<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: June 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _____ to _____
Commission File Number: 1-13049
CCA PRISON REALTY TRUST
(Exact name of Registrant as specified in its declaration of trust)
Maryland 62-1689525
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2200 Abbott Martin Road, Suite 201, Nashville, Tennessee 37215
(Address and zip code of principal executive offices)
(615) 460-7452
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No x
--- ---
21,576,000
(Outstanding shares of the issuer's common shares, $0.01 par value per share,
as of August 15, 1997)
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<PAGE> 2
CCA PRISON REALTY TRUST
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
INDEX
<TABLE>
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Page
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statement. 2
Balance Sheet as of June 30, 1997 2
Notes to Balance Sheet 2-3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 4-9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk. 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 10
Item 2. Changes in Securities. 10
Item 3. Defaults upon Senior Securities. 10
Item 4. Submission of Matters to a Vote of Security Holders. 10
Item 5. Other Information. 10
Item 6. Exhibits and Reports on Form 8-K. 10
SIGNATURES
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS.
CCA PRISON REALTY TRUST
(A MARYLAND REAL ESTATE INVESTMENT TRUST)
BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Cash and cash equivalents $ 1,000
===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accrued expenses $1,250,000
Shareholders' equity:
Preferred shares, $.01 par value; 10,000,000 shares authorized;
none outstanding $ --
Common shares, $.01 par value; 90,000,000 shares authorized;
1,000 shares issued and outstanding 1,000
Additional paid in capital (1,250,000)
----------
($1,249,000)
----------
$ 1,000
==========
</TABLE>
The accompanying notes are an integral part of this balance sheet.
<PAGE> 4
CCA PRISON REALTY TRUST
(A MARYLAND REAL ESTATE INVESTMENT TRUST)
NOTES TO BALANCE SHEET
JUNE 30, 1997
1. ORGANIZATION AND OPERATIONS
CCA Prison Realty Trust (the "Company") was formed April 23, 1997 as a
Maryland real estate investment trust. The Company has had no operations
through June 30, 1997 but has issued 1,000 common shares $0.01 par value per
share of the Company (the "Common Shares") to a founding shareholder.
As operations of the Company have not commenced, there are no
statements of operations or cash flows for the period ended June 30, 1997, and,
accordingly, no such statements are presented. The Company has incurred
substantial expenses in the organizational period which will be paid in
conjunction with the formation transactions as described in note 4. The
estimated liability for organizational costs and the corresponding reduction
to the Company's capital account is $1,250,000; no effect on current year
operations is anticipated from these liabilities. The Balance Sheet has been
prepared by the Company in accordance with the accounting policies described in
its Registration Statement on Form S-11 and should be read in conjunction with
the notes thereto.
In the opinion of management, all adjustments (which include only
normally recurring adjustments) necessary to present fairly the financial
position at June 30, 1997 have been made.
2. FEDERAL INCOME TAXES
At the earliest possible date, the Company plans to qualify as a real
estate investment trust ("REIT") under the Internal Revenue Code of 1986, as
amended and, accordingly, will not be subject to federal income taxes on
amounts distributed to shareholders provided that it distributes at least 95%
of its real estate investment trust taxable income and meets certain other
requirements.
3. PREFERRED SHARES
No preferred shares $0.01 par value per share of the Company (the
"Preferred Shares"), are outstanding. Preferred Shares may be issued from time
to time without shareholder approval with terms and conditions established by
the Board of Trustees of the Company.
4. PRO FORMA RESULTS OF OPERATIONS
In its Registration Statement on Form S-11 (Commission File No.
333-25727) filed with the Commission, the Company included certain pro forma
results of operations which estimated the Company's financial position, as of
the year ended December 31, 1996 and the three months ended March 31, 1997, as
if the Company had completed the Offering and acquired the Facilities.
The Company estimates that after giving effect to the Offering and the
acquisition of the Initial Facilities and the Northeast Ohio Option Facility,
revenues would have been $41.2 million for the year ended December 31, 1996 and
$10.3 million for the three months ended March 31, 1997. Net income would have
been $28.5 million or $1.51 per share for the year ended December 31, 1996, and
$7.1 million or $0.38 per share for the three months ended March 31, 1997.
Depreciation, amortization and other non-cash expenses would have been $10.5
million for the year ended December 31, 1996 and $2.6 million for the three
months ended March 31, 1997, respectively.
5. SUBSEQUENT EVENTS
In July 1997, the Company raised net proceeds of approximately $417
million in its initial public offering (the "Offering") and consummated the
transactions described below (collectively, the "Formation Transactions"). In
the Offering the Company sold 21,275,000 of its Common Shares, (including
2,775,000 Common Shares sold upon the exercise in full of the underwriters'
over-allotment option).
On July 18, 1997, the Company acquired the following nine correctional
and detention facilities (the "Initial Facilities") from CCA and certain of its
subsidiaries for an aggregate purchase price of $308.1 million:
(i) Houston Processing Center, located in Houston, Texas;
(ii) Laredo Processing Center, located in Laredo, Texas;
(iii) Bridgeport Pre-Parole Transfer Facility, located in Bridgeport,
Texas;
(iv) Mineral Wells Pre-Parole Transfer Facility, located in Mineral
Wells, Texas;
(v) West Tennessee Detention Facility, located in Mason, Tennessee;
(vi) Leavenworth Detention Center, located in Leavenworth, Kansas;
(vii) Eloy Detention Center, located in Eloy, Arizona;
(viii) Central Arizona Detention Center, located in Florence, Arizona;
and
(ix) T. Don Hutto Correctional Center, located in Taylor, Texas.
Additionally, on July 28, 1997, the Company exercised its option to purchase the
Northeast Ohio Correctional Center, located in Youngstown, Ohio from CCA. The
Company acquired the Northeast Ohio Correctional Center for a purchase price of
$70.1 million, (the Northeast Ohio Correctional Center, along with the Limited
Facilities, are sometimes referred to collectively as the "Facilities"). The
Company purchased a 100% interest in the real property and all tangible personal
property associated with each of the Facilities from CCA. The real and personal
property associated with each of the Facilities was used by CCA in the ownership
and operation of correctional and detention facilities. The Company will
continue to use the property in the same manner by leasing each of the
Facilities back to CCA who will use the property in the operation of
correctional and detention facilities.
Simultaneously with the acquisition of each of the Facilities by the
Company, the Company entered into agreements with CCA to lease the Facilities
back to CCA pursuant to long-term, non-cancelable triple net leases which
require CCA to pay all operating expenses, taxes, insurance and other costs.
All of the leases provide for base rent with certain annual escalations and
have primary terms ranging from 10-12 years which may be extended at the fair
market rates for three additional five-year periods upon the mutual
agreement of the Company and CCA.
Further, the Company has remaining options at any time during the
three-year period following the acquisition of the Initial Facilities to
purchase and leaseback any or all of four indentified, facilities from CCA or
its subsidiaries for CCA's or such subsidiaries' cost of developing,
constructing and equipping such facilities, plus 5% of such costs, aggregating
approximately $149.5 million. In addition, the Company has an option to
acquire, at fair market value, and lease back to CCA, any correctional or
detention facility acquired or developed and owned by CCA in the future for a
period of three years following the date CCA first receives inmates at such
facility. The obligations of CCA under the Leases are cross-defaulted to each
of the other Leases with respect to payment defaults and certain other
defaults. Each Lease (and any future lease with CCA) may be terminated by the
Company, at its option, at any time after the first five years of the lease,
upon 18 months written notice to CCA. Finally, contemporaneously with the
closing of the Offering, the Company entered into a $150 million bank credit
facility (the "Bank Credit Facility") from a group of banks led by First Union
National Bank of Tennessee.
<PAGE> 5
The Company will be dependent on CCA for its initial revenues. Also,
due to the nature of the business and the contractual relationships with CCA,
including the operating leases, the Company's ability to be successful is
dependent on a number of factors, including key personnel, continuing
qualification as a REIT and continued availability of financial resources.
5. SUBSEQUENT EVENTS
In July 1997, the Company raised net proceeds of approximately $417
million in its initial public offering (the "Offering") and consummated the
transactions described below (collectively, the "Formation Transactions"). In
the Offering the Company sold 21,275,000 of its common shares, $0.01 par value
per share (including 2,775,000 shares sold upon the exercise in full of the
underwriters' over-allotment option).
On July 18, 1977, the Company acquired the following nine correctional
and detention facilities (the "Initial Facilities") from CCA and certain of its
subsidiaries for an aggregate purchase price of $308.1 million:
(i) Houston Processing Center located in Houston, Texas;
(ii) Laredo Processing Center located in Laredo, Texas;
(iii) Brideport Pre-Parole Transfer Facility, located in Bridgeport,
Texas;
(iv) Mineral Wells Pre-Parole Transfer Facility, located in Mineral
Wells, Texas;
(v) West Tennessee Detention Facility, located in Mason, Tennessee;
(vi) Leavenworth Detention Center, located in Leavenworth, Kansas;
(vii) Eloy Detention Center, located in Eloy, Arizona;
(viii) Central Arizona Detention Center, located in Florence, Arizona;
and
(ix) T. Don Hutto Correctional Center, located in Taylor, Texas.
Additionally, on July 28, 1997, the Company exercised its option to purchase
the Northeast Ohio Correctional Center, located in Youngstown, Ohio from CCA.
The Company acquired the Northeast Ohio Correctional Center from CCA for a
purchase price of $70.1 million. The Company purchased a 100% interest in the
real property and all tangible personal property associated with each of the
facilities from CCA. The real and personal property associated with each of the
Facilities was used by CCA in the ownership and operation of correctional and
detention facilities. The Company will continue to use the property in the same
manner by leasing each of the Facilities back to CCA who will use the property
in the operation of correctional and detention facilities. The source of funds
for the purchase price of the facilities from CCA was from proceeds of the
Company's sale of an aggregate of 21,275,000 common shares in its initial
public offering.
Simultaneously with the acquisition of each of the facilities by the
Company, the Company entered into agreements with CCA to lease the facilities
back to CCA pursuant to long-term, non-cancelable triple net leases which
require CCA to pay all operating expenses, taxes, insurance and other costs.
All of the leases provide for base rent with certain annual escalations and
have primary terms ranging from 10-12 years which may be extended at the fair
market rates for three additional five-year periods upon the mutual agreement
of the Company and CCA.
Further, the Company has remaining options at any time during the
three-year period following the acquisition of the facilities to purchase any
or all of four identified, remaining option facilities from CCA or its
subsidiaries for CCA's costs of developing, constructing and equipping such
facilities, plus 5% of such costs, aggregating approximately $149.5 million. In
addition, the Company has an option to acquire, at fair market value, and lease
back to CCA, any correctional or detention facility acquired or developed and
owned by CCA in the future for a period of three years following the Service
Commencement Date (as defined in the Company's Registration Statement on Form
S-11, Registration No. 333-25727) with respect to such facility.
<PAGE> 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
CCA Prison Realty Trust (the "Company") was formed as a Maryland real
estate investment trust on April 23, 1997. The Company had no operations for
the period ended June 30, 1997 See "-- Results of Operations." The Company is
a self-administered real estate investment trust ("REIT") formed to capitalize
on the opportunities created by the increased demand for private correctional
and detention facilities. The Company expects to qualify as a REIT for federal
income tax purposes commencing with its taxable year ending December 31, 1997.
The principal business strategy of the Company is to acquire
correctional and detention facilities that meet the Company's investment
criteria, from both private prison managers and government entities, to expand
its existing facilities, and to lease all such facilities under long-term leases
to qualified third-party operators, including affiliates of the sellers. The
Company intends to initially focus its investments on privately-managed
facilities that are owned and operated by Corrections Corporation of America, a
Tennessee corporation ("CCA"), or its subsidiaries. However, the Company will
also pursue other opportunities, including acquisitions and lease backs of, or
financings for, correctional facilities owned and operated by various government
entities and private operators other than CCA or its subsidiaries. Substantially
all of the Company's initial revenues are expected to be derived from: (i) rents
received under triple net leases of correctional and detention facilities; and
(ii) interest earned from the temporary investment of funds in short-term
investments.
The Company will incur operating and administrative expenses including,
principally, compensation expense for its executive officers and other
employees, office rental and related occupancy costs and various expenses
incurred in the process of acquiring additional properties. The Company will be
self-administered and managed by its executive officers and staff, and will not
engage a separate advisor or pay an advisory fee for administrative or
investment services, although the Company will engage legal, accounting, tax and
financial advisors from time to time. The primary non-cash expense of the
Company will be the depreciation of its correctional and detention facilities.
The Company also expects to leverage its portfolio of real estate
equity investments and will incur long and short-term indebtedness, and related
interest expense, from time to time.
<PAGE> 7
The Company intends to make distributions to its shareholders in
amounts not less than the amounts required to maintain REIT status under the
Internal Revenue Code of 1986, as amended (the "Code"), and, in general,
in amounts exceeding taxable income. The Company's ability to make
distributions will depend upon its Cash Available or Distribution (defined
generally as net income (loss) (computed in accordance with generally accepted
accounting principles) of the Company plus depreciation and amortization minus
capital expenditures and principal payments on indebtedness).
SUBSEQUENT EVENTS
In July 1997, the Company raised net proceeds of approximately
$417.7 million in its initial public offering (the "Offering") and used a
portion of such proceeds to consummate the transactions described below
(collectively, the "Formation Transactions"). In the Offering the Company sold
21,275,000 of its Common Shares, $0.01 par value per share (the "Common
Shares") (including 2,775,000 Common Shares sold upon the exercise in full of
the underwriters' over-allotment option).
On July 18, 1997, the Company acquired the following nine correctional
and detention facilities (the "Initial Facilities") from CCA and certain of its
subsidiaries for an aggregate purchase price of $308.1 million:
(i) Houston Processing Center located in Houston, Texas;
(ii) Laredo Processing Center located in Laredo, Texas;
(iii) Bridgeport Pre-Parole Transfer Facility, located in
Bridgeport, Texas;
(iv) Mineral Wells Pre-Parole Transfer Facility, located in Mineral
Wells, Texas;
(v) West Tennessee Detention Facility, located in Mason,
Tennessee;
(vi) Leavenworth Detention Center, located in Leavenworth, Kansas;
(vii) Eloy Detention Center, located in Eloy, Arizona;
(viii) Central Arizona Detention Center, located in Florence,
Arizona; and
(ix) T. Don Hutto Correctional Center, located in Taylor, Texas.
Additionally, on July 28, 1997, the Company exercised its option to purchase the
Northeast Ohio Correctional Center, located in Youngstown, Ohio from CCA. The
Company acquired the Northeast Ohio Correctional Center from CCA for a purchase
price of $70.1 million (the Northeast Ohio Correctional Center, along with the
Initial Facilities, are sometimes referred to collectively as, the
"Facilities"). The Company purchased a 100% interest in the real property and
all tangible personal property associated with each of the Facilities from CCA.
The real and personal property associated with each of the Facilities was used
by CCA in the ownership and operation of correctional and detention facilities.
The Company will continue to use the property in the same manner by leasing each
of the Facilities back to CCA who will use the property in the operation of
correctional and detention facilities.
Further, the Company has remaining options at any time during the
three-year period following the acquisition of the Initial Facilities to
purchase and leaseback any or all of four identified correctional and detention
facilities from CCA or its subsidiaries for CCA's or such subsidiaries' costs
of developing, constructing and equipping such facilities, plus 5% of such
costs, aggregating approximately $149.5 million (the "Option Facilities"). In
addition, the Company has an option to acquire, at fair market value, and lease
back to CCA, any correctional or detention facility acquired or developed and
owned by CCA in the future for a period of three years following the date CCA
first receives inmates at such facility. As a result of these transactions, the
Company and CCA will have several ongoing relationships, some of which could
give rise to possible conflicts of interest.
<PAGE> 8
Simultaneously with the acquisition of each of the Facilities by the
Company, the Company entered into agreements with CCA to lease the Facilities
back to CCA pursuant to long-term, non-cancelable triple net leases (the
"Leases"), which require CCA to pay all operating expenses, taxes, insurance and
other costs. All of the leases provide for base rent with certain annual
escalations and have primary terms ranging from 10-12 years which may be
extended at the fair market rates for three additional five-year periods upon
the mutual agreement of the Company and CCA. The obligations of CCA under the
Leases are cross-defaulted to each of the other Leases with respect to payment
defaults and certain other defaults. Each Lease (and any future lease with CCA)
may be terminated by the Company, at its option, at any time after the first
five years of the lease, upon 18 months written notice to CCA.
Finally, contemporaneously with the closing of the Offering, the
Company entered into a $150 million bank credit facility (the "Bank Credit
Facility") from a group of banks led by First Union National Bank of Tennessee.
RESULTS OF OPERATIONS
The Company had no operations for the period ending June 30, 1997. As
of June 30, 1997, the Company did incur $1.25 million of accrued expenses in
connection with the Offering. The Company's future results of operations will
depend upon the financial performance of the Facilities, the Company's ability
to acquire other correctional and detention facilities, and the terms of any
subsequent investments the Company may make.
PRO FORMA RESULTS OF OPERATIONS
In its Registration Statement on Form S-11 (Commission File No.
333-25727) filed with the Commission, the Company included certain pro forma
results of operations which estimated the Company's financial position, as of
the year ended December 31, 1996 and the three months ended March 31, 1997, as
if the Company had completed the Offering and acquired the Facilities.
The Company estimates that after giving effect to the Offering and the
acquisition of the Initial Facilities and the Northeast Ohio Option Facility,
revenues would have been $41.2 million for the year ended December 31, 1996 and
$10.3 million for the three months ended March 31, 1997. Net income would have
been $28.5 million or $1.51 per share for the year ended December 31, 1996, and
$7.1 million or $0.38 per share for the three months ended March 31, 1997.
Depreciation, amortization and other non-cash expenses would have been $10.5
million for the year ended December 31, 1996 and $2.6 million for the three
months ended March 31, 1997, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company anticipates that its initial working capital and cash from
operations, together with the Bank Credit Facility, will provide adequate
liquidity to conduct its operations, fund administrative and operating costs,
interest payments, and acquisitions and allow distributions to the Company's
shareholders in accordance with the Code's requirements for qualification as a
REIT and to avoid any corporate level federal income or excise tax.
<PAGE> 9
In order to qualify as a REIT for federal income tax purposes, the
Company will be required to make substantial distributions to its shareholders.
The following factors, among others, will affect the Company's ability to make
distributions and will influence the decisions of the Board of Trustees
regarding distributions: (i) scheduled increases in base rent under the Leases
with respect to the Facilities; and (ii) returns from short-term investments
pending application of the net proceeds of the Offering. Although the Company
will receive most of its rental payments on a monthly basis, it intends to make
distributions quarterly. Amounts accumulated for distribution will be invested
by the Company in short-term money market instruments.
All facilities owned by the Company will be leased under triple net
leases, which require the lessee to pay substantially all expenses associated
with the operation of such facilities.
As a result of these arrangements, the Company does not
believe it will be responsible for any major expenses in connection with the
Facilities during the terms of the respective Leases. The Company
anticipates entering into similar leases with respect to all additional
properties. After the terms of the respective leases expire, or in the event a
lessee is unable to meet its obligations, the Company anticipates that any
expenditures it might become responsible for in maintaining its facilities will
be funded by cash from operations and, in the case of major expenditures,
possibly by borrowings. To the extent that unanticipated expenditures or
significant borrowings are required, the Company's liquidity may be adversely
affected.
The Company may raise additional long-term capital by issuing, in
public or private transactions, equity or debt securities, but the availability
and terms of such issuance will depend upon the market and other conditions. The
Company anticipates that as a result of its initially low debt to total
capitalization and its intention to maintain a debt to total capitalization of
50% or less, it will be able to obtain financing for its long-term capital
needs. However, there can be no assurance that such additional financing or
capital will be available on terms acceptable to the Company. The Company may,
under certain circumstances, borrow additional amounts in connection with the
renovation or expansion of the Facilities, the acquisition of additional
properties, including the Option Facilities or, as necessary, to meet certain
distribution requirements imposed on REITs under the Internal Revenue Code.
Acquisitions will be made subject to the investment objectives and
policies to maximize both current income and long-term growth in income. The
Company's liquidity requirements with respect to future acquisitions may be
reduced to the extent the Company uses Common Shares as consideration for such
purchases.
<PAGE> 10
INFLATION
Management believes that inflation should not have a material adverse
effect on the operating expenses of the Company because such expenses are
relatively insignificant as a percentage of revenues. Because the Bank Credit
Facility provides for a variable interest rate, inflation could have a material
adverse effect on the Company's interest expense if interest rates increase
substantially during any year. Accordingly, when appropriate, based on the then
current interest rates, management may seek to replace the Bank Credit Facility
with a credit facility that provides for a fixed interest rate.
IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
The preceding section, "Management's Discussions and Analysis of
Financial Condition and Results of Operations," and other sections of this
Quarterly Report contain various "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which represents the Company's
expectations or beliefs concerning future events, including, without limitation,
statements containing the words, "believes," "anticipates," "expects" and words
of similar import; and also including, without limitation, the following:
statements regarding the Company's continuing ability to target and acquire high
quality correctional and detention facilities; the expected availability other
debt and equity financing to support the Company's future operating and capital
requirements; financial performance; the planned acquisition and/or financing of
correctional and detention facilities; the expected dividend distribution rate;
the intended limit on the Company's level of consolidated indebtedness; the
expected tax treatment of the Company's operations; and the Company's beliefs
about continued growth in the corrections and detention industry. Such
forward-looking statements relate to future events and the future financial
performance of the Company and the industry and involve known and unknown risks,
uncertainties and other important factors which could cause actual results,
performance or achievements of the Company or industry to differ materially from
the future results, performance or achievements expressed or implied by such
forward-looking statements.
<PAGE> 11
Readers should carefully consider the various factors identified in
the preceding section, "Management's Discussion and Analysis of Financial
Condition and Results of Operation," and elsewhere in this Quarterly Report that
could cause actual results to differ materially from the results predicted in
the forward-looking statements. Further, the Company specifically cautions
readers to consider the following important factors in conjunction with the
forward-looking statements: the possible decline in the Company's ability to
locate and acquire quality correctional and detention facilities and to
negotiate acceptable lease terms; the possibility that Company management lacks
the skill to manage the Company's planned process of acquisitions and
expansions; the potential conflicts of interest which may arise between the
Company and CCA; the Company's lack of an operating history; the Company's lack
of control over day-to-day operations and management over its facilities;
the possible adverse effect of changing economic conditions, including interest
rate movements and changes in the corrections and detention industry market
both locally and nationally; the effect of severe weather or natural disasters;
and the effect of competitive pressures. Because of the foregoing factors,
among others, the actual results achieved by the Company in the future may
differ materially from the expected results described in the forward-looking
statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not Applicable.
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not Applicable.
ITEM 2. CHANGES IN SECURITIES.
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
A. The following action was taken on May 9, 1997 by the written
consent of James W. Phillips, the sole shareholder of the
Company on such date, acting without a meeting:
The Amended and Restated Declaration of Trust of the Company, as
recommended by the Board of Trustees, was approved thereby amending the
Company's original Declaration of Trust in order to enable the Company to list
its common shares on the New York Stock Exchange.
B. The following action was taken on May 12, 1997 by the written
consent of James W. Phillips, the sole shareholder of the Company on such date,
acting without a meeting:
The CCA Prison Realty Trust 1997 Employee Share Incentive Plan and the
CCA Prison Realty Trust Non-Employee Trustees' Share Option Plan were approved
and adopted.
ITEM 5. OTHER INFORMATION.
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. EXHIBITS
2 Agreement of Sale and Purchase between CCA Prison Realty
Trust, a Maryland real estate investment trust (the "Company")
and Corrections Corporation of America, a Tennessee
corporation ("CCA") (previously filed as Exhibit 2 to the
Company's Registration Statement on Form S-11 (Commission
File No. 333-25727) Amendment No. 4 (Filed July 9, 1997) and
incorporated herein by reference).
3.1 Amended and Restated Declaration of Trust of the Company
(previously filed as
<PAGE> 13
Exhibit 3.1 to the Company's Registration Statement on Form
S-11 (Commission File No. 333-25727) Amendment No. 1 (Filed
June 16, 1997) and incorporated herein by reference).
3.2 Amended and Restated Bylaws of the Company (previously filed
as Exhibit 3.2 to the Company's Registration Statement on Form
S-11 (Commission File No. 333-25727) Amendment No. 1 (Filed
June 16, 1997) and incorporated herein by reference).
10.1 Option Agreement between the Company and CCA with respect to
the Northeast Ohio Correctional Center (previously filed as
Exhibit 10.1(a) to the Company's Registration Statement on
Form S-11 (Commission File No. 333-25727) Amendment No. 4
(Filed July 9, 1997) and incorporated herein by reference).
10.2 Option Agreement between the Company and CCA with respect to
the Torrance County Detention Facility (previously filed as
Exhibit 10.1(b) to the Company's Registration Statement on
Form S-11 (Commission File No. 333-25727) Amendment No. 4
(Filed July 9, 1997) and incorporated herein by reference).
10.3 Option Agreement between the Company and CCA with respect to
the Southern Colorado Correctional Facility (previously filed
as Exhibit 10.1(c) to the Company's Registration Statement on
Form S-11 (Commission File No. 333-25727) Amendment No. 4
(Filed July 9, 1997) and incorporated herein by reference).
10.4 Option Agreement between the Company and CCA with respect to
the North Fork Correctional Facility (previously filed as
Exhibit 10.1(d) to the Company's Registration Statement on
Form S-11 (Commission File No. 333-25727) Amendment No. 4
(Filed July 9, 1997) and incorporated herein by reference).
10.5 Option Agreement between the Company and CCA with respect to
the Whiteville Correctional Center (previously filed as
Exhibit 10.1(e) to the Company's Registration Statement on
Form S-11 (Commission File No. 333-25727) Amendment No. 4
(Filed July 9, 1997) and incorporated herein by reference).
10.6 Master Agreement to Lease between the Company and CCA.
10.7 Lease Agreement between the Company and CCA with respect to
the Houston Processing Center.
10.8 Lease Agreement between the Company and CCA with respect to
the Laredo Processing Center.
10.9 Lease Agreement between the Company and CCA with respect to
the Bridgeport Pre-Parole Transfer Facility.
10.10 Lease Agreement between the Company and CCA with respect to
the Mineral Wells Pre-Parole Transfer Facility.
<PAGE> 14
10.11 Lease Agreement between the Company and CCA with respect to
the West Tennessee Detention Facility.
10.12 Lease Agreement between the Company and CCA with respect to
the Leavenworth Detention Center.
10.13 Lease Agreement between the Company and CCA with respect to
the Eloy Detention Center.
10.14 Lease Agreement between the Company and CCA with respect to
the Central Arizona Detention Center.
10.15 Lease Agreement between the Company and CCA with respect to
the T. Don Hutto Correctional Center.
10.16 Right to Purchase Agreement between the Company and CCA
(previously filed as Exhibit 10.4 to the Company's
Registration Statement on Form S-11 (Commission File No.
333-25727) Amendment No. 4 (Filed July 9, 1997) and
incorporated herein by reference).
10.17 Trade Name Use Agreement between the Company and CCA.
10.18 Lease Agreement between the Company and CCA with respect to
the Northeast Ohio Correctional Facility (previously filed as
Exhibit 10.5 to the Company's Current Report on Form 8-K
(Filed August 4, 1997) and incorporated by reference herein).
10.19 Credit Agreement, by and among, the Company, various Lenders,
First Union National Bank of Tennessee, as administrative
agent, and Southtrust Bank, National Association, as
co-agent.
10.20 Security Agreement entered into by the Company in favor of
First Union National Bank of Tennessee.
10.21 Officer and Trustee Indemnification Agreement between the
Company and its trustees and officers.
10.22 Employment Agreement between J. Michael Quinlan and the
Company.
10.23 Employment Agreement between D. Robert Crants, III and the
Company,
10.24 Employment Agreement between Michael W. Devlin and the
Company.
10.25 The Company's 1997 Employee Share Incentive Option Plan.
10.26 The Company's Non-Employee Trustees' Share Option Plan, as
amended.
