EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made as of August 1, 1996 by and between COMMAND
SECURITY CORPORATION, a New York corporation (the "Company"), and H. XXXXXXX
XXXXXXXXX, a resident of Morristown, New Jersey ("Xxxxxxxxx").
WITNESSETH THAT:
In consideration of the mutual covenants hereinafter contained, the
parties hereto agree as follows:
1. Employment Term.
1.1 Subject to earlier termination of this Agreement as hereinafter
provided, the Company hereby employs Xxxxxxxxx, and Xxxxxxxxx hereby agrees to
serve the Company, as hereinafter set forth, for the period commencing on the
date hereof and terminating on September 31, 1998 (such period being herein
referred to as the "Term").
1.2 Commencing nine (9) months prior to the expiration date of the
Term, the Company and Xxxxxxxxx shall enter into discussions of the terms and
conditions to govern any renewal hereof.
2. Office; Duties.
2.1 Xxxxxxxxx is appointed and shall serve the Company during the
Term as Executive Vice President and Chief Financial Officer ("CFO") of the
Company and shall have the duties set forth in Appendix A annexed hereto. If
Xxxxxxxxx'x duties are changed in a way that materially varies from the duties
customarily understood to be commensurate with those offices (or either of them)
Xxxxxxxxx may at his election by notice in writing to the Company treat such
variation as a termination without cause, Xxxxxxxxx'x employment hereunder shall
terminate thirty (30) days after the giving of such notice if in the first
eighteen (18) months of the Term, or six (6) months after the giving of such
notice if after the first eighteen (18) months of the Term, and the Company
shall pay to and provide Xxxxxxxxx the amounts and benefits provided described
in Section 2.4 hereof. Notwithstanding the foregoing, this section is not
intended to extend the Term of this Agreement.
2.2 Xxxxxxxxx'x primary office shall be located in New York City,
with his time apportioned between the Company's New York City office and the
Lagrangeville, New York, office as appropriate. He shall not be required to
relocate his residence from New Jersey.
2.3 This agreement may be terminated by the Company for any reason
whatsoever, at any time prior to expiration of the Term hereof. In the event the
Agreement is to be terminated for Cause, as hereinafter defined, or without
Cause during the first eighteen (18) months of the Term, the Company must
provide at least thirty (30) days prior notice of termination; in all other
cases, the Company must provide at least six (6) months prior written notice of
termination. For the purposes of this Agreement, "Cause" shall mean conviction
of a crime involving moral turpitude; dishonesty, willful misconduct or breach
of fiduciary duty, provided that the dishonesty, willful misconduct or breach of
fiduciary duty, as the case may be, involves personal profit to Xxxxxxxxx of at
least $25,000 at the expense of the Company; or a final cease and desist order
issued by the Securities and Exchange Commission or state securities regulator,
that prohibits Xxxxxxxxx from performing his principal duties under this
Agreement (provided that such a cease and desist order shall not be deemed
"Cause" if the actions or omissions underlying the order were taken or omitted
by Xxxxxxxxx with the approval of the Company's board of directors.)
2.4 In the event this Agreement is terminated by the Company without
Cause during the Term, the Company shall pay to Xxxxxxxxx as severance pay (i)
an amount determined by multiplying his "Base Monthly Compensation" by the
number of months which remain in the the term including the month of termination
(the "Unexpired Balance of the Term") - for example, if Xxxxxxxxx were
terminated
effective on October, 15, 1997, the amount would be calculated as follows: Base
monthly Compensation x 12 without deduction (other than withholding and other
typical payroll deductions); (ii) plus, at the Company's election, either the
continuation of any then existing coverage, on the same terms in effect at
termination, of Xxxxxxxxx'x health, life, disability and medical insurance for
the Unexpired Balance of the Term or the prompt payment to Xxxxxxxxx of an
after-tax amount sufficient to continue same; and (iii) the Bonus provided in
Section 3.2. The payments provided in (i) above shall be made in twelve
successive equal monthly installments commencing the month following the month
in which the termination becomes effective. "Base Monthly Compensation" shall
mean Base Compensation in effect at the time of the event triggering payment
divided by twelve.
