**EXHIBIT 4.3**

 

**REGISTRATION RIGHTS AGREEMENT**

 

**THIS****REGISTRATION RIGHTS AGREEMENT** (this “Agreement”),dated as of [                   ],2005, is by and among **TRI-S SECURITYCORPORATION**, a Georgia corporation (the “Company”), and eachof the investors whose names appear on the signature pages hereof (each an “Investor”and, collectively, the “Investors”).

 

The Company has agreed, on the terms andsubject to the conditions set forth in the Company’s Confidential PrivateOffering Memorandum dated July 26, 2005, as may be amended or supplemented fromtime to time (the “Memorandum”), and the Subscription Agreement executedby each Investor and accepted by the Company on [                    ],2005 (collectively, the “Subscription Agreements”), to issue and sell toeach Investor a Note and Warrant (each as hereinafter defined).  The Notes are convertible into shares (the “ConversionShares”) of the Company’s common stock, par value $0.001 per share (the “CommonStock”), in accordance with their terms, and the Warrants are exercisableinto shares (the “Warrant Shares”) of Common Stock in accordance withtheir terms.

 

In order to induce the Investors to purchasethe Notes and Warrants, the Company has agreed to provide certain registrationrights under the Securities Act of 1933, as amended (the “Securities Act”),and under applicable state securities laws.

 

In consideration of each Investor purchasinga Note and Warrant, and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties agree as follows:

 

**1.****                                      DEFINITIONS.**

 

For purposes of this Agreement,the following terms shall have the meanings specified below:

 

“Business Day” means anyday other than a Saturday, a Sunday or a day on which the Commission is closedor on which banks in the City of Atlanta, Georgia are authorized by law to beclosed.

 

“Commission” means theSecurities and Exchange Commission.

 

“Effective Date” meansthe date on which the Registration Statement covering the resale of theRegistrable Securities is declared effective by the Commission.

 

“Filing Deadline” meansno later than March 1, 2006, which is the date on which the Company will havebeen subject to the reporting requirements of the Securities Exchange Act of1934, as amended (the “Exchange Act”), for a period at least twelvecalendar months and will become eligible to file a Registration Statement onForm S-3 under the Securities Act.

 

“Holder”means any person owning or having the right to acquire, through conversion ofthe Notes, exercise of the Warrants or otherwise, Registrable Securities,including initially each Investor and thereafter any permitted assigneethereof.

 

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“Note”means each of the 10% Callable, Convertible Promissory Notes offered for salepursuant to the Memorandum and issued by the Company.

 

“RegistrableSecurities” means the Conversion Shares, the Warrant Shares and any sharesof capital stock issued or issuable from time to time (with any adjustments) inreplacement of, in exchange for or otherwise in respect of, the ConversionShares or the Warrant Shares.

 

“Registration Deadline”means the earlier of: (i) the date which is thirty (30) days prior to theearliest Maturity Date (as defined in each Note) of any of the Notes; and (ii)the date on which the Company delivers a Prepayment Notice (as defined in theNotes) to any Investor.

 

“Registration Statement”means a registration statement or statements prepared in compliance with theSecurities Act and pursuant to Rule 415 under the Securities Act (“Rule 415”)or any successor rule providing for the offering of securities on a continuousor delayed basis.

 

“Warrant” means each ofthe Warrants to purchase Common Stock offered for sale pursuant to theMemorandum and issued by the Company.

 

**2.****                                      REGISTRATION.**

 

(a)                                  Filingof Registration Statement.  On orbefore the Filing Deadline, the Company shall prepare and file with theCommission a Registration Statement on Form S-3 as a “shelf” registrationstatement under Rule 415 covering the resale of a number of shares of RegistrableSecurities equal to one hundred percent (100%) of the number of shares ofCommon Stock issuable upon conversion of the Notes and exercise of the Warrantsin full (such number to be determined without regard to any restriction on suchconversion or exercise).  SuchRegistration Statement shall state, to the extent permitted by Rule 416 underthe Securities Act, that it also covers such indeterminate number of additionalshares of Common Stock as may become issuable upon the conversion of the Notesand exercise of the Warrants in order to prevent dilution resulting from stocksplits, stock dividends or similar events.

