10-K
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-2433
SALANT CORPORATION
(Exact name of registrant as specified in its charter)
1114 Avenue of the Americas, New York, New York 10036
Telephone: (212) 221-7500
Incorporated in the State of Delaware
Employer Identification No. 13-3402444
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $1 per share,
registered on the New York Stock Exchange, and
series B Warrants, registered on the American Stock Exchange.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No __
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 ofRegulation S-K (Section 229-405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K.
As of March 16, 1995 there were outstanding 14,480,092 shares of the
Common Stock of the registrant. Based on the closing price of the Common
Stock on the New York Stock Exchange on such date, the aggregate market value
of the voting stock held by non-affiliates of the registrant on such date was
$31,011,121. For purposes of this computation, shares held by affiliates and
by directors and executive officers of the registrant have been excluded.
Such exclusion of shares held by directors and executive officers is not
intended, nor shall it be deemed, to be an admission that such persons
are affiliates of the registrant.
Documents incorporated by reference: The definitive Proxy Statement of
Salant Corporation relating to the 1995 Annual Meeting of Stockholders is
incorporated by reference in Part III hereof.
TABLE OF CONTENTS
PART I
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . . . . . . . . .
PART II
Item 5. Market for Registrant's Common Equity and
Related Shareholder Matters . . . . . . . . . . . . . . . .
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . .
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . .
Item 8. Financial Statements and Supplementary Data . . . . . . . . .
Item 9. Disagreements on Accounting and Financial
Disclosure. . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10. Directors and Executive Officers of the Registrant. . . . . .
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . .
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . . . .
Item 13. Certain Relationships and Related Transactions. . . . . . . .
PART IV
Item 14. Exhibits, Financial Statement Schedule and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I
ITEM 1. BUSINESS
Introduction. Salant Corporation ("Salant") designs, manufactures,
imports and markets to retailers throughout the United States a wide
range of men's, as well as women's junior and children's, apparel and
accessories, principally under internationally recognized brand names
owned by the Company or licensed from others. (As used herein, the
"Company" includes Salant and its subsidiaries, but excludes Salant's
Vera Scarf Division.)
The Company's products are sold through major department and
specialty stores, major discounters and mass volume retailers.
Approximately 12% of the Company's sales in the fiscal year ended
December 31, 1994 were to Federated Department Stores, Inc.
("Federated"), which includes all 1994 sales to Macy's Department
Stores ("Macy's"), which was acquired by Federated in 1994. In
1993, sales to a combined Federated/Macy's would have represented
approximately 10% of the Company's sales. No other customer accounted
for more than 10% of the Company's net sales during fiscal 1994. In
addition, the Company receives royalty income from the licensing of
certain of its owned trademarks and designs to other manufacturers.
The Company also operates a chain of factory outlet stores, at which
it sells its own products and those of other apparel manufacturers.
Salant, which was incorporated in Delaware in 1987, is the successor
to a business founded in 1893 and incorporated in New York in 1919.
Vera Scarf Division - Discontinued Operation. In February 1995, the
Company discontinued its Vera Scarf Division, which imported and
marketed women's scarves under (i) the Company-owned trademarks VERA
and ACUTE, (ii) trademarks licensed to the Company, including PERRY
ELLIS, and (iii) retailers' private labels. The Company intends to
close the Vera Scarf Division by June 1995. The financial statements
of the Company included in this report treat the Vera Scarf Division
as a discontinued operation.
Principal Product Lines. The following table sets forth, for fiscal
years 1994 through 1992, the percentage of the Company's total sales
contributed by each category of product:
Fiscal Year
1994 1993 1992
Men's Apparel and Accessories 86% 83% 81%
Women's Junior Apparel and Accessories 6% 7% 10%
Children's Apparel and Accessories 8% 10% 9%
The markets in which the Company operates are highly competitive.
The Company competes primarily on the basis of brand recognition,
quality, fashion, price and customer service.
A significant factor in the marketing of the Company's products is
the consumer perception of the trademark or brand name under which
those products are marketed. Approximately 80% of the Company's net
sales for 1994 was attributable to products sold under designer
trademarks and other internationally recognized brand names and the
balance was attributable to products sold under retailers' private
labels. The following table lists the principal trademarks under
which the Company's products are sold and the product lines
associated with those trademarks. Trademarks used under license are
indicated with an asterisk; all other listed trademarks are owned by
the Company.
Trademark Product Lines
THE BEATLES* . . . . . . . . . . . . Men's neckwear and
suspenders
DISNEY Characters* . . . . . . . . . Children's sleepwear
DR. DENTON . . . . . . . . . . . . . Children's sleepwear
GANT*. . . . . . . . . . . . . . . . Men's dress shirts,
neckwear, belts and
suspenders
JJ. FARMER . . . . . . . . . . . . . Men's and women's sportswear
JOE BOXER* . . . . . . . . . . . . . Children's boxer shorts, t-
shirts, pajamas, loungewear
and long underwear
JOHN HENRY . . . . . . . . . . . . . Men's dress shirts,
neckwear, belts and
suspenders; men's and boys'
jeans
LIBERTY OF LONDON* . . . . . . . . . Men's dress shirts,
neckwear, belts and
suspenders
MADE IN THE SHADE. . . . . . . . . . Women's junior sportswear
MANHATTAN. . . . . . . . . . . . . . Men's dress shirts and
sportswear
NINO CERRUTI*. . . . . . . . . . . . Men's dress shirts and
neckwear
OSH KOSH B'GOSH* . . . . . . . . . . Children's sleepwear
PEANUTS* . . . . . . . . . . . . . . Men's dress shirts, neckwear
and suspenders
PERRY ELLIS* . . . . . . . . . . . . Men's sportswear, dress
shirts, neckwear, belts and
suspenders
PERRY ELLIS AMERICA* . . . . . . . . Men's casual sportswear and
jeans
PORTFOLIO BY PERRY ELLIS*. . . . . . Men's dress slacks, dress
shirts, neckwear, belts and
suspenders
POWER RANGERS* . . . . . . . . . . . Children's sleepwear
RON CHERESKIN* . . . . . . . . . . . Men's dress shirts
SALTY DOG* . . . . . . . . . . . . . Men's dress shirts,neckwear,
belts and suspenders
SAVE THE CHILDREN* . . . . . . . . . Men's neckwear and
suspenders
THOMSON. . . . . . . . . . . . . . . Men's casual and dress
slacks and dress shirts
WORLD WILDLIFE FUND* . . . . . . . . Men's casual slacks, shorts,
t-shirts and sweaters,
neckwear and suspenders
During fiscal 1994, approximately 26% of the Company's net sales was
attributable to products sold under the PERRY ELLIS, PORTFOLIO BY
PERRY ELLIS and PERRY ELLIS AMERICA trademarks; these products are
sold through leading department and specialty stores. Products sold
under the MANHATTAN label accounted for approximately 12% of the
Company's net sales during fiscal 1994; these products are marketed
primarily through major mass volume retailers. Products sold under
the JOHN HENRY label accounted for approximately 9% of the Company's
net sales during fiscal 1994; these products are marketed primarily
through department and specialty stores. Products sold under the
THOMSON label accounted for approximately 8% of the Company's net
sales during fiscal 1994; these products are sold primarily through
department and specialty stores. No other line of products accounted
for more than 5% of the Company's net sales during fiscal 1994.
Trademarks Owned by the Company and Related Licensing Income. The
Company owns the DR. DENTON, JJ. FARMER, JOHN HENRY, LADY MANHATTAN,
MADE IN THE SHADE, MANHATTAN and THOMSON trademarks, among others.
All of the significant brand names owned by the Company have been
registered or are pending registration with the United States Patent
Office.
The Company has sought to capitalize on consumer recognition of and
interest in its trademarks by licensing various of those trademarks
to others. As of the end of 1994, licenses were outstanding to
approximately 56 licensees to make or sell apparel products and
accessories in the United States and in 29 other countries under the
MANHATTAN, LADY MANHATTAN and JOHN HENRY trademarks, which produced
royalty income, net of related expenses, of approximately $5.7
million in fiscal 1994. Products under license include men's ties,
sweaters, socks, pajamas, outerwear, activewear, swimwear, underwear,
sportcoats, sportshirts, slacks, scarves, sunglasses, leather
accessories, hats and gloves, and women's blouses and tops, lingerie,
skirts and pants.
Trademarks Licensed to the Company. The name Perry Ellis and related
trademarks are licensed to the Company under a series of license
agreements with Perry Ellis International, Inc. ("PEI"). The license
agreements contain renewal options which, subject to compliance with
certain conditions contained therein, permit the Company to extend
the terms of such license agreements. Assuming the exercise by the
Company of all available renewal options, the license agreements
covering men's apparel and accessories will expire on December 31,
2015 and the license agreement covering boys' sportswear expired on
December 31, 1994. The Company is presently negotiating with PEI on
extending the license agreement for certain categories of boyswear.
The Company also has rights of first refusal worldwide for any new
licenses granted by PEI for men's and children's apparel and
accessories.
The Company is also a licensee of the trademarks THE BEATLES, GANT,
LIBERTY OF LONDON, NINO CERRUTI, OSH KOSH B'GOSH, PEANUTS, RON
CHERESKIN, SALTY DOG, SAVE THE CHILDREN, WORLD WILDLIFE FUND, certain
DISNEY characters, POWER RANGERS, and JOE BOXER for various
categories of products, under license agreements expiring between
1995 and 2008.
The agreements under which the Company is licensed to use trademarks
owned by others typically provide for royalties at varying
percentages of net sales under the licensed trademark, subject to a
minimum annual royalty payable irrespective of the level of net
sales. The Company anticipates that it will be able to extend, if
it so desires, the term of any material licenses when they expire.
Design and Manufacturing. With limited exceptions, products sold by
the Company's various divisions are manufactured to the designs and
specifications (including fabric selections) of designers employed
by those divisions.
During fiscal 1994, approximately 32% of the products produced by the
Company (measured in units) were manufactured in the United States,
with the balance manufactured in foreign countries. Facilities
operated by the Company accounted for approximately 84% of its
domestic-made products and 28% of its foreign-made products; the
balance in each case was attributable to unaffiliated contract
manufacturers.
The Company's foreign sourcing operations are subject to various
risks of doing business abroad, including currency fluctuations,
quotas and, in certain parts of the world, political instability.
Although the Company's operations have not been materially adversely
affected by any of such factors to date, any substantial disruption
of its relationships with its foreign suppliers could adversely
affect its operations. Some of the Company's imported merchandise
is subject to United States Customs duties. In addition, bilateral
agreements between the major exporting countries and the United
States impose quotas which limit the amounts of certain categories
of merchandise that may be imported into the United States. Any
material increase in duty levels, material decrease in quota levels
or material decrease in available quota allocations could adversely
affect the Company's operations.
As discussed in Item 2 - Properties, the Company has manufacturing
facilities located in Mexico. The adoption of the North American Free
Trade Agreement (NAFTA) has benefitted the Company by (i) reducing
and/or eliminating United States Customs duties on merchandise
manufactured in the Company's facilities in Mexico, (ii) eliminating
quota levels on this merchandise, and (iii) eliminating restrictions
on exporting merchandise from the United States for sale in both
Mexico and Canada. Also, the recent devaluation of the Mexican peso
against the U.S. dollar, will benefit the Company as a result of
employees being paid in Mexican pesos which the Company purchases
with U.S. dollars.
Raw Materials. The raw materials used in the Company's manufacturing
operations consist principally of finished fabrics made from natural,
synthetic and blended fibers. These fabrics and other materials,
such as leathers used in the manufacture of various accessories, are
purchased from a variety of sources both within and outside the
United States. The Company believes that adequate sources of supply
at acceptable price levels are available for all such materials. No
single supplier accounted for more than 10% of Salant's raw material
purchases during fiscal 1994.
Seasonality of Business. Although the Company typically introduces
and withdraws various individual products throughout the year, the
Company's principal products are organized into seasonal lines for
resale at the retail level during the spring, fall and Christmas
seasons. The Company's products are manufactured approximately one
season in advance of the related retail selling season.
Backlog of Orders. The Company does not consider the amount of its
backlog of orders to be significant to an understanding of its
business primarily due to increased utilization of EDI technology,
which provides for the electronic transmission of orders from
customers' computers to those of the Company. As of March 4, 1995,
the Company's backlog of orders was approximately $141 million, 41%
greater than the backlog of orders of approximately $100 million that
existed as of March 5, 1994.
Employees. As of the end of fiscal 1994, the Company employed
approximately 4,200 persons, of whom 3,500 were engaged in
manufacturing and distribution operations and the remainder were
employed in executive, marketing and sales, product design,
engineering and purchasing activities and in the operation of the
Company's factory outlet stores. Certain manufacturing employees are
covered by collective bargaining agreements with various unions,
which are in effect and expire between August 31, 1996 and July 31,
1997. The Company believes that its relations with its employees are
satisfactory.
Competition. The apparel industry in the United States is highly
competitive and characterized by a relatively small number of multi-
line manufacturers (such as the Company) and a larger number of
specialty manufacturers. The Company faces substantial competition
in its markets from manufacturers in both categories. Some of the
Company's competitors have greater financial resources than the
Company.
The Company is one of the nation's leading suppliers of men's dress
shirts, sportswear, slacks, ties, belts and suspenders. The Company
seeks to maintain its competitive position in the markets for its
branded products on the basis of the strong brand recognition
associated with those products and, with respect to all of its
products, on the basis of styling, quality, fashion, price and
customer service.
Environmental Regulations. Current environmental regulations have
not had, and in the opinion of the Company, assuming the continuation
of present conditions, will not have a material effect on the
business, capital expenditures, earnings or competitive position of
the Company.
Bankruptcy Court Cases. On June 27, 1990 (the "Filing Date"), Salant
and its wholly owned subsidiary, Denton Mills, Inc. ("Denton Mills"),
each filed with the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court") a separate voluntary
petition for relief under chapter 11 of title 11 of the United States
Code (the "Bankruptcy Code") (Case Nos. 90-B-12037 (CB) and 90-B-
12038 (CB)) (the "Chapter 11 Cases"). The Company's other United
States subsidiaries on the Filing Date did not seek relief under the
Bankruptcy Code. On July 30, 1993, the Bankruptcy Court issued an
order confirming the Third Amended Joint Plan of Reorganization of
Salant and Denton Mills (the "Plan"). The Plan was consummated on
September 20, 1993 (the "Consummation Date"), as further described
in Item 3. "Legal Proceedings" and in Note 18 to the financial
statements.
Salant Children's Apparel Group (Obion Denton Division) -
Discontinued Operation Subsequently Retained. On March 10, 1993, the
Company determined to restructure and sell its Children's Apparel
division, which manufactures and markets children's sleepwear. As
a consequence, the division was accounted for as a discontinued
operation in the Company's financial statements for fiscal 1992 and
the first three quarters of fiscal 1993. During 1993, the Company
effected a comprehensive restructuring of the division's operations
involving (i) the discontinuation of certain product lines which had
historically produced inadequate gross profit margins, (ii) the
elimination of the resulting excess manufacturing capacity and
(iii) the reduction of the overhead costs of the restructured
business. In March 1994, the Company concluded that the value of the
division would be maximized by retaining and continuing to operate
the division. The financial statements of the Company for all
periods included in this report have been reclassified to treat the
Salant Children's Apparel Group as a continuing operation.
ITEM 2. PROPERTIES
The Company's principal executive offices are located at 1114 Avenue
of the Americas, New York, New York 10036. The Company's principal
properties consist of six domestic manufacturing facilities located
in Alabama, Georgia (2), New York, Tennessee and Texas, three
manufacturing facilities located in Mexico, and five distribution
centers located in Georgia, New York, South Carolina and Texas (2).
The Company owns approximately 1,279,000 square feet of space devoted
to manufacturing and distribution and leases approximately 434,000
square feet of such space. The Company owns approximately 34,000
square feet of combined office, design and showroom space and leases
approximately 178,000 square feet of such space. As of the end of
1994, the Company operated 69 factory outlet stores, comprising
approximately 200,000 square feet of selling space, all of which are
leased.
The Company believes that its plant and equipment are adequately
maintained, in good operating condition, and will be adequate for the
Company's present needs. The Company continues, however, to explore
opportunities for additional production facilities in order to enable
the Company to further reduce its manufacturing costs and to meet its
future needs.
ITEM 3. LEGAL PROCEEDINGS
(a) Chapter 11 Cases. On June 27, 1990, Salant and Denton Mills
each filed with the Bankruptcy Court a separate voluntary petition
for relief under chapter 11 of the Bankruptcy Code. On July 30, 1993,
the Bankruptcy Court issued an order confirming the debtors' Third
Amended Joint Plan of Reorganization (the "Plan").
The Plan was consummated on September 20, 1993. From that date
through December 31, 1994 (approximately 15 months), the Company made
cash payments of $8.5 million, issued $111.9 million of new 10-1/2%
senior secured notes, and issued 10.5 million shares of common stock
in settlement of certain undisputed and disputed claims in the
chapter 11 proceedings. Salant anticipates that an additional $8.0
million in cash and an additional 789 thousand shares of common stock
ultimately will be distributed in connection with the resolution of
all remaining claims. Provisions for such distributions had
previously been made in the consolidated financial statements for the
year ended January 1, 1994.
The process of resolving claims is continuing and, pursuant to the
Plan, remains under the jurisdiction of the Bankruptcy Court.
Significant Disputed Claims.
(i) IRS Claim. As previously disclosed, by proof of claim, as
amended, the Internal Revenue Service of the United States of America
(the "IRS") had asserted a claim (the "IRS Claim") against Salant in
the Chapter 11 Cases of approximately $5.2 million. The IRS Claim
included approximately $3.2 million of Excise Taxes, as discussed in
section (ii) below; pursuant to an interim agreement and formal
written agreement, which is subject to Bankruptcy Court approval,
Salant will pay $100,000 to the IRS in full settlement of the Excise
Tax claims. The balance of the IRS Claim sought the payment of (a)
income taxes that are claimed to be owing for prior tax periods; (b)
withholding and FICA taxes for the tax period ending March 31, 1990;
(c) interest and penalties with respect to those taxes; and (d) FUTA
taxes for the period from January 1 through June 27, 1990. Salant has
reached a tentative agreement with the IRS relating to such non-
Excise related taxes: the implementation of this settlement is
pending. The Company has provided reserves for amounts which it
deems to be appropriate for these claims and believes that this
settlement will not have a material adverse effect on the Company's
consolidated financial position or results of operations.
(ii) Minimum Funding Contributions for Salant's Pension Plans.
As discussed in section (i) above, the IRS filed a proof of claim,
as amended, in the amount of approximately $5.2 million, of which
approximately $3.2 million was in respect of Excise Taxes and
associated interest and penalties as a result of Salant's inability
to make certain contributions to its pension plans by reason of the
limitations on the payment of pre-petition debt that are imposed
under the Bankruptcy Code.
Salant and the IRS reached an interim agreement with respect to the
settlement of the Excise Tax claims which was read into the record
on July 30, 1993 at a hearing before the Bankruptcy Court concerning
the confirmation of the Plan. The interim agreement provides that its
terms would be set forth in detail in a formal written agreement
between Salant and the IRS, which formal written agreement has been
executed but which is still subject to Bankruptcy Court approval. The
basic terms of the agreement are that Salant will amortize the
accumulated funding deficiencies in the Retirement Plan and Pension
Plan with payments as follows: (1) $700,000 on the Consummation Date
(which was paid on September 15, 1993); (2) $750,000 on February 28,
1994 (which was paid on that date); (3) $550,000 on February 28, 1995
(which was paid on that date); and (4) a cash payment on each
anniversary of the Consummation Date during the years 1995 through
and including 2000 equal to the remainder of the aggregate funding
deficiency (after giving effect to the payments provided in (1)-(3)
above) divided by six, together with interest accruing on the
outstanding balance from the Consummation Date. Upon the effective
date of the formal written agreement, Salant will pay the IRS
$100,000 in full settlement of the Excise Tax claims.
(iii) Equity Committee Appeal. As previously disclosed, on
August 6, 1993, the Official Committee of Equity Security Holders of
Salant (the "Equity Committee") filed a notice of appeal in the
United States District Court for the Southern District of New York.
The Equity Committee appealed the portion of the Plan relating to the
payment of certain compensation to Salant's Chief Executive Officer,
Nicholas DiPaolo, which compensation became payable upon consummation
of the Plan, but did not seek to overturn the confirmation of the
Plan. On November 12, 1993, Salant moved to dismiss the appeal on the
grounds that the Equity Committee lacks standing and mootness. By
opinion and order dated December 14, 1994, Salant's motion was
granted (on the grounds that the Equity Committee lacked standing)
and the Equity Committee's appeal was dismissed.
(b) ILGWU National Retirement Fund. The ILGWU National Retirement
Fund (the "Fund") filed claims in the Chapter 11 Cases against both
Salant and Denton based on both Debtors' withdrawal liability. The
agreed amount of the total claim is $1.7 million, which in accordance
with the terms of the Plan is to be paid in common stock of Salant.
There is currently an ongoing dispute in the Bankruptcy Court
concerning the proper valuation of the common stock of Salant, and
consequently the amount of such stock necessary to pay the Fund's
total claim.
Additionally, on February 2, 1995, the Fund and two of its trustees
commenced a civil action in the United States District Court for the
Southern District of New York against seven subsidiaries of Salant,
ILGWU National Retirement Fund et al. v. Clantexport Inc. et al., No.
95 Civ. 0722 (DAB). Named as defendants were Clantexport Inc., Sea
Isle Sportswear Inc., Frost Bros. Enterprises, Inc., Vera Linen Mfg.,
Inc., Vera Licensing Inc., Manhattan Industries, Inc. (Delaware), and
Manhattan Industries, Inc. (New York). The complaint alleges, in
substance, that the defendants, as wholly owned subsidiaries of
Salant, were under common control with Salant within the meaning of
ERISA and applicable regulations, and thus that they are jointly and
severally liable for the withdrawal liability described above. The
plaintiffs seek damages in the amount of $1,715,524, plus interest,
liquidated damages and attorneys' fees, allegedly as authorized under
29 U.S.C. section 1132(g), reduced by any amounts received under the
Plan.
(c) Securities Litigation. As previously disclosed, on November 27,
1990, Mae Fischer ("Fischer"), an alleged purchaser of Salant's 13-
1/4% Senior Subordinated Debentures due June 15, 1999 (the
"Debentures"), instituted a purported class action suit in the United
States District Court for the Southern District of New York, claiming
that certain directors and officers of Salant violated the federal
securities laws by issuing favorable public statements concerning the
future profitability of Salant, which Fischer claims artificially
inflated the market price of the Debentures between October 1988 and
June 1990. Pursuant to Salant's bylaws, Salant is obligated to
indemnify its directors and officers against expenses and any
judgments or settlements entered against them in actions in which
they are sued in their capacity as directors or officers. Salant was
not named as a defendant in the suit, Fischer v. Tynan, et al., 90
Civ. 7587 (LBS), due to the pendency of the Chapter 11 Cases.
Fischer sought an unspecified amount of damages for herself and on
behalf of all persons who purchased the Debentures between October
18, 1988 and June 15, 1990. On April 30, 1992, Fischer also filed a
proof of claim (the "Fischer Claim") in the Chapter 11 Cases on
behalf of the same group of purchasers of the Debentures.
On November 30, 1992, Fischer filed an amended complaint which
contains essentially the same allegations, and seeks the same relief,
as the original complaint. On January 15, 1993, the defendants filed
a supplemental brief in further support of their motion to dismiss
the amended complaint on the ground that, among other things, it
fails to state a claim upon which relief can be granted. In addition,
the defendants have opposed the plaintiff's motion for class
certification, which was filed on June 22, 1992.
On June 16, 1993, defendants' motion to dismiss the amended complaint
was granted and Fischer's motion for class certification was
dismissed. On July 16, 1993, Fischer filed a notice of appeal from
the June 16, 1993 order with the United States Court of Appeals for
the Second Circuit. During the pendency of the appeal, the defendants
and Fischer reached an agreement to settle both the Fischer Claim and
the appeal. Pursuant to the terms and conditions of the stipulation
of settlement, Salant will issue and distribute a number of shares
of Salant Common Stock, not to exceed 11,000 shares in the
aggregate, to certain purchasers of the Debentures who sold at a loss
during a circumscribed period. In addition, Fischer's counsel will
receive $150,000 for their fees and expenses pursuant to the
settlement. The stipulation of settlement, which provides for
preliminary approval of the settlement, notice to class members of
the settlement, and a hearing for final approval, was signed by the
Bankruptcy Court on February 27, 1995. Upon final approval by the
Bankruptcy Court, the Fischer appeal and the Fischer Claim will be
deemed withdrawn with prejudice.
(d) Other. The Company is a defendant in several other legal
actions. In the opinion of the Company's management, based upon the
advice of the respective attorneys handling such cases, such actions
will not have a material adverse effect on Company's consolidated
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of fiscal year 1994, no matter was
submitted to a vote of security holders of Salant by means of the
solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
Salant's Common Stock is traded on the New York Stock Exchange (the
"NYSE") under the ticker symbol SLT.
The high and low sale prices per share of Common Stock (based upon
the NYSE composite tape as reported in published financial sources)
for each fiscal quarter for the 1994 and 1993 fiscal years are set
forth below. The Company did not declare or pay any dividends during
such fiscal years. Both (i) the indenture governing Salant's 10-1/2%
Senior Secured Notes due December 31, 1998 (the "Senior Notes"), and
(ii) the revolving credit, factoring and security agreement, dated
September 20, 1993 (the "Credit Agreement"), with the CIT
Group/Commercial Services, Inc. require the satisfaction of certain
net worth tests prior to the payment of any cash dividends by Salant.
As of December 31, 1994, Salant was prohibited from paying cash
dividends by the most restrictive of these provisions.
High and Low Sale Prices Per Share of the Common Stock
Fiscal Quarter High Low
1994
Fourth $ 6 $ 4 3/8
Third 7 5
Second 8 3/8 6 1/8
First 9 3/8 6 3/4
1993
Fourth $ 8 3/8 $ 6 1/8
Third 11 3/8 7 1/2
Second 10 3/4 7 7/8
First 9 5/8 8 1/4
On March 16, 1995, there were 1,209 holders of record of shares of
Common Stock, and the closing market price was 3 7/8.
All of the outstanding voting securities of the Company's
subsidiaries are owned beneficially and (except for shares of certain
foreign subsidiaries of the Company owned of record by others to
satisfy local laws) of record by the Company.
ITEM 6. SELECTED FINANCIAL DATA
(Amounts in thousands except share, per share and ratio data)
Dec. 31, Jan. 1, Jan. 2, Dec. 28, Dec. 29,
1994 1994 1993 1991 1990
(52 Weeks) (52 Weeks) (53 Weeks) (52 Weeks) (52 Weeks)
For The Year Ended:
Continuing Operations:
Net sales $ 419,285 $ 402,098 $ 411,021 $392,804 $403,617
Income/(loss) from
continuing operations 3,507 7,816 (4,687) (17,731) (42,328)
Discontinued Operations:
Loss from operations,
net of income taxes (9,639) (589) (1,299) (1,378) (1,544)
Estimated loss on disposal,
net of income taxes (1,796) - (11,772) - -
Reversal of estimated
loss on disposal,
net of income taxes - 11,772 - - -
Extraordinary gain 63 24,707 - - -
Net income/(loss)* (7,865) 43,706 (17,758) (19,109) (43,872)
Income/(loss) per share from continuing
operations before
extraordinary gain $ 0.23 $ 1.10 $ (1.35) $ (5.12) $ (12.24)
Income/(loss) per share from discontinued
operations (0.76) 1.57 (3.78) (0.40) (0.44)
Income per share from
extraordinary gain - 3.48 - - -
Net income/(loss) per share* (0.53) 6.15 (5.13) (5.52) (12.68)
Cash dividends per share - - - - -
At Year End:
Current assets $ 177,735 $157,622 $ 160,146 $159,864 $160,873
Total assets 276,540 253,232 259,466 270,651 286,034
Current liabiliti 81,487 45,713 55,093 38,091 25,483
Long-term debt 109,908 111,851 - - -
Deferred liabilities 13,479 16,766 2,462 5,833 5,835
Liabilities deferred pursuant
to chapter 11 cases - - 266,420 272,977 282,033
Working capital 96,248 111,909 105,053 121,773 135,390
Current ratio 2.2:1 3.4:1 2.9:1 4.2:1 6.3:1
Shareholders' equity/
(deficiency) $ 71,666 $ 78,902 $(64,509) $(46,250) $(27,317)
Book value per share $ 4.78 $ 5.34 $ (18.62) $ (13.37) $ (7.90)
Number of shares outstanding 15,008 14,781 3,463 3,463 3,463
* Includes, for the fiscal year ended January 1, 1994, a provision of
$5,500 (77 cents per share; tax benefit not available) for
restructuring costs principally related to the costs incurred in
connection with the closure of certain unprofitable operations,
including (i) inventory markdowns associated with those product lines
and (ii) fixed asset write-downs at closed locations; for
the fiscal year ended January 2, 1993, (a) a provision of $4,824
($1.39 per share; tax benefit not available) for restructuring
costs principally related to (i) the estimated costs to be incurred
in connection with the closure of certain unprofitable
operations, (ii) the rejection, pursuant to the Bankruptcy Code,
of certain lease obligations, and (iii) the write-off of leasehold
improvements, and buildings and equipment at closed locations, and (b)
the write-off of certain intangible assets of $6,759 ($1.95
per share; tax benefit not available); for the fiscal year ended
December 28, 1991, (a) a provision of $12,984 ($3.75 per share;
tax benefit not available) for restructuring costs principally related
to (i) the closure of certain women's wear operations,
(ii) the closure of certain unprofitable retail factory outlet stores,
(iii) the rejection, pursuant to the Bankruptcy Code, of
certain lease obligations and (iv) an accrual for payment pursuant to a
severance agreement with the previous chief executive
officer of Salant, (b) the write-off of certain intangible and other
assets of $6,587 ($1.90 per share; tax benefit not available)
and (c) management fee income of $1,962 ($0.57 per share) as a result
of a settlement of certain litigation; and for the fiscal
year ended December 29, 1990, a provision of $10,822 ($3.13 per share;
tax benefit not available) for restructuring costs
principally related to (i) the closure of the garment dye finishing
operations, (ii) discontinuance of a garment dye program and
(iii) the closing of 23 unprofitable retail factory outlet stores,
net of a reversal of $5,000 accrued for lease obligations which
were rejected in the chapter 11 case.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated results
of operations and financial condition should be read in conjunction
with the accompanying Consolidated Financial Statements and related
Notes to provide additional information concerning the Company's
financial activities and condition.
Results of Operations
The following discussion compares the operating results of the
Company for the fiscal year ended December 31, 1994 with the
operating results for the fiscal years ended January 1, 1994 and
January 2, 1993. In February 1995, the Company discontinued its
Vera Scarf division. The financial statements included in this
annual report treat the Vera Scarf division as a discontinued
operation, the effect of which is to exclude the results of
operations of the Vera Scarf division from the Company's results
from continuing operations for each fiscal year presented. See
"Notes to the Consolidated Financial Statements -- Note 3." As
announced in March 1994, the Company determined to retain and
continue to operate its Children's Apparel Group. Consequently,
the Company's financial statements for all periods presented
include the results of operations of that division.
(dollars in millions)
Twelve months ended
December 31, January 1, January 2,
1994 1994 1993
Net sales $419.3 $402.1 $411.0
Gross profit $ 93.2 $ 98.1 $ 92.6
Gross margin percentage 22.2% 24.4% 22.5%
EBITDA (a) $ 27.0 $ 37.8 $ 31.9
(a) Earnings before interest, taxes, depreciation, amortization, restructuring
costs, bankruptcy administration expenses, write-off of other assets,
discontinued operations and extraordinary gain.
Fiscal 1994 Compared with Fiscal 1993
For the 1994 fiscal year, net sales amounted to $419.3 million, a
4.3% increase over net sales of $402.1 million in fiscal year 1993.
The increase was attributable to significant sales increases in
men's sportswear and slacks achieved by the Company's Perry Ellis,
Thomson, Manhattan Apparel and JJ. Farmer divisions. Manhattan
Apparel commenced shipping in September 1993, and JJ. Farmer is a
label which was acquired in June 1994. These increases were
partially offset by reductions in sales of denim-based products and
men's accessories. Notwithstanding the popularity of the
casualwear trend in offices which contributed to a slight decrease
in the overall dress shirt market, the Company's dress shirt sales
increased slightly in 1994 as compared to 1993. In 1994, the
Company signed a new license agreement for dress shirts to be
produced and sold under the GANT label. This label accounted for
sales of $2.8 million in 1994.
Gross profit as a percentage of net sales decreased to 22.2% ($93.2
million) in 1994 from 24.4% ($98.1 million) in 1993. The reduction
in gross profit as a percentage of net sales was incurred primarily
in men's sportswear, neckwear and dress shirts and in denim-based
products. The cause of the reduction was (a) continuing pressure
on selling prices, (b) a change in the Company's mix to lower
priced sportswear, which carries a lower gross profit margin, as a
result of the introduction of Manhattan Sportswear late in the
third quarter of 1993, and (c) certain cost increases related to
wrinkle-free dress shirts.
Selling, general and administrative expenses for the 1994 fiscal
year amounted to $79.5 million, or 19.0% of net sales, as compared
to $74.8 million for the 1993 fiscal year, when such expenses
represented 18.6% of net sales. The increase in S,G&A expenses was
primarily attributable to (a) costs associated with new product
lines; JJ. Farmer which was acquired in June 1994 and Manhattan
Sportswear, which began shipping in September 1993, and (b) payroll
and occupancy costs related to an increase in the number of
factory outlet stores in operation in 1994.
Royalty income (net of related expenses) in fiscal 1994 was $5.7
million. During fiscal 1993, royalty income (net of related
expenses) was $6.7 million. The decrease in royalty income is
primarily a result of the termination of a license agreement in
1993, and the absence of the related licensing revenue in 1994.
The product for which royalties previously were received became the
basis of the Company's Manhattan Sportswear Division, which
commenced shipping in the third quarter of 1993. The license for
this product had contributed income of $580 thousand in 1993.
Earnings before interest, taxes, depreciation, amortization,
bankruptcy administration expenses, restructuring charges,
discontinued operations and extraordinary gain ("EBITDA") was $27.0
million, compared to $37.8 million in 1993, a decrease of $10.8
million, as described above. The Company believes that EBITDA is
helpful in understanding cash flow from operations that is
available for debt service, taxes and capital expenditures. EBITDA
should not be considered as an alternative to (a) net earnings as
an indicator of the Company's operating performance or (b) cash
flow as an indicator of liquidity.
In fiscal year 1993, the Company recorded a $5.5 million provision
for restructuring, which included $5.0 million related to the
restructuring of the Salant Children's Apparel Group.
Net interest expense for 1994 amounted to $15.6 million as compared
to $7.5 million in the prior year. Until September 20, 1993, Salant
was operating under chapter 11 of the Bankruptcy Code and,
accordingly, was not accruing interest on its prepetition debt.
Income from continuing operations before extraordinary gain was
$3.5 million, or $0.23 per share, versus income from continuing
operations of $7.8 million, or $1.10 per share, a year earlier. At
the end of 1994, the Company had 14,954,000 weighted average shares
outstanding versus 7,104,000 weighted average shares and share
equivalents outstanding at the end of the prior year. The increase
in the number of shares outstanding is related to the Company's
emergence from bankruptcy in September 1993.
For the 1994 fiscal year, the Company recognized a charge of $11.4
million, or $0.76 per share (inclusive of approximately $300
thousand of losses incurred by the Vera Scarf Division in the first
three quarters of 1994), reflecting the discontinuance of that
division. The Vera Scarf Division had net sales of $5.1 million in
the 1994 fiscal year.
For the 1993 fiscal year, the Company recognized an extraordinary
gain of $24.7 million, or $3.48 per share, related to the Company's
emergence from bankruptcy, a loss from discontinued operations of
$589,000, or $0.08 per share, and a reversal of estimated loss on
disposal of discontinued operations of $11.8 million, or $1.65 per
share.
As a result of the above, the net loss for the 1994 fiscal year was
$7.9 million, or $0.53 per share, compared with net income of $43.7
million, or $6.15 per share in 1993.
As of December 31, 1994, there were 14,218,000 shares of the
Company's common stock outstanding, including 10,504,000 shares
issued to creditors in connection with the Company's
reorganization, consummated on September 20, 1993. The weighted
average number of shares outstanding for the 1994 fiscal year was
14,954,000 shares, which treats as issued, as of such consummation
date, 789,000 shares that the Company anticipates will be issued to
creditors.
Inflation and Recent Legislation
Management believes that the rate of inflation over the past three
years has not had a material impact on Salant's operating results.
The passage of the General Agreement on Trades and Tariffs (GATT)
is anticipated to have a somewhat favorable impact on the Company's
results of operations.
The adoption of the North American Free Trade Agreement (NAFTA) has
benefitted the Company's business by (i) reducing and/or
eliminating United States Customs duties on merchandise
manufactured in the Company's facilities in Mexico, (ii)
eliminating quota levels on this merchandise, and (iii) eliminating
restrictions on exporting merchandise from the United States for
sale in both Mexico and Canada. Also, the recent devaluation of
the Mexican peso against the U.S. dollar, will benefit the Company
as a result of employees being paid in Mexican pesos which the
Company purchases with U.S. dollars.
Fiscal 1993 Compared with Fiscal 1992
For the 1993 fiscal year, net sales were $402.1 million, a 2%
decrease from net sales of $411.0 million in 1992. Excluding the
net sales of product lines which ceased operations prior to 1993,
net sales for fiscal 1993 increased by 1.1%. The Company's sales of
dress shirts in 1993 increased over 1992.
Gross profit in 1993 increased to $98.1 million, (24.4% of net
sales) from $92.6 million, (22.5% of net sales) in 1992 as a result
of increased gross profit margins in the men's Accessories Division
(primarily neckwear), the Children's Apparel Group, the Stores
division and the Thomson slacks division. These improvements more
than offset reduced gross margins in the Company's dress shirt and
denim based businesses.
The increased gross profit margin in the men's Accessories Division
was largely a result of the outstanding consumer acceptance of the
Company's novelty neckwear, produced under the PEANUTS, SAVE THE
CHILDREN, BEATLES and WORLD WILDLIFE FUND labels.
Selling, general and administrative expenses for the 1993 fiscal
year amounted to $74.8 million, or 18.6% of net sales, a decrease
of $800 thousand from the 1992 fiscal year, when such expenses
represented 18.4% of net sales.
Earnings before interest, taxes, depreciation, amortization,
bankruptcy administration expenses, restructuring charges and
write-off of other assets ("EBITDA") was $37.8 million, compared to
$31.9 million in 1992, an increase of 18%.
In fiscal year 1993, the Company recorded a $5.5 million provision
for restructuring, which included $5.0 million related to the
restructuring of the Salant Children's Apparel Group. In fiscal
year 1992, the Company recorded division restructuring costs of
$4.8 million, which included (i) the estimated costs to be incurred
in connection with the restructuring of certain unprofitable
operations, (ii) the rejection, allowable under chapter 11, of
certain lease obligations and (iii) the write-off of leasehold
improvements, buildings and equipment at closed locations.
Also, in fiscal year 1992, the Company wrote off the unamortized
portion of the excess of cost over net assets acquired related to
the Obion Denton and Vera Sportswear divisions in the amount of
$6.8 million.
Bankruptcy administration expenses decreased to $8.9 million during
fiscal year 1993 from $12.9 million during fiscal year 1992,
primarily as a result of the consummation of the plan of
reorganization on September 20, 1993.
Net interest expense (interest expense less interest income)
increased to $7.5 million in fiscal year 1993 from $3.0 million in
fiscal year 1992 as a result of interest incurred subsequent to
September 1993 on the Secured Notes issued pursuant to the Plan.
Interest expense for 1994 and subsequent years will include
approximately $11.7 million per annum related to the Secured Notes.
For the 1993 fiscal year, the Company reported income from
continuing operations before extraordinary gain of $7.8 million, or
$1.10 per share (based on a weighted average of 7,104,000 common
shares outstanding), compared to a loss from continuing operations
of $4.7 million, or $1.35 per share, (based on a weighted average
of 3,460,000 common shares outstanding) for the 1992 fiscal year.
For the 1993 fiscal year, net income was $43.7 million, or $6.15
per share, compared to a net loss of $17.8 million, or $5.13 per
share, in 1992. For the 1993 fiscal year, the Company recognized an
extraordinary gain of $24.7 million, or $3.48 per share, relating
to the Company's emergence from bankruptcy, a loss from
discontinued operations of $589,000, or $0.08 per share, and a
reversal of estimated loss on disposal of discontinued operations
of $11.8 million, of $1.65 per share. The net loss for 1992
included the provision for the reserve of $11.8 million, or $3.40
per share, related to the estimated loss on the previously planned
disposal of the Children's Apparel Group and a loss from
discontinued operations of $1.3 million, or $0.38 per share.
As of January 1, 1994, there were 13,100,000 shares of the
Company's common stock outstanding, including 9,612,000 shares
issued to creditors in connection with the Company's
reorganization, consummated on September 20, 1993. The weighted
average number of shares outstanding for the 1993 fiscal year was
7,104,000 shares, which (i) treats as issued, as of such
consummation date, 1,681,000 shares that the Company anticipates
will be issued to creditors, and (ii) gives effect to 465,000
common share equivalents relating to outstanding stock options.
Liquidity and Capital Resources
In September 1993, the Company entered into a two year revolving
credit, factoring and security agreement (the "Credit Agreement")
with The CIT Group/Commercial Services, Inc. ("CIT"), as referenced
in Exhibit 4.3 to this Form 10-K, to provide seasonal working
capital financing, in the form of direct borrowings and letters of
credit, up to an aggregate of $120 million (subject to an asset
based borrowing formula). Interest on direct borrowings was charged
monthly at an annual rate of one-half of one percent in excess of
the prime rate of Chemical Bank (the "Prime Rate")(which prime rate
was 8.5% at December 31, 1994). As collateral for borrowings under
the Credit Agreement, Salant has granted to CIT a security interest
in substantially all of the assets of the Company. At the end of
fiscal 1994, direct borrowings and letters of credit outstanding
under the Credit Agreement were $33.2 million and $50.5 million,
respectively, and the Company had unused availability of $4.1
million. At the end of fiscal 1993, the Company had fully repaid
its direct borrowings and held cash and marketable securities of
$2.2 million. On that date the Company had approximately $37.3
million of letters of credit outstanding under the Credit Agreement
and had unused availability of $31.1 million.
As previously disclosed in the Current Report on Form 8-K, dated
March 2, 1995, on February 28, 1995, the Company entered into an
agreement (the "Amendment") with CIT, as referenced in Exhibit
10.22 to this Form 10-K, amending the Credit Agreement. The
Amendment provides for, among other things (i) an increase in the
aggregate limitation (the "Maximum Credit") on direct borrowings
and letters of credit from $120 million to a maximum of $135
million during certain periods of 1995 (subject to an asset based
formula), (ii) an increase in the rate of advance of "Eligible
Inventory" (as defined in the Credit Agreement) used to calculate
the asset based formula from fifty percent to sixty percent during
March, April, May and June 1995 together with an increase in the
"Inventory Sublimit" (as defined in the Credit Agreement) from
$60,000,000 to $70,000,000 during such months, (iii) an extension
of the term of the Credit Agreement by one year ending on September
20, 1996, (iv) an increase in the interest rate on direct borrowing
from an annual rate of one-half of one percent in excess of the
Prime Rate to one percent in excess of the Prime Rate, (v) a
modification of certain financial covenants contained in the Credit
Agreement, and (vi) a continuation of certain factoring services by
CIT.
Salant's business is seasonal in nature. As a result, Salant's
working capital requirements increase significantly during the
first three quarters of each year. As discussed in Salant's
Quarterly Report on Form 10-Q for the period ended October 1, 1994,
Salant anticipated the need to borrow funds during certain periods
of 1995 in excess of the $120 million Maximum Credit limitation
under the Credit Agreement, as a result of projected increased
sales growth in 1995. The Amendment provides for, among other
things, the borrowing capacity to support Salant's planned growth
for 1995.
As a result of the loss incurred in the fourth quarter of 1994, as
well as higher inventory levels that are necessary to support
greater projected 1995 sales volume than had been anticipated, the
Company's loan balance at the end of the 1994 fiscal year was
higher than planned. Salant's requirement to borrow funds in
excess of the $120 million Maximum Credit commenced one month
earlier (in March 1995 rather than the second quarter of 1995),
than previously expected. In addition, Salant required funds
during certain periods in 1995 in excess of the asset based formula
contained in the Credit Agreement, prior to the Amendment. The
increase in the rate of advance on Eligible Inventory and the
increase in the Inventory Sublimit contained in the Amendment
provide Salant with sufficient borrowing capacity to support its
projected needs in 1995 under the asset based formula set forth in
the Credit Agreement. Although not currently anticipated based on
its projected requirements for 1995, if Salant needs to borrow
funds in excess of the asset based formula, the Credit Agreement
provides for, in the sole discretion of CIT, up to $15 million in
"Seasonal Overadvance" (as defined in the Credit Agreement). There
can be no assurance, however, that CIT would agree to provide
Salant with funds under the Seasonal Overadvance.
Pursuant to the Amendment, the Maximum Credit at the end of each
month in 1995 is as follows:
Month Maximum Credit
(in millions)
February $120
March $132
April $135
May $130
June $130
July $130
August $132
September $128
Thereafter $120
The Amendment also provides for a modification of financial
covenants relating to (i) working capital, (ii) stockholders'
equity, (iii) liabilities to stockholders' equity ratio, (iv) fixed
charge coverage ratio and (v) maximum loss. In the absence of the
Amendment, Salant (i) would not have been able to satisfy the fixed
charge coverage ratio for its 1994 fiscal year and (ii) may not
have been able to meet the other four covenants described above for
certain periods during 1995, commencing April 1995.
In September 1993, the Company issued $111.9 million principal
amount of 10 1/2% Senior Secured Notes due December 31, 1998 (the
"Secured Notes") in connection with the consummation of its plan of
reorganization, as referenced in Exhibit 4.5 to this Form 10-K. In
May 1994, the Company purchased and retired $3.6 million of the
Secured Notes in an open market transaction at a price below the
principal amount thereof.
