EXHIBIT 4.1
SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement (this "Second Amendment") is
made and entered into as of the 25th day of May, 2005 (the "Effective Date"), by
and among B&B ARMR CORPORATION, a Delaware corporation, with its principal
office and mailing address at 00000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000
(hereinafter called the "Borrower"), BRIAR CAPITAL, L.P., a Texas limited
partnership, with its principal office at 0000 Xxxx Xxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000 (hereinafter called the "Lender"),
INTEGRATED SECURITY SYSTEMS, INC., a Delaware corporation ("ISSI"),
INTELLI-SITE, INC., a Texas corporation ("Intelli"), and as validity guarantors,
C.A. XXXXXXX, JR., an individual ("Xxxxxxx"), and XXXXX XXXXX, an individual
("Beare") (ISSI, Intelli, Xxxxxxx, and Beare, being, collectively, the
"Guarantors").
W I T N E S S E T H:
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WHEREAS, in accordance with the terms and provisions of that certain
Loan Agreement (the "Original Agreement") dated November 10, 2004, by and among
Lender, Borrower, and the Guarantors, Lender agreed to make the Loan to Borrower
as provided therein;
WHEREAS, Lender, Borrower, and the Guarantors executed that certain
First Amendment to Loan Agreement dated effective as of March 7, 2005 (the
"Amendment", Amendment and Original Agreement being, collectively, the "Loan
Agreement");
WHEREAS, Borrower, Lender, and Guarantors now desire to further modify
and amend certain terms and provisions of the Loan Agreement, as hereinafter
provided, and to make certain agreements related thereto;
NOW, THEREFORE, in consideration of the terms and conditions hereof and
other good and valuable consideration, the receipt and sufficiency of which is
hereby agreed to by the parties hereto, Borrower, Lender and Guarantors hereby
agree as follows:
1. Amendments to Loan Agreement.
1.1 Amendment of Definition of Eligible Accounts. Clause
(b)(xiv) of the definition of Eligible Accounts is deleted in its entirety and
replaced with the following clause:
"(xiv) Accounts related to projects in which (A) Borrower
engages any subcontractor (1) pursuant to a written
manufacturing agreement, (2) which provides Borrower units
costing at least $5,000.00 per unit, and (3) which does not
deliver the units directly to Borrower's facility in Norwood,
Louisiana for inclusion in Borrower's physical inventory, and
(B) Borrower has not received from each such subcontractor a
fully executed and notarized lien waiver in the form attached
hereto as Exhibit 1.1(c)."
1.2 Pledge of Stock. The following section is added as
Section 7.12 of the Loan Agreement:
"(e) Pledge of Stock. ISSI shall have pledged to Lender its
ownership interest in the following stock as Collateral securing
its obligations under that certain Guaranty Agreement dated
November 10, 2004 by ISSI in favor of Lender:
(i) 1,000 shares of common stock in Borrower, formerly
known as ISSI Merger Sub, Inc., a Delaware corporation;
(ii) 1,000 shares of common stock in Intelli, formerly
known as Innovative Security Technologies, Inc., a Texas corporation;
(iii) 1,000 shares of common stock in Doortek
Corporation, a Texas corporation;"
1.3 Section 5.04. Section 5.04 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:
"Section 5.04 Dividends, Distributions and Redemptions. Unless
approved in writing by Lender prior to such event, Borrower
shall not declare or pay any dividend, distribution, purchase,
redeem or otherwise acquire for value any of its ownership
interests now or hereafter outstanding, return any capital to
its owners, or make any distribution of its assets to its
Affiliates as such. Notwithstanding the foregoing in this
Section 5.04 so long as an Event of Default has not occurred and
is continuing, Borrower may make monthly distributions or other
payments to Affiliates in an aggregate amount equal to the
lesser of: (i) $40,000.00; or (ii) 40% percent of Borrower's
monthly Net Income; provided, however, that the foregoing
restriction on distributions and other payments shall not apply
to reimbursements made by Borrower to its Affiliates for
payments made by such Affiliates on behalf of Borrower for
expenses directly related to Borrower on or after the Effective
Date hereof."