27 Financial Data Schedule. (for SEC use only)
<PAGE> 15
B. REPORTS ON FORM 8-K
The Company did not file any Current Reports on Form 8-K during the
quarter ended June 30, 1997. However, on August 4, 1997, the Company did file a
Current Report on Form 8-K pursuant to Item 2 of such form, with respect to the
purchase of 10 correctional and detention facilities from CCA. Certain financial
statements of the Company were incorporated into the Form 8-K by reference to
the Company's Prospectus filed with the Commission pursuant to Rule 424(b)(3) of
the Securities Act of 1933, as amended on July 15, 1997.
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CCA PRISON REALTY TRUST
/s/ Vida H. Carroll
--------------------------------------------
Vida H. Carroll
Chief Financial Officer
Date: August 25, 1997
<PAGE> 17
EXHIBIT INDEX
2 Agreement of Sale and Purchase between CCA Prison Realty
Trust, a Maryland real estate investment trust (the "Company")
and Corrections Corporation of America, a Tennessee
corporation ("CCA") (previously filed as Exhibit 2 to the
Company's Registration Statement on Form S-11 (Commission
File No. 333-25727) Amendment No. 4 (Filed July 9, 1997) and
incorporated herein by reference).
3.1 Amended and Restated Declaration of Trust of the Company
(previously filed as
<PAGE> 18
Exhibit 3.1 to the Company's Registration Statement on Form
S-11 (Commission File No. 333-25727) Amendment No. 1 (Filed
June 16, 1997) and incorporated herein by reference).
3.2 Amended and Restated Bylaws of the Company (previously filed
as Exhibit 3.2 to the Company's Registration Statement on Form
S-11 (Commission File No. 333-25727) Amendment No. 1 (Filed
June 16, 1997) and incorporated herein by reference).
10.1 Option Agreement between the Company and CCA with respect to
the Northeast Ohio Correctional Center (previously filed as
Exhibit 10.1(a) to the Company's Registration Statement on
Form S-11 (Commission File No. 333-25727) Amendment No. 4
(Filed July 9, 1997) and incorporated herein by reference).
10.2 Option Agreement between the Company and CCA with respect to
the Torrance County Detention Facility (previously filed as
Exhibit 10.1(b) to the Company's Registration Statement on
Form S-11 (Commission File No. 333-25727) Amendment No. 4
(Filed July 9, 1997) and incorporated herein by reference).
10.3 Option Agreement between the Company and CCA with respect to
the Southern Colorado Correctional Facility (previously filed
as Exhibit 10.1(c) to the Company's Registration Statement on
Form S-11 (Commission File No. 333-25727) Amendment No. 4
(Filed July 9, 1997) and incorporated herein by reference).
10.4 Option Agreement between the Company and CCA with respect to
the North Fork Correctional Facility (previously filed as
Exhibit 10.1(d) to the Company's Registration Statement on
Form S-11 (Commission File No. 333-25727) Amendment No. 4
(Filed July 9, 1997) and incorporated herein by reference).
10.5 Option Agreement between the Company and CCA with respect to
the Whiteville Correctional Center (previously filed as
Exhibit 10.1(e) to the Company's Registration Statement on
Form S-11 (Commission File No. 333-25727) Amendment No. 4
(Filed July 9, 1997) and incorporated herein by reference).
10.6 Master Agreement to Lease between the Company and CCA.
10.7 Lease Agreement between the Company and CCA with respect to
the Houston Processing Center.
10.8 Lease Agreement between the Company and CCA with respect to
the Laredo Processing Center.
10.9 Lease Agreement between the Company and CCA with respect to
the Bridgeport Pre-Parole Transfer Facility.
10.10 Lease Agreement between the Company and CCA with respect to
the Mineral Wells Pre-Parole Transfer Facility.
<PAGE> 19
10.11 Lease Agreement between the Company and CCA with respect to
the West Tennessee Detention Facility.
10.12 Lease Agreement between the Company and CCA with respect to
the Leavenworth Detention Center.
10.13 Lease Agreement between the Company and CCA with respect to
the Eloy Detention Center.
10.14 Lease Agreement between the Company and CCA with respect to
the Central Arizona Detention Center.
10.15 Lease Agreement between the Company and CCA with respect to
the T. Don Hutto Correctional Center.
10.16 Right to Purchase Agreement between the Company and CCA
(previously filed as Exhibit 10.4 to the Company's
Registration Statement on Form S-11 (Commission File No.
333-25727) Amendment No. 4 (Filed July 9, 1997) and
incorporated herein by reference).
10.17 Trade Name Use Agreement between the Company and CCA.
10.18 Lease Agreement between the Company and CCA with respect to
the Northeast Ohio Correctional Facility (previously filed as
Exhibit 10.5 to the Company's Current Report on Form 8-K
(Filed August 4, 1997) and incorporated by reference herein).
10.19 Credit Agreement, by and among, the Company, various Lenders,
First Union National Bank of Tennessee, as administrative
agent, and Southtrust Bank, National Association, as
co-agent.
10.20 Security Agreement by the Company in favor of First Union
National Bank of Tennessee.
10.21 Officer and Trustee Indemnification Agreement between the
Company and its trustees and officers.
10.22 Employment Agreement between J. Michael Quinlan and the
Company.
10.23 Employment Agreement between D. Robert Crants, III and the
Company,
10.24 Employment Agreement between Michael W. Devlin and the
Company.
10.25 The Company's 1997 Employee Share Incentive Option Plan.
10.26 The Company's Non-Employee Trustees' Share Option Plan, as
amended.
27 Financial Data Schedule. (for SEC use only)
<PAGE> 1
EXHIBIT 10.6
MASTER AGREEMENT TO LEASE
BETWEEN
CCA PRISON REALTY TRUST, LANDLORD
AND
CORRECTIONS CORPORATION OF AMERICA, TENANT
DATED: JULY 18, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
ARTICLE I SEPARATE LEASE AGREEMENTS; PREMISES AND TERM....................................1
1.01 Separate Lease Agreements.......................................................1
1.02 Leased Property.................................................................2
1.03 Term............................................................................2
1.04 Holding Over....................................................................3
1.05 Surrender.......................................................................3
ARTICLE II RENT............................................................................3
2.01 Base Rent.......................................................................3
2.02 Additional Rent.................................................................3
2.02.01 Other Additional Rent...........................................................4
2.03 Place(s) of Payment of Rent; Direct Payment of Other Additional Rent............4
2.04 Net Lease.......................................................................4
2.05 No Termination, Abatement, Etc..................................................4
ARTICLE III IMPOSITIONS AND UTILITIES.......................................................5
3.01 Payment of Impositions..........................................................5
3.02 Definition of Impositions.......................................................6
3.03 Utilities.......................................................................6
3.04 Escrow of Impositions...........................................................7
3.05 Discontinuance of Utilities.....................................................7
ARTICLE IV INSURANCE.......................................................................8
4.01 Property Insurance..............................................................8
4.02 Liability Insurance.............................................................8
4.03 Insurance Requirements..........................................................9
4.04 Replacement Cost...............................................................10
4.05 Blanket Policy.................................................................10
4.06 No Separate Insurance..........................................................10
4.07 Waiver of Subrogation..........................................................10
4.08 Mortgages......................................................................11
ARTICLE V INDEMNITY; HAZARDOUS SUBSTANCES................................................11
5.01 Tenant's Indemnification.......................................................11
5.02 Hazardous Substances or Materials..............................................11
5.03 Limitation of Landlord's Liability.............................................12
ARTICLE VI USE AND ACCEPTANCE OF PREMISES.................................................13
6.01 Use of Leased Property.........................................................13
6.02 Acceptance of Leased Property..................................................13
6.03 Conditions of Use and Occupancy................................................13
6.04 Financial Statements and Other Information.....................................14
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C> <C>
ARTICLE VII REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS............................14
7.01 Maintenance....................................................................14
7.02 Compliance with Laws...........................................................14
7.03 Required Alterations...........................................................15
7.04 Mechanics' Liens...............................................................15
7.05 Replacements of Fixtures.......................................................15
ARTICLE VIII ALTERATIONS AND SIGNS; TENANT'S PROPERTY; CAPITAL
ADDITIONS TO THE LEASED PROPERTY...............................................16
8.01 Tenant's Right to Construct....................................................16
8.02 Scope of Right.................................................................16
8.03 Cooperation of Landlord........................................................17
8.04 Commencement of Construction...................................................17
8.05 Rights in Tenant Improvements..................................................18
8.06 Personal Property..............................................................18
8.07 Requirements for Personal Property.............................................18
8.08 Signs..........................................................................20
8.09 Financings of Capital Additions to a Leased Property...........................20
ARTICLE IX DEFAULTS AND REMEDIES..........................................................22
9.01 Events of Default..............................................................22
9.02 Remedies.......................................................................24
9.03 Right of Set-Off...............................................................26
9.04 Performance of Tenant's Covenants..............................................26
9.05 Late Charge....................................................................27
9.06 Litigation; Attorneys' Fees....................................................27
9.07 Remedies Cumulative............................................................27
9.08 Escrows and Application of Payments............................................27
9.09 Power of Attorney..............................................................27
ARTICLE X DAMAGE AND DESTRUCTION.........................................................28
10.01 General........................................................................28
10.02 Landlord's Inspection..........................................................29
10.03 Landlord's Costs...............................................................29
10.04 Rent Abatement.................................................................29
10.05 Substantial Damage During Lease Term...........................................30
10.06 Damage Near End of Term........................................................30
ARTICLE XI CONDEMNATION...................................................................30
11.01 Total Taking...................................................................30
11.02 Partial Taking.................................................................31
11.03 Restoration....................................................................31
11.04 Landlord's Inspection..........................................................31
11.05 Award Distribution.............................................................32
11.06 Temporary Taking...............................................................32
ARTICLE XII TENANT'S RIGHT OF FIRST REFUSAL................................................32
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C> <C>
12.01 Rights of First Refusal........................................................32
12.02 Restriction on Exercise of Purchase Refusal Right..............................33
ARTICLE XIII ASSIGNMENT AND SUBLETTING; ATTORNMENT..........................................34
13.01 Prohibition Against Subletting and Assignment..................................34
13.02 Changes of Control.............................................................34
13.03 Operating/Service Agreements...................................................35
13.03.01 Permitted Agreements...........................................................35
13.03.02 Terms of Agreements............................................................35
13.03.03 Copies.........................................................................35
13.03.04 Assignment of Rights in Agreements.............................................35
13.03.05 Licenses, Etc..................................................................35
13.04 Assignment.....................................................................35
13.05 REIT Limitations...............................................................36
13.06 Attornment.....................................................................36
ARTICLE XIV ARBITRATION....................................................................36
14.01 Controversies..................................................................36
14.02 Appointment of Arbitrators.....................................................37
14.03 Arbitration Procedure..........................................................37
14.04 Expenses.......................................................................37
14.05 Enforcement of the Arbitration Award...........................................37
ARTICLE XV QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT, ESTOPPEL CERTIFICATES..............38
15.01 Quiet Enjoyment................................................................38
15.02 Landlord Mortgages; Subordination..............................................38
15.03 Attornment; Non-Disturbance....................................................38
15.04 Estoppel Certificates..........................................................39
ARTICLE XVI MISCELLANEOUS..................................................................39
16.01 Notices........................................................................39
16.02 Advertisement of Leased Property...............................................40
16.03 Landlord's Access..............................................................40
16.04 Entire Agreement...............................................................40
16.05 Severability...................................................................41
16.06 Captions and Headings..........................................................41
16.07 Governing Law..................................................................41
16.08 Memorandum of Lease............................................................41
16.09 Waiver.........................................................................41
16.10 Binding Effect.................................................................41
16.11 Authority......................................................................41
16.12 Transfer of Permits, Etc.......................................................41
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C> <C>
16.13 Modification...................................................................42
16.14 Incorporation by Reference.....................................................42
16.15 No Merger......................................................................42
16.16 Laches.........................................................................42
16.17 Waiver of Jury Trial...........................................................42
16.18 Permitted Contests.............................................................43
16.19 Construction of Lease..........................................................43
16.20 Counterparts...................................................................43
16.21 Relationship of Landlord and Tenant............................................43
16.22 Landlord's Status as a REIT....................................................44
16.23 Sale of Real Estate Assets.....................................................44
ARTICLE XVII NONDISCLOSURE AND RELATED MATTERS..............................................44
17.01 Covenant Not to Disclose.......................................................44
17.02 Non-Interference Covenant......................................................44
17.03 Business Materials and Property Disclosure.....................................45
17.04 Breach by Landlord.............................................................45
</TABLE>
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<PAGE> 6
MASTER AGREEMENT TO LEASE
This Master Agreement to Lease ("Agreement") dated as of the 18th day
of July, 1997 by and between CCA PRISON REALTY TRUST, a Maryland real estate
investment trust ("Landlord") and CORRECTIONS CORPORATION OF AMERICA, a
Tennessee corporation ("Tenant").
RECITALS
WHEREAS, Tenant (or one or more of Tenant's affiliates) has
concurrently conveyed to Landlord various properties upon which Tenant engages
in the business of the development and management of correctional and detention
facilities, which properties are listed on Schedule A attached hereto (the "Real
Estate Conveyance"), and Landlord and Tenant desire to provide for the lease by
Landlord back to the Tenant of such properties; and
WHEREAS, Landlord may from time to time lease additional properties
that Landlord may acquire to Tenant; and
WHEREAS, Landlord and Tenant desire that each of the properties listed
on Schedule A and each additional property that Landlord may lease to Tenant
shall be the subject of a separate and individual lease agreement describing
said property, the rent and various other terms of said lease (each such lease
agreement referred to individually as a "Lease," and the property that is the
subject of an individual Lease being referred to as "Leased Property"); and
WHEREAS, Landlord and Tenant desire to set forth in this Agreement
certain terms and conditions applicable to all Leases of all Leased Properties,
except as any individual Lease with respect to a particular Leased Property may
otherwise provide;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein and in each Lease, Landlord and
Tenant agree as follows:
ARTICLE I
SEPARATE LEASE AGREEMENTS; PREMISES AND TERM
1.01 Separate Lease Agreements. Landlord and Tenant are
concurrently entering into a separate Lease for each of the Leased Properties
referred to in Schedule A hereto, and may in the future enter into one or more
additional separate Leases for one or more additional Leased Properties. Except
as specifically set forth in a separate Lease, or any amendment, supplement,
schedule or exhibit thereto, all of the provisions of this Agreement shall be
deemed to be incorporated into and made a part of each such separate Lease made
between the Landlord as landlord (or Lessor) and the Tenant as tenant (or
Lessee) during the term of such separate Lease.
<PAGE> 7
1.02 Leased Property. Except as set forth in an individual Lease
(including any schedule or exhibit thereto), the property that is the subject of
each Lease and that shall be considered as leased by the Landlord to the Tenant
thereunder shall consist of:
(a) The land described in the Lease, together with all rights,
titles, appurtenant interests, covenants, licenses, privileges and
benefits thereto belonging, and any easements, rights-of-way, rights of
ingress or egress or other interests in, on, or to any land, highway,
street, road or avenue, open or proposed, in, on, across, in front of,
abutting or adjoining such real property including, without limitation,
any strips and gores adjacent to or lying between such real property
and any adjacent real property (the "Land");
(b) All buildings, improvements, structures and Fixtures now
located or to be located or to be constructed on the Land, including,
without limitation, landscaping, parking lots and structures, roads,
drainage and all above ground and underground utility structures,
equipment systems and other so-called "infrastructure" improvements
(the "Improvements");
(c) All equipment, machinery, fixtures, and other items of
real and/or personal property, including all components thereof,
located in, on or used in connection with, and permanently affixed to
or incorporated into, the Improvements, including, without limitation,
all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and
theft protection equipment, and similar systems, all of which, to the
greatest extent permitted by law, are hereby deemed to constitute real
estate, together with all replacements, modifications, alterations and
additions thereto (collectively the "Fixtures");
(d) All furniture, equipment, inventory and other personal
property identified on Schedule B attached hereto and incorporated
herein by reference (the "Personal Property"). For purposes hereof, (i)
Personal Property shall include all items of property which Tenant is
obligated to install, place, use, maintain, repair and/or replace
pursuant to the provisions of Sections 8.06 and 8.07 hereof however,
such Personal Property is and shall remain the property of Tenant until
the expiration or termination of this Lease, and (ii) Personal Property
shall not include certain proprietary property of Tenant as set forth
on Schedule C.
The Land, Improvements, Fixtures and Personal Property are hereinafter referred
to as the "Leased Property."
SUBJECT, HOWEVER, to the easements, liens, encumbrances, restrictions,
agreements, and other title matters listed or specifically referred to in any
individual Lease ("Permitted Exceptions").
1.03 Term. The term of each Lease shall be as set forth in the
individual Lease for a particular Leased Property.
-2-
<PAGE> 8
1.04 Holding Over. Should Tenant, without the express consent of
Landlord, continue to hold and occupy the Leased Property after the expiration
of the Term, such holding over beyond the Term and the acceptance or collection
of Rent by the Landlord shall operate and be construed as creating a tenancy
from month-to-month and not for any other term whatsoever. During any such
holdover period Tenant shall pay to Landlord for each month (or portion thereof)
Tenant remains in the Leased Property one hundred fifty percent (150%) of the
Base Rent in effect on the expiration date. Said month-to-month tenancy may be
terminated by Landlord by giving Tenant ten (10) days written notice, and at any
time thereafter Landlord may re-enter and take possession of the Leased
Property.
1.05 Surrender. Except as a result of (i) Tenant Improvements and
Capital Additions (as such terms are defined in Section 8.01 hereof); (ii)
normal and reasonable wear and tear (subject to the obligation of Tenant to
maintain the Leased Property in good order and repair during the Term); and
(iii) casualty, taking or other damage and destruction not required to be
repaired by Tenant, Tenant shall surrender and deliver up the Leased Property,
including all Personal Property and replacements thereof required to be provided
by Tenant pursuant to the terms of Sections 8.06 and 8.07 hereof, at the
expiration or termination of the Term broom clean, free of all Tenant's personal
property (but not the Personal Property), and in as good order and condition as
of the Commencement Date.
ARTICLE II
RENT
2.01 Base Rent. Unless otherwise provided in an individual Lease,
Tenant shall pay Landlord annual base rent for each Leased Property that is the
subject of a Lease without notice, demand, set-off or counterclaim in advance,
in lawful money of the United States of America in the amount specified therein
(the "Base Rent") for the Term in consecutive monthly installments payable in
advance on the Commencement Date of each Lease and thereafter on the first day
of each month during the Term, in accordance with the Base Rent Schedule set
forth in or attached to each individual Lease.
2.02 Additional Rent. Beginning on the first day of the month
following the first anniversary date of each Lease, the Tenant shall pay
Landlord an amount (the "Additional Rent") each year equal to a percentage of
the prior year Total Rent (for the purposes hereof, Total Rent is Base Rent plus
Additional Rent) under such Lease, such percentage being the greater of (i) four
percent (4%) or (ii) the percentage which is twenty-five percent (25%) of the
percentage increase in gross management revenues realized by Tenant from its
operations at the applicable Leased Property for such prior year exclusive of
any such increase as is attributable to an expansion in the size or number of
beds in such Leased Property. The Additional Rent shall be payable monthly, in
advance, along with Base Rent, and otherwise in the manner as set forth in
Section 2.01 above. Tenant shall provide to Landlord, not later than thirty (30)
days following each anniversary date of each Lease, Tenant's statement,
certified by Tenant's chief financial officer, setting forth such percentage
increase
-3-
<PAGE> 9
in gross management revenues realized by Tenant for the applicable Leased
Facility for the prior year.
2.02.01 Other Additional Rent. In addition to Base Rent and Additional
Rent, Tenant shall pay all other amounts, liabilities, obligations and
Impositions (as hereinafter defined ) which Tenant assumes or agrees to pay
under this Agreement or any Lease and any fine, penalty, interest, charge and
cost which may be added for nonpayment or late payment of such items
(collectively the "Other Additional Rent").
2.03 Place(s) of Payment of Rent; Direct Payment of Other
Additional Rent. The Base Rent, Additional Rent and Other Additional Rent are
hereinafter referred to as "Rent." Landlord shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Agreement, in
any Lease or by statute or otherwise in the case of nonpayment of the Rent.
Tenant shall make all payments of Base Rent and Additional Rent at Landlord's
principal place of business or as Landlord may otherwise from time to time
direct in writing, and all payments of Other Additional Rent directly to the
person or persons to whom such amount is owing at the time and times when such
payments are due, and shall give to Landlord such evidence of such direct
payments as Landlord shall reasonably request.
2.04 Net Lease. Each Lease shall be deemed and construed to be an
"absolute net lease" or "triple net lease," and Tenant shall pay all Rent,
Impositions, and other charges and expenses in connection with each Leased
Property throughout the Term, without abatement, deduction or set-off.
2.05 No Termination, Abatement, Etc. Except as otherwise
specifically provided in this Agreement or a particular Lease, Tenant shall
remain bound by this Agreement or such Lease in accordance with its terms.
Except as otherwise specifically provided in the Agreement or a particular
Lease, Tenant shall not, without the prior written consent of Landlord, modify,
surrender or terminate the Agreement or such Lease, nor seek nor be entitled to
any abatement, deduction, deferment or reduction of Rent, or set-off against the
Rent. Except as specifically provided in this Agreement or a particular Lease,
the obligations of Landlord and Tenant shall not be affected by reason of (i)
the lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any part thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title; (ii) any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Agreement or a particular Lease or any other agreement between Landlord and
Tenant, or to which Landlord and Tenant are parties; (iii) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceeding affecting Landlord or any assignee or transferee
of Landlord; or (iv) any other cause, whether similar or dissimilar to any of
the foregoing, other than a discharge of Tenant from any such obligations as a
matter of law. Except as otherwise specifically provided in this Agreement or a
particular Lease, and to the maximum extent permitted by law, Tenant hereby
specifically waives all rights, including but not limited to any rights under
any statute relating to rights of tenants in any state in which any Leased
Property is located, arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it
-4-
<PAGE> 10
by law (a) to modify, surrender or terminate any Lease or quit or surrender the
Leased Property or any portion thereof; or (b) entitling Tenant to any
abatement, reduction, suspension or deferment of the Rent or other sums payable
by Tenant hereunder. The obligations of Landlord and Tenant hereunder shall be
separate and agreements and the Rent and all other sums shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Agreement or a particular Lease or by
termination of this Agreement or a particular Lease other than by reason of an
Event of Default.
ARTICLE III
IMPOSITIONS AND UTILITIES
3.01 Payment of Impositions. Subject to the adjustments set forth
herein, Tenant shall pay, as Other Additional Rent, all Impositions (as
hereinafter defined) that may be levied or become a lien on the Leased Property
or any part thereof at any time (whether prior to or during the Term), without
regard to prior ownership of said Leased Property, before the same becomes
delinquent. Tenant shall furnish to Landlord on an annual basis copies of
official receipts or other satisfactory proof evidencing such payments. Tenant's
obligation to pay such Impositions shall be deemed absolutely fixed upon the
date such Impositions become a lien upon the Leased Property or any part
thereof. Tenant, at its expense, shall prepare and file all tax returns and
reports in respect of any Imposition as may be required by governmental
authorities, provided, Landlord shall be responsible for the preparation and
filing of any such tax returns or reports in respect of any real or personal
property owned by Landlord. Tenant shall be entitled to any refund due from any
taxing authority if no Event of Default (as hereinafter defined) shall have
occurred hereunder and be continuing. Landlord shall be entitled to any refund
from any taxing authority if an Event of Default has occurred and is continuing.
Any refunds retained by Landlord due to an Event of Default shall be applied as
provided in Section 9.08. Landlord and Tenant shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made with
respect to the Leased Property as may be necessary to prepare any required
returns and reports. In the event governmental authorities classify any property
covered by this Lease as personal property, Landlord and Tenant shall file all
personal property tax returns in such jurisdictions where it may legally so file
with respect to their respective owned personal property. Landlord, to the
extent it possesses the same, and Tenant, to the extent it possess the same,
will provide the other party, upon request, with cost and depreciation records
necessary for filing returns for any property so classified as personal
property. Where Landlord is legally required to file personal property tax
returns, Tenant will be provided with copies of assessment notices indicating a
value in excess of the reported value in sufficient time for Tenant to file a
protest. Tenant may, upon notice to Landlord, at Tenant's option and at Tenant's
sole cost and expense, protest, appeal, or institute such other proceedings as
Tenant may deem appropriate to effect a reduction of real estate or personal
property assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action. Tenant shall
provide Landlord copies of all materials filed or presented in connection with
any such proceeding. Tenant shall promptly reimburse Landlord for all personal
property taxes paid by Landlord upon receipt of billings accompanied by copies
of a bill therefor and payments thereof which identify the
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personal property with respect to which such payments are made. Impositions
imposed in respect to the tax-fiscal period during which the Term commences and
terminates shall be adjusted and prorated between Landlord and Tenant on a per
diem basis, with Tenant being obligated to pay its pro rata share from and
including the Commencement Date to and including the expiration or termination
date of the Term, whether or not such Imposition is imposed before or after such
commencement or termination, and Tenant's obligation to pay its prorated share
thereof shall survive such termination. Tenant shall also pay to Landlord a sum
equal to the amount which Landlord may be caused to pay of any privilege tax,
sales tax, gross receipts tax, rent tax, occupancy tax or like tax (excluding
any tax based on net income), hereinafter levied, assessed, or imposed by any
federal, state, county or municipal governmental authority, or any subdivision
thereof, upon or measured by rent or other consideration required to be paid by
Tenant under this Agreement.
3.02 Definition of Impositions. "Impositions" means, collectively,
(i) taxes (including without limitation, all real estate and personal property
ad valorem (whether assessed as part of the real estate or separately assessed
as unsecured personal property, sales and use, business or occupation, single
business, gross receipts, transaction, privilege, rent or similar taxes, but not
including income or franchise or excise taxes payable with respect to Landlord's
receipt of Rent); (ii) assessments (including without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed with in
the Term); (iii) ground rents, water, sewer or other rents and charges, excises,
tax levies, and fees (including without limitation, license, permit, inspection,
authorization and similar fees); (iv) to the extent they may become a lien on
the Leased Property all taxes imposed on Tenant's operations of the Leased
Property including without limitation, employee withholding taxes, income taxes
and intangible taxes; and (v) all other governmental charges, in each case
whether general or special, ordinary or extraordinary, or foreseen or unforseen,
of every character in respect of the Leased Property or any part thereof and/or
the Rent (including all interest and penalties thereon due to any failure in
payment by Tenant), which at any time prior to, during or in respect of the Term
hereof may be assessed or imposed on or in respect of or be a lien upon (a)
Landlord or Landlord's interest in the Leased Property or any part thereof; (b)
the Leased Property or any part thereof or any rent therefrom or any estate,
right, title or interest therein; or (c) any occupancy, operation, use or
possession of, or sales from, or activity conducted on, or in connection with
the Leased Property or the leasing or use of the Leased Property or any part
thereof. Tenant shall not, however, be required to pay (i) any tax based on net
income (whether denominated as a franchise or capital stock or other tax)
imposed on Landlord; or (ii) except as provided in Section 13.01, any tax
imposed with respect to the sale, exchange or other disposition by Landlord of
any Leased Property or the proceeds thereof; provided, however, that if any tax,
assessment, tax levy or charge which Tenant is obligated to pay pursuant to the
first sentence of this definition and which is in effect at any time during the
Term hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge set forth in clause (i) or (ii) immediately above is levied, assessed or
imposed expressly in lieu thereof Tenant shall then pay such tax, levy, or
charge set forth in said clause (i) or (ii).
3.03 Utilities. Tenant shall contract for, in its own name, and
will pay, as Other Additional Rent all taxes, assessments, charges/deposits, and
bills for utilities, including without limitation
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charges for water, gas, oil, sanitary and storm sewer, electricity, telephone
service, trash collection, and all other utilities which may be charged against
the occupant of the Improvements during the Term. Tenant shall at all times
maintain that amount of heat necessary to ensure against the freezing of water
lines. Tenant hereby agrees to indemnify and hold Landlord harmless from and
against any liability or damages to the utility systems and the Leased Property
that may result from Tenant's failure to maintain sufficient heat in the
Improvements.