The Credit Agreement and the indenture governing the Secured Notes
contain numerous financial and operating covenants, including
restrictions on incurring indebtedness and liens, making
investments in or purchasing the stock of all or a substantial part
of the assets of another person, selling property, making capital
expenditures, and paying cash dividends. In addition, under the
Credit Agreement, the Company is required to maintain minimum
levels of working capital and stockholders' equity and to satisfy
a ratio of total liabilities to stockholders' equity, a fixed
charge coverage ratio, and a maximum cumulative net loss test. At
December 31, 1994, the Company was in compliance with all financial
covenants as indicated below:
Covenant December 31, 1994
Credit Agreement Covenants Level (a) Actual Level
Working Capital $ 85.0 million $ 96.2 million
Stockholders' Equity $ 65.0 million $ 71.7 million
Liability/Equity less than 3.0 2.85
Fixed Charge Ratio greater than 1.5 1.73
Maximum Loss $(10.0) million positive income (b)
(a) The covenant levels reflect all modifications in the Credit Agreement
made pursuant to the Amendment.
(b) In accordance with the Amendment, maximum loss excludes any write-off
of goodwill in the 1994 fiscal year.
The Company is also required to reduce its indebtedness (excluding
outstanding letters of credit) to $20 million or less for fifteen
consecutive days during each twelve month period commencing
February 1, 1994. The Company has complied with this covenant for
the period February 1, 1994 through January 31, 1995.
During 1994, the Company's short term borrowings increased by $33.2
million. The increase in borrowings in 1994 over 1993 was
primarily the result of an increase in inventories of $19.3 million
to provide for businesses entered into in 1994 (Gant and JJ.
Farmer) and in anticipation of higher sales in 1995, a larger
increase (from year to year) in accounts receivable of $8.7 million
due to substantially higher sales in the last month of 1994, cash
payments aggregating $5.7 million in connection with the
acquisition of the JJ. Farmer business, and the purchase and
retirement of $3.6 million principal amount of the Secured Notes.
Capital expenditures in 1994 amounted to $4.9 million as compared
to $8.2 million in 1993. Capital expenditures for 1995 are
anticipated to be approximately $6 - 7 million.
The increase of one half of one percent in the Prime Rate,
announced in January 1995, is estimated (assuming no further
change) to increase the Company's interest expense in 1995 by
approximately $300 thousand per annum, assuming the same level of
average loan balance.
In addition, the increase in the interest rate on direct
borrowings, as contained in the Amendment, is estimated to raise
interest expense by approximately $300 thousand per annum, assuming
the same level of average loan balance.
Salant's principal sources of liquidity, both on a short-term and
a long-term basis, are provided by operations and borrowings under
the Credit Agreement.
Based upon its analysis of its consolidated financial position, its
cash flow during the past twelve months, and its cash flow
anticipated from future operations, Salant believes that its future
cash flow, together with the funds available under the Credit
Agreement, as amended, will be adequate to meet its financing
requirements including the growth it anticipates in the next twelve
months. There can be no assurance, however, that future
developments and general economic trends will not adversely affect
the Company's operations and, hence, its anticipated cash flow.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report
To the Board of Directors and Stockholders of
Salant Corporation:
We have audited the accompanying consolidated balance sheets of Salant
Corporation and subsidiaries as of December 31, 1994 and January 1, 1994,
and the related consolidated statements of operations, shareholders'
equity/deficiency and cash flows for the years ended December 31, 1994,
January 1, 1994 and January 2, 1993. Our audits also included the financial
statement schedule listed in the index at Item 14(a)(2). These financial
statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Salant Corporation and subsidiaries as of
December 31, 1994 and January 1, 1994, and the results of their operations and
their cash flows for the years ended December 31, 1994, January 1, 1994 and
January 2, 1993 in conformity with generally accepted accounting principles.
Also, in our opinion, the financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
As discussed in Note 1 to the financial statements, on July 30, 1993 the
Bankruptcy Court entered an order confirming the plan of reorganization which
became effective on September 20, 1993. Under the plan of reorganization, the
Company is required to comply with certain terms and conditions as more fully
described in Note 18.
/s/ Deloitte & Touche LLP
March 3, 1995
New York, New York
Salant Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Year Ended
December 31, January 1,January 2,
1994 1994 1993
Net Sales $ 419,285 $402,098 $411,021
Cost of goods sold 326,059 303,989 318,430
Gross Profit 93,226 98,109 92,591
Selling, general and
administrative expenses 79,463 74,818 75,661
Royalty income, net
of related expenses 5,709 6,650 6,188
Division restructuring
costs (Note 4) - 5,500 4,824
Write off of other assets (Note 8) - - 6,759
Bankruptcy administration expenses - 8,861 12,878
Income/(loss) from continuing operations
before interest, income taxes and
extraordinary gain 19,472 15,580 (1,343)
Interest expense,
net (Notes 10 and 11) 15,617 7,523 2,978
Income/(loss) from continuing operations
before income taxes
and extraordinary gain 3,855 8,057 (4,321)
Income taxes (Note 13) 348 241 366
Income/(loss) from continuing operations
before extraordinary gain 3,507 7,816 (4,687)
Discontinued operations (Notes 3 and 19):
Loss from operations (9,639) (589) (1,299)
Estimated loss on disposal (1,796) - (11,772)
Reversal of estimated loss
on disposal - 11,772 -
Extraordinary gain (Notes 5 and 11) 63 24,707 -
Net income/(loss) $ (7,865) $ 43,706 $(17,758)
Earnings/(loss) per share:
Income/(loss) per share from continuing
operations before
extraordinary gain $ 0.23 $ 1.10 $ (1.35)
Income from reversal of estimated loss on disposal of
discontinued operations - 1.65 -
Income/(loss) per share from
discontinued operations (0.76) (0.08) (3.78)
Extraordinary gain - 3.48 -
Net income/(loss) per share $ (0.53) $ 6.15 $ (5.13)
Weighted average common stock
outstanding 14,954 7,104 3,460
See Notes to Consolidated Financial Statements
Salant Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share data)
December 31, January 1,
1994 1994
ASSETS
Current assets:
Cash and cash equivalents $ 1,965 $ 2,146
Accounts receivable net of allowance
for doubtful accounts of $2,565 in 1994
and $2,261 in 1993 (Notes 10 and 11) 45,907 37,228
Inventories (Notes 6 and 10) 124,599 103,585
Prepaid expenses and other
current assets 5,264 4,163
Net assets of discontinued
operations (Note 3) - 10,500
Total current assets 177,735 157,622
Property, plant and equipment,
net (Notes 7 and 11) 27,460 27,459
Other assets (Notes 8, 11 and 13) 71,345 68,151
$ 276,540 $ 253,232
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Loans payable $ 33,230 $ -
Accounts payable 28,593 21,724
Reserve for business
restructuring (Note 4) - 2,038
Accrued salaries, wages and
other liabilities (Note 9) 18,848 21,951
Net liabilities of discontinued
operations (Note 3) 816 -
Total Current Liabilities 81,487 45,713
Long Term Debt (Notes 2 and 11) 109,908 111,851
Deferred Liabilities (Note 16) 13,479 16,766
Commitments and Contingencies (Notes 10, 11, 13, 14, 15 and 17)
Shareholders' Equity (Notes 4 and 15):
Preferred stock, par value $2 per share:
Authorized 5,000 shares; none issued - -
Common stock, par value $1 per share:
Authorized 30,000 shares; 15,242 15,016
issued and issuable-15,242 shares in 1994;
issued-and issuable-15,015 shares in 1993
Additional paid-in capital 107,017 106,726
Deficit (48,326) (40,461)
Excess of additional pension liability over
unrecognized prior service
cost adjustment (Note 14) (773) (986)
Accumulated foreign currency
translation adjustment 120 221
Less - treasury stock, at
cost - 234 shares (1,614) (1,614)
Total Shareholders' Equity 71,666 78,902
$ 276,540 $ 253,232
See Notes to Consolidated Financial Statements
Salant Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY/(DEFICIENCY)
(Amounts in thousands)
Excess of
Additional
Pension
Liability
Over
Unrecog-Cumulative Total
nized Foreign Share-
Common Stock Add'l Prior Currency Treasury Stock holders'
Number Paid-In Service TranslationNumber of Equity/
of Shares Amount Capital Deficit Cost Adjustment Shares Amount (Deficiency)
Balance at December 28, 1991 3,693 $3,693 $17,686 $(66,409) $172 $222 234 $(1,614) $(46,250)
Stock options exercised 5 5 16 21
Net loss (17,758) (17,758)
Excess of additional pension
liability over unrecognized
prior service cost adjustment (525) (525)
Foreign currency translation
adjustments 3 3
Balance at January 2, 1993 3,698 3,698 17,702 (84,167) (353) 225 234 (1,614) (64,509)
Stock options exercised 24 24 90 114
Shares issued and issuable
in settlement of claims 11,294 11,294 88,934 100,228
Net Income 43,706 43,706
Excess of additional pension
liability over unrecognized
prior service cost adjustment (633) (633)
Foreign currency translation
adjustments (4) (4)
Balance at January 1, 1994 15,016 15,016 106,726 (40,461) (986) 221 234 (1,614) 78,902
Stock options exercised 226 226 291 517
Net loss (7,865) (7,865)
Excess of additional pension
liability over unrecognized
prior service cost adjustment 213 213
Foreign currency translation
adjustments (101) (101)
Balance at December 31, 1994 15,242 $15,242 $107,017$(48,326) $ (773) $120 234 $(1,614) $ 71,666
See Notes to Consolidated Financial Statements
Salant Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Year Ended
December 31, January 1, January 2,
1994 1994 1993
Cash Flows from Operating Activities
Income/(loss) from continuing
operations $3,507 $7,816 $(4,687)
Adjustments to reconcile
income/(loss) from
continuing operations to net
cash (used in)/provided by
operating activities:
Depreciation 5,113 5,619 6,390
Amortization of intangibles 2,376 2,194 2,393
Write-off of other assets - - 6,759
Write-down of fixed assets - 2,095 -
Change in operating assets and liabilities:
Accounts receivable (8,679) 1,462 (1,950)
Inventories (19,262) 844 (14,706)
Prepaid expenses and
other current assets (947) (378) 3,831
Other assets (1,302) 48 (150)
Accounts payable 6,869 266 8,837
Accrued salaries, wages and
other liabilities (5,786) 5,941 2,212
Reserve for business
restructuring (2,038) (3,042) (2,009)
Deferred liabilities 330 398 409
Liabilities deferred
pursuant to chapter 11 - - (1,078)
Net cash (used in)/provided by
operating activities (19,819) 23,263 6,251
Cash Flows from Investing Activities
Capital expenditures, net (4,926) (8,153) (3,923)
Acquisition (5,720) - -
Proceeds from sale of assets 294 795 1,550
Net cash used in investing
activities (10,352) (7,358) (2,373)
Cash Flows from Financing Activities
Net short-term borrowings 33,230 - -
Repayment of pre-petition
secured debt - (15,940) (12,526)
Retirement of long-term debt (3,537) - -
Exercise of stock options 517 65 21
Other, net (101) (254) (522)
Net cash provided by/(used in)
financing activities 30,109 (16,129) (13,027)
Net cash used in continuing
operations (62) (224) (9,149)
Cash used in discontinued
operations (119) (304) (855)
Net decrease in cash and
cash equivalents (181) (528) (10,004)
Cash and cash equivalents
- beginning of year 2,146 2,674 12,678
Cash and cash equivalents
- end of year $1,965 $2,146 $2,674
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 16,150$ 3,847$ 3,831
Income taxes $ 674$ 206$ 430
Conversion of accounts payable, accrued expenses,
long-term debt and deferred liabilities to liabilities
deferred pursuant to chapter 11 cases $1,515 $ 1,503
Conversion of liabilities deferred pursuant to chapter11
cases to accounts payable
and deferred liabilities $10,249
Issuance of long-term debt $ 111,851
Issuance of common stock $ 100,228
See Notes to Consolidated Financial Statements
SALANT CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Amounts in Thousands of Dollars Except Share and Per Share Data)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The Consolidated Financial Statements include the accounts of
Salant Corporation ("Salant") and subsidiaries. (As used herein,
the "Company" includes Salant and its subsidiaries but excludes
Salant's Vera Scarf Division.) In February 1995, Salant
discontinued its Vera Scarf Division. As further described in Note
3, the Consolidated Financial Statements and the Notes thereto,
reflect the Vera Scarf Division as a discontinued operation, and
the financial results of the Vera Scarf Division are not included
in the presentation of income/(loss) from continuing operations.
In addition, the net assets and/or net liabilities of the
discontinued operations have been separately classified in the
Consolidated Balance Sheet for fiscal 1994. The fiscal 1993
Consolidated Balance Sheet has been restated to conform to the 1994
presentation. Significant intercompany balances and transactions
are eliminated in consolidation.
On June 27, 1990 (the "Filing Date"), Salant and one of its
subsidiaries, Denton Mills, Inc. ("Denton Mills"), filed separate
voluntary petitions for relief under chapter 11 of title 11 of the
United States Code (the "Bankruptcy Code") with the United States
Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court"). On July 30, 1993, the Bankruptcy Court issued
an order confirming the Third Amended Joint Plan of Reorganization
of Salant and Denton Mills, Inc. (the "Plan"). The Plan was
consummated on September 20, 1993 (the "Consummation Date"), as
further described in Note 18.
Fiscal Year
The Company's fiscal year ends on the Saturday closest to
December 31. The 1994 and 1993 fiscal years were each comprised of
52 weeks, while the 1992 fiscal year was comprised of 53 weeks.
Reclassifications
Certain reclassifications were made to the 1993 and 1992 financial
statements to conform with the 1994 presentation.
Cash and Cash Equivalents
The Company considers cash on hand, deposits in banks and
short-term investments as cash and cash equivalents for the
purposes of the statements of cash flows. Short-term investments
consist of certificates of deposit maturing within three months of
issuance. These investments are readily convertible to cash and
are stated at cost, which approximates market.
Accounts Receivable
The Company has entered into an agreement with a factor, as further
described in Note 10, whereby it sells, without recourse, an
interest in a defined pool of eligible accounts receivable. The
credit risk for such accounts is thereby transferred to the factor.
The amounts due from factor included in accounts receivable
amounted to $9,324 at December 31, 1994, and $12,610 at January 1,
1994.
Inventories
Inventories are stated at the lower of cost (principally determined
on a first-in, first-out basis for apparel operations and the
retail inventory method on a first-in, first-out basis for outlet
store operations) or market.
Property, Plant and Equipment
Property, plant and equipment are stated at cost and are
depreciated or amortized over their estimated useful lives, or for
leasehold improvements, the lease term, if shorter. Depreciation
and amortization are computed principally by the straight-line
method for financial reporting purposes and by accelerated methods
for income tax purposes.
The annual depreciation rates used are as follows:
Buildings and improvements 2.5% - 10.0%
Machinery, equipment and autos 6.7% - 33.3%
Furniture and fixtures 10.0% - 50.0%
Leasehold improvements Over the life of the asset
or the term of the lease,
whichever is shorter
Other Assets
Intangible assets are being amortized on a straight-line basis over
their respective useful lives. Costs in excess of fair value of
net assets acquired, which relate to the acquisition of the net
assets of Manhattan Industries, Inc. and JJ. Farmer Clothing, Inc.
are assessed for recoverability on an annual basis. In evaluating
the value and future benefits of these intangible assets, their
carrying value would be reduced by the excess, if any, of the
intangibles over management's best estimate of undiscounted future
operating income of the acquired businesses before amortization of
the related intangible assets over the remaining amortization
period. Intangible assets are being amortized over periods from
7 1/2 to 40 years.
Fair Value of Financial Instruments
For financial instruments including cash and cash equivalents,
accounts receivable and payable, and accruals, it was assumed that
the carrying amount approximated fair value because of their short
maturity. Long-term debt, which was issued at the market rate of
interest, currently trades at approximately 95% of the par value of
the debt.
Income Taxes
Effective January 3, 1993, the Company adopted Financial Accounting
Standards Board Statement No. 109 ("SFAS No. 109"), "Accounting for
Income Taxes". Under SFAS No. 109, the Company is required to
recognize the amount of taxes payable or refundable for the current
year and to recognize deferred tax liabilities and assets for the
expected future tax consequences of events that have been
recognized in the Company's financial statements or tax returns.
Earnings/(Loss) Per Share
Income/(loss) per share is based on the weighted average number of
common shares (including shares to be issued pursuant to the Plan)
and common stock equivalents outstanding, if applicable. Loss per
share for 1994 and 1992 did not include common stock equivalents,
as their effect would have been anti-dilutive.
Revenue Recognition
Revenue is recognized at the time the merchandise is shipped.
Retail factory outlet store revenues are recognized at the time of
sale.
Note 2. Acquisition
On June 10, 1994, the Company acquired all the capital stock of JJ.
Farmer Clothing Inc. (a Canadian corporation) and the assets of JJ.
Farmer International Limited (a Hong Kong corporation)
(collectively "JJ. Farmer") for approximately $5,311 in cash. The
purchase price is subject to adjustment based on the future
profitability of JJ. Farmer. Through December 31, 1994, the
Company made additional payments of $409. The acquisition has been
accounted for as a purchase, and accordingly, JJ. Farmer's
operating results have been included in the Company's consolidated
results of operations commencing June 11, 1994. Pro forma results
of operations have not been presented as the effect would not be
significant. JJ. Farmer's net sales for the five months ended May
31, 1994 and the twelve months ended December 31, 1993 were $3,392
and $13,104, respectively. The excess of cost over the book value
of net assets acquired ($4,535 subject to adjustment) is being
amortized over a period of not more than 15 years on a straight-
line basis.
As part of the acquisition, the Company agreed to pay to the
sellers of JJ. Farmer, certain minimum amounts in the years 1996
through 1999. The present value of such future payments is $1,657,
and is included in long-term debt.
Note 3. Discontinued Operations
In February 1995, the Company discontinued the Vera Scarf Division,
which imports and markets women's scarves. The loss from
operations of the Division in fiscal 1994 was $9,639, which
included a fourth quarter charge of $9,004 for the write-off of
goodwill and other intangible assets. The loss from operations of
the Division in fiscal 1993 was $589.
Additionally, the Company recorded a fourth quarter charge of
$1,796 to accrue for expected operating losses during the phase-out
period through June 1995. No income tax benefits have been
allocated to the Division's 1994, 1993 or 1992 losses. Such losses
are included in the Company's net operating loss carryforward
disclosed in Note 13.
Net sales of the Division were $5,087, $5,138 and $4,621 in 1994,
1993 and 1992, respectively. The net assets and/or net liabilities
of the discontinued operations have been reclassified on the
balance sheet as net assets or net liabilities of discontinued
operations, and consist principally of accounts receivable,
inventory and accrued losses for the phase-out period.
Note 4. Restructuring Costs
In the fourth quarter of fiscal 1993, the Company recorded a $5,500
restructuring provision, of which $5,000 related to the
restructuring of the Salant Children's Apparel Group, as more fully
described in Note 19.
In the fourth quarter of fiscal 1992, the Company recorded a $4,824
restructuring reserve, which included (i) the estimated costs to be
incurred in connection with the restructuring of certain
unprofitable operations, (ii) the rejection, allowable under
chapter 11, of certain lease obligations and (iii) the write-off of
leasehold improvements, buildings and equipment at closed
locations.
Note 5. Extraordinary Gain
In September 1993, the Company recorded an extraordinary gain of
$24,707 consisting of (i) an extraordinary gain of $45,974 from the
settlement and anticipated settlement of claims arising from the
chapter 11 proceeding for less than their full amount and (ii) an
extraordinary loss of $21,267 arising from the settlement of
accrued interest and fees in respect of the Company's secured bank
debt during the pendency of the Company's chapter 11 cases.
Note 6. Inventories
December 31, January 1,
1994 1994
Finished goods . . . . . . . . . . . $ 70,882 $ 59,993
Work-in-process. . . . . . . . . . . 28,298 27,426
Raw materials and supplies . . . . . 25,419 16,166
$ 124,599 $103,585
Inventory in transit was $6,500 and $5,000 at December 31, 1994 and
January 1, 1994, respectively.
Note 7. Property, Plant and Equipment
December 31, January 1,
1994 1994
Land and buildings . . . . . . . . . $ 16,808 $ 15,748
Machinery, equipment, furniture
and fixtures . . . . . . . . . . . 40,794 38,478
Leasehold improvements . . . . . . . 5,958 5,992
Property held under capital leases . 1,345 1,345
64,905 61,563
Less accumulated depreciation
and amortization . . . . . . . . . 37,445 34,104
$ 27,460 $ 27,459
Note 8. Other Assets
December 31, January 1,
1994 1994
Excess of cost over net assets acquired,
net of accumulated amortization of
$10,059 in 1994 and $8,269 in 1993. $52,542 $49,797
Trademarks and license agreements,
net of accumulated amortization of
$2,795 in 1994 and $2,350 in 1993 . 14,767 15,212
Leasehold interests, net of accumulated
amortization of $823 in 1994 and $682
in 1993. . . . . . . . . . . . . . 1,620 1,761
Other. . . . . . . . . . . . . . . . 2,416 1,381
$71,345 $68,151
In June 1994, the Company entered into various licensing agreements
for dress shirts and men's accessories using the trademarks GANT
and SALTY DOG. As part of these agreements, the Company purchased
inventory from the licensor, made advance royalty payments to the
licensor, and is required to make future minimum royalty payments.
In the fourth quarter of 1992, the Company wrote off other assets
of $6,759, which consisted of the unamortized portion of the excess
cost over net assets acquired related to the Salant Children's
Apparel Group and Vera Sportswear division.
Note 9. Accrued Salaries, Wages and Other Liabilities
December 31, January 1,
1994 1994
Accrued salaries and wages . . . . . . . $ 3,721 $ 6,045
Accrued pension and retirement. . . .. . 1,791 1,444
Accrued royalties. . . . . . . . . . . . 1,852 1,295
Accrued interest . . . . . . . . . . . . 3,716 3,839
Other accrued liabilities. . . . . . . . 7,768 9,328
$ 18,848 $ 21,951
Note 10. Financing and Factoring Agreements
On September 20, 1993, the Company entered into a two year
revolving credit, factoring and security agreement (the "Credit
Agreement") with The CIT Group/Commercial Services, Inc. ("CIT") to
provide seasonal working capital financing, including direct
borrowings and letters of credit, of up to $120,000 (subject to an
asset based borrowing formula). As of December 31, 1994, $4,085 was
available under this facility. Interest on direct borrowings is
charged monthly at an annual rate of one-half of one percent in
excess of the prime rate of Chemical Bank (the "Prime Rate")(8.5%
at December 31, 1994). As collateral for borrowings under the
Credit Agreement, the Company granted to CIT a security interest in
substantially all of the assets of the Company. As of December 31,
1994, direct borrowings were $33,230. As of January 1, 1994, there
were no direct borrowings. As of December 31, 1994 and January 1,
1994, letters of credit outstanding under the Credit Agreement were
$50,515 and $37,256, respectively. The weighted average interest
rate on borrowings under the Credit Agreement for the years ended
December 31, 1994 and January 1, 1994 was 7.8% and 6.8%,
respectively.
On February 28, 1995, Salant entered into an agreement (the
"Amendment") with CIT amending the Agreement. The Amendment
provides for, among other things (i) an increase in the aggregate
limitation (the "Maximum Credit") on direct borrowings and letters
of credit from $120,000 to a maximum of $135,000 during certain
periods of 1995 (subject to an asset based formula), (ii) an
increase in the rate of advance of "Eligible Inventory" (as defined
in the Credit Agreement) used to calculate the asset based formula
from fifty percent to sixty percent during March, April, May and
June 1995 together with an increase in the "Inventory Sublimit" (as
defined in the Credit Agreement) from $60,000 to $70,000 during
such months, (iii) an extension of the term of the Credit Agreement
by one year ending on September 20, 1996, (iv) an increase in the
interest rate on direct borrowing from an annual rate of one-half
of one percent in excess of the Prime Rate to one percent in excess
of the Prime Rate, (v) a modification of certain financial
covenants contained in the Credit Agreement, and (vi) a
continuation of certain factoring services by CIT.
The Credit Agreement contains numerous financial and operating
covenants, including restrictions on incurring indebtedness and
liens, making investments in or purchasing the stock of all or a
substantial part of the assets of another person, selling property,
incurring capital expenditures, and paying cash dividends. In
addition, the Company is required to maintain minimum levels of
working capital and stockholders' equity and to satisfy a ratio of
total liabilities to stockholders' equity, a fixed charge coverage
ratio and a maximum cumulative net loss test. At December 31,
1994, Salant was in compliance with all financial covenants, as
contained in the Credit Agreement, as amended.
The Amendment also provides for a modification of financial
covenants relating to (i) working capital, (ii) stockholders'
equity, (iii) liabilities to stockholders' equity ratio, (iv) fixed
charge coverage ratio and (v) maximum loss. In the absence of the
Amendment, Salant (i) would not have been able to satisfy the fixed
charge coverage ratio for its 1994 fiscal year and (ii) may not
have been able to meet the other four covenants described above for
certain periods during 1995, commencing April 1995.
Note 11. Long-Term Debt
On September 20, 1993, Salant issued $111,851 principal amount of
10 1/2% Senior Secured Notes (the "Secured Notes") due December 31,
1998. The Secured Notes bear interest from September 1, 1993 and
may be redeemed at any time prior to maturity, in whole or in part,
at the option of the Company, at a premium to the principal amount
thereof plus accrued interest. The premium on redemption declines
annually from 6.3% in 1995 to 2.1% in 1997. The Secured Notes are
secured by a first lien (subordinated to the Credit Agreement to
the extent of $15,000) on certain accounts receivable, certain
intangible assets, the capital stock of Salant's subsidiaries and
certain real property of the Company, and by a second lien on
substantially all of the other assets of the Company.
The Secured Notes contain various restrictions pertaining to future
indebtedness, the purchase of capital stock and the payment of
dividends. Under the most restrictive of these provisions, the
Company currently may not purchase or redeem any shares of its
capital stock, or declare or pay cash dividends.
In May 1994, the Company purchased and retired $3,600 of its
Secured Notes in an open market transaction at a price below the
principal amount thereof. As a result of this transaction, the
Company recorded an extraordinary gain of $63.
Note 12. Segment Information and Significant Customers
The Company operates within one industry segment, the business of
manufacturing and marketing apparel. The Company sells its products
to retailers, including department stores, specialty stores,
national chain stores and mass volume retailers, throughout the
United States. As an adjunct to its apparel manufacturing
operations, the Company operates 69 factory outlet stores in
various parts of the United States. Foreign operations are not
significant.
Approximately 12% of the Company's sales in the fiscal year ended
December 31, 1994 were to Federated Department Stores, Inc.
("Federated"), which includes all 1994 sales to Macy's Department
Stores ("Macy's"), which was acquired by Federated in 1994. In
1993, sales to a combined Federated/Macy's would have represented
approximately 10% of the Company's sales. No other customer
accounted for more than 10% of the Company's net sales during
fiscal 1994, 1993 or 1992.
Note 13. Income Taxes
The provision for income taxes consists of the following:
December 31, January 1, January 2,
1994 1994 1993
Current:
Federal . . . . . . . $ 100 $ - $ -
State . . . . . . . . 20 32 29
Foreign . . . . . . . 228 209 337
$ 348 $ 241 $ 366
The effective tax rate differed from the statutory rate for the
year ended January 1, 1994 due to differences in tax treatment
relating to the bankruptcy and other items. The effective tax rate
differed from the statutory rate in the years ended December 31,
1994 and January 2, 1993 because no tax benefit was available with
respect to losses incurred.
The following is a reconciliation of the tax provision/(benefit) at
the statutory Federal income tax rate to the actual income tax
provision:
1994 1993 1992
Income tax provision/
(benefit), at 34% $ 1,097 $ 2,543 $ (1,905)
Loss producing no current
tax benefit 1,905
Utilization of net
operating loss
carryforward (1,097) (2,543)
Alternative minimum tax 100
State, local and foreign
taxes 248 241 366
Income tax provision $ 348 $ 241 $ 366
The adoption of SFAS No. 109, as of January 3, 1993, had no
cumulative effect on earnings or effect on income tax expense for
the year ended January 1, 1994, as the Company recognized a net
deferred tax asset of $64,364, offset in full by a valuation
allowance as of the date of adoption.
The tax effects of significant items comprising the Company's net
deferred tax asset consists of the following:
December 31, January 1,
1994 1994
Deferred tax liabilities:
Differences between book and
tax basis of property $ (6,090) $ (6,564)
Deferred tax assets:
Reserves not currently deductible 16,862 17,517
Operating loss carryforwards 43,873 45,341
Tax credit carryforwards 2,992 2,936
Expenses capitalized into inventory 5,857 4,935
69,584 70,729
Valuation Allowance (63,494) (64,165)
Net deferred tax asset $ - $ -
At December 31, 1994, the Company had net operating loss
carryforwards ("NOLs") for income tax purposes of approximately
$112,000, which can be used to offset future taxable income,
expiring from 1999 to the year 2008. Approximately $51,000, which
arose from the acquisition of Manhattan, will offset goodwill when
utilized. The implementation of the Plan, together with
transactions that have occurred within the three-year period
preceding the consummation of the Plan, have caused an "ownership
change" for federal income tax purposes on the date the Plan was
consummated. As a result of such ownership change, the use of the
NOLs to offset future taxable income has been limited by the
requirements of section 382 of the Internal Revenue Code of 1986,
as amended. The annual limit under section 382 is approximately
$7,200 over a fifteen year carryover period. Upon consummation of
the Plan, the Company realized cancellation of indebtedness income
of approximately $917 and the NOLs have been reduced or limited
accordingly.
In addition, at December 31, 1994, the Company had available
investment tax and other credits which expire between 1995 and
1999, of which $1,986 will reduce goodwill and the balance will
reduce income tax expense when utilized. Utilization of these
credits may be limited in the same manner as the NOLs, as described
above.
On June 27, 1990, the date of the filing of the Chapter 11 cases,
the Internal Revenue Service (the "IRS") was in the process of
examining the tax returns of Manhattan (acquired in April 1988) for
the years ended January 31, 1982 through January 31, 1986 and
January 31, 1988. The IRS has filed amended proofs of claim (the
"IRS Claim") with the Bankruptcy Court in the aggregate amount of
$5,201 which includes $2,010 of income and withholding taxes,
interest and penalties thereon, and unemployment taxes (the "Income
Tax Claim") through the filing date of the Chapter 11 Cases.
Without prejudice to the rights, claims and defenses of the IRS and
the Company, at the confirmation hearing with respect to the Plan,
the Company and the IRS agreed to expunge all claims and proofs of
claims asserted and/or filed by the IRS other than the portion of
the IRS Claim relating to such taxes. The IRS Claim also includes
$3,191 for excise taxes (the "Excise Tax Claim") arising from the
failure of Salant to have met minimum funding obligations for its
defined benefit pension plans and penalties associated therewith.
Pursuant to a settlement reached with the IRS (which is subject to
final IRS approval), the Excise Tax Claim (plus any associated
penalties) has been reduced to $100, which is payable upon the
execution of the definitive settlement agreement. Provisions for
such distributions to the IRS in settlement of the Income Tax Claim
and the Excise Tax Claim had been made in the consolidated
financial statements for the year ended January 1, 1994.
Note 14. Employee Benefit Plans
Pension and Retirement Plans
The Company has several defined benefit plans for virtually all
full-time salaried employees and certain nonunion hourly employees.
The Company's funding policy for its plans is to fund the minimum
annual contribution required by applicable regulations.
The Company also has a nonqualified supplemental retirement and
death benefit plan covering certain employees. The funding for
this plan is based on premium costs of related insurance contracts.
Pension expense includes the following components:
1994 1993 1992
Service cost-benefit earned
during the period. . . . . . $ 1,125 $ 1,183 $ 1,101
Interest cost on projected
benefit obligation . . . . . 2,626 2,555 2,419
Loss/(return) on assets. . . . 1,331 (2,008) (2,162)
Net amortization . . . . . . . (3,437) 169 647
Net periodic pension cost. . . $ 1,645 $ 1,899 $ 2,005
The reconciliation of the funded status of the plans at December 31,
1994 and January 1, 1994 is as follows:
December 31, January 1, January 1,
1994 1994 1994
Accumulated Accumulated Plan
Plan Plan Assets
Benefits Benefits Exceed
Exceed Exceed Accumulated
Plan Assets Plan AssetsPlan Benefits
Actuarial present value of benefit
obligation
Vested benefit obligation. . . . $ (28,645) $(30,670) $ (710)
Nonvested benefit obligation . . (838) (680) -
Accumulated benefit obligation . . $ (29,483) $ (31,350) $ (710)
Projected benefit obligation . . . $ (33,579) $(36,068) $ (710)
Plan assets at fair value. . . . . 25,947 25,155 785
Projected benefit obligation in
(excess of)/less than plan assets. . (7,632) (10,913) 75
Unrecognized net obligation at date of
initial application, amortized over
15 years . . . . . . . . . . . . 897 985 -
Unrecognized net (gain)/loss . . . 784 1,928 (160)
Unrecognized prior service cost. . (739) 37 -
Recognition of minimum liability
under SFAS No. 87. . . . . . . . (1,160) (1,420) -
Accrued pension cost . . . . . . . $ (7,850) $ (9,383) $ (85)
Assumptions used in accounting for defined benefit pension plans
are as follows:
1994 1994 1993 1993 1992 1992
Non- Qualified Non- Qualified Non- Qualified
QualifiedPlans Qualified Plans Qualified Plans
Plan Plan Plan
Discount rate. . . . . 8.5% 8.5% 7.5% 7.5% 8.0% 8.0%
Rate of increase in
compensation levels . N/A 5.5% N/A 5.5% N/A 6.0%
Expected long-term
rate of return on assets 8.0% 8.0% 12.0% 8.0% 12.0% 8.0%
Assets of the Company's qualified plans are invested in directed
trusts. Assets in the directed trusts are invested in common and
preferred stocks, corporate bonds, money market funds and U.S.
government obligations. The nonqualified supplemental plan assets
consist of the cash surrender value of certain insurance contracts.
The Company also contributes to certain union retirement and
insurance funds established to provide retirement benefits and
group life, health and accident insurance for eligible employees.
The total cost of these contributions was $4,693, $5,060 and $4,769
in 1994, 1993 and 1992, respectively. The actuarial present value
of accumulated plan benefits and net assets available for benefits
for employees in the union administered plans are not determinable
from information available to the Company.
Long Term Savings and Investment Plan
Salant sponsors the Long Term Savings and Investment Plan, under
which eligible salaried employees may contribute up to 15% of their
annual compensation, subject to certain limitations, to a money
market fund, a fixed income fund and/or an equity fund. Salant
contributes a minimum matching amount of 20% of the first 6% of a
participant's annual compensation and may contribute an additional
discretionary amount in cash or in the Company's common stock. In
1994, 1993 and 1992 Salant's aggregate contributions to the Plan
amounted to $239, $208 and $163, respectively.
Note 15. Stock Options, Warrants and Shareholder Rights
On September 20, 1993, pursuant to the Plan, the Company adopted
the 1993 Stock Plan under which options or awards may be granted to
directors and key employees of the Company for the purchase of an
aggregate of 600,000 shares of the Company's common stock.
The 1988 and 1987 Stock Plans authorized the Company to grant stock
options or stock awards aggregating 1,200,000 shares of Salant
common stock to officers, key employees and, in the case of the
1988 Stock Plan, directors.
The 1993, 1988 and 1987 Stock Plans authorized such grants at such
prices and pursuant to such other terms and conditions as the Stock
Plan Committee may determine. Options may be nonqualified stock
options or incentive stock options and may include stock
appreciation rights. Options expire no later than ten years from
the date of grant and become exercisable in varying amounts over
periods ranging from four months to five years from the date of
grant.
The following table summarizes stock option transactions during
1992, 1993 and 1994:
Shares Price Range
Options outstanding at December 28, 1991 . . 980,225 $1.00-15.125
Options granted during fiscal 1992 . . . . . 197,000 $2.25-8.75
Options exercised during fiscal 1992 . . . . (5,000) $1.00
Options surrendered or cancelled during
fiscal 1992. . . (121,985) $2.25-12.875
Options outstanding at January 2, 1993 . . . 1,050,240 $1.00-15.125
Options granted during fiscal 1993 . . . . . 392,000 $6.69-10.69
Options exercised during fiscal 1993 . . . . (24,095) $1.00-5.875
Options surrendered or cancelled during
fiscal 1993. . . (55,371) $2.25-12.875
Options outstanding at January 1, 1994 . . . 1,362,774 $1.00-15.125
Options granted during fiscal 1994 . . . . . 61,050 $4.94-6.69
Options exercised during fiscal 1994 . . . . (226,666) $2.00-2.63
Options surrendered or cancelled during
fiscal 1994. . . (39,950) $5.125-12.00
Options outstanding at December 31, 1994 . . 1,157,208 $1.00-15.125
Options exercisable at December 31, 1994 . . 809,672 $1.00-15.125
At December 31, 1994, there were 316,041 shares of Salant common
stock reserved for future grants of stock options or stock awards.
Pursuant to the Plan, the Company issued 2,371,182 Salant B
Warrants (the "Warrants") to holders of the Company's common stock
immediately prior to the consummation date. Each Warrant expires
three years from the date of issuance and entitles the registered
holder thereof to purchase one share of common stock of the Company
at prices of $16 during the first year after issuance, $18 during
the second year after issuance and $20 thereafter. No Warrants
were exercised in 1993 or 1994.
The Company has a shareholder rights plan (the "Rights Plan"),
which provides for a dividend distribution of one right for each
share of Salant common stock to holders of record at the close of
business on December 23, 1987. The rights will expire on December
23, 1997. With certain exceptions, the rights will become
exercisable only in the event that an acquiring party accumulates
20 percent or more of the Company's voting stock, or if a party
announces an offer to acquire 30 percent or more of such voting
stock. Each right, when exercisable, will entitle the holder to buy
one one-hundredth of a share of a new series of cumulative
preferred stock at a price of $30 per right or upon the occurrence
of certain events, to purchase either Salant common stock or shares
in an "acquiring entity" at half the market value thereof. The
Company will generally be entitled to redeem the rights at three
cents per right at any time until the 10th day following the
acquisition of a 20 percent position in its voting stock. In July
1993, the Rights Plan was amended to provide that an acquisition or
offer by Apollo Apparel Partners, L.P., or any of its subsidiaries,
will not cause the rights to become exercisable.
As of December 31, 1994, there were 3,844,431 shares of Common
Stock reserved for the future issuance of stock options, stock
awards and warrants.
Note 16. Deferred Liabilities
December 31, January 1,
1994 1994
Lease obligations. . . . . . . $ 1,225 $ 1,688
Deferred pension obligation. . 6,253 8,300
Liability for chapter 11 claims
settlements . . . . . . . . . 6,001 6,778
$ 13,479 $ 16,766
Note 17. Commitments and Contingencies
(a) Lease Commitments
The Company conducts a portion of its operations in premises
occupied under leases expiring at various dates through 2012.
Certain of the leases contain renewal options. Rental payments
under certain leases may be adjusted for increases in taxes and
operating expenses above specified amounts. In addition, certain
of the leases for outlet stores contain provisions for additional
rent based upon sales.
In fiscal years 1994, 1993 and 1992, rental expense was $5,914,
$5,478 and $6,611, respectively. As of December 31, 1994, future
minimum rental payments under noncancellable operating leases
(exclusive of renewal options, percentage rentals, and adjustments
for property taxes and operating expenses) were as follows:
Fiscal Year
1995. . . . . . . . . . . . . . . $ 6,419
1996. . . . . . . . . . . . . . . 5,704
1997. . . . . . . . . . . . . . . 4,577
1998. . . . . . . . . . . . . . . 4,155
1999. . . . . . . . . . . . . . . 2,327
Thereafter. . . . . . . . . . . . 8,761
Total . . . . . . . . . . . $31,943
(b) Legal Contingencies/Significant Disputed Claims
Securities Litigation. On November 27, 1990, Mae Fischer
("Fischer"), an alleged purchaser of Salant's 13-1/4% Senior
Subordinated Debentures due June 15, 1999 (the "Debentures"),
instituted a purported class action suit in the United States
District Court for the Southern District of New York, claiming that
certain directors and officers of Salant violated the federal
securities laws by issuing favorable public statements concerning
the future profitability of Salant, which Fischer claims
artificially inflated the market price of the Debentures between
October 1988 and June 1990. Pursuant to Salant's bylaws, Salant is
obligated to indemnify its directors and officers against expenses
and any judgments or settlements entered against them in actions in
which they are sued in their capacity as directors or officers.
Salant was not named as a defendant in the suit, Fischer v. Tynan,
et al., 90 Civ. 7587 (LBS), due to the pendency of the Chapter 11
Cases.
Pursuant to the terms and conditions of the stipulation of
settlement, Salant will issue and distribute a number of shares of
Salant Common Stock, not to exceed 11,000 shares in the aggregate,
to certain purchasers of the Debentures who sold at a loss during
a circumscribed period. In addition, Fischer's counsel will receive
$150 for their fees and expenses pursuant to the settlement. The
stipulation of settlement, which provides for preliminary approval
of the settlement, notice to class members of the settlement, and
a hearing for final approval, was signed by the Bankruptcy Court on
February 27, 1995. Upon final approval by the Bankruptcy Court,
the Fischer appeal and the Fischer Claim will be deemed withdrawn
with prejudice. Provisions for such distributions had been made in
the consolidated financial statements for the year ended January 1,
1994.
(c) Employment Agreements
The Company has employment agreements with certain executives,
which provide for the payment of compensation aggregating
approximately $6,500 in 1995, $2,980 in 1996 and $250 in 1997. In
addition, such employment agreements provide for incentive
compensation based on various performance criteria.
Note 18. Consummation of the Plan of Reorganization
From the Consummation Date through December 31, 1994, pursuant to
the Plan, the Company made cash payments of $8,500, issued $111,851
of new 10-1/2% senior secured notes and issued 10.5 million shares
of common stock to creditors in settlement of certain claims in the
chapter 11 proceedings. Salant anticipates that an additional
$8,000 in cash and an additional 789 thousand shares of common
stock ultimately will have been distributed to creditors by the
time all remaining claims have been resolved. Provisions for such
distributions had previously been made in the consolidated
financial statements. As further described in Note 5, upon
consummation of the Plan, the Company recorded an extraordinary
gain of $24,707 relating to the settlement of indebtedness pursuant
to the Plan.
Note 19. Discontinued Operations Subsequently Retained
In March 1993, the Company adopted a formal plan to restructure and
sell the Salant Children's Apparel Group. Consequently, the
division was accounted for as a discontinued operation for fiscal
1992 and the first three quarters of fiscal 1993. In March 1994,
the Company concluded that the value of the division would be
maximized by retaining the Salant Children's Apparel Group as part
of its continuing operations. As a result, the assets, liabilities
and results of operations for all periods presented have been
presented as part of continuing operations.
In the fourth quarter of 1992, the Company recorded an $11,772
provision for the estimated costs to restructure the division and
to accrue for expected operating losses during the phase-out period
through December 1993. In the fourth quarter of 1993, the 1992
charge was reversed in its entirety and the Company recorded a
provision of $5,000 for restructuring costs, including (i) the
costs of closure of certain unprofitable product lines, (ii)
inventory markdowns associated with those product lines, and (iii)
fixed asset write-downs at closed locations.
The following is a summary of certain selected financial data for
the Salant Children's Apparel Group during the prior year period in
which it was reported as a discontinued operation.
Year Ended
January 2, 1993
Net sales $ 35,442
Operating loss (12,365)
Operating losses of $750 related to January and February 1993 were
included in pre-measurement date losses shown in the loss from
discontinued operations in the 1992 financial statements. These
amounts have been reclassified to operating losses from continuing
operations in 1992.
Note 20. Quarterly Financial Information (Unaudited)
Fiscal year ended December 31, 1994
Total 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
Net sales. . . . . . . . . . . . $ 419,285 $ 115,840 $ 125,403 $ 88,184 $ 89,858
Gross profit . . . . . . . . . . 93,226 22,662 29,591 18,867 22,106
Income/(loss) from continuing operations . . . . 3,507 (1,251) 6,119 (2,521) 1,160
Discontinued operations:
Income/(loss) from discontinued operations . . (9,639) (9,325) (21) (219) (74)
Estimated loss on disposal . .(1,796) (1,796) - - -
Extraordinary gain . . . . . . . 63 - - 63 -
Net income/(loss). . . . . . . . (7,865) (12,372) 6,098 (2,677) 1,086
Income/(loss) per share from continuing operations(a). $0.23 $ (0.08) $ 0.40 $ (0.17) $ 0.07
Loss per share from discontinued operations(a) . (0.76) (0.74) - (0.01) -
Net income/(loss) per share(a) . (0.53) (0.82) 0.40 (0.18) $0.07
Fiscal year ended January 1, 1994
Total 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
Net sales. . . . . . . . . . . . $402,098 $ 111,608 $ 111,475 $ 85,121 $ 93,894
Gross profit . . . . . . . . . . 98,109 28,158 27,861 20,295 21,795
Income/(loss) from continuing operations . 7,816 2,900 4,467 (216) 665
Discontinued Operations:
Reversal of estimated loss on disposal .11,772 11,772 - - -
Income/(loss) from discontinued
operations . . (589) (41) (21) (272) (255)
Extraordinary gain . . . . . . . 24,707 - 24,707 - -
Net income/(loss). . . . . . . . 43,706 14,631 29,153 (488) 410
Income/(loss) per share from continuing
operations(a). . $1.10 $ 0.19 $ 0.83 $ (0.05) $ 0.16
Income per share from reversal of estimated loss
on disposal of discontinued operations (a) 1.65 0.77 - - -
Loss per share from discontinued
operations (a). (0.08) - - (0.07) (0.06)
Income per share from extraordinary
gain (a) . . 3.48 - 4.63 - -
Net income/(loss) per share (a). 6.15 0.96 5.46 (0.12) 0.10
Reference is made to Notes 3, 4, 8 and 19 concerning fourth quarter
adjustments during the fiscal years ended December 31,
1994 and January 1, 1994.
