GUARANTY
THIS GUARANTY ("Guaranty") is executed as of the 30th day of
May, 1997, by XXX XXXXXX ("Guarantor"), resident of the state of North Carolina,
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 to HLM Design,
Inc. ("Borrower"), a Delaware corporation, on certain terms and conditions; and
WHEREAS, one condition to Lender's agreement to extend credit
to Borrower is that Guarantor must unconditionally guarantee the obligations of
Borrower to Lender;
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 Guaranteed Obligations. As used herein, the
"Guaranteed Obligations" shall mean all obligations of Guarantor under this
Guaranty and all obligations and indebtedness of Borrower, BBH Corp. and/or
Xxxxxx Xxxx Xxxxx Inc. under that certain Note Purchase Agreement of even date
herewith by and between Borrower, BBH Corp., Xxxxxx Xxxx Xxxxx Inc. ("HLM"), and
Lender (the "Note Purchase Agreement") 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. Guaranty of Payment. Guarantor hereby guarantees to Lender
the timely payment and performance of the Guaranteed Obligations.
3. 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
or any other law.
4. Guaranty Unconditional. Guarantor's guarantee of the
Guaranteed Obligations is absolute and unconditional, provided that this
Guaranty shall only become effective in the event that Guarantor ceases to be
employed by Borrower or HLM, whether voluntarily or involuntarily, except if
such cessation of employment is due to death, continued disability for a period
of at least six (6) months or involuntary termination by the Borrower or HLM
without "cause". For purposes of this Agreement, "cause" shall include (i)
commission of a fraud or other act of dishonesty by the Guarantor that is likely
to have a material adverse effect on the Borrower or HLM, (ii) instigation of a
criminal charge against the Guarantor that is likely to have a material adverse
effect on the Borrower or HLM, (iii) the failure of Guarantor to faithfully
perform the duties and responsibilities assigned to him from time to time by the
boards of directors of the Borrower and HLM, after notice and failure of
Guarantor to cure within twenty (20) days, (iv) the commission of any acts, or
failure to perform any acts, by the Guarantor that cause material disruption to
the Borrower's or HLM's business, after notice and failure of Guarantor to
cure within twenty (20) days, (v) the failure of Guarantor to adhere
to any written employee policies or procedures of Borrower or HLM in any
material respect, after notice and failure of Guarantor to cure within twenty
(20) days, (vi) the appropriation (or attempted appropriation) by Guarantor of a
material business opportunity of the Borrower, including attempting to secure or
securing any material personal profit in connection with any transaction entered
into on behalf of the Borrower without the prior consent of Borrower's board of
directors, or (vii) the occurrence of an event of default under that certain
Noncompetition Agreement of even date herewith between Guarantor and Borrower.
Except as otherwise provided herein, the validity of this Guaranty shall not be
impaired by any event whatsoever, including, but not limited to, the death,
disability, or incompetence of Borrower, if Borrower is an individual; the
merger, consolidation, dissolution, cessation of business or liquidation of
Borrower, if Borrower is a business entity; the financial decline or bankruptcy
of Borrower; the failure of any other party to guarantee the Guaranteed
Obligations or to provide collateral therefor; Lender's compromise or settlement
with or without release of any other party liable for the Guaranteed
Obligations; Lender's release of any collateral for the Guaranteed 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 Guaranteed Obligations against Borrower, due to
bankruptcy discharge or otherwise; the availability to Borrower of any setoff,
counterclaim or defense against Lender; Lender's acceleration of the Guaranteed
Obligations at any time; the extension, modification or renewal of the
Guaranteed Obligations; Lender's failure to exercise diligence in collection;
the termination of any relationship of Guarantor with Borrower, including, but
not limited to, any relationship of employment, ownership, commerce, or
marriage; 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. Each advance of credit by Lender to Borrower
following 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.
5. Guaranty Irrevocable. Guarantor's guarantee of the
Guaranteed Obligations is irrevocable; provided, however, Guarantor may at any
time by written notice to Lender prospectively terminate Guarantor's liability
for any advances made by Lender subsequent to Lender's receipt of the
termination notice, except for any advance that Lender had previously committed
to make. After the delivery of such notice to Lender, Guarantor shall remain
fully liable for all principal, interest and expenses outstanding as of the time
of Lender's receipt of the cancellation hereof; for all interest subsequently
accruing thereon and for all expenses subsequently incurred by Lender with
respect thereto; and for all subsequent principal advances that Lender may have
previously committed to make (regardless of whether Lender waived any default or
condition precedent in actually making the advance(s)), together with all
interest thereon and expenses related thereto. The renewal or extension of the
maturity of obligations covered by this paragraph shall not relieve Guarantor of
continuing liability therefor.
