UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
APRIL 16, 1999
Date of Report (Date of earliest event reported)
SALANT CORPORATION
(Exact name of registrant as specified in charter)
DELAWARE 0-2433 13-3402444
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
1114 Avenue of the Americas, New York, New York 10036
(Address of Principal Executive Offices) (Zip Code)
(212) 221-7500
(Registrant's telephone number, including area code)
<PAGE>
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
On April 16, 1999, the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court") entered an order (the
"Confirmation Order") confirming the First Amended Chapter 11 Plan of
Reorganization for Salant Corporation, dated February 3, 1999 (the "Plan"). The
effective date of the Plan is expected to occur in early May 1999 (the
"Effective Date"). A copy of the Plan and the Confirmation Order with
accompanying exhibits is attached hereto.
The Plan divides claims against, and interests in, Salant into
classes and sets forth the treatment afforded to each class. The following is a
general summary of the classes and treatment of claims and interests under the
Plan. Defined terms used herein and not defined shall have the respective
meanings assigned to them in the Plan.
Class 1 (Priority Claims) consists of any Allowed Claim, other
than a Priority Tax Claim and Administrative Expense, which is entitled to
priority of payment under section 507(a) of the Bankruptcy Code. Class 1 is
unimpaired under the Plan, and each holder of an Allowed Class 1 Claim will
receive Cash in an amount sufficient to render such Claim unimpaired on the
latest of (i) the Effective Date, (ii) the date such claim becomes due, and
(iii) the date on which Salant and the claimant otherwise agree.
Class 2 (CIT Claim) consists of any and all Claims in respect
of the Revolving Credit, Factoring and Security Agreement, dated as of September
20, 1993, as amended, modified or supplemented from time to time, between Salant
and the CIT Group/Commercial Services, Inc. ("CIT"), and as ratified and amended
pursuant to that certain Ratification and Amendment Agreement, dated as of
December 29, 1998. Class 2 is unimpaired under the Plan, and the Class 2 Claim
will be treated as mutually agreed upon between Salant and CIT as evidenced by
the exit financing facility to be entered into between Salant and CIT.
Class 3 (Senior Note Claims) consists of any and all Claims in
respect of Salant's 10-1/2% Senior Secured Notes, due December 31, 1998. Class 3
is impaired under the Plan, and each holder of an Allowed Class 3 Claim will
receive such holder's pro rata share of 9,500,000 shares of New Common Stock,
which in the aggregate will represent 95% of the issued and outstanding shares
of New Common Stock, subject to dilution.
Class 4 (Miscellaneous Secured Claims) consists of any Claim,
other than the CIT Claim, a Senior Note Claim, or an Administrative Expense,
that is a secured claim within the meaning of, and to the extent allowable as a
secured claim under, section 506 of the Bankruptcy Code. Class 4 is unimpaired
under the Plan, and, at Salant's election prior to the Effective Date, on the
Effective Date or as soon as practicable thereafter, each holder of an Allowed
Class 4 Claim will receive one of the following treatments: (i) the legal,
equitable and contractual rights to which such claim entitles such holder will
remain unaltered, (ii) such claim will be reinstated and rendered unimpaired in
accordance with section 1124(2) of the Bankruptcy Code, or (iii) such other
treatment as mutually agreed to between Salant and the claimant.
Class 5 (PBGC Claims) consists of any and all Claims of The
Pension Benefit Guaranty Corporation (the "PBGC"). Class 5 is impaired under the
Plan, and the Class 5 Claim will be treated as mutually agreed upon between
Salant and the PBGC as evidenced in the PBGC Agreement. A copy of the PBGC
Agreement is attached hereto.
Class 6 (General Unsecured Claims) consists of any Claim
against Salant, other than the CIT Claim, a Miscellaneous Secured Claim, a
Senior Note Claim, a Priority Claim, a Priority Tax Claim, an Administrative
Expense or any Claim subordinated under section 510(b) of the Bankruptcy Code.
Class 6 is unimpaired under the Plan, and, at Salant's election prior to the
Effective Date, on the Effective Date or as soon as practicable thereafter, each
holder of an Allowed Class 6 Claim will receive one of the following treatments:
(i) the legal, equitable and contractual rights to which such claim entitles
such holder will remain unaltered, (ii) such claim will be reinstated and
rendered unimpaired in accordance with section 1124(2) of the Bankruptcy Code,
or (iii) such other treatment as mutually agreed to between Salant and the
claimant.
Class 7 (Old Common Stock Interests) consists of any Interest
evidenced by Old Common Stock or any Claim, if any, relating to Old Common Stock
that is subordinated under section 510(b) of the Bankruptcy Code. Class 7 is
impaired under the Plan, and each holder of an Allowed Class 7 Claim will
receive such holder's pro rata share of 500,000 shares of New Common Stock,
which in the aggregate will represent 5% of the issued and outstanding shares of
New Common Stock, subject to dilution.
Class 8 (Other Interests) consists of any Interest other than
an Interest of Old Common Stock. Class 8 is impaired under the Plan, and all
such interests will be extinguished and no distributions will be made in respect
of Class 8 claims.
The foregoing summary does not purport to be complete and is
qualified in its entirety by reference to (i) the Plan, (ii) the Confirmation
Order, (iii) the PBGC Agreement, (iv) the press release, dated April 19, 1999
and (v) the press release, dated April 29, 1999, filed as Exhibits 2.5, 99.3,
99.4, 99.5 and 99.6 , respectively, to this Current Report on Form 8-K, which
items are incorporated by reference herein.
As of April 16, 1999, there were 14,984,608 shares of Salant's
Old Common Stock, par value $1 per share, outstanding. Pursuant to the Plan, on
the Effective Date, the Old Common Stock will be cancelled and 10,000,000 shares
of New Common Stock will be issued in respect of claims and interests filed and
allowed under the Plan. For financial information regarding Salant's assets and
liabilities, attached hereto are Projected Condensed Consolidated Balance Sheets
(as of the Effective Date) as set forth in the First Amended Disclosure
Statement for Chapter 11 Plan of Reorganization for Salant Corporation, dated
February 3, 1999, which was previously filed with the Bankruptcy Court.
It is anticipated that, immediately prior to the Effective
Date, each member of Salant's current Board of Directors (other than Michael
Setola) will resign. Pursuant to the Confirmation Order, such members of the
Board of Directors that do not resign prior to the Effective Date will be deemed
to have resigned immediately prior to the Effective Date. As of the Effective
Date, the following five (5) individuals will comprise Reorganized Salant's
Board of Directors: Michael Setola; Talton R. Embry; Rose Peabody Lynch; G.
Raymond Epson; and Ben Evans.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
The following exhibits are filed as part of this report:
Exhibit
Number Description
2.5 First Amended Chapter 11 Plan of Reorganization for Salant Corporation, dated February 3, 1999.
99.3 Order Pursuant to Section 1129 of the Bankruptcy Code Confirming the First Amended Chapter 11
Plan of Reorganization of Salant Corporation, dated April 16, 1999.
99.4 Agreement between Salant Corporation and Pension Benefit Guaranty Corporation, dated March 24, 1999.
99.5 Press Release, dated April 19, 1999.
99.6 Press Release, dated April 29, 1999.
99.7 Projected Condensed Consolidated Balance Sheets (as of the Effective Date).
</TABLE>
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
SALANT CORPORATION
Dated: April 29, 1999 By: /s/ Todd Kahn
Todd Kahn,
Chief Operating Officer and
General Counsel
<PAGE>
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Exhibit Index
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Exhibit
Number Description
2.5 First Amended Chapter 11 Plan of Reorganization for Salant Corporation, dated February 3, 1999.
99.3 Order Pursuant to Section 1129 of the Bankruptcy Code Confirming the First Amended Chapter 11
Plan of Reorganization of Salant Corporation, dated April 16, 1999.
99.4 Agreement between Salant Corporation and Pension Benefit Guaranty Corporation, dated March 24, 1999.
99.5 Press Release, dated April 19, 1999.
99.6 Press Release, dated April 29, 1999.
99.7 Projected Condensed Consolidated Balance Sheets (as of the Effective Date).
</TABLE>
Appendix I
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- -----------------------------------x
:
:
In re: :
:Chapter 11
SALANT CORPORATION, :Case No. 98-10107 (CB)
:
Debtor. :
:
- -----------------------------------x
FIRST AMENDED CHAPTER 11 PLAN OF REORGANIZATION
FOR SALANT CORPORATION
Dated: New York, New York
February 3, 1999
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON
(A Partnership Including
Professional Corporations)
Attorneys for Salant Corporation Debtor and Debtor-In-Possession
One New York Plaza
New York, New York 10004
(212) 859-8000
<PAGE>
- iii -
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE ONE DEFINITIONS 1
ARTICLE TWO PROVISIONS FOR TREATMENT OF ADMINISTRATIVE EXPENSES.................................................9
2.1. Administrative Expenses............................................................................9
ARTICLE THREE PROVISIONS FOR TREATMENT OF PRIORITY TAX CLAIMS...................................................9
3.1. Priority Tax Claims................................................................................9
ARTICLE FOUR CLASSIFICATION OF CLAIMS AND INTERESTS............................................................10
4.1. Claims 10
4.2. Interests 10
ARTICLE FIVE IDENTIFICATION OF CLASSES OF CLAIMS AND INTERESTS IMPAIRED AND NOT IMPAIRED BY THIS PLAN.........11
5.1. Classes of Claims and Interests Impaired by this Plan and Entitled to Vote........................11
5.2. Classes of Claims Not Impaired by this Plan and Conclusively Presumed to Accept this Plan.........11
5.3. Class of Interests Impaired by this Plan and Deemed Not to Have Accepted this Plan................11
ARTICLE SIX PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS..................................................11
6.1. Priority Claims (Class 1).........................................................................11
6.2. CIT Claim (Class 2)...............................................................................12
6.3. Senior Note Claims (Class 3)......................................................................12
6.4. Miscellaneous Secured Claims (Class 4)............................................................13
6.5. PBGC Claims (Class 5).............................................................................13
6.6. General Unsecured Claims (Class 6)................................................................14
6.7. Old Common Stock Interests (Class 7)..............................................................14
6.8. Other Interests (Class 8).........................................................................15
ARTICLE SEVEN ACCEPTANCE OR REJECTION OF THIS PLAN; EFFECT OF REJECTION BY ONE OR MORE IMPAIRED
CLASSES OF CLAIMS OR INTERESTS........................................................15
7.1. Impaired Class of Claims and Interests Entitled to Vote...........................................15
7.2. Acceptance by an Impaired Class of Creditors......................................................15
7.3. Acceptance by an Impaired Class of Interest Holders...............................................15
7.4. Classes of Claims Not Impaired by this Plan and Conclusively Presumed to Accept this Plan.........16
7.5. Class of Interests Deemed Not to Have Accepted this Plan..........................................16
7.6. Confirmation Pursuant to Section 1129(b) of the Bankruptcy Code...................................16
ARTICLE EIGHT UNEXPIRED LEASES AND EXECUTORY CONTRACTS.........................................................16
8.1. Assumption and Rejection of Executory Contracts and Unexpired Leases..............................16
8.2. Bar Date for Rejection Damages....................................................................16
ARTICLE NINE IMPLEMENTATION OF THIS PLAN.......................................................................17
9.1. Vesting of Property...............................................................................17
9.2. Transactions on Business Days.....................................................................17
9.3. Restated Certificate of Incorporation; Restated By-Laws...........................................17
9.4. Implementation....................................................................................18
9.5. Issuance of New Securities........................................................................18
9.6. Cancellation of Existing Securities and Agreements................................................18
9.7. Board of Directors of Reorganized Salant..........................................................19
9.8. Employee Benefit Plans............................................................................19
9.9. The Stock Award and Incentive Plan and Restricted Stock Plan......................................19
9.10. Survival of Indemnification and Contribution Obligations.........................................20
9.11. Listing of New Common Stock; Registration of Securities..........................................20
9.12. Retention and Enforcement of Causes of Action....................................................20
9.13. Management Employment Agreements.................................................................21
ARTICLE TEN PROVISIONS COVERING DISTRIBUTIONS..................................................................21
10.1. Timing of Distributions Under this Plan..........................................................21
10.2. Allocation of Consideration......................................................................21
10.3. Cash Payments....................................................................................21
10.4. Payment of Statutory Fees........................................................................22
10.5. No Interest......................................................................................22
10.6. Fractional Securities............................................................................22
10.7. Withholding of Taxes.............................................................................22
10.8. Distribution Record Date.........................................................................22
10.9. Persons Deemed Holders of Registered Securities..................................................23
10.10. Surrender of Existing Securities................................................................23
10.11. Special Procedures for Lost, Stolen, Mutilated or Destroyed Instruments.........................23
10.12. Undeliverable or Unclaimed Distributions........................................................24
ARTICLE ELEVEN PROCEDURES FOR RESOLVING DISPUTED CLAIMS........................................................25
11.1. Objections to Claims.............................................................................25
11.2. Procedure 25
11.3. Payments and Distributions With Respect to Disputed Claims.......................................25
11.4. Timing of Payments and Distributions With Respect to Disputed Claims.............................25
11.5. Individual Holder Proofs of Interest.............................................................26
ARTICLE TWELVE DISCHARGE, INJUNCTION, RELEASES AND SETTLEMENTS OF CLAIMS.......................................26
12.1. Discharge of All Claims and Interests and Releases...............................................26
12.2. Injunction 27
12.3. Exculpation......................................................................................27
12.4. Guaranties and Claims of Subordination...........................................................28
ARTICLE THIRTEEN CONDITIONS PRECEDENT TO CONFIRMATION ORDER AND EFFECTIVE DATE................................29
13.1. Conditions Precedent to Entry of the Confirmation Order..........................................29
13.2. Conditions Precedent to the Effective Date.......................................................29
13.3. Waiver of Conditions.............................................................................30
13.4. Effect of Failure of Conditions..................................................................30
ARTICLE FOURTEEN MISCELLANEOUS PROVISIONS......................................................................30
14.1. Bankruptcy Court to Retain Jurisdiction..........................................................30
14.2. Binding Effect of this Plan......................................................................31
14.3. Nonvoting Stock..................................................................................31
14.4. Authorization of Corporate Action................................................................31
14.5. Retiree Benefits.................................................................................32
14.6. Withdrawal of this Plan..........................................................................32
14.7. Captions 32
14.8. Method of Notice.................................................................................32
14.9. Dissolution of Committees........................................................................33
14.10. Discharge of Indenture Trustee..................................................................33
14.11 Amendments and Modifications to Plan.............................................................34
14.12. Section 1125(e) of the Bankruptcy Code..........................................................34
Exhibit A - PEI Licenses
Exhibit B - Registration Rights Agreement
Exhibit C - Reorganized Salant's 1999 Stock Award and Incentive Plan
Exhibit D - List of Initial Board of Directors of Reorganized Salant
</TABLE>
<PAGE>
SALANT CORPORATION, the above-captioned Debtor and
Debtor-in-Possession, hereby proposes the following chapter 11 plan of
reorganization pursuant to section 1121(a) of the Bankruptcy Code.
ARTICLE ONE
DEFINITIONS
Whenever from the context it appears appropriate, each term
stated in either the singular or the plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter. Unless the context requires
otherwise, the following words and phrases shall have the meanings set forth
below when used in initially-capitalized form in this Plan:
Administrative Expense: (a) Any cost or expense of administration of the
Chapter 11 Case (including, without limitation, professional fees and expenses)
asserted or arising under sections 503(b) or 507(b) of the Bankruptcy Code, (b)
a Claim given the status of an Administrative Expense by Final Order of the
Bankruptcy Court, and (c) all fees or charges assessed against the Debtor's
estate under title 28, United States Code, Section 1930.
Affiliate: As defined in section 101(2) of the Bankruptcy Code.
Allowed: With respect to Claims and Interests, (a) any Claim against, or
Interest in, the Debtor, proof of which is timely filed or by order of the
Bankruptcy Court is not or will not be required to be filed, (b) any Claim or
Interest that has been or is hereafter listed in the Schedules as neither
disputed, contingent or unliquidated, and for which no timely proof of claim has
been filed, (c) any Interest registered in the stock register maintained by or
on behalf of the Debtor as of the Record Date, or (d) any Claim allowed pursuant
to this Plan and, in each such case in (a), (b), and (c) above, as to which
either (i) no objection to the allowance thereof has been interposed within the
applicable period of time fixed by this Plan, the Bankruptcy Code, the
Bankruptcy Rules or the Bankruptcy Court or (ii) such an objection is so
interposed and the Claim or Interest shall have been allowed by a Final Order
(but only to the extent so allowed).
Apollo: Apollo Apparel Partners, L.P., a Delaware limited partnership, in
its capacity as the beneficial owner of 5,924,352 shares of the Old Common
Stock.
Bankruptcy Code: Title 11 of the United States Code, as amended from time
to time.
Bankruptcy Court: The United States Bankruptcy Court for the Southern
District of New York, or any other court having jurisdiction over this Chapter
11 Case.
Bankruptcy Rules: The Federal Rules of Bankruptcy Procedure, as amended,
promulgated under Section 2075 of title 28 of the United States Code and the
Local Rules of the Bankruptcy Court, as applicable from time to time during the
Chapter 11 Case.
Board: The Board of Directors of the Debtor or Reorganized Salant, as
applicable.
Business Day: Any day other than a Saturday, Sunday or "legal holiday" as
such term is defined in Bankruptcy Rule 9006(a).
By-Laws: The By-Laws, as amended, of the Debtor.
Canceled Security: A security, note or other instrument evidencing a Claim
or Interest outstanding immediately prior to the Effective Date, which security,
note or other instrument represents a Claim or Interest that is Impaired under
this Plan.
Cash: Currency, a certified check, a cashier's check or a wire transfer of
good funds from any source, or a check drawn on a domestic bank from the Debtor,
Reorganized Salant or other Entity making any distribution under this Plan.
Cause of Action: Any and all actions, causes of action, suits, accounts,
controversies, agreements, promises, rights to legal remedies, rights to
equitable remedies, rights to payment, and claims, whether known or unknown,
reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, unsecured and
whether asserted or assertable directly or derivatively, in law, equity or
otherwise.
Certificate of Incorporation: The Amended and Restated Certificate of
Incorporation of Salant.
Chapter 11 Case: The case under chapter 11 of the Bankruptcy Code
concerning the Debtor which was commenced on the Filing Date.
CIT: The CIT Group/Commercial Services, Inc., a New York corporation.
CIT Claim: Any and all Claims in respect of all or any portion of the
aggregate outstanding and unpaid amount of principal and interest due and owing
under, and subject to the terms and provisions of, the Credit Agreement and all
other Financing Agreements (as defined in the Credit Agreement), including,
without limitation, any and all interest, costs, attorney's fees and other
expenses owed by the Debtor or for which the Debtor may be liable in connection
therewith.
Claim: Any right to (a) payment from the Debtor, whether or not such right
is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (b)
an equitable remedy for breach of performance if such breach gives rise to a
right to payment from the Debtor, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
Class: A class of Claims or Interests designated pursuant to this Plan.
Commission: The Securities and Exchange Commission.
Confirmation Date: The date on which the Confirmation Order shall be
entered on the docket maintained by the Clerk of the Bankruptcy Court with
respect to the Chapter 11 Case.
Confirmation Hearing: The hearing held by the Bankruptcy Court pursuant to
section 1128(a) of the Bankruptcy Code regarding the confirmation of this Plan
pursuant to section 1129 of the Bankruptcy Code.
Confirmation Order: The order of the Bankruptcy Court confirming this Plan
pursuant to section 1129 of the Bankruptcy Code.
Credit Agreement: The Revolving Credit, Factoring and Security Agreement,
dated as of September 20, 1993, as amended, modified or supplemented from time
to time, between Salant and CIT, and as ratified and amended pursuant to that
certain Ratification and Amendment Agreement, dated as of December 29, 1998.
Creditors' Committee: Any official committee of unsecured creditors
appointed in the Chapter 11 Case pursuant to section 1102(a) of the Bankruptcy
Code, as the same may be constituted from time to time.
Debtor: Salant Corporation, as debtor and debtor-in-possession in the
Chapter 11 Case.
Disclosure Statement: The Disclosure Statement that relates to this Plan
and that has been approved by the Bankruptcy Court as containing adequate
information as required by section 1125 of the Bankruptcy Code.
Disputed: With respect to Claims, any Claim that is not Allowed.
Distribution Record Date: The date or dates fixed by the Bankruptcy Court
for determining the Holders of Senior Notes and Old Common Stock, respectively,
who are entitled to receive distributions under this Plan, or if the Bankruptcy
Court does not fix such date or dates, the Record Date.
Effective Date: The date which is 11 days after the Confirmation Date, or,
if such date is not a Business Day, the next succeeding Business Day, or such
earlier date after the Confirmation Date as agreed to in writing between the
Debtor and Magten so long as no stay of the Confirmation Order is in effect on
such date; provided, however, that if, on or prior to such date, all conditions
to the Effective Date set forth in Article Thirteen of this Plan have not been
satisfied, or waived, then the Effective Date shall be the first Business Day
following the day on which all such conditions to the Effective Date have been
satisfied or waived.
Entity: Any individual, corporation, limited or general partnership,
limited liability company, joint venture, association, joint stock company,
estate, entity, trust, trustee, United States trustee, unincorporated
organization, government, governmental unit (as defined in the Bankruptcy Code),
agency or political subdivision thereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Filing Date: December 29, 1998, which was the date on which the Debtor
filed its voluntary petition for relief commencing the Chapter 11 Case.
Final Decree: A final decree closing the Chapter 11 Case as described in
Bankruptcy Rule 3022.
Final Order: An order, ruling or judgment that: (i) is in full force and
effect; (ii) is not stayed; and (iii) is no longer subject to review, reversal,
modification or amendment, by appeal or writ of certiorari.
General Unsecured Claim: Any Claim against the Debtor (other than the CIT
Claim, a Miscellaneous Secured Claim, a Senior Note Claim, a Priority Claim, a
Priority Tax Claim, an Administrative Expense, or any Claim subordinated under
section 510(b) of the Bankruptcy Code).
Holder: Any Entity that holds a Claim or Interest. Where the identity of
the Holder of a Claim or Interest is set forth on a register or other record
maintained by or at the direction of the Debtor, the Holder of such Claim or
Interest shall be deemed to be the Holder as identified on such register or
record, unless the Debtor is otherwise notified in a writing authorized by such
Holder.
Impaired: Any Class of Claims or Interests that is impaired within the
meaning of section 1124 of the Bankruptcy Code.
Indenture: The Indenture, dated September 20, 1993, as amended, between
Salant and Bankers Trust Company, as Indenture Trustee, pursuant to which the
Senior Notes were issued.
Indenture Trustee: Bankers Trust Company, as trustee under the Indenture,
or its duly appointed successor (if any).
Instrument: Any share of stock, security, promissory note or other
"Instrument" within the meaning of that term, as defined in Section 9-105(1)(i)
of the UCC.
Interests: The equity interests in the Debtor, including, but not limited
to, shares of common stock and shares of preferred stock of the Debtor and any
rights, options, warrants, calls, subscriptions or other similar rights or
agreements, commitments or outstanding securities obligating the Debtor to
issue, transfer or sell any shares of capital stock of the Debtor.
Magten: Magten Asset Management Corp., a New York corporation, in its
capacity as the beneficial owner, or the investment manager on behalf of the
beneficial owners, of a substantial portion of the outstanding Senior Notes.
Management Employment Agreements: The Management Employment Agreements
between Reorganized Salant and Michael Setola and Todd Kahn, substantially in
the form of the exhibit to the Plan to be filed with the Bankruptcy Court prior
to the Confirmation Hearing.
Market Rate: The rate of interest per annum (rounded upward, if necessary,
to the nearest whole 1/100 of 1%) equal to the yield equivalent (as determined
by the Secretary of the Treasury) of the average accepted auction price for the
last auction of one-year United States Treasury bills settled at least fifteen
days prior to the Effective Date.
Miscellaneous Secured Claim: Any Claim, other than the CIT Claim, a Senior
Note Claim, or an Administrative Expense, that is a secured claim within the
meaning of, and to the extent allowable as a secured claim under, section 506 of
the Bankruptcy Code.
New Common Stock: The shares of common stock of Reorganized Salant, par
value $1.00 per share, to be issued by Reorganized Salant on and after the
Effective Date pursuant to this Plan.
New PIK Senior Notes: Collectively, the pay-in-kind notes, substantially in
the form to be attached to the New PIK Senior Note Indenture, to be issued to
the holders of Allowed Class 3 Claims on the Effective Date by Reorganized
Salant pursuant to the New PIK Senior Note Indenture, if the PEI Event does not
occur on or prior to the Effective Date, in the aggregate principal amount of
$92 million and with a maturity date on the eighth anniversary of the Effective
Date and bearing interest payable semi-annually in arrears, at the rate of (i)
15% per annum payable in the form of additional New PIK Senior Notes or (ii) at
the sole option of Reorganized Salant, 12% per annum payable in Cash.
New PIK Senior Note Indenture: The indenture to be dated as of the
Effective Date, substantially in the form of the exhibit to this Plan to be
filed with the Bankruptcy Court prior to the Confirmation Hearing. Noteholders:
The holders of the Senior Notes.
NYSE: The New York Stock Exchange, Inc.
Old Common Stock: The common stock of the Debtor, par value $1.00 per
share, issued and outstanding as of the Filing Date.
Old Common Stock Interest: Any Interest evidenced by Old Common Stock or
any Claim, if any, relating to Old Common Stock that is subordinated under
section 510(b) of the Bankruptcy Code.
Other Interest: Any Interest other than an Old Common Stock Interest.
PBGC: The Pension Benefit Guaranty Corporation.
PBGC Agreement: The agreement to be entered into between the PBGC and
Reorganized Salant on or prior to the Effective Date with respect to any and all
PBGC Claims.
PBGC Claims: Any and all Claims of the PBGC.
PEI. Perry Ellis International, Inc.
PEI Event: Either (i) the issuance of a Final Order of the Bankruptcy Court
approving the assumption of the PEI Licenses by the Debtor and/or Reorganized
Salant, as the case may be, and determining that the Debtor's reorganization
under the Plan with the treatment provided to Senior Note Claims (Class 3) under
Section 6.3(a)(i) of the Plan and the treatment provided to Old Common Stock
Interests (Class 7) under Section 6.7(a)(i) of the Plan, and the confirmation
and consummation of the Plan (including, but not limited to, the provisions
providing such treatment), does not and will not give rise to any rights of PEI
under the PEI Licenses based on any "change of control" provision in the PEI
Licenses (as that term is defined in the PEI Licenses) or any similar provision,
and does not and will not for any reason result in any forfeiture, termination
or modification of any rights of Salant existing under the PEI Licenses
immediately prior to the Filing Date, or (ii) the execution of an agreement or
stipulation by and between PEI and the Debtor and/or Reorganized Salant, as the
case may be, to the same effect.
PEI Licenses: Collectively, all licensing agreements by and between Salant
and PEI that are in effect immediately prior to the Filing Date including,
without limitation, those listed on the annexed Exhibit A.
Plan: This Chapter 11 plan of reorganization of the Debtor, together with
all exhibits hereto, as the same may be amended and modified from time to time
in accordance with the terms hereof.
Priority Claim: Any Claim, other than a Priority Tax Claim or an
Administrative Expense, which is entitled to priority of payment under section
507(a) of the Bankruptcy Code.
Priority Tax Claim: Any Claim which is entitled to priority of payment
under section 507(a)(8) of the Bankruptcy Code.
Pro Rata Share: A proportionate share, so that the ratio of the amount of
property distributed on account of an Allowed Claim or Allowed Interest, as the
case may be, in a class is the same as the ratio such Claim or Interest bears to
the total amount of all Claims or Interests (including Disputed Claims or
Disputed Interests until disallowed) in such class.
Record Date: February 3, 1999.
Registration Rights Agreement: A registration rights agreement, in
substantially the form annexed hereto as Exhibit B, to be entered into on the
Effective Date by and among Reorganized Salant and certain holders of the New
Common Stock as of the Effective Date.
Related Documents: This Plan and all documents necessary to consummate the
transactions contemplated by this Plan.
Reorganized Salant: The Debtor from and after the effectiveness of this
Plan on the Effective Date.
Reorganized Salant By-Laws: The by-laws of Reorganized Salant, as amended
and restated pursuant to this Plan, to be filed with the Bankruptcy Court prior
to the Confirmation Hearing.
Reorganized Salant Certificate of Incorporation: The certificate of
incorporation of Reorganized Salant, as amended and restated pursuant to this
Plan, in substantially the form to be filed with the Bankruptcy Court prior to
the Confirmation Hearing.
Restricted Stock Plan: Reorganized Salant Restricted Stock Plan,
substantially in the form of the exhibit to this Plan to be filed with the
Bankruptcy Court prior to the Confirmation Hearing.
Salant: Salant Corporation, a Delaware corporation.
Schedules: The schedule of assets and liabilities filed by the Debtor with
the Bankruptcy Court in accordance with section 521(1) of the Bankruptcy Code,
and any supplements and amendments thereto.
Securities Act: The Securities Act of 1933, as amended.
Senior Notes: The 10-1/2% Senior Secured Notes due December 31, 1998 issued
by Salant pursuant to the Indenture.
Senior Note Claims: Any and all Claims in respect of all or any portion of
the aggregate outstanding and unpaid amount of principal and interest due and
owing under, and subject to the terms and provisions of, the Senior Notes, and
any other indebtedness of the Debtor due and owing under the Indenture or the
Senior Notes (including, without limitation, any and all interest, costs,
attorneys' fees and other expenses owed by the Debtor or for which the Debtor
may be liable in connection therewith) and all other Claims against the Debtor,
if any, directly or indirectly related to or arising out of the transactions,
agreements or instruments upon which the Senior Notes are based.
Stock Award and Incentive Plan: Reorganized Salant's 1999 Stock Award and
Incentive Plan, in substantially the form annexed hereto as Exhibit C.
UCC: The Uniform Commercial Code, from time to time in effect in the State
of New York.
Unimpaired: Any Class of Claims or Interests that is not Impaired.
ARTICLE TWO
PROVISIONS FOR TREATMENT OF ADMINISTRATIVE EXPENSES
2.1. Administrative Expenses. (a) Each allowed Administrative
Expense shall be paid in full in Cash on the later of (i) the Effective Date and
(ii) the date on which the Bankruptcy Court enters an order allowing such
Administrative Expense; provided, however, that allowed Administrative Expenses
representing obligations incurred in the ordinary course of business, consistent
with past practice, or assumed by the Debtor shall be paid in full or performed
by the Debtor or Reorganized Salant in the ordinary course of business,
consistent with past practice; provided further, however, that allowed
Administrative Expenses incurred by the Debtor or Reorganized Salant after the
Confirmation Date, including (without limitation) claims for professionals' fees
and expenses, shall not be subject to application and may be paid by the Debtor
or Reorganized Salant, as the case may be, in the ordinary course of business
and without further Bankruptcy Court approval.
(b) The Indenture Trustee shall have an Allowed Administrative
Expense, without further Bankruptcy Court approval, in the amount of its
reasonable fees and expenses under Section 7.07 of the Indenture unless the
Debtor objects to such fees and expenses within ten (10) days of receipt of an
invoice therefor. In the event of a dispute, the matter shall be submitted to
the Bankruptcy Court for resolution.
ARTICLE THREE
PROVISIONS FOR TREATMENT OF PRIORITY TAX CLAIMS
1.3.1. Priority Tax Claims. With respect to each Allowed Priority Tax Claim, at
the sole option of the Debtor, the Holder of an Allowed Priority Tax Claim shall
be entitled to receive from Reorganized Salant on account of such Claim:
(a) Cash payments made in equal annual installments beginning on or before
the first anniversary following the Effective Date with the final installment
being payable no later than the sixth anniversary of the date of the assessment
of such Allowed Priority Tax Claim, together with interest on the unpaid balance
of such Allowed Priority Tax Claim from the Effective Date calculated at the
Market Rate; or
(b) Such other treatment agreed to by the Holder of such Allowed Priority
Tax Claim and the Debtor or Reorganized Salant, as the case may be.
ARTICLE FOUR
CLASSIFICATION OF CLAIMS AND INTERESTS
2.Pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code, set forth
below is a designation of classes of Claims and Interests. Administrative
Expenses and Priority Tax Claims of the kinds specified in sections 507(a)(1)
and 507(a)(8) of the Bankruptcy Code (set forth in Articles Two and Three above)
have not been classified and are excluded from the following classes in
accordance with section 1123(a)(l) of the Bankruptcy Code.
4.1. Claims
Class 1. Class 1 consists of all Priority Claims.
Class 2. Class 2 consists of the CIT Claim.
Class 3. Class 3 consists of all Senior Note Claims.
Class 4. Class 4 consists of all Miscellaneous
Secured Claims.
Class 5. Class 5 consists of all PBGC Claims.
Class 6. Class 6 consists of all General Unsecured
Claims.
4.2. Interests
Class 7. Class 7 consists of all Old Common Stock
Interests.
Class 8. Class 8 consists of all Other Interests.
ARTICLE FIVE
IDENTIFICATION OF CLASSES OF CLAIMS AND
INTERESTS IMPAIRED AND NOT IMPAIRED BY THIS PLAN
3.5.1. Classes of Claims and Interests Impaired by this Plan and Entitled to
Vote. Senior Note Claims (Class 3), PBGC Claims (Class 5) and Old Common Stock
Interests (Class 7) are Impaired by this Plan and the Holders of Allowed Claims
and Interests in such Classes are entitled to vote to accept or reject this
Plan.
5.2. Classes of Claims Not Impaired by this Plan and
Conclusively Presumed to Accept this Plan. Priority Claims (Class 1), the CIT
Claim (Class 2), Miscellaneous Secured Claims (Class 4) and General Unsecured
Claims (Class 6) are not Impaired by this Plan. Under section 1126(f) of the
Bankruptcy Code, the Holders of such Claims and Interests are conclusively
presumed to accept this Plan, and the acceptances of such Holders will not be
solicited.
5.3. Class of Interests Impaired by this Plan and Deemed Not
to Have Accepted this Plan. Other Interests (Class 8) are Impaired by this Plan
and do not receive or retain any property under this Plan. Under section 1126(g)
of the Bankruptcy Code, the Holders of Other Interests are deemed not to have
accepted this Plan, and the acceptance of such Holders will not be solicited.
ARTICLE SIX
PROVISIONS FOR TREATMENT OF
CLAIMS AND INTERESTS
4.6.1. Priority Claims (Class 1).
(a) Treatment. On the latest of (a) the Effective Date, (b)
the date on which such Priority Claim becomes an Allowed Claim, and (c) the date
on which the Debtor and the Holder of such Allowed Priority Claim otherwise
agree, each Holder of an Allowed Priority Claim shall be entitled to receive
Cash in an amount sufficient to render such Allowed Priority Claim Unimpaired
under section 1124 of the Bankruptcy Code.
(b) Full Settlement. The distribution provided for in this
Section 6.1 is in full settlement, release and discharge of each Holder's
Priority Claim.
Class 1 is not Impaired.
6.2. CIT Claim (Class 2).
(a) Treatment. At the election of the Debtor prior to the
Effective Date, on the Effective Date or as soon as practicable thereafter, CIT
shall be entitled to receive on account of the Allowed CIT Claim one of the
following treatments: (i) CIT shall be entitled to receive Cash in an amount
sufficient to render such Allowed CIT Claim Unimpaired under section 1124 of the
Bankruptcy Code, (ii) the Allowed CIT Claim shall be otherwise rendered
Unimpaired in accordance with section 1124 of the Bankruptcy Code, or (iii) such
other treatment as mutually agreed to by the Debtor and CIT.
(b) Full Settlement. The distribution provided for in this
Section 6.2 is in full settlement, release and discharge of the Holder's CIT
Claim.
Class 2 is not Impaired.
6.3. Senior Note Claims (Class 3).
(a) Treatment. (i) If the PEI Event occurs on or prior to
the Effective Date, then on the Effective Date or as soon as practicable
thereafter, each Holder of an Allowed Senior Note Claim shall be entitled to
receive on account of such Holder's Allowed Senior Note Claim such Holder's Pro
Rata Share of 9,500,000 shares of New Common Stock (or 90.5805738 shares of New
Common Stock for each $1,000 principal amount of Senior Notes held by such
Holder), which in the aggregate shall represent 95% of the issued and
outstanding shares of New Common Stock of Reorganized Salant as of the Effective
Date, subject to dilution for shares of New Common Stock issued under the Stock
Award and Incentive Plan and the Restricted Stock Plan.
