**Exhibit 10.24**

** **

**CORNELL COMPANIES, INC*.***

 

**DIRECTOR STOCK OPTION AWARD**

**PURSUANT TO THE 2006 INCENTIVE PLAN**

 

This Director Stock Option Award (“Award”) is dated effective as of                    ,20    .  Subject tothe terms and conditions of this Award, Cornell Companies, Inc. (the “Company”)grants to                            (the “Participant”) the Options (as defined below) described in this Award.

 

Preliminary Statement

 

Pursuant to the Company’s 2006 Incentive Plan, a copy of which isannexed hereto as Exhibit A (the “Plan”), nonqualified stockoptions (the “Options”) to purchase the number of shares (“Shares”) of theCompany’s Common Stock, par value $.001 per share (the “Common Stock”) havebeen authorized and may be granted to the Participant, as a Director (asdefined in the Plan).  This Award setsforth the terms of the Options.

 

Award Provisions

 

1.             Provisionsof Plan Control.  This Award issubject to all the terms, conditions and provisions of the Plan, and to suchrules, regulations and interpretations relating to the Plan as may be adoptedby the Committee and as may be in effect from time to time.  Any capitalized term used but not definedherein shall have the meaning ascribed to such term in the Plan.  The annexed copy of the Plan is incorporatedherein by reference.  If and to theextent that this Award conflicts or is inconsistent with the terms, conditionsand provisions of the Plan, the Plan shall control, and this Award shall bedeemed to be modified accordingly.

 

2.             Grantof Option.  Subject in all respectsto the Plan and the terms and conditions set forth herein and therein, theParticipant is hereby granted Options to purchase from the Company                        Shares at a price per Share of$                    .

 

3.             Vesting.  Subject in all respects to the Plan and theterms and conditions set forth herein and therein, the Options shall becomeexercisable in installments as provided below, which shall be cumulative.  To the extent that the Options have becomeexercisable with respect to a number of shares as provided below, the Optionsmay thereafter be exercised by the Participant, in whole or in part, at anytime or from time to time prior to the expiration of the Options as providedherein.  The following table indicateseach date (the “Vesting Date”) upon which the Participant shall

 

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be entitled toexercise the Options with respect to the number of Shares indicated beside thatdate:

 
| **Vesting Date**                           | ** ** | **Number of Shares** | ** ** |
|--------------------------------------------|------------|----------------------|------------|
|                                       |       |                 |       |
| January     ,  20 |       | 1,250                |       |
| April 1, 20                           |       | 1,250                |       |
| July 1, 20                            |       | 1,250                |       |
| October 1,  20                        |       | 1,250                |       |

 

4.             Restrictionsof Exercise.  The Options may not beexercised unless such exercise is in compliance with the Securities Act of1933, as amended, and all applicable state securities laws as they are ineffect on the date of exercise.

 

5.             Mannerof Exercise.

 

(a)           The Options shall beexercisable by delivery to the Company of written notice in the form attachedhereto as Exhibit B, or in such other form as may be approved bythe Company, which shall set forth the Participant’s election to exerciseOptions, the number of shares being purchased, and such other representationsand Awards as to the Participant’s investment intent and access to informationas may be required by the Company to comply with applicable securities laws.Such notice shall be accompanied by full payment of the aggregate PurchasePrice in cash or in other property acceptable to the Company, includingpreviously-owned shares of Company common stock, as set forth in the Plan.

 

(b)           Prior to the issuanceof any Shares upon exercise of Options, the Participant must pay or makeadequate provision for any applicable federal or state withholding obligationsof the Company.

 

(c)           Provided that suchnotice and payment are in form and substance satisfactory to counsel for theCompany, the Company shall issue the Shares registered in the name of theParticipant or the Participant’s legal representative.

 

6.             Termination.  Unless terminated as provided below orotherwise pursuant to the Plan, the Options shall expire on the tenthanniversary of this Award.

 

7.             Restrictionon Transfer of Options.

 

(a)           The Award and Options shall beexercisable only by the Participant during the Participant’s lifetime, or, ifpermissible under applicable law, by the Participant’s guardian or legalrepresentative or by a transferee receiving such Award pursuant to a qualifieddomestic relations order (a “QDRO”) as determined by the Committee.

 

(b)           Except as otherwise provided by theCommittee, this Award and the Options are not transferable except as designatedby the Participant by will or by the laws of descent and distribution.

 

8.             Effect ofTermination of Employment.

 

(a)           *Death,Disability, Etc.*  UponTermination of Employment, all outstanding Options then exercisable and notexercised by the Participant prior to such Termination of Employment (and anyOptions not previously exercisable but made exercised by the Committee at orafter the Termination of Employment) shall remain exercisable by theParticipant to the extent not exercised for the following time periods, or, ifearlier, the prior expiration of the Option in accordance with the terms of thePlan and grant:

 

(i)            Inthe event of the Participant’s death or Disability, such Options shall remainexercisable by the Participant (or by the Participant’s estate or by the persongiven authority to exercise such Options by the Participant’s will or byoperation of law) for a period of one year from the date of the Participant’sdeath or Disability, provided that the Committee, in its sole discretion, mayat any time extend such time period.

