COMMAND SECURITY CORPORATION
Route 55, Lexington Park
Lagrangeville, New York 12540
_______________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 18, 1996
________________________________
To the Shareholders of Command Security Corporation:
The annual meeting of shareholders of Command Security
Corporation will be held at its executive offices, located at Route
55, Lexington Park, Lagrangeville, New York on November 18, 1996, at
10:30 o'clock in the forenoon, New York time, for the following
purposes:
1. To elect four directors to hold office until their
respective two year terms expire and until their successors
have been elected and qualified.
2. To ratify the selection of auditors for the fiscal year
ending March 31, 1997.
3. To transact such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on October
18, 1996, are entitled to notice of and to vote at the meeting and at
any adjournment thereof. A complete list of shareholders entitled to
vote will be available for inspection by shareholders at the
executive offices of the Company at least ten days before the date of
the meeting.
By order of the Board of Directors.
Debra M. Miller, Secretary
Dated: October 21, 1996
Lagrangeville, New York
IMPORTANT - Please sign the enclosed proxy and mail it promptly in
the postpaid return envelope provided, particularly if you do not
expect to attend the meeting in person.
<PAGE>
COMMAND SECURITY CORPORATION
Route 55, Lexington Park
Lagrangeville, New York 12540
______________________________
PROXY STATEMENT
______________________________
This Proxy Statement is furnished in connection with the
solicitation of proxies by the board of directors of Command Security
Corporation (the "Company") to be used at the annual meeting of
shareholders of the Company to be held on November 18, 1996, at 10:30
o'clock in the forenoon, New York time, at its executive offices,
located at Route 55, Lexington Park, Lagrangeville, New York, for the
purposes set forth in the accompanying notice of annual meeting of
shareholders. If the enclosed form of proxy is executed and
returned, it may nevertheless be revoked at anytime before it is
exercised, either in person at the annual meeting or by written
notice or by a duly executed proxy, bearing a later date, sent to the
Secretary of the Company. If no instructions are given on the proxy,
it will be voted as herein recommended by the board of directors.
The Company anticipates mailing this proxy statement and the
accompanying proxy to shareholders on or about October 21, 1996. The
Company may require the assistance of certain broker-dealers in
obtaining completed proxies from shareholders. Such assistance would
be in the form of telephonic or written communication by employees of
such broker-dealers. No contract or compensation is anticipated in
connection with any such solicitation. All expenses of proxy
solicitation will be borne by the Company.
As of October 18, 1996, there were 6,936,706 shares of common
stock issued and outstanding, held by approximately 1,000 beneficial
owners and 250 holders of record. Each share of common stock is
entitled to one vote. Only holders of record of common stock at the
close of business on October 18, 1996 will be entitled to vote at the
meeting.
Proxies will be received and tabulated by the Company's transfer
agent. Votes cast in person at the meeting will be tabulated by an
election inspector appointed by the Company. Abstentions and "broker
non-votes" are included in the determination of the number of shares
present at the meeting. Abstentions are counted in tabulations of
the vote cast on Proposals presented to the shareholders, whereas
broker non-votes are not counted in tabulations of the votes cast.
Neither are counted as votes cast "for" a proposal.
<PAGE>
ELECTION OF DIRECTORS
The Company's bylaws provide for the board to be divided into
two classes. Directors are elected by a plurality of the votes of
the shareholders. The Company's by-laws provide that there shall be
not more than twenty-one nor fewer than three directors of the
Company, with the exact number to be determined from time to time by
the board. The board has resolved that the number of directors shall
be eight (8). Proxies cannot be voted for a greater number of
persons than the number of nominees named.
The board proposes that Messrs. H. Richard Dickinson, Peter T.
Kikis, Lloyd H. Saunders, III and Steven B. Sands, whose terms of
office expire at the upcoming annual meeting of shareholders, be re-
elected as directors. It is not anticipated that any of these
nominees will become unavailable for any reason, but, if that should
occur before the annual meeting, the appointees named in the proxy
reserve the right, in the exercise of their sole discretion, to
substitute and to vote for any other person of their choice as
nominee in place of such nominee or to vote for such lesser number of
directors as may be prescribed by the board of directors in
accordance with the Company's Certificate of Incorporation and
bylaws.
In accordance with Securities and Exchange Commission
regulations, the enclosed proxy card provides shareholders with an
opportunity to grant to, or withhold from, the appointees named
therein the authority to vote for the election of any director
nominee named above.
The board of directors recommends that shareholders vote FOR the
foregoing nominees.
The following information is furnished as to the nominees:
Name Age Title Since
H. Richard Dickinson 49 Executive Vice President, 1995
Chief Financial Officer
and Director
Peter T. Kikis 73 Director 1995
Steven B. Sands 37 Director 1994
Lloyd H.Saunders, III 42 Director 1995
H. Richard Dickinson was appointed Executive Vice President and
Chief Financial Officer of the Company on February 24, 1995, in
connection with the Company's acquisition of United Security Group,
Inc. ("United"). Before joining the Company, Mr. Dickinson was the
vice president and chief financial officer of United since 1989, and
a director since 1993. Mr. Dickinson has 13 years of industry
experience. From 1978 to 1982 he was employed by Burns International
Security Services, initially as director of corporate taxation and
thereafter as vice president and treasurer where his responsibilities
included corporate accounting and SEC reporting. In 1982, Borg
Warner acquired Burns; Mr. Dickinson remained at Burns until 1984
when he became assistant treasurer and then assumed the role of
treasurer of the Protective Services Group. Mr. Dickinson was named
to the Company's board as of May 4, 1995.
Peter T. Kikis became a director of the Company on February 24,
1995 in connection with the acquisition of United. He is a director
of Deltec International S.A., the parent of Deltec Development
Corporation, the subordinated debt lender to the Company. Since
1950, Mr. Kikis has been the President and a principal in Spencer
Management Company, a real estate development and management company
in New York, New York. From 1972 to 1992, Mr. Kikis was Chairman of
the board of directors and a principal of McRoberts Protective
Agency, a New York-based provider of security guard services.
