SECURITY AGREEMENT
The undersigned, organized and duly existing under the laws of the
State of Illinois with a mailing address at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter called "DEBTOR") for valuable consideration, receipt whereof
is hereby acknowledged, hereby grants to DEERE PARK CAPITAL MANAGEMENT, INC.,
the secured party hereunder (hereinafter called "LENDER"), a security interest
in Equipment, whether now owned or existing or hereafter created, acquired or
arising, or in which the DEBTOR now has or hereafter acquires any rights (the
term "Equipment" means and includes all equipment and any other machinery,
tools, fixtures, trade fixtures, furniture, furnishings, office equipment,
vehicles (including vehicles subject to a certificate of title law), and all
other goods now or hereafter used or usable in connection with the DEBTOR's
business, together with all parts, accessories and attachments relating to any
of the foregoing (all of which items or property are hereinafter referred to as
the "Collateral"), to secure the payment of any and all liabilities of EIF
Holdings, Inc., the parent company of DEBTOR ("EIF"), to LENDER, now existing or
hereafter arising, pursuant to a Note by EIF to LENDER dated the date hereof, in
the original principal amount of Two Million, Five Hundred Thousand
($2,500,000.00) Dollars (the "Note"), with such security interest being granted
as an inducement and accommodation to EIF to make a loan to DEBTOR in the
principal amount of Two Million, Five Hundred Thousand ($2,500,000.00) Dollars,
it being the intention of the parties hereto that this instrument shall
constitute a security agreement within the meaning of the Uniform Commercial
Code with respect to so much of the Collateral as may be considered for the
benefit of the LENDER to secure the indebtedness evidenced by the Note and
secured by this Agreement, and all other sums and charges which may become due
hereunder or thereunder (collectively, the "Obligations"). The security interest
held by the LENDER shall cover cash and non-cash proceeds of the Collateral, but
nothing contained herein shall be construed as prohibiting, either expressly or
by implication, the sale or other disposition of the Collateral by the DEBTOR in
the ordinary course of business.
The DEBTOR covenants and agrees that, as of the execution hereof and
upon the subsequent acquisition of such Collateral now or hereafter, the DEBTOR
shall:
(a) execute and deliver to the LENDER, in the form appropriate for
recording and filing, financing statements on all such Collateral;
(b) provide to the LENDER such other assurances as may be required by
the LENDER to establish the LENDER's security interest in such Collateral; and
(c) execute, deliver and cause to be recorded and filed from time to
time, upon reasonable notice and request, and at the DEBTOR's sole cost and
expense, continuances and such other instruments as will maintain the LENDER's
security in such Collateral.
The DEBTOR warrants and represents that all Collateral now is, and that
all replacements thereof, substitutions therefor or additions thereto will be,
free and clear of liens, encumbrances or security interests of others, except
for Permitted Encumbrances.
Page 195
For purposes of this Agreement, the term "Permitted Encumbrances" means (i)
liens for taxes, assessments and other governmental charges not yet due and
payable, or being contested in good faith by permissible proceedings; (ii)
customary retention of title provisions contained in contracts with suppliers
for purchase of goods or equipment entered into in the ordinary course of
business pending payment for such goods or equipment in accordance with
customary payment terms; (iii) mechanics', warehousemen's, landlords' and other
similar statutory liens incurred in the ordinary course of business; (iv)
easements, rights-of-way, covenants, conditions and other restrictions which do
not materially interfere with the present use, occupancy or operation of any
real property; (v) roads and highways, spurs and switch tracts, and
rights-of-way of any railroad serving any real property; (vi) planning, zoning,
business and other similar governmental regulations; (vii) unrecorded easements
or rights-of-way for any utilities providing utility services to any real
property; (viii) encroachments which do not materially interfere with the use,
occupancy or operation of any real property and which are disclosed on the
survey delivered with respect to each property listed on Schedule 4(l) attached
hereto (the "Survey"); (ix) all matters disclosed on the Survey; and (x) those
encumbrances referenced in Schedule 4(c) and 4(l) attached hereto and made a
part hereof.
DEBTOR hereby warrants and covenants to LENDER as follows:
1. That except for the security interest granted hereby and the
Permitted Encumbrances, DEBTOR is, or to the extent that this Agreement states
that the Collateral is to be acquired after the date hereof, will be the owner
of the Collateral free from any adverse lien, security interest, or other
encumbrance.
2. That the Collateral is not used or bought primarily for personal,
family or household purposes.
3. That, except as set forth below in Section 5, the Collateral will be
kept at the address as listed above; that DEBTOR will promptly notify LENDER of
any change in the location of the Collateral within said State; and that, except
as set forth below in ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇ will not remove the Collateral from said
State without the written consent of LENDER, such consent not to be unreasonably
withheld.
4. That if the Collateral has been attached or is to be attached to
real estate, a description of the real estate is as set forth on Schedule 4(l)
attached hereto.
5. That if the Collateral is of a type normally used in more than one
state (such as automotive equipment, rolling stock, airplanes, road building
equipment, commercial harvesting equipment, construction machinery and the like)
and DEBTOR has a place of business in more than one state, the chief place of
business of DEBTOR is that shown at the beginning of this Agreement and DEBTOR
will immediately notify LENDER in writing of any change in DEBTOR's chief place
of business.