2.5 It is distinctly understood and agreed that, Xxxxxxxxx'x death
or disability after this Agreement has been terminated without cause shall have
no effect on the Company's obligations under Sections 2.4 (i) and (iii).
3. Compensation,
3.1 In consideration of the services rendered by Xxxxxxxxx to the
Company in any capacity under this Agreement during Term and subject to the
provisions of Sections 5 and 6 below, the Company shall pay Xxxxxxxxx "Base
Compensation" of One Hundred Thirty Thousand Dollars ($130,000.00 per annum)
payable in accordance with the Company's payroll practices for executives in
effect from time to time.
3.2 The Company shall annually pay a. bonus to Xxxxxxxxx in respect
of each full fiscal year of the Company (commencing with respect to the fiscal
year of the Company ending March 31, 1997) equal to five (5%) percent of the
"pre-tax operating profit of the Company" (as hereinafter defined) for the
fiscal year then ended in excess of $500,000 but less than $1,000,000 and 1% of
the "pre-tax operating profit of the Company" in excess of $1,000,000. Payment
of the bonus shall be made within thirty (30) days of the date on which the
Company receives, from the outside auditors it retains ("Accountants"), the
determination of the "pre-tax operating profit of the Company" for the year in
question calculated by the Accountants. A copy of the Accountants, calculation
of the bonus shall accompany payment of the bonus. In the event this Agreement
expires or is terminated for any reason (other than Cause), the Bonus for the
fiscal year ending after such expiration or termination shall be prorated in
accordance with the number of months elapsed from the beginning of the fiscal
year that ended to the effective date of expiration or termination, as the case
may be, but including for proration purposes the month in which such effective
date occurs.
3.3 As used in Section 3.2, the term "pre-tax operating profit of
the Company" shall mean, with respect to any fiscal year, the pre-tax profit of
the Company for such year, calculated in accordance with generally accepted
accounting principles consistently applied, but. with the following adjustments:
a. Exclusion of any capital gains or losses.
b. Exclusion of the within bonus computed pursuant to Section 3.2 as an
expense in computing the "pre-tax operating profit of the Company".
c. Exclusion of Federal income taxes and state and local income and
franchise taxes.
The foregoing list of adjustments is intended to be representative,
but not necessarily exhaustive,, in determining the "pre-tax operating profit of
the Company", and the parties hereto expressly authorize the Accountants to
delete or add adjustments to the list depending on the financial affairs of the
Company and the Accountants' understanding of the objectives of Section 3.2 and
this Section 3.3, which objectives include the total exclusion of any
extraordinary items not resulting from the ordinary course of the Company's
business from the determination of "pre-tax operating profit of the Company".
3.4 Xxxxxxxxx shall have the right to draw from the Company advances
against his bonus for each fiscal year during the Term in an amount not to
exceed for such fiscal year, the bonus payable based upon fifty (50%) percent of
the estimated "pre-tax operating profit of the Company" for such applicable
fiscal year (the "Advance Draw"). The Board of Directors of the Company shall
compute the
Advance Draw, for each applicable fiscal year within 60 days of the beginning of
such fiscal year and any such computation shall be final and binding upon the
parties hereto. The advances of Xxxxxxxxx shall be made on the last day of each
quarter during the applicable fiscal year in an amount equal to one-quarter of
the Advance Draw. Such advances will be deemed to be taken against Xxxxxxxxx'x
right at the close of each applicable fiscal year to the bonus as set forth in
Section 3.2 and consequently any amount payable to him as a bonus will be
reduced by the amount advanced through the end of the applicable fiscal year. To
the extent that advances exceed the amount payable to Xxxxxxxxx as a bonus for
such fiscal year as set forth in Section 3.2, he shall pay the difference to the
Company by check within thirty (30) days of the date on which he receives from
the Company, the determination of the "pre-tax operating profit of the Company"
for the year in question, calculated by the Accountants. This repayment
obligation will survive the expiration or termination of this Agreement for any
reason and the repayment amount may be set-off against any amounts due
Xxxxxxxxx.
