Document:

Exhibit 10.30

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(“Agreement”) is made and entered into on February 24, 2004 (“Effective Date”) by and between
Paragon Systems, Inc., an Alabama corporation (the “Company”) and John T.
Wilson (“Employee”) (together, the “Parties”).

 

R E C I T A L S

 

WHEREAS, Employee is an
executive officer of the Company and various of its Subsidiaries;

 

WHEREAS, pursuant to the
terms of a Stock Purchase Agreement dated as of January 16th; 2004 (the “Stock Purchase Agreement”), by
and among Diversified Security Corporation (“Purchaser”) and each and all of
Charles Keathley, Robert Luther, Harold Bright, and John Wilson (together
referred to as the “Selling Shareholders”), the Purchaser has purchased from
the Selling Shareholders 100.00% of the outstanding stock of the Company;

 

WHEREAS, Employee’s entering
into this Agreement is a material inducement to the Purchaser to enter into the
Stock Purchase Agreement of even date herewith;

 

WHEREAS, the Company desires
to enter into a written employment agreement with Employee as an employee of
the Company in the capacity listed on Exhibit A hereto, and Employee
desires to be so employed by the Company in such position, on the terms and
conditions set forth and described herein; and

 

WHEREAS, the Parties desire
to enter into this Agreement setting forth the terms and conditions of the
employment relationship of Employee with the Company.

 

NOW, THEREFORE, subject to
the successful closing of the Stock Purchase Agreement (which closing is a condition
precedent of this Agreement), and in consideration of the mutual premises,
warranties, covenants and agreements set forth herein and in the Stock Purchase
Agreement, the Parties, intending to be legally bound, hereby agree as follows:

 

A G R E E M E N T

 

1.                                       EMPLOYMENT.

 

a                                          Term.  The term of Employee’s
employment pursuant to this Agreement is for the three (3) year period
commencing on the date hereof and terminating on the third anniversary of such
date (the “Term”), or upon the date of earlier termination of employment
pursuant to Section 3 of this Agreement.

 

 

b.                                      Duties.  The Company hereby agrees to employ
Employee, and Employee hereby agrees to serve, subject to the provisions of
this Agreement, as an employee of the Company in the position listed on Exhibit
A hereof, subject to the oversight of, and directions from, the Company’s
Board of Directors. Employee shall perform all services and acts necessary to
fulfill the duties and responsibilities of his position and shall render such
services on the terms set forth herein and shall report to the Board of
Directors or their designee. In addition, Employee shall have such other
executive and managerial powers and duties with respect to the Company as may
reasonably be assigned to him by the Board of Directors or their designee.

 

c.                                       Time
Devoted to Employment. 
Employee agrees to devote all his business time, attention and energies
to the performance of the duties assigned hereunder, and to perform such duties
diligently, faithfully and to the best of his abilities, and subject to such
laws, rules, regulations and policies from time to time applicable to the
Company’s employees. Employee agrees to refrain from any activity that does,
will or could reasonably be deemed to conflict with the best interests of the
Company, as the Board of Directors of the Company shall so determine.

 

2.                                       COMPENSATION
AND BENEFITS.

 

a.                                       Salary.  Employee shall be paid a Base salary
chargeble to military support contracts, payable in accordance with the
Company’s regular payroll practices, in the amount set forth in Exhibit A,
and, in the discretion of the Company, Employee may be paid a bonus, as
determined as provided in Exhibit A.

 

b.                                      Vacation,
Holidays and Sick Leave. 
While employed by the Company, Employee shall be entitled to that number
of weeks of paid vacation, to be prorated monthly for partial calendar years,
and paid holidays and sick leave in accordance with the Company’s standard
policies for its executives, as may be amended from time to time in the
discretion of the Company’s Board of Directors.

 

c.                                       Benefits.  While employed by the Company, Employee
shall be eligible to participate in such benefit plans as are, or from time to
time hereafter may be, provided by the Company to any of its executives. All
benefits shall be provided to Employee in accordance with the terms and
conditions of such benefit plans and programs as are maintained by the Company,
as such plans are amended from time to time.

 

d.                                      Business
Expenses.  While employed by
the Company, the Company shall reimburse Employee for all ordinary and
necessary business expenses incurred by him in connection with his employment
upon timely submission by Employee of receipts and other documentation in
conformance with the Company’s normal procedures.

