SUBORDINATION
      AGREEMENT

    (Argyle)

     

    This
      SUBORDINATION
      AGREEMENT
      (this
“Agreement”) is entered into as of September 30, 2008, among ARGYLE SECURITY,
      INC., a Delaware corporation (“Parent”), and LASALLE BANK NATIONAL ASSOCIATION,
      a national banking association (“Senior Lender”).

     

    RECITALS

     

    A. ISI
      Security Group, Inc., a Delaware corporation (“ISI”) and Senior Lender have
      entered into an Amended and Restated Loan and Security Agreement dated January
      23, 2008 (as the same hereafter may be amended, restated, supplemented or
      otherwise modified from time to time, the “Senior Loan Agreement”), subject to
      the terms and conditions of which the Senior Lender has agreed to make, and
      has
      made, loans and other financial accommodations to ISI.

     

    B. Parent
      owns all of the issued and outstanding capital stock of ISI. ISI is indebted
      to
      Parent under that certain Loan Agreement, dated September 30, 2008, between
      ISI
      and Parent and Promissory Note, dated September 30, 2008 in the original
      principal amount of $2,000,000, executed by ISI payable to Parent (such loan
      documents, as the same hereafter may be amended, restated, supplemented or
      otherwise modified from time to time, are collectively referred to herein as
      the
“Subordinated Loan”).

     

    C. Senior
      Lender’s consent to the Subordinated Loan is required under the Senior Loan
      Agreement and Senior Lender is willing to give its consent provided that Parent
      executes this Subordination Agreement.

     

    NOW
      THEREFORE,
      the
      parties hereto hereby agree as follows:

     

    SECTION
      1.

    RECITALS
      AND DEFINITIONS

     

    1.1 Recitals.
      The
      Recitals set forth above are acknowledged by the parties hereto to be true
      and
      correct and are incorporated herein by this reference.

     

    1.2 Definitions.
      All
      capitalized terms used but not elsewhere defined herein shall have the
      respective meanings ascribed to such terms in the Senior Loan Agreement. As
      used
      herein, the following terms shall have the following meanings:

     

    “Event
      of Default”
      shall
      mean the occurrence of an event of default, including a failure to pay when
      due,
      declared due, or properly demanded by Senior Lender, of any of the Senior
      Indebtedness.

     

    “Obligor”
shall
      mean ISI.

     

    “Person”
      shall
      mean any individual, sole proprietorship, partnership, joint venture, trust,
      unincorporated organization, association, corporation, limited liability
      company, institution, entity, party or foreign or United States government
      (whether federal, state, county, city, municipal or otherwise), including,
      without limitation, any instrumentality, division, agency, body or department
      thereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    “Proceeding”
      shall
      mean any insolvency, bankruptcy, receivership, custodianship, liquidation,
      reorganization, assignment for the benefit of creditors or other proceeding
      for
      the liquidation, dissolution or other winding up of Obligor or its properties
      (including, without limitation, any such proceeding under the Bankruptcy
      Code).

     

    “Senior
      Collection Action”
      shall
      mean any judicial or non-judicial proceeding initiated by Senior Lender against
      Obligor to collect the Senior Indebtedness, to foreclose the Senior Liens or
      otherwise to enforce the rights of Senior Lender under the Senior Loan Agreement
      and the other Senior Instruments or applicable law with respect to the Senior
      Indebtedness.

     

    “Senior
      Indebtedness”
      shall
      mean all liabilities, indebtedness and obligations of Obligor owed to Senior
      Lender under the Senior Instruments, whether now due or hereafter arising,
      direct or indirect, absolute or contingent, joint and several or several,
      secured or unsecured, together with all accrued and unpaid interest thereon,
      including all interest which accrues during the pendency of any Proceeding,
      whether or not allowed in such Proceeding. 

     

    “Senior
      Instruments”
      shall
      mean the Senior Loan Agreement and all notes now or hereafter evidencing the
      Senior Indebtedness, all guaranties of the Senior Indebtedness, all documents
      and instruments securing the repayment of the Senior Indebtedness and all other
      documents or instruments executed and delivered to Senior Lender evidencing
      or
      pertaining to the Senior Indebtedness.

     

    “Senior
      Liens”
      shall
      mean all Liens granted to Senior Lender by ISI or by any Guarantor (including
      but not limited to Obligor) to secure the Senior Indebtedness.

