Exhibit 10.1
HANESBRANDS INC.
OMNIBUS INCENTIVE PLAN OF 2006
CERTIFICATE
I hereby certify that the attached document is the official version of the Hanesbrands Inc. Omnibus Incentive Plan of 2006 adopted by the Board of Directors of the Company by resolution dated June 26, 2006 and subsequently finalized by the duly authorized officers of the Company effective as of July 2, 2006.
Dated this1stday of September, 2006.
| HANESBRANDS INC. | ||
By | /s/ Kevin Oliver | |
Its | Senior Vice President, Human Resources | |
HANESBRANDS INC. OMNIBUS INCENTIVE PLAN OF 2006
1.Purpose.The purposes of thePlan are (a) to promote the interests of theCorporation and itsSubsidiaries and its stockholders by strengthening the ability of theCorporation and itsSubsidiaries to attract and retain highly competent officers and other key employees, and (b) to provide a means to encourageStock ownership and proprietary interest in theCorporation. ThePlan is intended to providePlan Participants with forms of long-term incentive compensation that are not subject to the deduction limitation rules prescribed underCodeSection 162(m), and should be construed to the extent possible as providing for remuneration which is “performance-based compensation” within the meaning ofCodeSection 162(m) and the regulations promulgated thereunder.
2.Definitions. Where the context of thePlan permits, words in the masculine gender shall include the feminine gender, the plural form of a word shall include the singular form, and the singular form of a word shall include the plural form. Unless the context clearly indicates otherwise, the following terms shall have the following meanings:
| (a) | Awardmeans the grant of incentive compensation under thisPlan to aParticipant. |
| (b) | Boardmeans the board of directors of theCorporation. |
| (c) | Change of Control means: |
| (i) | upon the acquisition by any individual, entity or group, including anyPerson, of beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of 20% or more of the combined voting power of the then outstanding capital stock of theCorporation that by its terms may be voted on all matters submitted to stockholders of theCorporation generally (“Voting Stock”); provided, however, that the following acquisitions shall not constitute aChange in Control: (A) any acquisition directly from theCorporation (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 theCorporation); (B) any acquisition by theCorporation; (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by theCorporation or any corporation controlled by theCorporation; or (D) any acquisition by any corporation pursuant to a reorganization, merger or consolidation involving theCorporation, if, immediately after such reorganization, merger or consolidation, each of the conditions described in clauses (A), (B) and (C) of subsection (ii) below shall be satisfied; and provided further that, for purposes of clause (B) above, if (1) anyPerson (other than theCorporation or any employee benefit plan (or related trust) sponsored or maintained by theCorporation or any corporation controlled by theCorporation) shall become the beneficial owner of 20% or more of theVoting Stock by reason of an acquisition ofVoting Stock by theCorporation, and (2) suchPerson shall, after such acquisition by theCorporation, become the beneficial owner of any additional shares of theVoting Stock and such beneficial ownership is publicly announced, then such additional beneficial ownership shall constitute aChange in Control; or
| (ii) | upon the consummation of a reorganization, merger or consolidation of theCorporation, or a sale, lease, exchange or other transfer of all or substantially all of the assets of theCorporation; excluding, however, any such reorganization, merger, consolidation, sale, lease, exchange or other transfer with respect to which, immediately after consummation of such transaction: (A) all or substantially all of the beneficial owners of theVoting Stock of theCorporation 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 50% of the combined voting power of the voting securities of the entity resulting from such transaction (including, without limitation, theCorporation or an entity |
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which as a result of such transaction owns theCorporation or all or substantially all of theCorporation’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 (B) noPerson (other than anyPerson that beneficially owned, immediately prior to such reorganization, merger, consolidation, sale or other disposition, directly or indirectly,Voting Stock representing 20% or more of the combined voting power of theCorporation’s then outstanding securities) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding securities of theResulting Entity; and (C) at least a majority of the members of the board of directors of the entity resulting from such transaction wereInitial Directors of theCorporation at the time of the execution of the initial agreement or action of theBoard authorizing such reorganization, merger, consolidation, sale or other disposition; or
