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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CORRECTIONS CORPORATION OF AMERICA
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
-------------------------------
3) Filing party:
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4) Date filed:
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*Set forth the amount on which the filing fee is calculated and state how it
was determined.
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[CCA LOGO]
March 31, 1997
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of Corrections Corporation of America to be held at 10:00 a.m., local time, on
Tuesday, May 13, 1997, at Loews Vanderbilt Plaza, 2100 West End Avenue,
Nashville, Tennessee.
The formal Notice of the meeting, as well as the proxy statement and
form of proxy are included with this letter. A copy of the Company's 1996
Annual Report to Stockholders is also enclosed for your review.
During the meeting, in addition to a discussion of the specific matters
to be acted upon at the meeting, which are described in detail in the
accompanying proxy statement, there will be a review of the Company's recently
completed 1996 fiscal year, a report on the progress of the Company and an
opportunity for stockholders to ask management questions of general interest.
Regardless of the number of shares you own, it is important that your
views be represented. Accordingly, whether or not you plan to attend the
meeting in person, I urge you to complete, sign, date and promptly return
the enclosed proxy card in the envelope provided. If you choose to attend the
meeting, you may revoke your proxy and personally cast your votes.
Your Board of Directors and management look forward to greeting those
stockholders who are able to attend.
Sincerely,
Doctor R. Crants
Chairman and
Chief Executive Officer
<PAGE> 3
CORRECTIONS CORPORATION OF AMERICA
102 Woodmont Boulevard
Nashville, Tennessee 37205
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, MAY 13, 1997
Notice is hereby given that the annual meeting of stockholders (the
"Annual Meeting") of Corrections Corporation of America (the "Company") will be
held at 10:00 a.m., local time, on Tuesday, May 13, 1997, at Loews Vanderbilt
Plaza, 2100 West End Avenue, Nashville, Tennessee, for the following purposes:
(1) To elect a Board of Directors to serve for a term of one (1) year,
until the 1998 annual meeting, and until their successors are
elected and qualified;
(2) To consider and approve amendments to the Company's
Non-Employee Directors' Stock Option Plan to, among other things,
increase the number of shares of the Company's common stock
reserved for issuance thereunder from an aggregate of 600,000
shares to an aggregate of 900,000 shares;
(3) To consider and approve the adoption of an Agreement and Plan
of Merger whereby the Company will change its state of
incorporation from Delaware to Tennessee pursuant to a
"migratory merger" that will merge the Company with and into a
newly-formed Tennessee corporation; and
(4) To transact such other business as may properly come before
the Annual Meeting or any adjournment or postponement thereof.
Only stockholders of record, as shown by the transfer books of the
Company, at the close of business on March 18, 1997, are entitled to notice of,
and to vote at, the Annual Meeting or any adjournment or postponement thereof.
Your attention is directed to the proxy statement accompanying this
Notice of Annual Meeting for more complete information regarding the matters to
be presented and acted upon at the Annual Meeting.
The Board of Directors recommends that you vote FOR the director nominees
named in the proxy statement, FOR adoption of each of the amendments to the
Company's Non-Employee Directors' Stock Option Plan and FOR adoption of the
Agreement and Plan of Merger.
All stockholders are cordially invited to attend the meeting in person.
By Order of the Board of Directors
Darrell K. Massengale, Secretary
March 31, 1997
Nashville, Tennessee
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, WE URGE YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE. IF YOU CHOOSE TO ATTEND
THE MEETING, YOU MAY REVOKE YOUR PROXY AND PERSONALLY CAST YOUR VOTE AT THE
MEETING.
<PAGE> 4
CORRECTIONS CORPORATION OF AMERICA
102 Woodmont Boulevard
Nashville, Tennessee 37205
PROXY STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, MAY 13, 1997
This proxy statement is furnished to stockholders of Corrections
Corporation of America (the "Company" or "CCA") in connection with the
solicitation by the Board of Directors of the Company of proxies to be voted at
the 1997 annual meeting of stockholders of the Company (the "Annual Meeting")
to be held at 10:00 a.m., local time, on Tuesday, May 13, 1997, at Loews
Vanderbilt Plaza, 2100 West End Avenue, Nashville, Tennessee, and at any
adjournments or postponements thereof. The mailing address of the principal
executive offices of the Company is 102 Woodmont Boulevard, Suite 800,
Nashville, Tennessee 37205. The Company is mailing its Annual Report to
Stockholders for the year ended December 31, 1996, together with this proxy
statement and the enclosed proxy card, commencing on or about March 31, 1997, to
stockholders entitled to vote at the Annual Meeting.
The purpose of the Annual Meeting is:
(1) To elect a Board of Directors to serve for a term of one (1) year,
until the 1998 annual meeting, and until their successors are elected
and qualified;
(2) To approve amendments (collectively, the "Amendments") to the
Company's Non-Employee Directors' Stock Option Plan (the "Directors'
Plan") to:
(a) increase the number of shares of the common stock of the
Company, par value $1.00 per share (the "Common Stock"),
reserved for issuance under the Directors' Plan from an
aggregate of 600,000 shares to an aggregate of 900,000 shares;
(b) extend the term for which non-employee directors of the Company
are to receive stock options by six (6) years; and
(c) provide for the amendment of the Directors' Plan at the sole
discretion of the Company's Board of Directors;
(3) To consider and approve the adoption of an Agreement and Plan of
Merger (the "Plan of Merger"), whereby the Company will change its
state of incorporation from Delaware to Tennessee pursuant to a
"migratory merger" that will merge the Company with and into a
newly-formed Tennessee corporation (the "Merger"); and
(4) To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
When a proxy card is returned properly signed and dated by a stockholder,
the shares of Common Stock represented thereby will be voted in accordance
with the instructions on the proxy card. If a stockholder returns a properly
executed proxy card but does not mark the boxes located on the card and does
not revoke such proxy prior to the Annual Meeting, the shares of Common Stock
represented thereby will be voted (i) FOR the election as directors of the
Company of the nominees listed in this proxy statement; (ii) FOR the approval
of each of the Amendments; and (iii) FOR the approval of the adoption of the
Plan of Merger. An executed proxy card submitted by a stockholder will not
affect his or her right to attend, and to vote in person at, the Annual
Meeting. Stockholders who execute a proxy may revoke it at any time before it
is voted by filing a written revocation with the Secretary of the Company at or
before the time and date of the Annual Meeting, by executing a proxy bearing a
later date and delivering it to the Secretary of the Company at or before the
time and date of the Annual Meeting or by attending the Annual Meeting and
voting in person.
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Only stockholders of record at the close of business on March 18, 1997
(the "Record Date") are entitled to notice of, and to vote at, the Annual
Meeting or any adjournment thereof. A list of all stockholders entitled to
vote at the Annual Meeting will be available for inspection by any stockholder
for any purpose reasonably related to the Annual Meeting during ordinary
business hours for a period of ten days prior to the Annual Meeting at the
Company's principal executive offices. At the Record Date, 75,809,104 shares
of the Company's Common Stock were outstanding. Each share of Common Stock
entitles the owner to one vote. A majority of the outstanding shares present
in person or by proxy is required to constitute a quorum to transact business
at the Annual Meeting.
Under Delaware law, directors are elected by the affirmative vote, in
person or by proxy, of a plurality of the shares entitled to vote in any
election at a meeting at which a quorum is present. Only votes actually cast
will be counted for the purpose of determining whether a particular nominee
received more votes than another person or persons, if any, nominated for the
same seat on the Board. Accordingly, votes withheld from director nominees,
abstentions and broker-non-votes will not be included in vote totals and
will not be considered in determining the outcome of the vote. Stockholders do
not have cumulative voting rights with respect to the election of directors.
Approval of the Amendments, the Plan of Merger and any other matter that
may properly come before the Annual Meeting requires the affirmative vote, in
person or by proxy, of the holders of a majority of the shares of Common Stock
represented and entitled to vote thereon at the Annual Meeting. Abstentions
will have the same effect as votes cast against the approval of the Amendments,
the Plan of Merger, or any other matter to properly come before the Annual
Meeting or any adjournment thereof; however, broker-non-votes will have no
effect on the outcome of such matters.
The cost of soliciting proxies by the Board of Directors will be borne
by the Company. Such solicitation will initially be made by mail. The
Company has retained Corporate Communications, Inc. to assist in the
solicitation of proxies. It is estimated that Corporate Communications' fees
for such services will be approximately $5,000, plus all out-of-pocket costs and
expenses. In addition, proxy solicitation may be made personally or by telephone
by directors, officers and employees of the Company, none of whom will receive
additional compensation for these services. Forms of proxies and proxy
materials will also be distributed through brokers, custodians and other like
parties to the beneficial owners of shares of Common Stock. The Company will
reimburse such parties for the reasonable out-of-pocket expenses incurred in
connection with such distribution.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Bylaws of the Company presently provide that the Board of Directors
shall consist of not less than three members, and that the actual number of
directors comprising the Board of Directors shall be determined from time to
time by the vote of two-thirds of the entire Board of Directors. The current
Board of Directors has determined that the number of directors shall be set at
seven and that seven
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directors shall be elected at the Annual Meeting. Each director elected at the
Annual Meeting will serve for a term of one (1) year, until the 1998 annual
meeting, subject to the provisions of the Bylaws, and until his successor is
duly elected and qualified. The names of the individuals nominated for
election as directors, all of whom are presently directors of the Company,
together with certain information concerning such individuals, are set forth
below.
NOMINEES FOR DIRECTORS
THOMAS W. BEASLEY (age - 54), a founder of the Company, was elected
Chairman Emeritus of the Board of Directors of the Company in June 1994. From
June 1987 to June 1994, he served as Chairman of the Board. Mr. Beasley served
as President of the Company from January 1983 to June 1987. He has served as a
director since 1983. Mr. Beasley is currently President of Dixon Springs
Investments, Inc., a private real estate investment company. From 1974 through
1978, Mr. Beasley served as Chairman of the Tennessee Republican Party, and he
continues to be active in Tennessee politics. Mr. Beasley graduated from
the United States Military Academy at West Point in 1966 and received a Doctor
of Jurisprudence degree from Vanderbilt University School of Law in 1973.
DOCTOR R. CRANTS (age - 52), a founder of the Company, was elected Chief
Executive Officer and Chairman of the Board of the Company in June 1994. From
June 1987 to June 1994, he served as President, Chief Executive Officer and Vice
Chairman of the Board of Directors of the Company. From January 1983 through
June 1987, Mr. Crants served as Secretary and Treasurer of the Company. He has
served as a director of the Company since 1983. Mr. Crants graduated from the
United States Military Academy at West Point in 1966, and received joint
Masters in Business Administration and Juris Doctor degrees from the Harvard
Business School and Harvard Law School, respectively, in 1974.
WILLIAM F. ANDREWS (age - 65) has served as a director of the Company
since 1986. Mr. Andrews currently serves as the Chairman of Schrader, Inc., a
manufacturing company and Chairman of Scovill Fasteners. From January 1992
through December 1994, he was Chairman, President and Chief Executive Officer
of Amdura Corporation and Chairman of Utica Corp., both of which are
manufacturing companies. From April 1990 through January 1992, he served as
the President and Chief Executive Officer of UNR Industries, Inc., a
diversified steel processor. From September 1989 to March 1990, Mr. Andrews
was President of Massey Investment Company, a private investment company. Mr.
Andrews serves as a director of Navistar International Corporation, Southern
New England Telephone Company, Johnson Control Corporation, Katy Industries,
Northwestern Steel and Wire Company, Black Box Corporation and Process
Technology Holdings. Mr. Andrews was elected to the Board of Directors
pursuant to the Consulting Agreement between the Company and Massey Burch
Investment Group, Inc.
SAMUEL W. BARTHOLOMEW, JR. (age - 52) has served as a director of the
Company since June 1991. Mr. Bartholomew is a founder and Chairman of the
Nashville law firm of Stokes & Bartholomew, P.A., which serves as general
counsel to the Company. Mr. Bartholomew is a member of the Nashville and
Tennessee Bar Associations, and was installed as a Fellow in both the Tennessee
and Nashville Bar Foundations. He also serves on the Board of SunTrust National
Bank in Nashville and American Corporate Literature, Inc. and has served as a
Presidential Board Appointment to the Federal National Mortgage Association
(FANNIE MAE). He currently serves as Tennessee Chairman of the U.S. Olympic
Committee and is active on the board of numerous civic organizations. Mr.
Bartholomew graduated from the United States Military Academy at West Point in
1966 and received a Doctor of Jurisprudence degree, Order of the Coif, from
Vanderbilt University School of Law in 1973, where he subsequently chaired
the Dean's Council and taught seminars on Corporate Strategy and Business Law.
3
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JEAN-PIERRE CUNY (age - 42) has served as a director of the Company
since July 1994. Mr. Cuny serves as the Senior Vice President of The Sodexho
Group, a French based, leading supplier of catering and various other
services to institutions. From February 1982 to June 1987, he served as Vice
President in charge of Development for the aluminum semi-fabricated productions
division of Pechiney, a diversified aluminum and other materials integrated
producer. Mr. Cuny graduated from Ecole Polytechnique in Paris in 1977 and from
Stanford University Engineering School in 1978. Mr. Cuny was elected to the
Board of Directors pursuant to the Securities Purchase Agreement between the
Company and Sodexho S.A., of which The Sodexho Group is an affiliate.
JOSEPH F. JOHNSON, JR. (age - 46) has served as a director of the Company
since May 1996. He serves as Chairman and CEO of The Johnson Companies, a group
of closely held companies involved in government relations and corrections,
which includes Johnson & Associates, a government relations and consulting firm.
In 1994, Mr. Johnson founded National Corrections & Rehabilitation Corporation
(NCRC), a correctional services company, which specializes in providing
education, vocational training, substance abuse treatment and medical care
programs to inmates. In 1992, Mr. Johnson served as National Campaign Manager
and political advisor to Virginia Governor Douglas Wilder. In 1994, Mr. Johnson
served as District of Columbia Council member John Ray's top political
strategist. Mr. Johnson served as Secretary of Health under New Mexico Governor
Tony Anaya in the mid-1980's and as Executive Director of Reverend Jesse
Jackson's Rainbow Coalition in the late 1980's. Mr. Johnson graduated from New
Mexico State University, where he received a B.A. in Political Science in 1974
and a M.A. in Public Administration in 1976.
R. CLAYTON MCWHORTER (age - 63) has served as a director of the Company
since May 1996. He served as Chairman of Columbia/HCA Healthcare Corporation
from April 1995 to May 9, 1996. Mr. McWhorter remains a member of the Board of
Directors of Columbia/HCA and is currently the Chairman of the Board of
LifeTrust America, L.L.C., a start-up company engaged in the assisted living
business. He is also a principal in Clayton Associates, a limited liability
company, which provides venture capital to start-up companies. In September
1987, Mr. McWhorter participated in the formation of HealthTrust, Inc. and
served as its Chairman, President and Chief Executive Officer until its merger
with Columbia/HCA in April 1995. Mr. McWhorter is a director of SunTrust
National Bank in Nashville, Ingram Industries, Inc., the Metropolitan Nashville
Airport Authority and the YMCA. He is also a member of the Board of Trustees
for The University of Tennessee, the Board of the Foundation for State
Legislatures, the Nashville Area Chamber of Commerce and Partnership 2000, and
the Advisory Board of the YWCA.
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From 1951 through 1952, Mr. McWhorter attended the University of Tennessee,
Knoxville, pre-pharmacy program and earned his B.S. degree in Pharmacy in 1955
from Samford University in Birmingham, Alabama. Belmont University in
Nashville has named Mr. McWhorter a distinguished professor of entrepreneurship
at its Jack C. Massey Graduate School of Business, where he will help develop a
program to prepare graduates to work in health administration and assist in the
development of an entrepreneurial resource center for small businesses.
The information given in this Proxy Statement concerning the nominees is
based upon statements made or confirmed to the Company by or on behalf of
such nominees, except to the extent certain information appears in the Company's
records. Directors' ages are given as of March 1, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES LISTED
ABOVE. SHARES OF COMMON STOCK OF THE COMPANY COVERED BY PROXIES EXECUTED AND
RECEIVED IN THE ACCOMPANYING FORM WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF
ALL OF THE NOMINEES, UNLESS OTHERWISE SPECIFIED ON THE PROXY.
The Board of Directors does not contemplate that any of the nominees will
be unable to accept election as a director. However, in the event that one or
more nominees are unable or unwilling to accept or are unavailable to serve, the
persons named in the proxies or their substitutes will have authority, according
to their judgment, to vote, or refrain from voting, for other individuals as
directors.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
During 1996, the Board of Directors of the Company held one regular
meeting and five special meetings. Each director attended 75% or more of the
aggregate number of meetings held by the Board and its committees on which he
served.
