EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of the 12th day of September, 2000, by and among Command
Security Corporation, a New York corporation (the "Company") and Reliance
Security Group plc, a corporation organized under the laws of England and Wales
(the "Holder").
WITNESSETH:
WHEREAS, the Holder has agreed to purchase shares (the "Shares") of
common stock, par value $.0001 per share, of the Company (the "Common Stock"),
shares of Series A Preferred Stock, par value $.0001, per share of the Company
(the "Preferred Stock"), and certain of the Company's outstanding warrants to
purchase shares of Common Stock (the "Outstanding Warrants"), pursuant to a
Stock Purchase Agreement dated as of the date hereof (the "Stock Purchase
Agreement") between the Holder and certain shareholders of the Company;
WHEREAS, the Company has issued a Warrant (the "Warrant") to the
Holder to purchase shares of Common Stock; and
WHEREAS, the Company desires to grant to the Holder registration
rights with respect to the Shares purchased;
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. (a) Effectiveness. This Agreement shall become effective upon the date
of consummation of the transactions contemplated by the Stock Purchase Agreement
(the "Effective Date"). In the event the Stock Purchase Agreement is terminated,
this Agreement shall be null and void.
(b) Piggyback Registration. If, at any time during the five-year
period commencing on the Effective Date, the Company shall file a registration
statement (other than a registration statement on Form X-0, Xxxx X-0, or any
successor form) with the Securities and Exchange Commission (the "Commission")
while any Registrable Securities (as hereinafter defined) are outstanding, the
Company shall give the Holder at least 20 days' prior written notice of the
filing of such registration statement. If requested by the Holder in writing
within 20 days after receipt of any such notice, the Company shall, at the
Company's sole expense (other than the fees and disbursements of counsel for the
Holder, and the underwriting discounts, if any, payable in respect of the
Registrable Securities sold by the Holder), register all or, at the Holder's
option, any portion of the Registrable Securities of the Holder, concurrently
with the registration of such other securities, all to the extent required to
permit the public offering and sale of the Registrable Securities through the
facilities of all appropriate securities exchanges, if any, on which the
Company's Common Stock is being sold or on the over-the-counter market, and will
use its best efforts through its officers, directors, auditors, and counsel to
cause such registration statement to become effective as promptly as
practicable. Notwithstanding the foregoing, if the managing underwriter of any
such offering shall determine and advise the
Company in writing that, in its opinion, the distribution of all or a portion of
the Registrable Securities requested to be included in the registration
concurrently with the securities being registered by the Company would adversely
affect the distribution of such securities by the Company for its own account,
then the Holder shall delay the offering and sale of such Registrable Securities
(or the portions thereof so designated by such managing underwriter) for such
period, not to exceed 120 days (the "Delay Period") as the managing underwriter
shall request, provided that no such delay shall be required as to any
Registrable Securities if any securities of the Company are included in such
registration statement and eligible for sale during the Delay Period for the
account of any person other than the Company and Holder unless the securities
included in such registration statement and eligible for sale during the Delay
Period for such other person shall have been reduced pro rata to the reduction
of the Registrable Securities which were requested to be included and eligible
for sale during the Delay Period in such registration. As used herein,
"Registrable Securities" shall mean (i) the Shares of Common Stock, (ii) the
shares of Common Stock issuable upon conversion of the Preferred Stock, (iii)
the shares of Common Stock issuable upon exercise of the Outstanding Warrants
and (iv) the shares of Common Stock issuable upon exercise of the Warrant,
which, in each case, have not been previously sold pursuant to a registration
statement or Rule 144 promulgated under the Securities Act.
(c) Demand Registration. If, at any time during the five-year period
commencing on the Effective Date, the Company shall receive a written request
from the Holder to register the sale of all or part of such Registrable
Securities, the Company shall, as promptly as practicable, at the Company's sole
cost and expense (other than the fees and disbursements of counsel for the
Holder and the underwriting discounts, if any, payable in respect of the
Registrable Securities sold by the Holder) prepare and file with the Commission
a registration statement sufficient to permit the public offering and sale of
the Registrable Securities through the facilities of all appropriate securities
exchanges, if any, on which the Company's Common Stock is being sold or on the
over-the-counter market, and will use its best efforts through its officers,
directors, auditors, and counsel to cause such registration statement to become
effective as promptly as practicable; provided, however, that the Company shall
only be obligated to file one such registration statement. The Company shall not
be obligated to effect any registration of its securities pursuant to this
Section 1(c) within nine months after the effective date of any previous
registration statement prepared and filed in accordance with Sections 1(b) or
1(c) (other than a registration statement on Forms X-0, X-0 or other successor
forms).
