EXHIBIT 10.2


 


CORNELL
COMPANIES, INC.


 


RESTRICTED STOCK AWARD AGREEMENT


 


(Performance Based)


 


This
Award Agreement is made effective as of April 1, 2010 (the “Date of Grant”)
by CORNELL COMPANIES, INC. (the “Company”) to                              (the “Participant”).


 


1.                                       Grant.


 


(a)           Shares.  Pursuant to the Company’s 2006 Incentive Plan,
as amended and restated (the “Plan”),                                    contingent, performance-based
restricted shares (the “Restricted Shares”) of the Company’s common stock, par
value $0.001 (the “Common Stock”), will be issued as hereinafter provided in
the Participant’s name.  Such Restricted
Shares shall be subject to certain restrictions as hereinafter described
pursuant to the Plan and this Award Agreement.  The Restricted Shares will accumulate (but
not vest) in accordance with the provisions of Section 2(d) and will
vest in accordance with the provisions of Section 2(e).  The exact number of Restricted Shares that
will actually accumulate and thereafter vest and be earned by you (if any) is
expressly subject to the accumulation and vesting requirements described below.


 


(b)           Issuance of Shares.  The Restricted Shares will be issued upon
acceptance of this Award Agreement by the Participant.  The Restricted Shares may, in the discretion
of the Company, be issued in either book entry or certificate form.  During the period the Restricted Shares are
subject to the prohibitions and restrictions set forth herein with respect to
the sale or other disposition of the Restricted Shares and the obligation to
forfeit and surrender such Restricted Shares to the Company (the “Forfeiture
Restrictions”) any certificates representing the Restricted Shares shall bear a
restrictive legend to the effect that ownership of such Restricted Shares (and
any such Retained Distributions (as that term is defined below)), and the
enjoyment of all rights appurtenant thereto, are subject to the restrictions,
terms, and conditions provided in the Plan and this Award Agreement.  The Participant shall have the right to vote
the Restricted Shares awarded to the Participant and to receive and retain all
cash dividends with respect to such Restricted Shares, and to exercise all
other rights, powers and privileges of a holder of the Common Stock, with respect
to such Restricted Shares, with the exception that (a) the Participant shall
not be entitled to delivery of the stock certificate or certificates
representing such Restricted Shares or electronic delivery of the such
Restricted Shares until the Forfeiture Restrictions applicable thereto shall
have expired, (b) the Company shall retain custody of all Retained
Distributions made or declared with respect to the Restricted Shares (and such
Retained Distributions shall be subject to the same 


 

















 


restrictions,
terms and conditions as are applicable to the Restricted Shares) until such
time, if ever, as the Restricted Shares with respect to which such Retained
Distributions shall have been made, paid, or declared shall have become vested,
and such Retained Distributions shall not bear interest or be segregated in
separate accounts and (c) the Participant may not sell, assign, transfer,
pledge, exchange, encumber, or dispose of the Restricted Shares or any Retained
Distributions during the period in which the Restricted Shares may not be sold,
assigned, transferred, pledged, or otherwise encumbered (the “Restricted Period”).  Upon issuance of any certificates for the Restricted
Shares such certificate shall be delivered to the Secretary of the Company or
to such other depository as may be designated by the Company as a depository
for safekeeping until the forfeiture of such Restricted Shares occurs or the
Forfeiture Restrictions lapse, together with stock powers or other instruments
of assignment, each endorsed in blank, which will permit transfer to the
Company of all or any portion of the Restricted Shares and any securities
constituting Retained Distributions which shall be forfeited in accordance with
the Plan and this Award Agreement.  For purposes of
this Award Agreement, the term “Retained Distribution” means any securities or
other property (other than cash dividends) distributed by the Company in
respect of the Restricted Shares during any Restricted Period.  To the extent that all or a portion of the
Restricted Shares vest as provided in this Agreement, the Company will
distribute such vested Shares to the Participant in a reasonable time period
after vesting, which may consist of share certificates or electronic transfer
to brokerage accounts required to be established by the Participant and such
shares of the Common Stock shall be transferable by the Participant  (except to the extent that any proposed
transfer would, in the opinion of counsel satisfactory to the Company,
constitute a violation of applicable securities law).  The Participant agrees that the Participant
may be required to open a brokerage account as directed by the Company for
administration of the Participants equity awards from the Company.


