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SEVERANCE/CHANGE IN CONTROL AGREEMENT

Change of Control Agreement

SEVERANCE/CHANGE IN CONTROL AGREEMENT | Document Parties: JASPER-COSTA RICA, L.L.C. | Hanesbrands Inc.,  | Joia M. Johnson You are currently viewing:
This Change of Control Agreement involves

JASPER-COSTA RICA, L.L.C. | Hanesbrands Inc., | Joia M. Johnson

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Title: SEVERANCE/CHANGE IN CONTROL AGREEMENT
Governing Law: North Carolina     Date: 4/26/2007

SEVERANCE/CHANGE IN CONTROL AGREEMENT, Parties: jasper-costa rica  l.l.c. , hanesbrands inc.   , joia m. johnson
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Exhibit 10.22

SEVERANCE/CHANGE IN CONTROL AGREEMENT

          THIS SEVERANCE/CHANGE IN CONTROL AGREEMENT (the “ Agreement ”), is made and entered into this 5 th day of March 2007, by and between Hanesbrands Inc., a Maryland corporation (the “ Company ”), and Joia M. Johnson (“ Executive ”).

          WHEREAS, Executive is an employee of Company , Company desires to foster the continuous employment of Executive and has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of Executive to her duties free from distractions which could arise in anticipation of an involuntary termination of employment or a Change in Control of Company ;

          NOW, THEREFORE, in consideration of the mutual agreements herein set forth, Company and Executive agree as follows:

     1.  Term and Nature of Agreement. This Agreement shall commence on the date it is fully executed (“ Execution Date ”) by all parties and shall continue in effect unless the Company gives at least eighteen (18) months prior written notice that this Agreement will not be renewed. In the event of such notice, this Agreement will expire on the next anniversary of the Execution Date that is at least eighteen (18) months after the date of such notice. Notwithstanding the foregoing, if a Change in Control occurs during any term of this Agreement , the term of this Agreement shall be extended automatically for a period of twenty-four (24) months after the end of the month in which the Change in Control occurs. Except to the extent otherwise provided, the parties intend for this Agreement to be construed and enforced as an unfunded welfare benefit plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) including without limitation the jurisdictional provisions of ERISA.

     2.  Involuntary Termination Benefits . Executive shall be eligible for severance benefits upon an involuntary termination of employment under the terms and conditions specified in this section 2.

     (a)  Eligibility for Severance.

 

(i)

 

Eligible Terminations . Subject to subparagraph (a)(ii) below, Executive shall be eligible for severance payments and benefits under this section 2 if her employment terminates under one of the following circumstances:

 

(A)

 

Executive’s employment is terminated involuntarily without Cause (defined in subparagraph 2(a)(ii)(A)); or

 

 

 

 

 

(B)

 

Executive terminates her employment at the request of Company .

 

 

(ii)

 

Ineligible Terminations . Notwithstanding subparagraph (a)(i) next above, Executive shall not be eligible for any severance payments or benefits under this section 2 if her employment terminates under any of the following circumstances:

 


 

 

(A)

 

A termination for Cause . For purposes of this Agreement,Cause” means Executive has been convicted of (or pled guilty or no contest to) a felony or any crime involving fraud, embezzlement, theft, misrepresentation of financial impropriety; has willfully engaged in misconduct resulting in material harm to Company ; has willfully failed to substantially perform duties after written notice; or is in willful violation of Company policies resulting in material harm to Company ;

 

 

 

 

 

(B)

 

A termination as the result of Disability. For purposes of this Agreement “Disability” shall mean a determination under Company’s disability plan covering Executive that Executive is disabled;

 

 

 

 

 

(C)

 

A termination due to death;

 

 

 

 

 

(D)

 

A termination due to Retirement. For purposes of this Agreement “Retirement” shall mean Executive’s voluntary termination of employment on or after Executive’s attainment of the normal retirement age as defined in the Hanesbrands Inc. Pension and Retirement Plan (the “ Retirement Plan” );

 

 

 

 

 

(E)

 

A voluntary termination of employment other than at the request of Company ;

 

 

 

 

 

(F)

 

A termination following which Executive is immediately offered and accepts new employment with Company , or becomes a non-executive member of the Board;

 

 

 

 

 

(G)

 

The transfer of Executive’s employment to a subsidiary or affiliate of Company with her consent;

 

 

 

 

 

(H)

 

A termination of employment that qualifies Executive to receive severance payments or benefits under section 3 below following a Change in Control ; or

 

 

 

 

 

(I)

 

Any other termination of employment under circumstances not described in subparagraph 2(a)(i).

