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EXHIBIT 10.17
RETIREMENT AND CONSULTING AGREEMENT
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THIS RETIREMENT AND CONSULTING AGREEMENT (the "Consulting Agreement")
is made as of the 1st day of November, 1999, by and between Xxxxxx X. Xxxxxxx,
an individual (the "Consultant"), and International Total Services, Inc., an
Ohio corporation (the "Company").
The Consultant was formerly chairman, chief executive officer and a
director of the Company;
The Consultant has certain skills and experience that the Company wants
to have available to it; and
The Company and the Consultant desire to enter into this Consulting
Agreement to insure the Company of the services of the Consultant, and to
establish the rights and duties of the parties.
IN CONSIDERATION of the mutual covenants and promises herein contained,
and subject to the terms and conditions herein set forth, the Consultant and the
Company agree as follows:
1. RETIREMENT.
(a) Simultaneously with the effectiveness of this Consulting
Agreement and as a result hereof:
(i) The Consultant confirms that on October 19, 1999,
he resigned as the chairman, chief executive officer and
director of the Company and agrees to execute such additional
documents as requested by the Company to evidence such
resignations;
(ii) The employment agreement between the Consultant
and the Company dated as of September 27, 1997 was terminated
effective October 19, 1999 and it is agreed that neither party
thereto has any further obligations thereunder, with the
exception of any salary or benefits accrued through October
19, 1999;
(iii) The Consultant delivers, or has delivered, to
the Company all documents, letters, notices, agreements,
correspondence and similar instruments received by the
Consultant in his capacity as an officer, director or employee
of the Company during his employment by the Company, which
were not left in the Company's office by the Consultant on
October 19, 1999 and are no longer in the Consultant's
control; and
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(iv) The Consultant executes and delivers to the
Company (1) that certain stock restriction agreement
providing, among other things, that the Company has the right
of first refusal as to any transfer of shares of Company
common stock owned directly or indirectly by the Consultant
and (2) that certain voting trust agreement providing, among
other things, for the transfer of record ownership, and
related rights, of shares of Company common stock owned
directly or indirectly by the Consultant to the trustees
thereunder.
(b) In consideration of the foregoing, the Company agrees to
(i) pay the Consultant $300,000 upon the effectiveness of this
consulting Agreement and $200,000 on January 3, 2000, (ii) pay the
Consultant's legal counsel on behalf of the Consultant an amount equal
to the Consultant's legal fees and expenses incurred by the Consultant
in connection with the transactions contemplated by this Consulting
Agreement, in an amount not to exceed $6,000, (iii) provide the
Consultant, and through the Consultant to Consultant's spouse, with
medical coverage under the Company's medical program through September
30, 2001 on a basis consistent with the coverage made available to the
Company's officers during such period; provided, however, that: (1) the
coverage provided under this sentence shall be concurrent with and not
in addition to the coverage required to be made available to the
Consultant under Part 6 of Title I of ERISA ("COBRA"); and (2) except
as required under COBRA, the Company will use its best efforts to
obtain stop-loss insurance for the coverage required to be provided
under this sentence, but for any period for which such coverage cannot
be obtained at commercially reasonable group stop-loss insurance rates,
the Company shall not be required to provide such coverage for such
period and, instead, shall pay the Consultant in cash the "applicable
premium" for such coverage (as defined under COBRA) for such period,
and (iv) provide the Consultant with directors' and officers' liability
insurance coverage under the Company's policy through September 30,
2001 on a basis consistent with the coverage made available to the
Company's officers during such period.
2. TERM AND DUTIES.
(a) The "Term of Consulting" will begin on the date of this
Consulting Agreement and will continue through September 30, 2001,
unless terminated as provided in Sections 4, 5, 6 or 7 of this
Agreement.
(b) During the Term of Consulting, the Consultant will provide
the Company with advice, recommendations and services concerning the
business of the Company. The Consultant will meet with the Company's
officers and other representatives to provide certain of the required
consulting services. The Consultant will provide such consulting
services for up to five days per month during the Term of Consulting.
(c) The Company and the Consultant acknowledge and agree that
the consulting services to be provided by the Consultant under this
Consulting Agreement will be performed as an independent contractor,
and not as an agent or employee of the
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Company. The parties also acknowledge and agree that with respect to
any payments made to the Consultant hereunder, the Company will not:
(i) withhold or pay FICA or other Federal, state, or local income or
other taxes; or (ii) comply with or contribute to state worker's
compensation, unemployment or other funds or programs. The Consultant
also acknowledges that as an independent contractor the Consultant will
not be given the right to participate in any employee benefit or
insurance plan or any other plan or other fringe benefit which is
maintained, established or provided by the Company for its employees.
