COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS
THIS COLLATERAL ASSIGNMENT OF CONTRACT RIGHTS ("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 extension of credit to
Borrower is that Borrower must provide Lender a first priority security interest
in Borrower's architectural and engineering management and services contract
rights;
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 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) Assignment; Security Interest. To secure the payment of
the Secured Indebtedness Borrower hereby collaterally assigns to Lender
(including Equitas, L.P., as agent for the benefit of Lender) and grants to
Lender (including Equitas, L.P., as agent for the benefit of Lender) a security
interest in all of Borrower's presently existing and hereafter arising contract
rights arising from, or related or incidental to, management and services
agreements (and all amendments and modifications thereof) which Borrower enters
into with various architectural and engineering firms (each, an "Obligor," and
collectively, the "Obligors"), including without limitation, those certain
management and services agreements identified on Exhibit A attached hereto and
incorporated by reference (collectively, the "Contracts"), copies of which are
also attached hereto, together with all renewals, modifications, amendments and
extensions thereof, and all existing and hereafter arising accounts and/or
rights to receive payments associated therewith, rights to any claims and/or
damages with respect thereto, and any and all proceeds from any of the foregoing
(collectively the "Contract Rights").
(3) No Assumption of Obligations. Neither Lender's execution
hereof nor Lender's exercise of any remedies hereunder shall cause Lender to
assume any obligations of Borrower under the Contracts; provided, however,
Lender may assume Borrower's obligations under any of the Contracts if Lender
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so agrees by written instrument specifically referencing this Paragraph and
addressed to the respective Obligor thereto.
(4) Notice of Assignment. Borrower agrees to execute and cause
each Obligor under the Contracts to execute that certain letter in substantially
the same form as Exhibit B which is attached hereto and incorporated herein by
reference.
(5) Warranties. Borrower warrants to Lender the following:
(a) Valid Contract. Each Contract is and shall remain
valid and enforceable according to its terms.
(b) No Default. No default presently exists under any
of the Contracts and no condition exists which, with the giving of notice, the
passage of time, or both, would allow any party thereto to declare any other
party in default under the terms of any of the Contracts.
(c) No Other Lien. Borrower's rights under the
Contracts are not subject to any other assignment, security interest, lien,
claim or other encumbrance.
(d) Title. Borrower is the legal and equitable owner
of the Contracts and Contract Rights assigned hereby, and each Contract is
described on Exhibit A attached hereto.
(e) No Amendments to Contract. The terms of the
Contracts have not been modified or waived as to vary in any way from the terms
set forth in the copy of the Contracts attached hereto as Exhibit A, which
represents the entire agreements between the contracting parties.
(6) Covenants. Borrower covenants with Lender as follows:
(a) Performance of Contract Obligations. Borrower
shall duly perform Borrower's obligations under the Contracts, and shall not
cause or allow a default on its part thereunder.
(b) No Amendment Without Consent. Borrower shall not
modify, amend, cancel or waive any obligation or right of Borrower or any other
party to the Contracts, without the prior written approval of Lender. Any
attempted modification, amendment, cancellation or waiver without such consent
shall be void.
(c) Notice of Default. Borrower shall promptly notify
Lender in writing if Borrower or any other party to any of the Contracts
defaults thereunder.
(d) Supporting Documents. Borrower shall furnish
Lender any information that Lender may reasonably request pertaining to the
Contracts. Upon the reasonable request of Lender, Lender shall cause Borrower or
an independent auditor (at Borrower's expense) to obtain audit confirmations
relating to the Contracts from any Obligor at any time.
(e) No Other Lien. Borrower shall not grant or allow
any security interest or lien to attach to the Contract Rights, except for the
security interest provided for herein.
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(f) Perfection/New Contracts/Assignments. Borrower
agrees to take such action that Lender may reasonably request at any time to
perfect Lender's security interest in the Contract Rights, whether currently
existing or hereafter arising. Borrower shall give Lender twenty (20) days
written notice prior to entering into any new Contract, the terms of which shall
be subject to Lender's prior written approval. Upon entering into any new
Contract which is approved by Lender, Exhibit A to this Assignment shall be
amended by Borrower and Lender to reflect the additional Contract. None of the
Contracts shall prohibit a security interest and collateral assignment in favor
of Lender (or subsequent assignee of Lender). Upon Lender's request, Borrower
shall immediately execute and deliver to Lender additional specific assignments
related to the Contracts, including those Contracts entered into following the
date of this Assignment. A copy of this Assignment may be filed as a financing
statement.
(g) Collection Rights of Lender. Upon the occurrence
of a default hereunder, Lender may notify any Obligor(s) to make all payments
due under its respective Contract directly to Lender for the account of
Borrower, and Borrower hereby directs each Obligor to comply with Lender's
instructions without the need of confirmation from Borrower.
