AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 18, 1999.
REGISTRATION NO. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
------------------------
CORNELL CORRECTIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
DELAWARE 76-0433642
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
<S> <C>
STEVEN W. LOGAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
1700 WEST LOOP SOUTH, SUITE 1500 1700 WEST LOOP SOUTH, SUITE 1500
HOUSTON, TEXAS 77027 HOUSTON, TEXAS 77027
(713) 623-0790 (713) 623-0790
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
INCLUDING AREA CODE, OF REGISTRANT'S NUMBER,
PRINCIPAL EXECUTIVE OFFICES) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
WITH A COPY TO:
MARCUS A. WATTS
LOCKE LIDDELL & SAPP LLP
600 TRAVIS
HOUSTON, TEXAS 77002
(713) 226-1200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF SECURITIES TO PROPOSED MAXIMUM AGGREGATE
BE REGISTERED OFFERING PRICE(1)(2)(3) AMOUNT OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Debt Securities......................
Common Stock, par value $.001 per
share(4)...........................
Series A Junior Participating
Preferred Stock $350,000,000 $97,300
Purchase Rights (currently traded
with
Common Stock)......................
Preferred Stock, par value $.001 per
share..............................
=================================================================================================
</TABLE>
(1) Includes such indeterminate principal amount of Debt Securities and such
indeterminate number of shares of Common Stock and Preferred Stock as may
from time to time be issued at indeterminate prices, with an aggregate
public offering price not to exceed $350,000,000.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(3) Such amount represents (a) the principal amount of any Debt Securities
issued at their principal amounts, (b) the issue price rather than the
principal amount of any Debt Securities issued at an original issue
discount, (c) the amount computed pursuant to 457(c) for any Common Stock
and (d) the issue price of any Preferred Stock.
(4) Also includes such indeterminate number of shares of Common Stock as may be
issued upon conversion of or exchange for any Debt Securities or Preferred
Stock that provide for conversion or exchange into Common Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 18, 1999
PROSPECTUS
$350,000,000
CORNELL CORRECTIONS, INC.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
---------------------------
We will offer from time to time debt securities, common stock or preferred
stock. We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and any supplement carefully
before you invest. You should also read the documents we have referred you to in
the section called "Where You Can Find More Information" in this prospectus
for information about us and for financial statements.
Our common stock is traded on the New York Stock Exchange under the symbol
"CRN." Any common stock sold under a supplement to this prospectus will be
listed on the New York Stock Exchange. If we decide to list any of the debt
securities or the preferred stock on any exchange or market, the related
prospectus supplement will disclose the exchange or market.
---------------------------
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 5 IN THIS
PROSPECTUS.
---------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
----
About This Prospectus................ 2
Where You Can Find More
Information........................ 3
Cornell Corrections.................. 4
Consolidated Ratios of Earnings to
Fixed Charges...................... 4
Risk Factors......................... 5
Use of Proceeds...................... 11
Description of Debt Securities....... 12
Description of Common Stock.......... 19
Description of Preferred Stock....... 23
Plan of Distribution................. 24
Legal Matters........................ 25
Experts.............................. 25
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, we may sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$350,000,000.
This prospectus provides you with a general description of the securities
we may offer. Each time we offer our securities, we will provide you with a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. Before you invest in our securities,
you should read both this prospectus and any prospectus supplement together with
all additional information described under the heading "Where You Can Find More
Information."
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You can inspect and
copy the registration statement on Form S-3, of which this prospectus is a part,
as well as reports, proxy statements and other information filed by us, at the
public reference room maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional public
reference rooms of the Commission: 7 World Trade Center, Suite 1300, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You can call the Commission at 1-800-SEC-0330 for
information regarding the operations of its public reference rooms. The
Commission also maintains a World Wide Web site at http://www.sec.gov, which
contains reports, proxy and information statements, and other information
regarding registrants, like us, that file electronically.
Our common stock is listed on the New York Stock Exchange. Our reports,
proxy statements and other information can also be inspected at the offices of
the New York Stock Exchange at 20 Broad Street, New York, New York 10005.
The Commission allows us to "incorporate by reference" into this
prospectus certain information that we file with it, which means that we can
disclose important information to you by referring you to documents on file or
to be filed with the Commission. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
Commission will automatically update and replace this information. Therefore,
before you decide to invest in a particular offering of ours under this shelf
registration, you should always check for information we may have filed with the
Commission after the date of this prospectus. We incorporate by reference the
documents listed below and any future filings we make with the Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
we have sold all of the securities that we have registered.
o Annual Report on Form 10-K for the fiscal year ended December 31, 1998;
o Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999;
o Description of Common Stock set forth under the caption "Item 1.
Description of Registrant's Securities to be Registered" on Form 8-A
filed November 24, 1998; and
o Description of Rights set forth under the caption "Item 1.
Description of Registrant's Securities to be Registered" on Form 8-A
filed November 24, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Cornell Corrections, Inc.
1700 West Loop South, Suite 1500
Houston, Texas 77027
Attention: Corporate Secretary
Telephone: (713) 623-0790
You should rely only on the information contained or incorporated by
reference in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with any information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
3
<PAGE>
CORNELL CORRECTIONS
Cornell Corrections is one of the leading providers of privatized
correctional, detention and pre-release services in the United States based on
total offender capacity. We are the successor to entities that began developing
secure institutional correctional and detention facilities in 1984, pre-release
facilities in 1977 and juvenile facilities in 1973. We have significantly
expanded our operations through new contract awards, facility expansions and
acquisitions.
As of September 30, 1999, we had contracts to operate 56 facilities in 12
states and the District of Columbia with a total offender capacity of 13,063.
Our residential facilities had a total offender capacity of 11,395 beds, with 53
facilities in operation. In addition, since September 30, 1999, we have
announced the acquisition of various assets of Interventions and BHS Consulting
Corporation which increased our offender capacity by 1,750 to an aggregate total
offender capacity of 14,813. For the nine months ended September 30, 1999, our
revenues were $127.3 million, representing an increase of 46.5% from $86.9
million for the nine months ended September 30, 1998.
Our principal executive offices are located at 1700 West Loop South, Suite
1500, Houston, Texas 77027, and our telephone number is (713) 623-0790.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges for the periods
indicated are as follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
----------------------------------------------------- SEPTEMBER 30,
1994 1995 1996 1997 1998 1999
--------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratios of earnings to fixed charges
(1) (2)............................ -- -- -- 2.70x 1.98x 1.87x
</TABLE>
- ------------
(1) In computing the ratio of earnings to fixed charges, (a) earnings have been
based on income from continuing operations before income taxes and fixed
charges (exclusive of interest capitalized) and (b) fixed charges consist of
interest expense (including amounts capitalized) and the estimated interest
portion of rents.
(2) As a result of the net losses in 1994, 1995 and 1996, earnings did not cover
fixed charges for those years by $499,000, $989,000 and $2,304,000,
respectively.
4
<PAGE>
RISK FACTORS
BEFORE YOU INVEST IN OUR SECURITIES, YOU SHOULD UNDERSTAND THAT SUCH AN
INVESTMENT INVOLVES VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD
CAREFULLY CONSIDER THESE RISK FACTORS AS WELL AS ALL OF THE OTHER INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT BEFORE YOU DECIDE TO INVEST IN OUR SECURITIES.
WE HAVE MADE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934 IN THIS PROSPECTUS, AND IN THE DOCUMENTS THAT ARE INCORPORATED BY
REFERENCE. THOSE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO VARIOUS RISKS AND
UNCERTAINTIES. THE WORDS "ANTICIPATE," "BELIEVE," "ESTIMATE," "EXCEPT,"
"PLAN," "INTEND" AND SIMILAR WORDS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS, BUT ARE NOT THE ONLY MEANS OF IDENTIFYING THEM. IN GENERAL, ANY
STATEMENT OTHER THAN A STATEMENT OF HISTORICAL FACT IS A FORWARD-LOOKING
STATEMENT. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL
CONDITION OR OPERATING RESULTS COULD BE ADVERSELY AFFECTED AND COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN ANY FORWARD-LOOKING STATEMENTS.
OUR REVENUE AND PROFIT GROWTH DEPEND ON OUR ABILITY TO OBTAIN NEW CONTRACTS AND
ON OUR CONSTRUCTION AND OPERATION OF NEW FACILITIES.
Our internal growth depends on our ability to obtain additional management
contracts for privatized correctional, detention and pre-release facilities. Our
ability to obtain new contracts depends on the extent to which federal, state
and local governmental agencies turn to the private sector to manage new or
existing facilities or to expand existing facilities.
Our growth rate also depends on the construction and operation of new
correctional and detention facilities because contracts to operate existing
public facilities generally have not been offered to private operators. In
addition, because correctional and detention services are essential public
services, governmental agencies and, in many states, state legislatures have to
be persuaded that privatization will result in high-quality services at less
cost than that which the agencies themselves could provide.
Our ability to obtain new contracts also depends on the extent to which we
are able to compete with other private-sector providers. Factors that affect our
ability to compete effectively in bidding against other providers include:
o the price and other terms of our bids;
o our financial ability to make capital investments or post bonds or
other credit support which may be required; and
o particularly in the case of secure institutional adult facilities,
our ability to compete effectively with the two companies now
holding the majority of contracts for currently privatized adult
facilities.
We cannot guarantee that we will be able to obtain additional contracts to
develop or operate new facilities on favorable terms.
A DECREASE IN FACILITY OCCUPANCY LEVELS FOR ANY REASON COULD DECREASE OUR
PROFITABILITY.
A substantial portion of our revenues are generated under residential
facility management contracts that specify a per diem rate, which is a rate per
day per offender. A substantial portion of our cost structure is fixed. Under a
per diem rate structure, a decrease in occupancy rates would cause a decrease in
our revenues and profitability.
For each of our facilities, we depend on the contracting governmental
agency to supply the facility with enough offenders to meet and exceed the
facility's break-even design capacities. In most cases, the governmental agency
is under no obligation to provide offenders. Soliciting additional offenders
from other governmental agencies to meet capacity shortfalls in our facilities
generally is not possible. Because many of our facilities have offenders serving
relatively short sentences or only the last three to six months of their
sentences, the high turnover rate of offenders requires a constant
5
<PAGE>
influx of new offenders from the relevant governmental agencies to achieve
profitability. Moreover, occupancy rates during the "start-up" phase when
facilities are first opened typically result in capacity underutilization for a
one- to three-month period after the facilities first receive offenders. As a
result, as we open or begin operating new facilities under new contracts, there
may be a delay in reaching sufficient occupancies to meet break-even levels and
we may incur operating losses at new facilities until these occupancy levels are
reached. A failure of a governmental agency to supply a sufficient number of
offenders for any reason may cause us to forego revenues and income.
OUR FAILURE TO PROPERLY MANAGE ACQUISITIONS COULD ADVERSELY AFFECT OUR BUSINESS.
We have expanded, and plan to continue to expand, our operations through
acquisitions. Failure to manage our acquisition strategy successfully could have
an adverse effect on our business. We probably will compete with other potential
acquirors for acquisitions, and some of these potential acquirors may be larger
and have greater resources than us. We may not be able to continue to identify
and acquire businesses at prices and on terms we consider reasonable. In
addition, acquisitions involve a number of special risks, including:
o diversion of management's attention and resources;
o potential failure to retain key acquired personnel;
o assumption of unanticipated legal liabilities and other problems;
o difficulties integrating systems, operations and cultures;
o amortization of acquired intangible assets; and
o potential dilution of earnings per share.
Since 1994, we have made eight acquisitions. Prior to purchase by us,
certain of the companies we have acquired were operated as non-profit
organizations. We may not be able to profitably manage these acquired businesses
or successfully integrate any acquired businesses without substantial expense,
delay or other operational or financial problems. In addition, we cannot be sure
that an acquired business will achieve anticipated revenues and earnings.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE ON ACCEPTABLE
TERMS.
Our ability to compete in bidding for new contracts depends, in certain
circumstances, on our ability to make capital investments and finance
construction costs relating to secure institutional contract awards. In
addition, our acquisition strategy requires us to obtain financing for
acquisitions.
As of November 12, 1999, we had approximately $100 million in anticipated
unfunded capital requirements for new correctional and existing facility
expansion. We have a lease agreement with an unrelated entity that is available
to fund up to approximately $11.5 million of these facility investments.
Management believes that the remaining commitments of approximately $89 million
will be funded from (a) the expected net proceeds of a committed sale and
leaseback transaction of substantially all of our furniture, fixtures and
equipment, (b) a potential sale and leaseback transaction of one or more secure
institutions, (c) an expansion of our lease financing agreement, and/or (d)
other debt or equity financing arrangements. There is no assurance, however,
that any of these planned financing transactions can be consummated. If these
contemplated financing transactions are not consummated, we would be required to
seek alternative, and potentially dilutive, capital funding sources.
WE MAY NOT HAVE AVAILABLE CAPITAL IF WE ARE REQUIRED TO INVEST IN NEW
FACILITIES.
In general, governmental agencies require private operators to make capital
investments in new facilities and enter into direct financing arrangements in
connection with the development of facilities. We cannot be sure that we will
have available capital if and when we are required to make an investment to
secure a contract for developing a facility. In many cases the development and
construction of facilities we will manage are subject to obtaining permanent
facility financing.
6
<PAGE>
Financing currently is obtained through a variety of means, including private
bank debt, the sale of tax-exempt bonds or other obligations or direct
government appropriation. The sale of tax-exempt bonds or other obligations may
be adversely affected by changes in applicable tax laws or adverse changes in
the market for such securities.
In the past, we have worked with governmental agencies and placement agents
to obtain and structure financing for construction of facilities. In some cases,
an unrelated special purpose corporation is established to incur borrowings to
finance construction. In other cases, we directly incur borrowings for
construction financing.
WE MAY LOSE MONEY ON PER-DIEM RATE CONTRACTS.
Most of our facility management contracts provide for payments to us of
either fixed per diem rates or per diem rates that increase by only small
amounts during the terms of the contracts. If we experience increases in
personnel costs, which are the largest component of facility management expense,
or other operating expenses at rates faster than increases, if any, in per diem
rates, then our results of operations would be adversely affected.
NON-RENEWAL OR EARLY TERMINATION OF CONTRACTS COULD ADVERSELY AFFECT OUR
BUSINESS.
Our facility management contracts typically have terms ranging from one to
five years, and renewal is at the option of the contracting governmental agency.
We cannot be sure that any agency will exercise a renewal option in the future.
In addition, contracting governmental agencies typically may terminate a
facility contract without cause by giving us written notice ranging from 30 to
180 days. Any non-renewal or termination could adversely affect our business.
WE RELY ON A LIMITED NUMBER OF GOVERNMENTAL AGENCIES FOR A SIGNIFICANT PORTION
OF OUR REVENUES.
We currently derive and expect to continue to derive a significant portion
of our revenues from a limited number of governmental agencies. The loss of, or
a significant decrease in, business from the Federal Bureau of Prisons or
various other state agencies could seriously harm our financial condition and
results of operations. For the year ended December 31, 1998, contracts with the
Federal Bureau of Prisons accounted for approximately 20.1% of our revenues.
Based on projects we have announced, we anticipate that the amount of business
we receive from the Federal Bureau of Prisons in future periods will increase.
OUR CONTRACTS COULD BE TERMINATED AND OUR FEES COULD BE REDUCED BECAUSE OUR
CONTRACTS ARE SUBJECT TO GOVERNMENT FUNDING.
Our facility management contracts are subject to either annual or bi-annual
governmental appropriations. If a governmental agency does not receive
appropriations, our contract could be terminated by the agency or our management
fee could be reduced. In addition, even if funds are appropriated, delays in
payments may occur which could negatively affect our cash flow.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY YEAR 2000 COMPLIANCE ISSUES.
During the next year, many software programs may not recognize calendar
dates beginning in the year 2000. This problem could force computers or machines
which use date dependent software to either shut down or provide incorrect
information. Although we have completed most of our information technology
systems and non-information technology systems readiness efforts and critical-
systems testing, we can not guarantee that unanticipated year 2000 problems will
not occur. If year 2000 problems result in the inability of our contracting
governmental agencies to pay us in a timely manner for our services or the
inability of third-party suppliers, such as utility, telecommunications, food
service and healthcare suppliers, to provide their products and services our
business could be seriously harmed.
7
<PAGE>
GOVERNMENT REGULATION, AUDITS AND INVESTIGATIONS COULD NEGATIVELY AFFECT OUR
BUSINESS BY CAUSING US TO SUBSTANTIALLY MODIFY THE WAY WE CONDUCT OUR BUSINESS
OR BY SUBJECTING US TO PENALTIES OR CONTRACT TERMINATIONS.
The corrections and detention industry is subject to national, federal,
state and local regulations which are administered by various regulatory
authorities. Prospective providers of correctional and detention services must
comply with a variety of applicable state and local regulations including
education, health care and safety regulations.
Our contracts with government agencies typically include extensive
reporting requirements and require supervision and on-site monitoring by
representatives of contracting governmental agencies. State law also typically
requires correctional officers to meet certain training standards. Some states
deem prison guards to be peace officers and require our personnel to be licensed
and may make them subject to background investigation. In addition, many state
and local governments are required to enter into a competitive bidding procedure
before awarding contracts for products or services. The laws of certain
jurisdictions may also require us to award subcontracts on a competitive basis
or to subcontract with businesses owned by members of minority groups. Our
failure to comply with any applicable laws, rules or regulations could subject
us to substantial penalties, including loss of a management contract, and could
have a material adverse effect on our financial condition and results of
operation. Furthermore, our current and future operations may be subject to
additional regulations as a result of, among other factors, new statutes and
regulations and changes in the manner in which existing statutes and regulations
are or may be interpreted or applied. Any additional regulations or changes in
existing regulations could require us to modify substantially the manner in
which we conduct business and could adversely affect us.
Our contracts give the contracting agency the right to conduct routine
audits of the facilities and operations we manage for the agency. An audit
involves a governmental agency's review of our compliance with the prescribed
policies and procedures established for the facility. We also may be subject to
investigations as a result of an audit, an offender's complaint or other causes.
Any contract termination or non-renewal as a result of an audit or investigation
could seriously harm our business.
OUR BUSINESS WILL BE HARMED IF THE ACCEPTANCE OF PRIVATIZED CORRECTIONAL AND
DETENTION FACILITIES DOES NOT CONTINUE.
Our future success depends heavily on the continued acceptance and use of
private entities to manage correctional and detention facilities. Many
governmental agencies currently do not accept management of correctional and
detention facilities by private entities. Some sectors of the federal government
and some state governments are legally unable to delegate their traditional
management responsibilities for correctional and detention facilities to private
companies. The operation of correctional and detention facilities by private
entities has encountered resistance from certain groups, such as labor unions,
local sheriff's departments and groups that believe correctional and detention
facility operations should be conducted only by governmental agencies. Such
resistance may cause a change in public and government acceptance of privatized
correctional facilities. In addition, changes in political parties in any of our
markets could result in significant changes in elected officials' previously
established views of privatization in such markets.
THE LOCATION OF OUR FACILITIES MAY BE SUBJECT TO OPPOSITION.
Our success in obtaining new awards and contracts may depend in part upon
our ability to locate land that can be leased or acquired on favorable terms by
us or other entities working with us in connection with a proposal to construct
and/or manage a facility. Some locations may be in or near populous areas and
may generate legal action or other forms of opposition from residents in areas
surrounding a proposed site. Typically, we must obtain and comply with zoning
approvals and/or land use permits from local governmental entities with respect
to a facility. In certain circumstances, public hearings are required before we
can obtain approvals and permits.
8
<PAGE>
NEGATIVE PUBLICITY ABOUT OUR INDUSTRY OR OUR COMPETITORS COULD HARM OUR
BUSINESS.
Negative publicity could adversely affect our business. In addition to
possible negative publicity about privatization in general, an escape,
absconsion, riot, internal incident or other disturbance at one of our
facilities or another privately operated facility, or placement of one or more
notorious offenders or criminal or violent actions by offenders at one of our
facilities may result in publicity adverse to us and our industry. Although we
have not experienced any material adverse effect on our business or operating
results as a result of previous escapes or absconsions, we cannot guarantee that
any future escapes or absconsions would not have an adverse affect on our
business or operating results.
WE COULD BE SUBJECT TO LEGAL LIABILITY BECAUSE MANY OF OUR FACILITIES CONTAIN
HIGH-RISK OFFENDERS AND BECAUSE MANY OF OUR CONTRACTS REQUIRE US TO INDEMNIFY
GOVERNMENTAL AGENCIES.
Our management of correctional, detention and pre-release facilities
exposes us to potential third-party claims or litigation by offenders or other
persons for personal injury or other damages resulting from contact with our
facilities, programs, personnel or offenders, including damages arising from an
offender's escape or absconsion or from a disturbance or riot at one of our
facilities. The U.S. Supreme Court has held that prison guards employed by
private firms are not entitled to qualified immunity from suit by prisoners for
violations of their rights. In addition, certain of our correctional, detention
and pre-release facilities contain a high-risk population, many of whom have
been convicted of or charged with violent offenses. As a result, certain
offenders at our facilities could pose risks to the public for which we may be
held liable.
Our management contracts generally require us to indemnify the governmental
agency against any damages to which the governmental agency may be subject in
connection with claims or other liability risks we face, including personal or
bodily injury, death or property damage to a third party if we are found to be
negligent.
In order to obtain and maintain our management contracts, we are required
to have insurance. Although insurance generally is available, we cannot
guarantee that insurance will continue to be available on commercially
reasonable terms or will be adequate to cover all potential claims. In addition,
we are unable to secure insurance for some unique business risks including riot
and civil commotion or the acts of an escaped offender.
WE COMPETE WITH A WIDE VARIETY OF PRIVATE ENTITIES AND GOVERNMENTAL AGENCIES
THAT MAY HAVE GREATER FINANCIAL RESOURCES OR MAY BE PREFERRED PROVIDERS.
If we fail to compete successfully against current or future competitors,
our business, financial condition and operating results could be seriously
harmed. We compete with a number of publicly-traded companies, including Prison
Realty Trust Inc. (Corrections Corporation of America), Wackenhut Corrections
Corporation and Correctional Services Corporation. At December 31, 1998,
Corrections Corporation of America and Wackenhut Corrections Corporation
accounted for a substantial amount of the privatized secure institutional adult
beds under contract in the United States.
We also compete in some markets with small local companies that have better
knowledge of the local conditions and may be better able to gain political and
public acceptance. We may compete in some markets with governmental agencies
that operate correctional and detention facilities.
We may encounter significant competition in our efforts to achieve our
growth strategy. Other companies with growth objectives similar to ours may
enter the industry. These companies may have greater financial resources than us
to finance acquisition and internal growth opportunities. Although some states
require substantial capital investments in new projects, other states may allow
potential competitors to enter our business without substantial capital
investment or previous experience in the management of correctional and
detention facilities.
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WE ARE SUBJECT TO ECONOMIC RISKS ASSOCIATED WITH OUR DEVELOPMENT ACTIVITIES THAT
COULD ADVERSELY AFFECT OUR OPERATING RESULTS.
When we act as project manager for the design and construction of a
facility, we typically act as the primary contractor and subcontract with other
parties that act as the general contractors. As primary contractor, we are
subject to various risks of construction that could cause construction delays,
including shortages of labor and materials, work stoppages, labor disputes and
weather interference. We are also subject to the risk that the general
contractor will be unable to complete construction at the budgeted costs or to
fund any excess construction costs. We are ultimately liable for all late
delivery penalties and cost overruns. If we incur penalties and cost overruns,
our operating results could be adversely affected.
OUR ABILITY TO RETAIN OUR EXECUTIVE OFFICERS AND KEY PERSONNEL, AND OUR ABILITY
TO RECRUIT ADDITIONAL QUALIFIED PERSONNEL ARE CRUCIAL TO OUR SUCCESS.
We depend greatly on the efforts of our executive officers and key
personnel to obtain new contracts, to make acquisitions and to manage our
operations. The loss or unavailability of any of our executive officers could
have an adverse effect on us. Our ability to perform under current and new
contracts also depends, in part, on our ability to attract and retain qualified
senior executives and operating personnel. There is significant competition for
qualified facility administrators, managers, counselors and other key personnel.
We cannot be sure that we will be successful in recruiting or training a
sufficient number of qualified officers or employees to enable us to operate our
business and implement our growth strategy as planned.
OUR STOCK PRICE MAY BE VOLATILE BECAUSE OF OUR OPERATING RESULTS AND CERTAIN
FACTORS BEYOND OUR CONTROL.
The market price of our common stock may vary significantly from time to
time in response to many factors, including variations in our reported periodic
financial results, changing conditions in the economy or in our industry, and
negative publicity affecting us or our industry. In addition, stock markets and
the stock prices of our competitors experience significant price and volume
volatility from time to time which may affect the market price of our common
stock for reasons unrelated to our performance.
WE HAVE ANTI-TAKEOVER PROVISIONS THAT MAY PREVENT STOCKHOLDERS FROM EFFECTING A
CHANGE IN CONTROL.
Our certificate of incorporation and bylaws may discourage, delay or
prevent a change in control of Cornell that a stockholder may consider
favorable. Our certificate of incorporation and bylaws:
o prohibit cumulative voting in the election of directors;
o deny stockholders the ability to act by written consent unless the
written consent is unanimous;
o establish advance notice requirements for nominations for election to
the board of directors or proposing matters that can be acted upon by
stockholders at stockholder meetings;
o allow the board of directors to consider social, economic and other
factors in evaluating any offer of another party; and
o allow the alteration, amendment and repeal of the bylaws only in
accordance with our certificate of incorporation.
In addition, Section 203 of the Delaware General Corporation Law may discourage,
delay or prevent a change in control of Cornell by prohibiting a publicly held
Delaware corporation from engaging in a business combination with an interested
stockholder for a period of three years after the person becomes an interested
stockholder.
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WE COULD LOSE OUR LEASE RIGHTS FOR OUR BIG SPRING COMPLEX. OUR BUSINESS WOULD BE
SERIOUSLY HARMED IF WE COULD NOT OPERATE THE BIG SPRING COMPLEX.
Our inability to continue to operate our facility in Big Spring, Texas,
known as the Big Spring Complex, would adversely affect our business. The Big
Spring Complex is part of a larger tract of land. The larger tract of land was
formerly part of a United States Air Force base conveyed to the City of Big
Spring by the United States government in 1978. The document conveying the
larger tract of land contains restrictive covenants that generally require (1)
use of the larger tract of land for public airport purposes unless otherwise
consented in writing by the Federal Aviation Administration, or the FAA, (2)
maintenance of facilities on the larger tract of land and (3) the availability
of the larger tract for use by federal aircraft. The United States government
also has the right to use the larger tract in the case of a national emergency
and the FAA has the right to portions of the larger tract and any structures
located on the larger tract for use in construction, operation or maintenance of
facilities for air traffic control activities. In some circumstances, at the
option of the grantor, title to the larger tract could revert to the grantor for
any breach of the provisions of the document conveying the larger tract.
The FAA has reviewed the agreements which permit us to operate the Big
Spring Complex and has advised the City of Big Spring in writing that it has no
objections to the agreements. We believe that (1) the City of Big Spring is in
substantial compliance with the terms of the conveyance and (2) even if not in
substantial compliance, the FAA is aware of and has not objected to all past and
present uses of the larger tract by the City of Big Spring and its lessees.
However, the FAA could assert that those uses of the larger tract violate the
conveyance.
The City of Big Spring has used and leased, and may in the future use or
lease, other portions of the larger tract for other purposes unrelated to our
business. The continued compliance by the City of Big Spring or its lessees with
the terms of the conveyance is not within our control, and any breach by the
City of Big Spring or its lessees could result in reversion of title of all or a
portion of the larger tract to the United States government. We do not have any
recourse against the City of Big Spring in the case of a reversion. In addition,
we do not have any guarantees from the FAA that it will honor our lease rights
in the event of a reversion. Accordingly, in the case of a reversion of the
larger tract, or in any case in which the United States government or the FAA
has superior rights to use the larger tract, our continued ability to lease and
use the Big Spring Complex could be subject to the discretion of the United
States government or the FAA.
USE OF PROCEEDS
We will use the net proceeds from the sale of the securities for our
general corporate purposes, which may include:
o repaying indebtedness;
o funding future acquisitions;
o funding future facility expansions or construction;
o making additions to our working capital; or
o any other purpose we may describe in an accompanying prospectus
supplement.
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DESCRIPTION OF DEBT SECURITIES
The following description is a summary of the general terms and conditions
that could apply to debt securities we may issue under this shelf registration
statement. If and when we offer debt securities, a prospectus supplement will
describe the particular terms and conditions that actually apply to the debt
securities included under the prospectus supplement. The debt securities will be
our unsecured general obligations and either senior debt securities or
subordinated debt securities.
If we offer senior debt securities or subordinated debt securities, we will
issue them under an indenture that we refer to in this prospectus as the
indenture. We will enter into the indenture with Chase Bank of Texas, National
Association, as trustee. In this prospectus, we will refer to Chase Bank of
Texas, National Association, together with any other trustees that are qualified
to act under the Trust Indenture Act of 1939 and chosen by us and appointed in a
supplemental indenture with respect to a particular series of debt securities,
as the Trustee. We will identify the Trustee for each series of debt securities
in the applicable prospectus supplement. These filings will be available for
inspection at the corporate trust office of the Trustee, or as described above
under "Where You Can Find More Information." The indenture will be subject to,
and governed by, the Trust Indenture Act of 1939.
The following description does not restate the entire indenture and is
qualified in its entirety by express reference to the indenture. The indenture
is incorporated by reference as a part of the following description. Capitalized
terms used but not defined in this description have the meanings given to those
terms in the indenture. You should read the entire indenture for a complete
description of the terms of the indenture. We have filed a copy of the indenture
with the Commission as an exhibit to the registration statement which includes
this prospectus.
SPECIFIC TERMS OF EACH SERIES OF DEBT SECURITIES IN THE PROSPECTUS SUPPLEMENT
A prospectus supplement relating to any series of debt securities we offer
will describe the specific terms of those debt securities. Those terms will
include some or all of the following:
o the designation, aggregate principal amount and authorized
denominations;
o whether the debt securities are senior debt securities or subordinated
debt securities;
o the maturity date;
o the interest rate, if any, and the method for calculating the interest
rate;
o the interest payment dates and the record dates for the interest
payments;
o the portion of the principal amount that will be payable if the
maturity of the debt securities is accelerated;
o any guaranties of the debt securities by any of our subsidiaries or
others, or other forms of credit support for the debt securities;
o any mandatory or optional redemption terms or prepayment, conversion,
sinking fund or exchangeability or convertibility provisions;
o the place where principal and interest will be payable;
o if other than denominations of $1,000 or multiples of $1,000, the
denominations in which the debt securities will be issued;
o whether the debt securities will be issued in the form of global
securities or certificates;
o the currency or currencies, if other than the currency of the United
States, in which principal and interest will be payable;
o additional provisions, if any, relating to the defeasance of the debt
securities;
o whether the debt securities will be issuable in registered form or
bearer form or both and, if bearer securities are issuable, any
restrictions applicable to the exchange of one form for another and
the offer, sale and delivery of bearer securities;
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o any applicable United States federal income tax consequences;
o the dates on which premium, if any, will be payable;
o our right, if any, to defer payment of interest and the maximum length
of the deferral period;
o any listing on a securities exchange;
o the initial public offering price; and
o other specific terms, including events of default and covenants
provided for with respect to the debt securities.
Any particular series of debt securities may contain covenants limiting:
o the incurrence of additional debt, including guarantees, by us and our
subsidiaries and affiliates;
o the making of various payments by us and our subsidiaries and
affiliates;
o our business activities and those of our subsidiaries and affiliates;
o the issuance of other securities by our subsidiaries and affiliates;
o asset dispositions;
o transactions with affiliates;
o a change of control;
o the incurrence of liens; and
o mergers and consolidations involving us and our subsidiaries.
BOOK ENTRY, DELIVERY AND FORM
We may issue debt securities of a series in whole or part in registered,
bearer, coupon or global form. A global security is a security, typically held
by a depository, that represents the beneficial interest of a number of
purchasers of the security.
Unless otherwise stated in any prospectus supplement, The Depository Trust
Company, New York, New York will act as depositary. In this prospectus, we will
refer to The Depository Trust Company, in its capacity as depositary, as DTC. We
will issue book-entry debt securities of a series in the form of a global debt
security that will be deposited with DTC. This means that we will not issue
certificates to each holder. We will issue one global debt security to DTC who
will keep a computerized record of its participants, such as your broker, whose
clients have purchased the debt securities. The participant will then keep a
record of its clients who purchased the debt securities. Unless it is exchanged
in whole or in part for a certificated debt security, a global debt security may
not be transferred; except that DTC, its nominees and their successors may
transfer a global debt security as a whole to one another.
Beneficial interests in global debt securities will be shown on, and
transfers of global debt securities will be made only through, records
maintained by DTC and its participants.
DTC has provided us the following information: DTC is (1) a limited-purpose
trust company organized under the New York Banking Law, (2) a "banking
organization" within the meaning of the New York Banking Law, (3) a member of
the United States Federal Reserve System, (4) a "clearing corporation" within
the meaning of the New York Uniform Commercial Code and (5) a "clearing
agency" registered under the provisions of Section 17A of the Securities
Exchange Act of 1934.
DTC holds securities that its participants, known as direct participants,
deposit with DTC. DTC also records the settlement among direct participants of
securities transactions, such as transfers and pledges, in deposited securities
through computerized records for direct participants' accounts. This eliminates
the need to exchange certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and some
other organizations.
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DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
direct participant. The rules that apply to DTC and its participants are on file
with the Commission.
DTC is owned by a number of its direct participants and by the New York
Stock Exchange, the American Stock Exchange, and the National Association of
Securities Dealers.
We will wire principal and interest payments to DTC's nominee. We and the
Trustee will treat DTC's nominee as the owner of the global debt securities for
all purposes. Accordingly, we, the Trustee and any paying agent we may appoint
will have no direct responsibility or liability to pay amounts due on the global
debt securities to owners of beneficial interests in the global debt securities.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit direct participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global debt
securities as shown on DTC's records. In addition, it is DTC's current practice
to assign any consenting or voting rights to direct participants whose accounts
are credited with debt securities on a record date, by using an omnibus proxy.
Payments by participants to owners of beneficial interests in the global debt
securities, and voting by participants, will be governed by the customary
practices between the participants and owners of beneficial interests, as is the
case with debt securities held for the account of customers registered in
"street name." However, payments will be the responsibility of the
participants and not of DTC, the Trustee or us.
Debt Securities represented by a global debt security will be exchangeable
for certificated debt securities with the same terms in authorized denominations
only if:
o DTC notifies us that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered under
applicable law and a successor depositary is not appointed by us
within 90 days; or
o we determine not to require all of the debt securities of a series to
be represented by a global debt security and notify the Trustee of our
decision.
PROVISIONS RELATING ONLY TO THE SENIOR DEBT SECURITIES
The senior debt securities will rank equally in right of payment with all
of our other senior and unsubordinated debt and senior in right of payment to
any of our subordinated debt, including the subordinated debt securities. The
senior debt securities will be effectively subordinated to all of our secured
debt. We will disclose the amount of our secured debt in the prospectus
supplement.
PROVISIONS RELATING ONLY TO THE SUBORDINATED DEBT SECURITIES
SUBORDINATION TO SENIOR INDEBTEDNESS
The subordinated debt securities will rank junior in right of payment to
all of our senior indebtedness. Senior indebtedness will be defined to include
all notes or other evidences of debt not expressed to be subordinate or junior
in right of payment to any other of our debt.
PAYMENT BLOCKAGES
The indenture may provide that no cash payment of principal, interest and
any premium on the subordinated debt securities may be made:
o if we fail to pay when due any amounts on any senior indebtedness;
o if our property or we are involved in any voluntary or involuntary
liquidation or bankruptcy; and
o in other instances specified in the indenture.
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PAYMENT AND TRANSFER
Principal, interest and any premium on fully registered securities will be
paid at the office of the paying agent that we may designate. We may make
payment by check mailed to persons in whose names the debt securities are
registered on days specified in the indenture or any prospectus supplement. Debt
security payments in other forms will be paid at a place designated by us and
specified in a prospectus supplement.
Fully registered securities may be transferred or exchanged at the
corporate trust office of the Trustee or at any other office or agency
maintained by us for these purposes, without payment of any service charge,
except for any tax or governmental charge.
EVENTS OF DEFAULT
The indenture will provide that each of the following is an Event of
Default with respect to any series of debt securities:
o default for 30 days in the payment when due of interest on the debt
securities;
o default in payment when due of the principal of or any premium on the
debt securities;
o default in payment when due of any sinking fund payment with respect
to the debt securities;
o default in the performance of or breach of various covenants after
applicable notice or grace period; and
o various events of bankruptcy or insolvency with respect to us.
The applicable prospectus supplement will describe any additional Events of
Default.
If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the then outstanding debt securities of a
series may declare all debt securities of that series to be due and payable
immediately. The holders of a majority in principal amount of the debt
securities may, on behalf of all holders, waive any existing default or Event of
Default and its consequences, except (1) a default in the payment of principal
of, interest and any premium on, any of the debt securities and (2) a default in
respect of any provision of the indenture that cannot be modified or amended
without the consent of each holder affected.
No holder of debt securities may pursue any remedy under the indenture
unless:
o the holder gives the Trustee written notice of a continuing Event of
Default;
o the holders of at least 25% in principal amount of the then
outstanding debt securities of that series make a written request to
the Trustee to pursue the remedy;
o the holder or holders offer satisfactory indemnity to the Trustee
against costs, expenses and liabilities;
o the Trustee does not comply with the request within 60 days after
receipt of the request and offer of indemnity; and
o the Trustee has not received during that 60-day period contrary
instructions from the holders of at least a majority in principal
amount of the then outstanding debt securities.
The Trustee is required, within 90 days after the occurrence of a default
known to it, to give to the holders notice of the default. However, except in
the case of a default in the payment of principal of, interest or any premium on
any of the debt securities or in the making of any sinking fund payment, the
Trustee may withhold the notice if it in good faith determines that withholding
the notice is in the interests of the holders.
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MODIFICATION OF INDENTURE
From time to time, we, when authorized by resolutions of our board of
directors, and the Trustee, without the consent of the holders of debt
securities of any series, may amend, waive or supplement the indenture for
specified purposes, including, among other things:
o curing ambiguities, defects or inconsistencies;
o providing for the assumption of our obligations to holders of the debt
securities of a series in the case of a merger or consolidation;
o making any change that would provide any additional rights or benefits
to the holders of the debt securities of a series;
o adding guarantees with respect to the debt securities of a series;
o securing the debt securities of a series;
o providing for the acceptance of appointment by a successor Trustee or
a separate Trustee for one or more series of debt securities;
o maintaining the qualification of the indenture under the Trust
Indenture Act; or
o making any change that does not adversely affect the rights of any
holder.
Other amendments and modifications of the indenture may be made by us and
the Trustee without notice to any holder but with the consent of the holders of
not less than a majority of the aggregate principal amount of the outstanding
debt securities of each series affected. However, no modification or amendment
may, without the consent of the holder of each outstanding debt security
affected:
o reduce the principal amount of or extend the stated maturity of the
debt securities, or alter or waive the redemption provisions of the
debt securities;
o reduce the percentage in principal amount outstanding of debt
securities of any series which must consent to an amendment,
supplement or waiver or consent to take any action under the
indenture;
o reduce the premium payable upon the redemption of any debt security or
change the time at which any debt security may or shall be redeemed;
o make any debt security payable in currency other than that stated in
the debt security;
o make any change that adversely affects the rights of any holder in the
case of any debt security;
o reduce the rate of or extend the time for payment of interest on the
debt securities;
o release any security that may have been granted in respect of debt
securities; or
o make changes to the provisions regarding rights of the holders of a
majority in principal amount of the debt securities or the provisions
regarding modification of the indenture.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The indenture provides that we may not consolidate with or merge with or
into any Person, or convey, transfer or lease all or substantially all of our
assets, unless:
o either:
- we are the survivor in the case of a merger, or
- we are not the survivor and the survivor is a United States
corporation and expressly assumes by a supplemental indenture all of
our obligations under the debt securities and the indenture;
o immediately after giving effect to the transaction, no default or
Event of Default would have occurred and be continuing; and
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o we deliver to the Trustee an officer's certificate and an opinion of
our counsel stating that the transaction and the supplemental
indenture comply with the indenture.
DISCHARGING OUR OBLIGATIONS
Except as may otherwise be set forth in any prospectus supplement, we may
choose to either discharge our obligations on the debt securities of any series
in a legal defeasance or release ourselves from our covenant restrictions on the
debt securities of any series in a covenant defeasance.
If we choose to discharge our obligations in a legal defeasance, all of our
obligations with respect to the debt securities will be discharged, except for:
o obligations with respect to the registration of transfer and exchange
of debt securities;
o obligations with respect to mutilated, destroyed, lost or stolen debt
securities;
o obligations to maintain offices or agencies for the registration of
transfer, exchange and payment of debt securities;
o duties of paying agents;
o obligations to furnish the Trustee with information regarding the
holders of debt securities;
o requirements regarding compensation and reimbursement of the Trustee;
o provisions regarding the eligibility of the Trustee; and
o the defeasance provisions of the indenture.
If we choose to discharge our obligations in a covenant defeasance, the
events listed in the indenture as Events of Default will no longer constitute a
default or Event of Default, except for payment defaults and bankruptcy or
insolvency defaults.
We may choose legal or covenant defeasance at any time prior to the stated
maturity or redemption of the debt securities of the series if, among other
conditions,
o we deposit with the Trustee sufficient cash or U.S. Government
Obligations to pay the principal, interest, any premium and any other
sums due to the stated maturity date or redemption date of the debt
securities of the series;
o we deliver to the Trustee an opinion of our independent accountants
regarding the sufficiency of the cash and U.S. Government Obligations
to pay the principal, interest, any premiums and any other sums when
due;
o 91 days pass after the deposit and during the 91-day period no default
relating to our bankruptcy or insolvency is continuing;
o no default is continuing on the date of deposit and after giving
effect to the deposit;
o the deposit is not a default under any of our other agreements and is
not prohibited by the subordination provisions of the indenture if the
debt securities are subordinated;
o we provide the Trustee with an opinion of our counsel that the trust
resulting from the deposit is not, or is qualified as, a regulated
investment company under the Investment Company Act of 1940;
o in the event of legal defeasance, we provide the Trustee with an
opinion of our counsel that
- we have received an Internal Revenue Service ruling; or
- since the date of the indenture there has been no change in the
federal income tax law, and confirming that the holders will not be
affected for U.S. federal income tax purposes by the defeasance;
o in the case of covenant defeasance, we provide the Trustee with an
opinion of our counsel that the holders of the debt securities will
not be affected for U.S. federal income tax purposes by the
defeasance; and
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o we provide the Trustee with an officer's certificate and an opinion of
our counsel that all conditions precedent to the defeasance and
discharge of the debt securities have been complied with.
THE TRUSTEE
Chase Bank of Texas, National Association will serve as the initial Trustee
under the indenture. The indenture will govern the duties, responsibilities and
rights of the Trustee, including the following:
RESIGNATION OR REMOVAL OF TRUSTEE
Under provisions of the indenture and the Trust Indenture Act governing
trustee conflicts of interest, any uncured event of default under any series of
senior debt securities will force the Trustee to resign as Trustee for either
the subordinated debt securities or the senior debt securities. Also, any
uncured event of default under any series of subordinated debt securities will
force the Trustee to resign as Trustee for either the senior debt securities or
the subordinated debt securities. Any resignation of the Trustee will require
the appointment of a successor Trustee for the applicable debt securities in
accordance with the terms and conditions of the indenture.
The Trustee may resign or be removed by us for one or more series of debt
securities and a successor Trustee be appointed to act for that series. The
holders of a majority in aggregate principal amount of a series of debt
securities may remove the Trustee for that series.
LIMITATIONS ON TRUSTEE IF IT IS OUR CREDITOR
If the Trustee becomes our creditor, the indenture will limit the Trustee's
right to obtain payment of claims in some circumstances, or to realize on some
property received in respect of those claims as security or otherwise.
ANNUAL TRUSTEE REPORT TO HOLDERS OF DEBT SECURITIES
The indenture will require the Trustee to submit an annual report to the
holders of the debt securities regarding, among other things, (1) the Trustee's
eligibility to serve, (2) the priority of the Trustee's claims regarding
advances made by it and (3) any action taken by the Trustee materially affecting
those debt securities.
CERTIFICATE AND OPINIONS TO BE FURNISHED TO TRUSTEE
The indenture will provide that every application by us for action by the
Trustee requires an officers' certificate and an opinion of our counsel stating
that, in the opinion of the signers, we have complied with all conditions
precedent to the action.
GOVERNING LAW
The indenture and the debt securities will be governed by and construed in
accordance with the laws of the State of New York.
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DESCRIPTION OF COMMON STOCK
The following description of the material terms of our common stock is
qualified in its entirety by reference to applicable provisions of the Delaware
General Corporation Law, our certificate of incorporation, our bylaws and the
Rights Agreement dated as of May 1, 1998 between us and American Securities
Transfer & Trust, Inc., as rights agent.
AUTHORIZED AND OUTSTANDING COMMON STOCK
Our authorized capital stock includes 30,000,000 shares of common stock,
par value $.001 per share. As of October 31, 1999, we had 9,582,528 shares of
common stock outstanding. The outstanding shares of our common stock are listed
on the New York Stock Exchange under the symbol "CRN."
VOTING, LIQUIDATION AND DIVIDEND RIGHTS
Subject to the prior or special rights of holders of shares of preferred
stock, the holders of shares of common stock:
o are entitled to any dividends that may be declared by our board of
directors out of legally available funds;
o are entitled to one vote per share;
o have no preemptive or conversion rights;
o are not subject to, or entitled to the benefits of, any redemption or
sinking fund provision;
o are entitled upon liquidation to receive our assets remaining after
the payment of corporate debts and the satisfaction of the liquidation
preference of any outstanding preferred stock.
Voting is non-cumulative. The outstanding shares of our common stock are fully
paid and non-assessable.
We have never declared or paid cash dividends on our capital stock. We
currently anticipate that all of our excess earnings, if any, will be retained
for use in the operation and expansion of our business and we do not anticipate
paying cash dividends on our common stock in the foreseeable future. The payment
of dividends is within the discretion of our board of directors and will depend
upon, among other factors, our results of operations, financial condition,
capital requirements and restrictions, if any, imposed by financing commitments
and legal requirements. Our credit facilities and other financing arrangements
with our bank lenders currently prohibit the payment of dividends.
