Contract
THIS
OPTION (THE “OPTION”)
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”),
OR ANY APPLICABLE STATE SECURITIES LAWS. THIS OPTION MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED OR HYPOTHECATED, EXCEPT IN COMPLIANCE WITH THE ACT, THE
RULES AND REGULATIONS THEREUNDER AND APPLICABLE STATE
LAWS.
MANY
OF THE TERMS AND CONDITIONS OF THIS OPTION ARE GOVERNED BY, AND SET FORTH IN,
THAT CERTAIN EMPLOYMENT AGREEMENT DATED SEPTEMBER 29, 2007 (THE
“EMPLOYMENT
AGREEMENT”)
BETWEEN THE COMPANY AND THE REGISTERED HOLDER, WHICH TERMS AND CONDITIONS ARE
INTENDED TO SUPPLEMENT THIS OPTION AS IF THEY WERE SET FORTH HEREIN. IN THE
EVENT OF A CONFLICT BETWEEN THE TERMS OR CONDITIONS SET FORTH IN THIS AGREEMENT
AND THOSE SET FORTH IN THE EMPLOYMENT AGREEMENT, THE TERMS AND PROVISIONS SET
FORTH IN THE EMPLOYMENT AGREEMENT SHALL BE DETERMINATIVE AND CONTROL THE OUTCOME
OF SUCH CONFLICT.
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X. XXXXXX
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Certificate Number:
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A-9
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Date of Issuance:
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SEPTEMBER 29, 2008
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COMMAND
SECURITY CORPORATION
COMMON
STOCK OPTION
This
certifies that the Registered Holder is entitled to purchase from Command
Security Corporation, a New York corporation (the “Company”),
subject to the occurrence of certain specified time vesting criteria, at any
time commencing from the Date of Issuance set forth above and ending at 11:59
p.m., New York City time, on the tenth (10th)
anniversary date of the Date of Issuance, at the purchase price per share (the
“Exercise
Price”)
of
THREE DOLLARS AND THIRTY-SIXTY AND EIGHT-TENTHS CENTS
($3.368), an aggregate of five hundred thousand (500,000) shares (the
“Option
Shares”)
of
Common Stock, $.0001 par value, of the Company; provided
that
this Option shall be exercisable only with respect to “Vested
Options”
as
set
forth in the schedule contained in Section
1
of this
Option and in the Employment Agreement. The number of Option Shares purchasable
upon exercise of this Option and the Exercise Price shall be subject to
adjustment from time to time as set forth herein and in the Employment
Agreement.
This
Option may be exercised in whole or in part by presentation of this Option
with
the Exercise Agreement, a form of which is attached hereto as Exhibit
I
(the
“Exercise
Agreement”),
duly
executed and simultaneous payment of the Exercise Price (subject to any
adjustment) at the principal office of the Company. Payment of such price shall
be made at the option of the Registered Holder hereof in cash or by certified
check or bank cashier's check.
This
Option is subject to the terms and conditions of the Company's 2005 Stock
Incentive Plan
(the
“Plan”),
the
terms of which are hereby incorporated herein by reference. Terms used herein
and not otherwise defined shall have the meanings as set forth in the Plan.
In
the event of any conflict between the terms of this Option and those contained
in the Plan, the terms of the Plan shall be determinative and control the
outcome of such conflict.
This
Option is subject to the following additional provisions:
Section
1. Vesting
Criteria.
1.1. This
Option, and the Option Shares that may be purchased hereunder, shall vest with
respect to one-thirty-sixth (1/36th)
of the
aggregate number of Option Shares on the first day of each calendar month
immediately following Date of Issuance, subject
to
modification as provided in the Employment Agreement. The portion of this Option
that shall have so vested and become exercisable is referred to herein as the
“Vested
Option.”
1.2. Notwithstanding
the foregoing, upon a termination of the Registered Holder’s employment with the
Company under certain circumstances (i)
following a Change in Control of the Company (as such term is defined in the
Employment Agreement), the further vesting of this Option may be modified and
(ii)
not
following a Change in Control of the Company, the further vesting of this Option
shall expire and become void and shall no longer be exercisable, in each case
as
set forth in the Employment Agreement. Further, upon a termination of the
Registered Holder’s employment with the Company, the Vested Option may be
required to be exercised, if at all, within the time periods set forth in the
Employment Agreement.
