EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of this 20th day
of June, 2005, is by and between Corrections Corporation of America, a Maryland
corporation with its principal place of business at 00 Xxxxxx Xxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxxxxxxxx (the "Company"), and Xxxxxxx X. XxXxxxx, a resident of
Denver, North Carolina (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to engage Executive as its Chief People
Officer, subject to the terms of an executive employment agreement; and
WHEREAS, the Company and the Executive now desire to enter into this
Agreement and set forth the terms and conditions of the Executive's employment
with the Company.
NOW, THEREFORE, for and in consideration of the foregoing recitals, the
mutual promises and covenants set forth below and other good and valuable
consideration, receipt of which is hereby acknowledged, the Company and the
Executive do hereby agree as follows:
1. Employment. The Executive shall serve as the Chief People Officer of
the Company and such other office or offices to which Executive may be appointed
or elected by the Board of Directors. Subject to the direction and supervision
of the Board of Directors of the Company, the Executive shall perform such
duties as are customarily associated with the office of Chief People Officer and
such other offices to which Executive may be appointed or elected by the Board
of Directors. The Executive's principal base of operations for the performance
of his duties and responsibilities under this Agreement shall be the offices of
the Company located in Nashville, Tennessee. The Executive agrees to abide by
the Company's Charter and Bylaws as in effect from time to time and the
direction of its Board of Directors except to the extent such direction would be
inconsistent with applicable law or the terms of this Agreement.
2. Term. Subject to the provisions of termination as hereinafter
provided, the initial term of the Executive's employment under this Agreement
shall begin on the date hereof and shall terminate on December 31, 2005 (the
"Initial Term"). Unless the Company notifies the Executive that his employment
under this Agreement will not be extended or the Executive notifies the Company
that he is not willing to extend his employment, the term of his employment
under this Agreement shall automatically be extended for a series of three (3)
additional one (1) year periods on the same terms and conditions as set forth
herein (individually, and collectively, the "Renewal Term"). The Initial Term
and the Renewal Term are sometimes referred to collectively herein as the
"Term."
3. Notice of Non-Renewal. If the Company or the Executive elects not to
extend the Executive's employment under this Agreement, the electing party shall
do so by notifying the other party in writing not less than sixty (60) days
prior to the expiration of the Initial Term, or sixty (60) days prior to the
expiration of any Renewal Term. The Executive's date of termination, for
purposes of this Agreement, shall be the date of the Company's last payment to
the Executive. For the purposes of this Agreement, the election by the Company
not to extend the Executive's employment hereunder for any renewal term shall be
deemed a termination of the Executive's employment without "Cause," as
hereinafter defined.
4. Compensation.
4.1 Base Salary. The Company shall pay the Executive an annual salary
("Base Salary") of $245,000, which shall be payable to the Executive hereunder
in accordance with the Company's normal payroll practices, but in no event less
often than bi-weekly. Commencing in February 2006 (or at such other time during
the first or second quarter of 2006 when annual compensation for 2006 is
reviewed and considered) and following each year of the Executive's employment
with the Company thereafter, the Executive's compensation will be reviewed by
the Board of Directors of the Company, or a committee or subcommittee thereof to
which compensation matters have been delegated, and after taking into
consideration both the performance of the Company and the personal performance
of the Executive, the Board of Directors of the Company, or any such committee
or subcommittee, in their sole discretion, may increase the Executive's
compensation to any amount it may deem appropriate.
4.2 Bonus. In the event both the Company and the Executive each
respectively achieve certain financial performance and personal performance
targets, as established by the Board of Directors, or a committee or
subcommittee thereof to which compensation matters have been delegated, of the
Company pursuant to a cash compensation incentive plan or similar plan
established by the Company, the Company shall pay to the Executive an annual
cash bonus during the Term of this Agreement pursuant to the terms of such plan.
This bonus shall be payable to the Executive within ten (10) days following the
confirmation by the Board of Directors or applicable committee or subcommittee
that such targets have been met under the applicable plan for the relevant
fiscal year. The Board of Directors of the Company, or applicable committee or
subcommittee, may review and revise the terms of the cash compensation incentive
plan or similar plan referenced above at any time, after taking into
consideration both the performance of the Company and the personal performance
of the Executive, among other factors, and may, in their sole discretion, amend
the cash compensation incentive plan or similar plan in any manner it may deem
appropriate; provided, however, that any such amendment to the plan shall not
affect the Executive's right to participate in such amended plan or plans.
4.3 Benefits. The Executive shall be entitled to four (4) weeks of paid
vacation annually. In addition, the Executive shall be entitled to participate
in all compensation or employee benefit plans or programs and receive all
benefits and perquisites for which any salaried employees are eligible under any
existing or future plan or program established by the Company for salaried
employees. The Executive will participate to the extent permissible under the
terms and provisions of such plans or programs in accordance with program
provisions. These may include group hospitalization, health, dental care, life
or other insurance, tax qualified pension, savings, thrift and profit sharing
plans, termination pay programs, sick leave plans, travel or accident insurance,
disability insurance, and contingent compensation plans including unit purchase
programs and unit option plans. Nothing in this Agreement shall preclude the
Company from amending or terminating any of the plans or programs applicable to
salaried or senior executives as long as such amendment or termination is
applicable to all salaried employees or senior executives. In addition, the
Company shall pay, or reimburse Executive for, all membership fees and related
costs in connection with Executive's membership in professional and civic
organizations which are approved in advance by the Company.
