Document:

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                                                                   EXHIBIT 10.46

THIS SECURITY AGREEMENT IS SUBJECT TO AN INTERCREDITOR AGREEMENT, DATED AS OF
DECEMBER 21, 2001, AMONG FLEET CAPITAL CORPORATION, A RHODE ISLAND CORPORATION,
PETROCON ENGINEERING, INC., AND EQUUS II INCORPORATED, A DELAWARE CORPORATION,
ET AL. THIS SECURITY AGREEMENT IS SUBORDINATED IN RIGHT AND TIME OF PAYMENT TO
THE PRIOR PAYMENT IN FULL IN CASH OF ALL SENIOR DEBT (AS DEFINED IN THE
INTERCREDITOR AGREEMENT) IN ACCORDANCE WITH, AND TO THE EXTENT SPECIFIED IN,
SUCH INTERCREDITOR AGREEMENT AND EACH HOLDER OF THIS SECURITY AGREEMENT, BY ITS
ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE TERMS AND PROVISIONS
OF SUCH INTERCREDITOR AGREEMENT.

                               SECURITY AGREEMENT
                               ------------------

THIS SECURITY AGREEMENT (the "Agreement") dated as of December 21, 2001,
                              ---------
between EACH OF THE UNDERSIGNED (each, a "Grantor"), in favor of and for the
                                          -------
benefit of EQUUS II INCORPORATED, a Delaware corporation ("Lender").
                                                           ------

                                    RECITALS

     A.   Pursuant to that certain Settlement Agreement and Plan of
Reorganization dated as of July 31, 2001, by and among INDUSTRIAL DATA SYSTEMS
CORPORATION, a Nevada corporation ("IDS"), PETROCON ENGINEERING, INC., a Texas
corporation ("Debtor"), PEI ACQUISITION, INC., a Texas corporation, and a
              ------
wholly owned and indirect subsidiary of IDS ("Sub") and Lender (the "Settlement
                                              ---                    ----------
Agreement"), Equus has agreed to renew, rearrange and extend $3,000,000 of its
---------
existing loan to PEI (the "Loan") as evidenced by that certain Promissory Note
                           ----
from PEI to Lender in the principal amount of $3,000,000 dated as of December
21, 2001 (the "Note").
               ----

     B.   IDS, Sub, IDS Engineering Management, LC, a Texas limited liability
company ("LC") and PEI have entered into that certain Agreement and Plan of
Merger on or about July 31, 2001, whereby Sub will merge with and into PEI and
PEI will be the surviving corporation (the "Plan of Merger").
                                            --------------

     C.   It is a condition of the Note and the Settlement Agreement that
Grantors' obligations thereunder be secured by this Agreement.

     NOW, THEREFORE, in consideration of the premises and in order to induce
Lender to renew, rearrange and extend its loans to Debtor, each Grantor hereby
agrees with Lender as follows:

SECTION 1.   Definitions
             -----------

Security Agreement - Page 1
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     1.1  Certain Defined Terms. Terms defined in the Note and not otherwise
          ---------------------
defined herein have the respective meanings provided for in the Note. The
following terms, as used herein, have the meanings set forth below:

     "Accounts" means with respect to any Person, all accounts, accounts
      --------
receivable, contract rights, including without limitation rights under
contracts for the purchase of supplies (in any such case to the extent a
security interest can be granted in particular contracts), instruments, notes,
drafts, acceptances, documents, chattel paper, any right of or to payment for
goods sold or leased or for services rendered, whether arising out of the sale
of Inventory (as hereinafter defined) or otherwise and whether or not earned by
performance, and all other forms of obligations owing to such Person, and all
of such Person's rights to any merchandise (including without limitation any
returned or repossessed goods and the right of stoppage in transit which is
represented by, arises from or is related to any of the foregoing) whether now
existing or hereafter arising, and however evidenced or acquired, in which such
Person now has or hereafter acquires any interest or rights.

     "Account Debtor" means with respect to any Person, any other Person who is
      --------------
or may become obligated under or on account of an Account of Grantor owing to
such Person.

     "Collateral" has the meaning assigned to that term in Section 2.
     ----------

     "Copyright License" means any written agreement now or hereafter in
      -----------------
existence granting to any Grantor any right to use any Copyright (excluding any
such agreement if and to the extent that any attempt to grant a security
interest hereunder in any such agreement without the consent of a third party
would constitute a breach thereof or such consent has not been obtained by any
Grantor) including, without limitation, the agreements described in Schedule 1
of the Copyright Security Agreement.

     "Copyrights" means collectively all of the following: (a) all copyrights,
      ----------
rights and interests in copyrights, works protectable by copyright, copyright
registrations and copyright applications now owned or hereafter created or
acquired by each Grantor, including, without limitation, those listed on
Schedule 1 of the Copyright Security Agreement; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements of any of the foregoing;
(d) the right to sue for past, present and future infringements of any of the
foregoing; (e) all rights corresponding to any of the foregoing throughout the
world; and (f) all goodwill associated with and symbolized by any of the
foregoing.

     "Copyright Security Agreement" means the copyright security agreement to
      ----------------------------
be executed and delivered by any Grantor to Lender, substantially in the form
of Exhibit A, as such agreement may hereafter be amended, supplemented or
   ---------
otherwise modified from time to time.

     "Documents" means all "documents" (as defined in the UCC) or other
      ---------
receipts covering, evidencing or representing goods now owned or hereafter
acquired by any Grantor.

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     "Equipment" means with respect to any Person, all machinery, apparatus,
      ---------
equipment, fittings, furniture, fixtures, motor vehicles and other tangible
personal Property (other than Inventory) of every kind and description used in
the operations of such Person or owned by such Person or in which such Person
has an interest, whether now owned or hereafter acquired by such Person and
wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements therefor.

     "Fixtures" means all "Fixtures" (as defined in the UCC) now owned or
      --------
hereafter acquired by any Grantor including, without limitation, all plant
Fixtures; business Fixtures; other Fixtures and storage office facilities,
wherever located; and all additions and accessions thereto and replacements
therefor.

     "General Intangibles" means with respect to any Person, all general
      -------------------
intangibles of such Person, whether now owned or hereafter created or acquired
by such Person, including, without limitation, all payment intangibles, all
choses in action, causes of action, corporate or other business records,
deposit accounts, inventions, designs, patents, patent applications,
trademarks, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, tax refund claims, computer programs, all
claims under guaranties, security interests or other security held by or
granted to such Person to secure payment of any of the Accounts owing to such
Person by an Account Debtor, all rights to indemnification and all other
intangible property of every kind and nature (other than Accounts owing to such
Person).

     "Instruments" means all "instruments", "chattel paper" or "letters of
      -----------
credit" (each as defined in the UCC) including, but not limited to, promissory
notes, drafts, bills of exchange and trade acceptances, now owned or hereafter
acquired by any Grantor.

     "Intellectual Property" shall mean collectively all of the following:
      ---------------------
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and
Trademark Licenses.

     "Inventory" means with respect to any Person, all inventory of such
      ---------
Person, whether now owned or hereafter acquired including, but not limited to,
all goods intended for sale or lease by such Person, or for display or
demonstration; all work in process; all raw materials and other materials and
supplies of every nature and description used or which might be used in
connection with the manufacture, printing, packing, shipping, advertising,
selling, leasing or furnishing of such goods or otherwise used or consumed in
such Person's business; and all documents evidencing and General Intangibles
relating to any of the foregoing, whether now owned or hereafter acquired by
such Person.

     "Investment Property" means with respect to any Person, all of such
      -------------------
Person's investment property, whether now owned or hereinafter acquired by such
Person, including, without limitation, all securities (certificated or
uncertificated), securities accounts, securities entitlements, commodity
accounts and contracts.

     "Lien" means any interest in Property securing an obligation owed to, or a
      ----
claim by, a Person other than the owner of the Property, whether such interest
is based on common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments,

Security Agreement - Page 3
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easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting Property.

     "Obligations" means all loans and all other advances, debts, liabilities,
      -----------
obligations, covenants and duties to Lender arising in connection with the Note
together with all interest, fees and other charges thereon, owing, arising, due
or payable from Debtor to Lender of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, arising
under the Note or any other loan documents whether direct or indirect
(including those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and however
acquired.

     "Obligor" means any maker of the Note or any guarantor of the Obligations.
      -------

     "Patent License" means any written agreement now or hereafter in existence
      --------------
granting to any Grantor any right to use any invention on which a Patent is in
existence (excluding any such agreement if and to the extent that any attempt
to grant a security interest hereunder in any such agreement without the
consent of a third party would constitute a breach thereof and such consent has
not been obtained by any Grantor) including, without limitation, the agreements
described in Schedule 1 of the Patent Security Agreement.

     "Patents" means collectively all of the following: (a) all patents and
      -------
patent applications now owned or hereafter created or acquired by any Grantor
including, without limitation, those listed on Schedule l of the Patent
Security Agreement and the inventions and improvements described and claimed
therein, and patentable inventions; (b) the reissues, divisions, continuations,
renewals, extensions and continuations-in-part of any of the foregoing; (c) all
income, royalties, damages or payments now and hereafter due and/or payable
under any of the foregoing with respect to any of the foregoing, including,
without limitation, damages or payments for past or future infringements of any
of the foregoing; (d) the right to sue for past, present and future
infringements of any of the foregoing; (e) all rights corresponding to any of
the foregoing throughout the world; and (f) all goodwill associated with any of
the foregoing.

     "Patent Security Agreement" means a patent security agreement executed and
      -------------------------
delivered by any Grantor to Lender, substantially in the form of Exhibit B, as
                                                                 ---------
such agreement may be amended, supplemented or otherwise modified from time to
time.

     "Person" means a an individual, partnership, corporation, limited
      ------
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political subdivision
thereof.

     "Proceeds" means all proceeds of, and all other profits, rentals or
      --------
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, any
Collateral including, without limitation, all claims of any Grantor against
third parties for loss of, damage to or destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of insurance with respect
to any Collateral, and any condemnation or requisition payments with respect to
any Collateral, in each case whether now existing or hereafter arising.

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     "Property" means any interest in any kind of property or asset, whether
      --------
real (including immovable), personal (including movable) or mixed, or tangible
or intangible.

     "Secured Obligations" has the meaning assigned to that term in Section 3.
      -------------------

     "Security Interests" means the security interests granted pursuant to
      ------------------
Section 2, as well as all other security interests created or assigned by any
Grantor as additional security for the Secured Obligations pursuant to the
provisions of this Agreement.

     "Senior Debt" has the meaning assigned to that term in the Note.
      -----------

     "Senior Lender" means Fleet Capital Corporation, a Rhode Island
      -------------
corporation or any successor or assignee thereof and any Person providing
refinancing re replacement of the Senior Debt.

     "Trademark License" means any written agreement now or hereafter in
      -----------------
existence granting to any Grantor any right to use any Trademark (excluding any
such agreement if and to the extent that any attempt to grant a security
interest hereunder in any such agreement without the consent of a third party
would constitute a breach thereof and such consent has not been obtained by
such Grantor), including, without limitation, the agreements described in
Schedule 1 to the Trademark Security Agreement.

     "Trademarks" means collectively all of the following now owned or
      ----------
hereafter created or acquired by any Grantor: (a) all trademarks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, service marks, logos, other business identifiers, prints and
labels on which any of the foregoing have appeared or appear, all registrations
and recordings thereof, and all applications in connection therewith including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof,
including, without limitation, those described in Schedule 1 of the Trademark
Security Agreement; (b) all reissues, extensions or renewals thereof; (c) all
income, royalties, damages and payments now or hereafter due and/or payable
under any of the foregoing or with respect to any of the foregoing including
damages or payments for past or future infringements of any of the foregoing;
(d) the right to sue for past, present and future infringements of any of the
foregoing; (e) all rights corresponding to any of the foregoing throughout the
world; and (f) all goodwill associated with and symbolized by any of the
foregoing.

     "Trademark Security Agreement" means the trademark security agreement
      ----------------------------
executed and delivered by any Grantor to Lender substantially in the form of
Exhibit C, as such agreement may hereafter be amended, supplemented or
---------
otherwise modified from time to time.

     "UCC" means the Uniform Commercial Code as in effect on the date hereof in
      ---
the State of Texas, as amended from time to time, and any successor statute;
provided that if by reason of mandatory provisions of law, the perfection or
--------
the effect of perfection or non-perfection of the Security Interest in any
Collateral is governed by the Uniform Commercial Code as in effect on or after
the date hereof in any other jurisdiction, "UCC" means the Uniform Commercial
Code as

Security Agreement - Page 5
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in effect from time to time in such other jurisdiction for purposes of
the provision hereof relating to such perfection or effect of perfection or
non-perfection.

     1.2     Other Definition Provisions.  References to "Sections",
             ---------------------------
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.

SECTION 2.   Grant of Security Interests
             ---------------------------

     To secure the prompt payment and performance to Lender of the Obligations,
each Grantor hereby grants, subject to Applicable Law, to Lender a continuing
Lien upon all of such Grantor's assets, including all of the following Property
and interests in Property of such Grantor whether now owned or existing or
hereafter created, acquired or arising and wheresoever located (all being
collectively referred to as the "Collateral"):
                                 ----------
          (A)  Accounts;

          (B)  Inventory;

          (C)  Equipment;

          (D)  General Intangibles;

          (E)  Investment Property;

          (F)  All monies and other Property of each Grantor of any kind now or
     at any time or times hereafter in the possession or under the control of
     Lender or a bailee of Lender;

          (G)  All accessions to, substitutions for and all replacements,
     products and cash and non-cash proceeds of (A) through (F) above,
     including, without limitation, proceeds of and unearned premiums with
     respect to insurance policies insuring any of the Collateral; and

          (H)  All books and records (including, without limitation, customer
     lists, credit files, computer programs, print-outs, and other computer
     materials and records) of each Grantor pertaining to any of (A) through (G)
     above.

SECTION 3.   Security for Obligations
             ------------------------

     This Agreement secures the payment and performance of the Note and all
obligations of every nature of Debtor now or hereafter existing under this
Agreement and under the Note

Security Agreement - Page 6
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and all renewals, extensions, restructurings and refinancings of any of the
above (all such debts, obligations and liabilities of Debtor being collectively
called the "Secured Obligations").
            -------------------

SECTION 4.   Debtor Remains Liable
             ---------------------

     Anything herein to the contrary notwithstanding: (a) each Grantor shall
remain liable under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its respective duties and
obligations thereunder to the same extent as if this Agreement had not been
executed; (b) the exercise by Lender of any of the rights hereunder shall not
release any Grantor from any of its duties or obligations under the contracts
and agreements included in the Collateral; and (c) Lender shall not have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Lender be obligated to
perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

SECTION 5.   Representations and Warranties
             ------------------------------

     In order to induce Lender to renew, rearrange and extend the loan
contemplated by the Note, each Grantor represents and warrants to Lender that
the following statements are and will be true, correct and complete:

     5.1  Location of Equipment, Fixtures and Inventory.  All of the Equipment
          ---------------------------------------------
and Inventory is located at the places specified in Section B and C of Schedule
                                                                       --------
I or at such other locations as are specified in the Security Agreements
-
executed by other Obligors in favor of Lender. All Fixtures are located at the
place specified in Section B of Schedule I. Schedule I correctly identifies the
                                ----------  ----------
landlords (other than Lender), if any, of each Grantor's respective locations
identified on Schedule I. Schedule I sets forth the names and addresses of all
              ----------  ----------
Persons other than any Grantor who have possession of any of the Collateral.
None of the Collateral has been located in any location within the past four
months other than as set forth on Schedule I. None of the Equipment is
                                  -----------
evidenced by a certificate of title other than Equipment with an aggregate book
value not to exceed $50,000.

     5.2  Ownership of Collateral.  Except for the matters disclosed on Schedule
          -----------------------                                       --------
II, the Liens in favor of the Senior Lender and the Security Interests and
--
Liens otherwise permitted under the documents and agreements governing the
Senior Debt and the Obligations, each Grantor owns its Collateral free and
clear of any Lien. No effective financing statement or other form of lien
notice covering all or any part of the Collateral is on file in any recording
office, except for those in favor of Senior Lender and Lender and as disclosed
on Schedule II.
   -----------

     5.3  Jurisdiction of Organization; Office Locations; Fictitious Names.
          ----------------------------------------------------------------
Debtor is organized under the laws of the State of Texas. The chief executive
offices and the offices where each Grantor keeps its respective books and
records are located at the place or places specified in Section A of Schedule
                                                                     --------
I. Section B of Schedule I sets forth all other locations where each Grantor
-               ----------
has a place of business. No Grantor does business or has done business during
the past five years from the date hereof under any trade-name or fictitious
business name except as disclosed on Schedule III.
                                     ------------

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     5.4  Perfection. This Agreement and the Trademark Security Agreement, the
          ----------
Patent Security Agreement and the Copyright Security Agreement executed
pursuant hereto create a valid and enforceable security interest in the
Collateral, securing the payment of the Secured Obligations, including, without
limitation, all extensions, renewals and other modifications thereof. Upon the
filing of Uniform Commercial Code Financing Statements naming each Grantor as a
debtor and Lender as secured party in the jurisdictions set forth in Schedule
                                                                     --------
IV hereto, the delivery to Lender of all Collateral the possession of which is
--
necessary to perfect the security interest therein, the notation of Lender's
security interest on all certificates of title evidencing Equipment, the
release or assignment to Lender of the security interests described on Schedule
                                                                       --------
V hereto, the Filing of the Trademark Security Agreement with the United States
-
Patent and Trademark Office, the Filing of the Patent Security Agreement with
the United States Patent and Trademark Office, and the Filing of the Copyright
Security Agreement with the United States Copyright Office, the security
interests created hereby shall constitute perfected security interests upon all
the Collateral (other than Trademarks and Trademark Licenses registered in
countries other than the United States).

     5.5  Intellectual Property.  The Copyrights, Copyright Licenses, Patents,
          ---------------------
Patent Licenses, Trademarks and Trademark Licenses listed on the respective
schedules to each of the Copyright Security Agreement, the Trademark Security
Agreement and the Patent Security Agreement in the forms attached hereto as
exhibits constitute all of the material Intellectual Property owned and
currently in use by any Grantor.

SECTION 6.   Further Assurances: Covenants
             ------------------

     6.1  Other Documents and Actions. Each Grantor will, from time to time, at
          ---------------------------
its expense, promptly execute and deliver all further instruments and documents
and take all further action that may be necessary or desirable, or that Lender
may reasonably request, in order to perfect and protect any Security Interests
granted or purported to be granted hereby or to enable Lender to exercise and
enforce its rights and remedies hereunder, with respect to any Collateral or to
carry out the provisions and purposes hereof. Without limiting the generality
of the foregoing, each Grantor will: (a) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, and as Lender may request, in order
to perfect and preserve the Security Interests granted or purported to be
granted hereby; (b) at any reasonable time, upon demand by Lender make the
Collateral available for inspection by Lender or Persons designated by Lender;
and (c) upon Lender's request, appear in and defend any action or proceeding
that may affect such Grantor's title to or Lender's Security Interests in the
Collateral. Notwithstanding the foregoing, no Grantor shall be required to
execute any document or take any action to perfect the Lender's Lien in any
foreign Intellectual Property under the laws of the applicable foreign
jurisdiction.

