<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended April 2, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ________ to _______
Commission file number 1-5450
-------
THE WACKENHUT CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-0857245
- -------------------------------------------------------------------------------
(State of incorporation or organization) (I.R.S. Employer Identification No.)
4200 Wackenhut Drive #100, Palm Beach Gardens, FL 33410-4243
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (561) 622-5656
- -------------------------------------------------------------------------------
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
At May 12, 2000, 3,855,582 shares of Series A were issued and outstanding and
11,144,409 shares of Series B of the registrant's Common Stock were outstanding
after deducting 201,492 shares held in treasury.
Page 1 of 25
<PAGE> 2
THE WACKENHUT CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following consolidated financial statements of The Wackenhut Corporation and
subsidiaries (the "Company") have been prepared in accordance with the
instructions to Form 10-Q and therefore, omit or condense certain footnotes and
other information normally included in financial statements prepared in
accordance with generally accepted accounting principles. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of the financial information for the interim
periods reported have been made. Results of operations for the thirteen weeks
ended April 2, 2000 are not necessarily indicative of the results for the entire
fiscal year ending December 31, 2000.
Page 2 of 25
<PAGE> 3
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED
APRIL 2, 2000 and APRIL 4, 1999
(in millions except per share data)
UNAUDITED
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
REVENUES $ 594.0 $ 500.1
-------- --------
OPERATING EXPENSES:
Payroll and related taxes 452.9 388.8
Other operating expenses 126.1 98.2
Depreciation and amortization expense 6.3 5.2
-------- --------
585.3 492.2
-------- --------
OPERATING INCOME 8.7 7.9
-------- --------
OTHER INCOME (EXPENSE):
Interest and investment income 1.1 0.9
Interest expense (1.7) (1.0)
-------- --------
(0.6) (0.1)
-------- --------
INCOME BEFORE INCOME TAXES 8.1 7.8
Provision for income taxes (3.2) (3.1)
Minority interest, net of income taxes of $1.5 and $1.6 (2.3) (2.4)
Equity income of affiliates, net of income taxes
of $1.1 and $1.1 1.7 1.7
-------- --------
NET INCOME $ 4.3 $ 4.0
======== ========
EARNING PER SHARE:
Basic $ 0.29 $ 0.27
Diluted $ 0.28 $ 0.26
Basic weighted average shares outstanding 15.0 14.9
Diluted weighted average shares outstanding 15.1 15.1
</TABLE>
See notes to unaudited consolidated financial statements
Page 3 of 25
<PAGE> 4
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 2, 2000 AND JANUARY 2, 2000
(in millions)
UNAUDITED
<TABLE>
<CAPTION>
April 2, January 2,
2000 2000
------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 49.1 $ 67.0
Accounts receivable, net 204.2 182.3
Inventories 13.1 14.7
Deferred taxes 10.2 10.5
Prepaid expenses 12.4 12.5
Other 13.4 12.1
------ ------
302.4 299.1
------ ------
MARKETABLE SECURITIES 24.7 28.8
------ ------
PROPERTY AND EQUIPMENT - at cost 106.6 96.1
- accumulated depreciation (30.5) (27.9)
------ ------
76.1 68.2
------ ------
DEFERRED TAXES 9.7 10.0
------ ------
OTHER ASSETS:
Goodwill, net 53.1 52.3
Other intangibles, net 16.1 16.7
Investment in and advances to affiliates, at cost 50.0 42.0
Other 8.1 8.6
------ ------
127.3 119.6
------ ------
$540.2 $525.7
====== ======
</TABLE>
See notes to unaudited consolidated financial statements.
Page 4 of 25
<PAGE> 5
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 2, 2000 AND JANUARY 2, 2000
(in millions except share data)
UNAUDITED
<TABLE>
<CAPTION>
April 2, January 2,
2000 2000
-------- ----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 3.7 $ 4.7
Accounts payable 36.4 38.3
Accrued payroll and related taxes 81.0 77.1
Accrued expenses 59.1 59.7
------ ------
180.2 179.8
------ ------
RESERVES FOR INSURANCE LOSSES 75.4 77.5
------ ------
LONG-TERM DEBT 30.9 16.5
------ ------
DEFERRED REVENUE 14.8 15.2
------ ------
OTHER 18.0 17.4
------ ------
COMMITMENTS AND CONTINGENCIES (NOTE 10)
MINORITY INTEREST 54.0 55.4
------ ------
SHAREHOLDERS' EQUITY:
Preferred stock, 10 million shares authorized, none outstanding
Common stock, $.10 par value, 50 million shares authorized
Series A, 3.9 million issued and outstanding 0.4 0.4
Series B, 11.1 million issued and outstanding 1.1 1.1
Additional paid-in capital 123.9 124.8
Retained earnings 55.3 51.0
Accumulated other comprehensive loss (10.7) (10.3)
Treasury stock at cost, 0.2 million shares of Series B shares (3.1) (3.1)
------ ------
166.9 163.9
------ ------
$540.2 $525.7
====== ======
</TABLE>
See notes to unaudited consolidated financial statements.
Page 5 of 25
<PAGE> 6
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED APRIL 2, 2000 AND APRIL 4, 1999
(In millions)
UNAUDITED
<TABLE>
<CAPTION>
April 2, April 4,
2000 1999
-------- -------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net income $ 4.3 $ 4.0
Adjustments to reconcile net income to net cash
Provided by (used in) operating activities:
Depreciation expense 2.8 2.4
Uniform amortization 2.0 2.1
Other amortization expense 1.5 0.7
Deferred taxes 0.2 (1.9)
Provision for bad debts 0.7 0.1
Equity income, net of dividends (2.8) (2.6)
Minority interests in net income 3.8 4.1
Other (1.2) (0.4)
Changes in assets and liabilities, net of acquisitions and divestitures -
(Increase) Decrease in assets:
Accounts receivable (23.6) 1.3
Inventories (0.4) (3.2)
Prepaid expenses 0.1 (8.2)
Other current assets (1.3) (1.6)
Other (1.2) (2.3)
Increase (Decrease) in liabilities:
Accounts payable and accrued expenses (3.1) 10.7
Accrued payroll and related taxes 3.9 (3.5)
Reserves for insurance losses (2.1) 3.5
Deferred revenue (0.4) (0.2)
Other 0.7 0.6
------ -----
Net Cash (Used In) Provided By Operating Activities (16.1) 5.6
------ -----
INVESTING ACTIVITIES
Net proceeds from sale of prison facilities to CPV -- 22.3
Net investment in and advances to affiliates and joint ventures (5.1) --
Capital expenditures (10.7) (10.8)
Sales of marketable securities 8.0 4.7
Purchases of marketable securities (3.2) (8.9)
Non-current assets -- 1.3
------ -----
Net Cash (Used In) Provided By Investing Activities (11.0) 8.6
------ -----
</TABLE>
Page 6 of 25
<PAGE> 7
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED APRIL 2, 2000 AND APRIL 4, 1999
(in millions)
UNAUDITED
(Continued)
<TABLE>
<CAPTION>
April 2, April 4,
2000 1999
--------- --------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN):
FINANCING ACTIVITIES
Net proceeds from exercise of stock options of subsidiary -- 0.2
Proceeds from the exercise of stock options -- 0.7
Proceeds from issuance of debt 95.6 47.6
Payments on debt (82.3) (46.2)
Dividends paid -- (2.2)
Net proceeds from sales (payments for repurchases) of accounts receivable 1.0 (15.0)
Purchase of treasury stock of subsidiary (4.2) (4.3)
------ ------
Net Cash Provided By (Used In) Financing Activities 10.1 (19.2)
------ ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (0.9) 0.2
------ ------
NET DECREASE IN CASH AND EQUIVALENTS (17.9) (4.8)
CASH AND CASH EQUIVALENTS, at beginning of period 67.0 43.5
------ ------
CASH AND CASH EQUIVALENTS, at end of period $ 49.1 $ 38.7
====== ======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest $ 1.7 $ 1.1
Income taxes 0.1 1.4
Non-cash financing and investing activities:
Impact on equity from the exercise and tax benefit related to the exercise of
options issued under the Company's non-qualified stock option plan $ -- $ 1.6
</TABLE>
See notes to unaudited consolidated financial statements.
Page 7 of 25
<PAGE> 8
THE WACKENHUT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. GENERAL
The consolidated financial statements of the Company are unaudited and, in the
opinion of management, include all adjustments necessary to fairly present the
Company's financial condition, results of operations and cash flows for the
interim period. The Company's subsidiary, Wackenhut Corrections Corporation
("WHC"), is listed on the New York Stock Exchange as "WHC." The results for the
thirteen weeks ended April 2, 2000 are not necessarily indicative of the results
of operations to be expected for the full year. These statements should be read
in conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2000.
Certain prior year amounts have been reclassified to conform to current year
presentation. Accounts receivable are net of allowances of $5.1 million and $5.2
million at April 2, 2000 and January 2, 2000, respectively.
2. INVESTMENT IN AFFILIATES
Equity in undistributed earnings of affiliates approximated $24.1 million and
$22.5 million at April 2, 2000 and January 2, 2000, respectively, and is
included in "Investment in and advances to affiliates" in the accompanying
consolidated balance sheets. The following is a summary of condensed unaudited
financial information pertaining to affiliates (dollars in millions):
<TABLE>
<CAPTION>
April 2, January 2,
2000 2000
------- ---------
<S> <C> <C>
Balance sheet items:
Current assets $ 173.3 $ 142.6
Non-current assets 293.9 280.6
Current liabilities 100.9 92.3
Non-current liabilities 259.6 262.2
Minority interest liability 0.7 1.3
</TABLE>
<TABLE>
<CAPTION>
April 2, April 4,
2000 1999
------- -------
<S> <C> <C>
Income statement items for the thirteen weeks ended:
Revenues $ 147.9 $ 116.7
Operating income 12.1 9.1
Net income before taxes 7.4 6.8
</TABLE>
Page 8 of 25
<PAGE> 9
3. COMPREHENSIVE INCOME
The components of the Company's comprehensive income are as follows (dollars in
millions):
<TABLE>
<CAPTION>
Thirteen weeks ended
-------------------------------
April 2, April 4,
2000 1999
-------- -------
<S> <C> <C>
Net income $ 4.3 $ 4.0
Foreign currency translation adjustments, net of income tax
benefits of $0.6 million and $0.1 million, respectively (0.9) (0.2)
Unrealized gain on marketable securities, net of income
tax of $0.3 million and none, respectively 0.5 --
-------- -------
Comprehensive income $ 3.9 $ 3.8
======== =======
</TABLE>
4. INTANGIBLES
Intangibles consisted of the following (dollars in millions):
April 2, January 2,
2000 2000
------- ----------
Goodwill $ 59.1 $ 57.6
Contract value 15.6 15.6
Other 8.8 8.8
------- -------
$ 83.5 $ 82.0
Accumulated amortization
Goodwill 6.0 5.3
Contract value 5.0 4.8
Other 3.3 2.9
------- -------
14.3 13.0
------- -------
Net $ 69.2 $ 69.0
------- -------
Page 9 of 25
<PAGE> 10
5. INCOME TAXES
The combined Federal and state effective income tax rate was 39.9% for the first
thirteen weeks of 2000 and 39.7% for the first thirteen weeks of 1999.
6. LONG TERM DEBT
Long-term debt consists of the following (dollars in millions):
<TABLE>
<CAPTION>
April 2, January 2,
2000 2000
-------- -----------
<S> <C> <C>
Revolving loans at weighted average
rate of 7.5% and 8.0%, respectively $29.5 $15.0
Lease obligation payable in
installments through 2004 at a
weighted average rate of 4.5% 1.7 1.8
Other debt principally related to
North American operations and
International subsidiaries 3.4 4.4
----- -----
Total 34.6 21.2
Less: current portion (3.7) (4.7)
----- -----
Total $30.9 $16.5
----- -----
</TABLE>
Page 10 of 25
<PAGE> 11
7. EARNINGS PER SHARE
The table below shows the amounts used in computing earnings per share and the
effects on income and the weighed average number of shares of potential dilutive
common stock (in millions except for per share amounts).
April 2, April 4,
2000 1999
-------- --------
Basic
Net income $ 4.3 $ 4.0
Weighted average common
shares outstanding 15.0 14.9
------- --------
Basic earnings per share $ 0.29 $ 0.27
------- --------
Diluted
Net income $ 4.3 $ 4.0
Effect of Wackenhut Corrections
stock options (0.1) --
------- --------
Net income $ 4.2 $ 4.0
------- --------
Weighted average common
shares outstanding 15.0 14.9
Assumed exercise of stock
options, net of common
shares assumed repurchased
with the proceeds 0.1 0.2
------- --------
Adjusted weighted average
common shares outstanding 15.1 15.1
------- --------
Diluted earnings per share $ 0.28 $ 0.26
-------- --------
Options to purchase 924,300 and 285,000 shares of common stock at April 2, 2000
and April 4, 1999, respectively, were excluded from the diluted earnings per
share calculation as their impact would have been antidilutive.
Page 11 of 25
<PAGE> 12
8. SALE OF FACILITIES TO CORRECTIONAL PROPERTIES TRUST
On January 7, 2000, WHC sold its right to acquire the correctional facility in
Jena, Louisiana to Correctional Properties Trust ("CPV") for $15.3 million. As
the facility was sold at cost, WHC did not realize a gain or loss on the sale.
This facility is being leased back to WHC under an operating lease.
9. TREASURY STOCK
The Board of Directors of the Company and of Wackenhut Corrections authorized
the repurchase, at the discretion of each company's senior management, of up to
0.5 million shares of Series B common stock and 0.5 million shares of Wackenhut
Corrections common stock, respectively. In February 1999, the Board of Directors
of Wackenhut Corrections authorized, in addition to that previously authorized,
the repurchase of up to 0.5 million shares of its common stock. The Company's
repurchases of shares of common stock are recorded as treasury stock and result
in a reduction of stockholders' equity. Wackenhut Corrections' repurchases of
shares of common stock are recorded as a reduction to additional paid-in capital
and minority interest. As of January 2, 2000, the Company had bought back
196,400 shares of the Company's Series B common stock at an average price of
$15.48, and Wackenhut Corrections repurchased 878,000 shares of Wackenhut
Corrections common stock at an average price of $19.13 per share. From January
3, 2000 to April 2, 2000, WHC had repurchased an additional 424,800 shares of
its common stock at an average price of $9.99 per share. Subsequent to April 2,
2000, WHC repurchased an additional 75,200 shares at an average price of $9.13.
10. COMMITMENTS AND CONTINGENCIES
On August 31, 1999, WHC announced the mutual decision between WHC, the Texas
Department of Criminal Justice State Jail Division ("TDCJ") and Travis County,
Texas to discontinue WHC's contract for the operation of the Travis County
Community Justice Center. The contract was discontinued effective November 8,
1999. WHC is involved in discussions with TDCJ regarding close-out of all
contract claims. The Company cannot predict the outcome of these discussions at
this time.
In New Mexico, WHC has been is discussions with the State's Department of
Corrections and Legislative Finance Committee and has submitted proposed
contract modifications regarding additional compensation for physical plant
modification and increased staffing at Guadalupe County Correctional Facility
and Lea County Correctional Facility which have been implemented or are in the
process of being implemented by WHC. At this time no agreement has been reached
regarding these contract modifications.
Page 12 of 25
<PAGE> 13
11. BUSINESS SEGMENTS
The Company's principal segments are grouped based on similarity of business
services provided and the type of customer for which these services are offered.
These services consist of security services, correctional services and flexible
staffing services. The Company is a major provider of global business services
which include security-related and other support services to business and
government, a leading developer and manager of privatized correctional,
detention and public sector mental health services facilities, and a provider of
employee leasing and temporary staffing. For segment reporting, the accounts of
the Company's captive insurance company have been included in unallocated
corporate expenses. Intersegment transactions are accounted for on an
arms-length basis and are eliminated in consolidation. Direct general and
administrative expenses are allocated based on usage.
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-----------------------------------------
(dollars in millions) April 2, 2000 April 4, 1999
------------- -------------
<S> <C> <C>
Revenues:
Security services $ 285.0 $ 250.7
Correctional services 130.5 97.4
Staffing services 178.5 152.0
-------- -------
Total Revenues $ 594.0 $ 500.1
======== =======
Operating Income:
Security services $ 8.3 $ 5.8
Correctional services 5.6 6.5
Staffing services 0.7 0.6
Unallocated corporate expenses (5.9) (5.0)
-------- -------
Total operating income $ 8.7 $ 7.9
======== =======
Equity Income of Affiliates, net of taxes:
Security services $ 0.6 $ 1.0
Correctional services 1.1 0.7
-------- -------
Total equity income $ 1.7 $ 1.7
======== =======
Capital Expenditures:
Security services $ 0.2 $ 0.7
Correctional services 10.1 9.7
Staffing services 0.2 0.3
Unallocated corporate expenditures 0.2 0.1
-------- -------
Total capital expenditures $ 10.7 $ 10.8
======== =======
Depreciation and Amortization:
Security services $ 3.1 $ 3.0
Correctional services 2.1 1.3
Staffing services 0.6 0.5
Unallocated corporate expenses 0.5 0.4
-------- -------
Total depreciation and amortization expense $ 6.3 $ 5.2
======== =======
</TABLE>
<TABLE>
<CAPTION>
April 2, 2000 January 2, 2000
----------------- ------------------
<S> <C> <C>
Identifiable Assets:
Security services $ 180.2 $ 163.3
Correctional services 213.2 208.2
Staffing services 76.6 76.1
Unallocated corporate assets 70.2 78.1
-------- -------
Total identifiable assets $ 540.2 $ 525.7
======== =======
</TABLE>
Page 13 of 25
<PAGE> 14
DOMESTIC AND INTERNATIONAL OPERATIONS
Non-U.S. operations of the Company and its subsidiaries are conducted primarily
in South America, the United Kingdom and Australia. No individual foreign
subsidiary of the Company represented over 10% of combined revenues in 1999 or
in the first quarter of 2000. Minority interest in consolidated foreign
subsidiaries has been reflected, net of applicable income taxes, in the
accompanying financial statements. The Company carries its investment in
affiliates (20% to 50% owned) under the equity method. U.S. income taxes, which
would be payable upon remittance of affiliates' earnings to the Company, are
provided currently. Long-lived assets consist of property, plant and equipment.
