COLLATERAL ASSIGNMENT OF PROMISSORY NOTE
THIS COLLATERAL ASSIGNMENT OF PROMISSORY NOTE ("Assignment")
made as of this 30th day of May, 1997, by and between HLM DESIGN, INC.
("Borrower"), a Delaware corporation, and PACIFIC CAPITAL, L.P. ("Pacific"), a
Delaware limited partnership, and EQUITAS, L.P. ("Equitas"), a Delaware limited
partnership (Pacific and Equitas being sometimes referred to herein,
collectively as "Lender" with Equitas acting as collateral agent for the Lender
pursuant to that certain Intercreditor and Collateral Agent Agreement of even
date herewith by and between the Lenders).
W I T N E S S E T H
WHEREAS, Lender has extended credit to Borrower pursuant to
that Note Purchase Agreement of even date herewith by and among Lender,
Borrower, Xxxxxx Xxxx Xxxxx Inc. and BBH Corp. (together with any modifications
or amendments thereof, the "Note Purchase Agreement"), on certain terms and
conditions; and
WHEREAS, one condition to Lender's agreement to extend credit
to Borrower is that Lender must be provided a first priority perfected
collateral assignment of a certain promissory note owned by Borrower;
NOW, THEREFORE, as an inducement to cause Lender to extend
credit to Borrower, and for other valuable consideration, the receipt and
sufficiency of which are acknowledged, it is agreed as follows:
1. Definition of Secured Indebtedness. As used herein,
"Secured Indebtedness" shall mean all present and future debts and other
obligations of Borrower to Lender under this Assignment, the Note Purchase
Agreement, including those certain Promissory Notes of even date herewith in the
aggregate original principal amount of $2,000,000.00 made by Borrower payable to
the order of Lender, or each of them as the case may be, including all
modifications, amendments, extensions and renewals thereof.
2. Security Interest; Assignment. To secure the payment of the
Secured Indebtedness, Borrower hereby assigns to Lender and grants Lender a
security interest in that Affiliate Promissory Note dated May ___, 1997, made by
BBH Corp., a Delaware corporation, and assumed by Xxxxxx Xxxx Xxxxx Inc., an
Iowa corporation, pursuant to merger between BBH Corp. and Xxxxxx Xxxx Xxxxx
Inc. ("Obligor"), in the original principal amount of $3,200,000.00 payable to
the order of Borrower (the "Collateral Note"), together with all proceeds
thereof.
3. Negotiation of Collateral Note; Perfection. Borrower shall
negotiate the Collateral Note to Lender by endorsing the Collateral Note to the
order of Lender (without restriction or qualification) and delivering the
Collateral Note to Lender. Lender shall retain possession of the Collateral Note
to perfect its security interest therein.
4. Warranties. Borrower warrants to Lender the following:
(a) Sole Instrument. The Collateral Note is the only
instrument evidencing the indebtedness described therein.
(b) Ownership of Collateral. Borrower is the lawful
holder and owner of the Collateral Note.
(c) No Obligation to Remit Payments. Borrower has not
agreed, and no holder of the Collateral Note shall be obligated, to remit any
payments made under the Collateral Note for the account of any other person or
business entity, except that Lender shall apply all funds received by it as
holder thereof for the account of Borrower.
(d) Binding Agreement. The Collateral Note is valid,
binding and enforceable according to its terms.
(e) No Other Assignment. The Collateral Note is not
subject to any assignment, lien or other encumbrance or claim except for the
security interest provided for herein in favor of Lender.
(f) Payments Current. All payments due under the
Collateral Note to date have been timely made, and no amount of the principal
debt evidenced by the Collateral Note has been prepaid.
(g) No Default. No default presently exists under the
Collateral Note and no condition presently exists which, with the giving of
notice, the passage of time, or both, will cause such a default.
(h) No Setoff. The indebtedness evidenced by the
Collateral Note is not, and shall not be, subject to any defense or setoff.