PROVISIONS AFFECTING CONTROL OF CORNELL
Our certificate of incorporation and bylaws contain the following
provisions which are intended to enhance the likelihood of continuity and
stability in the composition of our board of directors and in the policies
formulated by our board of directors and to discourage certain types of
transactions that may involve an actual or threatened change of control. These
provisions include:
o prohibiting cumulative voting in the election of directors;
o denying stockholders the ability to act by written consent unless the
written consent is unanimous;
o establishing advance notice requirements for nominations for election
to the board of directors or proposing matters that can be acted upon
by stockholders at stockholder meetings;
o allowing the board of directors to consider social, economic and other
factors in evaluating any offer of another party; and
o allowing the alteration, amendment and repeal of the bylaws only in
accordance with our certificate of incorporation.
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In addition, Section 203 of the Delaware General Corporation Law may discourage,
delay or prevent a change in control of Cornell by prohibiting a publicly held
Delaware corporation from engaging in a business combination with an interested
stockholder for a period of three years after the person becomes an interested
stockholder.
RIGHTS AGREEMENT
On April 22, 1998 our board of directors authorized the issuance of one
preferred share purchase right, known as a Right, for each outstanding share of
our common stock to the stockholders of record at the close of business on May
11, 1998. Each Right entitles the registered holder to purchase from us one unit
of a share, which is currently one one-thousandth of a share, of our Series A
Junior Participating Preferred Stock, par value $.01 per share, at a price of
$120 per unit of a Series A Preferred Share, subject to adjustment. The
description and terms of the Rights are set forth in the Rights Agreement.
Until a Distribution Date, the Rights will be evidenced by the common stock
certificates. The Rights Agreement states that a Distribution Date occurs upon
the earlier to occur of (a) 10 days following a public announcement that a
person or group of affiliated or associated persons, known as an Acquiring
Person, has acquired beneficial ownership of 15% or more of our outstanding
Voting Shares (as defined in the Rights Agreement) or (b) 10 business following
the commencement or announcement of an intention to make a tender offer or
exchange offer, the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of our outstanding Voting Shares,
the earlier of such dates being called the Distribution Date.
Until the Distribution Date or earlier redemption or expiration of the
Rights:
o the Rights will be evidenced by the certificates representing common
stock;
o the Rights will be transferred with and only with the common stock;
o new common stock certificates issued after May 11, 1998, upon transfer
or new issuance of the common stock will contain a notation
incorporating the Rights Agreement by reference; and
o the surrender for transfer of any certificates for common stock
outstanding as of May 11, 1998, even without the notation, will also
constitute the transfer of the Rights associated with the common stock
represented by the certificates.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights will be mailed to holders of record of the
common stock as of the close of business on the Distribution Date and the
separate Right certificates alone will then evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on May 1, 2008, which is the Final Expiration Date, unless the Final
Expiration Date is extended or the Rights are earlier redeemed or exchanged by
us as described below.
If an Acquiring Person acquires 15% or more of our Voting Shares, each
Right then outstanding, other than Rights beneficially owned by the Acquiring
Person which would become null and void, will become a right to buy that number
of shares of common stock that at the time of the acquisition would have a
market value of two times the purchase price of the Right. If, however, our
board of directors determines in good faith that a person who would otherwise be
an Acquiring Person has become an Acquiring Person inadvertently, and that
person divests a sufficient number of Voting Shares by a deadline set by our
board of directors, then that person shall not be deemed to be an Acquiring
Person for any purposes of the Rights Agreement.
If, after any person has become an Acquiring Person, we are acquired in a
merger or other business combination transaction or more than 50% of our
consolidated assets or earning power are sold, proper provision will be made so
that each holder of a Right will have the right to receive, upon the exercise of
the Right at the then current purchase price of the Right, that number of shares
of
20
<PAGE>
common stock of the acquiring company which at the time of the transaction would
have a market value of two times the purchase price of the Right.
The offer and sale of the Series A Preferred Shares or other securities
issuable upon exercise of the Rights will be registered with the Commission but
the registration will not be effective until the Rights become exercisable. As
described above, the Rights will not be transferable separately from the common
stock until the Distribution Date.
The number of Series A Preferred Shares or other securities or property
issuable upon exercise of the Rights, and the purchase price payable, are
subject to customary adjustments from time to time to prevent dilution.
The number of outstanding Rights and the number of Series A Preferred
Shares or other securities issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the common stock or a stock
dividend on the common stock payable in common stock or subdivisions,
consolidations or combinations of the common stock occurring prior to the
Distribution Date.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of our outstanding
Voting Shares and before the acquisition by a person or group of 50% or more of
our outstanding Voting Shares, our board of directors may, at its option, issue
common stock or Series A Preferred Shares in mandatory redemption of, and in
exchange for, all or part of the then outstanding exercisable Rights (other than
Rights owned by such Acquiring Person or group which would become null and void)
at an exchange ratio of one share of common stock or one unit of a Series A
Preferred Share for each Right which is then exercisable, subject to adjustment.
At any time prior to the first public announcement that a person or group
has become the beneficial owner of 15% or more of our outstanding Voting Shares,
our board of directors may redeem all, but not less than all, of the then
outstanding Rights at a price of $0.01 per Right. The redemption of the Rights
may be made effective at the time, on the basis and with the conditions as our
board of directors in its sole discretion may establish. Immediately upon the
action of our board of directors ordering redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the redemption price.
Until a Right is exercised, the holder of the Right, as a holder, will have
no rights as a stockholder of Cornell, including, without limitation, the right
to vote or to receive dividends.
The terms of the Rights may be amended by our board of directors without
the consent of the holders of the Rights, including amendment to extend the
Final Expiration Date. However, after the Distribution Date no amendment may
materially and adversely affect the interests of holders of the Rights.
REGISTRATION RIGHTS AGREEMENTS
1994 REGISTRATION RIGHTS AGREEMENT
We and certain of our stockholders are parties to a Registration Rights
Agreement dated as of March 31, 1994, as amended. In this prospectus, we will
refer to this agreement as the 1994 Registration Rights Agreement. Under the
terms of the 1994 Registration Rights Agreement, the stockholders that are
parties to the 1994 Registration Rights Agreement are entitled to demand and
piggyback registration rights.
21
<PAGE>
The Registration Rights Agreement contains no termination provision,
although securities cease to be registrable under the 1994 Registration Rights
Agreement upon the earlier of:
o being disposed of pursuant to an effective registration statement;
o being transferred so that subsequent disposition of those securities
does not require registration or qualification of those securities
under the Securities Act of 1933 or any state securities laws; and
o ceasing to be outstanding.
1999 REGISTRATION RIGHTS AGREEMENT
We have issued warrants to purchase common stock, which are currently held
in escrow on behalf of ING (U.S.) Capital LLC. Pursuant to these warrants, we
and ING (U.S.) Capital LLC entered into a Registration Rights Agreement dated as
of October 14, 1999. In this prospectus, we will refer to this agreement as the
1999 Registration Rights Agreement. Under the terms of the 1999 Registration
Rights Agreement, ING (U.S.) Capital LLC is entitled to demand and piggyback
registration rights. The 1999 Registration Rights Agreement terminates when the
warrants, the securities issuable upon exercise of the warrants and any common
stock or other securities issued in respect thereof which are held by ING (U.S.)
Capital LLC have been sold pursuant to a registration statement or pursuant to
Rule 144 under the Securities Act.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American
Securities Transfer & Trust, Inc.
22
<PAGE>
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the preferred stock sets forth
the general terms and provisions of the preferred stock to which any prospectus
supplement may relate. Other terms of any series of the preferred stock offered
by any prospectus supplement will be described in that prospectus supplement.
The description of the provisions of the preferred stock set forth below and in
any prospectus supplement does not purport to be complete and is subject to and
qualified in its entirety by reference to our certificate of incorporation and
the certificate of designations relating to each series of the preferred stock.
The certificate of designations will be filed with the Commission and
incorporated by reference in the registration statement of which this prospectus
is a part at or prior to the time of the issuance of each series of the
preferred stock.
We have authority to issue 10,000,000 shares of preferred stock, par value
$.001 per share. As of the date of this prospectus, no shares of our preferred
stock are outstanding.
The preferred stock may be issued from time to time by our board of
directors as shares of one or more classes or series. Subject to the provisions
of our certificate of incorporation and limitations prescribed by law, our board
of directors is expressly authorized to adopt resolutions to issue the shares,
to fix the number of shares, to change the number of shares constituting any
series and to provide for or change the voting powers, designations, preferences
and relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof, including dividend rights (including
whether dividends are cumulative), dividend rates, terms of redemption
(including sinking fund provisions), redemption prices, conversion rights and
liquidation preferences of the shares constituting any class or series of the
preferred stock, in each case without any action or vote by the holders of
common stock.
The issuance of shares of preferred stock, or the issuance of rights to
purchase shares of preferred stock, could be used to discourage an unsolicited
acquisition proposal. For instance, the issuance of a series of preferred stock
might impede a business combination by including class voting rights that would
enable the holders to block such a transaction; or the issuance might facilitate
a business combination by including voting rights that would provide a required
percentage vote of the stockholders. In addition, under some circumstances, the
issuance of preferred stock could adversely affect the voting power of the
holders of the common stock. Although our board of directors is required to make
any determination to issue preferred stock based on its judgment as to the best
interests of our stockholders, the board of directors could act in a manner that
would discourage an acquisition attempt or other transaction that some or a
majority of the stockholders might believe to be in their best interests or in
which stockholders might receive a premium for their stock over the then market
price of the stock. The board of directors does not currently intend to seek
stockholder approval prior to any issuance of currently authorized stock, unless
otherwise required by law or the rules of any market on which our securities are
traded.
The preferred stock shall have the dividend, liquidation, redemption and
voting rights set forth in a prospectus supplement relating to a particular
series of the preferred stock. Reference is made to the prospectus supplement
relating to the particular series of the preferred stock offered by the
prospectus supplement for specific terms, including:
o the designation and stated value per share of such preferred stock and
the number of shares offered;
o the amount of liquidation preference per share;
o the initial public offering price at which the preferred stock will be
issued;
o the dividend rate or method of calculation, the dates on which
dividends shall be payable, the form of dividend payment and the dates
from which dividends shall begin to cumulate, if any;
o any redemption or sinking fund provisions;
23
<PAGE>
o any conversion or exchange rights; and
o any additional voting, dividend, liquidation, redemption, sinking fund
and other rights, preferences, privileges, limitations and
restrictions.
The preferred stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. The rights of the holders of each series of the
preferred stock will be subordinate to the rights of our general creditors.
PLAN OF DISTRIBUTION
We may sell the securities in any of the following three ways, or in any
combination thereof:
o through underwriters or dealers;
o directly to a limited number of purchasers or to a single purchaser; or
o through agents.
The prospectus supplement with respect to any securities will set forth the
terms of the offering of the securities, including:
o the name or names of any underwriters, dealers or agents and the
respective amounts of the securities underwritten or purchased by each
of them;
o the public offering price of the securities and the proceeds to us and
any discounts, commissions or concessions allowed or reallowed or paid
to dealers;
o any securities exchanges on which the securities may be listed; and
o the time and place of delivery for the securities.
Any public offering price and any discounts or concessions allowed or reallowed
or paid to dealers may be changed from time to time.
If underwriters are used in the sale of any securities, those securities
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Those securities may be either offered to the public
through underwriting syndicates represented by managing underwriters, or
directly by underwriters. Unless otherwise set forth in the applicable
prospectus supplement, the obligations of the underwriters to purchase those
securities will be subject to certain conditions precedent and the underwriters
will be obligated to purchase all of those securities if any are purchased.
The securities may be sold directly by us or through agents designated by
us from time to time. Any agent involved in the offer or sale of the securities
for which a prospectus supplement is delivered will be named, and any
commissions payable by us to that agent will be disclosed, in the prospectus
supplement. Unless otherwise indicated in the prospectus supplement, any agent
will be acting on a best efforts basis for the period of its appointment.
If indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers or agents to solicit offers by purchasers to purchase the
securities from us at the public offering price set forth in the prospectus
supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. Those contracts will be subject only
to those conditions disclosed in the prospectus supplement, and the prospectus
supplement will state the commission payable for solicitation of those
contracts.
Some or all of the securities may be new issues of securities with no
established trading market. We may elect to list any of the securities on an
exchange, and in the case of our common stock, on any additional exchange.
However, unless otherwise specified in the applicable prospectus supplement, we
will not be obligated to do so. Any underwriters who buy securities from us for
public offering and sale may make a market in those securities, but will not be
obligated to do so and may
24
<PAGE>
discontinue any market making at any time without notice. We cannot guarantee
the liquidity of or the trading markets for any securities.
To facilitate the offering of the securities, any underwriters or agents
involved in the offering of our securities may engage in transactions that
stabilize, maintain or otherwise affect the price of our securities or any other
securities the prices of which may be used to determine payments on our
securities. Specifically, the underwriters or agents may overallot in connection
with the offering, creating a short position in our securities for their own
account. In addition, to cover overallotments or to stabilize the price of our
securities or any other securities, the underwriters or agents may bid for, and
purchase, our securities or any other securities in the open market. Finally, in
any offering of our securities through a syndicate of underwriters, the
underwriting syndicate may reclaim selling concessions allotted to an
underwriter or a dealer for distributing our securities in the offering if the
syndicate repurchases previously distributed securities in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the securities
above independent market levels. The underwriters or agents are not required to
engage in these activities, and may end any of these activities at any time.
Agents and underwriters may be entitled under agreements entered into with
us to indemnification by us against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which the agents or underwriters may be required to make in respect of
those liabilities. Some agents and underwriters may be customers of, engage in
transactions with, or perform services for us in the ordinary course of
business. Those relationships will be disclosed in the applicable prospectus
supplement.
LEGAL MATTERS
The validity of the securities offered by this prospectus will be passed
upon for us by Locke Liddell & Sapp LLP, Houston, Texas. The underwriters' own
legal counsel will advise them about other issues relating to any offering.
EXPERTS
The audited financial statements incorporated by reference in this
prospectus and the registration statement on Form S-3 of which this prospectus
is a part have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect to such audited financial
statements, and are incorporated in this prospectus and the registration
statement on Form S-3 in reliance upon the authority of said firm as experts in
giving said report.
25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection with issuance
and distribution of the securities being registered, all of which shall be paid
by Cornell. All of such amounts (except the Securities and Exchange Commission
Registration Fee) are estimated.
Securities and Exchange Commission
Registration Fee..................... $ 97,300
Printing Expenses.................... 50,000
Legal Fees and Expenses.............. 75,000
Accounting Fees and Expenses......... 50,000
Miscellaneous Expenses............... 27,700
----------
Total........................... $ 300,000
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
DELAWARE GENERAL CORPORATION LAW
Consistent with Section 145(a) of the Delaware General Corporation Law (the
"DGCL"), Cornell may indemnify and, in certain cases, must indemnify, any
person who was or is made a party to any action by reason of the fact that he is
or was a director, officer, employee or agent of Cornell, or is or was serving
at the request of Cornell as a director, officer, employee or agent of another
corporation, (1) in the case of a non-derivative action, against judgments,
fines, amounts paid in settlement, and reasonable expenses (including attorneys'
fees) incurred by him as a result of such action, and (2) in the case of a
derivative action, against expenses (including attorneys' fees), if in either
type of action he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of Cornell.
This indemnification does not apply, (1) in a derivative action, to matters
as to which it is adjudged that the director, officer, employee or agent is
liable to Cornell, unless upon court order it is determined that, in view of all
the circumstances of the case and despite such adjudication of liability, he is
fairly and reasonably entitled to indemnity for expenses, and (2) in a
non-derivative action, to any criminal proceeding in which such person had
reasonable cause to believe his conduct was unlawful.
CERTIFICATE OF INCORPORATION
Cornell's Restated Certificate of Incorporation, as amended, provides that
a director of Cornell shall not be personally liable to Cornell or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (1) for any breach of the director's duty of loyalty to
Cornell or its stockholders, (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3) under
Section 174 of the DGCL or (4) 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 Cornell, 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
Certificate of Incorporation by the stockholders of Cornell shall be prospective
only, and shall not adversely affect any limitation on the personal liability of
a director of Cornell existing at the time of such repeal or modification.
Additionally, the Certificate of Incorporation provides that Cornell will
indemnify its officers and directors to the fullest extent permitted by the
DGCL.
II-1
<PAGE>
BYLAWS
Cornell's Amended and Restated Bylaws generally provide for
indemnification, to the fullest extent authorized by the DGCL, of its officers,
directors, legal representatives, employees or agents and persons serving at the
request of Cornell in such capacities for other business organizations 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 by reason of his position with Cornell or
such other business organizations. The Bylaws further provide that the right to
indemnification is a contract right and includes the right for Cornell to pay
the expenses incurred in defending any such proceeding in advance of its final
disposition and consistent with the DGCL. In addition, the Bylaws provide that
Cornell may, by action of its board of directors, provide indemnification to
employees and agents of Cornell, 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
Cornell maintains Indemnification Agreements with each of its officers and
directors. The Indemnification Agreements provide that Cornell 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 Cornell. The Indemnification Agreements
generally provide that Cornell 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 Cornell, subject to
certain exclusions. The Indemnification Agreements also provide certain
procedures regarding the right to indemnification and for the advancement of
expenses.
INSURANCE
Cornell maintains 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 Cornell.
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<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------------------ ------------------------------------------------------------------------------------------
<C> <S>
**1.1 -- Form of Underwriting Agreement (Debt Securities).
**1.2 -- Form of Underwriting Agreement (Common Stock).
**1.3 -- Form of Underwriting Agreement (Preferred Stock).
4.1 -- Restated Certificate of Incorporation of Cornell (incorporated by reference to Exhibit 3.1
to Cornell's Annual Report on Form 10-K for the year ended December 31, 1996).
4.2 -- Certificate of Designation of Series A Junior Participating Preferred Stock of Cornell
(incorporated by reference to Exhibit B to Exhibit 6 to Cornell's Registration Statement
on Form 8-A filed November 24, 1998).
4.3 -- Amended and Restated Bylaws of Cornell (incorporated by reference to Exhibit 3.2 to
Cornell's Annual Report on Form 10-K for the year ended December 31, 1998).
4.4 -- Certificate representing Common Stock (incorporated by reference to Exhibit 4.1 to
Cornell's Registration Statement on Form S-1 (Reg. No. 333-08243)).
4.5 -- Rights Agreement dated as of May 1, 1998 between Cornell and American Securities Transfer
& Trust, Inc., as Rights Agent (incorporated by reference to Exhibit 6 to Cornell's
Registration Statement on Form 8-A filed November 24, 1998).
4.6 -- Registration Rights Agreement dated as of March 31, 1994, as amended, among Cornell and
the stockholders listed on the signature pages thereto (incorporated by reference to
Exhibit 4.2 to the Form S-1).
*4.7 -- Registration Rights Agreement dated as of October 14, 1999 among Cornell and the investors
listed therein.
*4.8 -- Warrant Issuance Agreement dated as of October 14, 1999 between Cornell and ING (U.S.)
Capital LLC.
*4.9 -- Form of Indenture between Cornell and Chase Bank of Texas, National Association, as
Trustee.
*5.1 -- Opinion of Locke Liddell & Sapp LLP.
*12.1 -- Statement regarding Computation of Ratios of Earnings to Fixed Charges.
*23.1 -- Consent of Arthur Andersen LLP.
*23.2 -- Consent of Locke Liddell & Sapp LLP (contained in Exhibit 5.1).
*24.1 -- Power of Attorney (included on the signature page of this registration statement).
*25.1 -- Statement of Eligibility of Trustee.
</TABLE>
- ------------
* Filed herewith.
** Cornell will file any underwriting agreement relating to Debt Securities,
Common Stock or Preferred Stock that it may enter into and any form of Debt
Securities, Common Stock or Preferred Stock not previously filed, as an
Exhibit to a Current Report or Form 8-K.
ITEM 17. 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 of 1933, as amended (the "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), 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; and
II-3
<PAGE>
(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 paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the 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 Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 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 the
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 Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the 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 of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus 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.
(e) The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act, as amended, in
accordance with the Rules and Regulations prescribed by the Commission under
Section 305(b)(2) of that Act.
II-4
<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-3 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 November 18, 1999.
CORNELL CORRECTIONS, INC.
Dated: November 18, 1999 By:/s/STEVEN W. LOGAN
-----------------------------------------
STEVEN W. LOGAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints STEVEN W. LOGAN and JOHN L. HENDRIX and each of
them, his true and lawful attorney-in-fact and agents, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign, execute and file this Registration Statement under
the Securities Act and any and all amendments (including, without limitation,
post-effective amendments and any amendment or amendments or additional
registration statements filed pursuant to Rule 462 under the Securities Act
increasing the amount of securities for which registration is being sought) to
this Registration Statement, and to file the same, with all exhibits thereto,
and all other documents in statements, notices or other documents necessary or
advisable to comply with the applicable state securities laws, and to file the
same, together with other documents in connection therewith, with the
appropriate state securities authorities, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been duly signed by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ----------------------------------- -------------------
<S> <C> <C>
/s/STEVEN W. LOGAN President, Chief Executive November 18, 1999
- ------------------------------------------------------ Officer and Director
STEVEN W. LOGAN (Principal Executive Officer)
/s/JOHN L. HENDRIX
- ------------------------------------------------------ Vice President and Chief Financial November 18, 1999
JOHN L. HENDRIX Officer (Principal Financial
Officer and Principal Accounting
Officer)
/s/DAVID M. CORNELL Chairman of the Board November 18, 1999
- ------------------------------------------------------
DAVID M. CORNELL
/s/PETER A. LEIDEL Director November 18, 1999
- ------------------------------------------------------
PETER A. LEIDEL
/s/ARLENE R. LISSNER Director November 18, 1999
- ------------------------------------------------------
ARLENE R. LISSNER
/s/TUCKER TAYLOR Director November 18, 1999
- ------------------------------------------------------
TUCKER TAYLOR
/s/JAMES H.S. COOPER Director November 18, 1999
- ------------------------------------------------------
JAMES H. S. COOPER
/s/ANTHONY R. CHASE Director November 18, 1999
- ------------------------------------------------------
ANTHONY R. CHASE
/s/CAMPBELL A. GRIFFIN, JR. Director November 18, 1999
- ------------------------------------------------------
CAMPBELL A. GRIFFIN, JR.
</TABLE>
II-5
EXHIBIT 4.7
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT dated as of
October 14, 1999, among CORNELL CORRECTIONS,
INC., a Delaware corporation (the
"Corporation") and the Investors (as defined
herein).
The Investors own or have the right to acquire Common Stock (as herein
defined) of the Corporation. The parties hereto deem it to be in their
respective best interests to set forth in this Registration Rights Agreement
(the "Agreement") the rights of the Investors in connection with public
offerings and sales of the Common Stock.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
obligations hereinafter set forth, the Corporation and the Investors hereby
agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
(a) "Commission" shall mean the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
(b) "Common Stock" shall mean the Common Stock, par value $.001 per share,
of the Corporation or any securities into which such Common Stock shall have
been converted.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934 or any
successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
(d) "ING" shall mean ING (U.S.) Capital LLC, a Delaware limited liability
company.
(e) "Investors" shall mean the parties set forth on Schedule I hereto, and
shall include any successor to, or assignee or transferee of, any of the
Investors who or which agrees in writing to be treated as an Investor and to be
bound by the terms and comply with all applicable provisions hereof.
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(f) "Major Stockholder" shall mean David M. Cornell.
(g) "1994 Registration Rights Agreement" shall mean the registration
rights agreement identified on Schedule II hereto.
(h) "1994 Shares" shall mean shares of Common Stock the holders of which
have demand or piggyback registration rights pursuant to the 1994 Registration
Rights Agreement.
(i) "Other Shares" shall mean at any time those shares of Common Stock
which do not constitute Primary Shares or Registrable Shares.
(j) "Person" shall mean and include any natural person, company,
partnership, joint venture, corporation, business trust, unincorporated
organization or governmental authority.
(k) "Primary Shares" shall mean at any time authorized but unissued shares
of Common Stock or shares of Common Stock held by the Corporation in its
treasury.
(l) "Registrable Shares" shall mean the shares of Common Stock held by the
Investors which constitute Restricted Shares.
(m) "Requisite Holders" shall mean the holders of at least 50% of the
Restricted Shares held by the Investors at the date of determination voting
together as a single class.
(n) "Restricted Shares" shall mean the Warrants, Warrant Shares and any
shares of Common Stock or other securities received in respect thereof, which
are held by the Investors and which theretofore have not been sold to the public
pursuant to a registration statement under the Securities Act or pursuant to
Rule 144.
(o) "Rule 144" shall mean Rule 144 promulgated under the Securities Act or
any successor rule thereto or any complementary rule thereto (such as Rule
144A).
(p) "Securities Act" shall mean the Securities Act of 1933 or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
(q) "Transfer" shall include any disposition of any Restricted Shares or
of any interest therein which would constitute a sale thereof within the meaning
of the Securities Act other than any such disposition pursuant to an effective
registration statement under the Securities Act and complying with all
applicable state securities and "blue sky" laws.
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(r) "Warrant" shall mean any warrant issued by the Corporation pursuant to
the Warrant Issuance Agreement, and any new warrant or warrants issued by the
Corporation upon a transfer, division or combination thereof in accordance with
such Warrant Issuance Agreement.
(s) "Warrant Issuance Agreement" shall mean the Warrant Issuance Agreement
dated as of the date hereof, between the Corporation and ING.
(t) "Warrant Shares" shall mean, as of the date of determination, the
securities issued or issuable upon the exercise of the Warrant (whether or not
exercised) as of such date. For purposes of this Agreement, prior to the
exercise of any Warrant, the Warrant Shares issuable upon such exercise shall be
deemed to be held by the holder of such Warrant.
SECTION 2. REQUIRED REGISTRATION. If on any date prior to the ninth
anniversary hereof, the Corporation shall be requested in writing by the
Requisite Holders to effect the registration under the Securities Act of
Registrable Shares, the Corporation shall promptly notify in writing each
Investor who or which is not a signatory to such request and shall promptly
thereafter use its best efforts to effect the registration under the Securities
Act of the Registrable Shares requested by the Investors (pursuant to such
initial request or in response to receiving a copy thereof) to be so registered;
PROVIDED, HOWEVER, that the Corporation shall not be obligated to effect any
registration under the Securities Act except in accordance with the following
provisions:
(a) the Corporation shall not be obligated to use its best efforts
to file and cause to become effective (i) more than one registration
statement initiated pursuant to this Section 2 pursuant to which the
Registrable Shares included therein have been effectively sold thereunder;
PROVIDED, HOWEVER, that any registration proceeding begun pursuant to this
Section 2 which is subsequently withdrawn at the request of the holders of
a majority of the Registrable Shares held by the Investors to be
registered shall count towards such one registration statement which the
Investors have the right to cause the Corporation to effect pursuant to
this Section 2; PROVIDED FURTHER, HOWEVER, that such withdrawn
registration shall not be so counted if such withdrawal is based upon
material adverse information relating to the Corporation or its condition,
business, or prospects which is different from that generally known to the
Investors at the time of their request or (ii) any registration statement
during any period in which any other registration statement (other than on
Form S-4 or Form S-8 promulgated under the Securities Act or any successor
forms
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thereto) pursuant to which Primary Shares are to be or were sold has been
filed and not withdrawn or has been declared effective within the prior 90
days;
(b) the Corporation may delay the filing or effectiveness of any
registration statement for a period of up to 90 days after the date of a
request for registration pursuant to this Section 2 if (i) at the time of
such request the Corporation is engaged, or has fixed plans to engage
within 60 days of the time of such request, in a firm commitment
underwritten public offering of Primary Shares or (ii) the Corporation
shall furnish to the Investors requesting such registration a certificate
signed by the President of the Corporation stating that, in the good faith
judgment of the Board of Directors of the Corporation, it would be
seriously detrimental to the Corporation and its shareholders for such
registration statement to be filed and it is therefore essential to defer
the filing of such registration statement (provided that the Corporation
may not utilize the right set forth in this clause (ii) more than once in
any twelve (12) month period);
(c) with respect to any registration pursuant to this Section 2, the
Corporation may include in such registration any Primary Shares or Other
Shares; PROVIDED, HOWEVER, that if the managing underwriter advises the
Corporation that the inclusion of all Registrable Shares, Primary Shares
and Other Shares proposed to be included in such registration would
interfere with the successful marketing (including pricing) of the
Registrable Shares proposed to be included in such registration, then the
number of Registrable Shares, Primary Shares and Other Shares proposed to
be included in such registration shall be included in the following order:
(i) FIRST, the Registrable Shares and 1994 Shares requested to
be included in such registration PRO RATA, based upon the number of
Restricted Shares (based upon Common Stock equivalents) owned at the
time by each Investor and the number of 1994 Shares owned at the
time by each holder of 1994 Shares;
(ii) SECOND, the Primary Shares; and
(iii) THIRD, the Other Shares.
(d) if a registration required pursuant to this Section 2 involves
an underwritten offering, the underwriter or underwriters thereof shall be
selected by the Corporation and shall be reasonably acceptable to the
Requisite Holders.
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SECTION 3. PIGGYBACK REGISTRATION. (a) If the Corporation at any time
proposes for any reason to register Primary Shares or Other Shares under the
Securities Act (other than on Form S-4 or Form S-8 promulgated under the
Securities Act or any successor forms thereto), it shall promptly give written
notice to the Investors of its intention so to register the Primary Shares or
Other Shares and, upon the written request, given within 30 days (20 days in the
event the Corporation proposes to register Primary Shares or Other Shares on a
shelf registration statement) after delivery of any such notice by the
Corporation, of the Investors to include in such registration Registrable Shares
(which request shall specify the number of Registrable Shares proposed to be
included in such registration), the Corporation shall use its best efforts to
cause all such Registrable Shares to be included in such registration on the
same terms and conditions as the securities otherwise being sold in such
registration; PROVIDED, HOWEVER, that if the managing underwriter advises the
Corporation that the inclusion of all Registrable Shares or Other Shares
proposed to be included in such registration would interfere with the successful
marketing (including pricing) of Primary Shares proposed to be registered by the
Corporation, then the number of Primary Shares, Registrable Shares and Other
Shares proposed to be included in such registration shall be included in the
following order:
(i) FIRST, the Primary Shares; and
(ii) SECOND, the Registrable Shares, 1994 Shares and Other Shares
requested to be included in such registration PRO RATA, based upon the
number of Restricted Shares (based upon Common Stock equivalents) owned at
the time by each Investor and the number of Other Shares owned at the time
by each holder of Other Shares.
(b) If at any time after giving written notice pursuant to this
Section 3 of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Corporation shall determine for any reason either not to
register or to delay registration of such securities, the Corporation may,
at its election, give written notice of such determination to the
Investors and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration and (ii) in the case of a
determination to delay registering, shall be permitted to delay
registering any Registerable Securities, for the same period as the delay
in registering such other securities.
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(c) If a registration under this Section 3 involves an underwritten
offering, the underwriter or underwriters and any additional investment
bankers and managers to be used in connection with such registration shall
be selected by the Corporation, and any Investor desiring to have
Registrable Shares included in such registration shall be required to sign
an underwriting agreement in customary form with such underwriter or
underwriters.
SECTION 4. HOLDBACK AGREEMENT. If the Corporation at any time shall
register shares of Common Stock under the Securities Act (including any
registration pursuant to Sections 2 or 3) for sale to the public, the Investors
shall not sell publicly, make any short sale of, grant any option for the
purchase of, or otherwise dispose publicly of, any Restricted Shares (other than
those shares of Common Stock included in such registration pursuant to Sections
2 or 3) without the prior written consent of the Corporation for a period
designated by the Corporation in writing to the Investors, which period shall
not begin more than 10 days prior to the effectiveness of the registration
statement pursuant to which such public offering shall be made and shall not
last more than 90 days after the effective date of such registration statement;
PROVIDED, HOWEVER, that such period shall not be any longer than the shortest
such period applicable to Major Stockholder, any affiliate of Major Stockholder
in such circumstances.
SECTION 5. PREPARATION AND FILING. If and whenever the Corporation is
under an obligation pursuant to the provisions of this Agreement to use its best
efforts to effect the registration of any Registrable Shares, the Corporation
shall, as expeditiously as practicable:
(a) use its best efforts to cause a registration statement that
registers such Registrable Shares to become and remain effective for a
period of 180 days or until all of such Registrable Shares have been
disposed of (if earlier);
(b) furnish, at least five business days before filing a
registration statement that registers such Registrable Shares, a
prospectus relating thereto or any amendments or supplements relating to
such a registration statement or prospectus, to one counsel selected by
the Investors (the "Investors' Counsel"), copies of all such documents
proposed to be filed (it being understood that such five-business-day
period need not apply to successive drafts of the same document proposed
to be filed so long as such successive drafts are supplied to the
Investors' Counsel in advance of the proposed filing by a period of time
that is customary and reasonable under the circumstances);
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(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least a period of 180 days or until all of such
Registrable Shares have been disposed of (if earlier) and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of such Registrable Shares;
(d) notify in writing the Investors' Counsel promptly (i) of the
receipt by the Corporation of any notification with respect to any
comments by the Commission with respect to such registration statement or
prospectus or any amendment or supplement thereto or any request by the
Commission for the amending or supplementing thereof or for additional
information with respect thereto, (ii) of the receipt by the Corporation
of any notification with respect to the issuance by the Commission of any
stop order suspending the effectiveness of such registration statement or
prospectus or any amendment or supplement thereto or the initiation or
threatening of any proceeding for that purpose and (iii) of the receipt by
the Corporation of any notification with respect to the suspension of the
qualification of such Registrable Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purposes;
(e) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions
as the Investors reasonably request and do any and all other acts and
things which may be reasonably necessary or advisable to enable the
Investors to consummate the disposition in such jurisdictions of the
Registrable Shares owned by the Investors; PROVIDED, HOWEVER, that the
Corporation will not be required to qualify generally to do business,
subject itself to general taxation or consent to general service of
process in any jurisdiction where it would not otherwise be required to do
so but for this paragraph (e);
(f) furnish to the Investors such number of copies of a summary
prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as the Investors may reasonably request in order to facilitate
the public sale or other disposition of such Registrable Shares;
(g) use its best efforts to cause such Registrable Shares to be
registered with or approved by such other governmental agencies or
authorities as may be necessary by
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virtue of the business and operations of the Corporation to
enable the Investors to consummate the disposition of such
Registrable Shares;
(h) notify the Investors on a timely basis at any time when a
prospectus relating to such Registrable Shares is required to be delivered
under the Securities Act within the appropriate period mentioned in
subparagraph (a) of this Section 5, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing and, at the request of the Investors (subject to delay
rights under Section 2(b)), prepare and furnish to the Investors a
reasonable number of copies of a supplement to or amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
offerees of such shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
(i) make available for inspection by the Investors, any underwriter
participating in any disposition pursuant to such registration statement
and any attorney, accountant or other agent retained by the Investors or
any underwriter (collectively, the "Inspectors"), all pertinent financial
and other records, pertinent corporate documents and properties of the
Corporation (collectively, the "Records"), as shall be reasonably
necessary to enable them to exercise their due diligence responsibility,
and cause the Corporation's officers, directors and employees to supply
all information (together with the Records, the "Information") reasonably
requested by any such Inspector in connection with such registration
statement. Any of the Information which the Corporation determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, shall not be disclosed by the Inspectors unless (i) (subject to
delay rights under Section 2(b)) the disclosure of such Information is
necessary to avoid or correct a material misstatement or omission in the
registration statement, (ii) the release of such Information is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction or (iii) such Information has been made generally available
to the public. The Investors agree that they will, upon learning that
disclosure of such Information is sought in a court of competent
jurisdiction, give notice to the Corporation and
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allow the Corporation, at the Corporation's expense, to undertake
appropriate action to prevent disclosure of the Information deemed
confidential. If there is a reasonable likelihood, in the judgment of the
Corporation (based on written advice of counsel), that compliance with the
provisions of this subsection (i) could result in the loss of any
attorney-client privilege related to the Records, the Corporation will not
be required to comply with such provisions to the extent necessary to
avoid the loss of such privilege; PROVIDED, HOWEVER, that if the
Corporation chooses not to comply with such provisions under the foregoing
circumstance then each of the Investors participating in such registration
shall have the right to withdraw from such registration, such registration
shall not be counted toward any limitation contained in Section 2 with
respect to the number of registrations permitted to be requested and the
Corporation shall pay or reimburse the Investors on demand for all fees
and expenses incurred by them in connection with such registration.
(j) use its best efforts to obtain from its independent certified
public accountants "cold comfort" letters in customary form and at
customary times and covering matters of the type customarily covered by
cold comfort letters;
(k) use its best efforts to obtain from its counsel an opinion or
opinions in customary form;
(l) provide a transfer agent and registrar (which may be the same
entity and which may be the Corporation) for such Registrable Shares;
(m) issue to any underwriter to which the Investors may sell shares
in such offering certificates evidencing such Registrable Shares;
(n) list such Registrable Shares on any national securities exchange
on which any shares of the Common Stock are listed or, if the Common Stock
is not listed on a national securities exchange, use its best efforts to
qualify such Registrable Shares for inclusion on the automated quotation
system of the National Association of Securities Dealers, Inc. (the
"NASD") or, at the Corporation's option, a national securities exchange;
(o) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission and make available to its
securityholders, as soon as reasonably practicable, earnings statements
(which need not be audited) covering a period of 12 months beginning
within three months
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after the effective date of the registration statement, which earnings
statements shall satisfy the provisions of Section 11(a) of the Securities
Act; and
(p) use its best efforts to take all other steps necessary to effect
the registration of such Registrable Shares contemplated hereby.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the
Corporation of the occurrence of any event of the kind described in
subsection (h) of this Section 5, such holder will forthwith discontinue
such holder's disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by subsection (h) of this Section 5 and, if so directed by
the Corporation, will deliver to the Corporation (at the Corporation's
expense) all copies, other than permanent file copies, then in such
holder's possession of the prospectus relating to such Registrable
Securities currently at the time of receipt of such notice.
SECTION 6. EXPENSES. All expenses incurred by the Corporation in complying
with Section 5, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), fees and expenses of
complying with securities and blue sky laws, printing expenses, fees and
expenses of the Corporation's counsel and accountants and fees and expenses of
one counsel for the Investors shall be paid by the Corporation; PROVIDED,
HOWEVER, that all underwriting discounts and selling commissions applicable to
the Registrable Shares shall not be borne by the Corporation but shall be borne
by the Investors in proportion to the number of Registrable Shares sold by each
of them.
SECTION 7. INDEMNIFICATION. In connection with any registration of any
Registrable Shares under the Securities Act, the Corporation shall indemnify and
hold harmless the holders of Registrable Shares, each underwriter, broker or any
other person acting on behalf of the holders of Registrable Shares and each
other person, if any, who controls any of the foregoing persons within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which any of
the foregoing persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the registration statement under which
such
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Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Shares, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading or, with respect to any prospectus, necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
or any violation by the Corporation of the Securities Act or state securities or
blue sky laws applicable to the Corporation and relating to action or inaction
required of the Corporation in connection with such registration or
qualification under such state securities or blue sky laws; and shall reimburse
the holders of Registrable Shares, such underwriter, such broker or such other
person acting on behalf of the holders of Registrable Shares and each such
controlling person on demand for any legal or other expenses reasonably incurred
by any of them in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the Corporation
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in said
registration statement, preliminary prospectus, final prospectus, amendment,
supplement or document incident to registration or qualification of any
Registrable Shares in reliance upon and in conformity with written information
furnished to the Corporation by the holders of Registrable Shares or underwriter
specifically for use in the preparation thereof.
In connection with any registration of Registrable Shares under the
Securities Act pursuant to this Agreement, each holder of Registrable Shares
shall severally indemnify and hold harmless (in the same manner and to the same
extent as set forth in the preceding paragraph of this Section 7) the
Corporation, each director of the Corporation, each officer of the Corporation
who shall sign such registration statement, each underwriter, broker or other
person acting on behalf of the Corporation or the holders of Registrable Shares,
each holder of Registrable Shares and each person who controls any of the
foregoing persons within the meaning of the Securities Act with respect to any
statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to
registration or qualification of any Registrable Shares, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Corporation or such underwriter by the holders of Registrable
Shares specifically for use in connection with the
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preparation of such registration statement, preliminary prospectus, final
prospectus, amendment, supplement or document; PROVIDED, HOWEVER, that the
maximum amount of liability in respect of such indemnification shall be limited,
in the case of each seller of Registrable Shares, to an amount equal to the net
proceeds actually received by such Seller from the sale of Registrable Shares
effected pursuant to such registration.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 7, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; PROVIDED, HOWEVER, that if any indemnified party shall have
reasonably concluded that there may be one or more legal or equitable defenses
available to such indemnified party which are additional to or conflict with
those available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this Section 7, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
with respect to such additional or conflicting legal or equitable defenses or
such matters and such indemnifying party shall reimburse such indemnified party
and any person controlling such indemnified party for that portion of the
reasonable fees and expenses of any counsel retained by the indemnified party
which is reasonably related to the matters covered by the indemnity agreement
provided in this Section 7.
If the indemnification provided for in this Section 7 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, claim, damage, liability or action referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amounts paid or payable by such indemnified party as a
result of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such loss, claim,
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damage, liability or action as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
SECTION 8. UNDERWRITING AGREEMENT. To the extent that the Investors shall
enter into an underwriting or similar agreement, which agreement contains
provisions customary in scope and form covering one or more issues addressed in
Sections 4, 5, 6 and 7, the provisions contained in such underwriting agreement
shall control as to the party or parties so entering into such underwriting
agreement.
SECTION 9. INFORMATION BY HOLDER. Each of the Investors shall furnish to
the Corporation such written information regarding the Investors and the
distribution proposed by the Investors as the Corporation may reasonably request
in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
SECTION 10. EXCHANGE ACT COMPLIANCE; RULE 144 AND RULE 144A. (a) From such
date as a registration statement filed by the Corporation pursuant to the
Exchange Act relating to any class of the Corporation's securities shall have
become effective, the Corporation shall comply with all of the reporting
requirements of the Exchange Act (whether or not it shall be required by the
terms of such Act to do so) to the extent necessary to enable the Investors to
avail themselves of the benefits of Rule 144 or Rule 144A under the Securities
Act or any successor rules or regulations.
(b) With a view to making available the benefits of certain rules and
regulations of the Commission that may at any time permit the resale of the
Restricted Shares without registration, the Corporation will:
(i) at all times after 90 days after any registration statement
covering a public offering of securities of the Corporation under the
Securities Act shall have become effective:
(A) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
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(B) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the
Corporation under the Securities Act and the Exchange Act; and
(C) furnish to each holder of Restricted Shares forthwith upon
request a written statement by the Corporation as to its compliance
with the reporting requirements of such Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Corporation, and such other
reports and documents so filed by the Corporation as such holder may
reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Restricted Shares
without registration; and
(ii) at any time, at the request of the holder of Restricted
Shares, make available to such holder and to any prospective
transferee of such Restricted Shares the information concerning the
Corporation described in Rule 144A(d)(4) under the Securities Act.
SECTION 11. NO CONFLICT OF RIGHTS. The Corporation represents and warrants
to the Investors that any and all of the registration rights granted to any
Person, other than the registration rights granted to the Investors hereby, as
of the date hereof, are listed on Schedule II hereto. The Corporation shall not,
after the date hereof, grant any registration rights which conflict with or
impair the registration rights granted to the Investors hereby.
SECTION 12. TERMINATION. This Agreement shall terminate and be of no
further force or effect when there shall not be any Registrable Shares and all
the shares of Common Stock which would be received upon exercise, exchange or
conversion of any security included in Restricted Shares would not be
Registrable Shares.
SECTION 13. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the Corporation and the Investors, and subject to Section 14, the
respective successors and assigns of the Corporation and the Investors.
SECTION 14. ASSIGNMENT. Each Investor may assign its rights hereunder to
any purchaser or transferee of Restricted Shares; PROVIDED, HOWEVER, that such
purchaser or transferee shall, as a condition to the effectiveness of such
assignment, be required to execute a counterpart to this Agreement agreeing to
be treated as the seller or transferor hereunder whereupon such purchaser or
transferee shall have the benefits of, and shall be subject to the restrictions
contained in, this Agreement.
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SECTION 15. ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties with respect to the subject matter hereof and all prior and
contemporaneous arrangements or understandings with respect to the subject
matter hereof.
SECTION 16. NOTICES. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
(i) if to the Corporation, to:
Cornell Corrections, Inc.
1700 West Loop South
Suite 1500
Houston, Texas 77027
Attention: Mr. Steven Logan
Telecopier: 713/623-2853
(ii) if to the Investors, to their respective addresses set forth
on Schedule I hereto.
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch and (c) in the case of mailing, on the third business day after the
posting thereof.
SECTION 17. MODIFICATIONS; AMENDMENTS; WAIVERS. The terms
and provisions of this Agreement may not be modified or amended,
nor may any provision be waived, except pursuant to a writing
signed by the Corporation and the Requisite Holders.
SECTION 18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 19. HEADINGS. The headings of the various sections
of this Agreement have been inserted for convenience of reference
only and shall not be deemed to be a part of this Agreement.
15
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SECTION 20. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York (without giving effect to principles of
conflicts of laws).
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
CORNELL CORRECTIONS, INC.
By: /s/ JOHN HENDRIX
Name: John Hendrix
Title: CFO
ING (U.S.) CAPITAL LLC
By: /s/ DAVID BALESTRERY
Name: David Balestrery
Title:
17
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SCHEDULE I
INVESTORS
Internationale Nederlanden (U.S.) Capital LLC
135 E. 57th Street
New York, New York 10022-2101
Attention: Merchant Banking Group New York
Mr. David Scopelliti
Mr. David Balestrery
Telecopier: (212) 593-3362
18
<PAGE>
SCHEDULE II
[List of Other Registration Rights]
Registration Rights Agreement dated as of March 31, 1994, as
amended, by and among Cornell Corrections, Inc. (formerly Cornell
Cox, Inc.), the Investors (as defined therein), David Cornell and
Internationale Nederlanden (U.S.) Capital Corporation.
