Exhibit 10.4


 


CORNELL COMPANIES DEFERRED COMPENSATION PLAN


 


Cornell Companies, Inc.,
a Delaware corporation originally adopted, for the benefit of its eligible
employees, 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 restated
effective January 1, 2005, to ensure written compliance with Code Section 409A.


 


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


 


ARTICLE
I


DEFINITIONS


 


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


 


“Accounting Date” shall mean the end of each
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 duties
and responsibilities imposed by ERISA, except as specifically assigned,
delegated to or reserved to the Board of Directors under the Plan.


 


“Affiliate” shall mean any employer
which, at the time of reference, was, with the Company, a member of a
controlled group of corporations or trades or businesses under common control,
or a member of an affiliated service group, as determined under regulations
issued by the Secretary 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 the Company pursuant to regulations issued under Code Section 414(o).


 


“Beneficiary” shall mean the person or
persons, as designated by the Participant, on whose behalf benefits may be
payable under the Plan after the Participant’s death.


 


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


 

















 


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


 


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


 


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


 


(c)           the date Cornell is dissolved;


 


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


 


(e)           the date 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 a
majority thereof, provided that for purposes of this clause (e) any person
becoming a director whose election or nomination for election by Cornell’s
stockholders was approved by a vote of at least eighty percent (80%) of the
directors comprising the Incumbent Board (either by the specific vote or
approval of the proxy statement of Cornell in which such person is named as a
nominee for director, without objection by such person to such a nomination)
shall be, for purposes of this clause (e), considered as though such person was
a member of the Incumbent Board.


 


Notwithstanding the
foregoing, for purposes of a distribution from the Plan, including upon
termination of the Plan, the term “Change of Control” means a “change in the
ownership of a corporation,” “change in the effective control
of a corporation,” or a “change in the ownership of a substantial portion of a
corporation’s assets” of the Company as described in Code Section 409A and
the regulations thereunder.


 


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


 


“Company” shall mean Cornell and any
Affiliate that subsequently adopts the Plan as a whole or as to any one or more
divisions, in accordance with Section 12.3(b), and any successor company
which continues the Plan under Section 12.3(a), acting in each case
through its Board of Directors.


 


“Company Contributions” shall mean any contributions
made by the Company pursuant to Section 5.1 of the Plan.


 


“Company Contribution Account” of a
Participant shall mean the bookkeeping account established on behalf of the
Participant in accordance with Section 2.2 on the Plan.


 


“Compensation” of a Participant for any
Plan Year shall mean his total taxable remuneration received from the Company
in that Plan Year for services rendered as an Employee


 


2

















 


or a non-Employee member of
the Board of Directors (whether such remuneration received by the non-Employee
member of the Board of Directors is in the form of cash, stock or other
property), including deferred compensation under the Plan and amounts not
includable 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 deferred
compensation plan (to the extent includable in the Participant’s gross income
solely by reason of Code Section 415) and any distribution from a deferred
compensation plan (other than a nonqualified plan);


 


(b)           amounts realized from the exercise of
a nonqualified stock option or taxable by reason of restricted property
becoming freely tradable or free of a substantial risk of forfeiture, as
described in Code Section 83;


 


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


 


(d)           other amounts which receive special
tax benefits such as Company contributions toward the purchase of an annuity
contract described in Code Section 403(b) (whether or not excludable
from the Participant s gross income);


 


(e)           all reimbursements or other expense
allowances, fringe benefits (cash and non-cash), moving expenses, deferred
compensation, and welfare benefits (including severance benefits), even if
includable in gross income.


 


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


 


“Deferral
Period” shall have the meaning ascribed to it in Section 4.3 of the Plan.


 


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


 


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


 


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


 


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


 


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


 


“Investment Options” shall be any mutual fund
made available from time to time by the Company and the common stock of
Cornell.  The Company may add additional
Investment Options or delete same by written notice to the Trustee.


 


“Non-Employee
Director” shall be any member of the Board of Directors who
is not also an Employee.


 


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


 


“Nonqualified Deferred Compensation Account” of a Participant
shall mean the bookkeeping account established on behalf of the Participant in
accordance with Section 2.1 of the Plan.


 


“Participant” shall mean any person
included in the Plan as provided in Article III of the Plan.


 


“Plan” shall mean this Cornell Companies Deferred
Compensation Plan.