A summary of domestic and international operations is shown below:
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-----------------------------------------
(dollars in millions) April 2, 2000 April 4, 1999
------------- -------------
<S> <C> <C>
Revenues:
Domestic operations $ 518.8 $ 445.8
International operations 75.2 54.3
-------- -------
Total Revenues $ 594.0 $ 500.1
======== =======
Operating Income:
Domestic operations $ 2.2 $ 5.9
International operations 6.5 2.0
-------- -------
Total operating income $ 8.7 $ 7.9
======== =======
Equity Income of Affiliates, net of taxes:
Domestic operations $ 0.3 $ 0.5
International operations 1.4 1.2
-------- -------
Total equity income $ 1.7 $ 1.7
======== =======
Capital Expenditures:
Domestic operations $ 7.9 $ 10.3
International operations 2.8 0.5
-------- -------
Total capital expenditures $ 10.7 $ 10.8
======== =======
Depreciation and Amortization:
Domestic operations $ 4.8 $ 3.9
International operations 1.5 1.3
-------- -------
Total depreciation and amortization expense $ 6.3 $ 5.2
======== =======
</TABLE>
<TABLE>
<CAPTION>
April 2, 2000 January 2, 2000
----------------- ------------------
<S> <C> <C>
Long-lived Assets:
Domestic operations $ 59.2 $ 52.7
International operations 16.9 15.5
-------- -------
Total long-lived assets $ 76.1 $ 68.2
======== =======
</TABLE>
Page 14 of 25
<PAGE> 15
12. SUBSEQUENT EVENT
On May 12, 2000, the Louisiana Department of Public Safety and Corrections
("LDPSC") notified WHC of its intention to remove all inmates from the Jena
Juvenile Justice Center in Jena, Louisiana and to terminate the cooperative
agreement for such facility effective June 30, 2000. WHC notified facility staff
that their employment would be terminated effective May 17, 2000. The LDPSC will
continue to make lease payments to WHC through June 30, 2000. WHC is continuing
its efforts to find an alternative use for the facility. However, during this
period of transition, WHC will continue to incur certain fixed costs. If WHC is
unable to find an alternative use for the facility, there could be an adverse
impact on the Company's financial position and future results of operations.
Page 15 of 25
<PAGE> 16
THE WACKENHUT CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Wackenhut Corporation, a Florida corporation, and subsidiaries (the
"Company"), including WHC, a 57% owned public subsidiary, is a major provider of
global business services which include security-related and other support
services to business and government, a leading developer and manager of
privatized correctional, detention and public sector mental health services
facilities, and a provider of employee leasing and temporary staffing. Security
Services has expanded into a range of support services to include security
operations, facility management, fire and emergency medical services and food
service to private and publicly managed correctional facilities. The Security
Services business is organized into North American Operations and International
Operations. Wackenhut Corrections designs, constructs, finances and manages
correctional, detention and mental health psychiatric facilities and performs
separate correctional-related services, including prisoner transportation, home
detention monitoring and correctional health care. During the past four years,
the Company has established a national presence in the flexible staffing
business, which includes personnel employee leasing, temporary services,
recruiting, risk management, payroll processing and human resource services.
FINANCIAL CONDITION
Reference is made to pages 26 through 32 of the Company's Annual Report to
Shareholders, filed as Exhibit 13.0 with the Company's Annual Report Form 10-K
for the fiscal year ended January 2, 2000, for further discussion and analysis
of information pertaining to the Company's financial condition.
LIQUIDITY
Cash and cash equivalents at April 2, 2000 of $49.1 million decreased $17.9
million from January 2, 2000. Cash used in operating activities amounted to
$16.1 million in the first quarter 2000, versus $5.6 million provided by
operating activities in the first quarter 1999 primarily related to an increase
in accounts receivable and a decrease in accounts payable and accrued expenses.
Cash used in investing activities amounted to $11.0 in the first quarter 2000
versus cash provided by investing activities of $8.6 million for the same period
in the prior year, primarily reflecting proceeds from the sale of prison
facilities to Correctional Properties Trust ("CPV") in the prior year. Cash
provided by financing activities in the first quarter 2000 amounted to $10.1
million, reflecting primarily $95.6 million in proceeds from issuance of debt,
offset by $82.3 million for payments on debt. Cash used in financing activities
was $19.2 million in the first quarter of 1999. As of April 2, 2000, the total
amount available to the Company from its revolving credit and accounts
receivable securitization facility was $70.4 million.
As of April 2, 2000, approximately $81.1 million of WHC's $220.0 million
operating lease facility, established to acquire and develop new correctional
facilities, was outstanding for properties under development.
Page 16 of 25
<PAGE> 17
MARKET RISK
The Company is exposed to market risks, including changes in interest rates and
currency exchange rates. These exposures primarily relate to outstanding
balances under the revolving line of credit and securitization facilities and
international investments. In addition, Wackenhut Corrections is exposed to
market risks arising from changes in interest rates with respect to its $220.0
million operating lease facility. Based on the Company's interest rate and
foreign exchange rate position at April 2, 2000, a hypothetical 100 basis point
change in market interest rates or a 10% change in the historical currency rates
would not have a material effect on the Company's financial position or results
of operations.
*FORWARD-LOOKING STATEMENTS: Management's discussion and analysis of financial
condition and results of operations and Market Risk and the May 5, 2000 press
release contain forward-looking statements that are based on current
expectations, estimates and projections about the segments in which the Company
operates. This section of the quarterly report also includes management's
beliefs and assumptions made by management. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," and
variations of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions ("future
factors") which are difficult to predict. Therefore, actual outcomes and results
may differ materially from what is expressed or forecasted in such
forward-looking statements. The Company undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.
Future factors include: increasing price and product/service competition by
foreign and domestic competitors, including new entrants; rapid technological
developments and changes; the ability to continue to introduce competitive new
products and services on a timely, cost effective basis; the mix of
products/services; the achievement of lower costs and expenses; domestic and
foreign governmental and public policy changes, including environmental
regulations; protection and validity of patent and other intellectual property
rights; reliance on large customers; technological, implementation and
cost/financial risks in increasing use of large, multi-year contracts; the
outcome of pending and future litigation and governmental proceedings and
continued availability of financing; and financial instruments and financial
resources in the amounts, at the times and on the terms required to support the
Company's future business. These are representative of the future factors that
could affect the outcome of the forward-looking statements. In addition, such
statements could be affected by general industry and market conditions and
growth rates, general domestic and international economic conditions, including
interest rate and currency exchange rate fluctuations and other future factors.
Page 17 of 25
<PAGE> 18
RESULTS OF OPERATIONS
The table below summarizes the Company's results of operations by its
organizational business segments. The following discussion and analysis should
be read in conjunction with the Company's consolidated financial statements and
notes thereto (dollars in millions):
<TABLE>
<CAPTION>
Thirteen weeks ended
------------------------------------------------
April 2, 2000 April 4, 1999
---------------- ------------------
$ % $ %
----- ----- ----- -----
<S> <C> <C> <C> <C>
REVENUES [a]
Global Security Services:
North American Operations 243.7 41.0 214.2 42.8
International Operations 41.3 7.0 36.5 7.3
----- ----- ----- -----
285.0 48.0 250.7 50.1
Correction Services 130.5 22.0 97.4 19.5
Flexible Staffing Services 178.5 30.0 152.0 30.4
----- ----- ----- -----
Consolidated revenues 594.0 100.0 500.1 100.0
===== ===== ===== =====
OPERATING INCOME [b]
Global Security Services:
North America Operations 7.1 2.9 5.3 2.5
International Operations 1.2 2.9 0.5 1.4
----- -----
8.3 2.9 5.8 2.3
Correction Services 5.6 4.3 6.5 6.7
Flexible Staffing Services 0.7 0.4 0.6 0.4
Unallocated corporate expense (5.9) (1.0) (5.0) (1.0)
----- -----
Consolidated operating income 8.7 1.5 7.9 1.6
===== =====
</TABLE>
[a] Represents percent of total revenues.
[b] Represents percent of respective business related revenues.
COMPARISON OF THIRTEEN WEEKS ENDED APRIL 2, 2000 AND THIRTEEN WEEKS ENDED APRIL
4, 1999
REVENUES
Global Security Services
First quarter 2000 Global Security Services revenues increased $34.3 million, or
13.7%, to $285.0 million from $250.7 million in the first quarter of 1999.
Revenues of the North American Operations increased $29.5 million, or 13.8%, to
$243.7 million in the first quarter of 2000 from $214.2 million in the first
quarter of 1999. There was continued expansion of revenues from national
accounts due to new contracts and increases in existing contracts. International
Operations' revenues increased $4.8 million, or 13.2%, to $41.3 million in the
first quarter of 2000 compared to $36.5 million in the first quarter of
Page 18 of 25
<PAGE> 19
1999. Increases in international security revenues are primarily attributable to
growth in Europe and Latin America due to new contracts.
Correctional Services
First quarter 2000 Correctional Services revenues increased $33.1 million, or
33.9%, to $130.5 million from $97.4 million in the comparable quarter last year.
Approximately $26.9 million of the increase in revenues in the first quarter
2000 compared to the first quarter 1999 is attributable to increased compensated
resident days resulting from the opening of six facilities in 1999. The number
of compensated resident days in domestic facilities increased to 2,165,872 in
the first quarter 2000 from 2,029,870 in the first quarter 1999. Compensated
resident days in Australian facilities increased to 486,346 from 222,269 for the
comparable periods primarily due to higher compensated resident days at the
immigration detention facilities. Approximately $7.4 million of the increase in
revenues is attributable to the construction of new facilities. Revenues
decreased $2.7 million due to the loss of a contract. The balance of the
increase is attributable to facilities open during all of both periods. The
average facility occupancy in domestic facilities was 97.3% of capacity in the
first quarter 2000 compared to 96.9% in the first quarter 1999.
Staffing Services
Staffing Services first quarter 2000 revenues increased $26.5 million, or 17.4%,
to $178.5 million from $152.0 million in the comparable quarter last year.
Leased employees grew to approximately 31,000 at the end of the first quarter of
2000 from 27,000 at the end of the first quarter of 1999. Temporary placement
hours grew 8.5% to approximately 877,000 during the first quarter of 2000 from
approximately 808,000 during the first quarter of 1999.
OPERATING INCOME
First quarter 2000 consolidated operating income increased $0.8 million, or
10.1%, to $8.7 million from $7.9 million in the first quarter of 1999. The
operating margin for the first quarter of 1999 decreased slightly to 1.5% as
compared to 1.6% for the comparable first quarter of 1999. During a period of
low unemployment, some business units may experience difficulty in finding
qualified personnel. This could have an adverse impact on the Company's results
of operations to the extent wages and salaries increase at a faster rate than
the per diem or fixed rate received by the Company for its services.
SECURITY SERVICES
The operating income of the security services business increased $2.5 million,
or 43.1%, to $8.3 million in the first quarter of 2000 from $5.8 million for the
comparable quarter last year. North American Operations' operating income
increased $1.8 million, or 34.0%, to $7.1 million in the first quarter of 2000
from $5.3 million in the first quarter of 1999. The increase in operating income
of the North American Operations can be attributed mainly to increased revenue
growth. The operating income of North American Operations as a percentage of
revenues increased 40 basis points to 2.9% in the first quarter of 2000 compared
to the same quarter of 1999. This increase is primarily attributable to the
expensing of start-up costs in the first quarter 1999, relating to the opening
of five offices on the West Coast, and a reduction in IT project costs.
International Operations' operating income increased $0.7 million to $1.2
million in the first quarter 2000 from $0.5 million in the first quarter 1999,
and is primarily attributable to improved margins in Europe and Latin America.
CORRECTIONAL SERVICES
First quarter 2000 operating income decreased $0.9 million, or 14.9%, to $5.6
million from $6.5 million in the comparable period in 1999. As a percentage of
revenue, operating income decreased to 4.3% in the first quarter of 2000 from
6.7% in the first quarter of 1999. This decrease is due to expenses related to
the construction of two facilities and additional expenses related to operations
at six facilities in the
Page 19 of 25
<PAGE> 20
United States. WHC has developed strategies to improve the operational
performance of these facilities; however, there can be no assurances that these
strategies will be successful. In addition, there has been an adverse trend in
the development of liability claims experience, and although WHC is developing a
strategy to improve the management of loss claims incurred, there can be no
assurances that this strategy will be successful. As a result, WHC will incur
additional operating expenses related to general comprehensive liability
insurance that could have an adverse impact on the Company's future financial
results of operations.
On August 31, 1999, WHC announced the mutual decision to discontinue its
contract for the operation of the Travis County Community Justice Center
effective November 8, 1999, and is currently involved in discussions regarding
close-out of all contract claims. The Company cannot predict the outcome of
these discussions at this time. WHC has been in discussions regarding its New
Mexico operations and has submitted proposed contract modifications regarding
additional compensation for physical plant modification and increased staffing,
which have been or are in the process of being implemented by WHC. At this time
no agreement has been reached regarding these contract modifications.
The Louisiana authorities have notified WHC of its intention to remove all
juvenile inmates from the Jena Juvenile Justice Center and to terminate the
cooperative agreement for such facility effective June 30, 2000. WHC is
attempting to find an alternative use for the facility and will continue to
incur certain fixed costs during this transition period. If WHC is unable to
find an alternative use, there could be an adverse impact on the Company's
future financial results of operations.
STAFFING SERVICES
The operating profit of Staffing Services was $0.7 million in the first quarter
of 2000, as compared to $0.6 million for the first quarter of 1999. This
increase is attributable to revenue growth.
UNALLOCATED CORPORATE EXPENSES
Unallocated corporate general and administrative expenses increased 18.0% to
$5.9 million in the first quarter of 2000 from $5.0 million in the first quarter
of 1999. This increase over the prior year primarily reflects a non-recurring
increase in consulting fees. However, as a percentage of consolidated revenues,
unallocated corporate general and administrative expenses remained the same at
1.0% of revenues in the first quarter of 2000 and 1999.
OTHER INCOME/EXPENSE
The Company incurred other expense of $0.6 million in the first quarter of 2000
compared to $0.1 million in the first quarter of 1999. Investment income
increased $0.2 million to $1.1 million in the first quarter of 2000 from $0.9
million in the first quarter of 1999. This increase is primarily attributable to
WHC's return on investment in overseas affiliates. Interest expense increased
$0.7 million to $1.7 million in the first quarter of 2000 from $1.0 million in
the first quarter of 1999. This increase is primarily attributable to increased
interest expense related to the increase in the securitized accounts receivables
and the revolver loan along with higher interest rates.
INCOME BEFORE INCOME TAXES
First quarter 2000 income before taxes increased $0.3 million, or 3.8%, to $8.1
million from $7.8 million in the first quarter of 1999.
EBITDA, defined as earnings before interest expense, income taxes, depreciation
and amortization, was $15.0 million, or 2.5% of revenues for the first quarter
of 1999, which was an increase of $1.9 million, or 14.5%, over the $13.1
million, or 2.6% of revenues, EBITDA in the first quarter of 1999. EBITDA does
not necessarily indicate that cash flow is sufficient to fund all the Company's
cash needs or represent cash flow from operations as defined by generally
accepted accounting principles.
INCOME TAXES
The combined Federal and state effective income tax rate was 39.9% for the first
thirteen weeks of 2000 and 39.7% for the first thirteen weeks of 1999.
MINORITY INTEREST
Minority interest (net of income taxes) decreased $0.1 million to $2.3 million
in the first quarter of 2000 from $2.4 million in the first quarter of 1999,
reflecting principally the decrease in earnings of WHC.
EQUITY INCOME OF AFFILIATES
Equity income of affiliates (net of income taxes) remained the same at $1.7
million for the first quarter 2000 and first quarter 1999.
Page 20 of 25
<PAGE> 21
NET INCOME
Net income was $4.3 million for the first quarter 2000, or $0.29 basic earnings
per share, as compared to $4.0 million, or $0.27 basic earnings per share for
the same period in 1999. Earnings per share on a diluted basis was $0.28 in the
first quarter 2000 compared to $0.26 per share for the same period in 1999.
Goodwill amortization, after tax, amounted to $0.5 million and $0.3 million for
the first quarter 2000 and first quarter 1999, respectively. Excluding goodwill
amortization, after tax, basic earnings per share would have been $0.02 more for
both the first quarter 2000 and first quarter 1999. In addition, diluted
earnings per share would have been $0.03 and $0.02 more for the first quarter
2000 and first quarter 1999, respectively.
Page 21 of 25
<PAGE> 22
THE WACKENHUT CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is presently, and is from time to time, subject to claims arising in
the ordinary course of its business. In certain of such actions, plaintiffs
request punitive or other damages that may not be covered by insurance. In the
opinion of management, there are no other pending legal proceedings except those
disclosures below, for which the potential impact if decided unfavorable to the
Company could have a material adverse effect on the consolidated financial
statements of the Company.