19
EXHIBIT 4.8
EXECUTION COPY
================================================================================
WARRANT ISSUANCE AGREEMENT
Dated as of October 14, 1999
between
CORNELL CORRECTIONS, INC.
and
ING (U.S.) CAPITAL LLC
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
SECTION 1.1.Definitions................................................1
SECTION 1.2.Interpretation.............................................7
ARTICLE II
ISSUANCE OF WARRANT; CLOSING
SECTION 2.1.Issuance of Warrant........................................8
SECTION 2.2.Closing....................................................8
ARTICLE III
FORM; EXCHANGE FOR WARRANTS; TRANSFER; TAXES
SECTION 3.1.Form of Warrant............................................8
SECTION 3.2.Exchange of Warrants for Warrants..........................9
SECTION 3.3.Transfer of Warrant.......................................10
ARTICLE IV
EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES
SECTION 4.1.Exercise of Warrants......................................11
SECTION 4.2.Exchange for Warrant Shares...............................11
SECTION 4.3.Issuance of Common Stock..................................11
SECTION 4.4.Adjustment of Exercise Price and
Number of Warrant Shares......................13
SECTION 4.4.1. Adjustment upon Issuance of
Common Stock..................................13
SECTION 4.4.2. Subdivisions or Combinations of
Common Stock..................................16
SECTION 4.4.3. Capital Reorganization or Capital
Reclassifications.............................16
SECTION 4.4.4. Consolidations and Mergers.............................17
SECTION 4.4.5. Notice; Calculations; Etc..............................17
SECTION 4.4.6. Certain Adjustments....................................17
SECTION 4.4.7. Excluded Transactions..................................18
SECTION 4.4.8. Adjustment Rules.......................................18
SECTION 4.5.Regulated Holders.........................................18
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PAGE
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1.Representations and Warranties of ING.....................19
SECTION 5.2.Representations and Warranties of the Corporation.........19
ARTICLE VI
COVENANTS OF THE CORPORATION
SECTION 6.1. Notices of Certain Actions...............................21
SECTION 6.2. Financial Statements and Reports.........................21
SECTION 6.3. Information Rights.......................................22
SECTION 6.4. Regulated Holders........................................22
SECTION 6.5. Merger or Consolidation of the Corporation...............24
SECTION 6.6. Reservation of Shares....................................25
SECTION 6.7. Current Public Information...............................25
SECTION 6.8. Public Disclosures.......................................25
SECTION 6.9. Fiduciary Duties of the Corporation......................25
SECTION 6.10 Transactions with Affiliates.............................25
SECTION 6.11 Opinion of Counsel.......................................26
SECTION 6.12 Corporate Assurances.....................................26
ARTICLE VII
MISCELLANEOUS
SECTION 7.1.Notices...................................................26
SECTION 7.2.No Voting Rights; Limitations of Liability................27
SECTION 7.3.Amendments and Waivers....................................27
SECTION 7.4.Severability..............................................27
SECTION 7.5.Specific Performance......................................27
SECTION 7.6.Binding Effect............................................28
SECTION 7.7.Counterparts..............................................28
SECTION 7.8.Governing Law; Entire Agreement...........................28
SECTION 7.9.Benefits of this Agreement................................28
SECTION 7.10 Headings.................................................28
SECTION 7.11 Expenses.................................................28
SECTION 7.12 Attorneys' Fees..........................................29
SECTION 7.13 Other Transactions.......................................29
SECTION 7.14 Forum Selection and Consent to Jurisdiction..............29
SECTION 7.15 Registration Rights......................................29
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PAGE
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SECTION 7.16 Waiver of Jury Trial.....................................30
SECTION 7.17 Indemnification..........................................30
SECTION 7.18 Filings..................................................30
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WARRANT ISSUANCE AGREEMENT, dated as of October 14, 1999, between
CORNELL CORRECTIONS, INC., a Delaware corporation (the
"Corporation"), and ING (U.S.) CAPITAL LLC, a Delaware limited
liability company ("ING").
The parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. As used in this Agreement,
the following terms shall have the following meanings:
"AFFILIATE" shall mean, with respect to any Person, any Person that
directly or indirectly through one or more intermediaries Controls, is
Controlled by or is under common Control with such Person.
"ALLOCABLE NUMBER" shall have the meaning given to such term in
Section 4.2.
"APPLICABLE LAW" shall mean all provisions of laws, statutes,
ordinances, rules, regulations, permits, certificates or orders of any
Governmental Authority applicable to the Person in question or any of its assets
or property, and all judgments, injunctions, orders and decrees of all courts
and arbitrators in proceedings or actions in which the Person in question is a
party or by which any of its assets or properties are bound.
"ASSIGNMENT FORM" shall mean the assignment form
attached as Annex B to a Warrant.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banks are authorized or required to be closed in New York, New York
or Houston, Texas; PROVIDED, HOWEVER, that any determination of a Business Day
relating to a securities exchange shall mean a Business Day on which such
exchange is open for trading.
"CLOSING" shall have the meaning given to such term in
Section 2.2.
"CLOSING DATE" shall have the meaning given to such term in Section
2.2.
"COMMISSION" shall mean the Securities and Exchange
Commission (or a successor thereto).
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"COMMON STOCK" shall mean the Common Stock, $.001 par
value, of the Corporation.
"CONTROL" shall mean, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"CORPORATION" shall have the meaning given to such term
in the Preamble.
"CONVERTIBLE SECURITIES" shall have the meaning given to such term
in Section 4.4.1(b).
"CREDIT AGREEMENT" shall mean the Subordinated Bridge Loan Agreement
(as the same may be amended or otherwise modified from time to time), dated the
Closing Date, among the Corporation, the Subsidiary Guarantors (as defined
therein), ING, the other financial institutions appearing on the signature pages
thereto, and ING, as agent.
"DELIVERY DATE" shall have the meaning given to such term in Section
4.3(a).
"EQUIVALENT NONVOTING SECURITY", with respect to any security (a
"first security") issued or to be issued by any Person, shall mean a security
(an "equivalent security") of such Person that is identical in rights and
benefits to such first security, except that (a) the equivalent security shall
not be entitled to vote on any matter on which holders of voting securities of
such Person are entitled to vote, other than as required by Applicable Law or
with respect to any amendment or repeal of any provision of the Organizational
Documents of such Person or any other agreement or instrument pursuant to which
the equivalent security was issued which provision specifically affects such
equivalent security, (b) subject to such reasonable restrictions as any affected
Regulated Holder may request (including, without limitation, any restriction
necessary to prevent the violation by such Regulated Holder of any provision of
Applicable Law with respect to its Ownership of voting securities), the
equivalent security shall be convertible in a one-to-one ratio into the first
security and (c) the terms of the equivalent security shall include such
provisions requested by any affected Regulated Holder as are reasonable and
equitable to ensure that (i) the equivalent security is treated comparably to
the first security with respect to dividends, distributions, stock splits,
reclassifications, capital reorganizations, mergers, consolidations and other
similar events and transactions, (ii) the conversion right provided in clause
(b) above is equitably protected and (iii) the acquisition of the
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equivalent security will not cause such Regulated Holder to violate Applicable
Law.
"ESCROW AGENT" means ING Capital (U.S.) LLC.
"ESCROW AGREEMENT" means the Escrow Agreement dated as of October 14
1999, between the Escrow Agent and ING.
"EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
"EXCHANGE FORM" shall mean the exchange form attached as Annex B to
a Warrant.
"EXCLUDED SECURITIES" shall mean:
(i) shares of capital stock issued pursuant to a stock dividend or a
stock split or other subdivision of shares;
(ii) Common Stock issued upon (A) conversion or exercise of any of
the Corporation's convertible preferred stock outstanding at the Closing Date,
or (B) exercise of the Warrants;
(iii) securities issued by the Corporation in a Qualified Public
Offering;
(iv) securities issued pursuant to the direct or indirect BONA FIDE
acquisition by the Corporation of any Person, whether by merger, purchase of
stock, purchase of assets or otherwise;
(v) securities issued upon exercise of conversion or exchange
rights, options or subscription calls, warrants, commitments or claims, provided
that the foregoing are outstanding on the date hereof; and
(vi) Common Stock or options to purchase Common Stock issued to
directors, officers, employees or consultants of the Corporation or the issuance
of Common Stock upon the exercise of any such options; PROVIDED, HOWEVER, that
(x) such Common Stock or options shall be issued pursuant to a written agreement
either in effect on the date hereof or in form and substance reasonably
satisfactory to the Requisite Holders and (y) the aggregate amount of all such
Common Stock or Common Stock which may be acquired upon the exercise of such
options shall not exceed an aggregate of 20% of the Common Stock (on a
Fully-Diluted Basis).
"EXECUTIVE OFFICER" shall mean, with respect to the
Corporation, its Chairman or President.
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"EXERCISE FORM" shall mean the exercise form attached as Annex A to
a Warrant.
"EXERCISE PRICE" for any Warrant shall mean 110% of the Market Price
on the Release Date of such Warrant.
"EXPIRATION DATE" for any Warrant shall mean the earlier of the date
that is eight years after the Release Date thereof and date that is the ninth
anniversary hereof.
"FINANCIAL OFFICER" shall mean the Chief Financial
Officer, Treasurer or Assistant Treasurer of the Corporation.
"FISCAL YEAR" shall mean, with respect to the Corporation, the
one-year period ending on December 31 of any year.
"FULLY DILUTED BASIS" means, as applied to the calculation of the
number of shares of Common Stock outstanding at any time, after giving effect to
(a) all shares of Common Stock outstanding at the time of determination, (b) all
shares of Common Stock issuable upon the exercise of any option, warrant
(including the Warrants) or similar right to purchase Common Stock outstanding
at the time of determination and then exercisable at a per share price equal to
or less than the price per share of Common Stock being determined and (c) all
shares of Common Stock issuable upon the conversion or exchange of any security
convertible into or exchangeable for shares of Common Stock outstanding at the
time of determination and then so convertible or exchangeable at a conversion or
exchange price equal to or less than the price per share of Common Stock being
determined. Such calculation will not be made in accordance with the "treasury
method."
"GAAP" shall have the meaning set forth in the Credit
Agreement.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States of
America or foreign.
"HOLDER" shall have the meaning given to such term in
Section 3.1(c).
"ING" shall have the meaning given to such term in the
Preamble.
"MARKET PRICE" shall mean, with respect to a share of Common Stock
on any Business Day:
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(a) if the Common Stock is Publicly Traded at the time of
determination, the average of the closing prices for the Common Stock on
all domestic securities exchanges on which such security may at the time
be listed, or, if there have been no sales on any such exchange on such
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day; PROVIDED, HOWEVER, that after a
Qualified Public Offering, if the determination of MARKET PRICE is being
made for purposes of Article IV as a result of the issuance of Common
Stock pursuant to a registered, underwritten, publicly distributed
offering, then the MARKET PRICE will, for purposes of Article IV, be the
price to the public in connection with that public offering; or
(b) if the Common Stock is not Publicly Traded at the time of
determination, for the purposes of Article 4 only, the fair value of one
share of Common Stock, determined in good faith by the Board of Directors
of the Corporation exercising reasonable business judgment; PROVIDED,
HOWEVER, if the Common Stock is not Publicly Traded at the time of
determination for all other purposes, the MARKET PRICE shall be the Market
Value Per Share.
"MARKET VALUE" shall mean the highest price that would be paid for
the entire common equity interest in the Corporation on a going-concern basis in
a single arm's-length transaction between a willing buyer and a willing seller
(neither acting under compulsion), using valuation techniques then prevailing in
the securities industry and always determined in accordance with the Valuation
Procedures, and assuming full disclosure and understanding of all relevant
information and a reasonable period of time for effectuating such sale. For the
purposes of determining the Market Value, (i) the exercise price of options or
warrants to acquire Common Stock which are deemed to have been exercised for the
purpose of determining the number of shares of Common Stock outstanding on a
Fully Diluted Basis, shall be deemed to have been received by the Corporation
and (ii)(A) the liquidation preference or indebtedness, as the case may be,
represented by securities which are deemed exercised for or converted into
Common Stock for the purpose of determining the number of shares of Common Stock
outstanding on a Fully Diluted Basis, (B) any limitation in respect of any
shares of Common Stock, including as to their transfer, dividend payments,
voting and other rights and (C) any illiquidity arising by contract law in
respect of the shares of Common Stock and any voting rights or control rights
amongst the stockholders, shall be deemed to have been eliminated or canceled.
"MARKET VALUE PER SHARE" shall mean the price per share of Common
Stock obtained by dividing (A) the Market Value by (B)
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the number of shares of Common Stock outstanding (on a Fully-Diluted Basis) at
the time of determination.
"OPTIONS" shall have the meaning given to such term in Section
4.4.1(b) hereof.
"ORGANIZATIONAL DOCUMENTS" shall mean, with respect to any Person,
each instrument or other document that (a) defines the existence of such Person,
including its articles or certificate of incorporation, as filed or recorded
with an applicable Governmental Authority or (b) governs the internal affairs of
such Person, including its by-laws, in each case as amended, supplemented or
restated.
"OTHER ANTI-DILUTION INSTRUMENTS" shall mean any option, warrant,
convertible security or other rights to acquire Common Stock, whether
outstanding as of the date hereof or hereafter issued, together with any
agreements relating thereto, which provide for anti-dilution or other
adjustments in the number of shares of Common Stock and/or exercise or
conversion price.
"OWN" shall mean, with respect to any security, to own,
hold or Control. "OWNS" and "OWNERSHIP" shall have correlative
meanings.
"PERSON" shall have the meaning set forth in the Credit
Agreement.
"PROPORTIONATE PERCENTAGE" shall mean, with respect to any Holder at
any time, the quotient obtained by dividing (a) the aggregate number of Warrant
Shares then held by such Holder by (b) the total number of shares of Common
Stock then outstanding (on a Fully-Diluted Basis).
"PUBLICLY TRADED" shall mean, with respect to any security, that
such security is listed on a domestic securities exchange.
"QUALIFIED PUBLIC OFFERING" shall mean an underwritten public
offering of the Common Stock registered under the Securities Act, (a) which
offering results in net proceeds to the Corporation of at least $10,000,000, and
(b) after which the shares of Common Stock are Publicly Traded.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, dated as of October 14, 1999, among the Corporation and the Investors
(as defined therein).
"REGULATED HOLDER" shall mean any Holder subject to any
provisions of Applicable Law (including without limitation the
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Bank Holding Company Act of 1956, as amended, (12 U.S.C. ss. 1841 ET SEQ.) and
the regulations promulgated thereunder) limiting the quantity or kind of
securities (or any class thereof) of the Corporation which such Holder is
permitted to Own.
"RELEASE DATE" means any date on which any Warrant is released from
escrow in accordance with the terms of the Escrow Agreement.
"REQUISITE HOLDERS" shall mean Holders holding Warrants or Warrant
Shares representing at least a majority of all Warrant Shares issued or issuable
upon exercise of Warrants outstanding on the date of determination.
"SECTION 6.4 TRANSACTION" shall have the meaning given to such term
in Section 6.4.
"SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
"SECURITIES EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
"SUBSIDIARY" shall have the meaning set forth in the
Credit Agreement.
"WARRANT" shall have the meaning given to such term in
Section 3.1(a).
"WARRANT REGISTER" shall have the meaning given to such term in
Section 3.1(c).
"WARRANT SHARES" shall mean (a) the shares of Common Stock issued or
issuable upon exercise of a Warrant in accordance with Section 4.1 or upon
exchange of a Warrant in accordance with Section 4.2, (b) all other securities
or other property issued or issuable upon any such exercise or exchange in
accordance with this Agreement and (c) any securities of the Corporation
distributed with respect to the securities referred to in the preceding clauses
(a) and (b). As used in this Agreement, the phrase "Warrant Shares then held" by
any Holder or Holders shall mean Warrant Shares held at the time of
determination by such Holder or Holders, and shall include Warrant Shares
issuable upon exercise of Warrants held at the time of determination by such
Holder or Holders.
SECTION 1.2. INTERPRETATION. Unless the context of
this Agreement clearly requires otherwise, references to the
plural include the singular, to the singular include the plural,
and to the part include the whole. The term "including" is not
limiting and the term "or" has the inclusive meaning represented
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by the term "and/or." The words "hereof," "herein," "hereunder," and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to "Articles", "Sections,"
"Exhibits" and "Schedules" are to Articles, Sections and Schedules,
respectively, of this Agreement, unless otherwise specifically provided. Terms
defined herein may be used in the singular or the plural.
ARTICLE II
ISSUANCE OF WARRANT; CLOSING
SECTION 2.1. ISSUANCE OF WARRANT. On the Closing Date, the
Corporation hereby agrees to issue a Warrant registered in the name of ING
evidencing the right to purchase, on or before 5:00 p.m. on the Expiration Date,
a total of 500,910 shares of Common Stock of the Corporation at a price per
share equal to the Exercise Price. At the date hereof, such shares of Common
Stock represent 5.2273% of the outstanding shares of Common Stock and 5.0% of
the outstanding shares of Common Stock on a Fully Diluted Basis. The number of
Warrant Shares which may be purchased upon exercise of such Warrant and the
Exercise Price to be paid for such Warrant Shares are subject to adjustment in
the manner provided in Article IV. Upon issuance, the Warrant will be placed in
escrow and may only be released from escrow in accordance with the terms of the
Escrow Agreement.
SECTION 2.2. CLOSING. The closing (the "Closing") for the issuance,
sale and transfer of the Warrant shall take place simultaneously with the
execution and delivery of this Agreement on the date (the "Closing Date")
hereof.
ARTICLE III
FORM; EXCHANGE FOR WARRANTS; TRANSFER; TAXES
SECTION 3.1. FORM OF WARRANT. (a) Each Warrant issued hereunder
shall be in the form of Exhibit A (each, a "Warrant") and shall be executed on
behalf of the Corporation by an Executive Officer and attested to by a Financial
Officer. The signature of any officer on any Warrant may be manual or facsimile.
Upon initial issuance, each Warrant shall be dated as of the date of
counter-signature thereof by the Corporation.
(b) Each Warrant and each certificate representing Warrant
Shares shall include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND STATE
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SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF SUCH ACT. IN ADDITION, THE SECURITIES
REPRESENTED HEREBY ARE SUBJECT TO THE LIMITATIONS ON TRANSFER SET FORTH IN
THE WARRANT ISSUANCE AGREEMENT DATED AS OF OCTOBER 14, 1999, BETWEEN THE
CORPORATION AND ING (U.S.) CAPITAL LLC. A COPY OF THE WARRANT ISSUANCE
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
CORPORATION AND WILL BE FURNISHED WITHOUT CHARGE TO THE RECORD HOLDER
HEREOF UPON WRITTEN REQUEST TO THE CORPORATION.
(c) Each Warrant issued, exchanged or transferred hereunder
shall be registered in a warrant register (the "Warrant Register"). The Warrant
Register shall set forth the number of each Warrant, the name and address of the
holder (a "Holder") thereof, and the original number of Warrant Shares
purchasable upon the exercise thereof. The Warrant Register will be maintained
by the Corporation and will be available for inspection by any Holder at the
principal office of the Corporation or such other location as the Corporation
may designate to the Holders in the manner set forth in Section 7.1. The
Corporation shall be entitled to treat the Holder of any Warrant as the owner in
fact thereof for all purposes and shall not be bound to recognize any equitable
or other claim to or interest in such Warrant on the part of any other person.
The Corporation shall not be liable for complying with a request by a fiduciary
or nominee of a fiduciary to register a transfer of any Warrant which is
registered in the name of such fiduciary or nominee, unless made with the actual
knowledge that such fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with knowledge of such facts that
the Corporation's participation therein amounts to bad faith.
SECTION 3.2. EXCHANGE OF WARRANTS FOR WARRANTS. (a) The Holder may
exchange any Warrant issued hereunder for another Warrant or Warrants of like
kind and tenor representing in the aggregate the right to purchase the same
number of Warrant Shares which could be purchased pursuant to the Warrant being
so exchanged. In order to effect an exchange permitted by this Section 3.2, the
Holder shall deliver to the Corporation such Warrant accompanied by a written
request signed by the Holder thereof specifying the number and denominations of
Warrants to be issued in such exchange and the names in which such Warrants are
to be issued. Within ten (10) Business Days of receipt of such a request, the
Corporation shall issue, register and deliver to the Holder thereof each Warrant
to be issued in such exchange.
(b) Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the Holder being
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satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any Warrant, and in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Corporation (if the
Holder is a creditworthy financial institution or other creditworthy
institutional investor its own indemnification agreement being satisfactory) or,
in the case of any such mutilation, upon surrender of such Warrant, the
Corporation shall (at its expense) execute and deliver in lieu of such Warrant a
new Warrant of like kind representing the same rights represented by and dated
the date of such lost, stolen, destroyed or mutilated Warrant. Any such new
Warrant shall constitute an original contractual obligation of the Corporation,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be at any time enforceable by any Person.
(c) The Corporation shall pay all taxes (other than any
applicable income or similar taxes payable by a Holder of a Warrant)
attributable to an exchange of a Warrant pursuant to this Section 3.2; PROVIDED,
HOWEVER, that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance of any Warrant in a
name other than that of the Holder of the Warrant being exchanged.
SECTION 3.3. TRANSFER OF WARRANT. (a) Subject to Section 3.3(c)
hereof, each Warrant may be transferred by the Holder thereof by delivering to
the Corporation such Warrant accompanied by a properly completed Assignment
Form. Within ten (10) Business Days of receipt of such Assignment Form the
Corporation shall issue, register and deliver to the Holder, subject to Section
3(c) thereof, a new Warrant or Warrants of like kind and tenor representing in
the aggregate the right to purchase the same number of Warrant Shares which
could be purchased pursuant to the Warrant being transferred. In all cases of
transfer by an attorney, the original power of attorney, duly approved, or a
copy thereof, duly certified, shall be deposited and remain with the
Corporation. In case of transfer by executors, administrators, guardians or
other legal representatives, duly authenticated evidence of their authority
shall be produced and may be required to be deposited and remain with the
Corporation in its discretion.
(b) Each Warrant issued in accordance with this Section 3.3
shall bear the restrictive legend set forth in Section 3.1(b), unless the Holder
or transferee thereof supplies to the Corporation an opinion of counsel,
reasonably satisfactory to the Corporation, that the restrictions described in
such legend are no longer applicable to such Warrant.
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(c) The transfer of Warrants and Warrant Shares shall be
permitted, so long as such transfer is pursuant to a transaction that complies
with, or is exempt from, the provisions of the Securities Act, and the
Corporation may require an opinion of counsel (which may be internal counsel to
a Holder) in form and substance reasonably satisfactory to it to such effect
prior to effecting any transfer of Warrants or Warrant Shares.
ARTICLE IV
EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES
SECTION 4.1. EXERCISE OF WARRANTS. On any Business Day on or after
the relevant Release Date but prior to the Expiration Date, a Holder may
exercise a Warrant, in whole or in part, by delivering to the Corporation such
Warrant accompanied by a properly completed Exercise Form and a check in an
aggregate amount equal to the product obtained by multiplying (a) the Exercise
Price by (b) the number of Warrant Shares being purchased.
SECTION 4.2. EXCHANGE FOR WARRANT SHARES. On any Business Day prior
to the Expiration Date, a Holder may exchange a Warrant, in whole or in part,
for Warrant Shares by delivering to the Corporation such Warrant accompanied by
a properly completed Exchange Form along with any required payment of the
Exercise Price. The number of shares of Common Stock to be received by a Holder
upon such exchange shall be equal to the number of Warrant Shares allocable to
the portion of the Warrant being exchanged.
SECTION 4.3. ISSUANCE OF COMMON STOCK. (a) Within ten (10) Business
Days following the delivery date (the "Delivery Date") of (i) an Exercise Form
or Exchange Form in accordance with Section 4.1 or 4.2, (ii) a Warrant and (iii)
the required payment of the Exercise Price, the Corporation shall issue and
deliver to the Holder a certificate or certificates, registered in the name or
names set forth on such notice, representing the Warrant Shares being purchased
or to be received upon such exchange.
(b) If a Holder shall exercise or exchange a Warrant for less
than all of the Warrant Shares which could be purchased or received thereunder,
the Corporation shall issue to the Holder, within ten (10) Business Days of the
Delivery Date, a new Warrant evidencing the right to purchase the remaining
Warrant Shares. In the case of an exchange pursuant to Section 4.2, the number
of remaining Warrant Shares shall be the original number of Warrant Shares
subject to the Warrant so exchanged
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reduced by the Allocable Number of Warrant Shares. Each Warrant surrendered
pursuant to Section 4.1 or 4.2 shall be canceled.
(c) The Corporation shall not be required to issue fractional
shares of Common Stock upon the exercise or exchange of a Warrant. If any
fraction of a share of Common Stock would be issuable on the exercise or
exchange of any Warrant, the Corporation may, in lieu of issuing such fractional
share, pay to such Holder for any such fraction of a share an amount in cash
equal to the product obtained by multiplying (i) such fraction by (ii) the
Market Price in effect on the Delivery Date.
(d) The Corporation shall pay all taxes (other than any
applicable income or similar taxes payable by a Holder of a Warrant)
attributable to the initial issuance of Warrant Shares upon the exercise or
exchange of a Warrant; PROVIDED, HOWEVER, that the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance of any Warrant or any certificate for Warrant Shares in a name
other than that of the Holder of the Warrant being exercised or exchanged.
(e) The person in whose name any certificate for shares of
Common Stock is issued upon exercise or exchange of a Warrant shall for all
purposes be deemed to have become the holder of record of such shares on the
Delivery Date, irrespective of the date of delivery of such certificate, except
that, if the Delivery Date is a date when the stock transfer books of the
Corporation are closed, such person shall be deemed to have become the holder of
record of such shares at the close of business on the next succeeding date on
which the stock transfer books are open.
(f) If any shares of Common Stock required to be reserved for
purposes of the exercise or exchange of a Warrant require registration or
approval under any Applicable Law, the Corporation will in good faith and as
expeditiously as possible cause such shares to be registered or seek such
approval, as applicable. The Corporation may suspend the exercise of any Warrant
so affected for the period during which such registration or approval is
required but not in effect.
(g) Any Exercise Form or Exchange Form delivered under Section
4.1 or 4.2 may condition the exercise or exchange of any Warrant on the
consummation of a sale of Warrant Shares pursuant to a public offering
registered under the Securities Act, and such exercise or exchange shall not be
deemed to have occurred except concurrently with the consummation of any such
sale.
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SECTION 4.4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES. The number and kind of Warrant Shares purchasable upon exercise of each
Warrant shall be subject to adjustment from time to time in accordance with this
Section 4.4.
SECTION 4.4.1. ADJUSTMENT UPON ISSUANCE OF COMMON STOCK. (a) If, at
any time after any Release Date, the Corporation shall issue or sell (or, in
accordance with Section 4.4.1(b), shall be deemed to have issued or sold) any
shares of Common Stock without consideration or for a consideration per share
less than the Market Price determined as of the date of such issuance or sale,
then, effective immediately upon such issuance or sale, the Exercise Price of
any Warrant released from escrow prior to such sale or issuance shall be reduced
to an amount equal to the product obtained by multiplying (A) the Exercise Price
of such Warrants in effect immediately prior to such issuance or sale, by (B) a
fraction, the numerator of which shall be the sum of (x) the product obtained by
multiplying (1) the number of shares of Common Stock outstanding (on a
Fully-Diluted Basis) immediately prior to such issuance or sale by (2) the
Market Price as of the date of such issuance or sale, and (y) the consideration,
if any, received by the Corporation upon such issuance or sale, and the
denominator of which shall be the product obtained by multiplying (C) the number
of shares of Common Stock outstanding (on a Fully-Diluted Basis) immediately
after such issuance or sale, by (D) such Market Price. Upon each such adjustment
of the Exercise Price hereunder, the number of Warrant Shares which may be
obtained upon exercise of such Warrant shall be increased to the number of
shares determined by multiplying (A) the number of Warrant Shares which could be
obtained upon exercise of such Warrant immediately prior to such adjustment by
(B) a fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to such adjustment and the denominator of which shall be the
Exercise Price in effect immediately after such adjustment.
(b) For the purpose of determining the adjusted Exercise Price
under Section 4.4.1(a), the following shall be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Corporation in any manner
issues or grants any rights or options to subscribe for or to purchase (A)
Common Stock or (B) any stock or other securities convertible into or
exchangeable for Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or securities being
herein called "Convertible Securities"), and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities is less than the
Market Price determined as of the date of issuance or grant
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of such Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options (or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon
the exercise of such Options) shall be deemed to be outstanding and to
have been issued and sold by the Corporation for such price per share. For
purposes of this paragraph, the price per share for which Common Stock is
issuable upon exercise of Options or upon conversion or exchange of
Convertible Securities issuable upon exercise of Options shall be
determined by dividing (A) the total amount, if any, received or
receivable by the Corporation as consideration for the issuing or granting
of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of all such
Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon issuance or sale of such Convertible
Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon exercise of such
Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further
adjustment of the Exercise Price shall be made upon the actual issuance of
such Common Stock or of such Convertible Securities upon the Exercise of
such Options or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Corporation in any
manner issues or sells any Convertible Securities having an exercise or
conversion or exchange price per share of Common Stock which is less than
the Market Price determined as of the date of such issuance or sale, then
the maximum number of shares of Common Stock issuable upon the conversion
or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Corporation for such
lower price per share. For purposes of this paragraph, the price per share
for which Common Stock is issuable upon conversion or exchange of
Convertible Securities is determined by dividing (A) the total amount
received or receivable by the Corporation as consideration for the
issuance or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No further adjustment of the
Exercise Price shall be made upon the actual issuance of such Common Stock
upon conversion or exchange of such Convertible Securities,
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and if any such issuance or sale of such Convertible Securities is made
upon exercise of any Options for which adjustments of the Exercise Price
had been or are required to be made pursuant to other provisions of this
Section 4.4.1(b), no further adjustment of the Exercise Price shall be
made by reason of such issuance or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase
price provided for in any Options, the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock change at any time, then
the Exercise Price in effect at the time of such change shall be
readjusted without duplication to the Exercise Price which would have been
in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of Warrant Shares shall
be correspondingly readjusted.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities without the
exercise of such Option or right, the Exercise Price then in effect and
the number of Warrant Shares acquirable hereunder shall be adjusted to the
Exercise Price and the number of shares which would have been in effect at
the time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration
or termination, never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, then the consideration received therefor
shall be deemed to be the net amount received by the Corporation therefor
(before deduction of underwriting expenses). If any Common Stock, Options
or Convertible Securities are issued or sold for consideration other than
cash, then the amount of the consideration other than cash received by the
Corporation shall be the fair value of such consideration determined by
the Board of Directors of the Corporation.
(vi) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or
for the account of the Corporation or any Subsidiary of the Corporation,
and the disposition of
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any shares so owned or held shall be considered an issue or
sale of Common Stock.
(vii) RECORD DATE. If the Corporation takes a record of the holders
of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed
to be the date of the issuance or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
SECTION 4.4.2. SUBDIVISIONS OR COMBINATIONS OF COMMON STOCK. If, at
any time after any Release Date, (a) the number of shares of Common Stock
outstanding is increased by a dividend or other distribution payable in shares
of Common Stock or by a subdivision or split-up of shares of Common Stock or (b)
the number of shares of Common Stock outstanding is decreased by a combination
or reverse stock split of shares of Common Stock, then, in each case, effective
as of the effective date of such event retroactive to the record date, if any,
of such event, (i) the Exercise Price of any Warrant released from escrow prior
to such event shall be adjusted to a price determined by multiplying (A) the
Exercise Price in effect immediately prior to such event by (B) a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding after giving effect to such event, and
(ii) the number of Warrant Shares subject to purchase upon the exercise of any
Warrant shall be adjusted effective at such time, to a number equal to the
product of (A) the number of Warrant Shares subject to purchase upon the
exercise of such Warrant immediately prior to such event by (B) a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
after giving effect to such event and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such event.
SECTION 4.4.3. CAPITAL REORGANIZATION OR CAPITAL RECLASSIFICATIONS.
If, at any time after the Closing Date, there shall be any capital
reorganization or any reclassification of the capital stock of the Corporation
(other than a change in par value or from par value to no par value or from no
par value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), then in each case the Corporation shall
cause effective provision to be made so that each Warrant shall, effective as of
the effective date of such event retroactive to the record date, if any, of such
event, be
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exercisable or exchangeable for the kind and number of shares of stock, other
securities, cash or other property to which a holder of the number of shares of
Common Stock deliverable upon exercise or exchange of such Warrant would have
been entitled upon such reorganization or reclassification and any such
provision shall include adjustments in respect of such stock, securities or
other property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Agreement with respect to such Warrant.
SECTION 4.4.4. CONSOLIDATIONS AND MERGERS. If, at any time after the
Closing Date, the Corporation shall consolidate with, merge with or into, or
sell all or substantially all of its assets or property to, another corporation,
then the Corporation shall cause effective provision to be made so that each
Warrant shall, effective as of the effective date of such event retroactive to
the record date, if any, of such event, be exercisable or exchangeable for the
kind and number of shares of stock, other securities, cash or other property to
which a holder of the number of shares of Common Stock deliverable upon exercise
or exchange of such Warrant would have been entitled upon such event.
SECTION 4.4.5. NOTICE; CALCULATIONS; ETC. Whenever the Exercise
Price and the number of Warrant Shares shall be adjusted as provided in this
Section 4.4, the Corporation shall provide to each Holder a statement, signed by
an Executive Officer, describing in detail the facts requiring such adjustment
and setting forth a calculation of the Exercise Price and the number of Warrant
Shares applicable to each Warrant after giving effect to such adjustment. All
calculations under this Section 4.4 shall be made to the nearest one hundredth
of a cent ($.0001) or to the nearest one-tenth of a share, as the case may be.
Adjustments pursuant to Sections 4.4.1, 4.4.2 and 4.4.3 shall apply to
successive events or transactions of the type covered thereby.
SECTION 4.4.6. CERTAIN ADJUSTMENTS. (a) Subject to the limitations
set forth in Section 6.4, the Corporation may make such reductions in the
Exercise Price or increase in the number of Warrant Shares to be received by any
Holder upon the exercise or exchange of a Warrant, in addition to those
adjustments required by this Section 4.4, as it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Common Stock or any issuance wholly for cash of shares of Common Stock or
securities which by their terms are convertible into or exchangeable for shares
of Common Stock, or any stock dividend, or any issuance of rights, options or
warrants hereinafter made by the Corporation to the holders of its Common Stock
shall not be taxable to such holders.
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(b) In the event that the Corporation in any manner issues or
grants Options or Convertible Securities, or any other transaction,
circumstances or events occur which give rise to anti-dilution adjustments under
Other Anti-Dilution Instruments, but not the Warrants, then the Corporation will
promptly make proportional, equitable and corresponding adjustments in the
number of shares of Common Stock issuable upon exercise of the Warrants to
protect the Holders against dilution as a result of such events.
SECTION 4.4.7. EXCLUDED TRANSACTIONS. Notwithstanding
any other provision of this Section 4.4, no adjustment shall be
made pursuant to this Section 4.4 in respect of the issuance of
Excluded Securities.
SECTION 4.4.8. ADJUSTMENT RULES. Any adjustments pursuant to this
Section 4.4 shall be made successively whenever an event referred to herein
shall occur, except that, notwithstanding any other provision of this Section
4.4, no adjustment shall be made to the number of shares of Common Stock or to
the Exercise Price if such adjustment represents less than 1% of the number of
shares previously required to be so delivered, but any lesser adjustment shall
be carried forward and shall be made at the time and together with the next
subsequent adjustment which together with any adjustments so carried forward
shall amount to 1% or more of the number of shares to be so delivered.
SECTION 4.5. REGULATED HOLDERS. If, in the written opinion of
counsel to any Regulated Holder (which may be internal counsel), the receipt by
such Regulated Holder of Warrant Shares (or any security included therein) upon
any exercise or exchange pursuant to this Article IV would cause such Regulated
Holder to violate any provision of Applicable Law with respect to its Ownership
of voting securities of the Corporation, then the Corporation will use its best
efforts (including without limitation using its best efforts to cause its
Organizational Documents to be amended) to create an Equivalent Nonvoting
Security with respect to Warrant Shares (or any such security included therein),
and such Regulated Holder shall be entitled to receive upon such exercise or
exchange, in lieu of such number (as it shall specify) of shares or other units
of Warrant Shares (or any such security included therein) otherwise receivable
by such Regulated Holder, the same number of shares or other units of such
Equivalent Nonvoting Security.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1. REPRESENTATIONS AND WARRANTIES OF ING. ING represents
that it is acquiring the Warrant to be issued to it on the Closing Date for its
own account, for investment purposes only and not with a view to any
distribution or public offering in violation of the Securities Act.
SECTION 5.2. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation hereby represents and warrants to ING as follows:
(a) ORGANIZATION. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, has all requisite power and
authority and has all material governmental licenses, approvals, consents
and authorizations necessary to own its property and assets and to carry
on its business as currently conducted and is qualified to do business in
each jurisdiction in which the nature of the business conducted or the
property owned or leased by it requires such qualification except where
the failure to be so qualified or licensed would not have a material
adverse effect on the business, condition, operations or properties of the
Corporation.
(b) CORPORATE POWER AND AUTHORITY; NO REQUIRED CONSENTS OR
APPROVALS. (i) The Corporation has the power to execute, deliver and
perform its obligations under this Agreement, the Warrants and the
Registration Rights
Agreement.
(ii) The execution, delivery and performance by the
Corporation of this Agreement, the Registration Rights Agreement, the
issuance of Warrants and the issuance of Warrant Shares upon exercise of
each Warrant, have been duly authorized by all required corporate and
stockholder action of the Corporation and will not (i) violate any
provision of Applicable Law, any Organizational Document, or any indenture
or other material agreement or instrument to which the Corporation is a
party or by which the Corporation or any of its properties are or may be
bound, (ii) conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any such indenture
or other material agreement or instrument to which the Corporation is a
party, or by which the Corporation or any of its properties are or may be
bound, (iii) result in the creation or imposition of any Lien upon any
property of the Corporation or (iv) require registration or filing with,
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or consent, approval or any other action by any Governmental
Authority.
(c) ENFORCEABILITY. This Agreement and the Registration Rights
Agreement have been duly executed and delivered by the Corporation and
constitutes a legal, valid, binding and enforceable obligation of the
Corporation except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar event
affecting the enforcement of creditors' rights generally and except as
enforceability may be subject to general principles of equity, whether
such principles are applied in a court of equity. When the Warrants and
Warrant Certificates have been issued as contemplated hereby, (i) each
Warrant will constitute the legal, valid, binding and enforceable
obligation of the Corporation and (ii) the Warrant Shares, when issued
upon the exercise or exchange of a Warrant in accordance with the terms
hereof and of such Warrant, will be duly authorized, validly issued, fully
paid and nonassessable shares of the Common Stock with no personal
liability attaching to the ownership thereof.
(d) CAPITALIZATION. (i) Attached hereto as Schedule I is a
correct and complete description of the authorized and outstanding capital
stock of the Corporation. All such outstanding shares are duly authorized,
validly issued, fully paid and nonassessable. The Warrant Shares represent
5.2273% of the outstanding shares of Common Stock and 5.0% of the
outstanding shares of Common Stock on a Fully-Diluted Basis.
(ii) Except as set forth on Schedule I hereto, except with
respect to the Warrants no Person holds any option, warrant, subscription
right, commitment or claim with respect to any capital stock of the
Corporation and no securities convertible into or exercisable or
exchangeable for any capital stock of the Corporation have been authorized
or issued.
(e) CREDIT AGREEMENT. Each of the representations and
warranties of the Corporation set forth in or under the Credit Agreement
is true and correct in all material respects, and are hereby incorporated
herein, with the same effect as if stated in their entirety herein.
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ARTICLE VI
COVENANTS OF THE CORPORATION
SECTION 6.1. NOTICES OF CERTAIN ACTIONS. (a) In the
event that the Corporation:
(i) shall authorize issuance to all holders of Common Stock of
rights or warrants to subscribe for or purchase capital stock of the
Corporation or of any other subscription rights or warrants; or
(ii) shall authorize a dividend or other distribution to all
holders of Common Stock of evidences of its indebtedness, cash or other
property or assets; or
(iii) commences a voluntary or involuntary dissolution,
liquidation or winding up;
(iv) defaults under this Agreement; or
(v) proposes to take any other action which would require an
adjustment pursuant to Section 4.4;
then the Corporation shall provide a written notice to each Holder stating (i)
the date as of which the holders of record of Common Stock to be entitled to
receive any such rights, warrants or distribution are to be determined, (ii) the
material terms of any such consolidation or merger and the expected effective
date thereof, or (iii) the material terms of any such conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of record of Common Stock will be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, conveyance, transfer, dissolution,
liquidation or winding up. Such notice shall be given not later than twenty (20)
Business Days prior to the effective date (or the applicable record date, if
earlier) of such event. The failure to give the notice required by this Section
6.1 or any defect therein shall not affect the legality or validity of any
distribution, right, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any action.
SECTION 6.2. FINANCIAL STATEMENTS AND REPORTS. The
Corporation shall furnish to each Holder:
(a) as soon as available but in any event within ninety (90)
days after the end of each Fiscal Year (commencing with the Fiscal Year ending
December 31, 1999, consolidated
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balance sheets, income statements and cash flow statements of the Corporation
and its Subsidiaries, showing its financial condition as of the close of such
Fiscal Year and the results of its operations during such year, all the
foregoing financial statements to be audited by independent accountants of
nationally recognized standing and prepared in accordance with GAAP;
(b) as soon as available but in any event within thirty (30)
days after the end of each fiscal quarter, the unaudited consolidated balance
sheets, income statements and cash flow statements, showing the financial
condition and results of operations of the Corporation, as at the end of each
such fiscal quarter and for the then elapsed portion of the Fiscal Year, in each
case prepared in accordance with GAAP;
(c) as soon as practicable and in any event not less than 15
days after the end of each fiscal year of the Corporation, an annual operating
budget for the Corporation for the succeeding fiscal year, containing budget of
profit and loss and cash flow (the "Budget"). Promptly upon preparation thereof,
the Corporation will furnish to the Holder any revisions of such previously
furnished Budgets;
(d) promptly upon their becoming available, copies of any
statements, reports and other communications, if any, which the Corporation
shall have provided to its stockholders or filed with the Commission or any
national securities exchange; and
(e) as soon as practicable and in any event not less than 15
days after the end of (i) each fiscal year of the Corporation and (ii) the
second fiscal quarter of each fiscal year of the Corporation, a completed
certificate substantially in the form of EXHIBIT C hereto, certifying as to the
percentage of Common Stock (on a Fully Diluted Basis) of the Corporation which
the Warrant Shares of the Holder represent.
SECTION 6.3. INFORMATION RIGHTS. Each Holder shall have all of the
rights of a holder of Common Stock under Applicable Law, whether or not such
holder has exercised or exchanged any Warrants, to receive lists of stockholders
or other information respecting the Corporation, to inspect the books and
records of the Corporation and to visit the properties of the Corporation.
SECTION 6.4. REGULATED HOLDERS. (a) Notwithstanding any other
provision of this Agreement to the contrary, except as provided in this Section
6.4, without the prior written consent of any Regulated Holder, the Corporation
shall not redeem, purchase or otherwise acquire, directly or indirectly,
convert, take any action (including any amendment to an Organizational
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Document) with respect to the voting rights of, or undertake any other action or
transaction (including without limitation any merger, consolidation or
recapitalization) affecting, any shares of its capital stock or other voting
securities if the result of the foregoing would be to cause the Ownership of the
capital stock of any Person by such Regulated Holder, or the Ownership of voting
securities of any Person (or any class thereof) by such Regulated Holder, to
exceed the quantity of such capital stock or voting securities (or any class
thereof) that such Regulated Holder is permitted under Applicable Law to Own.
Any action or transaction referred to in the preceding sentence shall be
referred to herein as a "Section 6.4 Transaction". The Corporation shall be
permitted to undertake any Section 6.4 Transaction which would otherwise result
in the Ownership by any Regulated Holder of voting securities (or any class
thereof) in excess of the quantity permitted by Applicable Law if, in a manner
reasonably satisfactory to such Regulated Holder, the Corporation shall provide
or cause to be provided for such Regulated Holder (i) to receive in connection
with any such action or transaction a number of shares or other units of
Equivalent Nonvoting Securities equal to such excess in lieu of the same number
of shares or other units of the voting securities it would otherwise have
received or (ii) if it would not otherwise have received voting securities in
connection with such action or transaction, to exchange a number of shares or
other units of voting securities then held by such Regulated Holder equal to
such excess for the same number of shares or other units of Equivalent Nonvoting
Securities. If the Corporation proposes to undertake any action or transaction
which could constitute a Section 6.4 Transaction, it shall provide the Holders
at least 15 days prior written notice thereof. If, in the written opinion of
counsel to any Regulated Holder (which may be internal counsel) delivered within
10 days following receipt of such notice, such action or transaction constitutes
a Section 6.4 Transaction with respect to such Regulated Holder, then the
Corporation shall delay undertaking such Section 6.4 Transaction for the purpose
of using its best efforts to agree on a manner in which to restructure such
action or transaction in a manner reasonably satisfactory to the Corporation and
such Regulated Holder so that it no longer would constitute a Section 6.4
Transaction. If the Corporation and such Regulated Holder are unable to agree,
within 20 days of the delivery of such written opinion, upon a manner in which
to so restructure such Section 6.4 Transaction, and such Section 6.4 Transaction
is a bona fide action or transaction proposed by the Corporation in good faith,
then the Corporation shall be permitted to undertake such Section 6.4
Transaction if prior to or concurrently with doing so it purchases from such
Regulated Holder, at a purchase price equal to the Market Value Per Share, a
number (specified by such Regulated Holder) of Warrants (based on the number of
Warrant Shares represented thereby) or Warrant Shares sufficient, in the written
opinion of
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counsel to such Regulated Holder (which may be internal counsel), to prevent
such Section 6.4 Transaction from causing the Ownership of the capital stock of
any Person by such Regulated Holder to exceed the quantity of such capital stock
that such Regulated Holder is permitted under Applicable Law to Own.
(b) If it becomes unlawful for any Regulated Holder to continue to hold
some or all of the Warrants or Warrant Shares held by it, or restrictions are
imposed on any Regulated Holder by Applicable Law which, in the reasonable
judgment of such Regulated Holder, make it unduly burdensome to continue to hold
such Warrants or Warrant Shares, the Corporation shall (i) cooperate with such
Regulated Holder in any efforts by such Regulated Holder to dispose of some or
all of such Warrants or Warrant Shares in a prompt and orderly manner, including
without limitation providing (and authorizing such Regulated Holder to provide)
financial and other information (subject to appropriate confidentiality
restrictions)concerning the Corporation to any prospective purchaser of such
Warrants or Warrant Shares and (ii) at the request of such Regulated Holder,
take all steps (including without limitation using its best efforts to cause its
Organizational Documents to be amended) necessary to create an Equivalent
Nonvoting Security with respect to the Warrant Shares then held by such
Regulated Holder and permit such Regulated Holder to exchange Warrant Shares for
the same number of shares or other units of such Equivalent Nonvoting Security;
PROVIDED, HOWEVER, that nothing in this Section 6.4(b) shall require the
Corporation to register or qualify such Warrants or Warrant Shares under any
federal or state securities laws.
