Document:

cxw-ex44_155.htm

Exhibit 4.4

2027 Supplemental Indenture

SUPPLEMENTAL INDENTURE

SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of January 7, 2019, among Recovery Monitoring Solutions Corporation, a Texas corporation (the “Guaranteeing Subsidiary”), a subsidiary of CoreCivic, Inc. (successor to Corrections Corporation of America) (or its permitted successor), a Maryland corporation (the “Issuer”), the Issuer, the other Guarantors (as defined in the Indenture referred to herein) and Regions Bank, as trustee under the indenture referred to below and successor-in-interest to U.S. Bank National Association (the “Trustee”).

WITNESSETH

WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an Indenture dated as of September 25, 2015 (the “Base Indenture”) between the Issuer and the Trustee, as amended and supplemented by a Second Supplemental Indenture dated as of October 13, 2017 (the “Second Supplemental Indenture” and, together with the Base Indenture, the “Indenture”) providing for the issuance of the Issuer’s 4.75% Senior Notes due 2027 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “Subsidiary Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture;

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

	
1.
	
CAPITALIZED TERMS.  Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

	
2.
	
AGREEMENT TO GUARANTEE.  The Guaranteeing Subsidiary hereby agrees as follows:

	
(a)
	
Along with all Guarantors named in the Indenture, to jointly and severally unconditionally guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Issuer hereunder or thereunder, that:

(i)the principal of, and premium, if any, and interest on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and 

(ii)in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

 

 

Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately.

	
(b)
	
The obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or the Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor.

	
(c)
	
The following is hereby waived:  diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever.

	
(d)
	
This Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and the Indenture, and the Guaranteeing Subsidiary accepts all obligations of a Guarantor under the Indenture.

	
(e)
	
If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors, or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantors, any amount paid by either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.

	
(f)
	
The Guaranteeing Subsidiary shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby.

	
(g)
	
As between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 of the Indenture for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article 6 of the Indenture, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Subsidiary Guarantee.

	
(h)
	
The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantee.

	
(i)
	
Pursuant to Section 10.02 of the Indenture, after giving effect to any maximum amount and all other contingent and fixed liabilities that are relevant under any applicable (A) Bankruptcy or fraudulent conveyance laws or (B) any applicable state laws prohibiting shareholder distributions by an insolvent subsidiary to the extent applicable, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under Article 10 of the Indenture, this new Subsidiary Guarantee shall be limited to the maximum amount permissible such that the obligations of such Guarantor under this Subsidiary Guarantee will not constitute a fraudulent transfer or conveyance or an unlawful shareholder distribution.

2

 

	
3.
	
EXECUTION AND DELIVERY.  To evidence its Subsidiary Guarantee set forth herein, the Guaranteeing Subsidiary hereby agrees that a notation of such Subsidiary Guarantee substantially in the form attached as Exhibit D to the Indenture will be endorsed by an Officer of the Guaranteeing Subsidiary on each Note authenticated and delivered by the Trustee.  The Guaranteeing Subsidiary agrees that the Subsidiary Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Subsidiary Guarantee.

	
4.
	
RELEASES.

	
(a)
	
The Guaranteeing Subsidiary will be released and relived of any obligations under its Subsidiary Guarantee, the Indenture, the Notes and the Registration Rights Agreement (i) in the event of any sale or other disposition of all or substantially all of the assets of the Guaranteeing Subsidiary (including by way of merger, consolidation or otherwise) to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Issuer, (ii) a sale or other disposition of all of the Capital Stock of the Guaranteeing Subsidiary, in each case, to a Person that is not (either before or after giving effect to such transactions) a Subsidiary of the Issuer, (iii) upon Legal Defeasance or Covenant Defeasance of the Notes pursuant to Article Eight of the Indenture or (iv) if the Guaranteeing Subsidiary is released from its guarantees under all Credit Facilities of the Issuer or another Guarantor (including as a result of such Credit Facilities ceasing to be outstanding).  Upon delivery by the Issuer to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect that the provisions of the Indenture and this Supplemental Indenture with respect to the release of such Guaranteeing Subsidiary have been satisfied, the Trustee shall execute any documents reasonably required in order to evidence the release of any Guarantor from its obligations under its Subsidiary Guarantee.

