Document:

EXHIBIT 4.3

                           AMENDED AND RESTATED BYLAWS

                                       OF

                           CORNELL COMPANIES, INC.

                          ADOPTED SEPTEMBER 28, 2000
<PAGE>
                         AMENDED AND RESTATED BYLAWS OF

                             CORNELL COMPANIES, INC.

                                Table of Contents

ARTICLE I OFFICES............................................................1
      1.1   REGISTERED OFFICE................................................1
      1.2   OTHER OFFICES....................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS..........................................1
      2.1   PLACE OF MEETINGS................................................1
      2.2   ANNUAL MEETINGS..................................................1
      2.3   SPECIAL MEETINGS.................................................1
      2.4   NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS...................2
      2.5   REGISTERED HOLDERS OF SHARES; CLOSING OF SHARE
            TRANSFER RECORDS; AND RECORD DATE................................3
      2.6   QUORUM...........................................................4
      2.7   VOTING BY STOCKHOLDERS...........................................4
      2.8   PROXIES..........................................................5
      2.9   NO SHAREHOLDER ACTION WITHOUT MEETING............................5
ARTICLE III DIRECTORS........................................................5
      3.1   DUTIES AND POWERS................................................5
      3.2   NUMBER AND ELECTION OF DIRECTORS.................................6
      3.3   VACANCIES........................................................6
      3.4   RESIGNATIONS.....................................................6
      3.5   CHAIRMAN.........................................................6
      3.6   MEETINGS.........................................................6
      3.7   QUORUM...........................................................6
      3.8   ACTIONS WITHOUT A MEETING........................................6
      3.9   TELEPHONIC MEETINGS..............................................7
      3.10  COMMITTEES.......................................................7
      3.11  REIMBURSEMENT OF EXPENSES........................................7
      3.12  PROTECTION FOR RELIANCE..........................................7
      3.13  CONSIDERATION OF SOCIAL, ECONOMIC AND OTHER FACTORS
            IN EVALUATING A BID..............................................7
ARTICLE IV OFFICERS..........................................................8
      4.1   GENERAL..........................................................8
      4.2   ELECTION.........................................................8
      4.3   DUTIES...........................................................8
      4.4   CHIEF EXECUTIVE OFFICER..........................................8
      4.5   PRESIDENT........................................................8
      4.6   CHIEF FINANCIAL OFFICER..........................................9
      4.7   CHIEF OPERATING OFFICER..........................................9
      4.8   VICE PRESIDENTS..................................................9
      4.9   SECRETARY AND ASSISTANT SECRETARIES..............................9
      4.10  TREASURER AND ASSISTANT TREASURERS..............................10

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      4.11  REMOVAL.........................................................10
      4.12  VOTING SECURITIES OWNED BY THE CORPORATION......................10
ARTICLE V STOCK.............................................................10
      5.1   FORM OF CERTIFICATES............................................10
      5.2   SIGNATURES......................................................10
      5.3   LOST CERTIFICATES...............................................11
      5.4   TRANSFERS.......................................................11
      5.5   BENEFICIAL OWNERSHIP............................................11
      5.6   DIVIDENDS.......................................................11
ARTICLE VI INDEMNIFICATION..................................................11
      6.1   GENERAL.........................................................11
      6.2   EXPENSES........................................................12
      6.3   ADVANCES........................................................12
      6.4   REQUEST FOR INDEMNIFICATION.....................................12
      6.5   NONEXCLUSIVITY OF RIGHTS........................................12
      6.6   INSURANCE AND SUBROGATION.......................................13
      6.7   SEVERABILITY....................................................13
      6.8   CERTAIN PERSONS NOT ENTITLED TO INDEMNIFICATION.................13
      6.9   DEFINITIONS.....................................................13
ARTICLE VII NOTICES.........................................................14
      7.1   NOTICES.........................................................14
      7.2   WAIVER OF NOTICE................................................14
ARTICLE VIII MISCELLANEOUS..................................................14
      8.1   FISCAL YEAR.....................................................14
      8.2   AMENDMENTS......................................................14

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                         AMENDED AND RESTATED BYLAWS OF

                             CORNELL COMPANIES, INC.

                                    ARTICLE I

                                     OFFICES

      1.1 REGISTERED OFFICE. The registered office of Cornell Companies, Inc., a
Delaware corporation (the "Corporation"), is The Corporation Trust Company, 1209
Orange Street, in the City of Wilmington, County of New Castle, State of
Delaware, 19801.

      1.2 OTHER OFFICES. The Corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
of the Corporation (the "Board of Directors") may from time to time determine.

                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

      2.1 PLACE OF MEETINGS. Annual or special meetings of the stockholders for
the election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware, as may be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof. If not so designated or
stated, such meeting shall be held at the registered office of the Corporation.

      2.2 ANNUAL MEETINGS. The annual meeting of stockholders shall be held on
such date and at such time as may be designated from time to time by the Board
of Directors and stated in the notice of such meeting. At the annual meeting,
the stockholders shall elect by a plurality vote a Board of Directors and
transact such other business as may properly be brought before the meeting.
Written notice of the annual meeting of stockholders of the Corporation stating
the place, date and hour of the meeting shall be sent to each stockholder
entitled to vote at such meeting not less than 10 nor more than 60 days before
the date of the meeting. Failure to hold the annual meeting shall not work a
forfeiture or dissolution of the Corporation or affect otherwise valid corporate
acts.

      2.3 SPECIAL MEETINGS. Unless otherwise prescribed by the Delaware General
Corporation Law ("DGCL") or by the Certificate of Incorporation of the
Corporation (as amended or restated from time to time, the "Certificate of
Incorporation"), special meetings of stockholders of the Corporation for any
purpose or purposes may be called at any time by the Chairman of the Board of
Directors or by any two or more directors of the Corporation. Written notice of
the special meeting stating the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called shall be given not less 10
nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at such meeting.
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      2.4 NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.

            (a) NOMINATION OF DIRECTORS. Only persons who are nominated in
      accordance with the following procedures shall be eligible to serve as
      directors. Nominations of persons for election to the Board of Directors
      of the Corporation at a meeting of stockholders may be made (i) by or at
      the direction of the Board of Directors, or (ii) by any stockholder of the
      Corporation entitled to vote in the election of directors at the meeting
      who complies with the notice procedures set forth in this Section 2.4(a).
      Such nominations, other than those made by or at the direction of the
      Board of Directors, shall be made pursuant to timely notice in writing to
      the Secretary of the Corporation. To be timely, a stockholder's notice
      must be delivered to, or mailed and received by, the Secretary of the
      Corporation at the principal executive offices of the Corporation not less
      than ninety (90) days prior to the first anniversary of the date of the
      previous year's annual meeting of stockholders; provided, however, that if
      no annual meeting of stockholders was held in the previous year or if the
      date of the annual meeting is advanced by more than thirty (30) days prior
      to, or delayed by more than sixty (60) days after, such anniversary date,
      notice by the stockholder to be timely must be so delivered, or mailed and
      received, not later than the close of business on the tenth (10th) day
      following the day on which the date of such meeting has been first
      "publicly disclosed" (in the manner provided in the last sentence of this
      Section 2.4(a) by the Corporation). Any stockholder's notice pursuant to
      this Section 2.4(a) shall set forth (i) as to each person whom the
      stockholder proposes to nominate for election or re-election as a
      director, all information relating to such person that is required to be
      disclosed in solicitations of proxies for election of directors, or is
      otherwise required, in each case pursuant to Regulation 14A under the
      Securities Exchange Act of 1934, as amended (including such person's
      written consent to being named in the proxy statement as a nominee and to
      serving as director if elected); and (ii) as to the stockholder giving
      notice (A) the name and address, as they appear on the Corporation's
      books, of such stockholder and (B) the class and number of shares of the
      Corporation which are beneficially owned by such stockholder. At the
      request of the Board of Directors, any person nominated by the Board of
      Directors for election as a director shall furnish to the Secretary of the
      Corporation that information required to be set forth in a stockholder's
      notice of nomination which pertains to the nominee. No person shall be
      eligible to serve as a director of the Corporation unless nominated in
      accordance with the procedures set forth herein. The Chairman of the
      meeting shall, if the facts warrant, determine and declare to the meeting
      that a nomination was not properly brought before the meeting and in
      accordance with the provisions of these Amended and Restated Bylaws (these
      "Bylaws"), and if he or she should so determine, he or she shall so
      declare to the meeting and any such nomination not properly brought before
      the meeting shall be disregarded. For purposes of these Bylaws, "publicly
      disclosed" or "public disclosure" shall mean disclosure in a press release
      reported by the Dow Jones News Service, Associated Press or a comparable
      national news service or in a document publicly filed by the Corporation
      with the Securities and Exchange Commission.

