Document:

Exhibit 10.16

 

 

MANAGEMENT EMPLOYMENT
AGREEMENT

 

CORNELL COMPANIES, INC.

 

This EMPLOYMENT AGREEMENT is made and entered into
as 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 Employee
and to enter into an agreement embodying the terms of such employment (this “Agreement”)
and Employee desires to enter into this Agreement and to accept such
employment, subject to the terms and provisions of this Agreement.

 

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

 

Section 1.               Definitions.

 

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

 

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

 

(c)           “Board” shall
mean the Board of Directors of the Company.

 

(d)           “Cause” shall
mean (i) material acts of personal dishonesty substantially relevant to
Company matters, gross negligence or willful misconduct by Employee in
connection with Employee’s employment duties; (ii) failure or refusal by
Employee to perform in any material respect his duties or responsibilities
under this Agreement; (iii) misappropriation by Employee of the assets or
business opportunities of the Company or its affiliates; (iv) embezzlement
or other financial fraud committed by Employee, at his direction, or with his
personal knowledge; (v) Employee’s indictment for, conviction of,
admission to, or entry of pleas of no contest to any felony or any crime
involving moral turpitude; (vi) public or consistent drunkenness by
Employee or his illegal use of narcotics which is, or could reasonably be
expected to become, materially injurious to the reputation or business of the
Company or its affiliates or which impairs, or could reasonably be expected to
impair, the performance of Employee’s duties hereunder; or (vii) Employee’s
breach of any material provision of this Agreement or violation of the Company’s
practices or policies.

 

 

 

(e)           A “Change in Control” shall be
deemed to have occurred on the earliest of the following dates:  (i) the date the Company merges or
consolidates with any other entity, and the Company’s stockholders do not own,
directly or indirectly, at least 50% of the voting capital stock of the
surviving entity; (ii) the date the Company sells all or substantially all
of its assets to any other person or entity; provided that the sale or other
transfer of Company facilities to a real estate investment trust, in a
sale-leaseback transaction, or any similar transaction shall not be considered
a sale of all or substantially all of the Company’s assets; (iii) the date
the Company is dissolved; or (iv) the date any third person or entity
together with its Affiliates becomes, directly or indirectly, the beneficial
owner 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 connection
with any bankruptcy or insolvency of the Company, or any transaction in
connection therewith.

 

(i)            “Affiliate” shall mean, with respect
to any person or entity, any person or entity that directly or indirectly
Controls, is Controlled by, or is under common Control with such person or
entity;

 

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

 

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

 

Notwithstanding anything to the contrary above, if
the Employee’s position, duties and responsibilities on behalf of the Company
are devoted entirely to one distinct operating division of the Company, and
that operating division of the Company is the subject of a Sale, then such Sale
of that operating division shall be deemed a Change in Control for that
Employee. In the event the Company and the Employee do not agree whether he was
employed by such a distinct operation division, the issue shall be determined
with finality by the Company’s then-Chief Executive Officer in his sole and
absolute discretion.

 

(f)               “Commencement
Date” shall mean March 19, 2007.

 

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

 

(h)              “Competitive
Activities” shall mean any business activities in which the Company or its
subsidiaries are engaged or have plans to engage either (i) during the
period of Employee’s employment, or (ii) for purposes of Employee’s
obligations under Subsection 10(b) after the period of Employee’s
employment, at the time of termination of Employee’s employment, including
without limitation, (i) correctional services, (ii) half-way house
services or treatment programs, (iii) juvenile justice programs or
facilities, and (iv) related educational, correctional, rehabilitative, or
treatment services.

 

(i)               “Confidential
Information” 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.

 

(k)              “Disability”
shall mean any physical or mental disability or infirmity that prevents the
performance of Employee’s duties (despite reasonable accommodation) for a
period 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 or
potentiality of Employee’s Disability upon which Employee and the Company
cannot agree shall be determined by a qualified, independent physician selected
by the Company and approved by Employee (which approval shall not be
unreasonably withheld).  The
determination of any such physician shall be final and conclusive for all
purposes of this Agreement.

