UNCONDITIONAL GUARANTY
THIS UNCONDITIONAL GUARANTY ("Guaranty") is executed as of the
30th day of May, 1997, by XXXXXX XXXX XXXXX INC. ("Xxxxxx Xxxx"), an Iowa
corporation, and BBH CORP. ("BBH"), a Delaware corporation (Xxxxxx Xxxx and BBH
being collectively referred to herein as "Guarantor"), in favor of 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").
W I T N E S S E T H:
WHEREAS, Lender has agreed to extend credit (the "Loan") to
HLM Design, Inc. ("Borrower"), a Delaware corporation, on certain terms and
conditions pursuant to that Note Purchase Agreement of even date herewith by and
among Lender, Borrower and Guarantor (the "Note Purchase Agreement"); and
WHEREAS, Guarantor is an affiliate of Borrower, and
concurrently with the extension of the Loan, Borrower shall extend credit to BBH
in the approximate amount of $3,200,000.00 to fund BBH's obligations pursuant to
the terms of that certain Merger Agreement dated as of April 3, 1997 by and
between BBH and Xxxxxx Xxxx, whereby BBH will merge with and into Xxxxxx Xxxx,
with Xxxxxx Xxxx being the surviving entity (the "Merger");
WHEREAS, one condition to Lender's agreement to extend credit
to Borrower is that Guarantor must unconditionally guarantee certain obligations
of Borrower to Lender, including the Loan; and
WHEREAS, Guarantor has determined that the consummation of the
transactions described above will inure to their direct and indirect benefit;
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 Obligations. As used herein, the
"Obligations" shall mean all obligations of Guarantor under this Guaranty and
all obligations and indebtedness of Borrower and/or Guarantor under the Note
Purchase Agreement (as defined herein) and under 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, together with all modifications, extensions and renewals
thereof.
(2) Solvency of Guarantor. Guarantor warrants to Lender that
Guarantor is not insolvent and that Guarantor's execution hereof does not render
Guarantor insolvent, either before or after the consummation of the Merger, for
the purpose of state or federal fraudulent transfer laws, other avoidance laws,
laws regarding corporate distributions or any other law.
(3) Guaranty of Payment. Guarantor hereby guarantees to Lender
the timely payment and performance of the Obligations.
(4) Savings Provision. Should the liability of Guarantor
hereunder for the entire amount of the Obligations be subject to avoidance or
limitation, notwithstanding the contrary agreement and intention of Guarantor
and Lender, under any state or federal fraudulent transfer laws, laws regarding
corporate distributions or other law, then the liability of Guarantor for the
Obligations shall be limited to the maximum amount for which Guarantor may be
liable without legal impairment.
(5) Guaranty Unconditional. Guarantor's guarantee of the
Obligations is absolute and unconditional. The validity of this Guaranty shall
not be impaired by any event whatsoever, including, but not limited to, the
merger, consolidation, dissolution, cessation of business or liquidation of
Borrower; the financial decline or bankruptcy of Borrower; the failure of any
other party to guarantee the Obligations or to provide collateral therefor;
Lender's compromise or settlement with or without release of Borrower or any
other party liable for the Obligations; Lender's release of any collateral for
the Obligations; Lender's failure to file suit against Borrower (regardless of
whether Borrower is becoming insolvent, is believed to be about to leave the
state or any other circumstance); Lender's failure to give Guarantor notice of
default by Borrower; the unenforceability of the Obligations against Borrower
due to bankruptcy discharge, counterclaim or for any other reason; Lender's
acceleration of the Obligations at any time; the extension, modification or
renewal of the Obligations; Lender's failure to undertake or exercise diligence
in collection efforts against any party or property; the termination of any
relationship of Guarantor with Borrower, including, but not limited to, any
relationship of employment, ownership or commerce; Borrower's change of name or
use of any name other than the name used to identify Borrower in this Guaranty;
or Borrower's use of the credit extended for any purpose whatsoever. All
Obligations arising after the execution hereof shall be deemed made in reliance
upon the continued operation of this Guaranty and shall constitute additional
consideration for Guarantor's execution of this Guaranty. Guarantor agrees that
this Guaranty shall be valid and binding upon Guarantor upon the delivery of
this executed Guaranty to Lender by any party whomsoever.
