Document:

exv10w38

 

Exhibit 10.38

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is effective March 19, 2007, by and between James
Lusk (“Executive”) and ABM Industries Incorporated (“ABM”) for itself and on behalf of its
subsidiary corporations as applicable herein.

WHEREAS, the subsidiaries of ABM are engaged in the building maintenance and related service
businesses, and

WHEREAS, Executive is experienced in the administration, finance, marketing, and/or operation of
such services, and

WHEREAS, ABM and its subsidiaries have invested significant time and money to develop proprietary
trade secrets and other confidential business information, as well as invaluable goodwill among its
customers, sales prospects and employees, and

WHEREAS, ABM and its subsidiaries have disclosed or will disclose to Executive such proprietary
trade secrets and other confidential business information which Executive will utilize in the
performance of Executive’s duties and responsibilities as Executive Vice President and under this
Agreement; and

WHEREAS, Executive wishes to, or has been and desires to remain employed by ABM, and to utilize
such proprietary trade secrets, other confidential business information and goodwill in connection
with Executive’s employment;

NOW THEREFORE, Executive and ABM agree as follows:

	1.	 	EMPLOYMENT. ABM hereby agrees to employ Executive, and Executive hereby accepts such
employment, on the terms and conditions set forth in this Agreement.
	 
	2.	 	TITLE. Executive’s title shall be Executive Vice President of ABM, subject to modification
as determined by ABM’s Board of Directors.
	 
	3.	 	DEFINITIONS. The capitalized terms used in this agreement shall have the following
definitions:

	 	A.	 	“AAA” means the American Arbitration Association.
	 
	 	B.	 	“ABM” means ABM Industries Incorporated and its successors and assigns.
	 
	 	C.	 	“Base Salary” means the salary paid under Paragraph 7A for the applicable
Fiscal Year.
	 
	 	D.	 	“Board” means the Board of Directors of ABM.

			
	 	 	 
	James Lusk
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	 	E.	 	“Bonus” means a performance-based bonus payable under Paragraph 7B of this
Agreement.
	 
	 	F.	 	“Chief Executive Officer” means the Chief Executive Officer of ABM.
	 
	 	G.	 	“Company” means ABM, its subsidiaries, successors, and assigns.
	 
	 	H.	 	“Compensation Committee” means the Compensation Committee of the Board.
	 
	 	I.	 	“EPS” means earnings per share for the applicable Fiscal Year as reported by
ABM in its Annual Report on Form 10-K.
	 
	 	J.	 	“Executive” means James Lusk.
	 
	 	K.	 	“Extended Term” means the period for which this agreement is extended under
Paragraph 15 of this Agreement.
	 
	 	L.	 	“Fiscal Year” means the period beginning on November 1 of a calendar year and
ending on October 31 of the following calendar year or such other period as shall be
designated by the Board as ABM’s fiscal year.
	 
	 	M.	 	“Initial Term” is the period beginning on March 19, 2007 and ending March 31,
2009, unless sooner terminated under Paragraph 16 of this Agreement.
	 
	 	N.	 	“Insurance Contribution” means ABM’s contribution to provide group health and
life insurance for Executive and excludes any payment by Executive for such coverage.
	 
	 	O.	 	“Just Cause” means (i) theft or dishonesty, (ii) more than one instance of
neglect or failure to perform employment duties, (iii) more than one instance of
inability or unwillingness to perform employment duties, (iv) insubordination, (v)
abuse of alcohol or other drugs or substances affecting Executive’s performance of
Executive’s employment duties, (vi) material and willful breach of this Agreement,
(vii) other misconduct, unethical or unlawful activity, (viii) a conviction of or plea
of “guilty” or “no contest” to a felony under the laws of the United States or any
state thereof, or (ix) a conviction of or plea of “guilty” or “no contest” to a
misdemeanor involving a crime of moral turpitude under the laws of the United States or
any state thereof.
	 
	 	P.	 	“Modification Period” means the remainder of the Initial or the then current
Extended Term, as applicable, of this Agreement, following the change in Executive’s
employment status from that of a full-time employee to that of a part-time employee
under Paragraph 14 of this Agreement.
	 
	 	Q.	 	“Performance Assessment” means the Chief Executive Officer’s annual assessment
of Executive’s performance against the Performance Criteria.

			
	 	 	 
	James Lusk
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	 	R.	 	“Performance Criteria” means the performance criteria for Executive established
annually by the Chief Executive Officer in accordance with Paragraph 7B of this
Agreement.
	 
