SECOND AMENDED AND
RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
THIS SECOND
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this
“Agreement”) is entered into effective the 31
st day of December 2008 by and between The GEO
Group, Inc. (the “Company”) and George C. Zoley (the
“Executive” and, together with the Company, the
“Parties”).
WHEREAS ,
the Executive and the Company have previously entered into an
Amended and Restated Executive Employment Agreement, effective
November 4, 2004 (the “Prior Employment
Agreement”), and an Amended Executive Retirement Agreement,
dated January 17, 2003, (the “Amended Retirement
Agreement”), which set forth the Parties’ rights and
obligations with respect to the Executive’s employment with
the Company and retirement benefits, respectively; and
WHEREAS ,
the Executive and the Company wish to amend and restate the Prior
Employment Agreement to, among other things, make it compliant with
Section 409A of the Internal Revenue Code of 1986, as amended
from time to time (the “Code”), and its implementing
regulations and guidance (collectively, “Code
Section 409A”), and to ensure that certain provisions of
this Agreement comply with guidance recently issued under Section
162(m) of the Code; and
WHEREAS ,
the terms of this Agreement have been reviewed and approved by the
members of the Compensation Committee of the Board of Directors of
the Company (the “Board”);
NOW
THEREFORE , in consideration of the mutual covenants and
agreements contained herein, and for other valuable consideration
the receipt and adequacy of which is hereby acknowledged, the
Parties hereby agree as follows:
|
1.
|
|
POSITION AND DUTIES
. The Company hereby
agrees to continue to employ the Executive in the positions and
titles of Chairman & CEO of the Company, and the Executive
hereby agrees to be employed in such capacities. The Executive will
perform all duties and responsibilities and will have all authority
inherent in the positions of Chairman & CEO. The Executive
shall report directly to the Board of the Company. He shall have
all authority and responsibility commensurate with the Chairman
& CEO titles, including ultimate responsibility for and
authority over all day-to-day matters and personnel of the
Company.
|
|
2.
|
|
TERM OF AGREEMENT AND
EMPLOYMENT . The term of the Executive’s
employment under this Agreement will be for an initial period of
three (3) years, beginning on the effective date of this
Agreement, and terminating three years thereafter. The term of
employment under this Agreement will be automatically extended by
one day every day such that it has a continuous
“rolling” three-year term, unless otherwise terminated
pursuant to Section 6 or 7 of this Agreement.
|
|
|
A.
|
|
CAUSE . For purposes of this Agreement,
“Cause” for the termination of the Executive’s
employment hereunder shall be deemed to exist if, in the reasonable
judgment of the Company’s Board: (i) the Executive
commits fraud, theft or embezzlement against the Company or any
subsidiary or affiliate thereof; (ii) the Executive commits a
felony or a crime involving moral turpitude; (iii) the
Executive breaches any non-competition, confidentiality or
non-solicitation agreement with the Company or any subsidiary or
affiliate thereof; (iv) the Executive breaches any of the
terms of this Agreement and fails to cure such breach within
30 days after the receipt of written notice of such breach
from the Company; or (v) the Executive engages in gross
negligence or willful misconduct that causes harm to the business
and operations of the Company or a subsidiary or affiliate
thereof.
|
|
|
|
|
|
|
|
B.
|
|
GOOD REASON . Termination by the Executive of
his employment for “Good Reason” shall mean a
termination by the Executive of his employment upon the occurrence
of one of the following events or conditions without the consent of
the Executive:
|
|
|
|
|
|
|
|
|
|
(i) A material reduction in the
Executive’s authority, duties or responsibilities;
|
|
|
|
|
|
|
|
|
|
(ii) A material reduction in
the authority, duties or responsibilities of the Executive,
including any requirement that the Executive is required to report
to any person or entity other than the Board;
|
|
|
|
|
|
|
|
|
|
(iii) A material reduction in
the budget over which the Executive retains authority;
|
|
|
|
|
|
|
|
|
|
(iv) Any material reduction in
the Executive’s Annual Base Salary (as defined below) or
material adverse change in the terms or basis by which the
Executive’s Annual Performance Award is calculated as of the
effective date of this Agreement, including a suspension,
discontinuation or termination of such Annual Performance Award by
the Board or any committee thereof;
|
|
|
|
|
|
|
|
|
|
(v) A change in the location of
the Executive’s principal place of employment by the Company
of more than 50 miles from the location at which he was principally
employed; or
|
|
|
|
|
|
|
|
|
|
(vi) Any material breach of
this Agreement by the Company.
