EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of the 17th day of
February, 1998, by and between Correctional Services Corporation ("CSC")
located at 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxx 00000 and Xxxxx X.
Xxxxxxxx residing at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000.
1. CSC hereby employs you and you hereby accept employment and agree
to serve as the President and Chief Executive Officer of CSC. You will
perform all duties and responsibilities and will have all authority inherent
in the position of President and Chief Executive Officer, subject to the power
of the Board of Directors to modify, expand and limit such duties,
responsibilities and authorities.
2. The period of your employment under this Agreement will be three
(3) years. Following the first anniversary of this Agreement, the period of
employment under this Agreement will be extended by successive additional one-
year terms, unless terminated prior to any anniversary of this Agreement by
written notice by either party to the other no less than ninety (90) days
prior to the end of any anniversary. In that case, the Agreement will
terminate two years from the anniversary of this Agreement immediately prior
to which a notice of termination was given.
3. As full compensation for all services to be rendered by the
Executive to the Company pursuant to the terms of this Agreement, commencing
on the 17th day of February, 1998, the Company shall pay you a base salary
(the "Base Salary") of $270,000 per annum. For each year of the Term
thereafter, the Company shall pay to you a cost of living increase. The
amount shall be determined by multiplying the Base Compensation by a
percentage equal to the excess, if any, of the United States Department of
Labor Consumer Price Index -- New York Metropolitan area -- all items (the
"CPI") on the last day of the year preceding the year for which the
calculation is being made above the CPA on the Commencement Date. However,
under no circumstances shall the cost of living increase be less than 3.5% per
annum. The Base Salary shall be payable at such regular times and intervals
as the Company customarily pays its employees from time to time.
4. For each year during which you are employed by the Company, you
shall be entitled to receive a bonus equal to five (5%) percent of the
Company's earnings before income tax provision ("pre-tax profits") in excess
of $1,000,000, which bonus shall not exceed $200,000. Payment of the bonus,
if any, shall be made within thirty (30) days from receipt of the audited
financial statement for each fiscal year of the Company. Each bonus payment
shall be accompanied by the Company's financial statement for the requisite
period and a schedule calculating such bonus. Pre-tax profits determined by
the Company and audited by the Company's independent auditors shall be final
and binding. For purposes hereof, pre-tax profits shall not include
extraordinary gains and losses and shall be determined in accordance with
generally accepted accounting principles consistently applied. In the event
the Executive works for less than a full year, his bonus for that year shall
be pro-rated.
5. You will be granted an Incentive Stock Option to purchase 150,000
shares of CSC common stock at 100% of the fair market value of the shares of
CSC common stock on the date of this Agreement. 75,000 of the options which
are subject to this grant will vest on the date which is six months from the
date that the parties execute this Agreement. An additional 75,000 will vest
on the date that is 18 months from the date of this Agreement. The options
will have a five-year term and must be exercised by the close of business on
the fifth anniversary of the date of this Agreement.
6. CSC will provide you with the full-time use of a Company
automobile. The Company shall purchase all relevant insurance and pay for all
fuel and repairs.
7. You will be entitled to three weeks of vacation during CSC's
fiscal year ending December 31, 1998. You will be entitled to four weeks of
vacation during each fiscal year thereafter. Unused vacation may not be
carried over from one fiscal year to the next.
8. You will have additional benefits for which you, without action by
the Board of Directors of CSC or any committee thereof, may be or become
eligible under any group health, life insurance, disability, or other form of
employee benefit plan or program of CSC now existing or that may be later
adopted by CSC. This includes the health, dental and life insurance programs
CSC provides currently to its executives.
9. In the event that you resign, retire or otherwise terminate this
Agreement, your salary and benefits will be payable through your date of
termination.
10 Your employment will terminate immediately upon your death and in
that event your base salary will be paid to your estate or legally appointed
representative through the end of the month in which your death occurs. If
you become physically or mentally disabled so as to become unable for a period
of more than four consecutive months or for shorter periods aggregating at
least four months during any twelve-month period to perform your duties
hereunder on a substantially full-time basis, your employment will terminate
with no further payments of base salary or incentive compensation as of the
end of such four-month or twelve-month period. Such termination will not
affect your benefits under CSC's disability insurance program, if any, then in
effect.
11. In the event the Company merges into, consolidates with or
otherwise reorganizes or combines (the "Merger") with another company, wherein
immediately following such Merger, the shareholders of the Company prior to
the Merger own either (a) less than 50% of the outstanding voting stock of the
Company (if they Company is the survivor of the Merger), or (b) less than
fifty (50%) of the outstanding voting stock of the surviving entity, you will
receive a sum equal to three (3) years Base Salary plus three (3) times the
most recent year end bonus paid. Payment will be made in one lump sum within
thirty (30) days of closing of the transaction giving rise to a change of
control. In addition to the monies set forth above, all stock options shall
immediately vest and become exercisable.