     

    “Subordinated
      Collection Action”
      shall
      mean (i) any acceleration of the Subordinated Indebtedness, or a termination
      of
      Obligor’s right of possession under the Subordinated Lease, (ii) to file or
      initiate, or to join with other Persons in filing or initiating, an eviction
      or
      other Proceeding against Obligor or (iii) any judicial proceeding or other
      action initiated or taken by Parent, or by Parent in concert with other Persons,
      against Obligor or any other Person to collect the Subordinated Indebtedness
      or
      otherwise to enforce the rights of Parent under the Subordinated Loan or
      applicable law with respect to the Subordinated Indebtedness.

     

    “Subordinated
      Default”
      shall
      mean a default in the payment of the Subordinated Indebtedness or any other
      occurrence permitting Parent to accelerate the payment of all or any portion
      of
      the Subordinated Indebtedness.

     

    “Subordinated
      Default Notice”
      shall
      mean a written notice from Parent to Obligor of the occurrence of a Subordinated
      Default.


    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    


    “Subordinated
      Indebtedness”
      shall
      mean all of the Indebtedness of Obligor to Parent under the Subordinated Loan
      and all other amounts now or hereafter owed by any Obligor to
      Parent.

     

    “Subordinated
      Loan Documents”
      shall
      mean those documents described in Recital Paragraph C above, and all other
      documents and instruments executed and delivered by Obligor to Parent evidencing
      or pertaining to the Subordinated Indebtedness.

     

    SECTION
      2.

    SUBORDINATION
      OF THE SUBORDINATED

    INDEBTEDNESS
      TO SENIOR INDEBTEDNESS

     

    2.1 Subordination.
      Upon
      the terms and conditions contained in this Agreement, the payment of any and
      all
      of the Subordinated Indebtedness hereby expressly is subordinated to the prior
      indefeasible payment in full in cash of the Senior Indebtedness. Notwithstanding
      the date, manner or order of perfection, or lack of perfection, any and all
      liens, security interests, pledges, or other interests granted by or on behalf
      of Obligor in favor of Parent (whether granted in the Subordinated Loan or
      otherwise) shall be subordinate and junior to all liens, security interests,
      pledges or hypothecs securing repayment of the Senior Indebtedness in all
      respects.

     

    2.2 Restrictions
      on Payments.
      Notwithstanding any provision of the Subordinated Loan to the contrary and
      in
      addition to any other limitations set forth herein or therein, no payment of
      principal, interest, fees or any other amount due with respect to the
      Subordinated Indebtedness shall be made, and Parent shall not exercise any
      right
      of setoff or recoupment with respect to any Subordinated Indebtedness, until
      all
      of the Senior Indebtedness is paid in full in cash. Prior to the date the Senior
      Indebtedness is paid in full in cash, Obligor shall not make and Parent may
      receive any payments of accrued interest, principal or any other amounts due
      under the Subordinated Indebtedness. 

     

    2.3 Proceedings.
      In the
      event of any Proceeding (a) all Senior Indebtedness first shall be paid in
      full
      in cash before any payment of or with respect to the Subordinated Indebtedness
      shall be made; (b) any payment which, but for the terms hereof, otherwise would
      be payable or deliverable in respect of the Subordinated Indebtedness shall
      be
      paid or delivered directly to Senior Lender (to be held and/or applied by Senior
      Lender in accordance with the terms of the Senior Loan Agreement) until all
      Senior Indebtedness is paid in full, and Parent irrevocably authorizes, empowers
      and directs all receivers, trustees, liquidators, custodians, conservators
      and
      others having authority in the premises to effect all such payments and
      deliveries and further irrevocably authorizes and empowers Senior Lender to
      demand, sue for, collect and receive every such payment or distribution; (c)
      Parent agrees to execute and deliver to Senior Lender or its representative
      all
      such further instruments requested by Senior Lender confirming the authorization
      referred to in the foregoing clause (b); (d) Parent agrees (i) not to waive,
      discharge, release or compromise any claim of Parent in respect of the
      Subordinated Indebtedness without the prior written consent of Senior Lender;
      and (ii) to take all actions as Senior Lender reasonably may request in order
      to
      enable Senior Lender to enforce all claims upon or in respect of the
      Subordinated Indebtedness; (e) Parent expressly consents to the granting by
      Obligor to Senior Lender of first priority liens on Obligor’s property in
      connection with any financing provided by Senior Lender to Obligor after the
      commencement of such Proceeding; and (f) Parent agrees to timely execute,
      verify, deliver and file any proofs of claim in respect of the Subordinated
      Indebtedness in connection with any such Proceeding and agrees to vote such
      proofs of claim in any such Proceeding in a manner which is consistent with
      the
      terms of this Agreement; provided, however, that Parent will not vote in a
      manner which provides for less than full payment of the Senior Indebtedness
      or
      which is otherwise inconsistent with this Agreement.