(d) In the event of a registration pursuant to the provisions of
this Section 1, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Holder may reasonably
request; provided, however, that the Company shall not be required to qualify to
do business in any state by reason of this Section 1(d) in which it is not
otherwise required to qualify to do business.
(e) The Company shall keep effective any registration or
qualification contemplated by this Section 1 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document and communication for such period of
time as shall be required to permit the Holder to complete the offer and sale of
the Registrable Securities covered thereby. The Company shall in no event be
required to keep any such registration or qualification in effect for a period
in excess of nine months from the date on which the Holder is first free to sell
such Registrable Securities;
2
provided, however, that, if the Company is required to keep any such
registration or qualification in effect with respect to securities other than
the Registrable Securities beyond such period, the Company shall keep such
registration or qualification in effect as it relates to the Registrable
Securities for so long as such registration or qualification remains or is
required to remain in effect in respect of such other securities.
(f) In the event of a registration pursuant to the provisions of
this Section 1, the Company shall furnish to the Holder such number of copies of
the registration statement and of each amendment and supplement thereto (in each
case, including all exhibits) such number of copies of each prospectus contained
in such registration statement and each supplement or amendment thereto
(including each preliminary prospectus) all of which shall conform to the
requirements of the Securities Act and the rules and regulations thereunder, and
such other documents, as any Holder may reasonably request to facilitate the
disposition of the Registrable Securities included in such registration.
(g) In the event of a registration pursuant to the provisions of
this Section 1, the Company shall furnish the Holder of any Registrable
Securities so registered with an opinion of its counsel (reasonably acceptable
to the Holder) to the effect that such counsel has no knowledge of any material
misstatement or omission in such registration statement or any prospectus, as
amended or supplemented. Such opinion shall also state the jurisdictions in
which the Registrable Securities have been registered or qualified for sale
pursuant to the provisions of Section 1(d)
(h) The Company shall notify the Holder of the Registrable
Securities promptly when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed.
(i) The Company shall advise the Holder of the Registrable
Securities, promptly after it shall receive notice or obtain knowledge of the
issuance of any stop order by the Commission suspending the effectiveness of
such registration statement, or the initiation or threatening of any proceeding
for that purpose and promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should be issued.
(j) The Company shall promptly notify the Holder of the Registrable
Securities at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement, as then in effect,
would include an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the reasonable request of the Holder of the Registrable Securities prepare and
furnish to them such number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities or securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made.
(k) If requested by the underwriter for any underwritten offering of
Registrable Securities on behalf of a Holder pursuant to a registration
requested under Section 1(c), the Company and the Holder of Registrable
Securities will enter into an underwriting agreement
3
with such underwriter for such offering, which shall be reasonably satisfactory
in substance and form to the Company and the Company's counsel, the Holder of
Registrable Securities and the underwriter, and such agreement shall contain
such representations and warranties by the Company and the Holder of Registrable
Securities and such other terms and provisions as are customarily contained in
an underwriting agreement with respect to secondary distributions solely by
selling stockholders, including, without limitation, indemnities substantially
to the effect and to the extent provided in Section 2.
(l) The Company agrees that until all the Registrable Securities
have been sold under a registration statement or pursuant to Rule 144 under the
Securities Act following the closing of a public offering of the Company's
Common Stock, it shall use its commercially reasonable efforts to keep current
in filing all reports, statements and other materials required to be filed with
the Commission to permit holders of the Registrable Securities to sell such
securities under Rule 144.
2. Indemnification. (a) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless the Holder, its officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls any such person within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 2, but not be limited to, attorneys' fees and any and all reasonable
expenses whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation) as and when incurred,
arising out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented) or any amendment or supplement thereto, relating to
the sale of any of the Registrable Securities or (B) in any application or other
document or communication (in this Section 2 collectively called an
"application") executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to register or qualify any of the Registrable Securities under the
securities or blue sky laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements made
therein not misleading, unless (x) such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company with respect to the Holder by or on behalf of such person expressly for
inclusion in any registration statement, preliminary prospectus, or final
prospectus, or any amendment or supplement thereto, or in any application, as
the case may be, or (y) such loss, liability, charge, claim, damage or expense
arises out of the Holder's failure to comply with the terms and provisions of
this Agreement, or (ii) any breach of any representation, warranty, covenant, or
agreement of the Company contained in this Agreement. The foregoing agreement to
indemnify shall be in addition to any liability the Company may otherwise have,
including liabilities arising under this Agreement.