SECTION 6.5. MERGER OR CONSOLIDATION OF THE CORPORATION. The
Corporation will not merge or consolidate with or into, or sell, transfer or
lease all or substantially all of its property to, any other corporation or
partnership unless the successor or purchasing entity, as the case may be (if
not the Corporation), is organized under the laws of the United States of
America or any OECD member country or any state or political subdivision thereof
if such successor or purchasing entity will issue securities or other
consideration directly to all the stockholders of the Corporation and shall
expressly agree to provide to each Holder the securities, cash or property
required by Section 4.4.4 hereof upon the exercise or exchange of Warrants and
expressly assumes, by supplemental agreement reasonably satisfactory in form and
substance to each Holder, the due and punctual performance and observance of
each and every covenant and condition of this Agreement to be performed and
observed by the Corporation; PROVIDED, HOWEVER, that the initial obligation of
such successor with respect to the exercise or exchange of Warrants shall be
only as set forth in Section 4.4.4.
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<PAGE>
SECTION 6.6. RESERVATION OF SHARES. The Corporation will at all
times have authorized, and reserve and keep available, free from preemptive
rights, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares upon the exercise or exchange of each Warrant, the number of
shares of Common Stock deliverable upon exercise or exchange of all outstanding
Warrants.
SECTION 6.7. CURRENT PUBLIC INFORMATION. At all times after the
Corporation has filed a registration statement with the Securities and Exchange
Commission pursuant to the requirements of either the Securities Act or the
Securities Exchange Act, the Corporation will file all reports required to be
filed by it under the Securities Act and the Securities Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission
thereunder, and will take such further action as any holder or holders of
restricted securities may reasonably request, all to the extent required to
enable such holders to sell restricted securities pursuant to (i) Rule 144 or
Rule 144A adopted by the Securities and Exchange Commission under the Securities
Act (as such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the Securities and Exchange Commission. Upon
request, the Corporation will deliver to such holders a written statement as to
whether it has complied with such requirements.
SECTION 6.8. PUBLIC DISCLOSURES. The Corporation will not disclose
any Holder's name or identity as an investor in the Corporation in any press
release or other public announcement or in any written consent of such Holder,
unless such disclosure is required by applicable law or governmental regulations
or by order of a court of competent jurisdictions in which case prior to making
such disclosure the Corporation will give written notice to such Holder
describing in reasonable detail the proposed content of such disclosure and will
permit the Holder to review and comment upon the form and substance of such
disclosure.
SECTION 6.9. FIDUCIARY DUTIES OF THE CORPORATION. The Corporation
shall owe the holders of the Warrants the same fiduciary duties that the
Corporation and its directors would owe to the holders of the Warrant Shares
underlying the Warrants.
SECTION 6.10. TRANSACTIONS WITH AFFILIATES. The Corporation shall
not, and shall not permit any of its Subsidiaries to, enter into any transaction
with any Affiliate, except on terms no less favorable to the Corporation or such
Subsidiary than would be obtained in a comparable arm's length transaction with
a third party, provided, however, that the restrictions in this Section 6.10
will not be applicable to any
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<PAGE>
financing should the Holder have the right to participate in such
financing.
SECTION 6.11. OPINION OF COUNSEL. At the Closing, the
Corporation will deliver to the Holder an opinion, dated as of
the Closing Date, substantially in the form of Exhibit B.
SECTION 6.12. CORPORATE ASSURANCES. The Corporation will not, by
amendment of its charter or through any consolidation, merger, reorganization,
transfer of assets, dissolution, issue or sale of securities, or any other
voluntary action, seek to avoid the observance or performance of any of the
terms of this Agreement, but will at all times in good faith seek to carry out
all such terms and take all such action as may be necessary or appropriate in
order to protect the rights of the holders of the Warrants and the Warrant
Shares against impairment. Without limiting the generality of the foregoing, the
Corporation (a) will not permit the par value of the Warrant Shares to exceed
the Exercise Price and (b) will take all such action and execute all such
further instruments and documents as may be necessary or appropriate (i) in
order that the Corporation may validly and legally issue, free from preemptive
rights, fully paid and non-assessable Warrant Shares upon the exercise of all
Warrants from time to time outstanding and (ii) to effectuate the terms and
purposes of this Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NOTICES. All notices, demands and requests of any kind
to be delivered to any party hereto in connection with this Agreement shall be
in writing (i) delivered personally, (ii) sent by nationally-recognized
overnight courier, (iii) sent by first class, registered or certified mail,
return receipt requested or (iv) sent by facsimile, in each case to such party
at its address as follows:
(a) if to the Corporation, to:
Cornell Corrections, Inc.
1700 West Loop South
Suite 1500
Houston, Texas 77027
Attention: Mr. Steven Logan
Telecopier: 713/623-2853
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<PAGE>
(b) if to ING, to:
ING (U.S.) Capital LLC
135 East 57th Street
New York, New York 10022-2101
Attention: Merchant Banking Group New York
Mr. David Scopelliti
Mr. David Balestrery
Telecopier: 212/593-3362
Any notice, demand or request so delivered shall constitute valid notice under
this Agreement and shall be deemed to have been received (i) on the day of
actual delivery in the case of personal delivery, (ii) on the next Business Day
after the date when sent in the case of delivery by nationally-recognized
overnight courier, (iii) on the fifth Business Day after the date of deposit in
the U.S. mail in the case of mailing or (iv) upon receipt in the case of a
facsimile transmission. Any party hereto may from time to time by notice in
writing served upon the other as aforesaid designate a different mailing address
or a different Person to which all such notices, demands or requests thereafter
are to be addressed.
SECTION 7.2. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY. No Warrant
shall entitle the holder thereof to any voting rights or, except as otherwise
provided herein, other rights of a stockholder of the Corporation, as such. No
provision hereof, in the absence of affirmative action by the Holder to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the
Holder shall give rise to any liability of such Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the
Corporation.
SECTION 7.3. AMENDMENTS AND WAIVERS. Any provision of
this Agreement may be amended or waived, but only pursuant to a
written agreement signed by the Corporation and the Requisite
Holders.
SECTION 7.4. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 7.5. SPECIFIC PERFORMANCE. Each Holder shall
have the right to specific performance by the Corporation of the
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<PAGE>
provisions of this Agreement, in addition to any other remedies it may have at
law or in equity. The Corporation hereby irrevocably waives, to the extent that
it may do so under applicable law, any defense based on the adequacy of a remedy
at law which may be asserted as a bar to the remedy of specific performance in
any action brought against the Corporation for specific performance of this
Agreement by the Holders of the Warrants or Warrant Shares.
SECTION 7.6. BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of the Corporation, each
Holder and their respective successors and assigns.
SECTION 7.7. COUNTERPARTS. This Agreement may be executed (manually
or by facsimile) by the parties hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement. This Agreement shall become effective when
counterparts hereof executed on behalf of the Corporation and each Holder shall
have been received.
SECTION 7.8. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT AND THE
WARRANTS, SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement and the Warrants,
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof and supersede any prior agreements, written or oral, with
respect thereto.
SECTION 7.9. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Corporation and each
Holder of a Warrant or a Warrant Share any legal or equitable right, remedy or
claim hereunder.
SECTION 7.10. HEADINGS. The various headings of this
Agreement are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or any provisions
hereof or thereof.
SECTION 7.11. EXPENSES. The Corporation will promptly (and in any
event within thirty (30) days of receiving any statement or invoice therefor)
pay all reasonable fees, expenses and costs relating hereto, including, but not
limited to, (i) the fees and disbursements of counsel to the Holder in preparing
this Agreement, (ii) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect hereof or any other document referred to herein, (iii) fees and expenses
(including, without limitation, reasonable attorneys' fees) incurred in respect
of the enforcement by Holders, if successful, of the rights granted
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<PAGE>
to Holders under this Agreement, and (iv) the expenses relating to the
consideration, negotiation, preparation or execution of any amendments, waivers
or consents requested by the Corporation pursuant to the provisions hereof,
whether or not any such amendments, waivers or consents are executed.
SECTION 7.12. ATTORNEYS' FEES. In any action or proceeding brought
by a party to enforce any provision of this Agreement, the prevailing party
shall be entitled to recover the reasonable costs and expenses incurred by it in
connection with that action or proceeding (including, but not limited to,
attorneys' fees).
SECTION 7.13. OTHER TRANSACTIONS. Nothing contained herein shall
preclude the Holder from engaging in any transaction, in addition to those
contemplated by this Agreement with the Corporation or any of its Affiliates in
which the Corporation or such Affiliate is not restricted hereby from engaging
with any other Person.
SECTION 7.14. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE HOLDERS OR THE CORPORATION SHALL BE BROUGHT
AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; THE
CORPORATION HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE CORPORATION FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE CORPORATION HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT THE CORPORATION HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION
OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE
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<PAGE>
CORPORATION HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 7.15. REGISTRATION RIGHTS. The Holder shall
be entitled to the registration rights as set forth in the
Registration Rights Agreement with respect to the Warrant Shares.
SECTION 7.16. WAIVER OF JURY TRIAL. THE HOLDER AND THE CORPORATION
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE HOLDER OR THE
CORPORATION. THE CORPORATION ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE HOLDERS ENTERING INTO THIS AGREEMENT AND THE CREDIT
AGREEMENT.
SECTION 7.17. INDEMNIFICATION. The Corporation shall indemnify,
defend and hold the Holder harmless against all liability, loss or damage,
together with all reasonable costs and expenses related thereto (including legal
and accounting fees and expenses), arising from, relating to, or connected with
the untruth, inaccuracy or breach of any of the material representations,
warranties or covenants contained herein.
SECTION 7.18. FILINGS. The Corporation shall, at its own expense,
promptly execute and deliver, or cause to be executed and delivered, to the
Holder all applications, certificates, instruments and all other documents and
papers that the Holder may reasonably request in connection with the obtaining
of any consent, approval, qualification, or authorization of any Federal,
provincial, state or local government (or any agency or commission thereof)
necessary or appropriate in connection with, or for the effective exercise of,
any Warrants then held by the Holder.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their authorized officers, all as of the date
and year first above written.
CORNELL CORRECTIONS, INC.
By: /s/ JOHN HENDRIX
Name: John Hendrix
Title: CFO
ING (U.S.)CAPITAL LLC
By: /s/ DAVID BALESTRERY
Name: David Balestrery
Title:
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<PAGE>
EXHIBITS
Exhibit A: Form of Warrant Certificate
Exhibit B: Opinion(s) of Counsel
SCHEDULES
Schedule I: Existing Capitalization/
Existing Convertible Equity Rights/
Outstanding Securities and Existing
Registration Rights
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<PAGE>
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF SUCH ACT. IN ADDITION, THE SECURITIES REPRESENTED
HEREBY ARE SUBJECT TO THE LIMITATIONS ON TRANSFER SET FORTH IN THE WARRANT
ISSUANCE AGREEMENT DATED AS OF OCTOBER 14, 1999, BETWEEN THE CORPORATION AND ING
(U.S.) CAPITAL LLC. A COPY OF THE WARRANT ISSUANCE AGREEMENT IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF THE CORPORATION AND WILL BE FURNISHED
WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE CORPORATION.
CORNELL CORRECTIONS, INC.
No. __ Warrant to Purchase
[ ] Shares
of Common Stock
October 14, 1999
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, ING (U.S.) CAPITAL LLC, a
Delaware corporation ("ING"), is entitled to purchase from CORNELL CORRECTIONS,
INC., a Delaware corporation (the "Corporation"), [
] shares of Common Stock, $.001 par value (the "Common Stock"), of
the Corporation at the per share Exercise Price (as defined in the Warrant
Issuance Agreement dated as of October 14, 1999 between the Corporation and the
Holder (the "Warrant Issuance Agreement")), at any time or from time to time
during the period commencing on the date hereof and ending at 5:00 P.M. on
Expiration Date (as defined in the Warrant Issuance Agreement); PROVIDED,
HOWEVER, that this Warrant may not be exercised for Common Stock by any
Regulated Holder to the extent that such exercise will result in a violation of
any Applicable Law.
<PAGE>
This Warrant has been issued pursuant to the Warrant Issuance
Agreement and is subject to the terms and conditions, and entitled to the
benefits, thereof, including provisions (i) for adjusting the number of Warrant
Shares issuable upon the exercise hereof and the Exercise Price to be paid upon
such exercise and (ii) providing certain information and other rights. In
addition, this Warrant is subject to certain terms and conditions, and is
entitled to certain benefits, as set forth in the Registration Rights Agreement,
dated as of October 14, 1999, (the "Registration Rights Agreement"), among the
Corporation and the Investors named therein. A copy of each of the Warrant
Issuance Agreement, the Registration Rights Agreement is available for
inspection at the principal office of the Corporation and will be furnished
without charge to the Holder upon written request to the Corporation.
Capitalized terms used but not defined herein shall have the meaning given to
them in the Warrant Issuance Agreement.
SECTION 1. EXERCISE OF WARRANT. On any Business Day, prior to the
Expiration Date, the Holder may exercise this Warrant, in whole or in part, by
delivering to the Corporation this Warrant accompanied by a properly completed
Exercise Form in the form of Annex A and a check in an aggregate amount equal to
the product obtained by multiplying (a) the Exercise Price by (b) the number of
Warrant Shares being purchased.
SECTION 2. EXERCISE PRICE. The Exercise Price is subject
to adjustment from time to time as provided in the Warrant
Issuance Agreement.
SECTION 3. EXCHANGE OF WARRANT. On any Business Day prior to the
Expiration Date, the Holder may exchange this Warrant, in whole or in part, for
Warrant Shares by delivering to the Corporation this Warrant accompanied by a
properly completed Exchange Form in the form of Annex B. The number of shares of
Common Stock to be received by the Holder upon such exchange shall be determined
as provided in Section 4.2 of the Warrant Issuance Agreement.
SECTION 4. TRANSFER. Subject to the limitations set forth in the Warrant
Issuance Agreement, this Warrant may be transferred by the Holder by delivery to
the Corporation of this Warrant accompanied by a properly completed Assignment
Form in the form of Annex C.
SECTION 5. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant
is lost, stolen, mutilated or destroyed, the Corporation will issue a new
Warrant of like denomination and tenor upon compliance with the provisions set
forth in the Warrant Issuance Agreement.
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<PAGE>
SECTION 6. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the
holder hereof to any voting rights or, except as otherwise provided in the
Warrant Issuance Agreement or the Registration Rights Agreement, other rights of
a stockholder of the Corporation, as such.
SECTION 7. SUCCESSORS. All of the provisions of this Warrant by or for the
benefit of the Corporation or the Holder shall bind and inure to the benefit of
their respective successors and assigns.
SECTION 8. HEADINGS. Section headings in this Warrant have been Inserted
for convenience of reference only and shall not affect the construction of, or
be taken into consideration in interpreting, this Warrant.
SECTION 9. GOVERNING LAW. This Warrant shall be construed in accordance
with and governed by the laws of the State of New York (without giving effect to
principles or conflicts or laws).
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed
by its duly authorized officers under its corporate seal, and this Warrant to be
dated as of the date first set forth above.
CORNELL CORRECTIONS, INC.
By:______________________________________________________
Name:
Title:
[CORPORATE SEAL]
ATTEST:
By___________________
___________________
Name :
Title:
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<PAGE>
ANNEX A
ELECTION TO EXERCISE FORM
(To Be Executed By The Holder of This Warrant
In Order to Exercise This Warrant)
The undersigned hereby irrevocably elects to exercise the right to
purchase ______________ shares of Common Stock of Cornell Corrections, Inc.
covered by this Warrant according to the conditions hereof and herewith makes
payment of the Exercise Price of such shares in full.
_________________________
Signature
_________________________
_________________________
Address
Dated: _________________________
<PAGE>
ANNEX B
EXCHANGE FORM
(To Be Executed By The Holder of This Warrant
In Order to Assign This Warrant Certificate)
The undersigned hereby irrevocably elects to exchange this Warrant to
purchase ___________ shares of Common Stock of Cornell Corrections, Inc. covered
by this Warrant for ___________ Warrants to purchase the denominations of shares
of Common Stock set forth below to the persons named and hereby sells, assigns
and transfers unto such persons that portion of this Warrant represented by such
new Warrants and all rights evidenced thereby and does irrevocably constitute
and appoint ____________________, attorney, to exchange and transfer this
Warrant as aforesaid on the books of the Corporation.
NUMBER OF WARRANT SHARES
ASSIGNEE
____________
_____________________________
____________
_____________________________
_____________________________
Signature
_____________________________
_____________________________
Address
FOR USE BY THE CORPORATION ONLY:
This Warrant No. __ canceled (or transferred or exchanged) this
________ day of _____________, _____________ shares of Common
Stock issued therefor in the name of _________________, Warrant
No. ___ for __________ shares of Common Stock in the name of
________________________.
Dated: ____________________________
<PAGE>
ANNEX C
ASSIGNMENT FORM
(To Be Executed By The Holder of This Warrant
In Order to Assign This Warrant Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________________ this Warrant and all rights evidenced thereby
and does irrevocably constitute and appoint __________________, attorney, to
transfer the said Warrant on the books of the Corporation.
_____________________________
Signature
_____________________________
_____________________________
Address
Dated: _________________________
<PAGE>
EXHIBIT B
OPINION(S) OF COUNSEL
The matters set forth below shall be addressed in the opinion(s) of the
Corporation's counsel delivered in connection with the execution and delivery of
the Warrant Issuance Agreement, as of October 14, 1999 between Cornell
Corrections, Inc., a Delaware corporation, and Internationale Nederlanden (U.S.)
Capital LLC, a Delaware corporation (the "Agreement"). Capitalized terms used
but not defined herein shall have the meanings specified in the Agreement.
1. The Corporation (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite corporate power and authority to own its property and assets
and to carry on its business as now conducted and as proposed to be conducted,
and (c) has the corporate power and authority to execute, deliver and perform
its obligations under each of the Agreement, the Warrant and the Registration
Rights Agreement, each dated the date hereof, and the agreements contemplated
thereby to which it is or will be a party (collectively, the "Material
Agreements").
2. The execution, delivery and performance by the Corporation, of each of
the Material Agreements to which it is a party, the issuance of the Warrants and
the other transactions contemplated by the Material Agreements, (a) have been
duly authorized by all requisite corporate and, if required, stockholder action,
and (b) do not (i) violate or conflict with (A) any provision of law, any
statute, rule or regulation, or of the Organizational Documents, (B) any order
of any court or governmental entity or (C) any provision of any indenture,
agreement or other instrument to the Corporation is a party or by which its
properties are bound, (ii) conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under any such
indenture, agreement or other instrument (iii) to the best of our knowledge,
result in the creation or imposition of any lien upon or with respect to any
property or assets now owned or hereafter acquired by the Corporation.
3. The amendments to the Corporation's Organizational Documents and other
agreements and instruments contemplated by the Material Agreements have been
duly authorized, filed and obtained.
4. The Material Agreements to which the Corporation is a party have each
been duly authorized, executed and delivered by
<PAGE>
the Corporation. Each such Material Agreement constitutes the legal, valid and
binding obligation of the Corporation, enforceable against the Corporation in
accordance with its terms.
5. As of the Closing Date, the authorized capital stock of Corporation
consists of __________ shares of common stock, $.001 par value (the "Common
Stock") of which _________ shares are issued and outstanding. All outstanding
shares of capital stock of the Corporation are fully paid and nonassessable.
6. The Common Stock when issued in accordance with the Warrant Agreement
will be duly and validly issued, fully paid and non-assessable Common Stock of
the Corporation.
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<PAGE>
EXHIBIT C
[FORM OF CERTIFICATE]
CERTIFICATE OF OFFICER
OF
CORNELL CORRECTIONS, INC.
Furnished pursuant to the Warrant Issuance Agreement, dated as of
October 14, 1999 (the "WARRANT AGREEMENT"), between CORNELL
CORRECTIONS, INC., a Delaware corporation (the "CORPORATION") and
ING (U.S.) CAPITAL LLC, a Delaware limited liability company
("ING").
I, the undersigned, the Chief Financial Officer of the Corporation, do
hereby certify that as of October 14, 1999 that the total number of warrants of
the Corporation (the "WARRANTS") held by ING is _________ and that such number
of Warrants represents ___% of the total outstanding Common Stock of the
Corporation as determined on a Fully Diluted Basis.
Terms for which meanings are provided in the Warrant Agreement are used
herein with such meanings.
IN WITNESS WHEREOF. the undersigned has hereunto set his
hand on behalf of the Corporation on _______________.
By ___________________________
Name:
Title:
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EXHIBIT 4.9
CORNELL CORRECTIONS, INC.
the Company
and
CHASE BANK OF TEXAS
as Trustee
____________________
INDENTURE
dated as of _______________
____________________
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions................................................1
SECTION 1.01. Certain Terms Defined......................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.........10
SECTION 1.03. Rules of Construction.....................................11
ARTICLE II Debt Securities...........................................11
SECTION 2.01. Forms Generally...........................................11
SECTION 2.02. Form of Trustee's Certificate of Authentication...........12
SECTION 2.03. Principal Amount; Issuable in Series......................12
SECTION 2.04. Execution of Debt Securities..............................15
SECTION 2.05. Authentication and Delivery of Debt Securities............15
SECTION 2.06. Denomination of Debt Securities...........................17
SECTION 2.07. Registration of Transfer and Exchange.....................17
SECTION 2.08. Temporary Debt Securities.................................18
SECTION 2.09. Mutilated, Destroyed, Lost or Stolen Debt Securities......19
SECTION 2.10. Cancellation of Surrendered Debt Securities...............20
SECTION 2.11. Provisions of the Indenture and Debt Securities for the
Sole Benefit of the Parties and the Holders...............20
SECTION 2.12. Payment of Interest; Rights Preserved.....................20
SECTION 2.13. Securities Denominated in Foreign Currencies..............20
SECTION 2.14. Wire Transfers............................................21
SECTION 2.15. Securities Issuable in the Form of a Global Security......21
SECTION 2.16. Subsequent Issuances of Debt Securities...................23
SECTION 2.17. Defaulted Interest........................................24
SECTION 2.18. Judgments.................................................24
SECTION 2.19. CUSIP Numbers.............................................25
ARTICLE III Redemption of Debt Securities.............................25
SECTION 3.01. Applicability of Article..................................25
SECTION 3.02. Notice of Redemption; Selection of Debt Securities........25
SECTION 3.03. Payment of Debt Securities Called for Redemption..........26
SECTION 3.04. Mandatory and Optional Sinking Funds......................27
SECTION 3.05. Redemption of Debt Securities for Sinking Fund............28
ARTICLE IV Particular Covenants of the Company.......................29
SECTION 4.01. Payment of Principal of, and Premium, If Any, and Interest
on, Debt Securities.......................................29
SECTION 4.02. Maintenance of Offices or Agencies for Registration of
Transfer, Exchange and Payment of Debt Securities.........30
SECTION 4.03. Appointment To Fill a Vacancy in the Office of Trustee....30
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SECTION 4.04. Duties of Paying Agents, etc..............................30
SECTION 4.05. Statement by Officers as to Default.......................31
SECTION 4.06. Further Instruments and Acts..............................31
SECTION 4.07. Existence.................................................31
SECTION 4.08. Maintenance of Properties.................................32
SECTION 4.09. Payment of Taxes and Other Claims.........................32
SECTION 4.10. Calculation of Original Issue Discount....................32
ARTICLE V Holders' Lists and Reports by the Company and the Trustee.32
SECTION 5.01. Company To Furnish Trustee Information as to Names and
Addresses of Holders; Preservation of Information.........32
SECTION 5.02. Communications to Holders.................................33
SECTION 5.03. Reports by Company........................................33
SECTION 5.04. Reports by Trustee........................................34
SECTION 5.05. Record Dates for Action by Holders........................34
ARTICLE VI Remedies of the Trustee and Holders in Event of Default...35
SECTION 6.01. Events of Default.........................................35
SECTION 6.02. Collection of Indebtedness by Trustee.....................37
SECTION 6.03. Application of Moneys Collected by Trustee................38
SECTION 6.04. Limitation on Suits by Holders............................39
SECTION 6.05. Remedies Cumulative; Delay or Omission in Exercise of
Rights Not a Waiver of Default............................39
SECTION 6.06. Rights of Holders of Majority in Principal Amount of Debt
Securities To Direct Trustee and To Waive Default.........40
SECTION 6.07. Trustee To Give Notice of Defaults Known to It, but May
Withhold Such Notice in Certain Circumstances.............40
SECTION 6.08. Requirement of an Undertaking To Pay Costs in Certain
Suits under the Indenture or Against the Trustee..........41
ARTICLE VII Concerning the Trustee....................................41
SECTION 7.01. Certain Duties and Responsibilities.......................41
SECTION 7.02. Certain Rights of Trustee.................................42
SECTION 7.03. Trustee Not Liable for Recitals in Indenture or in Debt
Securities................................................43
SECTION 7.04. Trustee, Paying Agent or Registrar May Own Debt Securities44
SECTION 7.05. Moneys Received by Trustee To Be Held in Trust............44
SECTION 7.06. Compensation and Reimbursement............................44
SECTION 7.07. Right of Trustee To Rely on an Officers' Certificate Where
No Other Evidence Specifically Prescribed.................45
SECTION 7.08. Separate Trustee; Replacement of Trustee..................45
SECTION 7.09. Successor Trustee by Merger...............................46
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SECTION 7.10. Eligibility; Disqualification.............................46
SECTION 7.11. Preferential Collection of Claims Against Company.........47
SECTION 7.12. Compliance with Tax Laws..................................47
SECTION 7.13. Trustee's Application for Instructions from the Company...47
ARTICLE VIII Concerning the Holders....................................47
SECTION 8.01. Evidence of Action by Holders.............................47
SECTION 8.02. Proof of Execution of Instruments and of Holding of Debt
Securities................................................48
SECTION 8.03. Who May Be Deemed Owner of Debt Securities................48
SECTION 8.04. Instruments Executed by Holders Bind Future Holders.......48
ARTICLE IX Supplemental Indentures...................................49
SECTION 9.01. Purposes for Which Supplemental Indenture May Be Entered
into Without Consent of Holders...........................49
SECTION 9.02. Modification of Indenture with Consent of Holders of Debt
Securities................................................51
SECTION 9.03. Effect of Supplemental Indentures.........................52
SECTION 9.04. Debt Securities May Bear Notation of Changes by
Supplemental Indentures...................................53
SECTION 9.05. Payment for Consent.......................................53
ARTICLE X Consolidation, Merger, Sale or Conveyance.................53
SECTION 10.01. Consolidations and Mergers of the Company.................53
SECTION 10.02. Rights and Duties of Successor Corporation................53
ARTICLE XI Satisfaction and Discharge of Indenture;..................54
SECTION 11.01. Applicability of Article..................................54
SECTION 11.02. Satisfaction and Discharge of Indenture: Defeasance.......54
SECTION 11.03. Conditions of Defeasance..................................55
SECTION 11.04. Application of Trust Money................................56
SECTION 11.05. Repayment to Company......................................57
SECTION 11.06. Indemnity for U.S. Government Obligations.................57
SECTION 11.07. Reinstatement.............................................57
ARTICLE XII Subordination of Debt Securities..........................57
SECTION 12.01. Applicability of Article; Agreement To Subordinate........57
SECTION 12.02. Liquidation, Dissolution, Bankruptcy......................57
SECTION 12.03. Default on Senior Indebtedness............................58
SECTION 12.04. Acceleration of Payment of Debt Securities................59
SECTION 12.05. When Distribution Must Be Paid Over.......................59
SECTION 12.06. Subrogation...............................................59
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SECTION 12.07. Relative Rights...........................................59
SECTION 12.08. Subordination May Not Be Impaired by Company..............59
SECTION 12.09. Rights of Trustee and Paying Agent........................60
SECTION 12.10. Distribution or Notice to Representative..................60
SECTION 12.11. Article XII Not To Prevent Defaults or Limit Right to
Accelerate................................................60
SECTION 12.12. Trust Moneys Not Subordinated.............................60
SECTION 12.13. Trustee Entitled To Rely..................................60
SECTION 12.14. Trustee To Effectuate Subordination.......................61
SECTION 12.15. Trustee Not Fiduciary for Holders of Senior Indebtedness..61
SECTION 12.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions..................................61
ARTICLE XIII Miscellaneous Provisions..................................61
SECTION 13.01. Successors and Assigns of Company Bound by Indenture......61
SECTION 13.02. Acts of Board, Committee or Officer of Successor Company
Valid.....................................................61
SECTION 13.03. Required Notices or Demands...............................62
SECTION 13.04. Indenture and Debt Securities To Be Construed in
Accordance with the Laws of the State of New York.........62
SECTION 13.05. Officers' Certificate and Opinion of Counsel To Be
Furnished upon Application or Demand by the Company.......62
SECTION 13.06. Payments Due on Legal Holidays............................63
SECTION 13.07. Provisions Required by Trust Indenture Act To Control.....63
SECTION 13.08. Computation of Interest on Debt Securities................63
SECTION 13.09. Rules by Trustee, Paying Agent and Registrar..............63
SECTION 13.10. No Recourse Against Others................................63
SECTION 13.11. Severability..............................................63
SECTION 13.12. Effect of Headings........................................64
SECTION 13.13. Indenture May Be Executed in Counterparts.................64
SECTION 13.14. Acceptance by Trustee.....................................64
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INDENTURE dated as of _________________________, between CORNELL
CORRECTIONS, INC., a corporation duly organized and existing under the
laws of the State of Delaware (hereinafter sometimes called the
"Company"), and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a national
banking association (hereinafter sometimes called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its debentures,
notes, bonds or other evidences of indebtedness to be issued in one or more
series unlimited as to principal amount (herein called the "Debt Securities"),
as in this Indenture provided.
All things necessary to make this Indenture a valid agreement to the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH
That in order to declare the terms and conditions upon which the Debt
Securities are authenticated, issued and delivered, and in consideration of the
premises, and of the purchase and acceptance of the Debt Securities by the
holders thereof, the Company and the Trustee covenant and agree with each other,
for the benefit of the respective Holders from time to time of the Debt
Securities or any series thereof, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN TERMS DEFINED. The terms defined in this
Section 1.01 (except as herein otherwise expressly provided or unless the
context otherwise requires) for all purposes of this Indenture and of any
Indenture supplemental hereto shall have the respective meanings specified in
this Section 1.01. All other terms used in this Indenture which are defined in
the Trust Indenture Act or which are by reference therein defined in the
Securities Act (except as herein otherwise expressly provided or unless the
context otherwise requires), shall have the meanings assigned to such terms in
the Trust Indenture Act and in the Securities Act as in force as of the date of
original execution of this Indenture.
"AFFILIATE" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power
to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
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"AUTHORIZED NEWSPAPER" means a newspaper in an official language of
the country of publication customarily published at least once a day, and
customarily published for at least five days in each calendar week, and of
general circulation in such city or cities specified pursuant to Section
2.03 with respect to the Debt Securities of any series. Where successive
publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different newspapers
in the same city meeting the foregoing requirements and in each case on
any business day in such city.
"BANK INDEBTEDNESS" means any and all amounts payable under or in
respect of (i) the Credit Facilities, as supplemented, amended, modified,
refinanced or replaced at any time from time to time, and (ii) any lines
of credit and letters of credit of the Company, in each case, including
principal, premium (if any), interest (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization
relating to the Company whether or not a claim for post-filing interest is
allowed in such proceedings), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in
respect thereof.
"BOARD OF DIRECTORS" means either the Board of Directors of the
Company or any duly authorized committee or subcommittee of such Board,
except as the context may otherwise require.
"BUSINESS DAY" means, when used with respect to any Place of Payment
specified pursuant to Section 2.03, any day that is not a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies in such Place of Payment are authorized or obligated by law to
close, except as otherwise specified pursuant to Section 2.03.
"CAPITALIZED LEASE OBLIGATION" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP; and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount
due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"CAPITAL STOCK" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents
of or interests (including partnership interests) in (however designated)
equity of such Person, including any Preferred Stock, but excluding any
debt securities convertible into such equity.
"COMMON STOCK" means the common stock ($0.001 par value), of the
Company, which stock is currently listed on the New York Stock Exchange.
"COMPANY" means Cornell Corrections, Inc., a Delaware corporation,
and, subject to the provisions of Article X, shall also include its
successors and assigns.
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"COMPANY ORDER" means a written order of the Company, signed by its
Chairman of the Board, President or any Vice President and by its
Treasurer, Secretary, any Assistant Treasurer or any Assistant
Secretary.
"CORNELL BRIDGE LOAN FACILITY" means that certain $50.0 million
subordinated bridge loan agreement dated as of October 14, 1999 among the
Company and certain of its Subsidiaries, ING (U.S.) Capital LLC, as agent,
and the lenders named therein, as amended or supplemented from time to
time.
"CORNELL REVOLVING CREDIT FACILITY" means that certain third amended
and restated credit agreement dated as of December 3, 1998 (as amended or
supplemented from time to time) among the Company and certain of its
Subsidiaries, Atlantic Financial Group, Ltd., the lenders referred to
therein and ING (U.S.) Capital LLC, as agent.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" or other similar term means
the office of the Trustee at which the corporate trust business of the
Trustee shall, at any particular time, be principally administered.
"CREDIT FACILITIES" means, with respect to the Company and certain
of its Subsidiaries, one or more debt facilities (including, without
limitation, the Cornell Bridge Loan Facility, the Cornell Revolving Credit
Facility, the Synthetic Lease Facility and the Note Purchase Agreements)
or commercial paper facilities with banks or other lenders providing for
revolving credit loans, term loans, receivables financing (including
through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or
letters of credit, in each case, as amended, restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time.
"CURRENCY" means Dollars or Foreign Currency.
"DEBT SECURITY" or "Debt Securities" has the meaning stated in the
first recital of this Indenture and more particularly means any debt
security or debt securities, as the case may be, of any series
authenticated and delivered under this Indenture.
"DEFAULT" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"DEPOSITARY" means, unless otherwise specified by the Company
pursuant to either Section 2.03 or 2.15, with respect to registered Debt
Securities of any series issuable or issued in whole or in part in the
form of one or more Global Securities, The Depository Trust Company, New
York, New York, or any successor thereto registered as a clearing agency
under the Exchange Act or other applicable statute or regulations.
"DESIGNATED SENIOR INDEBTEDNESS" means (i) the Bank Indebtedness
and (ii) any other Senior Indebtedness of the Company.
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"DISQUALIFIED STOCK" of a Person means Redeemable Stock of such
Person as to which the maturity, mandatory redemption, conversion or
exchange or redemption at the option of the holder thereof occurs, or may
occur, on or prior to the 91st day after the Stated Maturity of the Debt
Securities.
"DOLLAR" or "$" means such currency of the United States as at the
time of payment is legal tender for the payment of public and private
debts.
"DOLLAR EQUIVALENT" means, with respect to any monetary amount in a
Foreign Currency, at any time for the determination thereof, the amount of
Dollars obtained by converting such Foreign Currency involved in such
computation into Dollars at the spot rate for the purchase of Dollars with
the applicable Foreign Currency as quoted by The Chase Manhattan Bank
(unless another comparable financial institution is designated by the
Company) in New York, New York at approximately 11:00 a.m. (New York time)
on the date two business days prior to such determination.
"EVENT OF DEFAULT" has the meaning specified in Section 6.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FLOATING RATE SECURITY" means a Debt Security that provides for the
payment of interest at a variable rate determined periodically by
reference to an interest rate index specified pursuant to Section 2.03.
"FOREIGN CURRENCY" means a currency issued or adopted by the
government of any country other than the United States, any other currency
available to banks, freely transferable and freely convertible to Dollars,
or a composite currency the value of which is determined by reference to
the values of the currencies of any group of countries.
"GAAP" means generally accepted accounting principles in the United
States as in effect from time to time, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations based on GAAP
contained in this Indenture shall be computed in conformity with GAAP
consistently applied.
"GLOBAL SECURITY" means with respect to any series of Debt
Securities issued hereunder, a Debt Security which is executed by the
Company and authenticated and delivered by the Trustee to the Depositary
or pursuant to the Depositary's instruction, all in accordance with this
Indenture and any Indentures supplemental hereto, or resolution of the
Board of Directors and set forth in an Officers' Certificate, which shall
be registered in the name of the Depositary or its nominee and which shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all the
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Outstanding Debt Securities of such series or any portion thereof, in
either case having the same terms, including, without limitation, the same
original issue date, date or dates on which principal is due and interest
rate or method of determining interest.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposits in
the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"HOLDER," "HOLDER OF DEBT SECURITIES" or other similar terms mean,
with respect to a Registered Security, the Registered Holder.
"INCUR" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be
incurred by such Subsidiary at the time it becomes a Subsidiary. The terms
"Incurred", "Incurrence" and "Incurring" shall each have a correlative
meaning.
"INDEBTEDNESS" means, with respect to any Person on any date of
determination (without duplication),
(i) the principal of Indebtedness of such Person for borrowed money;
(ii) the principal of obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(iii) all Capitalized Lease Obligations of such Person;
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables);
(v) all obligations of such Person in respect of letters of credit,
banker's acceptances or other similar instruments or credit transactions
(including reimbursement obligations with respect thereto), other than
obligations with respect to letters of credit securing obligations (other
than obligations described in (i) through (iv) above) entered into in the
ordinary course of business of such Person to the extent such letters of
credit are not drawn upon or, if and to the extent drawn upon, such
drawing is reimbursed no later than the third business day following
receipt by such Person of a demand for reimbursement following payment on
the letter of credit;
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(vi) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock
(but excluding, in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination or (B) the amount of such Indebtedness of such other
Persons; and
(viii) all Indebtedness of other Persons to the extent Guaranteed by
such Person.
For purposes of this definition, the maximum fixed redemption, repayment or
repurchase price of any Disqualified Stock or Preferred Stock that does not have
a fixed redemption, repayment or repurchase price shall be calculated in
accordance with the terms of such stock as if such stock were redeemed, repaid
or repurchased on any date on which Indebtedness shall be required to be
determined pursuant to this Indenture; provided, however, that if such stock is
not then permitted to be redeemed, repaid or repurchased, the redemption,
repayment or repurchase price shall be the book value of such stock as reflected
in the most recent financial statements of such Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount, and (ii)
the principal amount thereof, together with any interest thereon that is more
than 30 days past due, in the case of any other Indebtedness.
"INDENTURE" means this instrument as originally executed, or, if
amended or supplemented as herein provided, as so amended or supplemented
and shall include the form and terms of particular series of Debt
Securities as contemplated hereunder, whether or not a supplemental
Indenture is entered into with respect thereto.
"LIEN" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"NOTE PURCHASE AGREEMENTS" means the note purchase agreements each
dated July 15, 1998 between the Company and the purchasers named therein,
authorizing the issuance of $50.0. million senior secured notes due July
15, 2010 (and related security documents, guaranties and agreements), all
as amended or supplemented from time to time.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman
of the Board, the President or any Vice President and by the Treasurer,
chief accounting officer, the Secretary or any Assistant Treasurer or
Assistant Secretary of the Company. Each such certificate shall include
the statements provided for in Section 13.05, if applicable.
"OPINION OF COUNSEL" means an opinion in writing signed by legal
counsel for the Company (which counsel may be an employee of the Company),
or outside counsel for
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the Company. Each such opinion shall include the statements provided for
in Section 13.05, if applicable.
"ORIGINAL ISSUE DISCOUNT DEBT SECURITY" means any Debt Security
which provides for an amount less than the principal amount thereof to be
due and payable upon a declaration or acceleration of the maturity thereof
pursuant to Section 6.01.
"OUTSTANDING" when used with respect to any series of Debt
Securities, means, as of the date of determination, all Debt Securities of
that series theretofore authenticated and delivered under this Indenture,
except:
(i) Debt Securities of that series theretofore canceled by the
Trustee or delivered to the Trustee for cancellation;
(ii) Debt Securities of that series for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any paying agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its
own paying agent) for the holders of such Debt Securities; provided, that,
if such Debt Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Debt Securities of that series which have been paid pursuant
to Section 2.09 or in exchange for or in lieu of which other Debt
Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Debt Securities in respect of which there
shall have been presented to the Trustee proof satisfactory to it that
such Debt Securities are held by a bona fide purchaser in whose hands such
Debt Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debt Securities of any series have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Debt Securities owned by the Company or any other obligor upon the Debt
Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Debt Securities which
the Trustee knows to be so owned shall be so disregarded. Debt Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Debt Securities and that the pledgee is not the
Company or any other obligor upon the Debt Securities or an Affiliate of the
Company or of such other obligor. In determining whether the Holders of the
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requisite principal amount of outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
the principal amount of an Original Issue Discount Debt Security that shall be
deemed to be Outstanding for such purposes shall be the amount of the principal
thereof that would be due and payable as of the date of such determination upon
a declaration of acceleration of the maturity thereof pursuant to Section 6.01.
In determining whether the Holders of the requisite principal amount of the
Outstanding Debt Securities of any series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the principal
amount of a Debt Security denominated in one or more Foreign Currencies or
currency units that shall be deemed to be Outstanding for such purposes shall be
the Dollar Equivalent, determined in the manner provided as contemplated by
Section 2.03 on the date of original issuance of such Debt Security, of the
principal amount (or, in the case of any Original Issue Discount Security, the
Dollar Equivalent on the date of original issuance of such Security of the
amount determined as provided in the preceding sentence above) of such Debt
Security.
"PERSON" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"PLACE OF PAYMENT" means, when used with respect to the Debt
Securities of any series, the place or places where the principal of, and
premium, if any, and interest on, the Debt Securities of that series are
payable as specified pursuant to Section 2.03.
"PREFERRED STOCK" as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends, or as to
the distribution of assets upon any voluntary or involuntary liquidation
or dissolution of such corporation, over shares of Capital Stock of any
other class of such corporation.
"REDEEMABLE STOCK" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness (other than Preferred Stock) or Disqualified Stock or (iii)
is redeemable at the option of the holder thereof, in whole or in part.
"REGISTERED HOLDER" means the Person in whose name a Registered
Security is registered in the Debt Security Register (as defined in
Section 2.07(a)).
"REGISTERED SECURITY" means any Debt Security registered as to
principal and interest in the Debt Security Register (as defined in
Section 2.07(a)).
"REGISTRAR" has the meaning set forth in Section 2.07(a).
"REPRESENTATIVE" means the trustee, agent or representative (if
any) for an issue of Indebtedness.
"RESPONSIBLE OFFICER" when used with respect to the Trustee, means
any officer within the corporate trust department of the Trustee,
including any Vice President, any Assistant Vice President, any Assistant
Treasurer, any trust officer, any assistant trust officer or any other
officer of the Trustee performing functions similar to those
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performed by the persons who at the time shall be such officers, and any
other officer of the Trustee to whom corporate trust matters are referred
because of his knowledge of and familiarity with the particular subject.
"SECURED INDEBTEDNESS" means any Indebtedness of the Company
secured by a Lien.
"SECURITIES ACT" means the Securities Act of 1933.
"SENIOR INDEBTEDNESS" means, as to any series of Debt Securities
subordinated pursuant to the provisions of Article XII, the Indebtedness
of the Company identified as Senior Indebtedness in the resolution of the
Board of Directors and accompanying Officers' Certificate or supplemental
Indenture setting forth the terms, including as to subordination, of such
series.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02
under Regulation S-X promulgated by the SEC.
"STATED MATURITY" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for
the repurchase of such security at the option of the holder thereof upon
the happening of any contingency beyond the control of the issuer unless
such contingency has occurred).
"SUBSIDIARY" of any Person means (i) any corporation, association,
partnership or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly
or indirectly, by (a) such Person, (b) such Person and one or more
Subsidiaries of such Person or (c) one or more Subsidiaries of such
Person; and (ii) any partnership or limited liability company (a) the sole
general partner or the managing general partner (or equivalent) of which
is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or one or more Subsidiaries of such
Person (or any combination hereof).
"SYNTHETIC LEASE FACILITY" means the master agreement dated as of
December 3, 1998 (as amended or supplemented from time to time) among the
Company and certain of its Subsidiaries, Atlantic Financial Group, Ltd.,
the lenders referred to therein, ING (U.S.) Capital LLC, as syndication
agent, and Suntrust Bank, Atlanta, as documentation agent.
"TRADE PAYABLES" means, with respect to any Person, any accounts
payable or any Indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by
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such Person arising in the ordinary course of business of such Person in
connection with the acquisition of goods or services.
"TRUSTEE" initially means Chase Bank of Texas, National Association,
and any additional Person or Persons appointed as such from time to time
pursuant to Section 7.08, and, subject to the provisions of Article VII,
includes its or their successors and assigns. If at any time there is more
than one such Person, "Trustee" as used with respect to the Debt
Securities of any series shall mean the Trustee with respect to the Debt
Securities of that series.
"TRUST INDENTURE ACT" (except as herein otherwise expressly
provided) means the Trust Indenture Act of 1939 as in force at the date of
this indenture as originally executed and, to the extent required by law,
as amended.
"UNITED STATES" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"U.S. GOVERNMENT OBLIGATIONS" means securities that are (x) direct
obligations of the United States for the payment of which its full faith
and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United
States, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States, which, in either case, are not
callable or redeemable at the option of the issuer thereof.
"YIELD TO MATURITY" means the yield to maturity calculated at the
time of issuance of a series of Debt Securities, or, if applicable, at the
most recent redetermination of interest on such series and calculated in
accordance with accepted financial practice.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the Trust Indenture Act
which are incorporated by reference in and made a part of this indenture. The
following Trust Indenture Act terms have the following meanings:
"indenture securities" means the Debt Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the Debt Securities.
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All other Trust Indenture Act terms used in this Indenture that are defined by
the Trust Indenture Act, reference to another statute or defined by rules of the
Securities and Exchange Commission have the meanings assigned to them by such
definitions.
SECTION 1.03. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) if the applicable series of Debt Securities are subordinated
pursuant to Article XII, unsecured indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be the greater
of (i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect to
such Preferred Stock.
ARTICLE II
DEBT SECURITIES
SECTION 2.01. FORMS GENERALLY. The Debt Securities of each series shall be
in substantially the form established without the approval of any Holder by or
pursuant to a resolution of the Board of Directors or in one or more Indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as the Company may deem
appropriate (and, if not contained in a supplemental Indenture entered into in
accordance with Article IX, as are not prohibited by the provisions of this
Indenture) or as may be required or appropriate to comply with any law or with
any rules made pursuant thereto or with any rules of any securities exchange on
which such series of Debt Securities may be listed, or to conform to general
usage, or as may, consistently herewith, be determined by the officers executing
such Debt Securities as evidenced by their execution of the Debt Securities.
