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Exhibit 10.3  

 
 

NEGATIVE PLEDGE AGREEMENT    
    

        This Negative Pledge Agreement (as amended or replaced, this "Agreement") is executed as of June 24, 2004,
between CORNELL COMPANIES, INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the "Borrower") each
of the Subsidiaries of the Borrower identified under the caption "PLEDGOR" on the signature pages hereto (individually and together with the Borrower, the
"Pledgor") for the benefit of JPMORGAN CHASE BANK, as Administrative Agent for a syndicate of lenders ("Administrative
Agent"). 

        WHEREAS,
Administrative Agent, Borrower, and the lenders party thereto entered into a Credit Agreement dated effective as of June 24, 2004 (as amended, modified, supplemented or
restated, the "Credit Agreement"), whereby Administrative Agent and the lenders party thereto agreed to lend and Pledgor agreed to borrow up to an
aggregate amount of $60,000,000.00; 

        WHEREAS,
pursuant to the Credit Agreement, Borrower executed and delivered to Administrative Agent those certain promissory notes (as renewed, extended and modified, the
"Note") dated June 24, 2004 in the aggregate stated principal amount of $60,000,000.00, payable to the order of Administrative Agent and the
lenders in accordance with the terms thereof; 

        WHEREAS,
the execution and delivery of this Agreement is a condition to the execution of the Credit Agreement by Administrative Agent and is an integral part of the transactions
contemplated by the Credit Agreement and a condition precedent to the obligations of the Administrative Agent set forth in the Credit Agreement. 

        NOW
THEREFORE in consideration of the premises and other valuable consideration, the receipt and adequacy of which are acknowledged, each of the Pledgor covenants and agrees as follows: 

        1.    Certain Definitions.    Unless otherwise defined in this Agreement, each capitalized term used but not defined
in this Agreement will have the meaning given that term in the Credit Agreement. 

        2.    Property.    Pledgor hereby agrees that, for so long as the Debt remains outstanding, it will not, without first
obtaining the prior written consent of Administrative Agent, which at the sole discretion of Administrative Agent may be recorded in the appropriate jurisdiction, create or permit any lien,
encumbrance, charge, or security interest of any kind to exist on any of the property now or in the future owned by Pledgor, whether real or person, tangible or intangible (the
"Property"), nor will Pledgor transfer, sell, assign, or in any manner dispose of all or any part of any of the Property or any interest therein, except
in accordance with the terms of the Credit Agreement. 

        3.    Recording.    Administrative Agent is hereby authorized and permitted to cause this Agreement to be recorded at
such time and at such places as Administrative Agent, at its option, may elect. 

        4.    Representations and Warranties of the Companies.    Pledgor represents and warrants to the Administrative Agent
as follows: 

        (i)    Pledgor
owns the Property and there are no existing liens or encumbrances upon or affecting the Property, except for Permitted Encumbrances and other Liens expressly
permitted under the Credit Agreement. 

        (ii)   That
this Agreement constitutes the legal, valid, and binding obligation of Pledgor enforceable in accordance with its terms. The execution and delivery of this
Agreement and the compliance with the provisions hereof will not conflict with or constitute a breach of, or default under, any of the provisions of any other agreement to which such Pledgor is a
party. 

        5.    Default.    Any failure by Pledgor to comply with the terms of this Agreement shall constitute a Default, and
the Pledgor agrees that in such event Administrative Agent shall have the right in addition to such other remedies as may be available to it, to file such deeds of trust, mortgages, financial
statements, or security agreements securing the Debt as against any of the Property, and to injunctive 

relief
enjoining such breach of this Agreement and the Pledgor agrees that it shall not urge that such remedy is not appropriate under the circumstances, it being expressly acknowledged by the Pledgor
that such action shall cause the Administrative Agent irreparable damage for which legal remedies are inadequate to protect the Administrative Agent. 

        6.    Termination.    This Agreement shall remain in full force and effect until the Debt shall have been paid in
full. 

        7.    Governing Law.    THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, AND AS APPLICABLE, THE LAWS OF THE JURISDICTION IN WHICH THE PROPERTY IS LOCATED AND THE LAWS OF THE UNITED STATES OF AMERICA. 

        8.    Counterpart.    The Agreement may be executed in any number of counterparts, each of which when executed and
delivered shall be deemed an original, but all of which constitute one instrument. In making proof of this Agreement, it shall not be necessary to produce or account for more than one counterpart
thereof signed by each of the parties hereto. 