 

(b)                                 AlternativeRegistration Statement. Notwithstanding the foregoing paragraph 2(a), if on the Filing Deadline,the Company does not meet the eligibility requirements for filing aRegistration Statement on Form S-3, then in such case the Company shall insteadprepare and file with the Commission a Registration Statement meeting theforegoing requirements on Form S-1 or Form S-2.

 

(c)                                  Effectiveness.  The Company shall use reasonable best effortsto cause the Registration Statement to become effective as soon as practicablefollowing the filing thereof, but in no event later than the RegistrationDeadline.  The Company shall respondpromptly to any and all comments made by the staff of the Commission withrespect to the Registration Statement, and shall submit to the Commission,within three (3) Business Days after the Company learns that no review of theRegistration Statement will be made by the staff of the Commission or that thestaff of the Commission has no further comments on the Registration Statement,as the case may be, a request for acceleration of the effectiveness of suchRegistration Statement to a time and date not later than

 

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three (3) Business Days after the submissionof such request.  The Company willmaintain the effectiveness of each Registration Statement filed pursuant tothis Agreement until the earliest to occur of: (i) the date on which all of theRegistrable Securities eligible for resale thereunder have been publicly soldpursuant to either the Registration Statement or Rule 144 under the SecuritiesAct or any successor provision (“Rule 144”); (ii) the date on which allof the Registrable Securities remaining to be sold under such RegistrationStatement (in the reasonable opinion of counsel to the Company) may beimmediately sold to the public under Rule 144(k) under the Securities Act orany successor provision; and (iii) the date that is 120 days after theEffective Date (the period beginning on the date hereof and ending on theearliest to occur of (i), (ii) or (iii) above being referred to herein as the “RegistrationPeriod”).

 

(d)                                 Registrationof Other Securities.  The Companyshall not include any securities other than Registrable Securities on anyRegistration Statement filed by the Company on behalf of the Holders pursuantto the terms hereof.

 

**3.****                                      OBLIGATIONSOF THE COMPANY.**

 

In addition to performing its obligationshereunder, including, without limitation, those pursuant to Section 2 above,the Company shall, with respect to each Registration Statement:

 

(a)                                  prepareand file with the Commission such amendments and supplements to suchRegistration Statement and the prospectus used in connection with suchRegistration Statement as may be necessary to comply with the provisions of theSecurities Act or to maintain the effectiveness of such Registration Statementduring the Registration Period, or as may be reasonably requested by a Holderin order to incorporate information concerning such Holder or such Holder’sintended method of distribution;

 

(b)                                 solong as a Registration Statement is effective covering the resale of theapplicable Registrable Securities owned by a Holder, furnish to each Holdersuch number of copies of the prospectus included in such RegistrationStatement, including a preliminary prospectus, in conformity with therequirements of the Securities Act, and such other documents as such Holder mayreasonably request in order to facilitate the disposition of such Holder’sRegistrable Securities;

 

(c)                                  usecommercially reasonable efforts to register or qualify the RegistrableSecurities under the securities or “blue sky” laws of such jurisdictions withinthe United States as shall be reasonably requested from time to time by aHolder, and do any and all other acts or things which may reasonably benecessary or advisable to enable such Holder to consummate the public sale orother disposition of the Registrable Securities in such jurisdictions; *provided,* that the Company shall not berequired in connection therewith or as a condition thereto to qualify to dobusiness or to file a general consent to service of process in any suchjurisdiction;

 

(d)                                 notifyeach Holder immediately after becoming aware of the occurrence of any event(but shall not, without the prior written consent of such Holder, disclose tosuch Holder any facts or circumstances constituting material non-publicinformation) as a result of which the prospectus included in such RegistrationStatement, as then in effect, contains an untrue statement of material fact oromits to state a material fact required to be stated therein or necessary tomake the statements therein not misleading in light of the circumstances thenexisting, and as promptly as

