Exhibit 10.80
PLEDGE AGREEMENT
(COMPANY)
THIS STOCK PLEDGE ("Stock Pledge") made as of this 31st day of March,
2000, by and between Ha-Lo Industries, Inc., an Illinois corporation
("Company"), the Canadian Permitted Borrower and Comerica Bank, a Michigan
banking corporation, as Agent for and on behalf of the Banks (as defined below)
("Secured Party").
RECITALS:
A. Pursuant to that certain Ha-Lo Industries, Inc. Revolving Credit
Agreement dated as of March 31, 2000 (as may be amended, or otherwise modified
from time to time, the "Credit Agreement") by and among Company, the Canadian
Permitted Borrower, Secured Party as Agent and the financial institutions which
are named in and are signatories to the Credit Agreement ("Banks"), the Banks
have agreed to extend credit to the Company on the terms set forth in the Credit
Agreement.
B. As a condition to the performance of its obligations under the
Credit Agreement and the other Loan Documents, the Banks and Secured Party, as
Agent for the Banks, have required that Company provide this Stock Pledge to
Secured Party, as Agent for the Banks.
C. Agent is acting as Agent for the Banks pursuant to Section 12.1 of
the Credit Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
I. CREATION OF SECURITY INTEREST
Company hereby grants to Secured Party, on behalf of Banks and the
Agent, a security interest in the property described in paragraph II, below
("Collateral").
II. COLLATERAL.
The Collateral consists of the following:
(a) 100% of the outstanding shares of each class of stock of
(or other ownership interest in) each Subsidiary listed on Schedule A
hereto (as such Schedule may be revised pursuant to Section III B.1
hereof), together with all of the certificates and/or instruments
representing such shares of stock (or other ownership interest), and
all cash, securities, dividends, rights and other property at any time
and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares;
(b) 100% of any additional shares of stock of (or other
ownership interest in) any of the Subsidiaries listed on Schedule A
hereto, at any time and from time to time acquired by Company in any
manner, all of the cash, securities, dividends, rights and other
property at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
such shares;
(c) All other property hereafter delivered to the Agent in
substitution for or in addition to the foregoing, all certificates and
instruments representing or evidencing such property, and all cash,
securities, interest, dividends, rights and other property at any time
and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof; and
(d) All products and proceeds of all of the foregoing.
III. COMPANY'S OBLIGATIONS
A. PAYMENT OF SECURED OBLIGATIONS. The security interest
created herein is given as security for:
(1) All of Company's obligations contained in or
arising under or in connection with the Credit Agreement, and
all obligations of Company contained in or arising under the
other Loan Documents executed by Company;
(2) All of Company's obligations contained in or
arising under any and all Letter of Credit Agreements executed
or to be executed by Company from time to time pursuant to the
Credit Agreement, and any Letters of Credit issued or to be
issued thereunder;
(3) All of Company's obligations contained in or
arising under any Interest Rate Protection Agreements;
(4) The obligations of Company for payment of all
sums hereafter loaned, paid out, expended or advanced by or
for the account of the Banks (or any of them) or by the
Secured Party under the terms of this Stock Pledge, the Credit
Agreement, or the other Loan Documents, in connection with the
Collateral or any of the documents or instruments described in
this Stock Pledge, the Credit Agreement or the other Loan
Documents;
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together with interest thereon as provided for herein or
therein; and also as security for all other Indebtedness, and
any judgments that may hereafter be rendered on such
Indebtedness or any part thereof, with interest according to
the rates and terms specified, or as provided by law, and any
and all replacements, consolidations, amendments, renewals or
extensions of the foregoing (collectively herein called the
"Secured Obligations").
