AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 8, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CORNELL CORRECTIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 76-0433642
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization Identification No.)
1700 WEST LOOP SOUTH, SUITE 1500
HOUSTON, TEXAS
(Address of Principal Executive Offices)
77027
(Zip Code)
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CORNELL CORRECTIONS, INC. AMENDED AND RESTATED 1996 STOCK OPTION PLAN
CORNELL CORRECTIONS, INC. EMPLOYEE STOCK PURCHASE PLAN
CORNELL DEFERRED COMPENSATION PLAN
(Full title of the plan)
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DAVID M. CORNELL
CHIEF EXECUTIVE OFFICER
CORNELL CORRECTIONS, INC.
1700 WEST LOOP SOUTH, SUITE 1500
HOUSTON, TEXAS 77027
(Name and Address of Agent for Service)
Telephone Number, Including Area Code,
of Agent for Service:
(713) 623-0790
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================
TITLE OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE(2)
===============================================================================================
<S> <C> <C> <C> <C>
Common Stock (par
value $.001 per share) 970,000 $21.05 $20,422,193 $5,678
===============================================================================================
</TABLE>
(1) A previous Registration Statement (File No. 333-19145) registered 639,140
shares of Cornell Corrections, Inc. ( the "Company") common stock, $.001 par
value per share ("Common Stock"), offered under the Company's 1996 Stock Option
Plan, as amended (the "1996 Plan"). This Registration Statement is being filed
to register 620,000 additional shares of Common Stock that may be purchased
under the amended and restated 1996 Plan (the "Amended Plan"). This Registration
Statement also covers 250,000 shares that may be purchased under the Employee
Stock Purchase Plan and 100,000 shares that may be issued under the Deferred
Compensation Plan. In addition, pursuant to Rule 416(c) under the Securities Act
of 1933, this Registration Statement also covers an indeterminate amount of
interests to be offered or sold hereby.
(2) Estimated in accordance with Rule 457(c) and (h) solely for the purpose of
calculating the registration fee and based upon the option exercise prices of
options to acquire 589,880 shares of Common Stock which have been granted under
the Amended Plan, and the average of the high and low sales price of the shares
of Common Stock of the Company quoted on the New York Stock Exchange on June 2,
1999, with respect to (i) 30,120 shares of Common Stock which may be purchased
pursuant to options which may be granted under the Amended Plan, (ii) 250,000
shares of Common Stock which may be purchased under the Employee Stock Purchase
Plan and (ii) 100,000 shares of Common Stock to be issued in connection with the
Deferred Compensation Plan.
<PAGE>
EXPLANATION STATEMENT
A Registration Statement on Form S-8 (File No. 333-19145) (the "Original
Registration Statement") was filed with the Securities and Exchange Commission
(the "Commission") on December 31, 1996 covering the registration of 639,140
shares initially authorized for issuance under Cornell Corrections, Inc.'s (the
"Company") 1996 Stock Option Plan (the "Plan"). A filing fee of $1,780.00 was
paid at the time the Original Registration Statement was filed. Pursuant to
General Instruction E of Form S-8 and Rule 429, this Registration Statement is
being filed to register an additional 620,000 shares under the Amended and
Restated 1996 Stock Option Plan (the "Amended Plan") authorized by the Company's
Board of Directors on February 23, 1998 and approved by the Company's
stockholders on April 9, 1998. This Registration Statement also covers an
aggregate of 350,000 shares of Common Stock issuable under the Employee Stock
Purchase Plan and the Deferred Compensation Plan. The contents of the Original
Registration Statement are incorporated herein by reference.
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Part I of Form S-8
are not required to be filed with the Commission as part of this Registration
Statement on Form S-8. Such documents and the documents incorporated by
reference in this Registration Statement on Form S-8 pursuant to Item 3 of Part
II hereof, taken together, constitute a prospectus that meets the requirements
of Section 10(a) of the Securities Act of 1933, as amended (the "Securities
Act").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated by reference and shall be deemed to be a part hereof:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1998;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999;
3. Description of the Company's Common Stock set forth under the caption
"Item 1. Description of Registrant's Securities to be Registered" on Form 8-A
filed July 17, 1996 (as amended by Amendment No. 1 on Form 8A/A filed September
11, 1996); and
4. Description of Rights set forth under the caption "Item 1. Description
of Registrant's Securities to be Registered" on Form 8-A filed May 11, 1998, as
amended by the Form 8-A/A filed May 15, 1998.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Registration Statement and prior to the filing of a post-effective
amendment to this Registration Statement which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such documents.
<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
DELAWARE GENERAL CORPORATION LAW
Consistent with Section 145(a) of the Delaware General Corporation Law
(the "DGCL"), the Company 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 the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, 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 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 the Company.
This indemnification does not apply, in a derivative action, to matters as
to which it is adjudged that the director, officer, employee or agent is liable
to the Company, 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 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
The Company's Restated Certificate of Incorporation, as amended, provides
that a director of the Company shall not be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (1) for any breach of the director's duty of
loyalty to the Company 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 the Company, in addition to the limitation
on personal liability described above, shall be limited to the fullest extent
permitted by the amended DGCL. Further, any repeal or modification of such
provision of the Certificate of Incorporation by the stockholders of the Company
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Company existing at the time of such
repeal or modification. Additionally, the Certificate of Incorporation provides
that the Company will indemnify its officers and directors to the fullest extent
permitted by the DGCL.
BYLAWS
The Company'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 the Company 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 the Company or such other business organizations. The Bylaws further
provide that the right to indemnification is a contract right and includes the
right for the Company 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 the Company may, by action of its board of
directors,
2
<PAGE>
provide indemnification to employees and agents of the Company, individually or
as a group, with the same scope and effect as the indemnification of directors
and officers provided for in the Bylaws.
INDEMNIFICATION AGREEMENTS
The Company maintains Indemnification Agreements with each of its officers
and directors. The Indemnification Agreements provide that the Company shall
indemnify the officer or director and hold him harmless from any losses and
expenses which, in type or amount, are not insured under the directors and
officers' liability insurance maintained by the Company. The Indemnification
Agreements generally provide that the Company indemnifies the officer or
director against losses and expenses as a result of a claim or claims made
against him for any breach of duty, neglect, error, misstatement, misleading
statement, omission or other act done or wrongfully attempted by the officer or
director or any of the foregoing alleged by any claimant or any claim against
the officer or director solely by reason of him being an officer or director of
the Company, subject to certain exclusions. The Indemnification Agreements also
provide certain procedures regarding the right to indemnification and for the
advancement of expenses.
INSURANCE
The Company 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 the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
3
<PAGE>
ITEM 8. EXHIBITS
The following documents are filed as a part of this Registration Statement
or incorporated by reference herein:
Exhibit
NO. DESCRIPTION
4.1 Restated Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996).
4.2 Amended and Restated Bylaws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998).
4.3 Certificate representing Common Stock (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Reg. No.
333-08243) (the "Form S-1")).
4.4 Registration Rights Agreement dated as of March 31, 1994, as amended,
among the Company and the stockholders listed on the signature pages
thereto (incorporated by reference to Exhibit 4.2 to the Form S-1).
4.5 Rights Agreement dated as of May 1,1998 between the Company and American
Securities Transfer & Trust, Inc., as Rights Agent (incorporated by
reference to Exhibit 1 to the Company's Registration Statement on Form 8-A
filed May 11, 1998).
4.6 Cornell Corrections, Inc. Amended and Restated 1996 Stock Option Plan
(incorporated by reference to Exhibit B to the Company's Proxy Statement
dated March 9, 1998).
*4.7 Cornell Corrections, Inc. Employee Stock Purchase Plan.
*4.8 Cornell Deferred Compensation Plan.
*5 Opinion of Locke Liddell & Sapp LLP.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Locke Liddell & Sapp LLP (included in Exhibit 5).
*24 Powers of Attorney.
- ----------------
* filed herewith.
ITEM 9.UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
4
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this 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 this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or
any material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that the undertakings set forth in paragraphs (a)(1)(i)
and (a)(1)(ii) above do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the 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 Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 8th day of June,
1999.
CORNELL CORRECTIONS, INC.
By: /s/ DAVID M. CORNELL
David M. Cornell
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID M. CORNELL Chairman of the Board, President June 8, 1999
DAVID M. CORNELL and Chief Executive Officer
(Principal Executive Officer)
/s/ STEVEN W. LOGAN Acting Chief Financial Officer June 8, 1999
STEVEN W. LOGAN (Principal Financial Officer)
*/s/ PETER A. LEIDEL Director June 8, 1999
PETER A. LEIDEL
*/s/ ARLENE R. LISSNER Director June 8, 1999
ARLENE R. LISSNER
*/s/ TUCKER TAYLOR Director June 8, 1999
TUCKER TAYLOR
*By: /s/ STEVEN W. LOGAN
STEVEN W. LOGAN
Attorney-in-Fact
6
<PAGE>
EXHIBIT INDEX
Exhibit
NO. DESCRIPTION
4.1 Restated Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996).
4.2 Amended and Restated Bylaws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998).
4.3 Certificate representing Common Stock (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Reg. No.
333-08243)(the "Form S-1")).
4.4 Registration Rights Agreement dated as of March 31, 1994, as amended,
among the Company and the stockholders listed on the signature pages
thereto (incorporated by reference to Exhibit 4.2 to the Form S-1).
4.5 Rights Agreement dated as of May 1,1998 between the Company and American
Securities Transfer & Trust, Inc., as Rights Agent (incorporated by
reference to Exhibit 1 to the Company's Registration Statement on Form 8-A
filed May 11, 1998).
4.6 Cornell Corrections, Inc. Amended and Restated 1996 Stock Option Plan
(incorporated by reference to Exhibit B to the Company's Proxy Statement
dated March 9, 1998).
*4.7 Cornell Corrections, Inc. Employee Stock Purchase Plan.
*4.8 Cornell Deferred Compensation Plan.
*5 Opinion of Locke Liddell & Sapp LLP.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Locke Liddell & Sapp LLP (included in Exhibit 5).