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    


    2.4 Incorrect
      Payment.
      If any
      payment not permitted under Section 2.2 is received by Parent on account of
      the
      Subordinated Indebtedness before all Senior Indebtedness is paid in full in
      cash, such payment shall be held in trust by Parent for the benefit of Senior
      Lender and shall be paid over to Senior Lender, or its designated
      representative, for application (in accordance with the Senior Loan Agreement)
      to the payment of the Senior Indebtedness then remaining unpaid, until all
      of
      the Senior Indebtedness is paid in full in cash. Except for any payment made
      by
      Parent to Senior Lender pursuant to this Section 2.4, Parent has no other
      payment obligation, duty or commitment with respect to the Senior
      Indebtedness.

     

    2.5 Sale,
      Transfer.
      Parent
      shall not sell, assign, dispose of or otherwise transfer all or any portion
      of
      the Subordinated Indebtedness unless, prior to the consummation of any such
      action, the transferee thereof executes and delivers to Senior Lender an
      agreement substantially identical to this Agreement, providing for the continued
      subordination and forbearance of the Subordinated Indebtedness to the Senior
      Indebtedness as provided herein and for the continued effectiveness of all
      of
      the rights of Senior Lender arising under this Agreement. Notwithstanding the
      failure to execute or deliver any such agreement, the subordination effected
      hereby shall survive any sale, assignment, disposition or other transfer of
      all
      or any portion of the Subordinated Indebtedness, and the terms of this Agreement
      shall be binding upon the successors and assigns of Parent, as provided in
      Section 10 below.

     

    2.6 Legends.
      Until
      the Senior Indebtedness is paid in full in cash, each of the Subordinated Loan
      at all times shall contain in a conspicuous manner a legend stating
      substantially as follows:

     

    “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 Argyle Security Inc., and LaSalle
      Bank National Association, a national banking association (“Senior Lender”) to
      the obligations (including interest) owed by ISI Security Group, Inc.
      (“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.”

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    


    2.7 Restriction
      on Action by Parent.

     

    (A) Until
      the
      Senior Indebtedness is paid in full in cash and notwithstanding anything
      contained in the Subordinated Loan or the Senior Loan Agreement to the contrary,
      Parent shall not agree to any amendment or modification of, or supplement to,
      the Subordinated Loan as in effect on the date hereof, the effect of which
      is to
      (i) increase the base rent payable in respect of the Subordinated Indebtedness,
      (ii) accelerate the date of any regularly scheduled rental payments on the
      Subordinated Indebtedness, or (iii) make the covenants and events of default
      contained in the Subordinated Loan materially more restrictive.

     

    (B) Until
      the
      Senior Indebtedness is paid in full in cash, Parent shall not take any
      Subordinated Collection Action.

     

    (C) Notwithstanding
      the provisions of the foregoing clause (B), (i) Parent may participate in any
      Proceeding not initiated by or at the request of Parent or any other Persons
      acting in concert with Parent and (ii) in the event the Senior Indebtedness
      is
      accelerated, Parent may accelerate the Subordinated Indebtedness. If Senior
      Lender subsequently rescinds such acceleration, then all Subordinated Collection
      Actions shall likewise be rescinded or terminated, without prejudice to the
      rights of Parent.

     

    2.8 Subrogation.
      Subject
      to the payment in full in cash of all Senior Indebtedness, Parent shall be
      subrogated to the rights of Senior Lender to receive payments or distributions
      of assets of Obligor applicable to the Senior Indebtedness until the principal
      of, and interest and premium, if any, on, and all other amounts payable in
      respect of the Subordinated Indebtedness shall be paid in full. For purposes
      of
      such subrogation, no payment or distribution to Senior Lender under the
      provisions hereof to which Parent would have been entitled but for the
      provisions of this Agreement, and no payment pursuant to the provisions of
      this
      Agreement to Senior Lender by Parent, as among Obligor and its creditors other
      than Senior Lender, shall be deemed to be a payment by Obligor to or on account
      of the Senior Indebtedness;

