Document:

EXHIBIT 10.38

                               LEASE AGREEMENT

      THIS LEASE AGREEMENT, made and entered into as of the 31st day of
December, 1999 (this "Lease"), by and among the HINTON ECONOMIC DEVELOPMENT
AUTHORITY, a public trust and agency of the State of Oklahoma, with the Town of
Hinton, Oklahoma, as its beneficiary (the "Authority"), the Town of Hinton,
Oklahoma (the "Town") and CORNELL CORRECTIONS OF OKLAHOMA, INC., an Oklahoma
corporation ("CCOI").

                              W I T N E S S E T H:
                              - - - - - - - - - -

      WHEREAS, the Authority is the owner of certain land and the Facility
(hereinafter defined) located in Caddo County, Oklahoma, described in Section
1.06 hereinbelow and on Exhibit "A" attached hereto (such land and the Facility
being hereinafter referred to collectively as the "Land"); and

      WHEREAS, the Town, acting in furtherance of its governmental purposes and
in the exercise of its police powers, has taken action to create and establish a
correctional facility to house and care for adult medium-security inmates (as
more particularly defined in Section 1.03 hereinbelow, the "Facility") and has
designated CCOI to equip, manage, maintain, and operate the Facility in the
capacity of a private prison contractor pursuant to the terms of the
Intergovernmental and Private Prison Contractor Agreement dated as of December
31, 1999, by and among the Town, the Authority and CCOI (the "Intergovernmental
Agreement"); and

      WHEREAS, CCOI intends to lease the Land from the Authority pursuant to
this Lease and design, construct and equip certain improvements to the Facility.

      WHEREAS, the Authority intends to grant an option to purchase its interest
in the Land and the Facility, from time to time, in the event CCOI or the Town
is required to grant an option to purchase the Land and the Facility in
connection with the execution of a contract with the State of Oklahoma to house
and care for inmates at the Facility.

      NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties agree as follows:

                                  ARTICLE I

                                 DEFINITIONS

      For purposes of this Agreement:

      Section 1.01. "Alterations" shall mean construction (including tenant
improvements), reconstruction, replacement, repairs, renovations, alterations,
changes, additions, expansions, improvements and demolitions of or to the
Facility (hereinafter defined) and all excavations at any time made or to be
made in, on or
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about the Land.

      Section 1.02. "Events of Default" or any of the same shall mean Events of
Default as defined and described in Article VI.

      Section 1.03. "Facility" shall mean that certain medium-security prison
which is currently designed to house and care for up to 812 adult inmates
situate on the Land (hereinafter defined) together with all (a) Alterations,
buildings, structures, improvements and appurtenances now and hereafter located,
constructed, erected, installed, affixed, placed, and/or maintained in or upon
the Land, together with all replacements and substitutions therefor and (b) all
fixtures and goods to become fixtures that are installed, affixed, placed and/or
maintained in or upon the Land, together with all replacements and substitutions
thereof, including, but not limited to, furnaces, steam boilers, hot water
boilers, oil burners, pipes, radiators, air conditioning and sprinkler systems,
gas and electric fixtures, carpets, rugs, shades, awnings, screens, elevators,
motors, and dynamos.

      Section 1.04. "Financing Documents" shall mean all documents, instruments,
and agreements of whatsoever nature now or hereafter entered into by, between,
and among CCOI and Persons that are affiliates thereof and the Lenders (as
defined below) with respect to the Land, the Facility, and any matters related
thereto in any way whatsoever.

      Section 1.05. "Impositions" shall mean, subject to Section 4.03 hereof,
all taxes, assessments, water and sewer charges, charges for public utilities,
excises, levies, license and permit fees and other governmental charges, of any
kind and nature whatsoever which at any time prior to or during the term of the
Lease may become a lien on (i) the Land; (ii) the Facility; (iii) the rent,
income or other payments received by CCOI or anyone claiming by, through or
under CCOI; (iv) any use or occupation of the Land thereon or personal property
therein; and (v) such franchises as may be appurtenant to the use of the Land or
personal property therein.

      Section 1.06. "Land" shall mean a certain tract of real property situate
in Caddo County, Oklahoma, described on Exhibit "A" attached hereto and made a
part hereof and upon which the Facility is situated, and all improvements and
appurtenances, including the Facility, and all easements and rights appurtenant
thereto.

      Section 1.07. "Leasehold Estate" shall mean CCOI's interest in the Land
and the Facility and all other rights of CCOI created by this Lease.

      Section 1.08. "Leased Premises" shall mean all or any part of the Land.

      Section 1.09. "Lenders" shall mean any Persons providing financial
accommodations related to the Facility or the Land, including, without
limitation, Leasehold Mortgagees (hereinafter defined).

      Section 1.10. "Mortgage" shall mean that certain first mortgage (and any
amendments and refinancing thereof as permitted pursuant to Article IX) and any
other loan documents presently (or in the future) held by ING (U.S.) Capital
Corporation, as agent, and recorded in Book 2190, Page 34 - 59 of the records of
the County Clerk of Caddo County, State of Oklahoma, which constitutes a lien on
the

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Leasehold Estate, all executed by CCOI, as mortgagor, and any future mortgage
held by a Lender.

      Section 1.11. "Person" shall mean any individual, sole proprietorship,
corporation, business trust, unincorporated organization, association, company,
partnership, joint venture, limited liability company, or governmental authority
(whether a national, federal, state, county, municipality, or otherwise, and
shall include without limitation any instrumentality, division, agency, body, or
department thereof) or other entity.

                                   ARTICLE II
                                 DEMISE AND TERM

      Section 2.01. DEMISE. Subject to and upon the terms, conditions,
covenants, and undertakings hereinafter set forth, the Authority hereby demises
and leases to CCOI, and CCOI hereby leases from the Authority, upon the terms
and conditions herein contained, the Leased Premises.

      Section 2.02. LEASE TERM. The term of this Lease (the "Lease Term") shall
commence December 31, 1999 (the "Commencement Date"), and terminate on December
30, 2075; provided, however, that Tenant may renew this Lease and extend the
Lease Term for one (1) additional period of seventy-five (75) years (commencing
December 31, 2075) on the same terms and provisions as provided in this Lease,
by delivering written notice of the exercise of such option to extend to
Landlord prior to the expiration of the Lease Term.

      Section 2.03. OWNERSHIP OF FACILITY AND LAND. The Facility and the Land
shall be the property of the Authority and be a part of the realty and the
property of the Authority, without any compensation or payment therefor by the
Authority to CCOI.

      Section 2.04. CCOI TO QUIT. Upon expiration of this Lease or the exercise
of a purchase option described in Section 13.01 of this Lease, the Facility
shall be vacated and surrendered by CCOI to the Authority, and, upon payment to
CCOI of any sums due it pursuant to this Lease, CCOI agrees to execute and
deliver to the Authority such assignment or other instruments of conveyance as
may be reasonably deemed necessary to evidence such termination of the Leasehold
Estate.

                                   ARTICLE III
                                      RENT

      Section 3.01. BASE RENT. CCOI shall pay annual rental in arrears of One
Hundred Thousand and No/100 Dollars ($100,000.00) (the "Base Rent") to the
Authority on December 31, 2000, and on each anniversary thereof during the Lease
Term.

      Section 3.02. ADDITIONAL RENT. In the event that CCOI is granted an
increase in the Inmate Contract Per Diem rate (as defined in the
Intergovernmental Agreement), commencing on the first day of the Lease year
following such increase, CCOI shall pay "Additional Rent" in an amount equal to
the product of the Base

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Rent multiplied by the percentage increase in the Consumer Price Index,
Dallas-Fort Worth, TX CMSA (1993-1995=100) as reported for December of such
Lease year by the Bureau of Labor Statistics of the United States Department of
Labor (the "CPI") over the monthly CPI reported for December of the prior Lease
year; provided, however, that the percentage increase represented by the
Additional Rent shall in no event exceed the percentage increase in the Inmate
Contract Per Diem rate (for example, if the Inmate Contract Per Diem rate should
increase by five percent (5%)), and the CPI should increase by ten percent
(10%), then the Additional Rent shall represent an increase over the Base Rent
of only five percent (5%). Should the CPI cease to be reported, the index used
to calculate Additional Rent shall be one selected by the parties to reflect
changes in the purchasing power of the Base Rent as nearly as possible identical
to the CPI. Base Rent and Additional Rent are hereinafter referred to
collectively as the "Rent".

                                   ARTICLE IV
                             PAYMENT OF IMPOSITIONS

      Section 4.01. PAYMENT. Throughout the Lease Term, CCOI shall pay (except
as hereinafter provided in Section 4.02), as and when the same become due,
before any fine, penalty, interest or cost may be added thereto, or become due
or be imposed by operation of law for the non-payment thereof, all Impositions;
provided, however, that:

            (a) If, by law, any Imposition may at the option of the taxpayer be
      paid in installments (whether or not interest shall accrue on the unpaid
      balance of such Imposition) CCOI may exercise the option to pay the same
      (and any accrued interest on the unpaid balance of such Imposition) in
      installments and, in such event, shall pay such installments as the same
      become due during the Lease Term and before any fine, penalty, further
      interest or cost may be added thereto; provided, however, that the amount
      of all installments of any such Imposition, which are to become due and
      payable after the expiration of the Lease Term, shall be paid on or before
      the date which shall be one (1) year immediately prior to the date of such
      expiration or on such later date if such Imposition is levied thereafter;
      and

            (b) Any Imposition, other than Impositions which have been converted
      into installment payments by CCOI pursuant to subparagraph 4.1(a),
      relating to a fiscal period of the taxing authority, a part of which
      period is included within the Lease Term and a part of which is included
      in a period of time after the expiration of this Lease, shall (whether or
      not such Imposition shall become payable during the term of this Lease) be
      adjusted between the Authority and CCOI as of that portion of such
      Imposition which that part of such fiscal period included in the period of
      time before the expiration of this Lease bears to such fiscal period, and
      CCOI shall pay such portion thereof; provided, however, that if CCOI shall
      be in default in the performance of any of CCOI's covenants, agreements
      and undertakings of this Lease provided, then to the extent of the amount
      of any such default CCOI shall not be entitled to receive an
      apportionment.

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      Section 4.02. CONTEST. CCOI at CCOI's own cost and expense shall have the
right to contest the amount or validity, in whole or in part, of any Imposition
by appropriate proceedings diligently conducted in good faith. Upon the
termination of any such proceedings, CCOI shall pay the amount of such
Imposition or part thereof as finally determined in such proceedings, the
payment of which may have been deferred during the prosecution of such
proceedings, together with any costs, fees, interest, penalties or other
liabilities in connection therewith.

      CCOI shall have the right to seek a reduction in the valuation of the Land
and the Facility, or any part thereof, assessed for tax purposes and to
prosecute any action or proceeding theretofore commenced by CCOI, if such
assessed valuation or valuations shall relate or pertain, in whole or in part,
to any period subsequent to the commencement of the Lease Term.

      Section 4.03. ASSESSMENT OF CERTAIN TAXES. It is the intention and
understanding of the parties that no ad valorem taxes, personal property taxes,
real estate taxes, or other similar property taxes or assessments (collectively,
the "Property Taxes") will be assessed on the Land or the Facility during the
Lease Term. In the event Property Taxes are assessed (by reason of a change in
law, court ruling, agency regulation or for any other reason), then the
following shall control:

            (a) To the extent that Property Taxes are assessed retroactively for
      prior tax years, then (i) the Authority shall immediately pay to CCOI an
      amount necessary to reimburse CCOI for such retroactive taxes, such amount
      not to exceed, in the aggregate, the greater of (x) $500,000.00 or (y) the
      total Rent paid for the preceding five (5) years of the Lease Term,
      together with interest thereof from the date demand is made by CCOI until
      paid at the rate of eighteen percent (18%) per annum, and (ii) CCOI shall
      be entitled to offset against future-accruing payments of Rent an amount
      not to exceed thirty percent (30%) of the then-current per diem rate
      reserved to the Authority under the Intergovernmental Agreement, but only
      for so long as is necessary to reimburse CCOI for the amount of
      retroactive Property Taxes not reimbursed pursuant to Section 4.03(a)(i)
      hereinabove.

            (b) To the extent that Property Taxes are assessed (or it is
      determined that Property Taxes shall be assessed) on an ongoing, yearly
      basis, then (i) the Base Rent shall be decreased to the sum of $25,000.00
      per year and (ii) if Property Taxes are assessed prior to December 31,
      2005, then the then-current per diem rate reserved to the Authority under
      the Intergovernmental Agreement shall be decreased by $0.08 per inmate. In
      such event, the Base Rent shall thereafter not be subject to increase
      pursuant to Section 3.02 and no Additional Rent shall be imposed pursuant
      to Section 3.02.

      Section 4.04. AUTHORITY'S PARTICIPATION IN CONTEST. The Authority shall
join in and assist in good faith with any proceedings referred to in Section
4.02 hereof, including, without limitation, causing such proceedings be brought
by or in the name of the Authority or any owner of the Land or the Facility or
any part thereof. Except as otherwise provided in this Lease, CCOI shall be
entitled to any refund of any Imposition and penalties or interest thereon
received which have been paid by CCOI.

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      Section 4.05. ATTORNEY IN FACT. The Authority appoints CCOI the
attorney-in-fact of the Authority (which appointment is coupled with an
interest) for the purposes of making all payments to be made by CCOI pursuant to
any of the provisions of this Lease to persons or entities other than the
Authority.

                                    ARTICLE V
                                    INSURANCE

      Section 5.01. REQUIRED COVERAGE. At all times during the term of this
Lease, CCOI shall, at CCOI's sole cost and expense, but for the mutual benefit
of, and naming as additional insureds, the Authority and any Lender or other
mortgagee of the Leased Premises and the Facility as their interests may appear,
maintain the following policies of insurance:

            (a) Fire and extended coverage insurance on the Facility, including
      protection against loss or damage by other risks now embraced by the
      so-called all-risk coverage endorsement, in amounts at all times
      sufficient to prevent the Authority or CCOI from becoming a coinsurer
      under the terms of the applicable policies, but in any event in an amount
      not less than $17,000,000.

