Corrections Corporation of America
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): March 13, 2007
Corrections Corporation of America
(Exact name of registrant as specified in its charter)
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Maryland
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001-16109
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62-1763875 |
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(I.R.S. Employer |
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Identification No.) |
10 Burton Hills Boulevard, Nashville, Tennessee 37215
(Address of principal executive offices) (Zip Code)
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
TABLE OF CONTENTS
Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers.
On
March 13, 2007, Corrections Corporation of America (the Company) entered into new
employment agreements, or amendments to existing employment agreements, with certain of its named
executive officers. The terms and conditions of each of these agreements are described below.
Amendment to Irving E. Lingo, Jr. Employment Agreement
As previously disclosed, Irving E. Lingo, Jr. has decided to step down from his current
position as Executive Vice President, Chief Financial Officer and Assistant Secretary of the
Company, effective March 16, 2007. Mr. Lingo, however, has agreed to remain with the Company for a
one-year period of time in order to assist the new Chief Financial Officer of the Company and to
provide other assistance to the Company as needed. In connection therewith, the Company and Mr.
Lingo have entered into an amendment to Mr. Lingos employment agreement and general release (the
Agreement), pursuant to which Mr. Lingo will remain an employee of the Company until March 17,
2008. During this time, Mr. Lingo will continue to receive his current annual base salary of
$353,550 as well as customary life and health insurance benefits (to the extent permissible under
the Companys insurance plans), but will no longer have the right to receive a bonus pursuant to
the Companys 2007 Cash Incentive Plan or any similar incentive plan adopted for the 2008 fiscal
year. Additionally, Mr. Lingo will no longer be entitled to receive any severance payments or
other benefits in the event of a termination of his employment without cause or in connection
with a change in control of the Company, as was the case under Mr. Lingos prior employment
agreement. As provided for in the Agreement, Mr. Lingo has also agreed to forfeit his February
2007 option grant as well as all of his unvested restricted stock and to release any potential
claims he may have against the Company arising from or during his employment as Executive Vice
President, Chief Financial Officer and Assistant Secretary of the Company.
The foregoing description of the Agreement does not purport to be complete and is qualified in
its entirety by reference to the Agreement, which is attached hereto as Exhibit 10.1. The
terms of Mr. Lingos original employment agreement are described in the Current Report on Form 8-K
filed by the Company with the Securities and Exchange Commission on January 6, 2005. Such
description is incorporated by reference herein.
Employment Agreements with Kenneth A. Bouldin, G. A. Puryear IV and Richard P. Seiter
On
March 13, 2007, the Company also entered into new employment agreements with Kenneth A.
Bouldin, Executive Vice President and Chief Development Officer of the Company and G.A. Puryear IV,
Executive Vice President, General Counsel, and Secretary of the Company as well as an amended and
restated employment agreement with Richard P. Seiter, Executive Vice President and Chief
Corrections Officer of the Company. The material terms of each of these employment agreements are
generally as described below.
Duties. Each of the executives will continue to serve in their current offices and
such other office or offices to which he may be appointed or elected by the Board of Directors of
the Company.
Term. Subject to the termination provisions described below, the term of each of the
employment agreements expires on December 31, 2007 and is subject to three one-year automatic
renewals unless either party gives not less than 60 days prior written notice to the other party
that it is electing not to extend the agreement.
Compensation. Each agreement provides for the executive to continue to receive his current
annual base salary as well as customary benefits, including bonuses pursuant to the Companys cash
compensation incentive plans (assuming applicable performance targets are met), stock options or
restricted stock awards pursuant to the Companys equity incentive plans, life and health
insurance, and reimbursement for membership fees in connection with memberships in professional and
civic organizations which are approved in advance by the Company. Pursuant to the terms of each
agreement, the Company will also reimburse the executive for all reasonable travel and other
business expenses incurred by such executive in performance of his duties. Compensation payable
under the agreements is subject to annual review by the Board of Directors, or a committee or
subcommittee thereof to which compensation matters have been delegated, and may be increased based
on the executives personal performance and the performance of the Company.
