SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: June 22, 1998
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(Date of Earliest Event Reported)
COMMAND SECURITY CORPORATION
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(Exact name of Registrant as Specified in its Charter)
New York
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(State of Incorporation)
0-18684
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(Commission File Number)
14-1626307
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(IRS Employer Identification No.)
Lexington Park, Lagrangeville, New York 12540
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(Address of Principal Executive Offices)
(914) 454-3703
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(Registrant's Telephone Number)
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Item 1-Item 4 Not Applicable.
Item 5 : Other Events
On or about December 4, 1997, an outside shareholder and four of the
Company's directors commenced an action in the Supreme Court of the State of
New York, County of New York (Index No. 606166/97) against the other four
directors, the Company's outside corporate and securities counsel and the
Company itself in a lawsuit characterized as a derivative action. The
complaint alleges that Mr. Vassell, Chairman of the Board, and the other
defendant-directors engaged in improper activities, including ultra-vires
acts, breach of fiduciary duty, fraud against the Company, constructive
fraud, waste of corporate assets and concealment of information from the
plaintiff-directors regarding the Company's earnings, lacked power to enter
into an employment agreement on behalf of the Company with Mr. Robinett, and
entered into self-serving contracts with financially unstable companies without
performing due diligence. The complaint further alleges that the Company has
failed to appoint a replacement to the office of president and that the
directors have entered into a shareholder agreement which is violative of
public policy. Plaintiffs seek the award of money damages in an amount which
is "not less than" $11 million from the individual defendants, a declaratory
judgment that the shareholder agreement is void, an order for an accounting,
certain other injunctive relief and attorneys' fees and disbursements.
The Company has interposed an answer denying the allegations contained in the
complaint. The individual defendants believe the allegations are completely
without merit and intend to vigorously defend against each and every claim.
The Company's Certificate of Incorporation and the Business Corporation Law
of New York provide for indemnification of officers and directors with
respect to damages and legal fees incurred in connection with lawsuits
against them arising by reason of serving the Company. Due to the fact that
certain members of the board have chosen to participate as plaintiffs in this
lawsuit, the Company may not have coverage under its officers and directors
liability insurance policy. The defendant-directors intend to seek
indemnification, and have received advancements of legal fees incurred in
connection with their defense, from the Company. Through March 31, 1998, the
Company has expended approximately $120,000 in legal fees in defense of this
matter on its own behalf as well as on behalf of the defendant officers and
directors. An additional $68,000 in legal fees has been incurred through July
1, 1998. On or about March 25, 1998, the plaintiffs filed a motion for the
appointment of a temporary receiver. On June 5, 1998, the Court ordered the
appointment of a temporary receiver, but prior to the order taking effect,
the parties agreed to a stipulation pursuant to which Franklyn H. Snitow,
Esq., was appointed acting President and Chief Executive Officer and acting
ninth Board member during the pendency of the defendants' appeal to the
Appellate Division of the decision to appoint a receiver. Based on the
stipulation, the defendant's request to the Appellate Division for a stay
pending the appeal of the order appointing the receiver was granted. The
Company is unable to reasonably estimate the potential impact on the
Company's financial condition and results of operations from this lawsuit.
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Item 6 Not Applicable.
Item 7 Financial Statements and Exhibits.
(a),(b)
(c) Exhibits
(i) Press release dated July 8, 1998
Item 8. Not applicable.
Item 9. Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 8, 1998 COMMAND SECURITY CORPORATION
By: FRANKLYN H. SNITOW
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Franklyn H. Snitow
Acting President/CEO
<PAGE>
FOR IMMEDIATE RELEASE
CONTACT: William C. Vassell Donald Radcliffe
Chairman Radcliffe & Associates, Inc.
Tel: (914) 454-3703 Tel: (212) 605-0174
COMMAND SECURITY CORPORATION ANNOUNCES
ELECTION OF PRESIDENT/CEO AND DIRECTOR
Lagrangeville, New York *** July 7, 1998 *** Command Security Corporation
(NASDAQ:CMMD). The Company announced the Board's unanimous election of
Franklyn H. Snitow as acting President/CEO and acting director of the
Company. The Board believes that "Mr. Snitow's election will allow management
to maintain its focus on providing clients with the highest quality security
guard services."
Mr. Snitow has been practicing law for over 27 years and is a partner in
the law firm of Snitow & Cunningham, LLP in New York, New York. His election
is the result of an agreement reached by the Board in connection with
litigation including the Company and four of its directors as defendants and
a shareholder and four other directors as plaintiffs. As more fully disclosed
in Forms 8K filed by the Company in December of last year and July of this
year, the plaintiffs in the litigation allege, among other things, that the
Board has been deadlocked due to a four/four division of the Board on various
issues. Mr. Snitow's election will alleviate any such deadlock pending the
outcome of an appeal by the Company and the defendant directors to the
Appellate Division of the Supreme Court of the State of New York concerning a
decision by a lower court to grant the plaintiff's request that a temporary
receiver be appointed by the Court to operate the Company. The appeal will be
heard on an expedited basis but it is not possible to estimate how long it
will take. A period of at least 90-150 days is expected. Mr. Snitow's terms
as acting President/CEO and acting Director will automatically terminate upon
the outcome of the appeal.
Command Security Corporation provides security services to Company-owned
offices in New York, New Jersey, California, Illinois, Connecticut, Florida
and Pennsylvania and provides services to independent security companies
nationwide.