[Remainder of page intentionally left blank]

        Executed
as of the date first written above. 

	

 	
 	
PLEDGOR:
	

 	
 	
CORNELL COMPANIES, INC., a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL CORRECTIONS MANAGEMENT, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL CORRECTIONS OF TEXAS, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL CORRECTIONS OF RHODE ISLAND, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL CORRECTIONS OF CALIFORNIA, INC.,

a California corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CCG I CORPORATION, a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	 	 	 	 

	 	 	CORNELL ABRAXAS GROUP, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL CORRECTIONS OF ALASKA, INC.,

an Alaska corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL INTERVENTIONS, INC.,

an Illinois corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
WBP LEASING, INC., a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL INTERNATIONAL, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer

	

 	
 	
CORNELL COMPANIES MANAGEMENT SERVICES

LIMITED PARTNERSHIP, a Delaware limited partnership
	

 	
 	

By:	
 	
Cornell Companies Management LP, a Delaware

limited partnership, its general partner
	

 	
 	

 	
 	

By:	
 	
Cornell Companies Administration, LLC,

a Delaware limited liability company, its general partner

	

 	
 	

 	
 	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix,

Manager
	

 	
 	
CORNELL COMPANIES MANAGEMENT LP,

a Delaware limited partnership
	

 	
 	

By:	
 	
Cornell Companies Administration, LLC, a Delaware

limited liability company, its general partner
	

 	
 	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      
 John L. Hendrix,

Manager
	

 	
 	
CORNELL COMPANIES MANAGEMENT HOLDINGS,

LLC, a Delaware limited liability company
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Manager

	

 	
 	
CORNELL COMPANIES ADMINISTRATION, LLC,

a Delaware limited liability company
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Manager
	

 	
 	
ADMINISTRATIVE AGENT:
	

 	
 	
JPMORGAN CHASE BANK
	

 	
 	

By:	

/s/  SUSAN GARNER      
 Susan Garner, Vice President
	

 	
 	

 	

 

	STATE OF TEXAS	 	§
	 	 	§
	COUNTY OF HARRIS	 	§

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of Cornell Companies, Inc., a Delaware corporation, on
behalf of said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS
	

STATE OF TEXAS	
 	

§	
 	

 
	 	 	§	 	 
	COUNTY OF HARRIS	 	§	 	 
	

 	
 	

 	
 	

 

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of Cornell Corrections Management, Inc., a Delaware
corporation, on behalf of said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS

	STATE OF TEXAS	 	§
	 	 	§
	COUNTY OF HARRIS	 	§

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of Cornell Corrections of Texas, Inc., a Delaware
corporation, on behalf of said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS
	

STATE OF TEXAS	
 	

§	
 	

 
	 	 	§	 	 
	COUNTY OF HARRIS	 	§	 	 
	

 	
 	

 	
 	

 

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of Cornell Corrections of Rhode Island, Inc., a
Delaware corporation, on behalf of said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS

	STATE OF TEXAS	 	§
	 	 	§
	COUNTY OF HARRIS	 	§

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of Cornell Corrections of California, Inc., a
California corporation, on behalf of said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS
	

STATE OF TEXAS	
 	

§	
 	

 
	 	 	§	 	 
	COUNTY OF HARRIS	 	§	 	 
	

 	
 	

 	
 	

 

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of CCG I Corporation, a Delaware corporation, on behalf of
said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS

	STATE OF TEXAS	 	§
	 	 	§
	COUNTY OF HARRIS	 	§

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of Cornell Abraxas Group, Inc., a Delaware
corporation, on behalf of said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS
	

STATE OF TEXAS	
 	

§	
 	

 
	 	 	§	 	 
	COUNTY OF HARRIS	 	§	 	 
	

 	
 	

 	
 	

 

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of Cornell Corrections of Alaska, Inc., an Alaska
corporation, on behalf of said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS

	STATE OF TEXAS	 	§
	 	 	§
	COUNTY OF HARRIS	 	§

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of Cornell Interventions, Inc., an Illinois
corporation, on behalf of said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS
	

STATE OF TEXAS	
 	

§	
 	

 
	 	 	§	 	 
	COUNTY OF HARRIS	 	§	 	 
	

 	
 	

 	
 	

 

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of WBP Leasing, Inc., a Delaware corporation, on
behalf of said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS

