Execution
Copy
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT
the “ Agreement
”), entered into as of September 29, 2008 (the “
Effective Date ”), between COMMAND SECURITY
CORPORATION , a New York corporation (the “
Company ”), and EDWARD S. FLEURY (the
“ Executive ”). The Company and the Executive
are sometimes referred to in this Agreement individually as a
“ Party ” and collectively as the “
Parties .”
RECITAL
The Company desires to provide for the service
and employment of the Executive with the Company and the Executive
desires to perform services for, and be employed by, the Company,
in accordance with the terms and subject to the conditions provided
herein. All references herein to Sections shall be deemed to refer
to the Sections of this Agreement, unless otherwise
specified.
Accordingly, in consideration of the premises
and the respective covenants and agreements of the Parties herein
contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the Parties hereby agree as
follows:
1.
Employment
.
The Company hereby agrees to employ
the Executive, and the Executive hereby agrees to serve the
Company, upon the terms and subject to the conditions set forth
herein.
2.
Term
.
The term of employment of the
Executive by the Company hereunder (the “ Term
”) will commence as of the Effective Date and will end on the
third anniversary of the Effective Date, unless further extended or
sooner terminated as hereinafter provided. Notwithstanding the
foregoing, either the Company or the Executive shall have the right
to terminate this Agreement for any reason (or for no reason) and
end the Term at any time during Year 1 (as defined below in this
Section 2 ) by giving the other Party written notice thereof
at least 30 days’ prior to the first anniversary of the
Effective Date, subject to the satisfaction of any payment or other
obligations of the Party providing such notice as set forth in this
Agreement. Commencing on the third anniversary of the Effective
Date, and on the first day of each one-year anniversary thereafter,
the Term shall automatically be extended for one additional year on
terms no less favorable than in effect prior to such extension
unless either Party shall have given notice to the other Party (a
“ Non-Renewal Notice ”) at least 60 days prior
to such anniversary that it or he, as the case may be, does not
wish to extend the Term. References herein to the Term shall
be deemed to refer to both the initial term of this Agreement and
any extended term hereof. Notwithstanding the foregoing, the Term
shall end on the Date of Termination (as defined in Section
6(c) hereof). If, pursuant to this Section 2 , either
Party properly provides the Non-Renewal Notice of its or his
decision to not extend the Term, the expiration of the Term and the
termination of this Agreement as a result thereof shall be deemed
for all intents and purposes to be a termination of this Agreement
pursuant to Section 6(d) . As used in this Agreement,
“ Year 1 ” means the initial 12-month period
commencing on the Effective Date and ending on September 28, 2009;
“ Year 2 ” means the 12-month period commencing
on September 29, 2009 and ending on September 28, 2010; and “
Year 3 ” means the 12-month period commencing on
September 29, 2010 and ending on September 28, 2011.
3.
Nature of
Performance .
(a) Position and Duties . During the Term, the Executive shall serve as
Chief Executive Officer of the Company and shall have such
responsibilities, duties and authority as are customary to such
position including, without limitation, overall supervision of the
day-to-day operations of the Company and its divisions. The
Executive shall report directly to, and be subject to the direction
and authority of, the Board of Directors of the Company (the
“ Board ”). As soon as reasonably practicable
following the Effective Date, the Board shall, to the extent
permitted by applicable law take all action necessary to exercise
its rights under Article III Sections 2, 3 and 4 of the
Company’s Bylaws to (i) increase the number of directors
constituting the entire Board from six (6) to seven (7); (ii)
appoint Executive to fill the vacancy created by such increase; and
(iii) assign Executive to the class of directors with a term
expiring at the Company’s next annual meeting of the
Company’s shareholders. In addition, the Board shall duly
consider recommending to the Company’s shareholders that the
Executive be appointed to the Board at the next annual meeting of
the Company’s shareholders and including the Executive on the
slate of Board Nominees in its related proxy materials to be filed
and mailed in connection with such annual meeting, subject to the
recommendation thereof by the Nominating and Corporate Governance
Committee of the Board and to the determination by the Board that
no matters, circumstances or other factors exist that would cause
the Board to reasonably conclude that the election of the Executive
as a member of the Board would not be in the best interests of the
Company and its shareholders.