 

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3.                                       TERMINATION
OF EMPLOYMENT.

 

a.                                       Notwithstanding
any provision of this Agreement to the contrary, the employment of Employee
hereunder shall terminate on the first to occur of the following dates:

 

(i)                                     the
date of Employee’s death;

 

(ii)                                  the
date on which Employee shall have experienced a Disability (as defined below),
and the Company gives Employee notice of termination on account of Disability;

 

(iii)                               the
date on which Employee shall have engaged in conduct which, as reasonably
determined by the Board of Directors of the Company, constitutes Cause in
accordance with the provisions set forth in Section 3.b. below, and the
Company gives Employee notice of termination for Cause;

 

(iv)                              the
date on which the Company shall give Employee notice of termination for any
reason other than the reasons set forth in subsections (i) through (iii) above;
or the date on which Employee gives the Company notice of his resignation.

 

(v)                                 The
unavailability of military service charge numbers for military contracts at the
company’s option.

 

b.                                      Definitions
of Cause and Disability.

 

For purposes of this Agreement,
“Cause” shall mean the occurrence of any of the following events: (a)
Employee’s willful or continued failure to perform his duties with the Company;
(b) Employee’s conviction of, guilty plea to, or entry of a nolo contendere
plea to (1) a felony or (2) a misdemeanor involving moral turpitude; or (c)
Employee’s material breach of this Agreement, including but not limited to any
breach of a representation, warranty or covenant herein.

 

For purposes of this Agreement,
“Disability” shall mean an illness, injury or other incapacitating condition as
a result of which Employee is unable to perform the services required to be
performed under this Agreement for (a) thirty (30) consecutive days or (b) a
period or periods aggregating more than sixty (60) days in any six (6)
consecutive months.

 

4.                                                                                       COMPENSATION
IN EVENT OF TERMINATION. 
Upon termination or resignation of Employee’s employment with the
Company for any reason, the Company shall have no further obligation to
Employee except to pay the amounts set forth in this Section 4.

 

a.                                       Termination
For Cause or Resignation. 
In the event Employee’s employment is terminated by the Company for
Cause, or by Employee, Employee or his estate, conservator or designated
beneficiary, as the case may be, shall be entitled to payment of any earned but
unpaid Base Salary through the date of termination, as well as any accrued
vested benefits to which Employee is entitled. Following any such termination
or resignation, neither Employee nor his estate, conservator or designated
beneficiary shall be entitled to receive any

 

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other
payment provided for hereunder with respect to any period after such
termination or resignation.

 

b.                                      Termination
For Disability or Death. 
In the event Employee’s employment is terminated by the Company for
Disability, or due to Employee’s death, Employee or his estate, conservator or
designated beneficiary, as the case may be, shall be entitled to payment of any
earned but unpaid Base Salary through the date of termination, as well as any
accrued vested benefits to which Employee is entitled. Following termination
for Disability, neither Employee nor his estate, conservator or designated
beneficiary shall be entitled to receive any other payment provided for
hereunder with respect to any period after such termination.

 

c.                                       Termination
Without Cause.  In the event
Employee’s employment is terminated by the Company without Cause, Employee
shall be entitled to receive, as his sole and exclusive remedy, (i) payment of
any earned but unpaid Base Salary through the date of termination, as well as
any accrued vested benefits to which Employee is entitled, (ii) a lump sum
payment equal to three (3) months of the applicable Base Salary in effect at
the time of termination. Following any such termination or resignation, neither
Employee nor his estate, conservator or designated beneficiary shall be
entitled to receive any other payment provided for hereunder with respect to
any period after such termination or resignation.

 

5.                                                                                       REPRESENTATIONS.

 

a.                                       The
Company represents and warrants that this Agreement has been authorized by all
necessary corporate action of the Company and is a valid and binding agreement
of the Company enforceable against them in accordance with its terms.

 

b.                                      Employee
represents and warrants that he is not a party to any agreement or instrument
which would prevent him from entering into or performing his duties in any way
under this Agreement.