Steven B. Sands was placed on the board on April 13, 1994, in
accordance with the provisions of the Company's agreement with Sands
Brothers executed in connection with the Company's 1993 Private
Placement. Mr. Sands is Chairman of the Board of Sands Brothers &
Co., Ltd., a Delaware corporation registered as a broker-dealer. Mr.
Sands also has interests in certain entities which own the Company's
stock. Mr. Sands is currently on the board of directors of the
following publicly-traded companies: The Village Green Bookstore,
Inc.; Semi-Conductor Packaging Materials, Inc.; Digital Solutions,
Inc.; and Brightpoint Financing for Science International.
Lloyd H. Saunders, III became a director of the Company on
February 24, 1995, in connection with the acquisition of United. He
is a managing director at Sands Brothers and has been so since 1991.
From 1989 to 1990, he was a private investor and from 1986 to 1988 he
was the director of corporate finance for Whale Securities, New York,
New York.
Each member of the board entered into a shareholder Voting
Agreement on March 8, 1995, which was finally agreed to on March 24,
1995, and which has been amended to include H. Richard Dickinson. It
provides that each person then on the board will (i) vote all shares
beneficially owned by him for the election to directorships of each
of the other members of the board, (ii) refrain from voting any of
his shares for any action that would result in the increase or
decrease of the number of positions on the board or for the removal,
without cause, of any member of the board, and (iii) in the event of
death, resignation or removal of any director, vote all of his shares
in favor of the election of the person designated as replacement in
accordance with the shareholders Voting Agreement.
The provisions of the shareholder Voting Agreement will make it
more difficult for the shareholders to replace the current directors.
The shareholders Voting Agreement provides that it will remain in
effect so long as the parties thereto continue to hold shares.
DIRECTORS AND EXECUTIVE OFFICERS
The Company's By-Laws require that the Board be divided into two
classes once the size of the Board is greater than six. The Board
size exceeded six in February of 1995. The first class consists of
directors Steven B. Sands, Peter T. Kikis, Lloyd H. Saunders, III and
H. Richard Dickinson. The second class consists of William C.
Vassell, Gordon Robinett, Peter J. Nekos and Gregory J. Miller. The
terms of the directors in the first class expires at the upcoming
annual meeting of Shareholders. The terms of the directors in the
second class will expire at the annual meeting of Shareholders in
1997 and until their successors are elected and qualified. Each
director's term is for two years. A classified board makes it more
difficult for shareholders to change the majority of directors.
Depending on the number of people in each class it could take two (2)
annual meetings to replace a majority of the Board. This provision
is applicable to every election of directors after the initial
classification.
Each member of the Board entered into a Shareholder Voting
Agreement on March 8, 1995, which was finally memorialized on March
24, 1995, and which was amended on June 2, 1995 to include H. Richard
Dickinson. It provides that each person then on the Board will (i)
vote all shares beneficially owned by him (his "Shares") for the
election to directorships of each of the other members of the Board,
(ii) refrain from voting any of his Shares for any action that would
result in the increase or decrease of the number of positions on the
Board or for the removal, without cause, of any member of the Board,
and (iii) in the event of death, resignation or removal of any
director, vote all of his Shares in favor of the election of the
person designated as replacement in accordance with the Shareholders
Voting Agreement.
Simultaneously with the execution of the Shareholders Voting
Agreement, all of the persons then on the Board signed a Unanimous
Written Consent which provides for them to designate certain members
of the Board as replacements for any current director upon death,
resignation, removal or inability to serve. Messrs. Vassell, Nekos,
Miller and Robinett were given the authority to nominate their
replacements; Messrs. Dickinson, Sands and Saunders were given the
authority to nominate their replacements; and Mr. Kikis was given the
authority to nominate his replacement. The Board members agreed that
their respective nominees of any replacements could be provided at a
later date.
The Company has the following standing committees: Executive,
Compensation, and Audit. The Executive Committee includes Messrs.
Vassell, Kikis, and Dickinson. The Executive Committee advises
management between board meetings and considers matters prior to
presentation by the full board. The Executive Committee meets
regularly (at least twice monthly). The Compensation Committee
includes Messrs. Vassell, Sands, and Kikis. The Compensation
Committee advises the board on compensation-related issues with
respect to the Company's employees. The Audit Committee includes
Messrs. Robinett, Nekos and Saunders. The Audit Committee is
responsible for recommending a selection for the Company's
accountants and for advising the board with respect to all audit,
control and accounting matters. The Compensation Committee and Audit
Committee each met once during the fiscal year ended March 31, 1996.
All committee meetings were attended by at least 75% of the directors
comprising the committee.
The Company's Board of Directors met four times during the
fiscal year ended March 31, 1996 and took action by unanimous written
consent on six occasions. Each non-employee member of the Board was
paid $625 per Board meeting.
<PAGE>
The following table provides information concerning each person who
was an executive officer or director of the Company at October 18,
1996.
Name Age Title
William C. Vassell 38 Chairman of the Board
Gordon Robinett 60 Vice Chairman of the Board
and Director
H. Richard Dickinson 49 Executive Vice President, Chief
Financial Officer and
Director
Gregory J. Miller 37 Director
Peter J. Nekos 68 Director
Peter T. Kikis 73 Director
Steven B. Sands 37 Director
Lloyd H. Saunders, III 42 Director
Eugene U. McDonald 46 Sr. Vice President --Operations
Debra M. Miller 41 Secretary
William C. Vassell had been Chairman of the Board, President and
Chief Executive Officer of the Company since 1983, when he acquired
the remaining 50% equity interest in the Company (he became a 50%
owner of the Company in 1980). In connection with the acquisition of
United, Mr. Vassell resigned as President and Chief Executive Officer
on February 24, 1995, and retained his position as Chairman of the
Board. He has been a director of the Company since 1980. Mr.
