**Exhibit 10.4**

** **

**CORNELL COMPANIES DEFERRED COMPENSATION PLAN**

** **

Cornell Companies, Inc.,a Delaware corporation originally adopted, for the benefit of its eligibleemployees, the Cornell Correction Deferred Compensation Plan, effective June 1,1999, which was subsequently amended and restated effective as of November 30,2001, as the Cornell Companies Deferred Compensation Plan (the “Plan”).  The Plan is now amended and restatedeffective January 1, 2005, to ensure written compliance with Code Section 409A.

 

The Plan is a nonqualifieddeferred compensation plan pursuant to which certain eligible Employees of theCompany (as hereinafter defined) and non-Employee members of the Board ofDirectors may elect to defer compensation. The Plan is maintained primarily for the purpose of providing deferredcompensation for a select group of management or highly compensated employees,within the meaning of Sections 201(2), 301(a)(3), and 401(a)(l) ofERISA.  The Plan is unfunded for taxpurposes and for purposes of Title I of ERISA. The Participants have the status of general unsecured creditors of theCompany and the Plan constitutes a mere promise by the Company to make benefitpayments in the future.

 

# **ARTICLEI**

# **DEFINITIONS**

# ** **

Whenever the following termsare used in the Plan with the first letter capitalized, they shall have themeaning specified below, unless the context clearly indicates to the contrary.

 

##### **“Accounting Date”**shall mean the end of eachday that the New York Stock Exchange is open and conducting business.

#####  

##### **“Administrator”**shall mean the Company,acting through the Chief Administrative Officer of the Company.  The Administrator shall have all the dutiesand responsibilities imposed by ERISA, except as specifically assigned,delegated to or reserved to the Board of Directors under the Plan.

#####  

##### **“Affiliate”**shall mean any employerwhich, at the time of reference, was, with the Company, a member of acontrolled group of corporations or trades or businesses under common control,or a member of an affiliated service group, as determined under regulationsissued by the Secretary of the Treasury or his delegate under Code Sections414(b), 414(c), 414(m), and 415(h) and any other entity required to beaggregated with the Company pursuant to regulations issued under Code Section 414(o).

#####  

##### **“Beneficiary”**shall mean the person orpersons, as designated by the Participant, on whose behalf benefits may bepayable under the Plan after the Participant’s death.

#####  

##### **“Board of Directors”**shall mean the Board ofDirectors of the Cornell Companies, Inc. The Board of Directors may delegate any powers or duties to theAdministrator or any other person or persons.

 

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##### **“Change in Control”**shall be deemed to haveoccurred on the earliest of the following dates:

#####  

###### (a)           the date Cornell merges or consolidateswith any other entity, and the stockholders of Cornell do not own, directly orindirectly, at least 50% of the voting capital stock of the surviving entity;

######  

###### (b)           the date Cornell sells all orsubstantially all of its assets to any other person or entity; provided thatthe sale or other transfer of the Company’s facilities to a real estateinvestment trust, in a sale-leaseback transaction, or any similar transactionshall not be considered a sale of all or substantially all of Cornell’s assets;

######  

###### (c)           the date Cornell is dissolved;

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###### (d)           the date any third person or entitytogether with its affiliates become, directly or indirectly, the beneficialowner of 51% of the Voting Stock of Cornell; or

######  

###### (e)           the date the individuals whoconstitute the members of the Board of Directors (“Incumbent Board”) as of theeffective date of this Plan cease for any reason to constitute at least amajority thereof, provided that for purposes of this clause (e) any personbecoming a director whose election or nomination for election by Cornell’sstockholders was approved by a vote of at least eighty percent (80%) of thedirectors comprising the Incumbent Board (either by the specific vote orapproval of the proxy statement of Cornell in which such person is named as anominee for director, without objection by such person to such a nomination)shall be, for purposes of this clause (e), considered as though such person wasa member of the Incumbent Board.

######  

Notwithstanding theforegoing, for purposes of a distribution from the Plan, including upontermination of the Plan, the term “Change of Control” means a “change in theownership of a corporation,” “c***hange in the effective controlof a corporation,” or a “change in the ownership of a substantial portion of acorporation’s assets” of the Company as described in Code Section 409A andthe regulations thereunder.***

 

##### **“Code”**shall mean the Internal Revenue Code of 1986,as amended from time to time.

#####  

##### **“Company”**shall mean Cornell and anyAffiliate that subsequently adopts the Plan as a whole or as to any one or moredivisions, in accordance with Section 12.3(b), and any successor companywhich continues the Plan under Section 12.3(a), acting in each casethrough its Board of Directors.