	 	S.	 	“Proprietary Information” means Company’s proprietary trade secrets and other
confidential information not in the public domain, including but not limited to
specific customer data such as: (i) the identity of Company’s customers and sales
prospects, (ii) the nature, extent, frequency, methodology, cost, price and profit
associated with services and products purchased from Company, (iii) any particular
needs or preferences regarding its service or supply requirements, (iv) the names,
office hours, telephone numbers and street addresses of its purchasing agents or other
buyers, (v) its billing procedures, (vi) its credit limits and payment practices, and
(vii) its organization structure.
	 
	 	T.	 	“Section 162(m)” means Section 162(m) of the Internal Revenue Code of 1986, as
amended, or any successor statute.
	 
	 	U.	 	“Significant Transaction” means ABM Industries Incorporated’s acquisition or
disposition of a business or assets which ABM Industries Incorporated is required to
report under Item 2.01 of Form 8-K under the rules and regulations issued by the
Securities and Exchange Commission.
	 
	 	V.	 	“State of Employment” means New York.
	 
	 	W.	 	“Target Bonus” means a percentage of Executive’s Base Salary as established by
the Compensation Committee.
	 
	 	X.	 	“Total Disability” means Executive’s inability to perform Executive’s duties
under this Agreement and shall be deemed to occur on the 91st consecutive or
non-consecutive calendar day within any 12 month period that Executive is unable to
perform Executive’s duties under this Agreement because of any physical or mental
illness or disability.

	4.	 	DUTIES & RESPONSIBILITIES. Executive shall assume and perform such executive or managerial
duties and responsibilities as are assigned from time-to-time by the Chief Executive Officer,
to whom Executive shall report and be accountable.
	 
	5.	 	TERM OF AGREEMENT. This agreement shall end on March 31, 2009, unless sooner terminated
pursuant to Paragraph 16 or later extended to an Extended Term under Paragraph 15 of this
Agreement.
	 
	6.	 	PRINCIPAL OFFICE. During the Initial Term and any Extended Term, as applicable, of this
Agreement, Executive shall be based at a Company office located in the State of Employment or
such other location as shall be mutually agreed upon by Company and Executive.

			
	 	 	 
	James Lusk
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	7.	 	COMPENSATION. Company agrees to compensate Executive, and Executive agrees to accept as
compensation in full, for Executive’s assumption and performance of duties and
responsibilities pursuant to this Agreement:

	 	A.	 	SALARY. An annual salary paid in equal installments no less frequently than
semi-monthly. Executive shall be eligible, at the sole discretion of the Compensation
Committee, to receive a merit increase based on Executive’s job performance or for any
other reason deemed appropriate by the Compensation Committee.
	 
	 	B.	 	BONUS. Subject to subparagraphs (iii), (iv) and (v) below, Executive shall be
entitled to a Bonus for each Fiscal Year, as follows:

	 	i.	 	Executive’s Bonus may range from 0% to 180% of the Target Bonus
and shall be based on the Performance Assessment of Executive for the
applicable Fiscal Year evaluated on the basis of the Performance Criteria.
Performance Criteria may include both ABM and individual objectives, may be
both qualitative and quantitative in nature and shall be established by the
Chief Executive Officer, reviewed by the Compensation Committee, and
communicated to Executive within 90 days after the beginning of the Fiscal Year
for which they apply. The determination of the Bonus amount for each Fiscal
Year shall be determined by the Compensation Committee based upon the
Performance Assessment and the recommendation of the Chief Executive Officer.
	 
	 	ii.	 	The Compensation Committee reserves the right at any time to
adjust the Performance Criteria in the event of a Significant Transaction
and/or for any unanticipated and material events that are beyond the control of
ABM, including but not limited to acts of god, nature, war or terrorism, or
changes in the rules for financial reporting set forth by the Financial
Accounting Standards Board, the Securities and Exchange Commission, rules of
the New York Stock Exchange and/or for any other reason which the Compensation
Committee determines, in good faith, to be appropriate.
	 
	 	iii.	 	ABM shall pay Executive the Bonus for each Fiscal Year
following completion of the audit of ABM’s financial statements for such Fiscal
Year and within 10 days after determination of the Bonus by the Compensation
Committee. In the event of modification of employment under Paragraph 14 or
termination of employment hereunder other than (a) a termination under
Paragraph 16B, (b) a termination under Paragraph 16C for reasons other than
Executive’s health, or (c) Executive’s retiring at age 65 or more with no less
than 10 years of employment at Company, ABM shall pay Executive, within 75 days
thereafter, a prorated portion of the Target Bonus based on the fraction of the
Fiscal Year that has been completed prior to the date of modification or
termination.

