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EXHIBIT 10.70
SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (the "Agreement"), made and entered into
as of the 31st day of December, 1999, by and among Prison Realty Trust, Inc., a
Maryland corporation, whose principal place of business is located at 00 Xxxxxx
Xxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000 (the "Company"), Corrections
Corporation of America, a Tennessee corporation, whose principal place of
business is located at 00 Xxxxxx Xxxxx Xxxx., Xxxxxxxxx, Xxxxxxxxx 00000
("CCA"), and Xxxxxxx X. Xxxxxx, an individual currently residing in Nashville,
Davidson County, Tennessee (the "Executive").
WITNESSETH:
WHEREAS, the Executive is currently serving as a member of the
Board of Directors of the Company (the "Board") and Chief Operating Officer of
the Company; and
WHEREAS, the Executive has decided to voluntarily resign as an
officer and employee of the Company and as a member of the Board, effective as
of December 31, 1999 (the "Resignation Date").
NOW, THEREFORE, for and in consideration of the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Resignation. The Executive shall resign as an officer and
employee of the Company and as a member of the Board as of the Resignation Date.
The Executive and the Company agree that, effective as of the Resignation Date,
any and all existing employment agreements with the Company shall be terminated
and cease to have any effect whatsoever notwithstanding any survival or saving
clauses therein contained, other than with respect to amounts payable to the
Executive thereunder prior to the Resignation Date which remain unpaid, and this
Agreement shall control any and all matters relating to the Executive's
employment and termination thereof following the Resignation Date.
2. Certain Benefits.
(a) In consideration of the Executive's valued service to the
Company, the Company shall pay the Executive, on the Resignation Date, a
lump-sum cash payment of $233,750, representing amounts which would otherwise be
payable to the Executive pursuant to an Employment Agreement, dated as of June
1, 1997, by and between the Executive and CCA Prison Realty Trust, a Maryland
real estate investment trust and predecessor in interest to the Company, the net
proceeds of which, less any amounts required to be withheld therefrom by the
Company for income and employment tax purposes, shall be used to immediately
repay a portion of the promissory notes dated May 18, 1999, May 28, 1999 and
July 6, 1999, evidencing the indebtedness of the Executive to the Company in the
aggregate face amount of $1,000,000 made under the Prison Realty Corporation
Executive Equity Loan Plan (the "Plan") and the terms of the Plan (the "Loan").
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(b) On the Resignation Date, CCA shall repurchase from the
Executive one hundred fifty thousand (150,000) shares of the voting common stock
of CCA (representing 75% of the Executive's ownership interest in CCA) for
$300,000 in cash, which represents the economic value that the remaining
shareholders of CCA will receive in the Combination (as defined in Section 2(c)
below), the proceeds of which shall be used to immediately repay a portion of
the remaining Loan.
(c) Immediately prior to the closing of the merger of CCA with
and into a wholly-owned subsidiary of the Company pursuant to an Agreement and
Plan of Merger (the "Agreement and Plan of Merger"), dated as of December 26,
1999, by and between the Company, CCA Acquisition Sub, Inc., PMSI Acquisition
Sub, Inc., and JJFMSI Acquisition Sub, Inc., each a Tennessee corporation and a
wholly-owned subsidiary of Prison Realty, CCA, Prison Management Services, Inc.,
a Tennessee corporation ("PMSI"), and Juvenile and Jail Facility Management
Services, Inc., a Tennessee corporation ("JJFMSI") (the "Combination"), the
Executive shall sell to the Company, and the Company shall purchase from the
Executive, fifty thousand (50,000) shares of the voting common stock of CCA
(representing the remaining portion of the Executive's ownership interest in
CCA) for $100,000, which represents the economic value that the remaining
shareholders of CCA will receive in the Combination, the proceeds of which shall
be used to immediately repay a portion of the remaining balance of the Loan;
provided, however, that the obligation of the parties hereto to consummate such
purchase and sale of the Executive's interest in CCA shall be subject to the
satisfaction of the conditions set forth in Sections 6.01, 6.02 and 6.05 (except
for the conditions set forth in Sections 6.02(i) and (j) and 6.05(d)) of the
Agreement and Plan of Merger.