(ii) If the PEI Event does not occur on or prior to the
Effective Date, then on the Effective Date or as soon as practicable thereafter,
each Holder of an Allowed Senior Note Claim shall be entitled to receive on
account of such Holder's Allowed Senior Note Claim such Holder's Pro Rata Share
of (A) 4,000,000 shares of New Common Stock (or 38.1391890 shares of New Common
Stock for each $1,000 principal amount of Senior Notes held by such Holder),
which in the aggregate shall represent 40% of the issued and outstanding shares
of New Common Stock of Reorganized Salant as of the Effective Date, subject to
dilution for shares of New Common Stock issued under the Stock Award and
Incentive Plan and the Restricted Stock Plan, and (B) the New PIK Senior Notes
(or $877.20 aggregate principal amount of New PIK Senior Notes for each $1,000
principal amount of Senior Notes held by such Holder).
(b) Full Settlement. The distribution provided for in this
Section 6.3 is in full settlement, release and discharge of each Holder's Senior
Note Claim.
(c) Allowance of Senior Note Claims. The aggregate Senior Note
Claims in Class 3 shall be deemed Allowed in the aggregate amount of
$119,190,277, plus interest in the amount of $30,590 for each day after December
18, 1998, until and including the Filing Date. The Senior Note Claims are not
disputed, contingent or unliquidated, and no Holder of a Senior Note Claim or
the Indenture Trustee shall be required to file a proof of claim in order for
such Claims to be Allowed pursuant to this Plan. Any Claims filed with respect
to the Senior Note Claims shall be disallowed as duplicative of the Claim deemed
filed and Allowed as provided in this Section 6.3(c). The reasonable fees, costs
and expenses of the Indenture Trustee as provided for pursuant to the Indenture
shall be paid in Cash in accordance with Section 14.10 of this Plan.
Class 3 is Impaired.
6.4. Miscellaneous Secured Claims (Class 4).
(a) Treatment. At the election of the Debtor prior to the
Effective Date, on the Effective Date or as soon as practicable thereafter, each
Holder of an Allowed Miscellaneous Secured Claim shall be entitled to receive on
account of such Holder's Allowed Miscellaneous Secured Claim one of the
following treatments: (i) the legal, equitable and contractual rights to which
such Allowed Miscellaneous Secured Claim entitles such Holder shall remain
unaltered, (ii) such Holder's Allowed Miscellaneous Secured Claim shall be
reinstated and rendered Unimpaired in accordance with section 1124(2) of the
Bankruptcy Code, or (iii) such other treatment as mutually agreed to by the
Debtor and such Holder.
(b) Full Settlement. The distribution provided for in this
Section 6.4 is in full settlement, release and discharge of each Holder's
Miscellaneous Secured Claim.
Class 4 is not Impaired.
6.5. PBGC Claims (Class 5).
(a) Treatment. On the Effective Date, the Holder of the
Allowed PBGC Claims shall be entitled to receive on account of the Allowed PBGC
Claims the treatment provided for in the PBGC Agreement.
(b) Full Settlement. The distribution provided for in this
Section 6.5 is in full settlement, release and discharge of the Holder's PBGC
Claims.
Class 5 is Impaired.
6.6. General Unsecured Claims (Class 6).
(a) Treatment. At the election of the Debtor prior to the
Effective Date, on the Effective Date or as soon as practicable thereafter, each
Holder of an Allowed General Unsecured Claim shall be entitled to receive on
account of such Holder's Allowed General Unsecured Claim one of the following
treatments: (i) the legal, equitable and contractual rights to which such
Allowed General Unsecured Claim entitles such Holder shall remain unaltered;
(ii) such Holder's Allowed General Unsecured Claim shall be reinstated and
rendered Unimpaired in accordance with section 1124(2) of the Bankruptcy Code;
or (iii) such other treatment as mutually agreed to by the Debtor and such
Holder.
(b) Full Settlement. The distribution provided for in this
Section 6.6 is in full settlement, release and discharge of each Holder's
General Unsecured Claim.
Class 6 is not Impaired.
6.7. Old Common Stock Interests (Class 7).
(a) Treatment. (i) If the PEI Event occurs on or prior to the
Effective Date, then on the Effective Date or as soon as practicable thereafter,
each Holder of an Allowed Old Common Stock Interest shall be entitled to receive
on account of such Holder's Allowed Old Common Stock Interest such Holder's Pro
Rata Share of 500,000 shares of New Common Stock, which in the aggregate shall
represent 5% of the issued and outstanding shares of New Common Stock of
Reorganized Salant as of the Effective Date, subject to dilution for shares of
New Common Stock issued under the Stock Award and Incentive Plan and the
Restricted Stock Plan.
(ii) If the PEI Event does not occur on or prior to the
Effective Date, then on the Effective Date or as soon as practicable thereafter,
each Holder of an Allowed Old Common Stock Interest shall be entitled to receive
on account of such Holder's Allowed Old Common Stock Interest such Holder's Pro
Rata share of 6,000,000 shares of New Common Stock, which in the aggregate shall
represent 60% of the issued and outstanding shares of New Common Stock of
Reorganized Salant as of the Effective Date, subject to dilution for shares of
New Common Stock issued under the Stock Award and Incentive Plan and the
Restricted Stock Plan.
(b) Full Settlement. The distribution provided for in this
Section 6.7 is in full settlement, release and discharge of each Holder's Old
Common Stock Interest.
Class 7 is Impaired.
6.8. Other Interests (Class 8). On the Effective Date, all
Other Interests will be extinguished and no distributions will be made in
respect of such Other Interests.
Class 8 is Impaired.
ARTICLE SEVEN
ACCEPTANCE OR REJECTION OF THIS PLAN;
EFFECT OF REJECTION BY ONE OR MORE IMPAIRED
CLASSES OF CLAIMS OR INTERESTS
7.1. Impaired Class of Claims and Interests Entitled to Vote.
The Holders of Allowed Claims in each Impaired Class of Claims (Class 3 - Senior
Note Claims; Class 5 - PBGC Claims) and Interests (Class 7 Old Common Stock
Interests) are entitled to vote to accept or reject this Plan.
7.2. Acceptance by an Impaired Class of Creditors. Consistent
with section 1126(c) of the Bankruptcy Code and except as provided in section
1126(e) of the Bankruptcy Code, an Impaired Class of Claims shall have accepted
this Plan if this Plan is accepted by Holders of at least two-thirds in dollar
amount and more than one-half in number of the Allowed Claims in such Class that
have timely and properly voted to accept or reject this Plan.
7.3. Acceptance by an Impaired Class of Interest Holders.
Consistent with section 1126(d) of the Bankruptcy Code and except as provided in
section 1126(e) of the Bankruptcy Code, Class 7 (Old Common Stock Interests)
shall have accepted this Plan if this Plan is accepted by Holders of at least
two-thirds in amount of the Allowed Interests in Class 7 that have timely and
properly voted to accept or reject this Plan.
7.4. Classes of Claims Not Impaired by this Plan and
Conclusively Presumed to Accept this Plan. Priority Claims (Class 1), the CIT
Claim (Class 2), Miscellaneous Secured Claims (Class 4), and General Unsecured
Claims (Class 6) are not Impaired by this Plan. Under section 1126(f) of the
Bankruptcy Code, the Holders of such Claims are conclusively presumed to accept
this Plan, and the acceptances of such Holders will not be solicited.
7.5. Class of Interests Deemed Not to Have Accepted this Plan.
Other Interests (Class 8) are Impaired by this Plan and do not receive or retain
any property under this Plan. Under section 1126(g) of the Bankruptcy Code, the
Holders of such Other Interests are deemed not to have accepted this Plan, and
the acceptance of such Holders will not be solicited.
7.6. Confirmation Pursuant to Section 1129(b) of the
Bankruptcy Code. With respect to Class 8 and any Impaired Class that does not
accept this Plan, the Debtor intends to request that the Bankruptcy Court
confirm this Plan in accordance with section 1129(b) of the Bankruptcy Code.
ARTICLE EIGHT
UNEXPIRED LEASES AND EXECUTORY CONTRACTS
8.1. Assumption and Rejection of Executory Contracts and
Unexpired Leases. Each executory contract or unexpired lease that has not been
expressly assumed or rejected with approval by order of the Bankruptcy Court on
or prior to the Confirmation Date shall, as of the Confirmation Date (subject to
the occurrence of the Effective Date), be deemed to have been assumed by the
Debtor unless there is then pending before the Bankruptcy Court a motion to
reject such unexpired lease or executory contract. Entry of the Confirmation
Order by the clerk of the Bankruptcy Court shall constitute an order approving
such assumptions and rejections, as the case may be, pursuant to section 365(a)
of the Bankruptcy Code.
8.2. Bar Date for Rejection Damages. Unless otherwise provided
by an order of the Bankruptcy Court entered prior to the Confirmation Date, a
proof of claim with respect to any Claim against the Debtor arising from the
rejection of any executory contract or unexpired lease pursuant to an order of
the Bankruptcy Court must be filed with the Bankruptcy Court within the later of
(a) the time period established by the Bankruptcy Court in an order of the
Bankruptcy Court approving such rejection, or (b) if no such time period is or
was established, thirty (30) days from the date of entry of such order of the
Bankruptcy Court approving such rejection. Any Entity that fails to file a proof
of claim with respect to its Claim arising from such a rejection within the
period set forth above shall be forever barred from asserting a Claim against
the Debtor, Reorganized Salant or the property or interests in property of the
Debtor or Reorganized Salant. All Allowed Claims arising from the rejection of
executory contracts or unexpired leases shall be classified as a General
Unsecured Claim (Class 6) under this Plan.
ARTICLE NINE
IMPLEMENTATION OF THIS PLAN
9.1. Vesting of Property. Except as otherwise provided in this
Plan, on the Effective Date, title to all property of the Debtor's estate shall
pass to Reorganized Salant free and clear of all Claims, Interests, and liens
(including, without limitation, all liens securing the Senior Note Claims).
Confirmation of this Plan (subject to the occurrence of the Effective Date)
shall be binding and the Debtor's debts shall, without in any way limiting
Section 12.1 of this Plan, be discharged as provided in section 1141 of the
Bankruptcy Code.
9.2. Transactions on Business Days. If the Effective Date or
any other date on which a transaction may occur under this Plan shall occur on a
day that is not a Business Day, the transactions contemplated by this Plan to
occur on such day shall instead occur on the next succeeding Business Day.
9.3. Restated Certificate of Incorporation; Restated By-Laws.
On the Effective Date or as soon thereafter as is practicable, Reorganized
Salant shall file with the Secretary of State of the State of Delaware, in
accordance with sections 103 and 303 of the Delaware General Corporation Law,
the Reorganized Salant Certificate of Incorporation and such certificate shall
be the certificate of incorporation for Reorganized Salant. On the Effective
Date, the Reorganized Salant By-Laws shall become the by-laws of Reorganized
Salant.
9.4. Implementation. The Debtor shall be authorized to take
all necessary steps, and perform all necessary acts, to consummate the terms and
conditions of this Plan. On or before the Effective Date, the Debtor may file
with the Bankruptcy Court such agreements and other documents as may be
necessary or appropriate to effectuate or further evidence the terms and
conditions of this Plan and the other agreements referred to herein. The Debtor
or Reorganized Salant, as the case may be, may, and shall, execute such
documents and take such other actions as are necessary to effectuate the
transactions provided for in this Plan.
9.5. Issuance of New Securities. The issuance and distribution
of the New Common Stock by Reorganized Salant is hereby authorized and directed
without the need for any further corporate action, under applicable law,
regulation, order, rule or otherwise.
9.6. Cancellation of Existing Securities and Agreements. On
the Effective Date, the Senior Notes, the Old Common Stock, and any rights,
options, warrants, calls, subscriptions, or other similar rights or other
agreements or commitments, contractual or otherwise, obligating the Debtor to
issue, transfer, or sell any shares of Old Common Stock or any other capital
stock of the Debtor shall be canceled. On the Effective Date, the Indenture
shall, except as provided in this Plan, be deemed canceled, terminated and of no
further force or effect. Notwithstanding the foregoing, such cancellation of the
Indenture shall not impair the rights of holders of the Senior Notes to receive
distributions on account of such Senior Notes pursuant to this Plan, or the
right of the Indenture Trustee to receive payment of its fees and expenses
pursuant to Section 7.07 of the Indenture as an Allowed Administrative Expense
prior to any distribution to holders of Class 3 Claims. The Senior Notes shall
not be canceled other than pursuant to this Plan, provided, however, that until
such cancellation, such Senior Notes shall solely serve as evidence of
entitlement of the holder thereof to receive distributions pursuant to this Plan
and shall not otherwise be obligations of the Debtor or Reorganized Salant.
Notwithstanding anything contained in this Plan or the Confirmation Order to the
contrary, the Debtor's obligations to indemnify the Indenture Trustee to the
extent and in the manner set forth in Section 7.07 of the Indenture shall remain
in full force and effect and shall constitute an obligation of Reorganized
Salant.
9.7. Board of Directors of Reorganized Salant. On the
Effective Date, the operation of Reorganized Salant shall become the general
responsibility of its Board, subject to, and in accordance with, the Reorganized
Salant Certificate of Incorporation and the Reorganized Salant By-Laws. The
Reorganized Salant Certificate of Incorporation will provide, among other
things, for a classified board of directors with each class of directors serving
for a three year term. The initial Board of Reorganized Salant shall consist of
the individuals identified on the Exhibit D to this Plan. Such directors shall
be deemed elected or appointed, as the case may be, pursuant to the Confirmation
Order, but shall not take office and shall not be deemed to be elected or
appointed until the occurrence of the Effective Date. Those directors and
officers not continuing in office shall be deemed removed therefrom as of the
Effective Date pursuant to the Confirmation Order.
9.8. Employee Benefit Plans. Subject to the occurrence of the
Effective Date, all employee benefit plans, policies, and programs of the
Debtor, and the Debtor's obligations thereunder, shall survive confirmation of
this Plan, remain unaffected thereby, and not be discharged. Employee benefit
plans, policies, and programs shall include, without limitation, all savings
plans, retirement pension plans, health care plans, disability plans, severance
benefit plans, life, accidental death, and dismemberment insurance plans (to the
extent not executory contracts assumed under this Plan), but shall exclude all
employee equity or equity-based incentive plans.
9.9. The Stock Award and Incentive Plan and Restricted Stock
Plan. (a) The Stock Award and Incentive Plan shall remain in effect after the
Effective Date; provided, that, if the Stock Award and Incentive Plan has not
previously been approved by the stockholders of Salant, the Stock Award and
Incentive Plan and any grants made thereunder shall be subject to the subsequent
approval of the stockholders of Reorganized Salant.
(b) The Restricted Stock Plan shall become effective as of the
Effective Date. Grants under the Restricted Stock Plan shall not be effective
until after the Effective Date. In accordance therewith, on the Effective Date,
Reorganized Salant shall reserve 2% of the New Common Stock on a fully diluted
basis (subject to dilution for shares issued under the Stock Award and Incentive
Plan) for issuance to employees of Reorganized Salant that may be granted under
the Restricted Stock Plan; provided, that, if the PEI Event does not occur on or
prior to the Effective Date then the percentage of New Common Stock that is
reserved for issuance under the Restricted Stock Plan shall be adjusted so that
the amount reserved will equal 2% of the aggregate distribution to be made to
Holders of Senior Note Claims (Class 3) under Section 6.3(a)(ii) of the Plan.
9.10. Survival of Indemnification and Contribution
Obligations. Notwithstanding anything to the contrary contained in this Plan,
the obligations of the Debtor to indemnify and/or provide contribution to its
present or former directors, officers, agents, employees and representatives,
pursuant to the Certificate of Incorporation, By-Laws, applicable statutes or
contractual obligations, in respect of all past, present and future actions,
suits and proceedings against any of such directors, officers, agents, employees
and representatives, based upon any act or omission related to service with, for
or on behalf of the Debtor, shall not be discharged or impaired by confirmation
or consummation of this Plan but shall survive unaffected by the reorganization
contemplated by this Plan and shall be treated as, and deemed to be, Allowed
General Unsecured Claims that are Unimpaired pursuant to Section 6.5 of this
Plan.
9.11. Listing of New Common Stock; Registration of Securities.
Reorganized Salant shall use its reasonable best efforts to (i) maintain its
status as a reporting company under the Exchange Act and cause, on the Effective
Date, the shares of New Common Stock issued hereunder to be listed on the NYSE,
or, if Reorganized Salant is unable to have the shares of New Common Stock
listed on the NYSE, on another national securities exchange, or, as to the New
Common Stock, quoted in the national market system of the National Association
of Securities Dealers' Automated Quotation System, (ii) in accordance with the
terms of the Registration Rights Agreement, file prior to the Effective Date and
have declared effective as soon as possible thereafter a registration statement
or registration statements under the Securities Act, for the offering on a
continuous or delayed basis in the future of the shares of New Common Stock (the
"Shelf Registration"), (iii) cause to be filed with the Commission on the
Effective Date an appropriate registration statement under the Exchange Act with
respect to the New Common Stock, (iv) keep the Shelf Registration effective for
a three-year period, and (v) supplement or make amendments to the Shelf
Registration, if required under the Securities Act or by the rules or
regulations promulgated thereunder or in accordance with the terms of the
Registration Rights Agreement, and have such supplements and amendments declared
effective as soon as practicable after filing. In addition, on the Effective
Date, Reorganized Salant shall enter into the Registration Rights Agreement in
the form of Exhibit A hereto.
9.12. Retention and Enforcement of Causes of Action. Pursuant
to section 1123(b)(3) of the Bankruptcy Code, Reorganized Salant shall retain
and shall have the exclusive right, in its discretion, to enforce against any
Entity any and all Causes of Action of the Debtor, including all Causes of
Action of a trustee and debtor-in-possession under the Bankruptcy Code, other
than those released or compromised as part of, or under, this Plan.
9.13. Management Employment Agreements. The Management
Employment Agreements shall become effective as of the Effective Date. Such
agreements supersede all employment, severance, retention, bonus and other
agreements with respect to Messrs. Setola and Kahn in effect prior to the
Effective Date. On the Effective Date, all Claims and Administrative Expenses of
Messrs. Setola and Kahn against the Debtor under any employment, severance,
retention, bonus and other agreements, if any, between such individual and the
Debtor will be governed by, and completely satisfied in accordance with, the
terms and conditions of each of their Management Employment Agreements.
ARTICLE TEN
PROVISIONS COVERING DISTRIBUTIONS
10.1. Timing of Distributions Under this Plan. Except as
otherwise provided in this Plan and without in any way limiting Sections 9.6,
10.6, 10.11, 11.3 and 12.1 of this Plan, payments and distributions in respect
of Allowed Claims and Allowed Interests which are required by this Plan to be
made on the Effective Date shall be made by the Debtor, Reorganized Salant or
its designee or, in the case of the distributions to the Noteholders, by
Reorganized Salant or its designee (with the assistance of the Indenture
Trustee, if necessary) on, or as soon as practicable following, the Effective
Date. Distributions of New Common Stock to the Noteholders shall be made at the
addresses of the registered Holders of the Senior Notes last provided in writing
to the Indenture Trustee.
10.2. Allocation of Consideration. The aggregate consideration
to be distributed to the Holders of Allowed Claims in each Class under this Plan
shall be treated as first satisfying an amount equal to the stated principal
amount of the Allowed Claim for such Holders and any remaining consideration as
satisfying accrued, but unpaid, interest, if any.
10.3. Cash Payments. Cash payments made pursuant to this Plan
will be in U.S. dollars. Cash payments of $1,000,000 or more to be made pursuant
to this Plan will, to the extent requested in writing no later than ten days
after the Confirmation Date, be made by wire transfer from a domestic bank. Cash
payments to foreign creditors may be made, at the option of the Debtor or
Reorganized Salant, in such funds and by such means as are necessary or
customary in a particular foreign jurisdiction. Cash payments made pursuant to
this Plan in the form of checks issued by Reorganized Salant shall be null and
void if not cashed within 120 days of the date of the issuance thereof. Requests
for reissuance of any check shall be made directly to Reorganized Salant or its
designee as set forth in Section 10.13 below.
10.4. Payment of Statutory Fees. All fees payable to the
United States Trustee pursuant to 28 U.S.C. ss. 1930 as determined by the
Bankruptcy Court at the Confirmation Hearing shall be paid by the Debtor on or
before the Effective Date.
10.5. No Interest. Except with respect to holders of
Unimpaired Claims entitled to interest under applicable non-bankruptcy law or as
expressly provided herein, no Holder of an Allowed Claim or Interest shall
receive interest on the distribution to which such Holder is entitled hereunder,
regardless of whether such distribution is made on the Effective Date or
thereafter.
10.6. Fractional Securities. Notwithstanding any other
provision of this Plan, only whole numbers of shares of New Common Stock will be
issued or transferred, as the case may be, pursuant to this Plan. Reorganized
Salant will not distribute any fractional shares of New Common Stock. For
purposes of distribution, fractional shares of New Common Stock shall be rounded
up to the nearest share of New Common Stock.
10.7. Withholding of Taxes. Reorganized Salant shall withhold
from any property distributed under this Plan any property which must be
withheld for taxes payable by the Entity entitled to such property to the extent
required by applicable law. As a condition to making any distribution under this
Plan, Reorganized Salant or its designee, as the case may be, may request that
the Holder of any Allowed Claim provide such Holder's taxpayer identification
number and such other certification as may be deemed necessary to comply with
applicable tax reporting and withholding laws.
10.8. Distribution Record Date. As of the close of business on
the Distribution Record Date, the transfer registers for the Senior Notes and
Old Common Stock maintained by the Debtor, or its respective agents, will be
closed. Reorganized Salant, its designees and the Indenture Trustee will have no
obligation to recognize the transfer of any Senior Notes or Old Common Stock
occurring after the Distribution Record Date and will be entitled for all
purposes relating to this Plan to recognize and deal only with those Holders of
record as of the close of business on the Distribution Record Date.
10.9. Persons Deemed Holders of Registered Securities. Except
as otherwise provided herein and subject to Sections 9.6 and 10.10, the Debtor,
Reorganized Salant or its designee or, in the case of the Noteholders, the
Indenture Trustee, shall be entitled to treat the record holder of a registered
security as the Holder of the Claim or Interest in respect thereof for purposes
of all notices, payments or other distributions under this Plan unless the
Debtor, Reorganized Salant, its designee or the Indenture Trustee, as the case
may be, shall have received written notice specifying the name and address of
any new Holder thereof (and the nature and amount of the interest of such new
Holder) at least ten (10) Business Days prior to the date of such notice,
payment or other distribution. In the event of any dispute regarding the
identity of any party entitled to any payment or distribution in respect of any
Claim or Interest under this Plan, no payments or distributions will be made in
respect of such Claim or Interest until the Bankruptcy Court resolves that
dispute pursuant to a Final Order.
10.10. Surrender of Existing Securities. As a condition to
receiving any distribution under this Plan, each Holder of a Senior Note, Old
Common Stock Interest, or other instrument evidencing a Claim or equity Interest
must surrender such Senior Note, Old Common Stock Interest, or other instrument
to Reorganized Salant or its designee. Reorganized Salant appoints the Indenture
Trustee under the Indenture as its designee to receive the Senior Notes. Any
Holder of a Claim or Interest that fails to (a) surrender such instrument or (b)
execute and deliver an affidavit of loss and/or indemnity reasonably
satisfactory to Reorganized Salant before the later to occur of (i) the second
anniversary of the Effective Date and (ii) six months following the date such
Holder's Claim becomes an Allowed Claim, shall be deemed to have forfeited all
rights, Claims, and/or Interests and may not participate in any distribution
under this Plan.
10.11. Special Procedures for Lost, Stolen, Mutilated or
Destroyed Instruments. In addition to any requirements under the Debtor's
Certificate of Incorporation or By-laws, any Holder of a Claim or an Interest
evidenced by an Instrument that has been lost, stolen, mutilated or destroyed
shall be required to, in lieu of surrendering such Instrument, deliver to
Reorganized Salant or its designee: (a) evidence satisfactory to Reorganized
Salant or its designee, as the case may be, of the loss, theft, mutilation or
destruction; and (b) such security or indemnity as may be required by
Reorganized Salant or its designee, as the case may be, to hold Reorganized
Salant and/or its designee, as applicable, harmless from any damages,
liabilities or costs incurred in treating such individual as a Holder of an
Instrument. Upon compliance with this Section 10.12, the Holder of a Claim or
Interest evidenced by any such lost, stolen, mutilated or destroyed Instrument
will, for all purposes under this Plan, be deemed to have surrendered such
Instrument.
10.12. Undeliverable or Unclaimed Distributions. Any Entity
that is entitled to receive a Cash distribution under this Plan but that fails
to cash a check within 120 days of its issuance shall be entitled to receive a
reissued check from Reorganized Salant for the amount of the original check,
without any interest, if such Entity requests Reorganized Salant or its designee
to reissue such check and provides Reorganized Salant or its designee, as the
case may be, with such documentation as Reorganized Salant or its designee
requests to verify that such Entity is entitled to such check, prior to the
second anniversary of the Effective Date. If an Entity fails to cash a check
within 120 days of its issuance and fails to request reissuance of such check
prior to the later to occur of (i) the second anniversary of the Effective Date
and (ii) six months following the date such Holder's Claim becomes an Allowed
Claim, such Entity shall not be entitled to receive any distribution under this
Plan. If the distribution to any Holder of an Allowed Claim or Allowed Interest
is returned to Reorganized Salant or its designee as undeliverable, no further
distributions will be made to such Holder unless and until Reorganized Salant or
its designee is notified in writing of such Holder's then-current address.
Undeliverable distributions will remain in the possession of Reorganized Salant
or its designee pursuant to Section 10.1 of this Plan until such time as a
distribution becomes deliverable.
All claims for undeliverable distributions must be made on or
before the later to occur of (i) the second anniversary of the Effective Date
and (ii) six months following the date such Holder's Claim or Interest becomes
an Allowed Claim or Allowed Interest. After such date, all unclaimed property
shall revert to Reorganized Salant and the claim of any Holder or successor to
such Holder with respect to such property shall be discharged and forever barred
notwithstanding any federal or state escheat laws to the contrary.
ARTICLE ELEVEN
PROCEDURES FOR RESOLVING DISPUTED CLAIMS
11.1. Objections to Claims. Only the Debtor and Reorganized
Salant shall have the authority to file objections to Claims after the Effective
Date. Subject to an order of the Bankruptcy Court providing otherwise,
Reorganized Salant may object to a Claim by filing an objection with the
Bankruptcy Court and serving such objection upon the Holder of such Claim not
later than one hundred and twenty (120) days after the Effective Date or one
hundred and twenty (120) days after the filing of the proof of such Claim,
whichever is later, or such other date determined by the Bankruptcy Court upon
motion to the Bankruptcy Court without further notice or hearing.
Notwithstanding the foregoing, neither the Debtor nor Reorganized Salant shall
object to the allowance of the Senior Note Claims as described in Section 6.3(c)
of this Plan.
11.2. Procedure. Unless otherwise ordered by the Bankruptcy
Court or agreed to by written stipulation of the Debtor or Reorganized Salant,
or until an objection thereto by the Debtor or by Reorganized Salant is
withdrawn, the Debtor or Reorganized Salant shall litigate the merits of each
Disputed Claim until determined by a Final Order; provided, however, that, (a)
prior to the Effective Date, the Debtor, subject to the approval of the
Bankruptcy Court, and (b) after the Effective Date, Reorganized Salant, subject
to the approval of the Bankruptcy Court, may compromise and settle any objection
to any Claim.
11.3. Payments and Distributions With Respect to Disputed
Claims. No payments or distributions shall be made in respect of a Disputed
Claim until such Disputed Claim becomes an Allowed Claim.
11.4. Timing of Payments and Distributions With Respect to
Disputed Claims. Subject to the provisions of this Plan, payments and
distributions with respect to each Disputed Claim that becomes an Allowed Claim
that would have otherwise been made had the Disputed Claim been an Allowed Claim
on the Effective Date shall be made within thirty (30) days after the date that
such Disputed Claim becomes an Allowed Claim. Holders of Disputed Claims that
become Allowed Claims shall be bound, obligated and governed in all respects by
the provisions of this Plan.
11.5. Individual Holder Proofs of Interest. Individual Holders
of Allowed Old Common Stock Interests are not required to file proofs of such
Interests unless they disagree with the number of shares set forth on the
Debtor's stock register.
ARTICLE TWELVE
DISCHARGE, INJUNCTION, RELEASES AND SETTLEMENTS OF CLAIMS
12.1. Discharge of All Claims and Interests and Releases.
(a) Except as otherwise specifically provided by this Plan,
the confirmation of this Plan (subject to the occurrence of the Effective Date)
shall discharge and release the Debtor, Reorganized Salant, their successors and
assigns and their respective assets and properties from any debt, charge, Cause
of Action, liability, encumbrances, security interest, Claim, Interest, or other
cause of action of any kind, nature or description (including, but not limited
to, any claim of successor liability) that arose before the Confirmation Date,
and any debt of the kind specified in sections 502(g), 502(h) or 502(i) of the
Bankruptcy Code, whether or not a proof of Claim is filed or is deemed filed,
whether or not such Claim is Allowed, and whether or not the Holder of such
Claim has accepted this Plan.
(b) Furthermore, but in no way limiting the generality of the
foregoing, except as otherwise specifically provided by this Plan, the
distributions and rights that are provided in this Plan to Class 3, Class 5 and
Class 7 shall be in complete satisfaction, discharge and release, effective as
of the Effective Date of (i) all Claims and Causes of Action against,
liabilities of, liens on, charges, encumbrances, security interests, obligations
of and Interests in the Debtor, Reorganized Salant, or the direct or indirect
assets and properties of the Debtor or Reorganized Salant, whether known or
unknown, and (ii) all Causes of Action, whether known or unknown, either
directly or derivatively through the Debtor or Reorganized Salant, against
successors and assigns of the Debtor, present and former Affiliates of the
Debtor, and its partners, directors, officers, agents, attorneys, advisors,
financial advisors, investment bankers, independent accountants, employees of
the Debtor and its Affiliates and any Affiliate of any of the foregoing, and
Magten, and its attorneys, advisors, and financial advisors, based on the same
subject matter as any Claim or Interest, or based on any act or omission,
transaction or other activity or security, instrument or other agreement of any
kind or nature occurring, arising or existing prior to the Effective Date that
was or could have been the subject of any Claim or Interest, in each case
regardless of whether a proof of Claim or Interest was filed, whether or not
Allowed and whether or not the Holder of the Claim or Interest has voted to
accept or reject this Plan.
(c) In addition, but in no way limiting the generality of the
foregoing, except as otherwise specifically provided by this Plan, any Holder of
a Claim in Class 3, Class 5 or Class 7 accepting any distribution pursuant to
this Plan shall be presumed conclusively to have released the Debtor,
Reorganized Salant, successors and assigns of the Debtor, the present and former
Affiliates of the Debtor, directors, officers, agents, attorneys, independent
accountants, advisors, financial advisors, investment bankers and employees of
the Debtor and its Affiliates, and any Entity claimed to be liable derivatively
through any of the foregoing, from any Cause of Action based on the same subject
matter as the Claim on which the distribution is received. The release described
in the preceding sentence shall be enforceable as a matter of contract against
any Entity that accepts any distribution pursuant to this Plan.
(d) Without in any way limiting Section 12.2 of this Plan, all
injunctions or stays entered in the Chapter 11 Case and existing immediately
prior to the Confirmation Date shall remain in full force and effect until the
Effective Date.
12.2. Injunction. The satisfaction, release and discharge
pursuant to Sections 12.1, 12.3 and 12.4 of this Plan, shall act as an
injunction against any Entity commencing or continuing any action, employment of
process, or act to collect, offset or recover any Claim or Cause of Action
satisfied, released or discharged under this Plan. The injunction, discharge and
releases described in Sections 12.1, 12.2, 12.3 and 12.4 of this Plan shall
apply regardless of whether or not a proof of Claim or Interest based on any
Claim, debt, liability or Interests is filed or whether or not a Claim or
Interest based on such Claim, debt, liability or Interest is Allowed, or whether
or not such Entity voted to accept or reject this Plan.
12.3. Exculpation. In consideration of the distributions under
this Plan, upon the Effective Date, each Holder of a Claim or Interest will be
deemed to have released the Debtor and its directors, officers, agents,
attorneys, independent accountants, advisors, financial advisors, investment
bankers and employees (as applicable) employed by the Debtor from and after the
Filing Date and Magten and its attorneys, advisors, and financial advisors
employed by Magten from and after the Filing Date, from any and all Causes of
Action (other than the right to enforce the Debtor's obligations under this Plan
and the right to pursue a Claim based on any willful misconduct) arising out of
actions or omissions during the administration of the Debtor's estate.
12.4. Guaranties and Claims of Subordination.
(a) Guaranties. The classification and the manner of
satisfying all Claims under this Plan takes into consideration the possible
existence of any alleged guaranties by the Debtor of obligations of any Entity
or Entities, and that the Debtor may be a joint obligor with another Entity or
Entities with respect to the same obligation. All Claims against the Debtor
based upon any such guaranties shall be satisfied, discharged and released in
the manner provided in this Plan and the Holders of Claims shall be entitled to
only one distribution with respect to any given obligation of the Debtor.
(b) Claims of Subordination. (i) Except as expressly provided
for in this Plan, to the fullest extent permitted by applicable law, all Claims
against and Interests in the Debtor, and all rights and Claims between or among
Holders of Claims and Interests relating in any manner whatsoever to Claims
against or Interests in the Debtor, based on any contractual, legal or equitable
subordination rights, shall be terminated on the Effective Date and discharged
in the manner provided in this Plan, and all such Claims, Interests and rights
so based and all such contractual, legal and equitable subordination rights to
which any Entity may be entitled shall be irrevocably waived by the acceptance
by such Entity (or, unless the Confirmation Order provides otherwise, the Class
of which such Entity is a member) of this Plan or of any distribution pursuant
to this Plan. Except as otherwise provided in this Plan and to the fullest
extent permitted by applicable law, the rights afforded and the distributions
that are made in respect of any Claims or Interests hereunder shall not be
subject to levy, garnishment, attachment or like legal process by any Holder of
a Claim or Interest by reason of any contractual, legal or equitable
subordination rights, so that, notwithstanding any such contractual, legal or
equitable subordination, each Holder of a Claim or Interest shall have and
receive the benefit of the rights and distributions set forth in this Plan.
(ii) Pursuant to Bankruptcy Rule 9019 and any applicable state law and as
consideration for the distributions and other benefits provided under this Plan,
the provisions of this Section 12.4(b) shall constitute a good faith compromise
and settlement of any Causes of Action relating to the matters described in this
Section 12.4(b) which could be brought by any Holder of a Claim or Interest
against or involving another Holder of a Claim or Interest, which compromise and
settlement is in the best interests of Holders of Claims and Interests and is
fair, equitable and reasonable. This settlement shall be approved by the
Bankruptcy Court as a settlement of all such Causes of Action. Entry of the
Confirmation Order shall constitute the Bankruptcy Court's approval of this
settlement pursuant to Bankruptcy Rule 9019 and its finding that this is a good
faith settlement pursuant to any applicable state law, including, without
limitation, the laws of the States of New York and Delaware, given and made
after due notice and opportunity for hearing, and shall bar any such Cause of
Action by any Holder of a Claim or Interest against or involving another Holder
of a Claim or Interest.
ARTICLE THIRTEEN
CONDITIONS PRECEDENT TO CONFIRMATION
ORDER AND EFFECTIVE DATE
13.1. Conditions Precedent to Entry of the Confirmation Order.
The following conditions must occur and be satisfied or waived in accordance
with Section 13.3 of this Plan on or before the Confirmation Date for this Plan
to be confirmed on the Confirmation Date.
(a) The Confirmation Order is in form and substance reasonably
acceptable to the Debtor, Magten and Apollo.
13.2. Conditions Precedent to the Effective Date. The
following conditions must occur and be satisfied or waived by the Debtor on or
before the Effective Date for this Plan to become effective on the Effective
Date.
(a) Final Order. The Confirmation Order shall have become a
Final Order;
(b) Working Capital Facility. Reorganized Salant shall have
executed an agreement for a working capital facility on terms reasonably
satisfactory to Apollo and Magten;
(c) Certificate of Incorporation. The Reorganized Salant
Certificate of Incorporation shall have been filed with the Secretary of State
of the State of Delaware, in accordance with sections 103 and 303 of the
Delaware General Corporation Law;
(d) PBGC Agreement. The PBGC and Reorganized Salant shall have
entered into the PBGC Agreement and the PBGC Agreement shall have been approved
by the Bankruptcy Court and consummated; and
(e) Authorizations, Consents and Approvals. All
authorizations, consents and regulatory approvals required, if any, in
connection with this Plan's effectiveness shall have been obtained.
13.3. Waiver of Conditions. With the prior written consent
(which consent shall not be unreasonably withheld) of Magten and Apollo, but not
otherwise, the Debtor may waive one or more of the conditions precedent to the
confirmation or effectiveness of this Plan set forth in Sections 13.1 and 13.2
of this Plan.
