EXHIBIT 4.10
CORNELL COMPANIES, INC.
2000 BROAD-BASED EMPLOYEE PLAN
DECEMBER 8, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I. PURPOSES OF THE PLAN..............................................1
ARTICLE II. DEFINITIONS......................................................1
ARTICLE III. EFFECTIVE DATE..................................................3
ARTICLE IV. ADMINISTRATION...................................................3
(A) DUTIES OF THE COMMITTEE...............................................3
(B) ADVISORS..............................................................3
(C) INDEMNIFICATION.......................................................3
(D) MEETINGS OF THE COMMITTEE.............................................4
(E) DETERMINATIONS........................................................4
ARTICLE V. SHARES; ADJUSTMENT UPON CERTAIN EVENTS...........................4
(A) SHARES TO BE DELIVERED; FRACTIONAL SHARES.............................4
(B) NUMBER OF SHARES......................................................4
(C) ADJUSTMENTS; RECAPITALIZATION, ETC....................................4
(D) EXTRAORDINARY TRANSACTIONS............................................5
ARTICLE VI. AWARDS AND TERMS OF OPTIONS.....................................5
(A) GRANT.................................................................5
(B) EXERCISE PRICE........................................................5
(C) NUMBER OF SHARES......................................................5
(D) EXERCISABILITY........................................................5
(E) EXERCISE OF OPTIONS...................................................6
(F) OTHER TERMS AND CONDITIONS............................................6
ARTICLE VII. EFFECT OF TERMINATION OF EMPLOYMENT............................6
(A) DEATH, DISABILITY, RETIREMENT, ETC....................................6
(B) CAUSE.................................................................7
(C) CANCELLATION OF OPTIONS...............................................7
ARTICLE VIII. NONTRANSFERABILITY OF OPTIONS..................................7
ARTICLE IX. RIGHTS AS A STOCKHOLDER..........................................8
ARTICLE X. TERMINATION, AMENDMENT AND MODIFICATION...........................8
ARTICLE XI. USE OF PROCEEDS..................................................8
ARTICLE XII. GENERAL PROVISIONS..............................................8
(A) RIGHT TO TERMINATE EMPLOYMENT OR CONSULTING ARRANGEMENTS..............8
(B) PURCHASE FOR INVESTMENT...............................................9
(C) TRUSTS, ETC...........................................................9
(D) NOTICES...............................................................9
(E) SEVERABILITY OF PROVISIONS............................................9
(F) PAYMENT TO MINORS ETC.................................................9
(G) HEADINGS AND CAPTIONS.................................................9
(H) CONTROLLING LAW......................................................10
(I) OTHER BENEFITS.......................................................10
(J) COSTS................................................................10
(K) SECTION 16(B) OF THE EXCHANGE ACT....................................10
ARTICLE XIII. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES..10
(A) STOCK CERTIFICATES...................................................10
(B) LEGENDS..............................................................10
(C) PAYMENT OF EXPENSES..................................................10
ARTICLE XIV. LISTING OF SHARES AND RELATED MATTERS..........................10
ARTICLE XV. WITHHOLDING TAXES...............................................10
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CORNELL COMPANIES, INC.
2000 BROAD-BASED EMPLOYEE PLAN
ARTICLE I. PURPOSES OF THE PLAN
The purposes of this Cornell Companies, Inc. 2000 Broad-Based Employee
Plan (the "Plan") are to enable Cornell Companies, Inc. (the "Company") and
Designated Subsidiaries (as defined herein) to attract, retain and motivate
employees, directors and consultants of the Company and Designated Subsidiaries
and to create a long-term mutuality of interest between such persons and the
stockholders of the Company by granting the options to purchase Common Stock (as
defined herein). The Plan is intended to be a broad-based plan as defined in the
New York Stock Exchange Listed Company Manual on the Effective Date (as defined
herein) of the Plan.
ARTICLE II. DEFINITIONS
In addition to the terms defined elsewhere herein, for purposes of this
Plan, the following terms will have the following meanings when used herein with
initial capital letters:
(A) "Board" means the Board of Directors of the Company.