 

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

 

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

 

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

 

(o)              “Non-solicitation
Restricted Period” shall mean the period commencing on the Commencement
Date and extending through the (a) twelve (12) month anniversary of the
date of Employee’s termination of employment hereunder pursuant to Section 9
for any reason, but (b)  the eighteen (18) month anniversary of the date
of Employee’s termination hereunder following a Change in Control in accordance
with Subsection 9(f). .

 

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

 

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

 

Section 2.               Acceptance;
“At Will” Employment.

 

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

 

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Section 3.               Position,
Duties and Responsibilities.

 

(a)         Position;
Duties:  Throughout his period of
employment, Employee shall be employed and serve as the Corporate General
Counsel of the Company (together with such other position or positions
consistent with Employee’s title as the Company shall specify from time to
time) and shall have such duties typically associated with such title and as
may otherwise be assigned to him by the Company. Employee also agrees to serve
as an officer and/or director of any subsidiary of the Company without
additional compensation.

 

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

 

(c)           Company
Policies:  The Employee shall comply
with all Company practices, policies and procedures (including the Company’s
conflict of interest policy) as in effect from time to time.

 

Section 4.       Location.

 

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

 

Section 5.      Relocation.

 

                                In
the event that the Company shall request Employee to relocate his principal
residence, the Company shall reimburse employee for any reasonable moving
expenses that are actually incurred by Employee in connection with any such
relocation, provided Employee furnishes to the Company any documentation
reasonably requested by the Company evidencing any such reasonable moving
expenses.

 

Section 6. 
  Compensation.

 

                During the period of his
employment, Employee shall be entitled to the following compensation:

 

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

 

 

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

 

(c)           Long-term
Incentive Plan.  Employee will be
eligible to participate in the Long-term Incentive Plan, subject to the terms
and provisions of such Plan.

 

Section 7.   Employee Benefits; Vacation, etc.

 

During the period of his employment, Employee shall be
entitled to participate in such health, insurance, retirement and other
benefits generally provided to other members of the senior management team of
the Company.  Employee shall also be
entitled to the same number of holidays, paid time off and other employment
policies and practices as are generally allowed to members of the senior
management team of the Company in accordance with the Company policy in effect
from time to time.    Nothing in this
Agreement shall prevent or limit the Employee’s continuing or future
participation in any plan, program, policy or practice provided by the Company
and for which the Employee may qualify according to the terms therein as may be
modified from time to time.  Amounts that
are vested benefits or that the Employee is otherwise entitled to receive under
any plan, policy, practice or program of, or any contract or agreement with the
Company at or subsequent to the termination shall be payable in accordance with
the terms of such plan, policy, practice or program, or contract or agreement
as may be modified from time to time.

 

Section 8.     Reimbursement of Business Expenses.

 

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

 

Section 9.               Termination of Employment.

 

(a)           General.  The Employee’s employment hereunder shall
terminate upon the earliest to occur of (i) Employee’s death, (ii) a
termination by reason of a Disability, (iii) a termination by the Company
with Cause, (iv) a termination by the Company without Cause, (v) termination
by the Employee, or a termination by the Company without Cause following a
Change in Control. Upon any termination of Employee’s employment for any
reason, except as may otherwise be requested by the Company in writing,
Employee shall resign from any and all directorships, committee memberships or
any other positions Employee holds with the Company or any of its
affiliates.  Notwithstanding
any other provision of this Agreement, the provisions of this Section 9
shall 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 rights
with respect to the Long-term Incentive Plan, the terms and provisions of which
shall continue to govern Employee’s rights and interests in the Long-term
Incentive Plan following any termination in accordance therewith, or the
Accrued Obligations.

 

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

 

(i)               The Accrued Obligations; and

 

(ii)              Any
unpaid Incentive Compensation in respect to any completed fiscal year which has
ended prior to the date of such termination, which amount shall be paid at such
time as incentive compensation awards are paid to other senior executives of
the Company.

 

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

 

(c)              Termination by the Company for
Cause.

