EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Employment Agreement") is made and entered
effective as of this 7th day of February, 2001, by and between HA-LO Industries,
Inc., a Delaware corporation ("Employer"), and Marc S. Simon (hereafter
"Employee").
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 and
consumer event marketing (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, Employee will be granted direct and substantial exposure to the
customers and prospective customers of the Employer, and during the term of this
Employment Agreement, Employee may have direct and substantial exposure to the
customers and prospective customers of other entities currently or in the future
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, Employee 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 Employee's employment with the Employer. Employee
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.
2. EMPLOYMENT; DUTIES. The Employer hereby agrees to employ Employee, and
Employee hereby accepts such employment, as the Chief Executive Officer of
Employer, on the terms and subject to the conditions set forth herein. During
the "Term" (as hereafter defined), Employee 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 Board of
Directors of the Employer (the "Board"), provided, however, that the parties
agree that the Employee's duties shall expressly not include any involvement
with the subsidiaries of the Employer set forth in Section 3(c)(vii) hereof. The
Term of this Agreement shall commence on February 22, 2001 or such earlier date
from and after the date hereof as the Employee may elect ("Commencement Date").
Employee shall have the right during the Term to nominate himself to serve on
the Board.
-1-
Subject to the fiduciary duties of the Board as required under applicable law,
the Board of the Employer agrees to elect the Employee to the current Board and
the Employer agrees to cause the Employee to be included in the Board and
management slate of nominees presented to stockholders for election as
directors. While serving on the Board, the Employee shall be nominated for and
elected (subject to the fiduciary obligation of the Board) to the Nominating
Committee of the Board and to such other committees of the Board as is prudent.
For purposes hereof and for purposes of interpretations of the Bylaws of the
Employer, the term "subject to the control of the Board of Directors" shall not
serve to inhibit the Employee's authority to manage and administer the
day-to-day operations of the business and affairs of the Employer. Further,
Employee shall not be gainfully employed other than pursuant to this Agreement.
However, Employee may be involved in charitable work, service on boards of
directors of other companies, and manage his personal investments so long as
such activities do not unreasonably interfere with Employee's time commitment to
the Employer as contemplated by this Agreement and do not constitute a breach by
Employee of any of his covenants contained in Sections 7 through 13 hereof.
3. COMPENSATION.
(a) BASE SALARY. In consideration of the services to be rendered by
Employee to the Employer pursuant to this Agreement, during the Term, the
Employer agrees to pay to Employee an annual Base Salary of Five Hundred
Thousand Dollars ($500,000) (subject to applicable withholdings), payable
in installments in accordance with the Employer's normal payroll practices
("Base Salary").
(b) GUARANTEED BONUS. With respect to each calendar year ("Year") of
the Term (including, without limitation to calendar year 2001), Employee
shall receive a guaranteed bonus ("Guaranteed Bonus") in the amount of One
Hundred Thousand Dollars ($100,000). The Guaranteed Bonus shall, subject to
applicable withholdings, be payable no later than forty-five (45) days
following the conclusion of the applicable Year.
(c) PERFORMANCE BONUS.
(i) Employer agrees that with respect to each Year of the Term,
the Employer shall pay to Employee a performance-based bonus
("Performance Bonus") in accordance with the provisions of this
Section 3(c).
(ii) For each Year, the Employer shall determine the earnings of
the Employer before deductions are made for interest expense, income
taxation, depreciation or amortization (collectively, "EBITDA").