	STATE OF TEXAS	 	§
	 	 	§
	COUNTY OF HARRIS	 	§

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Chief Financial Officer of Cornell International, Inc., a Delaware
corporation, on behalf of said corporation and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS
	

STATE OF TEXAS	
 	

§	
 	

 
	 	 	§	 	 
	COUNTY OF HARRIS	 	§	 	 
	

 	
 	

 	
 	

 

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Manager of Cornell Companies Administration, LLC, a Delaware limited liability
company, general partner of Cornell Companies Management LP, a Delaware limited partnership, general partner of Cornell Companies Management Services Limited Partnership, a Delaware limited
partnership, on behalf of said limited liability company and limited partnerships and in the capacities therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS

	STATE OF TEXAS	 	§
	 	 	§
	COUNTY OF HARRIS	 	§

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Manager of Cornell Companies Administration, LLC, a Delaware limited liability
company, general partner of Cornell Companies Management LP, a Delaware limited partnership, on behalf of said limited liability company and limited partnership and in the capacities therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS
	

STATE OF TEXAS	
 	

§	
 	

 
	 	 	§	 	 
	COUNTY OF HARRIS	 	§	 	 
	

 	
 	

 	
 	

 

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Manager of Cornell Companies Management Holdings, LLC, a Delaware limited liability
company, on behalf of said limited liability company and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS

	STATE OF TEXAS	 	§
	 	 	§
	COUNTY OF HARRIS	 	§

        This
instrument was acknowledged before me on this 24th day of June 2004, by John L. Hendrix, Manager of Cornell Companies Administration, LLC, a Delaware limited liability
company, on behalf of said limited liability company and in the capacity therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS
	

STATE OF TEXAS	
 	

§	
 	

 
	 	 	§	 	 
	COUNTY OF HARRIS	 	§	 	 
	

 	
 	

 	
 	

 

        This
instrument was acknowledged before me on this 24th day of June 2004, by Susan Garner, Vice President of JPMorgan Chase Bank, on behalf of said association and in the capacity
therein stated. 

	

[SEAL]	
 	

 	
 	

/s/  FERNANDA KANNADY      
 NOTARY PUBLIC IN AND FOR THE

STATE OF TEXAS

After
recording please return to: 

Carol
M. Burke

Gardere Wynne Sewell LLP

1000 Louisiana, Suite 3400

Houston, TX 77002 

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NEGATIVE PLEDGE AGREEMENTExhibit 10.4  

GUARANTEE

(this "Guarantee") 

June 24,
2004 

JPMORGAN
CHASE BANK ("Chase"), as Administrative Agent for

the Lenders described below (the "Administrative Agent")

707 Travis, Floor 9

Houston, Texas 77002 

	Re:
	Credit
Agreement dated effective as of June 24, 2004 (as amended, modified, restated, or supplemented, the "Agreement") by and
among CORNELL COMPANIES, INC. as the Borrower (the "Borrower"), the several lenders party thereto from time to time (the
"Lenders"), and the Administrative Agent. 

Ladies
and Gentlemen: 

        1.     Guarantee. For value received, and in consideration of Borrower entering into the Agreement, the undersigned
(collectively, the "Guarantor"), do hereby irrevocably, absolutely, and unconditionally guarantee (a) payment, when due, of any and all
indebtedness and other amounts of every kind, howsoever created, arising, or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing or owing to the Lenders or the
Administrative Agent, by Borrower under the Notes as defined in the Agreement, (including, without limitation, amounts that would become due but for operation of any applicable provision of Title 11
of the United States Code (including, without limitation, 11 U.S.C. §§ 502 and 506)), together with all pre- and post-maturity interest thereon
(including, without limitation, all post-petition interest if Borrower voluntarily or involuntarily files for bankruptcy protection) (all such obligations being hereinafter collectively
referred to as the "Liabilities") and (b) the performance by Borrower of its obligations under the Agreement and the Security Documents (the
"Loan Papers") pursuant to the terms thereof (the "Obligations"). The Guarantor has a substantial,
direct or indirect, financial interest in the benefits and advantages which will result from the Agreement. The Guarantor hereby agrees that, upon any Default, the Guarantor will forthwith pay the
Liabilities as limited by this paragraph immediately upon written demand or perform the Obligations. 

