-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ThXC27OsRrAgi4ux+YI4amS0HzTXUAjSKHp+FviZox2D/pIhB5JmdUEe/TB1t2H9 ihiDVgxQpcdJFYEPOe/eZQ== /in/edgar/work/0001005477-00-008125/0001005477-00-008125.txt : 20001122 0001005477-00-008125.hdr.sgml : 20001122 ACCESSION NUMBER: 0001005477-00-008125 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20001121 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COMMAND SECURITY CORP CENTRAL INDEX KEY: 0000864509 STANDARD INDUSTRIAL CLASSIFICATION: [7381 ] IRS NUMBER: 141626307 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-53751 FILM NUMBER: 774929 BUSINESS ADDRESS: STREET 1: ROUTE 55 LEXINGTON PARK STREET 2: P O BOX 340 CITY: LAGRANGEVILLE STATE: NY ZIP: 12540 BUSINESS PHONE: 9144543703 MAIL ADDRESS: STREET 1: RTE 55 LEXINGTON PARK STREET 2: P O BOX 340 CITY: LAGRANGEVILLE STATE: NY ZIP: 12540 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RELLANCE SECURITY GROUP PLC CENTRAL INDEX KEY: 0001128178 STANDARD INDUSTRIAL CLASSIFICATION: [ ] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: BOUNDARY HOUSE STREET 2: CRICKET FIELD ROAD CITY: UXBRIDGE STATE: X0 ZIP: 00000 SC 13D 1 0001.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. )(1) Command Security Corporation - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $0.0001 - -------------------------------------------------------------------------------- (Title of Class of Securities) 20050L100 - -------------------------------------------------------------------------------- (CUSIP Number) Geoff Haslehurst With copies to: Reliance Security Group plc Howard S. Jacobs Boundary House Wayne A. Wald Cricket Field Road Rosenman & Colin LLP Uxbridge, Middlesex UB81QG 575 Madison Avenue 011-44-189-520-5036 New York, New York 10022 (212) 940-8800 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box |_| . Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 10 Pages) - ----------------- (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 1 CUSIP No. 20050L100 SCHEDULE 13D Page 2 of 10 Pages - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Reliance Security Group plc - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION England - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 2,899,874* -------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY OWNED BY -------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 2,899,874* WITH 0 -------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,899,874* - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 37.1* - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! * This number and the percentage ownership include 300,000 shares of Common Stock issuable upon exercise of Warrants and 1,232,535 Shares of Common Stock issuable upon conversion of 12,325.35 shares of the Company's Series A Preferred Stock 2 Item 1: Security and Issuer. This Statement relates to the Common Stock, par value $0.0001 (the "Common Stock"), of Command Security Corporation, a New York corporation (the "Company"), Route 55, Lexington Park, Lagrangeville, New York. Item 2: Identity and Background. (a) This Statement is filed by Reliance Security Group plc, a corporation organized under the laws of England and Wales ("Reliance"). The persons listed on Schedule 2 annexed hereto are the directors and executive officers (the "Listed Persons") of Reliance. (b) The address of the principal place of business of Reliance is Boundary House, Cricket Field Road, Uxbridge, Middlesex UB81QG England. Schedule A sets forth the respective business addresses of the Listed Persons. (c) The principal business of Reliance is security and electronic surveilance services. Schedule A sets forth the respective principal occupations of the Listed Persons. (d) Neither Reliance nor any of the Listed Persons (to the knowledge of the undersigned) has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) Neither Reliance nor any of the Listed Persons (to the knowledge of the undersigned) has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws. (f) All of the Listed Persons are citizens of Great Britain. Item 3: Source and Amount of Funds or Other Consideration. A net aggregate of $6,088,278.60 was paid in a transaction pursuant to which Reliance acquired securities of the Company on November 13, 2000. The purchase price for such acquired shares was paid out of Reliance's working capital. 3 Item 4: Purpose of Transaction. Thomas P. Kikis, Peter T. Kikis, Sarah Leifer, Murray Leifer, Michael Leifer, Jane Lenehan, Donald Radcliffe, Lloyd Saunders, Robert Rosan, Katie and Adam Bridge Partners, L.P., Owl Partners, L.P. Martin Sands, and Steven Sands each on behalf of themselves and in the case of Martin Sands, Steven Sands, and Peter T. Kikis on behalf of certain discretionary accounts (collectively the "Shareholders"), entered into a stock purchase agreement with Reliance, pursuant to which each of the Shareholders have sold all shares of Common Stock (1,367,339 shares), all shares of Series A Preferred Stock (12,325.35 shares which are convertible into 1,232,500 shares of Common Stock) and all warrants exercisable for shares of Common Stock (warrants to purchase 300,000 shares) beneficially owned by them as of November 13, 2000, including shares owned under discretionary authority (a total of 2,899,874 shares beneficially owned as of the date of this Statement) to Reliance for $2.20 per share on a fully converted basis (except that the purchase price for the warrants is the excess of $2.20 and the exercise price per share of such warrants multiplied by the number of shares issuable upon exercise of such warrants) (the "Stock Purchase Agreement"). The closing under the Stock Purchase Agreement was conditioned on a number of items, including but not limited to: (i) the issuance by the Company to Reliance of a warrant (the "Warrant") to purchase a number of shares equal to 20% of the outstanding Common Stock on a fully-diluted basis taking into account the exercise of all stock options, warrants and rights to acquire shares of Common Stock outstanding, conversion of all shares of Preferred Stock outstanding, and exercise of such warrant, but specifically excluding certain warrants issued to William Vassell pursuant to an employment agreement between the Company and William Vassell at $1.25 per share, (ii) the Company entering into a registration rights agreement with Reliance relating to the shares of Common Stock underlying the Warrant, (iii) the execution and delivery of a shareholders agreement between Reliance, the Company and William Vassell, (iv) the dismissal of the shareholders derivative action instituted in the Supreme Court of the State of New York, County of New York (Index No. 606166/97), by Robert J. Rosan and four directors of the Company, Steven B. Sands, Lloyd Saunders, III, Peter T. Kikis and Thomas P. Kikis, against William C. Vassell, Gordon Robinett, Peter J. Nekos, Gregory J. Miller, and David J. Pollitzer, (v) the execution and delivery of an employment agreement between the Company and William Vassell on terms acceptable to Reliance, (vi) the Company entering into a term loan facility for at least $2.25 million, (vii) shareholder approval of all actions to be taken by the Company requiring shareholder approval, (viii) termination of the Shareholders Voting Agreement dated as of the 8th day of March, 1995 by and among William C. Vassell, Gordon Robinett, Thomas Kikis, Lloyd H. Saunders III, Peter Kikis, Steven B. Sands, Peter G. Nekos and Gregory J. Miller, (ix) that the Company use its best efforts to effect an amendment to the Company's Bylaws and Certificate of Incorporation to remove the requirement that either 75% of all 4 outstanding shares or at least 75% of all members of the Board of Directors approve the removal of a director for cause and that directors may be removed without cause only by the vote of at least 75% of all outstanding shares and provide, in their stead, that a director may be removed with or without cause by the vote of the Shareholders or with cause by the vote of a majority of the entire Board of Directors, and (x) the authorized size of the Board of Directors of the Company shall have been reduced to seven (7) members and the Board shall initially consist of William C. Vassell, Gregory Miller, Peter Nekos, Geoff Haslehurst, Ken Allison, a Director to be named by Reliance and a director to be mutually agreed upon by William Vassell and Reliance. All of the closing conditions having been met or waived, the transaction closed on November 13, 2000. Pursuant to the Warrant, Reliance has the right to acquire a total of 2,298,092 shares or 20% of the Company's outstanding common stock on a fully diluted basis, as of November 13, 2000, taking into account the exercise of all stock options, warrants and rights to acquire shares of common stock outstanding on the date of the Warrant, conversion of all shares of preferred stock outstanding on the date of the Warrant, and the exercise of the Warrant itself. The Warrant is exercisable at any time after November 13, 2001 at an exercise price of $1.25 per share. The Warrant expires on November 13, 2005. The Warrant is subject to the usual and customary anti-dilution provisions. Any shares of Common Stock issued pursuant to exercise of the Warrant are covered by a Registration Rights Agreement which provides for piggyback registration rights commencing November 13, 2000 and one demand registration statement during the same five year period. The Company, William C. Vassell and Reliance are parties to a Shareholder's Agreement (the "Shareholder's Agreement") entered into in connection with the Stock Purchase Agreement described above. Pursuant to the terms of the Shareholder's Agreement, Mr. Vassell and Reliance agreed to vote all of their shares of common stock in accordance with the provisions contained therein. These provisions include among other things: (a) the establishment of a Board composed of seven directors; and (b) an agreement that each of Vassell and Reliance shall designate three individuals to be nominated to serve as directors of the Company and that the Company shall have at least one independent director jointly selected by Mr. Vassell and Reliance. The initial designees of Mr. Vassell to the Board are William C. Vassell, Gregory J. Miller and Peter J. Nekos. The initial designees of Reliance to the Board are Geoff Haslehurst, Ken Allison and a third director not yet determined. The initial independent director has not yet been determined. Any vacancy in the Board of Directors will be filled by the party which under the provisions of the Shareholders' Agreement, is entitled to designate such director. 5 The Shareholder's Agreement provides for the establishment of a confidential budget containing an annual performance target for each fiscal year defined in terms of earnings before taxes. Upon a deviation from the confidential target for such fiscal year by more than 20% and a majority vote of the Board Mr. Vassell's employment may be terminated. If such vote is obtained, Mr. Vassell shall resign as Chairman of the Board, President and Chief Executive Officer of the Company and cause his Board designees to resign from their positions. Notwithstanding these terms, in no event will Mr. Vassell be required to resign prior to November 13, 2001. If Mr. Vassell resigns under such circumstances, the parties will be released from any obligation to vote their shares to elect as members of the Board those individuals designated under the Shareholder's Agreement. Furthermore, the parties have agreed that Mr. Vassell may, for a period of ninety (90) days after the date of his resignation or termination of employment under certain circumstances offer to sell to Reliance all of his shares of Common Stock and any of his warrants or options to purchase any shares of the Common Stock of the Company at a purchase price determined by Mr. Vassell. Reliance shall then have forty-five (45) days from receipt of such notice to accept the terms of Mr. Vassell's offer to sell. If the offer is rejected or lapses, Mr. Vassell shall have the right to purchase from Reliance all of its shares of Common Stock (and Common Stock equivalents) and the Warrant at the price specified in Mr. Vassell's offer. The Shareholders' Agreement further subjects the holdings of the parties to a right of first refusal with respect to future sales of their shares. In addition to the foregoing, Reliance has discussed its concerns with management, other shareholders and potential financial and strategic investors in the Company. Reliance is also examining all of their options with respect to the possibility of taking actions, which they believe will enhance shareholder value. Any such actions could relate to or result in one or more of the matters referred to in paragraphs (a) through (j) of Item 4 of Schedule 13D. Reliance reserves the right to purchase or otherwise acquire additional Common Stock or to sell or otherwise dispose of Common Stock beneficially owned by it, in each case in open market or privately negotiated transactions or otherwise. Item 5: Interest in Securities of the Issuer. (a) Reliance has sole voting and dispositive power over 2,899,874 shares of Common Stock, representing approximately 37.1% of the total shares of Common Stock issued and outstanding. This number and the percentage ownership include: 6 1) 150,000 shares of Common Stock issuable upon exercise of a currently exercisable warrant. This warrant has an exercise price of $1.875 per share and expires on September 31, 2001; 2) 150,000 shares of Common Stock issuable upon exercise of a currently exercisable warrant. This warrant has an exercise price of $1.03125 per share and expires on November 11, 2004; 3) 1,232,535 Shares of Common Stock issuable upon conversion of 12,325.35 currently convertible shares of the Company's Series A Preferred Stock; and 4) 1,289,484 shares of Common Stock. (b) See Item 5 (a) (c) Not applicable. (d) No person other than the persons filing this Report and the Shareholders is known to have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of the Common Stock owned by them. (e) Not applicable. Item 6: Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. See response to Item 4 Item 7: Material to be Filed as Exhibits. (a) Stock Purchase Agreement dated September 12, 2000. (b) Command Security Corporation Shareholders Agreement. (c) Warrant for the Purchase of 150,000 Shares of Common Stock of Command Security Corporation. (d) Warrant for the Purchase of 150,000 Shares of Common Stock of Command Security Corporation. (e) Warrant for the Purchase of 2,298,092 Shares of Common Stock of Command Security Corporation. (f) Registration Rights Agreement. 7 After reasonable inquiry and to the best of the undersigneds' knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. November , 2000 RELIANCE SECURITY GROUP PLC By: /s/ Geoff P. Haslehurst ------------------------------------- Name: Geoff P. Haslehurst Title: Finance Director 8 Schedule A Name Business address Principal Occupation ---- ---------------- -------------------- (Employer) 1 Brian Kingham 81 Chester Square Chairman London Reliance Security Group plc SW1W 9DP 2 Kenneth Allison Boundary House Director Cricketfield Road Reliance Security Group plc Uxbridge UB8 1QG 3 Geoff P Haslehurst Boundary House Director Cricketfield Road Reliance Security Group plc Uxbridge UB8 1QG 4 Lord Lane of Horsell Rossmore Non-executive Director Pond Road Woking Surrey GU22 0JY 5 Mark Radcliffe 3A Kennet House Chairman 19 High Street Upton Management Hungerford Services Berkshireford RG17 0NL 6 James Graham Carlisle Chairman Cumbria Border Television CA1 3NT 7 Iain MacDonald Boundary House Company Secretary and Cricketfield Road Legal Counsel Uxbridge Reliance Security Group plc UB8 1QG 9 Exhibit Index Exhibit A Stock Purchase Agreement dated September 12, 2000. Exhibit B Command Security Corporation Shareholders Agreement. Exhibit C Warrant for the Purchase of 150,000 Shares of Common Stock of Command Security Corporation. Exhibit D Warrant for the Purchase of 150,000 Shares of Common Stock of Command Security Corporation. Exhibit E Warrant for the Purchase of 2,298,092 Shares of Common Stock of Command Security Corporation. Exhibit F Registration Rights Agreement. 10 EX-99.A 2 0002.txt STOCK PURCHASE AGREEMENT EXECUTION COPY ================================================================================ STOCK PURCHASE AGREEMENT September 12, 2000 ================================================================================ STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as of September 12, 2000, by and among the parties listed on Schedule A (each a "Seller" and collectively, the "Sellers") and Reliance Security Group plc, a company organized under the laws of England and Wales (the "Purchaser"). WITNESSETH WHEREAS, the Sellers Beneficially Own (as hereinafter defined) the number of shares of Common Stock, $.0001 par value (the "Common Stock") and Series A Preferred Stock, $.0001 par value (the "Preferred Stock"), of Command Security Corporation, a New York Corporation (the "Company"), set forth opposite each Seller's name on Schedule A annexed hereto (the "Shares"); WHEREAS, certain of the Sellers Beneficially Own the number of warrants to purchase shares of Common Stock of the Company set forth opposite that Seller's name on Schedule A annexed hereto (the "Warrants"); WHEREAS, the Sellers, individually and not as a group, desire to sell and transfer, and the Purchaser desires to purchase and acquire from Sellers, all right, title and interest in and to the Shares and Warrants (the "Acquisition"); NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties, and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. AGREEMENT TO SELL AND PURCHASE. 1.1 Sale and Purchase. Subject to the terms and conditions hereof, at the Closing (as hereinafter defined) the Sellers, individually and not jointly, shall convey, sell, transfer, assign and deliver to the Purchaser, and Purchaser shall purchase and accept from the Sellers, all of the Shares of Common Stock and Preferred Stock Beneficially Owned by the Sellers (the "Transaction Shares") and Warrants, which shall not be less than 770,414 Shares of Common Stock and 9,877.07 Shares of Preferred Stock, and 300,000 Warrants; provided all Shares owned of record by the Sellers and their affiliates and the plaintiffs in the action entitled Rosan et al. v. Vassell, New York State Supreme Court, County of New York, Index No. 606166/97 (the "Litigation") shall be sold to the Purchaser. 1.2 Purchase Price and Allocation. The purchase price (i) per Transaction Share of Common Stock shall be $2.20, (ii) per Transaction Share of Preferred Stock shall be $2.20 multiplied by the number of shares of Common Stock issuable upon conversion of such Share of Preferred Stock, and (iii) per Warrant shall be $2.20 per share of Common Stock issuable upon exercise of each Warrant (each a "Warrant Share") less the exercise price per Warrant Share of each Warrant. The aggregate purchase price for the Shares and Warrants shall be $5,976,888.30 (assuming discretionary authority is not withdrawn over any Shares), allocated among the Sellers in accordance with the allocation set forth on Schedule A annexed hereto (the "Purchase Price Allocation") and shall be paid in immediately available funds. 