COLLATERAL ASSIGNMENT OF PROCEEDS
COLLATERAL ASSIGNMENT OF PROCEEDS (this "Assignment"), dated as of January
I, 1997, by and among ENVIROMETRICS, INC. (Envirometrics, Inc. or any other
person or entity succeeding to the fights of Envirometrics, Inc. with respect to
any of the Collateral, as hereinafter defined, being the "Debtor"), a Delaware
corporation; and SHAKESPEARE PARTNERS, LP ("Shakespeare"), a South Carolina
limited partnership; THE UNITED STATES COMPANY ("USC"), a Virginia corporation;
XXXXXXX XXXXXXX ("Xxxxxxx"), an individual resident of South Carolina; XXXXXXX
X. XXXXXXX ("Xxxxxxx"), an individual resident of South Carolina; PRECISION
SOUTHEAST, INC. ("PSI"), a South Carolina corporation; TEN STATE STREET, L.L.P.
("10 State"), a South Carolina limited liability partnership; and XXXXXX X.
XXXXXXX III ("Xxxxxxx"), an individual resident of South Carolina. Shakespeare,
USC, Bennett, Feigley, PSI, 10 State and Xxxxxxx are hereinafter referred to
collectively as the "Secured Parties" and each individually as a "Secured
Party"; Xxxxxxx and Xxxxxxx are sometimes hereinafter referred to as the "Lease
Guarantors".
Preliminary Statement
Debtor is indebted to Shakespeare in the principal mount of $200,000,
evidenced by a promissory note or notes duly executed by Debtor and delivered to
Shakespeare (such mount, together with interest thereon at the rate or rates
specified in such note(s) and together with any costs, expenses, fees or other
charges specified in such note(s), being the "Shakespeare Debt").
Debtor is indebted to USC in the principal amount of $186,000, evidenced by
two promissory notes dated December 24, 1996 (such amount, together with
interest thereon at the rate or rates specified in such note and together with
any costs, expenses, fees or other charges specified in such note, being the
"USC Debt").
Debtor has entered into a Lease with Xxxxx X. Xxxxxx, M.D., as landlord
("Xxxxxx"), dated the date December 20, 1996 (the "Lease"), of certain real
property in which Debtor's main offices are located. Xxxxxx has required as a
condition to his execution of the Lease that' Debtor's performance thereunder be
unconditionally guaranteed by the Lease Guarantors (the "Lease Guaranty"), and
the Lease Guarantors has accordingly executed the required guaranties on the
Lease instrument. Therefore, Debtor now has a contingent liability to Lease
Guarantors in the amount of any payment or payments that such Lease Guarantors
may make in the Future pursuant to the relevant Lease guaranty (such contingent
liability, as further defined in clause (3)(B) below) being in each case a
"Lease Liability"). The total amount of the Lease Liability of the Lease
Guarantors shall not exceed $66271 in the aggregate.
Debtor is indebted to PSI in the aggregate mount of $122,000 (the 'PSI
Debt"), representing part of the unpaid portion of the purchase price of certain
goods sold and delivered by PSI to Debtor.
Debtor is indebted to 10 State in the aggregate amount of $55,000 (the "10
State Debt") representing the unpaid portion of legal fees for legal services
rendered by Ten State Street to the Debtor and its affiliates since 1995. The 10
State Debt is evidenced by a promissory note dated the date hereof, executed by
the Debtor and delivered to 10 State.
Debtor is indebted to Xxxxxxx in the principal amount of $15,038.00
evidenced by a promissory note dated December 31, 1996 (such amount together
with interest thereon at the rate or rates specified in such note and together
with any costs, expenses, fees or other charges specified in such note being the
"Xxxxxxx Debt").
The Shakespeare Debt, the USC Debt, PSI Debt, 10 State Debt and Xxxxxxx
Debt are sometimes hereinafter collectively referred to as the "Secured Debts".