	
(b)
	
Any Guarantor not released from its obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under the Indenture as provided in Article 10 of the Indenture.

	
(c)
	
Nothing contained in the Indenture or in any of the Notes shall prevent any consolidation or merger of a Guarantor with or into an Issuer (in which case such Guarantor shall no longer be a Guarantor) or another Guarantor or shall prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to an Issuer or another Guarantor.

	
6.
	
NO RECOURSE AGAINST OTHERS.  No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Issuer or any Guaranteeing Subsidiary under the Notes, any Subsidiary Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder of the Notes by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.  Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

	
7.
	
NEW YORK LAW TO GOVERN.  THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

	
8.
	
COUNTERPARTS.  The parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

3

 

	
9.
	
EFFECT OF HEADINGS.  The Section headings herein are for convenience only and shall not affect the construction hereof.

	
10.
	
THE TRUSTEE.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuer.

 

4

 

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.  

Dated:  January 7, 2019

GUARANTEEING SUBSIDIARY:

RECOVERY MONITORING SOLUTIONS CORPORATION

 

	
By: 
	
/s/ David M. Garfinkle

	
 
	
Name: David M. Garfinkle

	
 
	
Title:  Executive Vice President and Chief Financial Officer

 

 

5

 

OTHER GUARANTORS:

 

CORECIVIC, LLC

CORRECTIONAL MANAGEMENT, INC.

AVALON CORRECTIONAL SERVICES, INC.

ACS CORRECTIONS OF TEXAS, L.L.C.

AVALON CORPUS CHRISTI TRANSITIONAL CENTER, LLC

AVALON TULSA, L.L.C.

CARVER TRANSITIONAL CENTER, L.L.C.

EP HORIZON MANAGEMENT, LLC

FORT WORTH TRANSITIONAL CENTER, L.L.C.

SOUTHERN CORRECTIONS SYSTEMS OF WYOMING, L.L.C.

TURLEY RESIDENTIAL CENTER, L.L.C.

AVALON TRANSITIONAL CENTER DALLAS, LLC

CORECIVIC TRS, LLC

CCA SOUTH TEXAS, LLC

CCA HEALTH SERVICES, LLC

CCA INTERNATIONAL, LLC

CORRECTIONAL ALTERNATIVES, LLC

PRISON REALTY MANAGEMENT, LLC

TECHNICAL AND BUSINESS INSTITUTE OF AMERICA, LLC 

TRANSCOR AMERICA, LLC

CORECIVIC OF TENNESSEE, LLC

CORECIVIC GOVERNMENT SOLUTIONS, LLC

CORECIVIC OF TALLAHASSEE, LLC

GREEN LEVEL REALTY LLC

NATIONAL OFFENDER MANAGEMENT SYSTEMS, LLC

ROCKY MOUNTAIN OFFENDER MANAGEMENT SYSTEMS, LLC

TIME TO CHANGE, INC.

 

	
By: 
	
/s/ David M. Garfinkle

	
 
	
Name: David M. Garfinkle

	
 
	
Title:  Executive Vice President and Chief Financial Officer

 

ISSUER:

CORECIVIC, INC.

	
By: 
	
/s/ David M. Garfinkle

	
 
	
Name: David M. Garfinkle

	
 
	
Title:  Chief Financial Officer

6

 

TRUSTEE:

REGIONS BANK, as Trustee 

	
By: 
	
/s/ Kristine Prall

	
 
	
Authorized Signatory

 

25871645.2

7arcb_EX_10_2

		

			Exhibit 10.2

		

		

			[      ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

		

		

			Page 1 of 10

		

		
			 [       ] Schedule 
		

		
			ArcBest 16b Annual Incentive Compensation Plan
		

		
			 
		