(i) Principal Balance. The present principal balance
outstanding under the Collateral Note is $3,200,000.00.
(j) Valid Assignment. This Assignment grants Lender a
valid first priority assignment of, and security interest in, the Collateral
Note.
(k) Copy of Collateral Note. A correct and complete
copy of the Collateral Note is attached hereto as Exhibit A.
(l) No Amendment or Waiver. No provision of the Note
has been amended or waived as to vary from the terms shown in Exhibit A hereto.
(m) Address of Obligor. The correct current address
of Obligor is as follows:
Xxxxxx Xxxx Xxxxx Inc. (successor by merger with BBH Corp.)
Suite 2950
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
(n) Financial Ability of Obligor. Obligor is
financially capable of performing pursuant to the Collateral Note.
(o) Negotiability. The Collateral Note is a
negotiable instrument under the Uniform Commercial Code as adopted in North
Carolina.
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(p) Holder in Due Course. Upon the negotiation of the
Collateral Note to Lender, Lender shall become the holder in due course of the
Note as provided by the Uniform Commercial Code as adopted in North Carolina.
5. Covenants. Borrower covenants with Lender as follows:
(a) Notice of Default. Borrower shall immediately
notify Lender if a default occurs under the Collateral Note.
(b) No Amendment or Waiver. Borrower shall not
purport to modify or waive any terms of the Collateral Note without the prior
written approval of Lender.
(c) Notice of Prepayment. Borrower shall notify
Lender immediately if prepayment is made on the Collateral Note, and will hold
prepayment proceeds in trust for Lender pending notice to Lender and
instructions from Lender regarding the disposition of such proceeds, which
Lender may, in its sole discretion, require to be applied to the Secured
Indebtedness.
(d) Notices. Borrower shall promptly convey to Lender
any notice received by Borrower concerning the Collateral Note.
(e) No Further Encumbrances. Borrower shall not sell,
assign, or grant or allow any other security interest, claim or encumbrance to
attach to the Collateral Note, or to permit the payment under the Collateral
Note to be subject to any defense or right of setoff.
6. Collection Rights of Lender. Upon the occurrence of a
default under this Assignment (notwithstanding and excluding the application of
any applicable cure period for purposes of this Section 6), all payments made
under the Collateral Note by Obligor shall be payable as Lender shall so direct,
and Obligor shall send all payments, or such portion thereof as specified by
Lender, directly and exclusively to Lender at such address or addresses as
Lender may specify, and Obligor is hereby authorized and directed by Borrower to
comply with any such instructions given by Lender, without any inquiry on
Obligor's part. Obligor shall not be liable to Borrower for compliance with such
instructions given by Lender and Obligor shall receive full credit against the
Note for payments delivered to Lender.
7. Notice to Obligor. Concurrently with the execution hereof,
Borrower shall execute a letter in form and substance acceptable to Lender, in
substantially the same form as Exhibit B attached hereto, to be sent to inform
Obligor of Lender's rights under this Assignment.
8. No Conflict. Borrower warrants that its execution of and
performance under this Assignment and all related documents are permitted under
and will not violate any provision of Borrower's Charter or By-Laws. Borrower
further warrants that the execution of all necessary resolutions and other
prerequisites of corporate action have been duly performed so that the
individual executing this Assignment and related documents on behalf of Borrower
is duly authorized to bind Borrower by his signature. By signing below on behalf
of Borrower, the individual executing this Assignment on behalf of Borrower also
personally makes the warranties set forth in the preceding sentence.
9. Chief Executive Office. Borrower warrants that the address
designated herein to which notices are to be sent to Borrower is Borrower's
chief executive office. Borrower agrees to notify Lender
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in writing of any change thereof and agrees that the same shall not in any event
be moved outside Mecklenburg County, North Carolina, without Lender's prior
written consent.
10. Recitals. Borrower warrants and agrees that the recitals
set forth at the beginning of this Assignment are true.
