EXHIBIT 4.3
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is made as of the 10th
day of November, 2004, among BRIAR CAPITAL, L.P., a Texas limited partnership
("Briar"), RENAISSANCE US GROWTH INVESTMENT TRUST PLC, a public limited company
registered in England and Wales ("RUSGIT"), RENAISSANCE CAPITAL GROWTH & INCOME
FUND III, INC., a Texas corporation ("Renaissance III"), BFS US SPECIAL
OPPORTUNITIES TRUST PLC, a public limited company registered in England and
Wales ("BFS") (RUSGIT, Renaissance III, and BFS being, collectively, the
"Subordinated Lender"), B&B ARMR CORPORATION, a Delaware corporation (the
"Company"), INTEGRATED SECURITY SYSTEMS, INC., a Delaware corporation ("ISSI"),
and INTELLI-SITE, INC., a Texas corporation ("Inteli") (ISSI and Inteli being,
collectively, the "Guarantors").
BACKGROUND
As an inducement for Briar to enter into a loan arrangement with the
Company, the Subordinated Lender enters into this Agreement to (i) subordinate
the Subordinated Indebtedness to the Briar Obligations, and (ii) subordinate any
and all Liens the Subordinated Lender, or any of them, has with respect to the
Collateral to Briar's Liens on the Collateral.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
1.1. General Terms. For purposes of this Agreement, the
following terms shall have the following meanings:
"Briar Agreements" shall mean collectively the Loan Agreement,
as well as the other agreements contemplated by or entered into in connection
with the Loan Agreement, each as from time to time in effect.
"Briar Obligations" shall mean all obligations of any kind owed
by the Company to Briar from time to time under or pursuant to any of the Briar
Agreements including, without limitation, all charges, expenses, fees and other
sums (including all interest, charges, expenses, fees and other sums accruing
after commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Company) chargeable to the
Company by Briar, and reimbursement, indemnity or other obligations due and
payable to Briar. To the greatest extent allowed by law, the Briar Obligations
shall continue to constitute Briar Obligations, notwithstanding the fact that
such Briar Obligations or any claim for such Briar Obligations is subordinated,
avoided or disallowed under the Code or other applicable law. The Briar
Obligations shall also include any obligations or indebtedness of the Company
incurred in connection with any loan arrangement entered into by the Company in
replacement of or in substitution for the Briar Agreements if the terms and
conditions of the agreements, documents and instruments related to such
alternative financing arrangement, taken as a whole, are not materially more
onerous to the Holder of Subordinated Indebtedness than those set forth in the
Briar Agreements, as in effect on the date hereof.
"Code" shall mean the United States Bankruptcy Code, as amended
from time to time.
"Collateral" shall mean:
(i) all Accounts, Chattel Paper, Contracts, Documents,
Equipment, Fixtures, General Intangibles, Instruments and Inventory (all as
defined in the UCC) now owned or hereafter acquired by the Company or a
Guarantor;
(ii) the balance of any deposit accounts, reserve accounts,
credit balances or other reserves of any kind maintained by the Company and/or a
Guarantor with or by Briar for the benefit of the Company and/or a Guarantor;
and
(iii) all proceeds (including insurance proceeds) and products
of the foregoing, in any form.
"Creditor Agreements" shall mean, collectively, the Briar
Agreements and the Subordinated Lender Agreements.
"Creditors" shall mean, collectively, Briar and Subordinated
Lender and their respective successors and assigns.
"Default" shall have the meaning set forth in the Loan
Agreement.
"Distribution" shall mean any payment, whether in cash, in kind,
securities or any other property, or security for any such Distribution.
"Event" shall have the meaning set forth in Section 2.2(c)
hereof.
"Guarantors" shall have the meaning set forth in the first
paragraph of this Agreement.
"Holder of Subordinated Indebtedness" shall mean the
Subordinated Lender and any other Person(s) at any time or in any manner
acquiring any right or interest in any of the Subordinated Indebtedness, and any
successor and assigns of such Person.
"Liens" shall mean 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 the common law, statute or contract,
and including, but not limited to, the security interest or lien arising from a
mortgage, security agreement, deed of trust, assignment, collateral mortgage,
chattel mortgage, encumbrance, pledge, conditional sale or trust receipt or a
lease, consignment, bailment for security purposes or certificate of title lien.
