Exhibit 10.81
DOMESTIC SECURITY AGREEMENT
This SECURITY AGREEMENT ("Security Agreement") is made as of this 31st
day of March, 2000 by and among Ha-Lo Industries, Inc., an Illinois corporation
("Company") and such other persons or entities which from time to time become
parties hereto (collectively, including the Company, the "Debtors" and
individually each a "Debtor") and Comerica Bank, a Michigan banking corporation,
as Agent for and on behalf of the Banks (as defined below) ("Secured Party").
RECITALS
A. WHEREAS, pursuant to that certain Ha-Lo Industries, Inc. Revolving
Credit Agreement dated as of March 31, 2000 (as amended or otherwise modified
from time to time, the "Credit Agreement"), among Company, the Canadian
Permitted Borrower (as defined in the Credit Agreement), each of the financial
institutions party thereto (collectively, the "Banks") and Secured Party, as
Agent for the Banks, the Banks have agreed, subject to the satisfaction of
certain terms and conditions, to make Advances to Company of the Revolving
Credit, the Swing Line and to provide for the issuance of Letters of Credit for
the account of Company, individually, or jointly and severally with certain of
the other Account Parties (as such terms are defined in the Credit Agreement),
as provided therein; and
B. WHEREAS, each of the Debtors (other than the Company) has executed
and delivered a guaranty (as amended or otherwise modified from time to time,
the "Guaranty") of the obligations of the Company under the Credit Agreement;
and
C. WHEREAS, the obligations of the Company under the Credit Agreement
and the obligations of each Debtor (other than the Company) under the Guaranty
are to be secured pursuant to this 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
As security for the Secured Obligations (hereinafter defined), each
Debtor hereby pledges and grants to Secured Party, as Agent for and on behalf of
Banks, a security interest in the following described property of Debtor (the
"Collateral"):
(a) all inventory, goods (including returned or repossessed
goods and all goods the sale of which gives rise to accounts
receivable, contract rights, chattel paper, general
intangibles or instruments), merchandise and other personal property,
in each case whether now owned or hereafter produced, manufactured or
acquired by such Debtor which are held for sale or lease or are
furnished or to be furnished under a contract of service or are raw
materials, work in process or materials used or consumed or to be used
or consumed in such Debtor's business;
(b) all accounts; accounts receivable; contract rights;
general intangibles; chattel paper and instruments (including without
limitation instruments evidencing any obligation to such Debtor for
payment for goods sold or leased or services rendered or otherwise)
together with all payments thereon or thereunder; tax refunds;
goodwill; licenses, permits and privileges; customer lists; rights of
indemnification;
(c) all machinery, equipment, furniture and other tangible
personal property and fixtures of such Debtor, together with all
accessions, additions, accessories, parts and equipment now or
hereafter affixed thereto or used in connection therewith;
(d) all patents, trademarks, copyrights and other intellectual
property and proprietary rights, including without limitation those
items of property listed in Schedule I hereto;
(e) all Intercompany Notes issued in favor of such Debtor;
(f) all investment property of such Debtor; and
(g) the balance from time to time in all bank and depository
accounts of such Debtor and all amounts in any lockbox or in any
collateral account, including all funds on deposit therein, all
investments arising out of such funds, all claims thereunder or in
connection therewith, and all cash, instruments, securities, rights and
other property at any time and from time to time received, receivable,
or otherwise distributed in respect of such accounts, such funds or
such investments;
whether any such property is now owned or hereafter acquired or existing by such
Debtor, and all records (including computer software) pertaining to the
foregoing, and all substitutions for, all proceeds and all products of the
foregoing, including insurance proceeds, to the fullest extent permitted by law,
subject in each case only to the Permitted Liens. The pledge and grant of a
security interest in proceeds hereunder shall not be deemed to give such Debtor
any right to dispose of any of the Collateral except as provided in the Credit
Agreement. Notwithstanding the foregoing, the Collateral does not include
ownership interests in any Debtor.
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II. DEBTORS' OBLIGATIONS
A. PAYMENT OF SECURED OBLIGATIONS. The security interest created herein
by each Debtor is given as security for the discharge and performance of the
following obligations: all of any Company's and any Debtor's obligations
contained in or arising under or in connection with the Credit Agreement, any
Note (issued), the Letter of Credit Agreements and any Letters of Credit issued
thereunder, the Guaranty, any Interest Rate Protection Agreements, any other
Loan Document or any other document or instrument executed in connection
therewith, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due to become due,
together with interest thereon; 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 COLLATERAL. Each Debtor shall take any and all
reasonable steps required to protect the Collateral, and in pursuance thereof,
each such Debtor agrees that:
(1) The Collateral will not be misused, wasted or allowed to
deteriorate, except for the ordinary wear and tear of its intended primary use
or to the extent no longer useful or necessary to such Debtor's business, and
will at all times be maintained in accordance with the applicable terms of the
Credit Agreement.
(2) The Collateral described in Section I.(a) and (c) will be
insured with insurance coverage in such amounts and of such types as are
customarily covered by companies similar in size or nature. In the case of all
such insurance policies, each such Debtor shall designate the Secured Party, on
behalf of Banks, as mortgagee and loss payee and such policies shall provide
that any loss be payable to each such Debtor and Secured Party, on behalf of
Banks, as mortgagee and loss payee, as their respective interests may appear.
Further, upon the request of the Secured Party acting at the request of the
Banks, each such Debtor shall deliver copies of all said policies, including all
endorsements thereon and those required hereunder, or certificates evidencing
the same, to Secured Party; and each such Debtor assigns to Secured Party, on
behalf of Banks, as additional security hereunder, all its rights to receive
proceeds of insurance with respect to the Collateral. All such insurance shall,
by its terms, provide that no cancellation, lapse (including without limitation
any lapse for non-payment of premiums) or material change in coverage shall
become effective until thirty (30) days after receipt by Secured Party of
written notice from the applicable carrier. Each Debtor further shall provide
Secured Party upon request with evidence reasonably satisfactory to Secured
Party that each such Debtor is at all times in compliance with this paragraph.
During the continuance of an Event of Default, Secured Party may act as each
such Debtor's attorney-in-fact in obtaining, adjusting, settling and
compromising such insurance and endorsing any drafts. Upon default in this
covenant, Secured Party may procure such insurance and its costs therefor shall
be charged to Company, payable on demand, with interest at the highest rate set
forth in the Credit Agreement and added to the Secured Obligations secured
hereby. The disposition of proceeds of any insurance on the Collateral
("Insurance Proceeds") shall be treated as an Asset Sale.
