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EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of the 28th day of October, 1999,
by and between INTERNATIONAL TOTAL SERVICES, INC., an Ohio corporation (the
"Corporation"), and XXXX X. XXXXXXXX, an Ohio resident ("Xxxxxxxx").
RECITALS
WHEREAS, the Corporation desires to employ Xxxxxxxx and Xxxxxxxx
desires to enter into the employ of the Corporation, all on the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, Xxxxxxxx has requested, and the Corporation has agreed, that
Xxxxxxxx be indemnified for all liabilities arising out of or relating to his
services to the Corporation whether as a consultant, employee or officer of the
Corporation or otherwise;
NOW, THEREFORE, in consideration of the recitals and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Corporation and Xxxxxxxx hereby agree as follows:
1. Employment, Contract Period. During the period specified in this
Section 1, the Corporation shall employ Xxxxxxxx, and Xxxxxxxx shall serve the
Corporation, on the terms and subject to the conditions set forth herein. The
term of Xxxxxxxx'x employment hereunder shall commence as of the date hereof
(the "Effective Date"), and, subject to prior termination as provided in Section
8 hereof, shall continue indefinitely on a month-to-month basis. The term of
Xxxxxxxx'x employment hereunder shall be automatically renewed on the first of
each following month for an additional term of one month, unless the Corporation
shall have given at least ninety (90) days advance notice of its intention not
to renew the term of Xxxxxxxx'x employment hereunder. The term of Xxxxxxxx'x
employment hereunder is sometimes hereinafter referred to as the "Contract
Period".
2. Position; Duties; Responsibilities.
(a) At all times during the Contract Period, Xxxxxxxx shall
have the titles of "President" and "Interim Chief Executive Officer"
and shall have and perform duties and responsibilities as may be
assigned by the Board of Directors of the Corporation, which duties and
responsibilities will be those customarily performed by a chief
executive officer of a publicly-held company of comparable size in the
same or related industries.
(b) Xxxxxxxx shall devote such professional time, energy and
talent to the business of and to the furtherance of the purposes and
objectives of the Corporation as he deems appropriate to carry out his
duties hereunder.
(c) Xxxxxxxx shall report directly to the Board of Directors
of the Corporation.
3. Compensation. The Corporation shall pay to Xxxxxxxx a base salary at
the rate specified in Paragraph (a), below, and a bonus, if any, as provided in
Paragraph (b), below.
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(a) The rate of Xxxxxxxx'x base salary shall be $300,000 per
year, payable in accordance with the Corporation's usual pay practices
(and in any event no less frequently than monthly), as the same may be
increased (but not decreased) from time to time (based upon the
performance of the Corporation and Xxxxxxxx) as determined by the Board
of Directors of the Corporation in its sole discretion.
(b) For each calendar year or portion thereof that Xxxxxxxx is
employed under this Agreement, the Corporation may pay to Xxxxxxxx a
bonus, which will be based upon the performance of the Corporation and
Xxxxxxxx, at such times and in such amounts as the Board of Directors
of the Corporation, in its sole discretion, may determine.
(c) Upon adoption of this Agreement, the Corporation shall
grant to Xxxxxxxx 75,000 of the Corporation's common shares on a fully
vested and unrestricted basis. In addition, the Corporation shall xxxxx
Xxxxxxxx 100,000 of the Corporation's common shares as a restricted
stock award subject to the vesting, forfeiture and other provisions set
forth in the Restricted Stock Award Agreement attached hereto as
Exhibit "A." The Corporation shall use its reasonable best efforts
consistent with fiscal responsibility to register such common shares
with the Securities and Exchange Commission for resale by Xxxxxxxx as
soon as practicable after the Effective Date.
4. Reimbursement for Expenses. The Corporation shall reimburse Xxxxxxxx
for all reasonable, ordinary and necessary expenses incurred by him in the
performance of his duties hereunder, provided that Xxxxxxxx accounts to the
Corporation therefor in a manner sufficient to substantiate deductions with
respect to those expenses by the Corporation for federal income tax purposes.