             (b) Comprehensive general public liability and property damage
      (minimum limit of $5,000,000 per occurrence and a $5,000,000 umbrella
      policy), comprehensive property hazard, riot, medical, and employee
      workers compensation insurance. The liability policy or policies shall
      name the Trustees of the Town, the Town, the employees of the Town, the
      Trustees of the Authority and the Authority, as additional insureds and
      CCOI shall seek to have such policies provide for a thirty (30) days'
      notice prior to cancellation with the Town and the Authority named as
      additional notice parties. CCOI shall pay any and all applicable
      deductible amounts.

The foregoing policies shall be subject to a reasonable deductible or
coinsurance, but in no event shall any deductible amount for the coverage
required by Section 5.01(b) exceed the sum of $100,000 for the coverage afforded
the additional insureds. CCOI shall pay any and all applicable deductible
amounts.

      Section 5.02. LOSS PAYABLE. All insurance provided for in Section 5.01(a)
hereof shall be effected under standard form policies issued by insurers of
recognized responsibility, which are rated at least "A+7" by national rating
organizations. All such insurance shall be carried in the name of the Authority
and CCOI; and loss thereunder shall be payable to CCOI and any mortgagee, as
their respective interests may appear.

      Section 5.03. EVIDENCE OF POLICIES AND RENEWALS. Upon request by the
Authority and thereafter not less than seven (7) days prior to the expiration
dates of the expiring policies theretofore furnished pursuant to this Article,
certificates of insurance or insurance binders evidencing renewal of the
insurance required under this Article V. If said certificates or binders contain
language which limits the rights of the additional insureds unless their names
are specifically indorsed on the policy, CCOI shall provide copies of said
indorsements.

      Section 5.04. WAIVER OF CLAIM. Any other provisions of this Lease to the

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contrary notwithstanding, the Authority and CCOI do hereby mutually waive any
and all claims which shall or may arise, in favor of one party and against the
other party to this Lease during the Lease Term or any extension thereof, for
any and all claims regarding, loss of, or damage to the Leased Premises (or any
personal property therein or thereon), which claim, loss or damage are covered
by valid and collectible fire and extended coverage insurance policies (or are
required pursuant to this Lease to be so covered). Inasmuch as the above mutual
waiver shall and does preclude the assignment of any claim aforesaid, by way of
subrogation (or otherwise) to any insurance company (or any other person), the
Authority and CCOI hereby agree to give to each insurance company issuing
policies of fire and extended coverage insurance, written notification of the
terms of the said mutual waivers, and to have such policies of insurance
coverage properly endorsed, if such endorsement may be necessary, to prevent any
invalidation of the said policies of insurance coverage by reason of the
existence of such waivers.

      Section 5.05. CANCELLATION NOTICES. Each policy delivered hereunder shall,
to the extent obtainable, contain an agreement by the insurer that such policy
shall not be canceled without at least thirty (30) days prior written notice to
CCOI and the Authority (ten (10) days for non-payment), and to any additional
party or person that the Authority shall designate in writing from time to time.

                                  ARTICLE VI
                        EVENTS OF DEFAULT AND REMEDIES

      Section 6.01. CCOI'S DEFAULT. It shall be an "event of default" or a
"default" hereunder if CCOI shall fail to observe or perform any of its material
obligations under this Lease in accordance with the terms hereof.

      Section 6.02. AUTHORITY'S REMEDIES. Upon the occurrence of an event of
default by CCOI hereunder, which shall remain uncured for one hundred twenty
(120) days after receipt by CCOI of written notice of such event of default (or
such longer period as may be reasonably necessary, provided that within such 120
days CCOI has commenced cure of such default and is diligently continuing to
effect a cure), the Authority, as its sole and exclusive remedy, may thereafter
or any time subsequently during the existence of such event of default, subject
to the rights of existing lessees, sublessees, Lenders, or other entities
providing financing, file suit against CCOI for actual (but not consequential or
other) damages occasioned by the Authority as a result of CCOI's default. In no
event shall the Authority be entitled to terminate this Lease or to terminate or
disturb CCOI's possession, use or enjoyment of the Leased Premises. In the event
that the Authority attempts to terminate this Lease, it shall thereupon become
immediately liable to pay an amount equal to the sums described in Section
12.01(a) and (d) as liquidated damages and not as a penalty. The obligation of
the Authority to make such payment is absolute and unconditional and shall not
be subject to any abatement, reduction, set-off, counterclaim or recoupment for
any reason whatsoever.

      Section 6.03. AUTHORITY'S DEFAULT. It shall be an "event of default" or a
"default" hereunder if the Authority shall fail to observe or perform any of its
material obligations under this Lease in accordance with the terms hereof.

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      Section 6.04. CCOI'S REMEDIES. Upon the occurrence of an event of default
by the Authority hereunder, which shall remain uncured for sixty (60) days after
receipt by the Authority of written notice of such event of default (unless
within such 60 days the Authority has commenced cure of such default and is
diligently continuing to effect a cure), CCOI may thereafter or any time
subsequently during the existence of such breach or default perform any act that
the Authority is required to perform hereunder as the Authority's
attorney-in-fact (which power of attorney is coupled with an interest and is,
therefore, irrevocable) and recover its costs incurred in such performance,
bring suit for any and all damages occasioned by the Authority's default
(including, without limitation, lost profits), or to seek any other remedy to
which it may be entitled at law or in equity. CCOI shall have the right to
specific performance hereof.

                                 ARTICLE VII
                    USE OF PREMISES; ADDITIONAL COVENANTS

      Section 7.01. USE. CCOI shall have the right to use the Leased Premises
for any lawful purpose whatsoever, but shall not use or permit the use of the
Leased Premises for any unlawful purpose.

      Section 7.02. GRANTING EASEMENTS. Upon request by CCOI, the Authority and
the Town shall grant to CCOI such permanent easements over adjacent lands
respectively owned by same as are reasonably necessary to construct, maintain,
manage and operate the Facility (or cause same to be performed on CCOI's
behalf); and to exercise CCOI's rights and obligations under this Lease. The
Authority hereby covenants to CCOI that it shall not grant or allow to be
granted any easement, license or other right to use the Leased Premises without
the prior written consent of CCOI, which consent may be withheld in CCOI's sole
and absolute discretion.

      Section 7.03. CONTINUATION OF SERVICES. Notwithstanding any provision of
this Lease to the contrary, and notwithstanding that fire, police and ambulance
services (collectively, the "Services") may have previously been provided to the
Leased Premises, in consideration of the Rent and the per diem rate reserved to
the Authority under the Intergovernmental Agreement, the Services shall continue
to be provided by the Town to the Leased Premises in the same manner as
heretofore provided without charge, fee, cost or expense to CCOI.

      Section 7.04. NO CONDEMNATION. To the extent allowed by applicable law,
the Town hereby covenants that, during the Lease Term, it shall not exercise any
right of eminent domain, condemnation power or similar rights or powers with
respect to the Leasehold Estate or the Leased Premises. The Authority hereby
warrants and represents to CCOI that it possesses no right of eminent domain,
condemnation power or similar rights or powers; moreover, in the event that the
Authority has or obtains such rights or powers, it shall comply with the
preceding sentence. In the event that the Leasehold Estate or the Leased
Premises is the subject of a Taking (hereinafter defined) by or on behalf of the
Town or the Authority, the award to CCOI shall be not less than that established
pursuant to Section 12.01 hereinbelow (but without deduction for the amount set
forth in

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Section 12.01(c)).

      Section 7.05. LIMIT ON AMOUNT OF LEASEHOLD MORTGAGES. Notwithstanding any
provision contained in this Lease to the contrary, in no event shall the amount
of any Leasehold Mortgages incurred in connection with Alterations exceed the
principal amount of the actual costs (direct and indirect) of such Alterations,
together with accrued and unpaid interest thereon, all according to CCOI's books
and records regarding such costs.

      Section 7.06. COMPLIANCE WITH MORTGAGE AND LEASEHOLD Mortgages. Cornell
covenants to fully comply with all material terms and conditions of the Mortgage
or any Leasehold Mortgages.

                                 ARTICLE VIII
                          AUTHORITY'S TITLE AND LIEN

      Section 8.01. TITLE TO LAND. The Authority shall have title to the Land
and the remainder of the residual interest in the Facility paramount to all
others, subject, however, to the Mortgage, and the rights of CCOI existing
hereunder. The Authority shall not without the prior written consent of CCOI and
the Lenders transfer or convey any interest in this Lease, the Facility, or the
Land, which consent shall be given or not in the sole discretion of CCOI and the
Lenders.

      Section 8.02. NO RIGHT OF CCOI TO ENCUMBER TITLE. Except as provided in
this Lease, CCOI shall have no right or power to and shall not in any way
encumber the title of the Authority in and to the Land or the Authority's
residual or remainder interest in the Facility. If requested by CCOI, the
Authority agrees to grant one or more mortgages on the fee simple estate of the
Authority in the Land in connection with CCOI's financing and any refinancing of
the indebtedness secured thereby, but the Authority's fee simple estate in the
Land shall not otherwise be in any way subject to any claim by way of lien or
otherwise, whether claimed by operation of law or by virtue of any express or
implied lease or contract or other instrument made by CCOI. Other than such as
arise pursuant to the financing contemplated in this Section 8.02 and any
refinancing thereof, any claim to a lien or otherwise upon the Land arising from
any act or omission of CCOI shall accrue only against the Leasehold Estate of
CCOI in the Land and shall in all respects be subject to the paramount rights of
the Authority in the Land and the Authority's remainder or residual interest in
the Facility.

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                                  ARTICLE IX
                    MORTGAGE, ASSIGNMENT, SUBLETTING, ETC.

      Section 9.01. MORTGAGE OR ASSIGNMENT BY CCOI. CCOI may, without
restriction, (a) assign, pledge, mortgage, encumber and in any other manner
transfer this Lease and/or the Leasehold Estate, and any part thereof, either as
a stand-alone transaction or as part of a sale/leaseback or a lease/leaseback
transaction, and (b) sublease the Leased Premises, or any part thereof, to any
Person, all without the necessity of giving notice to, or obtaining the consent
of, the Authority. In such event, the Authority and the Town agree to execute
and deliver such assignments or amendments of this Lease or other instruments
requested by CCOI or the Lenders.

      Section 9.02. RENT TO CONTINUE AFTER ASSIGNMENT. If this Lease be
assigned, the Authority may and is hereby empowered to collect rent from the
assignee and enforce the terms of this Lease against the assignee.

      Section 9.03. ASSIGNEE AND SUCCESSOR LIABLE FOR RENT. Without limiting
CCOI's rights provided under Section 9.01 hereof, each and every assignee,
whether as assignee or as successor in interest of any assignee of CCOI herein
named, immediately shall be and become and remain liable for the payment of the
Rent and the charges payable under this Lease, and for the due performance of
all the covenants, agreements, terms and provisions of this Lease on CCOI's part
to be performed to the full end of the term of this Lease. Each and every
provision of this Lease applicable to CCOI shall also apply to and bind every
such assignee with the same force and affect as though such assignee were CCOI
named in this Lease. No transfer to such assignee shall be binding upon the
Authority unless such assignee shall deliver to the Authority a recordable
instrument which contains a covenant or assumption by such assignee to such
effect; but the failure or refusal of such assignee to deliver such instrument
shall not release or discharge such assignee from its obligations and liability
as above set forth. Notwithstanding the foregoing, the Authority agrees that no
assignment of this Lease as collateral for indebtedness shall thereby cause a
Lender to become liable for performance of the obligations of CCOI hereunder.

      Section 9.04. MORTGAGES AND REFINANCING. The proceeds from obligations
which are secured by the Mortgage were used to acquire, design, construct,
equip, operate, and maintain the Facility and to pay other expenses associated
with the Facility. CCOI may enter into refinance agreements relating to
obligations secured by the existing Mortgage.

      In furtherance of the rights granted to CCOI in Section 9.01 hereinabove,
CCOI may incur additional indebtedness secured by additional mortgages and liens
on the Leasehold Estate to secure obligations incurred for its own purposes,
including but not limited to the costs of operating expenses, refinancing
existing mortgages on the Facility or financing the cost of Alterations. CCOI
may mortgage, pledge and encumber the Leasehold Estate, but it may not further
mortgage the fee interest of the Authority in the Land and the Facility.

      Section 9.05. AUTHORITY TO COOPERATE. The Authority agrees that the
existing Mortgage and any refinancing under this Article shall constitute a lien
on

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the Land as well as upon the Facility thereon. The Authority agrees to execute
such documents as may reasonably be required by CCOI or the Lenders, including,
but not limited to, modifications and amendments to this Lease, the
Intergovernmental Agreement, and any other documents executed in connection with
the transactions contemplated in this Lease or the Financing Documents. The
Authority agrees to execute such subordination, attornment and non-disturbance
or similar documents as CCOI, the Lenders or an assignee or subtenant may
request. CCOI shall have the right to grant one or more mortgages or other
encumbrances upon the Leasehold Estate and its interests in the Facility and the
Land.

      Section 9.06. ESTOPPEL CERTIFICATES. The Authority agrees to execute
promptly upon presentation thereof, certificates to assignees, subtenants, or
providers of financing regarding the status of this Lease, the Rent, and whether
any defaults exist hereunder.

      Section 9.07. WAIVER OF AUTHORITY'S LIEN. The Authority and the Town each
hereby waives any and all liens and claims, whether statutory, constitutional or
otherwise, in and to any equipment, personal property, inventory, furnishings
and fixtures (except to the extent of fixtures not readily removable without
material damage) from time to time located in or upon the Leased Premises.

