**EXHIBIT 4.4**

 

**THIS NOTE AND THE SECURITIESISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLESTATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE OROTHERWISE TRANSFERRED EXCEPT PURSUANT TO: (A) THE RESTRICTIONS SET FORTHHEREIN AND (B) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIESACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSELREASONABLY SATISFACTORY TO TRI-S SECURITY CORPORATION THAT SUCH REGISTRATION ISNOT REQUIRED.**

 

**10% CALLABLE, CONVERTIBLE PROMISSORY NOTE**

 
| No. [               ] |   | Issue Date: [         ],  2005 |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|
|                                                                                                  |   | Alpharetta, Georgia                                                         |

 

Tri-S Security Corporation, a Georgia corporation (“Payor”), hereby promisesto pay to [                      ](“Holder”), at the address listed on the signature page hereto or suchaddress as Holder may from time to time designate in writing to Payor, theprincipal sum of [            ] DOLLARS($                  ),together with interest thereon as provided herein, in such coin or currency ofthe United States of America as at the time of payment shall be legal tenderfor the payment of public and private debts, in accordance with the terms andconditions of this promissory note (the “Note”).

 

# 1.                                       Series of Notes.  This Note is issued as part of a series ofsimilar notes issued pursuant to Payor’s Confidential Private OfferingMemorandum dated July 26, 2005, as the same may be amended or supplementedfrom time to time (the “Memorandum”), and the terms of that certain SubscriptionAgreement entered into between Payor and Holder, accepted by Payor on [              ],2005.

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# 2.                                       Interest.  The outstanding principal balance hereundershall bear interest at a rate of 10% per annum from the date of issuance ofthis Note as indicated above (the “Issue Date”), computed on the basis of a 360-dayyear consisting of twelve 30-day months. All accrued interest under this Note shall be payable monthly on thelast Trading Day (as hereinafter defined) of each month, commencing the monthafter the Issue Date.  All payments madehereunder shall be applied first to accrued interest and thereafter toprincipal.  For purposes of this Note, “TradingDay” means any day on which the shares of Payor’s common stock, par value$0.001 per share (the “Common Stock”), are purchased and sold on the principalsecurities exchange or market on which the Common Stock is then listed ortraded.

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# 3.                                       Maturity Date.  The outstanding principal balance hereunder andall unpaid, accrued interest thereon shall be payable on the date which is thethird anniversary of the Issue Date, or [                ],2008 (the “Maturity Date”).

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# 4.                                       Conversion.  At any time after Shareholder Approval (asdefined in Section 7 hereof) is obtained and prior to the Maturity Date,Holder may elect to convert all, but not less than all, of the outstandingprincipal balance hereunder (the “Converted Amount”) into a number

 

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# of shares of Common Stock (the “Conversion Shares”) equal to the quotientobtained by dividing the Converted Amount by the Conversion Price.  For purposes of this Note, the “ConversionPrice” shall equal $4.80 per share, subject to adjustment as set forth in Section 6hereof.

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# 5.                                       Conversion Procedure.

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## (a)                                  Holder shall exercise theconversion right set forth in Section 4 hereof by delivering to Payor acompleted Notice of Conversion in the form attached hereto as Exhibit A(a “Conversion Notice”).  No later thanfive Trading Days after Holder delivers to Payor the Conversion Notice, Payorshall issue to Holder a certificate or certificates representing the ConversionShares into which the Converted Amount has been converted.  Such conversion shall be deemed to have beeneffected as of the close of business on the date the Conversion Notice isdelivered to Payor, and Holder will be deemed to have become the holder ofrecord of the Conversion Shares issuable pursuant to such notice on such date.

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## (b)                                 Payor shall not be required topay any Federal or state transfer tax or charge that may be payable in respectof the issuance or delivery of certificates representing the Conversion Sharesin a name other than that of Holder.

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## (c)                                  Upon conversion of this Notepursuant to Sections 4 and 5 hereof, Payor will take all such actions as arenecessary in order to ensure that the Conversion Shares will be validly issued,fully paid and nonassessable.

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## (d)                                 If Holder is required to makeany governmental filings or to obtain any governmental approval in connectionwith the issuance or conversion of this Note, Payor will provide Holder withreasonable assistance in preparing such filings or obtaining suchapproval.  Payor will make all filingsPayor is required to make with the Securities and Exchange Commission (the “SEC”)and the applicable state securities commissions in connection with the issuanceof this Note and the Conversion Shares.

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## (e)                                  No fractional share of CommonStock or scrip representing any fractional share of Common Stock shall beissued upon the conversion of the Converted Amount.  If the conversion of the Converted Amountresults in a fraction, the number of shares of Common Stock to be issued toHolder shall be rounded up to the nearest whole share.

