EMPLOYMENT AGREEMENT/ DAVID OBERNESSER



 





Exhibit 10.2




EMPLOYMENT AGREEMENT




     This Employment Agreement (“Agreement”) is made and entered into on this
28th day of October, effective as of May 1, 2004, by and between Correctional
Properties Trust, a Maryland real estate investment trust (the “Company”), and
David Obernesser (the “Executive”).



R E C I T A L S




     A. The Executive is currently employed as the Chief Financial Officer and
Secretary of the Company.



     B. The Executive possesses intimate knowledge of the business and affairs
of the Company, its policies, methods and personnel.



     C. The Board of Trustees of the Company (the “Board”) recognizes that the
Executive has contributed to the growth and success of the Company, and desires
to assure the Company of the Executive’s continued employment and to compensate
him therefor.



     D. The Board has determined that this Agreement will reinforce and
encourage the Executive’s continued attention and dedication to the Company.



     E. The Executive is willing to make his services available to the Company
and on the terms and conditions hereinafter set forth.



AGREEMENT




     NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:



     1. Employment.



          1.1 Employment and Term. The Company hereby agrees to employ the
Executive and the Executive hereby agrees to serve the Company on the terms and
conditions set forth herein.



          1.2 Duties of Executive. During the Term of Employment under this
Agreement, the Executive shall serve as the Chief Financial Officer and
Secretary of the Company, shall faithfully and diligently perform all services
as may be assigned to him by the Board and by the Chief Executive Officer of
the Company (provided that, such services shall not materially differ from the
services currently provided by the Executive), and shall exercise such power
and authority as may from time to time be delegated to him by the Board or by
the Chief Executive Officer of the Company. The Executive shall devote his
full time and attention to the business and affairs of the Company, render such
services to the best of his ability, and use his reasonable best efforts to
promote the interests of the Company. Notwithstanding the foregoing or any
other provision of this Agreement, it shall not be a breach or violation of
this Agreement for the Executive to (i) serve on civic or charitable boards or
committees, (ii) deliver lectures or fulfill speaking engagements, or (iii)
manage personal investments, so long as such activities do



 









 




not significantly interfere with or significantly detract from the
performance of the Executive’s responsibilities to the Company in accordance
with this Agreement. The Executive may not accept any employment, consulting
or other engagements for which the Executive will receive compensation of any
kind without the prior approval of the compensation committee of the Board (the
“Compensation Committee”), including without limitation, serving on the board
of directors of any corporation not affiliated with the Company.




     2. Term.



          2.1 Term. The Term of Employment (as defined below) under this
Agreement, and the employment of the Executive hereunder, shall expire on April
30, 2009, unless sooner terminated in accordance with Section 5 hereof.



          2.2 Term of Employment and Expiration Date. The period during
which the Executive shall be employed by the Company pursuant to the terms of
this Agreement is sometimes referred to in this Agreement as the “Term of
Employment”, and the date on which the Term of Employment shall expire, is
sometimes referred to in this Agreement as the “Expiration Date”.



     3. Compensation.



          3.1 Base Salary. The Executive shall receive a base salary for
each calendar year at the annual rate set forth below (the “Base Salary”)
during the Term of Employment, with such Base Salary payable in installments
consistent with the Company’s normal payroll schedule, subject to applicable
withholding and other taxes. The Base Salary for each calendar year during the
Term of Employment shall be as follows:



	 	 	 	 	 
	Calendar Year Beginning
	 	Base Salary

	January 1, 2004
	 	$	120,000	 
	January 1, 2005
	 	$	135,000	 
	January 1, 2006
	 	$	150,000	 
	January 1, 2007
	 	$	165.000	 
	January 1, 2008
	 	$	185,000	 
	January 1, 2009
	 	$	185,000	 







     3.2 Bonuses.



               a. During the Term of Employment, the Executive shall be eligible for an
annual cash bonus from 0% to 40% of the Base Salary in effect as of the
beginning of each Bonus Period (as defined in Section 3.2(e) below) with a
minimum bonus for achieving minimum expectations of the Compensation Committee
of 10% of the Base Salary in effect as of the beginning of that Bonus Period
(the “Cash Bonus”). The Compensation Committee will establish its minimum
expectations and annual objectives for the Executive for each Bonus Period and
communicate those expectations and objectives to the Executive in an executive
session of the Committee.



               b. The Executive shall be eligible for an annual long-term incentive Bonus
of up to 100% of the Base Salary in effect as of the beginning of the Bonus
Period (as



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defined in Section 3.2(e), below) reduced by the amount of the Cash Bonus
payable with respect to the same Bonus Period, if any (the “Long-Term Bonus”),
which may be paid in cash or may be awarded and paid pursuant to such plan or
arrangement as the Company may from time to time establish. The Long-Term
Bonus awards may be made subject to a vesting schedule and subject to the
satisfaction of certain long-term performance criteria which the Compensation
Committee may establish (and adjust) from time to time and communicate to the
Executive. The Compensation Committee shall have the discretion to settle the
Long-Term Bonus awards that become payable to the Executive in cash or equity
interests of the Company.