The Company has an Audit Committee and a Compensation Committee. The
Audit Committee consists of Messrs. Andrews, Bartholomew (Chairman) and
McWhorter and is responsible for making recommendations to the Board for the
selection and remuneration of independent auditors to audit the Company's
annual financial statements. The Audit Committee also reviews (i) the results
and findings of audits performed by the independent auditors; (ii) the
Company's systems of internal accounting controls and significant accounting
policies; and (iii) the nature of nonaudited services performed by the
independent auditors. During 1996, the Audit Committee met twice.
The Compensation Committee consists of Messrs. Andrews (Chairman),
Bartholomew and McWhorter and is responsible for reviewing the compensation of
the Chief Executive Officer and other officers and key management of the
Company and for making recommendations thereon to the Board. The Compensation
Committee is also responsible for administering the Company's stock option
plans and employee stock ownership plan. In carrying out such
responsibilities, the Compensation Committee reviews the salaries and benefits
of key employees and recommends
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performance targets under the Company's bonus plan. During 1996, the
Compensation Committee met once.
The Board also has a Nominating Committee whose members are Messrs.
Beasley and Crants. The Nominating Committee is responsible for recommending to
the Board suitable persons for election as directors of the Company. The
Nominating Committee will consider nominees recommended by stockholders
provided that the names of such persons are submitted no later than the date
established for the submission of stockholder proposals for action at the
Company's next annual meeting of stockholders. See "Stockholder Proposals."
During 1996, the Nominating Committee met twice.
DIRECTOR COMPENSATION
No compensation is paid to executive officers of the Company for
services rendered in their capacities as directors. Each non-employee director
is entitled to receive a fee of $1,000 for attendance at each meeting of the
Board and a fee of $500 for attendance at each meeting of any committee of the
Board on which he serves. An additional fee of $250 is paid to the chairman of
each committee for each committee meeting he chairs. In addition to receiving
directors' fees, all non-employee directors are reimbursed for expenses incurred
in connection with their attendance at meetings of the Board or any of its
committees.
Non-employee directors are also entitled to participate in the Company's
Non-Employee Directors' Stock Option Plan. See "Proposal 2 -- Approval of
Amendments to Company's Non-Employee Directors' Stock Option Plan."
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SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS AND OFFICERS
The following table sets forth, as of the Record Date, except with respect
to Zweig-DiMenna Partners, L.P. ("Zweig-DiMenna"), which information is as of
March 25, 1997, the number of shares of the Company's Common Stock beneficially
owned by (a) each person known to the Company to be the beneficial owner of
more than five percent of the outstanding Common Stock, (b) each director or
nominee for director of the Company, (c) the Chief Executive Officer of the
Company and each of the four most highly compensated executive officers of the
Company (collectively, the "Named Executive Officers") and (d) all of the
Company's directors and executive officers, as a group. In October 1995, the
Company authorized a 2-for-1 stock split on its Common Stock, effective
October 31, 1995. The stock split was paid in the form of a one-share
dividend for every share of Common Stock held by stockholders of record on
October 16, 1995. In June 1996, the Company authorized a 2-for-1 stock split
on its Common Stock, effective July 2, 1996. The stock split was paid in the
form of a one-share dividend for every share of Common Stock held by
stockholders of record on June 19, 1996. All references herein to the Common
Stock are on a post-split basis.
<TABLE>
<CAPTION>
Common Stock Percent
Name Beneficially Owned (1) of Class(2)
---- ---------------------- -----------
<S> <C> <C>
Sodexho S.A. ("Sodexho") 13,976,209(3) 16.3%
Zweig-DiMenna Partners, L.P. 4,255,200(4) 5.6%
Thomas W. Beasley 2,906,128(5) 3.8%
Doctor R. Crants 1,789,881(6) 2.3%
William F. Andrews 275,332(7) *
Samuel W. Bartholomew, Jr. 207,400(8) *
Jean-Pierre Cuny 30,000(9) *
Joseph F. Johnson, Jr. -0- *
R. Clayton McWhorter 1,000 *
David L. Myers 194,547(10) *
Darrell K. Massengale 156,646(11) *
Gay Etheridge Vick, III 137,861(12) *
All executive officers and directors as a group 6,220,778(13) 7.9%
(17 persons)
- ---------------------
</TABLE>
* Represents beneficial ownership of less than 1% of Common Stock
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(1) Includes shares as to which such person directly or indirectly,
through any contract, arrangement, understanding, relationship, or
otherwise has or shares voting power and/or investment power as these
terms are defined in Rule 13d-3(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Shares of Common Stock
underlying options and warrants to purchase Common Stock, which are
exercisable within sixty days after the Record Date, are deemed to be
outstanding for the purpose of computing the outstanding Common Stock
owned by the particular person and by the group, but are not deemed
outstanding for any other purpose.
(2) Based upon 75,809,104 shares of Common Stock issued and outstanding.
(3) Sodexho's address is 3 avenue Newton, 78180 Montigny-le-Bretonneux,
France. Includes 2,725,807 shares of Common Stock issuable upon
conversion of certain convertible notes; 4,400,000 shares issuable upon
conversion of certain warrants, 30,000 shares issuable upon the
exercise of certain options issued to Mr. Cuny and transferred to
Sodexho and approximately 2,930,402 shares issuable upon conversion of
certain convertible subordinated notes which Sodexho is entitled to
purchase pursuant to a forward contract with the Company. Such
information is based solely on the Schedule 13D filed by Sodexho with
the Securities and Exchange Commission (the "Commission") in April 1996.
See "Certain Relationships and Related Transactions."
(4) Zweig-DiMenna's address is 900 Third Avenue, New York, New York 10022.
The shares of Common Stock deemed to be beneficially owned
by Zweig-DiMenna include: 957,400 shares owned by Zweig-DiMenna
Partners, L.P., with respect to which it has sole voting and investment
power; 2,097,400 shares owned by Zweig-DiMenna International Limited,
with respect to which it has sole voting and investment power; 475,200
shares owned by Zweig-DiMenna International Managers, Inc. on behalf of
a discretionary account, with respect to which it has sole voting and
investment power; 496,200 shares owned by Zweig-DiMenna Special
Opportunities, L.P., with respect to which it has sole voting and
investment power; and 229,060 shares owned by Gotham Advisors, Inc. on
behalf of adiscretionary account, with respect to which it has sole
voting and investment power. Such information is derived solely from
Zweig-DiMenna and from Amendment No. 2 to Schedule 13D
filed with the Commission, dated February 14, 1997, filed by
Zweig-DiMenna Partners, L.P., Zweig-DiMenna International Limited,
Zweig-DiMenna International Managers, Inc., on behalf of a
discretionary account, Zweig-DiMenna Special Opportunities, L.P., and
Gotham Advisors, Inc., on behalf of a discretionary account with the
Commission.
(5) Mr. Beasley's address is Route 2, Box 305, Burns, Tennessee 37029.
Includes 60,000 shares issuable upon the exercise of options, 4,000
shares owned by Mr. Beasley's wife, 29,680 shares allocated to Mr.
Beasley pursuant to the Company's Amended and Restated Employee Stock
Ownership Plan (the "ESOP"), 717,540 shares issuable upon the exercise
of Warrants (as hereinafter defined), 400 shares issuable upon the
exercise of Warrants owned by Mr. Beasley's wife, and 1,228,720 shares
held in a grantor retained annuity trust for which Mr. Beasley serves
as trustee.
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(6) Includes 400,000 shares issuable upon the exercise of options, 48,944
shares allocated to Mr. Crants pursuant to the ESOP and 199,880 shares
issuable upon the exercise of Warrants. Does not include 6,400 shares
held in trust for Mr. Crants' children and 13,280 shares issuable upon
the exercise of Warrants held in trust for Mr. Crants' children,
beneficial ownership of which is disclaimed.
(7) Includes 178,000 shares issuable upon the exercise of options and 8,000
shares owned of record by children of Mr. Andrews.
(8) Includes 150,000 shares issuable upon the exercise of options and 9,000
shares owned by minor children of Mr. Bartholomew.
(9) Mr. Cuny serves as the Senior Vice President of The Sodexho Group, an
affiliate of Sodexho. Mr. Cuny beneficially owns 30,000 shares
issuable upon the exercise of options. Does not include 13,976,209
shares beneficially held by Sodexho.
(10) Includes 174,400 shares issuable upon the exercise of options, 800
shares owned by children of Mr. Myers, 80 shares issuable upon the
exercise of Warrants, 160 shares issuable upon the exercise of Warrants
owned by children of Mr. Myers and 18,707 shares allocated to Mr. Myers
pursuant to the ESOP.
(11) Includes 129,600 shares issuable upon the exercise of options, 280
shares owned jointly by Mr. Massengale and his wife and 14,766 shares
allocated to Mr. Massengale pursuant to the ESOP.
(12) Includes 120,400 shares issuable upon the exercise of options, 2,400
shares issuable upon the exercise of Warrants and 12,639 shares
allocated to Mr. Vick pursuant to the ESOP.
(13) Includes an aggregate of 2,456,396 shares issuable upon the exercise of
options and warrants and 220,305 shares allocated to directors and
executive officers pursuant to the ESOP.
In September 1992, the Company issued a warrant dividend to its holders
of Common Stock by distributing one warrant for every five outstanding shares of
common stock held on the record date (the "Warrants"). The Warrants expire
on September 14, 1997 and are convertible into four shares of Common Stock at an
exercise price of $8.50. An aggregate of 3,252,244 shares of Common Stock
currently are issuable upon exercise of the Warrants.
9
<PAGE> 13
MANAGEMENT
Except as otherwise described under "Management - Employment Agreement"
herein, the executive officers of the Company are elected annually by the Board
of Directors following the annual meeting of stockholders to serve one-year
terms and until their successors are elected and qualified. Biographical
information concerning those executive officers of the Company who are also
directors of the Company is set forth under "Proposal 1 - Election of
Directors" in this proxy statement. Biographical information concerning all
other executive officers of the Company is set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Doctor R. Crants 52 Chairman of the Board; Chief Executive Officer;
Director
Thomas W. Beasley 54 Chairman Emeritus of the Board; Director
David L. Myers 53 President
Darrell K. Massengale 36 Chief Financial Officer; Secretary and Treasurer;
Vice President, Finance
Gay Etheridge Vick, III 49 Vice President, International Operations and
Managing Director, CCA International
Charles A. Blanchette, Jr. 46 Vice President, Operations
Dennis E. Bradby 47 Vice President, Education Services
Linda G. Cooper 46 Vice President, Legal Affairs
Susan Hart 36 Vice President, Communications
Peggy W. Lawrence 41 Vice President, Investor Relations
John D. Rees 50 Vice President, Business Development
Linda A. Staley 52 Vice President, Project Development
</TABLE>
DAVID L. MYERS became President of the Company in June 1994. From
December 1986 to June 1994, he served as Vice President, Facility Operations
of the Company. From September 1985 to December 1986, he served as
Administrator of the Company's Bay County, Florida facility. From 1968 to 1985,
Mr. Myers was employed with the Texas Department of Corrections, starting as a
10
<PAGE> 14
corrections officer in 1968 and progressing in 1973 to warden of a maximum
security prison. He graduated from Sam Houston State University in 1969.
DARRELL K. MASSENGALE joined the Company in February 1986 and in March
1991 became its Vice President, Finance, Secretary, and Treasurer. In June
1994, he was also elected Chief Financial Officer of the Company. From February
1986 to March 1991, Mr. Massengale served as Controller of the Company. He is a
certified public accountant who was employed by the accounting firm of KPMG
Peat Marwick from 1982 through 1986. Mr. Massengale graduated from Middle
Tennessee State University in 1982 and became a certified public accountant in
1985.
GAY ETHERIDGE VICK, III was elected Vice President and Managing Director
of the Company's International Operations in June 1994. From January 1987 to
June 1994, he served as Vice President, Project Development for the Company.
From April 1984 to December 1986, Mr. Vick served as Vice President, Design and
Construction. From April 1983 to April 1984, he served as President of Vick
and Harris, Ltd., where he masterplanned correctional and detention
facilities. Mr. Vick graduated from Virginia Tech in 1970.
CHARLES A. BLANCHETTE was elected Vice President, Operations of the
Company in November 1996. In 1995, Mr. Blanchette was appointed Director of
Facility Start-Up for the Company and in 1996 was named Division Coordinator in
the Operations Department. Prior to his move to the corporate office, Mr.
Blanchette directed successful start-ups of the Leavenworth Detention Center in
1992 and Central Arizona Detention Center in 1994. From 1987 to 1995, he served
as warden for a number of the Company's correctional facilities. Prior to
joining the Company in 1987, Mr. Blanchette worked for 16 years with the Texas
Department of Corrections. Mr. Blanchette graduated from Alvin Community
College in Texas in 1974 and received specialized training from Texas A&M
University, the National Institute of Justice and the Federal Bureau of
Investigation.
DENNIS E. BRADBY has served as Vice President, Education Services of the
Company since June 1991. From April 1986 through June 1991, Mr. Bradby served
as the Company's Vice President, Operational Support Systems. From January 1986
through April 1986, Mr. Bradby served as the Facility Administrator of the
Company's Silverdale Facility and, from March 1984 through January 1986, as the
Facility Administrator of the Company's Houston Immigration Detention facility.
He served as Regional Manager of the Virginia State Department of Corrections
from 1977 through March 1984 and as the Assistant Superintendent of that
department from 1974 through 1978. Mr. Bradby also served as Assistant
Superintendent of the Juvenile Detention Facility in Norfolk, Virginia from 1973
through 1974. Mr. Bradby graduated from Norfolk State University in 1972.
LINDA G. COOPER joined the Company in April 1987 as Senior Legal
Counsel. In May 1988, she was elected Assistant Secretary for the Company and
in January 1989 became its Vice President, Legal Affairs. From December
1981 to March 1987, she served as Staff Attorney and then Deputy General Counsel
for the Kentucky Corrections Cabinet. Ms. Cooper received a Juris Doctor
degree from the University of Kentucky in 1979.
11
<PAGE> 15
SUSAN HART was elected Vice President, Communications in June 1996. From
1993 to 1996, she served as Director, Communications of the Company. From 1989
to 1993, she served as Director of Public Relations for the American Red Cross
Blood Services. Ms. Hart graduated from Auburn University in 1981 with a
major in Communications and became an accredited public relations practitioner
in 1990.
PEGGY W. LAWRENCE was elected Vice President, Investor Relations of the
Company in June 1995. From June 1989 to June 1995, she served as Vice
President, Communications for the Company and from March 1987 to June 1989, she
served as the Company's Director of Communications. From January 1985 to March
1987, she served as an account executive for Dye, Van Mol and Lawrence Public
Relations. From January 1980 to January 1985, Ms. Lawrence served as Vice
President, Research at Morgan Keegan & Co., an investment banking firm. Ms.
Lawrence graduated from the University of Tennessee at Knoxville in 1977 and
became a Chartered Financial Analyst in 1984.
JOHN D. REES was elected Vice President, Business Relations for the
Company in June 1994. From 1969 until 1986, when he joined the Company, Mr.
Rees served as warden of the Kentucky State Reformatory. Mr. Rees holds a
Bechelor of Arts degree from the University of Kentucky, with majors in
Criminology, Correctional Administration and Sociology, and a Master of
Science degree from Florida State University.
LINDA A. STALEY was elected Vice President, Project Development for the
Company in June 1994. She joined the Company in 1985 as Director, Project
Development. Prior to joining the Company, Ms. Staley spent 18 years working
for federal governmental agencies, including the Department of Justice and the
Immigration and Naturalization Service in the contracting and procurement
field. Ms. Staley attended Wayne State College, where she studied business
administration.
EMPLOYMENT AGREEMENT
The Company currently has an employment agreement with Mr. Crants which
expires on September 28, 1997. The agreement provides that Mr. Crants' base
salary is subject to increase at the discretion of the Compensation Committee.
In 1996, Mr. Crants' salary was increased to $344,230. The agreement also
provides for bonus compensation based on Mr. Crants' performance, which may be
awarded at the discretion of the Compensation Committee. The agreement also
provides that if Mr. Crants' employment is terminated for certain specified
reasons, he will receive a salary equal to one-half of the amount of his salary
at the time he is terminated through the remaining term of the agreement. The
Company has no other employment agreements with any of its executive officers.
