**Exhibit 10.16**

 

**EXECUTIVE MANAGEMENT EMPLOYMENT AGREEMENT**

 

**CORNELL COMPANIES, INC.**

 

This EMPLOYMENT AGREEMENT is made and entered intoas of this 5th day of January, 2009, by and between Cornell Companies, Inc.,a Delaware corporation (the “Company”), and Cathryn L. Porter (“Employee”).

 

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

 

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

 

# Section 1.                                            **Definitions**.

#  

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

##  

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

##  

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

##  

## (d)                                 “Cause” shall mean (i) materialacts of personal dishonesty substantially relevant to Company matters, grossnegligence or willful misconduct by Employee in connection with Employee’semployment duties; (ii) failure or refusal by Employee to perform in anymaterial respect Employee’s duties or responsibilities under this Agreement; (iii) misappropriationby Employee of the assets or business opportunities of the Company or itsaffiliates; (iv) embezzlement or other financial fraud committed byEmployee, at Employee’s direction, or with Employee’s personal knowledge; (v) Employee’sindictment for, conviction of, admission to, or entry of pleas of no contest toany felony or any crime involving moral turpitude; (vi) public orconsistent drunkenness by Employee or Employee’s illegal use of narcotics whichis, or could reasonably be expected to become, materially injurious to thereputation or business of the Company or its affiliates or which impairs, orcould reasonably be expected to impair, the

 

----

 

## performanceof Employee’s duties hereunder; or (vii) Employee’s breach of any materialprovision of this Agreement or violation of the Company’s practices orpolicies.

##  

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

##  

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

###  

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

###  

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

###  

Notwithstanding anything to the contrary above, ifthe Employee’s position, duties and responsibilities on behalf of the Companyare devoted entirely to one distinct operating division of the Company, andthat operating division of the Company is the subject of a Sale, then such Saleof that operating division shall be deemed a Change in Control for thatEmployee. In the event the Company and the Employee do not agree whetherEmployee was employed by such a distinct operation division, the issue shall bedetermined with finality by the Company’s then-Chief Executive Officer inEmployee’s or her sole and absolute discretion.

 

## (f)                                            “Clawback” shall mean the returnto the Company of funds formerly provided to Employee for a specified, unearnedreason under defined circumstances.

##  

## (g)                                         “Commencement Date” shall mean January 5,2009.

##  

## (h)                                         “Company” shall mean CornellCompanies, Inc., a Delaware corporation.

##  

## (i)                                             “Competitive Activities” shallmean the core correctional business activities in which the Company or itssubsidiaries are engaged or have plans to engage either (i) during theperiod of Employee’s employment, or (ii) for purposes of Employee’sobligations under Subsection 10(b) after the period of Employee’semployment, at the time of termination of

 

2

----

 

## Employee’semployment, including without limitation, (i) correctional services, (ii) half-wayhouse services or treatment programs, (iii) juvenile justice programs orfacilities, and (iv) related educational, correctional, rehabilitative, ortreatment services.  Examples of suchentities, without limitation, would include Corrections Corporation of America;The Geo Group, Inc.; Community Education Centers; Psychiatric Solutions;Emerald Corrections; Management & Training Corporation; LCSCorrections Services, Inc., and any and all other suchcorrectional/treatment entities.

##  

## (j)                                             “Confidential Information” shallhave the meaning set forth in Subsection 10(a), below.

##  

## (k)                                          “Developments” shall have themeaning set forth in Subsection 10(e), below.

##  

## (l)                                             “Disability” shall mean anyphysical or mental disability or infirmity that prevents the performance ofEmployee’s duties (despite reasonable accommodation) for a period of (i) sixty(60) consecutive days or (ii) ninety (90) non-consecutive days during anytwelve (12) month period.  Any questionas to the existence, extent or potentiality of Employee’s Disability upon whichEmployee and the Company cannot agree shall be determined by a qualified,independent physician selected by the Company and approved by Employee (whichapproval shall not be unreasonably withheld). The determination of any such physician shall be final and conclusivefor all purposes of this Agreement.

