Exhibit 10.2
AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT ("Agreement")
is made and entered into as of this 21st day of November, 2001, by and between
The Wackenhut Corporation, a Florida corporation, its successor or successors,
(hereinafter referred to as the "Company") and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (hereinafter
referred to as the "Executive").
The Executive is a key executive of the Company, and the Company
desires to provide the Executive with an incentive to remain with the Company if
concerns arise over a possible change in control.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the Company and the Executive agree as follows:
1. TERMINATION OF EXECUTIVE EMPLOYMENT. (a) PAYMENTS AND BENEFITS. If the
Executive ceases to be employed by the Company for any reason
(including the delivery of a written resignation to the Company by the
Executive or his authorized representative on the Executive's or his
estate's behalf) at any time during the 12 month period commencing on
the date on which a Change in Control (as defined in Section 2 below)
occurs, then (i) the Company shall pay the Special Termination Payment
(as defined in Section 3 below) to the Executive (or his estate) within
ten days after said termination, (ii) all awards granted pursuant to
The Wackenhut Corporation Employee Long-Term Incentive Stock Plan and
any other unvested stock options or other interests the Executive holds
in the Company's stock or the stock of a subsidiary of the Company
shall become fully vested, all restrictions on restricted stock units
shall lapse, and all performance targets with respect to performance
units or shares will be deemed to have been met as of the date the
Executive's employment is terminated, (iii) the Company shall transfer
all of its interest in any automobile used by the Executive pursuant to
The Wackenhut Corporation Executive Automobile Policy (the "Executive
Automobile Policy") and shall pay the balance of any outstanding loans
or leases on such automobile (whether such obligations are those of the
Executive or the Company) so that the Executive owns the automobile
outright (in the event such automobile is leased, the Company shall pay
the residual cost of such lease), (iv) the Company shall pay to the
Executive, within ten days after said termination, an amount equal to
the Deferred Compensation Payoff Amount defined below in full
satisfaction of the Company's obligations under that certain Amended
and Restated Senior Officer Retirement/Deferred Compensation Agreement
between the Company and the Executive (the "Deferred Compensation
Agreement"), (v) the Company shall continue to provide the Executive
(and if applicable, his beneficiaries) with the Executive Benefits (as
described in Section 4), at no cost to the Executive in no less than
the same amount and, on the same terms and conditions as in effect on
the date on which the Change of Control occurs for a period of 3 years
after the date of termination of the Executive's employment with the
Company, regardless of the cost to the Company, or, alternatively, if
the Executive (or his estate) elects at any time in a written notice
delivered to the Company to waive any particular Executive Benefits,
the
Company shall make a cash payment to the Executive within ten days
after receipt of such election in an amount equal to the present value
of the Company's cost of providing such Executive Benefits from the
date of such election to the end of the foregoing 3-year period, and
such present value shall be determined by reference to the Company's
then-current cost levels and a discount rate equal to 120 percent of
the short-term applicable Federal rate provided for in Section 1274(d)
of the Internal Revenue Code (the "Code") for the month in which the
Change in Control occurs; and (vi) the Company shall pay to the
Executive, within 10 days after said termination, an amount equal to
the sum of (a) the dollar value of vacation time that would have been
credited to the Executive pursuant to the Company's Vacation Policy
dated August 1, 1997, Number ▇▇ ▇▇▇ (the "Vacation Policy") if the
Executive had remained employed by the Company through the "Anniversary
Date" (as defined in the Vacation Policy) immediately following his
termination of employment, multiplied by a fraction, the numerator of
which is the number of days which elapsed from the Executive's
Anniversary Date immediately preceding the date of termination through
the date of such termination, and the denominator of which is 365, plus
(b) the dollar value of vacation time which the Executive was entitled
to have taken immediately prior to the Executive's termination, which
was not in fact taken by the Executive; the dollar value of vacation
time referred to above shall be equal to the amount which would have
been paid to the Executive by the Company during such vacation time had
the vacation time in fact been taken by the Executive immediately prior
to the Executive's termination.
(b) RULES AND DEFINITIONS.
(1) If the Executive dies during the 3-year period
contemplated by clause (v) of the foregoing paragraph (a), the
Company shall provide the Executive Benefits, to the extent
applicable, to the Executive's estate, or make any applicable
cash payments in lieu thereof to said estate. The Executive
shall be deemed to be employed by the Company if the Executive
is employed by the Company or any subsidiary of the Company in
which the Company owns a majority of the subsidiary's voting
securities. Notwithstanding anything else in this Agreement to
the contrary, subsequent reemployment of the Executive by the
Company or any successor of the Company following a Change in
Control will not cause the Executive to forfeit any
compensation or benefits provided in this Agreement.
(2) The "Deferred Compensation Payoff Amount" is the
sum of (i) an amount which will be sufficient to allow the
Executive to purchase an annuity policy issued by a life
insurance company which has the highest ratings from
independent rating agencies (such as Standard & Poor's or A.M.
Best) which will provide after-tax benefits in amounts which
are at least equal to the after-tax benefits the Executive
would have received had the Company paid the deferred
compensation benefits to the Executive pursuant to the
Deferred Compensation Agreement, with payments commencing no
later than 30 days after the issuance of said annuity and at
the same intervals as provided for in the Deferred
Compensation Agreement (the "Annuity
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Funding Amount"), plus (ii) the Deferred Compensation Gross-up
Payment defined below. The Deferred Compensation Gross-up
Payment is an amount which will cause the remainder of the
Deferred Compensation Payoff Amount minus all Applicable Taxes
(defined below) applicable to the Executive as a result of
payment of the Deferred Compensation Payoff Amount, to be
equal to the Annuity Funding Amount prior to deduction of any
Applicable Taxes imposed with respect to the Annuity Funding
Amount."Applicable Taxes" means all federal, state, local and
other taxes, including income taxes, payroll taxes, and any
other taxes, but not including any Excise Tax which is the
subject of Section 3.a of this Agreement. The Deferred
Compensation Gross-up Payment is intended to place the
Executive in the same economic position with respect to the
Annuity Funding Amount that the Executive would have been in
if the Applicable Taxes did not apply. For purposes of
determining after-tax benefits referred to in the definition
of the Annuity Funding Amount above, the taxes to be taken
into account shall be all applicable federal taxes assuming
that the Executive is subject to taxation at the highest
marginal rates. The payment of the Excise Tax Gross-up Payment
provided for in Section 3.a, if applicable, shall be in
addition to the Deferred Compensation Gross-up Payment
referred to above. Upon payment of the Deferred Compensation
Payoff Amount, the Company shall have no further obligation to
make payments with respect to the Deferred Compensation
Agreement.
(3) With respect to any Executive Benefits which are
health benefits subject to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") ("Health Benefits") and
for which continuation coverage under COBRA is elected by the
Participant (at the Participant's expense), the Company shall
provide the Executive with the Health Benefits (at its
expense) contemplated by clause (v) of the foregoing paragraph
(a) for a 3-year period beginning on the date continuation
coverage under COBRA ends, provided that the Executive (or
Executive's estate) does not elect to waive the Health Benefit
in lieu of a cash payment as provided in clause (v) of the
foregoing paragraph (a). If the Executive makes the election
to receive the present value of said Executive Benefits under
clause (v) of paragraph (a), the present value of Executive
Benefits which are Health Benefits shall not be affected by
any COBRA coverage, and this shall not impair the Executive's
right to elect COBRA continuation as contemplated above.
2. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred as of the first day that any
one or more of the following conditions shall have been satisfied:
(i) any "person" as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, (the "Exchange Act")
(other than members of the Controlling Shareholder Group, the Company,
any trustee or other fiduciary holding securities under any employee
benefit plan of the Company, or any company owned, directly or
indirectly, by the
3
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities;
(ii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity,
OTHER THAN a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 80%
of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or
(iii) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets; or
(iv) the total combined voting power of the Company (or any
successor entity) represented by shares of voting stock owned by
members of the Controlling Shareholder Group is reduced to 30 percent
or less.
Notwithstanding the foregoing, in no event shall a Change in
Control be deemed to have occurred, with respect to the Executive, if
the Executive is part of a purchasing group which consummates a
transaction causing a Change in Control. The Executive shall be deemed
"part of a purchasing group" for purposes of the preceding sentence if
the Executive is a direct or indirect equity participant in the
purchasing company or group.
The "Controlling Shareholder Group" includes (i) ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, (ii) the spouse and lineal descendants of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, (iii) any trust whose only beneficiaries are persons
described in the foregoing clauses (i) and (ii), and (iv) Affiliates of
the persons described in the foregoing clauses (i), (ii) and (iii). An
"Affiliate" of a person includes only a corporation, limited liability
company, partnership, or similar entity where all of the voting
securities or ownership interests of said entity are directly owned by
such person. A "person" includes any natural person and any
corporation, limited liability company, partnership, trust or other
entity.
3. SPECIAL TERMINATION PAYMENT. For purposes of this Agreement, the
"Special Termination Payment" shall mean an aggregate amount of money
equal to the product of three (3) multiplied by the sum of the
Executive's annual base salary as in effect at the time of the
termination giving rise to the Special Termination Payment, or if
greater the annual base salary in effect for the calendar year prior to
the date of termination, plus the greater of (i) the annual bonus the
Executive received during the preceding calendar year or (ii) the
largest annual bonus the Executive would have received if his
employment had not been terminated
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in the calendar year in which his employment was terminated assuming
that all targets and incentives are met (regardless of actual results
and criteria). In the event that the Company does not pay the Special
Termination Payment by the due date specified in this Agreement, then
the unpaid amount shall bear interest at the rate of 18 percent per
annum, compounded monthly, until it is paid.
a. EQUALIZATION PAYMENT. If any of the Special Termination
Payment will be subject to the tax (the "Excise Tax") imposed
by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any similar tax that may hereafter be
imposed), the Company shall also pay to the Executive in cash
an additional amount (the "Excise Tax Gross-up Payment") such
that the net amount retained by the Executive after deduction
from the Special Termination Payment and the Excise Tax
Gross-up Payment of any Excise Tax imposed upon the Special
Termination Payment and any federal, state local and other
taxes (including income taxes, payroll taxes, Excise Tax and
any other taxes) imposed upon the Excise Tax Gross-up Payment
shall be equal to the original amount of the Special
Termination Payment, prior to deduction of any Excise Tax
imposed with respect to the Special Termination Payment. The
Excise Tax Gross-up Payment is intended to place the Executive
in the same economic position he would have been in if the
Excise Tax did not apply. The Excise Tax Gross-up Payment
shall be paid to the Executive in full, at the time the
Special Termination Payment is paid pursuant to Section 1
hereof. For purposes of determining the Excise Tax Gross-up
Payment pursuant to this Section 3.a, the Special Termination
Payment shall also include any amounts which would be
considered "Parachute Payments" (within the meaning of Section
280G(b)(2) of the Code) to the Executive, including, but not
limited to, all items listed in Section 1 of this Agreement to
the extent that they are considered to be Parachute Payments
such that the Company will absorb the full cost of any Excise
Tax thereon and all taxes relating to the Company's absorption
of any Excise Taxes.
b. TAX RATES. For purposes of determining the amount of the
Excise Tax Gross-up Payment, the Executive shall be deemed to
pay Federal income taxes at the highest marginal rate of
Federal income taxation in the calendar year in which the
Excise Tax Gross-up Payment is to be made, and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the date of
termination, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state and
local taxes.