 

(ii)           Inthe event of the Participant’s Termination of Employment without Cause or aTermination of Employment due to Participant’s resignation from employment withthe Company, such Options shall remain exercisable for ninety (90) days fromthe date of the Participant’s Termination of Employment, provided that theCommittee, in its sole discretion, may at any time extend such time period.

 

Unless theCommittee otherwise determines, there shall be no effect on the exercisabilityof Options held by a Participant if (i) the Participant’s employment,directorship or consultancy is transferred from the Company to a SubsidiaryCorporation, from a Subsidiary Corporation to the Company or from oneSubsidiary Corporation to another or (ii) the Participant is a KeyEmployee who becomes an Eligible Consultant or an Eligible Consultant whobecomes a Key Employee.

 

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(b)           *Cause.*  Upon the Termination of Employment of aParticipant for Cause, or if the Company or a Subsidiary Corporation obtains ordiscovers information after Termination of Employment that such Participant hadengaged in conduct that would have justified a Termination of Employment forCause during the Participant’s employment, directorship or consultancy, alloutstanding Options of such Participant shall, unless the Committee in its solediscretion determines otherwise, terminate and be null and void.

 

(c)           *Cancellationof Options.*  Except asotherwise provided in the Plan, no Options that were not exercisable during theperiod of employment shall thereafter become exercisable upon a Termination ofEmployment for any reason or no reason whatsoever, and such options shallterminate and become null and void upon a Termination of Employment, unless theCommittee determines in its sole discretion that such Options shall beexercisable.

 

(d)           *Definitions.*  For purposes of this Award, the followingterms will have the following meanings:

 

(i)            “Cause”means, with respect to a Participant’s Termination of Employment, (x) inthe case where there is no employment or consulting agreement between theCompany and the Participant, or where there is an employment or consultingagreement, 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 Corporation, anyother act involving dishonesty or fraud with respect to the Company or aSubsidiary Corporation, a material breach of a directive which is not curedwithin a specified time after written notice of such breach, or repeatedfailure after written notice to follow the directives of an appropriate officeror the Board, or (y) in the case where there is an employment orconsulting agreement between the Company or a Subsidiary and the Participant,termination that is or would be deemed to be for cause (or words of likeimport) as defined under such employment or consulting agreement.

 

(ii)           “Disability”means a permanent and total disability, rendering a Participant unable toperform the duties performed by the Participant for the Company or SubsidiaryCorporation by reason of physical or mental disability for a period of morethan an aggregate of one hundred eighty (180) days in any twelve (12) monthperiod. A Disability shall only be deemed to occur at the time of thedetermination by the Committee of the Disability.

 

(iii)          “EligibleConsultants” mean the consultants of the Company and Subsidiary Corporationswho are eligible to participate in the Plan (including, but not limited, toemployees of entities providing consulting services), as determined by theCommittee in its sole discretion.

 

(iv)          “KeyEmployee” means any person who is an officer or other valuable employee of theCompany or a Subsidiary Corporation, as determined by the Committee in its solediscretion. A Key Employee may, but need not, be an officer of the Company or aSubsidiary Corporation.

 

(v)           “Terminationof Employment”  with respect to a KeyEmployee means that individual is no longer actively employed by the Company ora Subsidiary Corporation on a full-time basis, irrespective of whether or notsuch employee is receiving salary continuance pay, is continuing to participatein other employee benefit programs or is otherwise receiving severance typepayments. In the event an entity shall cease to be a Subsidiary Corporation,there shall be deemed a Termination of Employment of any individual who is nototherwise an employee of the Company or another Subsidiary Corporation at thetime the entity ceases to be a Subsidiary Corporation. A Termination ofEmployee shall not include a leave of absence approved for purposes of the Planby the Committee. For purposes of this Plan, a full-time employee is a personwho is scheduled to work at least thirty (30) hours per week. With respect to aDirector, a Termination of Employment shall occur when the individual ceases tobe a director of the Company or any Subsidiary Corporation. With respect to anEligible Consultant, a Termination of Employment shall occur upon thetermination of the consulting contract or the termination of the performance ofconsulting services, as determined by the Committee in its sole discretion.

 

9.             Rights as aStockholder.  The Participant shallhave no rights as a stockholder with respect to any Shares covered by theOptions until the Participant shall have become the holder of record of theShares, and no adjustments shall be made for dividends in cash or otherproperty, distributions or other rights in respect of any such Shares, exceptas otherwise specifically provided for in the Plan.