*24 Powers of Attorney.
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* filed herewith.
EXHIBIT 4.7
CORNELL
EMPLOYEE STOCK
PURCHASE PLAN
Effective as of July 1, 1999
<PAGE>
CORNELL
EMPLOYEE STOCK
PURCHASE PLAN
TABLE OF CONTENTS
Article I Purpose and Effective Date..........................................1
Article II Definitions........................................................1
Article III Eligibility and Participation.....................................5
Article IV Payroll Deductions.................................................5
Article V Terms and Conditions of Options.....................................7
Article VI Exercise of Option.................................................9
Article VII Withdrawal, Termination, Death...................................11
Article VIII Shares Under Option, Distribution or Sale of Shares.............12
Article IX Administration....................................................14
Article X Amendment and Termination of the Plan..............................17
Article XI Nontransferability................................................17
Article XII Ownership and Use of Funds.......................................18
Article XIII Changes in Capitalization, Merger, etc. and Adjustments to
Shares..........................................................18
Article XIV Beneficiaries of Deceased Participants...........................21
Article XV Registration and Qualification of Shares..........................22
Article XVI Stockholder Approval.............................................22
Article XVII Restrictions On Participants Subject to Short-Swing Profit
Rules..........................................................23
Article XVIII Miscellaneous..................................................23
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ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1 The Cornell Employee Stock Purchase Plan is intended to encourage employees
of Cornell Corrections, Inc. (the "Company") and its participating subsidiary
corporations to acquire an ownership interest in the Company through the
purchase of Shares of common stock of the Company. It is believed that this Plan
will enhance stockholder value by aligning employee efforts with the financial
success of the Company. It is the intention of the Company to have the Plan
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code of 1986, as amended. The provisions of the Plan shall be construed
so as to extend and limit participation in a manner consistent with the
requirements of Section 423 of such Code.
1.2 The Plan is effective as of July 1, 1999.
ARTICLE II
DEFINITIONS
2.1 "Code" means the Internal Revenue Code of 1986, as amended.
2.2 "Commencement Date" means each January 1st during the Term of the Plan;
provided, however, that the Plan Administrator may designate as to any given
January 1st that such date shall not be a Commencement Date and that no options
shall be granted as of such date. Notwithstanding the foregoing, the initial
Commencement Date shall be July 1, 1999.
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2.3 "Company" means Cornell Corrections, Inc., a Delaware corporation and any
successor corporation which shall continue this Plan.
2.4 "Compensation" means all wages, salaries, overtime pay, shift differentials,
incentive compensation, fees for services and other amounts received during the
calendar year for personal services actually rendered in the course of
employment with the Employer to the extent that the amounts are includible in
gross income, plus any amounts contributed by the Employer pursuant to a salary
reduction agreement that are not includible in gross income of the Employee
under Section 125 of the Code (regarding contributions to a cafeteria plan),
Section 402(a)(8) of the Code (regarding contributions to a 401(k) plan) or
Section 451 of the Code (regarding contributions to a plan of deferred
compensation) and less any prizes, awards, automobile allowances, relocation
expenses, severance pay and similar types of extraordinary compensation.
The term "Compensation" shall not include the following:
(i) Any distributions from a plan of deferred compensation (regardless of
whether such amounts are includible in gross income of the Employee for
federal income tax purposes in the taxable year of distribution);
(ii) Amounts realized from the exercise of a nonqualified stock option;
(iii) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option;
(iv) Amounts realized when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture; or
(v) Other amounts that receive special tax benefits, such as premiums for
group term life insurance (but only to the extent that the premiums are
not includible in the gross income of the Employee).
2
<PAGE>
2.5 "Corresponding Exercise Date" with regard to a given Commencement Date means
the December 31st following such Commencement Date or, if such date is not a
trading day on the New York Stock Exchange or other established securities
market on which the Company's stock is traded, the nearest prior business day on
which such trading occurs.
2.6 "Election Period" means the period, commencing on a date determined by the
Plan Administrator prior to any Corresponding Exercise Date and ending on the
7th day preceding such Corresponding Exercise Date, during which a Participant
may elect, in accordance with Article VI, not to exercise any options and to
withdraw his payroll deductions for the Offering Period. The Participant's
election must be received by the Plan Administrator within the Election Period
in order for the election to be effective.
2.7 "Eligible Employee" means an Employee of the Employer who is eligible for
participation in the Plan in accordance with Article III.
2.8 "Employee" means any person, including an officer, who is carried on the
Employer's books as an employee for payroll tax purposes, provided such employee
is customarily employed more than five (5) months in a calendar year and more
than twenty (20) hours per week by the Employer. Any Employee otherwise meeting
the foregoing criteria but who is a member of the Board of Directors of an
Employer shall nevertheless be eligible to participate in the Plan.
2.9 "Employer" means the Company and any of its present or future subsidiaries
or affiliated organizations constituting a "subsidiary corporation" within the
meaning of Section 424(f) of the Code and designated by the Plan Administrator
as a participating employer as to the offering beginning as of any particular
Commencement Date.
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<PAGE>
2.10 "Offering Period" means a period of approximately one (1) year in duration
from a given Commencement Date to the Corresponding Exercise Date.
Notwithstanding the foregoing, the first Offering Period shall be a short period
commencing July 1, 1999 and ending December 31, 1999.
2.11 "Participant" means an Eligible Employee of the Employer who elects to
participate hereunder.
2.12 "Payroll Period" means each weekly, biweekly, semi-monthly or monthly
payroll period, as applicable, for which an Eligible Employee is paid.
2.13 "Plan" means this Cornell Employee Stock Purchase Plan, as amended from
time to time.
2.14 "Plan Administrator" means the Chief Administrative Officer of the Company,
who shall administer the Plan in accordance with Article IX.
2.15 "Shares" means shares of common stock of Cornell Corrections, Inc., par
value $.001, subject to adjustments that may be made in accordance with Article
XIII.
2.16 "Term of the Plan" means the time period from the initial Commencement Date
of July 1, 1999 to the Termination Date of the Plan.
2.17 "Termination Date" means, unless the Plan has been earlier terminated by
the Board of Directors, the final Corresponding Exercise Date on which all of
the Shares available to the Plan have been purchased by Participants through the
Plan.
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<PAGE>
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Any Employee of the Employer who is employed prior to a given Commencement
Date shall be an Eligible Employee and shall be eligible to participate in the
Plan on such Commencement Date, subject to the limitations imposed by Section
423 of the Code.
3.2 An Eligible Employee may elect to enroll as of, and become a Participant on,
the first Commencement Date on which such Employee qualifies as an Eligible
Employee or on any subsequent Commencement Date on which such Employee continues
to be an Eligible Employee. To enroll in the Plan, an Eligible Employee shall
complete a payroll deduction authorization on the form provided by the Plan
Administrator and file it with the Plan Administrator on or before the deadline
established by the Plan Administrator.
3.3 A Participant who ceases to be an Eligible Employee, although still employed
by the Employer, thereupon shall be deemed to discontinue participation in the
Plan, and the Participant shall have the rights provided in Section 7.2.
3.4 Participation in the Plan shall be voluntary.
ARTICLE IV
PAYROLL DEDUCTIONS
4.1 For each Offering Period, payroll deductions for a Participant shall begin
on the first payroll date following the Commencement Date for which an Eligible
Employee returns a timely payroll deduction authorization and shall end on the
last payroll date prior to the Corresponding
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<PAGE>
Exercise Date, unless sooner terminated by the Participant as provided in
Article VII or as otherwise provided herein.
4.2 Payroll deductions shall be elected by a Participant in full percentage
points not in excess of the LESSER of (i) ten percent (10%) of such
Participant's Compensation for each Payroll Period during the Offering Period or
(ii) $20,000 during the Offering Period.
Notwithstanding the foregoing, the Plan Administrator may at any time and in its
sole discretion designate a maximum payroll deduction percentage of less than
ten percent (10%) or a maximum payroll deduction amount of less than $20,000 for
a given Offering Period; provided that if a lesser percentage or amount is
designated for a given Offering Period, the percentage or amount referred to in
Section 5.2 shall be modified to be equal to the lesser percentage or amount
determined under this Section.
4.3 All payroll deductions made for Participants shall be credited to their
accounts under the Plan. Participants may not make any separate cash payments
into such accounts. A separate account will be established for each Offering
Period.
4.4 A Participant may discontinue participation at any time with respect to any
Offering Period and terminate the payroll deduction authorization as provided in
Section 7.1. All terminations of payroll deductions shall become effective as
soon as practicable after the date the amended payroll deduction authorization
form is received by the Plan Administrator.
4.5 Subject to the limitations described in Section 4.2 and Section 7.1, a
Participant may increase or reduce the amount of the Participant's payroll
deduction by completing an amended payroll deduction authorization on a payroll
deduction authorization form provided by the Plan
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<PAGE>
Administrator and filing it with the Plan Administrator. All changes in payroll
deduction amounts shall become effective on the January 1st which next follows
the date the amended payroll deduction authorization form is received by the
Plan Administrator; provided that if such form is received immediately prior to
a January 1st such that it is not received in time to permit the payroll
deduction change to begin on the next following January 1st, the payroll
deduction change shall begin as soon as practicable after such January 1st.
4.6 Payroll deductions for a Participant shall cease as of the date of the
Participant's termination of employment for any reason and the Participant shall
have the rights provided in Article VII.
ARTICLE V
TERMS AND CONDITIONS OF OPTIONS
5.1 Stock options granted pursuant to the Plan shall be evidenced by agreements
in such form as the Plan Administrator shall approve, provided that all
Employees shall have the same rights and privileges and provided further that
such options shall comply with and be subject to the terms and conditions of
this Article V and other applicable provisions of the Plan.