 

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practicable prepare and file with theCommission and furnish to each Holder a reasonable number of copies of asupplement or an amendment to such prospectus as may be necessary so that suchprospectus does not contain an untrue statement of material fact or omit tostate a material fact required to be stated therein or necessary to make thestatements therein not misleading in light of the circumstances then existing;

 

(e)                                  usecommercially reasonable efforts to prevent the issuance of any stop order orother order suspending the effectiveness of such Registration Statement and, ifsuch an order is issued, to use commercially reasonable efforts obtain thewithdrawal thereof at the earliest possible time and to notify each Holder inwriting of the issuance of such order and the resolution thereof;

 

(f)                                    furnishto each Holder no later than two (2) Business Days after the date that suchRegistration Statement, or any successor registration statement, becomeseffective, a letter, dated such date, signed by an officer of the Company andaddressed to such Holder, confirming such effectiveness; and

 

(g)                                 permitcounsel for each Holder to review such Registration Statement and allamendments and supplements thereto, and any comments made by the staff of theCommission concerning such Holder and the Company’s responses thereto, within areasonable period of time prior to the filing thereof with the Commission (or,in the case of comments made by the staff of the Commission, within areasonable period of time following the receipt thereof by the Company).

 

**4.****                                      OBLIGATIONSOF EACH HOLDER.**

 

In connection with the registration ofRegistrable Securities pursuant to a Registration Statement, each Holder shall:

 

(a)                                  timelyfurnish to the Company (i) a completed shareholder questionnaire, in form andsubstance which is reasonably acceptable to the Company, and (ii) suchinformation in writing regarding such Holder and the intended method ofdisposition of the Registrable Securities held by such Holder as the Companyshall reasonably request in order to effect the registration thereof;

 

(b)                                 uponreceipt of any notice from the Company of the happening of any event of thekind described in paragraphs 3(d) or 3(e), immediately discontinue any sale orother disposition of such Registrable Securities pursuant to such RegistrationStatement until the filing of an amendment or supplement as described inparagraph 3(d) or withdrawal of the stop order referred to in paragraph 3(e),and use commercially reasonable efforts to maintain the confidentiality of suchnotice and its contents;

 

(c)                                  tothe extent required by applicable law, deliver a prospectus to the purchaser ofsuch Registrable Securities;

 

(d)                                 notifythe Company when such Holder has sold all of the Registrable Securities held bysuch Holder; and

 

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(e)                                  notifythe Company in the event that any information supplied by such Holder in writingfor inclusion in such Registration Statement or related prospectus is untrue oromits to state a material fact required to be stated therein or necessary tomake such information not misleading in light of the circumstances thenexisting; immediately discontinue any sale or other disposition of suchRegistrable Securities pursuant to such Registration Statement until the filingof an amendment or supplement to such prospectus as may be necessary so thatsuch prospectus does not contain an untrue statement of material fact or omitto state a material fact required to be stated therein or necessary to make thestatements therein not misleading in light of the circumstances then existing;and use commercially reasonable efforts to assist the Company as may beappropriate to make such amendment or supplement effective for such purpose.

 

**5.****                                      INDEMNIFICATION.**

 

In the event that any Registrable Securitiesare included in a Registration Statement under this Agreement:

 