        2.     Guarantee Continuing, Absolute, Unlimited. This Guarantee is a continuing, absolute, and unlimited guarantee of payment
and the Guarantor is a primary obligor and not a surety. The Liabilities and Obligations shall be conclusively presumed to have been created in reliance on this Guarantee. The Administrative Agent
shall not be required to proceed first against Borrower or any other person, firm or corporation or against any property securing any of the Liabilities or Obligations before resorting to the
Guarantor for payment or performance. To the extent permitted by applicable law, this Guarantee shall be construed as a guarantee of payment without regard to the enforceability of any of the
Liabilities or Obligations or the rejection of the Agreement in bankruptcy, and notwithstanding any claim, defense (other than payment or performance by Borrower or the Guarantor) or right of setoff
which Borrower or the Guarantor may have against any Lender or the Administrative Agent, including any such claim, defense, or right of setoff based on any present or future law or order of any
government (de jure or de facto), or of any agency thereof or court of law purporting to reduce, amend,
or otherwise affect any of the Liabilities or Obligations of Borrower or any other obligor, or to vary any terms of payment thereof, and without regard to any other circumstances which might otherwise
constitute a legal or equitable discharge of a surety or a guarantor. The Guarantor agrees that this Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time
payment to the Lenders or the Administrative Agent of the Liabilities or any part thereof is rescinded or must otherwise be returned by any Lender or the Administrative 

1

 

Agent
upon the insolvency, bankruptcy, or reorganization of Borrower, or otherwise, as though such payment to such Lender or the Administrative Agent had not been made. To the extent permitted by
applicable law, the Guarantor's obligation to fully pay or perform the Liabilities and any remedy for the enforcement thereof shall not be impaired, modified, released, or limited in any way by any
impairment, modification, release, or limitation of the liability of Borrower or its bankruptcy estate, resulting from the operation of any present or future provision of any debtor relief law or from
the decision of any court interpreting the same. 

        3.     Guarantee Not Affected by Change in Security or Other Actions. The Administrative Agent and the Lenders may, from time to
time, without the consent of or notice to the Guarantor, take any or all of the following actions without impairing or affecting (except insofar as the Liabilities are reduced or modified thereby),
the Guarantor's obligations under this Guarantee or releasing or exonerating the Guarantor from any of its liabilities hereunder: 

        (a)   retain
or obtain a security interest in any property to secure any of the Liabilities or any obligation hereunder; 

        (b)   retain
or obtain the primary or secondary liability of any party or parties, in addition to the Guarantor, with respect to any of the Liabilities; 

        (c)   extend
the time or change the manner, place or terms of payment of, or renew or amend any note or other instrument evidencing the Liabilities or any part thereof, or
amend in any manner any agreement relating thereto, in each case in accordance with the terms of each such agreement; 

        (d)   release
or compromise, in whole or in part, or accept full or partial payment for, any of the Liabilities hereby guaranteed, or any liability of any nature of any other
party or parties with respect to the Liabilities or any security therefore; 

        (e)   enforce
the Administrative Agent's or the Lenders' security interest, if any, in all or any properties securing any of the Liabilities or any obligations hereunder in
order to obtain full or partial payment of the Liabilities then outstanding; or 

        (f)    release
or fail to perfect, protect, or enforce the Administrative Agent's or the Lenders' security interest, if any, in all or any properties securing any of the
Liabilities or any obligation hereunder, or permit any substitution or exchange for any such property. 

        4.     Waivers. The Guarantor hereby expressly waives to the extent permitted by law: 

        (a)   notice
of acceptance of this Guarantee; 

        (b)   notice
of the existence or incurrence of any or all of the Liabilities in accordance with the Loan Papers; 

        (c)   presentment,
demand, notice of dishonor, protest, and all other notices whatsoever (except the written demand referred to in  Section 1 hereinabove); 

        (d)   any
requirement that proceedings first be instituted by the Administrative Agent or any Lender against the Borrower; 

        (e)   all
diligence in collection or protection of or realization upon the Liabilities or any part thereof, or any obligation hereunder, or any collateral for any of the
foregoing; 

        (f)    any
rights or defenses based on the Administrative Agent's or a Lender's election of remedies, including any defense to the Administrative Agent's or Lender's action to
recover any deficiency after a non-judicial sale; and 

2

 

        (g)   the
occurrence of every other condition precedent to which the Guarantor might otherwise be entitled. 