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(3) The Collateral is located in the premises set forth on
Schedule II, and will not be moved to premises other than those set forth on
Schedule II, and such other locations with respect to which each such Debtor
shall have executed and delivered to Secured Party all financing statements and
other documents and instruments necessary to perfect or continue the perfection
of the Secured Party's security interest in the Collateral; provided, however,
Collateral consisting of demo Inventory used by sales representatives need not
be located at the premises set forth on Schedule II. Subject to the applicable
terms of the Credit Agreement, upon reasonable request therefor by the Secured
Party, each such Debtor will inform the Secured Party in writing of the
whereabouts of the Collateral and Debtor will promptly arrange for any
inspections requested by the Secured Party, on behalf of Banks.
(4) Each such Debtor shall comply with all applicable laws,
rules, ordinances, regulations and orders of any governmental authority, whether
federal, state, local or foreign in effect from time to time with respect to the
Collateral, to the full extent required under the Credit Agreement.
(5) Secured Party, on behalf of the Banks, may, subject to the
applicable terms of the Credit Agreement, examine and inspect the Collateral at
any time wherever located.
C. PROTECTION OF SECURITY INTEREST. Each Debtor agrees that:
(1) Except as permitted by the Credit Agreement, it will not
sell, transfer, lease or otherwise dispose of any of the Collateral or any
interest therein or offer to do so (other than the sale or lease of inventory in
the ordinary course of business) without the prior written consent of Secured
Party, given at the written direction or with the written approval of the
requisite Banks, and will not create, incur, assume or suffer to exist any
mortgage, pledge, encumbrance, security interest, lien or charge of any kind
upon any of the Collateral (or any interest therein or portion thereof), other
than in favor of Secured Party, on behalf of the Banks and liens permitted under
the Credit Agreement.
(2) It will, subject to the applicable terms of the Credit
Agreement, to the full extent required under the Credit Agreement, pay all taxes
including, without limitation, any maintenance fees payable on any registered
patents and any fees in connection with any required filings in connection with
any pending or registered trademarks, assessments, governmental charges and
levies upon the Collateral or for its use or operation.
(3) It will, subject to the applicable terms of the Credit
Agreement, sign and execute alone or with Secured Party any financing statement
or other document (including without limitation, filings required in connection
with any pending or registered trademark) or procure any documents and pay all
connected costs, reasonably necessary to protect the security interest under
this Security Agreement against the rights or interests of third persons.
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(4) It 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 of Debtor which Secured Party elects to remedy
pursuant to its rights under Paragraph V hereof.
(5) It will, subject to the applicable terms of the Credit
Agreement,
(i) allow Secured Party, or any Bank, to examine,
audit and inspect such Debtor's books, accounts, and other records
relating to the Collateral 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 the Company may require revealment of proprietory and/or
confidential data and information; the parties hereto acknowledge that
the provisions of Section 13.12 of the Credit Agreement (as to
confidentiality) are incorporated herein.
(ii) punctually and properly perform all of its
covenants and duties under any other security agreement, mortgage,
collateral document, 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 and comply with
the terms and provisions of the Credit Agreement and the other Loan
Documents to which it is or may become a party;
(iv) keep, at the addresses designated on Schedule II
and such additional addresses as may be provided from time to time for
its records, all records concerning the Collateral, which records will
be of such character as will enable Secured Party or its designees to
determine at any time the status of the Collateral;
(v) give Secured Party not less than thirty (30) days
prior written notice of all contemplated changes in such Debtor's name,
legal structure, or chief executive office, or in the location of the
Collateral or such Debtor's records concerning same and, prior to
making any such changes, file or cause to be filed all financing
statements or amendments or other documents or instruments determined
by Secured Party to be reasonably necessary or appropriate to establish
and maintain a valid first priority security interest in all the
Collateral in accordance with the terms hereof;
(vi) promptly furnish Secured Party with any
information in writing which Secured Party may reasonably request
concerning the Collateral;
(vii) to the extent required under the Credit
Agreement, 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
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Secured Party, appear in and defend, at such Debtor's expense, any such
action or proceeding;
(viii) 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 pursuant to and in accordance with the Credit
Agreement 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 accordance with the
Credit Agreement, and in enforcing the security interest created
herein; and
(ix) allow Secured Party, upon and so long as there
exists any Event of Default, to correspond with its account debtors to
confirm its accounts receivable and obligors under any contracts.
(6) 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, such
Debtor will forthwith upon demand by Secured Party execute and deliver to
Secured Party on behalf of Banks, whatever documentation the Secured Party or
the Majority Banks shall reasonably deem necessary or proper for such purpose.
Should any covenant, duty or agreement of such Debtor fail to be performed in
accordance with its terms hereunder resulting in an Event of Default, Secured
Party may, but shall never be obligated to, perform or attempt to perform such
covenant, duty or agreement on behalf of such Debtor, 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, such Debtor
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
the Credit Agreement, from the date of such expenditure by Secured Party until
paid. With respect to any Collateral (other than goods) in which such Debtor
acquires any rights subsequent to the date hereof and which, under applicable
law, a security interest is or can be perfected by possession, upon request of
the Secured Party or the Majority Banks, such Debtor agrees to deliver
possession of such Collateral to Secured Party immediately upon its acquisition
of rights therein. Debtor acknowledges that while Secured Party and the Banks
have elected, as of the date hereof, not to require the delivery (with
endorsement of liens thereon) of certificates of title covering Debtors' motor
vehicles, or to require the execution of appropriate fixture filings covering
the Collateral which constitutes fixtures under applicable law, Secured Party
and the Banks reserve the right, at any time (upon the following terms) to
subsequently elect, by written notice to Debtors and Secured Party, to perfect
the liens and security interests in fixtures established by this Security
Agreement, Debtors shall furnish, or cause to be furnished, to Secured Party
real property legal descriptions for all premises containing fixtures, real
property title and tax searches and copies of prior surveys, all in form and
substance reasonably acceptable to the Secured Party and the Bank.
(7) Investment Property. It will take any and all actions
required or reasonably requested by the Secured Party, from time to time, to (i)
cause the Secured Party to obtain exclusive
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control of any investment property owned by such Debtor in a manner reasonably
acceptable to the Secured Party and (ii) obtain from any issuers of investment
property and such other Persons, for the benefit of the Secured Party, written
confirmation of the Secured Party's control over such investment property. For
purposes of this Section C(7), the Secured Party shall have exclusive control of
investment property if (i) such investment property consists of certificated
securities and a Debtor delivers such certificated securities to the Secured
Party (with appropriate endorsements if such certificated securities are in
registered form); (ii) such investment property consists of uncertificated
securities and either (x) a Debtor causes the issuer to register the Debtor's
pledge of the investment property on the issuer's books and records or (y) the
issuer thereof agrees, pursuant to documentation in form and substance
satisfactory to the Secured Party, that it will comply with instructions
originated by the Secured Party without further consent by such Debtor; and
(iii) such investment property consists of security entitlements either (x) the
Secured Party becomes the entitlement holder thereof or (y) the appropriate
securities intermediary agrees, pursuant to the documentation in form and
substance satisfactory to the Secured Party, that it will comply with
entitlement orders originated by the Secured Party without further consent by
any Debtor.