5. Vacations. During the Contract Period, Xxxxxxxx shall be entitled to
up to four (4) weeks (twenty (20) days) of vacation each year to be taken at
such time or times xx Xxxxxxxx may determine in such a manner as to avoid undue
disruption to the business of the Corporation.
6. Benefits. During the Contract Period, Xxxxxxxx and his family shall
be entitled to participate in such pension, retirement, medical reimbursement,
insurance and similar plans, if any, enjoyed by executive officers of the
Corporation generally. Xxxxxxxx shall also be entitled to participate in any
option or other employee benefit compensation plan that is enjoyed by executive
officers of the Corporation generally. Xxxxxxxx'x participation in and benefits
under any such plan shall be on the terms and subject to the conditions
specified in the governing document of that plan.
7. Effect of Disability While in Employ of the Corporation. If while
Xxxxxxxx is employed by the Corporation, he becomes disabled, by reason of
physical or mental impairment, to such an extent that he is unable to
substantially perform his duties under this Agreement:
(a) the Corporation may relieve Xxxxxxxx of his duties under
this Agreement for as long xx Xxxxxxxx is so disabled.
(b) the Corporation shall pay to Xxxxxxxx, net of the offset
referred to in the last sentence of this Paragraph (b), all base salary
to which he would have been entitled under
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this Agreement had he continued to be actively employed by the
Corporation to the earliest of (i) the first date on which he is no
longer so disabled, (ii) the date on which he has been so disabled for
an aggregate of 120 business days (whether or not consecutive) during
any period of twelve consecutive calendar months, (iii) the date of his
death, or (iv) the 90th day of his disability. Any payment referred to
in this Paragraph (b) shall be made at the same time as that payment
would have been made if Xxxxxxxx were not disabled. Payments under this
Paragraph (b) for any period shall be offset, dollar for dollar, by any
disability benefits (other than benefits payable pursuant to any
disability income policy all of the premiums for which were paid by
Xxxxxxxx) for that period that are received by Xxxxxxxx.
(c) Except as provided in this Section 7, the Corporation
shall have no further obligations to Xxxxxxxx for base salary for any
period during which Xxxxxxxx is so disabled to such an extent that he
is unable to substantially perform his duties under this Agreement.
8. Termination.
(a) AT EXPIRATION OF A TERM. If the Corporation gives Xxxxxxxx
90 days' advance notice of its intention not to renew the term of
Xxxxxxxx'x employment hereunder (as permitted by Section 1), Xxxxxxxx'x
employment hereunder shall terminate at the close of business on the
last day of the month next preceding the first day of the month as to
which such 90 days' advance notice was given.
(b) DEATH OR DISABILITY. Xxxxxxxx'x employment hereunder will
terminate immediately upon Xxxxxxxx'x death. The Corporation may
terminate Xxxxxxxx'x employment hereunder immediately upon giving
notice of termination if Xxxxxxxx is disabled, by reason of physical or
mental impairment, to such an extent that he has been unable to
substantially perform his duties under this Agreement for an aggregate
of 120 business days (whether or not consecutive) during any period of
twelve consecutive calendar months.
(c) FOR CAUSE. The Board of Directors of the Corporation, by
action of three-quarters of all of its duly elected members, may
terminate Xxxxxxxx'x employment under this Agreement if it determines
in good faith that Xxxxxxxx has, by action or failure to act, given the
Corporation Cause for that termination and delivers written notice of
that termination, describing the facts constituting Cause, to Xxxxxxxx.
For purposes hereof, the term "Cause" shall mean Xxxxxxxx'x fraud or
commission of a felony which results in material injury to the business
or reputation of the Corporation, or Xxxxxxxx'x willful breach of this
Agreement, which breach has not been cured within thirty (30) days
after the Corporation gives notice thereof to Xxxxxxxx.
(d) WITHOUT CAUSE. The Board of Directors of the Corporation
may terminate Xxxxxxxx'x employment hereunder at any time without Cause
upon notice to Xxxxxxxx.
