6


                              EMPLOYMENT AGREEMENT



                EMPLOYMENT  AGREEMENT,   dated  as  of  January  1,  1997  (this
"Agreement"),   between  SALANT  CORPORATION,   a  Delaware  corporation,   (the
"Corporation") and NICHOLAS P. DiPAOLO (the "Employee").

                WHEREAS,  pursuant to the Employment Agreement,  dated September
20,  1993,  between  the  Employee  and  the  Corporation,  as  modified  by the
Agreement,  dated  September 22, 1993,  between the Employee and the Corporation
and the Letter  Agreement,  dated August 31, 1995,  between the Employee and the
Corporation,  the Employee is currently  the Chairman of the Board of Directors,
Chief Executive Officer and President of the Corporation; and

                WHEREAS,   the  Board  of  Directors  of  the   Corporation  has
determined  that it would be in the best interest of the  Corporation  to extend
the term of employment for a one year period.

                NOW THEREFORE,  in  consideration  of the  respective  premises,
mutual  covenants  and  agreements  of the  parties  hereto,  and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto agree as follows:

                Section 1. Nature of Employee's Services. The Corporation agrees
to employ the  Employee  and the  Employee  agrees to serve the  Corporation  as
Chairman of the Board, President and Chief Executive Officer of the Corporation.
The Employee  shall perform such services and duties as shall be assigned to him
or  delegated  to him  from  time to  time  by the  Board  of  Directors  of the
Corporation  (the "Board of Directors") or the Executive  Committee of the Board
of  Directors  during  the  Employment  Period  (as  hereinafter  defined).  The
Employee's  duties  shall  include,   without   additional   compensation,   the
performance of similar  services for any  subsidiaries of the  Corporation.  The
Employee  agrees that,  except as  otherwise  provided  herein,  he shall devote
substantially all of his business time,  attention and energy to the business of
the Corporation and its subsidiaries in the advancement of the best interests of
the  Corporation  and its  subsidiaries.  The  Employee  will perform his duties
hereunder  principally in the metropolitan New York area.  During the Employment
Period it shall not be a violation  of this  Agreement  for the  Employee to (a)
serve on  corporate,  civic or  charitable  boards or  committees,  (b)  deliver
lectures,  fulfill speaking engagements or teach at educational institutions and
(c) manage  personal  investments,  so long as such  activities do not interfere
with the  performance  of  Employee's  responsibilities  as an  employee  of the
Corporation in accordance  with this Agreement.  It is expressly  understood and
agreed that to the extent that any such  activities  have been  conducted by the
Employee  prior  to  the  Employment  Period,  the  continued  conduct  of  such
activities  (or the conduct of activities  similar in nature and scope  thereto)
during the  Employment  Period shall not  thereafter be deemed to interfere with
the performance of the Employee's responsibilities to the Corporation.

                Section 2. Term of Employment.  For purposes of this  Agreement,
the term Employment Period shall mean the period commencing  January 1, 1997 and
ending December 31, 1997, or, if earlier,  the Termination  Date (as hereinafter
defined).

                Section 3. Annual Compensation. Subject to the terms hereof, the
Corporation  agrees to pay to the Employee,  subject to all applicable  laws and
requirements, including, without limitation, laws with respect to withholding of
federal, state or local taxes the annual compensation set forth below.

                         (a)      Salary.  As annual salary for the services to
 be rendered by the Employee a
salary at the rate of $625,000 per annum from  January 1, 1997 through  December
31, 1997, payable in equal bi-weekly  installments  during the Employment Period
(the "Salary").

                         (b)      Incentive Compensation.  Incentive
compensation, payable in accordance with the
Corporation's  customary  practices  for  executive  employees,  based  upon the
schedule  comparing the Corporation's  performance during each fiscal year which
ends  within the  Employment  Period to  operating  targets for each such fiscal
year, which schedule is set forth in Exhibit 1 hereto.  Each bonus shall be paid
by the  Corporation to the Employee within ninety (90) days after the end of the
fiscal year for which such bonus is payable.  If the  employment of the Employee
is terminated  or if the  Employment  Period  terminates on a day other than the
last day of a fiscal year, the bonus amount payable shall be the amount to which
the Employee  would have been entitled had his  employment  continued for all of
that  fiscal  year,  prorated  by the  proportion  that the  number of months of
employment  completed  by the  Employee  during that fiscal year bears to twelve
(12).  Notwithstanding anything contained herein to the contrary, no bonus shall
be payable to the Employee (i) if the Employee is terminated pursuant to Section
6(d),  (ii) if the  Employee  breaches  this  Agreement or (iii) if the Employee
terminates the Employment Period other than pursuant to Section 6(e).