5.2 Subject to the limitations of this Article and Article VIII, as of each
Commencement Date on which a Participant has an effective payroll deduction
authorization, the Participant shall be granted an option to purchase a maximum
number of Shares equal to (A) divided by (B), where (A) is the LESSER of (i) ten
percent (10%) multiplied by the Participant's Compensation for the Offering
Period or (ii) $20,000, and (B) is 85% of the fair market value of a Share on
the Commencement Date. The fair market value of a Share shall be determined as
provided in Section 5.4. For purposes of this Section 5.2 only, a Participant's
Compensation for the Offering
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Period shall be deemed to be equal to the Participant's annual rate of base pay
in effect on the December 31st preceding the Commencement Date for such Offering
Period, plus incentive compensation paid during the calendar year preceding the
Commencement Date for such Offering Period.
5.3 The option price of Shares purchased with payroll deductions on a given
Corresponding Exercise Date shall be equal to eighty-five percent (85%) of the
lower of (i) the fair market value of the Shares as of the Commencement Date or
(ii) the fair market value of the Shares as of the Corresponding Exercise Date.
5.4 The fair market value of the Shares as of the Commencement Date shall be
equal to the closing price of the Company's common stock on the Commencement
Date or the nearest prior business day on which such trading occurred if the
Commencement Date is not a trading day on the New York Stock Exchange (or other
established securities market on which the Company's common stock is traded).
The fair market value of the Shares as of the Corresponding Exercise Date shall
be equal to the closing price of the Company's common stock on such date. If the
Company's common stock is not admitted to trading on any of the aforesaid dates
for which closing prices of the Shares are to be determined, then reference
shall be made to the fair market value of the stock on that date, as determined
on such basis as shall be established or specified for this purpose by the Plan
Administrator in a manner acceptable under Section 423 of the Code.
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5.5 Notwithstanding any provision of the Plan to the contrary, no Employee shall
be granted an option:
(a) if such Employee, immediately after the option is granted, owns
Shares possessing five percent (5%) or more of the total combined voting
power or value of all classes of Shares of the Company or a parent or a
subsidiary of the Company. For purposes of determining share ownership the
rules of Section 424(d) of the Code shall apply and Shares which the
Employee may purchase under outstanding options shall be treated as Shares
owned by the Employee; or
(b) which, when considered in conjunction with all other options
granted under this Plan (or other stock-based compensation plans of the
Company, or any parent or subsidiary of the Company, required under
Section 423(b)(8) to be aggregated with the Plan), results in the Employee
accruing rights in a calendar year to acquire Shares having a value in
excess of twenty-five thousand dollars ($25,000) measured at the date of
grant. For this purpose, all determinations of accrual and the value at
which Shares are taken into account shall be made in accordance with
Section 423(b)(8) of the Code.
ARTICLE VI
EXERCISE OF OPTION
6.1 Unless a Participant (or a deceased Participant's beneficiary) gives written
notice to the Plan Administrator as provided in Section 6.2 (or Section 7.3),
the Participant's option for the purchase of Shares will be exercised
automatically for the Participant as of the Corresponding Exercise Date for the
purchase of the number of full Shares which the accumulated payroll deductions
in the Participant's account (established for that Offering Period) at that time
will purchase at the applicable option price, but in no event shall the number
of full Shares be greater than the number of full Shares which the Participant
would have been eligible to purchase under
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Section 5.2 or allowed to purchase under Section 8.1. All options granted on a
given Commencement Date that are not exercised on the Corresponding Exercise
Date shall lapse on such Corresponding Exercise Date and all payroll deductions
attributable to these options shall be distributed to the Participant in cash,
without interest or earnings, as soon as practicable after the Corresponding
Exercise Date on which such options lapse.
6.2 By written notice to the Plan Administrator within the Election Period, a
Participant may elect not to exercise the Participant's option and to withdraw
the entire balance in the Participant's account, without interest or earnings.
The Participant's written notice electing not to exercise must be received by
the Plan Administrator within the Election Period to be effective.
6.3 Payroll deductions remaining in a Participant's individual account
representing less than the option price of a single Share as of any
Corresponding Exercise Date, shall be carried over to the next succeeding
Offering Period and credited to that Participant's account for such succeeding
Offering Period, without interest or earnings, provided the Participant elects
to participate in the Plan for such succeeding Offering Period. All other
payroll deductions for an Offering Period not applied to the exercise of an
option as of the Corresponding Exercise Date for such Period shall be refunded
to the Participant as soon as practicable after such Exercise Date, without
interest or earnings.
6.4 During a Participant's lifetime, no person other than the Participant shall
have the right to elect to exercise the Participant's option.
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ARTICLE VII
WITHDRAWAL, TERMINATION, OR DEATH
7.1 During an Offering Period, a Participant may elect to terminate payroll
deductions by giving written notice to the Plan Administrator. In the event a
Participant makes such election, the payroll deductions shall terminate as
provided in Section 4.4 and the Participant's payroll deductions credited to the
Participant's accounts to that date shall be retained in the account and, in
accordance with Section 6.1, automatically exercised on the Corresponding
Exercise Date or, at the Participant's election in accordance with Section 6.2,
distributed in cash to the Participant, without interest or earnings, as soon as
practicable following the Participant's election. If a Participant elects to
terminate payroll deductions, such Participant may not thereafter elect to
resume payroll deductions with respect to the same Offering Period. As of any
subsequent Commencement Date, such Eligible Employee may elect to resume payroll
deductions, with respect to a different Offering Period, in accordance with
Article IV.
7.2 Upon termination of the Participant's employment for any reason other than
the death of the Participant during an Offering Period, the payroll deductions
credited to the Participant's account shall be distributed in cash, without
interest or earnings, to the Participant as soon as practicable following the
Participant's termination.
7.3 In the event of the death of a Participant during an Offering Period, a
deceased Participant's beneficiary or beneficiaries, determined in accordance
with Article XIV, may give notice to the Plan Administrator electing to have the
accumulated payroll deductions distributed in cash, without interest or
earnings, as soon as practicable following such notice. Such notice must be
given to the Plan Administrator not later than the last day of the applicable
Election Period.
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7.4 If, in the event of the death of a Participant during an Offering Period, no
timely election is made to have accumulated payroll deductions refunded, the
beneficiary or beneficiaries shall be deemed to have elected to exercise, in
which event the accumulated payroll deductions in the account of the Participant
shall be used to purchase the number of full Shares which the accumulated
payroll deductions in the account of such deceased Participant will purchase at
the option price specified in Section 5.3, subject to the limitations of Article
V, and to have any remaining payroll deductions refunded, without interest or
earnings, promptly following the Corresponding Exercise Date for the Offering
Period for which deducted.
ARTICLE VIII
SHARES UNDER OPTION,
DISTRIBUTION OR SALE OF SHARES
8.1 The Shares to be sold to Participants under the Plan may, at the election of
the Company, be either treasury Shares, Shares originally issued for such
purpose, Shares purchased on the market or Shares from a combination of such
sources. The maximum number of Shares that shall be made available for sale
under the Plan shall be 250,000 Shares, subject to adjustment upon changes in
capitalization of the Company or other events, as provided in Article XIII. If
the total number of Shares for which options are granted or to be granted on any
Commencement Date exceeds the number of Shares then available under the Plan
(after deduction of all Shares for which options have been exercised or are then
outstanding), then, not later than the Corresponding Exercise Date, the Plan
Administrator shall make a pro rata allocation of the Shares remaining available
in as nearly a uniform manner as shall be practicable and as it shall determine
to be equitable taking into account the amount each Participant elected to defer
under Section 3.2. All excess options shall lapse and may not be exercised at
any time. In such event,
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payroll deductions to be made shall be reduced accordingly and the Plan
Administrator shall give written notice of such reduction to each Participant
affected thereby and, if necessary, excess payroll deductions previously
credited to the Participants' accounts shall be returned to such Participants
without interest or earnings. Notwithstanding the foregoing, if stockholder
approval for the requisite number of additional Shares is obtained within twelve
(12) months of the date that the excess options are granted, no such adjustments
to the number of options previously granted shall be required.
8.2 As promptly as practicable after the Corresponding Exercise Date, the
Company shall make the appropriate entries to show the purchase of Shares on
behalf of Participants. The Company, or its designee, will retain all the
certificates evidencing ownership of the Shares on behalf of each Participant
until such time as the Participant requests the certificates. A Participant may
not request that the Company distribute the Participant's stock certificates and
may not sell, transfer or otherwise dispose of any Shares prior to the end of
the six-month period following the Exercise Date on which such Shares were
purchased. Shares issued pursuant to the Plan shall be subject to such other
restrictions and for such period as the Company may designate and the
certificates representing the Shares shall include a legend reflecting such
restrictions.
8.3 A Participant, including a terminated Participant (or the beneficiary of a
deceased Participant), may request that the Company, or its designee, distribute
to the Participant the stock certificates evidencing the ownership of all or a
part of the Shares previously purchased for the Participant or may request that
such Shares be sold and the proceeds paid to the Participant; provided that the
Participant may not request that the Company, or its designee, distribute or
sell any Shares purchased within the six-month period preceding the date of the
requested distribution or sale. A Participant who wishes to request a
distribution or sale of Shares shall complete and file a distribution request
form with the Plan Administrator or his delegate.
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Distribution of the requested stock certificates or cash proceeds of sale, as
applicable, shall be made as soon as practicable after a properly completed
distribution request form is received by the Plan Administrator or his delegate.
All costs associated with the distribution of stock certificates to a
Participant or with the sale, transfer or other disposition of the Shares,
including commissions, certificate fees, transfer fees, taxes and the like,
shall be the responsibility of the Participant. The Participant shall pay such
commissions and/or fees directly to the third party administrator of the Plan,
to the transfer agent for the Shares, to the broker or to another party, as
appropriate, it being the intention of the Company that any costs incurred after
the applicable Exercise Date with regard to Shares purchased for the Participant
shall be borne by the Participant.
8.4 The Participant shall have no interest in Shares covered by an option until
such option has been exercised as provided in Section 6.1. Following exercise
and purchase of Shares on behalf of a Participant and prior to any sale or
transfer of such Shares, the Participant shall have the right to vote such
Shares and any cash dividends paid on such Shares shall be paid to the
Participant or retained and reinvested in additional Shares in the sole
discretion of the Plan Administrator. Any additional Shares accruing as a result
of a stock split or stock dividend that are attributable to Shares purchased on
behalf of the Participant under the Plan shall belong to the Participant and
shall be subject to the provisions of this Article VIII.
