Exhibit 10.12


 


PROMISSORY NOTE


 




	
   

  	
  Atlanta,
  Georgia

  
	
   

  	
  February 24,
  2004

  






 


ARTICLE I




PAYMENTS OF PRINCIPAL AND INTEREST


 


1.01                           For value received, Diversified Security Corporation, a
corporation organized under the laws of the State of Georgia, (hereinafter referred
to as “Maker”), hereby promises to pay to the order of John Wilson (“Payee”), at any location
Payee shall reasonably determine, the principal sum of FIVE HUNDRED TWENTY-SIX THOUSAND NINE  HUNDRED AND NO HUNDREDTHS DOLLARS ($526,900.00)
except as may be adjusted in accordance with the terms hereof, plus simple
interest on the unpaid principal amount hereof at the rate of seven (7.0%)
percent per annum, all according to the terms hereof, and with all such
payments being payable in cash, check, wire transfer or other form reasonably
acceptable to Payee in lawful money of the United States of America.


 


1.02                           Maker shall pay the obligation hereunder by
tendering a single payment on May 31, 2004 of the full amount of the principal
due hereunder, and all accrued interest and payment.


 


1.03                           Maker may prepay any or all of the
outstanding balance hereof without penalty prior to the due date of any
payment, and Payee shall apply such prepayments first to principal, then to any
interest or other amount hereunder.


 


1.04                           Notwithstanding the stated principal amount
hereof, Maker may offset against and reduce the principal amount of this Note
by an amount equal to the amount of any indemnification obligation as allowed
in Article 6 of the Stock Purchase Agreement by and between Maker and the
Selling Shareholders, as amended (the “Stock Purchase Agreement”). Such items
are referred to herein as Indemnification Obligations.


 


1.05                           Upon Maker’s receipt of any claim or bill for
any cost or expense that would give rise to an Indemnification Obligation,
Maker shall inform the Payee by the method(s) provided in the Stock Purchase
Agreement for providing notices.


 


1.06                           Maker may deduct from the principal amount of
this Note an amount equal to the amount stated in Maker’s notice, subject to
the amount deducted being added back to the principal amount of the Note if the
amount that Maker actually incurs that is subject to the Indemnification
Obligation is less than the amount previously deducted from the principal
amount of this Note. If an amount is deducted from the principal amount of this
Note and is later added back to the principal amount of the Note, Maker shall
be liable also for interest at the rate of seven percent (7%) per annum on the
amount of such deducted and re-added amount, as if such amount had never been
deducted.


 

















 


1.07                           Repayment of this Note shal1 be subject to
any Subordination Agreement agreed upon by Maker and Payee.


 


ARTICLE II




SECURITY


 


2.01                               As security for payment of all of the
obligations hereunder, Maker hereby pledges to Payee, pursuant to the Security
Agreement of even date herewith, 40% of the Shares of common stock of no par
value of Paragon Systems, Inc. (the “Shares”) sold by Payee to Maker pursuant
to the Stock Purchase Agreement.


 


2.02                               RESERVED


 


2.03                               Neither Payee nor any of the Selling
Shareholders shall sell, assign, give, pledge, encumber, hypothecate or
transfer any of the Shares securing payment of the Note.


 


2.04                               The number of Shares subject to this Security
Agreement, and the number of Shares subject to release from this Security
Agreement shall be adjusted for any stock split, reverse stock split, or stock
dividend of Paragon Systems, Inc.


 


ARTICLE III




MISCELLANEOUS


 


3.01                              Upon the failure of Maker to tender any
payment hereunder when due, Payee may, at its option, deliver written notice to
Maker of the failure to tender such payment. If Maker has not tendered payment
of the full amount of such late payment within ten business (10) days of the
date of such notice, Payee may accelerate the full amount of principal and
interest due hereunder, and upon such acceleration, the full principal amount
hereof shall be immediately due and payable.


 


3.02                              The failure of Payee to exercise any option
hereunder, or to make demand, or to proceed to collect after making demand
hereon, shall not constitute a waiver of the right to exercise such option,
make such demand or to proceed to collect.


 


3.03                              Maker waives presentment for payment, notice
of dishonor, protest, notice of protest and diligence in bringing suit against
any party hereto.


 


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3.04                              The obligations evidenced or created by this
Note, as well as all waivers of rights by Maker contained herein shall
effectively bind and be the obligations and waivers of any and all others who
may at any time become liable for the payment of all or any part of this Note.


 


3.05                              No party other than the Maker shall be liable
for the payment of all or any part of this Note unless such party has executed
a written document agreeing to be liable for payment of any or all of this
Note.


 


3.06                              If any provision (or any part of any
provision) contained in this Note shall for any reason be held or deemed to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision (or remaining part of
the affected provision) of this Note, and this Note shall be construed as if
such invalid, illegal or unenforceable provision (or part thereof) had never
been contained herein and the remaining provisions of this Note shall remain in
full force and effect.


 


3.07                              Payee shall not sell, assign, give, pledge,
encumber, hypothecate or transfer any of its rights pursuant to this Note.


 


3.08                              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.


 


3.09                              RESERVED.


 


3.10                              Capitalized terms such as “Selling
Shareholders” used herein and not otherwise defined herein shall have the same
definition as that term has in the Stock Purchase Agreement.


 


3.11                              Any party who is required to bring an action
to enforce the terms of this Note shall be entitled to reasonable attorneys’
fees, in addition to all other amounts otherwise due hereunder.


 


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Executed
this 24 day of February, 2004


 


	
   

  	
  MAKER:

  
	
   

  	
   

  
	
   

  	
  DIVERSIFIED
  SECURITY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald G. Farrell

  	
   

  
	
   

  	
  Name:

  	
  Ronald
  G. Farrell

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  



 


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