 

(i)               A
termination for Cause shall not take effect unless the provisions of this
Subsection (i) are complied with. 
Employee shall be given not less than fourteen (14) days written notice
by the Company of the intention to terminate him for Cause, which notice shall
describe the particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for Cause is
based.  If the nature of the alleged
Cause is capable of cure, Employee shall have fourteen (14) days after the date
that such written notice has been given to Employee in which to cure such
conduct. If he fails to cure such conduct within that time period, the
termination shall be effective on the date immediately following the expiration
of the fourteen (14) day notice period. 
During any cure period provided hereunder, the Company may, in its sole
and absolute discretion, prohibit Employee from entering the premises of the
Company or otherwise performing his duties hereunder, provided it does not
prevent the cure by doing so.

 

(ii)              In
the event the Company terminates Employee’s employment for Cause, he shall be
entitled only to the Accrued Obligations.

 

Following
such termination of Employee’s employment for Cause, except as set forth in
this Subsection 9(c), Employee shall have no further rights to any compensation
or any other benefits under this Agreement.

 

(d)           Termination
by the Company without Cause.  The
Company 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 is
terminated by the Company without Cause (other than due to death or
Disability), Employee shall be entitled to:

 

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(i)               The Accrued Obligations;

 

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

 

(iii)             Any
unpaid Incentive Compensation in respect to any completed fiscal year which has
ended prior to the date of such termination, which amount shall be paid at such
time as incentive compensation awards are paid to other senior executives of
the Company; and

 

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

 

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

 

Following such termination of Employee’s employment
by 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 benefits
under this Agreement.

 

(e)         Termination
by Employee.  Employee may terminate
his employment by providing the Company thirty (30) days written or oral notice
of such termination.  In the event of a
termination of employment by Employee under this Subsection 9(e), Employee
shall be entitled only to the Accrued Obligations.  In the event of termination of Employee’s
employment under this Subsection 9(e), the Company may, in its sole and
absolute discretion, prohibit Employee from entering the premises of the
Company for all or any portion of the notice period (which in no event shall be
treated as a termination without Cause), provided that the Company shall
continue to pay to Employee his then current Base Salary and continue benefits
provided for the duration of the notice period.

 

Following such termination
of Employee’s employment by Employee, except as set forth in this Subsection
9(e), Employee shall have no further rights to any compensation or any other
benefits under this Agreement.

 

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

 

7

 

 

eighteen (18) months or (B) the date Employee
commences employment with any person or entity and, thus, is eligible for
health insurance benefits, and (3) the Employee will also receive in “lump
sum” fashion, less applicable deductions and withholdings, a payment
representing the discretionary Incentive Compensation he would have been
awarded following the fiscal year’s end, as determined by the Company in its
sole discretion, pro-rated for the period of time he was employed by the
Company in the fiscal year for which the bonus is payable.

 

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

 

Following such termination of Employee’s employment by the Company
without 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 further
rights to any compensation or any other benefits under this Agreement.

 

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

 

Section 10.             Restrictive
Covenants.

 

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

 

(a)           Confidential Information.  At any time during and after the end of the
period of Employee’s employment by the Company, without the prior written
consent of the Company, except to the extent required by an order of a court
having jurisdiction or under subpoena from an appropriate government agency, in
which event, Employee shall use his best efforts to consult with the Company
prior to responding to any such order or subpoena, and except as required in
the performance of his duties hereunder, Employee shall not disclose to or use
for his benefit or the benefit of any third party any confidential or
proprietary trade secrets, customer lists, drawings, designs, information
regarding legislative initiatives, contract negotiations, vendor arrangements, product
development, marketing plans, sales plans, manufacturing plans, management
organization information, operating policies or manuals, business plans,
financial records, packaging design or other financial, commercial, business or
technical information (i) relating to the Company, or (ii) that the
Company may receive belonging to suppliers, customers, or others who do
business with the Company (collectively, 

 

 

8

 

 

“Confidential Information”).  Employee’s obligation under this Subsection
10(a) shall not apply to any information which (i) is known publicly;
or (ii) is in the public domain or hereafter enters the public domain
without the breach of Employee of this Subsection 10(a); or (iii) is made
available to Employee by a third party not in breach of an obligation of
confidentiality.

