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Exhibit 99.1
SETTLEMENT AGREEMENT AND GENERAL
RELEASE
THIS SETTLEMENT AGREEMENT AND GENERAL RELEASE (this "
Agreement ") is entered into this 26 th day of January, 2007, by and
between Tri-S Security Corporation, a Georgia corporation ("
Purchaser "), and David Shopay, on behalf of himself and the
other Shareholders (as hereinafter defined) in his capacity as the
Shareholder Representative. Capitalized terms used herein but not
otherwise defined herein shall have the meanings ascribed to such
terms in the Purchase Agreement (as hereinafter
defined).
W I T N E S S E T H:
WHEREAS , pursuant to that certain Stock Purchase Agreement,
dated as of August 30, 2005, by and among Purchaser and the
shareholders of The Cornwall Group, Inc., a Florida corporation ("
Cornwall "), listed on the signature pages thereto (the "
Shareholders "), as amended by that certain Amendment
No. 1 to Stock Purchase Agreement, dated October 18, 2006
(as so amended, the " Purchase Agreement "), Purchaser
purchased from the Shareholders all of the issued and outstanding
capital stock of Cornwall;
WHEREAS , pursuant to the Purchase Agreement and in
connection with the closing of the transactions contemplated
thereby, Purchaser executed that certain Promissory Note dated
October 18, 2005 in favor of David Shopay, in his capacity as
the Shareholder Representative, with a principal amount of $250,000
(the " Promissory Note "), which principal amount and the
interest accrued thereon constitutes a portion of the Escrow
Fund;
WHEREAS , Purchaser has asserted and demanded its right
to indemnification under the Purchase Agreement and its right of
offset under the Promissory Note with respect to the Purchaser
Losses described in those certain notices to the Indemnifying
Shareholders and the Escrow Agent dated June 17, 2006 and
November 15, 2006 (collectively, the " Loss Notices
");
WHEREAS , the Shareholder Representative disputes the
claims made by Purchaser in the Loss Notices;
WHEREAS , pursuant to Section 12.14 of the Purchase
Agreement, the Shareholder Representative has the power to, among
other things, act for the Shareholders with respect to all
indemnification matters referred to in the Purchase Agreement,
including, without limitation, the right to compromise and settle
any claim on behalf of the Shareholders; and
WHEREAS , Purchaser and the Shareholder Representative,
on behalf of himself and the other Shareholders, desire to amicably
settle the claims made by Purchaser in the Loss Notices and, in
connection therewith, desire to release each other from certain
claims, obligations and liability as set forth herein;
NOW, THEREFORE , in consideration of the mutual terms and
conditions contained herein and other valuable consideration, the
receipt and adequacy of which the parties hereby acknowledge, the
parties hereto agree as follows:
ARTICLE I
SETTLEMENT
Section 1.1 Forgiveness of Promissory Note . The
Shareholder Representative, on behalf of himself and each of the
Shareholders, hereby forgives, cancels and forever discharges all
amounts owed by Purchaser under the Promissory Note.
Contemporaneous with the execution hereof, the Shareholder
Representative shall deliver to Purchaser the original Promissory
Note, which the Shareholder Representative shall have marked and
acknowledged as "paid in full."
Section 1.2 Joint Instructions to Escrow Agent
. Contemporaneous with the execution hereof, Purchaser and the
Shareholder Representative shall issue joint written instructions
to the Escrow Agent in substantially the form of Exhibit "A"
attached hereto (the " Instructions ").
Section 1.3 Condition to Effectiveness .
Notwithstanding anything herein to the contrary, this Agreement is
conditional upon, and shall not become effective unless and until,
the Escrow Fund has been disbursed in accordance with the
Instructions. Purchaser and the Shareholder Representative
acknowledge that this Agreement has been drafted in an attempt to
settle the existing disputes between Purchaser and the Shareholder
Representative with respect to the Purchaser Losses described in
the Loss Notices and constitutes a settlement communication. In the
event that this Agreement does not become effective, each of
Purchaser and the Shareholder Representative shall preserve all
rights and remedies, and no waiver or concession shall be inferred
from any provision of this Agreement.