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4.4 Stock Option. On the date which is the Executive's first date of
employment, the Company hereby agrees to grant to the Executive an option to
purchase 37,000 shares of common stock, $0.01 par value per share, of the
Company, as hereinafter described. The option to be granted to the Executive
hereunder shall be subject to the terms of the Company's Amended & Restated 2000
Stock Incentive Plan (the "Plan") and shall be granted pursuant to an option
agreement substantially in the form of the stock option agreement attached
hereto as Exhibit A; provided, however, that it is hereby agreed that such
option agreement shall provide that the option to purchase one-third (1/3) of
the shares referenced above shall vest on the first anniversary date of the
option grant, the option to purchase an additional one-third (1/3) of such
shares shall vest on the second anniversary date of the option grant, and the
option to purchase the remaining one-third (1/3) of such shares shall vest on
the third anniversary date of the option grant. The Executive hereby agrees to
execute any other documents deemed reasonably necessary by the Company and its
legal counsel in connection with the option grant.
4.5 Restricted Share Awards. On the date which is the Executive's first
date of employment, the Company hereby agrees to grant to the Executive an award
of 14,060 shares of restricted stock pursuant to the Plan. Such shares of
restricted stock shall be granted pursuant to a restricted share award agreement
substantially in the form of the restricted share agreement attached hereto as
Exhibit B;
4.6 Expenses Incurred in Performance of Duties. The Company shall
promptly reimburse the Executive for all reasonable travel and other business
expenses incurred by the Executive in the performance of his duties under this
Agreement upon evidence of receipt.
4.7 Withholdings. All compensation payable hereunder shall be subject
to withholding for federal income taxes, FICA and all other applicable federal,
state and local withholding requirements.
5. Termination of Agreement.
5.1 General. During the term of this Agreement, the Company may, at any
time and in its sole discretion, terminate this Agreement with or without Cause
(as hereinafter defined) or upon a Change in Control (as hereinafter defined),
effective as of the date of provision of written notice to the Executive
thereof.
5.2 Effect of Termination With Cause. If the Executive's employment
with the Company shall be terminated with Cause: (i) the Company shall pay the
Executive his Base Salary earned through the date of termination of the
Executive's employment with the Company (the "Termination Date"); and (ii) the
Company shall not have any further obligations to the Executive under this
Agreement except those required to be provided by law or under the terms of any
other agreement between the Company and the Executive.
5.3 Definition of "Cause." For purposes of this Agreement, "Cause"
shall mean: (i) the death of the Executive; (ii) the permanent disability of the
Executive, which shall be defined as the inability of the Executive, as a result
of physical or mental illness or incapacity, to substantially perform his duties
pursuant to this Agreement for a period of one hundred eighty (180) days during
any twelve (12) month period; (iii) the Executive's conviction of a felony or of
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a crime involving dishonesty or moral terpitude, including, without limitation,
any act or crime involving misappropriation or embezzlement of Company assets or
funds; (iv) willful or material wrongdoing by the Executive, including, but not
limited to, acts of dishonesty or fraud, which could be expected to have a
materially adverse effect on the Company or its subsidiaries or affiliates, as
determined by the Company and its Board of Directors; (v) material breach by the
Executive of a material obligation under this Agreement or of his fiduciary duty
to the Company or its stockholders; or (vi) the Executive's intentional
violation of any applicable local, state or federal law or regulation affecting
the Company in any material respect, as determined by the Company and its Board
of Directors. Notwithstanding the foregoing, to the extent that any of the
events, actions or breaches set forth above are able to be remedied or cured by
the Executive, Cause shall not be deemed to exist (and thus the Company may not
terminate the Executive for Cause hereunder) unless the Executive fails to
remedy or cure such event, action or breach within twenty (20) days after being
given written notice by the Company of such event, action or breach.
5.4 Effect of Termination Without Cause. If the Executive's employment
with the Company is terminated without Cause, the Company shall pay to the
Executive an amount equal to the Executive's Base Salary, based upon the annual
rate payable as of the date of termination, without any cost of living
adjustments (the "Severance Amount"), which shall be payable as provided below.
If the Executive is terminated under this Section 5.4 on or between January 1
and March 14 of any given calendar year during the Term, then the Severance
Amount shall be payable for a period of one (1) year from the date of
termination on the same terms and with the same frequency as the Executive's
Base Salary was paid prior to termination. If the executive is terminated under
this Section 5.4 on or after March 15 and on or before December 31 of any given
calendar year during the Term, then the Severance Amount shall be payable on the
same terms and with the same frequency as the Executive's Base Salary was paid
prior to termination until March 14 of the following calendar year whereupon the
remainder of the Severance Amount shall be paid in a lump sum payment to the
Executive.