                Section 4. Employee  Benefit Plans.  The Employee shall,  during
the Employment  Period, be eligible to participate in and receive benefits under
and in accordance with the provisions of any pension plan, welfare plan or other
similar  plan or policy of the  Corporation  maintained  for the  benefit of its
employees (together, the "Benefit Plans") in which he now participates,  and the
Employee  shall be entitled to  continue  to  participate  in such plans (or any
successors thereto) during the Employment Period, to the extent permitted by the
respective terms thereof. In the event any new Benefit Plan is established which
is in addition  to, and not an  alternative  to, any  Benefit  Plan in which the
Employee now participates, the Employee shall be entitled to participate in such
Benefit Plan to the extent permitted by the terms thereof.  The Corporation will
not take any action directed solely at the Employee, with respect to the Benefit
Plans or the Employee's  participation  in the Benefit Plans,  that results in a
material  adverse  change  from  the  benefits  the  Employee  now  enjoys.  The
Corporation  shall have the right,  however,  to make  changes in Benefit  Plans
applicable  to its senior  executives  or employees  generally  and the Employee
agrees that such changes shall also be applicable to the Employee.

                Section 5. Expenses.  Subject to compliance by the Employee with
such policies  regarding  expenses and expense  reimbursement  as may be adopted
from  time to time by the  Corporation,  the  Employee  is  authorized  to incur
reasonable   expenses  in  the  performance  of  his  duties  hereunder  in  the
furtherance of the business of the  Corporation  and its  subsidiaries,  and the
Corporation shall reimburse the Employee for all such reasonable expenses.

                Section 6.  Termination.

                         (a)      Termination Date and Termination of Rights
and Obligations.  On the date (the
"Termination  Date")  which is the earlier of (i)  December 31, 1997 or (ii) the
date on which the  Company  delivers  to the  Employee  written  notice that the
Employee's  employment  hereunder  is  terminated  for any  reason,  including a
termination  of the  Employment  Period  which  becomes  effective  pursuant  to
subsections  (b) through (e) of this Section 6, the Employee's  salary and other
rights under this Agreement  (except as otherwise  provided in subsections  (e),
(f) and (g) of this  Section 6) shall  terminate,  provided,  however,  that the
Corporation  shall pay to the  Employee his Salary and  benefits  accrued  prior
thereto and the Employee shall be entitled to receive an incentive  bonus to the
extent provided in Section 3(b).

                         (b)      Death of Employee.  In the event of the death
 of the Employee, the Employment
Period shall terminate on the last day of the third full month after such death.

                         (c)      Disability of Employee.   The Corporation
shall have the right to terminate the
Employment  Period,  upon written  notice to the  Employee,  if the  Corporation
determines that the Employee has been disabled  (either  mentally or physically)
so as to be unable to substantially perform his duties hereunder for a period of
six months or more.

                         (d)      Termination for Cause.  The Corporation
 shall have the right to terminate the
Employment  Period,  upon written  notice to the  Employee,  if the Employee (i)
engages in conduct  which is determined by a court to constitute a felony or act
of moral turpitude or (ii) commits any act of willful misconduct, malfeasance or
gross negligence that is injurious to the Corporation  (collectively referred to
as "For Cause").

                         (e)      Termination by Employee for Good Reason.
 The Employee shall have the right to
terminate  the  Employment  Period for "good reason" (as  hereinafter  defined),
provided that the Employee  shall have given the  Corporation  written notice of
the  Employee's  decision to terminate his  employment  (specifying  the alleged
"good reason" in reasonable detail) and the Corporation shall not have cured the
same within ninety (90) days after receipt of such notice, or, if cure cannot be
fully  accomplished  within  ninety (90) days,  the  Corporation  shall not have
commenced  cure within  ninety (90) days after  receipt of such notice and cured
the alleged  "good reason" as soon as possible  thereafter.  For purposes of the
foregoing, "good reason" shall mean (i) the assignment to the Employee of duties
inconsistent  with, or the  diminution  of, the  Employee's  positions,  titles,
offices,  duties,  responsibilities or status with the Corporation,  or a change
without good cause in the Employee's reporting responsibilities,  or any removal
of the  Employee  from or any failure to elect the  Employee  to any  positions,
titles or offices  specified in this Agreement and held by the Employee,  (ii) a
reduction in the Employee's Salary, (iii) a material reduction in the Employee's
benefits  (other  than a reduction  pursuant  to the last  sentence of Section 4
hereof), or (iv) a "Change of Control" (as such term is defined in Section 19).