EBITDA shall be determined based upon the Year end audited financial
statements of the Employer prepared by the certified public accounting
firm regularly employed by the Employer (the "Accountants"), in
accordance with generally accepted accounting principles ("GAAP") and
in accordance with the past practices of Employer. The
-2-
determination of EBITDA by the Accountants shall be final and
conclusive upon Employer and Employee, PROVIDED, HOWEVER, that EBITDA
with respect to any calendar quarter of a Year in which the Employee
was not employed during the entirety of such quarter shall be prorated
based upon the number of days in such calendar quarter in which the
Employee was so employed, and FURTHER, PROVIDED, that if and to the
extent that the Employer takes a restructuring or other one-time
charge against its earnings (a "Charge") in the first or second
calendar quarter of 2001, such Charge shall not be included in the
calculation of EBITDA for all purposes herein. No later than two (2)
weeks following the Employer's filing of a Form 10-K with the
Securities and Exchange Commission (or such earlier date when the
Employer shall have made a final and definitive public announcement of
the Employer's earnings for the prior Year), the Employer shall
(A) pay the Employee, in cash, an amount equal to one
percent (1%) multiplied by the EBITDA (if positive) (such product
being the Bonus Product) (notwithstanding the actual calculation
of the Bonus Product for calendar year 2001, the amount payable
to the Employee pursuant to this Section 3(c)(ii)(A) shall be no
less that Seventy-Five Thousand Dollars ($75,000), plus
(B) issue to the Employee that number of options to purchase
common stock of the Employer ("Performance Options") determined
as follows: the product of (a)(1) Bonus Product multiplied by (2)
2.5, divided by (b) the closing price ("Closing Price") of
Employer common stock ("Common Stock") on the New York Stock
Exchange ("NYSE") on the date of the issuance of the Performance
Options.
(iii) The Performance Options shall be so-called non-qualified
options and shall be granted pursuant to the terms of the HA-LO
Industries, Inc. 1997 Stock Plan (Amended and Restated) or the HA-LO
Industries, Inc. 2000 Stock Option Plan (or a successor plan thereto)
(such plan being the "Stock Plan"). The Performance Options granted
shall be reflected more particularly by an option agreement in a form
generally executed by all option holders (the "Option Agreement"), a
copy of which is attached hereto as Annex A.
(iv) The Performance Options shall be fully vested upon issuance.
(v) Subject to the terms of the Stock Plan regarding vesting and
exercise in the event of the termination of Employee's employment, the
Performance Option shall terminate ten (10) years after the date of
grant.
(vi) The Performance Options shall have an exercise price equal
to Closing Price on the date of the issuance of the Performance
Options.
-3-
(vii) In the event of the sale or disposition by the Employer
during the Term of any subsidiary or division (a "Sale Unit") (other
than a sale or disposition to a wholly owned subsidiary of the
Employer), notwithstanding the determination of EBITDA by the
Accountants, an amount, positive or negative, shall be added to EBITDA
equal to the "Sale Unit EBITDA Factor." For purposes hereof, the Sale
Unit EBITDA Factor shall equal the quotient of (A) the total purchase
price of the Sale Unit, divided by (B) the EBITDA of the Sale Unit
during the Year prior to the sale of the Sale Unit by the Employer.
Notwithstanding the foregoing, there shall be no additions to EBITDA
pursuant to this subparagraph as a result of (i) any sale or
disposition by the Employer of any of the following entities: Lipson
Associates, Inc., CF NAPA Design, Inc., Market USA, Inc., Marusa
Marketing, Inc., Marusa Financial Services Ltd. or Nerok Verifications
Inc., or (ii) any interest income earned by the Employer upon the
sales proceeds received following (and with respect to) the sale of a
Sale Unit.
(viii) Notwithstanding anything herein to the contrary, the
Employee shall not be eligible to participate in any severance or
termination pay plan or program or any stock option, restricted stock
or other stock based plan or program available to any other employee
(or group of employees) of the Employer.
(d) OPTIONS. Pursuant to the Plan, on the Commencement Date, the
Employee shall receive so-called non-qualified options to purchase nine
hundred sixty thousand (960,000) shares of Common Stock; the options
granted shall be reflected more particularly by an Option Agreement but in
all cases subject to the following:
(i) such options shall vest one-third (1/3) on the first
anniversary of the Commencement Date, one-third (1/3) on the second
anniversary of the Commencement Date, and one-third (1/3) on the third
anniversary of the Commencement Date;
(ii) subject to the terms of the Plan regarding vesting and
exercise in the event of termination of Employee's employment, such
options shall terminate ten (10) years after the date of grant;
(iii) the options granted shall have an exercise price equal to
the Closing Price as of the date set forth in the first paragraph of
this Employment Agreement; and
(iv) the options granted pursuant to this subsection 3(d) shall
vest, in all circumstances, upon a Change of Control (as herein
defined).
