Document:

Amendment No. 1 to Director Designation Agreement

 Exhibit 10.4 
 AMENDMENT NO. 1 
 TO 
 DIRECTOR DESIGNATION AGREEMENT 
 THIS AMENDMENT NO. 1 TO DIRECTOR DESIGNATION
AGREEMENT (this “Amendment”) is made and entered into as of November 5, 2008, by and between TRI-S SECURITY CORPORATION, a Georgia corporation (the “Company”), and SELECT CONTRARIAN VALUE
PARTNERS, L.P. (“Select Contrarian”). 
 W I T N E S S E T H: 
 WHEREAS, the Company and Select Contrarian have entered into that certain Director Designation Agreement dated as of October 16, 2008 (the
“Agreement”); 
 WHEREAS, the Company and Select Contrarian wish to amend the Agreement as provided herein; and

 WHEREAS, capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Agreement.

 NOW, THEREFORE, in and as consideration of and for the provisions hereof, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, each party here, intending to be legally bound, hereby agrees as follows: 
 1.
Amendment to the Agreement. The Agreement is hereby amended as follows: 
 (a) Section 1 of the Agreement is amended by inserting
the following sentence as the last sentence thereof: 
 “In addition, for purposes of this Agreement: (i) a “Designee
Notice” means a written notice from Select Contrarian to the Company which identifies the Designee (as defined in Section 2) or any successor Designee designated pursuant to Section 5 and provides the information about such
Designee which would be required to be delivered to the Company pursuant to Section 2.05(b) of the Company’s Bylaws if such Designee were being nominated by a shareholder of the Company for election as a Director; and (ii) references
herein to “each Designee” or “any Designee” shall refer to, as the context requires, the initial Designee designated pursuant to Section 2 or any successor Designee designated pursuant to Section 5.”

 (b) The first sentence of Section 2 of the Agreement is amended and restated in its entirety as follows: 
 “Select Contrarian shall be entitled to designate one (1) natural person to be elected as a Director (the “Designee”);
provided, however, that the Designee must: (i) qualify as an “independent director” (as defined in the rules of the exchange applicable to the Company); (ii) agree in writing to resign from the Board of Directors
effective as of the termination of this Agreement; and (iii) as a condition of, and in connection with, the Designee’s election to the Board of Directors, deliver to the Company a written notice pursuant to which the Designee resigns from
the Board of Directors effective as of the termination of this Agreement.” 

 (c) The second sentence of Section 3 of the Agreement is amended and restated in its entirety as
follows: 
 “No later than two (2) weeks after Select Contrarian delivers to the Company a Designee Notice regarding the Designee,
and subject to the occurrence of the Exchange Date and the satisfaction of the requirements of Section 2(i) –(iii), the total authorized number of Directors shall be fixed at five (5) unless and until changed in any manner provided
herein.” 
 (d) The last paragraph of Section 3 is deleted in its entirety. 
 (e) Section 4 of the Agreement is amended and restated in its entirety as follows: 
 “Board Membership. No later than two (2) weeks after Select Contrarian delivers to the Company a Designee Notice regarding the Designee,
and subject to the occurrence of the Exchange Date and the satisfaction of the requirements of Section 2(i)-(iii), the Company shall cause the Board of Directors to elect the Designee as a Director and slate the Designee in a Director class in
accordance with the Organizational Documents and applicable law. The Company shall use commercially reasonably efforts to cause the Board of Directors to continue to include throughout the Term the Designee (or any successor Designee designated
pursuant to Section 5). The Company shall deliver to the Designee notice of all meetings of the independent Directors in the same manner and at the time such notice is delivered to the other independent Directors. 
 Notwithstanding anything herein to the contrary, if Select Contrarian delivers to the Company a Designee Notice during the period which
commences on the date the Company files with the SEC the Company’s preliminary proxy statement with respect to its annual meeting of shareholders to be held in 2008 and ends on the date on which such meeting is held, then the Company shall not
be obligated to increase the size of the Board of Directors pursuant to Section 3 or elect the Designee to the Board of Directors pursuant to Section 4 until two (2) weeks after the date such meeting is held.” 
 (f) The first sentence of Section 10 of the Agreement is amended and restated in its entirety as follows: 
 “Upon written request of Select Contrarian to the Company, the Company shall cause the Board of Directors to appoint the Designee (or any successor
Designee designated pursuant to Section 5) as a member of the Audit Committee, the Compensation Committee and each other Committee (if any); provided, however, that such Designee must satisfy the requirements applicable to members
of such Committee set forth in the (i) rules of the exchange applicable to the Company, (ii) rules and regulations of the SEC and (iii) provisions of the charter of the such Committee.” 
 (g) The Section headings of the Agreement are amended by renumbering Sections 12, 13, 14, 15, 16, 17, 18, 19 and 20 to be numbered as Sections 13, 14,
15, 16, 17, 18, 19, 20 and 21, respectively. 
 (h) The Agreement is amended to add a new Section 12 which reads as follows: 