Termination of Agreement. Under each of the agreements, if the Company terminates the
employment of the executive with cause, it is only required to pay the executive his salary
earned through the date of such termination. If the Company terminates the employment of the
executive without cause, including non-renewal by the Company, the Company generally is required
to pay a cash severance payment equal to the executives annual base salary then in effect, payable
in accordance with a predetermined schedule based on the date of termination. In the event of
termination in connection with a change in control, whether by resignation or otherwise, the
executive will be entitled to receive (i) a lump sum cash payment equal to 2.99 times his base
salary then in effect, (ii) certain tax reimbursement payments, and (iii) coverage under existing
life, medical, disability, and health insurance plans for a period of one year.
Non-Competition. Pursuant to the terms of each of the agreements, the executive is prohibited
from competing with the Company during the term of his employment and for a period of one year
following termination of employment. The executive is also subject to certain confidentiality and
non-disclosure provisions.
The foregoing description does not purport to be complete and is qualified in its entirety by
reference to the employment agreements of Mr. Bouldin, Mr. Puryear and Mr. Seiter, which are
attached hereto as Exhibit 10.3, Exhibit 10.4 and Exhibit 10.5,
respectively.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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10.1 |
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First Amendment to Employment Agreement and General Release,
dated as of March 13, 2007, with Irving E. Lingo, Jr. |
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10.2 |
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Employment Agreement, dated as of January 3, 2005, with Irving
E. Lingo, Jr. (previously filed as Exhibit 10.1 to the Companys Current Report
on Form 8-K (Commission File No. 001-16109), filed with the Securities and
Exchange Commission on January 6, 2005 and incorporated herein by this
reference). |
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10.3 |
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Employment Agreement, dated as of March 13, 2007, with Kenneth A. Bouldin. |
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10.4 |
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Employment Agreement, dated as of March 13, 2007, with G.A. Puryear IV. |
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10.5 |
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First Amended and Restated Employment Agreement, dated as of
March 13, 2007, with Richard P. Seiter. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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Date: March 13, 2007 |
CORRECTIONS CORPORATION OF AMERICA
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By: |
/s/ John D. Ferguson
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John D. Ferguson |
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President and Chief Executive Officer |
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Ex-10.1
Exhibit
10.1
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT AND
GENERAL RELEASE
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the Agreement), is entered
into this 13th day of March, 2007, by and between Corrections Corporation of America, a Maryland
corporation having a principal place of business at 10 Burton Hills Boulevard, Nashville, Tennessee
(the Company), and Irving E. Lingo, Jr., a resident of Nashville, Tennessee (the Executive).
All capitalized terms used herein but otherwise not defined shall have the meaning as set forth in
the Employment Agreement, as herein defined.
WHEREAS, the Company and the Executive are parties to that certain Employment Agreement, dated
January 3, 2005 (the Employment Agreement), pursuant to which the Executive currently serves as
Executive Vice President, Chief Financial Officer and Assistant Secretary of the Company;
WHEREAS, the Executive has decided to voluntarily resign as Executive Vice President, Chief
Financial Officer and Assistant Secretary of the Company, effective March 16, 2007;
WHEREAS, the Company desires to retain the Executive as an employee of the Company for a
period of time and on the terms and conditions set forth herein;
WHEREAS, the Executive acknowledges that by entering into this Agreement he will receive
certain benefits to which he would not otherwise be entitled as a result of his voluntary
resignation; and
WHEREAS, the Company and the Executive desire to resolve fully and finally all issues that may
arise out of the cessation of the Executives service as Executive Vice President, Chief Financial
Officer and Assistant Secretary of the Company and the termination of his employment as of the end
of the Term (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises, the mutual agreements contained herein, and
other good and valuable consideration, the receipt, sufficiency and mutuality of which are hereby
acknowledged, the Company and the Executive hereby agree as follows.
