Exhibit 10.79

AMENDMENT AND FORBEARANCE

This AMENDMENT AND FORBEARANCE (“Agreement”) to is entered into as of March 23,
2007 (the “2007 Closing Date”), by and between LSQ Funding Group, L.C. and BRE
LLC (collectively, “Lender”), and Tri-S Security Corporation (“TSS”), and each
of TSS’s affiliates (“Affiliates”), Paragon Systems, Inc. (“Paragon”), The
Cornwall Group, Inc., Vanguard Security, Inc., Forestville Corporation, Vanguard
Security of Broward County, Inc., On Guard Security and Investigations, Inc.,
Armor Security, Inc. (“Armor”), Protection Technologies Corporation,
International Monitoring, Inc., Guardsource Corp. and Virtual Guard Source, Inc.
(TSS and the Affiliates, collectively, “Borrower”).

WHEREAS, Lender and Borrower have, entered into that certain CREDIT AGREEMENT
(the “Loan Agreement”) and that certain FACTORING AGREEMENT (the “Factoring
Agreement”), both dated as of and closed on October 19, 2005, and the other
documents entered into and contemplated therein, all as amended hereby; and

WHEREAS, Borrower is or may be in default under the terms of the Loan Documents,
by reason of the following: (a) the pending lawsuit filed by Borrower in the
United States District Court, Northern District of Georgia, Atlanta Division
against the Former Shareholders, the legal proceeding contemplated thereby and
any claim for damages that have been commenced prior to the date hereof or may
be commenced after the date hereof by the Former Shareholders relating to the
Redemption Obligation or otherwise (the “Pending Claims”), and b(b) Borrower’s
failure to pay the interest otherwise payable in February 2006, August 2006 and
February 2007 with respect to the Redemption Obligation, (c) Borrower’s failure
to redeem by February 27, 2007, the shares of TSS’s Series C Redeemable
Preferred Stock held by the Former Shareholders, and (d) failure to either
submit the Report required under Section 5.17 of the Loan Agreement, or to
resolve the Pending Claims on a timely basis (each of the above collectively,
the “Existing Defaults”); and

WHEREAS, Borrower has requested that Lender forbear from exercising its rights
and remedies against Borrower from the date hereof through the earlier of
February 28, 2008, or the occurrence of an Event of Default other than an
Existing Default (the “Forbearance Period”). Although Lender is under no
obligation to do so, Lender is willing to forbear from exercising its rights and
remedies against Borrower through the Forbearance Period on the terms and
conditions set forth in this Agreement, so long as Borrower complies with the
terms, covenants and conditions set forth in this Agreement in a timely manner;
and

WHEREAS, Borrower needs additional funds up to $2.5 million dollars in order to
pursue several business opportunities; and

WHEREAS, Lender is willing to make the agreements and the loans that Borrower
has requested in consideration of the promises set forth below; and

WHEREAS, Borrower is willing to pay the fees and interest, and grant the rights
described below so that it can effectively pursue the opportunities.

 

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AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

1. Definitions. Capitalized terms used but not defined in this Agreement shall
have the meanings given to them in the Loan Agreement and Factoring Agreement.

2. Agreements.

2.1 Forbearance. So long as no Event of Default, other than the Existing
Defaults, occurs or exists, subject to the terms and conditions set forth
herein, Lender agrees that during the Forbearance Period, Lender will not
(x) exercise any default remedy available to Lender under any Loan Document or
applicable law; (y) enforce collection from any Borrower or any Guarantor of any
of the Obligations; or (z) foreclose on its security interest in any of the
Collateral (as defined in all Loan Documents).

Except as expressly provided herein, this Agreement does not constitute a waiver
or release by Lender of any Obligations or of any Event of Default other than
the Existing Defaults, or of any Event of Default which may arise in the future
after the date of this Agreement. If Borrower does not comply with the terms of
this Agreement and the Loan Documents, as modified herein, Lender shall have no
further obligations under this Agreement and shall be permitted to exercise at
such time any rights and remedies against Borrower as it deems appropriate in
its sole and absolute discretion. Borrower understands that Lender has made no
commitment and is under no obligation whatsoever to grant any additional
extensions of time at the end of the Forbearance Period.

