EXHIBIT 4.2


 


FORM OF WARRANT


 


THE
REGISTERED HOLDER OF THIS WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL
NOT SELL, TRANSFER OR ASSIGN THIS WARRANT EXCEPT AS HEREIN PROVIDED AND THE
REGISTERED HOLDER OF THIS WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER,
ASSIGN, PLEDGE OR HYPOTHECATE THIS WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY
(180) DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER THAN
(I) BATHGATE CAPITAL PARTNERS LLC (“BATHGATE”) OR AN UNDERWRITER OR A SELECTED
DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR PARTNER
OF BATHGATE OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER.


 


WARRANT


FOR THE PURCHASE OF


180,000 SHARES OF COMMON STOCK


OF


TRI-S SECURITY CORPORATION.


 


THIS WARRANT IS NOT EXERCISABLE PRIOR TO          ,
2005.


 


VOID AFTER 5:00 P.M. MOUNTAIN
TIME,           , 2009.


 


This
certifies that, in consideration of $100 duly paid by or on behalf of
             (the
“Holder”), as registered owner of this Warrant, to Tri-S Security Corporation
(the “Company”), Holder is entitled, at any time or from time to time
after 
          , 2005 (the
“Commencement Date”), and at or before  5:00 p.m., Mountain Time,             , 2009 (the “Expiration Date”),
but not  thereafter, to subscribe for, purchase and receive, in whole or
in part, up to One Hundred Eighty Thousand (180,000) Shares (the “Shares”) of
the common stock of the Company, par value $0.001 per  share (the “Common
Stock”).  If the Expiration Date is a day
on which banking institutions are authorized by law to close, then this Warrant
may be exercised on the next succeeding day which is not such a day in
accordance with the terms herein. During the period ending on the
Expiration Date, the Company agrees not to take any action that would terminate
the Warrant. This Warrant is initially exercisable at
$         per Share so purchased;
provided,  however, that upon the occurrence of any of the events
specified in Section 5  hereof, the rights granted by this Warrant,
including the exercise  price per Share and the number of Shares to be
received upon such exercise, shall be adjusted as therein specified. The term
“Exercise Price” shall mean the initial exercise price or the adjusted exercise
price, depending on the context.


 


SECTION I


EXERCISE


 


1.01                           Exercise Procedure. In order to exercise this Warrant,
the  exercise form attached hereto must be duly executed and completed and
delivered  to the Company, together with this Warrant and payment of the
 Exercise Price for the Shares being purchased payable in cash or by
certified  check or official bank check. If the subscription rights
represented hereby shall not be exercised at or before 5:00 p.m., Mountain
time, on the Expiration Date this Warrant shall become and be void without
further force or effect, and all rights represented hereby shall cease and
expire.


 


1.02                           Legend. Each certificate for the securities purchased under this
Warrant shall bear a legend as follows unless such securities have been
registered under the Securities Act of 1933, as amended (the “Act”):


 
















 


“The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the “Act”) or applicable state law. The
securities may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the Act, or pursuant to
an exemption from registration under the Act and applicable state law.”


 


1.03.                        Conversion Right.  In
addition to and without limiting the rights of the Warrantholder under the
terms of the Warrant, the Holder shall have the right (the “Conversion Right”)
to convert this Warrant or any portion thereof into Shares as provided in this
Paragraph 2(c) at any time or from time to time prior to its expiration.


 


(a)                                  Upon exercise of the Conversion Right with
respect to a particular number of Warrants (the “Converted Warrants”), the
Company shall deliver to the Holder, without payment by the Holder of any
Exercise Price or any cash or other consideration, that number of Shares
computed using the following formula:


 


	
  X
  =

  	
  Y(A-B)

  	
   

  
	
   

  	
  A

  	
   

  



 


Where:


 


X =                             the number of Shares and/or Warrants to be issued to the Holder;


 


Y =                              the number of Shares and/or Warrants to be converted under this
Warrant;


 


A =                            the average of the Current Market Price of one share of Common Stock
for the five Trading Days immediately preceding the Conversion Date (as defined
below); and


 


B =                              the Share Exercise Price.


 


(b)                                 No fractional Shares shall be issuable upon
exercise of the Conversion Right, and if the number of Shares to be issued in
accordance with the foregoing formula is other than a whole number, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the Current Market Price.


