AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 31, 1996
REGISTRATION NO. 333-
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
CORNELL CORRECTIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 76-0433642
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization Identification No.)
4801 WOODWAY, SUITE 400W
HOUSTON, TEXAS
(Address of Principal Executive Offices)
77056
(Zip Code)
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CORNELL CORRECTIONS, INC. 1996 STOCK OPTION PLAN
(Full title of the plan)
- ------------------------------------------------------------------------------
DAVID M. CORNELL
CHIEF EXECUTIVE OFFICER
CORNELL CORRECTIONS, INC.
4801 WOODWAY, SUITE 400W
HOUSTON, TEXAS 77056
(Name and Address of Agent for Service)
Telephone Number, Including Area Code,
of Agent for Service:
(713) 623-0790
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================== ============== ================= =============== ===========
Proposed
Title of Amount Proposed Maximum Maximum Amount of
Securities to be to be Offering Price Per Aggregate Registration
Registered Registered Share(1) Offering Price(1) Fee
<S> <C> <C> <C> <C>
Common Stock (par value
$.001 per share) 639,140 $ 9.1875 $5,872,098.75 $1,780.00
===================== ============== ================= =============== ===========
</TABLE>
(1) Estimated in accordance with Rule 457(c) and (h) solely for the purpose
of calculating the registration fee and based upon the average of the
high and low sales price of the shares of Common Stock of Cornell
Corrections, Inc. quoted on the American Stock Exchange on December 24,
1996.
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Note:This Registration Statement covers the 639,140 shares of the common
stock, par value $.001 per share, of Cornell Corrections, Inc. (the "Company")
reserved for issuance (and not previously issued) under the Cornell Corrections,
Inc. 1996 Stock Option Plan (the "Plan"). These 639,140 shares are available for
grant and issuance under the Plan. The document(s) containing the information
specified in Items 1 and 2 of Part I of Form S-8 will be provided to
participants under the Plan as specified by Rule 428 of the Securities Act of
1933, as amended (the "Securities Act") and, in accordance with the requirements
of Part I of Form S-8 of the Securities Act, are not being filed with the
Securities and Exchange Commission (the "Commission") as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424 under the Securities Act. The registrant shall maintain a file of such
documents in accordance with the provisions of Rule 428. Upon request, the
registration shall furnish to the Commission or its staff a copy or copies of
all of the documents included in such file.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3.INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, which the registrant, Cornell Corrections, Inc.
(the "Company") has filed with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (File No. 1-14472), are incorporated by reference and shall be
deemed to be a part hereof:
1. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996;
2. The Company's prospectus dated October 3, 1996, as filed with the
Commission pursuant to Rule 424(b) of the Securities Act of 1933, as amended
(the "Securities Act"); and
3. The description of the Company's common stock, par value $.001 per
share ("Common Stock") contained in the Company's Registration Statement on Form
8-A, as filed with the Commission on September 10, 1996, pursuant to the
Exchange Act.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Registration Statement and prior to the filing of a post-effective
amendment to this Registration Statement which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such documents.
Any statement contained in this Registration Statement, in an amendment
hereto or in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Registration Statement to the extent
that a statement contained herein or in any subsequently filed supplement to
this Registration Statement or in any document that also is incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
The audited financial statements included in the Company's prospectus
dated October 3, 1996 and incorporated by reference in this Registration
Statement, have been audited by Arthur Andersen LLP, independent public
accountants, as stated in their reports, which are incorporated herein by
reference, and have been so incorporated in reliance upon the reports of such
firm as experts in accounting and auditing.
ITEM 4.DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5.INTERESTS OF NAMED EXPERTS AND COUNSEL
Certain legal matters in the connection with the shares of Common Stock
offered hereby are being passed upon for the Company by Baker & Botts, L.L.P.,
Houston, Texas. Wade H. Whilden, a partner of Baker & Botts, L.L.P., owns
options to purchase 50,000 shares of Common Stock.
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<PAGE>
ITEM 6.INDEMNIFICATION OF DIRECTORS AND OFFICERS
DELAWARE GENERAL CORPORATION LAW
Section 145(a) of the General Corporation Law of the State of Delaware
(the "DGCL") provides that a corporation may indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 145(b) of the DGCL states that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 145(c) of the DGCL provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
Section 145(d) of the DGCL states that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsections (a) and (b) of Section 145. Such determination shall be
made (1) by a majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (2) if there are no such
directors, by independent legal counsel in a written opinion, or (3) by the
stockholders.
Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in Section 145. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
Section 145(f) of the DGCL states that the indemnification and
advancement of expenses provided by, or granted pursuant to, the other
subsections of Section 145 shall not be deemed exclusive of any other rights to
which
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<PAGE>
those seeking indemnification or advancement of expenses may be entitled under
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
Section 145(g) of the DGCL provides that a corporation shall have the
power to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of Section 145.
Section 145(j) of the DGCL states that the indemnification and
advancement of expenses provided by, or granted pursuant to, Section 145 shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
CERTIFICATE OF INCORPORATION
The Restated Certificate of Incorporation of the Company provides that a
director of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit. If the DGCL is amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the Company, in addition to the limitation on
personal liability described above, shall be limited to the fullest extent
permitted by the amended DGCL. Further, any repeal or modification of such
provision of the Restated Certificate of Incorporation by the stockholders of
the Company shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Company existing at
the time of such repeal or modification. Additionally, the Restated Certificate
of Incorporation provides that the Company will indemnify its officers and
directors to the fullest extent permitted by the DGCL.
BYLAWS
The Amended and Restated Bylaws of the Company (the "Bylaws") provide
that each person who was or is made a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she or a
person of whom he or she is the legal representative, is or was or has agreed to
become a director or officer of the Company or is or was serving or has agreed
to serve at the request of the Company as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving or having agreed to
serve as a director or officer, shall be indemnified and held harmless by the
Company to the fullest extent authorized by the DGCL, as the same exists or may
thereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment) against all expense, liability and loss (including without
limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue as
to a person who has ceased to serve in the capacity which initially entitled
such person to indemnity thereunder and shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that the Company shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the board of directors of the Company. The
Bylaws further provide that the right to indemnification conferred thereby shall
be a contract right and shall include the right to be paid by the Company the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the DGCL requires, the payment of such
expenses incurred by a current, former or proposed director or officer in his or
her capacity as a director or officer or proposed director or officer (and not
in any other capacity in which service was or is or has been agreed to be
rendered
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<PAGE>
by such person while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Company of an undertaking,
by or on behalf of such indemnified person, to repay all amounts so advanced if
it shall ultimately be determined that such indemnified person is not entitled
to be indemnified under the Bylaws or otherwise. In addition, the Bylaws provide
that the Company may, by action of its board of directors, provide
indemnification to employees and agents of the Company, individually or as a
group, with the same scope and effect as the indemnification of directors and
officers provided for in the Bylaws.