(e) EIGHT DOLLAR OPTIONS. Pursuant to the Plan, the Employee shall
receive options to purchase four hundred thousand (400,000) shares of
Common Stock to be
-4-
granted as of the Commencement Date; the options granted shall be reflected
more particularly by an Option Agreement but in all cases subject to the
following:
(i) such options shall vest on the earlier to occur of (A) the
date nine (9) years and nine (9) months from and after the
Commencement Date, (B) the date (if any) on which the Closing Price
equals or exceeds Eight Dollars ($8) per share of Common Stock for
each of twenty (20) consecutive trading days of the Common Stock, (C)
forty-five (45) days following the year-end which EBITDA of the
Employer for a Year exceeds Thirty-Five Million Dollars ($35,000,000),
or upon the occurrence of an event set forth in subsection (i), (ii)
or (iii) of the definition herein of Change of Control from and after
the nine (9) month anniversary of the date hereof, wherein the
purchase price of Common Stock equals or exceeds Six Dollars ($6) per
share;
(ii) subject to the terms of the Plan regarding vesting and
exercise in the event of termination of Employee's employment, such
options shall terminate ten (10) years after the date of grant; and
(iii) the options granted shall have an exercise price equal to
the Closing Price as of the date set forth in the initial paragraph of
this Employment Agreements.
(f) SIGNING BONUS. Upon the execution of this Employment Agreement, in
consideration of the Employer's promises hereunder, the Employer shall pay
the Employee a signing bonus of Seventy-Five Thousand Dollars ($75,000).
4. FRINGE BENEFITS. Subject to applicable law, and the rules and policies
adopted by the Board from time to time, the Employer shall provide Employee with
such non-performance related fringe benefits (including but not limited to group
medical, life or other insurance, tax qualified pension, savings, thrift and
profit sharing plans, sick leave plans, travel, or accident insurance,
automobile allowance, and disability insurance), 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,
Employee 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 Employee's employment hereunder shall commence as of the Commencement
Date and, except as otherwise provided herein, shall terminate at the first
to occur of any of the
-5-
following events: (A) the mutual agreement of the Employer and Employee to
so terminate this Employment Agreement, (B) the death or "disability" (as
hereafter defined) of Employee, (C) the Employer's written election to
terminate this Employment Agreement and Employee's employment hereunder
"for Cause" (as hereafter defined) or not for Cause or (D) the Employee's
written election to terminate this Employment Agreement and Employee's
employment hereunder "for Good Reason" (as hereinafter defined) or without
Good Reason, provided, however, that Employee may not terminate without
Good Reason prior to the six (6) month 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
twenty (20) days or more, which disability prevents the Employee from
substantially performing his duties hereunder. A disability shall be
determined by a physician selected by the Board and reasonably acceptable
to Employee 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 the following determined in
the reasonable good faith judgment of the Board: (i) Employee's theft,
embezzlement, fraud or misappropriation of funds, or conspiracy with others
to cause same, (ii) any material breach of fiduciary duty, abuse of trust
or other material act of dishonesty by Employee, or Employee's violation of
any other material law or ethical rule relating to his employment, (iii)
Employee's commission of or participation in a felony or other crime
involving moral turpitude, (iv) an indictment or information is issued
against Employer alleging criminal liability due to actions taken or failed
to be taken by Employee without the consent of Employer's Board, which
indictment or information is not dismissed with prejudice within one
hundred and twenty (120) days thereafter, (v) upon Employee'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 Employer, or (vi) gross misconduct or gross negligence in the
performance of Employee's duties hereunder.
(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: (i)
any material reduction or change in the power or duties of Employee or
reduction in Base Salary, (ii) a reassignment of Employee to a primary
business location outside of the metropolitan Chicago area, or (iii) upon
the occurrence of a Change of Control (as herein defined), so long as
Employee notifies the Employer within thirty (30) days of the occurrence of
the Change of Control of his termination of employment as a result thereof.