#####  

##### **“Company Contributions”**shall mean any contributionsmade by the Company pursuant to Section 5.1 of the Plan.

#####  

##### **“Company Contribution Account”**of aParticipant shall mean the bookkeeping account established on behalf of theParticipant in accordance with Section 2.2 on the Plan.

#####  

##### **“Compensation”**of a Participant for anyPlan Year shall mean his total taxable remuneration received from the Companyin that Plan Year for services rendered as an Employee

 

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##### or a non-Employee member ofthe Board of Directors (whether such remuneration received by the non-Employeemember of the Board of Directors is in the form of cash, stock or otherproperty), including deferred compensation under the Plan and amounts notincludable in gross income by reason of Code Sections 125 (cafeteria plans);402(a) (401(k) plans); 402(h); or 403(b), but exclusive of:

#####  

###### (a)           Company contributions to a deferredcompensation plan (to the extent includable in the Participant’s gross incomesolely by reason of Code Section 415) and any distribution from a deferredcompensation plan (other than a nonqualified plan);

######  

###### (b)           amounts realized from the exercise ofa nonqualified stock option or taxable by reason of restricted propertybecoming freely tradable or free of a substantial risk of forfeiture, asdescribed in Code Section 83;

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###### (c)           amounts realized from the sale,exchange or other disposition of stock acquired under a under a qualified stockoption;

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###### (d)           other amounts which receive specialtax benefits such as Company contributions toward the purchase of an annuitycontract described in Code Section 403(b) (whether or not excludablefrom the Participant s gross income);

######  

###### (e)           all reimbursements or other expenseallowances, fringe benefits (cash and non-cash), moving expenses, deferredcompensation, and welfare benefits (including severance benefits), even ifincludable in gross income.

######  

##### **“Cornell”**shall mean Cornell Companies, Inc.,a Delaware corporation.

#####  

##### **“DeferralPeriod”** shall have the meaning ascribed to it in Section 4.3 of the Plan.

#####  

##### **“Disability”**shall mean a Participant (i) isunable to engage in any substantial gainful activity by reason of any medicallydeterminable physical or mental impairment that can be expected to result indeath or can be expected to last for a continuous period of not less than 12months, or (ii) is, by reason of any medically determinable physical ormental impairment that can be expected to result in death or can be expected tolast for a continuous period of not less than 12 months, receiving incomereplacement benefits for a period of not less than three months under anaccident and health plan covering employees of the Participant’s employer.

#####  

##### **“Employee”**shall mean any person whorenders services to a Company in the status of an employee as that term isdefined in Code Section 3121(d), including officers but not including:

#####  

###### (a)           attorneys, accountants, and otherpersons doing independent work for the Company where the relationship ofemployer and employee does not exist between said person and the Company; and

######  

###### (b)           leased employees treated as Employeesof the Company pursuant to Code Sections 414(n) and 414(o).

 

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##### **“ERISA”**shall mean the EmployeeRetirement Income Security Act of 1974, as amended from time to time.

#####  

##### **“Investment Options”**shall be any mutual fundmade available from time to time by the Company and the common stock ofCornell.  The Company may add additionalInvestment Options or delete same by written notice to the Trustee.

#####  

##### **“Non-EmployeeDirector”** shall be any member of the Board of Directors whois not also an Employee.

#####  

##### **“Nonqualified Deferred Compensation”**of aParticipant shall mean the amounts deferred by such Participant under Section 4.1of the Plan.

#####  

##### **“Nonqualified Deferred Compensation Account”**of a Participantshall mean the bookkeeping account established on behalf of the Participant inaccordance with Section 2.1 of the Plan.

#####  

##### **“Participant”**shall mean any personincluded in the Plan as provided in Article III of the Plan.

#####  

##### **“Plan”**shall mean this Cornell Companies DeferredCompensation Plan.

#####  

##### **“Plan Quarter”**shall mean the three-monthperiods ending on March 31, June 30, September 30, and December 31of each Plan Year.

#####  

##### **“Plan Year”**shall mean the twelve-monthperiod commencing on January 1 and ending on December 31 (except thatthe first Plan Year shall begin on the effective date of the Plan and end on December 31,2001).

#####  

##### **“Qualified Accounts”**of a Participant shall meanhis accounts in the Qualified Plan.

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##### **“Qualified Plan”**shall mean the Cornell Companies401(k) Plan or, if applicable, the equivalent qualified plan of theCompany, as may be amended hereafter from time to time, or any successor planthereto.

#####  

##### **“SecuritiesAct”** Shall mean the Securities Exchange Act of 1934, as amended from timeto time.

#####  

##### **“Separationfrom Service”**shall mean a Participant’s complete separation fromservice with the Company and its Affiliates. The determination of whether a Participant incurs a Separation fromService will be determined in accordance with Code Section 409A and theregulations thereunder.

