SAN ANTONIO, Jan 9 /PRNewswire-FirstCall/ -- Argyle Security, Inc., (OTC Bulletin Board: ARGL), ('Argyle') a service and solutions provider in the physical electronic security industry, announced today that it has received a $3-million preferred stock investment from funds managed by MML Capital Partners (the 'Purchasers'). Under the terms of the transaction, Argyle has issued a new series of voting Preferred Stock, which can be converted into 2.7 million shares of Argyle's common stock at $1.10 per share.

ISI Security Group, Inc. ('Argyle Security USA'), Argyle's wholly-owned subsidiary amended its senior credit facility with The PrivateBank and Trust Company ('PrivateBank') by using the proceeds to reduce a portion of the outstanding balance of the senior credit facility and its mezzanine debt with William Blair Mezzanine Capital Fund III, L.P. ('Blair'), a fund managed by Merit Capital Partners. Each lender has agreed to amend its financial covenants, and Blair has agreed to extend the maturity date of its debt by one year to January 2011.

Bob Marbut, Chairman and Co-CEO of Argyle Security, commented 'We are pleased to announce this refinancing. Management believes that the financial flexibility gained from the amendments of our primary credit facilities will enable us to better serve our customers in the year ahead.'

Sam Youngblood, President of Argyle Security USA, commented, 'Despite the significant slowdowns in many sectors of the economy, the corrections and commercial security markets remain particularly strong. We believe that this refinancing will enable us to execute our 2009 business plan, continue to meet our customer expectations for quality service, and continue to strengthen our position as a leader in the corrections market and the fast growing critical infrastructure sector in the commercial security market.'

Terms and Conditions of Financing

In connection with the investment of $3 million, the Purchasers received 27,273 shares of Series B Convertible Preferred Stock. At the option of the holder, each preferred share is convertible into 100 shares of Argyle's Common Stock at a price of $1.10 per share, subject to weighted average anti-dilution rights. Each holder of Preferred Stock has the right to one vote for each share of Common Stock into which such share could then be converted and, with respect to such votes, such holder has full voting rights and powers equal to the voting rights and powers of the holders of Common Stock.