“12. Board Observer. Subject to the limitations set forth herein, Select Contrarian shall be entitled to designate one
(1) natural person (the “Observer”) who 

  

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shall, during the Term, have the right to (i) attend and participate in (and be given timely notice of) all meetings of the Board of Directors, whether
in person or by telephone, in a non-voting observer capacity, and (ii) receive the information provided by the Company to the Directors in respect of all such meetings; provided, however, that the Observer must, in writing in form
and substance reasonably satisfactory to the Company, (a) agree to hold in confidence and trust and to act in a fiduciary manner in accordance with applicable law with respect to all non-public information concerning the Company disclosed to
the Observer, or of which the Observer becomes aware, as a result of the Observer’s rights hereunder, (b) agree to be subject to all insider trading and “blackout” period trading policies and procedures of the Company as may be
in effect from time to time relating thereto to which the Directors are subject, including, without limitation, such policies and procedures set forth in the Company’s Code of Ethics and Conduct, (c) represent and warrant to the Company
that the Observer is not engaged or involved, directly or indirectly, in any business or activity that directly and materially competes with the primary business of the Company, and (d) agree not to become so engaged or involved while serving
as the Observer. For purposes of clarification, the rights of the Observer hereunder shall commence at such time as both of the following conditions have been satisfied: (i) Select Contrarian has validly tendered Select Contrarian’s
Existing Note in the Exchange Offer and (ii) the Exchange Date has occurred. 
 Notwithstanding anything herein to the
contrary, the Company reserves the right not to provide to the Observer information and to exclude the Observer from any meeting or portion thereof if a majority of the Board of Directors concludes in good faith, upon advice of the Company’s
counsel, that disclosure of such information to the Observer, or attendance at such meeting or portion thereof by the Observer, would adversely affect the attorney-client privilege between the Company and its counsel. 
 The Company shall promptly reimburse the Observer for any and all reasonable out-of-pocket fees and expenses actually incurred by the
Observer in connection with the Observer’s attendance at any meeting of the Board of Directors. The Observer shall also be entitled to receive the same compensation which the Designee is entitled to receive pursuant to Section 9.”

 2. Miscellaneous. 
 (a) Effectiveness; Termination. Notwithstanding anything herein to the contrary, this Amendment will not become effective and enforceable against the Company unless and until the Agreement becomes effective,
and this Amendment shall terminate at such time as the Agreement terminates. 
 (b) Severability. If any provision of
this Amendment is held to be illegal, invalid or unenforceable under any present or future law, and if any rights or obligation of either party hereto hereunder shall not be materially and adversely affected thereby, (i) such provision shall be
fully severable, (ii) this Amendment shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) each remaining provision of this Amendment shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom, and (iv) in lieu of such illegal, invalid or unenforceable provision, there shall be added, automatically as a part hereof, a
legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible or otherwise acceptable to each party hereto. 
  

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 (c) Counterparts. This Amendment may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 
 (d)
Existing Terms. The existing terms and conditions of the Agreement shall remain in full force and effect except as such terms and conditions are specifically amended by, or conflict with, the terms of this Amendment. 
 [Signature page follows.] 
  

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 IN WITNESS WHEREOF, each party hereto has caused this Amendment No. 1 to Director Designation
Agreement to be duly executed and effective as of the date first written above. 

			
	TRI-S SECURITY CORPORATION
		
	By:	 	 /s/  Ronald G. Farrell

	Name:	 	 Ronald G. Farrell

	Title:	 	 Chief Executive Officer

	
	SELECT CONTRARIAN VALUE PARTNERS, L.P.
		
