EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
the 29{th} day of September 1999 by and between Correctional Services
Corporation ("CSC" or "Employer") and Xxxxx X. Xxxxxxxx ("Employee").
WHEREAS, Employee has been employed under an employment agreement
dated February 17, 1998 (the "Existing Agreement") and Employee and Employer
desire to continue the employment of Employee as the President and Chief
Executive Officer of CSC on the terms and conditions set forth in this
Agreement; and
WHEREAS, parties are entering into contemporaneously herewith a
Change in Control Agreement (the "Change in Control Agreement").
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other valuable consideration the
receipt and adequacy of which is hereby acknowledged, the parties hereby
agree as follows:
1. POSITION AND DUTIES. CSC hereby continues to employ Employee
and Employee hereby accepts continued employment and agrees to continue to
serve as the President and Chief Executive Officer of CSC. Employee 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. TERM. The period of Employee's employment under this
Agreement will be for an initial term of three years. Following the first
anniversary of this Agreement, the period of employment under this
Agreement will be automatically extended by successive 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 such event, the Agreement will terminate
three years from the anniversary of this Agreement immediately prior to
which a notice of termination was given.
3. COMPENSATION.
(a) BASE SALARY. For all of the services rendered by
Employee during the period of employment, CSC will pay Employee a base
salary at the rate of not less than $270,000 per year. For each year of
the Term after the first year, the Company shall pay to Employee a cost of
living increase. The amount shall be determined by multiplying the annual
base salary then in effect 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 CPI on
the date hereof. However, under no circumstances shall the cost of living
increase be less than 3.5% per annum. The annual base salary shall be
payable at such regular times and intervals as the Company customarily pays
its employees from time to time.
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(b) INCENTIVE BONUS. For each fiscal year of CSC during which the
Employee is employed by the Company, Employee 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 Employee works for less than a full fiscal year (other than in
the first fiscal year of the term), his bonus for that fiscal year shall be
pro-rated.
4. BENEFITS.
(a) CSC will provide Employee with the full-time use of a
Company automobile. The Company shall purchase all relevant insurance and
pay for all fuel and repairs.
(b) Employee will be entitled to four weeks of vacation per
fiscal year. Employee will be eligible for and will participate in,
without action by the Board of Directors of CSC or any committee thereof,
any additional benefits and perquisites available to executive officers of
CSC, including 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.
5. TERMINATION.
(a) BY EMPLOYER WITH CAUSE. This Agreement may be terminated
by CSC for Cause by written notice to Employee specifying the event relied
upon for such termination within 30 days of such event. The term "Cause"
will mean after written notice and a reasonable opportunity to cure: (i)
the material failure by Employee to perform such duties as are reasonably
incidental to the position of President and Chief Executive Officer; (ii)
any instance of gross negligence or willful misconduct by Employee in the
performance of Employee's duties; (iii) the conviction of a felony; (iv)
chronic absenteeism; (v) substance abuse; or (vi) Employee's breach of the
representations and warranties contained in Section 8 of this Agreement.
(b) UPON DEATH OR DISABILITY. Employee's employment will
terminate immediately upon Employee's death and in that event Employee's
base salary and incentive compensation will be paid to Employee's estate or
legally appointed representative through the end of the third month
following the month in which Employee's death occurs. If Employee become
physically or mentally disabled so as to become unable for a period of more
than five consecutive months or for shorter periods aggregating at least
five months during any twelve-month period to perform Employee's duties
hereunder on a substantially full-time basis, Employee's employment will
terminate as of the end of such five-month or twelve-month period and in
that event Employee's base salary and incentive compensation will be paid
to the Employee or his legally appointed representative through the end of
the third month following the month in which the employment terminated.
Such termination will not affect Employee's benefits under CSC's disability
insurance program, if any, then in effect.
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6. CHANGE IN CONTROL AGREEMENT. Nothing in this Agreement shall
adversely affect the rights of the Employee under the Change in Control
Agreement. In the event of a termination of employment pursuant to which
Employee is entitled to compensation under the Change in Control Agreement,
he shall be entitled to no additional compensation or benefits hereunder.
