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Item
1.01
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Entry
into a Material Definitive Agreement.
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Merger
Agreement
On
September 18, 2018, Command Security Corporation, a New York corporation (the “Company”), entered into an Agreement
and Plan of Merger (the “Merger Agreement”) with Prosegur SIS (USA) Inc., a Florida corporation (“Parent”),
and Crescent Merger Sub, Inc., a New York corporation and a wholly owned subsidiary of Parent (“Merger Sub”). The
Merger Agreement provides that, subject to the terms and conditions set forth therein, Merger Sub will merge with and into the
Company (the “Merger”), with the Company surviving the Merger and becoming a wholly owned subsidiary of Parent.
Under
the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of the Company’s common stock
(other than (i) shares owned by Parent, Merger Sub or any other direct or indirect wholly owned subsidiary of Parent or (ii) shares
owned by any direct or indirect wholly owned subsidiary of the Company, and, in each case, not held on behalf of third parties)
will be cancelled and automatically converted into the right to receive $2.85 per share in cash (the “Merger Consideration”).
Under
the Merger Agreement, at the effective time of the Merger, each outstanding option to purchase shares, outstanding restricted
shares and outstanding restricted stock units, in each case, whether vested or unvested, will be cancelled. A holder of an outstanding
option to purchase shares will be entitled to receive an amount in cash equal to (x) the total number of shares subject to such
Company option, whether vested or unvested, immediately prior to the effective time of the Merger multiplied by (y) the excess,
if any, of the Merger Consideration over the exercise price per share under each Company option, less applicable taxes. A holder
of an outstanding restricted share or outstanding restricted stock unit will be entitled to receive an amount in cash equal to
(x) the total number of such restricted shares and restricted stock units, whether vested or unvested, immediately prior to the
effective time multiplied by (y) the Merger Consideration, less applicable taxes.
The
Company has made customary representations, warranties and covenants in the Merger Agreement, including covenants not to, during
the pendency of the Merger, solicit alternative transactions or, subject to certain exceptions, not to enter into discussions
concerning, or provide confidential information in connection with, an alternative transaction. Each of Parent and Merger Sub
also has made customary representations, warranties and covenants in the Merger Agreement.
Consummation
of the Merger is subject to the satisfaction or waiver of customary closing conditions, including adoption of the Merger Agreement
by the Company’s stockholders and receipt of the Committee on Foreign Investment in the United States (CFIUS) approval.
The transaction is not subject to any financing condition.
The
Merger Agreement contains certain customary termination rights for Parent and the Company, including a right to terminate the
Merger Agreement if the Merger is not completed by March 18, 2019, unless otherwise extended pursuant to the terms of the Merger
Agreement. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain specified circumstances,
the Company will be obligated to pay Parent a termination fee of approximately $1.2 million.
The
foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject
to, and qualified in its entirety by, the full text of the Merger Agreement attached hereto as Exhibit 2.1 and incorporated herein
by reference.
The
Merger Agreement has been attached as an exhibit hereto to provide investors with information regarding its terms. It is not intended
to provide any other factual information about the Company, Parent or Merger Sub, their respective businesses, or the actual conduct
of their respective businesses during the period prior to the consummation of the Merger. The representations, warranties and
covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates therein,
were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting
parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the
parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality
applicable to the contracting parties that differ from those applicable to investors. Accordingly, the representations and warranties
may not describe the actual state of affairs as of the date they were made or at any other time and investors should not rely
on them as statements of fact.