 


(c)           Plan Incorporated.  The Participant acknowledges receipt of a
copy of the Plan, and agrees that this grant of the Restricted Shares shall be
subject to all of the terms and provisions of the Plan, including future
amendments thereto, if any.


 


2.                                       Restrictions. The Participant hereby accepts the Restricted
Shares when issued and agrees with respect thereto as follows:


 


(a)           In the event of termination of the Participant’s
employment with the Company and all Affiliates as a result of an involuntary
termination without Cause (as hereinafter defined) by the Company and such
Affiliates, death or disability (each, an “Involuntary Event”), the Participant
shall vest in any Restricted Shares accumulated through the date of such event,
and if such event occurs following the completion of a calendar year but prior
to the time the performance determination is made and finalized for such year,
then the Participant shall also vest in any Restricted Shares that would
otherwise have been accumulated for that previously completed calendar year as
a result of the achievement of the performance-based accumulation requirements
in Section 2(d).  The Participant
shall, for no consideration, forfeit to the Company any remaining Restricted
Shares which do not vest in accordance with the preceding sentence.


 


2

















 


(b)           “Cause” shall mean any of the
following events:


 


(i)            the conviction
of the Participant or a plea of guilty or of nolo
contendere by the Participant, whether or not appeal be taken, of
any misdemeanor, or felony crime, involving personal dishonesty, moral
turpitude or willfully violent conduct;


(ii)           the commission
of any act of theft, fraud, embezzlement or wrongful diversion of funds of the
Company or any Affiliate by the Participant, regardless of whether a criminal conviction
is pursued or obtained;


(iii)          gross business
misconduct by the Participant, provided that this shall not include any
negligence, omissions, actions or judgments, if made in good faith by the
Participant;


(iv)          the willful
violation by the Participant of federal or state securities laws, as determined
in good faith by the Company’s Board of Directors;


(v)           the violation
of the Company’s policies and procedures, provided such conduct results in
substantial harm to the Company or any Affiliate;


(vi)          the material
breach by the Participant of his or her fiduciary and loyal duties to the
Company or any Affiliate;


(vii)         if the
Participant and the Company or any Affiliate have entered into an employment
agreement, the material breach by the Participant of any provision of such
agreement not fully remedied within twenty (20) days of written notice from
Company or such Affiliate.


 


To
the extent that the Participant and the Company or any Affiliate have entered
into an employment agreement that requires certain determinations or procedures
by the Company, such Affiliate, its Board or Directors or the Participant prior
to a finding of cause, then such determinations and/or procedures shall be
deemed incorporated into this definition of Cause for so long as such employment
agreement is in force.


 


(c)           Except as may be otherwise provided
in the Plan or this Award Agreement, in the event of termination of the
Participant’s employment with the Company and all Affiliates prior to April 1,
2013 for any reason other than an Involuntary Event, the Participant shall, for
no consideration, forfeit to the Company all Restricted Shares, including any
Restricted Shares that may have accumulated prior to the time of termination.


 


The Committee may, in its
discretion and pursuant to the Plan, accelerate the time at which vesting
conditions have been achieved with respect to any Restricted Shares that have
previously been accumulated under Section 2(d).


 


(d)           Subject in all respects to this Agreement, the Restricted Shares
shall accumulate (but not vest) only upon the Company achieving the performance
criteria set forth below and provided that the Participant remains employed
with the Company at the date of determination that the Company achieved the
performance criteria as described below, except as otherwise provided in Section 2(a).
 Except as otherwise provided in 


 


3

















 