INDEMNIFICATION AGREEMENTS
The Company has entered into Indemnification Agreements with each of its
officers and directors. The Indemnification Agreements provide that the Company
shall indemnify the officer or director and hold him harmless from any losses
and expenses which, in type or amount, are not insured under the directors and
officers' liability insurance maintained by the Company, and generally
indemnifies the officer or director against losses and expenses as a result of a
claim or claims made against him for any breach of duty, neglect, error,
misstatement, misleading statement, omission or other act done or wrongfully
attempted by the officer or director or any of the foregoing alleged by any
claimant or any claim against the officer or director solely by reason of him
being an officer or director of the Company, subject to certain exclusions. The
Indemnification Agreements also provide certain procedures regarding the right
to indemnification and for the advancement of expenses.
UNDERWRITING AGREEMENT
The Underwriting Agreement dated October 3, 1996 among the Company, the
Selling Stockholders referred to therein and the underwriters listed in Schedule
A thereto, a form of which Underwriting Agreement was filed as Exhibit 1.1 to
the Company's Registration Statement on Form S-1 (Registration No. 33-08243),
provides for the indemnification of the directors and officers of the Company in
certain circumstances.
INSURANCE
The Company has obtained a policy of liability insurance to insure its
officers and directors against losses resulting from certain acts committed by
them in their capacities as officers and directors of the Company.
ITEM 7.EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8.EXHIBITS
The following documents are filed as a part of this registration
statement or incorporated by reference herein:
Exhibit
NO. DESCRIPTION
4.1* Form of Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (Registration No. 333-08243))
4.2* Form of Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Registration Statement on Form
S-1 (Registration No. 333-08243))
4.3* Form of Certificate representing Common Stock (incorporated by reference
to Exhibit 4.1 to the Company's Registration Statement on Form S-1
(Registration No. 333-08243))
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<PAGE>
4.4 Cornell Corrections, Inc. 1996 Stock Option Plan
5 Opinion of Baker & Botts, L.L.P.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Baker & Botts, L.L.P. (included in Exhibit 5)
24 Powers of Attorney
* Incorporated herein by reference as indicated.
ITEM 9.UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) under the Securities
Act if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
PROVIDED, HOWEVER, that the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the registrant pursuant to the provisions described under Item 6 above, or
otherwise, the registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as
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<PAGE>
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer,
or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on December 31, 1996.
CORNELL CORRECTIONS, INC.
By:/S/ DAVID M. CORNELL
David M. Cornell
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on December 31, 1996.
Signature Title
/S/ DAVID M. CORNELL President, Chief Executive Officer
David M. Cornell and Director (Principal Executive Officer)
/S/ STEVEN W. LOGAN Chief Financial Officer, Treasurer and
Steven W. Logan Secretary (Principal Financial and
Accounting Officer)
/S/ CAMPBELL A. GRIFFIN, JR.*
Campbell A. Griffin, Jr.
Director
/S/ RICHARD T. HENSHAW III *
Richard T. Henshaw III
Director
/S/ PETER A. LEIDEL *
Peter A. Leidel
Director
/S/ TUCKER TAYLOR *
Tucker Taylor
Director
* By: /S/ DAVID M. CORNELL
David M. Cornell
Attorney-in-Fact
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<PAGE>
EXHIBIT INDEX
Exhibit DESCRIPTION
NO.
4.1* FORM OF RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY
(INCORPORATED BY REFERENCE TO EXHIBIT 3.1 TO THE COMPANY'S REGISTRATION
STATEMENT ON FORM S-1 (REGISTRATION NO. 333-08243))
4.2* FORM OF AMENDED AND RESTATED BYLAWS OF THE COMPANY (INCORPORATED BY
REFERENCE TO EXHIBIT 3.2 TO THE COMPANY'S REGISTRATION STATEMENT ON FORM
S-1 (REGISTRATION NO. 333-08243))
4.3* FORM OF CERTIFICATE REPRESENTING COMMON STOCK (INCORPORATED BY REFERENCE
TO EXHIBIT 4.1 TO THE COMPANY'S REGISTRATION STATEMENT ON FORM S-1
(REGISTRATION NO. 333-08243))
4.4 CORNELL CORRECTIONS, INC. 1996 STOCK OPTION PLAN
5 OPINION OF BAKER & BOTTS, L.L.P.
23.1 CONSENT OF ARTHUR ANDERSEN LLP
23.2 CONSENT OF BAKER & BOTTS, L.L.P. (INCLUDED IN EXHIBIT 5)
24 POWERS OF ATTORNEY
- --------------------------------------
* INCORPORATED HEREIN BY REFERENCE AS INDICATED.
II-8
EXHIBIT 4.4
CORNELL CORRECTIONS, INC.
1996 STOCK OPTION PLAN
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<PAGE>
TABLE OF CONTENTS
Page
I. Purposes of the Plan...................................................1
II. Definitions............................................................1
III. Effective Date.........................................................4
IV. Administration.........................................................4
(A) Duties of the Committee..........................................4
(B) Advisors.........................................................5
(C) Indemnification..................................................5
(D) Meetings of the Committee........................................5
(E) Determinations...................................................5
V. Shares; Adjustment Upon Certain Events................................6
(A) Shares to be Delivered; Fractional Shares........................6
(B) Number of Shares.................................................6
(C) Adjustments; Recapitalization, etc..............................6
(D) Extraordinary Transactions.......................................7
VI. Awards and Terms of Options............................................7
(A) Grant............................................................7
(B) Exercise Price...................................................8
(C) Number of Shares.................................................8
(D) Exercisability...................................................8
(E) Exercise of Options..............................................8
(F) Incentive Stock Option Limitations...............................9
(G) Other Terms and Conditions......................................10
VII. Effect of Termination of Employment...................................10
(A) Death, Disability, Retirement, etc..............................10
(B) Cause...........................................................11
(C) Cancellation of Options.........................................11
VIII. Nontransferability of Options.........................................11
IX. Rights as a Stockholder...............................................11
X. Termination, Amendment and Modification...............................11
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<PAGE>
Page
XI. Use of Proceeds.......................................................12
XII. General Provisions....................................................12
(A) Right to Terminate Employment or Consulting Arrangements........12
(B) Purchase for Investment.........................................13
(C) Trusts, etc.....................................................13
(D) Notices.........................................................13
(E) Severability of Provisions......................................14
(F) Payment to Minors, etc..........................................14
(G) Headings and Captions...........................................14
(H) Controlling Law.................................................14
(I) Other Benefits..................................................14
(J) Costs...........................................................14
(K) Section 162(m) Deduction Limitation.............................14
(L) Section 16(b) of the Exchange Act...............................14
XIII. Issuance of Stock Certificates; Legends; Payment of Expenses..........14
(A) Stock Certificates..............................................14
(B) Legends.........................................................15
(C) Payment of Expenses.............................................15
XIV. Listing of Shares and Related Matters.................................15
XV. Withholding Taxes.....................................................15
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<PAGE>
CORNELL CORRECTIONS, INC.