               c. For the Bonus Period (as defined in Section 3.1(e) below) in which the
Executive’s employment with the Company terminates for any reason other than by
the Company for Cause under Section 5.1 hereof, the Company shall pay the
Executive a pro rata portion (based upon the period ending on the date on which
the Executive’s employment with the Company terminates) of the Cash Bonus
otherwise payable under Section 3.2(a) and the Long-Term Bonus otherwise
payable under Section 3.2(b) for the Bonus Period in which such termination of
employment occurs. The Bonus Period shall be deemed to end on the last day of
the fiscal quarter of the Company in which the Executive’s employment so
terminates, and the business criteria for this short Bonus Period shall be
annualized and shall be determined based upon unaudited financial information
prepared in accordance with generally accepted accounting principles, applied
consistently with prior periods, and reviewed and approved by the Compensation
Committee of the Board. The Incentive Compensation described in this Section
3.2(c) is sometimes hereinafter referred to as the “Termination Year Bonus.”



               d. The Executive may receive such additional compensation, if any, as the
Board may in its sole and absolute discretion determine.



               e. Any bonuses payable pursuant to this Section 3.2 are sometimes
hereinafter referred to as “Incentive Compensation.” Each period for which
Incentive Compensation is payable is sometimes hereinafter referred to as a
“Bonus Period.” Unless otherwise specified by the Board or as provided in
Section 3.2(c), the Bonus Period with respect to each Cash Bonus and each
Long-Term Bonus shall be the calendar year.



               f. Any Incentive Compensation payable pursuant to this Section 3.2 shall
be paid or awarded by the Company to the Executive within 2 1/2 months after
the end of the Bonus Period for which it is payable.



     4. Expense Reimbursement and Other Benefits.



          4.1 Reimbursement of Expenses. Upon the submission of proper
substantiation by the Executive, and subject to such rules and guidelines as
the Company may from time to time adopt with respect to the reimbursement of
expenses of executive personnel, the Company shall reimburse the Executive for
all reasonable expenses actually paid or incurred by the Executive during the
Term of Employment in the course of and pursuant to the business of the
Company. The Executive shall account to the Company in writing for all
expenses for which reimbursement is sought and shall supply to the Company
copies of all relevant invoices, receipts or other evidence reasonably
requested by the Company.



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          4.2 Compensation/Benefit Programs. During the term of Employment,
the Executive shall be entitled to participate in any medical, dental,
hospitalization, accidental death and dismemberment, disability, travel and
life insurance plans, and any other plans as are presently and hereinafter
offered by the Company to its executive personnel, including any savings,
pension, profit-sharing and deferred compensation plans, subject to the general
eligibility and participation provisions set forth in such plans. The Company
shall reimburse the Executive up to a total of $200 for each calendar year
during the Term of Employment for insurance on the Executive’s life procured by
the Executive for the benefit of the Executive or his heirs. The Executive
shall not be entitled to any payment or stipend from the Company with respect
to legal fees incurred by the Executive at any time in connection with this
Agreement.



          4.3 Working Facilities. During the Term of Employment, the Company
shall furnish the Executive with an office, secretarial help and such other
facilities and services suitable to his position and adequate for the
performance of his duties hereunder.



          4.4 Other Benefits. The Executive shall be entitled to three weeks
of paid vacation each calendar year during the Term of Employment, to be taken
at such times as the Executive and the Company shall mutually determine and
provided that no vacation time shall significantly interfere with the duties
required to be rendered by the Executive hereunder. Any vacation time not
taken by Executive during any calendar year may not be carried forward into any
succeeding calendar year. No payment will be made for unused vacation days
upon termination of this Agreement for any reason. The Executive shall receive
such additional benefits, if any, as the Board of the Company shall from time
to time determine.



          4.5 Withholding. Anything in this Agreement to the contrary
notwithstanding, all payments required to be made by the Company hereunder to
the Executive or his estate or beneficiaries shall be subject to the
withholding of such amounts relating to taxes as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation. In
lieu of withholding such amounts, in whole or in part, the Company may, in its
sole discretion, accept other provisions for payment of taxes and withholding
as required by law, provided it is satisfied that all requirements of law
affecting its responsibilities to withhold have been satisfied.