 


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


 


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


 


“Qualified Accounts” of a Participant shall mean
his accounts in the Qualified Plan.


 


“Qualified Plan” shall mean the Cornell Companies
401(k) Plan or, if applicable, the equivalent qualified plan of the
Company, as may be amended hereafter from time to time, or any successor plan
thereto.


 


“Securities
Act” Shall mean the Securities Exchange Act of 1934, as amended from time
to time.


 


“Separation
from Service” shall mean a Participant’s complete separation from
service with the Company and its Affiliates. 
The determination of whether a Participant incurs a Separation from
Service will be determined in accordance with Code Section 409A and the
regulations thereunder.


 


“Specified
Employee” shall mean an Employee who is key employee as
defined in Code Section 416(i)(1)(A).


 


4

















 


“Trust Agreement” shall mean the Cornell
Companies Nonqualified Trust, a “Rabbi Trust,” created in connection with the
execution of this Plan, as set forth in Exhibit A hereto, as amended.


 


“Trust Fund” shall mean the trust fund
established pursuant to the terms of the Trust Agreement.


 


“Trustee” shall mean the corporate
trustee 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 Agreement
to administer the Trust Fund.


 


“Unforeseeable
Emergency” shall mean a severe financial hardship to the
Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent (as defined in section 152(a)) of the
Participant, loss of the Participant’s property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. The circumstances that will
constitute an Unforeseeable Emergency will depend upon the facts of each case,
but, in any case, payment under this Section shall not be made to the
extent that such emergency is or may be relieved: (i) through
reimbursement or compensation by insurance; (ii) by liquidation of the
Participant’s assets, to the extent the liquidation of such assets would not
itself cause a severe financial hardship; or (iii) by cessation of
deferrals under this Plan and any other plan in which the Participant
participates.  Such foreseeable needs for
funds as the need to send a Participant’s child to college or the desire to
purchase a home will not be considered to be an Unforeseeable Emergency.  A financial need shall not constitute an
Unforeseeable Emergency unless it is for at least $1,000.00 (or the entire
principal amount of the Participant s Nonqualified Deferred Compensation
Account, if less).


 


“Voting Stock” shall mean all of the
outstanding shares of capital stock of Cornell entitled to vote generally in
elections for directors, considered as one class; provided, however, that if
Cornell has shares of Voting Stock entitled to more or less than one vote for
any such share, each reference to a proportion of shares of Voting Stock shall
be deemed to refer to such proportion of the votes entitled to be cast by such
shares.


 


ARTICLE
II


NONQUALIFIED
ACCOUNTS


 


Section 2.1            Nonqualified Deferred Compensation
Account.  The
Administrator shall establish and maintain (or cause to be established and
maintained) a bookkeeping account for each Participant, known as a Nonqualified
Deferred Compensation Account to which shall be credited the amounts determined
under Section 4.1 of the Plan and credited or debited the amounts
determined under Article VI of the Plan.


 


Section 2.2            Company
Contribution Account.  The
Administrator shall establish and maintain (or cause to be established and
maintained) a bookkeeping account for each Participant, known as a Company
Contribution Account to which shall be credited the amounts determined under Section 5.1
of the Plan and credited or debited the amounts determined under Article VI
of the Plan.


 


5

















 


Section 2.3            Assignments,
etc., Prohibited.  No part of the
Nonqualified Deferred Compensation Account or the Company Contribution Account
of a Participant shall be liable for the debts, contracts, or engagements of
any Participant, his Beneficiaries or successors in interest, or be taken in
execution by levy, attachment, or garnishment or by any other legal or
equitable proceeding, nor shall any such person have any rights to alienate,
anticipate, commute, pledge, encumber, or assign any benefits or payments
hereunder in any manner whatsoever, except to designate a Beneficiary as
provided herein.


 


ARTICLE
III


ELIGIBILITY


 


Section 3.1            Requirements
for Participation.  Any Employee
who qualifies for the definition of “highly compensated” employee according to
Code Section 414(q) and who is selected by the Administrator shall be
eligible to be a Participant for the Plan Year on such date.  Such employees shall be (i) officers and
executives of the Company; or (ii) in management positions which report
directly to a Company President or Corporate Officer; or (iii) marketing
managers with responsibility for the acquisition of new business; or (iv) program
managers and other P&L managers who have overall performance
responsibilities for significant contracts; or (v) other key employees of
the Company who have a job assignment with significant impact on profits,
operating effectiveness, and overall success of the Company.