1. Amendments.
(a) Section 1 of the Employment Agreement is hereby amended to read in its entirety as
follows:
1. Employment. During the Term of this Agreement, the Executive shall be employed by the
Company upon the terms and conditions set forth herein. During the Term, the Executive will serve
as an advisor to and will assist the Company with such matters as the Company may request,
including, without limitation, assistance to the new Chief Financial Officer of the Company in
order to ensure a smooth transition of the responsibilities of such position. The Executive
acknowledges that during the Term he will not have the authority to bind the Company to agreements
without the express written consent of the Company, and that during such time, he will report to
and take instruction from the Companys Chief Executive Officer.
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(b) Section 2 of the Employment Agreement is hereby amended to read in its entirety as
follows:
2. Term. Subject to the provisions of termination as hereinafter provided, the term of the
Executives employment under this Agreement shall begin on March 16, 2007 and shall terminate on
March 17, 2008 (the Term).
(c) Section 3 of the Employment Agreement is hereby deleted in its entirety.
(d) Section 4.1 of the Employment Agreement is hereby amended to read in its entirety as
follows:
4.1 Base Salary. During the Term of this Agreement, the Company shall pay to the Executive
a salary of $353,550 (Base Salary), with said amount to be paid in equal installments during the
Term of this Agreement in accordance with the Companys normal and usual payroll schedule and
practices.
(e) Section 4.2 of the Employment Agreement is hereby amended to read in its entirety as
follows:
4.2 Bonus. The Executive will not be entitled to receive a bonus pursuant to the Companys
2007 Cash Incentive Plan or any similar incentive plan adopted for the 2008 fiscal year.
(f) Sections 5.4, 5.5 and 5.6 of the Employment Agreement are hereby deleted in
their entirety.
(g) Section 5.7 of the Employment Agreement is hereby amended to remove the reference to
Section 5.5 of the Employment Agreement.
(h) Section 8 of the Employment Agreement is hereby deleted in its entirety.
2. Effect of Amendments. Except as expressly modified by the terms of the above
amendments, the provisions of the Employment Agreement shall continue in full force and effect.
3. Outstanding Equity Awards.
(a) Restricted Stock. Upon the execution of this Agreement, all 18,627 shares of unvested
restricted stock that have previously been awarded by the Company to the Executive pursuant to the
Companys equity incentive plans shall be automatically forfeited to the Company without any
separate monetary consideration.
(b) Stock Options. As of March 1, 2007, the Executive has 274,975 Company stock options
vested and unexercised pursuant to the Companys equity incentive plans. Additional stock options
will vest as set forth on Schedule A. All vested options must be exercised within three
(3) months of the end of the Term of the Employment Agreement in accordance with the applicable
award agreements. The Executive acknowledges and agrees that any stock options
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granted to the Executive and not vested as of the end of the Term or exercised within the time
frame set forth above shall be forfeited to the Company without monetary consideration. The
Executive further acknowledges and agrees that, upon execution of this Agreement, all options that
the Executive was awarded in February 2007 shall be forfeited to the Company without any separate
monetary consideration.
4. General Release
(a) In consideration for the payments and additional benefits to be paid by the Company, the
Executive releases the Company and its affiliates (including all of its direct and indirect
subsidiaries) and all of its officers, directors, employees and agents (Releasees) from all
claims or causes of action of whatever nature that the Executive now may have and that he may
either know about or hereafter may learn about, arising from or during the Executives employment
or resulting from the termination of the Executives employment as Executive Vice President, Chief
Financial Officer and Assistant Secretary of the Company as of the execution of this Agreement.
This means that the Executive will not file any lawsuit for the purpose of obtaining any monetary
award above and beyond the amounts provided for in this Agreement, reinstatement of his employment
or for any equitable relief.