1996 STOCK OPTION PLAN
I. PURPOSES OF THE PLAN
The purposes of this 1996 Stock Option Plan (the "Plan") are to
enable Cornell Corrections, Inc. (the "Company") and Designated Subsidiaries (as
defined herein) to attract, retain and motivate certain key employees, directors
and consultants who are important to the success and growth of the business of
the Company and Designated Subsidiaries and to create a long-term mutuality of
interest between such persons and the stockholders of the Company by granting
the options to purchase Common Stock (as defined herein).
II. DEFINITIONS
In addition to the terms defined elsewhere herein, for purposes of
this Plan, the following terms will have the following meanings when used herein
with initial capital letters:
(A) "Board" means the Board of Directors of the Company.
(B) "Cause" means, with respect to a Participant's Termination of
Employment, (i) in the case where there is no employment or consulting agreement
between the Company and the Participant, or where there is an employment or
consulting agreement, but such agreement does not define cause (or words of like
import), commission of a felony, a crime involving moral turpitude,
embezzlement, misappropriation of property of the Company or a Subsidiary, any
other act involving dishonesty or fraud with respect to the Company or a
Subsidiary, a material breach of a directive which is not cured within a
specified time after written notice of such breach, or repeated failure after
written notice to follow the directives of an appropriate officer or the Board,
or (ii) in the case where there is an employment or consulting agreement between
the Company or a Subsidiary and the Participant, termination that is or would be
deemed to be for cause (or words of like import) as defined under such
employment or consulting agreement.
(C) "Code" means the Internal Revenue Code of 1986, as amended.
(D) "Committee" means a committee of the Board appointed from time
to time by the Board consisting of two (2) or more non-employee directors, each
of whom shall be an "outside director" as defined in Section 162(m) of the Code
to the extent then required and a "disinterested person" as defined in Rule
16b-3 promulgated under Section 16(b) of the Exchange Act, except that if and to
the extent that no Committee exists which has the authority to administer the
Plan, the functions of the Committee shall be exercised by the Board.
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<PAGE>
(E) "Common Stock" means either the Class A Common Stock of the
Company, par value $.001 per share, or the Class B Common Stock of the Company,
par value $.001 per share, or any common stock into which the Common Stock may
be converted and any common stock resulting from any reclassification of the
Common Stock.
(F) "Company" means Cornell Corrections, Inc., a Delaware
corporation.
(G) "Designated Subsidiary" means any Subsidiary which has been
designated from time to time by the Board. An entity shall be deemed a
Designated Subsidiary only for such periods as the requisite ownership
relationship is maintained.
(H) "Director" means any non-employee director of the Company or a
Designated Subsidiary.
(I) "Disability" means a permanent and total disability, rendering a
Participant unable to perform the duties performed by the Participant for the
Company or Designated Subsidiaries by reason of physical or mental disability
for a period of more than an aggregate of one hundred eighty (180) days in any
twelve (12) month period. A Disability shall only be deemed to occur at the time
of the determination by the Committee of the Disability.
(J) "Eligible Consultants" means the consultants of the Company and
Designated Subsidiaries who are eligible to participate in the Plan (including,
but not limited, to employees of entities providing consulting services), as
determined by the Committee in its sole discretion.
(K) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
(L) "Fair Market Value" means, for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder, as of any date, the last sales prices reported for the Common
Stock on the applicable date, (i) as reported by the principal national
securities exchange in the United States on which it is then traded, or (ii) if
not traded on any such national securities exchange, as quoted on an automated
quotation system sponsored by the National Association of Securities Dealers, or
if the sale of the Common Stock shall not have been reported or quoted on such
date, on the first day prior thereto on which the Common Stock was reported or
quoted. If the Common Stock is not readily tradable on a national securities
exchange or any system sponsored by the National Association of Securities
Dealers, its Fair Market Value shall be set by the Committee based upon its
assessment of the cash price that would be paid between a fully informed buyer
and seller under no compulsion to buy or sell (without giving effect to any
discount for a minority interest or any restrictions on transferability or any
lack of liquidity of the stock).
(M) "Incentive Stock Option" means any Option awarded under this
Plan intended to be and designated as an "Incentive Stock Option" within the
meaning of Section 422 of the Code.
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(N) "Key Employee" means any person who is an officer or other
valuable employee of the Company or a Designated Subsidiary, as determined by
the Committee in its sole discretion. A Key Employee may, but need not, be an
officer of the Company or a Designated Subsidiary.
(O) "Non-Qualified Stock Option" means any Option awarded under this
Plan that is not an Incentive Stock Option.
(P) "Option" means the right to purchase one Share at a prescribed
purchase price on the terms specified in the Plan.
(Q) "Participant" means a Key Employee, Director or Eligible
Consultant who is granted Options under the Plan which Options have not expired;
PROVIDED, HOWEVER, that any Director or Eligible Consultant shall be a
Participant or purposes of the Plan solely with respect to grants of
Non-Qualified Stock Options and shall be ineligible for Incentive Stock Options.
(R) "Person" means any individual or entity, and the heirs,
executors, administrators, legal representatives, successors and assigns of such
Person as the context may require.
(S) "Retirement" means a Termination of Employment without cause
from the Company and/or a Subsidiary by a Participant who is at least age 65 or,
with the consent of the Committee, such earlier date before age 65 but after age
55.
(T) "Securities Act" means the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.
(U) "Share" means a share of Common Stock.
(V) "Subsidiary" means any corporation that is defined as a
subsidiary corporation in Section 424(f) of the Code.
(W) "Ten Percent Shareholder" means a person owning Common Stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company as defined in Section 422 of the
Code.
(X) "Termination of Employment" with respect to a Key Employee means
that individual is no longer actively employed by the Company or a Subsidiary on
a full-time basis, irrespective of whether or not such employee is receiving
salary continuance pay, is continuing to participate in other employee benefit
programs or is otherwise receiving severance type payments. In the event an
entity shall cease to be a Subsidiary, there shall be deemed a Termination of
Employment of any individual who is not otherwise an employee of the Company or
another Subsidiary at the time the entity ceases to be a Subsidiary. A
Termination of Employment shall not
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include a leave of absence approved for purposes of the Plan by the Committee.
For purposes of this plan, a full-time employee is a person who is scheduled to
work at least thirty (30) hours per week. With respect to a Director, a
Termination of Employment shall occur when the individual ceases to be a
director of the Company or any Subsidiary. With respect to an Eligible
Consultant, a Termination of Employment shall occur upon the termination of the
consulting contract or the termination of the performance of consulting
services, as determined by the Committee in its sole discretion.
(Y) "Withholding Election" means the election set forth in Article
XV.
III. EFFECTIVE DATE
The Plan shall become effective as of May 15, 1996 (the "Effective
Date"). Grants of Options by the Committee under the Plan may be made as of or
after the Effective Date of the Plan, including retroactively, provided that, if
the Plan is not approved by the majority of the Common Stock (at the time of
approval), all Options which have been granted by the Committee shall be null
and void. No Options may be exercised prior to the approval of the Plan by the
majority of the Common Stock (at the time of approval).
