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”).
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;
(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 suc
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