EXHIBIT 10.11
Employment Agreement with Xxxxxx X. Xxxxx
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EMPLOYMENT AGREEMENT
THIS AGREEMENT made this 8th day of August, 1997, by and between AVALON
COMMUNITY SERVICES INC., 00000 Xxxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000 (the
"Company") and Xxxxxx X. Xxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxxx, Xxxxxxxx 00000
(the "Employee") (collectively referred to sometimes as the parties).
WHEREAS, the Company is engaged in the operation of private correctional
facilities designed to provide correctional services to inmates referred by
contracting agencies, pursuant to contractual arrangements;
WHEREAS, the Company intends to pursue the ownership, operation and/or
management of additional facilities in the future;
WHEREAS, the Employee has served as the Chief Executive Officer of Avalon
since 1992; and
WHEREAS, the Parties desire to establish the terms and conditions under which
the Company shall continue its relationship with the Employee, and their
respective rights and obligations pursuant to such relationship.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual promises contained
herein and for other good and valuable consideration as set forth herein, the
Parties hereto agree as follows:
1. Employment. The Company will employ the Employee as Chief Executive Officer
of the Company, with the duties and responsibilities as may be reasonably
assigned to the Employee from time to time by the Board of Directors, as the
same are defined in the Company's By-Laws to include, without limitation, total
responsibility for the Company's overall management, direction and performance
and the implementation of its business plan, as well as continued compliance
with the Company's responsibilities and obligations as a public Company, to its
shareholders and others. Additional duties in accordance with the By-Laws may be
determined and defined by the Board of Directors. The Employee shall serve on
the Company's Board of Directors and on any executive committee of the Board or
similar committee having powers of the Board now in existence or hereinafter
created. As used herein, the Company shall include each subsidiary of which the
Employee may be elected as an officer or director. The Employee shall exert his
best efforts in the performance of his duties as Chief Executive Officer, and as
director and committee member, if so elected, so as to promote the Company's
profit, benefit and advantage.
2. Term. The initial term of the employment under this Agreement shall be for
the period from the date of this Agreement through the third (3rd) anniversary
of the date of this Agreement (the "Primary Term") and shall be renewed and
extended for successive terms as determined by the written agreement of the
parties hereto.
3. Compensation. The Company agrees to pay the employee during the term of
this Agreement an annual base salary as may be determined annually by the Board
of Directors, provided however, that in no event shall the Board of Directors
authorize or approve in any twelve month a period an increase in salary in
excess of 20% over the Employee's existing annualized salary. The annual base
salary for the first year of this Agreement is $85,000, subject to the
provisions of Exhibit I to this Agreement. The Company further agrees that at no
time during the term of this Agreement shall the annual base salary of the
Employee be decreased unless the Employee otherwise agrees in writing.
Participation in discretionary bonuses, retirement plans, other employee benefit
plans, and in fringe benefits shall not reduce the salary payable to the
Employee under this section. Salary shall be payable to the Employee not less
frequently than monthly.
4. Termination of Employment.
(a) The Employee's employment hereunder may be terminated at any time by
mutual agreement of the parties.
(b) Subject to the terms of Paragraph 5 of this Agreement, which terms shall
survive the death or incapacity of the Employee, this Agreement shall
automatically terminate upon:
(1) the Employee's death; or
(2) the Employee's incapacity. "Incapacity" as used herein shall mean
mental or physical disability, or both, reasonably determined by the
Company based upon a certification of such incapacity by, in the
discretion of the Company, either Employee's regular attending
physician or a duly licensed physician selected by the Company,
rendering Employee unable to perform substantially all of his duties
hereunder and which appears reasonably certain to continue for at
least 120 consecutive days without substantial improvement. The
Employee shall be deemed to have "become incapacitated" on the date
the Company has determined that the Employee is incapacitated and so
notifies the Employee.
