SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or
ss.240.14a-12
COMMAND SECURITY CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[XXX] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
October 16, 2000
Dear Shareholder:
The Board of Directors of Command Security Corporation has been
exploring ways to strengthen our Company's performance including the
resolution of the litigation initiated in 1997 by a shareholder and four
directors against the Company and its four other directors. This process
started in 1998 and included discussions with several prospective purchasers
of the Company's assets. These efforts did not result in terms for the
Company or its shareholders which, in the opinion of the Company's Board,
would be fair and reasonable to the Company or its shareholders. In
approximately May of this year I advised the Board that Reliance Security Group
plc, a leading provider of security services in the United Kingdom, might be
interested in a transaction pursuant to which Reliance would purchase all of
the securities is owned or controlled by the plaintiff shareholder and
directors. Discussions continued until September 12, 2000, when the
transaction documents were executed. The transaction is somewhat complex and
there are significant costs to the Company. The closing of the transaction is
subject to several contingencies including shareholder approval of the
issuance of certain warrants. The Company's Board of Directors has conducted
an extensive review of the terms of the transaction over a period of months.
It has retained an independent appraisal firm to review the fairness of the
transaction to the Company and its shareholders. A subcommittee of the Board
of Directors consisting of independent directors, including Franklyn H.
Snitow, Acting President, has also extensively reviewed the transaction and
recommended its approval to the entire Board. Based on the opinion of the
independent appraiser, the review of the independent directors and its own
deliberations, the full Board unanimously voted to accept the proposed
transaction. The shareholders' approval of this transaction is a condition to
closing the transaction which will, in the opinion of the Board of Directors,
create an energized company. Please review this document carefully, and vote
your shares for the proposals.
Accordingly, you are cordially invited to attend a Special Meeting of
Stockholders of Command Security Corporation (the "Company"), to be held on
November 13, 2000 at 10:00, in the morning, eastern time, at its executive
offices, located at Route 55, Lexington Park, Lagrangeville, New York 12540.
The purpose of the meeting is to consider and vote upon a number of
proposals prompted by the Reliance transaction which, if completed, will
result in a change in control of the Company's management and ownership.
As a result of this transaction the shareholder and directors who sued
the Company in 1997 will terminate their lawsuit. I will assume the roles of
President and Chief Executive Officer and six directors will resign from the
<PAGE>
current board of nine directors. Pursuant to a new shareholder agreement
between Reliance and me, we will each designate three replacement directors
to a reconstituted Board of seven members for the balance of the resigning
directors' respective terms. The seventh director will be designated jointly
by Reliance and me. The Company recently obtained a commitment letter for a
new term loan facility of up to $3.0 million and obtained an increase in its
revolving line of credit of up to $15 million at a lower interest rate. The
new credit facility is expected to be in place in November, 2000. I believe
that with the settlement of the litigation and new management and credit
facilities in place, the Company can successfully expand its sales force and
look forward to continued growth.
Please complete, sign and date the enclosed proxy card, and return your
proxy card in the enclosed envelope as soon as possible.
THE BOARD OF DIRECTORS HAS DETERMINED THAT EACH OF THESE PROPOSALS (AS
DETAILED IN THE PROXY STATEMENT) TO BE VOTED UPON AT THE SPECIAL MEETING IS
IN THE BEST INTERESTS OF BOTH THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS
A VOTE "FOR" EACH OF THE PROPOSALS.
You should read carefully the accompanying Notice of Special Meeting of
Stockholders and the Proxy Statement for the details of the Proposals before
you. Your vote is important. Whether or not you plan to attend the Special
Meeting, please complete, sign and date the enclosed proxy card and return it
promptly in the enclosed postage-prepaid envelope. Your stock will be voted
in accordance with the instructions you have given in your proxy, or, if no
instructions are given, your executed proxy will be voted for both Proposals
in accordance with the recommendations of the Board of Directors. If you
attend the Special Meeting, you may vote in person if you wish, even though
you previously returned your proxy card.
Your prompt cooperation will be greatly appreciated.
Thank you,
Sincerely,
/s/William C. Vassell
---------------------
William C. Vassell
CHAIRMAN OF THE BOARD
<PAGE>
COMMAND SECURITY CORPORATION
Route 55, Lexington Park
Lagrangeville, New York 12540
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held November 13, 2000
--------------------------------
To the Shareholders of Command Security Corporation:
The special 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 13, 2000, at 10:00 o'clock in the
morning, eastern standard time, for the following purposes:
1. To obtain shareholder approval of the issuance to Reliance of a
five-year warrant to purchase up to 2,298,092 shares representing
approximately 20% of the outstanding shares of the Company on a fully
diluted basis at $1.25 per share and the issuance of (nonqualified)
incentive stock options to William C. Vassell exercisable at $1.25 per
share for up to 1,217,444 shares representing approximately 10.6% of the
outstanding shares of the Company on a fully diluted basis pursuant to a
new three-year employment agreement;
2. To obtain shareholder approval of the 2000 Stock Option Plan covering
500,000 shares for employees;
3. To obtain shareholder approval of an amendment to Article Tenth of the
Company's Certificate of Incorporation to provide that directors may be
removed with or without cause by a majority of the shareholders or for
cause by a majority of the Board of Directors; and
4. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on October 16,
2000, 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.
<PAGE>
By order of the Board of Directors.
/s/William Dunn
-----------------------
William Dunn, Secretary
Dated: October 16, 2000
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.
IT IS IMPORTANT THAT YOUR SHARES BE
VOTED IN ORDER TO AVOID DELAYS AND
THE ADDITIONAL EXPENSE TO THE COMPANY
OF FURTHER SOLICITATION.PLEASE MAIL
YOUR PROXY PROMPTLY.
<PAGE>
COMMAND SECURITY CORPORATION
Route 55, Lexington Park
Lagrangeville, New York 12540
------------------------------
PROXY STATEMENT
------------------------------
The Board of Directors of Command Security Corporation has been
exploring ways to strengthen the Company's performance including the
resolution of certain litigation (Rosan et al. v. Vassell, et al.) initiated
in 1997 by a shareholder, Robert Rosan, and four directors, Messrs. Sands,
Peter Kikis, Saunders and Thomas Kikis, against the Company and four other
directors, Messrs. Vassell, Miller, Nekos and Robinett. This process started
in 1998 and included discussions with several prospective purchasers of the
Company's assets. These efforts did not result in terms for the Company or
its shareholders which, in the opinion of the Company's Board, would be fair
and reasonable to the Company or its shareholders. In approximately May of
this year the Board was advised by Mr. Vassel, the Company's Chairman of the
Board, of a prospective transaction with Reliance Security Group plc, a
leading provider of security services in the United Kingdom, pursuant to
which Reliance would purchase all of the securities owned or controlled by
the plaintiff shareholder, Mr. Rosan and the four plaintiff directors,
Messrs. Sands, Peter Kikis, Saunders and Thomas Kikis. Discussions continued
until September 12, 2000, when the transaction documents were executed. The
closing of the transaction is subject to several contingencies including
shareholder approval of the issuance of certain warrants. Reliance had no
preexisting business relationship with the plaintiffs or the defendants prior
to this transaction. The approximately 2,914,921 shares and share equivalents
to be purchased by Reliance represent approximately 37% of the outstanding
common stock of the Company on a fully diluted basis. This constitutes a
change in control. Reliance has agreed to pay the selling shareholders a
total of approximately $6.0 million or $2.20 per common share and common
share equivalent.
The transaction is somewhat complex and there are significant costs to
the Company including the Reliance Warrant covering 2,298,092 shares of the
Company's common stock and approximately $375,000 of expenses incurred or to
be incurred by the Company. These costs are explained in further detail
herein. The Company's Board of Directors has conducted an extensive review of
the terms of the transaction over a period of months. It has retained an
independent appraisal firm to review the fairness of the transaction to the
Company and its shareholders. A subcommittee of the Board of Directors
consisting of independent directors, Messrs. Snitow, Acting President,
Miller, Nekos and Robinett has also extensively reviewed the transaction and
recommended its approval to the entire Board. Based on the opinion of the
independent appraiser, the review of the independent directors and its own
deliberations, the full Board unanimously voted to accept the proposed
transaction. The approval by the shareholders of this transaction will, in
the opinion of the Board of Directors, create an energized company. The
transaction is conditioned upon, and it is expected that, the court will
approve, termination of the 1997 litigation. Nasdaq rules require shareholder
approval due to the issuance of the Reliance Warrant which, upon exercise,
and in conjunction with the shares to be purchased by Reliance from the
selling shareholders, will result in a change of control of the Company;
however, as a result of this transaction Reliance will not control a majority
of the Board of Directors or beneficially own a sufficient number of voting
securities to give Reliance a majority of the votes which may be cast. The
New York Business Corporation Law requires shareholder approval of the
issuance of certain warrants to Mr. Vassell. Please review this document
carefully, and vote your shares for the proposals. The terms of the
transaction are provided in more detail below.
Messrs. Vassell, Peter Kikis, Sands, Thomas Kikis and Saunders all
have a direct interest in the Reliance transaction and, therefore, each one has
a conflict as a director. Messrs. Snitow, Miller, Robinett and Nekos are
considered independent directors and independently reviewed the transaction,
sought the assistance of an investment baker in evaluating it, and unanimously
approved the transaction and the recommendation for shareholder approval.
Although Messrs. Miller, Robinett,and Nekos are defendants in the litigation to
be terminated as a condition to the closing of the transaction, their economic
interest in the outcome of the transaction is mitigated due to the
Corporation's obligation to indemnify them for costs incurred in connection
with the 1997 litigation. Mr. Snitow has no interest in the transaction or the
litigation and exercises his fiduciary duty completely free of any conflicts.
All members of the Board have fiduciary duties to the Company and its
shareholders. They must be diligent and prudent in managing the affairs of the
corporation. They must exercise their honest judgment without fraud and free
from undisclosed conflicts of interest.
Shareholder approval is required pursuant to NASDAQ Rules due to the
issuance of the Reliance Warrant which, upon exercise, and in conjunction with
the Shares to be purchased by Reliance from the Selling Shareholders, will
result in a change of control of the Company. The New York Business Corporation
Law requires shareholder approval of the issuance of certain Warrants to Mr.
Vassell. Shareholder approval of both the Reliance Warrant and the Vassell
Warrants is a condition to the purchaser's obligation to close the transaction.
A further condition to the closing is the termination of the 1997 litigation.
All parties to the 1997 litigation have executed a stipulation of
discontinuance (Appendix 7) and the Company's management believes the Court
will approve the termination of the litigation. There are several other
conditions to be satisfied in order for the transaction to proceed to closing.
They are stated below in the sction entitled "The Terms of the Transaction".
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors to be used at the special meeting of
shareholders of the Company to be held on November 13, 2000, at 10:00 o'clock
in the morning, eastern standard time, at its executive offices, located at
Route 55, Lexington Park, Lagrangeville, New York, for the purposes set forth
in the accompanying notice of special meeting of shareholders.
At the meeting, action will be taken for the following purposes:
<PAGE>
1. To obtain shareholder approval of the issuance to Reliance of a
five-year warrant to purchase up to 2,044,853 shares representing
approximately 20% of the outstanding shares of the Company on a fully
diluted basis at $1.25 per share and the issuance of (nonqualified)
incentive stock options to William C. Vassell (the Vassel Warrents)
exercisable at $1.25 per share for up to 1,217,444 shares representing
approximately 10.6% of the outstanding shares of the Company on a
fully diluted basis pursuant to a new three-year employment agreement;
2. To obtain shareholder approval of the 2000 Stock Option Plan covering
500,000 shares for employees;
3. To obtain shareholder approval of an amendment to Article Tenth of the
Company's certificate of incorporation to provide that directors may be
removed with or without cause by a majority of the shareholders or for
cause by a majority of the Board of Directors; and
4. To transact such other business as may properly come before the meeting.
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 special 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 , 2000. In
addition to the solicitation of proxies by mail, the Company, through its
directors, officers and employees, may solicit proxies from shareholders
personally or by telephone or other forms of communication. The Company may
also require the assistance of certain broker-dealers and/or proxy
solicitation agents in obtaining completed proxies from shareholders. Such
assistance would be in the form of telephonic or written communication by
employees of such broker-dealers and/or proxy solicitation agents. 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 , 2000, (the "Record Date") there were 6,287,343 shares of the
Company's common stock issued and outstanding, held by approximately beneficial
owners and 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 10/16,
2000 will be entitled to vote at the meeting.
Action with respect to approval of all proposals except proposal 3
shall be authorized by a majority of the votes cast. Proposal 3 requires the
approval of the holders of 75% of the Company's common stock.
<PAGE>
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.
If fewer shares are voted in favor of the proposals than required
for their approval, the meeting may be adjourned for the purpose of allowing
additional time for obtaining additional proxies or votes. At any subsequent
reconvening of the meeting, all proxies will be voted on the matter(s) to be
considered at the reconvened meeting in the same manner as such proxies would
have been voted on the matter at the original convening of the meeting
(except for any proxies which have theretofore effectively been revoked or
changed), notwithstanding that they may have been effectively voted on the
same or any other matter at a previous meeting. Any such adjournment will
require the affirmative vote of a majority of the shares present at the
session of the meeting to be adjourned. A proxy granting authority to vote
upon such other business incidental to the conduct of the meeting as may
properly come before the meeting will constitute authority to vote in favor
of one or more adjournments of the meeting.
PURPOSE OF THE MEETING
The purpose of the meeting is to consider and vote upon a number of
proposals prompted by a private transaction which, if completed, would result
in a change in control of the Company's management and ownership. Reliance
Security Group plc, a leading provider of security services in the United
Kingdom has agreed to purchase all of Command's common shares, preferred
shares and options owned by a shareholder, Robert Rosan, and the four
plaintiff directors, Messrs. Sands, Peter Kikis, Saunders and Thomas Kikis,
who brought suit on December 4, 1997 against Command and four other
directors, Messrs. Vassell, Miller, Nekos and Robinett. Prior to this
proposed transaction Reliance had no business relationship with Command or
its officers or directors.
As an inducement to Reliance to complete the transaction, Command
has agreed to issue Reliance, if the transaction closes, a five-year warrant
to purchase up to 20% of Command's outstanding common stock on a fully
diluted based (approximately 2,298,092 shares) at $1.25 per share. As of
October 11, 2000, the Company's stock closed at $.81. Command has agreed to
pay certain transaction-related expenses of approximately $200,000 which
are in addition to what might be considered ordinary transaction costs of
approximately $175,000. The Company has also agreed to enter into a new
employment agreement with William C. Vassell, who will be appointed President
and Chief Executive Officer in addition to his current position as Chairman
of the Board. The new employment agreement provides Mr. Vassell five-year
(nonqualified) incentive stock options (the Vassell Warrants) which vest over
three years and one exercisable at $1.25 per share for up to 1,217,444 shares
of the Company's stock.
<PAGE>
As a result of this transaction, the shareholder, Robert Rosan, and
the directors, Messrs. Sands, Saunders, Peter Kikis and Thomas Kikis, who
sued Command, will terminate their lawsuit and a Stipulation (Appendix 7) to
that effect has been signed by the respective counsel representing all the
parties to the 1997 litigation. The court's approval of the termination of
the 1997 litigation is expected. The entire Board of Directors, except Mr.
Snitow, is party to a 1995 shareholder agreement which will be terminated and
six directors, Messrs. Snitow, Sands, Peter Kikis, Thomas Kikis, Saunders and
Robinett will resign from the current Board of nine directors leaving Messrs.
Vassell, Miller and Nekos. Pursuant to a new shareholder agreement, Mr.
Vassell and Reliance will each designate three directors to a reconstituted
Board of seven members for the balance of the directors' respective terms.
The seventh director will be designated by Mr. Vassell and Reliance. The
Board is expected to approve the respective designees. Command recently
obtained a commitment letter for a new term loan facility of up to $3.0 million
and obtained an increase in its revolving line of credit of up to $15 million
at a lower interest rate. This new credit facility is expected to be in place
in November, 2000. Management believes that with the 1997 litigation settled
and the new management and credit facilities in place, the Company can
successfully expand its sales force and look forward to continued growth.
The transaction has been approved by Command's Board of Directors
but is subject to other conditions including shareholder approval of:
(1) the issuance to Reliance of the five-year warrant to purchase up
to shares representing approximately 20% of the outstanding shares of the
Company on a fully diluted basis (approximately 2,044,853 shares) at $1.25 per
share; and
(2) the issuance to William C. Vassell of (nonqualified)incentive
stock options, referred to herein as the Vassel Warrants, exercisable at $1.25
per share for up to 1,217,444 shares representing approximately 10.6% of the
outstanding shares of the Company on a fully diluted basis pursuant to a new
three-year employment agreement.
The Company's Board of Directors is also seeking shareholder
approval of:
(1) the 2000 Stock Option Plan covering 500,000 shares for employees;
and
(2) an amendment to the Company's Certificate of Incorporation to
provide that directors may be removed with or without cause by a majority of
the shareholders or for cause by a majority of the Board of Directors.
The issuance of the Reliance warrant for up to 20% of the Company's
stock and the Vassell Warrants will have a dilutive effect on both the voting
power and economic interests of the existing stockholders. Assuming all these
warrants and options were exercised, and the Preferred stock converted into
common stock, Reliance, and Vassell would increase their percentage of
control of the voting power and economic interests of the Company from 49.4%
to 64.9% and the voting power and economic interests of the existing
shareholders would be reduced proportionately.
Rosin & Associates that (i) the issuance by the Company of the Reliance
warrant representing 20% of the Company's outstanding stock; and (ii) the
Company entering into certain agreements (Registrations Rights, Shareholder
Agreement, Employment Agreement, etc.), are fair to the Company's
shareholders from a financial point of view.
<PAGE>
The Board of Directors of the Company unanimously recommends that
the stockholders of the Company vote "FOR" each of the matters to be voted
upon.
The Company is submitting Proposal 1 to the shareholders for their
approval in accordance with the requirements of the Nasdaq Stock Market rules
which require shareholder approval due to the issuance of the Reliance
Warrant which, upon exercise, and in conjunction with the shares to be
purchased by Reliance from the selling shareholders, will result in a change
of control of the Company. The New York Business Corporation Law requires
shareholder approval of the issuance of the Vassell Warrants .
Messrs. Vassell, Peter Kikis, Sands, Thomas Kikis and Saunders,, who
are expected to own, in the aggregate, approximately 32% of the voting power
of the Company's outstanding voting securities as of the record date, have
executed voting agreements pursuant to which they have agreed to vote in
favor of these proposals.
PROPOSAL 1
Background of The Reliance Transaction
The Board of Directors of Command Security Corporation has been
exploring ways to strengthen our Company's performance including the
resolution of the 1997 litigation (Rosan, et al. v. Vassell, et al., Supreme
Court of the State of New York, County of New York, Index No. 606166/97))
initiated by a shareholder, Robert Rosan, and four directors, Messrs. Sands,
Peter Kikis, Saunders and Thomas Kikis, against the Company and four other
directors, Messrs. Vassell, Miller, Nekos and Robinett. This process started
in 1998 and included discussions with several prospective purchasers of the
Company's assets. These efforts did not result in terms for the Company or
its shareholders which, in the opinion of the Company's Board, would be fair
and reasonable to the Company or its shareholders. In approximately May of
this year Mr. Vassell, the Chairman of the Board, advised the Board of a
prospective transaction with Reliance Security Group plc, a leading provider
of security services in the United Kingdom, pursuant to which Reliance would
purchase all of the securities owned or controlled by the plaintiff
shareholder, Mr. Rosan and the four plaintiff directors, Messrs. Sands, Peter
Kikis, Saunders and Thomas Kikis.
The transaction is somewhat complex and there are significant
costs to the Company including the Reliance Warrant and approximately
$375,000 of expenses incurred or to be incurred by the Company. These costs
are explained in further detail below. The Company's Board of Directors has
conducted an extensive review of the terms of the transaction over a period
of months. It has retained an independent appraisal firm to review the
fairness of the transaction to the Company and the shareholders. A
subcommittee of the Board of Directors consisting of independent directors,
including Franklyn H. Snitow, Acting President, has reviewed the transaction
and recommended its approval to the entire Board. Based on the opinion of the
independent appraiser, the review of the independent directors and its own
deliberations, the full Board unanimously voted to accept the proposed
transaction. The approval by the shareholders of this transaction will, in
the opinion of the Board of Directors, create an energized company, free from
the effects of the 1997 litigation which will be terminated in conjunction
with the transaction. Please review this document carefully, and vote your
shares for the proposals. The terms of the transaction are provided in more
detail below.
The 1997 Litigation
<PAGE>
In December of 1997 an outside shareholder, Robert Rosen, and four of
the Company's directors (Steven B. Sands, Peter T. Kikis, Lloyd H. Saunders,
III and Thomas Kikis) commenced a lawsuit (Rosan, et al. v. Vassell, et al.)
characterized as a derivative action against the Company and the Company's
other four directors (William C. Vassell, Gordon Robinett, Peter J. Nekos and
Gregory J. Miller). The complaint alleged that one or more of the defendant
directors engaged in improper activities including ultra vires acts, breach
of fiduciary duty, fraud against the Company, constructive fraud and waste of
corporate assets. These charges were based upon claims that the defendant
directors concealed information from the plaintiff directors regarding the
Company's earnings, lacked the power to enter into an employment agreement on
behalf of the Company with Mr. Robinett and entered into administrative
service agreements with financially unstable companies without performing due
diligence.
The Company and defendant directors denied the allegations and
stated that they believed the allegations to be completely without merit.
Pursuant to the Company's Certificate of Incorporation and the Business
Corporation Law of New York, the Company indemnified the defendant directors
for approximately $204,000 in legal fees. It has also made a partial payment
of approximately $100,000 for legal fees on behalf of the plaintiff
directors. There is also a $92,000 accrual for legal fees incurred by the
defendants where it has been determined that indemnification by the Company
is probable.
In March of 1998, the plaintiffs filed a motion for the appointment
of a temporary receiver. Prior to the effectiveness of the Court's order that
a temporary receiver be appointed, the parties agreed to a stipulation
pursuant to which Franklyn H. Snitow, Esq. was appointed Acting President,
Chief Executive Officer and acting ninth Board member during the pendency of
the 1997 litigation. An appeal by the defendants to reverse the order
appointing the receiver was unsuccessful.
The Company's management then sought a buyer for the entire Company,
but as of late 1999 was unsuccessful in finding a buyer that would pay, in
the opinion of management, a full and fair price for the Company. Finally,
earlier this year, contact was made with Reliance Security Group plc which
resulted in the proposed transaction and proposals for the shareholders'
consideration.
Who Is Reliance Security Group plc
Reliance Security Group plc is a company organized under the laws of
England and Wales. It has been in business for approximately twenty five (25)
years and is an established market leader in the provision of contract
security management, manpower, electronic surveillance and related support
services. It has over 8,000 employees operating from a network of offices
throughout Great Britain. For its year ended April 28, 2000, the Company
reported revenue of approximately (pound)150 million with profit before taxes
of more than (pound)8.5 million. Reliance's management team is headed by
Brian Kingham, Chairman; Geoff P. Haslehurst, ACMA, Financial Director and
Secretary; and Kenneth Allison, Director. Reliance's stock is publicly traded
<PAGE>
on the London Stock Exchange under the symbol "RSG". It is expected that
Command's Board will appoint Graeme R. Halder, ASA to the position of Chief
Financial Officer in connection with the closing of the Reliance transaction.
Mr. Halder has served as a director of various of Reliance's subsidiaries.
Reliance had no preexisting business relationship with the plaintiffs or the
defendants prior to this transaction. The approximately 2,914,921 shares and
share equivalents to be purchased by Reliance represent approximately 37% of
the outstanding common stock of the Company on a fully diluted basis. This
constitutes a change in control. Reliance has agreed to pay the selling
shareholders a total of approximately $6.0 million or $2.20 per common share
and common share equivalent.
Reasons For The Reliance Transaction
The primary reason for the Reliance transaction is to strengthen the
Company's performance including the resolution of the 1997 litigation
initiated. Management believes that the Company will benefit from the new
members of the reconstituted Board who bring many years of experience in the
security guard and related businesses to the Company. Mr. Halder, who has
served Reliance since 1996, is expected to be a valuable addition as the
Company's new Chief Financial Officer . Management also believes that
resolution of the 1997 litigation will free the Company from the possible
loss of significant resources in terms of management time and expenses
associated with the 1997 litigation.
As a condition to Reliance's obligation to close the transaction,
Mr. Vassell has agreed to enter into a new three-year employment contract.
The contract provides for incentive compensation based on the Company's
performance and a restrictive covenant if Mr. Vassell leaves the Company
under certain circumstances. Management believes that the retention of Mr.