In Travis County, Texas, a grand jury indicted twelve of WHC's former facility
employees for various types of sexual misconduct at the Travis County Community
Justice Center. Eleven of the twelve indicted former employees already resigned
from or had been terminated by WHC as a result of WHC initiated investigations
over the course of the prior three years. WHC is not providing counsel to assist
in the defense of these twelve individuals. Management believes these
indictments are not expected to have any material financial impact on the
Company. The District Attorney in Travis County continues to review WHC
documents for alleged document tampering at the Travis County Facility. At this
time, WHC cannot predict the outcome of this investigation. WHC believes that if
the outcome of this investigation is unfavorable, there could be an adverse
effect upon the Company's financial position and future results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a). Exhibits
Exhibit
Number Description
- ------- -----------
4. Fifth Amendment to Transfer and Administration Agreement (this
"Amendment"), dated March 31, 2000, among Wackenhut Funding
Corporation, a Delaware Corporation (the "Transferor") and its
successors and assigns, The Wackenhut Corporation, a Florida
corporation, individually and as servicer ("Wackenhut" or the
"Servicer"), Enterprise Funding Corporation, a Delaware
Page 22 of 25
<PAGE> 23
corporation ("Enterprise" or the "Purchaser") and its successors
assigns, and Bank of America, N.A. (as successor to Nationsbank,
N.A.), a national banking association ("Bank of America"), as
agent for Enterprise and the Bank Investors (in such capacity, the
"Agent") and as a Bank Investor, amending that certain Transfer
and Administration Agreement dated as of December 30, 1997 among
the Transferor, the Servicer, the Purchaser, the Agent and Bank of
America (collectively, the "Parties"), as amended to the date
hereof by the First Amendment to Transfer and Administration
Agreement dated as of March 24, 1998, among the Parties, the
Second Amendment to Transfer and Administration Agreement dated
December 23, 1998, among the Parties, the Third Amendment to the
Transfer and Administration Agreement dated January 29, 1999,
among the Parties, and the Fourth Amendment to the Transfer and
Administration Agreement dated January 28, 2000, among the Parties
(collectively, the "Original Agreement," and said agreement as
amended by this Amendment, the "Agreement").
10.1 Amended and restated Senior Officer Retirement / Deferred
Compensation Agreement dated December 29, 1985 for Richard R.
Wackenhut
10.2 Amended and restated Senior Officer Retirement / Deferred
Compensation Agreement dated August 11, 1997 for Alan B.
Bernstein.
10.3 Amended and restated Senior Officer Retirement / Deferred
Compensation Agreement dated March 30, 1989 for Fernando
Carrizosa.
10.4 Amended and restated Senior Officer Retirement / Deferred
Compensation Agreement dated March 11, 1998 for Sandra L. Nusbaum.
10.5 Amended and restated Senior Officer Retirement / Deferred
Compensation Agreement dated August 2, 1999 for Timothy J. Howard.
10.6 Amended and restated Senior Officer Retirement / Deferred
Compensation Agreement dated April 30, 1988 for Robert C. Kneip.
10.7 Amended and restated Senior Officer Retirement / Deferred
Compensation Agreement dated August 11, 1997 for Philip L.
Maslowe.
10.8 Employment Agreement with G.R. Wackenhut dated March 17, 2000.
10.9 Employment Agreement with R.R. Wackenhut dated March 17, 2000.
10.10 Executive Severance Agreement with Fernando Carrizosa dated March
17, 2000.
10.11 Executive Severance Agreement with Sandra L. Nusbaum dated March
17, 2000.
10.12 Executive Severance Agreement with Robert C. Kneip dated March 17,
2000.
10.13 Executive Severance Agreement with Timothy J. Howard dated March
17, 2000.
Page 23 of 25
<PAGE> 24
10.14 Executive Severance Agreement with Alan B. Bernstein dated March
17, 2000.
10.15 Executive Severance Agreement with Philip L. Maslowe dated March
17, 2000.
Exhibit 27 - Financial Data Schedule (for SEC use only)
(b). Reports on Form 8-K
The Company did not file a Form 8-K during the first quarter of 2000.
Page 24 of 25
<PAGE> 25
THE WACKENHUT CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Quarterly Report on Form 10-Q for the thirteen
weeks ended April 2, 2000 to be signed on its behalf by the undersigned hereunto
duly authorized.
THE WACKENHUT CORPORATION
DATE: May 17, 2000 /s/ PHILIP L. MASLOWE
-----------------------------
Philip L. Maslowe,
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Page 25 of 25
<PAGE> 1
EXHIBIT 4
AMENDMENT NUMBER 5 TO
TRANSFER AND ADMINISTRATION AGREEMENT
AMENDMENT NUMBER 5 TO TRANSFER AND ADMINISTRATION AGREEMENT
(this "AMENDMENT"), dated as of March 31, 2000, among WACKENHUT FUNDING
CORPORATION, a Delaware corporation (the "TRANSFEROR") and its successors and
assigns, THE WACKENHUT CORPORATION, a Florida corporation, individually and as
servicer ("WACKENHUT" or the "SERVICER"), ENTERPRISE FUNDING CORPORATION, a
Delaware corporation ("ENTERPRISE" or the "PURCHASER") and its successors
assigns, and BANK OF AMERICA, N.A. (as successor to NATIONSBANK, N.A.), a
national banking association ("BANK OF AMERICA"), as agent for Enterprise and
the Bank Investors (in such capacity, the "AGENT") and as a Bank Investor,
amending that certain Transfer and Administration Agreement dated as of December
30, 1997 among the Transferor, the Servicer, the Purchaser, the Agent and Bank
of America (collectively, the "PARTIES"), as amended to the date hereof by the
First Amendment to Transfer and Administration Agreement dated as of March 24,
1998, among the Parties, the Second Amendment to Transfer and Administration
Agreement dated December 23, 1998, among the Parties, the Third Amendment to the
Transfer and Administration Agreement dated January 29, 1999, among the Parties,
and the Fourth Amendment to the Transfer and Administration Agreement dated
January 28, 2000, among the Parties (collectively, the "ORIGINAL AGREEMENT," and
said agreement as amended by this Amendment, the "AGREEMENT").
WHEREAS, the Transferor has requested that the Purchaser and
the Agent agree to: (a) extend the Commitment Termination Date of the Original
Agreement, and (b) make certain other amendments to the Original Agreement;
WHEREAS, the Original Agreement requires that the consent of
the Transferor, the Servicer, the Purchaser and each Bank Investor be obtained
in order to effect certain of the amendments contemplated herein;
WHEREAS, on the terms and conditions set forth herein, the
parties hereto consent to such amendments;
WHEREAS, capitalized terms used herein shall have the meanings
assigned to such terms in the Original Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENT TO DEFINITIONS.
(a) The definition of "PROGRAM FEE" is hereby deleted in its
entirety and replaced with the following:
1
<PAGE> 2
"PROGRAM FEE" shall have the meaning set forth in the
Fee Letter. If at any time the certificate furnished to the
Agent pursuant to Sections 7.5(a) or (b) shall disclose that
Consolidated Funded Debt (excluding Funded Debt of WCC from
Consolidated Funded Debt) exceeds 40% of Total Capitalization
and does not exceed 50% of Total Capitalization, then 0.25%
shall be added to the Program Fee set forth in the Fee Letter
(such incremental amount, the "Step-up Fee") effective for the
full fiscal quarter immediately following the calculation date
of such covenant.
(b) The definition of "NET INCOME AVAILABLE FOR FIXED CHARGES"
in Appendix C of the Agreement is hereby amended by deleting the period at the
end of clause (iv) and adding the following phrase at the end of such
definition:
"; PROVIDED, HOWEVER, that with respect to an
acquisition of a Subsidiary that is accounted for by Wackenhut
in accordance with GAAP as a "purchase", for the four
fiscal-quarter periods ending next following the date of such
acquisition, all components of Net Income Available for Fixed
Charges shall include the results of operations of the Person
or assets so acquired, which amounts shall be determined on a
historical pro forma basis as if such acquisition had been
consummated as a "pooling of interests"."
(c) The definition of "CONSOLIDATED NET WORTH" in Appendix C
of the Agreement is hereby amended by deleting the final clause thereof, reading
"plus or minus, as the case may be (iv) the cumulative effect of foreign
exchange valuations" and inserting in lieu thereof the following:
"plus (iv) up to $7,000,000 for the cumulative effect
of the change in accounting principles regarding start-up
costs of WCC."
(d) The following definition is added to the Agreement:
"STEP-UP FEE" has the meaning set forth in the
definition of "PROGRAM FEE".
SECTION 2. AMENDMENT TO SECTION 1.4. Section 1.4 of the
Original Agreement is hereby amended to (a) delete the heading "Number of
Undivided Interests" (b) delete the text of Section 1.4 and (c) substitute the
word "[Reserved]" therefor.
SECTION 3. AMENDMENT TO SECTION 1.5(a). Section 1.5(a) of the
Original Agreement is hereby amended to read in its entirety as follows (solely
for convenience, changed text is italicized):
"(a) The "COMMITMENT TERMINATION DATE" shall be the
earlier to occur of (i) JANUARY 26, 2001 (herein, as the same
2
<PAGE> 3
may be extended, called the "SCHEDULED COMMITMENT TERMINATION
DATE"), and (ii) the date of Termination of the Commitment
pursuant to SECTION 1.7 or 11.2."
SECTION 4. AMENDMENT TO SECTION 7.1(h). Section 7.1(h) of the
Original Agreement is hereby deleted in its entirety and replaced with the
following:
"(h) MINIMUM NET WORTH. The Transferor shall at all
times maintain a net worth in accordance with GAAP which is
not less than an amount equal to the sum of (i) the Aggregate
Unpaid Balance of all Defaulted Receivables and (ii) the sum
of the Aggregate Unpaid Balance of the three largest
Receivables of the Obligors; PROVIDED, HOWEVER, that in any
case, the net worth shall never be less than 15% of the
Aggregate Unpaid Balance of the Receivables."
SECTION 5. AMENDMENTS TO SECTION 7.7.
Section 7.7(A) of the Original Agreement is hereby deleted in
its entirety and replaced with the following:
"(A) CONSOLIDATED NET WORTH. The Servicer will at all
times keep and maintain Consolidated Net Worth at an amount
not less than (i) 90% of the Servicer and its Subsidiaries
Consolidated Net Worth at December 30, 1997 and (ii) as at the
last day of each succeeding fiscal quarter of the Servicer and
until (but excluding) the last day of the next following
fiscal quarter of the Servicer, the sum of (A) the amount of
Consolidated Net Worth required to be maintained pursuant to
this SECTION 7.7 as at the end of the immediately preceding
fiscal quarter, plus, (B) 50% of Consolidated Net Income (with
no reduction for net losses for any period) for the fiscal
quarter of the Servicer ending on such day, provided that for
the quarter ended December 31, 1998 there shall be added to
Consolidated Net Income up to $7,000,000 for the cumulative
effect of the change in accounting principles regarding
start-up costs of WCC, plus (C) 75% of the net proceeds to the
Servicer from the sale of shares of the Servicer's capital
stock received during the fiscal quarter of the Servicer
ending on such date. The calculation of this covenant shall be
based upon the consolidated financial statements of the
Servicer and its Subsidiaries, including WCC."
Section 7.7(B)(i) of the Original Agreement is hereby deleted
in its entirety and replaced with the following:
"(i) The Servicer will at all times keep and maintain
Consolidated Funded Debt (excluding Funded Debt of WCC from
Consolidated Funded Debt) in an amount not to exceed 50% of
Total Capitalization."
3
<PAGE> 4
Section 7.7(B)(ii) of the Original Agreement is hereby deleted
in its entirety and replaced with the following:
"(ii) The Servicer and its Subsidiaries (other than
WCC) will not, at any time, issue, incur, assume, be
or become liable in respect of any Indebtedness other
than (i) INDEBTEDNESS REPRESENTING AMOUNTS RECEIVED
BY THE SERVICER OR ANY SUBSIDIARY IN EXCHANGE FOR THE
TRANSFER OF INTERESTS IN TRADE RECEIVABLES ARISING
UNDER THIS AGREEMENT, (ii) the purchase of products,
merchandise and services in the ordinary course of
business, (iii) Indebtedness outstanding on the
Closing Date, (iv) Indebtedness of a Guarantor to the
Servicer or to another Guarantor, (v) INDEBTEDNESS
ARISING UNDER THAT CERTAIN AMENDED AND RESTATED
REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT AMONG
WACKENHUT AND BANK OF AMERICA, N.A. AS AGENT FOR THE
LENDERS DATED DECEMBER 30, 1997, and (vi) other
Indebtedness in an aggregate amount for the Servicer
and all Subsidiaries (other than WCC) taken as a
whole not greater than $30,000,000."
SECTION 6. CONDITION PRECEDENT. This Amendment shall not
become effective until the Agent shall have executed this Amendment and shall
have received counterparts of this Amendment executed by the Purchaser, the
Transferor, the Servicer and each Bank Investor.
SECTION 7. REPRESENTATIONS AND WARRANTIES. Each of the
Transferor and the Servicer hereby makes to the Purchaser, the Agent and each
Bank Investor on and as of the date hereof, the following representations and
warranties:
(a) AUTHORITY. Each of the Transferor and the
Servicer has the requisite corporate power and authority to
execute and deliver this Amendment and to perform its
obligations hereunder and under the Original Agreement (as
modified hereby). The execution, delivery and performance by
the Transferor and the Servicer of this Amendment and the
performance of the Original Agreement (as modified hereby)
have been duly approved by all necessary corporate action and
no other corporate proceedings are necessary to consummate
such transactions;
(b) ENFORCEABILITY. This Amendment has been duly
executed and delivered by each of the Transferor and the
Servicer. The Original Agreement (as modified hereby) is the
legal, valid and binding obligation of the Transferor and the
Servicer enforceable against the Transferor and the Servicer
in accordance with its terms, and is in full force and effect;
and
4
<PAGE> 5
(c) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Transferor and the
Servicer contained in the Original Agreement (other than any
such representations or warranties that, by their terms, are
specifically made as of a date other than the date hereof) are
correct on and as of the date hereof as though made on and as
of the date hereof.
SECTION 8. REFERENCE TO AND EFFECT ON THE ORIGINAL AGREEMENT.
Except as specifically amended and modified above, the
Original Agreement is and shall continue to be in full force and effect and is
hereby in all respects ratified and confirmed.
The execution, delivery and effectiveness of this Amendment
shall not operate as waiver of any right, power or remedy of the Purchaser, the
Agent or the Bank Investor(s) under the Agreement, nor constitute a waiver of
any provision of the Original Agreement.
SECTION 9. NO TERMINATION EVENT. No event has occurred and is
continuing that constitutes a Termination Event or an Unmatured Termination
Event.
SECTION 10. AMENDMENT AND WAIVER. No provision hereof may be
amended, waived, supplemented, restated, discharged or terminated without the
written consent of the Transferor, the Purchaser, the Agent and the Majority
Investors.
SECTION 11. SUCCESSORS AND ASSIGNS. This Amendment shall bind,
and the benefits hereof shall inure to the parties hereof and their respective
successors and permitted assigns; PROVIDED, HOWEVER, the Transferor may not
assign any of its rights or delegate any of its duties under this Amendment
without the prior written consent of the Purchaser.
SECTION 12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE
TRANSFEROR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 13. SEVERABILITY; COUNTERPARTS. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
5
<PAGE> 6
instrument. Any provisions of this Amendment which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 14. CAPTIONS. The captions in this Amendment are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first written above.
ENTERPRISE FUNDING CORPORATION,
as Purchaser
By: /s/ Kevin P. Burns
-------------------------------
Name: Kevin P. Burns
Title: Vice President
WACKENHUT FUNDING CORPORATION
as Transferor
By: /s/ Victoria L. Garrett
--------------------------------
Name: Victoria L. Garrett
Title: Vice President
THE WACKENHUT CORPORATION,
as Servicer
By: /s/ Juan Miyar
--------------------------------
Name: Juan Miyar
Title: V.P. Corporate Controller
BANK OF AMERICA, N.A. (as successor
to NATIONSBANK, N.A.),
as Agent and a Bank Investor
By: /s/ Chris Parrish
--------------------------------
Name: Chris Parrish
Title: Vice President
SUNTRUST BANK, SUCCESSOR-IN-INTEREST
TO SUNTRUST BANK, SOUTH FLORIDA, N.A.,
as a Bank Investor
By: /s/ Jon C. Long
--------------------------------
Name: Jon C. Long
Title: Vice President
THE BANK OF NOVA SCOTIA,
as a Bank Investor
By: /s/ William E. Zarrett
--------------------------------
Name: William E. Zarrett
Title: Managing Director
7
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED
SENIOR OFFICER RETIREMENT/DEFERRED COMPENSATION AGREEMENT
This Amended and Restated Deferred Compensation Agreement is entered
into by and between THE WACKENHUT CORPORATION, a Florida corporation ("Company")
and Richard R. Wackenhut ("Executive").
WHEREAS, the Company and Executive have executed that certain Deferred
Compensation Agreement ("Agreement") as of December 29, 1985; and
WHEREAS, the Company and Executive desire to amend and restate the
Agreement.