| (iii) | upon the approval of a plan of complete liquidation or dissolution of theCorporation; or |
| (iv) | when theInitial Directorscease for any reason to constitute at least a majority of theBoard. |
| (d) | Codemeans the Internal Revenue Code of 1986, as amended. |
| (e) | Committeemeans the Compensation and Benefits Committee of theBoard; provided that the Compensation and Benefits Committee of the Board of Directors of the Sara Lee Corporation shall serve as theCommittee under thePlan for as long as theCorporation is wholly-owned by Sara Lee Corporation. |
| (f) | Corporationmeans Hanesbrands Inc., a Maryland corporation, or any successor thereto. |
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| (g) | Covered Employeesmeans covered employees within the meaning ofCodeSection 162(m). |
| (h) | Deferred Stock Unit (“DSU”)means a vested right to a future award ofStock granted pursuant to section 10 below. |
| (i) | Exchange Actmeans the Securities Exchange Act of 1934, as amended. |
| (j) | Fair Market Valuemeans the fair market value ofStock determined at any time in such manner as theCommittee may deem equitable, or as required by applicable law or regulation. |
| (k) | Incentive Stock Optionsmeans aStock Optiondesigned to meet the requirements ofCodeSection 422 or any successor law. |
| (l) | Initial Directorsmeans those individuals initially appointed as the directors of theCorporation once it ceased to be wholly-owned by Sara Lee Corporation; provided, however, that any individual who becomes a director of theCorporation at or after the first annual meeting of stockholders of theCorporation whose election, or nomination for election by theCorporation’s stockholders, was approved by the vote of at least a majority of theInitial Directors then comprising theBoard (or by the nominating committee of theBoard, if such committee is comprised ofInitial Directors and has such authority) shall be deemed to have been anInitial Director; and provided further, that no individual shall be deemed to be anInitial Director if such individual initially was elected as a director of theCorporation as a result of: (i) an actual or threatened solicitation by aPerson (other than theBoard) made for the purpose of opposing a solicitation by theBoard with respect to the election or removal of directors; or (ii) any other actual or threatened solicitation of proxies or consents by or on behalf of anyPerson (other than theBoard). |
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| (m) | Nonqualified Stock Optionmeans aStock Option that is not anIncentive Stock Option. |
| (n) | Participantmeans (i) an employee of theCorporation or itsSubsidiaries; or (ii) a non-employee director of theCorporationdesignated by theCommittee as eligible to receive anAward under thePlan. |
| (o) | Performance Cash Awards means cash incentives subject to the satisfaction of long-termPerformance Criteria and granted pursuant to section 12 below. |
| (p) | Performance Criteria means business criteria within the meaning ofCode Section 162(m), including, but not limited to: revenue; revenue growth; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; operating income; pre-or after-tax income; net operating profit after taxes; economic value added (or an equivalent metric); ratio of operating earnings to capital spending; cash flow (before or after dividends); cash-flow per share (before or after dividends); net earnings; net sales; sales growth; share price performance; return on assets or net assets; return on equity; return on capital (including return on total capital or return on invested capital); cash flow return on investment; total shareholder return; improvement in or attainment of expense levels; and improvement in or attainment of working capital levels orPerformance Criteria. AnyPerformance Criteria may be used to measure our performance as a whole or any of our business units and may be measured relative to a peer group or index. |
| (q) | Performance Period means the period as designated by theCommittee with a minimum of one year and a maximum of five years. |
| (r) | Performance Shares meansAwards subject to the satisfaction of long-termPerformance Criteria and granted pursuant to section 11 below. |
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| (s) | Person means any individual, entity or group, including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of theExchange Act. |
| (t) | Plan means the Hanesbrands Omnibus Incentive Plan of 2006. |
| (u) | Restricted Stock meansStock subject to a vesting condition specified by theCommitteein an Awardin accordance with section 9 below. |
