Document:

Exhibit 10.16

 

PROMISSORY NOTE

 

	
   

  	
  Atlanta,
  Georgia

  
	
   

  	
  February 24,
  2004

  

 

ARTICLE I

 

PAYMENTS OF PRINCIPAL AND INTEREST

 

1.01                           For value received, the undersigned 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 Harold Bright (“Payee”), at any location
Payee shall reasonably determine, the principal sum of ONE HUNDRED FORTY THREE THOUSAND SEVEN  HUNDRED AND NO HUNDREDTHS DOLLARS ($143,700.00)
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 February 28, 2005 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 shall 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.

 

2

 

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                           Maker
and Payee hereby consent and agree to the exclusive jurisdiction and venue of
the courts of Fulton County, Georgia as proper and convenient for any action to
enforce any of the provisions of this Note.

 

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.

 

3

 

Executed
this 24 day of February, 2004

 

 

	
   

  	
  MAKER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DIVERSIFIED
  SECURITY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald
  G. Farrell

  	
   

  
	
   

  	
  Name:

  	
  Ronald
  G. Farrell

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
					

 

4Exhibit 10.17

 

PROMISSORY NOTE

 

	
   

  	
  Atlanta, Georgia

  
	
   

  	
  February 24, 2004

  

 

ARTICLE I

 

PAYMENTS OF PRINCIPAL AND INTEREST

 

1.01         For value received, the undersigned 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 Charles Keathley (“Payee”), at any location
Payee shall reasonably determine, the principal sum of EIGHT HUNDRED THIRTEEN THOUSAND SEVEN  HUNDRED FIFTY AND NO HUNDREDTHS DOLLARS ($813,750.00) 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 February 28, 2005 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 shall 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.

 

2

 

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         Maker and Payee hereby consent and agree to the exclusive
jurisdiction and venue of the courts of Fulton County, Georgia as proper and
convenient for any action to enforce any of the provisions of this Note.

 

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.

 

3

 

Executed this
24  day of February, 2004

 

 

	
   

  	
  MAKER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DIVERSIFIED
  SECURITY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald
  G. Farrell

  	
   

  
	
   

  	
  Name:

  	
  Ronald
  G. Farrell

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
					

 

4

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