UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(A) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
Amendment No. 2
Command Security Corporation
----------------------------
(Name of Issuer)
Common Stock
------------------------------
(Title of Class of Securities)
20050L100
--------------
(CUSIP Number)
Mr. Bruce Galloway
c/o Galloway Capital Management, LLC
1325 Avenue of the Americas
New York, N.Y. 10019
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
May 21, 2004
------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f), or 13d-1(g), check the following
box: |_|.
SCHEDULE 13D
CUSIP No. 20050L100
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1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bruce Galloway
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
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3) SEC USE ONLY
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4) SOURCE OF FUNDS OO
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5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
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6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7) SOLE VOTING POWER
5,297,966 (including 1,232,535 shares underlying
convertible preferred stock and 2,448,092 shares
NUMBER OF underlying warrants)
SHARES ---------------------------------------------------------------
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 0
EACH ---------------------------------------------------------------
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 5,297,966 (including 1,232,535 shares underlying
WITH convertible preferred stock and 2,448,092 shares
underlying warrants)
---------------------------------------------------------------
10) SHARED DISPOSITIVE POWER
0
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11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,297,966 (including 1,232,535 shares underlying convertible preferred
stock and 2,448,092 shares underlying warrants)
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12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
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13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.1%
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14) TYPE OF REPORTING PERSON
IN
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SCHEDULE 13D
CUSIP No. 20050L100
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1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GCM Security Partners, LLC
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
--------------------------------------------------------------------------------
3) SEC USE ONLY
--------------------------------------------------------------------------------
4) SOURCE OF FUNDS WC
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5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7) SOLE VOTING POWER
NUMBER OF 1,617,339
SHARES ---------------------------------------------------------------
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 0
EACH ---------------------------------------------------------------
REPORTING 9) SOLE DISPOSITIVE POWER
PERSON 1,617,339
WITH ---------------------------------------------------------------
10) SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,297,966
--------------------------------------------------------------------------------
12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
--------------------------------------------------------------------------------
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
53.1%
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14) TYPE OF REPORTING PERSON
OO
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This Amendment No. 2 amends the Schedule 13D filed on April 28, 2004,
on behalf of Mr. Bruce Galloway, with respect to the common stock, par value
$0.0001 per share ("Common Stock"), of Command Security Corporation, a New York
corporation (the "Company").
ITEM 1. SECURITY AND ISSUER.
The class of equity securities to which this statement relates is the
Common Stock of the Company. The principal executive offices of the Company are
located at Route 55, Lexington Park, Lagrangeville, NY, 12540.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (c) This statement is being filed by Mr. Bruce Galloway, an
individual investor and GCM Security Partners, LLC ("GCM"), a newly-formed
Delaware limited liability company of which Mr. Galloway is a Managing Member
(collectively, the "Reporting Persons"), each of whose principal place of
business is c/o Galloway Capital Management, LLC, 1325 Avenue of the Americas,
26th Floor New York, NY 10019.
(d) - (e) None of the Reporting Persons has, during the last five
years, been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
state securities laws or finding any violation with respect to such laws.
(f) Mr. Galloway is a United States citizen and GCM is a limited
liability company formed under the laws of the State of Delaware.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
GCM paid an aggregate of $2,850,000 in immediately available funds for
the securities of the Company that it acquired from Reliance (as defined below)
pursuant to the transaction referred to in Item 4, below. Such funds were was
paid to Reliance in the transaction pursuant to which GCM acquired from Reliance
the securities of the Company on May 21, 2004. The purchase price for such
acquired shares was paid out of the working capital of GCM.
ITEM 4. PURPOSE OF TRANSACTION.
On May 21, 2004, GCM completed the purchase, previously announced by
the Reporting Persons, from Reliance Security Group plc, a company organized
under the laws of England and Wales ("Reliance"), of all securities of the
Company that were owned by Reliance, consisting of (i) 1,617,339 shares of the
Company's Common Stock, (ii) 12,325.35 shares of the Company's preferred stock
(which are convertible into 1,232,535 shares of the Company's Common Stock,
(iii) a warrant to acquire 150,000 shares of the Company's Common Stock at an
exercise price of $1.03125 per share and (iv) a warrant to acquire 2,298,092
shares of the Company's Common Stock at an exercise price of $1.25 per share.
The Reporting Persons intend to use such control to change the members
of the board of Directors and to make changes in the management of the Company,
including the CEO. The Reporting Persons intend to propose Barry Regenstein as
the Chief Operating Officer of the Company. In this connection, the Reporting
Persons have delivered a letter, in the form attached hereto as Exhibit B,
requesting the cooperation of the Board of Directors of the Company to call a
stockholders meeting to change the composition of the Board of Directors,
terminate the employment agreement of the Company's Chief Executive Officer and
several other matters.
The Reporting Persons hope that the current Board members act in
accordance with their fiduciary duties, and in the best interests of the
stockholders, by making the transition as smooth as possible for the new
management.
The Reporting Persons plan to explore raising additional equity capital
for the Company.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date hereof, GCM beneficially own an aggregate of
5,297,966 shares of Common Stock (including an aggregate of 2,448,092 shares
underlying the warrants described in Item 4 hereof), representing approximately
53.1% of the outstanding shares of Common Stock, giving effect to the shares
underlying all outstanding warrants and options to purchase Common Stock and all
outstanding shares of preferred stock of the Company that are convertible into
Common Stock by GCM, based upon the 6,287,343 shares of Common Stock reported by
the Company to be issued and outstanding as of February 13, 2004 in the
Company's latest Form 10-Q filed with the Securities and Exchange Commission.
This percentage does not give effect to any outstanding shares of preferred
stock, warrants or options that are convertible or exercisable, as the case may
be, by any holder of the Company's securities, other than those held by the
Reporting Persons.