2. CLOSING. The closing of the sale and purchase of the Transaction Shares and Warrants under this Agreement (the "Closing") shall take place as soon as practicable after the satisfaction of the conditions set forth in Section 5. The Closing shall take place at the offices of Rosenman & Colin LLP, 575 Madison Avenue, New York, New York 10022. The date and time of the Closing is hereinafter referred to as the "Closing Date"). 3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. In order to induce the Purchaser to enter into this Agreement and to perform its obligations hereunder, each Seller, as to himself or to itself only, makes the following representations and warranties to the Purchaser. 3.1 Ownership of Shares.On the date hereof, the Seller is the record holder of or Beneficially Owns (as hereinafter defined) the Shares and Warrants. The Seller has power of disposition, power of conversion and power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Shares, with no limitations, qualifications or restrictions on such rights, subject to revocation and termination rights under state law, applicable state and federal securities laws, and the terms and conditions of discretionary agreements to which the Sellers may be subject and the terms of this Agreement. With respect to Shares over which discretionary authority has been granted to Sellers, such Shares are Beneficially Owned or owned of record by Persons (as hereinafter defined) with whom a Seller has had a pre-existing relationship. On the Closing Date, the Seller will be the record holder of or will Beneficially Own (as hereinafter defined) the Transaction Shares and Warrants. The Seller will have power of disposition, power of conversion and power to agree to all of the matters set forth in this Agreement, in each case with respect to all of the Transaction Shares, with no limitations, qualifications or restrictions on such rights, subject to revocation and termination rights under state law, applicable state and federal securities laws, and the terms and conditions of discretionary agreements to which the Sellers may be subject and the terms of this Agreement. For purposes of this Agreement, "Beneficially Own" "Beneficial Ownership" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as defined below) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. No representation or warranty is 2 made hereby that the Sellers constitute a "group" as within the meaning of Section 13(d)(3) of the Exchange Act. "Person" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. 3.2 Power; Binding Agreement. The Seller has the legal capacity, power and authority to enter into and perform all of the Seller's obligations under this Agreement. The execution, delivery and performance of this Agreement by the Seller will not violate any other Agreement to which Seller may be a party, but is subject to any outstanding discretionary agreement to which such Seller may be party, including the right of the record owner of the Shares to withdraw such discretion at any time. This Agreement has been duly and validly executed and delivered by the Seller and constitutes a valid and binding agreement of the Seller, enforceable against the Seller in accordance with its terms except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity and discretion of the court before which any proceedings seeking injunctive relief or specific performance may be sought. If the Seller is married and the Seller's Shares and/or Warrants Beneficially Owned by him (exclusive of Shares Beneficially Owned by virtue of discretionary authority) constitute community property, this agreement has been duly authorized, executed and delivered by, and constitutes a valid and binding agreement of, the Seller's spouse, enforceable against such Person in accordance with its terms except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity and discretion of the court before which any proceedings seeking injunctive relief or specific performance may be sought. 3.3 No Encumbrances. When the Transaction Shares and Warrants are delivered by the Seller in accordance with this Agreement, the Purchaser will receive valid title to the Transaction Shares and Warrants purchased by it hereunder, free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever (collectively, "Liens"). 3.4 No Conflicts. No filing with, and no permit, authorization, consent or approval of, any state, local or federal or foreign public body or authority or any other party is necessary for the execution of this Agreement by the Seller and the consummation by the Seller of the transactions contemplated hereby; provided that the parties understand that certain filings, including but not limited to a Schedule 13D, must be made to the Securities and Exchange Commission (the "Commission") in order to be in compliance with Federal securities laws. Neither of the execution and delivery of this Agreement by the Seller, the consummation by the Seller of the Acquisition or the transactions contemplated hereby nor compliance by the Seller with any of the provisions hereof shall, in a manner which would be material and adverse to the ability of the Seller to consummate the Acquisition or the transactions contemplated hereby or to comply with the terms hereof (i) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under any of the terms, conditions or 3 provisions of any note, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Seller is a party or by which the Seller or any of the Seller's properties or assets may be bound, other than that certain Shareholders Voting Agreement, dated as of the 8th day of March, 1995, as amended, by and among William C. Vassell, Gordon Robinett, Lloyd H. Saunders III, Peter Kikis, Thomas Kikis, Steven B. Sands, Peter G. Nekos and Gregory J. Miller, which must be revoked as a condition to Purchaser's obligation to close under this Agreement or (ii) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Seller or any of the Seller's properties or assets; provided, however, that no representation or warranty is made with respect to any actions required to be taken by Purchaser under applicable law as a result of the transactions contemplated hereby. 3.5 Broker's Fees. Except for fees paid to Peter Kikis, the Seller represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker's or finder's fee or any other commission directly or indirectly in connection with the transactions contemplated herein. 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby represents and warrants to the Sellers as follows: 4.1 Due Organization. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of England and Wales and has all requisite corporate power and authority to own, lease and operate its properties and carry its business in the places where such properties are now owned, leased or operated or where such business is now being conducted 4.2 Power; Binding Agreement. The Purchaser has the legal capacity, power and authority to enter into and perform all of its obligations under this Agreement. The execution, delivery and performance of this Agreement by the Purchaser will not violate any other Agreement to which the Purchaser is a party. This Agreement has been duly and validly executed and delivered by the Purchaser and constitutes a valid and binding agreement of the Purchaser, enforceable against the Purchaser in accordance with its terms except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity and discretion of the court before which any proceedings seeking injunctive relief or specific performance may be sought. 4.3 No Conflicts. No filing with, and no permit, authorization, consent or approval of, any state, local or federal or foreign public body or authority or any other party is necessary for the execution of this Agreement by the Purchaser and the consummation by the Purchaser of the transactions contemplated hereby. Neither the execution and delivery of this Agreement by the Purchaser, the consummation by the Purchaser of the Acquisition or the transactions contemplated hereby nor compliance by the Purchaser with any of the provisions hereof shall, in a manner which would be material and adverse to the ability of the Purchaser to consummate the Acquisition or the transactions contemplated hereby or to comply with the terms hereof (i) result in a violation or breach of, or constitute (with or without notice or lapse of time 4 or both) a default (or give rise to any third party right of termination, cancellation, material modification or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other instrument or obligation of any kind to which the Purchaser is a party or by which the Purchaser or any of the Purchaser's properties or assets may be bound, or (ii) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Purchaser or any of the Purchaser's properties or assets; provided, however, that no representation or warranty is made with respect to any actions required to be taken by Seller under applicable law as a result of the transactions contemplated hereby. 4.4 Broker's Fees. Except for fees paid to Peter Kikis, the Purchaser represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker's or finder's fee or any other commission directly or indirectly from the Purchaser in connection with the transactions contemplated herein. 4.5 Investment Representations. The Purchaser is acquiring the Transaction Shares and Warrants as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Transaction Shares or any part thereof. By executing this Agreement, the Purchaser further represents that the Purchaser does not presently have any contract, undertaking, agreement or arrangement with any Person to sell or transfer to such Person or to any third person, with respect to any of the Transaction Shares or Warrants. At the time the Purchaser was offered the Shares, it was, and at the date hereof it is, and at each exercise date under the Warrants, it will be, an "accredited investor" as defined in Rule 501(a) under the Securities Act of 1933, as amended (the "Securities Act"). The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Transaction Shares and Warrants, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Transaction Shares and Warrants and, at the present time, is able to afford a complete loss of such investment. The Purchaser's overall commitment to investments which are not readily marketable is not excessive in view of its net worth and financial circumstances and the purchase of the Transaction Shares and Warrants will not cause such commitment to become excessive. The Purchaser acknowledges it (i) has reviewed or had the opportunity to review all of the Company's periodic reports under the Exchange Act, (ii) has had access to information about the Company and the Company's financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) has had the opportunity to obtain such additional information that is necessary to make an informed investment decision with respect to the investment. The Purchaser is not purchasing the Transaction Shares and Warrants as a result of or subsequent to any advertisement, article, notice or other communication regarding the Transaction Shares and Warrants published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. The Purchaser understands and acknowledges that (i) the Transaction Shares and Warrants are being offered and sold to it without registration under the Securities Act in a private placement that is exempt from the registration provisions of the Securities Act and (ii) the availability of such exemption, depends 5 in part on, and the Sellers will rely upon the accuracy and truthfulness of, the foregoing representations and the Purchaser hereby consents to such reliance. The Purchaser understands that certain of the Transaction Shares and the Warrants are "restricted securities" under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold such Transaction Shares and Warrants indefinitely unless they are registered with the Commission and qualified by applicable state authorities, or an exemption from such registration and qualification requirements is available. 4.6 Purchaser represents and acknowledges that no Seller has made any representation or warranty with respect to the business, operations, condition (financial or otherwise), or prospects of the Company. 5. CONDITIONS TO CLOSING; COVENANTS WITH RESPECT TO CLOSING 5.1 Conditions to Purchaser's Obligations at the Closing. The Purchaser's obligations to purchase the Transaction Shares and Warrants at the Closing are subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions (all or any of which may be waived in whole or in part by the Purchaser in its sole discretion): (a) Representations and Warranties True; Performance of Obligations. The representations and warranties made by the Sellers in Section 3 hereof shall be true and correct in all material respects as of the Closing Date with the same force and effect as if they had been made as of the Closing Date, and the Sellers shall have performed all obligations, agreements and conditions herein required to be performed or observed by it on or prior to the Closing. (b) Consents, Permits, and Waivers. The Company and Sellers shall have obtained any and all consents, permits and waivers necessary for consummation of the transactions contemplated by the Agreement (except for such as may be properly obtained subsequent to the Closing), including, without limitation, the necessary approval of the Company's shareholders of the warrant, substantially in the form attached hereto as Exhibit A (the "Company Warrant"), entitling the Purchaser to purchase from the Company such number of shares of Common Stock equal to 20% of the outstanding Common Stock on a fully-diluted basis taking into account the exercise of all stock options, warrants and rights to acquire shares of Common Stock outstanding on the Closing Date, conversion of all shares of Preferred Stock outstanding on the Closing Dated and the exercise of the Company Warrant and any warrant issued to William Vassell. The Company shall have used its best efforts to obtain the approval of the Company's Shareholders of the amendment to the Company's Certificate of Incorporation substantially in the form attached hereto as Exhibit B (the "Charter Amendment"). In furtherance of obtaining the shareholder approval of the Company Warrant and Charter Amendment, certain of the Sellers shall have executed on the date hereof the voting agreement substantially in the form attached hereto as Exhibit C (the "Voting Agreement"). (c) Compliance Certificate. Each Seller shall have delivered to Purchaser a compliance certificate, executed by the Seller, dated the Closing Date, to the effect that the conditions specified in subsection (a) and (b) of this Section 5.1 have been satisfied. 6 (d) Instruments of Transfer. Sellers shall have delivered to the Purchaser the stock certificates for the Transaction Shares, Warrants or Warrant certificates, stock powers and other documents of transfer, conveyance and assignment in form and substance reasonably satisfactory to the Purchaser and Purchaser's counsel required to transfer all of Sellers' right, title and interest in and to the Transaction Shares and Warrants to Purchaser and to vest in Purchaser good and marketable title to the Transaction Shares and Warrants free and clear of all Liens. (e) Company Warrant. The Company Warrant shall have been executed by the Company and delivered to the Purchaser. (f) Listing of Shares Underlying Company Warrant. The Company shall file an application to cause the shares of the Company's Common Stock to be issued upon exercise of the Company Warrant to be approved for listing on the Nasdaq Small Cap Market and pay all requisite fees with respect thereto. (g) Registration Rights Agreement. The registration rights agreement in the form attached hereto as Exhibit D (the "Registration Rights Agreement") shall have been executed and delivered by the parties thereto and shall be in full force and effect. (h) Shareholders' Agreement. The shareholders' agreement in the form attached hereto as Exhibit E (the "Shareholders' Agreement") shall have been executed and delivered by the parties thereto and shall be in full force and effect. (i) Employment Agreement. The employment agreement between the Company and William C Vassell engaging Mr. Vassell to serve as Chairman of the Board and Chief Executive Officer of the Company, in the form attached hereto as Exhibit F (the "Employment Agreement") shall have been executed and delivered by the parties thereto and shall be in full force and effect. (j) Charter Amendment. If approved by the Company's Shareholders, the Charter Amendment shall have been filed with the Secretary of State of New York. (k) Corporate Documents. The Company shall have delivered to Purchaser or its counsel, copies of all corporate documents of the Company as Purchaser shall reasonably request. (l) Termination of Shareholders Voting Agreement. That certain Shareholders Voting Agreement dated as of the 8th day of March, 1995 by and among William C. Vassell, Gordon Robinett, Lloyd H. Saunders III, Peter Kikis, Thomas Kikis, Steven B. Sands, Peter G. Nekos and Gregory J. Miller, shall have been terminated pursuant to a termination agreement substantially in the form attached hereto as Exhibit G. (m) Term Loan Facility. The Company shall have entered into an additional $2.25 million term loan facility. 