                (f)  Severance.  Notwithstanding  anything to the  contrary  set
forth in Section 6(a), in the event that the Employee's  employment hereunder is
terminated by the Corporation  (other than pursuant to subsections (c) or (d) of
this  Section 6) or by the  Employee  for good reason or the  Employment  Period
continues to December 31, 1997 and the Corporation  does not offer to extend the
Employee's  employment on at least as favorable terms for an additional one year
term, the Corporation  shall pay to the Employee as severance (the  "Severence")
(i) a lump sum of $312,500 within ten (10) days of the Termination Date and (ii)
if the Separation Period (as hereinafter defined) is greater than six months, an
additional  amount equal to  $12,019.23  multiplied  by the number of full weeks
remaining  in the  Separation  Period  after the first six months have  elapsed,
payable in equal bi-weekly  installments  commencing at the end of the first six
months of the  Separation  Period.  For  purposes  of this  Agreement,  the term
Separation  Period shall mean the period  commencing on the Termination Date and
ending  on the  later of (i)  December  31,  1997 or (ii) six  months  after the
Termination  Date.  Notwithstanding  anything to the  contrary set forth in this
Agreement, all Severance paid to the Employee as a result of a Change of Control
will be paid in a lump sum within  ten (10) days of the  Termination  Date.  The
provisions of this subsection (f) shall be in lieu of any other rights or claims
which the  Employee may have under this  Agreement or otherwise  with respect to
damages  except  pursuant to subsection (a) of this Section 6. (g) Assignment of
Life Insurance on  Termination.  Except in the case of termination of employment
pursuant  to  subsection  (d) of this  Section  6, at the end of the  Separation
Period, the Corporation shall assign to the Employee the life insurance policies
of the Connecticut  Mutual Life Insurance Company numbered 4639537,  4639538 and
4706956 (collectively, the "Insurance Policies") owned by the Corporation on the
life of the Employee.  The Corporation hereby covenants that it shall during the
Employment Period (i) pay any and all premiums on the Insurance  Policies,  (ii)
keep the Insurance  Policies in effect at all times and (iii) not borrow against
the value of the Insurance Policies.

                Section 7. Covenant Not to Compete.  The Employee  covenants and
agrees that he will not, at any time during the  Employment  Period  (determined
without  giving effect to any  termination  of  employment)  and the  Separation
Period,  whether  as  owner,  principal,   agent,  partner,  director,  officer,
employee,   independent  contractor,   consultant,   shareholder,   licensor  or
otherwise,  alone or in association  with any other person,  either  directly or
indirectly,  carry on, be engaged or take part in,  render  services  to or own,
share in the earnings of, or invest in the stocks, bonds or other securities of,
or be interested in any way in any business  competing with or similar to any of
the  businesses  of the  Corporation  or its  subsidiaries  without  the written
consent of the Board of Directors, provided that the Employee may hold a passive
investment  in a  business  which is  competitive  with or similar to any of the
businesses of the  Corporation  if the  investment  is in  securities  which are
listed on a national  securities  exchange  and the  investment  in any class of
securities does not exceed 1% of the  outstanding  shares of such class or 1% of
the aggregate outstanding principal amount of such class, as the case may be. In
addition,  for one year  after  the  later of the end of the  Employment  Period
(determined  without giving effect to any  termination of employment) or the end
of the Separation  Period,  the Employee  covenants and agrees that he will not,
directly or  indirectly,  hire any person who is employed by the  Corporation on
the  Termination  Date who's  annual  salary on such date is equal to or greater
than  $100,000 or solicit,  induce,  entice or hire any such person to leave the
employment of the Corporation.