 

6.                                                                                       ACCOUNTS
RECEIVABLE  As part of
Employee’s responsibilities pursuant to this Agreement, Employee shall verify
that all accounts receivable generated by the Company are:

 

(a)                                solely
owned by the Company and, except as permitted by the Board of Directors of the
Company, have not been assigned or encumbered in any manner;

 

(b)                               for
the full amount stated in each invoice or account receivable, and are due and
payable in accordance with their terms and there are no set-offs, deductions,
discounts, reductions, disputes, contingencies or counterclaims against the
Company;

 

(c)                                enforceable
by the Company in accordance with the terms of the instruments or documents
creating them, and each account receivable is currently and presently due and

 

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owing
in full to the Company, and payment is not contingent upon fulfillment of any
other obligation at any time;

 

(d)                               is
not the result of any sale to an Affiliate;

 

(e)                                are
free of all liens, claims, charges and encumbrances; and

 

(f)                                  have
arisen solely out of, bona fide sales and deliveries of goods, performance of
services and other business transactions in the ordinary course of business
consistent with past practices.

 

7.                                                                                       NON-COMPETE
AND NON-SOLICITATION PROVISION

 

Employee acknowledges that,
simultaneously with the execution, hereof, he has sold certain shares of the
Company to the Purchaser, and as such, this Agreement is ancillary to the sale
of a business.  Employee also
acknowledges that he has read this Agreement and the covenants contained
herein, and that after the term of this Agreement, Employee will be able to
earn a livelihood without violating the restrictions of this section.

 

a.                                       Employee
hereby agrees that, for so long as Employee is employed by the Company, and for
a period of four (4) years after the date that Employee is no longer employed
by the Company, Employee will not, directly or indirectly, for or on behalf of
any individual, partnership, corporation or other legal entity, as principal,
agent, consultant or otherwise, own, control, manage, or otherwise participate
in the ownership, control or management of any business which derives more than
five (5%) percent of its revenue from the lines of business in which the
Company currently operates, including but not limited to providing any security
guard services, monitoring electronic security services, or providing
logistical support services for rotary-wing aircraft and Missle Systems that
may be competitive with Paragon.

 

b.                                      Employee
also hereby agrees that he shall not, at any time, divulge or disclose to any
person or firm, or use for Employee’s own benefit, gain or otherwise, any
proprietary plans, documents, presentations or products, data, customer lists,
or any other trade secrets or confidential materials of the Company or its
Affiliates. Employee acknowledges that any information gained while employed by
the Company or any material taken from the Company or its Affiliates is deemed
proprietary and/or confidential and Employee shall promptly return to the
Company or its Affiliates, after termination of this Agreement or upon request
from the Company, all such materials together with all copies thereof.  Such materials shall include, but are not
limited to, documents, contracts, agreements, plans, photographs, books, notes,
electronically stored data and all copies of the foregoing as well as any
materials or equipment supplied by the Company or any of its Affiliates to
Employee.

 

8.                                                                                       RIGHTS
AND REMEDIES UPON BREACH. 
In the event Employee breaches, or threatens to commit a breach of, any
of the provisions of this Agreement, the Company and its subsidiaries,
affiliates, successors or assigns shall have the following rights and remedies,
each of which shall be independent of the others and severally enforceable, and
each of which shall be

 

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in
addition to, and not in lieu of, any other rights or remedies available to the
Company or its subsidiaries, affiliates, successors or assigns at law or in
equity under this Agreement or otherwise:

 

a.                                       Specific
Performance.  The Company shall
have the right and remedy to have each and every one of the covenants in this
Agreement specifically enforced and the right and remedy to obtain injunctive
relief, it being agreed that any breach or threatened breach of any of the
non-competition or confidentiality covenants and agreements contained herein
would cause irreparable injury to the Company and its subsidiaries, affiliates,
successors or assigns and that money damages would not provide an adequate
remedy at law to the Company and its subsidiaries, affiliates, successors or
assigns. Also, to the extent any covenant is deemed unenforceable, the Employee
and the Company agree that a court may reduce the scope of such covenant, to
the extent that such covenant, as reduced, shall remain in force.

 

b.                                      Accounting.  The Company shall have the right and remedy
to require Employee to account for and pay over to the Company and its
subsidiaries, affiliates, successors or assigns, as the case may be, all
compensation, profits, monies, accruals, increments or other benefits derived
or received by Employee that result from any transaction or activity
constituting a breach of this Agreement.