c. TAX CALCULATION. Simultaneously with the Company's payment of
the Special Termination Payment, the Company shall deliver to
the Executive a written statement specifying the total amount
of all payments provided for in this Agreement, together with
all supporting calculations. If the Executive disagrees with
the Company's calculation of any of said payments, the
Executive shall submit to the Company, no later than 30 days
after receipt of the Company's calculations, a written
5
notice advising the Company of the disagreement and setting
forth his calculation of said payments. The Executive's
failure to submit such notice within such period shall be
conclusively deemed to be an agreement by the Executive as to
the amount of said payments. If the Company agrees with the
Executive's calculations, it shall pay any shortfall to the
Executive within 20 days after receipt of such a notice from
the Executive, together with interest thereon accruing at the
rate of 18 percent per annum, compounded monthly, from the
original due date of the Special Termination Payment through
the actual date of payment of said shortfall. If the Company
does not agree with the Executive's calculations, it shall
provide the Executive with a written notice within 20 days
after the receipt of the Executive's calculations advising the
Executive that the disagreement is to be referred to an
independent accounting firm for resolution. Such disagreement
shall be referred to an independent "Big 5" accounting firm
which is not the regular accounting firm of the Company and
which is agreed to by the Company and the Executive within 10
days after issuance of the Company's notice of disagreement
(if the parties cannot agree on the identity of the accounting
firm which is to resolve the dispute, the accounting firm
shall be selected by means of a coin toss conducted in Palm
Beach County, Florida by counsel to the Executive on the first
business day after such 10 day period in such manner as such
counsel may specify). The accounting firm shall review all
information provided to it by the parties and submit a written
report setting forth its calculation of the amounts provided
for in this Agreement within 15 days after submission of the
matter to it, and such decision shall be final and binding on
all of the parties. The fees and expenses charged by said
accounting firm shall be paid by the Company. If the amount of
the payment actually paid by the Company was less than the
amount calculated by the accounting firm, the Company shall
pay the shortfall to the Executive within 5 days after the
accounting firm submits its written report, together with
interest thereon accruing at the rate of 18 percent per annum,
compounded monthly, from the original due date of the Special
Termination Payment through the actual date of payment of said
shortfall.
d. SUBSEQUENT RECALCULATION. In the event the Internal Revenue
Service imposes an Excise Tax that is greater than the Excise
Tax assumed for purposes of calculating the Excise Tax
Gross-up Payment, the Company shall reimburse the Executive
for the full amount necessary to make the Executive whole in
accordance with the principles set forth above, including any
interest and penalties which may be imposed.
4. EXECUTIVE BENEFITS. The term "Executive Benefits" means all health,
dental, disability, life insurance, retirement and fringe benefits or
programs now or hereafter established by the Company which cover the
Company's executives or its employees, and applicable family members
and which are in effect on the date on which a Change in Control
occurs. The term "Executive Benefits" also includes, for purposes of
Section 3, the value of the items provided for in clauses (ii) and
(iii) of the first sentence in Section 1.
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5. NON-COMPETITION. In the event that Executive's employment is terminated
pursuant to Section 1 hereof and Executive timely receives payment of
the Special Termination Payment, Executive agrees that for a period of
12 months after such termination of employment not to, directly or
indirectly, own, manage, operate, control or participate in the
ownership, management operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any
financial interest in, or aid or assist anyone else in the conduct of,
any business (a "Competitive Operation") which competes with any
business conducted by the Company, or by any group, division or
subsidiary of the Company for which the Executive has had
responsibility, in any area where such business is being conducted at
the time of such termination. It is understood and agreed that, for the
purposes of the foregoing provisions of this Section 5, no business
which is conducted by the Company at the time of the Executive's
termination and which subsequently is sold or discontinued by the
Company shall be deemed to be a Competitive Operation within the
meaning of this Section 5. Ownership of an amount not to exceed five
percent (5%) of the voting stock of any publicly held corporation shall
not constitute a violation hereof.
6. RELEASE AND INDEMNITY. The Company hereby fully and forever releases,
acquits, discharges and holds the Executive harmless from any and all,
and all manner of, actions and causes of action, claims, suits, costs,
debts, sums of money, claims and demands, presently known or unknown,
whatsoever in law or equity or otherwise, which the Company ever had,
now has or may now have, or will have in the future, by reason of any
matter, cause or thing whatsoever, from the beginning of the world and
all times thereafter. The preceding sentence does not apply to any
matters, events, actions, claims, damages or losses arising from, in
connection with or relating to (i) any intentional illegal conduct of
the Executive, or (ii) conduct of the Executive after the Executive
ceases to be employed by the Company. The Company at all times shall
indemnify, save harmless and reimburse the Executive, from and against
any and all demands, claims, liabilities, losses, actions, suits or
proceedings, or other expenses, fees, or charges of any character or
nature, which the Executive may incur or with which they may be
threatened with, arising from, in connection with, relating to or
arising as a result of Executive's employment by the Company or any
other relationship that the Executive has with the Company as an
officer, director, agent shareholder or otherwise, including without
limitation settlement costs and attorneys' fees and court costs at
trial and appellate levels which the Executive may incur in connection
with settling, defending against or resisting any of the foregoing. The
Company shall pay to the Executive any amounts due with respect to said
indemnity within 5 business days after the Executive issues a written
demand therefor to the Company. The provisions of this section are an
expansion of any rights that the Executive may have with respect to the
subject matter, and no other agreement or arrangement which the Company
may have that benefits the Executive with respect to the subject matter
hereof shall be superseded or limited in any way as a result of the
parties entering into this Agreement.
7
7. EXAMPLES. The operation of this Agreement is illustrated by the example
set forth in Exhibit A attached hereto. Said example is not intended to
limit the manner in which amounts payable hereunder are to be
calculated. If other tax rates, taxes or other charges are applicable,
the calculations shall be adjusted to achieve the same economic result
to the Executive such that the Executive receives all payments under
this Agreement free of costs represented by Excise Taxes or any taxes
relating to the absorption by the Company of Excise Taxes, and also
such that the Annuity Funding Amount is received free not only of
Excise Taxes, but also of all other taxes arising with respect to the
Annuity Funding Amount and the absorption by the Company of all such
taxes. The assumptions set forth in the said example are for
illustrative purposes only, and have no relationship to the actual
amounts that may apply under this Agreement.
8. NOTICES. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when received at the address specified herein. In the case of
Executive, notices shall be delivered to him at the home address which
he has most recently communicated to the Company in writing. In the
case of the Company, notices shall be delivered to the Company's
corporate headquarters, and all notices shall be directed to the
attention of the Company's Chief Executive Officer, with a copy to the
Company's General Counsel.
9. NO MITIGATION. Executive shall not be required to mitigate the amount
of any payment or benefit contemplated by this Agreement upon his
termination of employment (whether by seeking new employment or in any
other manner), nor shall any such payment or benefit be reduced by any
earnings or benefits that Executive may receive from any other source.
10. MODIFICATION AND WAIVER. This Agreement shall not be canceled,
rescinded or revoked, nor may any provision of this Agreement be
modified, waived or discharged unless the cancellation, rescission,
revocation, modification, waiver or discharge is agreed to in writing
and signed by Executive and by the President or Chairman of the Board
of the Company. No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
11. COMPLETE AGREEMENT. This Agreement supersedes all previous severance
agreements entered into by Executive and the Company, including the
Executive Severance Agreement entered into between the parties in the
year 2000. Except as specifically provided in Section 1 of this
Agreement, this Agreement does not affect any deferred compensation
agreements, non-qualified retirement plans, or any other agreements
entered into by the parties.
12. NO ASSIGNMENT. No right, benefit or interest hereunder, shall be
subject to anticipation, alienation, sale, assignment, encumbrance,
charge, pledge, hypothecation, or set-off in respect of any claim, debt
or obligation, or to execution, attachment, levy or similar process, or
assignment by operation of law. Any attempt, voluntary or involuntary,
to effect any
8
action specified in the immediately preceding sentence shall, to the
full extent permitted by law, be null, void and of no effect. This
Agreement is binding on all successors of the Company, whether by
merger, consolidation, purchase or otherwise, and all references to the
Company shall also include references to any such successor.
13. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with and subject to, the laws of the State of
Florida applicable to Agreements made and to be performed entirely
within such State, as to all matters governed by state law or, if
controlling, by applicable federal law.
14. SEVERABILITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in
full force and effect.
15. LITIGATION; VENUE. Any action at law or in equity under this Agreement
shall be brought in the courts of Palm Beach County, Florida, and in no
other court (whether or not jurisdiction can be established in another
court). Each party hereto waives the right to argue that venue is not
appropriate in the courts of Palm Beach County, Florida.
16. EXPENSES. The Company shall reimburse the Executive for all legal
and/or accounting expenses he incurs in connection with the execution,
delivery and enforcement of his rights under this Agreement.
17. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
[Signatures on the Next Page]
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IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Executive Severance Agreement effective the 21st day of November, 2001.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------- ----------------------------------
PRINT NAME OF WITNESS BELOW: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Date: November 20, 2001
-----------------------------
-----------------------------------
PRINT NAME OF WITNESS BELOW:
-----------------------------------
THE WACKENHUT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
----------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
----------------------------------- Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
Date: November 21, 2001
----------------------------------- -----------------------------
PRINT NAME OF WITNESS BELOW:
-----------------------------------
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EXHIBIT A
Page 1 of 2
This example assumes the following:
(i) the Special Termination Payment in Section 1(a)(i)is $1.1 million;
(ii) the Annuity Funding Amount provided for in Section 1(b)(2) is $2
million;
(iii) the combined value of the benefits set forth in clauses (ii),
(iii), (v) and (vi) of Section 1(a) for purposes of Code Section 280G is
$100,000;
(iv) all payments under this Agreement are "parachute payments" under
Code Section 280G(b)(2)(A);
(v) the Executive's base amount under Code Section 280G(b)(3)(A) is
$300,000;
(vi) the present value of the deferred compensation payments due to the
Executive pursuant to the Deferred Compensation Agreement for purposes of Code
Section 280G is $1,800,000; and
(vii) payments made to the Executive under this Agreement are subject
to a maximum federal income tax rate under Code section 1 of 39.1%, a payroll
tax under Code section 3101 of 1.45%, and an excise tax under Code section 4999
of 20%, and no other taxes are applicable.
Under these assumptions, the Deferred Compensation Gross-up Payment
under Section 1(b)(2) of the Agreement is $1,364,171.57, the Deferred
Compensation Payoff Amount under Section 1(b)(2) of the Agreement is
$3,364,171.57, and the Excise Tax Gross-up Payment under Section 3.a is
$1,249,263.15. The calculation of these amounts is set forth in the table set
forth on the following page 2 of this Exhibit A.
EXHIBIT A
Page 2 of 2
A B C D E
----------- ------------ --------------- ------------- -----------------
INCREASED
PRESENT VALUE EXCISE TAX
SPECIAL OF DEFERRED GROSS-UP
TERMINATION VALUE OF OTHER COMPENSATION PAYMENT
1 BASE AMOUNT PAYMENT BENEFITS FROM CELL E5 (B2+C2+D2-A3)XB12
----------- ------------ -------------- ------------ ----------------
2 300,000.00 1,100,000.00 100,000.00 1,564,171.57 1,249,263.15
3
DEFERRED PRESENT VALUE INCREASED
COMPENSATION DEFERRED OF DEFERRED PRESENT VALUE
ANNUITY GROSS-UP COMPENSATION COMPENSATION FOR OF DEFERRED
FUNDING PAYMENT PAYOFF AMOUNT FOR 280G COMPENSATION
4 AMOUNT A5XB13 A5+B5 PURPOSES C5-D5
------------ ------------- ------------- ---------------- --------------
5 2,000,000.00 1,364,171.57 3,364,171.57 1,800,000.00 1,564,171.57
6
7 INCOME TAX RATE 0.39100
8 PAYROLL TAX RATE 0.01450
9 TAX RATE W/O
EXCISE TAX B7+B8 0.40550
10 EXCISE TAX RATE 0.20000
11 TOTAL TAX RATE
ON PARACHUTE
PAYMENTS B9+B10 0.60550
12 EXCISE TAX
GROSS-UP
MULTIPLIER
B10/(1-B11) 0.50697
13 INCOME TAX
GROSS-UP
MULTIPLIER
B9/(1-B9) 0.68209
AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT ("Agreement")
is made and entered into as of this 27th day of November, 2001, by and between
The Wackenhut Corporation, a Florida corporation, its successor or successors,
(hereinafter referred to as the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (hereinafter
referred to as the "Executive").
