EXHIBIT 10.9
EMPLOYMENT AGREEMENT
AGREEMENT dated the 12th day of February, 1998 between XXXXXX X. XXXXX
("Employee") and AMERICA SERVICE GROUP, INC., a Delaware corporation (the
"Company").
WHEREAS, the Company seeks to employ the Employee in various executive
capacities at the Company;
WHEREAS, the Employee accepts the positions contemplated herein;
NOW, THEREFORE, the parties hereby agree as follows:
1. Employment and Duties. The Company hereby employs the Employee as President
and Chief Executive Officer of Prison Health Services, Inc. ("PHS"), a
wholly-owned subsidiary of the Company, and/or such other offices and duties as
the Company's chief executive officer shall reasonably determine from time to
time, consistent with Employee's responsibilities. Employee shall perform the
duties and services of the offices and titles for which he is employed from time
to time hereunder.
2. Performance. Employee agrees to actively devote all of his time and effort
during normal business hours 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.
3. Term. The term of Employee's employment hereunder shall commence on March 2,
1998 and shall continue as an employment-at-will unless terminated by written
notice from either party to the other at least thirty (30) days prior to
termination.
4. 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 not less than $180,000.00, payable in such installments as the
parties shall mutually agree; plus (ii) such additional compensation as the
Compensation Committee of the Board (the "Committee") shall from time to time
determine.
5. 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 or
changed benefits as are from time to time provided to the Company's executives
generally.
6. 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.
7. Termination.
(a) Termination for Cause. Employee may be terminated from his employment
hereunder, either before Term End or thereafter, and without advance notice, by
the Company for "cause." For purposes hereof, "cause" shall mean: (i) violation
of the material terms of this Agreement, (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) continued incompetence, as determined by the chief
executive officer of the Company, using reasonable standards; (v) drug and/or
alcohol abuse which impairs Employee's performance of his duties or employment;
(vi) breach of loyalty to the Company, whether or not involving personal profit,
as determined by the chief executive officer of the Company using reasonable
standards; or (vii) failure to follow the directions of the chief executive
officer of the Company within 20 days after notice to Employee of such failure,
provided that the directions are not inconsistent with Employee's duties and
further provided that Employee is not directed to violate any law or take any
action that he reasonably deems to be immoral or unethical.
(b) Disability, Death. If Employee shall fail to or be unable to perform the
duties required hereunder because of any physical or mental infirmity, and such
failure or inability shall continue for any six (6) consecutive months while
Employee is employed hereunder, the Company shall have the right to terminate
this Agreement. 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 Without Cause. The company shall have the right to terminate the
employment of Employee at any time, without cause, cause being determined under
Section 7(a), upon thirty (30) days' advance written notice.
(d) Change in Control. Employee may terminate his employment hereunder in the
event of a change in control of the Company within ninety (90) days after such
change in control. For purposes of this Agreement, a "change in control of the
Company" shall mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934 ("Exchange Act"); provided however,
that without limitation, such a change in control shall be deemed to have
occurred if: (i) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) other than Employee or any other person currently
the beneficial owner of 10% or more of the outstanding common stock of the
Company, becomes the beneficial owner, directly or indirectly, of securities of
the Company representing 30% or more of the combined voting power of the
Company's then outstanding securities; (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Company cease for any reason to constitute at least a majority
thereof (unless the election of each director, who was not a director at the
beginning of the period, was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period); or (iii) approval by the stockholders of
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the Company of (A) a complete liquidation of the Company; (B) an agreement for
the sale or other disposition of all or substantially all of the assets of the
Company to any "person"; or (C) a merger, consolidation or reorganization
involving the Company, unless (1) the stockholders of the Company immediately
before such merger, consolidation or reorganization own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
two-thirds of the combined voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation or reorganization or
its parent company (the "Surviving Corporation") in substantially the same
proportion as their ownership of the voting shares immediately before such
merger, consolidation or reorganization; or (2) the individuals who were members
of the board immediately prior to the execution of the agreement for such
merger, consolidation or reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving Corporation.