B. PROTECTION OF SECURITY INTEREST.
(1) Company shall take any and all steps reasonably
required to protect the Collateral, and in pursuance thereof
Company agrees to deliver or cause to be delivered to Secured
Party and Secured Party shall receive possession, on behalf of
Banks, of certificates representing all of the pledged shares
referred to in Schedule A properly endorsed or with
assignments separate from such certificates in blank for
transfer, or in the case of ownership interests not evidenced
by a certificate, a consent and acknowledgment executed by
such Subsidiary in the form attached hereto as Exhibit A. In
addition Secured Party shall receive proof that appropriate
acknowledgments, governmental approvals, share register
entries, local pledge agreements, financing statements,
collateral and other documents covering the Collateral have
been executed and delivered by the appropriate parties and
recorded on file with such Persons and in such jurisdictions
as reasonably necessary to perfect the security interests, or
other liens granted hereby and/or thereby. The Secured Party
from time to time shall revise Schedule A hereto and promptly
deliver a copy thereto to Company and the Banks, on the
effective date of the acquisition or creation by Company of a
Significant Domestic Subsidiary, adding to Schedule A the name
of each such Subsidiary so acquired or created, and upon such
revision, Company shall be deemed to have pledged 100% of the
capital stock (or other ownership interests) of each such
Subsidiary so acquired or created to Secured Party for and on
behalf of Banks.
(2) Except to the extent permitted pursuant to the
provisions of the Credit Agreement, Company will not sell,
transfer, assign or otherwise dispose of any of the Collateral
or any interest therein or offer to do so without the prior
written consent of Secured Party, given at the direction of
the requisite Banks.
(3) Company will, subject to the applicable terms of
the Credit Agreement, pay all taxes and assessments upon the
Collateral or for its use or operation before any interest or
penalty for nonpayment attaches thereto unless said payment is
being contested in good faith and it establishes a reserve as
required by generally accepted accounting principles.
(4) Company will, subject to the applicable terms of
the Credit Agreement, sign and execute alone or with Secured
Party any financing statement or
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other document or procure any documents and pay all reasonable
connected costs, reasonably necessary to protect the security
interest under this Stock Pledge against the rights or
interests of third persons.
(5) Company will, subject to the applicable terms of
the Credit Agreement, reimburse Secured Party for all
reasonable costs, including reasonable attorneys' fees,
incurred for any action taken by Secured Party to remedy an
Event of Default which Secured Party elects to remedy pursuant
to its rights under Article VI hereof.
(6) Company will, subject to the applicable terms of
the Credit Agreement:
(i) allow Secured Party to examine, audit
and inspect Company's books, accounts, records
(including without limitation all records relating to
the Collateral or the Secured Obligations), ledgers
and assets and properties of every kind and
description wherever located at all reasonable times
during normal business hours, upon oral or written
request of Secured Party, and to make and take away
copies of any and all such books, accounts, records
and ledgers. An examination of the records or
properties of Company may require revealment of
proprietary and/or confidential data and information,
and the provisions of Section 13.12 of the Credit
Agreement are incorporated herein;
(ii) punctually and properly perform all of
its covenants and duties under any other security
agreement, mortgage, collateral pledge agreement or
contract of any kind now or hereafter existing as
security for or in connection with payment of the
Secured Obligations, or any part thereof;
(iii) perform its obligations under the Loan
Documents;
(iv) promptly furnish Secured Party with any
information in writing which Secured Party may
reasonably request concerning the Collateral;
(v) promptly notify Secured Party of any
material change in any fact or circumstances
warranted or represented by Company in this Stock
Pledge or in any other writing furnished by Company
to Secured Party in connection with the Collateral or
the Secured Obligations;
(vi) promptly notify Secured Party of any
material claim, action or proceeding affecting the
Collateral and title therein, or in any part thereof,
or the security interest created herein, and, at the
request of the Secured Party, appear in and defend,
at Company's expense, any such action or proceeding;
and
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(vii) promptly, after being requested by
Secured Party, pay to Secured Party the amount of all
reasonable expenses, including reasonable attorneys'
fees and other legal expenses, incurred by Secured
Party in protecting and maintaining the Collateral or
its rights hereunder, or in connection with any audit
or inspection of the Collateral pursuant to the terms
hereof, and in enforcing the security interest
created herein.