      Section 9.08. ADDITIONAL PROVISIONS REGARDING LEASEHOLD MORTGAGES. Without
limiting the foregoing, and notwithstanding any provision of this Lease to the
contrary:

            (a) RIGHT TO MORTGAGE LEASE. (i) On one or more occasions, without
      the Authority's consent, CCOI may mortgage or otherwise encumber CCOI's
      Leasehold Estate, and assign this Lease and mortgage CCOI's interest in
      the Leased Premises as security for such mortgage or mortgages. (ii)
      Anything herein to the contrary notwithstanding, there shall be no
      limitation or restriction on the amount or number of separate Leasehold
      Mortgages (as hereinafter defined) CCOI may place upon this Lease and/or
      the Leasehold Estate thereby created. (iii) CCOI's default as mortgagor
      under a Leasehold Mortgage shall not constitute a default under this Lease
      except to the extent that CCOI's actions or failure to act in and of
      itself constitutes an event of default under this Lease.

            (b) NOTICE TO LEASEHOLD MORTGAGEE AND FURTHER ASSURANCES. (i) (A) If
      CCOI shall, on one or more occasions, mortgage CCOI's Leasehold Estate to
      a mortgagee, and if CCOI or such mortgagee as the Leasehold Mortgagee (as
      hereinafter defined) shall have provided the Authority with notice of such
      Leasehold Mortgage together with a true copy of such Leasehold Mortgage,
      and the name and address of the Leasehold Mortgagee, the Authority and
      CCOI agree that, following receipt of such notice by the Authority, the
      following provisions of this Section 9.08(b) shall apply in respect to
      each such Leasehold Mortgage; provided that the following provisions of
      this Section 2 shall not be binding on the Authority unless and until such
      notice shall have been given and such copy delivered to the Authority. (B)
      In the event of any assignment of a Leasehold Mortgage or in the event of
      a change of address of a Leasehold Mortgagee, notice of the new name and
      address shall be provided to the Authority; provided that the following
      provisions of this Lease as to

                                       11
<PAGE>
      such mortgagee or assignee shall not be binding on the Authority unless
      and until such notice shall have been given and such copy delivered to the
      Authority. (ii) The Authority shall, upon request, acknowledge to CCOI and
      the Leasehold Mortgagee the receipt of the notice provided for by Section
      9.08(b)(i). (iii) Upon the written request of the holder of a Leasehold
      Mortgage, the Authority and such Leasehold Mortgagee shall execute and
      deliver a separate written instrument in recordable form signed and
      acknowledged by both parties setting forth and confirming the rights of
      such Leasehold Mortgagee under this Lease. (iv) Notice to the Authority of
      the name and address of a Leasehold Mortgagee shall bind any successor of
      the Authority, provided that such notice is given in the manner otherwise
      provided for in this Section 9.08.

            (c) LEASEHOLD MORTGAGES. The term "Leasehold Mortgage" as used in
      this Lease shall include a mortgage, a deed of trust, a deed to secure a
      debt, a UCC-1 security agreement or other security instrument by which
      CCOI's Leasehold Estate and CCOI's interest in the Leased Premises,
      including CCOI's right to use any improvements or fixtures and equipment
      or personal property subject to this Lease, is mortgaged, conveyed,
      assigned, or otherwise transferred, to secure a debt or other obligation
      (but not including installment purchases, equipment leases or similar
      arrangements entered into in the ordinary course of business) or in
      connection with an assignment of this Lease, a purchase money leasehold
      mortgage taken back by CCOI as part of the consideration for such
      assignment. More than one Leasehold Mortgage may exist at any time.

            (d) LEASEHOLD MORTGAGEE. The term "LEASEHOLD MORTGAGEE" as used in
      this Lease shall refer to each holder of a Leasehold Mortgage in respect
      to which the notice provided for by Section 9.08(b)(i) has been given and
      received and as to which the provisions of this Lease are applicable. More
      than one Leasehold Mortgagee may exist at any time.

            (e) LEASEHOLD MORTGAGEE'S CONSENT. No cancellation, surrender, or
      modification of this Lease shall be effective as to any Leasehold
      Mortgagee unless consented to in writing by such Leasehold Mortgagee,
      provided, however, that this provision shall not affect a cancellation
      because of a default under this Lease which is not cured in accordance
      with this Lease.

            (f) NOTICE TO LEASEHOLD MORTGAGEE. The Authority, upon providing any
      notice to CCOI, including but not limited to, notice of (i) a default or
      an event of default under this Lease, or (ii) a termination of this Lease,
      or (iii) a matter on which the Authority may predicate or claim a default
      or event of default, shall at the same time provide a copy of such notice
      to every Leasehold Mortgagee. No such notice by the Authority to CCOI
      shall be deemed to have been duly given to CCOI unless and until a copy
      thereof has been so given to each such Leasehold Mortgagee by registered
      or certified mail at the address specified in the notice given pursuant to
      Section 9.08(b)(i). From and after the date such notice has been given to
      a Leasehold Mortgagee, such Leasehold Mortgagee shall have the additional
      periods of time specified in Sections 9.08(g) and (h) to remedy, commence
      remedying, or

                                       12
<PAGE>
      cause to be remedied the defaults or events of defaults or acts or
      omissions which are specified in any such notice. The Authority shall
      accept such performance by or at the instigation of such Leasehold
      Mortgagee and does hereby authorize any such Leasehold Mortgagee to take
      any such action at such Leasehold Mortgagee's option and does hereby
      authorize entry upon the Leased Premises by the Leasehold Mortgagee for
      such purposes. The Leasehold Mortgagee shall in no event be obligated to
      remedy, commence remedying, or cause to be remedied any default, event of
      default or any acts or omissions specified in any notice received by the
      Leasehold Mortgagee.

            (g) LEASEHOLD MORTGAGEE'S CURE RIGHTS. (i) Anything herein to the
      contrary notwithstanding, if any event of default shall occur which
      entitles the Authority to terminate this Lease, the Authority shall have
      no right to terminate this Lease unless, following the expiration of the
      period of time given CCOI to cure such event of default or the act or
      omission which gave rise to such event of default, the Authority shall
      notify every Leasehold Mortgagee of the Authority's intent to so terminate
      (the "Leasehold Termination Notice") at least sixty (60) days in advance
      of the proposed effective date of such termination, if such event of
      default is capable of being cured by the payment of money, and at least
      one hundred twenty (120) days in advance of the proposed effective date of
      such termination, if such event of default is not capable of being cured
      by the payment of money. The provisions of Section 9.08(h) shall apply if,
      during such 60-day or 120-day Leasehold Termination Notice period, any
      Leasehold Mortgagee shall: (A) notify the Authority of such Leasehold
      Mortgagee's desire to nullify such Leasehold Termination Notice; (B) pay
      or cause to be paid all Rent and other payments then due under this Lease
      and in arrears as specified in the Leasehold Termination Notice and which
      may become due during such cure period unless such payments are disputed
      in good faith; (C) deposit in escrow all amounts otherwise payable under
      the preceding (B) but disputed in good faith; and (D) comply or in good
      faith, with diligence and continuity, commence to comply with all
      non-monetary requirements of this Lease then in default and reasonably
      susceptible of being complied with by such Leasehold Mortgagee. The
      Authority agrees to accept the good faith, diligent efforts of the
      Leasehold Mortgagee to cure such defaults, as if same were being conducted
      by CCOI. (ii) A Leasehold Mortgagee shall in no event be required to cure
      or commence to cure any default or event of default consisting of CCOI's
      failure to satisfy or discharge any lien, charge or encumbrance affecting
      the Leasehold Estate junior in priority to the lien of the Leasehold
      Mortgage held by such Leasehold Mortgagee unless such lien, charge or
      encumbrance is also a lien against the fee estate.

            (h) DEFERRAL OF TERMINATION. (i) If the Authority shall elect to
      terminate this Lease by reason of an event of default, and a Leasehold
      Mortgagee shall have proceeded in the manner provided for by Section
      9.08(g)(i), the specified date for the termination of this Lease as fixed
      by the Authority in its Leasehold Termination Notice shall be extended for
      a period of thirty (30) business days after the date proposed for
      termination in the Leasehold Termination Notice, provided that such
      Leasehold Mortgagee

                                       13
<PAGE>
      shall, during such thirty (30) business day period: (A) pay or cause to be
      paid the Rent, and other monetary obligations of CCOI under this Lease for
      the current period as the same become due, and continue its good faith
      efforts to perform all of CCOI's other obligations under this Lease; and
      (B) if not enjoined or stayed, take steps to commence the acquisition or
      sale of CCOI's interest in this Lease by foreclosure of the Leasehold
      Mortgage or other appropriate means. (ii) If at the end of such thirty
      (30) business day period such Leasehold Mortgagee is complying with
      Section 9.08(h)(i), this Lease shall not then terminate and the time for
      completion by such Leasehold Mortgagee of its proceedings (whether in
      foreclosure or otherwise) shall continue for so long as such Leasehold
      Mortgagee continues to comply with Section 9.08(h)(i) and is not enjoined
      or stayed and thereafter for so long as such Leasehold Mortgagee proceeds
      to complete steps to acquire or sell CCOI's interest in this Lease by
      foreclosure of the Leasehold Mortgage or by other appropriate means with
      diligence and continuity. Nothing in this Section, however, shall be
      construed to extend this Lease beyond its stated Lease Term or to require
      a Leasehold Mortgagee to continue such foreclosure proceedings after the
      event of default has been cured. If the event of default shall be cured
      and the Leasehold Mortgagee shall discontinue such foreclosure
      proceedings, this Lease shall continue in full force and effect as if CCOI
      had not defaulted under this Lease. (iii) If a Leasehold Mortgagee is
      complying with Sections 9.08(h)(i) and (ii), upon the acquisition of
      CCOI's estate herein by such Leasehold Mortgagee or its designee or any
      other purchaser at a foreclosure sale or otherwise and the discharge by
      foreclosure or otherwise of any lien, charge or encumbrance against CCOI's
      interest in this Lease or the Leased Premises which is junior in priority
      to the lien of the Leasehold Mortgage held by such Leasehold Mortgagee and
      which CCOI is obligated to satisfy and discharge by the terms of this
      Lease, this Lease shall continue in full force and effect as if CCOI had
      not defaulted under this Lease. (iv) The making of a Leasehold Mortgage
      shall not be deemed to constitute an assignment or transfer of this Lease
      or of the Leasehold Estate hereby created, nor shall any Leasehold
      Mortgagee, as such, be deemed to be an assignee or transferee of this
      Lease or of the Leasehold Estate created hereby so as to require such
      Leasehold Mortgagee, as such, to assume the performance of any of the
      terms, covenants or conditions on the part of CCOI to be performed
      hereunder, but the purchaser at any sale of this Lease and of the
      Leasehold Estate thereby created in any proceedings for the foreclosure of
      any Leasehold Mortgage, or the assignee or transferee of this Lease and of
      the Leasehold Estate created under any instrument of assignment or
      transfer, in lieu of the foreclosure of any Leasehold Mortgage, shall be
      deemed to be an assignee or transferee, and shall be deemed to have agreed
      to perform all of the terms, covenants and conditions on the part of the
      CCOI to be performed hereunder from and after the date of such purchase
      and assignment. (v) Any Leasehold Mortgagee or other acquirer of the
      Leasehold Estate of CCOI pursuant to foreclosure, assignment in lieu of
      foreclosure or other proceedings may, upon acquiring CCOI's Leasehold
      Estate, without further consent of the Authority, sell and assign such
      Leasehold Estate; provided that such assignee shall have delivered to the
      Authority its written

                                       14
<PAGE>
      agreement to be bound thereafter by all of the provisions of this Lease.
      (vi) Any sale of this Lease and of the Leasehold Estate thereby created in
      any proceedings for the foreclosure of any Leasehold Mortgage, or the
      assignment or transfer of this Lease and of the Leasehold Estate thereby
      created in lieu of the foreclosure of any Leasehold Mortgage shall be
      deemed to be a sale, transfer or assignment of this Lease and of the
      Leasehold Estate thereby created and the Authority shall recognize any
      such purchaser or assignee of the Leasehold Estate (including the
      Leasehold Mortgagee should it be the purchaser or assignee, and any
      assignee of the Leasehold Mortgagee) as CCOI hereunder.

            (i) NEW LEASE. In the event of the termination of this Lease as a
      result of an event of default, or in the event CCOI (as debtor in
      possession) or a trustee in bankruptcy for CCOI rejects this Lease in
      connection with any proceeding involving CCOI under the Bankruptcy Code or
      any similar state or federal statute, or in the event of any other
      termination of this Lease, the Authority shall, in addition to providing
      the notices of default and termination required by Sections 9.08(f) and
      (g) provide each Leasehold Mortgagee with written notice (the "Authority's
      Notice of Termination") that this Lease has been terminated, together with
      a statement of all sums which would at that time be due under this Lease
      but for such termination, and of all other defaults or events of default,
      if any, then known to the Authority. the Authority agrees to enter into a
      new lease ("New Lease") of the Leased Premises with such Leasehold
      Mortgagee or its designee for the remainder of the term, effective as of
      the date of termination, at the rent and additional rent, and upon the
      terms, covenants and conditions (but excluding requirements which are not
      applicable or which have already been fulfilled) of this Lease provided:
      (i) such Leasehold Mortgagee shall make written request upon the Authority
      for such New Lease within forty-five (45) days after the date such
      Leasehold Mortgagee receives the Authority's Notice of Termination given
      pursuant to this Section; (ii) such Leasehold Mortgagee or its designee
      shall pay or cause to be paid to the Authority at the time of the making
      of the request referred to in subparagraph (i) above, any and all sums
      which would at the time of execution and delivery thereof be due pursuant
      to this Lease but for such termination and, in addition thereto, all
      expenses, including reasonable attorneys' fees, which the Authority shall
      have incurred by reason of such termination and the execution and delivery
      of the New Lease and which have not otherwise been received by the
      Authority from CCOI or other party in interest under CCOI; (iii) such
      Leasehold Mortgagee or its designee shall agree in writing to remedy any
      of CCOI's defaults of which said Leasehold Mortgagee was notified by the
      Authority and which are reasonably susceptible of being so cured by the
      Leasehold Mortgagee or its designee; (iv) by virtue of the recording of
      this Lease or a memorandum thereof, the New Lease shall have the same
      priority as this Lease and the tenant under such New Lease shall have the
      same right, title and interest in and to the Leased Premises as CCOI had
      under this Lease; (v) the Authority shall, if requested, execute and
      deliver such ordinances and other documents as shall be reasonably
      necessary to enable the tenant under the New Lease to obtain title
      insurance as to its leasehold interest under the New Lease, at

                                       15
<PAGE>
      such new tenant's expense; (vi) if the Authority and the new tenant
      disagree regarding any payment due the Authority in connection with the
      execution of a New Lease, then the tenant shall be deemed to have
      performed its payment obligation if such new tenant: (A) pays the
      Authority the full amount not in controversy and (B) agrees in writing to
      pay any additional sum ultimately determined to be due promptly upon such
      determination; (vii) effective upon the commencement of the term of any
      New Lease, all subleases by CCOI shall be assigned and transferred without
      recourse by the Authority to tenant under the New Lease and all monies on
      deposit with the Authority pursuant to such subleases by CCOI, if any,
      shall be similarly assigned to tenant under the New Lease.