(B) "Cause" means, with respect to a Participant's Termination of
Employment, (i) in the case where there is no employment or consulting agreement
between the Company and the Participant, or where there is an employment or
consulting agreement, but such agreement does not define cause (or words of like
import), commission of a felony, a crime involving moral turpitude,
embezzlement, misappropriation of property of the Company or a Subsidiary, any
other act involving dishonesty or fraud with respect to the Company or a
Subsidiary, a material breach of a directive which is not cured within a
specified time after written notice of such breach, or repeated failure after
written notice to follow the directives of an appropriate officer or the Board,
or (ii) in the case where there is an employment or consulting agreement between
the Company or a Subsidiary and the Participant, termination that is or would be
deemed to be for cause (or words of like import) as defined under such
employment or consulting agreement.
(C) "Code" means the Internal Revenue Code of 1986, as amended.
(D) "Committee" means a committee of the Board appointed from time to time
by the Board consisting of two (2) or more non-employee directors, each of whom
shall be an "outside director" as defined in Section 162(m) of the Code to the
extent then required, except that if and to the extent that no Committee exists
which has the authority to administer the Plan, the functions of the Committee
shall be exercised by the Board.
(E) "Common Stock" means the common stock of the Company, par value $.001
per share, and any common stock resulting from any reclassification of the
Common Stock.
(F) "Company" means Cornell Companies, Inc., a Delaware corporation.
(G) "Designated Subsidiary" means any Subsidiary which has been designated
from time to time by the Board. An entity shall be deemed a Designated
Subsidiary only for such periods as the requisite ownership relationship is
maintained.
(H) "Director" means any director of the Company or a Designated
Subsidiary.
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(I) "Disability" means a permanent and total disability, rendering a
Participant unable to perform the duties performed by the Participant for the
Company or Designated Subsidiaries by reason of physical or mental disability
for a period of more than an aggregate of one hundred eighty (180) days in any
twelve (12) month period. A Disability shall only be deemed to occur at the time
of the determination by the Committee of the Disability.
(J) "Eligible Consultants" means the consultants of the Company and
Designated Subsidiaries who are eligible to participate in the Plan (including,
but not limited, to employees of entities providing consulting services), as
determined by the Committee in its sole discretion.
(K) "Employee" means any person who is an employee of the Company or a
Designated Subsidiary, as determined by the Committee in its sole discretion. An
Employee may, but need not, be an officer of the Company or a Designated
Subsidiary.
(L) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all rules and regulations promulgated thereunder.
(M) "Fair Market Value" means, for purposes of this Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, as of any date, the last sales prices reported for the Common Stock
on the applicable date, (i) as reported by the principal national securities
exchange in the United States on which it is then traded, or (ii) if not traded
on any such national securities exchange, as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers, or if the
sale of the Common Stock shall not have been reported or quoted on such date, on
the first day prior thereto on which the Common Stock was reported or quoted. If
the Common Stock is not readily tradable on a national securities exchange or
any system sponsored by the National Association of Securities Dealers, its Fair
Market Value shall be set by the Committee based upon its assessment of the cash
price that would be paid between a fully informed buyer and seller under no
compulsion to buy or sell (without giving effect to any discount for a minority
interest or any restrictions on transferability or any lack of liquidity of the
stock).
(N) "Option" means the right to purchase one Share at a prescribed
purchase price on the terms specified in the Plan.
(O) "Participant" means an Employee, Director or Eligible Consultant who
is granted Options under the Plan, which Options have not expired.
(P) "Person" means any individual or entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person as
the context may require.
(Q) "Retirement" means a Termination of Employment without cause from the
Company and/or a Subsidiary by a Participant who is at least age 65 or, with the
consent of the Committee, such earlier date before age 65 but after age 55.
(R) "Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
(S) "Share" means a share of Common Stock.
(T) "Subsidiary" means any corporation that is defined as a subsidiary
corporation in Section 424(f) of the Code.