7 (n) Operating Licenses. The Company shall have used its best efforts to cause all government licenses, permissions, consents, approvals or authorizations necessary for the conduct of the Company's business as being conducted by it as of the Closing Date to be registered in the name of an officer or employee of the Company other than, or in addition to, William C. Vassell. (o) Dismissal of Litigation. The Company and the Sellers shall have obtained a dismissal of (i) all claims brought by the Sellers, their affiliates and each other plaintiff in the Litigation and (ii) the receiver appointed in connection with such action. In furtherance of obtaining such dismissal, each Seller has executed on the date hereof a stipulation (the "Stipulation"), a copy of which is attached hereto as Exhibit H. (p) Nasdaq Listing. The Company's Common Stock shall continue to be listed on Nasdaq Small Cap Market or any national securities exchange. (q) Board of Directors. Each of Messrs. Snitow, Robinett, Thomas Kikis, Peter Kikis, Saunders and Sands shall have resigned as a member of the Board of Directors of the Company. The authorized size of the Board of Directors of the Company shall have been reduced to seven (7) members and the Board shall consist of William C. Vassell, Gregory Miller, Peter Nekos, Geoff Haslehurst, Graeme Halder, Ken Allison and the director to be mutually agreed upon in writing by William Vassell and the Purchaser in accordance with the terms of the Shareholders Agreement. (r) Directors' and Officers' Insurance. The Company shall have in full force and effect directors' and officers' liability insurance from established and reputable insurers in an amount not less than $2,000,000. (s) Escrowed Shares. William V. Vassell shall have deposited 250,000 Shares of Common Stock into escrow pursuant to the Escrow Agreement, dated the date hereof, among William Vassell, the Purchaser and Proskauer Rose LLP. (t) Injunctions or Restraints. No court of competent jurisdiction or other court, tribunal, arbitrator, authority, agency commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city, or other political subdivision (a "Governmental or Regulatory Authority") shall have enacted, issued, promulgated, enforced or entered any law or order (whether temporary, preliminary or permanent) which is in effect and has the effect of making illegal or otherwise restricting, preventing or prohibiting consummation of the Acquisition or the other transactions contemplated hereby. (u) Proceedings and Documents. All corporate and other proceedings in connection with the Acquisition and transactions contemplated hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchaser and its counsel, and the Purchaser and its counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. 8 (v) Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any condition, change or effect that is materially adverse to the business, properties, prospects or condition (financial or otherwise) of the Company (a "Material Adverse Effect") and no facts or circumstances arising after the date of this Agreement shall have occurred which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 5.2 Conditions to Obligations of the Sellers. Each of the Sellers' obligation to issue and sell the Shares and Warrants at the Closing is subject to the satisfaction, on or prior to such Closing, of the following conditions (all or any of which may be waived in whole or in part by the Sellers): (a) Representations and Warranties True. The representations and warranties in Section 4 made by the Purchaser shall be true and correct in all material respects as of the Closing Date, with the same force and effect as if they had been made on and as of said date. (b) Compliance Certificate. The Purchaser shall have delivered to each Seller a compliance certificate, executed by the Purchaser, dated the Closing Date, to the effect that the conditions specified in subsection (a) of this Section 5.2 have been satisfied. (c) Performance of Obligations. The Purchaser shall have performed and complied with all agreements and conditions herein required to be performed or complied with by the Purchaser on or before the Closing. (d) Delivery of Purchase Price. The Purchaser shall have delivered to each of the Sellers by wire transfer of immediately available funds or by certified or bank cashiers check made payable to each such Seller, the Purchase Price in the amount set forth opposite each Seller's name on Schedule A annexed hereto. (e) Delivery of Finders Fee. The Purchaser shall have paid Peter Kikis a finders fee in an amount equal to (i) $.05 multiplied by (ii) the aggregate number of Shares of Common Stock plus the aggregate number of Shares of Common Stock issuable upon conversion of the Shares of Preferred Stock plus the number of Warrants sold by the Sellers to the Purchaser hereunder. (f) Injunctions or Restraints. No Governmental or Regulatory Authority shall have enacted, issued, promulgated, enforced or entered any law or order (whether temporary, preliminary or permanent) which is in effect and has the effect of making illegal or otherwise restricting, preventing or prohibiting consummation of the Acquisition or the other transactions contemplated hereby. (g) Proceedings and Documents. All corporate and other proceedings in connection with the Acquisition and transactions contemplated hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Sellers and their counsel, and the Sellers and their counsel shall have 9 received such counterpart originals or certified or other copies of such documents as they may reasonably request. 5.3 Covenants Prior to Closing. Each of the parties hereto shall use its best efforts and shall cooperate fully with the other parties to satisfy the conditions to Closing set forth in Sections 5.1 and 5.2 and each of the parties agrees and covenants promptly to execute and deliver, or cause to be executed and delivered, such documents or instruments, in addition to those expressly required by this Agreement to be executed and delivered, as any of the other parties may reasonably deem necessary or desirable to carry out or implement any provision of this Agreement or the transactions contemplated hereby, including without limitation, all documents and instruments in addition to the Stipulation, as may be required to obtain a dismissal of the Litigation; provided that, with respect to the Shareholders, the agreements in this paragraph are made in their capacities as shareholders of the Company. Nothing in this Agreement shall have any effect or impact, or result in any liability to the Shareholders as a result of actions taken by them as directors of the Company. 6. TERMINATION. 6.1 Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned (a) by written agreement of the Purchaser, on the one hand, and each Seller, on the other hand; or (b) upon notification to the non-terminating party by the terminating party: (i) at any time after January 31, 2001 if the Acquisition shall have not been consummated on or prior to such date and such failure to consummate the Acquisition is not caused by a breach of this Agreement by the terminating party; (ii) if any court of competent jurisdiction or other competent Governmental or Regulatory Authority shall have issued an order making illegal or otherwise preventing or prohibiting the Acquisition and such order shall have become final and non-appealable; or (iii) if there has been a breach of any representation, warranty, covenant or agreement on the part of the non-terminating party set forth in this Agreement which breach is not curable, or, if curable, has not been cured within fifteen (15) days following receipt by the non-terminating party of notice of such breach from the terminating party. 10 6.2 Effect of Termination. In the event of a termination of this Agreement pursuant to 6.1, this Agreement shall become void and there shall be no liability hereunder on the part of the any Seller or the Purchaser or their respective officers or directors; provided, however, that nothing contained in this Section 6.2 shall relieve any party from any liability for any breach of this Agreement. 7. MISCELLANEOUS. 7.1 Governing Law. This Agreement shall be governed in all respects by the laws of the State of New York as such laws are applied to agreements between New York residents entered into and performed entirely in New York. 7.2 Survival. The representations and warranties made herein shall survive the closing of the transactions contemplated hereby for three years following the Closing and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of any Purchaser. All agreements contained herein shall survive the Closing until, by their respective terms, they are no longer operative. 7.3 Indemnification. (a) Each Seller, severally and not jointly, shall indemnify, defend and hold the Purchaser, its affiliates and respective officers, directors, partners (and the affiliates, officers, directors, partners, employees, agents, successors and assigns thereof), employees, agents, successors and assigns (each a "Purchaser Entity") harmless from and against all Losses (as defined below) incurred or suffered by a Purchaser Entity as a result of the breach of any of the representations, warranties, covenants or agreements made by such Seller in this Agreement or the Voting Agreement. The Purchaser, shall indemnify, defend and hold the Sellers, their affiliates and respective officers, directors, partners (and the affiliates, officers, directors, partners, employees, agents, successors and assigns thereof) employees, agents, successors and assigns (each, a "Seller Entity") harmless against all Losses incurred or suffered by a Seller Entity as a result of the breach of any of Purchaser's representations, warranties, covenants or agreements in this Agreement. (b) For purposes of this Section 7.3, "Losses" shall mean each and all of the following items: claims, losses, liabilities, obligations, payments, damages, charges, judgments, fines, penalties, amounts paid in settlement, costs and expenses (including, without limitation, interest which may be imposed in connection therewith, costs and expenses of investigation, actions, suits, proceedings, demands, assessments and reasonable fees, expenses and disbursements of counsel, consultants and other experts). Any payment (or deemed payment) by a Seller to the Purchaser pursuant to this Section 7.3 shall be treated for federal income tax purposes as an adjustment to the price paid by the Purchaser for the Shares and Warrants pursuant to this Agreement. (c) A party seeking indemnification (the "Indemnified Party") under this Section 7.3 shall promptly upon becoming aware of the facts indicating that a claim for indemnification may be warranted, give to the party from whom indemnification is being sought (the "Indemnifying Party") a claim notice relating to such Loss (a "Claim Notice"). Each Claim 11 Notice shall specify the nature of the claim, the applicable provision(s) of this Agreement or other instrument under which the claim for indemnity arises, and, if possible, the amount or the estimated amount thereof. No failure or delay in giving a Claim Notice and no failure to include any specific information relating to the claim (such as the amount or estimated amount thereof) or any reference to any provision of this Agreement or other instrument under which the claim arises shall affect the obligation of the Indemnifying Party unless such failure materially and adversely prejudices the Indemnifying Party. If such Loss relates to the commencement of any action or proceeding by a third person, the Indemnified Party shall give a Claim Notice to the Indemnifying Party regarding such action or proceeding and the Indemnifying Party shall be entitled to participate therein to assume the defense thereof with counsel reasonably satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense of such action or proceeding, the Indemnifying Party shall not be liable (except to the extent the proviso to this sentence is applicable, in which event it will be so liable) to the Indemnified Party under this Section 7.3 for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided that each Indemnified Party shall have the right to employ separate counsel to represent it and assume its defense (in which case, the Indemnifying Party shall not represent it) if (i) upon the advice of counsel, the representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them, (ii) in the event the Indemnifying Party has not assumed the defense thereof within ten (10) business days of receipt of notice of such claim or commencement of action, and in which case the fees and expenses of one such separate counsel shall be paid by the Indemnifying Party or (iii) if such Indemnified Party who is a defendant in any action or proceeding which is also brought against the Indemnifying Party reasonably shall have concluded that there may be one or more legal defenses available to such Indemnified Party which are not available to the Indemnifying Party. If any Indemnified Party employs such separate counsel it will not enter into any settlement agreement which is not approved by the Indemnifying Party, such approval not to be unreasonably withheld. If the Indemnifying Party so assumes the defense thereof, it may not agree to any settlement of any such claim or action as the result of which any remedy or relief, other than monetary damages for which the Indemnifying Party shall be responsible hereunder, shall be applied to or against the Indemnified Party, without the prior written consent of the Indemnified Party. In any action hereunder as to which the Indemnifying Party has assumed the defense thereof with counsel reasonably satisfactory to the Indemnified Party, the Indemnified Party shall continue to be entitled to participate in the defense thereof, with counsel of its own choice, but, except as set forth above, the Indemnifying Party shall not be obligated hereunder to reimburse the Indemnified Party for the costs thereof. (d) Except with respect to Losses which arise as a result of a claim based on an inaccuracy of a representation or the breach of a warranty which is known to a Seller to be false at the time such representation or warranty is made by such Seller (a "Purchaser Fraud Claim") for which there shall be no limit, in no event shall the aggregate liability of a Seller with respect to Losses exceed the aggregate amount of (i) $2.20 multiplied by the number of Transaction Shares of Common Stock purchased from such Seller, (ii) $2.20 multiplied by the number of Shares of Common Stock issuable upon conversion of each Transaction Share of Preferred Stock purchased from such Seller and (iii) $2.20 per share of Common Stock issuable upon exercise of each Warrant. 12 (e) Except with respect to Losses which arise as a result of a claim based on an inaccuracy of a representation or the breach of a warranty which is known to the Purchaser to be false at the time such representation or warranty is made by the Purchaser (a "Seller Fraud Claim") for which there shall be no limit, in no event shall the aggregate liability of the Purchaser to any Seller with respect to Losses exceed the aggregate amount of (i) $2.20 multiplied by the number of Transaction Shares of Common Stock purchased from such Seller, (ii) $.2.20 multiplied by the number of Transaction Shares of Common Stock issuable upon conversion of each Transaction Share of Preferred Stock purchase from such Seller, and (iii) $2.20 per share of Common Stock issuable upon exercise of each Warrant. 7.4 Public Announcements. The Sellers will consult with the Purchaser before issuing any press release or otherwise making any public statements with respect to the transactions contemplated by this Agreement and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law or regulation. 7.5 No Shop. Until the Closing or the termination of this Agreement in accordance with Section 6, neither the Sellers nor their respective affiliates nor any investment banker, attorney or accountant or other representative retained by the Sellers, shall solicit, or encourage the solicitation of, or enter into, negotiations of any type, directly or indirectly, or enter into a letter of intent or purchase agreement or other similar agreement with any person, firm or corporation other than the Purchaser with respect to the sale of any of the Shares or Warrants. 7.6 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Shares and/or Warrants from time to time. 7.7 Entire Agreement. This Agreement, the exhibits and schedules hereto, and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 7.8 Severability. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby; provided that the overall intent of this Agreement is achieved. 7.9 Amendment and Waiver. (a) This Agreement may be amended or modified only upon the written consent of all the parties hereto. 13 (b) No waiver of the provisions hereof shall be effective unless in writing and signed by the party to be charged with such waiver. 7.10 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. Any waiver, consent or approval of any kind or character on the Purchaser's part in connection with any breach, default or noncompliance under this Agreement, or any waiver on such party's part of any provisions or conditions of this Agreement, shall be in writing and shall be effective only to the extent specifically set forth in such writing. 7.11 Notices. All offers, notices, acceptances, requests of other communications hereunder shall be in writing and shall be delivered (i) in person, (ii) by certified or registered mail, return receipt requested, (iii) by Federal Express or other nationally recognized overnight courier service which issues confirmation of delivery or (iv) by confirmed facsimile transmission, to the Company, each Seller and the Purchaser at the addresses or facsimile numbers set forth below or to such other addresses or facsimile number, as applicable, as any party hereto may designate to the others in writing: If to Sellers: Peter Kikis c/o Kikis Asset Management 720 Fifth Avenue, 9th Floor New York, New York 10019 Facsimile: (212) 397-9728 Steven Sands c/o Sands Brothers & Co., Ltd. 90 Park Avenue New York, New York 10016 Facsimile: (212) 697-8035 with a copy to: Curtin & Galt LLP 19 Hollywood Avenue Albany, New York 12208 Attention: Germaine Curtin, Esq. Facsimile: (518) 459-5487 and 14 Littman Krooks Roth & Ball P.C. 655 Third Avenue, 20th Floor New York, New York 10017 Attention: Mitchell Littman, Esq. Facsimile: (212) 490-2990 If to Purchaser Reliance Security Group plc Boundary House Cricket Field Road Uxbridge, Middlesex UB8 1QG Attention: Geoff Haslehurst Facsimile: 011441895205090 with a copy to: Rosenman & Colin LLP 575 Madison Avenue New York, NY 10022 Attention: Howard S. Jacobs, Esq. Wayne Wald, Esq. Facsimile: 212 940 8776 Any such notice shall be deemed to be given (i) when delivered, if delivered personally or by Federal Express or other nationally recognized overnight courier service, (ii) on the third Business Day after the date of mailing, if sent by certified or registered mail or (iii) upon confirmation of receipt, if delivered by facsimile transmission. 7.12 Titles and Subtitles. The titles of the sections and subsections of the Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 7.13 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 7.14 Pronouns. All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require. 7.15 Other Remedies. In addition to those remedies specifically set forth herein, if any, either party hereto may proceed to protect and enforce its rights under this Agreement either by suit in equity and/or by action at law, including, but not limited to, an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement contained in this Agreement. No right or remedy conferred upon or 15 reserved to either party or the holder of Shares under this Agreement is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right and remedy given under this Agreement or now and hereafter existing under applicable law. Every right and remedy given by this Agreement or by applicable law to either party hereto or the holders of Shares may be exercised from time to time and as often as may be deemed expedient by the holders. 