Mr. Galloway may be deemed to have obtained beneficial ownership of
Common Stock pursuant to a Proxy, dated April 6, 2004, from Europa International
Inc. ("Europa") pursuant to which Mr. Galloway was appointed the proxy of
Europa, with full power and sole discretion to vote the shares of Common Stock
held by Europa for a period of three months. Mr. Galloway, for and on behalf of
accounts over which he has control, beneficially owns an aggregate of 384,500
shares of Common Stock, representing approximately 6.1% of the outstanding
shares of the Common Stock. Europa beneficially owns an aggregate of 212,000
shares of Common Stock, representing approximately 3.4% of the outstanding
shares of Common Stock.
(b) GCM has sole voting power over, and sole power to dispose of,
1,617,339 shares of Common Stock. Mr. Galloway has sole voting power over
384,500 shares of Common Stock and sole power to dispose of 172,500 shares of
Common Stock. Upon conversion of the preferred stock and exercise of the
warrants, GCM's would have sole voting power and sole power to dispose of
5,297,966.
(c) Except as described above, the Reporting Persons have not effected
any transaction in shares of Common Stock during the 60 days preceding the date
hereof.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
As stated above, Mr. Galloway was appointed the proxy of Europa, with
full power and sole discretion to vote the shares of Common Stock held by Europa
for a period of three months. No shares of the Common Stock were purchased from
Europa.
For a description of the agreement with Reliance and the warrants and
preferred stock, see Item 4.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A. Securities Purchase Agreement by and between GCM Securities
Partners, LLC and Reliance Security Group PLC, dated as of April 23, 2004.
Exhibit B. Letter, dated May 26, 2004, delivered by the Reporting
Persons to the Board of Directors of the Company.
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: May 26, 2004
-----------------------------
Bruce Galloway
GCM Security Partners, LLC
By:
-------------------------
Name:
Title:
EXHIBIT A
================================================================================
SECURITIES PURCHASE AGREEMENT
between
GCM SECURITY PARTNERS, LLC
and
RELIANCE SECURITY GROUP PLC
Dated as of April 23, 2004
================================================================================
TABLE OF CONTENTS
Page
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ARTICLE 1
Definitions..................................................................1
Section 1.1. Definitions..................................................1
ARTICLE 2
Purchase And Sale............................................................3
Section 2.1. Purchase and Sale of the Securities..........................3
Section 2.2. Purchase Price...............................................3
Section 2.3. Closing......................................................3
Section 2.4. Closing Deliveries by Seller.................................3
Section 2.5. Closing Deliveries by Purchaser..............................4
Section 2.6. Adjustment upon Change in Capitalization or Merger...........4
ARTICLE 3
Representations And Warranties Of Seller.....................................4
Section 3.1. Organization, Authority and Qualification of Seller..........4
Section 3.2. No Conflict..................................................5
Section 3.3. Valid Issuance; Ownership of the Securities..................5
Section 3.4. Absence of Litigation........................................6
Section 3.5. Brokers......................................................6
Section 3.6. Compliance with Laws.........................................6
ARTICLE 4
Representations And Warranties Of Purchaser..................................6
Section 4.1. Organization and Authority of Purchaser......................6
Section 4.2. No Conflict; Required Filings and Consents...................6
Section 4.3. Investment...................................................7
Section 4.4. Investment Experience........................................7
Section 4.5. Disclosure of Information....................................7
Section 4.6. Accredited Investor..........................................7
Section 4.7. Transfer Restrictions........................................7
Section 4.8. Legends......................................................8
Section 4.9. Brokers......................................................8
Section 4.10. Absence of Litigation.......................................8
ARTICLE 5
Additional Agreements........................................................8
Section 5.1. No Disposition or Encumbrance of the Securities..............8
Section 5.2. Company Board Representation.................................8
Section 5.3. Notification of Certain Matters..............................9
Section 5.4. Further Action; Reasonable Efforts...........................9
Section 5.5. Public Announcements.........................................9
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TABLE OF CONTENTS
(continued)
Page
----
ARTICLE 6
Conditions To Closing.......................................................10
Section 6.1. Conditions to Obligations of each Party.....................10
Section 6.2. Conditions to Obligations of Seller.........................10
Section 6.3. Conditions to Obligations of Purchaser......................10
ARTICLE 7
Termination And Waiver......................................................11
Section 7.1. Termination.................................................11
Section 7.2. Effect Of Termination.......................................12
Section 7.3. Waiver......................................................12
ARTICLE 8
Indemnification.............................................................12
Section 8.1. Indemnification by Seller...................................12
Section 8.2. Indemnification by Purchaser................................12
Section 8.3. Notice and Payment of Losses................................13
Section 8.4. Defense of Third-Party Claims...............................13
Section 8.5. Survival of Representations and Warranties..................14
Section 8.6. Limitation on Indemnification...............................14
Section 8.7. Characterization of Indemnity Payments......................14
Section 8.8. Exclusive Remedy............................................14
ARTICLE 9
General Provisions..........................................................14
Section 9.1. Expenses....................................................14
Section 9.2. Notices.....................................................14
Section 9.3. Headings....................................................15
Section 9.4. Severability................................................15
Section 9.5. Entire Agreement............................................16
Section 9.6. Assignment..................................................16
Section 9.7. Parties In Interest.........................................16
Section 9.8. Governing Law...............................................16
Section 9.9. Waiver Of Jury Trial........................................16
Section 9.10. Counterparts...............................................16
Section 9.11. Specific Performance.......................................17
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SECURITIES PURCHASE AGREEMENT, dated as of April 23, 2004 (this
"Agreement"), between GCM Security Partners, LLC, a Delaware limited liability
company ("Purchaser") and Reliance Security Group plc, a company organized under
the laws of England and Wales ("Seller"), as stockholder of Command Security
Corporation, a New York corporation (the "Company").