            (j) PRIORITY OF LEASEHOLD MORTGAGEES. If more than one Leasehold
      Mortgagee desires to exercise Leasehold Mortgagee's cure rights or shall
      request a New Lease, the Authority shall recognize the Leasehold Mortgagee
      exercising such right or privilege and enter into such New Lease with the
      Leasehold Mortgagee whose Leasehold Mortgage is prior in lien or with the
      designee of such Leasehold Mortgagee, and thereupon the requests for a New
      Lease of each holder of a Leasehold Mortgage junior in lien shall be, and
      be deemed to be, void and of no force or effect. The Authority, without
      liability to CCOI or any Leasehold Mortgagee with an adverse claim, may
      rely upon either (i) a mortgagee title insurance policy issued at CCOI's
      expense, by a title insurance company doing business within the State of
      Oklahoma and selected by the Authority or (ii) such other Leasehold
      Mortgagee as has been designated in writing by all Leasehold Mortgagees
      and CCOI, as the basis for determining the appropriate Leasehold Mortgagee
      who is entitled to such New Lease.

            (k) CONDEMNATION PROCEEDS. CCOI's share, as provided by this Lease,
      of condemnation proceeds arising from an exercise of the power of eminent
      domain shall, subject to the provisions of such Lease, be disposed of as
      provided for by any Leasehold Mortgage.

            (l) INSURANCE. A standard mortgagee clause naming each Leasehold
      Mortgagee may be added to any and all insurance policies required to be
      carried by CCOI on condition that the insurance proceeds shall be applied
      in the manner specified in this Lease. The Leasehold Mortgage may provide
      a manner for the disposition of such insurance proceeds, if any, otherwise
      payable to CCOI pursuant to the provisions of this Lease.

            (m) CONDEMNATION AND INSURANCE PROCEEDS. All references in this
      Lease to the disposition of condemnation and insurance proceeds are hereby
      amended to clarify that the Authority's share of any condemnation or
      insurance proceeds is limited to and calculated by reference to the
      Authority's interest in the land subject to this Lease and not in any
      improvements subject to this Lease.

            (n) ADDITIONAL NOTICE PROVISIONS. Anything herein to the contrary
      notwithstanding, notices from the Authority to each Leasehold Mortgagee
      shall be mailed to the address furnished the Authority pursuant to Section
      9.08(b) and those from each Leasehold Mortgagee to the Authority shall be

                                       16
<PAGE>
      mailed to the address designated pursuant to the provisions of this Lease.
      Such notices, demands and requests shall be given in the manner described
      in this Lease and shall in all respects be governed by the provisions of
      this Lease.

            (o) ADDITIONAL LEASES, ETC. The Authority and CCOI each agree to
      execute any amendments to this Lease or other documents reasonably
      required by a Leasehold Mortgagee; provided, however, that any such
      amendment shall not materially change either party's rights or increase
      either party's obligations hereunder.

            (p) TRANSFER OF CCOI'S RIGHTS. CCOI may delegate or otherwise
      transfer to a Leasehold Mortgagee any or all of CCOI's rights under this
      Lease, but no such delegation or transfer shall bind the Authority unless
      and until the Authority shall have received a copy of a written instrument
      effecting such delegation accompanied by a photocopy of the Leasehold
      Mortgagee's fully executed Leasehold Mortgage. Such delegation or transfer
      of authority may be effected by the terms of the Leasehold Mortgage
      itself, in which case service upon the Authority of a copy of such
      Leasehold Mortgage shall be sufficient to bind the Authority to such
      delegation or transfer of rights.

            (q) QUIET ENJOYMENT DURING CURE PERIOD. So long as the time for a
      Leasehold Mortgagee to properly exercise its cure rights pursuant to this
      Lease with respect to a nonmonetary default by CCOI has not expired (and
      provided that all monetary defaults are cured within the Leasehold
      Mortgagee's cure period provided for under this Lease), the Authority
      shall not (i) re-enter the Leased Premises, (ii) serve a notice of
      election to terminate this Lease, or (iii) bring a proceeding on account
      of such default or event of default to (1) dispossess CCOI and/or other
      occupants of the Leased Premises, (2) re-enter the Leased Premises, (3)
      terminate this Lease or the Leasehold Estate, or (4) otherwise exercise
      any other rights or remedies under this Lease by reason of such default or
      event of default.

            (r) LEASEHOLD MORTGAGEE'S RIGHT TO ENTER PREMISES. The Authority and
      CCOI authorize each Leasehold Mortgagee to enter the Leased Premises as
      necessary to effect such Leasehold Mortgagee's cure rights and take any
      actions reasonably necessary to effect such cure. A Leasehold Mortgagee's
      rights under this Section shall not constitute control of the Leased
      Premises or otherwise be construed to mean that such Leasehold Mortgagee
      has assumed performance of CCOI's obligations hereunder.

            (s) PAYMENTS MADE BY LEASEHOLD MORTGAGEE. Any payment made by a
      Leasehold Mortgagee to the Authority to cure any claimed default or event
      of default shall be deemed to have been made "under protest" and without
      prejudice to CCOI's or Leasehold Mortgagee's recovery of such payment if
      the Authority's claim of default or event of default shall be determined
      to have been erroneous.

            (t) ESCROW DEPOSITS, BONDS AND SECURITY. Notwithstanding anything in
      this Lease to the contrary, no escrow deposits, bonds or security

                                       17
<PAGE>
      (to the extent otherwise required under this Lease) shall be required
      pursuant to this Lease with respect to the performance of any obligation
      being undertaken or performed on behalf of CCOI pursuant to the terms of a
      Leasehold Mortgage by or under the supervision of any Leasehold Mortgagee.

            (u) THE AUTHORITY'S BANKRUPTCY. If the Authority (as debtor in
      possession) or a trustee in bankruptcy for the Authority rejects this
      Lease in connection with any proceeding under the Bankruptcy Code or any
      similar state or federal statute, then: (i) CCOI shall not have the right
      to elect to treat this Lease as terminated except with the prior written
      consent of each and every Leasehold Mortgagee whose recorded Leasehold
      Mortgage requires such consent by the applicable Leasehold Mortgagee; (ii)
      if CCOI does not properly elect to treat this Lease as terminated, then
      this Lease shall continue in effect without change upon all the same terms
      and conditions as are set forth in this Lease. Thereafter, CCOI and its
      successors (including Leasehold Mortgagees) shall be entitled to offset
      against rent any damages arising from such rejection, in accordance with
      applicable law governing the bankruptcy proceeding, and any such offset
      properly made shall not constitute an event of default. If CCOI claims a
      greater offset than the offset to which CCOI is lawfully entitled, then
      the taking of such excessive offset by CCOI shall constitute a monetary
      default as to which CCOI and Leasehold Mortgagees shall be entitled to
      notice and opportunity to cure as provided in this Lease; and (iii) the
      lien of any Leasehold Mortgage that was in effect before the rejection of
      this Lease shall extend to CCOI's continuing possessory rights with
      respect to the Leased Premises following such rejection, with the same
      priority as it would have enjoyed had such rejection not taken place.

            (v) NON-CURABLE DEFAULTS. (i) Nothing herein contained shall require
      any Leasehold Mortgagee or its designee as a condition to its exercise of
      rights hereunder to cure any default or event of default of CCOI not
      reasonably susceptible of being cured by such Leasehold Mortgagee or its
      designee, in order to comply with the provisions of Sections 9.08(g) or
      (h), or as a condition of entering into the New Lease provided for by
      Section 9.08(i), defaults or events of default capable of being cured by
      the payment of money to a third party shall, in any event, be deemed
      reasonably susceptible of being cured. (ii) If the Authority shall elect
      to terminate this Lease by reason of any default or event of default of
      CCOI not reasonably susceptible of being cured by a Leasehold Mortgagee,
      and a Leasehold Mortgagee shall have proceeded in the manner provided by
      Section 9.08(g)(i), the specified date for the termination of this Lease
      as fixed by the Authority in its termination notice shall be extended as
      provided for in Section 9.08(h), provided that such Leasehold Mortgagee
      shall proceed in the manner set forth in Section 9.08(h).

            (w) NOTICE OF ARBITRATION OR LEGAL PROCEEDINGS. The Authority shall
      give each Leasehold Mortgagee prompt notice of any arbitration or legal
      proceedings between the Authority and CCOI involving obligations under
      this Lease. Each Leasehold Mortgagee shall have the right to intervene in
      any such proceedings and be made a party to such proceedings, and the
      parties hereto do hereby consent to such intervention. In the event that
      any

                                       18
<PAGE>
      Leasehold Mortgagee shall not elect to intervene or become a party to any
      such proceedings, the Authority shall give the Leasehold Mortgagee notice
      of, and a copy of any award or decision made in any such proceedings,
      which shall be binding on all Leasehold Mortgagees not intervening after
      receipt of notice thereof.

            (x) NO MERGER. So long as any Leasehold Mortgage is in existence,
      unless all Leasehold Mortgagees shall otherwise expressly consent in
      writing, the fee title to the Leased Premises and the Leasehold Estate of
      CCOI created by this Lease shall not merge but shall remain separate and
      distinct, notwithstanding the acquisition of said fee title and said
      Leasehold Estate by the Authority or by CCOI or by a third party, by
      purchase or otherwise.

                                  ARTICLE X

                    CONSTRUCTION, REPAIRS, ADDITIONS, ETC.

      Section 10.01. EXPANSION OF FACILITY. CCOI shall at all times have the
right to make Alterations, erect additional improvements, and to remove,
remodel, alter, or otherwise change the Facility or any improvements in such
manner as shall be satisfactory to CCOI in its sole and absolute discretion,
without the necessity for prior notice to or approval of the Authority or the
Town.

      Section 10.02. NO REPAIRS BY AUTHORITY. The Authority shall not be
required to furnish any services or facilities or to make any normal repairs or
alterations in or to the Facility and the Land throughout the term of this
Lease, CCOI hereby assuming the full and sole responsibility for the condition,
operation, repair, and maintenance of the entire Facility and the Land. Nothing
contained in this Lease shall impose on the Authority the obligation to make any
repairs or expend any moneys for the maintenance of the Land or the renewal,
replacement or repair of the Facility.

      Section 10.03. CCOI TO MAKE REPAIRS. CCOI shall throughout the Lease Term,
at CCOI's sole expense, take good care of the Land and the Facility, promptly
make all normal repairs thereto, and shall maintain and keep the Land and the
sidewalks and curbs adjacent thereto in good order, repair and condition, normal
wear and tear and casualties excepted. CCOI shall indemnify and hold the
Authority harmless of and from any and all claims, damages, or demands upon or
arising out of the failure of CCOI to perform this covenant or arising out of
any accident, injury or damage to any person or property which shall or may
happen in or upon the Land, however caused (but excluding the negligence or
willful misconduct of the Authority or the Town or their respective employees,
agents and contractors), and except as is permitted under Article IX shall keep
the Land and the Facility free and clear of any and all mechanics' and
materialmen's liens or other similar liens or charges incidental to work done or
material supplied in or about the Land and the Facility, subject to the
provisions of Article IX.

      Section 10.04. DISPOSAL OF PROPERTY. CCOI will not do, permit or suffer
any material waste or damages to or upon the Facility, the Land or any part
thereof. CCOI shall have the right at any time and from time to time, to sell or

                                       19
<PAGE>
dispose of any fixture or other property subject to this Lease which CCOI
determines, in its sole discretion, may have become obsolete or unfit for use or
which CCOI determines, in its sole discretion, is no longer useful, necessary or
profitable in the conduct of CCOI's business.

      Section 10.05. ALTERATIONS TO FACILITY. CCOI shall have the right to make
(but shall not be obligated to do so, beyond initial repairs), at CCOI's sole
cost and expense, Alterations in or to the Leased Premises

      Section 10.06. NO LIABILITY TO AUTHORITY. Whether under the provisions of
this Lease or otherwise, but without limiting CCOI's rights and duties
hereunder, neither CCOI, nor any agent, employee, representative, contractor, or
subcontractor of CCOI shall have any power or authority to do any act or thing
or to make any contract or agreement which will bind the Authority. Further, the
Authority shall have no responsibility to CCOI or to any contractor,
subcontractor, supplier, materialman, workman or other person, firm or
corporation who shall engage in or participate in any construction of any
improvements or buildings or Alterations thereto unless the Authority shall
expressly undertake such obligations by an agreement in writing.

      Section 10.07. EXCAVATION TO LAND. If any excavation or other building
operation contemplated to be made or shall be made upon the Land or the Facility
or any adjoining premises, street or alley, CCOI shall, and does hereby assume,
at CCOI's expense, all obligations imposed by law on both the owner and the
occupant of the Land with respect to shoring and lateral support and agrees to
prevent any claims or liens against the Authority or the Land or any part
thereof by reason of failure to furnish such lateral support or shoring.

      Section 10.08. BUILDING CODES. The construction of Alterations shall be
done promptly and in good workmanlike manner and in compliance with the building
and zoning laws of the Town.

      Section 10.09. PAYMENT FOR ALTERATIONS. The cost of the construction of
Alterations shall be paid promptly so that the Land and the Facility shall at
all times be free of liens for labor and materials supplied to CCOI except as
contested.