 

(iii)

 

Characterization of Termination . The characterization of Executive’s termination shall be made by the Committee (as defined in section 5 below) which determination shall be final and binding.

 

 

 

 

 

(iv)

 

Termination Date . For purposes of this section 2, Executive’sTermination Date ” shall mean the date specified in the separation and release agreement described under section 2(e) below.

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(b)

 

Severance Benefits Payable . If Executive is terminated under circumstances described in subparagraph 2(a)(i), and not described in subparagraph 2(a)(ii), then in lieu of any benefits payable under any other severance plan of the Company of any type and in consideration of the separation and release agreement and the covenants contained herein, the following shall apply:

 

(i)

 

Executive shall receive continued payment of her Base Salary (the “ Salary Portion of Severance ”) during the “ Severance Period ”. The “ Severance Period” shall mean the number of months determined by multiplying the number of Executive’s full years of employment with Company or any subsidiary or affiliate of Company (including periods of employment with Sara Lee Corporation) by two; provided, however, that in no event shall the Severance Period be less than twelve months or more than twenty-four months. “ Base Salary” shall mean the annual salary in effect for Executive immediately prior to her Termination Date. At the discretion of the Committee , Executive may receive an additional salary portion in an amount equal to as much as 100% of Executive’s target bonus.

 

 

 

 

 

(ii)

 

Executive shall receive a pro-rata amount (determined based upon the number of days from the first day of the Company’s current fiscal year to Executive’s Termination Date divided by the total number of days in the applicable performance period) of:

 

 

(A)

 

The annual incentive, if any, payable under the Annual Incentive Plan in effect with respect to the fiscal year or Short Year in which the Termination Date occurs based on actual fiscal year performance (the “ Annual Incentive Portion of Severance ”). In this Agreement, “ Short Year ” means an incentive period of less than 12 months duration occurring immediately subsequent to the Company’s exit from the Sara Lee Corporation’s controlled group of corporations (within the meaning of Section 1563(a) of the Code)). “ Annual Incentive Plan” means the Hanesbrands Inc. annual incentive plan in which Executive participates as of the Termination Date ; and

 

 

 

 

 

(B)

 

The long-term incentive payable under the Omnibus Plan in effect on Executive’s Termination Date for any performance period or cycle that is at least fifty (50) percent completed prior to Executive’s Termination Date and which relates to the period of her service prior to her Termination Date . The “ Omnibus Plan” means the Hanesbrands Inc. Omnibus Incentive Plan of 2006, as amended from time to time, and any successor plan or plans. The long-term incentive described in this section (“ Long-Term Cash Incentive Plan ”) includes cash long-term incentives, but does not include stock options, RSUs, or other equity awards.

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Treatment of stock options, RSUs, or other equity awards shall be determined pursuant to the Executive’s award agreement(s). Executive shall not be eligible for any new Annual Incentive Plan grants, Long-Term Cash Incentive Plan grants, or any other grants of stock options, RSUs, or other equity awards under the Omnibus Plan during the Severance Period .

 

 

 

 

 

(iii)

 

Beginning on her Termination Date , Executive shall be eligible to elect continued coverage under the group medical and dental plan available to similarly situated senior executives. If Executive elects continuation coverage for medical coverage, dental coverage or both, Company shall subsidize the premium charged during the Severance Period so that the amount of such premium payable by such Executive shall equal the amount payable by an active executive of Company for similar coverage as adjusted from time to time; provided, however, that Executive’s right to COBRA continuation coverage under any such group health plan shall be reduced by the number of months of medical and dental coverage otherwise provided pursuant to this subparagraph. The premium charged for any COBRA continuation coverage after the end of the Severance Period shall be entirely at Executive’s expense and shall be different (greater) than the premium charged during the Severance Period . Executive’s COBRA continuation coverage shall terminate in accordance with the COBRA continuation of coverage provisions under Company’s group medical and dental plans. If Executive is eligible for early retirement under the terms of the Retirement Plan (or would become eligible if the Severance Period is considered as employment), then, after exhausting any COBRA continuation coverage under the group medical plan, Executive may elect to participate in any retiree medical plan available to similarly situated senior executives in accordance with the terms and conditions of such plan in effect on and after Executive’s Termination Date ; provided, that such retiree medical coverage shall not be available to Executive unless she elects such coverage within thirty (30) days following her Termination Date . The premium charged for such retiree medical coverage may be different (greater) than the premium charged an active employee for similar coverage;