 

(b)        Non-Competition.  Employee
covenants and agrees that during the Non-competition Restricted Period, with
respect to any State of the United States of America or any other jurisdiction
in which the Company engages in business during his employment, or, following
termination of Employee’s employment, was engaged in business at the time of
such termination, Employee shall not, directly or indirectly, individually or
jointly, own any interest in, operate, join, control or participate as a
partner, director, principal, officer, or agent of, enter into the employment
of, act as a consultant to, or perform any services for any person or entity (i) that
engages in Competitive Activities or (ii) in which any such relationship
with Employee would result in the likely, probable or inevitable use or
disclosure of Confidential Information; provided that nothing shall prohibit
Employee from being a partner or employee of, or otherwise being associated
with, a professional services firm as long as Employee is not directly engaged
in the provision of services to any such person or entity.  Notwithstanding anything herein to the
contrary, this Subsection 10(b) shall not prevent Employee from acquiring
as an investment securities representing not more than three percent (3%) of
the outstanding voting securities of any publicly-held corporation.

 

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

 

(d)       Return of Documents.  In the event of the termination of Employee’s
employment for any reason, Employee shall deliver to the Company all of (i) the
property of the Company, and (ii) the documents and data of any nature and
in whatever medium of the Company, and he shall not take with him any such
property, documents or data or any reproduction thereof, or any documents
containing or pertaining to any Confidential Information.

 

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

 

 

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

 

(f)        Blue Pencil.  If any court of competent jurisdiction shall
at any time deem the duration or the geographic scope of any of the provisions
of this Section entitled “Restrictive Covenants” unenforceable, the other
provisions of this Section entitled “Restrictive Covenants” shall
nevertheless stand and the duration and/or geographic scope set forth herein
shall be deemed to be the longest period and/or greatest size permissible by
law under the circumstances, and the parties hereto agree that such court shall
reduce the time period and/or geographic scope to permissible duration or size.

 

Section 11.             Injunctive
Relief.

 

Without limiting the remedies available to the Company, Employee
acknowledges that a breach or threatened breach of any of the covenants
contained this Section 10 hereof may result in material irreparable injury
to the Company or its subsidiaries or affiliates for which there is no adequate
remedy at law, that it will not be possible to measure damages for such
injuries 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 a
preliminary or permanent injunction, without the necessity of proving
irreparable harm or injury as a result of such breach or threatened breach of Section 10
hereof, restraining Employee from engaging in activities prohibited by Section 10
hereof or such other relief as may be required specifically to enforce any of
the covenants in Section 10 hereof. 
Notwithstanding any other provision to the contrary, the Non-competition
Restriction Period and the Non-solicitation Restriction Period shall be tolled
during any period of violation of any of the covenants in Subsections 10(b) or
(c) hereof and during any other period required for litigation during
which the Company seeks to enforce 

 

 

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such covenants against Employee or another person or entity with whom
Employee is affiliated if it is ultimately determined that Employee was in
breach of such covenants.

 

Section 12.             Representations
and Warranties of Employee.

 

Employee represents and warrants to the Company that:

 

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

 

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

 

(c)           in connection with his employment with
the Company he will not use any confidential or proprietary information he may
have obtained in connection with employment with any prior employer; and

 

(d)           The Company has
suggested to the Employee that he seek legal counsel of his choice to review
this Agreement before he signs it, and he has been given full and ample
opportunity to do so.

 

Section 13.             Taxes.

 

The Company may withhold from any payments made under this Agreement
all applicable taxes, including but not limited to income, employment and social
security taxes, as shall be required by law or governmental regulation or
ruling.

 

Section 14.             Set Off; No Mitigation.

 

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

 

Section 15.             Successors
and Assigns; No Third-Party Beneficiaries.