2.2 Amendments.

(a) Security Interest. Borrower hereby grants and reaffirms the grant to Lender
of a security interest in all Collateral to secure all Obligations, including
all obligations under the Loan Agreement, the Factoring Agreement, the Loan
Documents and this Agreement. The term Collateral shall include the Collateral
identified in the Loan Documents, and the collateral identified in Exhibit A
hereto. Borrower shall execute such documents as are required by Lender in order
to upon a valid perfected security interest in the Collateral, including the
Pledge Agreement attached hereto as Exhibit B.

(b) The following sub-sections shall be added to Section 2.2 of the Loan
Agreement:

(e) 2007 Term Loan. Subject to the terms and conditions hereof, Lender agrees to
make an additional Term Loan (the “2007 Term Loan”) to Borrower, up to Two
Million Five Hundred Thousand Dollars ($2,500,000), the proceeds of which may
only be used for working capital needs of Borrower. The term (“Term”) of the
2007 Term Loan shall be from the 2007 Closing Date until March 28, 2009 (“2007
Term Loan Due Date”). Upon the execution of this Agreement, Lender will make an
initial advance to Borrower of no less than $100,000.00 (“Initial Minimum
Balance”).

 

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(f) Amortization of 2007 Term Loan. Interest on the outstanding balance of the
2007 Term Loan will be due and payable on April 1, 2007, and on the first day of
each month thereafter. The outstanding principal balance of the 2007 Term Loan,
and all remaining accrued and unpaid interest under the 2007 Term Loan, must be
paid in full on the 2007 Term Loan Due Date. Subject to payment of the Minimum
Balance Fee, Borrower may repay the 2007 Term Loan at any time prior to the 2007
Term Loan Due Date, but any amounts repaid may not be re-borrowed.

(c) Section 2.4 of the Loan Agreement is deleted and replaced with the
following:

2.4 Rates; Payment.

(a) Interest Rates.

(i) Factoring Advances. With respect to the Factoring Advances, Borrower shall
pay to Lender the charges and interest due under the Factoring Agreement,
including a Fund Usage Fee Rate equal to one percent (1%) per annum in excess of
the Prime Rate, but not less than 6.0% per annum.

(ii) Term Loan Interest Rate. With respect to the entire principal outstanding
under the 2007 Term Loan, interest shall accrue and be payable at the Base Rate
plus the Term Loan Margin, but not less that 12% per annum. From and after 2007
Closing Date, the Term Loan Margin shall be 5.50 percent (550 basis points) per
annum.

(b) Other Rates, Fees.

(i) Default Rate; Fees. Upon the occurrence and during the continuance of an
Event of Default (other than the Existing Defaults during the Forbearance
Period), in addition to any of Lender’s other rights and remedies with respect
to such Event of Default, Borrower will pay post-Event of Default interest
(“Default Interest”), as follows: (i) with respect to the Factoring Advances,
Borrower shall pay to Lender the post-default charges and interest due under the
Factoring Agreement; (ii) in addition to any other fees and interest chargeable
to Borrower on account of the 2007 Term Loan, Borrower shall pay to Lender a fee
of $60,000 per month (“Term Loan Default Fee”), which shall be due and payable
when interest is otherwise due, but if the 2007 Term Loan has been paid in full
within sixty (60) days of a notice by Lender to Borrower of an Event of Default,
in lieu of the Term Loan Default Fee, Borrower may pay an amount equal to the
Minimum Balance Fee that would be calculated as of the date of the payment in
full of the 2007 Term Loan, if within the sixty day period; and (iii) in
addition to the Term Loan Default Fee, all Obligations not paid when due will
earn interest at the rate of eighteen percent (18%) per annum until paid,
including all amounts due under this section.

 

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(ii) Minimum Balance Fee. If there has been no Event of Default, and Borrower
has failed to maintain the principal amount outstanding under the 2007 Term Loan
at or above the Initial Minimum Balance (i.e., $100,000) for any consecutive
five day period during the Term, in addition to all other interest and fees due
under the Loan Documents, Borrower must pay to Lender a success fee (“Minimum
Balance Fee”) equal to the number of months (partial or otherwise) that any
portion of the 2007 Term Loan is outstanding during the Term, multiplied by
$50,000.00 (e.g., in the event that Borrower successfully pursues opportunities,
or is otherwise able to repay the 2007 Term Loan by June of 2007, for the months
of March to June of 2007, the Minimum Balance Fee would be $200.000, or, $50,000
per month for the four months that a balance was outstanding during the Term).
The Minimum Balance Fee shall be paid upon demand by Lender, or if no demand,
upon payment in full of the 2007 Term Loan, but no Minimum Balance Fee shall be
owing if the outstanding principal balance of the 2007 Term Loan is, at all
times during the Term, greater than the Initial Minimum Balance, or if Borrower
is obligated to make the Term Loan Default Fee.