13.4. Effect of Failure of Conditions. If all the conditions
to effectiveness and the occurrence of the Effective Date have not been
satisfied or duly waived on or before the first Business Day that is more than
179 days after the date the Court enters an order confirming this Plan, or by
such later date as is proposed and approved, after notice and a hearing, by the
Court, then upon motion by the Debtor or any party in interest made before the
time that all of the conditions have been satisfied or duly waived, the order
confirming this Plan may be vacated by the Court; provided, however, that
notwithstanding the filing of such a motion, the order confirming this Plan
shall not be vacated if each of the conditions to consummation is either
satisfied or duly waived before the Court enters an order granting the relief
requested in such motion. If the order confirming this Plan is vacated pursuant
to this section, this Plan shall be null and void in all respects, and nothing
contained in this Plan shall (a) constitute a waiver or release of any claims
against or equity interests in the Debtor or (b) prejudice in any manner the
rights of the Holder of any claim or equity interest in the Debtor.
ARTICLE FOURTEEN
MISCELLANEOUS PROVISIONS
14.1. Bankruptcy Court to Retain Jurisdiction. The business
and assets of the Debtor shall remain subject to the jurisdiction of the
Bankruptcy Court until the Effective Date. From and after the Effective Date,
the Bankruptcy Court shall retain and have exclusive jurisdiction of all matters
arising out of, and related to the Chapter 11 Case or this Plan pursuant to, and
for purposes of, subsection 105(a) and section 1142 of the Bankruptcy Code and
for, among other things, the following purposes: (a) to determine any and all
disputes relating to Claims and Interests and the allowance and amount thereof;
(b) to determine any and all disputes among creditors with respect to their
Claims; (c) to consider and allow any and all applications for compensation for
professional services rendered and disbursements incurred in connection
therewith; (d) to determine any and all applications, motions, adversary
proceedings and contested or litigated matters pending on the Effective Date and
arising in or related to the Chapter 11 Case or this Plan; (e) to remedy any
defect or omission or reconcile any inconsistency in the Confirmation Order; (f)
to enforce the provisions of this Plan relating to the distributions to be made
hereunder; (g) to issue such orders, consistent with section 1142 of the
Bankruptcy Code, as may be necessary to effectuate the consummation and full and
complete implementation of this Plan; (h) to enforce and interpret any
provisions of this Plan; (i) to determine such other matters as may be set forth
in the Confirmation Order or that may arise in connection with the
implementation of this Plan; (j) to determine the amounts allowable as
compensation or reimbursement of expenses pursuant to section 503(b) of the
Bankruptcy Code; (k) to hear and determine disputes arising in connection with
the interpretation, implementation, or enforcement of this Plan and the Related
Documents; (l) to hear and determine any issue for which this Plan or any
Related Document requires a Final Order of the Bankruptcy Court; (m) to hear and
determine matters concerning state, local, and federal taxes in accordance with
sections 346, 505, and 1146 of the Bankruptcy Code; (n) to hear and determine
any issue related to the composition of the initial Board of Reorganized Salant;
(o) to hear any other matter not inconsistent with the Bankruptcy Code; and (p)
to enter a Final Decree closing the Chapter 11 Case.
14.2. Binding Effect of this Plan. The provisions of this Plan
shall be binding upon and inure to the benefit of the Debtor, Reorganized
Salant, Magten, Apollo, any Holder of a Claim or Interest, their respective
predecessors, successors, assigns, agents, officers, managers and directors and
any other Entity affected by this Plan.
14.3. Nonvoting Stock. In accordance with section 1123(a)(6)
of the Bankruptcy Code, the Reorganized Salant Certificate of Incorporation
shall contain a provision prohibiting the issuance of nonvoting equity
securities by Reorganized Salant for a period of one year following the
Effective Date.
14.4. Authorization of Corporate Action. The entry of the
Confirmation Order shall constitute a direction and authorization to and of the
Debtor and Reorganized Salant to take or cause to be taken any action necessary
or appropriate to consummate the provisions of this Plan and the Related
Documents prior to and through the Effective Date (including, without
limitation, the filing of the Reorganized Salant Certificate of Incorporation)
and all such actions taken or caused to be taken shall be deemed to have been
authorized and approved by the Bankruptcy Code.
14.5. Retiree Benefits. On and after the Effective Date, to
the extent required by section 1129(a)(13) of the Bankruptcy Code, Reorganized
Salant shall continue to pay all retiree benefits, if any, as the term "retiree
benefits" is defined in section 1114(a) of the Bankruptcy Code, maintained or
established by the Debtor prior to the Confirmation Date.
14.6. Withdrawal of this Plan. The Debtor reserves the right,
at any time prior to the entry of the Confirmation Order, to revoke or withdraw
this Plan. If the Debtor revokes or withdraws this Plan, if the Confirmation
Date does not occur, or if the Effective Date does not occur then (i) this Plan
will be deemed null and void and (ii) this Plan shall be of no effect and shall
be deemed vacated, and the Chapter 11 Case shall continue as if this Plan had
never been filed and, in such event, the rights of any Holder of a Claim or
Interest shall not be affected nor shall such Holder be bound by, for purposes
of illustration only, and not limitation, (a) this Plan, (b) any statement,
admission, commitment, valuation or representation contained in this Plan, the
Disclosure Statement, or the Related Documents or (c) the classification and
proposed treatment (including any allowance) of any Claim in this Plan.
14.7. Captions. Article and Section captions used in this Plan are for
convenience only and will not affect the construction of this Plan.
14.8. Method of Notice. All notices required to be given under
this Plan, if any, shall be in writing and shall be sent by facsimile
transmission (with hard copy to follow), by first class mail, postage prepaid,
by hand delivery or by overnight courier to:
If to the Debtor to:
Salant Corporation
1114 Avenue of the Americas
New York, New York 10036
Attn: Todd Kahn, Esq.
Fax No.: (212) 354-3614
with copies to:
Fried, Frank, Harris, Shriver & Jacobson
(A Professional Partnership Including Professional Corporations)
One New York Plaza
New York, New York 10004
Attn: Brad Eric Scheler, Esq.
Lawrence A. First, Esq.
Fax No.: (212) 859-4000
Hebb & Gitlin, a Professional Corporation
(Special Counsel to Magten Asset Management Corp.)
One State Street
Hartford, Connecticut 06103-3178
Attn: Evan D. Flaschen, Esq.
Fax No.: (860) 240-2800
Apollo Apparel Partners, L.P.
c/o Apollo Management L.P.
1301 Avenue of the Americas
38th Floor
New York, New York 10019
Attn: Robert Katz
Fax No.: (212) 261-4102
Any of the above may, from time to time, change its address for future notices
and other communications hereunder by filing a notice of the change of address
with the Bankruptcy Court. Any and all notices given under this Plan shall be
effective when received.
14.9. Dissolution of Committees. On the Effective Date, any
committees appointed in the Chapter 11 Case pursuant to section 1102 of the
Bankruptcy Code shall cease to exist and its members and employees or agents
(including, without limitation, attorneys, investment bankers, financial
advisors, accountants and other professionals) shall be released and discharged
from further duties, responsibilities and obligations relating to and arising
from and in connection with this Chapter 11 Case.
14.10. Discharge of Indenture Trustee. The Indenture Trustee
shall certify to the Debtor on or before the Effective Date the names and
addresses of all holders of Senior Notes, and the face amount of Senior Notes
held by each of them as of the Distribution Record Date. The Indenture Trustee
shall not serve as a Disbursing Agent and any such Disbursing Agent shall be
required to comply with the terms of this Plan. Subsequent to the performance of
the Indenture Trustee or agents require under the provisions of this Plan and
Confirmation Order and under the terms of the Indenture, the Indenture Trustee
and agents and its successors and assigns shall be relieved of all obligations
associated with the Indenture.
14.11 Amendments and Modifications to Plan. This Plan may be
altered, amended or modified by the Debtor, after consultation with Magten,
before or after the Confirmation Date, as provided in section 1127 of the
Bankruptcy Code.
14.12. Section 1125(e) of the Bankruptcy Code. (i) The Debtor
has, and upon confirmation of this Plan shall be deemed to have, solicited
acceptances of this Plan in good faith and in compliance with the applicable
provisions of the Bankruptcy Code and (ii) the Debtor, Magten, Apollo, and each
of the members of the Creditors' Committee, if any (and each of their respective
affiliates, agents, directors, officers, employees, advisors, and attorneys)
have participated in good faith and in compliance with the applicable provisions
of the Bankruptcy Code in the offer, issuance, sale, and purchase of the
securities offered and sold under this Plan, and therefore are not, and on
account of such offer, issuance, sale, solicitation, and/or purchase will not
be, liable at any time for the violation of any applicable law, rule, or
regulation governing the
solicitation of acceptances or rejections of this Plan or the
offer, issuance, sale, or purchase of the securities offered and sold under this
Plan.
Dated: New York, New York
February 3, 1999
Respectfully submitted,
SALANT CORPORATION
Debtor and Debtor-In-Possession
By:/s/ Todd Kahn
Chief Operating Officer and General Counsel
FRIED, FRANK, HARRIS, SHRIVER &
JACOBSON
(A Partnership Including
Professional Corporations)
Attorneys for the Debtor and
Debtor-in-Possession
One New York Plaza
New York, New York 10004
(212) 859-8000
By:/s/ Brad Eric Scheler
Brad Eric Scheler, Esq.
<PAGE>
EXHIBIT A
PEI LICENSES
(i) Agreement, by and between Salant and PEI, dated as of October 1, 1980, as
amended.
(ii) Agreement, by and between Salant and PEI, dated as of March 11, 1982, as
amended.
(iii) Agreement, by and between Salant and PEI, dated as of March 1, 1982, as
amended.
(iv) Agreement, by and between Salant and PEI, dated as of January 1, 1987, as
amended.
(v) Agreement, by and between Salant and PEI, dated as of March 11, 1982, as
amended.
(vi) Letter agreement, by and between Salant and PEI, dated July 21, 1986.
(vii) Agreement, by and between Salant and PEI, dated as of January 1, 1997.
<PAGE>
EXHIBIT B
<PAGE>
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of ____ __, 199[ ], by and among
SALANT CORPORATION, a Delaware corporation (the "Company"), and the other
parties listed on the signature pages hereto (the "Initial Holders").
This Agreement is being entered into in connection with the restructuring
of the Company pursuant to the terms and conditions of the Chapter 11 Plan of
Reorganization for Salant Corporation, dated December __, 1998 (the "Plan"). The
Plan provides for the issuance of Common Stock (as hereinafter defined).
The parties hereto desire to provide certain registration rights to the
Initial Holders with respect to the shares of Common Stock.
Accordingly, the parties hereto agree as follows:
1. Definitions
As used herein, unless the context otherwise requires, the following terms
have the following respective meanings:
"Account" means, with respect to a Holder or Other Holder who has been
engaged to provide investment management services, each Person (including,
without limitation, any other Holder or Other Holder) on behalf of whom such
Holder or Other Holder provides such services.
"Affiliate" means, at any time, a Person (other than a Subsidiary or a
Holder): (a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the Company; or
(b) that beneficially owns (calculated in accordance with Rule 13d-3 under the
Exchange Act) or holds ten percent (10%) or more of any class of the Voting
Stock of the Company. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" means any shares of Common Stock, par value $1.00 per share,
of the Company now or hereafter authorized to be issued, and any and all
securities of any kind whatsoever of the Company which may be issued on or after
the date hereof in respect of, or in exchange for, shares of Common Stock
pursuant to a merger, consolidation, stock split, stock dividend,
recapitalization of the Company or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
"Holder" means a registered holder of Registrable Common Stock.
"Initial Holders" has the meaning assigned to it in the preamble hereof.
"Material Disclosure Event" means any pending or imminent event relating to
the Company which, based on (i) the good faith, reasonable opinion of the Board
of Directors of the Company and (ii) the advice of competent outside counsel to
the Board of Directors of the Company, (x) requires disclosure of material,
non-public information relating to such event in the Shelf Registration so that
such registration statement would not be materially misleading, (y) is otherwise
not required to be publicly disclosed at that time (e.g., on Form 8-K or Form
10-Q) under applicable federal or state securities laws, and (z) if publicly
disclosed at the time of such event, would have a material adverse effect on the
business and financial condition of the Company.
"Other Holder" means any person or entity to whom the Company has granted
or does grant registration rights.
"Other Holder Registrable Common Stock" means the shares of Common Stock
held by any Other Holder.
"Person" means a corporation, an association, a partnership, an
organization, a business, a trust, an individual, or any other entity or
organization, including a government or political subdivision or an
instrumentality or agency thereof.
"Registrable Common Stock" means (i) the shares of Common Stock issued to
an Initial Holder pursuant to the Plan or (ii) any Common Stock issued with
respect to the Common Stock referred to in clause (i) hereof by way of a stock
dividend, stock split or reverse stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or otherwise. As to any
particular Registrable Common Stock, such securities shall cease to be
Registrable Common Stock when (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (iii) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require the registration under the
Securities Act, or (iv) they shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to the registration and
disposition of the Registrable Common Stock pursuant to Section 2 hereof,
including, without limitation, all registration, filing and applicable national
securities exchange fees; all fees and expenses of complying with state
securities or blue sky laws (including fees and disbursements of counsel to the
underwriters or the Holders in connection with 'blue sky" qualification of the
Registrable Common Stock and determination of their eligibility for investment
under the laws of the various jurisdictions); all duplicating and printing
expenses; all messenger and delivery expenses; the fees and disbursements of
counsel for the Company and of its independent public accountants, including the
expenses of "cold comfort" letters or, in connection with a registration
pursuant to Section 2.3 only, any special audits required by, or incident to,
such registration; all fees and disbursements of underwriters (other than
underwriting discounts and commissions); all transfer taxes; and the reasonable
fees and expenses of one counsel to the Holders; provided, however, that
Registration Expenses shall exclude and the Holders shall pay underwriting
discounts and commissions in respect of the Registrable Common Stock being
registered.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar federal statute.
"Subsidiary" means any corporation in which the Company or one or more
Subsidiaries owns sufficient voting securities to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such corporation.
"Voting Stock" means, with respect to any corporation, any shares of stock
of such corporation whose holders are entitled under ordinary circumstances to
vote for the election of directors of such corporation (irrespective of whether,
at the time, stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
2. Shelf Registration; Registration Under Securities Act, Etc.
2.1 Shelf Registration
Within 35 days following the date hereof, the Company shall file with the
Commission, at the Company's expense, a "shelf" registration statement on any
appropriate form pursuant to Rule 415 under the Securities Act covering all
Registrable Common Stock (the "Shelf Registration"). The Company shall use its
reasonable commercial efforts to have the Shelf Registration declared effective
as promptly as practicable after such filing (but not later than 100 days after
the date hereof) and to keep the Shelf Registration continuously effective three
years following the date on which the Shelf Registration is declared effective
(subject to Suspension Periods (as hereinafter defined) and extensions
coincident with the length of such Suspension Periods) (the "Shelf Registration
Period"); provided, however, that if a registration statement on Form S-3 (or
such successor form as is prescribed by the Commission) is available to the
Company on the third anniversary of the date on which the Shelf Registration is
declared effective, the Company shall use its reasonable commercial efforts to
keep the Shelf Registration continuously effective for two additional years. The
Company shall, to the extent necessary, supplement or amend the Shelf
Registration (in each case, at the Company's expense) to keep the Shelf
Registration effective during the Shelf Registration Period. The Company further
agrees to supplement or amend any Shelf Registration, as required by the
registration form utilized by the Company, by the instructions applicable to
such registration form or by the Securities Act or the rules and regulations
thereunder or as reasonably requested by any Holder. The Company shall furnish
to the Holders copies, in substantially the form proposed to be used and/or
filed, of the registration statement and any such supplement or amendment at
least 30 days prior to its being used and/or filed with the Commission. The
Company hereby consents to the use (in compliance with applicable law) of the
prospectus or any amendment or supplement thereto by each of the selling Holders
of Registrable Common Stock in connection with the offering and sale of the
Registrable Common Stock covered by the prospectus or any amendment or
supplement thereto. The Company shall pay all Registration Expenses incurred in
connection with the Shelf Registration, whether or not it becomes effective. In
no event shall the Shelf Registration include securities other than Registrable
Common Stock, unless the Holders of all Registrable Common Stock consent to such
inclusion. Nothing herein shall obligate the Company to incur or pay for fees
and disbursements of underwriters in connection with a distribution under the
Shelf Registration.
For purposes hereof, "Suspension Period' shall mean a period of time
commencing on the date on which the Company provides notice that the Shelf
Registration is no longer effective, that the prospectus included in the Shelf
Registration no longer complies with the requirements therefor prescribed by
Section 10(a) of the Securities Act, or there is a Material Disclosure Event and
the Board of Directors of the Company has elected (in its good faith reasonable
judgment) to require the suspension of the sale by the Holder of Registrable
Common Stock pursuant to the Shelf Registration, and shall end on the date when
the Holder either receives copies of the supplemented or amended prospectus
contemplated by Section 2.4(g) or such earlier time that the Holder is otherwise
advised in writing by the Company that use of the prospectus may be resumed. The
Holder agrees that it will not sell any Registrable Common Stock pursuant to the
Shelf Registration during any Suspension Period. The Company agrees (i) that the
Company will use its best efforts to ensure that there is not more than one
Suspension Period in any 12-month period, (ii) to cause each Suspension Period
to end as soon as reasonably practicable and (iii) that no Suspension Period
shall exceed 30 consecutive days. The Company further agrees that no other
holder of any shares of the Company's capital stock will be permitted to sell
any such shares of the Company's capital stock pursuant to a registration
statement during a Suspension Period. If one or more Suspension Periods occur,
the Shelf Registration Period shall be extended by such number of days
coincident with the aggregate number of days included in all Suspension Periods.
2.2 Registration on Request
(a) Request
Subject to the provisions of Section 2.2(h) below, (i) if the Shelf
Registration remains continuously effective during the Shelf Registration Period
in accordance with the terms hereof, at any time or from time to time after the
expiration of the Shelf Registration Period, or (ii) if for any reason the Shelf
Registration does not become effective within 65 days after the date hereof or
ceases to be effective at any time prior to the expiration of the Shelf
Registration Period, at any time or from time to time after the date which is 65
days from the date hereof (if the Shelf Registration fails to become effective)
or the date on which the Shelf Registration ceases to be effective, as the case
may be, the Holders, individually and jointly, of more than 10% of issued and
outstanding shares of Common Stock (the "Initiating Holders") shall have the
right to require the Company to effect the registration under the Securities Act
of all or part of the Registrable Common Stock held by such Initiating Holders,
by delivering a written request therefor to the Company specifying the number of
shares of Registrable Common Stock and the intended method of distribution. The
Company shall promptly give written notice of such requested registration to all
other Holders, and thereupon the Company shall, as expeditiously as possible,
use its best efforts to (A) effect the registration under the Securities Act
(including by means of a shelf registration pursuant to Rule 415 under the
Securities Act if so requested in such request and if the Company is then
eligible to use such a registration) of the Registrable Common Stock which the
Company has been so requested to register by the Initiating Holders, and all
other Registrable Common Stock which the Company has been requested to register
by any other Holder (together with the Initiating Holders, the "Selling
Holders") by written request given to the Company within 10 days after giving of
written notice by the Company, all to the extent necessary to permit
distribution in accordance with the intended method of distribution set forth in
the written request or requests delivered by the Selling Holders, and (B) if
requested by the Selling Holders, obtain acceleration of the effective date of
the registration statement relating to such registration.
(b) Registration of Other Securities
Whenever the Company shall effect a registration pursuant to this Section
2.2, no securities (other than Registrable Common Stock) shall be included among
the securities covered by such registration (i) if, in connection with an
underwritten offering by any Selling Holders of Registrable Common Stock, the
managing underwriter of such offering shall have advised the Company and the
Selling Holders in writing that the inclusion of such other securities would
adversely affect such offering or (ii), if such offering is not an underwritten
offering, unless the Selling Holders of not less than 50% of the Registrable
Common Stock to be covered by such registration shall have consented (which
consent shall not be unreasonably withheld or delayed) in writing to the
inclusion of such other securities.
(c) Registration Statement Form
Registrations under this Section 2.2 shall be on such appropriate
registration form of the Commission as shall be selected by the Company and as
shall be reasonably acceptable to the Selling Holders. The Company agrees to
include in any such registration statement all information which, in the opinion
of counsel to the Selling Holders, counsel to the underwriters, if any, and
counsel to the Company, is required to be included.
(d) Expenses
The Company shall pay all Registration Expenses in connection with any
registration requested pursuant to this Section 2.2.
(e) Effective Registration Statement
A registration requested pursuant to this Section 2.2 shall not be deemed
to have been effected (including for purposes of paragraph (h) of this Section
2.2) (i) unless a registration statement with respect thereto has become
effective and has been kept continuously effective for a period of at least 120
days (or such shorter period which shall terminate when all the Registrable
Common Stock covered by such registration statement have been sold pursuant
thereto), (ii) if after it has become effective, such registration is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason not attributable
to the Selling Holders and has not thereafter become effective, or (iii) if the
conditions to closing specified in the underwriting agreement, if any, entered
into in connection with such registration are not satisfied for any reason not
attributable to the Selling Holders or waived.
(f) Selection of Underwriters
The underwriters of each underwritten offering of the Registrable Common
Stock to be registered shall be selected by the Selling Holders and shall be
reasonably satisfactory to the Company.
(g) Priority in Requested Registration
If the managing underwriter of any underwritten offering shall advise the
Company in writing (with a copy to each Selling Holder) that, in its opinion,
the number of shares of Registrable Common Stock requested to be included in
such registration exceeds the number of shares which can be sold in such
offering within a price range acceptable to the Selling Holders of Registrable
Common Stock, the Company will include in such registration that number of
shares of Registrable Common Stock which the Company is so advised can be sold
in such offering. The Registrable Common Stock requested to be included in such
registration shall be reduced pro rata among the Selling Holders requesting such
registration of Registrable Common Stock on the basis of the percentage of
Registrable Common Stock of such Selling Holders requesting such registration.
In connection with any such registration to which this Section 2.2(g) is
applicable, no securities other than Registrable Common Stock shall be covered
by such registration.
(h) Limitations on Registration on Request
Notwithstanding anything to the contrary contained herein, the registration
rights granted to the Holders in Section 2.2(a) are subject to the following
limitations: (i) the Holders shall be entitled to require the Company to, and
the Company shall be required to, effect no more than three registrations
pursuant to Section 2.2(a)(i) hereof and no more than four registrations
pursuant to Section 2.2(a)(ii) hereof, (ii) the Company shall not be required to
effect a registration pursuant to Section 2.2(a) if, with respect thereto, the
managing underwriter, the Commission, the Securities Act or the rules and
regulations thereunder, or the form on which the registration statement is to be
filed, would require the conduct of an audit other than the regular audit
conducted by the Company at the end of its fiscal year, but rather the filing
may be delayed until the completion of such regular audit (unless the Holders
agree to pay the expenses of the Company in connection with such an audit other
than the regular audit) and (iii) the Holders shall not be entitled to require
the Company to, and the Company shall not be required to, effect a registration
pursuant to Section 2.2(a) within three (3) months following the effective date
of another registration pursuant to Section 2.2(a).
(i) Postponement
The Company shall be entitled once in any 12-month period to postpone for a
reasonable period of time (but not exceeding 30 days) (the "Postponement
Period") the filing of any registration statement required to be prepared and
filed by it pursuant to this Section 2.2 if the Company determines, in its
reasonable judgment, that such registration and offering would materially
interfere with any material financing, corporate reorganization or other
material transaction involving the Company or any subsidiary, or would require
premature disclosure thereof, and promptly gives the Selling Holders written
notice of such determination, containing a general statement of the reasons for
such postponement and an approximation of the anticipated delay. If the Company
shall so postpone the filing of a registration statement, the Selling Holders of
not less than 50% of the shares of Registrable Common Stock to be registered
shall have the right to withdraw the request for registration in respect of the
Registrable Common Stock by giving written notice to the Company at any time
and, in the event of any such withdrawal, such request shall not be counted for
purposes of the requests for registration to which the Holders are entitled
pursuant to this Section 2.2.
2.3 Incidental Registration
(a) Right to Include Registrable Common Stock
If the Company at any time prior to the expiration of the Holders' right to
request the registration of Registrable Common Stock pursuant to Section 2.2(a)
hereof proposes to register any of its securities under the Securities Act by
registration on Form S-1, S-2 or S-3 or any successor or similar form(s) (except
registrations on such Form or similar form(s) solely for registration of
securities in connection with an employee stock option, stock purchase, stock
bonus or similar plan, pursuant to a dividend reinvestment plan, pursuant to a
merger, exchange, offer or transaction of the type specified in Rule 145(a)
under the Securities Act or pursuant to a "shelf" registration), whether or not
for sale for its own account, it will each such time give prompt written notice
to the Holders of its intention to do so and of the Holders' rights under this
Section 2.3 and the Holders shall be entitled to include, subject to the
provisions of this Agreement, Registrable Common Stock on the same terms and
conditions (if any) as apply to other comparable securities of the Company sold
in connection with such registration. Upon the written request of any Holder (a
"Requesting Holder"), specifying the maximum number of shares of Registrable
Common Stock intended to be disposed of by such Requesting Holder, made as
promptly as practicable and in any event within 15 days after the receipt of any
such notice, the Company shall use its best efforts to effect the registration
under the Securities Act of all Registrable Common Stock which the Company has
been so requested to register by the Requesting Holders; provided, however, that
if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company shall
give written notice of such determination and its reasons therefor to the
Holders and (i) in the case of a determination not to register, shall be
relieved of its obligation under this Section 2.3 to register any Registrable
Common Stock in connection with such registration (but not from any obligation
of the Company to pay the Registration Expenses in connection therewith),
without prejudice, however, to the rights of the Holders to request that such
registration be effected as a registration under Section 2.2, and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registrable Common Stock, for the same period as the delay in
registering such other securities. No registration effected under this Section
2.3 shall relieve the Company of its obligation to effect any registration upon
request under Section 2.2. The Company will pay all Registration Expenses in
connection with any registration of Registrable Common Stock requested pursuant
to this Section 2.3.
(b) Right to Withdraw
Any Requesting Holder shall have the right to withdraw its request for
inclusion of Registrable Common Stock in any registration statement pursuant to
this Section 2.3 at any time by giving written notice to the Company of its
request to withdraw.
(c) Priority in Incidental Registrations
If the managing underwriter of any underwritten offering shall inform the
Company by letter of its opinion that the number of shares of Registrable Common
Stock and Other Holder Registrable Common Stock when added to the number of
other securities to be offered in such registration, would materially adversely
affect such offering, then the Company shall include in such registration that
number of shares of Registrable Common Stock and Other Holder Registrable Common
Stock which the Company is so advised by the managing underwriter can be sold in
(or during the time of) such offering without materially adversely affecting
such offering in the following order of priority:
First: the holder or holders of securities (including the Company in the
case of a primary offering) originally requesting such registration shall be
entitled to participate in accordance with the relative priorities, if any, that
shall exist among them; and then
Second: the holder or holders of Registrable Common Stock
shall be entitled to participate in such offering, pro rata among
themselves in accordance with the number of shares of Registrable
Common Stock which each such holder shall have requested be registered;
and then
Third: all other holders (including the Company, if such
registration shall have been originally requested by a person other
than the Company) of securities having the right to include shares of
Common Stock in such registration shall be entitled to participate pro
rata in accordance with the number of shares proposed to be registered
by them.
(d) Plan of Distribution
Any participation by the Holders in a registration by the Company shall be
in accordance with the Company's plan of distribution.
<PAGE>
2.4 Registration Procedures
If and whenever the Company is required to use its best efforts to effect
the registration of any Registrable Common Stock under the Securities Act as
provided in Sections 2.1, 2.2 and 2.3 hereof, the Company shall as expeditiously
as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect such
registration (and shall include all financial statements required by
the Commission to be filed therewith) and thereafter use its best
efforts to cause such registration statement to become effective;
provided, however, that before filing such registration statement
(including all exhibits) or any amendment or supplement thereto or
comparable statements under securities or blue sky laws of any
jurisdiction, the Company shall furnish such documents to each Holder
selling Registrable Common Stock covered by such registration statement
and each underwriter, if any, participating in the offering of the
Registrable Common Stock and their respective counsel, which documents
will be subject to the review and comments of each such Holder, each
underwriter and their respective counsel; and provided further, that
(i) as to registration pursuant to Section 2.1 or 2.2 hereof, the
Company may discontinue any registration of its securities which are
not Registrable Common Stock and (ii) as to registration pursuant to
Section 2.3 hereof, the Company may discontinue any registration of its
securities, in each case, at any time prior to the effective date of
the registration statement relating thereto;
(b) notify each Holder selling Registrable Common Stock
covered by such registration statement of the Commission's requests for
amending or supplementing the registration statement and the
prospectus, and prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Common Stock
covered by such registration statement for such period as shall be
required for the disposition of all of such Registrable Common Stock in
accordance with the intended method of distribution thereof; provided
that, except with respect to the Shelf Registration and any other such
registration statement filed pursuant to Rule 415 under the Securities
Act, such period need not exceed 120 days;
(c) furnish, without charge, to each Holder selling
Registrable Common Stock covered by such registration statement and
each underwriter such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each
case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed
under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
Holders and such underwriters may reasonably request;
(d) use its best efforts (i) to register or qualify all
Registrable Common Stock and other securities covered by such
registration statement under such securities or blue sky laws of such
States of the United States of America where an exemption is not
available and as any Holder or Holders selling Registrable Common Stock
covered by such registration statement or any managing underwriter
shall reasonably request, (ii) to keep such registration or
qualification in effect for so long as such registration statement
remains in effect, and (iii) to take any other action which may be
reasonably necessary or advisable to enable the Holders to consummate
the disposition in such jurisdictions of the securities to be sold by
such Holder or Holders; provided, however, that the Company shall not
for any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified;
(e) use its best efforts to cause all Registrable Common Stock
covered by such registration statement to be registered with or
approved by such other Federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to the
Company, counsel to any underwriter, or counsel to any Holder or
Holders selling Registrable Common Stock covered by such registration
statement to consummate the disposition of such Registrable Common
Stock;
(f) furnish to each Holder selling Registrable Common Stock
covered by such registration statement and each underwriter, if any,
participating in the offering of the securities covered by such
registration statement, a signed counterpart of (i) an opinion of
counsel for the Company, and (ii) a "comfort" letter signed by the
independent public accountants who have certified the Company's
financial statements included or incorporated by reference in such
registration statement, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) and, in the case of the accountants' comfort letter, with
respect to events subsequent to the date of such financial statements,
as are customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates such
opinions and comfort letters are customarily dated) and, in the case of
the legal opinion, such other legal matters, and, in the case of the
accountants' comfort letter, such other financial matters, as such
Holder or Holders, or the underwriters, may reasonably request;
(g) immediately notify the Holders selling Registrable Common
Stock covered by such registration statement and each managing
underwriter, if any, participating in the offering of the securities
covered by such registration statement (i) when such registration
statement, any pre-effective amendment, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
such registration statement has been filed, and, with respect to such
registration statement or any post-effective amendment, when the same
has become effective; (ii) of any request by the Commission for
amendments or supplements to such registration statement or the
prospectus related thereto or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of any
proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
of the Registrable Common Stock for sale under the securities or blue
sky laws of any jurisdiction or the initiation of any proceeding for
such purpose; and (v) at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or, in the case of
the Shelf Registration, at any time during the Shelf Registration
Period, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, in
the light of the circumstances under which they were made, and in the
case of this clause (v), at the request of any Holder or Holders
selling Registrable Common Stock covered by such registration statement
promptly prepare and furnish to such Holder or Holders and each
underwriter, if any, participating in the offering of the Registrable
Common Stock, a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
under which they were made;
(h) otherwise comply with all applicable rules and regulations
of the Commission, and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering the period of
at least twelve months beginning with the first full calendar month
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder, and promptly
furnish to the Holders a copy of any amendment or supplement to such
registration statement or prospectus;
(i) cause to be maintained a transfer agent and registrar
(which, in each case, may be the Company) for the Common Stock from and
after the date of such registration;
(j) use its commercially reasonable efforts to cause all
Registrable Common Stock covered by such registration statement to be
(i) listed for trading on the New York Stock Exchange, Inc. ("NYSE"),
provided that, if the Company is unable to have the Registrable Common
Stock listed for trading on the NYSE, the Company will use its best
efforts to cause all Registrable Common Stock to be quoted on the
National Market System ("National Market System") of the NASDAQ Stock
Market ("NASDAQ") within the meaning of Rule 11Aa2-1 of the Commission
if the quoting of such Registrable Common Stock is then permitted under
NASDAQ rules; or (ii) if no similar securities of the Company are then
so quoted, use its best efforts to (x) secure designation of all such
Registrable Common Stock as a NASDAQ National Market System security or
(y) failing that, cause all such Registrable Common Stock to be listed
on another national securities exchange or (z) failing that, to secure
NASDAQ authorization for such shares and, without limiting the
generality of the foregoing, to arrange for at least two market makers
to register as such with respect to such shares with the National
Association of Securities Dealers, Inc.;
(k) deliver promptly to counsel to the Holders selling
Registrable Common Stock covered by such registration statement and
each underwriter, if any, participating in the offering of the
Registrable Common Stock, copies of all correspondence between the
Commission and the Company, its counsel or auditors and all memoranda
relating to discussions with the Commission or its staff with respect
to such registration statement;
(1) use its best efforts to obtain the withdrawal of any order suspending
the effectiveness of the registration statement;
(m) provide a CUSIP number for all Registrable Common Stock, no later than
the effective date of the registration statement;
(n) make available its employees and personnel and otherwise
provide reasonable assistance to the underwriters (taking into account
the needs of the Company's businesses) in their marketing of
Registrable Common Stock; and
(o) in the case of a Shelf Registration, upon the occurrence
of any event or the discovery of any facts, each as contemplated by
Section 2.4(g)(v) hereof, use its best efforts to prepare a supplement
or post-effective amendment to the registration statement or the
related prospectus or any document incorporated therein by reference or
file any other required documents so that, thereafter, such prospectus
will not contain at the time of such delivery any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
The Company may require the Holders selling Registrable Common Stock covered by
such registration statement to furnish the Company such information regarding
the Holders and the distribution of the Registrable Common Stock as the Company
may from time to time reasonably request in writing. In the event of a
registration effected pursuant to Section 2.1, 2.2(a) or 2.3(a) hereof, if a
Holder fails to provide such information and the failure by such Holder to
furnish such information would prevent or unreasonably delay the registration
statement relating to such registration from being declared effective by the
Commission, the Company may exclude such Holder's Registrable Common Stock from
such registration, which right of the Company shall, in the case of a
registration effected pursuant to Section 2.1 or 2.2(a) hereof, be subject to
the consent of the Holders of not less than 50% of the shares of Registrable
Common Stock to be included in such registration (other than such Holder's
Registrable Common Stock).
The Holders agree that upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (g)(iii) or (v) of
this Section 2.4, each of the Holders will discontinue its disposition of
Registrable Common Stock pursuant to the registration statement relating to such
Registrable Common Stock until, in the case of paragraph (g)(v) of this Section
2.4, its receipt of the copies of the supplemented or amended prospectus
contemplated by paragraph (g)(v) of this Section 2.4 and, if so directed by the
Company, will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies, then in its possession, of the prospectus
relating to such Registrable Common Stock current at the time of receipt of such
notice. If the disposition by the Holders of their securities is discontinued
pursuant to the foregoing sentence, the Company shall extend the period of
effectiveness of the registration statement by the number of days during the
period from and including the date of the giving of notice to and including the
date when the Holders shall have received copies of the supplemented or amended
prospectus contemplated by paragraph (g)(v) of this Section 2.4; and, if the
Company shall not so extend such period, the Holders' request pursuant to which
such registration statement was filed shall not be counted for purposes of the
requests for registration to which the Holders are entitled pursuant to Section
2.2 hereof.
2.5 Underwritten Offerings
(a) Requested Underwritten Offerings
If requested by the underwriters for any underwritten offering by the
Selling Holders pursuant to a registration requested under Section 2.1 or 2.2,
the Company shall enter into a customary underwriting agreement with such
underwriter or underwriters. Such underwriting agreement shall be reasonably
satisfactory in form and substance to the Selling Holders and shall contain such
representations and warranties by, and such other agreements on the part of, the
Company and such other terms as are generally prevailing in agreements of that
type, including, without limitation, such customary provisions relating to
indemnification and contribution by the Company. The Selling Holders shall be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of the Selling Holders and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the Selling
Holders. No Selling Holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Selling Holder, its
ownership of and title to the Registrable Common Stock, and its intended method
of distribution; any liability of any Selling Holder to any underwriter or other
Person under such underwriting agreement shall be limited to liability arising
from misstatements in or omissions from its representations and warranties and
shall be limited to an amount equal to the net proceeds that it derives from
such registration; and no Selling Holder shall be required to indemnify any
underwriter, or contribute to any payments required to be made by any
underwriter in lieu thereof, to any greater extent than such Selling Holder has
agreed in Section 2.7.
