**Exhibit 10.16**

 

 

**MANAGEMENT EMPLOYMENTAGREEMENT**

 

**CORNELL COMPANIES, INC.**

 

This EMPLOYMENT AGREEMENT is made and entered intoas of this 19th day of March, 2007, by and between Cornell Companies, Inc.,a Delaware corporation (the “Company”), and William E. Turcotte (“Employee”).

 

WHEREAS, the Company wishes to employ the Employeeand to enter into an agreement embodying the terms of such employment (this “Agreement”)and Employee desires to enter into this Agreement and to accept suchemployment, subject to the terms and provisions of this Agreement.

 

NOW, THEREFORE, in consideration of the promises andmutual covenants contained herein and for other good and valuableconsideration, the receipt and sufficiency of which are mutually acknowledged,the Company and Employee hereby agree as follows:

 

# Section 1.               **Definitions**.

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## (a)           “AccruedObligations” shall mean (i) all accrued but unpaid Base Salary throughthe date of termination of Employee’s employment, (ii) any unpaid orunreimbursed business expenses incurred in accordance with Section 8below, (iii) any benefits provided under the Company’s employee benefitplans or arrangements, in accordance with the terms of any such benefit plansor arrangements, and (iv) payments or benefits required to be providedEmployee by operation of applicable law.

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## (b)           “Base Salary”shall mean the salary provided for in Section 6(a), below, or anyincreased salary granted to Employee pursuant to Section 6(a).

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## (c)           “Board” shallmean the Board of Directors of the Company.

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## (d)           “Cause” shallmean (i) material acts of personal dishonesty substantially relevant toCompany matters, gross negligence or willful misconduct by Employee inconnection with Employee’s employment duties; (ii) failure or refusal byEmployee to perform in any material respect his duties or responsibilitiesunder this Agreement; (iii) misappropriation by Employee of the assets orbusiness opportunities of the Company or its affiliates; (iv) embezzlementor other financial fraud committed by Employee, at his direction, or with hispersonal knowledge; (v) Employee’s indictment for, conviction of,admission to, or entry of pleas of no contest to any felony or any crimeinvolving moral turpitude; (vi) public or consistent drunkenness byEmployee or his illegal use of narcotics which is, or could reasonably beexpected to become, materially injurious to the reputation or business of theCompany or its affiliates or which impairs, or could reasonably be expected toimpair, the performance of Employee’s duties hereunder; or (vii) Employee’sbreach of any material provision of this Agreement or violation of the Company’spractices or policies.

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## (e)           A “Change in Control” shall bedeemed to have occurred on the earliest of the following dates:  (i) the date the Company merges orconsolidates with any other entity, and the Company’s stockholders do not own,directly or indirectly, at least 50% of the voting capital stock of thesurviving entity; (ii) the date the Company sells all or substantially allof its assets to any other person or entity; provided that the sale or othertransfer of Company facilities to a real estate investment trust, in asale-leaseback transaction, or any similar transaction shall not be considereda sale of all or substantially all of the Company’s assets; (iii) the datethe Company is dissolved; or (iv) the date any third person or entitytogether with its Affiliates becomes, directly or indirectly, the beneficialowner of the least 51% of the Voting Stock of the Company; provided, however,that notwithstanding anything to the contrary contained in clauses (i) —(iv), a Change in Control shall not be deemed to have occurred in connectionwith any bankruptcy or insolvency of the Company, or any transaction inconnection therewith.

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### (i)            “Affiliate” shall mean, with respectto any person or entity, any person or entity that directly or indirectlyControls, is Controlled by, or is under common Control with such person orentity;

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### (ii)           “Control” shall mean, with respect toa person or entity, the possession, directly or indirectly, of the power todirect or cause the direction of the management and policies of such person orentity, in any way.

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### (iii)          “Voting Stock” shall mean theoutstanding shares of capital stock of the Company entitled to vote generally inelections for directors, considered as one class, provided that if any sharesare entitled to more or less than one vote, the term Voting Stock shall referto such proportion of the votes entitled to be cast by such shares.

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Notwithstanding anything to the contrary above, ifthe Employee’s position, duties and responsibilities on behalf of the Companyare devoted entirely to one distinct operating division of the Company, andthat operating division of the Company is the subject of a Sale, then such Saleof that operating division shall be deemed a Change in Control for thatEmployee. In the event the Company and the Employee do not agree whether he wasemployed by such a distinct operation division, the issue shall be determinedwith finality by the Company’s then-Chief Executive Officer in his sole andabsolute discretion.