     5. Termination.



          5.1 Termination for Cause. The Company shall at all times have the
right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause as defined below. For purposes of this Agreement, the
term “Cause” shall mean (i) an action or omission of the Executive which
constitutes a willful and material breach of, or willful and material failure
or refusal (other than by reason of his disability or incapacity) to perform
his duties under, this Agreement which is not cured within fifteen (15) days
after receipt by the Executive of written notice of same, (ii) fraud,
embezzlement, misappropriation of funds or breach of trust in connection with
his services hereunder, (iii) a conviction of any crime which involves
dishonesty or a breach of trust, (iv) indictment for any felony under federal
or state law, or (v) gross negligence or neglect in connection with the
performance of the Executive’s duties hereunder, which is not cured within
fifteen (15) days after receipt by the Executive of written notice of same and
which the Board in its reasonable discretion deems to be good and sufficient
cause to



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terminate the Executive’s employment with the Company. Any termination
for Cause shall be made by notice in writing to the Executive, which notice
shall set forth in reasonable detail all acts or omissions upon which the
Company is relying for such termination. The Executive shall have the right to
address the Board regarding the acts set forth in the notice of termination.
For purposes of this Section 5.1, any good faith determination by the Board of
Cause shall be binding and conclusive on all interested parties. Upon any
termination pursuant to this Section 5.1, the Company shall pay to the
Executive any unpaid Base Salary through the date of termination. No Incentive
Compensation shall be payable upon termination pursuant to this Section 5.1.
Upon any termination effected and compensated pursuant to this Section 5.1, the
Company shall have no further liability hereunder (other than for reimbursement
for reasonable business expenses incurred prior to the date of termination,
subject, however, to the provisions of Section 4.1.




          5.2 Disability. In the event the Executive shall be unable, or
fail, to perform the essential functions of his position, with or without
reasonable accommodation, for any period of 90 days or more in any six-month
period, the Company shall have the option, in accordance with applicable law,
to terminate this Agreement upon written notice to the Executive. Upon
termination pursuant to this Section 5.2, the Company shall (i) pay to the
Executive any unpaid Base Salary through the effective date of termination
specified in such notice, (ii) pay to the Executive his accrued but unpaid
Incentive Compensation, if any, for any Bonus Period ending on or before the
date on which the Executive first became disabled, and (iii) pay the Executive
the Termination Year Bonus as provided in Section 3.2(c). Upon any termination
effected and compensated pursuant to this Section 5.2, the Company shall have
no further liability hereunder (other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however
to the provisions of Section 4.1).



          5.3 Death. Upon the death of the Executive during the Term of
Employment, the Company shall (i) pay to the estate of the deceased Executive
any unpaid Base Salary through the Executive’s date of death, (ii) pay to the
estate of the deceased Executive the accrued but unpaid Incentive Compensation,
if any, for any Bonus Period ending on or before the Executive’s date of death,
and (iii) pay to the estate of the deceased Executive the Termination Year
Bonus as provided in Section 3.2(c). Upon any termination effected and
compensated pursuant to this Section 5.3, the Company shall have no further
liability hereunder (other than for reimbursement for reasonable business
expenses incurred prior to the date of the Executive’s death, subject, however
to the provisions of Section 4.1).



          5.4 Termination Without Cause. At any time the Company shall have
the right to terminate the Term of Employment by written notice not less than
thirty (30) days prior to the termination date, to the Executive. Upon any
termination pursuant to this Section 5.4 (that is not a termination under any
of Sections 5.1, 5.2, 5.3, 5.5 or 5.6), the Company shall (i) pay to the
Executive any unpaid Base Salary through the date of termination specified in
such notice, (ii) pay to the Executive the accrued but unpaid Incentive
Compensation, if any, for any Bonus Period ending on or before the date of the
termination of the Executive’s employment with the Company, (iii) pay to the
Executive the Termination Year Bonus as provided in Section 3.2(c), and (iv)
continue to pay the Executive’s Base Salary for a period (the “Continuation
Period”) through the date on which the Term of Employment would have ended
pursuant to Section 2 hereof in the absence of an earlier termination pursuant
to this Section 5. Upon any termination effected and compensated pursuant to
this Section 5.4, the Company shall have no further



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liability hereunder (other than for reimbursement for reasonable business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 4.1).




          5.5 Termination by Executive.



               a. The Executive shall at all times have the right, by written notice not
less than thirty (30) days prior to the termination date, to terminate the Term
of Employment.



               b. Upon termination of the Term of Employment pursuant to Section 5.5(a)
(that is not a termination under Section 5.5c or 5.6), the Company shall (i)
pay to the Executive any unpaid Base Salary through the effective date of
termination of the Term of Employment specified in such notice and (ii) pay to
the Executive his accrued but unpaid Incentive Compensation, if any, for any
Bonus Period ending on or before the termination of Executive’s employment with
the Company, and (iii) pay to the Executive the Termination Year Bonus as
provided in Section 3.2(c). Upon any termination effected and compensated
pursuant to this Section 5.5(b), the Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however, to the provisions
of Section 4.1).



               c. The Executive shall at all times have the right, by written notice not
less than thirty (30) days prior to the termination date, to terminate the Term
of Employment for Good Reason (as defined below).