(U) "Termination of Employment" with respect to an Employee means that
individual is no longer actively employed by the Company or a Subsidiary on a
full-time basis, irrespective of whether or not such employee is receiving
salary continuance pay, is continuing to participate in other employee
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benefit programs or is otherwise receiving severance type payments. In the event
an entity shall cease to be a Subsidiary, there shall be deemed a Termination of
Employment of any individual who is not otherwise an employee of the Company or
another Subsidiary at the time the entity ceases to be a Subsidiary. A
Termination of Employment shall not include a leave of absence approved for
purposes of the Plan by the Committee. For purposes of this Plan, a full-time
employee is a person who is scheduled to work at least thirty (30) hours per
week. With respect to a Director, a Termination of Employment shall occur when
the individual ceases to be a director of the Company or any Subsidiary. With
respect to an Eligible Consultant, a Termination of Employment shall occur upon
the termination of the consulting contract or the termination of the performance
of consulting services, as determined by the Committee in its sole discretion.
(V) "Withholding Election" means the election set forth in Article XV.
ARTICLE III. EFFECTIVE DATE
The Plan shall become effective as of December 8, 2000 (the "Effective
Date"). Grants of Options by the Committee under the Plan may be made as of or
after the Effective Date of the Plan, including retroactively.
ARTICLE IV. ADMINISTRATION
(A) DUTIES OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee. The Committee shall have full authority to
interpret the Plan and to decide any questions and settle all controversies and
disputes that may arise in connection with the Plan; to establish, amend and
rescind rules for carrying out the Plan; to administer the Plan, subject to its
provisions; to select Participants in, and grant Options under, the Plan; to
determine the terms, vesting requirements, exercise price and form of exercise
payment for each Option granted under the Plan; to determine the consideration
to be received by the Company in exchange for the grant of the Options; to
determine whether and to what extent Options are to be granted hereunder to one
or more Employees and whether and to what extent Options are to be granted
hereunder to one or more Eligible Consultants or Directors; to prescribe the
form or forms of instruments evidencing Options and any other instruments
required under the Plan (which need not be uniform) and to change such forms
from time to time; to determine whether, to what extent and under what
circumstances to permit reloads, such that to the extent that Options are
settled with Common Stock, that Options may be granted for the same number of
shares of the same or different types, based on such terms as the Committee may
determine, in its sole discretion; and to make all other determinations and to
take all such steps in connection with the Plan and the Options as the
Committee, in its sole discretion, deems necessary or desirable. The Committee
shall not be bound to any standards of uniformity or similarity of action,
interpretation or conduct in the discharge of its duties hereunder, regardless
of the apparent similarity of the matters coming before it.
(B) ADVISORS. The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan, and may rely
upon any advice or opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred by the
Committee in the engagement of such counsel, consultant or agent shall be paid
by the Company.
(C) INDEMNIFICATION. To the maximum extent permitted by applicable law, no
officer of the Company or member or former member of the Committee or of the
Board shall be liable for any action or determination made in good faith with
respect to the Plan or any Option granted under it. To the maximum extent
permitted by applicable law or the Certificate of Incorporation or Bylaws of the
Company and to the extent not covered by insurance, each officer and member or
former member of the Committee or of the Board shall be indemnified and held
harmless by the Company against any cost or expense (including
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reasonable fees of counsel reasonably acceptable to the Company) or liability
(including any sum paid in settlement of a claim with the approval of the
Company), and advanced amounts necessary to pay the foregoing at the earliest
time and to the fullest extent permitted, arising out of any act or omission to
act in connection with the Plan, except to the extent arising out of such
officer's, member's or former member's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
officers, members or former members may have as directors under applicable law
or under the Certificate of Incorporation or Bylaws of the Company or Designated
Subsidiary. Notwithstanding anything else herein, this indemnification will not
apply to the actions or determinations made by an individual with regard to
Options granted to him or her under this Plan.
(D) MEETINGS OF THE COMMITTEE. The Committee shall adopt such rules and
regulations as it shall deem appropriate concerning the holding of its meetings
and the transaction of its business. Any member of the Committee may be removed
from the Committee at any time either with or without cause by resolution
adopted by the Board, and any vacancy on the Committee may at any time be filled
by resolution adopted by the Board. All determinations by the Committee shall be
made by the affirmative vote of a majority of its members. Any such
determination may be made at a meeting duly called and held at which a majority
of the members of the Committee are in attendance in person or through
telephonic communication. Any determination set forth in writing and signed by
all the members of the Committee shall be as fully effective as if it had been
made by a majority vote of the members at a meeting duly called and held.