12
<PAGE> 16
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid or accrued by the
Company during the three fiscal years ended December 31, 1994, 1995 and 1996 to
those persons who, as of December 31, 1996, were the Named Executive Officers.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
---------------------------------------- ----------------------------------------------------
Awards (1) Payouts
------------------------ ------------------------
Securities
Name and Restricted Underlying
Principal Other Annual Stock Options/ LTIP All Other
Position Year Salary Bonus Compensation Award(s) SARs(#) Payouts Compensation(2)
--------- ---- --------- -------- ------------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Doctor R. Crants 1996 $344,230 0 0 0 30,000 0 $7,350
Chairman of the Board 1995 $313,461 0 0 $2,370,000(1) 70,000 0 7,350
and Chief Executive 1994 $275,000 $155,375 $58,429(3) 0 0 0 7,350
Officer
Thomas W. Beasley 1996 $175,000 0 0 0 0 0 $4,750
Chairman Emeritus 1995 $175,000 0 0 0 0 0 4,625
1994 $175,000 $15,313 0 0 0 0 4,100
David L. Myers 1996 $190,206 0 0 0 12,000 0 $4,750
President 1995 $153,715 0 0 $1,000,000(1) 60,000 0 4,675
1994 $113,223 $9,375 0 0 0 0 3,651
Darrell K. Massengale 1996 $161,140 0 0 0 12,000 0 $6,540
Chief Financial Officer, 1995 $126,487 0 0 $300,000(1) 40,000 0 4,682
Secretary, Treasurer and 1994 $105,863 $8,250 0 0 0 0 3,662
Vice President, Finance
Gay Etheridge Vick, III 1996 $107,827 0 0 0 6,000 0 $2,860
Vice President, 1995 $102,965 0 0 0 20,000 0 3,902
International Operations; 1994 $ 95,397 $7,211 0 0 0 0 3,554
Managing Director,
CCA International
</TABLE>
(1) The Company does not currently maintain a formal "Long Term Incentive
Plan." The Company has entered into agreements to issue Deferred Stock
to the executive officers listed above in accordance with the Company's 1988
Stock Bonus Plan. Generally, under the terms of the agreements with the
executives, the deferred shares do not vest until the earliest of the following
dates: (i) 10 years after the date the shares are awarded to the executive;
(ii) in the event of the death or disability of such executive; or (iii) in the
event of a change in control of the Company as defined in the Deferred Stock
Bonus Agreements. Prior to vesting, the deferred shares will carry no voting or
dividend rights. The values set forth in the table above are as of the date of
grant.
(2) Amounts represent Company contributions to the ESOP, as calculated on
December 31 of each year.
(3) This amount reflects a gross-up for tax reimbursement.
13
<PAGE> 17
OPTION GRANTS IN 1996
The following table sets forth information concerning options to
purchase shares of the Company's Common Stock granted in 1996 to those persons
who, as of December 31, 1996, were the Named Executive Officers.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
------------------------------------------------------- ------------------------------
% of Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price Expiration 5% 10%
Name Granted (1) Year(2) ($/share)(3) Date ($) ($)
- ---- ----------- ----------- ------------ ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Mr. Crants 30,000 3.3% $26.75 3/25/2006 $504,678 $1,278,978
Mr. Beasley -0- 0% N/A N/A N/A N/A
Mr. Myers 12,000 1.3% $26.75 3/25/2006 $201,875 $ 511,591
Mr. Massengale 12,000 1.3% $26.75 3/25/2006 $201,875 $ 511,591
Mr. Vick 6,000 .7% $26.75 3/25/2006 $100,938 $ 255,796
</TABLE>
(1) The dollar amounts under these columns are the result of
calculations at the 5% and 10% rates set by the Securities and
Exchange Commission and therefore are not intended to forecast
possible future appreciation, if any, of the Common Stock
price.
(2) The percent of stock options granted to each Named Executive
Officer is based on the total number of stock options granted,
which amounted to 903,000 during 1996.
(3) All options granted to Named Executive Officers have exercise
prices equal to the fair market value (closing price per share
of Common Stock on the New York Stock Exchange on the date of
grant). The exercise price related to the exercise may be
paid by delivery of shares of Common Stock. All options
become exercisable beginning on the later of (a) the second
anniversary of initial employment by the Company or (b) the
first anniversary of the date of grant and may be exercised
until the earlier of (x) the tenth anniversary of the date of
grant, (y) the date the optionee ceases to be an employee or
director of the Company for any reason other than death or
disability, or (z) the first anniversary of the optionee's
death or disability.
14
<PAGE> 18
AGGREGATED OPTION EXERCISES IN 1996 AND YEAR-END VALUES
The following table sets forth information with respect to exercises of
options by the Named Executive Officers during 1996 pursuant to the Company's
stock option plans, and information with respect to unexercised options held by
the Named Executive Officers as of December 31, 1996.
<TABLE>
<CAPTION>
Number of Securities
Underlying
Unexercised Options Value of Unexercised
Number of Held at in-the-Money Options
Shares December 31, 1996 at December 31, 1996(2)
Acquired --------------------- -----------------------
On Value
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Crants 480,000 $ 7,810,000 370,000 30,000 $10,440,000 $112,500
Mr. Beasley -0- $ -0- 60,000 -0- $ 1,708,125 $ -0-
Mr. Myers -0- $ -0- 162,400 12,000 $ 4,924,450 $ 45,000
Mr. Massengale 9,600 $ 210,600 129,600 12,000 $ 3,561,363 $ 45,000
Mr. Vick 24,000 $ 532,500 96,400 6,000 $ 3,178,825 $ 22,500
</TABLE>
_________________
(1) These amounts represent the market value of the underlying
Common Stock on the date of exercise, less the applicable
exercise price.
(2) These amounts were calculated by subtracting the exercise
price from the market price of the underlying Common Stock as
of year end. The market value of the Common Stock was $30.50
per share as of December 31, 1996 (the last trading date in
1996) based on the closing price per share on the New York
Stock Exchange.
The Company has not awarded stock appreciation rights to any employee
and has no long term incentive plans, as that term is defined in regulations
promulgated by the Commission. The Company has various stock option plans (the
"Stock Option Plans"), an Incentive Compensation Plan (the "Incentive
Compensation Plan"), and the ESOP. The Company presently has no defined
benefit or actuarial plans covering any employees of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee is composed of three independent
non-employee directors. The Committee is responsible for setting and
administering the policies and programs that govern both annual compensation
and stock ownership programs for the executive officers of the Company. The
Company's executive compensation policy is based on principles designed to
ensure that an appropriate relationship exists between executive pay and
corporate performance while at the same time motivating and retaining executive
officers.
15
<PAGE> 19
COMPENSATION COMPONENTS
The key components of the Company's compensation program are base
salary, an annual incentive award and equity participation. These components
are administered with the goal of providing total compensation that is
competitive in the marketplace, rewards successful financial performance and
aligns executive officers' interests with those of stockholders. The
Compensation Committee reviews each component of executive compensation on an
annual basis.
In 1995 and 1994, the Committee engaged the independent consulting firm
of Arthur Andersen LLP ("Arthur Andersen") to further develop the compensation
program for the Company's executive officers. In evaluating the Company's
compensation program, Arthur Andersen assessed the current and planned
compensation of the Company's executive officers as compared to that of certain
of the companies in the index of peer companies which are used in the
performance graph on page 19 (the "1996 Peer Group"). The 1996 Peer Group
includes those companies in the security business who are direct competitors of
the Company and other regional service organizations with annual revenues and
capitalizations within a reasonable range of the Company's. The Committee
plans to continue to utilize the services of Arthur Andersen in reviewing
executive compensation.
BASE SALARY
In the first quarter of each fiscal year, the Compensation Committee,
along with the CEO of the Company, review and approve an annual salary plan for
the Company's executive officers. This salary plan is developed by the
Company's CEO with the aid of the Company's President. Many subjective factors
are included in determining base salaries such as the responsibilities borne by
the executive officer, the scope of the position, length of service with the
Company, corporate and individual performance, and the salaries paid by
companies in the 1996 Peer Group to officers in similar positions. While these
subjective factors are then integrated with other objective factors, including
net income, earnings per share, return on equity and growth of the Company, the
overall assessment is primarily a subjective one, intended to reflect the level
of responsibility and individual performance of the particular executive
officer. The Committee believes that executive officer base salaries in 1996,
as a whole, were lower than the average base salaries paid by companies in
the 1996 Peer Group.
CASH INCENTIVE PLAN
The Compensation Committee is of the view that a significant portion of
the total cash compensation for executive officers should be subject to the
attainment by the Company of specific earnings criteria. This approach creates
a direct incentive for executive officers to achieve desired performance goals
and places a significant percentage of each executive officers' compensation at
risk. Under the Company's Incentive Compensation Plan (the "Incentive Plan"),
adopted by the Compensation Committee on November 1, 1991, the executive
officers of the Company receive a cash bonus, based on a percentage of annual
base salary, in the event the Company achieves certain predetermined earnings
per share criteria. Participation in the Incentive Plan is limited to a select
16
<PAGE> 20
group of management who have a material impact on Company performance. The
participants are selected by the Compensation Committee and include the
executive officers and the wardens. The Compensation Committee establishes a
minimum target for earnings per share annually, and the level of attainment
of such target results in varying payouts. The Committee establishes the
potential bonuses and earnings per share criteria based on the Committee's
judgment as to desirable financial results for the Company and the appropriate
percentage of compensation which should be based on the attainment of such
results. In 1996, none of the quarterly earnings targets, grossed up for the
proposed bonuses, were met. Accordingly, no cash bonuses were paid in 1996.
STOCK INCENTIVE PLANS
The Compensation Committee believes that long-term equity incentives are
a key component of its executive compensation program. The Company's existing
stock option plans authorize the issuance of both incentive and non-qualified
stock options to officers, key employees and wardens of the Company. The
members of the Compensation Committee participate in the Directors' Plan, which
is administered by the Board of Directors and no member of the Compensation
Committee is eligible for the grant of an option under any other stock option
plan. Subject to the general limits prescribed by the Stock Incentive Plans,
the Compensation Committee has the authority to determine the individuals to
whom stock options are awarded and the terms of the options and the number of
shares subject to each option. Stock options are granted to executive officers
primarily based on the officers' actual and potential contribution to the
Company's growth and profitability as well as the practices of companies such
as those included in the 1996 Peer Group. The number of options granted by the
Committee is based on its judgment that this number is appropriate and
desirable considering employee's actual and potential contribution to the
Company. The assessment of actual and potential contribution is based on the
Committee's subjective evaluation of each executive officer's ability, skills,
efforts and leadership. Option grants are designed to retain executive
officers and motivate them to enhance stockholder value by aligning the
financial interest of executive officers with those of stockholders. Stock
options also provide an effective incentive for management to create
stockholder value over the long term since the full benefit of the compensation
package cannot be realized unless an appreciation in the price of the Company's
Common Stock occurs over a number of years.
The Committee has determined that in addition to stock options, the
Company should have the flexibility to issue other stock-based incentives as
are included in the Company's Stock Bonus Plan and the Company's 1995 Employee
Stock Incentive Plan, including without limitation, stock appreciation rights,
restricted stock, deferred stock, stock purchase rights and/or other
stock-based awards. In 1995, the Committee authorized deferred share
agreements with the Chief Executive Officer and certain other key employees
providing for the potential issuance of a maximum of 337,024 shares of the
Company's Common Stock. The deferred shares do not vest until ten years from
the date of grant. The deferred stock will carry no voting rights or dividend
rights until such time as the stock is actually issued. The Committee entered
into the deferred share agreements in recognition of the significant efforts
expended by these officers to consummate certain acquisitions in 1994 and 1995
and to position the Company as the leading provider of private prison
management.
17
<PAGE> 21
Executive officers of the Company may also participate in the ESOP.
Executive officers participate in the ESOP on the same terms as non-executive
employees who meet the applicable eligibility criteria, subject to any legal
limitations on the amounts that may be contributed or the benefits that may be
payable under the ESOP. The Company makes contributions to the ESOP on behalf
of the employees and also matches employee contributions up to certain levels.
Benefits, which become 40% vested over four years of service and 100% vested
over five years of service, are paid on death, retirement or termination. All
contributions to the ESOP are made or invested in the Company's Common Stock.
The Committee believes that these features tend to further align the employees'
and stockholders' long-term financial interests.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee's basis for compensation of the CEO is
derived from the same considerations addressed above. Mr. Crants participates
in the same executive compensation plans available to the other executive
officers. In 1996, the Compensation Committee increased the salary of Mr.
Crants from $325,000 to $350,000 and granted Mr. Crants incentive stock
options to purchase 30,000 shares of Common Stock. The compensation levels
established for Mr. Crants were determined by the Committee based on its
judgment that these levels were appropriate and desirable in light of his
actual and potential contribution to the Company. The assessment of actual and
potential contributions was based on the Committee's subjective evaluation of
Mr. Crants' abilities, skills, efforts and continued leadership.
FEDERAL INCOME TAX DEDUCTIBILITY LIMITATIONS
The Committee intends to structure future compensation so that
executive compensation paid by the Company is fully deductible in accordance
with Section 162(m) of the Internal Revenue Code, as amended (the "Code"), which
generally disallows a tax deduction to public companies for compensation over
$1 million paid to certain executive officers unless certain conditions are
met.
SUMMARY
The Committee believes that the mix of base salaries, variable cash
incentives and the potential for equity ownership in the Company represents a
balance that will motivate the management team to continue to produce strong
returns. The Committee further believes this program strikes an appropriate
balance between the interests and needs of the Company in operating its
business and appropriate rewards based on stockholder value.
Submitted by the Compensation Committee of the Company's Board of
Directors.
William F. Andrews, Chairman
Samuel W. Bartholomew, Jr., Member
R. Clayton McWhorter, Member
18
<PAGE> 22
PERFORMANCE GRAPH
The following line graph is a comparison for the period of five years
commencing with the year ended December 31, 1992 through the year ended December
31, 1996, as prepared by Arthur Andersen LLP, of the yearly percentage change in
the cumulative total stockholder return on the Company Common Stock with the
cumulative total return of the Standard & Poor's 500 Composite Index and a Peer
Group Index consisting of companies that are either direct competitors of the
Company or other regional service organizations with similar market
capitalization to the Company. The Board of Directors believes that these
companies generally possess assets, liabilities and operations more similar to
those of the Company than other publicly-available indices.
[GRAPH INSERTED HERE]
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CCA $100.00 $104.95 $137.39 $246.16 $1,133.48 $1,862.42
Peer Group* $100.00 $110.90 $ 84.28 $ 93.23 $ 151.69 $ 169.98
S&P 500 Composite $100.00 $107.61 $118.41 $120.01 $ 165.12 $ 203.04
</TABLE>
_______________
* The Peer Group includes AMRESCO, Chattem, Inc., Command Security
Corporation, Correctional Services Corp. (formerly Esmor Corporation),
Hospital Staffing Services, Inc., Insituform Technology, Inc., Nichols
Research Corporation, Phycor, Inc., Pinkertons, Inc., Proffitts, Inc.,
Republic Automotive Parts, Inc., and Wackenhut Corrections. Medalliance
and Ren-Corporation-USA were members of the Company's Peer Group in 1995
but were not included in this year's Peer Group because stock in those
companies is no longer traded publicly, effective November 1995.
19
<PAGE> 23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1994, the Company entered into an international strategic
alliance with Sodexho, a French conglomerate, for the purpose of pursuing prison
management business outside the United States. In connection with the formation
of the 1994 international alliance, Sodexho purchased 2,800,000 shares of Common
Stock at $3.75 per share and a $7,000,000 Convertible Subordinated Note bearing
interest at 8.5% with a conversion price, as adjusted of $3.58 per share. In
consideration of Sodexho's agreement to enter into the international strategic
alliance with the Company, the Company, among other things, (i) entered into a
forward contract pursuant to which Sodexho is entitled to purchase at any time
on or before December 31, 1997, up to $20,000,000 aggregate principal amount of
the Company's convertible subordinated notes bearing interest at LIBOR plus
1.35%, with a conversion price, as adjusted, of $6.875 per share, and (ii)
granted Sodexho a presently exercisable warrant expiring on December 31, 1998,
covering 4,400,000 shares of Common Stock with an exercise price, as adjusted,
of $3.95 per share. In December 1996, in connection with Sodexho's purchase of
shares in UK Detention Services, a joint venture owned by the Company, the
Company agreed to extend the expiration date of the warrants to December 31,
1999. In June 1995, as a result of its preemptive right triggered in connection
with the issuance of shares of Common Stock to the stockholders of Concept
Incorporated, Sodexho purchased 1,090,000 shares of Common Stock from the
Company at a purchase price of $7.625 per share. In April 1996, as a result of
its preemptive right triggered in connection with the issuance of 7.5%
convertible notes, Sodexho purchased $30,000,000 in convertible notes from the
Company. The notes bear interest at 7.5% payable quarterly and are convertible
into shares of the Company's Common Stock at a conversion price, as adjusted, of
$25.91 per share.