(iii) Unused Line Fee. In addition, Borrower will pay Lender an unused line fee
of one-quarter of one percent (.25%) per month, computed on the difference
between the monthly average outstanding principal balance of the 2007 Term Loan
and $2,500,000.

(d) Section 2.10 of the Loan Agreement is deleted in its entirety, and is
replaced with the following

2.10 Crediting Payments. The receipt of any payment by Lender on the Term Loan
shall be applied provisionally to reduce the Term Loan obligations, but shall
not be considered a payment on account unless such payment is a wire transfer of
immediately available federal funds and is made to Lender or unless and until
such payment item is honored when presented for payment. All payments or
receipts shall, at Lender’s discretion, be applied first to any Obligations
under the Factoring Agreement, and then to the Term Loan. Should any payment
item not be honored when presented for payment, then Borrower shall be deemed
not to have made such payment, and interest shall be recalculated accordingly.
Any payment that has been received, but which Lender is required to return, for
any reason, shall not be deemed a payment. Anything to the contrary contained
herein notwithstanding, any payment item shall be deemed received by Lender, on
account of a Term Loan, only if it is received by Lender on a Business Day on or
before 11:00 a.m., Eastern time. If any payment item is received by Lender on a
non-Business Day or after 11:00 a.m., Eastern time on a Business Day, it shall
be deemed to have been received by Lender as of the opening of business on the
immediately following Business Day.

 

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(e) Section 5.17 of the Loan Agreement is deleted in its entirety, and is
replaced with the following:

5.17. Redemption. No later than February 28, 2008, Borrower shall deliver to
Lender a written report that demonstrates that Borrower has the ability to
satisfy the Redemption Obligation as of the due date thereof (the “Report”),
which Report shall be in form and content reasonably acceptable to Lender.
Lender shall review the Report, and in the event that Lender determines, in its
reasonable judgment, that the Report is not acceptable, then Lender shall send
Borrower a notice of rejection (“Notice of Rejection”). Upon delivery of a
Notice of Rejection by Lender to Borrower, Borrower shall be deemed to be in
default of this Section 5.17, and such notice shall constitute an Event of
Default under Section 7.1(b) of the Agreement.

(f) Other Terms. The following terms shall be added to the Loan Agreement:

(i) Availability Requirement. From and after February 28, 2008, and through and
until the 2007 Term Loan Due Date, Borrower must, at all times, maintain 30 day
average availability of not less than $1 million under the Factoring Agreement,
as calculated by Lender. In the event of a dispute as to the calculation,
Lender’s calculation shall prevail in the absence of manifest error, but in any
event, Borrower shall be bound by Lender’s calculation of availability as to
which Borrower has failed to make a written objection within ten days of Lender
sending Borrower any such calculation.

(ii) Pledge of Stock. Upon execution of this Agreement, Lender shall have been
granted a security interest in all of the shares of stock of the Affiliates
listed on Exhibit A to this Agreement. Lender’s security interest in the stock
of Paragon is subject to a security interest as to 40% of the shares in favor of
the Former Shareholders. No later than February 28, 2008, Borrow will have
provided Lender with a pledge of all of the stock of Paragon, free of the
security interests of the Former Shareholders, and all other security interests
or encumbrances.

(iii) Resolution of Pending Claims. The Pending Claims must be completely
resolved by February 28, 2008, to Lender’s satisfaction.

 

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(iv) Remedies. Failure by Borrower to satisfy any of the above on a timely
basis, is an Event of Default, and, in addition to all other remedies, Lender
may accelerate all Obligations, it may terminate the Factoring Agreement, it may
elect to continue to make advances and perform under the Factoring Agreement on
a provisional basis, or it may elect to do any or all of the above.

(v) Section 3.3(e) of the Loan Agreement. Lender acknowledges and agrees that,
by virtue of the sale of AFS Interest by Borrower in May 2006 and the payment of
the proceeds thereof by Borrower to Lender, the obligations of Borrower set
forth in Section 3.3(e) of the Loan Agreement have been satisfied in full.

3. Limitation of Forbearance.

3.1 This Agreement is effective for the purposes set forth herein and shall be
limited precisely as written and shall not be deemed to (a) be a consent to any
amendment, waiver or modification of any other term or condition of any Loan
Document, or (b) otherwise prejudice any right or remedy which Lender may now
have or may have in the future under or in connection with any Loan Document.

