Exhibit 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Employment Agreement") is made and entered
effective as of this 3rd day of May 2000, by and between HA-LO Industries,
Inc., an Illinois corporation ("Employer"), and Xxxx Xxxxxxxxx (hereafter
"Executive").
WHEREAS, the Employer is engaged in the business of the sale, marketing
and distribution of advertising specialty, premium and promotional products,
promotion marketing, brand strategy and identity, presence marketing, consumer
event marketing and telemarketing (the "Business");
WHEREAS, the Employer provides products and services to a wide range of
customers throughout the world, and during the course thereof, Employer has
established (and will continue to establish) customer bases, customer lists and
ongoing relationships with its customers;
WHEREAS, contemporaneously with the execution hereof, a subsidiary of the
Employer has merged with Xxxxxxxxx.xxx, Inc., a Delaware corporation f/k/a
XxxXxxxx.xxx, Inc. ("SBC"), pursuant to that certain Agreement and Plan of
Merger and Plan of Reorganization dated January 17, 2000 by and among such
subsidiary, the Employer and SBC (the "Merger Agreement");
WHEREAS, Executive has had, as an employee of SBC, direct and substantial
exposure to the customers and prospective customers of SBC;
WHEREAS, Executive will continue to be granted direct and substantial
exposure to the customers and prospective customers of the Employer, and during
the term of this Employment Agreement, Executive may have direct and substantial
exposure to the customers and prospective customers of other entities owned or
controlled by the Employer (all such entities, inclusive of the Employer, are
hereafter collectively "Related Entities");
NOW, THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
mutually acknowledged, Executive and the Employer, intending to be legally
bound, hereby agree as follows:
1. Recitals. Each of the above recitals is incorporated in this Employment
Agreement and shall be binding upon the parties hereto. This Employment
Agreement supersedes any and all previous agreements, understandings and
commitments relating to Executive's employment with the Employer. Executive
understands and agrees that each such agreement, understanding and commitment
relating to his continued employment with the Employer is revoked and cancelled,
with no further rights or obligations on the part of either party thereto.
Executive acknowledges and agrees that
Executive's execution and performance of this Employment Agreement is a material
inducement to and a condition of the Employer's execution of the Merger
Agreement.
2. Employment; Duties. The Employer hereby agrees to employ Executive, and
Executive hereby accepts such employment, as the Chief Operating Officer of
Employer, on the terms and subject to the conditions set forth herein. During
the "Term" (as hereafter defined), Executive shall devote his best efforts and
substantially all of his business time to the performance of all duties
pertaining to such position as are customary for similarly situated executives
of companies engaged in businesses similar to the Employer or as shall be
assigned to him consistent with such position from time to time by the chief
executive officer of the Employer (the "CEO"). Further, Executive shall not be
gainfully employed other than pursuant to this Agreement. However, Executive may
be involved in charitable work, service on boards of directors of other
companies, manage his personal investments, offer guidance to others and
wind-down his historical business activities (other than the business of SBC) so
long as such activities do not unreasonably interfere with Executive's time
commitment to the Employer as contemplated by this Agreement and do not
constitute a breach by Executive of any of his covenants contained in Sections 8
through 12 hereof. Any compensation or remuneration received by Executive on
account of the activities in the immediately preceding sentence may be retained
by Executive. The performance of Executive's duties hereunder shall be, at all
times, subject to the supervision, advice and direction of the CEO.
Executive shall have the right during the Term to nominate himself and one
other person to serve on the Board; provided, however, that the right to
nominate a second person to serve on the Board shall terminate if and when the
number of shares of Common Stock of the Employer owned of record by Coventry
Partners Family Limited Partnership is reduced to below four and one-half
percent (4-1/2%) of the then outstanding shares of Common Stock of the Employer.
Subject to the fiduciary duties of the Board as required under applicable law,
the Employer agrees to cause such nominees to be included in the Board and
management slate of nominees presented to stockholders for election as
directors.
3. Compensation.
(a) Base Salary. In consideration of the services to be rendered by
Executive to the Employer pursuant to this Agreement, during the Term, the
Employer agrees to pay to Executive an annual Base Salary of Three Hundred
Thousand Dollars ($300,000) (subject to applicable withholdings), payable
in installments in accordance with the Employer's normal payroll practices
("Base Salary").
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(b) Bonus. Executive shall participate, in a manner commensurate
with other key executives of the Employer, in an Executive Bonus Plan to
be adopted by the Employer and mutually agreeable to Executive and the CEO
("Bonus Compensation").