The term "Lien" shall include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting Property. For the purposes of this
Agreement, the Company or a Guarantor shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security purposes.
2
"Loan Agreement" shall mean that certain Loan Agreement dated
effective as of the date hereof between the Company and Briar, as the same has
or may be amended, supplemented, modified or restated from time to time.
"Person" shall mean an individual, a partnership, a corporation
(including a business trust), a joint stock company, a trust, an unincorporated
association, a joint venture, a limited liability company, a limited liability
partnership or other entity, or a government or any agency, instrumentality or
political subdivision thereof.
"Petition" shall have the meaning given to such term in Section
3.4(a) hereof.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Security Instruments" shall have the meaning given to such term
in the Loan Agreement.
"Subordinated Indebtedness" shall mean all principal, interest
and other amounts payable or chargeable in connection with the Subordinated
Notes and/or other Subordinated Lender Agreements.
"Subordinated Lender Agreements" shall mean, collectively, the
Subordinated Notes and all debentures, promissory notes, agreements, documents
and instruments now or at any time hereafter executed and/or delivered by
Company, a Guarantor, or any other person to, with or in favor of Subordinated
Lender in connection therewith or related thereto, as all of the foregoing now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
"Subordinated Notes" shall mean the promissory notes issued by
the Company or a Guarantor, together with any extensions thereof, securities
issued in exchange therefor or modifications or amendments thereto or
replacements and substitutions therefore, for the benefit of Subordinated Lender
including, without limitation, the promissory notes described on Exhibit "A"
hereto.
"UCC" means the Uniform Commercial Code in effect from time to
time in the State of Texas.
3
1.2. Other Terms. Capitalized terms not otherwise defined
herein shall have the meanings given to them in the Loan Agreement.
1.3. Certain Matters of Construction. The terms "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover all genders. Wherever
appropriate in the context, terms used herein in the singular also include the
plural and vice versa. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
Except as expressly set forth herein, all references to any instruments or
agreements, including, without limitation, references to any of Creditor
Agreements, shall include any and all modifications or amendments thereto and
any and all extensions or renewals thereof.
2. Covenants. Company, each Guarantor, and each Holder of
Subordinated Indebtedness hereby covenant that until the Briar Obligations shall
have been paid in full and satisfied in cash and the Loan Agreement shall have
been irrevocably terminated, all in accordance with the terms of the Loan
Agreement, each will comply with such of the following provisions as are
applicable to it:
2.1. Transfers. Each Holder of Subordinated Indebtedness
covenants that any transferee from him of any Subordinated Indebtedness shall,
prior to acquiring such interest, execute and deliver a counterpart of this
Agreement to each other party hereto.
2.2. Subordination Provisions. To induce Briar to enter into
the Loan Agreement and to loan funds pursuant thereto, notwithstanding any other
provision of the Subordinated Lender Agreements to the contrary, any
Distribution with respect to the Subordinated Indebtedness is and shall be
expressly junior and subordinated in right of payment to all amounts due and
owing upon all Briar Obligations outstanding from time to time, and any and all
Liens granted to or arising in favor of Subordinated Lender in and to any or all
of the Collateral shall be subordinate and junior in all respects to all Liens
granted to or arising in favor of Briar in the Collateral. Specifically, the
Company, each Guarantor, and each Holder of Subordinated Indebtedness hereby
agree, without limitation, as follows:
(a) Payments. Company and each Guarantor shall make no
Distribution on any Subordinated Indebtedness without Briar's prior written
consent until such time as the Briar Obligations shall have been paid in full in
cash and the Loan Agreement shall have been irrevocably terminated; provided,
however, that the Company and each Guarantor may make Distributions on the
Subordinated Indebtedness in an amount equal to the regular interest payments
specified under the Subordinated Lender Agreements to by made by such parties.
In the event the Subordinated Lender is notified by Briar of a Default, however,
Company and each Guarantor shall make no Distribution, including, without
limitation, current interest on any Subordinated Indebtedness, without Briar's
prior written consent, until such time as the Briar Obligations shall have been
paid in full in cash and the Loan Agreement shall have been irrevocably
terminated.
