SUBORDINATION AGREEMENT

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”).

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:

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.

“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.

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.

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. ”

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 t