For purposes hereof, a "Change in Control" shall be deemed to have occurred
if (i) a tender offer shall be made and consummated for the ownership of
more than fifty percent (50%) of the outstanding voting securities of the
Employer, (ii) the Employer shall be merged or consolidated with another
corporation and as a result of such merger of consolidation less
-6-
than fifty percent (50%) of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the
former shareholders of the Employer, as the same shall have existed
immediately prior to such merger or consolidation, (iii) the Employer shall
sell all or substantially all of its operating assets to another
corporation which is not a wholly-owned subsidiary or affiliate, (iv) as
the result of, or in connection with, any contested election for the Board
of Directors, or any tender or exchange offer, merger or business
combination or sale of assets, or any combination of the foregoing (a
"Transaction"), the persons who were Directors of the Employer before the
Transaction shall cease to constitute a majority of the Board of Directors
of the Employer, or any successor thereto, or (v) a person, within the
meaning of Section 3(a)(9) or of Section 13(d)(3) (as in effect on the date
hereof) of the Securities and Exchange Act of 1934 ("Exchange Act"), other
than any employee benefit plan then maintained by the Employer, shall
acquire more than fifty percent (50%) of the outstanding voting securities
of the Employer (whether directly, indirectly, beneficially or of record).
For purposes hereof, ownership of voting securities shall take into account
and shall include ownership as determined by applying the provisions of
Rule 13d-3(d)(1)(i) (as in effect on the date hereof) pursuant to the
Exchange Act.
(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) Employee's Base Salary,
Guaranteed Bonus and unpaid business expenses otherwise payable
pursuant to the terms of Section 3 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 Employee other than
for Good Reason, death or disability, (A) all duties and obligations
of the Employer hereunder shall terminate, except to the extent of
Employee's Base Salary, benefits and unpaid business expenses
otherwise payable pursuant to the terms of Section 3 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.
(iii) In the event that the Term of this Employment Agreement is
terminated (x) by Employee for Good Reason or (y) by the Employer
other than for Cause, all duties and obligations of Employee hereunder
(other than pursuant to Sections 7 through 13) shall terminate and
Employee shall be entitled to receive ("Severance") (A) an amount
equal to One Million Two Hundred Thousand Dollars ($1,200,000),
payable in equal installments in accordance with
-7-
the Employer's normal payroll practices (subject to applicable
withholdings) during the two (2) year period following the date of
termination, plus (B) an amount , in cash, equal to two percent (2%)
multiplied by the EBITDA of the Employer, if positive, for the
complete calendar quarters of the Employer which have occurred prior
to the date of termination (the "Quarterly Product") (such quarterly
EBITDA calculation to be determined by the Employer in accordance with
GAAP consistently applied) and shall be payable by the Employer within
thirty (30) days following the date of termination, plus (C) all
options described in Section 3(d) hereof which are then unvested shall
become immediately vested. The Employer shall cause its subsidiary,
HMK International Holdings B.V., a corporation organized under the
laws of the Netherlands, to guarantee the Severance payment payable
with respect to any applicable termination which occurs during the
first twelve (12) months of the Term (the "Guaranteed Severance"). All
other rights and remedies of Employee shall terminate, Severance
payments being Employee's sole payment.
(f) SURVIVAL OF COVENANTS. Notwithstanding anything herein to the
contrary, upon termination of the Term of this Employment Agreement for any
reason, the provisions of this Section 6, and the terms and conditions of
Sections 7 through 19 of this Employment Agreement, shall remain in full
force and effect, and shall be binding on and enforceable against Employee
and the Employer as though (for purposes of Sections 7 through 19) such
termination had not occurred. Employee hereby acknowledges that his
agreement to the survival of the terms and conditions of Sections 7 through
19 of this Employment Agreement constitute a material inducement to the
Employer to enter into this Employment Agreement.
(g) Upon the termination of employment of the Employee, for any
reason, the Employee shall resign from the board of directors and as a
officer of any Related Entity.
(h) The Performance Bonus and the portion of Severance based upon
quarterly EBITDA shall not be granted for any period from and after the
occurrence of the Change of Control.
7. EMPLOYEE'S REPRESENTATIONS. Employee hereby represents and warrants to
and with the Employer that Employee 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 Employee's execution of this Employment Agreement or by
Employee's performance of his duties hereunder. Employee 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. Employee expressly agrees and acknowledges
that it is the policy of the Employer to abstain from the improper use and
disclosure of the property rights, trade secrets and
-8-
confidential information of any other party and Employee agrees that it is a
material inducement to Employer's execution of this Employment Agreement that
Employee agrees to abide by such policy.
