AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) dated as of the 15th day of September, 2008, between Xxxxxxx
Xxxxxxxxx (“Employee”) and America Service Group Inc., a Delaware Corporation (the
“Company”).
WHEREAS, the Company has heretofore employed Employee as President and Chief Operating Officer
of the Company and President and Chief Executive Officer of Prison Health Services, Inc.
(“PHS”) pursuant to that certain Employment Agreement, dated March 28, 2006; and
WHEREAS, the Board of Directors (the “Board”) of the Company desires to xxxxxx the
continued employment and services of the Employee in his executive officer positions and, in
connection with the separation of Xxxxxxx Xxxxxxxx from the Company, appoint Employee to the office
of Chief Executive Officer, effective as of January 1, 2009, and as a member of the Board,
effective the date hereof (the “Transition Date”); and
WHEREAS, in connection with the appointment of Employee to the office of Chief Executive
Officer and the Board, the parties agree to make certain amendments to Employee’s compensation and
benefits structure.
NOW, THEREFORE, the parties hereby agree as follows:
1. Employment Duties and Compensation. The Company hereby employs the Employee as the
President and Chief Operating Officer of the Company and President and Chief Executive Officer of
PHS and, as of January 1, 2009, employs Employee as the President and Chief Executive Officer of
the Company and President and Chief Executive Officer of PHS and Employee shall perform such duties
and services as are normally associated with such offices and titles for which he is employed.
2. Directorship. The parties agree that the Company will appoint Employee as a member
of the Board effective as of the date hereof. Employee shall be covered by such directors and
officers insurance as is available to the directors of the Company from time to time.
3. Performance. From the date hereof, Employee agrees to actively devote all of his
time and effort during normal business hours as agreed with the Company, to the performance of his
duties hereunder and to use his reasonable best efforts and endeavors to promote the interests and
welfare of the Company, provided that Employee may (i) engage in civic and charitable activities
for which Employee receives no compensation or other pecuniary advantage, including services on the
board, a committee or similar governing body of a charitable or community based organization and
(ii) subject to the restrictions in Section 9 and applicable fiduciary duties, invest his personal
assets in businesses, provided that Employee does not provide any personal services to such
businesses.
4. Term. The term of Employee’s employment hereunder shall commence as of the date
hereof and shall continue as an employment at will, subject to the contractual rights upon
termination as set forth herein, unless terminated by written notice from either party to the other
at least thirty (30) days prior to termination. The effective date of termination pursuant to
the terms of this Agreement is herein referred to as the “Termination Date.”
5. Compensation. For all services rendered by Employee, the Company agrees to pay
Employee from and after the date hereof: (i) a salary (the “Base Salary”) at an annual rate
of Four Hundred Thousand Dollars ($400,000), payable in such installments as the parties shall
mutually agree; plus (ii) such additional compensation as the Incentive Stock and Compensation
Committee of the Board (the “Committee”) shall from time to time determine. As of the
Transition Date and after the date thereof, the Base Salary shall be at an annual rate of not less
than Five Hundred Thousand Dollars ($500,000).
6. Employee Benefits. During the period of his employment under this Agreement,
Employee shall be entitled to vacation, insurance, and other employment benefits customarily
provided by the Company to its executives, including increased, decreased or changed benefits as
are from time to time provided to the Company’s executives generally; provided that the Company
shall not reduce the number of paid days off or reduce the number of such days earned by the
Employee during any pay period.
7. Expenses. The Company shall promptly pay or reimburse Employee for all reasonable
expenses incurred by him in connection with the performance of his duties and responsibilities
hereunder, including, but not limited to, payment or reimbursement of reasonable expenses paid or
incurred for travel and entertainment relating to the business of the Company.
8. Termination.
(a) Certain Definitions
(i) Acquiring Person means that a Person (other than the Employee or any of the
Employee’s affiliates), considered alone or as part of a “group” within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, is or
becomes directly or indirectly the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act) of securities representing at least fifty percent (50%) of the
Company’s then outstanding securities entitled to vote generally in the election of
the Board
(ii) Cause. For purposes of this Agreement “cause” shall mean: (i) breach by
the Employee of the material terms of this Agreement after written notice of such
breach provided to the Employee and Employee’s failure to cure such breach within 30
days following the date of such notice, (ii) intentional commission of an act, or
failure to act, in a manner which constitutes dishonesty or fraud or which has a
direct material adverse effect on the Company or its business; (iii) Employee’s
conviction of or a plea of guilty to any felony or crime involving moral turpitude;
(iv) incompetence, as determined by the Board, using reasonable standards after
written notice of such incompetence provided to the Employee and Employee’s failure
to cure such incompetence within 30 days following the date of such notice; (v) drug
and/or alcohol abuse which impairs Employee’s performance of his duties or
employment; or (vi) breach of the duty
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of loyalty to the Company, whether or not involving personal profit, as
determined by the Board using applicable corporate governance standards.
