EXHIBIT 10-F-6
EMPLOYMENT AGREEMENT
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This Agreement entered into as of the 31st day of August, 1995, by and
between HARTMARX CORPORATION, a Delaware corporation ("Hartmarx"), and XXXXX X.
XXXXXX ("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 Hartmarx; and
WHEREAS, upon the execution of this Agreement by Hartmarx and Executive the
terms and conditions of this Agreement shall control and govern the employment
relationship between Hartmarx 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. Employment Period. Hartmarx hereby employs Executive and Executive
hereby agrees to remain in the employ of Hartmarx for an approximate 16 month
consecutive term beginning on August 31, 1995, and continuing in effect through
December 31, 1996 (the "Agreement Period"). While Executive is employed by
Hartmarx during the Agreement
Period, Hartmarx shall use its best efforts to have the Board of Directors elect
Executive to the office(s) of Executive Vice President and Chief Financial
Officer of Hartmarx.
2. Performance of Duties. While he is employed by Hartmarx Executive
agrees that he shall devote his best efforts and full business time exclusively
to the business affairs of Hartmarx and its subsidiaries and shall perform his
duties faithfully and efficiently, subject to the direction of the Hartmarx
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 him
devoting his best efforts to his duties to Hartmarx.
3. Compensation. Subject to the terms and provisions of this Agreement,
during the Agreement Period, Executive shall be compensated for his services by
Hartmarx as follows:
(a) Executive's annual base salary shall not be less than his annual
base salary as of the date hereof (i.e., $200,000) and shall be
payable semi-monthly or more frequently, in arrears, subject to
all normal deductions and withholdings. Such annual base salary
may be increased at the discretion of
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the Compensation and Stock Option Committee of the Hartmarx Board
of Directors (the "Committee").
(b) Executive shall be entitled to a bonus in accordance with the
terms and conditions of the Hartmarx Management Incentive Plan
(the "MIP") and/or any successor plan.
(c) Executive shall be a participant in the Hartmarx Long Term
Incentive Plan (the "LTI Plan") for such period of time as it may
be in effect and in any successor to that plan.
4. Participation in Benefit Plans. The payments and participation
provided in Paragraph 3 hereof are in addition to any benefits to which
Executive shall be, or may become, entitled under any group hospitalization,
health, dental care, vacation or sick-leave plan, salary continuance or
disability plan, life or other insurance or death benefit plan, travel or
accident insurance arrangement, auto and/or liability insurance plan, auto lease
arrangement, or executive contingent compensation plan, including, without
limitation, any capital accumulation and termination pay programs, restricted or
stock purchase plan, retirement income or pension plan, or other present or
future group employee benefit plan or program of Hartmarx which key executives
are or shall become eligible; and Executive shall be eligible to receive during
the Agreement Period, all benefits and emoluments for which key executives are
eligible under every such plan, program or arrangement of Hartmarx, to the
extent permissible under the general terms
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and provisions of such plans or programs and in accordance with the provisions
hereof (all of such benefits and emoluments being hereinafter referred to as
"Fringe Benefits").
5. Noncompete and Confidentiality. Provided Hartmarx is not in default
hereunder, Executive shall not, during the Agreement Period:
(a) engage in any competitive activities, unless Executive is
discharged or resigns due to the occurrence of any of the events
set forth in Paragraph 7 hereof;
(b) disparage, discredit or otherwise publicly criticize Hartmarx or
any subsidiary thereof; or
(c) engage in any act, directly or indirectly, for purposes of
disparaging, ridiculing or bringing scorn upon Hartmarx, any
subsidiary thereof, or any of their respective officers,
directors, businesses, tradenames or trademarks.
For the purpose of this Paragraph 5, the term "competitive activities" shall
mean engaging 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 which substantially competes with the business or
activities of Hartmarx or any of its
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subsidiaries; provided, that shareholdings aggregating less than 5% of the
outstanding shares of any publicly held company shall not constitute
"competitive activities."
During and after the Agreement Period, Executive will not divulge or
appropriate to his own use or to the use of others or maliciously divulge any
trade or confidential or proprietary information pertaining to the business of
Hartmarx or of any of its subsidiaries.
Executive acknowledges that Hartmarx would be irreparably injured by a
violation of the provisions of this Paragraph 5 and agrees that Hartmarx shall
be entitled to an injunction restraining Executive from any actual or threatened
breach of this Paragraph 5 and to any other appropriate equitable remedy without
any bond or other security being required.