The Executive is a key executive of the Company, and the Company
desires to provide the Executive with an incentive to remain with the Company if
concerns arise over a possible change in control.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the Company and the Executive agree as follows:
1. TERMINATION OF EXECUTIVE EMPLOYMENT. (a) PAYMENTS AND BENEFITS. If the
Executive ceases to be employed by the Company for any reason
(including the delivery of a written resignation to the Company by the
Executive or his authorized representative on the Executive's or his
estate's behalf) at any time during the 12 month period commencing on
the date on which a Change in Control (as defined in Section 2 below)
occurs, then (i) the Company shall pay the Special Termination Payment
(as defined in Section 3 below) to the Executive (or his estate) within
ten days after said termination, (ii) all awards granted pursuant to
The Wackenhut Corporation Employee Long-Term Incentive Stock Plan and
any other unvested stock options or other interests the Executive holds
in the Company's stock or the stock of a subsidiary of the Company
shall become fully vested, all restrictions on restricted stock units
shall lapse, and all performance targets with respect to performance
units or shares will be deemed to have been met as of the date the
Executive's employment is terminated, (iii) the Company shall transfer
all of its interest in any automobile used by the Executive pursuant to
The Wackenhut Corporation Executive Automobile Policy (the "Executive
Automobile Policy") and shall pay the balance of any outstanding loans
or leases on such automobile (whether such obligations are those of the
Executive or the Company) so that the Executive owns the automobile
outright (in the event such automobile is leased, the Company shall pay
the residual cost of such lease), (iv) the Company shall pay to the
Executive, within ten days after said termination, an amount equal to
the Deferred Compensation Payoff Amount defined below in full
satisfaction of the Company's obligations under that certain Amended
and Restated Senior Officer Retirement/Deferred Compensation Agreement
between the Company and the Executive (the "Deferred Compensation
Agreement"), (v) the Company shall continue to provide the Executive
(and if applicable, his beneficiaries) with the Executive Benefits (as
described in Section 4), at no cost to the Executive in no less than
the same amount and, on the same terms and conditions as in effect on
the date on which the Change of Control occurs for a period of 3 years
after the date of termination of the Executive's employment with the
Company, regardless of the cost to the Company, or, alternatively, if
the Executive (or his estate) elects at any time in a written notice
delivered to the Company to waive any particular Executive Benefits,
the
Company shall make a cash payment to the Executive within ten days
after receipt of such election in an amount equal to the present value
of the Company's cost of providing such Executive Benefits from the
date of such election to the end of the foregoing 3-year period, and
such present value shall be determined by reference to the Company's
then-current cost levels and a discount rate equal to 120 percent of
the short-term applicable Federal rate provided for in Section 1274(d)
of the Internal Revenue Code (the "Code") for the month in which the
Change in Control occurs; and (vi) the Company shall pay to the
Executive, within 10 days after said termination, an amount equal to
the sum of (a) the dollar value of vacation time that would have been
credited to the Executive pursuant to the Company's Vacation Policy
dated August 1, 1997, Number ▇▇ ▇▇▇ (the "Vacation Policy") if the
Executive had remained employed by the Company through the "Anniversary
Date" (as defined in the Vacation Policy) immediately following his
termination of employment, multiplied by a fraction, the numerator of
which is the number of days which elapsed from the Executive's
Anniversary Date immediately preceding the date of termination through
the date of such termination, and the denominator of which is 365, plus
(b) the dollar value of vacation time which the Executive was entitled
to have taken immediately prior to the Executive's termination, which
was not in fact taken by the Executive; the dollar value of vacation
time referred to above shall be equal to the amount which would have
been paid to the Executive by the Company during such vacation time had
the vacation time in fact been taken by the Executive immediately prior
to the Executive's termination.
(b) RULES AND DEFINITIONS.
(1) If the Executive dies during the 3-year period
contemplated by clause (v) of the foregoing paragraph (a), the
Company shall provide the Executive Benefits, to the extent
applicable, to the Executive's estate, or make any applicable
cash payments in lieu thereof to said estate. The Executive
shall be deemed to be employed by the Company if the Executive
is employed by the Company or any subsidiary of the Company in
which the Company owns a majority of the subsidiary's voting
securities. Notwithstanding anything else in this Agreement to
the contrary, subsequent reemployment of the Executive by the
Company or any successor of the Company following a Change in
Control will not cause the Executive to forfeit any
compensation or benefits provided in this Agreement.
(2) The "Deferred Compensation Payoff Amount" is the
sum of (i) an amount which will be sufficient to allow the
Executive to purchase an annuity policy issued by a life
insurance company which has the highest ratings from
independent rating agencies (such as Standard & Poor's or A.M.
Best) which will provide after-tax benefits in amounts which
are at least equal to the after-tax benefits the Executive
would have received had the Company paid the deferred
compensation benefits to the Executive pursuant to the
Deferred Compensation Agreement, with payments commencing no
later than 30 days after the issuance of said annuity and at
the same intervals as provided for in the Deferred
Compensation Agreement (the "Annuity
2
Funding Amount"), plus (ii) the Deferred Compensation Gross-up
Payment defined below. The Deferred Compensation Gross-up
Payment is an amount which will cause the remainder of the
Deferred Compensation Payoff Amount minus all Applicable Taxes
(defined below) applicable to the Executive as a result of
payment of the Deferred Compensation Payoff Amount, to be
equal to the Annuity Funding Amount prior to deduction of any
Applicable Taxes imposed with respect to the Annuity Funding
Amount."Applicable Taxes" means all federal, state, local and
other taxes, including income taxes, payroll taxes, and any
other taxes, but not including any Excise Tax which is the
subject of Section 3.a of this Agreement. The Deferred
Compensation Gross-up Payment is intended to place the
Executive in the same economic position with respect to the
Annuity Funding Amount that the Executive would have been in
if the Applicable Taxes did not apply. For purposes of
determining after-tax benefits referred to in the definition
of the Annuity Funding Amount above, the taxes to be taken
into account shall be all applicable federal taxes assuming
that the Executive is subject to taxation at the highest
marginal rates. The payment of the Excise Tax Gross-up Payment
provided for in Section 3.a, if applicable, shall be in
addition to the Deferred Compensation Gross-up Payment
referred to above. Upon payment of the Deferred Compensation
Payoff Amount, the Company shall have no further obligation to
make payments with respect to the Deferred Compensation
Agreement.
(3) With respect to any Executive Benefits which are
health benefits subject to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") ("Health Benefits") and
for which continuation coverage under COBRA is elected by the
Participant (at the Participant's expense), the Company shall
provide the Executive with the Health Benefits (at its
expense) contemplated by clause (v) of the foregoing paragraph
(a) for a 3-year period beginning on the date continuation
coverage under COBRA ends, provided that the Executive (or
Executive's estate) does not elect to waive the Health Benefit
in lieu of a cash payment as provided in clause (v) of the
foregoing paragraph (a). If the Executive makes the election
to receive the present value of said Executive Benefits under
clause (v) of paragraph (a), the present value of Executive
Benefits which are Health Benefits shall not be affected by
any COBRA coverage, and this shall not impair the Executive's
right to elect COBRA continuation as contemplated above.
2. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred as of the first day that any
one or more of the following conditions shall have been satisfied:
(i) any "person" as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, (the "Exchange Act")
(other than members of the Controlling Shareholder Group, the Company,
any trustee or other fiduciary holding securities under any employee
benefit plan of the Company, or any company owned, directly or
indirectly, by the
3
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities;
(ii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity,
OTHER THAN a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 80%
of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or
(iii) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets; or
(iv) the total combined voting power of the Company (or any
successor entity) represented by shares of voting stock owned by
members of the Controlling Shareholder Group is reduced to 30 percent
or less.
Notwithstanding the foregoing, in no event shall a Change in
Control be deemed to have occurred, with respect to the Executive, if
the Executive is part of a purchasing group which consummates a
transaction causing a Change in Control. The Executive shall be deemed
"part of a purchasing group" for purposes of the preceding sentence if
the Executive is a direct or indirect equity participant in the
purchasing company or group.
The "Controlling Shareholder Group" includes (i) ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, (ii) the spouse and lineal descendants of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, (iii) any trust whose only beneficiaries are persons
described in the foregoing clauses (i) and (ii), and (iv) Affiliates of
the persons described in the foregoing clauses (i), (ii) and (iii). An
"Affiliate" of a person includes only a corporation, limited liability
company, partnership, or similar entity where all of the voting
securities or ownership interests of said entity are directly owned by
such person. A "person" includes any natural person and any
corporation, limited liability company, partnership, trust or other
entity.
3. SPECIAL TERMINATION PAYMENT. For purposes of this Agreement, the
"Special Termination Payment" shall mean an aggregate amount of money
equal to the product of three (3) multiplied by the sum of the
Executive's annual base salary as in effect at the time of the
termination giving rise to the Special Termination Payment, or if
greater the annual base salary in effect for the calendar year prior to
the date of termination, plus the greater of (i) the annual bonus the
Executive received during the preceding calendar year or (ii) the
largest annual bonus the Executive would have received if his
employment had not been terminated
4
in the calendar year in which his employment was terminated assuming
that all targets and incentives are met (regardless of actual results
and criteria). In the event that the Company does not pay the Special
Termination Payment by the due date specified in this Agreement, then
the unpaid amount shall bear interest at the rate of 18 percent per
annum, compounded monthly, until it is paid.
a. EQUALIZATION PAYMENT. If any of the Special Termination
Payment will be subject to the tax (the "Excise Tax") imposed
by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any similar tax that may hereafter be
imposed), the Company shall also pay to the Executive in cash
an additional amount (the "Excise Tax Gross-up Payment") such
that the net amount retained by the Executive after deduction
from the Special Termination Payment and the Excise Tax
Gross-up Payment of any Excise Tax imposed upon the Special
Termination Payment and any federal, state local and other
taxes (including income taxes, payroll taxes, Excise Tax and
any other taxes) imposed upon the Excise Tax Gross-up Payment
shall be equal to the original amount of the Special
Termination Payment, prior to deduction of any Excise Tax
imposed with respect to the Special Termination Payment. The
Excise Tax Gross-up Payment is intended to place the Executive
in the same economic position he would have been in if the
Excise Tax did not apply. The Excise Tax Gross-up Payment
shall be paid to the Executive in full, at the time the
Special Termination Payment is paid pursuant to Section 1
hereof. For purposes of determining the Excise Tax Gross-up
Payment pursuant to this Section 3.a, the Special Termination
Payment shall also include any amounts which would be
considered "Parachute Payments" (within the meaning of Section
280G(b)(2) of the Code) to the Executive, including, but not
limited to, all items listed in Section 1 of this Agreement to
the extent that they are considered to be Parachute Payments
such that the Company will absorb the full cost of any Excise
Tax thereon and all taxes relating to the Company's absorption
of any Excise Taxes.
b. TAX RATES. For purposes of determining the amount of the
Excise Tax Gross-up Payment, the Executive shall be deemed to
pay Federal income taxes at the highest marginal rate of
Federal income taxation in the calendar year in which the
Excise Tax Gross-up Payment is to be made, and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the date of
termination, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state and
local taxes.