                                       20
<PAGE>
                                   ARTICLE XI

                              DAMAGE OR DESTRUCTION

      Section 11.01. FIRE OR CASUALTY DAMAGE. If during the term of this Lease
the Facility or any part thereof shall be substantially injured or destroyed by
fire or any other casualty so as to render the Facility unfit for occupancy, or
makes it impossible to conduct the business of CCOI thereon, or to such extent
that the Facility and the Leased Premises cannot in the sole opinion of CCOI be
repaired with reasonable diligence within two hundred seventy (270) days from
the later of (i) occurrence of such injury or destruction or (ii) the payment of
insurance proceeds relating thereto, then CCOI at CCOI's option may terminate
this Lease and the term hereof from the date of such injury or destruction. In
such instance, CCOI immediately shall surrender the Leased Premises and the
Facility and all interest therein to the Authority, and the Authority shall
refund to CCOI a pro-rata portion of the Rent previously paid for the year in
which the termination occurs. In such event, insurance proceeds shall be first
used to clear the debris from the Land and then be applied in the order of
priority established in Section 12.01, subparagraphs (a) through (e) hereof. In
the event that CCOI fails to recover an amount equal to the sums set forth in
Sections 12.01(a) and (d), CCOI shall have the option to require that the
Authority execute and deliver a conveyance to CCOI of all of the Authority's
right, title, and interest in the Land and Facility in such manner as CCOI shall
specify.

      Section 11.02. REPAIR OF FACILITY. Subject in all instances to the
requirements of the Mortgage and any Leasehold Mortgage, if the Facility has
been substantially injured or destroyed but, in the sole discretion of CCOI, can
be restored as nearly as possible to its condition immediately prior to such
injury or destruction within the aforesaid 270-day period, and CCOI does not
elect to terminate this Lease pursuant to Section 11.01 hereof, then this Lease
shall not end or terminate on account of such injury or destruction. In such
event, all insurance moneys recovered by CCOI or by the Authority (as their
respective interests may appear), on account of such damage or destruction under
the policies of insurance provided for in Section 5.01 hereof, less the cost, if
any, of such recovery (the "Insurance Proceeds"), shall be applied by CCOI, in
its sole discretion but subject to the terms of the Financing Documents, to the
payment of the cost of repairing, restoring, rebuilding the Facility or altering
the damaged property, including the cost of temporary repairs and the protection
of property pending the completion of permanent restoration, repairs, rebuilding
or alterations (all of which temporary work and permanent work are hereinafter
collectively referred to as the "Restoration").

      Section 11.03. OBLIGATION TO REPAIR. Subject in all instances to the terms
of the Mortgage and this Lease, in the event the Leased Premises shall be
injured by any cause aforesaid, so as not to be rendered unfit for occupancy,
then CCOI promptly shall repair the same.

      Section 11.04. EXCESS REPAIRS. It is expressly understood and agreed that
CCOI shall in no event be obligated to expend any sums for Restoration in excess
of the amount of Insurance Proceeds.

      Section 11.05. RENT ABATEMENT. Except as otherwise provided in this
Article XI no destruction of or damage to the Facility, the Leased Premises or
any

                                       21
<PAGE>
part thereof by fire or any other casualty shall terminate or permit CCOI to
surrender this Lease or shall relieve CCOI from CCOI's liability to pay the full
Rent and other charges payable under this Lease, except to the extent that Rent
shall be paid by the application thereto by the Authority of the proceeds of
insurance required pursuant to Section 5.01 or from any of CCOI's other
obligations under this Lease. CCOI waives any rights now or hereafter conferred
upon CCOI by statute or otherwise to quit or surrender this Lease or the Leased
Premises or any part thereof, or to any suspension, diminution, abatement or
reduction of Rent on account of any such destruction or damage.

      Section 11.06. CCOI TO DETERMINE SETTLEMENT. With respect to the
settlement of any claim under any policy of insurance maintained pursuant to
Section 5.01, the Authority and CCOI, subject to the rights of the Lenders in
the Financing Documents, shall use their reasonable efforts to mutually agree
upon the amount of any such settlement; provided, however, that as between the
Authority and CCOI, CCOI, in CCOI's sole judgment and discretion, shall make the
final decision with respect to the amount of any such settlement.

      Section 11.07. FORCE MAJEURE. Notwithstanding the above, CCOI shall not be
deemed in violation of the applicable provisions of this Lease if, while
undertaking to restore the Leased Premises and the Facility after a casualty,
the Restoration is interrupted by force majeure. CCOI shall be excused from the
performance required of CCOI hereunder, during the continuation of the
interruption by force majeure.

      Section 11.08. TERMS OF MORTGAGE TO CONTROL. In the event the Mortgage, or
any other mortgage shall be in force at the time of any damage to or destruction
by fire or otherwise to the Facility, the Leased Premises or any part thereof,
then the terms of such mortgage shall control with respect to repair,
restoration and replacement of the Leased Premises and to the application of
insurance proceeds.

                                 ARTICLE XII

                                 CONDEMNATION

      Section 12.01. DISTRIBUTION OF AWARD. If, at any time during the Lease
Term, title to the whole or substantially all of the Leased Premises shall be
taken by statute or in condemnation proceedings or by any right of eminent
domain (hereinafter called a "Taking"), this Lease shall terminate and expire on
the date of such Taking and the Rent and other charges payable hereunder shall
be apportioned and paid to (or refunded for all periods after) the date of such
Taking. For purposes of this Article XII, "substantially all" of the Leased
Premises or the Facility shall be deemed to have been taken if the remaining
portion cannot be practically and economically used or converted for use by CCOI
for the purposes permitted by this Lease, and "date of Taking" shall mean the
date that possession of the Leased Premises, the Facility or any part thereof is
denied CCOI and the Authority so that the intents and purposes of this Lease are
incapable of being fulfilled.

      In the event of any such Taking and the termination of this Lease, the
Authority and CCOI shall together make one claim for an award for the combined

                                       22
<PAGE>
interests in the subject property, and shall assist each other as shall be
reasonably necessary in the orderly and timely prosecution of their claims to
insure the maximum recovery for the Taking. The net award received (after
deduction of reasonable fees and expenses, including without limitation
reasonable fees for attorneys and experts) shall be paid as follows and in the
following order:

            (a) The holders of the Mortgage shall first receive the amount of
      the original promissory note made by CCOI in connection with the existing
      Mortgage, which is hereby stipulated to be $43,100,000.00, together with
      the amount of any increases in the indebtedness secured by such note made
      in connection with Alterations to the Leased Premises.

            (b) The holder of any mortgages or liens created pursuant to Article
      IX shall receive amounts required in reduction of the secured
      indebtedness.

            (c) The Authority shall then be entitled to receive the value of the
      Authority's fee interest in and to the Land for the agreed value of
      $240,000.00 if the entire tract is Taken or if the Land is sold pursuant
      to Section 13.01. If less than all of the tract is Taken, the Authority
      shall receive the value of that interest up to the amount of $240,000.

            (d) The sum of (i) an amount sufficient to compensate CCOI for all
      actual direct and indirect costs and expenses incurred by CCOI in
      acquiring, designing, constructing, financing and developing the Facility,
      plus (ii) a fair and reasonable rate of return, which the parties agree is
      18% per annum, on such costs and expenses, plus (iii) the fair market
      value of the Leasehold Estate. The books and records of CCOI shall be
      determinative of the total amount paid for said costs and expenses. The
      fair market value of CCOI interest in the Leasehold Estate (which includes
      the Land and the Facility) shall be conclusively determined by an
      independent M.A.I. certified appraiser selected by CCOI (which appraiser
      shall assume full occupancy of the Facility through the entire remaining
      Lease Term and a per diem payment per inmate equal to the then highest
      such payment, escalated annually at the then-prevailing CPI rate, over
      such term, discounted at 8% per annum to the calculation date). The costs
      of any such appraisal shall be paid by CCOI.

            (e) The balance of said award or awards, if any, shall then be paid
      to the Authority.

      Section 12.02. PARTIAL CONDEMNATION. Upon a Taking of only a portion of
the Leased Premises, the Facility or of an easement therein, which does not
substantially impair, render impractical or uneconomical the future business of
CCOI (in its sole and absolute discretion), this Lease shall nevertheless
continue, and in such event CCOI agrees (subject to any Financing Documents), at
CCOI's cost and expense, to repair or restore any improvements affected by the
condemnation, to permit the continuing improvements to be used by CCOI in the
most economical manner. CCOI shall not be obligated to expend an amount in
excess of the proceeds of the net award available to CCOI for such purposes.

      Section 12.03. RENT REDUCTION. From the date of such partial Taking, the
Rent to be paid by CCOI shall abate in the proportion that the remaining Leased
Premises bears to the Leased Premises as existing immediately preceding the
event of

                                       23
<PAGE>
the condemnation.

      Section 12.04. SEPARATE CLAIMS. The Authority and CCOI each reserve the
right to file separate claims and to prosecute their claims separately, arising
from the termination or taking by condemnation. However, each covenant with each
other to aid and assist each other reasonably in the orderly and timely
prosecuting of their claims to insure the maximum recovery for the Taking.

                                 ARTICLE XIII

                             OPTIONS TO PURCHASE

      Section 13.01. AUTHORITY TO GRANT OPTIONS TO PURCHASE. CCOI shall have the
right to grant one or more options to purchase the Land and/or the Facility to
the State of Oklahoma Department of Corrections. The Authority agrees to join in
execution of any documents executed in connection therewith. CCOI shall not,
without obtaining the prior written consent of the Authority, grant an option to
purchase the Land and the Facility which will result in the Authority's
receiving less than $240,000.00 in the event the option to purchase is
exercised.

      Section 13.02. DISTRIBUTION OF PROCEEDS. In the event a third party
exercises an option to purchase granted in accordance with this Article XIII,
the proceeds of such sale of the Land and/or the Facility shall be distributed
in the order of priority established in Section 12.01, subparagraphs (a) through
(e).

      Section 13.03. CCOI NOT TO PURCHASE. The parties hereto understand the
option to purchase established herein is to accommodate the requirements of
jurisdictions sending inmates to the Facility. Under no circumstances shall this
Lease be construed to allow CCOI an option to purchase the Facility or the Land.

                                 ARTICLE XIV

                               QUIET ENJOYMENT

      Section 14.01. NO HINDRANCE. The Authority covenants that if and so long
as CCOI in all material respects keeps and performs each and every material
covenant, agreement, term, provision and condition therein contained on the part
and on behalf of CCOI to be kept and performed, CCOI shall quietly have and
enjoy the Land during the term, subject to the covenants, agreements, terms,
provisions, and conditions of this Lease.

      Section 14.02. BINDING ON ASSIGNS. It is expressly understood and agreed
that the terms the "Authority" and "CCOI" as used in this Lease mean only the
present owner of the Land and the present owner of the Leasehold Estate,
respectively. In the event of the sale, assignment or transfer of either such
owner of its interest in the Leased Premises, or this Lease as permitted under
Article IX, such owner shall thereupon be released and discharged from all
covenants and obligations of the Authority or CCOI thereafter accruing; but such
covenants and obligations shall be binding upon each new owner of any interest
in the Land. CCOI shall have the right to sell or assign its interest in the
Facility, the Land, and/or the Leasehold Estate to such Persons as it may elect.

                                       24
<PAGE>
                                  ARTICLE XV

                                   NOTICES

      Section 15.01. ADDRESSES. All notices, demands, requests or other
communications which may be or are required to be given, served or sent by
either party to the other shall be in writing and shall be deemed to be
sufficient for all purposes and to have been properly given or sent:

            (a) If intended for CCOI, by mailing by registered or certified
      mail, return receipt requested, with the postage prepaid or by nationally
      recognized overnight courier, addressed to CCOI at: Cornell Companies of
      Oklahoma, Inc., 1700 West Loop South, Suite 1500, Houston, TX 77027.

            (b) If intended for the Authority, by mailing by registered or
      certified mail, return receipt requested, with the postage prepaid or by
      nationally recognized overnight courier, addressed to the Authority at:
      300 West Maple, P.O. Box 519, Hinton, OK 73047.

      Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may hereafter be so given, served or
sent. Each notice, demand, request or communication which shall be mailed by
certified mail, return receipt requested to the Authority or CCOI in the manner
aforesaid shall be deemed sufficiently given, served or sent for all purposes
hereunder three (3) business days after the time such notice, demand, request or
communication shall be mailed by United States certified mail, return receipt
requested in any post office or branch post office regularly maintained by the
United States Government.

      Section 15.02. DUTY TO ACT REASONABLY. Unless expressly provided otherwise
in this lease, if a request is received in writing by the Authority or CCOI for
a consent or approval required under this Lease or for information to which the
party making such request shall be entitled, the party receiving such request
shall act with reasonable promptness thereon and shall not unreasonably delay
notifying the party making such request as to the granting or withholding of
such consent or approval or furnishing to such party the information requested.

                                 ARTICLE XVI

                        REPRESENTATIONS AND WARRANTIES

      Section 16.01. OF AUTHORITY. The Authority, with knowledge that CCOI is
relying thereon in entering into this Lease, represents and warrants to CCOI
that:

            (a)   The Authority is a public trust duly formed, validly existing,
                  and in good standing under the laws of the State of Oklahoma.

            (b)   The Authority has all requisite right, power and authority to
                  enter into, execute, deliver, and perform its obligations
                  under this Lease. This Lease has been duly and validly
                  executed and delivered and

                                       25
<PAGE>
                  constitutes the legal, valid, and binding obligation of the
                  Authority in accordance with the terms hereof, free of any
                  claim of immunity with respect to the performance of this
                  Agreement by the Authority.

      Section 16.02. OF CCOI. CCOI, with knowledge that the Authority is relying
thereon in entering into this Lease, represents and warrants to the Authority
that:

            (a)   CCOI is a corporation duly formed, validly existing, and in
                  good standing under the laws of the State of Oklahoma.

            (b)   CCOI has all requisite right, power and authority to enter
                  into, execute, deliver, and perform its obligations under this
                  Lease. This Lease has been duly and validly executed and
                  delivered and constitutes the legal, valid, and binding
                  obligation of the Authority in accordance with the terms
                  hereof.