 


(c)                                  The Conversion Right may be exercised by the
Holder by the surrender of the Warrant at the principal office of the Company
or at the office of the Company’s stock transfer agent, if any, together with a
written statement specifying that the Holder thereby intends to exercise the
Conversion Right and indicating the number of Shares subject to the Warrant
which are being surrendered on the reverse side of the Warrant, in exercise of
the Conversion Right.  Such conversion
shall be effective upon receipt by the Company of the Warrant, or on such later
date as is specified therein (the “Conversion Date”), but not later than the
Expiration Date.  Certificates for the
Converted Shares issuable upon exercise of the Conversion Right, together with
a check in payment of any fractional Warrant Share and, in the case of a partial
exercise a new Warrant evidencing the Warrant Shares remaining subject to the
Warrant, shall be issued as of the Conversion Date and shall be delivered to
the Holder within seven (7) days following the Conversion Date.


 


1.04.                        Holder Deemed Holder of Record.  Upon
receipt of the Warrant by the company as described in Paragraph 2(a) or 2(c)
above, the Holder shall be deemed to be the holder of record of the Shares
issuable upon such exercise, notwithstanding that the transfer books of the
Company may then be


 


2
















 


closed or that certificates
representing such Shares may not have been prepared or actually delivered to
the Holder.


 


SECTION II


TRANSFER


 


2.01.                        Restrictions—General. The registered Holder of this Warrant,
by its acceptance hereof, agrees that it will not sell, transfer, assign,
pledge or hypothecate this Warrant for a period of one hundred eighty (180)
days following the Effective Date to anyone other than (i) Bathgate Capital
Partners LLC (“Bathgate”) or an underwriter or a selected dealer in connection
with the Offering, or (ii) a bona fide officer or partner of Bathgate or of any
such underwriter or selected dealer. On and after the first anniversary
of the Effective Date, transfers to others may be made subject to
compliance with or exemptions from applicable securities laws. In order to
make any permitted  assignment, the Holder must deliver to the Company the
assignment form attached  hereto duly executed and completed, together
with the Warrant and  payment of all transfer taxes, if any, payable in
connection therewith. The  Company shall within five business days
transfer this Warrant on  the books of the Company and shall execute and
deliver a new Warrant or Warrants of like tenor to the appropriate assignee(s)
 expressly evidencing the right to purchase the aggregate number of Shares
 purchasable hereunder or such portion of such number as shall be
contemplated by  any such assignment.


 


2.02.                        Restrictions—Securities. The securities evidenced by this
Warrant shall not be transferred unless and until (i) the Company has received
 the opinion of counsel for the Holder that the securities may be
transferred  pursuant to an exemption from registration under the Act and
applicable state  securities laws, the availability of which is
established to the reasonable satisfaction of the Company (the Company hereby
agreeing that the opinion of  David H. Drennen, Esq. shall be deemed
satisfactory evidence of the availability of  an exemption), or (ii) a
registration statement or a post-effective amendment to  the Registration
Statement relating to such securities has been filed by the  Company and
declared effective by the Securities and Exchange Commission (the
 ”Commission”) and compliance with applicable state securities law has
been  established.


 


SECTION III


NEW PURCHASE OPTIONS TO BE ISSUED


 


3.01.                     Partial Exercise. Subject to the restrictions in
Section 3 hereof, this Warrant may be exercised or assigned in whole or in
part. In the event  of the exercise or assignment hereof in part only,
upon surrender of this Warrant for cancellation, together with the duly
executed exercise or  assignment form and funds sufficient to pay any
Exercise Price and/or transfer  tax, the Company shall cause to be
delivered to the Holder without charge a new  Warrant of like tenor to
this Warrant in the name of  the Holder evidencing the right of the Holder
to purchase the number of Shares  purchasable hereunder as to which this
Warrant has not been  exercised or assigned.


 


3.02.                        Loss, Theft, Destruction. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant and of reasonably satisfactory indemnification or the posting of a
bond, the Company shall execute and deliver a new Warrant of like tenor and
date. Any such new Warrant executed and delivered as a result of such loss,
theft, mutilation or destruction shall constitute a substitute contractual
obligation on the part of the Company.