        5.     Definitions. As used in this Guarantee, capitalized terms not otherwise defined herein will have the meanings given them
in the Agreement. 

        6.     Representations, Warranties and Agreements of Guarantor. The Guarantor represents and warrants to the Administrative Agent
and the Lenders that: 

        (a)   Existence, Good Standing, Authority and Compliance. The Guarantor is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated, organized, or otherwise formed. Except where failure will not have a Material Adverse Effect, the Guarantor (a) is duly
qualified to transact business and is in good standing as a foreign corporation or other entity in each jurisdiction where the nature and extent of its business and properties require due
qualification and good standing, (b) possesses all requisite authority, permits and power to conduct its business as is now being, or is contemplated by this Guarantee to be, conducted, and
(c) is in compliance with all applicable laws, except in each case where the failure to so qualify, to possess such authority, permits or power or to comply with such law would not have a
Material Adverse Effect. 

        (b)   Authorization and Contravention. The execution and delivery by the Guarantor of this Guarantee or related document to
which it is a party and the performance by it of its obligations thereunder (a) are within its corporate, organizational or partnership power, (b) have been duly authorized by all
necessary corporate, organizational, or partnership action, (c) require no action by or filing with any tribunal (other than any action or filing that has been taken or made on or before the
date of this Guarantee or which would not cause a material adverse event), (d) do not violate any provision of its charter, bylaws, resolutions, or partnership agreement, (e) do not
violate any provision of law or order of any tribunal applicable to it, other than violations that individually or collectively will not have a Material Adverse Effect, (f) do not violate any
material agreements to which it is a party, other than a violation which would not have a Material Adverse Effect, (g) do not result in the creation or imposition of any Lien (other than the
Lender Liens) on any asset of the Guarantor, (h) are in furtherance of the corporate, organizational, or partnership purposes of the Guarantor and (i) do not require the consent or
approval of the shareholders, members, or partners of the Guarantor. 

        (c)   Binding Effect. Upon execution and delivery by all parties thereto, this Guarantee will constitute a legal and binding
obligation of the Guarantor, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable debtor relief laws and general principles of equity. 

        (d)   Consideration. Guarantor represents and warrants that the value of the consideration received and to be received by it is
reasonably worth at least as much as its liability under this Guarantee, and such liability may reasonably be expected to benefit Guarantor directly or indirectly. NOTWITHSTANDING ANY CONTRARY
PROVISION IN THIS GUARANTEE, GUARANTOR'S MAXIMUM LIABILITY HEREUNDER IS LIMITED, TO THE EXTENT, IF ANY, REQUIRED SO THAT ITS LIABILITY IS NOT SUBJECT TO AVOIDANCE UNDER ANY DEBTOR RELIEF LAW. 

        (e)   Solvency. As of the date of this Guarantee, the Guarantor is, and after giving effect to this Guarantee, will be,
solvent. 

        7.     Events of Default. Events of Default shall be as set forth and defined in the Credit Agreement. 

3

 

        8.     Remedies Upon Default. Without limiting any other rights or remedies of the Administrative Agent or the Lenders provided
for elsewhere in this Guarantee or the Loan Papers, or by any requirement of law, or in equity, or otherwise: 

        (a)   Upon
the occurrence of any Event of Default, the Lenders may without any notice to (except as expressly provided herein or in and during the continuance of any Loan
Paper) or demand upon Guarantor, which are expressly waived by Guarantor (except as to notices expressly provided for herein
or in any Loan Paper), proceed to protect, exercise and enforce the rights and remedies of the Lenders against Guarantor hereunder or under the Loan Papers and such other rights and remedies as are
provided by requirement of Law or equity. 

        (b)   The
rights provided for in this Guarantee and the Loan Papers are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or
in equity, or under any other instrument, document or agreement now existing or hereafter arising. 

        (c)   The
order and manner in which the Lenders' rights and remedies upon the occurrence and during the continuance of a Default are to be exercised shall be determined by the
Administrative Agent or the Lenders, as the case may be, in its sole discretion, and all payments received by the Administrative Agent shall be applied first to the costs and expenses (including
reasonable attorney's fees incurred by the Administrative Agent and Lenders) of the Administrative Agent and Lenders, then to the payment of all accrued and unpaid amounts due under any Loan Papers to
and including the date of such application. To the extent permitted by applicable law, no application of payments will cure any Default, or prevent acceleration, or continued acceleration, of amounts
payable under the Loan Papers, or prevent the exercise, or continued exercise, of rights or remedies of the Administrative Agent and Lenders hereunder or thereunder or under any requirement of Law or
in equity. 