			
	 	 	 
	James Lusk
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	 	iv.	 	Absent bad faith or material error, any conclusions of the
Chief Executive Officer with respect to the Performance Assessment or the
Compensation Committee with respect to the Performance Criteria or the Bonus
shall be final and binding upon Executive and ABM.
	 
	 	v.	 	No Bonus for any Fiscal Year of ABM (other than the payment of
a prorated portion of the Target Bonus under Paragraph 7B(iii) following a
modification or termination of employment) shall be payable unless ABM’s EPS
for the Fiscal Year then ending is equal to or greater than 80% of ABM’s EPS
for the previous Fiscal Year of ABM, in each case excluding any gains and
losses from sales of discontinued operations and any WTC Related Gain.
	 
	 	vi.	 	Notwithstanding any other provision of this Agreement, the
Compensation Committee may, prior to the beginning of any Fiscal Year, approve
and notify the Executive of a modification to the Target Bonus or the bonus
range set forth in subparagraph (i) above. The Compensation Committee’s
decision in this regard shall be deemed final and binding on Executive. In
addition, the Compensation Committee may grant a discretionary incentive bonus
to Executive at any time in its sole discretion.

	 	C.	 	PERQUSITES. Executive shall receive the then current perquisites generally
provided by ABM to its executives. Such perquisites may include but not be limited to
the use of an ABM-leased car or a car allowance, group health benefits, long-term
disability benefits, group life insurance, sick leave and vacation. Each of these
perquisites is subject to the applicable ABM policy at all times. Executive expressly
agrees that should Executive terminate employment with ABM for the purpose of being
re-employed by an ABM subsidiary or affiliate, Executive shall “carry-over” any
previously accrued but unused vacation balance to the books of the affiliate. ABM
reserves the right to add, increase, reduce or eliminate any perquisite at any time,
but no such perquisite or perquisites shall be reduced or eliminated as to Executive
unless generally reduced or eliminated as to senior executives at ABM.
	 
	 	D.	 	LIMIT. To the extent that any compensation to be paid to Executive under
this Agreement would cause compensation payable to Executive to be non-deductible by
ABM as a result of the $1 million compensation limit provisions of Section 162(m),
Executive agrees that any such amount in excess of $1 million shall not be paid out to
Executive but shall be deferred by Executive under the ABM Deferred Compensation Plan.
The distribution of such deferred amounts will be made in accordance with the ABM
Deferred Compensation Plan. Amounts deferred by Executive will be credited with
interest or gains and losses in accordance with the ABM Deferred Compensation Plan.

	8.	 	PAYMENT OR REIMBURSEMENT OF BUSINESS EXPENSES. ABM shall pay directly or reimburse Executive
for reasonable business expenses of ABM incurred by

			
	 	 	 
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	 	Executive in connection with ABM business in accordance with the ABM Travel & Entertainment
Policy.

	9.	 	BUSINESS CONDUCT. Executive shall comply with all applicable laws pertaining to the
performance of this Agreement, and with all lawful and ethical rules, regulations, policies,
codes of conduct, procedures and instructions of Company, including but not limited to the
following:

	 	A.	 	GOOD FAITH. Executive shall not act in any way contrary to the best interest
of Company.
	 
	 	B.	 	BEST EFFORTS. During all full-time employment hereunder, Executive shall
devote full working time and attention to ABM.
	 
	 	C.	 	VERACITY. Executive shall make no claims or promises to any employee,
supplier, contractor, customer or sales prospect of Company that are unauthorized by
Company or are in any way untrue.
	 
	 	D.	 	POSSIBLE CHANGE OF CONTROL. Executive agrees that if Executive is approached
by any person to discuss a possible acquisition or other transaction that could result
in a change of control of ABM, Executive will immediately advise the Chief Executive
Officer, ABM’s General Counsel and the Chair of the Governance Committee of the Board.
	 
	 	E.	 	CODE OF BUSINESS CONDUCT. Executive agrees to fully comply with and
annually execute a certification of compliance with ABM’s Code of Business Conduct and
Ethics.
	 
	 	F.	 	OTHER LAWS. Executive agrees to fully comply with the other laws and
regulations that govern Executive’s performance and receipt of compensation under this
Agreement, including but not limited to the provisions of Section 304 of the
Sarbanes-Oxley Act of 2002.