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The definitive Debt Securities of each series shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debt Securities,
as evidenced by their execution of such Debt Securities.
SECTION 2.02. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The
Trustee's Certificate of Authentication on all Debt Securities authenticated by
the Trustee shall be in substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated therein referred to
in the within-mentioned Indenture.
___________________________________ ,
As Trustee
By_________________________________
Authorized Signatory
SECTION 2.03. PRINCIPAL AMOUNT; ISSUABLE IN SERIES. The aggregate
principal amount of Debt Securities which may be issued, executed,
authenticated, delivered and outstanding under this Indenture is unlimited.
The Debt Securities may be issued in one or more series. There shall be
established, without the approval of any Holders, in or pursuant to a resolution
of the Board of Directors and set forth in an Officers' Certificate, or
established in one or more Indentures supplemental hereto, prior to the issuance
of Debt Securities of any series any or all of the following:
(1) the title of the Debt Securities of the series (which shall
distinguish the Debt Securities of the series from all other Debt
Securities);
(2) any limit upon the aggregate principal amount of the Debt
Securities of the series which may be authenticated and delivered under
this Indenture (except for Debt Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other
Debt Securities of the series pursuant to this Article II);
(3) the date or dates on which the principal and premium, if any, of
the Debt Securities of the series are payable;
(4) the rate or rates (which may be fixed or variable) at which the
Debt Securities of the series shall bear interest, if any, or the method
of determining such rate or rates, the date or dates from which such
interest shall accrue, the interest payment dates on which such interest
shall be payable, or the method by which such date will be determined, in
the case of Registered Securities, the record dates for the determination
of Holders thereof to whom such interest is payable; and the basis upon
which interest will be calculated if other than that of a 360-day year of
twelve thirty-day months;
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(5) the Place or Places of Payment, if any, in addition to or
instead of the corporate trust office of the Trustee where the principal
of, and interest on, Debt Securities of the series shall be payable;
(6) the price or prices at which, the period or periods within which
and the terms and conditions upon which Debt Securities of the series may
be redeemed, in whole or in part, at the option of the Company or
otherwise;
(7) the obligation, if any, of the Company to redeem, purchase or
repay Debt Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof, and the price
or prices to which and the period or periods within which and the terms
and conditions upon which Debt Securities of the series shall be redeemed,
purchased or repaid, in whole or in part, pursuant to such obligations;
(8) the terms, if any, upon which the Debt Securities of the series
may be convertible into or exchanged for Common Stock, Preferred Stock
(which may be represented by depositary shares), other Debt Securities or
warrants for Common Stock, Preferred Stock or Indebtedness or other
securities of any kind of the Company or any other obligor or issuer and
the terms and conditions upon which such conversion or exchange shall be
effected, including the initial conversion or exchange price or rate, the
conversion or exchange period and any other provision in addition to or in
lieu of those described herein;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Debt Securities of the series shall be
issuable;
(10) if the amount of principal of or any premium or interest on
Debt Securities of the series may be determined with reference to an index
or pursuant to a formula, the manner in which such amounts will be
determined;
(11) if the principal amount payable at the Stated Maturity of Debt
Securities of the series will not be determinable as of any one or more
dates prior to such Stated Maturity, the amount which will be deemed to be
such principal amount as of any such date for any purpose, including the
principal amount thereof which will be due and payable upon any maturity
other than the Stated Maturity or which will be deemed to be Outstanding
as of any such date (or, in any such case, the manner in which such deemed
principal amount is to be determined); and the manner of determining the
equivalent thereof in the currency of the United States of America for
purposes of the definition of Dollar Equivalent;
(12) any changes or additions to Article XI, including the addition
of additional covenants that may be subject to the covenant defeasance
option pursuant to Section 11.02(b)(ii);
(13) if other than such coin or Currency of the United States as at
the time of payment is legal tender for payment of public and private
debts, the coin or Currency or
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Currencies or units of two or more Currencies in which payment of the
principal of and premium, if any, and interest on, Debt Securities of the
series shall be payable;
(14) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which shall be payable
upon declaration of acceleration of the maturity thereof pursuant to
Section 6.01 or provable in bankruptcy pursuant to Section 6.02;
(15) the terms, if any, of the transfer, mortgage, pledge or
assignment as security for the Debt Securities of the series of any
properties, assets, moneys, proceeds, securities or other collateral,
including whether certain provisions of the Trust Indenture Act are
applicable and any corresponding changes to provisions of this Indenture
as currently in effect;
(16) any addition to or change in the Events of Default with respect
to the Debt Securities of the series and any change in the right of the
Trustee or the Holders to declare the principal of and interest on, such
Debt Securities due and payable;
(17) if the Debt Securities of the series shall be issued in whole
or in part in the form of a Global Security or Securities, the terms and
conditions, if any, upon which such Global Security or Securities may be
exchanged in whole or in part for other individual Debt Securities in
definitive registered form; and the Depositary for such Global Security or
Securities and the form of any legend or legends to be borne by any such
Global Security or Securities in addition to or in lieu of the legend
referred to in Section 2.15;
(18) any trustees, authenticating or paying agents, transfer agents
or registrars;
(19) the applicability of, and any addition to or change in the
covenants and definitions currently set forth in this Indenture or in the
terms currently set forth in Article X;
(20) the terms, if any, of any Guarantee of the payment of principal
of, and premium, if any, and interest on, Debt Securities of the series
and any corresponding changes to the provisions of this Indenture as
currently in effect;
(21) the subordination, if any, of the Debt Securities of the series
pursuant to Article XII and any changes or additions to Article XII;
(22) with regard to Debt Securities of the series that do not bear
interest, the dates for certain required reports to the Trustee; and
(23) any other terms of the Debt Securities of the series (which
terms shall not be prohibited by the provisions of this Indenture).
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All Debt Securities of any one series appertaining thereto shall be
substantially identical except as to denomination and except as may otherwise be
provided in or pursuant to such resolution of the Board of Directors and as set
forth in such Officers' Certificate or in any such Indenture supplemental
hereto.
SECTION 2.04. EXECUTION OF DEBT SECURITIES. The Debt Securities
shall be signed on behalf of the Company by its Chairman of the Board, its Vice
Chairman, its President or a Vice President and by its Secretary, an Assistant
Secretary, a Treasurer or an Assistant Treasurer. Such signatures upon the Debt
Securities may be the manual or facsimile signatures of the present or any
future such authorized officers and may be imprinted or otherwise reproduced on
the Debt Securities. The seal of the Company, if any, may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Debt Securities.
Only such Debt Securities as shall bear thereon a certificate of
authentication substantially in the form hereinbefore recited, signed manually
by the Trustee, shall be entitled to the benefits of this Indenture or be valid
or obligatory for any purpose. Such certificate by the Trustee upon any Debt
Security executed by the Company shall be conclusive evidence that the Debt
Security so authenticated has been duly authenticated and delivered hereunder.
In case any officer of the Company who shall have signed any of the Debt
Securities shall cease to be such officer before the Debt Securities so signed
shall have been authenticated and delivered by the Trustee, or disposed of by
the Company, such Debt Securities nevertheless may be authenticated and
delivered or disposed of as though the Person who signed such Debt Securities
had not ceased to be such officer of the Company; and any Debt Security may be
signed on behalf of the Company by such Persons as, at the actual date of the
execution of such Debt Security, shall be the proper officers of the Company,
although at the date of such Debt Security or of the execution of this Indenture
any such Person was not such officer.
SECTION 2.05. AUTHENTICATION AND DELIVERY OF DEBT SECURITIES. At any
time and from time to time after the execution and delivery of this Indenture,
the Company may deliver Debt Securities of any series executed by the Company to
the Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said Debt Securities to or upon a Company Order. In authenticating such
Debt Securities and accepting the additional responsibilities under this
Indenture in relation to such Debt Securities, the Trustee shall be entitled to
receive, and (subject to Section 7.01.)
shall be fully protected in relying upon:
(1) a copy of any resolution or resolutions of the Board of
Directors, certified by the Secretary or Assistant Secretary of the
Company, authorizing the terms of issuance of any series of Debt
Securities;
(2) an executed supplemental Indenture, if any;
(3) an Officers' Certificate; and
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(4) an opinion of Counsel prepared in accordance with Section 13.05
which shall also state:
(a) that the form of such Debt Securities has been established
by or pursuant to a resolution of the Board of Directors or by a
supplemental Indenture as permitted by Section 2.01 in conformity
with the provisions of this Indenture;
(b) that the terms of such Debt Securities have been
established by or pursuant to a resolution of the Board of Directors
or by a supplemental Indenture as permitted by Section 2.03 in
conformity with the provisions of this Indenture;
(c) that such Debt Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights
generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability;
(d) that the Company has the corporate power to issue such
Debt Securities and has duly taken all necessary corporate action
with respect to such issuance;
(e) that the issuance of such Debt Securities will not
contravene the charter or by-laws of the Company or result in any
material violation of any of the terms or provisions of any law or
regulation or of any indenture, mortgage or other agreement known to
such counsel by which the Company is bound;
(f) that authentication and delivery of such Debt Securities
and the execution and delivery of any supplemental Indenture will
not violate the terms of this Indenture; and
(g) such other matters as the Trustee may reasonably request.
Such Opinion of Counsel need express no opinion as to whether a court in
the United States would render a money judgment in a currency other than that of
the United States.
The Trustee shall have the right to decline to authenticate and deliver
any Debt Securities under this Section 2.05 if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith by its board of directors or trustees, executive committee or a
trust committee of directors, trustees or vice presidents shall determine that
such action would expose the Trustee to personal liability to existing Holders.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate Debt Securities of any series. Unless limited by the
terms of such appointment,
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an authenticating agent may authenticate Debt Securities whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the same
rights as any Registrar, paying agent or agent for service of notices and
demands.
Unless otherwise provided in the form of Debt Security for any series,
each Debt Security shall be dated the date of its authentication.
SECTION 2.06. DENOMINATION OF DEBT SECURITIES. Unless otherwise
provided in the form of Debt Security for any series, the Debt Securities of
each series shall be issuable only as Registered Securities in such
denominations as shall be specified or contemplated by Section 2.03. In the
absence of any such specification with respect to the Debt Securities of any
series, the Debt Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
SECTION 2.07. REGISTRATION OF TRANSFER AND EXCHANGE. (a) The Company
shall keep or cause to be kept a register for each series of Registered
Securities issued hereunder (hereinafter collectively referred to as the "Debt
Security Register"), in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Registered
Securities and the transfer of Registered Securities as in this Article II
provided. At all reasonable times the Debt Security Register shall be open for
inspection by the Trustee. Subject to Section 2.15, upon due presentment for
registration of transfer of any Registered Security at any office or agency to
be maintained by the Company in accordance with the provisions of Section 4.02,
the Company shall execute and the Trustee shall authenticate and deliver in the
name of the transferee or transferees a new Registered Security or Registered
Securities of authorized denominations for a like aggregate principal amount.
Unless and until otherwise determined by the Company by resolution of the
Board of Directors, the register of the Company for the purpose of registration,
exchange or registration of transfer of the Registered Securities shall be kept
at the corporate trust office of the Trustee and, for this purpose, the Trustee
shall be designated "Registrar".
Registered Securities of any series (other than a Global Security) may be
exchanged for a like aggregate principal amount of Registered Securities of the
same series of other authorized denominations. Subject to Section 2.15,
Registered Securities to be exchanged shall be surrendered at the office or
agency to be maintained by the Company as provided in Section 4.02, and the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor the Registered Security or Registered Securities which the Holder
making the exchange shall be entitled to receive.
(b) All Registered Securities presented or surrendered for registration of
transfer, exchange or payment shall (if so required by the Company, the Trustee
or the Registrar) be duly endorsed or be accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Company, the Trustee and
the Registrar, duly executed by the Registered Holder or his attorney duly
authorized in writing.
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All Debt Securities issued in exchange for or upon transfer of Debt
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture as the Debt
Securities surrendered for such exchange or transfer.
No service charge shall be made for any exchange or registration of
transfer of Debt Securities (except as provided by Section 2.09), but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto, other than those
expressly provided in this Indenture to be made at the Company's own expense or
without expense or without charge to the Holders.
The Company shall not be required (a) to issue, register the transfer of
or exchange any Debt Securities for a period of 15 days next preceding any
mailing of notice of redemption of Debt Securities of such series or (b) to
register the transfer of or exchange any Debt Securities selected, called or
being called for redemption.
Prior to the due presentation for registration of transfer of any Debt
Security, the Company, the Trustee, any paying agent or any Registrar may deem
and treat the Person in whose name a Debt Security is registered as the absolute
owner of such Debt Security for the purpose of receiving payment of principal
of, and premium, if any, and interest on, such Debt Security and for all other
purposes whatsoever, whether or not such Debt Security is overdue, and none of
the Company, the Trustee, any paying agent or Registrar shall be affected by
notice to the contrary.
None of the Company, the Trustee, any agent of the Trustee, any paying
agent or any Registrar will have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial ownership
interests of a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
SECTION 2.08. TEMPORARY DEBT SECURITIES. Pending the preparation of
definitive Debt Securities of any series, the Company may execute and the
Trustee shall authenticate and deliver temporary Debt Securities (printed,
lithographed, photocopied, typewritten or otherwise produced) of any authorized
denomination, and substantially in the form of the definitive Debt Securities in
lieu of which they are issued, in registered form and with such omissions,
insertions and variations as may be appropriate for temporary Debt Securities,
all as may be determined by the Company with the concurrence of the Trustee.
Temporary Debt Securities may contain such reference to any provisions of this
Indenture as may be appropriate. Every temporary Debt Security shall be executed
by the Company and be authenticated by the Trustee upon the same conditions and
in substantially the same manner, and with like effect, as the definitive Debt
Securities.
If temporary Debt Securities of any series are issued, the Company will
cause definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of such
series, the temporary Debt Securities of such series shall be exchangeable for
definitive Debt Securities of such series upon surrender of the temporary Debt
Securities of such series at the office or agency of the Company at a Place of
Payment for such series, without charge to the Holder thereof, except as
provided in Section 2.07 in connection
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with a transfer, and upon surrender for cancellation of any one or more
temporary Debt Securities of any series, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Debt Securities of the same series of authorized
denominations and of like tenor. Until so exchanged, temporary Debt Securities
of any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Debt Securities of such series, except as otherwise
specified as contemplated by Section 2.03(17) with respect to the payment of
interest on Global Securities in temporary form.
Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security or for the individual Debt Securities represented
thereby pursuant to Section 2.07 or this Section 2.08, the temporary Global
Security shall be endorsed by the Trustee to reflect the reduction of the
principal amount evidenced thereby, whereupon the principal amount of such
temporary Global Security shall be reduced for all purposes by the amount so
exchanged and endorsed.
SECTION 2.09. MUTILATED, DESTROYED, LOST OR STOLEN DEBT SECURITIES.
If (i) any mutilated Debt Security is surrendered to the Trustee at its
corporate trust office (in the case of Registered Securities) or (ii) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Debt Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them and any paying agent harmless, and neither the Company nor the
Trustee receives notice that such Debt Security has been acquired by a bona fide
purchaser, then the Company shall execute and, upon a Company Order, the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Debt Security, a new Debt Security of the
same series of like tenor, form, terms and principal amount, bearing a number
not contemporaneously Outstanding. Upon the issuance of any substituted Debt
Security, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith. In case any Debt Security which has matured
or is about to mature or which has been called for redemption shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substituted Debt Security, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Debt Security) if the
applicant for such payment shall furnish the Company and the Trustee with such
security or indemnity as either may require to save it harmless from all risk,
however remote, and, in case of destruction, loss or theft, evidence to the
satisfaction of the Company and the Trustee of the destruction, loss or theft of
such Debt Security and of the ownership thereof.
Every substituted Debt Security of any series issued pursuant to the
provisions of this Section 2.09 by virtue of the fact that any Debt Security is
destroyed, lost or stolen shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Debt
Security shall be found at any time, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all other Debt
Securities of that series duly issued hereunder. All Debt Securities shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Debt Securities, and shall preclude any and all other rights or
remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with
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respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
SECTION 2.10. CANCELLATION OF SURRENDERED DEBT SECURITIES. All Debt
Securities surrendered for payment, redemption, registration of transfer or
exchange shall, if surrendered to the Company or any paying agent or a
Registrar, be delivered to the Trustee for cancellation by it, or if surrendered
to the Trustee, shall be canceled by it, and no Debt Securities shall be issued
in lieu thereof except as expressly permitted by any of the provisions of this
Indenture. All canceled Debt Securities held by the Trustee shall be disposed of
by the Trustee in accordance with its procedures for the disposition of canceled
securities in effect as of the date of such disposition (subject to the record
retention requirements of the Exchange Act) and certification of their
disposition shall be delivered to the Company. On request of the Company, the
Trustee shall deliver to the Company canceled Debt Securities held by the
Trustee. If the Company shall acquire any of the Debt Securities, however, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented thereby unless and until the same are delivered or
surrendered to the Trustee for cancellation. The Company may not issue new Debt
Securities to replace Debt Securities it has redeemed, paid or delivered to the
Trustee for cancellation.
SECTION 2.11. PROVISIONS OF THE INDENTURE AND DEBT SECURITIES FOR THE
SOLE BENEFIT OF THE PARTIES AND THE HOLDERS. Nothing in this Indenture or in the
Debt Securities, expressed or implied, shall give or be construed to give to any
Person, other than the parties hereto, the Holders or any Registrar or paying
agent, any legal or equitable right, remedy or claim under or in respect of this
Indenture, or under any covenant, condition or provision herein contained; all
its covenants, conditions and provisions being for the sole benefit of the
parties hereto, the Holders and any Registrar and paying agents.
SECTION 2.12. PAYMENT OF INTEREST; RIGHTS PRESERVED. (a) Interest on
any Registered Security that is payable and is punctually paid or duly provided
for on any interest payment date shall be paid to the Person in whose name such
Registered Security is registered at the close of business on the regular record
date for such interest notwithstanding the cancellation of such Registered
Security upon any transfer or exchange subsequent to the regular record date.
Payment of interest on Registered Securities shall be made at the corporate
trust office of the Trustee (except as otherwise specified pursuant to Section
2.03), or at the option of the Company, by check mailed to the address of the
Person entitled thereto as such address shall appear in the Debt Security
Register or, if provided pursuant to Section 2.03 and in accordance with
arrangements satisfactory to the Trustee, at the option of the Registered Holder
by wire transfer to an account designated by the Registered Holder.
(b) Subject to the foregoing provisions of this Section 2.12 and Section
2.17, each Debt Security of a particular series delivered under this Indenture
upon registration of transfer of or in exchange for or in lieu of any other Debt
Security of the same series shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Debt Security.
SECTION 2.13. SECURITIES DENOMINATED IN FOREIGN CURRENCIES. (a)
Except as otherwise specified pursuant to Section 2.03 for Registered Securities
of any series, payment of
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the principal of, and premium, if any, and interest on, Registered Securities of
such series will be made in Dollars.
(b) For the purposes of calculating the principal amount of Debt
Securities of any series denominated in a Foreign Currency or in units of two or
more Foreign Currencies for any purpose under this Indenture, the principal
amount of such Debt Securities at any time Outstanding shall be deemed to be the
Dollar Equivalent of such principal amount as of the date of any such
calculation.
In the event any Foreign Currency or currencies or units of two or more
Currencies in which any payment with respect to any series of Debt Securities
may be made ceases to be a freely convertible Currency on United States Currency
markets, for any date thereafter on which payment of principal of, or premium,
if any, or interest on, the Debt Securities of a series is due, the Company
shall select the Currency of payment for use on such date, all as provided in
the Debt Securities of such series. In such event, the Company shall, as
provided in the Debt Securities of such series, notify the Trustee of the
Currency which it has selected to constitute the funds necessary to meet the
Company's obligations on such payment date and of the amount of such Currency to
be paid. Such amount shall be determined as provided in the Debt Securities of
such series. The payment to the Trustee with respect to such payment date shall
be made by the Company solely in the Currency so selected.
SECTION 2.14. WIRE TRANSFERS. Notwithstanding any other provision to
the contrary in this Indenture, the Company may make any payment of monies
required to be deposited with the Trustee on account of principal of, or
premium, if any, or interest on, the Debt Securities (whether pursuant to
optional or mandatory redemption payments, interest payments or otherwise) by
wire transfer of immediately available funds to an account designated by the
Trustee on or before the date such moneys are to be paid to the Holders of the
Debt Securities in accordance with the terms hereof.
SECTION 2.15. SECURITIES ISSUABLE IN THE FORM OF A GLOBAL SECURITY.
(a) If the Company shall establish pursuant to Sections 2.01 and 2.03 that the
Debt Securities of a particular series are to be issued in whole or in part in
the form of one or more Global Securities, then the Company shall execute and
the Trustee or its agent shall, in accordance with Section 2.05, authenticate
and deliver, such Global Security or Securities, which (i) shall represent, and
shall be denominated in an amount equal to the aggregate principal amount of,
the Outstanding Debt Securities of such series to be represented by such Global
Security or Securities, or such portion thereof as the Company shall specify in
an Officers' Certificate, (ii) shall be registered in the name of the Depositary
for such Global Security or securities or its nominee, (iii) shall be delivered
by the Trustee or its agent to the Depositary or pursuant to the Depositary's
instruction and (iv) shall bear a legend substantially to the following effect:
"Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented hereby, this Global Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary", or such other legend as may then be required by
the Depositary for such Global Security or Securities.
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(b) Notwithstanding any other provision of this Section 2.15 or of Section
2.07 to the contrary, and subject to the provisions of paragraph (c) below,
unless the terms of a Global Security expressly permit such Global Security to
be exchanged in whole or in part for definitive Debt Securities in registered
form, a Global Security may be transferred, in whole but not in part and in the
manner provided in Section 2.07, only by the Depositary to a nominee of the
Depositary for such Global Security, or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary, or by the Depositary or a
nominee of the Depositary to a successor Depositary for such Global Security
selected or approved by the Company, or to a nominee of such successor
Depositary.
(c) (i) If at any time the Depositary for a Global Security or
Securities notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security or Securities or if at any time the
Depositary for the Debt Securities for such series shall no longer be eligible
or in good standing under the Exchange Act or other applicable statute, rule or
regulation, the Company shall appoint a successor Depositary with respect to
such Global Security or Securities. If a successor Depositary for such Global
Security or Securities is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, the Company
shall execute, and the Trustee or its agent, upon receipt of a Company order for
the authentication and delivery of such individual Debt Securities of such
series in exchange for such Global Security, will authenticate and deliver,
individual Debt Securities of such series of like tenor and terms in definitive
form in an aggregate principal amount equal to the principal amount of such
Global Security.
(ii) The Company may at any time and in its sole discretion
determine that the Debt Securities of any series or portion thereof issued or
issuable in the form of one or more Global Securities shall no longer be
represented by such Global Security or Securities. In such event the Company
will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of individual Debt Securities of such series in
exchange in whole or in part for such Global Security, will authenticate and
deliver individual Debt Securities of such series of like tenor and terms in
definitive form in an aggregate principal amount equal to the principal amount
of such series or portion thereof in exchange for such Global Security or
Securities.
(iii) If specified by the Company pursuant to Sections 2.01 and 2.03
with respect to Debt Securities issued or issuable in the form of a Global
Security, the Depositary for such Global Security may surrender such Global
Security in exchange in whole or in part for individual Debt Securities of such
series of like tenor and terms in definitive form on such terms as are
acceptable to the Company, the Trustee and such Depositary. Thereupon the
Company shall execute, and the Trustee or its agent upon receipt of a Company
Order for the authentication and delivery of definitive Debt Securities of such
series shall authenticate and deliver, without service charge, (1) to each
Person specified by such Depositary a new Debt Security or Securities of the
same series of like tenor and terms and of any authorized denomination as
requested by such Person in aggregate principal amount equal to and in exchange
for such Persons beneficial interest in the Global Security; and (2) to such
Depositary a new Global Security of like tenor and terms and in an authorized
denomination equal to the
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difference, if any, between the principal amount of the surrendered Global
Security and the aggregate principal amount of Debt Securities delivered to
Holders thereof.
(iv) In any exchange provided for in any of the preceding three
paragraphs, the Company will execute and the Trustee or its agent will
authenticate and deliver individual Debt Securities. Upon the exchange of the
entire principal amount of a Global Security for individual Debt Securities,
such Global Security shall be canceled by the Trustee or its agent. Except as
provided in the preceding paragraph, Registered Securities issued in exchange
for a Global Security pursuant to this Section 2.15 shall be registered in such
names and in such authorized denominations as the Depositary for such Global
Security, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee or the Registrar. The Trustee or the
Registrar shall deliver such Registered Securities to the Persons in whose names
such Registered Securities are so registered.
(v) Payments in respect of the principal of and interest on any Debt
Securities registered in the name of the Depositary or its nominee will be
payable to the Depositary or such nominee in its capacity as the Registered
Holder of such Global Security. The Company and the Trustee may treat the Person
in whose name the Debt Securities, including the Global Security, are registered
as the owner thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. None of the Company, the Trustee, any Registrar,
the paying agent or any agent of the Company or the Trustee will have any
responsibility or liability for (a) any aspect of the records relating to or
payments made on account of the beneficial ownership interests of the Global
Security by the Depositary or its nominee or any of the Depositary's direct or
indirect participants, or for maintaining, supervising or reviewing any records
of the Depositary, its nominee or any of its direct or indirect participants
relating to the beneficial ownership interests of the Global Security, (b) the
payments to the beneficial owners of the Global Security of amounts paid to the
Depositary or its nominee, or (c) any other matter relating to the actions and
practices of the Depositary, its nominee or any of its direct or indirect
participants. None of the Company, the Trustee or any such agent will be liable
for any delay by the Depositary, its nominee, or any of its direct or indirect
participants in identifying the beneficial owners of the Debt Securities, and
the Company and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the Depositary or its nominee for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the Debt Securities to be issued).
SECTION 2.16. SUBSEQUENT ISSUANCES OF DEBT SECURITIES.
Notwithstanding any contrary provision herein, if all Debt Securities of a
series are not to be originally issued at one time, it shall not be necessary
for the Company to deliver to the Trustee an Officers' Certificate, resolutions
of the Board of Directors, supplemental Indenture, Opinion of Counsel or written
order or any other document otherwise required pursuant to Section 2.01, 2.03,
2.05 or 13.05 at or prior to the time of authentication of each Debt Security of
such series if such documents are delivered to the Trustee or its agent at or
prior to the authentication upon original issuance of the first such Debt
Security of such series to be issued; provided, that any subsequent request by
the Company to the Trustee to authenticate Debt Securities of such series upon
original issuance shall constitute a representation and warranty by the Company
that, as of the date of such request, the statements made in the Officers'
Certificate delivered pursuant to Section 2.05 or
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13.05 shall be true and correct as if made on such date and that the Opinion of
Counsel delivered at or prior to such time of authentication of an original
issuance of Debt Securities shall specifically state that it shall relate to all
subsequent issuances of Debt Securities of such series that are identical to the
Debt Securities issued in the first issuance of Debt Securities of such series.
A Company Order delivered by the Company to the Trustee in the
circumstances set forth in the preceding paragraph, may provide that Debt
Securities which are the subject thereof will be authenticated and delivered by
the Trustee or its agent on original issue from time to time upon the telephonic
or written order of Persons designated in such written order (any such
telephonic instructions to be promptly confirmed in writing by such Person) and
that such Persons are authorized to determine, consistent with the Officers'
Certificate, supplemental Indenture or resolution of the Board of Directors
relating to such written order, such terms and conditions of such Debt
Securities as are specified in such Officers' Certificate, supplemental
Indenture or such resolution.
SECTION 2.17. DEFAULTED INTEREST. If the Company defaults in a
payment of interest on the Debt Securities, it shall pay the defaulted interest
in any lawful manner plus, to the extent lawful, interest payable on the
defaulted interest, to the Persons who are Holders on a subsequent special
record date, in each case at the rate provided in the Debt Securities pursuant
to Section 4.01 hereof. The Company shall notify the Trustee in writing of the
amount of defaulted interest proposed to be paid on each Debt Security and the
date of the proposed payment. The Company shall fix or cause to be fixed each
such special record date and payment date; PROVIDED that, no such special record
date shall be less than 10 days prior to the related payment date for such
defaulted interest. At least 15 days before the special record date, the Company
(or, upon the written request of the Company delivered to the Trustee at least
five business days prior to the date notice is to be mailed, the Trustee in the
name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
SECTION 2.18. JUDGMENTS. The Company may provide pursuant to Section
2.03 for Debt Securities of any series that (a) the obligation, if any, of the
Company to pay the principal of, and premium, if any, and interest on, the Debt
Securities of any series in a Foreign Currency or Dollars (the "Designated
Currency") as may be specified pursuant to Section 2.03 is of the essence and
agrees that, to the fullest extent possible under applicable law, judgments in
respect of Debt Securities of such series shall be given in the Designated
Currency; (b) the obligation of the Company to make payments in the Designated
Currency of the principal of, and premium, if any, and interest on, such Debt
Securities shall, notwithstanding any payment in any other Currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the Designated Currency that the Holder receiving such payment may, in
accordance with normal banking procedures, purchase with the sum paid in such
other Currency (after any premium and cost exchange) on the business day in the
country of issue of the Designated Currency or in the international banking
community (in the case of a composite currency) immediately following the day on
which such Holder receives such payment; (c) if the amount in the Designated
Currency that may be so purchased for any reason falls short of the amount
originally due, the Company shall pay such additional amounts as may be
necessary to
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compensate for such shortfall; and (d) any obligation of the Company not
discharged by such payment shall be due as a separate and independent obligation
and, until discharged as provided herein, shall continue in full force and
effect.
SECTION 2.19. CUSIP NUMBERS. The Company in issuing the Debt
Securities may use "CUSIP" numbers (if then generally in use), and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Debt Securities
or as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Debt Securities, and any
such redemption shall not be affected by any defect in or omission of such
numbers. The Company will promptly notify the Trustee of any change in the
"CUSIP" numbers.
ARTICLE III
REDEMPTION OF DEBT SECURITIES
SECTION 3.01. APPLICABILITY OF ARTICLE. The provisions of this
Article shall be applicable to the Debt Securities of any series which are
redeemable before their Stated Maturity except as otherwise specified as
contemplated by Section 2.03 for Debt Securities of such series.
SECTION 3.02. NOTICE OF REDEMPTION; SELECTION OF DEBT SECURITIES. In
case the Company shall desire to exercise the right to redeem all or, as the
case may be, any part of the Debt Securities of any series in accordance with
their terms, a resolution of the Board of Directors of the Company or a
supplemental Indenture, the Company shall fix a date for redemption and shall
give notice of such redemption at least 30 and not more than 60 days prior to
the date fixed for redemption to the Holders of Debt Securities of such series
so to be redeemed as a whole or in part, in the manner provided in Section
13.03. The notice if given in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, failure to give such notice or any defect in the notice to
the Holder of any Debt Security of a series designated for redemption as a whole
or in part shall not affect the validity of the proceedings for the redemption
of any other Debt Security of such series.
Each such notice of redemption shall specify the CUSIP number, if any, the
date fixed for redemption, the redemption price at which Debt Securities of such
series are to be redeemed, the Place or Places of Payment that payment will be
made upon presentation and surrender of such Debt Securities, that any interest
accrued to the date fixed for redemption will be paid as specified in said
notice, that the redemption is for a sinking fund payment (if applicable), that,
if the Company defaults on making such redemption payment or if the Debt
Securities of that series are subordinated pursuant to the terms of Article XII
the paying agent is prohibited from making such payment pursuant to the terms of
this Indenture, that on and after said date any interest thereon or on the
portions thereof to be redeemed will cease to accrue, that in the case of
Original Issue Discount Securities original issue discount accrued after the
date fixed for redemption will cease to accrue, the terms of the Debt Securities
of that series pursuant to which the Debt Securities of that series are being
redeemed and that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Debt
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Securities of that series. If less than all the Debt Securities of a series are
to be redeemed the notice of redemption shall specify the CUSIP numbers of the
Debt Securities of that series to be redeemed. In case any Debt Security of a
series is to be redeemed in part only, the notice of redemption shall state the
portion of the principal amount thereof to be redeemed and shall state that on
and after the date fixed for redemption, upon surrender of such Debt Security, a
new Debt Security or Debt Securities of that series in principal amount equal to
the unredeemed portion thereof.
At least 60 days before the redemption date unless the Trustee consents to
a shorter period, the Company shall give notice to the Trustee of the redemption
date, the principal amount of Debt Securities to be redeemed and the series and
terms of the Debt Securities pursuant to which such redemption will occur. Such
notice shall be accompanied by an Officers' Certificate and an Opinion of
Counsel from the Company to the effect that such redemption will comply with the
conditions herein. If fewer than all the Debt Securities of a series are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and given to the Trustee, which record date shall be not less than 15
days after the date of notice to the Trustee.
On or prior to the redemption date for any Registered Securities, the
Company shall deposit with the Trustee or with a paying agent (or, if the
Company is acting as its own paying agent, segregate and hold in trust) an
amount of money in the Currency in which such Debt Securities are denominated
(except as provided pursuant to Section 2.03) sufficient to pay the redemption
price of such Registered Securities or any portions thereof that are to be
redeemed on that date.
If less than all the Debt Securities of like tenor and terms of a series
are to be redeemed (other than pursuant to mandatory sinking fund redemptions)
the Trustee shall select, in such manner as in its sole discretion it shall deem
appropriate and fair, the Debt Securities of that series or portions thereof (in
multiples of $1,000) to be redeemed. In any case where more than one Registered
Security of such series is registered in the same name, the Trustee in its
discretion may treat the aggregate principal amount so registered as if it were
represented by one Registered Security of such series. The Trustee shall
promptly notify the Company in writing of the Debt Securities selected for
redemption and, in the case of any Debt Securities selected for partial
redemption, the principal amount thereof to be redeemed. If any Debt Security
called for redemption shall not be so paid upon surrender thereof on such
redemption date, the principal, premium, if any, and interest shall bear
interest until paid from the redemption date at the rate borne by the Debt
Securities of that series. If less than all the Debt Securities of like tenor
and terms of a series are to be redeemed, the particular Debt Securities to be
redeemed shall be selected by the Company. Provisions of this Indenture that
apply to Debt Securities called for redemption also apply to portions of Debt
Securities called for redemption.
SECTION 3.03. PAYMENT OF DEBT SECURITIES CALLED FOR REDEMPTION. If
notice of redemption has been given as provided in Section 3.02, the Debt
Securities or portions of Debt Securities of the series with respect to which
such notice has been given shall become due and payable on the date and at the
Place or Places of Payment stated in such notice at the applicable redemption
price, together with any interest accrued to the date fixed for redemption, and
on and after said date (unless the Company shall default in the payment of such
Debt Securities at the
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applicable redemption price, together with any interest accrued to said date)
any interest on the Debt Securities or portions of Debt Securities of any series
so called for redemption shall cease to accrue and any original issue discount
in the case of Original Issue Discount Securities shall cease to accrue. On
presentation and surrender of such Debt Securities at the Place or Places of
Payment in said notice specified, the said Debt Securities or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
redemption price, together with any interest accrued thereon to the date fixed
for redemption.
Any Debt Security that is to be redeemed only in part shall be surrendered
at the corporate trust office of the Trustee or such other office or agency of
the Company as is specified pursuant to Section 2.03, if the Company, the
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Registrar and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing, and the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Debt Security without service charge, a new
Debt Security or Debt Securities of the same series, of like tenor and form, of
any authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debt Security so surrendered; except that if a Global Security is so
surrendered, the Company shall execute, and the Trustee shall authenticate and
deliver to the Depositary for such Global Security, without service charge, a
new Global Security in a denomination equal to and in exchange for the
unredeemed portion of the principal of the Global Security so surrendered. In
the case of a Debt Security providing appropriate space for such notation, at
the option of the Holder thereof, the Trustee, in lieu of delivering a new Debt
Security or Debt Securities as aforesaid, may make a notation on such Debt
Security of the payment of the redeemed portion thereof.
SECTION 3.04. MANDATORY AND OPTIONAL SINKING FUNDS. The minimum
amount of any sinking fund payment provided for by the terms of Debt Securities
of any series, resolution of the Board of Directors or a supplemental Indenture
is herein referred to as a "mandatory sinking fund payment", and any payment in
excess of such minimum amount provided for by the terms of Debt Securities of
any series, resolution of the Board of Directors or a supplemental Indenture is
herein referred to as an "optional sinking fund payment".
In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Debt Securities of a series in cash, the Company may at its
option (a) deliver to the Trustee Debt Securities of that series theretofore
purchased or otherwise acquired by the Company or (b) receive credit for the
principal amount of Debt Securities of that series which have been redeemed
either at the election of the Company pursuant to the terms of such Debt
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Debt Securities, resolution or
supplemental Indenture; provided, that such Debt Securities have not been
previously so credited. Such Debt Securities shall be received and credited for
such purpose by the Trustee at the redemption price specified in such Debt
Securities, resolution or supplemental Indenture for redemption through
operation of the sinking fund and the amount of such mandatory sinking fund
payment shall be reduced accordingly.
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SECTION 3.05. REDEMPTION OF DEBT SECURITIES FOR SINKING FUND. Not
less than 60 days prior to each sinking fund payment date for any series of Debt
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, any resolution or supplemental Indenture,
the portion thereof, if any, which is to be satisfied by payment of cash in the
Currency in which the Debt Securities of such series are denominated (except as
provided pursuant to Section 2.03) and the portion thereof, if any, which is to
be satisfied by delivering and crediting Debt Securities of that series pursuant
to this Section 3.05 (which Debt Securities, if not previously redeemed, will
accompany such certificate) and whether the Company intends to exercise its
right to make any permitted optional sinking fund payment with respect to such
series. Such certificate shall also state that no Event of Default has occurred
and is continuing with respect to such series. Such certificate shall be
irrevocable and upon its delivery the Company shall be obligated to make the
cash payment or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Company to deliver such
certificate (or to deliver the Debt Securities specified in this paragraph)
shall not constitute a Default, but such failure shall require that the sinking
fund payment due on the next succeeding sinking fund payment date for that
series shall be paid entirely in cash and shall be sufficient to redeem the
principal amount of such Debt Securities subject to a mandatory sinking fund
payment without the option to deliver or credit Debt Securities as provided in
this Section 3.05 and without the right to make any optional sinking fund
payment, if any, with respect to such series.
Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made in cash
which shall equal or exceed $100,000 (or a lesser sum if the Company shall so
request) with respect to the Debt Securities of any particular series shall be
applied by the Trustee on the sinking fund payment date on which such payment is
made (or, if such payment is made before a sinking fund payment date, on the
sinking fund payment date following the date of such payment) to the redemption
of such Debt Securities at the redemption price specified in such Debt
Securities, resolution or supplemental Indenture for operation of the sinking
fund together with any accrued interest to the date fixed for redemption. Any
sinking fund moneys not so applied or allocated by the Trustee to the redemption
of Debt Securities shall be added to the next cash sinking fund payment received
by the Trustee for such series and, together with such payment, shall be applied
in accordance with the provisions of this Section 3.05. Any and all sinking fund
moneys with respect to the Debt Securities of any particular series held by the
Trustee on the last sinking fund payment date with respect to Debt Securities of
such series and not held for the payment or redemption of particular Debt
Securities shall be applied by the Trustee, together with other moneys, if
necessary, to be deposited sufficient for the purpose, to the payment of the
principal of the Debt Securities of that series at its Stated Maturity.
The Trustee shall select the Debt Securities to be redeemed upon such
sinking fund payment date in the manner specified in the last paragraph of
Section 3.02 and the Company shall cause notice of the redemption thereof to be
given in the manner provided in Section 3.02 except that the notice of
redemption shall also state that the Debt Securities are being redeemed by
operation of the sinking fund. Such notice having been duly given, the
redemption of such Debt Securities shall be made upon the terms and in the
manner stated in Section 3.03.
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At least one business day before each sinking fund payment date, the
Company shall pay to the Trustee (or, if the Company is acting as its own paying
agent, the Company shall segregate and hold in trust) in cash a sum in the
Currency in which the Debt Securities of such series are denominated (except as
provided pursuant to Section 2.03) equal to any interest accrued to the date
fixed for redemption of Debt Securities or portions thereof to be redeemed on
such sinking fund payment date pursuant to this Section 3.05.
The Trustee shall not redeem any Debt Securities of a series with sinking
fund moneys or mail any notice of redemption of such Debt Securities by
operation of the sinking fund for such series during the continuance of a
Default in payment of interest on such Debt Securities or of any Event of
Default (other than an Event of Default occurring as a consequence of this
paragraph) with respect to such Debt Securities, except that if the notice of
redemption of any such Debt Securities shall theretofore have been mailed in
accordance with the provisions hereof, the Trustee shall redeem such Debt
Securities if cash sufficient for that purpose shall be deposited with the
Trustee for that purpose in accordance with the terms of this Article III.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such Default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such Default or
Event of Default, be held as security for the payment of such Debt Securities;
provided, however, that in case such Event of Default or Default shall have been
cured or waived as provided herein, such moneys shall thereafter be applied on
the next sinking fund payment date for such Debt Securities on which such moneys
may be applied pursuant to the provisions of this Section 3.05.
ARTICLE IV
PARTICULAR COVENANTS OF THE COMPANY
SECTION 4.01. PAYMENT OF PRINCIPAL OF, AND PREMIUM, IF ANY, AND
INTEREST ON, DEBT SECURITIES. The Company, for the benefit of each series of
Debt Securities, will duly and punctually pay or cause to be paid the principal
of, and premium, if any, and interest on, each of the Debt Securities at the
place, at the respective times and in the manner provided herein and in the Debt
Securities. Each installment of interest on the Debt Securities may at the
Company's option be paid by mailing checks for such interest payable to the
Person entitled thereto to the address of such Person as it appears on the Debt
Security Register maintained pursuant to Section 2.07(a).
Principal, premium and interest of Debt Securities of any series shall be
considered paid on the date due if on such date the Trustee or any paying agent
holds in accordance with this Indenture money sufficient to pay in the Currency
in which the Debt Securities of such series are denominated (except as provided
pursuant to Section 2.03) all principal, premium and interest then due and, in
the case of Debt Securities subordinated pursuant to the terms of Article XII,
the Trustee or such paying agent, as the case may be, is not prohibited from
paying such money to the Holders on that date pursuant to the terms of the
Indenture.
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The Company shall pay interest on overdue principal at the rate specified
therefor in the Debt Securities and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICES OR AGENCIES FOR REGISTRATION OF
TRANSFER, EXCHANGE AND PAYMENT OF DEBT SECURITIES. The Company will maintain in
each Place of Payment for any series of Debt Securities, an office or agency
where Debt Securities of such series may be presented or surrendered for
payment, where Debt Securities of such series may be surrendered for transfer or
exchange and where notices and demands to or upon the Company in respect of the
Debt Securities of such series and this Indenture may be served. The Company
will give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the corporate trust office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all
presentations, surrenders, notices and demands.
The Company may also from time to time designate different or additional
offices or agencies to be maintained for such purposes (in or outside of such
Place of Payment), and may from time to time rescind any such designation;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligations described in the preceding paragraph. The
Company will give prompt written notice to the Trustee of any such additional
designation or rescission of designation and any change in the location of any
such different or additional office or agency.
SECTION 4.03. APPOINTMENT TO FILL A VACANCY IN THE OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.08, a Trustee, so
that there shall at all times be a Trustee hereunder with respect to each series
of Debt Securities.
SECTION 4.04. DUTIES OF PAYING AGENTS, ETC.
(a) The Company shall cause each paying agent, if any, other than the
Trustee, to execute and deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 4.04,
(i) that it will hold all sums held by it as such agent for the
payment of the principal of, and premium, if any, or interest on, the Debt
Securities of any series (whether such sums have been paid to it by the
Company or by any other obligor on the Debt Securities of such series) in
trust for the benefit of the Holders of the Debt Securities of such
series;
(ii) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Debt Securities of such series) to
make any payment of the principal of and premium, if any, or interest on,
the Debt Securities of such series when the same shall be due and payable;
and
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(iii) that it will at any time during the continuance of an Event of
Default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held by it as such agent.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of, and premium, if any, or interest on,
the Debt Securities if any, of any series, set aside, segregate and hold in
trust for the benefit of the Holders of the Debt Securities of such series a sum
sufficient to pay such principal, premium, if any, or interest so becoming due.
The Company will promptly notify the Trustee of any failure by the Company to
take such action or the failure by any other obligor on such Debt Securities to
make any payment of the principal of, and premium, if any, or interest on, such
Debt Securities when the same shall be due and payable.
(c) Anything in this Section 4.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by it or any paying agent, as required by
this Section 4.04, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such paying agent.
(d) Whenever the Company shall have one or more paying agents with respect
to any series of Debt Securities, it will, prior to each due date of the
principal of, and premium, if any, or interest on, any Debt Securities of such
series, deposit with any such paying agent a sum sufficient to pay the
principal, premium or interest so becoming due, such sum to be held in trust for
the benefit of the Persons entitled thereto, and (unless any such paying agent
is the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
(e) Anything in this Section 4.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.04 is subject to
the provisions of Section 11.05.
SECTION 4.05. STATEMENT BY OFFICERS AS TO DEFAULT. The Company will
deliver to the Trustee, on or before a date not more than 120 days after the end
of each fiscal year of the Company (currently on a calendar year basis) ending
after the date hereof, an Officers' Certificate stating, as to each officer
signing such certificate, that (i) in the course of his performance of his
duties as an officer of the Company he would normally have knowledge of any
Default, (ii) whether or not to the best of his knowledge any Default occurred
during such year and (iii) if to the best of his knowledge the Company is in
Default, specifying all such Defaults and what action the Company is taking or
proposes to take with respect thereto. The Company also shall comply with
Section 314(a)(4) of the Trust Indenture Act.
SECTION 4.06. FURTHER INSTRUMENTS AND ACTS. The Company will, upon
request of the Trustee, execute and deliver such further instruments and do such
further acts as may reasonably be necessary or proper to carry out more
effectually the purposes of this Indenture.
SECTION 4.07. EXISTENCe. Subject to Article X, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence and rights (charter and statutory); PROVIDED, HOWEVER, that
the Company shall not be required to preserve
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any such right or franchise if the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries, taken as a whole, and that the loss thereof is not
disadvantageous in any material respect to the Holders.
SECTION 4.08. MAINTENANCE OF PROPERTIES. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
in all material respects and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on by the
Company and its Subsidiaries may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the Company
or a Subsidiary from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, not
materially detrimental to the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and not disadvantageous in any material respect
to the Holders.