#####  

##### **“SpecifiedEmployee”**shall mean an Employee who is key employee asdefined in Code Section 416(i)(1)(A).

 

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##### **“Trust Agreement”**shall mean the CornellCompanies Nonqualified Trust, a “Rabbi Trust,” created in connection with theexecution of this Plan, as set forth in Exhibit A hereto, as amended.

#####  

##### **“Trust Fund”**shall mean the trust fundestablished pursuant to the terms of the Trust Agreement.

#####  

##### **“Trustee”**shall mean the corporatetrustee or trustees or the individual trustee or trustees, as the case may be,appointed from time to time pursuant to the provisions of the Trust Agreementto administer the Trust Fund.

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### **“UnforeseeableEmergency”** shall mean a severe financial hardship to theParticipant resulting from an illness or accident of the Participant, theParticipant’s spouse, or a dependent (as defined in section 152(a)) of theParticipant, loss of the Participant’s property due to casualty, or othersimilar extraordinary and unforeseeable circumstances arising as a result ofevents beyond the control of the Participant. The circumstances that willconstitute an Unforeseeable Emergency will depend upon the facts of each case,but, in any case, payment under this Section shall not be made to theextent that such emergency is or may be relieved: (i) throughreimbursement or compensation by insurance; (ii) by liquidation of theParticipant’s assets, to the extent the liquidation of such assets would notitself cause a severe financial hardship; or (iii) by cessation ofdeferrals under this Plan and any other plan in which the Participantparticipates.  Such foreseeable needs forfunds as the need to send a Participant’s child to college or the desire topurchase a home will not be considered to be an Unforeseeable Emergency.  A financial need shall not constitute anUnforeseeable Emergency unless it is for at least $1,000.00 (or the entireprincipal amount of the Participant s Nonqualified Deferred CompensationAccount, if less).

###  

##### **“Voting Stock”**shall mean all of theoutstanding shares of capital stock of Cornell entitled to vote generally inelections for directors, considered as one class; provided, however, that ifCornell has shares of Voting Stock entitled to more or less than one vote forany such share, each reference to a proportion of shares of Voting Stock shallbe deemed to refer to such proportion of the votes entitled to be cast by suchshares.

#####  

# **ARTICLEII**

# **NONQUALIFIEDACCOUNTS**

# ** **

## **Section 2.1            Nonqualified Deferred CompensationAccount.**  TheAdministrator shall establish and maintain (or cause to be established andmaintained) a bookkeeping account for each Participant, known as a NonqualifiedDeferred Compensation Account to which shall be credited the amounts determinedunder Section 4.1 of the Plan and credited or debited the amountsdetermined under Article VI of the Plan.

##  

## **Section 2.2           ****CompanyContribution Account. **TheAdministrator shall establish and maintain (or cause to be established andmaintained) a bookkeeping account for each Participant, known as a CompanyContribution Account to which shall be credited the amounts determined under Section 5.1of the Plan and credited or debited the amounts determined under Article VIof the Plan.

 

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## **Section 2.3           ****Assignments,etc., Prohibited. **No part of theNonqualified Deferred Compensation Account or the Company Contribution Accountof a Participant shall be liable for the debts, contracts, or engagements ofany Participant, his Beneficiaries or successors in interest, or be taken inexecution by levy, attachment, or garnishment or by any other legal orequitable proceeding, nor shall any such person have any rights to alienate,anticipate, commute, pledge, encumber, or assign any benefits or paymentshereunder in any manner whatsoever, except to designate a Beneficiary asprovided herein.

##  

# **ARTICLEIII**

# **ELIGIBILITY**

# ** **

## **Section 3.1           ****Requirementsfor Participation. **Any Employeewho qualifies for the definition of “highly compensated” employee according toCode Section 414(q) and who is selected by the Administrator shall beeligible to be a Participant for the Plan Year on such date.  Such employees shall be (i) officers andexecutives of the Company; or (ii) in management positions which reportdirectly to a Company President or Corporate Officer; or (iii) marketingmanagers with responsibility for the acquisition of new business; or (iv) programmanagers and other P&L managers who have overall performanceresponsibilities for significant contracts; or (v) other key employees ofthe Company who have a job assignment with significant impact on profits,operating effectiveness, and overall success of the Company.

##  

Any Non-Employee Directorshall be eligible to be a Participant upon his initial election to the Board ofDirectors.

 

## **Section 3.2           ****DeferralElection Form. **Participantswho elect to defer their Compensation pursuant to this Plan shall submit a form(the “Deferral Election Form”) to the Administrator, which shall contain thefollowing:

##  

### (a)           the consent of the Participant thathe, his successors in interest and assigns, and all persons claiming under himshall be bound, to the extent authorized by law, by the statements containedtherein and by the provisions of the Plan;

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### (b)           the amount of Compensation to bedeferred and his authorization for the Company to reduce his Compensationaccordingly;

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### (c)           the date on which the Participantwishes to receive the deferred amounts, pursuant to Section 4.3

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### (d)           the form in which he wishes toreceive same; and

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### (e)           such other information as may berequired by the Administrator.