(E) DETERMINATIONS. Each determination, interpretation or other action
made or taken pursuant to the provisions of this Plan by the Committee shall be
final, conclusive and binding for all purposes and upon all persons, including,
without limitation, the Participants, the Company and Subsidiaries, directors,
officers and other employees of the Company and Subsidiaries, and the respective
heirs, executors, administrators, personal representatives and other successors
in interest of each of the foregoing.
ARTICLE V. SHARES; ADJUSTMENT UPON CERTAIN EVENTS
(A) SHARES TO BE DELIVERED; FRACTIONAL SHARES. Shares to be issued under
the Plan shall be made available, at the sole discretion of the Board, either
from authorized but unissued Shares or from issued Shares reacquired by the
Company and held in treasury. No fractional Shares will be issued or transferred
upon the exercise of any Option. In lieu thereof, the Company shall pay a cash
adjustment equal to the same fraction of the Fair Market Value of one Share on
the date of exercise.
(B) NUMBER OF SHARES. Subject to adjustment as provided in this Article V,
the maximum aggregate number of Shares that may be issued and sold under the
Plan shall not exceed the greater of (a) 400,000 Shares and (b) 4% of the number
of Shares issued and outstanding immediately after the grant of any Option. If
Options are for any reason canceled or forfeited, or expire or terminate
unexercised, the Shares covered by such Options shall again be available for the
grant of Options, subject to the foregoing limit.
(C) ADJUSTMENTS; RECAPITALIZATION, ETC. The existence of the Plan and the
Options granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting
Common Stock, the dissolution or liquidation of the Company or Designated
Subsidiaries, any sale or transfer of all or part of its assets or business or
any other corporate act or proceeding. The Committee may make or provide for
such adjustments in the maximum number of Shares specified in Article V(B), in
the number of Shares covered by outstanding Options granted hereunder and/or in
the Purchase Price (as hereinafter defined) applicable to such Options or such
other adjustments in the number and kind of securities received upon the
exercise
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of Options, as the Committee in its sole discretion may determine is equitably
required to prevent dilution or enlargement of the rights of Participants or to
otherwise recognize the effect that otherwise would result from any stock
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Company, merger, consolidation, spin-off,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase securities or any other corporate transaction or event having an
effect similar to any of the foregoing. Except as herein expressly provided, the
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor or upon conversion of shares or other securities, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number and class of shares and/or
other securities or property subject to Options theretofore granted or the
Purchase Price.
(D) EXTRAORDINARY TRANSACTIONS.
(i) In the event the Company shall, pursuant to action by its Board
of Directors, at any time propose to merge with or into, consolidate with, or
sell or otherwise transfer all or substantially all of its assets to another
entity or in the event of the acquisition of all or substantially all of the
Company's outstanding Common Stock by a single person or entity and/or group of
entities acting in concert (each, an "Extraordinary Transaction"), the Company
shall cause written notice of the proposed Extraordinary Transaction to be given
to the Participant not less than thirty (30) days prior to the anticipated
effective date of the proposed Extraordinary Transaction (the "Extraordinary
Transaction Effective Date").
(ii) On a date which the Company shall specify in such notice (the
"Early Vesting Date"), which date shall not be less than twenty (20) days prior
to the Extraordinary Transaction Effective Date, the Options shall become fully
vested, except as otherwise expressly provided in any Option agreement with
respect to the Options granted thereunder.
(iii) If the Extraordinary Transaction is consummated, the Options,
to the extent not previously exercised prior to the Extraordinary Transaction
Effective Date, shall terminate on the Extraordinary Transaction Effective Date.
If the Extraordinary Transaction is abandoned or otherwise not consummated then,
to the extent that the portion of the Options not exercised prior to such
abandonment or termination shall have vested solely by operation of Article
V(D)(ii) and the relevant Option agreements, such vesting shall be annulled and
be of no further force or effect, and the vesting provisions set forth in the
relevant Option agreements shall be reinstituted, as of the date of such
abandonment or termination.