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 Guaranteed 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 Guaranteed Obligations irrespective of the existence of any default
thereunder. 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.
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7. No Marshalling of Assets. Lender may proceed against any
collateral securing the Guaranteed Obligations and against parties liable
therefor in such order as it may elect, and Guarantor shall not be entitled to
require Lender to xxxxxxxx assets. The benefit of any rule of law or equity to
the contrary is hereby expressly waived.
8. Impairment of Collateral; Release of Liable Parties. Lender
may, in its sole discretion and with or without consideration, release any
collateral securing the Guaranteed 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 Guaranteed
Obligations are hereby waived.
9. Amendment of Guaranteed 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 Guaranteed Obligations (with or without the execution of new Promissory
Notes) and grant any consent or indulgence with respect thereto.
10. 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 required on Lender's part in connection
with the Guaranteed Obligations.
11. 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 shall be subordinate to the Guaranteed
Obligations as to both payment and collection. Accordingly, Guarantor agrees not
to accept any payment whatsoever from Borrower (except for reasonable salary,
bonus approved by the board of directors of Borrower, and reimbursement of
necessary and reasonable business expenses, unless Lender notifies Guarantor to
the contrary) or to allow any payment by Borrower on Guarantor's behalf until
this Guaranty has been terminated in full. Guarantor hereby grants Lender a
security interest in all accounts 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.
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, 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.
12. Subrogation of Guarantor. Guarantor shall not be
subrogated to any rights of Lender against Borrower until the Guaranteed
Obligations have been paid in full.
13. Statute of Limitations. Guarantor acknowledges that the
statute of limitation applicable to this Guaranty shall begin to run only upon
Lender's accrual of a cause of action against 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.
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14. Death of Guarantor. In the event of the death of Guarantor
and provided that this Guaranty has become effective in accordance with section
4 hereof prior to the date of death, the obligation of Guarantor shall continue
in full force and effect against Guarantor's estate, and the executor or
administrator of such estate shall be obligated and authorized to pay such debt
and otherwise honor this Guaranty, and, if acceptable to Lender, to execute
renewal Guaranties or endorsements or notes or other evidences of indebtedness,
from time to time, with respect to any unpaid obligations hereunder. In the
event of the death of Guarantor and provided that this Guaranty has not become
effective in accordance with section 4 hereof prior to the date of death,
Guarantor's obligations pursuant to this Guaranty shall be cancelled.
15. 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 Guaranteed
Obligations," however, the purported cancellation hereof and release of
Guarantor shall not impair Guarantor's continuing liability for (a) any amount
of principal, interest, or expenses that was mistakenly omitted by Lender in
calculating the final payment due under the Guaranteed Obligations, if the
release of Guarantor was based upon Lender's belief that it had been paid in
full; (b) 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 Guaranteed Obligations;
and (c) 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 Guaranteed
Obligations.
16. Recovery of Avoided Payments. If any amount applied by
Lender to the Guaranteed 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 Guaranteed Obligations. If the contested amount is successfully avoided, the
avoided amount will become part of the Guaranteed 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
Guaranteed 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.
17. Disclosure of Litigation. Guarantor warrants that, except
as disclosed to Lender in writing, Guarantor is not presently a defendant in any
pending litigation, arbitration or administrative proceeding or the subject of
any investigation; that there is no arbitration, administrative proceeding or
investigation threatened against Guarantor; and that Guarantor is not subject to
any outstanding court or administrative order. Guarantor covenants to give
Lender prompt written notice of any litigation, administrative proceeding or
investigation that may hereafter be instituted or threatened against Guarantor,
whether or not Guarantor's liability under such proceeding would be covered by
insurance.
18. Financial Statements. Guarantor warrants that, except as
disclosed to Lender in writing, Guarantor's financial statements delivered to
Lender in connection with the Guaranteed Obligations have been prepared in
accordance with generally accepted accounting principles, consistently applied,
and are true, accurate and complete in every respect. Guarantor acknowledges
that Lender has advanced (or committed
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to advance) the Guaranteed Obligations in reliance upon such financial
statements, and Guarantor warrants that no material change has occurred in
Guarantor's financial condition as set forth in such financial statements.
Guarantor covenants to furnish to Lender, upon demand, copies of Guarantor's tax
returns and additional financial statements in form and substance acceptable to
Lender.
19. Changes in Financial Condition. Guarantor covenants to
give Lender prompt written notice of the creation or discovery of any additional
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.