	10.	 	NO CONFLICT. Executive represents to ABM that Executive is not bound by any contract with a
previous employer or with any other business that might prevent Executive from entering into
this Agreement. Executive further represents that Executive is not bound by any other
contracts or covenants that in any way restrict or limit Executive’s activities in relation to
Executive’s or her employment with ABM that have not been fully disclosed to ABM prior to the
signing of this Agreement.

	11.	 	COMPANY PROPERTY. ABM shall, from time to time, entrust to the care, custody and
control of Executive certain of Company’s property, such as motor vehicles, equipment,
supplies, passwords and electronic and paper documents. Such documents may include, but
shall not be limited to, customer lists, financial statements, cost data, price lists,
invoices, forms, electronic files and media, mailing lists, contracts, reports, manuals,
personnel files or directories, correspondence, business cards, copies or notes made from
Company documents and documents compiled or prepared by Executive for

			
	 	 	 
	James Lusk
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	 	 	Executive’s use in connection with Company business. Executive specifically acknowledges
that all such items, including passwords and documents, are the property of Company,
notwithstanding their preparation, care, custody, control or possession by Executive at any
time(s) whatsoever.

	12.	 	GOODWILL & PROPRIETARY INFORMATION. In connection with Executive’s employment hereunder:

	 	A.	 	PROPRIETARY INFORMATION. Executive agrees to utilize and further Company’s
goodwill among its customers, sales prospects and employees, and acknowledges that
Company may disclose to Executive and Executive may disclose to Company Proprietary
Information.
	 
	 	B.	 	DUTY OF LOYALTY. Executive agrees that the Proprietary Information and
Company’s goodwill have unique value to Company, are not generally known or readily
available to Company’s competitors, and could only be developed by others after
investing significant time and money. ABM makes the Proprietary Information and
Company’s goodwill available to Executive in reliance on Executive’s agreement to hold
the Proprietary Information and Company’s goodwill in trust and confidence. Executive
hereby acknowledges that to use this Proprietary Information and Company’s goodwill
other than for the benefit of Company would be a breach of such trust and confidence
and a violation of Executive’s duty of loyalty to Company.

	13.	 	RESTRICTIVE COVENANTS. In recognition of Paragraph 12 above, Executive hereby agrees that
during the term of this Agreement and thereafter as specifically agreed herein:

	 	A.	 	NON-SOLICITATION OF EMPLOYEES. While employed by ABM and for a period of one
year following Executive’s termination of employment, Executive shall at no time
directly or indirectly solicit or otherwise encourage or arrange for any employee to
terminate employment with Company except in the proper performance of this Agreement.
	 
	 	B.	 	NON-DISCLOSURE. Except in the proper performance of this Agreement, Executive
shall not directly or indirectly disclose or deliver to any other person or business,
any Proprietary Information obtained directly or indirectly by Executive from, or for,
Company.
	 
	 	C.	 	NON-SOLICITATION OF CUSTOMERS. Executive agrees that for a reasonable time
after the termination of this Agreement, which Executive and ABM hereby agree to be one
year, Executive shall not directly or indirectly, for Executive or for any other person
or business, seek, solicit, divert, take away, obtain or accept any customer account or
sales prospect with which Executive had direct business involvement on behalf of
Company within one year prior to termination of this Agreement. In addition, Executive
agrees that at all times after the termination of this Agreement, Executive shall not
seek, solicit, divert,

			
	 	 	 
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	 	 	 	take away, obtain or accept the patronage of any customer or sales prospect of
Company through the direct or indirect use of any Proprietary Information or by any
other unfair or unlawful business practice.
	 
	 	D.	 	NON-DISPARAGEMENT. During Executive’s employment with ABM and for a period of
two years following termination of employment (whether voluntary or involuntary),
Executive agrees not to make any comment or take any action which disparages, defames,
or places in a negative light Company, its past and present officers, directors, and
employees. ABM agrees that during this same period, its officers and directors shall
refrain from making any comment or taking any action to disparage, defame, or place
Executive in a negative public light.
	 