ARTICLE VI. AWARDS AND TERMS OF OPTIONS
(A) GRANT. The Committee may grant Options to Employees, Directors and
Eligible Consultants. Each Option shall be evidenced by an Option agreement (the
"Option Agreement") in such form as the Committee shall approve from time to
time.
(B) EXERCISE PRICE. The purchase price per Share (the "Purchase Price")
deliverable upon the exercise of an Option shall be determined by the Committee
and set forth in a Participant's Option Agreement, provided that the Purchase
Price shall not be less than the par value of a Share.
(C) NUMBER OF SHARES. The Option Agreement shall specify the number of
Options granted to the Participant, as determined by the Committee in its sole
discretion.
(D) EXERCISABILITY. At the time of grant, the Committee shall specify when
and on what terms (including any vesting requirements) the Options granted shall
be exercisable. In the case of Options not immediately exercisable in full, the
Committee may at any time accelerate the time at which all or any part of the
Options may be exercised and may waive any other conditions to exercise. No
Option shall be
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exercisable after the expiration of ten (10) years from the date of grant. Each
Option shall be subject to earlier termination as provided in Article VII below.
(E) EXERCISE OF OPTIONS.
(i) A Participant may elect to exercise one or more Options then
exercisable by giving written notice to the Company of such election and of the
number of Options such Participant has elected to exercise, accompanied by
payment in full of the aggregate Purchase Price for the number of Shares for
which the Options are being exercised.
(ii) Shares purchased pursuant to the exercise of Options shall be
paid for at the time of exercise as follows:
(a) in cash or by check, bank draft or money order payable to
the order of the Company;
(b) in the form of shares of Common Stock owned by the
Participant (and for which the Participant has good title free and clear of any
liens and encumbrances) (in the case of owned shares obtained by previous
exercise of Options, such shares shall have been owned for at least 6 (six)
months prior to the current Option exercise);
(c) if the Shares are traded on a national securities
exchange, through the delivery of irrevocable instructions to a broker to
deliver promptly to the Company an amount equal to the aggregate Purchase Price
plus all required tax withholding by payment through a cash or margin
arrangement with a broker; or
(d) on such other terms and conditions as may be acceptable to
the Committee (which may include payment in full or in part by the transfer of
Shares which have been owned by the Participant for at least 6 (six) months or
the surrender of Options owned by the Participant) and in accordance with
applicable law.
(iii) Upon receipt of payment, the Company shall deliver to the
Participant as soon as practicable a certificate or certificates for the Shares
then purchased. No Shares shall be issued until payment, as provided herein, has
been made or provided for.
(F) OTHER TERMS AND CONDITIONS. Options may contain such other provisions,
which shall not be inconsistent with any of the foregoing terms of the Plan, as
the Committee shall deem appropriate including, without limitation, provisions
permitting the use of shares of Common Stock to exercise and settle an Option
("Stock Swaps") or permitting "reloads" such that in the case of Stock Swaps,
the same number of Options is granted as the number of shares of Common Stock
swapped ("Reloads"). With respect to Stock Swaps, shares of Common Stock shall
be valued at Fair Market Value on the date of exercise and shall have the same
remaining time period as the shares of Common Stock that were swapped. With
respect to Reloads, the exercise price of the new Option shall be the Fair
Market Value on the date granted and the term of the Option shall be the same as
the remaining term of the Options that are exercised. With respect to either
Stock Swaps or Reloads, if shares used to exercise and settle an Option were
obtained upon the prior exercise of Options, those shares must have been owned
by the Participant for at least 6 (six) months ("Mature Shares"). In no event
shall the Company issue a Reload whereby the Participant is allowed to exercise
Options using any means other than Mature Shares or shares otherwise owned by
the Participant for at least 6 (six) months.