Vassell is active in various industry and trade associations. He
twice was Chairman of the Mid-Hudson Chapter of the American Society
for Industrial Security (the nationally recognized security
association), and he is a Certified Protection Professional within
the Society. He is also a director of the Associated Licensed
Detectives of New York State and a member of the Committee of
National Security Companies.
Gordon Robinett was appointed Vice Chairman of the Board of
Directors on February 24, 1995. He served as Treasurer of the
Company from May, 1990 until August 1, 1996 when Mr. Robinett and
the Company agreed to mutually terminate his employment. He has been
a director since 1990. From May 1989 to April 1990, Mr. Robinett was
a consultant to Uniforce Temporary Personnel, Inc., a publicly held
national temporary personnel agency, and managed his personal
investments. From 1968 to April 1989, he was employed by Uniforce,
initially as Controller and thereafter as Vice President of Finance,
Secretary and Treasurer; and he continues to serve as a member of its
board of directors. At Uniforce, Mr. Robinett had responsibility for
all corporate accounting and financial management, and he maintained
regular contact with all Uniforce franchisees and supervised the
analysis of their operating statements.
H. Richard Dickinson was appointed Executive Vice President and
Chief Financial Officer of the Company on February 24, 1995, in
connection with the acquisition of United. Before joining the
Company, Mr. Dickinson was the Vice President and Chief Financial
Officer of United Security Group Inc. since 1989 and a Director of
United since 1993. Mr. Dickinson has 14 years of industry
experience. From 1978 to 1982 he was employed by Burns International
Security Services, initially as Director of Corporate Taxation and
thereafter as Vice President and Treasurer where his responsibilities
included corporate accounting and SEC reporting. In 1982, when Borg
Warner acquired Burns, Mr. Dickinson remained at Burns until 1984
when he became Assistant Treasurer and then assumed the role of
Treasurer of the Protective Services Group. Mr. Dickinson was named
to the Board as of May 4, 1995.
Peter T. Kikis became a director of the Company on February 24,
1995 in connection with the acquisition of United. He is a director
of Deltec International S.A., the parent of Deltec Development
Corporation, the subordinated debt lender to the Company. Since
1950, Mr. Kikis has been the President and a principal in Spencer
Management Company, a real estate development and management company
in New York, New York. From 1972 to 1992, Mr. Kikis was Chairman of
the Board of Directors and a principal of McRoberts Protective
Agency, a New York based provider of security guard services.
Gregory James Miller has been a director of the Company since
September 1992. Since 1987 he has served as General Counsel for
Goldline Connectors, Inc., a Connecticut-based electronics
manufacturer, and sits on its board of directors. Mr. Miller also
serves "of counsel" to Benenson & Kates, in New York, handling labor
law and contract negotiations for security guard clients and has
handled various legal matters for the Company since 1985. Mr. Miller
is currently employed by Goldline Connectors, Inc. He has a
Bachelors Degree from Kalamazoo College, and a Juris Doctor degree
from New York Law School, where he was an editor of the Journal of
Human Rights.
Peter J. Nekos has been a director of the Company since March
1991, when he was elected to fill a vacancy arising from the death of
Edward Hyde. Mr. Nekos is a certified public accountant and, since
July 1986, he has operated his own accounting firm in Mamaroneck, New
York, from July 1984 to June 1986 he was a partner of Nekos &
Kilduff, an accounting firm located in New Rochelle, New York.
Steven B. Sands was placed on the board on April 13, 1994, in
accordance with the provisions of the Company's agreement with Sands
Brothers executed in connection with the Company's 1993 Private
Placement. Mr. Sands is Chairman of the Board of Sands Brothers &
Co., Ltd., a Delaware corporation registered as a broker-dealer. Mr.
Sands also has interests in certain entities which own the Company's
stock. Mr. Sands is currently on the board of directors of the
following publicly-traded companies: The Village Green Bookstore,
Inc.; Semi-Conductor Packaging Materials, Inc.; Digital Solutions,
Inc.; and Brightpoint Financing for Science International.
Lloyd H. Saunders, III, became a director of the Company on
February 24, 1995, in connection with the acquisition of United. He
is a managing director at Sands Brothers and has been so since 1991.
From 1989 to 1990, he was a private investor and from 1986 to 1988 he
was the Director of Corporate Finance for Whale Securities, New York,
New York.
Eugene U. McDonald has more than 20 years experience in the
security business. He joined the Company in October of 1992 as Vice
President of Corporate Services, and recently took over the position
of Senior Vice President - Operations. Mr. McDonald has held senior
management positions with Globe Security (1973-1990) and Burns
International Security Services (1990-1992). He has extensive direct
personal experience with the handling of specialized security
personnel for cleared facilities as evidenced by his duties as Group
Vice President - Energy Services for Globe Security. He is active in
the American Nuclear Society, Institute of Nuclear Materials
Management, American Society for Industrial Security and the
Connecticut Police Chiefs Association.
Debra Miller has been employed by the Company since September
1983, initially as Office Manager and, since March 1986, as Corporate
Secretary.
OWNERSHIP OF SECURITIES
The following table sets forth certain information regarding the
number and percentage of common stock (being the Company's only
voting securities) beneficially owned by (i) each person who owns of
record (or is known by the Company to own beneficially) 5% or more of
the Company's common stock or as to which he has the right to acquire
within 60 days of October 18, 1996, (ii) each director and executive
officer and (iii) all of said beneficial owners, officers and
directors as a group, as of October 18, 1996. The address for each
director and executive officer is the Company's principal office at
Lexington Park, Route 55, Lagrangeville, New York 12540.
