COVENANT NOT TO COMPETE
This Covenant not to compete is made this 23rd day July, 1996 by and
between Command Security Corporation, a New York corporation (the "Company"),
and Xxxxxx Xxxxxxxx ("Xxxxxxxx").
WHEREAS the Company and Xxxxxxxx have mutually agreed to the termination
of Xxxxxxxx'x employment and employment Agreement dated ____, as amended; and
WHEREAS, the Company desires to protect its interests and its client list,
trade secrets and other intangibles;
NOW, THEREFORE the parties agree as follows:
1. Term of Agreement. This Agreement shall be for a period ending on July
19, 2000.
2. Payment. In consideration of Xxxxxxxx'x Agreement not to compete with
the Company as defined below, the Company shall pay the following non-refundable
payments to Xxxxxxxx: $22,500 upon execution of this Agreement, $22,500 within
45 days thereafter and six additional installments of $22,500 each on April 1,
1997; October 1, 1997; April 1, 1998; October 1, 1998; April 1, 1999; and
October 1, 1999. In addition, the exercise price under Xxxxxxxx'x option and
warrants covering 227,500 shares of the Company's common stock will be reduced
to $2.50 per share and be exercisable until July 19, 2000. In the event of a
breach of this Agreement by Xxxxxxxx, the Company's obligation to make payments
hereunder shall cease and any unexercised option or warrant shall revert to its
original terms with respect to exercise price.
2.1 As long as Xxxxxxxx and his immediate family members and assigns are
not in breach of this Agreement, Xxxxxxxx shall receive health insurance
coverage during the term of this Agreement on the same basis as the Company's
senior executive officers without charge and which shall not be less coverage
than exists upon the date of execution of this Agreement.
3. Event of Death. In the event Xxxxxxxx dies during the term of this
Agreement, provided his immediate family members and assigns comply with this
Agreement, the payments due to Xxxxxxxx in accordance with this Agreement shall
be paid to such immediate family members or assigns.
4. Non-Compete. Xxxxxxxx agrees that during the term of this Agreement he
will not engage (as an individual or as a stockholder, trustee, partner,
financier, agent, employee, consultant, independent consultant or representative
of any person, firm, corporation or association) or have any interest, direct or
indirect, in any business in competition with the business of the Company as
conducted as of the date hereof; provided that this Covenant Not to Compete
shall not prevent Xxxxxxxx from acquiring and holding not more than 2% of the
outstanding shares of any corporation engaged in such competitive business if
such shares are available to the general public on a national securities
exchange.
4.1 The foregoing Covenant Not to Compete shall extend to the immediate
family members and assigns of Xxxxxxxx such that if any of them engage in any
business in competition with the business of the Company, the payments due
hereunder as well as this Agreement shall terminate immediately.
4.3 In the event of a breach of any covenant contained in this Covenant
Not to Compete by Xxxxxxxx or his immediate family members or assigns, the
Company shall be entitled to an injunction restraining such breach in addition
to any other remedies provided by law or equity if the continued breach would
result in additional damage to the Company.
4.4 No assignment of this Agreement will release Xxxxxxxx or his immediate
family members from their obligation to comply with this Agreement.
5. Non-Disclosure and Non-Solicitation. Xxxxxxxx and his immediate family
members or assigns will not, at any time, other than for the benefit of the
Company, exploit, publish or disclose any non-public confidential or proprietary
information or trade secrets relating to the business of the Company
except: as required by law; to the Company's outside auditors or legal counsel;
in respect of required financial or other disclosure; to members of the
Company's Board of Directors; and to persons within the Company believed by
Xxxxxxxx, in good faith, to be authorized to receive same. All documents and
copies thereof, containing any of the same, in the possession of Xxxxxxxx or his
immediate family members as the result of his employment or consulting with the
Company or any of its subsidiaries shall remain the property of the Company, and
shall be surrendered to the Company.
5.1 Definitions. For the purposes of this paragraph 5, the following
definitions shall apply:
5.1.1 "Company" - Command Security Corporation and each of its
subsidiaries;
5.1.2 "Client" - Any person or entity, other than a "Major Client" as
defined below, with which the Company has, as of sixty days prior to the date of
this Agreement up to and including the date of its termination, a guard service
Agreement (pursuant to which the Company provides back office services to such
person or entity);
5.1.3 "Key Employee" - any officer, branch manager or client or account
manager of the Company employed by the Company as of sixty days prior to the
date of this Agreement up to and including the date of its termination;
5.1.4 "Major Client" - All Service Agreement Clients, as of sixty days
prior to the date of this Agreement up to and including the date of its
termination;
5.1.5 "Solicit" - Any personal communication by Xxxxxxxx (whether in
person, in writing, by telephone or otherwise) for the purpose of (i)
encouraging any Client, Major Client, or Key Employee to terminate or alter its
business relationship with the Company, or (ii) interfering with the business
relationship between the Company and any Client, Major Client or Key Employee.
5.1.6 "Xxxxxxxx" - Includes Xxxxxxxx as well as his immediate family
members and assigns.