 


3
















 


SECTION IV


REGISTRATION RIGHTS


 


4.01.                        Demand Registration.    (a) The Company, upon
written demand (the “Initial Demand Notice”) of the  Holder(s) of at least
51% of the Warrants and/or the underlying  Shares and/or the underlying securities
(the “Majority Holders”), agrees to  register on one occasion, all or any
portion of the Warrants  requested by the Majority Holders in the Initial
Demand Notice and all of the  securities underlying such Warrants,
including the Shares, Common  Stock, the Warrants and the Common Stock
underlying the Warrants (collectively,  the “Registrable Securities”). On
such occasion, the Company will file a registration statement or a
post-effective amendment to the Registration Statement covering the Registrable
Securities within sixty days after receipt of the Initial Demand Notice and use
its best efforts to have such registration statement or post-effective
amendment declared effective as soon as possible thereafter. The demand for
registration may be made at any time during a period of five years beginning on
the Effective Date. The Company covenants and agrees to give written notice of
its receipt of any Initial Demand Notice by any Holder(s) to all other
registered Holders of the Warrants and/or the Registrable Securities within ten
days from the date of the receipt of any such Initial Demand Notice.


 


(b)                                 The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, including the expenses of
any legal counsel selected by the Holders to represent them in connection with
the sale of the Registrable Securities, but the Holders shall pay any and all
underwriting commissions. The Company agrees to use its reasonable best efforts
to qualify or register the Registrable Securities in such states as are
reasonably requested by the  Majority Holder(s); provided, however, that
in no event shall the Company be  required to register the Registrable
Securities in a state in which such  registration would cause (i) the
Company to be obligated to qualify to do  business in such state, or would
subject the Company to taxation as a foreign  corporation doing business
in such jurisdiction or (ii) the principal  stockholders of the Company to
be obligated to escrow their shares of capital  stock of the Company. The
Company shall cause any registration statement or post-effective amendment
filed pursuant to the demand rights granted under Section 5.1.1 to remain
effective for a period of nine consecutive months from the effective date of
such registration statement or post-effective amendment.


 


4.02.                        “Piggy-Back” Registration.  
(a)  In addition to the demand
right of registration, the Holders of the Warrants shall have the right for a
period of seven years commencing on  the Effective Date, to include the
Registrable Securities as part of any other  registration of securities
filed by the Company (other than in connection with a  transaction
contemplated by Rule 145(a) promulgated under the Act or pursuant to  Form
S-8); provided, however, that if, in the written opinion of the Company’s
 managing underwriter or underwriters, if any, for such offering, the
inclusion  of the Registrable Securities, when added to the securities
being registered by  the Company or the selling stockholder(s), will exceed
the maximum amount of the  Company’s securities which can be marketed (i)
at a price reasonably related to  their then current market value, and
(ii) without materially and adversely  affecting the entire offering, then
the Company will still be required to  include the Registrable Securities,
but may require the Holders to agree, in  writing, to delay the sale of
all or any portion of the Registrable Securities  for a period of 90 days
from the effective date of the offering, provided,  further, that if the
sale of any Registrable Securities is so delayed, then the  number of
securities to be sold by all stockholders in such public offering  during
such 90 day period shall be apportioned pro rata among all such selling
 stockholders, including all holders of the Registrable Securities,
according to  the total amount of securities of the Company owned by said
selling  stockholders, including all holders of the Registrable
Securities.


 


4.03.                        Costs of Registration.  The Company shall bear all fees
and expenses attendant to registering the Registrable Securities, including the
expenses of any legal counsel selected by the Holders to represent them in
connection with the sale of the Registrable Securities but the Holders shall
pay any and all underwriting commissions related to the Registrable Securities.
In the event of such a proposed  registration,


 


4
















 


the
Company shall furnish the then Holders of outstanding  Registrable
Securities with not less than fifteen days written notice prior to  the
proposed date of filing of such registration statement. Such notice to the
Holders shall continue to be given for each applicable registration statement
filed (during the period in which the Warrant is exercisable) by the Company
until such time as all of the Registrable Securities have been registered and
sold. The holders of the Registrable Securities shall exercise the “piggy-back”
rights provided for herein by giving written notice, within ten days of the
receipt of the Company’s notice of its intention to file a registration
statement. The Company shall cause any registration statement filed pursuant to
the above “piggyback” rights to remain effective for at least nine months from
the date that the Holders of the Registrable Securities are first given the
opportunity to sell all of such securities.


 


4.04.                        Damages. Should the registration or the
effectiveness thereof required by  Sections 4.01 and 4.02 hereof be
delayed by the Company or the Company otherwise fails to comply with such
provisions, the Company shall, in addition to any  other equitable or
other relief available to the Holder(s), be liable for any  and all
incidental, special and consequential damages sustained by the  Holder(s),
including, but not limited to, the loss of any profits that might  have
been received by the Holder upon the sale of shares of Common Stock or
 Warrants (and shares of Common Stock underlying the Warrants) underlying
this  Warrant.