Vassell and his agreement to enter into the restrictive covenant is in the
Company's best interest.
The Terms of the Transaction
The terms of the transaction between Reliance and the selling
shareholders are set forth mainly in the Stock Purchase Agreement dated
September 12, 2000, a copy of which is attached to this Proxy Statement as
Appendix 1. The Stock Purchase Agreement and all of the agreements referenced
therein and all of the agreements described in this Proxy, are conditioned
upon consummation of the Reliance transaction. In other words, the Reliance
transaction contemplates shareholder approval and shortly thereafter there
will be a simultaneous closing involving the exchange of the Purchaser's
consideration for the selling shareholders' securities, the issuance of the
Reliance Warrant and the effectiveness of the Vassell employment agreement.
Shareholders are encouraged to review in their entirety the Stock
Purchase Agreement and each of the other appendices included with this Proxy.
The parties to the Stock Purchase Agreement include the following selling
directors: Peter T. Kikis, Thomas Kikis, Steven B. Sands and H. Lloyd
Saunders III. The following selling shareholders are also parties to the
Stock Purchase Agreement: Murray Leifer, Sarah Leifer, Michael Leifer, Jane
Lenahan, Donald Radcliffe, Robert Rosan and Martin Sands, as attorney-in-fact
for certain selling shareholders with respect to which he has discretionary
authority.
The Stock Purchase Agreement states that Reliance is purchasing from
the sellers all of their interests in the Company. This amounts to 1,382,339
shares of common stock, 12,325.82 shares of Series A Preferred
<PAGE>
Stock which are convertible into 1,232,582 shares of common stock and
warrants covering 300,000 shares of common stock. The purchase price is $2.20
per share of common stock and common stock equivalent. The purchase price for
the warrants will be $2.20 per share of common stock issued upon exercise of
each warrant, less the exercise price. The aggregate purchase price for these
securities is approximately $6 million. The closing of the Reliance
transaction is expected to take place in November 2000.
The Stock Purchase Agreement also contains several conditions to
closing including: (a) the accuracy as of the closing date of the
representations and warranties made in the Stock Purchase Agreement; (b) the
Company and the Sellers shall have obtained any and all consents, permits or
waivers needed to close the transaction including the shareholders approval
of the Reliance Warrant which entitles the Purchaser to purchase from the
Company up to 2,044,853 shares or 20%of the Company's outstanding common stock
on a fully diluted basis (Appendix 2) and the Vassell Warrants covering a total
of 1,044,853 shares or approximately 8% of the Company's outstanding common
stock on a fully diluted basis (Appendices 3a and 3b); (c) the Company shall
have used its best efforts to obtain approval of an amendment to the Company's
Certificate of Incorporation providing for the removal of directors with or
without cause upon approval of a majority of the shareholders or with respect
to removal for cause, upon approval of a majority of the Board of Directors
(Proposal 3); (d) certain of the Sellers shall have executed the Voting
Agreements (Appendices 4a and 4b); (e) the Company, Mr. Vassell and Reliance
shall have executed the Shareholders Agreement (Appendix 5); (f) Mr. Vassell
shall have entered into the Employment Agreement (Appendix 6); (g) the
Company shall have obtained a new term loan facility of at least $2.25
million; (h) the Stipulation (Appendix 7) providing for the termination of
the 1997 litigation against the Company and certain of its directors shall have
been executed and the 1997 litigation terminated; (i) termination of the 1995
Shareholder Agreement; (j) the Company's Board of Directors shall be
reconstituted based on the resignations of Messrs. Snitow, Robinett, Thomas
Kikis, Peter Kikis, Saunders and Sands, and the Board shall have been reduced
to seven (7) members consisting of Messrs. Vassell, Miller, Nekos,
Haslehurst, Halder, Allison and a director to be mutually agreed upon by Mr.
Vassell and Reliance; and (k) there shall not have occurred any material
adverse change and no facts or circumstances arising after the date of the
Stock Purchase Agreement shall have occurred which could reasonably be
expected to have a material adverse effect on the Company.
The Reliance Warrant
The Company has agreed to issue Reliance a warrant (Appendix 2) for
2,298,092 shares or 20% of the Company's 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 of the warrant, conversion of all shares of preferred stock
outstanding on the date of the warrant, and the exercise of the warrant
<PAGE>
itself. The warrant exercise price is $1.25 per share. Due to the current
closing bid price for the Company's stock of $.81 as of October 11, 2000, the
Warrant has nominal value. The warrant expires in five years and may not be
exercised for one year from the date of its issuance. The warrant is subject
to the usual and customary anti-dilution provisions. Any shares issued
pursuant to exercise of the warrant are covered by the Registration Rights
Agreement (Appendix 8) which provides for a piggyback registration during the
five year period following consummation of the Reliance transaction and one
demand registration statement during the same time period.
The Vassell Warrants
In accordance with the Employment Agreement (Appendix 6) with William
C. Vassell, Chairman of the Board of the Company, which becomes effective upon
consummation of the Reliance transaction, Mr. Vassell is entitled to receive,
among other things, two nonqualified incentive stock options which are
referenced herein as the Vassell Warrants. The first warrant (Appendix 3a) is
for 204,485 shares or 2% of the outstanding common stock of the Company 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
of the warrant, conversion of all shares of preferred stock on the date of
the warrant and exercise of the warrant. The calculation specifically
excludes the warrants issued to Mr. Vassell pursuant to Section 4.2 of his
Employment Agreement. The warrant exercise price is $1.25 per share. Due to
the current closing bid price for the Company's stock of $.81 as of October
11, 2000, the Warrant has nominal value. The warrant expires in five years
and may not be exercised for one year from the date of its issuance. The
warrant is subject to the usual and customary anti-dilution provisions and
may not be exercised until after the exercise by Reliance of the Reliance
warrant and only to the extent of the exercise of the Reliance warrant.
The second warrant (Appendix 3b) to be issued to Mr. Vassell in
accordance with Section 4.2 of his Employment Agreement covers 1,012,959
shares which is such number of shares of common stock which, when taken
together with all shares of common stock and options, warrants and rights to
acquire shares of common stock held by Mr. Vassell on the date of the
warrant, is equal to approximately 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
of the warrant, conversion of all shares of preferred stock outstanding on
the date of the warrant and exercise of the warrant. The terms of this
warrant are the same as the warrant referenced above except that the number
of shares covered by it are subject to the Company's performance. Due to the
current closing bid price for the Company's stock of $.81 as of October 11,
2000, the Warrant has nominal value. One-third of the shares covered by the
warrant shall become exercisable if the Company's earnings before taxes, as
that term is defined in the Employment Agreement (Appendix 6) for the year
ended March 31, 2002, exceeds the projected amount of earnings before taxes
for that year (as set forth in the confidential Letter Agreement dated
September 12, 2000 between the Company and Mr. Vassell). The warrant becomes
exercisable with respect to two-thirds of the shares covered by the warrant
if the Company's earnings before taxes for the year ended March 31, 2003
exceed projected earnings before taxes for that year. All of the shares
covered by the warrant become exercisable if the Company's earnings before
<PAGE>
taxes for the year ended March 31, 2004 exceed the projected amount of
earnings before taxes for that year. This warrant is also subject to the
usual and customary anti-dilution provisions.
The Shareholders' Agreement
The Company, William C. Vassell and Reliance are parties to a
Shareholder's Agreement dated September 12, 2000 (Appendix 5). The parties'
obligations under the Agreement are conditioned upon the consummation of the
Reliance transaction. Pursuant to the terms of the 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: (a) the
establishment of a Board composed of seven directors; (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 Graeme Halder.
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.
The 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 as defined in the Vassell Employment
Agreement (Appendix 6). Upon a deviation from the confidential target for
such fiscal year by more than 20%, Reliance may ask for a vote of the Board
to terminate Mr. Vassell's employment. 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 the first anniversary of the effective date of his Employment
Agreement.
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 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 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 and the
Reliance 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
<PAGE>
shares. The Company provides certain representations and warranties to
Reliance which are standard for a transaction of this nature.
The Voting Agreement
Reliance has entered into a Voting Agreement with Peter Kikis and
Thomas Kikis (Appendix 4a) and another Voting Agreement with Katie and Adam
Bridge Partners and Owl-1 Partners, LP (Appendix 4b), which are limited
partnerships controlled by Steven B. Sands. Each of the Voting Agreements,
which are substantially similar, provide Reliance's designees the power to
vote certain of the shares owned or controlled by Messrs. Kikis and Sands in
a manner that is consistent with the consummation of the Reliance
transaction. It prohibits any vote of the shares in favor of another
transaction prior to termination of the Stock Purchase Agreement and it
contains certain standard representations and warranties.
The Vassell Employment Agreement
The Company has executed an Employment Agreement with Mr. Vassell
dated as of September 12, 2000 (Appendix 6). The Agreement will not go into
effect unless and until the Reliance transaction is consummated. The
Agreement provides that Mr. Vassell will be employed as the Company's
Chairman of the Board of Directors, Chief Executive Officer and President.
The contract will end on the earlier of the third anniversary of the
effective date or the date on which Mr. Vassell's employment is terminated
under the Agreement. Unless either party gives ninety (90) days notice to the
other party prior to an anniversary of the effective date, the Agreement shall
be automatically extended for one year on such anniversary date. Mr. Vassell's
base salary shall be $175,000 per annum for the first employment period,
$225,000 for the second employment period and $250,000 thereafter.
Mr. Vassell shall be eligible to receive incentive compensation
commencing with the fiscal year ending March 31, 2001. He shall receive
incentive compensation equal to 20% of his base salary if earnings before
taxes for that year equal or exceed the Company's projections. For each
percentage increase in earnings before taxes above the projected amount, the
incentive compensation will be increased by three percentage points of the
base salary up to a maximum compensation equal to 50% of base salary. Mr.
Vassell shall also receive the warrants (Appendix 3a and Appendix 3b)
described above. Mr. Vassell's employment may be terminated by the Board with
or without cause or by Mr. Vassell in the event of a material breach by the
Company or Reliance of the Shareholders' Agreement, a material diminution in
his duties and/or authority under the Employment Agreement, or a relocation
of the Company's headquarters more than fifty miles away from its current
location. Mr. Vassell may also terminate his employment upon one hundred
eighty (180) days notice or under certain circumstances following a change
in control.
In the event Mr. Vassell is terminated for cause or he terminates
other than for constructive discharge or following a change of control, death
<PAGE>
or disability, the Company shall have no further obligation except to pay
those accrued obligations arising prior to the date of termination. In the
event the Company terminates Mr. Vassell without cause or Mr. Vassell
terminates as a result of constructive discharge, the Company will have no
obligation to the executive other than to pay all accrued obligations such as
salary and benefits, the payment of the balance of his base salary for the
year of termination, plus incentive compensation under certain circumstances.
The Employment Agreement provides that Mr. Vassell shall be subject
to a Confidentiality Agreement with respect to any confidential or
proprietary information, knowledge or data relating to the Company. In
addition, for one year following termination of his employment for any
reason, Mr. Vassell shall not solicit for employment or employ any person who
is a senior executive or branch manager of the Company, solicit any customer
of the Company or provide to any customer of the Company services of the type
offered by the Company as of the date of such termination except under
certain circumstances.
The Employment Agreement goes on to provide Mr. Vassell with
extensive indemnification with respect to any action taken or omission
occurring after the effective date of the contract. Such indemnification
provisions provide for advancement of expenses and costs.
Disadvantages of the Transaction
Among the disadvantages identified by Management and considered by
them in their deliberations, are the dilution to the Company's non-selling
stockholders as the result of the issuance of the Reliance Warrant and the
Vassell Warrants and the expenses associated with the transaction and their
impact on the Company's earnings. Notwithstanding the dilutive impact of the
issuance of the Warrants and the cost of the transaction, the Board
determined that the management expertise to be provided by Reliance in terms
of Board participation and senior management and the resolution of the 1997
litigation would be in the best long-term interests of the shareholders. The
expense of the transaction, estimated to be approximately $375,000 will have
an adverse effect on the Company's earnings for the periods in which the
expenses are recognized. The Board considered this impact as well as others
in its deliberations and concluded that the Reliance transaction will be in
the best long-term interests of the Company's shareholders.
Fairness Opinion
Rosin & Associates, Inc. located in New York, New York was engaged by
the Company to provide evaluation and advisory services. Rosin & Associates,
Inc. was founded in 1989. Over its ten-year history, the firm has performed
underwriting and valuation analysis on assets in excess of $4 billion. The
firm has over 30 years of combined experience in commercial mortgage
<PAGE>
underwriting, asset valuation, acquisition analysis and other financial
expertise. Rosin & Associates, Inc. specializes in the valuation of business
enterprises and is highly experienced in the performance of due diligence,
cash flow analysis, credit and legal document review, on-site inspection,
third-party report review and market analysis for retail, multi-family,
office, industrial, hotel and other properties throughout the nation. There
is no relationship between Rosin & Associates, Inc. and any of its affiliates
on one hand and the Company, Reliance or the selling shareholders or their
respective affiliates on the other hand. Rosin & Associates, Inc. was
referred to Mr. Vassell, Chairman of the Company's Board in connection with a
prior unrelated transaction which did not close. Mr. Vassell and Mr. Kikis
interviewed Rosin & Associates, Inc. and recommended to the Board that it be
engaged by the Company to provide a fairness opinion. Rosin & Associates,
Inc. will receive approximately $45,000 from the Company for its services.
Rosin & Associates, Inc. was engaged to provide an opinion as to the
fairness to the Company's shareholders, from a financial point of view, of a
transaction involving: (i) the issuance by the Company of a warrant
representing 20% of the Company's outstanding stock; (ii) the Company
entering into certain agreements (the Registration Rights Agreement,
Shareholders' Agreement and Employment Agreement) and (iii) changes to the
Company's Certificate of Incorporation and the installation of new directors
and officers, all in consideration of the termination of certain 1997
litigation against the Company and members of its Board of Directors.
In arriving at their opinion, Rosin & Associates, Inc. reviewed
certain publicly available and confidential business and financial information
relating to the Company as well as the agreements documenting the Reliance
transaction. They also considered certain financial and stock market data of
the Company and such other information financial studies, analysis and
investigations and financial, economic and market criteria which they deem
relevant. The analyses, opinions, conclusions and report of Rosin &
Associates, Inc. were developed and prepared in conformity with the
requirements of the Code of Professional Ethics and the Standards of
Professional Practice of the Appraisal Institute and also in accordance with
the Uniform Standards of Professional Appraisal Practice as set forth by the
Appraisal Foundation. No limitation was imposed by the Company upon Rosin &
Associates, Inc. on the scope of their investigation. In their Opinion Letter
dated October 4, 2000, Rosin & Associates, Inc. concluded that the
transaction is fair to the stockholders of the Company other than the sellers
and the acquirer and its affiliates from a financial point of view. A copy of
the Fairness Opinion is attached to the proxy as Appendix 9.
Recommendation of the Board of Directors
The Board of Directors believes that the Reliance transaction,
including the issuance of the Reliance Warrants, the Vassell Warrants and the
payment of the transaction fees, is in the best interest of the shareholders.
The primary reasons are the management expertise expected to be provided by
Reliance in terms of Board participation and senior management and the
resolution of the 1997 litigation by and against members of the Board of
Directors.
Estimated Expenses to be Incurred by the Company
The Company has agreed to pay Peter T. Kikis $135,000 in connection
with his services to the Company rendered in connection with the Reliance
transaction. The Company has also agreed to pay 50% of any fees payable to
Mr. Peter Vosberg for his services rendered in connection with the Reliance
transaction. These fees, if any, have not been determined but are not
expected to exceed $65,000. The Company also incurred approximately $45,000 in
<PAGE>
obtaining a Fairness Opinion from Rosin & Associates, the $30,000 in
reimbursement of legal fees incurred by director, Steven B. Sands, and
approximately $100,000 in legal and accounting fees allocable to the
transaction. The Company has estimated that future expenses to be incurred
include approximately $50,000 in connection with the Registration Rights
Agreement in favor of Reliance.
PROPOSAL 2
Plan Description
The Company's Board of Directors and Reliance have approved the 2000
Stock Option Plan covering 500,000 shares of the Company's common stock for
issuance to employees of the Company including directors who are also
employees, but not directors who are not employees. In accordance with the
Plan, the Board shall appoint a committee of three members of the Board who
shall be "disinterested persons" within the meaning of Rule 16b-3(d)(3) under
the Securities Exchange Act of 1934 as Amended. The committee shall have the
authority to administer the Plan and shall determine those individuals who
are eligible recipients and the number of shares they shall receive under the
Plan. The Plan gives the committee the power to determine the form of option
including whether it is intended to be an "incentive stock option" or a "non
qualified stock option". The exercise price per share of the shares to be
purchased pursuant to any option shall be fixed by the committee at the time
the option is granted, but in no event shall be less than the fair market
value of share on the day on which the option is granted. The duration of the
options shall not exceed ten years from the date upon which the option is
granted. A copy of the 2000 Stock Option Plan is annexed hereto as Appendix
10).
Reasons for the Plan
Competition in the security service business is intense. The Company
plans to expand its operations and to compete against local companies as well
as larger national companies which may have substantially greater financial
resources, personnel and facilities. The Board believes that one of the keys
to the Company's future success will be its ability to continue to compete on
the basis of quality of its service, personal relationships with customers
and reputation. In order to do this, the Company will need to continue to
recruit and retain a team of highly skilled managers. The Board believes that
the Company's ability to grant stock options will afford the Company the
opportunity to attract and retain key personnel. The Board also believes that
the grant of stock options is an effective method to encourage management to
become more aligned with the interests of the stockholders. In furtherance of
these goals, the Board of Directors has adopted, subject to shareholder
approval, the 2000 Stock Option Plan covering up to 500,000 shares of the
Company's common stock.
Federal Income Tax Consequences
<PAGE>
An optionee will not incur any federal income tax liability as a
result of the grant of a stock option. The same is true when any option becomes
exercisable. If an option is not qualified for tax purposes as an incentive
stock option ("ISO"), upon exercise, the optionee will generally recognize
ordinary income for federal income tax purposes in an amount equal to the
difference between the fair market value of the shares at the time of
exercise and the exercise price. The income recognized by the optionee will
be subject to tax withholding by the Company and the Company will be entitled
to a tax deduction in an amount equal to the amount of ordinary income
recognized by the optionee. Upon resale of such shares by the optionee, any
difference between the sale price and the fair market value of the shares at
the time the option was exercised will be treated as capital gain or loss.
Generally, an optionee will not incur federal income tax liability as the
result of an exercise of an ISO. However, except in the case of death or
disability, if an ISO is exercised more than three (3) months after an
optionee's termination of employment (a "disqualifying exercise"), the
optionee will recognize ordinary income in an amount equal to the difference
between the fair market value of the shares on the date of exercise and the
exercise price. For purposes of calculating optionee's alternative minimum
tax, if any, the difference between the fair market value of the shares at
the time the stock option is exercised and the exercise price becomes an item
of adjustment. When the shares acquired upon exercise of an ISO are sold, the
optionee will be taxed on the difference between the sale price and the
exercise price. If such a sale does not occur within two (2) years of the
date the ISO was granted or within one (1) year of the date it was exercised,
then the gain, if any, will be treated as long-term capital gain. If such a
sale occurs within either of the time periods specified in the preceding
sentence, a disqualifying disposition, then the portion of the optionee's
gain equal to the difference between the fair market value of the stock on
the date of exercise (or, if less, the selling price) and the exercise price
will be treated as income, while the balance of any gain would be treated as
capital gain. The Company is generally not entitled to a deduction as the
result of the grant or exercise of an ISO. However, if the optionee
recognizes ordinary income as the result of a disqualifying exercise or
disposition, the Company is entitled to a deduction in an equivalent amount
in the taxable year of the Company in which the disqualifying event occurs.
The foregoing is only a summary of the general effect of the U.S. federal
income taxation upon the optionee and the Company with respect to the grant
and exercise of options under the Plan and the subsequent sale of such
shares. This summary does not discuss the income tax laws of any state or
foreign country in which an optionee may be employed or reside.
Recommendation of the Board
The Board recommends shareholder approval of the 2000 Stock Option
Plan for the reasons stated above.
PROPOSAL 3
The Company's Certificate of Incorporation as amended, currently
requires that in order to remove a director for cause, there must be the
affirmative vote of the holders of at least 75% of all outstanding shares or
action of at least 75% of all members of the Board of Directors. Directors
may be removed without cause only by a vote of the holders of at least 75% of
all outstanding shares of the Company's stock. The provision further states
that it may not be altered or amended without the approval of the holders of
at least 75% of all outstanding shares.
In connection with the Reliance transaction, Reliance has requested
that the Board use its best efforts to obtain an amendment to this provision
in the Certificate of Incorporation in order to allow for the removal of
directors for cause by a vote of the holders of a majority of all outstanding
shares entitled to vote thereon or by action of a majority of the Board of
Directors. Any or all of the directors may be removed without cause by a vote
of the holders of a majority of all outstanding shares entitled to vote
thereon (Appendix 11).
<PAGE>
In the opinion of the Company's management, this amendment will make
it easier to remove directors with or without cause. The original restrictive
provisions with respect to removal of directors were adopted in 1992 in
connection with the Company's corporate planning with respect to potential
hostile takeovers. The current provisions in the Certificate of Incorporation
are considered to be more protective of existing management. The proposed
amendment would make it less difficult for a third party to remove members of
the Board.
The shareholder vote required in order to approve this amendment is
75% of all outstanding shares entitled to vote on the matter. The Board
recommends that the shareholders vote in favor of the amendment to the
Company's Certificate of Incorporation.
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 sixty (60) days of
September 27, 2000, (ii) each director and executive officer and (iii) all of
said beneficial owners, officers and directors as a group, as of September 27,
2000. Except as indicated below, 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
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.
Amount and
Nature of
Beneficial
Name Ownership(1) Percent of Class(7)
------------------ ------------ -------------------
William C. Vassell 1,030,000 16.4%
Steven B. Sands/ 974,412(2) 15.5%
Sands Brothers &
Co., Ltd. (9)
101 Park Avenue
New York, NY
<PAGE>
Franklyn H. Snitow 0 0
Gordon Robinett 35,000 (8)
Peter T. Kikis(9) 1,368,970(3) 20.8%
Peter Nekos 12,500(4) (8)
Debra Miller 100(5) (8)
Lloyd H. Saunders, III 500 (8)
Gregory J. Miller 10,000(5) (8)
Thomas P. Kikis(9) 1,368,970(6) 20.8%
Eugene U. McDonald 1,250 (8)
Reliance Security Group plc (9) 2,914,921 37.2%
Boundary House
Cricket Field Road
Uxbridge, Middlesex UBg 1 QG
All Officers and 3,046,810 40.1%
Directors as a Group (2)(3)(4)
(11 Persons) (5)(6)(7)
(1) The Company has been advised that all individuals listed, except
Steven B. Sands (see Note (2), below) and Peter T. and Thomas Kikis
(see Note (3), and (6) below) have the sole power to vote and
dispose of the number of shares set forth opposite their names.
(2) (a) Mr. Steven B. Sands is the beneficial owner of 974,412 shares of
common stock, or 15.5% of the Company's common stock outstanding.
Such ownership is indirect. Of such shares, 25,000 shares, over
which Steven B. Sands has dispositive power, are held in a
discretionary account at Sands Brother & Co., Ltd. (Sands Brothers)
(with respect to which Mr. Sands is Chairman of the Board) which
discretion may be revoked by the grantor thereof at any time.
Steven B. Sands acknowledges his relationship with each of Katie and
Adam Bridge Partners, L.P. (K&A) and Owl-1 Partners, LP (Owl-1), but
does not affirm that such partnerships and their general partners
constitute a group for reporting purposes under Section 13(d) of the
Securities Exchange Act of 1934, as amended. Pursuant to Rule 13d-4,
<PAGE>
under the Securities Exchange Act of 1934, as amended, Mr. Sands
disclaims beneficial ownership of any of such 974,412 shares.
(b) Mr. Martin S. Sands is the beneficial owner of 1,199,537 shares
of Common Stock, or 19.1% of the Company's common stock outstanding.
Such ownership is indirect. Of such shares, 250,125 shares, over
which Martin S. Sands has dispositive power, are held in
discretionary accounts at Sands Brothers, which discretion may be
revoked by the grantor thereof at any time. Martin S. Sands
acknowledges his relationship with each of K&A and Owl-1, but does
not affirm that such partnerships and their general partners
constitute a group for reporting purposes under Section 13(d) of the
Securities Exchange Act of 1934, as amended, Mr. Sands disclaims
beneficial ownership of any of such 1,199,537 shares.