c. TAX CALCULATION. Simultaneously with the Company's payment of
the Special Termination Payment, the Company shall deliver to
the Executive a written statement specifying the total amount
of all payments provided for in this Agreement, together with
all supporting calculations. If the Executive disagrees with
the Company's calculation of any of said payments, the
Executive shall submit to the Company, no later than 30 days
after receipt of the Company's calculations, a written notice
5
advising the Company of the disagreement and setting forth his
calculation of said payments. The Executive's failure to
submit such notice within such period shall be conclusively
deemed to be an agreement by the Executive as to the amount of
said payments. If the Company agrees with the Executive's
calculations, it shall pay any shortfall to the Executive
within 20 days after receipt of such a notice from the
Executive, together with interest thereon accruing at the rate
of 18 percent per annum, compounded monthly, from the original
due date of the Special Termination Payment through the actual
date of payment of said shortfall. If the Company does not
agree with the Executive's calculations, it shall provide the
Executive with a written notice within 20 days after the
receipt of the Executive's calculations advising the Executive
that the disagreement is to be referred to an independent
accounting firm for resolution. Such disagreement shall be
referred to an independent "Big 5" accounting firm which is
not the regular accounting firm of the Company and which is
agreed to by the Company and the Executive within 10 days
after issuance of the Company's notice of disagreement (if the
parties cannot agree on the identity of the accounting firm
which is to resolve the dispute, the accounting firm shall be
selected by means of a coin toss conducted in Palm Beach
County, Florida by counsel to the Executive on the first
business day after such 10 day period in such manner as such
counsel may specify). The accounting firm shall review all
information provided to it by the parties and submit a written
report setting forth its calculation of the amounts provided
for in this Agreement within 15 days after submission of the
matter to it, and such decision shall be final and binding on
all of the parties. The fees and expenses charged by said
accounting firm shall be paid by the Company. If the amount of
the payment actually paid by the Company was less than the
amount calculated by the accounting firm, the Company shall
pay the shortfall to the Executive within 5 days after the
accounting firm submits its written report, together with
interest thereon accruing at the rate of 18 percent per annum,
compounded monthly, from the original due date of the Special
Termination Payment through the actual date of payment of said
shortfall.
d. SUBSEQUENT RECALCULATION. In the event the Internal Revenue
Service imposes an Excise Tax that is greater than the Excise
Tax assumed for purposes of calculating the Excise Tax
Gross-up Payment, the Company shall reimburse the Executive
for the full amount necessary to make the Executive whole in
accordance with the principles set forth above, including any
interest and penalties which may be imposed.
4. EXECUTIVE BENEFITS. The term "Executive Benefits" means all health,
dental, disability, life insurance, retirement and fringe benefits or
programs now or hereafter established by the Company which cover the
Company's executives or its employees, and applicable family members
and which are in effect on the date on which a Change in Control
occurs. The term "Executive Benefits" also includes, for purposes of
Section 3, the value of the items provided for in clauses (ii) and
(iii) of the first sentence in Section 1.
6
5. NON-COMPETITION. In the event that Executive's employment is terminated
pursuant to Section 1 hereof and Executive timely receives payment of
the Special Termination Payment, Executive agrees that for a period of
12 months after such termination of employment not to, directly or
indirectly, own, manage, operate, control or participate in the
ownership, management operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any
financial interest in, or aid or assist anyone else in the conduct of,
any business (a "Competitive Operation") which competes with any
business conducted by the Company, or by any group, division or
subsidiary of the Company for which the Executive has had
responsibility, in any area where such business is being conducted at
the time of such termination. It is understood and agreed that, for the
purposes of the foregoing provisions of this Section 5, no business
which is conducted by the Company at the time of the Executive's
termination and which subsequently is sold or discontinued by the
Company shall be deemed to be a Competitive Operation within the
meaning of this Section 5. Ownership of an amount not to exceed five
percent (5%) of the voting stock of any publicly held corporation shall
not constitute a violation hereof.
6. RELEASE AND INDEMNITY. The Company hereby fully and forever releases,
acquits, discharges and holds the Executive harmless from any and all,
and all manner of, actions and causes of action, claims, suits, costs,
debts, sums of money, claims and demands, presently known or unknown,
whatsoever in law or equity or otherwise, which the Company ever had,
now has or may now have, or will have in the future, by reason of any
matter, cause or thing whatsoever, from the beginning of the world and
all times thereafter. The preceding sentence does not apply to any
matters, events, actions, claims, damages or losses arising from, in
connection with or relating to (i) any intentional illegal conduct of
the Executive, or (ii) conduct of the Executive after the Executive
ceases to be employed by the Company. The Company at all times shall
indemnify, save harmless and reimburse the Executive, from and against
any and all demands, claims, liabilities, losses, actions, suits or
proceedings, or other expenses, fees, or charges of any character or
nature, which the Executive may incur or with which they may be
threatened with, arising from, in connection with, relating to or
arising as a result of Executive's employment by the Company or any
other relationship that the Executive has with the Company as an
officer, director, agent shareholder or otherwise, including without
limitation settlement costs and attorneys' fees and court costs at
trial and appellate levels which the Executive may incur in connection
with settling, defending against or resisting any of the foregoing. The
Company shall pay to the Executive any amounts due with respect to said
indemnity within 5 business days after the Executive issues a written
demand therefor to the Company. The provisions of this section are an
expansion of any rights that the Executive may have with respect to the
subject matter, and no other agreement or arrangement which the Company
may have that benefits the Executive with respect to the subject matter
hereof shall be superseded or limited in any way as a result of the
parties entering into this Agreement.
7
7. EXAMPLES. The operation of this Agreement is illustrated by the example
set forth in Exhibit A attached hereto. Said example is not intended to
limit the manner in which amounts payable hereunder are to be
calculated. If other tax rates, taxes or other charges are applicable,
the calculations shall be adjusted to achieve the same economic result
to the Executive such that the Executive receives all payments under
this Agreement free of costs represented by Excise Taxes or any taxes
relating to the absorption by the Company of Excise Taxes, and also
such that the Annuity Funding Amount is received free not only of
Excise Taxes, but also of all other taxes arising with respect to the
Annuity Funding Amount and the absorption by the Company of all such
taxes. The assumptions set forth in the said example are for
illustrative purposes only, and have no relationship to the actual
amounts that may apply under this Agreement.
8. NOTICES. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when received at the address specified herein. In the case of
Executive, notices shall be delivered to him at the home address which
he has most recently communicated to the Company in writing. In the
case of the Company, notices shall be delivered to the Company's
corporate headquarters, and all notices shall be directed to the
attention of the Company's Chief Executive Officer, with a copy to the
Company's General Counsel.
9. NO MITIGATION. Executive shall not be required to mitigate the amount
of any payment or benefit contemplated by this Agreement upon his
termination of employment (whether by seeking new employment or in any
other manner), nor shall any such payment or benefit be reduced by any
earnings or benefits that Executive may receive from any other source.
10. MODIFICATION AND WAIVER. This Agreement shall not be canceled,
rescinded or revoked, nor may any provision of this Agreement be
modified, waived or discharged unless the cancellation, rescission,
revocation, modification, waiver or discharge is agreed to in writing
and signed by Executive and by the President or Chairman of the Board
of the Company. No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
11. COMPLETE AGREEMENT. This Agreement supersedes all previous severance
agreements entered into by Executive and the Company, including the
Executive Severance Agreement entered into between the parties in the
year 2000. Except as specifically provided in Section 1 of this
Agreement, this Agreement does not affect any deferred compensation
agreements, non-qualified retirement plans, or any other agreements
entered into by the parties.
12. NO ASSIGNMENT. No right, benefit or interest hereunder, shall be
subject to anticipation, alienation, sale, assignment, encumbrance,
charge, pledge, hypothecation, or set-off in respect of any claim, debt
or obligation, or to execution, attachment, levy or similar process, or
assignment by operation of law. Any attempt, voluntary or involuntary,
8
to effect any action specified in the immediately preceding sentence
shall, to the full extent permitted by law, be null, void and of no
effect. This Agreement is binding on all successors of the Company,
whether by merger, consolidation, purchase or otherwise, and all
references to the Company shall also include references to any such
successor.
13. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with and subject to, the laws of the State of
Florida applicable to Agreements made and to be performed entirely
within such State, as to all matters governed by state law or, if
controlling, by applicable federal law.
14. SEVERABILITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in
full force and effect.
15. LITIGATION; VENUE. Any action at law or in equity under this Agreement
shall be brought in the courts of Palm Beach County, Florida, and in no
other court (whether or not jurisdiction can be established in another
court). Each party hereto waives the right to argue that venue is not
appropriate in the courts of Palm Beach County, Florida.
16. EXPENSES. The Company shall reimburse the Executive for all legal
and/or accounting expenses he incurs in connection with the execution,
delivery and enforcement of his rights under this Agreement.
17. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
[Signature on the Next Page]
9
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Executive Severance Agreement effective the 27th day of November, 2001.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------ ----------------------------------
PRINT NAME OF WITNESS BELOW: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Date: November 27, 2001
-----------------------------
------------------------------------
PRINT NAME OF WITNESS BELOW:
------------------------------------
THE WACKENHUT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------ -------------------------------
PRINT NAME OF WITNESS BELOW:
------------------------------------ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
Date: November 27, 2001
------------------------------------ --------------------------
PRINT NAME OF WITNESS BELOW:
------------------------------------
10
EXHIBIT A
Page 1 of 2
This example assumes the following:
(i) the Special Termination Payment in Section 1(a)(i)is $1.1 million;
(ii) the Annuity Funding Amount provided for in Section 1(b)(2) is $2
million;
(iii) the combined value of the benefits set forth in clauses (ii),
(iii), (v) and (vi) of Section 1(a) for purposes of Code Section 280G is
$100,000;
(iv) all payments under this Agreement are "parachute payments" under
Code Section 280G(b)(2)(A);
(v) the Executive's base amount under Code Section 280G(b)(3)(A) is
$300,000;
(vi) the present value of the deferred compensation payments due to the
Executive pursuant to the Deferred Compensation Agreement for purposes of Code
Section 280G is $1,800,000; and
(vii) payments made to the Executive under this Agreement are subject
to a maximum federal income tax rate under Code section 1 of 39.1%, a payroll
tax under Code section 3101 of 1.45%, and an excise tax under Code section 4999
of 20%, and no other taxes are applicable.
Under these assumptions, the Deferred Compensation Gross-up Payment
under Section 1(b)(2) of the Agreement is $1,364,171.57, the Deferred
Compensation Payoff Amount under Section 1(b)(2) of the Agreement is
$3,364,171.57, and the Excise Tax Gross-up Payment under Section 3.a is
$1,249,263.15. The calculation of these amounts is set forth in the table set
forth on the following page 2 of this Exhibit A.
EXHIBIT A
Page 2 of 2
A B C D E
----------- ------------ --------------- ------------- -----------------
INCREASED
PRESENT VALUE EXCISE TAX
SPECIAL OF DEFERRED GROSS-UP
TERMINATION VALUE OF OTHER COMPENSATION PAYMENT
1 BASE AMOUNT PAYMENT BENEFITS FROM CELL E5 (B2+C2+D2-A3)XB12
----------- ------------ -------------- ------------ ----------------
2 300,000.00 1,100,000.00 100,000.00 1,564,171.57 1,249,263.15
3
DEFERRED PRESENT VALUE INCREASED
COMPENSATION DEFERRED OF DEFERRED PRESENT VALUE
ANNUITY GROSS-UP COMPENSATION COMPENSATION FOR OF DEFERRED
FUNDING PAYMENT PAYOFF AMOUNT FOR 280G COMPENSATION
4 AMOUNT A5XB13 A5+B5 PURPOSES C5-D5
------------ ------------- ------------- ---------------- --------------
5 2,000,000.00 1,364,171.57 3,364,171.57 1,800,000.00 1,564,171.57
6
7 INCOME TAX RATE 0.39100
8 PAYROLL TAX RATE 0.01450
9 TAX RATE W/O
EXCISE TAX B7+B8 0.40550
10 EXCISE TAX RATE 0.20000
11 TOTAL TAX RATE
ON PARACHUTE
PAYMENTS B9+B10 0.60550
12 EXCISE TAX
GROSS-UP
MULTIPLIER
B10/(1-B11) 0.50697
13 INCOME TAX
GROSS-UP
MULTIPLIER
B9/(1-B9) 0.68209
AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT ("Agreement")
fpis made and entered into as of this 21st day of November, 2001, by and between
The Wackenhut Corporation, a Florida corporation, its successor or successors,
(hereinafter referred to as the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (hereinafter
referred to as the "Executive").