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Notwithstanding theforegoing, in the case of any Nonqualified Deferred Compensation or CompanyContribution that is performance-based and based on services performed over a periodof at least 12 months, an initial deferral election may be made during theelection period established by the Administrator which may occur prior to orafter the beginning of any Plan Year, provided, that such election must be madeno later than six months before the end of the performance period.

 

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In the event a Participantfails to make a time of payment election under Section 4.3 with respect toany amounts deferred under the Plan, such amounts shall be distributed upon theearlier of the Participant’s death, Disability or Separation from Service andsuch distribution shall be made in the form of a lump sum payment.

 

Once an election has beenmade it becomes irrevocable for a Plan Year on the December 31 immediatelypreceding such Plan Year, except that a Participant may change the election ofthe time and form of payment he previously elected under Sections 4.3 and8.1; provided that all changes of election of a Participant’s time or form ofpayment shall be effective only if the election change is received by theAdministrator in proper form 12 months prior to the event which would require adistribution under the Plan, such election change does not provide for apayment or commencement of payment that is earlier than five (5) yearsafter the date on which such payment would otherwise have been made, and duringthe 12-month period prior to the effective date of such election change, thelast effective election made by the Participant shall continue to remain inforce; provided further, that with respect to amounts deferred and vested on orbefore December 31, 2004, all changes of election of a Participant’s timeor form of payment with respect to such amounts shall be effective only if theelection change is received by the Committee or its designee in proper formduring the 30-day period ending 12 months prior to the event which wouldrequire a distribution under the Plan.

 

The election to participatein the Plan for a given Plan Year will be effective only upon receipt by theAdministrator of the Participant’s properly executed election on such form orin accordance with such procedures as will be determined by the Administratorfrom time to time.  If the Participantdoes not elect to defer amounts under the Plan, the Participant will be deemedto have elected not to defer any part of his Compensation for that Plan Yearand such Compensation will be paid to the Participant in cash in accordancewith the normal payroll practices of the Company then in place.

 

# **ARTICLEIV**

# **PARTICIPANTDEFERRALS**

# ** **

## **Section 4.1           ****DeferralEligibility. **EachParticipant may elect to defer to his Nonqualified Deferred CompensationAccount for any Plan Year an amount that is any whole number percentage (notgreater than 75% of his base compensation or 75% of his incentive compensation)of his Compensation.  Non-EmployeeDirectors may defer up to 100% of their compensation.

##  

Such election shall be madeby submission of the Deferral Election Form to the Administrator prior tothe beginning of any Plan Year or calendar year, if applicable, or, in the caseof a newly eligible Participant, within 30 days of notification that he iseligible to participate in the Plan.  Theelection shall remain in effect for each Plan Year during which an Employee orNon-Employee Director is a Participant or until earlier discontinued pursuantto Section 4.2 below.

 

## **Section 4.2            Discontinuance of Deferral.**  A Participant may elect, upon 30 days priorwritten notice, to discontinue deferral of his Compensation for the first PlanYear that commences after receipt of such notice.

 

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## **Section 4.3           ****DeferralPeriod. **Participants may elect todefer Compensation for any period in excess of one Plan Year (a “Deferral Period”),provided, however, that a Participant may designate only one DeferralPeriod.  The Deferral Period shall be thesame with respect to any Company Contributions. The Deferral Period may be specified as ending on:

##  

### (a)           a date certain; or

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### (b)           the date of the Participant’sSeparation from Service with the Company.

###  

If a Participant elects aDeferral Period to a date certain, the Deferral Period shall end upon theParticipant’s death, Disability, or Separation from Service, if earlier.

 

In each event, theParticipant shall begin receiving payments in the manner provided herein.

 

Except as provided in Section 10.2of the Plan, if payment is made on account of a Separation from Service to aParticipant who is also a Specified Employee, such payment may not be madebefore the date which is six months after the date of such Separation fromService (or, if earlier, the Participant’s date of death).

 

# **ARTICLEV**

# **COMPANYCONTRIBUTIONS**

# ** **

## **Section 5.1           ****CompanyContributions. **The Company, inits sole discretion, may make contributions to the Plan on behalf of eachParticipant.

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## **Section 5.2           ****DeferralPeriod. **The Participant’s CompanyContribution Account shall be paid to the Participant in accordance with theelection made by the Participant pursuant to Section 8.1.

