Document:

Exhibit 4.2

 

NON-QUALIFIED STOCK OPTION AGREEMENT

 

This NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”)
is entered into and effective as of               
(the “Date of Grant”), by and between Tri-S Security Corporation, a Georgia corporation (the “Company”), and                     
(the “Optionee”).

 

WITNESSETH

 

WHEREAS, the Company has duly adopted the
Tri-S Security Corporation 2004 Stock Incentive Plan (the “Plan”) authorizing
the Board of Directors of the Company (the “Board”) or a committee as provided
for in the Plan (the “Committee”)
to grant stock options to Eligible Recipients (as defined in the Plan) of the
Company and its Subsidiaries (as defined in the Plan); and

 

WHEREAS, the Board desires to give the Optionee
an inducement to acquire a proprietary interest in the Company and an added
incentive to advance the interests of the Company by granting to the Optionee
an option to purchase shares of common stock of the Company, par value $.001
per share (the “Common Stock”).

 

NOW, THEREFORE, in consideration of the mutual covenants
and conditions hereinafter set forth, the parties hereto hereby agree as
follows:

 

I.              GRANT
OF OPTION.

 

The
Company hereby grants to the Optionee the right, privilege, and option (the “Option”) to purchase                     
shares (the “Option Shares”) of Common Stock according to the terms
and subject to the conditions hereinafter set forth.  The Option is a “non-qualified stock option,”
and it is not intended to be an “incentive stock option” within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended.

 

II.            OPTION
EXERCISE PRICE.

 

The exercise price to be
paid by Optionee upon exercise of the Option or any portion thereof shall be $             
per each Option Share purchased.

 

III.           EXERCISABILITY
AND EXPIRATION OF OPTION.

 

A.            Exercisability.  The Option shall be fully vested on the Date
of Grant and exercisable at any time on or after the Date of Grant and until
the Option expires as set forth herein.

 

B.            Expiration.  In no event shall the Option be exercisable
after, and this Option shall become void and expire as to all unexercised
Option Shares at, 11:59 p.m. Eastern Time on                     .

 

 

IV.           MANNER
OF OPTION EXERCISE.

 

A.            Notice.  This Option may be exercised by the Optionee in
whole or in part from time to time, subject to the conditions contained herein
and in the Plan, by delivery in person, by facsimile, electronic transmission,
or through the mail, of written notice of exercise to the Company at its office
at Royal Center One, 11675 Great Oaks Way, Suite 120, Alpharetta, Georgia
30022, or such other office as the Company may designate (Attention:  Chief Financial Officer), and by paying in
full the total exercise price for the Option Shares purchased.  The notice of Option exercise shall be in the
form determined from time to time by the Board or the Committee.  As soon as practicable after such notice and
payment are received, the Optionee shall be recorded on the books of the Company
as the owner of the Option Shares purchased, and the Company shall deliver to
the Optionee one or more duly issued stock certificates evidencing such
ownership.

 

B.            Payment.  At the time of exercise of the Option, the
Optionee may determine whether to pay the total exercise price of the Option
Shares to be purchased solely in cash, through a Broker Exercise Notice (as defined in
the Plan), by transfer from the Optionee to the Company of Previously
Acquired Shares (as defined in the Plan), or by a combination of such
methods.  The Board or the Committee,
however, in its sole discretion, may reject the Optionee’s election to pay all
or part of the exercise price with consideration other than cash.

 

V.            NONTRANSFERABILITY.

 

This
Option shall not be transferable by the Optionee, either voluntarily or
involuntarily, except as provided in Section 12.3 of the Plan.  Any attempt to transfer this Option other
than in accordance with Section 12.3 of the Plan shall void this Option.

 

VI.           LIMITATION
OF LIABILITY.

 

Nothing in this Agreement
shall be construed to be evidence of any agreement or understanding, express or
implied, that the Company or any of its Subsidiaries will employ the Optionee
in any particular position at any particular rate of compensation or for any
particular period of time.

 

VII.         BINDING
EFFECT.

 

This Agreement shall be
binding upon the heirs, executors, administrators and successors of the parties
hereto.

 

VIII.        SUBJECT
TO PLAN.

 

The Option represented by
this Agreement has been granted under, and is subject to the terms of, the
Plan.  The terms of the Plan are hereby
incorporated by reference herein in their entirety, and the Optionee, by
execution hereof, acknowledges having received a copy of the Plan.  The provisions of this Agreement shall be interpreted
as to be consistent with the Plan, and

 

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any ambiguities herein shall be interpreted by
reference to the Plan.  In the event that
any provision hereof is inconsistent with the terms of the Plan, the latter
shall prevail.

 

IX.           GOVERNING
LAW.

 

This
Agreement and all rights and obligations hereunder shall be construed in
accordance with the Plan and governed by the laws of the State of Georgia.

 

IN
WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused this Agreement to be executed effective the day and year
first above written.

