EXHIBIT 10.135
SECURITY AGREEMENT
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This SECURITY AGREEMENT is made and entered into as of this 5th day of
January, 1999, between LA-MAN CORPORATION, a Nevada corporation ("La-Man"), and
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC. and RENAISSANCE US GROWTH &
INCOME TRUST PLC (each a "Lender" and collectively, the "Lenders"). Capitalized
terms used herein, unless otherwise defined herein, have the definitions given
them in the Loan Agreement (as defined below).
WHEREAS, Lenders, Renaissance Capital Group, Inc. (the "Agent") and the
parent of La-Man, have entered into a Convertible Loan Agreement dated March 2,
1998 (the "Loan Agreement"), pursuant to which Lenders will lend to the parent
of La-Man the aggregate principal amount of $3,500,000 evidenced by the parent
of La-Man's 8.75% Convertible Debentures dated March 2, 1998 (the "Debentures");
WHEREAS, to satisfy covenants of the Loan Agreement, Lenders require that
La-Man grant a security interest in its assets as collateral for such Loan;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto and hereby agree as follows:
1. Grant of Security Interest. In order to secure payment when due of
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all obligations arising under the Loan Agreement and the Debentures and
all other indebtedness of the Borrower to the Lenders, whether pursuant
to subsequently-issued debentures or otherwise (the "Obligations"), now
existing or hereafter incurred, La-Man hereby irrevocably grants to
Lenders a continuing security interest in the following property of La-
Man (the "Collateral"), whether now owned or existing, or hereafter
acquired, owned, existing or arising (whether by contract or operation
by law), and wherever located, which shall be retained by Lenders until
the Obligations have been paid in full and the Loan Agreement has been
terminated; provided, however, that the security interest in certain of
the Collateral will be subordinate to existing security interests
previously granted to SouthTrust Bank, National Association:
a. All accounts, contract rights, chattel paper and rights of payment
of every kind (collectively, "Accounts") and instruments and general intangibles
of La-Man.
b. All bank accounts of La-Man.
c. All monies, residues and property of any kind, now or at any time
or times hereafter, in the possession or under the control of Lenders, Agent or
a bailee of Lenders.
d. All licenses, patents, patent applications, copyrights,
trademarks, trademark applications, trade names, assumed names, service marks
and service xxxx applications of La-Man.
e. All inventory, equipment (including any and all computer hardware
and components), machinery and fixtures of La-Man in all forms and wherever
located, and all parts and products thereof, all accessories thereto, and all
documents therefor.
f. All books and records (including, without limitation, customer
lists, credit files, tapes, ledger cards, computer software and hardware,
electronic data processing software, computer programs, printouts and other
computer materials and records) of La-Man evidencing or containing information
regarding or otherwise pertaining to any of the foregoing.
g. All accessories to, substitutions for and all replacements,
products and proceeds of the foregoing, including, without limitation, proceeds
of insurance policies insuring the Collateral (including, but not limited to,
claims paid and premium refunds).
2. Insurance on Collateral. La-Man further warrants and agrees that in
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each case where the terms of any such Accounts require La-Man or the
account debtor named in such Account to place or carry insurance in
respect of the property to which such Account relates, La-Man or the
account debtor will pay for and maintain such insurance.
3. Delivery of Receivables. Upon Lenders' or Agent's request, upon the
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occurrence of an Event of Default, La-Man will, at any reasonable time
and at La-Man's own expense, physically deliver to Lenders or Agent all
Accounts assigned to Lenders at any reasonable place or places
designated by Lenders or Agent. Failure to deliver any Account, or
failure to deliver physical possession of any instruments, documents or
writings in respect of any Account shall not invalidate Lenders' Lien
and security interest therein, except to the extent that possession may
be required by applicable law for the perfection of said Lien or
security interest, in which latter case, the Account shall be deemed to
be held by La-Man as the custodian agent of Lenders, for the benefit of
Lenders. Failure of Lenders or Agent to demand or require La-Man to
include any Account in any schedule, to execute any schedule, to assign
and deliver any schedule or to deliver physical possession of any
instruments, documents or writings related to any Account shall not
relieve La-Man of its duty so to do.
4. Collection of Receivables. La-Man hereby agrees that it shall use
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commercially reasonable efforts, at its sole cost and expense and in its
own name, to promptly and diligently collect and enforce payment of all
Accounts and La-Man will defend and hold Lenders harmless from any and
all loss, damage, penalty, fine or expense arising from such collection
or enforcement.