 

## (f)               “CommencementDate” shall mean March 19, 2007.

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## (g)              “Company”shall mean Cornell Companies, Inc., a Delaware corporation.

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## (h)              “CompetitiveActivities” shall mean any business activities in which the Company or itssubsidiaries are engaged or have plans to engage either (i) during theperiod of Employee’s employment, or (ii) for purposes of Employee’sobligations under Subsection 10(b) after the period of Employee’semployment, at the time of termination of Employee’s employment, includingwithout limitation, (i) correctional services, (ii) half-way houseservices or treatment programs, (iii) juvenile justice programs orfacilities, and (iv) related educational, correctional, rehabilitative, ortreatment services.

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## (i)               “ConfidentialInformation” shall have the meaning set forth in Subsection 10(a), below.

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## (j)               “Developments”shall have the meaning set forth in Subsection 10(e), below.

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## (k)              “Disability”shall mean any physical or mental disability or infirmity that prevents theperformance of Employee’s duties (despite reasonable accommodation) for aperiod of (i) sixty (60) consecutive days or (ii) ninety (90)non-consecutive days during any twelve (12) month period.  Any question as to the existence, extent orpotentiality of Employee’s Disability upon which Employee and the Companycannot agree shall be determined by a qualified, independent physician selectedby the Company and approved by Employee (which approval shall not beunreasonably withheld).  Thedetermination of any such physician shall be final and conclusive for allpurposes of this Agreement.

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(l)               “Entity”shall mean any “person” other than an individual person.

 

## (m)             “Long-termIncentive Plan” shall mean the Cornell Companies, Inc. Long-termIncentive Plan, as the same may be established, amended, modified orsupplemented (including replacement or additional plans) from time to time inthe sole discretion of the Company.

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## (n)              “Non-competitionRestricted Period” shall mean the period commencing on the CommencementDate and extending through (a) the twelve (12) month anniversary of thedate of Employee’s termination of employment hereunder pursuant to Section 9for any reason, but (b) the eighteen (18) month anniversary of the date ofEmployee’s termination of employment hereunder following a Change in Control inaccordance with Subsection 9(f).

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## (o)              “Non-solicitationRestricted Period” shall mean the period commencing on the CommencementDate and extending through the (a) twelve (12) month anniversary of thedate of Employee’s termination of employment hereunder pursuant to Section 9for any reason, but (b)  the eighteen (18) month anniversary of the dateof Employee’s termination hereunder following a Change in Control in accordancewith Subsection 9(f). .

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(p)              “Sale”shall mean a transfer of all or substantially all of the interests of theCompany, or a Change in Control of the Company, or any transaction having asimilar effect (including, without limitation, a merger or consolidation).

 

## (q)              “SeveranceAmount” shall mean the amount specified in Subsection 9(d)(ii) or, inthe alternative, Subsection 9(f), as applicable, below.

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# Section 2.               **Acceptance;“At Will” Employment**.

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The Company agrees to employ Employee and Employeeagrees to serve the Company on the terms and conditions set forth herein.  Employee’s employment is and shall at alltimes be on an “at will” basis, meaning that either the Company or the Employeemay terminate the employment relation, at any time, without notice to theother, for any lawful reason, except as may otherwise be required to satisfythe obligations of Company and Employee to each other pursuant to the terms ofthis Agreement.

 

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Section 3.               **Position,Duties and Responsibilities**.

 

## (a)         Position;Duties:  Throughout his period ofemployment, Employee shall be employed and serve as the Corporate GeneralCounsel of the Company (together with such other position or positionsconsistent with Employee’s title as the Company shall specify from time totime) and shall have such duties typically associated with such title and asmay otherwise be assigned to him by the Company. Employee also agrees to serveas an officer and/or director of any subsidiary of the Company withoutadditional compensation.

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## (b)        FullBusiness Time: Employee shall devote his full business time, attention,skill and best efforts to the performance of his duties under this Agreementand shall not engage in any other occupation or active business during theperiod of his employment, including, without limitation, any such activity that(x) conflicts with the interests of the Company, (y) interferes withthe proper and efficient performance of his duties for the Company or (z) interfereswith the exercise of his judgment in the Company’s best interests.

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## (c)           CompanyPolicies:  The Employee shall complywith all Company practices, policies and procedures (including the Company’sconflict of interest policy) as in effect from time to time.