(iii) Change in Control means (i) a Person is or becomes an Acquiring Person;
(ii) holders of the securities of the Company entitled to vote thereon approve any
agreement with a Person (or, if such approval is not required by applicable law and
is not solicited by the Company, the closing of such an agreement) that involves the
transfer of all or substantially all of the Company’s total assets on a consolidated
basis, as reported in the Company’s consolidated financial statements filed with the
Securities and Exchange Commission; (iii) holders of the securities of the Company
entitled to vote thereon approve a transaction (or, if such approval is not required
by applicable law and is not solicited by the Company, the closing of such a
transaction) pursuant to which the Company will undergo a merger, consolidation, or
statutory share exchange with a Person, regardless of whether the Company is
intended to be the surviving or resulting entity after the merger, consolidation, or
statutory share exchange, other than a transaction that results in the voting
securities of the Company carrying the right to vote in elections of persons to the
Board outstanding immediately prior to the closing of the transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 50% (fifty percent) of the Company’s
voting securities carrying the right to vote in elections of persons to the
Company’s Board, or such securities of such surviving entity, outstanding
immediately after the closing of such transaction; or (iv) the Continuing Directors
cease for any reason to constitute a majority of the Board.
(iv) Continuing Director means any member of the Board, while a member of the
Board and (i) who was a member of, or was appointed to, the Board on the date hereof
or (ii) whose nomination for or election to the Board was recommended or approved by
a majority of the then Continuing Directors
(v) Disability. For purposes of this Agreement, “disability” shall mean
Employee’s failure to or be unable to perform the duties required hereunder because
of any physical or mental infirmity, and such failure or inability continuing for
any six (6) consecutive months while Employee is employed hereunder as determined by
the Board using reasonable standards.
(vi) For Good Reason. The termination of Employee’s employment hereunder shall
be “for good reason” for purposes of this Agreement if it occurs no later than six
(6) months following the initial existence of one or more of the following
conditions arising without the consent of Employee: (1) a material diminution in
Employee’s base compensation; (2) a material diminution in Employee’s status, title,
positions, reporting relationships, authority, duties, or responsibilities with
respect to the Company or any of its affiliates, including without limitation the
failure to appoint Employee to the Board of Directors or the failure by the
Company’s Corporate Governance and Nominating Committee (the “Nominating
Committee”) or the Board to renominate Employee for election to
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the Board at the end of any of the Employee’s terms of service as director
(excluding any failure to renominate the Employee if the Nominating Committee or the
Board has determined, in the exercise of good faith, that Employee has not satisfied
or will not satisfy the applicable governance standards to serve as a director
(including without limitation standards of applicable law and the Company’s
Corporate Governance Standards as may then be in effect) or any failure to
renominate the Employee if the election of Employee would cause the Company to
violate any applicable listing standards, law, rule or regulation); (3) a material
change in the geographic location at which Employee must perform the services; and
(4) any other action or inaction that constitutes a material breach by the Company
of this Agreement. Employee must provide notice to Company of the existence of any
condition described in this Section 8(a)(vi) within a period not to exceed 90 days
of the initial existence of the condition, upon the notice of which the Company
shall be provided a period of at least 30 days during which it may remedy the
condition.
(vii) Person means any human being, firm, corporation, partnership, or other
entity. “Person” also includes any human being, firm, corporation, partnership, or
other entity as defined in sections 13(d)(3) and 14(d)(2) of the Exchange Act. The
term “Person” does not include the Company or any Related Entity, and the term
Person does not include any employee-benefit plan maintained by the Company or any
Related Entity, or any person or entity organized, appointed, or established by the
Company or any Related Entity for or pursuant to the terms of any such
employee-benefit plan, unless the Board determines that such an employee-benefit
plan or such person or entity is a “Person”.
(viii) Related Entity means any entity that is part of a controlled group of
corporations or is under common control with the Company within the meaning of
Sections 1563(a), 414(b) or 414(c) of the Code.
(b) Termination at Death. Except as otherwise provided herein, this Agreement shall
terminate upon the death of Employee, and the estate of Employee shall be entitled to receive all
unpaid amounts due Employee hereunder to such date of death.
(c) Termination Compensation.
(i) If Employee’s employment hereunder is terminated hereunder for any reason
or no reason, the Company shall pay the Employee his full Base Salary through the
Termination Date, plus, within five (5) business days of the Termination Date, any
bonuses, incentive compensation, or other payments due which pursuant to the terms
of any compensation or benefit plan have been earned or vested prior to or as of the
Termination Date.
