Document:

EX-10.34 Letter re Stock Option

 

EXHIBIT 10.34

Exhibit E

BROOKE GROUP LTD.

100 S.E. Second Street, 32nd Floor

Miami, Florida 33131

November 4, 1999

Mr. J. Bryant Kirkland III

100 Jefferson Avenue, Unit # 10015

Miami Beach, Florida 33139

     Dear Mr. Kirkland:

     We are pleased to inform you that Brooke Group Ltd. (the “Company”) has granted you a
nonqualified option (the “Option”) to purchase 45,000 shares of the Company’s common stock, par
value $.10 per share (the “Common Stock”), at a purchase price of $15 7/16 per share, subject to
adjustment (any of the underlying shares of Common Stock to be issued upon exercise of the Option
are referred to hereinafter as the “Shares”), pursuant to Section 12 hereof and pursuant to the
Company’s 1999 Long-Term Incentive Plan, as may be and is in effect and as amended from time to
time (the “Plan”). This agreement is conditioned upon the approval of the Plan by the Company’s
stockholders and is subject in all respects to the terms and provisions of the Plan, all of which
terms and provisions are made a part of and incorporated in this agreement as if they were each
expressly set forth herein. In the event of any conflict between the terms of this agreement and
the terms of the Plan, the terms of the Plan shall control.

     1. The Option may be exercised on or prior to the tenth anniversary of the date of grant
(after which date the Option will, to the extent not previously exercised, expire), provided the
Option shall only vest and become exercisable as to all of the aggregate shares covered thereby on
the fourth anniversary of the date of this agreement. However, the Option shall earlier vest and
become immediately exercisable upon (i) the occurrence of a “Change in Control” as defined in
Section 6(f) of the Employment Agreement dated as of June 1, 1995, as amended as of January 1,
1996, by and between Howard M. Lorber and New Valley Corporation, regardless of whether the
Employment Agreement is then in effect (the “Employment Agreement”), other than any Change in
Control arising by reason of a testamentary bequest by Bennett S. LeBow to or for the benefit of
his surviving spouse of any or all securities of the Company or of New Valley Corporation
beneficially owned by him as of the date of death, so long as, following the bequest, the event
referenced in Section 6(f)(ii) of the Employment Agreement shall not have occurred, or (ii) the
termination of your employment with the Company due to death or Disability (as defined in Section
2.8 of the Plan).

 

 

Mr. J. Bryant Kirkland III

November 4, 1999

Page 2

 

     2. The Option, from and after the date it vests and becomes exercisable pursuant to Section 1
hereof, may be exercised in whole or in part by delivering to the Company a written notice of
exercise in the form attached hereto as Exhibit A, specifying the number of the Shares to be
purchased and the purchase price therefor, together with payment of the purchase price of the
Shares to be purchased. The purchase price is to be paid in cash or by delivering shares of Common
Stock already owned by you for at least six months and having a fair market value on the date of
exercise equal to the purchase price of the Option being exercised, or a combination of such shares
and cash.

     In addition, payment of the purchase price of the Shares to be purchased may also be made by
delivering a properly executed notice to the Company, together with a copy of the irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds
necessary to pay the purchase price, and, if required, the amount of any federal, state or local
withholding taxes.

     No Shares shall be issued until full payment therefor has been made. You shall have all of
the rights of a stockholder of the Company holding the Common Stock that is subject to the Option
(including, if applicable, the right to vote the Shares and the right to receive dividends
thereon), when you have given written notice of exercise, have paid in full for such Shares and, if
requested, have given the certificate described in Section 9 hereof.

     3. In the event your employment with the Company is terminated for any reason, the Option
shall forthwith terminate, provided that you may exercise any then unexercised portion of the
Option then vested and exercisable pursuant to Section 1 hereof at any time prior to the earlier of
nine months after the termination of your employment (one year in the event of death or
Disability), or the expiration of the Option.

     4. The Option is not transferable except (i) by will or the applicable laws of descent and
distribution, (ii) as a gift to a foundation, charity or other not-for-profit organization, or
(iii) for transfers to your family members or trusts or other entities whose beneficiaries are your
family members, provided that such transfer is being made for estate, tax and/or personal planning
purposes.