Sodexho has also agreed to limit its ownership interest in the Company
to 25% (or 30% in certain limited circumstances) through June 23, 1999, subject
to earlier termination upon the occurrence of a change in control (the
"Standstill Period"). A change in control is defined as: (i) a party acquiring
more than 20% of the Common Stock; (ii) a 10% stockholder publicly announcing
an intent to commence a tender offer for the Company; (iii) the termination of
Doctor R. Crants as the Company's chief executive officer or the failure by
Doctor R. Crants to own at least 2% of the Common Stock; (iv) if the Company's
Board of Directors shall no longer consist of a majority of Continuing
Directors; or (v) an acquirer shall publicly announce an intent to commence a
tender offer and the Company's Board publicly recommending that the
stockholders accept such tender offer. "Continuing Directors" means the
directors of the Company as of June 23, 1994 and each other director, if such
other director's nomination for election to the Board of Directors of the
Company is recommended by a majority of the then Continuing Directors.
During the Standstill Period, Sodexho has agreed to vote its Common
Stock in the same fashion as either the Company's public stockholders or the
Company's Board of Directors, at Sodexho's option, on the election of directors
and certain other matters. Sodexho has also agreed that during the Standstill
Period, it will not solicit proxies under any circumstances, or become a
participant in any election contest, or make an offer for the acquisition of
substantially all of the assets or capital stock of the Company or induce or
assist any other person to make such an offer. Until Sodexho's ownership in
the Company is reduced to below 400,000 shares of Common Stock, Sodexho has the
right to nominate one member to the Company's Board of Directors and, without
Sodexho's consent, the Company may not increase the number of directors on the
Company's Board of Directors to eight or more. In addition, Sodexho has a
preemptive right to purchase additional
20
<PAGE> 24
shares of Common Stock or securities convertible into or exchangeable for Common
Stock in any issuance of securities by the Company in any amount necessary to
enable Sodexho to maintain a percentage ownership in the Company equal to 20% of
the Common Stock on a fully diluted basis. The Company plans to use the
proceeds from these future financings to fund new capital projects. In
consideration of the placement of the aforementioned securities and these future
financings, the Company agreed to pay Sodexho $3,960,000 over a four-year period
ending in 1998.
Stokes & Bartholomew, P.A., of which Mr. Bartholomew is a partner,
provided legal services to the Company in 1996, and it is anticipated that
Stokes & Bartholomew, P.A. will provide legal services to the Company in 1997.
The fees paid in 1996 by the Company in connection with such legal services
were $683,000.
PROPOSAL 2 - APPROVAL OF AMENDMENT TO COMPANY'S
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
On November 1, 1996, the Board of Directors adopted, subject to
stockholder approval, the Amendments, to: (i) increase the number of shares of
Common Stock reserved for issuance under the Directors' Plan from an aggregate
of 600,000 shares to an aggregate of 900,000 shares; (ii) extend the term for
which non-employee directors are to receive stock options by six (6) years; and
(iii) provide for the amendment of the Directors' Plan at the sole discretion
of the Company's Board of Directors.
The following is a brief description of the material terms of the
Directors' Plan, as amended. Such description is qualified in its entirety by
reference to the full text of the Directors' Plan and the Directors' Plan
Amendments which are attached hereto as Appendix A(1) and Appendix A(2),
respectively.
PURPOSE. The purpose of the Directors' Plan is to maintain the
Company's ability to attract and retain the services of experienced and highly
qualified non-employee directors and to enhance long-term stockholder value by
more closely aligning the interests of non-employee directors with those of the
stockholders.
TERM. The Directors' Plan will terminate on November 1, 2002 (unless
terminated by the Board of Directors at an earlier date).
STOCK SUBJECT TO DIRECTORS' PLAN. Currently, the Company has
authorized and reserved for issuance upon the exercise of stock options granted
under the Directors' Plan, an aggregate of 600,000 shares of Common Stock. As
of the Record Date, stock options exercisable to purchase all 600,000 shares
of Common Stock so authorized and reserved had been granted.
The pertinent proposed amendment, if approved, would increase the
number of shares reserved for issuance to an aggregate of 900,000 shares.
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ADMINISTRATION. The Directors' Plan is administered by the Board of
Directors, who are authorized to interpret the Directors' Plan.
ELIGIBILITY. All non-employee directors are (as defined in the
Directors' Plan) of the Company or any of its subsidiaries, are eligible to
participate in the Directors' Plan. Currently, five directors qualify to
participate in the Directors' Plan.
GRANT OF OPTIONS. Currently, the Directors' Plan provides that on
each of the four anniversary dates of the adoption of the Directors' Plan by the
Board of Directors (November 1, 1992), each person who is a non-employee
director on the date of adoption of the Directors' Plan shall receive an option
to purchase 7,500 shares of the Company's Common Stock. The pertinent proposed
amendment, if approved, would extend that period to ten-years. The exercise
price of the options shall equal the fair market value of the Company's Common
Stock determined by the last quoted sales price on the NYSE on the date of
grant. Shares subject to options which terminate or expire unexercised will be
available for future option grants. The total number of shares subject to the
Directors' Plan and the number covered under each individual option is subject
to automatic adjustment in the event of stock dividends, recapitalizations,
mergers, consolidations, split-ups, combinations or exchanges of shares and the
like, as determined by the Board of Directors.
The option price shall be payable in United States dollars immediately
upon the exercise of the option and may be paid in cash or by check. The stock
may also be purchased with previously issued Common Stock valued as of the date
of exercise of option, or a combination of cash and stock.
TRANSFER OF OPTIONS. A non-employee director may not
transfer options granted pursuant to the Directors' Plan, otherwise than by will
or the laws of descent and distribution.
VESTING. Pursuant to the terms of the Directors' Plan, the Board of
Directors may grant options to non-employee directors that are exercisable
immediately after grant. If any non-employee director ceases to be a director
as a result of death or total disability while holding an option that has not
expired and has not been fully exercised, such person or such person's
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executors, administrators, heirs, personal representative, conservator, or
distributees may, at any time within six months after the date of such death or
total disability, exercise the option in its entirety with respect to all
remaining shares covered by that option.
FEDERAL INCOME TAX CONSEQUENCES. The options granted pursuant to
the Directors' Plan are nonstatutory options intended not to qualify
under Section 422 of the Code. The grant of options will not result in taxable
income to the non-employee director or a tax deduction to the Company. The
exercise of an option by a non-employee director will result in taxable
ordinary income to the non-employee director and a corresponding deduction for
the Company, in each case equal to the difference between the option price and
the fair market value of the shares on the date the option is exercised. The
date for recognition and determination of ordinary income attributable to the
exercise may be delayed for up to six months if the holder is subject to
Section 16(b) of the Exchange Act at the time of the exercise and has not
elected to be taxed as of the date of exercise.
AMENDMENT OF DIRECTORS' PLAN. Currently, the Board may amend the
Directors' Plan as it shall deem advisable but may not, without further
stockholder approval, increase the maximum number of shares under the Plan or
options granted thereunder, reduce the minimum option price, extend the period
during which options may be granted or exercised, or change the class of
persons eligible to receive options. The pertinent proposed amendment, if
approved, would give the Board of Directors the authority to amend the
Directors' Plan at any time, in its sole discretion, without stockholder
approval; provided, however, that the Board may not amend the Directors' Plan
in any manner that will materially change or impair an option previously
granted, without the consent of each affected Non-Employee Director.
DIRECTORS' PLAN BENEFITS TABLE
The following table presents information regarding stock options
granted under the Directors' Plan to non-employee directors as a group for the
fiscal year ended December 31, 1996.
<TABLE>
<CAPTION>
Number of Shares
Name and Position Dollar Value Subject to Options
- ----------------- ------------ ------------------
<S> <C> <C>
Non-employee Director Group (5 individuals) $243,750 210,000
</TABLE>
The dollar value shown above was calculated based on the difference between
the exercise price of the stock options and the $27.50 per share closing price
of the Common Stock on the New York Stock Exchange on the Record Date.
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REASONS FOR DIRECTORS' PLAN AMENDMENTS
Management believes that the grant of options to purchase Common Stock
is necessary to assist the Company in its efforts to attract, retain and
motivate non-employee directors. However, as of the Record Date, the Company
had granted stock options for non-employee directors exercisable to purchase
all 600,000 shares of Common Stock currently authorized and reserved for
issuance pursuant to the Directors' Plan. Accordingly, the proposed amendments
to increase the Common Stock available for issuance and the extension of the
term for which non-employee directors are to receive stock options are
necessary to allow the Company to meet its foreseeable future needs for stock
option grants under the Directors' Plan.
The purpose of the remaining amendment is to conform the Directors'
Plan to the requirements of Section 16(b) of the Exchange Act. The Commission
amended Section 16 of the Exchange Act, effective November 1, 1996, to
modernize and simplify its requirements. The Board of Directors, therefore,
determined that these amendments should be proposed to the stockholders for
their approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF EACH OF THE
DIRECTORS' PLAN AMENDMENTS. SHARES OF COMMON STOCK COVERED BY PROXIES EXECUTED
AND RECEIVED IN THE ACCOMPANYING FORM WILL BE VOTED IN FAVOR OF EACH OF
THE DIRECTORS' PLAN AMENDMENTS, UNLESS OTHERWISE SPECIFIED IN THE PROXY.
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PROPOSAL 3 - CHANGING THE COMPANY'S
STATE OF INCORPORATION FROM DELAWARE TO TENNESSEE
PURSUANT TO AN AGREEMENT AND PLAN OF MERGER
On February 19, 1997, the Board of Directors adopted resolutions
approving and recommending to the stockholders for their approval the form of
Plan of Merger attached to this Proxy Statement as Appendix B, pursuant to
which the Company will be merged with and into CCA of Tennessee, Inc., a
newly-formed Tennessee corporation (the "Tennessee Company"). Under the terms
of the Merger, each outstanding share of the Company's Common Stock, $1.00 par
value per share outstanding, will be converted into one share of the Tennessee
Company's Common Stock, $1.00 par value per share.
The principal purposes of the Merger are (i) to change the state of
incorporation of the Company from Delaware to Tennessee and (ii) to eliminate
Delaware franchise taxes. The Merger will not involve any change in the
business, properties, management or capital structure of the Company. Upon the
effective date of the Merger, the Tennessee Company will be the continuing
corporation and will own all of the assets and will be responsible for all of
the liabilities of the Company. The Tennessee Company will continue the
Company's business under the name Corrections Corporation of America and the
Delaware corporation will cease to exist.
The Company's principal place of business and its corporate headquarters
are in Tennessee. In addition, in 1988, the State of Tennessee adopted a
comprehensive, modern and flexible version of the Model Business Corporation
Act. As a result, the prior advantages to the Company having its principal
place of business in Tennessee and being incorporated under the laws of the
State of Delaware have been significantly lessened. Delaware law does not
provide for the equivalent of Tennessee's Control Share Acquisition Law,
designed to protect Tennessee corporations from certain takeover attempts.
Stockholders should be aware, however, that the Tennessee courts have not
developed the expertise in dealing with corporate issues possessed by the
Delaware courts. Further, Tennessee has not developed the substantial body of
case law construing the Tennessee Business Corporation Act (the "TBCA"), and its
laws are not well-known or as generally understood as the Delaware General
Corporation Law (the "DGCL"). The Board of Directors believes that the
advantages of the Merger to the Company and its stockholders outweigh its
possible disadvantages.
Because the Company is incorporated under the laws of Delaware, it is
subject to Delaware franchise tax. The Delaware franchise tax generally may be
calculated by either of two methods. Under the first method, the amount of tax
is determined by applying the applicable tax rates to the number of a
corporation's authorized shares. Under the second method, the amount of the
tax is determined by applying the applicable tax rates (which differ from those
under the first method) by the "assumed par-value capital" with respect to a
corporation's authorized shares. The "assumed par-value capital" with respect
to a corporation's authorized shares is calculated generally by dividing the
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<PAGE> 29
amount of a corporation's gross assets by the number of outstanding shares,
then multiplying the result by the number of authorized shares. The maximum
amount of tax for any year is $150,000. For the years 1995 and 1996, the
Company was assessed $105,000 in Delaware franchise taxes and anticipates that
it would be assessed $150,000 in Delaware franchise taxes in 1997 under either
of the methods discussed above. Tennessee imposes a franchise tax on any
corporation that does business in Tennessee, regardless of the state of its
incorporation. Accordingly, the Merger will eliminate Delaware franchise tax
and not increase the amount of Tennessee franchise taxes paid by the Tennessee
Company. Further, the Company is required to qualify to do business in
Tennessee. This two-state expense occurs every year, since reporting
and filing fees are due annually in each state. Also, under Delaware law, the
Company is required to maintain an in-state agent for service of process.
RESULTS OF THE CHANGE TO TENNESSEE INCORPORATION
Summarized below are the principal differences between the TBCA and the
DGCL which may affect the interests of stockholders. This summary does not
purport to be a complete statement of the differences between the TBCA and the
DGCL and related laws affecting stockholders' rights, and the summary is
qualified in its entirety by reference to the provisions of these laws.
Stockholders of the Company are advised to consult with their own legal counsel
regarding all such matters.
Business Combination: The DGCL prohibits business combinations, such
as mergers, consolidations, asset purchases and other transactions, for a
period of three years where the transaction is with a corporation subject to
the provisions thereof, such as the Company, and where the acquiror became an
"interested stockholder" of the corporation before the date of the transaction
unless (i) prior to the date of the transaction the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, or (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned by persons who are directors and also officers
and employee stock plans in which employee participants do not have the right
to determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer, or (iii) on or subsequent to the date
of the transaction the business combination is approved by the board of
directors and authorized at an annual or special meeting of stockholders by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the "interested stockholder."
In this context, an "interested stockholder" is any person (other than
the corporation and any direct or indirect majority-owned subsidiary of the
corporation) who directly or indirectly, alone or in concert with others,
beneficially owns or controls 15% or more of the voting stock of the
corporation. The DGCL prohibits business combinations with an unapproved
interested stockholder for a period of three years after the date on which the
person became an interested stockholder. The DGCL is very broad in its scope
but it does not apply to corporations whose certificate of incorporation or
bylaws contain a provision not to be covered by this section. The Company's
Bylaws do not have such a provision.
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Tennessee's Business Combination Act (the "Business Combination Act")
provides that a party owning 10% or more of stock in a "resident domestic
corporation" (such party is called an "interested stockholder") cannot engage
in a business combination with the resident domestic corporation unless the
combination (i) takes place at least five years after the interested
stockholder first acquired 10% or more of the resident domestic corporation,
and (ii) either (A) is approved by at least two-thirds of the non-interested
voting shares of the resident domestic corporation or (B) satisfies certain
fairness conditions specified in the Business Combination Act.
These provisions apply unless one of two events occurs. A business
combination with an entity can proceed without delay when approved by the
target corporation's board of directors before that entity becomes an
interested stockholder, or the resident corporation may enact a charter
amendment or bylaw to remove itself entirely from the Business Combination Act.
This charter amendment or bylaw must be approved by a majority of the
stockholders who have held shares for more than one year prior to the vote. It
may not take effect for at least two years after the vote. The Tennessee
Company has not adopted a provision in its Charter or Bylaws removing it from
coverage under the Business Combination Act.
The Business Combination Act further provides an exemption from
liability for officers and directors of resident domestic corporations who do
not approve proposed business combinations or charter amendments and bylaws
removing their corporations from the Business Combination Act's coverage as
long as the officers and directors act in "good faith belief" that the proposed
business combination would adversely affect their corporation's employees,
customers, suppliers, or the communities in which their corporation operates
and such factors are permitted to be considered by the board of directors under
the charter. The Tennessee Company does not provide for these
factors to be considered. The United States Court of Appeals for the Sixth
Circuit has held that the Tennessee Business Combination Act is
unconstitutional as it applies to target corporations organized under the laws
of states other than Tennessee.
Control Share Acquisition: The Tennessee Control Share Acquisition Act
(the "TCSAA") strips a purchaser's shares of voting rights any time an
acquisition of shares in a Tennessee corporation brings the purchaser's voting
power to each of the one-fifth, one-third and a majority level of all voting
power if such corporation's charter or bylaws contain an election that shares of
that corporation be governed by the TCSAA. The purchaser's voting rights can be
re-established only by an affirmative majority vote of the other stockholders.
The purchaser may demand a special meeting of stockholders to conduct such a
vote. The purchaser can demand such a meeting before acquiring a control share
(i.e., reaching any and each of the aforementioned levels of share ownership)
only if it holds at least 10% of outstanding shares and announces a good faith
intention to make the control share acquisition. A target corporation may elect
to redeem the purchaser's shares if the shares are not granted voting rights.