IV. ADMINISTRATION
(A) DUTIES OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee. The Committee shall have full authority to
interpret the Plan and to decide any questions and settle all controversies and
disputes that may arise in connection with the Plan; to establish, amend and
rescind rules for carrying out the Plan; to administer the Plan, subject to its
provisions; to select Participants in, and grant Options under, the Plan; to
determine the terms, vesting requirements, exercise price and form of exercise
payment for each Option granted under the Plan; to determine the consideration
to be received by the Company in exchange for the grant of the Options; to
determine whether and to what extent Incentive Stock Options and Non-Qualified
Stock Options, or any combination thereof, are to be granted hereunder to one or
more Key Employees and whether and to what extent Non-Qualified Stock Options
are to be granted hereunder to one or more Eligible Consultants or Directors; to
prescribe the form or forms of instruments evidencing Options and any other
instruments required under the Plan (which need not be uniform) and to change
such forms from time to time; to determine whether, to what extent and under
what circumstances to permit reloads, such that to the extent that Options are
settled with Common Stock, that Non-Qualified Stock Options may be granted for
the same number of shares of the same or different types, based on such terms as
the Committee may determine, in its sole discretion; and to make all other
determinations and to take all such steps in connection with the Plan and the
Options as the Committee, in its sole discretion, deems necessary or desirable.
The Committee shall not be bound to any standards of uniformity or similarity of
action, interpretation or conduct in the discharge of its duties hereunder,
regardless of the apparent similarity of the matters coming before it. Any
determination, action or conclusion of the Committee shall be final, conclusive
and binding on all parties. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to
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Incentive Stock Options shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so as to
disqualify the Plan under Section 422 of the Code, or, without the consent of
the Participants affected, to disqualify any Incentive Stock Option under such
Section 422.
(B) ADVISORS. The Committee may employ such legal counsel,
consultants and agents as it may deem desirable for the administration of the
Plan, and may rely upon any advice or opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.
Expenses incurred by the Committee in the engagement of such counsel, consultant
or agent shall be paid by the Company.
(C) INDEMNIFICATION. To the maximum extent permitted by applicable
law, no officer of the Company or member or former member of the Committee or of
the Board shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it. To the maximum extent
permitted by applicable law or the Certificate of Incorporation or Bylaws of the
Company and to the extent not covered by insurance, each officer and member or
former member of the Committee or of the Board shall be indemnified and held
harmless by the Company against any cost or expense (including reasonable fees
of counsel reasonably acceptable to the Company) or liability (including any sum
paid in settlement of a claim with the approval of the Company), and advanced
amounts necessary to pay the foregoing at the earliest time and to the fullest
extent permitted, arising out of any act or omission to act in connection with
the Plan, except to the extent arising out of such officer's, member's or former
member's own fraud or bad faith. Such indemnification shall be in addition to
any rights of indemnification the officers, members or former members may have
as directors under applicable law or under the Certificate of Incorporation or
Bylaws of the Company or Designated Subsidiary. Notwithstanding anything else
herein, this indemnification will not apply to the actions or determinations
made by an individual with regard to Options granted to him or her under this
Plan.
(D) MEETINGS OF THE COMMITTEE. The Committee shall adopt such rules
and regulations as it shall deem appropriate concerning the holding of its
meetings and the transaction of its business. Any member of the Committee may be
removed from the Committee at any time either with or without cause by
resolution adopted by the Board, and any vacancy on the Committee may at any
time be filled by resolution adopted by the Board. All determinations by the
Committee shall be made by the affirmative vote of a majority of its members.
Any such determination may be made at a meeting duly called and held at which a
majority of the members of the Committee are in attendance in person or through
telephonic communication. Any determination set forth in writing and signed by
all the members of the Committee shall be as fully effective as if it had been
made by a majority vote of the members at a meeting duly called and held.
(E) DETERMINATIONS. Each determination, interpretation or other
action made or taken pursuant to the provisions of this Plan by the Committee
shall be final, conclusive and binding for all purposes and upon all persons,
including, without limitation, the Participants, the Company and Subsidiaries,
directors, officers and other employees of the Company and Subsidiaries, and the
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respective heirs, executors, administrators, personal representatives and other
successors in interest of each of the foregoing.
V. SHARES; ADJUSTMENT UPON CERTAIN EVENTS
(A) SHARES TO BE DELIVERED; FRACTIONAL SHARES. Shares to be issued
under the Plan shall be made available, at the sole discretion of the Board,
either from authorized but unissued Shares or from issued Shares reacquired by
the Company and held in treasury. No fractional Shares will be issued or
transferred upon the exercise of any Option. In lieu thereof, the Company shall
pay a cash adjustment equal to the same fraction of the Fair Market Value of one
Share on the date of exercise.
(B) NUMBER OF SHARES. Subject to adjustment as provided in this
Article V, the maximum aggregate number of Shares that may be issued under the
Plan shall be Eight Hundred Eighty Thousand (880,000). If Options are for any
reason canceled, or expire or terminate unexercised, the Shares covered by such
Options shall again be available for the grant of Options, subject to the
foregoing limit.
(C) ADJUSTMENTS; RECAPITALIZATION, ETC. The existence of the Plan
and the Options granted hereunder shall not affect in any way the right or power
of the Board or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the Company,
any issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting Common Stock, the dissolution or liquidation of the Company or
Designated Subsidiaries, any sale or transfer of all or part of its assets or
business or any other corporate act or proceeding. The Committee may make or
provide for such adjustments in the maximum number of Shares specified in
Article V(B), in the number of Shares covered by outstanding Options granted
hereunder and/or in the Purchase Price (as hereinafter defined) applicable to
such Options or such other adjustments in the number and kind of securities
received upon the exercise of Options, as the Committee in its sole discretion
may determine is equitably required to prevent dilution or enlargement of the
rights of Participants or to otherwise recognize the effect that otherwise would
result from any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
merger, consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities or any other
corporate transaction or event having an effect similar to any of the foregoing.
Except as herein expressly provided, the issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
for cash, property, labor or services, upon direct sale, upon the exercise of
rights or warrants to subscribe therefor or upon conversion of shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number and
class of shares and/or other securities or property subject to Options
theretofore granted or the Purchase Price.
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(D) EXTRAORDINARY TRANSACTIONS. (i) In the event the Company shall,
pursuant to action by its Board of Directors, at any time propose to merge with
or into, consolidate with, or sell or otherwise transfer all or substantially
all of its assets to another entity or in the event of the acquisition of all or
substantially all of the Company's outstanding Common Stock by a single person
or entity and/or group of entities acting in concert (each, an "Extraordinary
Transaction"), the Company shall cause written notice of the proposed
Extraordinary Transaction to be given to the Participant not less than thirty
(30) days prior to the anticipated effective date of the proposed Extraordinary
Transaction (the "Extraordinary Transaction Effective Date").
