EXHIBIT 10-D-3
AGREEMENT
AGREEMENT made and entered into effective as of the 15th day of
April, 2004, by and between Hartmarx Corporation, a Delaware Corporation (the
"Company"), and Xxxxxx X. Hand ("Executive").
W I T N E S S E T H:
WHEREAS, Executive has announced his intention to retire and will
retire from his position as Chairman of the Board of the Company effective as
of June 30, 2004; and
WHEREAS, Executive has expressed his intention to continue to serve
on the Board of Directors of the Company, subject to his election by
stockholders at the Company's annual meetings; and
WHEREAS, by virtue of his 35+ years of service, Executive expertise,
skills, knowledge and abilities which are useful and the Company desires to
continue to have the benefit of Executive's expertise, skills, knowledge and
abilities; and
WHEREAS, in recognition of Executive's long tenure and service to the
Company and to receive the benefits of Executive's expertise, skills,
knowledge and abilities, and to ensure that the skills and knowledge obtained
by Executive as a result of his employment with the Company are not disclosed
to the Company's competitors, Executive and the Company desire to enter into
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below, it is hereby covenanted and agreed and the parties
agree as follows:
1. Consulting Period; Renewals. The term of this Agreement (the
"Consulting Period") shall be a one year period commencing July 1, 2004 and
ending on June 30, 2005. The Consulting Period shall automatically renew on
each subsequent July 1 for an additional one year period ending on the
immediately following June 30, with the final renewal of the Consulting Period
to commence on July 1, 2010 and end on June 30, 2011. In the event that a
Change in Control shall have occurred during the Consulting Period, the term
of this Agreement and the rights and obligations of the parties shall be
governed by Section 8, below.
2. Consulting Services. During the Consulting Period, Executive shall
provide such consulting services as the Company may request from time to time.
The "Consulting Services" to be provided by Executive shall include, but not
be limited to:
(a) Customer relations, product development, selling, and
marketing, including all of the foregoing with the Company's largest
customers;
(b) Creative and production advice and services, from
concept to finished product, as necessary and appropriate for the
preparation and distribution of the Company's annual report required
under Rule 14a-3 of the Securities Exchange Act of 1934, as amended;
(c) Consulting advice and expertise related to the Company's
International Marketing Department and trademark licensing
activities; and
(d) such other consulting activities, advice and projects as
the Executive and the Company's Chief Executive Officer may from time
to time agree.
Executive shall devote such time and energies as may be reasonable and
necessary to perform the Consulting Services in order that the Company may
receive the benefit of Executive's expertise, skills, knowledge and abilities,
as contemplated and intended by this Agreement.
3. Compensation. For and in consideration of the Consulting Services
to be furnished by Executive, the Company agrees to pay or furnish to
Executive, the following:
(a) Consulting Fee: The Company shall pay Executive during
the Consulting Period, the sum of Seven Thousand and 00/100 Dollars
($7,000) per month, which Consulting Fee shall be paid to Executive
on or about the first day of each month during the Consulting Period.
Executive acknowledges and understands that Executive shall be solely
responsible for all federal, state and local taxes assessed and
payable with respect to said Consulting Fee.
(b) Medical and Dental Coverage:
(i) The Company shall provide Executive for the
term of Executive's natural life, with major medical and
dental coverage providing to Executive, in effect, the same
coverage, deductibles and co-payments as are available under
the Hartmarx Corporation Group Medical Plan (the "GMP") from
time to time, with the requirement that Executive pay to the
Company the same premiums as are required under the GMP from
time to time. Executive recognizes and acknowledges that the
medical and dental benefits shall be provided by Executive's
participation in Medicare as the primary medical coverage
and with such other supplemental medical insurance policies
as the Company may deem necessary, appropriate or advisable;
provided however, that the actual benefits, reimbursements
and costs to Executive shall be such as are available to
Company employees under the GMP from time to time.