NOW THEREFORE, it is agreed as follows:
1. EMPLOYMENT
Company will employ Executive as Chief Executive Officer or in such
other positions as may be determined from time to time by the Board of
Directors of Company and at such rate of compensation as may be so
determined. Executive will devote his full energy, skill and best
efforts to the affairs of Company on a full-time basis. It is
contemplated that such employment will continue until November 11, 2007
(Executive's Retirement Date), but nevertheless either Company or
Executive may terminate Executive's employment at any time and for any
reason upon ten (10) days written notice to the other.
2. RETIREMENT
In the event Executive's employment continues until his Retirement
Date, upon retirement, and commencing with the first month after
Executive actually retires, Company will pay Executive $14,583.33
monthly for two hundred forty (240) months.
3. TERMINATION OF EMPLOYMENT
If Executive terminates his employment with Company for reason other
than death, or if Company terminates Executive's employment prior to
Executive's Retirement for reason other than death, Company will pay
Executive monthly, commencing with the first month after Executive's
Retirement Date and continuing for two hundred forty (240) months, the
amount specified in Section 2 above.
4. DEATH
If Executive dies before Retirement Date and before termination of his
employment with Company, Company shall pay Executive's named
Beneficiary (designated as provided in Section 6 of this Agreement and
hereinafter referred to as Beneficiary) a monthly amount of $8,333.33
1
<PAGE> 2
commencing with the first month following death and continuing for one
hundred twenty (120) months thereafter. In the case of death of
Executive after termination of employment with Company, but before his
Retirement Date, the Company shall pay to Beneficiary $8,333.33
commencing with the first month following death and continuing for one
hundred twenty (120) months thereafter. If Executive dies within two
hundred forty (240) months following his Retirement Date and while
receiving payments hereunder, Company shall pay Beneficiary the
payments which would have been made to Executive had he lived for the
balance of said two hundred forty (240) month period.
5. CHANGE IN CONTROL
Upon the occurrence of a "Change in Control" (as defined in the
Employment Agreement between the Executive and Company, dated March 17,
2000), the Executive's Retirement Date shall automatically be changed
for all purposes to the date which is five years prior to the date
specified in Section 1 hereof. In addition, within ten (10) days
following the date the Executive's employment with the Company is
terminated following a Change in Control, the Company shall pay to the
Executive or if the Executive dies to the Beneficiary or Beneficiaries,
the present value of all deferred compensation provided for pursuant to
this Agreement that would have been paid if the Executive remained
employed with the Company through the Retirement Date. The present
value shall be calculated (i) using a discount rate equal to the lower
of the rate provided in Internal Revenue Code Section 280G(d)(4), or
six and one half percent (6-1/2%), and (ii) without regard to any
mortality factor or related probabilities.
6. SMALL AMOUNTS
In the event the amount of any monthly payments provided herein shall
be less than Twenty ($20) Dollars, the Company in its sole discretion
may in lieu thereof pay the commuted value of such payments (calculated
on the basis of the interest rate and mortality assumptions being used
by The Northwestern Mutual Life Insurance Company of Milwaukee,
Wisconsin, to calculate immediate annuity rates on the date of this
Agreement) to the person entitled to such payments.
7. BENEFICIARY
The Beneficiary (or Beneficiaries) of any payments to be made after
Executive's death, shall be as designated by Executive and shown on
attached Exhibit A or such other person or persons as Executive shall
designate in writing to Company. If no effective designation of
Beneficiaries has been made by Executive, any such payments shall be
made to Executive's estate.
2
<PAGE> 3
8. RESTRICTIONS
Executive shall not at any time, either directly or indirectly, accept
employment with, render service, assistance or advice to, or allow his
name to be used by any competitor of the Company unless approved by the
Board of Directors of the Company. Determination by the Board of
Directors of the Company that Executive has engaged in any such
activity shall be binding and conclusive on all parties, and in
addition to all other rights and remedies which Company shall have,
neither Executive nor Beneficiary shall be entitled to any payments
hereunder. Upon a "Change in Control", the provisions of this Section 8
shall no longer apply.
9. INSURANCE
If Company shall elect to purchase a life insurance contract to provide
Company with funds to make payments hereunder, Company shall at all
times be the sole and complete owner and beneficiary of such contract,
and shall have the unrestricted right to use all amounts and exercise
all options and privileges thereunder without knowledge or consent of
Executive of Beneficiary or any other person, it being expressly agreed
that neither Executive nor Beneficiary nor any other person shall have
any right, title or interest whatsoever in or to any such contract.
10. SOURCE OF PAYMENTS
Executive, Beneficiary and any other person or persons having or
claiming a right to payments hereunder or to any interest in this
Agreement shall rely solely on the unsecured promise of Company set
forth herein, and nothing in this Agreement shall be construed to give
Executive, Beneficiary or any other person or persons any right, title,
interest or claim in or to any specific asset, fund, reserve, account
or property of any kind whatsoever owned by Company or in which it may
have any right, title or interest now or in the future, but Executive
shall have the right to enforce his claim against Company in the same
manner as any unsecured creditor.
11. AMENDMENT
This Agreement may be amended at any time or from time to time by
written agreement of the parties.
12. ASSIGNMENT
Neither Executive, nor Beneficiary, nor any other person entitled to
payments hereunder shall have power to transfer, assign, anticipate,
mortgage or otherwise encumber in advance any of such payments, nor
shall such payments be subject to seizure for the payment of public or
private debts, judgments, alimony or separate maintenance, or be
transferable by operation of law in event of bankruptcy, insolvency or
otherwise.
3
<PAGE> 4
13. BINDING EFFECT
This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns. The Company agrees
it will not be a party to any merger, consolidation or reorganization,
unless and until its obligations hereunder shall be expressly assumed
by its successors.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
the 17th day of March, 2000.
Signed, Sealed and Delivered EXECUTIVE:
In the Presence of:
/s/ Patricia Delinois /s/ Richard R. Wackenhut
- -------------------------------- -------------------------------------
PRINT NAME OF WITNESS BELOW:
Patricia Delinois
- --------------------------------
Date: 3/17/00
--------------------------------
/s/ J.C. Tissot
- --------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- --------------------------------
THE WACKENHUT CORPORATION
/s/ Paul W. Miller By: /s/ Allan B. Bernstein
- -------------------------------- ------------------------------------
PRINT NAME OF WITNESS BELOW: Name: Alan B. Bernstein
Title: Executive Vice President
Paul W. Miller
- --------------------------------
/s/ Ultan P. McCabe Date: 3/17/00
- -------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
Ultan P. McCabe
- --------------------------------
4
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED
SENIOR OFFICER RETIREMENT/DEFERRED COMPENSATION AGREEMENT
This Amended and Restated Deferred Compensation Agreement is entered
into by and between THE WACKENHUT CORPORATION, a Florida corporation ("Company")
and Alan B. Bernstein ("Executive").
WHEREAS, the Company and Executive have executed that certain Deferred
Compensation Agreement ("Agreement") as of December 29, 1985; and
WHEREAS, the Company and Executive desire to amend and restate the
Agreement.
NOW THEREFORE, it is agreed as follows:
1. EMPLOYMENT
Company will employ Executive as Executive Vice President or in such
other positions as may be determined from time to time by the Board of
Directors of Company and at such rate of compensation as may be so
determined. Executive will devote his full energy, skill and best
efforts to the affairs of Company on a full-time basis. It is
contemplated that such employment will continue until April 22, 2007
(Executive's Retirement Date), but nevertheless either Company or
Executive may terminate Executive's employment at any time and for any
reason upon ten (10) days written notice to the other.
2. RETIREMENT
In the event Executive's employment continues until his Retirement
Date, upon retirement, and commencing with the first month after
Executive actually retires, Company will pay Executive $20,833.33
monthly for three hundred (300) months.
3. TERMINATION OF EMPLOYMENT
If Executive terminates his employment with Company for reason other
than death, or if Company terminates Executive's employment prior to
Executive's Retirement for reason other than death, Company will pay
Executive monthly, commencing with the first month after Executive's
Retirement Date and continuing for three hundred (300) months, the
amount specified in Section 2 above.
4. DEATH
If Executive dies before Retirement Date and before termination of his
employment with Company, Company shall pay Executive's named
Beneficiary (designated as provided in Section 6 of this Agreement and
hereinafter referred to as Beneficiary) a monthly amount of $10,416.66
1
<PAGE> 2
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. In the case of death of
Executive after termination of employment with Company, but before his
Retirement Date, the Company shall pay to Beneficiary $10,416.66
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. If Executive dies within three
hundred (300) months following his Retirement Date and while receiving
payments hereunder, Company shall pay Beneficiary the payments which
would have been made to Executive had he lived for the balance of said
three hundred (300) month period.
5. CHANGE IN CONTROL
Upon the occurrence of a "Change in Control" (as defined in the
Executive Severance Agreement between the Executive and Company, dated
March 17, 2000), the Executive's Retirement Date shall automatically be
changed for all purposes to the date which is five years prior to the
date specified in Section 1 hereof. In addition, within ten (10) days
following the date the Executive's employment with the Company is
terminated following a Change in Control, the Company shall pay to the
Executive or if the Executive dies to the, Beneficiary or Beneficiaries
the present value of all deferred compensation provided for pursuant to
this Agreement that would have been paid if the Executive remained
employed with the Company through the Retirement Date. The present
value shall be calculated (i) using a discount rate equal to the lower
of the rate provided in Internal Revenue Code Section 280G(d)(4), or
six and one half percent (6-1/2%), and (ii) without regard to any
mortality factor or related probabilities.
6. SMALL AMOUNTS
In the event the amount of any monthly payments provided herein shall
be less than Twenty ($20) Dollars, the Company in its sole discretion
may in lieu thereof pay the commuted value of such payments (calculated
on the basis of the interest rate and mortality assumptions being used
by The Northwestern Mutual Life Insurance Company of Milwaukee,
Wisconsin, to calculate immediate annuity rates on the date of this
Agreement) to the person entitled to such payments.
7. BENEFICIARY
The Beneficiary (or Beneficiaries) of any payments to be made after
Executive's death, shall be as designated by Executive and shown on
attached Exhibit A or such other person or persons as Executive shall
designate in writing to Company. If no effective designation of
Beneficiaries has been made by Executive, any such payments shall be
made to Executive's estate.
2
<PAGE> 3
8. RESTRICTIONS
Executive shall not at any time, either directly or indirectly, accept
employment with, render service, assistance or advice to, or allow his
name to be used by any competitor of the Company unless approved by the
Board of Directors of the Company. Determination by the Board of
Directors of the Company that Executive has engaged in any such
activity shall be binding and conclusive on all parties, and in
addition to all other rights and remedies which Company shall have,
neither Executive nor Beneficiary shall be entitled to any payments
hereunder. Upon a "Change in Control", the provisions of this Section 8
shall no longer apply.
9. INSURANCE
If Company shall elect to purchase a life insurance contract to provide
Company with funds to make payments hereunder, Company shall at all
times be the sole and complete owner and beneficiary of such contract,
and shall have the unrestricted right to use all amounts and exercise
all options and privileges thereunder without knowledge or consent of
Executive of Beneficiary or any other person, it being expressly agreed
that neither Executive nor Beneficiary nor any other person shall have
any right, title or interest whatsoever in or to any such contract.
10. SOURCE OF PAYMENTS
Executive, Beneficiary and any other person or persons having or
claiming a right to payments hereunder or to any interest in this
Agreement shall rely solely on the unsecured promise of Company set
forth herein, and nothing in this Agreement shall be construed to give
Executive, Beneficiary or any other person or persons any right, title,
interest or claim in or to any specific asset, fund, reserve, account
or property of any kind whatsoever owned by Company or in which it may
have any right, title or interest now or in the future, but Executive
shall have the right to enforce his claim against Company in the same
manner as any unsecured creditor.
11. AMENDMENT
This Agreement may be amended at any time or from time to time by
written agreement of the parties.
12. ASSIGNMENT
Neither Executive, nor Beneficiary, nor any other person entitled to
payments hereunder shall have power to transfer, assign, anticipate,
mortgage or otherwise encumber in advance any of such payments, nor
shall such payments be subject to seizure for the payment of public or
private debts, judgments, alimony or separate maintenance, or be
transferable by operation of law in event of bankruptcy, insolvency or
otherwise.
3
<PAGE> 4
13. BINDING EFFECT
This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns. The Company agrees
it will not be a party to any merger, consolidation or reorganization,
unless and until its obligations hereunder shall be expressly assumed
by its successors.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
the 17th day of March, 2000.
Signed, Sealed and Delivered EXECUTIVE:
In the Presence of:
/s/ Paul W. Miller /s/ Alan B. Bernstein
- -------------------------------- -------------------------------------
PRINT NAME OF WITNESS BELOW: Alan B. Bernstein
Paul W. Miller
- --------------------------------
Date: 3/17/00
--------------------------------
/s/ Ultan P. McCabe
- --------------------------------
PRINT NAME OF WITNESS BELOW:
Ultan P. McCabe
- --------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ Richard R. Wackenhut
- -------------------------------- ------------------------------------
PRINT NAME OF WITNESS BELOW: Name: Richard R. Wackenhut
Title: President and Chief Executive
Officer
Patricia Delinois
- --------------------------------
/s/ J.C. Tissot Date: 3/17/00
- -------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- --------------------------------
4
<PAGE> 1
EXHIBIT 10.3
AMENDED AND RESTATED
SENIOR OFFICER RETIREMENT/DEFERRED COMPENSATION AGREEMENT
This Amended and Restated Deferred Compensation Agreement is entered
into by and between THE WACKENHUT CORPORATION, a Florida corporation (Company)
and Fernando Carrizosa ("Executive").
WHEREAS, the Company and Executive have executed that certain Deferred
Compensation Agreement ("Agreement") as of March 30, 1989; and
WHEREAS, the Company and Executive desire to amend and restate the
Agreement.
NOW THEREFORE, it is agreed as follows:
1. EMPLOYMENT
Company will employ Executive as Senior Vice President or in such other
positions as may be determined from time to time by the Board of
Directors of Company and at such rate of compensation as may be so
determined. Executive will devote his full energy, skill and best
efforts to the affairs of Company on a full-time basis. It is
contemplated that such employment will continue until September 30,
2003 (Executive's Retirement Date), but nevertheless either Company or
Executive may terminate Executive's employment at any time and for any
reason upon ten (10) days written notice to the other.
2. RETIREMENT
In the event Executive's employment continues until his Retirement
Date, upon retirement, and commencing with the first month after
Executive actually retires, Company will pay Executive $16,666.66
monthly for three hundred (300) months.
3. TERMINATION OF EMPLOYMENT
If Executive terminates his employment with Company for reason other
than death, or if Company terminates Executive's employment prior to
Executive's Retirement for reason other than death, Company will pay
Executive monthly, commencing with the first month after Executive's
Retirement Date and continuing for three hundred (300) months, the
amount specified in Section 2 above.
4. DEATH
If Executive dies before this Retirement Date and before termination of
his employment with Company, Company shall pay Executive's named
Beneficiary (designated as provided in Section 6 of this Agreement and
hereinafter referred to as Beneficiary) a monthly amount of $8,333.33
commencing with the first month following death and continuing for one
1
<PAGE> 2
hundred fifty (150) months thereafter. In the case of death of
Executive after termination of employment with Company, but before his
Retirement Date, the Company shall pay to Beneficiary $8,333.33
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. If Executive dies within three
hundred (300) months following his Retirement Date and while receiving
payments hereunder, Company shall pay Beneficiary the payments which
would have been made to Executive had he lived for the balance of said
three hundred (300) month period.
5. CHANGE IN CONTROL
Upon the occurrence of a "Change in Control" (as defined in the
Executive Severance Agreement between the Executive and Company, dated
March 17, 2000), the Executive's Retirement Date shall automatically be
changed for all purposes to the date which is five years prior to the
date specified in Section 1 hereof. In addition, within ten (10) days
following the date the Executive's employment with the Company is
terminated following a Change in Control, the Company shall pay to the
Executive or if the Executive dies to the, Beneficiary or Beneficiaries
the present value of all deferred compensation provided for pursuant to
this Agreement that would have been paid if the Executive remained
employed with the Company through the Retirement Date. The present
value shall be calculated (i) using a discount rate equal to the lower
of the rate provided in Internal Revenue Code Section 280G(d)(4), or
six and one half percent (6-1/2%), and (ii) without regard to any
mortality factor or related probabilities.
6. SMALL AMOUNTS
In the event the amount of any monthly payments provided herein shall
be less than Twenty ($20) Dollars, the Company in its sole discretion
may in lieu thereof pay the commuted value of such payments (calculated
on the basis of the interest rate and mortality assumptions being used
by The Northwestern Mutual Life Insurance Company of Milwaukee,
Wisconsin, to calculate immediate annuity rates on the date of this
Agreement) to the person entitled to such payments.
7. BENEFICIARY
The Beneficiary (or Beneficiaries) of any payments to be made after
Executive's death, shall be as designated by Executive and shown on
attached Exhibit A or such other person or persons as Executive shall
designate in writing to Company. If no effective designation of
Beneficiaries has been made by Executive, any such payments shall be
made to Executive's estate.
2
<PAGE> 3
8. RESTRICTIONS
Executive shall not at any time, either directly or indirectly, accept
employment with, render service, assistance or advice to, or allow his
name to be used by any competitor of the Company unless approved by the
Board of Directors of the Company. Determination by the Board of
Directors of the Company that Executive has engaged in any such
activity shall be binding and conclusive on all parties, and in
addition to all other rights and remedies which Company shall have,
neither Executive nor Beneficiary shall be entitled to any payments
hereunder. Upon a "Change in Control", the provisions of this Section 8
shall no longer apply.