ARTICLE IX
ADMINISTRATION
9.1 The Plan Administrator shall be responsible for administering the Plan.
9.2 The Plan Administrator shall have the following discretionary powers and
duties:
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(a) to direct the administration of the Plan in accordance with the
provisions herein set forth;
(b) to adopt rules of procedure and regulations necessary for the
administration of the Plan, provided the rules are not inconsistent
with the terms of the Plan;
(c) to determine all questions with regard to rights of Participants of
the Plan, including, but not limited to rights of eligibility of an
Employee to participate in the Plan;
(d) to enforce the terms of the Plan and the rules and regulations it
adopts;
(e) to furnish the Employer with information which the Employer may
require for tax or other purposes;
(f) to engage the service of advisors, including consultants and counsel
(who may be consultants or counsel for the Employer) and agents whom
it may deem advisable to assist it with the performance of its
duties;
(g) to receive from the Employer and from Employees such information as
shall be necessary for the proper administration of the Plan;
(h) to select a third party administrator to recordkeep and carry out
other necessary functions under the Plan; and
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(i) to interpret and construe the Plan, to make findings of fact, to
correct errors, and to supply omissions under the Plan. The Plan
Administrator shall use its discretion to interpret the terms and
purpose of the Plan so as to resolve any conflict or contradiction.
9.3 The Plan Administrator shall administer the Plan in a uniform,
nondiscriminatory manner for the benefit of the Participants.
9.4 The Plan Administrator may delegate responsibilities for the operation and
administration of the Plan and may allocate or reallocate responsibilities under
the Plan.
9.5 The Plan Administrator and any delegate (other than a delegate that is a
corporation) shall be fully indemnified by the Company and by each Employer
against all liabilities, costs, and expenses (including defense costs, but
excluding any amount representing a settlement unless such settlement is
approved by the Company) imposed upon it in connection with any claim, action,
suit, or proceeding to which it may be a party by reason of being the Plan
Administrator or having been assigned or delegated any of the powers or duties
of the Plan Administrator, and arising out of any act, or failure to act, that
constitutes or is alleged to constitute a breach of such person's
responsibilities in connection with the Plan.
9.6 The Plan Administrator shall maintain, or cause to be maintained, records
that will adequately disclose all required information about the Plan. The
books, forms, and methods of accounting shall be the responsibility of the Plan
Administrator or his delegate.
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ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors of the Company may at any time, by written resolution,
amend or terminate the Plan or outstanding options granted under the Plan.
Provided, however, that no amendment (i) which would require sale of Shares in
excess of the number authorized under Article VIII of the Plan or (ii) which
would change the rules regarding eligibility for participation, shall be
effective unless approval of the stockholders of the Company is obtained within
the period beginning twelve (12) months prior to the adoption date of the
amendment and ending on the date which is twelve (12) months after the adoption
date of the amendment. Provided further that, except as provided in Article XIII
or as otherwise expressly provided in the Plan, no amendment or termination of
the Plan shall adversely affect the rights of an optionee under any outstanding
option without the optionee's consent.
ARTICLE XI
NONTRANSFERABILITY
Except as provided in Section 7.3, neither payroll deductions credited to a
Participant's account nor any rights with regard to the exercise of an option or
to receive Shares under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the Participant and any such attempted
assignment, transfer, pledge, or other disposition shall be null and void and
without effect, but the Plan Administrator may, at its option, treat such act as
an election to withdraw funds in accordance with Article VII. In the event of an
attempted transfer pursuant to a divorce decree affecting the Participant, the
Plan Administrator may distribute the existing payroll deductions, to the extent
of the attempted transfer, as soon as practicable following receipt by the Plan
Administrator of the divorce decree, without interest or earnings. Except to
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the extent required by law, in no event, shall a divorce decree create or
recognize any right in the Participant's former spouse to exercise options under
the Plan or to receive Shares under the Plan.
ARTICLE XII
OWNERSHIP AND USE OF FUNDS
All payroll deductions received or held by the Company under this Plan shall be
and remain general corporate assets of the Company and may be used by the
Company for any corporate purposes and any and all amounts earned on such
payroll deductions shall be general corporate assets of the Company. The Company
shall not be obligated to segregate such payroll deductions or to accrue or pay
interest or earnings on such payroll deductions, except as specifically provided
in this Plan.
ARTICLE XIII
CHANGES IN CAPITALIZATION, MERGER, ETC.
AND ADJUSTMENTS TO SHARES
13.1 Except as otherwise determined by the Plan Administrator, if the Company is
merged or consolidated into a new surviving company and the holders of the
Company's voting securities (on a fully-diluted basis) immediately prior to the
merger or consolidation own less than a majority of the ordinary voting power to
elect directors of the new surviving company (on a fully-diluted basis), or if
there is a sale of all or substantially all of the Company's assets or capital
stock in any transaction or series of related transactions, or upon the
dissolution or liquidation of the Company, then the holder of each option then
outstanding under the Plan will be entitled to receive at the Corresponding
Exercise Date, upon the exercise of such option for
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each Share as to which such option shall be exercised, as nearly as reasonably
may be determined, the cash, securities and/or property which a holder of one
Share was entitled to receive upon and at the time of such transaction. For
purposes of this Section 13.1 only, "Corresponding Exercise Date" shall be a
date designated by the Plan Administrator which may be a date earlier than the
normal Corresponding Exercise Date. Alternatively, the Company may designate
that the dissolution or liquidation of the Company shall cause each outstanding
option to terminate, provided in such event that immediately prior to such
dissolution or liquidation, each Participant shall be repaid the payroll
deductions credited to the Participant's account, without interest or earnings.
13.2 If, under circumstances not governed by Section 13.1, the outstanding
Shares have increased, decreased, changed into, or been exchanged for a
different number or kind of shares or securities of the Company through
reorganization, merger, recapitalization, reclassification, stock split, reverse
stock split or similar transaction, appropriate and proportionate adjustments
shall be made by the Plan Administrator in the number and/or kind of Shares
which are subject to purchase under outstanding options and on the option
exercise price or prices applicable to such outstanding options. In addition, in
any such event, the number and/or kind of Shares that may be offered under the
Plan shall also be proportionately adjusted. No adjustments shall be made for
stock dividends. For the purposes of this Section 13.2, any distribution of
Shares to stockholders in an amount aggregating twenty percent (20%) or more of
the outstanding shares shall be deemed a stock split and any distribution of
shares aggregating less than twenty percent (20%) of the outstanding shares
shall be deemed a stock dividend.
13.3 In the event of a change in the Shares of the Company as presently
constituted, which is limited to a change of all its authorized Shares with par
value into the same number of Shares
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with a different par value or without par value, the Shares resulting from any
such change shall be deemed to be Shares within the meaning of this Plan.
13.4 To the extent that the foregoing adjustments relate to Shares or securities
of the Company, such adjustments shall be made by the Plan Administrator, and
its determination in that respect shall be final, binding, and conclusive,
provided that each option granted pursuant to this Plan shall not be adjusted in
a manner that causes the option to fail to continue to satisfy as an option
issued pursuant to an "employee stock purchase plan" within the meaning of
Section 423 of the Code.
13.5 Except as herein before expressly provided, the Participant shall have no
right by reason of any subdivision or consolidation of Shares of any class or
the payment of any dividend or any other increase or decrease in the number of
Shares of any class or by reason of any dissolution, liquidation, merger, or
consolidation or spin-off of assets or stock of another corporation, and any
issue by the Company of Shares of any class, or securities convertible into
Shares of any class, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of Shares subject to the option.
13.6 The grant of an option pursuant to this Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
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ARTICLE XIV
BENEFICIARIES OF DECEASED PARTICIPANTS
A Participant may file a written designation of beneficiary with the Plan
Administrator. Such designation of beneficiary may be changed by the Participant
at any time by written notice to the Plan Administrator. If upon the death of a
Participant there is no surviving beneficiary duly designated as above provided,
the surviving spouse, or if no such surviving spouse exists, then to the
executor or administrator of the Participant's estate, if an executor or
administrator has been appointed, shall be deemed the deceased Participant's
beneficiary under the Plan. If there is no surviving spouse and no executor or
administrator has been appointed (to the knowledge of the Plan Administrator)
following the Participant's death, in the discretion of the Plan Administrator,
the Plan Administrator may determine the beneficiary or beneficiaries under the
Plan as follows; (i) the Participant's beneficiary or beneficiaries pursuant to
his Employer's group term life insurance plan, or if none, (ii) all or any one
or more of the persons comprising the group consisting of the Participant's
lineal descendants, the Participant's ancestors, or the Participant's heirs at
law, and the Plan Administrator may pay the entire amount to any member of such
group or apportion such amount among any two or more of them in such shares as
the Plan Administrator, in its sole discretion, shall determine. Any payment
made to any person pursuant to the power and discretion conferred upon the Plan
Administrator by the preceding sentence shall operate as a complete discharge of
all obligations under the Plan in respect of such deceased Participant and shall
not be subject to review by anyone, but shall be final, binding and conclusive
on all persons ever interested hereunder. Neither the Plan Administrator nor the
Employer shall be liable for any transfer or attempted transfer of Shares or
payroll deductions pursuant
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to any will or other testamentary disposition made by such Participant, or
because of the provisions of law concerning intestacy, or otherwise, nor shall
the Plan Administrator or the Employer be liable for transferring or
distributing any Shares and/or payroll deductions pursuant to any will. No
designated beneficiary or other person or entity to whom Shares and/or payroll
deductions are transferable or distributable after a Participant's death shall,
prior to the death of the Participant by whom the beneficiary has been
designated, acquire any interest in the Shares or payroll deductions credited to
the Participant under the Plan.