(c) K&A is the beneficial owner of 924,412 shares of common stock,
or 14.7% of the Company's common stock outstanding. Such ownership
is direct. K&A expressly disclaims beneficial ownership of any
shares of common stock deemed held or owned by Steven B. Sands,
Martin S. Sands and Owl-1.
(d) Owl-1 is the beneficial owner of 25,000 shares of common stock,
or 0.39% of the Company's common stock outstanding. Such ownership
is direct. Owl-1 expressly disclaims ownership of any shares of
common stock held or owned by Steven B. Sands, Martin S.
Sands and K&A.
(3) A Schedule 13D filed by Peter T. Kikis on or about September 12,
2000, states that this amount includes 300,000 shares underlying
currently exercisable warrants and 408,170 shares underlying the
Company's Series A Preferred Stock over which Mr. Kikis
has discretionary authority. Mr. Kikis expressly disclaims
beneficial ownership of all but 641,879 shares (108,879 shares
underlying the Company's Series A Preferred Stock,
300,000 shares underlying currently exercisable warrant and 233,000
shares of Common Stock).
(4) Includes 10,000 shares underlying options currently exercisable.
(5) Includes 10,000 shares underlying warrants currently exercisable.
(6) A Schedule 13D filed by Thomas P. Kikis, Kikis Asset Management
Corporation ("KAMC") and Arcadia Securities, LLC ("Arcadia"), filed
on or about September 12, 2000, indicates that Thomas P. Kikis and
Arcadia own beneficially, with shared power to vote, direct the vote
and dispose of, 1,368,970 shares including 300,000 shares issuable
on exercise of currently exercisable warrants and 408,170 shares
issuable on conversion of shares of the Series A Preferred Stock.
<PAGE>
The number of shares over which Thomas P. Kikis and Arcadia have
discretionary authority changes periodically, at the discretion the
grantor of discretionary authority. Such parties have the right to
revoke such discretionary authority at any time. KAMC owns
beneficially, with shared power to vote, direct the vote and dispose
of 786,295 shares, including 300,000 shares issuable on exercise of
currently exercisable warrants and 163,295 shares issuable on
conversion of shares of the Series A Preferred Stock.
(7) Percent of class for each shareholder is calculated as if all shares
underlying Preferred Stock, options and warrants
included in the table for such shareholder are outstanding. The
number of outstanding shares of common stock is 6,287,343. The
percent of class for all executive officers and directors as a group
is calculated as if all shares underlying Preferred
Stock, options and warrants held by any shareholders included in the
group are outstanding. The denominator for the group calculation is
7,839,925.
(8) Less than 1 percent.
(9) Messrs. Sands, Peter Kikis and Thomas Kikis have entered into a
Stock Purchase Agreement and Voting Agreements with Reliance. In
accordance with the terms of the Voting Agreements, they have
granted an irrevocable proxy to Reliance covering a total of 834,800
common shares and 12,325.82 shares of Series A Preferred stock
convertible into 1,232,582 shares of common stock and Reliance is
therefore deemed to be the beneficial owner of the shares covered by
the Voting Agreement. The shares included under the beneficial
ownership for Reliance includes 1,382,339 shares of common stock
currently held by selling shareholders; 12,325.82 shares of
preferred stock, convertible into 1,232,582 shares of common stock
owned by selling preferred stockholders and 300,000 shares
underlying warrants owned by Mr. Peter Kikis. The Voting Agreements
shall terminate in the event the Stock Purchase Agreement is
terminated in accordance with its terms. The Voting Agreements will
terminate upon consummation of the Reliance transaction since all
shares owned by the selling shareholders are expected to be
purchased by Reliance.
Reliance's interest in the Voting Agreements and the irrevocable
proxies from Messrs. Sands and Kikis may constitute a change in control of the
Company. The source of the funds Reliance will use to purchase the sellers'
interests in the Company pursuant to the Stock Purchase Agreement is Reliance's
own internal funds. In addition to the amounts shown in the table above to be
beneficially owned by Reliance, Mr. Vassell has pledged and will deposit into
escrow for the benefit of Reliance 250,000 of his 1,030,000 shares. In the
event the Company does not achieve certain performance levels following the
consummation of the Reliance transaction, these shares will be released from
escrow to Reliance.
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth for the fiscal year ended March 31,
2000, all plan and non-plan compensation paid to, earned by, or awarded to
William C. Vassell, Chairman of the Board, Nathan Nelson, Chief Financial
Officer and Executive Vice President, Franklyn H. Snitow, Acting President and
Chief Executive Officer, Gordon Robinett, Vice Chairman of the Board, Eugene
U. McDonald, Senior Vice President -- Operations, and Martin Blake,
Vice-President -- Aviation. 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, 2000 and, therefore, compensation for such other
executive officers is not disclosed. Mr. Nelson resigned as Chief Financial
Officer and Executive Vice President as of September, 2000.
SUMMARY COMPENSATION TABLE
FOR THE FISCAL YEAR ENDED March 31, 2000
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Shares Shares
Fiscal Year Other Annual Underlying Underlying
Name and Principal Ended Salary Warrants Repriced
Position March 31 Annual Salary Compensation Bonus Granted Warrants
-------- -------- ------------- ------------ ----- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Franklyn H. Snitow<F5>
Acting President and
Chief Executive Officer
1999 $ 0 <F2> 0 0 0
2000 $ 0 <F2> 0 0 0
William C. Vassell<F1>
Chairman of the Board
1998 $174,579 <F2> 0 0 0
1999 $175,000 <F2> 0 0 0
2000 $153,846 <F2> 0 0 0
Nathan Nelson
Chief Financial Officer and
Executive Vice President
2000 $103,384 <F2> 0 0 0
Gordon Robinett
Vice Chairman
of the Board
1998 $ 36,923 $52,500<F2><F4> 0 0 227,500<F3>
1999 $ 60,000 $37,500<F2><F4> 0 0 0
2000 $ 42,692 $22,500<F2><F4> 0 0 0
Eugene U. McDonald
Senior Vice President -
Operations
1998 $125,794 <F2> $18,000 0 0
1999 $112,116 <F2> 20,000 0 0
2000 $131,000 <F2> 11,297 0 0
<PAGE>
Martin Blake
Vice President-
- Aviation
1998 $100,000 <F2> $15,000 0 0
1999 $114,539 <F2> $62,991 0 0
2000 $116,074 <F2> $12,900 0 0
<FN>
<F1> As of June 20, 2000, Mr. Vassell held a total of 1,030,000 shares of the
Company's common stock.
<F2> All perquisites and other personal benefits, securities or property do
not exceed either $50,000, or 10% of the total annual salary and bonus of the
executive officer. All perquisites and other personal benefits, securities or
property are properly indicated in the "Other Annual Salary Compensation"
column, as they all fit into the categories set forth in Item 402 of
Regulation S-K.
<F3> Includes repricing of the: 107,500 shares issued on January 19, 1991,
with exercise price at market value of $5.00, reduced to market value of
$3.25 as of August 16, 1993 and reduced on July 15, 1996 to $2.50; 60,000
shares issued on April 8, 1991, with exercise price at market value of
$3.375, reduced to market value of $3.25 as of August 16, 1993 and reduced on
July 5, 1996 to $2.50; and 60,000 shares issued on May 15, 1992, with
exercise price at market value of $3.88, reduced to market value of $3.25 as
of August 16, 1993 and reduced on July 15, 1996 to $2.50. All of Mr. Robinett's
options and warrants expired in July, 2000.
<F4> Mr. Robinett received $22,500 under his termination agreement during the
fiscal year ended March 31, 2000.
<F5> Mr. Snitow is not compensated as an officer of the Company, however, Mr.
Snitow's law firm has been paid legal fees of $45,662 during the fiscal year
ending March 31, 2000. During the fiscal year ending March 31, 1999, Mr.
Snitow's law firm received $72,500.
</FN>
</TABLE>
Stock Options/Warrants
The Company did not grant any stock options or warrants during the
fiscal year ending March 31, 2000 to the Company's Chief Executive Officer or
to any of the Company's executive officers whose total annual salary and
bonus exceeded $100,000. There were no tandem or free-standing stock
appreciation rights granted to any person during the fiscal year ending March
31, 2000.
Board of Directors Compensation
No executive officer receives any additional compensation for serving
as a director, except in the case of Mr. Snitow who is compensated at the rate
of $300 per hour in accordance with an engagement letter between Mr. Snitow
and the Company. Directors who are not employees of the Company, and
<PAGE>
excluding Mr. Snitow, receive a meeting fee of $1,000 for each meeting
attended, and all directors are reimbursed for expenses incurred in attending
Board meetings. With the exception of Gregory J. Miller and Peter T. Kikis,
no other directors who are not also executive officers received any plan or
non-plan compensation from the Company during the last three fiscal years.
In January 2000, the Board granted to Mr. Peter Kikis a warrant to
purchase 150,000 shares of common stock at a purchase price of $1.03125 per
share, the fair market value at the time of issuance.
Limited Directors' Liability
Pursuant to the New York Business Corporation Law, the Company's
Certificate of Incorporation, as amended, eliminates to the fullest extent of
such Law the liability of the Company's Directors, acting in such capacity,
for monetary damages if they should fail through negligence or gross
negligence to satisfy their duty of exercising proper business judgment in
discharging their duties, but not for acts or omissions in bad faith, or
involving intentional misconduct or amounting to a knowing violation of law
or under other limited circumstances.
Employment, Termination of Employment
and Change of Control Agreements
The Company has executed an Employment Agreement with Mr. Vassell
dated as of September 12, 2000 (Appendix 6). The Agreement will not go into
effect unless and until the Reliance transaction is consummated. The
Agreement provides that Mr. Vassell will be employed as the Company's
Chairman of the Board of Directors, Chief Executive Officer and President.
The contract will end on the earlier of the third anniversary of the
<PAGE>
effective date or the date on which Mr. Vassell's employment is terminated
under the Agreement. Unless either party gives ninety (90) days notice to the
other party prior to an anniversary of the effective date, the Agreement
shall be automatically extended for one (1) year on such anniversary date.
Mr. Vassell's base salary shall be $175,000 per annum for the first
employment period, $225,000 for the second employment period and $250,000
thereafter.
Mr. Vassell shall be eligible to receive incentive compensation
commencing with the fiscal year ending March 31, 2001. He shall receive
incentive compensation equal to 20% of his base salary if earnings before
taxes for that year equal or exceed the Company's projections. For each
percentage increase in earnings before taxes above the projected amount, the
incentive compensation will be increased by three percentage points of the
base salary up to a maximum compensation equal to 50% of base salary. Mr.
Vassell shall also receive two warrants (Appendix 3a and Appendix 3b). Mr.
Vassell's employment may be terminated by the Board with or without cause or
by Mr. Vassell in the event of a material breach by the Company or Reliance
of the Shareholders' Agreement, a material diminution in his duties and/or
authority under the Employment Agreement, or a relocation of the Company's
headquarters more than fifty (50) miles away from its his current location.
Any such diminution, relocation or other uncured breach is referred to as
constructive discharge. Mr. Vassell may also terminate his employment upon
one hundred eighty (180) days notice or under certain circumstances following
a change in control.
In the event Mr. Vassell is terminated for cause or he terminates
other than for constructive discharge or following a change of control, death
or disability, the Company shall have no further obligation except to pay
those accrued obligations arising prior to the date of termination. In the
event the Company terminates Mr. Vassell without cause or Mr. Vassell
terminates as a result of constructive discharge, the Company will have no
obligation to the executive other than to pay all accrued obligations such as
salary and benefits, the payment of the balance of his base salary for the
year of termination, plus incentive compensation under certain circumstances.
The Employment Agreement provides that Mr. Vassell shall be subject
to a Confidentiality Agreement with respect to any confidential or
proprietary information, knowledge or data relating to the Company. In
addition, for one (1) year following termination of his employment for any
reason, Mr. Vassell shall not solicit for employment or employ any person who
is a senior executive or branch manager of the Company, solicit any customer
of the Company or provide to any customer of the Company services of the type
offered by the Company as of the date of such termination except under
certain circumstances.
The Employment Agreement goes on to provide Mr. Vassell with
extensive indemnification with respect to any action taken or omission
occurring after the effective date of the contract. Such indemnification
provisions provide for advancement of expenses and costs.
<PAGE>
The Company expects to offer and Employment Agreement to Mr. Graeme
R. Halder (Appendix 12). The Agreement will provide that Mr. Halder will be
employed as the Company's Chief Financial Officer and report to Mr. Vassell.
The contract contemplates a three (3) year term but may be terminated by either
party prior thereto. Mr. Halder's base salary will be $138,000 and he will be
eligible to receive up to an additional fifty percent (50%) of base salary
based on performance. The contract also anticipates the approval of the 2000
Stock Option Plan and indicates that Mr. Halder will be considered for a 75,000
share option. The perquisites offered to Mr. Halder will include a Tax
Equalization Agreement, an automobile, a $13,800 disturbance allowance per
annum, the reasonable costs of private education for his two eldest children,
a $6,000 per annum air travel allowance and reimbursement of moving costs
between the United States and the UK.
The Company has entered into an agreement pursuant to an engagement
letter and an Indemnification Agreement with Mr. Snitow. In accordance with
the engagement letter, Mr. Snitow is compensated at the rate of $300.00 per
hour, plus reimburseable expenses, based on his hourly billing to the
Company. The Indemnification Agreement between the Company and Mr. Snitow
provides for the maximum indemnification permitted under New York law, and
the Company's Certificate of Incorporation and By-Laws. The inclusion of the
foregoing information is intended to comply with Section 725(d) of the New
York Business Corporation Law.
Pursuant to the Employment Agreement which expired in July 2000, Mr.
Vassell serves as Chairman of the Board of the Company and received an annual
salary of $175,000 in fiscal years ended March 31, 1999 and March 31, 2000.
The Board determined that as of April 1, 1999, Mr. Vassell's salary would be
$150,000 annually. Mr. Vassell was 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 Pre-Tax Operating Profit in
excess of $1.0 million. Mr. Vassell is provided with the use of a
Company-owned automobile and reimbursement for automobile insurance and
operating expenses.
In September of 1992, the Company entered into a Compensation
Continuation Agreement with Mr. Vassell in consideration of 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 (3) years preceding the termination. All awards previously
<PAGE>
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 approximately $150,000 for the fiscal year ended March 31,
2000, or approximately $450,000.
Other than pursuant to the Employment Agreement and the Compensation
Continuation Agreement for Mr. Vassell, 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. In
November, 1999, the Company adopted a qualified RetirementPlan which was
effective for calendar year 1999, which provided for elective employee
deferrals and discretionary employer contributions to non highly compensated
participants. The Plan does not allow for employer matching of elective
deferrals. For the period ended March 31, 2000, no discretionary amounts have
been accrued or paid.
Compensation Committee Interlocks and
Insider Participation in Compensation Decisions
The Company's Compensation Committee is intended to make all
recommendations to the Board related to compensation issues with respect to
executive officers. It is comprised of William C. Vassell, Peter T. Kikis and
Steven B. Sands. While Mr. Vassell will participate in decisions relating to
compensation for executive officers, he will not vote on matters relating to
his own compensation. Likewise, none of the directors or executive officers
serve on the Compensation Committee of any other entity with the exception of
Gorden Robinett, who serves on the compensation committee of Uniforce
Temporary Personnel, Inc. None of the other members of the Company's Board is
an officer, director or employee of Uniforce Temporary Personnel, Inc.
<PAGE>
Certain Relationships and Related Transactions
The Company has agreed to pay director Peter T. Kikis up to
$135,000 for services rendered in connection with the Reliance transaction
and his evaluation and negotiations with respect to unsuccessful transactions
prior to the Reliance transaction.
An attorney representing Steven B. Sands in connection with the
legal proceeding brought by Mr. Sands against the Company and four of the
Company's directors and also in connection with the Reliance transaction,
will be paid $30,000 of his fees by the Company.
A description of the engagement letter and Indemnification Agreement
between the Company and Franklyn H. Snitow, Acting President, Chief Executive
Officer and Director of the Company, is found in "Employment Agreements and
Warrants and Termination of Employment and Change of Control Agreements".
The Company and its Board of Directors (except Mr. Snitow) are party
to a legal proceeding characterized as a derivative action. Certain
indemnification rights are afforded these parties under the Company's
Certificate of Incorporation and the Business Corporation Law of New York.
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, 2000, the Company has expensed and charged earnings with approximately
$204,000 in legal fees (none during the year ended March 31, 2000) in defense
of this matter on its own behalf as well as on behalf of the defendant
officers and directors. In addition, the Company expended $100,000 for
legal fees on behalf of the plaintiff directors in December, 1998, and
accrued a $92,000 contingency for legal fees incurred by one of the
defendants, where management has determined that indemnification by the
Company is probable.
Gregory J. Miller has been a director of the Company since 1992. Mr.
Miller is general counsel for Goldline Connectors, Inc. and has rendered
legal services to the Company during his tenure as a director. Mr. Miller has
rendered legal services in connection with various litigation and contractual
matters during the last three fiscal years. During each of the last three
fiscal years, payments to Mr. Miller for legal services were minimal. It is
expected that Mr. Miller will continue to render minimal legal services to
the Company from time to time. Management believes that the terms of the
various transactions between the Company and Mr. Miller were as favorable as
those which might have been obtained from an unaffiliated party.
<PAGE>
Gordon Robinett, a member of the Company's Board and former
Treasurer, entered into a Covenant Not-to-Compete with the Company on July
23, 1996 in connection with his termination of employment with the Company.
Under that agreement, the Company is to make periodic payments to Mr.
Robinett over four (4) years totaling $180,000, the exercise price of Mr.
Robinett's options and warrants was reduced to $2.50, and an expiration date
was fixed at July 19, 2000. In return, Mr. Robinett is prohibited from
directly or indirectly competing with the Company until July 19, 2000. In
August of 1997, Mr. Robinett was engaged by the Company on a per diem
proration of his prior Employment Agreement to temporarily perform the
functions of Mr. Dickinson until a replacement was approved by the Board. Mr.
Robinett worked an average of three (3) days per week and was compensated
therefor at the rate of $385 per day. On July 1, 1999, Nathan Nelson was
retained as the Company's Chief Financial Officer and Executive Vice
President, and therefore, Mr. Robinett's employment with the Company ended.
Shareholder Proposals and Nominations for Directors
for the 2001 Annual Meeting of Shareholders
Shareholder proposals intended for inclusion in the proxy material
for the 2001 Annual Meeting of Shareholders, 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 October 19, 2001, and not
earlier than September 19, 2001, in order for such proposals and nominations
to be included in the proxy material for the 2001 Annual Meeting of
Shareholders. The notice of nomination shall contain the following
information: (a) the full name and residence and business address 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
<PAGE>
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,
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.
Financial Information and Other Matters
[The Company's financial statements, supplemenary financial information,
management's disscussion and analysis of financial condition and results of
operation and quantitative and qualitative disclosures about market risk are
incorporated herein by reference to the Company's Annual Report for its
fiscal year ended March 31, 2000 and to its quarterly report, as amended, for
the quarter ended June 30, 2000. The Company's Annual Report is being
provided to you together with this proxy statement. Copies of quarterly
reports or of any exhibit may be obtained, at a reasonable charge, by writing
to the Company at Route 55, Lexington Park, Lagrangeville, New York 12540.
A representitive of D'Arcangelo & Co., LLP, the Company's principal
accountants for the current year, are not expected to be present at the
security holder's meeting.
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 according to the discretion of the Company's Board of
Directors.
By order of the board of directors,
/s/ William Dunn
----------------
William Dunn, Secretary
Dated: October 16, 2000
<PAGE>
INDEX TO APPENDICES
Appendix 1 Stock Purchase Agreement A-1
Appendix 2 Reliance Warrant A-2
Appendix 3a Vassell Warrant A-3a
Appendix 3b Vassell Warrant A-3b
Appendix 4a Kikis Voting Agreement A-4a
Appendix 4b Sands Voting Agreement A-4b
Appendix 5 Shareholders'Agreement A-5
Appendix 6 Vassell Employment Agreement A-6
Appendix 7 Stipulation A-7
Appendix 8 Registration Rights Agreement A-8
Appendix 9 Rosin & Associates Fairness Opinion A-9
Appendix 10 Stock Option Plan A-10
Appendix 11 Amendment to Certificate of Incorporation A-11
Appendix 12 Halder Employment Agreement A-12
<PAGE>
APPENDIX 1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
September 12, 2000
<PAGE>
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 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 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 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 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.
(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.
(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.
(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 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.
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 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.
(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.
(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
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
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]
<PAGE>
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 Haslehurst
----------------------------
Name:
Title:
SELLERS:
/s/ Peter Kikis
----------------------------
Peter Kikis
/s/ Thomas Kikis
----------------------------
Thomas Kikis
THE KIKIS FAMILY FOUNDATION
By: /s/ Thomas P. Kikis
----------------------------
Name:
Title:
THE PERSONS LISTED ON SCHEDULE B-1 HERETO
/s/ Thomas Kikis, as Attorney-in-Fact
---------------------------------
By: Thomas Kikis, as Attorney-in-Fact
/s/ Sarah Leifer
----------------------------
Sarah Leifer
/s/ Murray Leifer
----------------------------
Murray Leifer
/s/ Michael D. Leifer
----------------------------
Michael Leifer
/s/ Jane H. Lenehan
----------------------------
Jane Lenehan
/s/ Donald Radcliffe
----------------------------
Donald Radcliffe
THE PERSONS LISTED ON SCHEDULE B-2(a) HERETO
/s/ Martin Sands, as Attorney-in-Fact
---------------------------------
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
<PAGE>
EXECUTION COPY
VOTING AGREEMENT
THIS VOTING AGREEMENT dated September 12, 2000, between Reliance
Security Group plc, a company organized under the laws of England and Wales
("Reliance"), and Peter Kikis and Thomas Kikis (collectively, the
"Shareholder").
WITNESSETH
WHEREAS, concurrently herewith, Reliance and the Shareholder are
entering into a Stock Purchase Agreement (as such agreement may hereafter be
amended from time to time, the "Stock Purchase Agreement"), pursuant to which
Shareholder will sell all common stock, preferred stock and warrants of
Command Security Corporation, a New York corporation (the "Company"),
beneficially owned by such Shareholder to Reliance;
WHEREAS, the Shareholder Beneficially Owns, as of the date hereof,
709,800 shares of common stock, $.0001 par value per share, of the Company
(the "Common Stock") and 4081.70 shares of Series A Preferred Stock, $.0001
par value per share (the "Preferred Stock"), of the Company (together with
the Common Stock, the "Shares"); and
WHEREAS, as an inducement and a condition to entering into the Stock
Purchase Agreement, Reliance has required that the Shareholder agree, and the
Shareholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings given to such terms in the Stock Purchase
Agreement. For purposes of this Agreement:
(a) "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 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 shall include securities
Beneficially Owned by all other Persons with whom such Person would
constitute a "group" as within the meaning of Section 13(d)(3) of the
Exchange Act. No representation or warranty is made hereby that the Sellers
constitute a "group" within the meaning of Section 13(d)(3) of the Exchange
Act.
(b) "Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
2. Provisions Concerning Common Stock.
The Shareholder hereby agrees that, at any meeting of the
holders of Common Stock and/or Preferred Stock of the Company, however
called, or in connection with any written consent of the holders of Common
Stock and/or Preferred Stock of the Company, the Shareholder shall vote (or
cause to be voted) all Shares that he has Beneficial Ownership of at the time
of the vote, which shall not be less than 323,000 Shares of Common Stock and
1,632.95 Shares of Preferred Stock (the "Proxy Shares") (i) in favor of (A)
the issuance of the Company Warrant (as defined in the Stock Purchase
Agreement) and the Shares of Common Stock issuable upon exercise of the
Company Warrant, (B) approval of the Charter Amendment (as defined in the
Stock Purchase Agreement) and (C) any other transaction or matter
contemplated by, in connection with, or referenced as a closing condition in,
the Stock Purchase Agreement, and (ii) except as otherwise agreed to in
writing in advance by Reliance, against the following actions: (1) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company (other than in connection with the
transactions contemplated by, in connection with or referenced as a closing
condition in, the Stock Purchase Agreement); (2) a sale, lease or transfer of
a material amount of assets of the Company or its Subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company
or; (3) any change in a majority of the persons who constitute the board of
directors of the Company (other than in connection with the transactions
contemplated by, in connection with or referenced as a closing condition in,
the Stock Purchase Agreement); (4) any change in the present capitalization
of the Company or any amendment of the Company's Certificate of Incorporation
or Bylaws (other than in connection with the transactions contemplated by, in
connection with or referenced as a closing condition in, the Stock Purchase
Agreement); (5) any other material change in the Company's corporate
structure or business (other than in connection with the transactions
contemplated by, in connection with or referenced as a closing condition in,
the Stock Purchase Agreement); or (6) any other action involving the Company
which is intended, or could reasonably be expected, to materially impede,
interfere with, delay, postpone, or materially adversely affect the
transactions contemplated by, in connection with or referenced as a closing
condition in, this Agreement or the Stock Purchase Agreement. The Shareholder
shall not enter into any agreement or understanding with any Person the
effect of which would be inconsistent with or violative of the provisions and
agreements contained in this Section 2. Notwithstanding the foregoing, the
Shareholder shall not be prohibited from voting his Proxy Shares in favor of
a reverse stock split or other recapitalization transaction to enable the
Company to maintain its listing on the Nasdaq Small Cap Market.
3. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) During the term of this Agreement, the Shareholder hereby irrevocably
grants to, and appoints, Ken Allison and Geoff Haslehurst, each in his
capacity as an officer of Reliance, and any other individual who shall
hereafter be designated by Reliance, and each of them individually, the
Shareholder's proxy and attorney-in-fact (with full power of substitution),
for and in the name, place and stead of the Shareholder, to vote the Proxy
Shares, or grant a consent or approval in respect of such Proxy Shares, in
accordance with Section 2.
(b) The Shareholder represents that any proxies heretofore given in respect
of the Proxy Shares are not irrevocable, and that any such proxies are hereby
revoked, other than that certain Shareholders Voting Agreement dated as of
the 8th day of March, 1995 by and among William C. Vassell, Gordon Robinett,
John B. Goldsborough, Lloyd H. Saunders III, Peter Kikis, Steven B. Sands,
Peter Nekos and Gregory J. Miller which must be revoked as a condition to
Reliance's obligation to close under the Stock Purchase Agreement.
(c) The Shareholder hereby affirms that the irrevocable proxy set forth in
this Section 3 is given in connection with the execution of the Stock
Purchase Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Shareholder under this Agreement. The
Shareholder hereby further affirms that the irrevocable proxy is coupled with
an interest and may under no circumstances be revoked. The Shareholder hereby
ratifies and confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof and that such irrevocable proxy is executed
and intended to be irrevocable in accordance with the provisions of Section
609 (f) of the New York Business Corporations Law.
4. Representations and Warranties of the Shareholder. The Shareholder hereby
represents and warrants to Reliance as follows:
(a) Ownership of Shares. The Shareholder is the record holder of or
Beneficially Owns the Proxy Shares. The Shareholder has voting power and
power to issue instructions and grant the irrevocable proxies with respect to
the matters set forth in Section 2 and Section 3 hereof, power of
disposition, power of conversion, power to exercise dissenters' rights and
power to agree to all of the matters set forth in this agreement, in each
case with respect to all of the Proxy Shares, with no limitations,
qualifications or restrictions on such rights, subject to applicable state
and federal securities laws, the terms and conditions of discretionary
agreements to which the Shareholders may be subject and the terms of this
Agreement.
(b) Power; Binding Agreement. The Shareholder has the legal capacity, power
and authority to enter into and perform all of his obligations under this
Agreement. The execution, delivery and performance of this Agreement by the
Shareholder will not violate any other Agreement to which the Shareholder is
a party including, without limitation, any voting agreement, shareholders
agreement or voting trust. This Agreement has been duly and validly executed
and delivered by the Shareholder and constitutes a valid and binding
agreement of the Shareholder, enforceable against the Shareholder 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. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which the Shareholder is trustee whose consent is required for the
execution and delivery of this agreement or the consummation by the
Shareholder of the transactions contemplated hereby. If the Shareholder is
married and the Shareholder's Shares (other than Shares Beneficially Owned by
Shareholder without considering discretionary authority) constitute community
property, this agreement has been duly authorized, executed and delivered by,
and constitutes a valid and binding agreement of, the Shareholder'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.
(c) No Conflicts. No filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for
the execution of this Agreement by the Shareholder and the consummation by
the Shareholder of the transactions contemplated hereby. Neither of the
execution and delivery of this Agreement by the Shareholder, the consummation
by the Shareholder of the transactions contemplated hereby nor compliance by
the Shareholder with any of the provisions hereof shall, in a manner which
would be material and adverse to the ability of the Shareholder to consummate
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 provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which the
Shareholder is a party or by which the Shareholder or any of the
Shareholder's properties or assets may be bound, or (ii) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Shareholder or any of the Shareholder's properties or
assets.
(d) No Encumbrances. Except as applicable in connection with the transactions
contemplated hereby, the Shares over which Shareholder has Beneficial
Ownership at the time of the Closing (the "Transaction Shares") and the
certificates representing the Transaction Shares will be at the time of
Closing, held by the Shareholder, or by a nominee or custodian for the
benefit of the Shareholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder in favor of Reliance.
(e) Reliance. The Shareholder understands and acknowledges that Reliance is
entering into the Stock Purchase Agreement in reliance upon the Shareholder's
execution and delivery of this Agreement.
5. Additional Covenants of the Shareholder. The Shareholder hereby covenants
to Reliance as follows:
(a) Restriction on Transfer of Shares, Proxies and Non-Interference.
Beginning on the date hereof and ending on the date that all of the
Shareholder's obligations under Section 2 and Section 3 have terminated,
except as contemplated by this Agreement or the Stock Purchase Agreement, the
Shareholder shall not, directly or indirectly, (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect
to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of the
Transaction Shares or any interest therein, (ii) except as contemplated by
this Agreement, grant any proxies or powers of attorney, deposit any of the
Transaction Shares into a voting trust or enter into a voting agreement with
respect to any of the Transaction Shares, or (iii) take any action that would
make any representation or warranty of the Shareholder contained herein
untrue or incorrect or have the effect of preventing or disabling the
Shareholder from performing the Shareholder's obligations under this
Agreement.
(b) Additional Shares. The Shareholder agrees, while this Agreement is in
effect the Shareholder shall not acquire, directly or indirectly, any
additional shares of the Company's Common Stock or Preferred Stock.
6. Representations and Warranties of Reliance. Reliance hereby covenants,
represents and warrants to the Shareholder that it has the legal capacity,
power and authority to enter into and perform all of such party's obligations
under this Agreement; the execution, delivery and performance of this
Agreement by Reliance will not violate or result in a breach of any other
material agreement to which Reliance is a party; the execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly executed and delivered by Reliance and
constitutes a valid and binding agreement, enforceable in accordance with its
terms.
7. Further Assurances. From time to time, for a reasonable period of time
following the Closing under the Stock Purchase Agreement, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further
reasonable lawful action as may be necessary or desirable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
8. Termination; Expenses and Fees.
(a) The covenants and agreements contained herein with respect to the Shares
shall terminate in the event the Stock Purchase Agreement is terminated in
accordance with its terms, except that the provisions of Section 11 and
Section 12 hereof shall survive any termination of this Agreement. No
termination of this Agreement shall relieve any party of liability for a
breach hereof.
(b) Each party shall bear its own expenses in connection with this Agreement
and the transactions contemplated hereby.
9. Shareholder Capacity. The Shareholder is not executing this Agreement and
does not make any agreement or understanding herein in his or her capacity as
a director or officer of the Company and nothing contained herein shall limit
or affect any actions taken by the Shareholder in his capacity as a director
or officer of the Company and none of such actions in such capacities shall
be deemed to constitute a breach of this Agreement. The Shareholder signs
solely in his capacity as the record or Beneficial Owner of the Shares.
10. Risk of Revocation of Discretionary Authority. The parties understand and
agree that Shareholder's discretionary authority over the Shares may be
revoked at any time and further agree that Shareholder shall have no
liability for any representations, warranties, covenants, obligations or
agreements with respect to Shares for which his discretionary authority has
been revoked.
11. Sophistication. The Shareholder acknowledges that he or it is an informed
and sophisticated investor and, together with his advisors, has undertaken
such investigation as they have deemed necessary, including the review of the
Stock Purchase Agreement and this Agreement, to enable the Shareholder to
make an informed and intelligent decision with respect to the Stock Purchase
Agreement and this Agreement and the transactions contemplated thereby and
hereby.
12. Confidentiality. Each of the parties hereto recognizes that successful
consummation of the transactions contemplated by this Agreement may be
dependent upon confidentiality with respect to the matters referred to
herein. In this connection, pending public disclosure thereof, each party
hereby agrees not to disclose or discuss such matters with anyone not a party
to this Agreement or the Stock Purchase Agreement (other than the record or
other Beneficial Owners of the Shares, if necessary, such party's counsel and
advisors, if any, and the Company and its counsel and advisors) without the
prior written consent of the other party, except for filings required
pursuant to the Exchange Act and the rules and regulations thereunder or
disclosures such party's counsel advises are necessary in order to fulfill
such party's obligations imposed by law, in which event such party shall give
notice of such disclosure to the other party as promptly as practicable so as
to enable the other party to seek a protective order from a court of
competent jurisdiction with respect thereto.
13. Miscellaneous.
(a) Entire Agreement. This Agreement and the Stock Purchase Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to
the subject matter hereof.
(b) Certain Events. The Shareholder agrees that this Agreement and the
obligations hereunder shall attach to the Shareholder's Shares (exclusive of
Shares Beneficially Owned by virtue of discretionary authority) and shall be
binding upon any person or entity to which legal or Beneficial Ownership of
such Shares shall pass, whether by operation of law or otherwise, including,
without limitation, the Shareholder's heirs, guardians, administrators or
successors. Notwithstanding any transfer of Shares (exclusive of Shares
Beneficially Owned by virtue of discretionary authority), the transferor
shall remain liable for the performance of all obligations under this
Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of law or
otherwise without the prior written consent of the other party, provided,
that Reliance may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Reliance, but
no such assignment shall relieve Reliance of its obligations hereunder if
such assignee does not or cannot perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the party to be
charged thereby or, with respect to termination, as otherwise provided
herein.
(e) Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly received if so given) by hand delivery, telegram, telex or
telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any nationally recognized courier service, such as
Federal Express, providing proof of delivery. All communications hereunder
shall be delivered to the respective parties at the following addresses:
If to the Shareholder:
Peter Kikis and Thomas Kikis
c/o Kikis Asset Management
720 Fifth Avenue, 9th Floor
New York, New York 10019
Facsimile: (212) 397-9728
and
Curtin & Galt LLP
19 Hollywood Avenue
Albany, New York 12208
Facsimile: (518) 459-5487
If to Reliance:
Reliance Security Group plc
Boundary House
Cricket Field Road
Uxbridge, Middlesex UB81QG
Attention: Geoff Haslehurst `
Facsimile: 011 441895205090
and: Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022-2585
Attention: Howard S. Jacobs, Esq.
Wayne A. Wald, Esq.
Facsimile: (212) 940-8776
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of
any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and
this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein; provided that the overall intent
of this Agreement, together with the Stock Purchase Agreement is achieved.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the aggrieved party to sustain damages for which it
would not have an adequate remedy at law for money damages, and therefore
each of the parties hereto agrees that in the event of any such breach the
aggrieved party shall be entitled to seek the remedy of specific performance
of such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in
equity.
(h) Remedies Cumulative. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall
be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to
the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York or any court of the State of New York located in the City of New
York in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however, that
such consent to jurisdiction is solely for the purpose referred to in this
paragraph (1) and shall not be deemed to be a general submission to the
jurisdiction of said Courts or in the State New York other than for such
purposes. Each party hereto hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement.
[SIGNATURES BEGIN ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, Reliance and the Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
RELIANCE SECURITY GROUP PLC
By: ___________________________
Name:
Title:
-------------------------------
Thomas Kikis
-------------------------------
Peter Kikis
<PAGE>
APPENDIX 2
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. _____
[For 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 date hereof, conversion of all shares of 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 ____, 2000 between
the Company and William Vassell].
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
________, 2001 and before 5:00 P.M. on ________ 2005, New York time (the
"Exercise Period"), ________________________________________ (____________)
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 _______, 2000 (the "Shareholders' Agreement"),
among the Company, the Holder and William C. Vassell and the Stock Purchase
Agreement, dated September ______, 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.
<PAGE>
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.
<PAGE>
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 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 __, 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
<PAGE>
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 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
<PAGE>
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
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.
<PAGE>
(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 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.
<PAGE>
(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 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
<PAGE>
(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 ____, 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 THIS CERTIFICATE IS
<PAGE>
SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SPECIFIED IN A
SHAREHOLDERS' AGREEMENT, DATED AS OF SEPTEMBER ______, 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 presented at any
<PAGE>
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.
<PAGE>
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: ________________, 2000
COMMAND SECURITY CORPORATION
By: _________________________________
Name:
Title:
AGREED:
RELIANCE SECURITY GROUP PLC
By: ________________________________
Name:
Title:
<PAGE>
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.
<PAGE>
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)
<PAGE>
APPENDIX 3a
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. ________
[For number of shares of Common Stock equal to 2% 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 Preferred Stock outstanding on
the date hereof, and exercise of this warrant, but specifically excluding the
warrants issued to William Vassell pursuant to Section 4.2 of the Employment
Agreement dated September 12, 2000 between the Company and William Vassell].
THIS CERTIFIES that, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, WILLIAM VASSELL (the
"Holder"), is entitled subject to Section 1 below, 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 _________, 2001 and before 5:00 P.M. on ___________,
2005 New York time (the "Exercise Period") _________________________________
(____________) 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 Section 4.1 of the Employment
Agreement, dated September _______, 2000, between the Company and the Holder
(the "Employment Agreement"). 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.
<PAGE>
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 from time to time during the Exercise
Period, as to the whole or any lesser number of whole Warrant Shares, subject
to the following: Reference is made to the warrant issued by the Company to
Reliance Security Group plc ("Reliance") (the "Reliance Warrant") in
connection with the transactions contemplated by the Stock Purchase
Agreement, dated September ___, 2000 among Reliance and certain shareholders
of the Company; this Warrant may only be exercised, in the same proportion as
the number of warrant shares as to which Reliance theretofore has exercised
its warrant bears to the total number of shares issuable upon exercise of the
Reliance Warrant, 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"); provided,
however, that this Warrant shall only be exercisable after the exercise by
Reliance of the Reliance Warrant and only to the extent provided above.
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
<PAGE>
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 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 (2%) 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 and the Reliance Warrant but
specifically excluding the warrants (the "Section 4.2 Warrants") issued to
William Vassell pursuant to Section 4.2 of the Employment Agreement.
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
<PAGE>
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 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
<PAGE>
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
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.
<PAGE>
(e) In case the Section 4.2 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 (2%) 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 the Reliance Warrant and that portion of the Section 4.2
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 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
<PAGE>
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 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.
<PAGE>
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
(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
<PAGE>
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 ____, 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 THIS CERTIFICATE IS
SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SPECIFIED IN A
SHAREHOLDERS' AGREEMENT, DATED AS OF SEPTEMBER ______, 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
<PAGE>
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 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.
<PAGE>
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.
<PAGE>
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: ________________, 2000
COMMAND SECURITY CORPORATION
By: _________________________________
Name:
Title:
AGREED:
-----------------------------
William Vassell
<PAGE>
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.
<PAGE>
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)
<PAGE>
APPENDIX 3b
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. ____
[For number of shares of Common Stock which, taken together with all shares
of Common Stock and options, warrants and rights to acquire shares of Common
Stock held by the Holder on the date hereof , is equal to approximately 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
Preferred Stock outstanding on the date hereof, and exercise of this
warrant.]
THIS CERTIFIES that, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, WILLIAM VASSELL
(the "Holder"), is entitled Subject to Section 1(a) below 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 _________, 2001 and before 5:00 P.M. on
_____________, 2005 New York time (the "Exercise Period")
________________________________________ (____________) 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 Section 4.2 of the Employment Agreement, dated September _______,
2000, between the Company and the Holder (the "Employment Agreement"). 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.
<PAGE>
1. (a) This Warrant shall become exercisable as follows: (i) with respect to
one-third of the Warrant Shares if the Company's EBT (as that term is defined
in the Employment Agreement) for the year ended March 31, 2002 exceeds the
projected amount of EBT for that year (as set forth in the Letter Agreement,
dated September ____, between and the Company and the Holder); (ii) with
respect to two-thirds of the Warrant Shares if the Company's EBT for the year
ended March 31, 2003 exceeds the projected amount of EBT for that year and
(iii) with respect to all of the Warrant Shares if the Company's EBT for the
year ended March 31, 2004 exceeds the projected amount of EBT for that year.
Notwithstanding anything to the contrary herein, the projected amount of EBT
shall be subject to adjustment as provided in the Employment Agreement and
the calculation thereof shall be governed by the Employment Agreement.
(b) This Warrant may be exercised, as to the whole or any
lesser number of whole Warrant Shares (to the extent that it is exercisable
in accordance with its terms) 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").
(c) Any Warrants which under their terms are not yet
exercisable shall terminate upon the termination of Holder's employment with
the Company pursuant to Section 6.1 (b)(i) of the Employment Agreement or
Section 6.1(b)(ii) of the Employment Agreement if the Company has not
achieved at least 80% of the projected amount of EBT with respect to the
fiscal year prior to such termination.
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
<PAGE>
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 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, taken together with all shares of Common Stock and options, warrants
and rights to acquire shares of Common Stock held by the Holder on the date
hereof, is equal to approximately (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.
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
<PAGE>
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 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
<PAGE>
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
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) 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 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
<PAGE>
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.
(f) 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.
(g) 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.
(h) Upon each adjustment of the Exercise Price as a result of the
calculations made in Sections 5(b), 5(c) or 5(d) 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.
(i) 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.
(j) 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 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
<PAGE>
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
(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
<PAGE>
(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 ____, 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 THIS CERTIFICATE IS
SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SPECIFIED IN A
SHAREHOLDERS' AGREEMENT, DATED AS OF SEPTEMBER ______, 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."
<PAGE>
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 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
<PAGE>
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.
<PAGE>
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: ________________, 2000
COMMAND SECURITY CORPORATION
By: _________________________________
Name:
Title:
AGREED:
-----------------------------
William Vassell
<PAGE>
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.
<PAGE>
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)
<PAGE>
APPENDIX 4a
EXECUTION COPY
VOTING AGREEMENT
THIS VOTING AGREEMENT dated September 12, 2000, between Reliance
Security Group plc, a company organized under the laws of England and Wales
("Reliance"), and Peter Kikis and Thomas Kikis (collectively, the
"Shareholder").
WITNESSETH
WHEREAS, concurrently herewith, Reliance and the Shareholder are
entering into a Stock Purchase Agreement (as such agreement may hereafter be
amended from time to time, the "Stock Purchase Agreement"), pursuant to which
Shareholder will sell all common stock, preferred stock and warrants of
Command Security Corporation, a New York corporation (the "Company"),
beneficially owned by such Shareholder to Reliance;
WHEREAS, the Shareholder Beneficially Owns, as of the date hereof,
709,800 shares of common stock, $.0001 par value per share, of the Company
(the "Common Stock") and 4081.70 shares of Series A Preferred Stock, $.0001
par value per share (the "Preferred Stock"), of the Company (together with
the Common Stock, the "Shares"); and
WHEREAS, as an inducement and a condition to entering into the Stock
Purchase Agreement, Reliance has required that the Shareholder agree, and the
Shareholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings given to such terms in the Stock Purchase
Agreement. For purposes of this Agreement:
(a) "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 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 shall include securities
Beneficially Owned by all other Persons with whom such Person would
constitute a "group" as within the meaning of Section 13(d)(3) of the
Exchange Act. No representation or warranty is made hereby that the Sellers
constitute a "group" within the meaning of Section 13(d)(3) of the Exchange
Act.
(b) "Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
2. Provisions Concerning Common Stock.
The Shareholder hereby agrees that, at any meeting of the
holders of Common Stock and/or Preferred Stock of the Company, however
called, or in connection with any written consent of the holders of Common
Stock and/or Preferred Stock of the Company, the Shareholder shall vote (or
cause to be voted) all Shares that he has Beneficial Ownership of at the time
of the vote, which shall not be less than 323,000 Shares of Common Stock and
1,632.95 Shares of Preferred Stock (the "Proxy Shares") (i) in favor of (A)
the issuance of the Company Warrant (as defined in the Stock Purchase
Agreement) and the Shares of Common Stock issuable upon exercise of the
Company Warrant, (B) approval of the Charter Amendment (as defined in the
Stock Purchase Agreement) and (C) any other transaction or matter
contemplated by, in connection with, or referenced as a closing condition in,
the Stock Purchase Agreement, and (ii) except as otherwise agreed to in
writing in advance by Reliance, against the following actions: (1) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company (other than in connection with the
transactions contemplated by, in connection with or referenced as a closing
condition in, the Stock Purchase Agreement); (2) a sale, lease or transfer of
a material amount of assets of the Company or its Subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company
or; (3) any change in a majority of the persons who constitute the board of
directors of the Company (other than in connection with the transactions
contemplated by, in connection with or referenced as a closing condition in,
the Stock Purchase Agreement); (4) any change in the present capitalization
of the Company or any amendment of the Company's Certificate of Incorporation
or Bylaws (other than in connection with the transactions contemplated by, in
connection with or referenced as a closing condition in, the Stock Purchase
Agreement); (5) any other material change in the Company's corporate
structure or business (other than in connection with the transactions
contemplated by, in connection with or referenced as a closing condition in,
the Stock Purchase Agreement); or (6) any other action involving the Company
which is intended, or could reasonably be expected, to materially impede,
interfere with, delay, postpone, or materially adversely affect the
transactions contemplated by, in connection with or referenced as a closing
condition in, this Agreement or the Stock Purchase Agreement. The Shareholder
shall not enter into any agreement or understanding with any Person the
effect of which would be inconsistent with or violative of the provisions and
agreements contained in this Section 2. Notwithstanding the foregoing, the
Shareholder shall not be prohibited from voting his Proxy Shares in favor of
a reverse stock split or other recapitalization transaction to enable the
Company to maintain its listing on the Nasdaq Small Cap Market.
3. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) During the term of this Agreement, the Shareholder hereby irrevocably
grants to, and appoints, Ken Allison and Geoff Haslehurst, each in his
capacity as an officer of Reliance, and any other individual who shall
hereafter be designated by Reliance, and each of them individually, the
Shareholder's proxy and attorney-in-fact (with full power of substitution),
for and in the name, place and stead of the Shareholder, to vote the Proxy
Shares, or grant a consent or approval in respect of such Proxy Shares, in
accordance with Section 2.
(b) The Shareholder represents that any proxies heretofore given in respect
of the Proxy Shares are not irrevocable, and that any such proxies are hereby
revoked, other than that certain Shareholders Voting Agreement dated as of
the 8th day of March, 1995 by and among William C. Vassell, Gordon Robinett,
John B. Goldsborough, Lloyd H. Saunders III, Peter Kikis, Steven B. Sands,
Peter Nekos and Gregory J. Miller which must be revoked as a condition to
Reliance's obligation to close under the Stock Purchase Agreement.
(c) The Shareholder hereby affirms that the irrevocable proxy set forth in
this Section 3 is given in connection with the execution of the Stock
Purchase Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Shareholder under this Agreement. The
Shareholder hereby further affirms that the irrevocable proxy is coupled with
an interest and may under no circumstances be revoked. The Shareholder hereby
ratifies and confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof and that such irrevocable proxy is executed
and intended to be irrevocable in accordance with the provisions of Section
609 (f) of the New York Business Corporations Law.
4. Representations and Warranties of the Shareholder. The Shareholder hereby
represents and warrants to Reliance as follows:
(a) Ownership of Shares. The Shareholder is the record holder of or
Beneficially Owns the Proxy Shares. The Shareholder has voting power and
power to issue instructions and grant the irrevocable proxies with respect to
the matters set forth in Section 2 and Section 3 hereof, power of
disposition, power of conversion, power to exercise dissenters' rights and
power to agree to all of the matters set forth in this agreement, in each
case with respect to all of the Proxy Shares, with no limitations,
qualifications or restrictions on such rights, subject to applicable state
and federal securities laws, the terms and conditions of discretionary
agreements to which the Shareholders may be subject and the terms of this
Agreement.
(b) Power; Binding Agreement. The Shareholder has the legal capacity, power
and authority to enter into and perform all of his obligations under this
Agreement. The execution, delivery and performance of this Agreement by the
Shareholder will not violate any other Agreement to which the Shareholder is
a party including, without limitation, any voting agreement, shareholders
agreement or voting trust. This Agreement has been duly and validly executed
and delivered by the Shareholder and constitutes a valid and binding
agreement of the Shareholder, enforceable against the Shareholder 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. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which the Shareholder is trustee whose consent is required for the
execution and delivery of this agreement or the consummation by the
Shareholder of the transactions contemplated hereby. If the Shareholder is
married and the Shareholder's Shares (other than Shares Beneficially Owned by
Shareholder without considering discretionary authority) constitute community
property, this agreement has been duly authorized, executed and delivered by,
and constitutes a valid and binding agreement of, the Shareholder'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.