 


4.05.                        Indemnification.  The Company shall indemnify the Holder(s) of
the Registrable Securities to  be sold pursuant to any registration
statement hereunder and each person, if  any, who controls such Holders
within the meaning of Section 15 of the Act or  Section 20(a) of
the Securities Exchange Act of 1934, as amended (the “Exchange  Act”),
against all loss, claim, damage, expense or liability (including all
 reasonable attorneys’ fees and other expenses reasonably incurred in
 investigating, preparing or defending against litigation, commenced or
 threatened, or any claim whatsoever whether arising out of any action
between  the Underwriter and the Company or between the Underwriter and
any third party  or otherwise) to which any of them may become subject
under the Act, the  Exchange Act or otherwise, arising from such
registration statement but only to  the same extent and with the same
effect as the provisions pursuant to which the  Company has agreed to
indemnify the Underwriters contained in Section 5 of the
 Underwriting Agreement between the Company, Bathgate and the other
Underwriters named therein dated the Effective Date. The Holder(s) of the
 Registrable Securities to be sold pursuant to such registration
statement, and  their successors and assigns, shall severally, and not
jointly, indemnify the  Company, its officers and directors and each
person, if any, who controls the  Company within the meaning of
Section 15 of the Act or Section 20(a) of the  Exchange Act,
against all loss, claim, damage, expense or liability (including  all
reasonable attorneys’ fees and other expenses   reasonably incurred
in investigating, preparing or defending against any claim  whatsoever) to
which they may become subject under the Act, the Exchange Act or
 otherwise, arising from information furnished by or on behalf of such
Holders,  or their successors or assigns, in writing, for specific
inclusion in such  registration statement to the same extent and with the
same effect as the  provisions contained in Section 5 of the
Underwriting Agreement pursuant to  which the Underwriters have agreed to
indemnify the Company.


 


4.06.                        No Requirement to Exercise.  Nothing contained in this Warrant shall be construed as requiring the
Holder(s) to exercise their Warrants prior to or after the initial filing of
anyregistration statement or the effectiveness thereof.


 


4.07.                        Counsel and Accountants.  The
Company shall furnish Bathgate, as representative of  the Holders
participating in any of the foregoing offerings, a signed  counterpart,
addressed to the participating Holders, of (i) an opinion of  counsel to
the Company, dated the effective date of such registration statement
 (and, if such registration includes an underwritten public offering, an
opinion  dated the date of the closing under any underwriting agreement
related thereto),  and (ii) a “cold comfort” letter dated the effective
date of such registration  statement (and, if such registration includes
an underwritten public offering, a  letter dated the date of the closing
under the underwriting agreement) signed by  the independent public
accountants who have issued a report on the Company’s  financial
statements included in such registration


 


5
















 


statement,
in each case  covering substantially the same matters with respect to such
registration  statement (and the prospectus included therein) and, in the
case of such  accountants’ letter, with respect to events subsequent to
the date of such  financial statements, as are customarily covered in
opinions of issuer’s counsel  and in accountants’ letters delivered to
underwriters in underwritten public  offerings of securities. The Company
shall also deliver promptly to Bathgate, as representatives of the Holders
participating in the offering,  the correspondence and memoranda described
below and copies of all  correspondence between the Commission and the
Company, its counsel or auditors  and all memoranda relating to
discussions with the Commission or its staff with  respect to the
registration statement and permit Bathgate, as  representatives of the
Holders, to do such investigation, upon reasonable  advance notice, with
respect to information contained in or omitted from the  registration
statement as it deems reasonably necessary to comply with applicable securities
laws or rules of the National Association of Securities  Dealers, Inc.
(the “NASD”). Such investigation shall include access to books,  records
and properties and opportunities to discuss the business of the Company
 with its officers and independent auditors, all to such reasonable extent
and at such reasonable times and as often as Bathgate, as  representative
of the Holders, shall reasonably request. The Company shall not  be
required to disclose any confidential information or other records to Bathgate,
as representative of the Holders, or to any other  person, until and
unless such persons shall have entered into reasonable  confidentiality
agreements (in form and substance reasonably satisfactory to the
 Company), with the Company with respect thereto.