        9.     Payments. Each payment by the Guarantor to the Administrative Agent under this Guarantee shall be made by transferring the
amount thereof in immediately available funds without set-off or counterclaim. 

        10.   Costs, Expenses and Taxes. The Guarantor agrees to pay on demand: (i) all reasonable out of pocket costs and
expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Guarantee and any other documents to be delivered hereunder, including the reasonable fees and
out of pocket expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Guarantee,
and any modification, supplement or waiver of any of the terms of this Guarantee, (ii) all reasonable costs and expenses of the Administrative Agent hereunder, including reasonable legal fees
and expenses of counsel to the Administrative Agent, in connection with a default or the enforcement of this Guarantee and (iii) reasonable costs and expenses incurred in connection with third
party professional services reasonably required by the Administrative Agent pursuant to the Loan Papers such as appraisers, environmental consultants, accountants or similar Persons;  provided that
except during the continuance of any Default hereunder, the Administrative Agent will first obtain the consent of the Guarantor to such
expense, which consent shall not be unreasonably withheld. Without prejudice to the survival of any other obligations of the Guarantor hereunder, the obligations of the Guarantor under this Section
shall survive the termination of this Guarantee. 

        11.   Subrogation. The Guarantor shall not be subrogated to, in whole or in part, and agrees not to exercise any rights of
subrogation with respect to, the rights of the Administrative Agent or any Lender or those of any subsequent assignee or transferee of any of the Liabilities until all the Liabilities to the
Administrative Agent and the Lenders and every such subsequent assignee or transferee shall have been paid in full. The provisions of this  Section 11 shall survive the termination of this
Guarantee and any satisfaction and discharge of Borrower by virtue of any payment, court order,
or law. 

4

 

        12.   No Waiver; Remedies. No failure on the part of the Administrative Agent to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, or any abandonment or discontinuance of any steps to enforce such right, preclude any
other or further exercise thereof or the exercise of any other right. No notice to or demand on the Guarantor in any case shall entitle the Guarantor to any other or further notice or demand in
similar or other circumstances. The remedies herein are cumulative and not exclusive of any other remedies provided by law, at equity or in any other agreement. 

        13.   Survival of Representations and Warranties. All representations, warranties and covenants contained herein or made in
writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee, and the termination of the Loan Papers and will bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed or not. 

        14.   Confidentiality. The Administrative Agent and each Lender agree to keep any information delivered or made available by
the Guarantor to it which is clearly indicated to be confidential information, confidential from anyone other than Persons employed or retained by the Administrative Agent who are or are expected to
become engaged in evaluating, approving, structuring or administering the Loan Papers; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing such information (a) to any Lender, (b) pursuant to subpoena or upon the order of any court or administrative agency, (c) upon the request or
demand of any regulatory agency or authority having jurisdiction over Administrative Agent or any Lender, (d) which has been publicly disclosed, (e) to the extent reasonably required in
connection with any litigation to which the Administrative Agent, any Lender, the Borrower, the Guarantor or their respective Affiliates may be a party, (f) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (g) to any Lender's legal counsel and independent auditors. The Administrative Agent will promptly notify the Guarantor of any information
that it is required or requested to deliver pursuant to clause (b) or (c) of this  Section 14 and, if the Guarantor is a party to any such litigation, clause (e) of this  Section 14. 

        15.   Separability. Should any clause, sentence, paragraph or Section of this Guarantee be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of invalidating or voiding the remainder of this Guarantee, and the parties hereto agree that the part or parts of this Guarantee so held
to be invalid, unenforceable or void will be deemed to have been stricken herefrom and the remainder will have the same force and effectiveness as if such part or parts had never been included herein. 

