EXHIBIT 10-A-1
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EMPLOYMENT AGREEMENT
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This Agreement entered into as of the 1st day of July, 1997,
by and between HARTMARX CORPORATION, a Delaware corporation
("Company"), and XXXXXXXXX X. XXXXXXXXXXXXX ("Executive").
WITNESSETH THAT:
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WHEREAS, the parties hereto desire to enter into this
Agreement pertaining to the terms of Executive's employment by
the Company; and
WHEREAS, the Company and the Executive intend to enter into
a Severance Agreement ("Severance Agreement"), coincident
herewith; and
WHEREAS, upon the execution of this Agreement by the Company
and Executive the terms and conditions of this Agreement shall
control and govern the employment relationship between the
Company and Executive.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below, it is hereby covenanted and agreed by
the parties hereto as follows:
1. Agreement Period. The Company hereby employs Executive
and Executive hereby agrees to remain in the employ of the
Company for an employment term ("Agreement Period") beginning on
July 1, 1997, and continuing in effect through December 31, 1998;
provided, however, that the Agreement Period shall automatically
be extended for two additional years unless, not later than July
15, 1998, the Company or the Executive shall have given notice
not to extend this Agreement; and further; provided, however,
that if the Executive's employment is terminated following a
Change in Control (as defined in the Severance Agreement), the
Agreement Period shall terminate upon such termination of
employment and the Executive's rights with respect to such
termination of employment shall be governed by the provisions of
the Severance Agreement. While Executive is employed by the
Company during the Agreement Period, the Company shall use its
best efforts to have the Board of Directors elect Executive to
the offices of Senior Vice President, General Counsel and
Secretary of the Company.
2. Performance of Duties. While employed by the Company
Executive shall devote all his full working time, attention and
energies during normal business hours to the performance of his
duties for the Company and its subsidiaries and shall perform his
duties faithfully and efficiently, subject to the direction of
the Company Board of Directors; provided, however, that Executive
may become a director of other corporations and engage in
charitable, civic, professional and other similar pursuits to the
extent that such activities do not interfere with his duties
hereunder.
3. Compensation. As compensation for the performance by
Executive of his obligations hereunder:
(a) Base Salary. During the Agreement Period the
Company shall pay Executive an annual base salary of not less
than $185,000 ("Base Salary"). Base Salary shall be paid in
accordance with the Company's customary payroll practices. Base
Salary may be increased at the discretion of the Compensation and
Stock Option Committee of the Company Board of Directors (the
"Committee") and once so increased shall not thereafter be
decreased, except for across-the-board reductions similarly
affecting all executives of the Company.
(b) Management Incentive Plan. Executive shall
participate in the Company Management Incentive Plan (the "MIP")
and/or any successor plan.
(c) Long Term Incentive Plan. Executive shall
participate in any long-term incentive plan maintained by the
Company ("LTI Plan") for such period of time as such plan may be
in effect.
(d) Participation in Benefit Plans. During the
Agreement Period the Executive shall be eligible to participate
in all savings, retirement and welfare benefit plans and programs
now or hereafter applicable to any other senior executives of the
Company on a basis no less favorable than is made available to
any other senior executive of the Company.
(e) Perquisites. During the Agreement Period, the
Company shall make available to the Executive all perquisites
that are made available to Company's senior executives.
4. Termination. The Executive's employment hereunder may
be terminated under the following circumstances:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. The Company may terminate the
Executive's employment hereunder for "Disability". Any question
as to the existence of the Disability shall be determined in
accordance with the Company's disability plan.
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement,
the Company shall have "Cause" to terminate the Executive's
employment hereunder upon the Executive's:
(i) conviction for the commission of a felony; or
(ii) willful failure to substantially perform his
duties hereunder; or
(iii) willful or grossly negligent conduct that is
demonstrably and materially injurious to the
Company or its affiliates; or
(iv) material breach of this Agreement, including
but not limited to Section 7 hereof.