9. INSURANCE
If Company shall elect to purchase a life insurance contract to provide
Company with funds to make payments hereunder, Company shall at all
times be the sole and complete owner and beneficiary of such contract,
and shall have the unrestricted right to use all amounts and exercise
all options and privileges thereunder without knowledge or consent of
Executive of Beneficiary or any other person, it being expressly agreed
that neither Executive nor Beneficiary nor any other person shall have
any right, title or interest whatsoever in or to any such contract.
10. SOURCE OF PAYMENTS
Executive, Beneficiary and any other person or persons having or
claiming a right to payments hereunder or to any interest in this
Agreement shall rely solely on the unsecured promise of Company set
forth herein, and nothing in this Agreement shall be construed to give
Executive, Beneficiary or any other person or persons any right, title,
interest or claim in or to any specific asset, fund, reserve, account
or property of any kind whatsoever owned by Company or in which it may
have any right, title or interest now or in the future, but Executive
shall have the right to enforce his claim against Company in the same
manner as any unsecured creditor.
11. AMENDMENT
This Agreement may be amended at any time or from time to time by
written agreement of the parties.
12. ASSIGNMENT
Neither Executive, nor Beneficiary, nor any other person entitled to
payments hereunder shall have power to transfer, assign, anticipate,
mortgage or otherwise encumber in advance any of such payments, nor
shall such payments be subject to seizure for the payment of public or
private debts, judgments, alimony or separate maintenance, or be
transferable by operation of law in event of bankruptcy, insolvency or
otherwise.
3
<PAGE> 4
13. BINDING EFFECT
This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns. The Company agrees
it will not be a party to any merger, consolidation or reorganization,
unless and until its obligations hereunder shall be expressly assumed
by its successors.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
the 17th day of March, 2000.
Signed, Sealed and Delivered EXECUTIVE:
In the Presence of:
/s/ Paul W. Miller /s/ Fernanco Carrizosa
- -------------------------------- -------------------------------------
PRINT NAME OF WITNESS BELOW: Fernanco Carrizosa
Paul W. Miller
- --------------------------------
Date: 3/17/00
--------------------------------
/s/ Ultan P. McCabe
- --------------------------------
PRINT NAME OF WITNESS BELOW:
Ultan P. McCabe
- --------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ Richard R. Wackenhut
- -------------------------------- ------------------------------------
PRINT NAME OF WITNESS BELOW: Name: Richard R. Wackenhut
Title: President and Chief Executive
Officer
Patricia Delinois
- --------------------------------
/s/ J.C. Tissot Date: 3/17/00
- -------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- --------------------------------
4
<PAGE> 1
EXHIBIT 10.4
AMENDED AND RESTATED
SENIOR OFFICER RETIREMENT/DEFERRED COMPENSATION AGREEMENT
This Amended and Restated Senior Officer Retirement Agreement is
entered into by and between THE WACKENHUT CORPORATION, a Florida corporation
("Company") Sandra L. Nusbaum ("Executive").
WHEREAS, the Company and Executive have executed that certain Senior
Officer Retirement Agreement ("Agreement") as of March 11, 1998; and
WHEREAS, the Company and Executive desire to amend and restate the
Agreement.
NOW THEREFORE, it is agreed as follows:
1. EMPLOYMENT
Company will employ Executive as Senior Vice President or in such other
positions as may be determined from time to time by the Board of
Directors of Company and at such rate of compensation as may be so
determined. Executive will devote her full energy, skill and best
efforts to the affairs of Company on a full-time basis. It is
contemplated that such employment will continue until May 26, 2011
(Executive's Retirement Date), but nevertheless either Company or
Executive may terminate Executive's employment at any time and for any
reason upon ten (10) days written notice to the other.
2. RETIREMENT
In the event Executive's employment continues until her Retirement
Date, upon retirement, and commencing with the first month after
Executive actually retires, Company will pay Executive $16,666.66
monthly for three hundred (300) months.
3. TERMINATION OF EMPLOYMENT
If Executive terminates her employment with Company for reason other
than death, or if Company terminates Executive's employment prior to
Executive's Retirement for reason other than death, Company will pay
Executive monthly, commencing with the first month after Executive's
Retirement Date and continuing for three hundred (300) months, the
amount specified in Section 2 above.
4. DEATH
If Executive dies before Retirement Date and before termination of her
employment with Company, Company shall pay Executive's named
Beneficiary (designated as provided in Section 6 of this Agreement and
hereinafter referred to as Beneficiary) a monthly amount of $8,333.33
1
<PAGE> 2
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. In the case of death of
Executive after termination of employment with Company, but before her
Retirement Date, the Company shall pay to Beneficiary $8,333.33
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. If Executive dies within three
hundred (300) months following her Retirement Date and while receiving
payments hereunder, Company shall pay Beneficiary the payments which
would have been made to Executive had she lived for the balance of said
three hundred (300) month period.
5. CHANGE IN CONTROL
Upon the occurrence of a "Change in Control" (as defined in the
Executive Severance Agreement between the Executive and Company, dated
March 17, 2000), the Executive's Retirement Date shall automatically be
changed for all purposes to the date which is five years prior to the
date specified in Section 1 hereof. In addition, within ten (10) days
following the date the Executive's employment with the Company is
terminated following a Change in Control, the Company shall pay to the
Executive or if the Executive dies to the Beneficiary or Beneficiaries,
the present value of all deferred compensation provided for pursuant to
this Agreement that would have been paid if the Executive remained
employed with the Company through the Retirement Date. The present
value shall be calculated (i) using a discount rate equal to the lower
of the rate provided in Internal Revenue Code Section 280G(d)(4), or
six and one half percent (6-1/2%), and (ii) without regard to any
mortality factor or related probabilities.
6. SMALL AMOUNTS
In the event the amount of any monthly payments provided herein shall
be less than Twenty ($20) Dollars, the Company in its sole discretion
may in lieu thereof pay the commuted value of such payments (calculated
on the basis of the interest rate and mortality assumptions being used
by The Northwestern Mutual Life Insurance Company of Milwaukee,
Wisconsin, to calculate immediate annuity rates on the date of this
Agreement) to the person entitled to such payments.
7. BENEFICIARY
The Beneficiary (or Beneficiaries) of any payments to be made after
Executive's death, shall be as designated by Executive and shown on
attached Exhibit A or such other person or persons as Executive shall
designate in writing to Company. If no effective designation of
Beneficiaries has been made by Executive, any such payments shall be
made to Executive's estate.
2
<PAGE> 3
8. RESTRICTIONS
Executive shall not at any time, either directly or indirectly, accept
employment with, render service, assistance or advice to, or allow her
name to be used by any competitor of the Company unless approved by the
Board of Directors of the Company. Determination by the Board of
Directors of the Company that Executive has engaged in any such
activity shall be binding and conclusive on all parties, and in
addition to all other rights and remedies which Company shall have,
neither Executive nor Beneficiary shall be entitled to any payments
hereunder. Upon a "Change in Control", the provisions of this Section 8
shall no longer apply.
9. INSURANCE
If Company shall elect to purchase a life insurance contract to provide
Company with funds to make payments hereunder, Company shall at all
times be the sole and complete owner and beneficiary of such contract,
and shall have the unrestricted right to use all amounts and exercise
all options and privileges thereunder without knowledge or consent of
Executive of Beneficiary or any other person, it being expressly agreed
that neither Executive nor Beneficiary nor any other person shall have
any right, title or interest whatsoever in or to any such contract.
10. SOURCE OF PAYMENTS
Executive, Beneficiary and any other person or persons having or
claiming a right to payments hereunder or to any interest in this
Agreement shall rely solely on the unsecured promise of Company set
forth herein, and nothing in this Agreement shall be construed to give
Executive, Beneficiary or any other person or persons any right, title,
interest or claim in or to any specific asset, fund, reserve, account
or property of any kind whatsoever owned by Company or in which it may
have any right, title or interest now or in the future, but Executive
shall have the right to enforce her claim against Company in the same
manner as any unsecured creditor.
11. AMENDMENT
This Agreement may be amended at any time or from time to time by
written agreement of the parties.
12. ASSIGNMENT
Neither Executive, nor Beneficiary, nor any other person entitled to
payments hereunder shall have power to transfer, assign, anticipate,
mortgage or otherwise encumber in advance any of such payments, nor
shall such payments be subject to seizure for the payment of public or
private debts, judgments, alimony or separate maintenance, or be
transferable by operation of law in event of bankruptcy, insolvency or
otherwise.
3
<PAGE> 4
13. BINDING EFFECT
This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns. The Company agrees
it will not be a party to any merger, consolidation or reorganization,
unless and until its obligations hereunder shall be expressly assumed
by its successors.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
the 17th day of March, 2000.
Signed, Sealed and Delivered EXECUTIVE:
In the Presence of:
/s/ Paul W. Miller /s/ Sandra L. Nusbaum
- -------------------------------- -------------------------------------
PRINT NAME OF WITNESS BELOW: Sandra L. Nusbaum
Paul W. Miller
- --------------------------------
Date: 3/17/00
--------------------------------
/s/ Ultan P. McCabe
- --------------------------------
PRINT NAME OF WITNESS BELOW:
Ultan P. McCabe
- --------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ Richard R. Wackenhut
- -------------------------------- ------------------------------------
PRINT NAME OF WITNESS BELOW: Name: Richard R. Wackenhut
Title: President and Chief Executive
Officer
Patricia Delinois
- --------------------------------
/s/ J.C. Tissot Date: 3/17/00
- -------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- --------------------------------
4
<PAGE> 1
EXHIBIT 10.5
AMENDED AND RESTATED
SENIOR OFFICER RETIREMENT/DEFERRED COMPENSATION AGREEMENT
This Amended and Restated Senior Officer Retirement Agreement is
entered into by and between THE WACKENHUT CORPORATION, a Florida corporation
("Company") and Timothy J. Howard ("Executive").
WHEREAS, the Company and Executive have executed that certain Deferred
Compensation Agreement ("Agreement") as of August 2, 1999; and
WHEREAS, the Company and Executive desire to amend and restate the
Agreement.
NOW THEREFORE, it is agreed as follows:
1. EMPLOYMENT
Company will employ Executive as Senior Vice President or in such other
positions as may be determined from time to time by the Board of
Directors of Company and at such rate of compensation as may be so
determined. Executive will devote his full energy, skill and best
efforts to the affairs of Company on a full-time basis. It is
contemplated that such employment will continue until August 30, 2008
(Executive's Retirement Date), but nevertheless either Company or
Executive may terminate Executive's employment at any time and for any
reason upon ten (10) days written notice to the other.
2. RETIREMENT
In the event Executive's employment continues until his Retirement
Date, upon retirement, and commencing with the first month after
Executive actually retires, Company will pay Executive $16,666.66
monthly for three hundred (300) months.
3. TERMINATION OF EMPLOYMENT
If Executive terminates his employment with Company for reason other
than death, or if Company terminates Executive's employment prior to
Executive's Retirement for reason other than death, Company will pay
Executive monthly, commencing with the first month after Executive's
Retirement Date and continuing for three hundred (300) months, the
amount specified in Section 2 above.
4. DEATH
If Executive dies before Retirement Date and before termination of his
employment with Company, Company shall pay Executive's named
Beneficiary (designated as provided in Section 6 of this Agreement and
hereinafter referred to as Beneficiary) a monthly amount of $8,333.33
1
<PAGE> 2
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. In the case of death of
Executive after termination of employment with Company, but before his
Retirement Date, the Company shall pay to Beneficiary $8,333.33
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. If Executive dies within three
hundred (300) months following his Retirement Date and while receiving
payments hereunder, Company shall pay Beneficiary the payments which
would have been made to Executive had he lived for the balance of said
three hundred (300) month period.
5. CHANGE IN CONTROL
Upon the occurrence of a "Change in Control" (as defined in the
Executive Severance Agreement between the Executive and Company, dated
March 17, 2000), the Executive's Retirement Date shall automatically be
changed for all purposes to the date which is five years prior to the
date specified in Section 1 hereof. In addition, within ten (10) days
following the date the Executive's employment with the Company is
terminated following a Change in Control, the Company shall pay to the
Executive or if the Executive dies to the Beneficiary or Beneficiaries,
the present value of all deferred compensation provided for pursuant to
this Agreement that would have been paid if the Executive remained
employed with the Company through the Retirement Date. The present
value shall be calculated (i) using a discount rate equal to the lower
of the rate provided in Internal Revenue Code Section 280G(d)(4), or
six and one half percent (6-1/2%), and (ii) without regard to any
mortality factor or related probabilities.
6. SMALL AMOUNTS
In the event the amount of any monthly payments provided herein shall
be less than Twenty ($20) Dollars, the Company in its sole discretion
may in lieu thereof pay the commuted value of such payments (calculated
on the basis of the interest rate and mortality assumptions being used
by The Northwestern Mutual Life Insurance Company of Milwaukee,
Wisconsin, to calculate immediate annuity rates on the date of this
Agreement) to the person entitled to such payments.
7. BENEFICIARY
The Beneficiary (or Beneficiaries) of any payments to be made after
Executive's death, shall be as designated by Executive and shown on
attached Exhibit A or such other person or persons as Executive shall
designate in writing to Company. If no effective designation of
Beneficiaries has been made by Executive, any such payments shall be
made to Executive's estate.
2
<PAGE> 3
8. RESTRICTIONS
Executive shall not at any time, either directly or indirectly, accept
employment with, render service, assistance or advice to, or allow his
name to be used by any competitor of the Company unless approved by the
Board of Directors of the Company. Determination by the Board of
Directors of the Company that Executive has engaged in any such
activity shall be binding and conclusive on all parties, and in
addition to all other rights and remedies which Company shall have,
neither Executive nor Beneficiary shall be entitled to any payments
hereunder. Upon a "Change in Control", the provisions of this Section 8
shall no longer apply.
9. INSURANCE
If Company shall elect to purchase a life insurance contract to provide
Company with funds to make payments hereunder, Company shall at all
times be the sole and complete owner and beneficiary of such contract,
and shall have the unrestricted right to use all amounts and exercise
all options and privileges thereunder without knowledge or consent of
Executive of Beneficiary or any other person, it being expressly agreed
that neither Executive nor Beneficiary nor any other person shall have
any right, title or interest whatsoever in or to any such contract.
10. SOURCE OF PAYMENTS
Executive, Beneficiary and any other person or persons having or
claiming a right to payments hereunder or to any interest in this
Agreement shall rely solely on the unsecured promise of Company set
forth herein, and nothing in this Agreement shall be construed to give
Executive, Beneficiary or any other person or persons any right, title,
interest or claim in or to any specific asset, fund, reserve, account
or property of any kind whatsoever owned by Company or in which it may
have any right, title or interest now or in the future, but Executive
shall have the right to enforce his claim against Company in the same
manner as any unsecured creditor.
11. AMENDMENT
This Agreement may be amended at any time or from time to time by
written agreement of the parties.
12. ASSIGNMENT
Neither Executive, nor Beneficiary, nor any other person entitled to
payments hereunder shall have power to transfer, assign, anticipate,
mortgage or otherwise encumber in advance any of such payments, nor
shall such payments be subject to seizure for the payment of public or
private debts, judgments, alimony or separate maintenance, or be
transferable by operation of law in event of bankruptcy, insolvency or
otherwise.
3
<PAGE> 4
13. BINDING EFFECT
This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns. The Company agrees
it will not be a party to any merger, consolidation or reorganization,
unless and until its obligations hereunder shall be expressly assumed
by its successors.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
the 17th day of March, 2000.
Signed, Sealed and Delivered EXECUTIVE:
In the Presence of:
/s/ Ultan P. McCabe /s/ Timothy J. Howard
- -------------------------------- -------------------------------------
PRINT NAME OF WITNESS BELOW: Timothy J. Howard
Ultan P. McCabe
- --------------------------------
Date: 3/17/00
--------------------------------
/s/ Paul W. Miller
- --------------------------------
PRINT NAME OF WITNESS BELOW:
Paul W. Miller
- --------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ Richard R. Wackenhut
- -------------------------------- ------------------------------------
PRINT NAME OF WITNESS BELOW: Name: Richard R. Wackenhut
Title: President and Chief Executive
Officer
Patricia Delinois
- --------------------------------
/s/ J.C. Tissot Date: 3/17/00
- -------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- --------------------------------
4
<PAGE> 1
EXHIBIT 10.6
AMENDED AND RESTATED
SENIOR OFFICER RETIREMENT/DEFERRED COMPENSATION AGREEMENT
This Amended and Restated Deferred Compensation Agreement is entered
into by and between THE WACKENHUT CORPORATION, a Florida corporation ("Company")
and Robert C. Kneip ("Executive").
WHEREAS, the Company and Executive have executed that certain Deferred
Compensation Agreement ("Agreement") as of April 30, 1988; and
WHEREAS, the Company and Executive desire to amend and restate the
Agreement.
NOW THEREFORE, it is agreed as follows:
1. EMPLOYMENT
Company will employ Executive as Senior Vice President or in such other
positions as may be determined from time to time by the Board of
Directors of Company and at such rate of compensation as may be so
determined. Executive will devote his full energy, skill and best
efforts to the affairs of Company on a full-time basis. It is
contemplated that such employment will continue until March 8, 2008
(Executive's Retirement Date), but nevertheless either Company or
Executive may terminate Executive's employment at any time and for any
reason upon ten (10) days written notice to the other.
2. RETIREMENT.
In the event Executive's employment continues until his Retirement
Date, upon retirement, and commencing with the first month after
Executive actually retires, Company will pay Executive $16,666.66
monthly for three hundred (300) months.