|
|
|
|
|
|
|
|
|
|
Notwithstanding the foregoing, the
Executive shall not be deemed to have terminated this Agreement for
Good Reason unless: (i) the Executive terminates this
Agreement no later than 2 years following the initial
existence of the above referenced event or condition which is the
basis for such termination (it being understood that each instance
of any such event shall constitute a separate basis for such
termination and a separate event or condition occurring on the date
of
|
2
|
|
|
|
such instance
for purposes of calculating the 2-year period); and (ii) the
Executive provides to the Company a written notice of the existence
of the above referenced event or condition which is the basis for
the termination within 90 days following the initial existence
of such event or condition, and the Company fails to remedy such
event or condition within 30 days following the receipt of
such notice.
|
|
|
A.
|
|
ANNUAL BASE SALARY
. Executive shall be
paid his current annual base salary of $935,000 for the remainder
of calendar year 2008 (as such may be amended from time to time,
the “Annual Base Salary”). The Company shall increase
the Annual Base Salary paid to the Executive by applying a cost of
living increase to be determined by the Board, such increase to be
made effective the 1st day of January of each year of the
employment term. However, under no circumstances shall the cost of
living increase be less than 5% per annum. The Annual Base Salary
shall be payable at such regular times and intervals as the Company
customarily pays its senior executives from time to
time.
|
|
|
|
|
|
|
|
B.
|
|
ANNUAL PERFORMANCE AWARD
. For each fiscal year
of employment during which the Company employs the Executive, the
Executive shall be entitled to receive a target annual performance
award of up to a maximum of 150% of Executive’s Annual Base
Salary, in accordance with the terms of any plan governing senior
management performance awards then in effect as established by the
Board (the “Annual Performance Award”), such Annual
Performance Award to be paid effective the 1st day of January of
each year of the employment term with respect to the immediately
preceding year.
|
|
5.
|
|
EXECUTIVE BENEFITS
. The Executive will be
entitled to twenty six (26) paid-time-off (PTO) days of
vacation per fiscal year. The Executive, the Executive’s
spouse, and qualifying members of the Executive’s family will
be eligible for and will participate in, without action by the
Board or any committee thereof, any benefits and perquisites
available to executive officers of the Company, including any group
health, dental, life insurance, disability, or other form of
executive benefit plan or program of the Company now existing or
that may be later adopted by the Company (collectively, the
“Executive Benefits”).
|
|
6.
|
|
DEATH OR DISABILITY
. The Executive’s
employment will terminate immediately upon the Executive’s
death. If the Executive becomes physically or mentally disabled so
as to become unable for a period of more than five consecutive
months or for shorter periods aggregating at least five months
during any twelve-month period to perform the Executive’s
duties hereunder on a substantially full-time basis, the
Executive’s employment will terminate as of the end of such
five-month or twelve-month period and this shall be considered a
“disability” under this Agreement. Such termination
shall not affect the Executive’s benefits under the
Company’s disability insurance program, if any, then in
effect.
|
3
|
7.
|
|
TERMINATION
. Either the Executive
or the Company may terminate the Executive’s employment under
this Agreement for any reason upon not less than thirty
(30) days written notice.
|
|
|
A.
|
|
TERMINATION OF EMPLOYMENT BY THE
EXECUTIVE FOR GOOD REASON, BY THE COMPANY WITHOUT CAUSE OR UPON THE
DEATH OR DISABILITY OF THE EXECUTIVE . Upon the termination of the
Executive’s employment under this Agreement by the Executive
for Good Reason, by the Company without Cause, or as a result of
the death (in which case, the provisions of Section 7(A)(i
— viii) shall inure to the benefit of the Executive’s
covered dependents, or to the extent applicable, to the
Executive’s estate) or disability of the Executive, the
following shall apply:
|
|
|
(i)
|
|
TERMINATION PAYMENT
. The Executive shall be
entitled to and paid a termination payment (the “Termination
Payment”) equal to five (5) times the Executive’s
Annual Base Salary at the time of such termination together with
any Gross-Up Payments (as defined below) required to be paid in
accordance with Section 7(A)(iv) hereof. The Termination
Payment and the Gross-Up Payments shall be made within 10 days
of any termination pursuant to this Section 7(A).
|
|
|
|
|
|
|
|
(ii)
|
|
TERMINATION BENEFITS
. The Company shall
continue to provide the Executive and any covered dependents of
Executive (and if applicable, his beneficiaries) with the Executive
Benefits (as described in Section 5 hereof) for a period of
10 years after the date of termination of the
Executive’s employment with the Company. Such Executive
Benefits shall be provided at no cost to the Executive in no less
than the same amount, and on the same terms and conditions, as in
effect on the date on which the termination of employment occurs.