Notwithstanding the foregoing, no event shall
constitute "Cause" unless the Company shall have notified
Executive in writing of the conduct allegedly constituting Cause
and the Executive shall have failed to correct such conduct
within thirty (30) days of the date of his receipt of such
written notice from the Company.
(d) Good Reason. The Executive may terminate his
employment hereunder for Good Reason. Good Reason shall mean the
occurrence (without the Executive's written consent) of any one
of the following acts by the Company, or failures by the Company
to act:
(i) failure of the Board of Directors of the Company
to elect Executive to the office(s) described in
Section 1 hereof; or
(ii) [Intentionally omitted]
(iii) any change in (i) the provisions of the Company's
bylaws describing, or (ii) the relative duties and
responsibilities of, the office of Senior Vice
President, General Counsel and Secretary; or
(iv) the assignment to Executive of any duties
inconsistent with Executive's status as Senior
Vice President, General Counsel and Secretary or a
substantial adverse alteration in the nature or
status of Executive's responsibilities; or
(v) any reduction by the Company in Executive's Base
Salary, except for across-the-board salary
reductions similarly affecting all executives of
the Company; or
(vi) the failure by the Company to pay to Executive any
portion of Executive's current compensation, or to
pay to Executive any portion of an installment of
deferred compensation under any deferred
compensation program of the Company, within seven
(7) days of the date such compensation is due; or
(vii) the taking of any action by the Company which
directly or indirectly causes Executive to cease
to be eligible to participate in all savings,
retirement and welfare benefit plans and programs
applicable to any other senior executives of the
Company on a basis no less favorable than is made
available to any other senior executive of the
Company; the failure of the Company to make
available to the Executive all perquisites that
are made available to Company's senior executives;
the failure by the Company to calculate
Executive's annual bonus compensation, if any,
using at least the valuation and number of
accountability points used to determine the bonus
opportunity in any previous year during the
Agreement Period for any corporate officer
position held by Executive; or the failure by the
Company to provide Executive with the number of
paid vacation days to which Executive may then be
entitled; except (as to all of the foregoing) for
changes (including termination) in such benefits
and/or policies similarly affecting all executives
of the Company; or
(viii) the relocation of the Executive's principal place
of employment to a location more than 50 miles
from the Executive's principal place of employment
as of the date hereof or the Company's requiring
the Executive to be based anywhere other than such
principal place of employment (or permitted
relocation thereof) except for required travel on
the Company's business to an extent substantially
consistent with the Executive's present business
travel obligations; or
(ix) the giving notice by the Company of its decision
not to extend this Agreement, in accordance with
Section 1; or any purported termination of the
Executive's employment by the Company other than
in accordance with this Agreement.
Notwithstanding the foregoing, no event shall
constitute "Good Reason" unless the Executive shall have notified
the Company in writing of the conduct allegedly constituting Good
Reason and the Company shall have failed to correct such conduct
within thirty (30) days of the date of its receipt of such
written notice from the Executive.
5. Termination Procedure.
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(a) Notice of Termination. Any termination of the
Executive's employment by the Company or by the Executive (other
than termination pursuant to Section 4(a) hereof) shall be
communicated by written Notice of Termination to the other party
hereto in accordance with Section 9. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific provision in this Agreement relied
upon and shall identify in reasonable detail the reason for
termination of the Executive's employment under the provision so
indicated.
(b) Date of Termination. "Date of Termination" shall
mean (i) if the Executive's employment is terminated by his
death, the date of his death, (ii) if the Executive's employment
is terminated pursuant to Section 4(b) above, the date thirty
(30) days after Notice of Termination (provided that the
Executive shall not have returned to the performance of his
duties on a permanent full-time basis during such thirty (30) day
period), (iii) if the Executive's employment is terminated
pursuant to Section 4(c) or 4(d) above, the date thirty (30) days
after Notice of Termination and (iv) if the Executive's
employment is terminated for any other reason, the date specified
in the Notice of Termination which shall be not more than 30 days
from the date of such Notice.