3. TERMINATION OF EMPLOYMENT.
If Executive terminates his employment with Company for reason other
than death, or if Company terminates Executive's employment prior to
Executive's Retirement for reason other than death, Company will pay
Executive monthly, commencing with the first month after Executive's
Retirement Date and continuing for three hundred (300) months, the
amount specified in Section 2 above.
4. DEATH.
If Executive dies before Retirement Date and before termination of his
employment with Company, Company shall pay Executive's named
Beneficiary (designated as provided in Section 6 of this Agreement and
hereinafter referred to as Beneficiary) a monthly amount of $8,333.33
1
<PAGE> 2
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. In the case of death of
Executive after termination of employment with Company, but before his
Retirement Date, the Company shall pay to Beneficiary $8,333.33
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. If Executive dies within three
hundred (300) months following his Retirement Date and while receiving
payments hereunder, Company shall pay Beneficiary the payments which
would have been made to Executive had he lived for the balance of said
three hundred (300) month period.
5. CHANGE IN CONTROL
Upon the occurrence of a "Change in Control" (as defined in the
Executive Severance Agreement between the Executive and Company, dated
March 17, 2000), the Executive's Retirement Date shall automatically be
changed for all purposes to the date which is five years prior to the
date specified in Section 1 hereof. In addition, within ten (10) days
following the date the Executive's employment with the Company is
terminated following a Change in Control, the Company shall pay to the
Executive or if the Executive dies to the Beneficiary or Beneficiaries,
the present value of all deferred compensation provided for pursuant to
this Agreement that would have been paid if the Executive remained
employed with the Company through the Retirement Date. The present
value shall be calculated (i) using a discount rate equal to the lower
of the rate provided in Internal Revenue Code Section 280G(d)(4), or
six and one half percent (6-1/2%), and (ii) without regard to any
mortality factor or related probabilities.
6. SMALL AMOUNTS
In the event the amount of any monthly payments provided herein shall
be less than Twenty ($20) Dollars, the Company in its sole discretion
may in lieu thereof pay the commuted value of such payments (calculated
on the basis of the interest rate and mortality assumptions being used
by The Northwestern Mutual Life Insurance Company of Milwaukee,
Wisconsin, to calculate immediate annuity rates on the date of this
Agreement) to the person entitled to such payments.
7. BENEFICIARY
The Beneficiary (or Beneficiaries) of any payments to be made after
Executive's death, shall be as designated by Executive and shown on
attached Exhibit A or such other person or persons as Executive shall
designate in writing to Company. If no effective designation of
Beneficiaries has been made by Executive, any such payments shall be
made to Executive's estate.
2
<PAGE> 3
8. RESTRICTIONS
Executive shall not at any time, either directly or indirectly, accept
employment with, render service, assistance or advice to, or allow his
name to be used by any competitor of the Company unless approved by the
Board of Directors of the Company. Determination by the Board of
Directors of the Company that Executive has engaged in any such
activity shall be binding and conclusive on all parties, and in
addition to all other rights and remedies which Company shall have,
neither Executive nor Beneficiary shall be entitled to any payments
hereunder. Upon a "Change in Control", the provisions of this Section 8
shall no longer apply.
9. INSURANCE
If Company shall elect to purchase a life insurance contract to provide
Company with funds to make payments hereunder, Company shall at all
times be the sole and complete owner and beneficiary of such contract,
and shall have the unrestricted right to use all amounts and exercise
all options and privileges thereunder without knowledge or consent of
Executive of Beneficiary or any other person, it being expressly agreed
that neither Executive nor Beneficiary nor any other person shall have
any right, title or interest whatsoever in or to any such contract.
10. SOURCE OF PAYMENTS
Executive, Beneficiary and any other person or persons having or
claiming a right to payments hereunder or to any interest in this
Agreement shall rely solely on the unsecured promise of Company set
forth herein, and nothing in this Agreement shall be construed to give
Executive, Beneficiary or any other person or persons any right, title,
interest or claim in or to any specific asset, fund, reserve, account
or property of any kind whatsoever owned by Company or in which it may
have any right, title or interest now or in the future, but Executive
shall have the right to enforce his claim against Company in the same
manner as any unsecured creditor.
11. AMENDMENT
This Agreement may be amended at any time or from time to time by
written agreement of the parties.
12. ASSIGNMENT
Neither Executive, nor Beneficiary, nor any other person entitled to
payments hereunder shall have power to transfer, assign, anticipate,
mortgage or otherwise encumber in advance any of such payments, nor
shall such payments be subject to seizure for the payment of public or
private debts, judgments, alimony or separate maintenance, or be
transferable by operation of law in event of bankruptcy, insolvency or
otherwise.
3
<PAGE> 4
13. BINDING EFFECT
This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns. The Company agrees
it will not be a party to any merger, consolidation or reorganization,
unless and until its obligations hereunder shall be expressly assumed
by its successors.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
the 17th day of March, 2000.
Signed, Sealed and Delivered EXECUTIVE:
In the Presence of:
/s/ Timothy J. Howard /s/ Robert C. Kneip
- -------------------------------- -------------------------------------
PRINT NAME OF WITNESS BELOW: Robert C. Kneip
Timothy J. Howard
- --------------------------------
Date: 3/17/00
--------------------------------
/s/ Sandra L. Nusbaum
- --------------------------------
PRINT NAME OF WITNESS BELOW:
Sandra L. Nusbaum
- --------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ Richard R. Wackenhut
- -------------------------------- ------------------------------------
PRINT NAME OF WITNESS BELOW: Name: Richard R. Wackenhut
Title: President and Chief Executive
Officer
Patricia Delinois
- --------------------------------
/s/ J.C. Tissot Date: 3/17/00
- -------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- --------------------------------
4
<PAGE> 1
EXHIBIT 10.7
AMENDED AND RESTATED
SENIOR OFFICER RETIREMENT/DEFERRED COMPENSATION AGREEMENT
This Amended and Restated Senior Officer Retirement Agreement is
entered into by and between THE WACKENHUT CORPORATION, a Florida corporation
("Company") and Philip L. Maslowe ("Executive").
WHEREAS, the Company and Executive have executed that certain Senior
Officer Agreement ("Agreement") as of August 11, 1997; and
WHEREAS, the Company and Executive desire to amend and restate the
Agreement.
NOW THEREFORE, it is agreed as follows:
1. EMPLOYMENT
Company will employ Executive as Senior Vice President or in such other
positions as may be determined from time to time by the Board of
Directors of Company and at such rate of compensation as may be so
determined. Executive will devote his full energy, skill and best
efforts to the affairs of Company on a full-time basis. It is
contemplated that such employment will continue until August 30, 2007
(Executive's Retirement Date), but nevertheless either Company or
Executive may terminate Executive's employment at any time and for any
reason upon ten (10) days written notice to the other.
2. RETIREMENT
In the event Executive's employment continues until his Retirement
Date, upon retirement, and commencing with the first month after
Executive actually retires, Company will pay Executive $16,666.66
monthly for three hundred (300) months.
3. TERMINATION OF EMPLOYMENT
If Executive terminates his employment with Company for reason other
than death, or if Company terminates Executive's employment prior to
Executive's Retirement for reason other than death, Company will pay
Executive monthly, commencing with the first month after Executive's
Retirement Date and continuing for three hundred (300) months, the
amount specified in Section 2 above.
4. DEATH
If Executive dies before Retirement Date and before termination of his
employment with Company, Company shall pay Executive's named
Beneficiary (designated as provided in Section 6 of this Agreement and
hereinafter referred to as Beneficiary) a monthly amount of $8,333.33
1
<PAGE> 2
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. In the case of death of
Executive after termination of employment with Company, but before his
Retirement Date, the Company shall pay to Beneficiary $8,333.33
commencing with the first month following death and continuing for one
hundred fifty (150) months thereafter. If Executive dies within three
hundred (300) months following his Retirement Date and while receiving
payments hereunder, Company shall pay Beneficiary the payments which
would have been made to Executive had he lived for the balance of said
three hundred (300) month period.
5. CHANGE IN CONTROL
Upon the occurrence of a "Change in Control" (as defined in the
Executive Severance Agreement between the Executive and Company, dated
March 17, 2000), the Executive's Retirement Date shall automatically be
changed for all purposes to the date which is five years prior to the
date specified in Section 1 hereof. In addition, within ten (10) days
following the date the Executive's employment with the Company is
terminated following a Change in Control, the Company shall pay to the
Executive or if the Executive dies to the, Beneficiary or Beneficiaries
the present value of all deferred compensation provided for pursuant to
this Agreement that would have been paid if the Executive remained
employed with the Company through the Retirement Date. The present
value shall be calculated (i) using a discount rate equal to the lower
of the rate provided in Internal Revenue Code Section 280G(d)(4), or
six and one half percent (6-1/2%), and (ii) without regard to any
mortality factor or related probabilities.
6. SMALL AMOUNTS
In the event the amount of any monthly payments provided herein shall
be less than Twenty ($20) Dollars, the Company in its sole discretion
may in lieu thereof pay the commuted value of such payments (calculated
on the basis of the interest rate and mortality assumptions being used
by The Northwestern Mutual Life Insurance Company of Milwaukee,
Wisconsin, to calculate immediate annuity rates on the date of this
Agreement) to the person entitled to such payments.
7. BENEFICIARY
The Beneficiary (or Beneficiaries) of any payments to be made after
Executive's death, shall be as designated by Executive and shown on
attached Exhibit A or such other person or persons as Executive shall
designate in writing to Company. If no effective designation of
Beneficiaries has been made by Executive, any such payments shall be
made to Executive's estate.
2
<PAGE> 3
8. RESTRICTIONS
Executive shall not at any time, either directly or indirectly, accept
employment with, render service, assistance or advice to, or allow his
name to be used by any competitor of the Company unless approved by the
Board of Directors of the Company. Determination by the Board of
Directors of the Company that Executive has engaged in any such
activity shall be binding and conclusive on all parties, and in
addition to all other rights and remedies which Company shall have,
neither Executive nor Beneficiary shall be entitled to any payments
hereunder. Upon a "Change in Control", the provisions of this Section 8
shall no longer apply.
9. INSURANCE
If Company shall elect to purchase a life insurance contract to provide
Company with funds to make payments hereunder, Company shall at all
times be the sole and complete owner and beneficiary of such contract,
and shall have the unrestricted right to use all amounts and exercise
all options and privileges thereunder without knowledge or consent of
Executive of Beneficiary or any other person, it being expressly agreed
that neither Executive nor Beneficiary nor any other person shall have
any right, title or interest whatsoever in or to any such contract.
10. SOURCE OF PAYMENTS
Executive, Beneficiary and any other person or persons having or
claiming a right to payments hereunder or to any interest in this
Agreement shall rely solely on the unsecured promise of Company set
forth herein, and nothing in this Agreement shall be construed to give
Executive, Beneficiary or any other person or persons any right, title,
interest or claim in or to any specific asset, fund, reserve, account
or property of any kind whatsoever owned by Company or in which it may
have any right, title or interest now or in the future, but Executive
shall have the right to enforce his claim against Company in the same
manner as any unsecured creditor.
11. AMENDMENT
This Agreement may be amended at any time or from time to time by
written agreement of the parties.
12. ASSIGNMENT
Neither Executive, nor Beneficiary, nor any other person entitled to
payments hereunder shall have power to transfer, assign, anticipate,
mortgage or otherwise encumber in advance any of such payments, nor
shall such payments be subject to seizure for the payment of public or
private debts, judgments, alimony or separate maintenance, or be
transferable by operation of law in event of bankruptcy, insolvency or
otherwise.
3
<PAGE> 4
13. BINDING EFFECT
This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns. The Company agrees
it will not be a party to any merger, consolidation or reorganization,
unless and until its obligations hereunder shall be expressly assumed
by its successors.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
the 17th day of March, 2000.
Signed, Sealed and Delivered EXECUTIVE:
In the Presence of:
/s/ Paul W. Miller /s/ Philip L. Maslowe
- -------------------------------- -------------------------------------
PRINT NAME OF WITNESS BELOW: Philip L. Maslowe
Paul W. Miller
- --------------------------------
Date: 3/17/00
--------------------------------
/s/ Ultan P. McCabe
- --------------------------------
PRINT NAME OF WITNESS BELOW:
Ultan P. McCabe
- --------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ Richard R. Wackenhut
- -------------------------------- ------------------------------------
PRINT NAME OF WITNESS BELOW: Name: Richard R. Wackenhut
Title: President and Chief Executive
Officer
Patricia Delinois
- --------------------------------
/s/ J.C. Tissot Date: 3/17/00
- -------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- --------------------------------
4
<PAGE> 1
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of March 17,
2000, by and between THE WACKENHUT CORPORATION, a Florida corporation, its
successor or successors (the "COMPANY"), and GEORGE R. WACKENHUT (the
"EXECUTIVE").
The Executive is presently an executive officer of the Company and the
parties wish to continue their employment relationship on the terms of this
Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereto agree as follows:
1. EMPLOYMENT.
a. RETENTION. The Company agrees to employ the Executive, and the
Executive agrees to accept such employment, subject to the
terms and conditions of this Agreement.
b. EMPLOYMENT TERM. The period during which the Executive shall
serve as an Executive of the Company shall commence on the
date hereof and, unless earlier terminated pursuant to Section
4 of this Agreement, shall expire on the third anniversary of
the date hereof (the "Employment Term"). Thereafter, this
Agreement and the Employment Term shall be automatically
renewed for successive one year terms, unless either party
shall deliver a written notice to the other party during the
last calendar month of the initial three-year term or any
successive one-year term of this Agreement advising the other
party that this Agreement and the Employment period shall be
terminated at the end of such term.
c. DUTIES AND RESPONSIBILITIES. During the Employment Term, the
Executive shall have such authority and responsibility and
perform such duties as may be assigned to him from time to
time at the direction of the Board of Directors of the Company
(the "Board").
2. LOYALTY. Executive agrees that during the Employment Term, he will
devote such time that is reasonably necessary to perform his duties and
responsibilities.
3. COMPENSATION. During the Employment Term, the Company agrees to pay,
and Executive agrees to accept, the amounts set forth below:
a. BASE SALARY. As compensation for all services rendered by
Executive in performance of his duties or obligations under
this Agreement, Company shall pay Executive an annual base
salary of one million five hundred eighty-four thousand
dollars ($1,584,000) (the "Base Salary"). Such base salary
shall be increased (but not decreased) from time to time in
the sole discretion of the Board or the Compensation Committee
of the Board. Such base salary shall be payable in equal
installments, no
1
<PAGE> 2
less frequently than monthly, pursuant to the Company's
customary payroll policies in force at the time of payment,
less any required or authorized withholding or payroll
deductions. In addition, the Executive shall be eligible to
receive, on an annual basis a bonus (the "Bonus") in such
amounts and subject to such targets and incentives as set
forth in the Designated Executive Officer Bonus Plan. In no
event shall any such Bonus be less than thirty five percent
(35%) of the Executive's Base Salary, subject to satisfaction
of applicable targets and incentives.
b. EXECUTIVE BENEFITS. In addition to receiving the Base Salary
provided for in Section 3a., Executive shall be entitled
during the Employment Term to participate in all retirement
(subject to any eligibility requirements with respect to any
tax-qualified retirement plans), deferred compensation,
health, dental, disability, life insurance and fringe benefits
or programs now or hereafter established by the Company which
cover the Company's executives or its employees.
c. VACATION. Executive shall be entitled to receive six weeks of
paid vacation for each year during the Employment Term and
shall be entitled to receive paid holidays as enjoyed by all
other employees of the Company.
d. EXPENSES. The Company agrees to reimburse Executive for all
reasonable expenses incurred by him in providing services
under this Agreement in accordance with its policies and
practices regarding expense reimbursement then in effect.
e. AUTOMOBILE ALLOWANCE. Executive shall be entitled to receive
an automobile allowance in accordance with The Wackenhut
Corporation Executive Automobile Policy (the " Executive
Automobile Policy") as in effect on the date hereof. Both the
Company and Executive shall be responsible for paying the
costs related to Executive's automobile in accordance with the
terms of the Executive Automobile Policy.
f. CLUB MEMBERSHIP. The Company will provide Executive with a
corporate membership to a country club mutually acceptable to
Executive and to the Company, including initiation fees and
monthly dues.
4. TERMINATION OF EMPLOYMENT. At any time during the Employment Term, the
Executive or the Company shall have the right to terminate the
Employment Term for any reason effective upon delivery of written
notice to the other party. Upon any such termination, (i) the Company
shall pay to the Executive the unpaid portion of his Salary, payable
through the date of Executive's termination, when and as the same would
have been due and payable hereunder but for such termination and all of
the Executive's vested accrued benefits as of the date of termination
of employment that the Executive is entitled to under the Company's
benefit plans, (ii) the Company shall transfer all of its interest in
any automobile used by the Executive pursuant to 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
2
<PAGE> 3
such automobile is leased, the Company shall pay the residual cost of
such lease); and (iii) the Retirement Benefit (as defined in Section 5
Below).