(a) Income/(loss) per share of common stock is computed separately for each
period. The sum of the amounts of income/(loss)per share reported
in each period differs from the total for the year due to the issuance
of shares and, when appropriate,the inclusion of common stock equivalents.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by reference
from the Proxy Statement of Salant Corporation.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference
from the Proxy Statement of Salant Corporation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by Item 12 is incorporated by reference
from the Proxy Statement of Salant Corporation.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference
from the Proxy Statement of Salant Corporation.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON
FORM 8-K
Financial Statements
The following financial statements are included in Item 8 of this
Annual Report:
Independent Auditors' Report. . . . . . . . . . . . .
Consolidated Statements of Operations . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . .
Consolidated Statements of Shareholders'
Equity/(Deficiency) . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . .
Notes to Consolidated Financial Statements. . . . . .
Financial Statement Schedule
The following Financial Statement Schedule for the fiscal years
ended December 31, 1994, January 1, 1994, and January 2, 1993, and
is filed as part of this Annual Report:
Schedule II - Valuation and Qualifying Accounts
and Reserves. . . . . . . . . . . . . . . . . . . .
All other schedules have been omitted because they are inapplicable
or not required, or the information is included elsewhere in the
financial statements or notes thereto.
SALANT CORPORATION
AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
(1) (2)
Balance atCharged to Charged to Balance
Beginning Costs and Other Accounts Deductions at End
of Period Expenses -- Describe -- Describe of Period
Description
YEAR ENDED DECEMBER 31, 1994:
Accounts receivable - allowance
for doubtful accounts $ 2,261 $ 1,068 $ - $ 764(A) $ 2,565
Reserve for business
restructuring $ 2,038 $ 2,038 $ - $ - $ -
YEAR ENDED JANUARY 1, 1994:
Accounts receivable allowance
for doubtful accounts $ 3,776 $ 63 $ - $ 1,578(A) $ 2,261
Reserve for business
restructuring $ 5,931 $ 5,500 $ - $ 9,393(B) $ 2,038
Reserve for loss on disposal of
discontinued operations $11,772 $ - $ - $11,722(D) $ -
YEAR ENDED JANUARY 2, 1993:
Accounts receivable allowance
for doubtful accounts $ 4,635 $ 2,796 $ - $ 3,655(A) $ 3,776
Reserve for business
restructuring $ 7,941 $11,757 $ - $13,767(B) $ 5,931
Reserve for loss on disposal of
discontinued operations(E) $ - $11,772(C) $ - $ - $11,772
NOTES:
(A) Uncollectible accounts written off, less recoveries.
(B) Costs incurred in plant closings and business restructuring.
(C) Charged to discontinued operations.
(D) Reversal of estimated loss on disposal of discontinued operation.
(E) Included in reserve for restructuring on the balance sheet.
Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter ended
December 31, 1994.
Exhibits
Incorporation
Number Description By Reference To
2.1 Third Amended Disclosure Exhibit 1 to
Statement of Salant Form 8-A dated
Corporation, and Denton 7/28/93.
Mills, Inc., dated
5/12/93.
2.2 Third Amended Joint Included as
Chapter 11 Plan of Exhibit D-1
Reorganization of to Exhibit 1
Salant Corporation to Form 8-A
and Denton Mills, Inc. dated 7/28/93.
3.1 Form of Amended and Included as Exhibit
Restated Certificate of D-1 to Exhibit 2
Incorporation of Salant to Form 8-A dated
Corporation. 7/28/93.
3.2 Form of Bylaws, as amended, of
Salant Corporation, effective
9/21/94.
4.1 Rights Agreement dated as of Exhibit 1 to Current Report
12/8/87 between Salant Corporation on Form 8-K dated 12/8/87.
and The Chase Manhattan Bank, N.A.,
as Rights Agent. The Rights
Agreement includes as Exhibit B the
form of Right Certificate.
4.2 Form of First Amendment Exhibit 3 to
to the Rights Agreement Amendment No. 1 to
between Salant Corporation Form 8-A dated
and Mellon Securities. 7/29/93.
4.3 Revolving Credit, Exhibit 10.33 to
Factoring and Security Quarterly Report
Agreement dated 9/20/93, on Form 10-Q for
between Salant Corporation the quarter ended
and The CIT Group/Commercial 10/02/93.
Services, Inc.
4.5 Indenture, dated as of Exhibit 10.34 to
9/20/93, between Salant Quarterly Report
Corporation and Bankers on Form 10-Q for
Trust Company, as trustee, the quarter ended
for the 10-1/2% Senior 10/02/93.
Secured Notes due
December 31, 1998.
4.6 Warrant Agreement dated Exhibit 10.35 to
as of September 20, 1993, Quarterly Report on
between Salant Corporation Form 10-Q for the
and Bankers Trust Company, quarter ended 10/02/93.
as Warrant Agent.
10.1 Salant Corporation 1987 Stock Plan. Exhibit 19.2 to Annual Report on Form 10-K for
fiscal year 1987.
10.2 Salant Corporation 1987 Stock Plan Exhibit 10.12 to Form S-2
Agreement, dated as of 6/13/88, Registration Statement filed
between Salant Corporation and 6/17/88.
Nicholas P. DiPaolo.
10.3 Salant Corporation 1988 Stock Plan. Exhibit 19.3 to Annual Report on
Form 10-K for fiscal year 1988.
10.4 First Amendment, effective Exhibit 19.1 to Quarterly Report
as of 7/25/89, to the Salant on Form 10-Q for the
Corporation 1988 Stock Plan. quarter ended 9/30/89.
10.5 Form of Salant Corporation 1988 Exhibit 19.7 to Annual Report on
Stock Plan Employee Agreement. Form 10-K for fiscal year 1988.
10.6 Form of Salant Corporation Exhibit 19.8 to
1988 Stock Plan Director Annual Report on
Agreement. Form 10-K for fiscal
year 1988.
10.7 Employment Agreement, dated as of Exhibit 19.4 to
12/31/90, between Herbert R. Annual Report on
Aronson and Salant Corporation.* Form 10-K for fiscal
year 1990.
10.8 Letter Agreement, dated 6/30/92, Exhibit 19.1 to Quarterly
amending the Employment Agreement, Report on Form 10-Q for
dated as of 12/31/90, between the quarter ended 10/3/92.
Herbert R. Aronson and Salant
Corporation.*
10.9 License Agreement, dated Exhibit 19.1 to Annual Report
January 1, 1991, by and between on Form 10-K for fiscal year 1992.
Perry Ellis International Inc.
and Salant Corporation regarding
men's sportswear.
10.10 License Agreement, dated Exhibit 19.2 to Annual Report
January 1, 1991, by and between on Form 10-K for
Perry Ellis International Inc. fiscal year 1992.
and Salant Corporation regarding
men's dress shirts.
10.11 Employment Agreement Exhibit 10.32 to
dated as of 6/01/93, Quarterly Report on
between Salant Corporation Form 10-Q for the
and Todd Kahn.* quarter ended 7/8/93.
10.12 Form of Agreement between Included as Exhibit
Salant Corporation and P-11 to Exhibit 1
Apollo Apparel Partners, L.P. to Form 8-A dated
7/28/93.
10.13 Employment Agreement, dated Exhibit 10.36 to
as of 9/20/93, between Quarterly Report on
Salant Corporation and Form 10-Q for the
Nicholas P. DiPaolo.* quarter ended 10/2/93.
10.14 Employment Agreement, dated Exhibit 10.37 to
as of 7/30/93, between Quarterly Report on
Salant Corporation and Form 10-Q for the
John S. Rodgers.* quarter ended 10/2/93.
10.15 Employment Agreement, dated Exhibit 10.38 to
as of 7/30/93, between Quarterly Report on
Salant Corporation and Form 10-Q for the
Richard P. Randall.* quarter ended 10/2/93.
10.16 Employment Agreement dated Exhibit 10.32 to Annual Report on Form
as of 12/21/93, between 10-K for Fiscal Year 1993.
Elliot M. Lavigne and Salant
Corporation.*
10.17 Agreement, dated as of 9/22/93, Exhibit 10.33 to Annual Report on Form
between Nicholas P. DiPaolo and 10-K for Fiscal Year 1993.
Salant Corporation.*
10.18 Forms of Salant Corporation 1993 Exhibit 10.34 to Annual Report on Form
Stock Plan Directors' Option 10-K for Fiscal Year 1993.
Agreement.*
10.19 Letter Agreement, dated as of Exhibit 10.45 to
August 24, 1994, amending the Quarterly Report on
Revolving Credit, Factoring and Form 10-Q for the
Security Agreement, dated quarter ended 10/1/94.
September 20, 1993,
between The CIT Group/Commercial
Services, Inc. and Salant Corporation.
10.20 Letter Agreement, dated Exhibit 10.46 to
10/18/94, amending the Quarterly Report on
Employment Agreement, dated Form 10-Q for the
12/31/90, between Herbert R. quarter ended 10/1/94.
Aronson and Salant Corporation.*
10.21 Letter Agreement, dated Exhibit 10.47 to
10/25/94, amending the Quarterly Report on
Employment Agreement, dated Form 10-Q for the
7/30/93, between Richard quarter ended 10/1/94.
Randall and Salant Corporation.*
10.22 Third Amendment to Credit Agreement, Exhibit 10.48 to Current Report on
dated February 28, 1995, to the Form 8-K, dated March 2, 1995.
Revolving Credit, Factoring and
Security Agreement, dated
September 20, 1993, as amended,
between The CIT Group/Commercial
Services, Inc. and Salant Corporation.
10.23 Salant Corporation Retirement Plan,
as amended and restated. *
10.24 Salant Corporation Pension Plan,
as amended and restated. *
10.25 Salant Corporation Long Term Savings
and Investment Plan as amended
and restated. *
10.26 Letter Agreement, dated
2/15/95, amending the
Employment Agreement, dated
7/30/93, between Richard
Randall and Salant Corporation.*
21 List of Subsidiaries of the Company
27 Financial Data Schedule
* denotes management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SALANT CORPORATION
Date: March 22, 1995 By: /s/ Richard P. Randall
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated and on March 22, 1995.
Signature Title
/s/ Nicholas P. DiPaolo Chairman of the Board,
Nicholas P. DiPaolo President and Chief
Executive Officer
(Principal Executive
Officer); Director
/s/ Richard P. Randall Senior Vice President
Richard P. Randall and Chief
Financial Officer
(Principal Financial
and Accounting Officer)
/s/ John S. Rodgers Executive Vice President,
John S. Rodgers Senior Counsel and Secretary;
Director
/s/ Craig M. Cogut
Craig M. Cogut Director
/s/ Ann Dibble Jordan
Ann Dibble Jordan Director
/s/ Harold Leppo
Harold Leppo Director
/s/ Bruce F. Roberts
Bruce F. Roberts Director
/s/ Marvin Schiller
Marvin Schiller Director
/s/ Edward M. Yorke
Edward M. Yorke Director
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
to
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
SALANT CORPORATION
EXHIBIT INDEX
Incorporation
Number Description By Reference To
2.1 Third Amended Disclosure Exhibit 1 to
Statement of Salant Form 8-A dated
Corporation, and Denton 7/28/93.
Mills, Inc., dated
5/12/93.
2.2 Third Amended Joint Included as
Chapter 11 Plan of Exhibit D-1
Reorganization of to Exhibit 1
Salant Corporation to Form 8-A
and Denton Mills, Inc. dated 7/28/93.
3.1 Form of Amended and Included as Exhibit
Restated Certificate of D-1 to Exhibit 2
Incorporation of Salant to Form 8-A dated
Corporation. 7/28/93.
3.2 Form of Bylaws, as amended, of
Salant Corporation, effective
9/21/94.
4.1 Rights Agreement dated as of Exhibit 1 to Current Report
12/8/87 between Salant Corporation on Form 8-K dated 12/8/87.
and The Chase Manhattan Bank, N.A.,
as Rights Agent. The Rights
Agreement includes as Exhibit B the
form of Right Certificate.
4.2 Form of First Amendment Exhibit 3 to
to the Rights Agreement Amendment No. 1 to
between Salant Corporation Form 8-A dated
and Mellon Securities. 7/29/93.
4.3 Revolving Credit, Exhibit 10.33 to
Factoring and Security Quarterly Report
Agreement dated 9/20/93, on Form 10-Q for
between Salant Corporation the quarter ended
and The CIT Group/Commercial 10/02/93.
Services, Inc.
4.5 Indenture, dated as of Exhibit 10.34 to
9/20/93, between Salant Quarterly Report
Corporation and Bankers on Form 10-Q for
Trust Company, as trustee, the quarter ended
for the 10-1/2% Senior 10/02/93.
Secured Notes due
December 31, 1998.
4.6 Warrant Agreement dated Exhibit 10.35 to
as of September 20, 1993, Quarterly Report on
between Salant Corporation Form 10-Q for the
and Bankers Trust Company, quarter ended 10/02/93.
as Warrant Agent.
10.1 Salant Corporation 1987 Stock Plan. Exhibit 19.2 to Annual Report on Form 10-K for
fiscal year 1987.
10.2 Salant Corporation 1987 Stock Plan Exhibit 10.12 to Form S-2
Agreement, dated as of 6/13/88, Registration Statement filed
between Salant Corporation and 6/17/88.
Nicholas P. DiPaolo.
10.3 Salant Corporation 1988 Stock Plan. Exhibit 19.3 to Annual Report on
Form 10-K for fiscal year 1988.
10.4 First Amendment, effective Exhibit 19.1 to Quarterly Report
as of 7/25/89, to the Salant on Form 10-Q for the
Corporation 1988 Stock Plan. quarter ended 9/30/89.
10.5 Form of Salant Corporation 1988 Exhibit 19.7 to Annual Report on
Stock Plan Employee Agreement. Form 10-K for fiscal year 1988.
10.6 Form of Salant Corporation Exhibit 19.8 to
1988 Stock Plan Director Annual Report on
Agreement. Form 10-K for fiscal
year 1988.
10.7 Employment Agreement, dated as of Exhibit 19.4 to
12/31/90, between Herbert R. Annual Report on
Aronson and Salant Corporation.* Form 10-K for fiscal
year 1990.
10.8 Letter Agreement, dated 6/30/92, Exhibit 19.1 to Quarterly
amending the Employment Agreement, Report on Form 10-Q for
dated as of 12/31/90, between the quarter ended 10/3/92.
Herbert R. Aronson and Salant
Corporation.*
10.9 License Agreement, dated Exhibit 19.1 to Annual Report
January 1, 1991, by and between on Form 10-K for fiscal year 1992.
Perry Ellis International Inc.
and Salant Corporation regarding
men's sportswear.
10.10 License Agreement, dated Exhibit 19.2 to Annual Report
January 1, 1991, by and between on Form 10-K for
Perry Ellis International Inc. fiscal year 1992.
and Salant Corporation regarding
men's dress shirts.
10.11 Employment Agreement Exhibit 10.32 to
dated as of 6/01/93, Quarterly Report on
between Salant Corporation Form 10-Q for the
and Todd Kahn.* quarter ended 7/8/93.
10.12 Form of Agreement between Included as Exhibit
Salant Corporation and P-11 to Exhibit 1
Apollo Apparel Partners, L.P. to Form 8-A dated
7/28/93.
10.13 Employment Agreement, dated Exhibit 10.36 to
as of 9/20/93, between Quarterly Report on
Salant Corporation and Form 10-Q for the
Nicholas P. DiPaolo.* quarter ended 10/2/93.
10.14 Employment Agreement, dated Exhibit 10.37 to
as of 7/30/93, between Quarterly Report on
Salant Corporation and Form 10-Q for the
John S. Rodgers.* quarter ended 10/2/93.
10.15 Employment Agreement, dated Exhibit 10.38 to
as of 7/30/93, between Quarterly Report on
Salant Corporation and Form 10-Q for the
Richard P. Randall.* quarter ended 10/2/93.
10.16 Employment Agreement dated Exhibit 10.32 to Annual Report on Form
as of 12/21/93, between 10-K for Fiscal Year 1993.
Elliot M. Lavigne and Salant
Corporation.*
10.17 Agreement, dated as of 9/22/93, Exhibit 10.33 to Annual Report on Form
between Nicholas P. DiPaolo and 10-K for Fiscal Year 1993.
Salant Corporation.*
10.18 Forms of Salant Corporation 1993 Exhibit 10.34 to Annual Report on Form
Stock Plan Directors' Option 10-K for Fiscal Year 1993.
Agreement.*
10.19 Letter Agreement, dated as of Exhibit 10.45 to
August 24, 1994, amending the Quarterly Report on
Revolving Credit, Factoring and Form 10-Q for the
Security Agreement, dated quarter ended 10/1/94.
September 20, 1993,
between The CIT Group/Commercial
Services, Inc. and Salant Corporation.
10.20 Letter Agreement, dated Exhibit 10.46 to
10/18/94, amending the Quarterly Report on
Employment Agreement, dated Form 10-Q for the
12/31/90, between Herbert R. quarter ended 10/1/94.
Aronson and Salant Corporation.*
10.21 Letter Agreement, dated Exhibit 10.47 to
10/25/94, amending the Quarterly Report on
Employment Agreement, dated Form 10-Q for the
7/30/93, between Richard quarter ended 10/1/94.
Randall and Salant Corporation.*
10.22 Third Amendment to Credit Agreement, Exhibit 10.48 to Current Report on
dated February 28, 1995, to the Form 8-K, dated March 2, 1995.
Revolving Credit, Factoring and
Security Agreement, dated
September 20, 1993, as amended,
between The CIT Group/Commercial
Services, Inc. and Salant Corporation.
10.23 Salant Corporation Retirement Plan,
as amended and restated. *
10.24 Salant Corporation Pension Plan,
as amended and restated. *
10.25 Salant Corporation Long Term Savings
and Investment Plan as amended
and restated. *
10.26 Letter Agreement, dated
2/15/95, amending the
Employment Agreement, dated
7/30/93, between Richard
Randall and Salant Corporation.*
21 List of Subsidiaries of the Company
27 Financial Data Schedule
* denotes management contract or compensatory plan or arrangement.
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Birdhill, Limited, a Hong Kong corporation
Carrizo Manufacturing Co., S.A. de C.V., a Mexican corporation
Clantexport, Inc., a New York corporation
Denton Mills, Inc., a Delaware corporation
JJ. Farmer Clothing, Inc., a Canadian Corporation
Frost Bros. Enterprises, Inc., a Texas corporation
Manhattan Industries, Inc., a Delaware corporation
Manhattan Industries, Inc., a New York corporation
Manhattan Industries (Far East) Limited, a Hong Kong corporation
Maquiladora Sur S.A. de C.V., a Mexican corporation
Salant Canada, Inc., a Canadian Corporation
SLT Sourcing, Inc., a New York Corporation
Vera Licensing, Inc., a Nevada corporation
Vera Linen Manufacturing, Inc., a Delaware corporation
EX-1
2
EXHIBIT 10.24
SALANT CORPORATION PENSION PLAN
AS RESTATED
DECEMBER 1, 1988
TABLE OF CONTENTS
ARTICLE PAGE
PREAMBLE.......................... 1
I DEFINITIONS ............. 2
II SERVICE .......................... 8
III MEMBERSHIP.... 11
IV ELIGIBILITY FOR PLAN BENEFITS 12
V BENEFIT ACCRUAL .. 13
VI AMOUNT OF BENEFIT ...... 14
VII MANNER AND FORM OF PAYMENT 17
VIII CONTRIBUTIONS AND FUNDING. 21
IX LIMITATIONS ON BENEFITS AND CONTIBUTIONS 22
X TOP-HEAVY PLAN YEARS............. 28
XI ADMINISTRATION; CLAIMS PROCEDURE 34
XII THE TRUST FUND . 37
XIII AMENDMENT AND TERMINATION OFTHE PLAN 38
XIV LIMITATION OF BENEFITS FOR HIGHLY PAID
EMPLOYEES 41
XV MISCELLANEOUS PROVISION .. 42
APPENDIX A 44
PREAMBLE
Salant Corporation hereby amends the Salant
Corporation Pension Plan (the "Plan") to comply with requirements
of the Tax Reform Act of 1986, the Revenue Act of 1987, the
Technical and Miscellaneous Revenue Act of 1989, the Omnibus
Reconciliation Act of 1989 and the Unemployment Compensation
Amendments of 1992 (the "Acts") effective as of the pertinent
effective dates contained in the provisions of the Acts, and restates
the Plan as follows:
ARTICLE I
DEFINITIONS
The following words and phrases when used with the initial capital
letter throughout this Plan and any subsequent amendment thereof
shall have the meanings set forth below unless a different meaning
is plainly required by the context.
1.1 "Accrued Benefit" means the monthly amount of
benefit to which a Member would be entitled,
determined in accordance with Article V, commencing
on the later of (a) his Normal Retirement Date and (b)
his Benefit Commencement Date with the manner of
payment being a Life Annuity as described in Section
7.3.
1.2 "Actuarial Equivalent" means
(a) in the case of a benefit
other than a lump sum, an amount
of equivalent value determined on
the basis of (1) the Member's (and
where applicable, the beneficiary's)
age as of his Benefit
Commencement Date, (2) the 1971
Group Annuity Mortality Table
weighted 60% female, 40% male
for Members and 60% male, 40%
female for beneficiaries, and (3) an
investment rate of 7% compounded
annually; and
(b) in the case of a lump sum
payable to a Member or former
Member, an amount equivalent to
the present value as of the
Member's Benefit Commencement
Date of the Member's Retirement
Benefit or Vested Deferred Benefit
payable as of his Normal
Retirement Date in the form of a
single life annuity, determined on
the basis of (1) the Member's age
as of his Benefit Commencement
Date, and (2) the mortality table
specified in (a) and (3) the interest
rates promulgated by the Pension
Benefit Guaranty Corporation for
single employer plan terminations
occurring on the first day of the
Plan Year of the date of payment.
(c) in the case of a lump sum
payable to the surviving Spouse or
beneficiary of a Member, an
amount equivalent to the present
value, as of the Benefit
Commencement Date, of the
survivor annuity payable under
Section 4.5 or 4.6 in the form of a
single life annuity commencing on
the date specified in Section 7.5 or
7.6 based on (1) the age of the
surviving Spouse or beneficiary as
of the Benefit Commencement
Date, (2) the Mortality Tables
described in Subsection (a) above,
and (3) the interest rates
promulgated by the Pension
Benefit Guaranty Corporation for
single employer terminations
occurring on the first day of the
Plan Year of the date of payment.
1.3 "Affiliate" means any corporation or unincorporated
business in control of, controlled by, or under
common control with, the Company within the
meaning of Sections 414(b) and (c) of the Code and
any organization which is a member of an affiliated
service group of which the Company is a member
within the meaning of Section 414(m) of the Code;
provided, however, that, for the purposes of the
limitations upon the benefits of a Member contained
in Article IX, "Affiliate" status shall be determined in
accordance with Section 415(h) of the Code. Except
to the extent approved by the Board of Directors, a
corporation or unincorporated business shall not be
deemed an Affiliate for any purpose under the Plan
with respect to any period before it becomes an
Affiliate.
1.4 "Benefit Commencement Date" means the date on
which a Member's benefit payments commence under
the Plan.
1.5 "Board of Directors" means the Board of Directors of
Salant Corporation.
1.6 "Code" means the Internal Revenue Code of 1986, as
amended.
1.7 "Committee" means the person or persons appointed
by the Board to administer the Plan.
1.8 "Company" means Salant Corporation and any other
Affiliate or other entity which, with the consent of the
Board of Directors, has adopted the Plan and any
successor to such Company. Each participating
Company delegates all such rights, powers, and
duties, including amendment or termination of the
Plan, to Salant Corporation. Appendix A to the Plan
lists the Companies that have adopted the Plan and
the effective date of such adoption.
1.9 "Deferred Retirement" means a Member's retirement
after his Normal Retirement Date.
1.10 "Deferred Retirement Date" means the first day of the
month coincident with or next following a Member's
Deferred Retirement.
1.11 "Early Retirement Age" means (a) the date a Member
has both (1) attained his 55th birthday and (2)
completed a 10-year period of Vesting Service, or (b)
with respect to Members whose Severance from
Service Date is prior to January 1, 1994, the date the
Member has both (1) attained his 60th birthday and (2)
completed a 10-year period of Vesting Service.
1.12 "Early Retirement Date" means (a) the first day of
any month before his Normal Retirement Age as of
which a Member elects to retire provided he has
attained his Early Retirement Age by such date.
1.13 "Effective Date" means January 1, 1979.
1.14 "Eligible Spouse" means the person to whom a
Member has been legally married during the 12-
month period immediately preceding the Member's
date of death, if such death is earlier than his Benefit
Commencement Date, or the person to whom a
Member is legally married as of such date, if
applicable.
1.15 "Employee" means any person, including officers,
employed by the Company who is classified by the
Committee under uniform rules as other than a regular
salaried, office, sales, security, supervisory or
technical employee, provided that no person shall be
an Employee if such person is included in a unit of
employees covered by a collective bargaining
agreement between employee representatives and the
Company or an Affiliate, unless such agreement
provides that such employees shall be eligible to
participate in the Plan.
1.16 "Employment Commencement Date" means the date
on which an Employee first performs an Hour of
Service for the Company.
1.17 "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
1.18 "Hour of Service" means -
(a) each hour for which an Employee is paid or
entitled to payment, by the
Company for the performance of
duties for the Company, credited
for the Plan Year or other
computation period in which such
duties were performed; or
(b) each hour of a period
during which no duties are
performed due to vacation, holiday,
illness, incapacity, layoff, jury
duty, military duty or leave of
absence; and
(c) each hour for which an
Employee has been awarded, or is
otherwise entitled to, back pay
from the Company, irrespective of
mitigation of damages, if he is not
entitled to credit for such hour
under any other Subsection of this
Section 1.18.
1.19 "Member" means an Employee who satisfies the
requirements for Membership pursuant to Article III,
and whose Membership shall not have terminated
pursuant to such Article and any former Employee
who is receiving or is entitled to receive a deferred
benefit under the Plan.
1.20 "Normal Retirement Age" means the later of (a) the
date a Member attains his 65th birthday and (b) the
fifth anniversary of the commencement of his
participation in the Plan.
1.21 "Normal Retirement Date" means the first day of the
month coinciding with or next following a Member's
Normal Retirement Age.
1.22 "Period of Service" means a period of Service
commencing on an Employee's Employment
Commencement Date or Reemployment
Commencement Date, whichever is applicable, and
ending on the earlier of the first anniversary of the
date on which an Employee began a period of
absence for any reason other than quit, retirement,
discharge or death, and his Severance from Service
Date, except as provided in Sections 2.1, 2.2, and 2.3
for purposes of, respectively, eligibility, benefit
accrual and vesting.
The length of each Period
of Service shall be equal to the
number of complete years in such
Period of Service, counting from
the Employment Commencement
Date on which it began, and
including each month as 1/12 of a
year and each partial month as a
full month.
1.23 "Period of Severance" means the period of time
commencing on an Employee's Severance from
Service Date and ending on the date on which the
Employee again performs an Hour of Service for the
Company.
1.24 "Plan" means the provisions of the Salant Corporation
Pension Plan as restated effective December 1, 1988
and set forth herein.
1.25 "Plan Administrator" means Salant Corporation.
1.26 "Plan Year" means the eleven-month period beginning
on January 1, 1979 and ending on November 30,
1979; each twelve month period beginning on
December 1 and ending on November 30 from
December 1, 1979 through November 30, 1991; the
month of December 1991; and each calendar year
thereafter.
1.27 "Reemployment Commencement Date" means the first
day following a Period of Severance on which an
Employee performs an Hour of Service for the
Company.
1.28 "Retirement Date" means the Member's Early
Retirement Date, Normal Retirement Date or Deferred
Retirement Date, as the case may be.
1.29 "Service" means an Employee's period of employment
with the Company credited in accordance with Article
II.
Service shall include periods
during which an Employee is
absent for military service provided
employment is resumed within the
period prescribed by the statutes of
the United States, as from time to
time in effect, for the exercise of
veteran's reemployment rights and
periods during which an employee
is absent pursuant to an authorized
leave of absence approved by the
Committee under uniform rules.
Service with an Affiliate shall be
taken into account as provided
under Section 2.1 and 2.3 for
purposes of, respectively, eligibility
and vesting. For this purpose,
(a) the word "Company" shall be replaced by
the term "Company or Affiliate" whenever it
appears in Sections 1.16, 1.18, 1.23, 1.27 and
1.30; and
(b) the word "Employee" when used in those
Sections enumerated in Subsection (a) shall
include a person employed by an Affiliate.
To the extent that such periods
would have counted as Service had
the employer then been the
Company, Service shall also
include periods of employment by
any employer acting as a field
warehouseman if such employment
is determined by the Committee to
be solely in connection with a field
warehousing arrangement with the
Company.
1.30 "Severance from Service
Date" means the earlier of (a) the
date on which an Employee quits,
retires, is discharged or dies, and
(b) the later of (1) the first
anniversary of the first day of a
period in which an Employee
remains absent from Service (with
or without pay) with the Company
for any reason other than quit,
retirement, discharge or death, such
as vacation, holiday, sickness,
disability, leave of absence or
layoff, and (2) the second
anniversary of the date on which
an Employee began a period of
absence for any reason other than
quit, retirement, discharge or death,
if his absence beyond the first
anniversary of the date on which
he began such absence is by reason
of the pregnancy of such
Employee, the birth of a child of
such Employee, the placement of a
child in connection with the
adoption of such child by the
Employee, or the caring for such
child for a period beginning
immediately following such birth
or placement.
1.31 "Social Security Retirement Age" means, in the case
of a Member born before January l, l938, age 65; in
the case of a Member born after December 3l, l937
and before January l, l955, age 66; and in the case of
a Member born after December 3l, l954, age 67.
1.32 "Spousal Consent" means, with respect to the election
by a Member to waive the Qualified Joint and
Survivor Annuity form pursuant to Section 7.2, that
(a) the Member's Eligible
Spouse consents in writing to such
election, and the Spouse's consent
acknowledges the effect of such
election and is witnessed by a
Member of the Committee or by a
notary public; or
(b) it is established to the
Committee's satisfaction that the
consent required under Subsection
(a) hereof is unobtainable because
the Member is unmarried, because
the Member's Eligible Spouse
cannot be located, or because of
such other circumstances as the
Secretary of the Treasury may by
regulation prescribe.
Any such consent and any such
determination as to the
impossibility of obtaining such
consent shall be effective only with
respect to the individual who signs
such consent or with respect to
whom such determination is made
and not with respect to any
individual who may subsequently
become the Eligible Spouse of
such Member.
1.33 "Trust" or "Trust Fund" means the trust established
pursuant to the Trust Agreement to hold the assets of
the Plan. The assets of the Plan may be held in one
or more Trust Funds.
1.34 "Trust Agreement" means the agreement entered into
between the Company and the Trustee pursuant to
which the Trustee holds the Trust Fund.
1.35 "Trustee" means anyone serving as trustee under the
Trust Agreement.
The masculine pronoun
whenever used shall include the
feminine and the singular shall
include the plural.
ARTICLE II
SERVICE
2.1 Eligibility Service
Eligibility Service means the
aggregate Period of Service
credited to an Employee and not
forfeited due to a Period of
Severance in accordance with
Section 2.4(a)(1). For purposes of
this Section 2.1, the aggregate
Period of Service credited to an
Employee shall include each Period
of Service as an employee of the
Company not included in the
definition of Employee under
Section 1.15, each Period of
Service with an Affiliated
Company, each Period of
Severance taken into account under
Section 2.4(b) and in the case of
an individual who was an
employee of Denton Mills, Inc. on
the date on which it became an
Affiliate, the period of his
continuous employment by Denton
Mills, Inc. prior to such date.
2.2 Benefit Accrual Service
Benefit Accrual Service means the
aggregate Period of Service
credited to an Employee with the
exception of:
(a) any Period of Service forfeited due to a
Period of Severance in accordance with
Section 2.4(a)(1), and
(b) in the case of a Member who is not
credited with an Hour or Service on or after
December 1, 1988, any Period of Service
credited after his Normal Retirement Age,
(c) any Period of Service credited to a
Member at a location listed below prior to the
corresponding "benefit accrual start date"
Location
Benefit Accrual Start Date
Shultz Manufacturing August 1, 1967
Eagle Pass December 1,
1976
El Paso December 1,
1976
Del Rio December 1,
1976
Gibson June 12,
1978
West Dallas January 1, 1992
Denton Mills January 1, 1992
(d) any Period of Service by an individual
while he is not classified as an Employee.
Notwithstanding the above, to
determine a Member's period of
Benefit Accrual Service prior to
January 1, 1982, he shall be
considered to have completed a
one-year Period of Benefit Accrual
Service for each year of credited
service earned in accordance with
the provisions of the Plan as then
in effect and shall receive credit
for a one-year Period of Benefit
Accrual Service for each year of
such credited service.
2.3 Vesting Service
Vesting Service means whole years
of the aggregate Period of Service
credited to an Employee, whether
or not such Periods of Service
were rendered consecutively.
For purposes of this Section 2.3, the aggregate
Periods of Service credited to an Employee shall
include each Period of Service while an employee not
included in the definition of Employee under Section
1.15, each Period of Service with an Affiliated
Company, each Period of Severance taken into
account under Section 2.4(b) and, in the case of an
individual who was an employee of Denton Mills,
Inc. on the date, on which it became an Affiliate,
the
period of his continuous employment by Denton
Mills, Inc. prior to such date.
Notwithstanding the foregoing,
however, such aggregate Period of
Service shall not include any
Period of Service forfeited due to a
Period of Severance in accordance
with Section 2.4(a)(2).
Notwithstanding the above, to
determine a Member's period of
Vesting Service prior to January 1,
1982, he shall be considered to
have completed a one-year Period
of Vesting Service for each year of
credited service earned in
accordance with the provisions of
the Plan as then in effect and shall
receive credit for a one-year Period
of Vesting Service for each year of
such credited service.
2.4 Period of Severance:
(a) Effect of a Period of Severance
(1) an Employee
who incurs a Period of
Severance before he has a
vested interest under the
Plan that equals or exceeds
the greater of (A) his Period
of Eligibility Service
credited prior to such
Period of Severance and (B)
five years, shall forfeit the
Period of Eligibility Service
and Period of Benefit
Accrual Service previously
credited to him.
(2) an Employee who incurs a Period of
Severance before he has a vested interest
under the Plan that equals or exceeds the
greater of (A) his Period of Vesting Service
credited prior to the Period of Severance and
(B) five years, shall forfeit the Period of
Vesting Service previously credited to him.
(3) the Period of Service of a person who
incurs a Period of Severance shall include
Service following such Period of Severance
but
shall not include Service prior to such
Period of Severance until such person
completes a 12 consecutive month Period of
Service following such Period of Severance.
(b) Crediting of Period of Severance
(1) if an Employee has a Severance from
Service Date by reason of a quit, discharge or
retirement and then performs an Hour of
Service within 12 months of his Severance
from Service Date, the Period of Severance
shall be taken into account for purposes of
determining his aggregate Periods of Service
under Sections 2.1 and 2.3.
(2) if an Employee has a Severance from
Service Date by reason of a quit, discharge or
retirement during a period of 12 months or
less in which the Employee remains absent
from Service for any reason other than a quit,
discharge, retirement or death and then
performs an Hour of Service within 12 months
of the date on which he was first absent from
service, the Period of Severance shall be taken
into account for purposes of determining his
aggregate Periods of Service under Sections
2.1 and 2.3.
ARTICLE III
MEMBERSHIP
3.1 Each Employee who was a Member of the Plan
immediately preceding the effective date of this
amendment and restatement shall participate in this
Plan in accordance with the provisions of the Plan in
effect on and after such effective date.
3.2 Each other Employee shall become a Member of the
Plan on the January 1, April 1, July 1 or October 1
coinciding with or next following the later of (a) the
date on which he becomes an Employee as defined in
section 1.15 and (b) the date on which he attains his
21st birthday, and is credited with a one-year Period of
Eligibility Service, provided, however, that (i) an
Employee hired before July 1, 1993 shall become a
Member of the Plan on the January 1 or July 1
coinciding with or next following the later of (a) the
date on which he becomes an Employee as defined in
section 1.18 and (b) the earlier of the date on which he
attains his 21st birthday, or is credited with a two-year
Period of Eligibility Service, and (ii) an Employee
hired before December 1, 1988 who had attained age
60 prior to his Employment Commencement Date shall
become a Member of the Plan on the later of December
1, 1988 and the January 1 or July 1 coinciding with or
next following the date on which he is credited with a
one-year period of Eligibility Service.
3.3 A Member of the Plan who forfeits his Period of
Eligibility Service due to a Period of Severance in
accordance with Section 2.4(a)(1) will cease to be a
Member of the Plan. He may re-enter the Plan as a
new Member by again satisfying the Membership
requirements in accordance with Section 3.2. If a
Member has a Period of Severance of at least one
year but does not forfeit his Period of Eligibility
Service in accordance with Section 2.4(a)(1), he is
eligible to participate immediately upon his
Reemployment Commencement Date.
ART ICLE IV
ELI GIBILITY FOR PLAN BENEFITS
4.1 Normal Retirement Benefit
A Member shall be eligible for a
Normal Retirement Benefit if his
employment is terminated on or
after his attainment of his Normal
Retirement Age but on or
immediately before his attainment
of his Normal Retirement Date.
4.2 Early Retirement Benefit
A Member shall be eligible for an
Early Retirement Benefit if his
employment is terminated before
he attains his Normal Retirement
Age but on or after his attainment
of his Early Retirement Age.
4.3 Vested Deferred Benefit
A Member shall be eligible for a
Vested Deferred Benefit if his
employment is terminated for any
reason other than death or
retirement and after he has a vested
interest under the Plan.
4.4 Deferred Retirement Benefit
A Member shall be eligible for a
Deferred Retirement Benefit if his
employment is terminated after his
Normal Retirement Date.
4.5 Spouse's Benefit
A Member shall be eligible to have
a Spouse's Benefit provided for his
Eligible Spouse if he dies prior to
his Benefit Commencement Date
survived by an Eligible Spouse and
is vested in any portion of his
Accrued Benefit.
4.6 Death Benefit
A Member who is not survived by an Eligible Spouse shall be
eligible to have a Death Benefit provided for his surviving children
who have not attained age 23 if he dies while an active Employee
and prior to his Benefit Commencement Date, if he has been
credited with a Period of Vesting Service of at least 10 years and
has attained age 60.
ART ICLE V
BEN EFIT ACCRUAL
5.1 Accrued Benefit
Subject to Subsection 7.10(g), each
Member shall accrue a monthly
benefit equal to $3.00 multiplied
by his Period of Benefit Accrual
Service through November 30,
1988 and $8.00 multiplied by his
Period of Benefit Accrual Service
after November 30, 1988. For this
purpose, if the Member's Period of
Benefit Accrual Service exceeds 30
years, those years of a Member's
Benefit Accrual Service shall be
applied which produce the greatest
Accrued Benefit.
ART ICLE VI
AMO UNT OF BENEFIT
6.1 Amount of Normal Retirement Benefit
A Member's Normal Retirement
Benefit shall be the amount
determined in either (a) or (b),
whichever is applicable.
(a) A Member who
retires on the Life Annuity form
described in Section 7.3 shall
receive a monthly benefit equal to
the Accrued Benefit determined in
Section 5.1.
(b) A Member who
retires on a form of annuity other
than the Life Annuity form shall
receive a monthly benefit equal to
the Actuarial Equivalent of the
Accrued Benefit determined in
Section 5.1.
In no event, however, shall a
Member's Normal Retirement
Benefit be less than the greatest
Early Retirement Benefit he would
have been entitled to receive if he
had retired early under the
provisions of Section 4.2.
6.2 Amount of Early Retirement Benefit
A Member who elects to retire at
an Early Retirement Date shall
receive a monthly benefit equal to
the Actuarial Equivalent of his
Normal Retirement Benefit.
6.3 Amount of Vested Deferred Benefit
(a) For a Member
whose Severance from Service
Date is on or after December 1,
1989, the monthly amount of his
Vested Deferred Benefit
commencing at his Normal
Retirement Date on the Life
Annuity form, as described in
Section 7.3, shall be equal to a
percentage, in accordance with the
following schedule, of the Accrued
Benefit, as determined in Section
5.1:
Period of Vesting Service
Percentage Vested
less than 5 years 0
5 or more years 100
(b) The monthly amount of a Member's
Vested Deferred Benefit commencing at his Normal
Retirement Date on a form other than the Life
Annuity form, as described in Section 7.3, shall be
equal to the Actuarial Equivalent of the amount
otherwise determined under subsection (a), above.
Subject to Section 7.10, a Member may elect to
receive his Vested Deferred Benefit at an Early
Retirement Date, in which case such benefit shall be
equal to the Actuarial Equivalent of the amount
otherwise determined under this Section 6.3.
6.4 Amount of Deferred Retirement Benefit
Subject to Section 7.10 and 7.11, a Member's
Deferred Retirement Benefit shall commence on his
Deferred Retirement Date and shall be a monthly
benefit equal to the greater of (a) his Accrued
Benefit
as of his Benefit Commencement Date and (b) the
Actuarial Equivalent of his Normal Retirement
Benefit determined as of his Benefit Commencement
Date.
6.5 Amount of Disability Benefit
(a) If a Member with at least 15 years of
Service becomes totally and permanently disabled
while in the service of the Company so that he is
eligible for, and receiving, Social Security
disability
benefits, he may be retired and receive during the
period of disability, as determined from time to time
by evidence of such disability satisfactory to the
Committee, commencing on the first day of the sixth
month following such disability an annual disability
retirement benefit on the Life Annuity form, as
described in Section 7.3, equal to his Accrued
Benefit.
(b) The monthly amount of a Member's
Disability Benefit on a form other than the Life
Annuity form, as described in Section 7.3, shall be
equal to the Actuarial Equivalent of the amount
otherwise determined under subsection (a) above.
6.6 Amount of Spouse's Benefit
The Spouse's Benefit payable for life to a Member's
Eligible Spouse shall be:
(a) in the case of a Member who dies on or
after his Early Retirement Date, the annuity to which
such Member's Eligible Spouse would have been
entitled if the Member had retired on the day before
his death and his retirement benefit had been payable
in the Qualified Joint and Survivor Annuity form,
reduced in accordance with Section 6.2; and
(b) in the case of a Member who dies prior to
his Early Retirement Date, the annuity to which his
Eligible Spouse would have been entitled if the
Member's Severance from Service Date had occurred
on the date of his death (if the Member had not
already had a Severance from Service prior to the
date of his death), and such Member had survived to
his Early Retirement Date, had retired immediately
upon attainment of his Early Retirement Date with an
immediate Qualified Joint and Survivor Annuity form,
reduced as provided in Section 6.2, and had died on
the day next succeeding such retirement. The annuity
described in this Subsection (b) shall commence to be
payable, at the election of such Spouse, as of the
first
day of any month coincident with or next following
the date on which the Member would have attained
his Early Retirement Date.
6.7 Amount of Death Benefit
Any Member who is not eligible
for a Spouse's Benefit under
Section 6.6 is eligible for a death
benefit if he has at least 10 years
of Service and has attained age 60.
If after becoming eligible for the
death benefit provided by this
Section, a Member dies prior to the
commencement date of his
retirement benefits, a death benefit
shall be paid to his surviving
children who have not attained age
23.
The death benefit shall be paid
monthly in equal shares to each of
the Member's surviving children
who shall not have attained age 23
at the time of the Member's death.
The aggregate amount of the death
benefit payable to such children
upon the Member's death shall be
equal to the value of the amount of
a Spouse's Benefit that would have
been payable to a hypothetical
surviving spouse of the Member
born on the third anniversary of the
Member's birth. The death benefit
payable to each such child shall be
continued until such child attains
age 23 or dies, whichever occurs
first. The amount payable to any
such child shall not be increased
by reason of the termination of the
payment of benefits to any other
child.
ART ICLE VII
MAN NER AND FORM OF PAYMENT
7.1 A Member's Retirement Benefit or Vested Deferred
Benefit shall, except as provided under Section 7.6,
7.7 or 7.8, be payable as an annuity commencing on
the Member's Retirement Date, or as of the first day
of the month coinciding with or next following his
termination of employment, if later. The annuity shall
be paid on one of the forms described in the
following paragraphs of this Article.
7.2 A Member who has an Eligible Spouse at his Benefit
Commencement Date shall have his benefit paid on
the Qualified Joint and Survivor Annuity form under
Section 7.4. However, such Member may, prior to
his Benefit Commencement Date and subject to
Spousal Consent, elect in writing and on a form
provided by the Plan Administrator, not to have his
benefit paid in this manner and may, prior to such
Benefit Commencement Date, instead elect, in writing
and on a form provided by the Plan Administrator, to
have his benefit paid on the Life Annuity form under
Section 7.3.
No less than 90 days before the
Member's Benefit Commencement
Date, the Plan Administrator shall
furnish the Member with written
notification of the availability of
making an election not to have his
benefit paid on the Qualified Joint
and Survivor Annuity form. This
notification shall also inform the
Member that he may request an
explanation of the terms,
conditions and financial effect of
making such elections. Any
explanation shall be furnished to
the Member within 30 days of his
request provided the Member
furnishes the Plan Administrator
with proof of the date of birth of
his Eligible Spouse and such other
information as the Plan
Administrator may require the
Member to provide in order to give
such explanation.
A Member who elects not to have
his benefit paid on the Qualified
Joint and Survivor Annuity form
may revoke such election at any
time prior to his Benefit
Commencement Date.
A Member who does not have an
Eligible Spouse at his Benefit
Commencement Date shall have
his benefit paid on the Life
Annuity form under Section 7.3.
7.3 Life Annuity form provides for monthly payments to
the Member continuing to the first day of the month
in which his death occurs.
7.4 Qualified Joint and Survivor Annuity form provides
for a monthly benefit payable during the lifetime of
the Member and upon his death 50% of such monthly
benefit payable to his Eligible Spouse for the Eligible
Spouse's lifetime. No benefit shall be payable after
the death of the Member and his Eligible Spouse.
7.5 Payment of Spouse's Benefit
(a) The Spouse's Benefit shall commence
to be paid on the first day of the month next
following the later of the Member's death or the date
on which the Member would have attained Early
Retirement Age.