(d) Upon the Resignation Date, the terms of the Plan and Loan
shall be amended by this Agreement such that immediately following the
Resignation Date, the remaining balance of the Loan, as reduced by the payments
set forth in Section 2(a) and Section 2(b) of this Agreement, including all
interest accrued thereon as of December 31, 1999, shall be subject to the
following: (i) interest only payments on the newly constituted Loan (the "New
Loan") shall be due and payable on each of the first three anniversaries of the
Resignation Date, with such interest to be accrued annually at a rate of
two-hundred fifty (250) basis points over the thirty-day LIBOR rate in effect on
such date, and (ii) 33-1/3% of the principal amount of the New Loan, and all
accrued and unpaid interest thereon, shall become due and payable on each of the
fourth, fifth and sixth anniversaries of the Resignation Date. Upon completion
of the stock purchase described in Section 2(c) of this Agreement, the remaining
balance of the New Loan shall be reduced by an additional $100,000, in
accordance with Section 2(c) of this Agreement.
3. Employee Benefits. Except as expressly provided herein, the
Executive's rights under any employee benefit plan, policy or arrangement
maintained by either the Company or CCA shall be unaffected by this Agreement,
and such rights shall be determined under such plans, policies and arrangements.
Under the terms of such plans, policies and arrangements, any stock options or
similar rights which have not been exercised by the Executive, and any other
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grants or awards of stock or equity interests in which the Executive has not
become vested, shall be terminated or forfeited to the Company.
4. Release.
(a) In consideration of the Company's execution of this
Agreement, the Executive, for himself, and for his representatives, heirs,
executors, administrators, agents, successors and permitted assigns, irrevocably
and unconditionally releases, acquits and forever discharges the Company, CCA
and their respective subsidiaries, affiliates, divisions, successors and
assigns, officers, employees, directors, consultants, attorneys, agents or other
associated entities of the Company or CCA (the "Released Parties"), with respect
to and from any and all actions, causes of action, suits, debts, sums of money,
attorneys' fees, costs, promises, damages, claims, grievances, arbitrations or
demands whatsoever, known or unknown, in law or equity, by contract, or pursuant
to statute, rule, code or regulation, which the Executive now has or has had
from the beginning of the world until the full execution of this Agreement,
expressly including, without limiting the generality of the foregoing, all
claims arising out of or from or regarding or pertaining to any transaction,
dealing, conduct, act or omission, or any other matters or things relating to
the Executive's employment relationship (including his position as a director)
and/or the termination of the employment relationship, based upon any contract,
whether express or implied, or any allegation of illegal employment practices,
or breach of any federal, state or local fair employment practice or equal
opportunity law, or wage and hour law, as amended, including, but not limited
to, the National Labor Relations Act, Title VII of the Civil Rights Act of 1964,
Sections 1981 through 1988 of Title 42 of the United States Code, the
Immigration Reform Control Act, the Americans With Disabilities Act of 1990, the
Family and Medical Leave Act of 1993, the Fair Labor Standards Act, and the
Occupational Safety and Health Act. The Executive intends that this Agreement
shall irrevocably discharge the Released Parties to the maximum extent permitted
by law. Notwithstanding the foregoing, nothing herein shall release the Released
Parties or any successors or assigns thereof from the obligations set forth in
this Agreement (specifically including the Company's obligations under Section
11 of this Agreement) or impair the right or ability of the Executive to enforce
such provisions in accordance with the terms of this Agreement or pursue any
claim for benefits due under any "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.
The Executive acknowledges and agrees that if he should hereafter make any claim
or demand or commence or threaten to commence any action, claim or proceeding
against the Released Parties with respect to any cause, matter or thing which is
released by this Section 4(a) of this Agreement, this Section 4(a) may be raised
as a complete bar to any such action, claim or proceedings.
