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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 Xxxxxxxx Xxxxxxxxx (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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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 XX 000 (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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(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) Xxxxxx X.
Xxxxxxxxx, (ii) the spouse and lineal descendants of Xxxxxx X.
Xxxxxxxxx, (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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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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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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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/ Xxxx X. Xxxxxx /s/ Xxxxxxxx Xxxxxxxxx
------------------------------ ----------------------------------
PRINT NAME OF WITNESS BELOW: Xxxxxxxx Xxxxxxxxx
Xxxx X. Xxxxxx
------------------------------ Date: 3/17/00
-----------------------------
/s/ Xxxxx X. XxXxxx
------------------------------
PRINT NAME OF WITNESS BELOW:
Xxxxx X. XxXxxx
------------------------------
THE WACKENHUT CORPORATION
/s/ Xxxxxxxx Xxxxxxxx By: /s/ X. X. Xxxxxxxxx
------------------------------- ------------------------------
PRINT NAME OF WITNESS BELOW:
Xxxxxxxx Xxxxxxxx
------------------------------- Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief
Executive Officer
/s/ X.X. Tissot Date: 3/17/00
------------------------------- -------------------------------
PRINT NAME OF WITNESS BELOW:
X.X. Tissot
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