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## (f)                                    Upon conversion of the entireoutstanding principal balance hereunder and the payment of the accrued butunpaid interest due thereon, the rights of Holder with respect to this Notewill cease.

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# 6.                                       Adjustment ofConversion Price. In the event that, after the Issue Date, Payor shall: (i) pay adividend or make a distribution on the outstanding shares of Common Stock inPayor’s capital stock (which shall include any options, warrants or otherrights to acquire capital stock), (ii) subdivide the outstanding shares ofCommon Stock into a larger number of shares, (iii) combine the outstandingshares of Common Stock into a smaller number of shares, or (iv) issue anyshares of Payor’s capital stock in reclassification of the Common Stock, then,and in each such case, the Conversion Price in effect immediately prior to suchevent shall be adjusted so that, upon conversion of the Conversion Amount,Holder shall be entitled to receive the number of Conversion Shares or othersecurities of Payor that Holder would have owned or

 

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# would have been entitled to receive upon or by reason of any of the eventsdescribed above had the Conversion Amount been converted immediately prior tothe occurrence of such event.  In theevent that the outstanding shares of Common Stock are ever converted into agreater or lesser number of shares of another corporation or entity through amerger or similar transaction, a proportionate adjustment shall be made to theConversion Price to account for such change. Payor shall give prompt written notice to Holder following theoccurrence of any event which requires an adjustment to the Conversion Pricepursuant to the terms hereof.

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# 7.                                       Limitations on Rightto Convert.

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# (a)                                  In noevent shall Holder be permitted to convert the outstanding principal balancehereunder pursuant to Sections 4 and 5 hereof until Payor has obtained Shareholder Approval. For purposes of this Note, “Shareholder Approval” means the affirmativevote of at least a majority of the votes cast at a meeting of Payor’sshareholders (a “Shareholders Meeting”) at which a quorum is present toapprove the potential issuance in connection with the offering contemplated bythe Memorandum (the “Offering”) of more than 20% of the outstanding shares ofCommon Stock for purposes of complying with the rules governing The NasdaqStock Market, Inc.  No later thanthirty (30) days after the termination of the Offering, Payor shall file withthe SEC a preliminary proxy statement pursuant to the Securities Exchange Actof 1934, as amended (the “Exchange Act”), in connection with a ShareholderMeeting and shall seek to convene such meeting as promptly thereafter aspracticable.  Payor’s Chief ExecutiveOfficer, who in the aggregate beneficially owns approximately 24% of the CommonStock outstanding as of the date of the Memorandum has agreed to vote all suchshares in a manner to obtain Shareholder Approval.

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# (b)                                 In noevent shall Holder be permitted to convert the outstanding principal balancehereunder pursuant to Sections 4 and 5 hereof if, upon such conversion, thenumber of Conversion Shares to be issued pursuant to such conversion plusthe number of shares of Common Stock beneficially owned by Holder would exceed9.99% of the number of shares of Common Stock then issued and outstanding, itbeing the intent of Payor and Holder that Holder not be deemed at any time tohave the power to vote or dispose of greater than 9.99% of the number of sharesof Common Stock issued and outstanding at any time. Nothing contained hereinshall be deemed to restrict the right of Holder to convert such excessprincipal amount at such time as such conversion will not violate theprovisions of this Section 7. As used herein, beneficial ownership shallbe determined in accordance with Section 13(d) of the ExchangeAct.  To the extent that the limitationcontained in this Section 7 applies (and without limiting any rights Payormay otherwise have), Payor may rely on Holder’s determination of whether thisNote is convertible pursuant to the terms hereof, Payor shall have noobligation whatsoever to verify or confirm the accuracy of such determination,and the submission of a Conversion Notice by Holder shall be deemed to beHolder’s representation that this Note is convertible pursuant to the termshereof.

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# 8.                                       Securities Laws; ShareLegend.  Holder, by acceptanceof this Note, agrees that the Conversion Shares will be disposed of only inaccordance with the Securities Act and the rules and regulations of theSEC promulgated thereunder.  In additionto any other legend which Payor may deem advisable under the Securities Act andapplicable state securities laws, all

 

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# certificates representing the Conversion Shares (as well as any othersecurities issued hereunder in respect of any such shares) issued upon conversionof this Note shall be endorsed as follows:

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THE SECURITIESREPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIESACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOTBE SOLD OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO ANEFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATESECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUERTHAT SUCH REGISTRATION IS NOT REQUIRED.

 

Anycertificate issued at any time in exchange or substitution for any certificatebearing such legend (except a new certificate issued upon completion of apublic distribution pursuant to a registration statement under the SecuritiesAct) shall also bear such legend unless, in the opinion of counsel (in form andsubstance reasonably satisfactory to Payor) selected by Holder of suchcertificate, the securities represented thereby need no longer be subject torestrictions on resale under the Securities Act.