        16.   Execution in Counterparts. This Guarantee may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 

        17.   Interpretation. 

        (a)   In
this Guarantee, unless a clear contrary intention appears: 

          (i)  the
singular number includes the plural number and vice versa; 

         (ii)  reference
to any gender includes each other gender; 

        (iii)  the
words "herein," "hereof" and "hereunder" and other words of similar import refer to this Guarantee as a whole and not to any particular Article, Section or other
subdivision; 

        (iv)  reference
to any Person includes such Person's successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Guarantee, and
reference to a Person in a particular capacity excludes such Person in any other capacity or 

5

 

individually;  provided that nothing in this clause is intended to authorize any assignment not otherwise permitted by this Guarantee; 

         (v)  except
as expressly provided to the contrary herein, reference to any agreement, document or instrument (including this Guarantee) means such agreement, document or
instrument as amended, supplemented or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof; 

        (vi)  unless
the context indicates otherwise, reference to any Article, Section, Schedule or Exhibit means such Article or Section hereof or such Schedule or Exhibit hereto; 

       (vii)  the
word "including" (and with correlative meaning "include") means including, without limiting the generality of any description preceding such term; 

      (viii)  with
respect to the determination of any period of time, except as expressly provided to the contrary, the word "from" means "from and including" and the word "to"
means "to but excluding"; and 

        (ix)  reference
to any law, rule or regulation means such as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time. 

        (b)   The
Article and Section headings herein are for convenience only and shall not affect the construction hereof. 

        (c)   No
provision of this Guarantee shall be interpreted or construed against any Person solely because that Person or its legal representative drafted such provision. 

        18.   Submission to Jurisdiction. The Guarantor, to the extent permitted by applicable law, hereby agrees as follows: 

        (a)   ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTEE MAY BE BROUGHT IN THE DISTRICT COURTS OF HARRIS COUNTY, TEXAS OR OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF TEXAS AND, BY EXECUTION AND DELIVERY OF THIS GUARANTEE, THE GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION 21, SUCH
SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. 

        (b)   THE
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING
OUT OF OR IN CONNECTION WITH THIS GUARANTEE BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT
TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 

6

 

        19.   Waiver of Jury Trial. THE GUARANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTEE OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH, AND AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 

        20.   Parties. This Guarantee shall inure to the benefit of the Administrative Agent and the Lenders and their respective
successors, assigns or transferees, and shall be binding upon the Guarantor and its successors and assigns. The Guarantor may not assign any of its duties under this Guarantee without the prior
written consent of the Administrative Agent. The Administrative Agent and the Lenders may assign their respective rights and benefits under this Guarantee to any Participant in accordance with the
provisions of Section 9.04 of the Agreement. 

        21.   Notices. All notices, consents, requests, approvals, demands and other communications provided for herein shall be in
writing (including telecopy communications) and mailed, telecopied, sent by overnight courier or delivered: 

	 	 	(a)	 	If to any Guarantor:
	

 	
 	

 	
 	

c/o Cornell Companies, Inc.

1700 West Loop South, Suite 1500

Houston, Texas 77027
	 	 	 	 	Attention:	 	John L. Hendrix,

Executive Vice President and CFO
	 	 	 	 	telephone:	 	(713) 235-9321
	 	 	 	 	telecopy:	 	(713) 623-2853 and (713) 623-0090 (send copy to both)
	

 	
 	

(b)	
 	

If to the Administrative Agent:
	

 	
 	

 	
 	

JPMorgan Chase Bank

707 Travis, Floor 9

Houston, Texas 77002
	 	 	 	 	Attention:	 	Susan Garner, Vice President
	 	 	 	 	telephone:	 	(713) 216-3250
	 	 	 	 	telecopy:	 	(713) 216-6262
	

 	
 	

 	
 	

with a copy to
	

 	
 	

 	
 	

Gardere Wynne Sewell LLP

1000 Louisiana, Suite 3400

Houston, Texas 77002
	 	 	 	 	Attention:	 	Carol M. Burke
	 	 	 	 	telephone	 	(713) 276-5561
	 	 	 	 	telecopy:	 	(713) 276-6561

        (c)   or,
in the case of any party hereto, such other address or telecopy number as such party may hereafter specify for such purpose by notice to the other parties given in
accordance with the provisions of this Section 21. 

        Other
than the service of process set forth in Section 18(a) above, all communications shall be effective three (3) Business
Days after the date when mailed by certified mail, return receipt requested postage prepaid to any party at its address specified above, or upon receipt if telecopied to any party to 

7

 

the
telecopy number set forth above, or upon receipt if delivered personally to any party at its address specified above. 

        22.   Term. This Guarantee is not limited to any particular period of time, but shall continue in full force and effect until
all of the Liabilities have been fully and finally paid or have been otherwise discharged by the Administrative Agent and the Lenders, and the Guarantor shall not be released from any obligation or
liability hereunder until such full payment or discharge shall have occurred. 

