EXHIBIT 10-G-2
 
November 19, 2008
 
Mr. James T. Conners
Vice President, Controller
Hartmarx Corporation
101 North Wacker Drive
Chicago, Illinois 60606
 
Dear Jim:
 
Hartmarx Corporation ("Hartmarx") has been authorized by its Board of Directors
to take appropriate steps approved by the Compensation and Stock Option
Committee to induce your continued attention to your assigned duties as an
important Company executive in the event of a potential Change in Control,
although not now contemplated, of Hartmarx.
 
Accordingly, if you agree to remain employed by Hartmarx and/or any subsidiary
of Hartmarx (collectively, the "Company") until a Change in Control, Hartmarx
agrees to pay you the severance benefit described below ("Severance Payment") in
the event of the termination of your employment at any time during the
twenty-four (24) month period next following a Change in Control for any reason
other than (i) your death, disability or retirement; (ii) by the Company for
Cause (as hereinafter defined); or (iii) by you for other than Good Reason (as
hereinafter defined).
 
The initial term of this Agreement continues for one year, and shall be
automatically extended each day by one day to create a new one year term until
the Company delivers written notice to you or you deliver written notice to the
Company, in either case, to the effect that the term of this Agreement shall
expire on a date specified in the notice that is not less than twelve (12)
months after the date the notice is delivered to the Company or you,
respectively, provided, however, that if a Change in Control shall occur during
the initial or extended period, then this Agreement shall continue for a period
of twenty-four (24) months beyond the month in which such a Change in Control
shall be deemed to have occurred, and provided further that if an Imminent
Control Change Date (as defined below) occurs before the end of the term of this
Agreement, then the notice not to extend this Agreement shall be void and of no
further effect.  "Imminent Control Change Date" means any date on which (i) the
Board of Directors of the Company adopts a resolution by vote of a majority of
Directors at a meeting at which a quorum is present to the effect that an
Imminent Control Change Date for purposes of this Agreement has occurred; (ii)
the Company enters into an agreement, the consummation of which would result in
a Change in Control of the Company; or (iii) such resolution or agreement
remains effective and unrevoked.  In the event that such resolution or agreement
is revoked or declared ineffective, the Imminent Control Change Date shall be
deemed to no longer to exist.  A "Change in Control" shall be deemed to have
occurred if:

 
 
(A)
 
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

 

 
 

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(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 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 66b% 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 (i) an actual
or threatened election contest, including a consent solicitation, relating to
the election or removal of one or more members of the Board, (ii) a "tender
offer" (as such term is used in Section 14(d) of the Securities Exchange Act of
1934), (iii) a proposed merger or consolidation of the Company, or (iv) 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 at least 66b% of the Board then
in office; or
       
(C)
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
       
(D)
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 you (alone or with others)
acquire or retain, 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 you (or others acting in
concert with you) 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 (i) any employee plan established by
the Company, (ii) 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, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the same proportions
as their ownership of the Company.

 
 

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"Beneficial Owner" shall mean beneficial owner as defined in Rule 13d-3 under
the Exchange Act.
 
The Severance Payment will be equal to (i) 50% of your Annual Compensation plus
one-twelfth (1/12) of your Annual Compensation for each of your full or partial
years of employment by the Company at the time of your termination, up to twelve
years if you are under age 50, otherwise, up to eighteen years; plus (ii) the
excess of the value of all shares of Hartmarx common stock issuable upon
exercise of then outstanding stock options granted to you under any Hartmarx
stock option plan (whether or not then exercised or fully exercisable), over the
aggregate exercise price of such options.  All such options shall be cancelled
upon the making of said payment.  For purposes of calculating your Severance
Payment, the term "Annual Compensation" means the average annual rate of
compensation payable to you by the Company for the three (3) calendar years
immediately preceding the calendar year in which a Change in Control occurs,
including, without limitation, all compensation income recognized as a result of
your exercise of Hartmarx stock options (or Stock Appreciation Rights) or the
sale of the stock so acquired, or earned by you but not paid for any reason
other than your agreement to postpone and defer such payment.  In the event that
you have not been employed by the Company for at least three (3) calendar years
immediately preceding the calendar year in which a Change in Control occurs,
"Annual Compensation" shall mean the average annual rate of compensation payable
to you by the Company for such period of time as you have been employed by the
Company immediately preceding the calendar year in which a Change in Control
occurs, including, without limitation, all compensation income recognized as a
result of your exercise of Hartmarx stock options (or Stock Appreciation Rights)
or the sale of the stock so acquired, or earned by you but not paid for any
reason other than your agreement to postpone and defer such payment.
 
In addition, and with reference to Internal Revenue Code Section 409A, you and
the Company agree that:
 
(a)           Notwithstanding anything to the contrary set forth in clause (i)
and clause (ii) in the immediately preceding paragraph or elsewhere in this
Agreement, your entitlement to a series of installments payments, if any, shall
be treated and shall be deemed to be an entitlement to a series of separate
payments within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the "Code") and the regulations thereunder.
 