Company shall reimburse Executive on a semi-annual basis
during the Consulting Period for the costs of Medicare
premiums paid by Executive to the extent that such costs
exceed the premium payable by employees under the GMP for
Employee + one coverage. Executive covenants and agrees that
he will enroll in Medicare coverage at the time that he
makes application for Social Security retirement benefits
and in the event Executive fails to enroll in Medicare the
Company shall have no obligations under this Section
3(b)(i).
(ii) The Company shall provide medical and dental
coverage for Executive's current spouse providing to her, in
effect, the same coverage, deductibles and co-payments as
are available to Company employees under the GMP from time
to time, until such time as Executive's spouse attains the
age of 65 years. The medical and dental coverage to be
afforded to Executive's spouse may be furnished pursuant to
COBRA continuation coverage, individual or group policies,
or a combination of the foregoing as the Company may deem
appropriate.
(c) Office: For and during the Consulting Period, the
Company shall provide Executive with appropriate office space, office
furniture, telephones and associated office services, and including
reasonable and appropriate secretarial services. The office space to
be made available to Executive shall be at the Company's headquarters
or at such other locations or sites as are then occupied by the
Company or any of its subsidiaries, provided, however, that Company
shall utilize its reasonable efforts to provide the office space in
the same metropolitan area where the Company's headquarters are
located. In addition, the Company's obligation under this Section
3(c) shall not require that a full-time secretary, dedicated solely
to Executive, be provided to Executive.
(d) Automobile: For and during the Consulting Period, the
Company shall provide to Executive the use of an automobile of the
same general class, size and style as has been provided to Executive
in the past.
(e) Expenses: The Company shall reimburse Executive for
ordinary and necessary business expenses incurred, in accordance with
the Company's expense reimbursement policy then in effect, however,
the Company shall not reimburse Executive for any golf club, dining
club or other membership fees or dues, all of which shall be
Executive's responsibility.
4. Executive's Covenants. Executive covenants and agrees that:
(a) 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).
(b) Executive shall not engage directly or indirectly,
anywhere, in any business or activity, whether as an individual,
partner or employee, or as an officer, director or stockholder of a
corporation or other entity which competes with or is in competition
with the Company or any of its subsidiaries; provided however, that
shareholdings representing less than 5% of the outstanding shares of
any publicly held company shall not be a violation of this Section
4(b).
(c) 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.
(d) Executive shall not disparage, discredit or otherwise
publicly criticize the Company, any affiliate thereof, or any of
their respective officers, directors, or businesses 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 any provision set forth in
this Section 4, the Company shall be entitled to injunctive relief in a court
of appropriate jurisdiction to remedy any such breach or threatened breach,
and Executive acknowledges that damages would be inadequate and insufficient.
Except as otherwise provided in Section 8, below, any termination of this
Agreement shall have no effect on the continuing operation of and the
Executive's covenants set forth in Sections 4(a) - (d), each of which shall
survive the expiration or other termination of this Agreement.
5. Termination. Except as otherwise provided in Section 8 following a
Change in Control, this Agreement may be terminated only under the following
circumstances:
(a) Death: This Agreement shall terminate upon the death of
Executive, provided however, that the Company's obligations under
Section 3(b)(ii) shall continue until Executive's spouse attains the
age of 65 years.
(b) Disability: The Company may terminate this Agreement due
to Executive's "Disability". Disability means a mental or physical
condition which renders Executive unable or incompetent to carry out
the duties and responsibilities of Executive hereunder or the
material duties to which Executive was assigned at the time the
disability was incurred, which has existed for at least six (6)
months and which in the certified opinion of a physician mutually
agreed upon by the Company and Executive (which agreement neither
party shall unreasonably withhold) is expected to be permanent or to
last for an indefinite duration or a duration in excess of six (6)
months. In the event this Agreement terminates pursuant to this
Section 5(b), the Company's obligations under Sections 3(b) and (d)
shall continue as set forth in this Agreement.