3.04 Escrow of Impositions. In the event Tenant persistently fails
to timely pay Impositions with respect to any Leased Facility, then, upon thirty
(30) days written notice from Landlord to Tenant, Tenant shall thereafter
deposit with Landlord on the first day of each month during the remaining Term
hereof and any extended Term, a sum equal to one-twelfth (1/12th) of the
Impositions assessed against such Leased Property which sums shall be used by
Landlord toward payment of such Impositions. If, at the end of any applicable
tax year, any such funds held by Landlord are insufficient to make full payment
of taxes or other Impositions for which such funds are held, Tenant, on demand,
shall pay to Landlord any additional funds necessary to pay and discharge the
obligations of Tenant pursuant to the provisions of this section. If, however,
at the end of any applicable tax year, such funds held by Landlord are in excess
of the total payment required to satisfy taxes or other Impositions for which
such funds are held, Landlord shall apply such excess amounts to Tenant's tax
and Imposition escrow fund for the next tax year. If any such excess exists
following the expiration or earlier termination of any Lease, and subject to
Section 9.08 below, Landlord shall promptly refund such excess amounts to
Tenant. The receipt by Landlord of the payment of such Impositions by and from
Tenant shall only be as an accommodation to Tenant and the taxing authorities,
and shall not be construed as rent or income to Landlord, Landlord serving, if
at all, only as a conduit for delivery purposes. All such deposits by Tenant
shall be held in an interest-bearing account with one or more national banks
having total assets of not less than $1,000,000,000, with all interest thereon
accruing in favor of Tenant. In lieu of making escrow deposits as aforesaid,
Tenant may elect to provide Landlord with a letter of credit, or a payment bond,
in the face amount of one year's Impositions on the subject Leased Property,
issued by a national bank or reputable bonding or surety company, in all
respects reasonably acceptable to Landlord. Said letter of credit or payment
bond shall be drawable or callable, as the case may be, upon Tenant's failure to
timely pay any such Impositions, for the sole purpose of providing the funds
necessary to pay such Impositions, and shall otherwise be in form and substance
reasonably satisfactory to Landlord.
For purposes hereof, "persistently fails to timely pay Impositions"
shall mean failure to timely pay any Imposition with respect to any Leased
Premises for any two (2) Lease Years in any five (5) Lease Year Period,
notwithstanding Tenant's subsequent payment of such Impositions.
3.05 Discontinuance of Utilities. Landlord will not be liable for
damages to person or property or for injury to, or interruption of, business for
any discontinuance of utilities nor will such discontinuance in any way be
construed as an eviction of Tenant or cause an abatement of Rent or operate to
release Tenant from any of Tenant's obligations under this Lease.
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ARTICLE IV
INSURANCE
4.01 Property Insurance. Tenant shall, at Tenant's expense, keep
the Improvements, Fixtures, and other components of the Leased Property insured
against the following risks:
(a) Loss or damage by fire, vandalism and malicious mischief,
sprinkler leakage and all other physical loss perils commonly covered
by "All Risk" insurance in an amount not less than one hundred percent
(100%) of the then full replacement cost thereof (as hereinafter
defined). Such policy shall include an agreed amount endorsement if
available at a reasonable cost. Such policy shall also include
endorsements for contingent liability for operation of building laws,
demolition costs, and increased cost of construction.
(b) Loss or damage by explosion of steam boilers, pressure
vessels, or similar apparatus, now or hereafter installed on the Leased
Property, in commercially reasonable amounts acceptable to Landlord.
(c) Loss of rent under a rental value or business interruption
insurance policy covering risk of loss during the first six (6) months
of reconstruction necessitated by the occurrence of any hazards
described in Sections 4.01(a) or 4.01(b), above, and which causes an
abatement of Rent as provided in Article X hereof, in an amount
sufficient to prevent Landlord or Tenant from becoming a co-insurer,
containing endorsements for extended period of indemnity and premium
adjustment, and written with an agreed amount clause, if the insurance
provided for in this clause (c) is available.
(d) If the Land is located in whole or in part within a
designated flood plain area, loss or damage caused by flood in
commercially reasonable amounts acceptable to Landlord.
(e) Loss or damage commonly covered by blanket crime insurance
including employee dishonesty, loss of money orders or paper currency,
depositor's forgery, and loss of property accepted by Tenant for
safekeeping, in commercially reasonable amounts acceptable to Landlord.
(f) In connection with any repairs or rebuilding by Tenant
under Article X hereof, Tenant shall maintain (or cause its contractor
to maintain) appropriate builder's risk insurance covering any loss or
casualty to the subject Improvements during the course of such repairs
or rebuilding.
4.02 Liability Insurance. Tenant shall, at Tenant's expense,
maintain liability insurance against the following:
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(a) Claims for personal injury or property damage commonly
covered by comprehensive general liability insurance with endorsements
for blanket, contractual, personal injury, owner's protective
liability, real property, fire damage, legal liability, broad form
property damage, and extended bodily injury, with commercially
reasonable amounts for bodily injury and property damage acceptable to
Landlord, but with a combined single limit of not less than Five
Million Dollars ($5,000,000.00) per occurrence and Ten Million Dollars
($10,000,000.00) in the aggregate. At Landlord's request, such
$5,000,000.00 and $10,000,000.00 minimum requirements shall be
increased by up to four percent (4%) per year.
(b) Claims commonly covered by worker's compensation insurance
for all persons employed by Tenant on the Leased Property. Such
worker's compensation insurance shall be in accordance with the
requirements of all applicable local, state, and federal law.
4.03 Insurance Requirements. The following provisions shall apply
to all insurance coverages required hereunder:
(a) The carriers of all policies shall have a Best's Rating of
"A-" or better and a Best's Financial Category of XII or larger and
shall be authorized to do insurance business in the state in which the
Leased Property is located.
(b) Tenant shall be the "named insured" and Landlord and any
mortgagee of Landlord shall be an "additional named insured" on each
policy.
(c) Tenant shall deliver to Landlord certificates or policies
showing the required coverages and endorsements. The policies of
insurance shall provide that the policy may not be canceled or not
renewed, and no material change or reduction in coverage may be made,
without at least thirty (30) days' prior written notice to Landlord.
(d) The policies shall contain a severability of interest
and/or cross-liability endorsement, provide that the acts or omissions
of Tenant will not invalidate the Landlord's coverage, and provide that
Landlord shall not be responsible for payment of premiums.
(e) All loss adjustment shall require the written consent of
Landlord and Tenant, as their interests may appear.
(f) At least ten (10) days prior to the expiration of each
policy, Tenant shall deliver to Landlord a certificate showing renewal
of such policy and payment of the annual premium therefor.
Landlord shall have the right to review the insurance coverages
required hereunder with Tenant from time to time, to obtain the input of third
party professional insurance advisors (at Landlord's expense) with respect to
such insurance coverages, and to consult with Tenant in Tenant's
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annual review and renewal of such insurance coverages. All insurance coverages
hereunder shall be in such form, substance and amounts as are customary or
standard in Tenant's industry.
4.04 Replacement Cost. The term "full replacement cost" means the
actual replacement cost thereof from time to time including increased cost of
construction, with no reductions or deductions. Tenant shall, not later than
thirty (30) days after the anniversary of each policy of insurance, of the Term,
increase the amount of the replacement cost endorsement for the Improvements. If
Tenant makes any Permitted Alterations (as hereinafter defined) to the Leased
Property, Landlord may have such full replacement cost redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement cost was last determined.
4.05 Blanket Policy. Tenant may carry the insurance required by
this Article under a blanket policy of insurance, provided that the coverage
afforded Tenant will not be reduced or diminished or otherwise be different from
that which would exist under a separate policy meeting all of the requirements
of this Agreement.
4.06 No Separate Insurance. Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing insurance
by securing an additional policy or additional policies, unless all parties
having an insurable interest in the subject matter of the insurance, including
Landlord and any mortgagees, are included therein as additional named insureds
or loss payees, the loss is payable under said insurance in the same manner as
losses are payable under this Agreement, and such additional insurance is not
prohibited by the existing policies of insurance. Tenant shall immediately
notify Landlord of the taking out of such separate insurance or the increasing
of any of the amounts of the existing insurance by securing an additional policy
or additional policies. The term "mortgages" as used in this Agreement includes
Deeds of Trust and the term "mortgagees" includes trustees and beneficiaries
under a Deed of Trust.
4.07 Waiver of Subrogation. Each party hereto hereby waives any and
every claim which arises or may arise in its favor and against the other party
hereto during the Term or any extension or renewal thereof, for any and all loss
of, or damage to, any of its property located within or upon, or constituting a
part of, the Leased Property, which loss or damage is covered by valid and
collectible insurance policies, to the extent that such loss or damage is
recoverable under such policies. Said mutual waiver shall be in addition to, and
not in limitation or derogation of, any other waiver or release contained in
this Lease with respect to any loss or damage to property of the parties hereto.
Inasmuch as the said waivers will preclude the assignment of any aforesaid claim
by way of subrogation (or otherwise) to an insurance company (or any other
person), each party hereto agrees immediately to give each insurance company
which has issued to it policies of insurance, written notice of the terms of
said mutual waivers, and to have such insurance policies properly endorsed,
if necessary, to prevent the invalidation of said insurance coverage by reason
of said waivers, so long as such endorsement is available at a reasonable cost.
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4.08 Mortgages. The following provisions shall apply if Landlord
now or hereafter places a mortgage on the Leased Property or any part thereof:
(i) Tenant shall obtain a standard form of mortgage clause insuring the interest
of the mortgagee; (ii) Tenant shall deliver evidence of insurance to such
mortgagee; (iii) loss adjustment shall require the consent of the mortgagee; and
(iv) Tenant shall obtain such other coverages and provide such other information
and documents as may be reasonably required by the mortgagee.
ARTICLE V
INDEMNITY; HAZARDOUS SUBSTANCES
5.01 Tenant's Indemnification. Subject to Section 4.07, Tenant
hereby agrees to indemnify and hold harmless Landlord, its agents, and employees
from and against any and all demands, claims, causes of action, fines,
penalties, damages (including consequential damages), losses, liabilities
(including strict liability), judgments, and expenses (including, without
limitation, attorneys' fees, court costs, and the costs set forth in Section
9.06) incurred in connection with or arising from: (i) the use, condition,
operation or occupancy of each Leased Property; (ii) any activity, work, or
thing done, or permitted or suffered by Tenant in or about the Leased Property;
(iii) any acts, omissions, or negligence of Tenant or any person claiming under
Tenant, or the contractors, agents, employees, invitees, or visitors of Tenant
or any such person; (iv) any claim of any person incarcerated in the Leased
Premises, including claims alleging breach or violation of such person's civil
or legal rights; (v) any breach, violation, or nonperformance by Tenant or any
person claiming under Tenant or the employees, agents, contractors, invitees, or
visitors of Tenant or of any such person, of any term, covenant, or provision of
this Agreement or any Lease or any law, ordinance, or governmental requirement
of any kind; (vi) any injury or damage to the person, property or business of
Tenant, its employees, agents, contractors, invitees, visitors, or any other
person entering upon the Leased Property under the express or implied invitation
of Tenant; and (vii) and any accident, injury to or death of persons or loss of
damage to any item of property occurring at the Leased Property. If any action
or proceeding is brought against Landlord, its employees, or agents by reason of
any such claim, Tenant, upon notice from Landlord, will defend the claim at
Tenant's expense with counsel reasonably satisfactory to Landlord. In the event
Landlord reasonably determines that its interests and the interests of Tenant in
any such action or proceeding are not substantially the same and that Tenant's
counsel cannot adequately represent the interests of Landlord therein, Landlord
shall have the right to hire separate counsel in any such action or proceeding
and the reasonable costs thereof shall be paid for by Tenant.
5.02 Hazardous Substances or Materials. Tenant shall not, either
with or without negligence, injure, overload, deface, damage or otherwise harm
any Leased Property or any part or component thereof; commit any nuisance;
permit the emission of any hazardous agents or substances; allow the release or
other escape of any biologically or chemically active or other hazardous
substances or materials so as to impregnate, impair or in any manner affect,
even temporarily, any element or part of any Leased Property, or allow the
storage or use of such substances or materials in any manner not sanctioned by
law or by the highest standards prevailing
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in the industry for the storage and use of such substances or materials; nor
shall Tenant bring onto any Leased Property any such materials or substances;
permit the occurrence of objectionable noise or odors; or make, allow or suffer
any waste whatsoever to any Leased Property. Landlord may inspect the Leased
Property from time to time, and Tenant will cooperate with such inspections.
Without limitation, "hazardous substances" for the purpose of this Section 5.02
shall include any substances regulated by any local, state or federal law
relating to environmental conditions and industrial hygiene, including, without
limitation, the Resource Conservation and Recovery Act of 1976 ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), the Hazardous Materials Transportation Act, the Federal Water
Pollution Control Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, and all similar federal,
state and local environmental statutes, ordinances and the regulations, orders,
or decrees now or hereafter promulgated thereunder. Notwithstanding the
foregoing, Tenant anticipates using, storing and disposing of certain hazardous
substances in connection with operation of correctional or detention facilities
which are not in violation of the foregoing laws. Such substances include, but
are not limited to the following: medical wastes, diesel fuel, maintenance and
janitorial supplies, and waste from reprographic activities. Upon request by
Landlord, Tenant shall submit to Landlord annual reports regarding Tenant's use,
storage, and disposal of any of the foregoing materials, said reports to include
information regarding continued hazardous materials inspections, personal
interviews, and federal, state and local agency listings. In addition, Tenant
shall execute affidavits, representations and the like from time to time at
Landlord's request concerning Tenant's best knowledge and belief regarding the
presence or absence of hazardous materials on the Leased Property. Other than
for circumstances involving Landlord's gross negligence or intentional
misconduct, Tenant shall indemnify and hold harmless Landlord from and against
all liabilities (including punitive damages), costs and expenses (including
reasonable attorneys' fees) imposed upon or asserted against the Landlord or the
Leased Property on account of, among other things, any applicable federal, state
or local law, ordinance, regulation, order, permit, decree or similar items
relating to hazardous substances, human health or the environment (collectively,
"Environmental Laws") (irrespective of whether there has occurred any violation
of any Environmental Law ), in respect of the Leased Property, including (a)
liability for response costs and for costs of removal and remedial action
incurred by the United States Government, any state or local governmental unit
to any other person or entity, or damages from injury to or destruction or loss
of natural resources, including the reasonable costs of assessing such injury,
destruction or loss, incurred pursuant to any Environmental Law, (b) liability
for costs and expenses of abatement, investigation, removal, remediation,
correction or clean-up, fines, damages, response costs or penalties which arise
from the provisions of any Environmental Law, (c) liability for personal injury
or property damage arising under any statutory or common-law tort theory,
including damages assessed for the maintenance of a public or private nuisance
or for carrying on of a dangerous activity or (d) by reason of a breach of an
environmental representation or warranty by Tenant.
5.03 Limitation of Landlord's Liability. Landlord, its agents and
employees, will not be liable for any loss, injury, death, or damage (including
consequential damages) to persons, property, or Tenant's business occasioned by
theft, act of God, public enemy, injunction, riot, strike,
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insurrection, war, court order, requisition, order of governmental body or
authority, fire, explosion, falling objects, steam, water, rain or snow, leak or
flow of water (including water from the elevator system), rain or snow from any
Leased Property or into any Leased Property or from the roof, street, subsurface
or from any other place, or by dampness or from the breakage, leakage,
obstruction, or other defects of the pipes, sprinklers, wires, appliances,
plumbing, air conditioning, or lighting fixtures of the Leased Property, or from
construction, repair, or alteration of the Leased Property or from any acts or
omissions of any other occupant or visitor of the Leased Property, or from the
presence or release of any hazardous substance or material on or from the Leased
Property or from any other cause beyond Landlord's control.
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES
6.01 Use of Leased Property. Tenant shall use and occupy each
Leased Property exclusively as a correctional or detention facility or other
purpose for which the Leased Property is being used at the Commencement Date of
the Term, and for no other purpose without the prior written consent of the
Landlord. Tenant shall obtain and maintain all approvals, licenses, and consents
needed to use and operate each Leased Property for such purposes. Tenant shall
promptly deliver to Landlord complete copies of surveys, examinations,
certification and licensure inspections, compliance certificates, and other
similar reports issued to Tenant by any governmental agency.
6.02 Acceptance of Leased Property. Except as otherwise
specifically provided in this Agreement or in any individual Lease, Tenant
acknowledges that (i) Tenant and its agents have had an opportunity to inspect
the Leased Property; (ii) Tenant has found the Leased Property fit for Tenant's
use; (iii) delivery of the Leased Property to Tenant is in an "as-is" condition;
(iv) Landlord is not obligated to make any improvements or repairs to the Leased
Property; and (v) the roof, walls, foundation, heating, ventilating, air
conditioning, telephone, sewer, electrical, mechanical, utility, plumbing, and
other portions of the Leased Property are in good working order. Tenant waives
any claim or action against Landlord with respect to the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR
USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
QUALITY OR THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.03 Conditions of Use and Occupancy. Tenant agrees that during the
Term it shall use and keep the Leased Property in a careful, safe and proper
manner; not commit or suffer waste thereon; not use or occupy the Leased
Property for any unlawful purposes; not use or occupy the Leased Property or
permit the same to be used or occupied, for any purpose or business deemed extra
hazardous on account of fire or otherwise; keep the Leased Property in such
repair and condition as may be required by the local board of health, or other
city, state or federal authorities, free of all cost
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to Landlord; not permit any acts to be done which will cause the cancellation,
invalidation, or suspension of any insurance policy; and permit Landlord and its
agents to enter upon the Leased Property at all reasonable times after notice to
Tenant to examine the condition thereof.
6.04 Financial Statements and Other Information. Within ten (10)
days following Tenant's filing of quarterly and annual reports with the
Securities and Exchange Commission, Tenant shall deliver to Landlord copies of
such reports. Tenant shall provide Landlord at the same time Tenant provides
copies of its quarterly and annual reports as aforesaid (or more often as may be
reasonably requested by Landlord in writing), the following additional financial
information for each calendar quarter hereafter, with respect to each Leased
Property: gross revenues, average occupancy rates and total cash flow (i.e.,
operating income plus depreciation and amortization plus Base Rent plus
Additional Rent hereunder). Tenant shall also deliver to Landlord such
additional financial information as Landlord may reasonably request, provided
the same is of a type normally maintained by Tenant or can be obtained without
undue cost or burden on Tenant's personnel and does not constitute information
which Tenant reasonably determines to be proprietary or confidential.
Additionally, upon Landlord's request, Tenant shall provide Landlord with copies
of Tenant's annual capital expenditure budgets for each Leased Property and any
reports generated by Tenant regarding maintenance and repairs of the Leased
Property.
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS
7.01 Maintenance. Tenant shall maintain each Leased Property in
good order, repair and appearance, and repair each Leased Property, including
without limitation, all interior and exterior, structural and nonstructural
repairs and replacements to the roof, foundations, exterior walls, building
systems, HVAC systems, parking areas, sidewalks, water, sewer and gas
connections, pipes, and mains. Tenant shall pay as Other Additional Rent the
full cost of maintenance, repairs, and replacements. Tenant shall maintain all
drives, sidewalks, parking areas, and lawns on or about the Leased Property in a
clean and orderly condition, free of accumulations of dirt, rubbish, snow and
ice. Tenant shall permit Landlord to inspect the Leased Property at all
reasonable times, and shall implement all reasonable suggestions of the Landlord
as to the maintenance and replacement of the Leased Property.
7.02 Compliance with Laws. Tenant shall comply with all laws,
ordinances, orders, rules, regulations, and other governmental requirements
relating to the use, condition, or occupancy of each Leased Property, whether
now or hereafter enacted and in force including without limitation, (i)
licensure requirements for operation as a correctional or detention facility,
(ii) requirements of any board of casualty insurance underwriters or insurance
service office for any other similar body having jurisdiction over the Leased
Property, and (iii) all zoning and building codes and Environmental Laws. At
Landlord's request, from time to time, Tenant shall deliver to Landlord copies
of certificates or permits evidencing compliance with such laws, including
without limitation, copies of the correctional or detention facility licenses,
certificates of occupancy and building
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permits. Tenant shall provide Landlord with copies of any notice from any
governmental authority alleging any non-compliance by Tenant or any Leased
Facility with any of the foregoing requirements and such evidence as Landlord
may reasonably require of Tenant's remediation thereof. Tenant hereby agrees to
defend, indemnify and hold Landlord harmless from and against any loss,
liability (including strict liability), claim, damage (including consequential
damages), cost and expense (including attorneys' fees) resulting from any
failure by Tenant to comply with any laws, ordinances, rules, regulations, and
other governmental requirements.
7.03 Required Alterations. Tenant shall, at Tenant's sole cost and
expense, make any additions, changes, improvements or alterations to each Leased
Property, including structural alterations, which may be required by any
governmental authorities, including those required to continue licensure
requirements as a correctional or detention facility, whether such changes are
required by Tenant's use, changes in the law, ordinances, or governmental
regulations, defects existing as of the date of this Lease, or any other cause
whatsoever. Tenant shall provide prior written notice to Landlord of any changes
to each Leased Property pursuant to this Section 7.03 which involve changes to
the structural integrity of such Leased Property or materially affect the
operational capabilities or rated capacity of the Leased Facility. All such
additions, changes, improvements or alterations shall be deemed to be a Tenant
Improvement and shall comply with all laws requiring such alterations and with
the provisions of Section 8.01.
7.04 Mechanics' Liens. Tenant shall have no authority to permit or
create a lien against Landlord's interest in the Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in the Leased property against liens. Tenant hereby agrees
to defend, indemnify, and hold Landlord harmless from and against any mechanics'
liens against the Leased Property by reason of work, labor services or materials
supplied or claimed to have been supplied on or to the Leased Property. Tenant
shall immediately remove, bond-off, or otherwise obtain the release of any
mechanics' lien filed against the Leased Property. Tenant shall pay all expenses
in connection therewith, including without limitation, damages, interest, court
costs and reasonable attorneys' fees.
7.05 Replacements of Fixtures. Tenant shall not remove Fixtures
from any Leased Property except to replace the Fixtures by other similar items
of equal quality and value. Items being replaced by Tenant may be removed and
shall become the property of Tenant and items replacing the same shall be and
remain the property of the Landlord. Tenant shall execute, upon written request
from Landlord, any and all documents necessary to evidence Landlord's ownership
of the Fixtures and replacements therefor. Tenant may finance replacements for
the Fixtures by equipment lease or by a security agreement and financing
statement; provided, however, that for any item of Fixtures or Personal Property
having a cost greater than or equal to Twenty Thousand Dollars ($20,000.00),
Tenant may not finance replacements by security agreement or equipment lease
unless (i) Landlord has consented to the terms and conditions of the equipment
lease or security agreement; (ii) the equipment lessor or lender has entered
into a nondisturbance agreement with the Landlord upon terms and conditions
acceptable to Landlord, including without limitation, the following: (a)
Landlord shall have the right (but not the obligation) to assume such security
agreement or
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equipment lease upon the occurrence of an Event of Default by Tenant under any
Lease; (b) the equipment lessor or lender shall notify Landlord of any default
by Tenant under the equipment lease or security agreement and give Landlord a
reasonable opportunity to cure such default; and (c) Landlord shall have the
right to assign its rights under the equipment lease, security agreement, or
nondisturbance agreement; and (iii) Tenant shall, within thirty (30) days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred in reviewing and approving the equipment lease, security
agreement, and nondisturbance agreement, including without limitation,
reasonable attorneys' fees and costs.
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTY
8.01 Tenant's Right to Construct. During the Term of this
Agreement, so long as no Event of Default shall have occurred and be continuing
as to the Leased Property that is the subject of such improvements, Tenant may
make Capital Additions (as defined herein), or other alterations, additions,
changes and/or improvements to any Leased Property as deemed necessary or useful
to operate the Leased Property as a correction or detention facility (the
"Primary Intended Use") (individually, a "Tenant Improvement," or collectively,
"Tenant Improvements") with the prior written consent of the Landlord, which
will not be unreasonably withheld or delayed. "Capital Additions" shall mean the
construction of one or more new buildings or one or more additional structures
annexed to any portion of any of the Improvements on a particular Leased
Property, which are constructed on any parcel of land or portion of the Land of
a particular Leased Property during the Term of any individual Lease, including
the construction of a new floor, or the repair, replacement, restoration,
remodeling or rebuilding of the Improvements or any portion thereof on any
Leased Property which are not normal, ordinary or recurring to maintain the
Leased Property. Except as otherwise agreed to by Landlord in writing, any such
Tenant Improvement shall be made at Tenant's sole expense and shall become the
property of Landlord upon termination of this Lease. Unless made on an emergency
basis to prevent injury to person or property, Tenant will submit plans to
Landlord for Landlord's prior approval, such approval not to be unreasonably
withheld or delayed, for any Tenant Improvement which is not a Capital Addition
and which has a cost of more than $500,000 or a cost which, when aggregated with
the costs of all such Tenant Improvements for any individual Leased Facility in
the same Lease Year, would cause the total costs of all such Tenant Improvements
to exceed $1,000,000. Such $500,000 and $1,000,000 amounts shall be increased by
four percent (4%) per annum, cumulatively for each subsequent Lease Year.
Additionally, in connection with any Tenant Improvement, including any Capital
Addition, Tenant shall provide Landlord with copies of any plans and
specification therefor, Tenant's budget relating thereto, any required
government permits or approvals, any construction contracts or agreements
relating thereto, and any other information relating to such Tenant Improvement
as Landlord shall reasonably request.
8.02 Scope of Right. Subject to Section 8.01 herein and Section
7.03 concerning required alterations, at Tenant's cost and expense, Tenant shall
have the right to:
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(a) seek any governmental approvals, including building
permits, licenses, conditional use permits and any certificates of need
that Tenant requires to construct any Tenant Improvement;
(b) erect upon the Leased Property such Tenant Improvements as
Tenant deems desirable;
(c) make additions, alterations, changes and improvements in
any Tenant Improvement so erected; and
(d) engage in any other lawful activities that Tenant
determines are necessary or desirable for the development of the Leased
Property in accordance with its Primary Intended Use;
provided, however, Tenant shall not make any Tenant Improvement which would, in
Landlord's reasonable judgment, impair the value or Primary Intended Use of any
Leased Property without Landlord's prior written consent and provided, further
that Tenant shall not be permitted to create a mortgage, lien or any other
encumbrance on any individual Leased Property without Landlord's prior written
consent.
8.03 Cooperation of Landlord. Landlord shall cooperate with Tenant
and take such actions, including the execution and delivery to Tenant of any
applications or other documents, reasonably requested by Tenant in order to
obtain any governmental approvals sought by Tenant to construct any Tenant
Improvement within ten (10) business days following the later of (a) the date
Landlord receives Tenant's request, or (b) the date of delivery of any such
application or document to Landlord, so long as the taking of such action,
including the execution of said applications or documents, shall be without cost
to Landlord (or if there is a cost to Landlord, such cost shall be reimbursed by
Tenant), and will not cause Landlord to be in violation of any law, ordinance or
regulation.
8.04 Commencement of Construction. Tenant agrees that:
(a) Tenant shall diligently seek all governmental approvals
relating to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant
Improvement, Tenant shall diligently prosecute any such construction to
completion in accordance with applicable insurance requirements and the
laws, rules and regulations of all governmental bodies or agencies
having jurisdiction over the Leased Property;
(c) Landlord shall have the right at any time and from time to
time to post and maintain upon the Leased Property such notices as may
be necessary to protect Landlord's interest from mechanics' liens,
materialmen's liens or liens of a similar nature;
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(d) Tenant shall not suffer or permit any mechanics' liens or
any other claims or demands arising from the work of construction of
any Tenant Improvement to be enforced against the Leased Property or
any part thereof, and Tenant agrees to hold Landlord and said Leased
Property free and harmless from all liability from any such liens,
claims or demands, together with all costs and expenses in connection
therewith;
(e) All work shall be performed in a good and workmanlike
manner consistent with standards in the industry; and
(f) Subject to Section 8.09 in the case of Capital Additions,
Tenant shall not secure any construction or other financing for the
Tenant Improvements which is secured by a portion of the Leased
Property without Landlord's prior written consent, and any such
financing (i) shall not exceed the cost of the Tenant Improvements,
(ii) shall be subordinate to any mortgage or encumbrance now existing
or hereinafter created with respect to the Leased Property, and (iii)
shall be limited solely to Tenant's interest in the Leased Property
that is the subject of the improvements.