     6.2  Lender Authorized. Each Grantor hereby authorizes Lender to file one
          -----------------
or more financing or continuation statements, and amendments thereto (or
similar documents required by any laws of any applicable jurisdiction),
relating to all or any part of the Collateral without the signature of any
Grantor.

     6.3  Corporate or Name Change. Each Grantor will notify Lender in writing
          ------------------------
thirty (30) days prior to any change in such Grantor's name, identity or
corporate structure.

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     6.4  Business Locations.  Except for sales of Inventory in the ordinary
          ------------------
course of business and the movement of Equipment between such locations and any
other location specified by any Obligor in any other Security Agreement
executed by Obligor in favor of Lender and movements permitted by the
documentation governing the Senior Debt, each Grantor will keep the Collateral
at the locations specified on Schedule I.
                              ----------

     6.5  Third Parties in Possession of Collateral.  Each Grantor shall not
          -----------------------------------------
permit Inventory having an aggregate value of $50,000 to be held by any third
Person.

     6.6  Instruments.  Subject to the prior rights of the Senior Lender, each
          -----------
Grantor will deliver and pledge to Lender all Instruments duly endorsed and/or
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Lender except that each Grantor may retain for
collection and use in the ordinary course of business any checks representing
Proceeds of Accounts received in the ordinary course of business. When all the
obligations of each Grantor or issuer, as applicable, under any Instrument
delivered to Lender hereunder have been satisfied or otherwise terminated,
Lender agrees to return such Instrument to such Grantor, without recourse or
warranty, duly endorsed and/or accompanied by duly executed instruments of
transfer or assignment.

     6.7  Certificates of Title; Equipment.  Subject to the prior rights of the
          --------------------------------
Senior Lender and at Lender's request, each Grantor shall promptly deliver to
Lender any and all certificates of title, applications for title or similar
evidence of ownership of all Equipment and shall cause Lender to be named as
lienholder on any such certificate of title or other evidence or ownership.

     6.8  Intellectual Property Covenants. Each Grantor shall concurrently
          -------------------------------
herewith deliver to Lender the Copyright Security Agreement, the Trademark
Security Agreement and the Patent Security Agreement and all other documents,
instruments and other items as may be necessary for Lender to file such
agreements with the United States Copyright Office, the United States Patent
and Trademark Office and any similar domestic or foreign office, department or
agency except as otherwise provided in Section 6.1. If, before the Secured
Obligations are paid in full, any Grantor obtains any new Intellectual Property
or rights thereto or becomes entitled to the benefit of any Intellectual
Property which is (a) not listed on the schedules to the Copyright Security
Agreement, the Trademark Security Agreement or the Patent Security Agreement,
as the form of such agreements are attached hereto as Exhibits, and (b) should
be listed thereon to perfect or protect the Security Interest therein, then
such Grantor shall give to Lender prompt written notice thereof, and shall
amend the applicable Intellectual Property security agreement to include any
such new Intellectual Property and shall deliver all other documentation and
other items as may be necessary for Lender to file such agreements with the
United States Copyright Office, the United States Patent and Trademark Office
and/or any similar domestic or foreign office, department or agency except as
otherwise provided in Section 6.1. Each Grantor shall: (a) prosecute diligently
any copyright, patent, trademark or license application at any time pending to
the extent the Intellectual Property relating to such application has a
material value or is material to the conduct of such Grantor's business; (b)
make application on all new material copyrights, patents and trademarks as
reasonably deemed appropriate by such Grantor; (c) preserve and maintain all
rights in the Intellectual Property to the extent such Intellectual Property
has a material value or is material to the conduct of such Grantor's business;
and (d)

Security Agreement - Page 9
<PAGE>

upon and after the occurrence of an Event of Default, use its best efforts to
obtain any consents, waivers or agreements necessary to enable Lender to
exercise its remedies with respect to the Intellectual Property. No Grantor
shall abandon any right to file a copyright, patent or trademark application
nor shall any Grantor abandon any pending copyright, patent or trademark
application, or Copyright, Copyright License, Patent, Patent License, Trademark
or Trademark License unless such Intellectual Property has no material value
and is not material to the conduct of such Grantor's business.

     6.9  Insurance of Collateral.  Each Grantor shall maintain and pay for
          -----------------------
insurance upon all Collateral owned by it wherever located and with respect to
such Grantor's business, covering casualty, hazard, public liability and such
other risks in such amounts and with such insurance companies as are reasonably
satisfactory to Lender. Notwithstanding the foregoing, to the extent Grantor
maintains insurance in compliance with the provisions of the documentation
governing the Senior Debt, the requirements of this Section 6.9 shall be deemed
satisfied.

     6.10 Dispositions of Equipment. No Grantor will sell, lease or otherwise
          -------------------------
dispose of or transfer any of the Equipment of such Grantor or any part thereof
without the prior written consent of Lender; provided, however, that the
                                             --------  -------
foregoing restriction shall not apply (a) to dispositions permitted by the
provisions of the documentation governing the Senior Debt, (b) for so long as
no Event of Default exists, to (i) bona fide sales of Inventory to customers
for fair value in the ordinary course of business and dispositions of obsolete
Equipment not used or useful in the business, (ii) sales, discounts or
transfers of delinquent accounts receivable in the ordinary course of business
for purposes of collection, (iii) leases (as lessor) of real or personal
property, so long as the assets subject to any such lease are not necessary for
the conduct of such Grantor's business, (iv) dispositions of any Grantor's
Equipment which, in the aggregate in respect to all such dispositions by such
Grantor during any consecutive twelve-month period, has a fair market value or
book value, whichever is less, of One Hundred Fifty Thousand Dollars and No/100
($150,000) or less, and (v) any other sale, lease or disposition of or transfer
of any of the Equipment or other assets permitted under the terms of the
agreements and documents governing the Senior Debt or the Obligations.

SECTION 7.   Transfers and Other Liens
             -------------------------

     Except as otherwise permitted herein, by the Note or the other documents
and agreements evidencing the Obligations, no Grantor shall:

          (a)  sell, assign (by operation of law or otherwise) or otherwise
     dispose of, or grant any option with respect to, any of the Collateral to
     any Person who is not an Obligor; or

          (b)  create or suffer to exist any lien, security interest or other
     charge or encumbrance upon or with respect to any of the Collateral to
     secure indebtedness of any Person except for the Security Interest
     created by this Agreement and the liens, security interest and other
     charges to secure the Senior Debt and any other liens, and security
     interests permitted under the terms of the agreements and documents
     governing the Senior Debt or the Obligations.

Security Agreement - Page 10
<PAGE>

SECTION 8.   Remedies
             --------

     Subject to the rights of the Senior Lender, if any Event of Default shall
have occurred and be continuing, Lender may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the UCC (whether or not the UCC applies to the affected
Collateral) and also may: (a) require each Grantor to, and each Grantor hereby
agrees that it will, at its expense and upon request of Lender forthwith,
assemble all or part of the Collateral as directed by Lender and make it
available to Lender at a place to be designated by Lender which is reasonably
convenient to both parties; (b) without notice or demand or legal process,
enter upon any premises of any Grantor and take possession of the Collateral;
and (c) without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale, at any of the
Lender's offices or elsewhere, at such time or times, for cash, on credit or
for future delivery, and at such price or prices and upon such other terms as
Lender may deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale shall be required by law, at least fifteen days notice to
such Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. At any
sale of the Collateral, if permitted by law, Lender may bid (which bid may be,
in whole or in part, in the form of cancellation of indebtedness) for the
purchase of the Collateral or any portion thereof for the account of Lender.
Lender shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. Lender may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which
it was so adjourned. To the extent permitted by law and to the extent Lender's
rights hereunder may be impaired, each Grantor hereby specifically waives all
rights of redemption, stay or appraisal which it has or may have under any law
now existing or hereafter enacted.

SECTION 9.   License of Intellectual Property
             --------------------------------

     Each Grantor hereby assigns, transfers and conveys to Lender, effective
upon the occurrence of any Event of Default, the nonexclusive right and license
to use all Intellectual Property owned or used by such Grantor together with
any goodwill associated therewith, all to the extent necessary to enable Lender
and any successor or assign to enjoy the benefits of the Collateral. This right
and license shall inure to the benefit of all successors, assigns and
transferees of Lender and its successors, assigns and transferees, whether by
voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed
in lieu of foreclosure or otherwise. Such right and license is granted free of
charge, without requirement that any monetary payment whatsoever be made to
such Grantor by Lender.

SECTION 10.  Limitation on Duty of Lender With Respect to Collateral
             -------------------------------------------------------

     Beyond the safe custody thereof, Lender shall have no duty with respect to
any Collateral in its possession or control (or in the possession or control of
any agent or bailee) or with respect to any income thereon or the preservation
of rights against prior parties or any other rights pertaining thereto;
provided, however, that any Intellectual Property that is confidential shall be
kept confidential by Lender. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment

Security Agreement - Page 11
<PAGE>

substantially equal to that which it accords its own property. Lender shall not
be liable or responsible for any loss or damage to any of the Collateral, or
for any diminution in the value thereof, by reason of the act or omission of
any warehouseman, carrier, forwarding agency, consignee or other agent or
bailee selected by Lender in good faith.

SECTION 11.  Expenses
             --------

     Each Grantor shall pay all insurance expenses and all expenses of
protecting, storing, warehousing, appraising, insuring, handling, maintaining
and shipping the Collateral, all costs, fees and expenses of perfecting and
maintaining the Security Interests, any and all excise, property, sales and use
taxes imposed by any federal, state, local or foreign authority on any of the
Collateral, or with respect to periodic appraisals and inspections of the
Collateral, or with respect to the sale or other disposition thereof. If any
Grantor fails to promptly pay any portion of the above expenses when due or to
perform any other obligation of such Grantor under this Agreement, Lender may,
at its option, but shall not be required to, pay or perform the same and charge
such Grantor's account for all costs and expenses incurred therefor, and such
Grantor agrees to reimburse Lender therefor on demand. All sums so paid or
incurred by Lender for any of the foregoing, any and all other sums for which
such Grantor may become liable hereunder and all costs and expenses (including
reasonable attorneys' fees, legal expenses and court costs) incurred by Lender
in enforcing or protecting the Security Interests or any of their rights or
remedies under this Agreement shall be payable on demand, shall constitute
Obligations, shall bear interest until paid at the highest rate provided in the
Note and shall be secured by the Collateral.

SECTION 12.  Termination of Security Interests: Release of Collateral
             --------------------------------------------------------
     Upon payment in full of all Secured Obligations, the Security Interests
shall terminate and all rights to the Collateral shall revert to Grantors. Upon
such termination of the Security Interests or release of any Collateral, Lender
will, at the expense of each Grantor, execute and deliver to each Grantor such
documents as such Grantor shall reasonably request to evidence the termination
of the Security Interests or the release of such Collateral, as the case may be.

SECTION 13.  Notices
             -------

     All notices, approvals, requests, demands and other communications
hereunder shall be given in accordance with the notice provisions of the Note.

SECTION 14.  Waivers: Non-Exclusive Remedies
             -------------------------------

     No failure on the part of Lender to exercise, and no delay in exercising
and no course of dealing with respect to, any power, privilege or right under
the Note or this Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise by Lender of any power, privilege or right under the
Note or this Agreement preclude any other or further exercise thereof or the
exercise of any other power, privilege or right. The powers, privileges and
rights in this Agreement and the Note are cumulative and are not exclusive of
any other remedies provided by law.

Security Agreement - Page 12
<PAGE>

SECTION 15.  Successors and Assigns
             ----------------------

     This Agreement is for the benefit of Lender and its successors and
assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable to the Secured
Obligations so assigned, may be transferred with such Secured Obligations. This
Agreement shall be binding on each Grantor and its respective successors and
assigns.

SECTION 16.  Changes in Writing
             ------------------

     No amendment, modification, termination or waiver of any provision of this
Agreement or consent to any departure by Grantors therefrom, shall in any event
be effective without the written concurrence of Lender and each Grantor.

SECTION 17.  Applicable Law
             --------------

     THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.

SECTION 18.  Failure or Indulgence Not Waiver: Remedies Cumulative
             -----------------------------------------------------
     No failure or delay on the part of Lender in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or any other right, power or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.

SECTION 19.  Headings
             --------

     Section and subsection headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.

SECTION 20.  Counterparts
             ------------

     This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same agreement and any of the
parties hereto may execute this Agreement by signing any such counterpart.

                            [Signature page follows]

Security Agreement - Page 13
<PAGE>

     Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the day first above written.

                                 GRANTORS:

                                 INDUSTRIAL DATA SYSTEMS
                                 CORPORATION, a Nevada corporation

                                 By:___________________________________
                                       William A. Coskey, President

                                 IDS ENGINEERING, INC.,
                                 a Texas corporation

                                 By:___________________________________
                                       William A. Coskey
                                       President and Chief Executive Officer

                                 IDS ENGINEERING MANAGEMENT, LC,
                                 a Texas limited liability company

                                 By:___________________________________
                                       William A. Coskey
                                       Chief Executive Officer

                                 THERMAIRE, INC. d/b/a THERMAL CORP.,
                                 a Texas corporation

                                 By:___________________________________
                                       William A. Coskey
                                       President and Chief Executive Officer

                                 CONSTANT POWER MANUFACTURING,
                                 INC., a Texas corporation

                                 By:___________________________________
                                       William A. Coskey
                                       President and Chief Executive Officer

Security Agreement - Signature Page
<PAGE>

                                 INDUSTRIAL DATA SYSTEMS,INC.,
                                 a Texas corporation

                                 By:___________________________________
                                       William A. Coskey
                                       Chief Executive Officer

                                 PETROCON ENGINEERING, INC.,
                                 a Texas corporation

                                 By:___________________________________
                                       Michael L. Burrow,
                                       President and Chief Executive Officer

                                 TRIANGLE ENGINEERS &
                                 CONSTRUCTORS, INC., a Texas corporation

                                 By:___________________________________
                                       Robert W. Raiford, Secretary

                                 PETROCON SYSTEMS, INC.,
                                 a Texas corporation

                                 By:___________________________________
                                       Robert W. Raiford, Secretary

                                 PETROCON TECHNOLOGIES, INC.,
                                 a Texas corporation

                                 By:___________________________________
                                       Robert W. Raiford, Secretary

                                 PETROCON ENGINEERING OF LOUISIANA,
                                 INC., a Louisiana corporation

                                 By:___________________________________
                                       Robert W. Raiford, Secretary

Security Agreement - Signature Page
<PAGE>

                                 R.P.M. ENGINEERING, INC.,
                                 a Louisiana corporation

                                 By:___________________________________
                                       Robert W. Raiford, Secretary

                                 ALLIANCE ENGINEERING ASSOCIATES,
                                 INC., a Texas corporation

                                 By:___________________________________
                                       Robert W. Raiford, Secretary

                                 PETROCON CONSTRUCTION RESOURCES,
                                 INC., a Texas corporation

                                 By:___________________________________
                                       Robert W. Raiford, Secretary

                                 SECURED PARTY:

                                 EQUUS II INCORPORATED,
                                 a Delaware corporation

                                 By:___________________________________
                                       Randall B. Hale, Vice President

Security Agreement  -  Signature Page
<PAGE>

                                   SCHEDULE I
                                       TO
                               SECURITY AGREEMENT

                  Locations of Equipment, Inventory, Books and
                Records, Chief Executive Office, Other Locations
                ------------------------------------------------

1.   Grantors currently have the following business locations, and no others:

     Chief Executive Office:
     ----------------------

     Industrial Data Systems          600 Century Plaza Drive, Building 140,
                                      Houston,
     Corporation:                     TX 77073-6033

     Other Locations (Operations offices):
     ------------------------------------

     IDS Engineering, Inc.:           600 Century Plaza Drive, Building 140,
                                      Houston,
                                      TX 77073-6033 and
                                      11008 East 51st Street, Tulsa, OK 74146

     Constant Power Manufacturing:    757 Kenrick, Suite 100, Houston, TX 77060-
                                      3639

     Thermaire, Inc. dba
        Thermal Corporation:          10500 Windfern Rd, Houston, TX 77064

     Industrial Data Systems, Inc.:   15031 Woodham Drive, Suite 360, Houston,
                                      TX 77073-6026

     Chief Executive Office:
     ----------------------

     Petrocon Engineering, Inc.       3155 Executive Blvd.
                                      Beaumont, Texas 77705-0150
                                      (Jefferson County)

     Other Locations:
     ---------------

     Petrocon Engineering, Inc.       8901 Market Street
                                      Houston, Texas 77029
                                      (Harris County)

                                      3105 Executive Blvd.
                                      Beaumont, Texas 77705-1097
                                      (Jefferson County)

Security Agreement - Schedule
<PAGE>

                                      2580 North 11th Street
                                      Spaces F and G
                                      Beaumont, Texas 77703-4604
                                      (Jefferson County)

     Chief Executive Office:
     ----------------------

     Triangle Engineers and           3155 Executive Blvd.
     Constructors, Inc.               Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Other Location:
     --------------

     Triangle Engineers and           None
     Constructors, Inc.

     Chief Executive Office:
     ----------------------

     R.P.M. Engineering, Inc.         3155 Executive Blvd.
                                      Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Other Locations:
     ---------------

     R.P.M. Engineering, Inc.         10252 Mayfair
                                      Baton Rouge, Louisiana 70809-2505
                                      (East Baton Rouge Parish)

                                      9969 Professional Blvd.
                                      Baton Rouge, Louisiana 70809-2500
                                      (East Baton Rouge Parish)

                                      Hibernia Tower
                                      Suite 1895
                                      Lake Charles, Louisiana

     Chief Executive Office:
     ----------------------

     Petrocon Systems, Inc.           3155 Executive Blvd.
                                      Beaumont, Texas 77705-1050
                                      (Jefferson County)

Security Agreement - Schedule
<PAGE>

     Other Location:
     --------------

     Petrocon Systems, Inc.           3255 Executive Blvd.
                                      Suites 100 & 101
                                      Beaumont, Texas 77705-1051
                                      (Jefferson County)

     Chief Executive Office:
     ----------------------

     Petrocon Engineering of          3155 Executive Blvd.
     Louisiana, Inc.                  Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Other Location:
     --------------

     Petrocon Engineering of          One Lakeshore Drive
     Louisiana, Inc.                  Lake Charles, Louisiana  70629
                                      (Calcasieu Parish)

     Chief Executive Office:
     ----------------------

     Alliance Engineering             3155 Executive Blvd.
     Associates, Inc.                 Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Other Location:
     --------------

     Alliance Engineering             None
     Associates, Inc.