(ii) On a date which the Company shall specify in such notice (the
"Early Vesting Date"), which date shall not be less than twenty (20) days prior
to the Extraordinary Transaction Effective Date, the Options shall become fully
vested, except as otherwise expressly provided in any Option Agreement with
respect to the Options granted thereunder.
(iii) If the Extraordinary Transaction is consummated, the Options,
to the extent not previously exercised prior to the Extraordinary Transaction
Effective Date, shall terminate on the Extraordinary Transaction Effective Date.
If the Extraordinary Transaction is abandoned or otherwise not consummated then,
to the extent that the portion of the Options not exercised prior to such
abandonment or termination shall have vested solely by operation of Article
V(D)(ii) and the relevant Option agreements, such vesting shall be annulled and
be of no further force or effect, and the vesting provisions set forth in the
relevant Option agreements shall be reinstituted, as of the date of such
abandonment or termination.
VI. AWARDS AND TERMS OF OPTIONS
(A) GRANT. The Committee may grant Non-Qualified Stock Options or
Incentive Stock Options, or any combination thereof to Key Employees, and
Non-Qualified Stock Options to Directors and Eligible Consultants, provided that
the maximum number of Shares with respect to which Options may be granted
(excluding options initially granted prior to the Effective Date and thereafter
assumed under the Plan) to any Participant during any calendar year may not
exceed Two Hundred Fifty Thousand (250,000), subject to adjustment as provided
in Article V(C). To the extent that the maximum number of Shares with respect to
which Options may be granted are not granted in a particular calendar year to a
Participant (beginning with the year in which the Participant receives his or
her first grant of Options hereunder), such ungranted Options for any year shall
increase the maximum number of Shares with respect to which Options may be
granted to such Participant in subsequent calendar years during the term of the
Plan until used. Notwithstanding the foregoing, in order to comply with Section
162(m) of the Code, the Committee shall take into account that (1) if an Option
is canceled, the canceled Option continues to be counted against the maximum
number of shares for which Options may be granted to the Key Employee, Director
or Eligible Consultant under the Plan and (2) for purposes of Section 162(m) of
the Code, if after the grant of an Option, the Committee or the Board reduces
the exercise price or Purchase Price (as defined below), the transaction is
treated as a cancellation of the Option and a grant of a new Option, and in such
case, both the Option that is deemed to be canceled and the Option that is
deemed to be
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granted reduce the maximum number of shares for which Options may be granted to
the Key Employee, Director or Eligible Consultant under the Plan. To the extent
that any Option does not qualify as an Incentive Stock Option (whether because
of its provisions or the time or manner of its exercise or otherwise), such
Option or the portion thereof which does not qualify, shall constitute a
separate Non-Qualified Stock Option. Each Option shall be evidenced by an Option
agreement (the "Option Agreement") in such form as the Committee shall approve
from time to time.
(B) EXERCISE PRICE. The purchase price per Share (the "Purchase
Price") deliverable upon the exercise of a Non-Qualified Stock Option shall be
determined by the Committee and set forth in a Participant's Option Agreement,
provided that the Purchase Price shall not be less than the par value of a
Share. Notwithstanding the foregoing, to the extent the Committee grants an
Incentive Stock Option or grants an option which is intended to be "performance
based" for purposes of Section 162(m) of the Code, the Purchase Price
deliverable upon the exercise of any such option shall be determined by the
Committee and set forth in a Participant's Option Agreement but shall be not
less than 100% of the Fair Market Value of a Share at the time of grant;
PROVIDED, HOWEVER, if an Incentive Stock Option is granted to a Ten Percent
Shareholder, the Purchase Price shall be no less than 110% of the Fair Market
Value of a Share.
(C) NUMBER OF SHARES. The Option Agreement shall specify the number
of Options granted to the Participant, as determined by the Committee in its
sole discretion.
(D) EXERCISABILITY. At the time of grant, the Committee shall
specify when and on what terms (including any vesting requirements) the Options
granted shall be exercisable. In the case of Options not immediately exercisable
in full, the Committee may at any time accelerate the time at which all or any
part of the Options may be exercised and may waive any other conditions to
exercise. No Option shall be exercisable after the expiration of ten (10) years
from the date of grant; PROVIDED, HOWEVER, the term of an Incentive Stock Option
granted to a Ten Percent Shareholder may not exceed five (5) years. Each Option
shall be subject to earlier termination as provided in Article VII below.
(E) EXERCISE OF OPTIONS.
(i) A Participant may elect to exercise one or more Options
then exercisable by giving written notice to the Company of such election
and of the number of Options such Participant has elected to exercise,
accompanied by payment in full of the aggregate Purchase Price for the
number of Shares for which the Options are being exercised.
(ii) Shares purchased pursuant to the exercise of Options
shall be paid for at the time of exercise as follows:
(a) in cash or by check, bank draft or money order
payable to the order of the Company;
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(b) in the form of shares of Common Stock owned by the
Participant (and for which the Participant has good title free and
clear of any liens and encumbrances);
(c) by agreeing to surrender then exercisable Options
equivalent in value;
(d) if the Shares are traded on a national securities
exchange, through the delivery of irrevocable instructions to a
broker to deliver promptly to the Company an amount equal to the
aggregate Purchase Price plus all required tax withholding by
payment through a cash or margin arrangement with a broker;
(e) in Shares otherwise issuable upon exercise of the
Option; or
(f) on such other terms and conditions as may be
acceptable to the Committee (which may include payment in full or in
part by the transfer of Shares which have been owned by the
Participant for at least 6 (six) months or the surrender of Options
owned by the Participant) and in accordance with applicable law.
No shares shall be issued until payment, as provided herein, has been made
or provided for.
(iii) Upon receipt of payment, the Company shall deliver to
the Participant as soon as practicable a certificate or certificates for
the Shares then purchased.
(F) INCENTIVE STOCK OPTION LIMITATIONS. To the extent that the
aggregate Fair Market Value (determined as of the time of grant) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year under the Plan and/or any
other stock option plan of the Company or any subsidiary or parent corporation
(within the meaning of Section 424 of the Code) exceeds $100,000, such Options
shall be treated as Options which are not Incentive Stock Options.
To the extent permitted under Section 422 of the Code, or the
applicable regulations thereunder or any applicable Internal Revenue Service
pronouncement, if (i) a Participant's employment with the Company or Designated
Subsidiary is terminated by reason of death, Disability, Retirement or
termination without Cause, and (ii) the portion of any Incentive Stock Option
that would be exercisable during the post-termination period specified under
Article VII but for the $100,000 limitation currently contained in Section
422(d) of the Code is greater than the portion of such Stock Option that is
immediately exercisable as an "incentive stock option" during such
post-termination period under Section 422, such excess shall be treated as a
Non-Qualified Stock Option. If the exercise of an Incentive Stock Option is
accelerated for any reason, any portion
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of such Option that is not exercisable as an Incentive Stock Option by reason of
the $100,000 limitation contained in Section 422(d) of the Code shall be treated
as a Non-Qualified Stock Option.