8.05 Rights in Tenant Improvements. Notwithstanding anything to the
contrary in this Lease, all Tenant Improvements constructed pursuant to Section
8.01, any and all subsequent additions thereto and alterations and replacements
thereof, shall be the sole and absolute property of Tenant during the Term of
the particular Lease. Upon the expiration or early termination of any Lease, all
such Tenant Improvements shall become the property of Landlord. Without limiting
the generality of the foregoing, Tenant shall be entitled to all federal and
state income tax benefits associated with any Tenant Improvement during the Term
of this Agreement.
8.06 Personal Property. Tenant shall install, place, and use on the
Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Fixtures as may be required or as Tenant
may, from time to time, deem necessary or useful to operate the Leased Property
as a correctional or detention facility.
8.07 Requirements for Personal Property. Tenant shall comply with
all of the following requirements in connection with Personal Property:
(a) With respect to each Leased Property, Tenant shall notify
Landlord within one hundred twenty (120) days after each Lease Year of
any additions, substitutions, or replacements of an item of Personal
Property at such Leased Property which individually has a cost of more
than $25,000.00 and shall furnish Landlord with such other information
as Landlord may reasonably request from time to time.
(b) The Personal Property shall be installed in a good and
workmanlike manner, in compliance with all governmental laws,
ordinances, rules, and regulations and all insurance requirements, and
be installed free and clear of any mechanics' liens.
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(c) Tenant shall, at Tenant's sole cost and expense, maintain,
repair, and replace the Personal Property.
(d) Tenant shall, at Tenant's sole cost and expense, keep
Personal Property insured against loss or damage by fire, vandalism and
malicious mischief, sprinkler leakage, and other physical loss perils
commonly covered by fire and extended coverage, boiler and machinery,
and difference in conditions insurance in an amount not less than
ninety percent (90%) of the then full replacement cost thereof. Tenant
shall use the proceeds from any such policy for the repair and
replacement of Personal Property. The insurance shall meet the
requirements of Section 4.03.
(e) Tenant shall pay all taxes applicable to Personal
Property.
(f) If Personal Property is damaged or destroyed by fire or
any other case, Tenant shall promptly repair or replace Personal
Property unless Tenant is entitled to and elects to terminate the Lease
pursuant to Section 10.05.
(g) Unless an Event of Default (or any event which, with the
giving of notice of lapse of time, or both, would constitute an Event
of Default) has occurred and remains uncured beyond any applicable
grace period, Tenant may remove Personal Property from the Leased
Property from time to time provided that (i) the items removed are not
required to operate the Leased Property as a licensed correctional or
detention facility (unless such items are being replaced by Tenant);
and (ii) Tenant repairs any damage to the Leased Property resulting
from the removal of Personal Property.
(h) Tenant shall remove any of Tenant's personal property
which does not constitute Personal Property hereunder, upon the
termination or expiration of the Lease and shall repair any damage to
the Leased Property resulting from the removal of Tenant's personal
property. If Tenant fails to remove Tenant's personal property within
ninety (90) days after the termination or expiration of the Lease, then
Tenant shall be deemed to have abandoned Tenant's personal property,
Tenant's personal property shall become the property of Landlord, and
Landlord may remove, store and dispose of Tenant's personal property.
In such event, Tenant shall have no claim or right against Landlord for
such property or the value thereof regardless of the disposition
thereof by Landlord. Tenant shall pay Landlord, upon demand, all
expenses incurred by Landlord in removing, storing, and disposing of
Tenant's personal property and repairing any damage caused by such
removal. Tenant's obligations hereunder shall survive the termination
or expiration of the Lease. Notwithstanding the foregoing, it is
understood and agreed that all property constituting Personal Property
hereunder shall be and/or become the sole and exclusive property of
Landlord upon the expiration or termination of the Lease.
(i) Tenant shall perform its obligations under any equipment
lease or security agreement for Personal Property.
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8.08 Signs. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. Upon the occurrence of an Event of Default or
the termination or expiration of a Lease, Tenant shall, within thirty (30) days
after notice from Landlord, remove the signs and restore the applicable Leased
Property to its original condition.
8.09 Financings of Capital Additions to a Leased Property.
(a) Landlord may, but shall be under no obligation to,
provide or arrange construction, permanent or other financing for a
Capital Addition proposed to be made to any Leased Property by Tenant.
Within thirty (30) days of receipt of such a request by Tenant,
Landlord shall notify Tenant as to whether it will finance the proposed
Capital Addition and, if so, the terms and conditions upon which it
would do so, including the terms of any amendment to an individual
Lease or a new lease agreement for such proposed Capital Addition.
(b) If Landlord agrees to finance the proposed Capital
Addition of Tenant, Tenant shall provide Landlord with the following:
(i) all customary or other required loan
documentation which may be required;
(ii) any information, certificates, licenses,
permits or documents requested by either Landlord or any
lender with whom Landlord has agreed or may agree to provide
financing which are necessary to confirm that Tenant will be
able to use the Capital Addition upon completion thereof in
accordance with the Primary Intended Use (as defined in
Section 8.01), including all required, federal, state or local
government licenses and approvals;
(iii) a certificate from Tenant's architect,
setting forth in reasonable detail the projected (or actual,
if available) cost of the proposed Capital Addition;
(iv) an amendment to this Lease, or a new lease
agreement, duly executed and acknowledged, in form and
substance satisfactory to Landlord and Tenant, and containing
such provisions as may be necessary or appropriate, including
without limitation, any appropriate changes in the legal
description of the Land, the Rent, and other changes with
respect to the Capital Addition;
(v) a deed conveying title to Landlord to any
land acquired for the purpose of constructing the Capital
Addition, free and clear of any liens or encumbrances except
those approved by Landlord and, both prior to and following
completion of the Capital Addition, an as-built survey thereof
satisfactory to Landlord;
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(vi) endorsements to any outstanding policy of
title insurance covering the Leased Property or a supplemental
policy of title insurance covering the Leased Property
satisfactory in form and substance to Landlord (a) updating
the same without any additional exceptions, except as may be
permitted by Landlord; and (b) increasing the coverage thereof
by an amount equal to the fair market value of the Capital
Addition;
(vii) if required by Landlord, (a) an owner's
policy of title insurance insuring fee simple title to any
land conveyed to Landlord pursuant to subparagraph (v), free
and clear of all liens and encumbrances except those approved
by Landlord and (b) a lender's policy of title insurance
satisfactory in form and substance to Landlord and any lending
institution advancing a portion of the cost of the Capital
Addition;
(viii) if required by Landlord, upon completion of
the Capital Addition, an M.A.I. appraisal of the Leased
Property indicating that the value of the Leased Property upon
completion of the Capital Addition exceeds the fair market
value of the Leased Property prior thereto by an amount not
less than ninety-five percent (95%) of the cost of such
Capital Addition; and
(ix) such other certificates (including, but not
limited to, endorsements, increasing the insurance coverage,
if any, at the time required), documents, opinions of counsel,
appraisals, surveys, certified copies of duly adopted
resolutions of the board of directors of Tenant authorizing
the execution and delivery of any amendment to an individual
Lease or new lease agreement and any other instruments as may
be reasonably required by Landlord and any lending institution
advancing any portion of the cost of the Capital Addition.
(c) Upon making a request to finance a Capital Addition,
whether or not such financing is actually consummated, Tenant shall pay
or agree to pay, upon demand, all reasonable costs and expenses of
Landlord and any lending institution which has committed to finance
such Capital Addition which have been paid or incurred by them in
connection with the financing of the Capital Addition, including, but
not limited to, (i) the fees and expenses of their respective counsel,
(ii) all printing expenses, (iii) the amount of any filing,
registration and recording taxes and fees, (iv) documentary stamp
taxes, if any, (v) title insurance charges, appraisal fees, if any,
rating agency fees, if any, (vi) commitment fees, if any, and (vii)
costs of obtaining regulatory and governmental approvals for the
construction, operation, use or occupancy of the Capital Addition.
(d) (i) If Landlord and Tenant are unable to agree on the
terms of the financing of a Capital Addition by Landlord, Tenant may
undertake the cost of any such Capital Addition and seek construction,
permanent or other financing from other sources.
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(ii) In the event Tenant shall construct any Capital
Addition and shall have obtained construction, permanent or other
financing in connection therewith from sources other than Landlord, as
set forth in the foregoing Section 8.09(d)(i), Landlord shall have the
option to acquire such Capital Addition for a period of three (3) years
following the date Tenant first receives inmates in such Capital
Addition ("Service Commencement Date"). The price at which Landlord may
acquire such Capital Addition shall be the fair market value of the
Capital Addition, as reasonably and mutually determined by Landlord and
Tenant, provided, Landlord and Tenant agree that for the first two (2)
years following the Service Commencement Date the fair market value of
such Capital Addition shall be deemed to be equal to Tenant's actual
costs and expenses to acquire, develop, design, construct and equip
such Capital Addition ("Tenant's Cost"), as reflected on the books of
Tenant, plus five percent (5%) of Tenant's Cost. Landlord's exercise of
such option shall require Landlord to acquire such Capital Addition on
such terms and conditions as Landlord and Tenant shall reasonably
agree, which shall be generally consistent with the terms and
conditions of Landlord's initial acquisition of the related Leased
Property from Tenant. Upon such acquisition, Landlord shall lease such
Capital Addition to Tenant on the terms and conditions set forth
herein, and Landlord and Tenant shall execute a new Lease, or an
amendment to the existing Lease, with respect thereto. In such case,
for acquisitions of Capital Additions within five (5) years of the date
hereof, the annual Base Rent shall be the greater of (i) the fair
market rental value of the Capital Addition, as reasonably and mutually
determined by Landlord and Tenant and (ii) eleven percent (11%) of the
purchase price of such Capital Addition. For Capital Additions
thereafter, the Base Rent shall be the fair market rental value of the
Capital Addition, as reasonably and mutually determined by Landlord and
Tenant. Regardless of whether the foregoing option is exercised, all
Capital Additions shall become the property of Landlord upon the
expiration or termination of this Lease.
ARTICLE IX
DEFAULTS AND REMEDIES
9.01 Events of Default. The occurrence of any one or more of the
following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or
any other monetary obligation payable by Tenant to Landlord under a
Lease, within fifteen (15) days after notice of nonpayment from
Landlord;
(b) Tenant fails to observe and perform any other covenant,
condition or agreement under this Agreement or a Lease to be performed
by Tenant (except those described in Section 9.01(a) of this Agreement)
and such failure continues for a period of thirty (30) days after
written notice thereof is given to Tenant by Landlord; or if, by reason
of the nature of such default, the same cannot with due diligence be
remedied within said thirty (30) days, such failure will not be deemed
to continue if Tenant proceeds promptly and
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with due diligence to remedy the failure and diligently completes the
remedy thereof; provided, however, said cure period will not extend
beyond thirty (30) days if the facts or circumstances giving rise to
the default are creating a further harm to Landlord or the Leased
Property and Landlord makes a good faith determination that Tenant is
not undertaking remedial steps that Landlord would cause to be taken if
such Lease were then to terminate;
(c) If Tenant: (a) admits in writing its inability to pay its
debts generally as they become due, (b) files a petition in bankruptcy
or a petition to take advantage of any insolvency act, (c) makes an
assignment for the benefit of its creditors, (d) is unable to pay its
debts as they mature, (e) consents to the appointment of a receiver of
itself or of the whole or any substantial part of its property, or (f)
files a petition or answer seeking reorganization or arrangement under
the federal bankruptcy laws or any other applicable law or statute of
the United States of America or any state thereof;
(d) If Tenant, on a petition in bankruptcy filed against it,
is adjudicated as bankrupt or a court of competent jurisdiction enters
an order or decree appointing, without the consent of Tenant, a
receiver of Tenant of the whole or substantially all of its property,
or approving a petition filed against it seeking reorganization or
arrangement of Tenant under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state
thereof, and such judgment, order or decree is not vacated or set aside
or stayed within ninety (90) days from the date of the entry thereof;
(e) If the estate or interest of Tenant in any Leased Property
or any part thereof is levied upon or attached in any proceeding and
the same is not vacated or discharged within the later of ninety (90)
days after commencement thereof or thirty (30) days after receipt by
Tenant of notice thereof from Landlord (unless Tenant is contesting
such lien or attachment in accordance with this Agreement);
(f) Any representation or warranty made by Tenant in the
Agreement or any Lease or in any certificate, demand or request made
pursuant to any Lease proves to be incorrect, in any material respect
and any adverse effect on Landlord of any such misrepresentation or
breach of warranty has not been corrected to Landlord's satisfaction
within thirty (30) days after Tenant becomes aware of, or is notified
by the Landlord of the fact of, such misrepresentation or breach of
warranty;
(g) A default by Tenant in any payment of principal or
interest on any obligations for borrowed money having a principal
balance of Twenty-Five Million Dollars ($25,000,000) or more in the
aggregate (excluding obligations which are limited in recourse to
specific property of Tenant provided that such property is not a
substantial portion of the assets of Tenant and excluding any debt
which is denominated as "subordinated debt"), or in the performance of
any other provision contained in any instrument under which any such
obligation is created or secured (including the breach of any covenant
thereunder), if an
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effect of such default is that the holder(s) of such obligation cause
such obligation to become due prior to its stated maturity; or
(h) A final, non-appealable judgment or judgments for the
payment of money in excess of Ten Million Dollars ($10,000,000) in the
aggregate not fully covered (excluding deductibles) by insurance is
rendered against Tenant and the same remains undischarged, unvacated,
unbonded or unstayed for a period of one hundred twenty (120)
consecutive days.
Notwithstanding the foregoing, an Event of Default under the foregoing
subsections (a), (c), (d), (g) and (h) shall constitute an Event of Default
under all of the Leases and an Event of Default under the foregoing subsections
(b), (e) and (f) shall constitute an Event of Default only with respect to the
specific Lease and Leased Property to which such Event of Default applies.
Provided, with respect to the Events of Default under the foregoing subsections
(b), (e) and (f), if such Events of Default shall at any time be applicable to
Leased Properties for which the monthly Base Rent constitutes, in the aggregate,
greater than twenty-five percent (25%) of the monthly Base Rent for all of the
Leased Properties, then such Events of Default shall constitute Events of
Default under all of the Leases.
9.02 Remedies. To the extent any Event of Default is applicable
only to a specific Lease or Leases, or a specific Leased Property or Leased
Properties (in accordance with Section 9.01 above), the remedies set forth
herein shall be exercisable solely with respect to such Lease or Leases, or
Leased Property or Leased Properties, and shall not be exercisable with respect
to any other Leases or Leased Property. To the extent any Event of Default
constitutes an Event of Default under all of the Leases (in accordance with
Section 9.01 above), the remedies set forth herein shall be exercisable with
respect to all of the Leases and all of the Leased Properties. Subject to the
foregoing provisions, Landlord may exercise any one or more of the following
remedies upon the occurrence of an Event of Default:
(a) Landlord may terminate the applicable Lease, exclude
Tenant from possession of the subject Leased Property and use
reasonable efforts to lease such Leased Property to others. If any
Lease is terminated pursuant to the provisions of this subparagraph
(a), Tenant will remain liable to Landlord for damages in an amount
equal to the Rent and other sums which would have been owing by Tenant
under such Lease for the balance of the Term if the Lease had not been
terminated, less the net proceeds, if any, of any re-letting of the
subject Leased Property by Landlord subsequent to such termination,
after deducting all Landlord's expenses in connection with such
re-letting, including without limitation, the expenses set forth in
Section 9.02(b)(2) below. Landlord will be entitled to collect such
damages from Tenant monthly on the days on which the Rent and other
amounts would have been payable under the subject Lease if such Lease
had not been terminated and Landlord will be entitled to receive such
damages from Tenant on each such day. Alternatively, at the option of
Landlord, if such Lease is terminated, Landlord will be entitled to
recover from Tenant (a) all unpaid Rent then due and payable, and (b)
the worth at the time of the award (as hereafter defined) of the Rent
which would have been due and payable from the date of termination
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through the Expiration Date as if the Lease had not been terminated.
The "worth at the time of award" of the amount referred to in clause
(b) is computed at "present value" using New York Prime Rate. For
purposes of this Agreement, "New York Prime Rate" shall mean that rate
of interest identified as prime or national prime by the Wall Street
Journal, or if not published or found, then the rate of interest
charged by the American bank with the greatest number of assets on
ninety (90) day unsecured notes to its preferred customers. For the
purpose of determining unpaid Rent under clause (b), the Rent reserved
in the Lease will be deemed to be the sum of the following: (i) the
Base Rent computed pursuant to Section 2.01; (ii) the Additional Rent
computed pursuant to Section 2.02; and (iii) the Other Additional Rent
computed pursuant to Section 2.02.01. Such computation of Other
Additional Rent shall be based on the Other Additional Rent paid for
the Lease Year preceding the date of termination, increased by 4% per
year thereafter. Following payments by Tenant of the foregoing amounts,
Landlord shall deliver and pay over to Tenant all rent, income, and
other proceeds of any nature realized from the sale, lease or other
disposition or utilization of the Leased Premises, if any, actually
received by Landlord, up to the amounts so paid by Tenant less
Landlord's reasonably incurred costs and expenses of maintaining and
re-leasing or selling the Leased Premises.
(b) (1) Without demand or notice, Landlord may re-enter and
take possession of the applicable Leased Property or any part of such
Leased Property; and repossess such Leased Property as of the
Landlord's former estate; and expel the Tenant and those claiming
through or under Tenant from such Leased Property; and, remove the
effects of both or either, without being deemed guilty of any manner of
trespass and without prejudice to any remedies for arrears of Rent or
preceding breach of covenants or conditions. If Landlord elects to
re-enter, as provided in this paragraph (b) or if Landlord takes
possession of such Leased Property pursuant to legal proceedings or
pursuant to any notice provided by law, Landlord may, from time to
time, without terminating the subject Lease, re-let such Leased
Property or any part of such Leased Property, either alone or in
conjunction with other portions of the Improvements of which such
Leased Property are a part, in Landlord's name but for the account of
Tenant, for such term or terms (which may be greater or less than the
period which would otherwise have constituted the balance of the Term
of this Lease) and on such terms and conditions (which may include
concessions of free rent, and the alteration and repair of such Leased
Property) as Landlord, in its uncontrolled discretion, may determine.
Landlord may collect and receive the Rents for such Leased Property.
Landlord will not be responsible or liable for any failure to re-let
such Leased Property, or any part of such Leased Property, or for any
failure to collect any Rent due upon such re-letting. No such re-entry
or taking possession of such Leased Property by Landlord will be
construed as an election on Landlord's part to terminate this Lease
unless a written notice of such intention is given to Tenant. No notice
from Landlord under this Lease or under a forcible entry and detainer
statute or similar law will constitute an election by Landlord to
terminate this Lease unless such notice specifically says so. Landlord
reserves the right following any such re-entry or re-letting, or both,
to exercise its right to terminate this Lease by giving Tenant such
written notice, and, in that event such Lease will terminate as
specified in such notice.
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(2) If Landlord elects to take possession of such
Leased Property according to this subparagraph (b) without terminating
such Lease, Tenant will pay Landlord (i) the Rent, Additional Rent and
other sums which would be payable under such Lease if such repossession
had not occurred, less (ii) the net proceeds, if any, of any re-letting
of such Leased Property after deducting all of Landlord's expenses
incurred in connection with such re-letting, including without
limitation, all repossession costs, brokerage commissions, legal
expense, attorneys' fees, expense of employees, alteration, remodeling,
repair costs, and expense of preparation for such re-letting. If, in
connection with any re-letting, the new Lease term extends beyond the
existing Term or such Leased Property covered by such re-letting
includes areas which are not part of such Leased Property, a fair
apportionment of the Rent received from such re-letting and the
expenses incurred in connection with such re-letting will be made in
determining the net proceeds received from such re-letting. In
addition, in determining the net proceeds from such re-letting, any
rent concessions will be apportioned over the term of the new Lease.
Tenant will pay such amounts to Landlord monthly on the days on which
the Rent and all other amounts owing under this Agreement or such Lease
would have been payable if possession had not been retaken, and
Landlord will be entitled to receive the rent and other amounts from
Tenant on each such day.
(c) Landlord may re-enter the applicable Leased Property and
have, repossess and enjoy such Leased Property as if such Lease had not
been made, and in such event, Tenant and its successors and assigns
shall remain liable for any contingent or unliquidated obligations or
sums owing at the time of such repossession.
(d) Landlord may take whatever action at law or in equity as
may appear necessary or desirable to collect the Rent and other amounts
payable under the applicable Lease then due and thereafter to become
due, or to enforce performance and observance of any obligations,
agreements or covenants of Tenant under such Lease.
9.03 Right of Set-Off. Landlord may, and is hereby authorized by
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord, including all sums held in
any escrow for Impositions, any indebtedness of Landlord to Tenant, and any
claims by Tenant against Landlord, against any obligations of Tenant under this
Agreement or any Lease and against any claims by Landlord against Tenant,
whether or not Landlord has exercised any other remedies hereunder. The rights
of Landlord under this Section are in addition to any other rights and remedies
Landlord may have against Tenant.
9.04 Performance of Tenant's Covenants. Landlord may perform any
obligation of Tenant which Tenant has failed to perform within two (2) days
after Landlord has sent a written notice to Tenant informing it of its specific
failure (provided no such notice shall be required if Landlord has previously
notified Tenant of such failure under the provisions of Section 9.01). Tenant
shall reimburse Landlord on demand, as Other Additional Rent, for any
expenditures thus incurred by Landlord and shall pay interest thereon at the New
York Prime Rate (as herein defined).
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9.05 Late Charge. Any payment not made by Tenant for more than ten
(10) days after the due date shall be subject to a late charge payable by Tenant
as Rent of three percent (3%) of the amount of such overdue payment.
9.06 Litigation; Attorneys' Fees. Within ten (10) days after Tenant
has knowledge of any litigation or other proceeding that may be instituted
against Tenant, against any Leased Property to secure or recover possession
thereof, or that may affect the title to or the interest of Landlord in such
Leased Property, Tenant shall give written notice thereof to Landlord. Within
thirty (30) days of Landlord's presentation of an invoice, Tenant shall pay all
reasonable costs and expenses incurred by Landlord in enforcing or preserving
Landlord's rights under this Agreement and each Lease, whether or not an Event
of Default has actually occurred or has been declared and thereafter cured,
including without limitation, (i) the fees, expenses, and costs of any
litigation, receivership, administrative, bankruptcy, insolvency or other
similar proceeding; (ii) reasonable attorney, paralegal, consulting and witness
fees and disbursements; and (iii) the expenses, including without limitation,
lodging, meals, and transportation, of Landlord and its employees, agents,
attorneys, and witnesses in preparing for litigation, administrative,
bankruptcy, insolvency or other similar proceedings and attendance at hearings,
depositions, and trials in connection therewith. All such costs, charges and
fees as incurred shall be deemed to be Other Additional Rent under this
Agreement.
9.07 Remedies Cumulative. The remedies of Landlord herein are
cumulative to and not in lieu of any other remedies available to Landlord at law
or in equity. The use of any one remedy shall not be taken to exclude or waive
the right to use any other remedy.
9.08 Escrows and Application of Payments. As security for the
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title and interest in and to all monies escrowed with Landlord under
this Agreement or under any Lease and all deposits with utility companies,
taxing authorities, and insurance companies; provided, however, that Landlord
shall not exercise its rights hereunder until an Event of Default has occurred.
Any payments received by Landlord under any provisions of this Agreement or
under any Lease during the existence, or continuance of an Event of Default
shall be applied to Tenant's obligations in the order which Landlord may
determine.
9.09 Power of Attorney. Tenant hereby irrevocably and
unconditionally appoints Landlord, or Landlord's authorized officer, agent,
employee or designee, as Tenant's true and lawful attorney-in-fact, to act,
after an Event of Default, for Tenant in Tenant's name, place, and stead, and
for Tenant's and Landlord's use and benefit, to execute, deliver and file all
applications and any and all other necessary documents or things, to effect a
transfer, reinstatement, renewal and/or extension of any and all licenses and
other governmental authorizations issued to Tenant in connection with Tenant's
operation of any Leased Property, and to do any and all other acts incidental to
any of the foregoing. Tenant irrevocably and unconditionally grants to Landlord
as its attorney-in-fact full power and authority to do and perform, after an
Event of Default, every act necessary and proper to be done in the exercise of
any of the foregoing powers as fully as Tenant might or could do if
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personally present or acting, with full power of substitution, hereby ratifying
and confirming all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to the full performance of the Tenant's obligations under this
Agreement and each Lease.
ARTICLE X
DAMAGE AND DESTRUCTION
10.01 General. Tenant shall notify Landlord if any of the Leased
Property is damaged or destroyed by reason of fire or any other cause. Tenant
shall promptly repair, rebuild, or restore the Leased Property, at Tenant's
expense, so as to make the Leased Property at least equal in value to the Leased
Property existing immediately prior to such occurrence and as nearly similar to
it in character as is practicable and reasonable. Before beginning such repairs
or rebuilding, or letting any contracts in connection with such repairs or
rebuilding, Tenant will submit for Landlord's approval, which approval Landlord
will not unreasonably withhold or delay, complete and detailed plans and
specifications for such repairs or rebuilding. Promptly after receiving
Landlord's approval of the plans and specifications, Tenant will begin such
repairs or rebuilding and will prosecute the repairs and rebuilding to
completion with diligence, subject, however, to strikes, lockouts, acts of God,
embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the net proceeds of
any fire or other casualty insurance paid to Landlord for such repair or
rebuilding as the same progresses, after deduction of any costs of collection,
including attorneys' fees. Payment will be made against properly certified
vouchers of a competent architect in charge of the work and approved by
Landlord. Prior to commencing the repairing or rebuilding, Tenant shall deliver
to Landlord for Landlord's approval a schedule setting forth the estimated
monthly draws for such work. Landlord will contribute to such payments out of
the insurance proceeds an amount equal to the proportion that the total net
amount received by Landlord from insurers bears to the total estimated cost of
the rebuilding or repairing, multiplied by the payment by Tenant on account of
such work. Landlord may, however, withhold ten percent (10%) from each payment
until (i) the work of repairing or rebuilding is completed and proof has been
furnished to Landlord that no lien or liability has attached or will attach to
the Leased Property or to Landlord in connection with such repairing or
rebuilding, (ii) Tenant has obtained a certificate of use and occupancy (or its
functional equivalent) for the portion of the Leased Premises repaired
or rebuilt and (iii) if Tenant has an agreement with any governmental authority
for the detention of inmates at such Leased Property which requires such
governmental authority to approve such repairs or rebuilding, such approval
shall have been obtained. Upon the completion of rebuilding or repairing and the
furnishing of such proof, the balance of the net proceeds of such insurance
payable to Tenant on account of such repairing or rebuilding will be paid to
Tenant. Tenant will obtain and deliver to Landlord a temporary or final
certificate of occupancy before the Leased Property is reoccupied for any
purpose. Tenant shall complete such repairs or rebuilding free and clear of
mechanic's or other liens, and in accordance with the building codes and all
applicable laws, ordinances, regulations, or orders of any state, municipal, or
other public authority affecting the repairs or rebuilding, and also in
accordance with all requirements of the insurance rating
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organization, or similar body. Any remaining proceeds of insurance after such
restoration will be Tenant's property.
10.02 Landlord's Inspection. During the progress of such repairs or
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications
available, and Landlord and its architects and engineers may examine them at all
reasonable times. If, during such repairs or rebuilding, Landlord and its
architects and engineers determine that the repairs or rebuilding are not being
done in accordance with the approved plans and specifications, Landlord will
give prompt notice in writing to Tenant, specifying in detail the particular
deficiency, omission, or other respect in which Landlord claims such repairs or
rebuilding do not accord with the approved plans and specifications. Upon the
receipt of any such notice, Tenant will cause corrections to be made to any
deficiencies, omissions, or such other respect. Tenant's obligations to supply
insurance, according to Article IV, will be applicable to any repairs or
rebuilding under this Section.
10.03 Landlord's Costs. Tenant shall, within thirty (30) days after
receipt of an invoice from Landlord, pay the reasonable costs, expenses, and
fees of any architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Agreement, or for any services performed by
Landlord's attorneys in connection therewith; provided, however, that Landlord
will consult with Tenant and notify Tenant of the estimated amount of such
expenses.