(a)                                  Tothe extent permitted by law, the Company shall indemnify and hold harmless eachHolder, the officers, directors, employees, agents and representatives of suchHolder, and each person, if any, who controls such Holder within the meaning ofthe Securities Act or the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), against any losses, claims, damages, liabilities or reasonableout-of-pocket expenses (whether joint or several) (collectively, includingreasonable legal expenses or other expenses reasonably incurred in connection withinvestigating or defending same, “Losses”), insofar as any such Lossesarise out of or are based upon: (i) any untrue statement or alleged untruestatement of a material fact contained in such Registration Statement underwhich such Registrable Securities were registered, including any preliminaryprospectus or final prospectus contained therein or any amendments orsupplements thereto; or (ii) the omission or alleged omission to state thereina material fact required to be stated therein, or necessary to make thestatements therein, in light of the circumstances under which they were made,not misleading.  Subject to theprovisions of paragraph 5(c) below, the Company will reimburse such Holder, andeach such officer, director, employee, agent, representative or controllingperson, for any reasonable legal expenses or other out-of-pocket expenses asreasonably incurred by any such entity or person in connection withinvestigating or defending any Loss; *provided,however*, that the foregoing indemnity shall not apply to amountspaid in settlement of any Loss if such settlement is effected without theconsent of the Company (which consent shall not be unreasonably withheld), norshall the Company be obligated to indemnify any person for any Loss to the extentthat such Loss arises out of or is based upon: (i) any disclosure or anyomission or alleged omission (to state a material fact required to be statedtherein or necessary to make statements therein not misleading) that is basedupon or in conformity with written information furnished (or not furnished, inthe case of an omission) by such person expressly for use in such RegistrationStatement; or (ii) a failure of such person to deliver or cause to be deliveredthe final prospectus contained in the Registration Statement and made availableby the Company, if such delivery is required by applicable law.

 

(b)                                 Tothe extent permitted by law, each Holder who is named in such RegistrationStatement as a selling shareholder, acting severally and not jointly, shallindemnify and hold harmless the Company, the officers, directors, employees,agents and representatives of the Company, and each person, if any, whocontrols the Company within the meaning of the Securities 

 

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Act or the Exchange Act, against any Lossesto the extent (and only to the extent) that any such Losses arise out of or arebased upon: (i) any disclosure or any omission or alleged omission (to state amaterial fact required to be stated therein or necessary to make statementstherein not misleading) that is based upon or in conformity with writteninformation furnished (or not furnished, in the case of an omission) by suchperson expressly for use in such Registration Statement; or (ii) a failure ofsuch Holder to deliver or cause to be delivered the final prospectus containedin the Registration Statement and made available by the Company, if suchdelivery is required under applicable law. Subject to the provisions ofparagraph 5(c) below, such Holder will reimburse any legal or other expenses asreasonably incurred by the Company and any such officer, director, employee,agent, representative, or controlling person, in connection with investigatingor defending any such Loss; *provided,however*, that the foregoing indemnity shall not apply to amountspaid in settlement of any such Loss if such settlement is effected without theconsent of such Holder (which consent shall not be unreasonably withheld).

 

(c)                                  Promptlyafter receipt by an indemnified party under this Section 5 (an “IndemnifiedParty”) of notice of the commencement of any action (including anygovernmental action), such Indemnified Party will, if a claim in respectthereof is to be made against any indemnifying party under this Section 5(an “Indemnifying Party”), promptly deliver to the Indemnifying Party awritten notice of the commencement thereof and the Indemnifying Party shallhave the right to participate in and to assume the defense thereof with counselselected by the Indemnifying Party and reasonably acceptable to the IndemnifiedParty; *provided, however*, that anIndemnified Party shall have the right to retain its own counsel, with thereasonably incurred fees and expenses of one such counsel for all IndemnifiedParties to be paid by the Indemnifying Party, if representation of suchIndemnified Party by the counsel retained by the Indemnifying Party would beinappropriate under applicable standards of professional conduct due to actualor potential conflicting interests between such Indemnified Party and any otherparty represented by such counsel in such proceeding.  The failure to deliver written notice to theIndemnifying Party within a reasonable time of the delivery of notice of anysuch action, to the extent prejudicial to its ability to defend such action,shall relieve such Indemnifying Party of any liability to the Indemnified Partyunder this Section 5 with respect to such action, but the omission so todeliver written notice to the Indemnifying Party will not relieve it of anyliability that it may have to any Indemnified Party otherwise than under thisSection 5 or with respect to any other action unless the Indemnifying Party ismaterially prejudiced as a result of not receiving such notice.