(c) No Conflicts. No filing with, and no permit, authorization, consent or
approval of, any state or federal public body or authority is necessary for
the execution of this Agreement by the Shareholder and the consummation by
the Shareholder of the transactions contemplated hereby. Neither of the
execution and delivery of this Agreement by the Shareholder, the consummation
by the Shareholder of the transactions contemplated hereby nor compliance by
the Shareholder with any of the provisions hereof shall, in a manner which
would be material and adverse to the ability of the Shareholder to consummate
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 provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which the
Shareholder is a party or by which the Shareholder or any of the
Shareholder's properties or assets may be bound, or (ii) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Shareholder or any of the Shareholder's properties or
assets.
(d) No Encumbrances. Except as applicable in connection with the transactions
contemplated hereby, the Shares over which Shareholder has Beneficial
Ownership at the time of the Closing (the "Transaction Shares") and the
certificates representing the Transaction Shares will be at the time of
Closing, held by the Shareholder, or by a nominee or custodian for the
benefit of the Shareholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder in favor of Reliance.
(e) Reliance. The Shareholder understands and acknowledges that Reliance is
entering into the Stock Purchase Agreement in reliance upon the Shareholder's
execution and delivery of this Agreement.
5. Additional Covenants of the Shareholder. The Shareholder hereby covenants
to Reliance as follows:
(a) Restriction on Transfer of Shares, Proxies and Non-Interference.
Beginning on the date hereof and ending on the date that all of the
Shareholder's obligations under Section 2 and Section 3 have terminated,
except as contemplated by this Agreement or the Stock Purchase Agreement, the
Shareholder shall not, directly or indirectly, (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect
to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of the
Transaction Shares or any interest therein, (ii) except as contemplated by
this Agreement, grant any proxies or powers of attorney, deposit any of the
Transaction Shares into a voting trust or enter into a voting agreement with
respect to any of the Transaction Shares, or (iii) take any action that would
make any representation or warranty of the Shareholder contained herein
untrue or incorrect or have the effect of preventing or disabling the
Shareholder from performing the Shareholder's obligations under this
Agreement.
(b) Additional Shares. The Shareholder agrees, while this Agreement is in
effect the Shareholder shall not acquire, directly or indirectly, any
additional shares of the Company's Common Stock or Preferred Stock.
6. Representations and Warranties of Reliance. Reliance hereby covenants,
represents and warrants to the Shareholder that it has the legal capacity,
power and authority to enter into and perform all of such party's obligations
under this Agreement; the execution, delivery and performance of this
Agreement by Reliance will not violate or result in a breach of any other
material agreement to which Reliance is a party; the execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly executed and delivered by Reliance and
constitutes a valid and binding agreement, enforceable in accordance with its
terms.
7. Further Assurances. From time to time, for a reasonable period of time
following the Closing under the Stock Purchase Agreement, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further
reasonable lawful action as may be necessary or desirable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
8. Termination; Expenses and Fees.
(a) The covenants and agreements contained herein with respect to the Shares
shall terminate in the event the Stock Purchase Agreement is terminated in
accordance with its terms, except that the provisions of Section 11 and
Section 12 hereof shall survive any termination of this Agreement. No
termination of this Agreement shall relieve any party of liability for a
breach hereof.
(b) Each party shall bear its own expenses in connection with this Agreement
and the transactions contemplated hereby.
9. Shareholder Capacity. The Shareholder is not executing this Agreement and
does not make any agreement or understanding herein in his or her capacity as
a director or officer of the Company and nothing contained herein shall limit
or affect any actions taken by the Shareholder in his capacity as a director
or officer of the Company and none of such actions in such capacities shall
be deemed to constitute a breach of this Agreement. The Shareholder signs
solely in his capacity as the record or Beneficial Owner of the Shares.
10. Risk of Revocation of Discretionary Authority. The parties understand and
agree that Shareholder's discretionary authority over the Shares may be
revoked at any time and further agree that Shareholder shall have no
liability for any representations, warranties, covenants, obligations or
agreements with respect to Shares for which his discretionary authority has
been revoked.
11. Sophistication. The Shareholder acknowledges that he or it is an informed
and sophisticated investor and, together with his advisors, has undertaken
such investigation as they have deemed necessary, including the review of the
Stock Purchase Agreement and this Agreement, to enable the Shareholder to
make an informed and intelligent decision with respect to the Stock Purchase
Agreement and this Agreement and the transactions contemplated thereby and
hereby.
12. Confidentiality. Each of the parties hereto recognizes that successful
consummation of the transactions contemplated by this Agreement may be
dependent upon confidentiality with respect to the matters referred to
herein. In this connection, pending public disclosure thereof, each party
hereby agrees not to disclose or discuss such matters with anyone not a party
to this Agreement or the Stock Purchase Agreement (other than the record or
other Beneficial Owners of the Shares, if necessary, such party's counsel and
advisors, if any, and the Company and its counsel and advisors) without the
prior written consent of the other party, except for filings required
pursuant to the Exchange Act and the rules and regulations thereunder or
disclosures such party's counsel advises are necessary in order to fulfill
such party's obligations imposed by law, in which event such party shall give
notice of such disclosure to the other party as promptly as practicable so as
to enable the other party to seek a protective order from a court of
competent jurisdiction with respect thereto.
13. Miscellaneous.
(a) Entire Agreement. This Agreement and the Stock Purchase Agreement
constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to
the subject matter hereof.
(b) Certain Events. The Shareholder agrees that this Agreement and the
obligations hereunder shall attach to the Shareholder's Shares (exclusive of
Shares Beneficially Owned by virtue of discretionary authority) and shall be
binding upon any person or entity to which legal or Beneficial Ownership of
such Shares shall pass, whether by operation of law or otherwise, including,
without limitation, the Shareholder's heirs, guardians, administrators or
successors. Notwithstanding any transfer of Shares (exclusive of Shares
Beneficially Owned by virtue of discretionary authority), the transferor
shall remain liable for the performance of all obligations under this
Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of law or
otherwise without the prior written consent of the other party, provided,
that Reliance may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Reliance, but
no such assignment shall relieve Reliance of its obligations hereunder if
such assignee does not or cannot perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the party to be
charged thereby or, with respect to termination, as otherwise provided
herein.
(e) Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly received if so given) by hand delivery, telegram, telex or
telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any nationally recognized courier service, such as
Federal Express, providing proof of delivery. All communications hereunder
shall be delivered to the respective parties at the following addresses:
If to the Shareholder:
Peter Kikis and Thomas Kikis
c/o Kikis Asset Management
720 Fifth Avenue, 9th Floor
New York, New York 10019
Facsimile: (212) 397-9728
and
Curtin & Galt LLP
19 Hollywood Avenue
Albany, New York 12208
Facsimile: (518) 459-5487
If to Reliance:
Reliance Security Group plc
Boundary House
Cricket Field Road
Uxbridge, Middlesex UB81QG
Attention: Geoff Haslehurst `
Facsimile: 011 441895205090
and: Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022-2585
Attention: Howard S. Jacobs, Esq.
Wayne A. Wald, Esq.
Facsimile: (212) 940-8776
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of
any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and
this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein; provided that the overall intent
of this Agreement, together with the Stock Purchase Agreement is achieved.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the aggrieved party to sustain damages for which it
would not have an adequate remedy at law for money damages, and therefore
each of the parties hereto agrees that in the event of any such breach the
aggrieved party shall be entitled to seek the remedy of specific performance
of such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in
equity.
(h) Remedies Cumulative. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall
be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to
the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York or any court of the State of New York located in the City of New
York in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however, that
such consent to jurisdiction is solely for the purpose referred to in this
paragraph (1) and shall not be deemed to be a general submission to the
jurisdiction of said Courts or in the State New York other than for such
purposes. Each party hereto hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement.
[SIGNATURES BEGIN ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, Reliance and the Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
RELIANCE SECURITY GROUP PLC
By: ___________________________
Name:
Title:
-------------------------------
Thomas Kikis
-------------------------------
Peter Kikis
<PAGE>
APPENDIX 4b
VOTING AGREEMENT
THIS VOTING AGREEMENT dated September 12, 2000, between Reliance
Security Group plc, a company organized under the laws of England and Wales
("Reliance"), and Katie and Adam Bridge Partners, L.P. ("KA") and Owl-1
Partners, L.P. ("Owl" and with KA, collectively the "Shareholder").
WITNESSETH
WHEREAS, concurrently herewith, Reliance and the Shareholder, among
other parties, are entering into a Stock Purchase Agreement (as such agreement
may hereafter be amended from time to time, the "Stock Purchase Agreement"),
pursuant to which Shareholder will sell all common stock and preferred stock of
Command Security Corporation, a New York corporation (the "Company"),
beneficially owned by such Shareholder to Reliance;
WHEREAS, the Shareholder Beneficially Owns, as of the date hereof, an
aggregate of 125,000 shares of common stock, $.0001 par value per share, of the
Company (the "Common Stock") and 8,244.12 shares of Series A Preferred Stock,
$.0001 par value per share (the "Preferred Stock"), of the Company (together
with the Common Stock, the "Shares"); and
WHEREAS, as an inducement and a condition to entering into the Stock
Purchase Agreement, Reliance has required that the Shareholder agree, and the
Shareholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Definitions. Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings given to such terms in the Stock
Purchase Agreement. For purposes of this Agreement:
(a) "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 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 shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute
a "group" as within the meaning of Section 13(d)(3) of the Exchange Act. No
representation or warranty is made hereby that the Sellers constitute a "group"
within the meaning of Section 13(d)(3) of the Exchange Act. Reliance
understands, agrees and acknowledges that certain affiliates of the Shareholder
hold discretionary authority over certain shares which are not and should not
be deemed Beneficially Owned by Shareholder.
<PAGE> 2
(b) "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
2. Provisions Concerning Common Stock.
The Shareholder hereby severally and not jointly agrees that at
any meeting of the holders of Common Stock and/or Preferred Stock of the
Company, however called, or in connection with any written consent of the
holders of Common Stock and/or Preferred Stock of the Company, the Shareholder
shall vote (or cause to be voted) all Shares that it has Beneficial Ownership
of at the time of the vote, which shall be 125,000 Shares of Common Stock and
8,244.12 Shares of Preferred Stock (the "Proxy Shares") (i) in favor of (A) the
issuance of the Company Warrant (as defined in the Stock Purchase Agreement)
and the Shares of Common Stock issuable upon exercise of the Company Warrant,
(B) approval of the Charter Amendment (as defined in the Stock Purchase
Agreement) and (C) any other transaction or matter contemplated by, in
connection with, or referenced as a closing condition in, the Stock Purchase
Agreement, and (ii) except as otherwise agreed to in writing in advance by
Reliance, against the following actions: (1) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company (other than in connection with the transactions
contemplated by, in connection with or referenced as a closing condition in,
the Stock Purchase Agreement); (2) a sale, lease or transfer of a material
amount of assets of the Company or its Subsidiaries, or a reorganization,
recapitalization, dissolution or liquidation of the Company or; (3) any change
in a majority of the persons who constitute the board of directors of the
Company (other than in connection with the transactions contemplated by, in
connection with or referenced as a closing condition in, the Stock Purchase
Agreement); (4) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or Bylaws (other than
in connection with the transactions contemplated by, in connection with or
referenced as a closing condition in, the Stock Purchase Agreement); (5) any
other material change in the Company's corporate structure or business (other
than in connection with the transactions contemplated by, in connection with or
referenced as a closing condition in, the Stock Purchase Agreement); or (6) any
other action involving the Company which is intended, or could reasonably be
expected, to materially impede, interfere with, delay, postpone, or materially
adversely affect the transactions contemplated by, in connection with or
referenced as a closing condition in, this Agreement or the Stock Purchase
Agreement. The Shareholder shall not enter into any agreement or understanding
with any Person the effect of which would be inconsistent with or violative of
the provisions and agreements contained in this Section 2. Notwithstanding the
foregoing, the Shareholder shall not be prohibited from voting his Proxy Shares
in favor of a reverse stock split or other recapitalization transaction to
enable the Company to maintain its listing on the Nasdaq Small Cap Market.
3. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) During the term of this Agreement, the Shareholder
severally and not jointly hereby irrevocably grants to, and appoints, Ken
Allison and Geoff Haslehurst, each in his capacity as an officer of Reliance,
and any other individual who shall hereafter be designated by Reliance, and
each of them individually, the Shareholder's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of the
Shareholder, to vote the Proxy
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<PAGE> 3
Shares, or grant a consent or approval in respect of such Proxy Shares, in
accordance with Section 2.
(b) The Shareholder represents that any proxies
heretofore given in respect of the Proxy Shares are not irrevocable, and that
any such proxies are hereby revoked, other than that certain Shareholders
Voting Agreement dated as of the 8th day of March, 1995 by and among William C.
Vassell, Gordon Robinett, John B. Goldsborough, Lloyd H. Saunders III, Peter
Kikis, Steven B. Sands, Peter Nekos and Gregory J. Miller which must be revoked
as a condition to Reliance's obligation to close under the Stock Purchase
Agreement.
(c) The Shareholder hereby affirms that the irrevocable
proxy set forth in this Section 3 is given in connection with the execution of
the Stock Purchase Agreement, and that such irrevocable proxy is given to
secure the performance of the duties of the Shareholder under this Agreement.
The Shareholder hereby further affirms that the irrevocable proxy is coupled
with an interest and may under no circumstances be revoked. The Shareholder
hereby ratifies and confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof and that such irrevocable proxy is executed
and intended to be irrevocable in accordance with the provisions of Section 609
(f) of the New York Business Corporations Law.
4. Representations and Warranties of the Shareholder. The
Shareholder hereby severally and not jointly represents and warrants to
Reliance as follows:
(a) Ownership of Shares. The Shareholder is the record
holder of or Beneficially Owns the Proxy Shares. The Shareholder has voting
power and power to issue instructions and grant the irrevocable proxies with
respect to the matters set forth in Section 2 and Section 3 hereof, power of
disposition, power of conversion, power to exercise dissenters' rights and
power to agree to all of the matters set forth in this agreement, in each case
with respect to all of the Proxy Shares, with no limitations, qualifications or
restrictions on such rights, subject to applicable state and federal securities
laws, the terms and conditions of discretionary agreements to which the
Shareholders may be subject and the terms of this Agreement.
(b) Power; Binding Agreement. The Shareholder has the
legal capacity, power and authority to enter into and perform all of his
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Shareholder will not violate any other Agreement to which
the Shareholder is a party including, without limitation, any voting agreement,
shareholders agreement or voting trust. This Agreement has been duly and
validly executed and delivered by the Shareholder and constitutes a valid and
binding agreement of the Shareholder, enforceable against the Shareholder 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. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which the Shareholder is trustee whose consent is required for the
execution and delivery of this agreement or the consummation by the Shareholder
of the transactions contemplated hereby. If the Shareholder is married and the
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<PAGE> 4
Shareholder's Shares (other than Shares Beneficially Owned by Shareholder
without considering discretionary authority) constitute community property,
this agreement has been duly authorized, executed and delivered by, and
constitutes a valid and binding agreement of, the Shareholder'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.
(c) No Conflicts. No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by the Shareholder
and the consummation by the Shareholder of the transactions contemplated
hereby. Neither of the execution and delivery of this Agreement by the
Shareholder, the consummation by the Shareholder of the transactions
contemplated hereby nor compliance by the Shareholder with any of the
provisions hereof shall, in a manner which would be material and adverse to the
ability of the Shareholder to consummate 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 provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which the Shareholder is a party or by which the Shareholder or any of
the Shareholder's properties or assets may be bound, or (ii) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Shareholder or any of the Shareholder's properties or assets.
(d) No Encumbrances. Except as applicable in connection
with the transactions contemplated hereby, the Shares over which Shareholder
has Beneficial Ownership at the time of the Closing (the "Transaction Shares")
and the certificates representing the Transaction Shares will be at the time of
Closing, held by the Shareholder, or by a nominee or custodian for the benefit
of the Shareholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever, except for any such encumbrances or proxies
arising hereunder in favor of Reliance.
(e) Reliance. The Shareholder understands and acknowledges
that Reliance is entering into the Stock Purchase Agreement in reliance upon
the Shareholder's execution and delivery of this Agreement.
5. Additional Covenants of the Shareholder. The Shareholder
severally and not jointly hereby covenants to Reliance as follows:
(a) Restriction on Transfer of Shares, Proxies and
Non-Interference. Beginning on the date hereof and ending on the date that all
of the Shareholder's obligations under Section 2 and Section 3 have terminated,
except as contemplated by this Agreement or the Stock Purchase Agreement, the
Shareholder shall not, directly or indirectly, (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract,
-4-
<PAGE> 5
option or other arrangement or understanding with respect to or consent to the
offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of the Transaction Shares or any interest therein,
(ii) except as contemplated by this Agreement, grant any proxies or powers of
attorney, deposit any of the Transaction Shares into a voting trust or enter
into a voting agreement with respect to any of the Transaction Shares, or (iii)
take any action that would make any representation or warranty of the
Shareholder contained herein untrue or incorrect or have the effect of
preventing or disabling the Shareholder from performing the Shareholder's
obligations under this Agreement.
(b) Additional Shares. The Shareholder agrees, while this
Agreement is in effect the Shareholder shall not acquire, directly or
indirectly, any additional shares of the Company's Common Stock or Preferred
Stock.
6. Representations and Warranties of Reliance. Reliance hereby
covenants, represents and warrants to the Shareholder that it has the legal
capacity, power and authority to enter into and perform all of such party's
obligations under this Agreement; the execution, delivery and performance of
this Agreement by Reliance will not violate or result in a breach of any other
material agreement to which Reliance is a party; the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly executed and delivered by Reliance and constitutes a
valid and binding agreement, enforceable in accordance with its terms.
7. Further Assurances. From time to time, for a reasonable period
of time following the Closing under the Stock Purchase Agreement, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further
reasonable lawful action as may be necessary or desirable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
8. Termination; Expenses and Fees.
(a) The covenants and agreements contained herein with
respect to the Shares shall terminate in the event the Stock Purchase Agreement
is terminated in accordance with its terms, except that the provisions of
Section 11 and Section 12 hereof shall survive any termination of this
Agreement. No termination of this Agreement shall relieve any party of
liability for a breach hereof.
(b) Each party shall bear its own expenses in connection
with this Agreement and the transactions contemplated hereby.
9. Shareholder Capacity. To the extent an affiliate of the
Shareholder is an officer and/or director of the Company, the Shareholder is
not executing this Agreement and does not make any agreement or understanding
herein in his or her capacity as a director or officer of the Company and
nothing contained herein shall limit or affect any actions taken by the
Shareholder in his capacity as a director or officer of the Company and none of
such actions in such capacities
-5-
<PAGE> 6
shall be deemed to constitute a breach of this Agreement. The Shareholder
signs solely in his capacity as the record or Beneficial Owner of the Shares.
10. Risk of Revocation of Discretionary Authority. The parties
understand, acknowledge and agree that certain affiliates of the Shareholder
hold discretionary authority over certain shares of Common Stock which are not
and should not be deemed to be covered by this Agreement. Nevertheless,
Reliance understands that such discretionary accounts may be revoked at any
time and further agree that Shareholder shall have no liability for any
representations, warranties, covenants, obligations or agreements with respect
to shares of Common Stock for which such discretionary authority has been
revoked.
11. Sophistication. The Shareholder acknowledges that it is an
informed and sophisticated investor and, together with his advisors, has
undertaken such investigation as they have deemed necessary, including the
review of the Stock Purchase Agreement and this Agreement, to enable the
Shareholder to make an informed and intelligent decision with respect to the
Stock Purchase Agreement and this Agreement and the transactions contemplated
thereby and hereby.
12. Confidentiality. Each of the parties hereto recognizes that
successful consummation of the transactions contemplated by this Agreement may
be dependent upon confidentiality with respect to the matters referred to
herein. In this connection, pending public disclosure thereof, each party
hereby agrees not to disclose or discuss such matters with anyone not a party
to this Agreement or the Stock Purchase Agreement (other than the record or
other Beneficial Owners of the Shares, if necessary, such party's counsel and
advisors, if any, and the Company and its counsel and advisors) without the
prior written consent of the other party, except for filings required pursuant
to the Exchange Act and the rules and regulations thereunder or disclosures
such party's counsel advises are necessary in order to fulfill such party's
obligations imposed by law, in which event such party shall give notice of such
disclosure to the other party as promptly as practicable so as to enable the
other party to seek a protective order from a court of competent jurisdiction
with respect thereto.
13. Miscellaneous.
(a) Entire Agreement. This Agreement and the Stock Purchase
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
(b) Certain Events. The Shareholder agrees that this
Agreement and the obligations hereunder shall attach to the Shareholder's
Shares (exclusive of Shares Beneficially Owned by virtue of discretionary
authority) and shall be binding upon any person or entity to which legal or
Beneficial Ownership of such Shares shall pass, whether by operation of law or
otherwise, including, without limitation, the Shareholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares
(exclusive of Shares Beneficially Owned by virtue of discretionary authority),
the transferor shall remain liable for the performance of all obligations under
this Agreement of the transferor.
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<PAGE> 7
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party, provided, that Reliance may assign, in its sole discretion, its rights
and obligations hereunder to any direct or indirect wholly owned subsidiary of
Reliance, but no such assignment shall relieve Reliance of its obligations
hereunder if such assignee does not or cannot perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
party to be charged thereby or, with respect to termination, as otherwise
provided herein.
(e) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if so given) by hand delivery,
telegram, telex or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any nationally recognized courier
service, such as Federal Express, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Shareholder:
90 Park Avenue, 39th floor
New York, New York 10016
Facsimile: (212) 697-8035
and
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 Reliance :
Reliance Security Group plc
Boundary House
Cricket Field Road
Uxbridge, Middlesex UB81QG
Attention: Geoff Haslehurst
Facsimile: 011 441895205090
and: Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022-2585
Attention: Howard S. Jacobs, Esq.
Wayne A. Wald, Esq.
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<PAGE> 8
Facsimile: (212) 940-8776
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein; provided that the overall intent of this
Agreement, together with the Stock Purchase Agreement is achieved.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the aggrieved party to sustain damages
for which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to seek the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or
in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a waiver
by such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the United States District Court for the Southern
District of New York or any court of the State of New York located in the City
of New York in any action, suit or proceeding arising
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<PAGE> 9
in connection with this Agreement, and agrees that any such action, suit or
proceeding shall be brought only in such court (and waives any objection based
on forum non conveniens or any other objection to venue therein); provided,
however, that such consent to jurisdiction is solely for the purpose referred
to in this paragraph (1) and shall not be deemed to be a general submission to
the jurisdiction of said Courts or in the State New York other than for such
purposes. Each party hereto hereby waives any right to a trial by jury in
connection with any such action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same Agreement.
[SIGNATURES BEGIN ON NEXT PAGE]
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<PAGE> 10
IN WITNESS WHEREOF, Reliance and the Shareholder have caused this
Agreement to be duly executed as of the day and year first above written.
RELIANCE SECURITY GROUP PLC
By:
-------------------------------
Name:
Title:
Katie and Adam Bridge Partners, L.P.
By:
-------------------------------
Name:
Title: President of Corporate General Partner
Owl-1 Partners, L.P.
By:
-------------------------------
Name:
Title: President of Corporate General Partner
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<PAGE>
APPENDIX 5
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.
<PAGE>
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.
(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
<PAGE>
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];
<PAGE>
(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 tothe 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
Confidential Target shall be subject to adjustment as provided in the
<PAGE>
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.
<PAGE>
(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
<PAGE>
transferred Holder 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.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.
<PAGE>
(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
<PAGE>
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.
<PAGE>
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 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
<PAGE>
(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.
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 issues
<PAGE>
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
<PAGE>
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
<PAGE>
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"
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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Letter
Agreement as of the date first above written.
COMMAND SECURITY CORPORATION
By: ________________________________
Name:___________________________
Title:__________________________
------------------------------------
WILLIAM C. VASSELL
RELIANCE SECURITY GROUP PLC
By: ________________________________
Name:___________________________
Title:__________________________
<PAGE>
APPENDIX 6
PROSKAUER ROSE LLP
Draft 9/12/00
EMPLOYMENT AGREEMENT dated as of September ___, 2000 between COMMAND
SECURITY CORPORATION, a New York corporation (the "Company"), and WILLIAM
VASSELL ("Executive").