(8) Except as permitted by the Credit Agreement or this
Agreement, it will hold the proceeds of any of the Collateral (including
accounts receivable and contracts) which is sold other than in the ordinary
course of such Debtor's business in trust for Secured Party on behalf of the
Banks, will not commingle said proceeds with any other funds, and, after and
during the continuance of an Event of Default, will deliver such proceeds to
Secured Party immediately upon its request.
(9) It will not, except as permitted under the Credit
Agreement, grant any rebate, refund, allowance or credit on any account
receivable, or on any amounts due under any accounts receivable, other than in
the ordinary course of business, without Secured Party's prior written consent.
(10) If Secured Party, acting in its sole discretion,
redelivers any Collateral to such Debtor or such Debtor's designee for the
purpose of (i) the ultimate sale or exchange thereof, or (ii) presentation,
collection, renewal, or registration of transfer thereof, or (iii) loading,
unloading, storing, shipping, transshipping, manufacturing, processing or
otherwise dealing therewith preliminary to sale or exchange; 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 Banks,
specifically so agrees in writing. If such Debtor requests any such redelivery,
such Debtor will deliver with such request a duly executed financing statement
in form and substance satisfactory to Secured Party.
(11) Subject to the applicable terms of the Credit Agreement,
Debtor shall take any and all other steps reasonably required under applicable
law to perfect the lien and security interest established hereby in favor of
Secured Party, on behalf of the Banks, including without limitation the
execution, delivery and/or performance of appropriate acknowledgments,
governmental acknowledgments, registrations or approvals, financing statements
and other documents and
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instruments, and the registration, recording and/or filing of such instruments
with such Persons and in such jurisdictions as necessary to perfect the security
interest and lien established hereby.
III. COLLECTION OF PROCEEDS; LOCKBOX; REMITTANCE BASIS AFTER DEFAULT.
A. Within one hundred twenty (120) days following the date
hereof, (i) each Debtor shall, at its sole expense, establish
and maintain, during the entire term of this Agreement (or
until the Agent, acting at the direction or with the
concurrence of the Majority Banks in their sole discretion,
shall notify Debtors that Debtors are no longer required to do
so) United States Post Office Lock Box(s) (the "Lock
Box(es)"), to which Secured Party (directly, through a lock
box in the name of Secured Party) (a "Secured Party Lock Box")
or a Collection Bank (as defined below)) shall have exclusive
access, and to which Debtors shall have no access; (ii) each
Debtor shall, notify all account debtors and other parties
obligated to it (excluding those being shipped c.o.d.) that
all payments made on any account, invoice or other Collateral
consisting of Inventory, excluding payments by electronic
funds transfer, shall be remitted, for the credit of such
Debtor, to a Secured Party Lock Box, or a Lock Box maintained
by a Collection Bank and each such Debtor shall include a like
statement on all invoices; and (iii) payments made by
electronic funds transfer shall be made directly to the Cash
Collateral Account (defined below), and each such Debtor shall
so instruct its account debtors and other parties obligated to
it. The Debtors shall execute all documents, authorizations
and other agreements necessary to establish the Lock Boxes
(and any blocked account agreements, agreements pertaining to
Collection Accounts and related documentation), and Secured
Party's exclusive access thereto (either directly, or through
a Collection Bank, as set forth herein). For purposes of this
Agreement, a "Collection Bank" shall mean any Bank (party to
the Credit Agreement) selected by Debtor which has entered
into a blocked account agreement with Secured Party and the
applicable Debtor in form acceptable to the Majority Banks,
such blocked account agreement to become operative immediately
upon the occurrence of an Event of Default; and "Collection
Account" shall mean a deposit account (subject to a blocked
account agreement, as aforesaid), maintained with a Collection
Bank. Each Debtor shall comply with the terms and conditions
of each such blocked account agreement to which it is a party.
B. Provided that no Default or Event of Default has occurred and
is continuing under the Credit Agreement, (i) the Secured
Party or the Collection Bank, as the case may be, shall
forthwith upon receipt, release all checks, cash or other
items received in the applicable Lock Box to the applicable
Debtor (directly, or by deposit to a Collection Account), and
(ii) any collected funds credited to the Cash Collateral
Account shall, but only to the extent received in good funds
and not recoverable by any transmitting party, be released
forthwith to the applicable Debtor, or upon the reasonable
written instructions of such Debtor.
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C. Upon the occurrence and during the continuance of any Event of
Default under the Credit Agreement, (i) the Secured
Obligations shall be deemed to be on a "remittance basis",
(ii) no items or amounts remitted to a Lock Box or otherwise
delivered by or for the benefit of a Debtor to Secured Party
(or any Collection Bank) shall be released to any Debtor but,
instead, shall, at Secured Party's option (exercisable at the
direction or with the concurrence of the Majority Banks in
their sole discretion), (x) be applied against the Secured
Obligations, in the order and manner determined by the
Majority Banks in their sole discretion or (y) be deposited to
the credit of a non-interest bearing deposit account in the
name of Agent, as Secured Party, each Debtor hereby
authorizing Secured Party to establish such account for the
benefit of such Debtor (subject to the terms hereof) and such
sums to be held as security for payment of the Secured
Obligations, but subject to application by the Secured Party,
at any time (at the direction or with the concurrence of the
Majority Banks in their sole discretion) against the Secured
Obligations, in the order and manner as determined by the
Majority Banks in their sole discretion; and (iii) no Debtor
shall have any right whatsoever to withdraw any funds so
deposited, and each Debtor further grants to Secured Party a
first security interest in and lien on all funds on deposit in
such Cash Collateral account. To the extent collected funds
remain at any time on deposit in the Cash Collateral Account
after the irrevocable payment and discharge in full of the
Secured Obligations (and the irrevocable termination of any
commitments), Secured Party shall release such surplus
collected funds to or at the direction of the applicable
Debtor, or as a court of competent jurisdiction shall
otherwise require. Each Debtor hereby irrevocably authorizes
and directs Secured Party to endorse all items received for
deposit to the Cash Collateral Account, notwithstanding the
inclusion on any such item of a restrictive notation, e.g.,
"paid in full", "balance of account", or other restriction.
