<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section l3 or l5(d) of the
Securities Exchange Act of l934
Date of Report (Date of earliest event reported) June 25, 1996
SLM INTERNATIONAL, INC.
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter
Delaware 34-0-19596 13-36-32297
- -----------------------------------------------------------------------------
(State of other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
30 Rockefeller Plaza New York, New York 10020
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
212-332-1610
- ------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE> 2
Item 5. Other Events.
On June 26, 1996, SLM International, Inc., and six of
its subsidiaries (collectively, the "Company"), which filed for relief under
chapter 11 of the Federal Bankruptcy Code in the District of Delaware on
October 24, 1995, announced that it had entered into an agreement with its
Unsecured Creditors' Committee on a term sheet (the "Term Sheet") setting forth
the material provisions of a Plan of Reorganization. The Unsecured Creditors'
Committee represents the Company's Senior Noteholders, as well as the Company's
trade creditors.
The Term Sheet specifies that the Plan of Reorganization will
contain the following treatment for creditors and equity security holders:
o The Company's secured creditors will receive at least
$10 million in cash and up to $65 million in senior
secured notes, the terms of which have not yet been
determined, in exchange for $75 million of secured
indebtedness.
o The Company's unsecured creditors will receive 6.2
million shares of new common stock representing, at
the time of issuance, 100% of the distributed equity
in the Reorganized Company, subject to dilution upon
the exercise of the warrants distributed to equity
security holders, in exchange for approximately $120
million of unsecured indebtedness.
o The Company's equity security holders (currently
holding 18,859,679 shares of Common Stock) will
receive a total of 300,000 5-year warrants to
purchase an aggregate of 300,000 shares of new common
stock currently expected to be at an exercise price
above the initial value of the new common stock. The
warrants would be exercisable at an enterprise
valuation of $175 million. In addition, the warrant
holders will have the option to receive an aggregate
payment of $500,000 upon cancellation of such
warrants in connection with a sale of the Company for
more than $140 million.
The Term Sheet, which is predicated upon a Company valuation
of $130 million exclusive of cash for distribution under a Plan of
Reorganization, also provides for other terms.
The Bankruptcy Court, at a hearing held on June 12, 1996,
continued the Company's exclusive right to propose a Plan of Reorganization for
an additional 60-day period, ending August
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<PAGE> 3
11, 1996. The Company expects to file a definitive Plan of Reorganization
including the terms of the term sheet within such 60-day period.
The provisions set forth in the Term Sheet are subject to change in
advance of the filing of the definitive Plan of Reorganization as a result of
continuing negotiations with the Company's Unsecured Creditors Committee and
the Company's Secured Creditor Group. The Secured Creditors Group has not
agreed to the term sheet and has indicated that it currently intends to oppose
its approval in Bankruptcy Court. In addition, the effectiveness of the Plan
of Reorganization is subject to, among other things, the Bankruptcy Court's
prior approval of a Disclosure Statement describing the provisions and effect
of the Plan of Reorganization (which has not yet been filed with the Bankruptcy
Court), a creditor and equity security holder vote on such plan and Bankruptcy
Court approval of such plan. Completion of this process will take at least
three months and may take longer unless the Plan of Reorganization is accepted
by voting constituencies and the approval of such plan is not subject to
material opposition. There is no assurance that the Company will reach
agreement on a definitive Plan of Reorganization, that any constituent group
will vote in favor of the plan or that such plan will be approved by the
Bankruptcy Court. The Company, therefore, is not presently able to predict
when the chapter 11 case will be concluded or on what basis.
Item 7. Exhibits.
(c) Exhibits
1. Letter, dated June 25, 1996, from the Company to the Official
Committee of Unsecured Creditors of SLM International, Inc.
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<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
l934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
SLM INTERNATIONAL, INC.
(Registrant)
---------------------------------
(Signature)
John A. Sarto
Vice President and Chief
Financial Officer
Date: June 26, 1996
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<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
l934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
SLM INTERNATIONAL, INC.