Section
2. Adjustments.
2.1. In
the
event that, after the date hereof, the outstanding shares of Common Stock shall
be increased or decreased or changed into or exchanged for a different number
or
kind of shares of capital stock or other securities of the Company or of another
corporation through reorganization, merger or consolidation, recapitalization,
reclassification, stock split, split-up, combination or exchange of shares
or
declaration of any dividends payable in Common Stock, the number of shares
and
kind of shares of capital stock or other securities of the Company (and the
option price per share) subject to the unexercised portion of the Option shall
be proportionately adjusted to reflect such event (to the nearest possible
full
share), and such adjustment shall be effective and binding for all purposes
of
this Agreement.
2.2
If
any
capital reorganization or reclassification of the capital stock of the Company
or any consolidation or merger of the Company with another entity, or the sale
of all or substantially all its assets to another entity, shall be effected
after the date hereof in such a way that holders of Stock shall be entitled
to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then the Company shall thereafter have the right to deliver, upon the
exercise of the Option in accordance with the terms and conditions specified
in
this Agreement and in lieu of the shares of Common Stock immediately theretofore
deliverable upon the exercise of the Option, such shares of stock, securities
or
assets (including, without limitation, cash) as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore so
deliverable had such reorganization, reclassification, consolidation, merger
or
sale not taken place.
Section
3. Exercise
of Option.
Upon any
partial exercise of this Option, there shall be countersigned and issued to
the
Registered Holder hereof a new Option in respect of the Option Shares as to
which this Option shall not have been exercised. This Option may be exchanged
at
the principal office of the Company by surrender of this Option properly
endorsed either separately or in combination with one or more other Options
for
one or more new Options of the same aggregate number of Option Shares evidenced
by the Option or Options exchanged. No fractional Option Shares will be issued
upon the exercise of rights to purchase hereunder, but the Company shall pay
the
cash value of any fraction of an Option Share upon the exercise of this Option.
2
Section
4. No
Voting Rights.
This
Option will not entitle the Registered Holder hereof to any voting rights or
other rights as a stockholder of the Company.
Section
5. Section
83(b) Election.
If as a
result of exercising all or any part of this Option, the Registered Holder
receives Option Shares that are subject to a “substantial risk of forfeiture”
and are not “transferable” as those terms are defined for purposes of Section
83(a) of the Internal Revenue Code, then such Registered Holder may elect under
Section 83(b) of the Internal Revenue Code to include in the Registered Holder's
gross income, for the Registered Holder's taxable year in which the Option
Shares are transferred to the Registered Holder, the excess of the fair market
value of such Option Shares at the time of transfer (determined without regard
to any restriction other than one that by its terms will never lapse), over
the
amount paid for the Option Shares. If the Registered Holder makes the Section
83(b) election described above, the Registered Holder shall (i)
make
such election in a manner that is satisfactory to the Committee, (ii)
provide
the Company with a copy of such election, (iii)
agree
to promptly notify the Company if any Internal Revenue Service or state tax
agent, on audit or otherwise, questions the validity or correctness of such
election or of the amount of income reportable on account of such election,
and
(iv)
agree
to such tax withholding as the Company may reasonably require in its sole and
absolute discretion.
Section
6. No
Right to Employment.
This
Option shall not confer upon the Registered Holder any right to
employment.
Section
7. Compliance
with the Act; Transferability.
7.1. Compliance
with the Act.
The
Registered Holder acknowledges that this Option has not been registered under
the Act or the securities laws of any state and agrees that this Option and
all
Option Shares purchased upon exercise hereof shall be disposed of only in
accordance with the Securities Act of 1933, as amended (the “Act”),
and
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder and applicable state securities laws. Except as provided herein,
the
Registered Holder further agrees not to offer, sell, transfer or otherwise
dispose of this Option or any of such Option Shares issuable upon exercise
of
this Option to any other person unless a registration statement covering the
sale, transfer or other disposition shall then be effective under the Act and
except in compliance with any applicable state securities laws, or there shall
have been delivered to the Company an opinion of counsel reasonably acceptable
to the Company to the effect that such offer, sale, transfer or other
disposition may be effected without compliance with the registration and
prospectus delivery requirements of the Act and any applicable state securities
laws.