		
			Pursuant to the Executive Officer Incentive Compensation Plan (the “Governing Plan”), the Compensation Committee of the ArcBest Corporation Board of Directors (the “Compensation Committee”) has adopted the following Individual Award Opportunities, Performance Measures, and Participants for ArcBest Corporation and its subsidiaries for the [        ] – ArcBest 16b Annual Incentive Compensation Plan (the “[       ] Plan”). The Compensation Committee has determined that the [        ] Plan incentive will include the following components:
		

		
			 
		

			
					
						[           ] Operating Income (“Operating Income Component”)

					
					
						50% weighting

				
	
					
						ROCE Component

					
					
						50% weighting

				

		
			 
		

		
			 
		

		
			The weighting of the components is determined by the Compensation Committee for each Measurement Period.
		

		
			 
		

		
			I.  Defined Terms
		

		
			
		

		
			A.  Base Salary for Executive Officers.    Base Salary for Executive Officers  is defined as an Executive Officer’s total base salary earned, while an eligible Participant in the [       ] Plan, for the designated Measurement Period, but in no event shall the Base Salary for an Executive Officer exceed the monthly base salary for the Executive Officer as most recently approved by the Compensation Committee as of the end of the day on which the Plan is approved for the Measurement Period or, if later, the day on which the Participant becomes an Executive Officer with a salary approved by the Compensation Committee, multiplied by twelve, multiplied by 150%.  Base Salary is not reduced by any voluntary salary reductions or any salary reduction contributions made to any salary reduction plan, defined contribution plan or other deferred compensation plans of the Company, but does not include any payments under the Governing Plan, any stock option or other type of equity plan, or any other bonuses, incentive pay or special awards.
		

		
			 
		

		
			B.  Base Salary. Base Salary for Participants other than Executive Officers is defined as a  Participant’s total base salary earned, while an eligible Participant in the [      ] Plan, for the designated Measurement Period.  Base Salary is not reduced by any voluntary salary reductions or any salary reduction contribution made to any salary reduction plan, defined contribution plan or other deferred compensation plans of the Company, but does not include any payments under the Governing Plan, any stock option or other type of equity plan, or any other bonuses, incentive pay or special awards.
		

		
			 
		

		
			C.  Cause.  Cause shall mean (i) Participant’s gross misconduct or fraud in the performance of Participant’s duties to the Company or any Subsidiary; (ii) Participant’s conviction or guilty plea or pleas of nolo contendere with respect to any felony or act of moral turpitude; (iii) Participant’s engaging in any material act of theft or material misappropriation of Company or any Subsidiary’s property, or (iv) Participant’s material breach of the Company’s Code of Conduct, as such Code may be revised from time to time.  
		

		
			 
		

		
			D.  Good Reason. Good Reason shall mean (i) any material adverse diminution in Participant’s title, duties, or responsibilities; (ii) any reduction in Participant’s base salary or employee benefits (including reducing Participant’s level of participation or bonus award opportunity in the Company’s or a Subsidiary’s incentive compensation plans) or (iii) a relocation of Participant’s principal place of employment by more than 50 miles without the prior consent of Participant. 
		

		
			 
		

		
			E.  Measurement Period.  The Measurement Period is 1/1/[       ] to 12/31/[       ]. 
		

		
			 
		

		
			F.  Qualified Termination. Qualified Termination shall mean, within 24 full calendar months after a Change in Control, as defined in the Executive Officer Incentive Compensation Plan, a participant’s separation from service by the Company (or an Affiliate of the Company) without Cause (and not as a result of the Participant’s death or Disability), or by the Participant for Good Reason. 
		

		
			

		 

 

		

			 

		

		

			 

		

		

			[      ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

		

		

			Page 2 of 10

		

		

		
			 
		

		
			G.   Retirement. Retirement shall mean Participant’s retirement from active employment at or after age 65 or retirement from the Company or Subsidiary at or after age 55, so long as the Participant has, as of the date of such retirement, at least 10 years of service with the Company or any Subsidiary. Officers and/or Executive Officers must be a Participant in the Plan during the Plan Year for not less than ninety (90) days prior to his or her Retirement to be eligible for an incentive under the [       ] Plan. 
		