6. Compensation Upon Termination.
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(a) Termination due to Death or Disability. If the
Executive's employment is terminated by his death or Disability,
except as provided in Section 6(d) below, the Company shall have
no further obligations to Executive under this Agreement.
(b) Termination By Company without Cause or By
Executive for Good Reason. Upon termination of Executive's
employment hereunder during the Agreement Period by the Company
without Cause or by Executive for Good Reason hereunder, then, in
lieu of any further salary, bonus, or LTI Plan payments for
periods subsequent to the Date of Termination and in lieu of any
severance benefit otherwise payable to the Executive:
(i) The Company shall continue to pay to
Executive Base Salary as of the Date of Termination
(without giving effect to any decrease therein which
constitutes the basis, or one of the bases, upon which
the Notice of Termination is based), for a period of
twenty-four (24) months (the "Severance Period"),
payable semi-monthly or more frequently, in arrears,
commencing on the Date of Termination; provided,
however, that if a Change in Control occurs during the
Severance Period, the Company shall pay the Executive
by no later than 5 days following the Change in Control
a lump sum in cash equal to the sum of the remaining
payments that would have been payable to the Executive
hereunder had no Change in Control occurred, and
payments hereunder shall terminate.
(ii) The Company shall pay the Executive a lump
sum in cash, within 10 days of the Date of Termination,
equal to the sum of (A) any unpaid incentive
compensation (including the cash value, determined
without regard to any restrictions on the sale thereof,
of restricted stock) allocated or awarded to Executive
under the MIP with respect to any fiscal year ending
prior to the year in which the Date of Termination
occurs.
(iii) The Company shall pay the Executive as
bonuses any amount which would have been payable to
Executive under the MIP for the full fiscal year in
which Executive was terminated and for the full fiscal
year following such year. Such payments will be made
within five days of the date on which MIP payments are
made to other MIP participants after the close of each
fiscal year and will include the cash value, determined
without regard to any restrictions on the sale thereof,
of restricted stock. If a Change in Control occurs
prior to either of these two payments, then, in lieu of
any further bonus payments, the Company shall pay
Executive, no later than 10 days following the Change
in Control, a lump sum in cash calculated at the Step-1
level for the then current fiscal year for each MIP
bonus payment not yet made.
(iv) The Company shall pay the Executive a lump
sum in cash, within 10 days of the Date of Termination,
equal to the sum of (A) any unpaid incentive
compensation (including the cash value, determined
without regard to any restrictions on the sale thereof,
of restricted stock) allocated or awarded to Executive
under the LTI Plan with respect to any performance
period ending prior to the Date of Termination; plus
(B) a pro rata portion of the aggregate value of all
contingent incentive compensation (including the cash
value, determined without regard to any restrictions on
the sale thereof, of restricted stock) awards to
Executive with respect to any performance periods under
the LTI Plan which are not completed as of the Date of
Termination, calculated based on the assumption that
the Company's results from the beginning of such
performance period(s) to the Date of Termination would
continue at the same rate until the originally intended
completion date(s) of such performance period(s). The
amount set forth in item (B) above shall be payable to
Executive regardless of whether the Company actually
achieves the performance level upon which the
calculation of such amount is based.
(v) During the Severance Period the Company shall
arrange to provide the Executive with life, disability,
accident and health insurance benefits ("Welfare
Benefits") substantially similar in all material
respects to those which the Executive is receiving
immediately prior to the Date of Termination (without
giving effect to any decrease therein which constitutes
the basis, or one of the bases, upon which the Notice
of Termination is based). If the Executive receives,
or becomes eligible to receive, Welfare Benefits from
another source, then the Welfare Benefits otherwise
receivable by the Executive pursuant to this Section
6(b)(v) shall be reduced to the extent of such other
Welfare Benefits received by, or made available to, the
Executive during the Severance Period (and any such
Welfare Benefits received by or made available to the
Executive shall be reported to the Company by the
Executive). Nothing herein shall be deemed to limit
Executive's rights, if any, to thereafter participate
in any retiree medical plan then in effect.