1.4 Exhibit 1.1(c). The form of Exhibit 1.1(c) attached
hereto is hereby attached to and incorporated in the Loan Agreement as Exhibit
1.1(c) thereto.
1.5 Section 5.10. Section 5.10 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:
"Section 5.10 Issuance of Stock. During the term of this
Agreement, Borrower shall not permit Borrower, Intelli, or
Doortek to issue any stock or admit any additional Person as a
shareholder of the Borrower without the prior written consent of
Lender."
2. Fees and Expenses. Notwithstanding anything in the Loan
Agreement to the contrary, Borrower shall reimburse Lender for all of Lender's
reasonable fees and expenses (including attorneys' fees) incurred in connection
with the preparation, negotiation, and execution of this Second Amendment and
all documents required by Lender in connection therewith.
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3. Defined Terms. Words and terms used herein which are defined in
the Loan Agreement are used herein as defined therein, except as specifically
modified by the terms of this Second Amendment, or otherwise provided for
herein.
4. Counterparts. This Second Amendment may be executed in any
number of counterparts and by different parties on separate counterparts.
5. Preservation of Documents and Liens. Except as specifically
modified by the terms of this Second Amendment, all of the terms, provisions,
covenants, warranties, and agreements contained in the Loan Agreement, and all
liens and security interests granted in each Security Instrument (which liens
and security interests are acknowledged to be valid and subsisting and are
hereby specifically granted again as of the date hereof) remain in full force
and effect and secure the obligations provided for therein. Except as otherwise
expressly provided herein, by execution of this Second Amendment, Borrower and
Lender do not intend to in any manner impair the indebtedness and other
obligations described in and secured by each Security Instrument or to in any
way impair, waive, or release the liens and security interests granted in each
Security Instrument.
6. Entire Agreement. THE LOAN AGREEMENT, AS AMENDED BY THIS SECOND
AMENDMENT, AND THE SECURITY INSTRUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES.
7. Representations and Warranties. The representations and
warranties made by Borrower in the Loan Agreement and Security Instruments are
true and correct as of the date of this Second Amendment.
8. Release. Borrower hereby releases, remises, acquits and forever
discharges Lender, together with its employees, agents, representatives,
consultants, attorneys, fiduciaries, servants, officers, directors, partners,
predecessors, successors and assigns, subsidiary corporations, parent
corporations, and related corporate divisions (all of the foregoing hereinafter
called the "Released Parties"), from any and all actions and causes of action,
judgments, executions, suits, debts, claims, demands, liabilities, obligations,
damages and expenses of any and every character, known or unknown, direct and/or
indirect, at law or in equity, of whatsoever kind or nature, whether heretofore
or hereafter accruing, for or because of any matter or things done, omitted or
suffered to be done by any of the Released Parties prior to and including the
date hereof, and in any way directly or indirectly arising out of or in any way
connected to this Second Amendment or any other Security Instrument, or any of
the transactions associated therewith, including specifically but not limited to
claims of usury. THE FOREGOING RELEASE INCLUDES ACTIONS AND CAUSES OF ACTION,
JUDGMENTS, EXECUTIONS, SUITS, DEBTS, CLAIMS, DEMANDS, LIABILITIES, OBLIGATIONS,
DAMAGES AND EXPENSES ARISING AS A RESULT OF THE NEGLIGENCE OF ONE OR MORE OF THE
RELEASED PARTIES.
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9. Reaffirmation of Security Agreements. The undersigned Guarantors
and Validity Guarantors, being parties to their respective Guaranties, Validity
Guaranties, and/or Security Agreements (collectively the "Security Agreements")
executed in connection with the extension of the Loan, and certain other related
agreements, do hereby consent to the terms of this Second Amendment and do
further agree that their respective Guaranties, Validity Guaranties, and
Security Agreements, as the case may be, shall remain in full force and effect
and continue to secure and/or guaranty the timely payment of the Loan.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Loan Agreement to be duly executed as of the Effective Date.
LENDER: BORROWER:
--------------------------- -----------------------
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 XXXXXXXXXX
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Xxxxx Xxxxxxxxxx, President
GUARANTORS: VALIDITY GUARANTORS:
---------------------------------- -------------------------------
INTEGRATED SECURITY SYSTEMS, INC.,
a Delaware corporation /S/ C.A. XXXXXXX, JR.
