NEITHER
THIS OPTION (THE " OPTION ") NOR THE SHARES OF COMMON STOCK
OR OTHER SECURITIES RECEIVABLE UPON THE EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "
ACT ") OR ANY APPLICABLE STATE SECURITIES LAWS. THIS OPTION
AND THE SHARES OF COMMON STOCK OR OTHER SECURITIES RECEIVABLE UPON
THE EXERCISE HEREOF MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED
OR HYPOTHECATED, EXCEPT IN COMPLIANCE WITH THE ACT, THE RULES AND
REGULATIONS THEREUNDER AND APPLICABLE STATE
LAWS.
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MARC W.
BROWN
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A5
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APRIL 12,
2007
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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 and
ending at 11:59 p.m., New York City time, on the tenth (10
th ) anniversary date of the Date of Issuance hereof, at
the purchase price per share (the " Exercise Price ") of
$3.00, an aggregate of fifty thousand (50,000) shares (the “
Shares ”) of Common Stock, $.0001 par value, of the
Company; provided that this Option shall be exercisable only with
respect to “Earned Options” as set forth in the
schedule contained in Section 2 of this Option. The number of
Shares purchasable upon exercise of this Option and the Exercise
Price shall be subject to adjustment from time to time as set forth
herein.
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 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 determine
the outcome of such conflict and shall prevail. This Option is a
Non-Qualified Stock Option as determined under the Plan.
This Option is
subject to the following provisions:
Section
1. Certain Definitions . When used in this Option, the following
terms, when capitalized, shall have the meanings set forth below.
Certain other terms are defined in the text of this
Option.
1.1.
" Act " means the Securities
Act of 1933, as amended, and any successor law or statute
thereto.
1.2.
" Common Stock " means the
Company's Common Stock, par value $.0001 per share.
1.3.
" Company " means Command
Security Corporation, a New York corporation, and any other
corporation or any other entity which shall succeed to or assume
the obligations of the Company.
1.4
“ Conversion Shares
” means the Shares of Common Stock that have been purchased
upon the exercise of this Option.
1.5.
" Date of Issuance " is the
date set forth on the first page of this Option.
1.6.
" Earned Options " means
that portion of the Option Grant that has been earned as a result
of the passage of time as set forth in Section 2 hereto.
1.7.
" Registered Holder ”
or " Holder " means the person whom this Option was
originally issued.
1.8.
" Option Grant " means the
total number of Options granted to the Holder which are each
convertible into shares of Common Stock upon the attainment of
specified vesting criteria set forth herein.
Section
2. Vesting Criteria .
2.1.
This Option, and the Shares of
Common Stock that may be purchased hereunder, shall vest with
respect to one-twelfth (1/12) of the aggregate number of Shares on
the Date of Issuance and on the same date of each succeeding month
(and the balance, if any of the Shares that is subject to this
Option may be purchased in the 12 th month from the Date
of Issuance), so long as the Holder is still an employee of the
Company on such date. The portion of this Option that shall have so
vested and become exercisable is referred to herein as the “
Earned Option .”
2.2.
Notwithstanding the foregoing, upon
a Change of Control of the Company occurring during the
Holder’s employment by the Company or during a period of 30
days thereafter, this entire Option shall vest and become
exercisable. For purposes of this Agreement, a " Change in
Control " shall mean:
(i)
The acquisition (other than by or
from the Company), at any time after the date hereof, by any
person, entity or "group", within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934 (the " Exchange Act "), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either the then outstanding shares of common
stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the
election of directors (together with such common stock, " Voting
Securities "); or
(ii)
If the six members who comprise the
Company’s Board of Directors on the Issuance Date cease for
any reason to comprise a majority of the members of the Board;
or
(iii)
Approval by the shareholders of the
Company of (x) a reorganization, merger or consolidation with
respect to which persons who were the shareholders of the Company
immediately prior to such reorganization, merger or consolidation
do not, immediately thereafter, own more than 50% of the combined
voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then
outstanding voting securities, (y) a liquidation or
dissolution of the Company or (z) the sale of all or
substantially all of the assets of the Company, unless the approved
reorganization, merger, consolidation, liquidation, dissolution or
sale is subsequently abandoned.
In order to
prevent dilution of the rights granted under this Option, the
Exercise Price and the number of shares of other securities to be
received upon the exercise hereof shall be adjusted as set forth in
the Plan.
Section
4. Exercise of Option . Upon any partial exercise of this Option,
there shall be countersigned and issued to the Holder hereof a new
Option in respect of the 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 shares
of Common Stock evidenced by the Option or Options exchanged. No
fractional Shares will be issued upon the exercise of rights to
purchase hereunder, but the Company shall pay the cash value of any
fraction of a Share upon the exercise of this Option.
Section
5. Registered Holder Termination
. In the event of the voluntary or
involuntary termination (including by reason of death) of
employment of the original Registered Holder of the Option for any
reason whatsoever, all Options which have not vested pursuant to
Sections 2.1 or 2.2 hereof shall expire and become void