8. CONFIDENTIALITY. Employee acknowledges that by virtue of his employment
with Employer as a key member of senior management, he will be exposed to or
will have access to confidential information regarding the business of the
Related Entities of the most sensitive nature, including but not limited to,
trade secrets and proprietary information, all of which are proprietary to
Related Entities. Employee further acknowledges that it would be possible for an
employee, upon termination of his association with Employer, to use the
knowledge or information obtained while working for or with Employer to benefit
other individuals or entities. Employee acknowledges that the Related Entities
have expended considerable time and resources in the development of certain
confidential information used in connection with their respective business,
including without limitation business strategies and goals, accounting
methodology, pricing systems, advertising brochures and materials, graphic and
other designs, client and client prospect lists or records, client information,
use and utilization of copyrights, confidential information and trade secrets of
third parties, marketing techniques and, generally, the confidential information
of Employer which gives, or may give, Employer an advantage in the marketplace
against its competitors (all of the foregoing being herein referred to
collectively as "Proprietary Information"), and which have been disclosed to or
learned by Employee solely for the purpose of Employee's employment with
Employer. Employee acknowledges that Employer's Proprietary Information
constitutes a proprietary and exclusive interest of Employer and, therefore,
Employee agrees that during the Term and thereafter Employee shall hold and keep
secret the Proprietary Information as described herein and the confidential
information of the clients of the Related Entities which Employee has learned in
his capacity as an employee of Employer (the "Client Information"), as to which
Employee is now or any time during his employment shall become informed, and
Employee shall not directly or indirectly disclose any Proprietary Information
or Client Information to any person, firm, court, governmental agency or
corporation or use the same except in connection with the business and affairs
of Employer.
9. NON-COMPETITION. Employee covenants that during the Term and for a
period of two (2) years after the termination thereof for any reason whatsoever,
Employee shall not, directly or indirectly, in the 50 states of the United
States, on 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, engage in, or aid
or assist anyone in the conduct of a business, directly or indirectly,
competitive with that of any Related Entity or in a capacity in which it is
likely that Employee will disclose Employer's Proprietary Information.
10. NON-SOLICITATION. Employee covenants that during the Term and for a
period of two (2) years after the termination thereof, for any reason
whatsoever, Employee shall not, directly or indirectly, as an employee, agent,
salesman or member of any person, corporation, firm or otherwise call upon,
solicit, enter into, become employed by or engage in the business
-9-
conducted by a Related Entity with a customer or prospective customer of a
Related Entity (a) with which customer or prospective customer Employee had
direct or indirect contact as an employee of Employer, or (b) regarding which
customer or prospective customer Employee had learned, or become aware of,
Employer's Proprietary Information. For purposes of this Agreement, the term
"prospective customer" shall mean any person, corporation or other entity to
whom a Related Entity has made a written or oral presentation or proposal within
the eighteen (18) month period prior to the date of the termination of
employment.
11. NON-DISTURBANCE OF EMPLOYEES; NON-DISPARAGEMENT. Employee covenants
that during the Term and for a period of two (2) years after the termination
thereof, for any reason whatsoever, Employee shall not, directly or indirectly,
as an employee, agent, salesman or member of any person, corporation, firm or
otherwise (a) hire or solicit for hire any employee or agent of a Related Entity
or make such other contact with the employees or agents of Employer or Related
Entity, the product of which contact will or may yield a termination of the
employment or agency relationship of such employees or agents from a Related
Entity, or (b) make or cause others to make, whether in writing or orally,
disparaging statements or inferences with respect to the Employer or a Related
Entity, their respective business, officers or shareholders.
12. RETURN OF MATERIALS. Employee will, at any time upon the request of
Employer, and in any event upon the termination of his employment, for whatever
reason, immediately return and surrender to Employer originals and all copies of
all records, notes, memoranda, electronic files, personal computers, computer
discs, computer equipment, telephones, price lists, client and client prospects
lists, business plans, recordings and other documents and other property
belonging a Related Entity, created or obtained by Employee as a result of or in
the course of or in connection with Employee's employment with Employer
hereunder. Employee acknowledges that all such materials are, and will always
remain, the exclusive property of such Related Entity.