5.5 Effect of Termination Upon a Change in Control. If the Executive's
employment with the Company is terminated upon a Change in Control, the Company
shall (i) pay to the Executive a one-time payment, to be paid within sixty (60)
days of the date of termination, in an amount equal to 2.99 times the
Executive's Base Salary, based upon the annual rate payable as of the date of
termination, without any cost of living adjustments; (ii) reimburse Executive
for any Gross-Up Payment (as hereinafter defined) or other payment payable
pursuant to the provisions of Section 8 herein; and (iii) continue to provide
hospitalization, health, dental care, and life and other insurance benefits to
the Executive for a period of one (1) year following such termination on the
same terms and conditions existing immediately prior to termination.
Notwithstanding the foregoing, each of the following events shall be considered
a termination upon a Change in Control for purposes of this paragraph: (i) the
Executive's voluntary resignation for any reason within one-hundred eighty (180)
days following a Change in Control, or (ii) a material reduction in the duties,
powers or authority of the Executive as an officer or employee of the Company
within one-hundred eighty (180) days following a Change in Control.
5.6 Definition of a "Change of Control". "Change of Control" shall mean
the occurrence of any of the following events:
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(i) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended), of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Securities Exchange Act) of fifty
percent (50%) or more of the combined voting power of the
then-outstanding voting securities of the Company entitled to vote
generally in the election of directors, but excluding for the purpose
of this section, any such acquisition by (A) the Company or any of its
subsidiaries, (B) any employee benefit plan (or related trust) or (C)
any corporation with respect to which, following such acquisition, more
than fifty percent (50%) of the combined voting power of the
then-outstanding voting securities of the Company entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by individuals and entities who, immediately
prior to such acquisition, were the beneficial owners of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors; or
(ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity
regardless of which entity is the survivor, 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 being converted into voting
securities of the surviving entity) at least fifty percent (50%) 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 stockholders of the Company approve a plan of
complete liquidation or winding-up 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) any event which the Board of Directors determines should
constitute a Change in Control.
5.7 Resignation by the Executive. The Executive shall be entitled to
resign his employment with the Company at any time during the term of this
Agreement. If the Executive resigns his employment with the Company for any
reason other than as set forth in Section 5.5 herein: (i) the Company shall pay
the Executive his Base Salary earned through the date of termination of the
Executive's employment with the Company as the result of his resignation; and
(ii) the Company shall not have any further obligations to the Executive under
this Agreement except those required to be provided by law or under the terms of
any other agreement between the Company and the Executive.
6. Non-Competition, Non-Solicitation and Confidentiality and
Non-Disclosure
6.1 Non-Competition, Non-Solicitation. The Executive hereby covenants
and agrees that during the Term of the Executive's employment hereunder and for
a period of one (1) year thereafter, Executive shall not, directly or
indirectly: (i) own any interest in, operate, join, control or participate as a
partner, director, principal, officer or agent of, enter into the employment of,
act as a consultant to, or perform any services for any entity (each a
"Competing Entity") which has material operations which compete with any
business in which the Company or any of its
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subsidiaries is then engaged or, to the then existing knowledge of the
Executive, proposes to engage; (ii) solicit any customer or client of the
Company or any of its subsidiaries (other than on behalf of the Company) with
respect to any business in which the Company or any of its subsidiaries is then
engaged or, to the then existing knowledge of the Executive, proposes to engage;
or (iii) induce or encourage any employee of the Company or any of its
subsidiaries to leave the employ of the Company or any of its subsidiaries;
provided, that the Executive may, solely as an investment, hold not more than
five percent (5%) of the combined voting securities of any publicly-traded
corporation or other business entity. The foregoing covenants and agreements of
the Executive are referred to herein as the "Restrictive Covenant." The
Executive acknowledges that he has carefully read and considered the provisions
of the Restrictive Covenant and, having done so, agrees that the restrictions
set forth in this Section 6.1, including without limitation the time period of
restriction set forth above, are fair and reasonable and are reasonably required
for the protection of the legitimate business and economic interests of the
Company. The Executive further acknowledges that the Company would not have
entered into this Agreement absent Executive's agreement to the foregoing.
In the event that, notwithstanding the foregoing, any of the provisions
of this Section 6.1 or any parts hereof shall be held to be invalid or
unenforceable, the remaining provisions or parts hereof shall nevertheless
continue to be valid and enforceable as though the invalid or unenforceable
portions or parts had not been included herein. In the event that any provision
of this Section 6.1 relating to the time period and/or the area of restriction
and/or related aspects shall be declared by a court of competent jurisdiction to
exceed the maximum restrictiveness such court deems reasonable and enforceable,
the time period and/or area of restriction and/or related aspects deemed
reasonable and enforceable by such court shall become and thereafter be the
maximum restrictions in such regard, and the provisions of the Restrictive
Covenant shall remain enforceable to the fullest extent deemed reasonable by
such court.
6.2 Confidentiality and Non-Disclosure. In consideration of the rights
granted to the Executive hereunder, the Executive hereby agrees that during the
term of this Agreement and for a period of three (3) years thereafter to hold in
confidence all information concerning the Company or its business, including,
but not limited to contract terms, financial information, operating data, or
business plans or models, whether for existing, new or developing businesses,
and any other proprietary information (hereinafter, collectively referred to as
the "Proprietary Information"), whether communicated orally or in documentary or
other tangible form. The parties to this Agreement recognize that the Company
has invested considerable amounts of time and money in attaining and developing
all of the information described above, and any unauthorized disclosure or
release of such Proprietary Information in any form would irreparably harm the
Company.