                                 ARTICLE XVII

                                MISCELLANEOUS

      Section 17.01. SEVERABILITY. If any term or provision of this Lease, or
the application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, the remainder of this Lease or the application of such
term or provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and enforceable to the fullest extent
permitted by law.

      Section 17.02. BINDING EFFECT. This Lease shall be binding upon, and inure
to the benefit of, the parties hereto, and their successors and assigns.

      Section 17.03. COUNTERPARTS. This Lease may be executed in counterparts,
each of which shall constitute one and the same instrument.

      Section 17.04. APPLICABLE LAW. This Lease shall be interpreted and
enforced in accordance with the laws of the State of Oklahoma.

      Section 17.05. NO RECOURSE UNDER LEASE. All covenants, stipulations,
premises, agreements and obligations of the Authority contained in this Lease
shall be deemed to be the covenants, stipulations, promises, agreements and
obligations of the Authority and not of any member, officer, employee or agent
of the Authority in an individual capacity and no recourse shall be had for the
payment of amounts due under the Lease or for any claim based thereon or under
this Lease against any member, officer, employee or agent of the Authority.

      Section 17.06. RECORDING. CCOI may record a counterpart of this Lease (or
memorandum hereof, in which event the parties hereto agree to promptly execute
and deliver counterparts of such a memorandum) in the appropriate public records
of Caddo County, Oklahoma.

                     [SIGNATURES BEGIN ON FOLLOWING PAGE]

                                       26
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date first above written.

                                    HINTON ECONOMIC DEVELOPMENT AUTHORITY

                                    By: /s/ ELDON McCUMBER
                                            Eldon McCumber, Chairman
Attest:
/s/ illegible
Secretary
(SEAL)

                                    TOWN OF HINTON, OKLAHOMA

                                    By: /s/ JIMMY SMITH
                                            Jimmy Smith, Mayor
Attest:
/s/ SHERYL A. CORNELIUS
Town Clerk
(SEAL)

                                       27
<PAGE>
                                    CORNELL CORRECTIONS OF OKLAHOMA, INC.

                                    By: /s/ STEVEN W. LOGAN
                                            Steven W. Logan, President

                                       28
<PAGE>
STATE OF OKLAHOMA             )
                              )SS:
COUNTY OF CADDO               )

      The foregoing instrument was acknowledged before me this 30th day of
December, 1999, by Eldon McCumber, Chairman, of the Hinton Economic Development
Authority, a public trust, on behalf of the trust.

                                  /s/ illegible
                                      Notary Public

My Commission Expires: 7-8-2003

 (SEAL)

STATE OF OKLAHOMA             )
                              )SS:
COUNTY OF CADDO               )

      The foregoing instrument was acknowledged before me this 30th day of
December, 1999, by Jimmy Smith, Mayor of the Town of Hinton, Oklahoma, on behalf
of said town.

                                  /s/ SHERYL A. CORNELIUS
                                      Town Clerk

 (SEAL)

                                       29
<PAGE>
STATE OF TEXAS              )
                            )SS:
COUNTY OF HARRIS            )

      The foregoing instrument was acknowledged before me this 29th day of
December, 1999, by Steven W. Logan, President of Cornell Corrections of
Oklahoma, Inc., a corporation, on behalf of said corporation.

                                  /s/ STEPHANIE E. DONAHO
                                      Notary Public

My Commission Expires: 12-16-2002
 (SEAL)

                                       30
<PAGE>
                                  Exhibit A
                                Lease Agreement
                             (Legal Description)EXHIBIT 10.39

                             CONSULTANT AGREEMENT

      This Consultant Agreement ("AGREEMENT"), including the attached Exhibit A,
is entered into between CORNELL CORRECTIONS, INC., a Delaware corporation having
offices at 1700 West Loop South, Suite 1500, Houston, Texas 77027 ("COMPANY"),
and DAVID M. CORNELL, an individual currently residing at 4243 Emory, Houston,
Texas 77005 ("CONSULTANT"), on December 15, 1999, to be effective as of
September 1, 1999 (the "EFFECTIVE DATE").

                                 WITNESSETH:

      WHEREAS, the Company is desirous of obtaining the services of Consultant
pursuant to the terms and conditions and for the consideration set forth in this
Agreement, and Consultant is desirous of providing services to the Company
pursuant to such terms and conditions and for such consideration;

      NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, the Company and Consultant agree as
follows:

ARTICLE 1: TERM AND DUTIES:

      1.1 The Company agrees to retain Consultant, and Consultant agrees to
provide services to the Company, beginning as of the Effective Date and
continuing as set forth on Exhibit A, subject to the terms and conditions of
this Agreement. The Company and Consultant agree that this Agreement shall
automatically terminate at the end of the Initial Term (as defined on Exhibit
A), unless the Company and Consultant both agree in writing to renew the
Agreement for one additional period commencing at the end of the Initial Term
and continuing for a period of time as set forth on Exhibit A (the "RENEWAL
TERM").

      1.2 Consultant initially shall perform the services and duties set forth
on Exhibit A.

      1.3 Consultant shall, during the Initial Term and any Renewal Term, devote
Consultant's best efforts to the business and affairs of the Company. Consultant
shall serve as a director and as non-executive Chairman of the Board, as set
forth on and subject to Exhibit A.

      1.4 In connection with Consultant's performance of services for the
Company, the Company will provide Consultant access to confidential information
pertaining to the business and services of the Company as is appropriate for
Consultant's duties and responsibilities. The Company also shall provide to
Consultant the opportunity to develop business relationships pertaining to the
business and services of the Company that are appropriate for Consultant's
duties and responsibilities, and all business and corporate opportunities made
known to Consultant during the Initial Term and any Renewal Term pertaining to
the business and services of the Company shall belong to the Company.

      1.5 It is understood and agreed that Consultant will perform the
consulting services as an independent contractor and Consultant will not
<PAGE>
be deemed to be an employee of the Company. Consultant will not be entitled to
any benefits provided by the Company to its employees except as specifically
provided hereunder. Consultant agrees that he will be personally responsible for
any and all taxes and other payments due on payments received by him from the
Company hereunder.

      1.6 It is understood and agreed that Consultant shall have no authority to
act on behalf of the Company or to bind the Company to any contract or
obligation whatsoever. The foregoing shall not affect the Consultant's ability
to identify himself as a director and as non-executive Chairman of the Board
during the time he holds such positions.

ARTICLE 2: COMPENSATION AND BENEFITS

      2.1 Consultant's monthly base compensation during the Initial Term and
during the Renewal Term, if applicable, shall be not less than the amounts set
forth under the heading "Monthly Base Compensation" on Exhibit A, subject to
increase at the sole discretion of the Company, which shall be paid in monthly
installments. Any calculation to be made under this Agreement with respect to
Consultant's Monthly Base Compensation shall be made using the then current
Monthly Base Compensation in effect at the time of the event for which such
calculation is made. Consultant shall be entitled to a Fixed Bonus as described
and subject to the terms on Exhibit A. Consultant shall be entitled to a Monthly
Non-Compete Fee during the Initial Term as described on Exhibit A. The Monthly
Base Compensation, the Fixed Bonus and the Monthly Non-Compete Fee are
hereinafter referred to as the "AGREED PAYMENT AMOUNT," it being understood that
the Monthly Non-Compete Fee is paid during the Initial Term only but
Consultant's obligations with respect thereto shall remain in effect for the
full Covenant Period defined in Section 5.2.

      2.2 During the effectiveness of this Agreement (both during the Initial
Term and the Renewal Term, if applicable), Consultant shall be allowed to
participate solely in those benefit plans and programs listed on Exhibit A.
Consultant shall not be entitled to participate in any benefit plans and
programs not expressly referenced herein. Notwithstanding anything to the
contrary herein, upon termination of the effectiveness of this Agreement for any
reason, Consultant (or his heirs, administrators or legatees) shall be entitled
to receive benefits vested or accrued with respect to Consultant's service prior
to such termination according to the provisions of such benefit plans and
programs.

      2.3 The Company shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such benefit plan or program, so long as such actions are similarly applicable
to covered participants generally. Moreover, except as specifically provided
herein to the contrary, none of the benefits or arrangements described in this
Article 2 shall be secured or funded in any way, and each shall instead
constitute an unfunded and unsecured promise to pay money in the future
exclusively from the general assets of the Company.

                                       2
<PAGE>
      2.4 The Company may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.

ARTICLE 3: TERMINATION PRIOR TO EXPIRATION OF INITIAL TERM OR RENEWAL TERM, IF
ANY, AND EFFECTS OF SUCH TERMINATION:

      3.1 Notwithstanding any other provisions of this Agreement, the Company
shall have the right to terminate the consulting relationship created by this
Agreement at any time prior to the expiration of the Initial Term or any Renewal
Term for any of the following reasons:

            a. For "CAUSE" upon the good faith determination by the Company's
Board of Directors that Cause exists for the termination of the consulting
relationship. As used in this Section 3.1.a, the term Cause shall mean (i)
Consultant's gross negligence or willful misconduct in the performance of the
duties and services required of Consultant pursuant to this Agreement, (ii)
Consultant's final conviction of a felony, or (iii) Consultant's material breach
of any provision of this Agreement which is willful and intentional and which
remains uncorrected for sixty (60) days following written notice to Consultant
by the Company of such breach;

            b. for any other reason whatsoever, including termination without
Cause, in the sole discretion of the Company, on ninety (90) days prior written
notice to Consultant;

            c. upon Consultant's death; or

            d. upon Consultant's becoming disabled as to entitle Consultant to
benefits under the Company's long-term disability plan or, if Consultant is not
eligible to participate in such plan or if such plan is not available, then
Consultant is permanently and totally unable to perform Consultant's duties for
the Company as a result of any medically determinable physical or mental
impairment as supported by a written medical opinion to the foregoing effect by
a physician selected by the Company and Consultant's spouse or other member of
Consultant's immediate family. With respect to options granted pursuant to the
Amended and Restated 1996 Stock Option Plan, Consultant shall be considered
"disabled" in accordance with, and "disability" shall have the meaning set forth
in, the Amended and Restated 1996 Stock Option Plan, as in effect at the time of
such disability.

      The termination of Consultant's consulting relationship by the Company
prior to the expiration of the Initial Term shall constitute a "TERMINATION FOR
CAUSE" if made pursuant to Section 3.1.a, and the effect of such termination is
specified in Section 3.4. The termination of Consultant's consulting
relationship by the Company prior to the expiration of the Initial Term or
Renewal Term, if any, shall constitute an "INVOLUNTARY TERMINATION" if made
pursuant to Section 3.1.b, and the effect of such termination is specified in
Section 3.5. The effect of the consulting relationship being terminated pursuant
to Section 3.1.c as a result of Consultant's death is specified in Section 3.6.
The effect of the consulting relationship being terminated pursuant to Section
3.1.d as a result of the Consultant becoming disabled is specified in Section
3.7.

                                       3
<PAGE>
      3.2 Consultant shall have the right to terminate the consulting
relationship under this Agreement at any time prior to the expiration of the
Initial Term or the Renewal Term, if applicable, for any reason whatsoever, in
the sole discretion of Consultant, on ten (10) days prior written notice to the
Company.

            a. The termination of Consultant's consulting relationship by
Consultant prior to the expiration of the Initial Term or prior to the
expiration of the Renewal Term, if applicable, except upon any Change of Control
or within the ninety (90) days immediately following any Change of Control,
shall constitute a "VOLUNTARY TERMINATION" if made pursuant to this Section
3.2.a, and the effect of such termination is specified in Section 3.3.

            b. The termination of Consultant's consulting relationship by
Consultant prior to the expiration of the Initial Term or prior to the
expiration of the Renewal Term, if applicable, upon or within the ninety (90)
days immediately following any Change of Control, shall constitute an
Involuntary Termination if made pursuant to this Section 3.2.b, and the effect
of such termination is specified in Section 3.5.

      3.3 Upon a Voluntary Termination of the consulting relationship by
Consultant prior to expiration of the Initial Term or the Renewal Term, if
applicable, all future compensation to which Consultant is entitled and all
future benefits for which Consultant is eligible, with the exception of any and
all statutory rights and benefits, shall cease and terminate as of the date of
such termination. Consultant shall be entitled to pro rata Monthly Base
Compensation and pro rata Monthly Non-Compete Fee through the date of such
termination, but Consultant shall not be entitled to any bonuses not yet paid at
the date of such termination.

      3.4 If Consultant's consulting relationship hereunder shall be terminated
by the Company for Cause prior to expiration of the Initial Term or prior to
expiration of the Renewal Term, if applicable, all future compensation to which
Consultant is entitled and all future benefits for which Consultant is eligible,
with the exception of any and all statutory rights and benefits, shall cease and
terminate as of the date of termination. Consultant shall be entitled to pro
rata Monthly Base Compensation and pro rata Monthly Non-Compete Fee through the
date of such termination, but Consultant shall not be entitled to any other
bonuses not yet paid at the date of such termination.

      3.5 Upon an Involuntary Termination of the consulting relationship prior
to expiration of the Initial Term, Consultant shall be entitled, in
consideration of Consultant's continuing obligations hereunder after such
termination, to receive the payments, compensation, benefits and perquisites
upon Involuntary Termination set forth on Exhibit A under the heading "Payments
and Benefits Upon Involuntary Termination" for the remainder of the Initial
Term. Upon an Involuntary Termination of the consulting relationship subsequent
to the commencement of the Renewal Term, if applicable, but prior to the
expiration of the Renewal Term, if applicable, Consultant shall be entitled, in
consideration of Consultant's continuing obligations hereunder after such
termination, to receive the payments, compensation, benefits and perquisites
upon Involuntary Termination set forth on Exhibit A under the heading "Payments
and Benefits Upon Involuntary Termination" for the remainder of the Renewal
Term.