7.16 Further Assurances. At any time or from time to time for a reasonable period following the Closing, the Company and the Purchaser agree to cooperate with each other, and at the request of the other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the Acquisition and the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder. 7.17 Facsimile Signatures. Any signature page delivered by a fax 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 which requires it. 7.18 Risk of Revocation of Discretionary Authority. The parties understand and agree that certain Sellers' discretionary authority over the Shares may be revoked at any time and further agree that such Seller shall have no liability for any representations, warranties, covenants, obligations or agreements with respect to Shares for which his discretionary authority has been revoked at any time prior to the Closing hereunder. 7.19 Adjustment. All dollar amounts and share numbers set forth herein shall be subject to equitable adjustment in the event of any stock split, stock dividend, reverse stock split or similar event affecting the Company Common Stock and/or Preferred Stock, between the date of this Agreement and the Closing Date, to the extent appropriate. [Remainder of this page intentionally left blank] 16 IN WITNESS WHEREOF, the parties hereto have executed this STOCK PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof. PURCHASER: RELIANCE SECURITY GROUP PLC By: /s/ Geoff P. Haslehurst ------------------------------------- Name: Geoff P. Haslehurst Title: Finance Director SELLERS: /s/ Peter Kikis ---------------------------------------- Peter Kikis /s/ Thomas Kikis ---------------------------------------- Thomas Kikis THE KIKIS FAMILY FOUNDATION By: /s/ Peter Kikis ------------------------------------- Name: Peter Kikis Title: THE PERSONS LISTED ON SCHEDULE B-1 HERETO /s/ Thomas Kikis ---------------------------------------- By: Thomas Kikis, as Attorney-in-Fact /s/ Sarah Leifer ---------------------------------------- Sarah Leifer /s/ Murray Leifer ---------------------------------------- Murray Leifer /s/ Michael Leifer ---------------------------------------- Michael Leifer /s/ Jane Lenehan ---------------------------------------- Jane Lenehan /s/ Donald Radcliffe ---------------------------------------- Donald Radcliffe THE PERSONS LISTED ON SCHEDULE B-2(a) HERETO /s/ Martin Sands ---------------------------------------- By: Martin Sands, as Attorney-in-Fact THE PERSONS LISTED ON SCHEDULE B-2(b) HERETO /s/ Steven Sands ---------------------------------------- By: Steven Sands, as Attorney-in-Fact KATIE & ADAM BRIDGE PARTNERS, L.P. By: /s/ Steven Sands ------------------------------------- Name: Title: OWL-1 PARTNERS, L.P. By: /s/ Steven Sands ------------------------------------- Name: Title: /s/ Lloyd Saunders ---------------------------------------- Lloyd Saunders /s/ Robert Rosan ---------------------------------------- Robert Rosan SCHEDULE A SCHEDULE B-1 Deltec Pan American Arthur Byrnes Urania Perakos Douglas Kaye Lisa Grover Charles Kontulis Charles Kontulis IRA Elizabeth Kontulis Richard Cundiff Richard J. Schwartz Richard J. Schwartz Trust Walter Tritell Jeanette Andersen Andersen Group Alex Laughlin Judy Laughlin Phil Cocke Donna Cocke SCHEDULE B-2(a) Lexus Industries Joseph Preblod Roger Gimbel Lowell Dubrow Rollin Dick Yair Green Gloria Heinen William Lewis Wendy Williams Stanford Baratz March Investment Limited Partnership Sherman Henderson SCHEDULE B-2(b) Ronald Olson EX-99.B 3 0003.txt SHAREHOLDERS AGREEMENT EXECUTION COPY COMMAND SECURITY CORPORATION SHAREHOLDERS' AGREEMENT THIS SHAREHOLDERS' AGREEMENT (the "Agreement") is made and entered into this 12th day of September, 2000, by and among Command Security Corporation, a New York corporation (the "Company"), William C. Vassell, an individual ("Vassell") and Reliance Security Group plc, a company organized under the laws of England and Wales (the "Purchaser") (Vassell and the Purchaser, each a "Holder" and together the "Holders"). WITNESSETH WHEREAS, the Purchaser entered into that certain Stock Purchase Agreement, dated the date hereof (the "Stock Purchase Agreement") among the Purchaser and certain shareholders of the Company signatory thereto (collectively, the "Sellers") pursuant to which, among other things, the Purchaser agreed to purchase all of the issued and outstanding capital stock of the Company (and options and warrants to subscribe for or purchase capital stock of the Company) owned by the Sellers; and WHEREAS, the Purchaser's and the Sellers' obligations under the Stock Purchase Agreement are conditioned upon the execution and delivery of this Agreement by the parties hereto, and it is in the interest of Vassell and the Company for the transactions contemplated by the Stock Purchase Agreement to be consummated. NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Company,Vassell and the Purchaser agree as follows: 1. VOTING 1.1 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; provided, however, notwithstanding anything to the contrary herein, the representations and warranties in Section 3 hereof shall be effective on the date hereof. 1.2 Voting Shares. Each Holder agrees to vote all shares of the Company's common stock, $.0001 par value and Series A Preferred Stock, $.0001 par value (to the extent entitled to vote) (the "Shares"), registered in such Holder's name or beneficially owned by such Holder or over which such Holder has voting control as of and after the Effective Date (hereinafter collectively referred to as the "Holder Shares") subject to and in accordance with the provisions of this Agreement, and each Holder and the Company, jointly and severally, shall take all other necessary or desirable actions within the Company's and such Holder's control, to effect the provisions of this Agreement. 1.3 Board of Directors (a) The initial Board of Directors of the Company (the "Board") shall be composed of seven directors. (b) Subject to and except as otherwise provided in this Agreement and unless unanimously otherwise agreed in writing by the Holders, so long as each of Vassell and the Purchaser shall Beneficially Own (as defined in Section 7.1) fifty percent (50%) of the Shares held by each immediately after the Closing, Vassell and the Purchaser shall have the right to designate three individuals to be nominated to serve as directors of the Company in accordance with the Certificate of Incorporation and the By-Laws of the Company as in effect from time to time. The Company shall at all times have at least one Independent Director (as defined in Section 7.2) selected by Vassell and the Purchaser. If Vassell and the Purchaser cannot agree on the Independent Director, the Independent Director shall be selected by a professional adviser of recognized standing (e.g., an accounting or law firm) selected by Vassell and the Purchaser or if Vassell and the Purchaser cannot agree on a professional adviser, each shall select a professional adviser of recognized standing and the two advisers shall select another professional adviser, whose selection of such Independent Director shall be final. (c) Vassell and Purchaser shall each deliver to the Secretary of the Company a notice (a "Board Designee Notice") setting forth their respective designees and the selected Independent Directors not less than 30 days prior to the anniversary of the preceding year's record date for the annual meeting of shareholders of the Company; provided, however, if (i) the date of the annual meeting is advanced or delayed by more than 30 days from such anniversary date, or (ii) the Board of the Company is to be elected by solicitation by the Board of consents in writing of shareholders or a special meeting of shareholders, then the Company shall give Vassell and Purchaser notice thereof ("Notice of Election"), not less than 30 days before the record date established for any such meeting or the solicitation of consents, and Vassell and Purchaser shall each deliver a Board Designee Notice to the Secretary of the Company not less than 15 days after the date the Notice of Election is delivered. The Board Designee Notice shall set forth as to each person designated for nomination for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for elections of directors or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, including such person's written consent to be named in the proxy statement as a nominee and to serving as a director, if elected. (d) Each of the Company and Holders hereby agrees to take all actions necessary to call an annual meeting (and when circumstances so require, a special meeting) of the shareholders of the Company and each Holder agrees to vote all Holder Shares at any such meeting and at any other annual or special meeting of stockholders in favor of, or take all actions by written consent in lieu of any such meeting as may be necessary to cause, the election as members of the Board of those individuals so designated in accordance with, and to otherwise effect the intent of, this Section 1.3. 2 (e) The initial designees of Vassell shall be William C. Vassell, Gregory Miller and Peter Nekos. The initial designees of the Purchaser shall be Geoff Haslehurst, Ken Allison and Graeme Halder. The initial Independent Director shall be mutually agreed to in writing by Vassell and Purchaser prior to the Effective Date. (f) Whenever any vacancy in the Board of Directors (whether occurring by reason of death, resignation, removal or otherwise) is to be filled, the Holder which, under the provisions of this Section 1.3 is entitled to designate such director, will designate the successor to fill such vacancy. Each director shall be entitled to one vote on all matters coming before the Board. (g) Each non-employee member of the Board shall receive reimbursement by the Company for all reasonable out-of-pocket expenses, including, without limitation, travel expenses, incurred by such director in connection with the performance of such director's duties. (h) Each of the Company and Holders hereby agrees to take all actions necessary to call, or cause the Company and the directors of the Company to call, a meeting of the Board to be held at least once during each fiscal quarter of the Company in accordance with the By-Laws of the Company. Meetings of the Board may be held by telephone conference or other means of instantaneous communication, unless otherwise agreed by all directors. (i) The decisions of the Board shall be made by a majority vote of the entire Board; provided, however, that a vote upon any of the following matters shall require that the Board designees of Vassell and Purchaser shall be given reasonable notice of such vote and a reasonable opportunity to be present, either telephonically or in person, for such vote: (i) approval of the annual Budget and Business Plan (as such terms are hereinafter defined) or any material amendment thereto; (ii) any expenditure over $50,000 which is in excess of the budgetary line item relating thereto; (iii) the sale or disposition of any properties or assets of the Company, or any subsidiary of the Company, other than sales or dispositions in the ordinary course of business of the Company; (iv) the purchase or acquisition of another entity or the properties or assets of such entity; (v) the merger or consolidation of the Company with or into any other entity; (vi) the incurring of any indebtedness which would cause the aggregate outstanding principal amount of Company indebtedness together with all accrued and unpaid interest thereon to exceed $10,000,000]; 3 (vii) the creation of any mortgage, lien or other encumbrance on or any pledge of any asset of the Company, or any subsidiary of the Company, other than in the ordinary course of business of the Company; (viii) any material transactions with persons or entities owning an equity interest in the Company (the Purchaser and its affiliates not being deemed to be affiliates of the Company for this purpose); (ix) the execution, amendment or termination by the Company, or any subsidiary of the Company, of any contract or agreement other than any contract entered into in the ordinary course of business which involves consideration in excess of $100,000 or a term in excess of one year; (x) the granting to any employee of options to purchase the issued and outstanding capital stock of the Company (other than in connection with the transactions contemplated by the Stock Purchase Agreement); (xi) the issuance or authorization of any Shares or other equity interests (including, without limitation, options, warrants or convertible securities) in the Company to any person other than Purchaser or Company employees pursuant to employee stock options; (xii) any amendment to the Employment Agreement between the Company and Vassell, dated as of the date hereof in the form attached hereto as Exhibit A (the "Employment Agreement"); (xiii) any amendment to the Certificate of Incorporation of the Company or the By-Laws of the Company; or (xiv) the dissolution or liquidation of the Company. 1.4 Management. (a) The Company has prepared and submitted to the Purchaser for approval a confidential budget and operating forecast for the fiscal years ended March 31, 2001, 2002 and 2003 contained in that certain letter agreement, dated the date hereof between Vassell and the Company (the "Confidential Budget") which contains an annual performance target for each such fiscal year (each, a "Confidential Target") with respect to "earnings before taxes" (as defined in the Employment Agreement). (b) No later than 90 days following the end of each fiscal year, the Board shall in good faith determine, based on the Company's financial statements for such fiscal year audited by the Company's independent public accountants and prepared in accordance with generally accepted accounting principles consistently applied, whether the Company has met the Confidential Target for such fiscal year. Notwithstanding anything to the contrary herein, the 4 Confidential Target shall be subject to adjustment as provided in the Employment Agreement and the calculation thereof shall be governed by the Employment Agreement. Upon a deviation from the Confidential Target for such fiscal year by more than 20% and a vote by a majority of the Board terminating Vassell's employment pursuant to the Employment Agreement, Vassell shall (i) resign as Chairman of the Board, President and Chief Executive Officer of the Company and shall resign all other officerships, directorships and committee memberships with the Company and (ii) cause his Board designee(s) to resign all directorships and committee memberships with the Company (a "Vassell Resignation"). Vassell shall cause any individual to be nominated by Vassell to agree in writing to be bound by this Section 1.4(b) prior to such individual's appointment as a director of the Company. Notwithstanding the foregoing, in no event shall Vassell be required to resign pursuant to this Section 1.4(b) prior to the first anniversary of the Effective Date in the Employment Agreement. (c) In the event of a Vassell Resignation, each Holder shall be released from any obligation to vote such Holder's Shares to elect as members of the Board those individuals designated in accordance with Section 1.3. (d) In the event of (i) a Vassell Resignation, (ii) the election by the Board not to extend the term of Vassell's employment as Chief Executive Officer of the Company in accordance with the terms of the Employment Agreement or (iii) the termination of Vassell's employment with the Company pursuant to Sections 6.1(b)(ii) or 6.1(c) of the Employment Agreement, Vassell may, for a period of 90 days after the date of the Vassell Resignation or termination of Vassell's employment with the Company, as the case may be, provide the Purchaser with notice of an offer to sell all of Vassell's Shares and any warrants or options to purchase any shares of capital stock of the Company. The notice shall include a purchase price which shall be determined by Vassell in his sole discretion. The Purchaser shall then have a period of 45 days from receipt of such notice, to accept the terms of Vassell's offer to sell. If the offer is rejected or lapses, Vassell shall have the right to purchase from the Purchaser all the Purchaser's Shares and the Warrant (as defined hereafter) and at the price specified in Vassell's offer to sell within 90 days after such rejection or the lapse of the 45-day period as the case may be; provided, however, that Vassell must provide the Purchaser evidence of adequate financing to consummate such transaction within 60 days of such date. (e) Any obligation on the part of any of the Holders to sell or purchase Shares, warrants and options pursuant to Section 1.4(d) above shall be subject to the satisfaction of each of the following conditions: the purchasing Holder shall have delivered to selling Holder by wire transfer of immediately available funds or by certified or bank cashiers check made payable to selling Holder the purchase price and the selling Holder shall have delivered to the purchasing Holder the stock certificates, warrant certificates, option certificates, stock powers and other documents of transfer, conveyance and assignment in form and substance reasonably satisfactory to the purchasing Holder and purchasing Holder's counsel required to transfer all of selling Holder's right, title and interest in and to the selling Holder's Shares, warrants and/or options and to vest in the purchasing Holder good and marketable title to such Shares, warrants and options free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever. 5 (f) Unless unanimously otherwise agreed in writing by the Holders, a senior management position shall at all times be held by a designee of the Purchaser's Board designees subject to approval of such designee by the Board. (g) Each Holder hereby agrees to take all actions necessary to conduct, or cause the Company and the executive officers of the Company to conduct one meeting of the senior management per month and the Purchaser shall have the right to designate one non-voting observer to attend all such meetings. 2. RESTRICTION ON SALE OR TRANSFER 2.1 Right of First Offer. Each Holder hereby grants to the other Holder, a right of first offer with respect to future sales of Holder Shares. Each time a Holder (the "Selling Holder") proposes to offer any Holder Shares, the Selling Holder shall first make an offering of such Holder Shares to the other Holder (the "Non-Selling Holder") in accordance with the following provisions (a) The Selling Holder shall deliver a notice ("Notice") to the Non-Selling Holder stating (i) its bona fide intention to offer such Holder Shares, (ii) the number of such Shares to be offered (the "Offered Shares"), and (iii) the price and terms, if any, upon which it proposes to offer such Shares. (b) Within 30 days after giving of the Notice, the Non-Selling Holder may elect to purchase the Offered Shares, at the price and on the terms specified in the Notice. (c) If all Shares which the Non-Selling Holder is entitled to obtain pursuant to Section 2.1(b) are not elected to be purchased, the Selling Holder may, during the 90-day period following the expiration of the period provided in Section 2.1(b), offer the remaining unpurchased portion of such Shares to any person or persons at a price not less than, and upon terms no more favorable to the offeree than those specified in the Notice. (d) If the Selling Holder does not sell or enter into an agreement for the sale of the Shares within such 90-day period, or if such agreement is not consummated within 30 days of the execution thereof, the right provided under this Section 2.1 shall be deemed to be revived and such Shares shall not be offered or sold unless first reoffered to the Non-Selling Holder in accordance herewith. 