(c) Executive's Request: Upon not less than thirty (30) days
prior written notice to the Company, Executive may terminate this
Agreement, such termination to be effective on the thirtieth day
after Company's receipt of said notice. In the event this Agreement
terminates pursuant to this Section 5(c), the Company's obligations
under this Agreement shall thereupon cease and terminate and
Executives obligations and duties hereunder shall likewise cease and
terminate. Notwithstanding anything to the contrary set forth in this
Section 5(c) or elsewhere in this Agreement, Executive's obligations
under Sections 4(a) - (d) shall survive any termination of this
Agreement.
(d) By the Company: In the event Executive defaults in the
performance of his obligations under this Agreement, the Company may
terminate this Agreement upon not less than thirty (30) days prior
written notice to Executive in accordance with the procedures set
forth in Section 6, below. In such event, all of the Company's
obligations under this Agreement, except the obligation to provide
continued medical coverage to Executive pursuant to Section 3(b)(i),
shall thereupon cease and terminate.
6. Executive's Default. In the event that Executive defaults under
this Agreement by failing or refusing to devote such time and energies as may
be reasonable and necessary to perform the Consulting Services as provided in
this Agreement, the Company may terminate this Agreement only upon the
satisfaction of each of the following requirements, such termination to be
effective on the thirtieth day following the meeting referenced in Section
6(b):
(a) The Company shall have notified Executive in writing of
the conduct or failure which forms the basis of such default 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;
(b) A meeting with Executive, the Chief Executive Officer of
the Company, the then Lead Director and the then Chairman of the
Compensation and Stock Option Committee of the Board of Directors
shall be called for the stated purpose of determining whether
Executive's acts or omissions (which shall include the particular
conduct reference in the notice given under Section 6(a)) constitute
a default under this Agreement, whether the Executive failed to
correct such conduct and, if so, whether to terminate this Agreement;
and
(c) Executive shall have failed to confirm to the Company in
writing, at the meeting referenced in Section 6(b), that he remains
ready, willing and able to perform his obligations under this
Agreement.
Until such time as this Agreement is terminated, the Company shall continue to
pay the Consulting Fee to Executive and provide the benefits required
hereunder to Executive in accordance with the terms of this Agreement.
Notwithstanding anything to the contrary set forth in this Agreement,
Executive shall not be in default of his obligations under this Agreement if
the Company (i) assigns any of Executive's duties set forth in Sections 2(a) -
(d) to other executives, or (ii) fails or refuses to assign other duties to
Executive, provided however, that Executive remain ready, willing and able to
perform such duties.
7. Other Agreements and Benefits. Executive and Company are parties
to other agreements, including (i) that certain Employment Agreement dated as
of August 6, 1996, as amended and restated effective November 27, 2000, and as
subsequently amended; (ii) that certain Severance Agreement dated as of August
6, 1996, as amended and restated effective November 27, 2000, and as
subsequently amended; and (iii) that certain Xxxxxx X. Hand Supplemental
Benefit Compensation Agreement effective as of December 23, 1999, as amended
(collectively the "Other Agreements"). In addition by virtue of Executive's
employment with the Company, Executive is (or was) a participant in and is or
may be entitled to benefits under various of the Company's benefit plans as a
result of such employment status, including (v) The Hartmarx Corporation
Retirement Income Plan, (w) The Hartmarx Corporation Savings Investment Plan,
(x) the Management Security Plan, (y) the Xxxxxxxx Plan and (z) the Company's
stock option and incentive stock plans and the grant documents issued
thereunder (collectively the "Benefits Plans"). Nothing set forth in this
Agreement shall be deemed or construed as a modification, amendment,
extension, termination, enhancement or diminution of any of the Other
Agreements or benefits, including stock options and restricted stock awards,
to which Executive is entitled under the Benefits Plans. The Other Agreements
shall continue in full force and effect in accordance with their respective
terms and the payment and amounts of benefits payable under the respective
Benefits Plans shall be governed by the terms of the respective Benefits
Plans.
