Exhibit 10.41
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (the "Agreement") is made and entered into
as of the 30th day of May, 1997 by and between XXXXXXX XXXXXX & COMPANY LEASING,
INC. ("Xxxxxxx Xxxxxx") and FIRST CHARTER NATIONAL BANK ("First Charter").
STATEMENT OF FACTS
Xxxxxxx Xxxxxx has entered into a $2,800,000 lease arrangement with
Xxxxxx Xxxx Xxxxx Inc. ("HLM") pursuant to a lease agreement and related loan
documents dated May 30, 1997 (the "Xxxxxxx Xxxxxx Loan"). As security for the
Xxxxxxx Xxxxxx Loan, HLM has granted to Xxxxxxx Xxxxxx a security interest in
all of its assets, including, without limitation, all of its accounts
receivable.
HLM Design, Inc. ("Design") and First Charter propose to enter into a
loan agreement of even date herewith, together with related loan documents,
pursuant to which First Charter will advance to Design from time to time sums in
an aggregate principal amount up to $1,000,000 (the "First Charter Loan").
Design's obligation to repay the First Charter Loan is guaranteed by
HLM, which guaranty is to be secured by a security interest in HLM's accounts
receivable due to HLM from its clients and customers, as may now or hereafter be
due to HLM, and in all proceeds thereof (the "First Charter Collateral").
NOW, THEREFORE, in consideration of the sum of $1.00 and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and in order to induce First Charter to enter into the First
Charter Loan and to advance the sums to Design pursuant to the terms thereof,
Xxxxxxx Xxxxxx and First Charter do hereby agree with each other as follows:
1. Subordination of Security Interest. Xxxxxxx Xxxxxx hereby agrees
that its security interest in the First Charter Collateral shall be subordinated
to the security interest of First Charter therein, buy only to the extent of the
first $1,250,000 of the accounts receivable of HLM. Xxxxxxx Xxxxxx'x security
interest in HLM's accounts receivable in excess of the first $1,250,000 of
accounts receivable is not subordinate to First Charter's security interest.
Further, the aforesaid subordination of Xxxxxxx Xxxxxx'x security interest shall
continue in the event of a renewal and/or extension of the First Charter Loan
for a period of up to five (5) years. The foregoing shall be applicable
regardless of the order of filing of any financing statements in any particular
jurisdiction.
2. Order of Filing. The parties agree to cause appropriate financing
statements to be filed in applicable jurisdictions in the following order.
First, Xxxxxxx Xxxxxx shall file financing
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statements covering all assets of HLM, including, without limitation, HLM's
accounts receivable. Second, First Charter shall file financing statements
covering all accounts receivable of HLM. Upon the written request of Design,
HLM, Xxxxxxx Xxxxxx and/or First Charter, Xxxxxxx Xxxxxx and/or First Charter
will further execute and deliver to the other such further documents and
instruments as may be reasonably requested in order to evidence and confirm the
subordination of the Xxxxxxx Xxxxxx security interest in the First Charter
Collateral as described in Paragraph 1 above.
3. Existing First Charter Loan. The parties acknowledge an existing
unsecured loan from First Charter to HLM in the amount of $500,000 made pursuant
to a Promissory Note dated December 10, 1996 (the "$500,000 Loan"). Xxxxxxx
Xxxxxx hereby agrees and consents to the securing of the $500,000 Loan by the
security interest being granted by HLM to First Charter as of the date hereof.
4. Prior Consent. The parties hereto agree that Xxxxxxx Xxxxxx'x prior
written consent shall be required prior to any further borrowings by Design or
HLM from First Charter, other than the renewal from time to time of the $500,000
Loan and the First Charter Loan for a period of up to five (5) years from the
date hereof.
5. Binding Effect and Benefit. This Subordination Agreement shall be
binding upon and inure to the benefit of Xxxxxxx Xxxxxx and First Charter, their
respective successors and assigns.
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6. Joinder of Design and HLM. Design and HLM join in the execution of
this Subordination Agreement as evidence of their consent and acknowledgment of
the terms hereof.
7. Governing Law. This Subordination Agreement shall be interpreted
under and enforced according to the laws of the State of Iowa.
IN WITNESS WHEREOF, the parties hereto have caused this Subordination
Agreement to be duly executed and sealed as of the date first above written.
XXXXXXX XXXXXX & COMPANY
LEASING, INC.
By:/s/ Xxxxx X. Xxxxxxxxx
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XXXXX X. XXXXXXXXX, Vice
President and Chief Operating Officer
FIRST CHARTER NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
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Title: Vice President
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HLM DESIGN, INC.
By: /s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX, President
XXXXXX XXXX XXXXX INC.
By: /s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX, President
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