     Chief Executive Office:
     ----------------------

     Petrocon Construction            3155 Executive Blvd.
     Resources, Inc.                  Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Other Location:
     --------------

     Petrocon Construction            None
     Resources, Inc.

     Chief Executive Office:
     ----------------------

     Petrocon Technologies, Inc.      3155 Executive Blvd.
                                      Beaumont, Texas 77705-1050
                                      (Jefferson County)

Security Agreement - Schedule
<PAGE>

     Other Location:
     --------------

     Petrocon Technologies, Inc.      None

2.   Grantors maintain their books and records relating to Accounts and General
     Intangibles at:

     Industrial Data Systems          15031 Woodham Drive,
     Corporation                      Suite 360, Houston, Texas 77073-6026

     Petrocon Engineering, Inc.       3155 Executive Blvd.
                                      Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Triangle Engineers and           3155 Executive Blvd.
     Constructors, Inc.               Beaumont, Texas 77705-1050
                                      (Jefferson County)

     R.P.M. Engineering, Inc.         3155 Executive Blvd.
                                      Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Petrocon Systems, Inc.           3155 Executive Blvd.
                                      Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Petrocon Engineering of          3155 Executive Blvd.
     Louisiana, Inc.                  Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Alliance Engineering             3155 Executive Blvd.
     Associates, Inc.                 Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Petrocon Construction            3155 Executive Blvd.
     Resources, Inc.                  Beaumont, Texas 77705-1050
                                      (Jefferson County)

     Petrocon Technologies, Inc.      3155 Executive Blvd.
                                      Beaumont, Texas 77705-1050
                                      (Jefferson County)

3.   Grantors have had no office, place of business or agent for process located
     in any county other than as set forth above, except:

Security Agreement - Schedule
<PAGE>

     Registered Agents:
     -----------------

        Entity                    Registered Agent        Registered Office

Industrial Data Systems        Leisa Stillwell      11270 Winter Cottage Place
Corporation                                         Las Vegas, NV 89135

IDS Engineering, Inc.          Johnny J. Williams   13831 Northwest Freeway,
                                                    Ste. 155
Constant Power                                      Houston, TX 77040
Manufacturing, Inc.

Thermaire, Inc.

Industrial Data Systems, Inc.

IDS Engineering Management,    William A. Coskey   600 Century Plaza Drive,
LC                                                 Bldg. 140
                                                   Houston, TX 77073
PEI Acquisition, Inc.

4.   No bailee, warehouseman or similar party or cosignee holds inventory of any
     Grantor.

Security Agreement - Schedule
<PAGE>

                                  SCHEDULE II
                                       TO
                               SECURITY AGREEMENT

                      Other Liens, Security Interests and
                              Financing Statements
                              --------------------

1.   Capitalized leases:
     ------------------

Lessee           Lessor                     Terms of Lease     Property Covered

Thermal          Citicapital                60 months          Press Brake
Thermal          Unicapital                 60 months          Flexspander
Constant Power   Great American Leasing     60 months          Phone  System
Thermal          CIT Group Equipment        36 months          Fork Lift
Constant Power                                                 CADD Plodder
                 ---------------            --------------

2.   Operating leases:
     ----------------

<TABLE>
<CAPTION>
Lessee                  Lessor       Terms of Lease       Property Covered
<S>                     <C>          <C>                  <C>

IDS-Eng  Houston        G E Capital  48 Months Eff 09/01  Xerox Printing System
IDS-Eng  Houston        Panasonic    48 Months Eff 05/01  Panasonic Copier FP 60552
IDS-Eng  Houston        G E Capital  48 Months            Toshiba Copier 5550
Industrial Data System  G E Capital  36 Months Eff 02/00  Toshiba Copier 6550
Constant Power Mfg.     Stargel      36 Months            Toshiba Copier
</TABLE>

3.   Real Estate Leases:
     ------------------

     1.   Lease dated August 18, 1997, and all amendments thereto, between 319
          Century Plaza Associates, Ltd. and Industrial Data Systems, Inc.

     2.   Lease dated September 1, 1998, and all amendments thereto, between 600
          C.C. Business Park Ltd. and Industrial Data Systems, Inc.

     3.   Business Park Lease dated September 1, 2000, between Wilshire Square
          and IDS Engineering, Inc.

     4.   Master Lease Agreement dated January 3, 2001, between Citicorp Capital
          and Thermaire, Inc.

     5.   Standard Industrial Lease Agreement between Constant Power
          Manufacturing, Inc. and Houston Industrial Assets, L.P.

Security Agreement - Schedule
<PAGE>

4.

--------------------------------------------------------------------------------
Holder of Indebtedness      Description of Indebtedness    Maturity Date
--------------------------------------------------------------------------------
Chase Bank of Texas, N.A.   Mortgage loan on Thermaire,    2-28-02 (balloon of
                            Inc. land and building--debt   $362,432.63)
                            to be paid off at closing
--------------------------------------------------------------------------------

5.   Other equipment leases entered into in the ordinary course of business and
     consistent with past practice.

6.

--------------------------------------------------------------------------------
   Holder of Indebtedness     Description of Indebtedness         Maturity Date
--------------------------------------------------------------------------------
Wall Street Financial, LP  $190,916.47 owed to Wall Street      6/30/2002
                           Financial, LP by Petrocon
                           Engineering, Inc. pursuant to a
                           finance agreement dated October
                           16, 2001, related to premiums for
                           commercial insurance for the
                           period from September 30, 2001
                           to September 30, 2002.
--------------------------------------------------------------------------------
Petrocon Arabia, Ltd.      $937,230.00 Non-Negotiable           6/1/2004
                           Subordinated Promissory Note
                           from Petrocon Engineering to
                           Petrocon Arabia, Ltd. dated
                           March 9, 2000.
--------------------------------------------------------------------------------
CNA Insurance Companies    $193,180.56 owed to CNA by
                           Petrocon pursuant to a finance
                           agreement dated October 26, 2001
                           related to premiums for
                           commercial insurance for the
                           period from September 30, 2001
                           to September 30, 2002.
--------------------------------------------------------------------------------
David Seldford             Vehicle Financing, Ford F-150        12/2003
                           VIN: 1FTZF17241NA28178
--------------------------------------------------------------------------------
CARLTECH, INC.             $1,759,881.24 owed to                05/2002
CPW, INC.                  subcontractors on the ARAMCO
GAS UNLIMITED, INC.        project pursuant to Debt
PETROTECH SERVICES, INC.   Restructure Agreement dated
TACI                       August 11, 1999
--------------------------------------------------------------------------------

Security Agreement - Schedule
<PAGE>

--------------------------------------------------------------------------------
    Holder of Indebtedness       Description of Indebtedness       Maturity Date
--------------------------------------------------------------------------------
ABB AUTOMATION               $1,435,351.90 owed to equipment    05/2002
YOKOGAWA ELECTRIC            supplies on the ARAMCO project
                             Agreement dated June, 2000.
--------------------------------------------------------------------------------

7.

--------------------------------------------------------------------------------
                 Filing Jurisdiction: Iowa Secretary of State
--------------------------------------------------------------------------------
Secured Party              Debtor                               Nature of Lien
--------------------------------------------------------------------------------
                  Petrocon Construction                         None of Record
                  Resources, Inc.
--------------------------------------------------------------------------------
               Filing Jurisdiction: Illinois Secretary of State
--------------------------------------------------------------------------------
Secured Party              Debtor                               Nature of Lien
--------------------------------------------------------------------------------
                  Petrocon Construction                         None of Record
                  Resources, Inc.
--------------------------------------------------------------------------------
               Filing Jurisdiction: Louisiana Statewide Search
--------------------------------------------------------------------------------
Secured Party              Debtor                               Nature of Lien
--------------------------------------------------------------------------------
                  AMEC Engineering, Inc.                        None of Record
--------------------------------------------------------------------------------
                  Barnard & Burke                               None of Record
                  Engineering, Inc.
--------------------------------------------------------------------------------
                  Petrocon Construction                         None of Record
                  Resources, Inc.
IBM Credit        R.P.M. Engineering, Inc.                   IBM Equipment lien
Corporation
--------------------------------------------------------------------------------
IBM Credit        R.P.M. Engineering, Inc.                   IBM Equipment lien
Corporation
--------------------------------------------------------------------------------
               Filing Jurisdiction: Calcasieu Parish, Louisiana
--------------------------------------------------------------------------------
Secured Party              Debtor                               Nature of Lien
--------------------------------------------------------------------------------
                  Petrocon Engineering, Inc.                    None of Record
--------------------------------------------------------------------------------
                  Petrocon Engineering of                       None of Record
                  Louisiana, Inc.
--------------------------------------------------------------------------------

Security Agreement - Schedule
<PAGE>

--------------------------------------------------------------------------------
                 Filing Jurisdiction: East Baton Rouge Parish, Louisiana
--------------------------------------------------------------------------------
    Secured Party              Debtor                          Nature of Lien
--------------------------------------------------------------------------------
                      AMEC Engineering, Inc.                   None of Record
--------------------------------------------------------------------------------
                      Barnard & Burk                           None of Record
                      Engineering, Inc.
--------------------------------------------------------------------------------
                Filing Jurisdiction: North Dakota Secretary of State
--------------------------------------------------------------------------------
    Secured Party             Debtor                           Nature of Lien
--------------------------------------------------------------------------------
                      AMEC Engineering, Inc.                   None of Record
--------------------------------------------------------------------------------
                      Barnard & Burk                           None of Record
                      Engineering
--------------------------------------------------------------------------------
                      R.P.M. Engineering, Inc.                 None of Record
--------------------------------------------------------------------------------
                Filing Jurisdiction: Texas Secretary of State
--------------------------------------------------------------------------------
    Secured Party            Debtor                            Nature of Lien
--------------------------------------------------------------------------------
Sunbelt National      Alliance Engineering            PMSI in custom computer
Bank                  Associates, Inc. (also                 network system.
                      Alliance Engineering, Inc.)
--------------------------------------------------------------------------------
                      AMEC Engineering, Inc.                    None of Record
--------------------------------------------------------------------------------
                      Barnard & Burk                            None of Record
                      Engineering, Inc.
--------------------------------------------------------------------------------
                      Petrocon of Arabia, Ltd.                  None of Record
--------------------------------------------------------------------------------
Texas Commerce        Petrocon Construction                     1995 Ford F150
Bank - National       Resources, Inc.
Association
--------------------------------------------------------------------------------
Sanwa Leasing Corp.   Petrocon Engineering, Inc.        Sharp duplicator and
                                                               copiers.
--------------------------------------------------------------------------------
Lease Partners, Inc.  Petrocon Engineering, Inc.      Equipment lease for phone
                                                                 system
--------------------------------------------------------------------------------
Lease Partners, Inc.  Petrocon Engineering, Inc.     Equipment lease for routers
                                                            and voice mail
--------------------------------------------------------------------------------
Sharp Electronic      Petrocon Engineering, Inc.            Sharp copier systems
Credit Co.
--------------------------------------------------------------------------------
Tokai Financial       Petrocon Engineering, Inc.            Royal copier systems
Services, Inc.
--------------------------------------------------------------------------------

Security Agreement - Schedule
<PAGE>

--------------------------------------------------------------------------------
Ervin Leasing          Petrocon Engineering, Inc.          Xerox equipment
Company
--------------------------------------------------------------------------------
Technology             Petrocon Engineering, Inc.    Computer equipment and
Integration Financial                                accessories under lease
Services,
Inc.(Assigned to
NationsCredit
Commercial Corp.)
--------------------------------------------------------------------------------
                       Petrocon FSC, Ltd.                  None of Record
--------------------------------------------------------------------------------
                       R.P.M. Engineering, Inc.            None of Record
--------------------------------------------------------------------------------
                         Filing Jurisdiction: Harris County, Texas
--------------------------------------------------------------------------------
Secured Party                   Debtor                     Nature of Lien
--------------------------------------------------------------------------------
                       Alliance Engineering, Inc.          None of Record
--------------------------------------------------------------------------------
                       Alliance Engineering                None of Record
                       Associates, Inc.
--------------------------------------------------------------------------------
Technology             Petrocon Engineering, Inc.    Computer equipment and
Integration Financial                                accessories under lease
Services,
Inc.(Assigned to
NationsCredit
Commercial Corp.)
--------------------------------------------------------------------------------
                         Filing Jurisdiction: Jefferson County, Texas
--------------------------------------------------------------------------------
Secured Party                   Debtor                     Nature of Lien
--------------------------------------------------------------------------------
Technology             Petrocon Engineering, Inc.    Computer equipment and
Integration Financial                                accessories under lease
Services, Inc.
(Assigned to
NationsCredit
Commercial Corp.)
--------------------------------------------------------------------------------

Security Agreement - Schedule
<PAGE>

                                  SCHEDULE III
                                       TO
                               SECURITY AGREEMENT

                        Trade-names and Fictitious Names
                          (Present and Past Five Years)
                           ---------------------------

1.   Exact Corporate Name                     Trade Names
     --------------------                     -----------

     Petrocon Engineering, Inc.               Milltech
                                              Petrocon West
                                              All Resources
                                              Total Staffing Services

2.   Mergers/Acquisition Targets:

     OEI International, Inc. (Petrocon was the successor of a merger with OEI
     International, Inc. pursuant to a Plan and Agreement of Merger between
     OEI and Petrocon dated February 5, 1999 in connection with that certain
     Agreement and Plan of Reorganization by and among OEI, Petrocon and Equus
     II Incorporated dated February, 1999)

HTC Systems, Inc. (assets acquired by Petrocon Engineering, Inc.)

Temple Associates, Inc. (assets acquired by Petrocon Engineering, Inc.)

Pressure Technologies, Inc. (acquired and dissolved)

     Total Staffing Services, Inc. (a former company subsidiary which was
     merged with and into Petrocon Engineering, Inc. effective December 24,
     1997).

R.P.M. Engineering, Inc.

Merger/Acquisition Targets:

AMEC Engineering, Inc.

Barnard & Burk Engineering, Inc.

     RPM Investments, Ltd (assets acquired by R.P.M. Engineering, Inc.
     contemporaneously with PEI acquisition of R.P.M. Engineering, Inc.).

Alliance Engineering Associates, Inc.*

     Energy Integration Services, Inc. (former wholly-owned subsidiary of
     Petrocon Engineering, Inc. which merged with and into Alliance
     Engineering Associates, Inc. effective January 31, 1997).

Security Agreement - Schedule
<PAGE>

Alliance Engineering Incorporated (assumed name)

Alliance Engineering Associates Incorporated d/b/a Alliance Engineering, Inc.

Petrocon Construction Resources, Inc.

     Petrocon Plant Services, Inc. (former company subsidiary which was merged
     with and into Petrocon Construction Resources, Inc. effective December
     24, 1997).

     Petrocon Arabia Ltd.

          Eagleton Saudi Arabia Limited (former name)

*Acquired in reverse triangular merger with transitory subsidiary of Petrocon
 Engineering, Inc.

3.   Exact Corporate Name                          Fictitious or Trade Name
     --------------------                          ------------------------
      Industrial Data Systems                       None
       Corporation
      IDS Engineering, Inc.                         None
      Thermaire, Inc.                               Thermal Corporation
      Constant Power Manufacturing,                 None
       Inc.
      Industrial Data Systems, Inc.                 None
      IDS Engineering Management,                   None
       LC
      PEI Acquisition, Inc.                         None

Security Agreement - Schedule
<PAGE>

                                  SCHEDULE IV
                                       TO
                               SECURITY AGREEMENT

                            UCC Filing Jurisdictions
                            ------------------------

     Debtor                                           Jurisdiction
     ------                                           ------------

Industrial Data Systems Corporation                   Nevada

IDS Engineering, Inc.                                 Texas

IDS Engineering Management, LC                        Texas

Thermaire, Inc. d/b/a Thermal Corp.                   Texas

Constant Power Manufacturing, Inc.                    Texas

Industrial Data Systems, Inc.                         Texas

Petrocon Engineering, Inc.                            Texas

Triangle Engineers & Constructors, Inc.               Texas

Petrocon Systems, Inc.                                Texas

Petrocon Technologies, Inc.                           Texas

Petrocon Engineering of Louisiana, Inc.               Louisiana

R.P.M. Engineering, Inc.                              Louisiana

Alliance Engineering Associates, Inc.                 Texas

Petrocon Construction Resources, Inc.                 Texas

Security Agreement - Schedule
<PAGE>

                                   SCHEDULE V
                                       TO
                               SECURITY AGREEMENT

                            Releases and Assignments
                            ------------------------

None

Security Agreement - Schedule
<PAGE>

                                    EXHIBIT A

                          COPYRIGHT SECURITY AGREEMENT

     WHEREAS, [___________________________], a [____________] corporation
("Grantor") owns the Copyright registrations and Copyright applications listed
  -------
on Schedule 1 annexed hereto, and is a party to the Copyright Licenses listed
   ----------
on Schedule 1 annexed hereto; and
   ----------

     WHEREAS, Grantor has executed that certain Promissory Note dated as of
______________, 2001, payable to the order of Equus II Incorporated, a Delaware
corporation ("Lender") in the principal sum of $3,000,000 (the "Note";
              ------                                            ----
capitalized terms defined therein and not otherwise defined herein being used
herein as therein defined); and

     WHEREAS, pursuant to the terms of the Security Agreement dated as of
___________, 2001, (as said Security Agreement may be amended and in effect from
time to time, the "Security Agreement"), between Grantor and Lender (in such
                   ------------------
capacity, together with its successors in such capacity, the "Grantee"),
                                                              -------
Grantor has granted to Grantee a security interest in substantially all the
assets of Grantor including all right, title and interest of Grantor in, to and
under all now owned and hereafter acquired Copyrights (as defined in the
Security Agreement), Copyright registrations, Copyright applications and
Copyright Licenses (as defined in the Security Agreement), together with the
goodwill of the business symbolized by Grantor's Copyrights and all proceeds
thereof, to secure, inter alia, the payment of all amounts owing by Grantor
                    ----------
under the Note.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of its respective right, title
and interest in, to and under the following (all of the following items or
types of property being herein collectively referred to as the "Copyright
                                                                ---------
Collateral"), whether presently existing or hereafter created or acquired:
----------

          (1)   each Copyright, Copyright application and Copyright
     registration, together with any reissues, extensions or renewals thereof,
     including, without limitation, the Copyright, Copyright registrations and
     Copyright applications referred to in Schedule 1 annexed hereto, and all
                                           ----------
     of the goodwill of the business connected with the use of, and symbolized
     by, each Copyright, Copyright registration and Copyright application;

          (2)   each Copyright License and all of the goodwill of the business
     connected with the use of, and symbolized by, each Copyright License; and

          (3)   all products and proceeds of the foregoing, including, without
     limitation, any claim by Grantor against third parties for past, present
     or future (a) infringement or dilution of any Copyright or Copyright
     registration including,

Security Agreement - Exhibit A
<PAGE>

     without limitation, the Copyright and Copyright registrations referred to
     in Schedule 1 annexed hereto, the Copyright registrations issued with
        ----------
     respect to the Copyright applications referred in Schedule 1 and the
                                                       ----------
     Copyright licensed under the Copyright License, or (b) injury to the
     goodwill associated with any Copyright, Copyright registration or
     Copyright licensed under any Copyright License.