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# Section 4.       **Location.**

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The location of Employee’s employment by the Companyshall be in the greater metropolitan area of Houston, Texas, or withinfifty (50) miles of such greater metropolitan area, except where Employee andCompany have entered into a written arrangement that provides for the Employeeto work primarily from Employee’s own home office.

 

# Section 5.      **Relocation.**

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##                                 Inthe event that the Company shall request Employee to relocate his principalresidence, the Company shall reimburse employee for any reasonable movingexpenses that are actually incurred by Employee in connection with any suchrelocation, provided Employee furnishes to the Company any documentationreasonably requested by the Company evidencing any such reasonable movingexpenses.

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# Section 6. **  Compensation**.

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#                 During the period of hisemployment, Employee shall be entitled to the following compensation:

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## (a)           Base Salary.  Employee shall be paid an annualized BaseSalary, payable in accordance with the regular payroll practices of theCompany, of $230,000.00, with increases, if any, as may be approved in writingby the Company, in its sole discretion. During the Employment Period, the BaseSalary shall be reviewed at least annually. Any increase in Base Salary shall not serve to limit or reduce any otherobligation to the Employee under this Agreement.  The term Base Salary as utilized in this Agreementshall refer to Base Salary as so increased.

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## (b)           IncentiveCompensation.   Employee shall beeligible for the annual discretionary incentive compensation plan as determinedby the Company, in its sole discretion (the “Incentive Compensation”).  Employee shall receive the IncentiveCompensation, if any, in respect of any year at the same time as incentivecompensation awards are paid to other executive officers of the Company, but inno event later than one hundred twenty (120) days after the end of the fiscalyear for which the incentive compensation is payable. The annual target bonusforming part or all of the Incentive Compensation shall be no less thanthirty-five percent (35%) of Employee’s Base Salary.

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## (c)           Long-termIncentive Plan.  Employee will beeligible to participate in the Long-term Incentive Plan, subject to the termsand provisions of such Plan.

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# Section 7.  ** Employee Benefits; Vacation, etc.**

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## During the period of his employment, Employee shall beentitled to participate in such health, insurance, retirement and otherbenefits generally provided to other members of the senior management team ofthe Company.  Employee shall also beentitled to the same number of holidays, paid time off and other employmentpolicies and practices as are generally allowed to members of the seniormanagement team of the Company in accordance with the Company policy in effectfrom time to time.    Nothing in thisAgreement shall prevent or limit the Employee’s continuing or futureparticipation in any plan, program, policy or practice provided by the Companyand for which the Employee may qualify according to the terms therein as may bemodified from time to time.  Amounts thatare vested benefits or that the Employee is otherwise entitled to receive underany plan, policy, practice or program of, or any contract or agreement with theCompany at or subsequent to the termination shall be payable in accordance withthe terms of such plan, policy, practice or program, or contract or agreementas may be modified from time to time.

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# Section 8.     **Reimbursement of Business Expenses**.

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Employee is authorized to incur reasonable businessexpenses in carrying out his duties and responsibilities under this Agreementand the Company shall promptly reimburse him for all reasonable businessexpenses incurred in connection with carrying out the business of the Company,subject to documentation in accordance with the Company’s policy, as in effectfrom time to time.

 

# Section 9.               **Termination of Employment**.

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## (a)           General.  The Employee’s employment hereunder shallterminate upon the earliest to occur of (i) Employee’s death, (ii) atermination by reason of a Disability, (iii) a termination by the Companywith Cause, (iv) a termination by the Company without Cause, (v) terminationby the Employee, or a termination by the Company without Cause following aChange in Control. Upon any termination of Employee’s employment for anyreason, except as may otherwise be requested by the Company in writing,Employee shall resign from any and all directorships, committee memberships orany other positions Employee holds with the Company or any of itsaffiliates.  Notwithstandingany other provision of this Agreement, the provisions of this Section 9shall exclusively govern Employee’s rights upon termination of employment with 

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## the Company, provided, however,that nothing contained in this Section 9 shall diminish Employee’s rightswith respect to the Long-term Incentive Plan, the terms and provisions of whichshall continue to govern Employee’s rights and interests in the Long-termIncentive Plan following any termination in accordance therewith, or theAccrued Obligations.