 

# 9.                                       Call Provision.  Payor has the option to prepay all or anyportion of the outstanding principal balance hereunder at any time after theone year anniversary of the Issue Date with no prepayment penalty in accordancewith the terms of this Section 9. Payor may exercise this right of prepayment by delivering to Holder awritten notice (a “Prepayment Notice”) indicating the amount of the outstandingprincipal balance hereunder to be prepaid and the date on which Payor intendsto make such prepayment, which date may be no earlier than 30 days after thePrepayment Notice is delivered to Holder. Notwithstanding the foregoing, Payor may exercise this right ofprepayment only if a registration statement filed pursuant to the SecuritiesAct covering the resale of the Conversion Shares has been declared effective bythe SEC on or prior to the date on which Payor delivers the Prepayment Noticeto Holder.

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# 10.                                 Governing Law.  The terms of this Note shall be construed inaccordance with the laws of the State of Georgia.

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# 11.                                 Restrictions onTransfer.  Holder, byacceptance of this Note, agrees and understands that: (i) this Note maynot be transferred, sold pledged or hypothecated by Holder; and (ii) anyattempted transfer, sale, pledge or hypothecation of this Note by Holder shallbe void and of no effect.

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**[SIGNATUREPAGE FOLLOWS]**

 

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** **

**IN WITNESS WHEREOF,**the Payor and Holder have dulyexecuted and delivered this Note, or caused this Note to be duly executed anddelivered, all as of the date first written above.

 
|   | **TRI-S SECURITY CORPORATION**                  |
|--------|-------------------------------------------------|
|   |                                            |
|   |                                            |
|   |                                            |   |
|   |    By: Ronald G. Farrell         |
|   |    Its: Chief Executive  Officer |

** **

**ACCEPTED BY:**

 

**HOLDER:**

 

**[NAME OF HOLDER]**

 

 
|   |   |
|--------|--------|
| By:    |   |   |
| Its:   |   |   |

 
| Address of Holder: |   |   |
|--------------------|--------|--------|
|               |   |   |
|               |   |   |
| Facsimile Number:  |   |   |
| E-mail:            |   |   |

 

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**EXHIBIT A**

 

**NOTICEOF CONVERSION**

 

**TO:TRI-S SECURITY CORPORATION**

 

(1)                                  The undersignedhereby elects to convert the entire outstanding principal balance of thatcertain 10% Callable, Convertible Promissory Note, dated                     ,2005, issued by Tri-S Security Corporation (the “Company”) to the undersigned (“theNote”), into               shares (the “Shares”) of the Company’s common stock, $.001 par value per share,pursuant to the terms of the Note.

 

(2)                                  Please issue acertificate or certificates representing the Shares in the following name:

 
| Name   |   | Address   |
|--------|--------|---------------------|
|   |   |                |

 

(3)                                  The undersignedrepresents that:  (i) the Shares arebeing acquired for the account of the undersigned for investment purposes only andnot with a view to, or for resale in connection with, the distribution thereof,and the undersigned has no present intention of distributing or reselling the Shares;(ii) the undersigned is aware of the Company’s business affairs andfinancial condition and has acquired sufficient information about the Companyto reach an informed and knowledgeable decision regarding the undersigned’sinvestment in the Company; (iii) the undersigned is experienced in makinginvestments of this type and has such knowledge and background in financial andbusiness maters that the undersigned is capable of evaluating the merits andrisks of this investment and protecting the undersigned’s own interests; (iv) theundersigned understands that the Shares have not been registered under theSecurities Act of 1933, as amended (the “Securities Act”), by reason of aspecific exemption from the registration provisions of the Securities Act (whichexemption depends upon, among other things, the bona fide nature of theinvestment intent as expressed herein) and, because the Shares have not beenregistered under the Securities Act, they may not be sold or transferred by theundersigned unless so registered or an exemption from such registration isavailable; (v) the undersigned is aware that the Shares may not be soldpursuant to Rule 144 adopted under the Securities Act (the “Rule”) unlesscertain conditions are met and until the undersigned has held the Shares forthe number of years prescribed by the Rule and that among the conditions foruse of the Rule is the availability to the public of current information aboutthe Company; (vi) the undersigned agrees not to make any disposition ofall or any part of the Shares unless and until there is then in effect aregistration statement under the Securities Act covering such proposeddisposition and such disposition is made in accordance with said registrationstatement or the undersigned has provided the Company with an opinion of counselsatisfactory to the Company stating that such registration is not required; and(vii) the undersigned is an “accredited investor” as such term is definedin Rule 501 promulgated pursuant to the Securities Act.

 
| **Date:** | ** ** | ** ** | **[NAME  OF UNDERSIGNED]** |
|-----------|------------|------------|----------------------------|
|      |       |
|      |       |       |
|      | By:        |       |                       |
|      | Its:       |       |                       |

 

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