(b) Indemnification . To the fullest extent permitted by law,
including, without limitation, the New York Business Corporation
Law and the Company's Certificate of Incorporation and By-laws, the
Company shall promptly indemnify the Executive for all amounts
(including, without limitation, judgments, fines, settlement
payments, losses, damages, costs and expenses (including reasonable
attorneys' fees)) incurred or paid by the Executive in connection
with any action, proceeding, suit or investigation (a “
Proceeding ”) arising out of or relating to the
performance by the Executive of services for, or acting as a
fiduciary of any employee benefit plans, programs or arrangements
of the Company or as a director, officer or employee of, the
Company or any subsidiary thereof. The Company shall advance to the
Executive all reasonable costs and expenses incurred by him in
connection with a Proceeding within 15 days after receipt by the
Company of a written request from the Executive for such advance.
The Company also agrees to maintain a directors’ and
officers' liability insurance policy covering the Executive to the
maximum extent the Company provides such coverage for any of its
other executive officers. Following the Term, the Company shall
continue to indemnify and maintain such insurance for the benefit
of the Executive with respect to such services performed during the
Term, to the same extent as the Company indemnifies or maintains
such insurance for any of its officers, directors, employees or
fiduciaries, as applicable. Notwithstanding any other provision of
this Agreement to the contrary, no termination of Executives
employment for any reason shall serve to deprive Executive of the
benefits of this Section 3(b) .
4.
Place of
Performance . In connection with the Executive's employment by
the Company, the Executive shall be based at the current principal
executive offices of the Company in Lagrangeville, New York, or at
any other location as designated by the Board of Directors of the
Company that is within 60 miles of either ( i ) such
executive offices or ( ii ) the Borough of Manhattan, in New
York, New York, except for travel as reasonably required in
connection with the performance of the Executive’s duties
hereunder.
5.
Compensation and Related
Matters .
(a) Annual
Compensation .
(i) Base Salary . For services rendered by the Executive to the
Company pursuant to this Agreement, the Company shall pay to the
Executive an annual base salary (the Executive’s annual base
salary as in effect from time to time hereunder is hereinafter
referred to as the “ Base Salary ”) of $290,000,
such salary to be paid in conformity with the Company's policies
relating to salaried employees and executive officers generally.
From time to time (but not less than annually), the Board or the
compensation committee of the Board (the “ Committee
”) will review the Executive’s performance and will
consider increasing the Base Salary based on such performance, the
performance and financial condition of the Company and such other
factors as the Board or the Committee, as the case may be, shall
deem appropriate. Notwithstanding the foregoing, any decision to
increase the Base Salary, and the amount thereof, if any, shall be
in the sole and absolute discretion of the Board or the Committee,
as the case may be; provided that any annual increase
in Base Salary for the Executive awarded by the Board or the
Committee shall not be less, on a percentage basis, than
the higher of the increases, if any, for the corresponding year
awarded by the Board or the Committee to either the Company's
President or Chief Operating Officer (either, a “ Key
Officer ”). In addition, the Executive shall be eligible
for an increase whether or not an increase is awarded to the Key
Officers. Once increased, the Base Salary shall not be reduced or
diminished during the Term.
(ii) Annual Bonus . The Executive shall be eligible to participate
in any annual incentive plan of the Company in effect from time to
time, and shall be entitled to receive such amounts (each, a
“ Bonus ”) as may be authorized, declared and
paid by the Company pursuant to the terms of such plan. In the
event the Company does not have a bonus or incentive plan in place
at the time that a bonus is to be paid, the Board will make a good
faith evaluation of the Executive’s contribution to the
Company and will duly reward the Executive for the Company’s
growth, profitability and other successes under his leadership, as
determined by the Committee.
(b) Stock Option . On the Effective Date, the Company shall grant
the Executive a stock option (the “ Option ”) to
purchase an aggregate of five hundred thousand (500,000) shares (as
adjusted for any recapitalization, stock split, stock dividend or
similar event affecting the number of the Company’s
outstanding shares of Common Stock (as defined below) generally,
the “ Option Shares ”) of the Company’s
common stock, par value $0.001 per share (“ Common
Stock ”), at a price equal to the average closing price
of such Common Stock on the American Stock Exchange for the 20
trading days immediately preceding (but not including) the
Effective Date, subject to the vesting criteria and other
limitations described in this Section 5(b) and in the Stock
Option Agreement attached hereto as Exhibit A .