##  

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

 

## (m)                                       “Good Reason” shall mean (a) anysubstantial diminution in Employee’s authority or responsibilities described inSection 3(a); (b) the requirement by the Company that Employee’sprincipal office be located outside of Houston, Texas; or (c) the materialbreach by the Company of any provision of this Agreement not fully remediedwithin 14 days of written notice from Employee.

##  

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

##  

## (o)                                         “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’stermination of employment hereunder pursuant to Section 9 for any reason,but (b) the eighteen (18) month anniversary of the date of Employee’stermination of employment hereunder following a Change in Control in accordancewith Subsection 9(f).

##  

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

 

3

----

 

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

 

## (q)                                         “Severance Amount” shall mean theamount specified in Subsection 9(d)(ii) or, in the alternative, Subsection9(f), as applicable, below.

##  

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

#  

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

 

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

 

## (a)                          Position; Duties: Throughout Employee’s period of employment, Employee shall be employedand serve as the Corporate General Counsel & Corporate Secretary ofthe Company (together with such other position or positions consistent withEmployee’s title as the Company shall specify from time to time) and shall havesuch duties typically associated with such title and as may otherwise beassigned to Employee by the Company. Employee also agrees to serve as anofficer and/or director of any subsidiary of the Company without additionalcompensation.

##  

## (b)                         Full Business Time: Employee shall devote Employee’s fullbusiness time, attention, skill and best efforts to the performance of Employee’sduties under this Agreement and shall not engage in any other occupation oractive business during the period of Employee’s employment, including, withoutlimitation, any such activity that (x) conflicts with the interests of theCompany, (y) interferes with the proper and efficient performance ofEmployee’s duties for the Company or (z) interferes with the exercise ofEmployee’s judgment in the Company’s best interests.

 

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

##  

# Section 4.                                            **Location.**

#  

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

 

4

----

 

# Section 5.                                            **Relocation.**

#  

## In the event that the Company shall request Employeeto relocate Employee’s principal residence, the Company shall reimburseemployee for any reasonable moving expenses that are actually incurred byEmployee in connection with any such relocation, provided Employee furnishes tothe Company any documentation reasonably requested by the Company evidencingany such reasonable moving expenses.

##  

# Section 6.                                            **Compensation**.

#  

# During the period of Employee’s employment, Employee shall be entitledto the following compensation:

#  

## (a)                                  Base Salary. Employee shall be paid an annualized Base Salary, payable in accordancewith the regular payroll practices of the Company, of $235,000.00, withincreases, if any, as may be approved in writing by the Company, in its solediscretion.  During the EmploymentPeriod, the Base Salary shall be reviewed at least annually.  Any increase in Base Salary shall not serveto limit or reduce any other obligation to the Employee under thisAgreement.  The term Base Salary asutilized in this Agreement shall refer to Base Salary as so increased.

##  

## (b)                                 Incentive Compensation.  Employeeshall be eligible for the annual discretionary incentive compensation plan asdetermined by the Company, in its sole discretion (the “IncentiveCompensation”).  Employee shallreceive the Incentive Compensation, if any, in respect of any year at the sametime as incentive compensation awards are paid to other executive officers ofthe Company, but in no event later than one hundred twenty (120) days after theend of the fiscal year for which the incentive compensation is payable. Theannual target bonus forming part or all of the Incentive Compensation shall beno 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 IncentivePlan, subject to the terms and provisions of such Plan.

##  

## (d)                                 Signing Bonus. Employee shall receive with Employee’s first paycheck a signing bonus inthe amount of $35,000.00.  Employeeunderstands, acknowledges, and agrees that the Signing Bonus is subject toClawback should Employee’s employment with the Company terminate prior to onefull year from Employee’s date of hire;*provided, however*,said Clawback is subject to the following provisions:

##  

### (i)                           The Clawback amount owed shall amortizeover the one-year period, beginning at $35,000.00, then descending at a rate ofone-twelfth ($2,916.67) per month.