(vi) During the Severance Period, the Company
shall arrange to provide the Executive with such
material perquisites as are provided to the Executive
immediately prior to the Date of Termination (without
giving effect to any decrease therein which constitutes
the basis, or one of the bases, upon which the Notice
of Termination is based).
(vii) Effective as of the Date of Termination,
all stock options (whether or not then fully
exercisable) granted to Executive under any of the
Company's stock option plans prior to the Date of
Termination shall become immediately exercisable and
Executive shall be entitled to exercise any or all of
such options at any time prior to the respective
expiration dates of such options as set forth in the
grant document evidencing same.
(viii) Effective as of the Date of Termination,
all restricted stock granted to Executive prior to the
date Executive's employment with the Company is
terminated shall become fully vested and all
restrictions thereon shall lapse.
(ix) At the time and in the manner such benefits
are otherwise payable, the Executive shall receive
payment of the incremental qualified and supplemental
defined benefit pension benefits Executive would have
earned had Executive's employment continued during the
Severance Period, had he received credit for service
for the Severance Period for all purposes under the
applicable plans, and had the Executive received
compensation during the Severance Period of salary, at
the annual rate equal to the Executive's Base Salary in
effect immediately prior to the Date of Termination
(without giving effect to any decrease therein which
constitutes the basis, or one of the bases, upon which
the Notice of Termination is based), and MIP bonuses
actually paid during the Severance Period. Anything in
the applicable plan to the contrary notwithstanding,
the Executive's benefit (as increased hereunder) under
any supplemental defined benefit plan maintained by the
Company ("SERP Benefit") shall be payable to Executive
in the form of a single life annuity, monthly, at the
same times and for the same duration as Executive's
benefit payments from Hartmarx Retirement Income Plan
("RIP"); provided, however, that if the Executive
elects to receive payment of RIP benefits in the form
of a joint and survivor annuity, the SERP Benefit shall
be paid in the form of a joint and survivor annuity,
calculated so that the value of such SERP Benefit is
the actuarial equivalent of the SERP Benefit payable in
the form of a single life annuity. Notwithstanding the
foregoing, in the event of a Change in Control then the
Executive's SERP Benefit as of such date shall be paid
to him in a lump sum within 10 days of the Change in
Control or the Date of Termination, as applicable.
(c) Termination by the Company for Cause or By
Executive Other than for Good Reason. If the Executive's
employment shall be terminated by the Company for Cause or by the
Executive other than for Good Reason, then, subject to Section
6(d) below, the Company shall have no obligations to Executive
under this Agreement.
(d) Additional Payments. Following any termination of
Executive's employment, the Company shall pay the Executive all
unpaid amounts, if any, to which the Executive is entitled as of
the Date of Termination under any compensation plan or program of
the Company, at the time such payments are due. In addition,
within ten days of the Date of Termination, the Company shall pay
the Executive, or his legal representative or estate, as
applicable, any amounts accrued but not paid pursuant to Sections
3(a), 3(b) and 3(c) in respect of periods ending prior to the
Date of Termination.