| (v) | Resulting Entity means the entity resulting from a transaction (including, without limitation, theCorporation or an entity which as a result of such transaction owns theCorporation or all or substantially all of theCorporation’s property or assets, directly or indirectly). |
| (w) | RSU means a restricted stock unit providing aParticipant with the right to receiveStock at a date on or after vesting in accordance with the terms of such grant and/or upon the attainment ofPerformance Criteria specified by theCommitteein the Awardin accordance with section 9 below. |
| (x) | SAR means a stock appreciation right granted pursuant to section 8 below. |
| (y) | Stockmeans a share of common stock of theCorporationthat, by its terms, may be voted on all matters submitted to stockholders of theCorporation generally. |
| (z) | Stock Option means the right to acquire shares ofStock at a certain price that is granted pursuant to section 7 below. The termStock Option includes bothIncentive Stock Options andNonqualified Stock Options. |
| (aa) | Subsidiary orSubsidiaries means any corporation or entity of which theCorporationowns directly or indirectly, at least 50% of the total voting power or in which it has at least a 50% economic interest, and which is authorized to participate in thePlan. |
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3.Administration. ThePlan will be administered by theCommittee consisting of two or more directors of theCorporationas theBoard may designate from time to time, each of whom shall satisfy such requirements as:
| (a) | the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 or its successor under theExchange Act; |
| (b) | the New York Stock Exchange may establish pursuant to its rule-making authority; and |
| (c) | the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption underCodeSection 162(m). |
TheCommittee shall have the discretionary authority to construe and interpret thePlan and anyAwards granted thereunder, to establish and amend rules forPlan administration, to change the terms and conditions ofAwards at or after grant (subject to the provisions of section 20 below), to correct any defect or supply any omission or reconcile any inconsistency in thePlan or in anyAward granted under thePlan, and to make all other determinations which it deems necessary or advisable for the administration of thePlan.
Awards under thePlan to aCovered Employee may be made subject to the satisfaction of one or morePerformance Criteria.Performance Criteria shall be established by theCommittee for aParticipant (or group ofParticipants) no later than ninety (90) days after the commencement of eachPerformance Period (or the date on which 25% of thePerformance Period has elapsed, if earlier). TheCommittee may select one or morePerformance Criteria and may apply thosePerformance Criteriaon a corporate-wide or division/business segment basis; provided, however, that theCommittee may not increase the amount of compensation payable to aCovered Employee upon the satisfaction ofPerformance Criteria.
TheCommittee or theBoard may authorize one or more officers of theCorporation to select employees to participate in thePlan and to determine the number and type ofAwards to be granted to suchParticipants, except with respect toAwards to officers subject to Section 16 of
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theExchange Act, or to non-employee directors of theCorporation, or to officers who are, or who are reasonably expected to be,Covered Employees. Any reference in thePlan to theCommittee shall include such officer or officers.
The determinations of theCommittee shall be made in accordance with their judgment as to the best interests of theCorporation and its stockholders and in accordance with the purposes of thePlan. Any determination of theCommittee under thePlan may be made without notice or meeting of theCommittee, if in writing signed by all theCommittee members.
4.Participants.Participants may consist of all employees of theCorporation and its subsidiaries and all non-employee directors of theCorporation; provided, however, the following individuals shall be excluded from participation in thePlan: (a) contract labor; (b) employees whose base wage or base salary is not processed for payment by the payroll department of theCorporation or any subsidiary; and (c) any individual performing services under an independent contractor or consultant agreement, a purchase order, a supplier agreement or any other agreement that theCorporation enters into for service. Designation of aParticipant in any year shall not require theCommittee to designate that person to receive anAward in any other year or to receive the same type or amount ofAward as granted to theParticipant in any other year or as granted to any otherParticipant in any year. TheCommittee shall consider all factors that it deems relevant in selectingParticipants and in determining the type and amount of their respectiveAwards.