     This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect
to the security interest in the Copyright Collateral made and granted hereby
are more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.

Security Agreement - Exhibit A
<PAGE>

    IN WITNESS WHEREOF, Grantor has caused this Copyright Security Agreement
to be duly executed by its duly authorized officer as of the ------- day of
--------, 2001.

                                            GRANTOR:

                                            [________________________________]

                                            By:________________________________
                                            Name:______________________________
                                            Title:_____________________________

ACKNOWLEDGED:

EQUUS II INCORPORATED

By:________________________________
Name:______________________________
Title:_____________________________

Security  Agreement - Exhibit A
<PAGE>

                                 ACKNOWLEDGMENT

STATE OF _________  (S)
                    (S)
COUNTY OF ________  (S)

     On the _____ day of ___________, 2001, before me personally appeared
____________________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as ___________________________ of
[______________________________], a Texas corporation, who being by me duly
sworn, did depose and say that he is ___________________________ of
[_______________________________], the corporation described in and which
executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate
seal; that the said instrument was signed and sealed on behalf of said
corporation by order of its Board of Directors; that he signed his name
thereto by like order; and that he acknowledged said instrument to be the
free act and deed of said corporation.

     (Seal)                      _____________________________________________
                                 Notary Public in and for the State of Texas

My commission expires:_____________

Security  Agreement - Exhibit A
<PAGE>

                                 ACKNOWLEDGMENT

STATE OF __________  (S)
                     (S)
COUNTY OF _________  (S)

     On the _____ day of ____________, 2001 before me personally appeared
___________________, to me personally known proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as __________________ of EQUUS II INCORPORATED, a Delaware
corporation, who being by me duly sworn, did depose and say that he is
____________________ of EQUUS II INCORPORATED, the corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that the said instrument was signed and sealed on behalf of said corporation by
order of its Board of Directors; that he signed his name thereto by like order;
and that he acknowledged said instrument to be the free act and deed of said
corporation.

     (Seal)                       _____________________________________________
                                  Notary Public in and for the State of Texas

My commission expires:___________

Security  Agreement - Exhibit A
<PAGE>

                                   Schedule 1
                                  to Copyright
                               Security Agreement
                               ------------------

                                   COPYRIGHTS
                                   ----------

Grantor           Work        Reg. No.           Date
-------           ----        --------
                                                 Registered
                                                 ----------

                             COPYRIGHT APPLICATIONS
                             ----------------------

                               COPYRIGHT LICENSES
                               ------------------

Security  Agreement - Exhibit A
<PAGE>

                                    EXHIBIT B

                            PATENT SECURITY AGREEMENT
                            -------------------------

     WHEREAS, [______________________________], a [____________] corporation
("Grantor") owns the Patents and Patent Applications listed on Schedule 1
  -------                                                      ----------
annexed hereto, is a party to the Patent Licenses listed on Schedule 1
annexed hereto; and

     WHEREAS, Grantor has executed that certain Promissory Note dated as of
______________, 2001, payable to the order of Equus II Incorporated, a Delaware
corporation ("Lender") in the principal sum of $3,000,000 (the "Note";
                                                                ----
capitalized terms defined therein and not otherwise defined herein being used
herein as therein defined); and

     WHEREAS, pursuant to the terms of the Security Agreement dated as of
_______________, 2001, (as said Security Agreement may be amended and in effect
from time to time, the "Security Agreement"), between Grantor and
                        ------------------
Lender (in such capacity, together with its successors in such capacity, the
"Grantee"), Grantor has granted to Grantee a security interest in
 -------
substantially all the assets of Grantor including all right, title and
interest of Grantor in, to and under all now owned and hereafter acquired
Patents (as defined in the Security Agreement), Patent applications and Patent
Licenses (as defined in the Security Agreement), and all products and proceeds
thereof, to secure, inter alia, the payment of all amounts
                    ----- ----
owing by Grantor under the Note.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of its respective right, title
and interest in, to and under the following (all of the following items or
types of property being herein collectively referred to as the "Patent
                                                                ------
Collateral"), whether presently existing or hereafter created or
----------
acquired:

          (1)  each Patent and Patent application, including, without
     limitation, each Patent and Patent application referred to in Schedule 1
                                                                   ----------
     annexed hereto, together with any reissues, continuations or extensions
     thereof;

          (2)  each Patent License, including, without limitation, each Patent
     License listed on Schedule 1 annexed hereto; and
                       ----------

          (3)  all products and proceeds of the foregoing, including, without
     limitation, any claim by any Grantor against third parties for past,
     present or future infringement of any Patent, including, without
     limitation, any Patent referred to in Schedule 1 annexed hereto, any
                                           ----------
     Patent issued pursuant to a Patent Applications referred to in Schedule 1
                                                                    ----------
     and any Patent licensed under any Patent License listed on Schedule 1
                                                                ----------
     annexed hereto.

     This security interest is granted in conjunction with the security11
interests granted to Grantee pursuant to the Security Agreement. Grantor
hereby acknowledges and affirms that the rights and remedies of Grantee
with respect to the security interest in the Patent

Security  Agreement - Exhibit B
<PAGE>

Collateral made and granted hereby are more fully set forth in the Security
Agreement, the terms and provision of which are incorporated by reference
herein as if fully set forth herein.

Security  Agreement - Exhibit B
<PAGE>

     IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement to
be duly executed by its duly authorized officer thereunto as of the ______
day of _______________, _____.

                                            GRANTOR:

                                            [________________________________]

                                            By:________________________________
                                            Name:______________________________
                                            Title:_____________________________

ACKNOWLEDGED:

EQUUS II INCORPORATED

By:________________________________
Name:______________________________
Title:_____________________________

Security  Agreement - Exhibit B
<PAGE>

                                 ACKNOWLEDGMENT

STATE OF _________  (S)
                    (S)
COUNTY OF ________  (S)

     On the _____ day of ______________, 2001, before me personally appeared
________________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________________ of [__________________________],
a Texas corporation, who being by me duly sworn, did depose and say that he is
__________________ of [_____________________], the corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that the said instrument was signed and sealed on behalf of said corporation by
order of its Board of Directors; that he signed his name thereto by like order;
and that he acknowledged said instrument to be the free act and deed of said
corporation.

     (Seal)                       _____________________________________________
                                  Notary Public in and for the State of Texas

My commission expires:_____________

Security  Agreement - Exhibit B
<PAGE>

                                 ACKNOWLEDGMENT

STATE OF _________  (S)
                    (S)
COUNTY OF ________  (S)

     On the ______ day of ___________, 2001, before me personally appeared
--------------------, to me personally known or proved to me on the basis
of satisfactory evidence to be the person described in and who executed
the foregoing instrument as _____________________ of EQUUS II INCORPORATED, a
Delaware corporation, who being by me duly sworn, did depose and say that
he is ____________________ of EQUUS II INCORPORATED, the corporation described
in and which executed the foregoing instrument; that he knows the seal of
said corporation; that the seal affixed to said instrument is such
corporate seal; that the said instrument was signed and sealed on behalf
of said corporation by order of its Board of Directors; that he signed his
name thereto by like order; and that he acknowledged said instrument to be
the free act and deed of said corporation.

     (Seal)                       _____________________________________________
                                  Notary Public in and for the State of Texas

My commission expires:________________

Security  Agreement - Exhibit B
<PAGE>

                                   Schedule 1
                                    to Patent
                               Security Agreement
                               ------------------

                              UNITED STATES PATENTS
                              ---------------------

                                                    Patent        Issue
Grantor          Country         Description        Number        Date
-------          -------         -----------        ------        ----

                              PATENT APPLICATIONS
                              -------------------

                                PATENT LICENSES
                                ---------------

Security  Agreement - Exhibit B
<PAGE>

                                    EXHIBIT C

                          TRADEMARK SECURITY AGREEMENT
                          ----------------------------

     WHEREAS, [________________________], a [__________________] corporation
("Grantor") owns the Trademarks, Trademark registrations, and Trademark
  -------
applications listed on Schedule 1 annexed hereto, and is a party to the
                       ----------
Trademark Licenses listed on Schedule 1 annexed hereto;
                             ----------

     WHEREAS, Grantor has executed that certain Promissory Note dated as of
_________________, 2001, payable to the order of Equus II Incorporated, a
Delaware corporation ("Lender") in the principal sum of $3,000,000 (the
                       ------
"Note"; capitalized terms defined therein and not otherwise defined herein
 ----
being used herein as therein defined); and

     WHEREAS, pursuant to the terms of the Security Agreement dated as of
--------------, 2001, (as said Security Agreement may be amended and in
effect from time to time, the "Security Agreement"), between Grantor and
                               ------------------
Lender (in such capacity, together with its successors in such capacity,
the "Grantee"), Grantor has granted to Grantee a security interest in
     -------
substantially all the assets of Grantors including all right, title and
interest of Grantor in, to and under all now owned and hereafter acquired
Trademarks (as defined in the Security Agreement), Trademark
registrations, Trademark applications and Trademark Licenses (as defined
in the Security Agreement), together with the goodwill of the business
symbolized by Grantor's Trademarks, and all proceeds thereof, to secure,
inter alia, the payment of all amounts owing by Grantor under the Note.
      ----

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of its respective right,
title and interest in, to and under the following (all of the following
items or types of property being herein collectively referred to as the
"Trademark Collateral"), whether presently existing or hereafter created
 --------------------
or acquired:

          (1)  each Trademark, Trademark registration and Trademark application,
     including, without limitation, the Trademarks, Trademark registrations
     (together with any reissues, continuations or extensions thereof and
     Trademark applications referred to in Schedule 1 annexed hereto, and all
                                           ----------
     of the goodwill of the business connected with the use of, and symbolized
     by, each Trademark, Trademark registration and Trademark application;

          (2)  each Trademark License and all of the goodwill of the business
     connected with the use of, and symbolized by, each Trademark License; and

          (3)  all products and proceeds of the foregoing, including, without
     limitation, any claim by Grantor against third parties for past, present
     or future

Security  Agreement - Exhibit C
<PAGE>

     (a) infringement or dilution of any Trademark or Trademark
     registration including, without limitation, the Trademarks and Trademark
     registrations referred to in Schedule 1 annexed hereto, the Trademark
                                  ----------
     registrations issued with respect to the Trademark applications referred
     in Schedule 1 and the Trademarks licensed under any Trademark License, or
        ----------
     (b) injury to the goodwill associated with any Trademark, Trademark
     registration or Trademark licensed under any Trademark License.

     This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor
hereby acknowledges and affirms that the rights and remedies of Grantee
with respect to the security interest in the Trademark Collateral made and
granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if
fully set forth herein.

Security  Agreement - Exhibit C
<PAGE>

     IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement
to be duly executed by its duly authorized officer thereunto as of the ____
day of __________________, 2001.

                                                                     GRANTOR:

                                            [_______________________________]

                                            By:________________________________
                                            Name:______________________________
                                            Title:_____________________________

ACKNOWLEDGED:

EQUUS II INCORPORATED

By:________________________________
Name:______________________________
Title:_____________________________

Security  Agreement - Exhibit C
<PAGE>

                                 ACKNOWLEDGMENT

STATE OF _________  (S)
                    (S)
COUNTY OF ________  (S)

     On the _____ day of _______________, 2001, before me personally appeared
____________________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________________________________ of
[_______________________________], a Texas corporation, who being by me duly
sworn, did depose and say that he is ______________________________ of
[___________________________], the corporation described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that the said
instrument was signed and sealed on behalf of said corporation by order of
its Board of Directors; that he signed his name thereto by like order; and
that he acknowledged said instrument to be the free act and deed of said
corporation.

     (Seal)                       _____________________________________________
                                  Notary Public in and for the State of Texas

My commission expires:_____________

Security  Agreement - Exhibit C
<PAGE>

                                 ACKNOWLEDGMENT

STATE OF _________  (S)
                    (S)
COUNTY OF ________  (S)

     On the _____ day of ________________, 2001, before me personally appeared
________________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _________________ of EQUUS II INCORPORATED, a Delaware
corporation, who being by me duly sworn, did depose and say that he is
___________________ of EQUUS II INCORPORATED, the corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate
seal; that the said instrument was signed and sealed on behalf of said
corporation by order of its Board of Directors; that he signed his name
thereto by like order; and that he acknowledged said instrument to be the
free act and deed of said corporation.

     (Seal)                       ____________________________________________
                                  Notary Public in and for the State of Texas

My commission expires:_____________

Security  Agreement - Exhibit C
<PAGE>

                                   Schedule 1
                                  to Trademark
                               Security Agreement
                               ------------------

                      UNITED STATES TRADEMARK REGISTRATIONS
                      -------------------------------------

                                               Registration   Registration
Grantor           Mark       Country           Number                 Date
-------           ----       -------           ------                 ----

                      UNITED STATES TRADEMARK APPLICATIONS
                      ------------------------------------

                                               Application     Date of
Grantor            Mark       Country          Number          Filing
-------            ----       -------          ------          ------

                        FOREIGN TRADEMARK REGISTRATIONS
                        -------------------------------

                         FOREIGN TRADEMARK APPLICATIONS
                         ------------------------------

                               TRADEMARK LICENSES
                               ------------------

                            UNREGISTERED TRADEMARKS
                            -----------------------

Security Agreement - Exhibit C<PAGE>

                                                                   EXHIBIT 10.47

THIS MORTGAGE IS SUBJECT TO AN INTERCREDITOR AGREEMENT, DATED AS OF DECEMBER
21, 2001, AMONG FLEET CAPITAL CORPORATION, A RHODE ISLAND CORPORATION, PETROCON
ENGINEERING, INC., AND EQUUS II INCORPORATED, A DELAWARE CORPORATION. THIS
MORTGAGE IS SUBORDINATED IN RIGHT AND TIME OF PAYMENT TO THE PRIOR PAYMENT IN
FULL IN CASH OF ALL SENIOR DEBT (AS DEFINED THEREIN) IN ACCORDANCE WITH, AND TO
THE EXTENT SPECIFIED IN, SUCH INTERCREDITOR AGREEMENT AND EACH HOLDER OF THIS
MORTGAGE, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE TERMS
AND PROVISIONS OF SUCH INTERCREDITOR AGREEMENT.

AFTER RECORDING RETURN TO:

Gary B. Clark, Esq.
Gardere Wynne Sewell LLP
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201

                        MORTGAGE AND SECURITY AGREEMENT
                      with Assignment of Rents and Leases
                 and Assignment of Contracts and Sales Proceeds

     BE IT KNOWN, that on this 21st day of December, 2001, before me, the
undersigned Notary Public, duly commissioned and qualified in and for the State
of Texas, and in the presence of the undersigned competent witnesses,
personally came and appeared: R.P.M. ENGINEERING, INC., a Louisiana corporation
(hereinafter referred to as "Grantor"), whose taxpayer identification number is
33235900D, and whose address for notice hereunder is c/o Petrocon Engineering,
Inc., 3155 Executive Boulevard, Beaumont, Texas 77720, Attention: Michael L.
Burrow P.E., who declared and acknowledged as follows:

     Grantor is executing this Mortgage and Security Agreement with Assignment
of Rents and Leases and Assignment of Contracts and Sales Proceeds (as amended,
modified or restated from time to time and hereinafter referred to as this
"Mortgage") in favor of EQUUS II INCORPORATED, a Delaware corporation
("Grantee").

                                    RECITALS

     A.     Pursuant to that certain Settlement Agreement and Plan of
Reorganization dated as of December 21, 2001, by and among Petrocon
Engineering, Inc., a Texas corporation ("PEI"), Industrial Data Systems
                                         ---
Corporation, a Nevada corporation ("IDS"), PEI Acquisition, Inc., a Nevada
                                    ---
corporation ("Sub") and Grantee (the "Settlement Agreement"), Grantee has
              ---                     --------------------
agreed to

                                      1
<PAGE>

renew, rearrange extend $3,000,000 of its existing loan to PEI (the "Loan") as
evidenced by that certain Promissory Note from PEI to Grantee in the principal
amount of $3,000,000 dated as of December 21, 2001 (the "Note").
                                                         ----

     B.     IDS, Sub, and PEI have entered into that certain Agreement and Plan
of Merger on or about December 21, 2001, whereby Sub will merge with and into
PEI and PEI will be the surviving corporation (the "Plan of Merger"; PEI as the
                                                    --------------
surviving corporation of the Plan of Merger is the "Grantor").
                                                    -------

     C.     Pursuant to the terms of the Settlement Agreement and Plan of
Merger, Grantor shall enter into this Mortgage for the purpose, among other
things, of securing and providing for the repayment of the Note and the
obligations of Grantor under this Mortgage.

                                    ARTICLE I
                                  DEFINITIONS

     As used in this Mortgage, the following terms shall have the respective
meanings assigned to them:

     1.01   CERCLA: The term "CERCLA" shall mean the Comprehensive
                              ------
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
[sec][sec] 9601 et seq.), as amended from time to time, including, without
                -- ---
limitation, the Superfund Amendments and Reauthorization Act ("SARA").
                                                               ----

     1.02   Contracts: The term "Contracts" shall mean any and all purchase
                                 ---------
contracts and agreements for the sale by Grantor of the Mortgaged Property or
any part thereof, together with any and all renewals or extensions thereof and
substitutions or replacements therefor.

     1.03   Environmental Law: The term "Environmental Law" shall mean any
                                         -----------------
federal, state or local law, statute, ordinance, or regulation, as amended from
time to time, pertaining to air pollution, water pollution, health, industrial
hygiene, environmental conditions, noise control and/or the handling,
discharge, disposal or recovery of any on-site or off-site Hazardous Substance
on, under or about the Mortgaged Property, including but not limited to,
CERCLA, SARA and RCRA. The term "Environmental Law" shall also be deemed to
                                 -----------------
include the Louisiana Environmental Quality Act, La. R.S. 30:2001 et seq., as
                                                                  ------
amended, and the regulations now or hereafter promulgated pursuant to said law.

     1.04   Event of Default: The term "Event of Default" shall mean any
                                        ----------------
happening or occurrence described in Article IX of this Mortgage.
                                     ----------

     1.05   Financial Statements. The term "Financial Statements" shall mean
                                            --------------------
such balance sheets, profit and loss statements, reconciliations of capital and
surplus, changes in financial condition, schedules of sources and applications
of funds, operating statements with respect to the

                                      2
<PAGE>

Mortgaged Property, and other financial information of Grantor and of the
Mortgaged Property, submitted to Grantee prior to the date hereof consistent
for all periods after the date hereof so as to properly reflect the financial
condition and the results of operations and changes in financial position of
such relevant party, and which statements shall, as to the Grantor, be
certified by an officer and chief financial officer of the Grantor.