(b) The Executive acknowledges that this General Release includes, but is not limited to, all
claims arising under federal, state or local laws prohibiting employment discrimination and all
claims growing out of any legal restrictions on the Companys right to terminate its employees
including any breach of contract, tort, whistleblower or retaliation claims. This General Release
also specifically encompasses any claims of negligence and all claims of employment discrimination
based on race, color, religion, creed, sex, and national origin, as provided under Title VII of the
Civil Rights Act of 1964, as amended, and 42 U.S.C. § 1981, all claims of discrimination based on
age, as provided under the Age Discrimination in Employment Act of 1967, as amended, and the Older
Workers Benefit Protection Act, all claims under the Employee Retirement Income Security Act
(ERISA) and all claims of employment discrimination under the Americans With Disabilities Act
(ADA), all claims under the Family and Medical Leave Act (FMLA), as well as claims under applicable
state and local laws concerning the Executives employment and/or payment of compensation to the
Executive. This General Release does not include, however, the release of any rights or claims the
Executive may have which arise after the Executive signs this Agreement.
(c) The Executive intends this Agreement to be binding upon himself, his estate, heirs and
assignees. The Executive understands and agrees that if he breaches this Agreement or if he files
any claim or lawsuit against the Company or the Releasees challenging the validity of this
Agreement or seeking any equitable relief or compensation in addition to that paid to him, the
Company or the Releasees may also bring a lawsuit or raise a claim against the Executive because of
such action, and a court may award damages, restitution, recoupment or setoff and the Executive, or
his estate, may be liable for such an award as well as all payments and benefits he received under
this Agreement prior to such time, including attorneys fees and costs incurred by the Company or
the Releasees.
(d) The Executive acknowledges that he has carefully read and fully understands all the
provisions of this Agreement, specifically including the General Release of claims included
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in the Agreement. In addition, the Executive acknowledges that he has been given a period of
at least twenty-one (21) days to consider this Agreement and that he has been advised that he has
the right to, and should, consult with an attorney of his choice during this period at his expense.
Finally, the Executive acknowledges that, in considering whether to sign this Agreement, he has
not relied upon any representation or statement by anyone, either written or oral, not set forth in
this document and that he has not been threatened or coerced into signing this Agreement by any
official of the Company and that he has read, understands and fully and voluntarily accepts the
terms of this Agreement.
(e) The Executive acknowledges that he understands that he may revoke this Agreement at any
time during the seven (7) calendar day period after he has signed it. The Executives revocation,
if any, must be delivered to John D. Ferguson before the eighth (8th) day following his execution
of this Agreement.
5. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original, and all of which, taken together, shall be deemed to be one and the
same instrument.
6. Headings. Section headings are for convenience or reference only and shall not be
used to construe the meaning of any provision in this Amendment.
7. Governing Law. The validity, interpretation and effect of this Amendment shall be
governed exclusively by the laws of the State of Tennessee without regard to the choice of law
principals thereof.
8. Severability. Should any part of this Amendment be invalid or unenforceable, such
invalidity or unenforceability shall not affect the validity and enforceability of the remaining
portion.
9. Successors. This Amendment shall be binding upon and inure to the benefit of the
respective parties and their permitted assigns and successors in interest.
10. Waivers. No waivers of any breach of any of the terms or conditions of this
Amendment shall be held to be a waiver of any other or subsequent breach; nor shall any waiver be
valid or binding unless the same shall be in writing and signed by the party alleged to have
granted the waiver.
[remainder of page left intentionally blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
written.
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CORRECTIONS CORPORATION OF AMERICA
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By: |
/s/ John D. Ferguson |
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Name: |
John D. Ferguson |
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Title: |
Chief Executive Officer and President |
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/s/ Irving E. Lingo, Jr. |
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Irving E. Lingo, Jr. |
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Schedule A
Vesting Schedule
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Number of Shares Subject to |
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Grant Date |
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Options |
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Vesting Date |
2/16/2005
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11,250 |
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2/16/2008(1) |
2/15/2006
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10,750 |
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2/15/2008 |
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(1) |
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These shares are vested, but remain subject to the terms of that certain Resale
Restriction Agreement, dated as of December 19, 2005, between the Company and the
Executive. |
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Ex-10.3 Kenneth A. Bouldin Employment Agreement
Exhibit
10.3
EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (the Agreement), dated as of this
13th day of March, 2007 is by
and between Corrections Corporation of America, a Maryland corporation with its principal place of
business at 10 Burton Hills Boulevard, Nashville, Tennessee (the Company), and Kenneth A.
