EXHIBIT 4.8
EXECUTION COPY
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WARRANT ISSUANCE AGREEMENT
Dated as of October 14, 1999
between
CORNELL CORRECTIONS, INC.
and
ING (U.S.) CAPITAL LLC
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
SECTION 1.1.Definitions................................................1
SECTION 1.2.Interpretation.............................................7
ARTICLE II
ISSUANCE OF WARRANT; CLOSING
SECTION 2.1.Issuance of Warrant........................................8
SECTION 2.2.Closing....................................................8
ARTICLE III
FORM; EXCHANGE FOR WARRANTS; TRANSFER; TAXES
SECTION 3.1.Form of Warrant............................................8
SECTION ▇.▇.▇▇▇▇▇▇▇▇ of Warrants for Warrants..........................9
SECTION 3.3.Transfer of Warrant.......................................10
ARTICLE IV
EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES
SECTION 4.1.Exercise of Warrants......................................11
SECTION ▇.▇.▇▇▇▇▇▇▇▇ for Warrant Shares...............................11
SECTION 4.3.Issuance of Common Stock..................................11
SECTION 4.4.Adjustment of Exercise Price and
Number of Warrant Shares......................13
SECTION 4.4.1. Adjustment upon Issuance of
Common Stock..................................13
SECTION 4.4.2. Subdivisions or Combinations of
Common Stock..................................16
SECTION 4.4.3. Capital Reorganization or Capital
Reclassifications.............................16
SECTION 4.4.4. Consolidations and Mergers.............................17
SECTION 4.4.5. Notice; Calculations; Etc..............................17
SECTION 4.4.6. Certain Adjustments....................................17
SECTION 4.4.7. Excluded Transactions..................................18
SECTION 4.4.8. Adjustment Rules.......................................18
SECTION 4.5.Regulated Holders.........................................18
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1.Representations and Warranties of ING.....................19
SECTION 5.2.Representations and Warranties of the Corporation.........19
ARTICLE VI
COVENANTS OF THE CORPORATION
SECTION 6.1. Notices of Certain Actions...............................21
SECTION 6.2. Financial Statements and Reports.........................21
SECTION 6.3. Information Rights.......................................22
SECTION 6.4. Regulated Holders........................................22
SECTION 6.5. Merger or Consolidation of the Corporation...............24
SECTION 6.6. Reservation of Shares....................................25
SECTION 6.7. Current Public Information...............................25
SECTION 6.8. Public Disclosures.......................................25
SECTION 6.9. Fiduciary Duties of the Corporation......................25
SECTION 6.10 Transactions with Affiliates.............................25
SECTION 6.11 Opinion of Counsel.......................................26
SECTION 6.12 Corporate Assurances.....................................26
ARTICLE VII
MISCELLANEOUS
SECTION 7.1.Notices...................................................26
SECTION ▇.▇.▇▇ Voting Rights; Limitations of Liability................27
SECTION 7.3.Amendments and Waivers....................................27
SECTION 7.4.Severability..............................................27
SECTION 7.5.Specific Performance......................................27
SECTION 7.6.Binding Effect............................................28
SECTION 7.7.Counterparts..............................................28
SECTION 7.8.Governing Law; Entire Agreement...........................28
SECTION 7.9.Benefits of this Agreement................................28
SECTION 7.10 Headings.................................................28
SECTION 7.11 Expenses.................................................28
SECTION 7.12 Attorneys' Fees..........................................29
SECTION 7.13 Other Transactions.......................................29
SECTION 7.14 Forum Selection and Consent to Jurisdiction..............29
SECTION 7.15 Registration Rights......................................29
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SECTION 7.16 Waiver of Jury Trial.....................................30
SECTION 7.17 Indemnification..........................................30
SECTION 7.18 Filings..................................................30
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WARRANT ISSUANCE AGREEMENT, dated as of October 14, 1999, between
CORNELL CORRECTIONS, INC., a Delaware corporation (the
"Corporation"), and ING (U.S.) CAPITAL LLC, a Delaware limited
liability company ("ING").
The parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. As used in this Agreement,
the following terms shall have the following meanings:
"AFFILIATE" shall mean, with respect to any Person, any Person that
directly or indirectly through one or more intermediaries Controls, is
Controlled by or is under common Control with such Person.
"ALLOCABLE NUMBER" shall have the meaning given to such term in
Section 4.2.
"APPLICABLE LAW" shall mean all provisions of laws, statutes,
ordinances, rules, regulations, permits, certificates or orders of any
Governmental Authority applicable to the Person in question or any of its assets
or property, and all judgments, injunctions, orders and decrees of all courts
and arbitrators in proceedings or actions in which the Person in question is a
party or by which any of its assets or properties are bound.
"ASSIGNMENT FORM" shall mean the assignment form
attached as Annex B to a Warrant.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banks are authorized or required to be closed in New York, New York
or Houston, Texas; PROVIDED, HOWEVER, that any determination of a Business Day
relating to a securities exchange shall mean a Business Day on which such
exchange is open for trading.
"CLOSING" shall have the meaning given to such term in
Section 2.2.
"CLOSING DATE" shall have the meaning given to such term in Section
2.2.
"COMMISSION" shall mean the Securities and Exchange
Commission (or a successor thereto).
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"COMMON STOCK" shall mean the Common Stock, $.001 par
value, of the Corporation.
"CONTROL" shall mean, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"CORPORATION" shall have the meaning given to such term
in the Preamble.
"CONVERTIBLE SECURITIES" shall have the meaning given to such term
in Section 4.4.1(b).
"CREDIT AGREEMENT" shall mean the Subordinated Bridge Loan Agreement
(as the same may be amended or otherwise modified from time to time), dated the
Closing Date, among the Corporation, the Subsidiary Guarantors (as defined
therein), ING, the other financial institutions appearing on the signature pages
thereto, and ING, as agent.
"DELIVERY DATE" shall have the meaning given to such term in Section
4.3(a).
"EQUIVALENT NONVOTING SECURITY", with respect to any security (a
"first security") issued or to be issued by any Person, shall mean a security
(an "equivalent security") of such Person that is identical in rights and
benefits to such first security, except that (a) the equivalent security shall
not be entitled to vote on any matter on which holders of voting securities of
such Person are entitled to vote, other than as required by Applicable Law or
with respect to any amendment or repeal of any provision of the Organizational
Documents of such Person or any other agreement or instrument pursuant to which
the equivalent security was issued which provision specifically affects such
equivalent security, (b) subject to such reasonable restrictions as any affected
Regulated Holder may request (including, without limitation, any restriction
necessary to prevent the violation by such Regulated Holder of any provision of
Applicable Law with respect to its Ownership of voting securities), the
equivalent security shall be convertible in a one-to-one ratio into the first
security and (c) the terms of the equivalent security shall include such
provisions requested by any affected Regulated Holder as are reasonable and
equitable to ensure that (i) the equivalent security is treated comparably to
the first security with respect to dividends, distributions, stock splits,
reclassifications, capital reorganizations, mergers, consolidations and other
similar events and transactions, (ii) the conversion right provided in clause
(b) above is equitably protected and (iii) the acquisition of the
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equivalent security will not cause such Regulated Holder to violate Applicable
Law.
"ESCROW AGENT" means ING Capital (U.S.) LLC.
"ESCROW AGREEMENT" means the Escrow Agreement dated as of October 14
1999, between the Escrow Agent and ING.
"EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
"EXCHANGE FORM" shall mean the exchange form attached as Annex B to
a Warrant.
"EXCLUDED SECURITIES" shall mean:
(i) shares of capital stock issued pursuant to a stock dividend or a
stock split or other subdivision of shares;
(ii) Common Stock issued upon (A) conversion or exercise of any of
the Corporation's convertible preferred stock outstanding at the Closing Date,
or (B) exercise of the Warrants;
(iii) securities issued by the Corporation in a Qualified Public
Offering;
(iv) securities issued pursuant to the direct or indirect BONA FIDE
acquisition by the Corporation of any Person, whether by merger, purchase of
stock, purchase of assets or otherwise;
(v) securities issued upon exercise of conversion or exchange
rights, options or subscription calls, warrants, commitments or claims, provided
that the foregoing are outstanding on the date hereof; and
(vi) Common Stock or options to purchase Common Stock issued to
directors, officers, employees or consultants of the Corporation or the issuance
of Common Stock upon the exercise of any such options; PROVIDED, HOWEVER, that
(x) such Common Stock or options shall be issued pursuant to a written agreement
either in effect on the date hereof or in form and substance reasonably
satisfactory to the Requisite Holders and (y) the aggregate amount of all such
Common Stock or Common Stock which may be acquired upon the exercise of such
options shall not exceed an aggregate of 20% of the Common Stock (on a
Fully-Diluted Basis).