3. PAYMENT. As consideration for the obligations of the Consultant
under this Consulting Agreement, during the Term of Consulting, the Company will
make the following payments to the Consultant:
(a) The Company will pay the Consultant at the monthly rate of
Twenty-five Thousand Dollars ($25,000), payable monthly on the first
business day of each month from February 1, 2000 through September 1,
2001.
(b) The Company will promptly reimburse the Consultant for all
reasonable out of pocket business expenses incurred in furtherance of
the business of the Company in accordance with reimbursement policies
adopted by the Company from time_to_time.
4. EARLY TERMINATION: DEATH. Notwithstanding anything to the contrary
in Section 2 hereof, if the Consultant dies during the Term of Consulting, the
Term of Consulting will automatically terminate. Upon such termination, the
Consultant's estate or beneficiaries will receive any payments earned and
accrued prior to the date of termination and reimbursement for expenses incurred
prior to the date of termination and payments of amounts due under Section 3(a)
and benefits under Section 1(b)(iii) and (iv) through September 1, 2001. The
parties will have no further obligation under this Agreement.
5. EARLY TERMINATION: DISABILITY. Notwithstanding anything to the
contrary in Section 2 hereof, if the Consultant by virtue of ill health or other
disability has at any time been unable to perform substantially and continuously
the duties assigned to the Consultant under this Agreement (i) for a period of
ninety (90) calendar days out of any period of one hundred and eighty (180)
consecutive calendar days during the Term of Consulting, or (ii) for an
aggregate of two hundred forty (240) days out of the Term of Consulting, then
the Company will have the right to terminate the Term of Consulting upon notice
to the Consultant. Upon such termination, the Consultant will receive any
payments earned and accrued prior to the date of termination and reimbursement
for expenses incurred prior to the date of termination and payments of amounts
due under Section 3(a) and benefits under Section 1(b)(iii) and (iv) through
September 1, 2001. The parties will have no further obligation under this
Agreement except that the Consultant will not be relieved of the Consultant's
obligations under those certain provisions hereof relating to confidentiality
and non-competition, as set forth in Section 8 hereof (the "Confidentiality
Provisions").
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6. EARLY TERMINATION: TERMINATION BY THE COMPANY.
(a) Notwithstanding anything to the contrary in Section 2
hereof, the Term of Consulting may be terminated by the Company by
giving at least sixty (60) days' prior notice of termination to the
Consultant. Upon such termination, the Consultant will be entitled to
receive any payments earned and accrued prior to the date of
termination and reimbursement for expenses incurred prior to the date
of termination and payments of amounts due under Section 3(a) and
benefits under Section 1(b)(iii) and (iv) through September 1, 2001.
The parties will have no further obligation under this Agreement except
that the Consultant will not be relieved of the Consultant's
obligations under the Confidentiality Provisions.
(b) Notwithstanding the foregoing, the Company may terminate
the Term of Consulting immediately upon notice (a "Breach Notice") to
the Consultant of a Breach. Upon delivery of the Breach Notice, the
Consultant will be entitled to receive any payments earned and accrued
prior to the date of termination and reimbursement for expenses
incurred prior to the date of termination (but not any additional
payments or benefits, the rights to which are forfeited in the event of
a termination of the Term of Consulting pursuant to this Section 6(b)).
The parties will have no further obligation under this Agreement except
that the Consultant will not be relieved of the Consultant's
obligations under the Confidentiality Provisions. The term "Breach"
will mean the Consultant's (i) conduct subsequent to the date hereof
constituting a felony or like criminal conduct as determined by the
Company, (ii) gross negligence or willful misconduct in the performance
of his duties hereunder, (iii) breach of the Confidentiality Provisions
or of the representation contained in the last sentence of Section 10
below, or (iv) breach of the voting trust agreement or stock
restriction agreement, referred to in Section 1(a)(iv) above.
7. EARLY TERMINATION: TERMINATION BY RESIGNATION OF THE CONSULTANT.
Notwithstanding anything to the contrary in Section 2 hereof, the Term of
Consulting may be terminated by the Consultant upon not less than sixty (60)
days' notice of resignation to the Company. Upon such termination, the
Consultant will be entitled to receive any payments earned and accrued prior to
the date of termination and reimbursement for expenses incurred prior to the
date of termination. The parties will have no further obligation under this
Agreement except that the Consultant will not be relieved of the Consultant's
obligations under the Confidentiality Provisions.