4
(b) Limitation on Acceleration. No Holder of
Subordinated Indebtedness shall be entitled to accelerate the maturity of the
Subordinated Indebtedness, exercise any remedies or commence any action or
proceeding to recover any amounts due or to become due with respect to
Subordinated Indebtedness unless and until such time as the Briar Obligations
shall have been paid in full in cash and the Briar Agreements shall have been
irrevocably terminated.
(c) Prior Payment of Briar Obligations in Bankruptcy,
etc. In the event of any insolvency or bankruptcy proceedings relative to the
Company, a Guarantor, or any of their Property, or any receivership,
liquidation, reorganization or other similar proceedings in connection
therewith, or, in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Company or a Guarantor or distribution or
marshalling of its assets or any composition with creditors of the Company or a
Guarantor, whether or not involving insolvency or bankruptcy, or if the Company
or a Guarantor shall cease its operations, call a meeting of its creditors or no
longer do business as a going concern (each individually or collectively, an
"Event"), then all Briar Obligations shall be paid in full and satisfied in cash
and the Loan Agreement irrevocably terminated before any Distribution shall be
made on account of any Subordinated Indebtedness. Any such Distribution which
would, but for the provisions hereof, be payable or deliverable in respect of
the Subordinated Indebtedness, shall be paid or delivered directly to Briar or
its representatives, in the proportions in which they hold the same, until
amounts owing upon Briar Obligations shall have been paid in full in cash and
the Loan Agreement irrevocably terminated.
(d) Power of Attorney. To enable Briar to assert and
enforce its rights hereunder in any proceeding referred to in Section 2.2(c) or
upon the happening of any Event, Briar or any person whom Briar may designate is
hereby irrevocably appointed attorney in fact for Subordinated Lender with full
power to act in the place and stead of Subordinated Lender including the right
to make, present, file and vote such proofs of claim against the Company or
Guarantors on account of all or any part of the Subordinated Indebtedness as
Briar may deem advisable and to receive and collect any and all dividends or
other payments made thereon and to apply the same on account of the Briar
Obligations. Subordinated Lender will execute and deliver to Briar such
instruments as may reasonably be required by Briar to enforce any and all
Subordinated Indebtedness, to effectuate the aforesaid power of attorney, and to
effect collection of any and all dividends or other payments which may be made
at any time on account thereof, and Subordinated Lender hereby irrevocably
appoints Briar as the lawful attorney and agent of Subordinated Lender to
execute financing statements on behalf of Subordinated Lender and hereby further
authorizes Briar to file such financing statements in any appropriate public
office.
(e) Knowledge. Holders of Subordinated Indebtedness
shall be charged with knowledge of any of the events described in Section 2.2(a)
hereof which would prohibit receiving and/or retaining Distributions and on such
account shall be prohibited from (i) receiving or retaining any payment of
monies, and (ii) taking any action regarding acceleration or the exercise of
remedies.
(f) Payments Held in Trust. Should any Distribution or
the proceeds thereof, in respect of the Subordinated Indebtedness, be collected
or received by Subordinated Lender or any Affiliate (as such term is defined in
Rule 405 of Regulation C adopted by the Securities and Exchange Commission
pursuant to the Securities Act of 1933) of Subordinated Lender at a time when
Subordinated Lender is not permitted to receive any such Distribution or
proceeds thereof, including if same is collected or received when there is or
would be after giving effect to such payment a Default or an Event of Default
under the Loan Agreement, then Subordinated Lender will forthwith deliver, or
cause to be delivered, the same to Briar in precisely the form held by
Subordinated Lender (except for any necessary endorsement) and until so
delivered, the same shall be held in trust by Subordinated Lender, or any such
Affiliate, as the property of Briar and shall not be commingled with other
property of the Subordinated Lender or any such Affiliate.
5
(g) Subrogation. Subject to the prior payment in full
in cash of the Briar Obligations and the irrevocable termination of the Loan
Agreement, to the extent that Briar has received any Distribution on the Briar
Obligations which, but for this Agreement, would have been applied to the
Subordinated Indebtedness, Subordinated Lender shall be subrogated to the then
or thereafter rights of Briar including, without limitation, the right to
receive any Distribution made on the Briar Obligations, until the principal of,
interest on and other charges due under the Subordinated Indebtedness shall be
paid in full; and, for the purposes of such subrogation, no Distribution to
Briar to which Subordinated Lender would be entitled except for the provisions
of this Agreement shall, as between the Company, its creditors (other than
Briar) and Subordinated Lender, be deemed to be a Distribution by the Company to
or on account of Briar Obligations, it being understood that the provisions
hereof are and are intended solely for the purpose of defining the relative
rights of Subordinated Lender on the one hand, and Briar on the other hand.