"EXECUTIVE OFFICER" shall mean, with respect to the
Corporation, its Chairman or President.
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"EXERCISE FORM" shall mean the exercise form attached as Annex A to
a Warrant.
"EXERCISE PRICE" for any Warrant shall mean 110% of the Market Price
on the Release Date of such Warrant.
"EXPIRATION DATE" for any Warrant shall mean the earlier of the date
that is eight years after the Release Date thereof and date that is the ninth
anniversary hereof.
"FINANCIAL OFFICER" shall mean the Chief Financial
Officer, Treasurer or Assistant Treasurer of the Corporation.
"FISCAL YEAR" shall mean, with respect to the Corporation, the
one-year period ending on December 31 of any year.
"FULLY DILUTED BASIS" means, as applied to the calculation of the
number of shares of Common Stock outstanding at any time, after giving effect to
(a) all shares of Common Stock outstanding at the time of determination, (b) all
shares of Common Stock issuable upon the exercise of any option, warrant
(including the Warrants) or similar right to purchase Common Stock outstanding
at the time of determination and then exercisable at a per share price equal to
or less than the price per share of Common Stock being determined and (c) all
shares of Common Stock issuable upon the conversion or exchange of any security
convertible into or exchangeable for shares of Common Stock outstanding at the
time of determination and then so convertible or exchangeable at a conversion or
exchange price equal to or less than the price per share of Common Stock being
determined. Such calculation will not be made in accordance with the "treasury
method."
"GAAP" shall have the meaning set forth in the Credit
Agreement.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States of
America or foreign.
"HOLDER" shall have the meaning given to such term in
Section 3.1(c).
"ING" shall have the meaning given to such term in the
Preamble.
"MARKET PRICE" shall mean, with respect to a share of Common Stock
on any Business Day:
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(a) if the Common Stock is Publicly Traded at the time of
determination, the average of the closing prices for the Common Stock on
all domestic securities exchanges on which such security may at the time
be listed, or, if there have been no sales on any such exchange on such
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day; PROVIDED, HOWEVER, that after a
Qualified Public Offering, if the determination of MARKET PRICE is being
made for purposes of Article IV as a result of the issuance of Common
Stock pursuant to a registered, underwritten, publicly distributed
offering, then the MARKET PRICE will, for purposes of Article IV, be the
price to the public in connection with that public offering; or
(b) if the Common Stock is not Publicly Traded at the time of
determination, for the purposes of Article 4 only, the fair value of one
share of Common Stock, determined in good faith by the Board of Directors
of the Corporation exercising reasonable business judgment; PROVIDED,
HOWEVER, if the Common Stock is not Publicly Traded at the time of
determination for all other purposes, the MARKET PRICE shall be the Market
Value Per Share.
"MARKET VALUE" shall mean the highest price that would be paid for
the entire common equity interest in the Corporation on a going-concern basis in
a single arm's-length transaction between a willing buyer and a willing seller
(neither acting under compulsion), using valuation techniques then prevailing in
the securities industry and always determined in accordance with the Valuation
Procedures, and assuming full disclosure and understanding of all relevant
information and a reasonable period of time for effectuating such sale. For the
purposes of determining the Market Value, (i) the exercise price of options or
warrants to acquire Common Stock which are deemed to have been exercised for the
purpose of determining the number of shares of Common Stock outstanding on a
Fully Diluted Basis, shall be deemed to have been received by the Corporation
and (ii)(A) the liquidation preference or indebtedness, as the case may be,
represented by securities which are deemed exercised for or converted into
Common Stock for the purpose of determining the number of shares of Common Stock
outstanding on a Fully Diluted Basis, (B) any limitation in respect of any
shares of Common Stock, including as to their transfer, dividend payments,
voting and other rights and (C) any illiquidity arising by contract law in
respect of the shares of Common Stock and any voting rights or control rights
amongst the stockholders, shall be deemed to have been eliminated or canceled.
"MARKET VALUE PER SHARE" shall mean the price per share of Common
Stock obtained by dividing (A) the Market Value by (B)
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the number of shares of Common Stock outstanding (on a Fully-Diluted Basis) at
the time of determination.
"OPTIONS" shall have the meaning given to such term in Section
4.4.1(b) hereof.
"ORGANIZATIONAL DOCUMENTS" shall mean, with respect to any Person,
each instrument or other document that (a) defines the existence of such Person,
including its articles or certificate of incorporation, as filed or recorded
with an applicable Governmental Authority or (b) governs the internal affairs of
such Person, including its by-laws, in each case as amended, supplemented or
restated.
"OTHER ANTI-DILUTION INSTRUMENTS" shall mean any option, warrant,
convertible security or other rights to acquire Common Stock, whether
outstanding as of the date hereof or hereafter issued, together with any
agreements relating thereto, which provide for anti-dilution or other
adjustments in the number of shares of Common Stock and/or exercise or
conversion price.
"OWN" shall mean, with respect to any security, to own,
hold or Control. "OWNS" and "OWNERSHIP" shall have correlative
meanings.
"PERSON" shall have the meaning set forth in the Credit
Agreement.
"PROPORTIONATE PERCENTAGE" shall mean, with respect to any Holder at
any time, the quotient obtained by dividing (a) the aggregate number of Warrant
Shares then held by such Holder by (b) the total number of shares of Common
Stock then outstanding (on a Fully-Diluted Basis).
"PUBLICLY TRADED" shall mean, with respect to any security, that
such security is listed on a domestic securities exchange.
"QUALIFIED PUBLIC OFFERING" shall mean an underwritten public
offering of the Common Stock registered under the Securities Act, (a) which
offering results in net proceeds to the Corporation of at least $10,000,000, and
(b) after which the shares of Common Stock are Publicly Traded.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, dated as of October 14, 1999, among the Corporation and the Investors
(as defined therein).
"REGULATED HOLDER" shall mean any Holder subject to any
provisions of Applicable Law (including without limitation the
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Bank Holding Company Act of 1956, as amended, (12 U.S.C. ss. 1841 ET SEQ.) and
the regulations promulgated thereunder) limiting the quantity or kind of
securities (or any class thereof) of the Corporation which such Holder is
permitted to Own.
"RELEASE DATE" means any date on which any Warrant is released from
escrow in accordance with the terms of the Escrow Agreement.
"REQUISITE HOLDERS" shall mean Holders holding Warrants or Warrant
Shares representing at least a majority of all Warrant Shares issued or issuable
upon exercise of Warrants outstanding on the date of determination.
"SECTION 6.4 TRANSACTION" shall have the meaning given to such term
in Section 6.4.
"SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
"SECURITIES EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
"SUBSIDIARY" shall have the meaning set forth in the
Credit Agreement.
"WARRANT" shall have the meaning given to such term in
Section 3.1(a).
"WARRANT REGISTER" shall have the meaning given to such term in
Section 3.1(c).
"WARRANT SHARES" shall mean (a) the shares of Common Stock issued or
issuable upon exercise of a Warrant in accordance with Section 4.1 or upon
exchange of a Warrant in accordance with Section 4.2, (b) all other securities
or other property issued or issuable upon any such exercise or exchange in
accordance with this Agreement and (c) any securities of the Corporation
distributed with respect to the securities referred to in the preceding clauses
(a) and (b). As used in this Agreement, the phrase "Warrant Shares then held" by
any Holder or Holders shall mean Warrant Shares held at the time of
determination by such Holder or Holders, and shall include Warrant Shares
issuable upon exercise of Warrants held at the time of determination by such
Holder or Holders.
SECTION 1.2. INTERPRETATION. Unless the context of
this Agreement clearly requires otherwise, references to the
plural include the singular, to the singular include the plural,
and to the part include the whole. The term "including" is not
limiting and the term "or" has the inclusive meaning represented
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by the term "and/or." The words "hereof," "herein," "hereunder," and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to "Articles", "Sections,"
"Exhibits" and "Schedules" are to Articles, Sections and Schedules,
respectively, of this Agreement, unless otherwise specifically provided. Terms
defined herein may be used in the singular or the plural.
ARTICLE II
ISSUANCE OF WARRANT; CLOSING
SECTION 2.1. ISSUANCE OF WARRANT. On the Closing Date, the
Corporation hereby agrees to issue a Warrant registered in the name of ING
evidencing the right to purchase, on or before 5:00 p.m. on the Expiration Date,
a total of 500,910 shares of Common Stock of the Corporation at a price per
share equal to the Exercise Price. At the date hereof, such shares of Common
Stock represent 5.2273% of the outstanding shares of Common Stock and 5.0% of
the outstanding shares of Common Stock on a Fully Diluted Basis. The number of
Warrant Shares which may be purchased upon exercise of such Warrant and the
Exercise Price to be paid for such Warrant Shares are subject to adjustment in
the manner provided in Article IV. Upon issuance, the Warrant will be placed in
escrow and may only be released from escrow in accordance with the terms of the
Escrow Agreement.