Should any of the foregoing provisions not be necessary in order for
the Stock Options to qualify as Incentive Stock Options, or should any
additional provisions be required, the Committee may amend the Plan accordingly,
without the necessity of obtaining the approval of the stockholders of the
Company, except as otherwise required by law.
(G) OTHER TERMS AND CONDITIONS. Options may contain such other
provisions, which shall not be inconsistent with any of the foregoing terms of
the Plan, as the Committee shall deem appropriate including, without limitation,
provisions permitting the use of shares of Common Stock to exercise and settle a
Stock Option ("Stock Swaps") or permitting "reloads" such that in the case of
Stock Swaps, the same number of Non-Qualified Stock Options is granted as the
number of shares of Common Stock swapped ("Reloads"). With respect to Stock
Swaps, shares of Common Stock shall be valued at Fair Market Value on the date
of exercise and shall have the same remaining time period as the shares of
Common Stock that were swapped. With respect to Reloads, the exercise price of
the new Non-Qualified Stock Option shall be the Fair Market Value on the date
granted and the term of the Non-Qualified Stock Option shall be the same as the
remaining term of the Options that are exercised.
VII. EFFECT OF TERMINATION OF EMPLOYMENT
(A) DEATH, DISABILITY, RETIREMENT, ETC. Except as otherwise provided
in the Participant's Option Agreement, upon Termination of Employment, all
outstanding Options then exercisable and not exercised by the Participant prior
to such Termination of Employment (and any Options not previously exercisable
but made exercisable by the Committee at or after the Termination of Employment)
shall remain exercisable by the Participant to the extent not exercised for the
following time periods, or, if earlier, the prior expiration of the Option in
accordance with the terms of the Plan and grant:
(i) In the event of the Participant's death, Retirement or
Disability, such Options shall remain exercisable by the Participant (or
by the Participant's estate or by the person given authority to exercise
such Options by the Participant's will or by operation of law) for a
period of one year from the date of the Participant's death, Retirement or
Disability, provided that the Committee, in its sole discretion, may at
any time extend such time period.
(ii) In the event of the Participant's Termination of
Employment without Cause, such Options shall remain exercisable for ninety
(90) days from the date of the Participant's Termination of Employment,
provided that the Committee, in its sole discretion, may at any time
extend such time period.
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Unless the Committee otherwise determines, there shall be no effect on the
exercisability of Options held by a Participant if (i) the Participant's
employment, directorship or consultancy is transferred from the Company to a
Designated Subsidiary, from a Designated Subsidiary to the Company or from one
Designated Subsidiary to another or (ii) the Participant is a Key Employee who
becomes an Eligible Consultant or an Eligible Consultant who becomes a Key
Employee.
(B) CAUSE. Upon the Termination of Employment of a Participant for
Cause, or if the Company or a Designated Subsidiary obtains or discovers
information after Termination of Employment that such Participant had engaged in
conduct that would have justified a Termination of Employment for Cause during
the Participant's employment, directorship or consultancy, all outstanding
Options of such Participant shall, unless the Committee in its sole discretion
determines otherwise, terminate and be null and void.
(C) CANCELLATION OF OPTIONS. Except as otherwise provided in Article
V(D), no Options that were not exercisable during the period of employment shall
thereafter become exercisable upon a Termination of Employment for any reason or
no reason whatsoever, and such options shall terminate and become null and void
upon a Termination of Employment, unless the Committee determines in its sole
discretion that such Options shall be exercisable.
VIII. NONTRANSFERABILITY OF OPTIONS
No Option shall be transferable by the Participant otherwise than by
will or under applicable laws of descent and distribution, and during the
lifetime of the Participant may be exercised only by the Participant or his or
her guardian or legal representative. In addition, except as provided in the
immediately preceding sentence, no Option shall be assigned, negotiated, pledged
or hypothecated in any way (whether by operation of law or otherwise), and no
Option shall be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, negotiate, pledge or hypothecate any Option, or in
the event of any levy upon any Option by reason of any execution, attachment or
similar process contrary to the provisions hereof, such Option shall immediately
terminate and become null and void.
IX. RIGHTS AS A STOCKHOLDER
A Participant (or a permitted transferee of an Option) shall have no
rights as a stockholder with respect to any Shares covered by such Participant's
Option until such Participant (or permitted transferee) shall have become the
holder of record of such Shares, and no adjustments shall be made for dividends
in cash or other property or distributions or other rights in respect to any
such Shares, except as otherwise specifically provided in this Plan.
X. TERMINATION, AMENDMENT AND MODIFICATION
The Plan shall terminate at the close of business on the tenth
anniversary of the Effective Date (the "Termination Date"), unless terminated
sooner as hereinafter provided, and no
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Option shall be granted under the Plan on or after that date. The termination of
the Plan shall not terminate any outstanding Options that by their terms
continue beyond the Termination Date. At any time prior to the Termination Date,
the Committee may amend or terminate the Plan or suspend the Plan in whole or in
part.
The Committee may at any time, and from time to time, amend, in
whole or in part, any or all of the provisions of the Plan (including any
amendment deemed necessary to ensure that the Company may comply with any
regulatory requirements referred to in Article XII), or suspend or terminate it
entirely, retroactively or otherwise; PROVIDED, HOWEVER, that, unless otherwise
required by law or specifically provided herein, the rights of a Participant
with respect to Options granted prior to such amendment, suspension or
termination, may not, be materially impaired without the consent of such
Participant and; PROVIDED, FURTHER, without the approval of the stockholders of
the Company entitled to vote, no amendment may be made (except by operation of
Article V(C) with respect to clauses (i), (ii) and (iii) below), which would (i)
increase the aggregate number of shares of Common Stock that may be issued under
this Plan; (ii) decrease the minimum Purchase Price of any Option; (iii)
increase the individual limitation set forth in Article VI(A) of the Plan; (iv)
extend the maximum option period; or (v) effect any other change that would
require stockholder approval under Section 162(m) of the Code.
The Committee may amend the terms of any Option granted,
prospectively or retroactively, but, subject to Article VI above or as otherwise
provided herein, no such amendment or other action by the Committee shall
materially impair the rights of any Participant without the Participant's
consent. No modification of an Option shall adversely affect the status of an
Incentive Stock Option as an incentive stock option under Section 422 of the
Code. Notwithstanding the foregoing, however, no such amendment may, without the
approval of the stockholders of the Company, effect any change that would
require stockholder approval under applicable law.
XI. USE OF PROCEEDS
The proceeds of the sale of Shares subject to Options under the Plan
are to be added to the general funds of the Company and used for its general
corporate purposes as the Board shall determine.
XII. GENERAL PROVISIONS
(A) RIGHT TO TERMINATE EMPLOYMENT OR CONSULTING ARRANGEMENTS.