4. Fringe Benefits. Subject to applicable law, and the rules and policies
adopted by the Board from time to time, the Employer shall provide Executive
with such non-performance related fringe benefits, as are provided generally to
the executive employees of the Employer, as a group.
5. Expense Reimbursement. Subject to the rules, policies and regulations
of the Employer in effect from time to time and applicable to its employees,
Executive shall be entitled to reimbursement by the Employer of the reasonable
and customary travel, business entertainment and other business-related expenses
incurred by him in carrying out his duties under this Employment Agreement.
6. Termination.
(a) Termination. The term of this Employment Agreement (the "Term")
and Executive's employment hereunder shall commence as of the date hereof
and, except as otherwise provided herein, terminate at the earlier of (i)
the third (3rd) anniversary of the date hereof, or (ii) the first to occur
of any of the following events: (A) the mutual agreement of the Employer
and Executive to so terminate this Employment Agreement, (B) the death or
"disability" (as hereafter defined) of Executive, (C) the Employer's
written election to terminate this Employment Agreement and Executive's
employment hereunder "for Cause" (as hereafter defined) or not for Cause
or (D) the Executive's written election to terminate this Employment
Agreement and Executive's employment hereunder "for Good Reason" (as
hereinafter defined) or without Good Reason, provided, however, that
Executive may not terminate without Good Reason prior to the first
anniversary of the date hereof.
(b) Disability Defined. As used in this Employment Agreement, the
term "disability" shall mean any mental, physical or emotional disability
or condition which shall last for a continuous period of one hundred and
eighty (180) days or more, which disability prevents the Executive from
substantially performing his duties hereunder. A disability shall be
determined by a physician selected by the Board and reasonably acceptable
to Executive who shall be a specialist in internal medicine.
(c) "For Cause" Defined. As used in this Employment Agreement, the
term "for Cause" shall mean any one or more of
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the following: (1) Executive's conviction of a felony or (2) Executive's
refusal to comply with the reasonable directives of the Board of Directors
of the Employer (the "Board") which are consistent with Executive's
position, and failure to cure same within thirty (30) days following
written notice by the Employer. Any decision to terminate for Cause shall
only be made by the Board, in good faith, based upon the facts and after
having given Executive a reasonable opportunity to appear before the Board
to discuss, and make a presentation with respect to, and to cure the
matter underlying any prospective termination for Cause.
(d) "For Good Reason" Defined. As used in this Employment Agreement,
the term "for Good Reason" shall mean any one or more of the following:
(1) any material change in the duties of Executive inconsistent with his
position or reduction in Base Salary, (2) a reassignment of Executive to a
primary business location outside of the metropolitan Chicago area or (3)
upon the Employer's breach of any material representation or covenant set
forth in this Employment Agreement and failure to cure same within thirty
(30) days following written notice by Executive.
(e) Effect Upon Termination.
(i) In the event the Term of this Employment Agreement is
terminated by reason of death or disability, all rights, duties and
obligations of the parties pursuant to this Employment Agreement
shall terminate, except to the extent of (A) Executive's Base
Salary, Bonus Compensation and unpaid business expenses otherwise
payable pursuant to the terms of Section 5 hereof through the date
of termination and (B) death or disability benefits receivable
pursuant to the Employer's benefit plans.
(ii) In the event the Term of this Employment Agreement is
terminated (x) by the Employer for Cause or (y) by Executive other
than for Good Reason, death or disability, (A) all duties and
obligations of the Employer hereunder shall terminate, except to the
extent of Executive's Base Salary, Bonus Compensation, benefits and
unpaid business expenses otherwise payable pursuant to the terms of
Section 5 hereof through the date of termination and (B) all other
rights and remedies of the Employer shall remain in full force and
effect, including but not limited to rights arising from breach of
contract (but only if the event resulting in termination occurs
prior to the first anniversary of the date hereof) and rights
arising pursuant to the matters discussed in Section 6(f) hereof,
all such remedies being cumulative.
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Notwithstanding anything to the contrary herein, money damages and
the remedies for breach of contract (other than with respect to a
breach of Sections 8 through 12 hereof) shall not be available if
the event resulting in termination occurs on or after the first
anniversary of the date hereof.
(iii) In the event that the Term of this Employment Agreement
is terminated (x) by Executive for Good Reason or (y) by the
Employer other than for Cause, (A) all duties and obligations of
Executive hereunder (other than pursuant to Sections 8 and 12) shall
terminate and Executive shall continue to be entitled to receive his
Base Salary, Bonus Compensation and benefits under the Employer's
benefit plans through the end of the Term (as if not terminated), as
well as all unpaid business expenses, and (B) all other rights and
remedies of Executive shall remain in full force and effect,
including but not limited to rights arising from breach of contract,
all such remedies being cumulative.