7.2. Transferability
of Options.
This
Option shall be transferable only on the books of the Company maintained at
the
principal office of the Company. The transferability of the Option is limited
in
accordance with the terms of the Plan.
Section
8. Notice
of Certain Events.
8.
1. Adjustment
of Exercise Price.
Immediately upon any adjustment of the Exercise Price, the Company will give
written notice thereof to the Registered Holder.
3
8.2. Dividend
Distributions, etc.
The
Company will give written notice to the Registered Holder at least ten calendar
days prior to the date on which the Company closes its books or takes a record
(i)
with
respect to any dividend or distribution upon the Common Stock, and (ii)
with
respect to any pro
rata
subscription offer to holders of Common Stock (although the Company shall have
no obligation to cause to occur any of the events set forth in the foregoing
subparagraphs (i) or (ii)).
8.3. Other
Events.
The
Company will give written notice to the Registered Holder at least ten (10)
calendar days prior to the date on which the Company closes its books or takes
a
record with respect to any dissolution, liquidation, capital reorganization,
reclassification, consolidation or merger (in which the Company is not the
surviving corporation) or sale of all or substantially all of the Company's
assets.
Section
9. Supplements
and Amendments.
The
Board of Directors of Company may from time to time supplement or amend this
Option in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with the Company's
policies or operations as in effect on the date hereof. Notwithstanding the
forgoing, no such supplement or amendment which is detrimental to the rights
of
the Registered Holder under this Option shall be effective as against the
Registered Holder without the prior written consent of the Registered
Holder.
Section
10. Notices.
Except
as otherwise expressly provided herein, all notices referred to in this Option
will be in writing and will be delivered personally, mailed by registered or
certified first class mail, return receipt requested, postage prepaid or
transmitted by telegram, telecopy or telex, and will be deemed to have been
given when so delivered, mailed or transmitted (except for notices sent by
mail
which shall be deemed given three business days after being deposited in the
United States mail) to the Company or to the Registered Holder as set forth
in
the Employment Agreement.
Section
11. Other.
The
Registered Holder hereof may be treated by the Company and all other persons
dealing with this Option as the absolute owner hereof for any purpose and as
the
person entitled to exercise the rights represented hereby, or to the transfer
hereof on the books of the Company any notice to the contrary notwithstanding,
and until such transfer on such books, the Company may treat the Registered
Holder hereof as the owner for all purposes.
Section
12. Law
Governing.
This
Agreement shall be construed in accordance with and governed by the internal
laws of the State of New York, without regard to any conflict of law rule or
principle that would give effect to the laws of another
jurisdiction.
Section
13. Interpretation.
The
Registered Holder accepts this Option subject to all the terms and provisions
of
the this Agreement, the Employment Agreement and the Plan, and the terms and
conditions of the Employment Agreement and the Plan that relate to the Option
are incorporated herein by reference as if set forth in full herein.
4
IN
WITNESS WHEREOF,
the
Company has caused this Option to be signed by its duly authorized officer
and
to be dated the Date of Issuance hereof.
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COMMAND
SECURITY CORPORATION
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By:
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/s/
Xxxxx X. Xxxxxxxxxx
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Xxxxx
X. Xxxxxxxxxx
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President
and Chief Financial Officer
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AGREED
TO
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AND
ACCEPTED:
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OPTIONEE:
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/s/
Xxxxxx X. Xxxxxx
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Xxxxxx
X. Xxxxxx
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September
29, 2008
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5
EXHIBIT
I
COMMON
STOCK OPTION
EXERCISE
AGREEMENT
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TO:
_____________________________
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DATED:
_______________
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The
undersigned, pursuant to the provisions set forth in the attached Option
(Certificate No. __________), hereby agrees to subscribe for the purchase of
________ Option Shares of the Common Stock covered by such Option and makes
payment herewith in full therefor at the price per Option Share provided by
such
Option.
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By:
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Name:
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Address:
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Witness:
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Name:
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Address:
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