SECTION 4.09. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all material taxes, assessments and governmental charges levied
or imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a Lien upon the
property of the Company or any Subsidiary, provided, however, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings or where the failure to
effect such payment is not adverse in any material respect to the Holders of the
Debt Securities.
SECTION 4.10. CALCULATION OF ORIGINAL ISSUE DISCOUNT. The Company
shall file with the Trustee promptly at the end of each calendar year (i) a
written notice specifying the amount of original issue discount (including daily
rates and accrual periods) accrued on Outstanding Original Issue Discount Debt
Securities as of the end of such year and (ii) such other specific information
relating to such original issue discount as may then be relevant under the
Internal Revenue Code of 1986, as amended from time to time.
ARTICLE V
HOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 5.01. COMPANY TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND
ADDRESSES OF HOLDERS; PRESERVATION OF INFORMATION. The Company covenants and
agrees that it will furnish or cause to be furnished to the Trustee with respect
to the Registered Securities of each series:
(a) not more than 15 days after each record date with respect to the
payment of interest, if any, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Registered Holders
as of such record date, and
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(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list as of a date not more than 15 days prior to the time such list is
furnished;
PROVIDED, HOWEVER, that so long as the Trustee shall be the Registrar, such
lists shall not be required to be furnished.
The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders (1)
contained in the most recent list furnished to it as provided in this Section
5.01 or (2) received by it in the capacity of paying agent or Registrar (if so
acting) hereunder.
The Trustee may destroy any list furnished to it as provided in this
Section 5.01 upon receipt of a new list so furnished.
SECTION 5.02. COMMUNICATIONS TO HOLDERS. Holders may communicate
pursuant to Section 312(b) of the Trust Indenture Act with other Holders with
respect to their rights under this Indenture or the Debt Securities. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
Section 312(c) of the Trust Indenture Act.
SECTION 5.03. REPORTS BY COMPANY. (a) The Company covenants and
agrees, and any obligor hereunder shall covenant and agree, to file with the
Trustee, within 15 days after the Company or such obligor, as the case may be,
is required to file the same with the Securities and Exchange Commission, copies
of the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as said Commission may from time
to time by rules and regulations prescribe) which the Company or such obligor,
as the case may be, may be required to file with said Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Company or such
obligor, as the case may be, is not required to file information, documents or
reports pursuant to either of such Sections, then to file with the Trustee and
said Commission (to the extent the Commission accepts any such filing), in
accordance with rules and regulations prescribed from time to time by said
Commission, such of the supplementary and periodic information, documents and
reports which may be required pursuant to Section 13 of the Exchange Act in
respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations.
(b) The Company covenants and agrees, and any obligor hereunder shall
covenant and agree, to file with the Trustee and the Securities and Exchange
Commission, in accordance with the rules and regulations prescribed from time to
time by said Commission, such additional information, documents, and reports
with respect to compliance by the Company or such obligor, as the case may be,
with the conditions and covenants provided for in this Indenture as may be
required from time to time by such rules and regulations.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any
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information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 5.04. REPORTS BY TRUSTEE. The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the Trust Indenture Act at the time and in the
manner provided pursuant thereto.
Reports pursuant to this Section 5.04 shall be transmitted by mail:
(1) to all Registered Holders, as the names and addresses of such
Holders appear in the Debt Security Register;
(2) except in the cases of reports under Section 313(b)(2) of the
Trust Indenture Act, to each holder of a Debt Security of any series whose
name and address appear in the information preserved at the time by the
Trustee in accordance with Section 5.02.
A copy of each report at the time of its mailing to Holders shall be filed
with the Securities and Exchange Commission and each stock exchange (if any) on
which the Debt Securities of any series are listed. The Company agrees to notify
promptly the Trustee whenever the Debt Securities of any series become listed on
any stock exchange and of any delisting thereof.
SECTION 5.05. RECORD DATES FOR ACTION BY HOLDERS. If the Company
shall solicit from the Holders of Debt Securities of any series any action
(including the making of any demand or request, the giving of any direction,
notice, consent or waiver or the taking of any other action), the Company may,
at its option, by resolution of the Board of Directors, fix in advance a record
date for the determination of Holders of Debt Securities entitled to take such
action, but the Company shall have no obligation to do so. Any such record date
shall be fixed at the Company's discretion. If such a record date is fixed, such
action may be sought or given before or after the record date, but only the
Holders of Debt Securities of record at the close of business on such record
date shall be deemed to be Holders of Debt Securities for the purpose of
determining whether Holders of the requisite proportion of Debt Securities of
such series Outstanding have authorized or agreed or consented to such action,
and for that purpose the Debt Securities of such series Outstanding shall be
computed as of such record date.
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ARTICLE VI
REMEDIES OF THE TRUSTEE AND HOLDERS IN EVENT OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any one or more of the following
shall have occurred and be continuing with respect to Debt Securities of any
series (each of the following, an "Event of Default"):
(a) default in the payment of any installment of interest upon any
Debt Securities of that series as and when the same shall become due and
payable, whether or not such payment shall be prohibited by Article XII,
if applicable, and continuance of such default for a period of 30 days; or
(b) default in the payment of the principal of or premium, if any,
on any Debt Securities of that series as and when the same shall become
due and payable, whether at maturity, upon redemption, by declaration,
upon required repurchase or otherwise, whether or not such payment shall
be prohibited by Article XII, if applicable; or
(c) default in the payment of any sinking fund payment with respect
to any Debt Securities of that series as and when the same shall become
due and payable; or
(d) failure on the part of the Company to comply for 30 days, after
notice to the Company by the Trustee or the Holders of at least 25% in
aggregate principal amount at maturity of the Debt Securities then
outstanding voting as a single class, with any provision of Article IV or
Article X hereof; or
(e) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company in the
Debt Securities of that series, in any resolution of the Board of
Directors authorizing the issuance of that series of Debt Securities, in
this Indenture with respect to such series or in any supplemental
Indenture with respect to such series (other than a covenant a default in
the performance of which is elsewhere in this Section specifically dealt
with), continuing for a period of 60 days after the date on which written
notice specifying such failure and requiring the Company to remedy the
same shall have been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in aggregate principal amount of the Debt Securities of that
series at the time Outstanding; or
(f) the Company shall (i) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the United States Code
or any other Federal or State bankruptcy, insolvency or similar law, (ii)
consent to the institution of, or fail to controvert within the time and
in the manner prescribed by law, any such proceeding or the filing of any
such petition, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official for the
Company or for a substantial part of its property, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) admit in writing its inability or fail generally to pay
its debts as they
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become due, (vii) take corporate action for the purpose of effecting any
of the foregoing, or (viii) take any comparable action under any foreign
laws relating to insolvency; or
(g) the entry of an order or decree by a court having competent
jurisdiction in the premises for (i) relief in respect of the Company or a
substantial part of any of its property under Title 11 or the United
States Code or any other Federal or State bankruptcy, insolvency or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for the Company or for a substantial part
of any of its property or (iii) the winding-up or liquidation of the
Company and such order or decree shall continue unstayed and in effect for
60 consecutive days; or any similar relief is granted under any foreign
laws and the order or decree stays in effect for 60 consecutive days; or
(h) any other Event of Default provided under the terms of the Debt
Securities of that series;
then and in each and every case that an Event of Default with respect to Debt
Securities of that series at the time outstanding occurs and is continuing,
unless the principal of and interest on all the Debt Securities of that series
shall have already become due and payable, either the Trustee or the Holders of
not less than 25% in aggregate principal amount of the Debt Securities of that
series then Outstanding hereunder, by notice in writing to the Company (and to
the Trustee if given by Holders), may declare the principal of (or, if the Debt
Securities of that series are Original Issue Discount Debt Securities, such
portion of the principal amount as may be specified in the terms of that series)
and interest on all the Debt Securities of that series to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the Debt
Securities of that series contained to the contrary notwithstanding.
The Holders of a majority in principal amount of the Debt Securities of a
particular series by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
already rendered and if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due solely because of
acceleration. Upon any such rescission, the parties hereto shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the parties hereto shall continue as though no proceeding
had been taken.
In case the Trustee or any Holder shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee or such Holder, then and in
every such case the parties hereto shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies and powers of
the parties hereto shall continue as though no such proceeding had been taken.
The foregoing Events of Default shall constitute Events of Default
whatever the reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by
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operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (c), (d), (e), (f), (g) or (h), its status and
what action the Company is taking or proposes to take with respect thereto.
SECTION 6.02. COLLECTION OF INDEBTEDNESS BY TRUSTEE. If an Event of
Default occurs and is continuing, the Trustee, in its own name and as trustee of
an express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and unpaid
or enforce the performance of any provision of the Debt Securities of the
affected series or this Indenture, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Company or any other obligor upon the Debt Securities
of such series (and collect in the manner provided by law out of the property of
the Company or any other obligor upon the Debt Securities of such series
wherever situated the moneys adjudged or decreed to be payable).
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor upon the Debt Securities of
any series under Title 11 of the United States Code or any other Federal or
State bankruptcy, insolvency or similar law, or in case a receiver, trustee or
other similar official shall have been appointed for its property, or in case of
any other similar judicial proceedings relative to the Company or any other
obligor upon the Debt Securities of any series, its creditors or its property,
the Trustee, irrespective of whether the principal of Debt Securities of any
series shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 6.02, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal, premium, if any, and interest
(or, if the Debt Securities of such series are Original Issue Discount Debt
Securities, such portion of the principal amount as may be specified in the
terms of such series) owing and unpaid in respect of the Debt Securities of such
series, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities Incurred, and all advances
made, by the Trustee except as a result of its negligence or bad faith) and of
the Holders thereof allowed in any such judicial proceedings relative to the
Company, or any other obligor upon the Debt Securities of such series, its
creditors or its property, and to collect and receive any moneys or other
property payable or deliverable on any such claims, and to distribute all
amounts received with respect to the claims of such Holders and of the Trustee
on their behalf, and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of such Holders to make payments to
the Trustee, and, in the event that the Trustee shall consent to the making of
payments directly to such Holders, to pay to the Trustee such amount as shall be
sufficient to cover reasonable compensation to the Trustee, its agents,
attorneys and counsel, and all other reasonable expenses and liabilities
Incurred, and all advances made, by the Trustee except as a result of its
negligence or bad faith.
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All rights of action and claims under this Indenture, or under any of the
Debt Securities, of any series, may be enforced by the Trustee without the
possession of any such Debt Securities or the production thereof in any trial or
other proceedings relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment (except for any amounts payable to
the Trustee pursuant to Section 7.06) shall be for the ratable benefit of the
Holders of all the Debt Securities in respect of which such action was taken.
In case of an Event of Default hereunder the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
SECTION 6.03. APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys
or other property collected by the Trustee pursuant to Section 6.02 with respect
to Debt Securities of any series shall be applied, after giving effect to the
provisions of Article XII, if applicable, in the order following, at the date or
dates fixed by the Trustee for the distribution of such moneys or other
property, upon presentation of the several Debt Securities of such series in
respect of which moneys or other property have been collected, and the notation
thereon of the payment, if only partially paid, and upon surrender thereof if
fully paid:
FIRST: To the payment of all money due the Trustee pursuant to Section 7.06;
SECOND: In case the principal of the Outstanding Debt Securities in respect of
which such moneys have been collected shall not have become due, to the payment
of interest on the Debt Securities of such series in the order of the maturity
of the installments of such interest, with interest (to the extent that such
interest has been collected by the Trustee) upon the overdue installments of
interest at the rate or Yield to Maturity (in the case of Original Issue
Discount Debt Securities) borne by the Debt Securities of such series, such
payments to be made ratably to the Persons entitled thereto, without
discrimination or preference;
THIRD: In case the principal of the Outstanding Debt Securities in respect of
which such moneys have been collected shall have become due, by declaration or
otherwise, to the payment of the whole amount then owing and unpaid upon the
Debt Securities of such series for principal and premium, if any, and interest,
with interest on the overdue principal and premium, if any, and (to the extent
that such interest has been collected by the Trustee) upon overdue installments
of interest at the rate or Yield to Maturity (in the case of Original Issue
Discount Debt Securities) borne by the Debt Securities of such series; and, in
case such moneys shall be insufficient to pay in full the whole amount so due
and unpaid upon the Debt Securities of such series, then to the payment of such
principal and premium, if any, and interest, without preference or priority of
principal and premium, if any, over interest, or of interest over principal and
premium, if any, or of any installment of interest over any other installment of
interest, or of any Debt Security of
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such series over any Debt Security of such series, ratably to the aggregate of
such principal and premium, if any, and interest; and
FOURTH: The remainder, if any, shall be paid to the Company, its successors
or assigns, or to whomsoever may be lawfully entitled to receive the same, or
as a court of competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.03.
SECTION 6.04. LIMITATION ON SUITS BY HOLDERS. No Holder of any Debt
Security of any series shall have any right by virtue or by availing of any
provision of this Indenture to institute any action or proceeding at law or in
equity or in bankruptcy or otherwise, upon or under or with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such Holder previously shall have given to the Trustee
written notice of an Event of Default with respect to Debt Securities of that
same series and of the continuance thereof and unless the Holders of not less
than 25% in aggregate principal amount of the Outstanding Debt Securities of
that series shall have made written request upon the Trustee to institute such
action or proceedings in respect of such Event of Default in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
Incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action or proceedings and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 6.06; it being
understood and intended, and being expressly covenanted by the Holder of every
Debt Security with every other Holder and the Trustee, that no one or more
Holders shall have any right in any manner whatever by virtue or by availing of
any provision of this Indenture to affect, disturb or prejudice the rights of
any Holders, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all such
Holders. For the protection and enforcement of the provisions of this Section
6.04, each and every Holder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Notwithstanding any other provision in this Indenture, however, the right
of any Holder of any Debt Security to receive payment of the principal of, and
premium, if any, and (subject to Section 2.12) interest on, such Debt Security
on or after the respective due dates expressed in such Debt Security, and to
institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or effected without the consent of such
Holder.
SECTION 6.05. REMEDIES CUMULATIVE; DELAY OR OMISSION IN EXERCISE OF
RIGHTS NOT A WAIVER OF DEFAULt. All powers and remedies given by this Article VI
to the Trustee or to the Holders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other powers and
remedies available to the Trustee or the Holders, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any Holder to exercise any right or power accruing upon any Default
occurring and continuing as aforesaid, shall impair any such right or power, or
shall be construed to be a waiver of any such Default or
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an acquiescence therein; and, subject to the provisions of Section 6.04, every
power and remedy given by this Article VI or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Holders.
SECTION 6.06. RIGHTS OF HOLDERS OF MAJORITY IN PRINCIPAL AMOUNT OF
DEBT SECURITIES TO DIRECT TRUSTEE AND TO WAIVE DEFAULT. The Holders of a
majority in aggregate principal amount of the Debt Securities of any series at
the time Outstanding shall have the right to direct the time, method, and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the Debt
Securities of such series; PROVIDED, HOWEVEr, that such direction shall not be
otherwise than in accordance with law and the provisions of this Indenture, and
that subject to the provisions of Section 7.01, the Trustee shall have the right
to decline to follow any such direction if the Trustee being advised by counsel
shall determine that the action so directed may not lawfully be taken, or if the
Trustee shall by a responsible officer or officers determine that the action so
directed would involve it in personal liability or would be unjustly prejudicial
to Holders of Debt Securities of such series not taking part in such direction;
and PROVIDED FURTHER, HOWEVER, that nothing in this Indenture contained shall
impair the right of the Trustee to take any action deemed proper by the Trustee
and which is not inconsistent with such direction by such Holders. Prior to the
acceleration of the maturity of the Debt Securities of any series, as provided
in Section 6.01, the Holders of a majority in aggregate principal amount of the
Debt Securities of that series at the time Outstanding may on behalf of the
Holders of all the Debt Securities of that series waive any past Default or
Event of Default and its consequences for that series specified in the terms
thereof as contemplated by Section 2.03, except (i) a Default in the payment of
the principal of, and premium, if any, or interest on, any of the Debt
Securities and (ii) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Holder affected thereby. In case
of any such waiver, such Default shall cease to exist, any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture, and the Company, the Trustee and the Holders of the Debt Securities
of that series shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.
SECTION 6.07. TRUSTEE TO GIVE NOTICE OF DEFAULTS KNOWN TO IT, BUT MAY
WITHHOLD SUCH NOTICE IN CERTAIN CIRCUMSTANCES. The Trustee shall, within 90 days
after the occurrence of a Default actually known to a responsible officer with
respect to a series of Debt Securities give to the Holders thereof, in the
manner provided in Section 13.03, notice of all Defaults with respect to such
series actually known to a responsible officer of the Trustee, unless such
Defaults shall have been cured or waived before the giving of such notice;
provided that, except in the case of Default in the payment of the principal of,
or premium, if any, or interest on, any of the Debt Securities of such series or
in the making of any sinking fund payment with respect to the Debt Securities of
such series, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a committee of
directors or responsible officers of the Trustee in good faith determine that
the withholding of such notice is in the interests of the Holders thereof.
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SECTION 6.08. REQUIREMENT OF AN UNDERTAKING TO PAY COSTS IN CERTAIN
SUITS UNDER THE INDENTURE OR AGAINST THE TRUSTEE. All parties to this Indenture
agree, and each Holder of any Debt Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit in the manner and to the extent provided in the Trust Indenture Act, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 6.08 shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than ten percent in aggregate principal
amount of the Outstanding Debt Securities of that series or to any suit
instituted by any Holder for the enforcement of the payment of the principal of,
or premium, if any, or interest on, any Debt Security on or after the due date
for such payment expressed in such Debt Security.
ARTICLE VII
CONCERNING THE TRUSTEE
SECTION 7.01. CERTAIN DUTIES AND RESPONSIBILITIES. The Trustee, prior
to the occurrence of an Event of Default and after the curing or waiving of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an
Event of Default has occurred (which has not been cured or waived), the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(a) this subsection shall not be construed to limit the effect of
the first paragraph of this Section 7.01;
(b) prior to the occurrence of an Event of Default with respect to
the Debt Securities of a series and after the curing or waiving of all
Events of Default with respect to such series which may have occurred:
(1) the duties and obligations of the Trustee with respect to Debt
Securities of any series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable
except for the performance of such duties and obligations with
respect to such series as are specifically set forth in this
Indenture, and no implied covenants or obligations with respect to
such series shall be read into this Indenture against the Trustee;
and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the
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opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture; but the Trustee shall examine the
evidence furnished to it pursuant to Section 5.03 to determine
whether or not such evidence conforms to the requirement of this
Indenture;
(c) the Trustee shall not be liable for an error of judgment made in
good faith by a responsible officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(d) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it with respect to Debt Securities of any series
in good faith in accordance with the direction of the Holders of not less
than a majority in aggregate principal amount of the Outstanding Debt
Securities of that series relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to Debt Securities of such series.
None of the provisions of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any personal financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided
in Section 7.01:
(a) the Trustee may rely conclusively and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note or other paper or document believed
by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Company Order (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a
copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
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(c) the Trustee may consult with counsel, and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders of Debt Securities of any series pursuant
to the provisions of this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to it against
the costs, expenses and liabilities which may be Incurred therein or
thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture;
(f) prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, approval or other paper or
document, unless requested in writing to do so by the Holders of a
majority in aggregate principal amount of the then outstanding Debt
Securities of a series affected by such matter; PROVIDED, HOWEVER, that if
the payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be Incurred by it in the making of such
investigation is not, in the opinion of the Trustee, reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require indemnity satisfactory to it against such costs,
expenses or liabilities as a condition to so proceeding. The reasonable
expense of every such investigation shall be paid by the Company or, if
paid by the Trustee, shall be repaid by the Company upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due
care hereunder; and
(h) if any property other then cash shall at any time be subject to
a Lien in favor of the Holders, the Trustee, if and to the extent
authorized by a receivership or bankruptcy court of competent jurisdiction
or by the supplemental instrument subjecting such property to such lien,
shall be entitled to make advances for the purpose of preserving such
property or of discharging tax Liens or other prior Liens or encumbrances
thereon.
SECTION 7.03. TRUSTEE NOT LIABLE FOR RECITALS IN INDENTURE OR IN DEBT
SECURITIES. The recitals contained herein and in the Debt Securities (except the
Trustee's certificate of authentication) shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency of
this Indenture or of the Debt Securities of any series, except that the
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Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Debt Securities and perform its obligations
hereunder, and that the statements made by it or to be made by it in a Statement
of Eligibility and Qualification on Form T-1 supplied to the Company are true
and accurate. The Trustee shall not be accountable for the use or application by
the Company of any of the Debt Securities or of the proceeds thereof.
SECTION 7.04. Trustee, Paying Agent or Registrar May Own Debt
Securities. The Trustee or any paying agent or Registrar, in its individual or
any other capacity, may become the owner or pledgee of Debt Securities and
subject to the provisions of the Trust Indenture Act relating to conflicts of
interest and preferential claims may otherwise deal with the Company with the
same rights it would have if it were not Trustee, paying agent or Registrar.
SECTION 7.05. MONEYS RECEIVED BY TRUSTEE TO BE HELD IN TRUST. Subject
to the provisions of Section 11.05, all moneys received by the Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by law. The Trustee shall be under no liability for interest
on any moneys received by it hereunder. So long as no Event of Default shall
have occurred and be continuing, all interest allowed on any such moneys shall
be paid from time to time to the Company upon a Company Order.
SECTION 7.06. COMPENSATION AND REIMBURSEMENT. The Company covenants
and agrees to pay in Dollars to the Trustee from time to time, and the Trustee
shall be entitled to, such compensation as the Trustee and the Company shall
from time to time agree in writing for all services rendered by it hereunder
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and, except as otherwise
expressly provided herein, the Company will pay or reimburse in Dollars the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents, attorneys and counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advances as
may arise from its negligence or bad faith. The Company also covenants to
indemnify in Dollars the Trustee for, and to hold it harmless against, any loss,
liability, claim, damage or expense incurred without negligence, willful
misconduct or bad faith on the part of the Trustee, arising out of or in
connection with the acceptance or administration of this trust or trusts
hereunder, including the reasonable costs and expenses of defending itself
against any claim of liability in connection with the exercise or performance of
any of its powers or duties hereunder. The obligations of the Company under this
Section 7.06 to compensate and indemnify the Trustee and to pay or reimburse the
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture. The Company and the Holders agree that such additional indebtedness
shall be secured by a Lien prior to that of the Debt Securities upon all
property and funds held or collected by the Trustee, as such, except funds held
in trust for the payment of principal of, and premium, if any, or interest on,
particular Debt Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) or (g) occurs, the expenses and the
compensation for the services are intended
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to constitute expenses of administration under any bankruptcy, insolvency,
reorganization or other similar law.
SECTION 7.07. RIGHT OF TRUSTEE TO RELY ON AN OFFICERS' CERTIFICATE
WHERE NO OTHER EVIDENCE SPECIFICALLY PRESCRIBED. Except as otherwise provided in
Section 7.01, whenever in the administration of the provisions of this Indenture
the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Trustee and such certificate, in the absence of
negligence or bad faith on the part of the Trustee, shall be full warrant to the
Trustee for any action taken, suffered or omitted by it under the provisions of
this Indenture upon the faith thereof.
SECTION 7.08. SEPARATE TRUSTEE; REPLACEMENT OF TRUSTEE. The Company
may, but need not, appoint a separate Trustee for any one or more series of Debt
Securities. The Trustee may resign with respect to one or more or all series of
Debt Securities at any time by giving notice to the Company. The Holders of a
majority in aggregate principal amount of the Debt Securities of a particular
series may remove the Trustee for such series and only such series by so
notifying the Trustee and may appoint a successor Trustee. The Company shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a
majority in principal amount of the Debt Securities of a particular series and
such Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Company shall
promptly appoint a successor Trustee. No resignation or removal of the Trustee
and no appointment of a successor Trustee shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of this Section 7.08.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders of Debt
Securities of each applicable series. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject to
the Lien provided for in Section 7.06.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee gives notice of resignation or is removed, the retiring Trustee
or the Holders of 25% in aggregate principal amount of the Debt Securities of
any applicable series may, at the expense of the Company, petition any court of
competent jurisdiction for the appointment of a successor Trustee for the Debt
Securities of such series.
If the Trustee fails to comply with Section 7.10, any Holder of Debt
Securities of any applicable series may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee for the Debt Securities of such series.
Notwithstanding the replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.06 shall continue for the
benefit of the retiring Trustee.
In the case of the appointment hereunder of a separate or successor
trustee with respect to the Debt Securities of one or more series, the Company,
any retiring Trustee and each successor or separate Trustee with respect to the
Debt Securities of any applicable series shall execute and deliver an Indenture
supplemental hereto (1) which shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of any retiring Trustee with respect to the Debt Securities of any series as to
which any such retiring Trustee is not retiring shall continue to be vested in
such retiring Trustee and (2) that shall add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee, it being
understood that nothing herein or in such supplemental Indenture shall
constitute such Trustees co-trustees of the same trust and that each such
separate, retiring or successor Trustee shall be Trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Debt Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Debt Securities so
authenticated; and in case at that time any of the Debt Securities shall not
have been authenticated, any successor to the Trustee may authenticate such Debt
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debt Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of Section 310(a) of the Trust Indenture Act. The
Trustee shall have a combined capital and surplus of at least $50,000,000, as
set forth in its most recent published annual report of condition. No obligor
upon the Debt Securities of a particular series or Person
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directly or indirectly controlling, controlled by or under common control with
such obligor shall serve as Trustee upon the Debt Securities of such series. The
Trustee shall comply with Section 310(b) of the Trust Indenture Act; provided,
however, that there shall be excluded from the operation of Section 310(b)(1) of
the Trust Indenture Act this Indenture or any indenture or indentures under
which other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such exclusion
set forth in Section 310(b)(1) of the Trust Indenture Act are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding
any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A
Trustee who had resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act to the extent indicated therein.
SECTION 7.12. COMPLIANCE WITH TAX LAWS. The Trustee hereby agrees to
comply with all U.S. Federal income tax information reporting and withholding
requirements applicable to it with respect to payments of premium (if any) and
interest on the Debt Securities, whether acting as Trustee, Registrar, paying
agent or otherwise with respect to the Debt Securities.
SECTION 7.13. TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE
COMPANY. Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three business days after the date any officer of the Company actually receives
such application, unless such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE VIII
CONCERNING THE HOLDERS
SECTION 8.01. EVIDENCE OF ACTION BY HOLDERS. Whenever in this
Indenture it is provided that the Holders of a specified percentage in aggregate
principal amount of the Debt Securities of any or all series may take action
(including the making of any demand or request, the giving of any direction,
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the Holders of such specified percentage have
joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by Holders in person or by agent or proxy
appointed in writing, (b) by the record of the Holders voting in favor thereof
at any meeting of Holders duly called and held in accordance with the provisions
of Section 5.02 or (c) by a combination of such instrument or instruments and
any such record of such a meeting of Holders.
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SECTION 8.02. PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF
DEBT SECURITIES. Subject to the provisions of Sections 7.01, 7.02 and 13.09,
proof of the execution of any instrument by a Holder or his agent or proxy shall
be sufficient if made in accordance with such reasonable rules and regulations
as may be prescribed by the Trustee or in such manner as shall be satisfactory
to the Trustee.
The ownership of Registered Securities of any series shall be proved by
the Debt Security Register or by a certificate of the Registrar for such series.
The Trustee may require such additional proof of any matter referred to in
this Section 8.02 as it shall deem necessary.
SECTION 8.03. WHO MAY BE DEEMED OWNER OF DEBT SECURITIES. Prior to
due presentment for registration of transfer of any Registered Security, the
Company, the Trustee, any paying agent and any Registrar may deem and treat the
Person in whose name any Registered Security shall be registered upon the books
of the Company as the absolute owner of such Registered Security (whether or not
such Registered Security shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of and premium, if any, and (subject to Section
2.03) interest on such Registered Security and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Registrar shall
be affected by any notice to the contrary; and all such payments so made to any
such Holder for the time being, or upon his order, shall be valid and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Registered Security.
None of the Company, the Trustee, any paying agent or the Registrar will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
SECTION 8.04. INSTRUMENTS EXECUTED BY HOLDERS BIND FUTURE HOLDERS. At
any time prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.01, of the taking of any action by the Holders of the percentage in
aggregate principal amount of the Debt Securities of any series specified in
this Indenture in connection with such action and subject to the following
paragraph, any Holder of a Debt Security which is shown by the evidence to be
included in the Debt Securities the Holders of which have consented to such
action may, by filing written notice with the Trustee at its corporate trust
office and upon proof of holding as provided in Section 8.02, revoke such action
so far as concerns such Debt Security. Except as aforesaid any such action taken
by the Holder of any Debt Security shall be conclusive and binding upon such
Holder and upon all future Holders and owners of such Debt Security and of any
Debt Security issued upon transfer thereof or in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon such Debt Security or such other Debt Securities. Any action taken by the
Holders of the percentage in aggregate principal amount of the Debt Securities
of any series specified in this Indenture in connection with such action shall
be conclusively binding upon the Company, the Trustee and the Holders of all the
Debt Securities of such series.
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The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders of Registered Securities entitled to give
their consent or take any other action required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders of Registered
Securities at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders of Registered Securities after such record date. No such
consent shall be valid or effective for more than 120 days after such record
date unless the consent of the Holders of the percentage in aggregate principal
amount of the Debt Securities of such series specified in this Indenture shall
have been received within such 120-day period.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. PURPOSES FOR WHICH SUPPLEMENTAL INDENTURE MAY BE
ENTERED INTO WITHOUT CONSENT OF HOLDERS. The Company, when authorized by a
resolution of the Board of Directors, and the Trustee may from time to time and
at any time, without the consent of Holders, enter into an Indenture or
Indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof) for one or
more of the following purposes:
(a) to evidence the succession pursuant to Article X of another
Person to the Company, or successive successions, and the assumption by
the Successor Company (as defined in Section 10.01) of the covenants,
agreements and obligations of the Company in this Indenture and in the
Debt Securities;
(b) to surrender any right or power herein conferred upon the
Company, to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions for the protection of the Holders
of all or any series of Debt Securities (and if such covenants are to be
for the benefit of less than all series of Debt Securities, stating that
such covenants are expressly being included solely for the benefit of such
series) as the Board of Directors shall consider to be for the protection
of the Holders of such Debt Securities, and to make the occurrence, or the
occurrence and continuance, of a Default in any of such additional
covenants, restrictions, conditions or provisions a Default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture; provided, that in respect of any such
additional covenant, restriction, condition or provision such supplemental
Indenture may provide for a particular period of grace after Default
(which period may be shorter or longer than that allowed in the case of
other Defaults) or may provide for an immediate enforcement upon such
Default or may limit the remedies available to the Trustee upon such
Default or may limit the right of the Holders of a majority in aggregate
principal amount of any or all series of Debt Securities to waive such
default;
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(c) to cure any ambiguity or to correct or supplement any provision
contained herein, in any supplemental Indenture or in any Debt Securities
of any series that may be defective or inconsistent with any other
provision contained herein, in any supplemental Indenture or in the Debt
Securities of such series; to convey, transfer, assign, mortgage or pledge
any property to or with the Trustee, or to make such other provisions in
regard to matters or questions arising under this Indenture as shall not
adversely affect the interests of any Holders of Debt Securities of any
series;
(d) to modify or amend this Indenture in such a manner as to permit
the qualification of this Indenture or any Indenture supplemental hereto
under the Trust Indenture Act as then in effect, except that nothing
herein contained shall permit or authorize the inclusion in any Indenture
supplemental hereto of the provisions referred to in Section 316(a)(2) of
the Trust Indenture Act;
(e) to add to or change any of the provisions of this Indenture to
change or eliminate any restrictions on the payment of principal of, or
premium, if any, or interest on, Registered Securities; PROVIDED, that any
such action shall not adversely affect the interests of the Holders of
Debt Securities of any series in any material respect;
(f) to comply with Article X;
(g) in the case of any Debt Securities, if any, subordinated
pursuant to Article XII, to make any change in Article XII that would
limit or terminate the benefits applicable to any holder of Senior
Indebtedness (or Representatives therefor) under Article XII;
(h) to add Guarantees with respect to the Debt Securities or to
secure the Debt Securities;
(i) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Debt Securities; provided,
however, that any such addition, change or elimination not otherwise
permitted under this Section 9.01 shall (i) neither (A) apply to any Debt
Security of any series created prior to the execution of such supplemental
Indenture and entitled to the benefit of such provision nor (B) modify the
rights of the Holder of any such Debt Security with respect to such
provision or (ii) shall become effective only when there is no such Debt
Security outstanding;
(j) to evidence and provide for the acceptance of appointment
hereunder by a successor or separate Trustee with respect to the Debt
Securities of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee;
(k) to establish the form or terms of Debt Securities of any series
as permitted by Sections 2.01 and 2.03; and
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(l) to provide for uncertificated Debt Securities in addition to or
in place of uncertificated Debt Securities or to alter the provisions of
Article II hereof (including the related definitions) in a manner that
does not materially adversely affect any Holder.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental Indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental Indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental Indenture authorized by the provisions of this Section
9.01 may be executed by the Company and the Trustee without the consent of the
Holders of any of the Debt Securities at the time Outstanding, notwithstanding
any of the provisions of Section 9.02.
In the case of any Debt Securities subordinated pursuant to Article XII,
an amendment under this Section 9.01 may not make any change that adversely
affects the rights under Article XII of any holder of such Senior Indebtedness
then Outstanding unless the holders of such Senior Indebtedness (or any group or
Representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section 9.01 becomes effective, the Company
shall mail to Holders of Debt Securities of each series affected thereby a
notice briefly describing such amendment. The failure to give such notice to all
such Holders, or any defect therein, shall not impair or affect the validity of
an amendment under this Section 9.01.
SECTION 9.02. MODIFICATION OF INDENTURE WITH CONSENT OF HOLDERS OF
DEBT SECURITIES. Without notice to any Holder but with the consent (evidenced as
provided in Section 8.01) of the Holders of not less than a majority in
aggregate principal amount of the outstanding Debt Securities of each series
affected by such supplemental Indenture, the Company, when authorized by a
resolution of the Board of Directors, and the Trustee may from time to time and
at any time enter into an Indenture or Indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act as in force at the
date of execution thereof) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental Indenture or of modifying in any manner the rights of the
Holders of the Debt Securities of such series; provided, that no such
supplemental Indenture, without the consent of the Holders of each Debt Security
so affected, shall (i) reduce the percentage in principal amount of Debt
Securities of any series whose Holders must consent to an amendment; (ii) reduce
the rate of or extend the time for payment of interest on any Debt Security;
(iii) reduce the principal of or extend the Stated Maturity of any Debt
Security; (iv) reduce the premium payable upon the redemption of any Debt
Security or change the time at which any Debt Security may or shall be redeemed
in accordance with Article III; (v) make any Debt Security payable in Currency
other than that stated in the Debt Security; (vi) in the case of any Debt
Security subordinated pursuant to Article XII, make any change in Article XII
that adversely affects the rights of any Holder under Article XII;
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(vii) release any security that may have been granted in respect of the Debt
Securities; or (viii) make any change in Section 6.06 or this Section 9.02.
A supplemental Indenture which changes or eliminates any covenant or other
provision of this Indenture which has been expressly included solely for the
benefit of one or more particular series of Debt Securities or which modifies
the rights of the Holders of Debt Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Debt Securities of any other series.
Upon the request of the Company, accompanied by a copy of a resolution of
the Board of Directors authorizing the execution of any such supplemental
Indenture, and upon the filing with the Trustee of evidence of the consent of
Holders as aforesaid, the Trustee shall join with the Company in the execution
of such supplemental Indenture unless such supplemental Indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion but shall not be obligated to enter
into such supplemental Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed supplemental
Indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
In the case of any Debt Securities subordinated pursuant to Article XII,
an amendment under this Section 9.02 may not make any change that adversely
affects the rights under Article XII of any holder of such Senior Indebtedness
then Outstanding unless the holders of such Senior Indebtedness (or any group or
Representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section 9.02 becomes effective, the Company
shall mail to Holders of Debt Securities of each series affected thereby a
notice briefly describing such amendment. The failure to give such notice to all
such Holders, or any defect therein, shall not impair or affect the validity of
an amendment under this Section 9.02.
SECTION 9.03. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution
of any supplemental Indenture pursuant to the provisions of this Article IX,
this Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the Holders
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental Indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
The Trustee, subject to the provisions of Sections 7.01 and 7.02, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental Indenture complies with the provisions of
this Article IX.
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SECTION 9.04. DEBT SECURITIES MAY BEAR NOTATION OF CHANGES BY
SUPPLEMENTAL INDENTURES. Debt Securities of any series authenticated and
delivered after the execution of any supplemental Indenture pursuant to the
provisions of this Article IX may, and shall if required by the Issuer, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental Indenture. New Debt Securities of any series so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental Indenture may
be prepared and executed by the Company, authenticated by the Trustee and
delivered in exchange for the Debt Securities of such series then outstanding.
Failure to make the appropriate notation or to issue a new Debt Security of such
series shall not affect the validity of such amendment.
SECTION 9.05. PAYMENT FOR CONSENT. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Debt Securities unless such consideration
is offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 10.01. CONSOLIDATIONS AND MERGERS OF THE COMPANY. The
Company shall not consolidate with or merge with or into any Person, or convey,
transfer or lease all or substantially all its assets, unless: (i) either (a)
the Company shall be the continuing Person in the case of a merger or (b) the
resulting, surviving or transferee Person if other than the Company (the
"Successor Company") shall be a corporation organized and existing under the
laws of the United States, any State thereof or the District of Columbia and the
Successor Company shall expressly assume, by an Indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under the Debt Securities according to their
tenor, and this Indenture; (ii) immediately after giving effect to such
transaction (and treating any Indebtedness which becomes an obligation of the
Successor Company or any Subsidiary of the Company as a result of such
transaction as having been Incurred by the Successor Company or such Subsidiary
at the time of such transaction), no Default or Event of Default would occur or
be continuing; and (iii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental Indenture (if any)
comply with this Indenture.
SECTION 10.02. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In
case of any consolidation or merger, or conveyance or transfer of the assets of
the Company as an entirety or virtually as an entirety in accordance with
Section 10.01, the Successor Company shall succeed to and be substituted for the
Company, with the same effect as if it had been named herein as the party of the
first part, and the predecessor corporation shall be relieved of any further
obligation under the Indenture and the Debt Securities. The Successor Company
thereupon may cause to be signed, and may issue either in its own name or in the
name of the Company, any or all the Debt Securities issuable hereunder which
theretofore shall not have been signed by the Company and
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delivered to the Trustee; and, upon the order of the Successor Company, instead
of the Company, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any Debt
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any Debt Securities which
the Successor Company thereafter shall cause to be signed and delivered to the
Trustee for that purpose. All the Debt Securities so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Debt
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all such Debt Securities had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale or conveyance such changes
in phraseology and form (but not in substance) may be made in the Debt
Securities appertaining thereto thereafter to be issued as may be appropriate.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE;
DEFEASANCE; UNCLAIMED MONEYS
SECTION 11.01. APPLICABILITY OF ARTICLE. If, pursuant to Section
2.03, provision is made for the defeasance of Debt Securities of a series, then
the provisions of this Article XI relating to defeasance of Debt Securities
shall be applicable except as otherwise specified pursuant to Section 2.03 for
Debt Securities of such series.
SECTION 11.02. SATISFACTION AND DISCHARGE OF INDENTURE:
DEFEASANCE.
(a) If at any time (i) the Company shall have delivered to the
Trustee for cancellation all Debt Securities of any series theretofore
authenticated and delivered (other than (1) any Debt Securities of such
series which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.09 and (2) Debt
Securities for whose payment money has theretofore been deposited in trust
and thereafter repaid to the Company as provided in Section 11.05) or (ii)
all Debt Securities of such series not theretofore delivered to the
Trustee for cancellation shall have become due and payable, or are by
their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption, and the Company shall
deposit with the Trustee as trust funds the entire amount in the Currency
in which such Debt Securities are denominated (except as otherwise
provided pursuant to Section 2.03) sufficient to pay at maturity or upon
redemption all Debt Securities of such series not theretofore delivered to
the Trustee for cancellation, including principal and premium, if any, and
interest due or to become due on such date of maturity or redemption date,
as the case may be, and if in either case the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company, then
this Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of such Debt
Securities herein expressly provided for and rights to receive payments of
principal of, and premium, if any, and interest on, such Debt Securities)
with respect to the Debt Securities of such series, and the Trustee, on
demand of the Company accompanied by an Officers'
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Certificate and an opinion of counsel and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of
and discharging this Indenture.
(b) Subject to Sections 11.02(c), 11.03 and 11.07, the Company at
any time may terminate, with respect to Debt Securities of a particular
series, (i) all its obligations under the Debt Securities of such series
and this Indenture with respect to the Debt Securities of such series
("legal defeasance option") or (ii) its obligations with respect to the
Debt Securities of such series under clause (ii) of Section 10.01 and the
related operation of Section 6.01(d) and the operation of Sections 6.01(e)
and (h) ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant
defeasance option.
If the Company exercises its legal defeasance option, payment of the
Debt Securities of the defeased series may not be accelerated because of
an Event of Default. If the Company exercises its covenant defeasance
option, payment of the Debt Securities of the defeased series may not be
accelerated because of an Event of Default specified in Sections 6.01(d),
(e), and (h) (except to the extent covenants or agreements referenced in
such Sections remain applicable).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.07, 2.09, 4.02, 4.04, 5.01, 7.06, 7.10, 11.05,
11.06 and 11.07 shall survive until the Debt Securities of the defeased
series have been paid in full. Thereafter, the Company's obligations in
Sections 7.06, 11.05 and 11.06 shall survive.
SECTION 11.03. CONDITIONS OF DEFEASANCE. The Company may
exercise its legal defeasance option or its covenant defeasance option
with respect to Debt Securities of a particular series only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal of, and
premium, if any, and interest on, the Debt Securities of such series to
maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay the principal, premium and
interest when due on all the Debt Securities of such series to maturity or
redemption, as the case may be;
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(3) 91 days pass after the deposit is made and during the 91-day
period no Default specified in Section 6.01(f) or (g) with respect to the
Company occurs which is continuing at the end of the period;
(4) no Default has occurred and is continuing on the date of such
deposit and after giving effect thereto;
(5) the deposit does not constitute a default under any other
agreement binding on the Company and, if the Debt Securities of such
series are subordinated pursuant to Article XII, is not prohibited by
Article XII;
(6) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(7) in the event of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from the Internal Revenue Service a ruling, or (ii)
since the date of this Indenture there has been a change in the applicable
Federal income tax law, in either case of the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of Debt
Securities of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance had not
occurred;
(8) in the event of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of Debt Securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred; and
(9) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Debt Securities of such series as
contemplated by this Article XI have been complied with.
Before or after a deposit, the Company may make arrangements satisfactory to the
Trustee for the redemption of Debt Securities of such series at a future date in
accordance with Article III.
SECTION 11.04. APPLICATION OF TRUST MONEY. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article XI. It shall apply the deposited money and the money from U.S.
Government Obligations through any paying agent and in accordance with this
Indenture to the payment of principal of, and premium, if any, and interest on,
the Debt Securities of the
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defeased series. In the event the Debt Securities of the defeased series are
subordinated pursuant to Article XII, money and securities so held in trust are
not subject to Article XII.
SECTION 11.05. REPAYMENT TO COMPANY. The Trustee and any paying
agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and any
paying agent shall pay to the Company upon request any money held by them for
the payment of principal, premium or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to such money must look to the Company
for payment as general creditors.
SECTION 11.06. INDEMNITY FOR U.S. GOVERNMENT OBLIGATIONS. The
Company shall pay and shall indemnify the Trustee and the Holders against any
tax, fee or other charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest received on such U.S.
Government Obligations.
SECTION 11.07. REINSTATEMENT. If the Trustee or any paying agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article XI by reason of any legal proceeding or by reason of any order or
judgment of any court or government authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Debt Securities of the defeased series shall be revived and
reinstated as though no deposit had occurred pursuant to this Article XI until
such time as the Trustee or any paying agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article XI.
ARTICLE XII
SUBORDINATION OF DEBT SECURITIES
SECTION 12.01. APPLICABILITY OF ARTICLE; AGREEMENT TO
SUBORDINATE. The provisions of this Article XII shall be applicable to the Debt
Securities of any series (Debt Securities of such series referred to in this
Article XII as "Subordinated Debt Securities") designated, pursuant to Section
2.03, as subordinated to Senior Indebtedness. Each Holder by accepting a
Subordinated Debt Security agrees that the Indebtedness evidenced by such
Subordinated Debt Security is subordinated in right of payment, to the extent
and in the manner provided in this Article XII, to the prior payment of all
Senior Indebtedness and that the subordination is for the benefit of and
enforceable by the holders of Senior Indebtedness. All provisions of this
Article XII shall be subject to Section 12.12.
SECTION 12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of the Senior Indebtedness (including interest (if
any), accruing on or after the
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commencement of a proceeding in bankruptcy, whether or not allowed as a
claim against the Company in such bankruptcy proceeding) before Holders of
Subordinated Debt Securities shall be entitled to receive any payment of
principal of, or premium, if any, or interest on, the Subordinated Debt
Securities; and
(2) until the Senior Indebtedness is paid in full, any distribution
to which Holders of Subordinated Debt Securities would be entitled but for
this Article XII shall be made to holders of Senior Indebtedness as their
interests may appear, except that such Holders may receive shares of stock
and any debt securities that are subordinated to Senior Indebtedness to at
least the same extent as the Subordinated Debt Securities.