(i) Vesting Generally . Except as provided below in paragraphs
(ii) or (iii) of this Section 5(b) , the
Option will vest, and may be exercised by the Executive during the
time that he shall be employed by the Company under this Agreement,
with respect to 1/36 th of the Option Shares on the 1
st day of each calendar month during the Term, beginning
October 1, 2008.
(ii) Vesting Ends Upon Termination for any
Reason—No Change in Control . Except as provided in Section 5(b)(iii)
below, if the Executive's employment is terminated or the Executive
resigns for any reason (or for no reason) including, without
limitation ( A ) by reason of the Executive's death or
Disability; ( B ) by the Company with or without Cause; or (
C ) voluntarily by the Executive with or without Good
Reason, the Option:
(1)
may be exercised only with respect
to that portion of the Option that has vested prior to such
termination or resignation (subject to Section 6(d)(C)(1) or
(2) ); and
(2)
shall terminate, be null and void
and may no longer be exercised with respect to the portion of the
Option that has not vested as of and upon the effective date of
such termination or resignation.
(iii) Vesting upon Termination following Change in
Control . Following the
closing of a transaction that constitutes a “Change in
Control” of the Company (as defined in Section 6(f) ),
so long as the Executive continues to be employed by the Company
(or any successor company) under this Agreement, the Option shall
continue to vest in accordance with its terms on a monthly basis as
provided in paragraph (i) of this Section 5(b) ;
provided :
(A) If, following a Change in Control, ( 1 )
the Executive’s employment is terminated for Cause or by
reason of his death or Disability; ( 2 ) the Executive
voluntarily resigns (other than for Good Reason); or ( 3 )
this Agreement terminates as a result of the delivery by either
Party to the other Party of a Non-Renewal Notice, the
Option:
(x)
may be exercised only with respect
to that portion of the Option that has vested prior to such
termination or resignation (subject to Section 6(d)(C)(1) or
(2) ); and
(y)
shall terminate, be null and void
and may no longer be exercised with respect to the portion of the
Option that has not vested as of and upon the effective date of
such termination or resignation.
(B) If, following a Change in Control, ( 1 )
the Executive’s employment is terminated without Cause; or (
2 ) the Executive resigns for Good Reason, the Option shall
accelerate and may be exercised as to a portion, or all, of the
Option Shares (subject to Section 6(d)(C)(1) or (2) ), as
follows:
(x) if such termination or resignation occurs
during Year 1, the Option shall accelerate and may be exercised
with respect to 50% of the Option Shares, and the portion of the
Option that has not vested prior to such termination or resignation
(after giving effect to such acceleration) shall terminate, be null
and void and may no longer be exercised as of and upon the
effective date of such termination or resignation;
(y) if such termination or resignation occurs
during Year 2, the Option shall accelerate and may be exercised
with respect to 75% of the Option Shares, and the portion of the
Option that has not vested prior to such termination or resignation
(after giving effect to such acceleration) shall terminate, be null
and void and may no longer be exercised as of and upon the
effective date of such termination or resignation; and
(z) if such termination or resignation occurs
during Year 3, the Option shall accelerate and may be exercised
with respect to 100% of the Option Shares.
(c) Automobile and Medical Allowance
. During the Term, the Executive
shall be entitled to receive an annual, non-accountable expense
allowance and payment of $25,000 in respect of ( i ) all
health insurance (covering hospitalization, prescription drugs and
doctor’s visits) for him and his family and ( ii
) an automobile of his choosing. Such expense allowance shall be in
lieu of any health insurance (including, without limitation, any
coverage for any hospitalization, prescription drugs and
doctor’s visits) from the Company in respect of ( A )
health benefits for the Executive or any member of his family or (
B ) an automobile during the Term or at any time or for any
period following the termination of this Agreement for any reason,
whether or not otherwise required under any law, regulation,
Company policy or otherwise, the rights to all of which the
Executive hereby knowingly and voluntarily waives in all respects.
Such $25,000 annual payment shall be made in a lump sum on the
Effective Date and on each anniversary of the Effective Date during
the Term.