D. Furthermore, upon the occurrence and during the continuance of
any Event of Default, any and all cash (including amounts
received by electronic funds transfer), checks, drafts and
other instruments for the payment of money received by each
Debtor at any time, in full or partial payment of any of the
Collateral consisting of Accounts or Inventory, shall
forthwith upon receipt be transmitted and delivered to Secured
Party (directly or through a Collection Bank), properly
endorsed, where required, so that such items may be collected
by Secured Party. Any such amounts and other items received by
a Debtor following the occurrence and during the continuance
of an Event of Default shall not be commingled with any other
of such Debtor's funds or property, but will be held separate
and apart from such Debtor's own funds or property, and upon
express trust for the benefit of Secured Party and the Banks
until delivery is made to Secured Party.
E. Each Debtor agrees that neither Secured Party nor any Bank
shall be liable for any loss or damage which such Debtor
suffers or may suffer as a result of Secured Party's
processing of items or its exercise of any other rights or
remedies under this Agreement, including without limitation
indirect, special or consequential damages,
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loss of revenues or profits, or any claim, demand or action by
any third party arising out of or in connection with the
processing of items or the exercise of any other rights or
remedies hereunder, except for direct damages which arise from
Secured Party's or any Bank's gross negligence or willful
misconduct. Each Debtor further agrees to indemnify and hold
Secured Party and the Banks harmless from and against all such
third party claims, demands or actions, including without
limitation litigation costs and reasonable attorney fees,
except with respect to such claims, demands and actions which
arise from Secured Party's or any Bank's gross negligence or
willful misconduct.
IV. DEFAULT
The terms "Default" and "Event of Default", as used herein, shall mean
the occurrence of a Default or an Event of Default, as the case may be, under
the Credit Agreement.
V. SECURED PARTY'S RIGHTS AND REMEDIES.
In addition to its rights and remedies under the Credit Agreement and
the other Loan Documents, and under applicable law, Secured Party shall have
available to it the following rights and remedies upon occurrence and during the
continuance of an Event of Default:
A. RIGHT TO DISCHARGE DEBTOR'S OBLIGATIONS. Secured Party may, with the
approval of the Majority Banks, discharge taxes, liens or security interests or
other encumbrances at any time levied or placed on the Collateral in violation
of the terms hereof, whether senior or junior to the security interest herein
granted, may remedy or cure any default of a Debtor under the terms of any
lease, rental agreement, land contract or other document which in any way
pertains to or affects such Debtor's title to or interest in any of the
Collateral, may pay for insurance on the Collateral, and may pay for the
maintenance and preservation of the Collateral, unless such Debtor is contesting
in good faith such obligations, and such Debtor agrees to reimburse Secured
Party, on demand, for any reasonable payment made or any reasonable expense
incurred by Secured Party pursuant to the foregoing authorization, with
interest, which payments and expenses shall be secured by the Collateral.
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 or other
applicable uniform commercial code (or other applicable law), to the full extent
permitted by applicable law, on the date of this Security Agreement or the date
of such Debtor's default, together with any and all other rights and remedies
otherwise provided and available to Secured Party by applicable 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, Secured Party
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may, at the direction or with the approval of the Majority Banks, or with
respect to subparagraph (3) below, all of the Banks:
(1) Enter upon such Debtor's premises to take possession of,
assemble, collect and/or dispose of the Collateral and, if Secured
Party elects to do, to apply any of the Collateral against any of the
Secured Obligations;
(2) Require such Debtor to assemble the Collateral and make it
available at a place Secured Party designates to allow Secured Party to
take possession or dispose of the Collateral;
(3) 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;
(4) Without any notice to any Debtor, notify any parties
obligated on any of the Collateral to make payment to the Secured
Party, on behalf of the Banks, of any amounts due or to become due
thereunder and enforce collection of any of the Collateral by suit or
otherwise and surrender, release or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer
than the original period) the indebtedness thereunder or evidenced
thereby. Upon request of the Secured Party, each Debtor will, at its
own expense, notify any parties obligated to such Debtor on any of the
Collateral to make payment to the Secured Party of any amounts due or
to become due thereunder, and indicate on all billings to such account
debtors that their accounts must be paid to or as directed by Secured
Party. Each Debtor agrees that neither Secured Party nor the Banks
shall be liable for any loss or damage which such Debtor suffers or may
suffer as a result of Secured Party's processing of items or its
exercise of any other rights or remedies under this Security Agreement,
including without limitation indirect, special or consequential
damages, loss of revenues or profits, or any claim, demand or action by
any third party not related to or affiliated with such Debtor arising
out of or in connection with the processing of items (excluding only
the claims of such third parties in connection with the processing of
items based upon the gross negligence or willful misconduct of Secured
Party) or the exercise of any other rights or remedies hereunder. Each
Debtor further agrees to indemnify and hold Secured Party and the Banks
harmless from and against all such third party claims, demands or
actions, including without limitation litigation costs and reasonable
attorneys' fees, excepting only those claims, demands and actions
arising as a result of the gross negligence or willful misconduct of
Secured Party or any of the Banks;
(5) Appoint any officer or agent of Secured Party as a
Debtor's true and lawful proxy and attorney-in-fact, with power, upon
the occurrence of any Event of Default (exercisable so long as such
Event of Default is continuing); to endorse such Debtor's name or any
of its officers or agents upon any notes, checks, drafts, money orders,
or other instruments of payment (including payments payable under any
policy of insurance on the Collateral) or Collateral that may come into
possession of the Secured Party in full or part
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payment of any amounts owing to the Banks; to sign and endorse the name
of such Debtor and/or any of its officers or agents upon any invoice,
freight or express bill, bill of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in
connection with accounts, and any instrument or document relating
thereto or to such Debtor's rights therein; to execute on behalf of
such Debtor any financing statements, amendments, subordinations or
other filings pursuant to the Credit Agreement, this Security Agreement
or the other Loan Documents; each Debtor hereby granting unto Secured
Party on behalf of the Banks, as the proxy and attorney-in-fact of such
Debtor, full power to do any and all things necessary to be done in and
about the premises as fully and effectually as such Debtor 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 entire term of the Credit
Agreement, the Notes and all transactions thereunder and thereafter as
long as any Secured Obligations or any of the commitments to lend
(whether optional or obligatory) remain outstanding. The Secured Party
shall have full power 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 such Debtor, provided that
Secured Party shall act in a commercially reasonable manner.