SECTION 2.2. CLOSING. The closing (the "Closing") for the issuance,
sale and transfer of the Warrant shall take place simultaneously with the
execution and delivery of this Agreement on the date (the "Closing Date")
hereof.
ARTICLE III
FORM; EXCHANGE FOR WARRANTS; TRANSFER; TAXES
SECTION 3.1. FORM OF WARRANT. (a) Each Warrant issued hereunder
shall be in the form of Exhibit A (each, a "Warrant") and shall be executed on
behalf of the Corporation by an Executive Officer and attested to by a Financial
Officer. The signature of any officer on any Warrant may be manual or facsimile.
Upon initial issuance, each Warrant shall be dated as of the date of
counter-signature thereof by the Corporation.
(b) Each Warrant and each certificate representing Warrant
Shares shall include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND STATE
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SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF SUCH ACT. IN ADDITION, THE SECURITIES
REPRESENTED HEREBY ARE SUBJECT TO THE LIMITATIONS ON TRANSFER SET FORTH IN
THE WARRANT ISSUANCE AGREEMENT DATED AS OF OCTOBER 14, 1999, BETWEEN THE
CORPORATION AND ING (U.S.) CAPITAL LLC. A COPY OF THE WARRANT ISSUANCE
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
CORPORATION AND WILL BE FURNISHED WITHOUT CHARGE TO THE RECORD HOLDER
HEREOF UPON WRITTEN REQUEST TO THE CORPORATION.
(c) Each Warrant issued, exchanged or transferred hereunder
shall be registered in a warrant register (the "Warrant Register"). The Warrant
Register shall set forth the number of each Warrant, the name and address of the
holder (a "Holder") thereof, and the original number of Warrant Shares
purchasable upon the exercise thereof. The Warrant Register will be maintained
by the Corporation and will be available for inspection by any Holder at the
principal office of the Corporation or such other location as the Corporation
may designate to the Holders in the manner set forth in Section 7.1. The
Corporation shall be entitled to treat the Holder of any Warrant as the owner in
fact thereof for all purposes and shall not be bound to recognize any equitable
or other claim to or interest in such Warrant on the part of any other person.
The Corporation shall not be liable for complying with a request by a fiduciary
or nominee of a fiduciary to register a transfer of any Warrant which is
registered in the name of such fiduciary or nominee, unless made with the actual
knowledge that such fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with knowledge of such facts that
the Corporation's participation therein amounts to bad faith.
SECTION 3.2. EXCHANGE OF WARRANTS FOR WARRANTS. (a) The Holder may
exchange any Warrant issued hereunder for another Warrant or Warrants of like
kind and tenor representing in the aggregate the right to purchase the same
number of Warrant Shares which could be purchased pursuant to the Warrant being
so exchanged. In order to effect an exchange permitted by this Section 3.2, the
Holder shall deliver to the Corporation such Warrant accompanied by a written
request signed by the Holder thereof specifying the number and denominations of
Warrants to be issued in such exchange and the names in which such Warrants are
to be issued. Within ten (10) Business Days of receipt of such a request, the
Corporation shall issue, register and deliver to the Holder thereof each Warrant
to be issued in such exchange.
(b) Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the Holder being
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satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any Warrant, and in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Corporation (if the
Holder is a creditworthy financial institution or other creditworthy
institutional investor its own indemnification agreement being satisfactory) or,
in the case of any such mutilation, upon surrender of such Warrant, the
Corporation shall (at its expense) execute and deliver in lieu of such Warrant a
new Warrant of like kind representing the same rights represented by and dated
the date of such lost, stolen, destroyed or mutilated Warrant. Any such new
Warrant shall constitute an original contractual obligation of the Corporation,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be at any time enforceable by any Person.
(c) The Corporation shall pay all taxes (other than any
applicable income or similar taxes payable by a Holder of a Warrant)
attributable to an exchange of a Warrant pursuant to this Section 3.2; PROVIDED,
HOWEVER, that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance of any Warrant in a
name other than that of the Holder of the Warrant being exchanged.
SECTION 3.3. TRANSFER OF WARRANT. (a) Subject to Section 3.3(c)
hereof, each Warrant may be transferred by the Holder thereof by delivering to
the Corporation such Warrant accompanied by a properly completed Assignment
Form. Within ten (10) Business Days of receipt of such Assignment Form the
Corporation shall issue, register and deliver to the Holder, subject to Section
3(c) thereof, a new Warrant or Warrants of like kind and tenor representing in
the aggregate the right to purchase the same number of Warrant Shares which
could be purchased pursuant to the Warrant being transferred. In all cases of
transfer by an attorney, the original power of attorney, duly approved, or a
copy thereof, duly certified, shall be deposited and remain with the
Corporation. In case of transfer by executors, administrators, guardians or
other legal representatives, duly authenticated evidence of their authority
shall be produced and may be required to be deposited and remain with the
Corporation in its discretion.
(b) Each Warrant issued in accordance with this Section 3.3
shall bear the restrictive legend set forth in Section 3.1(b), unless the Holder
or transferee thereof supplies to the Corporation an opinion of counsel,
reasonably satisfactory to the Corporation, that the restrictions described in
such legend are no longer applicable to such Warrant.
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(c) The transfer of Warrants and Warrant Shares shall be
permitted, so long as such transfer is pursuant to a transaction that complies
with, or is exempt from, the provisions of the Securities Act, and the
Corporation may require an opinion of counsel (which may be internal counsel to
a Holder) in form and substance reasonably satisfactory to it to such effect
prior to effecting any transfer of Warrants or Warrant Shares.
ARTICLE IV
EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES
SECTION 4.1. EXERCISE OF WARRANTS. On any Business Day on or after
the relevant Release Date but prior to the Expiration Date, a Holder may
exercise a Warrant, in whole or in part, by delivering to the Corporation such
Warrant accompanied by a properly completed Exercise Form and a check in an
aggregate amount equal to the product obtained by multiplying (a) the Exercise
Price by (b) the number of Warrant Shares being purchased.
SECTION 4.2. EXCHANGE FOR WARRANT SHARES. On any Business Day prior
to the Expiration Date, a Holder may exchange a Warrant, in whole or in part,
for Warrant Shares by delivering to the Corporation such Warrant accompanied by
a properly completed Exchange Form along with any required payment of the
Exercise Price. The number of shares of Common Stock to be received by a Holder
upon such exchange shall be equal to the number of Warrant Shares allocable to
the portion of the Warrant being exchanged.
SECTION 4.3. ISSUANCE OF COMMON STOCK. (a) Within ten (10) Business
Days following the delivery date (the "Delivery Date") of (i) an Exercise Form
or Exchange Form in accordance with Section 4.1 or 4.2, (ii) a Warrant and (iii)
the required payment of the Exercise Price, the Corporation shall issue and
deliver to the Holder a certificate or certificates, registered in the name or
names set forth on such notice, representing the Warrant Shares being purchased
or to be received upon such exchange.
(b) If a Holder shall exercise or exchange a Warrant for less
than all of the Warrant Shares which could be purchased or received thereunder,
the Corporation shall issue to the Holder, within ten (10) Business Days of the
Delivery Date, a new Warrant evidencing the right to purchase the remaining
Warrant Shares. In the case of an exchange pursuant to Section 4.2, the number
of remaining Warrant Shares shall be the original number of Warrant Shares
subject to the Warrant so exchanged
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reduced by the Allocable Number of Warrant Shares. Each Warrant surrendered
pursuant to Section 4.1 or 4.2 shall be canceled.
(c) The Corporation shall not be required to issue fractional
shares of Common Stock upon the exercise or exchange of a Warrant. If any
fraction of a share of Common Stock would be issuable on the exercise or
exchange of any Warrant, the Corporation may, in lieu of issuing such fractional
share, pay to such Holder for any such fraction of a share an amount in cash
equal to the product obtained by multiplying (i) such fraction by (ii) the
Market Price in effect on the Delivery Date.
(d) The Corporation shall pay all taxes (other than any
applicable income or similar taxes payable by a Holder of a Warrant)
attributable to the initial issuance of Warrant Shares upon the exercise or
exchange of a Warrant; PROVIDED, HOWEVER, that the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance of any Warrant or any certificate for Warrant Shares in a name
other than that of the Holder of the Warrant being exercised or exchanged.
