1
EXHIBIT 10.29
RETENTION AND INDEMNIFICATION AGREEMENT
THIS RETENTION AND INDEMNIFICATION AGREEMENT (this "Agreement") is entered
into effective as of July 18, 2001, by and among (i) International Total
Services, Inc., an Ohio corporation (the "Company"), and (ii) each of the
directors and/or officers of the Company listed on Exhibit A to this Agreement
(each an "Indemnitee" and collectively, the "Indemnitees").
R E C I T A L S :
A. The Company and the Indemnitees are aware of the exposure to litigation
of officers, directors and representatives of the Company as such persons
exercise their duties to the Company;
B. The Company desires to continue to benefit from the services of highly
qualified, experienced and otherwise competent persons such as the Indemnitees;
and
C. Each of the Indemnitees currently desires to continue to serve the
Company as a director or officer or as a director, officer, employee, agent, or
trustee of another corporation, joint venture, enterprise, or trust, including,
without limitation, the voting trust (the "Xxxxxxx Voting Trust") established
pursuant to that certain Voting Trust Agreement (the "Xxxxxxx Voting Trust
Agreement") made and entered into as of the 1st day of November, 1999, by and
among the Company, Xxxxxx X. Xxxxxxx, H. Xxxxxxx Xxxxxxxx ("Xxxxxxxx"), J.
Xxxxxxx Xxxxx ("Xxxxx"), and Xxxx X. X'Xxxxx ("O'Brien"), for so long as the
Company continues to provide, on an acceptable basis, adequate and reliable
indemnification against certain liabilities and expenses which may be incurred
by each Indemnitee.
NOW, THEREFORE, in consideration of providing stability and an incentive
for continued service on the part of each Indemnitee, and in consideration of
the foregoing premises and the mutual covenants contained in this Agreement, the
parties to this Agreement hereby agree as follows:
1. INDEMNIFICATION. The Company agrees to indemnify each of the Indemnitees
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by each of them ("Expenses") in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, investigative (a "Proceeding"), to
which any of the Indemnitees was, is or is threatened to be made a party by
reason of facts which include that said Indemnitee is or was a director,
officer, employee or agent of the Company and/or is or was serving at the
request of the Company ("representative") as a director, trustee, officer,
employee, member, manager or agent of another corporation, limited liability
company, partnership, joint venture, trust or other enterprise, including,
without limitation, the Xxxxxxx Voting Trust (which service as trustee
thereunder is hereby agreed to be at the request of the Company), to the extent
of the highest and most advantageous to the Indemnitee, as determined by the
Indemnitee, of one or any combination of the following:
a. The benefits provided by the Company's current Code of
Regulations (the "By-Laws") in effect on the effective date of this
Agreement (whether or not the By-Laws are in effect at the time Expenses
are incurred by an Indemnitee), a copy of the relevant portions of which
are attached to this Agreement as Exhibit B;
b. The benefits allowable under Ohio law in effect at the date
hereof, including, without limitation, the benefits allowable under
Chapter 1701 of the Ohio Revised Code;
c. The benefits allowable under the laws of the jurisdiction under
which the Company exists at the time Expenses are incurred by the
Indemnitee;
d. With respect to Xxxxxxxx, Xxxxx and X'Xxxxx, the benefits
available under the Xxxxxxx Voting Trust Agreement, including, without
limitation, Section 17 of the Xxxxxxx Voting Trust Agreement, a copy of
the relevant portions of which are attached to this Agreement as Exhibit
C;
21
2
EXHIBIT 10.29
e. The benefits available under any liability insurance obtained by
the Company; and
f. Such other benefits as are or may be otherwise available to
Indemnitee.
Combination of two or more of the benefits provided by (a) through (f)
shall be available to the extent that the Applicable Document (as defined below)
does not require that the benefits provided therein be exclusive of other
benefits. The document or law providing for the benefits listed in items (a)
through (f) above is called the "Applicable Document" in this Agreement. The
Company hereby undertakes to use its best efforts to assist Indemnitee, in all
proper and legal ways, to obtain the benefits selected by Indemnitee under items
(a) through (f) above.
For purposes of this Agreement, references to "other enterprises" shall
include employee benefit plans for employees of the Company or of any affiliated
entity without regard to ownership of such plans; references to "fines" shall
include any excise taxes assessed on any of the Indemnitees with respect to any
employee benefit plan; references to "serving at the request of the Company"
shall include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, any of the Indemnitees
with respect to an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine; references to the
singular shall include the plural and vice versa; and if the Indemnitee acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
interest of the participants and beneficiaries of an employee benefit plan, he
shall be deemed to have acted in a manner consistent with the standards required
for indemnification by the Company under the Applicable Documents.