 


Any Non-Employee Director
shall be eligible to be a Participant upon his initial election to the Board of
Directors.


 


Section 3.2            Deferral
Election Form.  Participants
who elect to defer their Compensation pursuant to this Plan shall submit a form
(the “Deferral Election Form”) to the Administrator, which shall contain the
following:


 


(a)           the consent of the Participant that
he, his successors in interest and assigns, and all persons claiming under him
shall be bound, to the extent authorized by law, by the statements contained
therein and by the provisions of the Plan;


 


(b)           the amount of Compensation to be
deferred and his authorization for the Company to reduce his Compensation
accordingly;


 


(c)           the date on which the Participant
wishes to receive the deferred amounts, pursuant to Section 4.3


 


(d)           the form in which he wishes to
receive same; and


 


(e)           such other information as may be
required by the Administrator.


 


Notwithstanding the
foregoing, in the case of any Nonqualified Deferred Compensation or Company
Contribution that is performance-based and based on services performed over a period
of at least 12 months, an initial deferral election may be made during the
election period established by the Administrator which may occur prior to or
after the beginning of any Plan Year, provided, that such election must be made
no later than six months before the end of the performance period.


 


6

















 


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


 


Once an election has been
made it becomes irrevocable for a Plan Year on the December 31 immediately
preceding such Plan Year, except that a Participant may change the election of
the time and form of payment he previously elected under Sections 4.3 and
8.1; provided that all changes of election of a Participant’s time or form of
payment shall be effective only if the election change is received by the
Administrator in proper form 12 months prior to the event which would require a
distribution under the Plan, such election change does not provide for a
payment or commencement of payment that is earlier than five (5) years
after the date on which such payment would otherwise have been made, and during
the 12-month period prior to the effective date of such election change, the
last effective election made by the Participant shall continue to remain in
force; provided further, that with respect to amounts deferred and vested on or
before December 31, 2004, all changes of election of a Participant’s time
or form of payment with respect to such amounts shall be effective only if the
election change is received by the Committee or its designee in proper form
during the 30-day period ending 12 months prior to the event which would
require a distribution under the Plan.


 


The election to participate
in the Plan for a given Plan Year will be effective only upon receipt by the
Administrator of the Participant’s properly executed election on such form or
in accordance with such procedures as will be determined by the Administrator
from time to time.  If the Participant
does not elect to defer amounts under the Plan, the Participant will be deemed
to have elected not to defer any part of his Compensation for that Plan Year
and such Compensation will be paid to the Participant in cash in accordance
with the normal payroll practices of the Company then in place.


 


ARTICLE
IV


PARTICIPANT
DEFERRALS


 


Section 4.1            Deferral
Eligibility.  Each
Participant may elect to defer to his Nonqualified Deferred Compensation
Account for any Plan Year an amount that is any whole number percentage (not
greater than 75% of his base compensation or 75% of his incentive compensation)
of his Compensation.  Non-Employee
Directors may defer up to 100% of their compensation.


 


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


 


Section 4.2            Discontinuance of Deferral.  A Participant may elect, upon 30 days prior
written notice, to discontinue deferral of his Compensation for the first Plan
Year that commences after receipt of such notice.


 


7

















 


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


 


(a)           a date certain; or


 


(b)           the date of the Participant’s
Separation from Service with the Company.


 


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


 


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


 


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


 


ARTICLE
V


COMPANY
CONTRIBUTIONS


 


Section 5.1            Company
Contributions.  The Company, in
its sole discretion, may make contributions to the Plan on behalf of each
Participant.


 


Section 5.2            Deferral
Period.  The Participant’s Company
Contribution Account shall be paid to the Participant in accordance with the
election made by the Participant pursuant to Section 8.1.


 


ARTICLE
VI


INVESTMENT
OPTIONS;


VALUATION
OF NONQUALIFIED ACCOUNT


 


Section 6.1            Investment
Credits and Debits.


 


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


 


(b)           Any Company Contributions shall be
credited to the Participant’s Company Contribution Account on the next
following Accounting Date after the Company Contribution is deposited in the
Trust Fund and shall be allocated among the Investment Options as directed by
the Company, or the Participant if so authorized, from time to time.