Other than as set forth in the following table or pursuant to
the Shareholders Voting Agreement, the Company is not aware of any
person (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) who owns more than
5% of the common stock of the Company.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial
Name Ownership (1) Percent of Class (13)
<S> <C> <C>
William C. Vassell 1,486,950 (2) 19.9%
Steven B. Sands/ 1,261,311 (3) 17.7%
Sands Brothers &
Co., Ltd.
90 Park Avenue
New York, NY 10016
Gordon Robinett 262,500 (4) 3.6%
Peter T. Kikis 231,000 (5) 3.2%
Peter J. Nekos 23,500 (6) *
Eugene U. McDonald 16,000 (7) *
Debra Miller 17,600 (8) *
Lloyd H. Saunders, III 7,500 (9) *
Gregory J. Miller 10,000 (11) *
H. Richard Dickinson 35,000 (12) *
ISS International
Service Systems, Inc. 510,000 (10) 6.8%
375 Hudson Street
New York, NY 10014
All officers and 3,301,361 (2)(3)(4) 40.7%
directors as a group (5)(6)(7)(8)(9)
(10 Persons) (11)(12)
<FN>
* Less than 1 percent.
(1) The Company has been advised that all individuals listed
above, except Steven B. Sands (see Note (3), below) and Peter
T. Kikis (see Note (5), below) have the sole power to vote and
dispose of the number of shares set forth opposite their
names.
(2) Includes 525,000 shares underlying warrants that are currently
exercisable. Also includes all shares pledged to ISS on which
ISS has the current right to foreclose, including 510,000
shares held in escrow.
(3) A Schedule 13D filed by Mr. Sands, Sands Brothers and the
parties listed below, filed with the Commission on or about
November 8, 1993, and amended on April 7, 1994, December 13,
1994, March 31, 1995, and November 9, 1995 indicates that
these shares are beneficially owned by: Katie and Adam Bridge
Partners, L.P.; Jenna Partners, L.P.; Jenna Partners, II,
L.P.; and Owl-I Partners, L.P. The corporate general partners
of the above-named limited partnerships are, respectively, K &
A Bridge Partners Corp., Jenna Capital Corp., Jenna II Capital
Corp. and Owl Capital Management, Inc. Mr. Steven B. Sands is
the Chief Executive Officer of Sands Brothers as well as a
director and the owner of 50% of the capital stock of K & A
Bridge Partners Corp., Jenna Capital Corp., Jenna II Capital
Corp. and Owl Capital Management, Inc. Mr. Martin S. Sands is
the President of Sands Brothers as well as a director and 50%
owner of the above-referred corporate general partners.
Steven B. Sands and Martin P. Sands are the only executive
officers, directors and controlling persons of Sands Brothers.
On March 30, 1994, Mr. Steven B. Sands was elected to the
Company's board of directors. Based on information provided by
Sands Brothers to the Company, Steven B. Sands and Martin S.
Sands each share voting power, directly or indirectly, over
1,261,311 shares. This amount includes: (i) 7,000 shares
issuable upon exercise of the Sands Consulting Warrant issued
to Sands Brothers in connection with consulting services
provided to the Company; (ii) 746,061 shares over which Katie
and Adam Bridge Partners, L.P. has sole voting and dispositive
power; (iii) 122,500 shares over which Jenna Partners, L.P.
has sole voting and dispositive power; (iv) 85,750 shares over
which Jenna Partners, II, L.P. has sole voting and dispositive
power; (v) 35,000 shares over which Owl-I Partners, L.P. has
sole voting and dispositive power; (vi) 100,000 shares over
which Lily Capital Appreciation Partners, L.P. has sole voting
and dispositive power; and (vii) 165,000 shares over which
Ponderosa has sole voting and dispositive power (including
100,610 shares issuable upon exercise of the Sands 1995
Placement Warrant, issued to Sands Brothers in connection with
the Company's 1995 Private Placement that have been
transferred to Ponderosa, and 64,390 shares issuable upon
exercise of Sands Warrant issued to Sands Brothers in
connection with the Company's 1993 Private Placement.) As
disclosed in the November 1995 Schedule 13D, Sands Brothers
transferred to its designees warrants to purchase 95,610
shares underlying the Sands 1993 Private Placement Warrant and
approximately 149,390 under the Sands 1995 Placement Warrant.
(4) Includes 107,500 shares underlying presently exercisable non-
qualified stock options and 120,000 shares underlying warrants
that are currently exercisable.
(5) Includes 162,000 shares underlying warrants currently
exercisable and 40,000 shares issuable upon conversion of Series
A preferred stock and 5,000 shares owned by his spouse.
(6) Includes 10,000 shares underlying warrants currently exercisable.
(7) Includes 15,000 shares underlying options currently exercisable.
(8) Includes 17,500 shares underlying warrants currently exercisable.
(9) Includes 7,000 shares underlying warrants currently excercisable.
(10) Includes 510,000 shares pledged to secure payment on Company
notes. The Company is in default on March 31, 1995 and October
27, 1995 payments. The pledgeholder has not exercised its right
to foreclose and take delivery of these shares. See "--Change
in Ownership". Notwithstanding the foregoing, the Company has
signed an agreement in principle which, if finalized, will
result in the release of the 510,000 pledged shares to Mr.
Vassell.
(11) Includes 10,000 shares underlying warrants currently exercisable.
(12) Includes 35,000 shares underlying warrants currently exercisable.
(13) Percent of class for each shareholder is calculated as if all
options and warrants included in the table for such shareholder
are outstanding. The number of outstanding shares is 6,936,706.
The percent of class for all executive officers and directors as
a group is calculated as if all options and warrants held by any
shareholders included in the group are outstanding. The
denominator for the group calculation is 8,114,206.
</FN>
</TABLE>
Change in Ownership
According to a Schedule 13D filed by William C. Vassell with the
Commission on or about January 10, 1994, Mr. Vassell has pledged to
ISS, and placed in escrow, 510,000 of his Shares in connection with
the Company's acquisition of certain security guard assets from ISS.