3.2 This Agreement shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents are hereby ratified and confirmed and
shall remain in full force and effect.

4. Representations and Warranties. To induce Lender to enter into this
Agreement, Borrower hereby represents and warrants to Lender as follows:

4.1 Immediately after giving effect to this Agreement (a) the representations
and warranties contained in the Loan Documents are true, accurate and complete
in all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct as of such date), and (b) no Event of Default other than the
Existing Defaults has occurred and is continuing;

4.2 Borrower has the power and authority to execute and deliver this Agreement
and to perform its obligations under the Loan Agreement;

4.3 The organizational documents of Borrower delivered to Lender on the
Effective Date remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;

4.4 The execution and delivery by Borrower of this Agreement and the performance
by Borrower of its obligations under the Loan Agreement have been duly
authorized by all necessary action on the part of Borrower;

4.5 The execution and delivery by Borrower of this Agreement and the performance
by Borrower of its obligations under the Loan Documents do not and will not

 

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contravene (a) any law or regulation binding on or affecting Borrower, (b) any
contractual restriction with a Person binding on Borrower, (c) any order,
judgment or decree of any court or other governmental or public body or
authority, or subdivision thereof, binding on Borrower, or (d) the
organizational documents of Borrower;

4.6 The execution and delivery by Borrower of this Agreement and the performance
by Borrower of its obligations under the Loan Documents do not require any
order, consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption by any governmental or public body
or authority, or subdivision thereof, binding on either Borrower, except as
already has been obtained or made; and

4.7 This Agreement has been duly executed and delivered by Borrower and is the
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of
general application and equitable principles relating to or affecting creditors’
rights.

5. Prior Agreement. The Loan Documents are hereby ratified and reaffirmed and
shall remain in full force and effect. This Agreement is not a novation and the
terms and conditions of this Agreement shall be in addition to and supplemental
to all terms and conditions set forth in the Loan Documents. In the event of any
conflict or inconsistency between this Agreement and the terms of such
documents, the terms of this Agreement shall be controlling, but such document
shall not otherwise be affected or the rights therein impaired.

6. Release by Borrower.

6.1 FOR GOOD AND VALUABLE CONSIDERATION, Borrower hereby forever relieves,
releases, and discharges Lender and its present or former employees, officers,
directors, agents, representatives, attorneys, and each of them, from any and
all claims, debts, liabilities, demands, obligations, promises, acts,
agreements, costs and expenses, actions and causes of action, of every type,
kind, nature, description or character whatsoever, whether known or unknown,
suspected or unsuspected, absolute or contingent, arising out of or in any
manner whatsoever connected with or related to facts, circumstances, issues,
controversies or claims existing or arising from the beginning of time through
and including the date of execution of this Agreement (collectively “Released
Claims”). Without limiting the foregoing, the Released Claims shall include any
and all liabilities or claims arising out of or in any manner whatsoever
connected with or related to the Loan Documents, the Recitals hereto, any
instruments, agreements or documents executed in connection with any of the
foregoing or the origination, negotiation, administration, servicing and/or
enforcement of any of the foregoing.

6.2 In furtherance of this release, Borrower expressly acknowledges and waives
any and all rights under Section 1542 of the California Civil Code, or any
equivalent statute or rule that may be applicable, which provides substantially
as follows:

“A general release does not extend to claims which the creditor does not know or
expect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”
(Emphasis added.)

 

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6.3 By entering into this release, Borrower recognizes that no facts or
representations are ever absolutely certain and it may hereafter discover facts
in addition to or different from those which it presently knows or believes to
be true, but that it is the intention of Borrower hereby to fully, finally and
forever settle and release all matters, disputes and differences, known or
unknown, suspected or unsuspected; accordingly, if Borrower should subsequently
discover that any fact that it relied upon in entering into this release was
untrue, or that any understanding of the facts was incorrect, Borrower shall not
be entitled to set aside this release by reason thereof, regardless of any claim
of mistake of fact or law or any other circumstances whatsoever. Borrower
acknowledges that it is not relying upon and has not relied upon any
representation or statement made by Lender with respect to the facts underlying
this release or with regard to any of such party’s rights or asserted rights.

6.4 This release may be pleaded as a full and complete defense and/or as a
cross-complaint or counterclaim against any action, suit, or other proceeding
that may be instituted, prosecuted or attempted in breach of this release.
Borrower acknowledges that the release contained herein constitutes a material
inducement to Lender to enter into this Agreement, and that Lender would not
have done so but for Lender’s expectation that such release is valid and
enforceable in all events.