Trico Engineering Consultants, Inc. ("Trico") has executed and delivered to
the Debtor Trico's Promissory Note dated July 26, 1996 (the "Trico Note") in the
principal amount of $600,000. The Trico Note is secured by a Security Agreement
dated July 26, 1996 (the "Trico Mortgage"), and by a Pledge Agreement dated July
26, 1996 (the "Pledge Agreement"), each executed by Trico in favor of the
Debtor. Payment of the Trico Note is also personally guaranteed by Xxxxxx X.
Xxxxxxxx ("Xxxxxxxx") under a Pledge Agreement dated July 26, 1996 executed by
Xxxxxxxx in favor of the Debtor (the "Xxxxxxxx Guaranty"; the Xxxxxxxx Guaranty,
the Pledge Agreement and the Trico Mortgage being collectively the "Security
Documents"). The Trico Note provides for monthly payments of principal and
interest in accordance with the schedule set forth in Exhibit A hereto (each
such payment being a "Trico Note Payment").
NOW, THEREFORE, the parties agree as follows:
Section I. Acknowledgment of Other Debt: Effect of Payment. The parties
acknowledge that Debtor is or may be indebted to one or more Secured Parties in
mounts and by instruments not described in this Assignment, and agree that any
such other indebtedness is entirely outside the scope of this Assignment, does
not affect any rights of the parties to this Assignment, and is not secured by
this Assignment.
The receipt of payments of Proceeds (as hereinafter defined) hereunder
shall not affect the right of any Secured Party to timely payment in full of the
debt owed to such Secured Party and secured hereby.
This Assignment shall terminate and become void when all Proceeds have been
received by Debtor (or, as the case may be, by the relevant Secured Parties
directly pursuant to the Escrow Agreement) and paid over in accordance with the
terms hereof; except that the provisions of Section 3 shall survive such
termination.
Section 2. Assignment and Grant of Security Interest. For the purposes of
this Assignment: (a) "Proceeds" shall mean all Trico Note Payments, in whatever
form received, and all payments, in whatever form received, made under any of
the Security Documents; and (b) "Collateral" shall mean (i) all Proceeds, and
(ii) all of Debtor's right, title and interest in and to the Security Documents.
Debtor hereby assigns the Collateral to the several Secured Parties to the
following extent and in the following priorities:
(1) Except as provided in sub-paragraph (2) below, upon the receipt of any
Trico Note Payment, or any part thereof, the Debtor shall pay over first to
Shakespeare the sum of $4,093,43; second to the Lease Guarantor in the amount of
any Lease Liability created in the month preceding the month in which the Trico
Note Payment is received; third to USC an mount equal to the difference between
$2,629.26, the principle mount due under the USC Note, and the mount paid to USC
pursuant to the Promissory Note dated December 24, 1996; fourth to PSI the sum
of $2,000,00; fifth l0 State the sum of $2,500.00; sixth to Xxxxxxx.
(2) The Debtor covenants that it will use its best efforts to pay all
monthly installments of the rent due under the Lease ("Rent") from sources of
cash other than Trico Note Payments. If at any time while the Lease Guaranty
remains in force the Debtor becomes aware that it will be unable to pay all or
part of any installment of Rent from sources of cash other than Trico Note
Payments, then the Debtor shall give notice of that prospective inability to the
Lease Guarantor, USC, 10 State and PSI, and shall apply the next following Trico
Note Payment as follows: first to Shakespeare the sum of $4,093.43; second to
the Lease Guarantors in accordance with the Lease Guarantor Agreement executed
on December 20, 1996; third to USC an amount equal to the difference between
$2629.26, the principle mount due under the USC Note, and the amount paid to USC
pursuant to the Promissory Note dated December 24, 1996; fourth to PSI the sum
of $2,000.00; fifth to 10 State the sum of $2,500.00; sixth to Xxxxxxx.