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# **ARTICLEVI**

# **INVESTMENTOPTIONS;**

# **VALUATIONOF NONQUALIFIED ACCOUNT**

# ** **

## **Section 6.1            InvestmentCredits and Debits.**

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### (a)           Compensation deferred by aParticipant shall be credited to the Participant’s Nonqualified DeferredCompensation Account within ten (10) calendar days next following thededuction from his Compensation and deposited in the Trust Fund and shall beallocated among the Investment Options as directed by the Company, or theParticipant if so authorized, from time to time.

###  

### (b)           Any Company Contributions shall becredited to the Participant’s Company Contribution Account on the nextfollowing Accounting Date after the Company Contribution is deposited in theTrust Fund and shall be allocated among the Investment Options as directed bythe Company, or the Participant if so authorized, from time to time.

 

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### (c)           Each Participant’s NonqualifiedDeferred Compensation Account and Company Contribution Account shall be valuedas of each Accounting Date following the effective date of the Plan, based uponthe fair market value of the assets of each Nonqualified Deferred CompensationAccount and Company Contribution Account, as determined by the Trustee.  In determining such fair market value, eachNonqualified Deferred Compensation Account and Company Contribution Accountshall include adjustments regarding all dividends, interest income, otherinvestment income and expenses, investment management fees and expenses,administrative fees and expenses, applicable taxes, and authorized withdrawals.

###  

# **ARTICLEVII**

# **VESTINGOF ACCOUNTS**

# ** **

## **Section 7.1            Vesting of Nonqualified DeferredCompensation Account.**  EachParticipant’s interest in his Nonqualified Deferred Compensation Account shallbe vested at all times.

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## **Section 7.2           ****Vesting ofCompany Contribution Account. **EachParticipant’s interest in his Company Contribution Account shall be vested atall times.

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# **ARTICLEVIII**

# **BENEFITS**

# ** **

## **Section 8.1           ****Manner andTime of Distributions. **A Participantmay elect to receive the amounts credited to his Nonqualified DeferredCompensation Account and to his Company Contribution Account either in a lumpsum or in five or ten-year annual installment payments, in any case subject toapplicable tax withholding.  Such lumpsum payment shall be made, and the installment payments shall begin, not laterthan the date, which is fifteen (15) days after the first day of the Plan Yearfollowing the Deferral Period.  In theevent of five- or ten-year installment payments, each annual payment to be madewill be equal to an amount determined by dividing the total number of paymentsremaining to be made into the total amount of funds then available in suchParticipant’s Nonqualified Deferred Compensation Account and CompanyContribution Account.

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## **Section 8.2           ****Distributionin Common Stock of Cornell. **A Participantor his Beneficiary shall receive that portion of his Nonqualified DeferredCompensation Account and his Company Contribution Account which is creditedwith Cornell common stock in the form of common stock of Cornell, unless suchParticipant (or Beneficiary) has filed a timely election with the Administrator(which the Administrator in its sole discretion has accepted) to receive thecash proceeds of such Investment Option.

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## **Section 8.3           ****Effect ofFailure to Locate Distributee. **If the personto whom benefits are payable hereunder has not been ascertained or locatedwithin one (1) year after expiration of the Deferral Period, the amount ofhis Nonqualified Deferred Compensation Account and his Company Contribution Accountshall be forfeited and such amounts shall be removed from such account andreturned to the Company.

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## **Section 8.4           ****DistributionWithholding. **Any taxwithholding required with respect to any Plan distributions may be made (i) fromthe mutual fund portion of the Participant’s

 

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## Investment Options, (ii) bythe Participant remitting directly to the Company the appropriate amount ofwithholding, (iii) from the portion of the Participant’s InvestmentOptions credited with Cornell common stock (subject to applicable securitieslaw requirements), or (iv) through any combination of the foregoing, asdetermined by the Administrator.

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# **ARTICLEIX**

# **BENEFITSUPON DEATH**

# ** **

## **Section 9.1****           ****Distributionon Death.**

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### (a)           Upon the deathof a Participant or former Participant, prior to his Separation from Service,the amount credited to his Nonqualified Deferred Compensation Account and hisCompany Contribution Account as of the Accounting Date prior to his date ofdeath, less any amounts required to be withheld by law, shall be paid in a lumpsum to the former Participant’s Beneficiaries.

###  

### (b)           Upon the deathof a Participant or former Participant, subsequent to his Separation fromService, the amount credited to his Nonqualified Deferred Compensation Accountand his Company Contribution Account as of the Accounting Date prior to hisdate of death, less any amounts required to be withheld by law, shall be paidin a lump sum to the former Participant’s Beneficiaries.

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### (c)           Such lump sumpayment shall be made not later than thirty (30) calendar days after the end ofthe calendar quarter in which the Participant’s or former Participant’s deathoccurs.

