Exhibit 10.20


 


SECURITY AGREEMENT


 


This Security Agreement (“Security
Agreement”) is made as of the 24 day of February, 2004 by Diversified Security Corporation, a Georgia
corporation (the “Purchaser”) and in favor of Harold
Bright, a resident of the State of Alabama (the “Secured Party”) to
secure the payments required under certain Promissory Notes of even date
herewith and certain payments required by the terms of Class C Redeemable
Preferred Stock held by the Secured Party. The security is provided upon the
following terms and conditions:


 


ARTICLE I


 


THE OBLIGATION SECURED


 


1.01                           The Secured Party has
contemporaneously herewith agreed to accept two promissory notes of even date
herewith (the “Notes”) and certain shares of Class C Redeemable Preferred Stock
(the “Class C Stock”) from Purchaser. This Security Agreement provides security
solely for the payment of the Notes and Class C Stock and for no other
obligation.


 


1.02                           This Security Agreement and
the Notes and Class C Stock have been executed and delivered by the Purchaser
in reliance on the Secured Party’s full and complete performance of all of the
terms and conditions of the Stock Purchase Agreement, including but not limited
to the accuracy of all representations and warranties of the Selling Shareholders
pursuant to the Stock Purchase Agreement.


 


ARTICLE II


 


SECURITY INTEREST


 


2.01                           Purchaser hereby grants to
Secured Party a security interest in 50 shares of no par value common stock of
Paragon Systems, Inc. (the “Shares”), and such security interest shall include
any and all replacements and any Shares issued by way of any stock split,
reverse stock split or stock dividend.


 


2.02                           This Security Agreement and
the rights hereby granted shall secure the prompt payment of all amounts due
under the Note, as such amount may be adjusted pursuant to the terms of the
Notes, and all dividend payments and redemption payments due the Secured Party
as provided for the Class C Stock.


 

















 


2.03                           The Secured Party may, at its option, perfect
its interest in the Shares by appointing an agent or other designee as its
agent to take possession of and hold the Shares during the term of the Notes or
while any of the Class C Stock owned by the Secured Party remains outstanding.
The agent appointed by the Secured Party may not be any person currently or
previously employed by Paragon Systems, Inc., but Aubrey Lammons may serve as
agent for both the Secured Party and Purchaser for purposes of holding
possession of the Shares during the term of this Agreement, and releasing such Shares
pursuant to the terms of this Agreement.


 


2.04                           The Secured Party shall release its security
interest in the Shares upon the payment of the full amount of the principal of
the Notes and redemption in full of all of the Class C Stock owned by the
Secured Party. Within five (5) days of such full payment, the Secured Party
shall deliver the Shares to the Purchaser.


 


The Secured Party shall release 14 of the Shares originally subject to
this Security Agreement, upon payment of the Promissory Note issued to the
Secured Party pursuant to Article 1.2 (b) of the Stock Purchase Agreement of
February 23, 2004, which is part of the series of Notes totaling $5,500,000
issued to the Selling Shareholders.


 


ARTICLE III


 


COVENANT OF PURCHASER


 


3.01                           The Purchaser hereby covenants to operate
Paragon Systems, Inc. in such a way as to maximize long-term shareholder value,
and to enhance the value of the Shares. Such provision shall not be interpreted
as imposing on Purchaser, or any officer, director or controlling shareholder
thereof, any fiduciary or other duty to the Secured Party that exceeds the
duties imposed by law on the officers, directors or controlling shareholders of
a corporation to the other shareholders of such corporation.


 


ARTICLE IV


 


SECURED PARTY’S REMEDIES FOR NON-PAYMENT


 


4.01                           Secured Party shall be entitled to exercise
the remedies listed below upon the failure of the Purchaser to pay in full the
amount due on any payment required under the Notes (as such payment amount may
be adjusted pursuant to the Note) or pursuant to the terms of the Class C
Stock, at the time such amount is due, plus any applicable cure period.


 


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4.02                           Upon any non-payment as described in Section
4.01 hereof, and upon giving notice as provided herein, Secured Party shall
have the following rights and remedies:


 


a.                                       Secured Party may, at his option, declare all
sums due under the Notes due to the Secured Party, as may be adjusted
thereunder, immediately due and payable; and


 


b.                                      Pursue any legal remedy available to collect
all sums secured hereby and to enforce its title in and right to possession of
the Shares, and to enforce any and all other rights or remedies available to
it.


 


ARTICLE V


 


MISCELLANEOUS PROVISIONS


 


5.01                           This Security Agreement shall remain in full
force and effect until all of the payments due under the Notes shall be paid
and the Class C Stock owned by the Secured Party shall have been fully
redeemed.


 


5.02                           This Security Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the State of Georgia
without reference to choice of law principles.


 


5.03                           During the term of the Notes and until
redemption in full of the Class C Shares owned by the Secured Party, Purchaser
shall be the shareholder of the Shares. Specifically, during the term of the
Note and until redemption in full of the Class C Shares owned by the Secured
Party, Purchaser shall have the exclusive right to vote all of such Shares at
any meeting of the shareholders of Paragon Systems, Inc. and shall exercise all
rights of a shareholder of the Shares.


 


5.04                           This Security Agreement shall terminate on
the full payment of all obligations under the Notes and the redemption of the
Class C Stock owned by the Secured Party.


 


5.05                           Any notice required hereunder shall be deemed
given three (3) business days after such notice has been transmitted and
received by the party to receive such notice by the method(s) provided in the
Stock Purchase Agreement for providing notices.


 


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IN WITNESS WHEREOF, this Security Agreement has been executed and
delivered on behalf of and in the name of the Purchaser on the date indicated
above.


 


 


	
   

  	
  DIVERSIFIED SECURITY
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald
  G. Farrell

  	
   

  
	
   

  	
  Name:

  	
  Ronald G.
  Farrell

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SECURED PARTY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Charles
  Keathley agent for

  	
   

  
	
   

  	
  Harold Bright

  
					



 


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