(h) Scope of Subordination. The provisions of this
Agreement are solely to define the relative rights of any Holder of Subordinated
Indebtedness and Briar. Nothing in this Agreement shall impair, as between the
Company or the Guarantors and Subordinated Lender, the unconditional and
absolute obligation of the Company and Guarantors to punctually pay the
principal, interest and any other amounts and obligations owing under the
Subordinated Notes and Subordinated Lender Agreements in accordance with the
terms thereof, subject to the rights of Briar under this Agreement.
(i) Briar Priority Lien on Collateral. All Liens
granted to or arising in favor of Subordinated Lender, or any of them, in and to
any or all of the Collateral shall be subordinate and junior, and are hereby
subordinated in all respects, to all Liens granted to or arising in favor of
Briar in the Collateral.
(j) Effectiveness of Priorities. The priorities of
Liens set forth in this Agreement shall be effective notwithstanding the date,
manner or order of perfection, or lack of perfection of any of the Liens in
favor of Briar or Subordinated Lender, as such priorities relate to the parties
hereto.
(k) Event of Default. In the event of default in any of
the Briar Agreements, Briar may foreclose against the Collateral in accordance
with the terms of the Security Instruments, and, after such foreclosure, may
seek a judgment for its deficiency (if any) against the Company and/or
Guarantor.
6
(l) Subordinated Lender Standstill. Notwithstanding any
documents or agreements executed in connection with the Subordinated Lender
Agreements to the contrary, unless and until Briar shall have received
indefeasible payment in full in cash of all Briar Obligations, and any
continuing obligations of Briar to the Company under the Briar Agreements shall
have terminated pursuant to the respective terms and provisions thereof,
Subordinated Lender shall not ask, demand or xxx for any right or remedy in
respect of all or any part of the Collateral, and Subordinated Lender agrees not
to take or receive from any party, directly or indirectly, in cash or other
property or by set-off or in any other manner, whether pursuant to any
enforcement, collection, execution, levy or foreclosure proceeding or otherwise,
any part of the Collateral. Without limiting the generality of the foregoing,
until Briar shall have received indefeasible payment in full in cash of all
Briar Obligations, and any continuing obligations of Briar to the Company under
the Briar Agreements shall have terminated pursuant to the respective terms and
provisions thereof: (i) Subordinated Lender shall not exercise or otherwise
assert any right or remedy in respect of any part of the Collateral or any Lien
thereon; and (ii) the sole right of Subordinated Lender with respect to the
Collateral shall be to hold a Lien thereon to the extent granted pursuant to any
mortgage and to receive proceeds thereof remaining after such payment and
termination.
(m) Waivers. Subordinated Lender hereby waives any and
all provisions contained in those certain Subordinated Notes and/or in any other
Subordinated Lender Agreement to the extent necessary for the Company and
Guarantors to grant to Briar a Lien on all of their assets, including, but not
limited to, a Lien on the Collateral.
3. Miscellaneous.
3.1. Provisions of Subordinated Notes. From and after the date
hereof, the Company, the Guarantors, and Subordinated Lender shall cause each
Subordinated Note to contain a provision to the following effect:
"This Note is subject to that certain
Subordination Agreement dated as of November 10, 2004,
among the Maker, the Payee, and Briar Capital, L.P.,
under which this Note and the Maker's obligations
hereunder are subordinated in the manner set forth
therein to the prior payment of certain obligations to
the holders of Briar Obligations as defined in said
Subordination Agreement."
Proof of compliance with the foregoing shall be promptly given to
Briar.
3.2. Additional Agreements. In the event that the Briar
Obligations are refinanced in full, Subordinated Lender agrees to enter into a
subordination agreement on terms substantially similar to this Agreement at the
request of Briar or such refinancing party.
7
3.3. Survival of Rights. The right of Briar to enforce the
provisions of this Agreement shall not be prejudiced or impaired by any act or
omitted act of the Company, the Guarantors, or Briar including forbearance,
waiver, consent, compromise, amendment, extension, renewal, or taking or release
of security in respect of any Briar Obligations or noncompliance by the Company
or Guarantors with such provisions, regardless of the actual or imputed
knowledge of Briar.