2.2 Exempt Transfers. Notwithstanding the foregoing, the right of first offer set forth in this Section 2 shall not apply to (a) any transfer to the ancestors, descendants or spouse or to trusts for the benefit of such persons or such Holder or to any majority-owned or majority-controlled affiliate of a Holder or (b) any resale under Rule 144 (promulgated under the Securities Act) in compliance with the volume limitations set forth in Rule 144(e) thereunder (an "Exempt Transfer"), provided that as a condition precedent to any transfer made pursuant to the exemption provided by this Section 2.2(a), the Holder shall inform the other Holder of such transfer prior to effecting it and the transferee shall furnish the Holders with a written agreement to be bound by and comply with all provisions of this Agreement and such transferred Holder 6 Shares shall remain "Holder Shares" hereunder, and such pledgee or transferee shall be treated as a "Holder" for purposes of this Agreement. 2.3 Void Transfers. Any attempt by a Holder to transfer Holder Shares in violation of this Section 2 hereof shall be void, and the Company agrees it will not effect such a transfer nor will it treat any alleged transferee as the holder of such shares without the written consent of the each Holder. 2.4 Transfer Agent. The Holders agree that the Company may instruct its transfer agent to impose transfer restrictions on the Holder Shares to enforce the provisions of this Agreement and the Company agrees to promptly do so. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY In order to induce the Purchaser to enter into this Agreement, the Company hereby represents and warrants to the Purchaser that: 3.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver this Agreement, the Registration Rights Agreement in the form attached hereto as Exhibit B, the Warrant in the form attached hereto as Exhibit C and the Employment Agreement (collectively, the "Related Agreements"), and to carry out in all material respects the provisions of this Agreement, the Related Agreements and to carry on in all material respects its business as presently conducted and as presently proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which failure to so qualify would have a material adverse effect on its business, properties, prospects or condition (financial or otherwise) (a "Material Adverse Effect"). 3.2 Subsidiaries. Except as set forth in the Company's SEC Reports (as hereinafter defined), the Company does not own or control, directly or indirectly, any equity security or other interest of any other corporation, limited partnership or other business entity. The Company is not a participant in any joint venture, partnership or similar arrangement. 3.3 Capitalization.(a) The authorized capital stock of the Company, as of the date hereof, consists of (i) 20,000,000 shares of common stock, par value $0.0001 per share (the "Common Stock"), 6,287,343 shares of which are issued and outstanding, and (ii) 1,000,000 shares of preferred stock, par value $0.0001 per share, 1,000,000 shares of which are designated Convertible Series A Preferred Stock and 12,325.82 shares of which are issued and outstanding. (b) Other than as set forth in the Company's SEC Reports and other than the shares reserved for issuance under the Warrant, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities. 7 (c) All issued and outstanding shares of the Company's Common Stock (i) have been duly and validly authorized and issued, fully paid and nonassessable and (ii) other than as set forth in the Company's SEC Reports, were issued in compliance with all applicable state and federal laws concerning the issuance of securities. 3.4 Authorization; Binding Obligations. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization of this Agreement and the Related Agreements, the performance of all obligations of the Company hereunder and thereunder has been taken or will be taken prior to the Closing. The Agreement and the Related Agreements, when executed and delivered, will be valid and binding obligations of the Company enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights and (ii) general principles of equity that restrict the availability of equitable remedies. 3.5 Compliance with Laws; Permits. The Company is not in violation of (i) any federal, state, local or foreign statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof, (ii) its Certificate of Incorporation, as amended, or By-Laws and (iii) any contracts except where (with respect to (i) and (iii)) such violation would not have a Material Adverse Effect. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained by the Company and no registrations or declarations are required to be filed by the Company in connection with the execution and delivery of this Agreement or any of the Related Agreements. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could have a Material Adverse Effect and believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as currently planned to be conducted. The Company is not in default in any material respect under any of such franchises, permits, licenses, or other similar authority. The Company has not received notice of any pending cancellation or suspension of any thereof. The consummation of the transactions contemplated by the Stock Purchase Agreement and ownership of the Shares and the Warrant (as that term is defined in the Stock Purchase Agreement) by the Purchaser shall not result in the forfeiture or loss by the Company of any of the Company's licenses, permissions, consents, approvals or authorizations necessary for the conduct of the Company's business. 3.6 Full Disclosure. Neither this Agreement, the exhibits hereto, the Related Agreements nor any other document delivered by the Company to Purchaser or their attorneys or agents in connection herewith or therewith or with the transactions contemplated hereby or thereby, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein not misleading. 3.7 SEC Reports and Financial Statements. (a) The Company has filed all forms, reports, schedules, registration statements, definitive proxy statements and other documents (together with all amendments thereof and supplements thereto) required to be filed by the Company with the Securities and Exchange Commission (the "SEC") (as such documents have since the time of their filing been amended or supplemented, the "SEC Reports"). As of their 8 respective dates, the SEC Reports (i) complied as to form in all material respects with the requirements of the Securities Act of 1933 or the Securities Exchange Act of 1934, if applicable, as the case may be, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited financial statements and unaudited interim financial statements (including, in each case, the notes, if any, thereto) of the Company included in the SEC Reports (the "Financial Statements") complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end audit adjustments (which are not expected to be, individually or in the aggregate, materially adverse to the Company taken as a whole)) the financial position of the Company as at the respective dates thereof and the results of their operations and cash flows for the respective periods then ended. (b) Except as set forth in the SEC Reports, the Company does not have any liability or obligation of any nature (whether accrued, absolute, contingent or otherwise), except for liabilities and obligations incurred in the ordinary course of business consistent with past practice which could not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. The Company is not in default in respect of the material terms and conditions of any indebtedness or other agreement which could, individually or in the aggregate, be expected to have a Material Adverse Effect. 3.8 Absence of Certain Events. Except as disclosed in the SEC Reports, since March 31, 2000, the Company has operated its business only in the ordinary course consistent with past practices and there has not occurred (i) to the Company's knowledge any event, occurrence or conditions which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; (ii) any entry into or any commitment or transaction that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; (iii) any material change by the Company in its accounting methods, principles or practices; (iv) any amendments or changes in the Certificate of Incorporation or By-Laws of the Company; (v) any reevaluation by the Company of its of their assets, including, without limitation, write-offs of accounts receivable, other than in the ordinary course of the Company's business consistent with past practices; (vi) any damage, destruction or loss which, individually or in the aggregate, resulted in or could reasonably be expected to have a Material Adverse Effect; (vii) any event pursuant to which the Company has engaged in any material transaction or entered into any material agreement, in each case outside the ordinary course of business which, individually or in the aggregate, could be reasonably expected to have a Material Adverse Effect; (viii) any increase in the compensation of any officer of the Company or any general salary or benefits increase to the employees of the Company other than in the ordinary course of business; or (ix) any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, or any repurchase, redemption or other acquisition by the Company of any outstanding shares of 9 capital stock or other securities of, or other ownership interests in, the Company, except with respect to the dividends declared with respect to the 12,325.82 shares of Series A Preferred Stock. 4. COVENANTS OF THE COMPANY. The Company shall comply, and the Company shall cause any direct or indirect subsidiaries of the Company, if any, to comply (to the extent applicable), with the following covenants, except as shall otherwise be expressly agreed pursuant to a written consent or consents executed by the Purchaser: 4.1 Operating Licenses. The Company shall use its best efforts to cause all government licenses, permissions, covenants, approvals or authorizations necessary for the conduct of the Company's business as now being conducted by it, to be registered in the name of an officer or employee of the Company other than, or in addition to, Vassell. 4.2 Nasdaq Listing. The Company shall use its best efforts to cause the Company's Common Stock to remain listed on the Nasdaq Stock Market or any national securities exchange. 4.3 Directors' and Officers' Insurance. The Company shall maintain in full force and effect directors' and officers' liability insurance in reasonable amounts (but not less than $2,000,000) from established and reputable insurers. In accordance with Article Seventh of the Company's Certificate of Incorporation, the Company shall continue to limit the personal liability of its directors to the fullest extent permitted by Section 402 of the Business Corporation Law of the State of New York, as may be amended or supplemented (the "BCL"). In accordance with Article Eighth of the Company's Certificate of Incorporation, the Company shall continue to indemnify its directors and officers to the fullest extent permitted by Article 7 of the BCL. 10 4.4 Inspection Rights. Upon reasonable notice to the Company, so long as the Purchaser shall Beneficially Own 300,000 Shares, the Purchaser shall have the right to, and the Company shall take such actions as are reasonably practicable in order to permit the Purchaser to, (a) visit and inspect any properties of the Company, (b) inspect and make extracts from the books and records of the Company, including, without limitation, management letters prepared by its independent certified public accountants, and (c) discuss with the Company's officers and employees, the respective businesses, assets, liabilities, financial conditions, results of operations and business prospects of the Company. 5. TERMINATION 5.1 This Agreement shall continue in full force and effect from the date hereof through the earliest of the following dates, on which it shall terminate in its entirety: (a) the date as of which the parties hereto terminate this Agreement by written consent of the Purchaser and Vassell; or (b) the tenth anniversary of the date hereof. 6. MISCELLANEOUS 6.1 The parties hereto agree promptly after the execution of this Agreement to take all actions necessary to effect amendments to the Company's Certificate of Incorporation and By-Laws in order to incorporate and give full effect to the provisions of this Agreement. 6.2 The parties hereto hereby declare that it is impossible to measure in money the damages which will accrue to a party hereto or to their heirs, personal representatives, or assigns by reason of a failure to perform any of the obligations under this Agreement and agree that the terms of this Agreement shall be specifically enforceable. If any party hereto or its heirs, personal representatives, or assigns institutes any action or proceeding to specifically enforce the provisions hereof, any person against whom such action or proceeding is brought hereby waives the claim or defense therein that such party or such personal representative has an adequate remedy at law, and such person shall not offer in any such action or proceeding the claim or defense that such remedy at law exists. 6.3 This Agreement, and the rights of the parties hereto, shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the conflicts of law provisions thereof. 6.4 This Agreement may be amended and any term hereof may be waived only by an instrument in writing signed by the Company, Vassell and the Purchaser. 6.5 All offers, notices, acceptances, requests of other communications hereunder shall be in writing and shall be delivered (i) in person, (ii) by certified or registered mail, return receipt requested, (iii) by Federal Express or other nationally recognized overnight courier service which 11 issues confirmation of delivery or (iv) by confirmed facsimile transmission, to the Company, Vassell and the Purchaser at the addresses or facsimile numbers set forth below or to such other addresses or facsimile number, as applicable, as any party hereto may designate to the others in writing: If to the Company: Command Security Corporation Route 55 Lexington Park Lagrangeville New York 12540 Facsimile: (914) 454-0075 with a copy to: David J. Pollitzer, Esq. Herzog, Engstrom & Koplovitz, P.C. 99 Pine Street Albany, New York 12207-2776 Facsimile: (518) 462-2743 If to Vassell William C. Vassell 148 Edward Place Stamford, Connecticut 06905 with a copy to: Robert Cantone Proskauer Rose LLP 1585 Broadway New York, New York 10036-8299 Facsimile: (212) 969-2900 12 If to the Purchaser: Reliance Security Group plc Boundary House Cricket Field Road Uxbridge, Middlesex UB81QG Attention: Geoff Haslehurst Facsimile: 011-44-189-520-5090 with copies to: Rosenman & Colin LLP 575 Madison Avenue New York, NY 10022 Attention: Howard S. Jacobs, Esq. Wayne Wald, Esq. Facsimile: (212) 940-8776 Any such notice shall be deemed to be given (i) when delivered, if delivered personally or by Federal Express or other nationally recognized overnight courier service, (ii) on the third Business Day after the date of mailing, if sent by certified or registered mail or (iii) upon confirmation of receipt, if delivered by facsimile transmission. 6.6 If any provision of this Agreement is held to be invalid or unenforceable, the validity and enforceability of the remaining provisions of this Agreement shall not be affected thereby. 6.7 This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, assigns, administrators, executors and other legal representatives. 6.8 This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together shall constitute one and the same agreement. 6.9 No waivers of any breach of this Agreement extended by any party hereto to any other party shall be construed as a waiver of any rights or remedies of any other party hereto or with respect to any subsequent breach. 6.10 The Company and Purchaser agree that any transaction or series of transactions between the Company and Purchaser, whether or not in the ordinary course of business, will be on terms and conditions substantially as favorable as would be obtainable in a comparable arm's length transaction with a Person other than the Company or Purchaser, as the case may be. 7. CERTAIN DEFINITIONS 7.1 "Beneficially Own" or "Beneficial Ownership" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 13 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person (as defined below) shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" as within the meanings of Section 13(d)(3) of the Exchange Act. 7.2 "Independent Director" means a natural person (a) who, for the five-year period prior to his or her appointment as Independent Director has not been, and during the continuation of his or her services as Independent Director is not, (i) an employee, director, member or officer of the Company or any of its affiliates (other than his or her services as an Independent Director of the Company); (ii) a customer of the Company or any of its affiliates, (iii) a consultant or other professional adviser retained by the Company or (iv) any member of the immediate family of a person described in (i), (ii) or (iii) and (b) who, so long as the Company maintains a listing on the Nasdaq Stock Market, qualifies as an independent director under the Nasdaq listing requirements. 