(b) Incidental Underwritten Offerings
In the case of a registration pursuant to Section 2.3 hereof, if the
Company shall have determined to enter into any underwriting agreements in
connection therewith, all of the Requesting Holders' Registrable Common Stock to
be included in such registration shall be subject to such underwriting
agreements. The Requesting Holders may, at their option, require that any or all
of the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of the Requesting Holders and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Requesting Holders. No Requesting Holder shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
Requesting Holder, its ownership of and title to the Registrable Common Stock,
and its intended method of distribution; and any liability of any Requesting
Holder to any underwriter or other Person under such underwriting agreement
shall be limited to liability arising from misstatements in or omissions from
its representations and warranties and shall be limited to an amount equal to
the net proceeds that it derives from such registration.
2.6 Preparation; Reasonable Investigation
In connection with the preparation and filing of each registration
statement under the Securities Act pursuant to this Agreement, the Company will
give the participating Holders, their underwriters, if any, and their respective
counsel, accountants and other representatives and agents the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and, to the extent practicable,
each amendment thereof or supplement thereto, and give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers and employees and the independent public accountants
who have certified its financial statements, and supply all other information
reasonably requested by each of them, as shall be necessary or appropriate, in
the opinion of the participating Holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
2.7 Indemnification
(a) Indemnification by the Company
The Company agrees that in the event of any registration of any securities
of the Company under the Securities Act, the Company shall, and hereby does,
indemnify and hold harmless each Holder, its respective directors, officers,
partners, agents and affiliates and each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person, if
any, who controls such Holder or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages, or liabilities, joint or
several, to which such Holder or any such director, officer, partner, agent or
affiliate or underwriter or controlling Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities, joint or several (or actions or proceedings, whether commenced or
threatened, in respect thereof), arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, (ii) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, or (iii) any violation by
the Company of any federal, state or common law rule or regulation applicable to
the Company and relating to action required of or inaction by the Company in
connection with any such registration, and the Company shall reimburse such
Holder and each such director, officer, partner, agent or affiliate, underwriter
and controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be liable
in any such case or to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by or on behalf of the Holders or
underwriter, as the case may be, specifically stating that it is for use in the
preparation thereof; and provided, further, that the Company shall not be liable
to any Person who participates as an underwriter in the offering or sale of
Registrable Common Stock or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Common Stock to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
regardless of any investigation made by or on behalf of either Holder or any
such director, officer, partner, agent or affiliate or controlling Person and
shall survive the transfer of such securities by such Holder.
(b) Indemnification by the Holders
As a condition to including any Registrable Common Stock in any
registration statement, the Company shall have received an undertaking
reasonably satisfactory to it from each Holder so including any Registrable
Common Stock to indemnify and hold harmless (in the same manner and to the same
extent as set forth in paragraph (a) of this Section 2.7) the Company, and each
director of the Company, each officer of the Company and each other Person, if
any, who controls the Company within the meaning of the Securities Act, and, to
the extent requested, each underwriter, with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, but only to the extent such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Holder specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the liability of such indemnifying party
under this Section 2.7(b) shall be limited to the amount of net proceeds
received by such indemnifying party in the offering giving rise to such
liability. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive the transfer of such securities
by such Holder; and provided, further, that such Holder shall not be liable to
any Person who participates as an underwriter in the offering or sale of
Registrable Common Stock or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to any other Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Common Stock to such other Person if such statement or omission
was corrected by such Holder in such final prospectus.
(c) Indemnification for Controlling Person Liability.
In addition to the indemnification provided for in Section 2.7(a), the
Company shall indemnify, to the fullest extent permitted by law, each Holder,
its officers, directors, partners and agents, if any, and each Person, if any,
who controls such Holder within the meaning of Section 15 of the Securities Act,
against all losses, claims, damages, liabilities (or proceedings in respect
thereof) and expenses, joint or several, in each case, under the Securities Act
or common law or otherwise, resulting from:
(i) any violation by the Company of the provisions of the Securities Act;
(ii) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or amendment
thereto or prospectus (and as amended or supplemented if amended or
supplemented) or any preliminary prospectus or caused by any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, whether
or not, in each such case, the registration statement or amendment
thereto or prospectus (or amendment or supplement thereto) or
preliminary prospectus related or relates to any offering or sale of
Registrable Common Stock by a Holder; and
(iii) any other untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state a material
fact necessary to make the statements in any document issued or
delivered to any purchaser or potential purchaser or filed with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act
(in light of the circumstances under which they were made) not
misleading, in each case, in connection with any offering or sale of
securities of the Company by any Person, whether or not such securities
offered or sold are or were registered or required to be registered
under the Securities Act;
in each such case, to the extent that such losses, claims, damages, liabilities
(or proceedings in respect thereto) and expenses, joint or several, are alleged
to result from or exist by virtue of the fact that any Holder controls or is
alleged to control (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) the Company or any Subsidiary or Affiliate of
the Company, whether such claim or allegation arises under Section 15 of the
Securities Act or Section 20 of the Exchange Act or otherwise; provided,
however, that such indemnification shall not extend to losses, claims, damages,
liabilities (or proceedings in respect thereof) or expenses caused by any untrue
statement or alleged untrue statement contained in or by any omission or alleged
omission from information furnished in writing to the Company by such Holder
expressly for use therein, or from any such information provided by an
underwriter selected by the Holders or any of them.
(d) Notices of Claims, Etc.
Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in the
preceding subsections of this Section 2.7, such indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action or proceeding;
provided, however, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under the preceding subsections of this Section 2.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice,
and shall not relieve the indemnifying party from any liability which it may
have to the indemnified party otherwise than under this Section 2.7. In case any
such action or proceeding is brought against an indemnified party, the
indemnifying party shall be entitled to participate therein and, unless in the
opinion of outside counsel to the indemnified party a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action or proceeding include both the indemnified party
and the indemnifying party and if in the opinion of outside counsel to the
indemnified party there may be legal defenses available to such indemnified
party and/or other indemnified parties which are different from or in addition
to those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to defend such action or
proceeding on behalf of such indemnified party or parties and the indemnifying
party shall be obligated to pay the fees and expenses of such separate counsel
or counsels. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of investigation
(unless the proviso in the preceding sentence shall be applicable). No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent which shall not be unreasonably
withheld. No indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(e) Contribution
If the indemnification provided for in this Section 2.7 shall for any
reason be held by a court to be unavailable to an indemnified party under
subsection (a) or (b) hereof in respect of any loss, claim, damage or liability,
or any action in respect thereof, then, in lieu of the amount paid or payable
under subsection (a) or (b) hereof, the indemnified party and the indemnifying
party under subsection (a) or (b) hereof shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating the same), (i) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand, and the indemnified party on the other, which resulted in
such loss, claim, damage or liability, or action in respect thereof, with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law or if the allocation provided in this clause
(ii) provides a greater amount to the indemnified party than clause (i) above,
in such proportion as shall be appropriate to reflect not only the relative
fault but also the relative benefits received by the indemnifying party and the
indemnified party from the offering of the securities covered by such
registration statement as well as any other relevant equitable considerations.
The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 2.7(e) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the preceding sentence of this
Section 2.7(e). No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute as provided in this
subsection (e) are several and not joint and shall be in proportion to the
relative value of their respective Registrable Common Stock covered by such
registration statement. In addition, no Person shall be obligated to contribute
hereunder any amounts in payment for any settlement of any action or claim
effected without such Person's consent, which consent shall not be unreasonably
withheld. Notwithstanding anything in this subsection (e) to the contrary, no
indemnifying party (other than the Company) shall be required to contribute any
amount in excess of the net proceeds received by such party from the sale of the
Registrable Common Stock in the offering to which the losses, claims, damages or
liabilities of the indemnified parties relate.
(f) Other Indemnification
Indemnification and contribution similar to that specified in the preceding
subsections of this Section 2.7 (with appropriate modifications) shall be given
by the Company and the Holders with respect to any required registration or
other qualification of securities under any federal, state or blue sky law or
regulation of any governmental authority other than the Securities Act. The
indemnification agreements contained in this Section 2.7 shall be in addition to
any other rights to indemnification or contribution which any indemnified party
may have pursuant to law or contract and shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the transfer of any of the Registrable
Common Stock by any of the Holders.
(g) Indemnification Payments
The indemnification and contribution required by this Section 2.7 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred; provided, however, that such periodic payments
shall only be made upon delivery to the indemnifying party of an agreement by
the indemnified party to repay the amounts advanced to the extent it is
ultimately determined that the indemnified party is not entitled to
indemnification pursuant to this Section 2.7 or otherwise. The parties hereto
agree that for each of them such agreement shall be deemed to be contained
herein. Without limiting the generality of the foregoing, each indemnifying
party, as an interim measure during the pendency of any claim, action,
investigation, inquiry or proceeding arising out of or based upon any matter or
subject for which indemnity (or contribution in lieu thereof) would be available
to any indemnified party under any provision of this Section 2.7, the Company
will promptly reimburse each indemnified party, as often an invoiced therefor
(but in no event more often than monthly), for all reasonable legal or other
expenses incurred in connection with the investigation or defense of any such
claim, action, investigation, inquiry or proceeding, notwithstanding the absence
of any judicial determination as to the propriety or enforceability of the
indemnifying party's obligation to reimburse the indemnified party for such
expenses and notwithstanding the possibility that the obligations to pay such
expenses might later have been held to be improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement is held to be
improper, the indemnified party agrees to promptly return the amount so advanced
to the indemnifying party, together with interest, compounded monthly, at the
prime rate (or other commercial lending rate for borrowers of the highest credit
standing) listed from time to time in The Wall Street Journal which represents
the base rate on corporate loans posted by a substantial majority of the
nation's thirty (30) largest banks. Any such interim reimbursement payments
which are not made to the indemnified party within thirty (30) days of a request
therefor shall bear interest at such prime rate from the date of such request to
the extent such reimbursement payments are ultimately determined to be proper
obligations of the indemnifying party.
2.8 Limitation on Sale of Securities
If any registration of Registrable Common Stock or Other Holder Registrable
Common Stock shall be in connection with an underwritten public offering, each
of the Holders or the Other Holders, as the case may be, and the Company agrees
(except, in the case of any Holder or Other Holder, to the extent that such
Holder or Other Holder is prohibited by applicable law or the exercise of its
fiduciary duties from agreeing to withhold Registrable Common Stock or Other
Holder Registrable Common Stock, as the case may be, from sale) (x) not to
effect any public sale or distribution of any issue of the same class or series
as the Registrable Common Stock or Other Holder Registrable Common Stock being
registered in an underwritten public offering (other than pursuant to an
employee stock option, stock purchase or similar plan, pursuant to a dividend
reinvestment plan, pursuant to a merger, exchange offer or a transaction of the
type specified in Rule 145(a) under the Securities Act), any securities of the
Company similar to any such issue or any securities of the Company or of any
security convertible into or exchangeable or exercisable for any such issue of
the Company during the 15 days prior to, and during the 45 day period (or such
longer period, not in excess of 90 days, as may be reasonably requested by the
underwriter of such offering) beginning on the effective date of such
registration statement (except as part of such registration) and (y) that any
agreement entered into after the date of this Agreement pursuant to which the
Company issues or agrees to issue any privately placed securities shall contain
a provision under which holders of such securities agree not to effect any
public sale or distribution of any such securities during the period referred to
in the foregoing clause (x), including any sale pursuant to Rule 144 under the
Securities Act (except as part of such registration, if permitted). Without
limiting the scope of the term "fiduciary," a Holder or Other Holder shall be
deemed to be acting as a fiduciary if its actions or the Registrable Common
Stock or Other Holder Registrable Common Stock proposed to be sold is subject to
the Employee Retirement Income Security Act of 1974, as amended, the Investment
Advisers Act of 1940, as amended or the Investment Company Act of 1940, as
amended, or if such Registrable Common Stock or Other Holder Registrable Common
Stock is held in a separate account under applicable insurance law or
regulation. Notwithstanding the foregoing, no Holder or Other Holder who has
been on behalf of an Account shall be required to hold back Registrable Common
Stock or Other Holder Registrable Common Stock attributable to such Account if
such Account directs such Holder or Other Holder to dispose of some or all of
such Registrable Common Stock or Other Holder Registrable Common Stock,
attributable to such Account unless (1) such Holder or Other Holder shall have
directly or indirectly induced such Account to make such sale or (2) such
Account terminates the authority of the Holder or Other Holder of Registrable
Common Stock or Other Holder Registrable Common Stock to dispose of such
securities; provided, however, that any holdback agreement relating to such
underwritten sale shall continue to apply to Registrable Common Stock or Other
Holder Registrable Common Stock attributable to such Account which such Account
has not directed such Holder or Other Holder to sell.
2.9 No Required Sale
Nothing in this Agreement shall be deemed to create an independent
obligation on the part of any of the Holders to sell any Registrable Common
Stock pursuant to any effective registration statement.
3. Rule 144
The Company shall take all actions reasonably necessary to enable holders
of Registrable Common Stock to sell such securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144, or (b) any similar rule or regulation hereafter adopted by the Commission
including, without limiting the generality of the foregoing, filing on a timely
basis all reports required to be filed by the Exchange Act. Upon the request of
any Holder, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
4. Amendments and Waivers
This Agreement may not be modified or amended, or any of the provisions
hereof waived, temporarily or permanently, except pursuant to the written
consent of the Holders of not less than 50% of the shares of Registrable Common
Stock and the Company.
5. Adjustments
In the event of any change in the capitalization of the Company as a result
of any stock split, stock dividend, reverse split, combination,
recapitalization, merger, consolidation, or otherwise, the provisions of this
Agreement shall be appropriately adjusted.
6. Notice
All notices and other communications hereunder shall be in writing and,
unless otherwise provided herein, shall be deemed to have been given when
received by the party to whom such notice is to be given at its address set
forth below, or such other address for the party as shall be specified by notice
given pursuant hereto:
(a) If to any Holder, the address of such Holder set forth on Annex A
attached hereto;
(b) If to the Company, to it at:
Salant Corporation
1114 Avenue of the Americas
New York, New York 10036
Attn: Todd Kahn, Esq.
7. Assignment
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by the Company. Any Holder may, at
its election, at any time or from time to time, assign its rights under this
Agreement, in whole or in part, to any transferee of Registrable Common Stock.
8. Remedies
The parties hereto agree that money damages or any other remedy at law
would not be sufficient or adequate remedy for any breach or violation of, or a
default under, this Agreement by them and that, in addition to all other
remedies available to them, each of them shall be entitled to an injunction
restraining such breach, violation or default or threatened breach, violation or
default and to any other equitable relief, including, without limitation,
specific performance, without bond or other security being required. In any
action or proceeding brought to enforce any provision of this Agreement
(including the indemnification provisions thereof), the successful party shall
be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
9. No Inconsistent Agreements
The Company will not, on or after the date of this Agreement, enter into
any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof, other than any customary lock-up agreement with the
underwriters in connection with any registration and offering by the Company of
its securities to the public (an "Offering") effected hereunder, pursuant to
which the Company shall agree not to register for sale, and the Company shall
agree not to sell or otherwise dispose of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, as applicable,
for a specified period following such Offering. The Company hereby represents
and warrants that the rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with any other agreements to which the
Company is a party or by which it is bound. The Company further agrees that if
any other registration rights agreement entered into after the date of this
Agreement with respect to any of its securities contains terms which are more
favorable to, or less restrictive on, the other party thereto than the terms and
conditions contained in this Agreement are (insofar as they are applicable) to
the Holders, then the terms and conditions of this Agreement shall immediately
be deemed to have been amended without further action by the Company or the
Holders so that the Holders shall be entitled to the benefit of any such more
favorable or less restrictive terms or conditions.
10. Headings
Headings of the sections and paragraphs of this Agreement are for
convenience only and shall be given no substantive or interpretive effect
whatsoever.
11. Governing Law; Jurisdiction
(a) This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York, without giving effect to the
conflicts of law principles thereof.
(b) Each of the parties hereto irrevocably and unconditionally consents to
the jurisdiction of the federal courts and courts of the state of New York
situated in New York County, New York in respect of the interpretation and
enforcement of the provisions of this Agreement, and hereby agrees that service
of process in any such action, suit or proceeding against the other party with
respect to this Agreement may be made upon it in any manner permitted by the
laws of New York or the federal laws of the United States.
12. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument.
13. Invalidity of Provision
The invalidity or unenforceability of any provision of this Agreement in
any jurisdiction shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction. If any restriction or provision of this Agreement is held
unreasonable, unlawful or unenforceable in any respect, such restriction or
provision shall be interpreted, revised or applied in a manner that renders it
lawful and enforceable to the fullest extent possible under law.
14. Further Assurances
Each party hereto shall do and perform or cause to be done and performed
all further acts and things and shall execute and deliver all other agreements,
certificates, instruments, and documents as any other party hereto reasonably
may request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
15. Entire Agreement; Effectiveness
This Agreement and the other writings referred to herein or delivered in
connection herewith contain the entire agreement among the parties with respect
to the subject matter hereof and supersede all prior and contemporaneous
arrangements or understandings with respect thereto.
IN WITNESS WHEREOF, the undersigned have Executed this Agreement as of the
date first above written:
SALANT CORPORATION
By:
Name:
Title:
SALANT CORPORATION, as attorney in fact for the Holders of
Registrable Common Stock
By:
Name:
Title:
MAGTEN ASSET MANAGEMENT CORP., as
agent on behalf of those
investment advisory clients
listed on Schedule I hereto
By:
Name:
Title:
<PAGE>
EXHIBIT C
<PAGE>
SALANT CORPORATION
1999 STOCK AWARD AND INCENTIVE PLAN
<PAGE>
SALANT CORPORATION
1999 STOCK AWARD INCENTIVE PLAN
1. Purpose.
The purpose of this Plan is to strengthen Salant Corporation, a Delaware
corporation (the "Company"), by providing an incentive to its employees,
officers and directors and thereby encouraging them to devote their abilities
and industry to the success of the Company's business enterprise. It is intended
that this purpose be achieved by extending to employees, officers and directors
of the Company and its Subsidiaries an added long-term incentive for high levels
of performance and unusual efforts through the grant of Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Dividend Equivalent
Rights, Performance Awards and Restricted Stock (as each term is herein
defined).
2. Definitions.
For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a
Change in Control, the greater of (i) the highest price per Share paid to
holders of the Shares in any transaction (or series of transactions)
constituting or resulting in a Change in Control or (ii) the highest Fair Market
Value of a Share during the ninety (90) day period ending on the date of a
Change in Control.
2.2 "Affiliate" means any entity, directly or indirectly,
controlled by, controlling or under common control with the Company or any
corporation or other entity acquiring, directly or indirectly, all or
substantially all the assets and business of the Company, whether by operation
of law or otherwise.
2.3 "Agreement" means the written agreement between the
Company and an Optionee or Grantee evidencing the grant of an Option or Award
and setting forth the terms and conditions thereof.
2.4 "Award" means a grant of Restricted Stock, a Stock
Appreciation Right, a Performance Award, a Dividend Equivalent Right or any or
all of them.
2.5 "Board" means the Board of Directors of the Company.
2.6 "Cause" means, unless otherwise provided in an Agreement:
(a) in the case of an Optionee or Grantee whose employment with the Company
or a Subsidiary is subject to the terms of an employment agreement between such
Optionee or Grantee and the Company or Subsidiary, which employment agreement
includes a definition of "Cause", the term "Cause" as used in this Plan or any
Agreement shall have the meaning set forth in such employment agreement during
the period that such employment agreement remains in effect;
(b) for purposes of Section 6.4, the commission of an act of fraud or
intentional misrepresentation or an act of embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any of its Subsidiaries;
and
(c) in all other cases, (i) intentional failure to perform reasonably
assigned duties, (ii) dishonesty or willful misconduct in the performance of
duties, (iii) involvement in a transaction in connection with the performance of
duties to the Company or any of its Subsidiaries which transaction is adverse to
the interests of the Company or any of its Subsidiaries and which is engaged in
for personal profit or (iv) willful violation of any law, rule or regulation in
connection with the performance of duties (other than traffic violations or
similar offenses).
2.7 "Change in Capitalization" means any increase or reduction
in the number of Shares, or any change (including, but not limited to, in the
case of a spin-off, dividend or other distribution in respect of Shares, a
change in value) in the Shares or exchange of Shares for a different number or
kind of shares or other securities of the Company or another corporation, by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or rights or
debentures, stock dividend, stock split or reverse stock split, cash dividend,
property dividend, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.
2.8 A "Change in Control" shall mean the occurrence during the term of the
Plan of: (a) An acquisition (other than directly from the Company or pursuant to
the Plan of Reorganization) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as such term is used for purposes of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), immediately after which such Person has "Beneficial Ownership" (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent
(50%) or more of the then outstanding Shares or the combined voting power of the
Company's then outstanding Voting Securities; provided, however, in determining
whether a Change in Control has occurred, Shares or Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) Magten Asset Management Corp., in
its capacity as the beneficial owner, or the investment manager on behalf of the
beneficial owners, of the issued and outstanding Shares from and after the
consummation of the Plan of Reorganization ("Magten"), (ii) an employee benefit
plan (or a trust forming a part thereof) maintained by (A) the Company or (B)
any corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (for purposes of this definition, a "Subsidiary"), (iii) the Company
or its Subsidiaries, (iv) a merger or other business combination between the
Company and/or its Subsidiaries, on the one hand, and Perry Ellis International,
Inc. and/or its subsidiaries on the other hand, or (v) any Person in connection
with a "Non-Control Transaction" (as hereinafter defined);
(b) The individuals who, as of the Effective Date are members of the Board
(the "Incumbent Board"), cease for any reason to constitute at least two-thirds
of the members of the Board; provided, however, that if the election, or
nomination for election by the Company's common stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall, for purposes of this Plan, be considered as a member of
the Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or
reorganization with or into the Company or in which
securities of the Company are issued, unless such
merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control
Transaction" shall mean a merger, consolidation or
reorganization with or into the Company or in which
securities of the Company are issued where:
(A) the stockholders of the Company,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly immediately following
such merger, consolidation or
reorganization, at least fifty percent (50%)
of the combined voting power of the
outstanding voting securities of the
corporation resulting from such merger or
consolidation or reorganization (the
"Surviving Corporation") in substantially
the same proportion as their ownership of
the Voting Securities immediately before
such merger, consolidation or
reorganization,
(B) the individuals who were members
of the Incumbent Board immediately prior to
the execution of the agreement providing for
such merger, consolidation or reorganization
constitute at least a majority of the
members of the board of directors of the
Surviving Corporation, or a corporation
beneficially directly or indirectly owning a
majority of the Voting Securities of the
Surviving Corporation, and
(C) no Person other than (i) Magten,
(ii) the Company, (iii) any Subsidiary, (iv)
any employee benefit plan (or any trust
forming a part thereof) that, immediately
prior to such merger, consolidation or
reorganization, was maintained by the
Company or any Subsidiary, or (v) any Person
who, immediately prior to such merger,
consolidation or reorganization had
Beneficial Ownership of fifty percent (50%)
or more of the then outstanding Voting
Securities or Shares, has Beneficial
Ownership of fifty percent (50%) or more of
the combined voting power of the Surviving
Corporation's then outstanding voting
securities or its common stock, other than
as a result of the consummation of the
transactions contemplated under the Plan of
Reorganization.
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all
or substantially all of the assets of the Company to
any Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Shares or Voting
Securities as a result of the acquisition of Shares or Voting Securities by the
Company which, by reducing the number of Shares or Voting Securities then
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Shares or
Voting Securities by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares or Voting Securities which increases the percentage of the then
outstanding Shares or Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur.
2.9 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
2.10 "Committee" means a committee, as described in Section
3.1, appointed by the Board from time to time to administer the Plan and to
perform the functions set forth herein.
2.11 "Company" means Salant Corporation.
2.12 "Consummation Date" means the date of consummation
of the Plan of Reorganization.
2.13 "Director" means a director of the Company.
2.14 "Disability" means, unless otherwise provided in an Agreement:
(a) in the case of an Optionee or Grantee whose employment with the Company
or a Subsidiary is subject to the terms of an employment agreement between such
Optionee or Grantee and the Company or Subsidiary, which employment agreement
includes a definition of "Disability", the term "Disability" as used in this
Plan or any Agreement shall have the meaning set forth in such employment
agreement during the period that such employment agreement remains in effect;
and
(b) in all other cases, the term "Disability" as used in this Plan or any
Agreement shall mean a physical or mental infirmity which impairs the Optionee's
or Grantee's ability to perform substantially his or her duties for a period of
one hundred eighty (180) consecutive days.
2.15 "Division" means any of the operating units or divisions
of the Company designated as a Division by the Committee.
2.16 "Dividend Equivalent Right" means a right to receive all
or some portion of the cash dividends that are or would be payable with respect
to Shares.
2.17 "Effective Date" has the meaning given such term in Section 21.3
hereof.
2.18 "Eligible Director" means a director of the Company who
is not an officer or employee of the Company or any Subsidiary.
2.19 "Eligible Individual" means any director (other than an
Eligible Director), officer or employee of the Company or a Subsidiary,
designated by the Committee as eligible to receive Options or Awards subject to
the conditions set forth herein.
2.20 "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time.
2.21 "Fair Market Value" on any date means the average of the
high and low sales prices of the Shares on such date on the principal national
securities exchange on which such Shares are listed or admitted to trading, or,
if such Shares are not so listed or admitted to trading, the average of the per
Share closing bid price and per Share closing asked price on such date as quoted
on the National Association of Securities Dealers Automated Quotation System or
such other market in which such prices are regularly quoted, or, if there have
been no published bid or asked quotations with respect to Shares on such date,
the Fair Market Value shall be the value established by the Board in good faith
and, in the case of an Incentive Stock Option, in accordance with Section 422 of
the Code.
2.22 "Formula Option" means an Option granted pursuant to Section 6.
2.23 "Grantee" means a person to whom an Award has been
granted under the Plan.
2.24 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee in an
Agreement as an Incentive Stock Option.
2.25 "Nonemployee Director" means a Director who is a
"nonemployee director" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.
2.26 "Nonqualified Stock Option" means an Option which is not
an Incentive Stock Option.
2.27 "Option" means a Nonqualified Stock Option, an Incentive Stock Option
and/or a Formula Option.
2.28 "Optionee" means a person to whom an Option has been
granted under the Plan.
2.29 "Outside Director" means a director of the Company who is
an "outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.30 "Parent" means any corporation which is a parent
corporation (within the meaning of Section 424(e) of the Code) with respect to
the Company.
2.31 "Performance Awards" means Performance Units, Performance Shares or
either or both of them.
2.32 "Performance Cycle" means the time period specified by
the Committee at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.33 "Performance Objectives" has the meaning set forth in Section 11.
2.34 "Performance Shares" means Shares issued or transferred
to an Eligible Individual under Section 11.
2.35 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 11.
2.36 "Plan" means the Salant Corporation 1998 Stock Award and
Incentive Plan, as amended and restated from time to time.
2.37 "Plan of Reorganization" means the First Amended Chapter
11 Plan of Reorganization for Salant Corporation, dated February 3, 1999.
2.38 "Pooling Transaction" means an acquisition of the Company
in a transaction which is intended to be treated as a "pooling of interests"
under generally accepted accounting principles.
2.39 "Restricted Stock" means Shares issued or transferred to
an Eligible Individual pursuant to Section 10.
2.40 "Shares" means the shares of New Common Stock, as defined
in the Plan of Reorganization, par value $1.00 per share, of the Company.*
2.41 "Stock Appreciation Right" means a right to receive all
or some portion of the increase in the value of the Shares as provided in
Section 8 hereof.
2.42 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
2.43 "Successor Corporation" means a corporation, or a parent
or subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.
2.44 "Ten-Percent Stockholder" means an Eligible Individual,
who, at the time an Incentive Stock Option is to be granted to him or her, owns
(within the meaning of Section 422(b)(6) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company, or of a Parent or a Subsidiary.
3. Administration.
3.1 The Plan shall be administered by the Committee, which
shall hold meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its meetings. A
quorum shall consist of not fewer than two (2) members of the Committee and a
majority of a quorum may authorize any action. Any decision or determination
reduced to writing and signed by a majority of all of the members of the
Committee shall be as fully effective as if made by a majority vote at a meeting
duly called and held. The Committee shall consist of at least two (2) directors
of the Company and may consist of the entire Board; provided, however, that (A)
if the Committee consists of less than the entire Board, each member shall be a
Nonemployee Director and (B) to the extent necessary for any Option or Award
intended to qualify as performance-based compensation under Section 162(m) of
the Code to so qualify, each member of the Committee, whether or not it consists
of the entire Board, shall be an Outside Director. For purposes of the preceding
sentence, if one or more members of the Committee is not a Nonemployee Director
and an Outside Director but recuses himself or herself or abstains from voting
with respect to a particular action taken by the Committee, then the Committee,
with respect to that action, shall be deemed to consist only of the members of
the Committee who have not recused themselves or abstained from voting.
3.2 No member of the Committee shall be liable for any action,
failure to act, determination or interpretation made in good faith with respect
to this Plan or any transaction hereunder. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising in
connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder.
3.3 Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Options shall be granted
under the Plan and the number of such Options to be granted and to prescribe the
terms and conditions (which need not be identical) of each such Option,
including the exercise price per Share subject to each Option, and make any
amendment or modification to any Option Agreement consistent with the terms of
the Plan;
(b) select those Eligible Individuals to whom Awards shall be granted under
the Plan and to determine the number of Stock Appreciation Rights, Performance
Awards, Shares of Restricted Stock and/or Dividend Equivalent Rights to be
granted pursuant to each Award, the terms and conditions (which need not be
identical) of such Award, including the restrictions or Performance Objectives
relating to Shares, the maximum value of each Performance Share and make any
amendment or modification to any Award Agreement consistent with the terms of
the Plan;
(c) to construe and interpret the Plan and the Options and Awards granted
hereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem necessary or
advisable, including so that the Plan complies with Rule 16b-3 under the
Exchange Act, the Code, and other applicable law, and otherwise to make the Plan
fully effective. All decisions and determinations by the Committee in the
exercise of this power shall be final, binding and conclusive upon the Company,
its Subsidiaries, the Optionees and Grantees, and all other persons having any
interest therein;
(d) to determine the duration and purposes for leaves of absence which may
be granted to an Optionee or Grantee on an individual basis without constituting
a termination of employment or service for purposes of the Plan;
(e) to exercise its discretion with respect to the powers and rights
granted to it as set forth in the Plan; and
(f) generally, to exercise such powers and to perform such acts as are
deemed necessary or advisable to promote the best interests of the Company with
respect to the Plan.
4. Stock Subject to the Plan.
4.1 The maximum number of Shares that may be made the subject
of Options and Awards granted under the Plan is [ ].* No Eligible Individual may
be granted Options and Awards in the aggregate in respect of more than [ ]*
Shares in any one calendar year period. The maximum dollar amount of cash or the
Fair Market Value of Shares that any Eligible Individual may receive in any
calendar year during the term of the Plan in respect of Performance Units
denominated in dollars may not exceed [$ ]. Upon a Change in Capitalization, the
maximum number of Shares referred to in the first two sentences of this Section
4.1 shall be adjusted in number and kind pursuant to Section 13. The Company
shall reserve for the purposes of the Plan, out of its authorized but unissued
Shares or out of Shares held in the Company's treasury, or partly out of each,
such number of Shares as shall be determined by the Board.
4.2 Upon the granting of an Option or an Award, the number of
Shares available under Section 4.1 for the granting of further Options and
Awards shall be reduced as follows; provided, however, that if any Option is
exercised by tendering Shares, either actually or by attestation, to the Company
as full or partial payment of the exercise price, the maximum number of Shares
available under Section 4.1 shall be increased by the number of Shares so
tendered.
(a) In connection with the granting of an Option or an Award (other than
the granting of a Performance Unit denominated in dollars), the number of Shares
shall be reduced by the number of Shares in respect of which the Option or Award
is granted or denominated.
(b) In connection with the granting of a Performance Unit denominated in
dollars, the number of Shares shall be reduced by an amount equal to the
quotient of (i) the dollar amount in which the Performance Unit is denominated,
divided by (ii) the Fair Market Value of a Share on the date the Performance
Unit is granted.
4.3 Whenever any outstanding Option or Award or portion
thereof expires, is canceled or is otherwise terminated for any reason without
having been exercised or payment having been made in respect of the entire
Option or Award, the Shares allocable to the expired, canceled or otherwise
terminated portion of the Option or Award may again be the subject of Options or
Awards granted hereunder.
5. Option Grants for Eligible Individuals.
5.1 Authority of Committee. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, and the terms and conditions of the grant
to such Eligible Individuals shall be set forth in an Agreement.
5.2 Purchase Price. The purchase price or the manner in which
the purchase price is to be determined for Shares under each Option shall be
determined by the Committee and set forth in the Agreement; provided, however,
that the purchase price per Share under each Option shall not be less than 100%
of the Fair Market Value of a Share on the date the Option is granted (110% in
the case of an Incentive Stock Option granted to a Ten-Percent Stockholder).
5.3 Maximum Duration. Options granted hereunder shall be for
such term as the Committee shall determine and set forth in the Agreement,
provided that an Incentive Stock Option shall not be exercisable after the
expiration of ten (10) years from the date it is granted (five (5) years in the
case of an Incentive Stock Option granted to a Ten-Percent Stockholder) and a
Nonqualified Stock Option shall not be exercisable after the expiration of ten
(10) years from the date it is granted; provided, however, that the Committee
may provide that an Option (other than an Incentive Stock Option) may, upon the
death of the Optionee, be exercised for up to one (1) year following the date of
the Optionee's death even if such period extends beyond ten (10) years from the
date the Option is granted. The Committee may, subsequent to the granting of any
Option, extend the term thereof, but in no event shall the term as so extended
exceed the maximum term provided for in the preceding sentence.
5.4 Vesting. Subject to Section 7.4, each Option shall become
exercisable in such installments (which need not be equal) and at such times as
may be designated by the Committee and set forth in the Agreement. To the extent
not exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than the date the
Option expires. The Committee may accelerate the exercisability of any Option or
portion thereof at any time.
5.5 Limitations on Incentive Stock Options. To the extent that the aggregate
Fair Market Value (determined as of the date of the grant) of Shares with
respect to which Incentive Stock Options granted under the Plan and "incentive
stock options" (within the meaning of Section 422 of the Code) granted under all
other plans of the Company or its Subsidiaries (in either case determined
without regard to this Section 5.6) are exercisable by an Optionee for the first
time during any calendar year exceeds $100,000, such Incentive Stock Options
shall be treated as Nonqualified Stock Options. In applying the limitation in
the preceding sentence in the case of multiple grants of Options, Options which
were intended to be Incentive Stock Options shall be treated as Nonqualified
Stock Options according to the order in which they were granted such that the
most recently granted Options are first treated as Nonqualified Stock Options.
6. Option Grants for Nonemployee Directors.
6.1Grant.
(a) Each Eligible Director who is a Director on the Consummation Date shall
be granted a Formula Option in respect of [ ]* Shares on the Consummation Date.
(b) Each Eligible Director who becomes a Director for the first time after
the Consummation Date shall, upon becoming a Director, be granted a Formula
Option in respect of [ ]* Shares.
(c) Each Eligible Director shall be granted a Formula Option in respect of
[ ]* Shares on the first business day after the annual meeting of the
stockholders of the Company (other than any annual meeting pursuant to which
such Eligible Director receives a grant pursuant to paragraph (a) or (b) of this
Section 6.1) in each year that the Plan is in effect provided that the Eligible
Director is a Director on such date.
All Formula Options shall be evidenced by an Agreement containing such
other terms and conditions not inconsistent with the provisions of this Plan as
determined by the Board; provided, however, that such terms shall not vary the
price, amount or timing of Formula Options provided under this Section 6,
including provisions dealing with vesting, forfeiture and termination of such
Formula Options.
6.2 Purchase Price. The purchase price for Shares under each
Formula Option shall be equal to 100% of the Fair Market Value of such Shares on
the date the Formula Option is granted.
6.3 Vesting. Subject to Sections 6.4 and 7.4, each Formula
Option shall become fully vested and exercisable with respect to [ ]% of the
Shares subject thereto on the date of grant and on each of the first through [ ]
anniversaries of the date of grant; provided, that the Optionee continues to
serve as a Director as of such date. If an Optionee ceases to serve as a
Director for any reason, the Optionee shall have no rights with respect to any
Formula Option (or portion thereof) which has not then vested pursuant to the
preceding sentence and the Optionee shall automatically forfeit any Formula
Option which remains unvested.