(b) A surviving Spouse may elect that the
Spouse's Benefit commence on the first day of any
month following the date specified in Subsection(a)
subject to the limitations of Section 7.11.
(c) If a surviving Spouse elects to defer
payment pursuant to Subsection (b), the annuity
payable to such Spouse shall be the Actuarial
Equivalent of the annuity payable as of the date
specified in Subsection (a).
7.6 Payment of Death Benefit
The Death Benefit payable under Section 6.7 shall
commence to be paid on the first day of the month
next following the date of the member's death.
7.7 Small Benefit Payments
In the case of a Member whose Severance from Service
is after December 31, 1991, the Trustee shall distribute
to the Member or his Spouse, as the case may be, as
soon as practicable after the Member's Severance from
Service, in a single lump sum payment the Actuarial
Equivalent of the Member's vested Accrued Benefit, if
the amount of such distribution does not exceed
$3,500. In the case of a Member whose Severance from
Service is before January 1, 1992, the Trustee shall
distribute to the Member or his Spouse, as the case
may be, as soon as practicable after the Member's
Retirement Date, in a single lump sum payment the
Actuarial Equivalent of the Member's vested Accrued
Benefit, if the amount of such distribution does not
exceed $3,500. A Member with no vested interest in his
Accrued Benefit as of his Severance from Service shall
be deemed to have received a distribution of his entire
vested Accrued Benefit of zero dollars as of his
Severance from Service.
7.8 Qualified Domestic Relations Order - If required to do
so by a qualified domestic relations order, as defined in
Section 414(p) of the Code, the Trustee may commence
distribution of all or a portion of a Member's Accrued
Benefit to an alternate payee, as defined in Section
414(p) of the Code, at a time after the Member attains
age 50, but prior to the Member's Retirement Date or
termination of employment.
7.9 Retirement Benefit Payments - The annual retirement
benefits for life shall be payable in monthly
installments and shall end with the last monthly
payment prior to the death of the Member, or his
beneficiary if receiving benefits.
7.10 Reemployment after Retirement - If any retired
Member is reemployed by the Company, his
retirement benefit payments, if any, shall cease until
his subsequent retirement and his Service and
Credited Service shall be restored to him but the
benefit payable upon the Member's subsequent
retirement or death shall be reduced (but not to less
than zero) by the Actuarial Equivalent of any
payments under the Plan previously received by the
Member and by the cost of any retirement benefit
coverage of the Member's beneficiary under the Plan
during such reemployment provided that no reduction
shall be made for Disability Benefits received under
Section 6.5.
7.11 Required Distributions
Notwithstanding anything to the contrary contained in
this Plan --
(a) The entire interest of each Member
must either:
(1) be paid to him not later than the April
1st next following the close of his taxable year
in which he attains age seventy and one-half
(70-1/2); or
(2) commence to be paid to him not
later than the date specified in Paragraph (1)
and payable, in accordance with regulations
prescribed by the Secretary of the Treasury,
over a period not extending beyond the life of
such Member or the joint lives of such
Member and his designated beneficiary, or the
life expectancy of such Member or the joint
and last survivor life expectancy of such
Member and his designated beneficiary;
provided, however, that if the distribution of a
Member's Retirement Benefit has
commenced in accordance with this Paragraph
(2), any portion remaining to be distributed at
such Member's death shall continue to be
distributed at least as rapidly as under the
method of distribution in effect as of such
Member's death.
(b) If a Member has died prior to the
commencement of distributions to him in accordance
with Paragaraph (a)(2), the entire interest of such
Member shall be distributed:
(1) within five (5) years after the death of
such Member, or
(2) where distribution is to be made to the
Member's designated beneficiary, commencing
(A) within one (1) year (or such
longer time as the Secretary of the
Treasury may be regulations prescribe)
after the Member's death, or
(B) if the designated beneficiary is
such Member's surviving Spouse, no
later than the date on which such
Member would have attained age
seventy and one-half (70-1/2), and
payable, in accordance with regulations
prescribed by the Secretary of Treasury,
over a period not extending beyond the
life expectancy of such designated
beneficiary.
(c) For purposes of Paragraphs (a)(2) and (b)(2),
at the election of the Member or a surviving
Spouse the life expectancy of a Member
and/or his Spouse may be redetermined, but
not more often than annually. In the absence
of such an election, life expectancies shall not
be redetermined once benefit distribution has
commenced.
(d) Under regulations prescribed by the Secretary
of the Treasury, any amount paid to a
Member's child shall be treated as if it had
been paid to such Member's surviving Spouse
if such amount will become payable to such
spouse upon the child reaching maturity or
such other designated event which may be
permitted under such regulations.
(e) For purposes of this Section 7.11, the term
"designated beneficiary" shall mean a
Member's surviving Spouse or an individual
designated by the Member pursuant to Section
15.5.
(f) Notwithstanding anything in the Plan to the
contrary, the form and timing of all
distributions under the Plan shall be in
accordance with regulations issued by the
Department of the Treasury under section
401(a)(9) of the Code, including the incidental
death benefit requirements of section
401(a)(9)(g) of the Code.
7.12 Direct Transfers - If a Member who is entitled to a
distribution of at least $200 which is an "eligible
rollover distribution," as defined in Code Section
402(f)(2)(A), elects in writing on a form provided by
the Plan Administrator to have such distribution, or a
portion of such distribution equal to at least $500 (or
the entire distribution if less than $500) paid directly
to a specified "eligible retirement plan," as defined in
Code Section 402(c)(8)(B), which is a defined
contribution plan the terms of which permit the
acceptance of rollover distributions, the portion of
such distribution which would otherwise be includible
in the Mermber's gross income shall be distributed in
the form of a direct trustee-to-trustee transfer to the
eligible retirement plan so specified.
ARTI CLE VIII
CONT RIBUTIONS AND FUNDING
8.1 The Plan shall be funded for the exclusive purposes
of providing benefits to Members and their
beneficiaries and for defraying reasonable expenses in
administering the Plan.
8.2 All contributions to the Plan shall be made to the
Trust and all benefit payments shall be held in the
Trust.
8.3 Contributions to the Plan shall not be returned to the
Company, except in the following instances:
(a) In the case of a contribution made by
the Company pursuant to a mistake in fact, such
contribution shall be returned to the Company within
one year after the payment of the contribution.
(b) Each contribution to the Plan is hereby
conditioned on its deductibility under Section 404 of
the Code, and if any part or all of a contribution is
disallowed, then to the extent of such disallowance
the contribution shall be returned to the Company.
8.4 Forfeitures resulting from a Member's early
retirement, termination of employment or death shall
not be applied to increase the benefit that any
Member would otherwise receive under the Plan and
shall be applied as soon as possible to reduce
Company contributions.
ART ICLE IX
LIM ITATIONS ON BENEFITS AND CONTRIBUTIONS
9.1 As used in this Article IX -
(a) "Annual Addition," for a
Limitation Year, means, in the case of any Defined
Contribution Plan, the aggregate of -
(1) the amount of a
Member's voluntary contributions for the Limitation
Year; and
(2) Employer contributions
and forfeitures allocated to the Member's accounts
for
the Limitation Year.
(b) "Annual Benefit" under a
Defined Benefit Plan means a retirement benefit
payable annually in the form of a straight life
annuity
under such plan.
For purposes of this Subsection
(b) -
(1) if a retirement benefit is
provided in a form other than a straight life annuity
or
a qualified joint and survivor annuity (within the
meaning of Section 417(b)(1) of the Code), such
benefit shall be adjusted (in accordance with
regulations prescribed by the Secretary) to an
equivalent benefit in the form of a straight life
annuity on the basis of the actuarial assumptions
specified in Section 1.2 for optional forms of
payment
other than the lump sum option (except that the
interest rate assumption shall be 5% if the rate
specified is less than 5%);
(2) if a retirement benefit is
provided in the form of a qualified joint and
survivor
annuity (within the meaning of Section 417(b)(1) of
the Code) which includes additional post-retirement
death benefits, such benefit need not be adjusted to
the extent the value of the benefit in such form
exceeds the sum of (A) the value of a straight life
annuity and (B) the value of any post retirement
death
benefits that would be payable even if the annuity
was not in the form of a joint and survivor annuity;
(3) if such annual retirement
benefit is attributable in part to employee
contributions or to roll-over contributions (as
defined
in Section 402(a)(5), 403(a)(4) or 408(d)(3) of the
Code or Section 409(b)(3)(C) of the Code as in effect
prior to 1984), the annual retirement benefit shall
be
reduced on the basis of the actuarial assumptions
specified in Section 1.2 for optional forms of
payment
other than the lump sum option (except that the
interest rate assumption shall be 5% if the rate
specified is less than 5%) so that it will be the
equivalent of an annual retirement benefit derived
solely from employer contributions.
(c) "Defined Benefit Plan" means
any Retirement Plan that is not a Defined
Contribution Plan.
(d) "Defined Benefit Plan Fraction,"
for a Limitation Year, means a fraction,
(1) the numerator of which
is the aggregate Projected Annual Benefit (determined
as of the last day of the Limitation Year) of the
Member under all Defined Benefit Plans, and
(2) the denominator of
which is the greater of -
(A) an amount equal
to the lesser of -
(i) the product of
1.25 and the dollar limitation in effect under
Section
415(b)(1)(A) of the Code for such Limitation Year
(adjusted as described in Subsections 9.2(d) and
(e)),
or
(ii) the product
of 1.4 and the aggregate Projected Annual Benefit
(determined as of the last day of the Limitation
Year)
that the Member would receive under all such plans if
the plans, in the aggregate, provided the benefit
described in Section 415(b)(1)(B) of the Code; or
(B) in the case of an
individual who participated in a Defined Benefit Plan
that was in existence on July 1, 1982, the product of
1.25 and his Accrued Benefit under the Plan. For
purposes of this Subparagraph (B) and Paragraph
9.2(a)(2), an individual's "Accrued Benefit" under a
Defined Benefit Plan means the individual's accrued
benefit under the Plan (determined as of the end of
the last Plan Year beginning before January 1, 1983),
expressed as an annual benefit (within the meaning of
Section 415(b)(2) of the Code as in effect before the
amendments made by the Tax Equity and Fiscal
Responsibility Act of 1982).
(C) in the case of an
individual who participated in a Defined Benefit Plan
that was in existence on May 6, l986, the product of
l.25 and his Accrued Benefit under the Plan. For
purposes of this Subparagraph (C) and Paragraph
9.2(a)(2), an individual's "Accrued Benefit" under a
Defined Benefit Plan means the individual's accrued
benefit under the plan (determined as of the end of
the last plan year beginning before January l, l987),
expressed as an annual benefit (within the meaning of
Section 4l5(b)(2) of the Code as in effect before the
amendments made by the Tax Reform Act of l986).
(e) "Defined Contribution Plan" means a
Retirement Plan that provides for an individual
account for each Member and for benefits based
solely on the amount contributed to such account and
any income, expense, gains, losses, and forfeitures
of
accounts of other Members in respect of such account.
(f) "Defined Contribution Plan Fraction,"
for a Limitation Year, means a fraction,
(1) the numerator of which is the
sum of the Annual Additions to a Member's accounts
under all Defined Contribution Plans, as of the close
of the Limitation Year and for all prior Limitation
Years, and
(2) the denominator of which is the
sum of the lesser of the following amounts,
determined for such Limitation Year and for each
prior year of the Member's service with the Company
or an Affiliate:
(A) the product of 1.25 and
the dollar limitation in effect under Section
415(c)(1)(A) of the Code, or
(B) the product of 1.4 and
the amount that may be taken into account under
Section 415(c)(1)(B) of the Code; provided, however,
(3) the Company may elect, on a
uniform and nondiscriminatory basis, to make use of
the special transition rule of Section 415(e)(6) of
the
Code applicable to plan years ending before January
1, 1983, and Section 1106(i)(4) of the Tax Reform
Act of 1986 applicable to years ending before January
1, 1987, to determine the denominator of the Defined
Contribution Plan Fraction, and
(4) in accordance with regulations
promulgated under Section 415 of the Code, the
portion of the numerator of the Defined Contribution
Plan Fraction attributable to Limitation Years
beginning before January 1, 1983, or January 1, 1987,
as the case may be, shall be reduced, to the extent
necessary, so that the sum of the Defined Benefit
Plan
Fraction and Defined Contribution Plan Fraction for
the last Limitation Year beginning before January 1,
1983, or January 1, 1987, as the case may be, does
not exceed one (1.0).
(g) "Limitation Year" means the Plan Year.
(h) A Member's "Projected Annual
Benefit" under a Defined Benefit Plan shall be equal
to the Annual Benefit to which he would be entitled
under such plan if he were to continue employment
until his normal retirement age under such plan (or
until his current age, if later), his Section 415
Compensation for the Limitation Year under
consideration remains the same until the date he
attains such age, and all other relevant factors used
to
determine benefits under the plan were to remain the
same as in the current Limitation Year for all future
Limitation Years.
(i) "Retirement Plan" means any plan
maintained by the Company or an Affiliate that is (A)
a pension, profit sharing or stock bonus plan,
described in Section 401 (a) and 501(a) of the Code,
(B) an annuity plan or annuity contract described in
Section 403(a) of the Code, (C) a simplified employee
pension plan described in Section 408(k) of the Code,
or (D) a qualified bond purchase plan described in
Section 405(a) of the Code. In addition, Retirement
Plan shall include (A) an individual retirement
account or an individual retirement annuity described
in Section 408(a) or 408(b) of the Code (or an
individual retirement bond described in 409 of the
Code as in effect prior to 1984), or an annuity
contract described in Section 403(b) of the Code, if
such account or annuity (or bond) is considered to be
maintained by the Company or an Affiliate under
Section 1.415-7(h) or (i) of the Federal Income Tax
Regulations and (B) a program of voluntary
contributions contained in a defined benefit pension
plan.
(j) "Section 415 Compensation," for any
period, means an individual's current compensation
from the Company or an Affiliate required to be
reported on Form W-2 for such period, including
those items listed in Paragraph (1) of Section 1.415-
2(d) of the Federal Income Tax Regulations but
excluding those items listed in Paragraph (2)
thereof.
9.2 (a) Notwithstanding anything in this Plan
to the contrary, the Annual Benefit to which a
Member is entitled at any time under this Plan, when
added to his aggregate Annual Benefit under all other
Defined Benefit Plans, shall not, during a Limitation
Year exceed the greater of -
(1) the lesser of -
(A)$90,000, or
(B) 100 percent
(100%) of the average of his Section 415
Compensation for his high three (3) consecutive
calendar years during which he was a Member of the
Plan, or
(2) in the case of an
individual who was a Member prior to January 1,
1983, his Accrued Benefit as defined in Subparagraph
9.1(d)(2)(B).
(3) in the case of an
individual who was a Member prior to January 1,
1987, his Accrued Benefit as defined in Subparagraph
9.1(d)(2)(C)
(b) The Annual Benefit payable under this
Plan with respect to which a Member shall be deemed
to meet the requirements of Paragraph (a)(1) if -
(1) such Member's Annual
Benefit, when added to his aggregate Annual Benefit
under all other Defined Benefit Plans, does not
exceed
$10,000 for the current Limitation Year and for any
prior Limitation Year, and
(2) such Member has not at
any time participated in a Defined Contribution Plan.
(c) In the case of a Member who has
completed fewer than ten (10) years of participation
in the Plan, the maximum Annual Benefit allowable
under this Plan shall be computed by multiplying the
amount determined under Subsection (a) or (b),
whichever is applicable, by a fraction, the numerator
of which shall be the aggregate of his years of
participation and the denominator of which shall be
ten (10). The provisions of the previous sentence
shall apply to the limitations under Subparagraph
(a)(l)(B) and Subsection (b) of this Section 9.2,
except
that such Subparagraph and Subsection shall be
applied with respect to years of the Member's Period
of Service rather than years of participation in the
Plan. In no event shall the reductions set forth in
this
Subsection (c) reduce the limitations referred to in
Subsections (a) or (b) to an amount less than l/l0 of
such limitation (determined without regard to the
reductions in this Subsection (c)).
(d) If the Member's Annual Benefit
commences after the Social Security Retirement Age,
the dollar limitation contained in Section 9.2(a)(1)
shall be adjusted (in accordance with regulations
prescribed by the Secretary) based on the actuarial
assumptions specified in Section 1.2 for optional
forms of payment other than the lump sum option
(except that the interest rate assumption shall be 5%
if
the rate specified is greater than 5%) so that such
limitation equals an annual benefit, beginning at the
age at which the Member's benefit commences, which
is equivalent to a benefit equal to the dollar amount
specified under Section 9.2(a)(1) beginning at the
Social Security Retirement Age.
(e) In the case of an annual retirement
benefit that begins before a Member's Social Security
Retirement Age, the dollar limitation contained in
Subsection (a)(1) shall be adjusted (in accordance
with regulations prescribed by the Secretary) to the
actuarial equivalent, as of the date such benefits
commence, of a benefit equal to the amount specified
in Subsection (a)(1) commencing at the Social
Security Retirement Age on the basis of the actuarial
assumptions specified in Section 1.2 for optional
forms of payment other than the lump sum option
(except that the interest rate shall be 5% if the
rate
specified is less than 5%).
(f) The dollar limitations contained in
Subsection (a) shall be adjusted for increases in the
cost of living in accordance with regulations
prescribed by the Secretary of the Treasury under
Section 415(d) of the Code. Each annual adjustment
shall be limited to the scheduled annual increase, as
determined by the Secretary, and shall become
effective on January 1 of the year for which the
increase has been determined.
9.3 Notwithstanding the provisions of Section 9.2, for
each Member who is also a participant in any Defined
Contribution Plan, the Trustee will compute such
Member's Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction and will adjust his Annual
Additions under the Defined Contribution Plans and
his Projected Annual Benefit under the Defined
Benefit Plans, so that the sum of such fractions, for
any Limitation Year, will not exceed (1.0).
Reductions in such Annual Additions and such
Projected Annual Benefit shall be made in the
following order:
(a) First, voluntary contributions
constituting Annual Additions under each Retirement
Plan shall be reduced proportionately to the
voluntary
contributions which the Member could otherwise have
made to such Retirement Plans;
(b) Second, the Member's Projected Annual
Benefit under this Plan shall be reduced by the
proportion that his Projected Annual Benefit under
each such Plan bears to his aggregate Projected
Annual Benefit under all such Plans;
(c) Third, Employer Contributions (other
than Salary Reduction Contributions) to profit
sharing
plans and stock bonus plans shall be reduced
proportionately to such Employer Contributions that
would otherwise be made to the Member's accounts
under such Plans; and
(d) Fourth, Salary Reduction Contributions
to Defined Contribution Plans shall be reduced
proportionately to the Salary Reduction Contributions
that would otherwise be made to the Member's
accounts under such Plans.
9.4 If, on a Member's Benefit Commencement
Date, his Accrued Benefit, computed without regard
to this Article IX, exceeds the maximum annual
benefit which he may receive under the provisions
hereof, his retirement benefit shall be adjusted on
the
first day of each subsequent Plan Year to take into
account any increase, since his Benefit
Commencement Date, in the maximum permissible
retirement benefit; provided, however, that such
retirement benefit shall not at any time exceed his
Accrued Benefit, computed without regard to this
Article IX, as of his Benefit Commencement Date.
9.5 The limitation imposed by this Article IX shall be
administered in accordance with the final regulations
and rulings issued by the Secretary of the Treasury
under Section 415 of the Code.
ART ICLE X
TOP -HEAVY PLAN YEARS
10.1 For purposes of this Article X:
(a) (1) "Key Employee" means any
Employee who, at any time during the Plan Year or
any of the four (4) preceding Plan Years, is --
(A) one of the ten (10)
Employees owning the largest interests in the
Company and all Affiliates considered as a unit;
(B) an owner of (i) more
than five percent (5%) of the outstanding stock, or
of
stock possessing more than five percent (5%) of the
total combined voting power, of the Company or any
Affiliate, or (ii) more than five percent (5%) of the
capital or profits interest in any Affiliate which is
not
a corporation;
(C) an owner of (i) more
than one percent (1%) of the outstanding stock or of
stock possessing more than one percent (1%) of the
total combined voting power of the Company or any
Affiliate or (ii) more than one percent (1%) of the
capital or profits interest in any Affiliate which is
not
a corporation, in either case if and only if the
Section
415 Compensation of such owner from the Company
and all Affiliates combined exceeds $150,000; or
(D) an officer of the
Company or an Affiliate whose Section 415
Compensation exceeds 50% of the dollar limitation in
effect under Section 415(b)(1)(A) for any such Plan
Year.
(2) For purposes of Subparagraph
(1)(A),
(A) no Employee shall be
considered a Key Employee if such Employee's
Section 415 Compensation is not more than the
amount determined under Section 415(c)(1)(A) of the
Code (as adjusted pursuant to Section 415(d)(1)(B) of
the Code) for the calendar year in which falls the
Determination Date; and
(B) if any two Employees own
the same interest in the Company or any Affiliate,
the
Employee having the larger Section 415
Compensation will be considered to own the larger
interest.
(3) For purposes of Subparagraphs
(1)(A)-(C), an Employee shall be considered as
owning all interests in the Company or an Affiliate
which he owns directly or would be considered as
owning under the rules contained in Section 318 of
the Code, except that subparagraph (C) of Section
318(a)(2) shall be applied by substituting "5%" for
"50%".
(4) No more than the greater of
three (3) Employees or ten percent (10%) of all
Employees (up to a maximum of fifty (50)) of the
Company and all Affiliates combined shall be
considered officers for purposes of Subparagraph
(1)(D) and, with respect to Plan Years beginning on
or before February 28, 1985 no Employee of the
Company or an Affiliate which is not a corporation
shall be considered an officer for such purposes.
Where the actual number of such officers exceeds the
limits imposed by the preceding sentence, those
Employees who will be considered officers for
purposes of Subparagraph (1)(D) shall be the officers
having the highest annual compensation during the
five (5) year period consisting of the Plan Year and
the four (4) preceding Plan Years.
(b) "Determination Date" means with
respect to any Plan Year, the last day of the
immediately preceding Plan Year.
(c) "Aggregation Group" means
(1) each plan of the Company or an
Affiliate, which --
(A) has one or more
participants who are Key Employees, or
(B) enables any plan
described in Subparagraph (A) to meet the
requirements of Section 401(a)(4) or Section 410 of
the Code.
plus, at the Company's election,
(2) any other plan or plans which,
when considered together with the plan or plans
described in Paragraph (1), satisfy the requirements
of
Section 401(a)(4) and/or Section 410 of the Code.
(d) "Employee" and "Key Employee"
include their beneficiaries.
(e) "Top-Heavy Plan Year" means any
Plan Year with respect to which the Plan is a Top-
Heavy Plan described in Section 10.3, such Section
10.3 to be read as incorporating the definitions
supplied by Section 416 of the Code and the
regulations promulgated thereunder, and those of any
successor statute thereto.
(f) "Section 415 Compensation" has the
meaning assigned to it in Section 9.1(i) of the Plan,
but determined without regard to Sections 125,
402(a)(8) and 402(b)(1)(B) of the Code.
10.2 To the extent required under Section 401(a)(10)(B)
and/or Section 416 of the Code (or any successor
statute(s) thereto), for any Top-Heavy Plan Year, the
provisions of the Plan shall apply only to the extent
not inconsistent with Sections 10.4 through 10.7 of
the Plan.
10.3 (a) The Plan is a Top-Heavy Plan with
respect to a Plan Year, if, as of the Determination
Date of such Plan Year --
(1) the cumulative accrued benefits
of Key Employees under the Plan exceeds sixty
percent (60%) of the cumulative accrued benefits of
all Employees under the Plan unless the Plan is a
Member of an Aggregation Group with respect to
which the percentage test described in Subparagraph
(2)(B) is not met; or
(2) the Plan is a Member of an
Aggregation Group --
(A) which is described in
Section 10.1(c)(1),and
(B) with respect to which
the sum of --
(i) the present value
of the cumulative accrued benefits of all Key
Employees under all defined benefit plans within the
Aggregation Group, and
(ii) the aggregate of
the account balances of all Key Employees under all
defined contribution plans in the Aggregation Group -
-
exceeds sixty percent (60%) of the sum of --
(i) the present value
of the cumulative accrued benefits of all Employees
under all defined benefit plans included in the
Aggregation Group, and
(ii) the aggregate of
the account balances of all Employees under all
defined contribution plans in the Aggregation Group.
(b) For purposes of this Section 10.3:
(1) the accrued benefit and/or account
balances of any Employee who is not a Key
Employee during the Plan Year but who was a Key
Employee during any prior Plan Year shall be
disregarded;
(2) the present value of an Employee's
accrued benefit under a defined benefit plan as of a
Determination Date shall be determined as of that
valuation date which occurs within twelve (12) month
period ending on such Determination Date and is used
by the enrolled actuary for computing Plan costs for
minimum funding, as if the Employee's separation
from service occurred on such valuation date.
(3) the account balance of an
Employee in a defined contribution plan as of any
Determination Date shall be equal to the account
balance of the Employee on the valuation date which
occurs within the twelve (12) month period ending on
such Determination Date including an adjustment for
contributions made or which are due as of such
Determination Date.
(4) for any Plan Year beginning after
1984, the present value of the accrued benefit or the
account balance of any Employee who has not
performed services for the Company during the five
(5) year period ending on the Determination Date
shall be disregarded.
(5) the account balance of an
Employee in a defined contribution plan or the
present value of the accrued benefit of an Employee
in a defined benefit plan, as of a Determination Date
-
(A) excludes any rollover
contribution or similar transfer to such plan made
after December 31, 1983 and attributable to the
Participant's interest in a plan other than a plan
maintained by the Company or an Affiliate, and
(B) includes any amount
distributed with respect to the Employee under the
plan within the five (5) year period ending on the
Determination Date, except to the extent that such
amount is included in such Employee's account
balance or the present value of his accrued benefit
pursuant to Paragraph (2) or (3). This Subparagraph
(B) shall also apply to distributions under a
terminated plan which if it had not been terminated
would have been required to be included in an
Aggregation Group, and
(6) the present value of Employees'
accrued benefits shall be determined using the
actuarial assumptions specified in Section 1.2.
10.4 (a) The Accrued Benefit, commencing on
or after the Normal Retirement Date of each
individual, other than a Key Employee, who was a
Member during any Top-Heavy Plan Year shall be the
greater of:
(1) such Member's Accrued Benefit
determined under Article V, or
(2) an amount equal to two percent
(2%) of such Member's Highest Average
Compensation for each of the first ten (10) years of
his Top-Heavy Service, adjusted pursuant to
Subsection(c); provided, however, that in the case of
a
Member whose Benefit Commencement Date is later
than his Normal Retirement Date, the amount
determined under this Paragraph (2) commencing on
such Benefit Commencement Date shall not be less
than the Actuarial Equivalent of the Accrued Benefit
that would have been payable pursuant to this
Paragraph (2) on the Member's Normal Retirement
Date.
(b) For purposes of this Section 10.4:
(1) "Highest Average Compensation"
means a Member's average Section 415 Compensation
for the five (5) consecutive years during which his
aggregate Section 415 Compensation was highest,
excluding compensation earned by such Member --
(A) after the close of the
last Top-Heavy Plan Year, or
(B) prior to December 1,
1984, except to the extent that compensation prior to
Decmeber 1, 1984 is required to be taken into account
so that such average is based on a five (5) year
period.
(2) "Top-Heavy Service" means the
Member's Period of Service, excluding any Service --
(A) during a Plan Year
which was not a Top-Heavy Plan Year, or
(B) prior to December 1,
1984.
(c) In the case of a Member who is also a
participant in a defined contribution plan maintained
by the Company or an Affiliate, the amount described
in Paragraph (a)(2) shall be reduced by the actuarial
equivalent, determined as of the date of the Member's
Benefit Commencement Date, of the Member's
account balance under such defined contribution plan
derived from employer contributions (which account
balance shall be deemed to include prior withdrawals
made by the Member accumulated at interest to the
Member's Benefit Commencement Date). For
purposes of this Subsection (c), actuarial
equivalence
and the interest rate referred to in the preceding
sentence shall be determined using the actuarial
assumptions described in Section 1.2.
10.5 The Accrued Benefit of any individual, other than a
Key Employee, who was a Member during any Top-
Heavy Plan Year shall be the greater of:
(a) his Accrued Benefit determined in
accordance with Article V; or
(b) his Accrued Benefit computed in
accordance with Section 10.4(a)(2).
10.6 (a) For any Top-Heavy Plan Year, each
Member shall be vested in his Accrued Benefit in
accordance with the following schedule:
Nonforfeitable
Years of Service
Percentage
Fewer than Two years 0%
Two years but less than Three Years
20%
Three years but less than Four years
40%
Four years but less than Five years
60%
Five or more years
100%
(b) Any portion of a Member's Accrued
Benefit which has become vested pursuant to
Subsection (a) shall remain vested after the Plan has
ceased to be a Top-Heavy Plan.
(c) Any Member who has completed a
Period of Service of at least three years prior to
the
beginning of the Plan Year in which the Plan ceased
to be a Top-Heavy Plan shall continue to vest in his
Accrued Benefit according to the schedule set forth
in
Subsection (a) after the Plan has ceased to be a Top-
Heavy Plan.
10.7 For any Top-Heavy Plan Year, the limitations
contained in Article IX of the Plan shall be applied by
substituting "1.0" for "1.25" in Section 9.1(c)(2) and
9.1(f)(2) of the Plan, and the transitional rule under
Section 415(e)(6) of the Code, the use of which is
provided for by Section 9.1(f)(3) of the Plan shall be
applied by substituting $41,500 for $51,875, unless
for such Plan Year --
(a) the requirements of Section 10.4 would be
satisfied if "three percent (3%)" were substituted
for
"two percent (2%)" in Subsection (a)(1) thereof; and
(b) the Plan would not be a Plan described in
Section 10.3 if "ninety percent (90%)" were
substituted for "sixty percent (60%)" wherever the
latter figure appears in Section 10.3.
ARTICLE XI
ADMINISTRATION; CLAIMS PROCEDURE
11.1 Salant Corporation by its approval of the Plan, as
amended, accepts responsibility as a named fiduciary
of the Plan with respect to the selection and retention
of the Trustee of the Fund, the selection and retention
of any Investment Manager, the selection of the
members of the Committee and for reviewing the
performance of such Committee as to the fiduciary
duties and responsibilities vested in it under the Plan
as hereinafter set forth. Salant Corporation shall act
by resolution of its Board of Directors. Such action
shall be evidenced by written resolution certified in
writing by the Secretary or any Assistant Secretary of
Salant Corporation.
11.2 The Committee shall consist of not fewer than
3 nor more than 5 members and may, but need not,
include members of the Board of Directors of Salant
Corporation. Any member may resign at will by
notice to Salant Corporation or be removed (with or
without cause) by Salant Corporation. The
Committee shall have exclusive responsibility and
authority for approving and reviewing the Plan's
investment and funding objectives and policies; and
for reviewing and evaluating the performance and
policies of the Trustee and of any Investment
Manager. The Committee shall report regularly, at
least annually, to the Board of Directors of Salant
Corporation with respect to its evaluation of same.
The Committee shall also have primary responsibility
and authority for the administration of the Plan,
including the authority to interpret its provisions,
to
authorize distributions from Plan assets, to
establish
and enforce such rules and regulations as it shall
deem proper for the administration of the Plan, to
determine the amount of benefits which shall be
payable to any person in accordance with the
provisions the Plan, to establish benefit claim
procedures, to consider and decide conclusively
appeals by any claimant in accordance with an
appeals procedure established by the Committee and
to authorize the payment of benefits from Plan
assets.
The decisions of the Committee in the interpretation
of the provisions of the Plan and the determination
of
questions regarding eligibility for and the amount of
benefits payable in accordance with the provisions of
the Plan shall be conclusive and binding upon all
parties. The Committee shall also have the
responsibility for compiling and communicating to the
Investment Manager, if any, the financial information
and projections with respect to anticipated
contributions to and distributions from the Plan so
that the current and ongoing liquidity and other
financial needs of the Plan may be properly
integrated
into the recommendations of the Investment Manager
respecting the Plan's investment objectives. The
Committee shall have the authority to engage
independent actuaries, counsel and consultants in
order to fulfill its responsibilities, to rely on the
advice of same and to compensate same out of Plan
assets. The Committee shall also have the
responsibility with respect to reporting and
disclosure
requirements under the Employee Retirement Income
Security Act of 1974. The Committee shall also,
from time to time, recommend Plan amendments to
the Board of Directors of Salant Corporation as the
Committee in consultation with others may deem
appropriate. In addition to and in furtherance of
the
powers and authorities herein conveyed, the
Committee shall be authorized, in its discretion, to
allocate responsibilities among one or more of its
members, and to delegate responsibilities to any
person or persons selected by it. Any action taken
by
the Committee shall be taken by a majority of its
members at a meeting or by written instrument
approved by such majority in the absence of a
meeting. A written resolution or memorandum signed
by at least two members or by one member and the
secretary of the Committee shall be sufficient
evidence to any person of any action taken by such
Committee.
11.3 Salant Corporation shall have the power to appoint
one or more Investment Managers of the Fund. Any
Investment Manager appointed by Salant Corporation
shall have responsibility for recommending investment
objectives and policies to the Committee and for
implementing same. The Investment Manager shall
be responsible for investment decisions involving
assets of the Fund over which the Investment
Manager has authority and shall make regular reports
to the Committee.
11.4 Any person, corporation or other entity may serve in
more than one fiduciary capacity under the Plan.
11.5 In the event of a dispute between the Trustees
or Committee and a Member or beneficiary over the
amount of benefits payable under the Plan, the
Member or beneficiary may file a claim for benefits
by notifying the Committee of such claim. Such
notification may be in any form adequate to give
reasonable notice to the Committee, shall set forth
the
basis of such claim and shall authorize the Committee
to conduct such examinations as may be necessary to
determine the validity of the claim and to take such
steps as may be necessary to facilitate the payment
of
any benefits to which the claimant may be entitled
under the Plan.
11.6 The Committee shall decide whether to grant a claim
within ninety (90) days of the date on which the
claim is filed, unless special circumstances require a
longer period for adjudication and the claimant is
notified in writing of the reasons for an extension of
time within such ninety (90) day period; provided,
however, that no extension shall be permitted beyond
ninety (90) days after the date on which the claimant
received notice of the extension of time from the
Committee. If the Committee fails to notify the
claimant of their decision to grant or deny the claim,
such claim shall be deemed to have been denied by
the Committee and the review procedure described in
Subsection (3) shall become available to the claimant.
11.7 (a) Whenever a claim for benefits is
denied, written notice, prepared in a manner
calculated to be understood by the claimant, shall be
provided to the claimant, setting forth the specific
reasons for the denial and explaining the procedure
for review of the decision made by the Committee. If
the denial is based upon submission of information
insufficient to support a decision, the Committee shall
specify the information which is necessary to perfect
the claim and its reasons for requiring such additional
information.
(b) Any claimant whose claim is denied,
may, within sixty (60) days after the receipt of
written
notice of such denial, request in writing a review by
the Board, the Members of which shall be "named
fiduciaries," within the meaning of Section 402(a) of
ERISA for the purpose of adjudicating such appeals.
Such claimant or the claimant's representative may
examine any Plan documents relevant to the claim
and may submit the issues and comments in writing.
The Board shall adjudicate the claimant's appeal
within sixty (60) days after its receipt of the
claimant's written request for review, unless special
circumstances require a longer period for
adjudication
and the claimant is notified in writing of the
reasons
for an extension of time within such sixty (60) day
period; provided, however, that such adjudication
shall be made no later than one hundred twenty (120)
days after the Board's receipt by them of the
claimant's written request for review.
(c) If the Board fails to notify the claimant
of its decision with respect to the claimant's
request
for review within the time specified by this
Subsection (3), such claim shall be deemed to have
been denied on review.
11.8 If the claim is denied by the Board, such decision
shall be in writing, shall state specifically the reasons
for the decision, shall be written in a manner
calculated to be understood by the claimant and shall
make specific reference to the pertinent Plan
provisions upon which it is based.
11.9 The procedure set forth in this Article XI shall be
revised as necessary to conform to regulations
promulgated by the United States Department of
Labor or any successor authority regulating claims
procedures for employee benefit plans.
ARTI CLE XII
THE TRUST FUND
12.1 The Company shall enter into a Trust Agreement with
the Trustee, for the establishment and maintenance of
the Trust Fund. The Trust Agreement shall be
deemed to form a part of the Plan, and all rights
which may accrue to any person under the Plan shall
be subject to the terms of the Trust Agreement.
12.2 The Trustee shall manage and control the Trust Fund
in accordance with the terms of the Trust Agreement.
The Trustees shall pay benefits to Members or former
Members only upon the specific instructions of the
Committee.
12.3 Administrative expenses of the Plan shall be paid out
of the Trust Fund unless and to the extent paid by the
Company. The Company may reimburse the Trust
Fund for any payment so made.
ARTI CLE XIII
AMEN DMENT AND TERMINATION OF THE PLAN
13.1 Amendment of the Plan
The Company reserves the right to modify or amend
this Plan from time to time and to any extent that it
may deem advisable, including without limitation any
amendment deemed necessary to insure the continued
qualification of this Plan under the provisions of
the
Internal Revenue Code. Any amendment shall be
made pursuant to a resolution duly adopted by the
Company's Board of Directors. No amendment shall
have the effect of returning to the Company the whole
or any part of the assets of this Plan or of
diverting
any part of the assets of this Plan to purposes other
than for the exclusive benefit of the Members and
their beneficiaries at any time prior to the
satisfaction
of all the liabilities under this Plan with respect
to
such persons. If such amendment reduces the
Accrued Benefit of any Member, such amendment
shall not be valid unless approved by the Secretary
of
Labor or unless he fails to take action disapproving
such amendment within 90 days after receiving notice
of it.
Except as otherwise provided in regulations
prescribed
by the Secretary of the Treasury, an amendment to the
Plan which has the effect of eliminating or reducing
an early retirement benefit or eliminating an
optional
form of benefit with respect to benefits attributable
to
service prior to such amendment shall be treated as
reducing Accrued Benefits for purposes of this
Section 13.1.
A Plan amendment that changes the Plan's vesting
schedule shall not be effective with respect to any
Member with a three-year Period of Vesting Service
who makes an irrevocable election during the election
period to have his benefit determined without regard
to such amendment.
For purposes of the preceding paragraph the election
period shall begin on the date the Plan amendment is
adopted and end on the latest of the following dates:
(i) The date which is 60 days after the
day the Plan amendment is adopted,
(ii) The date which is 60 days after the
day the Plan amendment is effective, or
(iii) The date which is 60 days after
the day the Member is issued written
notice of the Plan amendment by the
Plan Administrator.
13.2 Termination of the Plan
(a) Termination. The Company reserves
the right to terminate the Plan, in whole or in
part, at any time.
(b) Benefits are Non-Forfeitable. Upon
termination or partial termination of the Plan,
the rights of all affected Members to their
Accrued Benefits in accordance with Section
5.1 to the date of termination or date of partial
termination shall be non-forfeitable, except as
provided under the provisions of Article XIV.
13.3 Allocation of Assets Upon Plan Termination
Upon termination of the Plan in accordance with the
provisions of Section 13.2, the Plan's assets shall
be
allocated in accordance with the following order,
subject to the provisions of Title IV of ERISA:
(a) Benefits payable as an annuity to
(i) Members and their beneficiaries who began
receiving benefits at least three years prior to
the termination date of the Plan and (ii)
Members and their beneficiaries who could
have been receiving benefits as of three years
prior to the termination date of the Plan if they
had retired prior to the beginning of the three
year period and if their benefits had
commenced (on the Life Annuity form under
this Plan) as of the beginning of such period,
based on the provisions of the Plan (as in
effect during the five year period ending on
such termination date) under which such
benefit would be the least.
Salant Corporation may at any time require any
Affiliate to withdraw from the Plan, and any
Affiliate may voluntarily withdraw with Salant
Corporation's consent, and upon any such
withdrawal, the Plan, in respect of such
Affiliate, shall be terminated.
Upon a termination of the Plan with respect to an
Affiliate, the Trustees shall allocate and
segregate for the benefit of the Members then
or theretofore employed by such Affiliate their
proportionate interest in the Trust Fund.
(b) All other benefits which are insured by
the Pension Benefit Guaranty Corporation
determined without regard to Section
4022(b)(5) of ERISA or which would have
been so insured if Section 4022(b)(6) of
ERISA did not apply.
(c) All other non-forfeitable benefits under
the Plan.
(d) All other benefits under the Plan.
If the assets of the Plan available for allocation under
(a) or (b) are insufficient to satisfy in full the
benefits which are described, the assets shall
be allocated pro rata among such individuals
on the basis of the present value (as of the
Plan's date of termination) of their respective
benefits.
Any residual assets of the Plan remaining after the
satisfaction of all liabilities of the Plan shall be
distributed to the Company.
13.4 Merger or Consolidation
No merger or consolidation with, or transfer of
assets
or liabilities to, any other plan shall be made
unless
each Member in this Plan would receive a benefit, if
the Plan terminated immediately after the merger,
consolidation or transfer, equal to or greater than
the
benefit he would have been entitled to receive
immediately before the merger, consolidation or
transfer if this Plan had then terminated.
ARTI CLE XIV
LIMITATION OF BENEFITS FOR HIGHLY PAID EMPLOYEES
14.1 In the event of Plan termination, the benefit payable
to any highly compensated employee or any highly
compensated former employee (as defined in
section 414(q) of the Code and regulations
thereunder) shall be limited to a benefit that is
nondiscriminatory under section 401(a)(4) of the
Code. If payment of benefits is restricted in
accordance with this Section 14.1, assets in excess of
the amount required to provide such restricted benefits
shall become a part of the assets available under
Section 13.3 for allocation among Members and their
contingent annuitants and beneficiaries whose benefits
are not restricted under this Section 14.1.
14.2 The restrictions of this Section 14.2 shall apply prior
to termination of the Plan to any Member who is a
highly compensated employee or a highly
compensated former employee and who is one of the
25 highest paid employees of the Company and its
Affiliates for any Plan Year. The annual payments to
any such Member shall be limited to an amount equal
to the payments that would have been made to the
Member under a single life annuity that is the
Actuarial Equivalent of the sum of the Member's
Accrued Benefit and any other benefits under the
Plan.
14.3 The restrictions in Section 14.2 shall not apply:
(a) if, after the payment of all benefits
payable to such Member, the value of the Plan
assets equals or exceeds 110 percent of the
value of the current liabilities (within the
meaning of section 412(1)(7) of the Code);
(b) if the value of all benefits payable to such
Member is less than one percent (1%) of the
value of current liabilities; or
(c) if the value of all benefits payable to such
Member does not exceed $3,500 (or such other
amount as is specified in section 411(a)(11) of
the Code.
ARTICLE X V
MISCELLAN EOUS PROVISIONS
15.1 Evidence of Survival
Where a benefit payment is contingent upon the
survival of any person, evidence of such person's
survival must be furnished either by personal
endorsement of the check drawn for such payment or
by other evidence satisfactory to the Plan
Administrator.
15.2 Non-Alienation of Benefits
Except in the case of a qualified domestic relations
order within the meaning of Section 414(p) of the
Code, benefit payments may not be assigned or
hypothecated and, to the extent permitted by law, no
such payment will be subject to legal process or
attachment for the payment of any claims against any
person entitled to receive the same. No portion of
any benefit payable under the Plan shall be alienated
except for those amounts designated by the Member,
provided (a) such amounts do not exceed 10% of any
benefit payment and (b) any such designation made
by a Member may be revoked by him at any time.
15.3 Payments to Incompetents
If the Company receives evidence satisfactory to it
that (a) a payee entitled to receive any payment
under
the Plan is physically or mentally incompetent to
receive such payment or is a minor, (b) another
person or an institution is then maintaining or has
custody of such payee and (c) no guardian, committee
or other representative of the estate of such payee
has
been appointed, the Plan Administrator may direct
that payments be made (in the case of a minor at a
rate not exceeding $50 a month) to such other person
or institution.
15.4 Misstated Information
If any information has been misstated on which a
benefit under the Plan with respect to a person was
based, such benefit shall not be invalidated but the
amount of the benefit shall be adjusted to the proper
amount as determined on the basis of the correct
information. Overpayments, if any, with interest as
determined by the Plan Administrator shall be charged
against any payments accruing with respect to the
person. The Plan Administrator reserves the right to
require proof of age of any person entitled to a
benefit under this Plan.
15.5 Beneficiary
Subject to Section 7.2, a Member shall designate,
with the right to change such designation, a
beneficiary to receive any payment or payments to
which a beneficiary may become entitled under the
Plan. Any other person to whom periodic payments
are payable under this Plan may designate, with the
right to change such designation, a beneficiary to
receive any remaining periodic payments becoming
due upon the death of such person provided that no
prior conflicting designation by a Member is then in
effect with respect thereto. If no designated
beneficiary is surviving when a payment is to be
made to a beneficiary, the commuted value of any
remaining periodic payments shall be made to the
person or persons in the first surviving class of the
following classes of successive preference
beneficiaries: (a) the Member's widow or widower,
(b) the Member's surviving children, (c) the Member's
surviving parents, (d) the Members surviving brothers
and sisters, (e) the executors or administrators of
the
person upon whose death the payments become due.
15.6 The law of the State of New York shall be the
controlling state law in all matters relating to the Plan
and shall apply to the extent it is not preempted by
the laws of the United States of America.
IN WITNESS WHEREOF, the Company, by
its duly authorized officers, with its corporate seal
affixed, has caused this Plan to be executed this
day of December 1994.