###  

### (ii)                        The Clawback requirement shall be voidand no payment shall be due in the event termination occurs for the reason ofeither a) “Termination by the Company without Cause” as defined in subsection 9(d) below;b) Termination by Employee for “Good Reason” as defined in subsection 1(m) above;or c) “Termination due to Death or Disability” as defined in subsection 9(b),below.

 

5

----

 

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

#  

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

##  

# Section 8.                                            **Reimbursement ofBusiness Expenses**.

#  

Employee is authorized to incur reasonable businessexpenses in carrying out Employee’s duties and responsibilities under thisAgreement and the Company shall promptly reimburse Employee for all reasonablebusiness expenses incurred in connection with carrying out the business of theCompany, subject to documentation in accordance with the Company’s policy, asin effect from time to time.

 

# Section 9.                                            **Termination ofEmployment**.

#  

## (a)                                  General.  The Employee’semployment hereunder shall terminate upon the earliest to occur of (i) Employee’sdeath, (ii) a termination by reason of a Disability, (iii) atermination by the Company with Cause, (iv) a termination by the Companywithout Cause, (v) termination by the Employee, or a termination by theCompany without Cause following a Change in Control. Upon any termination ofEmployee’s employment for any reason, except as may otherwise be requested bythe Company in writing, Employee shall resign from any and all directorships,committee memberships or any other positions Employee holds with the Company orany of its affiliates.  Notwithstandingany other provision of this Agreement, the provisions of this Section 9shall exclusively govern Employee’s rights upon termination of employment withthe Company, provided, however, that nothing contained in this Section 9shall diminish Employee’s rights with respect to the Long-term Incentive Plan,the terms and provisions of which shall continue to govern Employee’s rightsand interests in the Long-term Incentive Plan following any termination inaccordance therewith, or the Accrued Obligations.

 

## (b)                                 Termination due to Death or Disability. Employee’s employment shall terminate automatically upon Employee’sdeath.  The Company may terminateEmployee’s employment immediately upon the occurrence of a Disability, asdefined in Subsection 1(l) above, such termination to be effective uponEmployee’s receipt of written notice of such termination.  In the event Employee’s employment isterminated due to Employee’s death or Disability, Employee or Employee’s estateor Employee’s beneficiaries, as the case may be, shall be entitled to:

 

6

----

 

### (i)                                             The Accrued Obligations; and

###  

### (ii)                                          Any unpaid Incentive Compensation inrespect to any completed fiscal year which has ended prior to the date of suchtermination, which amount shall be paid at such time as incentive compensationawards are paid to other senior executives of the Company.

###  

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

 

## (c)                                          Termination by the Company for Cause.

##  

### (i)                                             A termination for Cause shall not takeeffect unless the provisions of this Subsection (i) are compliedwith.  Employee shall be given not lessthan fourteen (14) days written notice by the Company of the intention toterminate Employee for Cause, which notice shall describe the particular act oracts or failure or failures to act that constitute the grounds on which theproposed termination for Cause is based. If the nature of the alleged Cause is capable of cure, Employee shallhave fourteen (14) days after the date that such written notice has been givento Employee in which to cure such conduct. If Employee fails to cure suchconduct within that time period, the termination shall be effective on the dateimmediately following the expiration of the fourteen (14) day noticeperiod.  During any cure period providedhereunder, the Company may, in its sole and absolute discretion, prohibitEmployee from entering the premises of the Company or otherwise performingEmployee’s duties hereunder, provided it does not prevent the cure by doing so.

###  

### (ii)                                          In the event the Company terminatesEmployee’s employment for Cause, Employee shall be entitled only to the AccruedObligations.

###  

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

###  

## (d)                                 Termination by the Company without Cause. The Company may terminate Employee’s employment at any time withoutCause, effective upon Employee’s receipt of written notice of suchtermination.  In the event Employee’semployment is terminated by the Company without Cause (other than due to deathor Disability), Employee shall be entitled to:

##  

### (i)                                             The Accrued Obligations;

###  

### (ii)                                          Payment in twenty-six (26) equalbi-monthly installments of twelve (12) months of then-Base Salary (the “SeveranceAmount”), less applicable withholdings and deductions, subject in all events toSection 20 of this Agreement;

###  

### (iii)                                       Any unpaid Incentive Compensation inrespect 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 arepaid to other senior executives of the Company.