(d) Other Benefits . During the Term, the Executive shall be
entitled to participate in all other employee benefit plans,
programs and arrangements of the Company, as now or hereinafter in
effect, that are applicable to the Company's employees generally or
to any of its executive officers, as the case may be, subject to
and on a basis consistent with the terms, conditions and overall
administration of such plans, programs and arrangements, and
subject to Section 5(c) hereof. During the Term, the Company
shall provide to the Executive all of the fringe benefits and
perquisites that are available to the Company's employees generally
or to any of its executive officers, as the case may be, subject to
and on a basis consistent with the terms, conditions and overall
administration of such benefits and perquisites, except as
otherwise provided in this Agreement.
(e) Vacations and Other Leaves
. During the Term, the Executive
shall be entitled to paid vacation of four weeks annually and other
paid absence for holidays in which banks in New York are closed, in
accordance with policies applicable generally to executive officers
of the Company; provided that the Executive shall use his
best efforts to ensure that the timing and duration of vacations do
not materially interfere with the normal functioning of the
Company’s business activities or the performance of the
Executive’s duties hereunder. The Executive shall be entitled
to cash compensation (based on his prevailing Base Salary) for up
to two weeks of any vacation time unused by Executive in each
12-month period within the Term.
(f) Expenses . During the Term, the Executive shall be
entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in performing services
hereunder, including all expenses of travel and accommodations
while away from home on business or at the request of and in the
service of the Company; provided that such expenses are
incurred and accounted for in accordance with the policies and
procedures in existence on the Effective Date or hereafter
established by the Company from time to time.
(g) Other Services . The Company shall furnish the Executive with
office space, secretarial assistance and such other facilities and
services as shall be suitable to the Executive's position and
adequate for the performance of his duties hereunder.
(a) Termination Events . The Executive's employment hereunder may be
terminated during Year 1 as described in Section 2 and
otherwise without breach of this Agreement in accordance with only
under the following circumstances:
(i) Death . The Executive's employment hereunder shall
terminate upon his death.
(ii) Cause . The Company may terminate the Executive's
employment hereunder for "Cause." For purposes of this Agreement,
“ Cause ” shall mean the
Executive’s:
(A) failure to timely cure any material violation
of any of the terms and conditions of this Agreement or any written
agreement the Executive may from time to time have with the Company
following written notice thereof (as specified below);
(B) failure to timely cure any material failure to
perform his assigned duties and responsibilities for any reason
other than as a result of his Disability (as defined in Section
6(a)(iii) ) following written notice thereof (as specified
below);
(C) conviction of or plea of guilty or no contest
to a ( 1 ) criminal misdemeanor that either ( x )
involves dishonesty or theft or ( y ) results in the
Executive receiving a sentence of imprisonment or confinement of
six months or more or ( 2 ) felony;
(D) conviction of or plea of guilty or no contest
to a crime involving moral turpitude; or
(E) failure to timely cure any unsatisfactory
performance of his duties or responsibilities hereunder as a
consequence of alcohol or drug abuse by the Executive following
written notice thereof (as specified below).
(iii) A termination for Cause pursuant to clauses (
A ), ( B ), or ( E ) of this Section
6(a)(ii) shall not take effect unless the following provisions
of this paragraph are complied with. The Executive shall be given
written notice by the Board of its intention to terminate him for
Cause. Such notice shall ( A ) state in detail the
particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for Cause
is based and ( B ) be given within three months of the Board
learning of such act or acts or failure or failures to act. The
Executive shall have 30 days after the date that such written
notice has been received by the Executive to cure such conduct.
Upon receipt of such written notice, the Executive shall be
entitled to a hearing before the Board. Such hearing shall be held
within 15 days of such notice to the Executive, provided he
requests such hearing within ten days of the written notice from
the Board of the intention to terminate him for Cause. If, within
five days following such hearing, the Board provides the Executive
with written notice confirming that, in its judgment, grounds exist
for termination for Cause on the basis of the original notice, the
employment of the Executive shall terminate for Cause;
provided that the Executive shall not thereafter be
precluded from challenging the Company’s determination to
terminate the Executive for Cause. Nothing herein shall be deemed
to allow the Date of Termination (as hereinafter defined) for Cause
pursuant to clauses ( A ), ( B ), or ( E ) of
this Section 6(a)(ii) to occur prior to the expiration
of the 30 day cure period provided for above.