 

(d)                                 Inthe event that the indemnity provided in paragraph (a) or (b) of this Section 5is unavailable or insufficient to hold harmless an Indemnified Party for anyreason, the Company and each Holder agree, severally and not jointly, tocontribute to the aggregate Losses to which the Company or such Holder may besubject in such proportion as is appropriate to reflect the relative fault ofthe Company and such Holder in connection with the statements or omissionswhich resulted in such Losses.  Relativefault shall be determined by reference to whether any alleged untrue statementor omission relates to information provided by the Company or by suchHolder.  The Company and each Holderagree that it would not be just and equitable if contribution were determinedby *pro rata* allocation or anyother method of allocation which does not take account of the equitableconsiderations referred to above. Notwithstanding the provisions of this paragraph (d), no person guiltyof fraudulent misrepresentation (within the meaning of Section 11(f) of theSecurities Act) shall be entitled to contribution from any person who is notguilty of such fraudulent 

 

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misrepresentation.  For purposes of this Section 5, each personwho controls a Holder within the meaning of either the Securities Act or theExchange Act and each officer, director, employee, agent or representative ofsuch Holder shall have the same rights to contribution as such Holder, and eachperson who controls the Company within the meaning of either the Securities Actor the Exchange Act and each officer, director, employee, agent orrepresentative of the Company shall have the same rights to contribution as theCompany, subject in each case to the applicable terms and conditions of thisparagraph (d).

 

(e)                                  Theobligations of the Company and each Holder under this Section 5 shallsurvive the conversion of the Notes and exercise of the Warrants in full andthe completion of any offering or sale of Registrable Securities pursuant to aRegistration Statement under this Agreement or otherwise.

 

**6.****                                      REPORTS.**

 

With a view tomaking available to each Holder the benefits of Rule 144 and any other similarrule or regulation of the Commission that may at any time permit such Holder tosell securities of the Company to the public without registration, the Companyagrees to:

 

(a)                                  makeand keep public information available, as those terms are understood anddefined in Rule 144;

 

(b)                                 filewith the Commission in a timely manner all reports and other documents requiredof the Company under the Exchange Act; and

 

(c)                                  furnishto such Holder, so long as such Holder owns any Registrable Securities,promptly upon written request: (i) a written statement by the Company, if true,that it has complied with the reporting requirements of Rule 144 and theExchange Act; (ii) to the extent not publicly available through the Commission’sEDGAR database, a copy of the most recent annual or quarterly report of theCompany and such other reports and documents so filed by the Company with theCommission; and (iii) such other information as may be reasonably requested bysuch Holder in connection with such Holder’s compliance with any rule orregulation of the Commission which permits the selling of any such securitieswithout registration.

 

**7.****                                      MISCELLANEOUS.**

 

(a)                                  Expensesof Registration.  All reasonableexpenses, other than underwriting discounts and commissions and fees andexpenses of counsel and other advisors to each Holder, incurred in connectionwith the registrations, filings or qualifications described herein, including(without limitation) all registration, filing and qualification fees, printers’and accounting fees, shall be borne by the Company.

 

(b)                                 Amendment;Waiver.  Except as expressly provided herein, neither this Agreement nor anyterm hereof may be amended or waived except pursuant to a written instrumentexecuted by the Company and the Holders of at least a majority of the RegistrableSecurities into which all of the Notes and Warrants then outstanding areconvertible or exercisable (without regard

 

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to any limitation on such conversion orexercise). Any amendment or waiver effectedin accordance with this paragraph shall be binding upon each Holder, eachfuture Holder and the Company. The failure of any party to exercise any right or remedy under thisAgreement or otherwise, or the delay by any party in exercising such right orremedy, shall not operate as a waiver thereof.