7.3 "Person" shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity. 14 IN WITNESS WHEREOF, the parties hereto have executed this Letter Agreement as of the date first above written. COMMAND SECURITY CORPORATION By: /s/ William C. Vassell ------------------------------------- Name: William C. Vassell Title: Chairman of the Board /s/ William C. Vassell ---------------------------------------- WILLIAM C. VASSELL RELIANCE SECURITY GROUP PLC By: /s/ Geoff P. Haslehurst ------------------------------------- Name: Geoff P. Haslehurst Title: Finance Director 15 EX-99.C 4 0004.txt WARRANT FOR STOCK PURCHASE THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF, AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT OR REGULATION AND NOTIFICATION UNDER SUCH ACT COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. No. 14 Warrant to Purchase 150,000 Shares of Common Stock WARRANT TO PURCHASE COMMON STOCK of COMMAND SECURITY CORPORATION Void after November 11, 2004 This certifies that, for value received, Reliance Security Group plc (the "Holder"), is entitled, subject to the terms set forth below, at any time before November 11, 2004, to purchase from Command Security Corporation, a New York corporation (the "Company"), with its principal office at Route 55, Lexington Park, Lagrangeville, NY 12540, One Hundred and Fifty Thousand (150,000) shares (the "Shares") of common stock, $.0001 par value of the Company, upon surrender hereof, at the principal office of the Company, with the Election to Purchase form attached hereto duly executed, and simultaneous payment therefor in lawful money of the United States, or otherwise as hereinafter provided, at a price equal to $1.03125 per full Share. (Such price hereinafter referred to as the "Purchase Price"). The Purchase Price, number and character of such Shares are subject to adjustment as provided below, and the term "Shares" shall mean, unless the context otherwise requires, the stock and other securities and property at the time receivable upon the exercise of this Warrant. The term "Warrants" as used herein shall include this Warrant and any warrants delivered or deliverable in substitution or exchange thereof as provided herein. 1. Exercise. This Warrant may be exercised at any time or from time to time, on any business day for up to the number of Shares called for hereby, by surrendering it at the principal office of the Company, with the Election to Purchase form duly executed, together with payment in cash or by certified or official bank check, payable to the order of the Company, of the sum obtained by multiplying (i) the number of Shares indicated on the Election to Purchase form by (ii) the appropriate Purchase Price. This Warrant may be exercised for less than the full number of Shares at the time called for hereby, but not for less than 1,000 Shares unless the number of Shares called for on the face is less than 1,000 in which event the minimum number will be the number of Shares called for on the face. Upon a partial exercise this Warrant shall be surrendered, and a new Warrant of the same tenor and for the purchase of the number of such Shares not purchased upon such exercise shall be issued by the Company to Holder. A Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the Shares issuable upon such exercise shall be treated for all purposes as the holder of such Shares of record as of the close of business on such date. As soon as practicable on or after such date, the Company shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of full Shares issuable upon such exercise, together with cash, in lieu of any fraction of a Share, equal to such fraction of the current market value of one full Share. If surrendered by mail, the date of surrender shall be the date the Warrant is mailed consistent with the requirements for notice as described in Section 7. 2. Payment of Taxes. All Shares issued upon the exercise of this Warrant shall be validly issued, fully paid and nonassessable, and the Company shall pay all taxes and other governmental charges that may be imposed in respect of the issue or delivery thereof. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for Shares in any name other than that of the registered Holder of the Warrant surrendered in connection with the purchase of such Shares, and in such case the Company shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the Company's satisfaction that no tax or other charge is due. 3. Protection Against Dilution. The Shares covered by this Warrant and the Purchase Price payable therefor shall be subject to appropriate adjustment as follows: (a) If a Share dividend is declared on the Shares, or if an increase or decrease has been effected in the number of outstanding Shares by reason of subdivision of such Shares or combination of such Shares into a lesser number, the number of 2 Shares which may thereafter be purchased under this Warrant shall be the number of Shares which would have been received by the Holder on such dividend, subdivision or combination had the Holder been the Holder of record of the number of Shares then under this Warrant but not theretofore purchased and issued. (b) If there is any other capital reorganization or reclassification of the stated capital of the Company, or any consolidation or merger of the Company with any other corporation or corporations, or the sale or distribution of all or substantially all of the Company's property and assets, adequate provision shall be made by the Company so that there shall remain and be substituted under this Warrant the Shares, securities, or assets which would have been issuable or payable in respect of or in exchange for the Shares then remaining under this Warrant and not theretofore purchased and issued hereunder, as if the Holder of this Warrant had been the owner of such Shares on the applicable record date. (c) If any of the events described in Sections 3(a) or (b) occur, the Purchase Price shall be adjusted to that price determined by multiplying the then current Purchase Price by a fraction (x) the numerator of which shall be the total number of outstanding Shares immediately prior to such event and (y) the denominator of which shall be the total number of outstanding Shares immediately after such event. 4. Loss or Mutilation. Upon receipt by the Company of evidence satisfactory to it (in the exercise of reasonable discretion) of the ownership of and the loss, theft, destruction or mutilation of any Warrant and (in the case of mutilation) upon surrender and cancellation thereof, the Company will execute and deliver in lieu thereof a new Warrant of like tenor. 5. Reservation of Stock. The Company shall at all times reserve and keep available for issue upon the exercise of Warrants such number of its authorized but unissued Shares as will be sufficient to permit the exercise in full of all outstanding Warrants. 6. (a) Restrictions on Transfer. The Holder of this Warrant, by acceptance hereof, agrees that, absent an effective notification under Regulation A or registration statement, in either case under the Securities Act of 1933, as amended (the "Act"), covering the disposition of the Warrant or Shares issued or issuable upon exercise hereof, such Holder will not sell or transfer any or all of such Warrant or Shares, as the case may 3 be, without first providing the Company with an opinion of counsel (which may be counsel for the Company) to the effect that such sale or transfer will be exempt from the registration and prospectus delivery requirements of the Act. Such Holder consents to the Company making a notation on its records giving instructions to any transfer agent of the Warrant or such Shares in order to implement such restrictions on transferability. (b) Transfer Restriction Legend. Each certificate for Shares issued upon exercise of this Warrant, unless at the time of exercise such Common Stock is registered under the Act, shall bear a legend in substantially the following form on the face thereof: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ("THE ACT") AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. Any certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate subject to a registration statement) shall also bear such legend unless, in the opinion of counsel to the Company, the securities represented thereby may be transferred as contemplated by such Holder without violation of the registration requirements of the Act. 7. Notices. All notices and other communications from the Company to the Holder of this Warrant shall be mailed by first-class registered or certified mail, postage-prepaid, to the address furnished to the Company in writing by the last Holder of this Warrant who shall have furnished an address to the Company in writing. Notice shall be deemed given immediately upon delivery to the U.S. Postal Service in accordance with this section. 8. No Rights as Shareholder; Limitation of Liability. This Warrant shall not entitle any Holder hereof to any of the rights of a shareholder of the Company. No provision hereof, in the absence of affirmative action by the Holder hereof to purchase Shares, and no mere enumeration herein of the rights or 4 privileges of the Holder hereof, shall give rise to any liability of such Holder for the purchase price of the Shares issuable on exercise of this Warrant or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. No provision of this Warrant and no right or option granted or conferred hereunder shall in any way limit, affect, or abridge the exercise by the Company of any of its corporate rights or powers to recapitalize, amend its certificate of incorporation, reorganize, consolidate or merge with or into another corporation, or to transfer all or any part of its property or assets, or the exercise of any other of the corporate rights and powers of the Company. 9. Change; Waiver. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Notwithstanding anything herein to the contrary, the Company reserves the right to unilaterally and without prior notice, to reduce the Purchase Price or to extend the term of this Warrant, or both. 10. Headings. The headings in this Warrant are for purposes of convenience in reference only, and shall not be deemed to constitute a part thereof. 11. Law Governing. This Warrant is delivered in New York and shall be construed and enforced in accordance with and governed by the laws of such State. Dated: November 13, 2000 COMMAND SECURITY CORPORATION By: /s/ William C. Vassell ------------------------------------- William C. Vassell Chairman of the Board 5 ELECTION TO PURCHASE (To be executed only upon exercise of Warrant) The undersigned registered owner of this Warrant irrevocably exercises this Warrant and purchases __________ of the number of Shares of common stock of Command Security Corporation purchasable with this Warrant, and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant. Dated: __________ _______________ Warrant Number _____________________________ signature of registered owner _____________________________ printed name _____________________________ street address _____________________________ city, state and zip 6 EX-99.D 5 0005.txt WARRANT FOR STOCK PURCHASE THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF, AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT OR REGULATION AND NOTIFICATION UNDER SUCH ACT COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. No. 15 Warrant to Purchase 150,000 Shares of Common Stock WARRANT TO PURCHASE COMMON STOCK of COMMAND SECURITY CORPORATION Void after September 31, 2001 This certifies that, for value received, Reliance Security Group plc (the "Holder"), is entitled, subject to the terms set forth below, at any time before September 31, 2001, (subject to earlier redemption as provided in Section 1(b) below), to purchase from Command Security Corporation, a New York corporation (the "Company"), with its principal office at Route 55, Lexington Park, Lagrangeville, NY 12540, One Hundred and Fifty Thousand (150,000) shares (the "Shares") of common stock, $.0001 par value of the Company, upon surrender hereof, at the principal office of the Company, with the Election to Purchase form attached hereto duly executed, and simultaneous payment therefor in lawful money of the United States, or otherwise as hereinafter provided, at a price equal to $1.875 per full Share. (Such price hereinafter referred to as the "Purchase Price"). The Purchase Price, number and character of such Shares are subject to adjustment as provided below, and the term "Shares" shall mean, unless the context otherwise requires, the stock and other securities and property at the time receivable upon the exercise of this Warrant. The term "Warrants" as used herein shall include this Warrant and any warrants delivered or deliverable in substitution or exchange thereof as provided herein. 1. Exercise. This Warrant may be exercised at any time or from time to time, on any business day for up to the number of Shares called for hereby, by surrendering it at the principal office of the Company, with the Election to Purchase form duly executed, together with payment in cash or by certified or official bank check, payable to the order of the Company, of the sum obtained by multiplying (i) the number of Shares indicated on the Election to Purchase form by (ii) the appropriate Purchase Price. This Warrant may be exercised for less than the full number of Shares at the time called for hereby, but not for less than 1,000 Shares unless the number of Shares called for on the face is less than 1,000 in which event the minimum number will be the number of Shares called for on the face. Upon a partial exercise this Warrant shall be surrendered, and a new Warrant of the same tenor and for the purchase of the number of such Shares not purchased upon such exercise shall be issued by the Company to Holder. A Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the Shares issuable upon such exercise shall be treated for all purposes as the holder of such Shares of record as of the close of business on such date. As soon as practicable on or after such date, the Company shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of full Shares issuable upon such exercise, together with cash, in lieu of any fraction of a Share, equal to such fraction of the current market value of one full Share. If surrendered by mail, the date of surrender shall be the date the Warrant is mailed consistent with the requirements for notice as described in Section 7. (b) This Warrant is subject to the Company's call for redemption at $0.10 per Share which may be exercised at any time beginning April 30, 1994 if, at any time following March 31, 1994, either (i) the mean of the closing market price quotations for the Shares over 20 consecutive trading days is at least $6.00, or (ii) the closing market price quotations for the Shares is at least $6.00 for ten consecutive trading days. Upon notice, as provided in Section 7 herein, of the Company's call for redemption, the Holder shall have 30 days in which to exercise this Warrant. Effective 5:00 PM of the 30th day following said notice (the "Termination Date") if the Warrant has not been fully exercised, the Warrant shall, terminate and become the right to receive only $0.10 per Share remaining exercised. Payment therefor shall be made by the Company within 30 days of the Termination Date. All other rights and interests under the Warrant will terminate effective immediately, upon the Termination Date; provided, however, if such payment is not timely made by the Company, all rights and interests under the Warrant shall be reinstated in full. 2 2. Payment of Taxes. All Shares issued upon the exercise of this Warrant shall be validly issued, fully paid and nonassessable, and the Company shall pay all taxes and other governmental charges that may be imposed in respect of the issue or delivery thereof. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for Shares in any name other than that of the registered Holder of the Warrant surrendered in connection with the purchase of such Shares, and in such case the Company shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the Company's satisfaction that no tax or other charge is due. 3. Protection Against Dilution. The Shares covered by this Warrant and the Purchase Price payable therefor shall be subject to appropriate adjustment as follows: (a) If a Share dividend is declared on the Shares, or if an increase or decrease has been effected in the number of outstanding Shares by reason of subdivision of such Shares or combination of such Shares into a lesser number, the number of Shares which may thereafter be purchased under this Warrant shall be the number of Shares which would have been received by the Holder on such dividend, subdivision or combination had the Holder been the Holder of record of the number of Shares then under this Warrant but not theretofore purchased and issued. (b) If there is any other capital reorganization or reclassification of the stated capital of the Company, or any consolidation or merger of the Company with any other corporation or corporations, or the sale or distribution of all or substantially all of the Company's property and assets, adequate provision shall be made by the Company so that there shall remain and be substituted under this Warrant the Shares, securities, or assets which would have been issuable or payable in respect of or in exchange for the Shares then remaining under this Warrant and not theretofore purchased and issued hereunder, as if the Holder of this Warrant had been the owner of such Shares on the applicable record date. (c) If any of the events described in Sections 3(a) or (b) occur, the Purchase Price shall be adjusted to that price determined by multiplying the then current Purchase Price by a fraction (x) the numerator of which shall be the total number of outstanding Shares immediately prior to such event and (y) the 3 denominator of which shall be the total number of outstanding Shares immediately after such event. 4. Loss or Mutilation. Upon receipt by the Company of evidence satisfactory to it (in the exercise of reasonable discretion) of the ownership of and the loss, theft, destruction or mutilation of any Warrant and (in the case of mutilation) upon surrender and cancellation thereof, the Company will execute and deliver in lieu thereof a new Warrant of like tenor. 5. Reservation of Stock. The Company shall at all times reserve and keep available for issue upon the exercise of Warrants such number of its authorized but unissued Shares as will be sufficient to permit the exercise in full of all outstanding Warrants. 6. (a) Restrictions on Transfer. The Holder of this Warrant, by acceptance hereof, agrees that, absent an effective notification under Regulation A or registration statement, in either case under the Securities Act of 1933, as amended (the "Act"), covering the disposition of the Warrant or Shares issued or issuable upon exercise hereof, such Holder will not sell or transfer any or all of such Warrant or Shares, as the case may be, without first providing the Company with an opinion of counsel (which may be counsel for the Company) to the effect that such sale or transfer will be exempt from the registration and prospectus delivery requirements of the Act. Such Holder consents to the Company making a notation on its records giving instructions to any transfer agent of the Warrant or such Shares in order to implement such restrictions on transferability. (b) Transfer Restriction Legend. Each certificate for Shares issued upon exercise of this Warrant, unless at the time of exercise such Common Stock is registered under the Act, shall bear a legend in substantially the following form on the face thereof: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ("THE ACT") AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. 