ARTICLE VII. EFFECT OF TERMINATION OF EMPLOYMENT
(A) DEATH, DISABILITY, RETIREMENT, ETC. Except as otherwise provided in
the Participant's Option Agreement, upon Termination of Employment, all
outstanding Options then exercisable and not
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exercised by the Participant prior to such Termination of Employment (and any
Options not previously exercisable but made exercisable by the Committee at or
after the Termination of Employment) shall remain exercisable by the Participant
to the extent not exercised for the following time periods, or, if earlier, the
prior expiration of the Option in accordance with the terms of the Plan and
grant:
(i) In the event of the Participant's death, Retirement or
Disability, such Options shall remain exercisable by the Participant (or by the
Participant's estate or by the person given authority to exercise such Options
by the Participant's will or by operation of law) for a period of one year from
the date of the Participant's death, Retirement or Disability, provided that the
Committee, in its sole discretion, may at any time extend such time period.
(ii) In the event of the Participant's Termination of Employment
without Cause, such Options shall remain exercisable for ninety (90) days from
the date of the Participant's Termination of Employment, provided that the
Committee, in its sole discretion, may at any time extend such time period.
Unless the Committee otherwise determines, there shall be no effect on the
exercisability of Options held by a Participant if (i) the Participant's
employment, directorship or consultancy is transferred from the Company to a
Designated Subsidiary, from a Designated Subsidiary to the Company or from one
Designated Subsidiary to another or (ii) the Participant is (a) an Employee who
becomes an Eligible Consultant or Director, or (b) a Director who becomes an
Employee or an Eligible Consultant, or (c) an Eligible Consultant who becomes an
Employee or Director.
(B) CAUSE. Upon the Termination of Employment of a Participant for Cause,
or if the Company or a Designated Subsidiary obtains or discovers information
after Termination of Employment that such Participant had engaged in conduct
that would have justified a Termination of Employment for Cause during the
Participant's employment, directorship or consultancy, all outstanding Options
of such Participant shall, unless the Committee in its sole discretion
determines otherwise, terminate and be null and void.
(C) CANCELLATION OF OPTIONS. Except as otherwise provided in Article V(D),
no Options that were not exercisable during the period of employment shall
thereafter become exercisable upon a Termination of Employment for any reason or
no reason whatsoever, and such options shall terminate and become null and void
upon a Termination of Employment, unless the Committee determines in its sole
discretion that such Options shall be exercisable.
ARTICLE VIII. NONTRANSFERABILITY OF OPTIONS
Except as set forth below, no Option shall be transferable by the
Participant otherwise than by will or under applicable laws of descent and
distribution or pursuant to a qualified domestic relations order, and during the
lifetime of the Participant may be exercised only by the Participant or his or
her guardian or legal representative, as defined in the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder. The Committee may grant Options that are transferable, without
payment of consideration, to immediate family members of the Participant or to
trusts or partnerships for such family members; the Committee may also amend
outstanding Options to provide for such transferability. In addition, except as
provided in the immediately preceding two sentences, no Option shall be
assigned, negotiated, pledged or hypothecated in any way (whether by operation
of law or otherwise), and no Option shall be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, negotiate, pledge or
hypothecate any Option, or in the event of any levy upon any Option by reason of
any execution, attachment or similar process contrary to the provisions hereof,
such Option shall immediately terminate and become null and void.
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ARTICLE IX. RIGHTS AS A STOCKHOLDER
A Participant (or a permitted transferee of an Option) shall have no
rights as a stockholder with respect to any Shares covered by such Participant's
Option until such Participant (or permitted transferee) shall have become the
holder of record of such Shares, and no adjustments shall be made for dividends
in cash or other property or distributions or other rights in respect to any
such Shares, except as otherwise specifically provided in the Plan.
ARTICLE X. TERMINATION, AMENDMENT AND MODIFICATION
The Plan shall terminate at the close of business on the tenth anniversary
of the Effective Date (the "Termination Date"), unless terminated sooner as
hereinafter provided, and no Option shall be granted under the Plan on or after
that date. The termination of the Plan shall not terminate any outstanding
Options that by their terms continue beyond the Termination Date. At any time
prior to the Termination Date, the Committee may amend or terminate the Plan or
suspend the Plan in whole or in part.