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## (b)           Terminationdue to Death or Disability.  Employee’semployment shall terminate automatically upon his death.  The Company may terminate Employee’semployment immediately upon the occurrence of a Disability, as defined inSubsection 1(k) above, such termination to be effective upon Employee’sreceipt of written notice of such termination. In the event Employee’s employment is terminated due to his death orDisability, Employee or his estate or his beneficiaries, as the case may be,shall be entitled to:

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### (i)               The Accrued Obligations; and

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### (ii)              Anyunpaid Incentive Compensation in respect to any completed fiscal year which hasended prior to the date of such termination, which amount shall be paid at suchtime as incentive compensation awards are paid to other senior executives ofthe Company.

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Following such terminationof Employee’s employment by the reason of death or Disability, except as setforth in this Subsection 9(b), Employee shall have no further rights to anycompensation or any other benefits under this Agreement.

 

## (c)              Termination by the Company forCause.

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### (i)               Atermination for Cause shall not take effect unless the provisions of thisSubsection (i) are complied with. Employee shall be given not less than fourteen (14) days written noticeby the Company of the intention to terminate him for Cause, which notice shalldescribe the particular act or acts or failure or failures to act thatconstitute the grounds on which the proposed termination for Cause isbased.  If the nature of the allegedCause is capable of cure, Employee shall have fourteen (14) days after the datethat such written notice has been given to Employee in which to cure suchconduct. If he fails to cure such conduct within that time period, thetermination shall be effective on the date immediately following the expirationof the fourteen (14) day notice period. During any cure period provided hereunder, the Company may, in its soleand absolute discretion, prohibit Employee from entering the premises of theCompany or otherwise performing his duties hereunder, provided it does notprevent the cure by doing so.

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### (ii)              Inthe event the Company terminates Employee’s employment for Cause, he shall beentitled only to the Accrued Obligations.

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### Followingsuch termination of Employee’s employment for Cause, except as set forth inthis Subsection 9(c), Employee shall have no further rights to any compensationor any other benefits under this Agreement.

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## (d)           Terminationby the Company without Cause.  TheCompany may terminate Employee’s employment at any time without Cause,effective upon Employee’s receipt of written notice of such termination.  In the event Employee’s employment isterminated by the Company without Cause (other than due to death orDisability), Employee shall be entitled to:

 

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### (i)               The Accrued Obligations;

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### (ii)              Paymentin twenty-six (26) equal bi-monthly installments of twelve (12) months ofthen-Base Salary (the “Severance Amount”), less applicable withholdings anddeductions, subject in all events to Section 21 of this Agreement.

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### (iii)             Anyunpaid Incentive Compensation in respect to any completed fiscal year which hasended prior to the date of such termination, which amount shall be paid at suchtime as incentive compensation awards are paid to other senior executives ofthe Company; and

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### (iv)             ShouldEmployee be eligible for and elect to continue his health insurance pursuant toCOBRA following the date of such termination, the Company will pay the COBRApremiums, less the amount deducted from Employee’s severance in an amount equalto that which had been deducted for such insurance coverage when he was aregular employee, until the earlier of: (A) twelve (12) months or (B) thedate Employee commences employment with any person or entity and, thus, iseligible for health insurance benefits.

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Notwithstanding the foregoing,the payments and benefits described in Subsections (ii), (iii) and (iv) aboveshall immediately terminate, and the Company shall have no further obligationsto Employee with respect thereto, in the event that Employee breaches anyprovision of Section 10 hereof.

 

Following such termination of Employee’s employmentby the Company without Cause, except as set forth in this Subsection 9(d),Employee shall have no further rights to any compensation or any other benefitsunder this Agreement.

 

## (e)         Terminationby Employee.  Employee may terminatehis employment by providing the Company thirty (30) days written or oral noticeof such termination.  In the event of atermination of employment by Employee under this Subsection 9(e), Employeeshall be entitled only to the Accrued Obligations.  In the event of termination of Employee’semployment under this Subsection 9(e), the Company may, in its sole andabsolute discretion, prohibit Employee from entering the premises of theCompany for all or any portion of the notice period (which in no event shall betreated as a termination without Cause), provided that the Company shallcontinue to pay to Employee his then current Base Salary and continue benefitsprovided for the duration of the notice period.

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Following such terminationof Employee’s employment by Employee, except as set forth in this Subsection9(e), Employee shall have no further rights to any compensation or any otherbenefits under this Agreement.