	By:	 	Kaizen Management, L.P.
	Title:	 	General Partner
		
	By:	 	Kaizen Capital, L.L.C.
	Title:	 	General Partner
		
	By:	 	 /s/  David W. Berry

	Name:	 	 David W. Berry

	Title:	 	 Manager

 Signature Page to Amendment No. 1 to Director Designation Agreement.Letter Agreement

 Exhibit 10.5 
 November 5, 2008 
 Select Contrarian Value Partners, L.P. 
 c/o Kaizen Management, LP 
 4200 Montrose Blvd., Suite 400 
 Houston, Texas 77006 
 Attention: David W. Berry 
 RE:
Exchange Offer; Executive Compensation Disclosures 
 TRI-S SECURITY CORPORATION (the “Company”) hereby represents and warrants to, and
agrees with, Select Contrarian Value Partners, L.P. (“Select Contrarian”), (a) in order to induce Select Contrarian to tender that certain 10% Callable, Convertible Promissory Note dated October 14, 2005, in the original
principal amount of $1,500,000, payable by the Company to Select Contrarian (“Select Contrarian’s Existing Note”), in connection with the exchange offer contemplated by that certain tender offer statement on Schedule TO under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), initially filed by the Company with the Securities and Exchange Commission (the “SEC”) on August 20, 2008 (File No. 005-81576) (as may
be amended from time to time, together with each exhibit and other item related thereto, the “Tender Offer Documents”), (b) in order to induce Select Contrarian to enter into that certain Amendment No. 1 to Director
Designation Agreement dated as of the date hereof by and between the Company and Select Contrarian (the Director Designation Agreement, as amended by Amendment No. 1, the “Amended Agreement”), and (c) with the
understanding and agreement that Select Contrarian may rely upon the representations, warranties, and agreements of the Company herein in connection with the exchange offer, and for any and all other purposes, as follows (on and as of the date
hereof and at and as of the time of the exchange offer, to the same extent and with the same effect as if made at and as of the time of the exchange offer): 
 1. Each Designee (as defined in the Amended Agreement) and Observer (as defined in the Amended Agreement) will receive the exact same
compensation package as the existing board members and any other board member then serving. If any Designee and/or Observer ceases to be a director of the Company and/or an observer of the Board of Directors of the Company, respectively, prior to
the expiration of such Designee’s term (in the case of such Designee) and/or prior to the expiration of term of the Designee then serving (in the case of such Observer), then such Designee and/or Observer, as applicable, shall be entitled to
all benefits payable to a director upon a change of control of the Company. 
 2. Until the Designee and the Observer are
installed, no changes will be made to enhance Ron Farrell’s compensation package. 
 3. The approximately 181,000 shares
to be issued to Ron Farrell were calculated as follows: Salary for the first 6 months of 2009 is $244k less 25% equals a loss of $61k. Salary for the last 6 months of 2009 is $244k less 50% equals a loss of $122k. Salary for the first 6 months of
2010 is $268k less 50% equals a loss of $134k. Add $61k,$122k and $134k equals $317k divided by $1.75 equals a total of approximately 181,000 shares. This is approximate not exact. Assume vesting 10,000 shares on last day of each month beginning Jan
31, 2009 and ending June 30, 2010. That is 10,000 for 17 months and last month of 11,000. Any shares not vested through the end of the month in which a change of control takes place (or Mr. Farrell resigns, is terminated, or otherwise
ceases to be the Chief Executive Officer of the Company or employed by the Company for any reason) will be forfeited. 
 Remainder of Page
Intentionally Left Blank. Signature Page(s) to Follow. 

			
	Very truly yours,
	
	TRI-S SECURITY CORPORATION
		
	 By:
	 	 /s/  Ronald G. Farrell

	Name:	 	Ronald G. Farrell
	Title:	 	Chief Executive Officer
	
	ACCEPTED AND ACKNOWLEDGED:
	
	SELECT CONTRARIAN VALUE PARTNERS, L.P.
		
	By:	 	Kaizen Management, L.P.
	Title:	 	General Partner
		
	By:	 	Kaizen Capital, L.L.C.
	Title:	 	General Partner
		
	By:	 	 /s/  David W. Berry

	Name:	 	David W. Berry
	Title:	 	Manager

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