The Committee may at any time, and from time to time, amend, in whole or
in part, any or all of the provisions of the Plan (including any amendment
deemed necessary to ensure that the Company may comply with any regulatory
requirements referred to in Article XII), or suspend or terminate it entirely,
retroactively or otherwise; PROVIDED, HOWEVER, that, unless otherwise required
by law or specifically provided herein, the rights of a Participant with respect
to Options granted prior to such amendment, suspension or termination, may not
be materially impaired without the consent of such Participant and; PROVIDED,
FURTHER, that no amendment may be made (except by operation of Article V(C))
without the approval of the stockholders of the Company entitled to vote if
stockholder approval is required by applicable law or by the rules of the
national securities exchange or quotation system on which the Common Stock is
traded or quoted at such time.
The Committee may amend the terms of any Option granted, prospectively or
retroactively, but, subject to Article VI above or as otherwise provided herein,
no such amendment or other action by the Committee shall materially impair the
rights of any Participant without the Participant's consent. Notwithstanding the
foregoing, however, no such amendment may, without the approval of the
stockholders of the Company, effect any change that would require stockholder
approval under applicable law or the rules of the national securities exchange
or quotation system on which the Common Stock is traded or quoted at such time.
ARTICLE XI. USE OF PROCEEDS
The proceeds of the sale of Shares subject to Options under the Plan are
to be added to the general funds of the Company and used for its general
corporate purposes as the Board shall determine.
ARTICLE XII. GENERAL PROVISIONS
(A) RIGHT TO TERMINATE EMPLOYMENT OR CONSULTING ARRANGEMENTS. Neither the
adoption of the Plan nor the grant of Options shall impose any obligation on the
Company or Designated Subsidiaries to continue the employment of any
Participant, the directorship of any Director or the consulting arrangement with
any Eligible Consultant, nor shall it impose any obligation on the part of any
Participant to remain in the employ of the Company or Designated Subsidiaries or
to remain as a director or consultant of the Company or its Designated
Subsidiaries.
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(B) PURCHASE FOR INVESTMENT. If the Board or the Committee determines that
the law so requires, the holder of an Option granted hereunder shall, upon any
exercise or conversion thereof, execute and deliver to the Company a written
statement, in form satisfactory to the Company, representing and warranting that
such Participant is purchasing or accepting the Shares then acquired for such
Participant's own account and not with a view to the resale or distribution
thereof, that any subsequent offer for sale or sale of any such Shares shall be
made either pursuant to (i) a Registration Statement on an appropriate form
under the Securities Act, which Registration Statement shall have become
effective and shall be current with respect to the Shares being offered and
sold, or (ii) a specific exemption from the registration requirements of the
Securities Act, and that in claiming such exemption the holder will, prior to
any offer for sale or sale of such Shares, obtain a favorable written opinion,
satisfactory in form and substance to the Company, from counsel acceptable to
the Company as to the availability of such exception.
(C) TRUSTS, ETC. Nothing contained in the Plan and no action taken
pursuant to the Plan (including, without limitation, the grant of any Option
thereunder) shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and any Participant or the executor,
administrator or other personal representative or designated beneficiary of such
Participant, or any other persons. Any reserves that may be established by the
Company in connection with the Plan shall continue to be part of the general
funds of the Company, and no individual or entity other than the Company shall
have any interest in such funds until paid to a Participant. If and to the
extent that any Participant or such Participant's executor, administrator or
other personal representative, as the case may be, acquires a right to receive
any payment from the Company pursuant to the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company.
(D) NOTICES. Any notice to the Company required by or in respect of this
Plan will be addressed to the Company, Cornell Companies, Inc., 1700 West Loop
South, Suite 1500, Houston, TX 77027, Attention: Chief Financial Officer, or
such other place of business as shall become the Company's principal executive
offices from time to time. Each Participant shall be responsible for furnishing
the Company with the current and proper address for the mailing to such
Participant of notices and the delivery to such Participant of agreements,
Shares and payments. Any such notice to the Participant will, if the Company has
received notice that the Participant is then deceased, be given to the
Participant's personal representative if such representative has previously
informed the Company of his status and address (and has provided such reasonable
substantiating information as the Company may request) by written notice under
this Section. Any notice required by or in respect of this Plan will be deemed
to have been duly given when delivered in person or when dispatched by telegram
or one (1) business day after having been dispatched by a nationally recognized
overnight courier service or three (3) business days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid. The Company assumes no responsibility or obligation to deliver any item
mailed to such address that is returned as undeliverable to the addressee and
any further mailings will be suspended until the Participant furnishes the
proper address.