6.4 Duration. Subject to Section 7.4, each Formula Option (or
portion thereof) shall terminate on the date which is the tenth anniversary of
the date of grant (or if later, the first anniversary of the Director's death if
such death occurs prior to such tenth anniversary), unless terminated earlier as
follows:
(a) If an Optionee's service as a Director terminates for any reason other
than Disability, death or Cause, the Optionee may for a period of three (3)
months after such termination exercise his or her Option to the extent, and only
to the extent, that such Option or portion thereof was vested and exercisable as
of the date the Optionee's service as a Director terminated, after which time
the Option shall automatically terminate in full.
(b) If an Optionee's service as a Director terminates by reason of the
Optionee's resignation or removal from the Board due to Disability, the Optionee
may, for a period of one (1) year after such termination, exercise his or her
Option to the extent, and only to the extent, that such Option or portion
thereof was vested and exercisable, as of the date the Optionee's service as
Director terminated, after which time the Option shall automatically terminate
in full.
(c) If an Optionee's service as a Director terminates for Cause, the Option
granted to the Optionee hereunder shall immediately terminate in full and no
rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within three (3) months after
termination of service as a Director as described in clause (a) of this Section
6.4 or within twelve (12) months after termination of service as a Director as
described in clause (b) of this Section 6.4, the Option granted to the Optionee
may be exercised at any time within twelve (12) months after the Optionee's
death by the person or persons to whom such rights under the Option shall pass
by will, or by the laws of descent or distribution, after which time the Option
shall terminate in full; provided, however, that an Option may be exercised to
the extent, and only to the extent, that the Option or portion thereof was
exercisable on the date of death or earlier termination of the Optionee's
services as a Director.
(e) The Formula Option (or portion thereof), to the extent not yet vested
and exercisable as of the date the Director's service as a Director terminates
for any reason shall terminate immediately upon such date.
7. Terms and Conditions Applicable to All Options.
7.1 Non-Transferability. No Option shall be transferable by
the Optionee otherwise than by will or by the laws of descent and distribution
or, in the case of an Option other than an Incentive Stock Option, pursuant to a
domestic relations order (within the meaning of Rule 16a-12 promulgated under
the Exchange Act), and an Option shall be exercisable during the lifetime of
such Optionee only by the Optionee or his or her guardian or legal
representative. Notwithstanding the foregoing, the Committee may set forth in
the Agreement evidencing an Option (other than an Incentive Stock Option) at the
time of grant or thereafter, that the Option may be transferred to members of
the Optionee's immediate family, to trusts solely for the benefit of such
immediate family members and to partnerships in which such family members and/or
trusts are the only partners, and for purposes of this Plan, a transferee of an
Option shall be deemed to be the Optionee. For this purpose, immediate family
means the Optionee's spouse, parents, children, stepchildren and grandchildren
and the spouses of such parents, children, stepchildren and grandchildren. The
terms of an Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee.
7.2 Method of Exercise. The exercise of an Option shall be
made only by a written notice delivered in person or by mail to the Secretary of
the Company at the Company's principal executive office, specifying the number
of Shares to be purchased and accompanied by payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted;
provided, however, that Options may not be exercised by an Optionee for twelve
months following a hardship distribution to the Optionee, to the extent such
exercise is prohibited under Treasury Regulation ss. 1.401(k)-1(d)(2)(iv)(B)(4).
The purchase price for any Shares purchased pursuant to the exercise of an
Option shall be paid, as determined by the Committee in its discretion, in
either of the following forms (or any combination thereof): (i) cash or (ii) the
transfer, either actually or by attestation to the Company, of Shares that have
been held by the Optionee for at least six (6) months (or such lesser period as
may be permitted by the Committee), prior to the exercise of the Option, such
transfer to be upon such terms and conditions as determined by the Committee. In
addition, Options may be exercised through a registered broker-dealer pursuant
to such cashless exercise procedures which are, from time to time, deemed
acceptable by the Committee. Any Shares transferred to the Company as payment of
the purchase price under an Option shall be valued at their Fair Market Value on
the day preceding the date of exercise of such Option. The Optionee shall
deliver the Agreement evidencing the Option to the Secretary of the Company who
shall endorse thereon a notation of such exercise and return such Agreement to
the Optionee. No fractional Shares (or cash in lieu thereof) shall be issued
upon exercise of an Option and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.
7.3 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until (i)
the Option shall have been exercised pursuant to the terms thereof, (ii) the
Company shall have issued and delivered Shares to the Optionee, and (iii) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.
7.4 Effect of Change in Control. Upon the occurrence of a
Change in Control, all Options outstanding on the date of such Change in Control
shall become immediately and fully exercisable. In addition, to the extent set
forth in an Agreement evidencing the grant of an Option, an Optionee will be
permitted to surrender to the Company for cancellation within sixty (60) days
after such Change in Control any Option or portion of an Option to the extent
not yet exercised and the Optionee will be entitled to receive a cash payment in
an amount equal to the excess, if any, of (x) (A) in the case of a Nonqualified
Stock Option, the greater of (1) the Fair Market Value, on the date preceding
the date of surrender, of the Shares subject to the Option or portion thereof
surrendered or (2) the Adjusted Fair Market Value of the Shares subject to the
Option or portion thereof surrendered or (B) in the case of an Incentive Stock
Option, the Fair Market Value, on the date preceding the date of surrender, of
the Shares subject to the Option or portion thereof surrendered, over (y) the
aggregate purchase price for such Shares under the Option or portion thereof
surrendered.
8. Stock Appreciation Rights.
The Committee may in its discretion, either alone or in connection with the
grant of an Option, grant Stock Appreciation Rights in accordance with the Plan,
the terms and conditions of which shall be set forth in an Agreement. If granted
in connection with an Option, a Stock Appreciation Right shall cover the same
Shares covered by the Option (or such lesser number of Shares as the Committee
may determine) and shall, except as provided in this Section 8, be subject to
the same terms and conditions as the related Option.
8.1 Time of Grant. A Stock Appreciation Right may be granted
(i) at any time if unrelated to an Option, or (ii) if related to an Option,
either at the time of grant, or at any time thereafter during the term of the
Option.
8.2 Stock Appreciation Right Related to an Option.
(a) Exercise. A Stock Appreciation Right granted in connection with an
Option shall be exercisable at such time or times and only to the extent that
the related Options are exercisable, and will not be transferable except to the
extent the related Option may be transferable. A Stock Appreciation Right
granted in connection with an Incentive Stock Option shall be exercisable only
if the Fair Market Value of a Share on the date of exercise exceeds the purchase
price specified in the related Incentive Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock Appreciation Right related
to an Option, the Grantee shall be entitled to receive an amount determined by
multiplying (A) the excess of the Fair Market Value of a Share on the date
preceding the date of exercise of such Stock Appreciation Right over the per
Share purchase price under the related Option, by (B) the number of Shares as to
which such Stock Appreciation Right is being exercised. Notwithstanding the
foregoing, the Committee may limit in any manner the amount payable with respect
to any Stock Appreciation Right by including such a limit in the Agreement
evidencing the Stock Appreciation Right at the time it is granted.
(c) Treatment of Related Options and Stock Appreciation Rights Upon
Exercise. Upon the exercise of a Stock Appreciation Right granted in connection
with an Option, the Option shall be canceled to the extent of the number of
Shares as to which the Stock Appreciation Right is exercised, and upon the
exercise of an Option granted in connection with a Stock Appreciation Right, the
Stock Appreciation Right shall be canceled to the extent of the number of Shares
as to which the Option is exercised or surrendered.
8.3 Stock Appreciation Right Unrelated to an Option. The
Committee may grant to Eligible Individuals Stock Appreciation Rights unrelated
to Options. Stock Appreciation Rights unrelated to Options shall contain such
terms and conditions as to exercisability (subject to Section 8.7), vesting and
duration as the Committee shall determine, but in no event shall they have a
term of greater than ten (10) years. Upon exercise of a Stock Appreciation Right
unrelated to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the Fair Market Value of a Share on the date the Stock Appreciation Right was
granted, by (B) the number of Shares as to which the Stock Appreciation Right is
being exercised. Notwithstanding the foregoing, the Committee may limit in any
manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock Appreciation Right
at the time it is granted.
8.4 Non-Transferability. No Stock Appreciation Right shall be
transferable by the Grantee otherwise than by will or by the laws of descent and
distribution or pursuant to a domestic relations order (within the meaning of
Rule 16a-12 promulgated under the Exchange Act), and such Stock Appreciation
Right shall be exercisable during the lifetime of such Grantee only by the
Grantee or his or her guardian or legal representative. The terms of such Stock
Appreciation Right shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Grantee.
8.5 Method of Exercise. Stock Appreciation Rights shall be
exercised by a Grantee only by a written notice delivered in person or by mail
to the Secretary of the Company at the Company's principal executive office,
specifying the number of Shares with respect to which the Stock Appreciation
Right is being exercised. If requested by the Committee, the Grantee shall
deliver the Agreement evidencing the Stock Appreciation Right being exercised
and the Agreement evidencing any related Option to the Secretary of the Company
who shall endorse thereon a notation of such exercise and return such Agreement
to the Grantee.
8.6 Form of Payment. Payment of the amount determined under
Sections 8.2(b) or 8.3 may be made in the discretion of the Committee solely in
whole Shares in a number determined at their Fair Market Value on the date
preceding the date of exercise of the Stock Appreciation Right, or solely in
cash, or in a combination of cash and Shares. If the Committee decides to make
full payment in Shares and the amount payable results in a fractional Share,
payment for the fractional Share will be made in cash.
8.7 Effect of Change in Control. Upon the occurrence of a
Change in Control, all Stock Appreciation Rights shall become immediately and
fully exercisable. In addition, to the extent set forth in an Agreement
evidencing the grant of a Stock Appreciation Right unrelated to an Option, a
Grantee will be entitled to receive a payment from the Company in cash or stock,
in either case, with a value equal to the excess, if any, of (A) the greater of
(x) the Fair Market Value, on the date preceding the date of exercise, of the
underlying Shares subject to the Stock Appreciation Right or portion thereof
exercised and (y) the Adjusted Fair Market Value, on the date preceding the date
of exercise, of the Shares over (B) the aggregate Fair Market Value, on the date
the Stock Appreciation Right was granted, of the Shares subject to the Stock
Appreciation Right or portion thereof exercised.
9. Dividend Equivalent Rights.
Dividend Equivalent Rights may be granted to Eligible Individuals in tandem with
an Option or Award or as a separate award. The terms and conditions applicable
to each Dividend Equivalent Right shall be specified in the Agreement under
which the Dividend Equivalent Right is granted. Amounts payable in respect of
Dividend Equivalent Rights may be payable currently or deferred until the
lapsing of restrictions on such Dividend Equivalent Rights or until the vesting,
exercise, payment, settlement or other lapse of restrictions on the Option or
Award to which the Dividend Equivalent Rights relate. In the event that the
amount payable in respect of Dividend Equivalent Rights are to be deferred, the
Committee shall determine whether such amounts are to be held in cash or
reinvested in Shares or deemed (notionally) to be reinvested in Shares. If
amounts payable in respect of Dividend Equivalent Rights are to be held in cash,
there may be credited at the end of each year (or portion thereof) interest on
the amount of the account at the beginning of the year at a rate per annum as
the Committee, in its discretion, may determine. Dividend Equivalent Rights may
be settled in cash or Shares or a combination thereof, in a single installment
or multiple installments.
10. Restricted Stock.
10.1 Grant. The Committee may grant Awards to Eligible
Individuals of Restricted Stock, which shall be evidenced by an Agreement
between the Company and the Grantee. Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its discretion,
determine and (without limiting the generality of the foregoing) such Agreements
may require that an appropriate legend be placed on Share certificates. Awards
of Restricted Stock shall be subject to the terms and provisions set forth below
in this Section 10.
10.2 Rights of Grantee. Shares of Restricted Stock granted
pursuant to an Award hereunder shall be issued in the name of the Grantee as
soon as reasonably practicable after the Award is granted provided that the
Grantee has executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Committee, an escrow agreement and
any other documents which the Committee may require as a condition to the
issuance of such Shares. If a Grantee shall fail to execute the Agreement
evidencing a Restricted Stock Award, the appropriate blank stock powers and, in
the discretion of the Committee, an escrow agreement and any other documents
which the Committee may require within the time period prescribed by the
Committee at the time the Award is granted, the Award shall be null and void. At
the discretion of the Committee, Shares issued in connection with a Restricted
Stock Award shall be deposited together with the stock powers with an escrow
agent (which may be the Company) designated by the Committee. Unless the
Committee determines otherwise and as set forth in the Agreement, upon delivery
of the Shares to the escrow agent, the Grantee shall have all of the rights of a
stockholder with respect to such Shares, including the right to vote the Shares
and to receive all dividends or other distributions paid or made with respect to
the Shares.
10.3 Non-transferability. Until all restrictions upon the
Shares of Restricted Stock awarded to a Grantee shall have lapsed in the manner
set forth in Section 10.4, such Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated, nor
shall they be delivered to the Grantee.
10.4 Lapse of Restrictions.
(a) Generally. Restrictions upon Shares of Restricted Stock awarded
hereunder shall lapse at such time or times and on such terms and conditions as
the Committee may determine. The Agreement evidencing the Award shall set forth
any such restrictions.
(b) Effect of Change in Control. Unless the Committee shall determine
otherwise at the time of the grant of an Award of Restricted Stock, the
restrictions upon Shares of Restricted Stock shall lapse upon a Change in
Control. The Agreement evidencing the Award shall set forth any such provisions.
10.5 Treatment of Dividends. At the time an Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (i) deferred until the
lapsing of the restrictions imposed upon such Shares and (ii) held by the
Company for the account of the Grantee until such time. In the event that
dividends are to be deferred, the Committee shall determine whether such
dividends are to be reinvested in shares of Stock (which shall be held as
additional Shares of Restricted Stock) or held in cash. If deferred dividends
are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends in respect of Shares of Restricted Stock (whether
held in cash or as additional Shares of Restricted Stock), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Shares in respect of which the deferred dividends were paid, and
any dividends deferred (together with any interest accrued thereon) in respect
of any Shares of Restricted Stock shall be forfeited upon the forfeiture of such
Shares.
10.6 Delivery of Shares. Upon the lapse of the restrictions on
Shares of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.
11. Performance Awards.
11.1 Performance Units. The Committee, in its discretion, may
grant Awards of Performance Units to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Performance Units may be denominated in Shares or a specified
dollar amount and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle, represent the right to receive payment
as provided in Section 11.3(c) of (i) in the case of Share-denominated
Performance Units, the Fair Market Value of a Share on the date the Performance
Unit was granted, the date the Performance Unit became vested or any other date
specified by the Committee, (ii) in the case of dollar-denominated Performance
Units, the specified dollar amount or (iii) a percentage (which may be more than
100%) of the amount described in clause (i) or (ii) depending on the level of
Performance Objective attainment; provided, however, that, the Committee may at
the time a Performance Unit is granted specify a maximum amount payable in
respect of a vested Performance Unit. Each Agreement shall specify the number of
Performance Units to which it relates, the Performance Objectives which must be
satisfied in order for the Performance Units to vest and the Performance Cycle
within which such Performance Objectives must be satisfied.
(a) Vesting and Forfeiture. Subject to Sections 11.3(c) and 11.4, a Grantee
shall become vested with respect to the Performance Units to the extent that the
Performance Objectives set forth in the Agreement are satisfied for the
Performance Cycle.
(b) Payment of Awards. Subject to Section 11.3(c), payment to Grantees in
respect of vested Performance Units shall be made as soon as practicable after
the last day of the Performance Cycle to which such Award relates unless the
Agreement evidencing the Award provides for the deferral of payment, in which
event the terms and conditions of the deferral shall be set forth in the
Agreement. Subject to Section 11.4, such payments may be made entirely in Shares
valued at their Fair Market Value as of the day preceding the date of payment or
such other date specified by the Committee, entirely in cash, or in such
combination of Shares and cash as the Committee in its discretion shall
determine at any time prior to such payment; provided, however, that if the
Committee in its discretion determines to make such payment entirely or
partially in Shares of Restricted Stock, the Committee must determine the extent
to which such payment will be in Shares of Restricted Stock and the terms of
such Restricted Stock at the time the Award is granted.
11.2 Performance Shares. The Committee, in its discretion, may
grant Awards of Performance Shares to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Each Agreement may require that an appropriate legend be placed on
Share certificates. Awards of Performance Shares shall be subject to the
following terms and provisions:
(a) Rights of Grantee. The Committee shall provide at the time an Award of
Performance Shares is made the time or times at which the actual Shares
represented by such Award shall be issued in the name of the Grantee; provided,
however, that no Performance Shares shall be issued until the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of such
Performance Shares. If a Grantee shall fail to execute the Agreement evidencing
an Award of Performance Shares, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other documents which
the Committee may require within the time period prescribed by the Committee at
the time the Award is granted, the Award shall be null and void. At the
discretion of the Committee, Shares issued in connection with an Award of
Performance Shares shall be deposited together with the stock powers with an
escrow agent (which may be the Company) designated by the Committee. Except as
restricted by the terms of the Agreement, upon delivery of the Shares to the
escrow agent, the Grantee shall have, in the discretion of the Committee, all of
the rights of a stockholder with respect to such Shares, including the right to
vote the Shares and to receive all dividends or other distributions paid or made
with respect to the Shares.
(b) Non-transferability. Until any restrictions upon the Performance Shares
awarded to a Grantee shall have lapsed in the manner set forth in Sections
11.2(c) or 11.4, such Performance Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated, nor
shall they be delivered to the Grantee. The Committee may also impose such other
restrictions and conditions on the Performance Shares, if any, as it deems
appropriate.
(c) Lapse of Restrictions. Subject to Sections 11.3(c) and 11.4,
restrictions upon Performance Shares awarded hereunder shall lapse and such
Performance Shares shall become vested at such time or times and on such terms,
conditions and satisfaction of Performance Objectives as the Committee may, in
its discretion, determine at the time an Award is granted.
(d) Treatment of Dividends. At the time the Award of Performance Shares is
granted, the Committee may, in its discretion, determine that the payment to the
Grantee of dividends, or a specified portion thereof, declared or paid on Shares
represented by such Award which have been issued by the Company to the Grantee
shall be (i) deferred until the lapsing of the restrictions imposed upon such
Performance Shares and (ii) held by the Company for the account of the Grantee
until such time. In the event that dividends are to be deferred, the Committee
shall determine whether such dividends are to be reinvested in shares of Stock
(which shall be held as additional Performance Shares) or held in cash. If
deferred dividends are to be held in cash, there may be credited at the end of
each year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its discretion,
may determine. Payment of deferred dividends in respect of Performance Shares
(whether held in cash or in additional Performance Shares), together with
interest accrued thereon, if any, shall be made upon the lapsing of restrictions
imposed on the Performance Shares in respect of which the deferred dividends
were paid, and any dividends deferred (together with any interest accrued
thereon) in respect of any Performance Shares shall be forfeited upon the
forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions on Performance
Shares awarded hereunder, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.
11.3 Performance Objectives
(a) Establishment. Performance Objectives for Performance Awards may be
expressed in terms of (i) earnings per Share, (ii) Share price, (iii) pre-tax
profits, (iv) net earnings, (v) return on equity or assets, or (vi) any
combination of the foregoing. Performance Objectives may be in respect of the
performance of the Company, any of its Subsidiaries, any of its Divisions or any
combination thereof. Performance Objectives may be absolute or relative (to
prior performance of the Company or to the performance of one or more other
entities or external indices) and may be expressed in terms of a progression
within a specified range. The Performance Objectives with respect to a
Performance Cycle shall be established in writing by the Committee by the
earlier of (x) the date on which a quarter of the Performance Cycle has elapsed
or (y) the date which is ninety (90) days after the commencement of the
Performance Cycle, and in any event while the performance relating to the
Performance Objectives remain substantially uncertain.
(b) Effect of Certain Events. At the time of the granting of a Performance
Award, or at any time thereafter, in either case to the extent permitted under
Section 162(m) of the Code and the regulations thereunder without adversely
affecting the treatment of the Performance Award as Performance-Based
Compensation, the Committee may provide for the manner in which performance will
be measured against the Performance Objectives (or may adjust the Performance
Objectives) to reflect the impact of specified corporate transactions,
accounting or tax law changes and other extraordinary and nonrecurring events.
(c) Determination of Performance. Prior to the vesting, payment, settlement
or lapsing of any restrictions with respect to any Performance Award that is
intended to constitute Performance-Based Compensation made to a Grantee who is
subject to Section 162(m) of the Code, the Committee shall certify in writing
that the applicable Performance Objectives have been satisfied.
11.4 Effect of Change in Control. In the event of a Change in Control:
(a) With respect to Performance Units, the Grantee shall (i) become vested
in all or a portion of the Performance Units as determined by the Committee at
the time of the Award of such Performance Units and as set forth in the
Agreement and (ii) be entitled to receive in respect of all Performance Units
which become vested as a result of a Change in Control a cash payment within ten
(10) days after such Change in Control in an amount as determined by the
Committee at the time of the Award of such Performance Unit and as set forth in
the Agreement.
(b) With respect to Performance Shares, all or a portion of any unissued
Performance Shares shall be issued and restrictions shall lapse immediately on
all or a portion of the Performance Shares in each case as determined by the
Committee at the time of the Award of such Performance Shares and as set forth
in the Agreement.
(c) The Agreements evidencing Performance Shares and Performance Units
shall provide for the treatment of such Awards (or portions thereof) which do
not become vested as the result of a Change in Control, including, but not
limited to, provisions for the adjustment of applicable Performance Objectives.
11.5 Non-transferability. Until the vesting of Performance Units or the
lapsing of any restrictions on Performance Shares, as the case may be, such
Performance Units or Performance Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated.
12. Effect of a Termination of Employment.
The Agreement evidencing the grant of each Option and each Award shall set forth
the terms and conditions applicable to such Option or Award upon a termination
or change in the status of the employment of the Optionee or Grantee by the
Company, a Subsidiary or a Division (including a termination or change by reason
of the sale of a Subsidiary or a Division), which shall be as the Committee may,
in its discretion, determine at the time the Option or Award is granted or
thereafter.
13. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the Committee shall, in its
sole discretion, determine the appropriate adjustments, if any, to (i) the
maximum number and class of Shares or other stock or securities with respect to
which Options or Awards may be granted under the Plan, (ii) the maximum number
and class of Shares or other stock or securities with respect to which Options
or Awards may be granted to any Eligible Individual during any calendar year,
(iii) the number and class of Shares or other stock or securities which are
subject to outstanding Options or Awards granted under the Plan and the purchase
price therefor, if applicable, and (iv) the Performance Objectives.
(b) Any such adjustment in the Shares or other stock or securities subject
to outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a modification
as defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a Grantee of an Award
shall be entitled to, or an Optionee shall be entitled to exercise an Option
with respect to, new, additional or different shares of stock or securities,
such new, additional or different shares shall thereupon be subject to all of
the conditions, restrictions and performance criteria which were applicable to
the Shares subject to the Award or Option, as the case may be, prior to such
Change in Capitalization.
14. Effect of Certain Transactions.
Subject to Sections 7.4, 8.7, 10.4(b) and 11.4 or as otherwise provided in an
Agreement, in the event of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company (a "Transaction"), the Plan and
the Options and Awards issued hereunder shall continue in effect in accordance
with their respective terms, except that following a Transaction each Optionee
and Grantee shall be entitled to receive in respect of each Share subject to any
outstanding Options or Awards, as the case may be, upon exercise of any Option
or payment or transfer in respect of any Award, the same number and kind of
stock, securities, cash, property or other consideration that each holder of a
Share was entitled to receive in the Transaction in respect of a Share;
provided, however, that such stock, securities, cash, property, or other
consideration shall remain subject to all of the conditions, restrictions and
performance criteria which were applicable to the Options and Awards prior to
such Transaction.
15. Interpretation.
Following the required registration of any equity security of the Company
pursuant to Section 12 of the Exchange Act:
(a) The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the provisions of
the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.
(b) Unless otherwise expressly stated in the relevant Agreement, each
Option, Stock Appreciation Right and Performance Award granted under the Plan is
intended to be performance-based compensation within the meaning of Section
162(m)(4)(C) of the Code. The Committee shall not be entitled to exercise any
discretion otherwise authorized hereunder with respect to such Options or Awards
if the ability to exercise such discretion or the exercise of such discretion
itself would cause the compensation attributable to such Options or Awards to
fail to qualify as performance-based compensation.
16. Pooling Transactions.
Notwithstanding anything contained in the Plan or any Agreement to the contrary,
in the event of a Change in Control which is also intended to constitute a
Pooling Transaction, the Committee shall take such actions, if any, as are
specifically recommended by an independent accounting firm retained by the
Company to the extent reasonably necessary in order to assure that the Pooling
Transaction will qualify as such, including but not limited to (i) deferring the
vesting, exercise, payment, settlement or lapsing of restrictions with respect
to any Option or Award, (ii) providing that the payment or settlement in respect
of any Option or Award be made in the form of cash, Shares or securities of a
successor or acquirer of the Company, or a combination of the foregoing, and
(iii) providing for the extension of the term of any Option or Award to the
extent necessary to accommodate the foregoing, but not beyond the maximum term
permitted for any Option or Award.
17. Termination and Amendment of the Plan or Modification of Options
and Awards. 17.1 Plan Amendment or Termination. The Plan shall terminate on the
day preceding the tenth anniversary of the date of its adoption by the Board and
no Option or Award may be granted thereafter. The Board may sooner terminate the
Plan and the Board may at any time and from time to time amend, modify or
suspend the Plan; provided, however, that:
(a) no such amendment, modification, suspension or termination shall impair
or adversely alter any Options or Awards theretofore granted under the Plan,
except with the consent of the Optionee or Grantee, nor shall any amendment,
modification, suspension or termination deprive any Optionee or Grantee of any
Shares which he or she may have acquired through or as a result of the Plan; and
(b) to the extent necessary under any applicable law, regulation or
exchange requirement, no amendment shall be effective unless approved by the
stockholders of the Company in accordance with applicable law, regulation or
exchange requirement.
17.2 Modification of Options and Awards. No modification of an Option or Award
shall adversely alter or impair any rights or obligations under the Option or
Award without the consent of the Optionee or Grantee, as the case may be.
18. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.
19. Limitation of Liability.
As illustrative of the limitations of liability of the Company, but not intended
to be exhaustive thereof, nothing in the Plan shall be construed to:
(i) give any person any right to be granted an Option or Award other than
at the sole discretion of the Committee;
(ii) give any person any rights whatsoever
with respect to Shares except as specifically
provided in the Plan;
(iii) limit in any way the right of the Company or any Subsidiary to
terminate the employment of any person at any time; or
(iv) be evidence of any agreement or
understanding, expressed or implied, that the Company
will employ any person at any particular rate of
compensation or for any particular period of time.
20. Regulations and Other Approvals; Governing Law.
20.1 Except as to matters of federal law, the Plan and the
rights of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware without giving effect to
conflicts of laws principles thereof.
20.2 The obligation of the Company to sell or deliver Shares
with respect to Options and Awards granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
20.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.
20.4 Each Option and Award is subject to the requirement that,
if at any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.
20.5 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), and is not
otherwise exempt from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option or Award granted under the Plan, as a condition
precedent to receipt of such Shares, to represent and warrant to the Company in
writing that the Shares acquired by such individual are acquired without a view
to any distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act or the rules and regulations
promulgated thereunder. The certificates evidencing any of such Shares shall be
appropriately amended to reflect their status as restricted securities as
aforesaid.
21. Miscellaneous.
21.1 Multiple Agreements. The terms of each Option or Award
may differ from other Options or Awards granted under the Plan at the same time,
or at some other time. The Committee may also grant more than one Option or
Award to a given Eligible Individual during the term of the Plan, either in
addition to, or in substitution for, one or more Options or Awards previously
granted to that Eligible Individual.
21.2 Withholding of Taxes.
(a) At such times as an Optionee or Grantee recognizes taxable income in
connection with the receipt of Shares or cash hereunder (a "Taxable Event"), the
Optionee or Grantee shall pay to the Company an amount equal to the federal,
state and local income taxes and other amounts as may be required by law to be
withheld by the Company in connection with the Taxable Event (the "Withholding
Taxes") prior to the issuance, or release from escrow, of such Shares or the
payment of such cash. The Company shall have the right to deduct from any
payment of cash to an Optionee or Grantee an amount equal to the Withholding
Taxes in satisfaction of the obligation to pay Withholding Taxes. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee or Grantee may make a written election (the "Tax Election"), which may
be accepted or rejected in the discretion of the Committee, to have withheld a
portion of the Shares then issuable to him or her having an aggregate Fair
Market Value equal to the Withholding Taxes.
(b) If an Optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any Share or
Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.
21.3. Effective Date. The Plan shall be effective on the date
on which the plan of reorganization of the Company is consummated (the
"Effective Date"); provided, however, that any Awards granted under the Plan
shall be subject to the requisite approval of the stockholders of the Company.
<PAGE>
EXHIBIT D
<PAGE>
Proposed Directors of Reorganized Salant
The Board of Directors of Reorganized Salant as of the Effective Date shall
consist of the following members:
1) Michael Setola
2) Talton R. Embry
3) Rose Peabody Lynch
4) G. Raymond Epson; and
5) Ben Evans.
- --------
* Gives effect to the consummation of the Plan of Reorganization.
* Such number gives effect to the consummation of the Plan of Reorganization.
* Such number gives effect to the consummation of the Plan of Reorganization.
Robert E. Gerber (RG-6256)
FRIED, FRANK, HARRIS, SHRIVER
& JACOBSON
(A Partnership Including
Professional Corporations)
Attorneys for the Debtor
and Debtor-in-Possession
One New York Plaza
New York, New York 10004
(212) 859-8000
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - - - x
In re: :
Chapter 11
SALANT CORPORATION, :
Case No. 98 B 10107 (CB)
Debtor. :
- - - - - - - - - - - - - - - - - - - - x
ORDER PURSUANT TO SECTION 1129 OF THE BANKRUPTCY
CODE CONFIRMING THE FIRST AMENDED CHAPTER 11
PLAN OF REORGANIZATION OF SALANT CORPORATION
Salant Corporation, the above-captioned debtor and
debtor-in-possession (the "Debtor"), having proposed and filed with this Court
on December 29, 1998 a plan of reorganization under chapter 11 of title 11 of
the United States Code (the "Bankruptcy Code") including the exhibits annexed
thereto, as amended on February 3, 1999 and as further provided in this Order
(the "Plan"), and based upon all pleadings and papers filed in this chapter 11
case (the "Chapter 11 Case"), all proceedings heretofore held in this Chapter 11
Case, and the record on the Confirmation Hearing, and after due deliberation and
sufficient cause appearing therefor:
THE COURT HAVING FOUND AND DETERMINED THAT:
A. On the Filing Date, the Debtor filed the Plan and a form of disclosure
statement (the "Disclosure Statement") in accordance with sections 1121 and 1125
of the Bankruptcy Code and Rule 3016 of the Federal Rules of Bankruptcy
Procedure (the "Bankruptcy Rules"). B. At the conclusion of a hearing on
February 3, 1999 (the "Disclosure Statement Hearing"), at which the Debtor
announced the supplementation of the Disclosure Statement and committed to make
a number of additions to the Disclosure Statement, this Court entered an order,
dated February 3, 1999 (the "Disclosure Statement Order"), approving the
adequacy of the Disclosure Statement pursuant to section 1125 of the Bankruptcy
Code. C. Gerard J. Mucha of Morrow & Co., Inc., Cassandra Murray of Donlin,
Recano & Company, and Raj Cyril of Apple Direct Mail Services, Ltd. having
certified on March 25, 1999 (the "Affidavits of Service") that, pursuant to the
Disclosure Statement Order (i) copies of the Plan, the Disclosure Statement, the
notice to creditors or equity holders concerning voting, the confirmation
hearing (the "Confirmation Hearing") and time for objecting to confirmation, and
the Ballots were transmitted to holders of Claims or Interests entitled to vote
on the Plan, and (ii) the notice of unimpaired status and the notice of
Confirmation Hearing were transmitted to holders of Claims or Interests not
entitled to vote on the Plan. D. Carol Donlin of Donlin, Recano & Company, Inc.
having certified on March 25, 1999 (the "Donlin Certification") that the Debtor
received the requisite acceptances both in number and amount for confirmation of
the Plan as required under section 1126 of the Bankruptcy Code. E. Notice of (i)
the time for objections to confirmation of the Plan and (ii) the Confirmation
Hearing was given in accordance with Rule 2002(b)(2) of the Bankruptcy Rules and
the Disclosure Statement Order and all applicable Bankruptcy Rules, and no
further notice is required. F. Under the Plan:
(i) Priority Claims (Class 1), CIT Claims (Class 2),
Miscellaneous Secured Claims (Class 4), and General Unsecured
Claims (Class 6) were Unimpaired; they would be deemed by law
to have accepted the Plan; and they thus did not have the
right to vote to accept or reject the Plan.
(ii) Holders of Other Interests (Class 8) were
Impaired and would receive nothing under the Plan; they would
be deemed by law to have rejected the Plan; and they thus did
not have the right to vote to accept or reject the Plan.
(iii) Senior Notes Claims (Class 3), PBGC Claims
(Class 5), and Holders of Old Common Stock Interests (Class 7)
were Impaired; would receive property under the Plan; and they
thus had the right to vote to accept or reject the Plan.
G. After entry of the Disclosure Statement Order, the Debtor timely mailed
copies of the Disclosure Statement, with ballots, to all members of Impaired
Classes who were entitled to vote on the Plan. H. After entry of the Disclosure
Statement Order, the Debtor timely mailed notice of the Confirmation Hearing to
other creditors who were Unimpaired under the Plan. I. Upon the receipt and
tabulation of the ballots:
(i) 100% of Class 3 in dollar amount, and 100% in number, accepted the
Plan. Class 3 accepted the Plan;
(ii) the one and only member of Class 5, representing 100% of Class 5 in
dollar amount and 100% in number, accepted the Plan. Class 5 accepted the Plan;
(iii) 96.94% of Class 7 in amount, and 91.03% in number, accepted the Plan.
Class 7 accepted the Plan.
The Plan was accordingly accepted by three impaired classes.
J. When filed, the Plan provided for two alternative treatments for holders of
Senior Note Claims (Class 3). The first provided in substance that in
satisfaction of the Debtor's debt obligations to holders of Senior Note Claims,
they would receive the New Common Stock of the Reorganized Debtor ("Plan
Treatment 1"). The second provided in substance that in satisfaction of the
Debtor's debt obligations to holders of Senior Notes Claims, they would receive
payment in kind ("PIK") notes ("Plan Treatment 2"). The Debtor thereafter
informed the Court and parties in interest that it intended to proceed with Plan
Treatment 1, and provide holders of Senior Notes Claims with New Common Stock.
Accordingly, objections to confirmation of the Plan with respect to Plan
Treatment 2 became moot, and there was no need or occasion to consider the
confirmability of the Plan under Plan Treatment 2. K. No timely objections were
filed with respect to alleged failure to comply with the requirements of
Bankruptcy Code section 1129 with respect to Plan Treatment 1. However:
(i) An objection to confirmation (the "Supreme
Objection") was filed by Supreme International Corp.
("Supreme"). Supreme represented to the Court that it "it is
in the process of acquiring" PEI, and thereafter advised the
Court that it had acquired PEI, and objected to confirmation,
and in particular the provision of the Plan under which the
Debtor assumes the PEI Licenses. After a hearing and arguments
with respect to the Supreme Objection, but before the Court
announced its ruling with respect to the Supreme Objection,
the Debtor and Supreme (in its own capacity and on behalf of
PEI) announced that they had settled and resolved their
differences, and the economic terms of their settlement (the
"PEI Settlement") were set forth on the record in open court
on April 16, 1999, and are set forth in a Term Sheet attached
to this Order as Exhibit A. In connection with the PEI
Settlement, Supreme (in its own capacity and on behalf of PEI)
advised the Court that it withdrew, with prejudice, all
objections to confirmation of the Plan, and that it now
supported confirmation of the Plan.
(ii) Subsequent to the objection deadline, on April
8, 1999, an objection to confirmation (the "Georgia Revenue
Department Objection") was filed by the Georgia Department of
Revenue (the "Georgia Revenue Department"). The Georgia
Revenue Department Objection was subsequently resolved by the
parties pursuant to the terms set forth below, and the Georgia
Revenue Department withdrew the Georgia Revenue Department
Objection.
L. Any payments made or to be made by the Debtor, by Reorganized Salant or by
any person issuing securities or acquiring property under the Plan, for services
or for costs and expenses in or in connection with the Chapter 11 Case, or in
connection with the Plan and incident to the Chapter 11 Case, have been approved
by, or are subject to the approval of, this Court as reasonable.