(7) With respect to any Collateral of a kind
requiring an additional security agreement, financing
statement, or other writing to perfect a security interest
therein in favor of Secured Party, on behalf of Banks, Company
will forthwith execute and deliver to Secured Party on behalf
of Banks, whatever the Secured Party or the Majority Banks
shall deem reasonably necessary or proper for such purpose.
Should any covenant, duty or agreement of Company fail to be
performed in accordance with its terms hereunder and such
failure continues for ten (10) days after notice thereof by
Secured Party to Company, Secured Party may, but shall never
be obligated to, perform or attempt to perform such covenant,
duty or agreement on behalf of Company, and any amount
expended by Secured Party in such performance or attempted
performance shall become part of the Secured Obligations, and,
at the request of Secured Party, Company agrees to pay such
amount to Secured Party upon demand at Secured Party's office
in Detroit, Michigan together with interest thereon at the
highest rate at which interest accrues on amounts after the
same become due pursuant to the terms of any note executed
pursuant to the Credit Agreement from the date of such
expenditure by Secured Party until paid. With respect to any
Collateral in which Company acquires any rights subsequent to
the date hereof and which, under applicable law, a security
interest is or can be perfected by possession, Company agrees
to deliver possession of such Collateral to Secured Party
immediately upon its acquisition of rights therein.
(8) Following the occurrence and during the
continuance of an Event of Default, Company will hold the
proceeds of any of the Collateral in trust for Secured Party
on behalf of the Banks, will not commingle said proceeds with
any other funds, and will deliver such proceeds to Secured
Party at its request.
(9) If Secured Party, acting in its sole discretion,
redelivers any Collateral to Company or Company's designee for
the purpose of
(i) the ultimate sale or exchange thereof,
or
(ii) presentation, collection, renewal, or
registration of transfer thereof,
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such redelivery shall not constitute a release of Secured
Party's security interest therein or in the proceeds thereof
unless Secured Party, with the consent of the Majority Banks,
specifically so agrees in writing.
(10) If Company requests any such redelivery, Company
will deliver with such request a duly executed financing
statement in form and substance satisfactory to Secured Party.
IV. DEFAULT
The term "Event of Default", as used herein, means the occurrence of
any Event of Default under the Credit Agreement.
V. CONSEQUENCE OF DEFAULT.
So long as the Secured Party has not given notice to Company that an
Event of Default has occurred and is continuing:
A. The Company shall be entitled to exercise any and
all voting or consensual rights and powers and stock purchase
or subscription rights (but any such exercise by the Company
of stock purchase or subscription rights may be made only from
funds of the Company not comprising part of the Collateral)
relating or pertaining to the Collateral or any part thereof
for any purpose; PROVIDED, HOWEVER, that the Company agrees
that it shall not to exercise any such right or power in any
manner which would have a material adverse effect on the value
of the Collateral or any part thereof.
B. The Company shall be entitled to receive and
retain (free of any lien in favor of Secured Party) any and
all lawful dividends payable in respect of the Collateral
which are paid in cash if such dividends are permitted by the
Credit Agreement, but all dividends and distributions in
respect of the Collateral or any part thereof made in shares
of stock or other property or representing any return of
capital, whether resulting from a subdivision, combination or
reclassification of Collateral or any part thereof or received
in exchange for Collateral or any part thereof or as a result
of any merger, consolidation, acquisition or other exchange of
assets to which the issuer may be a party or otherwise or as a
result of any exercise of any stock purchase or subscription
right, shall be and become part of the Collateral hereunder
and, if received by the Company, shall be forthwith delivered
to the Secured Party in due form for transfer (i.e., endorsed
in blank or accompanied by stock or bond powers executed in
blank) to be held for the purposes of this Pledge Agreement.
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Upon notice from the Agent during the existence of an Event of Default,
and so long as the same shall be continuing, all rights and powers which Company
is entitled to exercise pursuant to the preceding paragraph, and all rights of
Company to receive and retain dividends pursuant to the preceding paragraph
shall forthwith cease, and all such rights and powers shall thereupon become
vested in the Secured Party which shall have, during the continuance of such
Event of Default, the sole and exclusive authority to exercise such rights and
powers and to receive such dividends. Any and all money and other property paid
over to or received by the Secured Party pursuant to this paragraph shall be
retained by the Secured Party as additional Collateral hereunder and applied in
accordance with the provisions hereof.