 

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

 

 

11

 

same manner and to the same extent that the Company
would be required to perform it if no such purchase, succession or assignment
had taken place.

 

(b)           Employee.  Employee’s rights and obligations under this
Agreement 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 hereunder
shall be paid in accordance with the terms of this Agreement to Employee’s
estate.

 

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

 

Section 16.             Waiver
and Amendments.

 

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

 

Section 17.             Severability
and Governing Law.

 

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

 

Section 18.             Notices.

 

                                Every notice or other communication
relating to this Agreement shall be in writing, and shall be mailed or
delivered to the party for whom it is intended at such address as may from time
to time be designated by it in a notice mailed or delivered to the other party
as herein provided, provided that, unless and until some other address shall be
so designated, all notices or communications by Employee to the Company shall be
mailed or delivered to the Company at its principal executive office, and all
notices or communications by the Company to Employee may be given to Employee
personally or may be mailed to Employee at Employee’s last known address, as
reflected in the Company’s records.  A
copy of any notice provided to the 

 

 

12

 

Company by Employee
hereunder shall be sent simultaneously to the Company’s Chief Executive
Officer, or the Company’s Corporate Secretary, at the address of the Company’s
primary corporate office.

 

Any notice so
addressed shall be deemed to be given:  (i) if
delivered by hand, on the date of such delivery; (ii) if mailed by courier
or by overnight mail, on the first business day following the date of such
mailing; and (iii) if mailed by registered or certified mail, on the third
business day after the date of such mailing.

 

Section 19.             Section Headings.

 

The headings of the Sections and Subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
thereof, affect the meaning or interpretation of this Agreement or of any term
or provision hereof.

 

Section 20.             IRS
Code 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 this
Agreement are otherwise not exempt from Code Section 409A as a short-term
deferral 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 Agreement
before the date which is six (6) months after the Employee’s “separation
from service” within the meaning of Code Section 409A or, if earlier, the
Employee’s death.  Any payments which
would have otherwise been required to be paid during such six (6) months
or, if earlier, before the Employee’s death, shall be paid to the Employee in
one lump sum payment as soon as administratively practical after the date which
is six (6) months after the Employee’s separation from service or, if
earlier, the Employee’s date of death. The Employee’s termination of employment
under this Agreement shall be interpreted in a manner consistent with the
definition of “Separation from Service” in Code Section 409A. To the
extent this Agreement is subject to Code Section 409A, it is intended to
comply with the applicable requirements of Code Section 409A and shall be
construed and interpreted in accordance therewith.

 

Section 21.             Entire
Agreement.

 

This Agreement, together with any agreements executed by the Company
and Employee in respect of awards under the Plan, constitutes the entire
understanding and agreement of the parties hereto regarding the employment of
Employee.  This Agreement supersedes all
prior negotiations, discussions, correspondence, communications, understandings
and agreements between the parties relating to the subject matter of this Agreement.

 

Section 22.             Survival
of Operative Sections.

 

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

 

 

 

13

 

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 no
significance in the interpretation and application of the terms, provisions and
conditions of this Agreement, such use being solely for the sake of
convenience.

 

Section 24.             Counterparts;
Facsimile Signature.

 

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

 

IN WITNESS WHEREOF, the undersigned have
executed 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

  

 

 

 

14ex10_07.htm

    
      
        
          

        
EXHIBIT
10.07

       

       

      RETIREMENT
AGREEMENT AND RELEASE

       

      THIS AGREEMENT is
made and entered into as of March 11, 2006, by and between Bank of Marin, a
California corporation (hereinafter all referred to as "Employer"), and
W. Robert Griswold, Jr. (hereinafter referred to as "Employee"), as
follows:

       

      Employee has been
and is employed by Employer.  Employee has decided to retire from such
employment and from his positions as Chief Executive Officer, President and
director of Employer effective at the close of business on June 30,
2006.  Employer and Employee agree that Employee shall be retained as
a consultant to Employer pursuant to the terms of the Consulting Agreement of
even date herewith (the "Consulting Agreement").  Employer and
Employee wish to set forth their agreed terms of Employee's retirement and
desire to settle all legal rights and obligations resulting from, or that could
be alleged to result from, the employment relationship or the retirement from
such relationship, in accordance with the terms set forth below.