(3) (A) Except as provided in clause (3)(B) below, if in any month the
amount received from Trico as a Trico Note Payment is insufficient to allow
payment in full to each Secured Party the mount otherwise due to such Secured
Party under sub-paragraph (1) or (2) above (as applicable), then the Secured
Party or Parties which fail to receive the entire amount due in such month shall
have no claim against the Debtor, the Collateral, or any other Secured Party in
respect of such deficiency. Instead, the amount of such deficiency shall merely
continue to constitute part of such Secured Party's Secured Debt.
(B) Notwithstanding clause (3)(A) above, if the provisions of sub-paragraph
(2) above are applied in any month in order to permit the Debtor to pay Rent,
and if the Rent for such month is nevertheless not paid in full, and if as a
result of such nonpayment (or inability to pay) the Lease Guarantor makes a
payment of Rent, then the amount of such payment by the Lease Guarantor shall
constitute a Lease Liability, which shall be satisfied in successive months as
provided in subsections (1) and (2) above.
(4) All Collateral other than Trico Note Payments shall be paid over as
received to the respective Secured Parties as follows: first to Shakespeare to
the extent of the Shakespeare Debt; second to the 'Lease Guarantor to the extent
of any then unsatisfied amount of Lease Liability; third to USC to the extent of
the USC Debt; fourth to PSI to the extent of the PSI Debt; fifth to I0 State to
the extent of the 00 Xxxxx Xxxx; and sixth to Xxxxxxx to the extent of the
Xxxxxxx Debt. All Collateral remaining undistributed after payment in full of
all the Debts shall remain the sole property of the Debtor.
All Proceeds paid over to a Secured Party hereunder shall be deemed applied
first to interest on the debt owed to such Secured Party, then to accrued
interest thereon, and finally to fees, charges and costs owed by Debtor in
connection therewith.
Section 3. Debtor's Warranties; Disclaimers. Debtor' warrants to each
Secured Party that (1) Debtor is the sole owner of the Collateral, free from any
adverse claim, security interest, lien or other encumbrance whatever; and (2)
Debtor has full legal authority to enter into this Assignment and make
assignment of Collateral effected hereby. Debtor has made no investigation and
accordingly makes no representation or warranty whatever as to the quality or
condition of the 'Collateral, such quality including, without limitation, the
creditworthiness of Trico and Xxxxxxxx, the existence or priority of any lien
created by the Security Documents, and any representation or warranty made by
Trico or Xxxxxxxx in any Security Document or the Collateral Note, Each Secured
party acknowledges familiarity with their terms and conditions of the Collateral
Note, the Security Documents and the Subordination Agreement.
Section 4. Third Party Bailee to Hold Collateral; Perfection and Notice
Fillings. The Secured Parties hereby authorize the law firm of Xxxxxxx & Xxxxxx,
LLP (the "Escrow Agent") to hold the Collateral Note and the Security Documents,
under an Escrow Agreement to be executed and delivered by the Escrow Agent and
all parties hereto. Notwithstanding the bailment of the Collateral Note and the
Security Documents, the Debtor shall continue to receive and apply all Proceeds
as provided herein unless and until an Even of Default (as defined in Section 6
hereof) occurs. Debtor shall not transfer, sell or otherwise alienate or allow
any transfer of the Collateral Note or any Collateral or any interest therein.
Debtor warrants that it will not, without the prior written approval of' the
Secured articles, release, terminate, cancel, modify or amend the Collateral
Note or the Security Documents in any material respect, it being Understood that
such approval will not be unreasonably withheld by any Secured Party, and any
such action by Debtor without such approval by all Secured Parties shall be
invalid and without legal operation or effect.
As soon as practicable after the execution and delivery of this Assignment,
Debtor shall execute and deliver to the designated agent of the Secured Parties
for filing or recording all such financing statements and memoranda of
assignment as the Secured Parties or any of them may reasonably request by any
Secured Party in order to confirm, protect or continue the security interest or
assignments effected hereby or any rights of any Secured Party hereunder.
Section 5. Liability of Secured Parties with Respect to Assigned Note.