Bouldin, a resident of Nashville, Tennessee (the Executive).
W I T N E S S E T H:
WHEREAS, the Executive has been and currently is engaged by the Company to serve as its Chief
Development Officer; and
WHEREAS, the Company and the Executive now desire to enter into this Agreement and set forth
the terms and conditions of the Executives 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 Development 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 Development Officer and such other offices to which Executive may be appointed or elected by
the Board of Directors. The Executives 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 Companys 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 Executives employment under this Agreement shall begin on the date hereof and shall
terminate on December 31, 2007 (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
Executives 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 Executives date of termination,
for purposes of this Agreement, shall be the date of the Companys last payment to the Executive.
For the purposes of this Agreement, the election by the Company not to extend the
Executives employment hereunder for any renewal term shall be deemed a termination of the
Executives employment without Cause, as hereinafter defined.
4. Compensation.
4.1 Base Salary. The Company shall pay the Executive an annual salary (Base Salary)
of $310,500, which shall be payable to the Executive hereunder in accordance with the Companys
normal payroll practices, but in no event less often than bi-weekly. Commencing at such time during
2007 when annual compensation for 2007 is reviewed and considered and following each year of the
Executives employment with the Company thereafter, the Executives 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
Executives 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
Executives 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,
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all membership fees and related costs in connection with Executives membership in
professional and civic organizations which are approved in advance by the Company.
4.4 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 and in accordance with
Company policies.
4.5 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 Executives 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 Executives 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 Executives conviction of a felony or of
a crime involving dishonesty or moral turpitude, 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, monetarily or otherwise, 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 Executives 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.
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5.4 Effect of Termination Without Cause. If the Executives employment with the
Company is terminated without Cause, the Company shall pay to the Executive an amount equal to the
Executives 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
Executives 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 Executives 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 Executives 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 Executives 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, with the costs of such
benefits (including the Companys portion of any premiums) paid by the Company on the Executives
behalf included in the Executives gross income. In addition to the foregoing, each of the
following events shall be considered a termination upon a Change in Control for purposes of this
paragraph: (i) the Executives 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:
(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
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(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 Companys 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
Executives 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.
5.8 Section 409A. To the extent required to comply with Section 409A of the Internal
Revenue Code of 1986, as amended (the Code), as determined by the Executives counsel if
requested by the Executive, one or more payments made pursuant to the Agreement shall be delayed to
the six month anniversary of the date of Executives separation from service, within the meaning of
Section 409A of the Code. In addition, if and to the extent required to prevent a violation of
Section 409A of the Code, as determined by the Executives counsel if requested by the Executive,
the Executive will pay the entire cost of any health insurance benefits provided pursuant to the
Agreement for the first six (6) months after the effective date of the termination and the Company
will reimburse the Executive for the Companys share of such costs on the six-month anniversary of
the Executives separation from service, as defined in Section 409A of the Code.
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 Executives 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 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
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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 Executives
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 Executives service in such
capacity, directors (and to the extent the Company maintains such an insurance 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
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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 Executives 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 pursuant
to this Section 8, shall be paid by the Company to Executive within fifteen (15) days of the
receipt of the Tax Firms determination. Subject to the other provisions of this
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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 Firms determinations hereunder and
the effect thereof, the Executive shall be provided a reasonable opportunity to review such
determinations with the Tax Firm and the Executives tax counsel. The Tax Firms
determinations hereunder, and the Tax Opinion, shall not be deemed reasonable until the
Executives 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;
(3) cooperate with the Company in good faith in order effectively to contest
such claim; and
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(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 sue 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 sue 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 Companys 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 Companys 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 advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.
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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:
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If to the Executive, to:
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(ii)
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If to the Company, to: |
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Corrections Corporation of America |
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10 Burton Hills Boulevard |
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Nashville, Tennessee 37215 |
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Attention: John D. Ferguson, Chief
Executive
Officer and President |
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Facsimile: (615) 263-3010 |
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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 and
supersedes in full and in all respects any prior oral or written agreement between the parties with
respect to Executives employment with the Company. 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.
