1
Exhibit 10.23
CHANGE OF CONTROL AGREEMENT ENTERED INTO at: Montreal
------------------
on: Aug. 3, 1998
------------------
BETWEEN: GILDAN ACTIVEWEAR INC., a Company duly
incorporated, having its principal office at
725, Xxxxxx xx Xxxxxx, Montreal (Quebec) X0X 0X0
(hereinafter the "Company")
AND XXXXXXXX XXXXXXX
27, Harbridge
Dollar-des-Ormeaux (Quebec)
H9G 1B0
(hereinafter the "Employee" or "he or "him")
1.0 Term of Agreement. The term of this Agreement (the "Term") shall commence
on the date hereof and shall continue in effect through the end of the two
(2) year period commencing on the date the Change in Control occurs;
provided, however, that, if payment of compensation and benefits has begun
under this Agreement, the payment of such compensation and benefits shall
continue beyond the end of the Term in accordance with the applicable
section of this Agreement.
2.0 Change in Control. No benefits shall be payable hereunder unless there
shall have been a Change in Control as set forth below. For purposes of
this Agreement, a "Change in Control" shall mean a change in control of
the Company of a nature that would be required to be reported, whether or
not the Company is then subject to such reporting requirement; provided
that, without limitation, a Change in Control shall be deemed to have
occurred if:
(a) any individual, partnership, firm, Company, association, trust,
unincorporated organization or other entity, or any syndicate or
group deemed to be a person, becomes the "beneficial owner",
directly or indirectly, of securities of
1
2
the Company representing 50.1% or more of the combined voting power
of the Company's then outstanding securities entitled to vote in the
election of directors of the Company (the "Company Voting
Securities"); provided, however, that any acquisition of Company
Voting Securities by the Company or any of its subsidiaries, or any
employee benefit plan (or related trust) of the Company or its
subsidiaries, or any Company with respect to which, following such
acquisition, substantially all of the combined voting power of the
then outstanding voting securities of such Company entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by the individuals and entities who were the
beneficial owners of Company Voting Securities immediately prior to
such acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, shall not
constitute a Change in Control;
(b) individuals who at the beginning of the Term constituted the Board
and any new directors whose appointment by the Board or whose
nomination for election by the Company's shareholders was approved
by a vote of at least three-quarters (3/4) of the directors then
still in office who either were directors at the beginning of the
Term or whose appointment or nomination for election was previously
so approved cease for any reason to constitute a majority of the
members of the Board;
(c) assets of the Company representing fifty (50) percent or more of the
net book value of the assets of the Company determined as of the
date of the audited financial statements of the Company then most
recently published, are sold, liquidated or distributed; or
(d) ten (10) percent or more of the value of the assets of the Company
or the voting securities of the Company are about to be transferred
or have been transferred because of any taking,
2
3
seizure, or defeasance as a results of, or in connection with (i)
nationalization, expropriation, confiscation, coercion, force or
duress or other similar action or (ii) the imposition of a
confiscatory tax, assessment or other governmental charge or levy.
The value of the assets of the Company shall be determined as of the
date of the audited financial statements of the Company most
recently published prior to the date of the transfer
A Change in Control shall also be deemed to occur as of the date the
Company executes an agreement which, if carried out, would result in the
occurrence of a Change in Control as described above, but only with
respect to a termination of employment occurring after the execution of
such agreement and prior to the expiration or termination of such
agreement.
3.0 Potential Change in Control. Notwithstanding his right to terminate
employment at any time with proper notice, the Employee agrees, subject to
the terms and conditions of this Agreement, to remain in the employ of the
Company in the event of a Potential Change in Control until the earliest
of (a) a date which is three hundred and sixty five (365) days from the
occurrence of such Potential Change in Control, (b) the termination of his
employment by reason of death or Disability as defined in Section 4(a) of
this Agreement, or (c) the date on which he first becomes entitled under
this Agreement to receive the benefits provided in Section 5(c) of this
Agreement. For purposes of this Agreement, a Potential Change in Control
shall be deemed to have occurred if:
(a) the Company enters into an agreement which, if carried out, would
result in the occurrence of a Change in Control;
(b) any person publicly announces an intention to take or to consider
taking actions which if carried out would constitute a Change in
Control;
3
4
(c) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control has occurred.