6.5 Borrower hereby represents and warrants to Lender, and Lender is relying
thereon, as follows:

(a) Except as expressly stated in this Agreement, neither Lender nor any agent,
employee or representative of Lender has made any statement or representation to
Borrower regarding any fact relied upon by Borrower in entering into this
Agreement.

(b) Borrower has made such investigation of the facts pertaining to this
Agreement and all of the matters appertaining thereto, as it deems necessary.

(c) The terms of this Agreement are contractual and not a mere recital.

(d) This Agreement has been carefully read by Borrower, the contents hereof are
known and understood by Borrower, and this Agreement is signed freely, and
without duress, by Borrower.

(e) Borrower represents and warrants that it is the sole and lawful owner of all
right, title and interest in and to every claim and every other matter which it
releases herein, and that it has not heretofore assigned or transferred, or
purported to assign or transfer, to any person, firm or entity any claims or
other matters herein released. Borrower shall indemnify Lender, defend and hold
it harmless from and against all claims based upon or arising in connection with
prior assignments or purported assignments or transfers of any claims or matters
released herein.

 

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7. Counterparts. This Agreement may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.

8. Effectiveness. This Agreement shall be deemed effective upon (a) the due
execution and delivery to Lender of this Agreement by each party hereto,
(b) Borrower’s payment of all legal fees and costs in connection with this
Agreement which are outstanding, and (c) Lender’s receipt of the Acknowledgment
of Forbearance and Reaffirmation of Guaranty substantially in the form attached
hereto.

9. Governing Law. This Agreement and the rights and obligations of the parties
hereto shall be governed by and construed in accordance with the laws of the
State of Florida.

10. Borrower agrees to pay to Lender, as fully earned, and to reimburse Lender
as follows: a) in consideration of the Lender’s commitment to the 2007 Term
Loan, Forty Thousand and No/00 Dollars ($40,000.00); b) legal fees incurred by
Lender in an amount estimated at $3000, plus such amounts are as incurred with
respect to comments made and changes requested by Borrower in connection with
this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first written above. In executing this
Agreement, the undersigned, in their individual capacity, warrant and represent
that the Affiliates are all of the entities with business operations affiliated
with TSS.

 

BORROWER: TRI-S SECURITY CORPORATION By:  

/s/ Robert K. Mills

Name:   Robert K. Mills Title:   Chief Financial Officer PARAGON SYSTEMS, INC.
By:  

/s/ Robert K. Mills

Name:   Robert K. Mills Title:   Secretary

 

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THE CORNWALL GROUP, INC. By:  

/s/ Robert K. Mills

Name:   Robert K. Mills Title:   Secretary VANGUARD SECURITY, INC. By:  

/s/ Robert K. Mills

Name:   Robert K. Mills Title:   Secretary FORESTVILLE CORPORATION By:  

/s/ Robert K. Mills

Name:   Robert K. Mills Title:   Secretary VANGUARD SECURITY OF BROWARD COUNTY,
INC. By:  

/s/ Robert K. Mills

Name:   Robert K. Mills Title:   Secretary

 

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ON GUARD SECURITY AND INVESTIGATIONS, INC. By:  

/s/ Robert K. Mills

Name:   Robert K. Mills Title:   Secretary ARMOR SECURITY, INC. By:  

/s/ Robert K. Mills

Name:   Robert K. Mills Title:   Secretary PROTECTION TECHNOLOGIES CORPORATION
By:  

/s/ Robert K. Mills

Name:   Robert K. Mills Title:   Secretary INTERNATIONAL MONITORING, INC. By:  

/s/ Robert K. Mills

Name:   Robert K. Mills Title:   Secretary

 

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    GUARDSOURCE CORP.     By:  

/s/ Robert K. Mills

    Name:   Robert K. Mills     Title:   Secretary     VIRTUAL GUARD SOURCE
CORP.     By:  

/s/ Robert K. Mills

    Name:   Robert K. Mills     Title:   Secretary LENDER:     LSQ FUNDING
GROUP, L.C.     By:  

/s/ Maxwell Eliscu

    Name:   Maxwell Eliscu     Title:   Authorized Agent     BRE LLC     By:  

/s/ Maxwell Eliscu

    Name:   Maxwell Eliscu     Title:   Authorized Agent

 

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