4 Any certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate subject to a registration statement) shall also bear such legend unless, in the opinion of counsel to the Company, the securities represented thereby may be transferred as contemplated by such Holder without violation of the registration requirements of the Act. 7. Notices. All notices and other communications from the Company to the Holder of this Warrant shall be mailed by first-class registered or certified mail, postage-prepaid, to the address furnished to the Company in writing by the last Holder of this Warrant who shall have furnished an address to the Company in writing. Notice shall be deemed given immediately upon delivery to the U.S. Postal Service in accordance with this section. 8. No Rights as Shareholder; Limitation of Liability. This Warrant shall not entitle any Holder hereof to any of the rights of a shareholder of the Company. No provision hereof, in the absence of affirmative action by the Holder hereof to purchase Shares, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the purchase price of the Shares issuable on exercise of this Warrant or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. No provision of this Warrant and no right or option granted or conferred hereunder shall in any way limit, affect, or abridge the exercise by the Company of any of its corporate rights or powers to recapitalize, amend its certificate of incorporation, reorganize, consolidate or merge with or into another corporation, or to transfer all or any part of its property or assets, or the exercise of any other of the corporate rights and powers of the Company. 9. Change; Waiver. Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Notwithstanding anything herein to the contrary, the Company reserves the right to unilaterally and without prior notice, to reduce the Purchase Price or to extend the term of this Warrant, or both. 5 10. Headings. The headings in this Warrant are for purposes of convenience in reference only, and shall not be deemed to constitute a part thereof. 11. Law Governing. This Warrant is delivered in New York and shall be construed and enforced in accordance with and governed by the laws of such State. Dated: November 13, 2000 COMMAND SECURITY CORPORATION By: /s/ William C. Vassell ------------------------------------- William C. Vassell Chairman of the Board 6 ELECTION TO PURCHASE (To be executed only upon exercise of Warrant) The undersigned registered owner of this Warrant irrevocably exercises this Warrant and purchases __________ of the number of Shares of common stock of Command Security Corporation purchasable with this Warrant, and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant. Dated: __________ _______________ Warrant Number _____________________________ signature of registered owner _____________________________ printed name _____________________________ street address _____________________________ city, state and zip 7 EX-99.E 6 0006.txt WARRANT FOR STOCK PURCHASE THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE REGISTRATION PROVISIONS OF SAID ACT OR APPLICABLE STATE LAW HAVE BEEN COMPLIED WITH OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF ITS COUNSEL OR AN OPINION OF OTHER COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. COMMAND SECURITY CORPORATION Warrant for the Purchase of Shares of Common Stock, par value $.0001 per Share No. _____ THIS CERTIFIES that, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, RELIANCE SECURITY GROUP PLC (the "Holder"), is entitled to subscribe for and purchase from COMMAND SECURITY CORPORATION, a New York corporation (the "Company"), upon the terms and conditions set forth herein, at any time or from time to time after November 13, 2001 and before 5:00 P.M. on November 12 2005, New York time (the "Exercise Period"), Two Million Two Hundred Ninety Eight Thousand Ninety Two (2,298,092) shares of the Company's Common Stock par value $.0001 (the "Common Stock"), at a price of $1.25 per share (the "Exercise Price"). This Warrant is the warrant or one of the warrants (collectively, including any warrants issued upon the exercise or transfer of any such warrants in whole or in part, the "Warrants") issued pursuant to and in connection with the Shareholders Agreement, dated September 12, 2000 (the "Shareholders' Agreement"), among the Company, the Holder and William C. Vassell and the Stock Purchase Agreement, dated September 12, 2000 (the "Stock Purchase Agreement"), the Holder and the Sellers named therein. As used herein the term "this Warrant" shall mean and include this Warrant and any Warrant or Warrants hereafter issued as a consequence of the exercise or transfer of this Warrant in whole or in part. The number of shares of Common Stock issuable upon exercise of the Warrants (the "Warrant Shares") and the Exercise Price may be adjusted from time to time as hereinafter set forth. 1. This Warrant may be exercised during the Exercise Period, as to the whole or any lesser number of whole Warrant Shares, by the surrender of this Warrant (with the form of election attached hereto duly executed) to the Company at its office at Route 55, Lexington Park, Lagrangeville, NY 12540, or at such other place as is designated in writing by the Company, together with a certified or bank cashier's check payable to the order of the Company in an amount equal to the Exercise Price multiplied by the number of Warrant Shares for which this Warrant is being exercised (the "Aggregate Exercise Price"). 2. Upon each exercise of the Holder's rights to purchase Warrant Shares, the Holder shall be deemed to be the holder of record of the Warrant Shares issuable upon such exercise, notwithstanding that the transfer books of the Company shall then be closed or certificates representing such Warrant Shares shall not then have been actually delivered to the Holder. As soon as practicable after each such exercise of this Warrant, the Company shall issue and deliver to the Holder a certificate or certificates for the Warrant Shares issuable upon such exercise, registered in the name of the Holder or its designee. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the right of the Holder to purchase the balance of the Warrant Shares (or portions thereof) subject to purchase hereunder. 3. Any Warrants issued upon the transfer or exercise in part of this Warrant shall be numbered and shall be registered in a warrant register maintained by the Company in a manner consistent with sound business practice (the "Warrant Register") as they are issued. The Company shall be entitled to treat the registered holder of any Warrant on the Warrant Register as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other person, and shall not be liable for any registration or transfer of Warrants which are registered or to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration or transfer, or with the knowledge of such facts that its participation therein amounts to bad faith. This Warrant shall be transferable only on the books of the Company upon delivery thereof duly endorsed by the Holder or by his or its duly authorized attorney or representative, or accompanied by proper evidence of succession, assignment, or authority to transfer. In all cases of transfer by an attorney, executor, administrator, guardian, or other legal representative, duly authenticated evidence of his or its authority shall be produced. Upon any registration of transfer, the Company shall deliver a new Warrant or Warrants to the person entitled thereto. This Warrant may be exchanged, at the option of the Holder thereof, for another Warrant, or other Warrants of different denominations, of like tenor and representing in the aggregate the right to purchase a like number of Warrant Shares (or portions thereof), upon surrender to the Company or its duly authorized agent. Notwithstanding the foregoing, the Company shall have no obligation to cause Warrants to be transferred on its books to any person if, in the opinion of counsel to the Company, such transfer does not comply with the provisions of the Act, and the rules and regulations thereunder. 4. The Company shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of providing for the exercise of the rights to purchase all Warrant Shares granted pursuant to the Warrants, such number of shares of Common Stock as shall, from time to time, be sufficient therefor. The Company covenants that 2 all shares of Common Stock issuable upon exercise of this Warrant, upon receipt by the Company of the full Exercise Price therefor, shall be validly issued, fully paid, nonassessable, and free of preemptive rights. The Company hereby represents and warrants to the Purchaser that on the date hereof the number of Warrant Shares is equal to twenty-percent (20%) of the outstanding Common Stock on a fully-diluted basis taking into account the exercise of all stock options, warrants and rights to acquire shares of Common Stock outstanding on the date hereof, conversion of all shares of the Company's Preferred Stock outstanding on the date hereof, and exercise of this Warrant, but specifically excluding the warrants (the "Vassell Warrants") issued to William Vassell pursuant to Section 4.2 of the Employment Agreement dated September 12, 2000 between the Company and William Vassell. 5. (a) In case the Company shall at any time after the date the Warrants were first issued (i) declare a dividend on the outstanding Common Stock payable in shares of its capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller number of shares, or (iv) issue any shares of its capital stock by reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then, in each case, the Exercise Price, and the number of Warrant Shares issuable upon exercise of this Warrant, in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination, or reclassification, shall be proportionately adjusted so that the Holder after such time shall be entitled to receive the aggregate number and kind of shares which, if such Warrant had been exercised immediately prior to such time, he would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination, or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur. (b) In case the Company shall issue or fix a record date for the issuance to all holders of Common Stock of rights, options, or warrants to subscribe for or purchase Common Stock (or securities convertible into or exchangeable for Common Stock) at a price per share (or having a conversion or exchange price per share, if a security convertible into or exchangeable for Common Stock) less than the Exercise Price on such record date, then, in each case, the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such record date plus the number of shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so to be offered (or the aggregate initial conversion or exchange price of the convertible or exchangeable securities so to be offered) would purchase at such Exercise Price and the denominator of which shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock to be offered for subscription or purchase (or into which the convertible or exchangeable securities so to be offered are initially convertible or exchangeable). Such adjustment shall become effective at the close of business on such record date; provided, however, that, to the extent the shares of Common Stock (or securities convertible into or exchangeable for shares of Common Stock) are not delivered, the Exercise Price shall be readjusted after the expiration of such rights, options, or warrants (but only with respect to Warrants exercised after such expiration), to the Exercise Price which would then be in effect had the adjustments made upon the issuance of such rights, options, or warrants been made upon the basis of delivery of only the number of shares of Common Stock (or securities convertible into or exchangeable for shares of Common Stock) actually issued. In case any subscription 3 price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the board of directors of the Company, whose determination shall be conclusive absent manifest error. Shares of Common Stock owned by or held for the account of the Company or any majority-owned subsidiary shall not be deemed outstanding for the purpose of any such computation. (c) In case the Company shall distribute to all holders of Common Stock (including any such distribution made to the stockholders of the Company in connection with a consolidation or merger in which the Company is the continuing corporation) evidences of its indebtedness or assets (other than cash dividends or distributions and dividends payable in shares of Common Stock), or rights, options, or warrants to subscribe for or purchase Common Stock, or securities convertible into or exchangeable for shares of Common Stock (excluding those with respect to the issuance of which an adjustment of the Exercise Price is provided pursuant to Section 5(b) hereof), then, in each case, the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date for the determination of stockholders entitled to receive such distribution by a fraction, the numerator of which shall be the Exercise Price on such record date, less the fair market value (as determined in good faith by the board of directors of the Company, whose determination shall be conclusive absent manifest error) of the portion of the evidences of indebtedness or assets so to be distributed, or of such rights, options, or warrants or convertible or exchangeable securities, applicable to one share, and the denominator of which shall be such Exercise Price. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the record date for the determination of shareholders entitled to receive such distribution. (d) In case the Company shall issue shares of Common Stock or rights, options, or warrants to subscribe for or purchase Common Stock, or securities convertible into or exchangeable for Common Stock (excluding shares, rights, options, warrants, or convertible or exchangeable securities issued or issuable (i) in any of the transactions with respect to which an adjustment of the Exercise Price is provided pursuant to Sections 5(a), 5(b), or 5(c) above, (ii) to employees, officers, directors or consultants pursuant to any employee benefit plan or other arrangement or agreement for the primary purpose of soliciting or retaining their services, (iii) upon conversion of the Company's Series A Preferred Stock outstanding on the date hereof, or (iv) upon exercise of the Warrants or any other rights, options or warrants outstanding on the date hereof), at a price per share (determined, in the case of such rights, options, warrants, or convertible or exchangeable securities, by dividing (x) the total amount received or receivable by the Company in consideration of the sale and issuance of such rights, options, warrants, or convertible or exchangeable securities, plus the minimum aggregate consideration payable to the Company upon exercise, conversion, or exchange thereof, by (y) the maximum number of shares covered by such rights, options, warrants, or convertible or exchangeable securities) lower than the Exercise Price in effect immediately prior to such issuance, then the Exercise Price shall be reduced on the date of such issuance to a price (calculated to the nearest cent) determined by multiplying the Exercise Price in effect immediately prior to such issuance by a fraction, the numerator of which shall be an amount equal to the sum of (A) the number of shares of Common Stock outstanding immediately prior to such issuance plus (B) the quotient obtained by dividing the consideration received by the Company upon such issuance by such Exercise Price, and (iv) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such issuance. For the purposes of such adjustments, the maximum number of 4 shares which the holders of any such rights, options, warrants, or convertible or exchangeable securities shall be entitled to initially subscribe for or purchase or convert or exchange such securities into shall be deemed to be issued and outstanding as of the date of such issuance, and the consideration received by the Company therefor shall be deemed to be the consideration received by the Company for such rights, options, warrants, or convertible or exchangeable securities, plus the minimum aggregate consideration or premiums stated in such rights, options, warrants, or convertible or exchangeable securities to be paid for the shares covered thereby. No further adjustment of the Exercise Price shall be made as a result of the actual issuance of shares of Common Stock on exercise of such rights, options, or warrants or on conversion or exchange of such convertible or exchangeable securities. On the expiration or the termination of such rights, options, or warrants, or the termination of such right to convert or exchange, the Exercise Price shall be readjusted (but only with respect to Warrants exercised after such expiration or termination) to such Exercise Price as would have obtained had the adjustments made upon the issuance of such rights, options, warrants, or convertible or exchangeable securities been made upon the basis of the delivery of only the number of shares of Common Stock actually delivered upon the exercise of such rights, options, or warrants or upon the conversion or exchange of any such securities; and on any change of the number of shares of Common Stock deliverable upon the exercise of any such rights, options, or warrants or conversion or exchange of such convertible or exchangeable securities or any change in the consideration to be received by the Company upon such exercise, conversion, or exchange, including, but not limited to, a change resulting from the antidilution provisions thereof, the Exercise Price, as then in effect, shall forthwith be readjusted (but only with respect to Warrants exercised after such change) to such Exercise Price as would have been obtained had an adjustment been made upon the issuance of such rights, options, or warrants not exercised prior to such change, or securities not converted or exchanged prior to such change, on the basis of such change. In case the Company shall issue shares of Common Stock or any such rights, options, warrants, or convertible or exchangeable securities for a consideration consisting, in whole or in part, of property other than cash or its equivalent, then the "price per share" and the "consideration received by the Company" for purposes of the first sentence of this Section 5(d) shall be as determined in good faith by the board of directors of the Company, whose determination shall be conclusive absent manifest error. Shares of Common Stock owned by or held for the account of the Company or any majority-owned subsidiary shall not be deemed outstanding for the purpose of any such computation. (e) In case the Vassell Warrants shall vest and become exercisable in accordance with their terms at any time after the date the Warrants were first issued, then the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionally adjusted so that the Holder after such vesting shall be entitled to receive such number of Warrant Shares equal to