Exhibit 10.2





Exhibit 10.2




AMENDMENT NO. 3 AND WAIVER




TO LOAN AND SECURITY AGREEMENT




THIS AMENDMENT NO. 3 AND WAIVER TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as
of August 3, 2009 by and between ISI SECURITY GROUP, INC. (the “Borrower”) and THE PRIVATEBANK AND
TRUST COMPANY (the “Bank”).



RECITALS:




WHEREAS,
the Borrower and the Bank are parties to the Loan and Security Agreement, dated as of
October 3, 2008, as amended by Amendment No. 1 to Loan and Security Agreement, dated as of January
8, 2009 and Amendment No. 2 to Loan and Security Agreement,
dated as of March 30, 2009 (the “Loan
Agreement”) (capitalized terms used and not otherwise defined herein shall have the meaning
ascribed thereto in the Loan Agreement); and



WHEREAS, the Borrower has informed the Bank that as of May 18, 2009, the Borrower exceeded the
Indebtedness limitation set forth in Section 4.5(a) (as amended, the “Blair Default”) of the Note and Warrant
Purchase Agreement dated as of October 22, 2004 (the “Purchase Agreement”) between the Borrower and William Blair Mezzanine
Capital Partners III, L.P. (“Blair”). The Borrower has informed the Bank that Blair has agreed to
waive the Blair Default and amend the Purchase Agreement whereby the Borrower is no longer
exceeding the Indebtedness limitation.



WHEREAS, the Borrower acknowledges that the Blair Default under the Purchase Agreement is a
default as set forth in Section 11.5 of the Loan Agreement, and the Bank is willing to provide a
limited waiver in respect of such default, subject to the terms and conditions of this Amendment;



WHEREAS, the Borrower has requested and the Bank has agreed to the amendments to the Loan
Agreement more fully set forth herein; and




WHEREAS, such amendments shall be of benefit, either directly or indirectly, to the Borrower;



NOW, THEREFORE, in consideration of the above premises, the agreements contained herein and
other good and valuable consideration, the adequacy, sufficiency and receipt of which are hereby
acknowledged, the parties hereto agree as follows:



Section 1. Amendments. Upon and after the Amendment Effective Date (as defined
below), Section 9.1 of the Loan Agreement is restated and amended in its entirety as
follows:




Debt. The Borrower shall not, either directly or indirectly, create, assume, incur
or have outstanding any Debt (including purchase money indebtedness), or become liable,
whether as endorser, guarantor, surety or otherwise, for any debt or obligation of any other
Person, except:


 


 









 






(a) the Obligations under this Agreement and the other Loan Documents;




(b) obligations of the Borrower for Taxes, assessments, municipal or other governmental
charges;




(c) obligations of the Borrower for accounts payable, other than for money borrowed,
incurred in the ordinary course of business;




(d) Subordinated Debt;




(e) Hedging Obligations incurred in favor of the Bank or an Affiliate thereof for bona fide
hedging purposes and not for speculation;




(f) Capitalized Lease Obligations, provided that the aggregate amount of all such Debt
outstanding at any time shall not exceed, in the aggregate, Five Hundred Thousand and 00/100
Dollars ($500,000.00) plus the amount of any Capitalized Lease Obligations owing by the
Borrower to Green Wing for so long as the Green Wing lease remains subject to an enforceable
Subordination Agreement;




(g) Debt for Capital Expenditures (other than Capitalized Lease Obligations permitted by
Section 9.1(f) and purchase money indebtedness secured by vehicles permitted by
Section 9.1(h)) not to exceed Five Hundred Thousand and 00/100 Dollars ($500,000.00)
in the aggregate at any time;




(h) Debt for purchase money indebtedness secured by vehicles in an amount not to exceed Five
Hundred Thousand and 00/100 Dollars ($500,000.00) in the aggregate at
any time;




(i) Debt described on Schedule 7.25 and any extension, renewal or refinancing
thereof so long as the principal amount thereof is not increased;




(j) other unsecured Debt, in addition to the Debt listed above, in an aggregate amount
outstanding at any time not to exceed Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00);




(k) operating lease obligations solely with respect to real property leases (excluding the
real property leases described in subpart (l) below) (1) requiring payments not to exceed
$850,000 in the aggregate for the Company and its Subsidiaries during the fiscal year ending
December 31, 2009; (2) requiring payments not to exceed $1,000,000 in the aggregate for the
Company and its Subsidiaries during the fiscal year ending December 31, 2010; (3) requiring
payments not to exceed $1,100,000 in the aggregate for the Company and its Subsidiaries
during the fiscal year ending December 31, 2011; and (4) requiring payments not to exceed
$1,200,000 in the aggregate for the Company and its Subsidiaries during the fiscal year
ending December 31, 2012 and during each fiscal year of the Company and its Subsidiaries
thereafter;


 


 









 






(l) operating lease obligations solely with respect to real property leases entered into by
the Company and its Subsidiaries, solely with respect to residential property utilized by their employees in connection with the completion of work pursuant to contracts entered
into in the course of ordinary course of business (for which the cost of the lease payments
has been or will be included in the cost to complete for such work required by such
contract), during any fiscal year of the Company; and




(m) Debt secured only by Liens on amounts deposited by or paid on behalf of the Borrower
arising out of the financing of insurance premiums.



