Document:

exv10w1

Exhibit 10.1

AMERICA SERVICE GROUP INC.

2009 EQUITY INCENTIVE PLAN

NON-INCENTIVE STOCK OPTION CERTIFICATE

America Service Group Inc. (“ASG”), a Delaware corporation, in accordance with the America Service
Group Inc. 2009 Equity Incentive Plan, hereby grants an Option to                                         , who shall be
referred to as “Employee,” to purchase from ASG                      shares of common stock at an Option Price
per share equal to $15.33, which grant shall be subject to all of the terms and conditions set
forth in this Option Certificate and in the Plan. This grant has been made as of October 5, 2010,
which shall be referred to as the “Grant Date.” This Option is not intended to satisfy the
requirements of § 422 of the Internal Revenue Code and thus shall be a Non-ISO as that term is
defined in the Plan.

	 	 	 	 	 	 	 

	 	 	AMERICA SERVICE GROUP INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Acknowledged and Agreed:	 	EMPLOYEE
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

TERMS AND CONDITIONS

     § 1. Plan. This Option grant is subject to all the terms and conditions set forth in
the Plan and this Option Certificate, and all the terms in this Option Certificate which begin with
a capital letter are either defined in this Option Certificate or in the Plan. If a determination
is made that any term or condition set forth in this Option Certificate is inconsistent with the
Plan, the Plan shall control. A copy of the Plan will be made available to Employee upon written
request to the Committee.

 

 

	 	§ 2. 	 	Vesting and Option Expiration.
	 
	 	(a)	 	General Rule. Subject to § 2(b) and § 2(c), Employee’s
right under this Option Certificate to exercise this Option shall vest with
respect to:

	 	(1)	 	one-third of the non-vested shares of Stock
which are subject to this Option on the first anniversary of the Grant
Date provided he or she remains continuously employed by ASG through
the first anniversary of the Grant Date,
	 
	 	(2)	 	one-third of the non-vested shares of Stock
which remain subject to this Option on the second anniversary of the
Grant Date provided he or she remains continuously employed by ASG
through the second anniversary of the Grant Date, and
	 
	 	(3)	 	the remaining non-vested shares of Stock which
are subject to this Option on the third anniversary of the Grant Date
provided he or she remains continuously employed by ASG through the
third anniversary of the Grant Date.

	 	(b)	 	Option Expiration Rules.

	 	(1)	 	Non-Vested Shares. Except as may
otherwise be set forth in Employee’s separate written employment
agreement (if any), if Employee’s employment with ASG terminates for
any reason whatsoever, including death, disability (as determined under
ASG’s long-term disability plan) or retirement, while there are any
non-vested shares of Stock subject to this Option under § 2(a), this
Option immediately upon such termination of employment shall expire and
shall have no further force or effect and be null and void with respect
to such non-vested shares of Stock.
	 
	 	(2)	 	Vested Shares. Employee’s right to
exercise all or any part of this Option which has vested under § 2(a)
shall expire no later than the tenth anniversary of the Grant Date.
However, if Employee’s employment with ASG terminates before the tenth
anniversary of the Grant Date, Employee’s right to exercise this Option
which has vested under § 2(a) shall expire and shall have no further
force or effect and shall be null and void as of:

	 	(A)	 	the date his or her employment
terminates if his or her employment terminates for cause (as
determined by the Committee),

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	 	(B)	 	the first anniversary of the date
his or her employment terminates if his or her employment
terminates as a result of his or her death or disability (as
determined under ASG’s long-term disability plan), or
	 
	 	(C)	 	the end of the 90-day period
which starts on the date his or her employment terminates if his
or her employment terminates other than (1) for cause (as
determined by the Committee) or (2) as a result of his or her
death or disability (as determined under ASG’s long-term
disability plan).

	 	(c)	 	Special Rules.

	 	(1)	 	Change in Control. If there is a
Change in Control of ASG, this Option shall be subject to the
provisions of § 14 of the Plan with respect to such Change in Control.
	 
	 	(2)	 	Affiliates. For purposes of this
Option Certificate, any transfer of employment between ASG and any
Affiliate, Parent or Subsidiary of ASG or between any Affiliate, Parent
or Subsidiary of ASG shall not be treated as a termination of
employment under the Plan or this Option Certificate.
	 
	 	(3)	 	Fractional Shares. Employee’s right to
exercise this Option shall not include a right to exercise this Option
to purchase a fractional share of Stock. If Employee exercises this
Option on any date when this Option includes a fractional share of
Stock, his or her exercise right shall be rounded down to the nearest
whole share of Stock and the fractional share shall be carried forward
until that fractional share together with any other fractional shares
can be combined to equal a whole share of Stock or this Option expires.

     § 3. Method of Exercise of Option. Employee may exercise this Option in whole or in
part (to the extent this Option is otherwise exercisable under § 2 with respect to vested shares of
Stock) only in accordance with the rules and procedures established from time to time by ASG for
the exercise of an Option. The Option Price shall be paid at exercise either in cash, by check
acceptable to ASG, by tendering to ASG shares of Stock registered in Employee’s name which have
been held for at least six months or through any cashless exercise/resale procedure which is
implemented by a broker unrelated to ASG through a sale of Stock in the open market and which is
acceptable to the Committee, or in any combination of these forms of payment.

