EXHIBIT 10.9
SECURITY AGREEMENT
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This SECURITY AGREEMENT is made and entered into as of this 2nd day of
March, 1998, between LA-MAN CORPORATION, a Nevada corporation (the "Borrower"),
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
Borrower, have entered into a Convertible Loan Agreement of even date herewith
(the "Loan Agreement"), pursuant to which Lenders will lend to the Borrower the
aggregate principal amount of $3,500,000 evidenced by the Borrower's 8.75%
Convertible Debentures of even date herewith (the "Debentures");
WHEREAS, as a condition for entering into the Loan Agreement and providing
the Loan, Lenders required that Borrower 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
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of all obligations arising under the Loan Agreement and the Debentures (the
"Obligations"), now existing or hereafter incurred, Borrower hereby irrevocably
grants to Lenders a continuing security interest in the following property of
the Borrower (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 Borrower.
b. All bank accounts of Borrower.
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 Borrower.
e. All inventory, equipment (including any and all computer hardware
and components), machinery and fixtures of Borrower 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 Borrower 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. Borrower further warrants and agrees that
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in each case where the terms of any such Accounts require the Borrower or the
account debtor named in such Account to place or carry insurance in respect of
the property to which such Account relates, the Borrower 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, the Borrower will, at any reasonable time and
at Borrower'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 the Borrower as the custodian agent of Lenders, for the benefit of
Lenders. Failure of Lenders or Agent to demand or require Borrower 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 Borrower of its duty so to do.
4. Collection of Receivables. Borrower 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
Borrower 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. Borrower 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 taxes, if any, necessary to effect the filing thereof.
Wherever permitted by law, Borrower authorizes Lenders or Agent to file
financing statements with respect to the Collateral without the signature of
Borrower. Without the written consent of Lenders or Agent, Borrower 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
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the Collateral, other than a Permitted Lien. All sums paid by Lenders in respect
thereof shall be payable, on demand, by Borrower to such Lenders and shall be a
part of the Obligations.
7. Default and Remedies.
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a. Borrower 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 Borrower 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
Borrower agrees that any of Lenders, Agent or their nominee may become the
purchaser at any such sale or sales. Borrower 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 Borrower 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. Borrower 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.
Borrower'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.
8. Representations and Covenants of Borrower. Borrower hereby
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represents to and agrees with Lenders as follows:
a. Except as referred to in Section 1, Borrower 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, Borrower agrees not to sell, assign or transfer the Collateral and to
maintain it free and clear of any Liens.
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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 Borrower 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. Borrower 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, Borrower 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.
BORROWER:
LA-MAN CORPORATION
By: /s/ J. Xxxxxxx Xxxxxxxx
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J. Xxxxxxx Xxxxxxxx
President and Chief Executive Officer
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LENDERS:
RENAISSANCE CAPITAL GROWTH & INCOME
FUND III, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
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Name:__________________________
Title: President
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RENAISSANCE US GROWTH & INCOME
TRUST, PLC
By: Renaissance Capital Group, Inc.,
Investment Manager
By: /s/ Xxxxxxx Xxxxxxxxx
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Name:_____________________
Title: President
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