(e) BY XXXXXXXX FOR GOOD REASON. Xxxxxxxx may terminate his
employment hereunder for "Good Reason" at any time upon thirty (30)
days' advance notice from
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Xxxxxxxx to the Board of Directors of the Corporation. Xxxxxxxx shall
be deemed to have "Good Reason" to terminate his employment under this
Agreement if, at any time during the Contract Period, (i) the
Corporation materially changes Xxxxxxxx'x duties and responsibilities
without his consent; (ii) Xxxxxxxx'x place of employment or the
principal executive offices of the Corporation are moved to a location
more than fifty (50) miles from Public Square in the City of Cleveland,
Ohio; (iii) there occurs a material breach by the Corporation of any of
its obligations under this Agreement (other than those specified in
this Section 8(e)); or (iv) there occurs a "Change in Control" (as
hereinafter defined) of the Corporation.
The term "Change in Control" means the first to occur of the
following events (i) any person or group of commonly controlled
persons, other than the voting trust established and maintained
pursuant to the Voting Trust Agreement made and entered into as of
November 1, 1998 by and among the Corporation, Xxxxxx X. Xxxxxxx, H.
Xxxxxxx Xxxxxxxx, Xxxx X. X'Xxxxx and J. Xxxxxxx Xxxxx (the "Voting
Trust"), acquire ownership or control, directly or indirectly, of more
than twenty percent (20%) of the voting control or value of the equity
interests in the Corporation; (ii) the shareholders of the Corporation
approve an agreement to merge or consolidate with another corporation
or other entity resulting (whether separately or in connection with a
series of transactions) in a change in ownership of twenty percent
(20%) or more of the voting control or value of the equity interests in
the Corporation, or an agreement to sell or otherwise dispose of all or
substantially all of the Corporation's assets (including, without
limitation, a plan of liquidation or dissolution), or otherwise approve
of a fundamental alteration in the nature of the Corporation's
business; (iii) at any time during any period of twenty-four (24)
consecutive months, individuals who were directors at the beginning of
the 24-month period no longer constitute a majority of the members of
the Board of Directors of the Corporation, unless the election, or the
nomination for election by the Corporation's shareholders, of each
director who was not a director at the beginning of the period is
approved by at least a majority of the directors who (x) are in office
at the time of the election or nomination and (y) were directors at the
beginning of the period (the "Continuing Directors"); (iv) the election
of any director to the Board of Directors of the Corporation who was
not nominated by the Continuing Directors; or (v) termination of the
Voting Trust.
Xxxxxxxx may exercise his right to terminate under this
Section 8(e) only if Xxxxxxxx gives the Corporation written notice
thereof within thirty (30) days after he first knew of the existence of
the events constituting "Good Reason" and, with respect to the events
specified in clauses (i) and (iii) of the definition of "Good Reason"
above, the Corporation fails to eliminate or cure the events
constituting "Good Reason" within ten (10) days after receiving that
notice.
(f) BY XXXXXXXX WITHOUT GOOD REASON. Xxxxxxxx may terminate
his employment hereunder at any time upon notice from Xxxxxxxx to the
Board of Directors of the Corporation.
The exercise by the Corporation of its rights of termination under this
Section 8 shall be the Corporation's sole remedy in the event of the occurrence
of the event as a result of which such right
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to terminate arises. Upon any termination of this Agreement, Xxxxxxxx shall be
deemed to have resigned from all offices and directorships held by Xxxxxxxx in
the Corporation.
In the event of a termination claimed by the Corporation to be for
"Cause" pursuant to Section 8(c) or by Xxxxxxxx to be for "Good Reason" pursuant
to Section 8(e), Xxxxxxxx or the Corporation shall have the right to have the
justification for said termination determined by arbitration in Cleveland, Ohio.
In order to exercise such right, Xxxxxxxx or the Corporation shall serve on the
other party hereto, within thirty (30) days after termination, a written request
for arbitration. The Corporation immediately shall request the appointment of an
arbitrator by the American Arbitration Association and thereafter the question
of "Cause" or "Good Reason," as the case may be, shall be determined under the
rules of the American Arbitration Association, and the decision of the
arbitrator shall be final and binding on both parties. The parties shall use all
reasonable efforts to facilitate and expedite the arbitration and shall act to
Cause the arbitration to be completed as promptly as possible. During the
pendency of the arbitration, Xxxxxxxx shall continue to receive all compensation
and benefits to which he is entitled hereunder, and if at any time during the
pendency of such arbitration the Corporation fails to pay and provide all
compensation and benefits to Xxxxxxxx in a timely manner, the Corporation shall
be deemed to have automatically waived whatever rights it then may have had to
terminate Xxxxxxxx'x employment for Cause. Expenses of the arbitration shall be
borne by the parties in the proportion determined by the arbitrator based upon
the reasonableness of the positions of the parties.