                Section 8. Non-Disclosure  Covenant. The Employee further agrees
that during the  Employment  Period and thereafter  without limit,  he will not,
either  directly or indirectly,  communicate  or divulge to any person,  firm or
corporation  other than the  Corporation and its  subsidiaries,  any information
(except that which is generally  known to the public)  relating to the business,
customers and suppliers, or other affairs of the Corporation or its subsidiaries
("Confidential  Information")  except (a) for the purpose  of, or in  connection
with,  the  advancement  of the business of the  Corporation or (b) in the event
that the Employee is required (by oral questions, interrogatories,  requests for
information or documents,  subpoena, civil investigative demand or similar legal
process) to disclose Confidential Information,  and the Employee is compelled to
disclose  such  Confidential  Information  or else stand  liable for contempt or
suffer other censure,  penalty or violation in a court proceeding.  In the event
that the Employee is required to disclose such  Confidential  Information in the
circumstances  described in Section  8(b) the Employee  will either (i) give the
Corporation at least ten days' written notice (or shorter, but prompt, notice to
the extent the  Employee is  required to respond to legal  process in fewer than
ten days) so that the  Corporation may seek an appropriate  protective  order or
(ii) make such disclosure to a court under seal.

                Section 9.  Indemnification.  On the same  terms and  conditions
applicable to other directors and officers of the  Corporation,  the Corporation
shall  continue to indemnify  the Employee  against all  liability and loss with
respect to any  threatened,  pending or completed  action,  suit or  proceeding,
whether civil,  criminal,  administrative or investigative (other than an action
by or in the right of the Corporation) by reason of the fact that he is or was a
director,  officer,  employee  or  agent  of  the  Corporation  or  any  of  its
subsidiaries or Affiliates (as hereinafter defined), against expenses (including
attorneys' fees),  judgments,  fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he  reasonably  believed  to be in or not
opposed to the best  interests  of the  Corporation,  and,  with  respect to any
criminal  action or proceeding,  had no reasonable  cause to believe his conduct
was unlawful.  The  termination  of any action,  suit or proceeding by judgment,
order,  settlement,  conviction,  or  upon  a plea  of  nolo  contendere  or its
equivalent,  shall not, of itself,  create a presumption  that he did not act in
good faith and in a manner which he reasonably  believed to be in or not opposed
to the best  interests  of the  Corporation,  and,  with respect to any criminal
action or  proceeding,  had  reasonable  cause to believe  that his  conduct was
unlawful.   Notwithstanding   any  other  provision  of  this   Agreement,   the
Corporation's  obligation to indemnify the Employee shall survive the expiration
of this  Agreement,  provided  that in the event that the Employee is terminated
pursuant  to  Section  6(d) of this  Agreement,  the  Corporation  shall have no
obligation to indemnify the Employee under this Section 9 against any liability,
loss or expense  arising  from  conduct  that (a)  constitutes  grounds  for the
Corporation  to  terminate  the  Employment  Period  pursuant  to clause (ii) of
Section 6(d) of this Agreement or (b) constitutes grounds for the Corporation to
terminate the Employment  Period  pursuant to clause (i) of Section 6(d) of this
Agreement and such conduct is injurious to the Corporation. The term "Affiliate"
shall mean any person,  firm,  corporation,  partnership  or other legal  entity
that,  directly or  indirectly,  controls,  is  controlled by or is under common
control with, the Corporation. The term "control" shall mean the power to direct
the affairs of any person, firm, corporation,  partnership or other legal entity
by reason of ownership of voting stock, by contract or otherwise.

                Section  10.  Automobile.  During  the  Employment  Period,  the
Corporation  will provide the Employee  with the vehicle  currently  used by the
Employee,  a 1993 Mercedes Benz Model 500SL.  The cost and  maintenance  of such
automobile (including insurance,  gasoline,  repairs, etc.) shall be paid by the
Corporation,  subject to compliance by the Employee with such policies regarding
automobiles  and the use  thereof  as may be  adopted  from  time to time by the
Corporation.  Unless  this  Agreement  shall have been  terminated  pursuant  to
Section  6(d)  hereof,  the  Employee  shall have the option,  to the extent the
Corporation may legally give such option,  within twenty (20) days after the end
of the Employment  Period,  to purchase such automobile at its then  depreciated
book value or, if such  automobile  is leased,  at the purchase  price under the
lease.

                Section 11.  Vacations.  The Employee  shall be entitled to paid
vacations in accordance with the policies of the Corporation in effect from time
to time, but no less than four weeks in any of the Fiscal Years during which the
Employee is employed.  To the extent the Employee does not use the full vacation
period during a Fiscal Year, the unused balance shall accrue and be carried over
into subsequent Fiscal Years; provided,  however, that no more than an aggregate
of two weeks of unused vacation time may be carried forward from one Fiscal Year
to the next Fiscal Year.