ARTICLE XV
REGISTRATION AND QUALIFICATION OF SHARES
The offering of the Shares hereunder shall be subject to the effecting by the
Company of any registration or qualification of the Shares under any federal or
state law or the obtaining of the consent or approval of any governmental
regulatory body which the Company shall determine, in its sole discretion, is
necessary or desirable as a condition to, or in connection with, the offering or
the issue or purchase of the Shares covered thereby. The Company shall make
reasonable efforts to effect such registration or qualification or to obtain
such consent or approval.
ARTICLE XVI
STOCKHOLDER APPROVAL
The Plan is expressly made subject to the approval of the holders of a majority
of the outstanding Shares of the Company (as described by the laws of the State
of Delaware) within the period commencing twelve (12) months before the date
this Plan is adopted and ending twelve (12) months after the date the Plan is
adopted.
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ARTICLE XVII
RESTRICTIONS ON PARTICIPANTS SUBJECT TO SHORT-SWING PROFIT RULES
Notwithstanding any provision of this Plan to the contrary, those Participants
who are directors, executive officers, and ten percent (10%) or greater
stockholders subject to Section 16 of the Securities Exchange Act of 1934 (the
"1934 Act") must effect transactions in Shares, including without limitation
initial or periodic transactions resulting from an election to participate in
the Plan or change levels of participation with respect to Shares, in accordance
with Section 16 and the rules promulgated thereunder to the extent such rules
are applicable. To the extent any provision of the Plan or action by the Plan
Administrator fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Plan Administrator. Moreover, in
the event the Plan does not include a provision required by Rule 16b-3 to be
stated therein, such provision (other than one relating to eligibility
requirements or the price and amount of an option) shall be deemed automatically
to be incorporated by reference into the Plan insofar as Participants subject to
Section 16 of the 1934 Act are concerned.
ARTICLE XVIII
MISCELLANEOUS
17.1 The Plan does not, directly or indirectly, create any absolute right for
the benefit of any Employee or class of Employees to purchase any Shares under
the Plan, or create in any Employee or class of Employees any right with respect
to continuation of employment by the Employer, and it shall not be deemed to
interfere in any way with the Employer's right to terminate, or otherwise
modify, an Employee's employment at any time.
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17.2 The laws of the State of Delaware, other than its principles of conflicts
of laws, shall govern all matters relating to this Plan except to the extent
superseded by the laws of the United States. Exclusive jurisdiction and venue of
all disputes arising out of or relating to this plan shall be in any court of
appropriate jurisdiction in Houston, Harris County, Texas.
17.3 The masculine or feminine genders, where appearing in the Plan, shall be
deemed to include the opposite gender, unless the context clearly indicates to
the contrary.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly
authorized officer as of the 1st day of July, 1999.
CORNELL CORRECTIONS, INC.
By: /s/ PATRICK PERRIN
Title: Chief Administrative Officer
24
EXHIBIT 4.8
CORNELL DEFERRED COMPENSATION PLAN
Cornell Corrections, Inc., a Delaware Corporation, by resolution of
its Board of Directors adopted the Cornell Corrections Deferred Compensation
Plan (the "Plan"), effective June 1, 1999, for the benefit of its eligible
employees.
The Plan is a nonqualified deferred compensation plan pursuant to
which certain eligible employees of the Company (as hereinafter defined) may
elect to defer compensation. The Plan is maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees, within the meaning of Sections 201(2), 301(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended.
ARTICLE I
DEFINITIONS
SECTION 1.1 - GENERAL
Whenever the following terms are used in the Plan with the first letter
capitalized, they shall have the meaning specified below unless the context
clearly indicates to the contrary.
SECTION 1.2 - ACCOUNTS
"Accounts" of a Participant shall mean his Qualified Account and his
Nonqualified Account.
SECTION 1.3 - ADMINISTRATOR
"Administrator" shall mean the Company, acting through the Chief
Administrative Officer or his delegates. The Administrator shall have all duties
and responsibilities imposed by ERISA, except as specifically assigned,
delegated to or reserved to the Board under the Plan.
SECTION 1.4 - BOARD
"Board" shall mean the board of directors of the Company. The Board may
delegate any power or duty otherwise allocated to the Administrator to any other
person or persons.
SECTION 1.5 - CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
SECTION 1.6 - COMPANY; COMPANY AFFILIATE
(a) "Company" shall mean Cornell Corrections, Inc. and any other firm
which subsequently adopts the Plan as a whole or as to any one or more
divisions, in accordance with Section 12.3(c), and any successor company which
continues the Plan under Section 12.3(a), acting in each case through the board
of directors of the company in question.
<PAGE>
(b) "Company Affiliate" shall mean any employer which, at the time of
reference, was, with the Company, a member of a controlled group of corporations
or trades or businesses under common control, or a member of an affiliated
service group, as determined under regulations issued by the Secretary of the
Treasury or his delegate under Code Sections 414(b), (c), (m) and 415(h) and any
other entity required to be aggregated with the Company pursuant to regulations
issued under Code Section 414(o).
SECTION 1.7 - COMPENSATION
"Compensation" of a Participant for any Plan Year shall mean his total
taxable remuneration received from the Company and all Company Affiliates in
that Plan Year for services rendered as an Employee (including those items not
reported on Form W-2 as determined under Treas. Reg. ss.
1.415-2(d)(2)(iii)-(iv), including deferred compensation under the Plan and
amounts not includable in gross income by reason of Code Sections 125 (cafeteria
plans), 402(a)(8) (401(k) plans), 402(h) or 403(b), but exclusive of
(a) Company and Company Affiliate contributions to a deferred
compensation plan (to the extent includable in the Participant's gross income
solely by reason of Code Section 415) and any distribution from a deferred
compensation plan (other than an unfunded, nonqualified plan),
(b) amounts realized from the exercise of a nonqualified stock
option or taxable by reason of restricted property becoming freely tradable or
free of a substantial risk of forfeiture, as described in Code Section 83,
(c) amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option and
(d) other amounts which receive special tax benefits such as Company
or Company Affiliate contributions toward the purchase of an annuity contract
described in Code Section 403(b) (whether or not excludable from the
Participant's gross income).
(e) all reimbursements or other expense allowances, fringe benefits
(cash and noncash), moving expenses, deferred compensation, and welfare benefits
(including severance benefits) (even if includable in gross income).
SECTION 1.8 - EMPLOYEE
"Employee" shall mean any person who renders services to a Company in the
status of an employee as that term is defined in Code Section 3121(d), including
officers but not including
(a) directors who serve solely in that capacity,
(b) attorneys, accountants and other persons doing independent work
for the Company or a Company Affiliate where the relationship of employer and
employee does not exist between said person and the Company or Company
Affiliate, and
(c) leased employees treated as Employees of the Company pursuant to
Code Sections 414(n) and 414(o) or employees of a Company Affiliate.
<PAGE>
SECTION 1.9 - ERISA
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
SECTION 1.10 - HARDSHIP
(a) "Hardship" of a Participant as determined by the Administrator in its
discretion on the basis of all relevant facts and circumstances and in
accordance with nondiscriminatory and objective standards, uniformly interpreted
and consistently applied and, without regard to the existence of other resources
which are reasonably available to the Participant in question, shall mean a
financial need which is beyond the Participant's control.
(b) A financial need shall not constitute a Hardship unless it is for at
least $1,000.00 (or the entire principal amount of the Participant's
Nonqualified Deferred Compensation Account, if less).
SECTION 1.11 - INVESTMENT FUND
"Investment Fund" shall have the meaning set forth in the Qualified Plan
(or its subsequent counterpart).
SECTION 1.12 - MILITARY LEAVE
Any employee who leaves a Company or Company Affiliate directly to perform
service in the Armed Forces of the United States or the United States Public
Health Service under conditions entitling him to reemployment rights as provided
in the laws of the United States shall, solely for the purposes of the Plan and
irrespective of whether he is compensated by a Company or Company Affiliate
during such period of service, be presumed on "Military Leave." If such Employee
voluntarily resigns from his Company or Company Affiliate during such period of
service, or if he fails to make application for reemployment within the period
specified by such laws for the preservation of his reemployment rights, such
Employee shall be regarded as having had a Separation from the Service by
resignation on the day such Military Leave expired.
SECTION 1.13 - NONQUALIFIED ACCOUNTS
"Nonqualified Account" or "Nonqualified Accounts" of a Participant shall
mean, as the context indicates, his Nonqualified Deferred Compensation Account.
SECTION 1.14 - NONQUALIFIED DEFERRED COMPENSATION
"Nonqualified Deferred Compensation" of a Participant shall mean the
amounts deferred by such Participant under Section 3.1 of the Plan.
SECTION 1.15 - NONQUALIFIED DEFERRED COMPENSATION ACCOUNT
"Nonqualified Deferred Compensation Account" of a Participant shall mean
the bookkeeping account, if any, established on behalf of the Participant in
accordance with Section 5.1.
<PAGE>
SECTION 1.16 - PARTICIPANT
"Participant" shall mean any person included in the Plan as provided in
Article II.
SECTION 1.17 - PAYDAY
"Payday" of a Participant shall mean the regular and recurring established
day for payment of Compensation to Employees in his classification or position.
SECTION 1.18 - PLAN
"Plan" shall mean the Cornell Corrections Deferred Compensation Plan.
SECTION 1.19 - PLAN YEAR
"Plan Year" shall mean the twelve-month period commencing on January 1 and
ending on December 31 (except that the first Plan Year shall begin May 1, 1999
and end December 31, 1999).
SECTION 1.20 - QUALIFIED ACCOUNTS
"Qualified Accounts" of a Participant shall mean his accounts in the
Qualified Plan.
SECTION 1.21 - QUALIFIED PLAN
"Qualified Plan" shall mean the Cornell Corrections, Inc. 401(k) Profit
Sharing Plan.
SECTION 1.22 - RULES OF THE PLAN
"Rules of the Plan" shall mean the rules adopted by the Administrator
pursuant to Section 11.1 for the administration, interpretation or application
of the Plan.
SECTION 1.23 - SEPARATION FROM THE SERVICE
(a) "Separation from the Service" of an Employee shall mean his
resignation from or discharge by the Company or a Company Affiliate, or his
death, but shall not include his transfer among the Company and Company
Affiliates.