(e) The person in whose name any certificate for shares of
Common Stock is issued upon exercise or exchange of a Warrant shall for all
purposes be deemed to have become the holder of record of such shares on the
Delivery Date, irrespective of the date of delivery of such certificate, except
that, if the Delivery Date is a date when the stock transfer books of the
Corporation are closed, such person shall be deemed to have become the holder of
record of such shares at the close of business on the next succeeding date on
which the stock transfer books are open.
(f) If any shares of Common Stock required to be reserved for
purposes of the exercise or exchange of a Warrant require registration or
approval under any Applicable Law, the Corporation will in good faith and as
expeditiously as possible cause such shares to be registered or seek such
approval, as applicable. The Corporation may suspend the exercise of any Warrant
so affected for the period during which such registration or approval is
required but not in effect.
(g) Any Exercise Form or Exchange Form delivered under Section
4.1 or 4.2 may condition the exercise or exchange of any Warrant on the
consummation of a sale of Warrant Shares pursuant to a public offering
registered under the Securities Act, and such exercise or exchange shall not be
deemed to have occurred except concurrently with the consummation of any such
sale.
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SECTION 4.4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES. The number and kind of Warrant Shares purchasable upon exercise of each
Warrant shall be subject to adjustment from time to time in accordance with this
Section 4.4.
SECTION 4.4.1. ADJUSTMENT UPON ISSUANCE OF COMMON STOCK. (a) If, at
any time after any Release Date, the Corporation shall issue or sell (or, in
accordance with Section 4.4.1(b), shall be deemed to have issued or sold) any
shares of Common Stock without consideration or for a consideration per share
less than the Market Price determined as of the date of such issuance or sale,
then, effective immediately upon such issuance or sale, the Exercise Price of
any Warrant released from escrow prior to such sale or issuance shall be reduced
to an amount equal to the product obtained by multiplying (A) the Exercise Price
of such Warrants in effect immediately prior to such issuance or sale, by (B) a
fraction, the numerator of which shall be the sum of (x) the product obtained by
multiplying (1) the number of shares of Common Stock outstanding (on a
Fully-Diluted Basis) immediately prior to such issuance or sale by (2) the
Market Price as of the date of such issuance or sale, and (y) the consideration,
if any, received by the Corporation upon such issuance or sale, and the
denominator of which shall be the product obtained by multiplying (C) the number
of shares of Common Stock outstanding (on a Fully-Diluted Basis) immediately
after such issuance or sale, by (D) such Market Price. Upon each such adjustment
of the Exercise Price hereunder, the number of Warrant Shares which may be
obtained upon exercise of such Warrant shall be increased to the number of
shares determined by multiplying (A) the number of Warrant Shares which could be
obtained upon exercise of such Warrant immediately prior to such adjustment by
(B) a fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to such adjustment and the denominator of which shall be the
Exercise Price in effect immediately after such adjustment.
(b) For the purpose of determining the adjusted Exercise Price
under Section 4.4.1(a), the following shall be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Corporation in any manner
issues or grants any rights or options to subscribe for or to purchase (A)
Common Stock or (B) any stock or other securities convertible into or
exchangeable for Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or securities being
herein called "Convertible Securities"), and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities is less than the
Market Price determined as of the date of issuance or grant
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of such Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options (or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon
the exercise of such Options) shall be deemed to be outstanding and to
have been issued and sold by the Corporation for such price per share. For
purposes of this paragraph, the price per share for which Common Stock is
issuable upon exercise of Options or upon conversion or exchange of
Convertible Securities issuable upon exercise of Options shall be
determined by dividing (A) the total amount, if any, received or
receivable by the Corporation as consideration for the issuing or granting
of such Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of all such
Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon issuance or sale of such Convertible
Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon exercise of such
Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further
adjustment of the Exercise Price shall be made upon the actual issuance of
such Common Stock or of such Convertible Securities upon the Exercise of
such Options or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Corporation in any
manner issues or sells any Convertible Securities having an exercise or
conversion or exchange price per share of Common Stock which is less than
the Market Price determined as of the date of such issuance or sale, then
the maximum number of shares of Common Stock issuable upon the conversion
or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Corporation for such
lower price per share. For purposes of this paragraph, the price per share
for which Common Stock is issuable upon conversion or exchange of
Convertible Securities is determined by dividing (A) the total amount
received or receivable by the Corporation as consideration for the
issuance or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No further adjustment of the
Exercise Price shall be made upon the actual issuance of such Common Stock
upon conversion or exchange of such Convertible Securities,
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and if any such issuance or sale of such Convertible Securities is made
upon exercise of any Options for which adjustments of the Exercise Price
had been or are required to be made pursuant to other provisions of this
Section 4.4.1(b), no further adjustment of the Exercise Price shall be
made by reason of such issuance or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase
price provided for in any Options, the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock change at any time, then
the Exercise Price in effect at the time of such change shall be
readjusted without duplication to the Exercise Price which would have been
in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of Warrant Shares shall
be correspondingly readjusted.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities without the
exercise of such Option or right, the Exercise Price then in effect and
the number of Warrant Shares acquirable hereunder shall be adjusted to the
Exercise Price and the number of shares which would have been in effect at
the time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration
or termination, never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, then the consideration received therefor
shall be deemed to be the net amount received by the Corporation therefor
(before deduction of underwriting expenses). If any Common Stock, Options
or Convertible Securities are issued or sold for consideration other than
cash, then the amount of the consideration other than cash received by the
Corporation shall be the fair value of such consideration determined by
the Board of Directors of the Corporation.
(vi) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or
for the account of the Corporation or any Subsidiary of the Corporation,
and the disposition of
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any shares so owned or held shall be considered an issue or
sale of Common Stock.
(vii) RECORD DATE. If the Corporation takes a record of the holders
of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed
to be the date of the issuance or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
SECTION 4.4.2. SUBDIVISIONS OR COMBINATIONS OF COMMON STOCK. If, at
any time after any Release Date, (a) the number of shares of Common Stock
outstanding is increased by a dividend or other distribution payable in shares
of Common Stock or by a subdivision or split-up of shares of Common Stock or (b)
the number of shares of Common Stock outstanding is decreased by a combination
or reverse stock split of shares of Common Stock, then, in each case, effective
as of the effective date of such event retroactive to the record date, if any,
of such event, (i) the Exercise Price of any Warrant released from escrow prior
to such event shall be adjusted to a price determined by multiplying (A) the
Exercise Price in effect immediately prior to such event by (B) a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding after giving effect to such event, and
(ii) the number of Warrant Shares subject to purchase upon the exercise of any
Warrant shall be adjusted effective at such time, to a number equal to the
product of (A) the number of Warrant Shares subject to purchase upon the
exercise of such Warrant immediately prior to such event by (B) a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
after giving effect to such event and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such event.
SECTION 4.4.3. CAPITAL REORGANIZATION OR CAPITAL RECLASSIFICATIONS.
If, at any time after the Closing Date, there shall be any capital
reorganization or any reclassification of the capital stock of the Corporation
(other than a change in par value or from par value to no par value or from no
par value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), then in each case the Corporation shall
cause effective provision to be made so that each Warrant shall, effective as of
the effective date of such event retroactive to the record date, if any, of such
event, be
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exercisable or exchangeable for the kind and number of shares of stock, other
securities, cash or other property to which a holder of the number of shares of
Common Stock deliverable upon exercise or exchange of such Warrant would have
been entitled upon such reorganization or reclassification and any such
provision shall include adjustments in respect of such stock, securities or
other property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Agreement with respect to such Warrant.
SECTION 4.4.4. CONSOLIDATIONS AND MERGERS. If, at any time after the
Closing Date, the Corporation shall consolidate with, merge with or into, or
sell all or substantially all of its assets or property to, another corporation,
then the Corporation shall cause effective provision to be made so that each
Warrant shall, effective as of the effective date of such event retroactive to
the record date, if any, of such event, be exercisable or exchangeable for the
kind and number of shares of stock, other securities, cash or other property to
which a holder of the number of shares of Common Stock deliverable upon exercise
or exchange of such Warrant would have been entitled upon such event.
SECTION 4.4.5. NOTICE; CALCULATIONS; ETC. Whenever the Exercise
Price and the number of Warrant Shares shall be adjusted as provided in this
Section 4.4, the Corporation shall provide to each Holder a statement, signed by
an Executive Officer, describing in detail the facts requiring such adjustment
and setting forth a calculation of the Exercise Price and the number of Warrant
Shares applicable to each Warrant after giving effect to such adjustment. All
calculations under this Section 4.4 shall be made to the nearest one hundredth
of a cent ($.0001) or to the nearest one-tenth of a share, as the case may be.