		
			 
		

		
			 
		

		
			II.  Participants
		

		
			 
		

		
			Eligible Participants in the [       ] Plan are listed in Appendix C  and certain employees or positions may be specifically included or excluded by the Compensation Committee.
		

		
			 
		

		
			If you are promoted to an eligible position after November 30, [       ], you will not be eligible to participate in the [       ] Plan.
		

		
			 
		

		
			If an Eligible Participant in the [       ] Plan also participates in the ArcBest Corporation 2012 Change in Control Plan, the terms of the ArcBest Corporation 2012 Change in Control Plan shall govern.
		

		
			 
		

		
			 
		

		
			III. Corporate Performance Metrics
		

		
			 
		

		
			Operating Income Component: The Individual Award Opportunities provided by the Operating Income Component are based on (a) achieving certain levels of Operating Income in [       ], and (b) Your Target Payout Factor Earned. The formula below illustrates how your incentive is computed:  
		

		
			 
		

		
			Your Incentive Payment= [Performance Factor Earned x Your Target Payout Factor x Your Base Salary x the Operating Income Component Weighting]
		

		
			 
		

		
			A. Performance Factor Earned. Performance Factor Earned is shown in Appendix A and depends on the Operating Income achieved.
		

		
			       
		

		
			B. Target Payout Factor.  Your Target Payout Factor is a percentage of your Base Salary. The Target Payout Factors are listed in Appendix C.
		

		
			 
		

		
			ROCE Component: The Individual Award Opportunities provided by the ROCE Component are based on (a) achieving certain levels of performance for ArcBest’s Consolidated Return on Capital Employed (“ROCE”) and (b) your Target Payout Factor. The formula below illustrates how your incentive is computed:  
		

		
			 
		

		
			Your Incentive Payment = [Performance Factor Earned x Your Target Payout Factor x Your Base Salary x the ROCE Component Weighting]
		

		
			 
		

		
			A. Performance Factor Earned. Performance Factor Earned is shown in Appendix B and depends on the ROCE achieved by ArcBest for the year.
		

		
			     
		

		
			B. Target Payout Factor. Your Target Payout Factor is a percentage of your Base Salary. The Target Payout Factors are listed in Appendix C.
		

		
			 
		

		
			If the performance result falls between two rows on Appendix A or Appendix B, interpolation is used to determine the factor used in the computation of the incentive.
		

		
			 
		

		
			The Compensation Committee has established maximum incentive amounts based on a maximum Performance Factor Earned of 200%  of your Target Payout Factor for the Operating Income Component and 300% of your 

		 

		

			2

		

		

			 

		

 

		

			 

		

		

			 

		

		

			[      ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

		

		

			Page 3 of 10

		

Target Payout Factor for the ROCE Component subject to the applicable weighting for each component as provided in Appendix A and Appendix B.
		

		
			 
		

		
			IV. Effect of a Change in Control
		

		
			 
		

		
			Change in Control. Upon the occurrence of a Qualified Termination following a Change in Control, Participant shall be entitled to immediate payment of the greater of the following:
		

		
			 
		

		
			                    (a)   The amount computed under the Plan based on 100% of the Participant’s “Target Payout Factor” in Appendix C using the date of the Change in Control as the end of the Measurement Period, or
		

		
			            (b)   The amount computed under the Plan based on the actual percentage of Performance Factor Earned in Appendix A and Appendix B, calculated as if the Measurement Period ended on the date of the Change in Control.
		

		
			 
		

		
			 
		

		
			V.  Payment of Award
		

		
			 
		

		
			Payment will be made as soon as practicable following the end of the Measurement Period, and in any event, no later than 2 1⁄2 months after the end of the Measurement Period.
		

