
the Corporation that he or she is terminating his/her 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 2(b);
(iii) in the case of death only, an additional 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 3 or 4;
(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
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 three (3) consecutive months or for a total of 90
days during any twelve month period.
(c) Termination by the Corporation for Cause .
(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 misconduct in carrying out his duties under this Agreement
or (ii) 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 3 or 4; 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 .
In the event the Employee's employment is terminated pursuant to a
change in control as herein defined or 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 commencing on the Termination Date and ending 6
months following such termination; plus, an amount paid in accordance with the
Corporation's normal severance policy (the "Severance Period");
(iii) pro-rated Bonus for the fiscal year in which termination
occurs, payable in accordance with Section 2(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 3 or 4; and
(vi) 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 5 (c)).
(e) Termination by Employee for Good Reason . The Employee shall have
the right to terminate his/her employment for "good reason" (as hereinafter
defined), provided that the Employee shall have given the Corporation 90 days
prior 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 the Employee's positions, titles, offices, duties, responsibilities or
status with the Corporation as an executive, 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 3 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 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 5(d) "Termination by the
Corporation Without Cause".
(f) 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 5 (c) above for a termination for Cause.
(g) 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.
Section 6. 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 6, the "Restriction Period" shall mean the period beginning on the
Commencement Date and ending on the last day of either (i) the employment of the
Employee by the Corporation (determined without giving effect to any termination
of employment) or (ii) the Severance Period whichever is longer.
Section 7. Non-Disclosure Covenant . The Employee further agrees that
while employed by the Corporation 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 verbal 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 at the risk of liability 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 other-
wise, 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 8. 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 9. 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 11 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 10. 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: Senior Vice President
Corporate Affairs
If to the Employee, then to the following:
Howard Posner
14 Escher Drive
Marlboro, New Jersey 07746
Each party may, by notice or other party, change the above address.
Section 11. 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. This
Agreement may be amended from time to time by action of the Executive Committee
of the Corporation. 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 12. 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 13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original.
Section 14. 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 15. Certain Definitions
"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.
"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; (ii) the Corporation
consolidates with or merges into another 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; or (iii) the Corporation conveys, transfers or leases all
or substantially all of its assets to any Person. Notwithstanding the foregoing,
a Change of Control shall not be deemed to occur if the Person described in
clause (i), (ii) or (iii) is Magten Asset Management Corp. or is an Affiliate of
Magten Asset Management Corp.
"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:_____________________________________
Michael J. Setola
Chairman of the Board
and Chief Executive Officer
________________________________________
Howard Posner
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 annual business plan for the Corporation for that
fiscal year ("Planned Annual Pre-tax Income"), the Employee
shall receive a cash bonus equal to 35% 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 .7% 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 31.5% 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 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
Chief Executive Officer.