(c) Employee's employment may be terminated by the Company "with cause"
effective upon delivery of written notice to Employee given at any
time (without any necessity for prior notice) upon the occurrence of
any of the following enumerated events: (i) a felony criminal
conviction; (ii) any other criminal conviction involving the
Employee's lack of honesty or moral turpitude; (iii) drug or alcohol
abuse; or (iv) acts of gross negligence or wilful misconduct which
have a material adverse effect on the Company. In the event of a
dispute between the parties hereto as to whether or not the Employee
has committed an act of gross negligence or wilful misconduct having a
material adverse effect on the Company, the parties hereby agree to
submit such dispute to arbitration. The parties hereto shall appoint
three arbitrators who are mutually agreeable to both the Employee and
the Company. The dispute shall be conducted under the terms of the
Uniform Arbitration Act, 15 Okla. Stat. ss. 802, et. seq.; or (v)
material breach of any provision of this Agreement which the Employee
fails to cure (if curable) or remedy such action or event within 15
days after receipt of such notice from the Company or, in the event
such act or event shall be of a nature that cannot be completely cured
or remedied within such 15 day period, which the Employee fails to
have diligently and in good faith commenced curing or remedying the
same within such 15 day period.
5. Payments and Benefits Upon Termination Under Section 4(a) or 4(b)(2):
5.1 Upon termination under Section 4(a), the Company shall be obligated to:
(a) Compensate the Employee for any base salary accrued prior to the date
of termination under the terms of this Agreement, and any unpaid
out-of-pocket expenses incurred by the Employee prior to the date of
termination which are reimbursable hereunder; and
(b) Until the end of the Primary Term of this Agreement, provide the
benefits to Employee described in Section 11 (a) hereof (except as
provided by law); and
(c) Pay to the Employee a sum of money equal to 100% of the Employee's
base annual salary for a 12 month period, at the base annual salary
level existing at the date of termination; and
(d) 100% of all stock options granted to the Employee shall fully vest
immediately.
5.2 Upon termination under Section 4(b)(2), the Company shall be obligated to:
(a) Compensate the Employee for any base salary accrued prior to the date
of termination under the terms of this Agreement, and any unpaid
out-of-pocket expenses incurred by the Employee prior to the date of
termination which are reimbursable hereunder; and
(b) Until the end of the Primary Term of this Agreement, provide the
benefits to Employee described in Section 11 (a) hereof (except as
provided by law); and
(c) Pay to the Employee a sum of money equal to 100% of the Employee's
base annual salary for a 24 month period, at the base annual salary
level existing at the date of termination; and
(d) 100% of all stock options granted to the Employee shall fully vest
immediately.
6. Payments and Benefits Upon Termination Under Section 4(b)(1): Upon
termination under Section 4(b)(1) of this Agreement, death of the Employee, the
Company shall be obligated to:
(a) Compensate the estate of the Employee for any base salary accrued
prior to the date of termination under the terms of this Agreement,
and any unpaid out-of-pocket expenses incurred by the Employee prior
to the date of the Employee's death which are reimbursable hereunder;
and
(b) Pay to the estate of the Employee a sum of money equal to six (6)
months salary, at the then existing monthly salary being received by
the Employee at the date of the Employee's death,
(c) 100% of all stock options granted to the Employee shall fully vest
immediately.
7. Payments and Benefits Upon Termination Under Section 4(c): Upon termination
under Section 4(c) of this Agreement, the Company shall neither be obligated to
compensate the Employee, his estate or representatives except for any base
salary accrued prior to the date of termination and any unpaid out-of-pocket
expenses incurred by the Employee prior to the date of termination which are
reimbursable pursuant to the terms of this Agreement, nor provide the benefits
to the Employee described in Section 11 hereof (except as required by law) and
the Company shall have no further obligation to the Employee.
8. Discretionary Bonuses. The Employee shall be entitled to participate in
bonuses as may be determined and authorized by the Board of Directors.
9. Attention to Company Affairs. The Employee shall devote substantially all
of his efforts to the Company's affairs. Nothing herein, however, shall be
construed so as to prohibit the Employee from involvement in other businesses so
long as such activities do not affect the Employee's obligation to devote
substantially all of his time to the Company, and do not involve any assistance
to or employment with any competitor of the Company.
10. This Section Not Used
11. Benefits. The Employee shall be entitled to receive during the term
hereof, the following benefits:
(a) Existing medical, hospital, dental, life insurance, or other fringe
benefits at the Company's expense as approved by the Board of Directors. The
Employee has elected to provide certain other benefits at his own expense and
elected to have a monthly payment of $560 made on his behalf by the Company in
lieu of these benefits. This payment in lieu of benefits shall be deemed
acceptable and continued throughout the term of this agreement.
(b) The Employee shall also be entitled to participate in any pension or
retirement plan or any other benefits afforded by the Company to its
employees, if and to the extent that the Employee is eligible to participate
in accordance with the provisions of any such plan.