(b) In consideration of the Executive's execution of this
Agreement, the Company and CCA, for themselves and for their subsidiaries,
affiliates, divisions, successors and assigns, officers, employees, directors,
consultants, attorneys, agents or other associated entities of the Company and
CCA (the "Company Releasors"), agree to and do hereby irrevocably and
unconditionally release, acquit and forever discharge the Executive, and his
heirs, executors, and
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administrators (hereinafter collectively referred to as the "Employee
Releasees"), with respect to and from any and all actions, causes of action,
suits, debts, sums of money, attorneys' fees, costs, promises, damages, claims,
grievances, arbitrations or demands whatsoever, known or unknown, in law or
equity, by contract, tort or pursuant to statute, rule, code or regulation,
which the Company Releasors now have or have had from the beginning of the world
until the full execution of this Agreement, relating to the Executive's
employment relationship with the Company; provided, however, that nothing herein
shall release the Employee Releasees from the obligation set forth in this
Agreement (including the New Loan), or impair the right or ability of the
Company to enforce such provisions in accordance with the terms of this
Agreement. The Company Releasors acknowledge and agree that if they should
hereafter make any claim or demand or commence or threaten to commence any
action, claim or proceeding against the Employee Releasees with respect to any
cause, matter or thing which is released by this Section 4(b) of this Agreement,
this Section 4(b) may be raised as a complete bar to any such action, claim or
proceedings.
5. Confidential Information. The Executive acknowledges and
agrees that all confidential or proprietary information, including but not
limited to, trade secrets, standards, specifications, systems, customer lists,
marketing plans and information, financial information, and all other
information (collectively, the "Confidential Information"), and all other
tangible or intangible items or ideas making up the Confidential Information
owned or developed by the Company or CCA and the goodwill associated with them,
which (i) has been obtained by the Executive as a result of his employment with
the Company, and (ii) is not generally available to the public, shall remain the
sole and exclusive property of the Company or CCA, shall not be used by the
Executive for any purpose, and shall not be described or disclosed to any party
or person without the express written consent of the Company or CCA. The
Executive agrees that no copies will be retained of any written Confidential
Information, documentary materials, computer hard drives, diskettes, and/or any
other electronic storage devices to which the Executive has access in the course
of his employment with the Company or CCA, except with the express written
consent and permission of the Company or CCA.
The Executive will return all Company or CCA property including, but not
limited to, Confidential Information, written notes, photographs, memoranda and
other similar items, keys, computers, diskettes, other electronic storage
devices, and any copies made thereof, obtained in the course of his employment,
to the Company or CCA, as the case may be, upon the Resignation Date.
6. Confidential Nature of this Agreement; Non-disparagement. The
Executive agrees that the terms of this Agreement shall remain strictly
confidential and that there will be no statements (public or private) with
respect to the Company, CCA or any other Released Party, or this Agreement. The
Executive acknowledges that he has no basis for any negative statements against
the Company, CCA or any other Released Party, and he agrees that he will not
directly or indirectly make any negative or derogatory statements to any third
parties, or imply any improper conduct regarding the Company, CCA or any other
Released Party. The Executive
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hereby acknowledges and agrees that there are not, nor have there ever been,
disagreements between the Company and the Executive regarding the Company's
operations, policies or practices which could give rise to the disclosure of
such disagreement by the Company in a Current Report on Form 8-K with the United
States Securities and Exchange Commission.
7. Effect of Breach. In the event that the Executive violates the
provisions of this Sections 1 through 6 of this Agreement, such a violation will
be deemed to constitute a material breach of this Agreement. Immediately after
such a breach, the Company's obligations under this Agreement shall cease, and
the Company shall be entitled to obtain injunctive and/or other appropriate
relief in the event of said breach, including but not limited to accelerating
the maturity entire principal amount of the New Loan, together with all accrued
and unpaid interest thereon, with the effect that such that all such amounts
shall become immediately due and payable.