 

	
   

  	
  TRI-S
  SECURITY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIONEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By execution
  hereof, the

  Optionee acknowledges having

  received a copy of the Plan.

  

 

3Exhibit 4.3

 

INCENTIVE STOCK OPTION AGREEMENT

 

This AGREEMENT is entered into and effective
this                          
(the “Date of Grant”) by and
between Tri-S Security Corporation (the “Company”) and                           (the “Optionee”).

 

WITNESSETH

 

WHEREAS, the Company has adopted the Tri-S
Security Corporation 2004 Stock Incentive Plan (the “Plan”) authorizing the Board of Directors of the Company (the “Board”)
or a committee as provided for in the Plan (the “Committee”), to grant incentive stock options to Eligible
Recipients (as defined in the Plan) of the Company and its Subsidiaries (as
defined in the Plan); and

 

WHEREAS, the Company desires to give the
Optionee an inducement to acquire a proprietary interest in the Company and an
added incentive to advance the interests of the Company by granting to the
Optionee an option to purchase shares of common stock of the Company, par value
$.001 per share (the “Common Stock”).

 

NOW, THEREFORE, in consideration of the
mutual covenants and conditions hereinafter set forth, the parties hereto
hereby agree as follows:

 

I.              GRANT
OF OPTION.

 

The
Company hereby grants to the Optionee the right, privilege, and option (the “Option”) to purchase                          
shares (the “Option Shares”) of
the Common Stock, according to the terms and subject to the conditions
hereinafter set forth.  The Option is
intended to be, to the extent allowable under applicable law, an “incentive
stock option” within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).  To the extent the aggregate fair market value
(determined at the Date of Grant) of the Option Shares with respect to which
the Option is exercisable for the first time by the Optionee during any
calendar year exceeds $100,000, the Option or a portion thereof which exceeds
such limit, shall be treated as a non-statutory stock option.

 

II.            OPTION
EXERCISE PRICE.

 

The
per share price to be paid by the Optionee in the event of an exercise of the
Option shall be $                
per each Option Share purchased.

 

III.           EXERCISABILITY
AND EXERCISE OF OPTION.

 

A.            Exercisability.  [The Option
shall be fully vested on the Date of Grant and exercisable at any time on or
after the Date of Grant and until the Option expires as set forth herein.]  [The Option
shall become vested and mutually exercisable with respect to the Option Shares
in                installments. 
The following table sets forth the initial dates of

 

 

Exercisability
of each installment and the number of Option Shares as to which the Option
shall become exercisable on such dates:]

 

[The foregoing rights to exercise the Option shall be
cumulative with respect to the Option Shares becoming exercisable on such
date.]

 

B.            Expiration.  In no event shall the Option be exercisable
after, and this Option shall become void and expire as to all unexercised
Option Shares at, 11:59 p.m. Eastern Time on                          
(the “Time of Termination”).  Subject to
the requirement that in no event shall the Option be exercisable after the Time
of Termination, (1) if the Optionee’s employment with the Company and all
of its Subsidiaries terminates by reason of: (i) Disability (as defined in the Plan); (ii) death; or (iii) Retirement (as defined in the Plan),
then such Option will become immediately exercisable in full and may be
exercised in whole or in part before the expiration of twelve months after such
termination of employment; (2) if the Optionee’s employment is terminated
without cause, then the Option may be exercised in whole or in part before the
expiration of three months after such termination, but only to the extent
exercisable at the time of termination of employment; and (3) if the
Optionee’s employment is terminated for cause, then the Option may be exercised
in whole or in part before the expiration of one month after such termination,
but only to the extent exercisable at the time of termination of employment.

 

C.            Change
in Control.

 

(1)           For purposes of this Section III.C,
“Change in Control” shall have the meaning set forth in Section 11.1 of
the Plan.

 

(2)           If any events constituting a Change in
Control of the Company shall occur, then the Option shall become immediately
exercisable in full and shall remain exercisable in full until the Time of
Termination, whether or not the Optionee remains an employee of the Company or
any of its Subsidiaries; provided, however, that if, with respect to the
Optionee, the acceleration of the vesting of this Option as provided herein or
any payment of cash in exchange for all or part of the Option together with any
other payments which the Optionee has the right to receive from the Company or
any corporation which is a member of an “affiliated group” (as defined in Section 1504(a) of
the Code without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of
the Code), then the payments to the Optionee pursuant to Section 11.3 or
11.4 of the Plan shall be reduced to the largest amount as will result in no
portion of such payments being subject to the excise tax imposed by Section 4999
of the Code.