3.4. Bankruptcy Financing Issues. (a) This Agreement shall
continue in full force and effect after the filing of any petition ("Petition")
by or against the Company or a Guarantor under the Code and all converted or
succeeding cases in respect thereof. All references herein to the Company or
Guarantor shall be deemed to apply to the Company or Guarantor as
debtor-in-possession and to a trustee for the Company or Guarantor. If the
Company shall become subject to a proceeding under the Code, and if Briar shall
desire to permit the use of cash collateral or to provide post-Petition
financing from Briar to the Company under the Code, Subordinated Lender agrees
as follows: (1) adequate notice to Subordinated Lender shall be deemed to have
been provided for such consent or post-Petition financing if Subordinated Lender
receive notice thereof three (3) Business Days (or such shorter notice as is
given to Briar) prior to the earlier of (a) any hearing on a request to approve
such post-petition financing or (b) the date of entry of an order approving
same, and (2) no objection will be raised by Subordinated Lender to any such use
of cash collateral or such post-Petition financing from Briar.
(b) Subordinated Lender shall not join in, solicit any
other person to, or act to cause the commencement of, any case involving the
Company or Guarantor under any state or federal bankruptcy or insolvency laws or
seek the appointment of a receiver for the affairs or property of the Company or
Guarantor until such time as the Briar Obligations shall have been paid in full
in cash and the Briar Agreements shall have been irrevocably terminated.
3.5. Receipt of Agreements. Subordinated Lender hereby
acknowledges that it has delivered to Briar a correct and complete copy of the
Subordinated Lender Agreements as in effect on the date hereof. Subordinated
Lender, solely for the purposes of this Agreement, hereby acknowledges receipt
of a correct and complete copy of each of the Briar Agreements as in effect on
the date hereof.
3.6. No Amendment of Subordinated Lender Agreements. So long
as the Loan Agreement remains in effect, neither the Company, nor any Guarantor,
nor any Holder of Subordinated Indebtedness shall enter into any amendment to or
modification of any Subordinated Lender Agreements which relates to or affects
the principal amount, interest rate, payment terms, or any other material
covenant or agreement of the Company or Guarantor thereunder or in respect
thereof, without the prior written consent of Briar.
3.7. Amendments to Briar Agreements. Nothing contained in this
Agreement, or in any other agreement or instrument binding upon any of the
parties hereto, shall in any manner limit or restrict the ability of Briar from
changing the terms of the Briar Agreements, or to otherwise waive, amend or
modify the terms and conditions of the Briar Agreements as permitted therein.
Each Holder of Subordinated Indebtedness hereby consents to any and all such
waivers, amendments, modifications and compromises, and any other renewals,
extensions, indulgences, releases of collateral or other accommodations granted
by Briar to the Company or to a Guarantor from time to time, and agrees that
none of such actions shall in any manner affect or impair the subordination
established by this Agreement in respect of the Subordinated Indebtedness.
8
3.8. Acknowledgement of Termination. Promptly following
inquiry from any Holder of Subordinated Indebtedness, Briar or any assignee, as
the case may be, shall (i) confirm in writing to the Holder of Subordinated
Indebtedness that Briar, or such assignee, is the holder of the Briar
Obligations and (ii) inform the Holder of Subordinated Indebtedness in writing
either (A) that this Agreement remains in effect, or (B) that the Loan Agreement
has been irrevocably terminated and the Briar Obligations satisfied in full.
3.9 Notice of Default and Certain Events. Briar and the
Holders of Subordinated Indebtedness shall undertake in good faith to notify the
other of the occurrence of any of the following as applicable:
(a) the obtaining of actual knowledge of the occurrence
of any default under the Subordinated Notes, or any of them;
(b) the acceleration of any Subordinated Indebtedness
by any Holder of Subordinated Indebtedness;
(c) the granting by Briar of any waiver of any Event of
Default under the Loan Agreement or the granting by any Holder of Subordinated
Indebtedness of any waiver of any "default" or "event of default" under the
Subordinated Lender Agreements; or
(d) The payment in full by the Company (whether as a
result of refinancing or otherwise) of all Briar Obligations.