RECITALS:
The Seller desires to sell, and Purchaser desires to purchase and acquire,
all upon the terms and subject to the conditions set forth in this Agreement,
(a) 1,617,339 shares of the Company's common stock, $.0001 par value per share
(the "Common Stock"), (b) 12,325.35 shares of the Company's Series A convertible
preferred stock, $.0001 par value per share (the "Preferred Stock"), (c) a
warrant to acquire 150,000 shares of Common Stock at an exercise price of
$1.03125 per share and (d) a warrant to acquire 2,298,092 shares of Common Stock
at an exercise price of $1.25 per share (the warrants referred to in (c) and (d)
are collectively referred to herein as the "Warrants").
Accordingly, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, Purchaser and Seller hereby agree as
follows:
ARTICLE 1.
DEFINITIONS
Section 1.1. Definitions. For purposes of this Agreement:
"Affiliate" means, with respect to any person, any person or entity which
is controlling, controlled by, or under common control with, directly or
indirectly through any person or entity, the person referred to, and, if the
person referred to is a natural person, any member of such person's immediate
family. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with") as used with respect to any
person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" has the meaning set forth in the preamble hereto, as such
agreement may be amended and supplemented from time to time in accordance with
its terms.
"Business Day" means any day on which banks are not required or authorized
to close in New York, New York.
"Action" means any claim, suit, action, arbitration, inquiry,
investigation or other proceeding of any nature (whether criminal, civil,
legislative, administrative, regulatory, prosecutorial or otherwise) by or
before any arbitrator or Governmental Entity.
"Closing" has the meaning set forth in Section 2.3.
"Closing Date" has the meaning set forth in Section 2.3.
"Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Company" has the meaning set forth in the preamble to this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute.
"Governmental Entity" means any government or any state, department or
other political subdivision thereof, or any governmental body, agency, authority
(including, but not limited to, any central bank or taxing authority) or
instrumentality (including, but not limited to, any court, tribunal or grand
jury) exercising executive, prosecutorial, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Indemnifying Party" has the meaning set forth in Section 8.3.
"Injured Party" has the meaning set forth in Section 8.3.
"Law" means any United States federal, state, local or foreign law,
statute, regulation, ordinance, order, judgment, decree, rule or other
applicable governmental or judicial restriction or requirement, and any judicial
or administrative interpretation or determination with respect thereto.
"Lien" means any lien, mortgage, deed of trust, pledge, hypothecation,
security interest, encumbrance, claim or charge of any kind, or any conditional
sale agreement or other agreement to create any of the foregoing.
"Losses" has the meaning set forth in Section 8.1.
"Notice of Claim" has the meaning set forth in Section 8.3.
"Person" means an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association or entity or government, political subdivision, agency or
instrumentality of a government.
"Preferred Stock" has the meaning set forth in the recitals to this
Agreement.
"Purchase Price" has the meaning set forth in Section 2.2.
"Purchaser" has the meaning set forth in the preamble to this Agreement.
"Purchaser Party" has the meaning set forth in Section 8.1.
"Regulation D" means Regulation D promulgated under the Securities Act.
"SEC" means the United States Securities and Exchange Commission.
2
"Securities" has the meaning set forth in Section 2.1.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor statute.
"Seller Party" has the meaning set forth in Section 8.2.
"Seller's Bank Account" means a bank account to be designated by Seller in
a written notice to Purchaser at least five Business Days before the Closing.
"Shareholders' Agreement" means that certain Shareholders' Agreement, made
and entered into on September 12, 2000, by and among the Company, Vassell, and
Seller.
"Shares" has the meaning set forth in Section 2.1.
""Vassell" has the meaning set forth in Section 3.4.
"Warrants" has the meaning set forth in the recitals to this Agreement.
ARTICLE 2.
PURCHASE AND SALE
Section 2.1. Purchase and Sale of the Securities. Upon the terms and
subject to the conditions contained in this Agreement, at the Closing, Seller
agrees to sell to Purchaser, and Purchaser agrees to purchase from Seller (a)
1,617,339 shares of Common Stock, (b) 12,325.35 shares of Preferred Stock, which
are convertible into 1,232,535 shares of Common Stock (together with the shares
of the Common Stock, the "Shares") and (c) the Warrants (together with the
Shares, and as adjusted pursuant to Section 2.6, if applicable, the
"Securities").
Section 2.2. Purchase Price. The aggregate purchase price for the
Securities shall be two million eight hundred fifty thousand dollars
($2,850,000) in immediately available United States dollars (the "Purchase
Price").
Section 2.3. Closing. Subject to the terms and conditions of this
Agreement, the sale and purchase of the Securities contemplated by this
Agreement shall take place at a closing (the "Closing") to be held at the
offices of Kramer Levin Naftalis & Frankel LLP, 919 Third Avenue, New York, New
York 10022 as soon as practicable following satisfaction or waiver of all
conditions to the obligations of the parties set forth in Article 6, or at such
other place or at such other time or on such other date as Seller and Purchaser
may mutually agree in writing. The date on which the Closing takes place is
referred to herein as the "Closing Date."
Section 2.4. Closing Deliveries by Seller. At the Closing, Seller shall
deliver or cause to be delivered to Purchaser:
(a) stock certificates evidencing the Shares duly endorsed in blank, or
accompanied by stock powers duly executed in blank, in form reasonably
satisfactory to Purchaser and with all required stock transfer tax stamps
affixed;
3
(b) the Warrants duly assigned to Purchaser or its nominees;
(c) a receipt for the Purchase Price; and
(d) the officer's certificates required to be delivered pursuant to
Section 6.3(a) and Section 6.3(b).
Section 2.5. Closing Deliveries by Purchaser. At the Closing, Purchaser
shall deliver to Seller:
(a) the Purchase Price by wire transfer in immediately available funds to
Seller's Bank Account; and
(b) the officer's certificates required to be delivered pursuant to
Section 6.2(a) and Section 6.2(b).