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            (b) NOTICE OF BUSINESS. Except as set forth in Section 2.4(a), at
      any meeting of the stockholders, only such business shall be conducted as
      shall have been brought before the meeting (a) by or at the direction of
      the Board of Directors or (b) by any stockholder of the Corporation who
      shall be entitled to vote at such meeting and who complies with the notice
      procedures set forth in this Section 2.4(b). For business to be properly
      brought before a stockholder meeting by a stockholder, the stockholder
      must have given timely notice thereof in writing to the Secretary of the
      Corporation. To be timely, a stockholder's notice must be delivered to, or
      mailed and received at, the principal executive offices of the Corporation
      not less than 50 days prior to the meeting; provided, however, that in the
      event that less than 55 days' notice or prior public disclosure of the
      date of the meeting is given or made to stockholders, notice by the
      stockholder to be timely must be received no later than the close of
      business on the tenth (10th) day following the day on which such notice of
      the date of the meeting was mailed or such public disclosure was made. A
      stockholder's notice to the Secretary shall set forth as to each matter
      the stockholder proposes to bring before the meeting (a) a brief
      description of the business desired to be brought before the meeting and
      the reasons for conducting such business at the meeting, (b) the name and
      address, as they appear on the Corporation's books, of the stockholder
      proposing such business, (c) the class and number of shares of the
      Corporation which are beneficially owned by the stockholder, and (d) any
      material interest of the stockholder in such business. Notwithstanding
      anything in these Bylaws to the contrary, no business shall be conducted
      at a stockholder meeting except (i) in accordance with the procedures set
      forth in this Section 2.4(b) or (ii) with respect to nominations of
      persons for election as directors of the Corporation, in accordance with
      the provisions of Section 2.4(a) hereof. The Chairman of the meeting
      shall, if the facts warrant, determine and declare to the meeting that
      business was not properly brought before the meeting and in accordance
      with the provisions of these Bylaws, and if he or she should so determine,
      he or she shall so declare to the meeting and any such business not
      properly brought before the meeting shall not be transacted.
      Notwithstanding the foregoing provisions of this Section 2.4(b), a
      stockholder shall also comply with all applicable requirements of the
      Securities Exchange Act of 1934, as amended, and the rules and regulations
      thereunder with respect to the matters set forth in this Section.

      2.5 REGISTERED HOLDERS OF SHARES; CLOSING OF SHARE TRANSFER RECORDS; AND
RECORD DATE.

            (a) REGISTERED HOLDERS AS OWNERS. Unless otherwise provided under
      Delaware law, the Corporation may regard the person in whose name any
      shares issued by the Corporation are registered in the stock transfer
      records of the Corporation at any particular time (including, without
      limitation, as of a record date fixed pursuant to paragraph (b) of this
      Section 2.5) as the owner of those shares at that time for purposes of
      voting those shares, receiving distributions thereon or notices in respect
      thereof, transferring those shares, exercising rights of dissent with
      respect to those shares, entering into agreements with respect to those
      shares, or giving proxies with respect to those shares; and neither the
      Corporation nor any of its officers, directors, employees or agents shall
      be liable for regarding that person as the owner of those shares at that
      time

                                      -3-
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      for those purposes, regardless of whether that person possesses a
      certificate for those shares.

            (b) RECORD DATE. For the purpose of determining stockholders of the
      Corporation entitled to notice of or to vote at any meeting of
      stockholders of the Corporation or any adjournment thereof, or entitled to
      receive a distribution by the Corporation (other than a distribution
      involving a purchase or redemption by the Corporation of any of its own
      shares) or a share dividend, or in order to make a determination of
      stockholders of the Corporation for any other proper purpose, the Board of
      Directors may fix in advance a date as the record date for any such
      determination of stockholders of the Corporation, such date in any case to
      be not more than 60 days and, in the case of a meeting of stockholders,
      not less than 10 days, prior to the date on which the particular action
      requiring such determination of stockholders of the Corporation is to be
      taken. The Board of Directors shall not close the books of the Corporation
      against transfers of shares during the whole or any part of such period.

If the Board of Directors does not fix a record date for any meeting of the
stockholders of the Corporation, the record date for determining stockholders of
the Corporation entitled to notice of or to vote at such meeting shall be at the
close of business on the day next preceding the day on which notice is given,
or, if in accordance with Section 7.2 of these Bylaws notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held.

      2.6 QUORUM. Except as otherwise provided by law or by the Certificate of
Incorporation, the holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders of the
Corporation for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders of the Corporation,
the stockholders of the Corporation entitled to vote at such meeting, present in
person or represented by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally noticed. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder entitled to vote at the meeting.

      2.7 VOTING BY STOCKHOLDERS.

            (a) VOTING ON MATTERS OTHER THAN THE ELECTION OF DIRECTORS. With
      respect to any matters as to which no other voting requirement is
      specified by the DGCL, the Certificate of Incorporation or these Bylaws,
      the affirmative vote required for stockholder action shall be that of a
      majority of the shares present in person or represented by proxy at the
      meeting (as counted for purposes of determining the existence of a quorum
      at the meeting). In the case of a matter submitted for a vote of the
      stockholders of the Corporation as to which a stockholder approval
      requirement is applicable under the stockholder approval policy of any
      stock exchange or quotation system on which the capital stock of the
      Corporation is traded or quoted, the

                                      -4-
<PAGE>
      requirements under the Securities Exchange Act of 1934, as amended (the
      "Exchange Act"), or any provision of the Internal Revenue Code, in each
      case for which no higher voting requirement is specified by the DGCL, the
      Certificate of Incorporation or these Bylaws, the vote required for
      approval shall be the requisite vote specified in such stockholder
      approval policy, the Exchange Act or Internal Revenue Code provision, as
      the case may be (or the highest such requirement if more than one is
      applicable). For the approval of the appointment of independent public
      accountants (if submitted for a vote of the stockholders of the
      Corporation), the vote required for approval shall be a majority of the
      votes cast on the matter.

            (b) VOTING IN THE ELECTION OF DIRECTORS. Unless otherwise provided
      in the Certificate of Incorporation or these Bylaws in accordance with the
      DGCL, directors shall be elected by a plurality of the votes cast by the
      holders of outstanding shares of capital stock of the Corporation entitled
      to vote in the election of directors at a meeting of stockholders at which
      a quorum is present.

            (c) OTHER. The Board of Directors, in its discretion, or the officer
      of the Corporation presiding at a meeting of stockholders of the
      Corporation, in his or her discretion, may require that any votes cast at
      such meeting shall be cast by written ballot.

      2.8 PROXIES. Each stockholder of the Corporation entitled to vote at a
meeting of stockholders of the Corporation may authorize another person or
persons to act for him or her by proxy. Proxies for use at any meeting of
stockholders of the Corporation shall be filed with the Secretary, or such other
officer as the Board of Directors may from time to time determine by resolution,
before or at the time of the meeting. All proxies shall be received and taken
charge of and all ballots shall be received and canvassed by the secretary of
the meeting who shall decide all questions relating to the qualification of
voters, the validity of the proxies and the acceptance or rejection of votes,
unless an inspector or inspectors shall have been appointed by the chairman of
the meeting, in which event such inspector or inspectors shall decide all such
questions.

      2.9 NO STOCKHOLDER ACTION WITHOUT MEETING. From and after the first date
as of which the Corporation has a class or series of capital stock registered
under the Exchange Act, no action required to be taken or that may be taken at
any annual or special meeting of the stockholders of the Corporation may be
taken without a meeting, and the power of the stockholders of the Corporation of
the Corporation to consent in writing to the taking of any action by written
consent without a meeting is specifically denied, except for action by unanimous
written consent, which is expressly allowed.

                                   ARTICLE III

                                    DIRECTORS

      3.1 DUTIES AND POWERS. The business, affairs and property of the
Corporation shall be managed by or under the directorship of the Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by law, the Certificate of Incorporation or
these Bylaws authorized or required to be exercised or done by the stockholders
of the Corporation.

                                      -5-
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      3.2 NUMBER AND ELECTION OF DIRECTORS. The number of directors of the
Corporation shall be determined in the manner provided in the Corporation's
Certificate of Incorporation. Directors shall be elected for one (1) year or
other terms as specified in the Corporation's Certificate of Incorporation, and
each director elected shall hold office during the term for which he or she is
elected and until his or her successor is elected and qualified, subject,
however, to his or her prior death, resignation, retirement or removal for cause
from office.

      3.3 VACANCIES. Any vacancies occurring in the Board of Directors and newly
created directorships shall be filled in the manner provided in the
Corporation's Certificate of Incorporation.

