LOAN AGREEMENT
This
LOAN
AGREEMENT is entered into this 30th
day of
September 2008,
by and
between Argyle Security, Inc. a Delaware corporation (hereinafter "Lender"),
and
ISI Security Group, Inc. a Delaware corporation (hereinafter
"Borrower").
WHEREAS,
Lender is the direct owner of all of the issued and outstanding capital stock
of
Borrower; and
WHEREAS,
Borrower desire to obtain a loan and other financial accommodations from Lender
and Lender is willing to provide such loan and accommodations all in accordance
with the terms of this Agreement.
NOW,
THEREFORE, in consideration of the premises, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
Lender and the Borrower do hereby agree as follows:
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THE
LOAN
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1.1.
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The
Loan.
On the date hereof, the Lender agrees to make, subject to the conditions
hereof, and Borrower agrees to take, a Loan (hereinafter "Loan")
in the
principal amount of Two Million Dollars
($2,000,000).
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1.2.
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The
Note.
Borrower shall execute a promissory note in favor of the Lender in
a form
substantially similar to that completed promissory note attached
hereto as
Exhibit A (hereinafter, "the Note") and payable to the order of the
Lender. The Note shall be dated the date of this Loan Agreement.
The Note
shall provide that the principal of the Loan and all accrued and
unpaid
interest shall be repaid on October 31, 2008.
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1.3.
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The
Terms of the Loan.
The aforesaid Loan shall be for a term of one month commencing from
the
date of the Note. The principal balance of the Loan, together with
all
interest accrued thereon, shall be payable monthly by Borrower as
required
by the terms of this Loan Agreement and the
Note.
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1.4.
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Rate
and Payment of Interest.
The aforesaid Note shall bear interest at the rate of six percent
(6%) per
annum calculated on the basis of a 365-day year. Interest shall be
payable
by Borrower upon the date for the repayment of principal set forth
in
Section 1.2 above.
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1.5.
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Prepayments.
The
Borrower may prepay the Note in whole or in part with accrued interest
to
the date of such prepayment on the amount prepaid, provided that
each
partial prepayment shall be applied to the principal installments
of the
Note, set forth in Section 1.2 hereof, in the inverse order of their
maturities.
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1.6
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Waivers
by Borrower.
To the fullest extent permitted by applicable law, Borrower waives:
(a) presentment, demand and protest, and notice of presentment,
dishonor, intent to accelerate, acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension
or
renewal of the Loan Agreement or this Note; (b) all rights to notice
and a
hearing prior to allowing Lender to exercise any of its remedies;
and (c)
the benefit of all valuation, appraisal and exemption
laws.
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| 2. |
DEFAULT
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Upon
the
happening of any of the following events, each of which shall constitute a
default hereunder, Lender may declare that all liabilities of the Borrower
to
the Lender under shall be accelerated and become immediately due and payable;
provided, that upon the occurrence of any default specified in Sections (c)
or
(d) below, all liabilities of the Borrower to Lender shall become immediately
due and payable without declaration, notice or demand by Lender: (a) failure
of
the Borrower (which shall include any endorser, surety or Guarantor) to perform
any material term, covenant, or agreement contained herein, which is not cured
within ten (10) days from the date of occurrence; (b) dissolution of the
Borrower; (c) filing of any petition in Bankruptcy by or against the Borrower;
(d) application by the Borrower for the appointment of a receiver, or making
of
a general assignment for the benefit of creditors by, or insolvency of the
Borrower; or (e) determination by any officer of the Lender that a material
adverse change has occurred in the financial condition of the Borrower.
| 3. |
MISCELLANEOUS
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3.1.
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Amendments,
Etc.
No amendment, modification, termination, or waiver of any provision
of
this Loan Agreement and the Note (“Loan Documents”) nor consent to any
departure by the Borrower from any Loan Document, shall in any event
be
effective unless the same shall be in writing and signed by the Lender,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which
given.
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3.2.
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No
Waiver. No
failure or delay on the part of the Lender in exercising any right,
power,
or remedy hereunder shall operate as a waiver thereof; nor shall
any
single or partial exercise of any such right, power, or remedy preclude
any other or further exercise thereof or the exercise of any other
right,
power, or remedy hereunder. The rights and remedies provided herein
are
cumulative, and are not exclusive of any other rights, powers, privileges,
or remedies, now or hereafter existing, at law or in equity or
otherwise.
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3.3.
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Successors
and Assigns.
This Loan Agreement shall be binding upon and inure to the benefit
of the
Borrower and the Lender and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights
under any Loan Document to which the Borrower is a party without
the prior
written consent of the Lender.
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3.4.
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Subordination.
The obligations evidenced hereby are subordinate in the manner and
to the
extent set forth in that certain Subordination Agreement (the
“Subordination Agreement”) dated as of September 30, 2008, by and between
Lender, and LaSalle Bank National Association, a national banking
association (“Senior Lender”) to the obligations (including interest) owed
by the Borrower to the holders of all of the notes issued pursuant
to that
certain Amended and Restated Loan and Security Agreement dated as
of
January 23, 2008, between the Borrower and Senior Lender, as such
Agreement may be supplemented, modified, restated or amended from
time to
time; and each holder hereof, by its acceptance hereof, shall be
bound by
the provisions of the Subordination
Agreement.