6. Discharge. If Executive is discharged by Hartmarx other than for
"Cause" (as hereinafter defined), or resigns due to the occurrence of any of the
events set forth in Paragraph 7 hereof:
(a) Executive shall be entitled to receive from Hartmarx (provided
Executive shall not be in breach of any provision of this Agreement
applicable to him after such discharge or resignation):
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(i) The then applicable salary provided for in Paragraph 3(a)
hereof for a period of twenty-four (24) consecutive months,
payable semi-monthly or more frequently, in arrears, commencing
on the date Executive's employment with Hartmarx is terminated.
(ii) The balance, if any, as of the date Executive's employment with
Hartmarx is terminated, of Executive's deferred compensation
account under any deferred compensation agreement between
Executive and Hartmarx.
(iii) An amount 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 for any
fiscal year ending prior to the year in which Executive's
employment with Hartmarx is terminated; plus (B) any amount
payable under the MIP (including the cash value, determined
without regard to any restrictions on the sale thereof, of
restricted stock) for the year in which Executive's employment
with Hartmarx is terminated calculated based on the assumption
that Hartmarx' actual results from the beginning of such year
to the date of termination (expressed as a percentage of
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achievement of projected or budgeted results for the same
period) would continue at the same rate until the end of the
year in which Executive's employment with Hartmarx is
terminated, plus (C) an amount equal to the bonus compensation
(including the cash value, determined without regard to any
restrictions on the sale thereof, of restricted stock) which
would be payable under the MIP for the year in which
Executive's employment is terminated calculated based on the
assumption that Hartmarx achieves its "Step-1" target level (as
defined in the MIP) for such year; plus (D) an additional
amount equal to the amount calculated in (C) above in the event
of the termination of Executive's employment after a Change in
Control (as defined herein). The amounts set forth in item (B),
(C) and (D) above shall be payable to Executive regardless of
whether Hartmarx actually achieves the performance levels upon
which the calculation of such amounts are based .
(iv) An amount 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 for
any fiscal
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year ending prior to such 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 for all uncompleted periods under
the LTI Plan, to the extent covered under the performance goals
for the performance period(s) in which such date of termination
occurs; plus (C) the aggregate value of all incentive
compensation (including the cash value, determined without
regard to any restrictions on the sale thereof, of restricted
stock) awards which would have been payable to Executive under
the LTI Plan for such performance period(s), calculated based
on the assumption that Hartmarx' 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 (C) above shall be payable to Executive
regardless of whether Hartmarx actually achieves the
performance level upon which the calculation of such amount is
based.
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(v) All Fringe Benefits (other than group medical/dental insurance)
for a period of twenty-four (24) consecutive months (or thirty-
six (36) months in the event of the termination of Executive's
employment after a Change in Control), commencing on the date
Executive's employment with Hartmarx is terminated; plus
(subject to Executive's continued payment of his share of any
premium with respect thereof) group medical/dental insurance
coverage equivalent to that provided at the time Executive's
employment with Hartmarx is terminated, until the earlier of
(A) the date twenty-four (24) months (or thirty-six (36) months
in the event of the termination of Executive's employment after
a Change in Control) after the date Executive's employment with
Hartmarx is terminated, or (B) the date covered medical/dental
benefits for Executive and Executive's dependents are payable
under any comparable medical insurance policy furnished to
Executive by a subsequent employer. Following the expiration of
the twenty-four or thirty-six month period (whichever is
applicable) described in the preceding sentence, Executive
shall be permitted to participate in any medical (including
dental and vision) plans maintained by Hartmarx in
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which he was participating immediately prior to his termination
of employment (if permitted under the terms of and/or policies
governing such plans and by applicable law) at his own cost
(i.e., without Hartmarx subsidization) until the earlier of his
sixty-fifth (65th) birthday or the commencement of his
employment (by other than Hartmarx). Nothing herein shall be
deemed to limit Executive's rights, if any, to thereafter
participate in any retiree medical plan then in effect.
The payments, if any, due in respect of items (ii), (iii) and (iv)
above shall be made not later than five (5) days after the date Executive's
employment with Hartmarx is terminated.
(b) In addition to Executive's entitlement to receive the aforesaid
payments and Fringe Benefits:
(i) All stock options (whether or not then fully exercisable)
granted to Executive under any of Hartmarx's stock option plans
prior to the date Executive's employment with Hartmarx is
terminated 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
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of such options (as set forth in the grant document
evidencing same);
(ii) All restricted stock granted to Executive prior to the date
Executive's employment with Hartmarx is terminated (and all
restricted stock to be awarded pursuant to Paragraph 6 hereof)
shall become fully vested and all restrictions thereon shall
lapse; and
(iii) The number of full and partial calendar months between the date
Executive's employment with Hartmarx is terminated and the date
that all payments due Executive pursuant to Paragraph 6(a)(i)
hereof are made (but not less than twenty-four (24) months, or,
in the event of the termination of Executive's employment after
a Change in Control, thirty-six (36) months) shall be counted
in determining the number of Executive's Years of Service for
benefit accrual purposes under the Hartmarx Retirement Income
Plan (RIP). In addition, any supplemental annual retirement
benefit theretofore authorized to be paid to Executive due to
ERISA limitations (SERP) 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 RIP.