     5. In the event of your death or Disability, the Option may be exercised by your personal
representative or representatives, or by the person or persons to whom your rights under the Option
shall pass by will or by the applicable laws of descent and distribution, within the one year
period following termination due to death or Disability.

     6. In the event of any change in capitalization affecting the Common Stock of the Company,
including, without limitation, a stock dividend or other distribution, stock split, reverse stock
split, recapitalization, consolidation, subdivision, split-up, spin-off, split-off,

 

 

Mr. J. Bryant Kirkland III

November 4, 1999

Page 3

 

combination or exchange of shares or other form of reorganization or recapitalization, or any other
change affecting the Common Stock, the aggregate number of shares of Common Stock covered by the
Option and the exercise price per share of Common Stock subject to the Option shall be
proportionately adjusted by the Company.

     7. The grant of the Option does not confer on you any right to continue in the employ of the
Company or any of its subsidiaries or affiliates or interfere in any way with the right of the
Company or its subsidiaries or affiliates to terminate the term of your employment.

     8. The Company shall require as a condition to the exercise of any portion of the Option that
you pay to the Company, or make other arrangements regarding the payment of, any federal state or
local taxes required by law to be withheld as a result of such exercise.

     9. Unless at the time of the exercise of any portion of the Option a registration statement
under the Securities Act of 1933, as amended (the “Act”), is in effect as to the Shares, the Shares
shall be acquired for investment and not for sale or distribution, and if the Company so requests,
upon any exercise of the Option, in whole or in part, you agree to execute and deliver to the
Company a reasonable certificate to such effect.

     10. You understand and acknowledge that: (i) any Shares purchased by you upon exercise of the
Option may be required to be held indefinitely unless such Shares are subsequently registered under
the Act or an exemption from such registration is available; (ii) any sales of such Shares made in
reliance upon Rule 144 promulgated under the Act may be made only in accordance with the terms and
conditions of that Rule (which, under certain circumstances, restrict the number of shares which
may be sold and the manner in which shares may be sold); (iii) certificates for Shares to be issued
to you hereunder shall bear a legend to the effect that the Shares have not been registered under
the Act and that the Shares may not be sold, hypothecated or otherwise transferred in the absence
of an effective registration statement under the Act relating thereto or an opinion of counsel
satisfactory to the Company that such registration is not required; and (iv) the Company shall
place an appropriate “stop transfer” order with its transfer agent with respect to such Shares.

     11. In the event of the payment of any dividends or other distributions in respect of the
Common Stock on or after the date hereof, through and including the tenth anniversary of the date
of grant, you shall receive, within ten days of the payment of such dividend or distribution, a
payment equal to the amount of any such dividends or other distributions that would have been paid
to you had you been at the record date for such dividends or other distributions a shareholder of
the Shares issuable upon exercise of any then unexercised portion of the Option, whether vested or
unvested. Notwithstanding the prior sentence, dividends or distributions in respect of Shares that
are paid to you prior to the date of approval of the Plan by the
Company’s stockholders shall be promptly repaid by you to the Company, with interest at Citibank N.A.’s prime
interest rate, if such approval is not obtained.

 

 

Mr. J. Bryant Kirkland III

November 4, 1999

Page 4

 

     12. The Committee administering the Plan shall have the right, on or prior to the date of the
approval of the Plan by the Company’s stockholders, to increase the exercise price of the Option
based on current market conditions or other factors deemed relevant by the Committee, provided that
the exercise price shall not exceed the Fair Market Value (as defined in the Plan) of the Shares on
the date of approval of the Plan by the Company’s stockholders.

     13. The Company represents and warrants to you as follows: (i) this agreement and the grant of
the Option hereunder have been authorized by all necessary corporate action by the Company and this
letter agreement is a valid and binding agreement of the Company enforceable against the Company in
accordance with its terms; (ii) the grant of the Option to you on the terms set forth herein will
be exempt from the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended,
pursuant to Rule 16b-3(d) thereunder; (iii) the Company will obtain, at its expense, any regulatory
approvals necessary or advisable in connection with the grant of the Option or the issuance of the
Shares; and (iv) the Company currently has reserved and available, and will continue to have
reserved and available during the term of the Option, sufficient authorized and issued shares of
its Common Stock for issuance upon exercise of the Option.