(h) Prohibition against Assignment. Except as
provided hereunder, neither Borrower nor any Obligor shall assign any rights or
delegate any obligations arising hereunder without the prior written consent of
Lender. Any attempted assignment or delegation by Borrower or Obligor without
the required prior consent shall be void and shall be a default hereunder.
(7) Compliance with Law. Borrower warrants that the Contracts,
and the performance by the parties of their obligations thereunder, comply with
all applicable laws and regulations.
(8) Name. Borrower warrants that Borrower has not been known
under or done business under any name other than the name used by Borrower in
executing this Assignment. Borrower agrees to give Lender at least fifteen (15)
days prior written notice before Borrower begins using any name other than that
used in executing this Assignment.
(9) Further Assurances. Borrower covenants to execute such
other assignments, security agreements, financing statements, and other
documents that Lender may deem necessary to further evidence the obligations
provided for herein or to perfect, extend, or clarify Lender's rights in any
property and contract rights securing or intended to secure the Secured
Indebtedness. Lender is hereby appointed as Borrower's attorney-in-fact for the
signing of such documents. Borrower acknowledges that this power of attorney is
coupled with an interest and is irrevocable.
(10) Default Defined. Applying the applicable cure periods as
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.
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(d) Contract Default or Termination. The occurrence
of a default under any Contract by any party thereto, or the termination or
cancellation of any Contract whether voluntary or involuntary.
(11) Remedies Upon Default. Upon the occurrence of a default
hereunder, Lender may pursue any or all of the following remedies, without any
notice to Borrower except as required below:
(a) Exercise of Rights. Lender may, but shall not be
obligated to, exercise any or all of Borrower's rights under any or all of the
Contracts. If Lender notifies an Obligor of Lender's election to exercise its
rights under this Assignment, such Obligor shall thereafter give all notices
concerning the respective Contract directly to Lender, and shall otherwise
regard Lender as the sole owner of Borrower's rights under the Contract unless
otherwise instructed by Lender. Borrower hereby directs each and every Obligor
to comply with the provisions of this subparagraph upon receipt of said notice
from Lender, without any inquiry on Obligor's part. An Obligor shall not be
liable to Borrower for compliance with such notice. Lender may exercise
Borrower's rights under the Contracts by giving any notice or demand; by
initiating or settling any claim or administrative or judicial proceeding; or by
taking any other action that is, in Lender's judgment, appropriate in connection
with the exercise of Borrower's rights under the Contracts. Any such actions may
be taken by Lender without notice to Borrower, and may be taken in Lender's own
name or in the name of Borrower. Borrower hereby irrevocably appoints Lender as
Borrower's attorney-in-fact for the purpose of so enforcing Borrower's rights
under the Contracts. All expenses incurred by Lender in the course of enforcing
Borrower's rights under the Contracts shall become part of the Secured
Indebtedness.
(b) Performance of Obligations. Lender may, but shall
not be obligated to, perform or cause to be performed any or all of Borrower's
obligations under the Contracts. Lender may take such action pursuant to the
terms of the Contracts or pursuant to any demand made by any Obligor concerning
the Contracts. Any demand made by any Obligor concerning the Contracts may be
settled, complied with, or contested by Lender in its name or in Borrower's name
and by any means, including administrative proceedings and litigation, without
notice to Borrower. Borrower hereby appoints Lender as Borrower's
attorney-in-fact for the purpose of settling or contesting any matter regarding
Borrower's obligations under the Contracts. This power of attorney shall be
deemed a power coupled with an interest. No action taken by Lender hereunder
shall cause Lender to assume Borrower's obligations under the Contracts, except
as otherwise provided herein. All expenses incurred by Lender in the course of
performing Borrower's obligations under the Contracts shall become part of the
Secured Indebtedness.
(c) Further Assignment. Upon five (5) days notice to
Borrower, Lender may assign Borrower's rights in any or all the Contracts to
such party as Lender may elect, with all consideration therefor to be applied to
the Secured Indebtedness as received. Lender may execute such assignment in
Lender's own name or in the name of Borrower. Borrower hereby appoints Lender as
Borrower's attorney-in-fact for the purpose of executing such an assignment.
This power of attorney shall be deemed a power coupled with an interest.
(d) 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 payment of any or all of the Secured
Indebtedness.
(e) Other Remedies. Borrower may seek any other
remedy available under any other document evidencing or securing the Secured
Indebtedness or otherwise available at law or equity.
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(f) Application of Proceeds. All amounts received by
Lender for Borrower's account through Lender's exercise of its remedies
hereunder shall be applied as set forth in the Note Purchase Agreement.