2. TERM; INSURANCE; TRUST FUND. The term of this Agreement (the "Term")
shall begin on the date first written above and shall end on the date that
immediately follows the expiration of the last to expire of all applicable
statutes of limitations pursuant to which any Proceeding could be commenced;
provided, however that the Term shall be extended to the extent and for so long
as (i) any such statute of limitations is waived, suspended or extended and/or
(ii) any Proceeding has, prior to the otherwise applicable expiration of the
Term, been commenced and remains subject to a final and non-appealable
adjudication or other determination, and for sixty (60) days thereafter;
provided, further, that the Term shall be further extended as necessary to
satisfy any request for indemnification made by an Indemnitee during the
otherwise applicable Term. The Company shall maintain liability insurance of the
same type(s) and in the same amount(s) as provided on the date of this
Agreement, provided and to the extent that such insurance is available for a
similar price or similar prices (taking into account reasonable cost of living
increases). (IF THE COMPANY IS UNABLE TO MAINTAIN LIABILITY INSURANCE OF THE
SAME TYPE(S) AND IN THE SAME AMOUNT(S) AS PROVIDED ON THE DATE OF THIS AGREEMENT
FOR A SIMILAR PRICE OR SIMILAR PRICES (TAKING INTO ACCOUNT REASONABLE COST OF
LIVING INCREASES), THEN THE COMPANY SHALL PROCURE LIABILITY INSURANCE OF SUCH
TYPE(S) AND IN SUCH AMOUNT(S) THAT THE COMPANY CAN REASONABLY AFFORD FOR
SUBSTANTIALLY THE SAME AGGREGATE COST (TAKING INTO ACCOUNT REASONABLE COST OF
LIVING INCREASES) AS WHAT THE COMPANY CURRENTLY SPENDS FOR LIABILITY INSURANCE.)
However, the Company agrees that the provisions of this Agreement shall remain
in effect regardless of whether liability or other insurance coverage is at any
time obtained or retained by the Company; except that any payments in fact made
to any of the Indemnitees under an insurance policy obtained or retained by the
Company shall reduce the obligation of the Company to make payments under this
Agreement by the amount of the payments made under any such insurance policy. As
of the effective date of this Agreement, for the purposes of covering the
Indemnitees' services under this Agreement, the Company maintains certain
management liability insurance policies (the "Existing Policies"), subject to
various retention amounts (collectively, the "Retention Amounts") depending on
the nature of the claims brought under the Existing Policies. The Company
acknowledges that its Board of Directors (the "Board") has reviewed and approved
that certain Trust Agreement dated as of even date among Schwartz, Eakin,
O'Brien, Xxxx X. Xxxxxxxx, and Xxxx X. Salt (the "Trust Agreement"). In order to
expressly ensure that adequate funds are available to satisfy indemnification
claims of the Indemnitees, including, without limitation, any Retention Amounts
that are required to be paid by the Company in the event that one or more
appropriate claims are brought against one or more of the Indemnitees
(including, without limitation, any claims that are brought under the Xxxxxxx
Trust Agreement), simultaneous with the execution and delivery of this Agreement
and the Trust Agreement, the Company shall deliver to the custody of the Trustee
(as defined in the Trust Agreement), by wire transfer or by Company check, the
sum of Five Hundred Thousand Dollars ($500,000.00), to be used and maintained as
provided in the Trust Agreement. In consideration of each of the Indemnitees
providing continued
2
3
EXHIBIT 10.29
service to the Company, the Company shall enter into the Trust Agreement for the
purpose of providing the indemnity to the Trustee discussed in Section 5(c) of
the Trust Agreement.
3. PAYMENT OF EXPENSES. At Indemnitee's request, after receipt of written
notice pursuant to Section 5 of this Agreement and an undertaking in the form of
Exhibit D attached to this Agreement by or on behalf of an Indemnitee to repay
such amounts so paid on an Indemnitee's behalf if it shall ultimately be
determined under the Applicable Document that an Indemnitee is not entitled to
be indemnified by the Company for such Expenses, the Company shall pay the
Expenses as and when incurred by an Indemnitee. That portion of Expenses which
represents attorneys' fees and other costs incurred in defending any proceeding
shall be paid by the Company within thirty (30) days of its receipt of such
request, together with reasonable documentation (consistent, in the case of
attorneys' fees, with Company practice in payment of legal fees) evidencing the
amount and nature of such Expenses, subject to its also having received such a
notice and undertaking.