7. Indemnification. The Company shall indemnify the Executive to the
fullest extent that would be permitted by law (including a payment of expenses
in advance of final disposition of a proceeding) as in effect at the time of the
subject act or omission, or by the Charter or Bylaws of the Company as in effect
at such time, or by the terms of any indemnification agreement between the
Company and the Executive, whichever affords greatest protection to the
Executive, and the Executive shall be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the benefit
of its officers or, during the Executive's service in such capacity, directors
(and to the extent the Company maintains such an insurance
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policy or policies, in accordance with its or their terms to the maximum extent
of the coverage available for any company officer or director), against all
costs, charges and expenses whatsoever incurred or sustained by the Executive
(including but not limited to any judgment entered by a court of law) at the
time such costs, charges and expenses are incurred or sustained, in connection
with any action, suit or proceeding to which the Executive may be made a party
by reason of his being or having been an officer or employee of the Company, or
serving as an officer or employee of an affiliate of the Company, at the request
of the Company, other than any action, suit or proceeding brought against the
Executive by or on account of his breach of the provisions of any employment
agreement with a third party that has not been disclosed by the Executive to the
Company. The provisions of this Section 7 shall specifically survive the
expiration or earlier termination of this Agreement.
8. Tax Reimbursement Payment.
(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment
or distribution by or on behalf of the Company to or for the benefit of
Executive as a result of a Change in Control, as defined herein,
(whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, a "Payment") would be subject
to the excise tax imposed by Section 4999 of the Code, or any interest
or penalties are incurred by Executive with respect to such excise tax
(such excise tax together with any such interest and penalties are
hereinafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by Executive
of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(ii) Subject to the provisions of subsection (iii) below, all
determinations required to be made under this Section 8, including
whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm
or law firm selected by the Executive, subject to the consent of the
Company, which consent shall not be unreasonably withheld (the "Tax
Firm"); provided, however, that the Tax Firm shall not determine that
no Excise Tax is payable by the Executive unless it delivers to
Executive a written opinion (the "Tax Opinion") that failure to pay the
Excise Tax and to report the Excise Tax and the payments potentially
subject thereto on or with Executive's applicable federal income tax
return will not result in the imposition of an accuracy-related or
other penalty on Executive. All fees and expenses of the Tax Firm shall
be borne solely by the Company. Within fifteen (15) business days of
the receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by the Company, the Tax Firm shall
make all determinations required under this Section 8, shall provide to
the Company and Executive a written report setting forth such
determinations, together with detailed supporting calculations, and, if
the Tax Firm determines that no Excise Tax is payable, shall deliver
the Tax Opinion to the Executive. Any Gross-Up Payment, as determined
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pursuant to this Section 8, shall be paid by the Company to Executive
within fifteen (15) days of the receipt of the Tax Firm's
determination. Subject to the other provisions of this Section 8, any
determination by the Tax Firm shall be binding upon the Company and the
Executive; provided, however, that the Executive shall only be bound to
the extent that the determinations of the Tax Firm hereunder, including
the determinations made in the Tax Opinion, are reasonable and
reasonably supported by applicable law. The parties acknowledge,
however, that as a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by
the Tax Firm hereunder or as a result of a contrary determination by
the Internal Revenue Service, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that it is ultimately determined in accordance
with the procedures set forth in subsection (iii) below that the
Executive is required to make a payment of any Excise Tax, the Tax Firm
shall reasonably determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of Executive. In determining the
reasonableness of the Tax Firm's determinations hereunder and the
effect thereof, the Executive shall be provided a reasonable
opportunity to review such determinations with the Tax Firm and the
Executive's tax counsel. The Tax Firm's determinations hereunder, and
the Tax Opinion, shall not be deemed reasonable until the Executive's
reasonable objections and comments thereto have been satisfactorily
accommodated by the Tax Firm.
(iii) The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
thirty (30) calendar days after Executive actually receives notice in
writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid;
provided however, that the failure of Executive to notify the Company
of such claim (or to provide any required information with respect
thereto) shall not affect any rights granted to the Executive under
this Section 8 except to the extent that the Company is materially
prejudiced in the defense of such claim as a direct result of such
failure. The Executive shall not, unless otherwise required by the
Internal Revenue Service, pay such claim prior to the expiration of the
30-day period following the date on which he gives such notice to the
Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such 30-day period that
it desires to contest such claim, the Executive shall:
(1) give the Company any information reasonably
requested by the Company relating to such claim;
(2) take such action in connection with contesting
such claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
selected by the Company and reasonably acceptable to
Executive;
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(3) cooperate with the Company in good faith in order
effectively to contest such claim; and
(4) if the Company elects not to assume and control
the defense of such claim, permit the Company to participate
in any proceedings relating to such claim;
provided, however, that the Company shall bear and
pay directly all costs and expenses (including additional
interest and penalties incurred in connection with such
contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limiting the foregoing provisions
of this subsection (iii), the Company shall have the right, at
its sole option, to assume the defense of and control all
proceedings in connection with such contest, in which case it
may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing
authority in respect of such claim and may either direct the
Executive to pay the tax claimed and xxx for a refund or
contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company
shall advance the amount of such payment to the Executive, on
an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and
further provided that any extension of the statue of
limitations relating to payment of taxes for the taxable year
of the Executive with respect to which such contested amount
is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's right to assume the defense
of and control the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable
hereunder, and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(iv) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to this Section 8, the Executive
becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the
requirements of subsection (iii) above) promptly pay to the Company the
amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to subsection
(iii) above, a determination is made that the Executive is not entitled
to a refund with respect to such claim and the Company does not notify
the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination,
then such advance shall, to the extent of such denial, be forgiven and
shall not be required to be repaid and the amount of forgiven
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advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
9. Notices. Any notice required or desired to be given under this
Agreement shall be in writing and shall be delivered personally, transmitted by
facsimile or mailed by registered mail, return receipt requested, or delivered
by overnight courier service and shall be deemed to have been given on the date
of its delivery, if delivered, and on the third (3rd) full business day
following the date of the mailing, if mailed, to each of the parties thereto at
the following respective addresses or such other address as may be specified in
any notice delivered or mailed as above provided:
(i) If to the Executive, to:
-------------------
-------------------
-------------------
(ii) If to the Company, to:
Corrections Corporation of America
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Chief
Executive Officer and President
Facsimile: (000) 000-0000
10. Waiver of Breach. The waiver by either party of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by the other party.
11. Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company. The Executive acknowledges that the services to be
rendered by him are unique and personal, and the Executive may not assign any of
his rights or delegate any of his duties or obligations under this Agreement.
12. Entire Agreement. This instrument contains the entire agreement of
the parties. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
13. Controlling Law. This Agreement shall be governed and interpreted
under the laws of the State of Tennessee.
14. Headings. The sections, subjects and headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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15. Enforcement. If the Executive is the prevailing party in any
dispute among the parties hereto regarding the enforcement of one or more of the
provisions of this Agreement, then the Company shall reimburse the Executive for
any reasonable attorneys' fees and other expenses incurred by him in connection
with such dispute.
[signature page to follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written.
EXECUTIVE:
Xxxxxxx X. XxXxxxx
/s/ Xxxxxxx X. XxXxxxx
-----------------------------------------
COMPANY:
CORRECTIONS CORPORATION OF AMERICA
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer and
President
EXHIBIT A
FORM OF STOCK OPTION AGREEMENT
NON-QUALIFIED STOCK OPTION AGREEMENT
This NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made this
20th day of June, 2005, by and between CORRECTIONS CORPORATION OF AMERICA, a
Maryland corporation (the "Company"), and Xxxxxxx X. XxXxxxx (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Amended and Restated Corrections
Corporation of America 2000 Stock Incentive Plan (the "Plan"), which authorizes
the Company to grant non-qualified stock options ("Options") to key employees of
the Company and/or its affiliates; and
WHEREAS, the Company and Optionee wish to confirm the terms and conditions
of an Option granted to Optionee on June 20, 2005 (the "Date of Grant").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed between the parties
hereto as follows:
1. Definitions. Except as provided in this Agreement, or unless the
context otherwise requires, the terms used herein shall have the same meaning as
in the Plan.
2. Grant of Option. Upon and subject to the terms, restrictions,
limitations and conditions stated herein, the Company hereby grants to Optionee
an Option to purchase up to 37,000 shares of the Company's Common Stock
(collectively, the "Option Shares").
3. Option Price. The purchase price per Option Share shall be $39.50
(the "Option Price").
4. Exercise; Vesting; Forfeiture.
(i) Except as otherwise provided herein, Optionee shall have the
right to exercise the Option, if and to the extent the Option has vested in
accordance with subparagraphs (iii) and (iv) below, at any time during the
ten-year period commencing on the Date of Grant; provided, however, that except
as otherwise provided in subparagraph (iv) below, Optionee may not exercise the
Option unless Optionee is on the date of exercise and continuously after the
Date of Grant an employee of: (a) the Company; (b) an Affiliate Corporation; or
(c) a corporation issuing or assuming the Option in a Transaction to which Code
Section 424 applies (or a Subsidiary Corporation of such corporation) ((a), (b)
and (c) known collectively, herein, as the "Employer").
(ii) The Option shall be exercised by giving written notice of such
exercise to the Company in the form attached hereto as Exhibit A; provided,
however, that an Option may not be exercised at any one time as to fewer than
one hundred (100) shares (or such number of
shares as to which the Option is then exercisable if such number of shares is
less than one hundred (100)). The Option Price shall be paid or satisfied in
full, at the time of exercise, in cash, in shares of Common Stock owned by
Optionee for at least six months having a Fair Market Value equal to such Option
Price or in a combination of cash and such shares of Common Stock. In addition,
payment may also be made in whole or in part in the form of an option to acquire
Common Stock or in the form of another Award (based, in each case, on the Fair
Market Value of such option or Award on the date the Option is exercised, as
determined by the Committee).
(iii) Subject to the provisions of subparagraph (iv) below, the Option
shall vest with respect to one third (1/3) of the Option Shares on each Vesting
Date (as herein defined). For purposes hereof, the term "Vesting Date" shall
mean each of the following three dates: (a) June 20, 2006; (b) June 20, 2007;
and (c) June 20, 2008.