11. No Burdensome Agreements. Borrower warrants that Borrower
is not a party to any contract or agreement and is not subject to any contingent
liability that does or may impair Borrower's ability to perform under the terms
of this Assignment. Borrower further warrants that the execution and performance
of this Assignment will not cause a default, acceleration or other event under
any other contract or agreement to which Borrower or any property of Borrower is
subject, and will not result in the imposition of any charge, penalty, lien or
other encumbrance against any of Borrower's property except in favor of Lender.
12. Legal and Binding Agreement. Borrower warrants that the
execution and performance of this Assignment will not violate any judicial or
administrative order or governmental law or regulation, and that this Assignment
is valid, binding and enforceable in every respect according to its terms.
13. No Consent Required. Borrower warrants that Borrower's
execution, delivery and performance of this Assignment do not require the
consent of or the giving of notice to any third party including, but not limited
to, any other lender, governmental body or regulatory authority.
14. Default Defined. Applying the applicable cure periods set
forth in the Note Purchase Agreement, the occurrence of any one or more of the
following events shall constitute a default under this Agreement:
(a) Default under Note Purchase Agreement. The
occurrence of a default under the Note Purchase Agreement.
(b) Breach of Covenant. The failure of Borrower or
any other party to perform or observe any obligation or covenant made under this
Assignment or with respect to the Secured Indebtedness.
(c) Breach of Warranty. Lender's discovery that any
representation or warranty in connection with this Assignment or the Secured
Indebtedness is materially false.
(d) Collateral Note Default. The occurrence of a
default under the Collateral Note.
15. Remedies Upon Default. Upon default, Lender may pursue any
or all of the following remedies without notice to Borrower except as required
below:
(a) Rights of Holder. Lender may exercise any or all
rights of the holder of the Collateral Note. Without limiting the foregoing,
Lender may initiate any administrative or judicial proceeding that it may deem
necessary in the course of enforcing any rights under the Collateral Note. Any
administrative or judicial action or other action taken by Lender pursuant to
the Collateral Note may be taken by Lender in its own name or in Borrower's
name. Lender may enter into any amendment or extension of the Collateral Note
and may grant any indulgences with respect thereto that Lender may deem
appropriate in the course of exercising its rights under the Collateral Note.
Borrower hereby appoints Lender Borrower's attorney-in-fact
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to take any action authorized by this Assignment upon default. Borrower
acknowledges that this power of attorney is coupled with an interest and is
irrevocable.
(b) Sale of Collateral Note. Lender may sell the
Collateral Note pursuant to Lender's rights under the Uniform Commercial Code.
Any such sale may be either public or private. If public, the sale may be
postponed by announcement at the scheduled time and place and adjourned to
another time or place, or both. It is agreed that five (5) days' notice of any
sale is commercially reasonable notice thereof. Any public sale may be adjourned
to a different time, place, or both by announcement at the advertised time and
place of sale, without further publication. Any advertised sale may be cancelled
in Lender's discretion, either before or after the opening of bidding. Lender
shall transfer the Collateral Note to any purchaser thereof by endorsing the
Collateral Note to the purchaser's order, without warranty or recourse on the
part of Lender.
(c) Setoff. Lender may exercise its lien upon and
right of setoff against any monies, items, credits, deposits or instruments that
Lender may have in its possession and which belong to Borrower or any other
person or entity liable for the payments of any or all of the Secured
Indebtedness.
(d) Other Remedies. Lender may pursue any other
remedies available under any other document evidencing or securing the Secured
Indebtedness or otherwise available to Lender at law or equity.
(e) Application of Proceeds. All amounts received by
Lender for Borrower's account by exercise of its remedies hereunder shall be
applied as set forth in the Note Purchase Agreement.
16. Incorporation of Exhibits. All Exhibits referred to in
this Assignment are incorporated herein by this reference.