4.0 Termination Following Change in Control. If any of the events described in
Section 2 hereof constituting a Change in Control shall have occurred, the
Employee shall be entitled to the benefits provided in Section 5 hereof
upon the subsequent termination of his employment during the Term, unless
such termination is because of death, Cause or Disability, or by the
Employee for other than Good Reason.
(a) Disability. If, as a result of the Employee's incapacity due to a
physical or mental illness which is determined to cause permanent
impairment in the ability to perform the Employee's duties, the
Employee shall have been absent from the full-time performance of
his duties with the Company for one hundred eighty (180) consecutive
days following the earlier of the Change in Control or the
commencement of the absence, and within thirty (30) days after
written Notice of Termination is given, the Employee shall not have
returned to the full-time performance of your duties, the Company
may terminate the Employee's employment for "Disability".
(b) Cause. Termination by the Company of the Employee's employment for
"Cause" shall mean termination upon (i) the Employee having engaged
in fraud, theft or embezzlement of Company funds or (ii) the
Employee having been convicted of felony or criminal offense or
(iii) the Employee having willfully engaged in conduct that is
demonstrably and materially injurious or result in significant
damage to the Company, monetarily or otherwise.
(c) Good Reason. The Employee shall be entitled to terminate his
employment for Good Reason. For purposes of this Agreement,
4
5
"Good Reason" shall mean the occurrence, without the Employee's
written consent, of any of the following:
(i) Inconsistent Duties. A meaningful and detrimental alteration
in the Employee's position or reporting relationship or in the
nature or status of his responsibilities from those in effect
immediately prior to the Change in Control;
(ii) Reduced Salary. A reduction by the Company in the Employee's
annual base salary as in effect on the date hereof.
(iii) Relocation. The relocation of the office of the Company where
the Employee is employed at the time of the Change in Control
to a location that is more than one sixty (60) miles away.
(iv) Incentive Compensation Plans. The failure by the Company to
continue in effect any incentive compensation plan in which
the Employee participates, or any other similar plans adopted
prior to the Change in Control, unless the Employee is
eligible to participate in, and are entitled to the
opportunity to receive a comparable level of benefits under,
an ongoing substitute or alternative plan (it being understood
that the manner or method of payment and the form of
consideration need not to be the same as existed in the
original plans); or the failure by the Company to continue the
Employee's participation therein on at least as favorable a
basis, both in terms of the amount of benefits available to
him and the level of the Employee's participation relative to
other participants, as existed at the time of the Change in
Control;
5
6
(v) Employment Benefits (Group Insurance and Perquisites). The
failure by the Company to continue to provide the Employee
with benefits at least as favorable as those enjoyed under any
of the Company's life insurance, accidental death, medical and
disability plans in which he was participating at the time of
the Change of Control; the taking of any action by the Company
that would directly or indirectly materially reduce any of
such benefits or deprive the Employee of any material
perquisite enjoyed by him at the time of the Change in
Control, including, without limitation and to the extent
applicable, the use of secretarial services, office space,
telephones, computer facilities and expense reimbursement.
(vi) No Assumption by successor. The failure of the Company to
obtain a satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated in
Section 6 hereof, or, if the business or undertaking in
connection with which the Employee's services are principally
performed is sold at any time after a Change in Control and
his employment is transferred as a result, the purchaser of
such business shall fail to agree to provide the Employee with
the same or a comparable position, duties, compensation and
benefits (as described in clauses (iv) and (v) above) as
provided to him by the Company immediately prior to the Change
in Control; or
(d) Notice of Termination. Any purported termination of the Employee's
employment by the Company or by the Employee shall be communicated
by written Notice of Termination to the other party hereto in
accordance with Section 8 hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the
specific termination
6
7
provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the
provision so indicated. The Employee's failure to set forth in the
Notice of Termination any fact or circumstance which contributes to
a showing of "Good Reason" shall not waive his rights hereunder or
preclude him from asserting such fact or circumstance in enforcing
his rights hereunder.