The Executive is a key executive of the Company, and the Company
desires to provide the Executive with an incentive to remain with the Company if
concerns arise over a possible change in control.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the Company and the Executive agree as follows:
1. TERMINATION OF EXECUTIVE EMPLOYMENT. (a) PAYMENTS AND BENEFITS. If the
Executive ceases to be employed by the Company for any reason
(including the delivery of a written resignation to the Company by the
Executive or his authorized representative on the Executive's or his
estate's behalf) at any time during the 12 month period commencing on
the date on which a Change in Control (as defined in Section 2 below)
occurs, then (i) the Company shall pay the Special Termination Payment
(as defined in Section 3 below) to the Executive (or his estate) within
ten days after said termination, (ii) all awards granted pursuant to
The Wackenhut Corporation Employee Long-Term Incentive Stock Plan and
any other unvested stock options or other interests the Executive holds
in the Company's stock or the stock of a subsidiary of the Company
shall become fully vested, all restrictions on restricted stock units
shall lapse, and all performance targets with respect to performance
units or shares will be deemed to have been met as of the date the
Executive's employment is terminated, (iii) the Company shall transfer
all of its interest in any automobile used by the Executive pursuant to
The Wackenhut Corporation Executive Automobile Policy (the "Executive
Automobile Policy") and shall pay the balance of any outstanding loans
or leases on such automobile (whether such obligations are those of the
Executive or the Company) so that the Executive owns the automobile
outright (in the event such automobile is leased, the Company shall pay
the residual cost of such lease), (iv) the Company shall pay to the
Executive, within ten days after said termination, an amount equal to
the Deferred Compensation Payoff Amount defined below in full
satisfaction of the Company's obligations under that certain Amended
and Restated Senior Officer Retirement/Deferred Compensation Agreement
between the Company and the Executive (the "Deferred Compensation
Agreement"), (v) the Company shall continue to provide the Executive
(and if applicable, his beneficiaries) with the Executive Benefits (as
described in Section 4), at no cost to the Executive in no less than
the same amount and, on the same terms and conditions as in effect on
the date on which the Change of Control occurs for a period of 3 years
after the date of termination of the Executive's employment with the
Company, regardless of the cost to the Company, or, alternatively, if
the Executive (or his estate) elects at any time in a written notice
delivered to the Company to waive any particular Executive Benefits,
the
Company shall make a cash payment to the Executive within ten days
after receipt of such election in an amount equal to the present value
of the Company's cost of providing such Executive Benefits from the
date of such election to the end of the foregoing 3-year period, and
such present value shall be determined by reference to the Company's
then-current cost levels and a discount rate equal to 120 percent of
the short-term applicable Federal rate provided for in Section 1274(d)
of the Internal Revenue Code (the "Code") for the month in which the
Change in Control occurs; and (vi) the Company shall pay to the
Executive, within 10 days after said termination, an amount equal to
the sum of (a) the dollar value of vacation time that would have been
credited to the Executive pursuant to the Company's Vacation Policy
dated August 1, 1997, Number ▇▇ ▇▇▇ (the "Vacation Policy") if the
Executive had remained employed by the Company through the "Anniversary
Date" (as defined in the Vacation Policy) immediately following his
termination of employment, multiplied by a fraction, the numerator of
which is the number of days which elapsed from the Executive's
Anniversary Date immediately preceding the date of termination through
the date of such termination, and the denominator of which is 365, plus
(b) the dollar value of vacation time which the Executive was entitled
to have taken immediately prior to the Executive's termination, which
was not in fact taken by the Executive; the dollar value of vacation
time referred to above shall be equal to the amount which would have
been paid to the Executive by the Company during such vacation time had
the vacation time in fact been taken by the Executive immediately prior
to the Executive's termination.
(b) RULES AND DEFINITIONS.
(1) If the Executive dies during the 3-year period
contemplated by clause (v) of the foregoing paragraph (a), the
Company shall provide the Executive Benefits, to the extent
applicable, to the Executive's estate, or make any applicable
cash payments in lieu thereof to said estate. The Executive
shall be deemed to be employed by the Company if the Executive
is employed by the Company or any subsidiary of the Company in
which the Company owns a majority of the subsidiary's voting
securities. Notwithstanding anything else in this Agreement to
the contrary, subsequent reemployment of the Executive by the
Company or any successor of the Company following a Change in
Control will not cause the Executive to forfeit any
compensation or benefits provided in this Agreement.
(2) The "Deferred Compensation Payoff Amount" is the
sum of (i) an amount which will be sufficient to allow the
Executive to purchase an annuity policy issued by a life
insurance company which has the highest ratings from
independent rating agencies (such as Standard & Poor's or A.M.
Best) which will provide after-tax benefits in amounts which
are at least equal to the after-tax benefits the Executive
would have received had the Company paid the deferred
compensation benefits to the Executive pursuant to the
Deferred Compensation Agreement, with payments commencing no
later than 30 days after the issuance of said annuity and at
the same intervals as provided for in the Deferred
Compensation Agreement (the "Annuity
2
Funding Amount"), plus (ii) the Deferred Compensation Gross-up
Payment defined below. The Deferred Compensation Gross-up
Payment is an amount which will cause the remainder of the
Deferred Compensation Payoff Amount minus all Applicable Taxes
(defined below) applicable to the Executive as a result of
payment of the Deferred Compensation Payoff Amount, to be
equal to the Annuity Funding Amount prior to deduction of any
Applicable Taxes imposed with respect to the Annuity Funding
Amount."Applicable Taxes" means all federal, state, local and
other taxes, including income taxes, payroll taxes, and any
other taxes, but not including any Excise Tax which is the
subject of Section 3.a of this Agreement. The Deferred
Compensation Gross-up Payment is intended to place the
Executive in the same economic position with respect to the
Annuity Funding Amount that the Executive would have been in
if the Applicable Taxes did not apply. For purposes of
determining after-tax benefits referred to in the definition
of the Annuity Funding Amount above, the taxes to be taken
into account shall be all applicable federal taxes assuming
that the Executive is subject to taxation at the highest
marginal rates. The payment of the Excise Tax Gross-up Payment
provided for in Section 3.a, if applicable, shall be in
addition to the Deferred Compensation Gross-up Payment
referred to above. Upon payment of the Deferred Compensation
Payoff Amount, the Company shall have no further obligation to
make payments with respect to the Deferred Compensation
Agreement.
(3) With respect to any Executive Benefits which are
health benefits subject to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") ("Health Benefits") and
for which continuation coverage under COBRA is elected by the
Participant (at the Participant's expense), the Company shall
provide the Executive with the Health Benefits (at its
expense) contemplated by clause (v) of the foregoing paragraph
(a) for a 3-year period beginning on the date continuation
coverage under COBRA ends, provided that the Executive (or
Executive's estate) does not elect to waive the Health Benefit
in lieu of a cash payment as provided in clause (v) of the
foregoing paragraph (a). If the Executive makes the election
to receive the present value of said Executive Benefits under
clause (v) of paragraph (a), the present value of Executive
Benefits which are Health Benefits shall not be affected by
any COBRA coverage, and this shall not impair the Executive's
right to elect COBRA continuation as contemplated above.
2. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred as of the first day that any
one or more of the following conditions shall have been satisfied:
(i) any "person" as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, (the "Exchange Act")
(other than members of the Controlling Shareholder Group, the Company,
any trustee or other fiduciary holding securities under any employee
benefit plan of the Company, or any company owned, directly or
indirectly, by the
3
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities;
(ii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity,
OTHER THAN a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 80%
of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or
(iii) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets; or
(iv) the total combined voting power of the Company (or any
successor entity) represented by shares of voting stock owned by
members of the Controlling Shareholder Group is reduced to 30 percent
or less.
Notwithstanding the foregoing, in no event shall a Change in
Control be deemed to have occurred, with respect to the Executive, if
the Executive is part of a purchasing group which consummates a
transaction causing a Change in Control. The Executive shall be deemed
"part of a purchasing group" for purposes of the preceding sentence if
the Executive is a direct or indirect equity participant in the
purchasing company or group.
The "Controlling Shareholder Group" includes (i) ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, (ii) the spouse and lineal descendants of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, (iii) any trust whose only beneficiaries are persons
described in the foregoing clauses (i) and (ii), and (iv) Affiliates of
the persons described in the foregoing clauses (i), (ii) and (iii). An
"Affiliate" of a person includes only a corporation, limited liability
company, partnership, or similar entity where all of the voting
securities or ownership interests of said entity are directly owned by
such person. A "person" includes any natural person and any
corporation, limited liability company, partnership, trust or other
entity.
3. SPECIAL TERMINATION PAYMENT. For purposes of this Agreement, the
"Special Termination Payment" shall mean an aggregate amount of money
equal to the product of three (3) multiplied by the sum of the
Executive's annual base salary as in effect at the time of the
termination giving rise to the Special Termination Payment, or if
greater the annual base salary in effect for the calendar year prior to
the date of termination, plus the greater of (i) the annual bonus the
Executive received during the preceding calendar year or (ii) the
largest annual bonus the Executive would have received if his
employment had not been terminated
4
in the calendar year in which his employment was terminated assuming
that all targets and incentives are met (regardless of actual results
and criteria). In the event that the Company does not pay the Special
Termination Payment by the due date specified in this Agreement, then
the unpaid amount shall bear interest at the rate of 18 percent per
annum, compounded monthly, until it is paid.
a. EQUALIZATION PAYMENT. If any of the Special Termination
Payment will be subject to the tax (the "Excise Tax") imposed
by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any similar tax that may hereafter be
imposed), the Company shall also pay to the Executive in cash
an additional amount (the "Excise Tax Gross-up Payment") such
that the net amount retained by the Executive after deduction
from the Special Termination Payment and the Excise Tax
Gross-up Payment of any Excise Tax imposed upon the Special
Termination Payment and any federal, state local and other
taxes (including income taxes, payroll taxes, Excise Tax and
any other taxes) imposed upon the Excise Tax Gross-up Payment
shall be equal to the original amount of the Special
Termination Payment, prior to deduction of any Excise Tax
imposed with respect to the Special Termination Payment. The
Excise Tax Gross-up Payment is intended to place the Executive
in the same economic position he would have been in if the
Excise Tax did not apply. The Excise Tax Gross-up Payment
shall be paid to the Executive in full, at the time the
Special Termination Payment is paid pursuant to Section 1
hereof. For purposes of determining the Excise Tax Gross-up
Payment pursuant to this Section 3.a, the Special Termination
Payment shall also include any amounts which would be
considered "Parachute Payments" (within the meaning of Section
280G(b)(2) of the Code) to the Executive, including, but not
limited to, all items listed in Section 1 of this Agreement to
the extent that they are considered to be Parachute Payments
such that the Company will absorb the full cost of any Excise
Tax thereon and all taxes relating to the Company's absorption
of any Excise Taxes.
b. TAX RATES. For purposes of determining the amount of the
Excise Tax Gross-up Payment, the Executive shall be deemed to
pay Federal income taxes at the highest marginal rate of
Federal income taxation in the calendar year in which the
Excise Tax Gross-up Payment is to be made, and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the date of
termination, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state and
local taxes.
