Document:

Exhibit
10.9

 

Investools Inc.

2001 STOCK OPTION PLAN

Notice and Agreement of Grant of Stock Option

 

 

	
  TO:

  	
  Scott
  D. Sheridan

  	
   

  
	
   

  	
   

  	
   

  
	
  FROM:

  	
  Compensation
  Committee of the Board of Directors

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE:

  	
  February
  15, 2007

  	
   

  

 

 

At the direction of the
Compensation Committee (the “Committee”) of the Board of Directors of
Investools Inc. (the “Company”), you are hereby notified that on February 15,
2007 (the “Date of Grant”) the Committee has granted to you an option to
purchase shares of Common Stock of the Company (the “Option”), pursuant to the
Investools Inc. 2001 Stock Option Plan (the “Plan”), as amended from time to
time, which is incorporated herein by reference and made a part of this
agreement.  This agreement evidences the Option that was granted to
you.  Capitalized terms not otherwise
defined herein shall have the same meanings as in the Plan.

 

1.          This
Option is intended to be a Nonstatutory Option.

 

2.          Subject
in all respects to the Plan and the terms and conditions set forth herein and
therein, you are hereby granted an Option to purchase from the Company 228,891 shares of Common Stock at the exercise price of $15.69 per share (the “Option Price”).  It is the determination of the Committee that
on the Date of Grant, the Fair Market Value of a share of Common Stock was not
more than the Option Price.

 

3.          The
Option may be exercised only by you and, subject to your Continuous Service,
shall become exercisable in installments at a rate of one-fourth (1/4) of the
total number of Shares subject to the Option per year commencing on the first
anniversary of the Date of Grant, and with respect to an additional one-fourth
(1/4) on each anniversary of the Date of Grant thereafter, provided that your
Continuous Service has not terminated with the Employer prior to that date.  In the event a Change of Control occurs
during your Continuous Service, the Option, to the extent not exercisable,
shall become fully exercisable immediately prior to such Change of Control.  If your Continuous Service is terminated for
any reason, the Option, to the extent not exercisable, shall be cancelled
without consideration.  For purposes
hereof,  “Continuous Service” includes
your periods of service with the Company during the Employment Period and, if
applicable, any subsequent Consulting Period, each as defined in the Employment
Agreement between you and the Company dated as of February 15, 2007.

 

4.          The
Option shall expire on the day prior to the tenth anniversary of the Date of
Grant (the “Expiration Date”).  Notwithstanding the foregoing, if your
Continuous Service is terminated prior to the Expiration Date, the vested
portion of the Option shall remain exercisable for the period set forth below:

 

a.               If
your Continuous Service is terminated by the Company or its affiliates for
Cause, the Option shall immediately expire on the effective date of the
termination of your Continuous Service;

 

b.              If
your Continuous Service is terminated due to your retirement on or after age
65, the vested portion of the Option shall remain exercisable for a period of
three (3) months following the effective date of the termination of your
Continuous Service;

 

c.               If
your Continuous Service is terminated due to your death or total and permanent
disability (within the meaning of Section 422 of the Internal Revenue Code),
the vested portion of the Option shall remain exercisable for a period of
twelve (12) months following the effective date of the termination of your
Continuous Service; and

 

d.              If
your Continuous Service is terminated other than due to your death, disability
or retirement on or after age 65, or by the Company or its affiliates for
Cause, the vested portion of the Option shall remain exercisable for a period
of ten (10) days following the effective date of the termination of your
Continuous Service.

 

5.          The
option is nontransferable, other than as may be occasioned by your death, and
then only to your estate or according to the terms of your will or the
provisions of applicable laws of descent and distribution.

 

In the event that the right to exercise the Option is
passed to your estate, or to a person to whom such right devolves by reason of
your death, then the Option shall be nontransferable in the hands of your
executor or administrator or of such person, except that the Option may be
distributed by your executor or administrator to the distributees of your
estate as a part of your estate.

 

6.          Enclosed
for your careful review is a copy of the Plan governing the Option, and a
Description of the 2001 Stock Option Plan, otherwise known as the “Plan Prospectus.” 
At the time or times when you wish to exercise the Option, in whole or in part,
please refer to the provisions of the Plan dealing with methods and formalities
of exercise of the Option.  The Company shall have the right, and is
hereby authorized, to withhold from any payment due or transfer made under the
Option, or from any compensation owing to you, applicable withholding taxes, if
any.