10.04 Rent Abatement. In the event that the provisions of Section
10.01 above shall become applicable, the Rent, real estate taxes and other
Impositions shall be abated or reduced proportionately during any period in
which, by reason of such damage or destruction, there is substantial
interference with the operation of the business of Tenant in the Leased
Property, having regard to the extent to which Tenant may be required to
discontinue its business in the Leased Property, and such abatement or reduction
shall continue for the period commencing with such destruction or damage and
ending with the substantial completion (defined below) by Tenant of such work or
repair and/or reconstruction. In the event that only a portion of any Leased
Property is rendered untenantable or incapable of such use, the Base Rent and
all real estate taxes and other Impositions payable hereunder shall be reduced
on a pro rata basis for the amount that the correctional or detention facility
at a particular Leased Property is rendered incapable of occupancy because of
such damage or destruction in proportion to the total size of the Leased
Property prior to such damage or destruction. For purposes of this paragraph,
substantial completion shall occur upon the earlier of (i) nine (9) months from
the date of the first disbursement of insurance proceeds, or (ii) the issuance
of a certificate of occupancy for the Leased Property. Notwithstanding any other
provision hereof, such rental abatement shall be limited to the amount of any
rental or business interruption insurance proceeds actually received by
Landlord.
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10.05 Substantial Damage During Lease Term. Provided Tenant has
fully complied with Section 4.01 hereof (including actually maintaining in
effect rental value insurance or business interruption insurance provided for in
clause (c) thereof) and has satisfied the conditions of the last sentence of
this Section 10.05, if, at any time during the Term of the particular Lease, the
Leased Property is so damaged by fire or otherwise that more than fifty percent
(50%) of the correctional or detention facility at the Leased Property is
rendered unusable, Tenant may, within thirty (30) days after such damage, give
notice of its election to terminate the Lease subject to the particular Leased
Property and, subject to the further provisions of this Section, such Lease will
cease on the tenth (10th ) day after the delivery of such notice. If the Lease
is so terminated, Tenant will have no obligation to repair, rebuild or replace
the Leased Property, and the entire insurance proceeds will belong to Landlord.
If the Lease is not so terminated, Tenant shall rebuild the Leased Property in
accordance with Section 10.01. If Tenant elects to terminate any Lease pursuant
to this Section 10.05, Tenant will pay (or cause to be paid) to Landlord, an
amount equal to the difference between the amount of all insurance proceeds
received by Landlord, and the net book value of such Leased Property as shown in
Landlord's financial statements as of the date of such termination.
10.06 Damage Near End of Term. Notwithstanding any provisions of
Section 10.01 to the contrary, if damage to or destruction of the Leased
Property occurs during the last twenty-four (24) months of the Term, and if such
damage or destruction cannot be fully repaired and restored within six (6)
months immediately following the date of loss, either party shall have the right
to terminate this Lease by giving notice to the other within thirty (30) days
after the date of damage or destruction, in which event Landlord shall be
entitled to retain the insurance proceeds and Tenant shall pay to Landlord on
demand the amount of any deductible or uninsured loss arising in connection
therewith; provided, however, that any such notice given by Landlord shall be
void and of no force and effect if Tenant exercises an available option to
extend the Term pursuant to provisions of the Lease for such Leased Property
within thirty (30) days following receipt of such termination notice.
ARTICLE XI
CONDEMNATION
11.01 Total Taking. If at any time during the Term any Leased
Property is totally and permanently taken by right of eminent domain or by
conveyance made in response to the threat of the exercise of such right
("Condemnation"), the applicable Lease shall terminate on the Date of Taking
(which shall mean the date the condemning authority has the right to possession
of the property being condemned), and Tenant shall promptly pay all outstanding
rent and other charges through the date of termination, provided, however the
applicable Lease shall not so terminate if the Condemnation occurred due to the
failure of Tenant to maintain the Leased Property as required by Article VII of
this Agreement or other applicable provision of this Agreement, whether or not
such failure on the part of Tenant constituted an Event of Default under an
individual Lease at the time of the Condemnation.
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11.02 Partial Taking. If a portion of any Leased Property is taken
by Condemnation, the subject Lease shall remain in effect if such Leased
Property is not thereby rendered Unsuitable for its Primary Intended Use (which
shall mean that the Leased Property is in such a state or condition such that in
the good faith judgment of Tenant, reasonably exercised, the Leased Property
cannot be operated on a commercially practicable basis as a correctional or
detention facility), but if such Leased Property is thereby rendered Unsuitable
for its Primary Intended Use, such Lease shall terminate on the Date of Taking,
provided such Condemnation was not as a result of Tenant's failure to maintain
the Leased Property as provided for in Section 11.01.
11.03 Restoration. If there is a partial taking of any Leased
Property and the subject Lease remains in full force and effect pursuant to
Section 11.02, Landlord shall furnish to Tenant the amount of the Award payable
to Landlord, as provided herein, in order for Tenant to accomplish all necessary
restoration. If Tenant receives an Award under Section 11.05, Tenant shall
repair or restore any Tenant Improvements up to but not exceeding the amount of
the Award payable to Tenant therefor. Before beginning such restoration, or
letting any contracts in connection with such restoration, Tenant will submit
for Landlord's approval, which approval Landlord will not unreasonably withhold
or delay, complete and detailed plans and specifications for such restoration.
Promptly after receiving Landlord's approval of the plans and specifications,
Tenant will begin such restoration and will prosecute the repairs and rebuilding
to completion with diligence, subject, however, to strikes, lockouts, acts of
God, embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the net proceeds of
any Award paid to Landlord for such restoration, after deduction of any costs of
collection, including attorneys' fees. Payment will be made against properly
certified vouchers of a competent architect in charge of the work and approved
by Landlord. Prior to commencing the restoration, Tenant shall deliver to
Landlord for Landlord's approval a schedule setting forth the estimated monthly
draws for such work. Landlord may, however, withhold ten percent (10%) from each
payment until the work of restoration is completed and proof has been furnished
to Landlord that no lien or liability has attached or will attach to the Leased
Property or to Landlord in connection with such restoration. Upon the completion
of restoration and the furnishing of such proof, the balance of the Award will
be paid to Tenant. Tenant will obtain and deliver to Landlord a temporary or
final certificate of occupancy before the Leased Property is reoccupied for any
purpose. Tenant shall complete such restoration free and clear of mechanic's or
other liens, and in accordance with the building codes and all applicable laws,
ordinances, regulations, or orders of any state, municipal, or other public
authority affecting the restoration, and also in accordance with all
requirements of the insurance rating organization, or similar body. Any
remaining proceeds of the Award after such restoration will be Tenant's
property.
11.04 Landlord's Inspection. During the progress of such
restoration, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such
restoration. Tenant will keep all plans, shop drawings, and specifications
available, and Landlord and its architects and engineers may examine them at all
reasonable times. If, during such restoration, Landlord and its architects and
engineers determine that the restoration is not being done in
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accordance with the approved plans and specifications, Landlord will give prompt
notice in writing to Tenant, specifying in detail the particular deficiency,
omission, or other respect in which Landlord claims such restoration does not
accord with the approved plans and specifications. Upon the receipt of any such
notice, Tenant will cause corrections to be made to any deficiencies, omissions,
or such other respect. Tenant's obligations to supply insurance, according to
Article IV, will be applicable to any restoration under this Section.
11.05 Award Distribution. The entire compensation, sums or anything
of value awarded, paid or received on a total or partial Condemnation (the
"Award") shall belong to and be paid to Landlord, except that, subject to the
rights of any mortgagee of Tenant, Tenant shall be entitled to receive from the
Award, if and to the extent such Award specifically includes such items, a sum
attributable to the value, if any, of: (i) any Tenant Improvements, and (ii) the
leasehold interest of Tenant under the subject Lease; provided, however, that if
the amount received by Landlord and said mortgagee is less than the Condemnation
Threshold (which shall mean, as of any given date, an amount equal to the net
book value of such Leased Property as shown on the financial statements of
Landlord as of the date of the Condemnation), then the amount of the Award
otherwise payable to Tenant for the value of its leasehold interest under this
Lease (and not any other funds of Tenant) shall instead be paid over to Landlord
up to the amount of the shortfall.
11.06 Temporary Taking. The taking of any Leased Property, or any
part thereof, by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the taking authority has
continued for longer than six (6) months. During any such six (6) month period,
which shall be a temporary taking, all the provisions of the subject Lease shall
remain in full force and effect with no abatement of rent payable by Tenant
hereunder. In the event of any such temporary taking, the entire amount of any
such Award made for such temporary taking allocable to the Term of such Lease,
whether paid by way of damages, rent or otherwise, shall be paid to Tenant.
ARTICLE XII
TENANT'S RIGHT OF FIRST REFUSAL
12.01 Rights of First Refusal. Subject to the terms and conditions
set forth in this Section 12.01 and provided that no Event of Default with
respect to the subject Leased Property has occurred and is continuing at such
time or at the expiration of this Agreement or the individual Lease, Tenant
shall have a right of first refusal (the "Purchase Refusal Right") to purchase
any Leased Property (including any Leased Property owned by an Affiliate [as
defined in Section 13.01 hereof] of Landlord). If during the Term or for a
period of ninety (90) days following termination of any Lease, Landlord or any
Affiliate of Landlord receives a bona fide third party offer to Transfer any
Leased Property, then, prior to accepting such third party offer, Landlord shall
send written notice and a copy thereof to Tenant ("Landlord's Notice"). Tenant
shall have ninety (90) days after receipt of Landlord's Notice to exercise
Tenant's Purchase Refusal Right, by giving Landlord written notice thereof.
Failure of Tenant to exercise the Purchase Refusal Right within such time period
set forth
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above shall be deemed to extinguish the Purchase Refusal Right for a period of
one hundred eighty (180) days. Thereafter, prior to the expiration of such one
hundred eighty (180) days, Landlord or its Affiliates may Transfer such Leased
Property provided however, that the Transfer of the Leased Property is at a
price equal to or greater than the price contained in the Landlord's Notice, and
otherwise consistent in all material respects with the terms and conditions set
forth in Landlord's Notice. Tenant's Purchase Refusal Right shall revive in the
event that Landlord fails to Transfer the Leased Property within said one
hundred eighty (180) days. In the event that Tenant elects to exercise the
Purchase Refusal Right and to acquire the Leased Property thereby, (a) Tenant
shall acquire such Leased Property on the same terms and conditions and subject
to all time periods and other limitations as provided in Landlord's Notice
(provided, however, Tenant shall in all events have not less than ninety (90)
days to close its acquisition of the Leased Property following its written
notice exercising its Purchase Refusal Right), and (b) concurrently with such
acquisition, the Lease of such Leased Property shall terminate (but Tenant shall
remain liable to pay any unpaid Rent with respect to such Leased Property and
all indemnifications and other provisions that survive the expiration of the
individual Lease or of this Agreement shall continue in effect), and this
Agreement shall be appropriately amended to reflect the termination of such
Lease.
Notwithstanding the foregoing provisions, the Purchase Refusal Right
shall not be applicable to any Transfer of a Leased Property to any Affiliate of
Landlord, so long as such Affiliate acquires such Leased Property subject to the
Purchase Refusal Right.
A "Transfer" is any direct or indirect sale, conveyance or other
disposition, including any transfer of a controlling ownership interest in any
owning partnership, limited liability company or corporation, and including any
lease with a term in excess of five (5) years.
12.02 Restriction on Exercise of Purchase Refusal Right.
Notwithstanding any other provision of this Article XII, Landlord shall not be
required to Transfer any Leased Property, or any portion thereof, which is a
real estate asset as defined in Section 856(c) (6) (B), or functionally
equivalent successor provision, of the Code, to Tenant if Landlord's counsel
advises Landlord that such Transfer may not be a sale of property described in
Section 857(b) (6) (C), or functionally equivalent successor provision of the
Code. If Landlord determines not to Transfer such property pursuant to the above
sentence, Tenant's right, if any, to acquire any or all of such property shall
continue and be exercisable, upon and subject to all applicable terms and
conditions set forth in this Lease, at such time as the transaction, upon the
advise of Landlord's tax counsel, would be a sale of property described in
Section 857(b) (6) (C) of the Code, or functionally equivalent successor
provision, and until such time Tenant shall lease the Leased Property for the
lesser of the rent otherwise called for in the Lease or fair market rental. If
the Transfer of the Leased Property is delayed pursuant to this section,
Landlord will use its reasonable best efforts to Transfer such Leased Property
to Tenant as soon as practicable in the next calendar year.
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ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT
13.01 Prohibition Against Subletting and Assignment. Subject to
Section 13.03, Tenant shall not, without the prior written consent of Landlord
(which consent Landlord may grant or withhold in its sole and absolute
discretion), assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer (except to an Affiliate of Tenant) (as defined) this Agreement or any
Lease or any interest herein or therein, or all or any part of the Leased
Property, or suffer or permit any Lease or the leasehold estate created thereby
or any other rights arising under any Lease to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether
voluntarily, involuntarily or by operation of law (except to an Affiliate of
Tenant). For purposes of this Section 13.01, an assignment of any Lease shall be
deemed to include any Change of Control of Tenant, as if such Change of Control
were an assignment of the Lease. No assignment shall in any way impair the
continuing primary liability of Tenant hereunder.
An "Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under common control with that Person.
A "Person" shall mean and include natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts, Indian tribes or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
13.02 Changes of Control. A Change of Control requiring the consent
of Landlord shall mean:
(a) the issuance and/or sale by Tenant or the sale by
any stockholder of Tenant of a Controlling (which shall mean,
as applied to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise)
interest in Tenant to a Person other than an Affiliate of
Tenant, other than in either case a distribution to the public
pursuant to an effective registration statement under the
Securities Act of 1933, as amended (a "Registered Offering");
(b) the sale, conveyance or other transfer of all or
substantially all of the assets of Tenant (whether by
operation of law or otherwise); or
(c) any transaction pursuant to which Tenant is
merged with or consolidated into another entity (other than an
entity owned and Controlled by an Affiliate of Tenant), and
Tenant is not the surviving entity.
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13.03 Operating/Service Agreements.
13.03.01 Permitted Agreements. Tenant shall, without Landlord's prior
approval, be permitted to enter into certain operating/service agreements for
portions of any Leased Property to various licensees in connection with Tenant's
operation of correctional or detention facilities as is customarily associated
with or incidental to the operation of such Leased Property, which agreements
may be in the nature of a sublease agreement.
13.03.02 Terms of Agreements. Each operating/service agreement
concerning any of the Leased Property shall be subject and subordinate to the
provisions of the applicable Lease. No agreement made as permitted by Section
13.03.01 shall affect or reduce any of the obligations of Tenant hereunder, and
all such obligations shall continue in full force and effect as if no agreement
had been made. No agreement shall impose any additional obligations on Landlord
under the applicable Lease.
13.03.03 Copies. Tenant shall, within ten (10) days after the execution
and delivery of any operating/service agreement permitted by Section 13.03.01,
deliver a duplicate original thereof to Landlord.
13.03.04 Assignment of Rights in Agreements. As security for
performance of its obligations under each Lease, Tenant hereby grants, conveys
and assigns to Landlord all right, title and interest of Tenant in and to all
operating/service agreements now in existence or hereinafter entered into for
any or all of the applicable Leased Property, and all extensions, modifications
and renewals thereof and all rents, issues and profits therefrom, to the extent
the same are assignable by Tenant. Landlord hereby grants to Tenant a license to
collect and enjoy all rents and other sums of money payable under any such
agreement concerning any of such Leased Property; provided, however, that
Landlord shall have the absolute right at any time after the occurrence and
continuance of an Event of Default upon notice to Tenant and any vendors or
licensees to revoke said license and to collect such rents and sums of money and
to retain the same. Tenant shall not (i) after the occurrence and continuance of
an Event of Default, consent to, cause or allow any material modification or
alteration of any of the terms, conditions or covenants of any of the agreements
or the termination thereof, without the prior written approval of Landlord nor
(ii) accept any rents (other than customary security deposits) more than ninety
(90) days in advance of the accrual thereof nor permit anything to be done, the
doing of which, nor omit or refrain from doing anything, the omission of which,
will or could be a breach of or default in the terms of any of the agreements.
13.03.05 Licenses, Etc. For purposes of Section 13.03, the
operating/service agreements shall mean any licenses, concession arrangements,
or other arrangements relating to the possession or use of all or any part of
any Leased Property but specifically excluding any management agreement,
facility operating agreement or other agreement for the housing or detention of
inmates.
13.04 Assignment. No assignment shall in any way impair the
continuing primary liability of Tenant hereunder, and no consent to any
assignment in a particular instance shall be deemed to
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be a waiver of the prohibition set forth in Article XIII. Any assignment shall
be solely of Tenant's entire interest in the subject Lease. Any assignment or
other transfer of all or any portion of Tenant's interest in any Lease in
contravention of Article XIII shall be voidable at Landlord's option.
13.05 REIT Limitations. Anything contained in this Agreement to the
contrary notwithstanding, Tenant shall not (i) sublet or assign any Leased
Property or any Lease on any basis such that the rental or other amounts to be
paid by the sublessee or assignee thereunder would be based, in whole or in
part, on the income or profits derived by the business activities of the
sublessee or assignee; (ii) sublet or assign any Leased Property or any Lease to
any person that Landlord owns, directly or indirectly (by applying constructive
ownership rules set forth in Section 856(d) (5) of the Code), a ten percent
(10%) or greater interest; or (iii) sublet or assign any Leased Property or any
Lease in any other manner or otherwise derive any income which could cause any
portion of the amounts received by Landlord pursuant to any Lease or any
sublease to fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or which could cause any other income received by
Landlord to fail to qualify as income described in Section 856(c) (2) of the
Code. The requirements of this Section 13.05 shall likewise apply to any further
subleasing by any subtenant.
13.06 Attornment. Tenant shall insert in each sublease permitted
under Section 13.03.01 provisions to the effect that (a) such sublease is
subject and subordinate to all of the terms and provisions of the applicable
Lease (including this Agreement) and to the rights of Landlord hereunder, (b) in
the event such Lease shall terminate before the expiration of such sublease, the
sublessee thereunder will, at Landlords' option, attorn to Landlord and waive
any right the sublessee may have to terminate the sublease or to surrender
possession thereunder, as a result of the termination of such Lease, and (c) in
the event the sublessee receives a written notice from Landlord or Landlord's
assignees, if any, stating that Tenant is in default under such Lease, the
sublessee shall thereafter be obligated to pay all rentals accruing under said
sublease directly to the party giving such notice, or as such party may direct.
All rentals received from the sublessee by Landlord or Landlord's assignees, if
any, as the case may be, shall be credit against the amounts owing by Tenant
under such Lease.
14.01 Controversies. Except with respect to the payment of Rent
hereunder, which shall be subject to the provisions of Section 9.02, in the case
a controversy arises between the parties as to any of the requirements of this
Agreement or of any individual Lease or the performance thereunder which the
parties are unable to resolve, the parties agree to waive the remedy of
litigation (except for extraordinary relief in an emergency situation) and agree
that such controversy or controversies shall be determined by arbitration as
hereafter provided in this Article.
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<PAGE> 42
ARTICLE XIV
ARBITRATION
14.02 Appointment of Arbitrators. The party or parties requesting
arbitration shall serve upon the other a demand therefor, in writing, specifying
in detail the controversy and matter(s) to be submitted to arbitration. The
selection of arbitrators shall be conducted pursuant to the rules for resolution
of commercial disputes promulgated by the American Arbitration Association. The
party or parties giving notice shall request a listing of available arbitrators
from the American Arbitration Association, and each party shall respond in the
selection process within fifteen (15) days after each receipt of such listings
until a panel of three (3) arbitrators has been designated. If either party
fails to respond within fifteen (15) days, it is agreed that the American
Arbitration Association may make such selections as are necessary to complete
the panel of three (3) arbitrators.
14.03 Arbitration Procedure. Within fifteen (15) days after the
selection of the arbitration panel, the arbitrators shall give written notice to
each party as to the time and the place of each meeting, which shall be held in
Nashville, Tennessee, at which the parties may appear and be heard, which shall
be no later than sixty (60) days after certification of the arbitration panel.
The parties specifically waive discovery, and further waive the applicability of
rules of evidence or rules of procedure in the proceedings. The applicable rules
shall be those in effect at the time for the resolution of commercial disputes
promulgated by the American Arbitration Association. Notwithstanding the
foregoing, the substantive law governing the arbitration shall be the laws of
the State of Tennessee. The arbitrators shall take such testimony and make such
examination and investigations as the arbitrators reasonably deem necessary. The
decision of the arbitrators shall be in writing signed by a majority of the
panel which decision shall be final and binding upon the parties to the
controversy. Provided, however, in rendering their decisions and making awards,
the arbitrators shall not add to, subtract from or otherwise modify the
provisions of this Agreement.
14.04 Expenses. The expenses of the arbitration shall be assessed by
the arbitrators and specified in the written decision. In the absence of a
determination or assessment of expenses of the arbitration procedure in the
award, all of the expenses of such arbitration shall be divided equally between
Landlord and Tenant. Each party in interest shall be responsible for and pay the
fees, costs and expenses of its own counsel, unless the arbitration award
provides for an assessment of reasonable attorneys' fees and costs.
14.05 Enforcement of the Arbitration Award. There shall be no appeal
from the decision of the arbitrators, and upon the rendering of an award, any
party thereto may file the arbitrators' decision in the United States District
Court for the Middle District of Tennessee for enforcement as provided by
applicable law.
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ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES
15.01 Quiet Enjoyment. So long as Tenant performs all of its
obligations under this Agreement and each Lease, Tenant's possession of the
Leased Property will not be disturbed by or through Landlord.
15.02 Landlord Mortgages; Subordination. Subject to Section 15.03,
without the consent of Tenant, Landlord may, from time to time, directly or
indirectly, create or otherwise cause to exist any lien, encumbrances or title
retention agreement on the Leased Properties, or any portion thereof or any
interest therein, whether to secure any borrowing or other means of financing or
refinancing. This Agreement and each Lease and Tenant's rights under this
Agreement and each Lease are subordinate to any ground lease or underlying
lease, first mortgage, first deed of trust, or other first lien against any
Leased Property, together with any renewal, consolidation, extension,
modification or replacement thereof, which now or at any subsequent time affects
any Leased Property or any interest of Landlord in any Leased Property, except
to the extent that any such instrument expressly provides that this Agreement
and each Lease is superior. This provision will be self-operative, and no
further instrument or subordination will be required in order to effect it.
However, Tenant shall execute, acknowledge and deliver to Landlord, at any time
and from time to time upon demand by Landlord, such documents as may be
requested by Landlord or any mortgagee or any holder of any mortgage or other
instrument described in this Section, to confirm or effect any such
subordination. If Tenant fails or refuses to execute, acknowledge, and deliver
any such document within twenty (20) days after written demand, Landlord may
execute, acknowledge and deliver any such document on behalf of Tenant as
Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably appoints
Landlord, its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any documents described in this
Section. This power of attorney is coupled with an interest and is irrevocable.
15.03 Attornment; Non-Disturbance. If any holder of any mortgage,
indenture, deed of trust, or other similar instrument described in Section 15.02
succeeds to Landlord's interest in any Leased Property, Tenant will pay to such
holder all Rent subsequently payable under the subject Lease. Tenant shall, upon
request of anyone succeeding to the interest of Landlord, automatically become
the tenant of, and attorn to, such successor in interest without changing such
Lease. The successor in interest will not be bound by (i) any payment of Rent
for more than one (1) month in advance; (ii) any amendment or modification of
such Lease made without its written consent; (iii) any claim against Landlord
arising prior to the date on which the successor succeeded to Landlord's
interest; or (iv) any claim or offset of Rent against the Landlord. Upon request
by Landlord or such successor in interest and without cost to Landlord or such
successor in interest, Tenant will execute, acknowledge and deliver an
instrument or instruments confirming the attornment. If Tenant fails or refuses
to execute, acknowledge and deliver any such instrument within twenty (20) days
after written demand, then Landlord or such successor in interest will be
entitled to execute, acknowledge,
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and deliver any document on behalf of Tenant as Tenant's attorney-in-fact.
Tenant hereby constitutes and irrevocably appoints Landlord, its successors and
assigns, as Tenant's attorney-in-fact to execute, acknowledge, and deliver on
behalf of Tenant any such document. This power of attorney is coupled with an
interest and is irrevocable.
Landlord shall use reasonable efforts to obtain a non-disturbance
agreement from any such party referred to above which provides that in the event
such party succeeds to Landlord's interest under the Lease and provided that no
Event of Default by Tenant exists, such party will not disturb Tenant's
possession, use or occupancy of the Leased Property.
15.04 Estoppel Certificates. At the request of Landlord or any
mortgagee or purchaser of any Leased Property, Tenant shall execute,
acknowledge, and deliver an estoppel certificate, in recordable form, in favor
of Landlord or any mortgagee or purchaser of such Leased Property certifying the
following: (i) that the subject Lease is unmodified and in full force and
effect, or if there have been modifications that the same is in full force and
effect as modified and stating the modifications; (ii) the date to which Rent
and other charges have been paid; (iii) that neither Tenant nor Landlord is in
default nor is there any fact or condition which, with notice or lapse of time,
or both, would constitute a default, if that be the case, or specifying any
existing default; (iv) that Tenant has accepted and occupies such Leased
Property; (v) that Tenant has no defenses, set-offs, deductions, credits, or
counterclaims against Landlord, if that be the case, or specifying such that
exist; (vi) that the Landlord has no outstanding construction or repair
obligations; and (vii) such other information as may reasonably be requested by
Landlord or any mortgagee or purchaser. Any purchaser or mortgagee may rely on
this estoppel certificate. If Tenant fails to deliver the estoppel certificates
to Landlord within ten (10) days after the request of the Landlord, then Tenant
shall be deemed to have certified that (a) such Lease is in full force and
effect and has not been modified, or that such Lease has been modified as set
forth in the certificate delivered to Tenant; (b) Tenant has not prepaid any
Rent or other charges except for the current month; (c) Tenant has accepted and
occupies such Leased Property; (d) neither Tenant nor Landlord is in default nor
is there any fact or condition which, with notice or lapse of time, or both,
would constitute a default; (e) Landlord has no outstanding construction or
repair obligation; and (f) Tenant has no defenses, set-offs, deductions,
credits, or counterclaims against Landlord. Tenant hereby irrevocably appoints
Landlord as Tenant's attorney-in-fact to execute, acknowledge and deliver on
Tenant's behalf any estoppel certificate which Tenant does not object to within
twenty (20) days after Landlord sends the certificate to Tenant. This power of
attorney is coupled with an interest and is irrevocable.
ARTICLE XVI
MISCELLANEOUS
16.01 Notices. Landlord and Tenant hereby agree that all notices,
demands, requests, and consents (hereinafter "Notices") required to be given
pursuant to the terms of this Lease shall be in writing and shall be addressed
as follows:
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<PAGE> 45
If to Tenant: Corrections Corporation of America
102 Woodmont Boulevard, Suite 800
Nashville, Tennessee 37205
Attention: Darrell K. Massengale
With a copy to: Stokes & Bartholomew, P.A.
424 Church Street, Suite 2800
Nashville, Tennessee 37219
Attention: Elizabeth E. Moore
If to Landlord: CCA Prison Realty Trust
2200 Abbott Martin Road
Nashville, Tennessee 37215
Attention: Michael W. Devlin
With a copy to: Sherrard & Roe, PLC
424 Church Street, Suite 2000
Nashville, Tennessee 37219
Attention: Kim A. Brown
and shall be served by (i) personal delivery, (ii) certified mail, return
receipt requested, postage prepaid, or (iii) nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this Section
shall be effective, regardless of whether or not actually received. Landlord or
Tenant may change its notice address at any time by giving the other party
Notice of such change.
16.02 Advertisement of Leased Property. In the event the parties
hereto have not executed a renewal lease of any Leased Property within one (1)
year prior to the expiration of the Term, then Landlord or its agent shall have
the right to enter such Leased Property at all reasonable times for the purpose
of exhibiting such Leased Property to others and to place upon such Leased
Property for and during the period commencing two hundred ten (210) days prior
to the expiration of the Term "for sale" or "for rent" notices or signs.
16.03 Landlord's Access. Landlord shall have the right to enter upon
the Leased Property, upon reasonable prior notice to Tenant, for purposes of
inspecting the same and assuring Tenant's compliance with this Agreement
provided, any such entry by Landlord shall be subject to all rules, guidelines
and procedures prescribed by Tenant in connection therewith. Landlord shall not
be allowed entry to the Leased Premises unless accompanied by such of Tenant's
personnel as Tenant shall require.