     14. Promptly following the date hereof, the Company shall use its best efforts to file and
keep in effect a Registration Statement on Form S-8, Form S-3 or other applicable form to register
under the Act the Shares issuable to you upon exercise of the Option and the resale thereof by you.

     15. This letter agreement contains all the understandings between the Company and you
pertaining to the matters referred to herein, and supercedes all undertakings and agreements,
whether oral or in writing, previously entered into by the Company and you with respect hereto. No
provision of this letter agreement may be amended or waived unless such amendment or waiver is
agreed to in writing signed by you and a duly authorized officer of the Company. No waiver by the
Company or you of any breach by the other party hereto of any condition or provision of this letter
agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same time, any prior time or any subsequent time. If any provision
of this letter agreement or the application of any such provision to any party or circumstances
shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any
extent, the remainder of this letter agreement or the application of such provision to such person
or circumstances other than those to which it is so determined to be invalid and unenforceable,
shall not be affected thereby, and each provision hereof shall be validated and shall be enforced
to the fullest extent permitted by law. This letter agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its conflicts of laws
principles. This letter agreement may be
executed in counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.

 

 

Mr. J. Bryant Kirkland III

November 4, 1999

Page 5

 

     Would you kindly evidence your acceptance of the Option and your agreement to comply with the
provisions hereof by executing this letter agreement in the space provided below.

	 	 	 	 	 
	 	Very truly yours,

BROOKE GROUP LTD.

 	 
	 	By:  	/s/ Bennett S. LeBow
 	 
	 	 	Bennett S. LeBow 	 
	 	 	Chairman, President and
Chief Executive Officer 	 
	 

AGREED TO AND ACCEPTED:

/s/ J. Bryant Kirkland III          

J. Bryant Kirkland III

 

 

EXHIBIT A

Brooke Group Ltd.

100 S. E. Second Street, 32nd Floor

Miami, Florida 33131

Gentlemen:

     Notice
is hereby given of my election to purchase ___ shares of Common Stock, $.10 par
value (the “Shares”), of Brooke Group Ltd., at a price of
$___ per Share, pursuant to the
provisions of the stock option granted to me on November 4, 1999. Enclosed in payment for the
Shares is:

			
	          o	 	my check in the amount of $                    .

			
	          o	 	                     Shares having a total value of $                    , such value
being based on the closing price(s) of the Shares on the date hereof.

     The following information is supplied for use in issuing and registering the Shares purchased
hereby:

	 	 	 
	Number of Certificates
	 	 
	and Denominations

	 	 

	 
	 	 
	Name

	 	 

	 
	 	 
	Address

	 	 

	 
	 	 
	 

	 	 

	 
	 	 
	 

	 	 

	 
	 	 
	Social Security No.

	 	 

	 
	 	 
	Dated:

	 	Very truly yours,
	 
	 	 
	 

	 	J. Bryant Kirkland IIIEX-10.1 EMPLOYMENT AGREEMENT TODD J. MULLENGER

 

EXHIBIT
10.1

EMPLOYMENT AGREEMENT

     This
EMPLOYMENT AGREEMENT (the “Agreement”), dated as of this
16th 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 Todd J. Mullenger,
a resident of Nashville, Tennessee (the “Executive”).

W I T N E S S E T H:

     WHEREAS, the Company desires to engage Executive as its Chief Financial Officer, subject to
the terms of an executive employment agreement; and

     WHEREAS, the Company and the Executive now desire to enter into this Agreement and set forth
the terms and conditions of the Executive’s employment with the Company.

     NOW, THEREFORE, for and in consideration of the foregoing recitals, the mutual promises and
covenants set forth below and other good and valuable consideration, receipt of which is hereby
acknowledged, the Company and the Executive do hereby agree as follows:

     1. Employment. The Executive shall serve as the Chief Financial 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
Financial Officer and such other offices to which Executive may be appointed or elected by the
Board of Directors. The Executive’s principal base of operations for the performance of his duties
and responsibilities under this Agreement shall be the offices of the Company located in Nashville,
Tennessee. The Executive agrees to abide by the Company’s Charter and Bylaws as in effect from time
to time and the direction of its Board of Directors except to the extent such direction would be
inconsistent with applicable law or the terms of this Agreement.

