EXECUTION COPY
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"), Xxxxxxx X. Xxxxxxx, an individual
("Xxxxxxx") and Reliance Security Group plc, a company organized under the laws
of England and Wales (the "Purchaser") (Xxxxxxx 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 Xxxxxxx 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,Xxxxxxx 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.
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 Xxxxxxx 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, Xxxxxxx 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 Xxxxxxx and the
Purchaser. If Xxxxxxx 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 Xxxxxxx and
the Purchaser or if Xxxxxxx 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) Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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.
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(e) The initial designees of Xxxxxxx shall be Xxxxxxx X. Xxxxxxx,
Xxxxxxx Xxxxxx and Xxxxx Xxxxx. The initial designees of the Purchaser shall be
Xxxxx Xxxxxxxxxx, Xxx Xxxxxxx and Xxxxxx Xxxxxx. The initial Independent
Director shall be mutually agreed to in writing by Xxxxxxx 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 Xxxxxxx 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];
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(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 to the Employment Agreement between the
Company and Xxxxxxx, 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 Xxxxxxx 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
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Confidential Target shall be subject to adjustment as provided in the 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 Xxxxxxx'x
employment pursuant to the Employment Agreement, Xxxxxxx 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 "Xxxxxxx
Resignation"). Xxxxxxx shall cause any individual to be nominated by Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx Resignation, (ii) the election by
the Board not to extend the term of Xxxxxxx'x employment as Chief Executive
Officer of the Company in accordance with the terms of the Employment Agreement
or (iii) the termination of Xxxxxxx'x employment with the Company pursuant to
Sections 6.1(b)(ii) or 6.1(c) of the Employment Agreement, Xxxxxxx may, for a
period of 90 days after the date of the Xxxxxxx Resignation or termination of
Xxxxxxx'x employment with the Company, as the case may be, provide the Purchaser
with notice of an offer to sell all of Xxxxxxx'x 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 Xxxxxxx in his sole
discretion. The Purchaser shall then have a period of 45 days from receipt of
such notice, to accept the terms of Xxxxxxx'x offer to sell. If the offer is
rejected or lapses, Xxxxxxx 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 Xxxxxxx'x 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
Xxxxxxx 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.
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(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 transferred Holder
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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.(a) 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.
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(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
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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.
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
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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, Xxxxxxx.
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 (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.
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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 Xxxxxxx; 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, Xxxxxxx 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
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issues confirmation of delivery or (iv) by confirmed facsimile transmission, to
the Company, Xxxxxxx 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
Xxxxx 00 Xxxxxxxxx Xxxx
Xxxxxxxxxxxxx Xxx Xxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxx, Xxxxxxxx & Xxxxxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
If to Xxxxxxx
Xxxxxxx X. Xxxxxxx
000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
with a copy to:
Xxxxxx Xxxxxxx
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
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If to the Purchaser:
Reliance Security Group plc
Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx XX00XX
Attention: Xxxxx Xxxxxxxxxx
Facsimile: 011-44-189-520-5090
with copies to:
Rosenman & Colin LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxx, Esq.
Facsimile: (000) 000-0000
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
determined pursuant to Rule 13d-3
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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.
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IN WITNESS WHEREOF, the parties hereto have executed this Letter Agreement
as of the date first above written.
COMMAND SECURITY CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
XXXXXXX X. XXXXXXX
RELIANCE SECURITY GROUP PLC
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Finance Director
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