5. RETIREMENT BENEFITS. Upon the termination of the Employment Term for
any reason, the Company shall provide the Executive and his spouse with
an annual Retirement Benefit (as defined below). The Retirement Benefit
shall be provided annually to the Executive and his spouse for the
remainder of the Executive's life, and upon the Executive's death, the
Retirement Benefit shall be provided to his spouse for the remainder of
her life. For purposes of this Agreement, the "Retirement Benefit"
shall mean any benefits or perquisites requested by the Executive (or
in the event of his death, his spouse), which shall not exceed $250,000
per year in total cost to the Company. The Retirement Benefit may
include, but is not limited to, health and life insurance, office
space, secretarial services, country club dues, living expenses, travel
allowances and automobile allowances.
a. EQUALIZATION PAYMENT. If any of the Retirement Benefit 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 pay to the Executive in cash an additional
amount (the "Gross-Up Payment") to enable the Executive to pay
the entire amount of any Excise Tax imposed upon the
Retirement Benefit and any federal, state and local income tax
and Excise Tax imposed upon the Gross-Up Payment. The 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 Gross-Up Payment shall be paid to the Executive
within 60 days from the expiration of the Employment Term. For
purposes of determining the Gross-Up Payment pursuant to this
Section 5.a, the Retirement Benefit 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.
b. TAX RATES. For purposes of determining the amount of the
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 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. Within 30 days from the expiration of the
Employment Term, the Company shall deliver to the Executive a
written statement (the "Gross-Up Statement") specifying the
total amount of the Gross-Up Payment (if any), together with
all supporting calculations. If the Executive disagrees with
the Company's calculation of said payment, the Executive shall
submit to the Company, no later than 30 days after receipt of
the Company's calculations, a written 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
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deemed to be an agreement by the Executive as to the amount of
the Gross-Up Payment. 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 Gross-Up Statement 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 GrossUp Payment
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 Gross-Up 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 Gross-Up
Statement through the actual date of payment of said
shortfall.
d. SUBSEQUENT RECALCULATION. In the event the Internal Revenue
Service imposes an Excise Tax with respect to the Retirement
Benefit that is greater than the Excise Tax calculated
hereunder, 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.
6. NO MITIGATION AND REEMPLOYMENT. 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. 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 payment or benefit
contemplated by this Agreement upon his termination of employment
7. 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
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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.
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. 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.
10. COMPLETE AGREEMENT. This Agreement supersedes all previous employment
agreements entered into by Executive and the Company. This Agreement
does not affect any deferred compensation agreements, nonqualified
retirement plans or any other agreements entered into by the parties.
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11. 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 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.
12. 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.
13. 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.
14. 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. THE PARTIES
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT
THEY MAY HAVE TO A TRIAL BY JURY, THIS WAIVER BEING A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
15. 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.
16. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
17. 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, each of the parties has executed this Agreement as
of the date first above written.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ Rey Ramirez /s/ GEORGE R. WACKENHUT
- ----------------------------------- ---------------------------------
PRINT NAME OF WITNESS BELOW: GEORGE R. WACKENHUT
Rey Ramirez
- ---------------------------------
Date:
/s/ Victor Stebnicki
- --------------------------------- ----------------------------
PRINT NAME OF WITNESS BELOW:
- ---------------------------------
Victor Stebnicki
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ RICHARD R. WACKENHUT
- ----------------------------------- ---------------------------------
PRINT NAME OF WITNESS BELOW: Name: Richard R. Wackenhut
Patricia Delinois Title: President and Chief
- ----------------------------------- Executive Officer
/s/ JC Tissot
- ---------------------------------
PRINT NAME OF WITNESS BELOW:
JC Tissot Date: 3/17/00
- --------------------------------- --------------------------
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EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of March
17th, 2000, by and between THE WACKENHUT CORPORATION, a Florida corporation, its
successor or successors (the "COMPANY"), and RICHARD R. WACKENHUT (the
"EXECUTIVE").
The Executive is presently an executive officer of the Company and the
parties wish to continue their employment relationship in the future on the
terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereto agree as follows:
1. EMPLOYMENT.
a. RETENTION. The Company agrees to employ the Executive as Chief
Executive Officer of the Company, and the Executive agrees to
accept such employment and serve in such position, subject to
the terms and conditions of this Agreement.
b. EMPLOYMENT TERM. The period during which the Executive shall
serve as an Executive of the Company shall commence on the
date hereof and, subject to the terms and conditions set forth
herein and unless sooner terminated as hereinafter provided,
shall expire on the tenth anniversary of the date hereof (the
"Employment Term"); provided, however, that the Employment
Term shall be automatically extended for an additional one
year period on each anniversary date of this Agreement, in
perpetuity, such that the number of years remaining under the
Employment Term as of each such anniversary date shall be ten
years, unless either party shall deliver a written notice to
the other party during any thirty-day period ending on any
anniversary date of this Agreement advising the other party
that the Employment Term shall not continue be extended for
one additional year.
c. DUTIES AND RESPONSIBILITIES. During the Employment Term, the
Executive shall have such authority and responsibility and
perform such duties as may be assigned to him from time to
time at the direction of the Board of Directors of the Company
(the "Board") and in the absence of such assignment, such
duties customary to office of Chief Executive Officer as are
necessary to the business and operations of the Company.
2. LOYALTY. Executive agrees that during the Employment Term, he will
devote his full time and attention during regular business hours to the
business and affairs of the Company. It shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civil or
charitable boards or committees, (ii) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (iii)
manage personal investment so long as such activities do not
significantly interfere with the performance of the Executive's duties
in accordance with this Agreement.
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3. COMPENSATION. During the Employment Term, the Company agrees to pay,
and Executive agrees to accept, the amounts set forth below:
a. BASE SALARY; BONUS. As compensation for all future services
rendered by Executive in performance of his future duties or
obligations under this Agreement, Company shall pay Executive
an annual base salary of one million fifty thousand dollars
($1,050,000) (the "Base Salary"). Such base salary shall be
increased (but not decreased) from time to time in the sole
discretion of the Board or the Compensation Committee of the
Board. Such base salary shall be payable in equal
installments, no less frequently than monthly, pursuant to the
Company's customary payroll policies in force at the time of
payment, less any required or authorized withholding or
payroll deductions. In addition, the Executive shall be
eligible to receive, on an annual basis a bonus (the "Bonus")
in such amounts and subject to such targets and incentives as
set forth in the Designated Executive Officer Bonus Plan. In
no event shall any such Bonus be less than thirty five percent
(35%) of the Executive's Base Salary, subject to satisfaction
of applicable targets and incentives.
b. EXECUTIVE BENEFITS. In addition to receiving the Base Salary
provided for in Section a, Executive, in consideration for all
future services to be rendered, shall be entitled during the
Employment Term to participate in all retirement (subject to
any eligibility requirements with respect to any tax-qualified
retirement plans), deferred compensation, health, dental,
disability, life insurance and fringe benefits or programs now
or hereafter established by the Company which cover the
Company's executives or its employees (the "Executive
Benefits").
c. VACATION. Executive shall be entitled to receive six weeks of
paid vacation for each year during the Employment Term and
shall be entitled to receive paid holidays as enjoyed by all
other employees of the Company.
d. EXPENSES. The Company agrees to reimburse Executive for all
reasonable expenses incurred by him in providing services
under this Agreement in accordance with its policies and
practices regarding expense reimbursement then in effect.
e. AUTOMOBILE ALLOWANCE. Executive shall be entitled to receive
an automobile allowance in accordance with The Wackenhut
Corporation Executive Automobile Policy (the " Executive
Automobile Policy") as in effect on the date hereof. Both the
Company and Executive shall be responsible for paying the
costs related to Executive's automobile in accordance with the
terms of the Executive Automobile Policy.
f. CLUB MEMBERSHIP. The Company will provide Executive with a
corporate membership to a country club mutually acceptable to
Executive and to the Company, including initiation fees and
monthly dues.
4. TERMINATION FOR DEATH. In the event the Executive's employment is
terminated due to his death, this Agreement shall automatically
terminate as of the date of the death. At such time, the Company shall
have the following obligations to the Executive's estate (but no other
obligations to the Executive's estate pursuant to this Agreement): (i)
the payment of
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Executive's earned and unpaid base salary and (ii) the payment of the
Special Termination Payment (as defined in Section 8 below). Such
payments shall be made within 30 days after the date of the Executive's
death
5. TERMINATION BY THE COMPANY. In the event the Company terminates
Executive's employment for any reason other than death, the Company
shall pay the Special Termination Payment (as defined in Section 8
below) to the Executive within ten days after said termination. In
addition, (i) the Company shall continue to provide the Executive with
the Executive Benefits (as described in Section 3.b) at no cost the
Executive in no less than the same amounts and on the same terms and
conditions that would have applied had he remained employed by the
Company for the remainder of the Employment Term, (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 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, the present value of all cash payments pursuant
to the Amended and Restated Deferred Compensation Agreement entered
into between the Company and the Executive (the "Deferred Compensation
Agreement") as if the Executive had remained employed with the Company
through the Retirement Date defined therein (the "Deferred Compensation
Payoff"), and (v) 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 HR 350 (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 numerator 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.The present value represented by the Deferred
Compensation Payoff referred to above shall be calculated (i) using a
discount rate equal to the lower of the rate provided for in Code
Section 280G(d)(4), or six and one-half percent (6.5%), and (ii)
without regard to any mortality factors or related probabilities.
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6. TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. Executive may terminate
his employment hereunder without Good Reason (as defined below) at any
time during the Employment Term (a "Resignation"). Upon such
termination, the Company shall have no obligation to the Executive
pursuant to this Agreement other than the payment of Executive's earned
and unpaid base salary, and payment of expenses pursuant to Section 17
below incurred by the Executive prior to such termination.
7. TERMINATION BY EXECUTIVE FOR GOOD REASON. If Executive terminates his
employment for Good Reason (as defined below), the Company shall pay
the Special Termination Payment (as defined in Section 8 below) to the
Executive within ten days after said termination. In addition to the
Special Termination Payment, upon such a termination, the Company shall
pay or provide to the Executive all of the payments and benefits
described in Section 5 in the same amounts and manner as provided in
Section 5.
a. TERMINATION FOR GOOD REASON. Termination by Executive of his
employment for "Good Reason" shall mean a termination by
Executive upon:
(i) A material reduction is Executive's title or
responsibilities as set forth in Section 1;
(ii) A material breach or violation by the Company of
any provision of this Agreement;
(iii) Any reduction in Executive's Base Salary;
(iv) The Executive's Disability (as defined below);
(v) Any termination by the Executive which occurs
more than 18 months after the occurrence of a Change in
Control (as defined below);
(vi) A diminution in the Executive's eligibility to
participate in bonus, stock options, incentive awards and
other compensation plans or a diminution in Executive
Benefits; or
(vii) A change in the location of the Executive's
principal place of employment by the Company of more than 50
miles from the location which he was principally employed
immediately prior to a Change in Control.
b. 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
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
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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) George R.
Wackenhut, (ii) the spouse and lineal descendants of George R.
Wackenhut, (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.
c. DISABILITY. For purposes of this Agreement, a "Disability"
shall occur if (i) Executive becomes incapacitated by bodily
injury or disease (including as a result of mental illness) so
as to be unable to perform the duties of his position for a
period in excess of 180 days in any twelve-month period or
(ii) a qualified independent physician determines that
Executive is mentally or physically disabled so as to be
unable to perform the duties of his position and such
condition is expected to be of a permanent duration.
The Executive's employment shall be deemed terminated for Good
Reason upon delivery to the Company of a written notice by the
Executive or his representative notifying the Company of such
termination, and specifying why such termination is for Good Reason
under this Agreement.
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8. SPECIAL TERMINATION PAYMENT. For purposes of this Agreement, the
"Special Termination Payment" shall mean an aggregate amount of money
equal to the product of the number of years (including fractional
years) remaining in the Employment Term (assuming that this Agreement
had not been terminated), 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 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 or the Gross-Up Payment (as defined below)
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. In the event that the Special Termination
Payment is made on account of the Executive's employment being
terminated (i) by the Executive for Good Reason, pursuant to Section 7
of this Agreement, or (ii) by the Company for any reason other than
death, pursuant to Section 5 of this Agreement, then the Company shall
continue to provide the Executive with the Executive Benefits (as
described in Section 3.b) at no cost to the Executive in no less than
the same amounts and on the same terms and conditions that would have
applied had he remained employed by of the Company for the remainder of
the Employment Term and such continuation should be considered to be an
additional Special Termination Payment.
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 pay to the Executive in cash an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive after deduction from the
Special Termination Payment and the Gross-Up Payment of any
Excise Tax imposed upon the Special Termination Payment and
any federal, state and local income tax and Excise Tax imposed
upon the 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 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 Gross-Up Payment shall
be paid to the Executive in full, at the time the Special
Termination Payment is paid pursuant to Section 7 hereof. For
purposes of determining the Gross-Up Payment pursuant to this
Section 8.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, the
value of any Executive Benefits to be provided to the
Executive.
b. TAX RATES. For purposes of determining the amount of the
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 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
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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 the Special Termination Payment and the Gross-Up Payment,
together with all supporting calculations. If the Executive
disagrees with the Company's calculation of either 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 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 the Special Termination Payment
and the Gross-Up Payment. 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 Special
Termination Payment and the Gross-Up Payment 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 Special Termination Payment or
Gross-Up 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 with respect to the Special
Termination Payment that is greater than the Excise Tax
calculated hereunder, 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.
7
<PAGE> 8
9. NO MITIGATION AND REEMPLOYMENT. 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. 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 payment or benefit
contemplated by this Agreement upon his termination of employment
10. 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.
11. 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 Secretary, with a copy to the Company's
General Counsel.
12. 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
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<PAGE> 9
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.
13. COMPLETE AGREEMENT. No agreements or representations, oral or
otherwise, express or implied, have been made by either party hereto
which are not set forth expressly in this Agreement. This Agreement
supersedes all previous employment agreements entered into by Executive
and the Company. Except as specifically provided in Sections 5, 7 and 9
of this Agreement, this Agreement does not affect any deferred
compensation agreements, nonqualified retirement plans or any other
agreements (other than employment agreements) entered into by the
parties.
14. 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 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.
15. 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.
16. 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.
17. 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. THE PARTIES
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT
THEY MAY HAVE TO A TRIAL BY JURY, THIS WAIVER BEING A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
18. 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.
19. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
20. 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.
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<PAGE> 10
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first above written.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ Patricia Delinois /s/ RICHARD R. WACKENHUT
- --------------------------------- ------------------------------
PRINT NAME OF WITNESS BELOW: RICHARD R. WACKENHUT
Patricia Delinois Date: 3/17/00
- --------------------------------- -------------------------
/s/ J.C. Tissot
- ---------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- ---------------------------------
THE WACKENHUT CORPORATION
/s/ Paul W. Miller By: /s/ Alan B. Berstein
- --------------------------------- -----------------------------
PRINT NAME OF WITNESS BELOW:
Paul W. Miller Name: Alan B. Berstein
- --------------------------------- --------------------------
Title: Executive Vice President
--------------------------
Date: 3/17/00
-------------------------
/s/ Ultan P. McCabe
- ---------------------------------
PRINT NAME OF WITNESS BELOW:
Ultan P. McCabe
- ---------------------------------
10
<PAGE> 1
EXHIBIT 10.10
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is made and entered
into as of this 17th day of March, 2000, by and between The Wackenhut
Corporation, a Florida corporation, its successor or successors, (hereinafter
referred to as the "Company") and Fernando Carrizosa (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. 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, the present value of
all cash payments pursuant to the Amended and Restated Deferred
Compensation Agreement entered into between the Company and the
Executive (the "Deferred Compensation Agreement") as if the Executive
had remained employed with the Company through the Retirement Date
defined therein (the "Deferred Compensation Payoff"), (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
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<PAGE> 2
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 HR 350 (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 numerator 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. If the
Executive dies during the 3-year period contemplated by clause (v) of
the foregoing sentence, 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
present value represented by the Deferred Compensation Payoff referred
to above shall be calculated (i) using a discount rate equal to the
lower of the rate provided for in Code Section 280G(d)(4), or six and
one-half percent (6.5%), and (ii) without regard to any mortality
factors or related probabilities. 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. 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 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;
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<PAGE> 3
(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) George R.
Wackenhut, (ii) the spouse and lineal descendants of George R.
Wackenhut, (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 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.
3
<PAGE> 4
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 pay to the Executive in cash an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive after deduction from the
Special Termination Payment and the Gross-Up Payment of any
Excise Tax imposed upon the Special Termination Payment and
any federal, state and local income tax and Excise Tax imposed
upon the 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 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 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 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, the
value of any Executive Benefits paid or provided to the
Executive during the period provided for in Code Section
280G(b)(2)(C).
b. TAX RATES. For purposes of determining the amount of the
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 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 the Special Termination Payment and the Gross-Up Payment,
together with all supporting calculations. If the Executive
disagrees with the Company's calculation of either 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 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 the Special Termination Payment
and the Gross-Up Payment. 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
4
<PAGE> 5
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 Special Termination Payment and the
Gross-Up Payment 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
Special Termination Payment or Gross-Up 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 with respect to the Special
Termination Payment that is greater than the Excise Tax
calculated hereunder, 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.
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
5
<PAGE> 6
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. 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.
8. 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.
9. 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
6
<PAGE> 7
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.
10. COMPLETE AGREEMENT. This Agreement supersedes all previous severance
agreements entered into by Executive and the Company. 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.