SALANT CORPORATION
By
Attest:
6960
03/23/95
APPENDIX A
ADOPTING COMPANIES
Name Effective Date
Salant Corporation January 1, 1979
Denton Mills, Inc. January 1, 1992
EX-2
3
EXHIBIT 10.23
SALANT CORPORATION RETIREMENT PLAN
AS RESTATED
DECEMBER 1, 1989
TABLE OF CONTENTS
ARTICLE PAGE
PREAMBLE 1
I DEFINITIONS 2
II SERVICE 9
III MEMBERSHIP 12
IV ELIGIBILITY FOR PLAN BENEFITS 13
V BENEFIT ACCRUAL 14
VI AMOUNT OF BENEFIT 16
VII MANNER AND FORM OF PAYMENT 20
VIII CONTRIBUTIONS AND FUNDING 27
IX LIMITATIONS ON BENEFITS AND CONTRIBUTIONS
28
X TOP-HEAVY PLAN YEARS 34
XI ADMINISTRATION; CLAIMS PROCEDURE 40
XII THE TRUST FUND 43
XIII AMENDMENT AND TERMINATION OF THE PLAN 44
XIV LIMITATION OF BENEFITS FOR HIGHLY PAID
EMPLOYEES 47
XV MISCELLANEOUS PROVISIONS 48
APPENDIX A 50
PREAMBLE
Salant Corporation hereby amends the Salant Corporation
Retirement Plan (the "Plan") and the Manhattan Industries Inc. Employees'
Benefit Plan (the "Manhattan Plan") to comply with requirements of the
Tax Reform Act of 1986, the Revenue Act of 1987, the Technical and
Miscellaneous Revenue Act of 1989, the Omnibus Reconciliation Act of
1989, the Unemployment Compensation Amendments of 1992 and the
Revenue Reconciliation Act of 1993 (the "Acts") effective as of December
1, 1989 with respect to the Plan and February 1, 1989 with respect to the
Manhattan Plan, or with respect to certain provisions as of the pertinent
effective dates contained in the provisions of the Acts, merges the
Manhattan Plan into the Plan effective as of March 1, 1992 and restates the
Plan as follows:
ARTICLE I
DEFINITIONS
The following words and phrases when us4p13ed with the initial capital
letter throughout this Plan and any subsequent amendment thereof shall
have the meanings set forth below unless a different meaning is plainly
required by the context.
1.1 "Accrued Benefit" means the monthly amount of benefit to
which a Member would be entitled, determined in accordance
with Article V, commencing on the later of (a) his Normal
Retirement Date and (b) his Benefit Commencement Date with
the manner of payment being a Life Annuity as described in
Section 7.3.
1.2 "Actuarial Equivalent" means
(a) in the case of a benefit other than a lump sum, an
amount of equivalent value determined on the basis of (1) the
Member's (and where applicable, the beneficiary's) age as of
his Benefit Commencement Date, (2) the 1971 Group Annuity
Mortality Table weighted 60% female, 40% male for Members
and 60% male, 40% female for beneficiaries, and (3) an
investment rate of 7% compounded annually; and
(b) in the case of a lump sum payable to a Member or
former Member, an amount equivalent to the present value as
of the Member's Benefit Commencement Date of the Member's
Retirement Benefit or Vested Deferred Benefit payable as of
his Normal Retirement Date in the form of a single life
annuity, determined on the basis of (1) the Member's age as of
his Benefit Commencement Date, and (2) the mortality table
specified in (a) and (3) the interest rates promulgated by the
Pension Benefit Guaranty Corporation for single employer plan
terminations occurring on the first day of the Plan Year of the
date of payment.
(c) in the case of a lump sum payable to the surviving
Spouse or beneficiary of a Member, an amount equivalent to
the present value, as of the Benefit Commencement Date, of
the survivor annuity payable under Section 4.6 or 4.7 in the
form of a single life annuity commencing on the date specified
in Section 7.8 or 7.9 based on (1) the age of the surviving
Spouse or beneficiary as of the Benefit Commencement Date,
(2) the Mortality Tables described in Subsection (a) above, and
(3) the interest rates promulgated by the Pension Benefit
Guaranty Corporation for single employer terminations
occurring on the first day of the Plan Year of the date of
payment.
In determining the Actuarial Equivalent of the minimum
Accrued Benefit under Section 5.2 of a Member who was a
participant in the Manhattan Plan, the actuarial equivalent
factors set forth in the Manhattan Plan prior to this restatement
shall be used.
1.3 "Affiliate" means any corporation or unincorporated business
in control of, controlled by, or under common control with, the
Company within the meaning of Sections 414(b) and (c) of the
Code and any organization which is a member of an affiliated
service group of which the Company is a Member within the
meaning of Section 414(m) of the Code; provided, however,
that, for the purposes of the limitations upon the benefits of a
member contained in Article IX, "Affiliate" status shall be
determined in accordance with Section 415(h) of the Code.
Except to the extent approved by the Board of Directors, a
corporation or unincorporated business shall not be deemed an
Affiliate for any purpose under the Plan with respect to any
period before it becomes an Affiliate.
1.4 "Average Final Compensation" means an Employee's average
annual Compensation received during the five consecutive
calendar years (disregarding calendar years in which the
Employee was not employed during the entire calendar year,
unless including the Compensation for such a calendar year
results in a greater Average Final Compensation) in the last
fifteen years of his Service affording the highest such average
Compensation. In the case of an Employee with fewer than
five complete consecutive calendar years of Compensation,
Final Average Compensation will be the Employee's average
monthly compensation for those months in his Period of
Service during which he was paid for the complete month
multiplied by twelve.
1.5 "Benefit Commencement Date" means the date on which a
Member's benefit payments commence under the Plan.
1.6 "Board of Directors" means the Board of Directors of Salant
Corporation.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended.
1.8 "Committee" means the person or persons appointed by the
Board to administer the Plan.
1.9 "Company" means Salant Corporation and any other Affiliate
or other entity which, with the consent of the Board of
Directors, has adopted the Plan and any successor to such
Company. Each participating Company delegates all such
rights, powers, and duties, including amendment or termination
of the Plan, to Salant Corporation. Appendix A to the Plan
lists the Companies that have adopted the Plan and the
effective date of such adoption.
1.10 "Compensation" means the total wages within the meaning of
Section 3401(a) of the Code and all other payments of
compensation paid by the Company to an employee for which
the Company is required to furnish the employee a written
statement under Sections 6041(d), 6051(a)(3) and 6052 of the
Code with respect to any period of Service together with any
salary deferral contributions made under the Company's
Savings and Investment Plan or any other employee plan
qualified under Section 401(k) or Section 125 of the Code, but
excluding all of the following items (even if includible in
gross income): reimbursements or other expense allowances,
fringe benefits (cash and non-cash), moving expenses, deferred
compensation and welfare benefits, severance payments to
former Employees, income from the exercise of stock options,
and any amount in excess of the amount specified in Section
401(a)(17) of the Code (as amended by the Revenue
Reconciliation Act of 1993 and as adjusted for increases in the
cost of living by the Secretary of the Treasury pursuant to
Section 401(a)(17)(B) of the Code). "Compensation" earned
prior to December 1, 1989 (February 1, 1989 in the case of a
Member who participated in the Manhattan Plan) shall be,
determined based upon the terms of the Plan (or the Manhattan
Plan, if applicable) as in effect prior to such date.
Compensation earned prior to January 1, 1992 by Denton
Mills and West Dallas Employees, and Compensation earned
by an individual while he is not classified as an Employee,
shall be disregarded.
1.11 "Covered Compensation" means, with respect to a Member,
the average (without indexing) of the Social Security Limits in
effect for each calendar year during the 35-year period ending
with the last day of the calendar year in which the Member
attains, or will attain, Social Security Retirement Age. In
determining a Member's Covered Compensation for a Plan
Year, the Social Security Limit for such Plan Year and any
subsequent Plan Year shall be assumed to be the same as the
Social Security Limit in effect as of the beginning of such
Plan Year. A Member's Covered Compensation for a Plan
Year commencing after the 35-year period described above is
his Covered Compensation for the Plan Year during which the
35-year period ends. A Member's Covered Compensation for
a Plan Year prior to the 35-year period described above is the
Social Security Limit as of the beginning of such Plan Year.
1.12 "Deferred Retirement" means a Member's retirement after his
Normal Retirement Date.
1.13 "Deferred Retirement Date" means the first day of the month
coincident with or next following a Member's Deferred
Retirement.
1.14 "Early Retirement Age" means (a) the date a Member has both
(1) attained his 55th birthday and (2) completed a 10-year
period of Vesting Service, (b) with respect to a Member whose
Severance from Service Date is prior to January 1, 1994, the
date the Member has both (1) attained his 60th birthday and
(2) completed a 10-year period of Vesting Service, or (c) with
respect to a Member who was a participant in the Manhattan
Plan whose Severance from Service Date is prior to January 1,
1994, the date a Member has both (1) attained his 55th
birthday and (2) completed a 20-year period of Vesting
Service, if such date is earlier than the date determined in (b)
above.
1.15 "Early Retirement Date" means the first day of any month
before his Normal Retirement Age as of which a Member
elects to retire provided he has attained his Early Retirement
Age by such date.
1.16 "Effective Date" means June 3, 1973.
1.17 "Eligible Spouse" means the person to whom a Member has
been legally married during the 12-month period immediately
preceding the Member's date of death, if such death is earlier
than his Benefit Commencement Date, or the person to whom
a Member is legally married as of such date, if applicable.
1.18 "Employee" means any person, including officers, employed
by the Company who is classified by the Committee under
uniform rules as a regular salaried, office, sales, security,
supervisory or technical employee, provided that no such
person shall be an Employee if such person is included in a
unit of employees covered by a collective bargaining
agreement between employee representatives and the Company
or an Affiliate, unless such agreement provides that such
employees shall be eligible to participate in the Plan.
1.19 "Employment Commencement Date" means the date on which
an Employee first performs an Hour of Service for the
Company.
1.20 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
1.21 "Hour of Service" means -
(a) each hour for which an Employee is paid or
entitled to payment, by the Company for the performance of
duties for the Company, credited for
the Plan Year or other computation period in which such
duties were performed; or
(b) each hour of a period during which no duties are
performed due to vacation, holiday, illness, incapacity, layoff,
jury duty, military duty or leave of absence; and
(c) each hour for which an Employee has been
awarded, or is otherwise entitled to, back pay from the
Company, irrespective of mitigation of damages, if he is not
entitled to credit for such hour under any other Subsection of
this Section 1.21.
1.22 "Manhattan Plan" means the Manhattan Industries, Inc.
Employees' Benefit Plan as it existed prior to March 1, 1992,
the date of its merger into the Plan.
1.23 "Member" means an Employee who satisfies the requirements
for Membership pursuant to Article III, and whose
Membership shall not have terminated pursuant to such Article
and any former Employee who is receiving or is entitled to
receive a deferred benefit under the Plan.
1.24 "Normal Retirement Age" means the later of (a) the date a
Member attains his 65th birthday and (b) the fifth anniversary
of the commencement of his participation in the Plan,
provided, however, that in the case of a Member who was a
participant in the Manhattan Plan and who attained age 65
prior to January 1, 1992, "Normal Retirement Age" means the
date such Member attains his 65th birthday.
1.25 "Normal Retirement Date" means the first day of the month
coinciding with or next following a Member's Normal
Retirement Age.
1.26 "Period of Service" means a period of Service commencing on
an Employee's Employment Commencement Date or
Reemployment Commencement Date, whichever is applicable,
and ending on the earlier of the first anniversary of the date on
which an Employee began a period of absence for any reason
other than quit, retirement, discharge or death, and his
Severance from Service Date, except as provided in Sections
2.1, 2.2, and 2.3 for purposes of, respectively, eligibility,
benefit accrual and vesting.
The length of each Period of Service shall be equal to
the number of complete years in such Period of Service,
counting from the Employment Commencement Date on which
it began, and including each month as 1/12 of a year and each
partial month as a full month.
The Period of Service of a Member who had been a
participant in the Manhattan Plan shall be the greater of (a) the
sum of (1) his "Service" as determined under the terms of the
Manhattan Plan through January 31, 1991 and (2) his Period of
Service commencing on February 1, 1991 or (b) the sum of (1)
his "Service" as determined under the terms of the Manhattan
Plan through January 31, 1992 and (2) his Period of Service
commencing on February 1, 1992.
1.27 "Period of Severance" means the period of time commencing
on an Employee's Severance from Service Date and ending on
the date on which the Employee again performs an Hour of
Service for the Company.
1.28 "Plan" means the provisions of the Salant Corporation
Retirement Plan as restated and set forth herein; and prior to
March 1, 1992 also means the provisions of the Manhattan
Industries, Inc. Employees' Benefit Plan as restated and set
forth herein.
1.29 "Plan Administrator" means Salant Corporation.
1.30 "Plan Year" means for periods prior to December 1, 1991,
each twelve month period beginning on December 1 and
ending on November 30; the month of December 1991; and
each calendar year thereafter. With respect to the Manhattan
Plan prior to the Merger, "Plan Year" means for periods prior
to February 1, 1991, each twelve month period beginning on
February 1 and ending on January 31; the eleven month period
beginning on February 1, 1991 and ending on December 31,
1991; and each calendar year thereafter.
1.31 "Profit Sharing Plan Company Amount" means any amount
transferred to the Trust Fund attributable to the Company's
contributions made under the Salaried Employees' Profit
Sharing Savings Plan of Salant Corporation on behalf of the
Member, together with interest compounded annually at the
rate of 6% a year from the date of transfer.
1.32 "Profit Sharing Plan Member Amount" means any amount
transferred to the Trust Fund attributable to a Member's
contributions made under the Salaried Employees' Profit
Sharing Savings Plan of Salant Corporation, together with
interest compounded annually at the rate of 6% a year from
the date of transfer.
1.33 "Reemployment Commencement Date" means the first day
following a Period of Severance on which an Employee
performs an Hour of Service for the Company.
1.34 "Retirement Date" means the Member's Early Retirement Date,
Normal Retirement Date or Deferred Retirement Date, as the
case may be.
1.35 "Service" means an Employee's period of employment with the
Company credited in accordance with Article II. For Members
who participated in the Manhattan Plan, Service for periods
prior to February 1, 1989 shall be determined based on the
terms of the Manhattan Plan as in effect prior to such date.
Service shall include periods during which an Employee is
absent for military service provided employment is resumed
within the period prescribed by the statutes of the United
States, as from time to time in effect, for the exercise of
veteran's reemployment rights and periods during which an
employee is absent pursuant to an authorized leave of absence
approved by the Committee under uniform rules.
Service with an Affiliate shall be taken into account as
provided under Section 2.1 and 2.3 for purposes of,
respectively, eligibility and vesting. For this purpose,
(a) the word "Company" shall be replaced by
the term "Company or Affiliate" whenever it appears in
Sections 1.19, 1.21, 1.27, 1.33 and 1.36; and
(b) the word "Employee" when used in those
Sections enumerated in Subsection (a) shall include a person
employed by an Affiliate.
To the extent that such periods would have counted as Service
had the employer then been the Company, Service shall also
include periods of employment by any employer acting as a
field warehouseman if such employment is determined by the
Committee to be solely in connection with a field warehousing
arrangement with the Company.
1.36 "Severance from Service Date" means the earlier of (a) the
date on which an Employee quits, retires, is discharged or
dies, and (b) the later of (1) the first anniversary of the first
day of a period in which an Employee remains absent from
Service (with or without pay) with the Company for any
reason other than quit, retirement, discharge or death, such as
vacation, holiday, sickness, disability, leave of absence or
layoff, and (2) the second anniversary of the date on which an
Employee began a period of absence for any reason other than
quit, retirement, discharge or death, if his absence beyond the
first anniversary of the date on which he began such absence
is by reason of the pregnancy of such Employee, the birth of a
child of such Employee, the placement of a child in
connection with the adoption of such child by the Employee,
or the caring for such child for a period beginning immediately
following such birth or placement.
1.37 "Social Security Limit" means, with respect to any calendar
year, the contribution and benefit base determined under
section 230 of the Social Security Act for such calendar year.
1.38 "Social Security Retirement Age" means, in the case of a
Member born before January l, l938, age 65; in the case of a
Member born after December 3l, l937 and before January l,
l955, age 66; and in the case of a Member born after
December 3l, l954, age 67.
1.39 "Spousal Consent" means, with respect to the election by a
Member to waive the Qualified Joint and Survivor Annuity
form pursuant to Section 7.2 or the Spouse's Benefit pursuant
to Section 6.6, that
(a) the Member's Eligible Spouse consents in
writing to such election, and the Spouse's consent
acknowledges the effect of such election and is witnessed by a
Member of the Committee or by a notary public; or
(b) it is established to the Committee's satisfaction
that the consent required under Subsection (a) hereof is
unobtainable because the Member is unmarried, because the
Member's Eligible Spouse cannot be located, or because of
such other circumstances as the Secretary of the Treasury may
by regulation prescribe.
Any such consent and any such determination as to the
impossibility of obtaining such consent shall be effective only
with respect to the individual who signs such consent or with
respect to whom such determination is made and not with
respect to any individual who may subsequently become the
Eligible Spouse of such Member.
1.40 "Thomson Company Plan Company Amount" means an
amount equal to the value of the Member's Benefit Units
attributable to the Thomson Company contributions under the
Retirement Plan of Thomson Company on behalf of the
Member as of October 1, 1973 multiplied by a factor of 1.098,
together with interest compounded annually at the rate of 6% a
year from such date.
1.41 "Thomson Company Plan Member Amount" means any
amount transferred to the Trust Fund attributable to a
Member's contributions made under the Retirement Plan of the
Thomson Company, together with interest compounded
annually at the rate of 6% a year from October 2, 1973.
1.42 "Trust" or "Trust Fund" means the trust established pursuant to
the Trust Agreement to hold the assets of the Plan. The assets
of the Plan may be held in one or more Trust Funds.
1.43 "Trust Agreement" means the agreement entered into between
Salant Corporation and the Trustee pursuant to which the
Trustee holds the Trust Fund.
1.44 "Trustee" means anyone serving as trustee under the Trust
Agreement.
The masculine pronoun whenever used shall include the
feminine and the singular shall include the plural.
ARTIC LE II
SERVI CE
2.1 Eligibility Service
Eligibility Service means the aggregate Period of Service
credited to an Employee and not forfeited due to a Period of
Severance in accordance with Section 2.4(a)(1). For purposes
of this Section 2.1, the aggregate Period of Service credited to
an Employee shall include each Period of Service as an
employee of the Company not included in the definition of
Employee under Section 1.18, each Period of Service with an
Affiliate and each Period of Severance taken into account
under Section 2.4(b).
2.2 Benefit Accrual Service
Benefit Accrual Service means the aggregate Period of Service
credited to an Employee with the exception of (a) any Period
of Service forfeited due to a Period of Severance in
accordance with Section 2.4(a)(1), (b) any Period of Service
by an individual while he is not classified as an Employee and
(c) in the case of an Employee employed at the West Dallas or
Denton Mills divisions of the Company, any Period of Service
prior to January 1, 1992.
To the extent that such period would count as Benefit Accrual
Service if the employer were the Company, Benefit Accrual
Service shall also include any period of employment by any
employer acting as a field warehouseman if such employment
is determined by the Committee to be solely in connection
with a field warehousing arrangement with the Company,
provided that the amount of retirement benefit payable to the
Member or his beneficiary under this Plan attributable to any
such period of employment shall be reduced (but not to less
than zero) by the amount of any pension or other benefit
derived from employer contributions attributable to such
periods of employment that is payable to the Member or to his
beneficiary under any other plan or arrangement to provide
retirement benefits that is maintained in whole or in part at the
expense of such employer. For purposes of computing such
reduction, the amount payable under any such plan or
arrangement to provide retirement benefits shall be valued by
the Committee to determine the appropriate actuarially
equivalent value using the factors specified for such purpose
under this Plan.
Notwithstanding the above, to determine a Member's period of
Benefit Accrual Service prior to January 1, 1979, he shall be
considered to have completed a one-year Period of Benefit
Accrual Service for each year of credited service earned in
accordance with the provisions of the Plan as then in effect
and shall receive credit for a one-year Period of Benefit
Accrual Service for each year of such credited service.
2.3 Vesting Service
Vesting Service means whole years of the aggregate Period of
Service credited to an Employee, whether or not such Periods
of Service were rendered consecutively.
For purposes of this Section 2.3, the aggregate Periods of
Service credited to an Employee shall include each Period of
Service as an employee of the Company not included in the
definition of Employee under Section 1.18, each Period of
Service with an Affiliated Company and each Period of
Severance taken into account under Section 2.4(b).
Notwithstanding the foregoing, however, such aggregate Period
of Service shall not include any Period of Service forfeited due
to a Period of Severance in accordance with Section 2.4(a)(2).
Notwithstanding the above, to determine a Member's period of
Vesting Service prior to January 1, 1979, he shall be
considered to have completed a one-year Period of Vesting
Service for each year of credited service earned in accordance
with the provisions of the Plan as then in effect and shall
receive credit for a one-year Period of Vesting Service for
each year of such credited service.
The Vesting Service of a Member who had been a participant
in the Manhattan Plan shall be the sum of his "Vesting
Service" as determined under the terms of the Manhattan Plan
through December 31, 1991 plus his Period of Service
commencing on January 1, 1992. Furthermore, if such a
Member is credited with at
least 1,000 Hours of Service for the period from February 1,
1991 through January 31, 1992 and is credited with a Period
of Service of one year for the period for January 1, 1992
through December 31, 1992 shall be credited with two whole
years of Vesting Service for the period from February 1, 1991
through December 31, 1992.
2.4 Period of Severance:
(a) Effect of a Period of Severance
(1) an Employee who incurs a Period of
Severance before he has a vested interest under the Plan that
equals or exceeds the greater of (A) his Period of Eligibility
Service credited prior to such Period of Severance and (B) five
years shall forfeit the Period of Eligibility Service and Period
of Benefit Accrual Service previously credited to him.
(2) an Employee who incurs a Period
of Severance before he has a vested interest under the Plan
that equals or exceeds the greater of (A) his Period of Vesting
Service credited prior to the Period of Severance and (B) five
years shall forfeit the Period of Vesting Service previously
credited to him.
(3) the Period of Service of a person
who incurs a Period of Severance shall include Service
following such Period of Severance but shall not include
Service prior to such Period of Severance until such person
completes a 12 consecutive month Period of Service following
such Period of Severance.
(b) Crediting of Period of Severance
(1) if an Employee has a Severance
from Service Date by reason of a quit, discharge or retirement
and then performs an Hour of Service within 12 months of his
Severance from Service Date, the Period of Severance shall be
taken into account for purposes of determining his aggregate
Periods of Service under Sections 2.1 and 2.3.
(2) if an Employee has a Severance
from Service Date by reason of a quit, discharge or retirement
during a period of 12 months or less in which the Employee
remains absent from Service for any reason other than a quit,
discharge, retirement or death and then performs an Hour of
Service within 12 months of the date on which he was first
absent from service, the Period of Severance shall be taken
into account for purposes of determining his aggregate Periods
of Service under Sections 2.1 and 2.3.
ARTICLE III
MEMBERSHIP
3.1 Each Employee who was a Member of the Plan immediately
preceding the effective date of this amendment and restatement
shall participate in this Plan in accordance with the provisions
of the Plan in effect on and after such effective date.
3.2 Each other Employee shall become a Member of the Plan on
the January 1, April 1, July 1 or October 1 coinciding with or
next following the later of (a) the date on which he becomes
an Employee as defined in section 1.18 and (b) the date on
which he attains his 21st birthday, and is credited with a one-
year Period of Eligibility Service, provided, however, that (i)
an Employee hired before July 1, 1993 shall become a
Member of the Plan on the January 1 or July 1 coinciding with
or next following the later of (a) the date on which he
becomes an Employee as defined in section 1.18 and (b) the
earlier of (1) the later of the date on which he attains his 21st
birthday or is credited with a one-year Period of Eligibility
Service, or (2) the date he is credited with a two-year Period
of Eligibility Service, and (ii) an Employee hired before
December 1, 1988 (February 1, 1988 in the case of an
Employee who was an employee of Manhattan Industries, Inc.)
who had attained age 60 prior to his Employment
Commencement Date shall become a Member of the Plan on
the later of December 1, 1988 (or February 1, 1988, as the
case may be) and the January 1 or July 1 coinciding with or
next following the date on which he is credited with a one-
year period of Eligibility Service.
3.3 A Member of the Plan who forfeits his Period of Eligibility
Service due to a Period of Severance in accordance with
Section 2.4(a)(1) will cease to be a Member of the Plan. He
may re-enter the Plan as a new Member by again satisfying
the Membership requirements in accordance with Section 3.2.
If a Member has a Period of Severance of at least one year but
does not forfeit his Period of Eligibility Service in accordance
with Section 2.4(a)(1), he is eligible to participate immediately
upon his Reemployment Commencement Date.
ART ICLE IV
ELI GIBILITY FOR PLAN BENEFITS
4.1 Normal Retirement Benefit
A Member shall be eligible for a Normal Retirement Benefit if
his employment is terminated on or after his attainment of his
Normal Retirement Age but on or immediately before his
attainment of his Normal Retirement Date.
4.2 Early Retirement Benefit
A Member shall be eligible for an Early Retirement Benefit if
his employment is terminated before he attains his Normal
Retirement Age but on or after his attainment of his Early
Retirement Age.
4.3 Vested Deferred Benefit
A Member shall be eligible for a Vested Deferred Benefit if
his employment is terminated for any reason other than death
or retirement and after he has a vested interest under the Plan.
4.4 Deferred Retirement Benefit
A Member shall be eligible for a Deferred Retirement Benefit
if his employment is terminated after his Normal Retirement
Date.
4.5 Disability Benefit
A Member shall be eligible for a Disability Benefit if, prior to
January 1, 1995, he (a) has at least 15 years of Service and (b)
becomes totally and permanently disabled while in the service
of the Company so that he is eligible for, and receiving, Social
Security disability benefits.
4.6 Spouse's Benefit
A Member shall be eligible to have a Spouse's Benefit
provided for his Eligible Spouse if he dies prior to his Benefit
Commencement Date survived by an Eligible Spouse and is
vested in any portion of his Accrued Benefit.
4.7 Death Benefit
A Member who is not survived by an Eligible Spouse or
whose Eligible Spouse is not eligible for immediate
distribution of the Spouse's Benefit shall be eligible to have a
Death Benefit provided for his designated beneficiary if he
dies while an active Employee or after having attained Early
Retirement Age and prior to his Benefit Commencement Date,
if he has been credited with a Period of Vesting Service of at
least 10 years and has attained age 45, and if the sum of his
age and Period of Vesting Service is not less than 65.
ART ICLE V
BEN EFIT ACCRUAL
5.1 Accrued Benefit
Each Member shall accrue a monthly benefit equal to 1/12 of
the sum of (a) and (b) reduced by (c), if applicable
(a) the greatest of (i), (ii), (iii) and (iv):
(i) (A) 0.65% of his Average Final
Compensation not in excess of 140% of his
Covered Compensation plus 1.25% of his
Average Final Compensation in excess of 140%
of his Covered Compensation, if any, multiplied
by (B) his Period of Benefit Accrual Service
(not in excess of 35 years); or
(ii) $96 multiplied by his Period of
Benefit Accrual Service after November 30,
1988 and $60 multiplied by his Period of
Benefit Accrual Service before December 1,
1988; provided, however, that no more than 30
years of Benefit Accrual Service shall be taken
into account, and for this purpose, those years
of a Member's Benefit Accrual Service shall be
applied that produce the greatest Accrued
Benefit; or
(iii) the sum of (A) and (B):
(A) the greater of an amount determined
under Subsection (a)(i) or (a) (ii) above
based on his Period of Benefit Accrual
Service after June 2, 1973; and
(B) the Actuarial Equivalent of his
Profit Sharing Plan Company Amount, if
any; or
(iv) the sum of (A) and (B):
(A) an amount determined under
Subsection (a)(i) above based on his
Period of Benefit Accrual Service after
October 1, 1973; and
(B) the Actuarial Equivalent of his
Thomson Company Plan Company
Amount, if any; and
(b) the Actuarial Equivalent of his Profit
Sharing Plan Member Amount or Thomson Company Plan
Member Amount, if any; less
(c) the Member's accrued benefit under the
terminated Manhattan Industries Inc. Employees' Benefit Plan
(As Amended Effective February 1, 1984) or the terminated
Vera Companies Division Employees' Pension Plan or the
terminated Manhattan Accessories Division Employees'
Pension Plan.
5.2. Minimum Accrued Benefit
(a) Notwithstanding any provision of the
Plan to the contrary, a Member's Accrued Benefit,
determined after November 30, 1989, shall not be less
than his Accrued Benefit, determined as of the earlier
of his Severance from Service Date and December 31,
1991, under the terms (including but not limited to
actuarial assumptions and equivalents) of the Plan or, if
applicable, the Manhattan Plan as in effect prior to this
Amendment and Restatement, based on his Period of
Benefit Accrual Service, Compensation and Average
Final Compensation, determined on the earlier of his
Severance from Service Date and December 31, 1991;
provided, however, that with respect to any Member
who was a highly compensated employee within the
meaning of section 414(q)(1)(A) or (B) of the Code for
the Plan Years ending November 30, 1990 and
November 30, 1991, such a Member's Accrued Benefit,
determined after November 30, 1989, shall not be less
than his Accrued Benefit, determined as of
November 30, 1989, under the terms of the Plan as in
effect prior to this Amendment and Restatement, based
on his years of Benefit Accrual Service, Compensation
and Average Final Compensation determined on
November 30, 1989; provided further, however, that a
Member who was such a highly compensated employee
for the Plan Year which ended November 30, 1991 but
not the Plan Year ended November 30, 1990, the
Member's Accrued Benefit, determined after
November 30, 1990, shall not be less than his Accrued
Benefit, determined as of November 30, 1990, under
the terms of the Plan as in effect prior to this
Amendment and Restatement, based on his years of
Benefit Accrual Service, Compensation and Average
Final Compensation determined on November 30, 1990;
and provided further, that any provision in the Plan to
the contrary notwithstanding, this Section 5.2 shall be
interpreted in a manner consistent with and reflective of
section 411(d)(6) of the Code such that nothing in the
Plan shall have the effect of decreasing an accrued
benefit of a Member or of eliminating or reducing an
early retirement benefit or a retirement-type subsidy or
eliminating an optional form of benefit with respect to
benefits attributable to service prior to January 1, 1992.
With respect to Members who were participants in the
Manhattan Plan, the references to November 30, 1989,
November 30, 1990, and November 30, 1991, in this
Section 5.2 shall be replaced with January 31, 1989,
January 31, 1990 and January 31, 1991, respectively,
and references to the terms of the Plan prior to this
Amendment and Restatement shall be replaced by the
terms of the Manhattan Plan prior to this Amendment
and Restatement.
(b) Notwithstanding any provision of the
Plan to the contrary, a Member's Accrued Benefit,
determined after December 31, 1993, shall not be less
than the greater of (1) his Accrued Benefit, determined
under the term of the Plan as in effect on and after
January 1, 1994, based on his entire Period of Benefit
Accrual Service, and (2) the sum of (1) his Accrued
Benefit, determined as of the earlier of his Severance
from Service Date and December 31, 1993, under the
terms (including but not limited to actuarial
assumptions and equivalents and the terms of
Subsection (a)) of the Plan as in effect prior to January
1, 1994, based on his Period of Benefit Accrual
Service, Compensation and Average Final
Compensation, determined on the earlier of his
Severance from Service Date and December 31, 1993,
and frozen in accordance with Treasury Regulation
Section 1.401(a)(4)-13 and (2) a Member's Accrued
Benefit, determined under the term of the Plan as in
effect on and after January 1, 1994, based on his Period
of Benefit Accrual Service and Compensation credited
after December 31, 1993.
ARTICLE VI
AMOUNT OF BENEFIT
6.1 Amount of Normal Retirement Benefit
A Member's Normal Retirement Benefit shall be the amount
determined in either (a) or (b), whichever is applicable.
(a) A Member who retires on the Life Annuity
form described in Section 7.3 shall receive a monthly benefit
equal to the Accrued Benefit determined in Section 5.1. or
Section 5.2.
(b) A Member who retires on a form of annuity
other than the Life Annuity form shall receive a monthly
benefit equal to the Actuarial Equivalent of the Accrued
Benefit determined in Section 5.1 or Section 5.2.
In no event, however, shall a Member's Normal Retirement
Benefit be less than the greatest Early Retirement Benefit he
would have been entitled to receive if he had retired early
under the provisions of Section 4.2.
6.2 Amount of Early Retirement Benefit
A Member who elects to retire at an Early Retirement Date
shall receive a monthly benefit equal to the Actuarial
Equivalent of his Normal Retirement Benefit.
6.3 Amount of Vested Deferred Benefit
(a) The monthly amount of a Member's Vested
Deferred Benefit commencing at his Normal Retirement Date
on the Life Annuity form, as described in Section 7.3, shall be
equal to the sum of (i) and (ii):
(i) the greater of (A) and (B):
(A) a percentage, in accordance with the
following schedule, of the Accrued Benefit, as
determined in Section 5.1 (disregarding Sections
5.1(a) (iii) and (iv) and 5.1(b)):
Period of Vesting Service Percentage
Vested
less than 5 years 0
5 or more years 100
and
(B) the sum of (1) and (2):
(1) a percentage, in accordance with the
schedule in Subsection (a)(i)(A) above,
of the amount determined in Section
5.1(a)(iii) or (iv), if any; and
(2) the Actuarial Equivalent of his Profit
Sharing Plan Company Amount and
Thomson Company Plan Company
Amount, if any; and
(ii) his Profit Sharing Plan Member Amount and
Thomson Company Plan Member Amount, if any.
A Member who was a participant in the Manhattan Plan on
January 31, 1989, and whose Period of Vesting Service is 4 or
more years but less than 5 years shall be 40% vested in his
Accrued Benefit.
In no event shall the annual amount of a Member's Vested
Deferred Benefit be less than a percentage of his Minimum
Accrued Benefit determined in Section 5.2 in accordance with
the schedule in Subsection (a)(i)(A) above.
(b) The monthly amount of a Member's Vested
Deferred Benefit commencing at his Normal Retirement Date
on a form other than the Life Annuity form, as described in
Section 7.3, shall be equal to the Actuarial Equivalent of the
amount otherwise determined under subsection (a), above.
Subject to Section 7.14, a Member may elect to receive his
Vested Deferred Benefit at an Early Retirement Date, in which
case such benefit shall be equal to the Actuarial Equivalent of
the amount otherwise determined under this Section 6.3.
6.4 Amount of Deferred Retirement Benefit
Subject to Section 7.14, a Member's Deferred Retirement
Benefit shall commence on his Deferred Retirement Date and
shall be a monthly benefit equal to the greater of (a) his
Accrued Benefit as of his Benefit Commencement Date and
(b) the Actuarial Equivalent of his Normal Retirement Benefit
determined as of his Benefit Commencement Date.
6.5 Amount of Disability Benefit
(a) A Member's Disability Benefit shall commence
on the first day of the sixth month following disability and
shall be an annual benefit on the Life Annuity form, as
described in Section 7.3, in an amount equal to his Accrued
Benefit.
(b) The monthly amount of a Member's Disability
Benefit on a form other than the Life Annuity form, as
described in Section 7.3, shall be equal to the Actuarial
Equivalent of the amount otherwise determined under
subsection (a) above.
6.6 Amount of Spouse's Benefit
The Spouse's Benefit payable for life to a Member's Eligible
Spouse shall be:
(a) in the case of a Member who dies on or after
his Early Retirement Date, the annuity to which such
Member's Eligible Spouse would have been entitled if the
Member had retired on the day before his death and his
retirement benefit had been payable in the Qualified Joint and
Survivor Annuity form, reduced in accordance with Section
6.2; and
(b) in the case of a Member who dies prior to his
Early Retirement Date, the annuity to which his Eligible
Spouse would have been entitled if the Member's Severance
from Service Date had occurred on the date of his death (if the
Member had not already had a Severance from Service prior to
the date of his death), and such Member had survived to his
Early Retirement Date, had retired immediately upon
attainment of his Early Retirement Date with an immediate
Qualified Joint and Survivor Annuity form, reduced as
provided in Section 6.2, and had died on the day next
succeeding such retirement; and
(c) in any case, not less than the Actuarial
Equivalent of the sum of the Member's Profit Sharing Plan
Member Amount and Profit Sharing Plan Company Amount or
Thomson Company Plan Member Amount and Thomson
Company Plan Company Amount, if any.
6.7 Amount of Death Benefit
Any Member who has no Eligible Spouse or whose Eligible
Spouse is not eligible for immediate distribution of a Spouse's
Benefit under Section 6.6 and whose service has not
terminated or who has left employment after reaching his
Early Retirement Age is eligible for a death benefit if he has
at least 10 years of service and has attained age 45 and if the
sum of his age and his Period of Service is not less than 65.
If, after becoming eligible for the death benefit provided by
this section, a Member dies prior to his Benefit
Commencement Date, a death benefit shall be paid to his
Eligible Spouse or, if there is no Eligible Spouse, to a
surviving beneficiary designated by the Member in a written
election filed with the Committee. The Member may change
his designated beneficiary at any time. If no validly
designated beneficiary survives the Member, the death benefit
shall be paid to the Member's estate.
Subject to Section 7.6, the death benefit so payable shall be an
annual amount continued for the life of the payee (or in the
case of an Eligible Spouse, until such spouse becomes eligible
for distribution of the Spouse's Benefit under Section 6.6)
equal to the annual amount that would be payable to such
person if such person were the Member's surviving joint
annuitant under a 50% joint and survivor annuity (as
hereinafter defined) if such 50% joint and survivor annuity,
which commenced on the day preceding the Member's death,
had an actuarial value on the day preceding the Member's
death equal to the Actuarial Equivalent of the Member's
Accrued Benefit. A 50% joint and survivor annuity is a form
of annuity whereby an amount would be payable annually to
the Member during his life and thereafter, if the joint annuitant
survived the Member, 50% of such amount would be payable
annually to the Member's joint annuitant for life.
The death benefit payable to the Member's estate shall be a
lump sum equal to the actuarial value of the death benefit (as
measured immediately after the
Member's death) payable to a hypothetical surviving
designated beneficiary born on the third anniversary of the
Member's birth.
In no event shall the Death Benefit payable under this Section
7.6 be less than the Actuarial Equivalent of the sum of the
Member's Profit Sharing Plan Member Amount and Profit
Sharing Plan Company Amount or Thomson Company Plan
Member Amount and Thomson Company Plan Company
Amount, if any.
ART ICLE VII
MAN NER AND FORM OF PAYMENT
7.1 A Member's Retirement Benefit or Vested Deferred Benefit
shall, except as provided under Section 7.10, 7.11, 7.12, 7.14
or 7.15, be payable as an annuity commencing on the
Member's Retirement Date, or as of the first day of the month
coinciding with or next following his termination of
employment, if later. The annuity shall be paid on one of the
forms described in the following paragraphs of this Article.
7.2 A Member who has an Eligible Spouse at his Benefit
Commencement Date shall have his benefit paid on the
Qualified Joint and Survivor Annuity form under Section 7.4.
However, such Member may, prior to his Benefit
Commencement Date and subject to Spousal Consent, elect in
writing and on a form provided by the Plan Administrator, not
to have his benefit paid in this manner and may, prior to such
Benefit Commencement Date, instead elect, in writing and on
a form provided by the Plan Administrator, to have his benefit
paid on one of the following:
(a) the Life Annuity form under Section 7.3,
(b) subject to the conditions and restrictions
of Section 7.6, the Non-Qualified Joint and Survivor Annuity
form under Section 7.4,
(c) subject to the conditions and restrictions
of Section 7.6, the Period Certain Life Annuity form under
Section 7.5, or
(d) subject to the conditions and restrictions
of Section 7.6, the Optional Temporary Annuity form under
Section 7.7.
No less than 90 days before the Member's Benefit
Commencement Date, the Plan Administrator shall furnish the
Member with written notification of the availability of making
an election not to have his benefit paid on the Qualified Joint
and Survivor Annuity form. This notification shall also inform
the Member that he may request an explanation of the terms,
conditions and financial effect of making such elections. Any
explanation shall be furnished to the Member within 30 days
of his request provided the Member furnishes the Plan
Administrator with proof of the date of birth of his Eligible
Spouse and such other information as the Plan Administrator
may require the Member to provide in order to give such
explanation.
A Member who elects not to have his benefit paid on the
Qualified Joint and Survivor Annuity form may revoke such
election at any time prior to his Benefit Commencement Date.
A Member who does not have an Eligible Spouse at his
Benefit Commencement Date shall have his benefit paid on the
Life Annuity form under Section 7.3, unless, subject to the
conditions and restrictions of Section 7.6, he elects the Non-
Qualified Joint and Survivor Annuity form under Section 7.4,
the Period Certain Life Annuity form under Section 7.5 or the
Optional Temporary Annuity form under Section 7.7.
7.3 Life Annuity form provides for monthly payments to the
Member continuing to the first day of the month in which his
death occurs.
7.4 Joint and Survivor Annuity form provides for monthly
payments to be made in accordance with one of the following
options:
Qualified Option - a monthly benefit payable
during the lifetime of the
Member and upon his death
50% of such monthly benefit
payable to his Eligible Spouse
for the Eligible Spouse's
lifetime. No benefit shall be
payable after the death of the
Member and his Eligible
Spouse.
Non-Qualified Option - a monthly benefit
payable during the lifetime of
the Member and following his
death a monthly benefit
payable to his surviving joint
annuitant for the joint
annuitant's lifetime equal to
50%, 75% or 100% of the
monthly benefit payable to the
Member during his lifetime.
No benefit shall be payable
after the death of the Member
and his joint annuitant.
7.5 Period Certain Life Annuity form provides for monthly
payments continuing to the first day of the month in which the
Member's death occurs or the end of the certain period,
whichever is later. The certain period may be either 60
months, 120 months or 180 months. If the Member dies
before the end of the certain period, payments in the same
amount shall be continued to the end of such period to the
beneficiary authorized to receive payments in accordance with
Section 15.5.
7.6 The following conditions and restrictions are applicable to the
election of the Non-Qualified Joint and Survivor Annuity form
or the Period Certain Life Annuity form:
(a) A Member shall make his election on a
form provided by the Plan Administrator, and must designate
either his Normal Retirement Age, his Deferred Retirement
Date, his required beginning date determined under
Section 7.15, or, if earlier, the date he intends to retire as the
effective date of the election.
(b) If a Member elects the Non-Qualified
Joint and Survivor Annuity form, he must designate his joint
annuitant, the percentage of his benefit to be continued to his
joint annuitant, and provide satisfactory proof of the joint
annuitant's age.
(c) If a Member elects the Period Certain
Life Annuity form he must designate his beneficiary.
(d) If a Member, or, in the case of the Non-
Qualified Joint and Survivor Annuity form, the joint annuitant,
dies before the effective date of the election, the election will
be cancelled.
(e) If a joint annuitant or a beneficiary is
other than a Member's Eligible Spouse and if the value of the
Member's benefit under the elected form of annuity would be
less than 51% of the value of his benefit that would be
payable on the Life Annuity form, such benefit on the form of
annuity elected shall be adjusted so that the value of the
Member's benefit under the form elected shall be equal to 51%
of the value of the Member's benefit on the Life Annuity form.
7.7 Optional Temporary Annuity Form
A Member whose Retirement Benefit or Vested Deferred
Benefit commences under the Plan before the earliest date on
which his primary insurance amount beginning under the
Social Security Act may elect to receive an adjusted benefit
prior to the first date on which he becomes eligible to receive
such primary insurance amount and a reduced benefit
thereafter. The adjusted benefit shall be calculated so that the
Retirement Benefit or Vested Deferred Benefit payable to the
Member prior to the date on which he becomes eligible to
receive his primary insurance amount shall be equal as nearly
as possible to the sum of (a) the reduced amount payable after
such date and (b) the estimated primary insurance amount
payable to the Member beginning on such date.
A Member may elect this Optional Temporary Annuity by
filing a written request with the Committee prior to his
Retirement Date.
7.8 Payment of Spouse's Benefit
(a) The Spouse's Benefit shall commence to be paid
on the first day of the month next following the later of the
Member's death and the date on which the Member would
have attained Early Retirement Age.
(b) A surviving Spouse may elect that the Spouse's
Benefit commence on the first day of any month following the
date specified in Subsection(a) subject to the limitations of
Section 7.15.
(c) If a surviving Spouse elects to defer payment
pursuant to Subsection (b), the annuity payable to such Spouse
shall be the Actuarial Equivalent of the annuity payable as of
the date specified in Subsection (a).
7.9 Lump Sums
If any portion of a Member's Accrued Benefit consists of a
Profit Sharing Plan Member Amount or Thomson Company
Plan Member Amount, the Member may elect, subject to
Spousal Consent, to receive such amount at any time following
his Severance from Service Date in a lump sum.
If as of a Member's Benefit Commencement Date, his Accrued
Benefit is equal to the sum of the amounts specified in
Sections 5.1(a)(iii) and 5.1(b) or 5.1(a)(iv) and 5.1(b):
(a) the Member may elect, subject to Spousal
Consent, to receive distribution of his Retirement Benefit or
Vested Deferred Benefit, as the case may be, in a lump sum,
or
(b) the Member's Eligible Spouse or designated
beneficiary may elect to receive distribution of the Spouse's
Benefit or Death Benefit, as the case may be, in a lump sum.
7.10 Payment of Death Benefit
The Death Benefit payable under Section 6.7 shall commence
to be paid on the first day of the month next following the
date of the member's death.
7.11 Small Benefit Payments
In the case of a Member whose Severance from Service is
after December 31, 1991, the Trustee shall distribute to the
Member or his Spouse, as the case may be, as soon as
practicable after the Member's Severance from Service, in a
single lump sum payment the Actuarial Equivalent of the
Member's vested Accrued Benefit, if the amount of such
distribution does not exceed $3,500. In the case of a Member
whose Severance from Service is before January 1, 1992, the
Trustee shall distribute to the Member or his Spouse, as the
case may be, as soon as practicable after the Member's
Retirement Date, in a single lump sum payment the Actuarial
Equivalent of the Member's vested Accrued Benefit, if the
amount of such distribution does not exceed $3,500. A
Member with no vested interest in his Accrued Benefit as of
his Severance from Service shall be deemed to have received a
distribution of his entire vested Accrued Benefit of zero dollars
as of his Severance from Service.
7.12 Qualified Domestic Relations Order - If required to do so by a
qualified domestic relations order, as defined in Section 414(p)
of the Code, the Trustee may commence distribution of all or
a portion of a Member's Accrued Benefit to an alternate payee,
as defined in Section 414(p) of the Code, at a time after the
Member attains age 50, but prior to the Member's Retirement
Date or termination of employment.