The Company hereby granting unto Secured Party on behalf of the Banks,
as the proxy and attorney-in-fact of Company, full power to do any and all
things necessary to be done in and about the premises as fully and effectually
as Company might or could do, and hereby ratifying all that said proxy and
attorney shall lawfully do or cause to be done by virtue hereof. The proxy and
power of attorney described herein shall be deemed to be coupled with an
interest and shall be irrevocable for the term of the Credit Agreement, and all
transactions thereunder and thereafter as long as any Secured Obligations or any
of the commitments to lend remain outstanding. The Secured Party shall have full
power, subject to applicable law to collect, compromise, endorse, sell or
otherwise deal with the Collateral or proceeds thereof on behalf of the Banks in
its own name or in the name of Company provided that Secured Party shall act in
a commercially reasonable manner.
VI. SECURED PARTY'S RIGHTS AND REMEDIES.
Secured Party shall have available to it (subject to applicable law)
the following rights and remedies upon occurrence and during the continuance of
an Event of Default:
A. RIGHT TO ASSIGN. Secured Party may assign this Stock Pledge
only as provided in the Credit Agreement and if Secured Party does
assign this Stock Pledge, the assignee shall be entitled to the
performance of all of Company's obligations and agreements under this
Stock Pledge, and the assignee shall be entitled to all the rights and
remedies of Secured Party under this Stock Pledge.
B. REMEDIES AND ENFORCEMENT. Secured Party shall have and may
exercise, at the direction or with the approval of the Majority Banks,
any and all rights of enforcement and remedies afforded to a secured
party under the Uniform Commercial Code as adopted and in force in the
State of Illinois, to the extent permitted by applicable law, on the
date of this Stock Pledge or the date of Company's default together
with any and all other rights and remedies otherwise provided and
available to Secured Party by law unless such application would result
in the invalidity or unenforceability of any provision hereof, in which
case the law of the state in which any of the Collateral is located
shall apply to the extent necessary to render such provision valid and
enforceable; and, in conjunction with, in addition to, or substitution
for those rights, at the direction or with the approval of the Majority
Banks, Secured Party may:
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(1) Apply any of the Collateral against any of the
Secured Obligations; and
(2) Waive any default, or remedy any default in any
reasonable manner, without waiving its rights and remedies
upon default and without waiving any other prior or subsequent
default.
C. RIGHT OF SALE.
(1) Company agrees that upon the occurrence and
during the continuance of an Event of Default (taking into
account applicable periods of cure, if any), Secured Party
may, at its option, sell and dispose of the Collateral at
public or private sale without any previous demand of
performance. Company agrees that notice of such sale sent to
Company's address, as set forth in the Credit Agreement, by
certified or registered mail sent at least ten (10) Business
Days prior to such sale, shall constitute reasonable notice of
sale. The proceeds of sale shall be applied in the following
order:
(i) to all reasonable costs and charges
incurred by Secured Party in the sale of said
property, including such reasonable attorneys' fees
as shall have been incurred by Secured Party;
(ii) to the Secured Obligations, including
all accrued interest thereon; and
(iii) any surplus of such proceeds remaining
shall be paid to Company, or to such other party who
shall lawfully be entitled thereto.
(2) At any sale or sales made pursuant to this Stock
Pledge or in a suit to foreclose the same, the Collateral may
be sold en masse or separately, at the same or at different
times, at the option of the Secured Party or its successors or
assigns. Such sale may be public or private with notice as
required by the Uniform Commercial Code as then in effect in
the state in which the Collateral is located, and the
Collateral need not be present at the time or place of sale.
At any such sale, the Secured Party or the holder of any note
hereby secured may bid for and purchase any of the property
sold, notwithstanding that such sale is conducted by the
Secured Party or its attorneys, agents, successors or assigns.