 

## (f)            Terminationby Company Without Cause Following a Change in Control.  If, within one hundred eighty (180) daysfollowing a Change in Control, the Company terminates the employment of theEmployee without Cause, then the Employee shall be treated in all respects asif he was terminated Without Cause in accordance with Subsection 9(d), above,except that (1) the Severance Amount shall represent eighteen (18) monthsof then-Base Salary, payable in eighteen (18) equal monthly installments, (2) paymentof employee’s COBRA premiums, as described in Subsection 9(d)(iv) above,shall continue until the earlier of: (A)

 

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## eighteen (18) months or (B) the date Employeecommences employment with any person or entity and, thus, is eligible forhealth insurance benefits, and (3) the Employee will also receive in “lumpsum” fashion, less applicable deductions and withholdings, a paymentrepresenting the discretionary Incentive Compensation he would have beenawarded following the fiscal year’s end, as determined by the Company in itssole discretion, pro-rated for the period of time he was employed by theCompany in the fiscal year for which the bonus is payable.

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Notwithstanding the foregoing, the paymentsand benefits described in this Subsections 9(f) shall immediatelyterminate, and the Company shall have no further obligations to Employee withrespect thereto, in the event that Employee breaches any provision of Section 10hereof.

 

Following such termination of Employee’s employment by the Companywithout Cause within One Hundred Eighty (180) days of a Change of Control,except as set forth in this Subsection 9(f), Employee shall have no furtherrights to any compensation or any other benefits under this Agreement.

 

## (g)           Release.  Notwithstanding any provision herein to thecontrary, the Company may require that, prior to payment of any amount orprovision of any benefit other than the Accrued Obligations, Employee shallhave executed a customary general release in favor of the Company and itsaffiliates and related parties in such form as is reasonably required by theCompany, and any waiting periods contained in such release shall have expired.

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# Section 10.             **RestrictiveCovenants**.

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# Employee acknowledges andagrees that (A) the agreements and covenants contained in this Section 10are (i) reasonable and valid in geographical and temporal scope and in allother respects, and (ii) essential to protect the value of the Company’sbusiness and assets, and (B) by his employment with the Company, Employeewill obtain knowledge, contacts, know-how, training and experience and there isa substantial probability that such knowledge, know-how, contacts, training andexperience could be used to the substantial advantage of a competitor of theCompany and to the Company’s substantial detriment.  For purposes of this Section 10,references to the Company shall be deemed to include its subsidiaries.

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## (a)           Confidential Information.  At any time during and after the end of theperiod of Employee’s employment by the Company, without the prior writtenconsent of the Company, except to the extent required by an order of a courthaving jurisdiction or under subpoena from an appropriate government agency, inwhich event, Employee shall use his best efforts to consult with the Companyprior to responding to any such order or subpoena, and except as required inthe performance of his duties hereunder, Employee shall not disclose to or usefor his benefit or the benefit of any third party any confidential orproprietary trade secrets, customer lists, drawings, designs, informationregarding legislative initiatives, contract negotiations, vendor arrangements, productdevelopment, marketing plans, sales plans, manufacturing plans, managementorganization information, operating policies or manuals, business plans,financial records, packaging design or other financial, commercial, business ortechnical information (i) relating to the Company, or (ii) that theCompany may receive belonging to suppliers, customers, or others who dobusiness with the Company (collectively, 

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## “Confidential Information”).  Employee’s obligation under this Subsection10(a) shall not apply to any information which (i) is known publicly;or (ii) is in the public domain or hereafter enters the public domainwithout the breach of Employee of this Subsection 10(a); or (iii) is madeavailable to Employee by a third party not in breach of an obligation ofconfidentiality.

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## (b)        Non-Competition.** **Employeecovenants and agrees that during the Non-competition Restricted Period, withrespect to any State of the United States of America or any other jurisdictionin which the Company engages in business during his employment, or, followingtermination of Employee’s employment, was engaged in business at the time ofsuch termination, Employee shall not, directly or indirectly, individually orjointly, own any interest in, operate, join, control or participate as apartner, director, principal, officer, or agent of, enter into the employmentof, act as a consultant to, or perform any services for any person or entity (i) thatengages in Competitive Activities or (ii) in which any such relationshipwith Employee would result in the likely, probable or inevitable use ordisclosure of Confidential Information; provided that nothing shall prohibitEmployee from being a partner or employee of, or otherwise being associatedwith, a professional services firm as long as Employee is not directly engagedin the provision of services to any such person or entity.  Notwithstanding anything herein to thecontrary, this Subsection 10(b) shall not prevent Employee from acquiringas an investment securities representing not more than three percent (3%) ofthe outstanding voting securities of any publicly-held corporation.