7.13 Retirement Benefit Payments - The annual retirement benefits
for life shall be payable in monthly installments and shall end
with the last monthly payment prior to the death of the
Member, or his beneficiary if receiving benefits.
7.14 Reemployment after Retirement - If any retired Member is
reemployed by the Company, his retirement benefit payments,
if any, shall cease until his subsequent retirement and his
Service and Credited Service shall be restored to him but the
benefit payable upon the Member's subsequent retirement or
death shall be reduced (but not to less than zero) by the
Actuarial Equivalent of any payments under the Plan
previously received by the Member and by the cost of any
retirement benefit coverage of the Member's beneficiary under
the Plan during such reemployment provided that no reduction
shall be made for Disability Benefits received under Section
6.5.
7.15 Required Distributions
Notwithstanding anything to the contrary contained in this Plan
--
(a) The entire interest of each Member must either:
(1) be paid to him not later than the April
1st next following the close of his taxable year in which he
attains age seventy and one-half (70-1/2); or
(2) commence to be paid to him not later
than the date specified in Paragraph (1) and payable, in
accordance with regulations prescribed by the Secretary of the
Treasury, over a period not extending beyond the life of such
Member or the joint lives of such Member and his designated
beneficiary, or the life expectancy of such Member or the joint
and last survivor life expectancy of such Member and his
designated beneficiary; provided, however, that if the
distribution of a Member's Retirement Benefit has commenced
in accordance with this Paragraph (2), any portion remaining
to be distributed at such Member's death shall continue to be
distributed at least as rapidly as under the method of
distribution in effect as of such Member's death.
(b) If a Member has died prior to the
commencement of distributions to him in accordance with
Paragraph (a)(2), the entire interest of such Member shall be
distributed:
(1) within five (5) years after the death of
such Member, or
(2) where distribution is to be made to the
Member's designated beneficiary, commencing
(A) within one (1) year (or such
longer time as the Secretary of the Treasury may be
regulations prescribe) after the Member's death, or
(B) if the designated beneficiary is
such Member's surviving Spouse, no later than the date on
which such Member would have attained age seventy and one-
half (70-1/2),
and payable, in accordance with regulations prescribed
by the Secretary of Treasury, over a period not extending
beyond the life expectancy of such designated beneficiary.
(c) For purposes of Paragraphs (a)(2) and (b)(2), at
the election of the Member or a surviving Spouse the life
expectancy of a Member and/or his Spouse may be
redetermined, but not more often than annually. In the
absence of such an election, life expectancies shall not be
redetermined once benefit distribution has commenced.
(d) Under regulations prescribed by the Secretary of
the Treasury, any amount paid to a Member's child shall be
treated as if it had been paid to such Member's surviving
Spouse if such amount will become payable to such spouse
upon the child reaching maturity or such other designated
event which may be permitted under such regulations.
(e) For purposes of this Section 7.14, the term
"designated beneficiary" shall mean a Member's surviving
Spouse or an individual designated by the Member pursuant to
Section 15.5.
(f) Notwithstanding anything in the Plan to the
contrary, the form and timing of all distributions under the
Plan shall be in accordance with regulations issued by the
Department of the Treasury under section 401(a)(9) of the
Code, including the incidental death benefit requirements of
section 401(a)(9)(g) of the Code.
7.16 Direct Transfers - If a Member who is entitled to a distribution
of at least $200 which is an "eligible rollover distribution," as
defined in section 402(f)(2)(a) of the Code, elects in writing on
a form provided by the Plan Administrator to have such
distribution, or a portion of such distribution equal to at least
$500 (or the entire distribution if less than $500) paid directly
to a specified "eligible retirement plan," as defined in section
402(c)(8)(B) of the Code, which is a defined contribution plan
the terms of which permit the acceptance of rollover
distributions, the portion of such distribution which would
otherwise be includible in the Member's gross income shall be
distributed in the form of a direct trustee-to-trustee transfer to
the eligible retirement plan so specified.
ARTI CLE VIII
CONT RIBUTIONS AND FUNDING
8.1 The Plan shall be funded for the exclusive purposes of
providing benefits to Members and their beneficiaries and for
defraying reasonable expenses in administering the Plan.
8.2 All contributions to the Plan shall be made to the Trust and all
benefit payments shall be made held in the Trust.
8.3 Contributions to the Plan shall be returned to the Company in
the following instances:
(a) In the case of a contribution made by the
Company pursuant to a mistake in fact, such contribution shall
be returned to the Company within one year after the payment
of the contribution.
(b) Each contribution to the Plan is hereby
conditioned on its deductibility under Section 404 of the Code,
and if any part or all of a contribution is disallowed, then to
the extent of such disallowance the contribution shall be
returned to the Company.
8.4 Forfeitures resulting from a Member's early retirement,
termination of employment or death shall not be applied to
increase the benefit that any Member would otherwise receive
under the Plan and shall be applied as soon as possible to
reduce Company contributions.
ART ICLE IX
LIM ITATIONS ON BENEFITS AND CONTRIBUTIONS
9.1 As used in this Article IX -
(a) "Annual Addition," for a Limitation
Year, means, in the case of any Defined Contribution Plan, the
aggregate of -
(1) the amount of a Member's
voluntary contributions for the Limitation Year; and
(2) Employer contributions and
forfeitures allocated to the Member's accounts for the
Limitation Year.
(b) "Annual Benefit" under a Defined
Benefit Plan means a retirement benefit payable annually in
the form of a straight life annuity under such plan.
For purposes of this Subsection (b) -
(1) if a retirement benefit is provided
in a form other than a straight life annuity or a qualified joint
and survivor annuity (within the meaning of Section 417(b)(1)
of the Code), such benefit shall be adjusted (in accordance
with regulations prescribed by the Secretary) to an equivalent
benefit in the form of a straight life annuity on the basis of the
actuarial assumptions specified in Section 1.2 for optional
forms of payment other than the lump sum option (except that
the interest rate assumption shall be 5% if the rate specified is
less than 5%);
(2) if a retirement benefit is provided
in the form of a qualified joint and survivor annuity (within
the meaning of Section 417(b)(1) of the Code) which includes
additional post-retirement death benefits, such benefit need not
be adjusted to the extent the value of the benefit in such form
exceeds the sum of (A) the value of a straight life annuity and
(B) the value of any post retirement death benefits that would
be payable even if the annuity was not in the form of a joint
and survivor annuity;
(3) if such annual retirement benefit
is attributable in part to employee contributions or to roll-over
contributions (as defined in Section 402(a)(5), 403(a)(4) or
408(d)(3) of the Code or Section 409(b)(3)(C) of the Code as
in effect prior to 1984), the annual retirement benefit shall be
reduced on the basis of the actuarial assumptions specified in
Section 1.2 for optional forms of payment other than the lump
sum option (except that the interest rate assumption shall be
5% if the rate specified is less than 5%) so that it will be the
equivalent of an annual retirement benefit derived solely from
employer contributions.
(c) "Defined Benefit Plan" means any
Retirement Plan that is not a Defined Contribution Plan.
(d) "Defined Benefit Plan Fraction," for a
Limitation Year, means a fraction,
(1) the numerator of which is the
aggregate Projected Annual Benefit (determined as of the last
day of the Limitation Year) of the Member under all Defined
Benefit Plans, and
(2) the denominator of which is the
greater of -
(A) an amount equal to the
lesser of -
(i) the product of 1.25
and the dollar limitation in effect under Section 415(b)(1)(A)
of the Code for such Limitation Year (adjusted as described in
Subsections 9.2(d) and (e)), or
(ii) the product of 1.4 and
the aggregate Projected Annual Benefit (determined as of the
last day of the Limitation Year) that the Member would
receive under all such plans if the plans, in the aggregate,
provided the benefit described in Section 415(b)(1)(B) of the
Code; or
(B) in the case of an
individual who participated in a Defined Benefit Plan that was
in existence on July 1, 1982, the product of 1.25 and his
Accrued Benefit under the Plan. For purposes of this
Subparagraph (B) and Paragraph 9.2(a)(2), an individual's
"Accrued Benefit" under a Defined Benefit Plan means the
individual's accrued benefit under the Plan (determined as of
the end of the last Plan Year beginning before January 1,
1983), expressed as an annual benefit (within the meaning of
Section 415(b)(2) of the Code as in effect before the
amendments made by the Tax Equity and Fiscal Responsibility
Act of 1982).
(C) in the case of an
individual who participated in a Defined Benefit Plan that was
in existence on May 6, l986, the product of l.25 and his
Accrued Benefit under the Plan. For purposes of this
Subparagraph (C) and Paragraph 9.2(a)(2), an individual's
"Accrued Benefit" under a Defined Benefit Plan means the
individual's accrued benefit under the plan (determined as of
the end of the last plan year beginning before January l, l987),
expressed as an annual benefit (within the meaning of Section
4l5(b)(2) of the Code as in effect before the amendments made
by the Tax Reform Act of l986).
(e) "Defined Contribution Plan" means a Retirement
Plan that provides for an individual account for each Member
and for benefits based solely on the amount contributed to
such account and any income, expense, gains, losses, and
forfeitures of accounts of other Members in respect of such
account.
(f) "Defined Contribution Plan Fraction," for a
Limitation Year, means a fraction,
(1) the numerator of which is the sum of the
Annual Additions to a Member's accounts under all Defined
Contribution Plans, as of the close of the Limitation Year and
for all prior Limitation Years, and
(2) the denominator of which is the sum of
the lesser of the following amounts, determined for such
Limitation Year and for each prior year of the Member's
service with the Company or an Affiliate:
(A) the product of 1.25 and the dollar
limitation in effect under Section 415(c)(1)(A) of the Code, or
(B) the product of 1.4 and the amount
that may be taken into account under Section 415(c)(1)(B) of
the Code; provided, however,
(3) the Company may elect, on a uniform
and nondiscriminatory basis, to make use of the special
transition rule of Section 415(e)(6) of the Code applicable to
plan years ending before January 1, 1983, and Section
1106(i)(4) of the Tax Reform Act of 1986 applicable to years
ending before January 1, 1987, to determine the denominator
of the Defined Contribution Plan Fraction, and
(4) in accordance with regulations
promulgated under Section 415 of the Code, the portion of the
numerator of the Defined Contribution Plan Fraction
attributable to Limitation Years beginning before January 1,
1983 or January 1, 1987 as the case may be, shall be reduced,
to the extent necessary, so that the sum of the Defined Benefit
Plan Fraction and Defined Contribution Plan Fraction for the
last Limitation Year beginning before January 1, 1983 or
January 1, 1987, as the case may be, does not exceed one
(1.0).
(g) "Limitation Year" means the Plan Year.
(h) A Member's "Projected Annual Benefit" under a
Defined Benefit Plan shall be equal to the Annual Benefit to
which he would be entitled under such plan if he were to
continue employment until his normal retirement age under
such plan (or until his current age, if later), his Section 415
Compensation for the Limitation Year under consideration
remains the same until the date he attains such age, and all
other relevant factors used to determine benefits under the plan
were to remain the same as in the current Limitation Year for
all future Limitation Years.
(i) "Retirement Plan" means any plan maintained
by the Company or an Affiliate that is (A) a pension, profit
sharing or stock bonus plan, described in Section 401 (a) and
501(a) of the Code, (B) an annuity plan or annuity contract
described in Section 403(a) of the Code, (C) a simplified
employee pension plan described in Section 408(k) of the
Code, or (D) a qualified bond purchase plan described in
Section 405(a) of the Code. In addition, Retirement Plan shall
include (A) an individual retirement account or an individual
retirement annuity described in Section 408(a) or 408(b) of the
Code (or an individual retirement bond described in 409 of the
Code as in effect prior to 1984), or an annuity contract
described in Section 403(b) of the Code, if such account or
annuity (or bond) is considered to be maintained by the
Company or an Affiliate under Section 1.415-7(h) or (i) of the
Federal Income Tax Regulations and (B) a program of
voluntary contributions contained in a defined benefit pension
plan.
(j) "Section 415 Compensation," for any period,
means an individual's current compensation from the Company
or an Affiliate required to be reported on Form W-2 for such
period, including those items listed in Paragraph (1) of Section
1.415-2(d) of the Federal Income Tax Regulations but
excluding those items listed in Paragraph (2) thereof.
9.2 (a) Notwithstanding anything in this Plan to the
contrary, the Annual Benefit to which a Member is entitled at
any time under this Plan, when added to his aggregate Annual
Benefit under all other Defined Benefit Plans, shall not, during
a Limitation Year exceed the greatest of -
(1) the lesser of -
(A) $90,000, or
(B) 100 percent (100%) of the
average of his Section 415 Compensation for his high three (3)
consecutive calendar years during which he was a Member of
the Plan,
(2) in the case of an individual who
was a Member prior to January 1, 1983, his Accrued Benefit
as defined in Subparagraph 9.1(d)(2)(B), and
(3) in the case of an individual who
was a Member prior to January 1, 1987, his Accrued Benefit
as defined in Subparagraph 9.1(d)(2)(C).
(b) The Annual Benefit payable under this Plan
with respect to which a Member shall be deemed to meet the
requirements of Paragraph (a)(1) if -
(1) such Member's Annual Benefit,
when added to his aggregate Annual Benefit under all other
Defined Benefit Plans, does not exceed $10,000 for the current
Limitation Year and for any prior Limitation Year, and
(2) such Member has not at any time
participated in a Defined Contribution Plan.
(c) In the case of a Member who has completed
fewer than ten (10) years of participation in the Plan, the
maximum Annual Benefit allowable under this Plan shall be
computed by multiplying the amount determined under
Subsection (a) or (b), whichever is applicable, by a fraction,
the numerator of which shall be the aggregate of his years of
participation and the denominator of which shall be ten (10).
The provisions of the previous sentence shall apply to the
limitations under Subparagraph (a)(l)(B) and Subsection (b) of
this Section 9.2, except that such Subparagraph and Subsection
shall be applied with respect to years of the Member's Period
of Service rather than years of participation in the Plan. In no
event shall the reductions set forth in this Subsection (c)
reduce the limitations referred to in Subsections (a) or (b) to
an amount less than l/l0 of such limitation (determined without
regard to the reductions in this Subsection (c)).
(d) If the Member's Annual Benefit commences
after the Social Security Retirement Age, the dollar limitation
contained in Section 9.2(a)(1) shall be adjusted (in accordance
with regulations prescribed by the Secretary) based on the
actuarial assumptions specified in Section 1.2 for optional
forms of payment other than the lump sum option (except that
the interest rate assumption shall be 5% if the rate specified is
greater than 5%) so that such limitation equals an annual
benefit, beginning at the age at which the Member's benefit
commences, which is equivalent to a benefit equal to the
dollar amount specified under Section 9.2(a)(1) beginning at
the Social Security Retirement Age.
(e) In the case of an annual retirement benefit that
begins before a Member's Social Security Retirement Age, the
dollar limitation contained in Subsection (a)(1) shall be
adjusted (in accordance with regulations prescribed by the
Secretary) to the actuarial equivalent, as of the date such
benefits commence, of a benefit equal to the amount specified
in Subsection (a)(1) commencing at the Social Security
Retirement Age on the basis of the actuarial assumptions
specified in Section 1.2 for optional forms of payment other
than the lump sum option (except that the interest rate shall be
5% if the rate specified is less than 5%).
(f) The dollar limitations contained in Subsection
(a) shall be adjusted for increases in the cost of living in
accordance with regulations prescribed by the Secretary of the
Treasury under Section 415(d) of the Code. Each annual
adjustment shall be limited to the scheduled annual increase,
as determined by the Secretary, and shall become effective on
January 1 of the year for which the increase has been
determined.
9.3 Notwithstanding the provisions of Section 9.2, for each
Member who is also a participant in any Defined Contribution
Plan, the Trustee will compute such Member's Defined Benefit
Plan Fraction and Defined Contribution Plan Fraction and will
adjust his Annual Additions under the Defined Contribution
Plans and his Projected Annual Benefit under the Defined
Benefit Plan, so that the sum of such fractions, for any
Limitation Year, will not exceed (1.0). Reductions in such
Annual Additions and such Projected Annual Benefit shall be
made in the following order:
(a) First, voluntary contributions constituting
Annual Additions under each Retirement Plan shall be reduced
proportionately to the voluntary contributions which the
Member could otherwise have made to such Retirement Plans;
(b) Second, the Member's Projected Annual Benefit
under this Plan shall be reduced by the proportion that his
Projected Annual Benefit under each such Plan bears to his
aggregate Projected Annual Benefit under all such Plans;
(c) Third, Employer Contributions (other than
Salary Reduction Contributions) to profit sharing plans and
stock bonus plans shall be reduced proportionately to such
Employer Contributions that would otherwise be made to the
Member's accounts under such Plans; and
(d) Fourth, Salary Reduction Contributions to
Defined Contribution Plans shall be reduced proportionately to
the Salary Reduction Contributions that would otherwise be
made to the Member's accounts under such Plans.
9.4 If, on a Member's Benefit Commencement Date, his Accrued
Benefit, computed without regard to this Article IX, exceeds
the maximum annual benefit which
he may receive under the provisions hereof, his retirement
benefit shall be adjusted on the first day of each subsequent
Plan Year to take into account any increase, since his Benefit
Commencement Date, in the maximum permissible retirement
benefit; provided, however, that such retirement benefit shall
not at any time exceed his Accrued Benefit, computed without
regard to this Article IX, as of his Benefit Commencement
Date.
9.5 The limitation imposed by this Article IX shall be
administered in accordance with the final regulations and
rulings issued by the Secretary of the Treasury under Section
415 of the Code.
ART ICLE X
TOP -HEAVY PLAN YEARS
10.1 For purposes of this Article X:
(a) (1) "Key Employee" means any Employee
who, at any time during the Plan Year or any of the four (4)
preceding Plan Years, is --
(A) one of the ten (10) Employees
owning the largest interests in the Company and all Affiliates
considered as a unit;
(B) an owner of (i) more than five
percent (5%) of the outstanding stock, or of stock possessing
more than five percent (5%) of the total combined voting
power, of the Company or any Affiliate, or (ii) more than five
percent (5%) of the capital or profits interest in any Affiliate
which is not a corporation;
(C) an owner of (i) more than one
percent (1%) of the outstanding stock or of stock possessing
more than one percent (1%) of the total combined voting
power of the Company or any Affiliate or (ii) more than one
percent (1%) of the capital or profits interest in any Affiliate
which is not a corporation, in either case if and only if the
Section 415 Compensation of such owner from the Company
and all Affiliates combined exceeds $150,000; or
(D) an officer of the Company or an
Affiliate whose Section 415 Compensation exceeds 50% of the
dollar limitation in effect under Section 415(b)(1)(A) for any
such Plan Year.
(2) For purposes of Subparagraph (1)(A),
(A) no Employee shall be considered a
Key Employee if such Employee's Compensation is not more
than the amount determined under Section 415(c)(1)(A) of the
Code (as adjusted pursuant to Section 415(d)(1)(B) of the
Code) for the calendar year in which falls the Determination
Date; and
(B) if any two Employees own the same
interest in the Company or any Affiliate, the Employee having
the larger Section 415 Compensation will be considered to
own the larger interest.
(3) For purposes of Subparagraphs (1)(A)-
(C), an Employee shall be considered as owning all interests in
the Company or an Affiliate in which he owns directly or
would be considered as owning under the rules contained in
Section 318 of the Code, except that subparagraph (C) of
Section 318(a)(2) shall be applied by substituting "5%" for
"50%".
(4) No more than the greater of three (3)
Employees or ten percent (10%) of all Employees (up to a
maximum of fifty (50)) of the Company and all Affiliates
combined shall be considered officers for purposes of
Subparagraph (1)(D) and, with respect to Plan Years beginning
on or before February 28, 1985 no Employee of the Company
or an Affiliate which is not a corporation shall be considered
an officer for such purposes. Where the actual number of such
officers exceeds the limits imposed by the preceding sentence,
those Employees who will be considered officers for purposes
of Subparagraph (1)(D) shall be the officers having the highest
annual compensation during the five (5) year period consisting
of the Plan Year and the four (4) preceding Plan Years.
(b) "Determination Date" means with respect to any
Plan Year, the last day of the immediately preceding Plan
Year.
(c) "Aggregation Group" means
(1) each plan of the Company or Affiliate,
which --
(A) has one or more participants
who are Key Employees, or
(B) enables any plan described in
Subparagraph (A) to meet the requirements of Section
401(a)(4) or Section 410 of the Code.
plus, at the Board's election,
(2) any other plan or plans which, when
considered together with the plan or plans described in
Paragraph (1), satisfy the requirements of Section 401(a)(4)
and/or Section 410 of the Code.
(d) "Employee" and "Key Employee" include their
beneficiaries.
(e) "Top-Heavy Plan Year" means any Plan Year
with respect to which the Plan is a Top-Heavy Plan described
in Section 10.3, such Section 10.3 to be read as incorporating
the definitions supplied by Section 416 of the Code and the
regulations promulgated thereunder, and those of any successor
statute thereto.
(f) "Section 415 Compensation" has the meaning
assigned to it in Section 9.1(j) of the Plan, but determined
without regard to Sections 125, 402(a)(8) and 402(h)(1)(B) of
the Code.
.
10.2 To the extent required under Section 401(a)(10)(B) and/or
Section 416 of the Code (or any successor statute(s) thereto),
for any Top-Heavy Plan Year, the provisions of the Plan shall
apply only to the extent not inconsistent with Sections 10.4
through 10.7 of the Plan.
10.3 (a) Except as provided in Section 10.3(a)(3), the
Plan is a Top-Heavy Plan with respect to a Plan Year, if, as of
the Determination Date of such Plan Year --
(1) the cumulative accrued benefits of Key
Employees under the Plan exceeds sixty percent (60%) of the
cumulative accrued benefits of all Employees under the Plan
unless the Plan is a Member of an Aggregation Group with
respect to which the percentage test described in Subparagraph
(2)(B) is not met; or
(2) the Plan is a Member of an Aggregation
Group --
(A) which is described in
Section 10.1(c)(1),and
(B) with respect to which the sum
of --
(i) the present value of the
cumulative accrued benefits of all Key Employees under all
defined benefit plans within the Aggregation Group, and
(ii) the aggregate of the
account balances of all Key Employees under all defined
contribution plans in the Aggregation Group --
exceeds sixty percent (60%) of the sum of --
(i) the present value of the
cumulative accrued benefits of all Employees under all defined
benefit plans included in the Aggregation Group, and
(ii) the aggregate of the
account balances of all Employees under all defined
contribution plans in the Aggregation Group.
(3) Notwithstanding Paragraphs (1) and (2) of
this Section 10.3(a), the Plan shall not be a Top-Heavy Plan
for any Plan Year in which the Plan is a member of an
Aggregation Group with respect to which the percentage test
described in Section 10.3(a)(2)(B) is not met.
(b) For purposes of this Section 10.3:
(1) the accrued benefit and/or account balances
of any Employee who is not a Key Employee during the Plan
Year but who was a Key Employee during any prior Plan Year
shall be disregarded;
(2) the present value of an Employee's accrued
benefit under a defined benefit plan as of a Determination
Date shall be determined as of that valuation date which
occurs within the twelve (12) month period ending on such
Determination Date and is used by the enrolled actuary for
computing Plan costs for minimum funding, as if the
Employee's separation from service occurred on such valuation
date.
(3) the account balance of an Employee in a
defined contribution plan as of any Determination Date shall
be equal to the account balance of the Employee on the
valuation date which occurs within the twelve (12) month
period ending on such Determination Date including an
adjustment for contributions made or which are due as of such
Determination Date.
(4) for any Plan Year beginning after 1984, the
present value of the accrued benefit or the account balance of
any Employee who has not performed services for the
Company during the five (5) year period ending on the
Determination Date shall be disregarded.
(5) the account balance of an Employee in a
defined contribution plan or the present value of the accrued
benefit of an Employee in a defined benefit plan, as of a
Determination Date -
(A) excludes any rollover
contribution or similar transfer to such plan made after
December 31, 1983 and attributable to the Participant's interest
in a plan other than a plan maintained by the Company or an
Affiliate, and
(B) includes any amount distributed
with respect to the Employee under the plan within the five (5)
year period ending on the Determination Date, except to the
extent that such amount is included in such Employee's
account balance or the present value of his accrued benefit
pursuant to Paragraph (2) or (3). This Subparagraph (B) shall
also apply to distributions under a terminated plan which if it
had not been terminated would have been required to be
included in an Aggregation Group, and
(6) the present value of Employees' accrued
benefits shall be determined using the actuarial assumptions
specified in Section 1.2.
10.4 (a) The Accrued Benefit, commencing on or after
the Normal Retirement Date of each individual, other than a
Key Employee, who was a Member during any Top-Heavy
Plan Year shall be the greater of:
(1) such Member's Accrued Benefit
determined under Article V, or
(2) an amount equal to two percent (2%) of
such Member's Highest Average Compensation for each of the
first ten (10) years of his Top-Heavy Service adjusted pursuant
to Subsection (c); provided, however, that in the case of a
Member whose Benefit Commencement Date is later than his
Normal Retirement Date, the amount determined under this
Paragraph (2) commencing on such Benefit Commencement
Date shall not be less than the Actuarial Equivalent of the
Accrued Benefit that would have been payable pursuant to this
Paragraph (2) on the Member's Normal Retirement Date.
(b) For purposes of this Section 10.4:
(1) "Highest Average Compensation" means a
Member's average Section 415 Compensation for the five (5)
consecutive years during which his aggregate Section 415
Compensation was highest, excluding compensation earned by
such Member --
(A) after the close of the last Top-
Heavy Plan Year, or
(B) prior to December 1, 1984,
except to the extent that compensation prior to December 1,
1984 is required to be taken into account so that such average
is based on a five (5) year period.
(2) "Top-Heavy Service" means the
Member's Period of Service, excluding any Year of Service --
(A) during a Plan Year which was
not a Top-Heavy Plan Year, or
(B) prior to December 1, 1984.
(c) In the case of a Member who is also a
participant in a defined contribution plan maintained by the
Company or an Affiliate, the amount described in Paragraph
(a)(2) shall be reduced by the actuarial equivalent, determined
as of the date of the Member's Benefit Commencement Date,
of the Member's account balance under such defined
contribution plan derived from employer contributions (which
account balance shall be deemed to include prior withdrawals
made by the Member accumulated at interest to the Member's
Benefit Commencement Date). For purposes of this
Subsection (c), actuarial equivalence and the interest rate
referred to in the preceding sentence shall be determined using
the actuarial assumptions described in Section 1.2.
10.5 (a) For any Top-Heavy Plan Year, each Member
shall be vested in his Accrued Benefit in accordance with the
following schedule:
Nonforfeitable
Years of Service
Percentage
Fewer than Two years
0%
Two years but less than Three Years
20%
Three years but less than Four years
40%
Four years but less than Five years
60%
Five or more years
100%
(b) Any portion of a Member's Accrued Benefit
which has become vested pursuant to Subsection (a) shall
remain vested after the Plan has ceased to be a Top-Heavy
Plan.
(c) Any Member who has completed a Period of
Service of at least three (3) years prior to the beginning of the
Plan Year in which the Plan ceased to be a Top-Heavy Plan
shall continue to vest in his Accrued Benefit according to the
schedule set forth in Subsection (a) after the Plan has ceased
to be a Top-Heavy Plan.
10.6 For any Top-Heavy Plan Year, the limitations contained in
Article IX of the Plan shall be applied by substituting "1.0" for
"1.25" in Section 9.1(d)(2) and 9.1(f)(2) of the Plan, and the
transitional rule under Section 415(e)(6) of the Code, the use
of which is provided for by Section 9.1(f)(3) of the Plan shall
be applied by substituting $41,500 for $51,875, unless for such
Plan Year --
(a) the requirements of Section 10.4 would be satisfied
if "three percent (3%)" were substituted for "two percent (2%)"
in Subsection (a)(1) thereof; and
(b) the Plan would not be a Plan described in Section
10.3 if "ninety percent (90%)" were substituted for "sixty
percent (60%)" wherever the latter figure appears in Section
10.3.
ARTIC LE XI
ADMIN ISTRATION; CLAIMS PROCEDURE
11.1 Salant Corporation by its approval of the Plan, as amended,
accepts responsibility as a named fiduciary of the Plan with
respect to the selection and retention of the Trustee of the
Fund, the selection and retention of any Investment Manager,
the selection of the members of the Committee and for
reviewing the performance of such Committee as to the
fiduciary duties and responsibilities vested in it under the Plan
as hereinafter set forth. Salant Corporation shall act by
resolution of its Board of Directors. Such action shall be
evidenced by written resolution certified in writing by the
Secretary or any Assistant Secretary of Salant Corporation.
11.2 The Committee shall consist of not fewer than 3 nor
more than 5 members and may, but need not, include members
of the Board of Directors of Salant Corporation. Any member
may resign at will by notice to Salant Corporation or be
removed (with or without cause) by Salant Corporation. The
Committee shall have exclusive responsibility and authority for
approving and reviewing the Plan's investment and funding
objectives and policies; and for reviewing and evaluating the
performance and policies of the Trustee and of any Investment
Manager. The Committee shall report regularly, at least
annually, to the Board of Directors of Salant Corporation with
respect to its evaluation of same. The Committee shall also
have primary responsibility and authority for the administration
of the Plan, including the authority to interpret its provisions,
to authorize distributions from Plan assets, to establish and
enforce such rules and regulations as it shall deem proper for
the administration of the Plan, to determine the amount of
benefits which shall be payable to any person in accordance
with the provisions the Plan, to establish benefit claim
procedures, to consider and decide conclusively appeals by any
claimant in accordance with an appeals procedure established
by the Committee and to authorize the payment of benefits
from Plan assets. The decisions of the Committee in the
interpretation of the provisions of the Plan and the
determination of questions regarding eligibility for and the
amount of benefits payable in accordance with the provisions
of the Plan shall be conclusive and binding on all parties. The
Committee shall also have the responsibility for compiling and
communicating to the Investment Manger, if any, the financial
information and projections with respect to anticipated
contributions to and distributions from the Plan so that the
current and ongoing liquidity and other financial needs of the
Plan may be properly integrated into the recommendations of
the Investment Manager respecting the Plan's investment
objectives. The Committee shall have the authority to engage
independent actuaries, counsel and consultants in order to
fulfill its responsibilities, to rely on the advice of same and to
compensate same out of Plan assets. The Committee shall
also have the responsibility with respect to reporting and
disclosure requirements under the Employee Retirement
Income Security Act of 1974. The Committee shall also, from
time to time, recommend Plan amendments to the Board of
Directors of Salant Corporation as the Committee in
consultation with others may deem appropriate. In addition to
and in furtherance of the powers and authorities herein
conveyed, the Committee shall be authorized, in its discretion,
to allocate responsibilities among one or more of its members,
and to delegate responsibilities to any person or persons
selected by it. Any action taken by the Committee shall be
taken by a majority of its members at a meeting or by written
instrument approved by such majority in the absence of a
meeting. A written resolution or memorandum signed by at
least two members or by one member and the secretary of the
Committee shall be sufficient evidence to any person of any
action taken by such Committee.
11.3 Salant Corporation shall have the power to appoint one or
more Investment Managers of the Fund. Any Investment
Manager appointed by Salant Corporation shall have
responsibility for recommending investment objectives and
policies to the Committee and for implementing same. The
Investment Manager shall be responsible for investment
decisions involving assets of the Fund over which the
Investment Manager has authority and shall make regular
reports to the Committee.
11.4 Any person, corporation or other entity may serve in more
than one fiduciary capacity under the Plan.
11.5 In the event of a dispute between the Trustees or Committee
and a Member or beneficiary over the amount of benefits
payable under the Plan, the Member or
beneficiary may file a claim for benefits by notifying the
Committee of such claim. Such notification may be in any
form adequate to give reasonable notice to the Committee,
shall set forth the basis of such claim and shall authorize the
Committee to conduct such examinations as may be necessary
to determine the validity of the claim and to take such steps as
may be necessary to facilitate the payment of any benefits to
which the claimant may be entitled under the Plan.
11.6 The Committee shall decide whether to grant a claim within
ninety (90) days of the date on which the claim is filed, unless
special circumstances require a longer period for adjudication
and the claimant is notified in writing of the reasons for an
extension of time within such ninety (90) day period;
provided, however, that no extension shall be permitted
beyond ninety (90) days after the date on which the claimant
received notice of the extension of time from the Committee.
If the Committee fails to notify the claimant of their decision
to grant or deny the claim, such claim shall be deemed to have
been denied by the Committee and the review procedure
described in Section 11.7 shall become available to the
claimant.
11.7 (a) Whenever a claim for benefits is denied, written
notice, prepared in a manner calculated to be understood by
the claimant, shall be provided to the claimant, setting forth
the specific reasons for the denial and explaining the procedure
for review of the decision made by the Committee. If the
denial is based upon submission of information insufficient to
support a decision, the Committee shall specify the
information which is necessary to perfect the claim and its
reasons for requiring such additional information.
(b) Any claimant whose claim is denied, may,
within sixty (60) days after the receipt of written notice of
such denial, request in writing a review by the Board, the
Members of which shall be "named fiduciaries," within the
meaning of Section 402(a) of ERISA for the purpose of
adjudicating such appeals. Such claimant or the claimant's
representative may examine any Plan documents relevant to
the claim and may submit the issues and comments in writing.
The Board shall adjudicate the claimant's appeal within sixty
(60) days after its receipt of the claimant's written request for
review, unless special circumstances require a longer period
for adjudication and the claimant is notified in writing of the
reasons for an extension of time within such sixty (60) day
period; provided, however, that such adjudication shall be
made no later than one hundred twenty (120) days after the
Board's receipt by them of the claimant's written request for
review.
(c) If the Board fails to notify the claimant of its
decision with respect to the claimant's request for review
within the time specified by this Section, such claim shall be
deemed to have been denied on review.
11.8 If the claim is denied by the Board, such decision shall be in
writing, shall state specifically the reasons for the decision,
shall be written in a manner calculated to be understood by the
claimant and shall make specific reference to the pertinent
Plan provisions upon which it is based.
11.9 The procedure set forth in this Article XI shall be revised as
necessary to conform to regulations promulgated by the United
States Department of Labor or any successor authority
regulating claims procedures for employee benefit plans.
ARTI CLE XII
THE TRUST FUND
12.1 Salant Corporation shall enter into a Trust Agreement with the
Trustee, for the establishment and maintenance of the Trust
Fund. The Trust Agreement shall be deemed to form a part of
the Plan, and all rights which may accrue to any person under
the Plan shall be subject to the terms of the Trust Agreement.
12.2 The Trustee shall manage and control the Trust Fund in
accordance with the terms of the Trust Agreement. The
Trustees shall pay benefits to Members or former Members
only upon the specific instructions of the Committee.
12.3 Administrative expenses of the Plan shall be paid out of the
Trust Fund unless and to the extent paid by the Company.
The Company may reimburse the Trust Fund for any payment
so made.
ARTI CLE XIII
AMEN DMENT AND TERMINATION OF THE PLAN
13.1 Amendment of the Plan
Salant Corporation reserves the right to modify or amend this
Plan from time to time and to any extent that it may deem
advisable, including without limitation any amendment deemed
necessary to insure the continued qualification of this Plan
under the provisions of the Internal Revenue Code. Any
amendment shall be made pursuant to a resolution duly
adopted by Salant Corporation's Board of Directors. No
amendment shall have the effect of returning to the Company
the whole or any part of the assets of this Plan or of diverting
any part of the assets of this Plan to purposes other than for
the exclusive benefit of the Members and their beneficiaries at
any time prior to the satisfaction of all the liabilities under this
Plan with respect to such persons. If such amendment reduces
the Accrued Benefit of any Member, such amendment shall
not be valid unless approved by the Secretary of Labor or
unless he fails to take action disapproving such amendment
within 90 days after receiving notice of it.
Except as otherwise provided in regulations prescribed by the
Secretary of the Treasury, an amendment to the Plan which
has the effect of eliminating or reducing an early retirement
benefit or eliminating an optional form of benefit with respect
to benefits attributable to service prior to such amendment
shall be treated as reducing Accrued Benefits for purposes of
this Section 13.1.
A Plan amendment that changes the Plan's vesting schedule
shall not be effective with respect to any Member with a three-
year Period of Vesting Service who makes an irrevocable
election during the election period to have his benefit
determined without regard to such amendment.
For purposes of the preceding paragraph the election period
shall begin on the date the Plan amendment is adopted and end
on the latest of the following dates:
(i) The date which is 60 days after the
day the Plan amendment is adopted,
(ii) The date which is 60 days after the
day the Plan amendment is effective, or
(iii) The date which is 60 days after the
day the Member is issued written notice of the Plan
amendment by the Plan Administrator.
13.2 Termination of the Plan
(a) Termination. The Company reserves the
right to terminate the Plan, in whole or in part, at any time.
(b) Benefits are Non-Forfeitable. Upon
termination or partial termination of the Plan, the rights of all
affected Members to their Accrued Benefits in accordance with
Section 5.1 to the date of termination or date of partial
termination shall be non-forfeitable, except as provided under
the provisions of Article XIV.
13.3 Allocation of Assets Upon Plan Termination
Upon termination of the Plan in accordance with the
provisions of Section 13.2, the Plan's assets shall be allocated
in accordance with the following order, subject to the
provisions of Title IV of ERISA:
(a) Benefits payable as an annuity to
(i) Members and their beneficiaries who began receiving
benefits at least three years prior to the termination date of the
Plan and (ii) Members and their beneficiaries who could have
been receiving benefits as of three years prior to the
termination date of the Plan if they had retired prior to the
beginning of the three year period and if their benefits had
commenced (on the Life Annuity form under this Plan) as of
the beginning of such period, based on the provisions of the
Plan (as in effect during the five year period ending on such
termination date) under which such benefit would be the least.
Salant Corporation may at any time require any other
Company to withdraw from the Plan, and any Affiliate may
voluntarily withdraw with Salant Corporation's consent, and
upon any such withdrawal, the Plan, in respect of such
Affiliate, shall be terminated.
Upon a termination of the Plan with respect to an
Affiliate, the Trustees shall allocate and segregate for the
benefit of the Members then or theretofore employed by such
Affiliate their proportionate interest in the Trust Fund.
(b) All other benefits which are insured by
the Pension Benefit Guaranty Corporation determined without
regard to Section 4022(b)(5) of ERISA or which would have
been so insured if Section 4022(b)(6) of ERISA did not apply.
(c) All other non-forfeitable benefits under
the Plan.
(d) All other benefits under the Plan.
If the assets of the Plan available for allocation under
(a) or (b) are insufficient to satisfy in full the benefits which
are described, the assets shall be allocated pro rata among such
individuals on the basis of the present value (as of the Plan's
date of termination) of their respective benefits.
Any residual assets of the Plan remaining after the
satisfaction of all liabilities of the Plan shall be distributed to
the Company.
13.4 Merger or Consolidation
No merger or consolidation with, or transfer of assets or
liabilities to, any other plan shall be made unless each Member
in this Plan would receive a benefit, if the Plan terminated
immediately after the merger, consolidation or transfer, equal
to or greater than the benefit he would have been entitled to
receive immediately before the merger, consolidation or
transfer if this Plan had then terminated.
ARTI CLE XIV
LIMI TATION OF BENEFITS FOR HIGHLY PAID EMPLOYEES
14.1 In the event of Plan termination, the benefit payable to any
highly compensated employee or any highly compensated
former employee (as defined in section 414(q) of the Code and
regulations thereunder) shall be limited to a benefit that is
nondiscriminatory under section 401(a)(4) of the Code. If
payment of benefits is restricted in accordance with this
Subsection (a), assets in excess of the amount required to
provide such restricted benefits shall become a part of the
assets available under Section 13.3 for allocation among
Members and their contingent annuitants and beneficiaries
whose benefits are not restricted under this Section 14.1.
14.2 The restrictions of this Section 14.2 shall apply prior to
termination of the Plan to any Member who is a highly
compensated employee or a highly compensated former
employee and who is one of the 25 highest paid employees of
the Company and its Affiliates for any Plan Year. The annual
payments to any such Member shall be limited to an amount
equal to the payments that would have been made to the
Member under a single life annuity that is the Actuarial
Equivalent of the sum of the Member's Accrued Benefit and
any other benefits under the Plan.
14.3 The restrictions in Section 14.2 shall not apply:
(a) if, after the payment of all benefits payable
to such Member, the value of the Plan assets equals or exceeds
110 percent of the value of the current liabilities (within the
meaning of section 412(1)(7) of the Code);
(b) if the value of all benefits payable to such
Member is less than one percent (1%) of the value of current
liabilities; or
(c) if the value of all benefits payable to such
Member does not exceed $3,500 (or such other amount as is
specified in section 411(a)(11) of the Code.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 Evidence of Survival
Where a benefit payment is contingent upon the survival of
any person, evidence of such person's survival must be
furnished either by personal endorsement of the check drawn
for such payment or by other evidence satisfactory to the Plan
Administrator.
15.2 Non-Alienation of Benefits
Except in the case of a qualified domestic relations order
within the meaning of Section 414(p) of the Code, benefit
payments may not be assigned or hypothecated and, to the
extent permitted by law, no such payment will be subject to
legal process or attachment for the payment of any claims
against any person entitled to receive the same. No portion of
any benefit payable under the Plan shall be alienated except
for those amounts designated by the Member, provided (a)
such amounts do not exceed 10% of any benefit payment and
(b) any such designation made by a Member may be revoked
by him at any time.
15.3 Payments to Incompetents
If the Company receives evidence satisfactory to it that (a) a
payee entitled to receive any payment under the Plan is
physically or mentally incompetent to receive such payment or
is a minor, (b) another person or an institution is then
maintaining or has custody of such payee and (c) no guardian,
committee or other representative of the estate of such payee
has been appointed, the Plan Administrator may direct that
payments be made (in the case of a minor at a rate not
exceeding $50 a month) to such other person or institution.
15.4 Misstated Information
If any information has been misstated on which a benefit
under the Plan with respect to a person was based, such
benefit shall not be invalidated but the amount of the benefit
shall be adjusted to the proper amount as determined on the
basis of the correct information. Overpayments, if any, with
interest as determined by the Plan Administrator shall be
charged against any payments accruing with respect to the
person. The Plan Administrator reserves the right to require
proof of age of any person entitled to a benefit under this
Plan.
15.5 Beneficiary
Subject to Section 7.2, a Member shall designate, with the
right to change such designation, a beneficiary to receive any
payment or payments to which a beneficiary may become
entitled under the Plan. Any other person to whom periodic
payments are payable under this Plan may designate, with the
right to change such designation, a beneficiary to receive any
remaining periodic payments becoming due upon the death of
such person provided that no prior conflicting designation by a
Member is then in effect with respect thereto. If no
designated beneficiary is surviving when a payment is to be
made to a beneficiary, the commuted value of any remaining
periodic payments shall be made to the person or persons in
the first surviving class of the following classes of successive
preference beneficiaries: (a) the Member's widow or widower,
(b) the Member's surviving children, (c) the Member's
surviving parents, (d) the Members surviving brothers and
sisters, (e) the executors or administrators of the person upon
whose death the payments become due.
15.6 The law of the State of New York shall be the controlling
state law in all matters relating to the Plan and shall apply to
the extent it is not preempted by the laws of the United States
of America.
IN WITNESS WHEREOF, Salant Corporation, by its
duly authorized officers, with its corporate seal affixed, has
caused this Plan to be executed
this day of December, 1994.
SALANT
CORPORATION
By. . . . . . . . . . . . . . . . . . . . . . . . . .
Attest:
. . .
6977
03/23/95
APPENDIX A
ADOPTING COMPANIES
Name
Effective Date
Salant Corporation
January 1, 1979
Denton Mills, Inc.
January 1, 1992
EX-3
4
EXHIBIT 10.25
SALANT CORPORATION
LONG TERM SAVINGS AND INVESTMENT PLAN
AS AMENDED AND RESTATED
EFFECTIVE JANUARY, 1, 1989
SALANT CORPORATION
LONG TERM SAVINGS AND INVESTMENT PLAN
(As amended and restated effective January 1, 1989)
Salant Corporation hereby amends and restates the Salant
Corporation Long Term Savings and Investment Plan, the Manhattan
Industries Salary Savings Plan (the "Manhattan Plan") and the Denton
Mills, Inc. Employees Profit-Sharing Plan (the "Denton Plan") to comply
with requirements of the Tax Reform Act of 1986, the Revenue Act of
1987, the Technical and Miscellaneous Revenue Act of 1989, the
Unemployment Compensation Amendments of 1992 and the Revenue
Reconciliation Act of 1993 (the "Acts") effective as of January 1, 1989 with
respect to the Plan, February 1, 1989 with respect to the Manhattan Plan
and November 1, 1989 with respect to the Denton Plan, or with respect to
certain provisions, as of the pertinent effective dates contained in the
provisions of the Acts, and merges the Manhattan Plan and the Denton Plan
into the Plan effective as of March 1, 1992. It is intended that this Plan as
amended and restated will be qualified under Section 401(a) of the Internal
Revenue Code and that its designated contribution provisions will satisfy
the additional requirements of Section 401(k) of the Code.
Table of Contents
Title Page
Section 1 Definitions 1
Section 2 Membership 7
Section 3 Salary Deferral Contributions. 8
Section 4 Company Matching Contributions 10
Section 5 The Trust Fund. 14
Section 6 Vesting 19
Section 7 Maximum Contributions 21
Section 8 Distributions, Loans, and Withdrawals 23
Section 9 Administration of Plan 35
Section 10 Top-Heavy Plan Years 38
Section 11 Miscellaneous 43
Section 12 Conditional Adoption 45
Appendix A Adopting Employers 46
Section 1
Definitions
1.1 "Affiliate" means any corporation or unincorporated
business in control of, controlled by, or under common control with, the
Company within the meaning of Sections 414(b) and (c) of the Code and
any organization which is a member of an affiliated service group of which
the Company is a Member within the meaning of Section 414(m) of the
Code; provided, however, that, for the purposes of the limitations upon the
benefits of a member contained in Section 7, "Affiliate" status shall be
determined in accordance with Section 415(h) of the Code. Except to the
extent approved by the Board of Directors, a corporation or unincorporated
business shall not be deemed an Affiliate for any purpose under the Plan
with respect to any period before it becomes an Affiliate.
1.2 "Aggregate Compensation" means the total amount of
Compensation paid to Members with respect to a Plan Year.