5.Shares Available under the Plan. There is hereby reserved for issuance under thePlan an aggregate of 13,105,000 shares ofStock.Stock covered by anAward granted under thePlan shall not be counted as used unless and until actually issued and delivered to aParticipant. Accordingly, if there is (a) a lapse, expiration, termination or cancellation of anyStock Option or otherAward outstanding under thisPlan prior to the issuance ofStock thereunder or (b) a forfeiture of any shares of Restricted Stock orStock subject toAwards granted under thisPlan prior to vesting, then theStock subject to theseStock Options or otherAwards shall be added to theStock available forAwards under thePlan. In addition, anyStock covered by anSAR (including anSAR settled inStock which theCommittee, in its discretion, may substitute for an outstandingStock Option) shall be counted as used only to the extentStock is
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actually issued to theParticipant upon exercise of the right. Finally, anyStock exchanged by an optionee as full or partial payment of the exercise price under anyStock Option exercised under thePlan, anyStock retained by theCorporation to comply with applicable income tax withholding requirements, and anyStock covered by anAward which is settled in cash, shall be added to theStock available forAwards under thePlan. AllStock issued under thePlan may be either authorized and unissuedStock or issuedStock reacquired by theCorporation. All of the availableStock may, but need not, be issued pursuant to the exercise ofIncentive Stock Options; provided, however, notwithstanding aStock Option’s designation, to the extent thatIncentive Stock Options are exercisable for the first time by theParticipant during any calendar year with respect toStock whose aggregateFair Market Value exceeds $100,000, suchStock Options shall be treated asNonqualified Stock Options. NoParticipant may receive in any calendar yearAwards relating to more than 2 million shares ofStock. TheStock reserved for issuance and the other limitations set forth above shall be subject to adjustment in accordance with section 15 hereto.
6.Types of Awards, Payments, and Limitations.Awards under thePlan shall consist ofStock Options,SARs,Restricted Stock,RSUs,DSUs,Performance Shares,Performance Cash Awards, and otherStock or cashAwards, all as described below. Payment ofAwards may be in the form of cash,Stock, otherAwards or combinations thereof as theCommittee shall determine, and with the expectation that anyAward ofStock shall be styled to preserve such restrictions as it may impose. TheCommittee, either at the time of grant or by subsequent amendment, and subject to the provisions of sections 20 and 21 hereto, may require or permitParticipants to elect to defer the issuance ofStock or the settlement ofAwards in cash under such rules and procedures as theCommittee may establish under thePlan.
TheCommittee may provide that anyAwards under thePlan earn dividends or dividend equivalents and interest on such dividends or dividend equivalents. Such dividends or dividend equivalents may be paid currently or may be credited to aParticipant’s Plan account and are subject to the same vesting orPerformance Criteria as the underlyingAward. Any crediting of dividends or dividend equivalents may be subject to such restrictions and conditions as theCommittee may establish, including reinvestment in additionalStock orStock equivalents.
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Awards shall be evidenced by an agreement that sets forth the terms, conditions and limitations of suchAward. Such terms may include, but are not limited to, the term of theAward, the provisions applicable in the event theParticipant’s employment terminates, and theCorporation’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind anyAward including without limitation the ability to amend suchAwards to comply with changes in applicable law. AnAward may also be subject to other provisions (whether or not applicable to similarAwards granted to otherParticipants) as theCommittee determines appropriate, including provisions intended to comply with federal or state securities laws and stock exchange requirements, understandings or conditions as to theParticipant’s employment, requirements or inducements for continued ownership ofStock after exercise or vesting ofAwards, or forfeiture ofAwards in the event of termination of employment shortly after exercise or vesting, or breach of noncompetition or confidentiality agreements following termination of employment.
TheCommittee may make retroactive adjustments to and theParticipant shall reimburse to theCorporation any cash or equity based incentive compensation paid to theParticipant where such compensation was predicated upon achieving certain financial results that were substantially the subject of a restatement, and as a result of the restatement it is determined that theParticipant otherwise would not have been paid such compensation, regardless of whether or not the restatement resulted from theParticipant’s misconduct. In each such instance, theCorporation will, to the extent practicable, seek to recover the amount by which theParticipant’s cash or equity based incentive compensation for the relevant period exceeded the lower payment that would have been made based on the restated financial results. TheCorporation will, to the extent permitted by governing law, require reimbursement of any cash or equity based incentive compensation paid to any named executive officer (for purposes of this policy “named executive officers” has the meaning given that term in Item 402(a)(3) of Regulation S-K under the Securities Exchange Act of 1934) where: (i) the payment was predicated upon the achievement of certain financial results that were subsequently the subject of
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a substantial restatement, and (ii) in theCommittee’s view the officer engaged in fraud or misconduct that caused or partially caused the need for the substantial restatement. In each instance described above, theCorporation will, to the extent practicable, seek to recover the described cash or equity based incentive compensation for the relevant period, plus a reasonable rate of interest.