Executive is currently a senior executive of the Company.
Contemporaneously with the execution and delivery of this Agreement, the
Company is entering into a certain Shareholder's Agreement with Reliance
Security Group plc ("Reliance") and the Executive (the "Shareholders'
Agreement"), and Reliance is entering into a Stock Purchase Agreement with
certain stockholders of the Company (the "Stock Purchase Agreement"). The
Company desires to assure the Company of Executive's continued service and
Executive desires to continue to perform services for the Company from and
after the consummation of the transactions contemplated by the Stock Purchase
Agreement (the "Stock Purchase Closing"), and to set forth the terms of such
continued employment.
In consideration of the agreements hereinafter set forth,
the Company and Executive agree as follows:
1. EFFECTIVENESS. This Employment 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.
2. EMPLOYMENT
2.1 Capacity; Duties. The Company hereby employs Executive as the Company's
Chairman of the Board of Directors, Chief Executive Officer and President.
Executive shall have general supervision over the business of the Company.
Executive may manage his personal investments and may be involved in civic or
charitable activities so long as such involvement does not interfere with his
full-time duties to the Company or its subsidiaries. Executive may serve as a
member of the board of directors of a corporation other than the Company or
one of its subsidiaries, subject to the approval of the Board of Directors of
the Company. Executive accepts the employment described herein and agrees to
devote his full business time and effort thereto, and to perform those duties
normally attributable to the positions for which he is employed hereunder.
<PAGE>
2.2 Employment Period. Subject to the succeeding sentence hereof, Executive's
employment shall be for the period (the "Employment Period") commencing on
the Effective Date, and ending on the earlier of (i) the third anniversary of
the Effective Date, or (ii) the date on which Executive's employment is
terminated earlier pursuant to Section 6 hereof. Unless, at any time, notice
is given by the Executive to the Company, or by the Company to the Executive,
in either case no later than 90 days prior to next anniversary of the
Effective Date, that the Employment Period shall not be extended, then, as of
such next anniversary of the Effective Date, the Employment Period shall be
automatically extended by one year on such anniversary date. Any such notice
of non-extension is hereinafter referred to as a "Non-Renewal Notice"). The
date on which the Employment Period shall expire pursuant to clause (i) above
or the second sentence hereof is hereinafter referred to as the "Expiration
Date."
3. COMPENSATION
3.1 Base Salary. During the Employment Period, as compensation for
Executive's employment hereunder, Executive shall receive a base salary
payable at such times as are consistent with the Company's normal payroll
practices for its senior Executive officers from time to time in effect. Such
base salary shall be at the rate of $175,000 per annum for the first year of
the Employment Period, $225,000 for the second year of the Employment Period
and $250,000 thereafter (including any period during which the Employment
Period is extended pursuant to Section 2.2 hereof). (The base salary,
including such increases, is hereinafter referred to as the "Base Salary".)
3.2 Incentive Compensation. During the Employment Period, Executive shall be
eligible to receive, in addition to his Base Salary, incentive compensation
(the "Incentive Compensation"). With respect to each of the three full fiscal
years of the Company occurring after the Effective Dates, commencing with the
fiscal year ending March 31, 2001, Executive shall be entitled to Incentive
Compensation equal to 20% of Executive's Base Salary as of the end of such
fiscal year ("Target Incentive Compensation") if EBT (as hereinafter defined)
for that year equals or exceeds the Company's projected amount of EBT for
that year. For each percentage increase in EBT above the projected amount of
EBT, the Incentive Compensation will be increased by three percentage points
of Executive's Base Salary, provided that the maximum Incentive Compensation
Executive shall be entitled to receive with respect to any year shall be 50%
of his Base Salary for that year. As
<PAGE>
used in this provision, (a) "EBT" shall mean the consolidated earnings of the
Company and any of its subsidiaries before taxes but after giving effect to
Executive's Incentive Compensation for such year, excluding extraordinary or
unusual nonrecurring items of income and expense as determined by the Board
of Directors of the Company in good faith based on the Company's audited
annual financial statements prepared in accordance with generally accepted
accounting principles consistently applied by the Company's independent
accountants, and (b) subject to any adjustment thereof required pursuant to
the succeeding sentences of this Section 3.2, the term "projected amount of
EBT" means the aggregate amount of projected earnings of the Company and any
of its subsidiaries, before taxes excluding extraordinary or unusual
nonrecurring items of income and expense set forth in the confidential letter
agreement dated the date hereof between the Executive and the Company (the
"Confidential Letter Agreement"). If in any year the Company or any of its
subsidiaries acquires or disposes of any material business, the projected
amount of EBT for that year shall be adjusted to reflect the increase or
decrease, as the case may be, in annual income and expense reasonably
attributable to the acquired or disposed of business as determined in good
faith by the Board of Directors of the Company. Executive shall be entitled
to receive such Incentive Compensation within 30 business days after the
issuance of the opinion of the Company's independent accountants concerning
the Company's consolidated year-end financial statements. If the Board of
Directors of the Company takes any action that alters in any material respect
the Company expenditures contemplated by the budgets referred to in the
Letter Agreement, then notwithstanding anything to the contrary contained
herein, the Board of Directors of the Company shall, in consultation with
Executive, (x) determine in good faith whether such action by the Board
requires an adjustment of the Company's projected amount of EBT for the
fiscal year in which such action is taken by the Board and/or for any
subsequent fiscal years, and (y) if such adjustment is determined to be
required, make a good faith adjustment of the Company's projected amount of
EBT for the fiscal year in which such action is taken by the Board and/or for
any subsequent fiscal years. Notwithstanding anything to the contrary herein,
no effect shall be given in the calculation of EBT to any expenses or charges
of the Company related to the transactions contemplated by the Shareholders'
Agreement or the Stock Purchase Agreement.
3.3 Additional Compensation. Nothing contained herein shall limit or
otherwise restrict the Board of Directors of the Company from granting to
Executive at any time and from time to time such additional compensation as
may be recommended from time to time by the Compensation Committee.
<PAGE>
3.4 Expenses. The Company shall promptly reimburse Executive for all expenses
reasonably incurred by him in the performance of his duties under this
Agreement in accordance with the Company's general policies and practices for
senior executive officers in effect from time to time.
4. OPTIONS
4.1 Initial Grant. Executive shall receive on the Effective Date options (the
"Initial Options") under the Option Agreement by and between Executive and
the Company (the "Initial Option Agreement"), a copy of which is attached
hereto as Exhibit 4.1 and incorporated herein by reference. [Form of option
to be substantially the same as Reliance Warrant, except that (a) the number
of shares covered shall be 2% of the total shares outstanding, assuming the
exercise of the Reliance Warrant, and (b) the Initial Options shall be
exercisable only to the extent the Reliance Warrant is exercised, on a pro
rata basis.]
4.2 Additional Grants. Executive shall be entitled to receive options
("Additional Options") under the Option Agreement by and between Executive
and the Company (the "Option Agreement"), a copy of which is attached hereto
as Exhibit 4.2, and incorporated herein by reference. [Form of option to be
substantially the same as Reliance Warrant, except that the number of shares
covered shall be sufficient to increase Bill's percentage ownership to 20%,
after giving effect to the exercise of the Reliance Warrant and vesting shall
be subject to achievement of EBT goals for fiscal 2002, 2003 and 2004.]
5. BENEFITS; PERQUISITES
5.1 Benefits. During the Employment Period, Executive shall be entitled to
participate in all benefit, welfare and perquisite plans, policies and
programs, in accordance with the terms thereof, as are generally provided
from time to time by the Company for its employees and for which Executive is
eligible and such other benefit, welfare and perquisite plans, policies and
programs (other than those involving a cash payment or the issuance of stock
options or other equity) as determined by the Compensation Committee or the
Board of Directors.
5.2 Vacation. During each calendar year during the Employment Period,
Executive shall be entitled to four (4) weeks of vacation. Such vacation 4
<PAGE>
entitlement shall be deemed earned as of January 1 of each year during the
Employment Period (except that a pro rata vacation entitlement shall be
deemed earned as of the Effective Date for 2000), and at the option of
Executive, up to two (2) weeks of vacation may be carried from one year to
another; provided, however, that Executive shall not be entitled to cash
compensation for any unused vacation.
5.3 Perquisites. During the Employment Period, the Company shall
(a) provide, at its cost, term life insurance on the life of Executive
payable to Executive's designated beneficiary or beneficiaries and providing
a death benefit equal to (i) the greater of $1 million or 200% of the
Executive's annual Base Salary and maximum Incentive Compensation then in
effect, less (ii) the death benefit payable under any group term life
insurance to which Executive is entitled under any insurance benefit program
of the Company; and
(b) provide Executive an automobile allowance in an amount at least equal the
allowance currently provided to Executive.
5.4 Relocation Expenses. If the Company relocates its corporate office to a
location more than 50 miles away from its current location and the Executive
does not terminate his Employment pursuant to Section 6.1(c)(i) hereof as a
result of such relocation, the Company shall provide the benefits set forth
on Exhibit 2 hereto.
6. TERMINATION
6.1 Termination of Employment. Executive's employment (and the Employment
Period) shall terminate prior to the Employment Expiration Date upon the
occurrence of any of the following events:
(a) upon Executive's death or Executive's Disability (pursuant to Section 6.2
hereof); or
(b) (i) by action of the Board of Directors for Cause (as defined in Section
6.3 hereof); or (ii) by action of the Board of Directors without Cause.
(c) by Executive (i) following a material breach to the detriment of
Executive by the Company or Reliance of the Shareholders Agreement, a
material diminution of the Executive's duties and/or authority hereunder, a
relocation of the
<PAGE>
Company's corporate headquarters to a location more than 50 miles away from
its current location, or any other material breach by the Company of this
Agreement, which other breach is not cured within 30 days after written
notice from Executive thereof (any such diminution, relocation or other
uncured breach being hereinafter referred to as a "Constructive Discharge"),
(ii) upon 180 days prior written notice to the Company, or (iii) following a
Change in Control (as hereinafter defined) provided that (x) Executive has
given the Company at least six months' prior written notice of his
termination, or (y) there has occurred a Constructive Discharge. A "Change in
Control" shall be deemed to occur upon any of the following: (i) acquisition
by any one "person" (as such term is defined in ss.3(a)(9) of the Securities
and Exchange Act of 1934, as amended, and used in ss.13(d) and 14(d) thereof,
including "group" as defined in ss.13(d) thereof) other than Reliance of more
than 50% of the Company's voting shares; (ii) directors elected to the Board
over any 24 month period not nominated by the Company's Board of Directors
represent 50% or more of the total number of directors constituting the Board
at the beginning of the period (or such nomination results from an actual or
threatened proxy contest) other than pursuant to the Shareholders' Agreement
or any election to the Board of Directors of the Company of designees of
Reliance; (iii) any merger, consolidation or other corporate combination upon
the completion of which the Company's shares do not represent more than 50%
of the combined voting power of the resulting entity; or (iv) upon the sale
of all or substantially all of the consolidated assets of the Company.
6.2 Disability. If, by reason of physical or mental disability, Executive is
unable to carry out the material duties he has agreed to carry out under this
Agreement (i) for more than 180 days in any twelve-month period or (ii) as
certified by a physician ("Disability"), the Employment Period shall
terminate hereunder. Executive shall submit to an examination by a physician
for purposes of the preceding sentence upon the request of the Board of
Directors. During any period of Disability prior to such termination,
Executive shall continue to receive all compensation and other benefits
provided herein as if he had not been disabled at the time, in the amounts
and in the manner provided herein. The Company shall be entitled to a credit
against any amounts payable to Executive under this Agreement during any
period of Disability (whether such payments are before or after termination
of employment hereunder) with regard to the amount, if any, paid to Executive
for such period under any disability plan of the Company.
6.3 Cause. For purposes of this Agreement, the term "Cause" shall be
limited to (i) action by Executive involving (x) fraud, embezzlement or
misappropriation affecting the Company or (y) willful malfeasance affecting
the
<PAGE>
Company in any material respect; (ii) Executive being convicted of a felony
involving theft, fraud or moral turpitude (other than resulting from a
traffic violation or like event); or (iii) Executive's failure or refusal to
perform his material duties as required hereunder or to follow direct
instructions from the Board of Directors of the Company or Executive's
material breach of his duty of loyalty to the Company and failure to correct
any such failure, refusal or breach within 30 days of notice of commission
thereof.
7. CONSEQUENCES OF TERMINATION
7.1 Company Termination for Cause; Executive Termination Other Than for
Constructive Discharge or Following Change in Control; Death or Disability.
If Executive's employment hereunder is terminated by the Company for Cause,
by the Executive other than pursuant to Section 6.1(c)(i) or (iii) hereof, or
as a result of Executive's death or Disability, the Company shall have no
further obligation to Executive under this Agreement except that Executive
shall be paid those obligations accrued hereunder to the date of termination,
consisting only of (a) Executive's unpaid Base Salary to the extent unpaid
through the date of termination, (b) any deferred compensation earned but not
yet paid (together with any accrued earnings thereon), and (c) to the extent
permitted under this Agreement, any other amounts or benefits owing to
Executive or his beneficiaries under the then applicable benefit plans,
policies and programs of the Company. (Such amounts specified in clauses (a)
through (c) above are hereinafter referred to as "Accrued Obligations".) In
the case of Executive death or disability, Executive shall also be entitled
to the Incentive Compensation to which he would have been entitled pursuant
to this Agreement multiplied by a fraction, the numerator of which is the
number of days from the end of the preceding fiscal year to the date of death
or termination for disability and the denominator of which is 365. Unless
otherwise previously directed by Executive (or, in the case of any benefit
plan qualified under Section 401(a) of the Internal Revenue Code, as amended
(the "Code") (any such plan hereinafter referred to as a "Qualified Plan"),
as may be required by such Qualified Plan), all Accrued Obligations shall be
paid to Executive in a lump sum (to the extent such obligations are able to
be paid, under the terms of the plan for which such obligation arose, in a
lump sum) in cash within 30 days after the date of termination, and,
otherwise, in accordance with the terms of the applicable plan or applicable
law.
7.2 Company Termination Without Cause; Constructive Discharge. If Executive's
employment hereunder is terminated by the Company without Cause or
<PAGE>
by Executive pursuant to Section 6.1(c)(i) or (iii) above, the Company shall
have no further obligation to Executive under this Agreement except that:
(a) Unless otherwise directed by Executive (or, in the case of any Qualified
Plan, as may be required by such plan) Executive shall be paid all Accrued
Obligations to the date of termination in a lump sum (to the extent such
obligations are able to be paid, under the terms of the plan for which such
obligation arose, in a lump sum) in cash within thirty (30) business days
after the date of termination, and, otherwise, in accordance with the terms
of the applicable plan or applicable law.
(b) Unless otherwise directed by Executive, Executive shall be paid, as
severance pay, within thirty (30) business days after the date of termination
in a lump sum in cash an amount equal to (i) Executive's then annual Base
Salary multiplied by a fraction, the denominator of which is 365 and the
numerator of which is the number of days between the date of termination and
the Expiration Date (the "Contract Balance Fraction"), plus (ii) if the
Company has achieved at least 80% of the projected amount of EBT with respect
to the fiscal year ended prior to such termination, the Target Incentive
Compensation to which Executive would have been entitled with respect to the
fiscal year in which such termination occurs multiplied by the Contract
Balance Fraction.
(c) If the Company has achieved at least 80% of the projected amount of EBT
with respect to the fiscal year ended prior to such termination, to the
extent permitted or not prohibited by any pension plan, as such term is
defined in ERISA Section 3(2)(A), of the Company (or its subsidiaries) in
which Executive is permitted to participate hereunder or by applicable law,
after the date of termination, the Company shall make immediately available
to Executive, in a lump sum (to the extent such obligation is able to be paid
in a lump sum under the terms of the plan for which such obligation arose),
all vested amounts under any such plan. Notwithstanding the terms of any
options or restricted stock agreements between the Company and Executive, the
vesting of all options and restricted stock, if any, held by Executive, shall
be accelerated to the date of termination; provided, however, that the
vesting of the Additional Options shall not be accelerated to the date of
termination unless the Company has achieved at least 80% of the projected
amount of EBT with respect to the fiscal year ended prior to such
termination.
(d) The Company, at its cost, shall continue for the lesser of one year or
the date upon which Executive accepts a position with an employer that offers
health and medical benefits comparable to those to which Executive is
entitled from
<PAGE>
the Company, the participation of Executive and his spouse and children in
all health and medical benefit plans, policies and programs in effect from
time to time with respect to the senior executive officers of the Company and
their families.
8. CONFIDENTIAL INFORMATION, NON-COMPETITION, ETC.
(a) (i) Both during and after the Employment Period, Executive shall hold in
a fiduciary capacity for the benefit of the Company and shall not, without
the prior written consent of the Company, communicate or divulge (other than
in the performance of Executive's duties to the Company under this
Agreement), to anyone other than the Company, its subsidiaries and those
designated by it, any confidential or proprietary information, knowledge or
data relating to the Company or any of its subsidiaries, or to any of their
respective businesses, obtained by Executive before or during the Employment
Period except to the extent (A) disclosure is made during the Employment
Period by Executive in the course of his duties hereunder and Executive
reasonably determines in good faith that it is in the best interest of the
Company to do so, (B) Executive is compelled pursuant to an order of a court
or other body having jurisdiction over such matter to do so (in which case
the Company shall be given prompt written notice of such intention to divulge
not less than five days prior to such disclosure or such shorter period as
the circumstances may reasonably require) or (C) such information, knowledge
or data is or becomes public knowledge or is or becomes generally known
within the Company's industry other than through improper disclosure by
Executive.
(ii) Executive acknowledges and agrees that the whole interest in any
invention, improvement, confidential information, copyright, design, plan,
drawing or data, including all worldwide rights to copyrights or any other
intellectual property rights (collectively, the "Rights") arising out of or
resulting from Executive's performance of his duties during the Employment
Period shall be the sole and exclusive property of the Company. Executive
undertakes (at the expense of the Company) to execute any document or do any
reasonably necessary act to enable the Company to obtain or to assist the
Company in obtaining any Rights. Executive hereby irrevocably appoints the
Company to be his attorney-in-fact to execute in his name and on his behalf
any instrument required and take any actions reasonably necessary for the
purpose of giving to the Company the full benefit of the provisions of this
subsection; provided, however, that the Company shall notify Executive prior
to executing any such instruments or taking any such actions.
<PAGE>
(b) Executive will not (other than on behalf of the Company) directly or
indirectly during the Employment Period, as an individual proprietor,
partner, stockholder, officer, employee, director, joint venturer, investor,
lender, or in any other capacity whatsoever (other than as the holder of not
more than five (5) percent of the total outstanding stock of a publicly held
company), engage in a business which is competitive with the business of the
Company as such business is conducted during the Employment Period. In
addition, for a period of one year following termination of Executive's
employment hereunder for any reason, Executive shall not (i) solicit (other
than by means of a general solicitation through advertisement) for employment
or employ any person who is a senior executive or branch manager of the
Company as of the date of termination of Executive's employment hereunder
unless such senior executive or branch manager is subsequently discharged by
the Company; (ii) solicit any customer of the Company as of the date of such
termination to purchase from Executive or any business of which Executive is
an individual proprietor, partner, stockholder, officer, employee, director,
joint venturer, investor (other than as the holder of not more than five (5)
percent of the total outstanding stock of a publicly held Company) or lender,
services of a type offered by the Company as of the date of such termination
unless such customer has terminated its business with the Company after the
date of such termination due solely to the Company's failure to provide
services to the customer in a manner satisfactory to the customer, which
failure has been asserted by such customer in writing to the Company; or
(iii) provide to any customer of the Company as of the date of such
termination on behalf of Executive or any business of which Executive is an
individual proprietor, partner, stockholder, officer, employee, director,
joint venturer, investor (other than as the holder of not more than five (5)
percent of the total outstanding stock of a publicly held Company) or lender,
services of a type offered by the Company as of the date of such termination
unless such customer has terminated its business with the Company after the
date of such termination of employment due solely to the Company's failure to
provide services to the customer in a manner satisfactory to the customer,
which failure has been asserted by such customer in writing to the Company.
(c) If any restriction set forth in Section 8(b) hereof is found by any court
of competent jurisdiction or arbitrator to be unenforceable because it
extends for too long a period of time or over too great a range of activities
or in too broad a geographic area, it shall be interpreted to extend only
over the maximum period of time, range of activities or geographic area as to
which it may be enforceable.
(d) The restrictions contained in Sections 8(a) and (b) hereof are necessary
for the protection of the business and goodwill of the Company and are
<PAGE>
considered by Executive to be reasonable to such purpose. Executive
acknowledges and agrees that money damages would not adequately compensate
the Company for any breach of Sections 7(a) or 7(b) hereof and will cause the
Company substantial and irreparable damage and therefore, in the event of any
such breach, in addition to such other remedies which may be available, the
Company shall have the right to seek specific performance and injunctive
relief.
9. NO MITIGATION; SET-OFF
If Executive's employment with the Company is terminated by the Company
without Cause prior to the Employment Expiration Date but within twelve
months after the end of any fiscal year, commencing with the fiscal year
ending March 31, 2001, in which the Company has failed to achieve EBT equal
to at least 80% of the projected amount of EBT, Executive shall attempt to
mitigate his damages by seeking, with reasonable diligence, a position
comparable in responsibility to his position held with the Company at a
compensation and benefits level comparable to those afforded him hereunder.
If Executive's employment with the Company is terminated prior to the
Employment Expiration Date for any other reason whatsoever, Executive shall
not be required to seek other employment or to attempt in any way to reduce
any amounts payable to Executive by the Company pursuant to this Agreement;
provided, however, that the amount of any payment provided for in Section
7.2(b) of this Agreement shall be reduced by any compensation earned by
Executive as the result of employment by another employer.
10. LEGAL FEES
If Executive collects, or negotiates and reaches a settlement for, any part
or all of the payments provided for hereunder (or otherwise successfully
enforces the terms of this Agreement) by or through a lawyer, the Company
shall advance all reasonable costs of such collection or enforcement,
including reasonable legal fees and disbursements and other fees and expenses
which Executive may incur, promptly after submission of documentation
reasonably acceptable to the Company in respect of such costs and expenses.
All amounts paid by the Company shall promptly be refunded to the Company if
and when a court of competent jurisdiction finds that the Company is entitled
to have such sums refunded or if a settlement is reached which is
insubstantial compared to the damages that were requested.
<PAGE>
11. SUCCESSORS; BINDING AGREEMENT
(a) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company to expressly assume and agree in
writing to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such transaction had
taken place, provided that Executive need only be one of the senior Executive
officers with the authority, powers and responsibilities set forth in Section
1.1 hereof with respect to the subsidiary or subdivision which operates the
business of the Company as it exists on the date of such business
combination. Failure of the Company to obtain such express assumption and
agreement at or prior to the effectiveness of any such transaction shall be a
breach of this Agreement and shall entitle Executive to compensation and
benefits from the Company in the same amount and on the same terms to which
Executive would be entitled hereunder if the Company terminated his
employment without Cause, except that for purposes of implementing the
foregoing, the date on which any such transaction becomes effective shall be
deemed the date of termination. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(b) The Company may not assign this Agreement except in connection with, and
to the acquiror of, all or substantially all of the business or assets of the
Company, provided such acquiror expressly assumes and agrees in writing to
perform this Agreement as provided in Section 11(a) hereof.
(c) This Agreement shall inure to the benefit of and be enforceable by
Executive and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees;
provided, however, that this Agreement may not be assigned by Executive.
(d) The parties agree that Executive's family members are the intended third
party beneficiaries of the provisions of Article 5 to the extent that
benefits are expressly granted to them in such Article, with the right to
enforce such provisions as fully as if they were parties to this Agreement.
<PAGE>
12. INDEMNIFICATION.
12.1 Company to Indemnify. The Company shall indemnify Executive with respect
to any action taken by Executive or omission of Executive occurring on or
after the Effective Date, to the fullest extent permitted by applicable law
in effect on the date hereof or as such laws may from time to time be
amended. Without diminishing the scope of the indemnification provided by
this Section 12.1, the rights of indemnification of Executive provided
hereunder shall include but shall not be limited to those rights set forth
hereinafter, except to the extent expressly prohibited by applicable law.
12.2 Action or Proceeding Other Than an Action by or in the Right of the
Company. Executive shall be entitled to the indemnification rights provided
in this Section 12.2 if he is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative in nature, other than an
action by or in the right of the Company, by reason of the fact that he is or
was a director, officer, employee, agent, partner or fiduciary of the Company
or is or was serving at the request of the Company as a director, officer,
employee, agent, partner or fiduciary of any other entity or by reason of
anything done or not done by him in any such capacity. Pursuant to this
Section 12.2, Executive shall be indemnified against all reasonable expenses
(including attorneys' fees), costs, judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding (including, but not limited to, the
investigation, defense or appeal thereof), if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Company, and, with respect to any criminal action or proceeding, he
had no reasonable cause to believe his conduct was unlawful.