twenty percent (20%) of the outstanding Common Stock taking into account the exercise of all stock options, warrants and rights to acquire shares of Common Stock outstanding on the date hereof, conversion of all shares of the Company's Preferred Stock outstanding on the date hereof, and exercise of this Warrant and that portion of the Vassell Warrants vested on such date. (f) As used in this Warrant, the "Current Market Price" per share of Common Stock on any date shall be deemed to be the average of the daily closing prices for the 30 consecutive trading days immediately preceding the date in question. The closing price for each day shall be the last reported sales price regular way or, in case no such reported sale takes place 5 on such day, the closing bid price regular way, in either case on the principal national securities exchange (including, for purposes hereof, the Nasdaq National Market) on which the Common Stock is listed or admitted to trading or, if the Common Stock is not listed or admitted to trading on any national securities exchange, the highest reported bid price for the Common Stock as furnished by the National Association of Securities Dealers, Inc. through Nasdaq or a similar organization if Nasdaq is no longer reporting such information. If on any such date the Common Stock is not listed or admitted to trading on any national securities exchange and is not quoted by Nasdaq or any similar organization, the fair value of a share of Common Stock on such date, as determined in good faith by the board of directors of the Company, whose determination shall be conclusive absent manifest error, shall be used. (g) No adjustment in the Exercise Price shall be required if such adjustment is less than $.05; provided, however, that any adjustments which by reason of this Section 5 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 5 shall be made to the nearest cent or to the nearest one-thousandth of a share, as the case may be. (h) In any case in which this Section 5 shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer, until the occurrence of such event, issuing to the Holder, if the Holder exercised this Warrant after such record date, the shares of Common Stock, if any, issuable upon such exercise over and above the shares of Common Stock, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment; provided, however, that the Company shall deliver to the Holder a due bill or other appropriate instrument evidencing the Holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment. (i) Upon each adjustment of the Exercise Price as a result of the calculations made in Sections 5(b), 5(c), 5(d) or 5(e) hereof, this Warrant shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of shares (calculated to the nearest thousandth) obtained by dividing (A) the product obtained by multiplying the number of shares purchasable upon exercise of this Warrant prior to adjustment of the number of shares by the Exercise Price in effect prior to adjustment of the Exercise Price by (B) the Exercise Price in effect after such adjustment of the Exercise Price. (j) Whenever there shall be an adjustment as provided in this Section 5, the Company shall promptly cause written notice thereof to be sent by registered mail, postage prepaid, to the Holder, at its address as it shall appear in the Warrant Register, which notice shall be accompanied by an officer's certificate setting forth the number of Warrant Shares purchasable upon the exercise of this Warrant and the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the computation thereof, which officer's certificate shall be conclusive evidence of the correctness of any such adjustment absent manifest error. (k) The Company shall not be required to issue fractions of shares of Common Stock or other capital stock of the Company upon the exercise of this Warrant. If any fraction of a share would be issuable on the exercise of this Warrant (or specified portions thereof), the 6 Company shall purchase such fraction for an amount in cash equal to the same fraction of the Exercise Price on the date of exercise of this Warrant. 6. (a) In case of any consolidation with or merger of the Company with or into another corporation (other than a merger or consolidation in which the Company is the surviving or continuing corporation), or in case of any sale, lease, or conveyance to another corporation of the property and assets of any nature of the Company as an entirety or substantially as an entirety, such successor, leasing, or purchasing corporation, as the case may be, shall (i) execute with the Holder an agreement providing that the Holder shall have the right thereafter to receive upon exercise of this Warrant solely the kind and amount of shares of stock and other securities, property, cash, or any combination thereof receivable upon such consolidation, merger, sale, lease, or conveyance by a holder of the number of shares of Common Stock for which this Warrant might have been exercised immediately prior to such consolidation, merger, sale, lease, or conveyance and (ii) make effective provision in its certificate of incorporation or otherwise, if necessary, to effect such agreement. Such agreement shall provide for adjustments which shall be as nearly equivalent as practicable to the adjustments in Section 5. (b) In case of any reclassification or change of the shares of Common Stock issuable upon exercise of this Warrant (other than a change in par value or from no par value to a specified par value, or as a result of a subdivision or combination, but including any change in the shares into two or more classes or series of shares), or in case of any consolidation or merger of another corporation into the Company in which the Company is the continuing corporation and in which there is a reclassification or change (including a change to the right to receive cash or other property) of the shares of Common Stock (other than a change in par value, or from no par value to a specified par value, or as a result of a subdivision or combination, but including any change in the shares into two or more classes or series of shares), the Holder shall have the right thereafter to receive upon exercise of this Warrant solely the kind and amount of shares of stock and other securities, property, cash, or any combination thereof receivable upon such reclassification, change, consolidation, or merger by a holder of the number of shares of Common Stock for which this Warrant might have been exercised immediately prior to such reclassification, change, consolidation, or merger. Thereafter, appropriate provision shall be made for adjustments which shall be as nearly equivalent as practicable to the adjustments in Section 5. (c) The above provisions of this Section 6 shall similarly apply to successive reclassifications and changes of shares of Common Stock and to successive consolidations, mergers, sales, leases, or conveyances. 7. In case at any time the Company shall propose (a) to pay any dividend or make any distribution on shares of Common Stock in shares of Common Stock or make any other distribution (other than regularly scheduled cash dividends which are not in a greater amount per share than such most recent cash dividend) to all holders of Common Stock; or 7 (b) to issue any rights, warrants, or other securities to all holders of Common Stock entitling them to purchase any additional shares of Common Stock or any other rights, warrants, or other securities; or (c) to effect any reclassification or change of outstanding shares of Common Stock, or any consolidation, merger, sale, lease, or conveyance of property, described in Section 6; or (d) to effect any liquidation, dissolution, or winding-up of the Company; or (e) to take any other action which would cause an adjustment to the Exercise Price; then, and in any one or more of such cases, the Company shall give written notice thereof, by registered mail, postage prepaid, to the Holder at the Holder's address as it shall appear in the Warrant Register, mailed at least 15 days prior to (i) the date as of which the holders of record of shares of Common Stock to be entitled to receive any such dividend, distribution, rights, warrants, or other securities are to be determined, (ii) the date on which any such reclassification, change of outstanding shares of Common Stock, consolidation, merger, sale, lease, conveyance of property, liquidation, dissolution, or winding-up is expected to become effective, and the date as of which it is expected that holders of record of shares of Common Stock shall be entitled to exchange their shares for securities or other property, if any, deliverable upon such reclassification, change of outstanding shares, consolidation, merger, sale, lease, conveyance of property, liquidation, dissolution, or winding up, or (iii) the date of such action which would require an adjustment to the Exercise Price. 8. The issuance of any shares of Common Stock or other securities upon the exercise of this Warrant, and the delivery of certificates or other instruments representing such shares or other securities, shall be made without charge to the Holder for any tax or other charge in respect of such issuance. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of any certificate in a name other than that of the Holder and the Company shall not be required to issue or deliver any such certificate unless and until the person or persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. 9. The Holder shall be entitled to the registration rights with respect to the Warrant Shares provided for in the Registration Rights Agreement, dated September 12, 2000, between the Company and the Holder. 10. The Warrant Shares issued upon exercise of the Warrants shall be subject to a stop transfer order and the certificate or certificates evidencing such Warrant Shares shall bear the following legend: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY 8 THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SPECIFIED IN A SHAREHOLDERS' AGREEMENT, DATED AS OF SEPTEMBER 12, 2000, BY AND AMONG THE ISSUER (THE "COMPANY"), WILLIAM C. VASSELL AND THE HOLDER, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SHARES UNTIL SUCH RESTRICTIONS AND CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH SALE, ASSIGNMENT, TRANSFER, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION. A COPY OF SUCH RESTRICTIONS AND CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDERS OF ITS CAPITAL STOCK UPON WRITTEN REQUEST AND WITHOUT CHARGE." 11. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction, or mutilation of any Warrant (and upon surrender of any Warrant if mutilated), and upon reimbursement of the Company's reasonable incidental expenses, the Company shall execute and deliver to the Holder thereof a new Warrant of like date, tenor, and denomination. 12. The Holder of any Warrant shall not have, solely on account of such status, any rights of a stockholder of the Company, either at law or in equity, or to any notice of meetings of stockholders or of any other proceedings of the Company, except as provided in this Warrant. 13. The Holder is acquiring the Warrant as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Warrant or Warrant Shares or any part thereof. By executing this Agreement, the Holder further represents that the Holder does not presently have any contract, undertaking, agreement or arrangement with any individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity (a "Person") to sell or transfer to such Person or to any third person, with respect to any of the Warrant or Warrant Shares. At the time the Holder was offered the Warrant, it was, and at the date hereof it is, an "accredited investor" as defined in Rule 501(a) under the Securities Act of 1933, as amended (the "Securities Act"). The Holder, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Warrant and the Warrant Shares, and has so evaluated the merits and risks of such investment. The Holder is able to bear the economic risk of an investment in the Warrant and the Warrant Shares and, at the present time, is able to afford a complete loss of such investment. The Holder's overall commitment to investments which are not readily marketable is not excessive in view of its net worth and financial circumstances and the purchase of the Warrant and the Warrant Shares will not cause such commitment to become excessive. The Holder acknowledges it (i) has reviewed or had the opportunity to review all of the Company's periodic reports under the Securities Exchange Act of 1934, as amended, (ii) has had access to information about the Company and the Company's financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) has had the opportunity to obtain such additional information that is necessary to make an informed investment decision with respect to the investment. The Holder has not entered into the transactions contemplated by the Shareholders Agreement and Stock Purchase Agreements as a result of or subsequent to any advertisement, article, notice or other communication regarding the Warrant or Warrant Shares published in any newspaper, magazine or similar media or broadcast over television or radio or 9 presented at any seminar or any other general solicitation or general advertisement. The Holder understands and acknowledges that (i) the Warrant and the Warrant Shares are being offered and sold to it without registration under the Securities Act in a private placement that is exempt from the registration provisions of the Securities Act and (ii) the availability of such exemption, depends in part on, and the Company will rely upon the accuracy and truthfulness of, the foregoing representations and the Holder hereby consents to such reliance. The Holder understands that the Warrant and the Warrant Shares are "restricted securities" under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Holder must hold such Warrant and Warrant Shares indefinitely unless they are registered with the Commission and qualified by applicable state authorities, or an exemption from such registration and qualification requirements is available. 14. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested or sent by Federal Express, Express Mail, or similar overnight delivery or courier service or delivered (in person or by telecopy, telex, or similar telecommunications equipment) against receipt to the party to whom it is to be given, if sent to the Company, at: Route 55, Lexington Park, Lagrangeville, New York, NY 12540, Attention: Chief Executive Officer; or if sent to the Holder, at the Holder's address as it shall appear on the Warrant Register; or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 13. Any notice or other communication given by certified mail shall be deemed given at the time of certification thereof, except for a notice changing a party's address which will be deemed given at the time of receipt thereof. Any notice given by other means permitted by this Section 13 shall be deemed given at the time of receipt thereof. 15. This Warrant shall be binding upon the Company and its successors and assigns and shall inure to the benefit of the Holder and its successors and assigns. 16. This Warrant shall be construed in accordance with the laws of the State of New York applicable to contracts made and performed within such State, without regard to principles of conflicts of law. 17. The Company and the Holder each irrevocably consents to the jurisdiction of the courts of the State of New York and of any federal court located in such State in connection with any action or proceeding arising out of or relating to this Warrant, any document or instrument delivered pursuant to, in connection with or simultaneously with this Warrant, or a breach of this Warrant or any such document or instrument. 10 IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed under its corporate seal on the day and year first written below. Dated: November 13, 2000 COMMAND SECURITY CORPORATION By: /s/ William Vassell ------------------------------------ Name: William Vassell Title: AGREED: RELIANCE SECURITY GROUP PLC By: /s/ Geoff P. Haslehurst -------------------------------- Name: Geoff P. Haslehurst Title: Finance Director 11 FORM OF ASSIGNMENT (To be executed by the registered holder if such holder desires to transfer the attached Warrant.) FOR VALUE RECEIVED, _____________________________ hereby sells, assigns, and transfers unto __________________ a Warrant to purchase __________ shares of Common Stock, par value $.0001 per share, of Command Security Corporation (the "Company"), together with all right, title, and interest therein, and does hereby irrevocably constitute and appoint __________ attorney to transfer such Warrant on the books of the Company, with full power of substitution. Dated: ______________ Signature_____________________________ NOTICE The signature on the foregoing Assignment must correspond to the name as written upon the face of this Warrant in every particular, without alteration or enlargement or any change whatsoever. 12 To: Command Security Corporation Route 55, Lexington Park Lagrangeville, NY 12540 ELECTION TO EXERCISE The undersigned hereby exercises his or its rights to purchase _______ Warrant Shares covered by the within Warrant and tenders payment herewith in the amount of $_________ in accordance with the terms thereof, and requests that certificates for such securities be issued in the name of, and delivered to: ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ (Print Name, Address and Social Security or Tax Identification Number) and, if such number of Warrant Shares shall not be all the Warrant Shares covered by the within Warrant, that a new Warrant for the balance of the Warrant Shares covered by the within Warrant be registered in the name of, and delivered to, the undersigned at the address stated below. Dated: _______________ Name____________________________________ (Print) Address:________________________________________________________________ ________________________________________ (Signature) 13 EX-99.F 7 0007.txt REGISTRATION RIGHTS AGREEMENT 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 S-4, Form S-8, 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 S-4, S-8 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 Route 55 Lexington Park Lagrangeville New York 12540 with copies to: David J. Pollitzer, Esq. Herzog, Engstrom & Koplovitz, P.C. 99 Pine Street Albany, New York 12207-2776 (ii) if to the Holder: Reliance Security Group plc Boundary House Cricket Field Road Uxbridge, Middlesex UB81QG Attention: Geoff Haslehurst with copies to: Howard S. Jacobs, Esq. Wayne A. Wald, Esq. Rosenman & Colin LLP 575 Madison Avenue New York, New York 10022 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/ William Vassell ------------------------------------- Name: William Vassell Title: Chairman RELIANCE SECURITY GROUP PLC By: /s/ Geoff P. Haslehurst ------------------------------------- Name: Geoff P. Haslehurst Title: Finance Director 8 -----END PRIVACY-ENHANCED MESSAGE-----