3.5 The determination by the Accountants of the definition and the
calculation of "pre-tax operating profit of the Company" shall, with the
exception of any adjustment not specifically enumerated in Section 3.3(a), (b)
or (c), be final, binding and conclusive upon the parties hereto and shall
except as aforesaid not be subject to the arbitration under Section 10 or to a
court proceeding.
3.6 Notwithstanding anything herein to the contrary, all payments
under this Agreement shall be subject to applicable withholding and other taxes.
3.7 Xxxxxxxxx, if elected or appointed a director shall receive no
additional compensation therefor and shall resign at the request of the Board of
Directors upon termination of his employment.
4. Benefits.
4.1 During the Term, in addition to receiving the payments described
in Section 3 hereof, Xxxxxxxxx, to the extent he is eligible (as any other
eligible executive of the Company), shall have the right to participate in any
and all group life, hospital, medical and disability insurance plans, and in any
retirement, pension or death benefit plans (hereinafter such plans are
collectively referred to as the "Company Benefit Plans"), now or hereafter
maintained by the Company during the Term and generally offered by the Company
to its executive employees. Notwithstanding anything herein to the contrary,
Xxxxxxxxx agrees that he shall not be entitled to participate in, and, he shall
be specifically excluded from the 1990 Stock Option Plan of the Company.
5. Disability,
5.1 In the event that during the term hereof Xxxxxxxxx shall suffer
a "Disability", as hereinafter defined, the Company's obligations under this
Agreement. shall be unaffected; provided however that if such Disability
continues for a period of three consecutive months, (the "Three Month Period")
the Company's obligations under this Agreement shall terminate except that
Xxxxxxxxx shall be entitled to (i) Base Compensation for a period of nine months
thereafter (the "Nine Month Period") payable monthly during the Nine Month
Period, and (ii) the Bonus under Section 3.2 prorated to the end of such Three
Month Period; provided further that the amounts provided in clause (i) above
shall not be paid, in whole or in part, to Xxxxxxxxx for (x) any periods in
respect of which Xxxxxxxxx shall be receiving disability benefits under either
an "Individual Disability Policy" (as hereinafter defined) or a "Group Policy"
(as hereinafter defined), it being the intention of the parties that any such
Policy shall be the primary source of such benefits after the passage of any
"waiting period" thereunder; or (y) any periods after the expiration of the Term
of this Agreement; provided further that if the Company has made payments to
Xxxxxxxxx pursuant to clause (i), above, during and in respect of periods within
the Nine Month Period ("Company Paid Periods") and Xxxxxxxxx shall during the
Nine Month Period or thereafter receive disability payments under any such
Policy in respect of any Company Paid Periods, Xxxxxxxxx shall return to the
Company the net amounts received by him (such return being a reduction in
compensation) from the Company in respect of the Company Paid Periods. If
Xxxxxxxxx should die during the
Three Month Period the provisions of Section 6 shall govern instead of Section 5
from and after the date of death.
5.2 Xxxxxxxxx agrees to make himself available for examination from
time to time on prior reasonable notice to a licensed physician appointed by the
Company at the Company's expense; in the event that there is a dispute as to
whether Xxxxxxxxx has suffered a Disability, and the Company appointed physician
and Xxxxxxxxx'x physician fail to agree, the dispute shall be conclusively
determined by a third physician appointed mutually by the Company physician and
Xxxxxxxxx'x physician. The fees of such third physician shall be borne in equal
shares by Xxxxxxxxx and the Company.
5.3 Disability shall mean a condition caused by physical injury or
physical or mental illness or disease that renders Xxxxxxxxx unable to perform
his duties hereunder.
5.4 Xxxxxxxxx may purchase an individual disability insurance policy
(an "Individual Disability Policy") and an amount equal to 1/12th of the annual
premium therefor (the "Policy Premium") shall be paid to Xxxxxxxxx as
compensation monthly in the same manner as Base Compensation as provided in
Section 3.1; provided however that if the Company shall make such insurance
available to Xxxxxxxxx on a group basis (a "Group Policy") providing
substantially similar coverage, the Company's obligation in respect of the
Policy Premium shall cease from and after the date such coverage becomes
available; should the Company thereafter cease making such a Group Policy
available, the Company's obligation in respect of the Policy Premium shall be
renewed.