12.3 Actions by or in the Right of the Company. Executive shall be entitled
to the indemnification rights provided in this Section 12.3 if he is a person
who was or is made a party or is threatened to be made a party to any
threatened, pending or completed action or suit brought by or in the right of
the Company to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee, agent, partner or fiduciary of the
Company or is or was serving at the request of the Company as a director,
officer, employee, agent, partner or fiduciary of any other entity by reason
of anything done or not done by him in any such capacity. Pursuant to this
Section 12.3, Executive shall be indemnified against all expenses (including
attorneys' fees) and costs actually and reasonably incurred by him in
connection with such action or suit (including, but not limited to, the
investigation,
<PAGE>
defense, settlement or appeal thereof) if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Company; provided, however, that no such indemnification shall be made
in respect of any claim, issue or matter as to which applicable law expressly
prohibits such indemnification by reason of an adjudication of liability of
Executive to the Company, unless, and only to the extent that, the court in
which such action or suit was brought shall determine upon application that,
despite such adjudication of liability but in view of all the circumstances
of the case, Executive is fairly and reasonably entitled to indemnification
for such expenses and costs as such court shall deem proper.
12.4 Indemnification for Costs, Charges and Expenses of Successful Party.
Notwithstanding the other provisions of this Agreement and in addition to the
rights to indemnification set forth in Sections 12.2 and 12.3 hereof, to the
extent that the Executive has served as a witness on behalf of the Company or
has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
action, suit or proceeding referred to in Sections 12.2 and 12.3 hereof, or
in defense of any claim, issue or matter therein, he shall be indemnified
against all costs, charges and expenses (including attorneys' fees) actually
and reasonably incurred by him or on his behalf in connection therewith.
12.5 Partial Indemnification. In addition to the rights to indemnification
set forth in Sections 12.2 and 12.3 hereof, if Executive is only partially
successful in the defense, investigation, settlement or appeal of any action,
suit, investigation or proceeding described in Sections 12.2 and 12.3 hereof,
and as a result is not entitled under Section 12.2, 12.3 or 12.4 hereof to
indemnification by the Company for the total amount of the expenses
(including attorneys' fees), costs, judgments, penalties, fines, and amounts
paid in settlement actually and reasonably incurred by him, the Company shall
nevertheless indemnify Executive, as a matter of right pursuant to Section
12.4 hereof, to the extent that Executive has been partially successful.
12.6 Determination of Entitlement to Indemnification. Upon written request by
Executive for indemnification pursuant to Section 12.2 or 12.3 hereof, the
entitlement of Executive to indemnification pursuant to the terms of this
Agreement shall be determined by the following person or persons who shall be
empowered to make such determination: (a) the Board of Directors of the
Company by a majority vote of a quorum consisting of Disinterested Directors
(as hereinafter defined); or (b) if such a quorum is not obtainable or, even
if obtainable, if the Board of Directors by the majority vote of
Disinterested Directors so directs, by Independent Counsel (as
<PAGE>
hereinafter defined) in a written opinion to the Board of Directors, a copy
of which shall be delivered to Executive; or (c) by the stockholders of the
Company. Independent Counsel shall be selected by the Board of Directors.
Upon failure of the Board so to select Independent Counsel, Independent
Counsel shall be selected by the President of the Association of the Bar of
the City of New York or such other person as such President shall designate
to make such selection. Such determination of entitlement to indemnification
shall be made not later than 60 days after receipt by the Company of a
written request for indemnification. Such request shall include documentation
or information which is necessary for such determination and which is
reasonably available to Executive. Any costs or expenses (including
attorneys' fees) actually and reasonably incurred by Executive in connection
with his request for indemnification hereunder shall be borne by the Company
if it is determined that the Executive is entitled to indemnification. If the
person making such determination shall determine that Executive is entitled
to indemnification as to part (but not all) of the application for
indemnification, such person shall reasonably prorate such partial
indemnification among such claims, issues or matters.
12.7 Presumptions and Effect of Certain Proceedings. The Secretary of the
Company shall, promptly upon receipt of Executive's request for
indemnification, advise in writing the Board of Directors or such other
person or persons empowered to make the determination as provided in Section
12.6 that Executive has made such request for indemnification. If the person
or persons so empowered to make such determination shall have failed to make
the requested indemnification within 120 days after receipt by the Company of
such request, the requisite determination of entitlement to indemnification
shall be deemed to have been made and Executive shall be absolutely entitled
to such indemnification, absent actual and material fraud in the request for
indemnification. The termination of any action, suit, investigation or
proceeding described in Section 12.2 or 12.3 hereof by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself: (a) create a presumption that Executive did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, that Executive had reasonable cause to believe
that his conduct was unlawful; or (b) otherwise adversely affect the rights
of Executive to indemnification except as may be provided herein.
12.8 Advancement of Expenses and Costs. All reasonable expenses and costs
incurred by Executive (including attorneys' fees, retainers and advances of
disbursements required of Executive) shall be paid by the Company in advance
of the
<PAGE>
final disposition of such action, suit or proceeding at the request of
Executive within 20 days after the receipt by the Company of a statement or
statements from Executive requesting such advance or advances from time to
time. Such statement or statements shall reasonably evidence the expenses and
costs incurred by him in connection therewith and shall include or be
accompanied by an undertaking by or on behalf of Executive to repay such
amount if it is ultimately determined that Executive is not entitled to be
indemnified against such expenses and costs by the Company as provided by
this Agreement or otherwise.
12.9 Remedies of Executive in Cases of Determination not to Indemnify or to
Advance Expenses. In the event that a determination is made that Executive is
not entitled to indemnification hereunder or if payment has not been timely
made following a determination of entitlement to indemnification pursuant to
Sections 12.6 and 12.7 hereof, or if expenses are not advanced pursuant to
Section 12.8 hereof, Executive shall be entitled to a final adjudication in
an appropriate court of the State of New York or any other court of competent
jurisdiction of his entitlement to such indemnification or advance.
Alternatively, Executive at his option may seek an award in arbitration to be
conducted by three arbitrators pursuant to the rules of the American
Arbitration Association, such award to be made within 60 days following the
filing of the demand for arbitration. The Company shall not oppose
Executive's right to seek any such adjudication or award in arbitration or
any other claim, but may oppose Executive's right to indemnification. Such
judicial proceeding or arbitration shall be made de novo and Executive shall
not be prejudiced by reason of a determination (if so made) pursuant to
Sections 12.6 and 12.7 hereof that he is not entitled to indemnification. If
a determination is made or deemed to have been made pursuant to the terms of
Section 12.6 or 12.7 hereof that Executive is entitled to indemnification,
the Company shall be bound by such determination and is precluded from
asserting that such determination has not been made or that the procedure by
which such determination was made is not valid, binding and enforceable. The
Company further agrees to stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement
and is precluded from making any assertion to the contrary. If the court or
arbitrator shall determine that Executive is entitled to any indemnification
hereunder, the Company shall pay all reasonable expenses (including
attorneys' fees) and costs actually incurred by Executive in connection with
such adjudication or award in arbitration (including, but not limited to, any
appellate proceedings).
12.10 Other Rights to Indemnification. The indemnification and advancement of
expenses (including attorneys' fees) and costs provided by this
<PAGE>
Agreement shall not be deemed exclusive of any other rights to which
Executive may now or in the future be entitled under any provision of the
by-laws, agreement, provision of the Certificate of Incorporation, vote of
stockholders or disinterested directors, provision of law or otherwise.
12.11 Duration of Agreement. This provision of this Article 12 shall continue
until and terminate upon the later of (a) 6 years after Executive has ceased
to occupy any of the positions or have any of the relationships described in
Sections 12.2 and 12.3 of this Agreement; and (b) the final termination of
all pending or threatened actions, suits, proceedings or investigations with
respect to Executive.
12.12 D&O Insurance. Without intending to limit in any way the obligations of
the Company pursuant to the other provisions of this Article 12, the Company
shall maintain in effect throughout the Employment Period and an additional
period of at least five years thereafter, the current policies of directors'
and officers' liability insurance maintained by the Company.
12.13 Definitions. For purposes of this Agreement:
(a) "Disinterested Director" shall mean a director of the Company who is not
or was not a party to the action, suit, investigation or proceeding in
respect of which indemnification is being sought by Executive.
(b) "Independent Counsel" shall mean a law firm or a member of a law firm
that neither is presently nor at any time in the past has been retained to
represent: (i) the Company or Executive in any matter material to either such
party, or (ii) any other party to the action, suit, investigation or
proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not
include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or Executive in an action to determine Executive's right
to indemnification under this Agreement.
13. MISCELLANEOUS
(a) Any notices or other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly made,
given or received when hand-delivered, one (1) business day after being
transmitted by telecopier (confirmed by mail) or sent by overnight courier
against receipt, or five (5)
<PAGE>
days after being mailed by registered or certified mail, postage prepaid,
return receipt requested, to the party to whom such communication is given at
the address set forth below, which address may be changed by notice given in
accordance with this Section:
If to the Company:
Command Security Corporation
Attention: Secretary
If to Executive:
Mr. William Vassell
----------------------------
----------------------------
(b) If any provision of this Agreement shall be held by court of competent
jurisdiction to be illegal, invalid or any unenforceable, such provision
shall be construed and enforced as if it had been more narrowly drawn so as
not to be illegal, invalid or unenforceable and such illegality, invalidity
or unenforceability shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement.
(c) No provision of this Agreement may be modified, waived or discharged
except by a waiver, modification or discharge in writing signed by Executive
and such officer as may be designated by the Board of Directors. No waiver by
either party hereto at any time of any breach by the other party hereto of,
or in compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the time or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
(d) This Agreement (together with the Shareholders Agreement, the
Confidential Letter Agreement, the Initial Option Agreement and the Option
Agreement) represents the entire agreement of the parties and shall supersede
any and
<PAGE>
all previous contracts, arrangements or understandings between the Company
and Executive with respect to the subject matter hereof including, without
limitation, the Amended and Restated Employment Agreement dated May 24, 1990,
between Executive and the Company, as further amended, and the Compensation
Continuation Agreement between Executive and the Company dated September 25,
1992 (collectively, the "Predecessor Agreement"); provided, however, that
this Agreement shall not supersede the Predecessor Agreement until the
Effective Date, and any rights accrued under the predecessor Agreement on or
prior to the Effective Date shall survive the Effective Date.
(e) This Agreement shall be construed, interpreted, and governed in
accordance with the laws of the State of New York, without reference to rules
relating to conflicts of law.
(f) The section headings herein are for the purpose of convenience only and
are not intended to define or limit the contents of any section.
(g) The parties may sign this Agreement in counterparts, all of which shall
be considered one and the same instrument.
[END OF TEXT -- SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
day and year first above written.
COMMAND SECURITY CORPORATION
By:_______________________________
Authorized Signatory
Name:
Title:
-------------------------------
WILLIAM VASSELL
<PAGE>
Exhibit 2
Relocation Program
This document describes the relocation/reimbursement program (the "Relocation
Program") available to Executive.
I. The Executive will be reimbursed by the Company for the actual costs
associated with the sale of Executive's principal home ("Former Home"), as
follows:
A. Generally:
1. Packing, shipping, moving, storing, if necessary, unpacking and insuring
household goods and common personal possessions (carrier is typically
prohibited from delivering perishables, frozen foods, plants or shrubbery,
combustible items and paint, or articles of extraordinary value such as
jewelry, precious stones, stamp collections, wills, stocks, etc.).
2. Reasonable (at least six roundtrips with Executive and one dependent)
pre-move travel, meals, etc. for house hunting.
3. Selling expenses on Executive's Former Home as follows:
- Reasonable attorney's fees
- Transfer tax
- Real estate commission, up to a maximum total of 6% of the gross sales price.
4. Disconnecting and connecting normal appliances at origin and destination.
B. The Company will pay for moving the following:
1. Automobiles (maximum two), registered in Executive's (or spouse's) name.
2. One boat or trailer, registered in Executive's (or spouse's) name.
3. Household pets.
<PAGE>
C. The Company will reimburse Executive for the following incidental expenses
reasonably incurred in connection with Executive's relocation:
1. Travel expenses, including meals and lodging incurred by Executive and
dependents while traveling from Former Home to Executive's new location via
personal car or common carrier, coach class.
2. Meals and lodging expenses temporarily incurred by Executive and
dependents, if any, until Executive obtains permanent living quarters. Such
reimbursement shall not exceed such costs for three months or until 21 days
following delivery of Executive's personal or household goods, whichever
first occurs. Extensions may be granted at the Company's discretion as a
result of extenuating circumstances.
D. The Company will reimburse Executive for the following expenses in
connection with purchasing a principal house/home within a reasonable
proximity to the new Company's headquarters' location within eighteen (18)
months of the relocation of Executive:
1. Reasonable attorney's fees;
2. Title search and any other filing fees;
3. Building and termite inspection;
4. Mortgage application, and placement fee.
E. The Company will provide, through a home equity broker or otherwise, to
Executive a bridge loan for the purchase of a principal house/home until his
Former Home is sold, in an amount up to $500,000 and the fair value of the
Former Home, net of any mortgages.
F. The Company will make a payment to Executive equal to one month's Base
Salary to cover other incidental expenses relating to moving. This payment
shall be automatic. This payment will be made within ten (10) days of
Executive's confirmation of commitments relative to the move.
G. To the extent the Executive incurs any tax obligations as a result of this
Relocation Program, the Company shall pay the Executive or the applicable
taxing authorities on the Executive's behalf, no later than thirty (30) days
prior to the time the tax is due, an amount equal to the sum of such taxes
and all taxes payable on account of payments made to the Executive under this
paragraph G.
<PAGE>
APPENDIX 7
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
-------------------------------------------------------x
ROBERT J. ROSAN, STEVEN B. SANDS,
LLOYD SAUNDERS, III, PETER T. KIKIS
and THOMAS P. KIKIS, :
Plaintiffs, :
Index No. 606166/97
-against- : IAS Part 49
(Kahn, J.)
WILLIAM C. VASSEL, GORDON ROBINETT, PETER J. NEKOS,
GREGORY I. MILLER, DAVID J. POLLITZER, ESQ., :
and COMMAND SECURITY CORPORATION,
: STIPULATION & ORDER
Defendants. OF DISMISSAL
:
:
-------------------------------------------------------x
IT IS HEREBY STIPULATED AND AGREED by and among the
undersigned counsel for the parties to this action that, upon the
consummation of the transactions contemplated by the Stock Purchase
Agreement, dated _______, plaintiffs' claims against defendants are dismissed
with prejudice and without costs to any party.
Dated: New York, New York
September _, 2000
LAW OFFICES OF STEVEN L. WITTELS
By: ---------------------------------
18 Half Mile Road
Armonk, New York 10504
(914) 273-7314
Attorneys for Plaintiff Robert J. Rosan
<PAGE>
LITTMAN KROOKS ROTH & BALL, P.C.
By:
655 Third Avenue, 20th Floor
New York, New York 10017
(212) 490-2020
Attorneys for Plaintiffs Steven B. Sands,
Lloyd Saunders, III, Peter T. Kikis and
Thomas P. Kikis
LAW OFFICES OF JEREMY HEISLER
By: --------------------------------
299 Broadway, Suite 1020
New York, New York 10007
(212) 406-0016
Attorneys for Plaintiffs Steven B. Sands,
Lloyd Saunders, III, Peter T. Kikis
and Thomas P. Kikis
PROSKAUER ROSE LLP
By: --------------------------------
1585 Broadway
New York, New York 10036
(212) 969-3000
Attorneys for Defendants William C.
Vassell, Gordon Robinett, Gregory J.
Miller and Peter J. Nekos
<PAGE>
SILLER WILK LLP
By: --------------------------------
747 Third Avenue
New York, New York 10017-2803
(212) 421-2233
Attorneys for Defendant David J.
Pollitzer, Esq.
BRAGAR & WEXLER, P.C.
By: --------------------------------
900 Third Avenue
New York, New York 10022
(212) 308-5858
Attorneys for Defendant Command Security
Corporation
SO ORDERED
By:------------------------------
Honorable Herman J. Cahn
<PAGE>
APPENDIX 8
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
<PAGE>
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
<PAGE>
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; 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 with such
<PAGE>
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
<PAGE>
notify shall not relieve 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
<PAGE>
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.
<PAGE>
(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
<PAGE>
parties, including without limitation 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: _____________________________
Name:
Title:
RELIANCE SECURITY GROUP PLC
By: ______________________________
Name:
Title:
<PAGE>
APPENDIX 9
Rosin & Associates 192 Lexington Avenue, Suite 1202
Valuation & Advisory Services New York, New York 10016
Tel: (212) 726-9090
Fax: (212) 726-0937
October 17, 2000
Board of Directors
Command Security Corporation
Route 55 Lexington Park
Lagrangeville, NY 12540
Dear Sirs:
You have asked us to advise you and express our opinion as to the fairness to
the shareholders of Command Security Corporation (the "Company") from a
financial point of view of a transaction between the Company and Reliance
Security Group plc (the Acquiror" or "Reliance") involving (i) the issuance
by the Company of a warrant (the "Warrant") representing twenty (20%) percent
of the Company's outstanding stock, (ii) the Company entering into certain
agreements (Registration Rights, Shareholder Agreement, Employment Agreement,
etc. (the "Agreements")), and (iii) the installation of certain new directors
and officers in place of certain current directors and officers ("Changes in
Corporate Governance"), all in consideration of the termination of certain
litigation against the Company and members of its board of directors.
The basic terms of the transaction are contained in an Acquisition
Agreement dated September 12, 2000, which provides, among other things, that
(I) the Acquiror shall purchase all of the issued and outstanding shares (the
"Shares") of capital stock of the Company (including any options and warrants
to acquire capital stock of the Company) owned or controlled by Peter Kikis,
Thomas Kikis, Steven Sands, their affiliates and each other plaintiff in the
litigation entitled Rosan et al v. Vassell et al. (NYS Supreme Court, County
of New York, Index No. 606166/97) (the "Litigation") (collectively, the
"Sellers") at $2.20 per share in cash; (II) the Litigation shall be dismissed
on terms satisfactory to the Acquiror and the Company; (III) the Company
shall terminate the existing shareholders agreement and the Acquiror shall
enter into a new shareholders agreement (the "Shareholders Agreement") with
the Company and William C. Vassell, which agreement shall include but not be
limited to the resignation of certain board members and the appointment of
new board members; (IV) William C. Vassell shall enter into a new employment
agreement (the "Employment Agreement") with the Company that includes but is
not limited to the issuance of certain warrants by the Company to Mr. Vassell
as described therein; (V) the Company shall execute a warrant (the "Warrant")
pursuant to which the Acquiror will have the right to acquire in addition to
the Shares, an additional number of shares of the Company's common stock
equal to 20% of the Company's outstanding common stock (on a fully diluted
basis); (VI) the Company shall enter into a registration rights agreement
(the "Registration Rights Agreement") with respect to the Shares purchased
from the Seller by the Acquiror and shares of the Company's common stock
issuable upon exercise of the Warrant; and (VII) the Company shall enter into
<PAGE>
an additional $3 million term loan facility containing terms and conditions
satisfactory to the Acquiror and the Company.
In arriving at our opinion, we have reviewed certain publicly
available business and financial information relating to the Company, as well
as the Acquisition Agreement. Furthermore, we have reviewed certain related
documents including the Shareholders Agreement, Employment Agreement,
Registration Rights Agreement, and financing commitment letter from LaSalle
Business Credit, Inc., as to which we express no opinion. We have also
reviewed certain other information, including financial forecasts, provided
to us by the Company and have met with the Company's management to discuss
the business and prospects of the Company.
We have also considered certain financial and stock market data of
the Company, and we have compared those data with similar data for other
publicly held companies in businesses similar to the Company and we have
considered the financial terms of certain other business combinations and
other transactions which have recently been effected. We also considered such
other information, financial studies, analyses and investigations and
financial, economic and market criteria which we deemed relevant. Our
analyses, opinions, conclusions and report have been developed and prepared,
in conformity with the requirements of the Code of Professional Ethics and
the Standards of Professional Practice of the Appraisal Institute and also
according to the Uniform Standards of Professional Appraisal Practice
("USPAP") as set forth by the Appraisal Foundation
In connection with our review, we have not assumed any
responsibility for independent verification of any of the foregoing
information and have relied on its being complete and accurate in all
material respects. With respect to the financial forecasts, we have assumed
that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the Company's management as to
the future financial performance of the Company. In addition, we have not
been requested to make, and have not made, an independent evaluation or
appraisal of the assets or liabilities (contingent or otherwise) of the
Company, nor have we been furnished with any such evaluations or appraisals.
Our opinion is necessarily based upon financial, economic, market and other
conditions as they exist and can be evaluated on the date hereof. We were not
requested to, and did not, solicit third party indications of interest in
acquiring all or any part of the Company.
We have been engaged by the Company solely to render an opinion with
respect to the fairness to the stockholders of the Company, other than the
Sellers and the "Acquiror", from a financial point of view of the terms of
the Acquisition Agreement, and will receive a fee for our services in
rendering this opinion.
It is understood that this letter is for the information of the
Board of Directors in connection with its consideration of the Acquisition
Agreement and does not constitute a recommendation to the Sellers as to how
they should vote on the proposed Acquisition.
Based upon and subject to the foregoing, it is our opinion that, as
of the date hereof, the terms of the Acquisition Agreement are fair to the
stockholders of the Company, other than the Sellers and the Acquiror and its
affiliates, from a financial point of view.
Very truly yours,
Rosin & Associates, Inc.
192 Lexington Avenue
Suite 1202
New York, NY 10016
<PAGE>
APPENDIX 10
2000 STOCK OPTION PLAN
OF
COMMAND SECURITY CORPORATION
1. Purpose. The purpose of this Stock Option Plan is to
advance the interests of Command Security Corporation (the "Corporation") by
encouraging and enabling the acquisition of a larger personal proprietary
interest in the Corporation by Eligible Recipients upon whose judgment and
keen interest the Corporation and its Subsidiaries are largely dependent for
the successful conduct of their operations. It is anticipated that the
acquisition of such proprietary interest in the Corporation will stimulate
the efforts of such Eligible Recipients on behalf of the Corporation and its
Subsidiaries and strengthen their desire to remain with the Corporation and
its Subsidiaries. It is also expected that the opportunity to acquire such a
proprietary interest will enable the Corporation and its Subsidiaries to
attract desirable personnel.
2. Definitions. When used in this Plan, unless that context
otherwise requires:
(a) "Board of Directors" or "Board" shall mean the
Board of Directors of Command security Corporation as
constituted at any time.
(b) "Chairman of the Board" shall mean the person who
at the time shall be Chairman of the Board of Directors.
(c) "Committee" shall mean the Stock Option Committee
of the Board of Directors, as described in Section 3.
(d) "Corporation" shall mean Command Security
Corporation.
(e) "Eligible Recipients" shall mean employees of the
Corporation or its Subsidiaries, including directors who are
also employees but not directors who are not employees.
(f) "Fair Market Value" on a specified date shall
mean the average of the bid and asked closing prices at which
one Share is reported to have traded in the OTC Bulletin Board
Service, as reported on the National Association of Securities
Dealers Automated Quotation System, or the closing price for a
Share on the stock exchange, if any, on which Shares are
primarily traded, but if no Shares were traded on such date,
then on the last previous date on which a Share was so traded,
or, if none of the above is applicable, the value of a Share
as established by the Board of Directors for such date using
any reasonable method of valuation.
(g) "Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended.
(h) "Options" shall mean the stock options issued
pursuant to this Plan.
(i) "Plan" shall mean this 2000 StockOption Plan of
Command Security Corporation as adopted by the Board of
Directors as of ___________, as such Plan may be amended from
time to time.
(j) "Share" shall mean a share of common stock of the
Corporation, par value $.0001.
<PAGE>
(k) "Subsidiary" shall mean any "Subsidiary
corporation", as such term is defined in Section 425(f) of the
Internal Revenue Code.