SECTION 12.03. DEFAULT ON SENIOR INDEBTEDNESS. The Company may
not pay the principal of, or premium, if any, or interest on, the Subordinated
Debt Securities or make any deposit pursuant to Article XI and may not
repurchase, redeem or otherwise retire (except, in the case of Subordinated Debt
Securities that provide for a mandatory sinking fund pursuant to Section 3.04,
by the delivery of Subordinated Debt Securities by the Company to the Trustee
pursuant to the first paragraph of Section 3.05) any Debt Securities
(collectively, "pay the Subordinated Debt Securities") if (i) any principal,
premium or interest in respect of Senior Indebtedness is not paid within any
applicable grace period (including at maturity) or (ii) any other default on
Senior Indebtedness occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, (x) the default
has been cured or waived and any such acceleration has been rescinded or (y)
such Senior Indebtedness has been paid in full in cash; provided, however, that
the Company may pay the Subordinated Debt Securities without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the Representative of each issue of Designated Senior Indebtedness.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Senior Indebtedness
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company may
not pay the Subordinated Debt Securities for a period (a "Payment Blockage
Period") commencing upon the receipt by the Company and the Trustee of written
notice of such default from the Representative of any Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period (a
"Blockage Notice") and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) by
repayment in full in cash of such Designated Senior Indebtedness or (iii)
because the default giving rise to such Blockage Notice is no longer
continuing). Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in the first
sentence of this Section 12.03), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Subordinated Debt Securities after such Payment Blockage Period. Not more
than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to any number of issues of
Senior Indebtedness during such period; provided, however, that if any Blockage
Notice within such 360-day period is given by or on behalf of any holders of
Designated Senior Indebtedness (other than the Bank Indebtedness), the
Representative of the Bank Indebtedness
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may give another Blockage Notice within such period; provided further, however,
that in no event may the total number of days during which any Payment Blockage
Period or Periods is in effect exceed 179 days in the aggregate during any 360
consecutive day period. For purposes of this Section 12.03, no default or event
of default which existed or was continuing on the date of the commencement of
any Payment Blockage Period with respect to the Senior Indebtedness initiating
such Payment Blockage Period shall be, or be made, the basis of the commencement
of a subsequent Payment Blockage Period by the Representative of such Senior
Indebtedness, whether or not within a period of 360 consecutive days, unless
such default or event of default shall have been cured or waived for a period of
not less than 90 consecutive days.
SECTION 12.04. ACCELERATION OF PAYMENT OF DEBT SECURITIES. If
payment of the Subordinated Debt Securities is accelerated because of an Event
of Default, the Company or the Trustee shall promptly notify the holders of the
Designated Senior Indebtedness (or their Representatives) of the acceleration.
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a
distribution is made to Holders of Subordinated Debt Securities that because of
this Article XII should not have been made to them, the Holders who receive such
distribution shall hold it in trust for holders of Senior Indebtedness and pay
it over to them as their interests may appear.
SECTION 12.06. SUBROGATION. After all Senior Indebtedness is paid
in full and until the Subordinated Debt Securities are paid in full, Holders
thereof shall be subrogated to the rights of holders of Senior Indebtedness to
receive distributions applicable to Senior Indebtedness. A distribution made
under this Article XII to holders of Senior Indebtedness which otherwise would
have been made to Holders of Subordinated Debt Securities is not, as between the
Company and such Holders, a payment by the Company on Senior Indebtedness.
SECTION 12.07. RELATIVE RIGHTS. This Article XII defines the
relative rights of Holders of Subordinated Debt Securities and holders of Senior
Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of either
Subordinated Debt Securities or Debt Securities, the obligation of the
Company, which is absolute and unconditional, to pay principal of, and
premium, if any, and interest on, the Subordinated Debt Securities and the
Debt Securities in accordance with their terms; or
(2) prevent the Trustee or any Holder of either Subordinated Debt
Securities or Debt Securities from exercising its available remedies upon
a Default, subject to the rights of holders of Senior Indebtedness to
receive distributions otherwise payable to Holders of Subordinated Debt
Securities.
SECTION 12.08. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No
right of any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Subordinated Debt Securities shall be impaired by
any act or failure to act by the Company or by its failure to comply with this
Indenture.
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SECTION 12.09. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding Section 12.03, the Trustee or any paying agent may continue to
make payments on Subordinated Debt Securities and shall not be charged with
knowledge of the existence of facts that would prohibit the making of any such
payments unless, not less than two business days prior to the date of such
payment, a responsible officer of the Trustee receives notice satisfactory to it
that payments may not be made under this Article XII. The Company, the
Registrar, any paying agent, a Representative or a holder of Senior Indebtedness
may give the notice; provided, however, that, if an issue of Senior Indebtedness
has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and any paying agent may do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this Article XII with respect
to any Senior Indebtedness which may at any time be held by it, to the same
extent as any other holder of Senior Indebtedness; and nothing in Article VII
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article XII shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.06.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever
a distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representative (if any).
SECTION 12.11. ARTICLE XII NOT TO PREVENT DEFAULTS OR LIMIT RIGHT
TO ACCELERATE. The failure to make a payment pursuant to the Debt Securities by
reason of any provision in this Article XII shall not be construed as preventing
the occurrence of a Default. Nothing in this Article XII shall have any effect
on the right of the Holders or the Trustee to accelerate the maturity of either
the Subordinated Debt Securities or the Debt Securities, as the case may be.
SECTION 12.12. TRUST MONEYS NOT SUBORDINATED. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article XI by the Trustee for
the payment of principal of, and premium, if any, and interest on, the
Subordinated Debt Securities or the Debt Securities shall not be subordinated to
the prior payment of any Senior Indebtedness or subject to the restrictions set
forth in this Article XII, and none of the Holders thereof shall be obligated to
pay over any such amount to the Company or any holder of Senior Indebtedness of
the Company or any other creditor of the Company.
SECTION 12.13. TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this Article XII, the Trustee and the Holders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to such
Holders or (iii) upon the Representatives for the holders of Senior Indebtedness
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable
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thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article XII. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness to participate in any payment
or distribution pursuant to this Article XII, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article XII, and, if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article XII.
SECTION 12.14. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder
by accepting a Subordinated Debt Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination between the Holders of Subordinated Debt
Securities and the holders of Senior Indebtedness as provided in this Article
XII and appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders of Subordinated Debt
Securities or the Company or any other Person, money or assets to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article XII
or otherwise.
SECTION 12.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON
SUBORDINATION PROVISIONS. Each Holder by accepting a Subordinated Debt Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Subordinated Debt Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. SUCCESSORS AND ASSIGNS OF COMPANY BOUND BY
INDENTURE. All the covenants, stipulations, promises and agreements in this
Indenture contained by or in behalf of the Company or the Trustee shall bind its
successors and assigns, whether so expressed or not.
SECTION 13.02. ACTS OF BOARD, COMMITTEE OR OFFICER OF SUCCESSOR
COMPANY VALID. Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any Successor Company.
61
<PAGE>
SECTION 13.03. REQUIRED NOTICES OR DEMANDS. Except as otherwise
expressly provided in this Indenture, any notice or demand which by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by the Holders to or on the Company may be given or served by
being deposited postage prepaid in a post office letter box in the United States
addressed (until another address is filed by the Company with the Trustee) as
follows: Cornell Corrections, Inc., 1700 West Loop South, Suite 1500, Houston,
Texas 77027, Attention: Chief Financial Officer. Except as otherwise expressly
provided in this Indenture, any notice, direction, request or demand by the
Company or by any Holder to or upon the Trustee may be given or made, for all
purposes, by being deposited, postage prepaid, in a post office letter box in
the United States addressed to the corporate trust office of the Trustee
initially at Chase Bank of Texas, National Association, 600 Travis, 10th Floor,
Houston, Texas 77002, Attention: Corporate Trust Administration. The Company or
the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.
Any notice required or permitted to a Registered Holder by the Company or
the Trustee pursuant to the provisions of this Indenture shall be deemed to be
properly mailed by being deposited postage prepaid in a post office letter box
in the United States addressed to such Holder at the address of such Holder as
shown on the Debt Security Register. Any report pursuant to Section 313 of the
Trust Indenture Act shall be transmitted in compliance with subsection (c)
therein.
In the event of suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice by mail, then such
notification as shall be given with the approval of the Trustee shall constitute
sufficient notice for every purpose thereunder. In the event of suspension of
publication of any Authorized Newspaper or by reason of any other cause it shall
be impracticable to give notice by publication, then such notification as shall
be given with the approval of the Trustee shall constitute sufficient notice for
every purpose hereunder.
Failure to mail a notice or communication to a Holder or any defect in it
or any defect in any notice by publication as to a Holder shall not affect the
sufficiency of such notice with respect to other Holders. If a notice or
communication is mailed or published in the manner provided above, it is
conclusively presumed duly given.
SECTION 13.04. INDENTURE AND DEBT SECURITIES TO BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. This Indenture and each Debt
Security shall be deemed to be New York contracts, and for all purposes shall be
construed in accordance with the laws of said State (without reference to
principles of conflicts of law).
SECTION 13.05. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL TO BE
FURNISHED UPON APPLICATION OR DEMAND BY THE COMPANY. Upon any application or
demand by the Company to the Trustee to take any action under any of the
provisions of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the
62
<PAGE>
furnishing of such document is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (1) a statement that the Person making such
certificate or opinion has read such covenant or condition, (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
SECTION 13.06. PAYMENTS DUE ON LEGAL HOLIDAYS. In any case where
the date of maturity of interest on or principal of and premium, if any, on the
Debt Securities of a series or the date fixed for redemption or repayment of any
Debt Security or the making of any sinking fund payment shall not be a business
day at any Place of Payment for the Debt Securities of such series, then payment
of interest or principal and premium, if any, or the making of such sinking fund
payment need not be made on such date at such Place of Payment, but may be made
on the next succeeding business day at such Place of Payment with the same force
and effect as if made on the date of maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date. If a record date is
not a business day, the record date shall not be affected.
SECTION 13.07. PROVISIONS REQUIRED BY TRUST INDENTURE ACT TO
CONTROL. If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision included in this Indenture which
is required to be included in this Indenture by any of Sections 310 to 318,
inclusive, of the Trust Indenture Act, such required provision shall control.
SECTION 13.08. COMPUTATION OF INTEREST ON DEBT SECURITIES.
Interest, if any, on the Debt Securities shall be computed on the basis of a
360-day year of twelve 30-day months, except as may otherwise be provided
pursuant to Section 2.03.
SECTION 13.09. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The
Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar and any paying agent may make reasonable rules for their functions.
SECTION 13.10. NO RECOURSE AGAINST OTHERS. An incorporator or any
past, present or future director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of the Company
under the Debt Securities or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Debt Security, each Holder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the Debt
Securities.
SECTION 13.11. SEVERABILITY. In case any provision in this
Indenture or the Debt Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
63
<PAGE>
SECTION 13.12. EFFECT OF HEADINGS. The article and section
headings herein and in the Table of Contents are for convenience only and shall
not affect the construction hereof.
SECTION 13.13. INDENTURE MAY BE EXECUTED IN COUNTERPARTS. This
Indenture may be executed in any number of counterparts, each of which shall be
an original; but such counterparts shall together constitute but one and the
same instrument.
SECTION 13.14. ACCEPTANCE BY TRUSTEE. The Trustee hereby accepts
the trusts in this Indenture upon the terms and conditions herein set forth.
64
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
signed as of the date first written above.
CORNELL CORRECTIONS, INC.
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
65
EXHIBIT 5.1
[LETTERHEAD OF LOCKE LIDDELL & SAPP LLP]
November 18, 1999
Cornell Corrections, Inc.
1700 West Loop South, Suite 1500
Houston, Texas 77027
Gentlemen:
We have acted as counsel for Cornell Corrections, Inc., a Delaware
corporation (the "Company"), in connection with its filing with the Securities
and Exchange Commission (the "Commission") of a Registration Statement on Form
S-3 (the "Registration Statement") with respect to the Company's (i) unsecured
debt securities ("Debt Securities"), (ii) shares of common stock, par value
$.001 per share, including the preferred stock purchase rights associated
therewith (collectively, "Common Stock"), and (iii) shares of preferred stock,
par value $.001 per share ("Preferred Stock" and, together with the Debt
Securities and the Common Stock, the "Securities"), such Securities to be issued
from time to time pursuant to Rule 415 under the Securities Act of 1933, as
amended, for an aggregate initial offering price not to exceed $350,000,000.
We have examined (i) the Restated Certificate of Incorporation and Amended
and Restated Bylaws of the Company, each as amended to date, (ii) a form of
Indenture (the "Indenture") between the Company and Chase Bank of Texas,
National Association, as Trustee, and (iii) such certificates, statutes and
other instruments and documents as we considered appropriate for purposes of the
opinions hereafter expressed.
In connection with this opinion, we have assumed that (i) the Registration
Statement, and any amendments thereto (including post-effective amendments),
will have become effective; (ii) a Prospectus Supplement will have been prepared
and filed with the Commission describing the Securities offered thereby; (iii)
all Securities will be issued and sold in compliance with applicable federal and
state securities laws and in the manner stated in the Registration Statement and
the appropriate Prospectus Supplement; and (iv) a definitive purchase,
underwriting, sales agency or similar agreement with respect to any Securities
offered will have been duly authorized and validly executed and delivered by the
Company and the other parties thereto.
Based upon and subject to the foregoing, and having regard for such legal
considerations as we have deemed relevant, we are of the opinion that:
1. With respect to shares of Common Stock, when (i) the Board of Directors
of the Company or, to the extent permitted by the Delaware General Corporation
Law, as amended, a duly constituted and acting committee thereof (such Board of
Directors or committee being
<PAGE>
Cornell Corrections, Inc.
November 18, 1999
Page 2
referred to herein as the "Board"), has taken all necessary corporate action to
approve the issuance of and the terms of the offering of the shares of Common
Stock and related matters; and (ii) certificates representing the shares of
Common Stock have been duly executed, countersigned, registered and delivered
either (a) in accordance with the applicable definitive purchase, underwriting,
sales agency or similar agreement approved by the Board upon payment of the
consideration therefor (not less than the par value of the Common Stock)
provided for therein, or (b) upon conversion, exchange or exercise of any other
Security in accordance with the terms of such Security or the instrument
governing such Security providing for such conversion, exchange or exercise as
approved by the Board, upon payment of the consideration approved by the Board
(not less than the par value of the Common Stock), the shares of Common Stock
(including any Common Stock duly issued upon the conversion or exchange of any
Securities convertible or exchangeable into Common Stock) will be duly
authorized, validly issued, fully paid and nonassessable.
2. With respect to shares of Preferred Stock, when (i) the Board has taken
all necessary corporate action to approve the issuance of and the terms of the
offering of the shares of Preferred Stock and related matters; and (ii)
certificates representing the shares of Preferred Stock have been duly executed,
countersigned, registered and delivered either (a) in accordance with the
applicable definitive purchase, underwriting, sales agency or similar agreement
approved by the Board upon payment of the consideration therefor (not less than
the par value of the Preferred Stock) provided for therein, or (b) upon
conversion, exchange or exercise of any other Security in accordance with the
terms of such Security or the instrument governing such Security providing for
such conversion, exchange or exercise as approved by the Board, upon payment of
the consideration approved by the Board (not less than the par value of the
Preferred Stock), the shares of Preferred Stock (including any Preferred Stock
duly issued upon the conversion or exchange of any Securities convertible or
exchangeable into Preferred Stock) will be duly authorized, validly issued,
fully paid and nonassessable.
3. With respect to Debt Securities to be issued under the Indenture, when
(i) the Indenture shall have been duly authorized and validly executed and
delivered by the Company and Chase Bank of Texas, National Association, as
Trustee, (ii) the Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"); (iii) the Board has taken all necessary
corporate action to approve the issuance and terms of such Debt Securities, the
terms of the offering thereof and related matters; (iv) such Debt Securities
have been duly executed, authenticated, issued and delivered in accordance with
the Indenture; and (v) such Debt Securities have been duly executed,
authenticated, issued and delivered in accordance with the applicable definitive
purchase, underwriting, sales agency or similar agreement approved by the Board
upon payment of the consideration therefore provided for therein, such Debt
Securities will be legally issued and will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as such enforcement is subject to any applicable bankruptcy,
insolvency, reorganization or other law relating to or affecting creditors'
rights generally and general principles of equity and will be entitled to the
benefits of the Indenture.
<PAGE>
Cornell Corrections, Inc.
November 18, 1999
Page 3
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the statements made with respect to us under the
caption "Legal Matters" in the Prospectus included as part of the Registration
Statement.
Very truly yours,
/s/ LOCKE LIDDELL & SAPP LLP
EXHIBIT 12.1
Computation of the Historical Ratio of Earnings to Fixed Charges
(000'S)
<TABLE>
<CAPTION>
NINE
MONTHS
YEAR ENDED DECEMBER 31, ENDED
-------------------------------------------------- SEP 30,
1994 1995 1996 1997 1998 1999
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense .................................. $ 294 $ 1,115 $ 2,810 $ 491 $ 2,601 $ 5,657
Capitalized interest .............................. -- -- -- 151 2,293 1,126
Interest element of rentals ....................... 1,180 1,589 1,669 2,534 3,090 2,524
------- ------- ------- ------- ------- -------
Total ............................................. $ 1,474 $ 2,704 $ 4,479 $ 3,176 $ 7,984 $ 9,307
======= ======= ======= ======= ======= =======
Earnings:
Net income (loss) ................................. $ (600) $ (989) $(2,379) $ 3,554 $ 6,062 $ 2,554
Plus:
Provision for income taxes ........................ 101 -- 75 1,999 4,042 3,672
Fixed charges less interest capitalized ........... 1,474 2,704 4,479 3,025 5,691 8,181
Cumulative effect of change in accounting principle -- -- -- -- -- 2,954
------- ------- ------- ------- ------- -------
$ 975 $ 1,715 $ 2,175 $ 8,578 $15,795 $17,361
======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges (1) (2) ........ -- -- -- 2.70 1.98 1.87
------- ------- ------- ------- ------- -------
</TABLE>
(1) In computing the ratio of earnings to fixed charges, (a) earnings have
been based on income from continuing operations before income taxes and
fixed charges (exclusive of interest capitalized) and (b) fixed charges
consist of interest expense (including amounts capitalized) and the
estimated interest portion of rents.
(2) As a result of the net losses in 1994, 1995 and 1996, earnings did not
cover fixed charges for those years by $499, $989 and $2,304,
respectively.
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 report dated February 25, 1999
included in Cornell Corrections, Inc.'s Form 10-K for the year ended December
31, 1998 and to all references to our Firm included in this registration
statement.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Houston, Texas
November 18, 1999
EXHIBIT 25.1
***************************************************************
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE
ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2) ____ [Not Applicable.]
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
Not applicable
(Jurisdiction of incorporation or organization
if not a U.S. national bank)
74-0800980
(I.R.S. Employer Identification No.)
712 Main Street, Houston, Texas 77002
(Address of principal executive offices) (Zip code)
Lee Boocker, 712 Main Street, 26th Floor,
Houston, Texas 77002, (713) 216-2448
(Name, address and telephone number of agent for service)
CORNELL CORRECTIONS, INC.
(Exact name of obligor as specified in its charter)
Delaware 76-0433642
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1700 West Loop South, Suite 1500, Houston, Texas 77027
(Address of principal executive offices) (Zip Code)
Debt Securities
(Title of the indenture securities)
****************************************************************
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee--
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency, Washington, D. C.
Federal Deposit Insurance Corporation,
Washington, D. C.
The Board of Governors of the Federal Reserve System, Washington,
D. C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
As of November 16, 1999
No such affiliation exists.
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting securities of
the trustee.
As of November 16, 1999
COLUMN A COLUMN B
TITLE OF CLASS AMOUNT OUTSTANDING
- ---------------------------------------------------------- ------------------
(1) Chase Bank of Texas, National Association Common Stock 5,000,000
(1) Chase Equity Holdings, Inc., a Deleware corporation, owns all of such
shares, except for director's qualifying shares.
2
<PAGE>
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:
(a) Title of the securities outstanding under each such other indenture.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
(b) A brief statement of the facts relied upon as a basis for the claim
that no conflicting interest within the meaning of Section 310(b)(1)
of the Act arises as a result of the trusteeship under any such
other indenture, including a statement as to how the indenture
securities will rank as compared with the securities issued under
such other indenture.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH
OBLIGOR OR UNDERWRITERS.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or representative
of the obligor or of any underwriter for the obligor, identify each such person
having any such connection and state the nature of each such connection.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR
ITS OFFICIALS.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner and
executive officer of the obligor.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
3
<PAGE>
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR
THEIR OFFICIALS.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by the
trustee.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor, furnish
the following information as to each class of securities of such underwriter any
of which are so owned or held by the trustee.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF
CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10% or more of the voting securities of the obligor or (2)
is an affiliate, other than a subsidiary, of the obligor, furnish the following
information as to the voting securities of such person.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A
PERSON OWNING 50% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50% or more of the voting
4
<PAGE>
securities of the obligor, furnish the following information as to each class of
securities of such person any of which are so owned or held by the trustee.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
Except as noted in the instructions to the Form T-1, if the obligor is
indebted to the trustee, furnish the following information: nature of
indebtedness, amount outstanding and date due.
DOLLAR AMOUNT APPLICANT EXPIRY DATE
- ------------ --------- -----------
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
ITEM 13. DEFAULTS BY THE OBLIGOR.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such
default.
As of November 16, 1999
There is not, nor has there been, a default with respect to
the securities under this Indenture. (See Note, Page 8 hereof.)
(b) If the trustee is a trustee under another indenture under which
any other securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, or is trustee for more than one outstanding series
of securities under the indenture, state whether there has been a
default under any such indenture or series, identify the
indenture or series affected, and explain the nature of any such
default.
As of November 16,1999
There has not been a default under any such indenture or
series. (See Note, Page 8 hereof.)
5
<PAGE>
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not applicable by virtue of Form T-1 General Instruction B and
response to Item 13
ITEM 15. FOREIGN TRUSTEE.
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be qualified
under the Act.
Not applicable.
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as part of this statement of eligibility.
* 1. A copy of the articles of association of the trustee
as now in effect.
* 2. A copy of the certificate of authority of the trustee
to commence business.
* 3. A copy of the certificate of authorization of the
trustee to exercise corporate trust powers issued by the Board of
Governors of the Federal Reserve System under date of January 21,
1948.
* 4. A copy of the existing bylaws of the trustee.
5. A copy of each indenture referred to in Item 4, if
the obligor is in default. Not Applicable.
6. The consent of the United States institutional trustees
required by Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or
examining authority.
8. A copy of any order pursuant to which the foreign trustee
is authorized to act as sole trustee under indentures qualified or
to be qualified under the Act. Not applicable.
6
<PAGE>
9. Foreign trustees are required to file a consent to service
of process on Form F-X. Not applicable.
- -----------------
* Incorporated by reference to Exhibit bearing the same Exhibit number
filed with the Securities and Exchange Commission as exhibits to the
Form S-4 File No. 333-63747 filed September 18, 1998.
7
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Chase Bank of Texas, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Houston, and State of Texas, on the 16th day of November, 1999.
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
(Trustee)
By: /s/ MAURI COWEN
Name: Mauri Cowen
Title: Vice President and Trust Officer
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligor within three
years prior to the date of filing this statement or will be the underwriters for
the indenture securities, or are owners of 10% or more of the voting securities
of the obligor, or are owners of 50% or more of the voting securities of the
obligor or are affiliates, and the amounts and percentages of such securities,
if any, owned by each of the foregoing, respectively, are based upon information
furnished to the trustee by the obligor and the underwriter. While the trustee
has no reason to doubt the accuracy of any such information, it cannot accept
any responsibility therefor. Accordingly, the trustee disclaims responsibility
as to the accuracy and completeness of the information received from the obligor
and the underwriter relating to the answers to items 2, 5, 7, 8, 9, 10, 11, 12,
13 and 14. However, such answers may be considered as correct unless additional
information is furnished by amendment.
8
<PAGE>
EXHIBIT 6 TO EXHIBIT 25.1
Securities & Exchange Commission
Washington, D.C. 20549
Gentlemen:
The undersigned is to be trustee under an indenture between CORNELL
CORRECTIONS, INC. and Chase Bank of Texas, National Association, as trustee, to
be entered into in connection with the issuance of its Debt Securities.
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned hereby consents that reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities & Exchange Commission upon
its request therefor.
Very truly yours,
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
By: /s/ MAURI COWEN
Name: Mauri Cowen
Title: Vice President and Trust Officer
<PAGE>
EXHIBIT 7 TO EXHIBIT 25.1
<TABLE>
<CAPTION>
<S> <C> <C>
RC-01.A RCFD0081 Cash and Noninterest-bearing Balances 2423471
RC-01.B RCFD0071 Interest-bearing Balances 200
RC-02.A RCFD1754 Securities Held-to-Maturity 116370
RC-02.B RCFD1773 Securities Available-for-sale 4892036
RC-03 RCFD1350 Fed Funds Sold & Secs Purchased 2554048
RC-04.A RCFD2122 Loans and Leases 12813241
RC-04.B RCFD3123 LESS: Allowance for Loan and Lease Lo 219078
RC-04.C RCFD3128 LESS: Allocated Transfer Risk Reserve 0
RC-04.D RCFD2125 Net Loans & Leases (Total) 12594163
RC-05 RCFD3545 Trading Assets 109914
RC-06 RCFD2145 Premises and Fixed Assets 688492
RC-07 RCFD2150 Other REO 0
RC-08 RCFD2130 Investments in Unconsolidated Subsidi 3448
RC-09 RCFD2155 Customers' Liability on Acceptances 9098
RC-10 RCFD2143 Intangible Assets 330089
RC-11 RCFD2160 Other Assets 610126
RC-12 RCFD2170 Total Assets 24331455
RC-13.A RCON2200 Deposits: Domestic Offices 18719796
RC-13.A.1 RCON6631 Domestic Deposits: Noninterest-bearin 9105667
RC-13.A.2 RCON6636 Domestic Deposits: Interest-bearing 9614129
RC-13.B RCFN2200 Deposits: Foreign Offices 0
RC-13.B.1 RCFN6631 Foreign Deposits: Noninterest-bearing 0
RC-13.B.2 RCFN6636 Foreign Deposits: Interest-bearing 0
RC-14 RCFD2800 Fed Funds Purchased & Secs Sold 1926003
RC-15.A RCON2840 Demand Notes to US Treasury 553255
RC-15.B RCFD3548 Trading Liabilities 96692
RC-16.A RCFD2332 Other Borrowed Money: Maturity less than 1yr 490640
RC-16.B RCFDA547 Other Borrowed Money: Mat. 1-3 YRS 0
RC-16.C RCFDA548 Other Borrowed Money: Maturity > 3yr 15001
RC-18 RCFD2920 Bank's Liability on Acceptances 9098
RC-19 RCFD3200 Subordinated Notes and Debentures 445000
RC-20 RCFD2930 Other Liabilities 232785
RC-21 RCFD2948 Total Liabilities 22488270
RC-23 RCFD3838 Perpetual Preferred Stock & Surplus 0
RC-24 RCFD3230 Common Stock 612893
RC-25 RCFD3839 Surplus 924674
RC-26.A RCFD3632 Undivided Profits/Capital Reserves 434112
RC-26.B RCFD8434 Unrealized holding gain(loss) secur. -128494
RC-26.C RCFD4336 Accm net gains(loss) on cash flow hedges 0
RC-27 RCFD3284 Foreign Currency Translation Adjustme 0
RC-28 RCFD3210 Total Equity Capital 1843185
RC-29 RCFD3300 Total Liabs, Pref. Stck, & Equity Cap 24331455
RC-M.1 RCFD6724 Auditor memo N/A
RCA1.A RCFD0022 Consolidated Bank: Cash 2078603
RCA1.A.B RCON0020 Domestic Offices: Cash Items In Colle 1729420
RCA1.B.B RCON0080 Domestic Offices: Cash 349183
RCA2.A.A RCFD0083 Consolidated Bank: Due from US Branch 0
RCA2.B RCON0082 Domestic Offices: Due from US Deposit 122801
RCA2.B.A RCFD0085 Consolidated Bank: Due from Other Dep 122801
RCA3.A.A RCFD0073 Consolidated Bank: Due from Foreign U 2171
RCA3.B RCON0070 Domestic Offices: Due from Foreign Ba 53632
RCA3.B.A RCFD0074 Consolidated Bank: Due from Other For 51461
RCA4.A RCFD0090 Due from Fed Reserve Banks 168635
RCA4.B RCON0090 Domestic Offices: Due from Fed Reserv 168635
RCA5.A RCFD0010 Domestic Offices - Total 2423671
RCA5.B RCON0010 Consolidated Bank - Total 2423671
RCAM.1 RCON0050 Non-Int bearing bals due from US Bnks 122601
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
RCB1.A RCFD0211 Held: Cost: US Treasury Securities 0
RCB1.B RCFD0213 Held: Value: US Treasury Securities 0
RCB1.C RCFD1286 Sale: Cost: US Treasury Securities 903833
RCB1.D RCFD1287 Sale: Value: US Treasury Securities 864009
RCB2.A.A RCFD1289 Held: Cost: Obligations US agencies 0
RCB2.A.B RCFD1290 Held: Value: Obligations US agencies 0
RCB2.A.C RCFD1291 Sale: Cost: Obligations US agencies 0
RCB2.A.D RCFD1293 Sale: Value: Obligations US agencies 0
RCB2.B.A RCFD1294 Held: Cost: Obligations US sponsored 36
RCB2.B.B RCFD1295 Held: Value: Obligations US sponsored 356
RCB2.B.C RCFD1297 Sale: Cost: Obligations US sponsored 251279
RCB2.B.D RCFD1298 Sale: Value: Obligations US sponsored 236684
RCB3.A.A RCFD1676 Held: Cost: General Obligations 145
RCB3.A.B RCFD1677 Held: Value: General Obligations 145
RCB3.A.C RCFD1678 Sale: Cost: General Obligations 0
RCB3.A.D RCFD1679 Sale: Value: General Obligations 0
RCB3.B.A RCFD1681 Held: Cost: Revenue Obligations 0
RCB3.B.B RCFD1686 Held: Value: Revenue Obligations 0
RCB3.B.C RCFD1690 Sale: Cost: Revenue Obligations 0
RCB3.B.D RCFD1691 Sale: Value: Revenue Obligations 0
RCB3.C.A RCFD1694 Held: Cost: Industrial Obligations 0
RCB3.C.B RCFD1695 Held: Value: Industrial Obligations 0
RCB3.C.C RCFD1696 Sale: Cost: Industrial Obligations 0
RCB3.C.D RCFD1697 Sale: Value: Industrial Obligations 0
RCB4.A.1.A RCFD1698 Held: Cost: Security Guaranteed GNMA 0
RCB4.A.1.B RCFD1699 Held: Value: Security Guaranteed GNMA 0
RCB4.A.1.C RCFD1701 Sale: Cost: Security Guaranteed GNMA 799399
RCB4.A.1.D RCFD1702 Sale: Value: Security Guaranteed GNMA 771283
RCB4.A.2.A RCFD1703 Held: Cost: Security Issued FNMA 116189
RCB4.A.2.B RCFD1705 Held: Value: Security Issued FNMA 115125
RCB4.A.2.C RCFD1706 Sale: Cost: Security Issued FNMA 3092161
RCB4.A.2.D RCFD1707 Sale: Value: Security Issued FNMA 2973933
RCB4.A.3.A RCFD1709 Held: Cost: Other Pass-Through Secs 0
RCB4.A.3.B RCFD1710 Held: Value: Other Pass-Through Secs 0
RCB4.A.3.C RCFD1711 Sale: Cost: Other Pass-Through Secs 0
RCB4.A.3.D RCFD1713 Sale: Value: Other Pass-Through Secs 0
RCB4.B.1.A RCFD1714 Held: Cost: Issued/Guar. FNMA, Etc. 0
RCB4.B.1.B RCFD1715 Held: Value: Issued/Guar. FNMA, Etc. 0
RCB4.B.1.C RCFD1716 Sale: Cost: Issued/Guar. FNMA, Etc. 0
RCB4.B.1.D RCFD1717 Sale: Value: Issued/Guar. FNMA, Etc. 0
RCB4.B.2.A RCFD1718 Held: Cost: Collateralized MBS -FNMA 0
RCB4.B.2.B RCFD1719 Held: Value: Collateralized MBS -FNMA 0
RCB4.B.2.C RCFD1731 Sale: Cost: Collateralized MBS -FNMA 0
RCB4.B.2.D RCFD1732 Sale: Value: Collateralized MBS -FNMA 0
RCB4.B.3.A RCFD1733 Held: Cost: All Other MBS 0
RCB4.B.3.B RCFD1734 Held: Value: All Other MBS 0
RCB4.B.3.C RCFD1735 Sale: Cost: All Other MBS 0
RCB4.B.3.D RCFD1736 Sale: Value: All Other MBS 0
RCB5.A.A RCFD1737 Held: Cost: Other Domestic Debt Sec. 0
RCB5.A.B RCFD1738 Held: Value: Other Domestic Debt Sec. 0
RCB5.A.C RCFD1739 Sale: Cost: Other Domestic Debt Sec. 0
RCB5.A.D RCFD1741 Sale: Value: Other Domestic Debt Sec. 0
RCB5.B.A RCFD1742 Held: Cost: Foreign Debt Securities 0
RCB5.B.B RCFD1743 Held: Value: Foreign Debt Securities 0
RCB5.B.C RCFD1744 Sale: Cost: Foreign Debt Securities 0
RCB5.B.D RCFD1746 Sale: Value: Foreign Debt Securities 0
RCB6.A.C RCFDA510 Sale: Cost: Securities Mutual Funds 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
RCB6.A.D RCFDA511 Sale: Value: Securities Mutual Funds 0
RCB6.B.C RCFD1752 Sale: Cost: Other Equity Securities 46127
RCB6.B.D RCFD1753 Sale: Value: Other Equity Securities 46127
RCB7.A RCFD1754 Total Held-to-maturity - Amort Cost 116370
RCB7.B RCFD1771 Total Held-to-maturity - Fair Value 115626
RCB7.C RCFD1772 Total Avail-for-sale - Amort Cost 5092799
RCB7.D RCFD1773 Total Avail-for-sale - Fair Value 4892036
RCBM.1 RCFD0416 Pledged 1704561
RCBM.2.A.1 RCFDA549 Memoranda: Non-Mort Debt less than 3 MO 65225
RCBM.2.A.2 RCFDA550 Memoranda: Non-Mort Debt 3-12 MO 20
RCBM.2.A.3 RCFDA551 Memoranda: Non-Mort Debt 1-3 YRS 29768
RCBM.2.A.4 RCFDA552 Memoranda: Non-Mort Debt 3-5 YRS 602321
RCBM.2.A.5 RCFDA553 Memoranda: Non-Mort Debt 5-15 YRS 403504
RCBM.2.A.6 RCFDA554 Memoranda: Non-Mort Debt > 15 YRS 36
RCBM.2.B.1 RCFDA555 Memoranda: Mort Pass Thru less than 3 MO 5077
RCBM.2.B.2 RCFDA556 Memoranda: Mort Pass Thru 3-12 MO 36637
RCBM.2.B.3 RCFDA557 Memoranda: Mort Pass Thru 1-3 YRS 75521
RCBM.2.B.4 RCFDA558 Memoranda: Mort Pass Thru 3-5 YRS 1078