(ii) If (1) Employee’s employment is terminated by the Company without cause,
(2) Employee’s employment is terminated by the Employee for good reason, or (3)
there is a change in control, all unexercised options, restricted
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stock or similar awards granted to Employee by the Company, whether before or
after the date hereof, shall accelerate and shall immediately vest.
(iii) If (1) Employee’s employment is terminated by the Company (x) without
cause, (y) because of Employee’s death or disability, or (z) within one year
following a change in control or (2) Employee’s employment is terminated by the
Employee (y) for good reason or (z) within one year following a change in control
but no later than the 10th day of the third month following the end of the year in
which the change in control occurs, the Company shall pay the Employee the
following:
(I) within five (5) business days following the Termination Date
(but no later than the 15th day of the third month following the end
of the year in which the change in control occurs in the case of
Employee’s termination of employment by Employee following a change
in control), his full Base Salary through the Termination Date, plus
any bonuses, incentive compensation, or other payments due which
pursuant to the terms of any compensation or benefit plan have been
earned or vested as of the Termination Date;
(II) within five (5) business days following the Termination
Date, (but no later than the 15th day of the third month following
the end of the year in which the change in control occurs in the case
of Employee’s termination of employment by Employee following a
change in control), to compensate for all accrued but unpaid holiday
and annual leave (vacation) under the Company’s paid leave plan, an
amount equal to the Employee’s then current Base Salary multiplied by
the quotient of (A) the total number of leave days accrued, divided
by (B) the total number of work days in the fiscal year in which the
Termination Date occurs;
(III) within five (5) business days following the Termination
Date, (but no later than the 15th day of the third month following
the end of the year in which the change in control occurs in the case
of Employee’s termination of employment by Employee following a
change in control), a lump sum severance payment in an amount equal
to two-hundred percent (200%) of the greater of (A) the incentive
compensation that the Employee could have earned under the Company’s
annual incentive plan for the current fiscal year, said amount to be
determined by projecting the then current financial results of the
Company on an annualized basis throughout the remainder of the fiscal
year, or (B) fifty percent (50%) of the Base Salary as of the
Termination Date; and
(IV) a lump sum payment, paid within five (5) business days
following the Termination Date (but no later than the15th day
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of the third month following the end of the year in which the
change in control occurs in the case of Employee’s termination of
employment by Employee following a change in control), equal to two
times Employee’s Annual Base Salary as of the Termination Date.
(d) Continuation of Benefits. If (1) Employee’s employment is terminated by the
Company (i) without cause, (ii) because of Employee’s death or disability, or (iii) within one year
following a change of control or (2) Employee’s employment is terminated by the Employee (i) for
good reason or (ii) within one year following a change in control, for the period commencing on the
Termination Date and ending on the earlier of (i) eighteen months following the Termination Date;
(ii) the last day Employee is permitted to maintain coverage under the Company’s existing group
health insurance plan pursuant to the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”); and (iii) the first day Employee is eligible to receive coverage under another
employer’s group health insurance plan, the Company shall reimburse Employee for the premiums to
continue coverage for Employee and his dependents under the existing group health insurance plan
maintained by the Company for the benefit of its officers and employees, provided Employee timely
provides the requisite election notice required under COBRA. The Employee shall promptly notify
the Company when the Employee becomes eligible to receive similar coverage under another employer’s
group health insurance plan.
(e) Section 409A. The Company and Employee intend, and the Company and Employee
intend to construe and interpret this Agreement such, that the payments set forth in this Section 8
will not be subject to the excise and other taxes imposed by Section 409A of the Internal Revenue
Code; provided that nothing herein shall cause the Company to be liable for any portion of such
excise or other tax or any income tax of Employee (excluding amounts withheld from such payments in
accordance with applicable law). In furtherance, but not in limitation of the foregoing: (i)
termination of employment under this Agreement shall be administered consistently with a
“separation from service” within the meaning of Code section 409A; and (ii) if Employee is a
“specified employee” within the meaning of Code section 409A on the date of his separation from
service, the payment of benefits hereunder shall be delayed for six (6) months from the date of
Employee’s separation from service (except to the extent that any of such benefits are not subject
to Code section 409A or are subject to an exception to such delay in payment).
9. Covenant Not to Compete.
(a) Covenant. Employee acknowledges that in the course of his employment he will
become familiar with the Company’s and its affiliates’ confidential information and that his
services are of special, unique and extraordinary value to the Company and its affiliates.