(6) Primary Liability of Guarantor. This Guaranty constitutes
a guarantee of payment and performance and not of collection. Accordingly,
Lender may enforce this Guaranty against Guarantor without first making demand
upon or instituting collection proceedings against Borrower. Guarantor's
liability for the Obligations is hereby declared to be primary, and not
secondary, and Guarantor may be called upon hereunder to make any payment when
due under the Obligations. Each document presently or hereafter executed by
Borrower to evidence or secure an obligation to Lender is incorporated herein by
reference and shall be fully enforceable against Guarantor.
(7) Irrevocable Guaranty. Guarantor's guarantee of the
Obligations is irrevocable.
(8) Corporate Capacity. BBH warrants that it is a duly
organized Delaware corporation in good standing under the laws of Delaware, and
that BBH is duly qualified to do business in each other state in which
qualification is necessary. Xxxxxx Xxxx warrants that it is and shall remain a
duly organized Iowa corporation in good standing under the laws of Iowa, and
that Xxxxxx Xxxx is and shall remain duly qualified to do business in each other
state in which qualification is necessary. Guarantor warrants that its execution
and delivery of and performance under this Guaranty and all related documents
are permitted under and will not violate any provision of Guarantor's Charter or
By-Laws. Guarantor 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 Guaranty and related documents on behalf
of Guarantor is duly authorized to bind Guarantor by his signature. By signing
below on behalf of Guarantor, the individual executing this Guaranty on behalf
of Guarantor also personally makes the warranties set forth in the preceding
sentence.
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(9) No Marshalling of Assets. Lender may proceed against any
collateral securing the Obligations and against parties liable therefor in such
order as it may elect, and Guarantor shall not be entitled to require Lender to
marshal assets. The benefit of any rule of law or equity to the contrary is
hereby expressly waived.
(10) Impairment of Collateral; Release of Liable Parties.
Lender may, in its sole discretion and with or without consideration, release
any collateral securing the Obligations or release any party liable therefor.
The defenses of impairment of collateral and impairment of recourse and any
requirement of diligence on Lender's part in collecting the Obligations are
hereby waived.
(11) Amendment of Obligations. Lender may, without notice to
or the joinder of Guarantor and without affecting Guarantor's liability
hereunder, modify, extend, accelerate, reinstate, refinance or renew the
Obligations (with or without the execution of new promissory notes) and grant
any consent or indulgence with respect thereto.
(12) Waivers of Notice. Guarantor hereby waives any
requirement of presentment, protest, notice of dishonor, notice of default,
demand, and all other actions or notices that may be otherwise required on
Lender's part in connection with the Obligations.
(13) Subordination. Guarantor agrees that any existing or
future loan made by Guarantor to Borrower and any other existing or future
obligation of Borrower to Guarantor (including but not limited to any rights
Guarantor may have against Borrower by virtue of Guarantor's performance
hereunder) shall be subordinate to the Obligations as to both payment and
collection. Accordingly, Guarantor agrees not to accept any payment whatsoever
from Borrower or to allow any payment by Borrower on Guarantor's behalf until
this Guaranty has been terminated in full; provided, however, that Lender
consents to Borrower repaying inter-company loans from Guarantor in the ordinary
course of business so long as no event of default exists hereunder or under the
Loan Agreement. Guarantor hereby grants Lender a security interest in all
obligations now or hereafter owed Guarantor by Borrower and in all instruments,
chattel paper and other property now or hereafter evidencing obligations of
Borrower to Guarantor, together with all collateral therefor. Guarantor shall
advise Lender of the status of such obligations and shall provide a payment
history therefor upon request. Lender may file this Guaranty (or a copy hereof)
as a financing statement with respect thereto, or Lender may require Guarantor
to execute a separate financing statement with respect thereto, or Lender may
require Guarantor to take any other action necessary to perfect Lender's
security interest therein, at Guarantor's expense. Without limiting the
foregoing, all such property owned by Guarantor in which a security interest may
be perfected by possession shall be delivered to Lender immediately as made
available to Guarantor. Guarantor agrees that, in the event of a bankruptcy or
other insolvency proceeding involving Borrower, Guarantor will timely file a
claim for the amount of the subordinated debt described herein, in form approved
by Lender. Guarantor agrees to pursue said claim with diligence and to comply
with any instructions from Lender pertaining to the pursuit of the claim. The
proceeds of any such claim shall be delivered to Lender for application to the
Obligations.