###  

# **ARTICLEX**

# **OTHERDISTRIBUTIONS FROM NONQUALIFIED**

# **DEFERREDCOMPENSATION ACCOUNT**

# ** **

## **Section 10.1****        ****Unforeseeable Emergency Distributions from Nonqualified Deferred CompensationAccount. **A Participant may apply fora distribution from his Nonqualified Deferred Compensation Account and hisCompany Contribution Account on account of an Unforeseeable Emergency, andsubject to applicable tax withholding, and subject to the followingrequirements:

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### (a)           The Participant’sUnforeseeable Emergency distribution shall not exceed the lesser of (i) theamount that is necessary to satisfy the Unforeseeable Emergency, or (ii) theamount credited to the Participant’s Nonqualified Deferred CompensationAccount.

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### (b)           The decision ofthe Administrator regarding the existence or nonexistence of an UnforeseeableEmergency of a Participant shall be final and binding.

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### (c)           The Participanthas not received an Unforeseeable Emergency distribution within the 12-monthperiod preceding the distribution.

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### (d)           TheAdministrator shall have the authority to require a Participant to provide suchproof as it deems necessary to establish the existence and significant natureof the Participant’s

 

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### hardship, including, but notlimited to the lack of existing insurance or other assets that may beliquidated without incurring additional financial hardship, or the absence ofan opportunity to terminate other deferral elections.

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## **Section 10.2****        ****Distribution Upon Disability. **Upon aParticipant’s Separation from Service due to a Disability, he shall receive allamounts from his Nonqualified Deferred Compensation Account and his CompanyContribution Account, payable in a lump sum. The lump sum payment, less any amount required to be withheld by law,shall be paid not later than thirty (30) calendar days after the Participant’sSeparation from Service due to a Disability, or, if later, as soon asadministratively practicable following such date.

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## **Section 10.3****        ****Tax Neutral Payments. **In the eventany Plan payment shall trigger the imposition of any excise tax, penalty orinterest under Code Section 280G, 4999 or any other similar provision, theCompany shall pay to such Participant additional amounts hereunder so as tocause the Participant to be tax neutral with respect to the imposition of suchexcise tax, penalty or interest.

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## **Section 10.4****        ****Change in Control. **In the event ofa Change in Control, the amounts credited to a Participant’s NonqualifiedDeferred Compensation Account and to his Company Contribution Account shall bepaid to him in a lump sum.  In the eventless than all of the total amount credited to a former Participant’sNonqualified Deferred Compensation Account and to his Company ContributionAccount has not been distributed as of a Change in Control, the balance shallbe paid to the former Participant or his Beneficiary in a lump sum.  The lump sum payment, less any amountrequired to be withheld by law, shall be paid not later than thirty (30)calendar days after the date of a Change in Control.

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## **Section 10.5****        ****Distributions in the Event of Taxation. **Should any amounts contained in a Participant’s Nonqualified DeferredCompensation Account or his Company Contribution Account become subject totaxation by the Internal Revenue Service of the U.S. Government prior to theactual receipt thereof by the Participant, or his Beneficiary, then suchamounts as necessary to pay any applicable taxes, including any taxes on suchamounts, shall become immediately payable thereto in a lump sumdistribution.  Such distribution shall besubject to all withholding required by law.

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# **ARTICLEXI**

# **ADMINISTRATIVEPROVISIONS**

# ** **

## **Section 11.1****        ****Administrator’s Duties andPowers.**

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### (a)           The Administratorshall conduct the general administration of the Plan in accordance with thePlan and shall have all the necessary power and authority to carry out thatfunction.  Among its necessary powers andduties, are the following:

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#### (i)            to delegate allor part of its function as Administrator to others and revoke any suchdelegation;

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#### (ii)           to determinequestions of eligibility of Participants and their entitlement to benefits;

 

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#### (iii)          to select andengage attorneys, accountants, actuaries, trustees, appraisers, brokers,consultants, administrators, physicians, or other persons to render service oradvice with regard to any responsibility the Administrator or the Company hasunder the Plan, or otherwise, to designate such persons to carry outresponsibilities, and (with the Company and its officers, trustees, andEmployees) to rely upon the advice, opinions or valuations of any such persons,to the extent permitted by law, being fully protected in acting or relyingthereon in good faith;

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#### (iv)          to interpretthe Plan for purpose of the administration and application of the Plan, in amanner not inconsistent with the Plan or applicable law and to amend or revokeany such interpretation; and

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#### (v)           to adopt rules ofthe Plan that are not inconsistent with the Plan or applicable law and to amendor revoke any such rules.

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### (b)           Every finding,decision, and determination made by the Administrator shall, to the full extentpermitted by law, be final and binding upon all parties.