4. ADDITIONAL RIGHTS. The indemnification and advancement of expenses
provided in this Agreement (i) shall not be exclusive of any other
indemnification or right to which Indemnitee may be entitled and (ii) shall
continue after an Indemnitee has ceased to occupy a position as an officer,
director, employee, agent or representative as described in Section 1 above with
respect to Proceedings relating to or arising out of an Indemnitee's acts or
omissions during his service in such position.
5. NOTICE TO COMPANY. Each Indemnitee shall provide to the Company prompt
written notice of any Proceeding brought, threatened, asserted or commenced
against an Indemnitee with respect to which an Indemnitee may assert a right to
indemnification under this Agreement; provided that failure to provide such
notice shall not, in any way, limit an Indemnitee's rights, or the Company's
obligations, under this Agreement.
6. COOPERATION IN DEFENSE AND SETTLEMENT. An Indemnitee shall not, absent
court order, make any statement of fact that relates to any matter in dispute
(other than to an authorized officer, director, employee or agent of the Company
or to Indemnitee's counsel) or effect any settlement without the Company's
written consent unless the Indemnitee shall have determined to undertake his own
defense in such matter and has waived the benefits of this Agreement. The
Company shall not settle any Proceeding to which an Indemnitee is a party in any
manner which would impose any Expense on an Indemnitee without his written
consent. Neither an Indemnitee nor the Company shall unreasonably withhold, or
delay in giving, consent to any proposed settlement. Each of the Indemnitees and
the Company shall cooperate to the extent reasonably possible with each other
and with the Company's insurers, in attempts to defend and/or settle such
Proceeding.
7. ASSUMPTION OF DEFENSE. Except as otherwise provided below, to the
extent that it may wish, the Company jointly with any other indemnifying party
similarly notified shall be entitled to assume an Indemnitee's defense in any
Proceeding, with counsel mutually satisfactory to the Indemnitee and the
Company. After notice from the Company to an Indemnitee of the Company's
election so to assume such defense, the Company shall not be liable to the
Indemnitee under this Agreement for Expenses subsequently incurred by Indemnitee
in connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. An Indemnitee shall have the right
to employ counsel in such Proceeding, but the fees and expenses of such counsel
incurred after notice from the Company of its assumption of the defense thereof
shall be at the Indemnitee's expense unless:
a. The employment of counsel by an Indemnitee has been authorized by
the Company;
b. Counsel employed by the Company initially is unacceptable or
later becomes unacceptable to Indemnitee and such unacceptability is
reasonable under then existing circumstances;
c. An Indemnitee shall have reasonably concluded that there may be a
conflict of interest between an Indemnitee and the Company in the conduct
of the defense of such Proceeding; or
d. The Company shall not have employed counsel promptly to assume
the defense of such Proceeding,
3
4
EXHIBIT 10.29
in each of which cases the fees and expenses of counsel shall be at the expense
of the Company and subject to payment pursuant to this Agreement. The Company
shall not be entitled to assume the defense of an Indemnitee in any Proceeding
brought by or on behalf of the Company or as to which an Indemnitee shall have
made either of the conclusions provided for in clause (b) or (c) above.
8. ENFORCEMENT. In the event that any dispute or controversy shall arise
under this Agreement between an Indemnitee and the Company with respect to
whether the Indemnitee is entitled to indemnification in connection with any
Proceeding or with respect to the amount of Expenses incurred, then with respect
to each such dispute or controversy, the matter will be submitted for
arbitration to the American Arbitration Association, in Cleveland, Ohio in
accordance with the then prevailing rules of that Association. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction in Cuyahoga County, Ohio. In any arbitration under this Agreement,
the prevailing party shall be entitled to recover from the other party any and
all costs reasonably incurred by the prevailing party in such arbitration,
including, without limitation, reasonable attorneys' fees.; provided that an
Indemnitee shall not be obligated to reimburse the Company unless the
arbitrator(s) resolving the dispute determines that the Indemnitee acted in bad
faith in bringing such action.