8. CONFIDENTIAL INFORMATION; NON-COMPETITION.
(a) The Consultant acknowledges that the Company has developed
and has taken steps to protect as trade secrets certain non-public
proprietary information, including that regarding customers,
operations, properties and employees of the Company (collectively
"Confidential Materials and Information"). In performing duties for the
Company, the Consultant has been and regularly will be exposed to and
work with the
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Company's Confidential Materials and Information. The Consultant
acknowledges that such Confidential Materials and Information are
critical to the Company's success and that the Company has invested
substantial money in developing the Company's Confidential Materials
and Information. Until September 30, 2001, the Consultant will not
reproduce, publish, disclose, divulge, discuss, use, reveal, show, or
otherwise communicate to any person or entity any Confidential
Materials and Information of the Company, including, without
limitation, in competition with or contrary to the interests of the
Company, unless specifically assigned or directed by the Company to do
so or unless it will have become public knowledge (other than by acts
by the Consultant or representatives of the Consultant in violation of
this Agreement). The covenant in this Section 8(a) has no geographical
or territorial restriction or limitation, and it applies wherever the
Consultant may be located.
(b) Until September 30, 2001, the Consultant will not (i)
actively solicit, either directly or indirectly through any third
person, any other consultant or any employee of the Company to
terminate his or her employment with the Company or (ii) employ, assist
in employing, or otherwise associate in business with, any other
consultant or any employee of the Company, without the written consent
of the Company.
(c) Until September 30, 2001, the Consultant will not, either
directly or indirectly, (i) be employed by, consult for, engage in any
business for, or have any ownership interest in any business entity
engaged in the business, or otherwise engage in the business, conducted
by the Company (which currently includes that of aviation services and
commercial security); (ii) call on, solicit or communicate with any of
the Company's customers or prospects other than for the benefit of the
Company; or (iii) interfere in any way with the Company's operation of
its business. Ownership, for personal investment purposes only, of
equity of the Company in conformance with the stock restriction
agreement and the voting trust agreement referred to above or of not in
excess of one percent (1%) of the voting stock of any publicly held
corporation will not constitute a violation hereof.
(d) The Consultant agrees that whenever the Term of Consulting
ends for any reason, all documents containing or referring to the
Company's Confidential Materials and Information as may be in the
Consultant's possession, or over which the Consultant may have control,
will be delivered by the Consultant to the Company immediately, with no
request being required.
(e) In the event the Consultant will violate any legally
enforceable provision of this Section 8 as to which there is a specific
time period during which he is prohibited from taking certain actions
or from engaging in certain activities, as set forth in such provision,
then, in such event, such violation will toll the running of such time
period from the date of such violation until such violation will cease.
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(f) The Consultant has carefully considered the nature and
extent of the restrictions upon him and the rights and remedies
conferred upon the Company under this Section 8, and acknowledges and
agrees that the same are reasonable in time and territory, are designed
to eliminate competition which otherwise would be unfair to the
Company, do not stifle the inherent skill and experience of the
Consultant, would not operate as a bar to the Consultant's sole means
of support, are fully required to protect the legitimate interests of
the Company and do not confer a benefit upon the Company
disproportionate to the detriment to the Consultant.
(g) In addition to the forgoing, the parties agrees that this
Agreement and the terms hereof are considered strictly confidential.
Each of the parties acknowledges and agrees that disclosure to anyone
without the express prior written consent of the other party hereto
will be a breach of this Agreement and cause this Agreement (other than
Sections 8 and 9) and all rights granted to the breaching party herein
to be immediately terminated, null and void and extinguished without
recourse. It is agreed that solely to the extent necessary to advise a
party hereto regarding legal and financial matters, disclosure of the
terms hereof by such party to his or its advisors, officers, directors
and employees on a need to know basis (provided such advisors are
advised of the confidentiality obligations relating to such information
and provided the disclosing party will be responsible for any
disclosure by such advisors as if made by such party) will not violate
this Section 8, nor will disclosure by such party to the extent
required by law, statute, rule or regulation or directed by a court or
governmental agency provided in any case the disclosing party notifies
the other party hereto in advance of any such disclosure. It is
acknowledged that the Company shall be permitted, and it shall not be a
breach of this Agreement, to disclose this Agreement and the terms
hereof and to file a copy of this Agreement, as part of the Company's
filing obligations under the federal securities laws and no prior
written consent of the Consultant shall be required in connection
therewith. It is further agreed that to the extent any term hereof is
disclosed by one party in breach of this Section 8(g) (other than to a
court or governmental agency under protection of an appropriate
confidential treatment order), the other party hereto will be entitled
to disclose such term without liability hereunder.
9. SURVIVAL OF COVENANTS. Notwithstanding anything herein to the
contrary, upon termination of the Term of Consulting for any reason (other than
a payment default by the Company under Sections 1(b) or 3(a) hereof, which
payment default continues for more than five days after the Company receives
notice of such default from the Consultant (in accordance with the terms hereof)
unless the Company's failure to make payment is as a result of a Breach) the
provisions of Sections 8 and 9 of this Consulting Agreement will remain in full
force and effect, and will be binding on and enforceable against the Consultant
and the Company as though such termination had not occurred. The Consultant
acknowledges that his agreement to the survival of the terms and conditions of
Sections 8 and 9 of this Consulting Agreement constitutes a material inducement
to the Company to enter into this Consulting Agreement. The Consultant expressly
agrees and understands that the remedy at law for any breach by him of Sections
8 or 9 will be inadequate and that the damages flowing from such breach are not
readily susceptible to being
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measured in monetary terms. Accordingly, it is acknowledged that upon adequate
proof of the Consultant's violation of any legally enforceable provision of
Sections 8 or 9, the Company will be entitled to immediate injunctive relief and
may obtain a temporary order restraining any threatened or further breach.