 


4.08.                        Underwriting Agreement.  The
Company shall enter into an underwriting agreement with the managing
underwriter(s), if any, selected by any Holders whose Registrable Securities
are being registered pursuant to this Section 5, which managing
underwriter shall be reasonably acceptable to the Company. Such agreement shall
be reasonably satisfactory in form and substance to the Company, each
Holder and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such other terms
as are customarily contained in agreements of that type used by the managing
underwriter. The Holders shall be parties to  any underwriting agreement
relating to an underwritten sale of their Registrable  Securities and may,
at their option, require that any or all the  representations, warranties
and covenants of the Company to or for the benefit  of such underwriters
shall also be made to and for the benefit of such Holders.  Such Holders
shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters except as they may  
 relate to such Holders and their intended methods of distribution. Such
Holders, however, shall agree to such covenants and indemnification and
contribution obligations for selling stockholders as are customarily contained
in agreements of that type used by the managing underwriter. Further, such
Holders shall execute appropriate custody agreements and otherwise cooperate
fully in the preparation of the registration statement and other documents
relating to any offering in which they include securities pursuant to this
Section 4.  Each Holder shall also
furnish to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of such securities as shall
be reasonably required to affect the registration of the Registrable
Securities.


 


4.09.
Effect of Rule 144.  Notwithstanding anything contained in this
Section 5 to the contrary, the  Company shall have no obligation
pursuant to Sections 4(a) or 5(b) for the  registration of Registrable
Securities held by any Holder (i) where such Holder  would then be
entitled to sell under Rule 144 within any three-month period (or  such
other period prescribed under Rule 144 as may be provided by amendment
 thereof) all of the Registrable Securities then held by such Holder, and
(ii)  where the number of Registrable Securities held by such Holder is
within the volume limitations under paragraph (e) of Rule 144 (calculated as if
such Holder  were an affiliate within the meaning of Rule 144).


 


4.10.
Notice to Company.  Each Holder agrees, that upon receipt of any
notice from the Company of the  happening of any event as a result of
which the prospectus included in the  Registration Statement, as then in
effect, includes an untrue statement of a  material fact or omits to state
a material fact required to be stated therein or  necessary to make the
statements therein not misleading in light of the  circumstances then


 


6
















 


existing,
such Holder will immediately discontinue  disposition of Registrable
Securities pursuant to the Registration Statement  covering such
Registrable Securities until such Holder’s receipt of the copies  of a
supplemental or amended prospectus, and, if so desired by the Company, such
 Holder shall deliver to the Company (at the expense of the Company) or
destroy  (and deliver to the Company a certificate of such destruction)
all copies, other  than permanent file copies then in such Holder’s
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such  notice.


 


SECTION V


ADJUSTMENTS


 


5.01.                        Exercise Price and Number of
Securities. The Exercise
Price and the number of Shares underlying the Warrant shall be subject to
adjustment from time to time as hereinafter set forth:


 


(a)                                  If after the date hereof, and subject to the
provisions of Section 6.3 below, the number
of outstanding shares of Common Stock is increased by a stock dividend payable
in shares of Common Stock or by a split-up of shares of Common Stock or other
similar event, then, on the effective date thereof, the number of shares of
Common Stock underlying each of the Shares purchasable hereunder shall be
increased in proportion to such increase in outstanding shares. In such case,
the number of shares of Common Stock, and the exercise price applicable
thereto, underlying the Warrants underlying each of the Shares purchasable
hereunder shall be adjusted in accordance with the terms of the Warrants. For
example, if the Company declares a two-for-one stock dividend and at the
time of such dividend this Warrant is for the purchase of one Share at $7.20
per whole Share, upon effectiveness of the dividend, this Warrant will be
adjusted to allow for the purchase of one Share at $7.20 per Share, each Share
entitling the holder to receive two shares of Common Stock.


 


(b)                                 If after the date hereof, and subject to the
provisions of Section 6.4, the number of outstanding shares of Common
Stock is decreased by a consolidation, combination or reclassification of
shares of Common Stock or other similar event, then, on the effective date
thereof, the number of shares of Common Stock underlying each of the Shares
purchasable hereunder shall be decreased in proportion to such decrease in
outstanding shares. In such case, the number of shares of Common Stock, and the
exercise price applicable thereto, issuable upon exercise of the Warrants
included in each of the Shares purchasable hereunder shall be adjusted in
accordance with the terms of the Warrants.