Neither the adoption of the Plan nor the grant of Options shall impose any
obligation on the Company or Designated Subsidiaries to continue the employment
of any Participant, the directorship of any Director or the consulting
arrangement with any Eligible Consultant, nor shall it impose any obligation on
the part of any Participant to remain in the employ of the Company or Designated
Subsidiaries or to remain as a director or consultant of the Company or its
Designated Subsidiaries.
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(B) PURCHASE FOR INVESTMENT. If the Board or the Committee
determines that the law so requires, the holder of an Option granted hereunder
shall, upon any exercise or conversion thereof, execute and deliver to the
Company a written statement, in form satisfactory to the Company, representing
and warranting that such Participant is purchasing or accepting the Shares then
acquired for such Participant's own account and not with a view to the resale or
distribution thereof, that any subsequent offer for sale or sale of any such
Shares shall be made either pursuant to (i) a Registration Statement on an
appropriate form under the Securities Act, which Registration Statement shall
have become effective and shall be current with respect to the Shares being
offered and sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, and that in claiming such exemption the
holder will, prior to any offer for sale or sale of such Shares, obtain a
favorable written opinion, satisfactory in form and substance to the Company,
from counsel acceptable to the Company as to the availability of such exception.
(C) TRUSTS, ETC. Nothing contained in the Plan and no action taken
pursuant to the Plan (including, without limitation, the grant of any Option
thereunder) shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and any Participant or the executor,
administrator or other personal representative or designated beneficiary of such
Participant, or any other persons. Any reserves that may be established by the
Company in connection with the Plan shall continue to be part of the general
funds of the Company, and no individual or entity other than the Company shall
have any interest in such funds until paid to a Participant. If and to the
extent that any Participant or such Participant's executor, administrator or
other personal representative, as the case may be, acquires a right to receive
any payment from the Company pursuant to the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company.
(D) NOTICES. Any notice to the Company required by or in respect of
this Plan will be addressed to the Company, Cornell Corrections, Inc., 4801
Woodway, Suite 400W, Houston, TX 77056, Attention: Chief Financial Officer, or
such other place of business as shall become the Company's principal executive
offices from time to time. Each Participant shall be responsible for furnishing
the Company with the current and proper address for the mailing to such
Participant of notices and the delivery to such Participant of agreements,
Shares and payments. Any such notice to the Participant will, if the Company has
received notice that the Participant is then deceased, be given to the
Participant's personal representative if such representative has previously
informed the Company of his status and address (and has provided such reasonable
substantiating information as the Company may request) by written notice under
this Section. Any notice required by or in respect of this Plan will be deemed
to have been duly given when delivered in person or when dispatched by telegram
or one (1) business day after having been dispatched by a nationally recognized
overnight courier service or three (3) business days after having been mailed by
United States registered or certified mail, return receipt requested, postage
prepaid. The Company assumes no responsibility or obligation to deliver any item
mailed to such address that is returned as undeliverable to the addressee and
any further mailings will be suspended until the Participant furnishes the
proper address.
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<PAGE>
(E) SEVERABILITY OF PROVISIONS. If any provisions of the Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions of the Plan, and the Plan shall be construed and
enforced as if such provisions had not been included.
(F) PAYMENT TO MINORS, ETC. Any benefit payable to or for the
benefit of a minor, an incompetent person or other person incapable of receipt
thereof shall be deemed paid when paid to such person's guardian or to the party
providing or reasonably appearing to provide for the care of such person, and
such payment shall fully discharge the Committee, the Company and their
employees, agents and representatives with respect thereto.
(G) HEADINGS AND CAPTIONS. The headings and captions herein are
provided for reference and convenience only. They shall not be considered part
of the Plan and shall not be employed in the construction of the Plan.
(H) CONTROLLING LAW. The Plan shall be construed and enforced
according to the laws of the State of Delaware.
(I) OTHER BENEFITS. No payment under this Plan shall be considered
compensation for purposes of computing benefits under any retirement plan of the
Company or a Designated Subsidiary nor affect any benefits under any other
benefit plan now or subsequently in effect under which the availability of
benefits is related to the level of compensation.
(J) COSTS. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any Options hereunder.
(K) SECTION 162(M) DEDUCTION LIMITATION. The Committee at any time
may in its sole discretion limit the number of Options that can be exercised in
any taxable year of the Company, to the extent necessary to prevent the
application of Section 162(m) of the Code (or any similar or successor
provision), provided that the Committee may not postpone the earliest date on
which Options can be exercised beyond the last day of the stated term of such
Options.
(L) SECTION 16(B) OF THE EXCHANGE ACT. All elections and
transactions under the Plan by persons subject to Section 16 of the Exchange Act
involving shares of Common Stock are intended to comply with all exemptive
conditions under Rule 16b-3. The Committee may establish and adopt written
administrative guidelines, designed to facilitate compliance with Section 16(b)
of the Exchange Act, as it may deem necessary or proper for the administration
and operation of the Plan and the transaction of business thereunder.
XIII. ISSUANCE OF STOCK CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES
(A) STOCK CERTIFICATES. Upon any exercise of an Option and payment
of the exercise price as provided in such Option, a certificate or certificates
for the Shares as to which such Option has been exercised shall be issued by the
Company in the name of the person or persons
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<PAGE>
exercising such Option and shall be delivered to or upon the order of such
person or persons.
(B) LEGENDS. Certificates for Shares issued upon exercise of an
Option shall bear such legend or legends as the Committee, in its sole
discretion, determines to be necessary or appropriate to prevent a violation of,
or to perfect an exemption from, the registration requirements of the Securities
Act or to implement the provisions of any agreements between the Company and the
Participant with respect to such Shares.
(C) PAYMENT OF EXPENSES. The Company shall pay all issue or transfer
taxes with respect to the issuance or transfer of Shares, as well as all fees
and expenses necessarily incurred by the Company in connection with such
issuance or transfer and with the administration of the Plan.
XIV. LISTING OF SHARES AND RELATED MATTERS
If at any time the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of Options or the award or sale of Shares under the Plan, no
Option grant shall be effective and no Shares will be delivered, as the case may
be, unless and until such listing, registration, qualification, consent or
approval shall have been effected or obtained, or otherwise provided for, free
of any conditions not acceptable to the Board.
XV. WITHHOLDING TAXES
The Company shall have the right to require prior to the issuance or
delivery of any shares of Common Stock payment by the Participant of any
federal, state or local taxes required by law to be withheld.
