Exhibit 10.5
EMPLOYMENT AGREEMENT
AGREEMENT dated the 15th day of October, 2001, between Xxxxxxx X.
Xxxxxx (Employee) and America Service Group Inc., a Delaware Corporation (the
Company).
WHEREAS, the Company seeks to employ the Employee; and
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 Senior Vice President and Chief Financial Officer of the Company and/or such
other offices and duties as the Company 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. 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.
3. Term. The term of Employee's employment hereunder shall
commence as of the date hereof 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 Two Hundred thousand and No/100,
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.
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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 Employees 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. For purposes of this Agreement, a change in
control of the Company shall mean (a) 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 50% or more of the combined voting power of the
Company's then outstanding securities and (b) as a result of such change in
control Employee will not be offered a continuation of his job after such change
in control.
(e) Voluntary Termination. Employee may voluntarily terminate his
employment
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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), 7(b) 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 at 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 in
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(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
and vacation 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;
(g) as of the termination pursuant to Section 7(b), 7(c) or 7(d),
a continuation, on at least a monthly basis, of Employee's annual base salary
for one year following the Termination Date.
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 (A) 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 no active participation
in the business of such corporation; (ii) 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 (iii)
directly or through an affiliate, acquiring, merging or
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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, (B) employ or retain as an independent contractor any
employee of the Company, or (C) recruit, solicit or otherwise induce any
employee of the Company to discontinue such employment relationship. For
purposes hereof, the Business shall consist of (A) delivery of pharmaceuticals
and 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) 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.
(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:
(i) If to the Company:
America Service Group Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
(ii) If to Employee:
Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
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 entitled to any payments
hereunder, any amounts would still be payable to his estate hereunder as 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.
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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 it enforceable, and that the Agreement in its reduced form shall be
valid and enforceable to the full extent permitted by law.
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 the
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.
AMERICA SERVICE GROUP INC.
By:
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EMPLOYEE:
By:
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