     1.06   Financing Statements: The term "Financing Statements" shall mean
                                            --------------------
the Form UCC-1 or other Grantee-approved financing statements to be filed on or
before the Closing Date with the appropriate offices for the perfection of a
security interest in any of the Mortgaged Property.

     1.07   Fixtures: The term "Fixtures" shall mean all materials, supplies,
                                --------
equipment, apparatus and other items now or hereafter attached to, installed on
or in the Land or the Improvements, or which in some fashion are deemed to be
fixtures to the Land or Improvements under applicable law. The term "Fixtures"
shall include, without limitation, all items of personalty to the extent that
the same may be deemed Fixtures under applicable law, but shall not include
                       --------
trade fixtures owned by any tenant of the Improvements.

     1.08   Governmental Authority: The term "Governmental Authority" shall
                                              ----------------------
mean the United States, the state, the county, the city, or any other political
subdivision in which the Mortgaged Property is located, and any other political
subdivision, agency, or instrumentality exercising jurisdiction over Grantor or
the Mortgaged Property.

     1.09   Grantor: The term "Grantor" shall mean the above defined Grantor
                               -------
and any and all subsequent record or equitable owners of the Mortgaged Property.

     1.10   Hazardous Substance: The term "Hazardous Substance" shall mean one
                                           -------------------
or more of the following substances:

            (i)    those substances included within the definitions of (A)
     "hazardous substances", "hazardous materials" or "toxic substances", in
     CERCLA, SARA, RCRA, Toxic Substances Control Act, Federal Insecticide,
     Fungicide and Rodenticide Act and the Hazardous Materials Transportation
     Act (49 U.S.C. Sections 1801 et seq.), or (B) "solid waste," as defined
     under the Texas Solid Waste Disposal Act;

            (ii)   such other substances, materials, constituents and wastes
     which are or become regulated as hazardous or toxic under applicable local,
     state or federal law, or the United States government, or which are
     classified as hazardous or toxic under federal, state, or local laws or
     regulations; and

            (iii)  any material, waste or substance which is: (A) asbestos; (B)
     polychlorinated biphenyls; (C) designated as a "hazardous substance"
     pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Sections 1251 et
     seq. (33 U.S.C. (S)1321) or listed pursuant to Section 307 of the Clean
     Water Act (33 U.S.C. [sec]1317); (D) explosives; (E) radioactive materials;
     or (F) petroleum, petroleum products or any fraction thereof.

                                      3
<PAGE>

     1.11   Impositions: The term "Impositions" shall mean all real estate and
                                   -----------
personal property taxes, water, gas, sewer, electricity and other utility rates
and charges; charges for any easement, license or agreement maintained for the
benefit of the Mortgaged Property, and all other taxes, charges and assessments
and any interest, costs or penalties with respect thereto of any kind and
nature whatsoever which at any time prior to or after the execution hereof may
be assessed, levied or imposed upon the Mortgaged Property or the ownership,
use, occupancy or enjoyment thereof.

     1.12   Improvements: The term "Improvements" shall mean any and all
                                    ------------
buildings, constructions, structures, open parking areas and other
improvements, including all component parts thereof, and any and all
accessions, additions, replacements, substitutions or alterations thereof or
appurtenances thereto, now or at any time hereafter situated, placed or
constructed upon the Land or any part thereof.

     1.13   Indebtedness: The term "Indebtedness" shall mean the principal of,
                                    ------------
interest on and all other amounts and payments due under or secured by the
Note, the Settlement Agreement and other Security Instruments, together with
all funds hereafter advanced by Grantee to or for the benefit of Grantor as
contemplated by any covenant or provision herein contained or for any other
purpose, and all other indebtedness, of whatever kind or character, direct or
indirect, absolute or contingent, owing or which may hereafter become owing by
Grantor to Grantee, whether such indebtedness is evidenced by note, open
account, overdraft, endorsement, surety agreement, guaranty or otherwise, it
being contemplated that Grantor may hereafter become indebted to Grantee in
further sum or sums and any and all renewals, extensions, or reinstatements of,
or amendments, modifications, or supplements to the indebtedness, liabilities
and obligations described above. Notwithstanding any other provision of this
Mortgage, the maximum amount of the Indebtedness secured hereby at any time
from time to time shall be limited to the Maximum Amount.

     1.14   Land: The term "Land" shall mean the full ownership or any interest
                            ----
therein covering the real estate or immovable property described in Exhibit "A"
                                                                    ----------
attached hereto and made a part hereof, together with all Improvements and
Fixtures and all rights, titles and interests appurtenant thereto.

     1.15   Leases: The term "Leases" shall mean any and all leases, subleases,
                              ------
licenses, concessions or other agreements (written or verbal, now or hereafter
in effect) which grant a possessory interest in and to, or the right to
extract, mine, reside in, sell or use the Mortgaged Property, and all other
agreements, including, but not limited to, utility contracts, maintenance
agreements and service contracts, which in any way relate to the use,
occupancy, operation, maintenance, enjoyment or ownership of the Mortgaged
Property, save and except any and all leases, subleases or other agreements
pursuant to which Grantor is granted a possessory interest in the Land.

     1.16   Legal Requirements: The term "Legal Requirements" shall mean (a)
                                          ------------------
any and all present and future judicial decisions, statutes, rulings, rules,
regulations, permits, certificates or

                                      4
<PAGE>

ordinances of any Governmental Authority in any way applicable to Grantor or
the Mortgaged Property, including, but not limited to, those respecting the
ownership, use, occupancy, possession, operation, maintenance, alteration,
repair or reconstruction thereof and all Environmental Laws, (b) Grantor's
presently or subsequently effective Articles of Incorporation, Bylaws or any
instruments establishing any partnership, limited partnership, joint venture,
trust or other form of business association (if either, both or all by any of
same), (c) any and all Leases and other contracts (written or oral) of any
nature to which Grantor may be bound and (d) any and all restrictions,
reservations, conditions, easements or other covenants or agreements of record
affecting the Mortgaged Property.

     1.17   Loans: The term "Loans" shall mean the Loans by Grantee to Grantor
                             -----
evidenced by the Note and pursuant to the Settlement Agreement.

     1.18   Maker: The term "Maker" shall mean the party or parties designated
                             -----
as the Maker or Makers of the Note. Grantor and Maker may or may not be the
same party.

     1.19   Maximum Amount: The amount of the Indebtedness that may be secured
any time and from time to time by this Mortgage (including the assignment of
Rents and Leases and the assignment of Contract and Sales Proceeds contained
herein) and the aggregate amount which Grantee may claim for damages that
Grantee may suffer from a breach of the Obligations secured by this Mortgage
(other than the payment of money), shall be fixed and limited to Three Million
and 00/100 ($3,000,000.00) Dollars.

     1.20   Mortgaged Property: The term "Mortgaged Property" shall mean the
                                          ------------------
Land, the Improvements, Fixtures, Contracts, Leases, Rents, Proceeds and
Personalty, whether now owned or hereafter acquired, and the following
described collateral:

            (a)  all rights, privileges, tenements, hereditaments, rights-of-
way, easements, appendages and appurtenances in anywise appertaining thereto,
and all right, title and interest of Grantor in and to any street, ways,
alleys, strips or gores of land adjoining the Land or any part thereof, whether
now owned or hereinafter acquired;

            (b)  all betterments, accessions, additions, appurtenances,
substitutions, replacements and revisions thereof and thereto and all
reversions and remainders therein;

            (c)  all of Grantor's right, title and interest in and to any
award, remuneration, settlement or compensation heretofore made or hereafter to
be made by any Governmental Authority to Grantor, including those for any
vacation of, or change of grade in, any streets affecting the Land or the
Improvements;

            (d)  all plans and specifications for the Improvements; all
contracts and subcontracts relating to the Improvements, all deposits
(including tenant's security deposits), funds, accounts, contract rights,
instruments, documents, general intangibles (including trademarks, service
marks, trade names and symbols used in connection therewith), and Note or
chattel paper arising from or by virtue of any transactions related to the
property described herein; all permits, licenses, franchises, certificates, and
other rights and privileges obtained in connection with the

                                      5
<PAGE>

property described herein; all proceeds arising from or by virtue of the sale,
lease or other disposition of all or any part of the Mortgaged Property
(consent to same not granted or to be implied hereby); all proceeds (including
premium refunds) payable or to be payable under each policy of insurance
relating to the Mortgaged Property;

            (e)  all other interest of every kind and character which Grantor
now has or at any time hereafter acquires in and to the above described real
and personal property and all property which is used or useful in connection
therewith, including rights of ingress and egress, easements, licenses, and all
reversionary rights or interests of Grantor with respect to such property. To
the extent permitted by law, all of the foregoing Personalty and Fixtures are
to be deemed and held to be a part of and affixed to the real property; and

            (f)  any and all other security and collateral of any nature
whatsoever, now or hereafter given for the repayment of the Indebtedness or the
performance and discharge of the Obligations.

     In the event the estate of Grantor in and to any of the Land and
Improvements is a leasehold estate, the definition of "Mortgaged Property"
                                                       ------------------
shall include and the lien, security interest and assignment created hereby
shall encumber and extend to all other, further or additional titles, estates,
interests, or rights which may exist now or at any time be acquired by Grantor
in or to the property demised under the lease creating such leasehold estate,
excluding Grantor's rights, if any, to purchase the property demised under such
lease. If full ownership title to any of such property shall ever become vested
in Grantor, Grantor's full ownership interest shall be encumbered by this
Mortgage in the same manner as if Grantor had full ownership title to such
property as of the date of execution of this Mortgage.

     As used in this Mortgage, the term "Mortgaged Property" is expressly
                                         ------------------
defined as meaning all or, where the context permits or requires, any portion
of the Mortgaged Property and all or, where the context permits or requires,
any interest therein.

     1.21   Note: The term "Note" shall mean collectively, (i) that certain
                            ----
Promissory Note dated of even date herewith in the stated principal amount of
$3,000,000.00 from the Borrower to Grantee, and.

     1.22   Obligations: The term "Obligations" shall mean any and all of the
                                   -----------
covenants, warranties, representations and other obligations (other than to
repay the Indebtedness) made or undertaken by Grantor or others to Grantee or
others as set forth in the Security Instruments, or any lease, sublease, or
other agreement pursuant to which Grantor is granted a possessory interest in
the Land.

     1.23   Permitted Encumbrances: The term "Permitted Encumbrances" shall
                                              ----------------------
mean the outstanding liens, easements, building lines, restrictions, security
interests and other matters (if any) as set forth on Exhibit "B" attached
                                                     -----------
hereto and made a part hereof.

                                      6
<PAGE>

     1.24   Personalty: The term "Personalty" shall mean all of the right,
                                  ----------
title and interest of Grantor in and to all tangible and intangible personal or
movable property, including all equipment, inventory, goods, consumer goods,
accounts, chattel paper, instruments, money, general intangibles, documents,
minerals, crops and timber which is attached to, installed on or placed or used
on, in connection with or is acquired for such attachment, installation,
placement or use, or which arises out of the development, improvement,
financing, leasing, operation or use of, the Land, the Improvements, Fixtures
or other goods located on the Land or Improvements, together with all
additions, accessions, accessories, amendments and modifications thereto,
extensions, renewals, enlargements and proceeds thereof, substitutions
therefor, and income and profits therefrom. The following are included, without
limitation, in the definition of Personalty: furnishings, building materials,
supplies, machines, engines, boilers, stokers, pumps, fans, vents, blowers,
dynamos, furnaces, elevators, ducts, shafts, pipes, furniture cabinets, shades,
blinds, screens; plumbing, heating, air conditioning, lighting, lifting,
ventilating, refrigerating, cooking, medical, laundry and incinerating
equipment; partitions, drapes, carpets, rugs and other floor coverings,
awnings, call and sprinkler systems, fire prevention and extinguishing
apparatus and equipment, water tanks, swimming pools, compressors, vacuum
cleaning systems, disposals, dishwashers, ranges, ovens, kitchen equipment,
cafeteria equipment, recreational equipment, loan commitments, financing
arrangements, bonds, construction contracts, leases, licenses, permits, sales
contracts, insurance policies and the proceeds therefrom, plans and
specifications, surveys, rent rolls, books and records, funds, bank deposits
and all other intangible personal property.

     1.25   Proceeds: The term "Proceeds" shall mean all of Grantor's rights
                                --------
to receive payments, receipts, revenues, interest and income of any kind under
the Contracts, less reasonable closing costs, as approved by Grantee.

     1.26   RCRA: The term "RCRA" shall mean the Resource Conservation and
                            ----
Recovery Act of 1976 (42 U.S.C. Sections 6901, et seq.), as amended from time
                                               -- ---
to time.

     1.27   Remedial Work: The term "Remedial Work" shall have the meaning
                                     -------------
assigned to such term in Subsection 8.01(d) of this Mortgage.
                         ------------------

     1.28   Rents: The term "Rents" shall mean all of the rents, revenues,
                             -----
income, proceeds, royalties, issues, profits and other benefits paid or payable
under all Leases and/or for using, leasing, licensing, possessing, operating
from or in, residing in, selling, mining, extracting or otherwise enjoying or
using the Mortgaged Property.

     1.29   Security Instruments: The term "Security Instruments" shall mean
                                            --------------------
this Mortgage, the Note, the Financing Statements and such other instruments
evidencing, securing, or pertaining to the Loans as shall, from time to time,
be executed and delivered by Grantor, or any other party to Grantee to secure
the Loans.

     1.30   Senior Debt: The term "Senior Debt" shall have the meaning assigned
                                   -----------
to such term in the Note.

                                      7
<PAGE>

     1.31   Senior Lender: The term "Senior Lender" shall mean Fleet Capital
                                     -------------
Corporation, a Rhode Island corporation, or any successor or assignee thereof
and any Person providing refinancing or replacement of the Senior Debt.

     1.32   Miscellaneous Definitions as used in the Louisiana Civil Code: The
term "lien" will also mean a privilege, mortgage, security interest,
      ----
assignment, or other encumbrance. The term "real property" will mean "immovable
                                            -------------
property" as that term is used in the Louisiana Civil Code. The term "personal
                                                                      --------
property" will mean "movable property" as that term is used in the Louisiana
--------
Civil Code. The term "easement" will mean "servitude" as that term is used in
                      --------
the Louisiana Civil Code. The term "building" will also include "other
                                    --------
constructions" as that term is used in the Louisiana Civil Code. The term
"tangible" will mean "corporeal" as that term is used in the Louisiana Civil
 --------
Code. The term "intangible" will mean "incorporeal" as that term is used in the
                ----------
Louisiana Civil Code. The term "Uniform Commercial Code" will mean Louisiana
                                -----------------------
Commercial Laws, La. R.S. 10:1-101 et seq. The term "fee estate" will mean
                                   ------            ----------
"full ownership interest" as that term is used in the Louisiana Civil Code. The
term "condemnation" will include "expropriation" as that term is used in
      ------------
Louisiana law. The term "receiver" will include "keeper" as that term is used
                         --------
in Louisiana law. The term "conveyance in lieu of foreclosure" or "action in
                            ---------------------------------      ---------
lieu thereof" will mean "giving in payment" as that term is used in the
------------
Louisiana Civil Code and "dation en paiment". The term "joint and several" will
                                                        -----------------
mean "solidary" as that term is used in the Louisiana Civil Code.

                                   ARTICLE II
                                      GRANT

     2.01   Mortgage: To secure the full and timely payment of the Indebtedness
and the full and timely performance and discharge of the Obligations, Grantor
does by these presents specifically mortgage, affect and hypothecate,
collaterally assign, pledge and grant a continuing security interest upon, unto
and in favor of Grantee any and all of the Mortgaged Property for the purpose
of securing the Indebtedness and Obligations up to the Maximum Amount, subject
only to the Permitted Encumbrances. To secure the full and timely payment of
the Indebtedness and the full and timely performance at the Obligations,
Grantor does hereby bind itself, its successors and assigns to warrant and
forever defend the title to the Mortgaged Property unto Grantee against every
person whomsoever lawfully claiming or to claim the same or any part thereof,
other than claims arising pursuant to the Permitted Encumbrances, provided,
however, that if Grantor shall pay (or cause to be paid) the Indebtedness as
and when the same shall become due and payable and shall perform and discharge
(or cause to be performed and discharged) the Obligations, then the liens,
security interests, estates and rights granted by the Security Instruments
shall terminate, otherwise same shall remain in full force and effect. The
reference to Permitted Encumbrances hereinabove is not intended to be an
acknowledgment, adoption or ratification by Grantor or Grantee (by its
acceptance of this Mortgage) that such Permitted Encumbrances are enforceable
or binding against the Mortgaged Property or against the rights of Grantee
hereunder, nor is it intended that this Mortgage, the Mortgaged Property or the
rights of Grantee hereunder shall be subject to, or encumbered by, any Permitted

                                      8
<PAGE>

Encumbrance except to the extent that, in each case, this Mortgage, the
Mortgaged Property, or the rights of Grantee hereunder, without any reference
herein to such Permitted Encumbrance, would be as a matter of law subject to,
or encumbered by, such Permitted Encumbrance. This Mortgage has been executed
by Grantor pursuant to Article 3298 of the Louisiana Civil Code for the purpose
of securing the Indebtedness and performance of the Obligations that may now be
existing and/or that may arise in the future as provided herein, with the
preferences and priorities provided under applicable Louisiana law. However,
nothing under this Mortgage shall be construed as limiting the duration of this
Mortgage or the purpose or purposes for which the Indebtedness may be requested
or extended.

     2.02   Security Interest: Grantor does by these presents specifically
hypothecate, and grant a continuing security interest in favor of Grantee, as
secured party, in all the Mortgaged Property that is susceptible of a security
interest under Chapter 9 of the Louisiana Commercial Laws (La. R.S. 10:9-101
et seq.) for the purposes of securing the Indebtedness and Obligations up to
------
the Maximum Amount.