16.04 Entire Agreement. This Agreement and the individual Leases
contain the entire agreement between Landlord and Tenant with respect to the
subject matter hereof and thereof. No
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<PAGE> 46
representations, warranties, and agreements have been made by Landlord except as
set forth in this Agreement and the Leases.
16.05 Severability. If any term or provision of this Agreement or
any Lease is held or deemed by Landlord to be invalid or unenforceable, such
holding shall not affect the remainder of this Agreement or any Lease and the
same shall remain in full force and effect, unless such holding substantially
deprives Tenant of the use of the Leased Property or Landlord of the Rents
therefor, in which event the Lease for such Leased Property shall forthwith
terminate as if by expiration of the Term.
16.06 Captions and Headings. The captions and headings are inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Agreement or the intent of any provision hereof.
16.07 Governing Law. This Agreement and each of the Leases shall be
construed under the laws of the State of Tennessee.
16.08 Memorandum of Lease. Landlord and Tenant agree that a record
of this Agreement or any Lease may be recorded by either party in a memorandum
of lease approved by Landlord and Tenant with respect to each Leased Property.
16.09 Waiver. No waiver by Landlord of any condition or covenant
herein contained, or of any breach of any such condition or covenant, shall be
held or take to be a waiver of any subsequent breach of such covenant or
condition, or to permit or excuse its continuance or any future breach thereof
or of any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Agreement or any Lease or exercise any other
remedy granted herein on account of such existing default.
16.10 Binding Effect. This Agreement and each Lease will be binding
upon and inure to the benefit of the heirs, successors, personal
representatives, and permitted assigns of Landlord and Tenant.
16.11 Authority. The persons executing this Agreement or any Lease
on behalf of Tenant warrant that (i) Tenant has the power and authority to enter
into this Agreement or such Lease; (ii) Tenant is qualified to do business in
the state in which the Leased Property is located; and (iii) they are authorized
to execute this Agreement and each Lease on behalf of Tenant. Tenant shall, at
the request of Landlord, provide evidence satisfactory to Landlord confirming
these representation.
16.12 Transfer of Permits, Etc. Upon the expiration or earlier
termination of the Term of any Lease (whether pursuant to the provisions of this
Agreement or of such Lease), Tenant shall, at the option of Landlord, transfer
to and relinquish to Landlord or Landlord's nominee and to cooperate with
Landlord or Landlords' nominee in connection with the processing by Landlord or
such nominee
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<PAGE> 47
of all licenses, operating permits, and other governmental authorization and all
contracts, including without limitation, the correctional or detention facility
license, and any other contracts with governmental or quasi-governmental
entities which may be necessary or appropriate for the operation by Landlord or
such nominee of the subject Leased Property for the purposes of operating a
correctional or detention facility; provided that the costs and expenses of any
such transfer or the processing of any such application shall be paid by
Landlord or Landlord's nominee; and provided further that any management
agreement, facility operating agreement or other agreement for the housing or
detention of inmates shall be expressly excluded. Any such permits, licenses,
certificates and contracts which are held in Landlord's name now or at the
termination of such Lease shall remain the property of Landlord. To the extent
permitted by law, Tenant hereby irrevocably appoints Landlord, its successors
and assigns and any nominee or nominees specifically designated by Landlord or
any successor or assign as Tenant's attorney-in-fact to execute, acknowledge,
deliver and file all documents appropriate to such transfer or processing of any
such application on behalf of Tenant; this power of attorney is coupled with an
interest and is irrevocable.
16.13 Modification. This Agreement and any Lease may only be
modified by a writing signed by both Landlord and Tenant.
16.14 Incorporation by Reference. All schedules and exhibits
referred to in this Agreement are incorporated into this Agreement, and all
schedules and exhibits referred to in any Lease (as well as the provisions of
this Agreement, except to the extent specifically excluded from or inconsistent
with the terms of such Lease) are incorporated into such Lease.
16.15 No Merger. The surrender of this Agreement or of any Lease by
Tenant or the cancellation of this Agreement or of any Lease by agreement of
Tenant and Landlord or the termination of this Agreement or of any Lease on
account of Tenant's default will not work a merger, and will, at Landlord's
option, terminate any subleases or operate as an assignment to Landlord of any
subleases. Landlord's option under this paragraph will be exercised by notice to
Tenant and all known subtenants of any applicable Leased Property.
16.16 Laches. No delay or omission by either party hereto to
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power or be construed to be a waiver thereof.
16.17 Waiver of Jury Trial. To the extent that there is any claim by
one party against the other that is not to be settled by arbitration as provided
in Article XIV hereof, Landlord and Tenant waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other on all
matters arising out of this Agreement or the use and occupancy of the Leased
Property (except claims for personal injury or property damage). If Landlord
commences any summary proceeding for nonpayment of Rent, Tenant will not
interpose, and waives the right to interpose, any counterclaim in any such
proceeding.
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<PAGE> 48
16.18 Permitted Contests. Tenant, on its own or on Landlord's behalf
(or in Landlord's name), but at Tenant's expense, may contest, by appropriate
legal proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any legal
requirement or insurance requirement or any lien, attachment, levy, encumbrance,
charge or claim provided that (i) in the case of an unpaid Imposition, lien,
attachment, levy, encumbrance, charge or claim, the commencement and
continuation of such proceedings shall suspend the collection thereof from
Landlord and from the Leased Property; (ii) neither the Leased Property nor any
Rent therefrom nor any part thereof or interest therein would be in any
immediate danger of being sold, forfeited, attached or lost; (iii) in the case
of a legal requirement, Landlord would not be in any immediate danger of civil
or criminal liability for failure to comply therewith pending the outcome of
such proceedings; (iv) in the event that any such contest shall involve a sum of
money or potential loss in excess of Fifty Thousand Dollars ($50,000.00), Tenant
shall deliver to Landlord and its counsel an opinion of Tenant's counsel to the
effect set forth in clauses (i), (ii) and (iii), to the extent applicable; (v)
in the case of a legal requirement and/or an Imposition, lien, encumbrance, or
charge, Tenant shall give such reasonable security as may be demanded by
Landlord to insure ultimate payment of the same and to prevent any sale or
forfeiture of the affected Leased Property or the Rent by reason of such
nonpayment or noncompliance; provided, however, the provisions of this Section
shall not be construed to permit Tenant to contest the payment of Rent (except
as to contests concerning the method of computation or the basis of levy of any
Imposition or the basis for the assertion of any other claim) or any other sums
payable by Tenant to Landlord hereunder; (vi) in the case of an insurance
requirement, the coverage required by Article IV shall be maintained; and (vii)
if such contest be finally resolved against Landlord or Tenant, Tenant shall, as
Other Additional Rent due hereunder, promptly pay the amount required to be
paid, together with all interest and penalties accrued thereon, or comply with
the applicable legal requirement or insurance requirement. Landlord, at Tenant's
expense, shall execute and deliver to Tenant such authorizations and other
documents as may be reasonably required in any such contest, and, if reasonably
requested by Tenant or if Landlord so desires, Landlord shall join as a party
therein. Tenant hereby agrees to indemnify and save Landlord harmless from and
against any liability, cost or expense of any kind that may be imposed upon
Landlord in connection with any such contest and any loss resulting therefrom.
16.19 Construction of Lease. This Agreement and each of the Leases
for Leased Properties have been reviewed by Landlord and Tenant and their
respective professional advisors. Landlord, Tenant, and their advisors believe
that this Agreement and such Leases are the product of all their efforts, that
they express their agreement, and agree that they shall not be interpreted in
favor of either Landlord or Tenant or against either Landlord or Tenant merely
because of any party's efforts in preparing such documents.
16.20 Counterparts. This Agreement and each Lease may be executed in
duplicate counterparts, each of which shall be deemed an original hereof or
thereof.
16.21 Relationship of Landlord and Tenant. The relationship of
Landlord and Tenant is the relationship of lessor and lessee. Landlord and
Tenant are not partners, joint venturers, or associates.
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<PAGE> 49
16.22 Landlord's Status as a REIT. Tenant acknowledges that Landlord
intends to elect to be taxed as a real estate investment trust ("REIT") under
the Code. Tenant shall not do anything which would adversely affect Landlord's
status as a REIT. Tenant hereby agrees to modifications of this Agreement which
do not materially adversely affect Tenant's rights and liabilities if such
modifications are required to retain or clarify Landlord's status as a REIT.
16.23 Sale of Real Estate Assets. Notwithstanding any other
provision of this Agreement or of any Lease, Landlord shall not be required to
sell or transfer Leased Property, or any portion thereof, which is a real estate
asset as defined in Section 856(c)(6) of the Code, to Tenant if Landlord's
counsel advises Landlord that such sale or transfer may not be a sale of
property described in Section 857(b)(6)(C) of the Code. If Landlord determines
not to sell such property pursuant to the above sentence, Tenant's right, if
any, to purchase the Leased Property shall continue and be exercisable at such
time as the transaction, upon the advice of Landlord's counsel, would be a sale
of property described in Section 857(b)(6)(C) of the Code.
ARTICLE XVII
NONDISCLOSURE AND RELATED MATTERS
17.01 Covenant Not to Disclose. Landlord agrees that, by virtue of
the relationship of trust and confidence between Landlord and Tenant, it
possesses and will possess certain data and knowledge of operations of the
Tenant which are proprietary in nature and confidential. Landlord covenants and
agrees that it will not knowingly, at any time, directly or indirectly, for
whatever reason, without Tenant's prior written consent, which may be given or
withheld in Tenant's sole discretion, reveal, divulge or make known to any
person or entity, any confidential or proprietary record, data, trade secret,
pricing policy, bid amount, pricing strategy, personnel policy, method or
practice of obtaining or doing business, or any other confidential or
proprietary information whatever (the "Confidential Information"), whether or
not obtained with the knowledge and permission of the Tenant and whether or not
developed, devised or otherwise created in whole or in part by the efforts of
Landlord, nor shall Landlord use such Confidential Information for its own
account. Confidential Information shall not include any information generally
available to the public other than as a result of a disclosure of such
information by Landlord. Notwithstanding anything to the contrary provided
herein, a disclosure of Confidential Information by Landlord will not be
considered a violation of this Article XVII in the event such disclosure is
involuntarily compelled by a final, non-appealable, order from a court of
competent jurisdiction.
17.02 Non-Interference Covenant. Landlord covenants and agrees that
it will not, at any time, directly or indirectly, for whatever reason, whether
for its own account or for the account of any other person, firm, corporation or
other organization, without Tenant's prior written consent, which may be given
or withheld in Tenant's sole discretion: (i) solicit, employ, deal with or
otherwise interfere with any of the Tenant's contracts or relationships with any
employee, officer, director or any independent contractor, whether the person is
employed by or associated with the Tenant on the date of this Agreement or at
any time hereafter; or (ii) solicit, accept, deal with or otherwise interfere
with any of the Tenant's contracts or relationships with any independent
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<PAGE> 50
contractor, customer, client or supplier. Notwithstanding the foregoing, (i)
Landlord may offer employment to the current employees of the Tenant who are
terminated by the Tenant subsequent to the date hereof, (ii) Landlord shall in
no way be liable for any actions by any entity leasing or managing any facility
owned by Landlord, and (iii) nothing provided herein shall prevent Landlord from
soliciting relationships with an entity or entities to lease, license, manage or
otherwise use any facility leased to the Tenant subsequent to the termination of
such lease with the Tenant.
17.03 Business Materials and Property Disclosure. All written
materials, records and documents made by Landlord or coming into its possession
concerning the business or affairs of the Tenant shall be the sole property of
the Tenant and, upon request by the Tenant, Landlord shall deliver the same to
the Tenant and shall retain no copies. The foregoing restrictions shall not be
applicable to any written materials, records and documents generally available
to the public other than as a result of a disclosure of such written materials,
records and documents by Landlord.
17.04 Breach by Landlord. It is expressly understood, acknowledged
and agreed by Landlord that: (i) the restrictions contained in this Article XVII
represent a reasonable and necessary protection of the legitimate interests of
the Tenant and that its failure to observe and comply with its covenants and
agreements in this Article XVII will cause irreparable harm to the Tenant; (ii)
it is and will continue to be difficult to ascertain the nature, scope and
extent of the harm; and (iii) a remedy at law for such failure by Landlord will
be inadequate. Accordingly, it is the intention of the parties that, in addition
to any other rights and remedies which the Tenant may have in the event of any
breach by Landlord of this Article XVII, the Tenant shall be entitled, and is
expressly and irrevocably authorized by Landlord, to demand and obtain specific
performance, including, without limitation, temporary and permanent injunctive
relief, and all other appropriate equitable relief against Landlord in order to
enforce against Landlord any of the covenants and agreements contained in this
Article XVII, and/or to prevent any breach or any threatened breach by Landlord
of the covenants and agreements of Landlord contained in this Article XVII.
Should the Tenant prevail in any action to enforce this Article XVII, the Tenant
shall be entitled to recover all of its costs and expenses relating thereto,
including reasonable attorney's fees and expenses.
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<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers as
of the date first set forth above.
CCA PRISON REALTY TRUST
By:
---------------------------------------
Title:
------------------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
---------------------------------------
Title:
------------------------------------
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<PAGE> 52
SCHEDULE A
THE FACILITIES
LOCATION
FACILITY NAME (CITY, STATE)
Bridgeport Pre-Parole Transfer Facility Bridgeport, Texas
Central Arizona Detention Center Florence, Arizona
Houston Processing Center Houston, Texas
Laredo Processing Center Laredo, Texas
Leavenworth Detention Center Leavenworth, Texas
Mineral Wells Pre-Parole Transfer Facility Mineral Wells, Texas
West Tennessee Detention Facility Mason, Tennessee
Eloy Detention Facility Eloy, Arizona
T. Don Hutto Correctional Facility Taylor, Texas
<PAGE> 53
SCHEDULE B
PERSONAL PROPERTY
All of those certain items of property described on the CCA - Master
Depreciation Schedule dated June 30, 1997, on file at the offices of Seller and
Purchaser.
<PAGE> 54
SCHEDULE C
EXCLUDED PERSONAL PROPERTY
Bridgeport
<TABLE>
<CAPTION>
Asset Number Vendor Description
- ------------ ------ -----------
<S> <C> <C>
9404 Dury's Camera for Timeclock Avant
9964 Control Systems Timeclock Systems
</TABLE>
Central Arizona
<TABLE>
<CAPTION>
Asset Number Vendor Description
- ------------ ------ -----------
<S> <C> <C>
12173 Control Systems Timeclock Systems
8463 Control Systems Timeclock Kronos 460F
8466 Control Systems Camera SSI 124E Die Cutter
</TABLE>
Eloy
<TABLE>
<CAPTION>
Asset Number Vendor Description
- ------------ ------ -----------
<S> <C> <C>
9255 Control Systems Timeclock Kronos 460F Barcode
9403 Control Systems Timeclock Kronos 460F Barcode
12218 Dycam Inc. Camera Digital Model 4STD PC
13103 Control Systems Timeclock Kronos 480F 256K
</TABLE>
Houston
<TABLE>
<CAPTION>
Asset Number Vendor Description
- ------------ ------ -----------
<S> <C> <C>
2619 Control Systems Timeclocks
12733 Digital Connections Wide Area Network - Wan
1026 Southern Time Timeclocks
</TABLE>
<PAGE> 55
Laredo
<TABLE>
<CAPTION>
Asset Number Vendor Description
- ------------ ------ -----------
<S> <C> <C>
2620 Control Systems Timeclocks
4110 Control Systems Internal Commun. Board
7230 Control Systems Software Close Up Customer
12166 Digital Connections Wide Area Network - Wan
12607 Computer Discount
Warehouse Novell Groupwise 5 Mailbox 10
12608 Computer Discount
Warehouse Novell Groupwise 5 Mailbox 10
12609 Megabyte Business Printer ID Card Persona 2MB
1620 Simplex Timeclock and Card Racks
</TABLE>
Leavenworth
<TABLE>
<CAPTION>
Asset Number Vendor Description
- ------------ ------ -----------
<S> <C> <C>
6729 Control Systems Timeclock System SS Barcode
12738 Digital Connections Wide Area Network - Wan
</TABLE>
Mineral Wells
<TABLE>
<CAPTION>
Asset Number Vendor Description
- ------------ ------ -----------
<S> <C> <C>
9256 Control Systems Timeclock Kronos 460F Barcode
</TABLE>
West Tennessee
<TABLE>
<CAPTION>
Asset Number Vendor Description
- ------------ ------ -----------
<S> <C> <C>
4184 Control Systems Timeclock - Kronos
10659 Control Systems Barcode Reader Kronos 460F
</TABLE>
<PAGE> 56
T. Don Hutto
<TABLE>
<CAPTION>
Asset Number Vendor Description
- ------------ ------ -----------
<S> <C> <C>
13024 Control Systems Timeclock Kronos 480F 256K
13266 Control Systems Software TKC250 V8B 1-User
</TABLE>
<PAGE> 1
EXHIBIT 10.7
LEASE AGREEMENT
(HOUSTON)
THIS LEASE AGREEMENT ("Lease") dated as of the 18th day of July, 1997,
by and between CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("Landlord") and CORRECTIONS CORPORATION OF AMERICA, a Tennessee corporation
("Tenant").
RECITALS
WHEREAS, Tenant (or one of Tenant's affiliates) has concurrently
conveyed to Landlord the property described in Exhibit A hereto, and Landlord
and Tenant desire that Landlord lease such property back to Tenant; and
WHEREAS, Landlord and Tenant have entered into a Master Agreement to
Lease of even date herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant leases
from Landlord the Land located in the City of Houston, Harris County, State of
Texas, described in Exhibit A hereto, and all Improvements, Fixtures, and
Personal Property thereon or thereto (each as defined in the Master Agreement,
and, together with said Land, the "Leased Property"); such Leased Property
collectively known and described at the date hereof as the Houston Processing
Center;
SUBJECT, HOWEVER, to the lien of the mortgage debt described in Exhibit
B hereto, if any, and to all easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of the date hereof and listed in
Exhibit C hereto (collectively the "Permitted Exceptions").
1.2 Term. The initial term (the "Fixed Term") of the Lease shall be for
a fixed term of twelve (12) years commencing on July 18, 1997 (the "Commencement
Date") and expiring on July 17, 2009 (the "Expiration Date"). The Term of this
Lease may be renewed on the mutual agreement of Landlord and Tenant as follows:
(i) provided that Tenant gives Landlord notice on or before the date which is
six (6) months prior to the Expiration Date, upon the mutual agreement of
Landlord and Tenant, the Lease shall be renewed for one (1) additional five (5)
year term (the "Extended Term") on the same terms and provisions (other than
with respect to renewal) as the Fixed Term, as set forth in the Lease; (ii)
provided that Tenant gives Landlord notice on or before the date which is six
(6) months prior to the expiration of the Extended Term, upon the mutual
agreement of Landlord and Tenant, the Lease shall be renewed for one (1)
additional five (5) year term (the "Second Extended Term") on the same terms and
provisions (other than with respect to renewal) as
<PAGE> 2
the Fixed Term, as set forth in the Lease; and (iii) provided that Tenant gives
Landlord notice on or before the date which is six (6) months prior to the
expiration of the Second Extended Term, upon the mutual agreement of Landlord
and Tenant, the Lease shall be renewed for one (1) additional five (5) year term
(the "Third Extended Term") on the same terms and provisions (other than with
respect to renewal) as the Fixed Term, as set forth in the Lease. Tenant's right
to so extend the Term of the Lease is conditioned on Landlord's prior approval
of the Extended Term, Second Extended Term, or Third Extended Term, as the case
may be. The term "Term" used in this Agreement means the Fixed Term, Extended
Term, Second Extended Term and Third Extended Term, as appropriate. The term
"Lease Year" means each twelve (12) month period during the Term commencing on
January 1 and ending on December 31, except the first Lease Year of each Lease
shall be the period from the Commencement Date through the following December
31, and the last Lease Year shall end on the date of termination of the Lease if
a day other than December 31. Landlord may terminate this Lease prior to the
expiration of the Term hereof, at any time following the date which is five (5)
years from the date hereof, upon written notice to Tenant not less than eighteen
(18) months prior to the effective date of such termination.
ARTICLE II
RENT
2.1 Base Rent. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term and the Third
Extended Term, commencing on the Commencement Date, in accordance with the Base
Rent Schedule attached hereto as Exhibit D. If the Commencement Date or the
Expiration Date shall be other than on the first day of a calendar month, the
initial (or final, as appropriate) monthly installment of Base Rent payable
pursuant to the Lease shall be prorated for the number of days until, in the
case of the initial monthly installment, the first day of the calendar month
following the Commencement Date and, in the case of the final monthly
installment, the Expiration Date.
2.2 Additional Rent. The Base Rent shall be subject to such increases
over the Term as determined pursuant to Section 2.02 of the Master Agreement.
2.3 Other Additional Rent. Tenant shall also pay all Other Additional
Rent with respect to the Leased Property, as set forth in the Master Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.1 Master Agreement Incorporated Herein. All provisions of the Master
Agreement (except any provisions expressly therein not to be a part of an
individual lease of leased property) are hereby incorporated in and are a part
of this Lease of the Leased Property.
2
<PAGE> 3
3.2 Recordation. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
CCA PRISON REALTY TRUST
By:
-----------------------------------------
Title:
--------------------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
-----------------------------------------
Title:
--------------------------------------
3
<PAGE> 4
EXHIBIT A
Legal Description of Leased Property
Metes and Bounds Description
5.843 Acres (254,531 Square Feet)
Portion of Reserve "C" Block One
World/Houston Section One International Business Center
William Lloyd Survey, A-1407
Harris County, Texas
Being a tract or parcel containing 5.843 acres (254,531 square feet) of land
situated in the William Lloyd Survey, Abstract No. 1407, Harris County, Texas,
being out of and a part of Reserve "C" Block One of World/Houston Section One
International Business Center, recorded in Volume 278, Page 25 of the Harris
County Map Records (H.C.M.R.) and being the same called 5.840 acre tract
described in deed recorded under Clerk's File Number J194317 of the Harris
County Official Public Records of Real Property (H.C.O.P.R.R.P.); said 5.843
acre tract being more particularly described by metes and bounds as follows with
all bearings referenced to said subdivision plat:
Beginning at a 5/8-inch iron rod found for the northeast corner of said Reserve
"C" and the herein described tract, being the southeast corner of that certain
called 6.6031 acre tract, described in deed recorded under Clerk's File Number
G291174 of said H.C.O.P.R.R.P. and being in the west line of Lot 10 of Block
One, Greenlee Addition, a subdivision in Harris County of record in Volume 40,
Page 32 of said H.C.M.R.:
THENCE, South 02 degrees 51 minutes 21 seconds East, 485.42 feet along the line
common to said Reserve "C" and said Greenlee Addition to a 3/4-inch galvanized
iron pipe found for the northeast corner of that certain called 5.50 acre tract
described in deed recorded under Clerk's File Number H038206 of said
H.C.O.P.R.R.P., and being the southeast corner of the herein described tract;
THENCE, South 89 degrees 07 minutes 09 seconds West, departing the west line of
said Block 1 of Greenlee Addition and along the north line of said 5.50 acre
tract, 500.50 feet to a 3/4-inch galvanized iron pipe found for the common west
corner of said 5.50 acre tract and the herein described tract, and being in the
existing east right-of-way line of Export Plaza Drive (80 feet wide);
THENCE, North 02 degrees 51 minutes 27 seconds West, 104.37 feet along the
existing east right-of-way line of said Export Plaza Drive to a 3/4-inch
galvanized iron pipe found for the beginning of a tangent curve to the left;
THENCE, Northwesterly, 172.82 feet along the existing east right-of-way line of
said Export Plaza Drive, the existing north right-of-way line of Consulate Plaza
Drive (80 feet wide) and along the arc of said curve to the left (Central Angle
= 70 degrees 43 minutes 34 seconds, Radius = 140.00 feet, Chord Bearing and
Distance = North 38 degrees 13 minutes 14 seconds West, 162.05 feet) to a 5/8-
<PAGE> 5
inch iron rod found for a common south corner of Reserves "B" and "C" of said
World/Houston Section One International Business Center;
THENCE, North 16 degrees 24 minutes 59 seconds East, 246.82 feet departing the
existing north right-of-way line of said Consulate Plaza Drive and along the
common line between said Reserve "B" and "C" to a 5/8-inch iron rod found for
the common corner of Reserves "A", "B" and "C" of said World/Houston Section One
International Business Center, being the southwest corner of said 6.6031 acre
tract and being the northwest corner of the herein described tract from which a
found 8-inch square cross-tie fence corner post bears South 52 degrees 12
minutes 39 seconds East, 0.74 feet;
THENCE, North 87 degrees 17 minutes 38 seconds East, 512.53 feet along the
common line between the herein described tract, Reserve "C" and said 6.6031 acre
tract to the POINT OF BEGINNING containing 5.843 acres (254,531 square feet) of
land, more or less.
Compiled by:
SURVCON INC.
Job No. 5980-01
April 14, 1997
D-2
Houston Processing Center
Houston, Harris County Texas
<PAGE> 6
EXHIBIT B
Mortgage Debt
Property: Houston Processing Center
This property is subject to the following Mortgage Debt:
That certain deed of trust of First Union National Bank of Tennessee,
as Administrative Agent, dated July 18, 1997.
<PAGE> 7
EXHIBIT C
Permitted Exceptions
Property: Houston Processing Center
1. Standby fees, taxes and assessments by any taxing authority for the
year 1997, and subsequent years.
2. The following restrictive covenants of record itemized below: Volume
278, page 25 of the Map Records of Harris County, Texas and those
Restrictions filed for record under Clerk's File No. F934983, as
corrected and refiled under Clerk's File No. F944735, and as amended by
instrument filed under Clerk's File No. G698447, all of the Official
Records of Real Property of Harris County, Texas.
3. A water line easement 10 feet wide along the westerly line of subject
property, which abuts Consulate Plaza Drive, and/or Export Plaza Drive,
as reflected on the map or plat thereof, recorded in Volume 278, page
25 of the Map Records of Harris County, Texas.
4. An unobstructed easement 16 feet wide, together with an unobstructed
aerial easement 5 feet, 6 inches wide, beginning at a height of 16 feet
3 inches above the ground, and extending upwards and outwards on an
inclined plane, to a height of 18 feet 6 inches above the ground,
located south and west of and adjoining the heretofore cited 16 feet
wide easement, all located along the north and east lines of subject
property, as granted to Houston Lighting and Power Company by
instrument filed under Clerk's File No. F941406, and as corrected by
instrument filed under Clerk's File No. G120555, and as further
ratified by instrument filed under Clerk's File No. G769967, all of the
Official Records of Real Property of Harris County, Texas.
5. Blanket easements for ingress and egress, for installation,
maintenance, repair and removal of public utilities, as set out in the
Declaration filed under Clerk's File No. F934983, and as refiled under
Clerk's File No. F944735, and as amended by instrument filed under
Clerk's File No. G698447, all of the Official Public Records of Real
Property of Harris County, Texas.
6. An easement for drainage purposes extending a distance of 15 feet on
each side of the center line of all natural water courses, as reflected
by the map or plat thereof, recorded in Volume 278, page 25 of the Map
Records of Harris County, Texas.
7. A water line and meter easement, as granted to the City of Houston by
instrument filed under Clerk's File No. J546727 of the Official Public
Records of Real Property of Harris County, Texas, and being more
particularly described by metes and bounds therein.
8. Agreement by and between Warner Cable Communications, Inc. and
Corrections Corporation of America for the installation, operation and
maintenance of a Cable Television
<PAGE> 8
System as reflected by instrument filed under Clerk's File No. N216013
of the Official Public Records of Harris County, Texas.
9. An unobstructed easement 10 feet wide, together with an unobstructed
aerial easement 10 feet wide, beginning at a plane of 16 feet above the
ground and extending upwards, located on both sides of and adjoining
the said 10 feet wide easement, as granted to Houston Lightening and
Power Company by instrument filed under Clerk's File No. J445703 of the
Official Public Records of Real Property of Harris County, Texas; said
easement(s) being further reflected and defined on Sketch No. N84-041
attached to said instrument.
10. A 1/16th non-participating royalty interest in and to all the oil, gas
and other minerals in, on, under or that may be produced from subject
property is excepted herefrom as the same is set forth in instrument
recorded in Volume 5812, page 576 of the Deed Records of Harris County,
Texas.