		
			 
		

		
			VI. Annual Incentive Compensation Plan
		

		
			 
		

		
			Defined terms in this [       ]  ArcBest 16b Annual Incentive Compensation Plan Schedule shall have the same meaning as in the Executive Officer Incentive Compensation Plan except where the context otherwise requires.
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			
		

		
			

		 

		

			3

		

		

			 

		

 

		

			 

		

		

			 

		

		

			[      ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

		

		

			Page 4 of 10

		

		

		
			Schedule A
		

		
			 
		

		
			[       ] Plan – Operating Income Component
		

		
			ArcBest 16b Annual Incentive Compensation Plan
		

		
			 
		

		
			Pursuant to the Executive Officer Incentive Compensation Plan (the “Governing Plan”), the Compensation Committee of the ArcBest Corporation Board of Directors (“Compensation Committee”) has adopted this Operating Income Component as a component of the [       ] Plan, including the following Individual Award Opportunities and Performance Measures for ArcBest Corporation and its subsidiaries. 
		

		
			 
		

		
			 
		

		
			I. Performance Measure 
		

		
			 
		

		
			[       ] Operating Income is defined as operating income as shown by the consolidated financial statements and consistent with the historical determination of operating income in ArcBest’s consolidated financial statements after taking into account the Section II Required Adjustments.
		

		
			 
		

		
			II. Required Adjustments
		

		
			 
		

		
			The following adjustments shall be made when calculating Operating Income:
		

		
			 
		

			
	
			
				 (i)
			

			
	
			
			add back any annual or long-term incentive compensation accruals for nonunion employees of ArcBest and all subsidiaries related to plans that have performance metrics based solely on annual performance when determining Operating Income;

			
	
			
				 (ii)
			

			
	
			
			add back the direct third-party expenses associated with an acquisition by ArcBest or any Subsidiary; 

			
	
			
				 (iii)
			

			
	
			
			exclude the operating results (all revenue and expenses) for any business acquired between the beginning of the Measurement Period and the end of the Measurement Period;

			
	
			
				 (iv)
			

			
	
			
			exclude expenses resulting directly from reorganization and restructuring programs for which amounts are publicly disclosed; 

			
	
			
				 (v)
			

			
	
			
			exclude increases or decreases in Operating Income resulting from any extraordinary, unusual or non-recurring item as determined by the Compensation Committee in its discretion provided such item is described, at the time the performance goal is established, in a manner that is objectively determinable; 

			
	
			
				 (vi)
			

			
	
			
			exclude increases or decreases in Operating Income resulting from any change in accounting principle (other than the change in accounting principle under ASC 606) as defined in the Accounting Standards Codification topic(s) that replaced or were formerly known as Financial Accounting Standards Board (“FASB”) Statement 154, as amended or superseded; 

			
	
			
				 (vii)
			

			
	
			
			exclude any loss from a discontinued operation as described in the Accounting Standards Codification topic(s) as they existed at December 31, 2013, that replaced or were formerly known as FASB Statement 144, as amended or superseded; 

			
	
			
				 (viii)
			

			
	
			
			exclude goodwill impairment charges; and

			
	
			
				 (ix)
			

			
	
			
			exclude settlement accounting charges incurred that relate to the qualified defined benefit pension plan.

		
			 
		

		
			 
		

		
			III. Discretionary Adjustments
		

		
			 
		

		
			Prior to a Change in  Control, the Compensation Committee may reduce any Participant’s Final Award if the Compensation Committee determines, in its sole discretion, that events have occurred or facts have become known which would make a reduction appropriate and equitable.
		

		
			 
		

		
			

		 

		

			4

		

		

			 

		

 

		

			[       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

		

		

			Page 5 of 10

		

		

		
			Schedule B
		

		
			 
		

		
			[       ] Plan – ROCE Plan Component
		

		
			ArcBest 16b Annual Incentive Compensation Plan
		

		
			 
		

		
			Pursuant to the Executive Officer Incentive Compensation Plan (the “Governing Plan”), the Compensation Committee of the ArcBest Corporation Board of Directors (“Compensation Committee”) has adopted this ROCE Component as a component of the [       ] Plan, including the following Individual Award Opportunities and Performance Measures for ArcBest Corporation and its subsidiaries.  
		