c. TAX CALCULATION. Simultaneously with the Company's payment of
the Special Termination Payment, the Company shall deliver to
the Executive a written statement specifying the total amount
of all payments provided for in this Agreement, together with
all supporting calculations. If the Executive disagrees with
the Company's calculation of any of said payments, the
Executive shall submit to the Company, no later than 30 days
after receipt of the Company's calculations, a written
5
notice advising the Company of the disagreement and setting
forth his calculation of said payments. The Executive's
failure to submit such notice within such period shall be
conclusively deemed to be an agreement by the Executive as to
the amount of said payments. If the Company agrees with the
Executive's calculations, it shall pay any shortfall to the
Executive within 20 days after receipt of such a notice from
the Executive, together with interest thereon accruing at the
rate of 18 percent per annum, compounded monthly, from the
original due date of the Special Termination Payment through
the actual date of payment of said shortfall. If the Company
does not agree with the Executive's calculations, it shall
provide the Executive with a written notice within 20 days
after the receipt of the Executive's calculations advising the
Executive that the disagreement is to be referred to an
independent accounting firm for resolution. Such disagreement
shall be referred to an independent "Big 5" accounting firm
which is not the regular accounting firm of the Company and
which is agreed to by the Company and the Executive within 10
days after issuance of the Company's notice of disagreement
(if the parties cannot agree on the identity of the accounting
firm which is to resolve the dispute, the accounting firm
shall be selected by means of a coin toss conducted in Palm
Beach County, Florida by counsel to the Executive on the first
business day after such 10 day period in such manner as such
counsel may specify). The accounting firm shall review all
information provided to it by the parties and submit a written
report setting forth its calculation of the amounts provided
for in this Agreement within 15 days after submission of the
matter to it, and such decision shall be final and binding on
all of the parties. The fees and expenses charged by said
accounting firm shall be paid by the Company. If the amount of
the payment actually paid by the Company was less than the
amount calculated by the accounting firm, the Company shall
pay the shortfall to the Executive within 5 days after the
accounting firm submits its written report, together with
interest thereon accruing at the rate of 18 percent per annum,
compounded monthly, from the original due date of the Special
Termination Payment through the actual date of payment of said
shortfall.
d. SUBSEQUENT RECALCULATION. In the event the Internal Revenue
Service imposes an Excise Tax that is greater than the Excise
Tax assumed for purposes of calculating the Excise Tax
Gross-up Payment, the Company shall reimburse the Executive
for the full amount necessary to make the Executive whole in
accordance with the principles set forth above, including any
interest and penalties which may be imposed.
4. EXECUTIVE BENEFITS. The term "Executive Benefits" means all health,
dental, disability, life insurance, retirement and fringe benefits or
programs now or hereafter established by the Company which cover the
Company's executives or its employees, and applicable family members
and which are in effect on the date on which a Change in Control
occurs. The term "Executive Benefits" also includes, for purposes of
Section 3, the value of the items provided for in clauses (ii) and
(iii) of the first sentence in Section 1.
6
5. NON-COMPETITION. In the event that Executive's employment is terminated
pursuant to Section 1 hereof and Executive timely receives payment of
the Special Termination Payment, Executive agrees that for a period of
12 months after such termination of employment not to, directly or
indirectly, own, manage, operate, control or participate in the
ownership, management operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any
financial interest in, or aid or assist anyone else in the conduct of,
any business (a "Competitive Operation") which competes with any
business conducted by the Company, or by any group, division or
subsidiary of the Company for which the Executive has had
responsibility, in any area where such business is being conducted at
the time of such termination. It is understood and agreed that, for the
purposes of the foregoing provisions of this Section 5, no business
which is conducted by the Company at the time of the Executive's
termination and which subsequently is sold or discontinued by the
Company shall be deemed to be a Competitive Operation within the
meaning of this Section 5. Ownership of an amount not to exceed five
percent (5%) of the voting stock of any publicly held corporation shall
not constitute a violation hereof.
6. RELEASE AND INDEMNITY. The Company hereby fully and forever releases,
acquits, discharges and holds the Executive harmless from any and all,
and all manner of, actions and causes of action, claims, suits, costs,
debts, sums of money, claims and demands, presently known or unknown,
whatsoever in law or equity or otherwise, which the Company ever had,
now has or may now have, or will have in the future, by reason of any
matter, cause or thing whatsoever, from the beginning of the world and
all times thereafter. The preceding sentence does not apply to any
matters, events, actions, claims, damages or losses arising from, in
connection with or relating to (i) any intentional illegal conduct of
the Executive, or (ii) conduct of the Executive after the Executive
ceases to be employed by the Company. The Company at all times shall
indemnify, save harmless and reimburse the Executive, from and against
any and all demands, claims, liabilities, losses, actions, suits or
proceedings, or other expenses, fees, or charges of any character or
nature, which the Executive may incur or with which they may be
threatened with, arising from, in connection with, relating to or
arising as a result of Executive's employment by the Company or any
other relationship that the Executive has with the Company as an
officer, director, agent shareholder or otherwise, including without
limitation settlement costs and attorneys' fees and court costs at
trial and appellate levels which the Executive may incur in connection
with settling, defending against or resisting any of the foregoing. The
Company shall pay to the Executive any amounts due with respect to said
indemnity within 5 business days after the Executive issues a written
demand therefor to the Company. The provisions of this section are an
expansion of any rights that the Executive may have with respect to the
subject matter, and no other agreement or arrangement which the Company
may have that benefits the Executive with respect to the subject matter
hereof shall be superseded or limited in any way as a result of the
parties entering into this Agreement.
7
7. EXAMPLES. The operation of this Agreement is illustrated by the example
set forth in Exhibit A attached hereto. Said example is not intended to
limit the manner in which amounts payable hereunder are to be
calculated. If other tax rates, taxes or other charges are applicable,
the calculations shall be adjusted to achieve the same economic result
to the Executive such that the Executive receives all payments under
this Agreement free of costs represented by Excise Taxes or any taxes
relating to the absorption by the Company of Excise Taxes, and also
such that the Annuity Funding Amount is received free not only of
Excise Taxes, but also of all other taxes arising with respect to the
Annuity Funding Amount and the absorption by the Company of all such
taxes. The assumptions set forth in the said example are for
illustrative purposes only, and have no relationship to the actual
amounts that may apply under this Agreement.
8. NOTICES. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when received at the address specified herein. In the case of
Executive, notices shall be delivered to him at the home address which
he has most recently communicated to the Company in writing. In the
case of the Company, notices shall be delivered to the Company's
corporate headquarters, and all notices shall be directed to the
attention of the Company's Chief Executive Officer, with a copy to the
Company's General Counsel.
9. NO MITIGATION. Executive shall not be required to mitigate the amount
of any payment or benefit contemplated by this Agreement upon his
termination of employment (whether by seeking new employment or in any
other manner), nor shall any such payment or benefit be reduced by any
earnings or benefits that Executive may receive from any other source.
10. MODIFICATION AND WAIVER. This Agreement shall not be canceled,
rescinded or revoked, nor may any provision of this Agreement be
modified, waived or discharged unless the cancellation, rescission,
revocation, modification, waiver or discharge is agreed to in writing
and signed by Executive and by the President or Chairman of the Board
of the Company. No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
11. COMPLETE AGREEMENT. This Agreement supersedes all previous severance
agreements entered into by Executive and the Company, including the
Executive Severance Agreement entered into between the parties in the
year 2000. Except as specifically provided in Section 1 of this
Agreement, this Agreement does not affect any deferred compensation
agreements, non-qualified retirement plans, or any other agreements
entered into by the parties.
12. NO ASSIGNMENT. No right, benefit or interest hereunder, shall be
subject to anticipation, alienation, sale, assignment, encumbrance,
charge, pledge, hypothecation, or set-off in respect of any claim, debt
or obligation, or to execution, attachment, levy or similar process, or
assignment by operation of law. Any attempt, voluntary or involuntary,
to effect any
8
action specified in the immediately preceding sentence shall, to the
full extent permitted by law, be null, void and of no effect. This
Agreement is binding on all successors of the Company, whether by
merger, consolidation, purchase or otherwise, and all references to the
Company shall also include references to any such successor.
13. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with and subject to, the laws of the State of
Florida applicable to Agreements made and to be performed entirely
within such State, as to all matters governed by state law or, if
controlling, by applicable federal law.
14. SEVERABILITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in
full force and effect.
15. LITIGATION; VENUE. Any action at law or in equity under this Agreement
shall be brought in the courts of Palm Beach County, Florida, and in no
other court (whether or not jurisdiction can be established in another
court). Each party hereto waives the right to argue that venue is not
appropriate in the courts of Palm Beach County, Florida.
16. EXPENSES. The Company shall reimburse the Executive for all legal
and/or accounting expenses he incurs in connection with the execution,
delivery and enforcement of his rights under this Agreement.
17. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
[Signatures on the Next Page]
9
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Executive Severance Agreement effective the 21st day of November, 2001.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ ----------------------------------
PRINT NAME OF WITNESS BELOW: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Date: November 20, 2001
-----------------------------
------------------------------------
PRINT NAME OF WITNESS BELOW:
------------------------------------
THE WACKENHUT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------ -------------------------------
PRINT NAME OF WITNESS BELOW:
------------------------------------ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
Date: November 21, 2001
------------------------------------ ---------------------------
PRINT NAME OF WITNESS BELOW:
------------------------------------
10
EXHIBIT A
Page 1 of 2
This example assumes the following:
(i) the Special Termination Payment in Section 1(a)(i)is $1.1 million;
(ii) the Annuity Funding Amount provided for in Section 1(b)(2) is $2
million;
(iii) the combined value of the benefits set forth in clauses (ii),
(iii), (v) and (vi) of Section 1(a) for purposes of Code Section 280G is
$100,000;
(iv) all payments under this Agreement are "parachute payments" under
Code Section 280G(b)(2)(A);
(v) the Executive's base amount under Code Section 280G(b)(3)(A) is
$300,000;
(vi) the present value of the deferred compensation payments due to the
Executive pursuant to the Deferred Compensation Agreement for purposes of Code
Section 280G is $1,800,000; and
(vii) payments made to the Executive under this Agreement are subject
to a maximum federal income tax rate under Code section 1 of 39.1%, a payroll
tax under Code section 3101 of 1.45%, and an excise tax under Code section 4999
of 20%, and no other taxes are applicable.
Under these assumptions, the Deferred Compensation Gross-up Payment
under Section 1(b)(2) of the Agreement is $1,364,171.57, the Deferred
Compensation Payoff Amount under Section 1(b)(2) of the Agreement is
$3,364,171.57, and the Excise Tax Gross-up Payment under Section 3.a is
$1,249,263.15. The calculation of these amounts is set forth in the table set
forth on the following page 2 of this Exhibit A.
EXHIBIT A
Page 2 of 2
A B C D E
----------- ------------ --------------- ------------- -----------------
INCREASED
PRESENT VALUE EXCISE TAX
SPECIAL OF DEFERRED GROSS-UP
TERMINATION VALUE OF OTHER COMPENSATION PAYMENT
1 BASE AMOUNT PAYMENT BENEFITS FROM CELL E5 (B2+C2+D2-A3)XB12
----------- ------------ -------------- ------------ ----------------
2 300,000.00 1,100,000.00 100,000.00 1,564,171.57 1,249,263.15
3
DEFERRED PRESENT VALUE INCREASED
COMPENSATION DEFERRED OF DEFERRED PRESENT VALUE
ANNUITY GROSS-UP COMPENSATION COMPENSATION FOR OF DEFERRED
FUNDING PAYMENT PAYOFF AMOUNT FOR 280G COMPENSATION
4 AMOUNT A5XB13 A5+B5 PURPOSES C5-D5
------------ ------------- ------------- ---------------- --------------
5 2,000,000.00 1,364,171.57 3,364,171.57 1,800,000.00 1,564,171.57
6
7 INCOME TAX RATE 0.39100
8 PAYROLL TAX RATE 0.01450
9 TAX RATE W/O
EXCISE TAX B7+B8 0.40550
10 EXCISE TAX RATE 0.20000
11 TOTAL TAX RATE
ON PARACHUTE
PAYMENTS B9+B10 0.60550
12 EXCISE TAX
GROSS-UP
MULTIPLIER
B10/(1-B11) 0.50697
13 INCOME TAX
GROSS-UP
MULTIPLIER
B9/(1-B9) 0.68209
AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT ("Agreement")
is made and entered into as of this 21st day of November, 2001, by and between
The Wackenhut Corporation, a Florida corporation, its successor or successors,
(hereinafter referred to as the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (hereinafter
referred to as the "Executive").