6. Death. If Xxxxxxxxx shall die at any time during the Term, this
Agreement shall terminate as of the close of the month in which the death
occurs. The Company shall pay to Xxxxxxxxx'x legal representatives an amount
equal to his Base Compensation through the end of the month in which death
occurs. In addition, the Company shall pay to his legal representative (i) the
Bonus payable pursuant to Section 3.2, prorated to the close of the month in
which death occurs, and (ii) his Base Monthly Compensation multiplied by six
(6), payable in a lump sum within sixty (6 0) days of the close of the month in
which death occurs. In no event will Xxxxxxxxx also receive a death benefit
payment if death occurs during the Nine Month Period defined in Section 5.1.
7. Vacation Xxxxxxxxx shall annually be entitled to a period of paid
vacation consisting of three (3) weeks.
8. Expenses
8.1 In addition to the payments described in Section 3 hereof, the
Company shall pay for or reimburse Xxxxxxxxx for the reasonable expenses
incurred by him which are directly related to the Company's business, including
expenses for entertainment, travel and similar items, upon presentation by
Xxxxxxxxx of an itemized account of such expenditures. Air travel expenses
directly related to the business of the Company shall be deemed "reasonable"
within the meaning of this Section 8.1 only if the travel is via business or a
lesser class. The Company's obligations hereunder shall survive the expiration
or earlier termination of this Agreement with respect to any expense properly
incurred by Xxxxxxxxx prior to the expiration or sooner termination of this
Agreement, as the case may be.
8.2 The Company will provide Xxxxxxxxx with a 1995 Buick Park Avenue
or comparable automobile and pay for all operating and parking expenses during
the Term.
9. Non-Disclosure and Non-Solicitation
9.1 Xxxxxxxxx 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: in pursuit of his duties hereunder; 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 Xxxxxxxxx, in good faith, to be authorized to
receive same. All documents and copies thereof, containing any of the
same, in the possession of Xxxxxxxxx as the result of his employment with the
Company or any of its subsidiaries shall be and remain the property of the
Company, and shall be surrendered to the Company upon termination of Xxxxxxxxx'x
employment.
9.2.1 Definitions. For the purposes of this paragraph 9.2, the
following definitions shall apply:
9.2.1.1 "Company" -- Command Security Corporation and each of its
subsidiaries.
9.2.1.2 "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 termination of Xxxxxxxxx up to and including the date of
termination, a guard service agreement (pursuant to which the Company provides
such person or entity with security guard services) or a service contract,
(pursuant to which the Company provides back office services to such person or
entity).
9.2.1.3 " 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 termination of Xxxxxxxxx up to and including the date of
termination;
9.2.1.4 "Major Clients" -- Park City Estates, Foreign Airlines
Operators Committee, British Airways, Wakefern Food Corporation and any Client
generating revenue of $500,000 per year, or more, with respect to guard service
agreements or $1.0 million per year with respect to service contract clients, as
of sixty days prior to the date of termination of Xxxxxxxxx up to and including
the date of termination;
9.2.1.5 "Solicit" -- Any personal communication by Xxxxxxxxx
(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.
9.2.2 During the Term and for the first twelve months following the
date of termination of Xxxxxxxxx, Xxxxxxxxx shall not Solicit any Client.
9.2. 3 During the Term and for a period of eighteen (18) months
following the date of termination of Xxxxxxxxx, Xxxxxxxxx shall not Solicit any
Major Client.
9.2.4 During the Term and for the first twelve months following the
date of termination of Xxxxxxxxx, Xxxxxxxxx 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
months following the date of Xxxxxxxxx'x termination.
9.2.5 During the Term and for the first twenty-four (24) months
following the termination of Xxxxxxxxx, Xxxxxxxxx shall not directly or
indirectly employ any Key Employee without the prior written consent of the
Company to be given or withheld in its sole discretion. It is expressly,
understood that the employment of a Key Employee by an employer of Xxxxxxxxx
will not, in and of itself, constitute a breach of this Agreement.