9. EXCLUSIONS. Notwithstanding the scope of indemnification which may be
available to an Indemnitee from time to time under any Applicable Document, no
indemnification, reimbursement or payment shall be required of the Company
hereunder with respect to:
a. Any claim or any part thereof as to which an Indemnitee shall
have been adjudged by a court of competent jurisdiction from which no
appeal is or can be taken to have acted not in good faith or not in a
manner he reasonably believed to be in and not opposed to the best
interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was lawful. 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 the person did
not act in good faith and in a manner which he reasonably believed to be
opposed to or not in the best interests of the Company, and, with respect
to any criminal action or proceeding had no reasonable cause to believe
that his conduct was unlawful;
b. Any obligation of an Indemnitee based upon or attributable to the
Indemnitee gaining in fact any personal gain, profit or advantage to which
he was not entitled;
c. Any claim or any part thereof arising under Section 16(b) of the
Securities Exchange Act of 1934, as amended, pursuant to which an
Indemnitee shall be obligated to pay any penalty, fine, settlement or
judgment; or
d. Any Proceeding initiated by an Indemnitee without the consent or
authorization of the Board, provided that this exclusion shall not apply
with respect to any claims brought by Indemnitee to enforce his rights
under this Agreement or in any Proceeding initiated by another person or
entity whether or not such claims were brought by Indemnitee against a
person or entity who was otherwise a party to such Proceeding.
Nothing in this Section 9 shall eliminate or diminish the Company's
obligations to advance that portion of an Indemnitee's Expenses which represent
attorneys' fees and other costs incurred in defending any proceeding pursuant to
Section 3 of this Agreement.
10. EXTRAORDINARY TRANSACTIONS. The Company covenants and agrees that in
the event of any merger, consolidation or reorganization in which the Company is
not the surviving entity, any sale of all or substantially all of the assets of
the Company or any liquidation of the Company (each such event is hereinafter
referred to as an "extraordinary transaction"), the Company shall:
a. Cause the obligations of the Company under this Agreement to be
expressly assumed by the survivor, purchaser or successor, as the case may
be, in such extraordinary transaction; or
4
5
EXHIBIT 10.29
b. Otherwise adequately provide for the satisfaction of the
Company's obligations under this Agreement.
11. NO PERSONAL LIABILITY. Each of the Indemnitees agrees that neither the
Board nor any officer, employee, representative or agent of the Company shall be
personally liable for the satisfaction of the Company's obligations under this
Agreement, and each of the Indemnitees shall look solely to the assets of the
Company, any insurance proceeds available as referred to in Section 2 of this
Agreement or otherwise, and the funds available pursuant to the Trust Agreement
for satisfaction of any claim hereunder.
12. SEVERABILITY. If any provision, phrase or other portion of this
Agreement should be determined by any court of competent jurisdiction to be
invalid, illegal or unenforceable, in whole or in part, and such determination
should become final, such provision, phrase or other portion shall be deemed to
be severed or limited, but only to the extent required to render the remaining
provisions and portions of this Agreement enforceable, and the Agreement as thus
amended shall be enforced to give effect to the intention of the parties insofar
as that is possible.
13. SUBROGATION. In the event of any payment under this Agreement, the
Company shall be subrogated to the extent thereof to all rights to
indemnification or reimbursement against any insurer or other entity or person
vested in an Indemnitee, who shall execute all instruments and take all other
actions as shall be reasonably necessary for the Company to enforce such rights.
14. GOVERNING LAW. The parties hereto agree that this Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Ohio.
15. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be considered to have been duly given if
delivered by hand and receipted for by the party to whom the notice, request,
demand or other communication shall have been directed, or mailed by certified
mail, return receipt requested, with postage prepaid:
(a) If to the Company, to:
International Total Services, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxx, President
(b) If to an Indemnitee, to the particular Indemnitee's address
listed on Exhibit A to this Agreement;
or to such other or further address as shall be designated from time to time by
the Indemnitee or the Company to the other.
16. COUNTERPARTS. This Agreement may be executed in several counterparts
(including by facsimile transmission), each of which so executed shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument bearing a uniform date, namely, the date first written
above, and as if all had been executed together on such date.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement with
respect to the subject matter of this Agreement and supersedes all prior written
and oral agreements with respect to the subject matter of this Agreement, and
the rights and duties of the Indemnitees and the Company under this Agreement
may not be amended, modified or terminated except by written instrument signed
and delivered by the parties to this Agreement.
5
6
EXHIBIT 10.29
This Agreement is and shall be binding upon and shall inure to the
benefits of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
6
7
EXHIBIT 10.29
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
INTERNATIONAL TOTAL SERVICES, INC.