      3.4 RESIGNATIONS. Any director of the Corporation may resign at any time
upon written notice to the Corporation. To be effective, such notice of
resignation need not be formally accepted by the Board of Directors. A director
of the Corporation need not be a stockholder of the Corporation or a resident of
the State of Delaware.

      3.5 CHAIRMAN. The Board of Directors may elect from among its members a
Chairman who shall preside over all meetings of the Board of Directors and the
stockholders of the Corporation. In his absence or inability to act, the Chief
Executive Officer shall preside over the meetings of the Board of Directors and
the stockholders. The Chairman shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to him or her by
the Board of Directors.

      3.6 MEETINGS. The Board of Directors of the Corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Regular meetings of the Board of Directors may be held without notice at such
time and at such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by the
Chairman, if there be one, or by the President or by any two or more directors
of the Corporation. Notice thereof stating the place, date and hour of the
meeting shall be given to each director either by mail not less than 48 hours
before the date of the meeting, by telephone, telegram or facsimile on 24 hours'
notice or on such shorter notice as the person or persons calling such meeting
may deem necessary or appropriate in the circumstances. Unless otherwise
required by law, neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board of Directors need be specified in
the notice or waiver of notice of such meeting.

      3.7 QUORUM. Except as may be otherwise specifically provided by law, the
Certificate of Incorporation or these Bylaws, at all meetings of the Board of
Directors, a majority of the entire Board of Directors shall constitute a quorum
for the transaction of business and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.

      3.8 ACTIONS WITHOUT A MEETING. Unless otherwise provided by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any

                                      -6-
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meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all the members of the Board of Directors or committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors or committee.

      3.9 TELEPHONIC MEETINGS. Unless otherwise provided by the Certificate of
Incorporation or these Bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors or such committee by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 3.9 shall constitute presence in person at such meeting.

      3.10 COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the entire Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors of the Corporation as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in place of any absent or
disqualified member. Any committee, to the extent allowed by law and provided in
the resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation. Each committee shall keep regular minutes and
report to the Board of Directors when required.

      3.11 REIMBURSEMENT OF EXPENSES. The directors of the Corporation shall be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary or other consideration as director. No
such reimbursement shall preclude any director from serving the Corporation in
any other capacity and receiving compensation therefor. Members of special or
standing committees shall be allowed like reimbursement for attending committee
meetings.

      3.12 PROTECTION FOR RELIANCE. Any member of the Board of Directors, or any
member of any committee designated by the Board of Directors, shall, in the
performance of his duties, be fully protected in relying in good faith upon the
records of the Corporation and upon such information, opinions, reports or
statements presented to the Corporation by any of the Corporation's officers or
employees, or committees of the Board of Directors, or by any other person as to
matters the member reasonably believes are within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Corporation.

      3.13 CONSIDERATION OF SOCIAL, ECONOMIC AND OTHER FACTORS IN EVALUATING A
BID. The Board of Directors of the Corporation, when evaluating any offer of
another party to (a) purchase or exchange any securities or property for any
outstanding equity securities of the Corporation, (b) merge or consolidate the
Corporation with another corporation,

                                      -7-
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or (c) purchase or otherwise acquire all or substantially all of the properties
and assets of the Corporation, shall, in connection with the exercise of its
judgment in determining what is in the best interests of the Corporation and its
stockholders, give due consideration not only to the price or other
consideration being offered but also to all other relevant factors, including
without limitation (i) the financial and managerial resources and future
prospects of the party, (ii) the possible effects on the business of the
Corporation and its subsidiaries and on the employees, customers, suppliers and
creditors of the Corporation and its subsidiaries, and (iii) the effects on the
communities in which the Corporation's facilities are located.

                                   ARTICLE IV

                                    OFFICERS

      4.1 GENERAL. The officers of the Corporation shall be chosen by the Board
of Directors and shall be a President and a Secretary. The Board of Directors,
in its discretion, may also choose a Chief Financial Officer, a Treasurer and
one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and
other officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law, the Certificate of Incorporation or these Bylaws.
The officers of the Corporation need not be stockholders or directors of the
Corporation.

      4.2 ELECTION. The Board of Directors shall elect or appoint the officers
of the Corporation who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors; and all officers of the Corporation shall hold
office until their successors are elected and qualified, or until the earlier of
their resignation or removal. Any officer elected by the Board of Directors may
be removed at any time by the affirmative vote of a majority of the Board of
Directors. Any vacancy occurring in any office of the Corporation may be filled
by the Board of Directors.

      4.3 DUTIES. The officers of the Corporation shall have such powers and
duties as generally pertain to their offices, except as modified herein or by
the Board of Directors, as well as such powers and duties as from time to time
may be conferred by the Board of Directors.

      4.4 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, who need not be
chosen from among the directors, shall have active, executive management of the
operations of the Corporation, subject, however, to the control of the Board of
Directors. The Chief Executive Officer shall have the authority to manage and
direct the duties and responsibilities of any other officer or employee of the
Corporation. The Chief Executive Officer shall also preside at all meetings of
the stockholders of the Corporation and the Board of Directors, unless the Board
of Directors has appointed a Chairman of the Board, who would preside at all
such meetings of the stockholders and the Board of Directors. He or she shall,
in general, perform all duties incident to the office of the Chief Executive
Officer and such other duties as from time to time may be assigned to him by the
Board of Directors.

      4.5 PRESIDENT. The President shall, subject to the control of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. At the request of the

                                      -8-
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Chief Executive Officer, the President may temporarily act in his or her place.
In the case of the death of the Chief Executive Officer, or in the case of his
absence or inability to act without having designated the President to act
temporarily in his or her place, the President shall perform the duties of the
Chief Executive Officer as designated by the Board of Directors. The President
shall also perform such other duties and may exercise such other powers as from
time to time may be assigned to him or her by the Board of Directors.

      4.6 CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall be the
principal financial officer of the Corporation; shall have charge and custody of
and be responsible for all funds of the Corporation and deposit all such funds
in the name of the Corporation in such depositories as may be designated by the
Board of Directors; shall receive and give receipts for moneys due and payable
to the Corporation from any source; and, in general, shall perform all the
duties incident to the office of the Chief Financial Officer and such other
duties as from time to time may be assigned to him or her by the Board of
Directors or by the Chief Executive Officer.

      4.7 CHIEF OPERATING OFFICER. The Chief Operating Officer shall assist the
Chief Executive Officer and the President in the operations of the Corporation
and shall have such powers and perform such duties as the Board of Directors or
the Chief Executive Officer may from time to time prescribe.

      4.8 VICE PRESIDENTS. At the request of the President or in his or her
absence or in the event of his inability or refusal to act, any Vice President
may perform the duties of the President and, when so acting, such officer shall
have all the powers of and be subject to all the restrictions upon the
President. Each Vice President shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe. If there
is no Vice President, the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event of the
inability or refusal of the President to act, shall perform the duties of the
President and, when so acting, such officer shall have all the powers of and be
subject to all the restrictions upon the President.

      4.9 SECRETARY AND ASSISTANT SECRETARIES. The Secretary or an Assistant
Secretary shall attend all meetings of the Board of Directors and all meetings
of stockholders of the Corporation and record all the proceedings at such
meetings in a book or books to be kept for that purpose, and the Secretary or an
Assistant Secretary shall also perform similar duties for the standing
committees when required. The Secretary or an Assistant Secretary shall give, or
cause to be given, notice of all meetings of the stockholders of the Corporation
and special meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors, the Chairman of the
Board, the President or any Vice President. If a Secretary or Assistant
Secretary shall be unable or shall refuse to cause to be given notice of any
meeting of the stockholders of the Corporation or any special meeting of the
Board of Directors, then either the Board of Directors, the Chairman of the
Board, the President or any Vice President may choose another officer to cause
such notice to be given. The Secretary or an Assistant Secretary shall see that
all corporate books, reports, statements, certificates and other documents and
records required by law to be kept or filed are properly kept or filed, as the
case may be.

                                      -9-
<PAGE>
      4.10 TREASURER AND ASSISTANT TREASURERS. The Treasurer or an Assistant
Treasurer shall have custody of the corporate funds and securities and shall
keep full and accurate accounts of receipts and disbursements in books belonging
to the Corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the Corporation in such depositories as may be
designated by the Board of Directors. The Treasurer or an Assistant Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the Chief Executive Officer, the President or the Chief Financial Officer and
the Board of Directors, at its regular meetings, or when the Board of Directors
so requires, an account of all his or her transactions as Treasurer or Assistant
Treasurer and of the financial condition of the Corporation.

      4.11 REMOVAL. Any officer may be removed, with or without cause, by the
Board of Directors. Any such removal shall be without prejudice to any rights
such officer may have pursuant to any employment contract he or she may have
with the Corporation. Any vacancy in an office may be filled by the Board of
Directors.