D. MISCELLANEOUS. Secured Party shall have the right at all
times to enforce the provisions of this Stock Pledge on behalf of Banks
in strict accordance with the terms hereof, notwithstanding any conduct
or custom on the part of Secured Party in refraining from so doing at
any time or times. The failure of Secured Party at any time or times to
enforce its rights under said provisions strictly in accordance with
the same shall not be construed as
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having created a custom in any way or manner contrary to the specific
provisions of this Stock Pledge or as having in any way or manner
modified the same. All rights and remedies of Secured Party and Banks
are cumulative and concurrent, and the exercise of one right or remedy
shall not be deemed a waiver or release of any other right or remedy.
VII. REPRESENTATIONS AND WARRANTIES OF COMPANY.
Company represents and warrants, as continuing representations and
warranties so long as the Stock Pledge remains in effect, that:
A. The individual signatory hereto has authority to execute
and deliver this Stock Pledge on behalf of Company.
B. No financing statement covering the Collateral, or any part
thereof, has been filed with any filing officer other than in favor of
Secured Party.
C. No other agreement, pledge or assignment covering the
Collateral, or any part thereof, has been made and no security
interest, other than the one created hereby or pursuant to pledges and
security agreements previously made in favor of Secured Party on behalf
of the Banks, has attached or been perfected in the Collateral or in
any part thereof.
D. All information supplied and statements made in any
financial or credit statements or application for credit prior to the
execution of this Stock Pledge are true and correct as of the date
hereof in all material respects.
E. The Collateral, (1) in the case of each Subsidiary,
constitutes all the issued and outstanding capital stock (or other
ownership interests) of each of the Subsidiaries, except as set forth
in Schedule A of this Stock Pledge, (2) has been duly authorized and
issued to Company, (3) is fully paid and non-assessable, (4) is freely
and validly assignable by Company, and (5) is not subject to any
option, warrant right to call or commitment of any kind or nature.
F. At the time Secured Party's security interest attaches to
any of the Collateral or its proceeds, Company will be the lawful owner
with the right to transfer any interest therein, and that Company will
make such further assurances as to prove its title to the Collateral as
may be reasonably required and will defend the Collateral and its
proceeds against the lawful claims and demands of all persons
whomsoever. The delivery at any time by Company to Secured Party of
Collateral or financing statements covering Collateral shall constitute
a representation and warranty by Company under this Stock Pledge that,
with respect to such Collateral, and each item thereof, Company is
owner of the Collateral and the matters heretofore warranted in this
paragraph are true and correct.
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VIII. MUTUAL AGREEMENTS.
Company and Secured Party mutually agree as follows:
A. "Company" and "Secured Party" as used in this Stock Pledge
include the successors and permitted assigns of those parties.
B. To the extent permitted by applicable law, except as
otherwise provided herein, the law governing this secured transaction
shall be that of the State of Illinois.
C. This Stock Pledge includes all amendments and supplements
hereto and assignments hereof and Company and Secured Party shall not
be bound by any amendment or undertaking not expressed in a writing
executed by each of them.
D. All capitalized terms not specifically defined herein which
are defined in the Credit Agreement are used as defined in the Credit
Agreement.
E. This Stock Pledge shall be a continuing security interest
in every respect (whether or not the outstanding balance of the Secured
Obligations is reduced to zero) and Secured Party's security interest
in the Collateral as granted herein shall continue in full force and
effect until all of the Secured Obligations are repaid and discharged
in full and no commitment (whether optional or obligatory) to extend
any credit under the Credit Agreement remains outstanding.
F. The parties hereto acknowledge that this Stock Pledge is
subject to the mutual waiver of jury trial contained in Section 13.15
of the Credit Agreement and to the consent to jurisdiction provisions
contained in Section 13.2 of the Credit Agreement.
G. This Stock Pledge has been executed and delivered pursuant
to the Credit Agreement and in the event of any conflict between this
Stock Pledge and the Credit Agreement, the Credit Agreement shall
govern.