 

c.                                       Enforceability
in all Jurisdictions. 
Employee intends to and hereby confers jurisdiction to enforce each and
every one of the covenants and agreements contained herein upon the courts of
any jurisdiction within the geographic scope of such covenants and agreements.
If the courts of any one or more of such jurisdictions hold any such covenant
or agreement unenforceable by reason of the breadth or such scope or otherwise,
it is the intention of Employee and the Company that such determination shall
not bar or in any way affect the Company’s or any of its Affiliates’,
successors’ or assigns’ right to the relief provided above in the courts of any
other jurisdiction within the geographic scope of such covenants and
agreements, as to breaches of such covenants and agreements in such other
respective jurisdictions, such covenants and agreements as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants and agreements.

 

9.                                                                                       ASSIGNABILITY
OF AGREEMENT.  This Agreement is
a personal contract and the rights and interests of Employee hereunder may not
be sold, transferred, assigned, pledged, encumbered, or hypothecated by him.
When applicable, this Agreement shall inure to the benefit of and be
enforceable by Employee and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. The
Company may assign its rights pursuant to this Agreement, in its sole
discretion.

 

10.                                                                                 ARBITRATION.  Except for an action by the Company seeking
injunctive relief in connection with a breach by Employee of this Agreement,
any disagreement, claim or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration before a single
arbitrator in accordance with the Employment Dispute Resolution rules of the
American Arbitration Association, such arbitration to take place in Fulton or
DeKalb Counties, Georgia. The arbitrator is not empowered to modify or change
this Agreement or award damages in excess of compensatory damages, and each
party hereby irrevocably waives

 

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any
right to recover punitive, exemplary or similar damages with respect to any
dispute. The award of the arbitrator with respect to such disagreement, claim
or controversy shall be enforceable in any court of competent jurisdiction and
shall be binding on the Parties hereto. The arbitrator shall be entitled to
award reasonable attorneys’ fees to the prevailing party in any arbitration or
judicial action under this Agreement.

 

11.                                                                                 NOTICES.  Any notice to be given hereunder shall be in
writing and shall be deemed given when delivered personally, sent by courier or
facsimile or registered or certified mail, postage prepaid, return receipt
requested, addressed to the party concerned at the address indicated below or
to such other address as such party may subsequently give notice of hereunder
in writing:

 

	
  To Employee:

  
	
   

  
	
   

  
	
   

  
	
  To the Company

  
	
  Paragon Systems, Inc.

  
	
   

  
	
   

  

 

Any notice delivered personally or
by courier under this Section shall be deemed given on the date delivered
and any notice sent by telecopy or registered or certified mail, postage
prepaid, return receipt requested, shall be deemed given on the date telecopied
or mailed.

 

12.                                 MISCELLANEOUS

 

a.                                       Severability.  In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of
the Agreement shall not in any way be affected or impaired thereby. Moreover,
if any one or more of the provisions contained in this Agreement shall be held
to be excessively broad as to duration, activity or subject, such provisions
shall be construed by limiting and reducing them so as to be enforceable to the
maximum extent allowed by applicable law.

 

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b.                                      Survivorship.  The respective rights and obligations of the
Parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

 

c.                                       Each
Party the Drafter.  This Agreement
and the provisions contained in it shall not be construed or interpreted for or
against any party to this Agreement because that party drafted or caused that
party’s legal representative to draft any of its provisions.

 

d.                                      Governing
Law.  This Agreement
shall be governed by and construed in accordance with the laws of the State of
Georgia, without regard to its conflict of law rules.

 

e.                                       Headings.  All descriptive headings of sections and
paragraphs in this Agreement are intended solely for convenience, and no
provision of this Agreement is to be construed by reference to the heading of
any section or paragraph.

 

f.                                         Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

g.                                      Amendment
or Modification, Waiver. 
No provision of this Agreement may be amended or waived unless such
amendment or waiver is agreed to in writing, signed by Employee and by a duly
authorized officer of the Company. The failure of either party to this
Agreement to enforce any of its terms, provisions or covenants shall not be
construed as a waiver of the same or of the right of such party to enforce the
same. Waiver by either party hereto of any breach or default by the other party
of any term or provision of this Agreement shall not operate as a waiver of any
other breach or default.

 

h.                                      Definitions  Capitalized terms used herein and not
otherwise defined in this Agreement have the same meaning as such term has in
the Stock Purchase Agreement. The term “Affiliates” shall have the same meaning
as in the General Release, a form of which is attached to the Stock Purchase
Agreement.