3. Administration of the Plan. The Board of Directors shall
appoint a Committee of at least three (3) members of the Board of Directors,
each of whom shall be a "disinterested person" within the meaning of Rule
16b-3(b)(3) under the Securities Exchange Act of 1934, as amended, which
shall have the authority to administer the Plan as provided herein. Each
member of the Committee shall hold office until the next regular annual
meeting of the Board of Directors following his designation and until his
successor is designated as a member of the Committee. Any vacancy in the
Committee may be filled by a resolution adopted by a majority of the full
Board of Directors. Any member of the Committee may be removed at any time,
with or without cause, by resolution adopted by a majority of the full Board
of Directors. A member of the Committee may resign from the committee at any
time by giving written notice to the President or Secretary of the
Corporation, and unless otherwise specified therein, such resignation shall
take effect upon receipt thereof. The acceptance of such resignation shall
not be necessary to make it effective. The Committee shall establish such
rules and procedures as are necessary or advisable to administer the Plan.
4. Participants. Except as hereinafter provided, the class of
individuals who are potential recipients of options to be granted under this
Plan consists of those individuals who are Eligible Recipients, as
determined by the Committee. The Eligible Recipients to whom Options are
granted under this Plan and the number of Shares subject to each such option
shall be determined by the Committee, in its sole discretion, in accordance
with the terms and conditions of this Plan.
5. Shares; Grant of Options. The Committee may, but shall not
be required to, grant, in accordance with this Plan, Options to purchase an
aggregate of up to 500,000 Shares, which may be either Treasury Shares or
authorized but unissued Shares.
Options granted under this Plan may be either "incentive
stock options" (within the meaning of Section 422A of the Internal Revenue
Code) or non-qualified stock options. An Option granted under this Plan
shall be deemed to be an incentive stock option (within the meaning of
section 422A of the Internal Revenue Code), unless the Committee, in its
sole discretion, designates otherwise. Options which are designated not to
be incentive stock options shall not be treated as such for purposes of this
Plan and the Internal Revenue Code.
If any Option shall expire, be cancelled or terminate for any
reason without having been exercised in full, the unpurchased Shares subject
thereto may again be made subject to Options under the Plan.
Nothing herein contained shall be construed to prohibit the
grant of Options at different times to the same Eligible Recipient.
The form of Option shall be determined from time to time by
the Committee. The terms and provisions of the Option shall be set forth in
writing in a certificate or agreement (the "Option Certificate") signed by
the Option holder and on behalf of the Corporation by the Chairman of the
Board of Directors or the President or a Vice President of the Corporation.
The Option Certificate shall state whether or not the Option is an incentive
stock option. The Committee may, in its sole discretion, at the time an
Option is granted, establish one or more conditions to the exercise of an
Option, provided that, if such Option is designated as an incentive stock
option, then such condition or conditions shall not be inconsistent with
Section 422A of the Internal Revenue Code.
<PAGE>
6. Price. The exercise price per share of the Shares to be
purchased pursuant to any option shall be fixed by the Committee at the time
an option is granted, but in no event shall it be less than the Fair Market
Value of a Share on the day on which the option is granted.
7. Duration of Options. The duration of any Option granted
under this Plan shall be for a period fixed by the Committee but not more
than ten (10) years from the date upon which the Option is granted.
8. Limitations Regarding Ten Percent Stockholders. No option
which is intended to qualify as an incentive stock option may be granted
under this Plan to any Eligible Recipient who, at the time the Option is
granted, owns, or is considered as owning, within the meaning of Section
422A of the Internal Revenue Code, shares possessing more than ten percent
(10%) of the total combined voting power or value of all classes of stock of
the Corporation or a Subsidiary, unless the exercise price under such Option
is at least 110 percent (110%) of the Fair Market value of a Share on the
date such Option is granted and the duration of such Option is no mere than
five (5) years.
9. Option Holder Not a Stockholder. An Option holder shall not
be deemed to be the holder of, or to have any of the rights of a stockholder
with respect to, any Shares subject to such Option unless and until the
Option shall have been exercised pursuant to the terms thereof, the
Corporation shall have issued and delivered Shares to the Option holder, and
said holder's name shall have been entered as a stockholder of record an the
books of the Corporation. Thereupon, said holder shall have full voting,
dividend and other ownership rights with respect to such Shares.
10. Consideration for Options. As consideration for the grant of
an Option, the Corporation may, in its discretion, obtain in each case: (a)
from any Eligible Recipient who is an employee of the Corporation or a
Subsidiary and who, at the time the Option is granted, shall not have been
under a contract of employment, an option to have the services of such
Eligible Recipient for such period, up to one (1) year, as the Corporation
shall determine; or (b) from any Eligible Recipient who is under an
employment contract at the time the Option is granted, an option to extend
the term of his contract for a period of up to one (1) year upon such terms
and conditions as the Corporation and the Eligible Recipient may agree, but
if they are unable to agree, then upon the same terms and conditions of such
contract; or (c) from either an Eligible Recipient who is or is not under an
employment contract at the time the Option is granted, such other
consideration as the Committee, in its discretion, shall request.
11. Non-transferability of Options. Options and all rights
thereunder shall be non-transferable and non-assignable by the holder
thereof, except to the extent that the representative of the estate or the
heirs of a deceased option holder may be permitted to exercise them, and
during the holder's lifetime shall be exercisable only by the holder.
12. Exercise of Options. Except as otherwise provided herein, an
Option, after the grant thereof, shall be exercisable by the holder at such
rate and times as may be fixed by the Committee at the time the Option is
granted.
Notwithstanding any other provision of this Plan to the
contrary, any option granted under the Plan which is an incentive stock
option shall not be exercisable to the extent that the Fair Market Value of
the Shares (determined as of the date of grant) with respect to which such
option (and any other incentive stock option granted to the holder under
this Plan or any other stock option plan maintained by the Corporation or
any Subsidiary) first becomes exercisable in any calendar year exceeds
$100,000.
<PAGE>
All or any part of any remaining unexercized Options granted
to any person may be exercised in full, whether or not then exercisable,
upon the occurrence of such special circumstance or event as in the sole
discretion of the Committee merits special consideration.
An Option shall be exercised by the delivery of a written
notice duly signed by the Option holder thereof (or the representative of
the estate or the heirs of a deceased Option holder) to such effect,
together with the Option Certificate and either cash, a certified check
payable to the order of the Corporation or Shares duly endorsed over to the
Corporation (which Shares shall be valued at their Fair Market Value as of
the date preceding the day of such exercise) or any combination of such
methods of payment, which together amount to the full exercise price of the
Shares purchased pursuant to the exercise of the Option, to the Chairman of
the Board, the President or an officer of the Corporation who has been
designated for the purpose of receiving the same; provided, however, that a
holder may not use any Shares acquired pursuant to the exercise of an Option
granted under this Plan or any other stock option plan maintained by the
Corporation or any Subsidiary unless the holder has beneficially owned such
Shares for at least six months. No Option may be granted pursuant to the
Plan or exercised at any time when such Option, or the granting or exercise
thereof, may result in the violation of any law or governmental order or
regulation.
Within a reasonable time after exercise of an Option, the
Corporation shall cause to be delivered to the person entitled thereto a
certificate for the Shares purchased pursuant to the exercise of the Option.
If the Option shall have been exercised with respect to less than all of the
Shares subject to the Option, the Corporation shall also cause to be
delivered to the person entitled thereto a new Option Certificate in
replacement of the Option Certificate surrendered at the time of the
exercise of the option, indicating the number of Shares with respect to
which the option remains available for exercise, or the original option
Certificate shall be endorsed to give effect to the partial exercise
thereof.
13. Termination of Services. All or any part of any Option,
to the extent unexercised, shall terminate immediately if the Option holder
ceases to be an employee of the corporation or a Subsidiary, except that the
Option holder shall have until the end of the tenth (10th) business day
following the date he ceases to be an employee of the corporation, or a
Subsidiary, and no longer, to exercise any unexercised Option that he could
have exercised on the day on which such employment or position terminated;
provided, that such exercise must be accomplished prior to the expiration of
the term of such Option. Notwithstanding the foregoing, if an individual
ceases to be an employee of the corporation or a subsidiary due to
retirement on or after attaining the, age of sixty-five (65) years (or such
earlier date as such person shall be permitted to retire under the
Corporation's retirement plan, if any), or to disability (as such term is
defined in Section 422A(c)(7) of the Internal Revenue Code, the existence of
which disability shall be determined by the Committee, in its sole
discretion, which determination shall be conclusive) or to death, the Option
holder, or the representative of the estate or the heirs of a deceased
Option holder, shall have the privilege of exercising the options which are
unexercisad at the time of such retirement, disability or death, but only to
the extent that such Options are then exercisable: (a) within three (3)
months of the option holder's retirement; (b) within one year of the Option
holders, disability, or (c) within one year of the Option holder's death, as
the case may be; Provided, however, that such exercise must be accomplished
prior to the expiration of the term of such Option. If an Option holder
ceases to be an employee of the Corporation or a Subsidiary because of the
Option holder's violation of his duties to the Corporation and its
Subsidiaries as he may from time to time have, the existence of which
violation shall be determined by the Committee, in its sole discretion
<PAGE>
(which determination by the Committee shall be conclusive), whether before
or after the Option holder's termination, all unexercised Options of such
Option holder shall terminate immediately upon such termination and such
Option holder shall have no right after such termination to exercise any
unexercised Option he might have exercised prior to the date he ceased to be
an employee of the Corporation or a Subsidiary.
Nothing contained herein or in the Option Certificate shall
be construed to confer on any Eligible Recipient any right to continue in
the employ of the Corporation or its Subsidiaries or as a director of the
Corporation or its Subsidiaries or derogate from any right of the
Corporation or its Subsidiaries to retire, request the resignation of or
discharge such Eligible Recipient, at any time, with or without cause.
14. Adjustment of Shares. If prior to the complete exercise
of any option there shall be declared and paid a stock dividend upon the
common stock of the corporation or if the common stock of the Corporation
shall be split-up, converted, exchanged, reclassified, or in any way
substituted for, the option, to the extent that it has not been exercised,
shall entitle the holder thereof upon the future exercise of the Option to
such number and kind of securities or cash or other property, subject to the
terms of the Option, to which he would have been entitled had he actually
owned the Shares subject to the unexercised portion of the Option at the
time of the occurrence of such stock dividend, split-up, conversion,
exchange, reclassification or substitution; and the aggregate exercise price
upon the future exercise of the option shall be the same as if the
originally optioned Shares were being purchased thereunder. If prior to the
complete exercise of any Option there shall be a spin-off transaction
pursuant: to the reorganization of the Corporation, the Option to the extent
that it has not been exercised, shall be adjusted by adjusting the exercise
price of the Option and adjusting the number of shares subject thereto, in
order to reflect the decrease, if any, in the fair market value of the
Shares, resulting from the spin-off transaction; in any such case, the
option as adjusted, shall entitle the holder thereof, upon the future
exercise of the Option, to the number of Shares which have a fair market
value immediately after the occurrence of the spin-off transaction equal to
the fair market value of the Shares subject to the Option on the day before
the occurrence of such spin-off transaction, and the aggregate exercise
price upon the future exercise of the Option shall be the same as the
aggregate exercise price of the Shares subject to the option on the day
before the occurrence of such spin-off transaction. Any fractional shares or
other securities payable upon the exercise of the Option as a result of such
adjustment due to the occurrence of such stock dividend, split-up,
conversion, exchange, reclassification, substitution or spin-off shall be
payable in Cash based upon the Fair market Value of such shares or
securities at the time of such exercise. If any such event should occur, the
number of Shares with respect to which Options remain to be issued, or with
respect to which Options may be reissued, shall be adjusted in a similar
manner.
Upon the dissolution or liquidation of the Corporation, or
upon a reorganization, merger or consolidation in which the Corporation is
not the surviving corporation, or in which the Corporation becomes a
subsidiary of another corporation, or upon the sale of substantially all of
the property of the Corporation to another corporation, the Plan and the
Options issued thereunder shall terminate, unless provision is made in
connection with such transaction for the assumption of Options theretofore
granted, or the substitution for such Options of new options of the
successor employer corporation or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kinds of shares and the per
share exercise prices.
15. Issuance of Shares and Compliance with Securities Laws.
Before issuing and delivering any Shares to an option holder, the
<PAGE>
Corporation may: (i) require the holder to give satisfactory assurances that
the Shares are being purchased for investment and not with a view to resale
or distribution, and will not be transferred in violation of applicable
securities laws; (ii) restrict the transferability of such Shares and
require a legend to be endorsed on the certificates representing the Shares;
and (iii) condition the exercise of an Option or the issuance and delivery
of Shares upon the listing, registration or qualification of the Shares
covered by such Option upon a securities exchange or under applicable
securities laws.
The Plan is intended to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended. Any provision inconsistent with
such Rule shall be inoperative and shall not affect the validity of the
Plan.
16. Income Tax Withholding. If the Corporation or a
Subsidiary 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 pursuant to the exercise of an Option, the Corporation or such
Subsidiary shall be entitled to deduct and withhold such amount from any
cash payments to be made to the Option holder. In any event, the holder
shall make available to the Corporation or such Subsidiary, promptly when
requested by the Corporation or such Subsidiary, sufficient funds to meet
the requirements of such withholding, and the Corporation or such Subsidiary
shall be entitled to take and authorize such steps as it may deem advisable
in order to have such funds made available to the Corporation or such
Subsidiary cut of any funds or property due or to become due to the holder.
17. Administration and Amendment of the Plan. Except as
hereinafter provided, the Board of Directors and the Committee, if any, may
at any time withdraw or from time to time amend the Plan as it relates to,
and the terms and conditions of, any Options not theretofore granted, and
the Board of Directors and the Committee, if any, with the consent of each
adversely affected Option holder, may at any time cancel any outstanding
Option or withdraw or from time to time amend the Plan as it relates to, and
the terms and conditions of, any outstanding Option. Notwithstanding the
foregoing, any amendment which would increase the number of Shares issuable
under Options or change the class of employees to whom options may be
granted must be adopted by the Board of Directors and shall be subject to
the approval of the stockholders of the Corporation within one (1) year of
such amendment.
Determinations of the Committee as to any question which may
arise with respect to the interpretation of the provisions of the Plan and
options shall be final. The Committee may authorize and establish such
rules, regulations and revisions thereof, not inconsistent with the
provisions of the Plan, as it may deem advisable to make the Plan and
Options effective or provide for their administration, and may take such
other action with regard to the Plan and Options as it shall deem desirable
to effectuate their purpose.
18. Indemnification of Committee. In addition to such other
rights of indemnification as they may have as members of the Board of
Directors or as members of the Committee, the Corporation shall indemnify
the members of the Committee against all costs and expenses reasonably
incurred by them in connection with any action suit or proceeding to which
they or any of them may be party by reason or any action taken or failure to
act under or in connection with the Plan or any award made under the Plan,
and against all amounts paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except a judgment based upon a finding of
bad faith. Upon the institution of any such action, suit or proceeding, a
Committee member shall notify the Corporation in writing, giving the
Corporation an opportunity, at its own expense, to handle and defend the
same before such Committee member undertakes to handle it on his own behalf.
<PAGE>
19. Effective Date. This Plan shall be effective as of
______, 2000, the date on-which the Plan was adopted by the Board of
Directors of the Company and approved by the holders of a majority of the
outstanding Shares of the Company at a duly held Stockholders' meeting.
20. Final Issuance Date. No Option shall be granted under the
Plan after 2010.
<PAGE>
APPENDIX 11
EXHIBIT B
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
COMMAND SECURITY CORPORATION
---------------------
Under Section 805 of the
Business Corporation Law
---------------------
We, the undersigned, ___________________, and____________________,
of Command Security Corporation (the "Corporation"), a corporation organized
and existing under the Business Corporation Law of the State of New York, do
hereby certify as follows:
1. The name of the Corporation is Command Security Corporation.
2. The Certificate of Incorporation of the Corporation was filed
with the Department of State on ____________________.
3. The Certificate of Incorporation is hereby amended so that the
Article thereof numbered "TENTH" shall read as follows:
"TENTH: Any or all of the directors may be removed for cause by a
vote of the holders of a majority of all outstanding shares entitled to vote
thereon or by action of a majority of the board of directors. Any or all of
the directors may be removed without cause by a vote of the holders of a
majority of all outstanding shares entitled to vote thereon."
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this Certificate of
Amendment and affirm under the penalties of perjury that the statements made
herein are true, this _____ day of _______, 2000.
------------------------------
Name:
Title:
------------------------------
Name:
Title:
<PAGE>
APPENDIX 12
Mr. G. R. Halder,
7, Wood Lane,
Hertwell,
Northants, NN7 2HG. 27th July, 2000
Dear Graeme
Further to our several recent meetings I am pleased to confirm, on behalf of
Command Security Corporation Inc., an offer to transfer your employment from
Reliance Security Services Limited to the position of Chief Financial
Officer, as a Command Board Director, reporting to Bill Vassell, CEO. The
appointment will formally commence upon completion of the legal processes
which will secure for the Reliance Security Group, an investment in Command
Security Corporation Inc..
The principal conditions of this transfer are as follows:-
1. Basic Salary
Your basic salary will be $138,000 with effect from 20th August, 2000,
payable in the USA. As you are aware, because of time delays in securing
a Visa, for the first few months you will be paid by Reliance Security
Services Limited, in the UK.
2. Bonus arrangements
For achievement of the Business Plan in year one you will receive a
payment of 20% of basic salary. You may also receive an additional
payment of up to a further 30% of basic salary on a sliding scale, for
performance in excess of Plan, subject to achievement of a series of
personal objectives to be agreed with Bill Vassell. Recognising the
uncertainty of these objectives and the Plan at the time of writing, in
this first year, you will be guaranteed a minimum payment of 10% of
basic salary, payable at the end of the month following publication of
Command's annual results and subject to you being in employment and not
under notice at that time. These bonus arrangements are discretionary
and may be altered or withdrawn by the Company at any time.
<PAGE>
3. Pension
Under current Inland Revenue regulations you are allowed to remain a
member of the Reliance Security Group Pension Scheme. Your own pension
contributions and those of Command as your employer will be paid into
the scheme using a notional salary of (pound)90,000 for calculation,
this being the UK rate for the role you will be fulfilling in the USA.
4. Share Options
As soon as possible after finalising the Reliance investment an
Executive Share Option Scheme will be established within Command which
it is intended will be broadly in line with a UK approved type scheme
but obviously subject to US legislation. Once the scheme is established
you will be entitled to 75,000 share options at a price equivalent to
the average market price of the three days prior to the date of grant,
which it is intended will be during the period of six weeks following
announcement of the transaction. Fifty percent of the options allocated
will be exercisable on the third anniversary of grant, with a further
twenty five percent exercisable on the fourth and fifth anniversaries.
In principle, the main conditions of exercise will be the achievement of
the agreed Command Business Plan over the three year period 2000/01 to
2002/03 and subject to you being in the employment of Command Security
Corporation Inc. for at least three years at the first exercise date and
Command or Reliance Security Group for the second and third exercise
dates; and not under notice at any of the points of exercise. In the
event that you return to the UK after at least two years with Command
and we are unable to offer you employment at an appropriate level within
the Reliance Security Group in the UK, then you will be entitled to
exercise your full option entitlement within three months of leaving by
reason of redundancy.
Exact terms of the right to exercise will be determined by the rules of
the scheme established.
5. US -v- UK Tax Liability
It is our intention that, with regard to the relevant tax regimes, you
should be no better or no worse off as a result of your assignment to
the USA. To achieve this the Company will enter into a `tax
equalisation' agreement with you. You will pay tax in the US as a normal
employee but at the year end our advisers will calculate the
`hypothetical tax' you would have paid had you stayed in the UK. A
reconciliation will follow with the company reimbursing you for any
`excess' tax paid. Similarly if you have `underpaid' tax in the US then
Reliance Security Services Limited will charge you the difference which
will be collected in a mutually acceptable manner. The calculation will
take into account and re-imburse you, if appropriate, for any tax paid
on supplements or allowances paid as a result of the assignment - e.g.
for housing, school fees, air fares, etc..
<PAGE>
6. Car/Fuel
You will be provided with a car in line with the Command car policy
prevailing at any one time. The car will be fully expensed.
7. Holiday
You will be entitled to twenty two days annual holiday and 10 days
public holiday per year, commencing at 1st January 2001. For the
remainder of this holiday year to 31st December you will be entitled to
take 11 days plus 4 public holidays.
8. Disturbance Allowance
You will be paid a disturbance allowance of $13800 per annum. This
amount will be divided into twelve equal amounts and paid monthly as a
supplement to your basic salary.
9. Housing
The Company will fund the monthly rental of a suitable property in the
US less a sum equivalent to the actual net rental income (after agency
fees) received from the let of your Hertwell property during a similar
period. Upon your return to the UK the Company will pay a sum of 10% of
the actual net rental of your UK property towards any refurbishment
necessary.
10. Schooling
The Company will fund 100% of the reasonable costs of private education
for your two eldest children. You will be responsible for the cost of
any extra- curricular activities, books, trips, etc.
11. Air Travel
The Company will pay an allowance of $6000 per annum towards the cost of
return air fares to the UK. This amount will be divided into twelve
equal amounts and paid monthly as a supplement to your basic salary.
12. Health Insurance
You will be provided with health insurance cover for yourself and your
Family, with a suitable insurer, on the basis applicable in Command.
13. Sickness
In the event of absence due to sickness you will be entitled to receive
full pay for the first 8 weeks of absence.
<PAGE>
14. Removal and Storage
The Company will refund all reasonable costs of removal of your personal
furnishings to the USA and, subject to paragraph 16 hereof, back to the
UK at the end of your proposed appointment with Command, including any
short term storage necessary, provided you are not under notice of
termination at the date of return to the UK.
15. Notice
You will be entitled to receive and required to give six months notice
of intention to terminate your employment.
16. Duration
Whilst it is not the intention that this offer should form the basis of
a fixed term contract, it is expected that your appointment in the US
will probably last for three years, following which your transfer back
to the UK will be on the basis of continuity of employment within the
Reliance Security Group. If, however, you wish to return having
completed at least two years service then the Company will refund the
costs of repatriation outlined above and will do its utmost to secure an
appointment for you within the Reliance Security Group. If you wish to
return before a period of two years has elapsed, from 20th August 2000,
then you will resign and any costs of repatriation will be at your own
expense.
Finally, Graeme it only remains for me to wish you every good fortune in this
new venture. Having worked with you for the last four years I am in no doubt
you will make it a great success and if I personally can help you in any way
then I will be only too pleased to do so. Good luck
Yours sincerely
Geoff Haslehurst
Group Finance Director
<PAGE>
PROXY COMMAND SECURITY CORPORATION PROXY
PROXY FOR THE 11/13/00 SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned
Shareholder of Command Security Corporation, Lagrangeville, New York, do
hereby nominate, constitute and appoint David J. Pollitzer and James M.
Reilly (neither being an officer or employee of the Company) or any of them
(with full power to act alone) my true and lawful attorney(s) with full power
of substitution, for me and in my name, place and stead to vote all the
Common Stock of said Company, standing in my name on its books on 10/16,
2000 at the Special Meeting of its Shareholders to be held at the Company's
executive offices at Route 55, Lexington Park, Lagrangeville, New York at
10:00 a.m. on 11/13 any adjournment thereof, with all the powers the
undersigned would possess if personally present, as follows:
1. The issuance to Reliance of a five-year warrant to purchase up to
2,044,853 shares (representing approximately 20% of the outstanding
shares of the Company on a fully diluted basis) at $1.25 per share and
the issuance of (nonqualified) incentive stock options to William C.
Vassell exercisable at $1.25 per share for up to 1,217,444 shares
(representing approximately ___% of the outstanding shares of the
Company on a fully diluted basis) pursuant to a new three-year
employment agreement.
o FOR o AGAINST o WITHHELD
2. The 2000 Stock Option Plan covering 500,000 shares for employees
o FOR o AGAINST o WITHHELD
3. The amendment to Article Tenth of the Company's certificate of
incorporation to provide that directors may be removed with or without
cause by a majority of the shareholders or for cause by a majority of
the board of directors; and
o FOR o AGAINST o WITHHELD
4. To transact such other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED ABOVE. IN
THE ABSENCE OF ANY DIRECTION, THE SHARES REPRESENTED HEREBY SHALL BE VOTED
FOR THE MATTERS SPECIFICALLY SET FORTH HEREIN. The Proxies are authorized to
vote at the direction of the Board of Directors upon such other business as
may properly come before such meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE MENTIONED
MATTERS. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY
BE REVOKED PRIOR TO ITS EXERCISE BY DELIVERY OF NOTICE OF REVOCATION OR A
LATER-DATED PROXY TO WILLIAM DUNN, SECRETARY OF THE CORPORATION AT ROUTE 55,
LEXINGTON PARK, LAGRANGEVILLE, NEW YORK 12540.
DATED: ______________________
___________________________________________(L.S.)
Signature of Shareholder
___________________________________________(L.S.)
Signature of Shareholder