(b) A leave of absence or sick leave authorized by the Company or a
Company Affiliate in accordance with established policies, a vacation period, a
temporary layoff for lack of work or a Military Leave shall not constitute a
Separation from the Service; provided, however, that
(i) continuation upon a temporary layoff for lack of work for a period in
excess of three months shall be considered a discharge effective as of the
commencement of the third month of such period:
(ii) failure to return to work upon expiration of any leave of absence,
sick leave, or vacation or within three days after recall from a temporary
layoff for lack of work or before expiration of a Military Leave shall be
considered a resignation effective as of the date of commencement of such
leave of absence, sick leave, Military Leave, vacation or temporary
layoff.
<PAGE>
SECTION 1.24 VALUATION DATE
"Valuation Date shall mean each day that the Investment Funds are valued
(currently each business day).
SECTION 1.25 - VESTED
"Vested," when used with reference to a Participant's Nonqualified
Account, shall mean not subject to forfeiture, except as provided in the Plan,
and unconditionally subject to distribution on his behalf, but only in
accordance with the Plan.
ARTICLE II
ELIGIBILITY
SECTION 2.1 - REQUIREMENTS FOR PARTICIPATION
Any Employee whose annualized rate of Compensation as of any date during a
Plan Year is more than the limit imposed by Code Section 414(q) for such Plan
Year and who is selected by the administrator shall be eligible to be a
Participant for such Plan Year on such date.
SECTION 2.2 - INITIAL ELIGIBILITY DEFERRAL ELECTION PROCEDURE
When an Employee first becomes eligible to participate in the Plan (by
virtue of being a newly hired Employee or by virtue of a pay increase), the
Administrator shall give such Employee a deferral election form on which the
Employee may elect to defer his Compensation under Article III. Each such
Employee electing to defer Compensation under Article III shall complete and
sign the deferral election form and return it to the Administrator; provided,
however, that such election shall be made not later than thirty days after the
date on which such Employee first becomes eligible to become a Participant and
shall, if received by the Administrator on a timely basis, become effective as
soon as practicable after receipt. If the newly eligible Employee does not
return a timely deferral election form to the Administrator, the Employee shall
be deemed to have elected not to participate and shall not again be eligible to
become a Participant until the following Plan Year.
SECTION 2.3 - ANNUAL PARTICIPATION DEFERRAL ELECTION PROCEDURE
Each Employee who continues to be eligible to participate in the Plan for
a specific Plan Year shall be given a deferral election form on which the
Employee may elect to defer his Compensation under Article III. Each such
Employee electing to defer Compensation under Article III shall complete and
sign the deferral election form and return it to the Administrator; provided,
however, that such election shall be made prior to the beginning of the Plan
Year for which it is to be effective and shall, if returned to the Plan
Administrator on a timely basis, become effective with the first pay period of
such Plan Year. If an eligible Employee does not return a timely deferral
election form to the Administrator, the Employee shall be deemed to have elected
not to participate for such Plan Year and shall not again be eligible to elect
to participate until the next following Plan Year.
<PAGE>
SECTION 2.4 - CONTENT OF DEFERRAL ELECTION FORM
The Participant shall set forth on the deferral election form
(a) his consent that he, his successors in interest and assigns and
all persons claiming under him shall be bound, to the extent authorized by law,
by the statements contained therein and by the provisions of the Plan as they
now exist, and as they may be amended from time to time,
(b) the amount of his Compensation to be deferred under Article III
and, in such case, his authorization to be the Company to reduce his
Compensation in accordance with Section 4.1 and
(c) such other information as may be required for the administration
of the Plan.
Such deferral election form shall be in the form specified by the Administrator.
SECTION 2.5 - CESSATION OF ELIGIBILITY.
The Administrator may remove an Employee from active participation in the
Plan if, as of any day during a Plan Year, he ceases to satisfy the criteria
which qualifies him as an eligible Employee, in which case his deferrals under
the Plan shall cease. Even if his active participation in the Plan ends, an
Employee shall remain an inactive Participant in the Plan until the earlier of
(i) the date the full amount of his Nonqualified Account (if any) is distributed
from the Plan, or (ii) the date he again becomes an eligible Employee and
recommences participation in the Plan. During the period of time that an
Employee is an inactive Participant in the Plan his Account shall continue to be
credited with earnings and losses as provided in Article VI.
ARTICLE III
PARTICIPANTS' DEFERRALS
SECTION 3.1 - DEFERRAL OF COMPENSATION
Each Participant may elect to defer to his Nonqualified Deferred
Compensation Account for any Plan Year an amount equal to any whole number
percentage (not greater than seventy five percent or such other percentage as
may be established by the Administrator from time to time) of his Compensation.
Such election shall be made upon such prior written notice (not later than
the earlier of the last day of the next preceding Plan Year or 30 days after the
date on which the Employee becomes eligible to be a Participant pursuant to
Section 2.1) to the Administrator as is required by the Administrator, and shall
remain in effect for the Plan Year.
SECTION 3.2 - DISCONTINUANCE OF DEFERRAL
A Participant may elect, upon such prior written notice as is required by
the Administrator, to discontinue deferral of his Compensation for any Plan
Year. The discontinuance is effective the first pay period immediately following
receipt of the notice by the Administrator.
<PAGE>
ARTICLE IV
CREDITING OF DEFERRALS
SECTION 4.1 - DETERMINATION OF CREDITS
Pursuant to the Rules of the Plan, each Participant's Nonqualified
Deferred Compensation Account shall be credited with an amount which is equal to
the amount of Compensation such Participant elected to defer under Section 3.1.
ARTICLE V
NONQUALIFIED ACCOUNTS
SECTION 5.1 - NONQUALIFIED DEFERRED COMPENSATION ACCOUNT
The Administrator shall establish and maintain for each Participant a
Nonqualified Deferred Compensation Account to which shall be credited the
amounts determined under Section 4.1, debited his distributions under Sections
8.1, 9.1, 10.2, and 10.3 and credited or debited the amounts determined under
Article VI.
SECTION 5.2 - ASSIGNMENTS, ETC. PROHIBITED
No part of the Nonqualified Deferred Compensation Account of a Participant
shall be liable for the debts, contracts or assignments of any Participant, his
beneficiaries or successors in interest, or be taken in execution by levy,
attachment or garnishment or by any other legal or equitable proceeding, nor
shall any such person have any rights to alienate, anticipate, commute, pledge,
encumber or assign any benefits or payments hereunder in any manner whatsoever
except to designate a beneficiary as provided herein.
SECTION 5.3 - NATURE OF DEFERRALS AND NONQUALIFIED ACCOUNTS
The Compensation deferrals and earnings or losses credited to a
Participant's Nonqualified Account shall be represented solely by bookkeeping
entries, and no moneys or other assets shall actually be set aside for such
Participant, except as expressly provided herein. All payments to a Participant
under the Plan shall be made from the general assets of the Company. The
Administrator or the Board shall allocate the total liability to pay benefits
under the Plan among the Company and participating Company Affiliates in such
manner and amount as the Administrator or the Board (as applicable) in its sole
discretion deems appropriate. Any assets, which may be acquired by the Company
in anticipation of its obligations under the Plan, shall be part of the general
assets of the Company. The Company's obligation to pay benefits under the Plan
constitutes a mere promise of the Company to pay such benefits, and a
Participant or beneficiary shall be and remain no more than an unsecured,
general creditor of the Company.
SECTION 5.4 - SOURCE OF FUNDS
Except as provided in this Section and Section 5.5, the Company shall
provide the benefits described in the Plan from the general assets of the
Company. The Company may, but shall not be required to, establish a rabbi trust
and may pay over funds from time to time to such trust (as described in
<PAGE>
Section 5.5), and, subject to the provisions of the trust, to the extent that
funds in such trust allocable to the benefits payable under the Plan are
sufficient, the trust assets shall be used to pay benefits under the Plan. If
such Trust assets are not sufficient to pay all benefits due under the Plan,
then the Company shall have the obligation, and the Participant or beneficiary,
who is due such benefits, shall look to the Company to provide such benefits.
SECTION 5.5 - TRUST
The Company may, but shall not be required to, transfer all or any portion
of the funds necessary to fund benefits accrued hereunder to a trustee to be
held and administered by the trustee pursuant to the terms of a rabbi trust
agreement. It is the intent of the Company that the assets held by any trust
established by the Company for the purposes of this Plan are and shall remain at
all times subject to the claims of the general creditors of the Company. No
Participant or beneficiary shall have any interest in the assets held by any
such trust or in the general assets of the Company other than as a general,
unsecured creditor. Accordingly, the Company shall not grant a security interest
in the assets held by the trust in favor of the Participants, beneficiaries or
any creditor.
ARTICLE VI
INVESTMENT OPTIONS; VALUATION
OF NONQUALIFIED ACCOUNTS
SECTION 6.1 - INVESTMENT CREDITS AND DEBITS
On each Valuation Date, additional amounts shall be credited (or debited)
to each Participant's Nonqualified Deferred Compensation Account under Section
4.1, such amounts to be equal to the earnings (or losses) that would have been
credited (or debited) had such Accounts been invested entirely in any one or
more Investment Fund in such proportions as in effect for such Participant under
the Qualified Plan for the period between successive Valuation Dates.
SECTION 6.2 - DETERMINATION OF VALUES
As of each Valuation Date, the Administrator shall determine the fair
market value of each asset in each Investment Fund based upon the information
reasonably available to the Administrator including the data from, but not
limited to, newspapers and financial publications of general circulation,
statistical and valuation services, records of securities exchanges, appraisals
by qualified persons, transactions and bona fide offers in assets of the type in
question and other information customarily used in evaluation of property for
the purposes of the Code. With respect to securities for which there is a
generally recognized market, the published selling prices on or nearest to such
Valuation Date shall establish fair market value of such security. Fair market
value so determined shall be conclusive for all purposes of the Plan.