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## (c)         Non-Solicitation; Non-Interference.  During the Non-solicitation RestrictedPeriod, Employee shall not, directly or indirectly, for his own account or forthe account of any other person or entity, (i) encourage, solicit orinduce, or in any manner attempt to encourage, solicit or induce, any person orentity employed by, as an agent of, or a service provider to, the Company toterminate (or, in the case of an agent or service provider, reduce) such person’sor entity’s employment, agency or service, as the case may be, with theCompany; (ii) solicit or accept business from any individual or entity forwhom the Company provided services or products within the one-year periodimmediately preceding the date of Employee’s termination of employment; or (iii) solicitor accept business from any prospective customer or client of the Company who,within the one-year period immediately preceding the date of Employee’stermination of employment, Employee had directly solicited or where, directlyor indirectly, in whole or in part, Employee supervised or participated in theCompany’s solicitation activities related to such prospective customer orclient, nor shall he assist any person or entity to engage in any activityprohibited by this Subsection 10(c).

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## (d)       Return of Documents.  In the event of the termination of Employee’semployment for any reason, Employee shall deliver to the Company all of (i) theproperty of the Company, and (ii) the documents and data of any nature andin whatever medium of the Company, and he shall not take with him any suchproperty, documents or data or any reproduction thereof, or any documentscontaining or pertaining to any Confidential Information.

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## (e)       Works for Hire.  Employee agrees that the Company shall ownall right, title and interest throughout the world in and to any and allinventions, original works of authorship, developments, concepts, know-how,improvements or trade secrets, whether or not patentable or registerable undercopyright or similar laws, which Employee may solely or jointly conceive ordevelop or reduce to practice, or cause to be conceived or developed or reducedto 

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## practice during Employee’s period of Employment,whether or not during regular working hours, provided they either (i) relateat the time of conception or development to the actual or demonstrably proposedbusiness or research and development activities of the Company; (ii) resultfrom or relate to any work performed for the Company; or (iii) aredeveloped through the use of Confidential Information and/or Company resourcesor in consultation with Company personnel (collectively referred to as “Developments”).  Employee hereby assigns all right, title andinterest in and to any and all of these Developments to the Company.  Employee agrees to assist the Company, at theCompany’s expense, to further evidence, record and perfect such assignments,and to perfect, obtain, maintain, enforce, and defend any rights specified tobe so owned or assigned.  Employee herebyirrevocably designates and appoints the Company and its agents asattorneys-in-fact to act for and on Employee’s behalf to execute and file anydocument and to do all other lawfully permitted acts to further the purposes ofthe foregoing with the same legal force and effect as if executed byEmployee.  In addition, and not incontravention of any of the foregoing, Employee acknowledges that all originalworks of authorship which are made by him (solely or jointly with others)within the scope of employment and which are protectable by copyright are “worksmade for hire,” as that term is defined in the United States Copyright Act (17USC Sec. 101).  To the extent allowed bylaw, this includes all rights of paternity, integrity, disclosure andwithdrawal and any other rights that may be known as or referred to as “moralrights.”  To the extent Employee retainsany such moral rights under applicable law, Employee hereby waives such moralrights and consents to any action consistent with the terms of this Agreementwith respect to such moral rights, in each case, to the full extent of such applicablelaw.  Employee will confirm any suchwaivers and consents from time to time as requested by the Company.

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## (f)        Blue Pencil.  If any court of competent jurisdiction shallat any time deem the duration or the geographic scope of any of the provisionsof this Section entitled “Restrictive Covenants” unenforceable, the otherprovisions of this Section entitled “Restrictive Covenants” shallnevertheless stand and the duration and/or geographic scope set forth hereinshall be deemed to be the longest period and/or greatest size permissible bylaw under the circumstances, and the parties hereto agree that such court shallreduce the time period and/or geographic scope to permissible duration or size.

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# Section 11.             **InjunctiveRelief**.

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Without limiting the remedies available to the Company, Employeeacknowledges that a breach or threatened breach of any of the covenantscontained this Section 10 hereof may result in material irreparable injuryto the Company or its subsidiaries or affiliates for which there is no adequateremedy at law, that it will not be possible to measure damages for suchinjuries precisely and that, in the event of such a breach or threat thereof,the Company shall be entitled to obtain a temporary restraining order and/or apreliminary or permanent injunction, without the necessity of provingirreparable harm or injury as a result of such breach or threatened breach of Section 10hereof, restraining Employee from engaging in activities prohibited by Section 10hereof or such other relief as may be required specifically to enforce any ofthe covenants in Section 10 hereof. Notwithstanding any other provision to the contrary, the Non-competitionRestriction Period and the Non-solicitation Restriction Period shall be tolledduring any period of violation of any of the covenants in Subsections 10(b) or(c) hereof and during any other period required for litigation duringwhich the Company seeks to enforce 

 

 

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such covenants against Employee or another person or entity with whomEmployee is affiliated if it is ultimately determined that Employee was inbreach of such covenants.