The TCSAA applies only to corporations that have adopted a provision in its
Charter or Bylaws expressly declaring that the TCSAA will apply. The Tennessee
Company has adopted a provision in its Charter electing protection under the
TCSAA. The United States Court of Appeals for the Sixth Circuit, however, has
held that the TCSAA is unconstitutional as it applies to target corporations
organized under the laws of states other than Tennessee.
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The DGCL contains no similar provisions with respect to control share
acquisitions.
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<PAGE> 32
Greenmail: The Tennessee Greenmail Act (the "TGA") applies to any
corporation chartered under the laws of Tennessee which has a class of voting
stock registered or traded on a national securities exchange or registered with
the Commission pursuant to Section 12(g) of the Exchange Act. The TGA provides
that it is unlawful for any corporation or subsidiary to purchase, either
directly or indirectly, any of its shares at a price above the market value, as
defined in the TGA, from any person who holds more than 3% of the class of the
securities purchased if such person has held such shares for less than two
years, unless either the purchase is first approved by the affirmative vote of
a majority of the outstanding shares of each class of voting stock issued or
the corporation makes an offer of at least equal value per share to all holders
of shares of such class.
The DGCL contains no similar provision with respect to Greenmail.
Other Constituencies: The TBCA provides that no resident domestic
corporation having any class of voting stock registered or traded on a national
securities exchange or registered with the Commission pursuant to Section 12(g)
of the Exchange Act nor any of its officers or directors may be held liable at
law or in equity for either having failed to approve the acquisition of shares
by an interested stockholder on or before the date such stockholder became an
interested stockholder, or for seeking to enforce or implement the provisions of
the Tennessee Anti-Takeover Acts (Chapter 103 of Title 48 of the Tennessee Code)
or for failing to adopt or recommend any charter or bylaw amendment or provision
in respect of any one or more of the Tennessee Anti-Takeover Acts, or for
opposing any merger, exchange, tender offer or significant disposition of assets
of the resident domestic corporation or any subsidiary of such corporation
because of a good faith belief that such merger, exchange, tender offer or
significant disposition of assets would adversely affect the corporation's
employees, customers, suppliers, the communities in which the corporation
operates or are located or any other relevant factor if such factors are
permitted to be considered by the board of directors under the corporation's
charter in connection with the merger, exchange, tender offer or significant
disposition of assets.
The DGCL does not have a comparable statutory provision.
Dividends and Other Distributions: The DGCL generally allows dividends
to be paid out of "surplus" of the Company or, if there is no surplus, out of
the net profits of the Company for the current fiscal year and/or the prior
fiscal year. No dividends may be paid if they would result in the capital of
the Company being less than the capital represented by the preferred stock of
the Company.
The TBCA provides that the Tennessee Company generally may make
dividends or other distributions to its stockholders unless after the
distribution either (i) the Tennessee Company would not be able to pay its
debts as they become due in the usual course of business or (ii) the Tennessee
Company's assets would be less than the sum of its liabilities plus the amount
that would be needed to satisfy the preferential dissolution rights of its
preferred stock.
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Dissenters' Rights: The DGCL provides appraisal rights for certain
mergers and consolidations. Appraisal rights are not available to holders of
(i) shares listed on a national securities exchange or a national market system
or held of record by more than 2,000 stockholders or (ii) shares of the
surviving corporation of the merger, if the merger did not require the approval
of the stockholders of such corporation, unless in either case, the holders of
such stock are required pursuant to the merger to accept anything other than
(A) shares of stock of the surviving corporation, (B) shares of stock of
another corporation which are also listed on a national securities exchange or
held by more than 2,000 holders, or (C) cash in lieu of fractional shares of
such stock, or any combination thereof. Given that the Company's Common Stock
is listed on the NYSE and holders of the Company's Common Stock are required by
the terms of the Merger Agreement to accept in exchange for their shares of the
Company's Common Stock only shares of the Tennessee Company's Common Stock,
appraisal rights are not available to the Company's stockholders with respect
to the Merger.
The TBCA generally provides dissenters' rights for mergers and share
exchanges that would require stockholder approval, sales of substantially all
the assets (other than sales that are in the usual and regular course of
business and certain liquidations and court-ordered sales), and certain
amendments to the charter that materially and adversely affect rights in
respect of a dissenter's shares. Dissenters' rights are not available as to
any shares which are listed on an exchange registered under Section 6 of the
Exchange Act or are "national market system" securities as defined in rules
promulgated pursuant to the Exchange Act. The Tennessee Company's Common
Stock will be listed on the NYSE and dissenters' rights are not available to
the Tennessee Company's stockholders with respect to future mergers. Since the
Tennessee Company will have only one stockholder at the time of the Merger,
dissenters' rights are not applicable to the Merger.
SUMMARY OF PROVISIONS OF THE TENNESSEE COMPANY'S CHARTER AND BYLAWS
In addition to the changes in stockholders' rights resulting in the
change from Delaware to Tennessee law, the Company's Certificate of
Incorporation and Bylaws contain certain differences from the Tennessee
Company's Charter. This summary does not purport to be a complete statement of
the differences between the Company's Certificate of Incorporation and the
Tennessee Company's Charter, and the summary is qualified in its entirety by
reference to the provisions of these documents. Stockholders of the Company
are advised to consult with their own legal counsel regarding all such matters.
The Charter of the Tennessee Company provides that the Tennessee
Company is to be governed by the provision of the Tennessee Control Share Act,
and that the vote of stockholders required to alter, amend or repeal the
provision, or to alter, amend or repeal any of the other provisions of the
Charter, in any respect, which would or might have the effect, direct or
indirect, of modifying, permitting any action inconsistent with, or permitting
circumvention of the section, shall be by the affirmative vote of at least
eighty percent (80%) of the total voting power of all shares of stock of the
Tennessee Company entitled to vote in the election of directors.
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The Company's Certificate of Incorporation contains no similar
provision.
The Bylaws of the Tennessee Company provide that one or more directors
may be removed with or without cause by a vote of sixty-six and two-thirds
percent (66 2/3%) of the stockholders, or with cause by a vote of a majority of
the numbers of directors then prescribed. A director may be removed only at a
meeting called for such purpose, and the notice of the meeting must state that
the purpose, or one of the purposes, of the meeting is the removal of a
director or directors.
The Company's Bylaws provide that any director may be removed from
office, with or without cause, upon the majority vote of the stockholders, at a
meeting with respect to which notice of such purpose is given.
The Tennessee Company's Bylaws provide specific provisions for the
establishment of an Executive Committee and other committees by the Board of
Directors upon a vote of the majority of the directors then in office. Subject
to any specific directions or restrictions given by the Board of Directors, the
committees may exercise all the authority of the Board of Directors, except for
authority forbidden by the Bylaws.
The Company's Bylaws make no special provisions for Executive or other
committees of the Board of Directors.
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The Bylaws of the Tennessee Company provide that to the fullest extent
allowed by law, a director shall be, in the performance of his or her duties,
protected and relying in good faith upon information, opinions, reports, or
statements, including financial statements and other financial data, if
prepared or presented by (i) one or more officers or employees of the Tennessee
Company whom the director reasonably believes to be reliable and competent in
the matters presented; (ii) legal counsel, public accountants, or other persons
as to the matters the directors reasonably believe are within the person's
professional or expert competence; or (iii) a committee of the Board of
Directors of which he or she is not a member, if the director reasonably
believes the committee merits confidence. This provision is in addition to any
protection offered by other provisions in the Charter and Bylaws regarding
indemnification of members of the Board of Directors.
The Bylaws of the Company do not provide for special provision on the
reliance upon information, opinions, reports, or statements above and beyond
the indemnification provisions contained in the Company's Certificate of
Incorporation and Bylaws.
The discussion contained in this Proxy Statement is qualified in its
entirety by reference to the Agreement and Plan of Merger, a form of which is
attached hereto as Appendix B, and to the Charter and Bylaws of the Tennessee
Company, forms of which are attached hereto as Appendices C and D.
EFFECT OF STOCKHOLDER RIGHTS PROVISIONS
The TBCA and the Tennessee Company's Charter and Bylaws contain certain
measures that would protect the interests of all stockholders and discourage
abusive takeover practices as described herein (the "Stockholder Rights
Provisions").
The Stockholder Rights Provisions have both advantages and disadvantages
to the stockholders. The Stockholder Rights Provisions cannot, and are not
intended to, prevent a purchase of all or a majority of the equity securities of
the Company, nor are they intended to deter bids or other efforts to acquire
such securities. Rather, the Stockholder Rights Provisions are intended to
discourage disruptive tactics and takeovers at unfair prices or on terms that do
not provide all stockholders with the opportunity to sell their stock at a fair
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<PAGE> 36
price. The Stockholder Rights Provisions are intended to encourage
third-parties who may seek to acquire control of the Tennessee Company, to
initiate such an acquisition through negotiations directly with the Board of
Directors. The Board of Directors believes that it will be in the best
position to protect the interests of all of the stockholders and negotiate a
fair price.
Although these Stockholder Rights Provisions are intended to encourage
persons seeking to acquire control of the Company to initiate such an
acquisition through arm's length negotiations with the Board of Directors, the
effect of these provisions may be to discourage a third-party from making a
tender offer, or otherwise attempting to obtain a substantial position in the
equity securities of the Company, even though some or a majority of the
Company's stockholders might believe such actions to be beneficial.
Moreover, to the extent that any potential third-party acquirers are
deterred by the Stockholder Rights Provisions, such provisions may have the
effect of preserving the incumbent management in office. The proposed
Stockholder Rights Provisions may also serve to benefit incumbent management by
making it more difficult to remove management, even when the only reason for
the proposed change may be the unsatisfactory performance of the present
directors.
Takeovers or changes in the board of directors of a company that are
proposed and effected without prior consultation and negotiations with the
company are not necessarily detrimental to such company and its stockholders.
However, the Board of Directors believes that the benefits of seeking to
protect the ability of the Company to negotiate effectively through directors
who have previously been elected by the stockholders and who are familiar with
the Company outweigh any disadvantage of discouraging such unsolicited attempts
to acquire the Company.
The Stockholder Rights Provisions are not being proposed in response to
Management's knowledge of any specific attempt to accumulate the Company's
securities or to obtain control of the Company. Moreover, the Board of Directors
does not currently contemplate any other action designed to affect the ability
of third parties to take over or change control of the Company.
THE MERGER
It is presently anticipated that the date on which the Merger will be
consummated (the "Effective Date of the Merger") will be May 13, 1997 or as
soon thereafter as practicable. However, the Board of Directors of the Company
has reserved the right to abandon the Merger prior to the Effective Date of the
Merger. See " Proposal 3 -- Changing the Company's State of Incorporation from
Delaware to Tennessee Pursuant to an Agreement and Plan of Merger --
Termination."
Upon the Effective Date of the Merger, each share of Common Stock of
the Company will be converted automatically into one share of Common Stock of
the Tennessee Company and thereafter the outstanding certificates for shares of
the Company's Common Stock will represent the same number of shares of Common
Stock of the Tennessee Company. Any shares of stock owned by the Tennessee
Company's incorporator and/or directors immediately prior to the Effective
Date of the Merger shall be repurchased by the Tennessee Company and such
shares shall be canceled. The Company's existing stock certificates will
be deemed to represent the same number of the Tennessee Company's shares as
were represented by the existing stock certificates prior to the Merger and IT
WILL NOT BE NECESSARY FOR STOCKHOLDERS TO EXCHANGE THEIR EXISTING STOCK
CERTIFICATES FOR NEW STOCK CERTIFICATES. Following the Merger, previously
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outstanding stock certificates will constitute "good delivery" in connection
with sales through a broker, or otherwise, of shares of the Tennessee Company.
The Tennessee Company Common Stock will be listed on the New York Stock
Exchange as the Common Stock of the Company is presently listed.
Pursuant to the Plan of Merger, each option, warrant or right to
purchase a share of the Company's Common Stock outstanding immediately prior to
the Effective Date of the Merger will become an option, warrant or right to
purchase a share of the Tennessee Company's Common Stock upon the same terms
and conditions as existed immediately prior to the Effective Date of the
Merger. Future options, warrants and rights, if any, granted under the
Company's option plans or otherwise will be for shares of the Tennessee
Company's Common Stock.
The foregoing objectives will be accomplished through a "migratory
merger", some of the principal features of which are as follows:
(1) The Company will be merged into the Tennessee Company, which
will be the survivor of the Merger.
(2) The Merger is not intended to effect any change in the
business, property, management or capitalization of the Company.
(3) Each share of the Company's Common Stock issued and
outstanding on the Effective Date of the Merger will automatically become one
share of Common Stock of the Tennessee Company.
(4) For Federal income tax purposes, no gain or loss will be
recognized by the Company's stockholders.
(5) The Tennessee Company will succeed to the business of the
Company, and the stockholders of the Company will become stockholders of the
Tennessee Company.
(6) The rights of the Company's stockholders, who upon
consummation of the Merger will become stockholders of the Tennessee Company,
will be governed by the laws of the State of Tennessee and by the terms and
provisions of the Charter and Bylaws of the Tennessee Company.
(7) The officers and directors serving the Company on the
Effective Date of the Merger will thereupon hold the same offices with the
Tennessee Company.
FEDERAL TAX CONSEQUENCES
The following material is based on discussions with counsel. No
opinion of counsel has been obtained. Stockholders are advised to consult with
their own tax advisors for more detailed information relating to their
individual tax circumstances.
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The Merger will constitute a reorganization under Section 368(a)(1) of
the Internal Revenue Code. For Federal income tax purposes, no gain or loss
will be recognized by the stockholders of the Company on the automatic
conversion of their shares of the Company into shares of the Tennessee Company
as a result of the Merger. Each stockholder will have a basis in shares of the
Tennessee Company equal to the basis in the stockholder's shares of the Company
immediately prior to the Effective Date of the Merger and the stockholder's
holding period of shares of the Tennessee Company will include the period
during which the stockholder held the corresponding shares of the Company
provided such shares were held by the stockholder as a capital asset on the
Effective Date of the Merger. No gain or loss will be recognized by the
Company or by the Tennessee Company as a result of the Merger.
Each stockholder is advised to consult with his or her attorney or tax
advisor as to the Federal, state or local tax consequences of the proposed
Merger in view of his or her individual circumstances.
CAPITAL STOCK OF THE TENNESSEE COMPANY
The Common Stock of the Tennessee Company is identical to that of the
Company. Holders of the Common Stock vote as one class on all matters,
including the election of directors, to be voted by the Tennessee Company's
stockholders. There is no cumulative voting with respect to the election of
directors. As a result, the holders of more than 50% of the shares voting for
the election of directors can elect 100% of the directors if they choose to do
so.
Holders of the Common Stock are entitled to receive ratably such
dividends, if any, as are declared by the Tennessee Company's Board of
Directors out of funds legally available for that purpose. In the event of the
liquidation, dissolution or winding up of the Tennessee Company, holders of
Common Stock are entitled to share ratably in all assets available for
distribution to holders of Common Stock. Holders of Common Stock generally
have no preemptive rights. The shares of Common Stock to be issued in the
Merger will be, when issued as set forth in this Proxy Statement, validly
issued, fully paid and nonassessable.
The Tennessee Company will appoint First Union National Bank of North
Carolina as the transfer agent and registrar for its Common Stock. First Union
National Bank of North Carolina is presently the transfer agent for the
Company.
35
<PAGE> 39
TERMINATION
The Agreement and Plan of Merger provides that the Board of Directors
may terminate and cancel the same at any time prior to the Effective Date of
the Merger, either before or after submission of the Merger to a vote of
stockholders.
AGREEMENT AND PLAN OF MERGER, CHARTER AND BYLAWS ARE ATTACHED AS APPENDICES
Stockholders are urged to read the form of Agreement and Plan of
Merger and the form of Charter and Bylaws of the Tennessee Company, which are
attached as Appendices B, C and D to this Proxy Statement, respectively.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AGREEMENT AND
PLAN OF MERGER. SHARES OF COMMON STOCK COVERED BY PROXIES EXECUTED AND
RECEIVED IN THE ACCOMPANYING FORM WILL BE VOTED IN FAVOR OF THE PLAN OF
MERGER, UNLESS OTHERWISE SPECIFIED IN THE PROXY.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and any person beneficially owning more than 10% of a
registered class of the Company's equity security to file with the Commission
and the New York Stock Exchange, reports of ownership and changes in ownership
of Common Stock and other equity securities of the Company. Officers, directors
and greater than 10% stockholders are required by the Commission regulation to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such reports furnished to
the Company during fiscal 1996 or written representations that no other reports
were required, the Company believes that during the 1996 fiscal year, all
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with, with the exception that a Form 4 was
filed late by R. Clayton McWhorter in connection with his purchase of 1,000
shares of Common Stock on July 10, 1996. During 1996, Samuel W. Bartholomew,
Jr., timely reported his transactions but inadvertently included 3,000 shares
indirectly owned. This omission was corrected by the reporting of these facts
on a Form 4 filed in January 1997.
