EXHIBIT 10.4
STOCKHOLDERS AGREEMENT
BY AND AMONG
CERTAIN STOCKHOLDERS OF
CORNELL CORRECTIONS, INC.
OCTOBER 8, 1996
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of October 8, 1996, by and among(a)
Xxxxx X. Xxxxxxx (including his guardian, the executor of his estate or other
personal representative, "Cornell"), (b) Charterhouse Equity Partners II, L.P.
and Chef Nominees Limited (collectively, "Charterhouse Group"), and (c) Concord
Partners; Concord Partners II, L.P.; Concord Partners Japan Limited; Xxxxxx,
Read & Co., as Agent; Lexington Partners III, L.P. and Lexington Partners IV,
L.P. (collectively, "Xxxxxx Read Group"). Cornell, Charterhouse Group, and
Xxxxxx Read Group are also collectively referred to herein as the "Holders."
W I T N E S S E T H:
In consideration of the mutual covenants and agreements contained
herein and for other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree, effective as of the
Effective Date (as defined in Section 3 below), as follows:
Section 1. DEFINITIONS. The following shall have (unless otherwise
provided elsewhere in this Agreement) the following respective meanings (such
meanings being equally applicable to both the singular and plural form of the
terms defined).
"AGREEMENT" means this Stockholders Agreement, including all
amendments and modifications hereof, supplements hereto, and any exhibits or
schedules to any of the foregoing, and shall refer to this Stockholders
Agreement as the same may be in effect at the time such reference becomes
operative.
"COMMON STOCK" means the Common Stock, par value $.001 per share, of
the Company.
Section 2. CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS.
(a) The Company has previously furnished to the Holders copies of
the Restated Certificate of Incorporation dated September 30, 1996 of the
Company and the Amended and Restated Bylaws dated October 1, 1996 of the Company
(collectively, the "Charter Documents"). From and after the date hereof, each
Holder shall vote all shares of Common Stock beneficially held by him or it and
which he or it has the power to vote (including any shares of Common Stock
hereafter acquired or owned by such Holder), at any regular or special meeting
of stockholders of the Company and shall otherwise take all actions necessary to
ensure that the Charter Documents do not, at any time, conflict with the
provisions of this Agreement.
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(b) From and after the date hereof, each Holder shall vote all
shares of Common Stock beneficially held by him or it and which he or it has the
power to vote (including any shares of Common Stock hereafter acquired or owned
by such Holder), at any regular or special meeting of stockholders of the
Company called for the purpose of filling positions on the Board of Directors of
the Company and shall use its best efforts to otherwise take all actions
necessary to ensure that the following members are elected to the Board of
Directors of the Company: (i) one individual (who may be Cornell) designated by
Cornell (the "Cornell Nominee"), (ii) one individual designated by Charterhouse
Group (the "Charterhouse Nominee"), and (iii) one individual designated by
Xxxxxx Read Group (the "Xxxxxx Read Nominee").
(c) If, prior to his or her election to the Board of Directors of
the Company pursuant to Section 2(b) hereof, any Cornell Nominee, Charterhouse
Nominee or Xxxxxx Read Nominee shall be unable or unwilling to serve as a
director of the Company, the entity designating such nominee shall be entitled
to nominate a replacement who shall then be the Cornell Nominee, Charterhouse
Nominee or Xxxxxx Read Nominee, as the case may be, for the purposes of this
Section 2. If, following election to the Board of Directors of the Company
pursuant to Section 2(b) hereof, any Cornell Nominee, Charterhouse Nominee, or
Xxxxxx Read Nominee shall resign or be removed or be unable to serve for any
reason prior to the expiration of his or her term as a director of the Company,
then the person or entity designating such nominee may, at any time thereafter,
notify the other Holders in writing of a replacement, and the remaining Cornell
Nominee, Charterhouse Nominee and Xxxxxx Read Nominee, as applicable, and
Cornell, Charterhouse Group and Xxxxxx Read Group, shall use its best efforts to
take all actions necessary to ensure the election to the Board of Directors of
the Company of such replacement nominee to fill the unexpired term of the prior
nominee.
(d) Each Holder hereby agrees to use such Holder's best efforts to
call, or cause the appropriate officers and directors of the Company to call, a
special or annual meeting of stockholders of the Company and to vote all of the
shares of Common Stock owned or controlled by such Holder for the removal (with
or without cause) of any nominee designated and elected pursuant to Section 2(b)
hereof if the person or entity designating such nominee shall have given written
notice to each of the other Holders of its desire to have such nominee removed.