(14) Postponement of Rights Against Borrower. Guarantor hereby
agrees to exercise no right of subrogation, indemnity, or other right of
reimbursement against Borrower in connection with the Obligations, or any right
of contribution against any other party whatsoever in connection with the
Obligations, in either case until and unless the Obligations have been satisfied
in full.
(15) Statute of Limitations. Guarantor acknowledges and agrees
that the statute of limitation applicable to this Guaranty shall begin to run
only upon Lender's accrual of a cause of action against
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Guarantor hereunder caused by Guarantor's refusal to honor a demand for
performance hereunder made by Lender in writing; provided, however, if,
subsequent to the demand upon Guarantor, Lender reaches an agreement with
Borrower on any terms causing Lender to forbear in the enforcement of its demand
upon Guarantor, the statute of limitation shall be reinstated for its full
duration until Lender subsequently again makes demand upon Guarantor.
(16) Cancellation by Lender. Lender may evidence its
cancellation of this Guaranty and the release of Guarantor from liability
hereunder by delivering to Guarantor an instrument of release, or by delivering
this Guaranty to Guarantor, or both. Unless Lender delivers this original
Guaranty to Guarantor with a notation on its face signed and dated by an
authorized officer of Lender stating "Cancelled in Full As To All Obligations,"
however, the purported cancellation hereof and release of Guarantor shall not
impair Guarantor's continuing liability for: (i) any amount of principal,
interest or expenses that was mistakenly omitted by Lender in calculating the
final payment due under the Obligations, if the release of Guarantor was based
upon Lender's belief that it had been paid in full; (ii) any surviving liability
of Borrower to reimburse Lender for expenses or to indemnify Lender provided for
in any document executed prior to the purported cancellation hereof evidencing
or securing the Obligations; and (iii) liability for avoided payments and
expenses related thereto (as provided in detail below). Lender shall not be
obligated to release any collateral securing this Guaranty until after all
applicable time periods have expired regarding bankruptcy preferences or other
avoidance actions that may be applicable to the circumstances of payment of any
or all of the Obligations.
(17) Recovery of Avoided Payments. If any amount applied by
Lender to the Obligations is subsequently challenged by a bankruptcy trustee or
debtor-in-possession as an avoidable transfer on the grounds that the payment
constituted a preferential payment or a fraudulent conveyance under state law or
the Bankruptcy Code or any successor statute thereto or on any other grounds,
Lender may, at its option and in its sole discretion, elect whether to contest
such challenge. If Lender contests the avoidance action, all costs of the
proceeding, including Lender's attorneys fees, will become part of the
Obligations. If the contested amount is nevertheless successfully avoided, the
avoided amount will become part of the Obligations hereunder. If Lender elects
not to contest the avoidance action, Lender may tender the amount subject to the
avoidance action to the bankruptcy court, trustee or debtor-in-possession and
the amount so advanced shall become part of the Obligations hereunder.
Guarantor's obligation to reimburse Lender for amounts due under this paragraph
shall survive the purported cancellation hereof except as otherwise provided
above.
(18) Costs of Collection Against Guarantor. Guarantor agrees
to pay all costs of collection, including, without limitation, court costs,
attorney's fees and compensation for time spent by Lender employees, that Lender
may incur in enforcing the terms of this Guaranty against Guarantor.
(19) Changes in Financial Condition. Guarantor covenants to
give Lender prompt written notice of the creation or discovery of any additional
material contingent liability or the occurrence of any other material adverse
change in the financial condition of Guarantor.