17. Indulgence Not Waiver. Lender's indulgence in the
existence of a default hereunder or any other departure from the terms of this
Assignment shall not prejudice Lender's rights to declare a default or otherwise
demand strict compliance with this Assignment.
18. Cumulative Remedies. The remedies provided Lender in this
Assignment are not exclusive of any other remedies that may be available to
Lender under any other document or at law or equity.
19. Amendment and Waiver in Writing. No provision of this
Assignment can be amended or waived, except by a statement in writing signed by
the party against which enforcement of the amendment or waiver is sought.
20. Notices. Any communications concerning this Assignment or
the credit described herein shall be addressed as follows:
As to Borrower:
HLM Design, Inc.
Suite 2950
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
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As to Lender:
Pacific Capital, L.P.
Suite 1070
0000 Xxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx III
Equitas, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx XxXxx
With a copy to:
Boult, Cummings, Xxxxxxx & Xxxxx, PLC
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Communications to be given to Lender shall only be effective when set forth in
writing and actually received by an officer of Lender at the address indicated
above. Communications to be given to Borrower shall be effective when actually
or constructively received by Borrower or when set forth in writing and mailed
or delivered to Borrower's address stated above. Lender or Borrower may change
its address for receipt of notices by submitting the change in writing to the
other party.
21. Assignment. This Assignment shall be binding upon and
inure to the benefit of the respective heirs, successors and assigns of Borrower
and Lender, except that Borrower shall not assign any rights or delegate any
obligations arising hereunder without the prior written consent of Lender. Any
attempted assignment or delegation by Borrower without the required prior
consent shall be void.
22. Entire Agreement. This Assignment and the other written
agreements between Borrower and Lender represent the entire agreement between
the parties concerning the subject matter hereof, and all oral discussions and
prior agreements are merged herein. Provided, if there is a conflict between
this Assignment and any other document executed contemporaneously herewith with
respect to the Secured Indebtedness, the provision most favorable to Lender
shall control.
23. Severability. Should any provision of this Assignment be
invalid or unenforceable for any reason, the remaining provisions hereof shall
remain in full effect.
24. Time of Essence. Time is of the essence of this
Assignment, and all dates and time periods specified herein shall be strictly
observed, except that Lender may permit specific deviations therefrom by its
written consent.
25. Applicable Law. The validity, construction and enforcement
of this Assignment and all other documents executed with respect to the Secured
Indebtedness shall be determined according to the
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laws of Tennessee applicable to contracts executed and performed entirely within
that state, in which state this Assignment has been executed and delivered.
26. Gender and Number. Words used herein indicating gender or
number shall be read as context may require.
27. Captions Not Controlling. Captions and headings have been
included in this Assignment for the convenience of the parties, and shall not be
construed as affecting the content of the respective paragraphs.
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IN WITNESS WHEREOF, this Collateral Assignment of Promissory
Note has been executed as of the date first written above.
THE UNDERSIGNED ACKNOWLEDGE A THOROUGH
UNDERSTANDING OF THE TERMS OF THIS
ASSIGNMENT AND AGREE TO BE BOUND THEREBY:
Borrower:
HLM DESIGN, INC.
By: /s/ Xxxxxx X. Xxxxxx
Title: President
Lender:
PACIFIC CAPITAL, L.P.
By: Pacific Capital Corporation,
General Partner
By: /s/ J. Xxxxx Xxxxxxxx
Title: Secretary-Treasurer
EQUITAS, L.P.
By: Tennessee Business Investments, Inc.,
General Partner
By: /s/ Xxxxxxx XxXxx
Title: President
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EXHIBIT A
Copy of Collateral Note
EXHIBIT B
PACIFIC CAPITAL, L.P.
EQUITAS, L.P.
May 30, 1997
Xxxxxx Xxxx Xxxxx Inc.
(successor by merger with BBH Corp.)