     

    2.9 Waivers.
      All of
      the Senior Indebtedness shall be deemed to have been made or incurred in
      reliance upon this Agreement. Parent expressly waives all notice of the
      acceptance by Senior Lender of the subordination and other provisions of this
      Agreement and agrees that Senior Lender has made no warranties or
      representations with respect to the legality, validity, enforceability,
      collectability or perfection of the Senior Indebtedness or any liens or security
      interests held in connection therewith. The Parent agrees that Senior Lender
      shall be entitled to manage and supervise its loans in accordance with
      applicable law and its usual practices, modified from time to time as it deems
      appropriate under the circumstances, without regard to the existence of any
      rights that Parent may now or hereafter have in or to any assets. Senior Lender
      shall have no liability to Parent as a result of any and all lawful actions,
      which do not violate any express provision of this Agreement, which Senior
      Lender takes or omits to take (including, without limitation, actions with
      respect to the creation, perfection or continuation of liens or security
      interests, actions with respect to the occurrence of any Default under the
      Senior Loan Agreement, actions with respect to the foreclosure upon, sale,
      release or failure to realize upon, any collateral, and actions with respect
      to
      the collection of any claim for all or any part of the Senior Indebtedness
      from
      any account debtor or any other party), regardless of whether any such actions
      or omissions may affect Senior Lender’s rights to a deficiency or Parent’s
      rights of subrogation or reimbursement. Senior Lender may, from time to time,
      enter into agreements and settlements with Obligor as they may determine,
      including, without limitation, any substitution of collateral, any release
      of
      any lien or security interest and any release of Obligor. Parent waives any
      and
      all rights it may have to require Senior Lender to marshal assets. Parent agrees
      that in the event Senior Lender forecloses or realizes upon or enforces any
      of
      its rights with respect. to the collateral subject to Senior Liens, or Obligor
      sells any such collateral or property in a transaction consented to by Senior
      Lender, Parent shall, upon demand, execute such terminations, partial releases
      and other documents as Senior Lender requests in its reasonable discretion
      to
      release Parent’s lien, if any, upon such property.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    SECTION
      3.

    CONTINUED
      EFFECTIVENESS OF THIS AGREEMENT

     

    The
      terms
      of this Agreement, the subordination effected hereby, and the rights and the
      obligations of Parent and Senior Lender arising hereunder, shall not be
      affected, modified or impaired in any manner or to any extent by (a) any
      amendment or modification of or supplement to the Senior Loan Agreement or
      any
      of the other Senior Instruments or any of the Subordinated Loan, and Parent
      hereby irrevocably consents to and waives any claim it may have as a result
      of
      any such amendment, modification or supplement of the Senior Loan Agreement
      or
      the other Senior Instruments; (b) the validity or enforceability of any of
      such
      documents; or (c) any exercise or non-exercise of any right, power or remedy
      under or in respect of the Senior Indebtedness or the Subordinated Indebtedness
      or any of the instruments or documents referred to in clause (a) above. The
      Senior Indebtedness shall continue to be treated as Senior Indebtedness and
      the
      provisions of this Agreement shall continue to govern the relative rights and
      priorities of the holders of Senior Indebtedness and Parent even if all or
      part
      of the Senior Liens are subordinated, set aside, avoided or disallowed in
      connection with any Proceeding (or if all or part of the Senior Indebtedness
      is
      subordinated, set aside, avoided or disallowed in connection with any Proceeding
      as a result of the fraudulent conveyance or fraudulent transfer provisions
      under
      the Bankruptcy Code or under any state fraudulent conveyance or fraudulent
      transfer statute or if any interest accruing on the Senior Indebtedness
      following the commencement of such Proceeding is otherwise disallowed) and
      this
      Agreement shall be reinstated if at any time any payment of any of the Senior
      Indebtedness is rescinded or must otherwise be returned by any holder of Senior
      Indebtedness or any representative of such holder.

     

    SECTION
      4.

    REPRESENTATIONS
      AND WARRANTIES

     

    Parent
      hereby represents and warrants to Senior Lender as follows:

     

    4.1 Existence
      and Power.
      Parent
      is duly organized, validly existing and in good standing under the laws of
      its
      state of organization and has all requisite power and authority to own its
      property and to carry on its business as now conducted and as proposed to be
      conducted.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    


    4.2 Authority.
      Parent
      has full power and authority to enter into, execute, deliver and carry out
      the
      terms of this Agreement and to incur the obligations provided for herein, all
      of
      which have been duly authorized by all proper and necessary action and are
      not
      prohibited by the organizational instruments of Parent.