 

Neither the Plan nor this agreement will be construed as
giving you the right to be retained in the employ of the Company or its
affiliates, and the Company or its affiliates may at any time terminate your
employment free from any liability or any claim under the Plan or this
agreement, except as otherwise expressly provided herein.

 

7.          This
agreement shall be governed by and construed in accordance with the laws of
Delaware, without regard to the conflicts of laws provisions thereof, and shall
be subject in all respects to the terms of the Plan.  If any one or more provisions of this
agreement shall be found to be 

 

2

 

            illegal or unenforceable in any respect, the validity and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.  This
agreement and the Plan contain the entire agreement between the Company and you
relating to the Option and the other matters set forth herein.  This agreement is subject to the terms and
conditions of the Plan.  In the event of
any inconsistent provisions between this agreement and the Plan, the Plan shall
govern.  Except as expressly provided in
this agreement or the Plan with respect to certain actions permitted to be
taken by the Committee with respect to this agreement and the terms of the
Option, this agreement may not be amended, modified, changed, or waived other
than by written instrument signed by the parties hereto.  This agreement may be executed in
counterparts, each of which shall be an original with the same effect as if the
signatures were upon the same instrument.

 

 

 

 

	
  Investools
  Inc. Compensation Committee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Ida K. Kane

  	
   

  	
   

  
	
  Ida
  K. Kane, Chief Financial Officer

  	
   

  	
   

  

 

 

 

 

 

I hereby acknowledge
receipt of a copy of the Plan and the Plan Prospectus, copies of which are
annexed hereto, and represent that I am familiar with the terms and provisions
thereof and hereby accept the Option, subject to all the terms and provisions
of the Plan and this agreement.  I hereby agree to accept as binding,
conclusive and final all decisions or interpretations of the Compensation
Committee with respect to any question arising under the Plan.

 

 

	
  Employee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Scott Sheridan

  	
   

  	
   

  
	
  Scott Sheridan

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  February 15, 2007

  	
   

  	
   

  
				

 

3

Investools Inc.

2001 STOCK OPTION PLAN

Notice and Agreement of Grant of
Stock Option

TO:         Scott
D. Sheridan

FROM:   Compensation
Committee of the Board of Directors

DATE:    February
15, 2007

At the direction of the Compensation Committee (the “Committee”)
of the Board of Directors of Investools Inc. (the “Company”), you are hereby
notified that on February 15, 2007 (the “Date of Grant”) the Committee has
granted to you an option to purchase shares of Common Stock of the Company (the
“Option”), pursuant to the Investools Inc. 2001 Stock Option Plan (the “Plan”),
as amended from time to time, which is incorporated herein by reference and
made a part of this agreement.  This agreement evidences the Option that
was granted to you.  Capitalized terms
not otherwise defined herein shall have the same meanings as in the Plan.

1.          This Option is intended to be a Nonstatutory Option.

2.          Subject in all respects to the Plan and the terms and
conditions set forth herein and therein, you are hereby granted an Option to
purchase from the Company 228,890 shares
of Common Stock at the exercise price of $23.535 per
share (the “Option Price”).  It is the
determination of the Committee that on the Date of Grant, the Fair Market Value
of a share of Common Stock was not more than the Option Price.

3.          The Option may be exercised only by you and, subject to
your Continuous Service, shall become exercisable in installments at a rate of
one-fourth (1/4) of the total number of Shares subject to the Option per year
commencing on the first anniversary of the Date of Grant, and with respect to
an additional one-fourth (1/4) on each anniversary of the Date of Grant
thereafter, provided that your Continuous Service has not terminated with the
Employer prior to that date.  In the
event a Change of Control occurs during your Continuous Service, the Option, to
the extent not exercisable, shall become fully exercisable immediately prior to
such Change of Control.  If your
Continuous Service is terminated for any reason, the Option, to the extent not
exercisable, shall be cancelled without consideration.  For purposes hereof,  “Continuous Service” includes your periods of
service with the Company during the Employment Period and, if applicable, any
subsequent Consulting Period, each as defined in the Employment Agreement
between you and the Company dated as of February 15, 2007.

