Exhibit 10.44
INTERCREDITOR AGREEMENT
THIS AGREEMENT is made and entered into as of this 10th day of
September, 1997, by, between and among Xxxxxxx Xxxxxx & Company Leasing, Inc.,
an Iowa corporation ("Subordinated Lender") as the subordinate lender, and
Pacific Capital, L.P., a Delaware limited partnership ("Pacific Capital") and
Equitas, L.P., a Delaware limited partnership ("Equitas") as the senior lenders.
Pacific Capital and Equitas together with their respective successors and
assigns are herein collectively referred to as the "Senior Lenders".
RECITALS
A. Senior Lenders have previously entered into a Note Purchase
Agreement dated as of May 30, 1997 among HLM Design, Inc., a Delaware
corporation ("Borrower"), Xxxxxx Xxxx Xxxxx Inc., an Iowa corporation as
guarantor (the "Guarantor") and the Senior Lenders (said Note Purchase
Agreement, together with any amendments hereafter made thereto, being referred
to collectively as the "Senior Loan Agreement") pursuant to which the Senior
Lenders agreed to extend certain credit to Borrower as set forth in said Senior
Loan Agreement (the "Senior Loan"). The obligations of Borrower to Senior
Lenders are guaranteed by the Guarantor and the contingent personal guaranties
of Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxx pursuant to guaranty agreements of
even date therewith.
B. The obligation of Borrower to pay the Senior Loan, with interest
therein, is evidenced by that certain Promissory Note dated May 30, 1997 in the
original principal amount of $1,200,000 made payable to Pacific Capital (the
"Pacific Capital Note"), and that certain Promissory Note dated May 30, 1997 in
the original principal amount of $800,000 made payable to Equitas (the "Equitas
Note") (the Pacific Capital Note and the Equitas Note, together with all
extensions, renewals, modifications and assignments thereof, are hereinafter
collectively referred to as the "Senior Notes" and each individually is referred
to as a "Senior Note").
C. The amounts now or hereafter owed under the Senior Loan Agreement
and the Senior Notes, including without limitation principal, interest (that
accrues before and after any petition under any chapter of the Bankruptcy Code
or any other law affecting creditor's rights), bank fees, reasonable costs of
collection and attorneys fees incurred in connection therewith, and reasonable
amounts expended to preserve, protect, maintain or resell the collateral, are
collectively referred to as the "Senior Debt".
D. The obligations of Borrower to Senior Lenders are secured by liens
on and security interests in the collateral described in the Senior Loan
Agreement (the "Senior Collateral").
E. Subordinated Lender has entered into two Note and Security
Agreements, dated as of September 10, 1997, and September 16, 1997,
respectively, by, between and among Borrower, Subordinated Lender, Guarantor and
the Personal Guarantors (said Note and Security Agreements, together with any
amendments, extensions, modifications or renewals hereinafter
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made thereto, being referred to herein collectively as the "Subordinated Loan
Agreements" and sometimes as the "Subordinate Notes") pursuant to which
Subordinated Lender has agreed to make two subordinated term loans to Borrower
in the original principal amounts of $500,000 and $250,000, respectively
(collectively, the "Subordinated Loan"). The obligations of Borrower to
Subordinated Lender are guaranteed by the Guarantor and the personal guaranties
of Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, and Xxxxxxx X. Xxxxxxx (Xx. Xxxxxx, Xx.
Xxxxxxx and Xx. Xxxxxxx being collectively referred to herein as the "Personal
Guarantors").
F. The obligations of Borrower and Guarantor to Subordinated Lender are
secured by certain collateral referenced in the Subordinated Loan Agreements and
the financing statements filed in connection therewith (the "Subordinated
Collateral").
