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EXHIBIT 10.20
RETENTION AND SEVERANCE AGREEMENT
This Retention and Severance Agreement is made effective as of this 3rd
day of August, 2000 by and between International Total Services, Inc. (the
"Corporation") and Xxxxxx X. Xxxxxxx ("Xxxxxxx").
WHEREAS, the Corporation has begun a process involving consideration of
various strategic options which, if pursued and implemented, could result in a
significant change in, or the elimination of, Xxxxxxx'x employment relationship
with the Corporation; and
WHEREAS, the Corporation recognizes that the strategic direction and
the achievement of the Corporation's strategic objectives will likely place
additional demands and burdens on Xxxxxxx and require special dedication and
efforts by Xxxxxxx, while at the same time, presenting Xxxxxxx with the
distraction and insecurity associated with the potential loss of employment.
WHEREAS, the Corporation has determined that providing Xxxxxxx with a
retention incentive and severance protection is appropriate under the
circumstances so as to reinforce Xxxxxxx'x dedication and focus in furtherance
of the Corporation's strategic objectives;
NOW THEREFORE, the Corporation and Xxxxxxx agree as follows:
1. SEVERANCE PACKAGE. In the event the Corporation terminates Xxxxxxx'x
employment other than for Cause (as defined below) or Xxxxxxx terminates
employment with the Corporation for Good Reason (as defined below), the
Corporation shall provide Xxxxxxx with the following Severance Package:
A. A lump sum cash severance payment equal to two (2) times (i)
Xxxxxxx'x annual base salary (as of the date of this Agreement) plus (ii) the
annual bonus (if any) paid during the year preceding the termination, payable
within ten (10) business days following Xxxxxxx'x execution and delivery of the
mutual release referred to in Section 3 of this Agreement. In the event that the
severance payment becomes payable under this Agreement, such payment shall
replace and be in lieu of any other severance payment due to Xxxxxxx from the
Corporation.
B. The Corporation shall provide Xxxxxxx with continued health care
coverage for a period of two (2) years following Xxxxxxx'x termination of
employment with the Corporation, subject to terms and conditions (including the
rate, if any, charged to Xxxxxxx) as are otherwise applicable to active
Corporation officers.
C. The Corporation shall, at its cost, provide Xxxxxxx with the
services of a qualified outplacement professional (as selected by Xxxxxxx,
subject to the Corporation's approval which will not be unreasonably withheld)
to assist Xxxxxxx in seeking and obtaining new employment.
D. The Corporation shall, at its cost, provide Xxxxxxx with the
personal computer equipment utilized by Xxxxxxx in providing services to the
Corporation.
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EXHIBIT 10.20
For purposes hereof, the terms "Cause" shall mean Xxxxxxx'x
fraud or commission of a felony which results in material injury to the
business or reputation of the Corporation. Xxxxxxx shall be deemed to
have "Good Reason" to terminate his employment under this Agreement if,
at any time after August 3, 2000, (i) the Corporation materially
increases Xxxxxxx'x duties and responsibilities without his consent;
(ii) the Corporation reduces Xxxxxxx'x level of annual base salary
(iii) Xxxxxxx'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; (iv) there occurs a
material breach by the Corporation of any of its obligations under this
Agreement; or (v) 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 (the "Voting Trust") made and
entered into as of November 1, 1999 by and among the Corporation,
Xxxxxx X. Xxxxxxx, H. Xxxxxxx Xxxxxxxx, Xxxx X. X'Xxxxx and J. Xxxxxxx
Xxxxx (the "Voting Trust Trustees"), 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; (v) termination of the Voting
Trust or change in the composition of the Voting Trust Trustees; or
(vi) a change in ownership or control sufficient to trigger the
requirements Section 280G of the Internal Revenue Code of 1986 (the
"Code") as amended or the Treasury Regulations or Proposed Treasury
Regulations thereunder.
2. INDEMNIFICATION AND LIABILITY COVERAGE.
(a) INDEMNIFICATION IN NON-DERIVATIVE ACTIONS. The Corporation
shall indemnify Xxxxxxx 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 of this
Agreement) 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
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EXHIBIT 10.20
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 Xxxxxxx 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 Xxxxxxx 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 of this
Agreement) 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 Xxxxxxx 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 adjudication of liability, but in view of all the
circumstances of the case, Xxxxxxx is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
(c) COUNSEL. Xxxxxxx 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 2 apply.
(d) ADVANCE PAYMENT OF EXPENSES. Expenses, excluding
attorneys' fees, incurred in defending any action, suit or proceeding
referred to in this Section 2, 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 Xxxxxxx 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
Xxxxxxx.
(e) NONEXCLUSIVITY. The parties agree that nothing in this
Agreement shall be construed to limit or negate any rights of Xxxxxxx
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
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EXHIBIT 10.20
statutory or common law, or otherwise, which provides Xxxxxxx with
broader protection than that provided herein. The Corporation will
maintain officer's acts and omissions liability insurance for Xxxxxxx
in amounts comparable to that maintained for other executive officers
employed by the Corporation. Such liability insurance shall, at a
minimum, cover all matters giving rise to an indemnification obligation
by the Corporation and such coverage shall remain in effect until the
expiration of the statute of limitations applicable to any claim that
could give rise to such indemnification obligation. In the event that
Xxxxxxx 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.
3. MUTUAL RELEASE. In the event Xxxxxxx'x employment with the Corporation
terminates under circumstances otherwise giving rise to entitlement to the
Severance Package described in Section 1, the Corporation and Xxxxxxx shall
promptly enter into a mutual release in the form attached hereto as Exhibit "A".