Adjustments pursuant to Sections 4.4.1, 4.4.2 and 4.4.3 shall apply to
successive events or transactions of the type covered thereby.
SECTION 4.4.6. CERTAIN ADJUSTMENTS. (a) Subject to the limitations
set forth in Section 6.4, the Corporation may make such reductions in the
Exercise Price or increase in the number of Warrant Shares to be received by any
Holder upon the exercise or exchange of a Warrant, in addition to those
adjustments required by this Section 4.4, as it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Common Stock or any issuance wholly for cash of shares of Common Stock or
securities which by their terms are convertible into or exchangeable for shares
of Common Stock, or any stock dividend, or any issuance of rights, options or
warrants hereinafter made by the Corporation to the holders of its Common Stock
shall not be taxable to such holders.
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(b) In the event that the Corporation in any manner issues or
grants Options or Convertible Securities, or any other transaction,
circumstances or events occur which give rise to anti-dilution adjustments under
Other Anti-Dilution Instruments, but not the Warrants, then the Corporation will
promptly make proportional, equitable and corresponding adjustments in the
number of shares of Common Stock issuable upon exercise of the Warrants to
protect the Holders against dilution as a result of such events.
SECTION 4.4.7. EXCLUDED TRANSACTIONS. Notwithstanding
any other provision of this Section 4.4, no adjustment shall be
made pursuant to this Section 4.4 in respect of the issuance of
Excluded Securities.
SECTION 4.4.8. ADJUSTMENT RULES. Any adjustments pursuant to this
Section 4.4 shall be made successively whenever an event referred to herein
shall occur, except that, notwithstanding any other provision of this Section
4.4, no adjustment shall be made to the number of shares of Common Stock or to
the Exercise Price if such adjustment represents less than 1% of the number of
shares previously required to be so delivered, but any lesser adjustment shall
be carried forward and shall be made at the time and together with the next
subsequent adjustment which together with any adjustments so carried forward
shall amount to 1% or more of the number of shares to be so delivered.
SECTION 4.5. REGULATED HOLDERS. If, in the written opinion of
counsel to any Regulated Holder (which may be internal counsel), the receipt by
such Regulated Holder of Warrant Shares (or any security included therein) upon
any exercise or exchange pursuant to this Article IV would cause such Regulated
Holder to violate any provision of Applicable Law with respect to its Ownership
of voting securities of the Corporation, then the Corporation will use its best
efforts (including without limitation using its best efforts to cause its
Organizational Documents to be amended) to create an Equivalent Nonvoting
Security with respect to Warrant Shares (or any such security included therein),
and such Regulated Holder shall be entitled to receive upon such exercise or
exchange, in lieu of such number (as it shall specify) of shares or other units
of Warrant Shares (or any such security included therein) otherwise receivable
by such Regulated Holder, the same number of shares or other units of such
Equivalent Nonvoting Security.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1. REPRESENTATIONS AND WARRANTIES OF ING. ING represents
that it is acquiring the Warrant to be issued to it on the Closing Date for its
own account, for investment purposes only and not with a view to any
distribution or public offering in violation of the Securities Act.
SECTION 5.2. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation hereby represents and warrants to ING as follows:
(a) ORGANIZATION. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, has all requisite power and
authority and has all material governmental licenses, approvals, consents
and authorizations necessary to own its property and assets and to carry
on its business as currently conducted and is qualified to do business in
each jurisdiction in which the nature of the business conducted or the
property owned or leased by it requires such qualification except where
the failure to be so qualified or licensed would not have a material
adverse effect on the business, condition, operations or properties of the
Corporation.
(b) CORPORATE POWER AND AUTHORITY; NO REQUIRED CONSENTS OR
APPROVALS. (i) The Corporation has the power to execute, deliver and
perform its obligations under this Agreement, the Warrants and the
Registration Rights
Agreement.
(ii) The execution, delivery and performance by the
Corporation of this Agreement, the Registration Rights Agreement, the
issuance of Warrants and the issuance of Warrant Shares upon exercise of
each Warrant, have been duly authorized by all required corporate and
stockholder action of the Corporation and will not (i) violate any
provision of Applicable Law, any Organizational Document, or any indenture
or other material agreement or instrument to which the Corporation is a
party or by which the Corporation or any of its properties are or may be
bound, (ii) conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any such indenture
or other material agreement or instrument to which the Corporation is a
party, or by which the Corporation or any of its properties are or may be
bound, (iii) result in the creation or imposition of any Lien upon any
property of the Corporation or (iv) require registration or filing with,
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or consent, approval or any other action by any Governmental
Authority.
(c) ENFORCEABILITY. This Agreement and the Registration Rights
Agreement have been duly executed and delivered by the Corporation and
constitutes a legal, valid, binding and enforceable obligation of the
Corporation except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar event
affecting the enforcement of creditors' rights generally and except as
enforceability may be subject to general principles of equity, whether
such principles are applied in a court of equity. When the Warrants and
Warrant Certificates have been issued as contemplated hereby, (i) each
Warrant will constitute the legal, valid, binding and enforceable
obligation of the Corporation and (ii) the Warrant Shares, when issued
upon the exercise or exchange of a Warrant in accordance with the terms
hereof and of such Warrant, will be duly authorized, validly issued, fully
paid and nonassessable shares of the Common Stock with no personal
liability attaching to the ownership thereof.
(d) CAPITALIZATION. (i) Attached hereto as Schedule I is a
correct and complete description of the authorized and outstanding capital
stock of the Corporation. All such outstanding shares are duly authorized,
validly issued, fully paid and nonassessable. The Warrant Shares represent
5.2273% of the outstanding shares of Common Stock and 5.0% of the
outstanding shares of Common Stock on a Fully-Diluted Basis.
(ii) Except as set forth on Schedule I hereto, except with
respect to the Warrants no Person holds any option, warrant, subscription
right, commitment or claim with respect to any capital stock of the
Corporation and no securities convertible into or exercisable or
exchangeable for any capital stock of the Corporation have been authorized
or issued.
(e) CREDIT AGREEMENT. Each of the representations and
warranties of the Corporation set forth in or under the Credit Agreement
is true and correct in all material respects, and are hereby incorporated
herein, with the same effect as if stated in their entirety herein.
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ARTICLE VI
COVENANTS OF THE CORPORATION
SECTION 6.1. NOTICES OF CERTAIN ACTIONS. (a) In the
event that the Corporation:
(i) shall authorize issuance to all holders of Common Stock of
rights or warrants to subscribe for or purchase capital stock of the
Corporation or of any other subscription rights or warrants; or
(ii) shall authorize a dividend or other distribution to all
holders of Common Stock of evidences of its indebtedness, cash or other
property or assets; or
(iii) commences a voluntary or involuntary dissolution,
liquidation or winding up;
(iv) defaults under this Agreement; or
(v) proposes to take any other action which would require an
adjustment pursuant to Section 4.4;
then the Corporation shall provide a written notice to each Holder stating (i)
the date as of which the holders of record of Common Stock to be entitled to
receive any such rights, warrants or distribution are to be determined, (ii) the
material terms of any such consolidation or merger and the expected effective
date thereof, or (iii) the material terms of any such conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of record of Common Stock will be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, conveyance, transfer, dissolution,
liquidation or winding up. Such notice shall be given not later than twenty (20)
Business Days prior to the effective date (or the applicable record date, if
earlier) of such event. The failure to give the notice required by this Section
6.1 or any defect therein shall not affect the legality or validity of any
distribution, right, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any action.
SECTION 6.2. FINANCIAL STATEMENTS AND REPORTS. The
Corporation shall furnish to each Holder:
(a) as soon as available but in any event within ninety (90)
days after the end of each Fiscal Year (commencing with the Fiscal Year ending
December 31, 1999, consolidated
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balance sheets, income statements and cash flow statements of the Corporation
and its Subsidiaries, showing its financial condition as of the close of such
Fiscal Year and the results of its operations during such year, all the
foregoing financial statements to be audited by independent accountants of
nationally recognized standing and prepared in accordance with GAAP;
(b) as soon as available but in any event within thirty (30)
days after the end of each fiscal quarter, the unaudited consolidated balance
sheets, income statements and cash flow statements, showing the financial
condition and results of operations of the Corporation, as at the end of each
such fiscal quarter and for the then elapsed portion of the Fiscal Year, in each
case prepared in accordance with GAAP;
(c) as soon as practicable and in any event not less than 15
days after the end of each fiscal year of the Corporation, an annual operating
budget for the Corporation for the succeeding fiscal year, containing budget of
profit and loss and cash flow (the "Budget"). Promptly upon preparation thereof,
the Corporation will furnish to the Holder any revisions of such previously
furnished Budgets;
(d) promptly upon their becoming available, copies of any
statements, reports and other communications, if any, which the Corporation
shall have provided to its stockholders or filed with the Commission or any
national securities exchange; and
(e) as soon as practicable and in any event not less than 15
days after the end of (i) each fiscal year of the Corporation and (ii) the
second fiscal quarter of each fiscal year of the Corporation, a completed
certificate substantially in the form of EXHIBIT C hereto, certifying as to the
percentage of Common Stock (on a Fully Diluted Basis) of the Corporation which
the Warrant Shares of the Holder represent.
