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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 Sell
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