(iv) In the event that: (a) Optionee dies while in the employ of the
Employer or within three (3) months after the termination of employment with
Employer or any reason; or (b) Optionee's employment with the Employer
terminates by reason of Optionee's Disability or Retirement, then in any such
case the Option shall vest in full and may be, unless earlier terminated or
expired, exercised by Optionee (or by Optionee's estate or by a person who
acquired the right to exercise such Option by bequest or inheritance or
otherwise by reason of the death or Disability of Optionee) at any time during
the stated term of the Option. In the event that there occurs a Change of
Control, then in such case the Option shall vest in full and, unless earlier
terminated or expired, may be exercised by Optionee (or by Optionee's estate or
by a person who acquired the right to exercise such Option by bequest or
inheritance or otherwise by reason of the death or Disability of Optionee)
within one (1) year following the Change in Control. Subject to the first
sentence of this subparagraph (iv), in the event that Optionee's employment with
the Employer terminates other than by reason of Optionee's death, Disability or
Retirement, then the Option, to the extent the Option has vested and unless it
earlier terminates or expires, may be exercised within three (3) months
following the termination of such employment, with the unvested portion of the
Option being forfeited. Nothing in this Agreement or in any Option granted
pursuant hereto shall confer upon Optionee any right to continue in the employ
or service of the Employer or interfere in any way with the right of the
Employer to terminate Optionee's employment at any time.
5. Option and Option Shares Subject to Plan. The Option and the Option
Shares shall be subject to, and the Company and Optionee agree to be bound by,
all of the terms and conditions of the Plan, as the same shall be amended from
time to time in accordance with the terms thereof. A copy of the Plan, as
amended, is attached hereto as Exhibit B and made a part hereof as if fully set
out herein.
6. Covenants and Representations of Optionee. Optionee represents,
warrants, covenants and agrees with the Company as follows:
(i) Optionee is not acquiring the Option Shares based upon any
representation, oral or written, by any person with respect to the future value
of, or income from,
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the Option Shares but rather upon an independent examination and judgment as to
the prospects of the Company;
(ii) Optionee is able to bear the economic risks of the investment
in the Option Shares, including the risk of a complete loss of his or her
investment therein;
(iii) Optionee understands and agrees that the Option Shares may be
issued and sold to Optionee without registration under any state law relating to
the registration of securities for sale, and in such event will be issued and
sold in reliance on exemptions from registration under appropriate state laws;
(iv) The Option Shares cannot be offered for sale, sold or
transferred by Optionee other than pursuant to: (A) an effective registration
under applicable state securities laws or in a transaction which is otherwise in
compliance with such laws; (B) an effective registration under the Securities
Act of 1933, as amended (the "1933 Act"), or in a transaction otherwise in
compliance with the 1933 Act; and (C) evidence satisfactory to the Company of
compliance with the securities laws of all applicable jurisdictions. The Company
shall be entitled to rely upon an opinion of counsel satisfactory to it with
respect to compliance with the foregoing laws;
(v) The Company will be under no obligation to register the Option
Shares or to comply with any exemption available for sale of the Option Shares
without registration. The Company is under no obligation to act in any manner so
as to make Rule 144 promulgated under the 1933 Act available with respect to
sales of the Option Shares;
(vi) A legend indicating that the Option Shares have not been
registered under the applicable state securities laws and referring to any
applicable restrictions on transferability and sale of the Option Shares may be
placed on the certificate or certificates delivered to Optionee and any transfer
agent of the Company may be instructed to require compliance therewith;
(vii) Optionee realizes that the purchase of the Option Shares is a
speculative investment and that any possible profit therefrom is uncertain;
(viii) Optionee will notify the Company prior to any sale of the
Option Shares within one year of the date of the exercise of all or any portion
of the Option; and
(ix) The agreements, representations, warranties and covenants made
by Optionee herein extend to and apply to all of the Common Stock of the Company
issued to Optionee from time to time pursuant to this Option. Acceptance by
Optionee of the certificate(s) representing such Common Stock shall constitute a
confirmation by Optionee that all such agreements, representations, warranties
and covenants made herein shall be true and correct at such time.
7. Withholding. If Optionee recognizes compensation income as a result
of the exercise of the Option granted hereunder, Optionee shall remit in cash to
the Company the
3
minimum amount of federal and state income and employment tax withholding which
the Company is required to remit to the Internal Revenue Service or applicable
state department of revenue in accordance with the then current provisions of
the Code or applicable state law. Optionee shall pay the full amount of such
withholding simultaneously with the exercise of the Option or upon the
occurrence of any other event that results in the recognition of compensation
income by Optionee. The failure by Optionee to remit the full amount of
withholding due may, in the discretion of the Company, result in the forfeiture
of the related benefit notwithstanding any other provision of this Agreement.
8. Governing Law. This Agreement shall be construed, administered and
enforced according to the laws of the State of Maryland, without regard to the
conflicts of laws provisions thereof; provided, however, the Option may not be
exercised except, in the reasonable judgment of the Committee, in compliance
with exemptions under applicable state securities laws of the state in which
Optionee resides, and/or any other applicable securities laws.
9. Successors. This Agreement shall be binding upon and inure to the
benefits of the heirs, legal representatives, successors and permitted assigns
of the parties.