Section 2(a), accumulated
Restricted Shares are not earned or vested until three (3) years following
the Date of Grant as provided in Section 2(e).  The performance criteria shall be based upon
the Company’s annual basic earnings per share of Common Stock, (“EPS”) targets set forth
below, calculated as described and contemplated herein. The accumulation of Restricted Shares is
subject to achievement of three separate EPS targets, with such shares
accumulating in one-third increments upon the achievement of each of the EPS
targets with respect to any calendar year from 2010 up to and including 2012. The
first target has two alternate EPS targets — the first alternate EPS target may
only be met in the 2010 performance year. 
If the first alternate is met during 2010, then the second alternate
becomes inapplicable.  If the first
alternate is not met for the 2010 performance year, then the second alternate
target becomes the target and may be met with respect to the 2011 or 2012
fiscal years.   These
contingent Restricted Shares shall accumulate (if at all) as follows: one-third
(33.33%) of such shares (XX shares) accumulate upon the achievement of each of
the EPS targets set forth below with respect to a fiscal year of the Company up
to and including 2012 (except as noted above for the first target, the first
alternate of which may only be met in 2010):


 


Performance-based Accumulation Requirements


 


	
  EPS Targets*

  ($ per share)

  	
   

  	
  $

  /

  	
   

  	
  $



  	
   

  	
  $



  	
   

  
	
  # Shares Accumulated
  (reduced by any EPS awards accumulated in prior periods and at a lower EPS
  Target level; not in addition to that at a lower EPS Target level **)

  	
   

  	
  33

  	
  %

  	
  34

  	
  %

  	
  33

  	
  %

  



 






*                 Determination of Performance Results. 
EPS shall be calculated and determined by the Company.  The Compensation Committee of the Board of
Directors of the Company, in its sole and exclusive discretion, may, within
ninety (90) days of the beginning of the applicable performance period (in
accordance with Section 162(m) of the Internal Revenue Code of 1986,
as amended) adjust the calculation of EPS for items similar to (but not limited
to):


 


i.      Changes to accounting standards as required by GAAP or
Financial Accounting Standard Board (FASB) after the 


 


4

















 


performance goal has been set;


 


ii.     Unbudgeted capital transactions, including the
expenses related to the transaction;


 


iii.    Any profit or loss attributable to the business
operations of any entity acquired by the Company during the year with greater
than 5% impact to EPS that was unbudgeted.


 


Any
and all adjustments made by the Compensation Committee as set forth above shall
be made for each calculation of EPS during the performance period.


 


The Participant expressly agrees that (i) the Company shall, in its
sole and absolute discretion, so calculate and determine EPS and the associated
performance under the targets, and (ii) Company’s determination will be
conclusive, final and binding.


 


**          By way of illustration, if
prior to any EPS targets being met, the EPS for a particular covered year were
the amount set forth in Column 2, then two-thirds (66.67%) of the Restricted
Shares would accumulate (i.e., one-third for achieving the EPS target in Column
1 and an additional one-third for achieving the EPS target in Column 2).


 


(e)   Except as otherwise provided
in Section 2(a), the
Restricted Shares, to the extent accumulated, will vest on April 1, 2013,
provided that the Participant remains employed with the Company at April 1,
2013.  Any shares of Restricted
Stock that did not accumulate on or prior to April 1, 2013 shall be
forfeited and shall revert back to the Company without any payment to you, and
you shall not thereafter have any rights with respect to such shares of
Restricted Stock.


 


3.             Transfer Restrictions.  The Restricted Shares granted hereunder are
not transferable by the Participant and may not be sold, assigned, pledged,
exchanged, hypothecated or otherwise transferred, encumbered or disposed of
(other than by will or the applicable laws of descent and distribution) to the
extent then subject to the Forfeiture Restrictions.  Any such attempted sale, assignment, pledge,
exchange, hypothecation, transfer, encumbrance or disposition in violation of
this Agreement shall be void and the Company shall not be bound thereby.  Further, the Restricted Shares granted hereby
that are no longer subject to Forfeiture Restrictions may not be sold or
otherwise disposed of in any manner that would constitute a violation of any
applicable federal or state securities laws. 
The Participant also agrees (a) that the Company may refuse to
cause the transfer of the Restricted Shares to be registered on the applicable
stock transfer records if such proposed transfer would in the opinion of
counsel satisfactory to the Company constitute a violation of any applicable
securities law and (b) that the Company may give related instructions to
the transfer agent, if any, to stop registration of the transfer of the
Restricted Shares.


