EXHIBIT 10.11
SECURITY AGREEMENT
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This SECURITY AGREEMENT is made and entered into as of this 2nd day of
March, 1998, between CERTIFIED MAINTENANCE SERVICES, INC., a Florida corporation
(the "Guarantor"), 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
La-Man Corporation (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 Guarantor, a subsidiary of the
Borrower, guarantee the obligations of the Borrower and grant a security
interest in the assets of the Guarantor as collateral for such guaranty; and
WHEREAS, the Guarantor executed a Continuing Guaranty of even date
herewith in favor of Lenders (the "Continuing Guaranty"), whereby Guarantor
guaranteed the due performance and full and prompt payment of all obligations
and indebtedness of the Borrower arising under the Loan Agreement;
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 Continuing Guaranty (the "Obligations"),
now existing or hereafter incurred, Guarantor hereby irrevocably grants to
Lenders a continuing security interest in the following property of the
Guarantor (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 Guarantor.
b. All bank accounts of Guarantor.
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 Guarantor.
e. All inventory, equipment (including any and all computer
hardware and components), machinery and fixtures of Guarantor 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 Guarantor 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. Guarantor further warrants and agrees
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that in each case where the terms of any such Accounts require the Guarantor or
the account debtor named in such Account to place or carry insurance in respect
of the property to which such Account relates, the Guarantor or the account
debtor will pay for and maintain such insurance.
3. Delivery of Receivables. Upon Lenders' or Agent's request, upon
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the occurrence of an Event of Default, the Guarantor will, at any reasonable
time and at Guarantor'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 Guarantor as the custodian agent of Lenders,
for the benefit of Lenders. Failure of Lenders or Agent to demand or require
Guarantor 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
Guarantor of its duty so to do.
4. Collection of Receivables. Guarantor hereby agrees that it shall
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use 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
Guarantor 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. Guarantor 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, Guarantor authorizes Lenders or Agent to file
financing statements with respect to the Collateral without the signature of
Guarantor. Without the
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written consent of Lenders or Agent, Guarantor 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
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discretion, 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 Guarantor to such Lenders and shall be a part of the Obligations.
7. Default and Remedies.
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a. Guarantor 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 Guarantor 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
Guarantor agrees that any of Lenders, Agent or their nominee may become the
purchaser at any such sale or sales. Guarantor 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 Guarantor 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. Guarantor 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. Guarantor'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 Guarantor. Guarantor hereby
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represents to and agrees with Lenders as follows:
a. Except as referred to in Section 1, Guarantor 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, Guarantor 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 Guarantor 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. Guarantor 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, Guarantor 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.
GUARANTOR:
CERTIFIED MAINTENANCE SERVICES, INC.
By: /s/ J. Xxxxxxx Xxxxxxxx
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J. Xxxxxxx Xxxxxxxx
Title: Vice President
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LENDERS:
RENAISSANCE CAPITAL GROWTH & INCOME FUND
III, INC.
By: /s/ Xxxxx X. Xxxxxx
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Name:________________________________________
Title:_______________________________________
RENAISSANCE US GROWTH & INCOME TRUST, PLC
By: Renaissance Capital Group, Inc.,
Investment Manager
By: /s/ Xxxxx X. Xxxxxx
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Name:___________________________________
Title:__________________________________
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