9. Payments Upon Termination. Upon any termination of Xxxxxxxx'x
employment, the Corporation shall pay to Xxxxxxxx all accrued, unpaid base
salary and other benefits accrued through the date of termination. Upon any
termination pursuant to Sections 8(a), 8(d) or 8(e), the Corporation shall pay
to Xxxxxxxx all of the compensation and benefits payable hereunder for the
remainder of the Contract Period.
10. Tax Adjustment Payments. If all or any portion of the amounts
payable to Xxxxxxxx under this Agreement (together with all other payments of
cash or property, whether pursuant to this Agreement or otherwise, including,
without limitation, the issuance of common shares of the Corporation, or the
granting, exercise or termination of options therefor) constitutes "excess
parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), that are subject to the excise tax
imposed by Section 4999 of the Code (or any similar tax or assessment), the
amounts payable hereunder shall be increased to the extent necessary to place
Xxxxxxxx in the same after-tax position as he would have been in had no such tax
assessment been imposed on any such payment paid or payable to Xxxxxxxx under
this Agreement or any other payment that Xxxxxxxx may receive in connection
therewith. The determination of the amount of any such tax or assessment and the
incremental payment required hereby in connection therewith shall be made by the
accounting firm employed by Xxxxxxxx and said incremental payment shall be made
within five (5) days after that determination has been made. If, after the date
upon which the payment required by this Section 10 has been made, it is
determined (pursuant to final regulations or published rulings of the Internal
Revenue Service, final judgment of a court of competent jurisdiction, Internal
Revenue Service audit assessment, or otherwise) that the amount of excise or
other similar taxes or assessments payable by Xxxxxxxx is greater than the
amount initially so determined, then the Corporation shall pay Xxxxxxxx an
amount equal to the sum of (i) such additional excise or other taxes, plus (ii)
any interest, fines and penalties resulting
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from such underpayment, plus (iii) an amount necessary to reimburse Xxxxxxxx for
any income, excise or other tax assessment payable by Xxxxxxxx with respect to
the amounts specified in (i) and (ii) above and the reimbursement provided by
this clause (iii), in the manner described above in this Section 10. Payment
thereof shall be made within five (5) days after the date upon which such
subsequent determination is made.
11. Indemnification.
(a) INDEMNIFICATION IN NON-DERIVATIVE ACTIONS. The Corporation
shall indemnify Xxxxxxxx against any and all losses, claims, damages,
liabilities, costs and expenses other than attorneys' fees (including
any and all losses, claims, damages, liabilities, costs and expenses
arising out of events occurring prior to the Effective Date) with
respect to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
other than an action by or in the right of the Corporation, by reason
of the fact that he is or was a consultant to or agent or officer of
the Corporation, or is or was serving at the request of the Corporation
as a consultant to or a director, trustee, officer, employee or agent
of another corporation, domestic or foreign, nonprofit or for profit,
partnership, limited liability company, joint venture, trust or other
enterprise, including judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the Corporation, and with respect to any criminal action or proceeding,
had no reasonable Cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that Xxxxxxxx
did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, that he had
reasonable Cause to believe that his conduct was unlawful.