      4.12 VOTING SECURITIES OWNED BY THE CORPORATION. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name and on behalf
of the Corporation by the Chairman of the Board, the President or any Vice
President, and any such officer may, in the name of and on behalf of the
Corporation, take all such action as any such officer may deem advisable to vote
in person or by proxy at any meeting of security holders of any corporation in
which the Corporation may own securities and at any such meeting shall possess
and may exercise any and all rights and powers incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have exercised
and possessed if present. The Board of Directors may, by resolution, from time
to time, confer like powers upon any other person or persons.

                                   ARTICLE V

                                      STOCK

      5.1 FORM OF CERTIFICATES. The shares of stock of the Corporation shall be
represented by certificates of stock, signed in the name of the Corporation (i)
by the Chairman of the Board, the President or a Vice President and (ii) by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary,
of the Corporation, certifying the number of shares of stock in the Corporation
owned by the holder named in the certificate.

      5.2 SIGNATURES. Where a certificate is countersigned by (i) a transfer
agent other than the Corporation or its employee or (ii) a registrar other than
the Corporation or its employee, any other signature on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he or she
were such officer, transfer agent or registrar at the date of issue.

                                      -10-
<PAGE>
      5.3 LOST CERTIFICATES. The Board of Directors may direct a new certificate
to be issued in place of any certificate theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the delivery to the
Secretary of the Corporation of an affidavit of the fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate, the Board of Directors may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate, or his or her legal representative, to
advertise the same in such manner as the Board of Directors shall require and/or
to give the Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.

      5.4 TRANSFERS. Stock of the Corporation shall be transferable in the
manner prescribed by law and in these Bylaws. Transfers of stock shall be made
on the books of the Corporation only by the person named in the certificate or
by his attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be canceled before a new certificate shall be
issued.

      5.5 BENEFICIAL OWNERSHIP. The Corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner, and to hold liable for calls
and assessments a person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by law.

      5.6 DIVIDENDS. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting thereof,
and may be paid in cash, in property or in shares of capital stock of the
Corporation. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.

                                   ARTICLE VI

                                 INDEMNIFICATION

      6.1 GENERAL. The Corporation shall indemnify and hold harmless an
Indemnitee (as this and all other capitalized words used in this Article VI not
previously defined in these Bylaws are defined in Section 6.9 hereof) from and
against any and all judgments, penalties, fines (including excise taxes),

                                      -11-
<PAGE>
amounts paid in settlement and, subject to Section 6.2, Expenses (including all
interest, assessments and other charges paid or payable in connection with or in
respect of such judgments, fines, penalties, amounts paid in settlement or
Expenses) arising out of any event or occurrence related to the fact that
Indemnitee is or was a director or officer of the Corporation. The Corporation
may, but shall not be required to, indemnify and hold harmless an Indemnitee
from and against any and all judgments, penalties, fines (including excise
taxes), amounts paid in settlement and, subject to Section 6.2, Expenses
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such judgments, fines, penalties, amounts paid
in settlement or Expenses) arising out of any event or occurrence related to the
fact that Indemnitee is or was an employee or agent of the Corporation or is or
was serving in another Corporate Status.

      6.2 EXPENSES. If Indemnitee is, by reason of his or her serving as a
director, officer, employee or agent of the Corporation, a party to and is
successful, on the merits or otherwise, in any Proceeding, the Corporation shall
indemnify such person against all Expenses actually and reasonably incurred by
such person or on his or her behalf in connection therewith. If Indemnitee is
not wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to any Matter in such Proceeding, the Corporation shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by such person
or on his or her behalf relating to such Matter. The termination of any Matter
in such a Proceeding by dismissal, with or without prejudice, shall be deemed to
be a successful result as to such Matter. If Indemnitee is, by reason of any
Corporate Status other than his or her serving as a director, officer, employee
or agent of the Corporation, a party to and is successful, on the merits or
otherwise, in any Proceeding, the Corporation may, but shall not be required to,
indemnify such person against all Expenses actually and reasonably incurred by
such person or on his or her behalf in connection therewith. To the extent that
the Indemnitee is, by reason of his or her Corporate Status, a witness in any
Proceeding, the Corporation may, but shall not be required to, indemnify such
person against all Expenses actually and reasonably incurred by such person or
on his or her behalf in connection therewith.

      6.3 ADVANCES. In the event of any threatened or pending Proceeding in
which Indemnitee is a party or is involved and that may give rise to a right of
indemnification under this Article VI, following written request to the
Corporation by Indemnitee, the Corporation may, but shall not be required to,
pay to Indemnitee amounts to cover Expenses reasonably incurred by Indemnitee in
such Proceeding in advance of its final disposition upon the receipt by the
Corporation of (i) a written undertaking executed by or on behalf of Indemnitee
providing that Indemnitee will repay the advance if it shall ultimately be
determined that Indemnitee is not entitled to be indemnified by the Corporation
as provided in these Bylaws and (ii) satisfactory evidence as to the amount of
such Expenses.

      6.4 REQUEST FOR INDEMNIFICATION. To request indemnification, Indemnitee
shall submit to the Secretary of the Corporation a written claim or request.
Such written claim or request shall contain sufficient information to reasonably
inform the Corporation about the nature and extent of the indemnification or
advance sought by Indemnitee. The Secretary of the Corporation shall promptly
advise the Board of Directors of such request.

      6.5 NONEXCLUSIVITY OF RIGHTS. This Article VI shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled to
under applicable law, the Certificate of Incorporation, these Bylaws, any
agreement, a vote of stockholders or a resolution of directors of the
Corporation, or otherwise. No amendment, alteration or repeal of this Article VI
or any provision hereof shall be effective as to any Indemnitee for acts, events
and circumstances that occurred, in whole or in part, before such amendment,
alteration or repeal. The provisions of this Article VI shall continue as to an
Indemnitee whose Corporate Status has

                                      -12-
<PAGE>
ceased for any reason and shall inure to the benefit of his or her heirs,
executors and administrators. Neither the provisions of this Article VI nor
those of any agreement to which the Corporation is a party shall be deemed to
preclude the indemnification of any person who is not specified in this Article
VI as having the potential to receive indemnification or is not a party to any
such agreement, but whom the Corporation has the power or obligation to
indemnify under the provisions of the DGCL.

      6.6 INSURANCE AND SUBROGATION. To the extent the Corporation maintains an
insurance policy or policies providing liability insurance for directors or
officers of the Corporation, an Indemnitee who is a director or officer of the
Corporation shall be covered by such policy or policies in accordance with its
or their terms to the maximum extent of coverage available for any such director
or officer under such policy or policies. In the event of any payment hereunder,
the Corporation shall be subrogated to the extent of such payment to all the
rights of recovery of Indemnitee, who shall execute all papers required and take
all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Corporation to bring suit to enforce
such rights. The Corporation shall not be liable under this Article VI to make
any payment of amounts otherwise indemnifiable hereunder if, and to the extent
that, Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.

      6.7 SEVERABILITY. If any provision or provisions of this Article VI shall
be held to be invalid, illegal or unenforceable for any reason whatsoever, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby; and, to the fullest extent possible,
the provisions of this Article VI shall be construed so as to give effect to the
intent manifested by the provision held invalid, illegal or unenforceable.

      6.8 CERTAIN PERSONS NOT ENTITLED TO INDEMNIFICATION. Notwithstanding any
other provision of this Article VI, no person shall be entitled to
indemnification or advancement of Expenses under this Article VI with respect to
any Proceeding, or any Matter therein, brought or made by such person against
the Corporation.

      6.9 DEFINITIONS. For purposes of this Article VI:

            (a) "CORPORATE STATUS" describes the status of a person who is or
      was a director, officer, employee or agent of the Corporation or of any
      other corporation, partnership, joint venture, trust, employee benefit
      plan or other enterprise which such person is or was serving at the
      written request of the Corporation. For purposes of this Agreement,
      "serving at the written request of the Corporation" includes any service
      by Indemnitee which imposes duties on, or involves services by, Indemnitee
      with respect to any employee benefit plan or its participants or
      beneficiaries.

            (b) "EXPENSES" shall include all reasonable attorneys' fees,
      retainers, court costs, transcript costs, fees of experts, witness fees,
      travel expenses, duplicating costs, printing and binding costs, telephone
      charges, postage, delivery service fees, and all other disbursements or
      expenses of the types customarily incurred in connection with prosecuting,
      defending, preparing to prosecute or defend, investigating, or being or
      preparing to be a witness in a Proceeding.

                                      -13-
<PAGE>
            (c) "INDEMNITEE" includes any person who is, or is threatened to be
      made, a witness in or a party to any Proceeding as described in Section
      6.1 or 6.2 hereof by reason of his Corporate Status.

            (d) "MATTER" is a claim, a material issue or a substantial request
      for relief.