11. 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 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
17. 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.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Executive Severance
Agreement effective the 17th day of March, 2000.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ Paul W. Miller /s/ Fernando Carrizosa
- ------------------------------ ----------------------------------
PRINT NAME OF WITNESS BELOW: Fernando Carrizosa
Paul W. Miller
- ------------------------------ Date: 3/17/00
-----------------------------
/s/ Ultan P. McCabe
- ------------------------------
PRINT NAME OF WITNESS BELOW:
Ultan P. McCabe
- ------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ R. R. Wackenhut
- ------------------------------- ------------------------------
PRINT NAME OF WITNESS BELOW:
Patricia Delinois
- ------------------------------- Name: Richard R. Wackenhut
Title: President and Chief
Executive Officer
/s/ J.C. Tissot Date: 3/17/00
- ------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- -------------------------------
8
<PAGE> 1
EXHIBIT 10.11
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is made and entered
into as of this 17th day of March, 2000, by and between The Wackenhut
Corporation, a Florida corporation, its successor or successors, (hereinafter
referred to as the "Company") and Sandra L. Nusbaum (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. 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, the present value of
all cash payments pursuant to the Amended and Restated Senior Officer
Retirement Agreement entered into between the Company and the Executive
(the "Deferred Compensation Agreement") as if the Executive had
remained employed with the Company through the Retirement Date defined
therein (the "Deferred Compensation Payoff"), (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
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<PAGE> 2
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 HR 350 (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 numerator 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. If the
Executive dies during the 3-year period contemplated by clause (v) of
the foregoing sentence, 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
present value represented by the Deferred Compensation Payoff referred
to above shall be calculated (i) using a discount rate equal to the
lower of the rate provided for in Code Section 280G(d)(4), or six and
one-half percent (6.5%), and (ii) without regard to any mortality
factors or related probabilities. 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. 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 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;
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<PAGE> 3
(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) George R.
Wackenhut, (ii) the spouse and lineal descendants of George R.
Wackenhut, (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 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.
3
<PAGE> 4
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 pay to the Executive in cash an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive after deduction from the
Special Termination Payment and the Gross-Up Payment of any
Excise Tax imposed upon the Special Termination Payment and
any federal, state and local income tax and Excise Tax imposed
upon the 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 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 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 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,
the value of any Executive Benefits paid or provided to the
Executive during the period provided for in Code Section
280G(b)(2)(C).
b. TAX RATES. For purposes of determining the amount of the
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 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 the Special Termination Payment and the Gross-Up Payment,
together with all supporting calculations. If the Executive
disagrees with the Company's calculation of either 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 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 the Special Termination Payment
and the Gross-Up Payment. 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
4
<PAGE> 5
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 Special Termination Payment and the
Gross-Up Payment 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
Special Termination Payment or Gross-Up 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 with respect to the Special
Termination Payment that is greater than the Excise Tax
calculated hereunder, 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.
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
5
<PAGE> 6
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. 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 her 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.
8. 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.
9. 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
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<PAGE> 7
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.
10. COMPLETE AGREEMENT. This Agreement supersedes all previous severance
agreements entered into by Executive and the Company. 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.
11. 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 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
17. 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.
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<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Executive Severance
Agreement effective the 17th day of March, 2000.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ Paul W. Miller /s/ Sandra L. Nusbaum
- ------------------------------ ----------------------------------
PRINT NAME OF WITNESS BELOW: Sandra L. Nusbaum
Paul W. Miller
- ------------------------------ Date: 3/17/2000
-----------------------------
/s/ Ultan P. McCabe
- ------------------------------
PRINT NAME OF WITNESS BELOW:
Ultan P. McCabe
- ------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ R. R. Wackenhut
- ------------------------------- ------------------------------
PRINT NAME OF WITNESS BELOW:
Patricia Delinois
- ------------------------------- Name: Richard R. Wackenhut
Title: President and Chief
Executive Officer
/s/ J.C. Tissot Date: 3/17/2000
- ------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- -------------------------------
8
<PAGE> 1
EXHIBIT 10.12
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is made and entered
into as of this 17th day of March, 2000, by and between The Wackenhut
Corporation, a Florida corporation, its successor or successors, (hereinafter
referred to as the "Company") and Robert C. Kneip (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. 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, the present value of
all cash payments pursuant to the Amended and Restated Deferred
Compensation Agreement entered into between the Company and the
Executive (the "Deferred Compensation Agreement") as if the Executive
had remained employed with the Company through the Retirement Date
defined therein (the "Deferred Compensation Payoff"), (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
1
<PAGE> 2
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 HR 350 (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 numerator 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. If the
Executive dies during the 3-year period contemplated by clause (v) of
the foregoing sentence, 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
present value represented by the Deferred Compensation Payoff referred
to above shall be calculated (i) using a discount rate equal to the
lower of the rate provided for in Code Section 280G(d)(4), or six and
one-half percent (6.5%), and (ii) without regard to any mortality
factors or related probabilities. 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. 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 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;
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<PAGE> 3
(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) George R.
Wackenhut, (ii) the spouse and lineal descendants of George R.
Wackenhut, (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 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.
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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 pay to the Executive in cash an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive after deduction from the
Special Termination Payment and the Gross-Up Payment of any
Excise Tax imposed upon the Special Termination Payment and
any federal, state and local income tax and Excise Tax imposed
upon the 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 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 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 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, the
value of any Executive Benefits paid or provided to the
Executive during the period provided for in Code Section
280G(b)(2)(C).
b. TAX RATES. For purposes of determining the amount of the
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 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 the Special Termination Payment and the Gross-Up Payment,
together with all supporting calculations. If the Executive
disagrees with the Company's calculation of either 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 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 the Special Termination Payment
and the Gross-Up Payment. 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
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<PAGE> 5
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 Special Termination Payment and the
Gross-Up Payment 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
Special Termination Payment or Gross-Up 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 with respect to the Special
Termination Payment that is greater than the Excise Tax
calculated hereunder, 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.
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
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<PAGE> 6
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. 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.
8. 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.
9. 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
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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.
10. COMPLETE AGREEMENT. This Agreement supersedes all previous severance
agreements entered into by Executive and the Company. 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.
11. 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 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
17. 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.
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<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Executive Severance
Agreement effective the 17th day of March, 2000.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ Dorothy A. Roberts /s/ Robert C. Kneip
- ------------------------------ ----------------------------------
PRINT NAME OF WITNESS BELOW: Robert C. Kneip
Dorothy A. Roberts
- ------------------------------ Date: 3/17/00
-----------------------------
/s/ Pamela C. Burroughs
- ------------------------------
PRINT NAME OF WITNESS BELOW:
Pamela C. Burroughs
- ------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ R. R. Wackenhut
- ------------------------------- ------------------------------
PRINT NAME OF WITNESS BELOW:
Patricia Delinois
- ------------------------------- Name: Richard R. Wackenhut
Title: President and Chief
Executive Officer
/s/ J.C. Tissot Date: 3/17/00
- ------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- -------------------------------
8
<PAGE> 1
EXHIBIT 10.13
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is made and entered
into as of this 17th day of March, 2000, by and between The Wackenhut
Corporation, a Florida corporation, its successor or successors, (hereinafter
referred to as the "Company") and Timothy J. Howard (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. 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, the present value of
all cash payments pursuant to the Amended and Restated Senior Officer
Retirement Agreement entered into between the Company and the Executive
(the "Deferred Compensation Agreement") as if the Executive had
remained employed with the Company through the Retirement Date defined
therein (the "Deferred Compensation Payoff"), (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
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<PAGE> 2
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 HR 350 (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 numerator 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. If the
Executive dies during the 3-year period contemplated by clause (v) of
the foregoing sentence, 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
present value represented by the Deferred Compensation Payoff referred
to above shall be calculated (i) using a discount rate equal to the
lower of the rate provided for in Code Section 280G(d)(4), or six and
one-half percent (6.5%), and (ii) without regard to any mortality
factors or related probabilities. 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. 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 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;
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<PAGE> 3
(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) George R.
Wackenhut, (ii) the spouse and lineal descendants of George R.
Wackenhut, (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 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.
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<PAGE> 4
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 pay to the Executive in cash an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive after deduction from the
Special Termination Payment and the Gross-Up Payment of any
Excise Tax imposed upon the Special Termination Payment and
any federal, state and local income tax and Excise Tax imposed
upon the 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 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 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 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, the
value of any Executive Benefits paid or provided to the
Executive during the period provided for in Code Section
280G(b)(2)(C).
b. TAX RATES. For purposes of determining the amount of the
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 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 the Special Termination Payment and the Gross-Up Payment,
together with all supporting calculations. If the Executive
disagrees with the Company's calculation of either 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 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 the Special Termination Payment
and the Gross-Up Payment. 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
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<PAGE> 5
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 Special Termination Payment and the
Gross-Up Payment 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
Special Termination Payment or Gross-Up 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 with respect to the Special
Termination Payment that is greater than the Excise Tax
calculated hereunder, 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.
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
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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. 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.
8. 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.
9. 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
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<PAGE> 7
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.
10. COMPLETE AGREEMENT. This Agreement supersedes all previous severance
agreements entered into by Executive and the Company. 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.
11. 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 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
17. 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.
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<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Executive Severance
Agreement effective the 17th day of March, 2000.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ Ultan P. McCabe /s/ Timothy J. Howard
- ------------------------------ ----------------------------------
PRINT NAME OF WITNESS BELOW: Timothy J. Howard
Ultan P. McCabe
- ------------------------------ Date: 3/17/2000
-----------------------------
/s/ Paul W. Miller
- ------------------------------
PRINT NAME OF WITNESS BELOW:
Paul W. Miller
- ------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ R. R. Wackenhut
- ------------------------------- ------------------------------
PRINT NAME OF WITNESS BELOW:
Patricia Delinois
- ------------------------------- Name: Richard R. Wackenhut
Title: President and Chief
Executive Officer
/s/ J.C. Tissot Date: 3/17/00
- ------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- -------------------------------
8
<PAGE> 1
EXHIBIT 10.14
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is made and entered
into as of this 17th day of March, 2000, by and between The Wackenhut
Corporation, a Florida corporation, its successor or successors, (hereinafter
referred to as the "Company") and Alan B. Bernstein (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. 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, the present value of
all cash payments pursuant to the Amended and Restated Deferred
Compensation Agreement entered into between the Company and the
Executive (the "Deferred Compensation Agreement") as if the Executive
had remained employed with the Company through the Retirement Date
defined therein (the "Deferred Compensation Payoff"), (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
1
<PAGE> 2
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 HR 350 (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 numerator 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. If the
Executive dies during the 3-year period contemplated by clause (v) of
the foregoing sentence, 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
present value represented by the Deferred Compensation Payoff referred
to above shall be calculated (i) using a discount rate equal to the
lower of the rate provided for in Code Section 280G(d)(4), or six and
one-half percent (6.5%), and (ii) without regard to any mortality
factors or related probabilities. 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. 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 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;
2
<PAGE> 3
(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) George R.
Wackenhut, (ii) the spouse and lineal descendants of George R.
Wackenhut, (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 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.
3
<PAGE> 4
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 pay to the Executive in cash an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive after deduction from the
Special Termination Payment and the Gross-Up Payment of any
Excise Tax imposed upon the Special Termination Payment and
any federal, state and local income tax and Excise Tax imposed
upon the 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 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 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 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, the
value of any Executive Benefits paid or provided to the
Executive during the period provided for in Code Section
280G(b)(2)(C).
b. TAX RATES. For purposes of determining the amount of the
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 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 the Special Termination Payment and the Gross-Up Payment,
together with all supporting calculations. If the Executive
disagrees with the Company's calculation of either 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 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 the Special Termination Payment
and the Gross-Up Payment. 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
4
<PAGE> 5
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 Special Termination Payment and the
Gross-Up Payment 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
Special Termination Payment or Gross-Up 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 with respect to the Special
Termination Payment that is greater than the Excise Tax
calculated hereunder, 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.
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
5
<PAGE> 6
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. 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.
8. 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.
9. 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
6
<PAGE> 7
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.
10. COMPLETE AGREEMENT. This Agreement supersedes all previous severance
agreements entered into by Executive and the Company. 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.
11. 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 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
17. 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.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Executive Severance
Agreement effective the 17th day of March, 2000.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ Paul W. Miller /s/ Alan B. Bernstein
- ------------------------------ ----------------------------------
PRINT NAME OF WITNESS BELOW: Alan B. Bernstein
Paul W. Miller
- ------------------------------ Date: 3/17/00
-----------------------------
/s/ Ultan P. McCabe
- ------------------------------
PRINT NAME OF WITNESS BELOW:
Ultan P. McCabe
- ------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ R. R. Wackenhut
- ------------------------------- ------------------------------
PRINT NAME OF WITNESS BELOW:
Patricia Delinois
- ------------------------------- Name: Richard R. Wackenhut
Title: President and Chief
Executive Officer
/s/ J.C. Tissot Date: 3/17/00
- ------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
J.C. Tissot
- -------------------------------
8
<PAGE> 9
<PAGE> 1
EXHIBIT 10.15
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is made and entered
into as of this 17th day of March, 2000, by and between The Wackenhut
Corporation, a Florida corporation, its successor or successors, (hereinafter
referred to as the "Company") and Philip L. Maslowe (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. 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, the present value of
all cash payments pursuant to the Amended and Restated Senior Officer
Retirement Agreement entered into between the Company and the Executive
(the "Deferred Compensation Agreement") as if the Executive had
remained employed with the Company through the Retirement Date defined
therein (the "Deferred Compensation Payoff"), (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
1
<PAGE> 2
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 HR 350 (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 numerator 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. If the
Executive dies during the 3-year period contemplated by clause (v) of
the foregoing sentence, 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
present value represented by the Deferred Compensation Payoff referred
to above shall be calculated (i) using a discount rate equal to the
lower of the rate provided for in Code Section 280G(d)(4), or six and
one-half percent (6.5%), and (ii) without regard to any mortality
factors or related probabilities. 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. 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 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;
2
<PAGE> 3
(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) George R.
Wackenhut, (ii) the spouse and lineal descendants of George R.
Wackenhut, (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 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.
3
<PAGE> 4
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 pay to the Executive in cash an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive after deduction from the
Special Termination Payment and the Gross-Up Payment of any
Excise Tax imposed upon the Special Termination Payment and
any federal, state and local income tax and Excise Tax imposed
upon the 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 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 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 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, the
value of any Executive Benefits paid or provided to the
Executive during the period provided for in Code Section
280G(b)(2)(C).
b. TAX RATES. For purposes of determining the amount of the
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 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 the Special Termination Payment and the Gross-Up Payment,
together with all supporting calculations. If the Executive
disagrees with the Company's calculation of either 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 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 the Special Termination Payment
and the Gross-Up Payment. 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
4
<PAGE> 5
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 Special Termination Payment and the
Gross-Up Payment 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
Special Termination Payment or Gross-Up 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 with respect to the Special
Termination Payment that is greater than the Excise Tax
calculated hereunder, 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.
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
5
<PAGE> 6
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. 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.
8. 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.
9. 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
6
<PAGE> 7
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.
10. COMPLETE AGREEMENT. This Agreement supersedes all previous severance
agreements entered into by Executive and the Company. 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.
11. 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 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
17. 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.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Executive Severance
Agreement effective the 17th day of March, 2000.
SIGNED, SEALED AND DELIVERED EXECUTIVE:
IN THE PRESENCE OF:
/s/ Paul W. Miller /s/ Philip L. Maslowe
- ------------------------------ ----------------------------------
PRINT NAME OF WITNESS BELOW: Philip L. Maslowe
Paul W. Miller
- ------------------------------ Date: 3/17/00
-----------------------------
/s/ Ultan P. McCabe
- ------------------------------
PRINT NAME OF WITNESS BELOW:
Ultan P. McCabe
- ------------------------------
THE WACKENHUT CORPORATION
/s/ Patricia Delinois By: /s/ R. R. Wackenhut
- ------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
Patricia Delinois
- ------------------------------- Name: Richard R. Wackenhut
Title: President and Chief
Executive Officer
/s/ JC Tissot Date: 3/17/00
- ------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
JC Tissot
- -------------------------------
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENT OF INCOME AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO FORM 10-Q FOR THE QUARTER ENDED APRIL 2, 2000.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-03-2000
<PERIOD-END> APR-02-2000
<CASH> 49
<SECURITIES> 25<F1>
<RECEIVABLES> 209
<ALLOWANCES> 5
<INVENTORY> 13
<CURRENT-ASSETS> 302<F2>
<PP&E> 107
<DEPRECIATION> 31
<TOTAL-ASSETS> 540
<CURRENT-LIABILITIES> 180<F3>
<BONDS> 31
0
0
<COMMON> 2
<OTHER-SE> 165
<TOTAL-LIABILITY-AND-EQUITY> 540<F4>
<SALES> 0
<TOTAL-REVENUES> 594
<CGS> 0
<TOTAL-COSTS> 585
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> 8
<INCOME-TAX> 3
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4<F5>
<EPS-BASIC> 0.29
<EPS-DILUTED> 0.28
<FN>
<F1>MARKETABLE SECURITIES ARE CLASSIFIED AS NON-CURRENT ASSETS ON THE BALANCE
SHEET.
<F2>INCLUDES $10 MILLION OF DEFERRED TAXES, $12 MILLION OF PREPAID EXPENSES AND $14
MILLION OF OTHER CURRENT ASSETS.
<F3>INCLUDES $40 MILLION OF NOTES AND ACCOUNTS PAYABLE, $81 MILLION OF ACCRUED
PAYROLL AND RELATED TAXES AND $59 MILLION OF ACCRUED EXPENSES.
<F4>INCLUDES $75 MILLION RESERVE FOR LOSSES OF CASUALTY REINSURANCE SUBSIDIARY, $54
MILLION MINORITY INTEREST, $15 MILLION DEFERRED REVENUE AND $18 MILLION OTHER
LIABILITIES.
<F5>INCLUDES MINORITY INTEREST AND EQUITY INCOME OF FOREIGN AFFILITES - NET OF
INCOME TAXES OF $(2.3) MILLION AND $1.7 MILLION RESPECTIVELY.
</FN>
</TABLE>