---------------------------------------
(Registrant)
/s/ John A. Sarto
---------------------------------------
(Signature)
John A. Sarto
Vice President and Chief
Financial Officer
Date: June 26, 1996
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<PAGE> 6
EXHIBIT INDEX
No.
- ---
1. Letter, dated June 25, 1996, from the Company to the Official
Committee of Unsecured Creditors of SLM International, Inc.
<PAGE> 1
Exhibit 1
SLM INTERNATIONAL, INC.
30 Rockefeller Plaza
Suite 4314
New York, New York 10112
June 25, 1996
Via Telecopy and Hand Delivery
- ------------------------------
Official Committee of Unsecured
Creditors of SLM International, Inc.
c/o The Equitable Life Assurance Society
of the United States
1345 Avenue of the Americas
New York, New York 10105
Attention: James Pendergast, Chairperson
Re: In re SLM International, Inc. et al.
------------------------------------
Gentlemen:
The purpose of this letter is to acknowledge the several
agreements reached among the debtors in the referenced proceedings ("Debtors")
and the Debtors' Unsecured Creditors' Committee ("Committee") and, together
with the Debtors, "Parties"). These agreements and the negotiations leading to
them will, in the estimation of the Debtors, lead directly to the expeditious
reorganization of the Debtors for the benefit of all of their creditors.
The Parties have agreed to the principal terms of a plan of
reorganization set forth in Attachment I to this letter. The Debtors have
agreed to draft and file in accordance with this letter a Chapter 11 Plan of
Reorganization ("Proposed Plan") and accompanying disclosure Statement required
by 11 U.S.C. Section 1125 (the "Disclosure Statement") consistent with such
Attachment.1/ The Debtors expect that such actions will be completed within
sixty days from the date hereof. Therefore the Debtors reduced their
exclusivity extension request from one hundred twenty days to sixty days from
June 12, 1996. The Committee supported the Debtors' reduced exclusivity
extension request and agreed to
- -------------------
1/ Use of the terms "Proposed Plan" and "Disclosure Statement" in this
letter is meant to include any iterations of or modifications to such
documents as agreed to by the Parties.
<PAGE> 2
cooperate in the preparation of the Proposed Plan and the Disclosure Statement.
In furtherance of confirmation and consummation of the
Proposed Plan, the Debtors, subject to the exercise of their fiduciary
responsibilities, have agreed to (i) prepare and file the Proposed Plan, and to
use their best efforts to prepare and file the Disclosure Statement, within
sixty days from the date hereof, (ii) use their best efforts to obtain Court
approval of the Disclosure Statement as promptly as possible after its filing;
(iii) actively pursue confirmation of the Proposed Plan; (iv) not to support or
propose any other plan of reorganization unless such plan is acceptable to and
endorsed by the Committee, except, subject to the next paragraph, if the
Committee seeks to propose or support an Alternative Plan (as defined below)
which adversely affects the treatment of any creditor of the Debtors (excluding
the Noteholders and other unsecured creditors other than the bank lenders and
the Lessors (as defined below)) from that set forth on Attachment I; (v)
negotiate with, and attempt to obtain support for the Proposed Plan from, the
Debtors' Secured (Former) Lender Group and other creditor constituencies; (vi)
identify potential post-confirmation working capital and term lenders for the
Reorganized Debtors and provide such financial and other information (subject
to appropriate assurances of confidentiality) and take such other action as may
be necessary to secure such financing; and (vii) meet and consult with
potential new senior employees for the Debtors or the reorganized Debtors at
the request of the Committee, and provide reasonable access to the Debtors'
facilities and books and records in connection therewith, subject to
appropriate assurances of confidentiality. The Debtors have advised the
Committee that they intend to actively prosecute the Maska lien avoidance
action and their pending motion for substantive consolidation to the extent
necessary to achieve confirmation of the Proposed Plan. The Committee, subject
to the exercise of their fiduciary responsibilities, agrees that it will not
support or propose any alternative plan of reorganization unless such plan
provides at least as favorable treatment for the Debtors' equity holders and
employees (in such capacities) as the treatment provided therefor in this
letter and Attachment I (any alternative plan of reorganization acceptable to
the Committee providing such treatment being hereinafter referred to as an
"Alternative Plan"). At the request of the Committee and subject to the
exercise by the Debtors of their fiduciary responsibilities, the Debtors agree
to propose and seek confirmation of an Alternative Plan, provided, subject to
the next paragraph, that such Alternative Plan does not adversely affect the
treatment of any creditor of the Debtors (excluding the Noteholders and other
unsecured creditors other than the bank lenders and the Lessors (as defined
below)) from that set forth in this letter and Attachment I. Nothing contained
in this letter shall be deemed to require any member of the Committee or
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<PAGE> 3
any other creditor of any Debtor to vote in favor of the Proposed Plan or any
other plan of reorganization.