(iv) In the event Executive's employment shall terminate by
reason of the expiration of the Term, unless otherwise provided
herein, Executive shall not be entitled to severance pay
notwithstanding any contrary policies and practices of HA-LO or the
Employer.
(v) Except in the case of clause (iii) above, all compensation
payable upon the termination of the Term of the Agreement shall be
paid to Executive within thirty (30) days of the date of the
termination of the Term.
(f) Return of Shares. Pursuant to the Merger Agreement, Coventry
Partners Family Limited Partnership, a Delaware limited partnership
("Executive's Partnership"), is being issued shares of Common Stock, no
par value, and shares of Series A Convertible Preferred Stock, no par
value, of HA-LO (the "Merger Shares"). Concurrently with the execution of
this Employment Agreement, Executive's Partnership, the Employer and
American National Bank and Trust Company of Chicago, as escrow agent, are
entering into an Employment Escrow Agreement pursuant to which the Merger
Shares described therein (the "Escrow Shares") shall be deposited into
escrow and subject (in whole or in part) to forfeiture and return to HA-LO
in the circumstances described therein. Executive agrees and acknowledges
that the disposition of the Escrow Shares (and any proceeds, if any, from
the sale or other transfer thereof) shall be governed by such Employment
Escrow Agreement and that Executive shall not, in his
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individual capacity, have any authority or rights under or pursuant to
such escrow agreement.
(g) Survival of Covenants. Notwithstanding anything herein to the
contrary, upon termination of the Term of this Employment Agreement for
any reason (other than in the circumstances described in Section 6(e)(iii)
hereof), the provisions of this Section 6, and the terms and conditions of
Sections 8 through 15 of this Employment Agreement, shall remain in full
force and effect, and shall be binding on and enforceable against
Executive and the Employer as though (for purposes of Sections 8 through
15) such termination had not occurred. Executive hereby acknowledges that
his agreement to the survival of the terms and conditions of Sections 8
through 15 of this Employment Agreement constitute a material inducement
to the Employer to enter into this Employment Agreement.
7. Executive's Representations. Executive hereby represents and warrants
to and with the Employer that Executive is not bound by or subject to, and that
he has not entered into, any covenants, agreements or restrictions which would
be breached or violated by Executive's execution of this Employment Agreement or
by Executive's performance of his duties hereunder. Without limiting the
generality of the foregoing, Executive is not subject or party to any continuing
covenants, agreements or restrictions, whether or not limited in time or
geographical scope, arising out of any prior work engagement involving Executive
and another party. Executive further represents and warrants to and with
Employer that, as of the date hereof, he has not breached or violated any
representation, warranty, covenant or agreement set forth in this Employment
Agreement, and as of the date hereof there does not exist any breach or
violation of any representation, warranty, covenant or agreement set forth in
this Employment Agreement.
8. Confidentiality. Executive acknowledges that by virtue of the corporate
offices and positions he maintains pursuant to the terms of this Employment
Agreement and while employed by SBC and Employer, he has been and will continue
to be granted access to, and has learned and may continue to learn of,
information regarding the Related Entities which is of a confidential, private
or sensitive nature (e.g., business strategies and goals, financial projections
and objectives, advertising campaigns and strategies, graphic designs and other
materials, use and utilization of tradenames, trademarks, patents, copyrights
and other registrable properties, pricing systems, product and service costs,
product and service designs, product and service margins, customer lists and
records, customer information, purchaser lists and records, purchaser
information, xxxx-ups and margins, marketing techniques, supplier and vendor
information, product content, and, generally, such other confidential
information,
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trade secrets and proprietary information) which give, or may give, the Related
Entities an advantage in the marketplace against competitors (all of the
foregoing, together with such other data and information intended by its holder
to constitute an asset or property the rights in or to which are protectable as
against third parties, are hereafter collectively referred to as "Proprietary
Information"). The term Proprietary Information does not include any information
generally known in the Employer's industry or publicly available other than as a
result of a wrongful disclosure by Executive. Executive agrees that during the
Term and thereafter, for any reason whatsoever, Executive shall hold and keep
confidential all Proprietary Information previously known to him or at any time
hereafter disclosed to or learned by him, and Executive shall not directly or
indirectly disclose such Proprietary Information to any person, firm, court,
governmental agency or corporation, or in any manner use the same, except in
connection with the business and affairs of Employer, as required by law or
legal process or in connection with any legal proceeding between Executive and
the Employer pertaining to this Agreement.