        23.   Governing Law. This Guarantee and all other documents executed in connection herewith shall be deemed to be contracts and
agreements executed by the Guarantor and Administrative Agent under the laws of the State of Texas and of the United States of America and for all purposes shall be construed in accordance with, and
governed by, the laws of said state and of the United States of America. 

        24.   Indemnity. 

        (a)   The
Borrower shall indemnify the Administrative Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being
called an "Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Guarantee, the Agreement, or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder
or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or
any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory
and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses [are determined by a court of competent jurisdiction by final and nonappealable judgment to have] resulted
from the gross negligence or willful misconduct of such Indemnitee. 

        (b)   Without
limiting any provision of this Guarantee, it is the express intention of the parties hereto that each Person to be indemnified hereunder or thereunder shall be
indemnified and held harmless against any and all losses, liabilities, claims or damages: (i) arising out of or resulting from the ordinary sole or contributory negligence of such Person or
(ii) imposed upon said party under any theory or strict liability. Without prejudice to the survival of any other obligations of the Guarantor hereunder and under the Loan Papers, the
obligations of the Guarantor under this Section shall survive the termination of this Guarantee and the Loan Papers and the payment of the Liabilities. 

        25.   New Guarantee. In the event that (i) any Loan Paper is rejected by a trustee or
debtor-in-possession in any bankruptcy or insolvency proceeding involving the Borrower or (ii) any Loan Paper or this Guarantee is terminated as a result of any
bankruptcy or insolvency proceeding involving the Borrower and, if within sixty (60) days after such rejection or termination, the Administrative Agent or its designee shall so request and
shall certify in writing to the Guarantor that it intends to perform the obligations of the Borrower as and to the extent required under such Loan Paper or this Guarantee, as applicable, the Guarantor
will, unless prohibited by bankruptcy or other applicable law, execute and deliver to the Administrative Agent or such designee, a new Guarantee that shall contain the same conditions, agreements,
terms, provisions and limitations as such original 

8

 

Guarantee
(except for any requirements which have been fulfilled by the Borrower and the Guarantor prior to such rejection or termination). 

[Remainder of page intentionally left blank] 

9

	 	 	Sincerely yours,
	

 	
 	
GUARANTOR:
	

 	
 	
CORNELL CORRECTIONS MANAGEMENT, INC., a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL CORRECTIONS OF TEXAS, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL CORRECTIONS OF RHODE ISLAND, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL CORRECTIONS OF CALIFORNIA, INC.,

a California corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CCG I CORPORATION, a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL ABRAXAS GROUP, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL CORRECTIONS OF ALASKA, INC.,

an Alaska corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	 	 	 	 

	

 	
 	
CORNELL INTERVENTIONS, INC.,

an Illinois corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
WBP LEASING, INC., a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer
	

 	
 	
CORNELL INTERNATIONAL, INC.,

a Delaware corporation
	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Chief Financial Officer

	

 	
 	
CORNELL COMPANIES MANAGEMENT SERVICES

LIMITED PARTNERSHIP, a Delaware limited partnership
	

 	
 	

By:	
 	
Cornell Companies Management LP, a Delaware

limited partnership, its general partner
	

 	
 	

 	
 	

By:	
 	
Cornell Companies Administration, LLC,

a Delaware limited liability company, its general partner

	

 	
 	

 	
 	

 	
 	

By:	

/s/  JOHN L. HENDRIX      
 John L. Hendrix,

Manager
	

 	
 	
CORNELL COMPANIES MANAGEMENT LP,

a Delaware limited partnership
	

 	
 	

By:	
 	
Cornell Companies Administration, LLC, a Delaware

limited liability company, its general partner
	

 	
 	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      
 John L. Hendrix,

Manager
	

 	
 	
CORNELL COMPANIES MANAGEMENT HOLDINGS,

LLC, a Delaware limited liability company
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Manager
	 	 	 	 	 	 	 	 

	

 	
 	
CORNELL COMPANIES ADMINISTRATION, LLC,

a Delaware limited liability company
	

 	
 	

By:	
 	

/s/  JOHN L. HENDRIX      
 John L. Hendrix, Manager

        ACCEPTED
AND AGREED as of the date first above written: 

	 	 	JPMORGAN CHASE BANK, as Administrative Agent
	

 	
 	

By:	

/s/  SUSAN GARNER      
 Susan Garner, Vice President

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