 


8

















 


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


 


ARTICLE
VII


VESTING
OF ACCOUNTS


 


Section 7.1            Vesting of Nonqualified Deferred
Compensation Account.  Each
Participant’s interest in his Nonqualified Deferred Compensation Account shall
be vested at all times.


 


Section 7.2            Vesting of
Company Contribution Account.  Each
Participant’s interest in his Company Contribution Account shall be vested at
all times.


 


ARTICLE
VIII


BENEFITS


 


Section 8.1            Manner and
Time of Distributions.  A Participant
may elect to receive the amounts credited to his Nonqualified Deferred
Compensation Account and to his Company Contribution Account either in a lump
sum or in five or ten-year annual installment payments, in any case subject to
applicable tax withholding.  Such lump
sum payment shall be made, and the installment payments shall begin, not later
than the date, which is fifteen (15) days after the first day of the Plan Year
following the Deferral Period.  In the
event of five- or ten-year installment payments, each annual payment to be made
will be equal to an amount determined by dividing the total number of payments
remaining to be made into the total amount of funds then available in such
Participant’s Nonqualified Deferred Compensation Account and Company
Contribution Account.


 


Section 8.2            Distribution
in Common Stock of Cornell.  A Participant
or his Beneficiary shall receive that portion of his Nonqualified Deferred
Compensation Account and his Company Contribution Account which is credited
with Cornell common stock in the form of common stock of Cornell, unless such
Participant (or Beneficiary) has filed a timely election with the Administrator
(which the Administrator in its sole discretion has accepted) to receive the
cash proceeds of such Investment Option.


 


Section 8.3            Effect of
Failure to Locate Distributee.  If the person
to whom benefits are payable hereunder has not been ascertained or located
within one (1) year after expiration of the Deferral Period, the amount of
his Nonqualified Deferred Compensation Account and his Company Contribution Account
shall be forfeited and such amounts shall be removed from such account and
returned to the Company.


 


Section 8.4            Distribution
Withholding.  Any tax
withholding required with respect to any Plan distributions may be made (i) from
the mutual fund portion of the Participant’s


 


9
















 


Investment Options, (ii) by
the Participant remitting directly to the Company the appropriate amount of
withholding, (iii) from the portion of the Participant’s Investment
Options credited with Cornell common stock (subject to applicable securities
law requirements), or (iv) through any combination of the foregoing, as
determined by the Administrator.


 


ARTICLE
IX


BENEFITS
UPON DEATH


 


Section 9.1            Distribution
on Death.


 


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


 


(b)           Upon the death
of a Participant or former Participant, subsequent to his Separation from
Service, the amount credited to his Nonqualified Deferred Compensation Account
and his Company Contribution Account as of the Accounting Date prior to his
date of death, less any amounts required to be withheld by law, shall be paid
in a lump sum to the former Participant’s Beneficiaries.


 


(c)           Such lump sum
payment shall be made not later than thirty (30) calendar days after the end of
the calendar quarter in which the Participant’s or former Participant’s death
occurs.


 


ARTICLE
X


OTHER
DISTRIBUTIONS FROM NONQUALIFIED


DEFERRED
COMPENSATION ACCOUNT


 


Section 10.1         Unforeseeable Emergency Distributions from Nonqualified Deferred Compensation
Account.  A Participant may apply for
a distribution from his Nonqualified Deferred Compensation Account and his
Company Contribution Account on account of an Unforeseeable Emergency, and
subject to applicable tax withholding, and subject to the following
requirements:


 


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


 


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


 


(c)           The Participant
has not received an Unforeseeable Emergency distribution within the 12-month
period preceding the distribution.


 


(d)           The
Administrator shall have the authority to require a Participant to provide such
proof as it deems necessary to establish the existence and significant nature
of the Participant’s


 


10

















 


hardship, including, but not
limited to the lack of existing insurance or other assets that may be
liquidated without incurring additional financial hardship, or the absence of
an opportunity to terminate other deferral elections.


 


Section 10.2         Distribution Upon Disability.  Upon a
Participant’s Separation from Service due to a Disability, he shall receive all
amounts from his Nonqualified Deferred Compensation Account and his Company
Contribution 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’s
Separation from Service due to a Disability, or, if later, as soon as
administratively practicable following such date.