In the event Executive shall elect to receive
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payment of his RIP benefits in the form of a joint and survivor
annuity, said supplemental annual benefit shall be paid in the
same form, and the amount of such annual income payable to
Executive and to his surviving spouse shall be adjusted so that
the value of such supplemental benefit is the actuarial
equivalent of the benefit which would otherwise be payable if
paid in the form of a single life annuity. Notwithstanding the
foregoing, in the event that Hartmarx thereafter elects to pay
a SERP benefit payable to any chief executive officer of
Hartmarx in the form of a discounted lump sum payment,
Executive shall have the option to receive his SERP benefit
paid in a similar manner.
For all purposes of this Agreement, the term "Cause" shall include any
material breach of this Agreement by Executive and/or any action or failure to
act on the part of Executive involving material malfeasance, nonfeasance (not
due to disability) or gross negligence having a material adverse effect on
Hartmarx.
7. Resignation for Good Reason. Executive may treat any of the following
events as a termination of his employment by Hartmarx without Cause, with the
consequences provided in Paragraph 6 hereof:
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(a) without Cause (as defined in Paragraph 6 hereof), the Board of
Directors of Hartmarx determines not to elect Executive to the
office(s) stated in Paragraph 1 hereof;
(b) [intentionally omitted]
(c) the provisions of Hartmarx' bylaws describing, or the relative duties
and responsibilities of, the office of Executive Vice President, Chief
Financial Officer are changed without Executive's consent;
(d) the assignment to Executive of any duties inconsistent with
Executive's status as Executive Vice President, Chief Financial
Officer of Hartmarx or a substantial adverse alteration in the nature
or status of Executive's responsibilities;
(e) any reduction by Hartmarx in Executive's annual base salary as in
effect on the date hereof or as the same may be increased from time to
time, except for across-the-board salary reductions similarly
affecting all executives of Hartmarx;
(f) the failure by Hartmarx, without Executive's consent, 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 Hartmarx, within seven (7)
days of the date such compensation is due; or
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(g) the failure by Hartmarx to continue to provide Executive with Fringe
Benefits substantially similar to those enjoyed by Executive under any
of Hartmarx' pension, life insurance, medical, health and accident, or
disability plans in which Executive was participating as of the date
hereof; the taking of any action by Hartmarx which would directly or
indirectly materially reduce or deprive Executive of any material
Fringe Benefit enjoyed by Executive or any beneficiary of Executive as
of the date hereof or to which Executive is entitled pursuant to this
Agreement; the failure by Hartmarx 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 Hartmarx to provide
Executive with the number of paid vacation days to which Executive may
then be entitled on the basis of years of service with Hartmarx in
accordance with Hartmarx' normal vacation policy in effect as of the
date hereof; except (as to all of the foregoing) for changes
(including termination) in such benefits and/or policies similarly
affecting all executives of Hartmarx.
(h) [intentionally omitted]
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Executive's right to treat any of the foregoing events as a termination of
his employment shall be exercised by notice given to Hartmarx after the
occurrence of such event.
8. Change in Control. Hartmarx further agrees to pay the severance
benefit described in this Paragraph 8 (the "Severance Payment") in the event of
Executive's termination of employment at any time during the twenty-four (24)
month period next following a Change in Control for any reason other than (i)
Executive's death, disability or retirement; (ii) by Hartmarx for Cause; or
(iii) by Executive for other than the occurrence of any of the events set forth
in Paragraph 7 hereof.
The Severance Payment shall be a lump sum payment equal to three (3) times
the annual base salary payable to Executive pursuant to Paragraph 3 hereof as of
the date Executive's employment with Hartmarx is terminated and shall be paid to
Executive, in lieu of any amounts otherwise payable under Paragraph 6(a)(i)
hereof, not later than five (5) days after the date Executive's employment with
Hartmarx is terminated. Executive shall also continue to be entitled to all
other payments, Fringe Benefits and entitlements set forth in Paragraphs
6(a)(ii)-(v) and Paragraphs 6(b)(i)-(iii) hereof in accordance with the
provisions of said Paragraphs.