Mr. Vassell pledged said Shares as additional collateral to secure
the Company's promissory notes (the "ISS Notes") to ISS originally
for $1.75 million, which was then the balance of the purchase price
of the ISS security guard assets. The Company and ISS have since
agreed in principle to a reduction to $500,000 of the amount due to
ISS.
Under the present agreement with ISS, ISS is entitled to the
transfer of so much of the pledged stock as is equal in value to the
amount due. The terms of the settlement are being negotiated but
contemplate the return to Mr. Vassell of his shares and the issuance
of 210,000 newly issued shares in their place.
In the event the pledged shares were delivered to ISS in
foreclosure, Mr. Vassell's influence over the Company's business
could be diminished as the result of the dilution of his interest in
the Company. However, Mr. Vassell would remain the Chairman of the
Board. (See "COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS --
Employment Agreements and Warrants and Termination of Employment and
Change of Control Agreements".)
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Board Report On Executive Compensation
The Company's Compensation Committee advises the board on all
matters related to the compensation of executive officers and is
currently comprised of William C. Vassell, Peter T. Kikis and Steven
B. Sands. The Compensation Committee's policy for determining
compensation for management personnel is based on its understanding
of the market rate for similar positions in an effort to attract and
retain qualified personnel. Raises are granted based on performance
which is measured in terms of a wide range of factors including the
Company's earnings, revenue, period to period performance,
acquisitions, cost savings, length of service, creativity and
financing.
Mr. Vassell's compensation has been fixed by an employment
agreement effective as of July, 1990. As a result of full board
action, this agreement was amended as of February 24, 1995 (the date
on which the assets of United Security Group Inc. were acquired), to
extend the terms to July 19, 2000 and to increase the base salary to
$150,000. The purpose of the extension was to ensure continuity of
management during the five-year period following the acquisition of
substantially all of the assets of United Security Group Inc. The
increase in salary payable to Mr. Vassell was determined by the
board to be in accordance with competitive rates paid senior
executive officers of comparably sized companies in the security
industry.
In making determinations with respect to compensation, the
Company reviewed the compensation paid to chief executive officers at
other security guard companies with which the board was familiar.
The base salary selected was at the low to median range of the
comparison companies. Mr. Vassell's bonus is equal to varying
percentages of specified levels of Pre-Tax Operating Profit ("PTOP").
Mr. Vassell is entitled to 5% of PTOP between $.5 million and $1.0
million and 2% of PTOP over $1.0 million. The bonus percentages were
determined by the committee, based upon potential PTOP and the total
compensation that would be payable Mr. Vassell in the event bonuses
were paid. The resulting potential aggregate compensation is
considered reasonable by the committee based on the achieved PTOP and
is intended to provide a monetary incentive to the Mr. Vassell to
maximize Company profits. The section "COMPENSATION OF DIRECTORS AND
EXECUTIVE OFFICERS-Employment Agreements and Warrants and Termination
of Employment and Change of Control Agreements" provides further
detail regarding this agreement with Mr. Vassell.
The foregoing report has been submitted by the Company's
Compensation Committee. No director has dissented to any information
contained herein.
William C. Vassell
Peter T. Kikis
Steven B. Sands
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
While Mr. Vassell may participate in discussions and/or
decisions relating to compensation for executive officers, he will
vote on matters relating to his own compensation. None of the
directors or executive officers serve on the Compensation Committee
of any other entity with the exception of Gordon Robinett who serves
on the Compensation Committee of Uniforce Services, Inc. None of the
other members of the Company's board of directors are an officer,
director or employee of Uniforce Services, Inc.
Summary Compensation
The following table sets forth for the fiscal year ended
March 31, 1996, all plan and non-plan compensation paid to, earned
by, or awarded to William C. Vassell, Chairman of the Board, H.
Richard Dickinson, Executive Vice President and Chief Financial
Officer and Gordon Robinett, Vice Chairman of the board and
Treasurer. No other executive officer of the Company received total
annual salary and bonus in excess of $100,000 for the fiscal year
ended March 31, 1996, and, therefore, compensation for such other
executive officers is not disclosed.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
FOR THE FISCAL YEAR ENDED 3/31/96
Annual Compensation Long-Term Compensation
Other Annual Shares
Name and Fiscal Year Salary Underlying Shares
Principal Ended Annual Compensation Bonus Warrants Underlying
Position March 31 Salary Granted Repriced
Warrants
<S> <C> <C> <C> <C> <C> <C>
William C.
Vassell 1
Chairman of the 1994 $117,692 $12,540 (3) 0 225,000 (4) 300,000(5)
Board 1995 $152,885 (2) 0 0 0
1996 $150,000 (2) 0 0 0
H. Richard 1996 $131,593 (2) 0 0 0
Dickinson
Chief Financial
Officer
Executive Vice-
President
Gordon Robinett 1994 $ 81,538 (2) 0 0 227,500 (6)
Vice Chairman 1995 $101,923 (2) 0 0 0
of the Board and 1996 $100,000 (2) 0 0 0
Treasurer
Eugene U. 1994 $ 69,577 (2) 0 15,000(7) 0
McDonald
Senior Vice- 1995 $ 78,172 (2) 0 0 0
President - 1996 $ 88,461 (2) $15,000 0 0
Operations
John B. 1996 $ 3,331 0 0 0 0
Goldsborough8
President, Chief
Executive
Officer
<FN>
(1) As of March 31, 1995, Mr. Vassell held a total of 961,950 shares and
warrants for 525,000 shares of the Company's common stock. He resigned as
President and Chief Executive Officer on February 24, 1995.
(2) All perquisites and other personal benefits, securities or property do
not exceed 10% of the total annual salary and bonus of the executive
officer.
(3) Includes auto allowance of $9,840.
(4) The exercise price of $3.75 per share was the market value of the
Company's shares on the date of grant. Remaining part of a warrant
covering 500,000 shares.