 


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


 


Section 10.4         Change in Control.  In the event of
a Change in Control, the amounts credited to a Participant’s Nonqualified
Deferred Compensation Account and to his Company Contribution Account shall be
paid to him in a lump sum.  In the event
less than all of the total amount credited to a former Participant’s
Nonqualified Deferred Compensation Account and to his Company Contribution
Account has not been distributed as of a Change in Control, the balance shall
be paid to the former Participant or his Beneficiary 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 date of a Change in Control.


 


Section 10.5         Distributions in the Event of Taxation. 
Should any amounts contained in a Participant’s Nonqualified Deferred
Compensation Account or his Company Contribution Account become subject to
taxation by the Internal Revenue Service of the U.S. Government prior to the
actual receipt thereof by the Participant, or his Beneficiary, then such
amounts as necessary to pay any applicable taxes, including any taxes on such
amounts, shall become immediately payable thereto in a lump sum
distribution.  Such distribution shall be
subject to all withholding required by law.


 


ARTICLE
XI


ADMINISTRATIVE
PROVISIONS


 


Section 11.1         Administrator’s Duties and
Powers.


 


(a)           The Administrator
shall conduct the general administration of the Plan in accordance with the
Plan and shall have all the necessary power and authority to carry out that
function.  Among its necessary powers and
duties, are the following:


 


(i)            to delegate all
or part of its function as Administrator to others and revoke any such
delegation;


 


(ii)           to determine
questions of eligibility of Participants and their entitlement to benefits;


 


11

















 


(iii)          to select and
engage attorneys, accountants, actuaries, trustees, appraisers, brokers,
consultants, administrators, physicians, or other persons to render service or
advice with regard to any responsibility the Administrator or the Company has
under the Plan, or otherwise, to designate such persons to carry out
responsibilities, and (with the Company and its officers, trustees, and
Employees) to rely upon the advice, opinions or valuations of any such persons,
to the extent permitted by law, being fully protected in acting or relying
thereon in good faith;


 


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


 


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


 


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


 


Section 11.2         Limitation Upon Powers.  The Plan shall
be uniformly and consistently administered, interpreted, and applied with
regard to all Participants in similar circumstances.


 


Section 11.3         Indemnification by the Company:
Liability Insurance.


 


(a)           The Company
shall pay or reimburse the Administrator for all expenses incurred thereby and
shall indemnify and hold it harmless from, all claims, liabilities, and costs
(including reasonable attorneys’ fees) arising out of the good faith
performance of its Plan functions.  This
indemnification shall survive the termination of the Plan and the distribution
of all Trust Funds.


 


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


 


Section 11.4         Recordkeeping.


 


(a)           The
Administrator shall maintain, or cause to be maintained, suitable records as
follows:


 


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


 


(ii)           records of its
deliberations and decisions.


 


(b)           The
Administrator may appoint a secretary to keep records of proceedings, to
transmit its decisions, instructions, consents, or directions to any interested
party, 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 to
perform other ministerial acts.


 


12

















 


(c)           The
Administrator shall not be required to maintain any records or accounts, which
duplicate any records or accounts maintained by the Company.


 


Section 11.5         Statement to Participants.  Within sixty
day 60) days after the last day of each Plan Quarter, the Administrator shall
furnish (or cause to be furnished) to each Participant a statement setting
forth the value of his Nonqualified Deferred Compensation Account and Company
Contribution Account and such other information as the Administrator shall deem
appropriate.


 


Section 11.6         Inspection of Records.  Copies of the
Plan and records of a Participant’s Nonqualified Deferred Compensation Account
and Company Contribution Account shall be open to inspection by him or his duly
authorized representatives at the office of the Company at any reasonable
business hour.


 


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


 


Section 11.8         Accounting for Distributions.  Records for
each Nonqualified Deferred Compensation Account and Company Contribution
Account shall be maintained by the Trustee.


 


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


 


ARTICLE
XII


MISCELLANEOUS
PROVISIONS


 


Section 12.1         Termination or Amendment of the
Plan.


 


(a)           Cornell shall
have the right at any time to declare the Plan terminated completely as to the
Company or as to any division, facility, or other operational unit thereof, and
may amend same from time to time; provided that no termination or amendment
shall reduce or terminate any benefit to or in respect of any Participant;
further provided, that no amendment of the Plan shall apply to amounts deferred
and vested on or before December 31, 2004, unless the instrument
explicitly states that the amendment shall apply to such amounts.