-------------------------------
C.A. XXXXXXX, JR., Individually
By: /S/ C.A. XXXXXXX, JR.
-----------------------------------
C.A. Xxxxxxx, Jr., Chairman and CEO /S/ XXXXX XXXXX
-------------------------
XXXXX XXXXX, Individually
INTELLI-SITE, INC., a Texas corporation
By: /S/ C.A. XXXXXXX, JR.
---------------------------
C.A. Xxxxxxx, Jr., Chairman
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EXHIBIT "1.1(c)"
FORM OF SUBCONTRACTOR'S WAIVER OF LIEN RIGHTS
ADDENDUM REGARDING WAIVER OF LIEN RIGHTS
WHEREAS, this addendum (this "Addendum") is hereby attached to and
incorporated as a portion of that certain dated , 200 (the "Subcontract"), by
and between , as the subcontractor (the "Subcontractor"), and B&B ARMR
CORPORATION, a Delaware corporation, as the contractor ("B&B"), pursuant to
which Subcontractor has agreed to, among other things, furnish certain materials
and labor and to produce certain products to be delivered to B&B's customers
(the "Services"), such Services being more particularly described in the
Subcontract;
WHEREAS, as a condition to B&B's execution of the Subcontract,
Subcontractor has agreed to waive all of its lien rights, regardless of their
source, with respect to (i) any of the products created pursuant to the
Subcontract and/or any of the materials used by the Subcontractor in performing
the Services (collectively, the "Personal Property"), and (ii) any real
property, including any improvements, onto which the products created pursuant
to the Subcontract are delivered, installed or affixed (the "Real Property")
(the owner of such Real Property being referred to herein as the "Owner");
NOW, THEREFORE, notwithstanding anything to the contrary in the
Subcontract, Subcontractor hereby agrees as follows:
1. Subcontractor hereby waives any and all lien rights, including,
without limitation, all liens created in favor of Subcontractor by contract,
statute, common law, constitutional law, or otherwise, which now exist or might
in the future arise on or against the above-described Personal Property or Real
Property on account of the work completed, labor performed, Services performed,
materials furnished, or claims incurred by Subcontractor arising out of or
related to the Subcontract.
2. In the event that for any reason any lien is filed against the
Real Property or the Personal Property by Subcontractor or any party claiming
by, through, or under Subcontractor for the Services, Subcontractor shall
immediately obtain and deliver to B&B and the Owner (if the lien is filed
against the Real Property), at B&B's sole cost and expense, a full and proper
release thereof, in recordable form. Subcontractor further hereby agrees to
indemnify, defend and hold harmless B&B, the Owner, and Briar Capital, L.P., a
Texas limited partnership, from and against any and all claims, damages, losses,
liabilities, actions, causes of action, expenses, costs and fees (including,
without limitation, court costs and attorney's fees) relating to any such lien
or claim or the removal or release thereof.
3. Subcontractor agrees and acknowledges that the interpretation
and enforcement of this Addendum, and all of the lien waiver matters and other
matters described herein, shall be governed by the laws of the state of Texas,
without regard to principles of conflicts of laws.
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4. Subcontractor agrees to execute and deliver any additional
documents and instruments, and to perform any additional acts necessary or
appropriate, to perform the terms, provisions, and conditions of this Addendum.
5. If any provision in this Addendum is for any reason held to be
unenforceable by a court of law, the unenforceability will not affect any other
provision hereof, and this Addendum will be construed as if the unenforceable
provision had never been a part of the Addendum.
6. The recitals in this Addendum constitute a substantive part of
the Addendum.
EXECUTED THIS _____________ day of __________________, 200____.
SUBCONTRACTOR:
____________________________________
By:_________________________________
Name:_______________________________
Title:______________________________
SUBSCRIBED AND SWORN TO before me on this ___ day of __________________
_____, 200__, by ________________________________.
____________________________
NOTARY PUBLIC, IN AND FOR
(PERSONALIZED SEAL) THE STATE OF________________
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