1.3 "Board" means the Board of Directors of Salant
Corporation.
1.4 "Code" means the Internal Revenue Code of 1986 as
amended.
1.5 "Committee" means the person or persons appointed by
the Board to administer the Plan.
1.6 "Common Stock" means the common stock of Salant
Corporation.
1.7 "Company" means Salant Corporation and any other
Affiliate or other entity which, with the consent of the Board, has adopted
the Plan and any successor to such Company. Each participating Company
delegates all rights, powers, and duties, including amendment or termination
of the Plan, to Salant Corporation. Appendix A to the Plan lists the
Companies that have adopted the Plan and the effective date of such
adoption.
1.8 "Company Matching Contributions" for any Plan Year
means the sum of a Member's "Basic Matching Contribution" and "Bonus
Matching Contribution," if any, as provided in Section 4 of this Plan.
1.9 "Compensation" means the total wages within the
meaning of Section 3401(a) of the Code and all other payments of
compensation paid by the Company to an Employee for which the
Company is required to furnish the Employee a written statement under
Sections 6041(d), 6051(a)(3) and 6052 of the Code with respect to any
period of Service together with any salary deferral contributions made under
this Plan or any other employee plan qualified under Section 401(k) or
Section 125 of the Code, but excluding all of the following items (even if
includible in gross income): reimbursements or other expense allowances,
fringe benefits (cash and non-cash), moving expenses, deferred
compensation and welfare benefits, severance payments to former
Employees, and any amount in excess of the amount specified in Section
401(a)(17) of the Code (as amended by the Revenue Reconciliation Act of
1993 and as adjusted for increases in the cost of living by the Secretary of
the Treasury pursuant to Section 401(a)(17)(B)of the Code).
1.10 "Denton Plan" means the Denton Mills, Inc. Employees
Profit-Sharing Plan as it existed prior to March 1, 1992, the date of its
merger into the Plan.
1.11 "Effective Date" means July 1, 1983. The effective
date of this amendment and restatement is January 1, 1989, except as
otherwise specifically stated.
1.12 "Employee" means any person, including officers,
employed by the Company who is classified by the Company under
uniform rules as a regular, office, sales, security, supervisory or technical
employee, provided that no such person shall be an Employee if such
person is included in a unit of employees covered by a collective bargaining
agreement between employee representatives and the Company or an
Affiliate unless such agreement provides that such employees shall be
eligible to participate in the Plan.
1.13 "Entry Date" means January 1 and July 1 and, with
respect to an Employee hired after June 30, 1993, April 1 October 1.
1.14 "ERISA" means the Employee Retirement Income
Security Act of 1974, as most recently amended.
1.15 "Hour of Service" means (a) each hour for which an
Employee is directly or indirectly paid, or entitled to payment, by his
Employer for the performance of duties; (b) each hour for which an
Employee is directly or indirectly paid, or entitled to payment, by his
Employer for reasons other than the performance of duties; (c) each hour
for which back pay, irrespective of mitigation of damages, is either awarded
or agreed to by the Employer excluding any hour credited under (a) or (b);
and (d) each hour attributable to a period of service with respect to which a
Member is not paid or entitled to payment (including an approved leave of
absence). For purposes of paragraph (d) of this Section 1.15, the number of
Hours of Service attributable to any such period of service shall be
determined by the Committee on a basis consistent with the Member's
customary work week. The Hours of Service to be so credited shall be
determined pursuant to 29 Code of Federal Regulations, Section 2530.200b-
2(b) and (c) as promulgated by the United States Department of Labor, as
amended from time to time.
Hours of Service shall be counted on the basis of such records
or assumptions as shall be adopted by the Committee on a
nondiscriminatory basis which is consistent with the Plan and permitted by
the Secretary.
1.16 "Manhattan Member Contributions" means the amount,
if any, credited to the account of a member of the Manhattan Plan equal to
the amount of the Member's contributions made under the provisions of the
Manhattan Industries Inc. Employees Benefit Plan prior to February 1,
1984, plus interest at the rate of 7% per annum credited to January 31,
1984.
1.17 "Manhattan Plan" means the Manhattan Industries
Salary Savings Plan as it existed prior to March 1, 1992, the date of its
merger into the Plan.
1.18 "Member" means any individual who has become a
member in accordance with Section 2 of the Plan and whose interest in the
Fund has not been completely distributed pursuant to Section 8.
1.19 "Plan" means this Salant Corporation Long Term
Savings and Investment Plan as from time to time in effect; and prior to
March 1, 1992 also means the provisions of the Manhattan Plan and the
Denton Plan as restated and set forth herein.
1.20 "Plan Year" means the calendar year. With respect to
the Manhattan Plan prior to the merger, "Plan Year" means for periods prior
to February 1, 1991, each twelve month period beginning on February 1
and ending on January 31; the eleven month period beginning on February
1, 1991 and ending on December 31, 1991; and each calendar year
thereafter. With respect to the Denton Plan prior to the merger, "Plan
Year" means for periods prior to November 1, 1991, each twelve month
period beginning on November 1 and ending on October 31; the two month
period beginning on November 1, 1991 and ending on December 31, 1991;
and each calendar year thereafter.
1.21 "Salary Deferral Contributions" for any Plan Year
means the sum of a Member's "Employee Matched Contributions" and
"Employee Supplemental Contributions," as provided in Section 3 of this
Plan. Salary Deferral Contributions shall be treated as employer
contributions for all purposes under this Plan except Section 6 and Section
11.
1.22 "Service" means the number of years including each
month as 1/12 of a year and each partial month as a full month contained in
the period beginning on the date on which an Employee first performs an
Hour of Service with the Company or any Employer and ending on the date
of termination or interruption of such employment, which shall be deemed
to be the earlier of (A) the date of retirement, quit or discharge or (B) the
later of (i) the first anniversary of the date a leave of absence commenced
or (ii) the second anniversary of the date a leave of absence commenced, if
the absence beyond the first anniversary is because of the pregnancy of the
Employee, the birth of a child of the Employee, the placement of a child in
connection with the adoption of such child by the Employee or the caring
for such child for a period immediately following such birth or placement.
(a) Service shall not include any service which preceded an
interruption in such service if the person had no vested interest under the
Plan at the time of such interruption and if the number of full consecutive
12 month periods contained in such interruption of such service equals or
exceeds the greater of five and the aggregate number of full consecutive 12
month periods of service not theretofore excluded preceding such
interruption.
(b) The service of a person whose service has been
interrupted shall include service thereafter but shall not be aggregated with
service prior to such interruption until such person completes a 12
consecutive month period of service after resumption of his service.
(c) An interruption of service shall not be deemed to occur
if employment recommences within 12 months.
(d) Service shall include periods during which an employee
is absent for military service provided employment is resumed within the
period prescribed by the statutes of the United States, as from time to time
in effect, for the exercise of veteran's reemployment rights and periods
during which an employee is absent pursuant to an authorized leave of
absence approved by the Committee under uniform rules.
(e) Service shall also include periods of employment by
any Affiliate commencing with the date of acquisition of control of such
Affiliate, to the extent that such periods of employment would have counted
as service had such employment been by the Company.
(f) Service shall also include service as an employee with
any corporation, division, plant, unit, or other business entity which has
been, or which in the future is, merged into or otherwise acquired by the
Company but only to the extent that the Board approves such service as
Service under the Plan.
(g) To the extent that such periods would have counted as
service had the employer then been the Company, service shall also include
periods of employment by any employer acting as a field warehouseman if
such employment has been determined by the Committee to be solely in
connection with a field warehousing arrangement with the Company.
(h) The Service of a Member who had been a participant
in the Manhattan Plan shall be the greater of (a) the sum of (1) his
"Service" as determined under the terms of the Manhattan Plan through
January 31, 1991 and (2) his Period of Service commencing on February 1,
1991 or (b) the sum of (1) his "Service" as determined under the terms of
the Manhattan Plan through January 31, 1992 and (2) his Period of Service
commencing on February 1, 1992. The Period of Service of a Member who
had been a participant in the Denton Plan shall be the greater of (a) the sum
of (1) his "Service" as determined under the terms of the Denton Plan
through October 31, 1991 and (2) his Service commencing on November 1,
1991 or (b) the sum of (1) his "Service" as determined under the terms of
the Denton Plan through October 31, 1992 and (2) his Period of Service
commencing on November 1, 1992.
1.23 "Trust Fund" means the trust fund established under the
Plan.
1.24 "Trustee" means Chemical Bank, N.A. or any successor
corporate trustee from time to time acting as trustee of the Trust Fund.
1.25 "Valuation Date" means the last business day of each
calendar month and such other special valuation dates as shall be agreed to
by the Committee and the Trustee.
Section 2
Membership
2.1 Any Employee who was a Member of the Plan or the
Manhattan Plan or the Denton Plan on December 31, 1991 and who is
employed by the Company on January 1, 1992 shall be a Member of this
Plan or the Manhattan Plan or the Denton Plan, as the case may be, as of
January 1, 1992. Every other Employee shall become a Member on the
first Entry Date on or after the date as of which he has both completed one
year of Service and attained age 21 (or in the case of an Employee hired
before July 1, 1993, the earlier of his completion of two years of Service
and the date as of which he has both completed one year of Service and
attained age 21). If an Employee ceases to be a Member and is reemployed
by the Company, he shall recommence membership as of the first day on
which he again performs an Hour of Service for the Company.
2.2 Any Employee who is eligible to receive from any
corporate plan an "Eligible Rollover Distribution," as defined in Section
402(c)(4) of the Code, or who has rolled over any portion of such
distribution within 60 days to an "eligible retirement plan," as defined in
Section 402(c)(8)(B) of the Code (regardless of whether he is making
Salary Deferral Contributions) may make a rollover contribution of all or
any portion of such amount into this Plan within 60 days of receipt of such
"Eligible Rollover Distribution" or distribution from such "eligible
retirement plan." Any such amount shall be separately accounted for
hereunder, shall at all times be fully (100%) vested, and shall be treated in
the same manner as Manhattan Member Contributions for all other purposes
hereunder, except that the Employee shall not be deemed a Member for
purposes of Sections 3 and 4 solely by virtue of having made such
contributions. The Committee may impose such administrative or other
restrictions on the right to make such contributions as it deems appropriate
or necessary, including, but not limited to, requesting written verification
of the qualified status of the plan from which the "Eligible Rollover
Distribution" is derived or verification that no disqualifying contributions
were made to such "eligible retirement plan."
Section 3
Salary Defer ral Contributions
3.1 Any Member participating in the Plan may elect in
writing to defer 1%, 2%, 3%, 4%, 5% or 6% of his Compensation while a
Member under this Plan, which contributions shall be Employee Matched
Contributions for purposes of Section 4.
3.2 Any Member making Employee Matched Contributions
may also elect in writing to defer additional full percentages of
Compensation up to an additional 9% of his Compensation while a Member
under this Plan which will not be matched by the Company ("Employee
Supplemental Contributions").
3.3. A Member may change, suspend or resume an election
to defer Compensation once in any calendar quarter. All elections, changes
of elections, suspensions and resumptions with respect to salary deferral
under this Plan shall be made as of the next succeeding Entry Date on no
less than 30 days' notice to the Committee.
3.4 Notwithstanding any other provision of the Plan, under
no circumstances shall the salary reductions of any Member in any calendar
year exceed $7,000 ($9,240 for 1994, and as adjusted for increases in the
cost of living factor pursuant to Section 402(g)(5) of the Code) nor shall a
salary reduction election by a 'highly compensated Member,' as defined in
Section 414(q) of the Code, be given effect to the extent such election
might cause the Plan to fail to meet the discrimination standards set forth in
Section 401(k)(3) of the Code. In this regard, the average of the
percentages of salary deferred ("average deferral percentage") by each
highly compensated Member participating in the Plan for any Plan Year
must either be (a) not more than such average of all other Members in the
Plan for such Plan Year multiplied by 1.25 or (b) not more than such
average of all other such Members for such Plan Year multiplied by 2.0, if
the differential between such average for the highly compensated Members
and such average for all other Members does not exceed 2 percentage
points. In the event the Company determines that the deferrals elected by
highly compensated Members might cause the deferrals under the Plan to
fail to meet the foregoing limitations, the Committee shall reduce in an
equitable manner, as it in its sole discretion shall determine, the
permissible percentages of Compensation which may subsequently be deferred
under the Plan by highly compensated Members. Notwithstanding the foregoing,
the Committee shall not reduce the permissible Employee Matched
Contributions of any highly compensated Member if any other highly
compensated Member may make Employee Supplemental Contributions.
3.5 While any election under Section 3.1 or Section 3.2 to
make Employee Matched Contributions or Employee Supplemental
Contributions is in effect, the Member's Compensation for each payroll
period shall be reduced by the elected percentage, and the deferred amount
shall be paid over in cash to the Trust Fund.
3.6 If, prior to March 1 in any calendar year a Member
notifies the Committee in writing that the sum of his salary reductions
under this Plan and his elective deferrals (as defined in Section 402(g) of
the Code) under all other plans for the previous calendar year exceeds
$7,000 (as adjusted) and requests that such excess be distributed to him, the
amount of such excess, adjusted for income or loss allocable thereto, shall
be distributed to him no later than the following April 15. Such
distribution shall be paid first out of the portion of the Member's account
attributable to Employee Supplemental Contributions and, to the extent
necessary, out of the portion of his account attributable to Employee
Matched Contributions.
3.7 Salary reductions of highly compensated Members shall
be maintained within the limit of Section 3.4 by reducing the salary
reductions of highly compensated Members in order of the percentages of
salary deferred beginning with the highest of such percentages. The amount
by which a Member's salary reductions is so reduced, adjusted for income
or loss allocable thereto, and reduced, but not below zero, by the amount of
any distribution made or to be made to the Member pursuant to Section 3.6
shall be distributed to the Member no later than December 31 following the
Plan Year for which such excess salary reductions were contributed to the
Plan on his behalf.
Section 4
Company Matc hing Contributions
4.1 The Company shall make monthly Basic Matching
Contributions to the Trust Fund Equal to 20% of the aggregate Employee
Matched Contributions of Members less the amount of any forfeitures
occurring during the previous month.
4.2 Each Basic Matching Contribution shall be allocated as
of each Valuation Date among the Members who made Employee Matched
Contributions during a calendar month in proportion to their Employee
Matched Contributions made during the calendar month for which the Basic
Matching Contribution is being made.
4.3 At the end of each Plan Year, the Company, in its
discretion, may make additional Bonus Matching Contributions out of the
Company's net income, as defined in Section 4.4.
Bonus Matching Contributions shall be allocated among those
Members who are employed on the last day of such Plan Year, or who
retired, died, became disabled, or transferred to a nonparticipating Employer
during such Plan Year, in proportion to their Employee Matched
Contributions made during the Plan Year.
4.4 For purposes of this Section 4, the term "net income"
means an amount for each fiscal year of the Company equal to the
Company's net income before income and franchise taxes for that fiscal
year, as shown on an income statement for that year prepared in accordance
with generally accepted accounting principles consistently applied but
without deduction for the Company's contribution under this Plan for that
fiscal year.
4.5 The aggregate of Salary Deferral Contributions and
Company Matching Contributions for any Plan Year may not exceed 15%
of the compensation paid or accrued to all Employees under the Plan
(within the meaning of Section 404(a)(3) of the Code) in the taxable year of
the Company ending with or within such Plan Year, plus any allowable
credit and contribution carryovers provided in Section 404(a)(3) of the
Code.
4.6 The total amount of the Trust Fund forfeited by
Members during any calendar month shall be applied to reduce future
Company Matching Contributions due under the Plan.
4.7 Notwithstanding any other provision of the Plan, under
no circumstances shall a Company Matching Contribution be allocated to
the account of a highly compensated Member, as defined in Section 414(q)
of the Code, to the extent that such allocation might cause the Plan to fail
to meet the discrimination standards as set forth in Section 401(m) of the
Code. In this regard the average of the allocations as a percentage of salary
("average contribution percentage") of each highly compensated Member
participating in the Plan for any Plan Year must either be (a) not more than
such average of all other Members in the Plan for such year multiplied by
1.25 or (b) not more than such average of all other Members for such Plan
Year multiplied by 2.0, if the differential between such average for the
highly compensated Members and such average for all other Members does
not exceed 2 percentage points. In any Plan Year for which the salary
deferrals of non-highly compensated employees exceeds the amount
necessary to keep the average deferral percentage of highly compensated
employees within the limit set forth in the second sentence of Section 3.4,
the excess salary deferrals shall be treated as Company Matching
Contributions allocated to the accounts on non-highly compensated
employees for purposes of this Section 4.7.
4.8 Company Matching Contributions to accounts of highly
compensated Members shall be maintained within the limits of Section 4.7
by reducing such Company Matching Contributions in the order of such
highly compensated Employees' Company Matching Contribution as a
percentage of salary beginning with the highest of such percentages. Such
reduction shall be made in proportion to the Member's Matching
Contribution allocated to his account for the Plan Year to which the
reduction relates. The amount of such reduction in the Member's Company
Matching Contribution allocated to his account to the extent the Member is
vested in his Company Matching Contributions, adjusted for income or loss
allocable thereto shall be distributed to the Member no later than December
31 following the Plan Year for which such excess Company Matching
Contributions were contributed to the Plan. The amount of any reduction in
the Company Matching Contribution allocated to a Member's account, to
the extent that he is not yet vested in his Company Matching Contributions,
adjusted for income or loss allocable thereto, shall be a forfeiture as of the
December 31 of the Plan Year following the Plan Year for which the
excess Company Matching Contribution was made. Any forfeiture pursuant
to this Section shall be applied to reduce future Company Matching
Contributions under the Plan.
4.9 For any Plan Year during which both the average
deferral percentage and the average contribution percentage for the eligible
highly compensated Members exceed the like percentages for all other
eligible Employees multiplied by 1.25, the sum of the average deferral
percentage and the average contribution percentage for the eligible highly
compensated Members shall not exceed the greater of:
(a) the sum of:
(1) 125% of the greater of the average deferral
percentage or the average contribution percentage for all other eligible
employees; plus
(B) the lesser of:
(i) 200% of the lesser of the average
deferral percentage or the average contribution percentage for all other
eligible employees; or
(ii) two percentage points plus the lesser
of the average actual deferral percentage or the average contribution
percentage for all other eligible employees; or
(2) the sum of:
(A) 125% of the lesser of the average actual
deferral percentage or the average contribution percentage for all other
eligible employees; plus
(B) the lesser of:
(i) 200% of the greater of the average
actual deferral percentage or the average contribution percentage for all
other eligible employees; or
(ii) two (2) percentage points plus the
greater of the average actual deferral percentage or the average contribution
percentage for all other eligible employees.
Section 5
The Trust Fund
5.1 Contributions shall be held in a Trust Fund by the
Trustee, pursuant to the terms of a Trust Agreement. No employee,
Member or beneficiary under this Plan or any other person shall have any
interest in or right to any part of the corpus, income or earnings of the
Trust Fund or any part of the assets of the Plan except as and to the extent
provided by the terms of the Plan.
5.2 Effective as of January 1, 1992, the Trust Fund shall
consist of the five funds listed below:
FUND (1) - Money Market Fund. A fund together with the
earnings thereon, invested in obligations of the United States Government
or agencies thereof, demand notes, commercial paper, certificates of deposit,
time deposits, and bankers' acceptances, with maturity dates of less than
one year from date of purchase.
FUND (2) - Fixed Income Fund. A fund, together with
earnings thereon, invested in fixed income investments of intermediate-term
maturities. Such fund may be restricted to obligations of the United States
Government or agencies thereof, or obligations guaranteed as to the
payment of principal and interest by such institutions.
FUND (3) - General Equity Fund. A fund, together with the
earnings thereon, invested in such (a) common or capital stocks; (b)
preferred stocks, notes, bonds or debentures, convertible into common or
capital stocks; (c) warrants or rights to purchase or subscribe for common
or capital stocks or securities convertible into common or capital stocks;
and (d) other types of equity investments, including real estate stock funds,
as the Trustee in its sole discretion shall determine, provided that no
investment shall be made in stocks or securities of the Company or
affiliates.
FUND (4) - Guaranteed Income Fund. A fund, together with
the earnings thereon, invested in contracts with insurance companies which
provide for a stated rate of interest.
FUND (5) - Salant Corporation Common Stock Fund. A fund,
together with the earnings thereon, consisting of Common Stock of Salant
Corporation contributed by the Company or purchased by the Trustee with
cash contributions made by the Company. If so directed, the Trustee shall
regularly purchase, or cause to be purchased, Common Stock of Salant
Corporation from time to time in the open market or by private purchase,
including purchase from Salant Corporation of authorized but unissued
shares of such Common Stock or shares of such Common Stock held as
treasury stock. All purchases and contributions from the Company shall be
made at a price equal to the closing price at which Salant Corporation's
Common Stock was traded as reported in the NYSE-Composite
Transactions list reported in the Wall Street Journal for the date of such
purchase or contribution or if there were no such trades on such date, at a
price equal to the mean between the "bid" and "asked" prices for such date.
The Committee may select additional or substitute investment
funds for subsequent investment of Salary Deferral Contributions.
The Trustee may keep any portion of the above funds of the
Trust Fund in the Money Market Fund or in short-term obligations of the
United States Government or agencies thereof or in other types of short-
term investments, including commercial paper (other than obligations of the
Company or affiliates), as it may from time to time deem to be in the best
interests of the Plan or Trust Fund; provided, however, that cash balances
(including any interim investment thereof) shall not be maintained in fund
(5) except to the extent that such balances are in anticipation of cash
distributions from fund (5) or are maintained not to disrupt directed
purchases of the Trustee required by the Plan.
5.3 The Trustee shall maintain sufficiently detailed records
so that the Trustee, the Committee or a designated plan recordkeeper, using
information reports which shall be no less frequent than monthly
revaluations at current market values, as determined by the Trustee, may
maintain a separate account for each Member, in which it shall keep a
separate record of the share of such Member in each fund of the Trust Fund
which is attributable to Company Matching Contributions, Salary Deferral
Contributions, Manhattan Member Contributions and any contribution of an
Eligible Rollover Distribution. Each month the earnings, income, losses
and expenses of the Trust Fund shall be allocated among Members'
accounts based on the balance in such accounts as of the previous Valuation
Date.
5.4 Elections for Investment. At the time an Employee
commences membership under the Plan, he shall also elect in writing to the
Committee to have his Salary Deferral Contributions, if any, invested in one
or more of funds (1), (2), (3) and (4) described in subsection 5.2. At the
time an Employee contributes an Eligible Rollover Distribution to the Plan,
he shall elect in writing to invest such contribution in one or more of funds
(1),(2), (3) and (4) described in subsection 5.2. In no event shall a Member
be permitted to elect to have a percentage other than a whole-number
multiple of 10% (25% prior to January 1, 1994) of such contributions
invested in any one fund. Company Matching Contributions shall be
invested in fund (5) and may not be transferred to other funds except as
provided in subsection 5.5(c).
5.5 Change of Elections For Investment. Transfers
between Funds. Each Member may, by filing a revised written election
with the Committee, make the following changes in his investment
elections:
(a) He may, not more than once in any calendar quarter, as
of any Valuation Date, file a revised investment election applicable to his
Salary Deferral Contributions to be made for the month following such
election and thereafter, subject to the limitations contained in subsection
5.4.
(b) He may, not more than once in any calendar quarter, as
of any Valuation Date, elect to reallocate his interest attributable to his
Salary Deferral Contributions, Eligible Rollover Distributions and
Manhattan Member Contributions in one or more of funds (1), (2), (3) and
(4) by specifying what percentage of the value of his account immediately
after the reallocation will be held in each such fund selected by him,
provided that all such percentages so specified shall be in whole-number
multiples of 10% (25% prior to January 1, 1994).
(c) Notwithstanding the foregoing, a Member who
terminates Service at or after age 60, and who is not reemployed shall be
entitled to make only one change of investment election thereafter, which
election shall be limited to transferring his entire account to fund (1) or
fund (2).
All transfers under these paragraphs (b) and (c) shall be made
as of the Valuation Date of the month in which the Member files a revised
written investment election with the Committee.
5.6 Voting of Salant Corporation Common Stock.
Common Stock of Salant Corporation held by the Trustee shall be voted by
the Trustee as directed by the Member to whose account such stock is
credited. The Company shall cause each Member to be provided with a
copy of a notice of each such stockholder meeting and the proxy statement
of Salant Corporation, together with an appropriate form for the Member to
indicate his voting instructions. If instructions are not timely received by
the Trustee with respect to any such stock, the Trustee shall vote the
uninstructed stock in the same proportions as the Trustee was instructed to
vote with respect to the shares for which it received instructions.
5.7 Tendering of Salant Corporation Common Stock
(a) Upon a commencement of a tender offer for Salant
Corporation Common Stock, the Company shall notify each Member whose
account includes shares of Salant Corporation Common Stock of such
tender offer and use its best efforts to timely distribute or cause to be
distributed to each such Member such information as is distributed to
shareholders of the Company in connection with such tender offer, and shall
provide a means by which the Member can instruct the Trustee whether or
not to tender the shares of Salant Corporation Common Stock allocated to
his account. The Company shall provide the Trustee with a copy of any
materials provided to Members.
(b) Each Member to whom subsection (a) applies, whether
or not such Member is then vested in his account, shall have the right to
instruct the Trustee how the Trustee is to respond to the tender offer, and
the Trustee shall respond as instructed. The Trustee shall not tender any
shares of Salant Corporation Common Stock allocated to a Member's
account for which the Trustee has received no instructions from the
Member.
(c) A Member who has directed the Trustee to tender
shares of Salant Corporation Common Stock allocated to his account may,
at any time prior to the tender offer withdrawal date, instruct the Trustee to
withdraw, and the Trustee shall withdraw, such shares of Salant Corporation
Common Stock from the tender offer prior to the withdrawal deadline. A
Member shall not be limited as to the number of instructions to tender or
withdraw which he may give to the Trustee.
(d) The Trustee shall allocate the proceeds received in
exchange for tendered Salant Corporation Common Stock in accordance
with the Member's investment election applicable to his Salary Deferral
Contributions.
5.8 Expenses. Administrative expenses of the Plan shall be
paid out of the Trust Fund unless and to the extent paid by the Company.
The Company may reimburse the Trust Fund for any payment so made.
Section 6
Vesting
6.1 A Member shall at all times be fully (100%) vested in
his Salary Deferral Contributions and any Manhattan Member Contributions
or any amount credited to the Member as a participant in the Denton Plan
and their allocable earnings.
6.2 A Member's Company Matching Contributions for any
Plan Year shall be vested in accordance with the following schedules:
Completed Years
of Service % Vested
Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
Company Matching Contributions shall also be fully (100%)
vested upon earlier death or disability, or upon a Member's attainment of
age 65 or upon the Member's involuntary termination of employment other
than for cause. "Disability" for this purpose shall mean physical or mental
disability which a licensed physician acceptable to the Committee has
certified as permanent or likely to be permanent and as rendering the
Member unable to perform his customary duties. The Committee shall act
in a uniform and nondiscriminatory manner with respect to all Members
similarly situated in ruling on determinations of disability.
6.3 If a Member shall terminate employment at a time
when he is not fully (100%) vested in all of his account under the Plan, the
non-vested portion of his account shall be forfeited upon his incurring a
termination of Service and shall be used to reduce the amount of the next
monthly Company Matching Contribution required to be contributed
pursuant to Section 4.1, and shall be allocated in accordance with
Section 4.2.
6.4 If an amount to the credit of a Member's account is
forfeited pursuant to Section 6.3, such amount shall subsequently be
restored to his account provided (a) he is re-employed by the Company
prior to the expiration of five years after his termination of Service and (b)
prior to the earlier of (i) five years after his re-employment date and (ii)
an interruption of Service of at least five years following his termination of
Service he makes a lump sum payment to the Trust Fund in cash in an
amount equal to the total amount of cash plus the value of the Common
Stock, if any, distributed to him from the Trust Fund on account of his
termination of Service. Such amounts shall be repaid and restored to funds
(1), (2), (3), (4) and/or (5) in accordance with the Plan's terms and the
portion allocable to a Member's contributions shall be allocated in
accordance with his most recent investment election.
Section 7
Maximum Cont ributions
7.1 In no event may a Member's Annual Addition under
this Plan exceed the lesser of: $30,000 (or such other amount as may be
prescribed pursuant to Section 415 of the Code) or 25% of Compensation
from the Company and from all Affiliates during the Limitation Year,
which shall be the Plan Year.
"Annual Additions" means, for each Limitation Year, the sum
of:
(a) all of a Member's Salary Deferral Contributions; and
(b) a Member's Company Matching Contributions.
7.2 If any Member participates in this Plan and
participates or has participated in any defined benefit pension plan
maintained by the Company or any Affiliate, the sum of his defined benefit
plan fraction and defined contribution plan fraction in any Limitation Year
may not exceed 1.0, calculated in the following manner:
(a) The defined contribution plan fraction is a fraction -
(1) The numerator of which is the Annual Additions
to a Member's account as of the close of the Limitation Year, and
(2) the denominator of which is the sum of the
lesser of the following amounts for this Limitation Year and each prior
Limitation Year:
(A) the product of 1.25
and the maximum dollar limitation under
Section 415(c) of this Limitation Year and
each prior Limitation Year; or
(B) the product of -
(i) 1.4 multiplied by
(ii) the maximum compensation
limitation under Section 415(c) for such
Limitation Year.
The defined benefit plan fraction is a fraction -
(1) the numerator of which is the aggregate projected
annual benefit of the Member under all defined benefit plans maintained by
the Company or any Affiliate (determined as of the close of the Limitation
Year); and
(2) the denominator of which is the lesser of:
(A) the product of 1.25 multiplied by
the maximum dollar limitation under Section 415(b) for
such year, or
(B) the product of -
(i) 1.4 multiplied by
(ii) the maximum
compensation limitation under Section 415(b)
for such year.
7.3 In any Limitation Year in which a Member would exceed the
foregoing 1.0 limitation, his benefits shall be reduced to the extent
necessary so that the sum of his defined contribution plan fraction and his
defined benefit plan fraction will not exceed 1.0 in the following non-
discretionary order of reduction:
(a) Benefits under defined benefit plans maintained by the
Company shall be reduced in the order specified in such plans.
(b) Employee Supplemental Contributions.
(c) Employee Matching Contributions and associated Company
Matching Contributions.
7.4 This Section 7 shall be interpreted in accordance with
regulations under Section 415 of the Code.
Section 8
Distribu tions, Loans, and Withdrawals
8.l Form of Distribution.
(a) At the time specified in Section 8.2 and with respect to a
Member who was a participant in the Denton Plan prior to January 1, 1992,
subject to Section 8.11, the vested portion of a Member's account balance
shall be distributed to him or in the event of his death, and subject to
Section 8.4(a), to his beneficiary in a lump sum, provided, however, that a
Member whose Service is terminated (i) by early retirement at or after the
attainment of age 60 and the completion of at least 10 years of Service as
provided under the Salant Corporation Retirement Plan, or (ii) after
attainment of age 65 whether or not the Member is eligible for retirement
under said Retirement Plan, or (iii) by reason of his total and permanent
physical or mental Disability as defined in Section 6.2, may elect
distribution in a lump sum or in annual installments as nearly equal as
practicable over a period of years specified by the Member not to exceed
twenty years. All lump sum distributions made on account of termination
of Service shall be in cash except for distributions from Fund (5), which
shall be in Common Stock, with cash in lieu of fractional shares, unless the
Member requests in writing by reasonable notice prior to such distribution
that such distribution shall be made solely in cash. A Member who elects
installment distributions must waive his right to receive a distribution in
Common Stock.
(b) Any election made under this Section 8.1 may be changed at
any time prior to the time distribution of the Member's account commences
but may not be changed thereafter, except that a Member may exercise on
or after retirement the right to transfer investments to the Plan's Money
Market Fund or Fixed Income Fund as provided in Section 5.5(c) and the
Member may irrevocably elect to accelerate payment of his unpaid
installments.
8.2 Timing of Distribution.
(a) Subject to Section 8.3, the distribution of a Member's account
in accordance with Section 8.1 shall commence -
(1) upon the earliest practicable date after the Member's
termination of employment, if the distribution is made in a lump sum and
does not exceed $3,500;
(2) if the Member so elects, upon any date following his
termination of employment and prior to his attainment of age 65; or
(3) upon the earliest practicable date after his attainment of
age 65 or death in any case not specified in Paragraph (1) or (2).
(b) In no event, unless a Member consents to postponement in
accordance with Subsection (c), shall the distribution of his account
commence later than the 60th day after the last day of the Plan Year in
which occurs the later of his attainment of age 65 or the date of his
termination of employment.
(c) Subject to Section 8.3, a Member may consent to postpone the
distribution of his account beyond the latest date permitted by Subsection
(b) by filing a written statement with the Committee describing the
distribution to which he is entitled and stating the date upon which he
desires such distribution to commence.
8.3 Minimum Distribution. Notwithstanding anything to the
contrary contained in this Plan --
(a) The entire interest of each Member must be paid to him
commencing not later than the April 1st next following the close of his
taxable year in which he attains age 70-1/2. The entire interest shall be
payable in accordance with regulations under Section 401(a)(9) of the Code,
including Section 1.40l(a)(9)-2, over a period not extending beyond the life
of such Member or the joint lives of such Member and his designated
beneficiary, or the life expectancy of such Member or the joint life and last
survivor expectancy of such Member and his designated beneficiary;
provided, however, that any portion of a Member's interest remaining to be
distributed on the date of such Member's death shall be distributed at least
as rapidly as under the method of distribution in effect as of such Member's
death.
(b) If the Member has died prior to the commencement of the
distribution of his interest in accordance with Paragraph (a) of this Section
10.3, the entire interest of such Member shall be distributed:
(1) in the case of a distribution to a
designated beneficiary other than the Member's
surviving spouse, commencing within one (l) year (or
such longer time as the Secretary of the Treasury may
by regulation prescribe) after the Member's death or
(2) if the beneficiary is the Member's
surviving spouse, commencing not later than the date
on which the Member would have attained age 70-1/2,
and payable in either case, in accordance with Treasury Regulations Section
1.401(a)(9), over the life, or over a period not extending beyond the life
expectancy, of such designated beneficiary or surviving spouse.
(c) For purposes of Subsections (a) and (b), the life expectancy of
the Member, and of a surviving spouse shall not be redetermined after
benefits have commenced to be distributed.
(d) Any amount paid to a Member's child shall be treated as if it
had been paid to the Member's surviving spouse if such amount will
become payable to such surviving spouse upon such child reaching maturity
or such other designated event which may be permitted under such
regulations.
(e) A Member may not elect to receive his benefits over a period
of years which would permit his beneficiary (other than his spouse) to
receive a benefit which is 50% or more of the actuarial value (determined
as of the Member's benefit commencement date) of the combined benefits
payable to such beneficiary and such Member.
8.4 (a) Subject to Section 8.11 with respect to the Member's
account balance, if any, accrued under the Denton Plan prior to January 1,
1992, if the Member is survived by a spouse to whom he was married
throughout the one-year period ending on the date his benefits commenced
to be distributed to him, or throughout the one-year period ending on his
death if his death occurs prior to the commencement of the distribution to
him or the Member married such spouse within one year of such
commencement, such Member's entire account balance shall be payable to
such surviving spouse, unless such spouse has consented in writing to the
designation of a beneficiary other than such spouse, and such consent is
witnessed by a Plan representative or by a notary public.
(b) Subject to the foregoing, upon receipt of a notification from
the Committee that he has qualified for participation in the Plan, a Member
shall designate, on forms provided for that purpose by the Committee, a
beneficiary and successor beneficiary. The designation of a beneficiary
shall be effective upon its receipt by the Committee. A Member may from
time to time change the beneficiary or the manner of distribution which he
has designated, without notice to his beneficiary, in accordance with such
rules and regulations as the Committee may from time to time prescribe.
(c) If a Member is not survived by a beneficiary designated under
the terms of the Plan pursuant to subsection (a) or by him pursuant to
Subsection (b), the Committee may (but shall not be required to) designate
a beneficiary, but only from among the Member's spouse, descendants
(including adoptive descendants), parents, brothers and sisters or nephews
and nieces. If the Committee shall fail to designate a beneficiary, the
balance in the Member's account shall be paid to his estate.
8.5 (a) If distribution is made in a lump sum, the amount of
the distribution shall be determined as of the Valuation Date immediately
preceding the distribution. If, after the date of a lump sum distribution,
any amounts are credited to the Member's account as his share of the Employer
Matching Contribution, such amounts shall be distributed to him as soon as
reasonably practicable after the allocation of such contributions.
(b) If distribution is made in installments, the amount of each
annual installment shall be determined by dividing the value of the
Member's account as of the Valuation Date immediately preceding
distribution of the installment by the remaining number of unpaid
installments. At the Member's election, payments may be made on a
monthly or quarterly rather than an annual basis pursuant to valuation
methods consistent with the foregoing.
8.6 Withdrawals - General Rules. Any Member may by written
application to the Committee request a "hardship withdrawal," as defined
below, of Salary Deferral Contributions and the earnings allocated to them
through the end of the last Plan Year ended before July 1, 1989 from his
account or a withdrawal without need to demonstrate "hardship" of his
vested Company Matching Contributions. A Member who shall have
attained the age of 59-1/2 shall not be limited to withdrawals of Salary
Deferral Contributions for hardship but may make withdrawals of such
contributions and the earnings thereon for any purpose. Such withdrawals
shall be effective as of the date of the filing of the withdrawal application
and shall be made as soon as practicable after the succeeding Valuation
Date unless the Committee and the Trustee have agreed to an earlier
valuation. Withdrawals shall be permitted not more than once in any
twelve-month period except upon a showing of Hardship.
8.7 Standards for Hardship Withdrawals. In accordance with the
rules established by the Committee uniformly applicable to all Members, all
or any part of the amount to the credit of the account of a Member may, in
the sole discretion of the Committee, to the extent that such amount is
vested, be distributed to him in cash at any time upon his written
application to the Committee showing immediate and heavy financial need
for a distribution which need may not be satisfied from other resources
available to the Member. Any such distribution approved by the
Committee shall be made from the Member's Employee Supplemental
Contributions and earnings thereon to the extent available, and if
insufficient therefor, the balance shall be distributed out of Employee
Matched Contributions and the earnings thereon. The amount distributed
shall not exceed the amount required to meet the immediate financial need
created by the hardship.
8.8 Withdrawal of Manhattan Member Contributions. A Member
who has made Manhattan Member Contributions or a rollover contribution
pursuant to Section 2.2 may make withdrawals of such contributions and
their allocable earnings for any purpose. Such withdrawals shall be
effective as of the date of the filing of the withdrawal application and shall
be made as soon as practicable after the succeeding Valuation Date unless
the Committee and the Trustee have agreed to an earlier valuation.
8.9 Form of Withdrawals. Distributions on account of withdrawals
and distributions on account of financial necessity shall be in cash.
8.10 Member Loans (a) Any Member who is a party-in-interest
within the meaning of Section 3(14) of ERISA may apply to the Committee
for a loan from the Plan by written application submitted at least thirty (30)
days (or such fewer number of days as the Committee, in their sole
discretion, may determine) prior to the date as of which the Member desires
to make the loan. The loan application shall specify the desired amount
and term of the loan and shall contain all such other information or
documentation as the committee requires.
(b) Upon receipt of a loan application containing all required
information, the loan requested shall be granted; provided, however, that -
(1) The amount of any loan granted to a Member together
with the aggregate outstanding balance (determined as of the date the loan
is made) of all previous loans to that Member under the Plan may not
exceed the lesser of:
(A) fifty percent (50%) of the sum of
the vested balances in his accounts (including any
accrued income earnings, losses or expenses
attributable thereto) determined as of the most recent
Valuation Date; or
(B) $50,000, reduced by the excess
(if any) of (i) the highest aggregate outstanding balance
of loans to the Member from the Plan and all other
plans maintained by an Employer or Affiliate during
the one-year period ending on the date before the date
the loan is made, over (ii) the aggregate outstanding
balances of loans to the Member from the Plan and all
other plans maintained by an Employer or Affiliate on
the date such loan is made.
(2) Except for home loans described in paragraph (d)
below, the maturity date for any loan to a Member may not exceed five (5)
years from the date the loan is made;
(3) Each loan shall bear interest at a rate to be determined
by the Trustee at the beginning of each calendar quarter. In determining
the rate of interest applicable to loans made or renewed during such quarter,
the Trustee shall take into account the rates of interest used by at least two
commercial entities in the business of lending money for similar types of
loans made under similar circumstances with similar collateral, and the rate
of interest established by the Trustee shall be commensurate with such
commercial rates;
(4) All loans shall be subject to any additional
nondiscriminatory criteria that may be established by the Committee,
provided that such criteria shall be those considered in an ordinary
commercial setting by an entity in the process of making similar types of
loans, including criteria relevant to creditworthiness and financial need;
(5) A Member may have only one outstanding loan from
the Plan at any time; and
(6) To the extent that the amount of any loan is greater
than the excess of the value of the aggregate balances in the Member's
accounts over the value, if any, of such accounts accrued under the Denton
Plan prior to January 1, 1992, the loan shall require the written consent of
the Member's spouse which is either witnessed by a Plan representative or a
notary public.
(c) The Committee shall make loans available to all Members on
a reasonably equivalent and nondiscriminatory basis and in accordance with
Section 408(b)(1) of ERISA and regulations promulgated thereunder; and
any Member to whom such loan is made agrees to such changes in the
terms of the loan as may be required by changes in the applicable law or
regulations thereto. The Committee shall not make loans available to
highly-compensated employees (within the meaning of Section 414(q) of
the code) in an amount greater than the amount made available to other
employees.
(d) The provisions of Subsection (b)(2) above shall not apply with
respect to any loan used to acquire, construct, reconstruct or substantially
rehabilitate the "principal residence" of a Member. The maturity date of
any such loan shall be a reasonable period of time as established by the
Committee, in their sole discretion, consistent with the requirements of
Section 72(p) of the Code and other applicable law.
(e) The entire principal amount or any portion of a loan may be
prepaid at any time following the expiration of 90 days after the date on
which the loan was made, without premium or penalty, together with
accrued or unpaid interest on the amount as of the date of prepayment.
(f) Principal and interest with respect to any loan to a Member
shall be repaid by payroll deduction in level installments in amounts
sufficient to liquidate the loan over its remaining term.
(g) Upon a Member's termination of employment the outstanding
principal amount of each loan together with all accrued and unpaid interest
shall become immediately due and payable.
(h) That portion of an account that remains charged by reason of a
loan to a Member shall not share in any income, expense, gain or loss
realized by the remainder of the Trust Fund and shall not be available for
any in-service withdrawal or distribution provisions under the Plan.
(i) Each Member to whom a loan is made shall grant to the
Trustees a security interest in his accounts to the extent of the loan and
execute a promissory note in a form acceptable to the Trustee, which shall
be payable to the order of the Trustees of the Plan for the amount of the
loan and which shall set forth the term, interest rate, and repayment
schedule for the loan. Such note shall be considered an asset of the
account against which the loan is charged.
(j) If a Member defaults on any periodic repayment of income or
principal, the Committee shall have the right to accelerate repayment or to
demand immediate repayment of the entire amount outstanding.
(k) Except as provided in paragraph (1) below if a Member fails
to pay in full the principal amount or the accrued interest on his loan upon
his termination of employment, the balance of any account that has been
charged by reason of the loan shall be reduced by the amount of the unpaid
principal and interest, and the amount by which the balance of the account
is reduced shall be treated as a distribution.If, under the terms of the Plan
without regard to this Section 10.9, the Member is not eligible to receive a
distribution, then the balance of any account charged by reason of a loan
shall be reduced and treated as a distribution on the first day on which the
Member is eligible to receive a distribution, and interest shall accrue on the
unpaid principal until such date.
(l) A Member on an authorized unpaid leave of absence shall be
entitled to suspend loan repayments during such unpaid leave for up to
twelve months without being deemed to be in default on his promissory
note thereby; provided, however, that the maturity of the loan may not be
extended beyond the maximum provided in Subsection (b)(2) or (d) of this
Section 8.10.
8.11 Distribution of Amounts Accrued Under the Denton Plan Prior
to January 1, 1992.
(a) Unless the Member elects an optional form in accordance with
subsection (b), then upon any distribution, the account balances of a
Member who was a participant in the Denton Plan shall, in the case of a
Member who is not married, be used to purchase an annuity for the life of
the Member and, in the case of a Member who is married, be used to
purchase a joint and 50% survivor annuity.
(b) A Member may elect, subject to the provisions of subsection
(c), and during the 90-day period prior to the commencement of benefits, to
have his benefit paid in one of the following manners:
(1) In a lump sum;
(2) In periodic payments of substantially equal amounts for
a specified number of years not in excess of 10. Such periodic payments
shall be made not less frequently than annually;
(3) Purchase of a life annuity.
(c) Any election by a married Member of one of the optional
forms of payment set forth in Subsection (b) must be in writing and must
be consented to by the Member's spouse. The spouse's consent must be
witnessed by a plan representative or notary public. Notwithstanding this
consent requirement, if the Member establishes to the satisfaction of a plan
representative that such written consent may not be obtained because there
is no spouse or the spouse cannot be located, a waiver by the Member will
be deemed a qualified election. Any consent necessary under this item will
be valid only with respect to the spouse who signs the consent, or in the
event of a deemed qualified election, the designated spouse. Additionally, a
revocation of a prior election may be made by a Member without the
consent of spouse at any time before a distribution of the Member's
account(s) is made. The number of revocations shall not be limited.
(d) Each Member shall be provided no later than 90 days before
the commencement of benefits a written explanation of: (a) the terms and
conditions of a qualified joint and survivor annuity; (b) the Member's right
to make and the effect of an election to receive benefits in another form; (c)
the rights of a Member's spouse; and (d) the right to make, and the effect of
a revocation of a previous election not to receive benefits in the form of a
joint and survivor annuity.
(e) With respect to the account balance of a Member who was a
participant in the Denton Plan each such Member may designate one or
more beneficiaries to receive any death benefits that may become payable
under the Plan by filing with the Company the forms specified for this
purpose. For a Member who is married, the beneficiary is the Member's
spouse, unless the spouse has consented in a notarized writing to the
selection by the Member of a beneficiary other than the spouse and the
Member selects such a beneficiary. With respect to such benefits, the
Member shall have a right to select one of the modes of payment specified
in Subsection (b) subject to the requirements of Section 8.3. Such selection
shall be made in the manner and on the forms prescribed by the Company.