The failure of any party to give such notice shall not affect
the subordination of the Subordinated Indebtedness as provided in this
Agreement.
3.10. Notices. Any notice or other communication required or
permitted pursuant to this Agreement shall be deemed given (a) when personally
delivered to any officer of the party to whom it is addressed, (b) on the
earlier of actual receipt thereof or three (3) days following posting thereof by
certified or registered mail, postage prepaid, or (c) upon actual receipt
thereof when sent by a recognized overnight delivery service or (d) upon actual
receipt thereof when sent by telecopier to the number set forth below with
electronic confirmation of receipt, in each case addressed to each party at its
address or telecopier number set forth below or at such other address or
telecopier number as has been furnished in writing by a party to the other by
like notice:
9
If to Briar: Briar Capital, L.P.
0000 Xxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Telephone: 000.000.0000, ext. 223
Facsimile: 713.532.3430
with a copy to: Xxxxx & Xxxxxx
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: 000.000.0000
Facsimile: 713.552.1758
If to Subordinated
Lender: c/o Renaissance Capital Group
0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000-XX00
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Telephone: 000.000.0000
Facsimile: 214.891.8291
If to the Company to: B&B ARMR Corporation
00000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone: 000.000.0000
Facsimile: 225.629.4128
with a copy to: Xxxxxx & Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: 000.000.0000
Facsimile: 214.200.0720
If to the Guarantors
to: Integrated Security Systems, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: C.A. Xxxxxxx, Jr.
Telephone: 000.000.0000
Facsimile: 972.869.3843
with a copy to: Xxxxxx & Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: 000.000.0000
Facsimile: 214.200.0720
10
3.11. Books and Records. Subordinated Lender shall (a) make
notations on the books of Subordinated Lender beside all accounts or on other
statements evidencing or recording any Subordinated Indebtedness to the effect
that such Subordinated Indebtedness is subject to the provisions of this
Agreement, (b) furnish Briar, upon request from time to time, a statement of the
account between Subordinated Lender and the Company or Guarantors, and (c) give
Briar, upon its request, full and free access to Subordinated Lender's books
pertaining only to such accounts with the right to make copies thereof.
3.12. Binding Effect; Other. This Agreement shall be a
continuing agreement, shall be binding upon and shall inure to the benefit of
the parties hereto from time to time and their respective successors and
assigns, shall be irrevocable and shall remain in full force and effect until
the Briar Obligations shall have been satisfied or paid in full in cash and the
Loan Agreement shall have been irrevocably terminated, but shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any amount paid by or on behalf of the Company with regard to
the Briar Obligations is rescinded or must otherwise be restored or returned
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Company, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee, custodian, or similar officer, for the Company or
any substantial part of its property, or otherwise, all as though such payments
had not been made. No action which Briar or the Company may take or refrain from
taking with respect to the Briar Obligations, including any amendments thereto,
shall affect the provisions of this Agreement or the obligations of Subordinated
Lender hereunder. Any waiver or amendment hereunder must be evidenced by a
signed writing of the party to be bound thereby and shall only be effective in
the specific instance. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas. The headings in this Agreement
are for convenience of reference only, and shall not alter or otherwise affect
the meaning hereof.
4. Representations and Warranties.
(a) Subordinated Lender represents and warrants to Briar that
Subordinated Lender is the holder of the Subordinated Indebtedness. Subordinated
Lender agrees that it shall not assign or transfer any of the Subordinated
Indebtedness without (i) prior notice being given to Briar and (ii) such
assignment or transfer being made expressly subject to the terms of this
Agreement. Subordinated Lender further warrants to Briar that it has full right,
power and authority to enter into this Agreement and, to the extent any
Subordinated Lender is an agent or trustee for other parties, that this
Agreement shall fully bind all such other parties.
(b) Briar represents and warrants to Subordinated Lender that
Briar is the holder of the Briar Obligations. Briar agrees that it shall not
assign or transfer any of the Briar Obligations without (i) prior notice being
given to Subordinated Lender and (ii) such assignment or transfer being made
expressly subject to the terms and provisions of this Agreement. Briar further
warrants to Subordinated Lender that it has full right, power and authority to
enter into this Agreement and, to the extent Briar is an agent or trustee for
other parties, that this Agreement shall fully bind all such other parties.