As discussed by the Parties, the Debtors lease on a long-term
basis certain facilities in the United States and Canada (the "Leases") from
lessors largely owned and controlled by affiliates of the Debtors ("Lessors"),
as more fully described on page 49 of the Form 10-K of SLM International Inc.
relating to its 1995 fiscal year. We understand that the Committee intends to
request an accommodation from the Lessors. Accordingly, the Proposed Plan will
provide for the assumption of all of the Leases, modified to permit the
Reorganized Debtors to terminate such Leases on or after the four years from
the effective date of the Plan in exchange for a termination payment. Within
45 days from the date hereof, the Committee, after consultation with the
Lessors, shall propose to the Lessors a termination payment. IF,
notwithstanding such proposal, the Committee and the Lessors have not reached
an agreement regarding treatment of the Leases under the Proposed Plan prior to
the hearing on the Disclosure Statement, then the Committee shall have the
right, prior to or in connection with the confirmation of the Proposed Plan or
any Alternative Plan, to commence any and all actions it deems necessary or
desirable to challenge, modify or otherwise contest on behalf of the Debtors'
estate or otherwise any obligations of the Debtors arising under the Leases, in
which event the Debtors shall continue to (i) be obligated to actively pursue
confirmation of the Proposed Plan or any Alternative Plan that, as to the
Leases, provides for the incorporation of the resolution of the aforementioned
actions and (ii) otherwise fulfill their other obligations hereunder.
Assumption of the modified Leases on terms acceptable to the Committee will be
a condition to confirmation of the Proposed Plan.
Finally, the Parties negotiations have addressed the Debtors'
officers and employee morale issues, and the concomitant risk of immediate loss
of key employee. These critical concerns have arisen from, among other things,
uncertainty about the future, the absence of severance protection, and the
heightened duties imposed both by the Debtors' operational restructuring and
the Chapter 11 environment in general. To address these management issues in a
manner intended to best accomplish the Debtors' reorganization, the Debtors
wish to adopt a three-part Incentive, Retention and Severance Protection Plan
("Employee Plan"). The terms of the Employee Plan are set forth in Attachment
II to this letter. The Employee Plan provides for, among other things, (i) the
assumption of employment contracts with specified modifications for eight key
employees, (ii) the adoption of severance benefits for an additional eight key
employees without employment contracts, (iii) the payment (in Reorganized
Company stock or its equivalent in the case of a sale of the Debtors) of
incentive compensation if specified levels of performance for the year ended
December 31, 1996 are achieved and
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<PAGE> 4
(iv) the payment in cash of discretionary retention/confirmation bonuses upon
confirmation of the Proposed Plan (or any plan of reorganization endorsed by
the Committee) by no later than March 31, 1997 or such later date agreed to by
the Committee.