Section 2.6. Adjustment upon Change in Capitalization or Merger. In the
event of any change in the Company's capital stock by reason of a stock
dividend, stock split, merger, consolidation, recapitalization, combination,
conversion, exchanges of shares, extraordinary or liquidating dividend or other
change in the corporate or capital structure of the Company which would have the
effect of diluting or changing Seller's or Purchaser's rights hereunder, the
number and kind of shares or other securities or property subject to this
Agreement shall be appropriately and equitably adjusted so that Purchaser shall
receive at the Closing the number of shares or other securities or property that
Purchaser would have received in respect of the Securities purchasable
immediately prior to such event.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement, Seller hereby
represents and warrants to Purchaser as of the date hereof and as of the Closing
Date as follows:
Section 3.1. Organization, Authority and Qualification of Seller. Seller
is a company duly organized, validly existing and in good standing under the
laws of England and Wales and has all necessary power and authority to enter
into this Agreement, to carry out its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Seller, the performance by Seller of its obligations hereunder and
the consummation by Seller of the transactions contemplated hereby have been
duly authorized by all requisite action on the part of Seller. This Agreement
has been duly executed and delivered by Seller, and (assuming due authorization,
execution and delivery by Purchaser) this Agreement constitutes a legal, valid
and binding obligation of Seller enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
4
Section 3.2. No Conflict. (a) The execution, delivery and performance of
this Agreement by Seller do not and will not, (i) contravene, conflict with or
violate the organizational documents of Seller, (ii) contravene, conflict with
or violate any Law applicable to Seller or by which any property or asset of
Seller is bound or affected or (iii) result in any breach of, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any
property or asset of Seller pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, except for any such conflicts, violations, breaches, defaults or
other occurrences that would not adversely affect or materially delay the
ability of any of Seller to carry out its obligations under, and to consummate
the transactions contemplated by, this Agreement.
(b) The execution, delivery and performance of this Agreement by Seller do
not and will not require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filing or notifications would not adversely affect or materially delay
the ability of Seller to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement; provided that the parties
understand that certain filings, including, but not limited to, a Schedule 13D
and a Statement of Changes in Beneficial Ownership on Form 4 must be made with
the SEC following the Closing by the Seller pursuant to the Exchange Act.
Section 3.3. Valid Issuance; Ownership of the Securities. (a) Seller is
the sole record and beneficial owner of, and has good and marketable title to,
the Securities. The Securities are owned by Seller free and clear of all Liens,
other than those that may exist under the Shareholders' Agreement, and at
Closing will not be subject to any Liens or pre-emptive or similar rights. Upon
the delivery and payment for the Securities as provided in this Agreement,
Seller will convey to Buyer good, valid and marketable title to the Securities
free and clear of any Liens other than those Liens created pursuant to the
Shareholders' Agreement.
(b) The Securities have been validly issued to Seller, and are fully paid
and nonassessable. The Securities are all the equity securities of the Company
owned, either of record or beneficially, by Seller or any Affiliate of Seller,
and neither Seller nor any Affiliate of Seller has any option or other right to
acquire any other securities of the Company. Except as provided in this
Agreement, Seller has not appointed or granted any proxy, which appointment or
grant is still effective, with respect to the Shares owned by Seller.
(c) Subject to the accuracy of the representation made by Purchaser in
Sections 4.4, 4.5, 4.6, 4.7 and 4.8 the Securities (assuming no change in
applicable law and no unlawful distribution of the Securities by Purchasers or
other parties) will be sold to Purchaser in compliance with applicable
exemptions from (i) the registration and prospectus delivery requirements of the
Securities Act and (ii) the registration and qualification requirements of all
applicable securities laws of the states of the United States.
5
Section 3.4. Absence of Litigation. Except for the action commenced by
William Vassell, the Company's Chief Executive Officer ("Vassell"), against
Seller and the Company in the United States District Court for the Southern
District of New York on April 7, 2004, as of the date of this Agreement, there
is no Action pending or, to the knowledge of Seller, threatened against Seller,
or any property or asset of Seller, before any Governmental Entity or any
tribunal that seeks to delay or prevent the consummation of the transactions
contemplated by this Agreement.
Section 3.5. Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller, other than Mallon Capital LLC. The Seller shall pay all
fees and expenses due to Mallon Capital LLC.
Section 3.6. Compliance with Laws. Seller has complied with all legal
requirements, including, without limitation, those promulgated by the SEC, and
has made all required filings with any Governmental Entity, concerning its
ownership of the Securities.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement, Purchaser hereby
represents and warrants to Seller as of the date hereof and as of the Closing
Date as follows:
Section 4.1. Organization and Authority of Purchaser. Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Purchaser, the performance by Purchaser of its
obligations hereunder and the consummation by Purchaser of the transactions
contemplated hereby have been duly authorized by all requisite action on the
part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser, and (assuming due authorization, execution and delivery by Seller)
this Agreement constitutes a legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Section 4.2. No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by Purchaser do not and
will not (i) contravene, conflict with or violate the certificate of formation
or the limited liability company operating agreement of Purchaser, (ii)
contravene, conflict with or violate any Law applicable to Purchaser or by which
any property or asset of Purchaser is bound or affected or (iii) result in any
breach of, or constitute a default (or event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any property or asset of Purchaser pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation, except for any such conflicts,
violations, breaches, defaults or other occurrences that would not adversely
6
affect or materially delay the ability of Purchaser to carry out its obligations
under, and to consummate the transactions contemplated by, this Agreement.
(b) The execution, delivery and performance of this Agreement by Purchaser
do not and will not, require any consent, approval, authorization or permit of,
or filing with, or notification to, any Governmental Entity, except where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not adversely affect or materially
delay the ability of Purchaser to carry out its obligations under, and to
consummate the transactions contemplated by, this Agreement; provided that the
parties understand that certain filings, including, but not limited to, a
Schedule 13D and an Initial Statement of Beneficial Ownership of Securities on
Form 3 must be made with the SEC following the Closing by the Purchaser pursuant
to the Exchange Act.