(5) Includes repricing to $3.25 of the 175,000 and 125,000 shares
covered by the warrants issued in 1992 and 1993, respectively.
(6) Includes repricing of the: 107,500 shares issued on January 19, 1991,
with exercise price at market value of $5.00 and reduced to market value
of $3.25 as of August 16, 1993; 60,000 shares issued on April 8, 1991,
with exercise price at market value of $3.375 and reduced to market value
of $3.25 as of August 16, 1993; and 60,000 shares issued on May 15, 1992,
with exercise price at market value of $3.88 and reduced to market value
of $3.25 as of August 16, 1993.
(7) The exercise price of $2.25 per share was the market value of
the Company's shares on the date of grant, August 1994.
(8) On February 24, 1995 the Company retained the services of John B.
Goldsborough, the former president and chief executive officer of United,
to serve the Company in the same capacity. On May 1, 1995 Mr.
Goldsborough resigned to pursue other interests. The Board has not named
a replacement for Mr. Goldsborough.
</FN>
</TABLE>
The following table sets forth the information for the fiscal year
ended March 31, 1996, with respect to each exercise of stock options
and warrants, and the fiscal year end value of unexercised options
and warrants for the Company's chief executive officer and each of
the Company's executive officers whose total annual salary and bonus
exceed $100,000. There were no tandem or free stock appreciation
rights outstanding.
<TABLE>
<CAPTION>
March 31, 1996
OPTION/WARRANT VALUES
Number of Shares Value of Unexercised in-the-money
Underlying Options at 3/31/96(2)
Warrants Outstanding(1)
Name Exercisable Exercisable
<S> <C> <C>
William C. Vassell 225,000 (3) $ 0
Chairman of the Board 175,000 $ 0
(4)
125,000 $ 0
Gordon Robinett 227,500 $ 0
Vice Chairman of the
Board and Treasurer
Eugene U. McDonald 15,000 $ 0
Senior Vice-President
- - Operations
<FN>
(1) No warrants were exercised by executive officers during the
fiscal year ended March 31, 1996.
(2) Values based on the $1.25 closing sales price of the Company's
common stock on March 31, 1996.
(3) Originally 500,000 reduced to 225,000 as of approximately March
31, 1995. Mr. Vassell reduced his warrants to minimize the
dilution to shareholders that resulted from the issuances that
were consummated in February, 1995 in connection with the
acquisition of the security guard assets of United Security
Group Inc.
(4) Mr. Vassell resigned as President and Chief Executive Officer on
February 24, 1995.
</FN>
</TABLE>
Comparison of Cumulative Total Return Among
Command, NASDAQ Index and Industry Peer Group
The following graph demonstrates the performance of the
cumulative total return to the stockholders of the Company's common
stock in comparison to the cumulative total return of companies which
trade their securities on the NASDAQ stock market (U.S. companies)
and an industry peer group defined as those companies with securities
traded in NASDAQ with SIC numbers 7380 - 7389 (Miscellaneous Business
Services). These companies include Pinkerton's, Inc. and total
eighty-two distinct issues. The Company will provide to any
shareholder, upon request, a list of the companies included in the
peer group.
Comparison of Five Year-Cumulative Total Returns
Performance Graph for
COMMAND SECURITY CORPORATION
Produced on 09/10/96 including data to 03/29/96
<TABLE>
<CAPTION>
Legend
CRSP Total Returns Index for: 03/28/91 03/31/92 03/31/93 03/31/94 03/31/95 03/29/96
<S> <C> <C> <C> <C> <C> <C>
COMMAND SECURITY CORPORATION 100.0 133.3 93.3 101.7 51.7 33.3
Nasdaq Stock Market (US Companies) 100.0 127.5 146.5 158.1 175.9 238.8
NASDAQ Stocks (SIC 7380-7389 US Companies) 100.0 106.9 85.2 79.0 89.9 190.2
Miscellaneous Business Services
</TABLE>
Notes:
A. The lines represent monthly index levels derived from
compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market
capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not
a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 03/28/91.
Employment Agreements and Warrants and Termination of Employment and
Change of Control Agreements
The Company currently has employment agreements with Messrs.
Vassell and Dickinson. Mr. Vassell's agreement was amended in April
of 1991 and amended and restated in June of 1991. In September 1992,
this agreement was extended for two years to July 19, 1995, and
further amended as of February 24, 1995, to extend to July 19, 2000.
Pursuant to his employment agreement, as amended as of
February 24, 1995, Mr. Vassell serves as Chairman of the board of the
Company and is entitled to an annual salary of $150,000. Mr. Vassell
is also entitled to an annual bonus equal to 5% of the Company's pre-
tax profit for each fiscal year exclusive of (a) capital gains and
losses; (b) the annual bonus; and (c) federal state and local income
and franchise taxes for that year ("Pre-Tax Operating Profit") from
$.5 million to $1.0 million, and 2% of all additional Pre-Tax
Operating Profit in excess of $1.0 million and is provided with the
use of a Company-owned automobile and reimbursement for automobile
insurance and operating expenses. Also pursuant to the employment
agreement, Mr. Vassell was awarded a warrant to purchase 175,000
shares of common stock at a price of $3.375 per share, exercisable on
or after March 31, 1992.
Pursuant to his employment agreement, Mr. Dickinson serves as
Chief Financial Officer of the Company at an annual salary of
$130,000. He is also entitled to an annual bonus equal to 5% of the
Company's Pre-Tax Operating Profit for each fiscal year from $.5
million to $1.0 million, and 1% of all additional Pre-Tax Operating
Profit in excess of $1.0 million. In October, 1996, Mr. Dickinson
was awarded a non-qualified, non-forfeitable five-year stock option
to purchase 35,000 shares at a price of $1.875 per share.