 

i.                                          Entire
Agreement.  This Agreement
contains all the understandings between the Parties hereto pertaining to the
matters referred to herein, and supersedes all undertakings and agreements,
whether oral or in writing, previously entered into by them with respect
thereto. Employee represents that, in executing this Agreement, he does not
rely and has not relied upon any representation or statement not set forth
herein made by the Company with regard to the subject matter, bases or effect
of this Agreement or otherwise.

 

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IN WITNESS WHEREOF, the Parties
hereto have executed this Agreement as of the date first written above.

 

 

	
   

  	
  PARAGON SYSTEMS, INC.

  	
  EMPLOYEE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald G. Farrell

  	
   

  	
  /s/ John T. Wilson

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Ronald G. Farrell

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chairman/CEO

  	
   

  	
   

  	
   

  
								

 

9

 

EXHIBIT A

 

 

	
  BASE SALARY:

  	
   

  	
  The same as for 2003 ($ 95,000).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BONUS:

  	
   

  	
  To be set based on the same criteria as the Bonus for
  2003

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CAPACITY:

  	
   

  	
  Vice President

  

 

10EXHIBIT 10.31

 

EXCHANGE AND RECAPITALIZATION AGREEMENT

 

This Exchange and Recapitalization Agreement (together with the
Exhibits hereto, the “Agreement”) is made as of
[                        ],
2004 by and among Tri-S Security Corporation, a Georgia corporation (the
“Company”), the holders (collectively, the “Shareholders”) of all the Company’s
outstanding shares of common stock, $0.001 par value per share (the “Common
Stock”), series A convertible preferred stock, $1.00 par value per share (the
“Series A Convertible Preferred Stock”), and series B convertible preferred
stock, $1.00 par value per share (the “Series B Convertible Preferred Stock”),
and the holders of all the Company’s outstanding options and warrants to
purchase Common Stock (the “Option Holders”).

 

WHEREAS, the Company
presently is preparing for an underwritten initial public offering of Common
Stock to be registered on a registration statement on Form S-1 (together with
all amendments and supplements thereto, the “Registration Statement”) under the
Securities Act of 1933, as amended (the “Initial Public Offering”);

 

WHEREAS, the Company
currently has authorized (i) 25,000,000 shares of Common Stock, of which
2,558,000 shares are outstanding on the date hereof, and (ii) 10,000,000 shares
of preferred stock, $1.00 par value per share (the “Preferred Stock”), of which
(a) 1,000,000 shares are designated as Series A Convertible Preferred
Stock and 100,000 shares of which are outstanding as of the date hereof, (b)
250,000 shares are designated as Series B Convertible Preferred Stock and
40,000 shares of which are outstanding as of the date hereof, and (c) 100
shares are designated as series C redeemable preferred stock, $1.00 par value
per share (the “Series C Redeemable Preferred Stock”), and all of which are
outstanding as of the date hereof, with the Series A Convertible Preferred
Stock, Series B Convertible Preferred Stock and Series C Redeemable Preferred
Stock having the relative rights and preferences as set forth in the Company’s
Articles of Incorporation in effect as of the date hereof; and

 

WHEREAS, in
anticipation of the Initial Public Offering, the Company desires to exchange of
all the Company’s outstanding Common Stock, Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock and all of the outstanding
options and warrants to purchase Common Stock as set forth herein (the
“Exchange”), with the Exchange to be effective on a date to be chosen by the
Company’s Chief Executive Officer (the “Exchange Date”), which date shall be a
date immediately prior to the date upon which the Company, in the judgment of
its Chief Executive Officer, anticipates that the Registration Statement shall
be declared effective by the Securities and Exchange Commission (“SEC”);

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby mutually acknowledged, the parties hereto agree as follows:

 

1.                                       Exchange.

 

1.1.                              The
Company and each Shareholder acknowledge and agree that, effective upon the
Exchange Date, the shares of capital stock of the Company held by such
Shareholder as of the date hereof as set forth on Exhibit A attached hereto
shall be exchanged for the number of post-Exchange shares of Common Stock as
set forth on such exhibit.  Each of the
Shareholders

 

 

acknowledges and agrees that all certificates representing shares of
capital stock of the Company that are issued and outstanding immediately prior
to the Exchange Date (the “Original Certificates”) shall, upon the Exchange
Date, be deemed to represent only a right to receive a replacement certificate
(each, a “Replacement Certificate”) representing the applicable number of
shares of Common Stock to be received by such Shareholder in connection with
the Exchange.  Each Shareholder further
acknowledges and agrees that upon issuance of the Replacement Certificates, the
Original Certificates shall be deemed cancelled without any further action on
the part of the Company or such Shareholder.