G. Senior Lenders and Subordinated Lender desire to confirm as among
themselves, the rights and priorities with respect to certain matters arising in
connection with the Senior Loan Agreement and the Subordinated Loan Agreements
which are of mutual importance to them, without affecting their respective
rights against Borrower, the Guarantor and the Personal Guarantors under those
agreements and the other agreements, instruments, and other writings executed
and delivered in connection therewith, all as more fully set forth herein.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, Senior Lenders and Subordinated Lender, intending to be legally bound
hereby, agree as follows:
1. Priorities Regarding Collateral. Notwithstanding anything to the
contrary contained in or arising from any note, agreement, instrument or
document now or hereafter executed and delivered by Senior Lenders, Subordinated
Lender, Borrower, Guarantor or any of the Personal Guarantors in connection with
the Senior Loan or the Subordinated Loan, including without limitation the terms
and conditions of any promissory note, security agreement, guaranty agreement or
mortgage executed and delivered by Borrower, Guarantor or any of the Personal
Guarantors to the Senior Lenders or Subordinated Lender, or any instrument or
document executed and delivered in connection therewith, or otherwise, any prior
perfection of a security interest, mortgage, deed of trust, lien, or the
provisions of the Uniform Commercial Code, or other law of any jurisdiction
which is applicable, or the existence of any present or future filing of
financing statements under the Uniform Commercial Code, or other law of any
jurisdiction which is applicable, or other filings or recordings under any other
law of any jurisdiction which is applicable or in which such filing or recording
has been made:
(a) the priorities of the liens and security interests of the
Senior Lenders in the Senior Collateral (including proceeds of casualty and
title insurance) securing the Senior Debt, shall be senior and prior to any
liens and security interests of Subordinated Lender at any time obtained on such
collateral, and the liens and security interests of Subordinated Lender at any
time obtained in such Senior Collateral shall be junior liens and security
interests subject to the liens and security interests of the Senior Lenders.
(b) in the event of any insolvency or bankruptcy proceedings,
and any receivership, liquidation, reorganization, arrangement or other similar
proceedings in connection therewith, relative to Borrower, Guarantor or any
Personal Guarantor, or to their property, and in the event of any proceedings
for voluntary liquidation, dissolution or other winding up of
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Borrower, Guarantor or any Personal Guarantor, whether or not involving
insolvency or bankruptcy, (i) the Senior Lenders shall be entitled to receive
payment in full of the Senior Debt before Subordinated Lender shall be entitled
to receive any payment on the Subordinated Notes, and to that end the Senior
Lenders shall be entitled to receive for application in payment thereof any
payment or distribution of any kind or character, whether in cash or property or
securities, which may be payable or deliverable in any such proceedings in
respect of the Subordinated Notes and (ii) after all the Senior Debt has been
paid in full, Subordinated Lender shall be entitled to receive full payment on
the Subordinated Notes. Subordinated Lender hereby irrevocably authorizes and
empowers any Senior Lender to file claims in the Senior Lender's own name or
names or naming and claiming through the Subordinated Lender, as may be
necessary or advisable for the enforcement of this agreement in any bankruptcy,
receivership, liquidation, insolvency or winding up of Borrower, Guarantor, or
any Personal Guarantor and to collect and receive any and all payments or
distributions which may be payable or deliverable at any time upon or with
respect to the Subordinated Notes until the Senior Debt has been paid in full.
Senior Lenders will provide Subordinate Lender with copies of any documents
filed naming and claiming through the Subordinated Lender. Subordinated Lender
shall retain the right to vote and otherwise act in any such proceeding,
including without limitation, the right to file claims in its own behalf, and to
vote to accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition, or extension.
2. Payments on Subordinated Notes. The indebtedness under the
Subordinated Notes is hereby made subordinate, junior and subject to the prior
payment in full in cash of all Senior Debt in accordance with the terms of this
Agreement. Until the Senior Debt has been paid in full, Borrower, Guarantor and
the Personal Guarantors shall not, directly or indirectly, make any payment of
any kind, of principal, interest or otherwise, on or on account of the
Subordinate Notes, and the Subordinated Lender shall not accept from Borrower,
Guarantor or the Personal Guarantors, any such payment. Notwithstanding the
immediately preceding sentence, any regularly scheduled payment of accrued
interest and/or principal required under the Subordinated Notes as in effect on
the date hereof made by Borrower, Guarantor or any Personal Guarantor to
Subordinated Lender prior to the receipt by Subordinated Lender of a Senior
Default Notice under Paragraph 3, shall be for the benefit and account of
Subordinated Lender ("Permitted Payment"). In connection with the foregoing, no
prepayments of interest and/or principal under the Subordinated Notes shall be
permitted without the prior written consent of the Senior Lenders. Any payment
received by Subordinated Lender which is not a Permitted Payment or if any such
payment is made to Subordinated Lender after receipt of a Senior Default Notice,
such payment(s) shall be held by Subordinated Lender in trust for the benefit of
Senior Lenders and promptly forwarded to Senior Lenders for application to the
Senior Debt. Upon receipt of a notice of waiver or cure under Paragraph 3 by the
Subordinated Lender from the Senior Lenders, Subordinated Lender may retain any
Permitted Payments received after the receipt of the notice of waiver or cure.