     

    4.3 Binding
      Agreements.
      This
      Agreement, when executed and delivered, will constitute the valid and legally
      binding obligation of Parent enforceable in accordance with its terms, except
      as
      such enforceability may be limited by applicable bankruptcy, insolvency,
      reorganization, moratorium or similar laws affecting the enforcement of
      creditors’ rights generally and by equitable principles.

     

    4.4 No
      Conflicts.
      Parent
      is the current owner and holder of the Subordinated Indebtedness free and clear
      of any Liens. No provisions of any mortgage, indenture, contract, agreement,
      statute, rule, regulation, judgment, decree or order binding on Parent or
      affecting the property of Parent conflicts with, or requires any consent which
      has not already been obtained under, or would in any way prevent the execution,
      delivery or performance of the terms of this Agreement. No pending or, to the
      best of Parent’s knowledge, threatened, litigation, arbitration or other
      proceedings if adversely determined would in any way prevent the performance
      by
      Parent of the terms of this Agreement.

     

    SECTION
      5.

    CUMULATIVE
      RIGHTS, NO WAIVERS

     

    Each
      and
      every right, remedy and power granted to Senior Lender hereunder shall be
      cumulative and in addition to any other right, remedy or power specifically
      granted herein, in the Senior Loan Agreement and the other Senior Instruments
      or
      in the
      Subordinated Loan or now or hereafter existing in equity, at law, by virtue
      of
      statute or otherwise, and may be exercised by Senior Lender, from time to time,
      concurrently or independently and as often and in such order as Senior Lender
      may deem expedient. Any failure or delay on the part of Senior Lender in
      exercising any such right, remedy or power, or abandonment or discontinuance
      of
      steps to enforce the same, shall not operate as a waiver thereof or affect
      Senior Lender’s right thereafter to exercise the same, and any single or partial
      exercise of any such right, remedy or power shall not preclude any other or
      further exercise thereof or the exercise of any other right, remedy or power,
      and no such failure, delay, abandonment or single or partial exercise of Senior
      Lender’s rights hereunder shall be deemed to establish a custom or course of
      dealing or performance among the parties hereto.

     

    SECTION
      6.

    MODIFICATION

     

    Any
      modification, termination or waiver of any provision of this Agreement, or
      any
      consent to any departure by Parent therefrom, shall not be effective in any
      event unless the same is in writing and signed by Senior Lender and Parent
      and
      then such modification, termination, waiver or consent shall be effective only
      in the specific instance and for the specific purpose given. Any notice to
      or
      demand on Parent in any event not specifically required of Senior Lender
      hereunder shall not entitle Parent to any other or further notice or demand
      in
      the same, similar or other circumstances unless specifically required
      hereunder.


    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    


    SECTION
      7.

    ADDITIONAL
      DOCUMENTS AND ACTIONS

     

    Parent
      at
      any time, and from time to time, after the execution and delivery of this
      Agreement, upon the reasonable request of Senior Lender, promptly will execute
      and deliver such further documents and do such further acts and things as Senior
      Lender reasonably may request in order to affect fully the purposes of this
      Agreement.

     

    SECTION
      8.

    NOTICES

     

    All
      notices under this Agreement shall be in writing and shall be (a) delivered
      in
      person, (b) sent by telecopy or (c) mailed, postage prepaid, either by
      registered or certified mail, return receipt requested, or by overnight express
      courier, addressed as follows:

     

    
      	
              To
                Parent:

            	
              Argyle
                Security, Inc.

