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Exhibit
99.1
MEDIATION SETTLEMENT
AGREEMENT
This Mediation Settlement
Agreement is made as of May 18, 2007 by and among TRI-S
SECURITY CORPORATION , a Georgia corporation formerly known as
Diversified Security Corporation (the “Company”),
PARAGON SYSTEMS, INC. , an Alabama corporation and a
wholly-owned subsidiary of the Company (“Paragon”), and
RONALD G. FARRELL (“Farrell”) on the one hand,
and HAROLD BRIGHT , a resident of the State of Tennessee
(“Bright”), CHARLES KEATHLEY , a resident of the
State of Alabama (“Keathley”), ROBERT LUTHER , a
resident of the State of Alabama (“Luther”), and
JOHN WILSON , a resident of the State of Alabama
(“Wilson”) (collectively, the “Selling
Shareholders”), on the other hand.
WHEREAS, the Company,
Paragon, and the Selling Shareholders are participants to a
mediation to resolve the litigation among them, Tri-S Security
Corporation v. Keathley, et al. (N.D. Ga., Civ. A.
No. 1:06-CV-00450-TCB), Tri-S Security Corporation v.
Keathley, et al. (N.D. Ga., Civ. A.
No. 1:07-CV-00111-TCB), Luther and Keathley v. Paragon
Systems, Inc. and Tri-S Security Corp. (Circuit Court for
Madison County, AL, Civ. A. No. 05-2019-LWH), Paragon
Systems, Inc. v. Bright and Wilson and Bright and Wilson v. Paragon
Systems, Inc., Tri-S Security Corporation, and Ronald G.
Farrell (American Arbitration Association Case No. 30
16600815 06), and In the Matter of the Arbitration Before the
American Arbitration Association Between Paragon Systems, Inc. v.
Luther and Keathley (all of these actions collectively, the
“Litigation”);
NOW, THEREFORE , in
consideration of the mutual covenants and agreements herein
contained and for other good and valuable consideration, the
receipt and sufficiency of which is hereby mutually acknowledged,
the parties hereto agree that they are duly authorized to execute
this Mediation Settlement Agreement and further agree as
follows:
1) The Company will issue to
the Selling Shareholders 35,000 shares of its common stock no later
than June 1, 2007, to be divided among the Selling
Shareholders as follows: Keathley – 15,694; Luther –
9,306; Bright – 5,000; Wilson – 5,000.
2) The Company will pay to
the Selling Shareholders $50,000 in cash to be paid by wire
transfer no later than May 21, 2007 to be divided equally
among them.
3) The parties agree jointly
to request by May 25, 2007 of the respective courts or other
appropriate venue to stay all the Litigation pending for 120 days
of the date hereof.
4) Contingent upon
(i) the Company obtaining the financing (on terms acceptable
to it in its sole discretion) to make the payment referred to in
Section 4(a) below within 120 days of the date hereof (which
the Company shall use its reasonable efforts to secure), at a
closing to take place within 120 days of the date hereof (the
“Closing Date”); (ii) the parties arriving at an
agreement with respect to the representation and indemnification of
the Selling Shareholders in the litigation styled Unschuld v.
Tri-S Security Corporation, et al. (N.D. Ga.,
1:06-CV-02931-JEC); and (iii) the respective courts or other
appropriate venue staying all of the Litigation:
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(a) |
the Company will issue to the Selling Shareholders 665,000
shares of its common stock to be divided among them as follows:
Keathley – 362,306; Luther – 172,694; Bright –
65,000; Wilson – 65,000; |
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(b) |
the Company will pay to the Selling Shareholders $1,200,000 to
be divided among them as follows: Keathley – $662 |
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