Suite 2950
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Re: Notice of Assignment of Promissory Note; Direct Payment to
Lender
Ladies and Gentlemen:
As you know, you are the obligor under that certain Affiliate
Promissory Note dated May ___, 1997, made by BBH Corp. and assumed by Xxxxxx
Xxxx Xxxxx Inc., an Iowa corporation, pursuant to merger between BBH Corp. and
Xxxxxx Xxxx Xxxxx Inc. (the "Obligor") in the original principal amount of
$3,200,000.00 payable to the order of HLM Design Inc. (the "Note").
Please be advised that the Note has been negotiated to Pacific
Capital, L.P. and Equitas, L.P. (collectively, "Lender") as collateral for
certain obligations of HLM Design, Inc. to Lender.
Upon your notification by Lender that an event of default has
occurred with respect to certain obligations of HLM Design, Inc. to Lender
pursuant to that Note Purchase Agreement dated May 30, 1997, by and among
Lender, HLM Design, Inc., Xxxxxx Xxxx Xxxxx Inc. and BBH Corp., or related
Transaction Documents described therein, you are hereby directed to send all
payments, or a portion thereof, as directed by Lender, made under the Note,
without deduction or offset, directly to Lender, at such address or addresses as
Lender may specify.
Obligor is hereby authorized and directed by HLM Design, Inc.
to comply with any such instructions given by Lender, without any inquiry on
Obligor's part. All such payments shall be made payable to the order of Lender,
or shall be sent via wire transfer to an account or accounts designated by
Lender. If you wish to prepay principal or interest under the Note, you must
first obtain the written consent of Lender in order to ensure that you receive
proper credit for the payment.
No provision of the Note may hereafter be amended or waived
without Lender's written consent.
It is Lender's understanding that thus far you have not made
any prepayment toward any amounts due under the Note. Please advise Lender
immediately if this is not correct.
Notwithstanding the foregoing, Obligor and its affiliates
agree to hold Lender harmless from any and all existing or future claims against
HLM Design, Inc. or its affiliates, or for any existing or future
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violations of any applicable laws by HLM Design, Inc. or its affiliates, and
shall not, as a result of said claims or violations, or for any other reason
whatsoever, deduct or setoff any amounts payable by Obligor under the Note.
This letter is a standard notice given by Lender when a
promissory note is negotiated to it as collateral. Please sign below to evidence
your acknowledgment and consent to the terms of this letter, and return the
original of this letter to Lender at the above-referenced address. HLM Design,
Inc., the previous holder of the Note, has consented to the sending of this
notice and the terms contained herein, evidenced by its signature below.
Please contact Xxxxxxx XxXxx of Equitas, L.P. at (615)
383-8673 if you have any questions regarding this notice of collateral
assignment of promissory note.
Sincerely,
PACIFIC CAPITAL, L.P.
By: Pacific Capital Corporation
Its: General Partner
By: /s/ J. Xxxxx Xxxxxxxx
Title: Secretary-Treasurer
EQUITAS, L.P.
By: Tennessee Business Investments, Inc.
Its: General Partner
By: /s/ Xxxxxxx XxXxx
Title: President
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THE UNDERSIGNED, ACTING THROUGH ITS DULY
AUTHORIZED OFFICER, HEREBY AGREES TO THE
TERMS AND PAYMENT INSTRUCTIONS AS SET FORTH
HEREIN.
HLM DESIGN, INC., as assignor of the Note
By: /s/ Xxxxxx X. Xxxxxx
Title: President
THE UNDERSIGNED, ACTING THROUGH ITS DULY
AUTHORIZED OFFICER, HEREBY ACKNOWLEDGES AND
CONSENTS TO THE ABOVE REFERENCED COLLATERAL
ASSIGNMENT OF THE NOTE AND AGREES TO THE
TERMS AND PAYMENT INSTRUCTIONS AS SET FORTH
HEREIN.
XXXXXX XXXX XXXXX INC., an Iowa corporation
(successor by merger with BBH Corp.)
By: /s/ Xxxxxx X. Xxxxxxx
Title: Senior Vice President
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