               d. Upon termination of the Term of Employment pursuant to Section 5.5(c)
(that is not a termination under Section 5.6), the Company shall pay to the
Executive the same amounts that would have been payable or provided by the
Company to the Executive under Section 5.4 of this Agreement if the Term of
Employment had been terminated by the Company without Cause. Upon any
termination effected and compensated pursuant to this Section 5.5(d), the
Company shall have no further liability hereunder (other than for reimbursement
for reasonable business expenses incurred prior to the date of termination,
subject, however, to the provisions of Section 4.1).



               e. For purposes of this Agreement, “Good Reason” shall mean (i) any action
by the Company which results in a material diminution in the Executive’s
position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given by
the Executive; and (ii) any material failure by the Company to comply with any
of the provisions of Article 3 of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive.



          5.6 Change in Control of the Company.



               a. In the event that (i) a Change in Control (as defined in paragraph (b)
of this Section 5.6) in the Company shall occur during the Term of Employment,
and (ii) prior to the earlier of the Expiration Date and one year after the
date of the Change in Control, either (x) the Term of Employment is terminated
by the Company without Cause, pursuant to Section 5.4 hereof or (y) the
Executive terminates the Term of Employment for Good Reason as



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defined in Section 5.5(e) hereof, the Company shall (1) pay to the
Executive any unpaid Base Salary through the effective date of termination, (2)
pay to the Executive the Incentive Compensation, if any, not yet paid to the
Executive for any year prior to such termination, at such time as the Incentive
Compensation otherwise would have been payable to the Executive, (3) pay to the
Executive as a single lump sum payment, within 30 days of the termination of
his employment hereunder, a lump sum payment equal to the Base Salary through
the Expiration Date and (4) unless otherwise provided in any agreement relating
to the vesting of restricted stock or other equity of the Company granted to
the Executive by the Company, the Executive’s equity awards, if any, shall
immediately vest. The Company shall have no further liability hereunder (other
than for reimbursement for reasonable business expenses incurred prior to the
date of termination, subject, however, to the provisions of Section 4.1).




               b. For purposes of this Agreement, the term “Change in Control” shall
mean:



                    (i) The acquisition by any Person of Beneficial Ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of
fifty-one percent (51%) or more of either (A) the then outstanding shares of
common stock of the Company (the “Outstanding Company Common Stock”) or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
Section 5.6(b), the following acquisitions shall not constitute a Change of
Control: (w) any acquisition directly from the Company; (x) any acquisition by
the Company; (y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any subsidiary of the Company;
or (z) any acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (ii) below; or



                    (ii) Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar corporate transaction involving the Company or any of
its subsidiaries, a sale or other disposition of all or substantially all of
the assets of the Company, or the acquisition of assets or stock of another
entity by the Company or any of its subsidiaries (each a “Business
Combination”), in each case, unless, following such Business Combination, (A)
all or substantially all of the individuals and entities who were the
Beneficial Owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than fifty percent
(50%) of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, (B) no Person (excluding any employee benefit plan of the
Company or such corporation resulting from such Business Combination
beneficially owns, directly or indirectly, fifty one percent (51%) or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or related trust or the combined
voting power of the then outstanding



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voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination, and (C) at least a
majority of the members of the Board of Directors of the corporation resulting
from such Business Combination were members of the Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or




                    (iii) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.



               c. For purposes of Section 5.6(b), the term “Person” shall have the
meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act
of 1934 and used in Sections 13(d) and 14(d) thereof, and shall include a
“group” as defined in Section 13(d) thereof.



          5.7 Vesting of Equity Interests. Unless otherwise provided in any
agreement relating to a grant of equity interests in the Company, which are
subject to a future vesting, in the event of a termination pursuant to 5.2,
5.3, 5.4, or 5.5(c), the Executive shall become immediately vested in that
portion of his then outstanding equity interests in the Company in the same
manner and to the same extent as if his employment hereunder had terminated on
the Expiration Date.



          5.8 Resignation. Upon any termination of employment pursuant to
this Article 5, the Executive shall be deemed to have resigned (i) as an
officer of the Company and its subsidiaries, and (ii) if the Executive was then
serving as a Trustee of the Company or as a director or manager of any of its
subsidiaries, as a Trustee of the Company and as a director or manager of its
subsidiaries, and if required by the Board, the Executive shall upon such
termination execute a resignation letter to the applicable board.



          5.9 Survival. The provisions of this Article 5 shall survive the
termination of the Term of Employment or expiration of the term of this
Agreement.