The Committee may permit any such withholding obligation to be
satisfied by reducing the number of shares of Common Stock otherwise
deliverable. A person required to file reports under Section 16(a) of the
Exchange Act with respect to securities of the Company may elect to have a
sufficient number of shares of Common Stock withheld to fulfill such tax
obligations (hereinafter a "Withholding Election") only if the election complies
with such conditions as are necessary to prevent the withholding of such shares
from being subject to Section 16(b) of the Exchange Act. To the extent necessary
under then current law, such conditions shall include the following: (x) the
Withholding Election shall be subject to the approval of the Committee and (y)
the Withholding Election is made (i) during the period beginning on the third
business day following the date of release for publication of the quarterly or
annual summary statements of sales and earnings of the Company and ending on the
twelfth business day following such date or is made in advance but takes effect
during such period, (ii) six (6) months before the stock award becomes taxable
or (iii) during any other period in which a Withholding Election may be made
under the provisions of Rule 16b-3 promulgated pursuant to the Exchange Act. Any
fraction of a share of Common Stock required to satisfy such tax obligations
shall be disregarded and the amount due shall be paid instead in cash by the
Participant.
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EXHIBIT 5
Baker & Botts, L.L.P.
December 31, 1996
Cornell Corrections, Inc.
4801 Woodway, Suite 400W
Houston, Texas 77056
Gentlemen:
At your request, this opinion of counsel is being furnished to you
for filing as Exhibit 5 to the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by Cornell Corrections, Inc., a Delaware
corporation (the "Company"), with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, relating to the proposed offering of up
to 639,140 shares of the Company's common stock, par value $.001 per share (the
"Shares"), pursuant to the Company's 1996 Stock Option Plan (the "Plan").
We have examined the Restated Certificate of Incorporation and
Restated and Amended Bylaws of the Company and the originals, or copies
certified or otherwise identified, of the Plan, corporate records of the
Company, including minute books of the Company as furnished to us by the
Company, certificates of public officials and of representatives of the Company,
statutes and other records, instruments and documents pertaining to the Company
as a basis for the opinion hereinafter expressed. In giving such opinion we have
relied upon certificates of officers of the Company with respect to the accuracy
of the material factual matters contained in such certificates.
Based upon our examination as aforesaid, we are of the opinion that
the Shares, when issued pursuant to the provisions of the Plan, will be duly
authorized, validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion of counsel as
Exhibit 5 to the Registration Statement.
Very truly yours,
/S/ BAKER & BOTTS, L.L.P.
BAKER & BOTTS, L.L.P.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated March 15, 1996
(except as to Notes 1 and 7, for which the date is July 16, 1996) included in
Cornell Corrections, Inc. Form S-1 for the year ended December 31, 1995 and to
all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
December 31, 1996
Houston, Texas
EXHIBIT 24
POWER OF ATTORNEY
WHEREAS, Cornell Corrections, Inc., a Delaware corporation (the
"Company") intends to file with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, a Registration
Statement on Form S-8 (the "Registration Statement"), relating to the Cornell
Corrections, Inc. 1996 Stock Option Plan (the "Plan") and the common stock, par
value $.001 per share, of the Company issuable pursuant to the Plan, with such
amendments thereto as may be necessary or appropriate, together with any and all
exhibits and other documents having relation thereto;
NOW, THEREFORE, the undersigned, in his capacity as a director of
the Company, does hereby appoint DAVID M. CORNELL and STEVEN W. LOGAN, and each
of them severally, his true and lawful attorney or attorneys with power to act
with or without the other and with full power of substitution and
resubstitution, to execute in his name, place and stead, in his capacity as a
director of the Company, the Registration Statement and any and all amendments
thereto as said attorneys or either of them shall deem necessary or appropriate,
together with all instruments, exhibits or other documents necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or desirable to be done in
the premises, as fully and to all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument on
this 7th day of November, 1996.
/S/ CAMPBELL A. GRIFFIN, JR.
Campbell A. Griffin, Jr.
<PAGE>
POWER OF ATTORNEY
WHEREAS, Cornell Corrections, Inc., a Delaware corporation (the
"Company") intends to file with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, a Registration
Statement on Form S-8 (the "Registration Statement"), relating to the Cornell
Corrections, Inc. 1996 Stock Option Plan (the "Plan") and the common stock, par
value $.001 per share, of the Company issuable pursuant to the Plan, with such
amendments thereto as may be necessary or appropriate, together with any and all
exhibits and other documents having relation thereto;
NOW, THEREFORE, the undersigned, in his capacity as a director of
the Company, does hereby appoint DAVID M. CORNELL and STEVEN W. LOGAN, and each
of them severally, his true and lawful attorney or attorneys with power to act
with or without the other and with full power of substitution and
resubstitution, to execute in his name, place and stead, in his capacity as a
director of the Company, the Registration Statement and any and all amendments
thereto as said attorneys or either of them shall deem necessary or appropriate,
together with all instruments, exhibits or other documents necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or desirable to be done in
the premises, as fully and to all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument on
this 7th day of November, 1996.
/S/ RICHARD T. HENSHAW III
Richard T. Henshaw III
<PAGE>
POWER OF ATTORNEY
WHEREAS, Cornell Corrections, Inc., a Delaware corporation (the
"Company") intends to file with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, a Registration
Statement on Form S-8 (the "Registration Statement"), relating to the Cornell
Corrections, Inc. 1996 Stock Option Plan (the "Plan") and the common stock, par
value $.001 per share, of the Company issuable pursuant to the Plan, with such
amendments thereto as may be necessary or appropriate, together with any and all
exhibits and other documents having relation thereto;
NOW, THEREFORE, the undersigned, in his capacity as a director of
the Company, does hereby appoint DAVID M. CORNELL and STEVEN W. LOGAN, and each
of them severally, his true and lawful attorney or attorneys with power to act
with or without the other and with full power of substitution and
resubstitution, to execute in his name, place and stead, in his capacity as a
director of the Company, the Registration Statement and any and all amendments
thereto as said attorneys or either of them shall deem necessary or appropriate,
together with all instruments, exhibits or other documents necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or desirable to be done in
the premises, as fully and to all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument on
this 7th day of November, 1996.
/S/ PETER A. LEIDEL
Peter A. Leidel
<PAGE>
POWER OF ATTORNEY
WHEREAS, Cornell Corrections, Inc., a Delaware corporation (the
"Company") intends to file with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, a Registration
Statement on Form S-8 (the "Registration Statement"), relating to the Cornell
Corrections, Inc. 1996 Stock Option Plan (the "Plan") and the common stock, par
value $.001 per share, of the Company issuable pursuant to the Plan, with such
amendments thereto as may be necessary or appropriate, together with any and all
exhibits and other documents having relation thereto;
NOW, THEREFORE, the undersigned, in his capacity as a director of
the Company, does hereby appoint DAVID M. CORNELL and STEVEN W. LOGAN, and each
of them severally, his true and lawful attorney or attorneys with power to act
with or without the other and with full power of substitution and
resubstitution, to execute in his name, place and stead, in his capacity as a
director of the Company, the Registration Statement and any and all amendments
thereto as said attorneys or either of them shall deem necessary or appropriate,
together with all instruments, exhibits or other documents necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, every act whatsoever necessary or desirable to be done in
the premises, as fully and to all intents and purposes as the undersigned might
or could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this instrument on
this 7th day of November, 1996.
/S/ TUCKER TAYLOR
Tucker Taylor