            (e) "PROCEEDING" includes any action, suit, alternate dispute
      resolution mechanism, hearing or any other proceeding, whether civil,
      criminal, administrative, arbitrative, investigative or mediative, any
      appeal in any such action, suit, alternate dispute resolution mechanism,
      hearing or other proceeding and any inquiry or investigation that could
      lead to any such action, suit, alternate dispute resolution mechanism,
      hearing or other proceeding, except one initiated by an Indemnitee to
      enforce his or her rights under this Article VI.

                                  ARTICLE VII

                                     NOTICES

      7.1 NOTICES. Whenever written notice is required by law, the Certificate
of Incorporation or these Bylaws to be given to any director, member of a
committee or stockholder, such notice may be given by mail, addressed to such
director, member of a committee or stockholder at his or her address as it
appears on the records of the Corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given personally
or by telegram, telex, facsimile or cable.

      7.2 WAIVER OF NOTICE. Whenever any notice is required by law, the
Certificate of Incorporation or these Bylaws to be given to any director, member
of a committee or stockholder of the Corporation, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.

                                  ARTICLE VIII

                                  MISCELLANEOUS

      8.1 FISCAL YEAR. The fiscal year of the Corporation shall end on December
31 of each year.

      8.2 AMENDMENTS. These Bylaws may be altered, amended or repealed or new
bylaws may be adopted only in the manner provided in the Corporation's
Certificate of Incorporation.

Adopted September 28, 2000

                                      -14-EXHIBIT 4.10

                             CORNELL COMPANIES, INC.

                         2000 BROAD-BASED EMPLOYEE PLAN

                                DECEMBER 8, 2000
<PAGE>
                                TABLE OF CONTENTS

                                                                           PAGE

ARTICLE I. PURPOSES OF THE PLAN..............................................1
ARTICLE II. DEFINITIONS......................................................1
ARTICLE III. EFFECTIVE DATE..................................................3
ARTICLE IV. ADMINISTRATION...................................................3
  (A)  DUTIES OF THE COMMITTEE...............................................3
  (B)  ADVISORS..............................................................3
  (C)  INDEMNIFICATION.......................................................3
  (D)  MEETINGS OF THE COMMITTEE.............................................4
  (E)  DETERMINATIONS........................................................4
ARTICLE V.  SHARES; ADJUSTMENT UPON CERTAIN EVENTS...........................4
  (A)  SHARES TO BE DELIVERED; FRACTIONAL SHARES.............................4
  (B)  NUMBER OF SHARES......................................................4
  (C)  ADJUSTMENTS; RECAPITALIZATION, ETC....................................4
  (D)  EXTRAORDINARY TRANSACTIONS............................................5
ARTICLE VI.  AWARDS AND TERMS OF OPTIONS.....................................5
  (A)  GRANT.................................................................5
  (B)  EXERCISE PRICE........................................................5
  (C)  NUMBER OF SHARES......................................................5
  (D)  EXERCISABILITY........................................................5
  (E)  EXERCISE OF OPTIONS...................................................6
  (F)  OTHER TERMS AND CONDITIONS............................................6
ARTICLE VII.  EFFECT OF TERMINATION OF EMPLOYMENT............................6
  (A)  DEATH, DISABILITY, RETIREMENT, ETC....................................6
  (B)  CAUSE.................................................................7
  (C)  CANCELLATION OF OPTIONS...............................................7
ARTICLE VIII. NONTRANSFERABILITY OF OPTIONS..................................7
ARTICLE IX. RIGHTS AS A STOCKHOLDER..........................................8
ARTICLE X. TERMINATION, AMENDMENT AND MODIFICATION...........................8
ARTICLE XI. USE OF PROCEEDS..................................................8
ARTICLE XII. GENERAL PROVISIONS..............................................8
  (A)  RIGHT TO TERMINATE EMPLOYMENT OR CONSULTING ARRANGEMENTS..............8
  (B)  PURCHASE FOR INVESTMENT...............................................9
  (C)  TRUSTS, ETC...........................................................9
  (D)  NOTICES...............................................................9
  (E)  SEVERABILITY OF PROVISIONS............................................9
  (F)  PAYMENT TO MINORS ETC.................................................9
  (G)  HEADINGS AND CAPTIONS.................................................9
  (H)  CONTROLLING LAW......................................................10
  (I)  OTHER BENEFITS.......................................................10
  (J)  COSTS................................................................10
  (K)  SECTION 16(B) OF THE EXCHANGE ACT....................................10
ARTICLE XIII. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES..10
  (A)  STOCK CERTIFICATES...................................................10
  (B)  LEGENDS..............................................................10
  (C)  PAYMENT OF EXPENSES..................................................10
ARTICLE XIV. LISTING OF SHARES AND RELATED MATTERS..........................10
ARTICLE XV. WITHHOLDING TAXES...............................................10

                                       i
<PAGE>
                             CORNELL COMPANIES, INC.
                         2000 BROAD-BASED EMPLOYEE PLAN

                        ARTICLE I. PURPOSES OF THE PLAN

      The purposes of this Cornell Companies, Inc. 2000 Broad-Based Employee
Plan (the "Plan") are to enable Cornell Companies, Inc. (the "Company") and
Designated Subsidiaries (as defined herein) to attract, retain and motivate
employees, directors and consultants of the Company and Designated Subsidiaries
and to create a long-term mutuality of interest between such persons and the
stockholders of the Company by granting the options to purchase Common Stock (as
defined herein). The Plan is intended to be a broad-based plan as defined in the
New York Stock Exchange Listed Company Manual on the Effective Date (as defined
herein) of the Plan.

                            ARTICLE II. DEFINITIONS

      In addition to the terms defined elsewhere herein, for purposes of this
Plan, the following terms will have the following meanings when used herein with
initial capital letters:

      (A) "Board" means the Board of Directors of the Company.

      (B) "Cause" means, with respect to a Participant's Termination of
Employment, (i) in the case where there is no employment or consulting agreement
between the Company and the Participant, or where there is an employment or
consulting agreement, but such agreement does not define cause (or words of like
import), commission of a felony, a crime involving moral turpitude,
embezzlement, misappropriation of property of the Company or a Subsidiary, any
other act involving dishonesty or fraud with respect to the Company or a
Subsidiary, a material breach of a directive which is not cured within a
specified time after written notice of such breach, or repeated failure after
written notice to follow the directives of an appropriate officer or the Board,
or (ii) in the case where there is an employment or consulting agreement between
the Company or a Subsidiary and the Participant, termination that is or would be
deemed to be for cause (or words of like import) as defined under such
employment or consulting agreement.

      (C) "Code" means the Internal Revenue Code of 1986, as amended.

      (D) "Committee" means a committee of the Board appointed from time to time
by the Board consisting of two (2) or more non-employee directors, each of whom
shall be an "outside director" as defined in Section 162(m) of the Code to the
extent then required, except that if and to the extent that no Committee exists
which has the authority to administer the Plan, the functions of the Committee
shall be exercised by the Board.

      (E) "Common Stock" means the common stock of the Company, par value $.001
per share, and any common stock resulting from any reclassification of the
Common Stock.

      (F) "Company" means Cornell Companies, Inc., a Delaware corporation.

      (G) "Designated Subsidiary" means any Subsidiary which has been designated
from time to time by the Board. An entity shall be deemed a Designated
Subsidiary only for such periods as the requisite ownership relationship is
maintained.

      (H) "Director" means any director of the Company or a Designated
Subsidiary.

                                       1
<PAGE>
      (I) "Disability" means a permanent and total disability, rendering a
Participant unable to perform the duties performed by the Participant for the
Company or Designated Subsidiaries by reason of physical or mental disability
for a period of more than an aggregate of one hundred eighty (180) days in any
twelve (12) month period. A Disability shall only be deemed to occur at the time
of the determination by the Committee of the Disability.

      (J) "Eligible Consultants" means the consultants of the Company and
Designated Subsidiaries who are eligible to participate in the Plan (including,
but not limited, to employees of entities providing consulting services), as
determined by the Committee in its sole discretion.

      (K) "Employee" means any person who is an employee of the Company or a
Designated Subsidiary, as determined by the Committee in its sole discretion. An
Employee may, but need not, be an officer of the Company or a Designated
Subsidiary.

      (L) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all rules and regulations promulgated thereunder.

      (M) "Fair Market Value" means, for purposes of this Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, as of any date, the last sales prices reported for the Common Stock
on the applicable date, (i) as reported by the principal national securities
exchange in the United States on which it is then traded, or (ii) if not traded
on any such national securities exchange, as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers, or if the
sale of the Common Stock shall not have been reported or quoted on such date, on
the first day prior thereto on which the Common Stock was reported or quoted. If
the Common Stock is not readily tradable on a national securities exchange or
any system sponsored by the National Association of Securities Dealers, its Fair
Market Value shall be set by the Committee based upon its assessment of the cash
price that would be paid between a fully informed buyer and seller under no
compulsion to buy or sell (without giving effect to any discount for a minority
interest or any restrictions on transferability or any lack of liquidity of the
stock).