AUDITORS
The firm of Arthur Andersen LLP has served as the Company's
independent public accountants since August, 1991 and has been selected to
serve in such capacity for the fiscal year ended December 31, 1997. A
representative of Arthur Andersen LLP is expected to attend the Annual Meeting
to respond to appropriate questions from stockholders and to make a statement
if he or she so desires.
36
<PAGE> 40
STOCKHOLDER PROPOSALS
Stockholders of the Company wishing to submit a proposal for action at
the Company's 1998 annual meeting of stockholders and to have the proposal
included in the Company's proxy materials relating to that meeting, must
deliver their proposals to the Company at its principal offices not later than
December 1, 1997. Additional legal requirements apply to any inclusion of
stockholder proposals in proxy materials of the Company.
ANNUAL REPORTS
The Company's Annual Report to Stockholders for the year ended December
31, 1996 is being mailed to the Company's stockholders with this proxy
statement. The Annual Report is not part of the proxy solicitation material.
OTHER MATTERS
The management of the Company knows of no other matters to be presented
and acted upon at the Annual Meeting other than those set forth in the
accompanying notice. However, if any other matters requiring a vote of the
stockholders should properly come before the Annual Meeting or any adjournment
thereof, each proxy will be voted with respect thereto in accordance with the
best judgment of the proxy holder.
By Order of the Board of Directors,
Doctor R. Crants,
Chairman of the Board and
Chief Executive Officer
March 31, 1997
Nashville, Tennessee
YOUR COOPERATION IN GIVING THESE MATTERS YOUR
IMMEDIATE ATTENTION AND IN RETURNING YOUR PROXY PROMPTLY
IS APPRECIATED.
37
<PAGE> 41
APPENDIX A(1)
CORRECTIONS CORPORATION OF AMERICA
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. Purpose. The purpose of the Corrections Corporation of
America Non-Employee Directors' Stock Option Plan (the "Plan") is to advance
the interests of Corrections Corporation of America (the "Company") and its
shareholders by encouraging increased share ownership by members of the Board
of Directors (the "Board") of the Company who are not employees of the Company
or any of its subsidiaries in order to enhance long-term shareholder value
through continuing ownership of the Company's common stock.
2. Administration.
(a) The Plan shall be administered by the Board. The Board shall
have all the powers vested in it by the terms of the Plan, which
include the authority (within the limitations described herein) to
prescribe the form of the agreements embodying awards of non-qualified
stock options (the "Options"). The Board, subject to the provisions of
the Plan, shall grant Options under the Plan and shall have the power
to construe the Plan, to determine all questions arising hereunder, and
to adopt and amend such rules and regulations for the administration of
the Plan as it may deem desirable. Any decision of the Board in the
administration of the Plan, as described herein, shall be final and
conclusive. The Board may act only by a majority of its members in
office, except that the members of the Board may authorize any one or
more of their members or the Secretary or any other officer of the
Company to execute and deliver documents on behalf of the Board.
(b) Each person who is or shall have been a member of the Board
shall be indemnified and held harmless by the Company against and from
any and all loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him in connection with or resulting from any
claim, action, suit, or proceeding to which he may be or become
involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement
thereof (with the Company's written approval) or paid by him in
satisfaction of a judgment in any such action, suit, or proceeding,
except a judgment in favor of the Company based upon a finding of his
lack of good faith; subject, however, to the conditions that upon the
institution of any claim, action, suit, or proceeding against him, he
shall in writing give the Company an opportunity, at its expense, to
handle and defend the same before he undertakes to handle and defend it
on such person's own behalf. The foregoing right of indemnification
shall not be exclusive of any other right to which such person may be
entitled as a matter of law or otherwise, or any power that the Company
may have to indemnify him or hold him harmless. Each member of the
Board and each officer and employee of the
A(1)-1
<PAGE> 42
Company shall be fully justified in relying or acting in good faith
upon any information furnished in connection with the administration of
the Plan by an appropriate person or persons other than himself. In no
event shall any person who is or shall have been a member of the Board
or an officer or employee of the Company be held liable for any
determination made or other action taken or any omission to act in
reliance upon any such information as referred to in the preceding
sentence, or for any action (including the furnishing of information)
taken or any omission to act, when such determination, action, or
omission is made in good faith.
3. Participation. Each member of the Board of the Company who is
not an employee of the Company or any of its subsidiaries (a "Non-Employee
Director") shall receive Options in accordance with Paragraph 5 below. As used
herein, the term "subsidiary" means any corporation at least 40% of whose
outstanding voting stock is owned, directly or indirectly, by the Company.
4. Awards Under the Plan.
(a) Type of Awards. Awards under the Plan shall include only
Options, which are rights to purchase shares of the common stock of the
Company having a par value of $1.00 per share (the "Shares"). All
Options are subject to the terms, conditions, and restrictions
specified in Paragraph 5 below.
(b) Maximum Number of Shares That May be Issued. No more than
150,000 Shares, subject to adjustment as provided in Paragraph 6 below,
may be issued under the Plan pursuant to the exercise of Options.
(c) Rights with Respect to Shares. A Non-Employee Director to
whom an Option is granted (and any person succeeding to such a
Non-Employee Director's rights pursuant to the Plan) shall have no
rights as a shareholder with respect to any Shares issuable pursuant to
any such Option until the date of the issuance of a stock certificate
to him for such Shares. Except as provided in Paragraph 6 below, no
adjustment shall be made for dividends, distributions, or other rights
(whether ordinary or extraordinary, and whether in cash, securities, or
other property) for which the record date is prior to the date such
stock certificate is issued.
A(1)-2
<PAGE> 43
5. Non-qualified Stock Options. All Options shall be
non-qualified. Each Option shall be evidenced by an agreement in such form as
the Board shall prescribe from time to time in accordance with the Plan and
shall be subject to the following terms and conditions:
(a) The Option exercise price shall be the fair market value of
the Shares subject to such Option on the date the Option is granted.
The fair market value per Share shall be the last quoted sales price of
a Share on the date of grant on the NASDAQ/NMS exchange or, if the
NASDAQ/NMS exchange is closed on that date, on the last preceding date
on which the exchange was open for trading.
(b) Any Non-Employee Director initially elected to the Board
subsequent to the adoption of the Plan shall receive an Option for
7,500 Shares upon his election to the Board. The Board shall award to
all Non-Employee Directors on each of the four anniversary dates of the
adoption of the Plan an Option for 7,500 Shares.
(c) An Option shall not be transferable by the optionee otherwise
than by will or the laws of descent and distribution, and shall be
exercisable during his lifetime only by him.
(d) Subject to Paragraph 7 with respect to death or total
disability, all Options shall have a term not to exceed ten (10) years
and shall be exercisable immediately after grant.
(e) An Option shall not be exercisable unless payment in full is
made for the Shares being acquired thereunder at the time of exercise,
such payment to be made
(i) in United States Dollars by cash or check, or
(ii) in lieu thereof, by tendering to the Company Shares
owned by the person exercising the Option and having fair market
value equal to the cash exercise price applicable to such Option,
such fair market value per share to be the closing price of a Share
on the date of exercise on the NASDAQ/NMS exchange as reported by The
Wall Street Journal, or, if the NASDAQ/NMS exchange is closed on that
date, on the last preceding date on which the NASDAQ/NMS exchange was
open for trading, or
(iii) by a combination of United States Dollars and Shares as
aforesaid.
A(1)-3
<PAGE> 44
(f) Subject to Paragraph 7 with respect to death or total
disability, any unexercised Options held by a participant lapse and
become void at the time a participant ceases to be a Non-Employee
Director.
6. Capital Adjustments. The number and price of Shares covered
by each Option and the total number of Shares that may be optioned and sold
under the Plan shall be proportionately adjusted to reflect any stock dividend,
stock split, or share combination of the common stock or any recapitalization
of the Company. In the event of any merger, consolidation, reorganization,
liquidation, or dissolution of the Company, or any exchange of Shares involving
the Common Stock, any Option granted under the Plan shall automatically be
deemed to pertain to the securities and other property to which a holder of the
number of Shares covered by the Option would have been entitled to receive in
connection with any such event. The Board shall have the sole discretion to
make all interpretations and determinations required under this paragraph to
the extent it deems equitable and appropriate.
The Company, during the term of the Options granted hereunder, will at
all times reserve and keep available, and will seek to obtain from any
regulatory body having jurisdiction, any requisite authority in order to issue
and sell such number of Shares of common stock as shall be sufficient to
satisfy the requirements of the Options granted under the Plan. If in the
opinion of its counsel the issuance or sale of any Shares of its stock
hereunder shall not be lawful for any reason, including the inability of the
Company to obtain from any regulatory body having jurisdiction, authority
deemed by such counsel to be necessary to such issuance or sale, the Company
shall not be obligated to issue or sell any such Shares.
7. Death or Total Disability. If any person to whom an Option
has been granted shall die or become totally disabled while holding an Option
that has not been fully exercised, his executors, administrators, heirs,
personal representatives, or distributees, as the case may be, may, at any time
within six months after the date of such death or total disability (but in no
event after the Option has expired under the provisions of Subparagraph 5(d)
above) exercise the Option with respect to all Shares subject to the Option,
which shall become exercisable in full upon the date of such participant's
death or total disability.
8. Retirement. If any person to whom an Option has been granted
shall retire from service to the Board of Directors while holding an Option
that has not been fully exercised, such Option shall be exercisable for the
full term provided herein.
A(1)-4
<PAGE> 45
9. Miscellaneous Provisions.
(a) No Non-Employee Director or other person shall have any claim
or right to be granted an Option under the Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving a Non-Employee
Director any right to be retained in the service of the Company.
(b) A participant's rights and interests under the Plan may not be
assigned or transferred in whole or in part either directly or by
operation of law or otherwise (except in the event of a participant's
death, by will or the laws of descent and distribution), including, but
not by way of limitation, execution, levy, garnishment, attachment,
pledge, bankruptcy, or in any manner, and no such right or interest of
any participant in the Plan shall be subject to any obligation or
liability of such participant.
(c) No Shares shall be issued hereunder unless counsel for the
Company shall be satisfied that such issuance will be in compliance
with applicable federal, state, and other securities laws.
(d) It shall be a condition to the obligation of the Company to
issue Shares upon exercise of an Option that the participant (or any
beneficiary or person entitled to act under paragraph 7 above) pay to
the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying any liability to withhold
federal, state, local, or foreign income or other taxes. If the amount
requested is not paid, the Company may refuse to issue Shares.
(e) The expenses of administration of the Plan shall be borne by
the Company.
(f) The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other
segregation of assets to ensure the issuance of Shares upon exercise of
any Option under the Plan and issuance of Shares upon exercise of
Options shall be subordinate to the claims of the Company's general
creditors.
(g) By accepting any Option or other benefit under the Plan, each
participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification
of, and consent to, any action taken under the Plan by the Company or
the Board.
(h) The appropriate officers of the Company shall cause to be
filed any reports, returns, or other information regarding Options
hereunder or any Shares issued pursuant hereto as may be required by
the Securities Exchange Act of 1934, as amended, the Securities
Exchange Act of 1933, as amended, or any other applicable statute,
rule, or regulation (excluding reports pursuant to Section 16 of the
Securities Act of 1934, which shall be the sole responsibility of a
Non-Employee Director who exercises an Option).
A(1)-5
<PAGE> 46
10. Amendment. The Plan may be amended at any time and from time to time
by the Board as the Board shall deem advisable. No amendment of the Plan shall
materially and adversely affect any right of any participant with respect to
any Option theretofore granted without such participant's written consent.
Also, without approval of the shareholders of the Company, no amendment shall:
(i) materially increase the benefits under the Plan; (ii) increase the number
of Shares that may be awarded under the Plan (except pursuant to paragraph 6);
(iii) reduce the minimum option price as set forth in paragraph 5(a); (iv)
extend the period of time (beyond that set forth in paragraphs 5(d)) during
which Options may be granted or exercised; or (v) change the class of persons
eligible to receive Options hereunder.
11. Effective Date. This Plan shall be effective as of the date
the Plan is adopted by the Board, subject to the approval by a majority of the
votes cast by the holders of the Company's common stock at the 1993 annual
shareholders' meeting.
12. Termination. This Plan shall terminate upon the earlier of
the following dates or events to occur:
(a) the adoption of a resolution of the Board terminating the
Plan; or
(b) ten years from the date the Plan is initially approved and
adopted by the Board.
No termination of the Plan shall materially and adversely affect any of
the rights or obligations of any person, without his consent, under any Option
theretofore granted under the Plan.
A(1)-6
<PAGE> 47
APPENDIX A(2)
FIRST AMENDMENT TO
CORRECTIONS CORPORATION OF AMERICA
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
This FIRST AMENDMENT is made this 1st day of November, 1996 by
Corrections Corporation of America, a corporation duly organized and existing
under the laws of the state of Delaware (the "Company").
W I T N E S S E T H:
WHEREAS, on November 1, 1992, the Company's Board of Directors adopted
the Corrections Corporation of America Non-Employee Directors' Stock Option
Plan (the "Directors' Plan") pursuant to which 600,000 shares of Company Common
Stock were authorized and reserved for issuance to permit the granting of
options to non-employee directors of the Company;
WHEREAS, the Board of Directors has granted stock options exercisable
to purchase all 600,000 shares of Common Stock so authorized and reserved;
WHEREAS, effective November 1, 1996, the Securities and Exchange
Commission amended the rules promulgated pursuant to Section 16 of the
Securities Exchange Act of 1934, as amended ("Section 16"), with respect to
employee benefit plans;
WHEREAS, the Company now wishes to amend the terms of the Directors'
Plan (collectively, the "Amendments") to (i) increase the number of shares of
common stock, par value $1.00 per share of the Company (the "Shares"), available
for issuance thereunder (ii) extend the term of the award formula of the
Directors' Plan by six years; and (iii) conform the Directors Plan with
Section 16; and
WHEREAS, the Board of Directors and the Stockholders of the Company
have duly approved and authorized the Amendments as embodied herein.
NOW, THEREFORE, effective on the day and year first set forth above,
the Company does hereby amend the Directors' Plan as follows:
1.
Section 4(b) of the Directors Plan shall be deleted in its entirety
and the following substituted in lieu thereof:
A(2)-1
<PAGE> 48
"[4](b) Maximum Number of Shares that may be Issued. No more than
900,000 Shares, subject to adjustment as provided in Paragraph 6
below may be issued under the Plan pursuant to the exercise of
Options."
2.
Section 5(b) of the Directors' Plan shall be deleted in its entirety
and the following substituted in lieu thereof:
"[5] (b) Any Non-Employee Director initially elected to the Board
subsequent to the adoption of the Plan shall receive an Option for
7,500 Shares upon his election to the Board. The Board shall award to
all Non-Employee Directors on each of the ten anniversary dates of the
adoption of the Plan an Option for 7,500 Shares."
A(2)-2
<PAGE> 49
3.
Section 10 of the Directors' Plan shall be deleted in its entirety and
the following substituted in lieu thereof:
"[10] The Board of Directors of the Company may amend the Plan at any
time, in its sole discretion; provided, however, that no such amendment
shall materially change or impair, without the consent of each affected
Non- Employee Director, an Option previously granted hereunder."
4.
Except as specifically amended hereby, the Directors' Plan shall remain
in full force and effect as prior to this amendment.
IN WITNESS WHEREOF, the Company caused this amendment to be executed on
the day and year first above written.
CORRECTIONS CORPORATION OF AMERICA
a Delaware corporation
By:_________________________________
Title:______________________________
ATTEST:
__________________________________
Secretary
A(2)-3
<PAGE> 50
APPENDIX B
FORM OF AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of the ____ day of
________, 1997 (the "Agreement and Plan of Merger"), by and between CCA of
Tennessee, Inc., a Tennessee corporation (hereinafter called the "Surviving
Corporation") and Corrections Corporation of America, a Delaware corporation
(hereinafter called the "Merging Corporation").
