**Exhibit10.44a**

 

**CORNELL COMPANIES DEFERREDBONUS PLAN**

 

Cornell Companies, Inc., a Delaware corporation,adopted the Cornell Companies Deferred Bonus Plan (the “Plan”), effectiveOctober 1st, 2001 for the benefit of selected  employees.

 

The Plan is a nonqualified deferred compensation planpursuant to which the Company (as hereinafter defined) has awarded and may inthe future award Employees of the Company a Bonus.  The Plan is maintained primarily for the purpose of providingdeferred compensation for a select group of management or highly compensatedemployees, within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) ofthe Employee Retirement Income Security Act of 1974, as amended.  The Plan is unfunded for tax purposes andfor purposes of Title I of ERISA.  TheParticipants have the status of general unsecured creditors of the Company andthe Plan constitutes a mere promise by the Company to make benefit payments inthe future.

 

**ARTICLEI**

**DEFINITIONS**

 

Whenever the following terms are used in the Plan withthe first letter capitalized, they shall have the meaning specified below,unless the context clearly indicates to the contrary.

 

**“Accounting Date”**shall mean the end ofeach day 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 or Compensation Committeeunder the Plan.

 

**“Affiliate”** shall mean any employer that,at the time of reference, was, with the Company, a member of a controlled groupof corporations or trades or businesses under common control, or a member of anaffiliated service group, as determined under regulations issued by theSecretary of the Treasury or his delegate under Code Sections 414(b), 414(c),414(m), and 415(h) and any other entity required to be aggregated with theCompany 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.

 

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

 

**“Bonus”** shall mean the Bonus awardedpursuant to Section 3.1 of the Plan.

 

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

 

(a)                                  thedate Cornell merges or consolidates with any other entity, and the stockholdersof Cornell do not own, directly or indirectly, at least 50% of the voting capitalstock of the surviving entity;

 

(b)                                 thedate Cornell sells all or substantially all of its assets to any other personor entity; provided that the sale or other transfer of the Company’s facilitiesto a real estate investment trust, in a sale-leaseback transaction, or anysimilar transaction shall not be considered a sale of all or substantially allof Cornell’s assets;

 

(c)                                thedate Cornell is dissolved;

 

(d)                                 thedate any third person or entity together with its affiliates become, directlyor indirectly, the beneficial owner of 51% of the Voting Stock of Cornell; or

 

(e)                                  thedate the individuals who constitute the members of the Board of Directors(“Incumbent Board”) as of the effective 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;

 

**“Code”** shall mean the Internal Revenue Codeof 1986, as amended.

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**“Company”** shall mean Cornell Companies,Inc. and any Affiliate that subsequently adopts the Plan as a whole or as toany one or more divisions, in accordance with Section 11.3(b), and anysuccessor company which continues the Plan under Section 11.3(a), acting ineach case through its Board of Directors.

 

“**Compensation Committee”**shall mean theCompensation Committee of the Board of Directors.

 

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

 

**“Date Vesting Commences”** shall mean thedate set forth in accordance with Section 4.1 of the Plan.

 

**“Disability”**shall mean a Participant’sdisability, as defined by the then current policies of the Company.

 

**“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)                                  directorswho serve solely in that capacity;

 

(b)                                 attorneys,accountants, and other persons doing independent work for the Company where therelationship of employer and employee does not exist between said person andthe Company; and

 

(c)                                  leasedemployees treated as Employees of the Company pursuant to Code Sections 414(n)and 414(o).

 

**“ERISA”** shall mean the Employee RetirementIncome Security Act of 1974, as amended from time to time.

 

**“Investment Options”** shall be any mutualfund made 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.

 

**“Nonqualified Deferred Bonus Account”** of aParticipant shall mean the bookkeeping account established on behalf of theParticipant in accordance with Section 5.2 of the Plan.