(c) The Employee shall also be entitled to reasonable use of Company in-house
legal counsel for representation in personal legal matters without obligation
to compensate the Company for such representation. Such legal representation
shall not be available to the Employee in any actions between the Employee and
the Company.
(d) The Employee shall be entitled to continue using a defined area of the
Company's warehouse for storage of personal items. The defined area shall
include that area currently enclosed in the southwest corner of the Company's
existing warehouse. The defined area shall be available for use of the
Employee without charge.
12. Automobile. The Company recognizes that it is necessary for the
performance of his duties that the Employee be provided with an automobile
appropriate to his position, and therefore agrees to provide such automobile, as
well as pay or reimburse any sums necessary for the maintenance, operation,
repair and insurance for such automobile and to replace the same from time to
time. The Employee shall be required to submit appropriate receipts to
substantiate any such sums to be reimbursed.
13. Expenses. The Company shall promptly reimburse the Employee for all
ordinary and necessary business expanses, including but not limited to travel
and entertainment expenses incurred in connection with the performance of this
duties hereunder. The Employee shall submit appropriate receipts to substantiate
any such expenses.
14. Vacations. The Employee shall be entitled to an annual paid vacation of
five (5) weeks during the period from the date of this Agreement through June
1998 and during each successive twelve (12) month period during which this
Agreement is in affect. The timing of said paid vacations shall be scheduled in
a reasonable manner by the Employee consistent with the operation of the
Company's business. Because of the demands on the Employee, the Employee may not
be able to take all of the vacation time he is entitled to under this section.
In the event, the Employee shall, at his option, be entitled to accumulate
unused paid vacation time from one twelve (12) month period to the next, or
receive additional compensation of such unused paid vacation time at the then
existing base salary upon the termination of the one year term during which the
paid vacation time was earned but not taken. Such option shall be exercised by
the Employee in writing and delivered to the Board of Directors.
15. Insurance. The Company shall have the right to purchase, increase, modify
or terminate insurance policies on the life of the Employee for the Company's
benefit, in such amounts as it may, in its sole discretion, determine are
appropriate. The Employee shall, at such time or times and at such place or
places as the Company may reasonable direct, submit to such physical
examinations and execute and deliver such documents as the Company may deem
necessary or desirable in connection therewith.
16. Severance Pay. In the event that the Employee's employment under this
Agreement is terminated by the Company, other than termination by mutual
agreement of the parties, termination for cause, death of the Employee or
incapacity, or in the event the Employee resigns due to a breach of this
Agreement by the Company, then; 100% of all stock options of the Employee shall
fully vest immediately; and the Employee shall receive as severance pay an
amount equal to the sum of 24 months' salary, calculated using the monthly gross
salary then being received by the Employee at the date of termination.
17. Non Competition. The Employee will not, directly or indirectly, throughout
the term hereof or for a period of two (2) years after termination of his
employment, own, manage, operate, join, control or participate in or be
connected with as an officer, director, employee, partner, stockholder or
otherwise, any business entity similar to or which competes, directly or
indirectly, with the Company as of the time of such termination. If the
Employee's employment is terminated by the Company for reasons other than those
described in Section 4, and Employee does not receive severance pay as provided
in Section 16 hereof, this Section is not applicable.
18. Contracts. The Employee acknowledges that any contractual relationships
entered into by the Employee in connection with the operation of the Company
will be on behalf of and for the sole benefit of the Company. The Employee
further acknowledges his responsibility, as an officer and director, to promptly
notify the Company of any and all potential business opportunities which could
be considered potential business opportunities of the Company.
19. Stock Ownership. Nothing in this Agreement is intended, nor shall it be
construed, to prevent the Employee, during the term hereof, from investing in
the stock or other securities listed on a national securities exchange or
actively traded on the over-the-counter market of any corporation which is at
the time engaged wholly or partly in any business which is in competition with
the Company or its subsidiaries (or any successor to the business of the Company
or its subsidiaries); provided that the Employee and his immediate family
members shall not, directly or indirectly, hold, beneficially or otherwise, in
the aggregate, more than five (5%) percent of the outstanding voting stock of
any such corporation.
20. Notices. All notices, requests, demands, payments or other communications
under this Agreement shall be in writing and addressed as follows:
(a) If to the Company:
Avalon Community Services, Inc.