The Executive is a key executive of the Company, and the Company
desires to provide the Executive with an incentive to remain with the Company if
concerns arise over a possible change in control.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the Company and the Executive agree as follows:
1. TERMINATION OF EXECUTIVE EMPLOYMENT. (a) PAYMENTS AND BENEFITS. If the
Executive ceases to be employed by the Company for any reason
(including the delivery of a written resignation to the Company by the
Executive or her authorized representative on the Executive's or her
estate's behalf) at any time during the 12 month period commencing on
the date on which a Change in Control (as defined in Section 2 below)
occurs, then (i) the Company shall pay the Special Termination Payment
(as defined in Section 3 below) to the Executive (or her estate) within
ten days after said termination, (ii) all awards granted pursuant to
The Wackenhut Corporation Employee Long-Term Incentive Stock Plan and
any other unvested stock options or other interests the Executive holds
in the Company's stock or the stock of a subsidiary of the Company
shall become fully vested, all restrictions on restricted stock units
shall lapse, and all performance targets with respect to performance
units or shares will be deemed to have been met as of the date the
Executive's employment is terminated, (iii) the Company shall transfer
all of its interest in any automobile used by the Executive pursuant to
The Wackenhut Corporation Executive Automobile Policy (the "Executive
Automobile Policy") and shall pay the balance of any outstanding loans
or leases on such automobile (whether such obligations are those of the
Executive or the Company) so that the Executive owns the automobile
outright (in the event such automobile is leased, the Company shall pay
the residual cost of such lease), (iv) the Company shall pay to the
Executive, within ten days after said termination, an amount equal to
the Deferred Compensation Payoff Amount defined below in full
satisfaction of the Company's obligations under that certain Amended
and Restated Senior Officer Retirement/Deferred Compensation Agreement
between the Company and the Executive (the "Deferred Compensation
Agreement"), (v) the Company shall continue to provide the Executive
(and if applicable, her beneficiaries) with the Executive Benefits (as
described in Section 4), at no cost to the Executive in no less than
the same amount and, on the same terms and conditions as in effect on
the date on which the Change of Control occurs for a period of 3 years
after the date of termination of the Executive's employment with the
Company, regardless of the cost to the Company, or, alternatively, if
the Executive (or her estate) elects at any time in a written notice
delivered to the Company to waive any particular Executive
Benefits, the Company shall make a cash payment to the Executive within
ten days after receipt of such election in an amount equal to the
present value of the Company's cost of providing such Executive
Benefits from the date of such election to the end of the foregoing
3-year period, and such present value shall be determined by reference
to the Company's then-current cost levels and a discount rate equal to
120 percent of the short-term applicable Federal rate provided for in
Section 1274(d) of the Internal Revenue Code (the "Code") for the month
in which the Change in Control occurs; and (vi) the Company shall pay
to the Executive, within 10 days after said termination, an amount
equal to the sum of (a) the dollar value of vacation time that would
have been credited to the Executive pursuant to the Company's Vacation
Policy dated August 1, 1997, Number ▇▇ ▇▇▇ (the "Vacation Policy") if
the Executive had remained employed by the Company through the
"Anniversary Date" (as defined in the Vacation Policy) immediately
following her termination of employment, multiplied by a fraction, the
numerator of which is the number of days which elapsed from the
Executive's Anniversary Date immediately preceding the date of
termination through the date of such termination, and the denominator
of which is 365, plus (b) the dollar value of vacation time which the
Executive was entitled to have taken immediately prior to the
Executive's termination, which was not in fact taken by the Executive;
the dollar value of vacation time referred to above shall be equal to
the amount which would have been paid to the Executive by the Company
during such vacation time had the vacation time in fact been taken by
the Executive immediately prior to the Executive's termination.
(b) RULES AND DEFINITIONS.
(1) If the Executive dies during the 3-year period
contemplated by clause (v) of the foregoing paragraph (a), the
Company shall provide the Executive Benefits, to the extent
applicable, to the Executive's estate, or make any applicable
cash payments in lieu thereof to said estate. The Executive
shall be deemed to be employed by the Company if the Executive
is employed by the Company or any subsidiary of the Company in
which the Company owns a majority of the subsidiary's voting
securities. Notwithstanding anything else in this Agreement to
the contrary, subsequent reemployment of the Executive by the
Company or any successor of the Company following a Change in
Control will not cause the Executive to forfeit any
compensation or benefits provided in this Agreement.
(2) The "Deferred Compensation Payoff Amount" is the
sum of (i) an amount which will be sufficient to allow the
Executive to purchase an annuity policy issued by a life
insurance company which has the highest ratings from
independent rating agencies (such as Standard & Poor's or A.M.
Best) which will provide after-tax benefits in amounts which
are at least equal to the after-tax benefits the Executive
would have received had the Company paid the deferred
compensation benefits to the Executive pursuant to the
Deferred Compensation Agreement, with payments commencing no
later than 30 days after the issuance of said annuity and at
the same intervals as provided for in the Deferred
Compensation Agreement (the "Annuity
2
Funding Amount"), plus (ii) the Deferred Compensation Gross-up
Payment defined below. The Deferred Compensation Gross-up
Payment is an amount which will cause the remainder of the
Deferred Compensation Payoff Amount minus all Applicable Taxes
(defined below) applicable to the Executive as a result of
payment of the Deferred Compensation Payoff Amount, to be
equal to the Annuity Funding Amount prior to deduction of any
Applicable Taxes imposed with respect to the Annuity Funding
Amount."Applicable Taxes" means all federal, state, local and
other taxes, including income taxes, payroll taxes, and any
other taxes, but not including any Excise Tax which is the
subject of Section 3.a of this Agreement. The Deferred
Compensation Gross-up Payment is intended to place the
Executive in the same economic position with respect to the
Annuity Funding Amount that the Executive would have been in
if the Applicable Taxes did not apply. For purposes of
determining after-tax benefits referred to in the definition
of the Annuity Funding Amount above, the taxes to be taken
into account shall be all applicable federal taxes assuming
that the Executive is subject to taxation at the highest
marginal rates. The payment of the Excise Tax Gross-up Payment
provided for in Section 3.a, if applicable, shall be in
addition to the Deferred Compensation Gross-up Payment
referred to above. Upon payment of the Deferred Compensation
Payoff Amount, the Company shall have no further obligation to
make payments with respect to the Deferred Compensation
Agreement.
(3) With respect to any Executive Benefits which are
health benefits subject to the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") ("Health Benefits") and
for which continuation coverage under COBRA is elected by the
Participant (at the Participant's expense), the Company shall
provide the Executive with the Health Benefits (at its
expense) contemplated by clause (v) of the foregoing paragraph
(a) for a 3-year period beginning on the date continuation
coverage under COBRA ends, provided that the Executive (or
Executive's estate) does not elect to waive the Health Benefit
in lieu of a cash payment as provided in clause (v) of the
foregoing paragraph (a). If the Executive makes the election
to receive the present value of said Executive Benefits under
clause (v) of paragraph (a), the present value of Executive
Benefits which are Health Benefits shall not be affected by
any COBRA coverage, and this shall not impair the Executive's
right to elect COBRA continuation as contemplated above.
2. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred as of the first day that any
one or more of the following conditions shall have been satisfied:
(i) any "person" as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, (the "Exchange Act")
(other than members of the Controlling Shareholder Group, the Company,
any trustee or other fiduciary holding securities under any employee
benefit plan of the Company, or any company owned, directly or
indirectly, by the
3
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding securities;
(ii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity,
OTHER THAN a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 80%
of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or
(iii) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets; or
(iv) the total combined voting power of the Company (or any
successor entity) represented by shares of voting stock owned by
members of the Controlling Shareholder Group is reduced to 30 percent
or less.
Notwithstanding the foregoing, in no event shall a Change in
Control be deemed to have occurred, with respect to the Executive, if
the Executive is part of a purchasing group which consummates a
transaction causing a Change in Control. The Executive shall be deemed
"part of a purchasing group" for purposes of the preceding sentence if
the Executive is a direct or indirect equity participant in the
purchasing company or group.
The "Controlling Shareholder Group" includes (i) ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, (ii) the spouse and lineal descendants of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, (iii) any trust whose only beneficiaries are persons
described in the foregoing clauses (i) and (ii), and (iv) Affiliates of
the persons described in the foregoing clauses (i), (ii) and (iii). An
"Affiliate" of a person includes only a corporation, limited liability
company, partnership, or similar entity where all of the voting
securities or ownership interests of said entity are directly owned by
such person. A "person" includes any natural person and any
corporation, limited liability company, partnership, trust or other
entity.
3. SPECIAL TERMINATION PAYMENT. For purposes of this Agreement, the
"Special Termination Payment" shall mean an aggregate amount of money
equal to the product of three (3) multiplied by the sum of the
Executive's annual base salary as in effect at the time of the
termination giving rise to the Special Termination Payment, or if
greater the annual base salary in effect for the calendar year prior to
the date of termination, plus the greater of (i) the annual bonus the
Executive received during the preceding calendar year or (ii) the
largest annual bonus the Executive would have received if her
employment had not been terminated
4
in the calendar year in which her employment was terminated assuming
that all targets and incentives are met (regardless of actual results
and criteria). In the event that the Company does not pay the Special
Termination Payment by the due date specified in this Agreement, then
the unpaid amount shall bear interest at the rate of 18 percent per
annum, compounded monthly, until it is paid.
a. EQUALIZATION PAYMENT. If any of the Special Termination
Payment will be subject to the tax (the "Excise Tax") imposed
by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any similar tax that may hereafter be
imposed), the Company shall also pay to the Executive in cash
an additional amount (the "Excise Tax Gross-up Payment") such
that the net amount retained by the Executive after deduction
from the Special Termination Payment and the Excise Tax
Gross-up Payment of any Excise Tax imposed upon the Special
Termination Payment and any federal, state local and other
taxes (including income taxes, payroll taxes, Excise Tax and
any other taxes) imposed upon the Excise Tax Gross-up Payment
shall be equal to the original amount of the Special
Termination Payment, prior to deduction of any Excise Tax
imposed with respect to the Special Termination Payment. The
Excise Tax Gross-up Payment is intended to place the Executive
in the same economic position she would have been in if the
Excise Tax did not apply. The Excise Tax Gross-up Payment
shall be paid to the Executive in full, at the time the
Special Termination Payment is paid pursuant to Section 1
hereof. For purposes of determining the Excise Tax Gross-up
Payment pursuant to this Section 3.a, the Special Termination
Payment shall also include any amounts which would be
considered "Parachute Payments" (within the meaning of Section
280G(b)(2) of the Code) to the Executive, including, but not
limited to, all items listed in Section 1 of this Agreement to
the extent that they are considered to be Parachute Payments
such that the Company will absorb the full cost of any Excise
Tax thereon and all taxes relating to the Company's absorption
of any Excise Taxes.
b. TAX RATES. For purposes of determining the amount of the
Excise Tax Gross-up Payment, the Executive shall be deemed to
pay Federal income taxes at the highest marginal rate of
Federal income taxation in the calendar year in which the
Excise Tax Gross-up Payment is to be made, and state and local
income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the date of
termination, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state and
local taxes.