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## **Section 11.2****        ****Limitation Upon Powers. **The Plan shallbe uniformly and consistently administered, interpreted, and applied withregard to all Participants in similar circumstances.

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## **Section 11.3****        ****Indemnification by the Company:Liability Insurance.**

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### (a)           The Companyshall pay or reimburse the Administrator for all expenses incurred thereby andshall indemnify and hold it harmless from, all claims, liabilities, and costs(including reasonable attorneys’ fees) arising out of the good faithperformance of its Plan functions.  Thisindemnification shall survive the termination of the Plan and the distributionof all Trust Funds.

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### (b)           The Companyshall obtain and provide for any such person, at the Company’s expense,liability insurance against liabilities imposed on him by law.

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## **Section 11.4****        ****Recordkeeping.**

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### (a)           TheAdministrator shall maintain, or cause to be maintained, suitable records asfollows:

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#### (i)            records of eachParticipant’s Nonqualified Deferred Compensation Account which shall show,among other things, deferrals and the gains and losses within such account; and

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#### (ii)           records of itsdeliberations and decisions.

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### (b)           TheAdministrator may appoint a secretary to keep records of proceedings, totransmit its decisions, instructions, consents, or directions to any interestedparty, and to execute and file, on behalf of the Administrator, such documents,reports, or other matters as may be necessary or appropriate under ERISA and toperform other ministerial acts.

 

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### (c)           TheAdministrator shall not be required to maintain any records or accounts, whichduplicate any records or accounts maintained by the Company.

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## **Section 11.5****        ****Statement to Participants. **Within sixtyday 60) days after the last day of each Plan Quarter, the Administrator shallfurnish (or cause to be furnished) to each Participant a statement settingforth the value of his Nonqualified Deferred Compensation Account and CompanyContribution Account and such other information as the Administrator shall deemappropriate.

##  

## **Section 11.6****        ****Inspection of Records. **Copies of thePlan and records of a Participant’s Nonqualified Deferred Compensation Accountand Company Contribution Account shall be open to inspection by him or his dulyauthorized representatives at the office of the Company at any reasonablebusiness hour.

##  

## **Section 11.7****        ****Service in More than One Capacity. **Any person or group of persons may serve in more than one capacity withrespect to the Plan.

##  

## **Section 11.8****        ****Accounting for Distributions. **Records foreach Nonqualified Deferred Compensation Account and Company ContributionAccount shall be maintained by the Trustee.

##  

## **Section 11.9****        ****ERISA Claims Procedures. **Any claims forbenefits or any other claims or disputes hereunder shall be brought inaccordance with the claims procedures set out in the Company’s 401(k) Plan.

##  

# **ARTICLEXII**

# **MISCELLANEOUSPROVISIONS**

# ** **

## **Section 12.1****        ****Termination or Amendment of thePlan.**

##  

### (a)           Cornell shallhave the right at any time to declare the Plan terminated completely as to theCompany or as to any division, facility, or other operational unit thereof, andmay amend same from time to time; provided that no termination or amendmentshall reduce or terminate any benefit to or in respect of any Participant;further provided, that no amendment of the Plan shall apply to amounts deferredand vested on or before December 31, 2004, unless the instrumentexplicitly states that the amendment shall apply to such amounts.

###  

### (b)           In the event ofany such termination, the Administrator shall continue to maintain theParticipant’s Nonqualified Deferred Compensation Account and CompanyContribution Account and payment from, and vesting under, such NonqualifiedDeferred Compensation Account and Company Contribution Account shall be made inaccordance with the Plan.

###  

### (c)           Notwithstandingthe foregoing, the Board of Directors may terminate the Plan as permitted underCode Section 409A, and distribute the value of the Participants’ Accountsto Participants in the manner and at the time determined by the Administrator,in its sole discretion, as permitted by Code Section 409A.

###  

## **Section 12.2****        ****Limitation of Rights. **Nothingcontained in the Plan shall give any Participant the right to be retained inthe service of the Company or to interfere with or restrict

 

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## the right of the Company,which is hereby expressly reserved, to discharge or retire any Participant,except as provided by law, at any time without notice and with or withoutcause.  Inclusion under the Plan will notgive any Participant any right or claim to any benefit hereunder except to theextent such right has specifically become fixed under the terms of this Plan.

##  

## **Section 12.3****        ****Consolidation or Merger: Adoptionof Plan by Other Companies.**

##  

### (a)           There shall beno merger, consolidation with, transfer, or sale of the assets or liabilitiesof the Plan to any other plan unless each Participant in this Plan would have,following such event, accounts which are equal to or greater than his correspondingNonqualified Deferred Compensation Account and Company Contribution Account hadthe Plan been terminated immediately before such merger, consolidation,transfer, or sale.