Measurement of the attainment ofPerformance Criteria may exclude, if theCommittee provides in anAward agreement, impact of charges for restructurings, discontinued operations, extraordinary items and other unusual or non-recurring items, and the cumulative effects of tax or accounting changes, each as defined by Generally Accepted Accounting Principles and as identified in the financial statements, in the notes to the financial statements, in the Management’s Discussion and Analysis section of the financial statements, or in other Securities and Exchange Commission filings.
TheCommittee, in its sole discretion, may require aParticipant to have amounts orStock that otherwise would be paid or delivered to theParticipant as a result of the exercise or settlement of anAward under thePlan credited to a deferred compensation or stock unit account established for theParticipant by theCommittee on theCorporation’s books of account. In addition, theCommittee may permitParticipants to defer the receipt of payments ofAwards pursuant to such rules, procedures or programs as may be established for purposes of thisPlan.
TheCommittee need not require the execution of any such agreement by aParticipant. Acceptance of theAward by the respectiveParticipant shall constitute agreement by theParticipant to the terms of theAward.
7.Stock Options.Stock Options may be granted toParticipants, at any time as determined by theCommittee. TheCommittee shall determine the number of shares subject to eachStock Option and whether theStock Option is anIncentive Stock Option. The exercise price for eachStock Option shall be determined by theCommittee but shall not be less than 100% of theFair Market Value of theStock on the date theStock Option is granted unless theStock Option is a substitute or assumedStock Option granted pursuant to section 16 hereto. EachStock Option shall expire at such time as theCommittee shall determine at the time of grant.Stock
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Options shall be exercisable at such time and subject to such terms and conditions as theCommittee shall determine; provided, however, that noStock Option shall be exercisable later than the tenth anniversary of its grant. The exercise price, upon exercise of anyStock Option, shall be payable to theCorporation in full by: (a) cash payment or its equivalent; (b) tendering previously acquiredStock purchased on the open market having aFair Market Value at the time of exercise equal to the exercise price or certification of ownership of such previously-acquiredStock; (c) to the extent permitted by applicable law, delivery of a properly executed exercise notice, together with irrevocable instructions to a broker to promptly deliver to theCorporation the amount of sale proceeds from theStock Option shares or loan proceeds to pay the exercise price and any withholding taxes due to theCorporation; and (d) such other methods of payment as theCommittee, in its discretion, deems appropriate. In no event shall theCommittee cancel any outstandingStock Option with an exercise price greater than the then currentFair Market Valueof theStock for the purpose of reissuing any otherAward to theParticipant at a lower exercise price nor reduce the exercise price of an outstandingStock Option without stockholder approval. Reload options are not permitted.
8.Stock Appreciation Rights.SARs may be granted toParticipants at any time as determined by theCommittee. Notwithstanding any other provision of thePlan, theCommittee may, in its discretion, substituteSARs which can be settled only inStock for outstandingStock Options. The grant price of a substituteSAR shall be equal to the exercise price of the relatedStock Option and the substituteSAR shall have substantive terms (e.g., duration) that are equivalent to the relatedStock Option. The grant price of any otherSAR shall be equal to theFair Market Value of theStock on the date of its grant unless theSARs are substitute or assumedSARs granted pursuant to section 16 hereto. AnSAR may be exercised upon such terms and conditions and for the term theCommittee in its sole discretion determines; provided, however, that the term shall not exceed theStock Option term in the case of a substituteSAR or ten years in the case of any otherSAR, and the terms and conditions applicable to a substituteSAR shall be substantially the same as those applicable to theStock Option which it replaces. Upon exercise of anSAR, theParticipant shall be entitled to receive payment from theCorporation in an amount determined by multiplying (a) the difference between theFair Market Value of a share ofStock on the date of exercise and the grant price of theSAR by (b) the number of shares with
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respect to which theSAR is exercised. The payment may be made in cash orStock, at the discretion of theCommittee, except in the case of a substituteSAR payment which may be made only inStock. In no event shall theCommittee cancel any outstandingSAR with an exercise price greater than the then currentFair Market Valueof theStock for the purpose of reissuing any otherAward to theParticipant at a lower grant price nor reduce the grant price of an outstandingSARwithout stockholder approval.