     2. Term. Subject to the provisions of termination as hereinafter provided, the initial
term of the Executive’s employment under this Agreement shall begin on March 16, 2007 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
Executive’s employment under this Agreement, the electing party shall do so by notifying the other
party in writing not less than sixty (60) days prior to the expiration of the Initial Term, or
sixty (60) days prior to the expiration of any Renewal Term. The Executive’s date of termination,
for purposes of this Agreement, shall be the date of the Company’s last payment to the Executive.
For the purposes of this Agreement, the election by the Company not to extend the Executive’s
employment hereunder for any renewal term shall be deemed a termination of the Executive’s
employment without “Cause,” as hereinafter defined.

 

 

     4. Compensation.

     4.1 Base Salary. The Company shall pay the Executive an annual salary (“Base Salary”)
of $270,000, which shall be payable to the Executive hereunder in accordance with the Company’s
normal payroll practices, but in no event less often than bi-weekly. Commencing at such time during
2007 when annual compensation for 2007 is reviewed and considered and following each year of the
Executive’s employment with the Company thereafter, the Executive’s compensation will be reviewed
by the Board of Directors of the Company, or a committee or subcommittee thereof to which
compensation matters have been delegated, and after taking into consideration both the performance
of the Company and the personal performance of the Executive, the Board of Directors of the
Company, or any such committee or subcommittee, in their sole discretion, may increase the
Executive’s compensation to any amount it may deem appropriate.

     4.2 Bonus. In the event both the Company and the Executive each respectively achieve
certain financial performance and personal performance targets, as established by the Board of
Directors, or a committee or subcommittee thereof to which compensation matters have been
delegated, of the Company pursuant to a cash compensation incentive plan or similar plan
established by the Company, the Company shall pay to the Executive an annual cash bonus during the
Term of this Agreement pursuant to the terms of such plan. This bonus shall be payable to the
Executive within ten (10) days following the confirmation by the Board of Directors or applicable
committee or subcommittee that such targets have been met under the applicable plan for the
relevant fiscal year. The Board of Directors of the Company, or applicable committee or
subcommittee, may review and revise the terms of the cash compensation incentive plan or similar
plan referenced above at any time, after taking into consideration both the performance of the
Company and the personal performance of the Executive, among other factors, and may, in their sole
discretion, amend the cash compensation incentive plan or similar plan in any manner it may deem
appropriate; provided, however, that any such amendment to the plan shall not affect the
Executive’s right to participate in such amended plan or plans.

     4.3 Benefits. The Executive shall be entitled to four (4) weeks of paid vacation
annually. In addition, the Executive shall be entitled to participate in all compensation or
employee benefit plans or programs and receive all benefits and perquisites for which any salaried
employees are eligible under any existing or future plan or program established by the Company for
salaried employees. The Executive will participate to the extent permissible under the terms and
provisions of such plans or programs in accordance with program provisions. These may include group
hospitalization, health, dental care, life or other insurance, tax qualified pension, savings,
thrift and profit sharing plans, termination pay programs, sick leave plans, travel or accident
insurance, disability insurance, and contingent compensation plans including unit purchase programs
and unit option plans. Nothing in this Agreement shall preclude the Company from amending or
terminating any of the plans or programs applicable to salaried or senior executives as long as
such amendment or termination is applicable to all salaried employees or senior executives. In
addition, the Company shall pay, or reimburse Executive for, all membership fees and related costs
in connection with Executive’s membership in professional and civic organizations which are
approved in advance by the Company.

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     4.4 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 Executive’s employment with the Company
shall be terminated with Cause: (i) the Company shall pay the Executive his Base Salary earned
through the date of termination of the Executive’s employment with the Company (the “Termination
Date”); and (ii) the Company shall not have any further obligations to the Executive under this
Agreement except those required to be provided by law or under the terms of any other agreement
between the Company and the Executive.