In July of 1996, the five-year employment agreement with Gordon
Robinett which provided for a $100,000 per year salary, plus bonus,
was mutually terminated by the Company and Mr. Robinett. In
consideration of said termination, the Company entered into a
consulting agreement with Mr. Robinett pursuant to which he would be
paid a total of $180,000 over four years. The Company also agreed to
lower the exercise price from $3.25 to $2.50 of the option and
warrants covering 227,500 shares already in his name and to affirm
their extension to July 19, 2000.
In recognition of sales and profits achievements, Mr. Vassell
was issued warrants covering 300,000 shares, 175,000 of which were
issued in April, 1991, are exercisable at $3.25 and expire on April
8, 1998, and 125,000 of which were issued in May, 1992, are
exercisable at $3.25 and expire on May 15, 1999. Mr. Vassell has
also been issued warrants in connection with his December, 1993,
pledge of 510,000 of his shares to ISS in connection with the
Company's acquisition of certain security guard assets from ISS. Mr.
Vassell pledged said shares as additional collateral to secure the
Company's $1.0 million in promissory notes to ISS for the balance of
the purchase price of the ISS security guard assets. Pursuant to an
indemnification agreement between Mr. Vassell and the Company, the
Company has agreed to indemnify Mr. Vassell for any liability, loss
or expense incurred by him as a result of his pledge of shares.
Furthermore, the Company issued a warrant for 500,000 shares in
consideration of Mr. Vassell's undertaking to pledge his personal
holdings as security for the Company's obligations to ISS. This
warrant expires in December 1998 and is exercisable at $3.75 per
share, the fair market value of the Company's common stock as of the
date of issuance of the warrant. In connection with the United
acquisition and pursuant to the Placement Agent Agreement dated
February 24, 1995 between the Company and Sands Brothers, Mr. Vassell
agreed to reduce the number of shares covered by the warrant to
225,000. The Company has defaulted on the $500,000 payments due to
ISS on each of March 31, 1995 and October 25, 1995 as the result of
disputes with ISS. The Company and ISS have entered into an
agreement in principle to settle these disputes. The terms of the
settlement are being negotiated but contemplate the return to Mr.
Vassell of his shares and the issuance of 210,000 newly issued shares
in their place.
In September of 1992, the Company entered into a Compensation
Continuation Agreement with Mr. Vassell in consideration for his
agreement to extend the term of his employment for two years. This
Agreement provides that, if, within specified periods of a Change of
Control of the Company (as defined in the Agreement) Mr. Vassell's
employment is terminated by the Company without Cause (as defined in
said Agreement), or if Mr. Vassell terminates his employment for Good
Reason (as defined in the Agreement), Mr. Vassell will be paid 2.99
times the greater of his annual compensation as in effect on the date
of the Agreement or the highest annual compensation for any of the
three years preceding the termination. All awards previously granted
under any performance incentive plan, the actual payment of which may
be deferred, will be vested as a result of the Change of Control and
all options and warrants held by Mr. Vassell will become immediately
exercisable. Currently, the aggregate amount payable to Mr. Vassell
upon his termination in the event of a Change in Control would be
2.99 times his total compensation of $150,000 for the fiscal year
ended March 31, 1996, or approximately $450,000.
In May 1992, as an incentive for outside directors, the board of
directors issued to Peter J. Nekos a five-year warrant to purchase
10,000 shares at an initial exercise price of $3.88 per share, the
fair market value on the date of grant. In recognition of Mr. Nekos'
contributions to the Company, in August 1993, the board of directors
authorized the extension of Mr. Nekos' outstanding warrant by two
years and reduced the purchase price to $3.25 per share, the fair
market value on the date of the extension. In consideration of their
contributions as members of the Board, Mr. Nekos and Gregory J.
Miller each received warrants in October 1996 for 10,000 shares
exercisable at $1.875 over five years, and Mr. Peter T. Kikis
received warrants in October 1996 to purchase 150,000 shares over
five years at a price of $1.875 per share.
Other than pursuant to the employment agreements for Messrs.
Vassell and Dickinson, the Compensation Continuation Agreement for
Mr. Vassell, the Severance Agreement with Mr. Goldsborough and the
Consulting Agreement with Mr. Robinett, there is no compensation plan
or arrangement for the benefit of any person named in the Summary
Compensation Table that would result from the resignation, retirement
or other termination of such person's employment.
Other than the compensation described above, there are no long-
term incentive plans for the persons named in the Summary
Compensation Table. The Company does not have a pension plan.
SECTION 16(a) REPORTING
Each director and executive officer of the Company who is
subject to Section 16 of the Securities Exchange Act of 1934, and
each other person who beneficially owns more than 10% of the
Company's common stock, is required by Section 16(a) of that Act to
report to the Securities and Exchange Commission by a specified date
his or her ownership of and transactions in the Company's common
stock. Copies of such reports on Forms 3, 4, and 5 must also be
provided to the Company. Based solely on a review of Forms 3, 4 and
5 and written representations to the Company from all directors
except Steven B. Sands with respect to the fiscal year ended March
31, 1996, the Company is not aware of any person who, at any time
during the fiscal year ended March 31, 1996, was a director, officer
or beneficial owner of more than ten percent (10%) of the Company's
common stock and who failed to file reports required by Section 16(a)
of the Securities Exchange Act of 1934, as amended, during the fiscal
year ended March 31, 1996 or prior fiscal years. Steven B. Sands did
not file a Form 5 with the Company for the fiscal year ending March
31, 1996, or a representation that said form need not be filed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 24, 1995 in connection with the acquisition of
United, the Company entered into a subordinated loan agreement with
Deltec Development Corporation, a subsidiary of Deltec International
SA. Peter T. Kikis, a director of the Company, is a director of
Deltec International SA. The original principal balance of the loan
was $1,500,000 payable over four years at 14% interest.
Steven B. Sands is Chairman of Sands Brothers & Co., Ltd.
("Sands Brothers") a broker-dealer and investment banking firm with
respect to which the Company has entered into numerous agreements.
Sands Brothers was engaged as private placement agent in connection
with the Company's 1993 and 1995 private placements. Lloyd H.