(20) No Unpaid Taxes. Guarantor warrants that Guarantor is not
presently delinquent in the payment of any taxes imposed by any governmental
authority or in the filing of any tax return and that Guarantor is not involved
in a dispute with any taxing authority over tax amounts due. Guarantor covenants
that all future taxes assessed against Guarantor shall be timely paid and that
all tax returns required of Guarantor shall be timely filed.
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(21) Compliance with Law. Guarantor warrants that Guarantor's
business activities are conducted in accordance with all applicable laws and
regulations, and Guarantor covenants that such activities shall continue to be
so conducted.
(22) Assistance in Litigation. Guarantor covenants to, upon
request, cooperatively participate in any proceeding in which Guarantor is not
an adverse party to Lender and which concerns Lender's rights regarding the
Obligations or any collateral securing its payment.
(23) Recitals. Guarantor warrants and agrees that the recitals
set forth at the beginning of this Guaranty are true.
(24) No Burdensome Agreements. Guarantor warrants that
Guarantor is not a party to any contract or agreement and is not subject to any
contingent liability that does or may materially impair Guarantor's ability to
perform under the terms of this Guaranty. Guarantor further warrants that the
execution and performance of this Guaranty will not cause a default,
acceleration or other event under any other contract or agreement to which
Guarantor or any property of Guarantor is subject, and will not result in the
imposition of any charge, penalty, lien or other encumbrance against any of
Guarantor's property, except in favor of Lender.
(25) Legal and Binding Agreement. Guarantor warrants that the
execution, delivery and performance of this Guaranty will not violate any
judicial or administrative order or governmental law or regulation, and that
this Guaranty is valid, binding and enforceable in every respect according to
its terms.
(26) No Consent Required. Guarantor warrants that Guarantor's
execution, delivery and performance of this Guaranty 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.
(27) Consent to Jurisdiction and Venue. Guarantor hereby
irrevocably consents to the jurisdiction of the United States District Court for
the Middle District of Tennessee and of all Tennessee state courts sitting in
Davidson County, Tennessee, for the purpose of any litigation to which Lender
may be a party and which concerns this Guaranty or the Secured Indebtedness. It
is further agreed that venue for any such action shall lie exclusively with
courts sitting in Davidson County, Tennessee, unless Lender agrees to the
contrary in writing.
(28) WAIVER OF RIGHT TO TRIAL BY JURY. GUARANTOR HEREBY
KNOWINGLY AND VOLUNTARILY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY ISSUE ARISING
FROM THE LENDING RELATIONSHIP OF LENDER, GUARANTOR AND BORROWER. GUARANTOR
ACKNOWLEDGES THAT THE EFFECT OF THIS WAIVER IS THAT ISSUES OF FACT IN ANY SUCH
DISPUTE WILL BE DETERMINED BY A JUDGE RATHER THAN BY A JURY. GUARANTOR
ACKNOWLEDGES THAT THERE HAVE BEEN NO ORAL REPRESENTA TIONS TO GUARANTOR LIMITING
THE ENFORCEMENT OF THIS WAIVER, AND GUARANTOR AGREES THAT THE EFFECT OF THIS
WAIVER OF RIGHT TO JURY TRIAL MAY BE HEREAFTER LIMITED ONLY UPON THE SPECIFIC
WRITTEN ACTION OF LENDER.
(29) Not Partners; No Third Party Beneficiaries. Nothing
contained herein or in any related document shall be deemed to render Lender a
partner of Guarantor for any purpose. This Guaranty has been executed for the
sole benefit of Lender, and no third party is authorized to rely upon Lender's
rights
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hereunder or to rely upon an assumption that Lender has or will exercise its
rights under this Guaranty or under any document referred to herein.
(30) Notices. Any communications concerning this Guaranty or
the credit described herein shall be addressed as follows:
As to Guarantor:
Xxxxxx Xxxx Xxxxx Inc.
Suite 2950
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
BBH Corp.