	 	E.	 	COOPERATION. Upon termination of employment hereunder, Executive shall
cooperate with Company in its defense or prosecution of any current or future matter in
any forum, including but not limited to lawsuits, federal, state or local agency
claims, audits and investigations, and internal and external investigations concerning
any matter in which Executive was involved during Executive’s employment with ABM or
about which Executive has or should have knowledge and information. Executive’s
cooperation shall include, but is not limited to, meeting with ABM’s in-house and/or
outside attorneys, communicating Executive’s knowledge of relevant facts to ABM’s
attorneys, experts, consultants, investigators, executives, management and human
resources employees and other representatives, reviewing and commenting on any relevant
documents, preparing any requested documentation and testifying at depositions,
hearings, arbitrations, trials and any other forum at which Executive’s participation
and testimony is requested by ABM. In performing the tasks outlined in this Paragraph
13E, Executive shall be bound by the covenants of good faith and veracity set forth in
Paragraph 9 of this Agreement and as outlined in ABM’s Code of Business Conduct and
Ethics. In performing responsibilities under this Paragraph 13E, Executive shall be
compensated for Executive’s time at an hourly rate of $250 per hour.
	 
	 	F.	 	LIMITATIONS. Nothing in this Agreement shall be binding upon the parties to
the extent it is void or unenforceable for any reason in the State of Employment,
including, without limitation, as a result of any law regulating competition or
proscribing unlawful business practices.

	14.	 	MODIFICATION OF EMPLOYMENT. At any time during the then current Initial or Extended Term, as
applicable, of this Agreement, upon approval of a majority of the non-management directors of
the Board, the Board shall have the absolute right, with or without cause and without
terminating this Agreement or Executive’s employment hereunder, to remove Executive as
Executive Vice President or from any other position in which Executive is then serving and to
modify the nature of Executive’s employment for the remainder of the then current Initial or
Extended Term, as applicable, from that of a full-time employee to that of a part-time
employee. The Modification Period shall commence immediately upon ABM giving Executive
written notice of such change.

			
	 	 	 
	James Lusk
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	 	A.	 	MODIFICATION ACTIONS. Upon commencement of the Modification Period: (i) Executive shall
immediately resign as an officer and/or director of ABM and of any ABM subsidiaries, as
applicable, (ii) Executive shall promptly return all Company property in Executive’s
possession to Company, including but not limited to any motor vehicles, equipment, supplies
and documents set forth in Paragraph 11 of this Agreement, and (iii) ABM shall pay Executive
when due any and all previously earned, but as yet unpaid, salary, Bonus pursuant to
Paragraph 7B(iii), or other contingent compensation, reimbursement of business expenses and
perquisites.

	 	B.	 	MODIFICATION OBLIGATIONS. During the Modification Period: (i) Executive shall
be deemed a part-time employee and not a full-time employee of ABM, (ii) Executive
shall provide ABM with such occasional executive or managerial services as reasonably
requested by the person(s) designated by the Chief Executive Officer, except that
failure to render such services by reason of any physical or mental illness or
disability other than Total Disability or death, or unavailability because of absence
from the State of Employment, shall not affect Executive’s right to receive payments
under subparagraph 14B(iii), (iii) ABM shall continue to pay Executive’s monthly salary
pursuant to Paragraph 7A of this Agreement and shall pay directly to Executive a
monthly amount equal to the Insurance Contribution immediately prior to the beginning
of the Modification Period, (iv) Executive shall not be eligible or entitled to receive
a Bonus with respect to the Modification Period or participate in any bonus or
perquisites other than the ABM Employee Stock Purchase Plan and 401(k) plan provided
that Executive continues to qualify under the terms of such plans, (v) Executive may
exercise rights under COBRA to obtain medical insurance coverage as may be available to
Executive, and (vi) ABM shall pay directly or reimburse Executive in accordance with
the provisions of Paragraph 8 of this Agreement for reasonable business expenses of ABM
incurred by Executive in connection with such services requested by the person(s)
designated by the Board.

	 	C.	 	MODIFICATION PERIOD. The Modification Period shall continue until the earlier
of: (i) Total Disability or death, (ii) termination of this Agreement by ABM for Just
Cause, (iii) Executive accepts employment or receives any other compensation from
operating, assisting or otherwise being involved or associated with any business that
is similar to or competitive with any business in which Company is engaged on the
commencement date of the Modification Period, or (iv) expiration of the then current
Initial or Extended Term, as applicable, of this Agreement.

15. EXTENSION OF EMPLOYMENT.

	 	A.	 	RENEWAL. Absent at least 90 days written notice of termination of employment
or notice of non-renewal from ABM to Executive prior to expiration of the then current
Initial or Extended Term, as applicable, of this Agreement, employment hereunder shall
continue for an Extended Term (or another Extended Term, as applicable) of one year.