10. Arbitration.
10.1 Subject to the provisions of the next paragraph of this Section
10, any controversy or claim (other than as provided in Section 3.5, a
controversy or claim arising out of or related to the determination by the
Accountants of the definition or calculation of "pre-tax operating profit")
arising out of or relating to this Agreement, or to performance hereunder, or to
the breach hereof, shall be settled by arbitration in the State, City and County
of New York in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"), and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof.
10.2 Notwithstanding the provisions of the initial sentence of this
Section 10, in the event the Company seeks to enforce the specific performance
of Section 9 by Xxxxxxxxx, or to enjoin Xxxxxxxxx from violating any term,
covenant or provision set forth in Section 9, whether or not the Company couples
to its demand for specific performance or for injunctive. relief a demand for
damages, the Company at its election may institute and prosecute proceedings in
any court of competent jurisdiction. In the event the court in which the Company
has instituted proceedings, as permitted by the immediately preceding sentence,
refuses or fails to grant to the Company equitable relief and the court has not
yet passed on the issue of whether the Company should be awarded damages, then
the Company shall, without prejudicing its right to renew in court a demand for
specific performance or injunctive relief
for the same or another alleged breach by Xxxxxxxxx of the provisions of Section
9, have the right to remove the issue of damages from the court and refer such
issue to arbitration.
11. Notices.
11.1 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, 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, with a copy to Xxxxx X.
Xxxxxxxxx, Esq., Xxxxxx, Xxxxxxxx & Xxxxxxxxx, P.C., 00 Xxxx Xxxxxx, Xxxxxx, XX
00000.
(b) If to Xxxxxxxxx, then at his home address at 00 Xxxxxxx Xxxx,
Xxxxxxxxxx, XX 00000, with a copy to Xxxx X. Xxxxx, Xx., Xxxxxxxxxx and Xxxxx,
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000.
11.2 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.
11.3 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 mailing shall be deemed the date of
such notice or consent.
12. Amendment; No Waiver. This Agreement may not be discharged,
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 a subsequent breach.
13. Agreement--Binding Upon Successors, This Agreement shall inure
to the benefit of, and shall be binding upon the Company, its successors and
assigns; it shall be binding upon Xxxxxxxxx and inure to the benefit of his
heirs, executors, administrators and legal representatives. The performance of
Xxxxxxxxx hereunder may not be delegated.
14. Legal Fees. In any action, proceeding or arbitration pursuant
hereto or in connection herewith, the prevailing party, if any, shall be
determined by the trier of fact based upon a balancing of the outcome of all the
issues raised therein. The other party shall immediately reimburse to the
prevailing party, if any, all costs and expenses, including reasonable counsel
fees and disbursements, incurred in connection with such action, proceeding or
arbitration.
15. No Set-Off. Any payment to be made by the Company to or for the
benefit of Xxxxxxxxx hereunder shall, with the exception of normal payroll
deductions and Xxxxxxxxx'x pay back obligations under Sections 3.4 and 5.1, if
any, be made without deduction or set-off of any kind.
16. Construction. 16.1 This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to its principles of conflicts of laws.
16.2 Whenever this Agreement requires a proration of a bonus for
part of a fiscal year, the "pre-tax operating profit of the Company" to be used
in making such prorata calculation shall be equal to the "pre-tax operating
profit of the Company" for the fiscal year in which falls the part thereof to be
prorated multiplied by a fraction the numerator of which is the number of days
in such fiscal year being prorated and the denominator of which is 365 days. If
a necessary date for an event falls other than at the end of a month, the
proration shall take effect as of the last day of the month in which the event
occurs.
16.3 Nothing in this Agreement shall be construed as limiting such
rights to which Xxxxxxxxx may be entitled as a matter of law, such as COBRA.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
H. Xxxxxxx Xxxxxxxxx
/s/
COMMAND SECURITY CORPORATION
By: /s/
Xxxxxxx X. Xxxxxxx
Chairman of the Board
APPENDIX A
The duties of Executive Vice President and of Chief Financial Officer are
those that are determined by the Board of Directors of the Company so long as
such duties are commensurate with each of those offices.
Notwithstanding the foregoing or any provisions in the By-laws, Xxxxxxxxx
will not have the powers and functions of the President absent a specific
resolution of the Company's Board of Directors authorizing such powers and
functions.