(e) Date of Termination and Interim Compensation. "Date of Termination
shall mean (i) if the Employee's employment is terminated for
Disability, thirty (30) days after a Notice of Termination is given
(provided that he shall not have returned to the full-time
performance of his duties during such thirty (30) day period), (ii)
if the Employee's employment is terminated pursuant to Section 4
(b), the date specified in the Notice of Termination, and (iii) if
the Employee's employment is terminated for any other reason, the
date specified in the Notice of Termination (which, in case of a
termination pursuant to Section 4(c) above, shall not be less than
thirty (30) nor more than sixty (60) days from the date such Notice
of Termination is given); provided that, except in the case of a
termination pursuant to Section 4(b) above, if within thirty (30)
days after any Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination
shall be the date on which the dispute is finally determined by
mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or the time for
appeal therefrom has expired and no appeal has been perfected);
provided further, that the Date of Termination shall be extended by
a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the
7
8
solution of such dispute, the Company will continue to pay the
Employee his full compensation in effect when the notice giving rise
to the dispute was given, and continue the Employee as a participant
in all compensation, benefit plans and perquisites in which he was
participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this
Section 4(e). Amounts paid under this Section 4(e) are in addition
to all other amounts due under this agreement and shall not be
offset against or reduce any other amounts due under this Agreement.
5.0 Compensation During Disability or Upon Termination. Following a Change of
Control, upon termination of the Employee's employment or Disability
occurring during the Term, the Company shall cause the Employee to be
provided with the following benefits:
(a) Disability. During any period that the Employee fails to perform his
full-time duties with the Company as a result of his Disability, he
shall continue to receive his base salary at the rate in effect at
the commencement of any such period, inclusive of all compensation
payable to him under the Company's disability insurance coverage or
other plans during such period, until his employment is terminated
pursuant to Section 4(a) hereof. Thereafter, his benefits shall be
determined in accordance with the Company's insurance programs and
other benefit plans then in effect.
(b) Termination by death, for Cause or Other Than for Good Reason. If
the Employee's employment is terminated on account of death, by the
Company for Cause or by him for other than for Good Reason, the
Company shall pay him his full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination
is given and any amounts to be paid to him pursuant to the Company's
benefit plans then in effect
8
9
and the Company shall have no further obligations to him under this
Agreement.
(c) By the Company Without Cause; By the Employee for Good Reason. If
the Employee's employment is terminated by the Company without Cause
and other than for Disability or death, or by him for Good Reason,
then he shall be entitled to the benefits provided below:
(i) Accrued Compensation. The Company shall pay him his full base
salary through the Date of Termination at the rate in effect
at the time the Notice of Termination is given;
(ii) Severance Payment. In lieu of any further salary payments to
him for periods subsequent to the Date of Termination, the
Company shall pay him, as severance pay, not later than the
thirtieth (30th) business day following the Date of
Termination (the "Payment Date"), a lump sum severance payment
(the "Severance Payment") equal to the amount of base salary
he would have earned had he continued to be employed until the
end of the twenty-four (24) month period following the Date of
Termination (the "Severance period") assuming that his rate of
monthly base salary during the Severance Period would be equal
to the highest monthly rate of base salary which was payable
to him by the Company (or any Company affiliated with the
Company) during the twenty-four (24) month period immediately
preceding the Date of Termination (the "Severance Salary
Rate");
(iii) Incentive Compensation Plans. The Company shall pay him any
amounts required to be paid to him under the terms of any
Company Stock Option Plan or any successor plan(s) in which he
participates. The Company shall pay
9
10
him, in cash, in a lump sum, no later than the Payment Date,
an amount in lieu of his participation in the Company's Annual
Incentive Plan during the Severance Period which shall be
equal to his target annual bonus, i.e. the set percentage of
base salary pursuant to the Company's Annual Incentive Plan
times his "Severance Salary Rate", for the year during which
the Date of Termination occurs multiplied by the number of
months during the Severance Period.