5. Financing Statements. La-Man agrees to execute all financing
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statements and amendments thereto as Lenders or Agent may request from
time to time to evidence the security interest granted to Lenders
hereunder and will pay all filing fees and
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taxes, if any, necessary to effect the filing thereof. Wherever
permitted by law, La-Man authorizes Lenders or Agent to file financing
statements with respect to the Collateral without the signature of La-
Man. Without the written consent of Lenders or Agent, La-Man will not
allow any financing statement or notice of assignment to be on file in
any public office covering any Collateral, proceeds thereof or other
matters subject to the security interest granted to Lenders herein,
unless such financing statement relates to a Permitted Lien.
6. Lenders' Payment of Claims. Lenders may, in their sole discretion,
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discharge or obtain the release of any security interest, lien, claim or
encumbrance asserted by any Person against the Collateral, other than a
Permitted Lien. All sums paid by Lenders in respect thereof shall be
payable, on demand, by La-Man to such Lenders and shall be a part of the
Obligations.
7. Default and Remedies.
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a. La-Man shall be in default hereunder upon the occurrence of an
Event of Default, as set forth in the Loan Agreement.
b. Upon the occurrence of any Event of Default which shall be
continuing, (i) unless Lenders or Agent shall elect otherwise, the entire unpaid
amount of due under the Continuing Guaranty as are not then otherwise due and
payable shall become immediately due and payable without notice to La-Man or
demand by Lenders or Agent and (ii) any of Lenders or Agent may at its or their
option exercise from time to time any and all rights and remedies available to
them under the Uniform Commercial Code or otherwise, including the right to
foreclose or otherwise realize upon the Collateral and to dispose of any of the
Collateral at one or more public or private sales or other proceedings, and La-
Man agrees that any of Lenders, Agent or their nominee may become the purchaser
at any such sale or sales. La-Man agrees that ten (10) days shall be reasonable
prior notice of the date of any public sale or other disposition of the same may
be made. All rights and remedies granted Lenders hereunder or under any other
agreement between Lenders and La-Man shall be deemed concurrent and cumulative
and not alternative, and Lenders, or Agent on their behalf, may proceed with any
number of remedies at the same time or at different times until all the
Obligations are fully satisfied. The exercise of any one right or remedy shall
not be deemed a waiver or release of or an election against any other right or
remedy. La-Man shall pay to Lenders or Agent on demand any and all expenses
(including reasonable attorneys' fees and legal expenses) which may have been
incurred by Lenders or Agent (i) in the prosecution or defense of any action
growing out of or connected with the subject matter of this Agreement, the
Continuing Guaranty, the Collateral or any of Lenders' rights therein or
thereto; or (ii) in connection with the custody, preservation, use, operation,
preparation for sale or sale of the Collateral, the incurring of all of which
are hereby authorized to the extent Lenders or Agent deem the same advisable.
La-Man's liability to Lenders or Agent for any such payment shall be included in
the Obligations. The proceeds of any Collateral received by Lenders or Agent at
any time before or after default, whether from a sale or other disposition of
Collateral or otherwise, or the Collateral itself, may be applied to the payment
in full or in part of such of the Obligations and in such order and manner as
Lenders or Agent may elect.
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8. Representations and Covenants of La-Man. La-Man hereby represents
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to and agrees with Lenders as follows:
a. Except as referred to in Section 1, La-Man owns the Collateral as
sole owner, free and clear of any Liens.
b. So long as any amounts due pursuant to the Loan Agreement remain
unpaid, La-Man agrees not to sell, assign or transfer the Collateral and to
maintain it free and clear of any Liens.
9. Miscellaneous.
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a. This Agreement shall bind and inure to the benefit of the parties
and their respective heirs, personal representatives, successors and assigns,
except that La-Man shall not assign any of its rights hereunder without Lenders'
and Agent's prior written consent.
b. Any provision hereof which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without affecting the validity or
enforceability of the remainder of this Agreement or the validity or
enforceability of such provision in any other jurisdiction.
c. All issues arising hereunder shall be governed by the laws of the
State of Texas.
d. La-Man hereby consents to the jurisdiction of the courts of the
State of Texas in any action or proceeding which may be brought against it under
or in connection with this Agreement or any transaction contemplated hereby or
to enforce any agreement contained herein, and in the event any such action or
proceeding shall be brought against it, La-Man agrees not to raise any objection
to such jurisdiction or to the laying of venue in Dallas County, Texas or, if
applicable, any other county in any state in which Collateral is located.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
and year written above.
LA-MAN:
LA-MAN CORPORATION
By: /s/ J. Xxxxxxx Xxxxxxxx
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J. Xxxxxxx Xxxxxxxx, Chairman
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LENDERS:
RENAISSANCE CAPITAL GROWTH & INCOME
FUND III, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Senior Vice President
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RENAISSANCE US GROWTH & INCOME
TRUST, PLC
By: Renaissance Capital Group, Inc.,
Investment Manager
By: Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Senior Vice President
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