7. NON-COMPETITION; CONFIDENTIALITY.
(a) NON-COMPETITION. During the period of Employee's
employment with CSC, Employee will not, directly or indirectly, on
Employee's 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 majority owned
subsidiaries; provided, however, that the foregoing shall not be deemed to
prevent the Employee from investing in securities of any company having a
class of securities which is publicly traded, so long as through such
investment holdings in the aggregate, the Employee is not deemed to be the
beneficial owner of more than 5% of the class of securities that are so
publicly traded. During the period of Employee's employment and until two
years after the termination of Employee's employment, Employee will not,
directly or indirectly, on Employee's own behalf or as a partner,
shareholder, officer, employee, director, trustee, agent, consultant or
member of any person, firm or corporation or otherwise, seek to employ or
otherwise seek the services of any employee of CSC or any of its majority
owned subsidiaries.
(b) CONFIDENTIALITY. During and following the period of
Employee's employment with CSC, Employee will not use for Employee's 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 Employee at any time prior to or during the term of Employee's
employment with CSC, except with the specific prior written consent of CSC.
(c) WORK PRODUCT. Employee agree that all programs,
inventions, innovations, improvements, developments, methods, designs,
analyses, reports and all similar or related information which relate to
the business of CSC and its affiliates, actual or anticipated, or to any
actual or anticipated research and development conducted in connection with
the business of CSC and its affiliates, and all existing or future products
or services, which are conceived, developed or made by Employee (alone or
with others) during the term of this Agreement ("Work Product") belong to
CSC. Employee will cooperate fully in the establishment and maintenance of
all rights of CSC and its affiliates in such Work Product. The provisions
of this Section 7(c) will survive termination of this Agreement
indefinitely to the extent necessary to require actions to be taken by
Employee after the termination of the Agreement with respect to Work
Product created during the Agreement.
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(d) ENFORCEMENT. If any covenant or agreement contained in
this Section 7 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.
8. REPRESENTATIONS. Employee hereby represent and warrant to CSC
that (i) the execution, delivery and full performance of this Agreement by
Employee does not and will not conflict with, breach, violate or cause a
default under any agreement, contract or instrument to which Employee are a
party or any judgment, order or decree to which Employee are subject; (ii)
Employee 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 Employee's valid
and binding obligation, enforceable in accordance with its terms.
9. ARBITRATION. In the event of any dispute between CSC and
Employee 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, Florida and will be conducted
in accordance with the rules of the American Arbitration Association. If
the Employee is the prevailing party in any such arbitration, he will be
entitled to reimbursement by CSC for all reasonable costs and expenses
(including attorneys' fees incurred in such arbitration).
10. ASSIGNMENT. Employee may not assign, transfer, convey,
mortgage, hypothecate, pledge or in any way encumber the compensation or
other benefits payable to Employee or any rights which Employee may have
under this Agreement. Neither Employee nor Employee's 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.
11. GOVERNING LAW. This Agreement shall be governed by the laws
of Florida without regard to the application of conflicts of laws.
12. ENTIRE AGREEMENT. This Agreement constitutes the only
agreement between CSC and Employee regarding Employee's employment by CSC.
This Agreement supersedes any and all other agreements and understandings,
written or oral, between CSC and Employee. A waiver by either party of any
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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 Employee, duly executed by both parties.
13. NOTICES. 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 Employee hereunder will be addressed to
CSC to the attention of its Chief Financial Officer at its main offices,
0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxx 00000. Any notice to be
given to Employee will be addressed to Employee at Employee's residence
address last provided by Employee 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 Section.
14. HEADINGS. Section headings are for convenience of reference
only and shall not limit or otherwise affect the meaning or interpretation
of this Agreement or any of its terms and conditions.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement under seal as of the date first above written.
CORRECTIONAL SERVICES CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxx X. Xxxxxxxx
Title: President & CEO
/s/ Xxxxx X. Xxxxxxxx
_______________________________
Xxxxx X. Xxxxxxxx
Approved by a majority of the members of the Compensation Committee at
a duly convened meeting of that committee held on September 29, 1999.
/s/ Xxxxxx X. Xxxxx
________________________
Xxxxxx X. Xxxxx
/s/ Xxxxxx X.Xxxxxx
________________________
Xxxxxx X. Xxxxxx
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