12. (a) During the period of your employment with CSC, you will not,
directly or indirectly, on your own behalf or as a partner, officer, director,
trustee, employee, agent, consultant or member of any person, firm or
corporation, or otherwise, enter into the employ of, render any service to, or
engage in any business or activity which is the same as or competitive with
any business or activity conducted by CSC or any of its affiliates. During
the two-year period following the termination of your employment, you will not
directly or indirectly, in any such manner, enter into the employ of, render
any service to, or engage in a business or activity which is the same as,
similar to, or competitive with any business or activity of CSC or any of its
affiliates. During the period of your employment and until two years after
the termination of your employment, you will not, directly or indirectly, on
your own behalf or as a partner, shareholder, officer, employee, director,
trustee, agent, consultant or member of any person, firm or corporation or
otherwise, employ, seek to employ or otherwise obtain or seek the services of
any employee of CSC or any of its affiliates.
(b) During and following the period of your employment with CSC,
you will not use for your own benefit or for the benefit of others, or divulge
to others, any information, trade secrets, knowledge or data of secret or
confidential nature and otherwise not available to members of the general
public that concerns the business or affairs of CSC or its affiliates and
which was acquired by you at any time prior to or during the term of your
employment with CSC, except with the specific prior written consent of CSC.
(c) If any covenant or agreement contained in this paragraph 12
is found by a court having jurisdiction to be unreasonable in duration,
geographical scope or character of restriction, the covenant or agreement will
not be rendered unenforceable thereby but rather the duration, geographical
scope or character of restriction of such covenant or agreement will be
reduced or modified with retroactive effect to make such covenant or agreement
reasonable, and such covenant or agreement will be enforced as so modified.
13. You hereby represent and warrant to CSC that (i) the execution,
delivery and full performance of this Agreement by you does not and will not
conflict with, breach, violate or cause a default under any agreement,
contract or instrument to which you are a party or any judgment, order or
decree to which you are subject; (ii) you are not a party or bound by any
employment agreement, consulting agreement, agreement not to compete,
confidentiality agreement or similar agreement with any other person or
entity; and (iii) upon the execution and delivery of this Agreement by CSC,
this Agreement will be your valid and binding obligation, enforceable in
accordance with its terms.
14. In the event of any dispute between CSC and you with respect to
this Agreement, either party may, in its sole discretion by notice to the
other, require such dispute to be submitted to arbitration. The arbitrator
will be selected by agreement of the parties or, if they cannot agree on
arbitrator or arbitrators within 30 days after the giving of such notice, the
arbitrator will be selected by the American Arbitration Association. The
determination reached in such arbitration will be final and binding on both
parties without any right of appeal. Execution of the determination by such
arbitrator may be sought in any court having jurisdiction. Unless otherwise
agreed by the parties, any such arbitration will take place in Sarasota
County, Florida and will be conducted in accordance with the rules of the
American Arbitration Association.
15. You may not assign, transfer, convey, mortgage, hypothecate,
pledge or in any way encumber the compensation or other benefits payable to
you or any rights which you may have under this Agreement. Neither you nor
your beneficiary or beneficiaries will have any right to receive any
compensation or other benefits under this Agreement, except at the time, in
the amounts and in the manner provided in this Agreement. This Agreement will
inure to the benefit of and will be binding upon any successor to CSC. As
used in this Agreement, the term `successor' means any person, firm,
corporation or other business entity which at any time, whether by merger,
purchase or otherwise, acquires all or substantially all of the capital stock
or assets of CSC. This Agreement may not be otherwise assigned by CSC.
16. This Agreement constitutes the only agreement between CSC and you
regarding your employment by CSC. This Agreement supersedes any and all other
agreements and understandings, written or oral, between CSC and you. A waiver
by either party of any provision of this Agreement of any breach of such
provision in any instance will not be deemed or construed to be a waiver of
such provision for the future, or of any subsequent breach of such provision.
This Agreement may be amended, modified or changed only by further written
agreement between CSC and you, duly executed by both parties.
17. Any and all notices required or permitted to be given hereunder
will be in writing and will be deemed to have been given when deposited in
United States mail, certified or registered mail, postage prepaid. Any notice
to be given by you hereunder will be addressed to CSC to the attention of its
General Counsel at its main offices, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx,
Xxxxxxx 00000. Any notice to be given to you will be addressed to you at your
residence address last provided by you to CSC. Either party may change the
address to which notices are to be addressed by notice in writing to the other
party given in accordance with the terms of this paragraph.
CORRECTIONAL SERVICES XXXXX X. XXXXXXXX
CORPORATION
By: Xxxxx Xxxx By: Xxxxx X. Xxxxxxxx
Title: Secretary & Authorized Officer Title: Employee
Date: June, 1998 Date: June, 1998
Approved by Compensation Committee:
By: Xxxxxx Xxxxxx
Title: Director
Date: June, 1998
By: Xxxxxx X. Xxxxx
Title: Director
Date: June, 1998