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EXECUTIVE:
Kenneth A. Bouldin
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/s/
Kenneth A. Bouldin |
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COMPANY:
CORRECTIONS CORPORATION OF AMERICA
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/s/ John D. Ferguson |
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Name: |
John D. Ferguson |
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Title: |
Chief Executive Officer and President |
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Ex-10.4 G.A. Puryear IV Employment Agreement
Exhibit
10.4
EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (the Agreement), dated as of this
13th day of March, 2007 is by
and between Corrections Corporation of America, a Maryland corporation with its principal place of
business at 10 Burton Hills Boulevard, Nashville, Tennessee (the Company), and G.A. Puryear IV, a
resident of Nashville, Tennessee (the Executive).
W I T N E S S E T H:
WHEREAS, the Executive has been and currently is engaged by the Company to serve as its
General Counsel; and
WHEREAS, the Company and the Executive now desire to enter into this Agreement and set forth
the terms and conditions of the Executives 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 General Counsel 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 General Counsel and such
other offices to which Executive may be appointed or elected by the Board of Directors. The
Executives 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 Companys 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 Executives employment under this Agreement shall begin on the date hereof and shall
terminate on December 31, 2007 (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
Executives 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 Executives date of termination,
for purposes of this Agreement, shall be the date of the Companys last payment to the Executive.
For the purposes of this Agreement, the election by the Company not to extend the Executives
employment hereunder for any renewal term shall be deemed a termination of the Executives
employment without Cause, as hereinafter defined.
4. Compensation.
4.1 Base Salary. The Company shall pay the Executive an annual salary (Base Salary)
of $240,000, which shall be payable to the Executive hereunder in accordance with the Companys
normal payroll practices, but in no event less often than bi-weekly. Commencing at such time during
2007 when annual compensation for 2007 is reviewed and considered and following each year of the
Executives employment with the Company thereafter, the Executives 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
Executives 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
Executives 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 Executives membership in professional and civic organizations which are
approved in advance by the Company.
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4.4 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 and in accordance with
Company policies.
4.5 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 Executives 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 Executives 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 Executives conviction of a felony or of
a crime involving dishonesty or moral turpitude, 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, monetarily or otherwise, 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 Executives 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 Executives employment with the
Company is terminated without Cause, the Company shall pay to the Executive an amount equal to the
Executives 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
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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 Executives 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 Executives 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 Executives 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 Executives 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, with the costs of such
benefits (including the Companys portion of any premiums) paid by the Company on the Executives
behalf included in the Executives gross income. In addition to the foregoing, each of the
following events shall be considered a termination upon a Change in Control for purposes of this
paragraph: (i) the Executives 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:
(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
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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 Companys 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
Executives 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.
5.8 Section 409A. To the extent required to comply with Section 409A of the Internal
Revenue Code of 1986, as amended (the Code), as determined by the Executives counsel if
requested by the Executive, one or more payments made pursuant to the Agreement shall be delayed to
the six month anniversary of the date of Executives separation from service, within the meaning of
Section 409A of the Code. In addition, if and to the extent required to prevent a violation of
Section 409A of the Code, as determined by the Executives counsel if requested by the Executive,
the Executive will pay the entire cost of any health insurance benefits provided pursuant to the
Agreement for the first six (6) months after the effective date of the termination and the Company
will reimburse the Executive for the Companys share of such costs on the six-month anniversary of
the Executives separation from service, as defined in Section 409A of the Code.