SECTION 6.3 - APPLICABILITY OF NONQUALIFIED ACCOUNT VALUES
The value of a Nonqualified Account as determined as of a given date under
this Article, plus any amounts subsequently allocated thereto under Sections 4.1
and less any amounts distributed under Sections 8.1, 9.1, 10.2 and 10.3, shall
remain the value thereof for all purposes of the Plan until revalued hereunder.
<PAGE>
ARTICLE VII
VESTING OF NONQUALIFIED ACCOUNTS
SECTION 7.1 - VESTING OF ACCOUNTS
Each Participant's interest in his Nonqualified Deferred Compensation
Account shall be Vested at all times.
ARTICLE VIII
BENEFITS UPON SEPARATION FROM THE SERVICE
SECTION 8.1 - DISTRIBUTIONS ON SEPARATION FROM THE SERVICE
A participant who has a Separation from Service for any reason other than
death shall receive in a lump sum or in 5 and 10 year annual installment
payments, as determined by the Participant's distribution election made at the
time described in Section 2.2, the Vested amount credited to his Nonqualified
Account as of the last valuation of such Accounts under Article VI, less any
amounts required to be withheld by law. Such payment shall be made or
installment payments shall commence not later than the date which is 30 days
after the end of the calendar year in which such Separation from the Service
occurs, or at a later date as elected by the Participant at the time described
in Section 2.2 (but in no event to exceed five years from the date of the
Participant's Separation from Service).
SECTION 8.2 - EFFECT OF DELAY OR FAILURE TO ASCERTAIN AMOUNT DISTRIBUTABLE OR
TO LOCATE DISTRIBUTEE
(a) If an amount payable under Article VIII or IX cannot be
ascertained or the person to whom it is payable has not been ascertained
or located within the stated time limits and reasonable efforts to do so
have been made, then distribution shall be made not later than 30 days
after such amount is determined or such person is ascertained or located,
or as prescribed in subsection (b).
(b) If, within one year after a Participant has a Separation from
the Service, the Administrator, in the exercise of due diligence, has
failed to locate him (or if such Separation from the Service is by reason
of his death, has failed to locate the person entitled to his Vested
Nonqualified Accounts under Section 9.1) , his entire Distributable
interest in the Plan shall be forfeited; provided, however, that if the
Participant (or in the case of his death, the person entitled thereto
under Section 9.1) makes proper claim therefor pursuant to the Rules of
the Plan, the amount so forfeited shall be paid to such Participant or
such person in a lump sum not later than 30 days after such claim is made.
<PAGE>
ARTICLE IX
BENEFITS UPON DEATH
SECTION 9.1 - DISTRIBUTION ON DEATH
(a) Upon the death of a Participant or former Participant, the Vested
amount credited to his Nonqualified Accounts as of the last valuation of
such Accounts under Article VI, less any amounts required to be withheld
by law, shall be paid in one lump sum to such Participant's or former
Participant's beneficiaries under the Qualified Plan.
(b) Subject to Section 8.2, such Payment shall be made not later than 30
days after the end of the calendar quarter in which the Participant's or
former Participant's death occurs.
ARTICLE X
OTHER DISTRIBUTIONS FROM NONQUALIFIED ACCOUNTS
SECTION 10.1 - ACCOUNTING FOR DISTRIBUTIONS
Records for each Nonqualified Deferred Compensation Account shall be
maintained so that contributions thereto with respect to the Plan, as adjusted
under Article VI, may be identified for the purposes of this Article.
SECTION 10.2 - HARDSHIP DISTRIBUTIONS FROM NONQUALIFIED DEFERRED COMPENSATION
ACCOUNTS
A Participant may apply for a distribution from his Nonqualified Deferred
Compensation Account on account of his Hardship, subject to the following
requirements:
(a) The Participant's Hardship distribution shall not exceed the
amount that is necessary to satisfy the Hardship, less the amount
that can be satisfied from other resources that are reasonably
available to the Participant.
(b) The denial of the Participant's Hardship distribution request
would result in severe financial hardship to the Participant.
(c) The Participant has not received a Hardship distribution within
the 12 month period preceding the distribution.
SECTION 10.3 - DISTRIBUTIONS WHILE ACTIVELY EMPLOYED
A Participant, at the time described in Section 2.2, may elect to receive
a lump sum or installment distributions from his Nonqualified Deferred
Compensation Account while actively employed subject to the following: if the
Participant elects to receive installment payments, and said payments begin
while the Participant is actively employed by the Company, the Participant may
not elect to defer Compensation under Section 3.1 of the Plan, while receiving
benefits from his Vested account.
<PAGE>
ARTICLE XI
ADMINISTRATIVE PROVISIONS
SECTION 11.1 - ADMINISTRATOR'S DUTIES AND POWERS
(a) The Administrator shall conduct the general administration of the
Plan in accordance with the Plan and shall have all the necessary power
and authority to carry out that function. Among its necessary powers and
duties, are the following:
(i) To delegate all or part of its function as Administrator to
others and to revoke any such delegation.
(ii) To determine questions of eligibility and vesting of
Participants and their entitlement to benefits.
(iii) To select and engage attorneys, accountants, actuaries,
trustees, appraisers, brokers, consultants, administrators,
physicians or other persons to render service or advice with regard
to any responsibility the Administrator or the board has under the
Plan, or otherwise, to designate such persons to carry out
responsibilities, and (with the Company, the Board and its officers,
trustees and Employees) to rely upon the advice, opinions or
valuations of any such persons, to the extent permitted by law,
being fully protected in acting or relying thereon in good faith.
(iv) To interpret the Plan for purpose of the administration and
application of the Plan, in a manner not inconsistent with the Plan
or applicable law and to amend or revoke any such interpretation.
(v) To adopt Rules of the Plan that are not inconsistent with the
Plan or applicable law and to amend or revoke any such rules.
(b) Every finding, decision, and determination made by the Administrator
shall, to the full extent permitted by law, be final and binding upon all
parties, except to the extent found by a court of competent jurisdiction
to constitute an abuse of discretion.
SECTION 11.2 - LIMITATIONS UPON POWERS
The Plan shall be uniformly and consistently administered, interpreted and
applied with regard to all Participants in similar circumstances. The Plan shall
be administered, interpreted and applied fairly and equitably and accordance
with the specified purposes of the Plan.
SECTION 11.3 - FINAL EFFECT OF ADMINISTRATOR ACTION
All actions taken and all determinations made by the Administrator in good
faith shall be final and binding upon all Participants and any person interested
in the Plan.
<PAGE>
SECTION 11.4 - INDEMNIFICATION BY THE COMPANY; LIABILITY INSURANCE
(a) The Company shall pay or reimburse any of the Company's officers,
directors or Employees who administer the Plan for all expenses incurred
by such persons in, and shall indemnify and hold them harmless from, all
claims, liability and costs (including reasonable attorneys' fees) arising
out of the good faith performance of their Plan functions.
(b) The Company may obtain and provide for any such person, at the
Company's expense, liability insurance against liabilities imposed on him
by law or by virtue of his actions taken in connection with this Plan.
SECTION 11.5 - RECORDKEEPING
(a) The Administrator shall maintain suitable records as follows:
(i) Records of each Participant's individual Nonqualified Account
which, among other things, shall show separately deferrals, and the
gains and losses thereon.
(ii) Records which show the operations of the Plan during each Plan
Year.
(iii) Records of its deliberations and decisions.
(b) The Administrator may appoint a secretary to keep the record of
proceedings, to transmit its decisions, instructions, consents or
directions to any interested party, to execute and file, on behalf of the
Administrator, such documents, reports or other matters as may be
necessary or appropriate under ERISA and to perform ministerial acts.
(c ) The Administrator shall not be required to maintain any records or
accounts that duplicate any records or accounts maintained by the Company.
SECTION 11.6 - STATEMENT TO PARTICIPANTS
Within thirty days (or as soon as practicable) after the last day of each
Plan Quarter, the Administrator shall furnish to each Participant a statement
setting forth the value of his Nonqualified Accounts and the Vested percentage
thereof and such other information as the Administrator shall deem advisable to
furnish.
SECTION 11.7 - INSPECTION OF RECORDS
Copies of the Plan and records of a Participant's Nonqualified Account
shall be open to inspection by him or his duly authorized representatives at the
office of the Company at any reasonable business hour.
SECTION 11.8 - CONFLICTING CLAIMS
If the Administrator is confronted with conflicting claims concerning a
Participant's Nonqualified Account, the Administrator may interplead the
claimants in an action at law, or in an arbitration conducted in accordance with
the rules of the American Arbitration Association, as the Administrator shall
elect in its sole discretion, and in either case, the attorneys' fees, expenses
and costs
<PAGE>
reasonably incurred by the Administrator in such proceeding shall be paid from
the Participant's Nonqualified Accounts.
SECTION 11.9 - SERVICE OF PROCESS
The secretary of the Company is hereby designated as agent of the Plan for
the service of legal process.
SECTION 11.10 - SERVICE IN MORE THAN ONE CAPACITY
Any person or group of persons may serve more than one capacity with
respect to the Plan.
SECTION 11.11 - CLAIMS
(a) Claims for benefits under the Plan may be filed with the Administrator
on forms or in such other written documents, as the Administrator may
prescribe. The Administrator shall furnish to the claimant written notice
of the disposition of a claim within ninety (90) days after the
application therefor is filed In the event the claim is denied, the notice
of the disposition of the claim shall provide the specific reasons for the
denial, citations of the pertinent provisions of the Plan, and, where
appropriate, an explanation as to how the claimant can perfect the claim
and/or submit the claim for review.
(b) Any Participant or beneficiary who has been denied a benefit shall be
entitled, upon request to the Administrator, to appeal the denial of his
claim. The claimant (or his duly authorized representative) may review
pertinent documents related to the Plan and in the Administrator's
possession in order to prepare the appeal. The request for review,
together with written statement of the claimant's position, must be filed
with the Administrator no later than sixty (60) days after receipt of the
written notification of denial of a claim provided for in subsection (a).