 


(c)                                  In case of any reclassification or
reorganization of the outstanding  shares of Common Stock other than a
change covered by Section 6(a)(i) or  6(a)(ii) hereof or that solely
affects the par value of such shares of Common  Stock, or in the case of
any merger or consolidation of the Company with or into  another
corporation (other than a consolidation or merger in which the Company  is
the continuing corporation and that does not result in any reclassification
 or reorganization of the outstanding shares of Common Stock), or in the
case of  any sale or conveyance to another corporation or entity of the
property of the  Company as an entirety or substantially as an entirety in
connection with which  the Company is dissolved, the Holder of this
Warrant shall have the  right thereafter (until the expiration of the
right of exercise of this Warrant) to receive upon the exercise hereof, for the
same aggregate  Exercise Price payable hereunder immediately prior to such
event, the kind and  amount of shares of stock or other securities or
property (including cash)  receivable upon such reclassification,
reorganization, merger or consolidation,  or upon a dissolution following
any such sale or transfer, by a Holder of the  number of shares of Common
Stock of the Company obtainable upon exercise of this  Warrant and the
underlying Warrants immediately prior to such  event; and if any
reclassification also results in a change in shares of Common  Stock covered
by Section 6(a)(i) or 6(a)(ii), then such adjustment shall be made
 pursuant to Sections 6(a)(i), 6(a)(ii) and this Section 6(a)(iii).
The provisions of this Section 6(a)(iii) shall similarly apply to
successive reclassifications, reorganizations, mergers or consolidations, sales
or other transfers.


 


7
















 


(d)                                 This form of Warrant need not be changed
because of any change pursuant to this Section, and Warrants issued after such
change may state the same Exercise Price and the same number of Shares as are
stated in the Warrants initially issued pursuant to this Agreement. The
acceptance by any Holder of the issuance of new Warrants reflecting a required
or permissive change shall not be deemed to waive any rights to an adjustment
occurring after the Commencement Date or the computation thereof.


 


5.02.                        Substitute Warrant. In case of any consolidation of the Company
 with, or merger of the Company with, or merger of the Company into,
another  corporation (other than a consolidation or merger which does not
result in any  reclassification or change of the outstanding Common
Stock), the corporation  formed by such consolidation or merger shall
execute and deliver to the Holder a  supplemental Warrant providing that
the holder of each Warrant then outstanding or to be outstanding shall have the
right  thereafter (until the stated expiration of such Warrant) to
 receive, upon exercise of such Warrant, the kind and amount of
 shares of stock and other securities and property receivable upon such
 consolidation or merger, by a holder of the number of shares of Common
Stock of  the Company for which such Warrant might have been exercised
 immediately prior to such consolidation, merger, sale or transfer. Such
supplemental Warrant shall provide for adjustments which shall be identical to
the adjustments provided in Section 6. The above provision of this
Section shall similarly apply to successive consolidations or mergers.


 


5.03.                        Fractional Interests. The Company shall not be required to issue
certificates representing fractions of shares of Common Stock or Warrants upon
the exercise of the Warrant, nor shall it be required to issue scrip or pay
cash in lieu of any fractional interests, it being the intent of the parties that
all fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of Warrants, shares of Common Stock or other securities,
properties or rights.


 


5.04.                        Reservation and Listing. The Company shall at all times reserve and
keep  available out of its authorized shares of Common Stock, solely for
the purpose  of issuance upon exercise of the Warrants or the Warrants
 underlying the Warrant, such number of shares of Common Stock or
 other securities, properties or rights as shall be issuable upon the
exercise  thereof. The Company covenants and agrees that, upon exercise of
the Warrants and payment of the Exercise Price therefor, all shares of
 Common Stock and other securities issuable upon such exercise shall be
duly and  validly issued, fully paid and non-assessable and not subject to
preemptive  rights of any stockholder. The Company further covenants and
agrees that upon  exercise of the Warrants underlying the Warrants and
payment of the  respective Warrant exercise price therefor, all shares of
Common Stock and other  securities issuable upon such exercise shall be
duly and validly issued, fully  paid and non-assessable and not subject to
preemptive rights of any stockholder.  As long as the Warrants shall be
outstanding, the Company shall use  its best efforts to cause all (i)
Shares and shares of Common Stock issuable upon  exercise of the Warrants,
(iii) Warrants issuable upon exercise of  the Warrants and (iv) shares of
Common Stock issuable upon exercise  of the Warrants included in the
Shares issuable upon exercise of the Warrant to be listed (subject to official
notice of issuance) on all  securities exchanges (or, if applicable on the
Nasdaq National Market, SmallCap  Market, OTC Bulletin Board or any successor
trading market) on which the Shares,  the Common Stock or the Public
Warrants issued to the public in connection  herewith may then be listed
and/or quoted.