M. The Debtor informed the Court at the Confirmation Hearing
that it had agreed to, and did, modify the Plan (the "Modifications") to address
desires and/or concerns of the PBGC, the Office of the United States Trustee,
and the Office of the United States Attorney. The Confirmation Order sets forth
these Modifications, and the Plan is accordingly modified in the manner provided
in this Order. Those Modifications have been considered by the Court in
determining whether the Plan should be confirmed. The Modifications do not
adversely affect the rights of any party.
N. The Court makes the following factual findings with respect
to the requirements of Bankruptcy Code section 1129:
(i) Notice of (i) the time for objections to
confirmation of the Plan and (ii) the Confirmation Hearing was
given in accordance with Rule 2002(b)(2) of the Federal Rules
of Bankruptcy Procedure (the "Bankruptcy Rules") and the
Disclosure Statement Order and all applicable Bankruptcy
Rules, and no further notice is required.
(ii) The procedures by which the Ballots for
acceptance or rejection of the Plan were distributed and
tabulated were fair and were properly conducted in accordance
with the Disclosure Statement Order.
(iii) The Debtor obtained the requisite acceptances
both in number and amount for confirmation of its Plan.
(iv) With respect to the requirements of the
Bankruptcy Code, including, without limitation, sections
1129(a)(1), 1122 and 1123, the Plan complies with any and all
applicable provisions and requirements of the Bankruptcy Code.
(v) With respect to the requirements of Bankruptcy
Code section 1129(a)(2), the Plan fully complies with any and
all requirements of the Bankruptcy Code.
(vi) With respect to the requirements of Bankruptcy
Code section 1129(a)(3), the Plan has been proposed in good
faith, and not by any means forbidden by law.
(vii) With respect to the requirements of Bankruptcy
Code section 1129(a)(4), any payments made or to be made by
the Debtor, by Reorganized Salant or by any person issuing
securities or acquiring property under the Plan, for services
or for costs and expenses in or in connection with the Chapter
11 Case, or in connection with the Plan and incident to the
Chapter 11 Case, have been approved by, or are subject to the
approval of, this Court as reasonable.
(viii) With respect to the requirements of
Bankruptcy Code section 1129(a)(5): (a)
The Debtor has disclosed the identity and
affiliations of each of the
individuals proposed to serve, after consummation of
the Plan, as directors or officers of Reorganized
Salant, and the appointment to, or continuance in,
such office of each such individual is consistent
with the interests of the Creditors and holders of
Interests and with public policy;
(b) As of the Effective Date, the Board of
Directors of Reorganized Salant will consist of the
following five (5) individuals: Michael Setola,
Talton R. Embry, Rose Peabody Lynch, G. Raymond Epson
and Ben Evans. Michael Setola will continue to be the
chairman of Reorganized Salant's Board of Directors.
Each member of the Board of Reorganized Salant will
serve in accordance with the Amended and Restated
Certificate of Incorporation and the Amended and
Restated By-Laws of Reorganized Salant and the laws
of the State of Delaware. To the extent that the
individuals comprising the Debtor's Board of
Directors who will not continue to serve in such
capacity with Reorganized Salant as of the Effective
Date have not resigned immediately prior to the
Effective Date, such individuals shall be deemed to
have resigned from the Debtor's Board of Directors
immediately prior to the Effective Date; and
(c) The Debtor has disclosed the identity
of any insider that will be employed or retained by
Reorganized Salant and the nature of any compensation
for such insider. (ix) With respect to the
requirements of Bankruptcy Code section 1129(a)(6),
the Plan
does not provide for any changes in rates over which a
governmental regulatory commission has jurisdiction.
(x) With respect to the requirements of Bankruptcy
Code section 1129(a)(7), each holder of an Allowed Claim or
Interest in an Impaired class:
(a) has duly and timely accepted the Plan; or
(b) will receive or retain under the Plan
on account of such Claim or Interest property of a
value, as of the Effective Date, that is not less
than the amount that such holder would receive or
retain if the Debtor were liquidated under chapter 7
of the Bankruptcy Code. (xi) With respect to the
requirements of Bankruptcy Code section 1129(a)(8),
the
Court cannot find that each class of Claims or Interests has
accepted the Plan, or such class is not Impaired under the
Plan, but only because the Class of Other Interests (Class 8)
will receive nothing under the Plan and is deemed to have
rejected the Plan.
(xii) With respect to the requirements of Bankruptcy
Code section 1129(a)(9), the Plan provides for treatment of
Administrative Expenses, Priority Tax Claims and all other
Claims entitled to priority pursuant to section 507(a) of the
Bankruptcy Code in the manner required.
(xiii) With respect to the requirements of
Bankruptcy Code section 1129(a)(10): (a) a
class of claims is Impaired under the Plan
(or to be more exact, 4
classes are so Impaired); and
(b) at least one Class of Claims that is
Impaired under the Plan has accepted the Plan (or to
be more exact, 3 Classes have so accepted),
determined without including any acceptance of the
Plan by any insider. (xiv) With respect to the
requirements of Bankruptcy Code section 1129(a)(11):
(a) the Debtor has de-leveraged itself
considerably, converting approximately $105 million
in principal amount of debt into equity;
(b) the Debtor has arranged for an exit
financing facility with CIT (the "CIT Exit Facility")
pursuant to the Post-Confirmation Credit Agreement
(as defined below) which can reasonably be expected
to provide the Debtor with the working capital it
will require; and
(c) confirmation of the Plan is not likely
to be followed by the liquidation, or the need for
further financial reorganization, of the Debtor or
Reorganized Salant. (xv) With respect to the
requirements of Bankruptcy Code section 1129(a)(12),
the
Plan provides for the payment of all fees payable under
section 1930 of title 28 of the United States Code on the
Effective Date of the Plan.
(xvi) With respect to the requirements of Bankruptcy
Code section 1129(a)(13), payment of "retiree benefits" (as
that term is defined in section 1114 of the Bankruptcy Code),
if any, will continue after the Effective Date at the level
established pursuant to section 1114 of the Bankruptcy Code,
at any time prior to confirmation of the Plan, for the
duration of the period the Debtor has obligated itself to
provide such benefits.
(xvii) With respect to the requirements of Bankruptcy Code section 1129(b):
(a) the Debtor, as proponent of the Plan, has requested that the Court confirm
the Plan notwithstanding that the requirements of Bankruptcy Code section
1129(a)(8) have not been satisfied;
(b) the Plan does not discriminate
unfairly with respect to holders of Other Interests
(Class 8) who are Impaired under the Plan and have
not accepted the Plan;
(c) the Plan is "fair and equitable" (as
defined in section 1129(b) of the Bankruptcy Code)
with respect to holders of Other Interests (Class 8)
who are Impaired under the Plan and have not accepted
the Plan; and
(d) all requirements of section 1129(b) of
the Bankruptcy Code have been satisfied.
O. All conditions to confirmation contained in Section 13.1 of the Plan have
been satisfied or have been duly waived. P. All documents necessary to implement
the Plan, including, without limitation, the Amended Certificate of
Incorporation, the Amended and Restated By-Laws, the Stock Award and Incentive
Plan, the Management Employment Agreements, the PBGC Agreement, the CIT Exit
Facility and all other such relevant and necessary documents shall, upon
execution, be valid, binding and enforceable agreements and not be in conflict
with any federal or state law. Q. The Reorganized Salant New Common Stock is
exempt from the registration requirements of the Securities Act of 1933 and
relevant state securities laws or local laws under section 1145 of the
Bankruptcy Code. R. Except as otherwise specifically provided in the Plan or
this Order, the rights provided under the Plan shall be in complete
satisfaction, discharge and release of all claims against, liabilities of, liens
on, obligations of and interests in the Debtor or Reorganized Salant, or of the
assets of the Debtor or Reorganized Salant, that arose before the Confirmation
Date, and of any debt of a kind specified in sections 502(g), 502(h) and 502(i)
of the Bankruptcy Code, whether known or unknown, in each case regardless of
whether a proof of Claim or Interest is filed or is deemed filed, whether or not
Allowed, and whether or not the holder of the Claim or Interest has voted on the
Plan. All Claims and Interests shall forever be satisfied, discharged or
released in full as of the Effective Date, and all holders of Claims or
Interests shall be forever precluded from asserting against the Debtor or
Reorganized Salant, or the assets of the Debtor or Reorganized Salant, any other
or further liabilities, liens, obligations, or Claims based upon any act or
omission, transaction or other activity or security agreement or other agreement
of any kind or nature occurring, arising or existing prior to the Effective
Date, except as otherwise expressly preserved pursuant to the Plan and this
Order. S. The PEI Settlement represents a reasonable exercise of business
judgment by the Debtor, and is in the best interests of the Debtor's estate.
Pursuant to, and to the extent provided by, the PEI Settlement, the Debtor's
assumption of the PEI Licenses (which term, for purposes herein, shall be deemed
to include the Settlement Agreement dated March 24, 1992 between the Debtor and
PEI and the PEI Settlement) and the Debtor's reorganization under the Plan with
the treatment provided to Senior Note Claims (Class 3) under Section 6.3(a)(i)
of the Plan and the treatment provided to Old Common Stock Interests (Class 7)
under Section 6.7(a)(i) of the Plan, and the confirmation and consummation of
the Plan (including, but not limited to, the provisions providing such
treatment), and the sale of assets by the Debtor during the course of this
Chapter 11 Case, do not and will not give rise to any rights of PEI under the
PEI Licenses based on any "change of control" provision in the PEI Licenses (as
that term is defined in the PEI Licenses) or any other provision on which
Supreme relied in the Supreme Objection, and such change of control and such
sales of assets will not result in any forfeiture, termination or modification
of any rights of the Debtor under the PEI Licenses as assumed, or any right on
the part of PEI to cause any forfeiture, termination or modification. T. The
execution, delivery or performance by the Debtor or Reorganized Salant, as the
case may be, of the CIT Exit Facility and/or the Plan and compliance by the
Debtor or Reorganized Salant, as the case may be, with the terms thereof is
authorized by and does not conflict with the terms of the Plan or this Order.
The financial accommodations to be extended pursuant to the CIT Exit Facility
are being extended in good faith and for legitimate business purposes. In
connection with confirmation of the Plan, no party objected to the terms and
conditions of the CIT Exit Facility. U. The Court may properly retain
jurisdiction over this Chapter 11 Case, including, without limitation (i) the
right to enforce and interpret this Order and any of the orders that have been
previously entered in this Chapter 11 Case, (ii) any stipulations that have been
authorized and approved, (iii) to issue any order that is necessary or
appropriate to implement this Order or the Plan and (iv) in accordance with
Section 14.1 of the Plan. V. All requirements for confirmation of the Plan set
forth in section 1129(a), and, to the extent applicable, 1129(b), of the
Bankruptcy Code have been satisfied.
THEREFORE, IT IS ORDERED, ADJUDGED AND DECREED that:
1. This Court has subject matter jurisdiction over the matter
before it, the matter of confirmation of the Debtor's Plan, pursuant to 28
U.S.C. ss. 1334.
2. This matter is a core matter in which a Bankruptcy Judge
has the power to hear and determine this matter in its entirety, pursuant to 28
U.S.C. ss. 157(b)(2)(A), in that it is a matter concerning the administration of
the estate; ss. 157(b)(2)(L), in that it is a matter concerning confirmation of
a plan; and ss. 157(b)(2)(O), in that it is a proceeding affecting the
adjustment of the debtor-creditor or the equity security holder relationship.
3. All requirements for confirmation of the Plan set forth in
section 1129(a), and, to the extent applicable, 1129(b), of the Bankruptcy Code
have been satisfied.
4. The findings of this Court as set forth above shall
constitute findings of fact and conclusions of law pursuant to Bankruptcy Rule
7052, as made applicable to this matter by Bankruptcy Rule 9014.
5. The Plan, as modified on the record at the Confirmation
Hearing and by this Order, be, and it hereby is (a) incorporated herein by
reference as if fully set forth at length and (b) confirmed.
6. The PEI Settlement is approved. The Debtor is authorized
and directed to take such steps as are necessary or desirable to implement the
PEI Settlement, including, without limitation, the execution of definitive
documentation with respect thereto.
7. All documents necessary to implement the Plan, including,
without limitation, the Amended Certificate of Incorporation, the Amended and
Restated By-Laws, the Stock Award and Incentive Plan, the Management Employment
Agreements, the PBGC Agreement, the CIT Exit Facility and all other such
relevant and necessary documents shall, upon execution, be valid, binding and
enforceable agreements and not be in conflict with any federal or state law.
8. In accordance with Bankruptcy Rule 3019 and section 1127 of
the Bankruptcy Code, the Modifications provided for herein and as set forth in
the record of the Confirmation Hearing do not
(i) affect the classification of Claims against or Interests
in the Debtor, (ii) constitute material modifications of the
Plan, (iii) cause the Plan to fail to meet the requirements of
sections 1122 or 1123 of the
Bankruptcy Code,
(iv) adversely change the treatment of holders of Claims or
Interests who have accepted the Plan,
(v) require resolicitation of acceptances or rejection from
any holders of Claims against or Interests in the Debtor or
(vi) require that any holders be afforded an opportunity to
change previously cast acceptances or rejections of the Plan.
9. Disclosure of the Modifications on the record of the
Confirmation Hearing and of the PEI Settlement constitutes due and sufficient
notice thereof under the circumstances of this Chapter 11 Case. Therefore, the
Plan, as amended by the Modifications, is deemed accepted by the holders of
Claims and Interests who have previously accepted the Plan, and all references
to the Plan contained in this Order shall be to the Plan as modified in this
Order.
10. Fed. R. Bankr. P. 7062 shall not apply to this Order.
11. Section 12.3 of the Plan be, and it hereby is, modified by
adding the following phrase to the end of Section 12.3:
provided, however, that nothing in this Section
12.3 of the Plan shall effect a release in favor
of the Debtor or any other person with respect to
any debt owed to the United States government,
any state, city or municipality, (a) for any
liability of the Debtor or such other person
arising under (i) the Internal Revenue Code, or
any state, city or municipality tax code, (ii)
the environmental laws of the United States, any
state, city or municipality, or (iii) any
criminal laws of the United States, any state,
city or municipality, or (b) for any liability of
the Debtor or such other person that arose on or
after the Confirmation Date and through the
Effective Date.
12. Section 6.5 of the Plan be, and it hereby is, modified by
deleting the existing Section 6.5(b) of the Plan and substituting the following:
Incorporation of PBGC Agreement. The terms of the
PBGC Agreement shall be deemed to be part of the
Plan.
13. As provided for under the Plan and without in any way limiting the
provisions of the Plan:
(i) The Debtor, Reorganized Salant and all
parties in interest herein be, and they
hereby are, authorized, empowered and
directed to issue all securities under the
Plan, including, without limitation, the New
Common Stock.
(ii) Pursuant to section 1145 of the Bankruptcy
Code the issuance of all securities under
the Plan, including the New Common Stock,
are exempt from the registration
requirements of the Securities Act of 1933
and any state or local laws.
(iii) As of the Effective Date, Reorganized Salant
will adopt the Stock Award and Incentive
Plan. Pursuant to the Stock Award and
Incentive Plan, Reorganized Salant will be
authorized to grant to its senior
management, other key employees and
nonemployee Directors shares of, and options
to acquire shares of, New Common Stock.
(iv) Except as otherwise specifically provided by the Plan or this Order,
the confirmation of the Plan (subject to the occurrence of the Effective Date)
shall discharge and release the Debtor, Reorganized Salant, their successors and
assigns and their respective assets and properties from any debt, charge, Cause
of Action, liability, encumbrances, security interest, Claim, Interest, or other
cause of action of any kind, nature or description (including, but not limited
to, any claim of successor liability) that arose before the Confirmation Date,
and any debt of the kind specified in sections 502(g), 502(h) or 502(i) of the
Bankruptcy Code, whether or not a proof of Claim is filed or is deemed filed,
whether or not such Claim is Allowed, and whether or not the Holder of such
Claim has accepted the Plan.
(v) Without in any way limiting the generality of the immediately
proceeding paragraph, except as otherwise specifically provided by the Plan, the
distributions and rights that are provided in the Plan to Class 3 (Senior Note
Claims), Class 5 (PBGC Claims) and Class 7 (Old Common Stock Interests) shall be
in complete satisfaction, discharge and release, effective as of the Effective
Date of (i) all Claims and Causes of Action against, liabilities of, liens on,
charges, encumbrances, security interests, obligations of and Interests in the
Debtor, Reorganized Salant, or the direct or indirect assets and properties of
the Debtor or Reorganized Salant, whether known or unknown, and (ii) all Causes
of Action, whether known or unknown, either directly or derivatively through the
Debtor or Reorganized Salant, against successors and assigns of the Debtor,
present and former Affiliates of the Debtor, and its partners, directors,
officers, agents, attorneys, advisors, financial advisors, investment bankers,
independent accountants, employees of the Debtor and its Affiliates and any
Affiliate of any of the foregoing, and Magten, and its attorneys, advisors, and
financial advisors, based on the same subject matter as any Claim or Interest,
or based on any act or omission, transaction or other activity or security,
instrument or other agreement of any kind or nature occurring, arising or
existing prior to the Effective Date that was or could have been the subject of
any Claim or Interest, in each case regardless of whether a proof of Claim or
Interest was filed, whether or not Allowed and whether or not the Holder of the
Claim or Interest voted to accept or reject the Plan.
(vi) Without in any way limiting the generality of the foregoing, except as
otherwise specifically provided by the Plan, any Holder of a Claim in Class 3
(Senior Note Claims), Class 5 (PBGC Claims) or Class 7 (Old Common Stock
Interests) accepting any distribution pursuant to this Plan shall be presumed
conclusively to have released the Debtor, Reorganized Salant, successors and
assigns of the Debtor, the present and former Affiliates of the Debtor,
directors, officers, agents, attorneys, independent accountants, advisors,
financial advisors, investment bankers and employees of the Debtor and its
Affiliates, and any Entity claimed to be liable derivatively through any of the
foregoing, from any Cause of Action based on the same subject matter as the
Claim on which the distribution is received. The release described in the
preceding sentence shall be enforceable as a matter of contract against any
Entity that accepts any distribution pursuant to the Plan.
(vii) Without in any way limiting Section 12.2 of
the Plan, all injunctions or stays entered
in the Chapter 11 Case and existing
immediately prior to the Confirmation Date
shall remain in full force and effect until
the Effective Date.
(viii) Except as otherwise set forth in paragraph 19 below, the
satisfaction, release and discharge pursuant to Section 12 of the Plan and this
Order, shall act as an injunction against any Entity commencing or continuing
any action, employment of process, or act to collect, offset or recover any
Claim or Cause of Action satisfied, released or discharged under the Plan. The
injunction, discharge and releases described in Section 12 of the Plan and this
Order shall apply regardless of whether or not a proof of Claim or Interest
based on any Claim, debt, liability or Interests is filed or whether or not a
Claim or Interest based on such Claim, debt, liability or Interest is Allowed,
or whether or not such Entity voted to accept or reject this Plan.
(ix) Except for paragraph 19 hereof, notwithstanding anything to the
contrary contained in the Plan or this Order in consideration of the
distributions under the Plan, upon the Effective Date, each holder of a Claim or
Interest shall be deemed to have released the Debtor, Reorganized Salant or its
directors, officers, agents, attorneys, independent accountants, advisors,
financial advisors, investment bankers, and employees (as applicable) employed
by the Debtor from and after the Filing Date and Magten and its attorneys,
advisors and financial advisors employed by Magten from and after the Filing
Date from any and all Causes of Action (other than the right to enforce the
Debtor's obligations under the Plan and the right to pursue a Claim based on any
willful misconduct) arising out of actions or omissions during the
administration of the Debtor's estate; provided, however, that nothing in
-------- -------
Section 12.3 of the Plan or this Order shall effect a release in favor of
the Debtor or any other person with respect to any debt owed to the United
States government, any state, city or municipality, (a) for any liability of the
Debtor or such other person arising under (i) the Internal Revenue Code, or any
state, city or municipal tax code, (ii) the environmental laws of the United
States, any state, city or municipality, or (iii) any criminal laws of the
United States, any state, city or municipality, or (b) for any liability of the
Debtor or such other person that arose on or after the Confirmation Date and
through the Effective Date.
(x) The classification and the manner of satisfying all Claims under the
Plan takes into consideration the possible existence of any alleged guaranties
by the Debtor of obligations of any Entity or Entities, and that the Debtor may
be a joint obligor with another Entity or Entities with respect to the same
obligation. All Claims against the Debtor based upon any such guaranties shall
be satisfied, discharged and released in the manner provided in the Plan and the
Holders of Claims shall be entitled to only one distribution with respect to any
given obligation of the Debtor.
(xi) Except as expressly provided for in the Plan, to the fullest extent
permitted by applicable law, all Claims against and Interests in the Debtor, and
all rights and Claims between or among Holders of Claims and Interests relating
in any manner whatsoever to Claims against or Interests in the Debtor, based on
any contractual, legal or equitable subordination rights, shall be terminated on
the Effective Date and discharged in the manner provided in the Plan, and all
such Claims, Interests and rights so based and all such contractual, legal and
equitable subordination rights to which any Entity may be entitled shall be
irrevocably waived by the acceptance by such Entity (or, unless this Order
provides otherwise, the Class of which such Entity is a member) of the Plan or
of any distribution pursuant to the Plan. Except as otherwise provided in the
Plan and to the fullest extent permitted by applicable law, the rights afforded
and the distributions that are made in respect of any Claims or Interests under
the Plan shall not be subject to levy, garnishment, attachment or like legal
process by any Holder of a Claim or Interest by reason of any contractual, legal
or equitable subordination rights, so that, notwithstanding any such
contractual, legal or equitable subordination, each Holder of a Claim or
Interest shall have and receive the benefit of the rights and distributions set
forth in the Plan.
(xii) Pursuant to Bankruptcy Rule 9019 and any applicable state law and as
consideration for the distributions and other benefits provided under the Plan,
the provisions of Section 12.4(b) of the Plan shall constitute a good faith
compromise and settlement of any Causes of Action relating to the matters
described in the Section 12.4(b) which could be brought by any Holder of a Claim
or Interest against or involving another Holder of a Claim or Interest, which
compromise and settlement is in the best interests of Holders of Claims and
Interests and is fair, equitable and reasonable. This settlement shall be
approved by the Bankruptcy Court as a settlement of all such Causes of Action.
Entry of the Confirmation Order shall constitute the Bankruptcy Court's approval
of this settlement pursuant to Bankruptcy Rule 9019 and its finding that this is
a good faith settlement pursuant to any applicable state law, including, without
limitation, the laws of the States of New York and Delaware, given and made
after due notice and opportunity for hearing, and shall bar any such Cause of
Action by any Holder of a Claim or Interest against or involving another Holder
of a Claim or Interest.
(xiii) In accordance with sections 1123(a)(5) and
1141 of the Bankruptcy Code, on the
Effective Date, title to all property of the
Debtor's estate shall pass to Reorganized
Salant free and clear of all Claims and
Interests (except as otherwise provided in
the Plan), confirmation of the Plan shall be
binding, and the Debtor shall be discharged
as provided in section 1141 of the
Bankruptcy Code.
(xiv) All key employment agreements, including but
not limited to the Management Employment
Agreements shall be, and hereby are,
approved by the Court, including any and all
such agreements negotiated and entered into
between the Debtor and any individual after
the filing of the petition and during the
Chapter 11 Case.
(xv) Any executory contract or unexpired lease
that has not been rejected by the Debtor
with this Court's approval on or prior to
the Effective Date shall be deemed to have
been assumed by the Debtor on the Effective
Date unless there is then pending before
this Court a motion to reject such executory
contract or unexpired lease.
(xvi) On the Effective Date, all Old Common Stock
Interests will be canceled and extinguished
and the holder of an Allowed Interest in
Class 7 shall be entitled to receive, in
lieu thereof, New Common Stock in accordance
with the Plan.
(xvii) The business and assets of the Debtor shall
remain subject to the jurisdiction of this
Court until the Effective Date. From and
after the Effective Date, this Court shall
retain and have exclusive jurisdiction as
set forth in Section 14.1 of the Plan.
14. The Debtor, Reorganized Salant and all parties in interest
herein be, and they hereby are, authorized, empowered and directed forthwith to
take any and all actions, and to execute any and all documents, necessary to
implement the provisions of the Plan and the PEI Settlement, including, without
limitation, the execution, delivery and performance of all loan documents,
agreements and instruments related to the CIT Exit Facility (collectively, the
"Post-Confirmation Credit Agreement"), the Registration Rights Agreement, the
Stock Award and Incentive Plan, the Management Employment Agreements and the
PBGC Agreement and to execute, deliver and file (as appropriate) all documents
and take all actions provided in or contemplated by any of the same to
accomplish the intent of same. All such actions taken or caused to be taken
shall be deemed to have been authorized and approved by this Court and shall be
deemed effective pursuant to applicable law including section 303 of the
Delaware General Corporation Law and without any requirement of further action
by stockholders or directors of the Debtor. Each of such documents and
agreements will, upon execution, be valid, binding and enforceable against the
Debtor and any other person who is a party thereto, and is entered into for good
and valuable consideration, including the benefits of the Plan.
15. Without the need for a further Order or authorization of
this Court, the Debtor is authorized and empowered to make modifications to the
documents filed with the Court or admitted in the evidentiary record at the
Confirmation Hearing in their reasonable business judgment as may be necessary,
including, but not limited to, the Registration Rights Agreement, the Stock
Award and Incentive Plan, the Management Employment Agreements, and the PBGC
Agreement.
16. On the Effective Date, the Debtor's existing Certificate
of Incorporation and By-laws shall be, and they hereby are, amended and restated
in accordance with the terms thereof and any rights or obligations that may have
been created under either of them are hereby subject to the release and
discharge provisions of this Order.
17. On the Effective Date, the Debtor's Shareholder Rights
Plan between the Debtor and Chase Manhattan Bank, N.A., as rights agent, dated
December 8, 1987, as amended, be, and it hereby is, terminated and canceled and
any rights (including the Rights outstanding under such Rights Plan) or
obligations created by such agreement be, and they hereby are, extinguished in
their entirety.
18. As of the Effective Date, the obligations under the CIT
Exit Facility, if consummated, shall constitute legal, valid, binding and
authorized obligations of the respective parties thereto, enforceable in
accordance with their terms.
19. In accordance with Section 6.2(a)(iii) of the Plan, upon
the CIT Exit Facility becoming effective, the Debtor and CIT agree that the
treatment of CIT under the Plan shall be as set forth in the documents
evidencing the CIT Exit Facility. Notwithstanding anything contained in this
Order (including, without limitation, in Sections 12 (viii) and (ix)) or in
Sections 6.2 or 12 or any other provision of the Plan, the Credit Agreement
between the Debtor and CIT and the obligations of the Debtor to CIT thereunder,
and the liens, security interests and mortgages on the Debtor's property
heretofore granted to CIT, and all UCC financing statements and mortgages
heretofore filed to perfect or record any such liens, security interests or
mortgages, or which otherwise are deemed perfected pursuant to prior Orders of
this Court, shall not be deemed terminated, discharged, satisfied or released as
of the Effective Date or thereafter and shall, without any further act, continue
in full force and effect subject to, and in accordance with, the terms and
conditions of the CIT Exit Facility.
20. The execution, delivery or performance by the Debtor or
Reorganized Salant, as the case may be, of its obligations under the CIT Exit
Facility and/or the Plan, and compliance by the Debtor or Reorganized Salant, as
the case may be, with the terms thereof, is authorized by and does not conflict
with the terms of this Order. The financial accommodations to be extended
pursuant to the CIT Exit Facility are being extended in good faith and for
legitimate business purposes.
21. On the Effective Date, the Senior Notes, the Old Common
Stock, and any rights, options, warrants, calls, commitments, contractual or
otherwise, obligating the Debtor to issue, transfer or sell any shares of Old
Common Stock or any other capital stock or the Debtor shall be canceled.
Pursuant to Section 9.6 of the Plan, and, subject to the occurrence of the
Effective Date, the Indenture, the Senior Notes and the Security documents (as
defined below) shall (except as specifically provided for in the Plan) be deemed
canceled, terminated and of no further force or effect and any and all liens,
security interests and mortgages in or on property of the Debtor or any
affiliate of the Debtor that the Trustee or the holders of Senior Note Claims
may have pursuant to the Indenture or any documents granting a lien, security
interest or mortgage to secure the obligations arising in connection with the
Indenture or any agreements relating thereto (the "Security Documents") shall be
deemed released, and the Debtor or Reorganized Salant shall execute and deliver
any documents reasonably requested by the Trustee to effectuate the cancellation
of the Indenture, the Senior Notes and the Security Documents and the Trustee is
authorized and directed to execute and deliver any documents reasonably
necessary to effectuate the cancellation of the Indenture, the Senior Notes and
the Security Documents and to release such liens, security interests and
mortgages.
22. On the Effective Date, the Debtor is hereby authorized and
directed to pay the Indenture Trustee all fees and expenses due to it under
Section 7.07 of the Indenture and Section 2.1 of the Plan.
23. On the Effective Date, the Debtor is hereby authorized and
directed to pay to the Georgia Revenue Department cash in the amount of its
Allowed Priority Tax Claim (as defined in the Plan), and such payment to the
Georgia Revenue Department shall be in full satisfaction and release of all
prepetition claims the Georgia Revenue Department has or may have against the
Debtor.
24. All distributions of cash, securities or other
consideration required to be made by Reorganized Salant pursuant to the Plan
shall be made within such time as provided by the Plan and all such
distributions shall be timely and proper if mailed by first class mail on or
before the distribution dates set forth in the Plan to the last known address of
the person or entity entitled thereto.
25. The record date for distributions under the Plan be, and
it hereby is, the date of entry of this Order.
26. The Debtor or Reorganized Salant, as the case may be, is
authorized and empowered to retain, without further order of the Court, one or
more exchange, disbursing or similar agents with respect to the distributions to
be made under the Plan.
27. Notwithstanding anything in this Order to the contrary,
the rights of the plaintiffs in the Rodriguez-Olvera Action shall be as set
forth in this Court's order, dated March 15, 1999, pursuant to section 362(d) of
the Bankruptcy Code and Bankruptcy Rule 9006(b) (i) partially modifying the
automatic stay and (ii) enlarging the time within which to file notice of
removal.
28. This Court hereby retains exclusive jurisdiction over this
Chapter 11 Case, including, without limitation, (i) to enforce and interpret
this Order and any of the orders that have been previously entered in this
Chapter 11 Case, (ii) to enforce and interpret any stipulations that have been
authorized and approved, (iii) to issue any order that is necessary or
appropriate to implement this Order or the Plan, and (iv) in accordance with
Section 14.1 of the Plan.
29. Pursuant to the PEI Settlement, the objection of Supreme
has been withdrawn, and unless withdrawn with prejudice, all other objections to
confirmation of the Plan, be, and the same hereby are, denied.
30. All applications by professionals for compensation or
reimbursement of expenses pursuant to sections 330 and 503(b)(4) of the
Bankruptcy Code, or by a party in interest pursuant to section 503(b)(3)(D),
shall be filed with this Court on or before May 28, 1999. All applications for
final allowances of compensation and reimbursement of expenses pursuant to
sections 330 and 503(b) of the Bankruptcy Code in connection with the Chapter 11
Case for all periods prior to and including the Confirmation Date shall be filed
with this Court and served upon (a) Fried, Frank, Harris, Shriver & Jacobson,
One New York Plaza, New York, New York 10004 (Attn.: Robert E. Gerber, Esq.),
attorneys for the Debtor; and (b) the Office of the United States Trustee, 33
Whitehall Street New York, New York 10004 (Attn.: Carolyn Schwartz, Esq.) by no
later than 4:30 p.m., Eastern Standard Time, on May 28, 1999. Objections, if
any, to such final applications shall be filed with this Court and served upon
(a) Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New
York 10004 (Attn.: Robert E. Gerber, Esq.), attorneys for the Debtor; and (b)
the Office of the United States Trustee, 33 Whitehall Street, New York, New York
10004 (Attn.: Carolyn Schwartz, Esq.) by no later than 4:30 p.m., Eastern
Standard time, on June 18, 1999.
31. Within 10 days after entry of this Order, or within such
further time as this Court may allow, the Debtor shall, as provided in
Bankruptcy Rule 2002(f)(7) and in accordance with Bankruptcy Rule 2002(l), cause
to be published one time in The Wall Street Journal (National Edition) a copy of
a notice of entry of this Order in the form annexed hereto as Exhibit B.
Dated: New York, New York
April 16, 1999
/s/ Cornelius Blackshear
The Honorable Cornelius Blackshear
United States Bankruptcy Judge
239865
<PAGE>
EXHIBIT A
<PAGE>
Terms of Proposed Compromise and Settlement
between Salant Corporation and its affiliates ("Salant")
and Supreme International Corporation ("Supreme") and
Perry Ellis International, Inc. ("PEI") (Supreme and PEI
and each of their respective affiliates are hereinafter
referred collectively to as "Supreme-PEI")
A. Salant shall return to PEI the license to sell Perry Ellis products in
Puerto Rico, the U.S. Virgin Islands and Guam.
B. Salant shall return to PEI the license to sell Perry Ellis products in
Canada; provided, that, Salant shall retain the right to sell its
existing inventory under such license through January 31, 2000.
C. Salant's license to manufacture, sell and distribute Perry Ellis
Portfolio pants shall be modified and amended to provide that with
respect to regular price sales of Perry Ellis Portfolio pants (which
shall include all sales to department stores and sales to other
retailers at full price) only in excess of the net amount of
$15,000,000 annually, the royalty rate due PEI under the license with
respect to such regular price sales of Perry Ellis Portfolio pants in
excess of the net amount of $15,000,000 shall be increased to 5%.
D. Salant will provide Supreme-PEI with an option to take over any real
estate lease on retail stores that Salant intends to close, subject to
applicable landlord consent and/or court approval with respect to such
assignment to Supreme-PEI; provided, however, that Salant shall be
released and indemnified by Supreme-PEI with respect to all claims,
obligations and liabilities with respect to such assigned leases, which
arise after the dates on which Supreme-PEI assumes such leases.
E. With respect to Salant's current sublicense to manufacture, sell and
distribute Perry Ellis America brand sportswear dated June 17, 1998
with Aris Industries, Inc. ("Aris"), Salant will assign such sublicense
to PEI. Supreme-PEI will have sole and exclusive responsibility for
obtaining all necessary consents, if any, from Aris with respect to
Salant's assignment of the sublicense to Supreme-PEI.
F. With respect to annual sales of Perry Ellis America brand sportswear for
each of the calendar years 1999 and 2000, regardless of whether such sales are
(i) under the sublicense agreement with Aris, (ii) under any other sublicense
agreement with any entity, or (iii) made directly by Supreme-PEI, Salant shall
continue to receive 50% of the royalties payable each year in respect of such
sales; provided, that,
-------- ----
such royalty payments to Salant shall be computed at the rates set forth in
the sublicense agreement with Aris and shall not exceed $400,000 in any such
year. Unless and until the sublicense agreement with Aris is terminated, for
each of the calendar years 2001, 2002, 2003, 2004 and 2005, Salant shall be
entitled to the annual royalty payments provided above up to the maximum of
$400,000 per year. If subsequent to January 1, 2001, the Aris sublicense is
terminated during or prior to the end of a calendar year, then the maximum
amount of royalties due Salant for such calendar year shall be as set forth
below:
<TABLE>
<CAPTION>
Year Maximum Royalty Amount
---- ----------------------
<S> <C>
2001 $350,000
2002 $300,000
2003 $250,000
2004 $200,000
2005 $200,000
</TABLE>
All royalty payments due Salant shall be due and payable on the terms
and conditions set forth in the sublicense agreement with Aris. Other
than with respect to accrued and unpaid royalty payments, subsequent to
December 31, 2005, Salant's rights with respect to the Perry Ellis
America brand sportswear shall terminate.
G. Supreme-PEI agrees that so long as the PEI License Agreements (as
hereinafter defined) are in effect, any and all exploitation of the
Perry Ellis America brand by Supreme-PEI of every kind and nature
whatsoever, including, without limitation, any and all exploitation
pursuant to licenses and sublicenses of the Perry Ellis America brand,
shall be subject to and conditioned upon and all such licenses and
sublicenses shall contain the identical limitations and restrictions
that are currently set forth in the sublicense agreement with Aris.
H. The parties agree that the following amounts are due and owing under
Salant's license agreements with PEI (the "PEI License Agreements"):
a. $287,886 Advertising for 1998
b. $331,831 Excess royalty for 4th quarter 1998
c. $ 375 Invoiced February 18, 1999 for spring
advertising books
d. $ 56,579 Invoiced March 29, 1999 for balance of
March 1999 MAGIC costs
e. $( 2,873) Overpayment by Salant on January 25, 1999
Total $673,798
These amounts will be paid to PEI on the later of (i) the Effective
Date of the First Amended Chapter 11 Plan of Reorganization for Salant
Corporation, dated February 3, 1999 (the "Plan") and (ii) the due date
with respect to such amounts.