 

1.2.                              The
Company and each Option Holder acknowledge and agree that, effective upon the
Exchange Date, all options and warrants to purchase shares of Common Stock held
by such Option Holder as of the date hereof as set forth on Exhibit B attached
hereto shall be exchanged for an option to purchase the number of post-Exchange
shares of Common Stock at the exercise price as set forth on such exhibit.  On the Exchange Date, the Company shall deliver
to the Option Holder an executed option agreement representing such
post-Exchange option in a form reasonably acceptable to the parties
thereto.  Each Option Holder acknowledges
and agrees that all agreements or certificates representing all options and
warrants to purchase shares of Common Stock held by such Option Holder as of
the date hereof shall, upon the Exchange Date, be cancelled and terminated
without any further action on the part of the Company or such Option Holder.

 

2.                                       Exchange Date.  The parties hereto intend for the Exchange to
occur on a date prior to the date upon which the Registration Statement shall
be declared effective by the SEC. In the event that the SEC has not declared
the Registration Statement effective on or before a date which is five business
days following the Exchange Date, then the Shareholders and the Company (unless
they otherwise unanimously agree) intend and agree that the Exchange (as
contemplated by Section 1) shall become null and void and of no further
force or effect (except that such nullification shall not limit any right of
enforcement of, or for damages in connection with, any breach of this Agreement
on the part of any party). In the event that the Exchange shall become null and
void as herein specified and certain partial performances hereunder shall have
been completed by the parties hereto with respect to the Exchange, the parties
severally covenant and agree to take any and all action and to file any and all
instruments and documents as shall be necessary, appropriate or, upon the
reasonable request of any party hereto, desirable in order to restore all
parties to their respective rights and obligations immediately prior to the
Exchange Date.

 

3.                                       Representations and Warranties of Shareholders.  Each Shareholder represents and warrants to
the Company that the following statements are true and correct:

 

(i)                                     the
shares of Common Stock, Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock held by such Shareholder as of the date hereof as
set forth on Exhibit A are owned by such Shareholder free and clear of all
claims, liens, pledges, options, charges, security interests, mortgages, deeds
of trust, encumbrances or rights of any third party of any nature whatsoever;

 

(ii)                                  in
the Exchange, each Shareholder will convey to the Company good title to the
shares of Common Stock, Series A Convertible Preferred Stock and Series B
Convertible

 

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Preferred Stock held by such Shareholder as of the date hereof as set
forth on Exhibit A attached hereto free and clear of all claims, liens,
pledges, options, charges, security interests, mortgages, deeds of trust,
encumbrances or rights of any third party of any nature whatsoever;

 

(iii)                               if
such Shareholder is not a natural person, then this Agreement, when executed
and delivered by such Shareholder, shall have been duly authorized, executed
and delivered by and on behalf of such Shareholder, and shall constitute the
valid and binding agreement of such Shareholder, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally;

 

(iv)                              if
such Shareholder is not a natural person, then such Shareholder has the
requisite power and authority to enter into this Agreement and to perform its
obligations hereunder;

 

(v)                                 such
Shareholder is acquiring the shares of Common Stock issuable to such
Shareholder upon the Exchange for investment purposes only, for its own account
and not with a view to, or for resale in connection with, any distribution
thereof in violation of applicable securities laws;

 

(vi)                              such
Shareholder has been advised that the shares of Common Stock issuable to such
Shareholder upon the Exchange will not be registered under the Securities Act
of 1933, as amended (“Securities Act”), or applicable state securities laws and
that such shares must be held indefinitely unless the offer and sale thereof
are subsequently registered under the Securities Act or an exemption from such registration
is available;

 

(vii)                           such
Shareholder (a) has knowledge, skill and experience in financial, business and
investment matters, (b) is capable of evaluating the merits and risks of the
receipt of the shares of Common Stock issuable to such Shareholder upon the
Exchange, (c) is an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D promulgated
under the Securities Act,
and (d) has the ability to bear the risk of losing such Shareholder’s entire
position in shares of Common Stock issuable to such Shareholder upon the
Exchange; and