WITNESSETH:
WHEREAS, the Surviving Corporation is a corporation duly organized and
existing under the laws of the State of Tennessee, with its principal offices
located in Nashville, Tennessee;
WHEREAS, the Merging Corporation is a corporation duly organized and
existing under the laws of the State of Delaware;
WHEREAS, the Board of Directors of the Surviving Corporation and the
Board of Directors of the Merging Corporation have determined that for the
purpose of effecting the reincorporation of the Surviving Corporation in the
State of Tennessee, it is advisable and to the advantage of the Merging
Corporation and the Surviving Corporation and their respective shareholders,
that the Surviving Corporation merge with and into the Merging Corporation
under the terms and conditions herein provided (the "Merger"); and
WHEREAS, the Board of Directors of the Surviving Corporation and the
Board of Directors of the Merging Corporation have adopted resolutions
approving this Agreement and Plan of Merger and have directed that this
Agreement and Plan of Merger be submitted to a vote of their respective
shareholders;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, the parties hereto agree to effect the Merger provided for in
this Agreement and Plan of Merger upon the following terms and conditions.
1. That on the Effective Date (as hereinafter defined) of the
Merger, the Merging Corporation shall be merged with and into Surviving
Corporation on the terms and conditions hereinafter set forth as permitted by
and in accordance with the Tennessee Business Corporation Act and the General
Corporation Law of Delaware. Thereupon, the separate existence of the Merging
Corporation shall cease, and the Surviving Corporation shall continue to exist
under and be governed by the Tennessee Business Corporation Act.
2. Subsequent to the execution of this Agreement and Plan of
Merger, the Surviving Corporation and the Merging Corporation shall each submit
this Agreement and Plan of Merger to their respective shareholders for their
approval pursuant to the applicable provisions under the
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<PAGE> 51
Tennessee Business Corporation Act and the General Corporation Law of Delaware.
The Board of Directors of the Merging Corporation may terminate and cancel the
same at any time prior to the Effective Date of the Merger (as defined herein),
either before or after submission of the Merger to a vote of stockholders.
3. The Merger shall become effective immediately upon the filing
of the Articles of Merger with the Secretary of State of the State of Tennessee
and the Certificate of Merger with the Delaware Secretary of State (the
"Effective Date").
4. On and after the Effective Date, the Charter and Bylaws of the
Surviving Corporation, as in effect immediately prior to the Effective Date,
shall continue in full force and effect as the Charter and Bylaws of the
Surviving Corporation on and after the Effective Date, except as hereinafter
provided in paragraph 10.
5. On and after the Effective Date, the officers and Board of
Directors of the Surviving Corporation shall consist of all the persons who are
officers and directors of the Merging Corporation immediately prior to the
Merger. All of such officers and directors shall continue to hold office until
their successors have been duly qualified in accordance with applicable law and
the Bylaws of the Surviving Corporation.
6. On and after the Effective Date, the separate existence and
corporate organization of the Merging Corporation shall cease and the Merging
Corporation shall be merged with and into the Surviving Corporation. The
Surviving Corporation shall, from and after the Effective Date, possess all the
rights, privileges, and powers of whatever nature and description, and shall be
subject to all the restrictions and duties, of the Merging Corporation and the
Surviving Corporation; and all property (real, personal, and mixed) and debts
due to either the Merging Corporation or the Surviving Corporation on whatever
account or belonging to either the Merging Corporation or the Surviving
Corporation shall be vested in the Surviving Corporation without further act or
deeds; and all property, rights, privileges, powers, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were the Merging Corporation's prior to the Merger. Title
to any real estate vested by deed or otherwise in either the Merging
Corporation or the Surviving Corporation shall not convert to or be any way
impaired by reason of the Merger, but shall be vested in the Surviving
Corporation. All rights of creditors and liens upon the property of the
Merging Corporation and the Surviving Corporation shall be preserved
unimpaired, and all debts, liabilities and duties of the Merging Corporation
and the Surviving Corporation shall henceforth attach to and be the liabilities
of the Surviving Corporation, except as otherwise provided among the parties.
7. As a result of the Merger, the shares of capital stock of the
Merging Corporation outstanding immediately prior to the Effective Date shall
be converted into one share of capital stock of the Surviving Corporation.
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<PAGE> 52
8. As a result of the Merger, the shares of capital stock of the
Surviving Corporation outstanding immediately prior to the Effective Date shall
not be converted as a result of the Merger. Any shares of stock owned by the
Incorporator and/or any Directors immediately prior to the Effective Date shall
be repurchased by the Surviving Corporation and such shares shall be cancelled.
9. Upon the Effective Date, the holder of the certificates
evidencing the capital stock of the Merging Corporation shall cease to have any
rights with respect to such stock and all of the capital stock of the Merging
Corporation issued and outstanding immediately prior to the Effective Date
shall, on the Effective Date, be automatically by operation of law cancelled
and void and extinguished.
10. The Surviving Corporation and the Merging Corporation intend
that this Agreement and Plan of Merger effect a tax free reorganization under
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended.
11. Upon the Effective Date, the Charter of the Surviving
Corporation is hereby amended by deleting Article 1 in its entirety and
substituting in lieu thereof the following:
"The name of the Corporation shall be Corrections Corporation of America."
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Merger.
CORRECTIONS CORPORATION OF
AMERICA
By:________________________________
Title:______________________________
CCA OF TENNESSEE, INC.
By:________________________________
Title:______________________________
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<PAGE> 53
APPENDIX C
FORM OF CHARTER
OF
CCA OF TENNESSEE, INC.
The undersigned, acting as the incorporator of a corporation under the
Tennessee Business Corporation Act, adopts the following charter for such
corporation:
1. The name of the Corporation is CCA of Tennessee, Inc.
(hereinafter called the "Corporation")
2. The Corporation is for profit.
3. The street address of the Corporation's principal office is:
102 Woodmont Blvd., Suite 800
Nashville, Tennessee 37205
County of Davidson
4. (a) The name of the Corporation's initial registered
agent is Linda G. Cooper.
(b) The street address of the Corporation's initial
registered office in Tennessee is:
102 Woodmont Blvd., Suite 800
Nashville, Tennessee 37205
County of Davidson
5. The name and address of the incorporator is:
Elizabeth E. Moore
424 Church Street
Suite 2800
Nashville, Tennessee 37219
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<PAGE> 54
6. The Corporation is authorized to issue two classes of shares
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the Corporation shall have authority to issue
is One Hundred Fifty-One Million (151,000,000) shares, consisting of One Hundred
Fifty Million (150,000,000) shares of Common Stock having One Dollar ($1.00) par
value per share ("Common Stock") and One Million (1,000,000) shares of Preferred
Stock having One Dollar ($1.00) par value per share ("Preferred Stock"). The
shares of Preferred Stock may be issued from time to time in one or more series,
each such series to be so designated as to distinguish the shares thereof from
the shares of all other series and classes. The Board of Directors is hereby
vested with the authority to divide any or all classes of Preferred Stock into
series and to fix and determine the relative rights and preferences of the
shares of any series so established.
7. The Corporation hereby elects to be governed by the provisions
of the Tennessee Control Share Act, Tenn. Code Ann. 48-103-301 et. seq., as
amended. The vote of shareholders required to alter, amend or repeal this
Paragraph 7, or to alter, amend or repeal any other section of the Charter in
any respect which would or might have the effect, direct or indirect, of
modifying, permitting any action inconsistent with, or permitting circumvention
of this Paragraph 7, shall be by the affirmative vote of at least eighty
percent (80%) of the total voting power of all shares of stock of the
Corporation entitled to vote in the election of directors, considered for
purposes of this Paragraph as one class.
8. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Charter in the manner now or hereafter
prescribed by the laws of the State of Tennessee. All rights herein conferred
to the shareholders are granted subject to this reservation.
9. The purpose for which the Corporation is organized is to
engage in any lawful act or activity for which corporations may be organized
under the laws of the State of Tennessee.
10. To the fullest extent permitted by the Tennessee Business
Corporation Act as in effect on the date hereof and as hereafter amended from
time to time, a director of the corporation shall not be liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director. If the Tennessee Business Corporation Act or any successor
statute is amended after adoption of this provision to authorize corporate
action further eliminating or limiting the personal liability of directors,
then the liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the Tennessee Business Corporation
Act, as so amended from time to time. Any repeal or modification of this
Paragraph 10 by the shareholders of the corporation shall not adversely affect
any right or protection of a director of the corporation existing at the time
of such repeal or modification with respect to events occurring prior to such
time.
Dated this ___ day of May, 1997.
___________________________________
Elizabeth E. Moore, Incorporator
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APPENDIX D
FORM OF BYLAWS
OF
CCA OF TENNESSEE, INC.
ARTICLE I
NAME
The affairs of the corporation (the "Corporation") shall be conducted
using the name Corrections Corporation of America ("CCA"), or such other name
or names as the board of directors may from time to time authorize.
ARTICLE II
MEETINGS
Section 1. Annual Meetings. An annual meeting of shareholders for the
purposes of electing directors and transacting such other business as may
properly come before the meeting shall be held within three (3) months of the
last day of the fiscal year at 10:00 a.m., or on such other date or at such
other time, or both, as shall be designated from time to time by the Board of
Directors, the Chairman of the Board, or the President.
Section 2. Special Meetings. A special meeting of shareholders may be
called for any purpose or purposes by the Board of Directors, the Chairman of
the Board, or the President.
Section 3. Place of Meetings. Annual and special meetings of
shareholders shall be held at the principal office of the Corporation or at
such other place, either within or without the State of Tennessee, as the Board
of Directors, the Chairman of the Board, or the President shall designate.
Section 4. Notice of Meetings. Notice stating the date, time, and
place of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is being called, shall be provided to each
shareholder entitled to vote at such meeting no fewer than ten (10) days nor
more than two (2) months before the date of such meeting. In the case of
special meetings of shareholders, the notice of meeting shall include the
purpose or purposes for which
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the meeting is being called. Notice may be in writing, or oral if
reasonable in the circumstance, and notice shall be deemed provided when
received or, if mailed, when deposited in the United States mail addressed to
the shareholder at his or her address as it appears in the Corporation's current
record of shareholders, with first class postage affixed thereon. When a
meeting is adjourned to another date, time, or place, it shall not be necessary
to provide any notice of the adjourned meeting if the new date, time, or place
to which the meeting is adjourned is announced at the meeting at which the
adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted at the original meeting. If after
the adjournment, however, the Board of Directors fixes a new record date for the
adjourned meeting pursuant to Section 9 of this Article II, a new notice of the
adjourned meeting shall be provided.
Section 5. Waiver of Notice. A shareholder may waive in writing any
notice required by these Bylaws, provided that the waiver must be signed by the
shareholder entitled to the notice and must be delivered to the Corporation for
inclusion in the minutes or for filing with the corporate records. A
shareholder's attendance at a meeting (i) waives objection to lack of notice or
defective notice of the meeting unless the shareholder at the beginning of the
meeting (or promptly upon his or her arrival) objects to holding the meeting or
transacting business at the meeting and (ii) waives objection to consideration
of a particular matter at the meeting that is not within the purpose or
purposes described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
Section 6. Quorum and Voting. The holders of a majority of shares
entitled to vote, whether present in person or represented by proxy, shall
constitute a quorum. Once a share is represented for any purpose at a meeting,
the holder of such share is deemed present for quorum purposes for the
remainder of the meeting and for any adjournment of that meeting, unless a new
record date is or must be set for the adjourned meeting. A meeting may be
adjourned despite the absence of a quorum. If a quorum exists, action on a
matter, other than the election of directors, is approved by the shareholders
if the votes cast favoring the action exceeds the votes cast opposing the
action.
Section 7. Proxies. A shareholder may vote his or her shares in
person or by proxy and may appoint a proxy to vote or otherwise act for him or
her by signing a proxy or other appointment form, either personally or by his
or her attorney-in-fact. An appointment of a proxy is effective when received
by the Secretary or other officer or agent of the Corporation authorized to
tabulate votes. An appointment is valid for eleven (11) months unless another
period is expressly provided in the proxy or other appointment form. An
appointment of a proxy is revocable by the shareholder unless the proxy or
other appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest, as provided in the Tennessee Business
Corporation Act.
Section 8. Action Without a Meeting. Any action required or permitted
to be taken at a meeting of the shareholders may be taken without a meeting.
If all shareholders entitled to vote on the action consent to taking such
action without a meeting, the affirmative vote of the number
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of shares that would be necessary to authorize or take such action at a meeting
is the act of the shareholders. The action must be evidenced by one (1) or more
written consents describing the action taken, signed by each shareholder
entitled to vote on the action in one (1) or more counterparts, and indicating
each shareholder's vote or abstention on the action, and such written consent or
consents must be delivered to the Corporation for inclusion in the minutes or
for filing with the corporate records. A consent effected as provided in this
section shall have the effect of a meeting vote and may be described as such in
any document.
Section 9. Record Date. For the purpose of determining the
shareholders entitled to notice of or entitled to vote at any meeting of
shareholders, or for the purpose of determining the shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other purpose, the Board of Directors may fix a future
date as the record date for such purpose, provided that such record date shall
not be more than seventy (70) days before the meeting or action requiring a
determination of shareholders. If no record date is fixed by the Board of
Directors: (i) the record date shall be at the close of business on the day
next preceding the day on which notice of the meeting is given, or, if notice
is waived, at the close of business on the eleventh day next preceding the day
on which such meeting is held; (ii) the record date for the determination of
shareholders entitled to consent to an action in writing without a meeting
shall be at the close of business on the eleventh day next preceding the date
on which the first shareholder, being entitled so to do, signs such a consent;
and (iii) the record date for the determination of shareholders for any other
purpose shall be at the close of business on the date on which the Board of
Directors adopts the resolution or resolutions relating thereto. A
determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless
the Board of Directors fixes a new record date, which it shall do if the
meeting is adjourned to a date more than four (4) months after the date fixed
for the original meeting.
Section 10. List of Shareholders. After a record date has been fixed
for a meeting, the Secretary shall prepare or cause to be prepared a complete
list of the shareholders entitled to notice of the meeting, arranged in
alphabetical order by class of stock and series, if any, and showing the
address of each shareholder and the number of shares registered in the name of
the shareholder. The shareholders' list shall be available for inspection by
any shareholder, beginning two (2) business days after notice of the meeting is
given for which the list was prepared and continuing through the meeting, at
the Corporation's principal office or at the place identified in the meeting
notice in the city where the meeting will be held. If the right to vote at any
meeting is challenged, the person presiding thereat may rely on such list as
evidence of the right of the person challenged to vote at such meeting.
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ARTICLE III
DIRECTORS
Section 1. Management. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation managed
under the direction of, the Board of Directors.
Section 2. Number. The number of directors, which shall not be less
than three (3), of the Corporation shall be as fixed from time to time by the
Board of Directors by a vote of two-thirds of the whole Board.
Section 3. Election and Term of Office. Except in the case of the
filling of vacancies, directors shall be elected at the annual meeting of
shareholders by a plurality of the votes cast by shareholders entitled to vote
in the election, a quorum being present. Each director, including a director
elected to fill a vacancy, shall hold office until the next annual meeting of
shareholders and until his or her successor is elected and qualified, or until
his or her earlier death, resignation, or removal.
Section 4. Resignation. Any director may resign at any time by
delivering written notice to the Board of Directors, the Chairman of the Board,
the President, or the Corporation. A resignation shall be effective when
notice thereof is so delivered, unless the notice specifies a later effective
date.
Section 5. Removal. One or more directors may be removed with or
without cause by a vote of sixty-six and two- thirds percent (66 2/3%) of the
shareholders or with cause by a vote of a majority of the number of directors
then prescribed. A director may be removed only at a meeting called for the
purpose, and the notice of the meeting must state that the purpose, or one (1)
of the purposes, of the meeting is the removal of a director or directors.
Section 6. Annual and Other Regular Meetings. An annual meeting of
the Board of Directors shall be held immediately following the annual meeting
of shareholders, at the place of such annual meeting of shareholders. The
Board of Directors may provide for the holding of other regular meetings of the
Board of Directors, and may fix the dates, times, and places thereof.
Section 7. Special Meetings. A special meeting of the Board of
Directors shall be held whenever called by the Chairman of the Board, the
President, or any two (2) directors, at such date, time, and place as may be
specified by the person or persons calling the meeting.
Section 8. Notice. Notice of an annual or other regular meeting of
the Board of Directors need not be provided. Notice stating the date, time,
and place of any special meeting of the Board of Directors shall be provided to
each director in writing, or it may be provided orally if reasonable in the
circumstances, no fewer than two (2) days before such meeting. Notice shall be
deemed provided when received or, if mailed, five (5) days after it is
deposited in the United States mail addressed to the director at his or her
address as it appears in the Corporation's current record of directors, with
first class postage affixed thereon. Notice of an adjourned meeting need not
be given if the time and place to which such meeting is adjourned are fixed at
the meeting at
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which the adjournment is taken and if the period of adjournment does not exceed
one (a) month in any one (1) adjournment. At the adjourned meeting, the Board
of Directors may transact any business that might have been transacted at the
original meeting.