                Section 12. Legal Expenses.  The Corporation shall pay all legal
fees and  related  expenses  incurred  by the  Employee  as a result  of (i) the
Employee's  termination of employment  (including all such fees and expenses, if
any,  incurred in contesting or disputing any such termination of employment) if
the Corporation has been found to be in breach of its obligations hereunder,  or
(ii) the Employee's  seeking to obtain or enforce any right or benefit  provided
by this  Agreement,  if the Employee  prevails  against the  Corporation  in any
proceeding in which rights hereunder are contested.

                Section  13.  Successors  and  Assigns.  In the  event  that the
Corporation  shall  at any  time  be  merged  or  consolidated  with  any  other
corporation or shall sell or otherwise transfer  substantially all of its assets
or business to another  corporation or entity,  the provisions of this Agreement
shall be binding  upon and inure to the  benefit of such  corporation  or entity
surviving or resulting from such merger or consolidation or to which such assets
or business shall be so sold or  transferred;  provided,  however,  that nothing
contained in this  Section 13 shall in any way limit,  or be construed to limit,
the obligations to the Employee, under this Agreement, of the Corporation or the
Corporation's  successors or assigns.  This Agreement shall not be assignable by
the Employee.

                Section 14. Notice. Any notice or other  communication  which is
required or permitted by this Agreement  shall be in writing and shall be deemed
to have been duly given when  delivered  in person,  transmitted  by telecopy or
five (5) days after  being  mailed by  registered  or  certified  mail,  postage
prepaid, return receipt requested, to such party at the address shown below:

                If to the Corporation, care of the following:

                         Salant Corporation

                         1114 Avenue of the Americas

                         New York, New York  10036

                         Attention:  Todd Kahn, Esq.



                If to the Employee, then to the following:



                         Mr. Nicholas P. DiPaolo

                         1114 Avenue of the Americas

                         New York, New York 10036



                With a copy to:



                         Roger M. Deitz, Esq.

                         437 Madison Avenue

                         New York, New York 10022-7302



Each party may, by notice to other party, change the above address.

                Section  15.  Entire  Agreement;   Amendments.   This  Agreement
embodies  the  entire  agreement  and  understanding  between  the  parties  and
supersedes all prior agreements and  understandings  as to the employment of the
Employee. No amendment, waiver, modification or discharge of any of the terms of
this Agreement  shall be valid unless in writing and signed by the party against
which enforcement is sought.

                Section 16.  Waiver.  The waiver by either party of a breach
of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach thereof.

                Section 17.  Counterparts.  This Agreement may be executed
in several counterparts, each of which
shall be deemed to be an original.



<PAGE>




                Section 18.  Governing Law. This Agreement shall be governed by,
and  construed  in  accordance  with,  the laws of the  State of New  York.  For
purposes of any action or proceeding  involving this Agreement,  the Corporation
and the  Employee  hereby  submit to the  jurisdiction  of all federal and state
courts of competent jurisdiction sitting within the area comprising the Southern
District of New York. The Employee hereby  acknowledges that irreparable  damage
will  occur  in the  event  that  Sections  7 and 8 of  this  Agreement  are not
performed in accordance  with their specific terms or are otherwise  breached by
the Employee. It is accordingly agreed that the Corporation shall be entitled to
an injunction or injunctions to prevent breaches of such provisions in any Court
of the United States or any states having  jurisdiction,  this being in addition
to any other  remedy to which the  Corporation  may be  entitled to at law or in
equity.


It is the  intention  of the parties to the fullest  extent  possible to resolve
disputes  without  recourse  to the  judicial  system.  Except  in the event the
Corporation  is attempting to seek  injunctive or other  equitable  relief for a
breach by the Employee of Sections 7 and 8 of this Agreement,  the parties agree
that as a condition  precedent  to the filing of any claim the parties and their
attorneys  must confer at least  twice,  in person,  in an effort to resolve any
dispute.  Should such efforts not be successful,  the parties shall submit their
dispute to non-binding mediation at the offices of J.A.M.S./Endispute,  Inc., in
the City of New York. Should mediation not be successful, suit may be brought in
any Court in accordance  with this Section 18. The fees and expenses,  including
actual   attorneys'  fees,  of  the  prevailing  party  shall  be  paid  by  the
non-prevailing party.

                Section 19. Certain  Definitions.  When used in this  Agreement,
the following  terms shall have the following  meanings  (such  meanings will be
applicable to both the singular and plural forms of the terms defined):

                "Affiliate"  shall mean any natural person,  firm,  corporation,
partnership  or other legal entity that,  directly or indirectly,  controls,  is
controlled by or is under common control with, the Corporation.