SECTION 6.3. INFORMATION RIGHTS. Each Holder shall have all of the
rights of a holder of Common Stock under Applicable Law, whether or not such
holder has exercised or exchanged any Warrants, to receive lists of stockholders
or other information respecting the Corporation, to inspect the books and
records of the Corporation and to visit the properties of the Corporation.
SECTION 6.4. REGULATED HOLDERS. (a) Notwithstanding any other
provision of this Agreement to the contrary, except as provided in this Section
6.4, without the prior written consent of any Regulated Holder, the Corporation
shall not redeem, purchase or otherwise acquire, directly or indirectly,
convert, take any action (including any amendment to an Organizational
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Document) with respect to the voting rights of, or undertake any other action or
transaction (including without limitation any merger, consolidation or
recapitalization) affecting, any shares of its capital stock or other voting
securities if the result of the foregoing would be to cause the Ownership of the
capital stock of any Person by such Regulated Holder, or the Ownership of voting
securities of any Person (or any class thereof) by such Regulated Holder, to
exceed the quantity of such capital stock or voting securities (or any class
thereof) that such Regulated Holder is permitted under Applicable Law to Own.
Any action or transaction referred to in the preceding sentence shall be
referred to herein as a "Section 6.4 Transaction". The Corporation shall be
permitted to undertake any Section 6.4 Transaction which would otherwise result
in the Ownership by any Regulated Holder of voting securities (or any class
thereof) in excess of the quantity permitted by Applicable Law if, in a manner
reasonably satisfactory to such Regulated Holder, the Corporation shall provide
or cause to be provided for such Regulated Holder (i) to receive in connection
with any such action or transaction a number of shares or other units of
Equivalent Nonvoting Securities equal to such excess in lieu of the same number
of shares or other units of the voting securities it would otherwise have
received or (ii) if it would not otherwise have received voting securities in
connection with such action or transaction, to exchange a number of shares or
other units of voting securities then held by such Regulated Holder equal to
such excess for the same number of shares or other units of Equivalent Nonvoting
Securities. If the Corporation proposes to undertake any action or transaction
which could constitute a Section 6.4 Transaction, it shall provide the Holders
at least 15 days prior written notice thereof. If, in the written opinion of
counsel to any Regulated Holder (which may be internal counsel) delivered within
10 days following receipt of such notice, such action or transaction constitutes
a Section 6.4 Transaction with respect to such Regulated Holder, then the
Corporation shall delay undertaking such Section 6.4 Transaction for the purpose
of using its best efforts to agree on a manner in which to restructure such
action or transaction in a manner reasonably satisfactory to the Corporation and
such Regulated Holder so that it no longer would constitute a Section 6.4
Transaction. If the Corporation and such Regulated Holder are unable to agree,
within 20 days of the delivery of such written opinion, upon a manner in which
to so restructure such Section 6.4 Transaction, and such Section 6.4 Transaction
is a bona fide action or transaction proposed by the Corporation in good faith,
then the Corporation shall be permitted to undertake such Section 6.4
Transaction if prior to or concurrently with doing so it purchases from such
Regulated Holder, at a purchase price equal to the Market Value Per Share, a
number (specified by such Regulated Holder) of Warrants (based on the number of
Warrant Shares represented thereby) or Warrant Shares sufficient, in the written
opinion of
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counsel to such Regulated Holder (which may be internal counsel), to prevent
such Section 6.4 Transaction from causing the Ownership of the capital stock of
any Person by such Regulated Holder to exceed the quantity of such capital stock
that such Regulated Holder is permitted under Applicable Law to Own.
(b) If it becomes unlawful for any Regulated Holder to continue to hold
some or all of the Warrants or Warrant Shares held by it, or restrictions are
imposed on any Regulated Holder by Applicable Law which, in the reasonable
judgment of such Regulated Holder, make it unduly burdensome to continue to hold
such Warrants or Warrant Shares, the Corporation shall (i) cooperate with such
Regulated Holder in any efforts by such Regulated Holder to dispose of some or
all of such Warrants or Warrant Shares in a prompt and orderly manner, including
without limitation providing (and authorizing such Regulated Holder to provide)
financial and other information (subject to appropriate confidentiality
restrictions)concerning the Corporation to any prospective purchaser of such
Warrants or Warrant Shares and (ii) at the request of such Regulated Holder,
take all steps (including without limitation using its best efforts to cause its
Organizational Documents to be amended) necessary to create an Equivalent
Nonvoting Security with respect to the Warrant Shares then held by such
Regulated Holder and permit such Regulated Holder to exchange Warrant Shares for
the same number of shares or other units of such Equivalent Nonvoting Security;
PROVIDED, HOWEVER, that nothing in this Section 6.4(b) shall require the
Corporation to register or qualify such Warrants or Warrant Shares under any
federal or state securities laws.
SECTION 6.5. MERGER OR CONSOLIDATION OF THE CORPORATION. The
Corporation will not merge or consolidate with or into, or sell, transfer or
lease all or substantially all of its property to, any other corporation or
partnership unless the successor or purchasing entity, as the case may be (if
not the Corporation), is organized under the laws of the United States of
America or any OECD member country or any state or political subdivision thereof
if such successor or purchasing entity will issue securities or other
consideration directly to all the stockholders of the Corporation and shall
expressly agree to provide to each Holder the securities, cash or property
required by Section 4.4.4 hereof upon the exercise or exchange of Warrants and
expressly assumes, by supplemental agreement reasonably satisfactory in form and
substance to each Holder, the due and punctual performance and observance of
each and every covenant and condition of this Agreement to be performed and
observed by the Corporation; PROVIDED, HOWEVER, that the initial obligation of
such successor with respect to the exercise or exchange of Warrants shall be
only as set forth in Section 4.4.4.
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SECTION 6.6. RESERVATION OF SHARES. The Corporation will at all
times have authorized, and reserve and keep available, free from preemptive
rights, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares upon the exercise or exchange of each Warrant, the number of
shares of Common Stock deliverable upon exercise or exchange of all outstanding
Warrants.
SECTION 6.7. CURRENT PUBLIC INFORMATION. At all times after the
Corporation has filed a registration statement with the Securities and Exchange
Commission pursuant to the requirements of either the Securities Act or the
Securities Exchange Act, the Corporation will file all reports required to be
filed by it under the Securities Act and the Securities Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission
thereunder, and will take such further action as any holder or holders of
restricted securities may reasonably request, all to the extent required to
enable such holders to sell restricted securities pursuant to (i) Rule 144 or
Rule 144A adopted by the Securities and Exchange Commission under the Securities
Act (as such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the Securities and Exchange Commission. Upon
request, the Corporation will deliver to such holders a written statement as to
whether it has complied with such requirements.
SECTION 6.8. PUBLIC DISCLOSURES. The Corporation will not disclose
any Holder's name or identity as an investor in the Corporation in any press
release or other public announcement or in any written consent of such Holder,
unless such disclosure is required by applicable law or governmental regulations
or by order of a court of competent jurisdictions in which case prior to making
such disclosure the Corporation will give written notice to such Holder
describing in reasonable detail the proposed content of such disclosure and will
permit the Holder to review and comment upon the form and substance of such
disclosure.
SECTION 6.9. FIDUCIARY DUTIES OF THE CORPORATION. The Corporation
shall owe the holders of the Warrants the same fiduciary duties that the
Corporation and its directors would owe to the holders of the Warrant Shares
underlying the Warrants.
SECTION 6.10. TRANSACTIONS WITH AFFILIATES. The Corporation shall
not, and shall not permit any of its Subsidiaries to, enter into any transaction
with any Affiliate, except on terms no less favorable to the Corporation or such
Subsidiary than would be obtained in a comparable arm's length transaction with
a third party, provided, however, that the restrictions in this Section 6.10
will not be applicable to any
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financing should the Holder have the right to participate in such
financing.