 

**“Participant”** shall mean any Employeeselected to participate in the Plan in accordance with Section 2.1 of the Plan.

 

**“Plan”**shall mean this Cornell CompaniesDeferred Bonus Plan.

 

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

 

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

 

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**“Separation from Service”** of an Employeeshall mean his discharge by the Company, or a material reduction or alterationin his title, responsibilities or his compensation, a relocation greater thanfifty (50) miles from his office location as of the effective date of the Plan,or the Participant’s voluntary resignation due to a material reduction or alterationin his title, responsibilities or his compensation, or a relocation greaterthan fifty (50) miles from his office location as of the effective date of thePlan.  A leave of absence or sick leaveauthorized by the Company in accordance with established policies (other thanfor Disability), a vacation period, or a military leave shall not constitute aSeparation from Service; except that failure to return to work upon expirationof any leave of absence, sick leave, or vacation or after expiration of amilitary leave shall be considered a voluntary resignation effective as of thedate of expiration of such leave of absence, sick leave, vacation, temporarylayoff or military leave.

 

**“Trust Agreement”** shall mean the CornellCompanies Nonqualified Trust, a “Rabbi Trust.”

 

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

 

**“Trustee”** shall mean the corporate trusteeor 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.

 

**“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.

 

## **ARTICLE II**

**SELECTION OF PARTICIPANTS**

 

**Section 2.1 - Selection of Participants.**The Compensation Committee shall select the Employees of the Company that shallparticipate in the Plan.  A Participantso selected shall be named on Attachment 1 to this Agreement.  A separate Attachment 1 shall be created foreach Participant.

 

**Section 2.2. Requirements of Participants.**  Any Employee who qualifies for thedefinition of “highly compensated” employee according to Code Section 414(q),who is selected by the Compensation Committee, and who otherwise enters intocertain contractual agreements with Cornell if so requested, shall become aParticipant in the Plan.  Such employeesshall be (i) officers and executives of the Company; or (ii) in management

 

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positions which report directly to a Company President or CorporateOfficer; or (iii) marketing managers with responsibility for the acquisition ofnew business; or (iv) program managers and other P&L managers who haveoverall performance responsibilities for significant contracts; or (v) otherkey employees of the Company who have a job assignment with significant impacton profits, operating effectiveness, and overall success of the Company.

 

**ARTICLEIII**

**BONUS**

 

**Section 3.1 -**The Compensation Committeeshall determine the dollar amount of the Bonus to be awarded to eachParticipant selected pursuant to Section 2.1 of the Plan.

 

**Section 3.2 -**The dollar amount of theBonus determined pursuant to Section 3.1 shall be entered on the Attachment 1created for the Participant.

 

**ARTICLEIV**

**VESTING**

 

**Section 4.1 - Vesting Period.**  The Bonus awarded to a Participant shallvest 100% on the date determined by the Compensation Committee.  Attachment 1, created for each Participant,shall define the vesting schedule and any other terms and conditions of vestingnot otherwise described in Article IV.

 

**Section 4.2 - Three Year Vesting. **If the Company achieves a $1.56 earnings pershare (as determined under Generally Accepted Accounting Principles in effecton the Date Vesting Commences and excluding any “start-up expenses”) (“EPS”)determined as of the end of 2004 (or in the event the Company commencesoperation of the Pike County Correctional Facility (the Southeast Federal Bureauof Prisons project) the Company must achieve $1.76 EPS determined as of the endof 2004), the Bonus awarded to a Participant shall vest sixty percent (60%) asof the last day of 2004, whether or not the Participant was otherwise vested inthe Bonus.

 

**Section 4.3 - Death, Disability, or Change in Control.**  If any Participant shall die or sufferDisability while employed by the Company; or if a Change in Control shouldoccur, the Participant shall be deemed to be 100% vested in his Bonus, whetheror not the Participant was otherwise vested in the Bonus.

 

**Section 4.4 – Hypothetical Investment Gains Vesting.**  With respect to any portion of the Bonusallocated pursuant to Section 6.2, other than the portion of such Bonus vestedpursuant to Sections 4.1-4.3 (the “Cash Bonus”), to the extent there is anyincrease in value with respect to such Cash Bonus, as determined by Cornell ona quarterly basis or at such other times as it deems appropriate, the amount ofsuch increase shall become

 

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100% vested at that time.  Suchvested amount shall be reallocated to a vested subaccount by the Trustee of theTrust Agreement.