(b)           Any Severance Payments paid within the later of (i) 2-1/2 months
of the end of the Company's taxable year in which your severance from employment
occurred, or (ii) 2-1/2 months of the end of your taxable year in which your
severance from employment occurred shall be exempt from Section 409A and shall
be paid in accordance with this Agreement.  Severance Payments subject to this
paragraph (b) shall be treated and shall be deemed to be an entitlement to a
separate payment within the meaning of Section 409A of the Code and the
regulations thereunder.
 
(c)           To the extent Severance Payments are not exempt from Section 409A
under paragraph (b) above, any benefits paid in the first 6 months following
your severance from employment that are equal to or less than the lesser of the
amounts described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and
(2) shall be exempt from Section 409A and shall be paid in accordance with this
Agreement.  Severance Payments subject to this paragraph (c) shall be treated
and shall be deemed to be an entitlement to a separate payment within the
meaning of Section 409A of the Code and the regulations thereunder.
 
(d)           To the extent Severance Payments are not exempt from Section 409A
under paragraphs (b) or (c) above, any benefits paid equal to or less than the
applicable dollar amount under Section 402(g)(1)(B) of the Code for the year of
severance from employment shall be exempt from Section 409A in accordance with
Treasury Regulation Section 1.409A-1(b)(9)(v)(D) and shall be paid in accordance
with this Agreement.  Severance Payments subject to this paragraph (d) shall be
treated and shall be deemed to be an entitlement to a separate payment within
the meaning of Section 409A of the Code and the regulations thereunder.
 
(e)           To the extent Severance Payments are not exempt from Section 409A
pursuant to paragraphs (b), (c) or (d) above, and to the extent you are a
"specified employee" (as defined below), payments due to you under this
Agreement shall be paid in a lump sum after six months have elapsed

 
 

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following your severance from employment (other than for Death); provided,
however, that any payments not made during the six (6) month period described in
this paragraph (e) due to the 6-month delay period required under Treasury
Regulation Section 1.409A-3(i)(2) shall be made in a single lump sum as soon as
administratively practicable after the expiration of such six (6) month period,
with interest thereon computed at the rate set forth in the first full paragraph
on page 6 hereof.
 
(f)           For purposes of this Agreement, any reference to severance of
employment or termination of employment shall mean a "separation from service"
as defined in Treasury Reg. Section 1.409A-1(h).  For purposes of this
Agreement, the term "specified employee" shall have the meaning set forth in
Treasury Reg. Section 1.409A-1(i).  The determination of whether you are a
"specified employee" shall be made by the Employer in good faith applying the
applicable Treasury regulations.
 
(g)           Notwithstanding anything to the contrary set forth in this
Agreement, and in addition to any tax gross-up payments to which you may be
entitled under any other agreement between you and Company, if any of the
amounts payable to you hereunder are or become subject to excise or other tax
liability (including interest and penalties) that may be assessed by the IRS
pursuant to Section 409A or any other section of the Code and imposed upon you,
the Company shall reimburse you and pay you a gross-up in an amount sufficient
so that such payments and benefits received by you hereunder will be so received
without reduction for any such taxes, interest or penalties.  Such gross-up
payment shall be made promptly after the assessment of such excise or other tax
liability (including interest and penalties); however, in any event, such
gross-up payment shall be made no later than the end of your taxable year next
following the taxable year in which the related taxes, interest or penalties are
remitted.
 
Termination of your employment for "Cause" means termination because of (i) your
willful and continued failure to substantially perform your duties with the
Company (other than resulting from your disability or after you have notified
the Company that you intend to terminate your employment for Good Reason) after
a written demand for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the Board believes you
have not substantially performed your duties; or (ii) your willful engaging in
wrongful conduct which is demonstrably and materially injurious to the Company;
provided, however, that no act or failure to act on your part shall be deemed
"willful" unless done, or omitted to be done, in bad faith and without
reasonable belief that your action or omission was in the best interest of the
Company.  In the event that the existence of Cause shall become an issue in any
action or proceeding between the parties, the Company shall have the burden of
establishing by clear and convincing evidence that the actions or omissions did
in fact occur and do constitute Cause and that you failed to correct such
conduct.  Unless the Company so establishes, by clear and convincing evidence,
any termination of employment shall be deemed a termination by the Company
without Cause for all purposes of this Agreement.  Termination of your
employment for "Good Reason" means your termination after the Company has taken
any action without your express written consent, which directly or indirectly
reduces or deprives you of any material benefit enjoyed by you or any of your
beneficiaries immediately prior to a Change in Control, including, without
limitation, the occurrence of any of the following, each of which shall be
deemed to be a material negative change in the terms and conditions of your
employment:
 

 
(A)
the assignment to you of any duties inconsistent with your status as Vice
President, Controller, Hartmarx Corporation, or a substantial adverse alteration
in the nature or status of your responsibilities from those in effect
immediately prior to a Change in Control;
       