     5.3 Definition of “Cause.” For purposes of this Agreement, “Cause” shall mean: (i) the
death of the Executive; (ii) the permanent disability of the Executive, which shall be defined as
the inability of the Executive, as a result of physical or mental illness or incapacity, to
substantially perform his duties pursuant to this Agreement for a period of one hundred eighty
(180) days during any twelve (12) month period; (iii) the Executive’s conviction of a felony or of
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 Executive’s intentional violation of any
applicable local, state or federal law or regulation affecting the Company in any material respect,
as determined by the Company and its Board of Directors. Notwithstanding the foregoing, to the
extent that any of the events, actions or breaches set forth above are able to be remedied or cured
by the Executive, Cause shall not be deemed to exist (and thus the Company may not terminate the
Executive for Cause hereunder) unless the Executive fails to remedy or cure such event, action or
breach within twenty (20) days after being given written notice by the Company of such event,
action or breach.

     5.4 Effect of Termination Without Cause. If the Executive’s employment with the
Company is terminated without Cause, the Company shall pay to the Executive an amount equal to the
Executive’s Base Salary, based upon the annual rate payable as of the date of termination, without
any cost of living adjustments (the “Severance Amount”), which shall be payable as

3

 

provided below. If the Executive is terminated under this Section 5.4 on or between January 1
and March 14 of any given calendar year during the Term, then the Severance Amount shall be payable
for a period of one (1) year from the date of termination on the same terms and with the same
frequency as the Executive’s Base Salary was paid prior to termination. If the executive is
terminated under this Section 5.4 on or after March 15 and on or before December 31 of any given
calendar year during the Term, then the Severance Amount shall be payable on the same terms and
with the same frequency as the Executive’s Base Salary was paid prior to termination until March 14
of the following calendar year whereupon the remainder of the Severance Amount shall be paid in a
lump sum payment to the Executive.

     5.5 Effect of Termination Upon a Change in Control. If the Executive’s employment with
the Company is terminated upon a Change in Control, the Company shall (i) pay to the Executive a
one-time payment, to be paid within sixty (60) days of the date of termination, in an amount equal
to 2.99 times the Executive’s Base Salary, based upon the annual rate payable as of the date of
termination, without any cost of living adjustments; (ii) reimburse Executive for any Gross-Up
Payment (as hereinafter defined) or other payment payable pursuant to the provisions of Section 8
herein; and (iii) continue to provide hospitalization, health, dental care, and life and other
insurance benefits to the Executive for a period of one (1) year following such termination on the
same terms and conditions existing immediately prior to termination, with the costs of such
benefits (including the Company’s portion of any premiums) paid by the Company on the Executive’s
behalf included in the Executive’s 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 Executive’s voluntary resignation for any reason within one-hundred eighty (180)
days following a Change in Control, or (ii) a material reduction in the duties, powers or authority
of the Executive as an officer or employee of the Company within one-hundred eighty (180) days
following a Change in Control.

     5.6 Definition of a “Change of Control”. “Change of Control” shall mean the occurrence
of any of the following events:

     (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 Company’s assets; or

     (iv) any event which the Board of Directors determines should constitute a Change in
Control.

     5.7 Resignation by the Executive. The Executive shall be entitled to resign his
employment with the Company at any time during the term of this Agreement. If the Executive resigns
his employment with the Company for any reason other than as set forth in Section 5.5 herein: (i)
the Company shall pay the Executive his Base Salary earned through the date of termination of the
Executive’s employment with the Company as the result of his resignation; and (ii) the Company
shall not have any further obligations to the Executive under this Agreement except those required
to be provided by law or under the terms of any other agreement between the Company and the
Executive.