 

**Section 4.5 – Vesting.**  In order to become 100% vested, aParticipant must accrue sixty (60) “vesting service credits”.  A vesting service credit is each month thatCornell’s pre-tax earnings before extraordinary or unusual charges or beforethe annualized expense of the Plan but not excluding the Plan’s startup expenses,all as defined by GAAP, exceed $600,000.00 (the “Benchmark”).  If Cornell’s pre-tax earnings as describedin the preceding sentence are less than the Benchmark (such amount shall bereferred to as the “Shortfall”), the Participant will receive a pro ratavesting service credit for such Shortfall month which shall be equal to thepercentage of the Benchmark that was actually achieved for that month. Inaddition, in any subsequent month that Cornell’s pre-tax earnings (as describedabove) exceed the Benchmark, then the amount of such excess (determined asa  percentage of such excess over theBenchmark) shall be added to the pro rata vesting service credit credited inthe prior Shortfall month.  This processby which a prior months’ Shortfall is “made up” by future months’ earnings inexcess of the Benchmark shall be repeated each month until the vesting servicecredit for the initial Shortfall month equals one hundred percent, in whichcase the Participant will accrue a full vesting service credit for such initialShortfall month.  If there aresubsequent Shortfalls, then this process shall continue with respect to theoldest months’ Shortfall, which process shall be repeated as described herein.

 

**ARTICLEV**

**CREDITING OF BONUS**

 

**Section 5.1**- Company Contributions.**  The Company, in its sole discretion, maydeposit the Bonus for each Participant under the Trust Agreement.

 

**Section 5.2 - Participant Account.** The Administrator shall establish andmaintain (or cause to be established and maintained) a bookkeeping account foreach Participant, known as the Nonqualified Deferred Bonus Account, to whichshall be credited the amounts determined under Section 3.1 of the Plan andcredited or debited the amounts determined under Article VII of the Plan.  Such bookkeeping account may consist ofsubaccounts pursuant to which amounts vested pursuant to the Plan may becredited.

 

**Section 5.3 - Assignments, etc., Prohibited.**Nopart of the Nonqualified Deferred Bonus Account of a Participant shall beliable for the debts, contracts, or engagements of any Participant, hisBeneficiaries or successors in interest, or be taken in execution by levy,attachment, or garnishment or by any other legal or equitable proceeding, norshall any such person have any rights to alienate, anticipate, commute, pledge,encumber, or assign any benefits or payments hereunder in any mannerwhatsoever, except to designate a Beneficiary as provided herein.

 

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**ARTICLE VI**

**INVESTMENT OPTIONS**

 

**Section 6.1 - Investment in Common Stock of CornellCompanies, Inc.**  TheCompensation Committee shall determine the dollar amount of the Bonus amountthat shall be allocated in the form of common stock of Cornell.

 

**Section 6.2 - Investment in Investment Funds.**  The balance of the Bonus amount shall be allocatedamong the Investment Options as directed by the Company,  or the Participant if so authorized, fromtime to time.

 

**ARTICLE VII**

**VALUATION OF ACCOUNTS**

 

Each Participant’s Nonqualified Deferred Bonus  Account shall be valued as of eachAccounting Date following the effective date of the Plan, based upon the fairmarket value of the assets of each Nonqualified Deferred Bonus Account, asdetermined by the Trustee.  Indetermining such fair market value, each Nonqualified Deferred Bonus 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.

 

**ARTICLE VIII**

## **BENEFITS**

 

**Section 8.1 - Manner and Time of Distributions.**  The Bonus shall be paid to the Participantcommencing at such time, in such form and over such period of time as set bythe Compensation Committee.  The datepayments are to commence,  the form ofpayment, the period over which payments are to be made, and any otherlimitations on payments shall be entered on the Attachment 1 created for theParticipant.

 

**Section 8.2 - Payment upon Death, Disability or Change inControl.**  All paymentrequired to be made as a result of death, Disability or Change in Control,shall be paid in a lump sum to the Participant or his Beneficiaries withinthirty (30) calendar days after the Participant’s death, Disability or a Changein Control,

 

**Section 8.3 – Distribution in  Common Stock of Cornell. **AParticipant or his Beneficiary shall receive the vested portion of hisNonqualified Deferred Bonus Account which is credited with Cornell common stockin the form of common stock of Cornell, unless such Participant (orBeneficiary) has filed a timely election with the Administrator to receive thecash proceeds of such Investment Option (which the Administrator in its solediscretion has accepted).