Section 4.3. Investment. Purchaser is acquiring the Securities for its own
account as principal, not as a nominee or agent, for investment purposes only,
and not with a view to, or for, resale or distribution thereof in whole or in
part. Purchaser does not have any contract, undertaking, agreement or
arrangement with any Person or entity to sell, transfer or grant participations
to such Person or entity or to any third Person or entity with respect to any of
the Securities.
Section 4.4. Investment Experience. The Purchaser acknowledges that it can
bear the economic risk and complete loss of its investment in the Securities and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.
Section 4.5. Disclosure of Information. The Purchaser has had an
opportunity to receive all information related to the Company requested by it
and to ask questions of and receive answers from the Company regarding the
Company, its business and the terms and conditions of the Securities. The
Purchaser acknowledges receipt of copies of all SEC filings of the Company as
requested.
Section 4.6. Accredited Investor. Purchaser is an "accredited investor,"
as that term is defined in Rule 501 of Regulation D.
Section 4.7. Transfer Restrictions. Purchaser shall not sell or otherwise
transfer any of the Securities without registration under the Securities Act or
an exemption therefrom, and Purchaser fully understands and agrees that
Purchaser must bear the economic risk of its purchase of the Securities because,
among other reasons, the Securities have not been registered under the
Securities Act or under the securities laws of any state and, therefore, cannot
be resold, pledged, assigned or otherwise disposed of unless they are
subsequently registered under the Securities Act and under the applicable
securities laws of such states, or unless exemptions from such registration
requirements are available. In particular, Purchaser is aware that the
Securities are "restricted securities," as such term is defined in Rule 144
promulgated under the Securities Act. Such Purchaser further understands that
sale or transfer of the Securities are further restricted by state securities
laws and the provisions of this Agreement.
7
Section 4.8. Legends. Purchaser agrees that, so long as required by law,
certificates evidencing any of the Securities and any securities issued in
exchange for or in respect thereof will bear a legend substantially to the
following effect:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR WITH ANY STATE SECURITIES COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED
OF BY THE HOLDER IN THE ABSENCE OF A REGISTRATION STATEMENT WHICH IS EFFECTIVE
UNDER THE SECURITIES ACT AND APPLICABLE STATE LAWS AND RULES, OR, UNLESS,
IMMEDIATELY PRIOR TO THE TIME SET FOR TRANSFER, THE HOLDER PROVIDES A REASONABLY
ACCEPTABLE LEGAL OPINION TO THE COMPANY THAT SUCH TRANSFER MAY BE EFFECTED
WITHOUT VIOLATION OF THE SECURITIES ACT AND OTHER APPLICABLE STATE LAWS AND
RULES."; and
(b) any other legends required by applicable state or federal securities
laws.
Section 4.9. Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser.
Section 4.10. Absence of Litigation. As of the date of this Agreement,
there is no Action pending or, to the knowledge of Purchaser, threatened against
Purchaser or any property or asset of Purchaser before any Governmental Entity
or any tribunal that seeks to materially delay or prevent the consummation of
the transactions contemplated by this Agreement.
ARTICLE 5.
ADDITIONAL AGREEMENTS
Section 5.1. No Disposition or Encumbrance of the Securities. Seller
agrees that except as contemplated by this Agreement or the Shareholders'
Agreement, Seller shall not (a) sell, transfer, tender, pledge, assign,
contribute to the capital of any entity, hypothecate, give or otherwise dispose
of, grant a proxy or power of attorney with respect to, deposit into any voting
trust, enter into any voting agreement with respect to, or create or permit to
exist any Liens of any nature whatsoever with respect to, any of the Securities
(or agree or consent to, or offer to do, any of the foregoing), (b) take any
action that would make any representation or warranty of Seller herein untrue or
incorrect in any material respect or have the effect of preventing or disabling
Seller from performing Seller's obligations hereunder or (c) knowingly, directly
or indirectly, initiate, solicit or encourage any Person to take actions that
could reasonably be expected to lead to the occurrence of any of the foregoing.
Section 5.2. Company Board Representation. Promptly upon the Closing,
Seller shall cause the directors nominated by Seller or who are otherwise
affiliated with Seller after the Closing to resign from the Board of Directors
of the Company and, if applicable, the boards of directors of the Company's
subsidiaries.
8
Section 5.3. Notification of Certain Matters. Seller shall give prompt
notice to Purchaser, and Purchaser shall give prompt notice to Seller, of (a)
the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which reasonably could be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect and (b) any failure of Seller or Purchaser,
as the case may be, to comply with or satisfy any covenant or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.3 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
Section 5.4. Further Action; Reasonable Efforts. (a) Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use its
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
using its reasonable efforts to obtain all permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities as are
necessary for the consummation of the transactions contemplated by this
Agreement; provided that no party will be required by this Section 5.4 to take
any action that would materially delay or prevent the consummation of the
transactions contemplated by this Agreement by Seller or Purchaser, including,
without limitation, entering into any consent decree, hold separate orders or
other arrangements. In case, at any time after the Closing Date, any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use
their reasonable efforts to take all such action.
(b) Each of the parties hereto agrees to cooperate and use its
commercially reasonable efforts to vigorously contest and resist any Action,
including administrative or judicial Action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and that restricts,
prevents or prohibits consummation of the transactions contemplated by this
Agreement, including, without limitation, by vigorously pursuing all available
avenues of administrative and judicial appeal.
(c) Subject to the consent of the Company's Board of Directors, Purchaser
shall use its commercially reasonable efforts to obtain the agreement of CIT
Group Inc. referred to in Section 6.3(e).