 

 

 

 

 

(iv)

 

Except as otherwise provided herein or in the applicable plan , participation in all other Company plans available to similarly situated senior executives including but not limited to, qualified pension plans, stock purchase plans, matching grant programs, 401(k) plans and ESOPs, personal accident insurance, travel accident insurance, short and long term disability insurance, and accidental death and dismemberment insurance, shall cease on Executive’s Termination Date . During the Severance Period, Company shall continue to maintain life insurance covering Executive under Company’s life insurance program. If Executive is eligible for early retirement or becomes eligible for early retirement during the Severance Period , then Company will continue to pay the premiums

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(or prepay the entire premium) so that Executive has a paid-up life insurance benefit equal to her annual salary on her Termination Date .

 

(c)

 

Payment of Severance . The Salary Portion of Severance shall be paid in accordance with Company’s payroll schedule, unless the Committee shall elect to pay the Salary Portion of Severance in a lump sum payment or a combination of regular payments and a lump sum payment. Any lump sum payment shall be made as soon as practicable following the Termination Date , but in no event later than the fifteenth day of the third month after the date of termination), unless Company reasonably determines that Section 409A of the United States Internal Revenue Code of 1986, as amended, and any successors thereto (the “Code” ) will result in the imposition of additional tax on account of such payment before the expiration of the six-month period described in Section 409A(a)(2)(B)(i) in which case, all missed payments will be paid on the date that is six (6) months and one (1) day following the date of Executive’s separation from service (as defined in Code Section 409A) or, if earlier, the date of death of Executive (the “ Delayed Payment Date ”). The Annual Incentive Portion of Severance , if any, shall be paid in cash on the same date the active participants under the Annual Incentive Plan are paid. The Long-Term Cash Incentive Plan payout, if any, shall be paid in the same form and on the same date the active participants under the Omnibus Plan are paid. All payments hereunder shall be reduced by such amount as Company (or any subsidiary or affiliate of Company ) may be required under all applicable federal, state, local or other laws or regulations to withhold or pay over with respect to such payment.

 

 

 

 

 

(d)

 

Termination of Benefits . Notwithstanding any provisions in this Agreement to the contrary, all rights to receive or continue to receive severance payments and benefits under this section 2 shall cease on the earliest of: (i) the date Executive breaches any of the covenants in the separation and release agreement described in section 2(e); or (ii) the date Executive becomes reemployed by Company or any of its subsidiaries or affiliates.

 

 

 

 

 

(e)

 

Separation and Release Agreement . No benefits under this section 2 shall be payable to Executive until Executive and Company have executed a separation and release agreement and the payment of severance benefits under this section 2 shall be subject to the terms and conditions of the separation and release agreement.

 

 

 

 

 

(f)

 

Death of Executive . In the event that Executive shall die prior to the payment in full of any benefits described above as payable to Executive for Involuntary Termination , payments of such benefits shall cease on the date of Executive’s death.

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3.

 

Change in Control Benefits .

 

(a)

 

Eligibility for Change in Control Benefits .

 

 

(i)

 

Eligible Terminations . If (A) within three (3) months preceding a Change in Control , the Executive’s employment is terminated by the Company at the request of a third party in contemplation of a Change in Control , (B) within twenty-four (24) months following a Change in Control, Executive ’s employment is terminated by Company other than on account of Executive’s death, disability or retirement and other than for Cause, or (C) within twenty-four (24) months following a Change in Control Executive voluntarily terminates her employment for Good Reason, Executive shall be entitled to the Change in Control benefits as described in section 3(b) below.