8. Change in Control.
(a) Upon a Change in Control during the Consulting Period,
the Consulting Period and the term of this Agreement shall be
automatically extended for a term ending on June 30, 2011. Following
a Change in Control, the Executive and Company shall have the
following options available under this Agreement:
(i) Company Option. Upon thirty (30) days prior
written to notice (the "Early Termination Notice") to
Executive given at any time after a Change in Control, the
Company may terminate this Agreement and shall continue to
provide to Executive the benefits under Sections 3(b) and
(d) in accordance with the terms as set forth therein. In
addition, not later than thirty (30) days after the date of
the Early Termination Notice, the Company shall pay to
Executive, in a lump sum, the Consulting Fee multiplied by
the number of months remaining in the Consulting Period
until June 30, 2011 (the "Termination Payment"). The
Termination Payment shall be discounted to present cash
value applying a rate equal to the average rate of interest
incurred by the Company for incremental short term
borrowings during the calendar quarter which immediately
precedes the date of the Early Termination Notice.
(ii) Executive Option. Upon thirty (30) days prior
written to notice (the "Executive Notice") to Company given
at any time after a Change in Control, the Executive may
terminate this Agreement and upon the effective date of such
termination by Executive all benefits and payments by the
Company to Executive under this Agreement shall cease and
neither party shall have any continuing rights or
obligations one to the other.
(b) Upon termination of this Agreement by either Company or
Executive in accordance with the provisions of this Section 8, except
as expressly provided in Section 8(a)(i) and (ii), as applicable, all
rights and obligations of the parties shall thereupon terminate and
neither party shall have any continuing rights or obligations one to
the other. In the event that neither Company nor Executive elect to
terminate this Agreement in accordance with the provisions of this
Section 8, and until such time as Company or Executive elect to
terminate this Agreement pursuant to this Section 8, the Agreement
shall continue in accordance with all of its terms through June 30,
2011. No termination of this Agreement pursuant to this Section 8
shall in any way affect, modify, diminish or enhance any of
Executive's rights under Other Agreements or Benefits Plans as set
forth in Section 7.
(c) A Change in Control shall mean the occurrence of any of
the following:
(i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the
Company's then outstanding securities, excluding any Person
who becomes such a Beneficial Owner in connection with a
merger or consolidation which would result in the record
holders of the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or
any parent thereof) in substantially the same proportions as
their ownership immediately prior to such merger or
consolidation at least 75% of the combined voting power of
the voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately after
such merger or consolidation; provided that this exclusion
shall only apply to the percentage obtained by merger or
consolidation and shall cease to apply in the event
additional securities are purchased in another transaction;
or
(ii) during any period of two consecutive years
(not including any period prior to the date of the original
Severance Agreement), individuals who at the beginning of
such period constitute the Board of Directors of the
Company ("Board") (together with any new directors whose
election by the Board or whose nomination for election by
the shareholders of the Company was approved by a vote of at
least 662/3% of the directors of the Company then still in
office who were either directors at the beginning of such
period or whose election or nomination for election was
previously so approved unless the initial assumption of
office of such subsequently-elected or appointed director
was in connection with (A) an actual or threatened election
contest, including a consent solicitation, relating to the
election or removal of one or more members of the Board, (B)
a "tender offer" (as such term is used in Section 14(d) of
the Securities Exchange Act of 1934), (C) a proposed merger
or consolidation of the Company, or (D) a request,
nomination or suggestion of any one or more Beneficial Owner
of voting securities of the Company representing 20% or more
of the aggregate voting power of the voting securities of
the Company or the surviving corporation, as applicable))
cease for any reason to constitute 662/3% of the Board then
in office; or
(iii) there is consummated a merger or
consolidation of the Company (or any direct or indirect
subsidiary of the Company) with any other corporation, other
than a merger or consolidation which would result in the
record holders of the voting securities of the Company
outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) in substantially
the same proportions as their ownership immediately prior to
such merger or consolidation at least 75% of the combined
voting power of the voting securities of the Company or such
surviving entity or any parent thereof outstanding
immediately after such merger or consolidation; or
(iv) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of
the Company's assets, other than a sale or disposition by
the Company of all or substantially all of the Company's
assets to an entity at least 75% of the combined voting
power of the voting securities of which are owned by Persons
in substantially the same proportions as their ownership of
the Company immediately prior to such sale.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur in the event of a Management Change in Control. A Management
Change in Control shall mean a Change in Control pursuant to which Executive
(alone or with others) acquires or retains, directly or indirectly, the power
to direct or cause the direction of the management and policies of the Company
(whether through the ownership of voting securities, by contract, or
otherwise) and which is directly or indirectly attributable to a public
announcement by Executive (or others acting in concert with Executive) of an
intention to take actions which, if consummated, would constitute such
Management Change in Control. In addition, no "Change in Control" shall be
deemed to have occurred if there is consummated any transaction or series of
integrated transactions immediately following which the record holders of the
combined voting power of the Company's outstanding securities immediately
prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately following such
transaction or series of transactions.