8. Termination of Lease Agreement as Condition to Company's
Obligations. Notwithstanding any other provision of this Agreement, the Company
shall not be required to perform its obligations under this Agreement until such
time as the Company and DC Investment Partners, LLC, a Tennessee limited
liability company ("DC Investment Partners"), and/or any affiliated entities,
including, without limitation, Xxxxxx Hills Limited, L.P., a Tennessee limited
partnership, and Four Corners Capital, LLC, a Tennessee limited liability
company (collectively, the "Affiliated Entities"), have entered into an
agreement of even date herewith relating to the termination of any and all
agreements and understandings, whether written or oral, regarding the lease of
rentable space in the building known as the Corrections Corporation of America
Building, 00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 by DC Investment
Partners or its Affiliated Entities, specifically including, but not limited to,
the lease of approximately 2,284 square feet of rentable space in such building,
utilized by DC Investment Partners as its principal place of business, pursuant
to that certain Lease Agreement, dated as of November 15, 1997, by and between
the former Corrections Corporation of America, a Tennessee corporation and
predecessor by merger to the Company, and DC Investment Partners.
9. Governing Law. This Agreement is governed by, and is to be
construed and enforced in accordance with, the laws of the State of Tennessee,
without regard to principles of conflicts of laws. If, under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement; and the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion hereof.
10. Notices. All notices under this Agreement shall be in writing
and shall be deemed effective when delivered in person (in the Company's or
CCA's case, attn.: Secretary) or twenty-four (24) hours after deposit thereof in
the U.S. mails, postage prepaid, for delivery as registered or certified mail;
addressed, in the case of the Executive, to him at 000 Xxxxxxx Xxxx., Xxxxxxxxx,
Xxxxxxxxx, 00000, and, in the case of the Company or CCA, to its corporate
headquarters, attention of the Secretary, or to such other addresses as the
Company, CCA and the
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Executive may designate in writing at any time or from time to time to the other
party. In lieu of personal notice or notice by deposit in the U.S. mail, a party
may give notice by facsimile transmission or telex.
11. Resolution of Differences Over Breaches of Agreement. Any
controversy or claim arising out of, or relating to this Agreement or the breach
thereof, shall be settled by binding arbitration in Nashville, Tennessee in
accordance with the rules then obtaining of the Employment Dispute Resolution
Rules of the American Arbitration Association, and judgment upon the award
rendered by the Arbitrator(s) may be entered in any court having jurisdiction
thereof.
12. Miscellaneous. Except as specifically provided herein, this
Agreement constitutes the entire understanding between the Company and the
Executive relating to the resignation of the Executive and cancels all prior
written and oral agreements and understandings with respect to the subject
matter of this Agreement, including any and all existing employment agreements
with the Company notwithstanding any survival or saving clauses therein
contained, other than with respect to amounts payable to the Executive
thereunder prior to the Resignation Date which remain unpaid, and this Agreement
shall control any and all matters relating to the Executive's employment and
termination thereof following the Resignation Date. This Agreement may be
amended only by a subsequent written agreement of the Executive and the Company.
This Agreement shall be binding upon and shall inure to the benefit of the
Executive, his heirs, executors, administrators, beneficiaries and assigns and
shall be binding upon and shall inure to the benefit of the Company and its
successors. This Agreement may not be assigned except by written agreement of
the parties hereto or by operation of law and any assignor shall remain liable
under this Agreement without giving effect to such assignment.
13. Indemnification. The Company shall indemnify and hold the
Executive harmless, to the fullest extent permitted by applicable state law, the
charter or by-laws of the Company, or any contract obligating the Company to
fully indemnify and hold the Executive harmless, with regards to actions or
inactions in relation to the Executive's service as a director or officer of the
Company prior to the Resignation Date and shall maintain, in respect of the
Executive, directors and officers insurance coverage for the Executive which is
no less favorable than that maintained from time to time for its executives and
officers.
14. Noncontravention. The Company represents that all corporate
action necessary to enter into this Agreement has been taken, the Company is not
prevented from entering into, or performing this Agreement by the terms of any
law, order, rule or regulation, its by-laws or charter, or any agreement to
which it is a party, and this Agreement represents the binding obligation of the
Company and is enforceable in accordance with its terms.
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15. Section Headings. The section headings in this Agreement are
for convenience of reference only, and they form no part of this Agreement and
shall not affect its interpretation.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the year and day first above written.
PRISON REALTY TRUST, INC.
By: /s/ Doctor X. Xxxxxx
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CORRECTIONS CORPORATION OF AMERICA
By: /s/ Doctor X. Xxxxxx
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/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX
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