3. Senior Default Notice and Payment Blockage. Upon the occurrence and
continuance of any Event of Default (under and as defined in the Senior Loan
Agreement), and upon a declaration of an Event of Default by any one of the
Senior Lenders with written notice specifying the nature thereof (the "Senior
Default Notice") to the Subordinated Lender, then unless and until said Event of
Default shall be cured or waived to the sole satisfaction of the Senior Lenders,
with written notice of such waiver or cure to be given to the Subordinated
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Lender (i) Senior Lenders shall be entitled to thereafter receive payment in
full of all Senior Debt before Subordinated Lender shall be entitled to receive
any payment on account of principal or interest or otherwise upon the
Subordinated Notes and (ii) after all Senior Debt has been paid in full,
Subordinated Lender shall be entitled to receive full payment on the
Subordinated Notes.
4. Additional Provisions Regarding Collateral and Payments. Under the
terms and conditions of this Agreement:
(a) If Subordinated Lender shall receive any payment or
distribution out of any of the assets of Borrower, Guarantor or any of the
Personal Guarantors, whether or not arising out of or as a result of any event
described in Paragraph 3 of this Agreement, and such payment or distribution is
not in accordance with the provisions of this Agreement, then Subordinated
Lender shall hold such payment or distribution in trust as trustee of an express
trust, for the benefit of the Senior Lenders, shall not commingle such payment
or distribution with its other assets, and shall promptly take all action
necessary to cause such payment or distribution to be allocated or paid in
accordance with this Agreement.
(b) With respect to the collection of any proceeds of any
policy of insurance covering any collateral, or any part thereof, the proceeds
of which are assigned to Senior Lenders and/or Subordinated Lender as additional
collateral to secure the obligations of Borrower, Guarantor and the Personal
Guarantors under the Senior Notes or the Subordinated Notes, the Senior Lenders
and Subordinated Lender shall join in any instructions to the insurance
companies involved so that the proceeds of such insurance shall be payable in
full to Senior Lenders and then, to the extent of any excess, to Subordinated
Lender.
5. Senior Loan Agreement: Default and Acceleration Notices.
(a) When Senior Lenders give Subordinated Lender, as provided
in Paragraph 3 hereof, a Senior Default Notice, Subordinated Lender shall have
the right, but not the obligation, to undertake to cure such an Event of
Default. If Subordinated Lender determines to undertake to cure such Event of
Default, it will so notify Senior Lenders within ten (10) Business Days after
receipt of Senior Lenders' notice or it will be deemed to have waived this
right. Senior Lenders may exercise any and all remedies available to them
consistent with the provisions of this Agreement while Subordinated Lender is
considering whether to cure such Event of Default. If Subordinated Lender elects
to cure such Event of Default, Subordinated Lender must cure within twenty (20)
Business Days of the receipt of such notice such Event of Default as it exists
on the date of cure and not on the date of the Senior Default Notice delivered
to Subordinated Lender; provided, however, Subordinated Lender shall have no
obligation to then cure any other Event of Default not stated in the Senior
Default Notice.
(b) Upon any acceleration of the Senior Debt, a written notice
of acceleration (the "Senior Acceleration Notice") shall be given by the Senior
Lenders to Subordinated Lender within five (5) Business Days (a Business Day for
the purposes of this Agreement being a day which national banks located in
Nashville, Tennessee are open for business) of such acceleration or concurrently
with the giving of notice of acceleration to Borrower, whichever first occurs.
The Senior Lenders shall be entitled to send out Senior Default Notices and
Senior Acceleration Notices simultaneously, and the Subordinated Lender hereby
acknowledges this right.
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6. Default Under Subordinated Loan Agreement: Standstill Periods.