Section 5.5. Public Announcements. The parties hereto agree that no public
release or announcement concerning the transactions contemplated by this
Agreement shall be issued by any party without the prior consent (which consent
shall not be unreasonably withheld) of Purchaser, in the case of a release or
announcement by Seller or any of its Affiliates (other than the Company), or
Seller, in the case of a release or announcement by Purchaser or any of its
Affiliates, except as, and to the extent that, such release or announcement may
be required by Law or the rules or regulations of any quotation system on which
the Common Stock or any exchange on which any securities of Seller is listed or
quoted for trading, in which case the party required to make the release or
announcement shall use its reasonable best efforts to allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance; provided, however, that filings under the Exchange Act and a press
9
release by the Seller in accordance with the London Stock Exchange requirements
shall not required to be submitted to the other party for comment.
ARTICLE 6.
CONDITIONS TO CLOSING
Section 6.1. Conditions to Obligations of each Party. The obligations of
Seller and Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, at or prior to the Closing, of
the following conditions:
(a) No Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any Law (whether temporary, preliminary or permanent) which
is then in effect and has the effect of making the acquisition of shares by
Purchaser or any Affiliate of Purchaser illegal or otherwise restricting,
prohibiting or imposing material conditions upon consummation of the
transactions contemplated by this Agreement.
(b) Consummation of the transactions contemplated by this Agreement shall
not conflict with or violate any provision of Law.
(c) The litigation commenced by Vassell and referred to in Section 3.4
shall have been terminated or dismissed, or a final opinion in such Action shall
have been rendered to the effect that the Securities may be sold by Seller to
Purchaser pursuant to this Agreement free of all claims by Vassell and
restrictions under Section 2 of the Shareholders' Agreement.
Section 6.2. Conditions to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
additional conditions:
(a) The representations and warranties of Purchaser contained in Article 4
in this Agreement (i) that are qualified by materiality shall be true and
correct as of the Closing with the same force and effect as if made as of the
Closing, other than such representations and warranties as are made as of
another date, which shall be true and correct as of such date, and (ii) that are
not qualified by materiality shall be true and correct in all material respects
as of the Closing with the same force and effect as if made as of the Closing,
other than such representations and warranties as are made as of another date,
which shall be true and correct in all material respects as of such date, and
Seller shall have received a certificate to such effect signed by a duly
authorized officer of Purchaser.
(b) The covenants and agreements contained in this Agreement to be
complied with or performed by Purchaser on or before the Closing shall have been
complied with or performed by Purchaser in all material respects, and Seller
shall have received a certificate to such effect signed by a duly authorized
officer of Purchaser.
Section 6.3. Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
additional conditions:
10
(a) The representations and warranties of Seller contained in Article 3 of
this Agreement (i) that are qualified by materiality shall be true and correct
as of the Closing with the same force and effect as if made as of the Closing,
other than such representations and warranties as are made as of another date,
which shall be true and correct as of such date, and (ii) that are not qualified
by materiality shall be true and correct in all material respects as of the
Closing with the same force and effect as if made as of the Closing, other than
such representations and warranties as are made as of another date, which shall
be true and correct in all material respects as of such date, and Purchaser
shall have received a certificate to such effect signed by a duly authorized
officer of Seller.
(b) The covenants and agreements contained in this Agreement to be
complied with or performed by Seller on or before the Closing shall have been
complied with or performed by Seller in all material respects, and Purchaser
shall have received a certificate to such effect signed by a duly authorized
officer of Seller.
(c) All members of the Company's Board of Directors that have been
nominated or appointed by Seller shall have submitted their resignations as of
the Closing Date.
(d) Vassell shall either have resigned or shall have been terminated as an
officer and employee of the Company and all of its subsidiaries, effective on or
prior to the Closing.
(e) CIT Group Inc. shall have agreed in writing that no default or event
of default under its credit facility with the Company exists as of the Closing
or shall occur or have occurred as a result of the consummation of the
transactions contemplated hereby.
ARTICLE 7.
TERMINATION AND WAIVER
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of both Seller and Purchaser, which consent
shall have been duly authorized by the Board of Directors or Board of Managers
of Seller and Purchaser, as the case may be; or
(b) by either Seller or Purchaser if:
(i) the Closing shall not have occurred by May 14, 2004; provided,
however, that the right to terminate this Agreement under this Agreement
shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date, or
(ii) any Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any injunction, order, decree or ruling
(whether temporary, preliminary or permanent) which has become final and
nonappealable and has the effect of making the transactions contemplated
11
by this Agreement illegal or otherwise preventing or prohibiting
consummation of the transactions contemplated by this Agreement; or
(iii) the other party materially breached any representation or
warranty (without giving effect to any materiality qualifications or
thresholds contained in such representation or warranty) or covenant
contained in this Agreement and such breach has continued without cure for
a period of ten days after such other party has received written notice of
such breach.
Section 7.2. Effect Of Termination. In the event of termination of this
Agreement as provided herein, this Agreement shall forthwith become void and
there shall be no liability on the part of either party hereto except (a) as set
forth in Section 9.2 and (b) that nothing herein shall relieve any party from
liability for any breach of this Agreement.
Section 7.3. Waiver. At any time prior to the Closing, either of the
parties hereto may (a) extend the time for the performance of any obligation or
other act of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any agreement
of the other party or any condition to its own obligations contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
ARTICLE 8
INDEMNIFICATION
Section 8.1. Indemnification by Seller. Seller shall indemnify and hold
harmless Purchaser and its directors, managers, officers, members, partners,
employees and agents (each, a "Purchaser Party") against and in respect of any
and all losses, liabilities, obligations, claims, settlements, court costs and
reasonable attorneys' fees and costs of investigation (collectively, "Losses")
that any such Purchaser Party may suffer or incur as a result of or relating to:
(a) any breach or violation of the covenants made in this Agreement by
Seller; or
(b) any misrepresentation, breach or inaccuracy of any of the
representations and warranties made by Seller in this Agreement.