Therefore, Employee agrees that, during his employment with the Company, and for twelve (12) months
after the Termination Date, neither Employee nor any company with which Employee is affiliated as
an employee, consultant or independent contractor, will directly or indirectly engage in any
business similar to the Business of the Company, as described below, anywhere in the United States
of America, or have interest directly or indirectly in any Business; provided, however, that
nothing herein shall prohibit Employee from (i) owning in the aggregate not more than 5% of the
outstanding stock of any class of stock of a corporation so long as Employee has
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no active participation in the business of such corporation; (ii) working for or affiliating
with any company which may participate in the Business, so long as Employee is not directly or
indirectly assisting such company in its participation in the Business and is not otherwise engaged
in the Business; or (iii) directly or through an affiliate, acquiring, merging or otherwise gaining
control, or purchasing an interest in an organization as long as the Business represents less than
10% of the acquiree’s revenue at the time of the transaction. Following the Termination Date,
Employee shall not directly or indirectly, and shall not cause any company with which Employee is
affiliated to, recruit, solicit or otherwise induce any employee or contractor of the Company to
discontinue such employment or contractual relationship or otherwise employ any contractor or
employee of the Company within one year following such employee’s or contractor’s separation from
the Company. For purposes hereof, the term “Business” shall consist of (A) delivery of medical
services, pharmaceuticals or supplies to correctional facilities, and (B) any other business in
which the Company is significantly engaged as of the date that Employee ceases to perform duties
hereunder.
(b) Modification. If, at the time of enforcement of this Section 9 a court shall hold
that the duration, scope or area restrictions stated herein are unreasonable under circumstances
then existing, the parties agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area.
(c) Enforcement. In the event of the breach by Employee of any of the provisions of
this Section 9, the Company, in addition and supplementary to other rights and remedies existing in
its favor, may apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or prevent any violations of the
provisions hereof, the parties agreeing economic damages alone are insufficient for a breach.
10. Notices. All notices hereunder, to be effective, shall be in writing and shall be
deemed delivered when delivered by and or when sent by first-class, certified mail, postage and
fees prepaid, to the following addresses or as otherwise indicated in writing by the parties:
(i)
|
If to the Company: | |
| America Service Group, Inc. | ||
| 000 Xxxxxxxx Xxxxx, Xxxxx 000 | ||
| Xxxxxxxxx, XX 00000 | ||
| Attn: Chief Legal Officer | ||
(ii)
|
If to Employee: | |
| Xxxxxxx Xxxxxxxxx | ||
| 000 Xxxxxxxx Xxxxx, Xxxxx 000 | ||
| Xxxxxxxxx, Xxxxxxxxx 00000 |
11. Assignment. This Agreement is based upon the personal services of Employee and
the rights and obligations of Employee hereunder shall not be assignable except as herein expressly
provided. This Agreement shall inure to the benefit of and be enforceable by the Employee’s
personal and legal representatives, executors, administrators, successors, heirs, and
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distributees, devisees and legatees. All such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Employee’s devisee,
legatee or other designee and if there is no such devisee, legatee or designee, to the Employee’s estate.
12. Entire Agreement. This Agreement supersedes all prior understandings and
agreements with respect to the provisions hereof and contains the entire agreement of the parties.
It may only be amended by a specific written amendment appended to this agreement and signed by the
parties hereto.
13. Severability. The provisions of this Agreement are severable, and the invalidity
of any provision shall not affect the validity of any other provision. In the event that any
arbitrator or court of competent jurisdiction shall determine that any provision of this Agreement
or the application thereof is unenforceable because of the duration or scope thereof, the parties
hereto agree that said arbitrator or court in making such determination shall have the power to
reduce the duration and scope of each provision to the extent necessary to make it enforceable, and
that the Agreement in its reduced form shall be valid and enforceable to the full extent permitted
by law.
14. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Employee’s continuing or future participation in any benefit, bonus, incentive or other plan or
program provided by the Company (except for any severance or termination policies, plans, programs
or practices) and for which the Employee may qualify, nor shall anything herein limit or reduce
such rights as the Employee may have under any other Agreement with the Company. Amounts which are
vested benefits or which the Employee is otherwise entitled to receive under any plan or program of
the Company shall be payable in accordance with such plan or program, except as explicitly modified
by this Agreement.
15. Governing Law. This Agreement shall be construed under the governed by the
internal laws of the State of Tennessee, without regard to its conflicts of law principles.
16. Expenses. The Company shall reimburse Employee for all reasonable and documented
legal fees and expenses incurred in connection with the negotiation of this agreement, such
reimbursement to be paid as soon as practicable but in any event not later than the end of the
month following the month in which Employee provides documentation of such fees and expenses.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as a binding contract
as of the day and year first above written.
| COMPANY: AMERICA SERVICE GROUP INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Director and Authorized Signatory | |||
| EMPLOYEE: |
||||
| By: | /s/ Xxxxxxx Xxxxxxxxx | |||
| Xxxxxxx Xxxxxxxxx | ||||
SIGNATURE PAGE TO HALLWORTH EMPLOYMENT AGREEMENT
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