			
	 	 	 
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	 	B.	 	NOTICE OF NON-RENEWAL. In the event that notice of non-renewal is given 90
days prior to the expiration of the then Initial or Extended Term, as applicable, of
this Agreement, employment shall continue on an “at will” basis following the
expiration of such Initial or Extended Term. In such event, ABM shall have the right
to terminate Executive’s employment or to change the terms and conditions of
Executive’s employment, including but not limited to Executive’s position and/or
compensation .

16. TERMINATION OF EMPLOYMENT.

	 	A.	 	TERMINATION UPON EXPIRATION OF TERM. Subject to at least 90 days
prior written notice of termination of employment, Executive’s employment shall
terminate, with or without cause, at the expiration of the then current Initial or
Extended Term. ABM has the option, without terminating this Agreement, of placing
Executive on a leave of absence at the full compensation set forth in Paragraph 7 of
this Agreement, for any or all of such notice period.
	 
	 	B.	 	TERMINATION FOR CAUSE. ABM may terminate Executive’s employment
hereunder at any time during the then current Initial or Extended Term, as applicable,
of this Agreement, without notice subject only to a good faith determination by a
majority of the Board of Just Cause.
	 
	 	C.	 	VOLUNTARY TERMINATION BY EXECUTIVE. At any time during the
then current Initial or Extended Term, as applicable, of this Agreement and with or
without cause, Executive may terminate employment hereunder by giving ABM 90 days prior
written notice. For voluntary termination reasons other than health, Executive will
only receive a prorated Bonus pursuant with Paragraph 7B(iii).
	 
	 	D.	 	DISABILITY OR DEATH. Employment hereunder shall automatically terminate upon
the Total Disability or death of Executive. ABM shall pay when due to Executive or,
upon death, Executive’s designated beneficiary or estate, as applicable, any and all
previously earned, but as yet unpaid, salary, Bonus, other contingent compensation,
reimbursement of business expenses and perquisites which would have otherwise been
payable to Executive under this Agreement, through the end of the month in which Total
Disability or death occurs.
	 
	 	E.	 	ACTIONS UPON TERMINATION. Upon termination of employment hereunder, Executive
shall immediately resign as an officer and/or director of ABM and of any ABM
subsidiaries or affiliates, as applicable. Executive shall promptly return and release
all Company property in Executive’s possession to Company, including but not limited
to, any motor vehicles, equipment, supplies, passwords and documents set forth in
Paragraph 11 of this Agreement. ABM shall pay Executive when due any and all
previously earned, but as yet unpaid, salary, Bonus, other contingent compensation,
reimbursement of business expenses and perquisites.

			
	 	 	 
	James Lusk
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	17.	 	GOVERNING LAW. This Agreement shall be interpreted and enforced in accordance with the laws
of the State of Employment.

18. DISPUTE RESOLUTION.

	 	A.	 	ARBITRATION. Except as provided in Paragraph 18B below, any claim or dispute
related to or arising from this Agreement (whether based in contract, statute or tort,
in law or equity) including, but not limited to, claims or disputes between Executive
and Company or its directors, officers, employees and agents regarding Executive’s
employment or termination of employment hereunder, or any other business of Company,
shall be resolved by binding arbitration in accordance with the following procedures:

	 	i.	 	The arbitration shall be administered by AAA.
	 
	 	ii.	 	Except as modified herein, the arbitration proceeding shall be
administered pursuant to AAA’s Employment Arbitration Rules (see www.adr.org).
	 
	 	iii.	 	The parties will mutually agree upon two neutral arbitrators
who shall be respectively designated the “Pre-hearing Arbitrator” and the
“Hearing Arbitrator.” The Pre-hearing Arbitrator shall preside over all issues
or disputes arising prior to the hearing on the merits, including discovery
issues and pre-hearing motions. The Hearing Arbitrator shall preside over the
formal hearing on the merits and shall have the sole authority to issue a final
and binding award in the matter.
	 
	 	iv	 	 The parties may conduct the following discovery as a matter of
right: (a) two depositions per side, (b) 35 non-compound interrogatories per
side, which shall be answered under penalty of perjury by the responding party,
(c) 35 non-compound document requests, which shall be answered under penalty of
perjury by the responding party. Any additional discovery shall only take
place as stipulated by the parties, as provided by the AAA’s Employment
Arbitration Rules, or as ordered by the Pre-hearing Arbitrator.
	 
