ARGYLE
      SECURITY, INC.

     

    2007
      OMNIBUS SECURITIES AND INCENTIVE PLAN

     

    STOCK
      OPTION AGREEMENT

     

    INCENTIVE
      STOCK OPTION

     

     

    THIS
      AGREEMENT made as of ___________________, 200_, by and between Argyle Security,
      Inc., a Delaware corporation (the “Company”),
      and
      _________________________________ (the “Optionee”).

     

    WITNESSETH:

     

    WHEREAS,
      the Company has adopted the Argyle Security, Inc. 2007 Omnibus Securities and
      Incentive Plan (the “Plan”)
      for
      the benefit of its employees, nonemployee directors and consultants and the
      employees, nonemployee directors and consultants of its affiliates,
      and

     

    WHEREAS,
      the Committee has authorized the grant to the Optionee of an Option under the
      Plan, on the terms and conditions set forth in the Plan and as hereinafter
      provided,

     

    NOW,
      THEREFORE, in consideration of the premises contained herein, the Company and
      the Optionee hereby agree as follows:

     

    1. Definitions.

     

    Terms
      used in this Agreement which are defined in the Plan shall have the same meaning
      as set forth in the Plan.

     

    2. Grant
      of Option.

     

    The
      Committee hereby grants to the Optionee an option to purchase [insert
      #
      of
      shares] shares
      of
      the Company’s Common Stock (“Shares”)
      for an
      Option price per Share equal to [insert
      price] (not
      less
      than the Fair Market Value of a Share on the date of this Agreement and not
      less
      than one hundred ten percent (110%) of the Fair Market Value of a Share if
      the
      Optionee is a ten percent (10%) or greater shareholder of the Company as
      described in Section 7.3 of the Plan) (the “Option”).
      The
      Option is intended by the Committee to be an Incentive Stock Option and the
      provisions hereof shall be interpreted on a basis consistent with such
      intent.

     

    3. Option
      Terms and Exercise Period.

     

    (a) The
      Option shall be exercised, and payment by the Optionee of the Option price
      shall
      be made, pursuant to the terms of the Plan.

     

    (b) All
      or
      any part of the Option may be exercised by the Optionee no later than ten (10)
      years (five (5) years if the Optionee is a ten percent (10%) or greater
      shareholder of the Company as described in Section 7.3 of the Plan) after the
      date of this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) [Except
      as
      otherwise provided in Section 10,]
      this
      Agreement and the Option shall terminate on the earlier of (i) the (10th)
      anniversary (no later than the tenth anniversary) (the fifth (5th) anniversary
      if the Optionee is a ten percent (10%) or greater shareholder of the Company
      as
      described in Section 7.3 of the Plan) of the date of this Agreement, or (ii)
      the
      date the Option is fully exercised.

     

    4. Vesting.

     

    The
      Option shall vest and become exercisable pursuant to the following
      schedule:

     

    Insert
      Vesting Schedule/Performance Goals

     

    Notwithstanding
      the above schedule, the Optionee shall be one hundred percent (100%) vested
      in
      the Option if the Optionee’s employment with the Company shall terminate on
      account of the Optionee’s (a) Total and Permanent Disability, (b) death or (c)
      retirement upon or after attaining age sixty-five (65) with at least five (5)
      full years of service for the Company and/or an Affiliate. The Optionee shall
      forfeit any unvested portion of the Option upon termination of employment with
      the Company for any reason other than the Optionee’s Total and Permanent
      Disability, death or retirement upon or after attaining age sixty-five
      (65).

     

    5. Termination
      of Employment.

     

    Sections
      6.2, 6.4 and 6.5 of the Plan shall control.

     

    6. Restrictions
      on Transfer of Option.

     

    This
      Agreement and the Option shall not be transferable otherwise than by will or
      by
      the laws of descent and distribution, and the Option shall be exercisable,
      during the Optionee’s lifetime, solely by the Optionee, except on account of the
      Optionee’s Total and Permanent Disability or death.

     

    7. Exercise
      of Option.

     

    (a) The
      Option shall become exercisable at such time as shall be provided herein or
      in
      the Plan and shall be exercisable by written notice of such exercise, in the
      form prescribed by the Committee, to the Secretary of the Company, at its
      principal office. The notice shall specify the number of Shares for which the
      Option is being exercised.

     

    (b) Shares
      purchased pursuant to the Option shall be paid for in full at the time of such
      purchase in cash, in Shares, including Shares acquired pursuant to the Plan,
      or
      part in cash and part in Shares. Shares transferred in payment of the Option
      price shall be valued as of the date of transfer based on their Fair Market
      Value.

     

    8. Regulation
      by the Committee.

     

    This
      Agreement and the Option shall be subject to any administrative procedures
      and
      rules as the Committee shall adopt. All decisions of the Committee upon any
      question arising under the Plan or under this Agreement, shall be conclusive
      and
      binding upon the Optionee and any person or persons to whom any portion of
      the
      Option has been transferred by will or by the laws of descent and
      distribution.

     

    
      
        
        

      

      
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    9. Rights
      as a Shareholder.

     

    The
      Optionee shall have no rights as a shareholder with respect to Shares subject
      to
      the Option until certificates for Shares of Common Stock are issued to the
      Optionee.

     

    10. [Change
      of Control.