     6. Restrictive Covenants.



          6.1 Non-competition.



               a. At all times during the Restricted Period (as defined below), the
Executive shall not, directly or indirectly, engage in any competition with, or
have any interest in any sole proprietorship, corporation, company,
partnership, association, venture or business or any other person or entity
(whether as an employee, officer, director, partner, agent, security holder,
creditor, consultant or otherwise) that directly or indirectly (or through any
affiliated entity) a Competing Business (as defined below); provided that such
provision shall not apply to the Executive’s ownership of equity interests of
the Company or the acquisition by the Executive, solely as an investment, of
securities of any issuer that is registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, and that are listed or admitted
for trading on any United States national securities exchange or that are
quoted on the NASDAQ Stock Market, or any similar system or automated
dissemination of quotations of securities prices in common use, so long as the
Executive does not control, acquire a controlling interest in or become a
member of a group which exercises direct or indirect control of, more
than two percent (2%) of any class of capital stock of such corporation.



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               b. For purposes of this Agreement, the “Restricted Period” shall be the
Term of Employment and, if, and only if, the Term of Employment is terminated
for any reason other than by the Executive for Good Reason (as defined in
Section 5.5(e) hereof), the two (2) year period immediately following the
termination date. Notwithstanding the foregoing, the Restricted Period shall
end in the event that the Company fails to make any payments required by
Article 5 hereof with 15 days of written notice from the Executive of such
failure.



               c. For purposes of this Agreement, a Competing Business shall mean any
real estate investment trust or other entity involved in the financing or
ownership of correctional facilities or otherwise doing business which is
competitive with any material business being conducted or pursued by the
Company as of the day prior to the commencement of the Restricted Period.



          6.2 Confidential Information. The Executive shall not at any time
divulge, communicate, use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any Confidential Information
(as hereinafter defined) pertaining to the business of the Company. Any
Confidential Information or data now or hereafter acquired by the Executive
with respect to the business of the Company (which shall include, but not be
limited to, information concerning the Company’s financial condition,
prospects, technology, customers, suppliers, sources of leads and methods of
doing business) shall be deemed a valuable, special and unique asset of the
Company that is received by the Executive in confidence and as a fiduciary, and
Executive shall remain a fiduciary to the Company with respect to all of such
information. For purposes of this Agreement, “Confidential Information” means
all trade secrets and information disclosed to the Executive or known by the
Executive as a consequence of or through the unique position of his employment
with the Company (including information conceived, originated, discovered or
developed by the Executive and information acquired by the Company from others)
prior to or after the date hereof, and not generally or publicly known (other
than as a result of unauthorized disclosure by the Executive), about the
Company or its business. Notwithstanding the foregoing, nothing herein shall
be deemed to restrict the Executive from disclosing Confidential Information as
required to perform his duties under this Agreement or to the extent required
by law. Upon request by the Company, the Executive shall deliver promptly to
the Company upon termination of his services for the Company, or at any time
thereafter as the Company may request, all Company memoranda, notes, records,
reports, manuals, drawings, designs, computer files in any media and other
documents (and all copies thereof) containing such Confidential Information and
all property of the Company or any other Company affiliate, which he may then
possess or have under his control.



          6.3 Nonsolicitation of Employees and Customers. At all times
during the Restricted Period, the Executive shall not, directly or indirectly,
for himself or for any other person, firm, corporation, partnership,
association or other entity (a) employ or attempt to employ or enter into any
contractual arrangement with any employee or former employee of the Company,
unless such employee or former employee has not been employed by the Company
for a period in excess of six months, and/or (b) call on or solicit any of the
actual or targeted prospective customers or clients of the Company on behalf of
any person or entity in connection



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with any Competing Business nor shall the Executive make known the names
and addresses of such clients or any information relating in any manner to the
Company’s trade or business relationships with such customers, other than in
connection with the performance of Executive’s duties under this Agreement.




          6.4 Ownership of Developments. All processes, concepts,
techniques, inventions and works of authorship, including new contributions,
improvements, formats, packages, programs, systems, machines, compositions of
matter manufactured, developments, applications and discoveries, and all
copyrights, patents, trade secrets, or other intellectual property rights
associated therewith conceived, invented, made, developed or created by the
Executive during the Term of Employment either during the course of performing
work for the Company or its clients or which are related in any manner to the
business (commercial or experimental) of the Company or its clients
(collectively, the “Work Product”) shall belong exclusively to the Company and
shall, to the extent possible, be considered a work made by the Executive for
hire for the Company within the meaning of Title 17 of the United States Code.
To the extent the Work Product may not be considered work made by the Executive
for hire for the Company, the Executive agrees to assign, and automatically
assign at the time of creation of the Work Product, without any requirement of
further consideration, any right, title, or interest the Executive may have in
such Work Product. Upon the request of the Company, the Executive shall take
such further actions, including execution and delivery of instruments of
conveyance, as may be appropriate to give full and proper effect to such
assignment. The Executive shall further: (a) promptly disclose the Work Product
to the Company; (b) assign to the Company, without additional compensation, all
patent or other rights to such Work Product for the United States and foreign
countries; (c) sign all papers necessary to carry out the foregoing; and (d)
give testimony in support of his inventions, all at the sole cost and expense
of the Company.