Section 2. Representations and Warranties. In order to induce the Bank to agree to
the amendment described in Section 1 of this Amendment, the Borrower makes the following
representations and warranties, which shall survive the execution and delivery of this Amendment:



(a) No Event of Default will exist immediately after giving effect to the amendment contained
herein;



(b) Each of the representations and warranties set forth in Section 7 of the Loan
Agreement are true and correct as though such representations and warranties were made at and as of
the Amendment Effective Date, except to the extent that any such representations or warranties are
made as of a specified date or with respect to a specified period of time, in which case such
representations and warranties shall be made as of such specified date or with respect to such
specified period. Each of the representations and warranties made under the Loan Agreement shall
survive to the extent provided therein and not be waived by the execution and delivery of this
Amendment;



(c) The Borrower is a duly organized, validly existing Delaware corporation and has the power
and authority to execute, deliver and carry out the terms and provisions of this Amendment, and has
taken or caused to be taken all necessary corporate action to authorize the execution, delivery and
performance of this Amendment;



(d) No consent of any other Person or filing or action by any governmental authorities, is
required to authorize the execution, delivery and performance of this Amendment;



(e) This Amendment has been duly executed by a duly authorized signatory on behalf of the
Borrower and constitutes the legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms, except as enforcement thereof may be subject to the effect of any
applicable (i) bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors’ rights generally and (ii) general principals of equity; and



(f) The execution and delivery and performance of the agreements in this Amendment will not
violate any law, statute or regulation applicable to the Borrower or any order or decree of any
governmental authorities, or conflict with or result in the breach or any contractual obligation of
the Borrower.



Section 3. Conditions Precedent to Effectiveness of the Amendment. This Amendment is
subject to the satisfaction of (or waiver by the Bank in its sole discretion) the following
conditions precedent:


 


 









 





(a) No
unmatured Event of Default or Event of Default (other than the Blair
Default) under the Loan Agreement shall have
occurred and be continuing;



(b) The Guarantors shall have executed and delivered to the Bank a Reaffirmation of Guaranty
Agreement in the form attached to this Amendment; and



(c) The Borrower shall have executed and delivered such other documents and instruments that
the Bank may reasonably request to effect the purposes of this Amendment.




Section 4. Waiver.



(a) The
Bank hereby waives the Event of Default under Section 11.5 of the Loan Agreement
solely as it relates to occurrence of the Blair Default. The Bank’s waiver of the Event of Default
under Section 11.5 of the Purchase Agreement is limited to the specific instance of the Blair
Default and shall not be deemed a waiver of or consent to any other failure to comply with the
terms of Section 11.5 of the Loan Agreement or any other provisions of the Loan Agreement. Such
waiver shall not prejudice or constitute a waiver of any right or remedies which the Bank may have
or be entitled to with respect to any other breach of
Section 11.5 or any other provision of the
Loan Agreement. The Bank also hereby waives any right to restrict Blair from accepting an
amendment fee from the Borrower in exchange for its agreement to amend the Purchase Agreement.



(b) The waivers in section (a) above are for this particular instance and shall not be
construed as a waiver of any other presently existing or future default or Event of Default. Other
than as specifically set forth herein, the Bank reserves all of its interests, rights and remedies
under and pursuant to the Loan Documents.



Section 5. Effectiveness. The amendments and waivers to the Loan Agreement contained
in Sections 1 and 4 of this Amendment shall become effective as of the date first referenced above
after the Bank shall have received this Amendment, executed and delivered by the Borrower and the
Bank (the “Amendment Effective Date”).



Section 6. Expenses. The Borrower agrees to pay on demand all reasonable costs and
expenses, including filing and recording fees, incurred by the Bank in connection with the
preparation, execution and delivery of this Amendment, and any other documents or instruments which
may be delivered in connection herewith, including without limitation, the reasonable fees and
expenses of legal counsel for the Bank.



Section 7. Counterparts. This Amendment may be executed in counterparts and by
different parties hereto in separate counterparts, each of which, when so executed and delivered,
shall be deemed to be an original and all of which, when taken together, shall constitute one and
the same instrument. Faxed or emailed signatures of this Amendment shall be binding on the
parties. Each party shall promptly send to the other party signed originals of faxed or emailed
signatures to this Agreement.



Section 8.
Ratification. The Loan Agreement, as amended hereby, is and shall continue to be in full force
and effect and is hereby in all respects confirmed, approved and
ratified. Except as amended and waived
hereby, all terms and conditions of the Loan Agreement remain the same.