C. RIGHT OF SALE.
(1) Each Debtor agrees that upon the occurrence and
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. Each Debtor agrees that notice of such
sale sent to Debtor'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 foregoing
shall not require notice if none is necessary under applicable law. The
proceeds of sale shall be applied in the following order:
(i) to all reasonable costs and charges incurred by
Secured Party in the taking and causing the removal, repair
and sale of said property, including such reasonable
attorneys' fees (if permitted by law) as shall have been
incurred by Secured Party;
(ii) to the Secured Obligations, including without
limitation all accrued interest thereon, premiums and make
whole amounts, if any, in the order set forth in the Credit
Agreement; and
(iii) any surplus of such proceeds remaining shall be paid
to such Debtor, or to such other party who shall lawfully be
entitled thereto.
(2) At any sale or sales made pursuant to this Security
Agreement or in a suit to foreclose the same, the Collateral may be
sold en masse or separately, at the same or at different times, for
cash, on credit or for future delivery at the option of the Secured
Party or
12
its 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. The Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been
given. The Secured Party may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned. The Company and each Debtor hereby waives
any claims against the Secured Party arising by reason of the fact that
the price at which any Collateral may have been sold at such private
sale was less than the price which might have been obtained at a public
sale, even if the Secured Party accepts the first offer received and
does not offer such Collateral to more than one offeree, and in all
events such sale shall be deemed commercially reasonable. At any such
sale, the Secured Party may bid for and purchase any of the property
sold, notwithstanding that such sale is conducted by the Secured Party
or its attorneys, agents, or assigns.
D. MISCELLANEOUS. Secured Party shall have the right at all times to
enforce the provisions of this Security Agreement, on behalf of Banks, in strict
accordance with the terms hereof, notwithstanding any conduct or custom on the
part of Secured Party or any of the Banks in refraining from so doing at any
time or times. The failure of Secured Party or any of the Banks at any time or
times to enforce its rights under said provisions strictly in accordance with
the same shall not be construed as having created a custom in any way or manner
contrary to the specific provisions of this Security Agreement or as having in
any way or manner modified the same. All rights and remedies of Secured Party
and Banks hereunder shall be 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.
VI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTORS.
Each Debtor represents and warrants, and, after the date hereof,
covenants so long as any of the Credit Agreement, the Notes (if issued) the
Letter of Credit Agreements, the Guaranty or any Interest Rate Protection
Agreements remain in effect, that:
A. Such Debtor's chief executive office and principal place of business
are set forth in Schedule III hereto and such Debtor has not maintained its
chief executive office and principal place with business at any other location
since September 30, 1999;
B. Each other location where such Debtor maintains a place of business
is set forth on Schedule IV;
C. No financing statement covering the Collateral, or any part thereof,
has been or will be filed with any filing officer, except as permitted under the
Credit Agreement (including the schedules thereto).
13
D. No other agreement, pledge or assignment covering the Collateral, or
any part thereof, has been or will be made and no security interest, other than
the one created hereby or pursuant to security agreements and pledges previously
made in favor of Secured Party on behalf of the Banks, has or will be attached
or has been or will be perfected in the Collateral or in any part thereof,
except as permitted under the Credit Agreement.
E. No material dispute, right of setoff, counterclaim or defenses exist
with respect to any part of the Collateral (excluding accounts, accounts
receivable and rights to payment for services rendered), except as permitted
under the Credit Agreement.
F. At the time Secured Party's security interest attaches to any of the
Collateral or its proceeds, such Debtor will be the lawful owner thereof with
the right to transfer any interest therein, such Collateral is free and clear of
all liens other than the one created hereby or permitted by the Credit Agreement
and that such Debtor will make such further assurances to prove its title to the
Collateral as may be reasonably required, will keep such Collateral free and
clear of all liens other than the one created hereby and liens permitted by the
Credit Agreement, and will take such action to defend the Collateral and its
proceeds against the lawful claims and demands of all persons whomsoever. The
delivery at any time by such Debtor to Secured Party of Collateral, or financing
statements covering any Collateral shall constitute a representation and
warranty by such Debtor under this Security Agreement that, with respect to such
Collateral, and each item thereof, such Debtor is owner of the Collateral and
the matters heretofore warranted in this paragraph are true and correct in all
material respects.
G. It shall, if applicable, contemporaneously with the execution and
delivery of this Agreement, execute and deliver to the Agent an Agreement
(Trademark), an Agreement (Patent) and an Agreement (Copyright) in the forms of
Exhibits A-1, A-2 and A-3 hereto, respectively, and shall execute and deliver to
the Agent any other document reasonably required to acknowledge or register or
perfect the Agent's and the Banks' interest in any of the Collateral described
in Section I(d).
VII. MUTUAL AGREEMENTS.
Each Debtor and Secured Party mutually agree as follows:
A. "Debtor" and "Secured Party" as used in this Security Agreement
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 Security Agreement shall be that of the
State of Illinois.
C. This Security Agreement includes all amendments and supplements
hereto and all assignments hereof, provided, that such Debtor and Secured Party
shall not be bound by any amendment hereto unless such amendment is expressed in
a writing executed by each of them.
14
D. All capitalized or other terms not specifically defined herein are
used as defined in the Credit Agreement. To the extent not inconsistent
therewith, all such terms shall also be construed in conformity with the
Illinois or other applicable Uniform Commercial Code.
E. The security interest granted under this Security Agreement shall be
a continuing security interest in every respect (whether or not the outstanding
balance of the Secured Obligations is from time to time temporarily reduced to
zero) and Secured Party's security interest in the Collateral as granted herein
shall continue in full force and effect for the entire duration that the Credit
Agreement remains in effect and 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, any of the Notes or any Letter of
Credit Agreement remains outstanding. 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.
F. THE PARTIES HERETO ACKNOWLEDGE THAT THIS SECURITY AGREEMENT IS
SUBJECT TO THE MUTUAL WAIVER OF JURY TRIAL CONTAINED IN THE APPLICABLE
PROVISIONS OF THE CREDIT AGREEMENT AND THE GUARANTY, AS APPLICABLE.
G. Each of the Debtors hereby irrevocably submits to the non-exclusive
jurisdiction of any United States Federal Court sitting in Detroit, Michigan or
Chicago, Illinois or any Michigan State court sitting in Detroit, Michigan or
any Illinois State court sitting in Chicago, Illinois, in any action or
proceeding arising out of or relating to this Security Agreement and hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in any such United States Federal Court, Michigan or
Illinois state court. Each Debtor irrevocably consents to the service of any and
all process in any such action or proceeding brought in any court in or of the
State of Michigan or State of Illinois by the delivery of copies of such process
to such Debtor at its address specified in Schedule III hereto or by certified
mail directed to such address. Nothing in this paragraph shall affect the right
of the Banks and the Secured Party to serve process in any other manner
permitted by law or limit the right of the Banks or the Secured Party (or any of
them) to bring any such action or proceeding against any of the Debtors or any
of its or their property in the courts of any other jurisdiction. Each of the
Debtors hereby irrevocably waives any objection to the laying of venue of any
such suit or proceeding in the above described courts.