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     § 4. Delivery and Other Laws. ASG shall deliver appropriate and proper evidence of
ownership of any Stock purchased pursuant to the exercise of this Option as soon as practicable
after such exercise to the extent such delivery is then permissible under applicable law or rule or
regulation, and such delivery shall discharge ASG of all of its duties and responsibilities with
respect to this Option.

     § 5. Nontransferable. Except as expressly authorized by the Committee, no rights
granted under this Option shall be transferable by Employee other than by will or by the laws of
descent and distribution, and the rights granted under this Option shall be exercisable during
Employee’s lifetime only by Employee. The person or persons, if any, to whom this Option is
transferred by will or by the laws of descent and distribution shall be treated after Employee’s
death the same as Employee under this Option Certificate.

     § 6. No Right to Continue Service. Neither the Plan, this Option, nor any related
material shall give Employee the right to continue in employment by ASG or shall adversely affect
the right of ASG to terminate Employee’s employment with or without cause (as determined by the
Committee) at any time.

     § 7. Stockholder Status. Employee shall have no rights as a stockholder with respect
to any shares of Stock under this Option until such shares have been duly issued and delivered to
Employee, and no adjustment shall be made for dividends of any kind or description whatsoever or
for distributions of rights of any kind or description whatsoever respecting such Stock except as
expressly set forth in the Plan.

     § 8. Governing Law. The Plan and this Option shall be governed by the laws of the
State of Delaware.

     § 9. Binding Effect. This Option shall be binding upon ASG and Employee and their
respective heirs, executors, administrators and successors.

     § 10. Tax Withholding. This Option has been granted subject to the condition that
Employee consents to whatever action the Committee directs to satisfy the minimum statutory federal
and state withholding requirements, if any, which ASG determines are applicable upon the exercise
of this Option.

     § 11. References. Any references to sections (§) in this Option Certificate shall be
to sections (§) of this Option Certificate unless otherwise expressly stated as part of such
reference.

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Exhibit 10.2

EMPLOYMENT AGREEMENT

     AGREEMENT dated the 11th day of October, 2010, between Carl Keldie (“Employee”) and
America Service Group Inc., a Delaware Corporation (the “Company”).

     WHEREAS, the Company seeks to continue to employ the Employee; and

     WHEREAS, the Employee would like to continue to be employed by the Company and accepts the
positions contemplated herein;

     NOW, THEREFORE, the parties hereby agree as follows:

     1. Employment and Duties. The Company hereby agrees to continue to employ the
Employee as Senior Vice President, Chief Medical 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 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, subject to his professional
medical ethical and other obligations to patients. The Company shall not direct the Employee with
respect to the practice of medicine or any professional medical judgments.

     3. Term. The term of Employee’s employment hereunder shall commence as of the date
hereof and shall continue until terminated in accordance with the provisions of Paragraph 7 of this
Agreement.

     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 a gross annual rate of
not less than $340,683 Dollars and 98/100’s, less applicable withholdings, payable in such
installments as the parties shall mutually agree; plus (ii) such additional compensation as the CEO
and/or the Incentive Stock and 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 Without Cause. The Company shall have the right to terminate the
employment of Employee at any time, without cause, upon thirty (30) days advance written notice.

     (b) Termination for Cause. The Company shall have the right to terminate the
employment of Employee at any time, without advance notice, 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, 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.

     (c) Disability, Death. If Employee shall fail to or be unable to perform the
essential functions of his position, with or without a reasonable accommodation, 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 as provided for in this Agreement.

     (d) Change in Control. For purposes of this Agreement, a “change in control”
shall mean a change in control of America Service Group Inc.(hereinafter referred to as ‘ASG’)
involving (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 ASG , becomes the beneficial owner, directly or
indirectly, of securities of ASG representing 50% or more of the combined voting power of the
ASG’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
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(b), 7(c) 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(a) without cause, or if there
is a “Change in Control” 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(a), 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) as of the termination pursuant to Section 7(a), 7(c) or 7(d), a continuation,
on a bi-weekly basis, of Employee’s bi-weekly 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 and have access to the Company and its affiliates’ confidential business information and trade
secrets 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’s employment with the Company is
terminated for any reason, neither Employee nor any company with which Employee is affiliated as an
owner, agent, 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, and so long as Employee has no active
participation in the Business on

 

 

behalf of such company; 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, and so long as Employee
has no active participation in the Business on behalf of such company, (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
term “Business” shall consist of (A) delivery of medical services, mental health services, dental
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) 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) Employee agrees and understands that his duty to maintain the confidentiality of and
protect the Company’s confidential business information and trade secrets continues indefinitely
after his employment with the Company has been terminated. Employee further agrees that, after the
termination of his employment with the Company, he is absolutely precluded from using, in any way,
the Company’s confidential business information or trade secrets for any purpose.

     (d) Employee acknowledges and recognizes that if he breaches any of the provisions of this
Section 8, the Company will suffer serious and irreparable harm as a result. 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.

105 Westpark Drive, Suite 200

Brentwood, TN 37027

Attn: Chief Legal Officer

 

 

	 	(ii)	 	If to Employee:

Carl J. Keldie

6326 Westcates Ct.

Brentwood, Tennessee 37027

     10. Assignment. The Company has the right to assign this Agreement as appropriate to
an affiliate or successor entity. Except as otherwise provided herein, Employee may not assign his
rights and obligations hereunder to another person or entity.

     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:  	/s/ Richard Hallworth 
 	 
	 	 	 
	 	EMPLOYEE:

 	 
	 	By:  	/s/ Carl J. Keldie, MD

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