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EXHIBIT 10.21
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 Xxxxxxx X. Xxxx ("Xxxx").
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, Sosh's 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 Sosh and require special dedication and
efforts by Sosh, while at the same time, presenting Sosh with the distraction
and insecurity associated with the potential loss of employment.
WHEREAS, the Corporation has determined that providing Sosh with a
retention incentive and severance protection is appropriate under the
circumstances so as to reinforce Sosh's dedication and focus in furtherance of
the Corporation's strategic objectives;
NOW THEREFORE, the Corporation and Sosh agree as follows:
1. SEVERANCE PACKAGE. In the event the Corporation terminates Sosh's employment
other than for Cause (as defined below) or Sosh terminates employment with the
Corporation for Good Reason (as defined below), the Corporation shall provide
Sosh with the following Severance Package:
A. A lump sum cash severance payment equal to two (2) times (i) Sosh's
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 Sosh's 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 Sosh from the Corporation.
B. The Corporation shall provide Sosh with continued health care
coverage for a period of two (2) years following Sosh's termination of
employment with the Corporation, subject to terms and conditions (including the
rate, if any, charged to Sosh) as are otherwise applicable to active Corporation
officers.
C. The Corporation shall, at its cost, provide Sosh with the services
of a qualified outplacement professional (as selected by Sosh, subject to the
Corporation's approval which will not be unreasonably withheld) to assist Sosh
in seeking and obtaining new employment.
D. The Corporation shall, at its cost, provide Sosh with the personal
computer equipment utilized by Sosh in providing services to the Corporation.
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EXHIBIT 10.21
For purposes hereof, the terms "Cause" shall mean Sosh's fraud
or commission of a felony which results in material injury to the
business or reputation of the Corporation. Sosh 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
Sosh's duties and responsibilities without his consent; (ii) the
Corporation reduces Sosh's level of annual base salary (iii) Sosh's
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 Sosh 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 reason of the fact that he is or was a consultant to or
agent or officer of the Corporation, or is or
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EXHIBIT 10.21
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 Sosh 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 Sosh 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 Sosh 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, Sosh is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
(c) COUNSEL. Sosh 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 Sosh 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
Sosh.
(e) NONEXCLUSIVITY. The parties agree that nothing in this
Agreement shall be construed to limit or negate any rights of Sosh
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
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EXHIBIT 10.21
law, or otherwise, which provides Sosh with broader protection than
that provided herein. The Corporation will maintain officer's acts and
omissions liability insurance for Sosh 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 Sosh 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 Sosh's employment with the Corporation
terminates under circumstances otherwise giving rise to entitlement to the
Severance Package described in Section 1, the Corporation and Sosh shall
promptly enter into a mutual release in the form attached hereto as Exhibit "A".
Failure by Sosh to promptly execute such release shall result in forfeiture of
all compensation and benefits otherwise due Sosh under this Agreement Failure by
the Corporation to promptly execute such release shall result in the Corporation
owing Sosh, in addition to all other amounts owing Sosh 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: H. Xxxxxxx Xxxxxxxx
Co-Chairman of the Board of Directors
/s/ Xxxxxxx X. Xxxx
XXXXXXX X. XXXX
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EXHIBIT 10.21
EXHIBIT "A"
MUTUAL RELEASE
This Mutual Release is made by and between International Total
Services, Inc. (the "Corporation") and Xxxxxxx X. Xxxx ("Sosh"), effective upon
Sosh's termination of employment with the Corporation.
Sosh 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 Sosh 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 Sosh's employment with the Corporation or
the termination of Sosh's 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 Sosh 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
Sosh's position with the Corporation.
The Corporation hereby fully, finally, and unconditionally releases
Sosh 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 Sosh 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 Sosh's employment with the Corporation or
the termination of Sosh's employment. Excluded from this release, however, are
any of the Corporation's rights or claims against Sosh for the commission of a
felony resulting in material injury to the Corporation.
Sosh and the Corporation hereby further acknowledge:
(a) That Sosh 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 Sosh has taken less than
twenty-one (21) days to consider this Agreement, Sosh
acknowledges that Sosh has had sufficient time to
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EXHIBIT 10.21
consider this Agreement and to consult with counsel,
and that Sosh does not desire additional time;
(c) That the benefits offered by the Corporation and
accepted by Sosh as provided herein are in excess of
the benefits that Sosh 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 Sosh 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 Sosh 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: ________________________________
______________________________________
XXXXXXX X. XXXX
Date: ________________________________
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