11
5. Proceedings. ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST
SUBORDINATED LENDER OR THE COMPANY WITH RESPECT TO THIS AGREEMENT OR ANY RELATED
AGREEMENT MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF
TEXAS, UNITED STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT EACH PARTY THERETO ACCEPTS FOR THEMSELVES AND IN CONNECTION WITH THEIR
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY FINAL JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF BRIAR TO BRING PROCEEDINGS AGAINST SUBORDINATED LENDER OR THE COMPANY
IN ANY COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY SUBORDINATED
LENDER OR THE COMPANY AGAINST BRIAR INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS
AGREEMENT OR ANY RELATED AGREEMENT, SHALL BE BROUGHT ONLY IN A COURT LOCATED IN
THE CITY OF HOUSTON, STATE OF TEXAS; PROVIDED THAT NOTWITHSTANDING THE
FOREGOING, IF IN ANY JUDICIAL PROCEEDING BY OR AGAINST SUBORDINATED LENDER OR
THE COMPANY THAT IS BROUGHT IN ANY OTHER COURT SUCH COURT DETERMINES THAT BRIAR
IS AN INDISPENSABLE PARTY, SUBORDINATED LENDER OR THE COMPANY SHALL BE ENTITLED
TO JOIN OR INCLUDE EACH PARTY HERETO IN SUCH PROCEEDINGS IN SUCH OTHER COURT.
SUBORDINATED LENDER AND THE COMPANY WAIVE ANY OBJECTION TO JURISDICTION AND
VENUE OF ANY ACTION INSTITUTED HEREUNDER AND SHALL NOT ASSERT ANY DEFENSE BASED
ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS.
6. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY CREDITOR, BRIAR OR THE COMPANY
OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS
OR AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AND
EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT JURY, AND THAT ANY OF
THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THEIR CONSENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
12
7. Company Acknowledgement. The Company agrees that (i) nothing
contained in this Agreement shall be deemed to amend, modify, supercede or
otherwise alter the terms of the respective agreements between the Company, the
Guarantors, and each Creditor, and (ii) this Agreement is solely for the benefit
of the Creditors and shall not give the Company, the Guarantors, or their
successors or assigns or any other person, any rights vis-a-vis any Creditor.
8. Counterparts; Facsimile. This Agreement may be executed by the
parties hereto in one or more counterparts, each of which shall be deemed an
original and all of which when taken together shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
[SIGNATURE PAGE FOLLOWS]
13
IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
of the date first written above.
LENDER: COMPANY:
--------------------------- -----------------------
BRIAR CAPITAL, L.P., B&B ARMR CORPORATION, a
a Texas limited partnership Delaware corporation
By: Briar Capital General, LLC, a Texas limited
liability company, its general partner By: /S/ Xxxxx Xxxxx
---------------------
Xxxxx Xxxxx, Chairman
By: /S/ Xxxxx Xxxxxxxx
-------------------
Xxxxx Xxxxxxxx, CEO
GUARANTORS:
----------------------------------
INTEGRATED SECURITY SYSTEMS, INC.,
a Delaware corporation
By: /S/ C.A. Xxxxxxx, Jr.
-----------------------------------
C.A. Xxxxxxx, Jr., Chairman and CEO
INTELLI-SITE, INC., a Texas corporation
By: /S/ C.A. Xxxxxxx, Jr.
---------------------------
C.A. Xxxxxxx, Jr., Chairman
[SIGNATURES CONTINUE ON NEXT PAGE]
14
SUBORDINATED LENDER:
------------------------------------------
RENAISSANCE US GROWTH INVESTMENT TRUST PLC,
a public limited company registered
in England and Wales
By: /S/Xxxxxxx Xxxxxxxxx
---------------------------
Xxxxxxx Xxxxxxxxx, Director
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.,
a Texas corporation
By: /S/ Xxxxxxx Xxxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxxx, President and CEO
BFS US SPECIAL OPPORTUNITIES TRUST PLC,
a public limited company registered in
England and Wales
By: /S/ Xxxxxxx Xxxxxxxxx
---------------------------
Xxxxxxx Xxxxxxxxx, Director
15
EXHIBIT "A"
LIST OF CERTAIN PROMISSORY NOTES
16