 


SECTION VI


CERTAIN NOTICE REQUIREMENTS


 


6.01.                        Right to Notice. Nothing herein shall be construed as
conferring upon the Holders the right to vote or consent as a stockholder for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of  the Warrants and their exercise, any of the events
described in  Section 8(b) shall occur, then, in one or more of said
events, the Company shall  give written notice of such event at least
fifteen days prior to the date fixed  as a record date or the date of
closing the transfer books for the determination  of the stockholders
entitled


 


8
















 


to such dividend, distribution,
conversion or  exchange of securities or subscription rights, or entitled
to vote on such  proposed dissolution, liquidation, winding up or sale.
Such notice shall specify such record date or the date of the closing of the
transfer books, as the case may be. Notwithstanding the foregoing, the Company
shall deliver to each Holder a copy of each notice given to the other
stockholders of the Company at the same time and in the same manner that such
notice is given to the stockholders.


 


6.02.                        Enumerated Events. The Company shall be required to give
the notice  described in this Section 8 upon one or more of the
following events: (i) if the  Company shall take a record of the holders
of its shares of Common Stock for the  purpose of entitling them to
receive a dividend or distribution payable  otherwise than in cash, or a
cash dividend or distribution payable otherwise  than out of retained
earnings, as indicated by the accounting treatment of such  dividend or
distribution on the books of the Company, or (ii) the Company shall  offer
to all the holders of its Common Stock any additional shares of capital
 stock of the Company or securities convertible into or exchangeable for
shares  of capital stock of the Company, or any option, right or warrant
to subscribe  therefor, or (iii) a dissolution, liquidation or winding up
of the Company (other than in connection  with a consolidation or merger)
or a sale of all or substantially all of its  property, assets and
business shall be proposed.


 


6.03.                        Change in Exercise Price. The Company shall, promptly
after an event requiring a change in the Exercise Price pursuant to
Section 6 hereof, send notice to the Holders of such event and change (the
“Price Notice”). The Price Notice shall describe the event causing the change
and the method of calculating same and shall be certified as being true and
accurate by the Company’s President and Chief Financial Officer.


 


6.04.                        Notice Delivery. All notices, requests, consents and
other communications under this Warrant shall be in writing and shall be deemed
to have been duly made when hand delivered, or mailed by express mail or private
courier service: (i) If to the registered Holder of the Warrant, to the address
of such Holder as shown on the books of the Company, or (ii) If to the Company,
to the following address or to such other address as the Company may designate
by notice to the Holders:


 


Tri-S
Security Corporation


3700
Mansell Road, Suite 220


Alpharetta,
Georgia 30022


Attn:  President


 


SECTION VII


MISCELLANEOUS


 


7.01.                        Amendments. The Company and Bathgate may from time to
time supplement or  amend this Warrant without the approval of any of the
Holders in  order to cure any ambiguity, to correct or supplement any
provision contained  herein that may be defective or inconsistent with any
other provisions herein,  or to make any other provisions in regard to
matters or questions arising  hereunder that the Company and Bathgate may
deem necessary or desirable and  that the Company and Bathgate deem shall
not adversely affect the interest of  the Holders. All other modifications
or amendments shall require the written consent of and be signed by the party
against whom enforcement of the modification or amendment is sought.  
 (b) Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Share Purchase
Option.    10. Entire Agreement. This Warrant (together with the
other  agreements and documents being delivered pursuant to or in
connection with this  Warrant) constitutes the entire agreement of the
parties hereto  with respect to the subject matter hereof, and supersedes
all prior agreements  and understandings of the parties, oral and written,
with respect to the subject  matter hereof.


 


9
















 


7.02.                        Binding Effect. This Warrant shall inure solely to
the benefit of, and shall be binding upon, the Holder and the Company and their
permitted assignees, respective successors, legal representative and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Warrant or any provisions herein contained.


 


7.03.                        Governing Law. This Warrant shall be governed by and
construed and enforced in accordance with the laws of the State of
Colorado, without giving effect to conflict of laws. The Company hereby agrees
that any action,  proceeding or claim against it arising out of, or
relating in any way to this  Warrant shall be brought and enforced in the
courts of the State of  Colorado or of the United States of America for
the District of Colorado, and irrevocably submits to such jurisdiction, which
jurisdiction shall be  exclusive. The Company hereby waives any objection
to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any process  or summons to be served upon the Company may be served
by transmitting a copy  thereof by registered or certified mail, return
receipt requested, postage  prepaid, addressed to it at the address set
forth in Section 8 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the Company in any action, proceeding or
claim. The Company and the Holder agree  that the prevailing party(ies) in
any such action shall be entitled to recover  from the other party(ies)
all of its reasonable attorneys’ fees and expenses  relating to such
action or proceeding and/or incurred in connection with the  preparation
therefor.