I. In consideration of the value provided to Supreme-PEI hereunder,
Supreme-PEI (i) agrees and acknowledges that the sales of businesses
made by Salant during the course of Salant's Chapter 11 case do not
violate any term of the PEI License Agreements and do not give rise to
any right to terminate the PEI License Agreements, and (ii) consents to
the change in control arising from the conversion of debt into equity
under the Plan and accordingly, acknowledges that such change in
control does not give rise to any rights that may arise under the PEI
License Agreements or otherwise by reason of such change in control,
including, without limitation, any right to terminate the PEI License
Agreements.
J. It is understood and agreed by Salant that (i) the consent in paragraph
I above is limited solely to the change in control contemplated by the
conversion of debt into equity under the Plan and shall not constitute
a consent to any subsequent change in control and (ii) the agreements
in paragraph I above shall be without prejudice to any rights or
positions of Supreme-PEI under the PEI License Agreements with respect
to any matters other than those outlined above.
K. Supreme-PEI shall withdraw with prejudice all objections to and support
confirmation of the Plan and the entry of a confirmation order on April
16, 1999.
L. The parties will jointly seek authorization and approval of this
settlement by the Bankruptcy Court on April 16, 1999.
M. The parties shall issue on April 16, 1999 a mutually agreeable,
enthusiastic and congratulatory joint press release announcing the
resolution of all open issues and the launch of their efforts as
trading partners.
N. The parties agree to execute and deliver such agreements and other
documents and take all such other actions as may be necessary to effect
and complete the transactions contemplated herein.
<PAGE>
EXHIBIT B
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
In re: ) Chapter 11
)
SALANT CORPORATION, ) Case No. 98 B 10107(CB)
)
Debtor. )
NOTICE OF ENTRY OF ORDER CONFIRMING THE CHAPTER 11
PLAN OF REORGANIZATION OF SALANT CORPORATION
- --------------------------------------------------------------------------------
TO ALL CREDITORS, INTEREST HOLDERS AND OTHER PARTIES IN INTEREST IN THE
ABOVE-CAPTIONED CASE:
PLEASE TAKE NOTICE that an order (the "Confirmation Order") confirming the
chapter 11 plan of Salant Corporation was signed by the Honorable Cornelius
Blackshear, United States Bankruptcy Judge, on the day of April, 1999, and duly
entered and filed in the office of the Clerk of the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court").
PLEASE TAKE FURTHER NOTICE that the Confirmation Order is available for
inspection in the office of the Clerk of the Bankruptcy Court at the United
States Bankruptcy Court, Alexander Hamilton Custom House, One Bowling Green, New
York, New York 10004, Alexander Hamilton Customs House, One Bowling Green, New
York, New York 10004, and may also be procured through the Bankruptcy Court's
internet website at www.nysb.uscourts.gov.
Dated: April __, 1999
BY ORDER OF THE BANKRUPTCY COURT
United States Bankruptcy Judge
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
(A Partnership Including Professional Corporations)
Counsel for Debtor and Debtor-in-Possession
One New York Plaza
New York, New York 10004-1980
Attn: Brad Eric Scheler, Esq.
(212) 859-8000
AGREEMENT
between
SALANT CORPORATION
and
PENSION BENEFIT GUARANTY CORPORATION
This AGREEMENT ("Agreement") is dated as of March 24, 1999, by
and between SALANT CORPORATION, a Delaware Corporation ("Salant"), and the
Pension Benefit Guaranty Corporation ("PBGC").
W I T N E S S E T H
WHEREAS, the PBGC is a wholly-owned United States Government
corporation, created under Title IV of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), which guarantees the payment of certain
pension benefits upon termination of those pension plans to which Title IV
applies;
WHEREAS, Salant is the "contributing sponsor" (as defined in
Section 4001(a)(13) of ERISA) of the Salant Corporation Retirement Plan (the
"Retirement Plan") and the Salant Corporation Pension Plan (the "Pension Plan"
and together with the Retirement Plan, the "Plans");
WHEREAS, as a result of the closing, on or about June 1, 1996,
of Salant's Thompson Company division, the number of active participants in the
Pension Plan was, as of such date, reduced to less than eighty percent (80%) of
the number of active participants in such Plan as of January 1, 1996, which
resulted in the occurrence of a reportable event (the "Thompson Reportable
Event") with respect to the Pension Plan and in respect of which Salant provided
notice to the PBGC pursuant to Section 4043 of ERISA;
WHEREAS, in connection with the consummation of the First
Amended Chapter 11 Plan of Reorganization for Salant, dated February 3, 1999
(the "Plan of Reorganization"), Salant intends, prior to and/or following the
effective date (the "Effective Date") of the Plan of Reorganization, to sell or
otherwise dispose of certain of its businesses not related to the Perry Ellis
menswear business, specifically, the non-Perry Ellis dress shirt business, the
Children's Group and the Bottoms Division and Accessories Division of Salant's
Menswear Group (each such sale or disposition a "Proposed Transaction" and all
such sales and dispositions the "Proposed Transactions");
WHEREAS, the consummation of one or more of the Proposed
Transactions may result in the occurrence of one or more additional reportable
events (the "Potential Reportable Events" and together with the Thompson
Reportable Event, the "Reportable Events") with respect to either or both of the
Plans;
WHEREAS, each of the Plans is covered under Title IV of ERISA;
WHEREAS, in December 1998, Salant filed a voluntary petition
with the United States Bankruptcy Court for the Southern District of New York
(the "Bankruptcy Court") for relief under Chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code");
WHEREAS, the PBGC has filed proofs of claim in In Re Salant
Corporation, Case No. 98-10107 (CB), now pending in the Bankruptcy Court (the
"Chapter 11 Case") on behalf of itself and the Plans;
WHEREAS, (i) claim number 13 held by the PBGC attached hereto
as Exhibit 1 is for the termination liability that the PBGC asserts would be
owed by Salant to the PBGC pursuant to Sections 4062 and 4068 of ERISA, 29
U.S.C. Sections 1362 and 1368, upon a termination of either or both of the
Plans; (ii) claim numbers 15 and 16 held by the PBGC attached hereto as Exhibits
2 and 3, respectively, are for the minimum funding contributions that the PBGC
asserts are owed by Salant to the Plans pursuant to Section 302 of ERISA, 29
U.S.C. Section 1082, and Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code"), 26 U.S.C. Section 412; (iii) claim number 17 held by the
PBGC attached hereto as Exhibit 4 is for the premiums, interest and penalties
that the PBGC asserts are owed by Salant to the PBGC pursuant to Sections
4007(a), (b) and (e) of ERISA, 29 U.S.C. 1307(a), (b) and (e), and PBGC
Regulation Section 4007.12(a), 29 C.F.R. Section 4007.12(a); and (iv) claim
number 439 held by the PBGC attached hereto as Exhibit 5 is for the liability
that the PBGC asserts may be owed by Salant pursuant to Section 4063 of ERISA,
29 U.S.C. Section 1363, as a result of the occurrence of the Reportable Events
(claim numbers 13, 15 through 17 and 439 collectively the "Filed Claims"); and
WHEREAS, Salant and the PBGC desire to address the issues
giving rise to the claims, and eliminate the need for the PBGC to have any
claims, including, without limitation, the Filed Claims, relating to the Plans
and arising out of any state of facts existing or event occurring on or before
Effective Date; and
WHEREAS, Salant and the PBGC believe that entering into this
Agreement is in the best interests of the participants of the Plans, Salant and
the PBGC;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements set forth herein, the receipt, adequacy and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
Salant, as Debtor and on behalf of the Reorganized Salant, and the PBGC hereby
agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
meanings set forth below:
"Agreement" shall have the meaning set forth in the Preamble hereto.
"Code" shall have the meaning set forth in the Recitals hereto.
"ERISA" shall have the meaning set forth in the Recitals hereto.
"IRS Agreement" means the agreement made as of July 13, 1994, among Salant
and Denton Mills, Inc. and the Internal Revenue Service as in effect from time
to time.
"Letter of Credit" shall have the meaning set forth in Section 3(a) hereof.
"PBGC" shall have the meaning set forth in the Preamble hereto.
"Pension Plan," "Retirement Plan" and "Plans" shall have the meanings set
forth in the Recitals hereto.
"Plan Year" means for each Plan, the calendar year, or such other
twelve-month period specified in each Plan as amended, supplemented or modified
from time to time.
"Replacement Letter of Credit" shall have the meaning set
forth in Section 3(b) hereof.
"Reportable Event" shall have the meaning set forth in the Recitals hereto.
"Salant" shall have the meaning set forth in the Preamble hereto.
"Termination Date" shall have the meaning set forth in Section 4 hereof.
"Termination Liability" means the joint and several liability
of Salant and each member of its "controlled group" (within the meaning of
Section 4001(a)(14) of ERISA) under Section 4062 of ERISA in respect of the
Plans determined as of the date of the termination of the Plans under Section
4048 of ERISA during the term of the Agreement.
"Total Unfunded Liabilities" means aggregate unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA) with respect to both of
the Plans, and disregarding a Plan with no unfunded benefit liabilities.
2. Effectiveness of this Agreement.
This Agreement is enforceable pursuant to its terms, and is contingent upon
consummation of the Plan of Reorganization; provided, however, that in no event
shall this Agreement be effective without its having been approved by the
Bankruptcy Court, which approval shall be evidenced either by the confirmation
order or an order entered under Bankruptcy Rule 9019. Provided the Effective
Date shall have occurred, the effective date of this Agreement shall be as of
the date of entry of an order confirming the Plan of Reorganization. This is the
"PBGC Agreement" defined in Article One of the Plan of Reorganization, and
referred to in Section 6.5 of the Plan of Reorganization.
3. Letter of Credit to the PBGC.
(a) (i) General terms. On or before the effective date of this
Agreement, Salant will provide, a one-year renewable standby letter of credit
arranged by CIT Group/Commercial Services, Inc., or such other financial
institution as may be reasonably acceptable to the PBGC, in the form to be
mutually agreed upon prior to the Effective Date (the "Letter of Credit") in the
amount of $2.25 million to secure the obligations of Salant for the Termination
Liability.
(ii) Drawing on Letter of Credit. The PBGC may
draw on the Letter of Credit(or any Replacement Letter of Credit) only as
follows:
(A) Upon the receipt by the PBGC of a Notice of
Intent to Terminate one or both
of the Plans in a distress termination under Section 4041(c) of ERISA;
(B) Upon the issuance by the PBGC of a Notice of
Determination that one or both of the Plans should be terminated in an
involuntary termination under Section 4042 of ERISA; or
(C) Under the circumstances described in Section
3(b)(ii).
Any drawing on the Letter of Credit or the Replacement Letter
of Credit shall be pursuant to a Certificate for Drawing in the form to be
mutually agreed upon prior to the Effective Date delivered to the bank or other
financial institution issuing the Letter of Credit or the Replacement Letter of
Credit. The PBGC shall not present a Certificate for Drawing to the issuing
entity unless one of the conditions described in Section 3(a)(ii) have been
satisfied. The PBGC shall deliver a copy of any Certificate for Drawing to
Salant within one (1) business day of its presentment to the issuing bank.
(b) Replacement
(i) The Letter of Credit provided for in Section 3(a) shall provide that
the issuing entity shall notify the PBGC at least sixty (60) days in advance of
the anniversary date of the Letter of Credit as to whether or not the Letter of
Credit will be extended. If the issuing entity provides notice that the Letter
of Credit will not be extended, Salant shall obtain from a financial institution
reasonably acceptable to the PBGC a replacement letter of credit (substantially
identical in terms and identical in amount to the then outstanding Letter of
Credit) (the "Replacement Letter of Credit") for the benefit of the PBGC at
least thirty (30) days before the anniversary date of the Letter of Credit then
outstanding. Such Replacement Letter of Credit shall become effective upon the
anniversary date of the Letter of Credit then outstanding. Upon the issuance of
a Replacement Letter of Credit, it shall be deemed for purposes of this
Agreement to be a Letter of Credit issued pursuant to Section 3(a).
(ii) The Letter of Credit provided for in Section
3(a) shall further provide that
if, under the circumstances described in Section 3(b)(i), the Replacement Letter
of Credit is not obtained at least thirty (30) days before the anniversary date
of the Letter of Credit then outstanding, the PBGC may draw down the full amount
of the Letter of Credit within the thirty (30) day period prior to the
anniversary date.
(c) Amounts received by PBGC pursuant to a draw of any Letter
of Credit under this Agreement shall be held in an interest-bearing escrow
account maintained at the State Street Bank in the name of the PBGC. PBGC may
withdraw amounts after termination of the one or both of the Plans to satisfy
the Termination Liability thereunder. The amounts shall stay in the escrow
account and the escrow account shall not be closed until such time as:
(i) the Termination Liabilities under both of the Plan have been satisfied;
(ii) this Agreement expires in accordance with Section 4,
whichever event occurs soonest.
At the time the escrow account is closed, PBGC shall return any remaining
amounts held therein to Reorganized Salant, provided, however, that in the event
the termination of one or both of the Plans has been proposed as contemplated in
section 3(a)(ii)(A) or (B), but said plan termination has not been made final by
agreement or court order, and this Agreement expires in accordance with the
terms of Section 4, the escrow account shall not end until the proposed
termination action is complete and PBGC has had a reasonable opportunity to
apply amounts therein to the Termination Liability of one or both of the Plans,
if appropriate.
4. Term of Agreement.
This Agreement shall commence as provided in Section 2 and
will terminate upon the earliest of (a), (b), (c), or (d), below, provided that
Reorganized Salant is in full compliance with the Agreement, but in the case of
(a), (c), and (d), no earlier than five (5) years after the Effective Date of
the Plan of Reorganization (the "Termination Date"):
(a) The Total Unfunded Liabilities, as calculated at the end
of the Plan Year for two consecutive years, is zero (0); provided, however, that
if the Total Unfunded Liabilities of the Plan as of the last day of the Plan
Year for two consecutive years is less than $1,000,000, Salant will have
satisfied the conditions of this paragraph provided it has contributed in cash
an amount equal to the Total Unfunded Liabilities no later than September 15 of
the first calendar year following the end of such two-Plan-Year period; or
(b) The last date on which PBGC receives a Post Distribution Certification for
the Plans pursuant to 29 CFR ss. 4041.29 indicating that the Plans have been
successfully terminated in standard terminations under Section 4041(b) of ERISA;
or
(c) Upon receipt by PBGC of written evidence from the
applicable rating agencies that one of the following two conditions has been
satisfied:
(i) Salant has a rating on its unsecured debt at the rating level (or
better) of BBB from Standard & Poor's or Baa2 from Moody's;
(ii) In the event there is no such rating on its
unsecured debt, Salant obtains a
private rating on a hypothetical issue of unsecured debt of at least $50 million
at the rating level (or better) of BBB from Standard & Poor's or Baa2 from
Moody's; or
(d) If there is a change of the Salant controlled group for
purposes of Title IV of ERISA and the unsecured debt of the new controlled group
has been rated BBB by Standard & Poor's or Baa2 by Moody's, or better, for the
two consecutive years prior to a rating date (which rating date is subsequent to
the date of the change of the controlled group), and such ratings are reaffirmed
taking into account the change in the controlled group.
5. Notice and Information to PBGC.
Until this Agreement is terminated, Salant shall deliver or
cause to be delivered to the Director of the Corporate Finance & Negotiations
Department ("CFND") of the PBGC the following:
(a) Copies of any notices of reportable events at the time they are filed;
(b) Written notice no later than thirty (30) days prior to any
pension plan merger or spinoff or any transaction that would have the effect of
transferring more than three percent (3%) of the assets and liabilities of
either of the Plans;
(c) Written notice thirty (30) days prior to any change in any
of the Plans' actuarial assumptions or methods for the purpose of the minimum
funding standard of Section 412 of the Code, other than changes that are
required by law, which change shall be subject to PBGC's consent, with consent
not to be unreasonably withheld; PBGC shall communicate its response to any
requested changes within fifteen (15) days after the receipt by CFND of the
Salant notice.
(d) For each Plan Year, Form 5500 for each Plan (or its
successors), promptly after filing with the IRS, but no later than October 31 of
the following Plan Year and the most recent Actuarial Valuation Report for the
Plans within ten (10) days of its receipt by Salant, but not later than December
31 of that Plan Year.
(e) Copy of any amendment to a Plan or an appropriate summary thereof
within ten (10) days of adoption.
(f) Written notice of the date and amount of contributions
made to the Plans within ten (10) business days after the contribution is made
or written notice of failure to make any contribution within (5) business days
after the due date.
(g) Written notice within thirty (30) days prior to a
transaction that would result in a change in the Plans' contributing sponsor or
in Reorganized Salant's controlled group.
(h) Written notice sixty (60) days prior to the anniversary
date of the issuance of any outstanding Letter of Credit as to whether or not
the Letter of Credit will be renewed.
6. Covenants and Agreements of Salant.
(a) From and after the Effective Date, the Reorganized Salant will assume
Salant's obligations under ERISA with respect to the Pension Plans, including
becoming the contributing sponsor of the Pension Plans. The Reorganized Salant
intends to continue as the contributing sponsor of each of the Plans and, for so
long as it maintains the Plans, Reorganized Salant shall fund each of the Plans
in accordance with applicable law ( including, without limitation, the minimum
funding requirements set forth in Section 302 of ERISA and Section 412 of the
Code); provided, however, that nothing herein shall preclude the Reorganized
Salant (or any successor to the Reorganized Salant or to the business of
Reorganized Salant) from terminating or transferring the sponsorship of either
or both of the Plans in accordance with applicable law.
(b) The Reorganized Salant will continue to honor all of the terms and
conditions of the IRS Agreement, and shall continue to make all contributions
required to be made to each of the Plans under the IRS Agreement, as such
agreement shall from time to time be in effect.
(c) Salant agrees that its obligations to the Plans, including any
obligations under the IRS Agreement, shall not be discharged by reason of the
confirmation of the Plan of Reorganization, and such obligations shall remain in
full force and effect, and may be enforced against the Reorganized Salant in
accordance with applicable law regardless of any provision of the Plan of
Reorganization.
7. Covenants and Agreements of the PBGC.
(a) The Filed Claims shall be withdrawn by the PBGC no later than the
Effective Date and shall not be re-filed nor shall any additional proofs of
claims be filed by the PBGC in the Chapter 11 Case.
(b) In consideration of the covenants and agreements of Salant as provided
herein, the PBGC shall not take any action pursuant to Title IV of ERISA or
otherwise with respect to the Plans arising out of (i) any state of facts
existing or event occurring on or before the Effective Date or (ii) the
Reportable Events (whether occurring before or after the Effective Date).
(c) The PBGC will support confirmation of, and vote to accept, the Plan of
Reorganization, provided the Plan of Reorganization is not amended to change
substantively the obligations of Salant and the Reorganized Salant with respect
to the Plans or the PBGC.
8. Retention of Rights.
Nothing in this Agreement shall limit or impair the rights of the PBGC to
take any action in accordance with applicable law in respect of the Plans based
upon any event (other than the Reportable Events) occurring after the Effective
Date.
9. No Admission of Liability.
This Agreement is not and shall not be construed as or deemed to be an
admission or concession by or on the part of any party of any liability or the
applicability of any provision of ERISA or other applicable law in connection
with any matter described in this Agreement, and each party expressly denies any
liability whatsoever.
10. Notices.
Any notices, requests or other communication hereunder shall be in writing,
and shall be deemed to have been duly given when mailed by registered or
certified mail postage prepaid, or upon receipt if overnight delivery service or
facsimile is used, addressed as follows:
To the PBGC:
Director
Corporate Finance and Negotiations Department
Pension Benefit Guaranty Corporation
1200 K Street N.W., Suite 270
Washington, D.C. 20005-4026
Facsimile: (202) 842-2643
To Salant:
Salant Corporation
1155 Avenue of the Americas
New York, New York 10019
Telephone: (212) 221-5367
Facsimile: (212) 221-5369
Attn: Awadhesh Sinha
With a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004-1980
Telephone: (212) 859-8202
Facsimile: (212) 859-8589
Attn: Donald P. Carleen, Esq.
11. Miscellaneous.
(a) This Agreement constitutes the entire final agreement between the
parties hereto with respect to the matters provided for herein, and no other
agreement or understanding, written or oral, exists except as expressly set
forth herein.
(b) This Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed in accordance with the Code, ERISA and other
applicable federal law.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision or
provisions of this Agreement, which shall remain in full force and effect.
(d) This Agreement shall not be modified or amended, except by a written
instrument signed by the parties hereto.
(e) This Agreement shall inure to the benefit of, and may be enforced
solely by the parties hereto, and, in each case, their respective successors and
assigns.
(f) The captions used herein are for reference only and shall not in any
way affect the meaning or construction of any provision of this Agreement.
(g) This Agreement may be executed in any number of identical counterparts,
each of which shall be deemed an original as against the party who signed it,
and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties to this Agreement have caused
this Agreement to be duly executed and delivered by their respective duly
authorized officers as of the day and year indicated below.
SALANT CORPORATION
By:
Title:
PENSION BENEFIT GUARANTY CORPORATION
By:
Title:
<PAGE>
EXHIBIT 1
FORM B10 (Official Form 10)(4/98)
- --------------------------------------------------------------------------------
United States Bankruptcy Court SOUTHERN District of NEW YORK PROOF OF CLAIM
- --------------------------------------------------------------------------------
Name of Debtor Case Number
SALANT CORPORATION 98-10107 (CB)
- ----------------------------------------------------------------
Note: This form should not be sued to make a claim for an
administrative expense arising after the commencement of the
case. A "request" for payment of an administrative expense may
be filed pursuant to 11 U.S.C. Section 503.
- ----------------------------------------------------------------
Name of Creditor (The person or [ ] Check box if you are
other entity to whom the debtor aware that anyone else
owes money or property): has filed a proof of
claim relating to your
PENSION BENEFIT GUARANTY claim. Attach copy
CORPORATION of statement giving
particulars.
- -------------------------------------
Name and address where notices
should be sent: [X] Check box if you have
never received any
Pension Benefit Guaranty Corporation notices from the
Office of the General Counsel, bankruptcy court in
Attn: Bruce H. James, Esq. this case.
1200 K. Street, N.W., Suite 3105
Washington, D.C. 20005-4026 [ ] Check box if the
address differs from
the address on the
envelope sent to you
by the court.
Telephone number:
202-326-4020, ext. 3235
- --------------------------------------------------------------------------------
Account or other number by which Check here [ ] replaces
creditor identifies debtor: if this claim [ ] amends a previously
filed claim,
dated: _______________
- --------------------------------------------------------------------------------
1. Basis for Claim
[ ] Goods sold [ ] Retiree benefits as defined in
[ ] Services performed 11 U.S.C. Section 1114(a)
[ ] Money loaned [ ] Wages, salaries, and compensation
[ ] Personal injury/wrongful (fill out below)
death
[ ] Taxes Your SS#: _____ ______ _______
[X] Other Unpaid Compensation for services
Statutory liability performed
under 29 U.S.C. from ______________ to ______________
Sections 1362, 1368 (date) (date)
(see attached
statement)
- --------------------------------------------------------------------------------
2. Date debt was incurred: 3. If court judgment, date obtained:
Arises on pension plan
termination (see attached
statement)
- --------------------------------------------------------------------------------
4. Total Amount of Claim at Time Case Filed: $27,500,000
----------
If all or part of your claim is secured or entitled to priority, also
complete Item 5 or 6 below.
[ ] Check this box if claim includes interest or other charges in addition to
the principal amount of the claim. Attach itemized statement of all
interest or additional charges
- --------------------------------------------------------------------------------
5. Secured Claim.
[ ] Check this box if your claim is secured by collateral (including a right of
setoff).
Brief Description of Collateral:
[ ] Real Estate [ ] Motor Vehicle
[ ] Other ___________________
Value of Collateral: $_____________________
Amount of arrearage and other charges at time case filed included in secured
claim, if any: $______________________
- --------------------------------------------------------------------------------
6. Unsecured Priority Claim.
[X] Check this box if you have an unsecured priority claim
Amount entitled to priority $ 27,500,000
----------
Specify the priority of the claim:
[ ] Wages, salaries, or commissions (up to $4300), * earned within 90 days
before filing of the bankruptcy petition or cessation of the debtor's
business, whichever is earlier -- 11 U.S.C. Section 507(a)(3).
[ ] Contributions to an employee benefit plan -- 11 U.S.C. Section 507(a)(4).
[ ] Up to $1,950* of deposits toward purchase, lease, or rental of property
or services for personal, family, or household use -- 11 U.S.C.
Section 507(a)(6)
[ ] Alimony, maintenance, or support owed to a spouse, former spouse, or
child -- 11 U.S.C. Section 507(a)(7).
[X] Taxes or penalties owed to governmental units -- 11 U.S.C.
Section 507(a)(8).
[X] Other -- Specify applicable paragraph of 11 U.S.C. Section 507(a)
(1), 503(b)(1)
--------------
(see attached statement)
* Amounts are subject to adjustment on 4/1/98 and every 3 years thereafter
with respect to cases commenced on or after the date of adjustment.
- --------------------------------------------------------------------------------
7. Credits: The amount of all payments on this THIS SPACE IS FOR
claim has been credited and deducted for COURT USE ONLY
the purpose of making this proof of claim.
8. Supporting Documents: Attach copies of
supporting documents, such as promissory
notes, purchase orders, invoices,
itemized statements of running accounts,
contracts, court judgments, mortgages,
security agreements, and evidence of
perfection of lien. DO NOT SEND
ORIGINAL DOCUMENTS. If the documents
are not available, explain. If the
documents are voluminous, attach
a summary.
9. Date-Stamped Copy: To receive an
acknowledgment of the filing of your
claim, enclose a stamped,
self-addressed envelope and copy
of this proof of claim.
- -------------------------------------------------
Date Sign and print the name and title,
if any, of the creditor or other
person authorized to file this
claim (attach copy of power of
attorney, if any):
Stephen D. Schreiber
Assistant General Counsel
- --------------------------------------------------------------------------------
Penalty for presenting fraudulent claim: Fine of up to $500,000 or imprisonment
for up to 5 years, or both. 18 U.S.C. Sections 152 and 3571.
- --------------------------------------------------------------------------------
<PAGE>
Bruce H. James (BJ-2184)
Pension Benefit Guaranty Corporation
Office of the Counsel
1200 K Street, NW, Suite 3105
Washington, DC 20005-4026
(202) 326-4020, ext. 3235
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE
SALANT CORPORATION,
Debtor.
Chapter 11
Case No. 98B 10107(CB)
STATEMENT IN SUPPORT OF CLAIM
The Pension Benefit Guaranty Corporation ("PBGC") hereby sets forth
its claim against Salant Corporation (hereinafter the "Debtor"), stating:
1. PBGC is a wholly-owned United States Government corporation created
under Title IV of the Employee Retirement income Security Act of 1974 ("ERISA"),
29 U.S.C. ss.ss. 1301-1461 (1994 and Supp. II 1996), to administer the mandatory
pension plan termination insurance program established under Title IV of ERISA.
The PBGC guarantees the payment of certain pension benefits upon termination of
a pension plan to which Title IV applies. See 29 U.S.C. ss.ss. 1321, 1322.
2. The Salant Corporation Pension Plan (the "Hourly Plan") and the
Salant Corporation Retirement Plan (the "Salaried Plan") (collectively the
"Plans") are tax-qualified, single employer, defined benefit pension plans
covered by Title IV of ERISA. 29 U.S.C. ss. 1321.
3. The Debtor is the contributing sponsor of the Plans, within the
meaning of 29 U.S.C. ss. 1301(a)(13).
4. This claim is contingent on the termination of either of the Plans,
or both, in accordance with 29 U. S.C. ss.ss. 1341 (c), 1342, prior to the
effective date of a plan of reorganization. If and when date(s) of plan
termination is/are established, pursuant to 29 U.S.C. ss. 1348, the PBGC will
amend this claim as necessary.
5. On information and belief, the assets of each of the Plans are not
sufficient to discharge when due all of the benefit liabilities of that pension
plan.
6. Under 29 U.S.C. ss. 1362(b), the contributing sponsor of a plan and
each member of the contributing sponsor's controlled group is jointly and
severally liable to the PBGC for the amount by which the assets of a terminated
pension plan are insufficient to cover the plan's benefit liabilities to
participants on the date of plan termination ("Unfunded Benefit Liabilities"),
plus interest from the termination date.
7. Under 29 U.S.C. ss. 1368, if any liable party fails to pay the
amount of its debt under 29 U.S.C. ss. 1362(b), after demand by the PBGC, the
PBGC has a lien to the extent such amount does not exceed 30 percent of the
collective net worth of all persons described in ERISA ss. 4062(a), 29 U.S.C.
ss.1362(a). The lien created by 29 U.S C. ss. 1368 arises as of the date of plan
termination on all property and rights to property of those persons and is
"treated in the same manner as a tax due and owing to the United States for
purposes of Title 11 [of the United States Code]." 29 U.S.C. ss. 1368(c)(2).
8. By filing this claim, the PBGC asserts that the Debtor is liable to
the PBGC pursuant to ERISA ss.ss. 4062 and 4068, 29 U.S.C. ss.ss. 1362 and 1368,
and demands payment of that liability from the Debtor and all members of its
controlled group.
9. This debt to the PBGC will arise, the administration of the estate
and, therefore, will be entitled to priority as a tax incurred by the estate
pursuant to 11 U.S.C. ss.ss. 503(b)(1)(B) and 507(a)(1), up to the amount
described above in paragraph 7.
10. Alternatively, in the event that the claim or any part of it is
determined not to be entitled to priority under 11 U.S.C. ss.ss. 503(b)(1)(B)
and 507(a)(1), then, to the extent such claim or part thereof does not exceed
the amount described in paragraph 7, such claim or part is hereby filed and
asserted as a priority claim under 11 U.S.C. ss. 507(a)(8).
11. Any amount of Unfunded Benefit Liabilities which is determined not
to be entitled to priority is hereby filed as a general unsecured claim.
12. The PBGC estimates that the Unfunded Benefit Liabilities of the
Hourly Plan and the Salaried Plan are $10,100,000, and $17,400,000,
respectively. This estimate is based upon actuarial information prepared by the
Debtor and, where applicable, adjusted by the PBGC. It is subject to amendment
after a date of plan termination is established and upon completion of any
inquiry to be carried out by the PBGC.
13. The amount of this claim may be subject to reduction upon
determination by the PBGC of the value, if any, of the claim for unpaid minimum
funding contributions in this case. That claim is being filed in a separate
document.
14. The PBGC lacks sufficient information on which to estimate the
collective net worth of all persons described in 29 U.S.C. ss. 1362(a), and has
not received proof that the collective net worth of such persons limits the
priority of this claim. If a limiting collective net worth is asserted and
established pursuant to 29 U.S.C.
ss. 1362, the PBGC will amend this claim accordingly.
15. The PBGC reserves the right to amend, modify and supplement this
proof of claim and/or to file additional proofs of claim for additional claims.
The filing of this claim is not intended to be and shall not be construed as (1)
an election of remedy or (2) a waiver or limitation of any rights of the PBGC,
the Plans or any of its beneficiaries or participants. In addition, the PBGC
reserves the right to supplement this claim with additional documents.
STEPHEN D. SCHREIBER
Assistant General Counsel
BRUCE H. JAMES (BJ 2184)
Attorney
PENSION BENEFIT GUARANTY
CORPORATION
Office of the General Counsel
1200 K Street, N.W.
Washington D.C. 20005-4026
(202) 326-4020, ext. 3235
Attorneys for Claimant
<PAGE>
EXHIBIT 2
FORM B10 (Official Form 10)(4/98)
- --------------------------------------------------------------------------------
United States Bankruptcy Court SOUTHERN District of NEW YORK PROOF OF CLAIM
- --------------------------------------------------------------------------------
Name of Debtor Case Number
SALANT CORPORATION 98-10107 (CB)
- ----------------------------------------------------------------
Note: This form should not be sued to make a claim for an
administrative expense arising after the commencement of the
case. A "request" for payment of an administrative expense may
be filed pursuant to 11 U.S.C. Section 503.
- ----------------------------------------------------------------
Name of Creditor (The person or [ ] Check box if you are
other entity to whom the debtor aware that anyone else
owes money or property): has filed a proof of
claim relating to your
PENSION BENEFIT GUARANTY claim. Attach copy
CORPORATION of statement giving
particulars.
- -------------------------------------
Name and address where notices
should be sent: [X] Check box if you have
never received any
Pension Benefit Guaranty Corporation notices from the
Office of the General Counsel, bankruptcy court in
Attn: Bruce H. James, Esq. this case.
1200 K. Street, N.W., Suite 3105
Washington, D.C. 20005-4026 [ ] Check box if the
address differs from
the address on the
envelope sent to you
by the court.
Telephone number:
202-326-4020, ext. 3235
- --------------------------------------------------------------------------------
Account or other number by which Check here [ ] replaces
creditor identifies debtor: if this claim [ ] amends a previously
filed claim,
dated: _______________
- --------------------------------------------------------------------------------
1. Basis for Claim
[ ] Goods sold [ ] Retiree benefits as defined in
[ ] Services performed 11 U.S.C. Section 1114(a)
[ ] Money loaned [ ] Wages, salaries, and compensation
[ ] Personal injury/wrongful (fill out below)
death
[ ] Taxes Your SS#: _____ ______ _______
[X] Other Unpaid Compensation for services
Statutory liability performed
under 29 U.S.C. from ______________ to ______________
Sections 1362, 1368 (date) (date)
(see attached
statement)
- --------------------------------------------------------------------------------
2. Date debt was incurred: 3. If court judgment, date obtained:
Arises from before the petition
date through date of plan
termination
- --------------------------------------------------------------------------------
4. Total Amount of Claim at Time Case Filed: $UNLIQUIDATED
------------
If all or part of your claim is secured or entitled to priority, also
complete Item 5 or 6 below.
[ ] Check this box if claim includes interest or other charges in addition to
the principal amount of the claim. Attach itemized statement of all
interest or additional charges
- --------------------------------------------------------------------------------
5. Secured Claim.
[ ] Check this box if your claim is secured by collateral (including a right of
setoff).
Brief Description of Collateral:
[ ] Real Estate [ ] Motor Vehicle
[ ] Other ___________________
Value of Collateral: $_____________________
Amount of arrearage and other charges at time case filed included in secured
claim, if any: $______________________
- --------------------------------------------------------------------------------
6. Unsecured Priority Claim.
[X] Check this box if you have an unsecured priority claim
Amount entitled to priority $ UNLIQUIDATED
------------
Specify the priority of the claim:
[ ] Wages, salaries, or commissions (up to $4300), * earned within 90 days
before filing of the bankruptcy petition or cessation of the debtor's
business, whichever is earlier -- 11 U.S.C. Section 507(a)(3).
[X] Contributions to an employee benefit plan -- 11 U.S.C. Section 507(a)(4).
[ ] Up to $1,950* of deposits toward purchase, lease, or rental of property
or services for personal, family, or household use -- 11 U.S.C.
Section 507(a)(6)
[ ] Alimony, maintenance, or support owed to a spouse, former spouse, or
child -- 11 U.S.C. Section 507(a)(7).
[X] Taxes or penalties owed to governmental units -- 11 U.S.C.
Section 507(a)(8).
[X] Other -- Specify applicable paragraph of 11 U.S.C. Section 507(a)
(1), 503(b)(1)
--------------
(see attached statement)
* Amounts are subject to adjustment on 4/1/98 and every 3 years thereafter
with respect to cases commenced on or after the date of adjustment.
- --------------------------------------------------------------------------------
7. Credits: The amount of all payments on this THIS SPACE IS FOR
claim has been credited and deducted for COURT USE ONLY
the purpose of making this proof of claim.
8. Supporting Documents: Attach copies of
supporting documents, such as promissory
notes, purchase orders, invoices,
itemized statements of running accounts,
contracts, court judgments, mortgages,
security agreements, and evidence of
perfection of lien. DO NOT SEND
ORIGINAL DOCUMENTS. If the documents
are not available, explain. If the
documents are voluminous, attach
a summary.
9. Date-Stamped Copy: To receive an
acknowledgment of the filing of your
claim, enclose a stamped,
self-addressed envelope and copy
of this proof of claim.
- -------------------------------------------------
Date Sign and print the name and title,
if any, of the creditor or other
person authorized to file this
claim (attach copy of power of
attorney, if any):
Stephen D. Schreiber
Assistant General Counsel
- --------------------------------------------------------------------------------
Penalty for presenting fraudulent claim: Fine of up to $500,000 or imprisonment
for up to 5 years, or both. 18 U.S.C. Sections 152 and 3571.