10. Notice. Except as otherwise specified herein, all notices and other
communications under this Agreement shall be in writing and shall be deemed to
have been given if personally delivered or if sent by registered or certified
United States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of such recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
such address to the other parties in the same manner provided herein.
11. Severability. In the event that any one or more of the provisions or
portion thereof contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, the same shall not invalidate
or otherwise affect any other provisions of this Agreement and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.
12. Entire Agreement. Subject to the terms and conditions of the Plan,
this Agreement expresses the entire understanding and agreement of the parties
hereto with respect to such terms, restrictions and limitations. This Agreement
may be executed in two or more counterparts, each of which shall be deemed and
original but all of which shall constitute one and the same instrument.
13. Violation. Any transfer, pledge, sale, assignment or hypothecation
of the Option except in accordance with this Agreement shall be a violation of
the terms hereof and shall be void and without effect.
14. Headings. Section headings used herein are for convenience of
reference only and shall not be considered in interpreting this Agreement.
15. Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party or parties who
4
are thereby aggrieved shall have the right to specific performance and
injunction in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative.
16. Counterparts. This Agreement may be executed by the signatures of
each of the parties hereto, or to a counterpart of this Agreement, and all such
counterparts shall collectively constitute one Agreement. Facsimile signatures
shall constitute original signatures for purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on
the day and year first set forth above.
CORRECTIONS CORPORATION OF AMERICA
By: ________________________________
Title: President and Chief Executive Officer
OPTIONEE:
Signature: ________________________________
Name (printed): Xxxxxxx X. XxXxxxx
5
EXHIBIT B
FORM OF RESTRICTED SHARE AGREEMENT
RESTRICTED STOCK AGREEMENT
This RESTRICTED STOCK AGREEMENT (the "Agreement") is made this 20th day of
June, 2005, by and between CORRECTIONS CORPORATION OF AMERICA, a Maryland
corporation (the "Company"), and Xxxxxxx X. XxXxxxx, (the "Recipient").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Amended and Restated Corrections
Corporation of America 2000 Stock Incentive Plan (the "Plan"), which authorizes
the Company to award restricted shares ("Restricted Shares") of its common
stock, $0.01 par value per share (the "Common Stock"), to key employees of the
Company and/or its affiliates (individually, a "Restricted Stock Award"); and
WHEREAS, the Company and Recipient wish to confirm the terms and
conditions of a Restricted Stock Award to Recipient on June 20, 2005 (the "Date
of Award").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed between the parties
hereto as follows:
1. Definitions. Except as provided in this Agreement, or unless the
context otherwise requires, the terms used herein shall have the same meaning as
in the Plan.
2. Award of Shares. Upon and subject to the terms, restrictions,
limitations and conditions stated herein, the Company hereby awards to Recipient
14,060 Restricted Shares of the Company's Common Stock (the "Shares").
3. Rights; Vesting; Forfeiture. Except as otherwise provided herein,
Recipient shall have full right, title and interest in the Shares to the extent
such Shares have vested in accordance with subparagraph (iii) below.
(i) During the Vesting Period (as defined below) and prior to the
vesting of the Shares, the Shares may not be sold, assigned, transferred,
pledged or otherwise encumbered by Recipient. Certificates issued with respect
to the Shares shall be registered in the name of Recipient and deposited by
Recipient with the Company, and any such certificates shall bear an appropriate
legend disclosing the restrictions imposed on the Shares hereunder and by the
Plan. Upon the lapse of the restrictions applicable to the Shares, the Company
shall deliver such certificates to Recipient or Recipient's legal
representative, as the case may be.
(ii) During the Vesting Period the Recipient shall have all rights
of a stockholder of the Company (except as otherwise provided herein), including
without limitation the right to vote and receive dividends on the Shares. If as
a result of a stock dividend, stock split, recapitalization or other adjustment
in the capital stock or stated capital of the Company, or as the result of a
merger, consolidation, or other reorganization, the Common Stock is increased,
reduced or otherwise changed and by virtue thereof, Recipient shall be entitled
to new or additional or different shares, with such new or additional shares
being subject to the same terms, conditions and restrictions as applicable to
the Shares.
(iii) The Shares shall vest in accordance with Schedule A attached hereto
and made a part hereof, provided that Recipient is employed by the Company or an
Affiliate Corporation (the "Employer") at all times following the Date of Award
and prior to and on the Vesting Dates (the "Vesting Period"). If, at any time
during the Vesting Period, Recipient's employment with Employer is terminated
for any reason other than as a result of the death, Disability or Retirement of
Recipient, all of the Shares held by such Recipient shall immediately and
automatically be forfeited to the Company without monetary consideration and
shall be automatically canceled and retired. If (i) Recipient shall die while in
the employ or service of the Employer or within a period of three (3) months
thereafter, (ii) Recipient's employment or service with the Employer shall
terminate by reason of Disability or Retirement, or (iii) there occurs a Change
in Control, then in any such case all Shares shall become immediately vested and
nonforfeitable.
4. Share Award and Shares Subject to Plan. The Restricted Stock Award
represented by this Agreement and the Shares shall be subject to, and the
Company and Recipient agree to be bound by, all of the terms and conditions of
the Plan, as the same shall be amended from time to time in accordance with the
terms thereof. A copy of the Plan, as amended, is attached hereto as Exhibit A
and made a part hereof as if fully set out herein.
