AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (the "AMENDMENT") is made and
entered into as of July 31, 2000 (the "EFFECTIVE DATE") by and between
PROMOTIONAL MARKETING, L.L.C., an Illinois limited liability company
("EMPLOYER", "COMPANY" or "UPSHOT"), JOHN R. KELLEY, JR. ("EXECUTIVE") and HA-LO
INDUSTRIES, INC., an Illinois corporation ("HA-LO" or "ACQUIROR").
WHEREAS, Employer and Executive have previously entered into an Employment
Agreement, dated as of June 30, 1998, (the "EMPLOYMENT AGREEMENT"); and
WHEREAS, effective November, 1999, Executive was appointed as the Chief
Executive Officer and President of HA-LO; and
WHEREAS, as of the date hereof, Executive is the Chief Executive Office of
HA-LO and a Manager of UPSHOT;
WHEREAS, the parties wish to further amend certain provisions of the
Employment Agreement:
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree
as follows:
1. Each of the above recitals are incorporated in the Amendment and are
binding upon the parties hereof. Capitalized terms used herein shall
have the meaning set forth in Employment Agreement unless otherwise
defined herein.
2. Section 3 of the Employment Agreement shall be restated in its
entirety as follows:
"EMPLOYMENT SERVICES. During the Term of his employment pursuant
to this Agreement, Executive shall render his services to the
Company, or otherwise as Executive and Company shall mutually
agree. In the performance of his duties to the Company hereunder,
Executive shall report to the Managers of the Company (other than
Executive) or to such other executive officer of the Company or
its affiliates as the Majority of the Managers of the Company
directs. During the Term of his employment pursuant to this
Agreement, Executive shall render his services as Chief Executive
Officer of HA-LO pursuant to the by-laws of HA-LO; Executive
shall report directly to the Board of Directors of HA-LO.
Executive shall devote all of his working time, efforts and his
energy and skill to promote the interests of the Company and
Acquiror (which shall include all subsidiaries and affiliates of
the Company and Acquiror), and agrees that during the Term he
will not engage in any other business activity or have business
pursuits or interests except activities or interests which the
Majority of the Managers reasonably determines do not conflict or
interfere with the performance of the Executive's duties and
obligations hereunder.
3. Notwithstanding the terms of Section 4(a) of the Employment
Agreement, from and after the Effective Date and throughout the
remainder of the Term, Executive's Base Salary shall be five
hundred thousand dollars ($500,000).
4. Section 4(b) of the Employment Agreement shall be restated in its
entirety as follows:
"OPTIONS. Concurrently with the execution of the Amendment,
Acquiror shall execute and deliver to Executive Option
Agreements, in substantially the forms attached to the
Amendment as Exhibit A, pursuant to which Executive shall be
granted, as of the Effective Date, the following options to
purchase shares of common stock of Acquiror pursuant to the
HA-LO Industries, Inc. 1997 Stock Plan (Amended and
Restated) (or a successor plan thereto or a plan
substantially thereto), which options shall terminate ten
(10) years from the date of grant:
(a) 100,000 options, vesting immediately on the
Effective Date, at an exercise price per share equal
to $6.00; it being understood that these options are
being granted to Executive in consideration for his
prior services as Chief Marketing Officer of
Acquiror during 1999;
(b) 500,000 options, vesting immediately on the
Effective Date, at an exercise price per share equal
to the $5.0625 (the closing price of a share of
common stock of Acquiror on the New York Stock
Exchange on the Effective Date);
(c) 500,000 options, vesting on December 31, 2001, at an
exercise price per share equal to the closing price
of a share of common stock of Acquiror on the New
York Stock Exchange on December 31, 2001; PROVIDED,
HOWEVER, that (i) Executive is the Chief Executive
Officer of Acquiror on December 31, 2001, and (ii)
Acquiror has met its 2001 budget and business plan
goals set by the HA-LO Compensation Committee and
approved by Acquiror's Board of Directors; BUT
PROVIDED, HOWEVER, that notwithstanding anything
herein to the contrary, 125,000 of such options
shall vest immediately in the event that a
Significant Event (as hereinafter defined) shall
occur prior to December 31, 2001, at an exercise
price per share equal to $5.0625. For the purposes
of the Amendment, a "SIGNIFICANT EVENT" shall mean
the sale of a majority of the equity interests
(whether by merger with a non-affiliate of Acquiror,
by sale of equity interests or otherwise) or
substantially all of the assets of the Company,
HA-LO or the promotional products business of HA-LO;
(d) 500,000 options, vesting on December 31, 2002, at an
exercise price per share equal to the closing price
of a share of common stock of Acquiror on the New
York Stock Exchange on December 31, 2002; PROVIDED,
HOWEVER, that (i) Executive is the Chief Executive
Officer of Acquiror on December 31, 2002, and (ii)
Acquiror has met its 2002 budget and business plan
goals set by the HA-LO Compensation Committee and
approved by Acquiror's Board of Directors; BUT
PROVIDED, HOWEVER, that
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notwithstanding anything herein to the contrary,
125,000 of such options shall vest immediately in
the event that a Significant Event shall occur prior
to December 31, 2001, at an exercise price per share
equal to $5.0625;
(e) 75,000 options, at an exercise price per share equal
to $5.0625, vesting on the date following the first
thirty calendar day period during which the average
closing price of Acquiror's common stock (as
reported on the New York Stock Exchange for all
trading days during such period) is greater than or
equal to $10.125; PROVIDED, HOWEVER, that Executive
remains the Chief Executive Officer of Acquiror on
such date or retained such position at any time
within ninety (90) days prior to the date of such
measurement; and
(f) 75,000 options, at an exercise price per share equal
to $5.0625, vesting on the date following the first
thirty calendar day period during which the average
closing price of Acquiror's common stock (as
reported on the New York Stock Exchange for all
trading days during such period) is greater than or
equal to $15.1875; PROVIDED, HOWEVER, that Executive
remains the Chief Executive Officer of Acquiror on
such date or retained such position at any time
within ninety (90) days prior to the date of such
measurement."
5. Section 4(c) of the Employment Agreement shall be amended by the
addition of the following subsection 4(c)(v):
"(v) Notwithstanding anything in this Section 4(c) to the
contrary, the Executive shall (1) not be entitled to any Bonus
for any Measurement Period commencing on or after January 1,
2001, and (2) be entitled to 58.33% of the Bonus he otherwise
would receive for the Measurement Period of calendar year 2000."
6. Except as otherwise provided herein, the terms and provisions of the
Employment Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed the Amendment as of
the date and year first above written.
EMPLOYER EXECUTIVE
PROMOTIONAL MARKETING, L.L.C.
By: ---------------------------- ---------------------------
Its: --------------------------- John R. Kelley, Jr.
HA-LO INDUSTRIES, INC.
By: ----------------------------
Its: ---------------------------
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