                                  ARTICLE III
                         ASSIGNMENT OF RENTS AND LEASES

     3.01   Assignment: Grantor hereby pledges, grants,
assigns, transfers and sets over unto Grantee, and grants Grantee a continuing
security interest in, all of Grantor's right, title and interest in and to all
current and future Rents and Leases that are susceptible of assignment under
La. R.S. 9:4401 for the purpose of securing the Indebtedness and Obligation up
to the Maximum Amount together with (a) all rights, remedies, benefits and
advantages to be derived therefrom, (b) all of the right, power and authority
of Grantor to alter, modify or change the terms of the Leases, or to surrender,
cancel or terminate the same and (c) all Rents, arising from the Leases and
renewals thereof, if any. Notwithstanding any other provision herein contained,
the assignment of Rents and Leases contained herein is intended by Grantor and
Grantee to be a collateral assignment, subject, however, to the license granted
to Grantor pursuant to Section 3.02 hereof.
                       ------------

     3.02   Collection of Rents: Grantor shall have a license (which license
may, at the option of Grantee, be terminated upon the occurrence of an Event of
Default) to collect, all Rents from the Mortgaged Property; provided, however,
that all such Rents that are ever received by Grantor shall be applied first to
pay the sums due and to be due upon the Indebtedness and otherwise to discharge
the remaining items referred to in subparts (a), (b) and (c) of Section 3.04
                                   ------------- ---     ---    ------------
below, and Grantor covenants and agrees, and represents and warrants to Grantee
that upon the occurrence of an Event of Default, a constructive trust is hereby
imposed upon such Rents for the benefit of Grantee. Grantee may make from time
to time alterations, renovations, repairs or replacements to the Mortgaged
Property as may seem proper to Grantee and apply such Rents to the payment of
(a) the cost of all such alterations, renovations, repairs and replacements,
and expenses incident to taking and retaining possession of the Mortgaged
Property, and the management and operation thereof, and keeping the same
properly insured, and (b) all taxes, charges, claims, assessments, water rents,
and any other liens which may be prior in lien or payment to the mortgage debt,
and premiums for said insurance, with interest on all such items and (c) the
Indebtedness, together with all costs and attorney's fees, in such order of
priority as to any of such items as Grantee in its sole discretion may
determine. Notwithstanding anything contained herein or in any other Security
Instrument to the contrary, possession of the Mortgaged Property by Grantee
shall not be a prerequisite to Grantee's right to collect Rents upon the
occurrence of an Event of Default, it being hereby declared that the

                                      9
<PAGE>

Assignment of Rents and Leases set forth herein is absolute and unconditional
and, subject only to the license hereinabove granted, shall entitle Grantee to
collect all Rents.

     3.03   Default: Upon the occurrence of an Event of Default hereunder,
then the assignment granted in this Mortgage shall automatically become
absolute as provided in La. R.S. 9:4401, and Grantee, without in any way
waiving such default, at its option, upon notice and without regard to the
adequacy of the security for the Indebtedness and performance of the
Obligations or to whether it has exercised any of its other rights or remedies
hereunder, shall have the right to directly collect and receive all Rents and
any other proceeds and/or payments arising under or in any way accruing under
the Leases assigned herein, as such amounts become due and payable and to apply
the same to the Indebtedness as provided herein.

     In order to permit the foregoing, Grantor unconditionally agrees to
deliver to Grantee, immediately following demand, any and all of Grantor's
records, ledger sheets, and other documentation, in the form requested by
Grantee, with regard to the Leases and the Rents any and all proceeds and/or
payments applicable thereto. Grantee shall have the further right, upon the
occurrence of an Event of Default, where appropriate and within Grantee's sole
discretion, to file suit, either in Grantor's own name or in the name of
Grantee, to collect any and all Rents and other proceeds and payments that may
then and/or in the future be due and owing under and/or as a result of the
Leases assigned herein. Where it is necessary for Grantee to attempt to collect
any such Rents and other proceeds and/or payments from the obligors therefor,
Grantee may compromise, settle, extend, or renew for any period (whether or not
longer than the original period) any obligation or indebtedness thereunder or
evidenced thereby, or surrender, release, or exchange all or any part of said
obligation or indebtedness, without affecting the liability of Grantee under
this Mortgage or under the Indebtedness. To that end, Grantor hereby
irrevocably constitutes and appoints Grantee as its attorney-in-fact, coupled
with an interest and with full power of substitution, to take any and all such
actions and any and all other actions permitted hereby, either in the name of
Grantor or Grantee. In order to permit the foregoing, Grantee shall have the
additional irrevocable right, coupled with an interest, to: (a) remove any and
all of Grantor's documents, instruments, files and records relating or
pertaining to the Leases and/or the Rents from any premises where the same
shall then be located; (b) at Grantor's sole cost and expense, use such of
Grantor's personnel, supplies and space at Grantor's place or places of
business as may be necessary and proper within Grantee's sole discretion, to
administer collection of such proceeds and/or payments; (c) receive, open and
dispose of all mail addressed to Grantor pertaining to any of the Leases and/or
the Rents and proceeds and/or payments thereunder; (d) notify the postal
authorities to change the address and delivery of mail addressed to Grantor
pertaining to any of the Leases and/or Rents and proceeds and/or payments
thereunder, to such address as Grantee may designate; (e) endorse Grantor's
name on any and all notes, acceptances, checks, drafts, money orders, or other
evidences of payment of such proceeds and/or payments that may come into
Grantee's possession, and to deposit or otherwise collect the same; (f) prepare
and mail invoices and/or statements to such obligors and/or debtors; (g) send
verifications of amounts owed to such obligors and/or debtors; and (h) execute
in Grantor's name affidavits and/or notices with regard to lien rights
available to Grantor in connection with such Leases and/or Rents. In the event
that Grantor should, for any reason whatsoever, receive any proceeds derived
from the sale, lease, insurance loss, damage and/or condemnation, of all or any
part of

                                      10
<PAGE>

said premises and/or the Leases or Rents, or should Grantor receive any other
payments under the Leases or Rents as provided hereunder (with such proceeds
and/or payments being hereinafter individually, collectively and
interchangeably referred to as Grantor's "Rent Funds"), following notice to the
obligors or debtors thereunder to make their respective payments directly to
Grantor, Grantor shall hold such Rent Funds in trust for and on behalf of
Grantee, and Grantor hereby unconditionally agrees to remit or to otherwise
turn over such Rent Funds to Grantee immediately following demand. Should
Grantor deposit any such Rent Funds into one or more of Grantor's deposit
accounts, no matter where located, Grantee shall have the additional right to
attach any and all of Grantor's deposit accounts in which Grantee may prove
such Rent Funds were deposited, whether or not such Rent Funds are or were
commingled with other moneys of Grantor, and whether or not such Rent Funds
then remain on deposit in such an account or accounts. Anything to the contrary
in this Mortgage notwithstanding, Grantee will not be deemed or construed to
have taken possession of said premises or to be managing it by reason of its
exercise of any of its rights or remedies under this Paragraph.

     3.04   Possession: Grantor hereby authorizes Grantee, at Grantee's option,
upon any taking by Grantee of possession of the Mortgaged Property hereunder,
to let or relet the Mortgaged Property or any part thereof, to cancel and
modify leases, evict tenants, bring or defend any suits in connection with the
possession of the Mortgaged Property in its own name or Grantor's name, make
repairs as Grantee deems appropriate, and perform such other acts in connection
with the management and operation of the Mortgaged Property as Grantee, in its
discretion, may deem proper. The receipt by Grantee of any Rents pursuant to
this assignment after the institution of foreclosure proceedings under this
Mortgage shall not cure any default nor affect such proceedings or sale
pursuant thereto.

     3.05   Grantor's Obligations: Grantee shall not be obligated to perform
or discharge, nor does it hereby undertake to perform or discharge, any
obligation, duty or liability under the Leases or under or by reason of this
assignment; and Grantor shall and does hereby agree to perform and discharge
any and all obligations, duties and liabilities of Grantor under the terms of
any of the Leases and to indemnify Grantee for and to hold Grantee harmless of
and from any and all liability, loss or damage which it may or might incur
under the Leases or under or by reason of this assignment, and of and from any
and all claims and demands whatsoever which may be asserted against it by
reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants or agreements contained in the Leases,
except for matters caused by Grantee's gross negligence or willful acts. Should
Grantee incur any liability, loss or damage under the Leases or under or by
reason of this assignment, or in the defense of any such claims or demands, the
amounts thereof, including costs, expenses and reasonable attorney's fees,
shall be secured by this Mortgage; and Grantor shall reimburse Grantee therefor
immediately upon demand, and upon failure of Grantor so to do Grantee may
declare all sums secured by this Mortgage immediately due and payable.

     3.06   Payment of Indebtedness; Performance of Obligations: Upon payment
in full of all Indebtedness and the complete and timely performance and
discharge of the Obligations, this assignment shall become and be void and of
no effect; but the affidavit, certificate, letter or statement of any officer,
supervisor or attorney of Grantee, showing any part of said Indebtedness to

                                      11
<PAGE>

remain unpaid, shall be and constitute conclusive evidence of the validity,
effectiveness and continuing force of this assignment, and any person may be
and is hereby authorized to rely thereon. A demand on the tenants by Grantee
for the payment of the Rents on any default claimed by Grantee shall be
sufficient notice to said tenants to make future payments of Rents to Grantee,
without the necessity of further consent by said Grantor.

     3.07   Release: Grantee may take or release other security, may release
any party primarily or secondarily liable for any Indebtedness secured hereby,
may grant extensions, renewals or indulgences with respect to such
Indebtedness, and may apply any other security therefor held by it to the
satisfaction of such indebtedness, without prejudice to any of its rights
hereunder.

     3.08   Waiver: Nothing herein contained and no act done or omitted by
Grantee pursuant to the powers and rights granted it herein shall be deemed to
be a waiver by Grantee of its rights and remedies under the Settlement
Agreement, the Note or any of the Security Instruments, but this assignment is
made and accepted without prejudice to any of the rights and remedies possessed
by Grantee under the terms thereof. The right of Grantee to collect said
Indebtedness and to enforce any other security therefor owned by it may be
exercised by Grantee either prior to, simultaneously with, or subsequent to any
action taken by it under this assignment. This assignment and the powers and
rights granted are separate and independent from any obligation contained
elsewhere in this Mortgage and may be enforced without regard to whether
Grantee institutes foreclosure proceedings under this Mortgage.

                                   ARTICLE IV
                            ASSIGNMENT OF CONTRACTS
                               AND SALES PROCEEDS

     4.01   Assignment: As additional security for payment of the Indebtedness
and the performance of the Obligations, Grantor hereby pledges, grants,
assigns, transfers, sets over unto Grantee, and grants Grantee a continuing
security interest in, all of Grantor's right, title and interest in, to and
under the Contracts, including, but not limited to (a) any and all rights of
Grantor to receive the Proceeds and (b) any and all rights and remedies which
Grantor may have against any other party to any of the Contracts, whether
related to the payment of any portion of the Proceeds or otherwise.

     4.02   Grantee in Possession: These presents shall not be deemed or
construed to constitute Grantee as mortgagee in possession of the Mortgaged
Property or to obligate Grantee to take any action hereunder, to incur expenses
or to perform or discharge any obligation, duty or liability hereunder or under
the Contracts. Until all Indebtedness shall have been paid in full, and all
Obligations are completely and timely performed and discharged, Grantor will
from time to time execute and deliver unto Grantee upon demand any and all
writings that Grantee may reasonably deem necessary or desirable to carry out
the purpose and intent of this assignment, or to enable Grantee to enforce any
right or rights hereunder.

     4.03   Default: From and after the occurrence of an Event of Default and so
long as such Event of Default shall be continuing (whether or not Grantee shall
have exercised its option to

                                      12
<PAGE>

declare the Note or other Indebtedness evidenced by the Settlement Agreement
immediately due and payable), all Proceeds assigned hereunder shall be paid
directly to Grantee; and Grantee may notify the purchasers under the Contracts
(or any other parties in possession of the Mortgaged Property) to pay all of
the Proceeds directly to Grantee. All Proceeds so paid to Grantee shall be
applied by Grantee, in its sole discretion, to the payment of the costs and
expenses of the operation of the Mortgaged Property, to the payment of accrued
interest and principal on the Indebtedness and/or the prepayment of the
Indebtedness, all in such order and in such respective amounts as Grantee shall
from time to time determine.

     4.04   Possession: Grantor, upon the occurrence of an Event of Default,
hereby authorizes Grantee, at its option, to enter and take possession of the
Mortgaged Property and to manage, operate, develop and construct the same; to
collect as herein provided all or any Proceeds payable under the Contracts; to
consummate the transactions contemplated by the Contracts; to bring or defend
any suits in connection with the possession of the Mortgaged Property, in
Grantor's name or Grantee's own name; to make repairs as Grantee deems
appropriate; and to perform such other acts in connection with the management,
operation and development of the Mortgaged Property as Grantee, in its sole
discretion, may deem proper.

     4.05   Grantor's Obligations: Grantee shall not be obligated to perform or
discharge any obligation or duty to be performed or discharged by Grantor under
any of the Contracts; and Grantor hereby agrees to indemnify Grantee for, and
to save Grantee harmless from, any and all liability arising from any of the
Contracts or from this assignment. This assignment shall not place
responsibility for the care, management, operation, upkeep, repair or control
of the Mortgaged Property resulting in loss or damage or injury or death to any
party; provided, however, the aforesaid indemnity and save harmless of Grantor
shall not apply to any liability caused by Grantee's gross negligence or
willful misconduct occurring while Grantee has actual possession of the
Mortgaged Property and is operating same pursuant thereto, upon foreclosure or
otherwise.

     4.06   Foreclosure: The receipt by Grantee of any Proceeds pursuant to
this assignment after the institution of foreclosure proceedings under this
Mortgage shall not cure any such Event of Default or affect such proceedings or
any sale pursuant thereto.

     4.07   Performance of Mortgage: The full performance of the Mortgage and
the duly executed and delivered release of the Mortgaged Property shall render
this assignment of no further force or effect from the date of such release
forward.

                                    ARTICLE V
                         WARRANTIES AND REPRESENTATIONS

     Grantor hereby unconditionally warrants and represents to Grantee as
follows:

     5.01   Access and Utilities: The Mortgaged Property has adequate rights of
access to public ways and all water, sanitary sewer and storm drain facilities.
All public utilities necessary or convenient to the full use and enjoyment of
the Mortgaged Property are connected so as to fully serve the Mortgaged
Property. To the best of Grantor's knowledge after due inquiry, all roads

                                      13
<PAGE>

necessary for the full utilization of the Mortgaged Property for its intended
purposes have been completed, dedicated to public use and accepted by the
appropriate Governmental Authority.

     5.02   Lien Potential: Grantor has not made any contract or arrangement
of any kind, which has given rise to (or the performance of which by the other
party thereto would give rise to) a lien or claim of lien on the Mortgaged
Property or other collateral covered by the Security Instruments, except for
the collateral documents executed in connection with the Loans.

     5.03   Title to the Property: Grantor has good and indefeasible title to
the Land in full ownership and the Mortgaged Property, free and clear of any
liens, charges, encumbrances, security interests and adverse claims whatsoever,
subject only to the Permitted Encumbrances. The reference to Permitted
Encumbrances hereinabove is made for the purpose of giving effect to the
warranty of Grantor contained herein, and is not intended to limit or restrict
the description of the Mortgaged Property, nor is it intended that this
Mortgage or the rights of Grantee hereunder shall be subject to, or encumbered
by, the Permitted Encumbrances.

     5.04   Leases: Grantor has full right, title, power and authority to
assign the Leases and the Rents, income and profits due or to become due
thereunder and no other assignment of any interest in the Leases has been made
by Grantor. There are no existing defaults under the provisions of the Leases.
Grantor has not performed any act or executed any instrument which might
prevent Grantee from operating under any terms and conditions of the Assignment
of Rents and Leases contained in Article III of this Mortgage or which would
                                 -----------
limit Grantee in such operation. Grantor has not accepted and will not accept
Rents under any Lease for any period subsequent to the current period for which
Rent has already become due, except as otherwise permitted by this Mortgage.

     5.05   Contracts and Proceeds:

            (a)   Grantor has the full right, power and capacity to assign the
Contracts and Proceeds and no person, firm or corporation other than Grantor or
Grantee has or will have (i) any right, title or interest in, to or under the
Contracts, as seller thereunder or (ii) any right to receive the Proceeds or
any part thereof. Grantor will perform and discharge all of Grantor's
obligations and undertakings as seller under the Contracts. Grantor will use
all reasonable efforts to enforce or secure the performance of each and every
obligation and undertaking of the purchasers under the Contracts and will
appear in and prosecute or defend any action or proceeding arising under, or in
any manner connected with, the Contracts or the obligations and undertakings of
the purchasers thereunder.

            (b)   Grantor will not, without the prior written consent of
Grantee, (i) pledge, transfer, mortgage or otherwise encumber or assign any
portion of the Proceeds or any of Grantor's rights under any of the Contracts,
(ii) waive, excuse, condone or in any manner release or discharge any purchaser
under any of the Contracts, (iii) disaffirm, cancel, terminate or consent to
any surrender of any of the Contracts or (iv) modify, extend or in any way
alter the terms of any of the Contracts so as to reduce or diminish or postpone
Grantor's receipt of any portion of the Proceeds, except that Grantor may take
in the ordinary course of business any such actions described in (i), (ii) and
(iii) if taken to protect Grantor's interest in the Mortgaged Property or any
portion thereof

                                      14
<PAGE>

and to obtain Proceeds from the sale thereof. Grantee shall not unreasonably
withhold its approval with regard to any matter for which its approval is
required under this Section.

            (c)   There are no existing defaults under any of the Contracts
and Grantor has not performed any act or executed any instrument which might
prevent Grantee from operating under any of the terms and provisions of this
Mortgage or which would limit Grantee in such operation.

                                   ARTICLE VI
                             AFFIRMATIVE COVENANTS:

     Grantor hereby unconditionally covenants and agrees with Grantee as
follows:

     6.01   Payment and Performance: Grantor will pay the Indebtedness, as and
when called for in the Security Instruments and will perform all of the
Obligations in full and on or before the dates they are to be performed.

     6.02   Compliance with Legal Requirements: Grantor will promptly and
faithfully comply with, conform to and obey all present and future Legal
Requirements, whether or not same shall necessitate structural changes in,
improvements to, or interfere with the use or enjoyment of, the Mortgaged
Property.

     6.03   Payment of Impositions: Grantor will duly pay and discharge, or
cause to be paid and discharged, the Impositions not later than the due date
thereof, or the day any fine, penalty, interest or cost may be added thereto or
imposed, or the day any lien may be filed, for the nonpayment thereof (if such
day is used to determine the due date of the respective item), except and only
to the extent that such Impositions are being Properly Contested. The term
"Properly Contested" as used herein means that if an Imposition is not paid as
 ------------------
and when due or payable by reason of the Grantor's bona fide dispute concerning
its liability to pay the same or concerning the amount thereof, that (a) such
Impositions and any liens securing the same are being properly contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted; (b) subject to the rights of the Senior Lender, the Grantor has
established appropriate reserves as shall be required in conformity with
generally accepted accounting principles in the United States of America in
effect from time to time; (c) the non-payment of such Imposition will not have
a material adverse effect and will not result in a forfeiture of any assets of
the Grantor; (d) no lien is imposed upon any of the Grantor's assets with
respect to such Imposition unless such lien is at all times junior and
subordinate in priority to the liens in favor of Grantee (except only with
respect to property taxes that have priority as a matter of applicable state
law); (e) if the Imposition results from the entry, rendition or issuance
against Grantor or any of its assets of a judgment, writ, order or decree, such
judgment, writ, order or decree is stayed or bonded pending a timely appeal or
other judicial review; and (f) if such contest is abandoned, settled or
determined adversely to Grantor, Grantor forthwith pays such Imposition and all
penalties and interest in connection therewith.