(12) Incorporation of Exhibits. All Exhibits referred to in
this Assignment are incorporated herein by this reference.
(13) 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.
(14) 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.
(15) 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.
(16) 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
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 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.
(17) 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.
(18) 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.
(19) Severability. Should any provision of this Assignment be
invalid or unenforceable for any reason, the remaining provisions hereof shall
remain in full effect.
(20) 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.
(21) 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 laws of Tennessee
applicable to contracts executed and performed entirely within that state, in
which state this Assignment has been executed and delivered.
(22) Gender and Number. Words used herein indicating gender or
number shall be read as context may require.
(23) 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, the parties hereto have caused this
Collateral Assignment of Contract Rights to be executed and delivered on their
behalf by their duly authorized officers, as of the date first set out above.
THE UNDERSIGNED ACKNOWLEDGE A THOROUGH
UNDERSTANDING OF THE TERMS OF THIS
AGREEMENT AND AGREE TO BE BOUND THEREBY:
Borrower:
HLM DESIGN, INC.
By:___________________________________
Title:________________________________
Lender:
PACIFIC CAPITAL, L.P.
By: Pacific Capital Corporation,
General Partner
By:___________________________________
Title:________________________________
EQUITAS, L.P.
By: Tennessee Business Investments, Inc.,
General Partner
By:___________________________________
Title:________________________________
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EXHIBIT A
Contracts, together with amendments and modifications
EXHIBIT B
PACIFIC CAPITAL, L.P.
EQUITAS, L.P.
May ___, 1997
VIA CERTIFIED MAIL-
RETURN RECEIPT REQUESTED
__________________________
Attn:_____________________
__________________________
__________________________
Re: Notice of Collateral Assignment of Contract Rights
under that certain Management and Services Agreement
dated ________, 1997 between HLM Design, Inc. and
________________ (the "Contract"); Consent to
Assignment to Pacific Capital, L.P. and Equitas, L.P.
(collectively, "Lender")
Ladies and Gentlemen:
As you know, your firm, ______________________ ("Obligor"),
has entered into the above-referenced Contract with HLM Design, Inc. ("HLM")
whereby HLM will provide Obligor certain management services specified in the
Contract and Obligor will pay HLM certain amounts on a [monthly] [quarterly]
basis (the "Contract Payments") for said services, said Contract to expire
____________________ [any renewal options].
Please be informed that HLM's rights under the Contract,
including HLM's right to the Contract Payments, is to be collaterally assigned
to Lender, pursuant to that certain Collateral Assignment of Contract Rights
("Collateral Assignment") dated May 30, 1997, between HLM and Lender. HLM's
entering into the Collateral Assignment is one of the conditions to Lender's
extension of credit to HLM.
No provision of the Contract may hereafter be amended, waived,
renewed, modified or extended without Lender's prior written consent. Obligor
hereby agrees to promptly notify Lender in writing of any default under the
Contract, and if said default is not cured by HLM within 20 days of Lender's
receipt of written notice of the default, Obligor hereby agrees to give Lender
30 days thereafter to cure said default (collectively, the "Cure Period").
Obligor agrees that it shall not terminate the Contract in the event HLM is in
default or breach of the Contract during the Cure Period. In the event of
default, Obligor hereby agrees to permit Lender, or any agent appointed by
Lender, to assume all of HLM's obligations under the Contract, and upon written
notice from Lender to Obligor, and without the need of confirmation from HLM,
Obligor will send all Contract Payments, and any other monies, due under the
Contract directly to Lender at the such address as Lender may designate from
time to time.
In the event Lender elects to assume HLM's obligations under
the Contract, Lender shall be entitled to exercise any and all of HLM's renewal
or extension options under the Contract and shall be entitled to all other
rights and benefits under the Contract.
Notwithstanding the foregoing, Obligor and its affiliates
agree to hold Lender harmless from any and all existing or future claims against
HLM or its affiliates, or for any existing or future violations of any
applicable laws by HLM or its affiliates, and shall not, as a result of said
claims or violations, deduct or setoff any amounts payable by Obligor under the
Contract. Upon Lender's request, Obligor agrees to furnish Lender with a letter
confirming that neither Obligor, nor, to Obligor's knowledge, HLM, is in default
under the Contract, and that Obligor is not aware of any fact that may now or in
the future result in a default under the Contract.
This letter is a standard notice given by Lender when the
rights under a contract are collaterally assigned to Lender. 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 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 contract rights.
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
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 its
rights under the Contract
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 CONTRACT
AND AGREES TO THE TERMS AND PAYMENT
INSTRUCTIONS AS SET FORTH HEREIN.
___________________________, a _________
corporation
By:_____________________________________
Title:__________________________________