Section 8.2. Indemnification by Purchaser. Purchaser shall indemnify and
hold harmless Seller and its directors, managers, officers, members, partners,
employees and agents (each, a "Seller Party") against and in respect of any and
all Losses that any such Seller Party may suffer or incur as a result of or
relating to:
(a) any breach or violation of the covenants made in this Agreement by
Purchaser; or
(b) any misrepresentation, breach or inaccuracy of any of the
representations and warranties made by Purchaser in this Agreement.
12
Section 8.3. Notice and Payment of Losses. Upon obtaining knowledge of any
Loss, the party entitled to indemnification (the "Injured Party") shall promptly
notify the party liable for such indemnification (the "Indemnifying Party") in
writing of such Losses which the Injured Party has determined have given or
could give rise to a claim under Section 8.1 or 8.2 (such written notice being
hereinafter referred to as a "Notice of Claim"); provided, however, that failure
of an Injured Party timely to give a Notice of Claim to the Indemnifying Party
shall not release the Indemnifying Party from its indemnity obligations set
forth in this Article 8 except to the extent that such failure adversely affects
the ability of the Indemnifying Party to defend such claim or increases the
amount of indemnification which the Indemnifying Party is obligated to pay
hereunder, in which event the amount of indemnification which the Injured Party
shall be entitled to receive shall be reduced to an amount which the Injured
Party would have been entitled to receive had such Notice of Claim been timely
given. The Injured Party shall use commercially reasonable efforts to mitigate
any continuing Losses (including without limitation by using its commercially
reasonable efforts to obtain any applicable insurance proceeds). If the Injured
Party settles or compromises any third party claims prior to giving a Notice of
Claim to the Indemnifying Party, the Indemnifying Party shall be released from
its indemnity obligation. A Notice of Claim shall specify in reasonable detail,
to the extent known by the Injured Party, the nature and, to the extent
reasonably calculable, estimated amount of any such claim giving rise to a right
of indemnification. The Indemnifying Party shall satisfy its obligations under
Section 8.1 or 8.2, as the case may be, within sixty (60) days of its receipt of
a Notice of Claim; provided, however, that for so long as the Indemnifying Party
is disputing its liability or defending a third-party claim in good faith
pursuant to Section 8.4, its obligations to indemnify the Injured Party with
respect thereto shall be suspended until a final unappealable judgment of a
court of competent jurisdiction is given in relation to such claim. The
Indemnifying Party shall have thirty (30) business days (or such shorter period
of time that the Injured Party may be required to respond to any suit or
governmental action) after receipt of a Notice of Claim to notify the Injured
Party (a) whether or not it disputes its liability to the Injured Party with
respect to such Notice of Claim and (b) whether it elects to defend a
third-party claim pursuant to Section 8.4.
Section 8.4. Defense of Third-Party Claims. With respect to any action or
any claim set forth in a Notice of Claim relating to a third-party claim, the
Indemnifying Party may defend, in good faith and at its expense, any such claim
or demand, and the Injured Party, at its expense, shall have the right, but not
the obligation, to participate (but not control) at its expense in the defense
of any such third-party claim; provided that if the Injured Party reasonably
determines that the counsel selected by the Indemnifying Party to defend such
claim or demand is subject to an actual or potential material conflict of
interest which precludes such counsel from adequately representing the interests
of both the Indemnified Party and the Injured Party in connection with such
matter, the Injured Party shall be entitled to retain its own counsel (the
reasonable fees and expenses of which shall be paid as incurred by the
Indemnifying Party) to defend the interests of the Injured Party with respect to
such matter. So long as the Indemnifying Party is defending any such third-party
claim, the Injured Party shall not settle or compromise such third-party claim
without the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. If such claim is settled by the Injured Party without the
Indemnifying Party's reasonable consent, the Injured Party shall be deemed to
have waived all rights hereunder for money damages arising out of such claim.
The Indemnifying Party may settle or compromise such third-party claim without
13
the consent of the Injured Party, unless there has not been a complete release
of the Injured Party, in which case the Indemnifying Party may not settle or
compromise such third-party claim without the consent of the Injured Party,
which consent shall not be unreasonably withheld. The Injured Party shall make
available to the Indemnifying Party or its representatives all records and other
materials reasonably required for use in contesting any third-party claim. The
Injured Party shall cooperate fully with the Indemnifying Party in the defense
of all such claims. If the Indemnifying Party elects not to defend any such
third-party claims, the Injured Party shall have no obligation to do so, but may
settle or compromise any such third-party claim at the risk and expense of the
Indemnifying Party. The Indemnifying Party will not, however, be responsible for
any Losses if and to the extent that they arise from action taken or omitted to
be taken by the Injured Party in bad faith, fraudulently or as a result of a
breach of this Agreement by the Injured Party.
Section 8.5. Survival of Representations and Warranties. All of the
representations and warranties made by any Party in Articles 3 or 4, as the case
may be, shall survive the Closing.
Section 8.6. Limitation on Indemnification. The indemnification
obligations of Seller and Purchaser shall be limited by the amount of the
Purchase Price, and neither Seller nor Purchaser shall have any obligation to
make indemnification payments to the extent that the aggregate amount of all
such payments made by such party exceeds the Purchase Price.
Section 8.7. Characterization of Indemnity Payments. Any indemnification
payments made pursuant to this Agreement shall be considered, to the extent
permissible under Law, as adjustments to the Purchase Price for all purposes.
Section 8.8. Exclusive Remedy. In the absence of fraud or the intentional
breach of this Agreement, the indemnification provisions set forth in this
Article 8 shall provide the exclusive remedy for breaches of any covenant,
agreement, representation or warranty set forth in this Agreement or any other
agreement ancillary hereto executed pursuant to this Agreement.
ARTICLE 9
GENERAL PROVISIONS
Section 9.1. Expenses. Except as otherwise specified in this Agreement,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred.