9.Restricted Stock and RSUs.Restricted Stock andRSUs may be awarded or sold toParticipants under such terms and conditions as shall be established by theCommittee.Restricted Stock andRSUs shall be subject to such restrictions as theCommittee determines, including, without limitation, any of the following:
| (a) | a prohibition against sale, assignment, transfer, pledge, hypothecation or other encumbrance for a specified period; |
| (b) | a requirement that the holder forfeit (or in the case ofStock orRSUs sold to theParticipant, resell to theCorporation at cost) suchStock orRSUs in the event of termination of employment during the period of restriction; and |
| (c) | the attainment ofPerformance Criteria. |
All restrictions shall expire at such times as theCommittee shall specify, but generally shall require theParticipant to complete three years of service to fully vest in theAward.
10.DSUs.DSUs provide aParticipant a vested right to receiveStock in lieu of other compensation at termination of employment or service or at a specific future designated date.
11.Performance Shares. TheCommittee shall designate theParticipants to whomPerformance Shares are to be awarded and determine the number of shares, the length of thePerformance Period and the other terms and conditions of each suchAward; provided the statedPerformance Period will not be less than 12 months and to the extent theAward is designed to constitute performance-based compensation underCodeSection 162(m),Performance Criteria shall be established within 90 days of the period of service to which thePerformance Criteriarelate has elapsed. EachAward ofPerformance Shares shall entitle theParticipant to a payment in the form ofStock upon the attainment ofPerformance Criteria and other terms and conditions specified by theCommittee.
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Notwithstanding satisfaction of anyPerformance Criteria, the number of shares issued under aPerformance Shares Award may be adjusted by theCommittee on the basis of such further consideration as theCommittee in its sole discretion shall determine. However, theCommittee may not, in any event, increase the number of shares earned upon satisfaction of anyPerformance Criteria by anyParticipant who is aCovered Employee. TheCommittee may, in its discretion, make a cash payment equal to theFair Market Value ofStock otherwise required to be issued to aParticipant pursuant to aPerformance Share Award.
12.Performance Cash Awards. TheCommittee shall designate theParticipants to whomPerformance Cash Awards are to be awarded and determine the amount of theAwardand the terms and conditions of each suchAward; provided thePerformance Period will not be less than 12 months and to the extent theAward is designed to constitute performance-based compensation underCodeSection 162(m),Performance Criteria shall be established within 90 days of the period of service to which thePerformance Criteriarelate has elapsed. EachPerformance Cash Award shall entitle theParticipant to a payment in cash upon the attainment ofPerformance Criteria and other terms and conditions specified by theCommittee. NoAward may be paid to aParticipant in excess of $5,000,000 for any single year. If anAward is earned in excess of $5,000,000, the amount of theAward in excess of this amount shall be deferred in accordance with the date the Participant ceases to be covered byCode Section 162(m) (or six months after that date if theParticipant ceases to be covered byCode Section 162(m) because ofParticipant’s separation from service (as defined inCode Section 409A).
Notwithstanding the satisfaction of anyPerformance Criteria, the amount to be paid under aPerformance Cash Award may be adjusted by theCommittee on the basis of such further consideration as theCommittee in its sole discretion shall determine. However, theCommittee may not, in any event, increase the amount earned underPerformance Cash Awards upon satisfaction of anyPerformance Criteria by anyParticipant who is aCovered Employee. TheCommittee may, in its discretion, substitute actualStock for the cash payment otherwise required to be made to aParticipant pursuant to aPerformance Cash Award.