 

7

----

 

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

 

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

 

## (e)                          Termination by Employee. Employee may terminate Employee’s employment by providing the Companythirty (30) days written or oral notice of such termination.  In the event of a termination of employmentby Employee under this Subsection 9(e), Employee shall be entitled only to theAccrued Obligations.  In the event oftermination of Employee’s employment under this Subsection 9(e), the Companymay, in its sole and absolute discretion, prohibit Employee from entering thepremises of the Company for all or any portion of the notice period (which inno event shall be treated as a termination without Cause), provided that theCompany shall continue to pay to Employee Employee’s then current Base Salaryand continue benefits provided for the duration of the notice period.

##  

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

 

## (f)                                    Termination by Company Without CauseFollowing a Change in Control.  If, withinone hundred eighty (180) days following a Change in Control, the Companyterminates the employment of the Employee without Cause, then the Employeeshall be treated in all respects as if Employee was terminated Without Cause inaccordance with Subsection 9(d), above, except for the following:

##  

### (i)                                             The Severance Amount shall representeighteen (18) months of then-Base Salary, payable in eighteen (18) equalmonthly installments;

###  

### (ii)                                          The Employee will also receive in “lumpsum” fashion, less applicable deductions and withholdings, a paymentrepresenting the discretionary Incentive Compensation Employee would have beenawarded following the fiscal year’s end, as determined by the Company in itssole discretion, pro-rated for the period of time Employee was employed by theCompany in the fiscal year for which the bonus is payable; and

###  

### (iii)                                       Should Employee be eligible for and electto continue his health insurance pursuant to COBRA following the date of suchtermination, the Company will pay the COBRA premiums, less the amount deductedfrom Employee’s severance in an amount equal to that which had been deductedfor such insurance coverage when he was a regular employee, until the earlierof: (1) twelve (12) months, or (2) the date Employee commencesemployment with any person or entity and, thus, is eligible for healthinsurance benefits.

 

Notwithstanding theforegoing, the payments and benefits described in this Subsections 9(f) shallimmediately terminate, and the Company shall have no further obligations

 

8

----

 

to Employee with respect thereto, in theevent that Employee breaches any provision of Section 10 hereof.

 

Following such termination of Employee’s employmentby the Company without Cause within One Hundred Eighty (180) days of a Changeof Control, except as set forth in this Subsection 9(f), Employee shall have nofurther rights to any compensation or any other benefits under this Agreement.

 

## (g)                                 Release. Notwithstanding any provision herein to the contrary, the Company mayrequire that, prior to payment of any amount or provision of any benefit otherthan the Accrued Obligations, Employee shall have executed a customary generalrelease in favor of the Company and its affiliates and related parties in suchform as is reasonably required by the Company, and any waiting periodscontained in such release shall have expired.

##  

# Section 10.                                      **Restrictive Covenants**.

#  

# Employee acknowledges and agrees that (A) the agreements andcovenants contained in this Section 10 are (i) reasonable and validin geographical and temporal scope and in all other respects, and (ii) essentialto protect the value of the Company’s business and assets, and (B) byEmployee’s employment with the Company, Employee will obtain knowledge,contacts, know-how, training and experience and there is a substantialprobability that such knowledge, know-how, contacts, training and experiencecould be used to the substantial advantage of a competitor of the Company andto the Company’s substantial detriment. For purposes of this Section 10, references to the Company shall bedeemed to include its subsidiaries.