 


7.04.                        Waivers. The failure of the Company or the Holder to at any time
enforce any of the provisions of this Warrant shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Warrant or any provision hereof or the right of the Company or any Holder
to thereafter enforce each and every provision of this Warrant. No waiver of
any breach, non-compliance or non-fulfillment of any of the provisions of this
Warrant shall be effective unless set forth in a written instrument executed by
the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.


 


7.05.                        Counterparts. This Warrant may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement, and shall become effective
when one or more counterparts has been signed by each of the parties hereto and
delivered to each of the other parties hereto.


 


7.06.                        Exchange Agreement. As a condition of the Holder’s
receipt and acceptance of this Warrant, Holder agrees that, at any time prior
to the complete exercise of this Warrant by Holder, if the Company and Bathgate
enter into an agreement (the “Exchange Agreement”) pursuant to which they agree
that all outstanding Warrants will be exchanged for securities or cash or a combination
of both, then Holder shall agree to such exchange and become a party to the
Exchange Agreement.


 


IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer as of
the               day
of               ,
2004.


 


TRI-S
SECURITY CORPORATION


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					



 


10
















 


PURCHASE FORM


 


	
  Dated:

  	
   

  	
  .

  	
   

  



 


The undersigned hereby irrevocably elects to exercise this Warrant to
the extent of purchasing
                Shares
of common stock and hereby tenders payment of the exercise price thereof.


 


INSTRUCTIONS
FOR REGISTRATION OF STOCK


 


	
  Name:

  	
   

  	
   

  
	
   

  	
  (Please type or print in block letters)

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
				



 


 


ASSIGNMENT FORM


 


FOR VALUE
RECEIVED,                                                    ,
hereby sells, assigns and transfers unto


 


	
  Name

  	
   

  	
   

  
	
  (Please
  type or print in block letters)

  
	
   

  
	
  Address

  	
   

  	
   

  
				



 


 


the
right to purchase Shares of Tri-S Securities Corporation represented by this
Warrant to the extent
of                 
Shares


as
to which such right is exercisable and does hereby irrevocably constitute and
appoint                              attorney,
to transfer the same on the books of the Company with full power of
substitution in the premises.


 


	
  Signature

  	
   

  	
   

  	
  Dated

  	
   

  	
   

  



 


Notice:  the signature on this assignment must
correspond with the name as it appears upon the face of this Warrant
Certificate in every particular, without alteration or enlargement or any
change whatever.


 


 


WARRANT CONVERSION EXERCISE FORM


 


Pursuant to Section 1.03  of the Warrant, the Holder hereby irrevocably elects to
convert Warrants with respect to Shares of the Company
into                         Shares
of the Company.  A conversion calculation
is attached hereto as Exhibit A-1.


 


The undersigned requests that
certificates for such Shares be issued as follows:


 


	
  Name:

  	
   

  	
   

  
	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  
	
  Deliver to:

  	
   

  	
   

  
					



 


and
that a new Warrant for the balance remaining of the Warrants, if any, subject
to the Warrant be registered in the name of, and delivered to, the undersigned
at the address stated above.


 


	
  Signature

  	
   

  	
   

  	
  Dated

  	
   

  	
   

  



 


11
















 


Exhibit A-1


CALCULATION OF WARRANT CONVERSION


 


	
  Converted
  Securities (Y)

  	
  =

  	
   

  	
   

  
	
   

  
	
  Current
  Market Price (A)

  	
  =

  	
   

  	
  $

  
	
   

  
	
  Exercise
  Price (B)

  	
  =

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  Converted
  Shares (X)

  	
  =

  	
   

  	
  Y(A-B)/A

  
	
   

  	
   

  	
   

  	
   

  
	
  Fractional
  Converted Shares (1)

  	
  =

  	
   

  	
   

  
						



 


 


Where:


 


X
=                             the number of Shares and/or Warrants to be
issued to the Holder;


 


Y
=                              the number of Shares and/or Warrants to be
converted under this Warrant;


 


A
=                            the Current Market Price of one share of
Common Stock (calculated as described below); and


 


B
=                              the Share Exercise Price.


 










(1)  Company to pay for fractional Shares in cash
@
$                                          
per Share.


 


12