If any action is brought against the Holder or any of its officers,
directors, partners, employees, agents, or counsel, or any controlling persons
of such person (an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (but the failure so to notify shall not relieve
4
the Company from any liability other than pursuant to this Section 2 (a)) and
the Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties) provided that the indemnified party shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action or the Company shall not have
promptly employed counsel reasonably satisfactory to such indemnified party or
parties to have charge of the defense of such action or such indemnified party
or parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this Section 2 to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of each indemnified party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto) unless such settlement, compromise,
consent, or termination includes an unconditional release of each indemnified
party from all liability in respect of such action. The Company agrees promptly
to notify Holder of the commencement of any litigation or proceedings against
the Company or any of it officers or directors in connection with the sale of
any Registrable Securities or any preliminary prospectus, prospectus,
registration statement, or amendment or supplement thereto, or any application
relating to any sale of any Registrable Securities.
(b) Holder agrees to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall have signed any
registration statement covering Registrable Securities held by the Holder, each
other person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act, and its or their
respective counsel, to the same extent as the foregoing indemnity from the
Company to the Holder in Section 2 (a) but only with respect to statements or
omissions, if any, made in any registration statement, preliminary prospectus,
or final prospectus (as from time to time amended and supplemented) or any
amendment or supplement thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company with respect to the
Holder by or on behalf of the Holder, expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus, or
final prospectus, or any amendment or supplement thereto, or in any application,
and in respect of which indemnity may be sought against the Holder pursuant to
this Section 2(b) the Holder shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
2(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 2(a) or
2(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such
5
indemnification may not be enforced in such case, even though this Agreement
expressly provides for indemnification in such case, or (ii) any indemnified or
indemnifying party seeks contribution under the Securities Act, the Exchange Act
or otherwise, then the Company (including for this purpose any contribution made
by or on behalf of any director of the Company, any officer of the Company who
signed any such registration statement, any controlling person of the Company,
and its or their respective counsel) as one entity, and the Holder of the
Registrable Securities, included in such registration in the aggregate
(including for this purpose any contribution by or on behalf of an indemnified
party), as a second entity, shall contribute to the losses, liabilities, claims,
damages, and expenses whatsoever to which any of them may be subject, on the
basis of relevant equitable considerations such as the relative fault of the
Company and the Holder in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission shall be determined by, among other things, whether such statement,
alleged statement, omission or alleged omission relates to information supplied
by the Company or by the Holder, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement,
alleged statement, omission, or alleged omission. The Company and Holder agree
that it would be unjust and inequitable if the respective obligations of the
Company and the Holder for contribution were determined by pro rata or per
capita allocation of the aggregate losses, liabilities, claims, damages, and
expenses (even if the Holder and the other indemnified parties were treated as
one entity for such purpose) or by any other method of allocation that does not
reflect the equitable considerations referred to in this Section 2(c). No person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 2 (c)
each person, if any, who controls the Holder within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act and each officer,
director, partner, employee, agent, and counsel of Holder or control person
shall have the same rights to contribution as the Holder or control person and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act, each officer of the
Company who shall have signed any such registration statement, each director of
the Company, and its or their respective counsel shall have the same rights to
contribution as the Company, subject to each case to the provisions of this
Section 2(c). Anything in this Section 2(c) to the contrary notwithstanding, no
party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 2(c) is
intended to supersede any right to contribution under the Securities Act, the
Exchange Act or otherwise.
3. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, the Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
(b) Agreements and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, unless such amendment, modification or supplement is in writing
and signed by the parties hereto.
6
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, or telecopies, initially to the address set forth
below, and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 3(c):
(i) if to the Company:
Command Security Corporation
Xxxxx 00 Xxxxxxxxx Xxxx
Xxxxxxxxxxxxx Xxx Xxxx 00000
with copies to:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxx, Xxxxxxxx & Xxxxxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000-0000
(ii) if to the Holder:
Reliance Security Group plc
Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx XX00XX
Attention: Xxxxx Xxxxxxxxxx
with copies to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxx, Esq.
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; two business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation
7
and without the need for an express assignment, subsequent holders of the
Registrable Securities subject to the terms hereof.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without reference to its
conflicts of law provisions.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application hereof in any circumstance is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of this agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
concerning the registration rights granted by the Company pursuant to this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
COMMAND SECURITY CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chairman
RELIANCE SECURITY GROUP PLC
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Finance Director
8