#  

## (a)                                  Confidential Information. At any time during and after the end of the period of Employee’semployment by the Company, without the prior written consent of the Company,except to the extent required by an order of a court having jurisdiction orunder subpoena from an appropriate government agency, in which event, Employeeshall use Employee’s best efforts to consult with the Company prior toresponding to any such order or subpoena, and except as required in theperformance of Employee’s duties hereunder, Employee shall not disclose to oruse for Employee’s benefit or the benefit of any third party any confidentialor proprietary trade secrets, customer lists, drawings, designs, informationregarding legislative initiatives, contract negotiations, vendor arrangements,product development, marketing plans, sales plans, manufacturing plans,management organization information, operating policies or manuals, businessplans, financial records, packaging design or other financial, commercial,business or technical information (i) relating to the Company, or (ii) thatthe Company may receive belonging to suppliers, customers, or others who dobusiness with the Company (collectively, “Confidential Information”).  Employee’s obligation under this Subsection10(a) shall not apply to any information which (i) is known publicly;or (ii) is in the public domain or hereafter enters the public domainwithout the breach of Employee of this Subsection 10(a); or (iii) is madeavailable to Employee by a third party not in breach of an obligation ofconfidentiality.

##  

## (b)                                 Non-Competition.** **Employee covenants and agrees thatduring the Non-competition Restricted Period, with respect to any State of theUnited States of America or any

 

9

----

##  

## otherjurisdiction in which the Company engages in business during Employee’semployment, or, following termination of Employee’s employment, was engaged inbusiness at the time of such termination, Employee shall not, directly orindirectly, 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 servicesfor any person or entity (i) that engages in Competitive Activities or (ii) inwhich any such relationship with Employee would result in the likely, probableor inevitable use or disclosure of Confidential Information; provided thatnothing shall prohibit Employee from being a partner or employee of, or otherwisebeing associated with, a professional services firm as long as Employee is notdirectly engaged in the provision of services to any such person orentity.  Notwithstanding anything hereinto the contrary, this Subsection 10(b) shall not prevent Employee fromacquiring 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 Employee’s own account or for the account of anyother person or entity, (i) encourage, solicit or induce, or in any mannerattempt to encourage, solicit or induce, any person or entity employed by, asan agent of, or a service provider to, the Company to terminate (or, in thecase of an agent or service provider, reduce) such person’s or entity’semployment, agency or service, as the case may be, with the Company; (ii) solicitor accept business from any individual or entity for whom the Company providedservices or products within the one-year period immediately preceding the dateof Employee’s termination of employment; or (iii) solicit or acceptbusiness from any prospective customer or client of the Company who, within theone-year period immediately preceding the date of Employee’s termination ofemployment, Employee had directly solicited or where, directly or indirectly,in whole or in part, Employee supervised or participated in the Company’ssolicitation activities related to such prospective customer or client, norshall Employee assist any person or entity to engage in any activity prohibitedby 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 theCompany, and (ii) the documents and data of any nature and in whatevermedium of the Company, and Employee shall not take with Employee any suchproperty, documents or data or any reproduction thereof, or any documentscontaining or pertaining to any Confidential Information.

##  

## (e)                                  Works for Hire. Employee agrees that the Company shall own all right, title and interestthroughout the world in and to any and all inventions, original works ofauthorship, 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 practice during Employee’speriod of Employment, whether or not during regular working hours, providedthey either (i) relate at the time of conception or development to theactual or demonstrably proposed business or research and development activitiesof the Company; (ii) result from or relate to any work performed for theCompany; or (iii) are developed through the use of ConfidentialInformation and/or Company resources or in consultation with Company personnel(collectively referred to as “Developments”).  Employee hereby assigns all right, title

 

10

----

 