          6.5 Books and Records. All books, records, and accounts relating
in any manner to the customers or clients of the Company, whether prepared by
the Executive or otherwise coming into the Executive’s possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company on termination of the Executive’s employment hereunder or on the
Company’s request at any time.



          6.6 Definition of Company. Solely for purposes of this Article 6,
the term “Company” also shall include any existing or future subsidiaries of
the Company that are operating during the time periods described herein and any
other entities that directly or indirectly, through one or more intermediaries,
control, are controlled by or are under common control with the Company during
the periods described herein.



          6.7 Acknowledgment by Executive. The Executive acknowledges and
confirms that the restrictive covenants contained in this Article 6 (including
without limitation the length of the term of the provisions of this Article 6)
are reasonably necessary to protect the legitimate business interests of the
Company, and are not overbroad, overlong, or unfair and are not the result of
overreaching, duress or coercion of any kind. The Executive further
acknowledges and confirms that the compensation payable to the Executive under
this Agreement is in consideration for the duties and obligations of the
Executive hereunder, including the restrictive covenants contained in this
Article 6, and that such compensation is sufficient, fair and reasonable. The
Executive further acknowledges and confirms that his full,



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uninhibited and faithful observance of each of the covenants contained in
this Article 6 will not cause him any undue hardship, financial or otherwise,
and that enforcement of each of the covenants contained herein will not impair
his ability to obtain employment commensurate with his abilities and on terms
fully acceptable to him or otherwise to obtain income required for the
comfortable support of him and his family and the satisfaction of the needs of
his creditors. The Executive acknowledges and confirms that his special
knowledge of the business of the Company is such as would cause the Company
serious injury or loss if he were to use such ability and knowledge to the
benefit of a competitor or were to compete with the Company in violation of the
terms of this Article 6. The Executive further acknowledges that the
restrictions contained in this Article 6 are intended to be, and shall be, for
the benefit of and shall be enforceable by, the Company’s successors and
assigns. The Executive expressly agrees that upon any breach or violation of
the provisions of this Article 6, the Company shall be entitled, as a matter of
right, in addition to any other rights or remedies it may have, to (a)
temporary and/or permanent injunctive relief in any court of competent
jurisdiction as described in Section 6.10 hereof, and (b) such damages as are
provided at law or in equity. The existence of any claim or cause of action
against the Company or its affiliates, whether predicated upon this Agreement
or otherwise, shall not constitute a defense to the enforcement of the
restrictions contained in this Article 6.




          6.8 Reformation by Court. In the event that a court of competent
jurisdiction shall determine that any provision of this Article 6 is invalid or
more restrictive than permitted under the governing law of such jurisdiction,
then only as to enforcement of this Article 6 within the jurisdiction of such
court, such provision shall be interpreted or reformed and enforced as if it
provided for the maximum restriction permitted under such governing law.



          6.9 Extension of Time. If the Executive shall be in violation of
any provision of this Article 6, then each time limitation set forth in this
Article 6 shall be extended for a period of time equal to the period of time
during which such violation or violations occur. If the Company seeks
injunctive relief from such violation in any court, then the covenants set
forth in this Article 6 shall be extended for a period of time equal to the
pendency of such proceeding including all appeals by the Executive.



          6.10 Injunction. It is recognized and hereby acknowledged by the
parties hereto that a breach by the Executive of any of the covenants contained
in Article 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants
contained in Article 6 of this Agreement by the Executive or any of his
affiliates, associates, partners or agents, either directly or indirectly, and
that such right to injunction shall be cumulative and in addition to whatever
other remedies the Company may possess.



          6.11 Survival. The provisions of this Article 6 shall survive the
termination of the Term of Employment or expiration of the term of Agreement.



     7. Mediation. Except to the extent the Company has the right to
seek an injunction under Section 6.10 hereof, in the event a dispute arises out
of or relates to this Agreement, or the



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breach thereof, and if the dispute cannot be settled through negotiation,
the parties hereby agree first to attempt in good faith to settle the dispute
by mediation administered by the American Arbitration Association under its
Employment Mediation Rules before resorting to arbitration pursuant to Section
8 hereof.