 

# Section 12.             **Representationsand Warranties of Employee**.

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Employee represents and warrants to the Company that:

 

## (a)           Employee is entering into thisAgreement voluntarily and that his execution of this Agreement, his employmenthereunder and compliance with the terms and conditions hereof will not conflictwith or result in the breach by him of any agreement to which he is a partyor by which he may be bound;

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## (b)           He has not, and in connection withhis employment with the Company will not, violate any non-solicitation or othersimilar covenant or agreement by which he is or may be bound;

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## (c)           in connection with his employment withthe Company he will not use any confidential or proprietary information he mayhave obtained in connection with employment with any prior employer; and

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(d)           The Company hassuggested to the Employee that he seek legal counsel of his choice to reviewthis Agreement before he signs it, and he has been given full and ampleopportunity to do so.

 

# Section 13.             **Taxes**.

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The Company may withhold from any payments made under this Agreementall applicable taxes, including but not limited to income, employment and socialsecurity taxes, as shall be required by law or governmental regulation orruling.

 

# Section 14.             **Set Off; No Mitigation**.

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The Company’s obligation to pay Employee the amounts provided and tomake the arrangements provided hereunder shall be subject to set-off,counterclaim or recoupment of amounts owed by Employee to the Company or itsaffiliates. Employee shall not be required to mitigate the amount of anypayment provided for pursuant to this Agreement by seeking other employment orotherwise and, except as expressly provided for in this Agreement, the amountof any payment provided for pursuant to this Agreement shall not be reduced byany compensation earned as a result of Employee’s other employment orotherwise.

 

# Section 15.             **Successorsand Assigns; No Third-Party Beneficiaries**.

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# (a)           The Company. This Agreementshall inure to the benefit of, be binding upon, and be enforceable by, and may be assigned by the Company to, anypurchaser of all or substantially all of the Company’s business or assets, or anoperating division thereof, any successor to the Company or any assigneethereof (whether direct or indirect, by stock purchase, asset purchase, merger,consolidation or otherwise).  The Companywill require any such purchaser, successor or assignee to expressly assume andagree to perform this Agreement in the 

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# same manner and to the same extent that the Companywould be required to perform it if no such purchase, succession or assignmenthad taken place.

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## (b)           Employee.  Employee’s rights and obligations under thisAgreement shall not be transferable by Employee by assignment or otherwise,without the prior written consent of the Company; provided, however,that if Employee shall die, all amounts then payable to Employee hereundershall be paid in accordance with the terms of this Agreement to Employee’sestate.

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## (c)           No Third-Party Beneficiaries. Nothing expressed or referred to in this Agreement will be construed togive any person or entity other than the Company and Employee any legal orequitable right, remedy or claim under or with respect to this Agreement or anyprovision of this Agreement.

##  

# Section 16.             **Waiverand Amendments**.

#  

Any amendment or modification of any of the terms of this Agreement shallbe valid only if made in writing and signed by each of the parties hereto.  No waiver by either of the parties hereto oftheir rights hereunder or of compliance by the other party of any of the termsor conditions hereof shall be effective unless the party waiving its rightshereunder or compliance with the terms hereof shall have executed a writteninstrument setting forth the terms and conditions of such waiver.  In addition, no waiver by either of theparties hereto of their rights hereunder or of compliance by the other party ofany of the terms or conditions hereof shall be deemed to constitute a waiverwith respect to any subsequent occurrences or transactions hereunder unlesssuch waiver specifically states that it is to be construed as a continuingwaiver.

 

# Section 17.             **Severabilityand Governing Law**.

#  

Without limiting the terms of Section 10 above, if any covenantsor such other provisions of this Agreement are found to be invalid orunenforceable by a final determination of a court of competent jurisdiction: (a) theremaining terms and provisions hereof shall be unimpaired, and (b) theinvalid or unenforceable term or provision hereof shall be deemed replaced by aterm or provision that is valid and enforceable and that comes closest toexpressing the intention of the invalid or unenforceable term or provisionhereof.  This Agreement shall be governedby and construed in accordance with the laws of the State of Texas(without  giving effect to the choice oflaw principles thereof) applicable to contracts made and to be performedentirely within such state.