            
	 	
              200
                Concord Plaza

            
	 	
              Suite
                700

            
	 	
              San
                Antonio, TX 78216

            
	 	
              ATTN:
                Donald Neville

            
	 	 
	
              To
                Senior Lender:

            	
              LaSalle
                Bank National Association

            
	 	
              Republic
                Plaza

            
	 	
              370
                17th Street, Suite 3590

            
	 	
              Denver,
                CO 80202     

            
	 	
              ATTN:
                Edward Lobb

            
	 	 
	
              With
                a copy to:

            	
              Sherman
                & Howard LLC

            
	 	
              633
                17th Street, Suite 3000

            
	 	
              Denver,
                CO 80202

            
	 	
              ATTN:
                Alan M. Keeffe

            


    

    


    or
      to any
      other address or telecopy number, as to any of the parties hereto, as such
      party
      shall designate in a notice to the other parties hereto. All notices sent
      pursuant to the terms of this Section 8 shall be deemed received (a) if
      personally delivered, then on the Business Day of delivery, (b) if sent by
      telecopy, on the next Business Day, (c) if sent by registered or certified
      mail,
      on the earlier of the seventh (7th) Business Day following the day sent or
      when
      actually received or (d) if sent by overnight, express courier, on the second
      Business Day immediately following the day sent. Any notice by telecopy shall
      be
      followed by delivery of a copy of such notice on the next Business Day by
      overnight, express courier or by personal delivery.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    SECTION
      9.

    SEVERABILITY

     

    In
      the
      event that any provision of this Agreement is deemed to be invalid by reason
      of
      the operation of any law or by reason of the interpretation placed thereon
      by
      any court or governmental authority, the validity, legality and enforceability
      of the remaining terms and provisions of this Agreement shall not in any way
      be
      affected or impaired thereby, all of which shall remain in full force and
      effect; and the affected term or provision shall be modified to the minimum
      extent permitted by law so as to achieve most fully the intention of this
      Agreement.

     

    SECTION
      10.

    SUCCESSORS
      AND ASSIGNS

     

    This
      Agreement shall be binding upon and inure to the benefit of the successors
      and
      assigns of Senior Lender, Obligor and Parent.

     

    SECTION
      11.

    COUNTERPARTS

     

    This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed to be an original, but all of which taken together shall be one and
      the
      same instrument.

     

    SECTION
      12.

    DEFINES
      RIGHTS OF CREDITORS

     

    The
      provisions of this Agreement are solely for the purpose of defining the relative
      rights of Parent and Senior Lender and shall not be deemed to create any rights
      or priorities in favor of any other Person, including, without limitation,
      Obligor. This Agreement or any part hereof shall not be deemed the creation
      of a
      security interest for the benefit of any party hereto in the Subordinated
      Indebtedness.

     

    SECTION
      13.

    CONFLICT

     

    In
      the
      event of any conflict between any term, covenant or condition of this Agreement
      and any term, covenant or condition of any of the Subordinated Loan, the Senior
      Loan Agreement or the other Senior Instruments, the provisions of this Agreement
      shall control and govern. For purposes of this Section 13, to the extent that
      any provisions of any of the Subordinated Loan provide rights, remedies and
      benefits to Senior Lender that exceed the rights, remedies and benefits provided
      to Senior Lender under this Agreement, such provisions of the applicable
      Subordinated Loan shall be deemed to supplement (and not to conflict with)
      the
      provisions hereof.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    SECTION
      14.

    STATEMENTS
      OF INDEBTEDNESS

     

    Upon
      demand by Senior Lender, Parent will furnish to Senior Lender a statement of
      the
      indebtedness owing from Obligor to Parent. Senior Lender may rely without
      further investigation upon such statements. 

     

    SECTION
      15.

    HEADINGS

     

    The
      paragraph headings used in this Agreement are for convenience only and shall
      not
      affect the interpretation of any of the provisions hereof.

     

    SECTION
      16.

    TERMINATION

     

    This
      Agreement shall terminate upon the indefeasible payment in full in cash of
      the
      Senior Indebtedness.

     

    SECTION
      17.

    DEFAULT
      NOTICES

     

    Parent
      shall provide Senior Lender with a copy of each Subordinated Default Notice
      concurrently with the sending thereof to Obligor and promptly shall notify
      Senior Lender in the event the Subordinated Default which is the subject of
      such
      Subordinated Default Notice is cured or waived.

     

    SECTION
      18.

    NO
      CONTEST OF LIENS;

    NO
      SECURITY FOR SUBORDINATED INDEBTEDNESS

     

    Parent
      agrees that it will not at any time contest the validity, perfection, priority
      or enforceability of the Liens in the Collateral granted to Senior Lender
      pursuant to the Senior Loan Agreement and the other Senior Instruments.
      Notwithstanding the date, manner or order of perfection of the security
      interests and liens granted to Senior Lender and Parent, and notwithstanding
      any
      provisions of the Uniform Commercial Code, or any applicable law or decision
      or
      whether Senior Lender or Parent holds possession of all or any part of the
      collateral security for the repayment of the Senior Indebtedness or the
      Subordinated Indebtedness, as between Senior Lender and Parent, Senior Lender
      shall have a first (and prior in right and time to Parent) interest in all
      the
      Collateral and proceeds thereof, including insurance proceeds relating thereto,
      and products thereof. The provisions of this Agreement shall apply regardless
      of
      any invalidity, unenforceability or lack of perfection of the Senior
      Liens.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    SECTION
      19.