The Debtors intend to promptly file with the Court a motion
for approval of the Employee Plan and to seek a prompt hearing thereon. In
accordance with the Parties' jointly held beliefs that the Employee Plan
reasonably meets the Debtors' critical employee morale and retention concerns,
is a prudent exercise of the Debtors' business judgment and that Court approval
of the Employee Plan is an essential step towards the Debtors' rehabilitation,
the Committee has agreed, subject to compliance by the Debtors with their
respective obligations hereunder, and to the exercise of the Committee's
fiduciary responsibilities, to support fully Court approval of the Employee
Plan. The Debtors acknowledge that the Employee Plan is a critical but
nevertheless merely a step towards confirmation. Accordingly, the Debtors have
agreed to adjourn from time to time any hearing scheduled on approval of the
Employee Plan until the Debtors have filed with the Court the Proposed Plan and
have either filed with the Court or delivered to the Committee in a form ready
for filing the Disclosure Statement.
The obligations of the Parties hereunder shall terminate on
March 31, 1997 (or such earlier date as the Parties shall agree), unless a
Proposed Plan or an Alternative Plan has theretofore been confirmed by the
Bankruptcy Court.
I believe the foregoing accurately sets forth the material
agreements reached among the Parties. If so, please acknowledge the
Committee's agreement below.
Sincerely,
SLM INTERNATIONAL, INC., on its own
behalf and on behalf of the other
Debtors
By:__________________________________
Howard Zunenshine
Chief Executive Officer
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<PAGE> 5
AGREED AND ACCEPTED:
The Official Committee of
Unsecured Creditors of SLM
International, Inc. et al.
By:__________________________________
The Equitable Life Assurance
Society of the United States
Chairperson
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<PAGE> 6
ACKNOWLEDGED BY:
KASOWITZ, BENSON, TORRES
& FRIEDMAN LLP
By:________________________________
KRAMER, LEVIN, NAFTALIS & FRANKEL
By:________________________________
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<PAGE> 7
ATTACHMENT I
SLM International, Inc. et al.
Term Sheet for Plan of Reorganization
I. Joint Plan. Joint Chapter 11 Plan of Reorganization filed by (i) SLM
International, Inc. ("SLMI" or "Company"), (ii) Sport Maska Inc. (for
itself and as successor-in-interest to St. Lawrence Manufacturing
Canada Inc.), (iii) #1 Apparel Canada Inc. and (iv) Maska U.S., Inc.
(for itself and as successor-in-interest to #1 Apparel, Inc.)
(collectively, "Reorganized Debtors").1/
II. Valuation. Assumed enterprise valuation of $130mm. Assumed
collateral valuation of $75mm. Assumed distributable cash of at least
$10mm.
III. Capitalization.
A. Working Capital. $50mm working capital facility secured by a
first priority security interest in the Reorganized Debtors'
cash, inventory and accounts (collectively, "Current Assets")
and a shared lien on all other assets.
B. Senior Secured Notes. $65mm senior notes secured by a second
priority security interest in the Current Assets and a shared
lien in all of the Reorganized Debtors' other assets.
C. New Common Stock. 6.5 million shares of common stock in
Reorganized SLM International, Inc. ("New Common Stock").2/
Presumed Effective Date value of $10 per share.
IV. Management.
A. Directors. New 5-member board of directors: 1 director
selected by the Secured Group; 3 directors selected by the
Unsecured Committee; and 1 director selected by the existing
board. Initial board of
- -----------------------
1/ This Term Sheet presumes the pre-confirmation occurrence of the
above-referenced mergers and the sale of Mitchel & King Skates
Limited.
2/ Plus shares to be issued to the Incentive Compensation Plan
described below.
<PAGE> 8
directors appointed for two years, thereafter subject to
annual elections.
B. Officers. Continuation subject to the discretion of the
new Board and to contractual rights of officers.
C. Governance. Affirmative vote of 4 directors and
two-thirds shareholder approval required for, among other
transactions:
(1) sale (in one or a series of transactions) of
any or all of the Reorganized Debtors, any of
their subsidiaries or substantially all of
the assets of any of the foregoing.
