November 23, 2009
Exhibit 99.4
November 23, 2009
ISI Detention Contracting Group, Inc.
00000 Xxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
00000 Xxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
Gentlemen:
Each of Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx (each, a “Holder”, and collectively, the “Holders”), as
an assignee of LAMSP, Inc., a California corporation (f/k/a Xxxxxxxx Detention, Inc., “PDI”), and
sole holder of each Note, has agreed to provide to ISI Detention Contracting Group, Inc., a
California corporation (the “Company”), at the Company’s request, the Holder’s commitment to enter
into a note modification agreement (collectively, the “Modification”) to each of those two certain
Guaranteed Convertible Promissory Notes dated January 1, 2008 by the Company payable to the order
of PDI, each in the original principal amount of $1.5 million (each, a “Note”, and collectively,
the “Notes”) on terms and conditions set out below.
The Notes will be modified to permit the Company to defer until January 3, 2011 the installments of
principal in the aggregate amount of $358,338.68 under each Note (consisting of $250,000 in
principal being deferred under Section 7.B. of each Note plus an additional $108,338.68 in
principal being deferred under each Note) by agreement of each Holder and the Company (under each
Note, the “Deferral Amount”) that would be due and payable on January 28, 2010, February 28, 2010,
March 28, 2010, April 28, 2010, May 28, 2010, and June 28, 2010. Accrued but unpaid interest on
the outstanding principal under the Notes shall be due and payable monthly in arrears commencing on
January 28, 2010. Attached hereto as Schedule A is a revised amortization for each Note,
taking into account the modification to the amortization of each Note contemplated hereby, and as
part of the Modification, Schedule A attached to each Note shall be replaced with the
attached Schedule A. Each Holder shall waive the notice requirement under Section 7.B. of
each Note in respect of the Company’s Election (as defined therein). Except as specifically set
forth herein and in the Modification, Holders do not agree to waive or modify any right or remedy
under the Notes or related documents, and all other terms and provisions of the Notes will remain
unchanged and in full force and effect. At the closing, the Company will pay the reasonable legal
fees and expenses of the Holders’ legal counsel, Xxxxx Vine & Xxxxx, P.C., in connection with the
preparation, negotiation and closing of the Modification, whether or not the Modification closes.
Each Holder’s commitment to enter into the Modification is subject to the following conditions
precedent: (a) satisfaction of each of the terms and conditions set forth herein; (b) the
negotiation, execution and delivery of definitive documentation for the Modification consistent
with this commitment letter and the payment to the Holders of a fee in the aggregate amount of
$15,000 (divided $,7,500 for each Holder); and (c) the negotiation, execution and delivery of
definitive documentation for (i) an amendment to that certain Loan and Security Agreement dated
October 3, 2008 between ISI Security Group, Inc., a Delaware corporation (“ISI”) and The
PrivateBank and Trust Company (the “PrivateBank”) consistent with the terms set forth in the
commitment letter dated the date hereof between ISI and PrivateBank, (ii) an amendment to that
certain Note and Warrant Purchase Agreement dated as of October 22, 2004 between ISI and Xxxxxxx
Xxxxx Xxxxxxxxx Capital Fund III, L.P., a Delaware limited partnership (“Xxxxx Mezz”), consistent
with the terms set forth in the commitment letter dated the date hereof between ISI and Xxxxx Mezz,
and (iii) an aggregate of $10.45 million in convertible debt to be issued to one or more affiliates
of MML Capital Partners, LLC by Argyle Security, Inc.(“Parent”) in the form of (y) $8.0 million
principal amount of convertible subordinated bridge notes, and (z) $2.45 million principal amount
of convertible subordinated notes consistent with the terms set forth in the commitment letter
dated the date hereof among Mezzanine Management Fund IV A, LP, Mezzanine Management Fund IV
Coinvest A, LP, and Parent.
This commitment letter forms the entire agreement that has been entered into between us with
respect to the Modification and sets forth the entire understanding of the parties with respect
thereto. This commitment letter may be modified or amended only by the written agreement of all of
us. This commitment letter is not assignable by the Company without our prior written consent and
is intended to be solely for the benefit of the parties hereto.
This commitment letter may be executed in counterparts which, taken together, shall constitute an
original. Delivery of an executed counterpart of this commitment letter by .pdf, or facsimile
shall be effective as delivery of a manually executed counterpart thereof. This commitment letter
shall be governed by, and construed in accordance with, the laws of the State of Texas.
This commitment letter will expire on 5:00 p.m. (central time) on November 23, 2009, unless
accepted in writing by the Company and delivered by .pdf or facsimile to Holders and Holders’
counsel, Xxxx Xxxxxx of Xxxxx, Xxxx & Xxxxx, P.C., or before such time and will expire at 5:00 p.m.
(central time) on December 15, 2009 unless definitive documentation for the Modification is
executed and delivered and all conditions for closing have been satisfied or waived in writing by
the Holders (such date, the “Closing Date”) on or prior to such date.
[Remainder of Page Left Blank; Signatures Appear on Following Page]
We appreciate the opportunity to present you with this commitment and look forward to working with
you.
Very truly yours, |
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/s/ Xxxx Xxxxxxxx
|
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/s/ Xxxxxxx Xxxxxxxx
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| ACKNOWLEDGED AND AGREED: | ||||||
| ISI DETENTION CONTRACTING GROUP, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxx | |||||
| Title: | Chief Financial Officer | |||||
SCHEDULE A
(See attached Excel spreadsheet)
SCHEDULE A — PDI NOTE (FOR EACH OF TWO NOTES)
| REVISED PAYMENT SCHEDULE COMMENCING JANUARY 1, 2010: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payment | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beg Balance |
1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 | 1,439,316 | 1,378,328 | 1,317,036 | 1,255,437 | 1,193,530 | 1,131,313 | 708,786 | 645,945 | 582,791 | 519,321 | 455,533 | 391,427 | 327,000 | 262,250 | 197,177 | 131,779 | 66,054 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Payment |
7,500 | 7,500 | 7,500 | 7,500 | 7,500 | 7,500 | 68,184 | 68,184 | 68,184 | 68,184 | 68,184 | 68,184 | 426,384 | 66,384 | 66,384 | 66,384 | 66,384 | 66,384 | 66,384 | 66,384 | 66,384 | 66,384 | 66,384 | 66,384 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Interest |
7,500 | 7,500 | 7,500 | 7,500 | 7,500 | 7,500 | 7,500 | 7,197 | 6,892 | 6,585 | 6,277 | 5,968 | 3,857 | 3,544 | 3,230 | 2,914 | 2,597 | 2,278 | 1,957 | 1,635 | 1,311 | 986 | 659 | 330 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Interest |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal |
0 | 0 | 0 | 0 | 0 | 0 | 60,684 | 60,988 | 61,293 | 61,599 | 61,907 | 62,217 | 422,528 | 62,840 | 63,154 | 63,470 | 63,788 | 64,107 | 64,427 | 64,749 | 65,073 | 65,398 | 65,725 | 66,054 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending Balance |
1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 | 1,500,000 | 1,439,316 | 1,378,328 | 1,317,036 | 1,255,437 | 1,193,530 | 1,131,313 | 708,786 | 645,945 | 582,791 | 519,321 | 455,533 | 391,427 | 327,000 | 262,250 | 197,177 | 131,779 | 66,054 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