###  

### (b)           An Affiliatemay, with the approval of the Company, adopt the Plan as a whole company or asto any one or more divisions by resolution of its own board of directors.  Such Affiliate shall give written notice ofsuch adoption to the Administrator.

###  

## **Section 12.4****        ****Payment on Behalf of Minor, etc. **In the eventany amount becomes payable under the Plan to a minor or a person who, in thesole judgment of the Administrator is considered by reason of physical ormental condition to be unable to give a valid receipt therefor, theAdministrator may direct that such payment be made to any person found by theAdministrator in its sole judgment, to have assumed the care of such minor orother person.  Any payment made pursuantto such determination shall constitute a full release and discharge of the Company,the Administrator, and their officers, directors, and employees.

##  

## **Section 12.5****        ****Governing Law. **This Plan shallbe construed, administered, and governed in all respects under the laws of theState of Texas, and venue for any dispute shall be Harris County, Texas.

##  

## **Section 12.6****        **The masculinepronoun shall include the feminine pronoun, and the singular the plural wherethe context so indicates.

##  

## **Section 12.7****        ****Titles. **Titles areprovided herein for convenience only and are not to serve as a basis forinterpretation or construction of the Plan.

##  

## **Section 12.8****        ****References. **Unless thecontext clearly indicates to the contrary, a reference to a statute, regulationor document shall be construed as referring to any subsequently enacted,adopted or executed statute, regulation or document.

##  

## **Section 12.9****        ****No Tax Guarantee. **Neither thisPlan, nor any representations made in connection with it, shall be construed tobe assurance or guarantee of a deferral of income for income tax purposes ofany amount to be paid pursuant to this Plan.

##  

## **Section 12.10****      ****Plan Payment/Release. **All paymentsmade pursuant to this Plan shall constitute a full release and discharge of theCompany, the Administrator, and their officers, directors, and employees underthis Plan.

 

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## **Section 12.11****      ****Source of Payments. **All paymentsmade pursuant to this Plan shall be made, at the sole discretion of Cornell,from assets accumulated under the Trust Fund, from other assets of the Company,or from any combination of the two.

##  

## **Section 12.12****      ****Section 409A**.  The Plan is intended to be a nonqualifieddeferred compensation arrangement and is not intended to meet the requirementsof Code Section 401(a).  The Plan isintended to meet the requirements of Code Section 409A and may beadministered in a manner that is intended to meet those requirements and shallbe construed and interpreted in accordance with such intent.  To the extent that a deferral, accrual,vesting or payment of an amount under the Plan is subject to Code Section 409A,except as the Administrator otherwise determines in writing, the amount will bedeferred, accrued, vested or paid in a manner that will meet the requirementsof Code Section 409A, including regulations or other guidance issued withrespect thereto, such that the deferral, accrual, vesting or payment shall notbe subject to the excise tax applicable under Code Section 409A.  Any provision of the Plan that would causethe deferral, accrual, vesting or payment of an amount under the Plan to failto satisfy Code Section 409A shall be amended (in a manner that as closelyas practicable achieves the original intent of the Plan) to comply with Code Section 409Aon a timely basis, which may be made on a retroactive basis, in accordance withregulations and other guidance issued under Code Section 409A.  In the event additional regulations or otherguidance is issued under Code Section 409A or a court of competentjurisdiction provides additional authority concerning the application of Code Section 409Awith respect to the distributions under the Plan, then the provisions of thePlan regarding distributions shall be automatically amended to permit suchdistributions to be made at the earliest time permitted under such additionalregulations, guidance or authority that is practicable and achieves the intentof the Plan prior to its amendment to comply with Code Section 409A.

##  

## **Section 12.13****      ****Amendmentand Restatement of the Plan**.  The amendment and restatement of the Planeffective as of January 1, 2005, shall apply only to amounts deferred andvested on or after January 1, 2005. The provisions of the Plan prior to this amendment and restatement shallapply to any amounts that were earned and vested under the Plan on or before December 31,2004.  The amendment and restatement ofthe Plan is not intended to be a material modification of the Plan with respectto amounts deferred and vested on or before December 31, 2004, and, anyprovision of the Plan that is considered to be a material modification of thePlan shall be retroactively amended to the extent required to prevent suchprovision from being considered a material modification of the Plan withrespect to such amounts.

 

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INWITNESS WHEREOF, Cornell has caused this Plan to be executed on this 13th dayof September 2007.

 

 
|   | By:    | /s/  Patrick N. Perrin                           |
|--------|--------|--------------------------------------------------|
|   |   |                                             |
|   | Name:  | Patrick  N. Perrin                               |
|   | Title: | Sr.  V.P. & Chief Administrator Officer |

 

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