(e) Each Holder hereby agrees that, except as provided in Section
2(d) hereof, he or it shall not vote to remove any director who is a Cornell
Nominee, Charterhouse Nominee or Xxxxxx Read Nominee without Cause (as such term
is hereinafter defined). For the purposes of this Section 2(e) only, "Cause"
shall mean (i) the commission by a director of an act of fraud or embezzlement
against the Company or any of its subsidiaries or (ii) a conviction for a felony
(or a plea of NOLO CONTENDERE thereto) or guilty plea of such director with
respect to a felony.
(f) In order to effectuate the provisions of this Section 2, the
Holders hereby agree that when any action or vote is required to be taken by
such Holders pursuant to this Agreement, such Holders shall use their respective
best efforts to call, or cause the appropriate
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officers and directors of the Company to call, a special or annual meeting of
stockholders of the Company, as the case may be, to effectuate such stockholder
action.
Section 3. EFFECTIVE TIME. This Agreement shall become effective
only upon the closing date (the "Effective Date") of an initial public offering
of shares of Common Stock by the Company pursuant to a registration statement
that shall have become effective under the Securities Act of 1933, as amended.
If the Effective Date has not occurred prior to December 31, 1996, this
Agreement shall become null and void and be of no force or effect.
Section 4. TERMINATION.
(a) This Agreement will terminate upon the first to occur of (i)
four years from the Effective Date or (ii) the Holders collectively owning less
than 25% of the outstanding shares of Common Stock of the Company.
(b) This Agreement will terminate as to any Holder upon such Holder
owning less than 5% of the outstanding shares of Common Stock of the Company.
Section 5. SPECIFIC PERFORMANCE. Each of the Holders acknowledges
and agrees that in the event of any breach of this Agreement, the non-breaching
party or parties would be irreparably harmed and could not be made whole by
monetary damages. It is accordingly agreed that the Holders shall waive the
defense in any action for specific performance that a remedy at law would be
adequate and that the Holders, in addition to any other remedy to which they may
be entitled at law or in equity, shall be entitled to compel specific
performance of this Agreement.
Section 6. MISCELLANEOUS.
(a) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
any provisions hereof.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants, or undertakings with respect to the
subject matter hereof, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties hereto with respect to the subject matter hereof except to
the extent expressly set forth herein.
(c) NOTICES. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Agreement shall be sufficiently given or made if in
writing and (i) delivered in person with receipt acknowledged, (ii) sent by
registered or certified mail, return receipt requested, postage prepaid, (iii)
sent by overnight courier with guaranteed next day delivery or (iv) sent by
telex or telecopier to the party to whom directed at the following address:
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(i) If to Cornell, to him at:
Xxxxx X. Xxxxxxx
Cornell Corrections, Inc.
0000 Xxxxxxx
Xxxxx 000X
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
(ii) If to any Charterhouse Group entity, to it at:
Charterhouse Equity Partners II, L.P.
c/o Charter Group International, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
(iii) If to any Xxxxxx Read Group entity, to it at:
Xxxxxx, Read & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Fax: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, three (3) business days after the same
shall have been deposited in the United States mail, one business day after sent
by overnight courier or on the day telexed or telecopied.
(d) APPLICABLE LAW. The laws of the State of Delaware shall govern
the interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under applicable principles of
conflicts of laws.
(e) SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
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including any provision, in any other jurisdiction, it being intended that all
rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
(f) SUCCESSOR, ASSIGNS, TRANSFEREES. The provisions of this
Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, successors and permitted assigns.
(g) AMENDMENTS; WAIVERS. This Agreement may not be amended, modified
or supplemented and no waivers of or consent to departures from the provisions
hereof may be given unless consented to in writing by the Charterhouse Group,
Xxxxxx Read Group and Cornell.
(h) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement as of the date first above written.
XXXXX X. XXXXXXX
/S/ XXXXX X. XXXXXXX
CHARTERHOUSE EQUITY
PARTNERS II, L.P.
By: Chusa Equity Investors II, L.P.,
general partner
By: Charterhouse Equity II, Inc.,
general partner
By: /S/ XXXXXXX X. XXXXXXX III
Title:
CHEF NOMINEES LIMITED
By: Charterhouse Group International Inc.,
Attorney-in-fact
By: /S/ XXXXXXX X. XXXXXXX III
Title:
CONCORD PARTNERS
By: /S/ XXXXX X. XXXXXX
Title:
CONCORD PARTNERS II, L.P.
By: /S/ XXXXX X. XXXXXX
Title:
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CONCORD PARTNERS JAPAN LIMITED
By: /S/ XXXXX X. XXXXXX
Title:
XXXXXX, READ & CO., INC., as Agent
By: /S/ XXXXX X. XXXXXXX
Title:
LEXINGTON PARTNERS III, L.P.
By: /S/ XXXXX X. XXXXXXX
Title:
LEXINGTON PARTNERS IV, L.P.
By: /S/ XXXXX X. XXXXXXX
Title:
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