SECTION 6.11. OPINION OF COUNSEL. At the Closing, the
Corporation will deliver to the Holder an opinion, dated as of
the Closing Date, substantially in the form of Exhibit B.
SECTION 6.12. CORPORATE ASSURANCES. The Corporation will not, by
amendment of its charter or through any consolidation, merger, reorganization,
transfer of assets, dissolution, issue or sale of securities, or any other
voluntary action, seek to avoid the observance or performance of any of the
terms of this Agreement, but will at all times in good faith seek to carry out
all such terms and take all such action as may be necessary or appropriate in
order to protect the rights of the holders of the Warrants and the Warrant
Shares against impairment. Without limiting the generality of the foregoing, the
Corporation (a) will not permit the par value of the Warrant Shares to exceed
the Exercise Price and (b) will take all such action and execute all such
further instruments and documents as may be necessary or appropriate (i) in
order that the Corporation may validly and legally issue, free from preemptive
rights, fully paid and non-assessable Warrant Shares upon the exercise of all
Warrants from time to time outstanding and (ii) to effectuate the terms and
purposes of this Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NOTICES. All notices, demands and requests of any kind
to be delivered to any party hereto in connection with this Agreement shall be
in writing (i) delivered personally, (ii) sent by nationally-recognized
overnight courier, (iii) sent by first class, registered or certified mail,
return receipt requested or (iv) sent by facsimile, in each case to such party
at its address as follows:
(a) if to the Corporation, to:
Cornell Corrections, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: 713/623-2853
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(b) if to ING, to:
ING (U.S.) Capital LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Merchant Banking Group New York
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopier: 212/593-3362
Any notice, demand or request so delivered shall constitute valid notice under
this Agreement and shall be deemed to have been received (i) on the day of
actual delivery in the case of personal delivery, (ii) on the next Business Day
after the date when sent in the case of delivery by nationally-recognized
overnight courier, (iii) on the fifth Business Day after the date of deposit in
the U.S. mail in the case of mailing or (iv) upon receipt in the case of a
facsimile transmission. Any party hereto may from time to time by notice in
writing served upon the other as aforesaid designate a different mailing address
or a different Person to which all such notices, demands or requests thereafter
are to be addressed.
SECTION 7.2. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY. No Warrant
shall entitle the holder thereof to any voting rights or, except as otherwise
provided herein, other rights of a stockholder of the Corporation, as such. No
provision hereof, in the absence of affirmative action by the Holder to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the
Holder shall give rise to any liability of such Holder for the Exercise Price of
Warrant Shares acquirable by exercise hereof or as a stockholder of the
Corporation.
SECTION 7.3. AMENDMENTS AND WAIVERS. Any provision of
this Agreement may be amended or waived, but only pursuant to a
written agreement signed by the Corporation and the Requisite
Holders.
SECTION 7.4. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 7.5. SPECIFIC PERFORMANCE. Each Holder shall
have the right to specific performance by the Corporation of the
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provisions of this Agreement, in addition to any other remedies it may have at
law or in equity. The Corporation hereby irrevocably waives, to the extent that
it may do so under applicable law, any defense based on the adequacy of a remedy
at law which may be asserted as a bar to the remedy of specific performance in
any action brought against the Corporation for specific performance of this
Agreement by the Holders of the Warrants or Warrant Shares.
SECTION 7.6. BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of the Corporation, each
Holder and their respective successors and assigns.
SECTION 7.7. COUNTERPARTS. This Agreement may be executed (manually
or by facsimile) by the parties hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement. This Agreement shall become effective when
counterparts hereof executed on behalf of the Corporation and each Holder shall
have been received.
SECTION 7.8. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT AND THE
WARRANTS, SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement and the Warrants,
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof and supersede any prior agreements, written or oral, with
respect thereto.
SECTION 7.9. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Corporation and each
Holder of a Warrant or a Warrant Share any legal or equitable right, remedy or
claim hereunder.
SECTION 7.10. HEADINGS. The various headings of this
Agreement are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or any provisions
hereof or thereof.
SECTION 7.11. EXPENSES. The Corporation will promptly (and in any
event within thirty (30) days of receiving any statement or invoice therefor)
pay all reasonable fees, expenses and costs relating hereto, including, but not
limited to, (i) the fees and disbursements of counsel to the Holder in preparing
this Agreement, (ii) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect hereof or any other document referred to herein, (iii) fees and expenses
(including, without limitation, reasonable attorneys' fees) incurred in respect
of the enforcement by Holders, if successful, of the rights granted
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to Holders under this Agreement, and (iv) the expenses relating to the
consideration, negotiation, preparation or execution of any amendments, waivers
or consents requested by the Corporation pursuant to the provisions hereof,
whether or not any such amendments, waivers or consents are executed.
SECTION 7.12. ATTORNEYS' FEES. In any action or proceeding brought
by a party to enforce any provision of this Agreement, the prevailing party
shall be entitled to recover the reasonable costs and expenses incurred by it in
connection with that action or proceeding (including, but not limited to,
attorneys' fees).
SECTION 7.13. OTHER TRANSACTIONS. Nothing contained herein shall
preclude the Holder from engaging in any transaction, in addition to those
contemplated by this Agreement with the Corporation or any of its Affiliates in
which the Corporation or such Affiliate is not restricted hereby from engaging
with any other Person.
SECTION 7.14. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE HOLDERS OR THE CORPORATION SHALL BE BROUGHT
AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; THE
CORPORATION HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE CORPORATION FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE CORPORATION HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT THE CORPORATION HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION
OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE
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CORPORATION HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 7.15. REGISTRATION RIGHTS. The Holder shall
be entitled to the registration rights as set forth in the
Registration Rights Agreement with respect to the Warrant Shares.
SECTION 7.16. WAIVER OF JURY TRIAL. THE HOLDER AND THE CORPORATION
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE HOLDER OR THE
CORPORATION. THE CORPORATION ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE HOLDERS ENTERING INTO THIS AGREEMENT AND THE CREDIT
AGREEMENT.
SECTION 7.17. INDEMNIFICATION. The Corporation shall indemnify,
defend and hold the Holder harmless against all liability, loss or damage,
together with all reasonable costs and expenses related thereto (including legal
and accounting fees and expenses), arising from, relating to, or connected with
the untruth, inaccuracy or breach of any of the material representations,
warranties or covenants contained herein.
SECTION 7.18. FILINGS. The Corporation shall, at its own expense,
promptly execute and deliver, or cause to be executed and delivered, to the
Holder all applications, certificates, instruments and all other documents and
papers that the Holder may reasonably request in connection with the obtaining
of any consent, approval, qualification, or authorization of any Federal,
provincial, state or local government (or any agency or commission thereof)
necessary or appropriate in connection with, or for the effective exercise of,
any Warrants then held by the Holder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their authorized officers, all as of the date
and year first above written.
CORNELL CORRECTIONS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: CFO
ING (U.S.)CAPITAL LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title:
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EXHIBITS
Exhibit A: Form of Warrant Certificate
Exhibit B: Opinion(s) of Counsel
SCHEDULES
Schedule I: Existing Capitalization/
Existing Convertible Equity Rights/
Outstanding Securities and Existing
Registration Rights
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EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF SUCH ACT. IN ADDITION, THE SECURITIES REPRESENTED
HEREBY ARE SUBJECT TO THE LIMITATIONS ON TRANSFER SET FORTH IN THE WARRANT
ISSUANCE AGREEMENT DATED AS OF OCTOBER 14, 1999, BETWEEN THE CORPORATION AND ING
(U.S.) CAPITAL LLC. A COPY OF THE WARRANT ISSUANCE AGREEMENT IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF THE CORPORATION AND WILL BE FURNISHED
WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE CORPORATION.
CORNELL CORRECTIONS, INC.
No. __ Warrant to Purchase
[ ] Shares
of Common Stock
October 14, 1999
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that, for value received, ING (U.S.) CAPITAL LLC, a
Delaware corporation ("ING"), is entitled to purchase from CORNELL CORRECTIONS,
INC., a Delaware corporation (the "Corporation"), [
] shares of Common Stock, $.001 par value (the "Common Stock"), of
the Corporation at the per share Exercise Price (as defined in the Warrant
Issuance Agreement dated as of October 14, 1999 between the Corporation and the
Holder (the "Warrant Issuance Agreement")), at any time or from time to time
during the period commencing on the date hereof and ending at 5:00 P.M. on
Expiration Date (as defined in the Warrant Issuance Agreement); PROVIDED,
HOWEVER, that this Warrant may not be exercised for Common Stock by any
Regulated Holder to the extent that such exercise will result in a violation of
any Applicable Law.