                                       4
<PAGE>
      3.6 Upon termination of the consulting relationship during the Initial
Term as a result of Consultant's death, Consultant's heirs, administrators, or
legatees shall be entitled to receive the payments, compensation, benefits and
perquisites set forth on Exhibit A under the heading "Payments and Benefits Upon
Termination as a Result of Death." Upon termination of the consulting
relationship during the Renewal Term, if any, as a result of Consultant's death,
Consultant's heirs, administrators, or legatees shall be entitled only to
compensation and benefits accrued prior to such termination, subject to the
terms and provisions of the plans and programs pursuant to which such benefits
were accrued, and as set forth on Exhibit A under the heading "Payments and
Benefits Upon Termination as a Result of Death."

      3.7 Upon termination of the consulting relationship during the Initial
Term as a result of Consultant's disability, Consultant shall be entitled to
receive the payments, compensation, benefits and perquisites set forth on
Exhibit A under the heading "Payments and Benefits Upon Termination as a Result
of Disability." Upon termination of the consulting relationship during the
Renewal Term, if any, as a result of Consultant's disability, Consultant shall
be entitled only to compensation and benefits accrued prior to such termination,
subject to the terms and provisions of the plans and programs pursuant to which
such benefits were accrued, and as set forth on Exhibit A under the heading
"Payments and Benefits Upon Termination as a Result of Disability."

      3.8 Upon termination of the consulting relationship as a result of the
expiration of the Agreement upon expiration of the Initial Term or upon
expiration of the Renewal Term, if any, Consultant shall be entitled to no
further compensation or benefits, with the exception of (a) any and all
statutory rights and benefits and (b) compensation and benefits vested or
accrued prior to such termination, subject to the terms and provisions of the
plans and programs pursuant to which such benefits were accrued. Notwithstanding
anything to the contrary contained in this Agreement, any indemnification
obligations of the Company to Consultant in connection with his status as a
director shall not be affected by any termination of this Agreement.

      3.9 In all cases, the compensation and benefits payable to Consultant
under this Agreement upon termination of the consulting relationship shall be
offset against any amounts to which Consultant may otherwise be entitled under
any and all severance plans, and policies of the Company or its affiliates.

      3.10 Termination of the consulting relationship does not terminate those
obligations imposed by this Agreement which are continuing obligations,
including, without limitation, Consultant's obligations under Articles 5 and 6.
Termination of the consulting relationship also does not terminate Consultant's
right to receive any compensation and benefits which he is entitled to receive
as a director while Consultant remains a director.

                                       5
<PAGE>
ARTICLE 4:  CONTINUATION OF CONSULTING  RELATIONSHIP  BEYOND THE RENEWAL TERM;
TERMINATION AND EFFECTS OF TERMINATION:

      4.1 Should the Company continue to retain the Consultant and should the
Consultant continue to provide services to the Company beyond the expiration of
the Renewal Term, if any, such consulting relationship shall convert to a
month-to-month relationship terminable at any time by either the Company or
Consultant for any reason whatsoever, with or without Cause. Upon expiration of
the Initial Term, the Company shall have no obligation to agree to any renewal
of this Agreement or to offer Consultant a new consulting agreement. Upon
expiration of the Renewal Term, if any, the Company shall have no obligation to
offer Consultant a new consulting agreement.

ARTICLE 5: POST-CONSULTING RELATIONSHIP OBLIGATIONS:

      5.1 As part of the consideration for the compensation and benefits to be
paid to Consultant hereunder, in keeping with Consultant's duties as a
fiduciary, and in order to protect the Company's interest in the trade secrets
of the Company, and as an additional consideration and incentive for the Company
to enter into this Agreement, the Company and Consultant agree to the provisions
of this Article.

      5.2 The obligations in this Article shall commence on the Effective Date
and shall continue for a period of ten (10) years (the "COVENANT Period"). The
obligations in this Article shall continue for the full Covenant Period
regardless of any prior termination of the consulting relationship pursuant to
Article 3 hereof.

      5.3 Consultant hereby acknowledges and agrees that: (i) the Company would
not enter into this Agreement or retain the Consultant if the Consultant had not
executed and delivered this Agreement to the Company; (ii) the Consultant has
had, throughout the term of the existence of the Company, and will have
throughout his consulting relationship with the Company or its Affiliates (as
defined below), access to information that is confidential to the Company,
constitutes a valuable, special and unique asset of the Company, and with
respect to which the Company is entitled to the protections afforded by this
Agreement and to the remedies for enforcement of this Agreement provided by law
or in equity (including, without limitation, those remedies the availability of
which may be within the discretion of the court in which any action for
enforcement of this Agreement is brought); (iii) the Company would not grant the
Additional Options listed on Exhibit A to the Consultant if the Consultant had
not executed and delivered this Agreement to the Company; and (iv) the Company
would not pay the Consultant the Monthly Non-Compete Fee listed on Exhibit A if
the Consultant had not executed and delivered this Agreement to the Company.

      5.4 In consideration of the Consultant's noncompetition and nondisclosure
agreements set forth herein, the Company shall pay to Consultant the Monthly
Non-Compete Fee listed on Exhibit A, subject to the other terms and conditions
of this Agreement.

                                       6
<PAGE>
      5.5 During the Covenant Period, Consultant shall not, and shall cause each
of his Affiliates not to:

            1) within the United States (the "TERRITORY"), transact any
      Competitive Business (as defined below), carry on or be engaged or
      otherwise take part in any Competitive Business (whether for his own
      account or for the account of any person or entity, other than the
      Company), or render any service (whether for or without compensation) to
      any person or entity (other than the Company) who or which is, to the
      knowledge of Consultant, engaged in any Competitive Business at the time
      the service is rendered.

            2) share in the earnings of, or beneficially own or hold any
      security issued by, or otherwise own or hold any interest (including,
      without limitation, any debt) in, any person or entity who or which is
      directly or indirectly engaged in any Competitive Business within the
      Territory.

      5.6 Without limiting the generality of the provisions of this Article 5,
the Consultant (or an Affiliate of the Consultant) shall be deemed to transact
or be engaged in a particular business if the Consultant or any Affiliate which
he controls (whether alone or in association with one or more other persons or
other entities) is, without limitation, an owner, proprietor, partner, member,
stockholder, officer, employee, agent, independent contractor, director or joint
venturer of, or a consultant or lender to, or an investor in any manner in, any
person or entity who or which is, to the knowledge of Consultant, directly or
through an Affiliate engaged in any such Competitive Business, including,
without limitation, any such person or entity with respect to which a member of
the immediate family of the Consultant is an Affiliate. Notwithstanding the
foregoing provisions of this Article 5, the Consultant (or an Affiliate of the
Consultant) may own, solely as an investment, securities if the Consultant (or
an Affiliate of the Consultant) (i) is not an Affiliate of the issuer of such
securities and (ii) does not, directly or indirectly, beneficially own more than
5% of the class of which such securities are a part.

      5.7 During the Covenant Period, the Consultant shall not, and shall cause
each of his Affiliates not to, whether for his own account or for the account of
any other person or other entity (other than the Company or any Affiliate of the
Company), solicit the employment or services of, or cause or attempt to cause to
leave the employment or services of the Company or any Affiliate of the Company,
any person or entity who or which is employed by, or otherwise engaged to
perform services for the Company or any Affiliate of the Company (whether in the
capacity of employee, consultant, independent contractor or otherwise).

      5.8 Consultant acknowledges that money damages would not be sufficient
remedy for any breach of this Article 5 by Consultant, and the Company shall be
entitled to enforce the provisions of this Article 5 by terminating any payments
then owing to Consultant under this Agreement and/or to specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such
remedies shall not be deemed the exclusive remedies for a breach of this Article
5, but shall be in addition to all remedies available at law or in equity to the

                                       7
<PAGE>
Company, including, without limitation, the recovery of damages from Consultant
and his agents involved in such breach.

ARTICLE 6:  MISCELLANEOUS:

      6.1 For purposes of this Agreement, "AFFILIATE" means, with respect to any
person or entity, any person or entity that, directly or indirectly, Controls,
is Controlled by, or is under common Control with, such person or entity in
question. For the purposes of the definition of Affiliate, "Control" (including,
with correlative meaning, the terms "Controlled by" and "under common Control
with") as used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person or entity, whether through the ownership of voting
securities or by contract or otherwise.

      6.2 For purposes of this Agreement "COMPETITIVE BUSINESS" means (i) any
business, enterprise or activity, whether or not for profit, that provides
management, maintenance, construction, consultation, services, contracts,
properties, facilities, plans or designs relating to correction, detention,
treatment, education or pre-release services or (ii) any business, enterprise or
activity, whether or not for profit, that the Company, or any of its Affiliates,
is engaged in or has stated its intent to engage in prior to the time the
Consultant commences or becomes associated with such a business, enterprise or
activity.

      6.3 For purposes of this Agreement the term "CHANGE OF CONTROL" means (i)
the Company merges or consolidates with any other entity, and the Company's
stockholders do not own, directly or indirectly, at least 50% of the voting
capital stock of the surviving entity, (ii) the Company sells all or
substantially all of its assets to any other person or entity, (iii) the Company
is dissolved, (iv) if any third person or entity together with its Affiliates
shall become, directly or indirectly, the beneficial owner of the least 51% of
the Voting Stock of the Company, or (v) if the individuals who constituted the
members of the Company's Board of Directors ("INCUMBENT Board") as of the date
of this Agreement cease for any reason to constitute at least a majority
thereof, provided that for purposes of this clause (v) any person becoming a
director whose election or nomination for election by Company stockholders was
approved by a vote of at least eighty percent (80%) of the directors comprising
the Incumbent Board (either by the specific vote or approval of the proxy
statement of the Company in which such person is named as a nominee for
director, without objection to such a nomination) shall be, for purposes of this
clause (v), considered as though such person were a member of the Incumbent
Board. "VOTING STOCK" means all the outstanding shares of capital stock of
Company entitled to vote generally in elections for directors, considered as one
class; provided, however, that if Company has shares of Voting Stock entitled to
more or less than one vote for any such share, each reference to a proportion of
shares of Voting Stock shall be deemed to refer to such proportion of the votes
entitled to be cast by such shares. Notwithstanding the foregoing, a transaction
shall not be considered a Change of Control for purposes of this Agreement if
the transaction is approved by a vote of at least eighty percent (80%) of the
directors comprising the Incumbent Board.

                                       8
<PAGE>
      6.4 For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

            If to the Company, to:

                  Cornell Corrections, Inc.
                  1700 West Loop South, Suite 1500
                  Houston, Texas 77027
                  Attention: Secretary

            With a copy to:

                  Locke Liddell & Sapp LLP
                  3500 Chase Tower
                  600 Travis
                  Houston, Texas 77002
                  Attention: Marcus A. Watts

            If to Consultant, to the address shown on the first page hereof.

            With a copy to:

                  Gibson, Dunn & Crutcher
                  1050 Connecticut Avenue NW
                  Washington, D.C. 20036-8500
                  Attention: Peter Wallison

Either the Company or Consultant may furnish a change of address to the other in
writing in accordance herewith, except that notices of changes of address shall
be effective only upon receipt.

      6.5 This Agreement shall be governed in all respects by the laws of the
State of Texas, excluding any conflict-of-law rule or principle that might refer
to the construction of the Agreement to the laws of another State or country.

      6.6 No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

      6.7 If a dispute arises out of or related to this Agreement, other than a
dispute regarding Consultant's obligations under Article 5, and if the dispute
cannot be settled through

                                       9
<PAGE>
direct discussions, then the Company and Consultant agree to first endeavor to
settle the dispute in an amicable manner by mediation, before having recourse to
any other proceeding or forum.

      6.8 The Company's principal place of business is in Houston, Harris
County, Texas. This Agreement shall be performed in Houston, Harris County,
Texas. Any litigation that may be brought by either the Company or Consultant
involving the enforcement of this Agreement or the rights, duties, or
obligations of this Agreement, shall be brought exclusively in the state or
federal courts sitting in Houston, Harris County, Texas. In the event that
service of process cannot be effected upon a party, each party hereby
irrevocably appoints the Secretary of State for the State of Texas as its or his
agent for service of process to receive the summons and other pleadings in
connection with any such litigation. In the event of litigation between the
parties regarding this Agreement, the prevailing party shall, in addition to any
sums recovered in the litigation, be entitled to recover all sums expended by
that party (including reasonable costs, reasonable attorneys' fees and
reasonable expert witness' fees) in connection with that litigation.

      6.9 It is a desire and intent of the parties that the terms, provisions,
covenants and remedies contained in this Agreement shall be enforceable to the
fullest extent permitted by law. If any such term, provision, covenants, or
remedy of this Agreement or the application thereof to any person, association,
or entity or circumstances shall, to any extent, be construed to be invalid or
unenforceable in whole or in part, then such term, provision, covenant, or
remedy shall be construed in a manner so as to permit its enforceability under
the applicable law to the fullest extent permitted by law. In any case, the
remaining provisions of this Agreement or the application thereof to any person,
association, or entity or circumstances other than those to which they have been
held invalid or unenforceable, shall remain in full force and effect.

       6.10 This Agreement shall be binding upon and inure to the benefit of the
Company, and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of the
Company by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. This Agreement shall be binding upon and inure to
the benefit of Consultant, and his heirs, successors and permitted assigns.
Consultant's rights and obligations under Agreement hereof are personal and such
rights, benefits, and obligations of Consultant shall not be voluntarily or
involuntarily assigned, alienated, or transferred, whether by operation of law
or otherwise, without the prior written consent of the Company. The Company
shall not assign this Agreement without the prior written consent of Consultant.

      6.11 This Agreement replaces and merges previous agreements and
discussions pertaining to the following subject matters covered herein:
Consultant's prior employment by the Company and any agreements regarding such
relationship and the nature of Consultant's relationship with the Company and
the term and termination of such relationship. This Agreement constitutes the
entire agreement of the parties with regard to such subject matters, and
contains all of the covenants, promises, representations, warranties, and
agreements between the parties with respect to such subject matters; provided
that Consultant shall also comply with all policies and procedures of the
Company as established from time to time. Each party to this Agreement
acknowledges that no representation, inducement, promise, or agreement, oral or

                                       10
<PAGE>
written, has been made by either party with respect to such subject matters,
which is not embodied herein, and that no agreement, statement, or promise
relating to the relationship between the Company and Consultant that is not
contained in this Agreement shall be valid or binding. Any modification of this
Agreement will be effective only if it is in writing and signed by each party
whose rights hereunder are affected thereby, provided that any such modification
must be authorized or approved by the Board of Directors of the Company.