ARTICLE II
MUTUAL RELEASES AND CERTAIN COVENANTS
Section 2.1 Release of Claims by the Shareholder
Representative . As a material inducement for Purchaser to
enter into this Agreement, the Shareholder Representative, for
himself and on behalf of each of the other Shareholders and on
behalf of his and their respective successors, assigns, directors,
officers, employees, Affiliates, family members, agents and
representatives, as applicable (collectively, the " Seller
Parties "), hereby absolutely, unconditionally and irrevocably
releases, waives, acquits, withdraws, retracts and forever
discharges any and all claims, obligations, losses, demands,
actions, causes of action and liabilities, of whatsoever kind and
nature, character and description, whether in law or equity,
whether sounding in tort, contract or under any other applicable
Law, whether known or unknown, and whether anticipated or
unanticipated, which any of the Seller Parties ever had, now has or
may ever have, directly or indirectly (collectively, "
Claims "), against Purchaser and its successors, assigns,
directors, officers, employees, Affiliates, family members, agents
and representatives, as applicable (the " Purchaser Parties
"), by reason of any act, omission, matter, cause or thing
whatsoever, from the beginning of time to, and including, the date
of the execution of this Agreement, including, without limitation,
all Claims arising out of or relating to the Promissory Note, the
Purchase Agreement or any of the transactions contemplated thereby;
provided , however , that the release provided in
this Section 2.1 does not include a release of any Claims
arising out of or related to any breach, or the interpretation or
enforcement of, this Agreement, the Approved Employment Agreements
or that certain letter agreement dated
2
October 18, 2005 among Purchaser, David
Shopay, Thomas Shopay and Rebecca L. Shopay (the "Letter
Agreement").
Section 2.2 Release of Claims by Purchaser .
As a material inducement for the Shareholder Representative, on
behalf of himself and each of the other Shareholders, to enter into
this Agreement, Purchaser, for itself and on behalf of the other
Purchaser Parties, hereby absolutely, unconditionally and
irrevocably releases, waives, acquits, withdraws, retracts and
forever discharges any and all Claims against any of the Seller
Parties by reason of any act, omission, matter, cause or thing
whatsoever, from the beginning of time to, and including, the date
of the execution of this Agreement, including, without limitation,
all Claims arising out of or relating to the Promissory Note, the
Purchase Agreement or any of the transactions contemplated thereby;
provided , however , that the release provided in
this Section 2.2 does not include a release of any Claims
arising out of or related to any breach, or the interpretation or
enforcement of, this Agreement, the Approved Employment Agreements
or the Letter Agreement.
Section 2.3 Covenants .
(a) The consequences of the foregoing provisions have been
explained to Purchaser and the Shareholder Representative by their
respective counsel. Each of Purchaser and the Shareholder
Representative acknowledges that it may hereafter discover facts
different from, or in addition to, those which it now knows or
believes to be true with respect to the Claims, and agrees that
this Agreement and the releases contained herein shall be and
remain effective in all respects notwithstanding such different or
additional facts or the discovery thereof.
(b) To the extent applicable Law would not otherwise recognize
the provisions of Sections 2.1 and 2.2 hereof as constituting a
final release applying to unknown and unanticipated Claims within
the scope of the release, as well as those now known or disclosed,
each of Purchaser and the Shareholder Representative, on behalf of
himself and the other Seller Parties, hereby expressly waives all
rights or benefits which they may have now or in the future under
any such applicable Law.
(c) The Shareholder Representative, on behalf of himself and all
of the other Seller Parties, hereby forever agrees and covenants to
refrain and forbear from asserting, commencing, instituting or
prosecuting any lawsuit, action, claim or right to setoff or
deduction based on, arising out of or related to the Promissory
Note, the Purchase Agreement or the transactions contemplated
thereby.
(d) The Purchaser, on behalf of itself and the other Purchaser
Parti
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