       

      1.          Retirement.  Employer
and Employee agree that Employee hereby resigns as an employee, director and
officer of Employer effective at the close of business on June 30,
2006.  Employee shall continue to serve as President and Chief
Executive Officer of Employer through and including June 30, 2006, at his
current compensation and benefit level and shall fully carry out and perform all
duties and obligations as President and Chief Executive Officer through such
date.  Effective concurrently with the effectiveness of the
resignation of Employee at the close of business on June 30, 2006, Employee's
successor, designated by employer's Board of Directors, will be appointed
President and Chief Executive Officer of Employer.  From the date of
this Agreement through and including June 30, 2006, Employee shall exert
his full time and attention, with the assistance of his designated successor and
Employer's consultant David McLeod, to the transition of the leadership of
Employer from Employee to his successor, to be made effective July 1,
2006.  At all times, Employee will positively and in good faith
support the transition of leadership of Employer to Employee's
successor.

       

      As consideration
for Employee's services to Employer for all periods ending June 30, 2006,
Employee shall be entitled to the following:

       

      (a)           Employee
shall receive a bonus for 2005, payable on or before March 15, 2006, in the
amount of $136,850, except that any portion of such bonus that Employee has
previously elected to have paid on a deferred basis in accordance with
Employer's Officer Deferred Compensation Plan shall be paid in accordance with
such plan.

       

      (b)           Prior
to the close of business on June 30, 2006, Employer shall pay to Employee all
salary and director's fees earned to that date together with accrued and unpaid
vacation through that date.

       

      (c)           All
payments under items (a) and (b) above shall be less deductions for federal and
state withholding and other applicable taxes and deductions as required by
law.

      

        
          
             

          

          
            -1-

            
              

            

          

          
             

          

        

      

       

      (d)           Employee
will be entitled to continue his medical insurance coverage in Employer's plan
for its employees subsequent to June 30, 2006, entirely at the expense of
Employee and pursuant to the terms and conditions applicable to employees who
retire at age 55 after ten (10) years of service.

       

      (e)           Employer
and Employee shall fulfill their obligations under Employer's Officer Deferred
Compensation Plan and Stock Option Plan and all written agreements governing
Employee's options to purchase common stock of Employer.

       

      Employee
acknowledges that the foregoing is a complete description of all compensation
that he will be entitled to receive from Employer with respect to his services
to Employer for periods ending June 30, 2006.

       

      2.          Consideration.  As
consideration for Employee's release of all Claims against Employer, as set
forth in paragraph 3 below, Employer tenders, and Employee agrees to accept, a
payment of $136,850.  The payment shall be less deductions for federal
and state withholding and other applicable taxes and deductions as required by
law.  The consideration shall be paid in full at the close of business
on June 30, 2006, subject to the condition precedent that Employee shall have
executed the Release Renewal, as defined at the end of paragraph 3
below.

       

      3.          Release.  Employee
and Employer each irrevocably and unconditionally release the other from any and
all Claims made, to be made, or which might have been made as a consequence of
Employee's employment by Employer, or arising out of the termination of the
employment relationship, or arising out of any acts committed or omitted during
the existence of the employment relationship.  Employee and Employer
each agree that they will not file, claim, sue, or cause or permit to be filed
or claimed, any action for damages or any other relief against the other
involving any matter occurring in the past up to the date of this
Agreement.

       

      For purposes of
this Agreement, the term "Claim(s)" shall in addition to any definitions of
Claims set forth above, include, but not be limited to, the
following:

       

      (a)           Any
and all actions, causes of action, suits, debts, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages, and
expenses (including attorneys' fees and other costs actually
incurred),  pertaining to Employee's employment by Employer or the
termination of such employment, or any other nature whatsoever, in contract or
tort and in law or equity.