Suite 2950
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
With a copy to:
Xxxxxxxxx Xxxxxx Xxxxxx & Xxxxxx PA
Xxxxxxxxx Xxxxx Xxxxxxxx
Xxxxx 0000
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxx
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
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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 Guarantor shall be effective when actually
or constructively received by Guarantor or when set forth in writing and mailed
or delivered to Guarantor's address stated above. Lender or Guarantor may change
its address for receipt of notices by submitting the change in writing to the
other party.
(31) Indulgence Not Waiver. Lender's indulgence in any
departure from the terms of this Guaranty or any other document shall not
prejudice Lender's rights to make demand and recover from Guarantor in
accordance with this Guaranty, or otherwise demand strict compliance with this
Guaranty.
(32) Cumulative Remedies. The remedies provided Lender in this
Guaranty are not exclusive of any other remedies that may be available to Lender
under any other document or at law or equity.
(33) Amendment and Waiver in Writing. No provision of this
Guaranty 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.
(34) Assignment. This Guaranty shall be binding upon and inure
to the benefit of the respective heirs, successors and assigns of Guarantor and
Lender, except that Guarantor shall not assign any rights or delegate any
obligations arising hereunder without the prior written consent of Lender. Any
attempted assignment or delegation by Guarantor without the required prior
consent shall be void.
(35) Severability. Should any provision of this Guaranty be
invalid or unenforceable for any reason, the remaining provisions hereof shall
remain in full effect.
(36) Applicable Law. The validity, construction and
enforcement of this Guaranty and all other documents executed with respect to
the Obligations shall be determined according to the laws of Tennessee
applicable to contracts, in which state this Guaranty has been executed and
delivered.
(37) Gender and Number. Words used herein indicating gender or
number shall be read as context may require.
(38) Captions Not Controlling. Captions and headings have been
included in this Guaranty for the convenience of the parties, and shall not be
construed as affecting the content of the respective paragraphs.
(39) NOTICE TO LENDER UPON PERCEIVED BREACH. GUARANTOR AGREES
TO GIVE LENDER WRITTEN NOTICE OF ANY ACTION OR INACTION BY LENDER IN CONNECTION
WITH THE OBLIGATIONS THAT GUARANTOR BELIEVES MAY BE ACTIONABLE AGAINST LENDER OR
A DEFENSE TO PAYMENT FOR ANY REASON, INCLUDING, BUT NOT
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LIMITED TO, COMMISSION OF A TORT OR VIOLATION OF ANY CONTRACTUAL DUTY OR DUTY
IMPLIED BY LAW. GUARANTOR AGREES THAT UNLESS SUCH NOTICE IS DULY GIVEN AS
PROMPTLY AS POSSIBLE (AND IN ANY EVENT WITHIN TEN (10) DAYS) AFTER GUARANTOR
LEARNS OF ANY SUCH ACTION OR INACTION, GUARANTOR SHALL NOT ASSERT AGAINST
LENDER, AND GUARANTOR SHALL BE DEEMED TO HAVE WAIVED, ANY CLAIM OR DEFENSE
ARISING THEREFROM.
(40) NO ORAL REPRESENTATIONS LIMITING ENFORCEMENT. GUARANTOR
ACKNOWLEDGES LENDER'S INTENTION TO ENFORCE THIS GUARANTY TO THE FULLEST EXTENT
POSSIBLE AND GUARANTOR ACKNOWL EDGES THAT LENDER HAS MADE NO ORAL STATEMENTS TO
GUARANTOR THAT COULD BE CONSTRUED AS A WAIVER OF LENDER'S RIGHT TO ENFORCE THIS
GUARANTY BY ALL AVAILABLE LEGAL MEANS.
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Executed the date first written above.
THE UNDERSIGNED
ACKNOWLEDGES A THOROUGH
UNDERSTANDING OF THE TERMS
OF THIS GUARANTY AND AGREES
TO BE BOUND THEREBY:
GUARANTOR:
XXXXXX XXXX XXXXX INC.
By: /s/ Xxxxxx X. Xxxxxx
Title: President
BBH CORP.
By: /s/ Xxxxxx X. Xxxxxx
Title: President
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