     6.04   Repair: Grantor will keep the Mortgaged Property in good, working
order and condition and will make all repairs, replacements, renewals,
additions, betterments, improvements

                                      15
<PAGE>

and alterations thereof and thereto, interior and exterior, structural and
nonstructural, ordinary and extraordinary, foreseen and unforeseen, which are
necessary or reasonably appropriate to keep same in such order and condition.
Grantor will also use its reasonable efforts to prevent any act or occurrence
which might impair the value or usefulness of the Mortgaged Property for its
intended usage as set forth in any plans and specifications for the
Improvements submitted to Grantee or in the Security Instruments. In instances
where repairs, replacements, renewals, additions, betterments, improvements or
alterations are required in and to the Mortgaged Property on an emergency basis
to prevent loss, damage, waste or destruction thereof, Grantor shall proceed to
construct same, or cause same to be constructed, notwithstanding anything to
the contrary contained in Section 7.02 hereof; provided, however, that in
                          ------------         --------  -------
instances where such emergency measures are to be taken, Grantor will promptly
notify Grantee in writing of the commencement of same and the measures to be
taken, and when same are completed, the completion date and the measures
actually taken.

     6.05   Insurance: Grantor shall obtain and maintain insurance upon and
relating to the Mortgaged Property in accordance with the provisions of the
Note.

     6.06   Restoration Following Casualty: If any act or occurrence of any
kind or nature (including any casualty for which insurance
was not obtained or obtainable) shall result in damage to or loss or
destruction of the Mortgaged Property, Grantor will give notice thereof to
Grantee.

     6.07   Leases and Rents: Grantee shall, at any time subsequent to, and
during the continuance of, an Event of Default, have the right to collect all
Rents due and owing from the Mortgaged Property directly from any lessee,
tenant or any other obligor obligated to pay the same. After the occurrence and
during the continuance of an Event of Default, Grantee at any time may contact
each and every such lessee, tenant or obligor and any other party obligated on
the Leases, informing them to make payment of all sums due and owing Grantor or
any other party directly to Grantee to the credit of Grantor. After the
occurrence and during the continuance of an Event of Default, Grantee may
demand, sue for, compromise and collect any Rents, either under its own name or
in the name of Grantor, with or without the consent of Grantor.

     6.08   Defense of Title: If the interest of Grantee in, the Mortgaged
Property hereby granted, or any part thereof, shall be endangered or shall be
attacked, directly or indirectly, Grantor hereby authorizes Grantee, at
Grantor's expense, to take all necessary and proper steps for the defense of
such interest, including the employment of counsel, the prosecution or defense
of litigation and the compromise or discharge of claims made against such
interest in the Mortgaged Property. Grantor will indemnify and hold Grantee
harmless from and against any and all loss, cost, damage, liability or expense
incurred by Grantee in protecting its interests hereunder in such an event
(including all court costs and reasonable attorneys' fees).

     6.09   Future Impositions: If at any time any law shall be enacted
imposing or authorizing the imposition of any tax upon this Mortgage or upon
any rights, titles, liens or security interest created hereby or upon the Note,
or any part thereof, Grantor shall immediately pay all such taxes; provided
that, in the alternative, Grantor may, in the event of the enactment of such a
law, and must, if it is unlawful for Grantor to pay such taxes, prepay the Note
and all other Obligations in

                                      16
<PAGE>

full within 60 days after demand therefor by Grantee. Grantor shall, upon
request, promptly furnish at any time and from time to time, a written
statement or affidavit, in such form as may be required by Grantee, stating the
amount of the unpaid balance of the Note and that there are no offsets or
defenses against full payment of the Note and performance of the terms hereof
or, if there are any such offsets and defenses, specifying them in detail.

     6.10   Costs and Expenses: Except as provided in Section 6.03 hereof,
Grantor shall pay when due all costs and expenses required by this Mortgage,
which shall include, without limitation, (a) all taxes and assessments
applicable to the Mortgaged Property, (b) all fees for filing or recording the
Security Instruments, (c) all fees and commissions lawfully due to brokers,
salesmen and agents in connection with the Loans or the Mortgaged Property, (d)
all reasonable fees and expenses of counsel to Grantee, (e) all title insurance
and title examination charges, (f) all survey costs and expenses, (g) all
premiums for the insurance incurred by Grantee in connection with the
consummation of the transactions contemplated by this Mortgage and (h) all
appraisal fees for appraisal of all or any portion of the Mortgaged Property.

     6.11   Change in Information: Grantor shall give the Grantee thirty (30)
days notice prior to any change in Grantor's employer identification number by
Grantor and shall give the Grantee notice of any change in Grantor's employer
identification number that is not made by Grantor within thirty (30) days after
such change. In the event of any change whatsoever in Grantor's employer
identification number, Grantor will execute and file any new UCC-1 financing
statements or any other documents that are necessary or desirable to preserve
and continue the Grantee's security interest under this Mortgage within thirty
(30) days after such change.

     6.12   No Subordination. Mortgagor shall not subordinate any Lease to any
            ----------------
mortgage or other encumbrance (other than Liens in favor of Mortgagee or Senior
Lender), or permit, consent or agree to such subordination.

                                    ARTICLE VII
                                NEGATIVE COVENANTS

     Grantor hereby covenants and agrees with Grantee that, until the entire
Indebtedness shall have been paid in full and all of the Obligations shall have
been fully performed and discharged:

     7.01   Use Violations: Grantor will not use, maintain, operate or occupy,
or allow the use, maintenance, operation or occupancy of the Mortgaged Property
in a manner which (a) violates any Legal Requirement, (b) may be dangerous
unless safeguarded as required by law, (c) constitutes a public or private
nuisance or (d) makes void, voidable or cancelable, or increases the premium
of, any insurance then in force with respect thereto.

     7.02   Alterations: Grantor will not commit or permit any waste of the
Mortgaged Property and will not (subject to the provisions of Section 6.04
                                                              ------------
herein), without the prior written consent of Grantee, make or permit to be
made any alterations or additions to the Mortgaged Property of a material
nature.

                                     17
<PAGE>

                                    ARTICLE VIII
                        PROVISIONS REGARDING ENVIRONMENTAL LAWS

     8.01   Covenants Regarding Environmental Compliance: Grantor hereby
covenants and agrees with Grantee as follows:

            (a)   Hazardous Substance Use, Manufacture: Grantor shall not use,
generate, manufacture, produce, store, release, discharge or dispose of on,
under or about the Mortgaged Property or transport to or from the Mortgaged
Property any Hazardous Substance, or allow any other person or entity to do so
on the Mortgaged Property, except in compliance with all Legal Requirements
(including all applicable Environmental Laws).

            (b)   Compliance with Environmental Laws: Grantor shall keep and
maintain the Mortgaged Property in compliance with, and shall not cause or
permit the Mortgaged Property to be in violation of, any applicable
Environmental Law.

            (c)   Legal Proceeding: Grantee shall have the right, at its
expense, to join and participate in, as a party if it so elects, any legal
proceedings or actions initiated with respect to the Mortgaged Property in
connection with any Environmental Law.

            (d)   Remedial Work: In the event that any investigation, site
monitoring, containment, cleanup, removal, restoration or other remedial work
of any kind or nature (the "Remedial Work") is required to be undertaken under
                            -------------
any applicable local, state or federal law or regulation, any judicial order,
or by any governmental entity because of, or in connection with, the current or
reasonably threatened future presence or release of a Hazardous Substance in or
into the air, soil, groundwater, surface water or soil vapor at, on, about,
under or within the Mortgaged Property (or any portion thereof), Grantor shall
promptly after written demand for performance thereof by appropriate
governmental authorities or Grantee (or such shorter period of time as may be
required under any applicable law, regulation, order or agreement or, if any
applicable law, regulation, order or agreement expressly specifies a longer
period of time, such longer period), commence and thereafter diligently
prosecute to completion, all such Remedial Work.

                                    ARTICLE IX
                                EVENTS OF DEFAULT

     The term "Event of Default" shall mean the occurrence or happening, at
               ----------------
any time and from time to time, of any Event of Default under the Note.

                                     18
<PAGE>

                                   ARTICLE X
                            DEFAULT AND FORECLOSURE

     If an Event of Default shall occur and so long as it is continuing and
subject to the rights of the Senior Lender, Grantee may exercise any or all of
the following rights, remedies and recourses:

     10.01  Acceleration: Grantee may declare the entire Indebtedness,
including the Note, Principal Balance (defined hereby as meaning the then
aggregate unpaid principal balance on the Note), the accrued interest and any
other accrued but unpaid interest thereon, court costs and attorneys' fees
hereunder immediately due and payable, without notice, presentment, protest,
demand or action of any nature whatsoever (each of which hereby is expressly
waived by Grantor), whereupon the same shall become immediately due and
payable.

     10.02  Entry on Mortgage Property: Grantee may enter upon the Mortgaged
Property and take exclusive possession thereof and of all books, records and
accounts relating thereto without notice and without being guilty of trespass.
If Grantor remains in possession of all or any part of the Mortgaged Property
after an Event of Default and without Grantee's prior written consent thereto,
Grantee may, without notice to Grantor, invoke any and all legal remedies to
dispossess Grantor, including specifically one or more actions for forcible
entry and detainer, trespass to try title and writ of restitution. Nothing
contained in the foregoing sentence shall, however, be construed to impose any
greater obligation or any prerequisites to acquiring possession of the
Mortgaged Property after an Event of Default than would have existed in the
absence of such sentence.

     10.03  Operation of Mortgaged Property: Grantee may hold, lease, manage,
operate or otherwise use or permit the use of the Mortgaged Property, either
itself or by other persons, firms or entities, in such manner, for such time
and upon such other terms as Grantee may deem to be prudent and reasonable
under the circumstances (making such repairs, alterations, additions and
improvements thereto and taking any and all other action with reference
thereto, from time to time, as Grantee shall deem necessary or desirable), and
apply all Rents and other amounts collected by Grantee in connection therewith
in accordance with the provisions of Section 10.12 herein.
                                     -------------

     10.04  Foreclosure and Sale:

            (a)   Seizure and Sale of Mortgaged Property: In the event that
Grantee elects to commence appropriate Louisiana foreclosure proceedings under
this Mortgage, Grantee may cause the Mortgaged Property, or any part or parts
thereof, to be immediately seized and sold, whether in term of court or in
vacation, under ordinary or executory process, in accordance with applicable
Louisiana law, to the highest bidder for cash, with or without appraisement,
and without the necessity of making additional demand upon or notifying Grantor
or placing Grantor in default, all of which are expressly waived.

            (b)   Automatic Transfer of Rights: In the event of foreclosure
under this Mortgage, or other transfer of title or assignment of the Mortgaged
Property, or any part or parts thereof, in lieu of payment of the Indebtedness
or Obligations, whether in whole or in part, all

                                     19
<PAGE>

policies of insurance and other incorporeal rights applicable to the foreclosed
upon or transferred Mortgaged Property (collectively, the "Rights") shall
automatically inure to the benefit of and shall pass to the purchaser(s) or
transferee(s) thereof, subject to the rights of the purchaser(s) or
transferee(s) to reject such insurance coverage and/or Rights at its or their
sole option and election.

            (c)   Additional Expenses: In the event that it should become
necessary for Grantee to conduct a search for any of the Mortgaged Property in
connection with any foreclosure action, or should it be necessary to remove the
Mortgaged Property, or any part or parts thereof, from the premises in which or
on which the Mortgaged Property is then located, and/or to store and/or
refurbish such Mortgaged Property, Grantor agrees to reimburse Grantee for the
cost of conducting such a search and/or removing and/or storing and/or
refurbishing such Mortgaged Property, which additional expense shall also be
secured by the lien of this Mortgage and the assignments and security interests
created herein.

            (d)   Purchaser: To the extent and under such circumstances as are
permitted by law, Grantee may be a purchaser at any such sale.

            (e)   Confession of Judgment: For purposes of foreclosure under
Louisiana executory process procedures, Grantor confesses judgment and
acknowledges to be indebted unto and in favor of Grantee, up to the full amount
of the Indebtedness and Obligations, in principal, interest, costs, expenses,
and attorneys' fees. To the extent permitted under applicable Louisiana law,
Grantor additionally waives: (a) the benefit of appraisal as provided in
Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure,
and all other laws with regard to appraisal upon judicial sale; (b) the demand
and three (3) days' delay as provided under Articles 2639 and 2721 of the
Louisiana Code of Civil Procedure; (c) the notice of seizure as provided under
Articles 2293 and 2721 of the Louisiana Code of Civil Procedure; (d) the three
(3) days' delay provided under Articles 2331 and 2722 of the Louisiana Code of
Civil Procedure; and (e) all other benefits provided under Articles 2331, 2722
and 2723 of the Louisiana Code of Civil Procedure and all other Articles not
specifically mentioned above.

            (f)   Seizure and Sale: Upon the occurrence of an Event of Default
and at any time thereafter so long as the same shall be continuing, and in
addition to all other rights and remedies granted Grantee hereunder, it shall
be lawful for and Grantor hereby authorizes Grantee without making a demand or
putting Grantor in Default, a putting in default being expressly waived, to
cause all and singular the Mortgaged Property and/or the Collateral under
Article XII hereof, or any part thereof, to be seized and sold after due
process of law, Grantor waiving the benefit of any and all laws or parts of
laws relative to the appraisement of property seized and sold under executory
process or other legal process, and consenting that such Mortgaged Property or
Collateral be sold without appraisement, either in its entirety, or in lots or
parcels, as Grantee may determine, to the highest bidder for cash or on such
other terms as Grantee in such proceedings may direct. Grantee should be
granted all of the rights and remedies grant it hereunder as well as all of the
rights and remedies granted mortgagees or secured parties under Louisiana law.

                                     20
<PAGE>

     10.05  Specific Performance: Grantee may, in addition to the foregoing
remedies, or in lieu thereof, in Grantee's sole discretion, commence an
appropriate action against Grantor seeking specific performance of any covenant
contained herein, or in aid of the execution or enforcement of any power herein
granted.

     10.06  Collect Revenues, Apply Account: Grantee shall have the right, at
its sole option and election, to directly collect and receive all proceeds
and/or payments arising under or in any way accruing from the Mortgaged
Property, as such amounts become due and payable. In order to permit the
foregoing, Grantor unconditionally agrees to deliver to Grantee, immediately
following demand, any and all of Grantor's records, ledger sheets, and other
documentation, in the form requested by Grantee, with regard to the Mortgaged
Property and any and all proceeds and/or payments applicable thereto. Grantee
shall have the further right within Grantee's sole discretion, to file suit,
either in Grantee's own name or in the name of Grantor, to collect any and all
proceeds and payments that may then and/or in the future be due and owing under
this Mortgage, and if as a result of such it is necessary for Grantee to
attempt to collect any such proceeds and/or payments from the obligors
therefor, Grantee may compromise, settle, extend, or renew for any period
(whether or not longer than the original period) any obligation or indebtedness
thereunder or evidenced thereby, or surrender, release, or exchange all or any
part of said obligation or indebtedness, without affecting the liability of
Grantor under this Mortgage or under the Indebtedness or Obligations. To that
end, Grantor hereby irrevocably constitutes and appoints Grantee as its
attorney-in-fact, coupled with an interest and with full power of substitution,
to take any and all such actions and any and all other actions permitted
hereby, either in the name of Grantor or Grantee.

     10.07  Keeper: Should any or all of the Mortgaged Property be seized as an
incident to an action for the recognition or enforcement of this Mortgage, by
executory process, sequestration, attachment, writ of fieri facias or
otherwise, Grantor hereby agrees that the court issuing any such order shall,
if requested by Grantee, appoint Grantee, or any agent designated by Grantee,
or any person or entity named by Grantee at the time such seizure is requested,
or any time thereafter, as Keeper of the Mortgaged Property as provided under
La. R.S. 9:5136 et seq. Such a Keeper shall be entitled to reasonable
                -- ---
compensation. Grantor agrees to pay the reasonable fees of such Keeper, which
are hereby fixed at the greater of market rate or $50.00 per hour, which
compensation to the Keeper shall also be secured by this Mortgage.

     10.08  Public or Private Sale of Collateral: To the extent that any of the
Collateral is then in Grantee's possession, Grantee shall have full power to
sell, lease, transfer, or otherwise deal with the Collateral or proceeds
thereof in its own name or that of Grantor. Grantee may sell the Collateral at
public auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Grantee will give Grantor reasonable notice of the time after which any private
sale or any other intended disposition of the Collateral is to be made. All
expenses relating to the disposition of the Collateral, including without
limitation the expenses of retaking, holding, insuring, preparing for sale and
selling the Collateral, shall become a part of the Indebtedness and Obligations
secured hereby and shall be payable on demand, with interest at the Default
Rate from date of expenditure until repaid. Grantor agrees that any such sale
shall be conclusively deemed to be conducted in a

                                     21
<PAGE>

commercially reasonable manner if it is made consistent with the standard of
similar sales of collateral by commercial banks in Louisiana.

     10.09  Separate Sales: Grantee may cause the seizure of all or any portion
of the Mortgaged Property together or in lots or parcels and in such manner and
order as Grantee, in its sole discretion, may elect. The foreclosure of less
than the whole of the Mortgaged Property shall not exhaust the right of Grantee
to institute successive foreclosures until the whole of the Mortgaged Property
shall be foreclosed upon; and if the proceeds of such sale or sales of less
than the whole of such Mortgaged Property shall be less than the aggregate of
the Indebtedness and the expenses of foreclosure, this Mortgage and the lien,
security interest and assignment hereof shall remain in full force and effect
as to the unsold portion of the Mortgaged Property just as though no
foreclosure had been made; provided, however, that Grantor shall never have any
                           --------  -------
right to require the sale or sales of less than the whole of the Mortgaged
Property, but Grantee shall have the right, at its sole election, to request
the sale of less than the whole of the Mortgaged Property. If default is made
hereunder, the holder of the Indebtedness or any part thereof on which the
payment is delinquent shall have the option to proceed as if under a full
foreclosure, conducting the sale as herein provided without declaring the
entire Indebtedness due, and if sale is made because of default of an
installment, or a part of an installment, such sale may be made subject to the
unmatured portions of the Note and the Indebtedness; and such sale, if so made,
shall not in any manner affect the unmatured part of the Indebtedness but as to
such unmatured part, this Mortgage shall remain in full force and effect as
though no sale had been made under the provisions of this paragraph. Any number
of foreclosure sales may be made hereunder without exhausting the right of
foreclosure for any unmatured part of the Indebtedness secured hereby.

     10.10  Remedies Cumulative, Concurrent and Nonexclusive: Grantee shall
have the rights, remedies and recourses granted in the Security Instruments and
available at law or equity (including specifically those granted by the Uniform
Commercial Code in effect and applicable to the Mortgaged Property or any
portion thereof) and same (a) shall be cumulative and concurrent; (b) may be
pursued directly, separately, successively or concurrently against Grantor,
Maker, or others obligated under the Note, or against the Mortgaged Property,
or against any one or more of them at the sole discretion of Grantee; (c) may
be exercised as often as occasion therefor shall arise, it being agreed by
Grantor that the exercise or failure to exercise any of the same shall in no
event be construed as a waiver or release thereof or of any other right, remedy
or recourse and (d) are intended to be, and shall be, nonexclusive.