       

      (b)           Any
action or claim that could arise under federal, state, or local law, regulation,
or executive order, including but not limited to, actions under Title VII of the
Civil Rights Act of 1964, as amended; the Equal Pay Act, as amended; the Fair
Labor Standards Act, as amended; the Federal Family and Medical Leave Act, the
California Family Rights Act; the Americans with Disabilities Act, as amended;
the Employee Retirement Income Security Act of 1974, as amended; the California
Labor Code; the California Fair Employment and Housing Act; the National Labor
Relations Act, as amended; and the Age Discrimination in Employment Act, to the
fullest extent permitted by law.

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

       

      At the close of
business on June 30, 2006, Employer and Employee shall execute the agreement
entitled Release Renewal (the "Release Renewal") set forth at the end of this
document immediately following the signatures of Employer and
Employee.  Employee's execution of the Release Renewal is a condition
of his entitlement to receive the consideration provided for in paragraph 2
above.

       

      4.          Covenant
Not to Sue.  Each of Employee and Employer hereby covenants and
agrees not to assert any claim, or file, claim, sue or cause or permit to be
filed or claimed, any action for damages or any other relief against the other
with respect to any Claim that has been released.  Any attempt to
initiate any such Claim shall constitute a breach of this
Agreement.  In the event of any such breach, Employee shall
immediately return to Employer all consideration paid to Employee pursuant to
paragraph 2 above.

       

      5.          Section
1542.  It is the intention of Employee and Employer that this
Agreement will act as a bar to each and every Claim, including such Claims which
Employee and Employer do not know or suspect to exist.  Employee and
Employer acknowledge that they may hereafter discover the existence of
additional claims or facts with respect to the subject matter of this Agreement
and which, if known, or suspected at the time of signing this Agreement, may
have materially affected this settlement.  Employee and Employer
expressly waive any and all rights and benefits conferred upon Employee or
Employer by the provisions of Section 1542 of the California Civil Code or any
comparable statutory provisions, and expressly consent, that this Agreement will
be given full force and effect according to each and all of its express terms
and provisions, including as well those related to unknown and unsuspected
claims, demands, and causes, and demands and causes of action described
above.  Section 1542 provides:

       

      A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

       

      6.          References;
Nondisparagement.  Any requests for employment references for
Employee, whether written or oral, must be made directly to Employer's then
current Chairman of the Board.  References solicited from persons
other than Employer's Chairman of the Board will not be provided, and if
provided, will not be authorized by Employer.  In response to a
reference request for Employee, the parties agree that Employer will provide
only job title, dates of employment, and final salary.  Employee shall
refrain from defaming, disparaging, or otherwise speaking negatively of
Employer, or any of its customers or personnel, to any other person, business,
or third party, and Employer shall refrain from defaming, disparaging, or
otherwise speaking negatively of Employee to any other person, business, or
third party.

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

       

      7.          Review
and Revocation.  By signing this Agreement Employee certifies
that he has read all of this Agreement, and knowingly and voluntarily consents
to its terms.  Employee certifies that Employer has advised Employee
in writing to consult with an attorney before signing this Agreement to be sure
that Employee understands the meaning of the terms and conditions in the
Agreement.  Employee also certifies that Employee has been given at
least twenty-one (21) days to consider this Agreement, that Employee's signature
below indicates either that Employee has taken twenty-one (21) days to consider
this Agreement, or has knowingly and voluntarily waived some or all of this
consideration period.  Employee has seven (7) days from the date of
signing this Agreement to revoke the Agreement, after which the Agreement is
final and binding ("Effective Date").

       

      8.          Confidentiality.  Employee
agrees that the terms of this Agreement are considered a confidential document
by Employer, and agrees, except as required by law, not to disclose the terms to
any other person or entity without the advance written consent of
Employer.  This nondisclosure provision does not apply to Employee's
spouse, attorney or tax advisor so long as the excepted individuals are provided
with a copy of this provision and agree not to further disclose in accordance
with the terms of this provision.

       

      9.          Non-Admission.  The
parties agree that this Agreement is not an admission of wrongdoing, fault,
guilt or liability on the part of Employer under any federal, state, or local
law, whether statutory or common law.