 


4.             Taxes.  All distributions under this Award are subject to
withholding of all applicable taxes. 
Subject to the rules as may be established by the Committee, such
withholding obligations may be satisfied through the surrender of Restricted Shares
that the Participant is otherwise entitled to under the Plan.


 


5

















 


5.             Binding.  This Award shall be binding upon and inure to the
benefit of any successor to the Company and all persons lawfully claiming under
the Participant.


 


6.             Defined Terms.  Unless otherwise specifically defined herein, each capitalized
term used herein which is defined in the Plan shall have the meaning assigned
such term in the Plan.


 


7.             Amendment;
Modification.  This Award may be amended by agreement of
the Participant and the Company, without the consent of any other person.  The Company shall have the rights of
amendment and modification set forth in the Plan.


 


8.             Governing Law.  This Award shall be governed by, and
construed in accordance with the laws of the State of Texas.


 


9.             Restrictions on Resale.  Other than the restrictions expressly
described herein, there are no additional restrictions imposed by the Plan on
the resale of vested Restricted Shares acquired under the Plan.  However, under the provisions of the
Securities Act of 1933 (the “Securities Act”) and the rules and
regulations of the Securities and Exchange Commission (the “SEC”), resales of
shares acquired under the Plan by certain officers and directors of the Company
who may be deemed to be “affiliates” of the Company must be made pursuant to an
appropriate effective registration statement filed with the SEC, pursuant to
the provisions of Rule 144 issued under the Securities Act, or pursuant to
another exemption from registration provided in the Securities Act.  At the present time, the Company does not
have a currently effective registration statement pursuant to which such
resales may be made by affiliates.  These
restrictions do not apply to persons who are not affiliates of the Company;
provided, however, that all employees are subject to the Company’s policies
against insider trading, and restrictions on resale may be imposed by the
Company from time-to-time as may be necessary under applicable law.


 


10.           Capital Adjustments and
Reorganizations.  The existence of
the Restricted Shares shall not affect in any way the right or power of the
Company or any company the stock of which is awarded pursuant to this Award Agreement
to make or authorize any adjustment, recapitalization, reorganization or other
change in its capital structure or its business, engage in any merger or
consolidation, issue any debt or equity securities, dissolve or liquidate, or
sell, lease, exchange or otherwise dispose of all or any part of its assets or
business, or engage in any other corporate act or proceeding.


 


11.           Section 83(b) Election.  The Participant shall not exercise the
election permitted under section 83(b) of the Code with respect to the
Restricted Shares without the written approval of the Chief Financial Officer
of the Company.


 


12.           Legend.  The Participant consents to the placing on
the certificate for the Restricted Shares of an appropriate legend restricting
resale or other transfer of the Restricted Shares except in accordance with the
Securities Act of 1933 and all applicable rules thereunder.


 


6

















 


13.           Effect on Other Benefits.  Income recognized by the Participant as a
result of the grant or vesting of the Restricted Shares or dividends on the
Restricted Shares will not be included in the formula for calculating benefits
under any of the Company’s retirement and disability plans or any other benefit
plans of the Company.


 


14.           Recoupment
of Awards. The Company’s Board of Directors adopted a
recoupment policy on April 30, 2009 (the “Policy”), that may require an officer of the Company to return
incentive compensation if there is a restatement of the financial results and
the Board determines that the restatement was due, in whole or in part, to the
fraudulent or intentional misconduct of such officer.  Participant acknowledges and agrees that, if
Participant is an officer, the Policy applies to this Award Agreement and that
any payments or issuances of Common Stock with respect to the Award Agreement may
be subject to recoupment pursuant to the terms of the Policy. This Award Agreement
shall be deemed to include the restrictions imposed by the Policy.


 


By signing this Award Agreement, the Participant acknowledges
acceptance of the terms and conditions set forth herein and in the Plan.


 


 


PARTICIPANT


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CORNELL COMPANIES, INC.

  	
   

  



 


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Patrick N.
  Perrin

  	
   

  
	
   

  	
  Title:  Senior Vice President

  	
   

  
	
   

  	
  Chief
  Administrative Officer

  	
   

  
				



 


7