 


 









 





Section 9. Release. In consideration of the amendments provided herein, the Borrower
releases and discharges the Bank, and its directors, officers, employees, agents, successors and
assigns from all claims and causes of action of any nature whatsoever, which the Borrower, its
successors and assigns ever had or have as of the date hereof against the Bank that arise, directly
or indirectly, out of or are related to the Loan Agreement. The Borrower acknowledges that the
Obligations arising under the Loan Agreement are not subject to any such counterclaim, offset,
defense or rights of recoupment against the Bank.



Section 10. Governing Law. The rights and duties of the Borrower and the Bank under
this Amendment shall be governed by the law of the State of Illinois.



Section 11. Reference to Loan Agreement. From and after the Amendment Effective Date,
each reference in the Loan Agreement to “this Loan Agreement”, “hereof”, “hereunder” or words of
like import, and all references to the Loan Agreement in any and all agreements, instruments,
documents, notes, certificates and other writings of every kind and nature, shall be deemed to mean
the Loan Agreement as modified and amended by this Amendment.



IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed by their
authorized officers as of the date first written above.



ISI SECURITY GROUP, INC.




	 	 	 	 	 
	By:

	 	/s/ Sam Youngblood
 

Name: Sam Youngblood
	 	 
	 

	 	Title: COO	 	 






THE PRIVATEBANK AND TRUST COMPANY




	 	 	 	 	 
	By:

	 	/s/ Nate Palmer
 

Name: Nate Palmer
	 	 
	 

	 	Title: Associate Managing Director	 	 





 


 









 





REAFFIRMATION OF GUARANTY AGREEMENT




The undersigned (a) acknowledges receipt of a copy of (i) Amendment No. 3 to Loan and Security
Agreement, dated August 3, 2009, between ISI Security Group, Inc. and The PrivateBank and Trust
Company, (b) consents to such amendments and waivers and all prior amendments and each of the
transactions referenced therein, and (c) hereby reaffirms its obligations under its Unconditional
Continuing Guaranty Agreement, dated as of October 3, 2008 in favor of The PrivateBank and Trust
Company.



Dated as of August 3, 2009




DETENTION CONTRACTING GROUP, LTD.,

a Texas limited partnership



	 	 	 	 	 
	By:

	 	ISI DETENTION CONTRACTING	 	 
	 

	 	GROUP, INC., a Texas corporation,	 	 
	 

	 	its general partner	 	 
	 
	 	 	 	 
	By:

	 	/s/ Donald F. Neville
 

	 	 
	Name:

	 	Donald F. Neville	 	 
	Title:

	 	CFO	 	 






ISI DETENTION CONTRACTING

GROUP, INC., a Texas corporation



	 	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 






ISI DETENTION CONTRACTING

GROUP, INC., a California corporation



	 	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 






ISI DETENTION CONTRACTING

GROUP, INC., a New Mexico corporation



	 	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 





 


 









 





ISI DETENTION SYSTEMS, INC.,

a Texas corporation



	 	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 






ISI SYSTEMS, LTD.,

a Texas limited partnership



	 	 	 	 	 
	By:

	 	ISI DETENTION SYSTEMS, INC.,	 	 
	 

	 	a Texas corporation, its general partner	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 






METROPLEX CONTROL SYSTEMS, INC.,

a Texas corporation, (f/k/a ISI Metroplex Controls, Inc.)



	 	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 






ISI CONTROLS, LTD.,

a Texas limited partnership



	 	 	 	 	 
	By:

	 	METROPLEX CONTROL SYSTEMS, INC.,	 	 
	 

	 	a Texas corporation, its general partner	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 






METROPLEX COMMERCIAL FIRE AND

SECURITY ALARMS, INC., a Texas corporation



	 	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 





 


 









 





MCFSA, LTD.,

a Texas limited partnership



	 	 	 	 	 
	By:

	 	METROPLEX COMMERCIAL FIRE AND	 	 
	 

	 	SECURITY ALARMS, INC., a Texas	 	 
	 

	 	corporation, its general partner	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 






COM-TEC SECURITY, LLC,

a Wisconsin limited partnership



	 	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 






COM-TEC CALIFORNIA LIMITED

PARTNERSHIP, a Wisconsin

limited partnership




	 	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO	 	 





 


 









 





REAFFIRMATION OF GUARANTY AGREEMENT




The undersigned (a) acknowledges receipt of a copy of (i) Amendment No. 3 to Loan and Security
Agreement, dated August 3, 2009, between ISI Security Group, Inc. and The PrivateBank and Trust
Company, (b) consents to such amendments and waivers and all prior amendments and each of the
transactions referenced therein, and (c) hereby reaffirms its obligations under its Unconditional
Continuing Guaranty Agreement, dated as of January 8, 2009 in favor of The PrivateBank and Trust
Company.



Dated as of August 3, 2009




ARGYLE SECURITY, INC., a Delaware corporation




	 	 	 	 	 
	By: 

Name:

	 	/s/ Donald F. Neville
 

Donald F. Neville
	 	 
	Title:

	 	CFO