A Change in Control shall be deemed to have occurred during the Agreement
Period if:
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(a) any person, as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, other than a trustee or
other fiduciary holding securities under an employee benefit plan of
Hartmarx, is or becomes the beneficial owner, as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended, directly or
indirectly, of securities of Hartmarx representing 25% or more of the
combined voting power of Hartmarx' then outstanding securities; or
(b) during any period of two consecutive years (not including any period
prior to the date of this Agreement), individuals who at the beginning
of such period constitute the Board of Directors of Hartmarx ("Board")
and any new director whose election by the Board or nomination for
election by the stockholders of Hartmarx was approved by a vote of at
least two-thirds (2/3) of the directors who were directors at the
beginning of the period, cease for any reason to constitute a majority
thereof; or
(c) the business of Hartmarx is disposed of pursuant to a partial or
complete liquidation of Hartmarx, a sale of all or substantially all
of its assets (including stock of its subsidiaries), or otherwise.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur in the event of a Management
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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.
Notwithstanding any other provision of this Agreement, in the event that
any payment or benefit received or to be received by Executive in connection
with the termination of the Executive's employment after a Change in Control
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with Hartmarx, any person whose actions result in a Change in
Control or any person affiliated with Hartmarx or such person, all such payments
and benefits, including the Severance Payment, being hereinafter called "Total
Payments") would be subject, in whole or part, to any excise tax (the "Excise
Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), then the Severance Payment shall be reduced to the extent
necessary so that no portion of the Total Payments is subject to the Excise Tax
(after taking into account any reduction in the Total Payments provided by
reason of section 280G of the Code in such other
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plan, arrangement or agreement), provided, however, that there shall be no
reduction to the Severance Payment unless (A) the net amount of such Total
Payments, as so reduced, and after deduction of the net amount of federal, state
and local income tax on such reduced Total Payments is greater than (B) the
excess of (i) the net amount of such Total Payments, without reduction, but
after deduction of the net amount of federal, state and local income tax on such
Total Payments, over (ii) the amount of Excise Tax to which the Executive would
be subject in respect of such Total Payments. For purposes of determining
whether and the extent to which the Total Payments will be subject to the Excise
Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the
Executive shall have effectively waived in writing prior to the date Executive's
employment with Hartmarx is terminated shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account which in the opinion
of tax counsel selected by Executive does not constitute a "parachute payment"
within the meaning of section 28OG(b)(2) of the Code, (including by reason of
section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no
portion of such Total Payments shall be taken into account which constitutes
reasonable compensation for services actually rendered (within the meaning of
section 280G(b)(4)(B) of the Code) in excess of the Base Amount (as defined in
section 280G(b)(3) of the Code) allocable to such reasonable compensation, and
(iii) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be
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determined by Executive in accordance with the principles of sections 280G(d)(3)
and (4) of the Code. Prior to the payment of the Severance Payment as provided
in Paragraph 8 hereof, Hartmarx shall provide the Executive with its calculation
of the amounts referred to in this paragraph and such supporting materials as
are reasonably necessary for the Executive to evaluate Hartmarx' calculations.
If the Executive objects to Hartmarx' calculations, Hartmarx shall pay to the
Executive such portion of the Severance Payments (up to 100% thereof) as the
Executive determines is necessary to result in the Executive receiving the
greater of clauses (A) and (B) of this paragraph.
9. 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.
10. 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
Hartmarx at its principal executive offices, to the attention of its General
Counsel, or to Executive at the last address filed by him in writing with the
Committee, as the case may be.
11. Nonalienation. The interests of Executive under this Agreement are
not subject to the claims of his
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creditors, other than Hartmarx and its subsidiaries, and may not otherwise be
voluntarily or involuntarily assigned, alienated or encumbered.
12. Successors. This Agreement shall be binding upon, and inure to the
benefit of, Hartmarx and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of Hartmarx's assets and business.
13. Prior Agreements. This Agreement cancels any agreements entered into
between the parties hereto prior to the day and year first above written.
14. 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.
15. Applicable Law. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Illinois.
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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.
17. Attorney's Fees. Hartmarx will pay or reimburse Executive for all
legal fees and expenses incurred to obtain any benefit (including but not
limited to the Severance Payment) to be provided to Executive pursuant to this
Agreement.
18. 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.
19. 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. Hartmarx
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 Hartmarx.
20. Mitigation. In no event shall the payments to be made and the
benefits to be provided by Hartmarx under this Agreement be reduced by
Executive's receipt of any
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compensation or benefits from other employment following the termination of
Executive's employment with Hartmarx.
IN WITNESS WHEREOF, Executive has hereunto set his hand, and Hartmarx 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 Secretary, all as of
the day and year first above written.
_________________________
Xxxxx X. Xxxxxx
Attest: HARTMARX CORPORATION
_______________________ By:______________________
Xxxx X. Xxxxx, E.O. Hand, Chairman
Secretary and Chief Executive
Officer
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