6. Except for Permitted Encumbrances, no financing statement covering
any Collateral or any process thereof is on file in any public office, and that
at the request of LENDER, DEBTOR will join with LENDER in executing one or more
financing statements pursuant to the Uniform Commercial Code in form
satisfactory to LENDER and will pay the cost of filing the same in all public
offices wherever filing is reasonably deemed by LENDER to be necessary or
desirable.
Page 196
7. That DEBTOR will not sell or offer to sell or otherwise transfer the
Collateral or any interest therein except in the ordinary course of business.
8. That DEBTOR will have and maintain or cause to have maintained
insurance at all times with respect to all Collateral against risks of fire
(including so-called extended coverage) and theft.
9. That except for the Permitted Encumbrances, the DEBTOR will keep the
Collateral free from any adverse lien, security interest or encumbrance and will
not waste or destroy the Collateral or any part thereof; and that LENDER may
examine and inspect the Collateral at any reasonable time, upon prior written
notice.
10. That DEBTOR will pay promptly when due all taxes and assessments
upon the Collateral, except for such taxes and assessments which are being
contested in good faith by DEBTOR.
11. At its option, LENDER may discharge taxes and assessments at any
time levied or placed on the Collateral, except for such taxes and assessments
which are being contested in good faith by DEBTOR. DEBTOR agrees to reimburse
LENDER on demand for any payment made by LENDER pursuant to the foregoing
authorization.
12. Until the declaration of an Event of Default (as defined below)
which remains uncured fifteen (15) days after DEBTOR's receipt of notice of such
default, DEBTOR may have possession of the Collateral and use it in any manner
not inconsistent with this Agreement.
13. The occurrence of any one or more of the following events shall
constitute an event of default hereunder ("Event of Default") if it remains
uncured fifteen (15) days after DEBTOR's receipt of notice of such default:
(a) The failure of DEBTOR to pay any sum when due and payable under
the Note;
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of DEBTORS (a "Bankruptcy Law"), the DEBTOR shall (1) commence a
voluntary case or proceeding; (2) consent to the entry of an order for relief
against it in an involuntary case; (3) consent to the appointment of a trustee,
receiver, assignee, liquidator or similar official; (4) make an assignment for
the benefit of its creditors; or (5) admit in writing its inability to pay its
debts as they become due.
Page 197
(c) If a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (1) is for relief against DEBTOR in an
involuntary case; (2) appoints a trustee, receiver, assignee, liquidator or
similar official for the DEBTOR or any substantial part of any of DEBTOR's
properties; or (3) orders the liquidation of the DEBTOR and the order or decree
is not dismissed within ninety (90) days.
14. Upon such Event of Default, or at any time or times thereafter if
such Event of Default remains uncured, LENDER may declare all Obligations
secured hereby immediately due and payable and shall have the remedies of a
secured party under the Uniform Commercial Code and any options as heretofore
stated in this Agreement. LENDER may require DEBTOR to assemble the Collateral
and make it available to LENDER at a place to be designed by LENDER which is
reasonably convenient to both parties. Whenever notification with respect to the
sale or other disposition of the Collateral is required by law, such
notification of the time and place of public sale, or of the date after which a
private sale or of other intended disposition is to made, shall be deemed
reasonable if mailed, postage prepaid, addressed to DEBTOR and given at least
twenty (20) days before the time of such public sale or the date after which any
such private sale or other intended disposition is to be made, as the case may
be.
15. The rights created by this Agreement shall inure to the benefit of,
and the obligations created thereby shall be binding upon, the respective
successors and assigns of the parties hereto.
16. This Agreement and all rights and obligations hereunder, including
matters of construction, validity and performance, shall be governed by the laws
of the State of Illinois, to the jurisdiction of whose Courts the party hereto
submit.
17. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the notice recipient, with copies
to such party's counsel, as set forth below:
Page 198
If to the LENDER:Deere Capital Management, Inc. Copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,Esq.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Associates, P.C.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the DEBTOR: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
President & CEO ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
EIF Holdings, Inc . Branch, P.A.
▇▇▇ ▇▇ ▇▇▇▇ West ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇ P.O. Box 39
Houston, TX 77090 ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Fax ▇▇▇-▇▇▇-▇▇▇▇
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth in this Section
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any party may change the address and/or the notice recipient to which
notices, requests, demands, claims, and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
LENDER hereby warrants and covenants as follows:
1. That DEBTOR has acknowledged the existence and perfection of ▇▇▇▇▇▇
Trust and Savings Bank's ("▇▇▇▇▇▇") first position security interest in and to
the Collateral, and that the LENDER's security interest in and to the Collateral
hereunder and pursuant to the Note shall be subordinated and junior to ▇▇▇▇▇▇'
security interest described herein pursuant to that certain Debt Subordination
Agreement, dated the date hereof, by and among the DEBTOR, ▇▇▇▇▇▇, EIF Holdings,
Inc., and LENDER and shall be subject to the Permitted Encumbrances.
Page 199
Signed, sealed and delivered on this 18th day of November, 1997.
▇.▇. MANTA, INC.
By:
Name:
Title:
ACCEPTED AND AGREED:
DEERE PARK CAPITAL MANAGEMENT, INC.
By:
Name:
Title:
g:\common\corp\agreemnt\deere.sec
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