      (N) "Option" means the right to purchase one Share at a prescribed
purchase price on the terms specified in the Plan.

      (O) "Participant" means an Employee, Director or Eligible Consultant who
is granted Options under the Plan, which Options have not expired.

      (P) "Person" means any individual or entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person as
the context may require.

      (Q) "Retirement" means a Termination of Employment without cause from the
Company and/or a Subsidiary by a Participant who is at least age 65 or, with the
consent of the Committee, such earlier date before age 65 but after age 55.

      (R) "Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.

      (S) "Share" means a share of Common Stock.

      (T) "Subsidiary" means any corporation that is defined as a subsidiary
corporation in Section 424(f) of the Code.

      (U) "Termination of Employment" with respect to an Employee means that
individual is no longer actively employed by the Company or a Subsidiary on a
full-time basis, irrespective of whether or not such employee is receiving
salary continuance pay, is continuing to participate in other employee

                                       2
<PAGE>
benefit programs or is otherwise receiving severance type payments. In the event
an entity shall cease to be a Subsidiary, there shall be deemed a Termination of
Employment of any individual who is not otherwise an employee of the Company or
another Subsidiary at the time the entity ceases to be a Subsidiary. A
Termination of Employment shall not include a leave of absence approved for
purposes of the Plan by the Committee. For purposes of this Plan, a full-time
employee is a person who is scheduled to work at least thirty (30) hours per
week. With respect to a Director, a Termination of Employment shall occur when
the individual ceases to be a director of the Company or any Subsidiary. With
respect to an Eligible Consultant, a Termination of Employment shall occur upon
the termination of the consulting contract or the termination of the performance
of consulting services, as determined by the Committee in its sole discretion.

      (V) "Withholding Election" means the election set forth in Article XV.

                          ARTICLE III. EFFECTIVE DATE

      The Plan shall become effective as of December 8, 2000 (the "Effective
Date"). Grants of Options by the Committee under the Plan may be made as of or
after the Effective Date of the Plan, including retroactively.

                           ARTICLE IV. ADMINISTRATION

      (A) DUTIES OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee. The Committee shall have full authority to
interpret the Plan and to decide any questions and settle all controversies and
disputes that may arise in connection with the Plan; to establish, amend and
rescind rules for carrying out the Plan; to administer the Plan, subject to its
provisions; to select Participants in, and grant Options under, the Plan; to
determine the terms, vesting requirements, exercise price and form of exercise
payment for each Option granted under the Plan; to determine the consideration
to be received by the Company in exchange for the grant of the Options; to
determine whether and to what extent Options are to be granted hereunder to one
or more Employees and whether and to what extent Options are to be granted
hereunder to one or more Eligible Consultants or Directors; to prescribe the
form or forms of instruments evidencing Options and any other instruments
required under the Plan (which need not be uniform) and to change such forms
from time to time; to determine whether, to what extent and under what
circumstances to permit reloads, such that to the extent that Options are
settled with Common Stock, that Options may be granted for the same number of
shares of the same or different types, based on such terms as the Committee may
determine, in its sole discretion; and to make all other determinations and to
take all such steps in connection with the Plan and the Options as the
Committee, in its sole discretion, deems necessary or desirable. The Committee
shall not be bound to any standards of uniformity or similarity of action,
interpretation or conduct in the discharge of its duties hereunder, regardless
of the apparent similarity of the matters coming before it.

      (B) ADVISORS. The Committee may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan, and may rely
upon any advice or opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred by the
Committee in the engagement of such counsel, consultant or agent shall be paid
by the Company.

      (C) INDEMNIFICATION. To the maximum extent permitted by applicable law, no
officer of the Company or member or former member of the Committee or of the
Board shall be liable for any action or determination made in good faith with
respect to the Plan or any Option granted under it. To the maximum extent
permitted by applicable law or the Certificate of Incorporation or Bylaws of the
Company and to the extent not covered by insurance, each officer and member or
former member of the Committee or of the Board shall be indemnified and held
harmless by the Company against any cost or expense (including

                                       3
<PAGE>
reasonable fees of counsel reasonably acceptable to the Company) or liability
(including any sum paid in settlement of a claim with the approval of the
Company), and advanced amounts necessary to pay the foregoing at the earliest
time and to the fullest extent permitted, arising out of any act or omission to
act in connection with the Plan, except to the extent arising out of such
officer's, member's or former member's own fraud or bad faith. Such
indemnification shall be in addition to any rights of indemnification the
officers, members or former members may have as directors under applicable law
or under the Certificate of Incorporation or Bylaws of the Company or Designated
Subsidiary. Notwithstanding anything else herein, this indemnification will not
apply to the actions or determinations made by an individual with regard to
Options granted to him or her under this Plan.

      (D) MEETINGS OF THE COMMITTEE. The Committee shall adopt such rules and
regulations as it shall deem appropriate concerning the holding of its meetings
and the transaction of its business. Any member of the Committee may be removed
from the Committee at any time either with or without cause by resolution
adopted by the Board, and any vacancy on the Committee may at any time be filled
by resolution adopted by the Board. All determinations by the Committee shall be
made by the affirmative vote of a majority of its members. Any such
determination may be made at a meeting duly called and held at which a majority
of the members of the Committee are in attendance in person or through
telephonic communication. Any determination set forth in writing and signed by
all the members of the Committee shall be as fully effective as if it had been
made by a majority vote of the members at a meeting duly called and held.

      (E) DETERMINATIONS. Each determination, interpretation or other action
made or taken pursuant to the provisions of this Plan by the Committee shall be
final, conclusive and binding for all purposes and upon all persons, including,
without limitation, the Participants, the Company and Subsidiaries, directors,
officers and other employees of the Company and Subsidiaries, and the respective
heirs, executors, administrators, personal representatives and other successors
in interest of each of the foregoing.

               ARTICLE V. SHARES; ADJUSTMENT UPON CERTAIN EVENTS

      (A) SHARES TO BE DELIVERED; FRACTIONAL SHARES. Shares to be issued under
the Plan shall be made available, at the sole discretion of the Board, either
from authorized but unissued Shares or from issued Shares reacquired by the
Company and held in treasury. No fractional Shares will be issued or transferred
upon the exercise of any Option. In lieu thereof, the Company shall pay a cash
adjustment equal to the same fraction of the Fair Market Value of one Share on
the date of exercise.

      (B) NUMBER OF SHARES. Subject to adjustment as provided in this Article V,
the maximum aggregate number of Shares that may be issued and sold under the
Plan shall not exceed the greater of (a) 400,000 Shares and (b) 4% of the number
of Shares issued and outstanding immediately after the grant of any Option. If
Options are for any reason canceled or forfeited, or expire or terminate
unexercised, the Shares covered by such Options shall again be available for the
grant of Options, subject to the foregoing limit.

      (C) ADJUSTMENTS; RECAPITALIZATION, ETC. The existence of the Plan and the
Options granted hereunder shall not affect in any way the right or power of the
Board or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting
Common Stock, the dissolution or liquidation of the Company or Designated
Subsidiaries, any sale or transfer of all or part of its assets or business or
any other corporate act or proceeding. The Committee may make or provide for
such adjustments in the maximum number of Shares specified in Article V(B), in
the number of Shares covered by outstanding Options granted hereunder and/or in
the Purchase Price (as hereinafter defined) applicable to such Options or such
other adjustments in the number and kind of securities received upon the
exercise

                                       4
<PAGE>
of Options, as the Committee in its sole discretion may determine is equitably
required to prevent dilution or enlargement of the rights of Participants or to
otherwise recognize the effect that otherwise would result from any stock
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Company, merger, consolidation, spin-off,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase securities or any other corporate transaction or event having an
effect similar to any of the foregoing. Except as herein expressly provided, the
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor or upon conversion of shares or other securities, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number and class of shares and/or
other securities or property subject to Options theretofore granted or the
Purchase Price.

      (D) EXTRAORDINARY TRANSACTIONS.

            (i) In the event the Company shall, pursuant to action by its Board
of Directors, at any time propose to merge with or into, consolidate with, or
sell or otherwise transfer all or substantially all of its assets to another
entity or in the event of the acquisition of all or substantially all of the
Company's outstanding Common Stock by a single person or entity and/or group of
entities acting in concert (each, an "Extraordinary Transaction"), the Company
shall cause written notice of the proposed Extraordinary Transaction to be given
to the Participant not less than thirty (30) days prior to the anticipated
effective date of the proposed Extraordinary Transaction (the "Extraordinary
Transaction Effective Date").