H. In accordance with Section 7.19 of the Credit Agreement, certain
future Subsidiaries of the Company shall become obligated as Debtors hereunder
(each as fully as though an original signatory hereto) by executing and
delivering to Agent and the Banks that certain joinder agreement in the form
attached to this Security Agreement as Exhibit B.
In the event of any conflict between the terms and conditions of this
Security Agreement and the terms and conditions of the Credit Agreement, the
terms and conditions of the Credit Agreement shall govern and control.
15
[SIGNATURES FOLLOW ON SUCCEEDING PAGES]
IN WITNESS WHEREOF, each of the undersigned Debtors and Secured Party
have executed this Security Agreement as of the day and year first above
written.
HA-LO INDUSTRIES, INC.
By:_______________________________________
Its:______________________________________
CREATIVE CONCEPTS IN ADVERTISING, INC.
By:_______________________________________
Its:______________________________________
MARKET U.S.A. INC.
By:_______________________________________
Its:______________________________________
PREMIER PROMOTIONS AND MARKETING, INC.
By:_______________________________________
Its:______________________________________
LIPSON ASSOCIATES, INC. (d/b/a LAGA)
By:_______________________________________
Its:______________________________________
Signature Page 1 to
Domestic Security Agreement
UPSHOT DIRECT, INC.
By:_______________________________________
Its:______________________________________
LEE WAYNE CORPORATION
By:_______________________________________
Its:______________________________________
UPSHOT (NEW YORK), INC.
By:_______________________________________
Its:______________________________________
HA-LO SPORTS, INC.
By:_______________________________________
Its:______________________________________
PROMOTIONAL MARKETING, L.L.C.
By:_______________________________________
Its:______________________________________
Signature Page 2 to
Domestic Security Agreement
CF NAPA DESIGN, INC.
By:___________________________________
Its:__________________________________
ACCEPTED BY SECURED PARTY:
- -------------------------
COMERICA BANK, as Agent for the Banks
By:_______________________________
Its:______________________________
Signature Page 3 to
Domestic Security Agreement
SCHEDULE I
Intellectual Property
See attached.
20
Attachment 1
to Agreement (Patent)
NONE.
21
Schedule II
Location of Collateral
1. HA-LO INDUSTRIES, INC.
Arizona
California
Florida
Georgia
Idaho
Illinois
Indiana
Massachusetts
Minnesota
New Jersey
New Mexico
New York
North Carolina
Ohio
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin
2. CREATIVE CONCEPTS IN ADVERTISING, INC.
Alabama
Florida
Illinois
Michigan
Pennsylvania
Rhode Island
Tennessee
Canada
3. MARKET U.S.A. INC.
Arizona
Florida
Illinois
Kansas
Ohio
Texas
Wisconsin
Canada
4. LEE WAYNE CORPORATION
California
Illinois
Michigan
Louisiana
Ohio
Pennsylvania
23
Schedule III
Each Debtor's chief executive office
and principal place of business
Ha-Lo Industries, Inc.
5980 Towny Avenue
Niles, IL 60714
Federal Employment I.D. Number: 36-3573412
Schedule IV
Locations of Place of Business
(Other than chief executive place of business)
None.
EXHIBIT A-1
to Security Agreement
AGREEMENT
(Trademark)
THIS AGREEMENT (TRADEMARK) (this "Agreement"), dated as of March 31,
2000, between the undersigned (individually each the "Debtor" and collectively
the "Debtors") and Comerica Bank in its capacity as Agent for the Banks referred
to below ("Secured Party").
WITNESSETH
A. WHEREAS, pursuant to that certain Ha-Lo Industries, Inc. Revolving
Credit Agreement dated as of March 31, 2000 (as amended or otherwise modified
from time to time, the "Credit Agreement"), among Ha-Lo Industries, Inc.
("Company"), the Canadian Permitted Borrower, each of the financial institutions
party thereto (collectively, the "Banks") and Secured Party, as Agent for the
Banks, the Banks have agreed, subject to the satisfaction of certain terms and
conditions, to make Advances to Company and to provide for the issuance of
Letters of Credit for the account of Company, individually, or jointly and
severally with certain of the other Account Parties (as such terms are defined
in the Credit Agreement), as provided therein; and
B. WHEREAS, in connection with the Credit Agreement, the Debtors have
executed and delivered a Security Agreement, dated as of the date hereof (as
amended or otherwise modified from time to time, the "Security Agreement"); and
C. WHEREAS, as a condition precedent to the making of the initial
Advances under the Credit Agreement, the Debtors are required to execute and
deliver this Agreement and to further confirm the grant to the Secured Party for
the benefit of the Banks a continuing security interest in all of the Trademark
Collateral (as defined below) to secure all Secured Obligations.
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, and in order to induce the Banks to make Advances
(including the initial Advance) to the Company pursuant to the Credit Agreement,
Debtors agree, for the benefit of the Banks, as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. GRANT OF SECURITY INTEREST. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Debtors do hereby mortgage, pledge
and hypothecate to the Secured Party for the benefit of the Banks, and grant to
the Secured Party for the benefit of the Banks a security interest in, all of
the following property (the "TRADEMARK COLLATERAL"), whether now owned or
hereafter acquired or existing:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, certification marks, collective
marks, logos, other source of business identifiers, prints and labels
on which any of the foregoing have appeared or appear, designs and
general intangibles of a like nature (all of the foregoing items in
this CLAUSE (a) being collectively called a "TRADEMARK") now existing
anywhere in the world or hereafter adopted or acquired, whether
currently in use or not, all registrations and recordings thereof and
all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any
office or agency of the United States of America or any State thereof
or any foreign country, including those referred to in ITEM A of
ATTACHMENT 1 hereto;
(b) all Trademark licenses, including each Trademark license
referred to in ITEM B of ATTACHMENT 1 hereto;
(c) all renewals of any of the items described in CLAUSES (a)
and (b);
(d) all of the goodwill of the business connected with the use
of, and symbolized by the items described in, CLAUSES (a) and (b); and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by the Debtors against third parties for
past, present, or future infringement or dilution of any Trademark,
Trademark registration, or Trademark license, including any Trademark,
Trademark registration or Trademark license referred to in ITEM A and
ITEM B of ATTACHMENT 1 hereto, or for any injury to the goodwill
associated with the use of any Trademark or for breach or enforcement
of any Trademark license.