If the Member has not specified a payment mode of distribution, the
beneficiary may select one of the modes of distribution specified in
Subsection (b). Any death benefits with respect to which the Member did
not designate a beneficiary or the beneficiary fails to survive the Member
shall be paid in a lump-sum in accordance with Section 8.4.
(f) The Employer will provide each married Member with an
account balance accrued under the Denton Plan prior to January 1, 1992
within the applicable period set forth in subsection (g) with a written
explanation of (1) the terms of the preretirement survivor's death benefit;
(2) the Member's right to designate and the effect of designating a
beneficiary other than the Member's spouse; (3) the rights of the Member's
spouse; (4) the right to make and the effect of a revocation of a previous
beneficiary designation.
(g) The applicable period shall be whichever of the following
periods ends last: (1) the period beginning with the first day of the Plan
Year in which the Member attains age 32 and ending with the close of the
Plan Year preceding the Plan Year in which the Member attains age 35; (2)
a reasonable period after the individual becomes a Member; (3) a
reasonable period ending after Section 417(a)(5) of the Code ceases to
apply to the Member or Section 401(a)(11) of the Code applies to the
Member; (4) a reasonable period after separation from service if the
Participant separates before attaining age 35.
8.12 Qualified Domestic Relations Order. A distribution may be
made to an "alternate payee" pursuant to a "qualified domestic relations
order" (each as defined in Section 414(p) of the Code) at a time when such
a distribution would not be permitted to the Member pursuant to the
provisions of the Plan or Section 401(k) of the Code.
8.13 Direct Transfers. If a Member who is entitled to a distribution
of at least $200 which is an "eligible rollover distribution," as defined in
section 402(f)(2)(a) of the Code, elects in writing on a form provided by the
Company to have such distribution, or a portion of such distribution equal
to at least $500 (or the entire distribution if less than $500) paid directly to
a specified "eligible retirement plan," as defined in section 402(c)(8)(B) of
the Code, which is a defined contribution plan the terms of which permit
the acceptance of rollover distributions, the portion of such distribution
which would otherwise be includible in the Member's gross income shall be
distributed in the form of a direct trustee-to-trustee transfer to the
eligible retirement plan so specified.
Section 9
Administr ation of Plan
9.1 Salant Corporation by its approval of the Plan, as
amended, accepts responsibility as plan administrator of the Plan and a
named fiduciary of the Plan with respect to the selection and retention of
the Trustee of the Fund, the selection and retention of any Investment
Manager, investment of Plan Assets in Common Stock, the selection of the
members of the Committee and for reviewing the performance of such
Committee as to the fiduciary duties and responsibilities vested in it under
the Plan as hereinafter set forth. Salant Corporation shall act by resolution
of the Board. Such action shall be evidenced by written resolution certified
in writing by the Secretary or any Assistant Secretary of Salant Corporation.
9.2 The Committee shall consist of not fewer than 3 nor
more than 5 members and may, but need not, include members of the
Board. Any member may resign at will by notice to Salant Corporation or
be removed (with or without cause) by Salant Corporation. The Committee
shall have exclusive responsibility and authority for approving and
reviewing the Plan's investment and funding objectives and policies; and for
reviewing and evaluating the performance and policies of the Trustee and of
any Investment Manager. The Committee shall report regularly, at least
annually, to the Board with respect to its evaluation of same. The
Committee shall also have primary responsibility and authority for the
administration of the Plan including the authority to interpret its provisions,
to authorize distributions from Plan assets, to establish and enforce such
rules and regulations as it shall deem proper for the administration of the
Plan, to determine the amount of benefits which shall be payable to any
person in accordance with the provisions of the Plan, to implement benefit
claim procedures in accordance with Section 9.5 hereof, and to authorize
the payment of benefits from Plan assets. The Committee shall also have
the responsibility for compiling and communicating to the Investment
Manager, if any, the financial information and projections with respect to
anticipated contributions to and distributions from the Plan so that the
current and ongoing liquidity and other financial needs of the Plan may be
properly integrated into the recommendations of the Investment Manager
respecting the Plan's investment objectives. The Committee shall have the
authority to engage independent counsel and consultants in order to fulfill
its responsibilities, to rely on the advice of same and to compensate same
out of Plan assets. The Committee shall also, from time to time,
recommend Plan amendments to the Board as the Committee in
consultation with others may deem appropriate. In addition to and in
furtherance of the powers and authorities herein conveyed, the Committee
shall be authorized, in its discretion, to allocate responsibilities among one
or more of its members, and to delegate responsibilities to any person or
persons selected by it. Any action taken by the Committee shall be taken
by a majority of its members at a meeting or by written instrument
approved by such majority in the absence of a meeting. A written
resolution or memorandum signed by at least two members or by one
member and the secretary of the Committee shall be sufficient evidence to
any person of any action taken by such Committee. The plan administrator
shall also have the responsibility with respect to reporting and disclosure
requirements under ERISA.
9.3 Salant Corporation shall have the power to appoint one
or more Investment Managers of the Fund. Any Investment Manager
appointed by Salant Corporation shall be a bank, an insurance company, or
an advisor registered under the Investment Company Act of 1940, as
specified in Section 3(38) of ERISA and shall have responsibility for
recommending investment objectives and policies to the Committee and for
implementing same. The Investment Manager shall be responsible for
investment decisions involving its allocable assets of the Fund and shall
make regular reports to the Committee.
9.4 Any person, corporation or other entity may serve in
more than one fiduciary capacity under the Plan.
9.5 In the event of a dispute over entitlement to benefits,
claims for additional benefits under the Plan shall be filed with the
Committee on forms supplied by the Committee. Written notice of the
disposition of a claim shall be furnished the claimant within 90 days after
the claim is filed, unless written notice is furnished within the initial 90
day period specifying the reasons an additional 90 days are needed to rule
upon the claim. If the claim is denied, the reasons for the denial shall be
specifically set forth in writing, pertinent provisions of the Plan shall be
cited, including an explanation of the Plan's claims review procedure, and,
if the claim is perfectible, an explanation as to how the claimant can perfect
the claim shall be provided.
If a claimant whose claim has been denied wishes further
consideration of his claim, he may obtain a form from the Committee on
which to request a review of his claim denial. Such form, together with a
written statement of the claimant's positions, shall be filed with the
Committee no later than 60 days after receipt of the written notification
provided for in the previous paragraph. The Committee shall fully and
fairly review the matter within the next 60 days and shall advise the
claimant, in writing, promptly of its decision, except that, due to special
circumstances, and if the claimant is so advised within 60 days of the filing
of the appeal, said review and advice may be made within 120 days of the
filing of the appeal.
Section 10
Top-Heavy Plan Years
10.1 For purposes of this Section 10:
(a) (1) "Key Employee" means any Member who, at any
time during the Plan Year or any of the four preceding Plan Years, is --
(A) one of the ten
Employees owning the largest interests in
the Company and all Affiliates considered
as a unit;
(B) an owner of a 5
percent or greater interest in the Company
or any Affiliate;
(C) an owner of a greater
than one percent interest in the Company
or any Affiliate, whose Section 415
Compensation from all Employers
combined exceeds $150,000.
(D) an officer of the
Company or an Affiliate whose Section
415 Compensation exceeds 50% of the
dollar limit in effect under
Section 415(b)(1)(A) of the Code for any
such Plan Year.
(2) No Employee shall be considered a Key Employee
pursuant to Subsection (1)(A) if such Employee's Compensation is less than
the amount determined under Section 415(c)(1)(A) of the Code (as adjusted
pursuant to Section 415(d)(1)(B) of the Code), for the calendar year in
which falls the Determination Date; provided, further, if any two Employees
own the same interest in the Company or any Affiliate, the Employee
having the larger Section 415 Compensation will be considered to own the
larger interest.
(3) For purposes of Subsection 10.1(a)(1)(A)- (C), an
Employee shall be considered as owning all interests in the Company or an
Affiliate which he owns directly or would be deemed to own under the
rules contained in Section 318 of the Code, except that subparagraph (C) of
Section 318(a)(2) shall be applied by substituting "5%" for "50%."
(4) No more than the greater of three Employees or
10% of all Employees (up to a maximum of 50) of the Company and all
Affiliates combined shall be considered officers for purposes of
Subsection 10.1(a)(1)(D) and no Employee of the Company or an Affiliate
which is not a corporation shall be considered an officer for such purpose.
Where the actual number of such officers exceeds the limit imposed by the
preceding sentence, those Employees who will be considered officers for
purposes of Subsection 10.1(a)(1)(D) shall be the officers having the highest
annual compensation during the five-year period which includes the Plan
Year and the four preceding Plan Years.
(b) "Determination Date" means, with respect to each Plan
Year, the last day of the immediately preceding Plan Year.
(c) "Aggregation Group" means
(1) each plan of the Company or an Affiliate
(including terminated plans) which --
(A) has one or more
participants who are Key Employees,
and/or
(B) enables any plan
described in subsection (A) to meet the
requirements of Section 401(a)(4) or
Section 410 of the Code,
plus, at the Board's election,
(2) any other plan or plans which, when considered
together with the plan or plans described in subsection (1), satisfy the
requirements of Section 401(a)(4) and Section 410 of the Code.
(d) "Top-Heavy Plan Year" means any Plan Year with respect
to which the Plan is a Top-Heavy Plan described in Section 10.3, such
Section 10.3 to be read as incorporating the applicable definitions contained
in Section 416 of the Code and the regulations promulgated thereunder, and
those of any successor statute thereto.
(e) "Section 415 Compensation," for any period, means an
individual's current compensation from the Company or an Affiliate
required to be reported on Form W-2 for such period, including those items
listed in Paragraph (1) of Section 1.415-2(d) of the Federal Income Tax
Regulations but excluding those items listed in Paragraph (2) thereof.
10.2 To the extent required under
Section 401(a)(10)(B) and/or Section 416 of the Code (or any successor
statute(s) thereto), for any Top-Heavy Plan Year, the provisions of the Plan
shall apply only to the extent not inconsistent with Sections 10.4 and 10.5
of the Plan.
10.3 (a) Except as provided in Section 10.3(a)(3), the
Plan is a Top-Heavy Plan with respect to a Plan Year if, as of the
Determination Date of such Plan Year --
(1) the aggregate of the Accounts of Key Employees
under the Plan exceeds 60% of the aggregate of the Accounts of all
Employees under the Plan; or
(2) the Plan is a member of an Aggregation Group:
(A) which is described in
Section 10.1(c)(1), and
(B) with respect to which
the sum of --
(i) the present
value of the cumulative accrued
benefits for Key Employees under
all defined benefit plans within the
Aggregation Group, and
(ii) the
aggregate of the accounts of Key
Employees under all defined
contribution plans in the
Aggregation Group --
exceeds 60 percent of the sum of --
(i) the present
value of the cumulative accrued
benefits of all Employees under all
defined benefit plans included in
the Aggregation Group; and
(ii) the
aggregate of the accounts of all
Employees under all defined
contribution plans within the
Aggregation Group.
(3) Notwithstanding Paragraphs (1) and (2) of this
Section 10.3(a), the Plan shall not be a Top-Heavy Plan for any Plan Year
in which the Plan is a member of an Aggregation Group with respect to
which the percentage test described in Section 10.3(a)(2)(B) is not met.
(b) For purposes of this Section 10.3:
(1) the accrued benefit and/or account balance of any
Employee who is not a Key Employee during the Plan Year but who was a
Key Employee during any prior Plan Year shall be disregarded;
(2) the present value of an Employee's accrued
benefit under a defined benefit plan as of a Determination Date shall be
determined as of that valuation date which occurs within the twelve (12)
month period ending on such Determination Date and is used by the
enrolled actuary for computing Plan costs for minimum funding, as if the
Employee's separation from service occurred on such valuation date;
(3) the account balance of an Employee in a defined
contribution plan as of any Determination Date shall be equal to the
account balance of the Employee on the valuation date which occurs within
the twelve (12) month period ending on such Determination Date including
an adjustment for contributions made or which are due as of such
Determination Date;
(4) the accrued benefit and/or account balance of any
individual who has not received compensation from an Employer during the
five-year period ending on any Determination Date after 1984 shall be
disregarded; and
(5) the account balance of an Employee in a defined
contribution plan or the present value of the accrued benefit of an
Employee in a defined benefit plan, as of a Determination Date -
(A) excludes any rollover
contribution or similar transfer to such
plan made after December 31, 1983 and
attributable to the Employee's interest in a
plan other than a plan maintained by the
Company or an Affiliate, and
(B) includes any amount
distributed with respect to the Employee
under the Plan within the five (5) year
period ending on the Determination Date,
except to the extent that such amount is
included in such Employee's Account
balance or the present value of his accrued
benefit pursuant to Paragraph (2) or (3).
This Subparagraph (B) shall also apply to
distributions under a terminated plan
which, if it had not been terminated,
would have been required to be included
in an Aggregation Group, and
(6) the terms "Employee" and "Key Employee"
include their beneficiaries.
10.4 (a) Except as otherwise provided in Subsection
(b), the amount of the Employer contribution made on behalf of each
Member, or Employee eligible to participate who has not separated from
Service at the end of the Plan Year and who is not a Key Employee for any
Top-Heavy Plan Year shall be at least equal to the lesser of:
(1) three percent (3%) of such Member's Section
415 Compensation; or
(2) the percentage of Compensation represented by
the Employer contributions made on behalf of the Key Employee for whom
such percentage is the highest for such Plan Year, determined by dividing
the contribution made on behalf of each such Key Employee by so much of
his Compensation as does not exceed $200,000.
(b) Where the inclusion of this Plan in an Aggregation
Group pursuant to Section 10.1(c)(1) enables a defined benefit plan
described in Section 10.1(c)(1) to meet the requirements of
Section 401(a)(4) or Section 410 of the Code, the minimum Employer
contribution required under this Section shall be the amount specified in
Section 10.4(a)(1).
(c) For Plan Years beginning after 1984, the term
"Employer contribution" for purposes of Section 10.4(a) shall include any
contribution made on behalf of a Member pursuant to Section 3.1 of the
Plan.
10.5 For any Top-Heavy Plan Year, the limitations
contained in Section 7 of the Plan shall be applied by substituting "1.0" for
"1.25" in Sections 7.2(a)(2)(A) and 7.2(b)(2)(A) of the Plan, unless for such
Plan Year --
(a) the requirements of Section 10.4 would be satisfied if
"four percent (4%)" were substituted for "three percent (3%)" in
Subsection (a)(1) thereof; and
(b) the Plan would not be a plan described in
Section 10.3 if "90%" were substituted for "60%" wherever the latter figure
appears in Section 10.3.
Section 11
Miscellaneo us
11.1 It shall be impossible for any part of the corpus or
income of the Trust Fund to be used for or diverted to purposes other than
for the exclusive benefit of Members and their beneficiaries, or to deprive
any one of them of his vested interest in the Trust Fund. Subject to this
provision, the Plan may be amended at any time by the Board, and any
amendment may be given retroactive effect as the Board may determine,
except that no amendment may be adopted which has the effect of
eliminating an optional form of benefit with respect to benefits attributable
to service prior to the amendment.
11.2 The Plan may be terminated, partially terminated or
contributions under the Plan may be completely discontinued at any time by
the Board. In the event of termination, partial termination of the Plan or
complete discontinuance of contributions under the Plan, no contribution
shall be made thereafter except for a month the last day of which coincides
with or precedes such termination or discontinuance, no distribution shall be
made except as provided in the Plan, the rights of all Members directly
affected by any such termination or discontinuance of contributions to the
amounts to the credit of their accounts as of the date of such termination or
discontinuance shall be fully vested, no person shall have any right or
interest except with respect to the Trust Fund, and the Trustee shall
continue to act until the Trust Fund shall have been distributed in
accordance with the Plan assuming the restrictions described in Section 8.5
to the extent still required by law shall remain in effect.
In the event of closing of a plant or layoff or discharge of a
number of employees which would not constitute a partial termination for
purposes of the Code, the Board may determine in its discretion pursuant to
uniform and non-discriminatory rules to fully vest all affected Members.
11.3 Except as otherwise provided in the case of a
qualified domestic relations order described in Section 414(p) of the Code,
and the loan provisions of Section 8, no Member or beneficiary shall have
the right to assign, transfer, alienate, pledge, encumber or subject to lien
any benefits to which he is entitled under the Plan, and benefits under the
Plan shall not be subject to attachment, garnishment or other legal process.
Any attempted assignment, transfer, alienation, pledge or encumbrance of
benefits or subjection of benefits to lien or adverse legal process of any
kind shall not be recognized by the Committee and the Committee in such
case may direct that such benefits be held or applied for the benefit of such
Member or beneficiary, his spouse, children or other dependents in such
manner and in such proportion as the Committee deems advisable.
11.4 If a Member or beneficiary to whom benefits shall be
due under the Plan shall be or become incompetent, either physically or
mentally, in the judgment of the Committee, the Committee shall have the
right to determine to whom such benefits shall be paid for the benefit of
such Member or beneficiary.
11.5 Each Member and beneficiary shall keep the
Committee advised of his current address. If amounts become distributable
under the Plan and the Committee is unable to locate the Member or
beneficiary to whom the distributions are payable, the account of such
Member or beneficiary shall be closed after three (3) years from the time
such distributions first become payable and the amount of such account
shall be applied to reduce Company Matching Contributions. If, however,
such Member or beneficiary subsequently makes proper claim to the
Committee for such amount, the amount of such account will be restored to
the Trust Fund by the Company and will be distributable in accordance
with the terms of the Plan.
11.6 In the case of any merger or consolidation with, or
transfer of assets or liabilities to, any other plan, each Member and
beneficiary under the Plan shall be entitled to receive a benefit immediately
after the merger, consolidation or transfer (if the merged, consolidated or
transferee plan then terminated) which is equal to or greater than the benefit
he would have been entitled to receive immediately before the merger,
consolidation or transfer (if the Plan had then terminated).
11.7 This Plan shall be governed by the laws of the State
of New York to the extent not preempted by ERISA or other federal law.
Section 12
Conditional Adoption
This amended and restated Plan is adopted subject to the
conditions precedent that it be determined to be qualified under Section
401(a) of the Code and that it be determined to satisfy the requirements of
Section 401(k) of the Code. In the event that the Internal Revenue Service
determines that this Plan or any part thereof does not so qualify, all affected
company contributions shall be returned to the Company and all affected
Salary Deferral Contributions, together with any allocable earnings, shall be
returned to Members within one year of the date of the denial of
qualification or unfavorable determination.
IN WITNESS WHEREOF, Salant Corporation has hereby
adopted this Plan on this day of December, 1994, as of the year and
day first above written.
Attest:
President
Secretary
6985
03/23/95 APPENDIX A
ADOPTING COMPANIES
Name Effective Date
Salant Corporation January 1, 1979
Denton Mills, Inc. January 1, 1992
EX-4
5
EXHIBIT 10.26
February 15, 1995
Mr. Richard P. Randall
Peaceable Street
Redding, Connecticut 06896
Dear Dick:
Reference is hereby made to the Employment Agreement, dated as of
July 30, 1993, as amended by letter agreement, dated October 25,
1994 (the "Employment Agreement"), between yourself as the
Employee and Salant Corporation ("Salant")..
We hereby acknowledge that effective February 26, 1995 you
voluntarily offered (along with other employees of Salant) to
reduce your base salary as set forth in Section 4 of the
Employment Agreement from $300,000 per annum to $280,000 per
annum for the remainder of the 1995 calendar year.
Notwithstanding anything to the contrary contained herein or
otherwise, the reduction in your base salary provided herein
shall not be considered for purposes of (i) calculating the
Incentive Compensation provided for in Section 4 (b) of the
Employment Agreement and (ii) calculating any severance owed to
you upon a termination of your Employment Agreement.
You hereby acknowledge that your voluntary reduction in Salary
contained herein is not a "reduction in the Employee's Salary" as
described in Section 9 (e) of the Employment Agreement.
If the foregoing correctly sets forth our mutual agreement,
please sign and return to me three attached copies of this
letter.
Very truly yours,
SALANT CORPORATION
By: /s/ Nicholas P. DiPaolo
Nicholas P. DiPaolo
Chairman of the Board,
President and CEO
Accepted and Agreed To:
By: /s/ Richard P. Randall
Richard P. Randall
Date: February 15, 1995
EX-5
6
EXHIBIT 3.2
As of 9/20/94
COMPOSITE COPY OF
BYLAWS, AS AMENDED, OF
SALANT CORPORATION
(A Delaware Corporation)
ARTICLE I
OFFICES
SECTION 1. Registered Office. The registered office of
Salant Corporation (hereinafter referred to as the "Corporation")
within the State of Delaware is The Prentice-Hall Corporation
System, Inc., 229 South State Street, Dover, Delaware 19901,
County of Kent, and the name of its registered agent at that
address is The Prentice-Hall Corporation System, Inc.
SECTION 2. Other Offices. The Corporation may also have
offices at such other places, either within or without the State
of Delaware, as the Board of Directors may from time to time
designate or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meetings. All meetings of the
stockholders for the election of directors or for any other
purpose shall be held at such time and place, either within or
without the State of Delaware, as shall be stated in the notice
of meeting or in a duly executed waiver thereof.
SECTION 2. Annual Meeting. The annual meeting of
stockholders shall be held on the second Tuesday in May of each
year beginning in 1990, if not a legal holiday, and if a legal
holiday, then on the next succeeding day not a legal holiday, at
11 A.M., or at such other date and time as shall be designated
from time to time by the Board of Directors and stated in the
notice of meeting or in a duly executed waiver thereof. At such
annual meeting, the stockholders shall elect a Board of Directors
and transact such other business as may be properly brought
before the meeting.
SECTION 3. Special Meetings. Special meetings of
stockholders may only be called as provided in Article SEVENTH of
the Certificate of Incorporation.
SECTION 4. Notice of Meetings. Except as otherwise expressly
required by statute, written notice of each annual and special
meeting of stockholders, stating the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given to each
stockholder of record entitled to vote thereat not less than ten
nor more than sixty days before the date of the meeting. Notice
shall be given personally or by mail and, if by mail, shall be
sent in a postage prepaid envelope, addressed to the stockholder
at his address as it appears on the records of the Corporation.
Notice by mail shall be deemed given at the time when the same
shall be deposited in the United States mail, postage prepaid.
Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when such person attends the
meeting in person or by proxy for the express purpose of
objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or
convened, or who, either before or after the meeting, shall
submit a signed written waiver of notice, in person or by proxy.
Neither the business to be transacted at, nor the purpose of, an
annual or special meeting of stockholders need be specified in
any written waiver of notice.
SECTION 5. Stockholders List. The officer who has charge of
the stock transfer books of the Corporation shall prepare and
make, at the time and in the manner required by applicable law, a
list of stockholders entitled to vote and shall make such list
available for such purposes, at such places, at such times and to
such persons as required by applicable law. The stock transfer
books shall be the only evidence as to the identity of the
stockholders entitled to examine the stock transfer books or to
vote in person or by proxy at any meeting of stockholders.
SECTION 6. Quorum, Adjournments. The holders of a majority
of the voting power of the issued and outstanding stock of the
Corporation entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum for the
transaction of business at any meeting of stockholders, except as
otherwise provided by statute or by the Certificate of
Incorporation. The stockholders present and entitled to vote at
a duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the
withdrawal of enough stockholders entitled to vote to leave less
than a quorum then present and represented provided that the
action taken (other than an adjournment) is approved by at least
a majority of the holders of stock required to constitute a
quorum. Any stockholders' meeting, annual or special, whether or
not a quorum is present or represented, may be adjourned from
time to time by the vote of the holders of a majority of the
stock entitled to vote thereat, the holders of which are either
present in person or represented by proxy, or the chairman of the
meeting, but in the absence of a quorum no other business may be
transacted at such meeting. At any adjourned meeting, at which a
quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as
originally notified, except for such business as was duly
transacted at any earlier meeting. If the adjournment is for
more than thirty days, or if after adjournment a new record date
is set, a notice of the adjourned meeting shall be given as in
the case of an original meeting to each stockholder of record
entitled to vote at the meeting.
SECTION 7. Organization. At each meeting of stockholders,
the President or, in his absence or inability to act, such other
person as the Board of Directors may have designated shall call
to order and act as chairman of the meeting. The Secretary or,
in his absence or inability to act, the person whom the chairman
of the meeting shall appoint secretary of the meeting shall act
as secretary of the meeting and keep the minutes thereof.
SECTION 8. Order of Business. The order of business and the
procedure at all meetings of the stockholders shall be as
determined by the chairman of the meeting, unless otherwise
prescribed by law or regulation.
SECTION 9. Voting. Except as otherwise provided by statute
or the Certificate of Incorporation, each stockholder of the
Corporation shall be entitled at each meeting of stockholders to
one vote for each share of capital stock of the Corporation
standing in his name on the record of stockholders of the
Corporation.
(a) on the date fixed pursuant to the provisions of
SECTION 7 of Article V of these Bylaws as the record date
for the determination of the stockholders who shall be
entitled to notice of and to vote at such meeting; or
(b) if no such record date shall have been so fixed,
then at the close of business on the day next preceding
the day on which notice thereof shall be given, or,
if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held.
Each stockholder entitled to vote at any meeting of stockholders
may authorize another person or persons to act for him by a proxy
signed by such stockholder or his attorney-in-fact, but no proxy
shall be voted after three years from its date, unless the proxy
provides for a longer period. Any such proxy shall be delivered
to the secretary of the meeting at or prior to the time
designated in the order of business for so delivering such
proxies. When a quorum is present at any meeting, the vote of
the holders of a majority of the voting power of the issued and
outstanding stock of the Corporation entitled to vote thereon,
present in person or represented by proxy, shall decide any
question brought before such meeting, unless the question is one
upon which, by express provision of statute or of the Certificate
of Incorporation or of these Bylaws, a different vote is
required, in which case such express provision shall govern and
control the decision of such question. On a vote by ballot, each
ballot shall be signed by the stockholder voting, or by his
proxy, if represented by proxy, and shall state the number of
shares voted.
SECTION 10. Inspectors. The Board of Directors may, in
advance of any meeting of stockholders, appoint one or more
inspectors to act at such meeting or any adjournment thereof. If
any of the inspectors so appointed shall fail to appear or act,
the chairman of the meeting shall, or, if inspectors shall not
have been appointed, the chairman of the meeting may, appoint one
or more inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully
to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The
inspectors shall determine the number of shares of capital stock
of the Corporation outstanding and the voting power thereof, the
number of shares represented at the meeting, the existence of a
quorum and the authenticity, validity and effect of proxies, and
shall receive votes or ballots, hear and determine all challenges
and questions arising in connection with the right to vote, count
and tabulate all votes or ballots, determine the results and
perform such acts as are proper to conduct the election or vote
with fairness to all stockholders. If more than one inspector
has been appointed, the decision, act or certificate of a
majority of the inspectors is effective in all respects as the
decision, act or certificate of all of the inspectors. On
request of the chairman of the meeting, the inspector shall make
a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact
found by them. No director or candidate for the office of
director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
SECTION 11. Action by Consent. The stockholders of the
Corporation shall not be entitled to take action by written
consent in lieu of taking such action at an annual or special
meeting of stockholders.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the
Board of Directors. The Board of Directors may exercise all such
authority and powers of the Corporation and do all such lawful
acts and things as are not by statute or the Certificate of
Incorporation directed or required to be exercised or done by the
Continuing Directors (as defined in Article NINTH of the
Certificate of Incorporation) or the stockholders.
SECTION 2. Number, Qualifications, Election and Term of
Office. The number of directors may be fixed, from time to time,
as provided in Article FIFTH of the Certificate of Incorporation.
Nominations of candidates for election as directors shall be made
pursuant to the procedures set forth in Article FIFTH of the
Certificate of Incorporation. The election of directors, the
division of directors into separate classes and the terms of
directors shall be as provided in Article FIFTH of the
Certificate of Incorporation.
SECTION 3. Place of Meetings. Meetings of the Board of
Directors shall be held at such place or places, within or
without the State of Delaware, as the Board of Directors may from
time to time determine or as shall be specified in the notice of
any such meeting.
SECTION 4. Annual Meeting. The Board of Directors shall meet
for the purpose of organization, the election of officers and the
transaction of other business, as soon as practicable after each
annual meeting of stockholders, on the same day and at the same
place where such annual meeting shall be held. Notice of such
meeting need not be given. In the event such annual meeting is
not so held, the annual meeting of the Board of Directors may be
held at such other time or place, within or without the State of
Delaware, as shall be specified in a notice thereof given as
provided in Section 7 of this Article III.
SECTION 5. Regular Meetings. Regular meetings of the Board
of Directors shall be held at such time and place as the Board of
Directors may fix. If any day fixed for a regular meeting shall
be a legal holiday at the place where the meeting is to be held,
then the meeting which would otherwise be held on that day shall
be held at the same hour on the next succeeding business day.
Notice of regular meetings of the Board of Directors need not be
given.
SECTION 6. Special Meetings. Special meetings of the Board
of Directors may be called by the Chairman of the Board or the
President and shall be called by the Secretary on the written
request of a majority of the members of the Board of Directors.
SECTION 7. Notice of Meetings. Notice of each special
meeting of the Board of Directors shall be given by the Secretary
as hereinafter provided in this Section 7, in which notice shall
be stated the time and place of the meeting. Except as otherwise
required by these Bylaws, such notice need not state the purpose
or purposes of such meeting. Notice of each such meeting shall
be mailed, postage prepaid, to each director, addressed to him at
his residence or usual place of business, by first class mail, at
least four days before the time of the meeting, or shall be sent
addressed to him at such place by telegraph, cable, telex,
telecopier or other similar means, or be delivered to him
personally or be given to him by telephone or other similar
means, at least twelve hours before the time of the meeting.
Notice of any such meeting need not be given to any director who
shall, either before or after the meeting, submit a signed waiver
of notice or who shall attend such meeting, except when he shall
attend for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 8. Quorum and Manner of Acting. At all meetings of
the Board of Directors, a majority of the total number of
directors shall be necessary and sufficient to constitute a
quorum for the transaction of business, and, except as otherwise
expressly required by statute or the Certificate of Incorporation
or these Bylaws, the act of a majority of the directors present
at any meeting at which a quorum is present shall be the act of
the Board of Directors. In the absence of a quorum at any
meeting of the Board of Directors, a majority of the directors
present thereat may adjourn such meeting to another time and
place. Notice of the time and place of any such adjourned
meeting shall be given to all of the directors unless such time
and place were announced at the meeting at which the adjournment
was taken, in which case such notice shall only be given to the
directors who were not present thereat. At any adjourned meeting
at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally
called. The directors shall act only as a Board and the
individual directors shall have no power as such.
SECTION 9. Resignations. Any director of the Corporation may
resign at any time by giving written notice of his resignation to
the Corporation. Any such registration shall take effect at the
time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its
tender. Unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 10. Newly Created Directorships and Vacancies. Any
vacancy on the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office,
an increase in the number of authorized directors or any other
cause shall be filled as provided in Article FIFTH of the
Certificate of Incorporation.
SECTION 11. Removal of Directors. A director may be removed
only as provided in Article FIFTH of the Certificate of
Incorporation.
SECTION 12. Compensation. Each director shall receive such
fees and other compensation, along with reimbursement of expenses
incurred on behalf of the Corporation or in connection with
attendance at meetings, as the Board of Directors may from time
to time determine. No such payment of fees or other compensation
shall preclude any director from serving the Corporation in any
other capacity and receiving fees or other compensation for such
services.
SECTION 13. Committees. Unless restricted by the Certificate
of Incorporation, the Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate
one or more committees, including an executive committee (as more
fully described in Section 14 of this Article III), each
committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a
committee, a member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any
such absent or disqualified member. Except to the extent
restricted by statute or the Certificate of Incorporation, each
such committee, to the extent provided in the resolution creating
it, shall have and may exercise all of the powers and authority
of the Board of Directors, including, if such resolution so
provides, the power to declare a dividend, to authorize the
issuance of stock or to adopt a certificate of ownership and
merger pursuant to Section 253 of Title 8 of the Delaware Code,
and may authorize the seal of the Corporation to be affixed to
all papers which require it. Each such committee shall serve at
the pleasure of the Board of Directors and have such name as may
be determined from time to time by resolution adopted by the
Board of Directors. Each committee shall keep regular minutes of
its meetings and report the same to the Board of Directors.
Members of either standing or special committees shall receive
such fees and other compensation, along with reimbursement of
expenses incurred on behalf of the Corporation or in connection
with attendance at meetings, as the Board of Directors may from
time to time determine. No such payment of fees or compensation
shall preclude any member of a committee from serving the
Corporation in any other capacity and receiving fees or other
compensation for such services.
SECTION 14. Executive Committee. The Board of Directors may
designate an Executive Committee to consist of not less than
three nor more than seven members, one of whom shall be
designated as the Chairman of the Executive Committee, and two of
whom shall be the Chairman of the Board and the President.
During the intervals between meetings of the Board of Directors,
the Executive Committee shall possess and exercise, to the
fullest extent permitted by law, all of the powers of the Board
of Directors in the management and direction of the operations of
the Corporation and of all its business and affairs in such
manner as the Executive Committee shall deem for the best
interest of the Corporation, except as to any matters as to which
specific directions shall have been given, or specific action
shall have been taken, by the Board of Directors. At all
meetings of the Executive Committee, a majority of its members
shall be necessary and sufficient to constitute a quorum for the
transaction of business; provided, however, that any action
required or permitted to be taken by the Executive Committee may
be taken without a meeting if all of its members consent thereto
in writing.
SECTION 15. Action by Consent. Any action required or
permitted to be taken by the Board of Directors or any committee
thereof may be taken without a meeting if all members of the
Board of Directors or such committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with
the minutes of the proceedings of the Board of Directors or such
committee, as the case may be.
SECTION 16. Telephonic Meeting. Any one or more members of
the Board of Directors or any committee of the Board of Directors
may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other. Participation
by such means shall constitute presence in person at a meeting.
SECTION 17. Presumption of Assent. A director of the
Corporation who is present at a meeting of the Board of Directors
at which action is taken shall be presumed to have assented to
the action taken unless his dissent or abstention therefrom shall
be entered in the minutes of the meeting or unless he shall file
a written dissent from such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary of the
Corporation within five days after the date a copy of the minutes
of the meeting is received. Such right to dissent shall not
apply to a director who voted in favor of such action.
ARTICLE IV
OFFICERS
SECTION 1. Number and Qualifications. The officers of the
Corporation shall be elected annually by the Board of Directors
at the first meeting of the Board held after each annual meeting
of stockholders, or as soon thereafter as possible. The Board of
Directors shall elect from among its number a Chairman of the
Board and a President. The Board of Directors shall also elect
one or more Vice Presidents, a General Counsel, a Secretary and a
Treasurer, who need not be directors. If the Board of Directors
wishes, it may also elect such other officers (including one or
more Assistant Treasurers and one or more Assistant Secretaries)
as may be necessary or desirable for the business of the
Corporation. Any two or more offices may be held by the same
person, except the offices of President and Secretary. Each
officer shall hold office until his successor shall have been
duly elected and qualified, or until his death, resignation or
removal, as hereinafter provided. A vacancy in any office
because of death, resignation, removal, disqualification or
otherwise, shall be filled only by a majority vote of the Board
of Directors for the unexpired portion of the term.
SECTION 2. Resignations. Any officer of the Corporation may
resign at any time by giving written notice of his resignation to
the Corporation. Any such resignation shall take effect at the
time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its
tender. Unless otherwise specified therein, the acceptance of
any such registration shall not be necessary to make it
effective.
SECTION 3. Removal. Any officer of the Corporation may be
removed, either with or without cause, at any time, by the Board
of Directors at any meeting thereof, but such removal, other than
for cause (as defined in any contract between the officer and the
Corporation), shall be without prejudice to the contract rights,
if any, of the person so removed.
SECTION 4. Chairman of the Board. The Chairman of the Board
shall be a member of the Board of Directors, an officer of the
Corporation and, if present, shall preside at each meeting of the
Board of Directors. He shall advise and counsel with the
President, and, in the event of the President's absence or
incapacity, with other executives of the Corporation, and shall
perform all duties incident to the office of Chairman of the
Board of Directors and such other duties as may from time to time
be assigned to him by the Board of Directors.
SECTION 5. The President. The President shall be the chief
executive officer of the Corporation. He shall, if present,
preside at each meeting of stockholders and, in the event of the
absence or incapacity of the Chairman of the Board, preside at
each meeting of the Board of Directors. He shall perform all
duties incident to the office of President and chief executive
officer and such other duties as may from time to time be
assigned to him by the Board of Directors.
SECTION 6. Vice President. Each Vice President shall perform
all duties incident to his office and such other duties as from
time to time may be assigned to him by the Board of Directors or
the President.
SECTION 7. General Counsel. The General Counsel shall be the
principal legal officer of the Corporation. He shall have
general direction of and supervision over the legal affairs of
the Corporation and shall advise the Board of Directors and
officers of the Corporation on all legal matters, and shall
perform such other duties as may from time to time be assigned to
him by the Board of Directors or the President.
SECTION 8. Chief Financial Officer. The Chief Financial
Officer shall:
(a) have charge and custody of, and be responsible for, all the
funds and securities of the Corporation;
(b) keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation;
(c) deposit all moneys and other valuables to the credit of the
Corporation in such depositories as may be designated by
the Board of Directors or pursuant to its direction;
(d) receive, and give receipts for, moneys due and payable to
the Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds, taking proper vouchers therefor;
(f) render to the Board of Directors, whenever the Board of the
Directors may require, an accounting of the financial
condition of the Corporation; and
(g) in general, perform all other duties incident to the office
of Chief Financial Officer and such other duties as from
time to time may be assigned to him by the Board of
Directors or the President.
SECTION 9. Secretary. The Secretary shall
(a) keep or cause to be kept, in one or more books provided
for the purpose, the minutes of all meetings of the Board of
Directors, the committees of the Board of Directors and the
stockholders;
(b) see that all notices are duly given in accordance
with the provisions of these Bylaws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all certificates for
shares of the Corporation (unless the seal of the Corporation on
such certificates shall be facsimile, as hereinafter provided)
and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates
and other documents and records required by law to be kept and
filed are properly kept and filed; and
(e) in general, perform all other duties incident
to the office of Secretary and such other duties as
from time to time may be assigned to him by the Board of
Directors or the President.
SECTION 10. Assistant Secretary. The Assistant Secretary, or
if there be more than one, the Assistant Secretaries in the order
determined by the Board of Directors (or, if there be no such
determination, then in the order of their election), shall, at
the request of the President or the Secretary or in the
absence of the Secretary or in the event of his inability or
refusal to act, perform the duties of the Secretary (and when so
acting, shall have the powers of and be subject to the
restrictions placed upon the Secretary in respect of the
performance of such duties) and shall perform such other duties
as from time to time may be assigned by the Board of Directors or
the President.
SECTION 11. Officers' Bonds or Other Security. If required
by the Board of Directors, any officer of the Corporation shall
give a bond or other security for the faithful performance of his
duties, in such amount and with such surety as the Board of
Directors may require.
SECTION 12. Compensation. The compensation of the officers
of the Corporation for their services as such officers shall be
fixed from time to time by the Board of Directors. An officer of
the Corporation shall not be prevented from receiving
compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE V
STOCK CERTIFICATES AND THEIR TRANSFER
SECTION 1. Stock Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by, or
in the name of the Corporation by, the Chairman of the Board or
the President or a Vice President and by the Chief Financial
Officer or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by him in the
Corporation. If the Corporation shall be authorized to issue
more than one class of stock or more than one series of any
class, the designations, preferences and relative, participating,
optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of
such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series of
stock, provided that, except as otherwise provided in Section 202
of the General Corporation Law of the State of Delaware, in lieu
of the foregoing requirements, there may be set forth, on the
face or back of the certificate which the Corporation shall issue
to represent such class or series of stock, a statement that the
Corporation will furnish without charge to each stockholder who
so requests the designations, preferences and relative,
participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
SECTION 2. Facsimile Signatures. Any or all of the
signatures on a certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer, transfer agent
or registrar at the date of issuance.
SECTION 3. Lost Certificates. The Board of Directors may
direct that a new certificate or certificates be issued in place
of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed. When
authorizing the issuance of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such
amount as it may direct sufficient to indemnify it against any
claim that may be made against the Corporation on account of the
alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
SECTION 4. Transfers of Stock. Upon surrender to the
Corporation or the transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by
properevidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its records;
provided, however, that the Corporation shall be entitled to
recognize and enforce any lawful restriction on transfer.
Whenever any transfer of stock shall be made for collateral
security, and not absolutely, it shall be so expressed in the
entry of transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and the transferee
request the Corporation to do so. Persons whose stock is pledged
shall be entitled to vote, unless in the transfer by the pledgor
on the books of the Corporation he has expressly empowered the
pledgee to vote thereon, in which case only the pledgee, or his
proxy, may represent and vote such stock.
SECTION 5. Transfer Agents and Registrars. The Board of
Directors may appoint, or authorize any officer or officers to
appoint, one or more transfer agents and one or more registrars.
SECTION 6. Regulations. The Board of Directors may make such
additional rules and regulations, not inconsistent with these
Bylaws, as it may deem expedient concerning the issuance,
transfer and registration of certificates for shares of stock of
the Corporation.
SECTION 7. Fixing the Record Date. In order that the
Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend or other
distribution or any allotment of rights, or entitled to exercise
any rights in respect of any change, conversion or exchange of
stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 8. Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered
on its records as the owner of shares of stock to receive
dividends and to vote as such owner, shall be entitled to hold
liable for calls and assessments a person registered on its
records as the owner of shares of stock, and shall not be bound
to recognize any equitable or other claim to or interest in such
6share or shares of stock on the part of any other person,
whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. General. The Corporation shall indemnify any
person who was or is a party, or is threatened to be made a
party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
SECTION 2. Derivative Actions. The Corporation shall
indemnify any person who was or is a party, or is threatened to
be made a party, to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Corporation, provided that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless
and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 3. Indemnification in Certain Cases. To the extent
that a director, officer, employee or agent of the Corporation
has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 1 and 2 of
this Article VI, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection therewith.
SECTION 4. Procedure. Any indemnification under Sections 1
and 2 of this Article VI (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in such
Sections 1 and 2. Such determination shall be made (a) by the
Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or
proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (c) by the
stockholders.
SECTION 5. Advances for Expenses. Expenses incurred in
defending a civil or criminal action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay
such amount if it shall be ultimately determined that he is not
entitled to be indemnified by the Corporation as authorized in
this Article VI.
SECTION 6. Rights Not Exclusive. The indemnification and
advancement of expenses provided by, or granted pursuant to, the
other subsections of this Article VI shall not be deemed
exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under
any law, bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such
office.
SECTION 7. Insurance. The Corporation shall have power to
purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or
not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.
SECTION 8. Definition of Corporation. For the purposes of
this Article VI, references to "the Corporation" include all
constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporation so that any person
who is or was a director, officer, employee or agent of such a
constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust
or other enterprise, shall stand in the same position under the
provisions of this Article VI with respect to the resulting or
surviving corporation as he would if he had served the resulting
or surviving corporation in the same capacity.
SECTION 9. Survival of Rights. The indemnification and
advancement of expenses provided by, or granted pursuant to, this
Article VI shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a
person.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. Dividends. Subject to the provisions of law and
the Certificate of Incorporation, dividends upon the shares of
capital stock of the Corporation may be declared by the Board of
Directors at any regular or special meeting. Dividends may be
paid in cash, in property or in shares of stock of the
Corporation, unless otherwise provided by law or the Certificate
of Incorporation.
SECTION 2. Seal. The seal of the Corporation shall be in
such form as shall be approved by the Board of Directors.
SECTION 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed, and once fixed, may thereafter be changed, by
resolution of the Board of Directors. The Corporation shall be
subject to an annual audit as of the end of its fiscal year by
independent public accountants appointed by and responsible to
the Board of Directors. The appointment of such accountants
shall be subject to annual ratification by the stockholders.
SECTION 4. Checks, Notes, Drafts, Etc. All checks, notes,
drafts or other orders for the payment of money of the
Corporation shall be signed, endorsed or accepted in the name of
the Corporation by such officer, officers, person or persons as
from time to time may be designated by the Board of Directors or
by an officer or officers authorized by the Board of Directors to
make such designation.
SECTION 5. Execution of Contracts, Deeds, Etc. The Board of
Directors may authorize any officer or officers, agent or agents,
in the name and on behalf of the Corporation to enter into or
execute and deliver any and all deeds, bonds, mortgages,
contracts and other obligations or instruments, and such
authority may be general or confined to specific instances.
SECTION 6. Voting of Stock in Other Corporations. Unless
otherwise provided by resolution of the Board of Directors, the
President or, in the event of his absence, the Chairman of the
Board, from time to time, may (or may appoint one or more
attorneys or agents to) cast the votes which the Corporation may
be entitled to cast as a stockholder or otherwise in any other
corporation, any of whose shares or securities may be held by the
Corporation, at meetings of the holders of the shares or other
securities of such other corporation. In the event one or more
attorneys or agents are appointed, the President or the Chairman
of the Board may instruct the person or persons so appointed as
to the manner of casting such votes or giving such consent. The
President or the Chairman of the Board may, or may instruct the
attorneys or agents appointed to, execute or cause to be executed
in the name and on behalf of the Corporation and under its seal
or otherwise, such written proxies, consents, waivers or other
instruments as may be necessary or proper in the circumstances.
ARTICLE VIII
AMENDMENTS
These Bylaws may be amended or repealed or new bylaws
adopted as provided in Article ELEVENTH of the Certificate of
Incorporation.
DATAFI07
EX-27
7
EXHIBIT 27
5
0000086346
SALANT CORPORATION
1,000
12-MOS 12-MOS 12-MOS
DEC-31-1994 JAN-1-1994 JAN-1-1993
DEC-31-1994 JAN-1-1994 JAN-1-1993
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(11435) 11183 (13071)
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(7865) 43706 (17758)
(0.53) 6.15 (5.13)
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