5.2 During the term of this Agreement and for a period of twelve (12)
months following the date of its termination, Xxxxxxxx shall not Solicit any
Client.
5.3 During the term of this Agreement and for a period of eighteen (18)
months following the date of its termination, Xxxxxxxx shall not Solicit any
Major Client.
5.4 During the term of this Agreement and for the first twelve (12) months
following the date of its termination, Xxxxxxxx shall not Solicit any Key
Employee; provided that if such Key Employee is associated with, or involved in
servicing the account of, any Major Client, such prohibition shall extend for
eighteen (18) months following the date of this Agreement's termination.
5.5 During the term of this Agreement and for the first twenty-four (24)
months following its termination, Xxxxxxxx shall not directly or indirectly
employ any Key Employee without the prior written consent of the Company.
6. Notices. All notices and consents required or desired to be given
pursuant hereto shall be in writing and shall be deemed properly given if
delivered to the addressee by overnight courier, in person, or if mailed, by
registered or certified mail, return receipt requested, to the following
addresses:
(a) If to the Company, then at its headquarters at Xxxxx 00,
Xxxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxx 00000.
(b) If to Xxxxxxxx, then at his home address at 0 Xxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxx 00000.
6.1 Any address specified above may be changed by notice given, as herein
provided, by the party hereto whose address is being changed to the other party
hereto.
6.2 If any such notice or consent is delivered in person, the date of
delivery shall be deemed the date of such notice or consent; and if any notice
or consent is mailed, the date of receipt of the mailing shall be deemed the
date of such notice and consent.
7. Amendment, Breach and Waiver. This Agreement may not be amended or
modified in any manner, except by an instrument in writing signed by both
parties hereto and approved by the Board
of Directors of the Company. The failure of either party hereto to enforce at
any time any of the provisions of this Agreement shall in no way be construed to
be a waiver of any such provision or any other provision, or of the right of
such party thereafter to enforce each and every such provision or other
provision in the event of subsequent breach.
8. Agreement Binding Upon Successors. This Agreement shall inure to the
benefit of, and shall be binding upon the Company, its successors and assigns,
and upon Xxxxxxxx, his heirs, executors, administrators and legal
representatives.
9. Construction/Entire Agreement. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to its principles or conflicts of laws.
9.1 This Agreement contains the entire Agreement of the parties with
respect to the subject matter hereof and supersedes all prior Agreements or
understandings among the parties with respect thereto.
10. Judgment on Default. Provided Xxxxxxxx or his immediate family members
or assigns have not violated any of the non-compete, non-disclosure and
non-solicitation provisions of this Agreement, in the event the Company
continues in default after the notice and expiration of the cure period of
Section 10.2, in any of its payment obligations to Xxxxxxxx pursuant to this
Agreement, any and all amounts to be paid to him for the remainder of the term
of this Agreement shall become immediately due and payable. Notwithstanding any
such payments Xxxxxxxx and his immediate family members and assigns shall remain
subject to and in compliance with the non-compete, non-disclosure and
non-solicitation provisions of this Agreement. Upon any breach thereof all
accelerated payments will be returned to Command immediately.
10.1 Subject to the terms of Section 10.2, upon such default, the Company
hereby confesses judgment for said amount, together with interest from the date
of the default at the prime rate as published in the Wall Street Journal, as
well as all costs, disbursements and attorneys fees incurred by Xxxxxxxx and
authorizes entry thereof against the Company in said amount in a County within
the State of New York wherein it has its principal place of business.
10.2 The Affidavit of Confession of Judgment executed simultaneously
herewith, a copy of which is annexed hereto, will be delivered to and held in
accordance with an escrow agreement between the parties and Xxxxxx, Xxxxxxxx &
Xxxxxxxxx, (the "Escrow Agent"). Upon receipt by the Escrow Agent of a written
notice from Xxxxxxxx of a default in any payment due to Xxxxxxxx hereunder, the
Escrow Agent shall notify the Company of its receipt of such notice. In the
event the Escrow Agent does not receive evidence, within seven (7) days
thereafter, that the unaccelerated installment payment due to Xxxxxxxx has been
paid by the Company (the Company having the right to cure any default without
acceleration within such period) the Escrow Agent shall release the Affidavit of
Confession of Judgment to Xxxxxxxx. The parties hereto agree to indemnify and
hold harmless the Escrow Agent from any liability in the performance of its
duties hereunder, gross negligence excepted.
11. Other Agreements. Xxxxxxxx agrees not to terminate the Liquidation
Assistance Agreements dated February 24, 1995, by and between him and Deltec
Development Corporation and The CIT Group/Credit Finance, Inc. Xxxxxxxx agrees
that his employment Agreement with the Company and any and all other contractual
obligations of the Company to him, except as described herein, are terminated.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
23rd day of July, 1996.
___________________________________
Xxxxxx Xxxxxxxx
COMMAND SECURITY CORPORATION
By:________________________________
Xxxxxxx X. Xxxxxxx
Chairman of the Board