            (ii) On a date which the Company shall specify in such notice (the
"Early Vesting Date"), which date shall not be less than twenty (20) days prior
to the Extraordinary Transaction Effective Date, the Options shall become fully
vested, except as otherwise expressly provided in any Option agreement with
respect to the Options granted thereunder.

            (iii) If the Extraordinary Transaction is consummated, the Options,
to the extent not previously exercised prior to the Extraordinary Transaction
Effective Date, shall terminate on the Extraordinary Transaction Effective Date.
If the Extraordinary Transaction is abandoned or otherwise not consummated then,
to the extent that the portion of the Options not exercised prior to such
abandonment or termination shall have vested solely by operation of Article
V(D)(ii) and the relevant Option agreements, such vesting shall be annulled and
be of no further force or effect, and the vesting provisions set forth in the
relevant Option agreements shall be reinstituted, as of the date of such
abandonment or termination.

                    ARTICLE VI. AWARDS AND TERMS OF OPTIONS

      (A) GRANT. The Committee may grant Options to Employees, Directors and
Eligible Consultants. Each Option shall be evidenced by an Option agreement (the
"Option Agreement") in such form as the Committee shall approve from time to
time.

      (B) EXERCISE PRICE. The purchase price per Share (the "Purchase Price")
deliverable upon the exercise of an Option shall be determined by the Committee
and set forth in a Participant's Option Agreement, provided that the Purchase
Price shall not be less than the par value of a Share.

      (C) NUMBER OF SHARES. The Option Agreement shall specify the number of
Options granted to the Participant, as determined by the Committee in its sole
discretion.

      (D) EXERCISABILITY. At the time of grant, the Committee shall specify when
and on what terms (including any vesting requirements) the Options granted shall
be exercisable. In the case of Options not immediately exercisable in full, the
Committee may at any time accelerate the time at which all or any part of the
Options may be exercised and may waive any other conditions to exercise. No
Option shall be

                                       5
<PAGE>
exercisable after the expiration of ten (10) years from the date of grant. Each
Option shall be subject to earlier termination as provided in Article VII below.

      (E) EXERCISE OF OPTIONS.

            (i) A Participant may elect to exercise one or more Options then
exercisable by giving written notice to the Company of such election and of the
number of Options such Participant has elected to exercise, accompanied by
payment in full of the aggregate Purchase Price for the number of Shares for
which the Options are being exercised.

            (ii) Shares purchased pursuant to the exercise of Options shall be
paid for at the time of exercise as follows:

                  (a) in cash or by check, bank draft or money order payable to
the order of the Company;

                  (b) in the form of shares of Common Stock owned by the
Participant (and for which the Participant has good title free and clear of any
liens and encumbrances) (in the case of owned shares obtained by previous
exercise of Options, such shares shall have been owned for at least 6 (six)
months prior to the current Option exercise);

                  (c) if the Shares are traded on a national securities
exchange, through the delivery of irrevocable instructions to a broker to
deliver promptly to the Company an amount equal to the aggregate Purchase Price
plus all required tax withholding by payment through a cash or margin
arrangement with a broker; or

                  (d) on such other terms and conditions as may be acceptable to
the Committee (which may include payment in full or in part by the transfer of
Shares which have been owned by the Participant for at least 6 (six) months or
the surrender of Options owned by the Participant) and in accordance with
applicable law.

            (iii) Upon receipt of payment, the Company shall deliver to the
Participant as soon as practicable a certificate or certificates for the Shares
then purchased. No Shares shall be issued until payment, as provided herein, has
been made or provided for.

      (F) OTHER TERMS AND CONDITIONS. Options may contain such other provisions,
which shall not be inconsistent with any of the foregoing terms of the Plan, as
the Committee shall deem appropriate including, without limitation, provisions
permitting the use of shares of Common Stock to exercise and settle an Option
("Stock Swaps") or permitting "reloads" such that in the case of Stock Swaps,
the same number of Options is granted as the number of shares of Common Stock
swapped ("Reloads"). With respect to Stock Swaps, shares of Common Stock shall
be valued at Fair Market Value on the date of exercise and shall have the same
remaining time period as the shares of Common Stock that were swapped. With
respect to Reloads, the exercise price of the new Option shall be the Fair
Market Value on the date granted and the term of the Option shall be the same as
the remaining term of the Options that are exercised. With respect to either
Stock Swaps or Reloads, if shares used to exercise and settle an Option were
obtained upon the prior exercise of Options, those shares must have been owned
by the Participant for at least 6 (six) months ("Mature Shares"). In no event
shall the Company issue a Reload whereby the Participant is allowed to exercise
Options using any means other than Mature Shares or shares otherwise owned by
the Participant for at least 6 (six) months.

                ARTICLE VII. EFFECT OF TERMINATION OF EMPLOYMENT

      (A) DEATH, DISABILITY, RETIREMENT, ETC. Except as otherwise provided in
the Participant's Option Agreement, upon Termination of Employment, all
outstanding Options then exercisable and not

                                       6
<PAGE>
exercised by the Participant prior to such Termination of Employment (and any
Options not previously exercisable but made exercisable by the Committee at or
after the Termination of Employment) shall remain exercisable by the Participant
to the extent not exercised for the following time periods, or, if earlier, the
prior expiration of the Option in accordance with the terms of the Plan and
grant:

            (i) In the event of the Participant's death, Retirement or
Disability, such Options shall remain exercisable by the Participant (or by the
Participant's estate or by the person given authority to exercise such Options
by the Participant's will or by operation of law) for a period of one year from
the date of the Participant's death, Retirement or Disability, provided that the
Committee, in its sole discretion, may at any time extend such time period.

            (ii) In the event of the Participant's Termination of Employment
without Cause, such Options shall remain exercisable for ninety (90) days from
the date of the Participant's Termination of Employment, provided that the
Committee, in its sole discretion, may at any time extend such time period.

Unless the Committee otherwise determines, there shall be no effect on the
exercisability of Options held by a Participant if (i) the Participant's
employment, directorship or consultancy is transferred from the Company to a
Designated Subsidiary, from a Designated Subsidiary to the Company or from one
Designated Subsidiary to another or (ii) the Participant is (a) an Employee who
becomes an Eligible Consultant or Director, or (b) a Director who becomes an
Employee or an Eligible Consultant, or (c) an Eligible Consultant who becomes an
Employee or Director.

      (B) CAUSE. Upon the Termination of Employment of a Participant for Cause,
or if the Company or a Designated Subsidiary obtains or discovers information
after Termination of Employment that such Participant had engaged in conduct
that would have justified a Termination of Employment for Cause during the
Participant's employment, directorship or consultancy, all outstanding Options
of such Participant shall, unless the Committee in its sole discretion
determines otherwise, terminate and be null and void.

      (C) CANCELLATION OF OPTIONS. Except as otherwise provided in Article V(D),
no Options that were not exercisable during the period of employment shall
thereafter become exercisable upon a Termination of Employment for any reason or
no reason whatsoever, and such options shall terminate and become null and void
upon a Termination of Employment, unless the Committee determines in its sole
discretion that such Options shall be exercisable.

                  ARTICLE VIII. NONTRANSFERABILITY OF OPTIONS

      Except as set forth below, no Option shall be transferable by the
Participant otherwise than by will or under applicable laws of descent and
distribution or pursuant to a qualified domestic relations order, and during the
lifetime of the Participant may be exercised only by the Participant or his or
her guardian or legal representative, as defined in the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder. The Committee may grant Options that are transferable, without
payment of consideration, to immediate family members of the Participant or to
trusts or partnerships for such family members; the Committee may also amend
outstanding Options to provide for such transferability. In addition, except as
provided in the immediately preceding two sentences, no Option shall be
assigned, negotiated, pledged or hypothecated in any way (whether by operation
of law or otherwise), and no Option shall be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, negotiate, pledge or
hypothecate any Option, or in the event of any levy upon any Option by reason of
any execution, attachment or similar process contrary to the provisions hereof,
such Option shall immediately terminate and become null and void.

                                       7
<PAGE>
                      ARTICLE IX. RIGHTS AS A STOCKHOLDER

      A Participant (or a permitted transferee of an Option) shall have no
rights as a stockholder with respect to any Shares covered by such Participant's
Option until such Participant (or permitted transferee) shall have become the
holder of record of such Shares, and no adjustments shall be made for dividends
in cash or other property or distributions or other rights in respect to any
such Shares, except as otherwise specifically provided in the Plan.