(a) Subordinated Lender hereby agrees with the Senior Lenders
not to declare an Event of Default, accelerate the Subordinated Notes, or pursue
any remedies available under the Subordinated Loan Agreements or other financing
agreements, if any, related thereto so long as the Senior Debt is outstanding,
except as hereinafter provided. Concurrently with declaring an event of default
and/or accelerating the Subordinated Notes and prior to pursuing any other
remedies, Subordinated Lender shall immediately give Senior Lenders written
notice of the occurrence of a Default under the Subordinated Loan Agreements
specifying the nature of such default. During the "Standstill Period" as defined
below, the Subordinated Lender shall not pursue any remedy available to it
(including without limitation, foreclosing on any collateral) upon the
occurrence of such default, said Standstill Period to begin on the date such
notice is given by Subordinated Lender to Senior Lenders. At the expiration of
said Standstill Period, if the default is still in effect, Subordinated Lender
may exercise such remedies and take such actions as it deems advisable, subject
to the other provisions contained herein. The Standstill Period shall be the
following:
(i) in the case of a voluntary bankruptcy
proceeding instituted by Borrower, Guarantor or any Personal Guarantor or an
involuntary bankruptcy proceeding instituted against Borrower, Guarantor or any
Personal Guarantor that is not dismissed within sixty (60) days of filing, there
shall be not Standstill Period and if a Standstill Period is otherwise in effect
the same shall cease immediately;
(ii) in the case of a default in the payment of
any amount required to be paid under the Subordinated Loan Agreements and the
continuation of such default for ten (10) days, the Standstill Period shall be
one hundred twenty (120) days commencing on the date of Subordinated Lender's
notice to Senior Lenders as provided in this Paragraph 6(a) or the Senior
Default Notice to Subordinated Lender as provided in Paragraph 5 hereof,
whichever first occurs;
(iii) in the case of any other default, the
Standstill Period shall be one hundred twenty (120) days following the
occurrence of such default and Senior Lenders' notice thereof as provided
herein.
(b) Upon the declaration of a default (under and as defined in
the Subordinated Loan Agreements), Subordinated Lender shall immediately give
written notice to the Senior Lenders of such Default specifying the nature
thereof. The Senior Lenders shall have the right, but not the obligation, to
undertake to cure such Default. If the Senior Lenders determine to undertake to
cure such Default, they will notify Subordinated Lender within ten (10) Business
Days after receipt of Subordinated Lender's Notice or they will be deemed to
have waived this right. If Senior Lenders elect to cure such default, Senior
Lenders must cure within twenty (20) Business Days of the receipt of such notice
such default as it exists on the date of cure and not on the date of the notice
of default delivered to Senior Lenders; provided, however, Senior Lenders shall
have no obligation to then cure any other default not stated in the notice of
default.
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7. Subordinated Notes Owed Only to Subordinated Lender. Subordinated
Lender warrants and represents that it has not previously assigned any interest
in the Subordinated Notes and that no party other than Subordinated Lender owns
an interest in the Subordinated Notes. Notwithstanding the foregoing,
Subordinated Lender shall have the right to assign or transfer all or any part
of its interest in the Subordinated Notes or sell or participate all or any part
of the Subordinated Loan; provided, that any assignee of the Subordinated Notes
assumes the obligations of the Subordinated Lender under this Agreement. The
attempted assignment of the Subordinated Notes to a party who does not assume
the obligations hereunder shall be void.
8. Legend on Subordinated Notes. Subordinated Lender agrees that as
long as this Agreement, and/or any amendment, modification, substitution or
replacement thereof, is in effect, the Subordinated Notes shall bear the
following legend:
PURSUANT TO THE TERMS OF THAT CERTAIN INTERCREDITOR AGREEMENT DATED AS OF
SEPTEMBER 10, 1997, BY AND BETWEEN SUBORDINATED LENDER AND SENIOR LENDERS (EACH
AS DEFINED IN THE INTERCREDITOR AGREEMENT), THE PAYMENT OF THIS NOTE IS
SUBORDINATE TO THE PAYMENT OF CLAIMS ON THE PART OF SENIOR LENDERS AGAINST HLM
DESIGN, INC., XXXXXX XXXX XXXXX INC., XXXXXX X. XXXXXX, XXXXXX X. XXXXXXX AND
XXXXXXX X. XXXXXXX TO THE EXTENT SET FORTH IN SUCH INTERCREDITOR AGREEMENT.
9. Subordinated Loan Agreement Provisions. The Subordinated Lender
agrees that it will not now or in the future include any provision in any
agreement between the Borrower and Subordinated Lender that requires the consent
of the Subordinated Lender to any renewal, extension, or modification of any
agreement between the Borrower and the Senior Lenders. The Subordinated Lender
further agrees that is shall not amend, modify, renew or extend the Subordinated
Loan Agreements or related transaction documents without the prior consent of
the Senior Lenders.
10. Subordinated Lender's Sale-Leaseback Arrangement with Guarantor.
For purposes of this Agreement, Senior Lenders acknowledge and agree that the
indebtedness of Borrower, Guarantor and the Personal Guarantors arising under
the Subordinated Loan Agreements and related transaction documents does not
include any indebtedness of obligations of Guarantor under that certain
sale-leaseback arrangement between Subordinated Lender and Guarantor pursuant to
that certain Lease Agreement between Subordinated Lender and Guarantor dated May
29, 1997.