The Administrator's decision shall be made within sixty (60) days
following the filing of the request for review. If unfavorable, the notice
of the decision shall explain the reasons for denial and indicate the
provisions of the Plan or other documents used to arrive at the decision.
(c) Any payment to a Participant or beneficiary shall to the extent
thereof be in full satisfaction of all claims hereunder against the
Administrator and the Company and participating Company Affiliates, any of
whom may require such Participant or beneficiary, as a condition to such
payment, to execute a receipt and release therefor in such form as shall
be determined by the Administrator. If receipt and release is required but
the Participant or beneficiary (as applicable) does not provide such
receipt and release in a timely enough manner to permit a timely
distribution in accordance with the general timing of distribution
provisions in the Plan, the payment of any affected distribution may be
delayed until the Administrator receives a proper receipt and release.
<PAGE>
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1 - TERMINATION OF THE PLAN
(a) While the Plan is intended as a permanent program, the Board shall
have the right at any time to declare the Plan terminated completely as to
the Company or as to any division, facility or other operational unit
thereof.
(b) Discharge or layoff of Employees of the Company or any unit thereof
without such a declaration shall not result in a termination of the Plan.
(c) In the event of any termination, the Board shall direct either that
the Administrator shall continue to maintain Participants' Nonqualified
Accounts and payment of such Nonqualified Accounts shall be made in
accordance with Articles VIII and IX or that distribution of each
Participant's Nonqualified Account shall be paid in a lump sum as soon as
practicable following the termination date of the Plan.
SECTION 12.2 - LIMITATIONS ON RIGHTS OF EMPLOYEES
The Plan is strictly a voluntary undertaking on the part of the Company
and shall not constitute a contract between the Company and any Employee, or
consideration for, or an inducement or condition of, the employment of an
Employee. Nothing contained in the Plan shall give any Employee the right to be
retained in the service of the Company or to interfere with or restrict the
right to the Company, which is hereby expressly reserved, to discharge or retire
any Employee, except as provided by law, at any time without notice and with or
without cause. Inclusion under the Plan will not give any Employee any right or
claim to any benefit hereunder except to the extent such right has specifically
become fixed under the terms of the Plan. The doctrine of substantial
performance shall have no application to Employees, Participants or any other
persons entitled to payments under the Plan. Each condition and provision,
including numerical items, has been carefully considered and constitutes the
minimum limit on performance that will give rise to the applicable right.
SECTION 12.3 - CONSOLIDATION OR MERGER; ADOPTION OF PLAN BY OTHER COMPANIES
(a) In the event of the consolidation or merger of the Company with or
into any other corporation, or the sale by the Company of its assets, the
resulting successor may continue the Plan by adopting it in a resolution
of its board of directors. If within 90 days from the effective date of
such consolidation, merger or sale of assets, such new corporation does
not adopt the Plan, the Plan shall be terminated in accordance with
Section 12.1.
(b) There shall be no merger or consolidation with, or transfer of the
assets or liabilities of the Plan to, any other plan unless each
Participant in this Plan would have, if the combined or successor plans
were then terminated, immediately after the merger, consolidation, or
transfer accounts which are equal to or greater than his corresponding
Nonqualified Accounts under this Plan had the Plan been terminated
immediately before the merger, consolidation or transfer.
(c) A Company Affiliate may, with the approval of the Board, adopt the
Plan as a whole company or as to any one or more divisions effective as of
the first day of any Plan Year by
<PAGE>
resolution of its own board of directors or agreement of its partners.
Such Company Affiliate shall give written notice of such adoption to the
Administrator by its duly authorized officers.
SECTION 12.4 - ERRORS AND MISSTATEMENTS
In the event of any misstatement or omission of fact by a Participant to
the Administrator or any administrative, clerical or other error resulting in
payment of benefits in an incorrect amount, the Administrator shall promptly
cause the amount of future payments to be corrected upon discovery of the facts
and shall pay the Participant or any other person entitled to payment under the
Plan any underpayment in cash in a lump sum or recoup any overpayment from
future payments to the Participant or any other person entitled to payment under
the Plan in such amounts as the Administrator shall direct or proceed against
the Participant or any other person entitled to payment under the Plan for
recovery of any such overpayment.
SECTION 12.5 - PAYMENT ON BEHALF OF MINOR, ETC.
In the event any amount becomes payable under the Plan to a minor or a
person who, in the sole judgment of the Administrator is considered by reason of
physical or mental condition to be unable to give a valid receipt therefor, the
Administrator may direct that such payment be made to any person found by the
Administrator its sole judgment, to have assumed the care of such minor or other
person. Any payment made pursuant to such determination shall constitute a full
release and discharge of the Company, the Board, the Administrator, and their
officers, directors and employees.
SECTION 12.6 - AMENDMENT OF PLAN
As limited by any applicable law, the Plan may be wholly or partially
amended by the Administrator from time to time including retroactive amendments;
provided, however, that no amendment shall decrease the Vested amount any
Participant or any other person entitled to payment under the Plan has in the
Participant's Nonqualified Accounts on the Valuation Date immediately preceding
the amendment.
SECTION 12.7 - GOVERNING LAW
This Plan shall be construed, administered and governed in all respects
under and by applicable federal laws and, where state law is applicable, the
laws of the State of Texas. Exclusive jurisdiction and venue of all disputes
arising out of or relating to this plan shall be in any court of appropriate
jurisdiction in Houston, Harris County, Texas.
SECTION 12.8 - PRONOUNS AND PLURALITY
The masculine pronoun shall include the feminine pronoun, and the singular
the plural where the context so indicates.
SECTION 12.9 - TITLES
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
<PAGE>
SECTION 12.10 - REFERENCES
Unless the context clearly indicates to the contrary, a reference to a
statute, regulation or document shall be construed as referring to any
subsequently enacted, adopted or executed statute, regulation or document.
SECTION 12.11 - TAX WITHHOLDING
If the whole or any part of any Participant's or Beneficiary's benefit
hereunder shall become subject to any income tax, FICA tax, estate or
inheritance tax, or other tax which the Company shall be required to withhold,
the Company shall have the full power and authority to withhold and pay such tax
out of any monies or other property in its hand for the account of the
Participant or Beneficiary whose interests hereunder are so affected. Prior to
making any payment, the Company may require such releases or other documents
from any lawful taxing authority as it shall deem necessary.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
on this 17th day of May, 1999.
CORNELL CORRECTIONS, INC.
By /s/ PATRICK PERRIN
Title Chief Administrative Officer
EXHIBIT 5
[LETTERHEAD OF LOCKE LIDDELL & SAPP LLP]
June 8, 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 the registration, pursuant to a
Registration Statement on Form S-8 being filed with the Securities and Exchange
Commission (the "Registration Statement") under the Securities Act of 1933, as
amended, of the offering of up to 970,000 shares of the Company's common stock,
par value $.001 per share (the "Common Stock"), which may be issued under the
Cornell Corrections, Inc. Amended and Restated 1996 Stock Option Plan, the
Cornell Correction, Inc. Employee Stock Purchase Plan and the Cornell Deferred
Compensation Plan (collectively, the "Plans").
In such capacity, we have examined the corporate documents of the Company,
including its Restated Certificate of Incorporation and its Amended and Restated
Bylaws, each as amended, and resolutions adopted by its board of directors and
committees thereof. We have also examined the Registration Statement, together
with the exhibits thereto, and such other documents which we have deemed
necessary for the purposes of expressing the opinion contained herein. We have
relied on representations made by and certificates of the officers of the
Company and public officials with respect to certain facts material to our
opinion. We have made no independent investigation regarding such
representations and certificates.
Based upon the foregoing, we are of the opinion that the shares of Common
Stock issued pursuant to the Plans will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Locke Liddell & Sapp LLP
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
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
June 8, 1999
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned person constitutes
and appoints DAVID M. CORNELL and STEVEN W. LOGAN and each of them, his or her
true and lawful attorney-in-fact and agents, with full power of substitution and
resubstitution for him or her and in his or her name, place and stead, in any
and all capacities, to sign, execute and file the Registration Statement on Form
S-8 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) thereto, 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
or she 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 or her
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Dated: June 3, 1999
/s/ DAVID M. CORNELL
--------------------
DAVID M. CORNELL
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned person constitutes
and appoints DAVID M. CORNELL and STEVEN W. LOGAN and each of them, his or her
true and lawful attorney-in-fact and agents, with full power of substitution and
resubstitution for him or her and in his or her name, place and stead, in any
and all capacities, to sign, execute and file the Registration Statement on Form
S-8 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) thereto, 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
or she 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 or her
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Dated: June 3, 1999
/s/ STEVEN W. LOGAN
-------------------
STEVEN W. LOGAN
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned person constitutes
and appoints DAVID M. CORNELL and STEVEN W. LOGAN and each of them, his or her
true and lawful attorney-in-fact and agents, with full power of substitution and
resubstitution for him or her and in his or her name, place and stead, in any
and all capacities, to sign, execute and file the Registration Statement on Form
S-8 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) thereto, 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
or she 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 or her
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Dated: June 3, 1999
/s/ PETER A. LEIDEL
-------------------
PETER A. LEIDEL
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned person constitutes
and appoints DAVID M. CORNELL and STEVEN W. LOGAN and each of them, his or her
true and lawful attorney-in-fact and agents, with full power of substitution and
resubstitution for him or her and in his or her name, place and stead, in any
and all capacities, to sign, execute and file the Registration Statement on Form
S-8 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) thereto, 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
or she 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 or her
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Dated: June 3, 1999
/s/ ARLENE R. LISSNER
---------------------
ARLENE R. LISSNER
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned person constitutes
and appoints DAVID M. CORNELL and STEVEN W. LOGAN and each of them, his or her
true and lawful attorney-in-fact and agents, with full power of substitution and
resubstitution for him or her and in his or her name, place and stead, in any
and all capacities, to sign, execute and file the Registration Statement on Form
S-8 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) thereto, 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
or she 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 or her
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Dated: June 3, 1999
/s/ TUCKER TAYLOR
-----------------
TUCKER TAYLOR