c. TAX CALCULATION. Simultaneously with the Company's payment of
the Special Termination Payment, the Company shall deliver to
the Executive a written statement specifying the total amount
of all payments provided for in this Agreement, together with
all supporting calculations. If the Executive disagrees with
the Company's calculation of any of said payments, the
Executive shall submit to the Company, no later than 30 days
after receipt of the Company's calculations, a written
5
notice advising the Company of the disagreement and setting
forth her calculation of said payments. The Executive's
failure to submit such notice within such period shall be
conclusively deemed to be an agreement by the Executive as to
the amount of said payments. If the Company agrees with the
Executive's calculations, it shall pay any shortfall to the
Executive within 20 days after receipt of such a notice from
the Executive, together with interest thereon accruing at the
rate of 18 percent per annum, compounded monthly, from the
original due date of the Special Termination Payment through
the actual date of payment of said shortfall. If the Company
does not agree with the Executive's calculations, it shall
provide the Executive with a written notice within 20 days
after the receipt of the Executive's calculations advising the
Executive that the disagreement is to be referred to an
independent accounting firm for resolution. Such disagreement
shall be referred to an independent "Big 5" accounting firm
which is not the regular accounting firm of the Company and
which is agreed to by the Company and the Executive within 10
days after issuance of the Company's notice of disagreement
(if the parties cannot agree on the identity of the accounting
firm which is to resolve the dispute, the accounting firm
shall be selected by means of a coin toss conducted in Palm
Beach County, Florida by counsel to the Executive on the first
business day after such 10 day period in such manner as such
counsel may specify). The accounting firm shall review all
information provided to it by the parties and submit a written
report setting forth its calculation of the amounts provided
for in this Agreement within 15 days after submission of the
matter to it, and such decision shall be final and binding on
all of the parties. The fees and expenses charged by said
accounting firm shall be paid by the Company. If the amount of
the payment actually paid by the Company was less than the
amount calculated by the accounting firm, the Company shall
pay the shortfall to the Executive within 5 days after the
accounting firm submits its written report, together with
interest thereon accruing at the rate of 18 percent per annum,
compounded monthly, from the original due date of the Special
Termination Payment through the actual date of payment of said
shortfall.
d. SUBSEQUENT RECALCULATION. In the event the Internal Revenue
Service imposes an Excise Tax that is greater than the Excise
Tax assumed for purposes of calculating the Excise Tax
Gross-up Payment, the Company shall reimburse the Executive
for the full amount necessary to make the Executive whole in
accordance with the principles set forth above, including any
interest and penalties which may be imposed.
4. EXECUTIVE BENEFITS. The term "Executive Benefits" means all health,
dental, disability, life insurance, retirement and fringe benefits or
programs now or hereafter established by the Company which cover the
Company's executives or its employees, and applicable family members
and which are in effect on the date on which a Change in Control
occurs. The term "Executive Benefits" also includes, for purposes of
Section 3, the value of the items provided for in clauses (ii) and
(iii) of the first sentence in Section 1.
6
5. NON-COMPETITION. In the event that Executive's employment is terminated
pursuant to Section 1 hereof and Executive timely receives payment of
the Special Termination Payment, Executive agrees that for a period of
12 months after such termination of employment not to, directly or
indirectly, own, manage, operate, control or participate in the
ownership, management operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or have any
financial interest in, or aid or assist anyone else in the conduct of,
any business (a "Competitive Operation") which competes with any
business conducted by the Company, or by any group, division or
subsidiary of the Company for which the Executive has had
responsibility, in any area where such business is being conducted at
the time of such termination. It is understood and agreed that, for the
purposes of the foregoing provisions of this Section 5, no business
which is conducted by the Company at the time of the Executive's
termination and which subsequently is sold or discontinued by the
Company shall be deemed to be a Competitive Operation within the
meaning of this Section 5. Ownership of an amount not to exceed five
percent (5%) of the voting stock of any publicly held corporation shall
not constitute a violation hereof.
6. RELEASE AND INDEMNITY. The Company hereby fully and forever releases,
acquits, discharges and holds the Executive harmless from any and all,
and all manner of, actions and causes of action, claims, suits, costs,
debts, sums of money, claims and demands, presently known or unknown,
whatsoever in law or equity or otherwise, which the Company ever had,
now has or may now have, or will have in the future, by reason of any
matter, cause or thing whatsoever, from the beginning of the world and
all times thereafter. The preceding sentence does not apply to any
matters, events, actions, claims, damages or losses arising from, in
connection with or relating to (i) any intentional illegal conduct of
the Executive, or (ii) conduct of the Executive after the Executive
ceases to be employed by the Company. The Company at all times shall
indemnify, save harmless and reimburse the Executive, from and against
any and all demands, claims, liabilities, losses, actions, suits or
proceedings, or other expenses, fees, or charges of any character or
nature, which the Executive may incur or with which they may be
threatened with, arising from, in connection with, relating to or
arising as a result of Executive's employment by the Company or any
other relationship that the Executive has with the Company as an
officer, director, agent shareholder or otherwise, including without
limitation settlement costs and attorneys' fees and court costs at
trial and appellate levels which the Executive may incur in connection
with settling, defending against or resisting any of the foregoing. The
Company shall pay to the Executive any amounts due with respect to said
indemnity within 5 business days after the Executive issues a written
demand therefor to the Company. The provisions of this section are an
expansion of any rights that the Executive may have with respect to the
subject matter, and no other agreement or arrangement which the Company
may have that benefits the Executive with respect to the subject matter
hereof shall be superseded or limited in any way as a result of the
parties entering into this Agreement.
7
7. EXAMPLES. The operation of this Agreement is illustrated by the example
set forth in Exhibit A attached hereto. Said example is not intended to
limit the manner in which amounts payable hereunder are to be
calculated. If other tax rates, taxes or other charges are applicable,
the calculations shall be adjusted to achieve the same economic result
to the Executive such that the Executive receives all payments under
this Agreement free of costs represented by Excise Taxes or any taxes
relating to the absorption by the Company of Excise Taxes, and also
such that the Annuity Funding Amount is received free not only of
Excise Taxes, but also of all other taxes arising with respect to the
Annuity Funding Amount and the absorption by the Company of all such
taxes. The assumptions set forth in the said example are for
illustrative purposes only, and have no relationship to the actual
amounts that may apply under this Agreement.
8. NOTICES. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly
given when received at the address specified herein. In the case of
Executive, notices shall be delivered to him at the home address which
she has most recently communicated to the Company in writing. In the
case of the Company, notices shall be delivered to the Company's
corporate headquarters, and all notices shall be directed to the
attention of the Company's Chief Executive Officer, with a copy to the
Company's General Counsel.
9. NO MITIGATION. Executive shall not be required to mitigate the amount
of any payment or benefit contemplated by this Agreement upon her
termination of employment (whether by seeking new employment or in any
other manner), nor shall any such payment or benefit be reduced by any
earnings or benefits that Executive may receive from any other source.
10. MODIFICATION AND WAIVER. This Agreement shall not be canceled,
rescinded or revoked, nor may any provision of this Agreement be
modified, waived or discharged unless the cancellation, rescission,
revocation, modification, waiver or discharge is agreed to in writing
and signed by Executive and by the President or Chairman of the Board
of the Company. No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
11. COMPLETE AGREEMENT. This Agreement supersedes all previous severance
agreements entered into by Executive and the Company, including the
Executive Severance Agreement entered into between the parties in the
year 2000. Except as specifically provided in Section 1 of this
Agreement, this Agreement does not affect any deferred compensation
agreements, non-qualified retirement plans, or any other agreements
entered into by the parties.
12. NO ASSIGNMENT. No right, benefit or interest hereunder, shall be
subject to anticipation, alienation, sale, assignment, encumbrance,
charge, pledge, hypothecation, or set-off in respect of any claim, debt
or obligation, or to execution, attachment, levy or similar process, or
assignment by operation of law. Any attempt, voluntary or involuntary,
to effect any
8
action specified in the immediately preceding sentence shall, to the
full extent permitted by law, be null, void and of no effect. This
Agreement is binding on all successors of the Company, whether by
merger, consolidation, purchase or otherwise, and all references to the
Company shall also include references to any such successor.
13. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with and subject to, the laws of the State of
Florida applicable to Agreements made and to be performed entirely
within such State, as to all matters governed by state law or, if
controlling, by applicable federal law.
14. SEVERABILITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in
full force and effect.
15. LITIGATION; VENUE. Any action at law or in equity under this Agreement
shall be brought in the courts of Palm Beach County, Florida, and in no
other court (whether or not jurisdiction can be established in another
court). Each party hereto waives the right to argue that venue is not
appropriate in the courts of Palm Beach County, Florida.
16. EXPENSES. The Company shall reimburse the Executive for all legal
and/or accounting expenses she incurs in connection with the execution,
delivery and enforcement of her rights under this Agreement.
17. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
[Signatures on the Next Page]
9
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Executive Severance Agreement effective the 21st day of November, 2001.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------ ----------------------------------
PRINT NAME OF WITNESS BELOW: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Date: November 20, 2001
-----------------------------
------------------------------------
PRINT NAME OF WITNESS BELOW:
------------------------------------
THE WACKENHUT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------ -------------------------------
PRINT NAME OF WITNESS BELOW:
------------------------------------ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
Date: November 21, 2001
------------------------------------ ---------------------------
PRINT NAME OF WITNESS BELOW:
------------------------------------
10
EXHIBIT A
Page 1 of 2
This example assumes the following:
(i) the Special Termination Payment in Section 1(a)(i)is $1.1 million;
(ii) the Annuity Funding Amount provided for in Section 1(b)(2) is $2
million;
(iii) the combined value of the benefits set forth in clauses (ii),
(iii), (v) and (vi) of Section 1(a) for purposes of Code Section 280G is
$100,000;
(iv) all payments under this Agreement are "parachute payments" under
Code Section 280G(b)(2)(A);
(v) the Executive's base amount under Code Section 280G(b)(3)(A) is
$300,000;
(vi) the present value of the deferred compensation payments due to the
Executive pursuant to the Deferred Compensation Agreement for purposes of Code
Section 280G is $1,800,000; and
(vii) payments made to the Executive under this Agreement are subject
to a maximum federal income tax rate under Code section 1 of 39.1%, a payroll
tax under Code section 3101 of 1.45%, and an excise tax under Code section 4999
of 20%, and no other taxes are applicable.
Under these assumptions, the Deferred Compensation Gross-up Payment
under Section 1(b)(2) of the Agreement is $1,364,171.57, the Deferred
Compensation Payoff Amount under Section 1(b)(2) of the Agreement is
$3,364,171.57, and the Excise Tax Gross-up Payment under Section 3.a is
$1,249,263.15. The calculation of these amounts is set forth in the table set
forth on the following page 2 of this Exhibit A.
EXHIBIT A
Page 2 of 2
A B C D E
----------- ------------ --------------- ------------- -----------------
INCREASED
PRESENT VALUE EXCISE TAX
SPECIAL OF DEFERRED GROSS-UP
TERMINATION VALUE OF OTHER COMPENSATION PAYMENT
1 BASE AMOUNT PAYMENT BENEFITS FROM CELL E5 (B2+C2+D2-A3)XB12
----------- ------------ -------------- ------------ ----------------
2 300,000.00 1,100,000.00 100,000.00 1,564,171.57 1,249,263.15
3
DEFERRED PRESENT VALUE INCREASED
COMPENSATION DEFERRED OF DEFERRED PRESENT VALUE
ANNUITY GROSS-UP COMPENSATION COMPENSATION FOR OF DEFERRED
FUNDING PAYMENT PAYOFF AMOUNT FOR 280G COMPENSATION
4 AMOUNT A5XB13 A5+B5 PURPOSES C5-D5
------------ ------------- ------------- ---------------- --------------
5 2,000,000.00 1,364,171.57 3,364,171.57 1,800,000.00 1,564,171.57
6
7 INCOME TAX RATE 0.39100
8 PAYROLL TAX RATE 0.01450
9 TAX RATE W/O
EXCISE TAX B7+B8 0.40550
10 EXCISE TAX RATE 0.20000
11 TOTAL TAX RATE
ON PARACHUTE
PAYMENTS B9+B10 0.60550
12 EXCISE TAX
GROSS-UP
MULTIPLIER
B10/(1-B11) 0.50697
13 INCOME TAX
GROSS-UP
MULTIPLIER
B9/(1-B9) 0.68209