7. Confidentiality; Nondisparagement. The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
trade secrets, confidential information, and knowledge or data
relating to the Company and its affiliates which shall have been
obtained by the Executive during the Executive's employment by
the Company and which shall not have been or now or hereafter
have become public knowledge (other than by acts by the Executive
or representatives of the Executive in violation of this
Agreement). The Executive shall not, without the prior written
consent of the Company, or as may otherwise be required by law or
legal process, communicate or divulge any such trade secrets,
information, knowledge or data to anyone other than the Company
and those designated by the Company. In addition, the Executive
shall not disparage, discredit or otherwise publicly criticize
the Company or its affiliates or engage in any act, directly or
indirectly, for purposes of disparaging, ridiculing or bringing
scorn upon the Company, any affiliate thereof, or any of their
respective officers, directors, businesses, tradenames or
trademarks. In the event of a breach or threatened breach of
this Section 7, the Executive agrees that the Company shall be
entitled to injunctive relief in a court of appropriate
jurisdiction to remedy any such breach or threatened breach, the
Executive acknowledging that damages would be inadequate and
insufficient. Any termination of the Executive's employment,
Agreement Period or of this Agreement shall have no effect on the
continuing operation of this Section 7.
8. Amendment. This Agreement may be amended in writing by
mutual agreement of the parties without the consent of any other
person and, during the life of Executive, no person, other than
the parties hereto, shall have any rights under or interest in
this Agreement or the subject matter hereof.
9. Notice. Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing and, if
sent by registered mail, to the Company at its principal
executive offices, to the attention of its Chief Executive
Officer, or to Executive at the last address filed by him in
writing with the Committee, as the case may be.
10. Nonalienation. The interests of Executive under this
Agreement are not subject to the claims of his creditors, other
than the Company and its subsidiaries, and may not otherwise be
voluntarily or involuntarily assigned, alienated or encumbered.
11. Successors. This Agreement shall be binding upon, and
inure to the benefit of, the Company and its successors and
assigns and upon any person acquiring, whether by merger,
consolidation, purchase of assets or otherwise, all or
substantially all of the Company's assets and business.
12. Severability. If, for any reason, any provision of
this Agreement is held invalid, such invalidity shall not affect
any other provision of this Agreement not held so invalid, and
each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of
this Agreement shall be held invalid in part, such invalidity
shall in no way affect the rest of such provision not held so
invalid, and the rest of such provision, together with all other
provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.
13. Applicable Law. The provisions of this Agreement shall
be construed in accordance with the laws of the State of
Illinois.
14. Counterpart. The Agreement may be executed in two or
more counterparts, any one of which shall be deemed the original
without reference to the others.
15. Attorney's Fees. Company shall reimburse Executive for
all reasonable legal fees and costs and other fees and expenses
which Executive may incur in respect of any dispute or
controversy arising under or in connection with this Agreement;
provided, however, that the Company shall not reimburse such
legal fees and costs and other fees and expenses if the fact
finder determines that the action brought by the Executive was
frivolous.
16. Beneficiaries. If Executive should die while any
amount is payable to him hereunder, such amount shall be paid to
Executive's devisee, legatee or other designee or, if there is no
such designee, to Executive's estate.
17. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration, conducted before a panel of three arbitrators in
Chicago, Illinois in accordance with the rules of the American
Arbitration Association then in effect. The Company and the
Executive shall each be entitled to select one arbitrator, with
the two selected arbitrators choosing the third arbitrator.
Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The expense of such arbitration shall be
borne by the Company.
18. Mitigation. Executive shall not be required to
mitigate damages or the amount of any payment provided for under
this Agreement by seeking (and, except as provided in Section
6(b)(v), no payment otherwise required hereunder shall be reduced
on account of) other employment.
IN WITNESS WHEREOF, Executive has hereunto set his hand, and
the Company has caused these presents to be executed in its name
and on its behalf, and its corporate seal to be hereunto affixed
and attested by its Assistant Secretary, all as of the day and
year first above written.
/s/ XXXXXXXXX X. XXXXXXXXXXXXX
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XXXXXXXXX X. XXXXXXXXXXXXX
Attest: HARTMARX CORPORATION
/s/ XXXXX X. XXXXXX By: /s/ E.O. HAND
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Xxxxx X. Xxxxxx E.O. Hand, Chairman and Chief
Assistant Secretary Executive Officer