     8. Arbitration.



          8.1 Exclusive Remedy. The parties recognize that litigation in
federal or state courts or before federal or state administrative agencies of
disputes arising out of the Executive’s employment with the Company or out of
this Agreement, or the Executive’s termination of employment or termination of
this Agreement, may not be in the best interests of either the Executive or the
Company, and may result in unnecessary costs, delays, complexities, and
uncertainty. The parties agree that any dispute between the parties arising
out of or relating to the Executive’s employment, or to the negotiation,
execution, performance or termination of this Agreement or the Executive’s
employment, including, but not limited to, any claim arising out of this
Agreement, claims under Title VII of the Civil Rights Act of 1964, as amended,
the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967,
the Americans with Disabilities Act of 1990, Section 1981 of the Civil Rights
Act of 1966, as amended, the Family Medical Leave Act, the Employee Retirement
Income Security Act, and any similar federal, state or local law, statute,
regulation, or any common law doctrine, whether that dispute arises during or
after employment shall be resolved by arbitration in the Palm Beach County,
Florida area, in accordance with the National Employment Arbitration Rules of
the American Arbitration Association, as modified by the provisions of this
Section 8. Except as set forth below with respect to Section 6 of this
Agreement, the parties each further agree that the arbitration provisions of
this Agreement shall provide each party with its exclusive remedy, and each
party expressly waives any right it might have to seek redress in any other
forum, except as otherwise expressly provided in this Agreement.
Notwithstanding anything in this Agreement to the contrary, the provisions of
this Section 8 shall not apply to any injunctions that may be sought with
respect to disputes arising out of or relating to Section 6 of this Agreement.
The parties acknowledge and agree that their obligations under this arbitration
agreement survive the expiration or termination of this Agreement and continue
after the termination of the employment relationship between the Executive and
the Company. By election of arbitration as the means for final settlement of
all claims, the parties hereby waive their respective rights to, and agree not
to, sue each other in any action in a Federal, State or local court with
respect to such claims, but may seek to enforce in court an arbitration award
rendered pursuant to this Agreement. The parties specifically agree to waive
their respective rights to a trial by jury, and further agree that no demand,
request or motion will be made for trial by jury.



          8.2 Arbitration Procedure and Arbitrator’s Authority. In the
arbitration proceeding, each party shall be entitled to engage in any type of
discovery permitted by the Federal Rules of Civil Procedure, to retain its own
counsel, to present evidence and cross-examine witnesses, to purchase a
stenographic record of the proceedings, and to submit post-hearing briefs. In
reaching his/her decision, the arbitrator shall have no authority to add to,
detract from, or otherwise modify any provision of this Agreement. The
arbitrator shall submit with the award a written opinion which shall include
findings of fact and conclusions of law. Judgment upon the award rendered by
the arbitrator may be entered in any court having
competent jurisdiction.



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          8.3. Effect of Arbitrator’s Decision; Arbitrator’s Fees. The
decision of the arbitrator shall be final and binding between the parties as to
all claims which were or could have been raised in connection with the dispute,
to the full extent permitted by law. In all cases in which applicable federal
law precludes a waiver of judicial remedies, the parties agree that the
decision of the arbitrator shall be a condition precedent to the institution or
maintenance of any legal, equitable, administrative, or other formal proceeding
by the Executive in connection with the dispute, and that the decision and
opinion of the arbitrator may be presented in any other forum on the merits of
the dispute. If the arbitrator finds that the Executive was terminated in
violation of law or this Agreement, the parties agree that the arbitrator
acting hereunder shall be empowered to provide the Executive with any remedy
available should the matter have been tried in a court, including equitable
and/or legal remedies, compensatory damages and back pay. The arbitrator’s fees
and expenses and all administrative fees and expenses associated with the
filing of the arbitration (the “Fees”) shall be borne by the non-prevailing
party.



     9. Section 162(m) Limits. Notwithstanding any other provision
of this Agreement to the contrary, if and to the extent that any remuneration
payable by the Company to the Executive for any year would exceed the maximum
amount of remuneration that the Company may deduct for that year under Section
162(m) (“Section 162(m)”) of the Internal Revenue Code of 1986, as amended (the
“Code”), payment of the portion of the remuneration for that year that would
not be so deductible under Section 162(m) shall, in the sole discretion of the
Board, be deferred and become payable at such time or times as the Board
determines that it first would be deductible by the Company under Section
162(m), with interest at the “short-term applicable rate” as such term is
defined in Section 1274(d) of the Code. The limitation set forth under this
Section 9 shall not apply with respect to any amounts payable to the Executive
pursuant to Article 5 hereof.



     10. Assignment. The Company shall have the right to assign this
Agreement and its rights and obligations hereunder in whole, but not in part,
to any corporation or other entity with or into which the Company may hereafter
merge or consolidate or to which the Company may transfer all or substantially
all of its assets, if in any such case said corporation or other entity shall
by operation of law or expressly in writing assume all obligations of the
Company hereunder as fully as if it had been originally made a party hereto,
but may not otherwise assign this Agreement or its rights and obligations
hereunder. The Executive may not assign or transfer this Agreement or any
rights or obligations hereunder.



     11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Florida, without reference to the conflict of laws rules or principles thereof.