Saunders, III is a managing director at Sands Brothers.
In response to the request of the subject warrant holders, on
October 4, 1996, the board determined that it would be in the best
interest of all shareholders to authorize a one (1) year extension of
the warrant covering 800,000 shares issued to investors in the 1993
Private Placement. The warrants have a current exercise price of
$3.50 and expire by their terms on October 28, 1996. The expiration
date has been extended to October 28, 1997.
Steven B. Sands and Peter T. Kikis, members of the board, have
an interest in 95,610 and 12,000 shares, respectively, underlying
warrants which were extended as described above. Both Mr. Sands and
Mr. Kikis purchased their warrants as part of a Private Placement in
1993.Mr. Sands ownership is through related parties. (See OWNERSHIP
OF SECURITIES, footnote 3 to beneficial ownership table.)
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On February 5, 1996, at the direction of its Board of Directors,
the Company advised Coopers & Lybrand LLP ("Coopers") that due to
cost containment efforts, its engagement of Coopers as its
independent public accountants was terminated. The Board also
determined to engage D'Arcangelo & Co. LLP ("D'Arcangelo"), as its
new independent public accountants, effective as of February 8, 1996.
The following information concerns prior opinions and
disagreements with the Company's former accountants during the fiscal
years ending March 31, 1994 and 1995.
Cooper's report on the financial statements for the fiscal years
ended March 31, 1994 and March 31, 1995 contained an opinion modified
to disclose substantial doubt about the Company's continuation as a
going concern. Coopers' report on the financial statements for the
year ended March 31, 1994 also contained a modification to disclose
the restatement of the Company's March 31, 1992 and March 31, 1993
year-end financial statements. The restatements were made in
connection with the application of an accounting principle related to
the method of recognizing gain on sales of the Company's customer
lists and advances to service companies in exchange for notes.
Previously, the Company recognized gain associated with the sale of a
customer list at the date the transaction was consummated if certain
conditions, such as the adequacy of collateral and a reasonable
expectation of performance, were met. Advances to service companies
were recorded as a current or long-term asset, depending on the term
of the note. Upon reconsideration, the Company determined that,
absent an adequate down payment at closing, such gain should be
recognized only when cash collections are received. Advances to
customer list purchasers are charged to operations and recognized
only upon recovery.
The above-mentioned application of an accounting principle was
the subject of a disagreement between the Company and Coopers in
early February l994. The disagreement was resolved to the
satisfaction of Coopers and the Company's Board of Directors. The
Company has authorized Coopers to respond fully to the inquiries of
the successor accounting firm, D'Arcangelo, regarding the
disagreement.
In connection with the disagreement with Coopers, the Company
consulted with D'Arcangelo concerning the recognition of earnings
generated by the Company from one of its service agreement clients.
D'Arcangelo, which has been providing supplemental accounting and
consulting services to the Company, expressed its view regarding this
matter of disagreement with Coopers. D'Arcangelo's views were that
the Company's method of recognizing earnings from its service
agreement clients was correct. As stated above, Cooper's view was
that certain earnings reported by the Company in connection with one
of its service agreement clients was not the correct manner of
accounting for those transactions.
Upon final disposition of the matters which were the subject of
the disagreement, all parties, including the Company, Coopers and
D'Arcangelo, were in agreement with the manner in which the subject
matter was accounted for.
AUDITORS
D'Arcangelo & Co., LLP audited the financial statements of the
Company for the fiscal year ending March 31, 1996 and has been
selected by the board of directors to audit the Company's financial
statements for the fiscal year ending March 31, 1997.
Representatives of D'Arcangelo & Co., LLP are expected to be present
at the Meeting, with the opportunity to make a statement and to be
available to respond to appropriate questions. At the annual
meeting, the shareholders will be asked to ratify the selection.
The board of directors recommends that shareholders vote FOR
this Proposal.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTORS
FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals intended for inclusion in the proxy
material for the 1997 annual meeting of shareholders, and nominations
for directors to be elected at the 1997 Annual Meeting, must be
received by the Secretary of the Company at the Company's offices at
Route 55, Lexington Park, Lagrangeville, New York 12540 not later
than July 21, 1997, and not earlier than June 21, 1997, in order for
such proposals and nominations to be included in the proxy material
for the 1997 annual meeting of shareholders. The notice of
nomination shall contain the following information: (a) the full
names and residence and business addresses of each of the proposed
nominees; (b) the business experience of each of the proposed
nominees for the most recent five (5) years, including principal
occupations and employment; (c) name, principal business and size of
any entity in which such occupations and employment were carried on;
(d) the number of shares of the Company's capital stock owned
directly or indirectly by each of the proposed nominees; (e) a
description of any legal or administrative proceedings or order or
decree any nominee is or has been a party to or is or was subject to
during the most recent five (5) years; (f) the name and residence and
business address of the shareholder who makes the nomination; (g) the
number of shares of the Company's capital stock owned directly or
indirectly by the shareholder who makes the nomination; and (h) any
other information regarding each of the nominees required by Schedule
14A of the Securities Exchange Act of 1934, as amended or any
successor provision.
ADDITIONAL INFORMATION AND OTHER MATTERS
The Company's financial statements, and Management's Discussion
and Analysis thereof, are incorporated herein by reference to the
Company's Annual Report for its fiscal year ended March 31, 1996, a
copy of which is being provided to you together with this proxy
statement. Any exhibit may be obtained, at a reasonable charge, by
writing to the Company, Route 55, Lexington Park, Lagrangeville, New
York 12540.
Management is not aware of any matters to be presented for
action at the meeting other than the matters mentioned above, and
does not intend to bring any other matters before the Meeting.
However, if any other matters should come before the Meeting, it is
intended that the holders of the proxies will vote them in their
discretion.
By order of the board of directors,
Debra M. Miller, Secretary
Dated: October 21, 1996