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13.Other Stock or Cash Awards. In addition to the incentives described in sections 6 through 12 above, theCommittee may grant other incentives payable in cash or inStock under thePlan as it determines to be in the best interests of theCorporation and subject to such other terms and conditions as it deems appropriate; provided an outright grant ofStock will not be made unless it is offered in exchange for cash compensation that has otherwise already been earned by the recipient including without limitation awards earned under the Hanesbrands Inc. Performance-Based Annual Incentive Plan (or any successor annual incentive plan of theCorporation) or under the Hanesbrands Inc. Non-Employee Director Deferred Compensation Plan.
14.Change of Control. Except as otherwise determined by theCommittee at the time of grant of anAward, upon aChange of Control, all outstandingStock Options andSARs shall become vested and exercisable; all restrictions onRestricted Stock andRSUs shall lapse; allPerformance Criteriashall be deemed achieved at target levels and all other terms and conditions met; allPerformance Shares shall be delivered; allPerformance Cash Awards,DSUs andRSUs shall be paid out as promptly as practicable; and all otherStock or cashAwards shall be delivered or paid.
In the event that a payment or delivery of anAward following aChange of Control would not be a permissible distribution event, as defined inCode Section 409A(a)(2) or any regulations or other guidance issued thereunder, then the payment or delivery shall be made on the earlier of: (a) the date of payment or delivery originally provided for suchAward; or (b) the date of termination of theParticipant’s employment or service with theCorporation or six months after such termination in the case of a “specified employee” (as defined inCode Section 409A(a)(2)(B)(i)).
15.Adjustment Provisions.
| (a) | In the event of any change affecting the number, class, market price or terms of theStock by reason of share dividend, share split, recapitalization, |
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reorganization, merger, consolidation, spin-off, disaffiliation of a subsidiary, combination ofStock, exchange ofStock,Stock rights offering, or other similar event, or any distribution to the holders ofStock other than a regular cash dividend, theCommittee shall equitably substitute or adjust the number or class ofStock which may be issued under thePlan in the aggregate or to any oneParticipant in any calendar year and the number, class, price or terms of shares ofStock subject to outstandingAwards granted under thePlan.
| (b) | In the event of any merger, consolidation or reorganization of theCorporation with or into another corporation which results in the outstandingStock of theCorporation being converted into or exchanged for different securities, cash or other property, or any combination thereof, there shall be substituted, on an equitable basis, for each share of Stock then subject to anAward granted under thePlan, the number and kind of shares of stock, other securities, cash or other property to which holders ofStock will be entitled pursuant to the transaction. |
16.Substitution and Assumption of Awards. TheBoard or theCommittee may authorize the issuance ofAwards under thisPlan in connection with the assumption of, or substitution for, outstandingAwards previously granted to individuals who become employees of theCorporation or any subsidiary as a result of any merger, consolidation, acquisition of property or stock, or reorganization, upon such terms and conditions as theCommittee may deem appropriate. Any substituteAwards granted under thePlan shall not count against theStock limitations set forth in section 5 hereto, to the extent permitted by Section 303A.08 of the Corporate Governance Standards of the New York Stock Exchange.
17.Nontransferability. EachAward granted under thePlan shall not be transferable other than by will or the laws of descent and distribution, and eachStock Option andSAR shall be exercisable during theParticipant’s lifetime only by theParticipant or, in the event of disability, by theParticipant’s personal representative. In the event of the death of aParticipant, exercise of anyAward or payment with respect to anyAward shall be made only by or to the
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beneficiary, executor or administrator of the estate of the deceasedParticipant or the person or persons to whom the deceasedParticipant’s rights under theAward shall pass by will or the laws of descent and distribution. Subject to the approval of theCommittee in its sole discretion,Stock Options may be transferable to charity or to members of the immediate family of theParticipant and to one or more trusts for the benefit of such family members, partnerships in which such family members are the only partners, or corporations in which such family members are the only stockholders. Members of the immediate family means theParticipant’s spouse, children, stepchildren, grandchildren, parents, grandparents, siblings (including half brothers and sisters), and individuals who are family members by adoption.