11. Miscellaneous.
(a) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
given when actually delivered, if personally delivered, or when mailed, if
mailed by registered or certified mail, return receipt requested, to the
following addresses or to such other address as either party may subsequently
designated in writing:
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As to Subordinated Lender:
Xxxxxxx Xxxxxx & Company Leasing, Inc.
000 Xxxxxx Xxxxxx XX
Xxxxx Xxxxxx, Xxxx 00000
As to Senior Lenders:
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
Attention: Xxxxxxx XxXxx
With a copy to:
Boult, Cummings, Xxxxxxx & Xxxxx, PLC
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
(b) Governing Law and Jurisdiction. This Agreement shall be
deemed to be a contract under the laws of the State of Tennessee and for all
purposes shall be governed by and construed and enforced in accordance with the
laws of such State.
(c) Prior Understandings. this Agreement supersedes all prior
understandings and agreements, whether written or oral, among the parties
relating to the subject matter hereof.
(d) Successors and Assigns. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
(e) Severability. The provisions of this Agreement are
intended to be severable. If any provision of this Agreement is held invalid or
unenforceable in whole or in part in any jurisdiction such provision will, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
of such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
(f) Section Headings. The section headings in this Agreement
are for convenience only and do not limit, define or construe the contents of
the sections.
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(g) Rights of Third Parties. This Agreement is intended to
establish the relative priorities among Senior Lenders and Subordinated Lender
and shall not be deemed to create any rights or priorities in any other Person,
including, without limitation, Borrower, Guarantor or any Personal Guarantor or
any party claiming by, through or under them.
(h) Liabilities of Parties to One Another. Except as provided
herein for breach of contract, neither Subordinated Lender nor Senior Lenders
shall have any liability to one another except for gross negligence or willful
misconduct.
(i) Amendments and Waivers. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated except by a writing
signed by all of the parties hereto.
(j) Injunctive Relief. Each party hereto acknowledges that the
breach by it of any of the provisions of this Agreement is likely to cause
irreparable damage to the other parties. Therefore, the relief to which any
party shall be entitled in the event of any such breach or threatened breach
shall include, but not be limited to, a mandatory injunction for specific
performance, judicial relief to prevent a violation of any of the provisions of
this Agreement, damages and any other relief to which it may be entitled at law
or in equity.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Intercreditor Agreement to be executed by its duly authorized officer on the day
and year first above written.
SENIOR LENDERS:
PACIFIC CAPITAL, L.P.
By: Pacific Capital Corporation
Its: General Partner
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Title: President
---------------------------------
EQUITAS, L.P.
By: Tennessee Business Investments, Inc.
Its: General Partner
By:
------------------------------------
Title:
---------------------------------
SUBORDINATED LENDER:
XXXXXXX XXXXXX & COMPANY LEASING, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------------
Title: Vice President & COO
--------------------------------------
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Intercreditor Agreement to be executed by its duly authorized officer on the day
and year first above written.
SENIOR LENDERS:
PACIFIC CAPITAL, L.P.
By: Pacific Capital Corporation
Its: General Partner
By: /s/ Illegible Signature
------------------------------------
Title: Vice Chairman
---------------------------------
EQUITAS, L.P.
By: Tennessee Business Investments, Inc.
Its: General Partner
By: /s/ Xxxxxxx XxXxx
------------------------------------
Title: President
---------------------------------
SUBORDINATED LENDER:
XXXXXXX XXXXXX & COMPANY LEASING, INC.
By:
-----------------------------------------
Title:
--------------------------------------
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JOINDER
Borrower, Guarantor and each of the Personal Guarantors, hereby join in
the execution of this Intercreditor Agreement by and between Xxxxxxx Xxxxxx &
Company Leasing, Inc., Pacific Capital, L.P., and Equitas, L.P., for the purpose
of consenting and agreeing to all of the terms and provisions hereof, but this
Intercreditor Agreement shall not create any rights in Borrower, Guarantor or
any of the Personal Guarantors respecting the matters and transactions which are
the subject hereof.
BORROWER:
HLM DESIGN, INC.
BY: /s/ Xxxxxx X. Xxxxxxx
-----------------------
TITLE: Sr. Vice President
--------------------
GUARANTOR:
XXXXXX XXXX XXXXX INC.
BY: /s/ Xxxxxx X. Xxxxxxx
-----------------------
TITLE: Sr. Vice President
--------------------
PERSONAL GUARANTORS:
/s/ Xxxxxx Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx Xxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxx
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