               (THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK;
                      COUNTERPART SIGNATURE PAGES FOLLOW.)

                                       11
<PAGE>
      IN WITNESS WHEREOF, the Company and Consultant have duly executed this
Agreement in multiple originals to be effective on the Effective Date of the
Agreement.

Company:                                  Consultant:

CORNELL CORRECTIONS, INC.                 DAVID M. CORNELL

By: /s/ STEVEN W. LOGAN                   /s/ DAVID M. CORNELL
Name:   Steven W. Logan                   This 1st day of September, 1999
        Authorized Signatory
This 1st day of September, 1999

                                       12
<PAGE>
                                 EXHIBIT A TO
                             CONSULTANT AGREEMENT

                      BETWEEN CORNELL CORRECTIONS, INC.
                             AND DAVID M. CORNELL

Consultant Name:        David M. Cornell

Initial Term:           This Agreement shall commence on the Effective Date
                        through the Second Anniversary of the Effective Date.
                        This Agreement shall automatically renew for five
                        additional one-year terms, without any requirement for
                        action on the part of the Company or Consultant, unless
                        sooner terminated as provided in this Agreement. The
                        two-year term together with the five additional one-year
                        terms, comprising seven years in the aggregate, are
                        herein referred to as the "INITIAL TERM".

Renewal Term:           From  Conclusion of the Initial Term through the Third
                        Anniversary of such Conclusion

Duties and Services:    Consultant shall serve the Company as non-executive
                        Chairman of the Board from the Effective Date through
                        the Fourth Anniversary of the Effective Date, to the
                        extent Consultant is a member of the Board of Directors
                        during such period. The Company shall nominate
                        Consultant to stand for election as a director to serve
                        through the expiration of the Initial Term, subject to
                        the fiduciary duties of the Company's Board of
                        Directors. Consultant shall perform such consulting
                        responsibilities consistent with his rank and position
                        with the Company as reasonably determined by the Board
                        of Directors, including, without limitation, assisting
                        with development of business, acquisitions and obtaining
                        financings. The projects on which Consultant works shall
                        be subject to Consultant's consent, not to be
                        unreasonably withheld.

Location:               Houston, Harris County, Texas

Reporting Relationship: In his role as a Consultant, Consultant shall report
                        directly to the Company's Chief Executive Officer. This
                        reporting requirement shall not apply to Consultant's
                        status as Chairman of the Board and as a director.

                                      A-1
<PAGE>
Monthly Base Compensation:

                        First 48 Months of Initial Term           $21,250.00
                        Remaining 36 Months of Initial Term       $15,000.00
                        Renewal Term, if applicable,              $25,000.00

Monthly Non-Compete Fee:

                        Initial Term                              $10,000.00

Fixed Bonus:            Consultant will receive a bonus equal to (i) $75,000
                        during the first four years of the Initial Term, and
                        (ii) $60,000 during the last three years of the Initial
                        Term and during any Renewal Term, if applicable. The
                        foregoing notwithstanding, in the event that the Board
                        determines at the end of any year that the Company does
                        not have or is not reasonably likely to have adequate
                        working capital timely to meet its obligations, the
                        Company shall be under no obligation to pay Consultant
                        such bonus for such year; however, such bonus must be
                        paid if a bonus is paid to a senior executive officer
                        for such fiscal year.

Options:                As of December 9, 1999, Consultant has 296,124 options
                        under the Company's Amended and Restated 1996 Stock
                        Option Plan ("EXISTING OPTIONS"), as follows: 126,124 of
                        which were granted during the Company's 1996 fiscal year
                        and were exercisable prior to the Effective Date; 10,000
                        of which were granted during the Company's 1998 fiscal
                        year, of which 8,000 were not exercisable prior to the
                        Effective Date; and 160,000 of which were granted during
                        the Company's 1999 fiscal year, of which 160,000 were
                        not exercisable prior to the Effective Date. The Company
                        will grant Consultant options for One Hundred Twenty
                        Thousand (120,000) additional shares ("ADDITIONAL
                        OPTIONS") in four equal annual grants beginning on the
                        First Anniversary of the Effective Date, subject to the
                        terms of the Company's Amended and Restated 1996 Stock
                        Option Plan, or such other stock option plan of the
                        Company as shall be in effect from time to time (the
                        "PLAN"). The option agreement ("OPTION AGREEMENT")
                        pursuant to which the Additional Options shall be
                        granted to Consultant shall provide that the Additional
                        Options shall vest at the time such options are granted.
                        The exercise price of the Additional Options shall be
                        the Fair Market Value, as defined in the Plan, on the
                        date of grant. The Option Agreement pursuant to which
                        the Additional Options shall be granted shall specify
                        that the Additional Options shall be exercisable only to
                        the extent that Consultant has exercised,

                                       A-2
<PAGE>
                        subsequent to the Effective Date, or exercises
                        simultaneously therewith an equal or greater number of
                        Existing Options.

Payments and Benefits
upon Involuntary
Termination:            In the event of an Involuntary Termination of
                        Consultant's consulting relationship pursuant to Section
                        3.1.b or Section 3.2.b, Consultant shall be entitled to
                        the following in accordance with Section 3.5:

                        o     Consultant will receive pro rata Agreed Payment
                              Amounts accrued prior to such Involuntary
                              Termination, but not yet paid, and a lump sum
                              payment equal to the net present value (calculated
                              on the date payment is tendered with a discount
                              rate of 8%) of the sum of all pro rata Agreed
                              Payment Amounts to become due (a) during the
                              remainder of the Initial Term, if such Involuntary
                              Termination occurs during the Initial Term, or (b)
                              during the remainder of the Renewal Term, if such
                              Involuntary Termination occurs during the Renewal
                              Term.

                        o     The Company will grant and Consultant will receive
                              any of the Additional Options which have not been
                              granted prior to the date of the Involuntary
                              Termination on the date of the Involuntary
                              Termination, even if none of the Existing Options
                              have been exercised as of such date; provided,
                              however, that the Additional Options shall be
                              exercisable only to the extent that Consultant has
                              exercised, subsequent to the Effective Date, or
                              exercises simultaneously therewith an equal or
                              greater number of Existing Options.

                        o     With regard to Existing Options which are not
                              vested, such Existing Options shall immediately
                              become vested. With regard to the Existing Options
                              which were granted during the Company's 1998 and
                              1999 fiscal year, the period during which such
                              Existing Options are exercisable shall be
                              extended, if necessary, so that such Existing
                              Options are exercisable until 90 days after August
                              31, 2006.

                        o     Consultant shall be entitled to the same level of
                              medical and disability coverage through the
                              remainder of the Initial Term or the Renewal Term,
                              if applicable, as he received prior to the date of
                              Involuntary Termination.

                                       A-3
<PAGE>
                        o     Consultant shall be entitled to continue to
                              receive the Monthly Allowance described below
                              until the Fourth Anniversary of the Effective
                              Date.

Payments and Benefits
Upon Termination as a
Result of Death:        Upon termination of the consulting relationship pursuant
                        to Section 3.1.c as a result of Consultant's death,
                        Consultant's heirs, administrators, or legatees shall be
                        entitled to the following in accordance with Section
                        3.6:

                        o     If termination of the consulting relationship
                              occurs during the Initial Term, Consultant's
                              heirs, administrators, or legatees shall be
                              entitled to (i) Consultant's pro rata Agreed
                              Payment Amount through the date of such
                              termination and to a lump sum payment equal to the
                              net present value (calculated on the date payment
                              is tendered with a discount rate of 8%) of the
                              lesser of (a) the pro rata Agreed Payment Amount
                              due during the remainder of the Initial Term and
                              (b) the pro rata Agreed Payment Amount due during
                              the two (2) years immediately following such
                              termination, and (ii) the Additional Options
                              described below.

                        o     If termination of the consulting relationship
                              occurs during the Renewal Term, if any,
                              Consultant's heirs, administrators, or legatees
                              shall be entitled only to compensation and
                              benefits accrued prior to such termination,
                              subject to the terms and provisions of the plans
                              and programs pursuant to which they were accrued.

                        o     The Company will grant and Consultant's heirs,
                              administrators, or legatees will receive any of
                              the Additional Options which have not been granted
                              prior to the date of the termination on the date
                              of the termination, even if none of the Existing
                              Options have been exercised as of such date;
                              provided, however, that the Additional Options
                              shall be exercisable only to the extent that
                              Consultant or his heirs, administrators, or
                              legatees exercise, subsequent to the Effective
                              Date, or exercise simultaneously therewith an
                              equal or greater number of Existing Options.

                                      A-4
<PAGE>
Payments and Benefits
Upon Termination as a
Result of Disability:   Upon termination of the consulting relationship pursuant
                        to Section 3.1.d as a result of Consultant's disability,
                        Consultant shall be entitled to the following in
                        accordance with Section 3.7:

                        o     If termination of the consulting relationship
                              occurs during the Initial Term, Consultant shall
                              be entitled to (i) Consultant's pro rata Agreed
                              Payment Amount through the date of such
                              termination and to a lump sum payment equal to the
                              net present value (calculated on the date payment
                              is tendered with a discount rate of 8%) of the
                              lesser of (a) the pro rata Agreed Payment Amount
                              due during the remainder of the Initial Term and
                              (b) the pro rata Agreed Payment Amount due during
                              the two (2) years immediately following such
                              termination, (ii) the Additional Options described
                              below and (iii) the medical coverage described
                              below.

                        o     If termination of the consulting relationship
                              occurs during the Renewal Term, if any, Consultant
                              shall be entitled only to compensation and
                              benefits accrued prior to such termination,
                              subject to the terms and provisions of the plans
                              and programs pursuant to which such benefits were
                              accrued.

                        o     The Company will grant and Consultant will receive
                              any of the Additional Options which have not been
                              granted prior to the date of the termination on
                              the date of the termination, even if none of the
                              Existing Options have been exercised as of such
                              date; provided, however, that the Additional
                              Options shall be exercisable only to the extent
                              that Consultant has exercised, subsequent to the
                              Effective Date, or exercises simultaneously
                              therewith an equal or greater number of Existing
                              Options.

                        o     Until such time as Consultant is eligible to
                              receive Medicare coverage, Consultant shall be
                              provided with the same level of medical coverage
                              after the date of termination as he received prior
                              to the termination.

                                      A-5
<PAGE>
Benefits:               The Company reaffirms its obligations under the Cornell
                        Corrections, Inc. Split-Dollar Insurance Agreement
                        between the Company, Consultant and David M. Cornell II,
                        Trustee, dated April 26, 1999, and its obligations under
                        the Cornell Corrections, Inc. Split-Dollar Insurance
                        Agreement between the Company, Consultant and Mary
                        Catherine Cornell Wideman, Trustee, dated April 26, 1999
                        and shall continue to pay each life insurance premium as
                        it becomes due, subject to the terms of such agreements.
                        Notwithstanding anything to the contrary in this
                        Agreement, the Company shall fulfill all of its
                        obligations under such Split-Dollar Insurance
                        Agreements, even though this Agreement is terminated
                        prior to the time such obligations are fulfilled. During
                        the Initial Term and the Renewal Term, if any,
                        Consultant shall be provided with medical and disability
                        coverage with benefits and on terms and conditions at
                        least comparable to the coverage provided to the
                        Company's senior executives. Consultant will elect
                        Medicare coverage as soon as Consultant is eligible, and
                        the Company will pay for all reasonably available
                        supplemental coverage. During the Initial Term, so long
                        as Consultant is a member of the Board of Directors,
                        Consultant shall be entitled to receive benefits
                        accorded to outside directors and to participate in
                        benefit plans made available to outside directors,
                        subject to eligibility requirements and the other terms
                        of such plans.

Secretarial Assistance: During the period commencing on the Effective Date and
                        continuing through the Fourth Anniversary of the
                        Effective Date, the Company shall provide Consultant
                        with the services of a secretary who shall be Ms. Pam
                        Rogers. If Ms. Rogers is for any reason unavailable, the
                        Company shall furnish a secretary reasonably acceptable
                        to Consultant.

Monthly Allowance:      During the period commencing on the Effective Date and
                        continuing through the Fourth Anniversary of the
                        Effective Date, Consultant shall be entitled to a
                        Monthly Allowance of Two Thousand Five Hundred Dollars
                        ($2,500) for any and all direct and indirect expenses
                        associated with establishing and maintaining an office
                        at a location separate from the Company's headquarters.
                        Such payment is intended to cover all expenses
                        associated with maintaining an office, including,
                        without limitation, leasehold improvements, office
                        furniture and equipment, utilities, insurance, parking
                        and transportation to and from the office. No other
                        business expenses or costs shall be paid to Consultant
                        unless advance written approval of the project with
                        which the expenses

                                       A-6
<PAGE>
                        are associated is granted by the Company's Chief
                        Executive Officer. Expense reimbursements shall be
                        subject to approval by the Audit Committee of the Board
                        of Directors.

Legal Fees:             The Company shall pay to Consultant up to Fifteen
                        Thousand Dollars ($15,000.00) of Consultant's legal fees
                        relating to negotiation of this Agreement upon
                        submission of a bill or invoice to the Company.

               (THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK;
                      COUNTERPART SIGNATURE PAGES FOLLOW.)

                                      A-7
<PAGE>
      IN WITNESS WHEREOF, the Company and Consultant have duly executed this
Exhibit A in multiple originals to be effective on the Effective Date of the
Agreement.

Company:                                  Consultant:

CORNELL CORRECTIONS, INC.                 DAVID M. CORNELL

By: /s/ STEVEN W. LOGAN                   /s/ DAVID M. CORNELL
Name:   Steven W. Logan                   This 1st day of September, 1999
        Authorized Signatory
        This 1st day of September, 1999

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}]]