"Person" shall mean any person (as defined in Section 3(a)(9) of the
Securities Exchange Act (the "Exchange Act"), as such term is modified in
Sections 13(d) and 14(d) of the Exchange Act) other than (1) any employee plan
established by the Company, (2) the Company or any of its affiliates (as
defined in Rule 12b-2 promulgated under the Exchange Act) prior to the
transaction resulting in the Change in Control, (3) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (4) a
corporation owned, directly or indirectly, by stockholders of the Company in
substantially the same proportions as their ownership of the Company.
"Beneficial Owner" shall mean beneficial owner as defined in Rule
13d-3 under the Exchange Act.
9. Nonalienation; Non-Assignment. 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. In addition, the Consulting
Services to be provided by Executive hereunder are unique and the services to
be provided hereunder may not be performed by other then Executive.
Accordingly, Executive may not assign or transfer any of his duties under this
Agreement.
10. Notice. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and, if (i) sent by registered
mail or certified mail, or (ii) personally delivered, or (iii) sent via
nationally recognized courier service, to the Company at its principal
executive offices, to the attention of its Chief Executive Officer, or to
Executive at the last address as reflected in the Company's records, as the
case may be.
11. Amendments; Binding Effect. No amendment, modification or
supplement to this Agreement shall be binding unless executed in writing by
both of the parties hereto. No waiver of any provision of this Agreement shall
constitute or be deemed a waiver of any other provision hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and upon the Company's successors (including, but not limited
to, any direct or indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business and/or assets of the
Company) and assigns.
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 internal laws of the State of Illinois
without regard to common law conflicts of laws principles.
14. WAIVER OF JURY TRIAL. THE COMPANY AND EXECUTIVE WAIVE THEIR
RIGHTS TO REQUEST A JURY TRIAL IN ANY LAWSUIT RELATING TO THIS AGREEMENT.
15. Entire Agreement; No Third-Party Beneficiaries. This Agreement
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof and (b) is not intended to confer upon any
person other than the parties hereto and other persons specifically enumerated
herein any rights or remedies hereunder.
16. Counterparts. The Agreement may be executed in two or more
counterparts, any one of which shall be deemed the original without reference
to the others.
[signatures appear on immediately following page]
IN WITNESS WHEREOF, Executive has set his hand, and the Company has
caused this Agreement to be executed in its name and on its behalf and its
corporate seal to be hereunto affixed and attested by its Secretary, all as of
the day and year first above written.
HARTMARX CORPORATION
By: /s/ XXXXXXX X. XXXXXX /s/ XXXXXX X. HAND
----------------------------- -----------------------------
Xxxxxxx X. Xxxxxx, Chairman Xxxxxx X. Hand
Compensation and Stock
Committee of the Board of
Directors
Attest:
/s/ XXXXX X. XXXXXXX
----------------------------
Xxxxx X. Xxxxxxx, Secretary