Neither this Assignment nor anything contained herein shall be construed to
impose any liability or obligation on any Secured Party on or with respect to
the Collateral Note or the Security Documents. Debtor shall indemnify and hold
each Secured Party harmless against all costs, claims and other liabilities that
such Secured Party may incur to the extent that such costs, claims or other
liabilities are the result of such Secured Party's being a party to this
Assignment.
Section 6. Events of Default.
(a) Under this Assignment. If:
(1) the Debtor fails to make any payment to any Secured Party within 30
calendar days after the date of which Debtor receives a Trico Note Payment, or
(2) during any 6-month period Debtor fails to make any payment to one or
more Secured Parties of moneys received from Trico Note Payments within 15
calendar days after the date of which Debtor receives a Trico Note Payment, or
(3) if the Debtor should file any petition for protection from creditors
under the provisions of any bankruptcy, insolvency, moratorium or other similar
state or federal law affecting creditors' rights generally (or if any such
petition should be filed against Debtor and remain undischarged for more than 30
calendar days after being filed), or should Debtor enter into any assignment or
composition for the benefit of creditors, then, upon the occurrence of such
event, an Event of Default shall be deemed to exist under this Assignment.
Debtor shall give immediate written notice of the occurrence of any Event of
Default to each Secured Party and to the Escrow Agent, but Debtor's failure to
give such notice shall not affect the rights of any Secured Party. Upon the
occurrence and continuance of any Event of Default, any Secured Party may give
written instructions to the Escrow Agent and to Trico and Xxxxxxxx, that all
further Trico Note Payments must be made directly to the Escrow Agent and not to
Debtor. If the Event of Default is later cured, Debtor may, with the written
consent of all Secured Parties (which may be withheld in the sole discretion of
any Secured Party for any reason or no reason), instruct the Escrow Agent, Trico
and Xxxxxxxx that all further Trico Note Payments must be made directly to
Debtor and no longer to the Escrow Agent.
(b) Under the Security Documents. If any even of default should occur under
the Trico Note or any Security Document, Debtor shall immediately notify each
Secured Party of such default and shall immediately take all such remedial
actions in respect of such event(s) of default ("Remedial Actions") as it may
deem reasonable in the circumstances, and shall pursue such actions to the
maximum extent feasible to protect the interests of the Secured Parties. A
two-thirds majority in interest of the Secured Parties (on the basis of dollar
amount of then outstanding debt held) shall have the right to direct Debtor to
pursue such Remedial Actions as such Secured Parties require, and may pursue
such Remedial Actions, by actions at law or in equity, or by extra-judicial
action, in the name and on behalf of the Debtor, for the benefit of all Secured
Parties, equalIy and ratably. In such even, Debtor shall cooperate fully with
such Secured Parties as requested by them from time to time.
Section 7. Miscellaneous. (a) This Assignment represents the entire
agreement of the parties with respect to the subject matter hereof, and no
written or oral representation or statement of any kind, made by any person for
any purpose, is part of the agreement represented hereby unless set forth
herein; (b) no modification of the terms of this Assignment, nor any consent to
any departure from the terms hereof, shall be valid for any purpose unless in
writing and signed by the party or parties against whom enforcement is sought;
(c) this Assignment shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns; and (d) this Assignment shall be
governed by the law of South Carolina.
IN WITNESS WHEREOF, the parties have executed this Assignment as of the
date first above written
ENVIROMETRICS, INC.,
By:
Xxxxxx X. Xxxxxxx, III, President
SHAKESPEARE PARTNERS, L.P.
By:
H.E. Xxxx Jr., General Partner
THE UNITED STATES COMPANY
By:
Xxxxxxx X. Xxxxxxxx, President
TEN STATE STREET, LLP
By:
Xxxxxxxx Xxxxxxxx, Partner
PRECISION SOUTHEAST, INC.
By:
Title:
XXXXXXX X. XXXXXXX
XXXXXXX X XXXXXXX