(e) Voluntary Termination. Employee may voluntarily terminate
his employment hereunder at any time, for any reason or for no reason.
(f) Termination Compensation. If Employee's employment hereunder is terminated
pursuant to Sections 7(a) or 7(e) of this Agreement, 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 as of the termination date. If Employee's
employment is terminated by the Company under Section 7(c) without cause, or if
there is a change in control of the Company as defined Section 7(d), all
unexercised options granted to Employee under the Company's Incentive Stock Plan
or Amended Incentive Stock Plan shall accelerate and shall immediately vest. If
Employee's employment is terminated pursuant to Sections 7(b), 7(c) or 7(d) of
this Agreement, the Company shall pay the Employee the following:
(i) within five (5) business days of the termination, 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 of the termination, to compensate for all
accrued but unpaid leave such as holidays, vacation and sick pay under the
Company's paid leave plan, an amount equal to the Employee's then current base
salary multiplied by the product 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 of a termination pursuant to Section 7(b) or
7(d), a lump sum severance payment equal to the Employee's annual base salary as
of the termination date, less, in the case of a termination for disability under
Section 7(b), any payments to be received by the Employee under any disability
plan or policy maintained by the Company;
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(iv) in the event of a termination pursuant to Section 7(c), Employee's annual
base salary as of the termination date shall be continued for one year following
the termination date.
If Employee's employment is terminated pursuant to Sections 7(b), 7(c) or 7(d)
of this Agreement, the Company shall maintain, for eighteen (18) months
following the termination date, in full force and effect for the benefit of the
Employee and Employee's dependents and beneficiaries, at the Company's expense,
all medical insurance under plans and programs in which the Employee and/or the
Employee's dependents and beneficiaries participated immediately prior to the
termination date, provided that continued participation is possible under the
general terms and provisions of such plans and programs. If continued
participation in any such plan or program is barred, the Company shall arrange
at its own expense to provide the Employee with benefits substantially similar
to those which he was entitled to receive under such plans and programs.
8. Covenant Not to Compete, Nonemployment, Noninducement.
(a) Employee acknowledges that in the course of his employment he will become
familiar with the Company and its affiliates' confidential information
concerning the Company and its affiliates 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 one year
after Employee ceases to perform duties hereunder, neither Employee nor any
company with which Employee is affiliated as an employee, consultant or
independent contractor, will directly or indirectly (i) 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
(A) 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 no active participation
in the business of such corporation; (B) affiliating with any company which may
participate in the Business, so long as that participation at the time of
affiliation aggregates less than 10% of such company's revenue; or (C) 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; (ii)
employ or retain as an independent contractor any employee of the Company; or
(iii) recruit, solicit or otherwise induce any employee of the Company to
discontinue such employment relationship. For purposes hereof, the "Business"
shall consist of (i) delivery of contract health care to correctional
facilities, and (ii) any other business in which the Company is significantly
engaged as of the date that Employee ceases to perform duties hereunder.
(b) If, at the time of enforcement of this Section 8 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.
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(c) In the event of the breach by Employee of any of the provisions of this
Section 8, 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.
9. 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:
(a) If to the Company:
America Service Group Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
(b) If to Employee:
Xxxxxx X. Xxxxx
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
10. 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 distributees, devisees and
legatees. If the Employee should die while any amounts would still be payable to
him hereunder if he would have continued to live, 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.
11. Entire Agreement. This Agreement supersedes all prior understandings and
agreements with respect to the provisions hereof and contains the entire
agreement of the parties and may be amended only in writing, signed by the
parties hereto.
12. 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 enforceable, and that the Agreement in its reduced from shall be valid
and enforceable to the full extent permitted by law.
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13. 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.
14. Governing Law. This Agreement shall be construed under and governed
by the internal laws of the State of Tennessee.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a binding contract as of the day and year first above written.
EMPLOYEE AMERICA SERVICE GROUP INC.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Mercy
-------------------------- -----------------------------------
Xxxxxx X. Xxxxx Xxxxx X. Mercy
Chief Executive Officer
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