		
			 
		

		
			 
		

		
			I. Performance Measure 
		

		
			 
		

		
			ROCE for ArcBest is calculated as the following ratio:
		

		
			 
		

		
			Net Income + After-tax Effect of Interest Expense 
		

		
			+ After-tax Effect of Imputed Interest Expense +  After-tax Effect of Amortization of intangibles
		

		
			– After-tax Effect of Income from
		

		
			Cash and Short-term Investments Attributable to the reduction in Average Debt
		

		
			Average Equity + Average Debt + Average Imputed Debt
		

		
			 
		

		
			 
		

		
			“Net Income” for the ROCE calculation is consolidated net income determined in accordance with Generally Accepted Accounting Principles after taking into account the Section II Required Adjustments. 
		

		
			 
		

		
			“Interest Expense” for the ROCE calculation is (i) interest on all long and short-term indebtedness, including capital leases, and other interest bearing obligations, and (ii) deferred financing cost amortization and other financing costs including letters of credit fees, reduced by the amount of interest expense on debt not included in Average Debt as defined below.
		

		
			 
		

		
			“Imputed Interest Expense” consists of the interest attributable to Average Imputed Debt assuming an interest rate of 7.5%.
		

		
			 
		

		
			“Average Debt” is the average of the beginning of the year and the end of the year current and long-term debt, with beginning of the year and end of the year current and long-term debt reduced by the respective amount of the beginning of the year and end of the year total of unrestricted cash, cash equivalents and short-term investments, and limited to a reduction of debt to zero.  
		

		
			 
		

		
			“Average Equity” is the average of the beginning of the Measurement Period and the end of the Measurement Period stockholder’s equity.  
		

		
			 
		

		
			“Average Imputed Debt” consists of the average of the beginning of the year and the end of the year present value of all payments determined using an interest rate of 7.5% on operating leases of revenue equipment with an initial term of more than two years.
		

		
			 
		

		
			“Amortization of intangibles” consists of amortization of intangibles and depreciation of software related to acquired businesses including any writedown or impairment charge related to those assets.
		

		
			 
		

		
			“Income from Cash and Short-term Investments Attributable to the reduction in Average Debt” consists of income earned on the amount by which Average Debt is reduced at the average interest rate earned in cash and short-term investments for the measurement period.
		

		
			 
		

		
			

		 

		

			5

		

		

			 

		

 

		

			[       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

		

		

			Page 6 of 10

		

		

		
			II.  Required Adjustments
		

		
			 
		

		
			The following adjustments shall be made when calculating ROCE:
		

		
			 
		

			
	
			
				 (i)
			

			
	
			
			add back any after-tax annual or long-term incentive compensation accruals for nonunion employees of ArcBest and all subsidiaries when determining Net Income; 

			
	
			
				 (ii)
			

			
	
			
			add back after-tax direct third party expenses associated with an acquisition by ArcBest or any Subsidiary;

			
	
			
				 (iii)
			

			
	
			
			exclude the net results (all revenue, expenses and taxes) for any business acquired between the beginning of the Measurement Period and the end of the Measurement Period from the numerator of the ratio and exclude any Acquisition Debt attributable to the business acquired (either directly held by the business or incurred to acquire the business) from the denominator in the ratio calculation;

			
	
			
				 (iv)
			

			
	
			
			exclude decreases in Net Income resulting directly from reorganization and restructuring programs for which amounts are publicly disclosed;

			
	
			
				 (v)
			

			
	
			
			exclude increases or decreases to ROCE resulting from any extraordinary, unusual or non-recurring item as determined by the Compensation Committee in its discretion provided such item is described, at the time the performance goal is established, in a manner that is objectively determinable; 

			
	
			
				 (vi)
			

			
	
			
			exclude increases or decreases in Net Income resulting from any change in accounting principle (other than the change in accounting principle under ASC 606) as defined in the Accounting Standards Codification topic(s) that replaced or were formerly known as Financial Accounting Standards Board (“FASB”) Statement 154, as amended or superseded; 

			
	
			
				 (vii)
			

			
	
			
			exclude any loss from a discontinued operation as described in the Accounting Standards Codification topic(s) as they existed as of December 31, 2013 that replaced or were formerly known as FASB Statement 144, as amended or superseded; 

			
	
			
				 (viii)
			