By: /s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx, President
INDEMNITEES
/s/ Xxxx X. X'Xxxxx /s/ Xxxxxxx X. Xxxx
Xxxx X. X'Xxxxx Xxxxxxx X. Xxxx
/s/ J. Xxxxxxx Xxxxx /s/ Xxxxxxx X. Xxxxxx
J. Xxxxxxx Xxxxx Xxxxxxx X. Xxxxxx
/s/ H. Xxxxxxx Xxxxxxxx /s/ Xxxxx X. Xxxxxx
H. Xxxxxxx Xxxxxxxx Xxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxxxx /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxxxx Xxxx X. XxXxxx
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
7
8
EXHIBIT 10.29
EXHIBIT A
Xxxx X. X'Xxxxx
Inglewood Associates, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Phone: 000.000.0000
Fax: 000.000.0000
J. Xxxxxxx Xxxxx
Preferred Capital, Inc.
0000 X. Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Phone: 000.000.0000
Fax: 000.000.0000
H. Xxxxxxx Xxxxxxxx
Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Phone: 000.000.0000
Fax: 000.000.0000
Xxxx X. Xxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Phone: 000.000.0000
Fax:
Xxxxxx X. Xxxxxxx
International Total Services, Inc.
0000 Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Phone: 000.000.0000
Fax: 000.000.0000
9
EXHIBIT 10.29
Xxxxxxx X. Xxxx
International Total Services, Inc.
0000 Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Phone: 000.000.0000
Fax: 000.000.0000
Xxxxxxx X. Xxxxxx
International Total Services, Inc.
1200 Crown Centre
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Phone: 000.000.0000
Fax: 000.000.0000
Xxxxx X. Xxxxxx
International Total Services, Inc.
1200 Crown Centre
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Phone: 000.000.0000
Fax: 000.000.0000
Xxxx X. XxXxxx
International Total Services, Inc.
0000 Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Phone: 000.000.0000
Fax: 000.000.0000
9
10
EXHIBIT 10.29
EXHIBIT B
Attached.
10
11
EXHIBIT 10.29
EXHIBIT C
Attached.
11
12
EXHIBIT 10.29
EXHIBIT D
FORM OF UNDERTAKING
THIS UNDERTAKING has been entered into by ____________________________
(hereinafter "Indemnitee") pursuant to a Retention and Indemnification Agreement
dated July 18, 2001 (the "Indemnification Agreement"), between International
Total Services, Inc. (hereinafter "Company"), an Ohio corporation, and
Indemnitee.
R E C I T A L S :
A. Pursuant to the Indemnification Agreement, Company agreed to pay
Expenses (within the meaning of the Indemnification Agreement) as and when
incurred by Indemnitee in connection with any claim against Indemnitee which is
the subject of any threatened, pending or completed action, suit or proceeding,
whether civil, criminal or investigative, to which Indemnitee was, is or is
threatened to be made a party by reason of facts which include Indemnitee's
being or having been a director, officer or representative (within the meaning
of the Indemnification Agreement) of Company;
B. Such claim has arisen against Indemnitee and Indemnitee has notified
Company thereof in accordance with the terms of Section 5 of the Indemnification
Agreement (hereinafter the "Proceeding");
C. Indemnitee believes that Indemnitee is entitled to indemnification
under the Indemnification Agreement and it is in the interest of both Indemnitee
and Company to defend against the claims against Indemnitee thereunder;
NOW, THEREFORE, Indemnitee hereby agrees that in consideration of
Company's advance payment of Indemnitee's Expenses incurred prior to a final
disposition of the Proceeding, Indemnitee hereby undertakes to reimburse Company
for any and all expenses paid by Company on behalf of Indemnitee prior to a
final disposition of the Proceeding in the event that Indemnitee is determined
under the Applicable Document (within the meaning of the Indemnification
Agreement) not to be entitled to indemnification for such Expenses pursuant to
the Indemnification Agreement and applicable law, provided that if Indemnitee is
entitled under the Applicable Document to indemnification for some or a portion
of such Expenses, Indemnitee's obligation to reimburse Company shall only be for
those Expenses for which Indemnitee is determined not to be entitled to
indemnification. Such reimbursement or arrangements for reimbursement by
Indemnitee shall be consummated within ninety (90) days after a determination
that Indemnitee is not entitled to indemnification and reimbursement pursuant to
the Indemnification Agreement and applicable law.
IN WITNESS WHEREOF, the undersigned has set his hand this ___ day of
________________________, ____.
Indemnitee:
____________________________
12