RCBM.2.B.5 RCFDA559 Memoranda: Mort Pass Thru 5-15 YRS 482249
RCBM.2.B.6 RCFDA560 Memoranda: Mort Pass Thru > 15 YRS 3260843
RCBM.2.C.1 RCFDA561 Memoranda: Other Mort-backed less than 3 YRS 0
RCBM.2.C.2 RCFDA562 Memoranda: Other Mort-backed > 3 YRS 0
RCBM.2.D RCFDA248 Memoranda: Tot Debt less than 1 YR 108722
RCBM.7 RCFD1778 Amortized Cost Held Securities Sold 0
RCBM.9.A RCFD8782 Structured Notes - Amortized Cost 0
RCBM.9.B RCFD8783 Structured Notes - Fair Value 0
RCC01.A RCFD1410 Consolidated RE Loans 2476207
RCC01.A.B RCON1415 Domestic Const/Development Loans 572575
RCC01.B.B RCON1420 Domestic Secured by Farmland 8846
RCC01.C.1B RCON1797 Domestic Secured by 1-4 Revolving 0
RCC01.C.2A RCON5367 Domestic Secured by 1-4 Other 821862
RCC01.C.2B RCON5368 Domestic Secured by 1-4 Other 496530
RCC01.D.B RCON1460 Domestic Secured by 5+ 77689
RCC01.E.B RCON1480 Domestic Secured by Nonfarm Nonreside 498705
RCC02.A.B RCON1505 Domestic to US Coml Banks 1618
RCC02.A1.A RCFD1506 Consolidated to US Branches of Forei 750
RCC02.A2.A RCFD1507 Consolidated to Other US Coml Banks 868
RCC02.B.A RCFD1517 Consolidated to Other Dep'y in US 3
RCC02.B.B RCON1517 Domestic to Other Dep'y in US 3
RCC02.C.B RCON1510 Domestic to Foreign Banks 58
RCC02.C1.A RCFD1513 Consolidated to For Branches US Bank 0
RCC02.C2.A RCFD1516 Consolidated to Foreign Banks 58
RCC03.A RCFD1590 Consolidated to Farmers 23717
RCC03.B RCON1590 Domestic to Farmers 23717
RCC04.A.A RCFD1763 Consolidated US Coml 6340393
RCC04.A.B RCON1763 Domestic US Coml 6340393
RCC04.B.A RCFD1764 Consolidated non-US Coml 200654
RCC04.B.B RCON1764 Domestic non-US Coml 200654
RCC05.A.A RCFD1756 Consolidated Accep's of US Banks 0
RCC05.A.B RCON1756 Domestic Accep's of US Bank 0
RCC05.B.A RCFD1757 Consolidated Accep's of Foreign Banks 0
RCC05.B.B RCON1757 Domestic Accep's of Foreign Banks 0
RCC06.A.A RCFD2008 Consolidated Credit Cards 105389
RCC06.B RCON1975 Domestic Consumer 1557955
RCC06.B.A RCFD2011 Consolidated Other Consumer 1452566
RCC07.A RCFD2081 Consolidated Loans to For Govts 7408
RCC07.B RCON2081 Domestic Loans to For Govts 7408
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
RCC08.A RCFD2107 Consolidated Obligations US 7698
RCC08.B RCON2107 Domestic Obligations US 7698
RCC09.A RCFD1563 Consolidated Other 2152458
RCC09.A.B RCON1545 Domestic Loans for Securities 60713
RCC09.B.B RCON1564 Domestic Other 2091745
RCC10.A.A RCFD2182 Consolidated US Leases 44639
RCC10.B RCON2165 Domestic Leases 45072
RCC10.B.A RCFD2183 Consolidated For Leases 433
RCC11.A RCFD2123 LESS: Consolidated Unearned Income 0
RCC11.B RCON2123 LESS: Domestic Unearned Income 0
RCC12.A RCFD2122 Total Loans & Leases (Consolidated) 12813241
RCC12.B RCON2122 Total Loans & Leases (Domestic) 12813241
RCCM.2.A1A RCFD1687 Cons Restruc'd US RE 0
RCCM.2.A2A RCFD1689 Cons Restruc'd non-US RE 0
RCCM.2.B.A RCFD8691 Cons Restruc'd - All Other Loan/Lease 0
RCCM.2.C.A RCFD8692 Cons Restruc'd - Non-U.S. Addressees 0
RCCM.3.A.1 RCONA564 Memo: Loans Secd by Real Est less than 3 MO 22543
RCCM.3.A.2 RCONA565 Memo: Loans Secd by Real Est 3-12 MO 69021
RCCM.3.A.3 RCONA566 Memo: Loans Secd by Real Est 1-3 YRS 38309
RCCM.3.A.4 RCONA567 Memo: Loans Secd by Real Est 3-5 YRS 45104
RCCM.3.A.5 RCONA568 Memo: Loans Secd by Real Est 5-15 YRS 244761
RCCM.3.A.6 RCONA569 Memo: Loans Secd by Real Est > 15 YRS 393489
RCCM.3.B.1 RCFDA570 Memo: Other Loans/Leases less than 3 MO 7843232
RCCM.3.B.2 RCFDA571 Memo: Other Loans/Leases 3-12 MO 1417479
RCCM.3.B.3 RCFDA572 Memo: Other Loans/Leases 1-3 YRS 963370
RCCM.3.B.4 RCFDA573 Memo: Other Loans/Leases 3-5 YRS 1130473
RCCM.3.B.5 RCFDA574 Memo: Other Loans/Leases 5-15 YRS 478478
RCCM.3.B.6 RCFDA575 Memo: Other Loans/Leases > 15 YRS 41534
RCCM.3.C RCFDA247 Memo: Tot Remg Loans/Leases less than 1 YR 5134955
RCCM.3.D RCONA577 Memo: Non-Farm/Res Loans/Leases > 5YR 128240
RCCM.3.E RCFDA578 Memo: Comm/Indust > 3 YRS 2199666
RCCM.4 RCFD2746 Loans to fin. comm. real est., constr 867517
RCCM.5 RCFD5369 Loans & leases held for sale 109971
RCCM.6 RCON5370 Adj. rate closed-end loans secured 82727
RCCP2.01 RCON6999 YES/NO - RCC01.E & RCC04 >= $ 100,000 0
RCCP2.02AA RCON5562 Number of Loans RCC01.E N/A
RCCP2.02BA RCON5563 Number of Loans RCC04 N/A
RCCP2.03AA RCON5564 Number of Loans RCC01.E Orig less than or equal to $100K N/A
RCCP2.03AB RCON5565 Amount of Loans RCC01.E Orig less than or equal to $100K N/A
RCCP2.03BA RCON5566 # of Loans RCC01.E $100K less than Orig less than or equal to $250K N/A
RCCP2.03BB RCON5567 $ of Loans RCC01.E $100K less than Orig less than or equal to $250K N/A
RCCP2.03CA RCON5568 # of Loans RCC01.E $250K less than Orig less than or equal to $1M N/A
RCCP2.03CB RCON5569 $ of Loans RCC01.E $250K less than Orig less than or equal to $1M N/A
RCCP2.04AA RCON5570 Number of Loans RCC04 Orig less than or equal to $100K N/A
RCCP2.04AB RCON5571 Amount of Loans RCC04 Orig less than or equal to $100K N/A
RCCP2.04BA RCON5572 # of Loans RCC04 $100K less than Orig less than $250K N/A
RCCP2.04BB RCON5573 $ of Loans RCC04 $100K less than Orig less than or equal to $250K N/A
RCCP2.04CA RCON5574 # of Loans RCC04 $250K less than Orig less than or equal to $1M N/A
RCCP2.04CB RCON5575 $ of Loans RCC04 $250K less than Orig less than or equal to $1M N/A
RCCP2.05 RCON6860 YES/NO - RCC01.B & RCC03 >= $ 100,000 0
RCCP2.06AA RCON5576 Number of Loans RCC01.B N/A
RCCP2.06BA RCON5577 Number of Loans RCC03 N/A
RCCP2.07AA RCON5578 Number of Loans RCC01.B Orig less than or equal to $100K N/A
RCCP2.07AB RCON5579 Amount of Loans RCC01.B Orig less than or equal to $100K N/A
RCCP2.07BA RCON5580 # of Loans RCC01.B $100K less than Orig less than or equal to $250K N/A
RCCP2.07BB RCON5581 $ of Loans RCC01.B $100Kless than Orig less than or equal to $250K N/A
RCCP2.07CA RCON5582 # of Loans RCC01.B $250K less thankOrig less than or original o$500K N/A
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
RCCP2.07CB RCON5583 $ of Loans RCC01.B $250K less than Orig less than or equal to $500K N/A
RCCP2.08AA RCON5584 Number of Loans RCC03 - Orig less than or equal to $100K N/A
RCCP2.08AB RCON5585 Amount of Loans RCC03 - Orig less than or equal to $100K N/A
RCCP2.08BA RCON5586 # of Loans RCC03 - $100K less than Orig less than or equal to$250K N/A
RCCP2.08BB RCON5587 $ of Loans RCC03 - $100K less than Orig less than or equal to $250K N/A
RCCP2.08CA RCON5588 # of Loans RCC03 - $250K less than Orig less than or equal to $500K N/A
RCCP2.08CB RCON5589 $ of Loans RCC03 - $250K less than Origless than or equal to.$500K N/A
RCD01 RCON3531 US Treasury securities N/A
RCD02 RCON3532 US Govt agency obligations N/A
RCD03 RCON3533 Securities issued by State and Subdiv N/A
RCD04.A RCON3534 Pass-through secs by FNMA/FHLMC/GNMA N/A
RCD04.B RCON3535 CMOs and REMICs issued by FNMA/FHLMC N/A
RCD04.C RCON3536 All other mortgage-backed securities N/A
RCD05 RCON3537 Other debt securities N/A
RCD09 RCON3541 Other trading assets domestic 8401
RCD10 RCFN3542 Trading assets foreign N/A
RCD11.A RCON3543 Gains on rate & contracts domestic 100535
RCD11.B RCFN3543 Gains on rate & contracts foreign 978
RCD12 RCFD3545 Total Trading Assets 109914
RCD13 RCFD3546 Liability for short positions N/A
RCD14 RCFD3547 Losses on rate & contracts 96692
RCD15 RCFD3548 Total trading liabilities 96692
RCE1.1.A RCON2201 Private Transaction 5532537
RCE1.1.B RCON2240 Private Demand Deposits 5259766
RCE1.1.C RCON2346 Private Nontransaction 12400001
RCE1.2.A RCON2202 USG Transaction 7528
RCE1.2.B RCON2280 USG Demand Deposits 2542
RCE1.2.C RCON2520 USG Nontransaction 0
RCE1.3.A RCON2203 State/Local Transaction 119240
RCE1.3.B RCON2290 State/Local Demand Deposits 60846
RCE1.3.C RCON2530 State/Local Nontransaction 117086
RCE1.4.A RCON2206 US Coml Banks Transaction 411959
RCE1.4.B RCON2310 US Coml Banks Demand Deposits 411959
RCE1.4.C RCON2550 US Coml Banks Nontransaction 0
RCE1.5.A RCON2207 Other US Dep'y Transaction 38786
RCE1.5.B RCON2312 Other US Dep'y Demand Deposits 38786
RCE1.5.C RCON2349 Other US Dep'y Nontransaction 0
RCE1.6.A RCON2213 For Banks Transaction 21040
RCE1.6.B RCON2320 For Banks Demand Deposits 21040
RCE1.6.C RCON2236 For Branches US Banks Nontransaction 0
RCE1.7.A RCON2216 For Govt Transaction 1305
RCE1.7.B RCON2300 For Govt Demand Deposits 1305
RCE1.7.C RCON2377 For Govt Nontransaction 0
RCE1.8.A RCON2330 Certified Checks: Transaction 70314
RCE1.8.B RCON2330 Certified Checks: Demand 70314
RCE1.9.A RCON2215 Total Transaction Accounts 6202709
RCE1.9.B RCON2210 Total Demand Deposits 5866558
RCE1.9.C RCON2385 Total Nontransaction Accounts 12517087
RCE1.M.1.A RCON6835 IRA/Keogh 614941
RCE1.M.1.B RCON2365 Brokered 0
RCE1.M.1.E RCON5590 Memoranda: Preferred Deposits N/A
RCE1.M.1C1 RCON2343 Brokered less than $100K 0
RCE1.M.1C2 RCON2344 Brokered Participated to less than $100K 0
RCE1.M.1D1 RCONA243 Matur data:denom less than 100k,matur less than or equal to 1 yr 0
RCE1.M.1D2 RCONA244 Matur data:denom =>100k,matur less than or equal to 1 yr 0
RCE1.M.2.B RCON6648 Time Deposits less than or equal to $100K 1992489
RCE1.M.2.C RCON2604 Memoranda: Time Deposits >=$100 000 1050259
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
RCE1.M.2A1 RCON6810 MMDAs 5788317
RCE1.M.2A2 RCON0352 Other Savings 3686022
RCE1.M.3 RCON2398 NOW 336151
RCE1.M.5A1 RCONA579 Memo: Time Deps less than 100K less than 3 MO 538545
RCE1.M.5A2 RCONA580 Memo: Time Deps less than 100K 3-12 MO 962683
RCE1.M.5A3 RCONA581 Memo: Time Deps less than 100K 1-3 YRS 427153
RCE1.M.5A4 RCONA582 Memo: Time Deps less than 100K > 3 YRS 64108
RCE1.M.5B RCONA241 Memo: Time Deps less than 100K less than 1 YR 1501228
RCE1.M.6A1 RCONA584 Memo: Time Deps > 100K less than 3 MO 494446
RCE1.M.6A2 RCONA585 Memo: Time Deps > 100K 3-12 MO 452148
RCE1.M.6A3 RCONA586 Memo: Time Deps > 100K 1-3 YRS 84004
RCE1.M.6A4 RCONA587 Memo: Time Deps > 100K > 3 YRS 19661
RCE1.M.6B RCONA242 Memo: Time Deps > 100K less than 1 YR 946594
RCE2.1 RCFN2621 Private 0
RCE2.2 RCFN2623 US Banks 0
RCE2.3 RCFN2625 For Banks 0
RCE2.4 RCFN2650 For Govts 0
RCE2.5 RCFN2330 Certified Checks 0
RCE2.6 RCFN2668 Other 0
RCE2.7 RCFN2200 Total Deps in Foreign Offices 0
RCE2.M.1 RCFNA245 Memo:TD with remaining maturity less than or equal to 1 yr" 0
RCF1 RCFD2164 Income Earned Not Collected Loans 81932
RCF2 RCFD2148 Net Deferred Tax Assets 134143
RCF3.A RCFDA519 Interest Only Strip: Mortgage Loans 0
RCF3.B RCFDA520 Interest Only Strip: Other Assets 0
RCF4 RCFD2168 Other Assets 394051
RCF4.A RCFD3549 Other Assets - Line A 196300
RCF4.B RCFD3550 Other Assets - Line B N/A
RCF4.C RCFD3551 Other Assets - Line C N/A
RCF5 RCFD2160 Total Other Assets 610126
RCFM.1 RCFD5610 Memo: Deferred Tax Assets Disallowed 0
RCG1.A RCON3645 Expenses Accrued and Unpaid on deposi 15041
RCG1.B RCFD3646 Other Expenses Accrued and Unpaid 172675
RCG2 RCFD3049 Net Deferred Tax Liabilities 0
RCG3 RCFD3000 Minority Interest in Subsidiaries 0
RCG4 RCFD2938 Other Liabilities 45069
RCG4.A RCFD3552 Other Liabilities - Line A N/A
RCG4.B RCFD3553 Other Liabilities - Line B N/A
RCG4.C RCFD3554 Other Liabilities - Line C N/A
RCG5 RCFD2930 Total Other Liabilities 232785
RCH01 RCON2155 Customers' Liability on Acceptances 9098
RCH02 RCON2920 Bank's Liability on Acceptances 9098
RCH03 RCON1350 Fed Funds Sold 2554048
RCH04 RCON2800 Fed Funds Purchased 1926003
RCH05 RCON3190 Other Borrowed Money 505641
RCH06 RCON2163 Net Due from Own For Offices N/A
RCH07 RCON2941 Net Due to Own For Offices N/A
RCH08 RCON2192 Total Assets 24331455
RCH09 RCON3129 Total Liabilities 22488270
RCH10 RCON1039 US Treasury Securities 903833
RCH11 RCON1041 US Government agency obligations 251315
RCH12 RCON1042 There is no description for this item 145
RCH13.A.1 RCON1043 MBS: Pass-Through: FNMA/FHLMC/GNMA 4007749
RCH13.A.2 RCON1044 MBS: Pass-Through: Other Pass-Through 0
RCH13.B.1 RCON1209 MBS: Other MBS: FNMA/FHLMC/GNMA 0
RCH13.B.2 RCON1280 MBS: Other MBS: All Other MBS 0
RCH14 RCON1281 Other Domestic Debt Securities 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
RCH15 RCON1282 Foreign Debt Securities 0
RCH16.A RCONA510 Equity Securities: Mutual Fund/Eq Sec 0
RCH16.B RCON1752 Equity Securities: All others 46127
RCH17 RCON1374 Total Securities Held and Sale 5209169
RCHM.1 RCON3051 Net Due from Own IBF N/A
RCHM.2 RCON3059 Net Due to Own IBF N/A
RCI1 RCFN2133 Total IBF Assets N/A
RCI2 RCFN2076 Total IBF Loans/Leases N/A
RCI3 RCFN2077 IBF Coml/Indl N/A
RCI4 RCFN2898 Total IBF Liabilities N/A
RCI5 RCFN2379 IBF Deposit Liabilities Due to Banks N/A
RCI6 RCFN2381 Other IBF Deposit Liabilities N/A
RCK01 RCFD3381 Interest-bearing Balances 200
RCK02 RCFD3382 US Govt/Treasury 5175018
RCK03 RCFD3383 State/Local Securities 149
RCK04.A RCFD3647 Other debt Securities 36
RCK04.B RCFD3648 Other equity Securities 46129
RCK05 RCFD3365 Fed Funds Sold 868090
RCK06.A.1 RCON3360 Total Loans 12885138
RCK06.A.2 RCON3385 RE Loans 2506647
RCK06.A.3 RCON3386 Agricultural & Farm Loans 22826
RCK06.A.4 RCON3387 Commercial/Industrial Loans 6550824
RCK06.A.5 RCON3388 Consumer Loans 1598874
RCK06.B RCFN3360 Foreign Office Loans 0
RCK07 RCFD3401 Assets Held in Trading Accounts 81747
RCK08 RCFD3484 Lease Fin'g Receivables 45831
RCK09 RCFD3368 Total Assets 22526703
RCK10 RCON3485 Domestic Transaction Accounts 276335
RCK11.A RCON3486 MMDAs 4921154
RCK11.B RCON3487 Other Savings 3689941
RCK11.C RCONA514 Time Deposits >= $100,000 1024400
RCK11.D RCONA529 Time Deposits less than $100,000 2032900
RCK12 RCFN3404 Interest-bearing Deposits in For Offi 88167
RCK13 RCFD3353 Fed Funds Purchased 1921099
RCK14 RCFD3355 Other Borrowed Money 322631
RCL01.A RCFD3814 Unused Commits: Revolv Lines Secured 0
RCL01.B RCFD3815 Unused Commits: Credit Card Lines 0
RCL01.C.1 RCFD3816 Unused Commits: Fund loans secured 245381
RCL01.C.2 RCFD6550 Unused Commits: Fund loans not secure 553209
RCL01.D RCFD3817 Unused Commits: Securities Underwrit 0
RCL01.E RCFD3818 Unused Commits: Other Unused Commits 9043285
RCL02 RCFD3819 Fincl Standby Letters of Credit 1480336
RCL02.A RCFD3820 Amount Fincl Standby Letters Conveyed 88110
RCL03 RCFD3821 Perfm Standby Letters of Credit 240713
RCL03.A RCFD3822 Amount Perfm Standby Letters Conveyed 639
RCL04 RCFD3411 Commercl & Similar Letters of Credit 178910
RCL05 RCFD3428 Participations in Acceptncs Conveyed 0
RCL06 RCFD3429 Participations in Acceptncs Acquired 0
RCL07 RCFD3432 Securities Borrowed 0
RCL08 RCFD3433 Securities Lent 0
RCL09.A.1 RCFDA521 1-4 Family: Outstanding Balance 0
RCL09.A.2 RCFDA522 1-4 Family: Amount of Recourse 0
RCL09.B.1 RCFDA523 Other Assets: Outstanding Balance 0
RCL09.B.2 RCFDA524 Other Assets: Amount of Recourse 0
RCL09.C.1 RCFDA249 Sml busns obligations:Outstanding bal" 0
RCL09.C.2 RCFDA250 Sml busns obligations:retaind recours 0
RCL10.A RCFDA534 Credit Derivatives: Guarantor 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
RCL10.B RCFDA535 Credit Derivatives: Beneficiary 0
RCL11 RCFD8765 Spot Foreign Exchange Contracts 1841465
RCL12 RCFD3430 All Other Off-Balance Sheet Liabs 0
RCL12.A RCFD3555 Other Off-Balance Sheet Liabilities-A N/A
RCL12.B RCFD3556 Other Off-Balance Sheet Liabilities-B N/A
RCL12.C RCFD3557 Other Off-Balance Sheet Liabilities-C N/A
RCL12.D RCFD3558 Other Off-Balance Sheet Liabilities-D N/A
RCL13 RCFD5591 All Other Off-Balance Sheet Assets 0
RCL13.A RCFD5592 Other Off-Balance Sheet Assets - A N/A
RCL13.B RCFD5593 Other Off-Balance Sheet Assets - B N/A
RCL13.C RCFD5594 Other Off-Balance Sheet Assets - C N/A
RCL13.D RCFD5595 Other Off-Balance Sheet Assets - D N/A
RCL14.A.A RCFD8693 Int Rate Contracts - Gross Futures 97300
RCL14.A.B RCFD8694 Forgn Exch Contracts - Gross Futures 0
RCL14.A.C RCFD8695 Equity Contracts - Gross Futures 0
RCL14.A.D RCFD8696 Commodity Contracts - Gross Futures 0
RCL14.B.A RCFD8697 Int Rate Contracts - Gross Forwards 0
RCL14.B.B RCFD8698 Forgn Exch Contracts - Gross Forwards 1707052
RCL14.B.C RCFD8699 Equity Contracts - Gross Forwards 0
RCL14.B.D RCFD8700 Commodity Contracts - Gross Forwards 0
RCL14.C.1A RCFD8701 Int Rate Contracts - Exchg Trad Wrttn 1550000
RCL14.C.1B RCFD8702 Forgn Exch Contracts - Exchg Trad Wrt 0
RCL14.C.1C RCFD8703 Equity Contracts - Exchg Trad Written 0
RCL14.C.1D RCFD8704 Commodity Contracts - Exchg Trad Wrtn 0
RCL14.C.2A RCFD8705 Int Rate Contracts - Exchg Trad Purch 3100000
RCL14.C.2B RCFD8706 Forgn Exch Contracts - Exchg Trad Pur 0
RCL14.C.2C RCFD8707 Equity Contracts - Exchg Trad Purchas 0
RCL14.C.2D RCFD8708 Commodity Contracts - Exchg Trade Pur 0
RCL14.D.1A RCFD8709 Int Rate Contracts - OTC Written Optn 4153114
RCL14.D.1B RCFD8710 Forgn Exch Contracts - OTC Wrtn Optns 82677
RCL14.D.1C RCFD8711 Equity Contracts - OTC Written Option 319396
RCL14.D.1D RCFD8712 Commodity Contracts - OTC Written Opt 5424
RCL14.D.2A RCFD8713 Int Rate Contracts - OTC Purchased Op 4153114
RCL14.D.2B RCFD8714 Forgn Exch Contracts - OTC Purchased 82677
RCL14.D.2C RCFD8715 Equity Contracts - OTC Purchased Optn 319396
RCL14.D.2D RCFD8716 Commodity Contracts - OTC Purch Optn 5424
RCL14.E.A RCFD3450 Int Rate Contracts - Gross Swaps 6050752
RCL14.E.B RCFD3826 Forgn Exch Contracts - Gross Swaps 27553
RCL14.E.C RCFD8719 Equity Contracts - Gross Swaps 0
RCL14.E.D RCFD8720 Commodity Contracts - Gross Swaps 0
RCL15.A RCFDA126 Int Rate Contracts - Gross Held Trade 13527679
RCL15.B RCFDA127 Forgn Exch Contracts - Gross Held Trd 1899959
RCL15.C RCFD8723 Equity Contracts - Gross Held Trading 638792
RCL15.D RCFD8724 Commodity Contracts - Gross Held Trad 10848
RCL16.A.A RCFD8725 Int Rate Contracts - Marked to Market 347600
RCL16.A.B RCFD8726 Forgn Exch Contracts - Marked to Mrkt 0
RCL16.A.C RCFD8727 Equity Contracts - Marked to Market 0
RCL16.A.D RCFD8728 Commodity Contracts - Marked to Mrkt 0
RCL16.B.A RCFD8729 Int Rate Contracts - NOT Marked 5229001
RCL16.B.B RCFD8730 Forgn Exch Contracts - NOT Marked 0
RCL16.B.C RCFD8731 Equity Contracts - NOT Marked 0
RCL16.B.D RCFD8732 Commodity Contracts - NOT Marked 0
RCL16.C.A RCFDA589 Int Rate Contracts - Bank Pays Fixed 6701
RCL17.A.1A RCFD8733 Int Rate Contracts Held - Pos Values 47406
RCL17.A.1B RCFD8734 Forgn Exch Contracts Held - Pos Value 35035
RCL17.A.1C RCFD8735 Equity Contracts Held - Pos Values 31698
RCL17.A.1D RCFD8736 Commodity Contracts Held - Pos Value 136
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
RCL17.A.2A RCFD8737 Int Rate Contracts Held - Neg Values 38201
RCL17.A.2B RCFD8738 Forgn Exch Contracts Held - Neg Value 33312
RCL17.A.2C RCFD8739 Equity Contracts Held - Neg Values 31698
RCL17.A.2D RCFD8740 Commodity Contracts Held - Neg Value 136
RCL17.B.1A RCFD8741 Int Rate Contracts Markd- Pos Values 1842
RCL17.B.1B RCFD8742 Forgn Exch Contracts Markd- Pos Value 0
RCL17.B.1C RCFD8743 Equity Contracts Markd- Pos Values 0
RCL17.B.1D RCFD8744 Commodity Contracts Markd- Pos Value 0
RCL17.B.2A RCFD8745 Int Rate Contracts Markd- Neg Values 27
RCL17.B.2B RCFD8746 Forgn Exch Contracts Markd- Neg Value 0
RCL17.B.2C RCFD8747 Equity Contracts Markd- Neg Values 0
RCL17.B.2D RCFD8748 Commodity Contracts Markd- Neg Value 0
RCL17.C.1A RCFD8749 Int Rate Contracts Not Markd - PosVal 126
RCL17.C.1B RCFD8750 Forgn Exch Contracts Not Markd-PosVal 0
RCL17.C.1C RCFD8751 Equity Contracts Not Markd - PosVal 0
RCL17.C.1D RCFD8752 Commodity Contracts Not Markd-PosVal 0
RCL17.C.2A RCFD8753 Int Rate Contracts Not Markd - NegVal 27597
RCL17.C.2B RCFD8754 Forgn Exch Contracts Not Markd-NegVal 0
RCL17.C.2C RCFD8755 Equity Contracts Not Markd - NegVal 0
RCL17.C.2D RCFD8756 Commodity Contracts Not Markd-NegVal 0
RCLM.3 RCFD3833 Unused Commitments > 1 year 4845246
RCLM.3.A RCFD3834 Participations in Commitments > 1 Yr 87755
RCLM.4 RCFD3377 Standby Letters of Credit - Non-U.S. 39817
RCLM.5.A RCFD2741 Con Inst Lns w/o recourse - Prv Autos 0
RCLM.5.B RCFD2742 Con Inst Lns w/o recourse - Crd Cards 0
RCLM.5.C RCFD2743 Con Inst Lns w/o recourse - All other 0
RCM1.A RCFD6164 Credit to Executives/Principals 1197
RCM1.B RCFD6165 Number of Execs Who Borrowed $500K/5% 1
RCM10.A RCON6441 Mutual Fund: Money Market Funds 12540070
RCM10.B RCON8427 Mutual Fund: Equity Securities 7417
RCM10.C RCON8428 Mutual Fund: Debt Securities 1186
RCM10.D RCON8429 Mutual Fund: Other Mutual Funds 347590
RCM10.E RCON8430 Mutual Fund: Annuities 645
RCM10.F RCON8784 Mutual Fund: Sales of Proprietary 5404439
RCM11 RCFDA525 Net Unamortized Gains (Sched RC) 2545
RCM12 RCFDA526 Assets Netted Against (Sched RC) 0
RCM13 RCFDA591 Outstanding Principal Bal Serviced 0
RCM2 RCFD3405 Fed Funds Sold -- Foreign Banks 0
RCM4.A RCFD5500 O/S Bal Mortgages Serviced - GNMA 0
RCM4.B.1 RCFD5501 O/S Bal Morts Serviced-FHLMC w/ recou 0
RCM4.B.2 RCFD5502 O/S Bal Morts Serviced-FHLMC w/o rec 0
RCM4.C.1 RCFD5503 O/S Bal Morts Serviced-FNMA Reg optn 0
RCM4.C.2 RCFD5504 O/S Bal Morts Serviced-FNMA Spec optn 0
RCM4.D RCFD5505 O/S Bal Morts Serviced-All other 0
RCM5.A RCFD2103 Customers' Liability on Acceptances: 7056
RCM5.B RCFD2104 Customers' Liability on Acceptances: 2042
RCM6.A RCFD3164 Mtge Servicing Rights 0
RCM6.A.1 RCFDA590 Mort Serv Rights - Est Fair Value 0
RCM6.B.1 RCFDB026 Other intangible - Purch cc rels 0
RCM6.B.2 RCFD5507 Other Intangible - All Other 38774
RCM6.C RCFD3163 Goodwill 291315
RCM6.D RCFD2143 Total Intangible Assets 330089
RCM6.E RCFD6442 Intangible Assets Grandfathered 0
RCM7 RCFD3295 Mandatory Convertible Debt Dedictated 0
RCM8.A.1 RCFD5372 Othr Real Estate - Direct & Indirect 0
RCM8.A.2.A RCON5508 Othr Real Estate - All other Real Est 0
RCM8.A.2.B RCON5509 Othr Real Estate - Farmland 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
RCM8.A.2.C RCON5510 Othr Real Estate - 1-4 Family Residnt 0
RCM8.A.2.D RCON5511 Othr Real Estate - Multifamily Resid 0
RCM8.A.2.E RCON5512 Othr Real Estate - Nonfarm Nonresiden 0
RCM8.A.2.F RCFN5513 Othr Real Estate - In Foreign Offices 0
RCM8.A.3 RCFD2150 Othr Real Estate - Total 0
RCM8.B.1 RCFD5374 Inves - Direct & Indirect invest R/E 0
RCM8.B.2 RCFD5375 Inves - All othr invest unconsol subs 3448
RCM8.B.3 RCFD2130 Investmnts in unconsold subs - Total 3448
RCM9 RCFD3778 Noncumulative Perpetual Preferred Stk 0
RCMM.1 RCFD3836 Interbank Holdings: Reciprocal N/A
RCN.O.1 RCON6979 Optional Narrative Comment (Y/N) 0
RCN1.A.A RCFD1245 RE US: 30-89 Days 37458
RCN1.A.B RCFD1246 RE US: 90+ Days 6972
RCN1.A.C RCFD1247 RE US: Nonaccrual 20913
RCN1.B.A RCFD1248 RE non-US: 30-89 Days 0
RCN1.B.B RCFD1249 RE non-US: 90+ Days 0
RCN1.B.C RCFD1250 RE non-US: Nonaccrual 0
RCN10.A RCFD5612 Loans/Leases US Guaranteed-30-89 Days 1401
RCN10.A.A RCFD5615 Loans/Leases Guaranteed: 30-89 Days 1121
RCN10.A.B RCFD5616 Loans/Leases Guaranteed: 30-89 Days 0
RCN10.A.C RCFD5617 Loans/Leases Guaranteed: 30-89 Days 3481
RCN10.B RCFD5613 Loans/Leases US Guaranteed- 90+ Days 0
RCN10.C RCFD5614 Loans/Leases US Guaranteed-Nonaccrual 4351
RCN2.A.A RCFD5377 Loans US Deps: US Banks: 30-89 Days 0
RCN2.A.B RCFD5378 Loans US Deps: US Banks: 90+ Days 0
RCN2.A.C RCFD5379 Loans US Deps: US Banks: Nonaccrual 0
RCN2.B.A RCFD5380 Loans US Deps: Foreign: 30-89 Days 0
RCN2.B.B RCFD5381 Loans US Deps: Foreign: 90+ Days 0
RCN2.B.C RCFD5382 Loans US Deps: Foreign: Nonaccrual 0
RCN3.A RCFD1594 Ag US: 30-89 Days 0
RCN3.B RCFD1597 Ag US: 90+ Days 0
RCN3.C RCFD1583 Ag US: Nonaccrual 160
RCN4.A.A RCFD1251 Coml/Indl US: 30-89 Days 79138
RCN4.A.B RCFD1252 Coml/Indl US: 90+ Days 21398
RCN4.A.C RCFD1253 Coml/Indl US: Nonaccrual 70543
RCN4.B.A RCFD1254 Coml/Indl non-US: 30-89 Days 2139
RCN4.B.B RCFD1255 Coml/Indl non-US: 90+ Days 0
RCN4.B.C RCFD1256 Coml/Indl non-US: Nonaccrual 13402
RCN5.A.A RCFD5383 Consumer: Credit Cards: 30-89 Days 1199
RCN5.A.B RCFD5384 Consumer: Credit Cards: 90+ Days 932
RCN5.A.C RCFD5385 Consumer: Credit Cards: Nonaccrual 0
RCN5.B.A RCFD5386 Consumer: Other: 30-89 Days 39186
RCN5.B.B RCFD5387 Consumer: Other: 90+ Days 5718
RCN5.B.C RCFD5388 Consumer: Other: Nonaccrual 2168
RCN6.A RCFD5389 Foreign: 30-89 Days 0
RCN6.B RCFD5390 Foreign: 90+ Days 0
RCN6.C RCFD5391 Foreign: Nonaccrual 0
RCN7.A RCFD5459 Other: 30-89 Days 44105
RCN7.B RCFD5460 Other: 90+ Days 4070
RCN7.C RCFD5461 Other: Nonaccrual 18262
RCN8.A.A RCFD1257 Leases US: 30-89 Days 0
RCN8.A.B RCFD1258 Leases US: 90+ Days 0
RCN8.A.C RCFD1259 Leases US: Nonacrual 0
RCN8.B.A RCFD1271 Leases non-US: 30-89 Days 0
RCN8.B.B RCFD1272 Leases non-US: 90+ Days 0
RCN8.B.C RCFD1791 Leases non-US: Nonaccrual 0
RCN9.A RCFD3505 Debt Securities: 30-89 Days 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
RCN9.B RCFD3506 Debt Securities: 90+ Days 0
RCN9.C RCFD3507 Debt Securities: Nonaccrual 0
RCNM.1.A RCFD1658 Restruc'd Loans: 30-89 Days 0
RCNM.1.B RCFD1659 Restruc'd Loans: 90+ Days 0
RCNM.1.C RCFD1661 restruc'd Loans: Nonaccrual 0
RCNM.2.A RCFD6558 Comm Real Estate Loans: 30-89 Days 2539
RCNM.2.B RCFD6559 Comm Real Estate Loans: 90+ Days 2590
RCNM.2.C RCFD6560 Comm Real Estate Loans: Nonaccrual 1559
RCNM.3.AA RCON2759 Secured Loans - Const: 30-89 Days 4509
RCNM.3.AB RCON2769 Secured Loans - Const: 90+ Days 5311
RCNM.3.AC RCON3492 Secured Loans - Const: Nonaccrual 6389
RCNM.3.BA RCON3493 Secured Loans - Farmland: 30-89 Days 231
RCNM.3.BB RCON3494 Secured Loans - Farmland: 90+ Days 0
RCNM.3.BC RCON3495 Secured Loans - Farmland: Nonaccrual 945
RCNM.3.C1A RCON5398 Secd Loans 1-4 Fam-Revol: 30-89 Days 0
RCNM.3.C1B RCON5399 Secd Loans 1-4 Fam-Revol: 90+ Days 0
RCNM.3.C1C RCON5400 Secd Loans 1-4 Fam-Revol: Nonaccrual 0
RCNM.3.C2A RCON5401 Secd Loans 1-4 Fam-Other: 30-89 Days 25447
RCNM.3.C2B RCON5402 Secd Loans 1-4 Fam-Other: 90+ Days 1661
RCNM.3.C2C RCON5403 Secd Loans 1-4 Fam-Other: Nonaccrual 8635
RCNM.3.DA RCON3499 Secured Loans - Multifam: 30-89 Days 200
RCNM.3.DB RCON3500 Secured Loans - Multifam: 90+ Days 0
RCNM.3.DC RCON3501 Secured Loans - Multifam: Nonaccrual 507
RCNM.3.EA RCON3502 Secured Loans - Non Farm: 30-89 Days 7071
RCNM.3.EB RCON3503 Secured Loans - Non Farm: 90+ Days 0
RCNM.3.EC RCON3504 Secured Loans - Non Farm: Nonaccrual 4437
RCNM.4.AA RCFD3522 Rate/Contract: Book Value: 30-89 Days 0
RCNM.4.AB RCFD3528 Rate/Contract: Book Value: 90+ Days 0
RCNM.4.BA RCFD3529 Rate/Contract: Replacement:30-89 Days 0
RCNM.4.BB RCFD3530 Rate/Contract: Replacement: 90+ Days 0
RCO1.A RCON0030 Unposted Debits 0
RCO1.B.1 RCON0031 Unposted Debits: Demand N/A
RCO1.B.2 RCON0032 Unposted Debits: Time/Savings N/A
RCO10 RCON8432 Deposit Institution Invest. Contracts 0
RCO11.A RCON8785 Reciprocal Demand Bals - Savings Asc. 0
RCO11.B RCONA181 Reciprocal Demand Bals - Foreign Brch 0
RCO11.C RCONA182 Reciprocal Demand Bals - Cash Items 0
RCO12.A RCONA527 Amt of Assets Netted agst Dem Deps 0
RCO12.B RCONA528 Amt of Assets Netted agst Tim/Svg Dep 0
RCO2.A RCON3510 Unposted Credits 0
RCO2.B.1 RCON3512 Unposted Credits: Demand N/A
RCO2.B.2 RCON3514 Unposted Credits: Time/Savings N/A
RCO3 RCON3520 Uninvested Trust Fund Cash 28616
RCO4.A RCON2211 Demand Deposits of Unconsolidaed Subs 4228
RCO4.B RCON2351 Time/Savings Deposits of Unconsolida 17
RCO4.C RCON5514 Int accrued/unpaid on deps of con sub 0
RCO5.A RCON2229 Demand Deposits: Insured Branches 0
RCO5.B RCON2383 Time/Savings Deposits: Insured Branc 0
RCO5.C RCON5515 Int accrued/unpaid on deps in ins brc 0
RCO6.A RCON2314 Pass-through Reserve Balances: Demand 0
RCO6.B RCON2315 Pass-through-Reserve Balances: Time/S 0
RCO7.A RCON5516 Unamortized premiums 0
RCO7.B RCON5517 Unamortized discounts 0
RCO8.A.1 RCONA531 OAKAR: Total Deposits Purchased N/A
RCO8.A.2 RCONA532 OAKAR: Amt of Purchased Deposits N/A
RCO8.B RCONA533 OAKAR: Total Deposits Sold N/A
RCOM.1.A.1 RCON2702 Amount of Deposit Accounts less than $100K 7979017
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
RCOM.1.A.2 RCON3779 (June Only) Number of Deposit Accts less than N/A
RCOM.1.B.1 RCON2710 Amount of Deposit Accounts > $100K 10740779
RCOM.1.B.2 RCON2722 Number of Deposit Accounts > $100K 21810
RCOM.2.A RCON6861 Yes/No: Bank has a better method/proc 0
RCOM.2.B RCON5597 If YES: Uninsured Deposits Amount N/A
RCOM.3 RCONA545 Cert No of consolidated inst. N/A
RCR1 RCFD6056 Do You Meet Capital Requirements? Y/N 0
RCR2.A RCFDA515 Subord Debt & Int Term Prfrd Stock 445000
RCR2.B RCFDA516 Other Limited-Life cap Instr 0
RCR3.A1 RCFD8274 Regulatory capt ratios:Tier 1 Capital 1641590
RCR3.A2 RCFD8275 Regulatory capt ratios:Tier 2 Capital 664078
RCR3.A3 RCFD1395 Regulatory capt ratios: Tier 3 Capital 0
RCR3.B RCFD3792 Regulatory capt ratios:Total RB Captl 2305668
RCR3.C RCFDA222 Regulatory capt ratios:Excess allownc 0
RCR3.D1 RCFDA223 Regulatory capt ratios:Risk-wtd assts 18912102
RCR3.D2 RCFD1651 Regulatory capt ratios: Mrkt Risk-equiv 0
RCR3.E RCFD1727 Regulatory capt ratios: Max Cont Dolr 0
RCR3.F RCFDA224 Regulatory capt ratios:Avrg tot assts 22196614
RCR4.A RCFD5163 00 % Risk assets recorded on Bal Sht 2306232
RCR4.B RCFD3796 Zero % Risk: Credit Equiv Off-Balance 8318
RCR5.A RCFD5165 20 % Risk assets recorded on Bal Sht 8283283
RCR5.B RCFD3801 20 % Risk: Credit Equiv Off-Balance 282593
RCR6.A RCFD3802 50 % Risk: Assets On Balance Sheet 836340
RCR6.B RCFD3803 50 % Risk: Credit Equiv Off-Balance 144260
RCR7.A RCFD3804 100 % Risk: Assets On Balance Sheet 12821569
RCR7.B RCFD3805 100 % Risk: Credit Equiv Off-Balance 3738763
RCR8 RCFD3806 On-Balance Sheet Values Excluded From 303109
RCR9 RCFD3807 Total Assets Recorded On Balnce Sheet 24550533
RCRM.01 RCFD8764 Credit Exp - Off-Bal Sheet Derivative 33399
RCRM.02.AA RCFD3809 Derivative Int Rate Contracts less than 1 YR 4533645
RCRM.02.AB RCFD8766 Derivative Int Rate Contracts 1-5 YRS 5248686
RCRM.02.AC RCFD8767 Derivative Int Rate Contracts > 5 YRS 3521535
RCRM.02.BA RCFD3812 Derivative Fgn Exch Contracts less than 1 YR 1494059
RCRM.02.BB RCFD8769 Derivative Fgn Exch Contracts 1-5 YRS 319865
RCRM.02.BC RCFD8770 Derivative Fgn Exch Contracts > 5 YRS 3358
RCRM.02.CA RCFD8771 Derivative Gold Contracts less than 1 YR 0
RCRM.02.CB RCFD8772 Derivative Gold Contracts 1-5 YRS 0
RCRM.02.CC RCFD8773 Derivative Gold Contracts > 5 YRS 0
RCRM.02.DA RCFD8774 Derivative P Metals Contracts less than 1 YR 0
RCRM.02.DB RCFD8775 Derivative P Metals Contracts 1-5 YRS 0
RCRM.02.DC RCFD8776 Derivative P Metals Contracts > 5 YRS 0
RCRM.02.EA RCFD8777 Derivative Commodity Contrcts less than 1 YR 1320
RCRM.02.EB RCFD8778 Derivative Commodity Contrcts 1-5 YRS 4104
RCRM.02.EC RCFD8779 Derivative Commodity Contrcts > 5 YRS 0
RCRM.02.FA RCFDA000 Derivative Equity Contracts less than 1 YR 319396
RCRM.02.FB RCFDA001 Derivative Equity Contracts 1-5 YRS 0
RCRM.02.FC RCFDA002 Derivative Equity Contracts > 5 YRS 0
RCX01.A RCFD3561 Number Of Loans To Executive Officers 0
RCX01.B RCFD3562 Amount Of Loans To Executive Officers 0
RCX01.C1 RCFD7701 Start Rate (####.##%) Loans To Execs. 0
RCX01.C2 RCFD7702 Top Rate (####.##%) Loans To Execs. 0
RI-01.A.1A RIAD4011 RE Loans 162842
RI-01.A.1B RIAD4019 Loans to Dep'y Inst's 173
RI-01.A.1C RIAD4024 Ag/Farmer Loans 1096
RI-01.A.1D RIAD4012 Coml/Indl Loans 325599
RI-01.A.1E RIAD4026 Acceptances 0
RI-01.A.1G RIAD4056 Loans to For Govts 418
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
RI-01.A.1I RIAD4058 Other Domestic Loans 108842
RI-01.A.2 RIAD4059 For Loans 1477
RI-01.A1F1 RIAD4054 Credit Cards 10257
RI-01.A1F2 RIAD4055 Other Consumer 114158
RI-01.A1H1 RIAD4503 Taxable State/Local Obligations 0
RI-01.A1H2 RIAD4504 Exempt State/Local Obligations 264
RI-01.B.1 RIAD4505 Taxable Leases 1502
RI-01.B.2 RIAD4307 Exempt Leases 0
RI-01.C.1 RIAD4105 Domestic Interest on Balances Due 0
RI-01.C.2 RIAD4106 For Interest on Balances due 116
RI-01.D.1 RIAD4027 US Govt/Treasury Securities 232751
RI-01.D.2A RIAD4506 Taxable State/Local Securities 1
RI-01.D.2B RIAD4507 Exempt State/Local Securities 8
RI-01.D.3 RIAD3657 Other Domestic Debt securities 40
RI-01.D.4 RIAD3658 Foreign Debt Securities 147
RI-01.D.5 RIAD3659 Equity Securities (incl mutual funds) 2140
RI-01.E RIAD4069 Interest on Trading Assets 38
RI-01.F RIAD4020 Interest on Fed Funds Sold Etc 15155
RI-01.G RIAD4107 Total Interest Income 977024
RI-02.A.1A RIAD4508 Transaction Accounts 3164
RI-02.A.2 RIAD4172 Interest on For Deposits 11680
RI-02.A1B1 RIAD4509 MMDAs 31898
RI-02.A1B2 RIAD4511 Other Savings 95575
RI-02.A1B3 RIADA517 Int Exp: Time Deposits >=$100,000 30505
RI-02.A1B4 RIADA518 Int Exp: Time Deposits less than $100,000 79228
RI-02.B RIAD4180 Fed Funds Purchased Etc 61184
RI-02.C RIAD4185 Interest on Demand Notes to US Treasu 17070
RI-02.E RIAD4200 Interest on Subordinated Notes/Debent 21379
RI-02.F RIAD4073 Total Interest Expense 351683
RI-03 RIAD4074 Net Interest Income 625341
RI-04.A RIAD4230 Provision for Loan and Lease Losses 92000
RI-04.B RIAD4243 Provision for Allocated Transfer Risk 0
RI-05.A RIAD4070 Income from Fiduciary Activities 138580
RI-05.B RIAD4080 Service Charges on Deposit Accounts 117913
RI-05.C RIADA220 Trading Revenue 18516
RI-05.F.1 RIAD5407 Other Noninterest Income - Fee Income 95347
RI-05.F.2 RIAD5408 Other Noninterest Income - All Other 168386
RI-05.G RIAD4079 Total Noninterest Income 538742
RI-06.A RIAD3521 Gain/Loss Sec Held to Maturities 0
RI-06.B RIAD3196 Gain/Loss Sec Available-for-sale 23687
RI-07.A RIAD4135 Salaries and Benefits 429670
RI-07.B RIAD4217 Expense on Premises/Fixed Assets 160298
RI-07.C RIAD4092 Other Noninterest Expensze 201788
RI-07.D RIAD4093 Total Noninterest Expense 791756
RI-08 RIAD4301 Income (loss) Before Income Taxes 304014
RI-09 RIAD4302 Income Taxes 108682
RI-10 RIAD4300 Income (loss) Before Extraordinary 195332
RI-11 RIAD4320 Extraordinary Items Net Of Taxes 0
RI-12 RIAD4340 Net Income (loss) 195332
RI-M.1 RIAD4513 Interest Expense on Exempt After 8/7/ 5
RI-M.10 RIADA251 Memo:Credit losses on off-balnc sheet 0
RI-M.11 RIADA530 Does Bank have Subchapter-S Y/N N/A
RI-M.12 RIAD4772 Deferred N/A
RI-M.2 RIAD8431 Memoranda: Income Sale Mutuals 16840
RI-M.5 RIAD4150 Number of Employees on Payroll 9759
RI-M.7 RIAD9106 There is no description for this item N/A
RI-M.8.A RIAD8757 Memoranda: Trading Rev - Interest 76
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
RI-M.8.B RIAD8758 Memoranda: Trading Rev - Foreign Exch 18440
RI-M.8.C RIAD8759 Memoranda: Trading Rev - Equity/Index 0
RI-M.8.D RIAD8760 Memoranda: Trading Rev - Commodity 0
RI-M.9.A RIAD8761 Memoranda: Impact - Interest Income 2574
RI-M.9.B RIAD8762 Memoranda: Impact - Interest Expense 486
RI-M.9.C RIAD8763 Memoranda: Impact - Other Allocations -1014
RIA01 RIAD3215 Total Equity on Dec 31 prev year-end 1812417
RIA02 RIAD3216 Equity Adjustments 0
RIA03 RIAD3217 Amended Balance Previous Year 1812417
RIA04 RIAD4340 Net Income/Loss 195332
RIA05 RIAD4346 Sale/Conversion of Stock 0
RIA06 RIAD4356 Changes Incident to Combinations 0
RIA07 RIAD4470 LESS: Cash Dividends on Common 0
RIA08 RIAD4460 LESS: Cash Dividends on preferred 0
RIA09 RIAD4411 Changes in Accounting Principles 0
RIA10 RIAD4412 Corrections of Accounting Errors 0
RIA11.A RIAD8433 Net Unrealized Holding Avail Forsale -164564
RIA11.B RIAD4574 Accm net gains(loss) on cash flow hedges 0
RIA12 RIAD4414 Foreign Currency Translation Adjustme 0
RIA13 RIAD4415 Other Parent BHC Transactions 0
RIA14 RIAD3210 Total Equity Capital End Of Cur. Per. 1843185
RIB1.1.A.A RIAD4651 RE Loans: US 1878
RIB1.1.A.B RIAD4661 RE Loans: non-US 1550
RIB1.1.B.A RIAD4652 RE Loans: non-US: Charge-Offs 0
RIB1.1.B.B RIAD4662 RE Loans: non-US: Recoveries 0
RIB1.2.A.A RIAD4653 Loans to US Banks: Charge-Offs 17
RIB1.2.A.B RIAD4663 Loans to US Banks: Recoveries 0
RIB1.2.B.A RIAD4654 Loans to For Banks: Charge-Offs 0
RIB1.2.B.B RIAD4664 Loans to For Banks: Recoveries 0
RIB1.3.A RIAD4655 Ag/Farm Loans: Charge-Offs 0
RIB1.3.B RIAD4665 Ag/Farm Loans: Recoveries 386
RIB1.4.A.A RIAD4645 Coml/Indl Loans US: Charge-Offs 21750
RIB1.4.A.B RIAD4617 Coml/Indl Loans US: Recoveries 2679
RIB1.4.B.A RIAD4646 Coml/Indl Loans non-US: Charge-Offs 0
RIB1.4.B.B RIAD4618 Coml/Indl Loans non-US: recoveries 0
RIB1.5.A.A RIAD4656 Credit Cards: Charge-Offs 1493
RIB1.5.A.B RIAD4666 Credits Cards: Recoveries 295
RIB1.5.B.A RIAD4657 Other Consumer Charge-Offs 39254
RIB1.5.B.B RIAD4667 Other Consumer: Recoveries 8470
RIB1.6.A RIAD4643 Loans to For Govts: Charge-Offs 0
RIB1.6.B RIAD4627 Loans to For Govts: Recoveries 13
RIB1.7.A RIAD4644 Other Loans: Charge-Offs 29103
RIB1.7.B RIAD4628 Other Loans: Recoveries 3051
RIB1.8.A.A RIAD4658 Leases US: Charge-Offs 0
RIB1.8.A.B RIAD4668 Leases US: Recovereies 0
RIB1.8.B.A RIAD4659 Leases non-US: Chatge-Offs 0
RIB1.8.B.B RIAD4669 Leases non-US: Recoveries 0
RIB1.9.A RIAD4635 Total Charge-offs (year-to-date) 93495
RIB1.9.B RIAD4605 Total Recoveries (year-to-date) 16444
RIB1.M.4.A RIAD5409 Memo: Charge-offs: Loans to fin comm. 8
RIB1.M.4.B RIAD5410 Memo: Recoveries: Loans to fin commcl 45
RIB1.M.5AA RIAD3582 Memo: Charge-offs: Loans sec construc 0
RIB1.M.5AB RIAD3583 Memo: Recoveries: Loans sec construct 40
RIB1.M.5BA RIAD3584 Memo: Charge-offs: Loans sec farmland 0
RIB1.M.5BB RIAD3585 Memo: Recoveries: Loans sec farmland 14
RIB1.M.5DA RIAD3588 Memo: Charge-offs: Loans sec multifam 0
RIB1.M.5DB RIAD3589 Memo: Recoveries: Loans sec multifaml 3
</TABLE>
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<CAPTION>
<S> <C> <C>
RIB1.M.5EA RIAD3590 Memo: Charge-offs: Loans sec nonfarm 22
RIB1.M.5EB RIAD3591 Memo: Recoveries: Loans sec nonfarm 838
RIB1.M5C1A RIAD5411 Memo: Charge-offs: Revolv loans 1-4 r 0
RIB1.M5C1B RIAD5412 Memo: Recoveries: Revolv loans 1-4 rs 0
RIB1.M5C2A RIAD5413 Memo: Charge-offs: Other loans 1-4 rs 1856
RIB1.M5C2B RIAD5414 Memo: Recoveries: Other loans 1-4 res 655
RIB2.01 RIAD3124 Allowance for Loan/Lease: Dec 31 204129
RIB2.02 RIAD2419 Recoveries (Loan/Lease) 16444
RIB2.03 RIAD2432 LESS: Charge-Offs (Loan/Lease) 93495
RIB2.04 RIAD4230 Provision (Loan/Lease) 92000
RIB2.05 RIAD4815 Adjustments (Loan/Lease) 0
RIB2.06 RIADA512 Allow. Loan/Lease Loss Balance 219078
RID1.1.A RIAD4837 Interest Income Booked N/A
RID1.1.B RIAD4838 Interest Expense Booked N/A
RID1.1.C RIAD4839 Total N/A
RID1.2.A RIAD4840 Net Int'l Int Income Sold American N/A
RID1.2.B RIAD4841 Net Domestic Int Income Booked Foreig N/A
RID1.2.C RIAD4842 Total N/A
RID1.3.A RIAD4097 Noninterest Intl INcome N/A
RID1.3.B RIAD4235 Provision for Intl Loan/Lease Losses N/A
RID1.3.C RIAD4239 Other Intl Nonint Expense N/A
RID1.3.D RIAD4843 Total N/A
RID1.4 RIAD4844 Total N/A
RID1.5 RIAD4845 Adjustment to Pretax Income Etc N/A
RID1.6 RIAD4846 Total N/A
RID1.7 RIAD4797 Intl Income Taxes N/A
RID1.8 RIAD4341 Total N/A
RID1.M.1 RIAD4847 Intracompany Int Income N/A
RID1.M.2 RIAD4848 Intracompany Int Expense N/A
RID2.1 RIAD4849 Interest Income at IBFs N/A
RID2.2 RIAD4850 Interest Expense at IBFs N/A
RID2.3.A RIAD5491 Noninterest Intl Income (Gain/Losses) N/A
RID2.3.B RIAD5492 Noninterest Intl Income (Fees & Othr) N/A
RID2.4 RIAD4852 Provision Loan/Lease Losses Intl Sold N/A
RID2.5 RIAD4853 Other Noninterest Exp INtl Sold Ameri N/A
RIE01.A RIAD5415 Other non-interest income (RI-5.f.2) N/A
RIE01.B RIAD5416 Other non-interest income (RI-5.f.2) 1877
RIE01.C RIAD5417 Other non-interest income (RI-5.f.2) N/A
RIE01.D RIAD4461 Other non-interest income (RI-5.f.2) 71000
RIE01.E RIAD4462 Other non-interest income (RI-5.f.2) 57478
RIE01.F RIAD4463 Other non-interest income (RI-5.f.2) N/A
RIE02.A RIAD4531 Other non-interest expense (RI-7.c) 30494
RIE02.B RIAD5418 Other non-interest expense (RI-7.c) N/A
RIE02.C RIAD5419 Other non-interest expense (RI-7.c) N/A
RIE02.D RIAD5420 Other non-interest expense (RI-7.c) N/A
RIE02.E RIAD4464 Other non-interest expense (RI-7.c) N/A
RIE02.F RIAD4467 Other non-interest expense (RI-7.c) N/A
RIE02.G RIAD4468 Other non-interest expense (RI-7.c) N/A
RIE03.A.1 RIAD6373 Effect of adopting FAS 133 0
RIE03.A.2 RIAD4486 Applicable tax effect (RI-11.b) 0
RIE03.B.1 RIAD4487 Extraordinary items and Adj (RI-11.a) 0
RIE03.B.2 RIAD4488 Applicable tax effect (RI-11.b) 0
RIE03.C.1 RIAD4489 Extraordinary items and Adj (RI-11.a) 0
RIE03.C.2 RIAD4491 Applicable tax effect (RI-11.b) 0
RIE04.A RIAD4492 Equity cap adjustments (RIA-2) N/A
RIE04.B RIAD4493 Equity cap adjustments (RIA-2) N/A
RIE05.A RIAD4494 Acct changes effects (RIA-9) N/A
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
RIE05.B RIAD4495 Acctg changes effects (RIA-9) N/A
RIE06.A RIAD4496 Corrections (RIA-10) N/A
RIE06.B RIAD4497 Corrections (RIA-10) N/A
RIE07.A RIAD4498 Transactions w/parent (RIA-12) N/A
RIE07.B RIAD4499 Transactions w/parent (RIA-12) N/A
RIE08.A RIAD4521 Adjs. to allow for l & l loss (RIB.2. N/A
RIE08.B RIAD4522 Adjs. to allow for l & l loss (RIB.2. N/A
RIE09 RIAD4769 RI-E Other Explanations (Y/N) 0
</TABLE>