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 Executives 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 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
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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 Executives
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 Executives service in such
capacity, directors (and to the extent the Company maintains such an insurance 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
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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 Executives 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 pursuant
to this Section 8, shall be paid by the Company to Executive within fifteen (15) days of the
receipt of the Tax Firms 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
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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 Firms determinations hereunder and
the effect thereof, the Executive shall be provided a reasonable opportunity to review such
determinations with the Tax Firm and the Executives tax counsel. The Tax Firms
determinations hereunder, and the Tax Opinion, shall not be deemed reasonable until the
Executives 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;
(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;
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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 sue 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 sue 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 Companys 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 Companys 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 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
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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:
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If to the Executive, to:
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(ii)
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If to the Company, to: |
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Corrections Corporation of America |
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10 Burton Hills Boulevard |
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Nashville, Tennessee 37215 |
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Attention: John D. Ferguson, Chief
Executive Officer and President |
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Facsimile: (615) 263-3010 |
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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 and
supersedes in full and in all respects any prior oral or written agreement between the parties with
respect to Executives employment with the Company. 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.
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.
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EXECUTIVE:
G.A. Puryear IV
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/s/ G.A. Puryear IV |
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COMPANY:
CORRECTIONS CORPORATION OF AMERICA
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/s/ John D. Ferguson |
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Name: |
John D. Ferguson |
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Title: |
Chief Executive Officer and President |
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11
Ex-10.5
Exhibit
10.5
FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This
FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
Agreement), dated as of this 13th day of March, 2007, is by and between Corrections Corporation of America, a Maryland corporation
with its principal place of business at 10 Burton Hills Boulevard, Nashville, Tennessee (the
Company), and Richard P. Seiter, a resident of Nashville, Tennessee (the Executive), amends and
replaces in its entirety that certain Employment Agreement, dated as of January 3, 2005, between
the Company the Executive, as amended.
W I T N E S S E T H:
WHEREAS, the Company desires to engage Executive as its Chief Corrections 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 Executives 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 Corrections 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 Corrections Officer and such other offices to which Executive may be appointed or elected by
the Board of Directors. The Executives 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. It is expressly acknowledged by the Company that the Executive shall perform
his duties and responsibilities under this Agreement during the first six months of the Term (as
hereinafter defined) while commuting on a weekly basis from his home in St. Louis, Missouri. The
Executive agrees to abide by the Companys 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 Executives employment under this Agreement shall begin on the date hereof, and shall
terminate on December 31, 2007 (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
Executives 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 Executives date of
termination, for purposes of this Agreement, shall be the date of the Companys last payment to the
Executive. For the purposes of this Agreement, the election by the Company not to extend the
Executives employment hereunder for any renewal term shall be deemed a termination of the
Executives employment without Cause, as hereinafter defined.
4. Compensation.
4.1 Base Salary. The Company shall pay the Executive an annual salary (Base Salary)
of $290,000, which shall be payable to the Executive hereunder in accordance with the Companys
normal payroll practices, but in no event less often than bi-weekly.
Commencing in February 2007
(or at such other time during the first or second quarter of 2007
when annual compensation for 2007
is reviewed and considered) and following each year of the Executives employment with the Company
thereafter, the Executives 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 Executives 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
Executives 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
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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 Executives membership in professional and
civic organizations which are approved in advance by the Company.
4.4 Relocation Expenses. The Company shall reimburse the Executive for all reasonable
moving expenses and other customary relocation expenses incurred in connection with the sale of the
Executives principal residence located in St. Louis, Missouri and the Executives purchase of a
new principal residence in the Nashville, Tennessee metropolitan area. In addition, the Company
shall reimburse the Executive for all reasonable and customary real estate brokerage costs related
to the sale of the Executives principal residence in St. Louis, Missouri. All such expenses for
which reimbursement is sought under this Section 4.4 shall be approved in advance by the Company.
4.5 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 and in accordance with
Company policies. In addition, until June 30, 2005 and upon evidence of receipt, the Company shall
reimburse the Executive for all reasonable travel expenses related to Executives weekly commute
between St. Louis, Missouri and Nashville, Tennessee and shall reimburse the Executive for
reasonable living expenses in the Nashville, Tennessee area. All such expenses for which
reimbursement is sought under this Section 4.5 shall be approved in advance by the Company.
4.6 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.