## andinterest in and to any and all of these Developments to the Company.  Employee agrees to assist the Company, at theCompany’s expense, to further evidence, record and perfect such assignments,and to perfect, obtain, maintain, enforce, and defend any rights specified tobe so owned or assigned.  Employee herebyirrevocably designates and appoints the Company and its agents asattorneys-in-fact to act for and on Employee’s behalf to execute and file anydocument and to do all other lawfully permitted acts to further the purposes ofthe foregoing with the same legal force and effect as if executed by Employee.  In addition, and not in contravention of anyof the foregoing, Employee acknowledges that all original works of authorshipwhich are made by Employee (solely or jointly with others) within the scope ofemployment and which are protectable by copyright are “works made for hire,” asthat term is defined in the United States Copyright Act (17 USC Sec. 101).  To the extent allowed by law, this includesall rights of paternity, integrity, disclosure and withdrawal and any otherrights that may be known as or referred to as “moral rights.”  To the extent Employee retains any such moralrights under applicable law, Employee hereby waives such moral rights andconsents to any action consistent with the terms of this Agreement with respectto such moral rights, in each case, to the full extent of such applicablelaw.  Employee will confirm any suchwaivers and consents from time to time as requested by the Company.

##  

## (f)                                    Blue Pencil. If any court of competent jurisdiction shall at any time deem theduration 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/orgeographic scope set forth herein shall be deemed to be the longest periodand/or greatest size permissible by law under the circumstances, and theparties hereto agree that such court shall reduce the time period and/orgeographic scope to permissible duration or size.

##  

# Section 11.                                      **Injunctive Relief**.

#  

Without limiting the remedies available to theCompany, Employee acknowledges that a breach or threatened breach of any of thecovenants contained this Section 10 hereof may result in materialirreparable injury to the Company or its subsidiaries or affiliates for whichthere is no adequate remedy at law, that it will not be possible to measuredamages for such injuries precisely and that, in the event of such a breach orthreat thereof, the Company shall be entitled to obtain a temporary restrainingorder and/or a preliminary or permanent injunction, without the necessity ofproving irreparable harm or injury as a result of such breach or threatenedbreach of Section 10 hereof, restraining Employee from engaging inactivities prohibited by Section 10 hereof or such other relief as may berequired specifically to enforce any of the covenants in Section 10hereof.  Notwithstanding any otherprovision to the contrary, the Non-competition Restriction Period and theNon-solicitation Restriction Period shall be tolled during any period ofviolation of any of the covenants in Subsections 10(b) or (c) hereofand during any other period required for litigation during which the Companyseeks to enforce such covenants against Employee or another person or entitywith whom Employee is affiliated if it is ultimately determined that Employeewas in breach of such covenants.

 

# Section 12.                                      **Representations andWarranties of Employee**.

#  

Employee represents and warrants to theCompany that:

 

11

----

 

## (a)                                  Employee is entering into this Agreementvoluntarily and that Employee’s execution of this Agreement, Employee’semployment hereunder and compliance with the terms and conditions hereof willnot conflict with or result in the breach by Employee of any agreement to whichEmployee is a party or by which Employee may be bound;

##  

## (b)                                 Employee has not, and in connection withEmployee’s employment with the Company will not, violate any non-solicitationor other similar covenant or agreement by which Employee is or may be bound;

##  

## (c)                                  In connection with Employee’s employmentwith the Company Employee will not use any confidential or proprietaryinformation Employee may have obtained in connection with employment with anyprior employer; and

##  

## (d)                                 The Company has suggested to the Employeethat Employee seek legal counsel of Employee’s choice to review this Agreementbefore Employee signs it, and Employee has been given full and ampleopportunity to do so.

##  

# Section 13.                                      **Taxes**.

#  

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

 

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

#  

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

 

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

#  

# (a)                                  The Company. This Agreement shall inure to thebenefit of, be binding  upon, and be enforceableby, and may be assigned by the Company to, any purchaser of all orsubstantially all of the Company’s business or assets, or an operating divisionthereof, any successor to the Company or any assignee thereof (whether director indirect, by stock purchase, asset purchase, merger, consolidation orotherwise).  The Company will require anysuch purchaser, successor or assignee to expressly assume and agree to performthis Agreement in the same manner and to the same extent that the Company wouldbe required to perform it if no such purchase, succession or assignment hadtaken place.