 

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**Section 8.4 - Distribution Withholding.** Anytax withholding required with respect to any Plan distributions may be made (i)from the mutual fund portion of the Participant’s Investment Options, (ii) bythe Participant remitting directly to the Company the appropriate amount ofwithholding, (iii) from the portion of the Participant’s Investment Optionscredited with Cornell common stock (subject to applicable securities lawrequirements), or (iv) through any combination, as determined by theAdministrator.

 

**Section 8.5 – Tax Neutral Provision. **In the event any such Planpayment shall trigger the imposition of any excise tax, penalty or interestunder Code Section 280G, 4999, or any other similar provisions, the Companyshall pay to such Participant additional amounts hereunder so as to cause theParticipant to be tax neutral to at the imposition of such excise tax, penaltyor interest.

 

**Section 8.6 - Effect of Failure to Locate Distributee.**If the person to whom benefits are payable hereunder has not been ascertainedor located within one (1) year after the payments are to be made, the amount ofhis Nonqualified Deferred Bonus Account shall be forfeited and such amountsshall be removed from such account and returned to the Company.

 

**ARTICLE IX**

**DISTRIBUTIONS IN THE EVENT OF TAXATION**

 

Should any amounts contained in a Participant’sNonqualified Deferred Bonus Account become subject to taxation by the InternalRevenue Service of the U.S. Government prior to the actual receipt thereof bythe Participant, or his Beneficiary, then such amounts shall become immediatelypayable thereto in a lump sum distribution. Such distribution shall be subject to all withholding required by law.

 

**ARTICLE X**

**ADMINISTRATIVE PROVISIONS**

 

**Section 10.1 - Administrator’s Duties and Powers.**

 

(a)                                  TheAdministrator shall conduct the general administration of the Plan inaccordance with the Plan and shall have all the necessary power and authorityto carry out that function. Among its necessary powers and duties, are thefollowing:

 

(i)                                     todelegate all or part of its function as Administrator to others and revoke anysuch delegation;

 

(ii)                                  todetermine questions of eligibility of Participants and their entitlement tobenefits;

 

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(iii)                             toselect and engage attorneys, accountants, actuaries, trustees, appraisers,brokers, consultants, administrators, physicians, or other persons to renderservice or advice with regard to any responsibility the Administrator or theCompany has under the Plan, or otherwise, to designate such persons to carryout responsibilities, 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;

 

(iv)                            tointerpret the Plan for purpose of the administration and application of thePlan, in a manner not inconsistent with the Plan or applicable law and to amendor revoke any such interpretation; and

 

(v)                                 toadopt rules of the Plan that are not inconsistent with the Plan or applicablelaw and to amend or revoke any such rules.

 

(b)                                 Everyfinding, decision, and determination made by the Administrator shall, to thefull extent permitted by law, be final and binding upon all parties.

 

**Section 10.2 - Limitation Upon Powers**. ThePlan shall be uniformly and consistently administered, interpreted, and appliedwith regard to all Participants in similar circumstances.

 

**Section 10.3 - Indemnification by the Company: LiabilityInsurance.**

 

(a)                                  TheCompany shall pay or reimburse the Administrator for all expenses incurredthereby and shall indemnify and hold it harmless from, all claims, liabilities,and costs (including reasonable attorneys’ fees) arising out of the performanceof its Plan functions.  Thisindemnification shall survive the termination of the Plan and the distributionof all Trust Funds.

 

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

 

**Section 10.4 - Recordkeeping.**

 

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

 

(i)                                     recordsof each Participant’s Nonqualified Deferred Bonus Account which shall show,among other things, the gains and losses within such account; and

 

(ii)                                  recordsof its deliberations 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.

 

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

 

**Section 10.5 - Statement to Participants.**Within sixty day 60) days after the last day of each Plan Quarter, theAdministrator shall furnish (or cause to be furnished) to each Participant astatement setting forth the value of his Nonqualified Deferred Bonus Accountand such other information as the Administrator shall deem appropriate.

 

**Section 10.6 - Inspection of Records.**Copies of the Plan and records of a Participant’s Nonqualified Deferred BonusAccount and Attachment 1 shall be open to inspection by him or his dulyauthorized representatives at the office of the Company at any reasonablebusiness hour.