     12. Jurisdiction and Venue. The parties acknowledge that a
substantial portion of the negotiations, anticipated performance and execution
of this Agreement occurred or shall occur in Palm Beach Gardens, Florida and
that, therefore, without limiting the jurisdiction or venue of any other
federal or state courts, each of the parties irrevocably and unconditionally
(a) agrees that any suit, action or legal proceeding arising out of or relating
to this Agreement which is expressly permitted by the terms of this Agreement
to be brought in a court of law, shall be



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brought in the courts of record of the State of Florida in Palm Beach
County or the court of the United States, Southern District of Florida; (b)
consents to the jurisdiction of each such court in any such suit, action or
proceeding; (c) waives any objection which it or he may have to the laying of
venue of any such suit, action or proceeding in any of such courts; and (d)
agrees that service of any court papers may be effected on such party by mail,
as provided in this Agreement, or in such other manner as may be provided under
applicable laws or court rules in such courts.




     13. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and, upon its effectiveness, shall supersede all prior agreements,
understandings and arrangements, both oral and written, between the Executive
and the Company (or any of its affiliates) with respect to such subject matter.
This Agreement may not be modified in any way unless by a written instrument
signed by both the Company and the Executive.



     14. Notices. All notices required or permitted to be given
hereunder shall be in writing and shall be personally delivered by courier,
sent by registered or certified mail, return receipt requested or sent by
confirmed facsimile transmission addressed as set forth herein. Notices
personally delivered, sent by facsimile or sent by overnight courier shall be
deemed given on the date of delivery and notices mailed in accordance with the
foregoing shall be deemed given upon the earlier of receipt by the addressee,
as evidenced by the return receipt thereof, or three (3) days after deposit in
the U.S. mail. Notice shall be sent (i) if to the Company, addressed to
Correctional Properties Trust, 3300 PGA Boulevard, Suite 750, Palm Beach
Gardens, Florida 33410, attention: Chairman of the Compensation Committee, with
a copy to the Chairman of the Board at the Chairman’s business address as
reflected on the records of the Company, and (ii) if to the Executive, to his
address as reflected on the payroll records of the Company, or to such other
address as either party shall request by notice to the other in accordance with
this provision.



     15. Benefits; Binding Effect. This Agreement shall be for the
benefit of and binding upon the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and, where
permitted and applicable, assigns, including, without limitation, any successor
to the Company, whether by merger, consolidation, sale of stock, sale of assets
or otherwise.



     16. Right to Consult with Counsel; No Drafting Party. The
Executive acknowledges having read and considered all of the provisions of this
Agreement carefully, and having had the opportunity to consult with counsel of
his own choosing, and, given this, the Executive agrees that the obligations
created hereby are not unreasonable. The Executive acknowledges that he has
had an opportunity to negotiate any and all of these provisions and no rule of
construction shall be used that would interpret any provision in favor of or
against a party on the basis of who drafted the Agreement.



     17. Severability. The invalidity of any one or more of the words,
phrases, sentences, clauses, provisions, sections or articles contained in this
Agreement shall not affect the enforceability of the remaining portions of this
Agreement or any part thereof, all of which are inserted conditionally on their
being valid in law, and, in the event that any one or more of the



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words, phrases, sentences, clauses, provisions, sections or articles
contained in this Agreement shall be declared invalid, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, provisions or provisions, section or sections or
article or articles had not been inserted. If such invalidity is caused by
length of time or size of area, or both, the otherwise invalid provision will
be considered to be reduced to a period or area which would cure such
invalidity.




     18. Waivers. The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.



     19. Damages; Attorneys Fees. Nothing contained herein shall be
construed to prevent the Company or the Executive from seeking and recovering
from the other damages sustained by either or both of them as a result of its
or his breach of any term or provision of this Agreement. In the event that
either party hereto seeks to collect any damages resulting from, or the
injunction of any action constituting, a breach of any of the terms or
provisions of this Agreement, then the party found to be at fault shall pay all
reasonable costs and attorneys’ fees of the other.



     20. Waiver of Jury Trial. The Executive and the Company each hereby
knowingly, voluntarily and intentionally waives any right that the Executive or
the Company may have to a trial by jury in respect of any litigation based
hereon, or arising out of, under or in connection with this Agreement and any
agreement, document or instrument contemplated to be executed in connection
herewith, or any course of conduct, course of dealing statements (whether
verbal or written) or actions of any party hereto.



     21. No Set-off or Mitigation. The Company’s obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement.



     22. Section Headings. The article, section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.



     23. No Third Party Beneficiary. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person other than the Company, the Executive and their respective heirs,
personal representatives, legal representatives, successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.



     24. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument and agreement.



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     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written to be effective as specified herein.


	 	 	 	 	 
	 	COMPANY:





CORRECTIONAL PROPERTIES TRUST,

a Maryland real estate

investment trust

 	 
	 	By /s/ Clarence Anthony
 	 
	 	Name:  	Clarence Anthony 	 
	 	Title:  	Chairman of the
Compensation Committee 	 
	 



	 	 	 	 	 
	 	EXECUTIVE:

 	 
	 	/s/ David Obernesser
 	 
	 	David Obernesser 	 
	 	 	 
	 





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