4.          The Option shall expire on the day prior to the tenth
anniversary of the Date of Grant (the “Expiration Date”).  Notwithstanding
the foregoing, if your Continuous Service is terminated prior to the Expiration
Date, the vested portion of the Option shall remain exercisable for the period
set forth below:

a.               If your Continuous Service is terminated by the Company
or its affiliates for Cause, the Option shall immediately expire on the
effective date of the termination of your Continuous Service;

b.              If your Continuous Service is terminated due to your
retirement on or after age 65, the vested portion of the Option shall remain
exercisable for a period of three (3) months following the effective date of
the termination of your Continuous Service;

c.               If your Continuous Service is terminated due to your
death or total and permanent disability (within the meaning of Section 422 of
the Internal Revenue Code), the vested portion of the Option shall remain
exercisable for a period of twelve (12) months following the effective date of
the termination of your Continuous Service; and

d.              If your Continuous Service is terminated other than due
to your death, disability or retirement on or after age 65, or by the Company
or its affiliates for Cause, the vested portion of the Option shall remain
exercisable for a period of ten (10) days following the effective date of the
termination of your Continuous Service.

5.          The option is nontransferable, other than as may be
occasioned by your death, and then only to your estate or according to the
terms of your will or the provisions of applicable laws of descent and
distribution.

In the
event that the right to exercise the Option is passed to your estate, or to a
person to whom such right devolves by reason of your death, then the Option
shall be nontransferable in the hands of your executor or administrator or of
such person, except that the Option may be distributed by your executor or
administrator to the distributees of your estate as a part of your estate.

6.          Enclosed for your careful review is a copy of the Plan
governing the Option, and a Description of the 2001 Stock Option Plan,
otherwise known as the “Plan Prospectus.”  At the time or times when you
wish to exercise the Option, in whole or in part, please refer to the
provisions of the Plan dealing with methods and formalities of exercise of the
Option.  The Company shall have the right, and is hereby authorized, to
withhold from any payment due or transfer made under the Option, or from any
compensation owing to you, applicable withholding taxes, if any.

Neither
the Plan nor this agreement will be construed as giving you the right to be
retained in the employ of the Company or its affiliates, and the Company or its
affiliates may at any time terminate your employment free from any liability or
any claim under the Plan or this agreement, except as otherwise expressly
provided herein.

7.          This agreement shall be governed by and construed in
accordance with the laws of Delaware, without regard to the conflicts of laws
provisions thereof, and shall be subject in all respects to the terms of the
Plan.  If any one or more provisions of
this agreement shall be found to be

 2
 

illegal
or unenforceable in any respect, the validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.  This agreement and the Plan
contain the entire agreement between the Company and you relating to the Option
and the other matters set forth herein. 
This agreement is subject to the terms and conditions of the Plan.  In the event of any inconsistent provisions
between this agreement and the Plan, the Plan shall govern.  Except as expressly provided in this
agreement or the Plan with respect to certain actions permitted to be taken by
the Committee with respect to this agreement and the terms of the Option, this
agreement may not be amended, modified, changed, or waived other than by
written instrument signed by the parties hereto.  This agreement may be executed in
counterparts, each of which shall be an original with the same effect as if the
signatures were upon the same instrument.

Investools Inc. Compensation Committee

	
  

  	
   

  
	
  /s/ Ida K. Kane

  	
   

  
	
  Ida K. Kane,
  Chief Financial Officer

  

 

I hereby acknowledge receipt of a copy of the Plan and
the Plan Prospectus, copies of which are annexed hereto, and represent that I
am familiar with the terms and provisions thereof and hereby accept the Option,
subject to all the terms and provisions of the Plan and this agreement.  I
hereby agree to accept as binding, conclusive and final all decisions or
interpretations of the Compensation Committee with respect to any question
arising under the Plan.

	
  Employee:

  
	
   

  
	
   

  
	
  /s/ Scott
  Sheridan

  	
   

  
	
  Scott Sheridan

  
	
  Date:

  	
  February 15,
  2007

  	
   

  
				

 

 3Exhibit 10.2

EMPLOYMENT AGREEMENT

CORNELL COMPANIES, INC.

This EMPLOYMENT
AGREEMENT is made and entered into as of the 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.

 2
 

 

(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.

 3
 

 

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.

 4
 

 

(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 

 5
 

 

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 

 9
 

 

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 

 10
 

 

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:

  	
   

  	
  /s/ Patrick N. Perrin

  
	
   

  	
   

  	
   

  	
   

  	
  Patrick N. Perrin,

  
	
   

  	
   

  	
   

  	
   

  	
  Sr. V.P. &

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Administrative Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Employee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ William E. Turcotte

  
	
   

  	
   

  	
   

  	
   

  	
  William E. Turcotte

  

 

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