If the Executive dies during the 10-year period following a
termination pursuant to this Section 7(A), the Company shall
continue to provide the Executive Benefits to the Executive’s
covered dependents under the same terms as were being provided
prior to Executive’s death and, to the extent applicable, to
the Executive’s estate.
|
|
|
|
|
|
|
|
(iii)
|
|
TERMINATION AUTOMOBILE
. Within 10 days
following termination, the Company shall transfer all of its
interest in any automobile used by the Executive pursuant to the
Company’s Executive Automobile Policy (the “Executive
Automobile Policy”) and shall pay the balance of any
outstanding loans or leases on such automobile (whether such
obligations are those of the Executive or the Company) so that the
Executive owns the automobile outright (in the event such
automobile is leased, the Company shall pay the residual cost of
such lease).
|
|
|
|
|
|
|
|
(iv)
|
|
GROSS-UP PAYMENTS
. If any of the
Termination Payment will be subject to the tax (the “Excise
Tax”) imposed by Section 4999 of the Code (or any
similar tax that may hereafter be imposed), the Company shall
pay
|
4
|
|
|
|
to
the Executive in cash additional amounts (the “Gross-Up
Payments”) such that the net amount retained by the Executive
after deduction from the Termination Payment and the Gross-Up
Payments of any Excise Tax imposed upon the Termination Payment and
any federal, state and local income tax and Excise Tax and any
other tax imposed upon the Gross-Up Payments shall be equal to the
original amount of the Termination Payment, prior to deduction of
any Excise Tax imposed with respect to the Termination Payment. The
Gross-Up Payments are intended to place the Executive in the same
economic position he would have been in if the Excise Tax did not
apply. The Gross-Up Payments shall be paid to the Executive at the
earlier of the time that the Termination Payment is paid to the
Executive, or the time when any Excise Tax relating to said
Termination Payment becomes due and payable. For purposes of
determining the Gross-Up Payments pursuant to this Section
7(A)(iv), the Termination Payment shall also include any other
amounts which would be considered “Parachute Payments”
(within the meaning of Section 280G(b)(2) of the Code) to the
Executive, including, but not limited to, the value of any benefits
or payments paid or made pursuant to the terms of the Amended
Retirement Agreement to the extent provided for by Code
Section 280G and final, temporary or proposed regulations
thereunder, and Gross-Up Payments relating to said amounts shall be
paid to the Executive at the earlier of the time that said amounts
are paid to the Executive, or the time when any Excise Tax relating
to said amounts becomes due and payable.
|
|
|
|
|
|
|
|
(v)
|
|
TAX RATES . 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 in the calendar year in which the Gross-Up Payment
is to be made, and state and local income taxes at the highest
marginal rate of 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.
|
|
|
|
|
|
|
|
(vi)
|
|
TAX CALCULATION
. Simultaneously with
the Company’s payment of the Termination Payment (as that
term is used in Section 7(A)(iv)), the Company shall deliver
to the Executive a written statement specifying the total amount of
the Termination Payment and the Gross-Up Payment, together with all
supporting calculations. If the Executive disagrees with the
Company’s calculation of either of said payments, the
Executive shall submit to the Company, no later than 15 days
after receipt of the Company’s calculations, a written notice
advising the Company of the disagreement and setting forth his
calculation of said payments. The Executive’s failure to
submit such notice within such period shall be conclusively deemed
to be an agreement by the Executive as to the amount of the
Termination Payment and the Gross-Up Payment. If the Company agrees
with the Executive’s calculations, it shall pay
any
|
5
|
|
|
|
shortfall to the Executive within
20 days after receipt of such a notice from the Executive,
together with interest thereon accruing at the rate of
18 percent per annum, compounded monthly, from the original
due date of the Termination Payment through the actual date of
payment of said shortfall. If the Company does not agree
with
|
|