     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 Executive’s 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 Executive’s 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 Executive’s 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 Company’s share of such costs on the six-month anniversary of
the Executive’s “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 Executive’s employment hereunder and for a period of one (1) year
thereafter, Executive shall not, directly or indirectly: (i) own any interest in, operate, join,
control or participate as a partner, director, principal, officer or agent of, enter into the
employment of, act as a consultant to, or perform any services for any entity (each a “Competing
Entity”) which has material operations which compete with any business in which the Company or any
of its 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

5

 

leave the employ of the Company or any of its subsidiaries; provided, that the Executive may,
solely as an investment, hold not more than five percent (5%) of the combined voting securities of
any publicly-traded corporation or other business entity. The foregoing covenants and agreements of
the Executive are referred to herein as the “Restrictive Covenant.” The Executive acknowledges that
he has carefully read and considered the provisions of the Restrictive Covenant and, having done
so, agrees that the restrictions set forth in this Section 6.1, including without limitation the
time period of restriction set forth above, are fair and reasonable and are reasonably required for
the protection of the legitimate business and economic interests of the Company. The Executive
further acknowledges that the Company would not have entered into this Agreement absent Executive’s
agreement to the foregoing.

     In the event that, notwithstanding the foregoing, any of the provisions of this Section 6.1 or
any parts hereof shall be held to be invalid or unenforceable, the remaining provisions or parts
hereof shall nevertheless continue to be valid and enforceable as though the invalid or
unenforceable portions or parts had not been included herein. In the event that any provision of
this Section 6.1 relating to the time period and/or the area of restriction and/or related aspects
shall be declared by a court of competent jurisdiction to exceed the maximum restrictiveness such
court deems reasonable and enforceable, the time period and/or area of restriction and/or related
aspects deemed reasonable and enforceable by such court shall become and thereafter be the maximum
restrictions in such regard, and the provisions of the Restrictive Covenant shall remain
enforceable to the fullest extent deemed reasonable by such court.

     6.2 Confidentiality and Non-Disclosure. In consideration of the rights granted to the
Executive hereunder, the Executive hereby agrees that during the term of this Agreement and for a
period of three (3) years thereafter to hold in confidence all information concerning the Company
or its business, including, but not limited to contract terms, financial information, operating
data, or business plans or models, whether for existing, new or developing businesses, and any
other proprietary information (hereinafter, collectively referred to as the “Proprietary
Information”), whether communicated orally or in documentary or other tangible form. The parties to
this Agreement recognize that the Company has invested considerable amounts of time and money in
attaining and developing all of the information described above, and any unauthorized disclosure or
release of such Proprietary Information in any form would irreparably harm the Company.

     7. Indemnification. The Company shall indemnify the Executive to the fullest extent
that would be permitted by law (including a payment of expenses in advance of final disposition of
a proceeding) as in effect at the time of the subject act or omission, or by the Charter or Bylaws
of the Company as in effect at such time, or by the terms of any indemnification agreement between
the Company and the Executive, whichever affords greatest protection to the Executive, and the
Executive shall be entitled to the protection of any insurance policies the Company may elect to
maintain generally for the benefit of its officers or, during the Executive’s service in such
capacity, directors (and to the extent the Company maintains such an insurance 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

6

 

reason of his being or having been an officer or employee of the Company, or serving as an
officer or employee of an affiliate of the Company, at the request of the Company, other than any
action, suit or proceeding brought against the Executive by or on account of his breach of the
provisions of any employment agreement with a third party that has not been disclosed by the
Executive to the Company. The provisions of this Section 7 shall specifically survive the
expiration or earlier termination of this Agreement.

     8. Tax Reimbursement Payment.

     (i) Anything in this Agreement to the contrary notwithstanding, in the event it shall
be determined that any payment or distribution by or on behalf of the Company to or for the
benefit of Executive as a result of a Change in Control, as defined herein, (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise, a “Payment”) would be subject to the excise tax imposed by Section 4999 of the
Code, or any interest or penalties are incurred by Executive with respect to such excise tax
(such excise tax together with any such interest and penalties are hereinafter collectively
referred to as the “Excise Tax”), then Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