	 	v.	 	The Pre-hearing Arbitrator shall hear and rule upon such
motions for summary judgment or summary adjudication as might be made by either
party. Upon receipt of such a motion, the Pre-hearing Arbitrator shall consult
with the parties and establish both a hearing date and a briefing schedule
which allows an opposition and reply submission prior to the hearing.
	 
	 	vi.	 	The cost of such arbitration shall be borne by ABM.
	 
	 	vii.	 	Any such arbitration must be requested in writing within one
year from the date the party initiating the arbitration knew or should have
known

			
	 	 	 
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	 	 	 	about the claim or dispute, or all claims arising from that dispute are
forever waived.
	 
	 	viii.	 	Any such arbitration shall be held in the city and/or county
of employment hereunder. Judgment upon the award rendered through such
arbitration may be entered and enforced in any court having proper
jurisdiction.

	 	B.	 	LITIGATION / COURT ACTION. Disputes involving the threatened or actual breach
of obligations set forth in Paragraphs 12 and 13 of this Agreement shall not be subject
to arbitration. Rather, any such disputes shall be resolved through civil litigation,
which may be filed in any court of competent jurisdiction.

19. REMEDIES & DAMAGES.

	 	A.	 	INJUNCTIVE RELIEF. The parties agree that compliance with Paragraphs 12 and 13
of this Agreement is necessary to protect the business and goodwill of Company, and
that any breach of such Paragraphs will result in irreparable and continuing harm to
Company, for which monetary damages may not provide adequate relief. Accordingly, in
the event of any actual or threatened breach of Paragraphs 12 and 13 of this Agreement
by Executive, ABM and Executive agree that ABM shall be entitled to all appropriate
remedies, including temporary restraining orders and injunctions enjoining or
restraining such actual or threatened breach. Executive hereby consents to the
issuance thereof forthwith by any court of competent jurisdiction.
	 
	 	B.	 	WITHHOLDING AUTHORIZATION. To the fullest extent permitted under the laws of
the State of Employment hereunder, Executive authorizes ABM to withhold from any
severance payments otherwise due to Executive and from any other funds held for
Executive’s benefit by ABM, any damages or losses sustained by Company as a result of
any material breach or other material violation of this Agreement by Executive, pending
resolution of the underlying dispute as provided in Paragraph 18 above.

	20.	 	NO WAIVER. Failure by either party to enforce any term or condition of this Agreement at any
time shall not preclude that party from enforcing that provision, or any other provision of
this Agreement, at any later time.

	21.	 	SEVERABILITY. The provisions of this Agreement are severable. If any arbitrator (or court
as applicable hereunder) rules that any portion of this Agreement is invalid or unenforceable,
the arbitrator’s or court’s ruling shall not affect the validity and enforceability of other
provisions of this Agreement. It is the intent of the parties that if any provision of this
Agreement is ruled to be overly broad, the arbitrator or court shall interpret such provision
with as much permissible breadth as is allowable under law rather than consider such provision
void.

	22.	 	SURVIVAL. All terms and conditions of this Agreement which by reasonable implication are
meant to survive the termination of this Agreement, including but not

			
	 	 	 
	James Lusk
	 	Page 12 of 14

 

 

	 	 	limited to the provisions of Paragraphs 13 and 18 of this Agreement, shall remain in full
force and effect after the termination of this Agreement.

	23.	 	REPRESENTATIONS. Executive represents and agrees that Executive has carefully read and fully
understands all of the provisions of this Agreement, that Executive is voluntarily entering
into this Agreement and has been given an opportunity to review all aspects of this Agreement
with an attorney, if Executive chooses to do so.

	24.	 	NOTICES.

	 	A.	 	ADDRESSES. Any notice required or permitted to be given pursuant to this
Agreement shall be in writing and delivered in person, or sent prepaid by certified
mail, bonded messenger or overnight express, to the party named at the address set
forth below or at such other address as either party may hereafter designate in writing
to the other party:

	 	 	 	 	 
	 

	 	Executive:
	 	James Lusk
	 

	 	 	 	9 Wisteria Way
	 

	 	 	 	Basking Ridge, NJ 07920
	 
	 	 	 	 
	 

	 	Company:
	 	ABM Industries Incorporated
	 

	 	 	 	160 Pacific Avenue, Suite 222
	 

	 	 	 	San Francisco, CA 94111
	 

	 	 	 	Attention: Chief Executive Officer
	 
	 	 	 	 
	 

	 	Copy:
	 	ABM Industries Incorporated
	 

	 	 	 	160 Pacific Avenue, Suite 222
	 

	 	 	 	San Francisco, CA 94111
	 

	 	 	 	Attention: Senior Vice President of Human Resources

	 	B.	 	RECEIPT. Any such notice shall be assumed to have been received when delivered
in person or 48 hours after being sent in the manner specified above.