(b) INDEMNIFICATION IN DERIVATIVE ACTIONS. The Corporation
shall indemnify Xxxxxxxx against any and all losses, claims, damages,
liabilities, costs and expenses other than attorneys' fees (including
any and all losses, claims, damages, liabilities, costs and expenses
arising out of events occurring prior to the Effective Date) with
respect to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a consultant to or agent or
officer of the Corporation, or is or was serving at the request of the
Corporation as a consultant to or a director, trustee, officer,
employee or agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, limited liability company, joint
venture, trust or other enterprise, actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit
if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Corporation, except that
no indemnification shall be made in respect of any claim, issue or
matter as to which Xxxxxxxx shall have been adjudged to be liable for
gross negligence or gross misconduct in the performance of his duty to
the Corporation unless, and only to the extent that the court in which
such action or suit was brought shall determine upon application that,
despite the
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adjudication of liability, but in view of all the circumstances of the
case, Xxxxxxxx is fairly and reasonably entitled to indemnity for such
expenses as such court shall deem proper.
(c) COUNSEL. Xxxxxxxx shall, at his own expense, have the
right to retain counsel of his own choosing to represent him in
connection with any matters as to which the provisions of this Section
11 apply.
(d) ADVANCE PAYMENT OF EXPENSES. Expenses, excluding
attorneys' fees, incurred in defending any action, suit or proceeding
referred to in this Section 11, shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of Xxxxxxxx to repay
such amount, unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as provided herein. Such
fees and expenses shall be paid from time to time as incurred upon
request by Xxxxxxxx.
(e) NONEXCLUSIVITY. The parties agree that nothing in this
Agreement shall be construed to limit or negate any rights of Xxxxxxxx
under the Corporation's Articles of Incorporation or Code of
Regulations, as the same may be amended from time to time, or any other
agreement, vote of shareholders or directors, or provision of
applicable law, whether statutory or common law, or otherwise, which
provides Xxxxxxxx with broader protection than that provided herein.
(f) SURVIVAL. The provisions of this Section 11 shall survive
the termination of this Agreement.
12. Liability Insurance. The Corporation will maintain officer's acts
and omissions liability insurance for Xxxxxxxx in amounts comparable to that
maintained for other executive officers employed by the Corporation. In the
event that Xxxxxxxx is subject to a liability in excess of the coverage limits
of such insurance, the Corporation will be responsible for any such uninsured
liabilities to the extent provided herein.
13. Assignment and Binding Effect. The obligations of the parties
hereto may not be assigned or transferred, except upon the merger, consolidation
or sale of the Corporation, or the sale of all or substantially all the assets
of the Corporation, with or to another person or entity. This Agreement shall be
binding upon and inure to the benefit of Xxxxxxxx and the Corporation; provided,
however, that this Agreement shall also inure to the benefit of Xxxxxxxx'x
heirs, personal representatives, executors and administrators.
14. Notices. All notices under this Agreement shall be in writing and
shall be deemed effective when delivered in person, or three days after deposit
thereof in the official U.S. mail, postage prepaid, for delivery as registered
or certified mail, or its delivery by a courier service, such as, for example,
FedEx or UPS, addressed:
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if to Xxxxxxxx, to
Xxxx X. Xxxxxxxx
000 Xxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
and if to the Corporation, to
International Total Services, Inc.
0000 Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
Attention, Chairman, Board of Directors
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
In lieu of personal notice or notice by deposit in the official U.S. mail, or
delivery by courier service, a party may give notice by confirmed telegram,
telex or facsimile. Either party may change the address to which notice to that
party may be mailed by notifying the other party of the change in the manner
contemplated in this Section.
15. Severability. Any provision of this Agreement that is prohibited or
unenforceable shall be ineffective to the extent, but only to the extent, of
such prohibition or unenforceability without invalidating the remaining portions
hereof and such remaining portions of this Agreement shall continue to be in
full force and effect.
16. Governing Law. The provisions of this Agreement shall be governed
by and construed in accordance with the laws of the State of Ohio applicable to
contracts made in and to be performed within the State of Ohio.
17. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto and, except as provided herein,
supersedes all prior understandings, whether written or oral, with respect to
the employment of Xxxxxxxx by the Corporation. This Agreement was adopted by the
Compensation Committee of the Corporation's Board of Directors on January 13,
2000.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INTERNATIONAL TOTAL SERVICES, INC.
By: /s/ H. Xxxxxxx Xxxxxxxx
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Name:
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Title: CO-CHAIRMAN OF THE BOARD
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XXXX X. XXXXXXXX
/s/ Xxxx X. Xxxxxxxx
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