               ARTICLE X. TERMINATION, AMENDMENT AND MODIFICATION

      The Plan shall terminate at the close of business on the tenth anniversary
of the Effective Date (the "Termination Date"), unless terminated sooner as
hereinafter provided, and no Option shall be granted under the Plan on or after
that date. The termination of the Plan shall not terminate any outstanding
Options that by their terms continue beyond the Termination Date. At any time
prior to the Termination Date, the Committee may amend or terminate the Plan or
suspend the Plan in whole or in part.

      The Committee may at any time, and from time to time, amend, in whole or
in part, any or all of the provisions of the Plan (including any amendment
deemed necessary to ensure that the Company may comply with any regulatory
requirements referred to in Article XII), or suspend or terminate it entirely,
retroactively or otherwise; PROVIDED, HOWEVER, that, unless otherwise required
by law or specifically provided herein, the rights of a Participant with respect
to Options granted prior to such amendment, suspension or termination, may not
be materially impaired without the consent of such Participant and; PROVIDED,
FURTHER, that no amendment may be made (except by operation of Article V(C))
without the approval of the stockholders of the Company entitled to vote if
stockholder approval is required by applicable law or by the rules of the
national securities exchange or quotation system on which the Common Stock is
traded or quoted at such time.

      The Committee may amend the terms of any Option granted, prospectively or
retroactively, but, subject to Article VI above or as otherwise provided herein,
no such amendment or other action by the Committee shall materially impair the
rights of any Participant without the Participant's consent. Notwithstanding the
foregoing, however, no such amendment may, without the approval of the
stockholders of the Company, effect any change that would require stockholder
approval under applicable law or the rules of the national securities exchange
or quotation system on which the Common Stock is traded or quoted at such time.

                          ARTICLE XI. USE OF PROCEEDS

      The proceeds of the sale of Shares subject to Options under the Plan are
to be added to the general funds of the Company and used for its general
corporate purposes as the Board shall determine.

                        ARTICLE XII. GENERAL PROVISIONS

      (A) RIGHT TO TERMINATE EMPLOYMENT OR CONSULTING ARRANGEMENTS. Neither the
adoption of the Plan nor the grant of Options shall impose any obligation on the
Company or Designated Subsidiaries to continue the employment of any
Participant, the directorship of any Director or the consulting arrangement with
any Eligible Consultant, nor shall it impose any obligation on the part of any
Participant to remain in the employ of the Company or Designated Subsidiaries or
to remain as a director or consultant of the Company or its Designated
Subsidiaries.

                                       8
<PAGE>
      (B) PURCHASE FOR INVESTMENT. If the Board or the Committee determines that
the law so requires, the holder of an Option granted hereunder shall, upon any
exercise or conversion thereof, execute and deliver to the Company a written
statement, in form satisfactory to the Company, representing and warranting that
such Participant is purchasing or accepting the Shares then acquired for such
Participant's own account and not with a view to the resale or distribution
thereof, that any subsequent offer for sale or sale of any such Shares shall be
made either pursuant to (i) a Registration Statement on an appropriate form
under the Securities Act, which Registration Statement shall have become
effective and shall be current with respect to the Shares being offered and
sold, or (ii) a specific exemption from the registration requirements of the
Securities Act, and that in claiming such exemption the holder will, prior to
any offer for sale or sale of such Shares, obtain a favorable written opinion,
satisfactory in form and substance to the Company, from counsel acceptable to
the Company as to the availability of such exception.

      (C) TRUSTS, ETC. Nothing contained in the Plan and no action taken
pursuant to the Plan (including, without limitation, the grant of any Option
thereunder) shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and any Participant or the executor,
administrator or other personal representative or designated beneficiary of such
Participant, or any other persons. Any reserves that may be established by the
Company in connection with the Plan shall continue to be part of the general
funds of the Company, and no individual or entity other than the Company shall
have any interest in such funds until paid to a Participant. If and to the
extent that any Participant or such Participant's executor, administrator or
other personal representative, as the case may be, acquires a right to receive
any payment from the Company pursuant to the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company.

      (D) NOTICES. Any notice to the Company required by or in respect of this
Plan will be addressed to the Company, Cornell Companies, Inc., 1700 West Loop
South, Suite 1500, Houston, TX 77027, Attention: Chief Financial Officer, or
such other place of business as shall become the Company's principal executive
offices from time to time. Each Participant shall be responsible for furnishing
the Company with the current and proper address for the mailing to such
Participant of notices and the delivery to such Participant of agreements,
Shares and payments. Any such notice to the Participant will, if the Company has
received notice that the Participant is then deceased, be given to the
Participant's personal representative if such representative has previously
informed the Company of his status and address (and has provided such reasonable
substantiating information as the Company may request) by written notice under
this Section. Any notice required by or in respect of this Plan will be deemed
to have been duly given when delivered in person or when dispatched by telegram
or one (1) business day after having been dispatched by a nationally recognized
overnight courier service or three (3) business days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid. The Company assumes no responsibility or obligation to deliver any item
mailed to such address that is returned as undeliverable to the addressee and
any further mailings will be suspended until the Participant furnishes the
proper address.

      (E) SEVERABILITY OF PROVISIONS. If any provisions of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions of the Plan, and the Plan shall be construed and
enforced as if such provisions had not been included.

      (F) PAYMENT TO MINORS ETC. Any benefit payable to or for the benefit of a
minor, an incompetent person or other person incapable of receipt thereof shall
be deemed paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Committee, the Company and their employees, agents and
representatives with respect thereto.

      (G) HEADINGS AND CAPTIONS. The headings and captions herein are provided
for reference and convenience only. They shall not be considered part of the
Plan and shall not be employed in the construction of the Plan.

                                       9
<PAGE>
      (H) CONTROLLING LAW. The Plan shall be construed and enforced according to
the laws of the State of Delaware.

      (I) OTHER BENEFITS. No payment under this Plan shall be considered
compensation for purposes of computing benefits under any retirement plan of the
Company or a Designated Subsidiary nor affect any benefits under any other
benefit plan now or subsequently in effect under which the availability of
benefits is related to the level of compensation.

      (J) COSTS. The Company shall bear all expenses included in administering
this Plan, including expenses of issuing Common Stock pursuant to any Options
hereunder.

      (K) SECTION 16(B) OF THE EXCHANGE ACT. All elections and transactions
under the Plan by persons subject to Section 16 of the Exchange Act involving
shares of Common Stock are intended to comply with all exemptive conditions
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan and the transaction of business thereunder.

   ARTICLE XIII. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES

      (A) STOCK CERTIFICATES. Upon any exercise of an Option and payment of the
exercise price as provided in such Option, a certificate or certificates for the
Shares as to which such Option has been exercised shall be issued by the Company
in the name of the person or persons exercising such Option and shall be
delivered to or upon the order of such person or persons.

      (B) LEGENDS. Certificates for Shares issued upon exercise of an Option
shall bear such legend or legends as the Committee, in its sole discretion,
determines to be necessary or appropriate to prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act
or to implement the provisions of any agreements between the Company and the
Participant with respect to such Shares.

      (C) PAYMENT OF EXPENSES. The Company shall pay all issue or transfer taxes
with respect to the issuance or transfer of Shares, as well as all fees and
expenses necessarily incurred by the Company in connection with such issuance or
transfer and with the administration of the Plan.

               ARTICLE XIV. LISTING OF SHARES AND RELATED MATTERS

      If at any time the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the grant of
Options or the award or sale of Shares under the Plan, no Option grant shall be
effective and no Shares will be delivered, as the case may be, unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board.

                         ARTICLE XV. WITHHOLDING TAXES

      The Company shall have the right to require prior to the issuance or
delivery of any shares of Common Stock payment by the Participant of any
federal, state or local taxes required by law to be withheld.

                                       10
<PAGE>
      The Committee may permit any such withholding obligation to be satisfied
by reducing the number of shares of Common Stock otherwise deliverable. A person
required to file reports under Section 16(a) of the Exchange Act with respect to
securities of the Company may elect to have a sufficient number of shares of
Common Stock withheld to fulfill such tax obligations (hereinafter a
"Withholding Election") only if the election complies with such conditions as
are necessary to prevent the withholding of such shares from being subject to
Section 16(b) of the Exchange Act. To the extent necessary under then current
law, such conditions shall include the following: (x) the Withholding Election
shall be subject to the approval of the Committee and (y) the Withholding
Election is made (i) during the period beginning on the third business day
following the date of release for publication of the quarterly or annual summary
statements of sales and earnings of the Company and ending on the twelfth
business day following such date or is made in advance but takes effect during
such period, (ii) six (6) months before the stock award becomes taxable or (iii)
during any other period in which a Withholding Election may be made under the
provisions of Rule 16b-3 promulgated pursuant to the Exchange Act. Any fraction
of a share of Common Stock required to satisfy such tax obligations shall be
disregarded and the amount due shall be paid instead in cash by the Participant.

                                       11

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