     

    Notwithstanding
      the vesting requirements contained in Section 4, upon a Change of Control,
      in
      the sole discretion of the Committee, either (a) the Option shall automatically
      become fully vested and exercisable as of the date of such Change of Control,
      or
      (b) the Option shall terminate and the Company shall, within 30 days, make
      a cash payment to the Optionee equal to the product of (i) the number of Shares
      set forth in Section 1, multiplied by (ii) the excess of the Fair Market Value
      of a Share of Common Stock immediately prior to the Change of Control over
      the
      Option price. If the Company fails to make the payment described in clause
      (b)
      of the immediately preceding sentence within days following the Change of
      Control, the Option shall automatically become fully vested and exercisable
      as
      of the next day. 

     

    For
      purposes of this Agreement, the term “Change
      of Control”
shall
      mean (i) for an Optionee who is a party to an employment agreement with the
      Company or an Affiliate which agreement provides for a definition of “Change of
      Control” therein, “Change
      of Control”
shall
      have the same meaning as provided for in such agreement, or (ii) for an Optionee
      who is not a party to such an agreement, “Change
      of Control”
shall
      mean the earliest of the following to occur:

     

    (a) The
      public announcement by the Company or any person (other than the Company, any
      subsidiary of the Company or any employee benefit plan of the Company or of
      any
      subsidiary of the Company) (“Person”)
      that
      such Person, who or which, together with all “affiliates” and “associates”
(within the meanings of such terms under Rule 12b-2 of the Exchange Act) of
      such
      Person, shall be the beneficial owner of (fifty percent (50%) or more of the
      Company’s voting stock then outstanding;

     

    (b) The
      commencement of, or after the first public announcement of any Person to
      commence, a tender or exchange offer the consummation of which would result
      in
      any Person becoming the beneficial owner of the Company’s voting stock
      aggregating fifty percent (50%) or more of the Company’s then outstanding voting
      stock;

     

    (c) The
      announcement of any transaction relating to the Company required to be described
      pursuant to the requirements of Item 6(e) of Schedule 14A of Regulation 14A
      of
      the Securities and Exchange Commission under the Exchange Act;

     

    (d) A
      proposed change in the constituency of the Board such that, during any period
      of
      two (2) consecutive years, individuals who at the beginning of such period
      constitute the Board cease for any reason to constitute at least a majority
      thereof, unless the election or nomination for election by the shareholders
      of
      the Company of each new director was approved by a vote of at least two-thirds
      (2/3) of the directors then still in office who were members of the Board at
      the
      beginning of the period;

     

    
      
        
        

      

      
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    (e) The
      Company enters into an agreement of merger, consolidation, share exchange or
      similar transaction with any other corporation other than a transaction which
      would result in the Company’s voting stock outstanding immediately prior to the
      consummation of such transaction continuing to represent (either by remaining
      outstanding or by being converted into voting stock of the surviving entity)
      at
      least two-thirds (2/3) of the combined voting power of the Company’s or such
      surviving entity’s outstanding voting stock immediately after such
      transaction;

     

    (f) The
      Board
      approves a plan of liquidation or dissolution of the Company or an agreement
      for
      the sale or disposition by the Company (in one transaction or a series of
      transactions) of all or substantially all of the Company’s assets to a person or
      entity which is not an affiliate of the Company; or

     

    (g) Any
      other
      event which shall be deemed by a majority of the members of the Board to
      constitute a “Change of Control.”

     

    Notwithstanding
      anything to the contrary contained in this Section 10, the Board is hereby
      authorized to make any modifications to the above “Change of Control” definition
      as it determines in its sole discretion to be necessary for purposes of
      compliance with Section 409A of the Code, to the extent applicable.]

     

    11. Reservation
      of Shares.

     

    With
      respect to the Option, the Company hereby agrees to at all times reserve for
      issuance and/or delivery upon payment by the Optionee of the Option price,
      such
      number of Shares as shall be required for issuance and/or delivery upon such
      payment pursuant to the Option.

     

    12. Delivery
      of Share Certificates.

     

    Within
      a
      reasonable time after the exercise of the Option, the Company shall cause to
      be
      delivered to the Optionee, his or her legal representative or his or her
      beneficiary, a certificate for the Shares purchased pursuant to the exercise
      of
      the Option.

     

    13. Withholding.

     

    In
      the
      event the Optionee elects to exercise the Option (or any part thereof), if
      the
      Company or an Affiliate shall be required to withhold any amounts by reason
      of
      any federal, state or local tax rules or regulations in respect of the issuance
      of Shares to the Optionee, the Company or Affiliate shall be entitled to deduct
      and withhold such amounts.


    
      
        
        

      

      
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    14. Amendment.

     

    The
      Committee may amend this Agreement at any time and from time to time;
provided,
      however,
      that no
      amendment of this Agreement that would materially and adversely impair the
      Optionee’s rights or entitlements with respect to the Option shall be effective
      without the prior written consent of the Optionee (unless such amendment is
      required in order to cause the Award hereunder to qualify as “performance-based”
compensation within the meaning of Section 162 (m) of the Code and applicable
      interpretive authority thereunder).

     

    15. Plan
      Terms.

     

    The
      terms
      of the Plan are hereby incorporated herein by reference.

     

    16. Effective
      Date of Grant.

     

    The
      Option shall be effective as of the date first written above.

     

    17. Optionee
      Acknowledgment.

     

    By
      executing this Agreement, the Optionee hereby acknowledges that he or she has
      received and read the Plan and this Agreement and that he or she agrees to
      be
      bound by all of the terms of both the Plan and this Agreement.

     

    
      
        	
                ATTEST:
                  

              	ARGYLE
                SECURITY, INC.
	                           
	
                By: 

              	
                                                

              
	 	 	 
	 	Its:	
                                                

              
	 	 
	 	
                                ,
                  Awardee 

                [Name]

              


      

       

    

    
      
        
        

      

      
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