     (ii) Subject to the provisions of subsection (iii) below, all determinations required
to be made under this Section 8, including whether and when a Gross-Up Payment is required,
the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm or law firm selected
by the Executive, subject to the consent of the Company, which consent shall not be
unreasonably withheld (the “Tax Firm”); provided, however, that the Tax Firm shall not
determine that no Excise Tax is payable by the Executive unless it delivers to Executive a
written opinion (the “Tax Opinion”) that failure to pay the Excise Tax and to report the
Excise Tax and the payments potentially subject thereto on or with Executive’s applicable
federal income tax return will not result in the imposition of an accuracy-related or other
penalty on Executive. All fees and expenses of the Tax Firm shall be borne solely by the
Company. Within fifteen (15) business days of the receipt of notice from Executive that
there has been a Payment, or such earlier time as is requested by the Company, the Tax Firm
shall make all determinations required under this Section 8, shall provide to the Company
and Executive a written report setting forth such determinations, together with detailed
supporting calculations, and, if the Tax Firm determines that no Excise Tax is payable,
shall deliver the Tax Opinion to the Executive. Any Gross-Up Payment, as determined pursuant
to this Section 8, shall be paid by the Company to Executive within fifteen (15) days of the
receipt of the Tax Firm’s determination. Subject to the other provisions of this Section 8,
any determination by the Tax Firm shall be binding upon the Company and the Executive;
provided, however, that the Executive shall only be bound to the extent that the
determinations of the Tax Firm hereunder, including the determinations made in the

7

 

Tax Opinion, are reasonable and reasonably supported by applicable law. The parties
acknowledge, however, that as a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Tax Firm hereunder or as a
result of a contrary determination by the Internal Revenue Service, it is possible that
Gross-Up Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the
event that it is ultimately determined in accordance with the procedures set forth in
subsection (iii) below that the Executive is required to make a payment of any Excise Tax,
the Tax Firm shall reasonably determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the Company to or for the benefit of
Executive. In determining the reasonableness of the Tax Firm’s determinations hereunder and
the effect thereof, the Executive shall be provided a reasonable opportunity to review such
determinations with the Tax Firm and the Executive’s tax counsel. The Tax Firm’s
determinations hereunder, and the Tax Opinion, shall not be deemed reasonable until the
Executive’s reasonable objections and comments thereto have been satisfactorily accommodated
by the Tax Firm.

     (iii) The Executive shall notify the Company in writing of any claims by the Internal
Revenue Service that, if successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable but no later than
thirty (30) calendar days after Executive actually receives notice in writing of such claim
and shall apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid; provided however, that the failure of Executive to notify the
Company of such claim (or to provide any required information with respect thereto) shall
not affect any rights granted to the Executive under this Section 8 except to the extent
that the Company is materially prejudiced in the defense of such claim as a direct result of
such failure. The Executive shall not, unless otherwise required by the Internal Revenue
Service, pay such claim prior to the expiration of the 30-day period following the date on
which he gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such 30-day period that it desires to
contest such claim, the Executive shall:

     (1) give the Company any information reasonably requested by the Company
relating to such claim;

     (2) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney
selected by the Company and reasonably acceptable to Executive;

     (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;

8

 

     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 Company’s right to assume
the defense of and control the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder, and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

     (iv) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to this Section 8, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company’s complying with the
requirements of subsection (iii) above) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by the Company pursuant to
subsection (iii) above, a determination is made that the Executive is not entitled to a
refund with respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial of refund prior to the expiration of thirty (30) days
after such determination, then such advance shall, to the extent of such denial, be forgiven
and shall not be required to be repaid and the amount of forgiven 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

9

 

following the date of the mailing, if mailed, to each of the parties thereto at the following
respective addresses or such other address as may be specified in any notice delivered or mailed as
above provided:

	 	 	 	 	 
	(i)

	 	If to the Executive, to:
	 	
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	(ii)

	 	If to the Company, to:	 	 
	 
	 	 	 	 
	 

	 	Corrections Corporation of America	 	 
	 

	 	10 Burton Hills Boulevard	 	 
	 

	 	Nashville, Tennessee 37215	 	 
	 

	 	Attention: John D. Ferguson, Chief
Executive
                 Officer and President	 	 
	 

	 	Facsimile: (615) 263-3010	 	 

     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]

10

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
written.

	 	 	 	 	 
	 	EXECUTIVE:

Todd J. Mullenger

 	 
	 	/s/ Todd
J. Mullenger	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	COMPANY:

CORRECTIONS CORPORATION OF AMERICA

 	 
	 	By:  	/s/ John
D. Ferguson	 
	 	 	Name:  	John D. Ferguson 	 
	 	 	Title:  	Chief Executive Officer and President 	 
	 

11

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