 

**Section 10.7 - Service in More than One Capacity. **Any person or group ofpersons may serve in more than one capacity with respect to the Plan.

 

**Section 10.8 - Accounting for Distributions.**Records for each Nonqualified Deferred Bonus Account shall be maintained by theTrustee.

 

**Section 10.9 - ERISA Claims Procedures.**  Any claims for benefits or any other claimsor disputes hereunder shall be brought in accordance with the claims proceduresset out in the Company’s 401(k) Plan.

 

**ARTICLEXI**

**MISCELLANEOUS PROVISIONS**

 

**Section 11.1 - Termination or Amendment of the Plan.**

 

(a)                                  Cornellshall have the right at any time to declare the Plan terminated completely asto the Company or as to any division, facility, or other operational unitthereof, and may amend same from time to time, provided that no termination oramendment shall reduce or terminate any benefit to or in respect of anyParticipant.

 

(b)                                 Inthe event of any such termination, the Administrator shall distribute in lumpsum payment all vested Bonus amounts (including investment earnings related tovested Bonus amounts) and the Administrator shall continue to maintain theunvested

 

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Participants’ Nonqualified Deferred Bonus Accounts and payment from,and vesting under, such Nonqualified Deferred Bonus Accounts shall be made inaccordance with the Plan.

 

**Section 11.2 - Limitation of Rights**.  Nothing contained in the Plan shall give anyEmployee the right to be retained in the service of the Company or to interferewith or restrict the right of the Company, which is hereby expressly reserved,to discharge or retire any Employee, except as provided by law, at any timewithout notice and with or without cause. Inclusion under the Plan will notgive any Employee any right or claim to any benefit hereunder except to theextent such right has specifically become fixed under the terms of this Plan.

 

**Section 11.3 - Consolidation or Merger: Adoption of Plan byOther Companies.**

 

(a)                                  Thereshall be no merger, consolidation with, transfer, or sale of the assets orliabilities of the Plan to any other plan unless each Participant in this Planwould have, following such event, accounts which are equal to or greater thanhis corresponding Nonqualified Deferred Bonus Account had the Plan beenterminated immediately before such merger, consolidation, transfer, or sale.

 

(b)                                 AnAffiliate may, with the approval of the Company, adopt the Plan as a wholecompany or as to any one or more divisions by resolution of its own board ofdirectors. Such Affiliate shall give written notice of such adoption to theAdministrator.

 

**Section 11.4 - Payment on Behalf of Minor. etc.**Inthe event any amount becomes payable under the Plan to a minor or a person who,in the sole judgment of the Administrator is considered by reason of physicalor mental condition to be unable to give a valid receipt therefore, 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 pursuant to such determination shall constitutea full release and discharge of the Company, the Administrator, and theirofficers, directors, and employees.

 

**Section 11.5 - Governing Law.**  This Plan shall be construed, administered,and governed in all respects under the laws of the State of Texas, and venuefor any disputes shall be Harris County, Texas.

 

**Section 11.6** - The masculine pronoun shallinclude the feminine pronoun, and the singular the plural where the context soindicates.

 

**Section 11.7 - Titles.**Titles are providedherein for convenience only and are not to serve as a basis for interpretationor construction of the Plan.

 

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**Section 11.8 - 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 11.9 - No Tax Guarantee.**Neitherthis Plan, nor any representations made in connection with it, shall beconstrued to be assurance or guarantee of a deferral of income for income taxpurposes of any amount to be paid pursuant to this Plan.

 

**Section 11.10 - Plan Payment/Release.** All payments made pursuant to this Plan shallconstitute a full release and discharge of the Company, the Administrator, andtheir officers, directors, and employees under this Plan.

 

**Section 11.11 - Source of Payments.** All payments made pursuant to this Plan shallbe made, at the sole discretion of Cornell, from assets accumulated under theTrust Fund, from other assets of the Company, or from any combination of thetwo.

 

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**IN WITNESS WHEREOF,** Cornell has caused thisPlan to be executed on this 1st day of October 1, 2001.

 
|   | By:    | /s/ Patrick Perrin            |
|--------|--------|-------------------------------|
|   |   |                          |
|   | Name:  | Patrick Perrin                |
|   |   |                          |
|   | Title: | Chief Administrative  Officer |

 

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