    GOVERNING
      LAW

     

    THIS
      AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED AS TO VALIDITY,
      INTERPRETATION, CONSTRUCTION, EFFECT AND IN ALL OTHER RESPECTS BY THE LAWS
      AND
      DECISIONS OF THE STATE OF ILLINOIS. FOR PURPOSES OF THIS SECTION 19, THIS
      AGREEMENT SHALL BE DEEMED TO BE PERFORMED AND MADE IN THE STATE OF
      ILLINOIS.

     

    SECTION
      20.

    JURISDICTION
      AND VENUE

     

    PARENT
      HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY PARENT AND ARISING
      DIRECTLY OR INDIRECTLY OUT OF THE SENIOR INSTRUMENTS SHALL BE LITIGATED IN
      EITHER THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS OR IN THE UNITED STATES
      DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, OR IF SENIOR LENDER
      INITIATES SUCH ACTION, IN ADDITION TO THE FOREGOING COURTS, ANY COURT IN WHICH
      SENIOR LENDER SHALL INITIATE OR TO WHICH SENIOR LENDER SHALL REMOVE SUCH ACTION,
      TO THE EXTENT SUCH COURT HAS JURISDICTION. PARENT HEREBY EXPRESSLY SUBMITS
      AND
      CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
      BY SENIOR LENDER IN OR REMOVED BY SENIOR LENDER TO ANY OF SUCH COURTS. PARENT
      WAIVES ANY CLAIM THAT EITHER THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS OR
      THE
      UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS IS AN
      INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE. TO THE EXTENT
      PROVIDED BY LAW, SHOULD PARENT, AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER
      TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF
      DAYS
      PRESCRIBED BY LAW AFTER THE MAILING THEREOF, PARENT SHALL BE DEEMED IN DEFAULT
      AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED BY THE COURT AGAINST PARENT AS
      DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE
      EXCLUSIVE CHOICE. OF FORUM FOR PARENT SET FORTH IN THIS SECTION 20 SHALL NOT
      BE
      DEEMED TO PRECLUDE THE ENFORCEMENT BY SENIOR LENDER OF ANY JUDGMENT OBTAINED
      IN
      ANY OTHER FORUM OR THE TAKING BY SENIOR LENDER OF ANY ACTION TO ENFORCE THE
      SAME
      IN ANY OTHER APPROPRIATE JURISDICTION, AND PARENT HEREBY WAIVES THE RIGHT TO
      COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.

     

    SECTION
      21.

    WAIVER
      OF RIGHT TO JURY TRIAL

     

    SENIOR
      LENDER AND PARENT ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE
      UNDER THIS AGREEMENT WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND
      THEREFORE, SENIOR LENDER AND PARENT AGREE THAT ANY COURT PROCEEDING ARISING
      OUT
      OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION
      BY A
      JUDGE SITTING WITHOUT A JURY.


    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    


    SECTION
      22.

    TIME
      OF ESSENCE

     

    Time
      for
      the performance of Parent’s obligations under this Agreement is of the
      essence.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the
      parties hereto have caused this Agreement to be executed as of the date first
      above written.

     

    
      	
              PARENT:

            
	 
              	 
	
              ARGYLE
                SECURITY, INC., a Delaware corporation

            
	 	 
	
              By:

            	
              /s/
                Donald F. Neville

            
	
              Name:
                

            	
              Donald
                F. Neville

            
	
              Title:

            	
              Chief
                Financial Officer

            
	 
              	 
	 
              	 
	
              SENIOR
                LENDER:

            
	 
              	 
	
              LASALLE
                BANK NATIONAL ASSOCIATION,

            
	
              a
                national banking association

            
	 
              	 
	
              By:
                

            	
              /s/
                Richard J. Wadley

            
	
              Name:


            	
              Richard
                J. Wadley

            
	
              Title:

            	
              Senior
                Vice President

            


    

     

    
      
        
        

      

      
        -13-