Section 9.2. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
facsimile, or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses or facsimile
numbers (or at such other address or facsimile number for a party as shall be
specified in a notice given in accordance with this Section 9.2):
14
(a) if to Seller, to
Reliance Security Group plc
Boundry House
Cricketfield Road
Uxbridge, Middlesex UB81QG
United Kingdom
Facsimile: 011-44-1895-205-085
Attention: Neil French
Group Finance Director
with copy to:
KMZ Rosenman
575 Madison Avenue
New York, New York 10022-2585
United States
Facsimile: (212) 940-8776
Attention: Wayne Wald, Esq.
(b) if to Purchaser:
GCM Security Partners, LLC
c/o Galloway Capital Management, LLC
1325 Avenue of the Americas, 26th Floor
New York, New York 10019 United States Facsimile:
Attention: Bruce Galloway
with a copy to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
United States
Facsimile: (212) 715-7519
Attention: Andrew Hulsh, Esq.
Section 9.3. Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 9.4. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
15
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the fullest extent possible.
Section 9.5. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties or any of them, with respect to the subject matter hereof.
Section 9.6. Assignment. Neither party may assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
party; provided, however, that Purchaser may assign all or any of its rights and
obligations under this Agreement to one or more of its Affiliates.
Section 9.7. Parties In Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, along with its successors and
assigns and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
Section 9.8. Governing Law. This Agreement shall be governed by and
construed in accordance with, the laws of the State of New York. The parties
hereto hereby (a) submit to the exclusive jurisdiction of any state or federal
court sitting in the Borough of Manhattan of The City of New York in respect of
the interpretation and enforcement of the provisions of this Agreement brought
by any party hereto, and (b) irrevocably waive, and agree not to assert by way
of motion, defense, or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the Action is improper, or
that this Agreement may not be enforced in or by any of the above-named courts.
Section 9.9. Waiver Of Jury Trial. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement. Each of the parties hereto
(a) certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce that foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
Section 9.9.
Section 9.10. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
16
Section 9.11. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
[SIGNATURE PAGE FOLLOWS]
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
GCM SECURITY PARTNERS, LLC
By:
-------------------------------
Name:
Title:
RELIANCE SECURITY GROUP PLC
By:
-------------------------------
Name:
Title:
18
EXHIBIT B
GCM SECURITY PARTNERS, LLC
c/o GALLOWAY CAPITAL MANAGEMENT, LLC
1325 AVENUE OF THE AMERICAS, 26TH FLOOR
NEW YORK, NEW YORK 10019
May 26, 2004
BY FACSIMILE AND
FEDERAL EXPRESS
Board of Directors
Command Security Corporation
Route 55 Lexington Park
Lagrangeville, NY 12540
Gentlemen,
As you know, as a result of our recent transaction with the Reliance Group, we
have become the controlling stockholder of Command. We believe that a number of
changes are necessary in order for Command to prosper and for all of the
stockholders, including us, to benefit. We intend to use our control position to
implement such changes, including changes of management at both the director and
officer level and exploring necessary financing options. We would ask the
cooperation of the Board during this transition period. We believe that it is in
the best interests of the stockholders for the Board to take action to allow us
to get a head start on tackling Command's problems. We also believe that it is
the Board's fiduciary duty to do so.
That being said, we request that the Board take action, as soon as possible, to
implement the following actions:
1. We believe the Company's working capital situation is critical and it is a
situation we intend to address. To do so, we ask that the Board grant us
permission to speak with CIT regarding the Company's Financing Agreement so we
can accurately assess Command's needs, short-term and long-term;
2. We ask that the Board set a record date, in accordance with its by-laws, of
Wednesday, July 28th, for its Annual Meeting of stockholders and that you
nominate the following individuals to serve as the members of the Board of
Directors:
Bruce Galloway (as Chairman of the Board), Robert S. Ellin, David R. Goddard,
Peter Kikis, Thomas Kikis, Carl Painter and Martin D. Wade, III. We will provide
you with background information with respect to each of these individuals within
the next several days;
3. We ask that the Board immediately give Mr. Vassell notice that his contract
will not be renewed and will terminate at the end of the current term (which we
believe to be in November 2004;
4. We ask that Barry I. Regenstein be appointed as Chief Operating Officer of
the Company. Information concerning Mr. Regenstein's background is as follows:
Mr. Regenstein has over 25 years of experience with 21 years of such experience
in the aviation services industry. Mr. Regenstein was formerly Senior Vice
President and Chief Financial Officer of GlobeGround North America (previously
Hudson General Corporation), and previously served as GlobeGround's Controller
and as a Vice President. Prior to joining Hudson General Corporation in 1982, he
had been with Coopers & Lybrand in Washington, D.C. since 1978. Mr. Regenstein
is a Certified Public Accountant and received his Bachelor of Science in
Accounting from the University of Maryland and an M.S. in Taxation from Long
Island University;
5. We ask that the Board direct Mr. Vassell to cause additional licensees to be
added to licenses or to obtain licenses to operate guard services in all states
in which Mr. Vassell is currently the only named licensee or take such other
steps as are necessary to safeguard this asset of the Company in the event Mr.
Vassell is no longer affiliated with Command;
6. Although this would always have been within the Board's purview and its
responsibility, we ask that the Board reaffirm that no material commitments or
agreements be made without authority of the full Board. Any such commitments or
agreements made without the full Board's authority should be deemed "ultra
vires" and any individual purporting to enter into such a commitment or
agreement without Board authority should be personally responsible for holding
the Company harmless against such agreement or commitment;
7. Terminate the Company's current outside counsel and appoint Kramer, Levin,
Naftalis & Frankel as the new outside counsel for Command;
8. Dissolve the Special Committee of the Board; and
9. Confirm that Graeme Halder will be available to assist the GCM Group during
the transition in ownership/control for a period of approximately six (6) weeks.
Please contact us if you have any questions regarding the above items. We look
forward to your cooperation and help in moving Command forward.
Sincerely,
Bruce Galloway
Managing Member