5. Covenants and Representations of Recipient. Recipient represents,
warrants, covenants and agrees with the Company as follows:
(i) The Shares cannot be offered for sale, sold or transferred by
Recipient other than pursuant to: (A) an effective registration under applicable
state securities laws or in a transaction which is otherwise in compliance with
such laws; (B) an effective registration under the Securities Act of 1933, as
amended (the "1933 Act"), or in a transaction otherwise in compliance with the
1933 Act; and (C) evidence satisfactory to the Company of compliance with the
securities laws of all applicable jurisdictions. The Company shall be entitled
to rely upon an opinion of counsel satisfactory to it with respect to compliance
with the foregoing laws;
(ii) The Company will be under no obligation to register (or
maintain the registration of) the Shares or to comply with any exemption
available for sale of the Shares without registration. The Company is under no
obligation to act in any manner so as to make Rule 144 promulgated under the
1933 Act available with respect to sales of the Shares; and
(iii) If applicable, a legend indicating that the Shares have not
been registered under the applicable state securities laws and referring to any
applicable restrictions on transferability and sale of the Shares may be placed
on the certificate or certificates delivered to Recipient and any transfer agent
of the Company may be instructed to require compliance therewith.
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6. Governing Law. This Agreement shall be construed, administered and
enforced according to the laws of the State of Maryland, without regard to the
conflicts of laws provisions thereof; provided, however, the Restricted Shares
may not be sold except, in the reasonable judgment of the Committee, in
compliance with exemptions under applicable state securities laws of the state
in which Recipient resides, and/or any other applicable securities laws.
7. Successors. This Agreement shall be binding upon and inure to the
benefits of the heirs, legal representatives, successors and permitted assigns
of the parties.
8. Notice. Except as otherwise specified herein, all notices and other
communications under this Agreement shall be in writing and shall be deemed to
have been given if personally delivered or if sent by registered or certified
United States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of such recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
such address to the other parties in the same manner provided herein.
9. Severability. In the event that any one or more of the provisions or
portion thereof contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, the same shall not invalidate
or otherwise affect any other provisions of this Agreement and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.
10. Entire Agreement. Subject to the terms and conditions of the Plan,
this Agreement expresses the entire understanding and agreement of the parties
hereto with respect to such terms, restrictions and limitations. This Agreement
may be executed in two or more counterparts, each of which shall be deemed and
original but all of which shall constitute one and the same instrument.
11. Violation. Any transfer, pledge, sale, assignment or hypothecation
of the Shares except in accordance with this Agreement shall be a violation of
the terms hereof and shall be void and without effect.
12. Headings. Section headings used herein are for convenience of
reference only and shall not be considered in interpreting this Agreement.
13. Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party or parties who are thereby aggrieved shall have the right
to specific performance and injunction in addition to any and all other rights
and remedies at law or in equity, and all such rights and remedies shall be
cumulative.
14. Counterparts. This Agreement may be executed by the signatures of
each of the parties hereto, or to a counterpart of this Agreement, and all such
counterparts shall collectively
3
constitute one Agreement. Facsimile signatures shall constitute original
signatures for purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on
the day and year first set forth above.
CORRECTIONS CORPORATION OF AMERICA
By: _______________________________________
Title: President and Chief Executive Officer
RECIPIENT:
Signature: ________________________________
Name (printed): Xxxxxxx X. XxXxxxx
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SCHEDULE A
CORRECTIONS CORPORATION OF AMERICA
VESTING SCHEDULE FOR 2005 RESTRICTED STOCK AWARD
THREE-YEAR CUMULATIVE EARNINGS PER SHARE ("EPS") % OF RESTRICTED SHARES VESTING
------------------------------------------------ ------------------------------
Less than $4.79 0%
$4.79 50%
$4.98 75%
Greater than $5.17 100%
Notes:
1) Vesting percentage is interpolated on a straight-line basis for
three-year cumulative EPS performance from $4.79 through $5.17.
2) If EPS for fiscal 2005 is at least $1.59, then 1/3 of the
Recipient's Restricted Shares vest upon the later of delivery of the
2005 audited financial statements or one year following the grant
date (see #5 below).
3) If cumulative EPS for fiscal 2005 and 2006 is at least $3.37, then
2/3 of the Restricted Shares vest upon the later of delivery of the
2006 audited financial statements or the second anniversary of the
grant date (see #5 below).
4) The dollar amounts above (EPS) shall be determined as reported in
the audited financial statements (fully diluted) and are subject to
adjustment, as determined in the sole discretion of the Compensation
Committee, to address adverse implications to earnings per share for
the application of FAS123R and refinancing charges incurred by the
Company in connection with the tender offer for the 9 7/8% senior
notes and the issuance of the 6 1/4% senior notes due 2013 and
future financing transactions.
5) "Vesting Dates" (as set forth in the Agreement) correspond with the
percentage allocations set forth above and are fulfilled upon
achievement of the stated performance criteria (as determined by the
Compensation Committee) and upon the later of (i) delivery of the
audited financial statements by the Company's certified independent
auditors for the respective fiscal year periods 2005, 2006 and 2007
and (ii) the applicable anniversary of the grant date.