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Debtors for the purpose of registering the security interest of
the Secured Party and the Banks in the Trademark Collateral with the United
States Patent and Trademark Office and corresponding offices in other countries
of the world. The security interest granted hereby has been granted as a
supplement to, and not in limitation of, the security interest granted to the
Secured Party and the Banks under the Security Agreement as security for the
discharge and performance of the Secured Obligations. The Security Agreement
(and all rights and remedies of the Secured Party and the Banks thereunder)
shall remain in full force and effect in accordance with its terms.
SECTION 4. RELEASE OF SECURITY INTEREST. 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 the Debtors'
expense, execute and deliver to the Debtors all instruments and other documents
as may be necessary or proper to release the lien on and security interest in
the Trademark Collateral which has been granted hereunder.
SECTION 5. ACKNOWLEDGMENT. The Debtors do hereby further acknowledge
and affirm that the rights and remedies of the Secured Party for the benefit of
the Banks with respect to the security interest in the Trademark Collateral
granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which (including the remedies provided for therein) are
incorporated by reference herein as if fully set forth herein.
2
SECTION 6. LOAN DOCUMENTS, ETC. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. COUNTERPARTS. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
[SIGNATURES FOLLOW ON SUCCEEDING PAGES]
3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
DEBTORS:
______________________________________
By:
___________________________________
Its:
__________________________________
______________________________________
By:___________________________________
Its:__________________________________
COMERICA BANK, as Agent for the Banks
By:___________________________________
Its:__________________________________
ATTACHMENT 1
to
Agreement
(Trademark)
Item A. TRADEMARKS
REGISTERED TRADEMARKS
COUNTRY TRADEMARK REGISTRATION NO.
PENDING TRADEMARK APPLICATIONS
COUNTRY TRADEMARK SERIAL NO.
EXPIRED, ABANDONED OR CANCELLED TRADEMARKS
COUNTRY TRADEMARK REGISTRATION NO./SERIAL NO.
TRADEMARK APPLICATIONS IN PREPARATION
COUNTRY TRADEMARK PRODUCTS/SERVICES
Item B. TRADEMARK LICENSES
EXHIBIT A-2
to Security Agreement
AGREEMENT
(Patent)
THIS AGREEMENT (PATENT) (this "Agreement"), dated as of March 31, 2000,
among the undersigned (individually each a "Debtor" and collectively the
"Debtors"), and Comerica Bank in its capacity as agent for the Banks referred to
below.
WITNESSETH
A. WHEREAS, pursuant to that certain Ha-Lo Industries, Inc. Revolving
Credit Agreement dated as of March 31, 2000 (as amended or otherwise modified
from time to time, the "Credit Agreement"), among Ha-Lo Industries, Inc.
("Company"), the Canadian Permitted Borrower, each of the financial institutions
party thereto (collectively, the "Banks") and Secured Party, as Agent for the
Banks, the Banks have agreed, subject to the satisfaction of certain terms and
conditions, to make Advances to Company and to provide for the issuance of
Letters of Credit for the account of Company individually, or jointly and
severally with certain of the other Account Parties (as such terms are defined
in the Credit Agreement), as provided therein; and
B. WHEREAS, in connection with the Credit Agreement, the Debtors have
executed and delivered a Security Agreement, dated as of the date hereof (as
amended or otherwise modified from time to time, the "Security Agreement"); and
C. WHEREAS, as a condition precedent to the making of the initial
Advances under the Credit Agreement, the Debtors are required to execute and
deliver this Agreement and to further confirm the grant to the Secured Party for
the benefit of the Banks a continuing security interest in all of the Patent
Collateral (as defined below) to secure all Secured Obligations.
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, and in order to induce the Banks to make Advances
(including the initial Advance) to the Company pursuant to the Credit Agreement,
the Debtors agree, for the benefit of the Banks, as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. GRANT OF SECURITY INTEREST. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Debtors do hereby mortgage, pledge
and hypothecate to the Secured Party for the benefit of the Banks, and grant to
the Secured Party for the benefit of the Banks a security interest in, all of
the following property (the "PATENT COLLATERAL"), whether now owned or hereafter
acquired or existing:
(a) all letters patent and applications for letters patent
throughout the world, including all patent applications in preparation
for filing anywhere in the world and including each patent and patent
application referred to in Item A of Attachment 1 hereto;
(b) all patent licenses, including each patent license
referred to in Item B of Attachment 1 hereto;
(c) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any
of the items described in the foregoing clauses (a) and (b); and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceed of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, including any patent or patent
application referred to in Item A of Attachment 1 hereto, and for
breach or enforcement of any patent license, including any patent
license referred to in Item B of Attachment 1 hereto, and all rights
corresponding thereto throughout the world.
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Debtors for the purpose of registering the security interest of
the Secured Party and the Banks in the Patent Collateral with the United States
Patent and Trademark Office and corresponding offices in other countries of the
world. The security interest granted hereby has been granted as a supplement to,
and not in limitation of, the security interest granted to the Secured Party and
the Banks under the Security Agreement as security for the discharge and
performance of the Secured Obligations. The Security Agreement (and all rights
and remedies of the Secured Party and the Banks thereunder) shall remain in full
force and effect in accordance with its terms.
SECTION 4. RELEASE OF SECURITY INTEREST. 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 the Debtors'
expense, execute and deliver to the Debtors all instruments and other documents
as may be necessary or proper to release the lien on and security interest in
the Patent Collateral which has been granted hereunder.
SECTION 5. ACKNOWLEDGMENT. The Debtors do hereby further acknowledge
and affirm that the rights and remedies of the Secured Party for the benefit of
the Banks with respect to the security interest in the Patent Collateral granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which (including the remedies provided for therein) are
incorporated by reference herein as if fully set forth herein.
SECTION 6. LOAN DOCUMENTS, ETC. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. COUNTERPARTS. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
DEBTOR:
__________________________________
By:
_______________________________
Its:
______________________________
__________________________________
By:
_______________________________
Its:
______________________________
COMERICA BANK, as Agent for the Banks
By:
_______________________________
Its:
______________________________
Attachment 1
to Agreement (Patent)
Patents (including letters patent and applications for letters patent):
- --------------------------------------------------------------------------------------------------------------------
Country Patent Patent No. Issue Date
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Patent licenses:
EXHIBIT A-3
to Security Agreement
AGREEMENT
(Copyright)
THIS AGREEMENT (COPYRIGHT) (this "Agreement"), dated as of March 31,
2000, between the undersigned (individually each the "Debtor" and collectively
the "Debtors") and Comerica Bank in its capacity as Agent for the Banks referred
to below ("Secured Party").