Nothing in Sections 8 and 9 will be deemed to limit the Company's remedies at
law or in equity for any breach by the Consultant of any of the provisions of
Sections 8 or 9 which may be pursued or availed of by the Company.
10. THE CONSULTANT'S REPRESENTATIONS. The Consultant represents and
warrants to and with the Company that the Consultant is not bound by or subject
to, and that he has not entered into, any covenants, agreements or restrictions
which would be breached or violated by the Consultant's execution of this
Consulting Agreement or by the Consultant's performance of his duties hereunder.
The Consultant further represents and warrants to and with the Company that, as
of the date hereof, he has not breached or violated any representation,
warranty, covenant or agreement set forth in this Consulting Agreement, and as
of the date hereof there does not exist any breach or violation of any
representation, warranty, covenant or agreement set forth in this Consulting
Agreement. The Consultant further represents and warrants to and with the
Company that, as of the date hereof, he has delivered to the Company all
documents, letters, notices, agreements, correspondence and similar instruments
received by the Consultant in his capacity as an officer, director or employee
of the Company during his employment by the Company, which were not left in the
Company's office by the Consultant on October 19, 1999 and are no longer in the
Consultant's control.
11. MISCELLANEOUS. This Agreement will be binding on and inure to the
benefit of the parties and their respective successors, permitted assigns,
heirs, executors and legal representatives. No amendment, modification, or
waiver of any provision of this Agreement, nor consent to any departure by the
Consultant therefrom, will be effective unless the same will be in writing and
signed by the Company. This Agreement will be governed by and construed in
accordance with the laws of the State of Ohio. Any notices or other
communications required or permitted under this Agreement will be deemed to have
been effectively given and made if in writing and if served either by personal
delivery or facsimile transmission to the party for whom it is intended or by
being deposited postage prepaid, in the first class United States mail,
certified or registered mail, return receipt requested, addressed as follows:
If to the Company: If to the Consultant:
International Total Services, Inc. Xxxxxx X. Xxxxxxx
Crown Centre 0000 Xxxx Xxxxxx
0000 Xxxxxxxx Xxxx Xxxxx Xxxxx, XX 00000
Xxxxxxxxxxxx, XX 00000 Telephone No. (000) 000-0000
Attention: Board of Directors Facsimile No. (000) 000-0000
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
12. ATTORNEY FOR THE CONSULTANT. The Consultant acknowledges that the
Consultant has retained such separate and independent legal counsel and advice
as the Consultant deems
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appropriate to advise the Consultant in connection with the execution and
delivery of this Agreement, that the Consultant is not relying on legal counsel
to the Company in this regard, and that the Consultant understands the terms and
conditions hereof which have been reviewed with the Consultant and explained by
such separate and independent legal counsel as the Consultant deems appropriate.
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13. CONSENT TO JURISDICTION AND FORUM. The Consultant expressly and
irrevocably agrees that the Company may bring any action, whether at law or in
equity, arising out of or based upon this Agreement or the Consultant's
consulting with the Company in the State of Ohio or in any federal court
therein. The Consultant irrevocably consents to personal jurisdiction in such
court and to accept service of process in accordance with the provisions of the
laws of the State of Ohio.
14. MULTIPLE COUNTERPARTS. This Agreement may be signed in multiple
counterparts (including by facsimile transmission), all of which taken together
will constitute an original agreement. The execution by one party of any
counterpart will be sufficient execution by that party, whether or not the same
counterpart has been executed by any other party.
15. SEVERABILITY. If any paragraph, subparagraph or provision of this
Agreement is found for any reason whatsoever to be invalid or inoperative, that
paragraph, subparagraph or provision shall be deemed severable and shall not
affect the force and validity of any other provision of this Agreement. If any
paragraph, subparagraph or provision of this Agreement is determined by a court
or arbitrator to be invalid or inoperative, the parties agree and it is their
desire that such court shall substitute a reasonable judicially enforceable
provision in place of the invalid or inoperative provision and that as so
modified the provision shall be as fully enforceable as if set forth herein by
the parties themselves in the modified form.
IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Consulting Agreement on the date first above written.
THE CONSULTANT
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
INTERNATIONAL TOTAL SERVICES, INC.
By: /s/ H. Xxxxxxx Xxxxxxxx
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Its Co-Chairman of the Board if Directors