     10.11  Release of and Resort to Collateral: Any part of the Mortgaged
Property may be released by Grantee without affecting, subordinating, noveting
or releasing the lien, security interest and assignment hereof against the
remainder. The lien, security interest and other rights granted hereby shall
not affect or be affected by any other security taken for the same indebtedness
or any part thereof. The taking of additional security, or the rearrangement,
extension or renewal of the Indebtedness, or any part thereof, shall not
release or impair the lien, security interest and other rights granted hereby
or affect the liability of any endorser, guarantor or surety, or improve the
right of any permitted junior lienholder; and this Mortgage, as well as any
instrument given to secure any rearrangement, renewal or extension of the
Indebtedness secured hereby, or any part thereof, shall

                                     22
<PAGE>

be and remain a first and prior lien, except as otherwise provided herein, on
all of the Mortgaged Property not expressly released until the Indebtedness is
completely paid.

     10.12  Waiver of Redemption, Notice and Marshaling of Assets: To the
fullest extent permitted by law, Grantor hereby irrevocably and unconditionally
waives and releases (a) all benefits that might accrue to Grantor and/or Maker
by any present or future laws exempting the Mortgaged Property from attachment,
levy or sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption or extension of time for
payment; (b) all notices of any Event of Default (except as may be provided for
under the terms hereof) or of Grantee's election to exercise or the actual
exercise of any right, remedy or recourse provided for under the Security
Instruments; (c) any right to appraisal or marshaling of assets or a sale in
inverse order of alienation; (d) the exemption of homestead; and (e) the
administration of estates of decedents, or other matter whatever to defeat,
reduce or affect the right of Grantee under the terms of this Mortgage, to sell
the Mortgaged Property for the collection of the Indebtedness secured hereby
(without any prior or different resort for collection) or the right of Grantee,
under the terms of this Mortgage, to the payment of the Indebtedness out of the
proceeds of sale of the Mortgaged Property in preference to every other person
and claimant whatever (only reasonable expenses of such sale being first
deducted).

     10.13  Discontinuance of Proceedings: In case Grantee shall have proceeded
to invoke any right, remedy or recourse permitted under the Security
Instruments and shall thereafter elect to discontinue or abandon the same for
any reason, Grantee shall have the unqualified right so to do and, in such
event, Grantor and Grantee shall be restored to their former positions with
respect to the Indebtedness, the Obligations, the Security Instruments, the
Mortgaged Property and otherwise, and the rights, remedies, recourses and power
of Grantee shall continue as if same had never been invoked.

     10.14  Application of Proceeds; Deficiency Obligation: The proceeds of any
sale of, and the Rents and other income generated by the holding, leasing,
operating or other use of, the Mortgaged Property shall be applied by Grantee
(or the receiver, if one is appointed) to the extent that funds are so
available therefrom as provided in the Note.

     10.15  Purchase by Grantee: Grantee shall have the right to become the
purchaser at the sale of the Mortgaged Property hereunder pursuant to any other
means and shall have the right to be credited on the amount of its bid therefor
all of the Indebtedness and Obligations due and owing as of the date of such
sale.

     10.16  Disaffirmation of Contracts: The purchaser at any foreclosure sale
hereunder may disaffirm any easement granted, or rental, lease or other
contract made in violation of any provisions of this Mortgage and may take
immediate possession of the Mortgaged Property free from, and despite the terms
of, such grant of easement and rental, lease or other contract.

                                     23
<PAGE>

                                  ARTICLE XI
                                 CONDEMNATION

     If the Mortgaged Property, or any part thereof, shall be condemned or
otherwise taken for public or quasi-public use under the power of eminent
domain, or be transferred in lieu thereof, all damages or other amounts awarded
for the taking of, or injury to, the Mortgaged Property shall be paid to the
Grantee who shall apply the amounts so received as provided in the Note.

                                  ARTICLE XII
                              SECURITY AGREEMENT

     12.01  Security Interest: This Mortgage shall be construed as a mortgage
lien and assignment of leases and rents on real or immovable property, and it
shall also constitute and serve as a security agreement on personal or movable
property within the meaning of, and shall constitute until this Mortgage shall
terminate and be released as provided in Article II hereof, a first and prior
                                         ----------
pledge and assignment and a first and prior lien security interest under the
Uniform Commercial Code in effect in the state where such property is situated
with respect to the Mortgaged Property, Contracts, Proceeds, Personalty,
Fixtures, Leases and Rents (collectively referred to as the "Collateral").
Grantor has granted, bargained, conveyed, assigned, transferred and set over,
and by those presents does grant, bargain, convey, assign, transfer and set
over unto Grantee a first and prior security interest in and to all of
Grantor's right, title and interest in, to and under the Collateral, to secure
the full and timely payment of the Indebtedness and the full and timely
performance and discharge of the Obligations of Grantor and Maker.

     12.02  Financing Statements: Contemporaneously with the execution of this
Mortgage, Grantor has completed and signed one or more appropriate Louisiana
UCC-1 financing statements with regard to the Mortgaged Property and the
proceeds thereof. Grantor authorizes Grantee, at Grantor's expense, to file
multiple originals, or photocopies, carbon copies or facsimile copies of such
Louisiana UCC-1 financing statements with the appropriate filing officer or
officers in the State of Louisiana, pursuant to the provisions of the Uniform
Commercial Code. Grantor shall execute and deliver to Grantee, in form and
substance satisfactory to Grantee, such Financing Statements and such further
assurances as Grantee may, from time to time, consider reasonably necessary to
create, perfect and preserve Grantee's security interest herein granted, and
Grantee may cause such statements and assurances to be recorded and filed at
such times and places as may be required or permitted by law to so create,
perfect and preserve such security interest.

     12.03  Uniform Commercial Code Remedies: Upon the occurrence of an Event
of Default and so long as it is continuing and subject to the rights of the
Senior Lender, Grantee shall have all the rights, remedies and recourses with
respect to the Collateral afforded a secured party by the aforesaid Uniform
Commercial Code in addition to, and not in limitation of, the other rights,
remedies and recourses afforded by this Mortgage, the Security Instruments and
at law.

     12.04  No Obligation of Grantee: The assignment and security interest
herein granted shall not be deemed or construed to constitute Grantee as a
trustee in possession of the Mortgaged Property, to obligate Grantee to operate
the Mortgaged Property or attempt to do the same, or take

                                     24
<PAGE>

any action, incur expenses or perform or discharge any obligation, duty or
liability whatsoever under any of the Leases or otherwise.

                                 ARTICLE XIII
                                 MISCELLANEOUS

     13.01  Survival of Obligations: Each and all of the Obligations shall
survive the execution and delivery of the Security Instruments and the
consummation of the loan called for therein and shall continue in full force
and effect until the Indebtedness shall have been paid in full.

     13.02  Further Assurances: Grantor, upon the request of Grantee, will
execute, acknowledge, deliver and record and/or file such further instruments
and do such further acts as may be necessary, desirable or proper to carry out
more effectively the purposes of the Security Instruments, to subject to the
liens and security interests thereof any property intended by the terms thereof
to be covered thereby, including specifically, without limitation, any
renewals, additions, substitutions, replacements or appurtenances to the
Mortgaged Property, and to complete, execute, record and file any document or
instrument necessary to place third parties on notice of the liens and security
interests granted under the Security Instruments. Grantor hereby irrevocably
appoints Grantee as its agent to execute and deliver all such instruments and
additionally to record and file any of the same as may be necessary.

     13.03  Recording and Filing: Grantor will cause the Security Instruments
and all amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded and refiled in such manner and in such places as
Grantee shall reasonably request and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.

     13.04  Notices: All notices or other communications required or permitted
to be given pursuant to this Mortgage shall be in writing and shall be given in
accordance with the Note except as otherwise may be required by applicable law.

     13.05  No Waiver: Any failure by Grantee to insist, or any election by
Grantee not to insist, upon strict performance by Grantor of any of the terms,
provisions or conditions of the Security Instruments shall not be deemed to be
a waiver of the same or of any other term, provisions or condition thereof, and
Grantee shall have the right at any time thereafter to insist upon strict
performance by Grantor of any and all of such terms, provisions and conditions.

     13.06  Grantee's Right to Pay Indebtedness and Pay Obligations: If Maker,
Grantor or any other party shall fail, refuse or neglect to make any required
payment of the Indebtedness or perform any of the Obligations required by the
Security Instruments, then at any time thereafter and without notice or demand
upon Maker, Grantor or any other party, and without waiving or releasing any
other right, remedy or recourse Grantee may have because of the same, Grantee
may (but shall not be obligated to) make such payment or perform such act for
the account of and at the expense of Grantor and shall have the right to enter
upon the Mortgaged Property for such purpose and to take all such action
thereon with respect to the Mortgaged Property as it may deem necessary or

                                     25
<PAGE>

appropriate. Grantor shall be obligated to repay Grantee for all sums advanced
by it pursuant to this Section 13.06 and shall indemnify and hold Grantee
                       -------------
harmless from and against any and all loss, cost, expense, liability, damage
and claims and causes of action, including reasonable attorneys' fees, incurred
or accruing by any acts performed by Grantee pursuant to the provisions of this
Section 13.06 or by reason of any other provision of the Security Instruments.
-------------
All sums paid by Grantee pursuant to this Section 13.06 and all other sums
                                          -------------
extended by Grantee to which it shall be entitled to be indemnified, together
with interest thereon at the maximum legal contract rate of interest that
Grantee may charge Grantor from the date of such payment or expenditure, shall
constitute additions to the Indebtedness and Obligations, shall be secured by
the Security Instruments and shall be paid by Grantor to Grantee upon demand.

     13.07  Covenants Running with the Land: All Obligations contained in the
Security Instruments are intended by the parties to be and shall be construed
as covenants running with the Mortgaged Property.

     13.08  Successors and Assigns: All of the terms of the Security Instruments
shall apply to, be binding upon and inure to the benefit of the parties thereto,
their respective successors, assigns, heirs and legal representatives and all
other persons claiming by, through or under them.

     13.09  Severability: The Security Instruments are intended to be performed
in accordance with, and only to the extent permitted by, all applicable Legal
Requirements. If any provision of any of the Security Instruments or the
application thereof to any person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, neither the remainder of the
instrument in which such provision is contained nor the application of such
provision to other persons or circumstances or other instruments referred to
hereinabove shall be affected thereby, but rather, the same shall be enforced
to the greatest extent permitted by law.

     13.10  Usury: It is the intention of Grantor, Maker and Grantee to conform
strictly to the usury laws in force in the State of Texas. Therefore: (a) in
the event that Indebtedness is prepaid or the maturity of the Indebtedness and
Obligations is accelerated by reason of an election by Grantee, unearned
interest shall be canceled and, if theretofore paid, shall either be refunded
to Maker or credited on the Indebtedness, as Grantee may elect; (b) the
aggregate of all interest and other charges constituting interest under
applicable laws and contracted for, chargeable or receivable under the Note,
the Indebtedness (if unpaid), the other Security Instruments or otherwise in
connection with the loan transaction contemplated thereby shall never exceed
the maximum amount of interest, nor produce a rate in excess of the maximum
contract rate of interest that Grantee is authorized to charge Maker under
applicable law and (c) if any excess interest is provided for, it shall be
deemed a mistake, and the same shall, at the option of the Grantee, either be
refunded to the Maker or credited on the unpaid principal amount (if any), and
the Indebtedness shall be automatically reformed so as to permit only the
collection of the maximum legal contract rate and the amount of interest.

     13.11  Entire Agreement and Modification: The Security Instruments contain
the entire agreements between the parties relating to the subject matter hereof
and thereof, and all prior agreements relative thereto which are not contained
herein or therein are terminated. The Security

                                     26
<PAGE>

Instruments may be amended, revised, waived, discharged, released or terminated
only by a written instrument or instruments executed by the party against which
enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to
any party.

     13.12  Counterparts: This Mortgage may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute but one instrument.

     13.13  Applicable Law and Uniform Commercial Code: The Security Instruments
provide that to the extent permitted by otherwise applicable law, they are to
be governed by, construed and enforced in accordance with the laws of the State
of Texas. Notwithstanding such provisions, however, the terms and provisions of
this Mortgage relating to the creation, perfection and enforcement of the liens
and security interests created by this Mortgage and the realization by Grantee
of its rights and remedies under this Mortgage or with respect to the Mortgaged
Property or the Collateral in which a security interest is granted herein,
shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of Louisiana. BORROWER HEREBY SUBMITS ITSELF TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF
TEXAS AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN
ANY LEGAL PROCEEDING RELATING TO THE SECURITY INSTRUMENTS OR THE INDEBTEDNESS
BY ANY MEANS ALLOWED UNDER TEXAS OR FEDERAL LAW. VENUE FOR ANY LEGAL PROCEEDING
MAY BE DALLAS COUNTY, TEXAS; PROVIDED, THAT Grantee MAY CHOOSE ANY VENUE IN ANY
STATE THAT IT DEEMS APPROPRIATE IN THE EXERCISE OF ITS SOLE DISCRETION.

     13.14  Headings and General Application: The article, section, paragraph
and subparagraph entitlements hereof are inserted for convenience of reference
only and shall in no way affect, modify or define, or be used in construing,
the text of such article, paragraph or subparagraph. If the text requires,
words used in the singular shall be read as including the plural, and pronouns
of any gender shall include all genders.

     13.15  Sole Benefit: This Mortgage and the other Security Instruments have
been executed for the sole benefit of Grantor, Maker and Grantee and the
successors, assigns and legal representatives of Grantee. No other party shall
have rights thereunder nor be entitled to assume that the parties thereto will
insist upon strict performance of their mutual obligations hereunder, any of
which may be waived from time to time. Grantor and Maker shall have no right to
assign any of their rights under the Security Instruments to any party
whatsoever, including the right to receive advances under the Note or otherwise.

     13.16  Subrogation: If any or all of the proceeds of the Indebtedness or
Obligations have been used to extinguish, extend or renew any indebtedness
heretofore existing against the Mortgaged Property or to satisfy any
indebtedness or obligation secured by a lien or encumbrance of any kind
(including liens securing the payment of any Impositions), such proceeds have
been advanced by Grantee at Grantor's request, and to the extent of such funds
so used, the Indebtedness

                                     27
<PAGE>

and Obligations in this Mortgage shall be subrogated to and extend to all of
the rights, claims, liens, titles and interests heretofore existing against the
Mortgaged Property pursuant thereto to secure the indebtedness or obligation so
extinguished, paid, extended or renewed, and the rights, claims, liens, titles
and interests of Grantee pursuant thereto, shall not be waived but rather shall
be continued in full force and effect and in favor of Grantee and shall be
merged with the lien and security interest created herein as cumulative
security for the repayment of the Indebtedness and satisfaction of the
Obligations.

     13.17  Business or Commercial Purpose: Grantor warrants that the extensions
of credit evidenced by the Note and the Security Instruments secured hereby are
each solely for business or commercial purposes, other than agricultural
purposes. The Grantor further warrants that the credit transactions evidenced
by the Note and other Security Instruments are each specifically exempted under
Section 226.3(a) of Regulation Z issued by the Board of Governors of the
Federal Reserve System and Title 12 (Truth in Lending Act) and Section 1603 of
Title 15 (General Provisions) of the Consumer Credit Protection Act and that no
disclosures are required to be given under such regulations and federal laws in
connection with the above transaction.

     13.18  Not Acting as Agent: If Grantor is not a corporation, Grantor
warrants and represents that it does not hold title as agent or trustee for a
noncorporate entity.

     13.19  ORAL AGREEMENTS INEFFECTIVE:  THIS MORTGAGE REPRESENTS THE FINAL
            ---------------------------
AGREEMENT BETWEEN THE PARTIES, AND THIS MORTGAGE MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     13.20  Limitation: Notwithstanding any other provision of this Mortgage,
the maximum amount of the Indebtedness and Obligations secured hereby at any
time from time to time shall be limited to the Maximum Amount.

     13.21  Resolutions: Grantor does declare that attached hereto as Exhibit C
                                                                      ---------
and made a part hereof is a certified copy of the resolutions adopted by the
Board of Directors of Grantor authorizing the execution and delivery of this
Mortgage.

     13.22  No Paraph: The Note and other evidences of the Indebtedness have not
been paraph for identification with this Mortgage.

     13.23  Declaration of Fact: Should it become necessary for Grantee to
foreclose under this Mortgage, all declarations of fact, which are made under
an authentic act before a Notary Public in the presence of two witnesses, by a
person declaring such facts to lie within his or her knowledge, shall
constitute authentic evidence for purposes of executory process and also for
purposes of La. R.S. 9:3509.1, La. R.S. 9:3504(D)(6) and La. R.S. 10:9-508,
where applicable.

     13.24  Acceptance: The acceptance of this Mortgage by Grantee is presumed
and this Mortgage need not be signed by Grantee.

                                     28
<PAGE>

     13.25  Note Controls: If any provision contained in this Mortgage is in
direct conflict with, or inconsistent with, any provision in the Note, the
provision in the Note shall govern and control; provided, however, (i) the
provisions of this Mortgage shall govern and control over the terms of the Note
to the extent that any provision of the Note would negate or adversely affect
the enforceability, validity, perfection or priority of the lien and security
interest created by this Mortgage, and (ii) the provisions of Article II and
                                                              ----------
Sections 3.01, 4.01, and 13.20 hereof shall govern and control over the Note in
-------------  ----      -----
the event of a conflict.

     13.26  Certificates: The parties to this Mortgage hereby waive the
production of mortgage, conveyance, tax, paving, assignment of accounts
receivable and other certificates and relieve and release the Notary before
whom this Mortgage was passed from all responsibilities and liabilities in
connection therewith.

     13.27  Clerk of Court: The parties to this Mortgage hereby authorize,
direct and instruct the East Baton Rouge Parish Clerk of Court to record this
instrument in the records.

                                     29
<PAGE>

            THUS DONE AND PASSED, in multiple originals, before me, the
undersigned Notary Public, in and for the State of Texas, on the day and in the
month and year first above written, in the presence of the undersigned
competent witnesses, who hereunto sign their names with Grantor and me, said
Notary Public, after reading of the whole.

                                              GRANTOR:

WITNESSES:                                    R.P.M. Engineering, Inc.
__________________                            a Louisiana corporation

__________________                            By:______________________________
                                              Robert W. Raiford, Secretary

               ________________________________________________
                                NOTARY PUBLIC,
                         In and for the State of Texas

                    My Commission Expires:  ______________

                                 [NOTARY SEAL]

                                     1
<PAGE>

                                  EXHIBIT "A"
                                  -----------

                                      Land

                                  See attached.

                                     1
<PAGE>

                                  EXHIBIT "B"
                                  -----------

                             Permitted Encumbrances

                                  See attached.

                                     B-1
<PAGE>

                                  EXHIBIT "C"
                                  -----------

                                Board Resolutions

                                  See attached.

                                     C-1

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