 


(b)           In the event of
any such termination, the Administrator shall continue to maintain the
Participant’s Nonqualified Deferred Compensation Account and Company
Contribution Account and payment from, and vesting under, such Nonqualified
Deferred Compensation Account and Company Contribution Account shall be made in
accordance with the Plan.


 


(c)           Notwithstanding
the foregoing, the Board of Directors may terminate the Plan as permitted under
Code Section 409A, and distribute the value of the Participants’ Accounts
to 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.  Nothing
contained in the Plan shall give any Participant the right to be retained in
the 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 without
cause.  Inclusion under the Plan will not
give any Participant any right or claim to any benefit hereunder except to the
extent such right has specifically become fixed under the terms of this Plan.


 


Section 12.3         Consolidation or Merger: Adoption
of Plan by Other Companies.


 


(a)           There shall be
no merger, consolidation with, transfer, or sale of the assets or liabilities
of 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 corresponding
Nonqualified Deferred Compensation Account and Company Contribution Account had
the Plan been terminated immediately before such merger, consolidation,
transfer, or sale.


 


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


 


Section 12.4         Payment on Behalf of Minor, etc.  In the 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 physical or
mental condition to be unable to give a valid receipt therefor, the
Administrator may direct that such payment be made to any person found by the
Administrator in its sole judgment, to have assumed the care of such minor or
other person.  Any payment made pursuant
to 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 shall
be construed, administered, and governed in all respects under the laws of the
State of Texas, and venue for any dispute shall be Harris County, Texas.


 


Section 12.6         The masculine
pronoun shall include the feminine pronoun, and the singular the plural where
the context so indicates.


 


Section 12.7         Titles.  Titles are
provided herein for convenience only and are not to serve as a basis for
interpretation or construction of the Plan.


 


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


 


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


 


Section 12.10       Plan Payment/Release.  All payments
made pursuant to this Plan shall constitute a full release and discharge of the
Company, the Administrator, and their officers, directors, and employees under
this Plan.


 


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Section 12.11       Source of Payments.  All payments
made 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 nonqualified
deferred compensation arrangement and is not intended to meet the requirements
of Code Section 401(a).  The Plan is
intended to meet the requirements of Code Section 409A and may be
administered in a manner that is intended to meet those requirements and shall
be 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 be
deferred, accrued, vested or paid in a manner that will meet the requirements
of Code Section 409A, including regulations or other guidance issued with
respect thereto, such that the deferral, accrual, vesting or payment shall not
be subject to the excise tax applicable under Code Section 409A.  Any provision of the Plan that would cause
the deferral, accrual, vesting or payment of an amount under the Plan to fail
to satisfy Code Section 409A shall be amended (in a manner that as closely
as practicable achieves the original intent of the Plan) to comply with Code Section 409A
on a timely basis, which may be made on a retroactive basis, in accordance with
regulations and other guidance issued under Code Section 409A.  In the event additional regulations or other
guidance is issued under Code Section 409A or a court of competent
jurisdiction provides additional authority concerning the application of Code Section 409A
with respect to the distributions under the Plan, then the provisions of the
Plan regarding distributions shall be automatically amended to permit such
distributions to be made at the earliest time permitted under such additional
regulations, guidance or authority that is practicable and achieves the intent
of the Plan prior to its amendment to comply with Code Section 409A.


 


Section 12.13       Amendment
and Restatement of the Plan.  The amendment and restatement of the Plan
effective as of January 1, 2005, shall apply only to amounts deferred and
vested on or after January 1, 2005. 
The provisions of the Plan prior to this amendment and restatement shall
apply to any amounts that were earned and vested under the Plan on or before December 31,
2004.  The amendment and restatement of
the Plan is not intended to be a material modification of the Plan with respect
to amounts deferred and vested on or before December 31, 2004, and, any
provision of the Plan that is considered to be a material modification of the
Plan shall be retroactively amended to the extent required to prevent such
provision from being considered a material modification of the Plan with
respect to such amounts.


 


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IN
WITNESS WHEREOF, Cornell has caused this Plan to be executed on this 13th day
of September 2007.


 


 


	
   

  	
  By:

  	
  /s/
  Patrick N. Perrin

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Patrick
  N. Perrin

  
	
   

  	
  Title:

  	
  Sr.
  V.P. & Chief Administrator Officer

  



 


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