9. Non-Competition. Subject to Section 6(e)(iii) hereof, Executive
covenants that during the Term and for a period of two (2) years thereafter,
Executive shall not, directly or indirectly, anywhere in the world, for his own
account or as an employee, consultant, agent, partner, joint venturer, owner or
officer of any other person, firm, partnership, corporation or other entity, or
any other capacity, in any way conduct or engage in any business directly
competitive (i) with the Business, (ii) with any other business actually engaged
in by a Related Party during the Term or (iii) with the business reasonably
contemplated or anticipated to be engaged in by the Related Entities during the
period from the date of this Employment Agreement through ______ __, 2005 of
which Executive has actual knowledge during the Term or in which Executive has
been involved, and for which substantial steps, actions or documentation (such
as, without limitation, research and development, hiring and preparation of a
business plan) have taken place or been prepared prior to termination of
employment ((i), (ii) and (iii), collectively, the "Post-Termination Business").
Notwithstanding any other provision of this Agreement, nothing in this Agreement
will restrict or be construed to restrict or preclude Executive from engaging or
participating in any business which is not engaged in the Post-Termination
Business directly or over the Internet.
10. Non-Solicitation. Subject to Section 6(e)(iii) hereof, Executive
hereby covenants and agrees that during the Term and for a period of two (2)
years thereafter, he shall not, as it relates to the Post-Termination Business,
directly or indirectly, for his own account, or as an employee, consultant,
agent, partner, joint venturer, owner or officer of any other person, firm,
partnership, corporation or other entity, or in any other capacity, in any way
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solicit, any person or entity which then is, or at any time prior thereto was, a
customer or Prospective Customer of a Related Entity which Executive, directly
or indirectly, solicited or sold products or services to prior to or during the
Term hereof. For purposes of this Employment Agreement, the term "Prospective
Customer" shall mean any person, firm, partnership, corporation or other entity
to which Employee has made a written presentation or proposal, or presented
written materials at a meeting, within the one (1) year period immediately prior
to the expiration of the Term.
11. Non-Disturbance. Subject to Section 6(e)(iii) hereof, Executive hereby
covenants and agrees that during the Term and for a period of two (2) years
thereafter, he shall not, directly or indirectly, for his own account, or as an
employee, consultant, agent, partner, joint venturer, owner or officer of any
other person, firm, partnership, corporation or other entity, or in any other
capacity, engage, hire or solicit any employee of a Related Entity (other than
Xxxx Xxxxxxx) which solicitation or contact may reasonably lead such employee to
terminate his employment with such Related Entity.
12. Inventions and Other Matters. Executive agrees that all ideas,
inventions, artwork, images, designs, concepts, discoveries or improvement
(collectively the "Inventions") which Executive, individually or with others,
may originate or develop (or has heretofore originated and developed) while
employed with Employer, relating to the Business or any other business actually
engaged in by a Related Party during the Term, or a Related Entity's actual or
demonstrably anticipated research or development, shall belong to and be the
sole property of the Employer. Executive further agrees to promptly disclose
each such Invention to the Employer and to execute such applications,
assignments and other documents as may be necessary or convenient to vest in the
Employer full title to each such Invention and as may be necessary or convenient
to obtain United States and foreign patents, copyrights and trademarks thereon
to the extent the Employer may so choose.
For purposes of this Agreement, an Invention shall be deemed to have been
made during the period of the Executive's employment if, during such period, the
Invention was conceived, in part or in whole, or first actually reduced to
practice, and the Executive agrees that any patent, trademark or copyright
application filed within six (6) months after termination of his employment
shall be presumed to relate to an Invention made during the term of his
employment unless Executive can provide evidence as to the contrary.
Executive represents and warrants to the Employer that all inventions
heretofore developed by Executive during the course of Executive's employment
with SBC to be used in respect of the
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business of SBC belong to and are the sole property of HA-LO Industries, Inc., a
Delaware corporation (as the surviving corporation in the merger contemplated by
the Merger Agreement), that he has not sold, transferred or assigned any such
invention or rights therein to a third party, and that Executive shall execute
such applications, assignments or other documents as may be necessary or
convenient to vest in such surviving corporation full title to each such
invention and as may be necessary or convenient to obtain United States and
foreign patents, copyrights and trademarks thereon to the extent the Employer
may so choose.