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
Guaranteed Obligations or any collateral securing its payment.
23. Solvency of Guarantor. Guarantor warrants to Lender that
Guarantor is not insolvent and that Guarantor's execution hereof does not render
Guarantor insolvent.
24. Security Interest; Setoff. In order to further secure the
payment of the Guaranteed Obligations, Guarantor hereby grants to Lender a
security interest and right of setoff against all of Guarantor's presently owned
or hereafter acquired monies, items, credits, deposits and instruments
(including certificates of deposit) presently or hereafter in the possession of
Lender. By maintaining any such accounts or other property at Lender, Guarantor
acknowledges that Guarantor voluntarily subjects the property to Lender's rights
hereunder.
25. Recitals. Guarantor warrants and agrees that the recitals
set forth at the beginning of this Guaranty are true.
26. No Burdensome Agreements. Guarantor warrants that the
execution and performance of this Guaranty will not cause a default under any
other contract or agreement to which Guarantor or any property of Guarantor is
subject.
27. Legal and Binding Agreement. Guarantor warrants that the
execution and performance of this Guaranty will not violate any judicial or
administrative order or governmental law or regulation, and that this Guaranty
is valid and binding in every respect according to its terms.
28. No Consent Required. Guarantor warrants that Guarantor's
execution 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.
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29. 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 Guaranteed Obligations.
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.
30. Not Partners; No Third Party Beneficiaries. Nothing
contained herein or in any related document shall be deemed to render Lender a
partner of Borrower or Guarantor for any purpose. This Guaranty and any
documents securing the Guaranteed Obligations has been executed for the sole
benefit of Lender as an inducement to cause it to extend credit to Borrower, and
neither Guarantor nor any other third party is authorized to rely upon Lender's
rights hereunder or to rely upon an assumption that Lender has or will exercise
its rights under any document.
31. 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.
32. Notices. Any communications concerning this Guaranty or
the credit described herein shall be addressed as follows:
As to Guarantor:
Xxx Xxxxxx
Suite 2950
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
With a copy to:
Xxxxxxxxx Xxxxxx Xxxxxx & Xxxxxx, P.A.
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
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Suite 101
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 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. Any party may change its
address for receipt of notices by submitting the change in writing to the other
party.
33. Indulgence Not Waiver. Lender's indulgence in the
existence of a default under the Guaranteed Obligations or 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.
34. 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.
35. 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.
36. Assignment. This Guaranty shall be binding upon 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.
37. Severability. Should any provision of this Guaranty be
invalid or unenforceable for any reason, the remaining provisions hereof shall
remain in full effect.
38. Applicable Law. The validity, construction and enforcement
of this Guaranty and all other documents executed with respect to the Guaranteed
Obligations shall be determined according to the laws of Tennessee, in which
state this Guaranty has been executed and delivered.
39. Gender and Number. Words used herein indicating gender or
number shall be read as context may require.
40. 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.
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41. Commercial Obligations. Guarantor acknowledges that this
Guaranty secures commercial, rather than personal, obligations.
42. Entire Agreement; No Oral Representations Limiting
Enforcement. This Guaranty represents the entire agreement between the parties
concerning the liability of Guarantor for the Guaranteed Obligations, and any
oral statements regarding Guarantor's liability for the Guaranteed Obligations
are merged herein. Without limiting the foregoing, Guarantor acknowledges
Lender's intention to enforce this Guaranty to the fullest extent possible and
Guarantor acknowledges 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.
Executed the date first written above.
THE UNDERSIGNED ACKNOWLEDGES A THOROUGH
UNDERSTANDING OF THE TERMS OF THIS GUARANTY
AND AGREES TO BE BOUND THEREBY:
/s/ Xxxxxx X. Xxxxxx
---------------------------- --------------------------------------------
Witness XXX XXXXXX
###-##-####
Guarantor's Social Security or Taxpayer I.D. No. _______________________________
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STATE OF NORTH CAROLINA)
COUNTY OF XXXXXX)
Personally appeared before me, the undersigned, a Notary
Public in and for said County and State, the within named Xxx Xxxxxx, the
bargainor, with whom I am personally acquainted (or proved to me on the basis of
satisfactory evidence), and who upon oath acknowledged that he executed the
within instrument for the purposes therein contained.
Witness my hand and seal, at office in Charlotte,
North Carolina, this the 30th day of May, 1997.
/s/ Xxxxx X. Xxxxxxx
---------------------------------------
NOTARY PUBLIC
My Commission Expires: 7-4-99
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