4.7 Stock Option or Restricted Stock. Subject to the future approval of the Board of
Directors, or a committee or subcommittee thereof to which compensation matters have been
delegated, the Company shall grant to the Executive an option to purchase an amount of shares of
common stock, $0.01 par value per share, of the Company, as determined by the Board of Directors,
or such committee of the Board of Directors, to be appropriate for the position of Chief
Corrections Officer. The option to be granted to the Executive hereunder shall be subject to the
applicable equity incentive plan of the Company governing the Companys stock options in effect on
the date of the option grant. The terms and conditions of the option shall be set forth in an
option agreement in form and substance mutually satisfactory to the Company and the Executive and
as provided for under the terms of such equity incentive plan and the terms of this Agreement. The
Executive hereby agrees to execute any other documents deemed reasonably necessary by the Company
and its legal counsel in connection with the stock option. At the discretion of the Board of
Directors, or a committee or subcommittee thereof, the Company may choose to grant certain
restricted stock to Executive, and such a grant may reduce or eliminate the option discussed in
this section. In the event a grant of restricted stock is made, the terms and conditions of such a
grant of restricted stock shall be set forth in an agreement in form and substance mutually
satisfactory to the Company and the Executive, such terms and conditions shall be subject to any
applicable restricted stock plan the Company may have in place at such time as the award, and the
Executive hereby agrees to execute any other documents deemed
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reasonably necessary by the Company and its legal counsel in connection with the grant of
restricted stock.
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 Executives 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 Executives 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 Executives conviction of a felony or of
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, monetarily or otherwise, 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 Executives 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 Executives employment with the
Company is terminated without Cause, the Company shall pay to the Executive an amount equal to the
Executives 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
Executives 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 Executives Base Salary was paid prior to termination
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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 Executives 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 Executives 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, with the costs of such
benefits (including the Companys portion of any premiums) paid by the Company on the Executives
behalf included in the Executives gross income. In addition to the foregoing, each of the
following events shall be considered a termination upon a Change in Control for purposes of this
paragraph: (i) the Executives 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:
(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
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(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 Companys 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
Executives 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.
5.8 Section 409A. To the extent required to comply with Section 409A of the Internal
Revenue Code of 1986, as amended (the Code), as determined by the Executives counsel if
requested by the Executive, one or more payments made pursuant to the Agreement shall be delayed to
the six month anniversary of the date of Executives separation from service, within the meaning of
Section 409A of the Code. In addition, if and to the extent required to prevent a violation of
Section 409A of the Code, as determined by the Executives counsel if requested by the Executive,
the Executive will pay the entire cost of any health insurance benefits provided pursuant to the
Agreement for the first six (6) months after the effective date of the termination and the Company
will reimburse the Executive for the Companys share of such costs on the six-month anniversary of
the Executives separation from service, as defined in Section 409A of the Code.
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 Executives 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 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
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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 Executives 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 Executives service in such
capacity, directors (and to the extent the Company maintains such an insurance 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.
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(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 Executives 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 pursuant
to this Section 8, shall be paid by the Company to Executive within fifteen (15) days of the
receipt of the Tax Firms 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
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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 Firms determinations
hereunder and the effect thereof, the Executive shall be provided a reasonable opportunity
to review such determinations with the Tax Firm and the Executives tax counsel. The Tax
Firms determinations hereunder, and the Tax Opinion, shall not be deemed reasonable until
the Executives 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;
(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
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and may either direct the Executive to pay the tax claimed and sue 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 sue 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 Companys 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 Companys 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 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:
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(i)
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If to the Executive, to:
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(ii)
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If to the Company, to: |
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Corrections Corporation of America |
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10 Burton Hills Boulevard |
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Nashville, Tennessee 37215 |
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Attention: John D. Ferguson, Chief
Executive
Officer and President |
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Facsimile: (615) 263-3010 |
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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.
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.
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EXECUTIVE:
Richard P. Seiter
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/s/ Richard P. Seiter |
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COMPANY:
CORRECTIONS CORPORATION OF AMERICA
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By: |
/s/ John D. Ferguson |
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Name: |
John D. Ferguson |
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Title: |
Chief Executive Officer and President |
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