Failure by Xxxxxxx to promptly execute such release shall result in forfeiture
of all compensation and benefits otherwise due Xxxxxxx under this Agreement
Failure by the Corporation to promptly execute such release shall result in the
Corporation owing Xxxxxxx, in addition to all other amounts owing Xxxxxxx under
this Agreement, liquidated damages for such failure in the amount of One Hundred
Thousand Dollars ($100,000.00).
4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on the Corporation
and its successors and assigns.
IN WITNESS WHEREOF, the unsigned parties hereby execute this Agreement
effective as of August 3, 2000.
INTERNATIONAL TOTAL SERVICES, INC.
by: /s/ H. Xxxxxxx Xxxxxxxx
Co-Chairman of the Board of Directors
/s/ Xxxxxx X. Xxxxxxx
XXXXXX X. XXXXXXX
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EXHIBIT 10.20
EXHIBIT "A"
MUTUAL RELEASE
This Mutual Release is made by and between International Total
Services, Inc. (the "Corporation") and Xxxxxx X. Xxxxxxx ("Xxxxxxx"), effective
upon Xxxxxxx'x termination of employment with the Corporation.
Xxxxxxx hereby fully, finally, and unconditionally releases the
Corporation, its officers, directors, employees, agents and any of their
predecessors, successors and assigns ("Released Parties") from any and all
claims, suits, demands, charges, debts, grievances, costs, attorneys fees or
injuries of every kind or nature, whether known or unknown, absolute or
contingent, suspected or unsuspected, which Xxxxxxx had or now has against the
Released Parties based on any matter or thing occurring or arising on or prior
to the effective date of this Mutual Release, including but not limited to
claims arising out of or relating to Xxxxxxx'x employment with the Corporation
or the termination of Xxxxxxx'x employment, ANY CLAIM FOR UNPAID COMPENSATION,
BONUS COMPENSATION OR SEVERANCE PAY, PENSION OR ANY OTHER BENEFITS, BREACH OF
EXPRESS AND/OR IMPLIED CONTRACT, WRONGFUL DISCHARGE, EMOTIONAL DISTRESS,
VIOLATION OF PUBLIC POLICY, AND/OR EMPLOYMENT DISCRIMINATION IN VIOLATION OF THE
AGE DISCRIMINATION IN EMPLOYMENT ACT, 29 U.S.C. SS. 621, ET SEQ., TITLE VII OF
THE CIVIL RIGHTS ACT OF 1964, 42 U.S.C. SS. 2000, ET SEQ., THE AMERICANS WITH
DISABILITIES ACT, 42 U.S.C. SS. 12101, ET SEQ., OHIO REVISED CODE SS. 4112, ET
SEQ., AND/OR ANY OTHER FEDERAL, STATE OR MUNICIPAL FAIR EMPLOYMENT PRACTICE OR
DISCRIMINATION LAW, STATUTE, OR ORDINANCE. Excluded from this release, however,
are (i) rights under his written Retention and Severance Agreement with the
Corporation (dated effective as of August 3, 2000) and claims or administrative
charges which cannot be waived by law; (ii) rights to plan benefits under any
plan covered by the Xxxxxxx Retirement Income Security Act of 1974, as amended
("ERISA"); (iii) rights under any other type of benefit plan not covered by
ERISA; and (iv) rights to indemnification and liability coverage associated with
Xxxxxxx'x position with the Corporation.
The Corporation hereby fully, finally, and unconditionally releases
Xxxxxxx from any and all claims, suits, demands, charges, debts, grievances,
costs, attorneys fees or injuries of every kind or nature, whether known or
unknown, absolute or contingent, suspected or unsuspected, which the Corporation
had or now has against Xxxxxxx based on any matter or thing occurring or arising
on or prior to the effective date of this Mutual Release, including but not
limited to claims arising out of or relating to Xxxxxxx'x employment with the
Corporation or the termination of Xxxxxxx'x employment. Excluded from this
release, however, are any of the Corporation's rights or claims against Xxxxxxx
for the commission of a felony resulting in material injury to the Corporation.
Xxxxxxx and the Corporation hereby further acknowledge:
(a) That Xxxxxxx has had the opportunity to review and
consider the terms of this Agreement for a period of
twenty-one (21) days;
(b) To the extent that Xxxxxxx has taken less than
twenty-one (21) days to consider this Agreement,
Xxxxxxx acknowledges that Xxxxxxx has had
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EXHIBIT 10.20
sufficient time to consider this Agreement and to
consult with counsel, and that Xxxxxxx does not
desire additional time;
(c) That the benefits offered by the Corporation and
accepted by Xxxxxxx as provided herein are in excess
of the benefits that Xxxxxxx would otherwise be
entitled to receive;
(d) That each understands and had the opportunity to
receive counsel regarding their respective rights,
obligations and liabilities;
(e) That nothing in this Agreement is or shall be
construed as an admission by the Corporation of any
breach of any agreement or any intentional or
unintentional wrongdoing of any nature;
(f) That neither Xxxxxxx nor the Corporation has made any
representations concerning the terms or effects of
this Agreement other than those contained in this
Agreement, it being clearly understood that this
Agreement (together with the Employment Agreement) is
the sole agreement between the parties and may not be
modified or terminated orally; and
(g) That the terms of this Agreement are not effective or
enforceable until seven (7) days after its execution,
during which period Xxxxxxx may revoke this Agreement
by written notice to the Corporation at 0000 Xxxxx
Xxxxxx, 0000 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxx 00000.
The parties hereto understand and agree this release forever bars each
of them from suing, arbitrating or otherwise asserting a claim against the other
on any released claim.
INTERNATIONAL TOTAL SERVICES, INC.
By: __________________________________
Date: __________________________________
________________________________________
XXXXXX X. XXXXXXX
Date: __________________________________
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