WITNESSETH
A. WHEREAS, pursuant to that certain Ha-Lo Industries, Inc. Revolving
Credit Agreement dated as of March 31, 2000 (as amended or otherwise modified
from time to time, the "Credit Agreement"), among Ha-Lo Industries, Inc.
("Company"), the Canadian Permitted Borrower, each of the financial institutions
party thereto (collectively, the "Banks") and Secured Party, as Agent for the
Banks, the Banks have agreed, subject to the satisfaction of certain terms and
conditions, to make Advances to Company and to provide for the issuance of
Letters of Credit for the account of Company individually, or jointly and
severally with certain of the other Account Parties (as such terms are defined
in the Credit Agreement), as provided therein; and
B. WHEREAS, in connection with the Credit Agreement, the Debtors have
executed and delivered a Security Agreement, dated as of the date hereof (as
amended or otherwise modified from time to time, the "Security Agreement"); and
C. WHEREAS, as a condition precedent to the making of the initial
Advances under the Credit Agreement, the Debtors are required to execute and
deliver this Agreement and to further confirm the grant to the Secured Party for
the benefit of the Banks a continuing security interest in all of the Copyright
Collateral (as defined below) to secure all Secured Obligations.
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged, and in order to induce the Banks to make Advances
(including the initial Advance) to the Company pursuant to the Credit Agreement,
Debtors agree, for the benefit of the Banks, as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Security Agreement.
SECTION 2. GRANT OF SECURITY INTEREST. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Debtors do hereby mortgage, pledge
and hypothecate to the Secured Party for the benefit of the Banks, and grant to
the Secured Party for the benefit of the Banks a security interest in, all of
the following property, whether now owned or hereafter acquired or existing: all
United States copyrights and mask works, whether or not registered, and all
applications for registration of all copyrights and mask works, including, but
not limited to all copyrights and mask works, and all
applications for registration of all copyrights and mask works identified in
Attachment 1 hereto and made a part hereof, and including without limitation
(1) the right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations thereof; (2) all income,
royalties, damages and other payments now and hereafter due and/or payable
with respect thereto (including, without limitation, payments under all
Copyright Licenses entered into in connection therewith, and damages and
payments for past or future infringements thereof); and (3) all rights
corresponding thereto and all modifications, adaptations, translations,
enhancements and derivative works, renewals thereof, and all other rights of
any kind whatsoever of the Grantor accruing thereunder or pertaining thereto
(Copyrights and Copyright Licenses being, collectively, the "COPYRIGHT
COLLATERAL").
SECTION 3. SECURITY AGREEMENT. This Agreement has been executed and
delivered by the Debtors for the purpose of registering the security interest of
the Secured Party and the Banks in the Copyright Collateral with the United
States Copyright Office and corresponding offices in other countries of the
world. The security interest granted hereby has been granted as a supplement to,
and not in limitation of, the security interest granted to the Secured Party and
the Banks under the Security Agreement as security for the discharge and
performance of the Secured Obligations. The Security Agreement (and all rights
and remedies of the Secured Party and the Banks thereunder) shall remain in full
force and effect in accordance with its terms.
SECTION 4. RELEASE OF SECURITY INTEREST. 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 the Debtors'
expense, execute and deliver to the Debtors all instruments and other documents
as may be necessary or proper to release the lien on and security interest in
the Copyright Collateral which has been granted hereunder.
SECTION 5. ACKNOWLEDGMENT. The Debtors do hereby further acknowledge
and affirm that the rights and remedies of the Secured Party for the benefit of
the Banks with respect to the security interest in the Copyright Collateral
granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which (including the remedies provided for therein) are
incorporated by reference herein as if fully set forth herein.
SECTION 6. LOAN DOCUMENTS, ETC. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. COUNTERPARTS. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
[SIGNATURES FOLLOW ON SUCCEEDING PAGES]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
DEBTORS:
By:__________________________________
Its:_________________________________
By:__________________________________
Its:_________________________________
COMERICA BANK, as Agent for the Banks
By:__________________________________
Its:_________________________________
EXHIBIT B
to
Security Agreement
JOINDER AGREEMENT
THIS JOINDER AGREEMENT is dated as of _____________, ____ by the
undersigned ("New Debtor").
WHEREAS, pursuant to Section 7.19 of that certain Revolving Credit
Agreement dated as of March 31, 2000 (as amended or otherwise modified from time
to time, the "Credit Agreement") by and among Ha-Lo Industries, Inc.
("Company"), the Canadian Permitted Borrower, Banks signatory thereto and
Comerica Bank, as Agent for the Banks (in such capacity, "Agent") and pursuant
to Section VII.H of that certain Security Agreement dated March 31, 2000 (as
amended or otherwise modified from time to time, the "Security Agreement)
executed and delivered by the Debtors signatory thereto, in favor of Agent on
behalf of the Banks, the New Debtor must execute and deliver a Joinder Agreement
in accordance with the Credit Agreement and the Security Agreement.
NOW THEREFORE, as a further inducement to Banks to continue to provide
Credit accommodations to the Company, New Debtor hereby covenants and agrees as
follows:
1. All capitalized terms used herein shall have the meanings
assigned to them in the Credit Agreement unless expressly
defined to the contrary.
2. New Debtor hereby enters into this Joinder Agreement in order
to comply with Section 7.19 of the Credit Agreement and does
so in consideration of the Advances made or to be made and the
Letters of Credit issued or to be issued from time to time
under the Credit Agreement (and the other Loan Documents, as
defined in the Credit Agreement).
3. New Debtor shall be considered, and deemed to be, for all
purposes of the Credit Agreement, the Security Agreement and
the other Loan Documents, a Debtor under the Security
Agreement as fully as though New Debtor had executed and
delivered the Security Agreement at the time originally
executed and delivered under the Credit Agreement and hereby
ratifies and confirms its obligations under the Security
Agreement, all in accordance with the terms thereof.
4. No Default or Event of Default (each such term being defined
in the Credit Agreement) has occurred and is continuing under
the Credit Agreement.
5. This Joinder Agreement shall be governed by the laws of the
State of Illinois and shall be binding upon New Debtor and its
successors and assigns.
IN WITNESS WHEREOF, the undersigned New Debtor has executed and
delivered this Joinder Agreement as of the day and year first above written.
[NEW DEBTOR]
By:__________________________________
Its:_________________________________
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