(iv) Disability . The Company may terminate the Executive's
employment hereunder for “Disability.” For purposes of
this Agreement, “ Disability ” shall mean the
Executive’s material inability, by reason of illness or other
physical or mental disability, to perform the principal duties
required by the position held by the Executive at the inception of
such illness or disability, for any consecutive 180-day period. A
determination of Disability shall be subject to the certification
of a qualified medical doctor agreed to by the Company and the
Executive or, if the Executive is unable to designate a doctor as a
consequence of his condition, by the Executive’s legal
representative. If the Company and the Executive cannot agree on
the designation of a doctor, then each Party shall nominate a
qualified medical doctor and the two doctors shall select a third
doctor, and the third doctor shall make the determination as to
Disability.
(iv) Termination by the Executive
. The Executive may terminate his
employment hereunder ( A ) for Good Reason or ( B )
by voluntarily resigning without Good Reason. For the purpose of
this Agreement, “ Good Reason ” shall mean (
A ) any material diminution in the Executive’s title,
position, responsibilities, authority or duties described in
Section 3(a) hereof; ( B ) any breach of the
provisions of Section 4 hereof with respect to the place of
performance of the Executive’s services hereunder; or, (
C ) any breach by the Company of the provisions of
Section 3(b) or Section 5 hereof with respect to
compensation and related matters. A termination by the Executive
for Good Reason pursuant to clauses ( A ), ( B ) or (
C ) of this Section 6(a)(iv) shall not take effect
unless the following provisions of this paragraph are complied
with. The Company shall be given written notice by the Executive of
his intention to terminate this Agreement for Good Reason. Such
notice shall ( 1 ) state in detail the particular act or
acts or failure or failures to act that constitute the grounds on
which the proposed termination for Good Reason is based and (
2 ) be given within 30 days of the Executive learning of
such act or acts or failure or failures to act. The Company shall
have 30 days after the date that such written notice has been
received by the Company to cure such conduct. Upon receipt of such
written notice, the Board shall be entitled to request a meeting
with the Executive to discuss the Executive’s request to
terminate this Agreement for Good Reason. Such hearing shall be
held within 15 days of such notice to the Executive, provided the
Board requests such hearing within ten days of the written notice
from the Executive of his intention to terminate this Agreement for
Good Reason. If, within five days following such hearing, the
Executive provides the Board with written notice confirming that,
in his judgment, grounds exist for termination for Good Reason on
the basis of the original notice, the employment of the Executive
shall terminate for Good Reason; provided that the Company
shall not thereafter be precluded from challenging the
Executive’s determination to terminate this Agreement for
Good Reason.
(b) Notice of Termination . Any termination of the Executive's employment
by the Company or by the Executive (other than termination under
Section 6(a)(i) ) shall be communicated by written Notice of
Termination to the other Party in accordance with Section 11
hereof. For purposes of this Agreement, a “ Notice of
Termination ” shall mean a written notice that shall
indicate the specific termination provision in this Agreement
relied upon and, in the case of a termination by the Company for
Cause or by the Executive for Good Reason, shall set forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated.
(c) Date of Termination . “ Date of Termination ”
shall mean ( i ) if the Executive's employment is terminated
by his death, the date of his death; ( ii ) if the
applicable Term expires because either Party has provided the other
Party a Non-Renewal Notice in accordance with Section 2
hereof, the expiration of the prevailing Term; or ( iii ) if
the Executive's employment is terminated or the Executive resigns
for any other reason (or for no reason), the date specified in the
Notice of Termination, subject to compliance with the terms and
conditions of this Agreement.
(d) Termination Upon Death; Disability; for Cause;
Voluntary Termination (other than for Good Reason); Failure to
Extend Term . If the
Executive's employment is terminated or this Agreement terminates (
i ) by reason of the Executive's death or Disability; (
ii ) by the Company for Cause; ( iii ) voluntarily by
the Executive (other than for Good Reason); or ( iv ) by
either Party as a result of the delivery by such Party to the other
Party of a Non-Renewal Notice:
(A) the Company shall, as soon as practicable,
but no later than 30 days following the Date of Termination, pay
the Executive (or the Executive's beneficiary, as t