	25.	 	ENTIRE AGREEMENT. Unless otherwise specified herein, this Agreement sets forth every
contract, understanding and arrangement as to the employment relationship between Executive
and ABM, and may only be changed by a written amendment signed by both Executive and ABM.

	 	A.	 	NO EXTERNAL EVIDENCE. The parties intend that this Agreement speak for itself,
and that no evidence with respect to its terms and conditions other than this Agreement
itself may be introduced in any arbitration or judicial proceeding to interpret or
enforce this Agreement.

	 	B.	 	SUPERSEDES OTHER AGREEMENTS. It is specifically understood and accepted that
this Agreement supersedes all oral and written employment agreements between Executive
and ABM prior to the date of this Agreement as well as all conflicting provisions of
Company’s Human Resources Manual,

			
	 	 	 
	James Lusk
	 	Page 13 of 14

 

 

	 	 	 	including but not limited to the termination, discipline and discharge provisions
contained therein.
	 
	 	C.	 	AMENDMENTS. This Agreement may not be amended except in a writing approved by
the Board and signed by the Executive and the Chief Executive Officer.

IN WITNESS WHEREOF, Executive and the Chief Executive Officer have executed this Agreement
as of the date set forth above.

	 	 	 	 	 
	Executive:

	 	James Lusk	 	 
	 
	 	 	 	 
	 

	 	Signature:
	 	/s/ James Lusk
	 

	 	Date:
	 	March 8, 2007
	 
	 	 	 	 
	Company:

	 	ABM Industries Incorporated
	
	 
	 	 	 	 
	 

	 	Signature:
	 	/s/ Henrik C. Slipsager
	 

	 	Title:
	 	Chief Executive Officer
	 

	 	Date:
	 	March 21, 2007

			
	 	 	 
	James Lusk
	 	Page 14 of 14exv10w39

 

EXHIBIT 10.39

Severance Program

On October 22, 2007, the Compensation Committee of the Board of Directors adopted a severance
program that, in the event the employment of an executive officer of the Company is terminated
without cause, provides the following:

For the Chief Executive Officer, 24 months base salary and target bonus shall be paid, 18
months of benefits shall be provided, and up to 24 months of outplacement services shall be
made available.

For Executive Vice Presidents,18 months base salary and target bonus shall be paid, 18
months of benefits shall be provided, and up to 18 months of outplacement services shall be
made available.

For Senior Vice Presidents who are direct reports to the Chief Executive Officer, 12 months
base salary and target bonus shall be paid, 12 months of benefits shall be provided, and up
to 12 months of outplacement services shall be made available.

For eligible Senior Vice Presidents other than direct reports to the Chief Executive
officer, 9 months base salary shall be paid, 9 months of benefits shall be provided, and up
to 9 months of outplacement services shall be made available.

Severance pay will be paid semi-monthly to ensure compliance with the post-employment contract
terms. In addition, an executive officer shall be eligible for a prorated bonus based on the
number of months worked in such executive officer’s last fiscal year. With respect to benefits,
the Company will pay the employer’s portion of COBRA coverage costs up to the maximum period
specified, provided the former employee remains COBRA-eligible.

A signed release, including acknowledgement of non-competition restrictions and release from any
claims, is required to be received by the Company prior to payment of severance. For executive
officers with an agreement providing for a specific term of employment, officers may elect payments
under the employment agreement rather than the severance program. In addition, in the event of a
change of control, those executive officers with change-in-control severance agreements may elect
to receive payments and benefits under a severance agreement rather than payments under the
severance program.

Executive officers will not be eligible for the severance program unless they enter into new forms
of employment agreements containing post-employment restrictions on solicitation of customers and
employees, use of confidential data, and, for employees employed outside the state of California,
broad restrictions on competitive activities. To date executive officers have not been extended
new forms of employment agreement and named executive officers are not eligible for benefits under
the severance program. The

 

current employment agreements of the named executive officers other than George B. Sundby,
Executive Vice President & Chief Financial Officer, extend through October 31, 2008. Mr. Sundby’s
employment agreement terminates on December 31, 2007.

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