(E) SEVERABILITY OF PROVISIONS. If any provisions of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions of the Plan, and the Plan shall be construed and
enforced as if such provisions had not been included.
(F) PAYMENT TO MINORS ETC. Any benefit payable to or for the benefit of a
minor, an incompetent person or other person incapable of receipt thereof shall
be deemed paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Committee, the Company and their employees, agents and
representatives with respect thereto.
(G) HEADINGS AND CAPTIONS. The headings and captions herein are provided
for reference and convenience only. They shall not be considered part of the
Plan and shall not be employed in the construction of the Plan.
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(H) CONTROLLING LAW. The Plan shall be construed and enforced according to
the laws of the State of Delaware.
(I) OTHER BENEFITS. No payment under this Plan shall be considered
compensation for purposes of computing benefits under any retirement plan of the
Company or a Designated Subsidiary nor affect any benefits under any other
benefit plan now or subsequently in effect under which the availability of
benefits is related to the level of compensation.
(J) COSTS. The Company shall bear all expenses included in administering
this Plan, including expenses of issuing Common Stock pursuant to any Options
hereunder.
(K) SECTION 16(B) OF THE EXCHANGE ACT. All elections and transactions
under the Plan by persons subject to Section 16 of the Exchange Act involving
shares of Common Stock are intended to comply with all exemptive conditions
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan and the transaction of business thereunder.
ARTICLE XIII. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES
(A) STOCK CERTIFICATES. Upon any exercise of an Option and payment of the
exercise price as provided in such Option, a certificate or certificates for the
Shares as to which such Option has been exercised shall be issued by the Company
in the name of the person or persons exercising such Option and shall be
delivered to or upon the order of such person or persons.
(B) LEGENDS. Certificates for Shares issued upon exercise of an Option
shall bear such legend or legends as the Committee, in its sole discretion,
determines to be necessary or appropriate to prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act
or to implement the provisions of any agreements between the Company and the
Participant with respect to such Shares.
(C) PAYMENT OF EXPENSES. The Company shall pay all issue or transfer taxes
with respect to the issuance or transfer of Shares, as well as all fees and
expenses necessarily incurred by the Company in connection with such issuance or
transfer and with the administration of the Plan.
ARTICLE XIV. LISTING OF SHARES AND RELATED MATTERS
If at any time the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the grant of
Options or the award or sale of Shares under the Plan, no Option grant shall be
effective and no Shares will be delivered, as the case may be, unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board.
ARTICLE XV. WITHHOLDING TAXES
The Company shall have the right to require prior to the issuance or
delivery of any shares of Common Stock payment by the Participant of any
federal, state or local taxes required by law to be withheld.
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The Committee may permit any such withholding obligation to be satisfied
by reducing the number of shares of Common Stock otherwise deliverable. A person
required to file reports under Section 16(a) of the Exchange Act with respect to
securities of the Company may elect to have a sufficient number of shares of
Common Stock withheld to fulfill such tax obligations (hereinafter a
"Withholding Election") only if the election complies with such conditions as
are necessary to prevent the withholding of such shares from being subject to
Section 16(b) of the Exchange Act. To the extent necessary under then current
law, such conditions shall include the following: (x) the Withholding Election
shall be subject to the approval of the Committee and (y) the Withholding
Election is made (i) during the period beginning on the third business day
following the date of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following such date or is made in advance but takes effect during
such period, (ii) six (6) months before the stock award becomes taxable or (iii)
during any other period in which a Withholding Election may be made under the
provisions of Rule 16b-3 promulgated pursuant to the Exchange Act. Any fraction
of a share of Common Stock required to satisfy such tax obligations shall be
disregarded and the amount due shall be paid instead in cash by the Participant.
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