 

 

 

 

 

(ii)

 

Good Reason . For purposes of this section 3, “Good Reason” means the occurrence of any one or more of the following (without Executive’s written consent after a Change in Control ):

 

(A)

 

A material adverse change in Executive’s duties or responsibilities;

 

 

 

 

 

(B)

 

A reduction in Executive’s annual base salary except for any reduction of not more than ten (10) percent applicable to all senior executives;

 

 

 

 

 

(C)

 

A material reduction in Executive’s level of participation in any of Company’s short- and/or long-term incentive compensation plans, or employee benefit or retirement plans, policies, practices or arrangements in which Executive participates except for any reduction applicable to all senior executives;

 

 

 

 

 

(D)

 

The failure of any successor to Company to assume and agree to perform this Agreement ;

 

 

 

 

 

(E)

 

Company’s requiring Executive to be based at an office location which is at least fifty (50) miles from her office location at the time of the Change in Control ;

 

 

 

 

The existence of Good Reason shall not be affected by Executive’s temporary incapacity due to physical or mental illness not constituting a Disability . Executive’s retirement shall constitute a waiver of her rights with respect to any circumstance constituting Good Reason . Executive’s continued employment shall not constitute a waiver of her rights with respect to any circumstances which may constitute Good Reason ; provided, however, that Executive may not rely on any particular action or event described in clause (A) through (E) above as a basis for terminating her employment for Good Reason unless she delivers a Notice of Termination based on that action or event within six months after its

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occurrence and Company has failed to correct the circumstances cited by Executive as constituting Good Reason within thirty (30) days of receiving the Notice of Termination .

 

 

 

 

 

(iii)

 

Change in Control. For purposes of this Agreement , a “Change in Control” will occur:

 

 

(A)

 

Upon the acquisition by any individual, entity or group, including any Person (as defined in the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”)), of beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of twenty (20) percent or more of the combined voting power of the then outstanding capital stock of Company that by its terms may be voted on all matters submitted to stockholders of Company generally (“ Voting Stock ”); provided, however, that the following acquisitions shall not constitute a Change in Control :

 

1)

 

Any acquisition directly from Company (excluding any acquisition resulting from the exercise of a conversion or exchange privilege in respect of outstanding convertible or exchangeable securities unless such outstanding convertible or exchangeable securities were acquired directly from Company );

 

 

 

 

 

2)

 

Any acquisition by Company ;

 

 

 

 

 

3)

 

Any acquisition by an employee benefit plan (or related trust) sponsored or maintained by Company or any corporation controlled by Company ; or

 

 

 

 

 

4)

 

Any acquisition by any corporation pursuant to a reorganization, merger or consolidation involving Company , if, immediately after such reorganization, merger or consolidation, each of the conditions described in clauses (1), (2) and (3) of subparagraph 3(a)(iii)(B) below shall be satisfied; and provided further that, for purposes of clause (2) immediately above, if (i) any Person (other than Company or any employee benefit plan (or related trust) sponsored or maintained by Company or any corporation controlled by Company ) shall become the beneficial owner of twenty (20) percent or more of the Voting Stock by reason of an acquisition of Voting Stock by Company , and (ii) such Person shall, after such acquisition by Company , become the beneficial owner of any additional shares of the Voting Stock and such beneficial ownership is publicly

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announced, then such additional beneficial ownership shall constitute a Change in Control ; or

 

(B)

 

Upon the consummation of a reorganization, merger or consolidation of Company , or a sale, lease, exchange or other transfer of all or substantially all of the assets of Company ; excluding, however, any such reorganization, merger, consolidation, sale, lease, exchange or other transfer with respect to which, immediately after consummation of such transaction:

 

 

1)

 

All or substantially all of the beneficial owners of the Voting Stock of Company outstanding immediately prior to such transaction continue to beneficially own, directly or indirectly (either by remaining outstanding or by being converted into voting securities of the entity resulting from such transaction), more than fifty (50) percent of the combined voting power of the voting securities of the entity resulting from such transaction (including, without limitation, Company or an entity which as a result of such transaction owns Company or all or substantially all of Company ‘s property or assets, directly or indirectly) (the “ Resulting Entity ”) outstanding immediately after such transaction, in substantially the same proportions relative to each other as their ownership immediately prior to such transaction; and

 

 

 

 

 

2)

 

No Person (other than any Person that beneficially owned, immediately prior to such reorganization, merger, consolidation, sale or other disposition, directly or indirectly, Voting Stock representing twenty (20) percent or more of the combined voting power of Company’s then outstanding securities) beneficially owns, directly or indirectly, twenty (20) percent or more of the combined voting power of the then outstanding securities of the Resulting Entity ; and

 

 

 

 

 

3)

 

At least a majority of the members of the board of directors of the entity resulting from such transaction were members of the board of directors of Company (the “ Board ”) at the time of the execution of the initial agreement or action of the Board authorizing such reorganization, merger, consolidation, sale or other disposition; or

 

(C)

 

Upon the consummation of a plan of complete liquidation or dissolution of Company ; or

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(D)

 