13. INVENTIONS AND OTHER MATTERS. Employee agrees that all ideas,
inventions, artwork, images, designs, concepts, discoveries or improvement
(collectively the "Inventions") which Employee, 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 such Related Entity. Employee 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 (or such Related Entity) 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 Employee's employment if, during such period, the
Invention was conceived, in
-10-
part or in whole, or first actually reduced to practice, and the Employee 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 Employee can provide evidence as
to the contrary.
This Section 13 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 Employee's own time.
14. REVISION. In the event that any of the provisions, covenants,
warranties or agreements in Sections 7 through 13, 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. INDEMNIFICATION. The Employer will indemnify the Employee to the
fullest extent permitted by the laws of the state of incorporation in effect at
that time, or pursuant to the Certificate of Incorporation and Bylaws of the
Employer, whichever affords the greater protection to the Employee. The Employer
will obtain and maintain customary directors and officers liability insurance
covering executive employees of the Employer.
16. COOPERATION. The Employee will, with reasonable notice during or after
the Term, furnish information as may be in his possession and cooperate with the
Employer as may reasonably be requested in connection with any claims or legal
action in which any Related Entity is or may be a party.
17. ARMS LENGTH NEGOTIATION. The Employer and the Employee acknowledge that
this Agreement was a result arms lengths negotiations between sophisticated
parties each afforded representation by legal counsel. Each and every provision
of this Employment Agreement shall be construed as though both parties
participated equally in the drafting of same, and any rule of construction that
a document shall be construed against a drafting party shall not be applicable
to this Agreement.
18. SECTION 280G. Notwithstanding any provisions of this Agreement to the
contrary, in the event that (i) the aggregate payment or benefits be made or
afforded to the Employee under this Employment Agreement or from the Employer in
any other matter (the "Termination Benefits") would be deemed to include an
"Excess Parachute Payment" under Section 280G of the Internal Revenue Code, as
amended, or any successor thereto (the "Code"), and (ii) if such Termination
Benefits were reduced to an amount (the "Non-Triggering Amount"), the value of
which is one dollar ($1) less than an amount equal to three (3) times the
"Employee Base
-11-
Amount" as determined in accordance with such Section 280G, and the
Non-Triggering Amount would be greater than the aggregate value of the
Termination Benefits (without such reduction) minus the amount of tax required
to be paid by Employee thereon by Section 4999 of the Code, then the Termination
Benefits under this Agreement shall be reduced so that the Termination Benefits
are not more than the Non-Triggering Amount. The application of said Section
280G, and the allocation of the reduction required by this Section shall be
determined by the Employer's regularly engaged Accountants.
19. GENERAL PROVISIONS.
(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 Employment 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.
Employee 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. Employee 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 contains 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.
-12-
(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.
(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 5980 West
Touhy Avenue, Niles, Illinois, 60174, Attention: Chairman of the Board, and
to Employee at the last address shown in Employee's personnel file.
(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.
(k) CHANGES IN CAPITALIZATION. The number of shares of Common Stock
covered by each option or share of Common Stock, as well as the price per
share of Common Stock (whether covered by each option) shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock.
Such adjustment shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an option.
-13-
WHEREFORE, the parties have executed this Agreement on the date and year
first above written.
HA-LO INDUSTRIES, INC.
By: ---------------------------------
Its: --------------------------
-------------------------------------
Marc S. Simon
GUARANTY
For good and valuable consideration, the receipt of which is hereby
acknowledged, the undersigned, HMK International Holdings B.V., a corporation
organized under the laws of the Netherlands, in order to induce Marc S. Simon
("Employee") to enter into and perform that certain Employment Agreement of even
date herewith by and between HA-LO Industries, Inc., a Delaware corporation
("Employer") and Employee (the "Employment Agreement"), does hereby jointly and
severally guaranty to the Employee the payment when due of the Guaranteed
Severance (as defined in the Employment Agreement).
HMK INTERNATIONAL HOLDING B.V.
By: HA-LO INDUSTRIES, INC.
By: ----------------------------------
Its: -----------------------------
Dated: ----------------------
-14-