 

(viii)                        such
Shareholder acknowledges and agrees that the certificates evidencing the shares
of Common Stock issuable to such Shareholder upon the Exchange will bear a
restrictive legend in substantially the following form:

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND THEY MAY NOT
BE OFFERED FOR SALE OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT THEREUNDER OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13)
OF CODE SECTION 10-5-9 OF THE ‘GEORGIA SECURITIES ACT OF 1973,’ AND MAY
NOT BE SOLD OR TRANSFERRED

 

3

 

EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO
AN EFFECTIVE REGISTRATION UNDER SUCH ACT.

 

4.                                       Representations and Warranties of the Company.
The Company represents and warrants to the Shareholders that the following
statements are true and correct:

 

(i)                                     upon
issuance and delivery to the Shareholders of the shares of Common Stock
issuable to the Shareholders upon the Exchange, such shares will be validly
issued, fully paid and non-assessable;

 

(ii)                                  the
issuance and sale of the shares of Common Stock issuable to the Shareholders
upon the Exchange will not give rise to any preemptive rights or rights of
first refusal which have not been duly waived by the holders thereof and will
not violate any laws to which the Company or any of its assets are subject;

 

(iii)                               this
Agreement, when executed and delivered by the Company, shall have been duly
authorized, executed and delivered by and on behalf of the Company, and shall
constitute the valid and binding agreement of the Company, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally;

 

(iv)                              the
Company has the requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder; and

 

(v)                                 neither
the execution and delivery of this Agreement and the other agreements,
certificates or instruments required to be executed and delivered pursuant to
the terms and conditions of this Agreement nor the consummation of the
transactions contemplated thereby will (a) conflict with, or result in a breach
of the terms, conditions or provisions of, or constitute a default under, (1)
the governing documents of the Company, (2) any agreement or instrument to
which the Company or any of its subsidiaries is now a party or by which any of
them is bound, (3) any provision of any judgment, decree, order, statute, rule
or regulation applicable to or binding on the Company or (4) result in the
creation of any mortgage, pledge, lien, encumbrance, or charge upon any of the
properties or assets of the Company.

 

5.                                       Miscellaneous.

 

5.1.                              This
Agreement shall be binding upon the parties hereto and their respective
successors, assigns, heirs and legal representatives.

 

5.2.                              This
Agreement shall be subject to the laws of the State of Georgia without regard
to principles of conflict of law.

 

5.3.                              Headings
and captions are included herein for convenience, do not form a part of this
Agreement, and are not admissible as to construction.

 

5.4.                              This
instrument is the entire expression of the agreement of the parties with
respect to its subject matter, and supersedes all prior understandings, agreements
or representations in such regard.

 

4

 

5.5.                              Neither
this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought

 

5.6.                              The
parties acknowledge the unique nature of the provisions hereof, and agree that
damages in event of breach would be both difficult to calculate and an
inadequate remedy. Consequently, in the event of breach, and in addition to
recovering any provable damages and reimbursement of any legal fees, the
injured party shall be entitled to equitable relief, including specific
performance.

 

5.7.                              No
person or entity not signatory shall have any rights as a third party
beneficiary under this Agreement, or to enforce the provisions hereof on behalf
of any signatory hereto.

 

5.8.                              Any
signature page delivered by a fax machine or telecopy machine shall be binding
to the same extent as an original signature page, with regard to any agreement
subject to the terms hereof or any amendment thereto. Any party who delivers
such a signature page agrees to later deliver an original counterpart to any
party that requests it.

 

5.9.                              This
Agreement may be executed in any number of counterparts, all of which together
shall constitute one instrument, and each of which may be executed by less than
all of the parties to this Agreement.

 

5.10.                        In
the event that any provision of this Agreement becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision. In
such event, the parties shall negotiate, in good faith, a valid, legal and
enforceable substitute provision which most nearly effects the intent of the
parties in entering into this Agreement.

 

[SIGNATURE PAGES FOLLOW]

 

5

 

IN WITNESS WHEREOF,
the parties hereto have executed and delivered this Exchange and
Recapitalization Agreement, or caused this Exchange and Recapitalization
Agreement to be executed and delivered, as of the date first written above.