When the Initial Directors cease for any reason to constitute at least a majority of the Board . For this purpose, an “ Initial Director ” shall mean those individuals serving as the directors of Company immediately after Company ceased to be wholly-owned by Sara Lee Corporation; provided, however, that any individual who becomes a director of Company at or after the first annual meeting of stockholders of Company whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a majority of the Initial Directors then comprising the Board (or by the nominating committee of the Board , if such committee is comprised of Initial Directors and has such authority) shall be deemed to have been an Initial Director ; and provided further, that no individual shall be deemed to be an Initial Director if such individual initially was elected as a director of Company as a result of: (1) an actual or threatened solicitation by a Person (other than the Board ) made for the purpose of opposing a solicitation by the Board with respect to the election or removal of directors; or (2) any other actual or threatened solicitation of proxies or consents by or on behalf of any Person (other than the Board ).

 

(iv)

 

Termination Date. For purposes of this section 3, “ Termination Date ” shall mean the date specified in the Notice of Termination as the date on which the conditions giving rise to Executive’s termination were first met.

 

(b)

 

Change in Control Benefits . In the event Executive becomes entitled to receive benefits under this section 3, the following shall apply:

 

(i)

 

In consideration of Executive’s covenant in section 4 below, Company shall pay Executive :

 

 

(A)

 

A lump sum payment equal to the unpaid portion of Executive’s annual Base Salary and vacation accrued through the Termination Date ;

 

 

 

 

 

(B)

 

A lump sum payment equal to Executive’s prorated Annual Incentive Plan payment (as determined in accordance with subparagraph 2(b)(ii)(A) above;

 

 

 

 

 

(C)

 

A lump sum payment equal to Executive’s prorated Long-Term Cash Incentive Plan payment(as determined in accordance with subparagraph 2(b)(ii)(B) above; and

 

 

 

 

 

(D)

 

A lump sum payment equal to two times the sum of (1) Executive’s annual Base Salary ; and (2) the greater of (i) Executive’s target annual incentive (as defined in the Annual Incentive Plan ) for the year in which the Change in Control occurs and (ii) Executive’s

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average annual incentive calculated over the three fiscal years immediately preceding the year in which the Change in Control occurs (including for this purpose any annual incentive received from Sara Lee Corporation); and (3) an amount equal to the Company matching contribution to the defined contribution plan in which Executive is participating at the Termination Date (currently 4%).

 

 

 

Treatment of stock options, RSUs, or other equity awards shall be determined pursuant to the Executive’s award agreement(s). Executive shall not be eligible for any new Annual Incentive Plan grants, Long-Term Cash Incentive Plan grants, or any other grants of stock options, RSUs, or other equity awards under the Omnibus Plan with respect to the CIC Severance Period as defined immediately below.

 

 

 

 

 

(ii)

 

For a period of 24 months following Executive’s Termination Date (the “ CIC Severance Period ”), Executive shall have the right to elect continuation of the health insurance, life insurance, personal accident insurance, travel accident insurance and accidental death and dismemberment insurance coverages which insurance coverages shall be provided at the same levels and the same costs in effect immediately prior to the Change in Control ; provided, however, that Executive’s right to COBRA continuation coverage under any group health plan shall be reduced by the number of months of coverage otherwise provided pursuant to this subparagraph. The premium charged for any COBRA continuation coverage after the end of the CIC Severance Period shall be entirely at Executive’s expense and may be different (greater) than the premium charged during the CIC Severance Period . Executive’s COBRA continuation coverage shall terminate in accordance with the COBRA continuation of coverage provisions under Company’s group medical and dental plans. If Executive is eligible for early retirement under the terms of the Retirement Plan (or would become eligible if the Severance Period is considered as employment), then, after exhausting any COBRA continuation coverage under the group medical plan, Executive may elect to participate in any retiree medical plan available to similarly situated senior executives in accordance with the terms and conditions of such plan in effect on and after Executive’s Termination Date ; provided, that such retiree medical coverage shall not be available to Executive unless she elects such coverage within thirty (30) days following her Termination Date . The premium charged for such retiree medical coverage may be different from the premium charged an active employee for similar coverage;

 

 

 

 

 

(iii)

 

If the aggregate benefits accrued by Executive as of the Termination Date under the savings and retirement plans sponsored by Company are not fully vested pursuant to the terms of the applicable plan(s), the difference between the benefits Executive is entitled to receive under such plans and

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