- --------------------------------------------------------------------------------
<PAGE>
Bruce H. James (BJ-2184)
Pension Benefit Guaranty Corporation
Office of the General Counsel
1200 K Street, NW, Suite 3105
Washington, DC 20005-4026
(202) 326-4020, ext. 3235
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE
SALANT CORPORATION,
Debtor.
Chapter 11
Case No. 98 B 10107(CB)
STATEMENT IN SUPPORT OF CLAIM
The Pension Benefit Guaranty Corporation ("PBGC"), on behalf of the
SALANT Corporation Pension Plan (hereinafter the "Plan"), hereby sets forth its
claim against SALANT Corporation (hereinafter the "Debtor"), stating:
1. PBGC is a wholly-owned United States Government corporation created
under Title IV of the Employee Retirement income Security Act of 1974 ("ERISA"),
29 U.S.C. ss.ss. 1301-1461 (1994 & Supp. II 1996), to administer the mandatory
pension plan termination insurance program established under Title IV of ERISA.
The PBGC guarantees the payment of certain pension benefits upon termination of
a pension plan to which Title IV applies. See 29 U.S.C. ss.ss. 1321, 1322.
2. The Plan is a tax-qualified, single employer, defined benefit
pension plan covered by Title IV of ERISA. 29 U.S.C. ss. 1321. At all relevant
times, the Debtor was the contributing sponsor of the within the meaning of 29
U.S.C. ss. 1301(a)(13).
3. The contributing sponsor and each member of its controlled group are
liable to the Plan for at least the amounts necessary to satisfy ERISA's minimum
funding standards ("Minimum Funding Contributions"). See 29 U.S.C. ss.ss. 1082,
1362(c); 26 U.S.C. ss. 412.
4. The Plan may terminate. This claim is made on behalf of the Plan for
unpaid Minimum Funding Contributions based on the contingency that the Plan will
terminate and/or the PBGC will become trustee prior to the confirmation of a
plan of reorganization in this case. See 29 U.S.C. ss.ss. 1341, 1342. If the
Plan terminates, the PBGC will amend this claim as necessary.
5. On information and belief, if the Plan terminates, the assets held
under the Plan will not be sufficient to discharge when due all obligations of
the Plan with respect to benefits guaranteed by the PBGC.
6. To date, the PBGC has not calculated the amount of Minimum Funding
Contributions owed with respect to the Plan.
7. This claim is entitled to priority as follows:
A. PRIORITY UNDER 11 U.S.C. ss.ss. 503(b)(1)(A) AND 507(a)(1)
The debt for unpaid Minimum Funding Contributions to the Plan that
accrued in the ordinary course of business during the administration of the
Debtor's Chapter 11 estate until the date of Plan termination is entitled to
priority as an expense of administration pursuant to 11 U.S.C.
ss.ss.503(b)(1)(A) and 507(a)(1).
B. PRIORITY UNDER 11 U. S. C. ss.ss. 503 (b)(1)(B) AND 507 (a)(1 )
When the aggregate unpaid Minimum Funding Contributions for plan years
beginning after 1987 exceeds $1 million, 29 U.S.C. ss. 1082(f) and 26 U.S.C. ss.
412(n) create a lien in favor of the Plan against the contributing sponsor and
each member of its controlled group. Under these sections, the amount of such
lien is "treated as taxes due and owing the United States." 29 U.S.C. ss.
1082(f)(4)(C); 26 U.S.C. ss.412(n)(4)(C). To the extent this debt arises during
the post-petition period, it is entitled to priority pursuant to 11 U.S.C.
ss.ss. 503(b)(1)(B) and 507(a)(1).
C. PRIORITY UNDER 11 U. S.C. ss. 507(a)(4)
The debt for Unpaid Minimum Funding Contributions to the Plan that are
attributable to the 180 days prior to the filing of the bankruptcy petition is
entitled to priority pursuant to 11 U.S.C. ss.507(a)(4).
D. PRIORITY UNDER 11 U.S.C. ss. 507(a)(8)
To the extent the Debtor's tax liability for unpaid Minimum Funding
Contributions arose prior to the administration of the estate, it is entitled to
priority pursuant to 11 U.S.C. ss. 507(a)(8)
8. To the extent that any portion of this claim is determined not to be
entitled to priority, that amount is asserted as a general unsecured claim.
9. The PBGC is not aware of any other claim for Minimum Funding
Contributions having been filed by any person on behalf of the Plan
10. The PBGC reserves the right to amend, modify and supplement this
proof of claim and/or to file additional proofs of claim. The filing of this
proof of claim is not intended to be and shall not be construed as (1) an
election of remedy or (2) a waiver or limitation of any rights of the PBGC, the
Plan or any of its beneficiaries or participants. In addition, PBGC reserves the
right to supplement this proof of claim with additional relevant documents.
STEPHEN D. SCHREIBER
Assistant General Counsel
BRUCE H. JAMES
Attorney
PENSION BENEFIT GUARANTY
CORPORATION ON BEHALF OF THE
SALANT CORPORATION
PENSION PLAN
1200 K Street, NW
Washington, DC 20005-4026
(202) 326-4020, ext. 3235
Attorneys for Claimant Pension Benefit
Guaranty Corporation
<PAGE>
EXHIBIT 3
FORM B10 (Official Form 10)(4/98)
- --------------------------------------------------------------------------------
United States Bankruptcy Court SOUTHERN District of NEW YORK PROOF OF CLAIM
- --------------------------------------------------------------------------------
Name of Debtor Case Number
SALANT CORPORATION 98-10107 (CB)
- ----------------------------------------------------------------
Note: This form should not be sued to make a claim for an
administrative expense arising after the commencement of the
case. A "request" for payment of an administrative expense may
be filed pursuant to 11 U.S.C. Section 503.
- ----------------------------------------------------------------
Name of Creditor (The person or [ ] Check box if you are
other entity to whom the debtor aware that anyone else
owes money or property): has filed a proof of
claim relating to your
PENSION BENEFIT GUARANTY claim. Attach copy
CORPORATION of statement giving
particulars.
- -------------------------------------
Name and address where notices
should be sent: [X] Check box if you have
never received any
Pension Benefit Guaranty Corporation notices from the
Office of the General Counsel, bankruptcy court in
Attn: Bruce H. James, Esq. this case.
1200 K. Street, N.W., Suite 3105
Washington, D.C. 20005-4026 [ ] Check box if the
address differs from
the address on the
envelope sent to you
by the court.
Telephone number:
202-326-4020, ext. 3235
- --------------------------------------------------------------------------------
Account or other number by which Check here [ ] replaces
creditor identifies debtor: if this claim [ ] amends a previously
filed claim,
dated: _______________
- --------------------------------------------------------------------------------
1. Basis for Claim
[ ] Goods sold [ ] Retiree benefits as defined in
[ ] Services performed 11 U.S.C. Section 1114(a)
[ ] Money loaned [ ] Wages, salaries, and compensation
[ ] Personal injury/wrongful (fill out below)
death
[ ] Taxes Your SS#: _____ ______ _______
[X] Other Unpaid Compensation for services
Statutory liability performed
under 29 U.S.C. from ______________ to ______________
Sections 1362, 1368 (date) (date)
(see attached
statement)
- --------------------------------------------------------------------------------
2. Date debt was incurred: 3. If court judgment, date obtained:
Arises from before the petition
date through date of plan
termination
- --------------------------------------------------------------------------------
4. Total Amount of Claim at Time Case Filed: $UNLIQUIDATED
------------
If all or part of your claim is secured or entitled to priority, also
complete Item 5 or 6 below.
[ ] Check this box if claim includes interest or other charges in addition to
the principal amount of the claim. Attach itemized statement of all
interest or additional charges
- --------------------------------------------------------------------------------
5. Secured Claim.
[ ] Check this box if your claim is secured by collateral (including a right of
setoff).
Brief Description of Collateral:
[ ] Real Estate [ ] Motor Vehicle
[ ] Other ___________________
Value of Collateral: $_____________________
Amount of arrearage and other charges at time case filed included in secured
claim, if any: $______________________
- --------------------------------------------------------------------------------
6. Unsecured Priority Claim.
[X] Check this box if you have an unsecured priority claim
Amount entitled to priority $ UNLIQUIDATED
------------
Specify the priority of the claim:
[ ] Wages, salaries, or commissions (up to $4300), * earned within 90 days
before filing of the bankruptcy petition or cessation of the debtor's
business, whichever is earlier -- 11 U.S.C. Section 507(a)(3).
[X] Contributions to an employee benefit plan -- 11 U.S.C. Section 507(a)(4).
[ ] Up to $1,950* of deposits toward purchase, lease, or rental of property
or services for personal, family, or household use -- 11 U.S.C.
Section 507(a)(6)
[ ] Alimony, maintenance, or support owed to a spouse, former spouse, or
child -- 11 U.S.C. Section 507(a)(7).
[X] Taxes or penalties owed to governmental units -- 11 U.S.C.
Section 507(a)(8).
[X] Other -- Specify applicable paragraph of 11 U.S.C. Section 507(a)
(1), 503(b)(1)
--------------
(see attached statement)
* Amounts are subject to adjustment on 4/1/98 and every 3 years thereafter
with respect to cases commenced on or after the date of adjustment.
- --------------------------------------------------------------------------------
7. Credits: The amount of all payments on this THIS SPACE IS FOR
claim has been credited and deducted for COURT USE ONLY
the purpose of making this proof of claim.
8. Supporting Documents: Attach copies of
supporting documents, such as promissory
notes, purchase orders, invoices,
itemized statements of running accounts,
contracts, court judgments, mortgages,
security agreements, and evidence of
perfection of lien. DO NOT SEND
ORIGINAL DOCUMENTS. If the documents
are not available, explain. If the
documents are voluminous, attach
a summary.
9. Date-Stamped Copy: To receive an
acknowledgment of the filing of your
claim, enclose a stamped,
self-addressed envelope and copy
of this proof of claim.
- -------------------------------------------------
Date Sign and print the name and title,
if any, of the creditor or other
person authorized to file this
claim (attach copy of power of
attorney, if any):
Stephen D. Schreiber
Assistant General Counsel
- --------------------------------------------------------------------------------
Penalty for presenting fraudulent claim: Fine of up to $500,000 or imprisonment
for up to 5 years, or both. 18 U.S.C. Sections 152 and 3571.
- --------------------------------------------------------------------------------
<PAGE>
Bruce H. James (BJ-2184)
Pension Benefit Guaranty Corporation
Office of the General Counsel
1200 K Street, NW, Suite 3105
Washington, DC 20005-4026
(202) 326-4020, ext. 3235
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE
SALANT CORPORATION,
Debtor.
Chapter 11
Case No. 98 B 10107(CB)
STATEMENT IN SUPPORT OF CLAIM
The Pension Benefit Guaranty Corporation ("PBGC"), on behalf of the
SALANT Corporation Retirement Plan (hereinafter the "Plan"), hereby sets forth
its claim against SALANT Corporation (hereinafter the "Debtor"), stating:
PBGC is a wholly-owned United States Government corporation
created under Title IV of the Employee Retirement income Security Act of 1974
("ERISA"), 29 U.S.C. ss.ss. 1301-1461 (1994 & Supp. II 1996), to administer the
mandatory pension plan termination insurance program established under Title IV
of ERISA. The PBGC guarantees the payment of certain pension benefits upon
termination of a pension plan to which Title IV applies.
See 29 U.S.C. ss.ss. 1321, 1322.
2. The Plan is a tax-qualified, single employer, defined benefit
pension plan covered by Title IV of ERISA. 29 U.S.C. ss. 1321. At all relevant
times, the Debtor was the contributing sponsor of the Plan within the meaning of
29 U.S.C. ss. 1301(a)(13).
3. The contributing sponsor and each member of its controlled group are
liable to the Plan for at least the amounts necessary to satisfy ERISA's minimum
funding standards ("Minimum Funding Contributions"). See 29 U.S.C. ss.ss. 1082,
1362(c); 26 U.S.C. ss. 412.
4. The Plan may terminate. This claim is made on behalf of the Plan for
unpaid Minimum Funding Contributions based on the contingency that the Plan will
terminate and/or the PBGC will become trustee prior to the confirmation of a
plan of reorganization in this case. See 29 U. S.C. ss.ss.1341, 1342. If the
Plan terminates, the PBGC will amend this claim as necessary.
5. On information and belief, if the Plan terminates, the assets held
under the Plan will not be sufficient to discharge when due all obligations of
the Plan with respect to benefits guaranteed by the PBGC.
6. To date, the PBGC has not calculated the amount of Minimum Funding
Contributions owed with respect to the Plan.
7. This claim is entitled to priority as follows:
A. PRIORITY UNDER 11 U.S.C. ss.ss. 503(b)(1)(A) AND 507(a)(1)
The debt for unpaid Minimum Funding Contributions to the Plan that
accrued in the ordinary course of business during the administration of the
Debtor's Chapter 11 estate until the date of Plan termination is entitled to
priority as an expense of administration pursuant to 11 U.S.C.
ss.ss.503(b)(1)(A) and 507(a)(1)
B. PRIORITY UNDER 11 U.S.C. ss.ss. 503(b)(1)(B) AND 507 (a)(1)
When the aggregate unpaid Minimum Funding Contributions for plan years
beginning after 1987 exceeds $1 million, 29 U.S.C. ss. 1082(0 and 26 U.S.C. ss.
412(n) create a lien in favor of the Plan against the contributing sponsor and
each member of its controlled group. Under these sections, the amount of such
lien is "treated as taxes due and owing the United States." 29 U.S.C. ss.
1082(f)(4)(C); 26 U.S.C. ss.412(n)(4)(C). To the extent this debt arises during
the post-petition period, it is entitled to priority pursuant to 11 U.S.C.
ss.ss. 503(b)(1)(B) and 507(a)(1).
C. PRIORITY UNDER 11 U.S.C. ss. 507(a)(4)
The debt for Unpaid Minimum Funding Contributions to the Plan that are
attributable to the 180 days prior to the filing of the bankruptcy petition is
entitled to priority pursuant to 11 U.S.C. ss.507(a)(4).
D. PRIORITY UNDER 11 U.S.C. ss. 507(a)(8)
To the extent the Debtor's tax liability for unpaid Minimum Funding
Contributions arose prior to the administration of the estate, it is entitled to
priority pursuant to 11 U.S.C. ss. 507(a)(8)
8. To the extent that any portion of this claim is determined not to be
entitled to priority, that amount is asserted as a general unsecured claim.
9. The PBGC is not aware of any other claim for Minimum Funding
Contributions having been filed by any person on behalf of the Plan.
10. The PBGC reserves the right to amend, modify and supplement this
proof of claim and/or to file additional proofs of claim. The filing of this
proof of claim is not intended to be and shall not be construed as (1) an
election of remedy or (2) a waiver or limitation of any rights of the PBGC, the
Plan or any of its beneficiaries or participants. In addition, PBGC reserves the
right to supplement this proof of claim with additional relevant documents.
STEPHEN D. SCHREIBER
Assistant General Counsel
BRUCE H. JAMES
Attorney
PENSION BENEFIT GUARANTY
CORPORATION ON BEHALF OF THE
SALANT CORPORATION
RETIREMENT PLAN
1200 K Street, NW
Washington, DC 20005-4026
(202) 326-4020, ext. 3235
Attorneys for Claimant Pension Benefit
Guaranty Corporation
<PAGE>
EXHIBIT 4
FORM B10 (Official Form 10)(4/98)
- --------------------------------------------------------------------------------
United States Bankruptcy Court SOUTHERN District of NEW YORK PROOF OF CLAIM
- --------------------------------------------------------------------------------
Name of Debtor Case Number
SALANT CORPORATION 98-10107 (CB)
- ----------------------------------------------------------------
Note: This form should not be sued to make a claim for an
administrative expense arising after the commencement of the
case. A "request" for payment of an administrative expense may
be filed pursuant to 11 U.S.C. Section 503.
- ----------------------------------------------------------------
Name of Creditor (The person or [ ] Check box if you are
other entity to whom the debtor aware that anyone else
owes money or property): has filed a proof of
claim relating to your
PENSION BENEFIT GUARANTY claim. Attach copy
CORPORATION of statement giving
particulars.
- -------------------------------------
Name and address where notices
should be sent: [X] Check box if you have
never received any
Pension Benefit Guaranty Corporation notices from the
Office of the General Counsel, bankruptcy court in
Attn: Bruce H. James, Esq. this case.
1200 K. Street, N.W., Suite 3105
Washington, D.C. 20005-4026 [ ] Check box if the
address differs from
the address on the
envelope sent to you
by the court.
Telephone number:
202-326-4020, ext. 3235
- --------------------------------------------------------------------------------
Account or other number by which Check here [ ] replaces
creditor identifies debtor: if this claim [ ] amends a previously
filed claim,
dated: _______________
- --------------------------------------------------------------------------------
1. Basis for Claim
[ ] Goods sold [ ] Retiree benefits as defined in
[ ] Services performed 11 U.S.C. Section 1114(a)
[ ] Money loaned [ ] Wages, salaries, and compensation
[ ] Personal injury/wrongful (fill out below)
death
[ ] Taxes Your SS#: _____ ______ _______
[X] Other Unpaid Compensation for services
Statutory liability performed
under 29 U.S.C. from ______________ to ______________
Sections 1362, 1368 (date) (date)
(see attached
statement)
- --------------------------------------------------------------------------------
2. Date debt was incurred: 3. If court judgment, date obtained:
Arises from before the petition
date through date of plan
termination
- --------------------------------------------------------------------------------
4. Total Amount of Claim at Time Case Filed: $UNLIQUIDATED
------------
If all or part of your claim is secured or entitled to priority, also
complete Item 5 or 6 below.
[X] Check this box if claim includes interest or other charges in addition to
the principal amount of the claim. Attach itemized statement of all
interest or additional charges
- --------------------------------------------------------------------------------
5. Secured Claim.
[ ] Check this box if your claim is secured by collateral (including a right of
setoff).
Brief Description of Collateral:
[ ] Real Estate [ ] Motor Vehicle
[ ] Other ___________________
Value of Collateral: $_____________________
Amount of arrearage and other charges at time case filed included in secured
claim, if any: $______________________
- --------------------------------------------------------------------------------
6. Unsecured Priority Claim.
[X] Check this box if you have an unsecured priority claim
Amount entitled to priority $ UNLIQUIDATED
------------
Specify the priority of the claim:
[ ] Wages, salaries, or commissions (up to $4300), * earned within 90 days
before filing of the bankruptcy petition or cessation of the debtor's
business, whichever is earlier -- 11 U.S.C. Section 507(a)(3).
[ ] Contributions to an employee benefit plan -- 11 U.S.C. Section 507(a)(4).
[ ] Up to $1,950* of deposits toward purchase, lease, or rental of property
or services for personal, family, or household use -- 11 U.S.C.
Section 507(a)(6)
[ ] Alimony, maintenance, or support owed to a spouse, former spouse, or
child -- 11 U.S.C. Section 507(a)(7).
[ ] Taxes or penalties owed to governmental units -- 11 U.S.C.
Section 507(a)(8).
[X] Other -- Specify applicable paragraph of 11 U.S.C. Section 507(a)
(1), 503(b)(1)
--------------
(see attached statement)
* Amounts are subject to adjustment on 4/1/98 and every 3 years thereafter
with respect to cases commenced on or after the date of adjustment.
- --------------------------------------------------------------------------------
7. Credits: The amount of all payments on this THIS SPACE IS FOR
claim has been credited and deducted for COURT USE ONLY
the purpose of making this proof of claim.
8. Supporting Documents: Attach copies of
supporting documents, such as promissory
notes, purchase orders, invoices,
itemized statements of running accounts,
contracts, court judgments, mortgages,
security agreements, and evidence of
perfection of lien. DO NOT SEND
ORIGINAL DOCUMENTS. If the documents
are not available, explain. If the
documents are voluminous, attach
a summary.
9. Date-Stamped Copy: To receive an
acknowledgment of the filing of your
claim, enclose a stamped,
self-addressed envelope and copy
of this proof of claim.
- -------------------------------------------------
Date Sign and print the name and title,
if any, of the creditor or other
person authorized to file this
claim (attach copy of power of
attorney, if any):
Stephen D. Schreiber
Assistant General Counsel
- --------------------------------------------------------------------------------
Penalty for presenting fraudulent claim: Fine of up to $500,000 or imprisonment
for up to 5 years, or both. 18 U.S.C. Sections 152 and 3571.
- --------------------------------------------------------------------------------
<PAGE>
Bruce H. James (BJ-2184)
Pension Benefit Guaranty Corporation
Office of the General Counsel
1200 K Street, NW, Suite 3105
Washington, DC 20005-4026
(202) 326-4020, ext. 3235
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE
SALANT CORPORATION,
Debtor
Chapter 11
Case No. 98 B 10107(CB)
STATEMENT IN SUPPORT OF CLAIM
The Pension Benefit Guaranty Corporation ("PBGC") hereby sets forth
its claim against SALANT Corporation (hereinafter the "Debtor"), stating:
1. PBGC is a wholly-owned United States Government corporation created
under Title IV of the Employee Retirement income Security Act of 1974
("ERISA.'), 29 U.S.C. ss.ss. 1301-1461 (1994 and Supp. II 1996), to administer
the mandatory pension plan termination insurance program established under Title
IV of ERISA. The PBGC guarantees the payment of certain pension benefits upon
termination of a pension plan to which Title I\' applies. See 29 U.S.C. ss.ss.
1321, 1322.
2. The SALANT Corporation Pension Plan (the "Hourly Plan") and the
SALANT Corporation Retirement Plan (the "Salaried Plan) (collectively the
"Plans"), are tax-qualified, single employer, defined benefit pension plans
covered by Title IV of ERISA. 29 U.S.C. ss. 1321.
3. The Debtor is the contributing sponsor of the Plans, within the
meaning of 29 U.S.C. ss. 1301(a)(13).
4. A contributing sponsor is a "designated payor" under 29 U.S.C. ss.
1307(e)(1)(A), and as such, is liable for premiums, interest, and penalties
imposed by ERISA for plans covered by Title IV of ERISA. See 29 U.S.C. ss.
1307(a), (b) and (e); 29 C.F.R. ss. 4007.12(a).
5. This claim is made pursuant to 29 U.S.C. ss. 1307(a), (b) and (e),
for unpaid premiums, plus interest and penalties.
6. This claim includes unpaid premiums that may become due during the
administration of the Debtor's estate. Such amounts are entitled to priority
under 11 U.S.C. ss.ss. 507(a)(1) and 503(b)(1)(A).
7. The amount of this claim is unliquidated at this time. Pursuant to
29 U.S.C. ss. 1307(a), PBGC premiums are due until a plan's assets are
distributed pursuant to a termination procedure or, if earlier, until a trustee
is appointed pursuant to 29 U.S.C. ss. 1342. Since neither event has occurred,
premiums continue to accrue and the total amount of premiums due cannot be
determined. When the amount can be finally determined, the PBGC will amend this
claim as necessary.
8. Any amount of the premiums due with respect to the Plans which is
determined not to be entitled to priority is hereby filed as a general unsecured
claim.
9. The PBGC reserves the right to amend, modify and supplement this
proof of claim and/or to file additional proofs of claim. The filing of this
proof of claim is not intended to be and shall not be construed as (1) an
election of remedy or (2) a waiver or limitation of any rights of the PBGC, the
Plans or any of its beneficiaries or participants.
STEPHEN D. SCHREIBER
Assistant General Counsel
BRUCE H. JAMES (BJ-2184)
Attorney
PENSION BENEFIT GUARANTY
CORPORATION
Office of the General Counsel
1200 K Street, N.W.
Washington D.C. 20005-4026
(202) 326-4020, ext. 3235
Attorneys for Claimant
<PAGE>
EXHIBIT 5
FORM B10 (Official Form 10)(4/98)
- --------------------------------------------------------------------------------
United States Bankruptcy Court SOUTHERN District of NEW YORK PROOF OF CLAIM
- --------------------------------------------------------------------------------
Name of Debtor Case Number
SALANT CORPORATION 98-10107 (CB)
- ----------------------------------------------------------------
Note: This form should not be sued to make a claim for an
administrative expense arising after the commencement of the
case. A "request" for payment of an administrative expense may
be filed pursuant to 11 U.S.C. Section 503.
- ----------------------------------------------------------------
Name of Creditor (The person or [ ] Check box if you are
other entity to whom the debtor aware that anyone else
owes money or property): has filed a proof of
claim relating to your
PENSION BENEFIT GUARANTY claim. Attach copy
CORPORATION of statement giving
particulars.
- -------------------------------------
Name and address where notices
should be sent: [X] Check box if you have
never received any
Pension Benefit Guaranty Corporation notices from the
Office of the General Counsel, bankruptcy court in
Attn: Bruce H. James, Esq. this case.
1200 K. Street, N.W., Suite 3105
Washington, D.C. 20005-4026 [ ] Check box if the
address differs from
the address on the
envelope sent to you
by the court.
Telephone number:
202-326-4020, ext. 3235
- --------------------------------------------------------------------------------
Account or other number by which Check here [ ] replaces
creditor identifies debtor: if this claim [ ] amends a previously
filed claim,
dated: _______________
- --------------------------------------------------------------------------------
1. Basis for Claim
[ ] Goods sold [ ] Retiree benefits as defined in
[ ] Services performed 11 U.S.C. Section 1114(a)
[ ] Money loaned [ ] Wages, salaries, and compensation
[ ] Personal injury/wrongful (fill out below)
death
[ ] Taxes Your SS#: _____ ______ _______
[X] Other Unpaid Compensation for services
Statutory liability performed
under 29 U.S.C. from ______________ to ______________
Sections 1362, 1368 (date) (date)
(see attached
statement)
- --------------------------------------------------------------------------------
2. Date debt was incurred: 3. If court judgment, date obtained:
Arises from before the petition
date through date of plan
termination
- --------------------------------------------------------------------------------
4. Total Amount of Claim at Time Case Filed: $UNLIQUIDATED
------------
If all or part of your claim is secured or entitled to priority, also
complete Item 5 or 6 below.
[ ] Check this box if claim includes interest or other charges in addition to
the principal amount of the claim. Attach itemized statement of all
interest or additional charges
- --------------------------------------------------------------------------------
5. Secured Claim.
[ ] Check this box if your claim is secured by collateral (including a right of
setoff).
Brief Description of Collateral:
[ ] Real Estate [ ] Motor Vehicle
[ ] Other ___________________
Value of Collateral: $_____________________
Amount of arrearage and other charges at time case filed included in secured
claim, if any: $______________________
- --------------------------------------------------------------------------------
6. Unsecured Priority Claim.
[ ] Check this box if you have an unsecured priority claim
Amount entitled to priority $ UNLIQUIDATED
------------
Specify the priority of the claim:
[ ] Wages, salaries, or commissions (up to $4300), * earned within 90 days
before filing of the bankruptcy petition or cessation of the debtor's
business, whichever is earlier -- 11 U.S.C. Section 507(a)(3).
[ ] Contributions to an employee benefit plan -- 11 U.S.C. Section 507(a)(4).
[ ] Up to $1,950* of deposits toward purchase, lease, or rental of property
or services for personal, family, or household use -- 11 U.S.C.
Section 507(a)(6)
[ ] Alimony, maintenance, or support owed to a spouse, former spouse, or
child -- 11 U.S.C. Section 507(a)(7).
[ ] Taxes or penalties owed to governmental units -- 11 U.S.C.
Section 507(a)(8).
[ ] Other -- Specify applicable paragraph of 11 U.S.C. Section 507(a)
(1), 503(b)(1)
--------------
(see attached statement)
* Amounts are subject to adjustment on 4/1/98 and every 3 years thereafter
with respect to cases commenced on or after the date of adjustment.
- --------------------------------------------------------------------------------
7. Credits: The amount of all payments on this THIS SPACE IS FOR
claim has been credited and deducted for COURT USE ONLY
the purpose of making this proof of claim.
8. Supporting Documents: Attach copies of
supporting documents, such as promissory
notes, purchase orders, invoices,
itemized statements of running accounts,
contracts, court judgments, mortgages,
security agreements, and evidence of
perfection of lien. DO NOT SEND
ORIGINAL DOCUMENTS. If the documents
are not available, explain. If the
documents are voluminous, attach
a summary.
9. Date-Stamped Copy: To receive an
acknowledgment of the filing of your
claim, enclose a stamped,
self-addressed envelope and copy
of this proof of claim.
- -------------------------------------------------
Date Sign and print the name and title,
if any, of the creditor or other
person authorized to file this
claim (attach copy of power of
attorney, if any):
Stephen D. Schreiber
Assistant General Counsel
- --------------------------------------------------------------------------------
Penalty for presenting fraudulent claim: Fine of up to $500,000 or imprisonment
for up to 5 years, or both. 18 U.S.C. Sections 152 and 3571.
- --------------------------------------------------------------------------------
<PAGE>
Bruce H. James (BJ2184)
Pension Benefit Guaranty Corporation
Of Office the General Counsel
1200 K Street, NW, Suite 3105
Washington, DC 200054026
(202) 326-4020 ext. 3235
UNTIED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE
SALANT CORPORATION,
Debtor.
Chapter 11
Case No. 98 B 10107(CB)
STATEMENT IN SUPPORT OF CLAIM
The Pension Benefit Guaranty Corporation ("PBGC") hereby sets forth its
claim against Salant Corporation (hereinafter the "Debtor") stating:
1. PBGC is a wholly-owned United States Government corporation created
under Title IV of the Employee Retirement Income Security Act of 1974 ("ERISA"),
29 U.S.C. ss. ss. 1301 -1461 (1994 and Supp. II 1996), to administer the
mandatory pension plan termination insurance program established under Title IV
of ER ISA The PBGC guarantees the payment of certain pension benefits upon
termination of a pension plan to which Title IV applies.
See 29 U.S.C. ss.ss.1321, 1322.
2. The SALANT Corporation Pension Plan (the "Hourly Plan") and the
Salant Corporation Retirement Plan (the "Salaried Plan") (collectively the
"Plans") are tax-qualified single employer, defined benefit pension plans
covered by Title IV of ERISA. 29 U.S.C. ss. 1321.
3. The Debtor is the contributing sponsor of the Plans, within the
meaning of 29 U.S.C. ss. 1301(a)(13).
4. If an employer ceases operations at a facility in any location and,
as a result more than 20 percent of the total number of active participants in a
pension plan are separated from employment, 29 U.S.C. 5 1362(e) provides that
the employer shall he treated as if it were "a substantial employer under a plan
to which more than ores employer makes contributions and the provisions of 29
U.S.C. ss.ss. 1363, 1364, and 1365 shall apply."
5. If an event which is described in 29 U. S.C. ss. 1362(o) occurs with
respect to a pension plan, 29 U.S.C. 5 1363 provides, inter alia, for the
imposition of liability to the PBGC on the employer sponsoring the plan That
liability is equal to an allocable share of the total underfunding of the
pension plan and may be returned to the employer if the pension plan does not
terminate during the next five years.
6. By letter dated March 20, 1998, the Debtor reported to the PBGC that
an event described in 29 U.S.C. 5 1362(e) occurred in 1996 when it closed its
Thomson Company division.
7. On information and belief one or more events described in 29 U.S.C.
5 1362(o) may occur as a result of actions contemplated in the Debtor's proposed
First Amended Plan of Reorganization.
8. As a result, the Debtor may be liable to the PBGC under 29
U.S.C. ss. 1363.
9. The PBGC is unable to determine the amount of this claim at this
time.
10. The PBGC reserves the right to amend, modify and supplement this
proof of claim and/or to file additional proofs of claim for additional claims.
The filing of this claim is not intended to be sad shall not be construed as (1)
en election of remedy or (2) a waiver or limitation of any rights of the PBGC,
the Plans or any of its beneficiaries or participants in addition, the PBGC
reserves the right to supplement this claim with additional documents. This
claim may be subject to a right of set off by PBGC as an agency of the United
States Government and the United States' right to withhold subject to offset
amounts due from another Federal entity.
S STEPHEN D. SCHREIBER
Assistant General Counsel
BRUCE H. JAMES (BJ 2184)
Attorney
PENSION BENEFIT GUARANTY
CORPORATION
Office of the General Counsel
1200 K Street, N.W.
Washington D.C. 20005-4026
(202) 326-4020, ext. 3235
Attorneys for Claimant
FOR IMMEDIATE RELEASE
CONTACT: Kekst and Company
Wendi Kopsick
James Fingeroth
(212) 521-4800
Salant's REstructuring Plan is confirmed by
court - - Company expects to emerge from chapter 11 by
April 30, 1999 - -
New York, NY, April 19, 1999 -- Salant Corporation (OTC BB:SLNT)
announced that at a hearing held on Friday April 16, 1999 the Bankruptcy Court
confirmed its Chapter 11 Plan of Reorganization. As previously announced, upon
Salant's emergence from bankruptcy, Salant will enter into a new $85 million
revolving credit facility with The CIT Group/Commercial Services, Inc., the
Company's existing working capital lender.
Salant's pre-negotiated chapter 11 plan received the support of all of
the holders of the Company's 10-1/2% Senior Secured Notes and over 96% of its
stockholders who voted. Confirmation of the chapter 11 plan comes only three and
half months after Salant filed for chapter 11 protection on December 29, 1998.
Michael Setola, the Company's Chairman and Chief Executive Officer,
stated, "Confirmation clears the way for us to emerge from bankruptcy by the end
of April with not only a deleveraged, restructured balance sheet, but with a
streamlined and improved business. The restructuring has enabled us to exit
areas of the business that no longer fit our strategic plan, and, as a result,
we are a stronger company that will be able to focus all of our efforts on
building our Perry Ellis men's apparel business."
Mr. Setola further commented, "We appreciate the strong support we
received from our employees, our customers, our vendors and our other trading
partners throughout the restructuring period. Most importantly, our entire
management team is excited about Salant's prospects for future growth and
profitability in the months and years ahead."
FOR IMMEDIATE RELEASE
CONTACT: Kekst and Company
Wendi Kopsick
James Fingeroth
(212) 521-4800
SUPREME SUPPORTS SALANT'S EMERGENCE from CHAPTER 11
New York, NY, April 29, 1999 -- Salant Corporation (OTC BB:SLNT),
together with Supreme International Corporation (NASDAQ:SUPI), announced today
that in connection with the confirmation of Salant's Chapter 11 Plan of
Reorganization, Salant and Supreme had reached an agreement designed to lay the
foundation for their ongoing partnership to enhance the value of the Perry Ellis
brand. Salant is a licensee of Perry Ellis International, a wholly owned
subsidiary of Supreme.
Michael Setola, Salant's Chairman and Chief Executive Officer, stated,
"We are extremely excited about working with Supreme to maintain the Perry Ellis
brand at the forefront of men's apparel. Consummation of our chapter 11 plan
will allow us to focus all of our efforts on building our Perry Ellis men's
apparel business."
George Feldenkries, Supreme's Chairman and Chief Executive Officer,
stated, "We are confident that the reorganized, deleveraged Salant will be a
strong and exciting partner for Perry Ellis International. Supreme and Perry
Ellis look forward to working with Salant and its entire management team to
build and grow the Perry Ellis men's apparel business."
As previously announced, the Bankruptcy Court confirmed Salant's
Chapter 11 Plan of Reorganization on April 16, 1999. Salant expects to emerge
from bankruptcy by the end of April.
<TABLE>
<CAPTION>
PROJECTED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
Current Assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 1,698 $ 8,162 $ 14,557
Accounts receivable, net 25,176 27,121 29,238
Inventories, net 41,394 44,854 49,327
Prepaid expenses and other current assets 3,766 3,766 3,766
----------------- ----------------- -----------------
Total Current Assets 72,034 83,903 96,888
Property, plant and equipment, net 10,802 11,393 11,459
Other assets 14,304 14,645 14,545
----------------- ----------------- -----------------
TOTAL ASSETS $ 97,140 $ 109,941 $ 122,892
================= ================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Loans payable $ 1,459 $ - $ -
Accounts payable 9,091 10,987 12,159
Accrued expenses 11,069 12,123 13,323
Interest payable
- - -
Other 753 832 911
----------------- ----------------- -----------------
Total Current Liabilities 22,372 23,942 26,393
Deferred Liabilities 4,301 3,725 2,917
Restructuring Reserves 3,994 3,994 2,994
Shareholders' equity:
Common stock 100 100 100
Additional paid in-in capital 231,459 231,459 231,459
Pension liability (3,508) (3,508) (3,508)
Foreign exchange translation (184) (184) (184)
Treasury stock
- - -
Retained earnings (161,394) (149,587) (134,280)
----------------- ----------------- -----------------
Total shareholders' equity 66,473 78,280 90,587
----------------- ----------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 97,140 $ 109,941 $ 122,892
================= ================= =================
</TABLE>