 

(c)                                  Notices.  Any notice, demand or request required orpermitted to be given by the Company or a Holder pursuant to the terms of thisAgreement shall be in writing and shall be deemed delivered: (i) when deliveredpersonally or by verifiable facsimile transmission, unless such delivery ismade on a day that is not a Business Day, in which case such delivery will bedeemed to be made on the next succeeding Business Day; (ii) on the nextBusiness Day after timely delivery to a reputable overnight courier; and (iii) on the Business Day actually received if depositedin the U.S. mail (certified or registered mail, return receipt requested,postage prepaid), addressed as follows:

* *

* *

*If to the Company*:

 

Tri-S Security Corporation

3700 Mansell Road, Suite 220

Alpharetta, GA 30022

Attn:                  Chief Executive Officer

Tel:                            (770) 625-4945

Fax:                         (770) 625-4946

 

*with a copy (which shall notconstitute notice) to:*

 

Rogers & Hardin LLP

2700 International Tower

229 Peachtree Street NE

Atlanta, GA 30303

Attn:                    Steven E. Fox, Esq.

Tel:                            (404) 522-4700

Fax:                           (404) 525-2224

 

and if to a Holder, to such address as shallbe designated by such Holder in writing to the Company.

 

(d)                                 Assignment.  Upon the transfer of any Notes, Warrants orRegistrable Securities by a Holder, the rights of such Holder hereunder withrespect to such securities so transferred shall be assigned automatically tothe transferee thereof, and such transferee shall thereupon be deemed to be a “Holder”for purposes of this Agreement, as long as: (i) the Company is, within areasonable period of time following such transfer, furnished with writtennotice of the name and address of such transferee; (ii) the transferee agreesin writing with the Company to be bound by all of the provisions hereof; and(iii) such transfer is made in accordance with the applicable requirements ofthe Notes, Warrants and all applicable law.

 

(e)                                  Counterparts.  This Agreement may be executed incounterparts, each of which shall be deemed an original, and all of whichtogether shall be deemed one and the same instrument.  This Agreement, once executed by a party, maybe delivered to any other party hereto by facsimile transmission.

 

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(f)                                    GoverningLaw.  This Agreement shall begoverned by and construed in accordance with the laws of the State of Georgiaapplicable to contracts made and to be performed entirely within the State ofGeorgia.

 

(g)                                 Holderof Record.  A person is deemed to bea Holder whenever such person owns or is deemed to own of record suchRegistrable Securities.  If the Companyreceives conflicting instructions, notices or elections from two or morepersons with respect to the same Registrable Securities, the Company shall actupon the basis of instructions, notice or election received from the recordowner of such Registrable Securities.

 

(h)                                 EntireAgreement. This Agreement and the Notes, Warrants, Subscription Agreementsand Memorandum (collectively, the “Transaction Documents”) constitutethe entire agreement among the parties hereto with respect to the subjectmatter hereof and thereof.  There are norestrictions, promises, warranties or undertakings, other than those set forthor referred to herein and therein.  ThisAgreement and the other Transaction Documents supersede all prior agreementsand understandings among the parties hereto with respect to the subject matterhereof and thereof.

 

(i)                                     Headings.  The headings in this Agreement are forconvenience of reference only and shall not limit or otherwise affect themeaning hereof.

 

(j)                                     ThirdParty Beneficiaries.  This Agreementis intended for the benefit of the parties hereto and their respectivepermitted successors and assigns, and is not for the benefit of, nor may anyprovision hereof be enforced by, any other person.

 

 

**[SignaturePage to Follow]**

 

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**IN WITNESS WHEREOF**, the undersigned have executed this RegistrationRights Agreement as of the date first-above written.

 
|   | **TRI-S  SECURITY CORPORATION** |
|--------|---------------------------------|
|   | ** **                      |
|   |                            |
|   | By:                             |   |   |
|   |                            | Name: Ronald G. Farrell |
|   |                            | Title: Chief Executive Officer |
|   |                            |
|   | **INVESTOR:**                   |
|   |                            |
|   |                            |   |
|   |                            | Investor Name |
|   |                            |
|   |                            |
|   | By:                             |                                                 ,  its                       |
|   |                            |
|   |                            | By: |   |   |
|   |                            |   | Name: |
|   |                            |   | Title: |
|        |                                 |  |  |  |  |  |  |  |

 

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