AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (this “ Agreement
”) dated as of the 15th day of September, 2008, between
Richard Hallworth (“ 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 foster the continued employment and services of the
Employee in his executive officer positions and, in connection with
the separation of Michael Catalano 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.
(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 di
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