11. All oil, gas and other minerals, the royalties, bonuses, rentals and
all other rights in connection with same are excepted herefrom as set
forth in instrument filed under Clerk's File No. G296822 of the
Official Public Records of Harris County, Texas. Waiver of surface
rights contained therein.
12. All oil, gas and other minerals, the royalties, bonuses, rentals and
all other rights in connection with same are excepted herefrom as set
forth in instrument filed under Clerk's File No. F934983, and as
refiled under Clerk's File No. F944735, and as amended by instrument
filed under Clerk's File No. G698447, all of the Official Public
Records of Harris County, Texas. Waiver of surface rights contained
therein.
13. Building set back line of 20 feet along that portion of the west
property line abutting Consulate Plaza Drive and/or Export Plaza Drive,
as set out on plat recorded in Volume 278, page 25 of the Map Records
of Harris County, Texas.
14. The subject property lies within the area designated and zoned by the
City of Houston as the "Jetero Airport Hazard Area" (Houston
Intercontinental Airport) and is subject to the restrictions and
regulations imposed by Ordinance of the City of Houston, a certified
copy of which is recorded in Volume 5448, page 421, Deed Records,
Harris County, Texas, as amended by Ordinance No. 83-861, filed for
record under Clerk's File No. J040968 of the Official Public Records,
Harris County, Texas.
15. Annual Maintenance Charge payable to World/Houston International
Business Center Improvement Association, as set forth in instrument
filed under Clerk's File No. F934983, and as refiled under Clerk's File
No. F944735, and as amended by instrument filed under Clerk's File No.
G698447, all of the Official Public Records of Real Property of Harris
County, Texas and additionally secured by a separate, valid and
subsisting lien, as set forth therein.
<PAGE> 9
16. The subject property is located within the City of Houston or within
its extra territorial jurisdiction (within 5 miles of the city limits
but outside another municipality). It is subject to the terms,
conditions, and provisions of City of Houston Ordinance No. 85-1878,
pertaining to, among other things, the platting and re-platting of real
property and to the establishment of building lines (25 feet along
major thoroughfares and 10 feet along other streets). A certified copy
of said ordinance was filed for record on August 1, 1991, under Harris
County Clerk's File No. N 253886.
17. All matters shown on the Plat of Asbuilt Survey, dated April 15, 1997,
as revised June 17, 1997, prepared by William H. Smith, Jr., R.P.L.S.
No. 3982, Survcon Inc., 5757 Woodway, Houston, Texas 77057, Job Number
5980-01.
<PAGE> 10
EXHIBIT D
Base Rent Schedule
Property: Houston Processing Center
Tenant will pay to Landlord annual Base Rent of $1,500,000.00, payable
in equal monthly installments of $125,000.00.
Base Rent for the Extended Term, Second Extended Term and Third
Extended Term shall be equal to the fair market rental value of the Leased
Property as of the respective commencement dates thereof.
<PAGE> 1
EXHIBIT 10.8
LEASE AGREEMENT
(LAREDO)
THIS LEASE AGREEMENT ("Lease") dated as of the 18th day of July, 1997,
by and between CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("Landlord") and CORRECTIONS CORPORATION OF AMERICA, a Tennessee corporation
("Tenant").
RECITALS
WHEREAS, Tenant (or one of Tenant's affiliates) has concurrently
conveyed to Landlord the property described in Exhibit A hereto, and Landlord
and Tenant desire that Landlord lease such property back to Tenant; and
WHEREAS, Landlord and Tenant have entered into a Master Agreement to
Lease of even date herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant leases
from Landlord the Land located in the City of Laredo, Webb County, State of
Texas, described in Exhibit A hereto, and all Improvements, Fixtures, and
Personal Property thereon or thereto (each as defined in the Master Agreement,
and, together with said Land, the "Leased Property"); such Leased Property
collectively known and described at the date hereof as the Laredo Processing
Center;
SUBJECT, HOWEVER, to the lien of the mortgage debt described in Exhibit
B hereto, if any, and to all easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of the date hereof and listed in
Exhibit C hereto (collectively the "Permitted Exceptions").
1.2 Term. The initial term (the "Fixed Term") of the Lease shall be for
a fixed term of twelve (12) years commencing on July 18, 1997 (the "Commencement
Date") and expiring on July 17, 2009 (the "Expiration Date"). The Term of this
Lease may be renewed on the mutual agreement of Landlord and Tenant as follows:
(i) provided that Tenant gives Landlord notice on or before the date which is
six (6) months prior to the Expiration Date, upon the mutual agreement of
Landlord and Tenant, the Lease shall be renewed for one (1) additional five (5)
year term (the "Extended Term") on the same terms and provisions (other than
with respect to renewal) as the Fixed Term, as set forth in the Lease; (ii)
provided that Tenant gives Landlord notice on or before the date which is six
(6) months prior to the expiration of the Extended Term, upon the mutual
agreement of Landlord and Tenant, the Lease shall be renewed for one (1)
additional five (5) year term (the "Second Extended Term") on the same terms and
provisions (other than with respect to renewal) as
<PAGE> 2
the Fixed Term, as set forth in the Lease; and (iii) provided that Tenant gives
Landlord notice on or before the date which is six (6) months prior to the
expiration of the Second Extended Term, upon the mutual agreement of Landlord
and Tenant, the Lease shall be renewed for one (1) additional five (5) year term
(the "Third Extended Term") on the same terms and provisions (other than with
respect to renewal) as the Fixed Term, as set forth in the Lease. Tenant's right
to so extend the Term of the Lease is conditioned on Landlord's prior approval
of the Extended Term, Second Extended Term, or Third Extended Term, as the case
may be. The term "Term" used in this Agreement means the Fixed Term, Extended
Term, Second Extended Term and Third Extended Term, as appropriate. The term
"Lease Year" means each twelve (12) month period during the Term commencing on
January 1 and ending on December 31, except the first Lease Year of each Lease
shall be the period from the Commencement Date through the following December
31, and the last Lease Year shall end on the date of termination of the Lease if
a day other than December 31. Landlord may terminate this Lease prior to the
expiration of the Term hereof, at any time following the date which is five (5)
years from the date hereof, upon written notice to Tenant not less than eighteen
(18) months prior to the effective date of such termination.
ARTICLE II
RENT
2.1 Base Rent. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term and the Third
Extended Term, commencing on the Commencement Date, in accordance with the Base
Rent Schedule attached hereto as Exhibit D. If the Commencement Date or the
Expiration Date shall be other than on the first day of a calendar month, the
initial (or final, as appropriate) monthly installment of Base Rent payable
pursuant to the Lease shall be prorated for the number of days until, in the
case of the initial monthly installment, the first day of the calendar month
following the Commencement Date and, in the case of the final monthly
installment, the Expiration Date.
2.2 Additional Rent. The Base Rent shall be subject to such increases
over the Term as determined pursuant to Section 2.02 of the Master Agreement.
2.3 Other Additional Rent. Tenant shall also pay all Other Additional
Rent with respect to the Leased Property, as set forth in the Master Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.1 Master Agreement Incorporated Herein. All provisions of the Master
Agreement (except any provisions expressly therein not to be a part of an
individual lease of leased property) are hereby incorporated in and are a part
of this Lease of the Leased Property.
2
<PAGE> 3
3.2 Recordation. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
CCA PRISON REALTY TRUST
By:
-------------------------------
Title:
----------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
-------------------------------
Title:
----------------------------
3
<PAGE> 4
EXHIBIT A
Legal Description of Leased Property
THE SURFACE ONLY TO:
A 4.0 ACRE TRACT OF LAND, MORE OR LESS, BEING PARTLY OUT OF THE ROBERT HAYNES
22.43 ACRE TRACT, BEING OF RECORD IN VOLUME 295, PAGES 238-241, WEBB COUNTY DEED
RECORDS AND PARTLY OUT OF THE HAYNES TRACT BEING OF RECORD IN VOLUME 207, PAGE
161, WEBB COUNTY DEED RECORDS; THIS 4.0 ACRE TRACT ALSO KNOWN AS LOT 2A, BLOCK
1, OUT OF THE CASA BLANCA SUBDIVISION, AS RE-PLATTED AND RECORDED IN VOLUME 8,
PAGE 50, OF THE WEBB COUNTY PLAT RECORDS, ALL SAID PROPERTY BEING OUT OF PORCION
28, WEBB COUNTY, TEXAS;
COMMENCING from the southeast corner of said Haynes tract, same being a point on
the northeasterly right-of-way line of U.S. Highway No. 59, and same being at
approximately highway station 194 + 86;
THENCE, North 87 degrees 21 minutes 00 seconds West, 862 feet, along said
right-of-way line, to the southwest corner of Lot No. 1, out of the Casa Blanca
Subdivision Plat as Recorded in Volume 3, Page 100, of the Webb County Plat
Records, to the southeast corner of this tract and the POINT OF BEGINNING.
THENCE, North 02 degrees 39 minutes 00 seconds East, 200 feet, with the common
boundary line of this tract and said Lot No. 1, to the northwest corner of said
Lot No. 1 and an exterior corner of this tract;
THENCE, North 87 degrees 21 minutes 00 seconds West, 25.76 feet, with the common
boundary line of the Juan Moreno 1.9261 acre tract, recorded in Volume 1414,
Pages 805-811, of the Webb County Deed Records, to the most westerly, southwest
corner of the said Juan Moreno tract, and an interior corner of this tract;
THENCE, North 02 degrees 39 minutes 00 seconds East, 250 feet, with the common
boundary line of this tract and said Juan Moreno tract, to the northwest corner
of said Juan Moreno tract and the northeast corner of this tract;
THENCE, North 87 degrees 21 minutes 00 seconds West, 375.75 feet, to the
northeast corner of Lot No. 3, out of the aforesaid Casa Blanca Subdivision Plat
and the northwest corner of this tract;
THENCE, South 02 degrees 39 minutes 00 seconds West, 450 feet, with the common
boundary line of this tract, and said Lot No. 3, to the southeast corner of said
Lot No. 3, a point on the aforesaid northeasterly right-of-way line of U. S.
Highway 59, to the southwest corner of this tract;
<PAGE> 5
THENCE, South 87 degrees 21 minutes 00 seconds East, 401.51 feet, along the
southwesterly boundary line of this tract, being in common with the
northeasterly right-of-way line of said U.S. Highway 59, to the POINT OF
BEGINNING.
Laredo Processing Center
Laredo, Webb County, Texas
<PAGE> 6
EXHIBIT B
Mortgage Debt
Property: Laredo Processing Center
This property is subject to the following Mortgage Debt:
That certain deed of trust of First Union National Bank of
Tennessee, as Administrative Agent, dated July 18, 1997.
<PAGE> 7
EXHIBIT C
Permitted Exceptions
Property: Laredo Processing Center
1. Standby fees, taxes and assessments by any taxing authority for the
year 1997, and subsequent years.
2. Easement and right of way for electric transmission lines dated
November 6, 1984, executed by Richard E. Haynes to Central Power and
Light Company, recorded in Volume 1083, pages 817-820, Webb County Real
Property Records.
3. All oil, gas and other minerals reserved in Deed dated November 30,
1984, executed by Richard E. Haynes, Trustee to Corrections Corporation
of America, recorded in Volume 1087, Pages 781-783, Webb County Real
Property Records, and containing the waiver of any right of ingress and
egress and surface rights.
4. Easement and right of way for electric transmission lines dated May 11,
1983, executed by Victor M. Solis and Gloria Solis to Central Power and
Light Company, recorded in Volume 1025, pages 792-793, Webb County Real
Property Records.
5. All oil, gas and other minerals reserved in Deed dated May 28, 1987,
executed by Richard E. Haynes to Corrections Corporation of America,
recorded in Volume 1236, pages 490-493, Webb County Real Property
Records, in which the Surface Rights only were conveyed.
6. All utility easements reflected on Subdivision Replat recorded in
Volume 8, page 50, Webb County Plat Records.
7. Subject to Order of Joint Airport Zoning Board of the City of Laredo
and Webb County recorded in Volume 655, page 277, Webb County Real
Property Records.
8. Rights of Webb County, Texas, to flood spillway along the Eastern
boundaries of Chacon Creek, as reflected on Plat prepared by J. Limon
on July 15, 1961, as set out in Deed dated January 18, 1962, from
Adelaide G. Bunn, individually and as Independent Executrix of the
Estate of T. B. Bunn, Deceased to Veterans Land Board of the State of
Texas, recorded in Volume 295, pages 238-241, Webb County, Records.
9. All matters shown on the Survey, dated November 15, 1990, last revised
_______________, 1997, prepared by Cesareo R. Porras, P.L.S. No. 3481,
Porras Engineering Company, 304 E. Calton Road, Laredo, Texas 78044,
Drawing Number F.B. #94.
<PAGE> 8
EXHIBIT D
Base Rent Schedule
Property: Laredo Processing Center
Tenant will pay to Landlord annual Base Rent of $1,200,000.00, payable
in equal monthly installments of $100,000.00.
Base Rent for the Extended Term, Second Extended Term and Third
Extended Term shall be equal to the fair market rental value of the Leased
Property as of the respective commencement dates thereof.
<PAGE> 1
EXHIBIT 10.9
LEASE AGREEMENT
(BRIDGEPORT)
THIS LEASE AGREEMENT ("Lease") dated as of the 18th day of July, 1997,
by and between CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("Landlord") and CORRECTIONS CORPORATION OF AMERICA, a Tennessee corporation
("Tenant").
RECITALS
WHEREAS, Tenant (or one of Tenant's affiliates) has concurrently
conveyed to Landlord the property described in Exhibit A hereto, and Landlord
and Tenant desire that Landlord lease such property back to Tenant; and
WHEREAS, Landlord and Tenant have entered into a Master Agreement to
Lease of even date herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant leases
from Landlord the Land located in the City of Bridgeport, Wise County, State of
Texas, described in Exhibit A hereto, and all Improvements, Fixtures, and
Personal Property thereon or thereto (each as defined in the Master Agreement,
and, together with said Land, the "Leased Property"); such Leased Property
collectively known and described at the date hereof as the Bridgeport Pre-Parole
Transfer Facility;
SUBJECT, HOWEVER, to the lien of the mortgage debt described in Exhibit
B hereto, if any, and to all easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of the date hereof and listed in
Exhibit C hereto (collectively the "Permitted Exceptions").
1.2 Term. The initial term (the "Fixed Term") of the Lease shall be for
a fixed term of twelve (12) years commencing on July 18, 1997 (the "Commencement
Date") and expiring on July 17, 2009 (the "Expiration Date"). The Term of this
Lease may be renewed on the mutual agreement of Landlord and Tenant as follows:
(i) provided that Tenant gives Landlord notice on or before the date which is
six (6) months prior to the Expiration Date, upon the mutual agreement of
Landlord and Tenant, the Lease shall be renewed for one (1) additional five (5)
year term (the "Extended Term") on the same terms and provisions (other than
with respect to renewal) as the Fixed Term, as set forth in the Lease; (ii)
provided that Tenant gives Landlord notice on or before the date which is six
(6) months prior to the expiration of the Extended Term, upon the mutual
agreement of Landlord and Tenant, the Lease shall be renewed for one (1)
additional five (5) year term (the "Second Extended Term") on the same terms and
provisions (other than with respect to renewal) as
<PAGE> 2
the Fixed Term, as set forth in the Lease; and (iii) provided that Tenant gives
Landlord notice on or before the date which is six (6) months prior to the
expiration of the Second Extended Term, upon the mutual agreement of Landlord
and Tenant, the Lease shall be renewed for one (1) additional five (5) year term
(the "Third Extended Term") on the same terms and provisions (other than with
respect to renewal) as the Fixed Term, as set forth in the Lease. Tenant's right
to so extend the Term of the Lease is conditioned on Landlord's prior approval
of the Extended Term, Second Extended Term, or Third Extended Term, as the case
may be. The term "Term" used in this Agreement means the Fixed Term, Extended
Term, Second Extended Term and Third Extended Term, as appropriate. The term
"Lease Year" means each twelve (12) month period during the Term commencing on
January 1 and ending on December 31, except the first Lease Year of each Lease
shall be the period from the Commencement Date through the following December
31, and the last Lease Year shall end on the date of termination of the Lease if
a day other than December 31. Landlord may terminate this Lease prior to the
expiration of the Term hereof, at any time following the date which is five (5)
years from the date hereof, upon written notice to Tenant not less than eighteen
(18) months prior to the effective date of such termination.
ARTICLE II
RENT
2.1 Base Rent. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term and the Third
Extended Term, commencing on the Commencement Date, in accordance with the Base
Rent Schedule attached hereto as Exhibit D. If the Commencement Date or the
Expiration Date shall be other than on the first day of a calendar month, the
initial (or final, as appropriate) monthly installment of Base Rent payable
pursuant to the Lease shall be prorated for the number of days until, in the
case of the initial monthly installment, the first day of the calendar month
following the Commencement Date and, in the case of the final monthly
installment, the Expiration Date.
2.2 Additional Rent. The Base Rent shall be subject to such increases
over the Term as determined pursuant to Section 2.02 of the Master Agreement.
2.3 Other Additional Rent. Tenant shall also pay all Other Additional
Rent with respect to the Leased Property, as set forth in the Master Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.1 Master Agreement Incorporated Herein. All provisions of the Master
Agreement (except any provisions expressly therein not to be a part of an
individual lease of leased property) are hereby incorporated in and are a part
of this Lease of the Leased Property.
2
<PAGE> 3
3.2 Recordation. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
CCA PRISON REALTY TRUST
By:
-----------------------------------------
Title:
--------------------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
-----------------------------------------
Title:
--------------------------------------
3
<PAGE> 4
EXHIBIT A
Legal Description of Leased Property
THE SURFACE ESTATE ONLY, IN AND TO:
Being a 4.26 acre tract in the Edward Stephens Survey, Abstract Number 755, Wise
County, Texas and also being the same tract of land deeded to Concept, Inc.,
described in instruments recorded in Volume 255, page 523, Real Records, Wise
County, Texas and Volume 382, page 17, Real Records, Wise County, Texas and
being described as one tract by metes and bounds as follows:
Beginning at a 5/8" iron rod found in the North Right-of-Way of F.M. #1658 for
the Southeast corner of said tract described in Volume 255, page 523;
THENCE North 73 degrees 31 minutes 34 seconds West with the North Right-of-Way
line of said F.M. #1658 a distance of 335.92 feet to a 3" steel fence post found
for the Southwest corner of the tract herein described;
THENCE North 01 degrees 32 minutes 30 seconds East a distance of 697.88 feet to
a 3" steel fence post found for the Northwest corner of the tract herein
described;
THENCE North 89 degrees 03 minutes 36 seconds East a distance of 164.69 feet to
a 1/2" iron pipe found for a corner;
THENCE South 89 degrees 38 minutes 04 seconds East a distance of 57.10 feet to a
5/8" iron rod found for the most North Northeast corner of the tract herein
described;
THENCE South 01 degrees 30 minutes 36 seconds West a distance of 551.24 feet to
a 3" steel fence post found for a ell corner of the tract herein described;
THENCE South 88 degrees 01 minutes 24 seconds East a distance of 102.37 feet to
a 5/8" iron rod found for the most East Northeast corner of the tract herein
described;
THENCE South 01 degrees 28 minutes 34 seconds West a distance of 240.72 feet to
the point of beginning and containing 4.26 acres of land, more or less.
Bridgeport Pre-Parole Transfer Facility
Bridgeport, Wise County, Texas
<PAGE> 5
EXHIBIT B
Mortgage Debt
Property: Bridgeport Pre-Parole Transfer Facility
This property is subject to the following Mortgage Debt:
That certain deed of trust of First Union National Bank of Tennessee,
as Administrative Agent, dated July 18, 1997.
<PAGE> 6
EXHIBIT C
Permitted Exceptions
Property: Bridgeport Pre-Parole Transfer Facility
1. Standby fees, taxes and assessments by any taxing authority for the
year 1997, and subsequent years.
2. Reservation of all oil, gas and other minerals contained in deed dated
January 3, 1975, from A. J. Whelan, et al. to Robert Goode, recorded in
Volume 340, page 181, Deed Records of Wise County, Texas.
3. Reservation of all oil, gas and other minerals contained in deed dated
March 10, 1977, from A. J. Whelan, et al to Gordon E. Taylor, recorded
in Volume 362, page 442, Deed Records of Wise County, Texas.
4. Right-of-Way to West Wise Rural Water Supply Corp., dated July 15,
1993, recorded in Volume 541, page 586, Real Records of Wise County,
Texas.
5. Water and sewer lines across subject property as shown on survey dated
April 15, 1997, as revised June 18, 1997, prepared by Roger C.
Steadham, R.P.L.S. No. 4281.
6. Overhead electric and telephone lines as shown on survey dated April
15, 1997, as revised June 18, 1997, prepared by Roger C. Steadham,
R.P.L.S. No. 4281.
7. Fence inset along the North and East property lines as shown on survey
dated April 15, 1997, as revised June 18, 1997, prepared by Roger C.
Steadham, R.P.L.S. No. 4281.
8. Rights of the Wise County Water Control and Improvement District #1 to
issue bonds.
9. All matters shown on the Survey, dated April 15, 1997, as revised June
18, 1997, prepared by Roger C. Steadham, R.P.L.S. No. 4281, Steadham
Surveying, 608 13th Street, Bridgeport, Texas 76426.
<PAGE> 7
EXHIBIT D
Base Rent Schedule
Property: Bridgeport Pre-Parole Transfer Facility
Tenant will pay to Landlord annual Base Rent of $400,000.00, payable in
equal monthly installments of $33,333.33.
Base Rent for the Extended Term, Second Extended Term and Third
Extended Term shall be equal to the fair market rental value of the Leased
Property as of the respective commencement dates thereof.
<PAGE> 1
EXHIBIT 10.10
LEASE AGREEMENT
(MINERAL WELLS)
THIS LEASE AGREEMENT ("Lease") dated as of the 18th day of July, 1997,
by and between CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("Landlord") and CORRECTIONS CORPORATION OF AMERICA, a Tennessee corporation
("Tenant").
RECITALS
WHEREAS, Tenant (or one of Tenant's affiliates) has concurrently
conveyed to Landlord the property described in Exhibit A hereto, and Landlord
and Tenant desire that Landlord lease such property back to Tenant; and
WHEREAS, Landlord and Tenant have entered into a Master Agreement to
Lease of even date herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant leases
from Landlord the Land located in the City of Mineral Wells, Parker County,
State of Texas, described in Exhibit A hereto, and all Improvements, Fixtures,
and Personal Property thereon or thereto (each as defined in the Master
Agreement, and, together with said Land, the "Leased Property"); such Leased
Property collectively known and described at the date hereof as the Mineral
Wells Pre-Parole Transfer Facility;
SUBJECT, HOWEVER, to the lien of the mortgage debt described in Exhibit
B hereto, if any, and to all easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of the date hereof and listed in
Exhibit C hereto (collectively the "Permitted Exceptions").
1.2 Term. The initial term (the "Fixed Term") of the Lease shall be for
a fixed term of twelve (12) years commencing on July 18, 1997 (the "Commencement
Date") and expiring on July 17, 2009 (the "Expiration Date"). The Term of this
Lease may be renewed on the mutual agreement of Landlord and Tenant as follows:
(i) provided that Tenant gives Landlord notice on or before the date which is
six (6) months prior to the Expiration Date, upon the mutual agreement of
Landlord and Tenant, the Lease shall be renewed for one (1) additional five (5)
year term (the "Extended Term") on the same terms and provisions (other than
with respect to renewal) as the Fixed Term, as set forth in the Lease; (ii)
provided that Tenant gives Landlord notice on or before the date which is six
(6) months prior to the expiration of the Extended Term, upon the mutual
agreement of Landlord and Tenant, the Lease shall be renewed for one (1)
additional five (5) year term (the
<PAGE> 2
"Second Extended Term") on the same terms and provisions (other than with
respect to renewal) as the Fixed Term, as set forth in the Lease; and (iii)
provided that Tenant gives Landlord notice on or before the date which is six
(6) months prior to the expiration of the Second Extended Term, upon the mutual
agreement of Landlord and Tenant, the Lease shall be renewed for one (1)
additional five (5) year term (the "Third Extended Term") on the same terms and
provisions (other than with respect to renewal) as the Fixed Term, as set forth
in the Lease. Tenant's right to so extend the Term of the Lease is conditioned
on Landlord's prior approval of the Extended Term, Second Extended Term, or
Third Extended Term, as the case may be. The term "Term" used in this Agreement
means the Fixed Term, Extended Term, Second Extended Term and Third Extended
Term, as appropriate. The term "Lease Year" means each twelve (12) month period
during the Term commencing on January 1 and ending on December 31, except the
first Lease Year of each Lease shall be the period from the Commencement Date
through the following December 31, and the last Lease Year shall end on the date
of termination of the Lease if a day other than December 31. Landlord may
terminate this Lease prior to the expiration of the Term hereof, at any time
following the date which is five (5) years from the date hereof, upon written
notice to Tenant not less than eighteen (18) months prior to the effective date
of such termination.
ARTICLE II
RENT
2.1 Base Rent. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term and the Third
Extended Term, commencing on the Commencement Date, in accordance with the Base
Rent Schedule attached hereto as Exhibit D. If the Commencement Date or the
Expiration Date shall be other than on the first day of a calendar month, the
initial (or final, as appropriate) monthly installment of Base Rent payable
pursuant to the Lease shall be prorated for the number of days until, in the
case of the initial monthly installment, the first day of the calendar month
following the Commencement Date and, in the case of the final monthly
installment, the Expiration Date.
2.2 Additional Rent. The Base Rent shall be subject to such increases
over the Term as determined pursuant to Section 2.02 of the Master Agreement.
2.3 Other Additional Rent. Tenant shall also pay all Other Additional
Rent with respect to the Leased Property, as set forth in the Master Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.1 Master Agreement Incorporated Herein. All provisions of the Master
Agreement (except any provisions expressly therein not to be a part of an
individual lease of leased property) are hereby incorporated in and are a part
of this Lease of the Leased Property.
2
<PAGE> 3
3.2 Recordation. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
CCA PRISON REALTY TRUST
By:
-------------------------------
Title:
----------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
-------------------------------
Title:
----------------------------
3
<PAGE> 4
EXHIBIT A
Legal Description of Leased Property
Being a 25.08 acre tract in the T. & P. Railroad Co. Survey East of the Brazos
River, Abstract Number 1549, Parker County, Texas and also being a certain tract
conveyed to Mineral Wells R.E. Holding Corp. recorded in instrument recorded in
Volume 1581, page 85, Deed Records, Parker County, Texas, being described by
metes and bounds as follows:
Beginning at a 1/2 inch iron rod with a yellow plastic cap stamped STEADHAM
R.P.L.S. 4281 set in the East R.O.W. of Reynolds Road and the North R.O.W. of
Shurtz Road for the Southwest corner of said Mineral Wells R.E. Holding Corp.
Tract, said point being by previous description 7241.98 feet South 65 degrees 05
minutes 59 seconds East from the Northwest corner of the T. & P. Railroad Co.