 

IV.           MANNER
OF OPTION EXERCISE.

 

A.            Notice.  This Option may be exercised by the Optionee
in whole or in part from time to time, subject to the conditions contained
herein and in the Plan, by delivery in person, by facsimile, electronic
transmission, or through the mail, of written notice of exercise to the Company
at its office at Royal Center One, 11675 Great Oaks Way, Suite 120,
Alpharetta, Georgia 30022, or such other office as the Company may designate
(Attention:  Chief Financial Officer),
and by paying in full the total exercise price for the Option Shares
purchased.  The notice of Option exercise
shall be in the form determined from time to time by the Board or the

 

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Committee.  As soon as
practicable after such notice and payment are received, the Optionee shall be
recorded on the books of the Company as the owner of the Option Shares purchased,
and the Company shall deliver to the Optionee one or more duly issued stock
certificates evidencing such ownership.

 

B.            Payment.  At the time of exercise of the Option, the
Optionee may determine whether to pay the total exercise price of the Option Shares
to be purchased solely in cash, through a Broker Exercise Notice (as defined in
the Plan), by transfer from the Optionee to the Company of Previously
Acquired Shares (as defined in the Plan) or by a combination of such
methods.  The Board or the Committee,
however, in its sole discretion, may reject the Optionee’s election to pay all
or part of the exercise price with consideration other than cash.

 

C.            Withholding
Taxes. The Company is entitled to (1) withhold and deduct from future
wages of the Optionee (or from other amounts that may be due and owing to the
Optionee from the Company or a Subsidiary), or make other arrangements for the
collection of, all legally required amounts necessary to satisfy any and all
federal, state and local withholding and employment-related tax requirements
attributable to any action of the Optionee, including, but not limited to, the
exercise of the Option; or (2) require the Optionee promptly to remit the
amount of such withholding to the Company before taking any action, including
the issuance to the Optionee of the Option Shares.  Notwithstanding, the Board or the Committee
may, in its sole discretion and upon terms and conditions established by the
Board or the Committee, permit or require an Optionee to satisfy, in whole or
in part, any withholding or employment-related tax obligation by electing to
tender Previously Acquired Shares, a Broker Exercise Notice or by a combination
of such methods.

 

V.            NONTRANSFERABILITY.

 

This
Option shall not be transferable by the Optionee, either voluntarily or
involuntarily, except as provided in Section 12.3 of the Plan.  Any attempt to transfer this Option other
than in accordance with Section 12.3 of the Plan shall void this Option.

 

VI.           LIMITATION
OF LIABILITY.

 

Nothing
in this Agreement shall be construed to:

 

A.            Limit
in any way the right of the Company or any of its Subsidiaries to terminate the
employment of the Optionee at any time.

 

B.            Be
evidence of any agreement or understanding, express or implied, that the
Company or any of its Subsidiaries will employ the Optionee in any particular
position at any particular rate of compensation or for any particular period of
time.

 

VII.         DISPOSITION
OF STOCK.

 

Prior
to making a disposition (as defined in Section 424(c) of the Code) of
any of the Option Shares before the expiration of two years after the Date of
Grant or before the expiration

 

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of one year after the date on which the Option Shares were transferred
to the Optionee pursuant to exercise of the Option, the Optionee shall send
written notice to the Company (in the manner set forth in Section IV.A
hereof) of the proposed date of such disposition, the number of Option Shares
to be disposed of, the amount of proceeds to be received from such disposition
and any other information relating to such disposition that the Company may
reasonably request.  The right of the
Optionee to make such a disposition shall be conditioned on the receipt by the
Company of all amounts necessary to satisfy any federal, state or local
withholding tax requirements attributable to such disposition.  The Board or the Committee shall have the
right, in its sole discretion, to endorse the certificates representing the
Option Shares with a legend restricting transfer and to cause a stop transfer
order to be entered with the Company’s transfer agent until such time as the
Company receives the amounts necessary to satisfy such withholding requirements
or until the later of the expiration of two years from the Date of Grant or one
year from the date on which the Option Shares were transferred to the Optionee.

 

VIII.        BINDING
EFFECT.

 

This
Agreement shall be binding upon the heirs, executors, administrators and
successors of the parties hereto.

 

IX.           SUBJECT
TO PLAN.

 

The
Option represented by this Agreement has been granted under, and is subject to
the terms of, the Plan.  The terms of the
Plan are hereby incorporated by reference herein in their entirety, and the
Optionee, by execution hereof, acknowledges having received a copy of the
Plan.  The provisions of this Agreement
shall be interpreted as to be consistent with the Plan, and any ambiguities
herein shall be interpreted by reference to the Plan.  In the event that any provision hereof is
inconsistent with the terms of the Plan, the latter shall prevail.

 

X.            GOVERNING
LAW.

 

This
Agreement and all rights and obligations hereunder shall be construed in
accordance with the Plan and governed by the laws of the State of Georgia.

 

[Signatures on following page]

 

4

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement or caused this Agreement to be
executed effective the day and year first above written.

 

	
   

  	
  TRI-S
  SECURITY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIONEE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By execution
  hereof, the

  Optionee acknowledges having

  received a copy of the Plan.

  

 

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