 

	
   

  	
  TRI-S SECURITY CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:  Ronald G.
  Farrell

  	
   

  
	
   

  	
  Title:  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SHAREHOLDERS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS K. BALL

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MICHAEL F. BENNETT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BONNIE LYNN FARRELL

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HAROLD E. HODGE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  R

  	
   

  	
   

  
	
   

  	
  JUNE D. HODGE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TIMOTHY J. MCGAUGHEY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MICHAEL MCKINZIE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KENNETH E. MOORE

  	
   

  
				

 

 

	
   

  	
   

  	
   

  
	
   

  	
  ROBERT PARKER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  R.G.F. INVESTMENTS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BRANT W. SCOTT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SOUTHWICK CAPITAL, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RODNEY A. TAYLOR

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OPTION HOLDERS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RONALD G. FARRELL

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BRE LLC

  	
   

  
						

 

7

 

EXHIBIT A

 

	
  Name
  of

  Shareholder

  	
   

  	
  Number of Shares of the Company’s Capital

  Stock Held as of the Date of the Agreement

  	
   

  	
  Aggregate

  Number of Shares

  of Common Stock

  to be Issued Upon

  the Exchange

  	
   

  
	
  Douglas K. Ball

  	
   

  	
  20,000 shares Series B Convertible Preferred Stock

  	
   

  	
  64,725

  	
   

  
	
  Michael F. Bennett

  	
   

  	
  15,000 shares Common Stock, 50,000 shares Series A Convertible
  Preferred Stock, and 10,000 shares Series B Convertible Preferred Stock

  	
   

  	
  158,576

  	
   

  
	
  Bonnie Lynn Farrell

  	
   

  	
  300,000 shares Common Stock

  	
   

  	
  97,087

  	
   

  
	
  Harold E. Hodge

  	
   

  	
  10,000 shares Series A Convertible Preferred Stock

  	
   

  	
  24,272

  	
   

  
	
  June D. Hodge

  	
   

  	
  10,000 shares Series A Convertible Preferred Stock

  	
   

  	
  24,272

  	
   

  
	
  Timothy J. McGaughey

  	
   

  	
  25,000 shares Common Stock

  	
   

  	
  8,091

  	
   

  
	
  Michael McKinzie

  	
   

  	
  9,000 shares Common Stock

  	
   

  	
  2,913

  	
   

  
	
  Kenneth E. Moore

  	
   

  	
  4,500 shares Common Stock

  	
   

  	
  1,456

  	
   

  
	
  Robert Parker

  	
   

  	
  5,000 shares Series A Convertible Preferred Stock,  and  10,000 shares Series B Convertible Preferred
  Stock

  	
   

  	
  44,498

  	
   

  
	
  R.G.F. Investments, Inc.

  	
   

  	
  2,200,000 shares Common Stock

  	
   

  	
  711,974

  	
   

  
	
  Bryant W. Scott

  	
   

  	
  10,000 shares Series A Convertible Preferred Stock

  	
   

  	
  24,272

  	
   

  
	
  Southwick Capital, LLC

  	
   

  	
  15,000 shares Series A Convertible Preferred Stock

  	
   

  	
  36,408

  	
   

  
	
  Rodney A. Taylor

  	
   

  	
  4,500 shares Common Stock

  	
   

  	
  1,456

  	
   

  

 

 

EXHIBIT B

 

 

	
  Name
  of Option Holder

  	
   

  	
  Number of

  Shares of

  Common Stock

  Underlying

  Options or

  Warrants Held

  as of the Date

  Hereof

  	
   

  	
  Pre-Exchange

  Exercise Price

  Per Share

  	
   

  	
  Post-

  Exchange

  Number of

  Shares

  Underlying

  Option

  	
   

  	
  Post-Exchange

  Exercise Price

  Per Share

  	
   

  
	
  Ronald G. Farrell, Inc.

  	
   

  	
  300,000

  	
   

  	
  $

  	
  0.04

  	
   

  	
  97,087

  	
   

  	
  $

  	
  0.12

  	
   

  
	
  BRE LLC

  	
   

  	
  50,000

  	
   

  	
  $

  	
  1.00

  	
   

  	
  16,181

  	
   

  	
  $

  	
  3.09

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}]]