(2) merger or consolidation of any of the
Reorganized Debtors where (a) such
Reorganized Debtor(s) is not the surviving
corporation, (b) such Reorganized Debtor(s)'s
common stock is converted into cash or
securities or both, (c) the holders of common
stock of such Reorganized Debtor(s) are not
the majority holder of the common stock in
the surviving corporation, or (d) any
material subsidiary of the Reorganized
Debtors does not continue as such after such
merger of consolidation; or
(3) the sale or issuance of common stock (or
warrants or options to acquire common stock)
in any calendar year, other than in
connection with the valid exercise of
preexisting options or warrants, in an amount
greater than 20% of the then-outstanding
common stock on a fully diluted basis.
V. Plan Structure. The Reorganized Debtors are substantively
consolidated.
VI. Treatment of Claims and Interests.
A. Administrative Claims. Approximately $4mm. Paid in full (i)
in cash on the Effective Date or (ii) on such other terms as
agreed to by the Claimant and the Reorganized Debtors.
B. Priority Non-Tax. Approximately $0. Paid in full (i) in cash
on the Effective Date or (ii) on such other as agreed to by
the Claimant and the Reorganized Debtors.
C. Priority Tax. Approximately $2.8mm. Paid in full (i) in cash
on the Effective Date, (ii) in accordance with 11 U.S.C.
Section 1129(a)(9)(C) or (iii) on such other terms
-2-
<PAGE> 9
as agreed to by the Claimant and the Reorganized Debtors.
D. Former Lenders Claims. Approximately $95mm of which $75mm is
secured and $20mm is unsecured, which unsecured deficiency
claims may be reduced by further distributions from the Buddy
L estate.
1. Pro Rata distribution of following:
a. Cash. $l0mm. At Reorganized Debtors'
option, up to $10mm in additional cash in
exchange for $10mm in principal amount of
Senior Secured Notes.
b. Notes. $65mm in Senior Secured Notes,
subject to Reorganized Debtors' option "to
buy back" up to $10mm in principal amount of
Senior Secured Notes.
c. Stock. 1.05mm shares of New Common Stock as
a distribution on the Former Lenders'
unsecured deficiency claims, subject to
reduction due to payments from the Buddy L
estate.3/
2. Reservation of all issues regarding Inter-Creditor
Agreement disputes for resolution, at option of the
Noteholders, in Bankruptcy Court or in state or
federal court(s) of competent jurisdiction.
E. Other Creditors. Approximately $98mm (exclusive of Former
Lenders' unsecured deficiency claims) consisting of the
following:
<TABLE>
<S> <C>
Noteholders: $80mm4/
-
Unsecured Creditors $18mm
-----
Total: $98mm
</TABLE>
1. Distribution of 5.15mm shares of New Common Stock (in
addition to the 1.05mm shares of New Common Stock
distributed to the Former Lenders on their
- ----------------------
3/ This constitutes the treatment of the Former Lenders' $20mm
unsecured claim in accordance with the treatment of all unsecured
claims.
4/ Includes secured portion of Noteholders claims.
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<PAGE> 10
unsecured deficiency claims in accordance with
paragraph 6.d.(1)(c) above).
2. Allocation between Noteholders and Unsecured
Creditors to be determined.
3. Reservation of all issues regarding Inter-Creditor
Agreement disputes for resolution, at option of the
Noteholders, in Bankruptcy Court or in state or
federal court(s) of competent jurisdiction.
F. Equity. Pro Rata distribution of five year warrants to
purchase up to 0.3mm shares of New Common Stock at an
enterprise valuation of $175mm; if the Debtors or the
Reorganized Debtors are sold for aggregate consideration of at
least $140mm, the holders of the warrants shall be entitled
either to retain their warrants or to receive in exchange for
cancellation thereof a pro rata portion of $500,000.