 

# Section 18.             **Notices.**

#  

#                                 Every notice or other communicationrelating to this Agreement shall be in writing, and shall be mailed ordelivered to the party for whom it is intended at such address as may from timeto time be designated by it in a notice mailed or delivered to the other partyas herein provided, provided that, unless and until some other address shall beso designated, all notices or communications by Employee to the Company shall bemailed or delivered to the Company at its principal executive office, and allnotices or communications by the Company to Employee may be given to Employeepersonally or may be mailed to Employee at Employee’s last known address, asreflected in the Company’s records.  Acopy of any notice provided to the 

#  

 

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# Company by Employeehereunder shall be sent simultaneously to the Company’s Chief ExecutiveOfficer, or the Company’s Corporate Secretary, at the address of the Company’sprimary corporate office.

#  

## Any notice soaddressed shall be deemed to be given:  (i) ifdelivered by hand, on the date of such delivery; (ii) if mailed by courieror by overnight mail, on the first business day following the date of suchmailing; and (iii) if mailed by registered or certified mail, on the thirdbusiness day after the date of such mailing.

##  

# Section 19.             **Section Headings**.

#  

The headings of the Sections and Subsections of this Agreement areinserted for convenience only and shall not be deemed to constitute a partthereof, affect the meaning or interpretation of this Agreement or of any termor provision hereof.

 

# Section 20.             **IRSCode Section 409A**

#  

Notwithstanding any other provision of this Agreement to the contrary,if the Employee is a “Specified Employee” as defined in IRS Code (“the Code”) Section 409A,and if any amounts that the Employee is entitled to receive pursuant to thisAgreement are otherwise not exempt from Code Section 409A as a short-termdeferral or otherwise, then to the extent necessary to comply with Code Section 409A,no payments may be made and no benefits may be provided under this Agreementbefore the date which is six (6) months after the Employee’s “separationfrom service” within the meaning of Code Section 409A or, if earlier, theEmployee’s death.  Any payments whichwould have otherwise been required to be paid during such six (6) monthsor, if earlier, before the Employee’s death, shall be paid to the Employee inone lump sum payment as soon as administratively practical after the date whichis six (6) months after the Employee’s separation from service or, ifearlier, the Employee’s date of death. The Employee’s termination of employmentunder this Agreement shall be interpreted in a manner consistent with thedefinition of “Separation from Service” in Code Section 409A. To theextent this Agreement is subject to Code Section 409A, it is intended tocomply with the applicable requirements of Code Section 409A and shall beconstrued and interpreted in accordance therewith.

 

# Section 21.             **EntireAgreement**.

#  

This Agreement, together with any agreements executed by the Companyand Employee in respect of awards under the Plan, constitutes the entireunderstanding and agreement of the parties hereto regarding the employment ofEmployee.  This Agreement supersedes allprior negotiations, discussions, correspondence, communications, understandingsand agreements between the parties relating to the subject matter of this Agreement.

 

# Section 22.             **Survivalof Operative Sections**.

#  

Upon any termination of Employee’s employment, the provisions ofSections 9, 10, 11, 13, 14, 15, 16, 17, 18 and 23 of this Agreement (and anyrelated definitions set forth in Section 1 hereof) shall survive to theextent necessary to give effect to the provisions thereof.

 

#  

 

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# Section 23.             **Gender Neutrality.**

#  

Any use of the male or female pronouns in this Agreement, whether “he,”“she,” “him,” “her” or words or phrases to similar effect, shall have nosignificance in the interpretation and application of the terms, provisions andconditions of this Agreement, such use being solely for the sake ofconvenience.

 

# Section 24.             **Counterparts;Facsimile Signature.**

#  

This Agreement may be executed in two or more counterparts, each ofwhich shall be deemed to be an original but all of which together shallconstitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.

 

**IN WITNESS WHEREOF**, the undersigned haveexecuted this Employment Agreement as of the date first above written.

 
| ** ** | **CORNELL COMPANIES, INC.** |
|------------|-----------------------------|
| ** ** | ** **                  |
| ** ** | ** **                  |
|       | By:                         |   |
|       |                        | Patrick N. Perrin, |
|       |                        | Sr. V.P. & |
|       |                        | Chief Administrative Officer |
|       |                        |
|       |                        |
|       | Employee                    |
|       |                        |
|       | William E. Turcotte         |

 

 

 

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