       

      10.        Entire
Agreement/Legality.  Both parties agree that this Agreement
supersedes any prior agreements or representations between the parties, oral or
otherwise, pertaining to the subject matter of this Agreement, and that all such
prior agreements are null and void.  No representations, obligations,
understandings, or agreements, oral or otherwise, exist between the parties
except as expressly stated in the Agreement.  This Agreement may be
amended or terminated only by a written document signed by Employer and
Employee.

       

      If any portion or
term of this Agreement is found to be invalid by any court, agency, or other
competent authority, the remaining lawful terms will remain in full force and
effect; provided, however, that if the release provisions in paragraph three (3)
are not fully enforced as a bar to any claim made by Employee against Employer,
then the monies received by Employee in consideration of the release under
paragraph 3 of this Agreement will be returned to Employer.

       

      11.        State
Law Governs.  The Agreement will be governed by and construed
according to the Laws of the State of California.

       

      12.        Arbitration.  If
a dispute or controversy arises regarding the performance of either party under
the terms of this Agreement or regarding the enforceability of any terms of this
Agreement, then the parties agree that such dispute or controversy shall be
resolved by binding arbitration in Marin County, California in accordance with
the Commercial Arbitration Rules of the American Arbitration Association or such
other rules or arbitrator as the parties mutually agree.  A judgment
upon any decision of the arbitrator may be entered in any court having
jurisdiction thereof.  The costs of the arbitration shall be borne
equally by the parties.  The prevailing party in any such proceeding
shall be entitled to recover a sum equal to its reasonable attorneys' fees
incurred.

       

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

       

      
        	
                /s/WRG

              	 
    	
                /s/J.A.

              
	
                Employee

              	 
    	
                Employer

              
	
                Initials

              	 
    	
                Initials

              

      

       

      13.        Consultations
With Attorney.  Employee acknowledges that Employer has urged
that he consult with an attorney, and that he has had the opportunity to consult
with an attorney, of Employee's choice prior to executing this
Agreement

       

      14.        Acknowledgment.  Employee
acknowledges that he has read this Agreement, and he fully understands
it.  Employee agrees that no representations inconsistent with this
Agreement have been made to Employee and Employer has not made any promises,
agreements or statements concerning the terms or effect of this Agreement other
than those contained herein.  Employee further acknowledges that after
consideration of this Retirement Agreement and Release, that he has signed this
Agreement as a voluntary act and without coercion or force of any kind
whatsoever.

       

      
        	
                ACCEPTED BY
      EMPLOYEE

              	 
    	 
    
	
                /s/
      W. Robert Griswold, Jr.

              	 
    	
                3/11/06

              
	
                W. Robert
      Griswold, Jr.

              	 
    	
                Date

              

      

       

      
      

      
        	
                ACCEPTED BY
      EMPLOYER

              	 	 
	
                Bank of
      Marin

              	 	 
	
                By:

              	
                /s/
      Judith O'Connell Allen

              	 
    	
                3/11/06

              
	
                Its:

              	
                Chairman of
      Board

              	 
    	
                Date

              

      

       

       

      Release
Renewal

       

      Employer and
Employee hereby agree that the release set forth in paragraph 3 of the foregoing
Retirement Agreement and Release is renewed and made effective once again as of
the close of business on June 30, 2006, as if originally given on such
date.

       

      
        	
                ACCEPTED BY
      EMPLOYEE

              	 
    	 
    
	
                /s/
      W. Robert Griswold, Jr.

              	 
    	
                Dated: June
      30, 2006

              
	
                W. Robert
      Griswold, Jr.

              	 
    	 
    

      

       

      
        	
                ACCEPTED BY
      EMPLOYER

              	 	 
	
                Bank of
      Marin

              	 	 
	
                By:

              	
                /s/
      Judith O'Connell Allen

              	 
    	
                Dated: June
      30, 2006

              
	
                Its:

              	
                Chairman of
      Board

              	 
    	 
    

      

       

       

       -5-

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