This Section 12 shall not apply to an invention for which no material
equipment, supplies or facility, and no confidential information or other trade
secret information, of a Related Entity was used and which was developed,
consistent with this Agreement, entirely on Executive's own time, unless the
invention relates to the Post-Termination Business.
13. Remedies. Executive acknowledges that compliance with the restrictive
covenants set forth in Sections 8 through 12 herein is necessary to protect the
business, goodwill and Proprietary Information of the Related Entities, and that
a breach of these restrictions may irreparably and continually damage such
entity, for which monetary damages may not be adequate. Consequently, Executive
agrees that, in the event that he violates or breaches any of such covenants in
Sections 8 through 12 of this Agreement, the Employer shall be entitled to both
(1) a temporary, preliminary or permanent injunction in order to prevent the
continuation of such harm, and (2) monetary damages insofar as they can be
determined. Nothing in this Employment Agreement, however, shall be construed to
prohibit an aggrieved entity from pursuing any and all remedies available to it
with respect to a violation or breach of any of such covenants in Sections 8
through 12 of this Agreement, the parties having agreed that all remedies are to
be cumulative. The parties expressly agree that the Employer may, in its sole
discretion, choose to enforce the restrictive covenants in Sections 8 through 12
hereof, in part, or to enforce any of said restrictive covenants to a lesser
extent than that set forth herein.
14. Revision. In the event that any of the provisions, covenants,
warranties or agreements in Sections 8 through 12, inclusive, of this Employment
Agreement are held to be in any respect an unreasonable or unenforceable
restriction or otherwise invalid, for whatsoever cause, then the court so
holding shall reduce, and is so authorized to reduce, the territory to which it
pertains and/or the period of time in which it operates and/or the scope of
activity to which it pertains or effect any other change to the extent necessary
to render such provision, covenant, warranty or agreement reasonable,
enforceable and valid.
15. General Provisions.
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(a) Severability. Each of the terms and provisions of this
Employment Agreement is to be deemed severable in whole or in part and, if
any term or provision or the application thereof in any circumstances
should be invalid, illegal or unenforceable, the remaining terms and
provisions or the application thereof to circumstances other than those as
to which it is held invalid, illegal or unenforceable, shall not be
affected thereby and shall remain in full force and effect.
(b) Binding Agreement. This Employment Agreement shall be binding
upon the parties, their heirs, successors, personal representatives and
assigns. The Employer may assign this Agreement to its successors in
interest to the business, or part thereof, of the Employer, provided that
the assignee assumes all of the liabilities of the assignor hereunder.
Executive may not assign any of his obligations or duties hereunder.
(c) Controlling Law and Jurisdiction. This Employment Agreement
shall be governed by and interpreted and construed according to the laws
of the State of Illinois. Executive and the Employer hereby consent to the
sole and exclusive jurisdiction of the state and federal courts in
Illinois in the event that any disputes arise under this Employment
Agreement.
(d) Attorneys Fees. In the event of a dispute between the parties
hereto relative to this Employment Agreement, the prevailing party shall
be entitled to reimbursement of its reasonable attorneys fees and
expenses.
(e) Entire Agreement. This instrument and the Agreement and Covenant
Not to Compete between the parties hereto contain the entire agreement of
the parties with regard to the subject matter hereof, and may not be
changed orally, but only by an agreement in writing signed by the parties
hereto.
(f) Failure to Enforce. The failure to enforce any of the provisions
of this Employment Agreement shall not be construed as a waiver of such
provisions. Further, any express waiver by any party with respect to any
breach of any provision hereunder by any other party shall not constitute
a waiver of such party's right to thereafter fully enforce each and every
provision of the Employment Agreement.
(g) Headings. All numbers and Section headings are for reference
only and are not intended to qualify, limit or otherwise affect the
meaning or interpretation of any such Section.
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(h) Notices. All notices which are required, permitted or
contemplated hereunder to be given or made shall be given or made in
writing by certified mail (return receipt requested) to the Employer at
0000 Xxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxxxx, 00000, Attention: Chief Executive
Officer, and to Executive at the last address shown in Executive's
personnel file.
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(i) Gender. The masculine, feminine or neuter pronouns used herein
shall be interpreted without regard to gender, and the use of the singular
or plural shall be deemed to include the other whenever the context so
requires.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
WHEREFORE, the parties have executed this Agreement on the date and year
first above written.
HA-LO INDUSTRIES, INC.
By: /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
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Chief Executive Oficer
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/s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx
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