VII. Post-Effective Date Ownership:
<TABLE>
<CAPTION>
Percent of
Outstanding
Constituency Amount5/ Stock5/ Recovery
------------ ------- - -------- -- --------
<S> <C> <C> <C> <C> <C> <C>
Former Lenders 1.051mm 16.95% 90.01%6/
-
Noteholders and Unsecured 83.05%
Creditors 5.149mm 52.54%6,7/
- -
Equity 0.300mm8/ 0% N/A
-------
Total: 6.50mm 100.00%
</TABLE>
- ---------------------
5/ Excludes shares issued pursuant to Incentive Compensation Plan.
5/ Excludes shares issued pursuant to Incentive Compensation Plan.
6/ Subject to outcome of inter-creditor disputes between Former
Lenders and Noteholders.
7/ The breakdown of these shares is subject to Noteholder/
Unsecured Creditor discussions.
8/ Consists of five year warrants.
-4-
<PAGE> 11
ATTACHMENT II
SLM International, Inc. et al.
Outline of Incentive, Retention and Severance Protection Plan
I. EMPLOYMENT AGREEMENT ASSUMPTION
A. Applicable to the officers set forth on Exhibit A.
B. Assumption of employment agreements is subject to the
following:
1. Change of control termination provisions to be waived
for changes occurring pursuant to the plan.
Termination payments as described in Exhibit A as if
termination occurred in 1996.
2. Severance payments to officers (other than H.
Zunenshine, J. Sarto, R. Levy, J. Hodgins and K.
Bloom) during the second half of the applicable
severance period (i.e., last 6 months if period of
severance payments is 12 months) to be reduced by
payments received by officers from new employers.
3. Modification of the agreements of Messrs.
Zunenshine, Sarto and Levy to provide for reasonable
cooperation during the 6 month period following
written notice of constructive termination in hiring
a successor and in otherwise managing the affairs of
the Debtors or Reorganized Debtors.
4. Provisions relating to "cause" for termination shall
be modified in the contracts of Messrs. Zunenshine
and Levy in a manner that is consistent with section
2.04 of Mr. Sarto's current employment agreement.
C. Reorganized Debtors (or in the event a motion to appoint a
trustee, to dismiss the case or to convert the case to Chapter
7 is filed by an unaffiliated third party, the Debtor, but in
no event earlier than ten days prior to the hearing on such
motion, taking effect of any adjournment or agreement to
adjourn such hearing or, in other situations, to the extent
agreed between the Debtors and the Committee) will secure
severance obligations to each of Messrs. Zunenshine, Sarto and
Levy by providing an irrevocable letter of credit which shall
expire on January 1, 1999 in the amount of the cash severance
liability of the Reorganized Debtors (or
<PAGE> 12
the Debtors, as the case may be) to such person. Such letter
of credit will be drawable by the beneficiary on the earliest
to occur of (i) actual termination of beneficiary's
employment by the Reorganized Debtors (or the Debtors, as the
case may be); (ii) 6 months following written notice given by
the beneficiary to the Reorganized Debtors (or the Debtors, as
the case may be) of such beneficiary's constructive
termination; and (iii) expiration of the term of such
beneficiary's employment agreement.
D. Stock option grants to be made at discretion of board of
directors of the Reorganized Company; all other rights to
stock options or other equity interests to be terminated.
II. SEVERANCE PROTECTION TO OTHER MANAGEMENT PERSONNEL
Applicable to the management employees and in the amounts set forth on
Exhibit B provided that payments to such employees during the second
half of the applicable severance period to be reduced by payments
received by employees from new employers.
III. INCENTIVE PLAN
A. Applicable to senior, high middle, low middle and junior
management.
B. Structured bonuses, tied to achieving EBITDA levels of $13.5mm
and 15mm and maintaining specified levels of receivables,
inventory and cash consistent with such levels of performance.
C. Bonuses will be paid in Reorganized Company common stock (or
its equivalent in the case of a sale of the Debtors) on the
later of consummation of the plan and 30 days after 1996
EBITDA has been determined. Continuation of employment at
confirmation required to realize earned bonuses.