Section 9. Waiver of Notice. A director may waive in writing any
notice required by these Bylaws, provided that the waiver must be signed by the
director entitled to the notice and must be filed with the minutes or corporate
records. A director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless the director at the beginning of
the meeting (or promptly upon his or her arrival) objects to holding the
meeting or transacting business at the meeting and does not thereafter vote for
or assent to action taken at the meeting.
Section 10. Quorum and Voting. A majority of the number of directors
then in office shall constitute a quorum for the transaction of business,
provided that at no time shall a quorum consist of fewer than one-third (1/3)
of the number of directors then prescribed. If a quorum is present when a vote
is taken, the affirmative vote of a majority of directors present is the act of
the Board of Directors. A director who is present at a meeting of the Board of
Directors when corporate action is taken is deemed to have assented to the
action taken unless: (i) the director objects at the beginning of the meeting
(or promptly upon his or her arrival) to holding the meeting or transacting
business at the meeting; (ii) the director's dissent or abstention from the
action taken is entered in the minutes of the meeting; or (iii) the director
delivers written notice of his or her dissent or abstention to the presiding
officer of the meeting before its adjournment or to the Corporation immediately
after adjournment of the meeting. The right of dissent or abstention is not
available to a director who votes in favor of the action taken.
Section 11. Telephone Meetings. Any or all directors may participate
in a meeting of the Board of Directors by use of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting may simultaneously hear each other during the meeting, and
participation in such a meeting shall constitute presence in person at such a
meeting.
Section 12. Action Without a Meeting. Any action required or
permitted to be taken at a meeting of the Board of Directors may be taken
without a meeting if all directors consent to taking such action without a
meeting. The affirmative vote of the number of directors that would be
necessary to authorize or take such action at a meeting is the act of the Board
of Directors. The action must be evidenced by one (1) or more written consents
describing the action taken, signed by each director in one (1) or more
counterparts, and indicating each director's vote or abstention on the action,
and such written consent or consents shall be included in the minutes or filed
with the corporate records reflecting the action taken. Any action taken under
this section shall be effective when the last director signs the consent,
unless the consent specifies a different effective date. A consent effected as
provided in this section shall have the effect of a meeting vote and may be
described as such in any document.
Section 13. Executive Committee. The Board of Directors, by the vote
of a majority of the directors then in office, may create an Executive
Committee of the Board of Directors
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consisting of one (1) or more directors, who shall serve at the pleasure of the
Board of Directors. Subject to any specific directions or restrictions given by
the Board of Directors, the Executive Committee may exercise all the authority
of the Board of Directors, except that the Executive Committee may not: (i)
authorize distributions to shareholders, except according to a formula or method
prescribed by the Board of Directors; (ii) approve or propose to the
shareholders action that the Tennessee Business Corporation Act requires to be
approved by shareholders; (iii) fill vacancies on the Board of Directors or on
any committee of the Board of Directors; (iv) amend the Charter of the
Corporation pursuant to the provision of the Tennessee Business Corporation Act
allowing the amendment of corporate charters by boards of directors; (v) amend
or repeal these Bylaws or adopt new bylaws; (vi) approve a plan of merger not
requiring shareholder approval; (vii) authorize or approve the reacquisition of
shares, except according to a formula or method prescribed by the Board of
Directors; or (viii) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, except within limits
specifically prescribed by the Board of Directors. So far as applicable, the
provisions of Sections 7 through 12 of this Article III shall apply to the
Executive Committee as well as to the Board of Directors. The Executive
Committee shall report its acts and proceedings to the Board of Directors at the
next following regular meeting of the Board of Directors and at such other time
or times as the Board of Directors shall request.
Section 14. Other Committees. The Board of Directors, by the vote of
a majority of the directors then in office, may designate one or more
committees of the Board of Directors other than the Executive Committee, each
such committee to consist of one (1) or more directors, who shall serve at the
pleasure of the Board of Directors. Any such committee, to the extent
specified by the Board of Directors, may exercise the authority of the Board of
Directors, except that no such committee may exercise any authority forbidden
to the Executive Committee by Section 13 of this Article III. So far as
applicable, the provisions of Section 13 of this Article III shall apply to
each such committee as well as to the Executive Committee, whether or not there
is an Executive Committee.
Section 15. Reliance Upon Information, Opinions, Reports, or
Statements. To the full extent allowed by law, a director shall be, in the
performance of his or her duties, protected in relying in good faith upon
information, opinions, reports, or statements, including financial statements
and other financial data, if prepared or presented by (i) one or more officers
or employees of the Corporation whom the director reasonably believes to be
reliable and competent in the matters presented; (ii) legal counsel, public
accountants, or other persons as to matters the director reasonably believes
are within the person's professional or expert competence; or (iii) a committee
of the Board of Directors of which he or she is not a member if the director
reasonably believes the committee merits confidence.
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ARTICLE IV
OFFICERS
Section 1. General. The Corporation shall have a Chairman of the
Board, Vice Chairman of the Board, President and a Secretary, and may have one
or more Vice Presidents, a Treasurer, and such other officers as may from time
to time be deemed advisable by the Board of Directors, the Chairman of the
Board, or the President. Any two (2) or more offices may be held by the same
person, except the offices of President and Secretary. The Chairman of the
Board shall be the chief executive officer of the Corporation. The Vice
Chairman of the Board, President, any Vice President, the Secretary, and the
Treasurer shall be appointed by the Board of Directors. Each other officer may
be appointed by the Board of Directors, the Chairman of the Board, or the
President. Each officer shall hold office until the meeting of the Board of
Directors following the next annual meeting of shareholders and until his or
her successor has been appointed and qualified, or until his or her earlier
death, resignation, or removal. The Chairman of the Board must be a director
of the Corporation. Any other officer may be, but is not required to be, a
director of the Corporation. Each officer shall have the authority and perform
the duties set forth in these Bylaws or, to the extent consistent with these
Bylaws, the duties prescribed by the Board of Directors or prescribed by an
officer authorized by the Board of Directors to prescribe the duties of other
officers.
Section 2. Resignation. Any officer may resign at any time by
delivering notice to the Corporation. A resignation shall be effective when
notice thereof is so delivered, unless the notice specifies a later effective
date.
Section 3. Removal. The Board of Directors may remove any officer at
any time with or without cause, and any officer appointed by another officer
may be removed likewise by such other officer.
Section 4. Vacancies. Any vacancy occurring in any office for any
reason may be filled by the Board of Directors or by an officer having the
power of appointment with respect to the office in question.
Section 5. Reliance Upon Information, Opinions, Reports, or
Statements. To the full extent allowed by law, an officer shall be, in the
performance of his or her duties, protected in relying in good faith upon
information, opinions, reports, or statements, including financial statements
and other financial data, if prepared or presented by (i) one or more officers
or employees of the Corporation whom the officer reasonably believes to be
reliable and competent in the matters presented; or (ii) legal counsel, public
accountants, or other persons as to matters the officer reasonably believes are
within the person's professional or expert competence.
Section 6. Chairman of the Board. The Chairman of the Board, when
present, shall preside at all meeting of the Board of Directors. The Chairman
of the Board shall also perform such other duties and have such other powers as
the Board of Directors shall from time to time prescribe.
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Section 7. Vice Chairman of the Board. The Vice Chairman of the Board
shall perform the duties of the Chairman of the Board in the event of the
Chairman's inability or refusal to act. The Vice Chairman of the Board shall
perform such other duties and have such other powers as the Board of Directors,
the Chairman of the Board, or the President may from time to time prescribe.
Section 8. President. The President may be, but is not required to
be, the chief executive officer of the Corporation. The President shall
exercise general supervision over the management of the business and affairs of
the Corporation and shall perform such other duties and have such other powers
as the Board of Directors, or the Chairman of the Board if he or she is the
chief executive officer, shall from time to time prescribe. In the absence of
the Chairman of the Board or in the event of his or her inability or refusal to
act, the President may perform the duties of the Chairman of the Board, and when
so acting shall have all the powers of and be subject to all the restrictions
upon the Chairman of the Board.
Section 9. Vice Presidents. In the absence of the President or in the
event of his or her inability or refusal to act, the Vice President, or in the
event there is more than one Vice President, the Vice Presidents in the order
designated, or in the absence of any designation, then in the order of their
appointment, may perform the duties of the President, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
President. Each Vice President shall also perform such other duties and have
such other powers as the Board of Directors or the President, or the Chairman
of the Board if he or she is the chief executive officer, may from time to time
prescribe.
Section 10. Secretary and Assistant Secretaries. The Secretary shall,
when possible, attend all meetings of the shareholders and all meetings of the
Board of Directors, shall prepare or supervise the preparation of minutes of
the proceedings of the shareholders, the Board of Directors, and the Executive
Committee and other committees, and shall keep such minutes, along with all
written consents to action without a meeting, in a book or books devoted to
that purpose. The Secretary shall be the officer primarily responsible for
authenticating records of the Corporation. The Secretary shall keep a record
of the shareholders of the Corporation, arranged alphabetically for class and
series, if any, giving the names and addresses of all shareholders and the
number of shares held by each, and shall cause such a list as of the
appropriate record date to be open for inspection prior to and at any meeting
of shareholders, as provided in Section 10 of Article II. The Secretary shall
give, or cause to be given, notice of meetings of the shareholders and special
meetings of the Board of Directors. The Secretary shall also perform such
other duties as are generally performed by a secretary of a Corporation and, in
addition, shall perform such other duties and have such other powers as the
Board of Directors or the President, or the Chairman of the Board if he or she
is the chief executive officer, may from time to time prescribe. Any Assistant
Secretary may, in the absence of the Secretary or in the event of his or her
inability or refusal to act, perform the duties of the Secretary, and when so
acting shall have all the powers of and be subject to all the restrictions upon
the Secretary. Each Assistant Secretary shall also perform such other duties
and have such other powers as the Board of Directors, the President,
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the Secretary, or the Chairman of the Board if he or she is the chief executive
officer, may from time to time prescribe.
Section 11. Treasurer and Assistant Treasurers. The Treasurer shall have
custody of the Corporation's funds and securities, shall keep or cause to be
kept full and accurate accounts of receipts and disbursements, and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as
ordered by the Board of Directors or by an officer authorized by the Board of
Directors so to order, taking proper vouchers for such disbursements, and shall
render to the Board of Directors, the Chairman of the Board, and the President
an account of all his or her transactions as Treasurer and of the financial
condition of the Corporation. The Treasurer shall also perform such other
duties as are generally performed by a treasurer of a Corporation and, in
addition, shall perform such other duties and have such other powers as the
Board of Directors or the President, or the Chairman of the Board if he or she
is the chief executive officer, may from time to time prescribe. Any Assistant
Treasurer may, in the absence of the Treasurer or in the event of his or her
inability or refusal to act, perform the duties of the Treasurer, and when so
acting shall have all the powers of and be subject to all the restrictions upon
the Treasurer. Each Assistant Treasurer shall also perform such other duties
and have such other powers as the Board of Directors, the President, the
Treasurer, or the Chairman of the Board if he or she is the chief executive
officer, may from time to time prescribe.
ARTICLE V
SHARES OF STOCK
Section 1. Certificates. Unless the Board of Directors authorizes the
issuance of some or all of the shares of the Corporation as uncertificated
shares, the shares of the Corporation shall be represented by certificates
signed on behalf of the Corporation by the Chairman of the Board, the
President, or a Vice President and by the Treasurer, an Assistant Treasurer,
the Secretary, or an Assistant Secretary. The certificates shall be in such
form as shall be approved by the Board of Directors and shall be numbered and
registered in the order issued. Each certificate shall include, as a minimum,
the name of the Corporation and that the Corporation is organized under the
laws of the State of Tennessee, the name of the person to whom issued, and the
number and class of shares and the designation of the series, if any, the
certificate represents. The name of the person or entity owning the shares, the
number of shares, and the date of issue shall be entered in the Corporation's
books and on the certificate or its stub. Share certificates exchanged or
returned shall be cancelled by the Secretary and placed in their original place
in the stock book.
Section 2. Lost, Destroyed, or Stolen Certificates. The Corporation
may issue a new certificate in the place of any certificate previously issued
and alleged to have been lost, destroyed, or stolen, on production of such
evidence of loss, destruction, or theft as the Board of Directors
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may require. The Board of Directors may require the owner of such lost,
destroyed, or stolen certificate, or his or her legal representative, to provide
to the Corporation a bond in such sum as the Board of Directors may direct, and
with such surety or sureties as may be satisfactory to the Board of Directors,
to indemnify the Corporation against any claims, loss, liability, or damage it
may suffer on account of issuing a new certificate.
Section 3. Transfers of Shares. Transfers of shares of the
Corporation shall be made on the stock transfer books of the Corporation only
as permitted in this section and only by the holder of record thereof, or by
his or her duly authorized attorney, upon surrender for cancellation of the
certificate or certificates representing such shares, with an assignment or
power of transfer endorsed thereon or delivered therewith, duly executed with
such proof of the authenticity of the signature and of authority to transfer as
the Corporation may require. The Corporation shall be entitled to treat the
holder of record of any share or shares as the absolute owner thereof for all
purposes and, accordingly, shall not be bound to recognize any legal,
equitable, or other claim to, or interest in, such share or shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise expressly provided by law.
Section 4. Voting. The holders of the shares shall be entitled to vote
for each share of stock standing in their/its name.
ARTICLE VI
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS
Section 1. General. The Corporation may indemnify any person
authorized by the Tennessee Business Corporation Act, as amended, in the manner
and to the extent set forth herein.
Section 2. Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the Corporation, or who, while a
director, officer, employee, or agent of the Corporation, is or was serving at
the request of the Corporation as a director, officer, partner, trustee,
employee, or agent of another Corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise, against any liability asserted
against him or incurred by him in any such capacity or arising from his status
as such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article VI.
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ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors from time to time.
ARTICLE VIII
CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved
from time to time by the Board of Directors.
ARTICLE IX
AMENDMENTS
These Bylaws may be amended or repealed, and new Bylaws may be adopted,
by a majority vote of the Board of Directors or the shareholders.
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Appendix E
CORRECTIONS CORPORATION OF AMERICA
PROXY
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 13, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(PLEASE SIGN AND RETURN IN THE ENCLOSED ENVELOPE.)
The undersigned stockholder(s) of Corrections Corporation of America (the
"Company") hereby acknowledge(s) receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement and hereby appoint(s) Doctor R. Crants and
Darrell K. Massengale, and each of them, proxies of the undersigned, each with
full power of substitution and revocation, and authorize(s) them, or either of
them, to vote the number of shares which the undersigned would be entitled to
cast if personally present at the Annual Meeting of Stockholders of the Company
to be held on Tuesday, May 13, 1997, at 10:00 a.m., local time, at Loews
Vanderbilt Plaza, 2100 West End Avenue, Nashville, Tennessee, and any
adjournment(s) thereof.
The Board of Directors recommends a vote "FOR" each of the nominees and all
of the following proposals:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS.
[ ] FOR all nominees named [ ] WITHHOLD AUTHORITY to vote for all
(except as indicated below) nominees named
</TABLE>
Names of Nominees:
Thomas W. Beasley, Doctor R. Crants, William F. Andrews
Samuel W. Bartholomew, Jr., Jean-Pierre Cuny, R. Clayton McWhorter, Joseph F.
Johnson, Jr.
(INSTRUCTION: To withhold authority to vote for one or more individual
nominee(s), write the name of such nominee(s) on the following
line.)
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2. AMENDMENTS TO THE COMPANY'S NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN.
(a) To increase the number of shares of the common stock of the Company
reserved for issuance under the Non-Employee Directors' Plan from an
aggregate of 600,000 shares to an aggregate of 900,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on reverse side)
(b) To extend the term for which non-employee directors of the Company are to
receive stock options by six (6) years.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) To provide for the amendment of the Non-Employee Directors' Plan at the
sole discretion of the Company's Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF THE ADOPTION OF THE AGREEMENT AND PLAN OF MERGER WHEREBY THE
COMPANY WILL CHANGE ITS STATE OF INCORPORATION FROM DELAWARE TO TENNESSEE.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
ANNUAL MEETING AND ANY ADJOURNMENTS THEREOF.
PLEASE FULLY COMPLETE, DATE, PROPERLY SIGN, AND RETURN THIS PROXY CARD
PROMPTLY.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, IT
WILL BE VOTED IN FAVOR OF EACH NOMINEE AND EACH OF THE PROPOSALS.
Date:______________________ _____________________________
Typed or Printed Name(s)
_____________________________
Signature(s)
_____________________________
NOTE: Please date and sign
exactly as your name appears
on your stock certificate. If
more than one owner or joint
tenancy, each must sign
personally. When signing as
attorney, executor,
administrator, trustee,
guardian, etc., give full
title as such. The proxy shall
be deemed a grant of authority
to vote.