(B)
a reduction in your annual base salary and/or bonus opportunity as in effect
immediately prior to a Change in Control;
       
(C)
the Company's requiring you to be based at a location more than 50 miles from
your principal place of employment immediately prior to a Change in Control;
       
(D)
the Company's failure to:  (i) pay you any portion of your compensation,
including bonus and/or deferred compensation, within seven (7) days of its due
date; (ii) continue any compensation or benefit plan in which you participate,
or to continue your participation
     

 

 
 

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therein on a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of your participation relative to other
participants; (iii) continue to provide you with benefits substantially similar
to those you enjoy at the time of a Change in Control; (iv) to provide you with
the number of paid vacation days to which you may then be entitled on the basis
of years of service with the Company in accordance with the Company's normal
vacation policy in effect at the time of a Change in Control; or (v) to obtain a
satisfactory agreement from any successor to assume and agree to perform this
Agreement.

 
If you are employed by the Company upon a Change in Control and simultaneously
or thereafter become eligible to receive a Severance Payment, it will be paid to
you, in a lump sum, immediately upon your termination of employment in addition
to all other amounts to which you may be entitled under any employment
agreement(s) and/or compensation plan(s) of the Company.  Hartmarx will also pay
or reimburse you for all legal fees, accounting, expert witness or other fees,
costs and expenses which you incur (together with an additional amount such that
the net amount retained by you, after deduction of any federal, state and local
income tax upon the payment provided by this sentence shall be equal to the
amount you are paid or reimbursed pursuant to this sentence) to obtain any
benefit (including the Severance Payment) to be provided to you pursuant to this
Agreement.  If the Company fails to pay any amount provided under this Agreement
when due, the Company shall pay interest, compounded monthly, on such amount at
a rate equal to the lesser of (a) (i) the highest rate of interest charged by
the Company's principal lender on its revolving credit agreements as in effect
from time to time during the period of such nonpayment plus 200 basis points, or
(ii) in the absence of such a lender, 300 basis points over the prime commercial
lending rate announced by The Wall Street Journal in effect from time to time
during the period of such nonpayment, or (b) the highest legally-permissible
interest rate allowed to be charged under applicable law.  If you should die
while any amount is payable to you hereunder, such amount shall be paid to your
devisee, legatee or other designee or, if there is no such designee, to your
estate.
 
Nothing in this Agreement is intended to give you the right to be retained in
the employ of Hartmarx or any of its subsidiaries or to interfere with the
Company's right to discharge you at any time for any reason.  Prior to a Change
in Control, you will have no right or interest whatsoever in or to the Severance
Payment or any portion thereof.
 
The Company shall establish irrevocable standby letters of credit issued by
Wachovia Bank, National Association, or another bank having combined capital and
surplus in excess of $500 million to secure the Company's obligations to
you.  Said letters of credit shall be established prior to an Imminent Control
Change Date, and shall be as follows:
 

 
(A)
one letter of credit, in substantially the form attached hereto, to secure the
payment of legal fees and related tax gross-up payment as provided for under
this Agreement in the amount of $5 million, which amount shall be available to
you and each other person covered by the letter of credit; and
       
(B)
one letter of credit, in substantially the form attached hereto, to secure the
other payments and benefits provided for under this Agreement in an amount which
is not less than the amount of severance and other benefits (the "Severance
Benefits") that would be payable to you pursuant to this Agreement if you were
terminated by the Company without Cause following a Change in Control, which
amount shall be available solely to you.

 
 
The amount of the letter of credit described in paragraph (B) above, shall be
increased by the Company from time to time so that such amount is never less
than the amount of your Severance Benefits.  The letters of credit described in
paragraphs (A) and (B) may expire on the date on which the Imminent Control
Change Date ceases to exist.  Upon a Change in Control, the letters of credit
shall remain in effect and shall not be subject to termination prior to their
respective Expiry Dates as provided in each such letter of credit.  The Company
shall establish an escrow account for each of the letters of credit at the time
the letters of credit are established by entering into escrow agreements with
LaSalle Bank National Association,

 
 

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or another bank having combined capital and surplus in excess of $100 million in
substantially the forms attached hereto.
 
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Upon receiving this letter, please sign both copies where indicated
(acknowledging your agreement to the foregoing) and return one fully executed
counterpart as soon as possible.  Upon your execution and return of this letter,
the terms and conditions of this letter shall control and govern and shall
replace and supersede all prior agreements between you and the Company relating
to the subject matter hereof.
 

 
Very truly yours,
     
HARTMARX CORPORATION
             
By:
/s/ HOMI B. PATEL
     
Hoi B. Patel, Chairman and
AGREED AND ACCEPTED:
 
Chief Executive Officer
           
/s/ JAMES T. CONNERS
   
James T. Conners
 
Vice President, Controller
 
Hartmarx Corporation