This Warrant has been issued pursuant to the Warrant Issuance
Agreement and is subject to the terms and conditions, and entitled to the
benefits, thereof, including provisions (i) for adjusting the number of Warrant
Shares issuable upon the exercise hereof and the Exercise Price to be paid upon
such exercise and (ii) providing certain information and other rights. In
addition, this Warrant is subject to certain terms and conditions, and is
entitled to certain benefits, as set forth in the Registration Rights Agreement,
dated as of October 14, 1999, (the "Registration Rights Agreement"), among the
Corporation and the Investors named therein. A copy of each of the Warrant
Issuance Agreement, the Registration Rights Agreement is available for
inspection at the principal office of the Corporation and will be furnished
without charge to the Holder upon written request to the Corporation.
Capitalized terms used but not defined herein shall have the meaning given to
them in the Warrant Issuance Agreement.
SECTION 1. EXERCISE OF WARRANT. On any Business Day, prior to the
Expiration Date, the Holder may exercise this Warrant, in whole or in part, by
delivering to the Corporation this Warrant accompanied by a properly completed
Exercise Form in the form of Annex A and a check in an aggregate amount equal to
the product obtained by multiplying (a) the Exercise Price by (b) the number of
Warrant Shares being purchased.
SECTION 2. EXERCISE PRICE. The Exercise Price is subject
to adjustment from time to time as provided in the Warrant
Issuance Agreement.
SECTION 3. EXCHANGE OF WARRANT. On any Business Day prior to the
Expiration Date, the Holder may exchange this Warrant, in whole or in part, for
Warrant Shares by delivering to the Corporation this Warrant accompanied by a
properly completed Exchange Form in the form of Annex B. The number of shares of
Common Stock to be received by the Holder upon such exchange shall be determined
as provided in Section 4.2 of the Warrant Issuance Agreement.
SECTION 4. TRANSFER. Subject to the limitations set forth in the Warrant
Issuance Agreement, this Warrant may be transferred by the Holder by delivery to
the Corporation of this Warrant accompanied by a properly completed Assignment
Form in the form of Annex C.
SECTION 5. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant
is lost, stolen, mutilated or destroyed, the Corporation will issue a new
Warrant of like denomination and tenor upon compliance with the provisions set
forth in the Warrant Issuance Agreement.
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SECTION 6. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the
holder hereof to any voting rights or, except as otherwise provided in the
Warrant Issuance Agreement or the Registration Rights Agreement, other rights of
a stockholder of the Corporation, as such.
SECTION 7. SUCCESSORS. All of the provisions of this Warrant by or for the
benefit of the Corporation or the Holder shall bind and inure to the benefit of
their respective successors and assigns.
SECTION 8. HEADINGS. Section headings in this Warrant have been Inserted
for convenience of reference only and shall not affect the construction of, or
be taken into consideration in interpreting, this Warrant.
SECTION 9. GOVERNING LAW. This Warrant shall be construed in accordance
with and governed by the laws of the State of New York (without giving effect to
principles or conflicts or laws).
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed
by its duly authorized officers under its corporate seal, and this Warrant to be
dated as of the date first set forth above.
CORNELL CORRECTIONS, INC.
By:______________________________________________________
Name:
Title:
[CORPORATE SEAL]
ATTEST:
By___________________
___________________
Name :
Title:
-3-
ANNEX A
ELECTION TO EXERCISE FORM
(To Be Executed By The Holder of This Warrant
In Order to Exercise This Warrant)
The undersigned hereby irrevocably elects to exercise the right to
purchase ______________ shares of Common Stock of Cornell Corrections, Inc.
covered by this Warrant according to the conditions hereof and herewith makes
payment of the Exercise Price of such shares in full.
_________________________
Signature
_________________________
_________________________
Address
Dated: _________________________
ANNEX B
EXCHANGE FORM
(To Be Executed By The Holder of This Warrant
In Order to Assign This Warrant Certificate)
The undersigned hereby irrevocably elects to exchange this Warrant to
purchase ___________ shares of Common Stock of Cornell Corrections, Inc. covered
by this Warrant for ___________ Warrants to purchase the denominations of shares
of Common Stock set forth below to the persons named and hereby sells, assigns
and transfers unto such persons that portion of this Warrant represented by such
new Warrants and all rights evidenced thereby and does irrevocably constitute
and appoint ____________________, attorney, to exchange and transfer this
Warrant as aforesaid on the books of the Corporation.
NUMBER OF WARRANT SHARES
ASSIGNEE
____________
_____________________________
____________
_____________________________
_____________________________
Signature
_____________________________
_____________________________
Address
FOR USE BY THE CORPORATION ONLY:
This Warrant No. __ canceled (or transferred or exchanged) this
________ day of _____________, _____________ shares of Common
Stock issued therefor in the name of _________________, Warrant
No. ___ for __________ shares of Common Stock in the name of
________________________.
Dated: ____________________________
ANNEX C
ASSIGNMENT FORM
(To Be Executed By The Holder of This Warrant
In Order to Assign This Warrant Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________________ this Warrant and all rights evidenced thereby
and does irrevocably constitute and appoint __________________, attorney, to
transfer the said Warrant on the books of the Corporation.
_____________________________
Signature
_____________________________
_____________________________
Address
Dated: _________________________
EXHIBIT B
OPINION(S) OF COUNSEL
The matters set forth below shall be addressed in the opinion(s) of the
Corporation's counsel delivered in connection with the execution and delivery of
the Warrant Issuance Agreement, as of October 14, 1999 between Cornell
Corrections, Inc., a Delaware corporation, and Internationale Nederlanden (U.S.)
Capital LLC, a Delaware corporation (the "Agreement"). Capitalized terms used
but not defined herein shall have the meanings specified in the Agreement.
1. The Corporation (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite corporate power and authority to own its property and assets
and to carry on its business as now conducted and as proposed to be conducted,
and (c) has the corporate power and authority to execute, deliver and perform
its obligations under each of the Agreement, the Warrant and the Registration
Rights Agreement, each dated the date hereof, and the agreements contemplated
thereby to which it is or will be a party (collectively, the "Material
Agreements").
2. The execution, delivery and performance by the Corporation, of each of
the Material Agreements to which it is a party, the issuance of the Warrants and
the other transactions contemplated by the Material Agreements, (a) have been
duly authorized by all requisite corporate and, if required, stockholder action,
and (b) do not (i) violate or conflict with (A) any provision of law, any
statute, rule or regulation, or of the Organizational Documents, (B) any order
of any court or governmental entity or (C) any provision of any indenture,
agreement or other instrument to the Corporation is a party or by which its
properties are bound, (ii) conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under any such
indenture, agreement or other instrument (iii) to the best of our knowledge,
result in the creation or imposition of any lien upon or with respect to any
property or assets now owned or hereafter acquired by the Corporation.
3. The amendments to the Corporation's Organizational Documents and other
agreements and instruments contemplated by the Material Agreements have been
duly authorized, filed and obtained.
4. The Material Agreements to which the Corporation is a party have each
been duly authorized, executed and delivered by
the Corporation. Each such Material Agreement constitutes the legal, valid and
binding obligation of the Corporation, enforceable against the Corporation in
accordance with its terms.
5. As of the Closing Date, the authorized capital stock of Corporation
consists of __________ shares of common stock, $.001 par value (the "Common
Stock") of which _________ shares are issued and outstanding. All outstanding
shares of capital stock of the Corporation are fully paid and nonassessable.
6. The Common Stock when issued in accordance with the Warrant Agreement
will be duly and validly issued, fully paid and non-assessable Common Stock of
the Corporation.
-2-
EXHIBIT C
[FORM OF CERTIFICATE]
CERTIFICATE OF OFFICER
OF
CORNELL CORRECTIONS, INC.
Furnished pursuant to the Warrant Issuance Agreement, dated as of
October 14, 1999 (the "WARRANT AGREEMENT"), between CORNELL
CORRECTIONS, INC., a Delaware corporation (the "CORPORATION") and
ING (U.S.) CAPITAL LLC, a Delaware limited liability company
("ING").
I, the undersigned, the Chief Financial Officer of the Corporation, do
hereby certify that as of October 14, 1999 that the total number of warrants of
the Corporation (the "WARRANTS") held by ING is _________ and that such number
of Warrants represents ___% of the total outstanding Common Stock of the
Corporation as determined on a Fully Diluted Basis.
Terms for which meanings are provided in the Warrant Agreement are used
herein with such meanings.
IN WITNESS WHEREOF. the undersigned has hereunto set his
hand on behalf of the Corporation on _______________.
By ___________________________
Name:
Title:
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