EXHIBIT 10.1
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
A. The Employment Agreement (the “Agreement”) made and entered into on
October 28, 2004, effective as of May 1, 2004, by and between CentraCore
Properties Trust (f/k/a Correctional Properties Trust), a Maryland real estate
investment trust (the “Company”), and Charles R. Jones (the “Executive”) is
hereby amended as follows:
     1. Section 5.6(a) of the Agreement is hereby amended by deleting said
subsection in its entirety and substituting the following in lieu thereof:
          “a. In the event that (i) a Change in Control (as defined in paragraph
(b) of this Section 5.6) in the Company shall occur during the Term of
Employment, and (ii) prior to the earlier of the Expiration Date and one year
after the date of the Change in Control, either (x) the Term of Employment is
terminated by the Company without Cause, pursuant to Section 5.4 hereof or
(y) the Executive terminates the Term of Employment for Good Reason as defined
in Section 5.5(e) hereof, the Company shall (1) pay to the Executive any unpaid
Base Salary through the effective date of termination, (2) pay to the Executive
the Incentive Compensation, if any, not yet paid to the Executive for any year
prior to termination, at such time as the Incentive Compensation otherwise would
have been payable to the Executive, (3) pay to the Executive a Termination Year
Bonus as provided in Section 3.2(c), (4) pay to the Executive as a single lump
sum payment, within 30 days of the termination of his employment hereunder, a
lump sum payment equal to three (3) times the sum of the Executive’s then
current Base Salary and average Cash Bonuses for the three (3) calendar years
preceding the date of the Change in Control and (5) unless otherwise provided in
any agreement relating to the vesting of restricted stock or other equity of the
Company granted to the Executive by the Company, the Executive’s equity awards,
if any, shall immediately vest. The Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however, to the provisions
of Section 4.1).”

 

--------------------------------------------------------------------------------

 

     2. Section 5 of the Agreement is hereby further amended by adding the
following Sections 5.10 and 5.11 at the end of Section 5.9:
     “5.10 Section 409A. Notwithstanding anything herein to the contrary, if at
the time of the Executive’s termination of employment with the Company, the
Executive is a ‘specified employee’ within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the ‘Code’) and the regulations
promulgated thereunder, and the Company notifies the Executive that, based on
the advice of counsel, the deferral of the commencement of any severance
benefits payable under Section 5 is necessary in order to comply with
Section 409A of the Code, then the Company shall defer the commencement of the
severance benefits (without any reduction) by a period of at least six months
after the Executive’s termination of employment and any payments so deferred
shall earn interest calculated at the prime rate of interest reported by The
Wall Street Journal as of the date of termination. Any severance benefits that
would have been paid during such six-month period but for the provisions of the
preceding sentence shall be paid in a lump sum to the Executive six (6) months
and one (1) day after the Executive’s termination of employment. The provisions
of this Section 5.10 shall apply only to the extent required to avoid the
Executive’s incurrence of any accelerated or additional tax under Section 409A
of the Code.
     5.11 Tax Gross-Up for Excise Tax.
          a. Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any compensation, payment or distribution by
the Company to or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the ‘Severance Payments’), would be subject to the excise tax imposed
by Section 4999 of the Code, or any interest or penalties are incurred by the
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 the Executive shall be entitled to receive an additional
payment (a ‘Gross-Up Payment’) such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Severance Payments, any
Federal, state, and local income tax, employment tax and Excise Tax upon the
payment provided by this subsection, and any interest and/or penalties assessed
with respect to such Excise Tax, shall be equal to the Severance Payments.
          b. Subject to the provisions of paragraph (c) below, all
determinations required to be made under this paragraph (b), including whether a
Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be
made by a nationally

2

--------------------------------------------------------------------------------

 

recognized accounting firm selected by the Company (the ‘Accounting Firm’),
which shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the date of termination, if applicable, or
at such earlier time as is reasonably requested by the Company or the Executive.
For purposes of determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay Federal income taxes at the highest marginal rate of
Federal income taxation applicable to individuals for the calendar year in which
the Gross-Up Payment is to be made, and state and local income taxes at the
highest marginal rates of individual taxation in the state and locality of the
Executive’s residence on the date of termination, net of the maximum reduction
in Federal income taxes which could be obtained from deduction of such state and
local taxes. If the Accounting Firm determines that no Excise Tax is payable by
the Executive, the Company shall furnish the Executive with an opinion of
counsel that failure to report the Excise Tax on the Executive’s applicable
Federal income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made (an ‘Underpayment’). In the
event that the Company exhausts its remedies pursuant to paragraph (c) below and
the Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred, consistent with the calculations required to be made hereunder, and
any such Underpayment, and any interest and penalties imposed on the
Underpayment and required to be paid by the Executive in connection with the
proceedings described in paragraph (c) below, shall be promptly paid by the
Company to or for the benefit of the Executive.
          c. The Executive shall notify the Company in writing of any claim 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 10 business days after the Executive knows 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. The Executive shall not 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 period that it desires
to contest such claim, provided that the Company has set aside adequate reserves
to cover

3

--------------------------------------------------------------------------------

 

the Underpayment and any interest and penalties thereon that may accrue, the
Executive shall:
               (i) give the Company any information reasonably requested by the
Company relating to such claim,
               (ii) 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,
               (iii) cooperate with the Company in good faith in order to
effectively contest such claim, and
               (iv) 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 limitation on the
foregoing provisions of this paragraph (c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, 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 (to the extent
not prohibited by applicable law) 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 statute 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

4

--------------------------------------------------------------------------------

 

such contested amount. Furthermore, the Company’s control of 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 issues raised by the Internal Revenue Service or any other
taxing authority.
          d. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to paragraph (c) above, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company’s complying with the requirements of paragraph (c) 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 paragraph (c) above,
a determination is made that the Executive shall not be entitled to any 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 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.”
     3. Section 6 of the Agreement is hereby further amended by adding the
following subsection (d) immediately after subsection (c) thereof:
          “d. Notwithstanding any other provision of this Agreement to the
contrary, in no event shall the restrictions contained in subsection (a) of this
Section 6 apply to the Executive in the event of a termination of the Term of
Employment in connection with a Change of Control (as defined in Section 5.6(b)
hereof) in the Company, whether by the Company without Cause pursuant to Section
5.4 hereof or by the Executive for Good Reason as defined in Section 5.5(e)
hereof.”

5

--------------------------------------------------------------------------------

 

B. Except as amended herein, the Agreement is hereby confirmed in all other
respects.
     IN WITNESS WHEREOF, this First Amendment is entered into this
twenty-seventh day of July, 2006 by the parties hereto.

            CENTRACORE PROPERTIES TRUST,
a Maryland real estate investment trust
      By:   /s/ Clarence Anthony         Name:   Clarence Anthony       
Title:   Chairman of the Compensation Committee              /s/ Charles R.
Jones       Charles R. Jones         

6