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3.5.
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Integration.
This
Loan Agreement and the Loan Documents contain the entire agreement
between
the parties relating to the subject matter hereof and supersede all
oral
statements and prior writings with respect
thereto.
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3.6.
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Governing
Law and Jurisdiction.
This Loan Agreement and the
Note shall be governed by, and construed in accordance with, the
laws of
the State of Texas without regard to conflicts-of-laws principles
that
would require the application of any other law. The parties hereby
agree
to submit any dispute arising out of or in connection with the Loan
Documents to the exclusive jurisdiction of the courts of Bexar County
in
the State of Texas.
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3.7.
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Severability
of Provisions. Any
provision of any Loan Document which is prohibited or unenforceable
in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent
of such prohibition
or unenforceability without invalidating the remaining
provisions
of
such Loan Document or affecting the validity or enforceability of
such
provision in any other
jurisdiction.
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3.8.
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Headings.
Article and Section headings in the Loan Documents are included in
such
Loan Documents for the convenience of reference only and shall not
constitute a part of the applicable Loan Documents for any other
purpose.
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3.9.
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Jury
Trial Waiver.
THE LENDER AND THE BORROWER
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR
COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING
OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE LOAN DOCUMENTS.
NO
OFFICER OF THE LENDER HAS AUTHORITY TO WAIVE, CONDITION, OR MODIFY
THIS
PROVISION.
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement on the date herein
stated.
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By:
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/s/
Xxxxxx X. Xxxxxxx
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Name:
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Xxxxxx
X. Xxxxxxx
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Title:
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Chief
Financial Officer
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ISI
SECURITY GROUP, INC.
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By:
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/s/
Xxx Xxxxxxxxxx
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Name:
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Xxx
Xxxxxxxxxx
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Title:
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President
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EXHIBIT
“A”
THE
OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT
SET
FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT (THE “SUBORDINATION AGREEMENT”)
DATED AS OF SEPTEMBER 30, 2008, BY AND BETWEEN PARENT, AND LASALLE BANK NATIONAL
ASSOCIATION, A NATIONAL BANKING ASSOCIATION (“SENIOR LENDER”) TO THE OBLIGATIONS
(INCLUDING INTEREST) OWED BY OBLIGOR TO THE HOLDERS OF ALL OF THE NOTES ISSUED
PURSUANT TO THAT CERTAIN AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT DATED
AS OF JANUARY 23, 2008, BETWEEN OBLIGOR AND SENIOR LENDER, AS SUCH AGREEMENT
MAY
BE SUPPLEMENTED, MODIFIED, RESTATED OR AMENDED FROM TIME TO TIME; AND EACH
HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE PROVISIONS OF
THE
SUBORDINATION AGREEMENT.
PROMISSORY
NOTE
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$2,000,000.00
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September
30, 2008
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FOR
VALUE
RECEIVED, ISI
SECURITY GROUP, INC.
a
Delaware corporation, (hereinafter called "Maker"), promises to pay to
ARGYLE
SECURITY, INC.
(hereinafter called "Lender"), the principal sum of Two Million Dollars
($2,000,000) with interest thereon at the rates and on the dates specified
in
subsections 1.2 and 1.4 of the Loan Agreement between Maker and Lender dated
September 30, 2008 (the “Loan Agreement”).
Upon
the
happening of any default under the Loan Agreement, Lender may declare that
all
liabilities of the Maker to the Lender under shall be accelerated and become
immediately due and payable; provided, that upon the occurrence of any default
specified in Sections 2(c) or (d) of the Loan Agreement, all liabilities of
the
Maker to Lender shall become immediately due and payable without declaration,
notice or demand by Lender
Maker
shall pay all reasonable and documented costs and expenses incurred by or on
behalf of Lender in connection with Lender’s exercise of any or all of its
rights and remedies under this Note, including, without limitation, reasonable
attorneys’ fees and expenses.
Any
demand upon or notice to Maker shall be sufficiently served for all purposes
if
personally delivered or placed in the mail addressed to the address shown above
or such other address as may be shown on Lender's records.
There
will be no pre-payment penalty on this Note.
If
any
provision in this Note is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Note will remain in full
force and effect. Any provision of this Note held invalid or unenforceable
only
in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.
This
Note
will be governed by and construed under the laws of the State of Texas without
regard to conflicts-of-laws principles that would require the application of
any
other law. Any dispute arising out of or in connection with this Note shall
be
submitted to the exclusive jurisdiction of the courts of Bexar County in the
State of Texas.
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To
the
fullest extent permitted by applicable law, Maker waives: (a) presentment,
demand and protest, and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of the Loan Agreement or this Note; (b) all
rights to notice and a hearing prior to allowing Lender to exercise any of
its
remedies; and (c) the benefit of all valuation, appraisal and exemption
laws.
IN
WITNESS WHEREOF, Maker has executed and delivered this Note as of the date
first
stated above.
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By:
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Name:
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Xxx
Xxxxxxxxxx
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President
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