18.Taxes. TheCorporation shall be entitled to withhold the amount of any tax attributable to any amounts payable orStock deliverable under thePlan, after giving notice to the person entitled to receive such payment or delivery, and theCorporation may defer making payment or delivery as to anyAward, if any such tax is payable, until indemnified to its satisfaction. AParticipant may pay all or a portion of any withholding limited to the minimum statutory amount arising in connection with the exercise of aStock Option orSAR or the receipt or vesting ofStock hereunder by electing to have theCorporation withholdStock having aFair Market Value equal to the amount required to be withheld.
19.Duration of the Plan. NoAward shall be made under thePlan more than ten years after the date of its adoption by theBoard; provided, however, that the terms and conditions applicable to anyStock Option granted on or before such date may thereafter be amended or modified by mutual agreement between theCorporation and theParticipant, or such other person as may then have an interest therein.
20.Amendment and Termination. TheBoard or theCommittee may amend thePlan from time to time or terminate thePlan at any time. However, unless expressly provided in anAward or thePlan, no such action shall reduce the amount of any existingAward or change the terms and conditions thereof without theParticipant’s consent; provided, however, that theCommittee may, in its discretion, substituteSARs which can be settled only inStock for outstandingStock Options, and may require anAward be deferred pursuant to section 6 hereto, without aParticipant’s consent; and further provided that theCommittee may amend or
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terminate anAward to comply with changes in law without aParticipant’s consent. Notwithstanding any provision of thePlan to the contrary, the final sentence in each of section 7 and section 8 of thePlan (regarding the reissuing at a relatively reduced price,Stock Options andSARs respectively) shall not be amended without stockholder approval. Notwithstanding any provision of thePlan to the contrary, to the extent thatAwards under thePlan are subject to the provisions ofCode Section 409A, then thePlan as applied to those amounts shall be interpreted and administered so that it is consistent with suchCode section.
TheCorporation shall obtain stockholder approval of anyPlan amendment to the extent necessary to comply with applicable laws, regulations, or stock exchange rules.
21.Other Provisions.
| (a) | In the event anyAward under thisPlan is granted to an employee who is employed or providing services outside the United States and who is not compensated from a payroll maintained in the United States, theCommittee may, in its sole discretion: (i) modify the provisions of thePlan as they pertain to such individuals to comply with applicable law, regulation or accounting rules consistent with the purposes of thePlan; and (ii) cause theCorporation to enter into an agreement with any local subsidiary pursuant to which such subsidiary will reimburse theCorporation for the cost of such equity incentives. |
| (b) | Neither thePlan nor anyAward shall confer upon aParticipant any right with respect to continuing theParticipant’s employment with theCorporation; nor interfere in any way with theParticipant’s right or theCorporation’s right to terminate such relationship at any time, with or without cause, to the extent permitted by applicable laws and any enforceable agreement between the employee and theCorporation. |
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| (c) | No fractional shares ofStock shall be issued or delivered pursuant to thePlan or anyAward, and theCommittee, in its discretion, shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional shares of Stock, or whether such fractional shares or any rights thereto shall be canceled, terminated, or otherwise eliminated. |
| (d) | In the event any provision of thePlan shall be held to be illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of thePlan, and thePlan shall be construed and enforced as if such illegal or invalid provisions had never been contained in thePlan. |
| (e) | Payments and other benefits received by aParticipant under anAward made pursuant to thePlan generally shall not be deemed a part of aParticipant’s compensation for purposes of determining theParticipant’s benefits under any other employee benefit plans or arrangements provided by theCorporation or a subsidiary, unless theCommittee expressly provides otherwise in writing or unless expressly provided under such plan. TheCommittee shall administer, construe, interpret, and exercise discretion under thePlan and eachAward in a manner that is consistent and in compliance with a reasonable, good faith interpretation of all applicable laws, and that avoids (to the extent practicable) the classification of anyAward as “deferred compensation” for purposes ofCode Section 409A, as determined by theCommittee. |
22.Governing Law. ThePlan and any actions taken in connection herewith shall be governed by and construed in accordance with the laws of the state of North Carolina without regard to any state’s conflict of laws principles. Any legal action related to thisPlan shall be brought only in a federal or state court located in North Carolina.
23.Stockholder Approval. ThisPlan shall be effective as of July 2, 2006, as approved by Sara Lee Corporation as the sole shareholder of theCorporation.
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