Board of Directors
00000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
(b) If to the Employee:
Xxxxxx X. Xxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxxx, XX 00000
Any such notice, request, demand or other communication shall be affective as of
the date on which such notice is mailed by United States, Mail, certified mail,
return receipt requested, with postage prepaid thereon, or if sent by any other
means as of the date of actual delivery thereof. Each party may change such
notice address by written notice as provided herein.
21. Assignment. The Company's rights and obligations hereunder shall inure to
its benefit and shall be binding upon any successor of the Company or to its
business. Neither the Agreement nor any of the Employee's rights or obligations
hereunder shall be transferable or assignable by the Employee.
22. Amendments or Additions. No amendment or addition to this Agreement shall
be binding unless in writing and signed by both parties.
23. Attorney's Fees and Costs. If either party should retain counsel for the
purposes of enforcing or preventing the breach of any provision of this
Agreement or for any other judicial remedy relating to it, then the prevailing
party shall be entitled to reimbursement by the losing party for all costs,
expenses and witness fees so incurred by the prevailing party including, but not
limited to, reasonable attorney's fees and costs.
24. Indemnity. The Company shall indemnify the Employee and hold him harmless
from all acts or decisions made by him in good faith in connection with all
services performed for and on behalf of the Company. The Company shall also use
its best efforts to obtain coverage for him under any insurance policy now in
force or hereinafter obtained during the term of this Agreement covering
officers and directors of the Company against lawsuits. The Company shall pay
all expenses, including attorney's fees actually and necessarily incurred by the
Employee in connection with the defense of any such actions, suits or
proceedings and in connection with any related appeal and/or settlement.
25. Severability. The provisions of this Agreement shall be severable and the
invalidity or unenforceability of the other provisions herein.
26. Governing Law. This Agreement shall be governed by and construed in
accordance with the applicable laws and statutes of the State of Oklahoma.
27. Entire Agreement. This Agreement embodies the entire understanding and
commitment of the Parties.
28. Confidentiality. Employee acknowledges that because of his experience,
knowledge and expertise and because of his duties and position of trust under
this Agreement, he will be able to develop the trust, confidence and good will
of, and close relationships with, the customers of the Company and will become
familiar with the trade secrets and other confidential information of the
Company ("Confidential Information") which are valuable assets and property
rights of the Company. Employee therefore agrees that he will not, during the
term of this Agreement or at any time thereafter, either directly or indirectly,
disclose to any person, firm or corporation such trade secrets or other
Confidential Information. Employee agrees to retain all such trade secrets and
other Confidential Information in a fiduciary capacity for the sole benefit of
the Company, its successors and assigns. Upon termination of his employment by
the Company or at any time that the Company may so request, Employee will
surrender to the Company all records, papers, notes, reports and other documents
(and all copies thereof), whether on paper or contained in computers, relating
to the business of the Company, which he may then possess or have under his
control. A matter shall no longer be deemed a trade secret or confidential when
it becomes publicly known through no fault of the Employee.
29. Non-Solicitation. Employee will not, directly or indirectly, solicit the
employment of any employee of the Company or a person who was an employee of the
Company at any time during the one year period prior to solicitation or induce
or influence any employee, customer, client or supplier of the Company who at
the time has a business relationship with the Company to discontinue or reduce
such relationship with the Company.
30. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one in the same instrument and any
Party hereto may execute this Agreement by signing any such counterpart.
IN WITNESS WHEREOF, the Parties have duly executed the Agreement in duplicate
original as of the day and year above first written.
AVALON COMMUNITY SERVICES INC.
ATTEST:
\Xxxxx X. Xxxxxxxxxx
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BY: Xxxxx X. Xxxxxxxxxx
Its: President
\Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
EXHIBIT I
The Employee's compensation as defined in Section 3 of this agreement shall
remain at the current level of $60,000 per year until such time as the earlier
of the following occurs:
1. Emerald Square Assisted Living Center is sold.
2. The overall cash flow of Avalon, combined with the cash flow of Emerald
Square Assisted Living Center is at a break even or positive cash flow for a
period of three months.
AVALON COMMUNITY SERVICES INC.
ATTEST:
\Xxxxx X. Xxxxxxxxxx
-----------------------------
BY: Xxxxx X. Xxxxxxxxxx
Its: President
\Xxxxxx X. Xxxxx
-----------------------------
Xxxxxx X. Xxxxx