H. Upon payment in full of all Secured Obligations and when
all commitments to extend any credit under the Credit Agreement have
been terminated, the Secured Party shall, at Debtors' expense, execute
and deliver to Debtors all instruments and documents as may be
necessary or proper to release the lien on and security interest in the
Collateral which has been granted hereunder.
[SIGNATURES FOLLOW ON SUCCEEDING PAGE]
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IN WITNESS WHEREOF, Company and Secured Party have executed this Stock
Pledge on the day and year first above written.
COMPANY:
HA-LO-INDUSTRIES, INC. an Illinois
corporation
By:__________________________________
Its:_________________________________
ACCEPTED BY SECURED PARTY:
COMERICA BANK, as Agent for the Banks
By:__________________________________
Its:_________________________________
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SCHEDULE A
SIGNIFICANT SUBSIDIARIES:
1. CREATIVE CONCEPTS IN ADVERTISING, INC.
2. MARKET U.S.A. INC.
3. PREMIER PROMOTIONS AND MARKETING, INC.
4. LIPSON ASSOCIATES, INC. (d/b/a LAGA)
5. UPSHOT DIRECT, INC.
6. LEE WAYNE CORPORATION
7. UPSHOT (NEW YORK), INC.
8. HA-LO SPORTS, INC.
9. PROMOTIONAL MARKETING, L.L.C.
10. CF NAPA DESIGN, INC.
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FORM OF
ACKNOWLEDGMENT AND CONSENT
(___________)
The undersigned acknowledges receipt of: (i) notice that Ha-Lo
Industries, Inc. ("Assigning Member") has assigned, pledged and granted to
Comerica Bank in its capacity as agent ("Agent") a security interest in such
Assigning Member's interest as a member in ________________, a __________
limited liability company ("Subsidiary") and (ii) a copy of the Pledge Agreement
dated as of March 31, 2000 made between the Assigning Member and Agent (in each
case, as amended or otherwise modified from time to time, the "Pledge
Agreement"). The undersigned consents to such assignment, pledge and grant of
security and agrees that upon the written request of Agent the undersigned will
pay or cause to be paid to Agent all monies to the extent required in the Pledge
Agreement, due the Assigning Members arising out of the interest of Assigning
Member in Subsidiary.
The undersigned warrants and represents to Agent that the membership
interests of Subsidiary assigned hereunder to Agent are not (i) dealt in or
traded on securities exchanges or in securities markets, (ii) the terms
establishing the interest do not expressly provide that they are governed by
Article 8 of the Uniform Commercial Code, (iii) interests in a unit investment
trust that is registered as an investment company under Federal Investment
Company laws and (iv) are not face amount certificates issued by a face-amount
certificate company that is registered as an investment company under Federal
Investment Company laws. And the undersigned further represents and warrants
that the undersigned is not registered as an investment company under Federal
Investment Company laws.
The undersigned warrants and represents to Agent that the operating
agreement governing Subsidiary continues to be in full force and effect and
that, to the knowledge of the undersigned, no event has occurred or condition
exists which reasonably would be expected to result in a defense, offset or
counterclaim limiting Subsidiary's obligations to distribute any monies due or
to become due to the Assigning Member in accordance with such operating
agreement. The undersigned further warrants and represents to Agent that the
operating agreement authorizes the assignment and security interest made by such
Assigning Member to Agent. The undersigned agrees that, unless and until Agent
shall have exercised its rights and remedies under the Pledge Agreement and then
only to the extent set forth therein, Agent shall have no responsibility for any
of the liabilities or obligations of the Assigning Member to the undersigned nor
any interest in any of the rights of the Assigning Member under the operating
agreement. Nothing in this Acknowledgment and Consent shall be construed to
expand the rights of the Agent under the Pledge Agreement.
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In Witness Whereof, the undersigned has executed this acknowledgment
and consent as of March 31, 2000.
[SUBSIDIARY]
By:__________________________________
Its:_________________________________
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