 

10.           Compliance withLaws and Regulations.  The issuanceand transfer of the Shares to be issued pursuant to the Options shall besubject to compliance by the Company and the Participant with all applicablerequirements of federal and state laws and with all applicable requirements ofany stock exchange on which the Common Stock may be listed at the time of suchissuance or transfer.

 

11.           Notices.  Any notice of communication given hereundershall be in writing and shall be deemed to have been duly given when deliveredin person, when dispatched by telegram or one business day after having beendispatched by a 

 

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nationallyrecognized courier service or three business days after having been mailed byUnited States registered or certified mail, return receipt requested, postageprepaid, to the appropriate party at the address set forth below (or such otheraddress as the party shall from time to time specify in writing:

 

If to the Company, to:

 

Cornell Companies, Inc.

1700 West Loop South, Suite 1500

Houston, TX 77027

Attn: Corporate Secretary

 

If to the Participant, to the address reflected in the records of theCompany, as same may be updated from time to time.

 

12.           No Obligation toContinue Employment.  This Awardshall not be construed as giving the Participant the right to be retained inthe employ of the Company or any Affiliate or service on the Board. Further,the Company or an Affiliate may at any time dismiss the Participant fromemployment or the Board may dismiss the Participant from service on the Board,free from any liability or any claim under the Plan, unless otherwise expresslyprovided in the Plan or in any Award Agreement.

 

13.           Tax Consequences.  Participant is hereby notified that he or shemay incur tax liability as a result of Participant’s purchase or disposition ofthe Option Shares.  The Company may makeor cause to be made certain withholdings in connection with transactionsinvolving the Option Shares.  Participantis solely responsible for his or her taxes and for obtaining any tax advice.  Participant is encouraged to consult a taxadvisor in connection with the purchase or disposition of the Option Shares,and Participant is may not rely on the Company for any tax advice.

 

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**EXHIBIT A**

 

**CORNELL COMPANIES, INC.**

 

**2006 INCENTIVE PLAN**

 

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**Exhibit B**

 

**STOCK OPTION EXERCISE NOTICE**

 

Cornell Companies, Inc.

1700 West LoopSouth, Suite 1500

Houston, Texas77027

 

Attention:              Chief Administrative Officer

 

1.             ***Exercise of Option***.  The undersigned (“Participant”) hereby electsto exercise Participant’s nonqualified stock option to purchase                                shares of common stock (the “Option Shares”) of Cornell Companies, Inc.(the “Company”) under and pursuant to the Company’s 2006 Incentive Plan (the “Plan”)and the Award made to Participant by the Company dated                                  ,20     (the “Award”). The terms and conditions of the Plan and the Award are herebyincorporated into and made a part of this Notice by this reference.

 

2.             ***Representations of Participant***.  Participant hereby acknowledges, representsand warrants that Participant has received, read and understood the Plan andthe Award and will abide by and be bound by their terms and conditions.  Participant represents that Participant ispurchasing the Option Shares for Participant’s own account for investment andnot with a view to, or for sale in connection with, a distribution of any ofsuch Option Shares.

 

3.             ***Compliance with Securities Laws***.  Participant understands and acknowledges thatthe Option Shares have not been registered under the Securities Act of 1933, asamended (the “1933 Act”), and notwithstanding any other provision of the Awardto the contrary, the exercise of any rights to purchase any Option Shares areexpressly conditioned upon compliance with the 1933 Act and all applicablestate securities laws.  Participantagrees to cooperate with the Company to ensure compliance with such laws.

 

4.             ***Federal Restrictions on Transfer***.  Participant understands that the OptionShares must be held indefinitely unless registered under the 1933 Act or unlessan exemption from such registration is available and that the certificate(s) representingthe Option Shares will bear a legend to that effect.  Participant has been advised that anexemption may not be available or may not permit Participant to transfer OptionShares in the amounts or at the times desired by Participant.

 

5.             ***Tax Consequences***.  Participant understands that Participant mayincur tax liability as a result of Participant’s purchase or disposition of theOption Shares.  Participant representsthat Participant has consulted with a tax advisor in connection with thepurchase or disposition of the Option Shares and that Participant is notrelying on the Company for any tax advice.

 

6.             ***Delivery of Payment***.  Participant herewith delivers to the Companythe aggregate purchase price of the Option Shares that Participant has electedto purchase or has made provision for the payment of such aggregate purchaseprice in accordance with the Plan and has made provision for the payment of anyfederal or state withholding taxes required to be paid or withheld by theCompany.

 
|   |   | SUBMITTED BY: |
|--------|--------|---------------|
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|   |   | Participant:  |   |
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|   |   | Name:         |   |
|   |   | Address:      |   |
|   |   |          |   |
|   |   |          |   |
|   |   | Date:         |   |
|        |        |               |  |  |  |

 

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