THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (ii)
UPON FIRST FURNISHING TO THE MAKER AN OPINION OF COUNSEL SATISFACTORY TO IT THAT
SUCH TRANSFER IS NOT IN VIOLATION OF THE REGISTRATION REQUIREMENTS OF THE ACT OR
ANY STATE SECURITIES LAW.
PROMISSORY NOTE A-1
$1,200,000.00 Nashville, Tennessee May 30, 1997
FOR VALUE RECEIVED, HLM DESIGN, INC. ("Maker"), a Delaware
corporation, promises to pay to the order of PACIFIC CAPITAL, L.P. ("Payee"), a
Delaware limited partnership, the sum of One Million Two Hundred Thousand and
No/100 Dollars ($1,200,000.00), together with interest thereon at the fixed rate
of thirteen and one-half percent (13.50%) per annum. Commencing July 1, 1997,
and continuing on the first day of each calendar month thereafter until this
Note is paid in full, accrued interest payments on the outstanding balance of
this Note shall become due and payable. Commencing on June 1, 2000 and
continuing on the first day of each calendar month thereafter until and
including May 1, 2002, principal payments in the amount of Twenty Thousand and
No/100 Dollars ($20,000.00) each shall become due and payable, together with
accrued interest. The entire unpaid principal balance, together with all accrued
interest, shall be due and payable in full on June 1, 2002.
Interest Calculation. Interest hereunder will be calculated
based upon a 360-day year and actual days elapsed. The interest rate required
hereby shall not exceed the maximum rate permissible under applicable law, and
any amounts paid in excess of such rate shall be applied to reduce the principal
amount hereof or shall be refunded to Maker, at the option of the holder of this
Note.
Payment Directions. All amounts due under this Note are
payable at par in lawful money of the United States of America, at the principal
place of business of Payee in Nashville, Tennessee, or at such other address as
the Payee or other holder hereof (herein "Holder") may direct.
Defaults; Remedies and Default Interest. The occurrence of any
default under that Note Purchase Agreement of even date herewith executed by
Maker, Payee and certain other parties thereto, together with any and all
amendments and modifications thereof (the "Agreement") and the lapse of any
applicable cure period provided therein, shall constitute a default hereunder.
Upon the
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occurrence of an event of default, as defined above, Holder may, at its option
and without notice (except as may be required under the Agreement and upon the
expiration of any applicable cure period as provided above) declare all
principal and interest provided for under this Note, and any other obligations
of Maker to Holder, to be presently due and payable, and Holder may enforce any
remedies available to Holder at law or equity or under any documents securing or
evidencing debts of Maker to Holder. Holder may waive any default before or
after it occurs and may restore this Note in full effect without impairing the
right to declare it due for a subsequent default, this right being a continuing
one. Upon default, the remaining unpaid principal balance of the indebtedness
evidenced hereby and all expenses due Holder shall, without any action being
required by Holder, bear interest at the lesser of (i) sixteen percent (16.00%)
per annum and (ii) the highest rate permissible under applicable law.
Application of Payments; Prepayment Rights. All amounts
received for payment of this Note shall be first applied to any expenses due
Holder under this Note or under any other documents evidencing or securing
obligations of Maker to Holder, then to accrued interest, and finally to the
reduction of principal. Prepayment of principal or accrued interest may be made,
in whole or in part, at any time without penalty at the option of Maker. Any
prepayment(s) shall reduce the amount of indebtedness outstanding under the Note
according to the prepayment provisions in the Agreement.
Consents and Waivers. Maker and all sureties, guarantors,
endorsers and other parties to this instrument hereby consent to any and all
renewals, waivers, modifications, or extensions of time (of any duration) that
may be granted by Holder with respect to this Note and severally waive demand,
presentment, protest, notice of dishonor, and all other notices that might
otherwise be required by law. All parties hereto waive the defense of impairment
of collateral and all other defenses of suretyship.
Security. This Note is subject to the terms and provisions set
forth in the Agreement and Maker's performance under this Note is secured by
that certain collateral as more particularly described in the Agreement.
Payments of Legal Fees and Costs. Maker and all sureties,
guarantors, endorsers and other parties hereto agree to pay reasonable
attorneys' fees and all court and other costs that Holder may incur in the
course of efforts to collect the debt evidenced hereby or to protect Holder's
interest in any collateral securing the same.
Tennessee Law and Construction. The validity and construction
of this Note shall be determined according to the laws of Tennessee applicable
to contracts executed and performed within that state. If any provision of this
Note should for any reason be invalid or unenforceable, the remaining provisions
hereof shall remain in full effect.
Amendments. The provisions of this Note may be amended or
waived only by instrument in writing signed by the Holder and Maker and attached
to this Note.
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Words used herein indicating gender or number shall be read as
context may require.
Executed as of the date first written above.
HLM DESIGN, INC., Maker
By: /s/ Joseph M. Harris
Title: President
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