                "Change of  Control"  shall mean an event or series of events by
which (i) any Person is or becomes the  "beneficial  owner" (as defined in rules
13d-3 and 13d-5 under the  Securities  Exchange Act of 1934, as amended,  except
that a Person shall be deemed to have "beneficial  ownership" of all shares that
any such  Person has the right to  acquire,  whether  such right is  exercisable
immediately  or only after the passage of time),  directly or  indirectly,  of a
majority  of  the  aggregate  Voting  Stock  of the  Corporation;  or  (ii)  the
Corporation  consolidates  with  or  merges  into  another  Person  or  conveys,
transfers or leases all or substantially all of its assets to any Person, or any
Person  consolidates  with or  merges  into the  Corporation,  in  either  event
pursuant  to a  transaction  in  which  the  outstanding  Voting  Stock  of  the
Corporation is changed into or exchanged for cash, securities or other property,
other than any such  transaction  where the  holders of the Voting  Stock of the
Corporation  immediately  prior to such transaction own, directly or indirectly,
immediately after such transaction,  Voting Stock of such surviving  corporation
entitling them to not less than 50% of the aggregate  voting power of all Voting
Stock of such surviving corporation.

                "Control"  shall  mean the power to direct  the  affairs  of any
natural person, firm,  corporation,  partnership or other legal entity by reason
of ownership of Voting Stock, by contract or otherwise.

                "Person"   shall   mean   any   natural   person,   corporation,
partnership,  trust,  association,  governmental authority or unit, or any other
entity, whether acting in an individual, fiduciary or other capacity.

                "Voting Stock" shall mean securities of any class or classes (or
equivalent  interests) of any entity,  if the holders of the  securities of such
class or classes (or  equivalent  interests) are  ordinarily,  in the absence of
contingencies,  entitled to vote for the election of the  directors  (or natural
persons or entities  performing similar  functions) of such entity,  even though
the right to so vote has been suspended by the happening of such a contingency.

                IN WITNESS WHEREOF,  the parties have executed this Agreement as
of the date first set forth above.



                                                        SALANT CORPORATION





                                              By:
                                              Todd Kahn, Esq.
                                              Vice President,
                                             Secretary and General Counsel





                                             Nicholas P. DiPaolo
                                    EXHIBIT 1







                         INCENTIVE COMPENSATION SCHEDULE





?               If the Corporation's  "Pre-tax Income",  as shown on its audited
                financial  statements  for any Fiscal Year during the Employment
                Period ("Actual Annual Pre-tax Income"),  is equal to or greater
                than  100% of the  amount  of  Pre-tax  Income  provided  for in
                Salant's  annual  business  plan for that Fiscal Year  ("Planned
                Annual Pre-tax Income"), the Employee shall receive a cash bonus
                equal to 100% of his Salary at the end of the applicable  Fiscal
                Year ("Annual Salary").



?               For each full five  percentage  points  (after  rounding  to the
                nearest 1/100th of a percent) by which the Corporation's  Actual
                Annual  Pre-tax  Income  exceeds 100% of Planned  Annual Pre-tax
                Income,  the Employee  shall  receive an  additional  cash bonus
                equal to 20% of his Annual Salary.



?               The following principles shall apply in calculating the "Pre-tax
                Income"  which  term  shall  mean the  aggregate  income  of the
                Corporation  before  provision for all Federal,  State and local
                income taxes thereon. In calculating such "Pre-tax Income",  all
                items of income and deductions shall be determined in accordance
                with  generally  accepted  accounting  principles  applied  on a
                consistent  basis,  subject,  however,  to the provisions of the
                following subparagraphs.



                (i) There shall be excluded from income: all extraordinary
                items of income such as

                 gains  and  losses on the sale of fixed  assets  or  intangible
                assets;  all  insurance   recoveries  other  than  for  business
                interruption;  non-recurring gains or losses including,  without
                limitation,  gains or losses on the  termination of any employee
                benefit plans or gains or losses realized on the sale of quota.



                (ii)Deductions from income shall include all interest expenses,
                fixed charges and

                reasonable   provisions  for   depreciation,   amortization  and
                obsolescence,  inventory  write-offs  and the  salary  and bonus
                payable  to all of the  employees  of the  Corporation  and  the
                Employee hereunder.