(iv) Employment Benefits. The Company shall continue to provide him
and his dependants with the same level of life, accidental
death, disability, medical insurance benefits which he and his
dependants were receiving or entitled to receive immediately
prior to the Date of Termination until the end of the
Severance Period or, if earlier, the date on which he and his
dependants are provided coverage under similar plans of a
subsequent employer. Contributions by the Employee required
under such programs shall be payable to the Company or to the
insurer, as applicable, on the same basis as if he continued
to be employed during the Severance Period.
(v) Vacation. The Company shall pay him, in cash, in a lump sum,
no later than the Payment Date, an amount equal to all accrued
but unused vacation determined as of the Date of Termination.
The amount of such payment shall be determined based upon his
Severance Salary Rate. In no event shall the amount of
vacation time to which the Employee is entitled be less than
the amount to which he would have been entitled under the
vacation policy in effect as of the change in Control.
(vi) Loans. The Employee shall make repayments of any loan issued
by the Company in accordance with the repayment
10
11
schedule under the loan as though he had not terminated
employment; except that full repayment of the loan shall be
due on the earlier of the end of the Severance Period or the
date repayment of the loan is due.
(d) Tax Withholding. Unless expressly provided otherwise in an
applicable provision of this Agreement, all payments to be made
under this Section shall be subject to required statutory deductions
at source.
(e) No Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Section by seeking other
employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section be reduced by any compensation
earned by him as the result of employment whether by another
employer or self-employment, after the Date of Termination, or
otherwise, except as specifically provided in this Section.
6.0 Successors; Binding Agreement.
(a) Assumption by Successor. The Company will require any successor
company (whether direct or indirect, and whether by purchase,
merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and
agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it had no such
succession taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the
Employee to compensation from the Company in the same amount and on
the same terms as that to which he would be entitled hereunder if he
had terminated his employment for Good Reason following a Change in
Control, except that for purposes of implementing
11
12
the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this
Agreement, "the Company" shall include any successor to the
Company's business and/or assets as aforesaid that assumes and
agrees to perform this Agreement by operation of law, otherwise.
(b) Enforceability by Beneficiaries. This Agreement shall inure to the
benefit of and be enforceable by the Employee's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die
while any amount would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement
to his devisee, legatee or other designee or, if there is no such
designee, to his estate.
7.0 Confidential Information. The Employee shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential information,
knowledge or date relating to the Company or any of its affiliated
companies, and their respective business, that shall have been obtained by
him during his employment by the Company or any of its affiliated
companies and that shall not be or become public knowledge unless required
by law (other than by acts of him or his representatives in violation of
this Agreement). After termination of the Employee's employment with the
Company, he shall not, without the prior written consent of the Company,
communicate or divulge any such information, knowledge or date to anyone
other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section constitute a basis
for deferring or withholding any amounts otherwise payable to the Employee
under this Agreement.
12
13
8.0 Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing,
addressed to GILDAN ACTIVEWEAR INC., 000, Xxxxxxx xx Xxxxxx, Xxxxxxxx
(Quebec) X0X 0X0, Attention: Chief Executive Officer or to the Employee at
the address set forth on the first page of this Agreement or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
9.0 Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is agreed to in
writing. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time.
10.0 Final Agreement. It is the intention of the Company and the Employee that
the compensation and benefits to be provided to him under this Agreement
shall be the only compensation and benefits to be provided to him by the
Company in the event of his termination of employment following a Change
in Control. No Agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by
either party that are not expressly set forth in this Agreement and this
Agreement shall supersede all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or
written, with respect to the subject matter hereof.
11.0 Governing Law. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of Canada.
13
14
12.0 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13.0 Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14.0 No Contract of Employment. Nothing in this Agreement shall be construed as
giving the Employee any right to be retained in the employ of the Company.
15.0 Headings. The headings contained in this Agreement are intended solely for
convenience and shall not affect the rights of the parties to this
Agreement.
16.0 English Language. The parties hereto declare that they require that this
Agreement and any related documents be drawn up and executed in English.
Les parties declarent qu'elles requierent que cette convention ainsi que
tous documents relatifs a cette convention soient rediges et executes en
anglais.
GILDAN ACTIVEWEAR INC. EMPLOYEE
(the Company)
/s/ H. Xxxx Xxxxxxxx /s/ Xxxxxxxx Xxxxxxx
------------------------ --------------------------
14