#  

## (b)                                 Employee.  Employee’srights and obligations under this Agreement shall not be transferable byEmployee by assignment or otherwise, without the prior written consent of theCompany; provided, however, that if Employee shall die, allamounts then payable to

 

12

----

 

## Employeehereunder shall be paid in accordance with the terms of this Agreement toEmployee’s estate.

##  

## a.               No Third-Party Beneficiaries.  Nothingexpressed or referred to in this Agreement will be construed to give any personor 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 ofthis Agreement.

##  

# Section 16.                                      **Waiver and Amendments**.

#  

Any amendment or modification of any of the terms ofthis Agreement shall be valid only if made in writing and signed by each of theparties hereto.  No waiver by either ofthe parties hereto of their rights hereunder or of compliance by the otherparty of any of the terms or conditions hereof shall be effective unless theparty waiving its rights hereunder or compliance with the terms hereof shallhave executed a written instrument setting forth the terms and conditions ofsuch waiver.  In addition, no waiver byeither of the parties hereto of their rights hereunder or of compliance by theother party of any of the terms or conditions hereof shall be deemed toconstitute a waiver with respect to any subsequent occurrences or transactionshereunder unless such waiver specifically states that it is to be construed asa continuing waiver.

 

# Section 17.                                      **Severability andGoverning Law**.

#  

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

 

# Section 18.                                      **Notices.**

#  

# Every notice or other communication relating to thisAgreement shall be in writing, and shall be mailed or delivered to the partyfor whom it is intended at such address as may from time to time be designatedby 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, allnotices or communications by Employee to the Company shall be mailed ordelivered to the Company at its principal executive office, and all notices orcommunications by the Company to Employee may be given to Employee personallyor may be mailed to Employee at Employee’s last known address, as reflected inthe Company’s records.  A copy of anynotice provided to the Company by Employee hereunder shall be sentsimultaneously to the Company’s Chief Executive Officer, or the Company’sCorporate Secretary, at the address of the Company’s primary corporate office.

#  

## Any notice so addressed shall be deemed to begiven:  (i) if delivered by hand, onthe date of such delivery; (ii) if mailed by courier or by overnight mail,on the first business 

 

13

----

 

## day following the date of such mailing; and (iii) if mailed byregistered or certified mail, on the third business day after the date of suchmailing.

 

14

----

 

# Section 19.                                      **Section Headings**.

#  

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

 

# Section 20.                                      **IRS Code Section 409A**

#  

Notwithstanding any other provision of thisAgreement to the contrary, if the Employee is a “Specified Employee” as definedin IRS Code (“the Code”) Section 409A, and if any amounts that theEmployee is entitled to receive pursuant to this Agreement are otherwise notexempt from Code Section 409A as a short-term deferral or otherwise, thento the extent necessary to comply with Code Section 409A, no payments maybe made and no benefits may be provided under this Agreement before the datewhich is six (6) months after the Employee’s “separation from service”within the meaning of Code Section 409A or, if earlier, the Employee’sdeath.  Any payments which would haveotherwise been required to be paid during such six (6) months or, ifearlier, before the Employee’s death, shall be paid to the Employee in one lumpsum payment as soon as administratively practical after the date which is six (6) monthsafter the Employee’s separation from service or, if earlier, the Employee’sdate of death. The Employee’s termination of employment under this Agreementshall be interpreted in a manner consistent with the definition of “Separationfrom Service” in Code Section 409A. To the extent this Agreement issubject to Code Section 409A, it is intended to comply with the applicablerequirements of Code Section 409A and shall be construed and interpretedin accordance therewith.

 

# Section 21.                                      **Entire Agreement**.

#  

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

#  

# Section 22.                                      **Survival of OperativeSections**.

#  

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

 

# Section 23.                                      **Counterparts; FacsimileSignature.**

#  

This Agreement may be executed in two or morecounterparts, each of which shall be deemed to be an original but all of whichtogether shall constitute one and the same instrument.  The execution of this Agreement may be byactual or facsimile signature.

 

15

----

 

**IN WITNESS WHEREOF**, the undersigned haveexecuted 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/ Cathryn L. Porter        |
|   | Cathryn  L. Porter           |

 

15

----