			
	
			
			exclude the effect on ROCE of changes to net income, equity and debt as a result of any change in accounting principle as defined in the Accounting Standards Codification topic(s) that replaced or were formerly known as Accounting Principles Board Opinion No. 30, as amended or superseded;

			
	
			
				 (ix)
			

			
	
			
			exclude the effect of changes in federal income tax law or regulations affecting reported results during the Measurement Period including increases or decreases in tax rates, changes in the taxability or deductibility of any item of income or expense or the addition or elimination of tax credits. A change for this purpose will be as compared to the laws and regulations in effect on January 1, [       ], without consideration of any retroactive changes in tax law after January 1, [       ];  

			
	
			
				 (x)
			

			
	
			
			exclude goodwill impairment charges; and

			
	
			
				 (xi)
			

			
	
			
			exclude after-tax settlement accounting charges incurred that relate to the qualified defined benefit pension plan.

		
			 
		

		
			 
		

		
			III. Discretionary Adjustments
		

		
			 
		

		
			Prior to a Change in  Control, the Compensation Committee may reduce any Participant’s Final Award if the Compensation Committee determines, in its sole discretion, that events have occurred or facts have become known which would make a reduction appropriate and equitable.
		

		
			

		 

		

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			[       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

		

		

			Page 7 of 10

		

		

		
			Appendix A
		

		
			 
		

		
			Operating Income Component
		

		
			 
		

			
					
						 

					
					
						[       ] Operating Income 

					
						 

					
					
						Performance Factor Earned

				
	
					
						 

					
					
						 

					
					
						0%

				
	
					
						Threshold

					
					
						As approved annually

					
					
						25%

				
	
					
						Target

					
					
						by the Compensation

					
					
						100%

				
	
					
						Maximum

					
					
						Committee 

					
					
						200%

				
	
					
						 

					
					
						 

					
					
						200%

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			Operating Income Component Weighting: 50%
		

		
			 
		

		
			 
		

		
			
		

		
			

		 

		

			7

		

		

			 

		

 

		

			[       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

		

		

			Page 8 of 10

		

		

		
			Appendix B
		

		
			 
		

		
			[       ] ROCE Component
		

		
			 
		

		
			 
		

			
					
						 

					
					
						Return on Capital Employed 

					
						(“ROCE”)

					
					
						 

					
						Performance Factor Earned

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						  Less than 8%

					
					
						 0%

				
	
					
						Threshold

					
					
						8%

					
					
						50%

				
	
					
						Target

					
					
						13%

					
					
						100%

				
	
					
						Maximum

					
					
						18%

					
					
						300%

				
	
					
						 

					
					
						Greater than 18%

					
					
						300%

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			ROCE Component Weighting: 50%
		

		
			 
		

		
			 
		

		
			 
		

		
			
		

		
			

		 

		

			8

		

		

			 

		

 

		

			[       ] Schedule – ArcBest 16b Annual Incentive Compensation Plan

		

		

			Page 9 of 10

		

		

		
			Appendix C
		

		
			 
		

		
			Target Payout Factors
		

			
					
						 

					
					
						 

					
						 

				
	
					
						Participants/Job Title

					
					
						 

					
						Target Payout Factor

				
	
					
						ArcBest Chairman, President & CEO

					
					
						[    ]%

				
	
					
						ABF Freight President 

					
						ArcBest Vice President – CFO

					
					
						[   ]%

				
	
					
						ArcBest, COO, Asset-Light Logistics

					
						AB Tech President and ArcBest SVP - CINO

					
					
						[   ]%

				
	
					
						ArcBest Vice President – General Counsel & Corporate Sec.

					
						ArcBest Vice President – Chief Human Resources Officer

					
						ArcBest Vice President – Chief Sales Officer

					
						ArcBest Vice President – Chief Yield Officer

					
						ArcBest Vice President – Chief Customer Experience Officer

					
					
						[   ]%

				
	
					
						   ArcBest Vice President – Controller

					
						ArcBest Vice President – Customer Solutions

					
					
						[   ]%

				

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		 

		

			9

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