D. Aggregate bonuses equal to $500,000 of Reorganized Company
common stock if $l3.5mm of EBITDA and other tests are met and
$750,000 of Reorganized Company common stock if $15mm of
EBITDA and other tests are met. Reorganized Company common
stock will have a presumed value of $10 per share.
E. Additional specifics of Incentive Plan to be agreed.
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<PAGE> 13
IV. RETENTION PLAN
A. Aggregate bonuses of $500,000 payable if plan of
reorganization Stable to Unsecured Creditors' Committee is
confirmed no later than March 31, 1997 or such other date
agreed to by the committee.
B. Applicable to members of management designated by CEO and
reasonably acceptable to the Unsecured Creditors' Committee;
provided that no more than $250,000 aggregate bonuses may be
paid to Messrs. Zunenshine, Sarto, and Levy.
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<PAGE> 14
EXHIBIT A
Employment Agreements to be Assumed
<TABLE>
<CAPTION>
Term of Annual Termination
Position Employment Base Salary Payment
<S> <C> <C> <C> <C>
Howard J. Zunenshine CEO SLMI and Subsidiaries December 31, 1998 $400,000 Two years of then current
salary plus two times
average bonus paid for two
years prior to termination
event and continuation of
benefits for two years.
John S. Sarto Vice President and CFO SLMI December 31, 1997 $250,000 through Two years of then current
and Vice President of 6/30/96 salary and continuation of
Subsidiaries $275,000 7/1/96- benefits for two years.
12/31/97
Richard S. Levy Vice President, Legal December 31, 1997 $160,000 Base salary and
Affairs and General Counsel continuation of benefits
and Secretary of SLMI and for such period.
Subsidiaries
Jon Hodgins Senior Vice President December 31, 1997 $165,000 CDN Greater of base salary and
Worldwide Marketing benefits for (i) twelve
months or (ii) remaining
term.
D. Bruce Randall Corporate Counsel Indefinite $70,000 (reviewed Base salary and benefits
annually) for six months.
Kenneth A. Bloom Vice President and Indefinite $140,000 Twelve months of then
Treasurer of SLMI and current salary and car
Subsidiaries allowance and continuation
of benefits for twelve
months.
</TABLE>
A-1
<PAGE> 15
EXHIBIT A
<TABLE>
<S> <C> <C> <C> <C>
David R. Quackenbush Director of Financial Indefinite $85,000 Not less than six months
Planning of SLMI salary, eight months
following a change in
control. Payable in equal
installments every two
weeks.
Charles Luthi Manager - Director Indefinite $145,000 Salary and benefits for
Europe six months.
</TABLE>
A-2
<PAGE> 16
EXHIBIT B
Severance Agreements to be Implemented
<TABLE>
<CAPTION>
Term of Annual Termination
Position Employment Base Salary Benefits
<S> <C> <C> <C> <C>
Andre Larouche President and Chief Operating Indefinite $200,000 CDN Salary and benefits for
Officer twelve months
Michael Jaques Senior Vice President Indefinite $150,000 Salary and benefits for
Worldwide Sales twelve months
TO BE NAMED Vice President Finance Indefinite $120,000 CDN Salary and benefits for
twelve months
Andrew Haber Vice President Research and Indefinite $110,000 CDN Salary and benefits for
Development twelve months
Ben Knoester Vice President General Manager Indefinite $90,000 CDN Salary and benefits for
#1 Apparel Canada Inc. twelve months
Stephen Kelley Vice President Finance of Indefinite $85,000 Salary and benefits for
Maska U.S. Inc. twelve months
Jacques Cordeau Vice President Worldwide Indefinite $127,800 CDN Salary and benefits for
Manufacturing twelve months
Jean Theriault Vice President of Maska U.S. Indefinite $115,000 Salary and benefits for
Inc. twelve months
David Aziz Director Financial Reporting Indefinite $82,400 Salary and benefits for
SLMI six months
</TABLE>
B-1
