Exhibit 11
AGREEMENT AND COVENANT NOT TO COMPETE
This Agreement and Covenant Not to Compete (the "Agreement") is made and
entered into as of May 3, 2000 by and between HA-LO INDUSTRIES, INC., an
Illinois corporation (and together with that entity's direct and indirect
wholly- and majority-owned subsidiaries and affiliates, sometimes referred to
herein, collectively, as "HA-LO"), and Xxxx Xxxxxxxxx, a resident of the State
of Illinois ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is a shareholder, executive officer and director of
Xxxxxxxxx.xxx, Inc., a Delaware corporation f/k/a XxxXxxxx.xxx, Inc. ("SBC"),
which is engaged in the business of the development, sale, marketing and
distribution of advertising specialty, premium and promotional products and
services to businesses through the Internet (the "Business");
WHEREAS, SBC, HA-LO Industries, Inc. and others have entered into an
Agreement and Plan of Merger and Plan of Reorganization dated January 17, 2000
(the "Purchase Agreement"), pursuant to which a subsidiary of HA-LO Industries,
Inc. will merge with SBC;
WHEREAS, Executive possesses specialized knowledge and skill pertaining to
the Business; and
WHEREAS, in consideration of the consummation by HA-LO Industries, Inc. of
the transactions contemplated under the Purchase Agreement and other good and
valuable consideration, Executive agrees to execute and be bound by this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements contained herein, the parties agree as follows:
1. Recitals; Defined Terms. Each of the above recitals is hereby
incorporated in this Agreement and shall be binding upon the parties hereto.
Unless otherwise provided in this Agreement, all capitalized terms herein shall
have the meanings ascribed to them in the Purchase Agreement.
2. Non-Competition Covenants. Executive covenants that during the
Restricted Period (as herein defined), 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 in any other
capacity, in any way conduct or engage in a business (i) which competes with the
Business or (ii) in which Executive, directly or indirectly, uses or discloses
Proprietary Information (as herein defined). For
purposes of this Agreement, (a) the term "Restricted Period" shall mean the
period beginning on the date hereof and ending on the fifth (5th) anniversary of
the date hereof and (b) the term "Proprietary Information" shall mean
information regarding SBC which is of a confidential, proprietary, private or
sensitive nature (including, without limitation, trade secrets, business
strategies and goals, accounting methodology, pricing systems, advertising
brochures and materials, graphics and other designs, marketing programs and
techniques, copyrighted and non-copyrighted software source codes or object
codes, technology applications and advances, client and client prospect lists or
records, client information, information regarding independent contractors and
vendors, confidential information and trade secrets of third parties, supplier
information, and generally, such other confidential information, trade secrets
and proprietary information) which give HA-LO or which gave SBC an advantage in
the marketplace against competitors. The term Proprietary Information does not
include any information generally known in SBC's industry or publicly available
other than as a result of a wrongful disclosure by Executive. 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 Business directly or over the
Internet.
3. Non-Solicitation. Executive hereby covenants and agrees that during the
Restricted Period, for any reason whatsoever, he shall not, as it relates to the
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 call upon or solicit, any person or entity which was a
Customer or Prospective Customer of SBC to sell products or render services
which compete with the Business. For purposes of this Agreement, (i) the term
"Customer" shall mean any person, corporation or other entity that is reasonably
known to Executive to whom SBC has sold goods or rendered services within the
twelve (12) month period prior to the date hereof, and (ii) the term
"Prospective Customer" shall mean any person, corporation or other entity that
is reasonably known to Executive to whom SBC has made a written presentation or
proposal, or presented written materials at a meeting, within the twelve (12)
month period prior to the date hereof.
4. Non-Disturbance. Executive hereby covenants and agrees that during the
Restricted Period, for any reason whatsoever, 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, solicit any employee of
SBC (other than Xxxx Xxxxxxx) which solicitation or contact could reasonably be
expected to lead such employee to terminate his
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employment or engagement with SBC or XX-XX.
0. Remedies.
(a) Executive further acknowledges that he will be able to earn a
livelihood during the Restricted Period without violating the foregoing
restrictions and that his ability to earn such a livelihood without
violating such restrictions is a material condition to the agreements of
HA-LO Industries, Inc. under the Purchase Agreement.
(b) Executive acknowledges that compliance with the restrictive
covenants set forth in Paragraphs 2, 3 and 4 herein are necessary to
protect the business, goodwill and Proprietary Information of HA-LO and
that a breach of these restrictions will irreparably and continually
damage HA-LO for which money damages may not be adequate. Consequently,
Executive agrees that, in the event that he breaches any of such covenants
in Paragraphs 2, 3 and 4 of this Agreement, HA-LO Industries, Inc. shall
be entitled to both (i) a temporary, preliminary or permanent injunction
in order to prevent the continuation of such harm, and (ii) money damages
insofar as they can be determined. Nothing in this Agreement, however,
shall be construed to prohibit HA-LO Industries, Inc. from also pursuing
any other remedy, the parties having agreed that all remedies are to be
cumulative. The parties expressly agree that HA-LO Industries, Inc. may,
in its sole discretion, choose to enforce the restrictive covenants in
Paragraphs 2, 3 and 4 hereof, in part, or to enforce any of said
restrictive covenants to a lesser extent than that set forth herein.
Executive acknowledges and agrees that his execution and performance of
this Agreement is a material inducement to the execution of the Purchase
Agreement by HA-LO Industries, Inc.
6. Scope. The covenants contained in Section 2 of this Agreement shall be
construed to extend to each country of the world and to each state, province and
political subdivision thereof (each, a "Jurisdiction"). To the extent that any
covenant herein shall be illegal and/or unenforceable with respect to any one of
said Jurisdictions, said covenants shall not be affected thereby with respect to
each other Jurisdiction, such covenants with respect to each such Jurisdiction
being construed as severable and independent.
7. Revision. In the event that any of the provisions, covenants,
warranties or agreements in this Agreement is held to be in any respect an
unreasonable or unenforceable restriction 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
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other change to the extent necessary to render such provision, covenant,
warranty or agreement reasonable, enforceable and valid.
8. Severability. Each of the terms and provisions of this 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.
9. Binding Agreement. This Agreement shall be binding upon the parties,
their heirs, successors, personal representatives and assigns. HA-LO Industries,
Inc. may assign this Agreement to any successor in interest, or part thereof.
Executive may not assign any of his obligations or duties hereunder.
10. Controlling Law and Jurisdiction. This Agreement shall be governed by
and interpreted and construed according to the laws of the State of Illinois.
Executive hereby consents to the sole and exclusive jurisdiction of the state
and federal courts in Illinois in the event that any disputes arise under this
Agreement.
11. Attorneys Fees. In the event of a dispute between the parties hereto
pertaining to this Agreement, the prevailing party shall be entitled to
reimbursement of its reasonable attorneys fees and expenses.
12. Entire Agreement. This instrument and the Employment Agreement 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.
13. Failure to Enforce. The failure to enforce any of the provisions of
this 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 Agreement.
14. Headings. All numbers and heading of paragraphs are for reference only
and are not intended to qualify, limit or otherwise affect the meaning or
interpretation of any paragraph.
15. 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
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address of the appropriate party set forth in the Purchase Agreement.
16. 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.
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WHEREFORE, the parties have executed this Agreement on the date and year
first above written.
HA-LO:
HA-LO INDUSTRIES, INC.
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Chief Executive Officer
EXECUTIVE:
/s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx
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