Survey East of the Brazos River, Abstract Number 869, Palo Pinto County, Deed
Records;
THENCE North 12 degrees 49 minutes 41 seconds East a distance of 117.14 feet to
a 1/2 inch iron rod with a yellow plastic cap stamped STEADHAM R.P.L.S. 4281 set
in the East R.O.W of said Reynolds Road for the Southwest corner of a certain
0.31 acre tract described in instrument recorded in Volume 1646, Page 651, Deed
Records, Parker County, Texas;
THENCE South 77 degrees 10 minutes 26 seconds East a distance of 150.00 feet to
a 1/2 inch iron rod with a yellow plastic cap stamped STEADHAM R.P.L.S. 4281 set
for the Southeast corner of said 0.31 acre tract;
THENCE North 12 degrees 49 minutes 41 seconds East a distance of 90.00 feet to a
1/2 inch iron rod with a yellow plastic cap stamped STEADHAM R.P.L.S. 4281 set
for the Northeast corner of said 0.31 acre tract;
THENCE North 77 degrees 10 minutes 26 seconds West a distance of 150.00 feet to
a 1/2 inch iron rod with a yellow plastic cap stamped STEADHAM R.P.L.S. 4281 set
in the East R.O.W. of said Reynolds Road for the Northwest corner of said 0.31
acre tract;
THENCE North 12 degrees 49 minutes 41 seconds East a distance of 348.86 feet to
a 1/2 inch iron rod with a yellow plastic cap stamped STEADHAM R.P.L.S. 4281 set
in the East R.O.W. of said Reynolds Road for the Southwest corner of a certain
0.44 acre tract described in instrument recorded in Volume 1554, page 1635, Deed
Records, Parker County, Texas;
THENCE South 77 degrees 10 minutes 31 seconds East a distance of 110.00 feet to
a 1/2 inch iron rod with a yellow plastic cap stamped STEADHAM R.P.L.S. 4281 set
for the Southeast corner of said 0.44 acre tract;
THENCE North 12 degrees 49 minutes 41 seconds East a distance of 175.00 feet to
a 1/2 inch iron rod with a yellow plastic cap stamped STEADHAM R.P.L.S. 4281 set
for the Northeast corner of said 0.44 acre tract;
<PAGE> 5
THENCE North 77 degrees 10 minutes 31 seconds West a distance of 110.00 feet to
a 1/2 inch iron rod with a yellow plastic cap stamped STEADHAM R.P.L.S. 4281 set
in the East R.O.W. of said Reynolds Road for the Northwest corner of said 0.44
acre tract;
THENCE North 12 degrees 49 minutes 41 seconds East a distance of 710.91 feet to
a 3/4 inch iron rod found in the East R.O.W. of said Reynolds Road for the
Northwest corner of said Mineral Wells R.E. Holding Corp. tract;
THENCE South 77 degrees 01 minutes 31 seconds East a distance of 780.78 feet to
a 3/4 inch iron rod found in the West R.O.W. of Heintzelman Road for the
northeast corner of said Mineral Wells R.E. Holding Corp. tract;
THENCE South 12 degrees 51 minutes 11 seconds West a distance of 1441.93 feet to
a 1/2 inch iron rod with a yellow plastic cap stamped STEADHAM R.P.L.S. 4281 set
in the West R.O.W. of said Heintzelman Road and in the North R.O.W. of said
Shurtz Road for the southeast corner of said Mineral Wells R.E. Holding Corp.
tract;
THENCE North 77 degrees 01 minutes 25 seconds West a distance of 780.15 feet to
the POINT OF BEGINNING and containing 25.08 acres of land, more or less.
Mineral Wells Pre-Parole Transfer Facility
Mineral Wells, Parker County, Texas
<PAGE> 6
EXHIBIT B
Mortgage Debt
Property: Mineral Wells Pre-Parole Transfer Facility
This property is subject to the following Mortgage Debt:
That certain deed of trust of First Union National Bank of
Tennessee, as Administrative Agent, dated July 18, 1997.
<PAGE> 7
EXHIBIT C
Permitted Exceptions
Property: Mineral Wells Pre-Parole Transfer Facility
1. Standby fees, taxes and assessments by any taxing authority for the
year 1997, and subsequent years.
2. Easements created in instrument executed by United States of America to
City of Mineral Wells, Texas for joint usage of existing sewer lines
and appurtenances, dated September 30, 1975, filed October 7, 1975,
recorded in Volume 620, page 89, Deed Records, Parker County, Texas.
3. Easements created in instrument executed by United States of America to
City of Mineral Wells, Texas for joint usage of existing water lines
and appurtenances, dated September 30, 1975, filed October 7, 1975,
recorded in Volume 622, page 502, Deed Records, Parker County, Texas.
4. Easements created in instrument executed by United States of America to
Texas Power & Light Company for all existing electrical transmission
lines and systems, dated November 5, 1975, filed December 24, 1975,
recorded in Volume 626, page 1, Deed Records, Parker County, Texas.
5. Easements created in instrument by United States of America to Brazos
River Gas Company for all existing gas distribution lines and systems,
dated March 12, 1976, filed March 25, 1976, recorded in Volume 634,
page 1, Deed Records, Parker County, Texas.
6. Oil, Gas and Mineral Lease executed by and between Carl Kessler and
Richard F. Williamson, Trustee, dated June 23, 1981, filed August 4,
1981, recorded in Volume 1115, page 1121, Real Records, Parker County,
Texas.
7. Terms, provisions, and conditions of Lease Agreement by and between
Mineral Wells R.E. Holding Corp., a Delaware corporation, as Lessor,
and Concept Incorporated, a Delaware corporation, as Lessee, as
evidenced by Memorandum of Lease, dated November 17, 1993, filed
November 18, 1993, recorded in Volume 1581, page 91, Real Records,
Parker County, Texas.
8. Reservation of subsurface mineral estate, including oil, gas and other
minerals in and under subject property, including royalty interests,
royalties, bonuses, rentals and all other rights in connection
therewith, including all easements or rights-of-way owned or held by
any lessee or mineral owner, on, over, or across the said lands for the
purpose of producing or transporting any of said minerals together with
the rights of ingress and egress, as set forth in deed from Concept
Incorporated, a Delaware corporation to Mineral Wells R.E. Holding
<PAGE> 8
Corp., a Delaware corporation, dated November 17, 1993, filed November
18,1 993, recorded in Volume 1581, page 85, Real Records, Parker
County, Texas.
9. That portion of the premises located within the boundaries of any road
or roadway.
10. All matters shown on the Survey, dated April 17, 1997, as revised June
18, 1997, prepared by Roger C. Steadham, R.P.L.S. No. 4281, Steadham
Surveying, 608 13th Street, Bridgeport, Texas 76426, including, but not
limited to, the following: (a) asphalt roadway (50' r.o.w.) crossing
West to East at Northern side of subject property; (b) fences not on
property lines; and (c) overhead electric lines which enter property
from various points and cross from East to West at North side of
subject property.
<PAGE> 9
EXHIBIT D
Base Rent Schedule
Property: Mineral Wells Pre-Parole Transfer Facility
Tenant will pay to Landlord annual Base Rent of $3,000,000.00, payable
in equal monthly installments of $250,000.00.
Base Rent for the Extended Term, Second Extended Term and Third
Extended Term shall be equal to the fair market rental value of the Leased
Property as of the respective commencement dates thereof.
<PAGE> 1
EXHIBIT 10.11
LEASE AGREEMENT
(MASON)
THIS LEASE AGREEMENT ("Lease") dated as of the 18th day of July, 1997,
by and between CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("Landlord") and CORRECTIONS CORPORATION OF AMERICA, a Tennessee corporation
("Tenant").
RECITALS
WHEREAS, Tenant (or one of Tenant's affiliates) has concurrently
conveyed to Landlord the property described in Exhibit A hereto, and Landlord
and Tenant desire that Landlord lease such property back to Tenant; and
WHEREAS, Landlord and Tenant have entered into a Master Agreement to
Lease of even date herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant leases
from Landlord the Land located in the City of Mason, Tipton County, State of
Tennessee, described in Exhibit A hereto, and all Improvements, Fixtures, and
Personal Property thereon or thereto (each as defined in the Master Agreement,
and, together with said Land, the "Leased Property"); such Leased Property
collectively known and described at the date hereof as the West Tennessee
Detention Facility;
SUBJECT, HOWEVER, to the lien of the mortgage debt described in Exhibit
B hereto, if any, and to all easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of the date hereof and listed in
Exhibit C hereto (collectively the "Permitted Exceptions").
1.2 Term. The initial term (the "Fixed Term") of the Lease shall be for
a fixed term of ten (10) years commencing on July 18, 1997 (the "Commencement
Date") and expiring on July 17, 2007 (the "Expiration Date"). The Term of this
Lease may be renewed on the mutual agreement of Landlord and Tenant as follows:
(i) provided that Tenant gives Landlord notice on or before the date which is
six (6) months prior to the Expiration Date, upon the mutual agreement of
Landlord and Tenant, the Lease shall be renewed for one (1) additional five (5)
year term (the "Extended Term") on the same terms and provisions (other than
with respect to renewal) as the Fixed Term, as set forth in the Lease; (ii)
provided that Tenant gives Landlord notice on or before the date which is six
(6) months prior to the expiration of the Extended Term, upon the mutual
agreement of Landlord and Tenant, the Lease shall be renewed for one (1)
additional five (5) year term (the "Second Extended Term") on the same terms and
provisions (other than with respect to renewal) as the Fixed Term, as
<PAGE> 2
set forth in the Lease; and (iii) provided that Tenant gives Landlord notice on
or before the date which is six (6) months prior to the expiration of the Second
Extended Term, upon the mutual agreement of Landlord and Tenant, the Lease shall
be renewed for one (1) additional five (5) year term (the "Third Extended Term")
on the same terms and provisions (other than with respect to renewal) as the
Fixed Term, as set forth in the Lease. Tenant's right to so extend the Term of
the Lease is conditioned on Landlord's prior approval of the Extended Term,
Second Extended Term, or Third Extended Term, as the case may be. The term
"Term" used in this Agreement means the Fixed Term, Extended Term, Second
Extended Term and Third Extended Term, as appropriate. The term "Lease Year"
means each twelve (12) month period during the Term commencing on January 1 and
ending on December 31, except the first Lease Year of each Lease shall be the
period from the Commencement Date through the following December 31, and the
last Lease Year shall end on the date of termination of the Lease if a day other
than December 31. Landlord may terminate this Lease prior to the expiration of
the Term hereof, at any time following the date which is five (5) years from the
date hereof, upon written notice to Tenant not less than eighteen (18) months
prior to the effective date of such termination.
ARTICLE II
RENT
2.1 Base Rent. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term and the Third
Extended Term, commencing on the Commencement Date, in accordance with the Base
Rent Schedule attached hereto as Exhibit D. If the Commencement Date or the
Expiration Date shall be other than on the first day of a calendar month, the
initial (or final, as appropriate) monthly installment of Base Rent payable
pursuant to the Lease shall be prorated for the number of days until, in the
case of this initial monthly installment, the first day of the calendar month
following the Commencement Date and, in the case of the final monthly
installment, the Expiration Date.
2.2 Additional Rent. The Base Rent shall be subject to such increases
over the Term as determined pursuant to Section 2.02 of the Master Agreement.
2.3 Other Additional Rent. Tenant shall also pay all Other Additional
Rent with respect to the Leased Property, as set forth in the Master Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.1 Master Agreement Incorporated Herein. All provisions of the Master
Agreement (except any provisions expressly therein not to be a part of an
individual lease of leased property) are hereby incorporated in and are a part
of this Lease of the Leased Property.
2
<PAGE> 3
3.2 Recordation. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
CCA PRISON REALTY TRUST
By:
-------------------------------
Title:
----------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
-------------------------------
Title:
----------------------------
3
<PAGE> 4
EXHIBIT A
Legal Description of Leased Property
Beginning at a 1/2 inch rebar found the right-of-way line of Finde Naifeh Jr.
Drive (Mason Gainsville Road - 60 ft. R.O.W.) a distance of 1612.95 feet
(C=1615.56 ft.) Southwestwardly, as measured along said southerly right-of-way
line from its intersection with the westerly right-of-way line of U. S. Highway
#70, said point being the northwesterly corner of the William Liles Tract
(DB.568, PG. 42); thence South 03 degrees 45 minutes 00 seconds East along the
westerly line of said Liles Tract and the Cecil Bright Tract (DB. 701, PG. 664)
a distance of 1601.22 feet to point; thence South 80 degrees 00 minutes 00
seconds West a distance of 53.65 feet to a point; thence South 81 degrees 00
minutes 00 seconds West a distance of 105.60 feet to a point; thence South 86
degrees 00 minutes 00 seconds West a distance of 110.20 feet to a point; thence
South 00 degrees 15 minutes 00 seconds East a distance of 39.60 feet to a point;
thence South 68 degrees 00 minutes 00 seconds West a distance of 112.20 feet to
a point; thence South 01 degrees 15 minutes 00 seconds East a distance of 138.00
feet to a point; thence South 25 degrees 00 minutes 00 seconds East a distance
of 141.90 feet to a point; thence South 50 degrees 15 minutes 00 seconds West a
distance of 135.30 feet to a point; thence North 62 degrees 45 minutes 00
seconds West a distance of 110.20 feet to a point; thence South 73 degrees 45
minutes 00 seconds West a distance of 117.50 feet to a point; thence South 86
degrees 45 minutes 00 seconds West, a distance of 67.30 feet to a point; thence
South 73 degrees 00 minutes 00 seconds West a distance of 130.70 feet to a
point; thence South 10 degrees 45 minutes 00 seconds West a distance of 240.90
feet to a point; thence South 43 degrees 45 minutes 00 seconds West a distance
of 104.90 feet to a point; thence North 03 degrees 45 minutes 00 seconds West
along the easterly line of the Robert Marshall Tract (DB. 235, PG. 85) a
distance of 2369.40 feet to a 1/2 inch rebar set in the southerly right-of-way
line of said Finde Naifeh Jr. Drive; thence North 87 degrees 45 minutes 00
seconds East along said southerly right-of-way line a distance of 983.40 feet to
the point of beginning, containing 43.186 acres or 1881168.086 square feet, more
or less, described according to the ALTA Boundary Survey, dated April 16, 1997,
as revised June 19, 1997, prepared by John Wesley Ashworth, III, Tennessee No.
1344, Ashworth-Vaughan, Inc., 195 Center Street, Collierville, Tennessee 38017,
Job Number 3989.00
Being the same property conveyed to Corrections Partners, Inc., a Delaware
corporation, by deed from Corrections Corporation of America, a Tennessee
corporation, of record in Record Book _____, page _____, Register's Office for
Tipton County, Tennessee.
West Tennessee Detention Facility
Mason, Tipton County, Tennessee
<PAGE> 5
EXHIBIT B
Mortgage Debt
Property: West Tennessee Detention Facility
This property is subject to the following Mortgage Debt:
That certain deed of trust of First Union National Bank of
Tennessee, as Administrative Agent, dated July 18, 1997.
<PAGE> 6
EXHIBIT C
Permitted Exceptions
Property: West Tennessee Detention Facility
1. 1997 Taxes, a lien, which are not yet due and payable.
2. Easement(s) in favor of Memphis CATV, Inc. (Cablevision), as set forth
in instrument recorded in Record Book 666, page 666, Register's Office
for Tipton County, Tennessee.
3. Easement(s) for the flow of Beaver Creek Canal.
4. All matters shown on ALTA Boundary Survey, dated April 16, 1997, as
revised June 19, 1997, prepared by John Wesley Ashworth, III, Tennessee
No. 1344, Ashworth-Vaughan, Inc., 195 Center Street, Collierville,
Tennessee 38017, Job Number 3989.00.
<PAGE> 7
EXHIBIT D
Base Rent Schedule
Property: West Tennessee Detention Facility
Tenant will pay to Landlord annual Base Rent of $3,700,000.00, payable
in equal monthly installments of $308,333.33.
Base Rent for the Extended Term, Second Extended Term and Third
Extended Term shall be equal to the fair market rental value of the Leased
Property as of the respective commencement dates thereof.
<PAGE> 1
EXHIBIT 10.12
LEASE AGREEMENT
(LEAVENWORTH)
THIS LEASE AGREEMENT ("Lease") dated as of the 18th day of July, 1997,
by and between CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("Landlord") and CORRECTIONS CORPORATION OF AMERICA, a Tennessee corporation
("Tenant").
RECITALS
WHEREAS, Tenant (or one of Tenant's affiliates) has concurrently
conveyed to Landlord the property described in Exhibit A hereto, and Landlord
and Tenant desire that Landlord lease such property back to Tenant; and
WHEREAS, Landlord and Tenant have entered into a Master Agreement to
Lease of even date herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant leases
from Landlord the Land located in the City of Leavenworth, Leavenworth County,
State of Kansas, described in Exhibit A hereto, and all Improvements, Fixtures,
and Personal Property thereon or thereto (each as defined in the Master
Agreement, and, together with said Land, the "Leased Property"); such Leased
Property collectively known and described at the date hereof as the Leavenworth
Detention Center;
SUBJECT, HOWEVER, to the lien of the mortgage debt described in Exhibit
B hereto, if any, and to all easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of the date hereof and listed in
Exhibit C hereto (collectively the "Permitted Exceptions").
1.2 Term. The initial term (the "Fixed Term") of the Lease shall be for
a fixed term of ten (10) years commencing on July 18, 1997 (the "Commencement
Date") and expiring on July 17, 2007 (the "Expiration Date"). The Term of this
Lease may be renewed on the mutual agreement of Landlord and Tenant as follows:
(i) provided that Tenant gives Landlord notice on or before the date which is
six (6) months prior to the Expiration Date, upon the mutual agreement of
Landlord and Tenant, the Lease shall be renewed for one (1) additional five (5)
year term (the "Extended Term") on the same terms and provisions (other than
with respect to renewal) as the Fixed Term, as set forth in the Lease; (ii)
provided that Tenant gives Landlord notice on or before the date which is six
(6) months prior to the expiration of the Extended Term, upon the mutual
agreement of Landlord and Tenant, the Lease shall be renewed for one (1)
additional five (5) year term (the "Second Extended Term") on the same terms and
provisions (other than with respect to renewal) as the Fixed Term, as
<PAGE> 2
set forth in the Lease; and (iii) provided that Tenant gives Landlord notice on
or before the date which is six (6) months prior to the expiration of the Second
Extended Term, upon the mutual agreement of Landlord and Tenant, the Lease shall
be renewed for one (1) additional five (5) year term (the "Third Extended Term")
on the same terms and provisions (other than with respect to renewal) as the
Fixed Term, as set forth in the Lease. Tenant's right to so extend the Term of
the Lease is conditioned on Landlord's prior approval of the Extended Term,
Second Extended Term, or Third Extended Term, as the case may be. The term
"Term" used in this Agreement means the Fixed Term, Extended Term, Second
Extended Term and Third Extended Term, as appropriate. The term "Lease Year"
means each twelve (12) month period during the Term commencing on January 1 and
ending on December 31, except the first Lease Year of each Lease shall be the
period from the Commencement Date through the following December 31, and the
last Lease Year shall end on the date of termination of the Lease if a day other
than December 31. Landlord may terminate this Lease prior to the expiration of
the Term hereof, at any time following the date which is five (5) years from the
date hereof, upon written notice to Tenant not less than eighteen (18) months
prior to the effective date of such termination.
ARTICLE II
RENT
2.1 Base Rent. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term and the Third
Extended Term, commencing on the Commencement Date, in accordance with the Base
Rent Schedule attached hereto as Exhibit D. If the Commencement Date or the
Expiration Date shall be other than on the first day of a calendar month, the
initial (or final, as appropriate) monthly installment of Base Rent payable
pursuant to the Lease shall be prorated for the number of days until, in the
case of the initial monthly installment, the first day of the calendar month
following the Commencement Date and, in the case of the final monthly
installment, the Expiration Date.
2.2 Additional Rent. The Base Rent shall be subject to such increases
over the Term as determined pursuant to Section 2.02 of the Master Agreement.
2.3 Other Additional Rent. Tenant shall also pay all Other Additional
Rent with respect to the Leased Property, as set forth in the Master Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.1 Master Agreement Incorporated Herein. All provisions of the Master
Agreement (except any provisions expressly therein not to be a part of an
individual lease of leased property) are hereby incorporated in and are a part
of this Lease of the Leased Property.
2
<PAGE> 3
3.2 Recordation. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
CCA PRISON REALTY TRUST
By:
--------------------------------
Title:
-----------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
--------------------------------
Title:
-----------------------------
3
<PAGE> 4
EXHIBIT A
Legal Description of Leased Property
SURFACE ONLY AS TO ALL TRACTS:
Tract 1:
Lots 2, 3, 4, 5, 6, 7, and 8, Block 5, LEAVENWORTH INDUSTRIAL PARK,
City of Leavenworth, Leavenworth County, Kansas.
Tract 2:
Lots 2, 4, and 6, Block 4, BREWER PLACE, REPLAT OF BLOCKS 3 AND 4,
LEAVENWORTH INDUSTRIAL PARK, City of Leavenworth, Leavenworth County, Kansas.
Tract 3:
Vacated Highway Terrace bounded by the above tracts.
All being more particularly described as follows:
Beginning at the Southeast corner of Lot 8, Block 5, of said "LEAVENWORTH
INDUSTRIAL PARK";
THENCE North 89 degrees 40 minutes 56 seconds West, 410.31 feet along the South
line of said Lot 8, also being the North line of Astro Way, to a point on the
West line of vacated Highway Terrace, also being on the East line of Lot 6,
Block 4, of said "BREWER PLACE REPLAT";
THENCE, South 00 degrees 19 minutes 04 seconds West, 60.00 feet to the Southeast
corner of said Lot 6;
THENCE North 89 degrees 40 minutes 56 seconds West, 321.00 feet to the Southwest
corner of said Lot 6;
THENCE, North 00 degrees 19 minutes 04 seconds East, 1,278.78 feet to the
Northwest corner of Lot 2, Block 5, of said "LEAVENWORTH INDUSTRIAL PARK";
THENCE, along the North line of said Lot 2, also being the South line of Kansas
Highway No. 5, South 89 degrees 50 minutes 26 seconds East, 236.60 feet to a
point of curvature;
THENCE along a curve to the right, having a delta of 90 degrees 51 minutes 00
seconds a radius of 501.95 feet, an arc length of 795.91 feet;
<PAGE> 5
THENCE continuing along the West line of said Kansas Highway No.5, also being
the East line of said "LEAVENWORTH INDUSTRIAL PARK", South 01 degrees 00 minutes
34 seconds West, 711.48 feet to the "Point of Beginning", NET AREA: 863,056.076
square feet or 19.813 acres, more or less.
Leavenworth Detention Center
Leavenworth, Leavenworth County, Kansas
<PAGE> 6
EXHIBIT B
Mortgage Debt
Property: Leavenworth Detention Center
This property is subject to the following Mortgage Debt:
That certain mortgage of First Union National Bank of Tennessee, as
Administrative Agent, dated July 18, 1997.
<PAGE> 7
EXHIBIT C
Permitted Exceptions
Property: Leavenworth Detention Center
1. General taxes and special assessments for 1997 and subsequent years,
not yet due or payable.
2. Restrictive covenants appearing in Book 484, page 37, and as amended in
Book 484, page 670 and Book 503, page 1867 and Book 505, page 724, and
Book 650, page 1847, and Book 651, page 317.
3. Restrictions, reservations and covenants, if any, as shown on the Plat
of Leavenworth Industrial Park, recorded in Plat Book 7, page 99.
4. Restrictive covenants appearing in Book 475, page 61.
5. Restrictions, reservations and covenants, if any, as shown on the Plat
of Brewer Place, Replat of Blocks 3 and 4, Leavenworth Industrial Park,
recorded in Plat Book 10, page 41.
6. Building set-back line(s) 40 feet from the unvacated portion of Highway
Terrace, Astrow Way and Kansas Highway #5 on Lots 2 through 8, Block 5,
Leavenworth Industrial Park.
7. Building set-back line(s) across the 40 feet from Astrow Way and the
unvacated portion of Highway Terrace on Lots 2, 4 and 6, Block 4,
Brewer Place Replat.
8. License Agreement, dated November 10, 1947, to Cities Service Gas
Company recorded January 6, 1948 in Book 357, page 141.
9. All of the coal underlying the subject property was conveyed to Carr
Coal Mining and Manufacturing Company in Deed recorded March 23, 1925
in Book 278, page 47.
10. All matters shown on ALTA/ACSM Land Title Survey, dated April 16, 1997,
as revised June 20, 1997, prepared by David L. King, Ks. L.S. No. 782,
Schmitz, King & Associates, Inc., 3202-B Parallel Parkway, Kansas City,
Kansas 66104, Job No. 97046.
<PAGE> 8
EXHIBIT D
Base Rent Schedule
Property: Leavenworth Detention Center
Tenant will pay to Landlord annual Base Rent of $3,300,000.00, payable
in equal monthly installments of $275,000.00.
Base Rent for the Extended Term, Second Extended Term and Third
Extended Term shall be equal to the fair market rental value of the Leased
Property as of the respective commencement dates thereof.
<PAGE> 1
EXHIBIT 10.13
LEASE AGREEMENT
(ELOY)
THIS LEASE AGREEMENT ("Lease") dated as of the 18th day of July, 1997,
by and between CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("Landlord") and CORRECTIONS CORPORATION OF AMERICA, a Tennessee corporation
("Tenant").
RECITALS
WHEREAS, Tenant (or one of Tenant's affiliates) has concurrently
conveyed to Landlord the property described in Exhibit A hereto, and Landlord
and Tenant desire that Landlord lease such property back to Tenant; and
WHEREAS, Landlord and Tenant have entered into a Master Agreement to
Lease of even date herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant leases
from Landlord the Land located in the City of Eloy, Pinal County, State of
Arizona, described in Exhibit A hereto, and all Improvements, Fixtures, and
Personal Property thereon or thereto (each as defined in the Master Agreement,
and, together with said Land, the "Leased Property"); such Leased Property
collectively known and described at the date hereof as the Eloy Detention
Center;
SUBJECT, HOWEVER, to the lien of the mortgage debt described in Exhibit
B hereto, if any, and to all easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of the date hereof and listed in
Exhibit C hereto (collectively the "Permitted Exceptions").
1.2 Term. The initial term (the "Fixed Term") of the Lease shall be for
a fixed term of twelve (12) years commencing on July 18, 1997 (the "Commencement
Date") and expiring on July 17, 2009 (the "Expiration Date"). The Term of this
Lease may be renewed on the mutual agreement of Landlord and Tenant as follows:
(i) provided that Tenant gives Landlord notice on or before the date which is
six (6) months prior to the Expiration Date, upon the mutual agreement of
Landlord and Tenant, the Lease shall be renewed for one (1) additional five (5)
year term (the "Extended Term") on the same terms and provisions (other than
with respect to renewal) as the Fixed Term, as set forth in the Lease; (ii)
provided that Tenant gives Landlord notice on or before the date which is six
(6) months prior to the expiration of the Extended Term, upon the mutual
agreement of Landlord and Tenant, the Lease shall be renewed for one (1)
additional five (5) year term (the "Second Extended Term") on the same terms and
provisions (other than with respect to renewal) as
<PAGE> 2
the Fixed Term, as set forth in the Lease; and (iii) provided that Tenant gives
Landlord notice on or before the date which is six (6) months prior to the
expiration of the Second Extended Term, upon the mutual agreement of Landlord
and Tenant, the Lease shall be renewed for one (1) additional five (5) year term
(the "Third Extended Term") on the same terms and provisions (other than with
respect to renewal) as the Fixed Term, as set forth in the Lease. Tenant's right
to so extend the Term of the Lease is conditioned on Landlord's prior approval
of the Extended Term, Second Extended Term, or Third Extended Term, as the case
may be. The term "Term" used in this Agreement means the Fixed Term, Extended
Term, Second Extended Term and Third Extended Term, as appropriate. The term
"Lease Year" means each twelve (12) month period during the Term commencing on
January 1 and ending on December 31, except the first Lease Year of each Lease
shall be the period from the Commencement Date through the following December
31, and the last Lease Year shall end on the date of termination of the Lease if
a day other than December 31. Landlord may terminate this Lease prior to the
expiration of the Term hereof, at any time following the date which is five (5)
years from the date hereof, upon written notice to Tenant not less than eighteen
(18) months prior to the effective date of such termination.
ARTICLE II
RENT
2.1 Base Rent. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term and the Third
Extended Term, commencing on the Commencement Date, in accordance with the Base
Rent Schedule attached hereto as Exhibit D. If the Commencement Date or the
Expiration Date shall be other than on the first day of a calendar month, the
initial (or final, as appropriate) monthly installment of Base Rent payable
pursuant to the Lease shall be prorated for the number of days until, in the
case of the initial monthly installment, the first day of the calendar month
following the Commencement Date and, in the case of the final monthly
installment, the Expiration Date.
2.2 Additional Rent. The Base Rent shall be subject to such increases
over the Term as determined pursuant to Section 2.02 of the Master Agreement.
2.3 Other Additional Rent. Tenant shall also pay all Other Additional
Rent with respect to the Leased Property, as set forth in the Master Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.1 Master Agreement Incorporated Herein. All provisions of the Master
Agreement (except any provisions expressly therein not to be a part of an
individual lease of leased property) are hereby incorporated in and are a part
of this Lease of the Leased Property.
2
<PAGE> 3
3.2 Recordation. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
CCA PRISON REALTY TRUST
By:
-----------------------------------------
Title:
--------------------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
-----------------------------------------
Title:
--------------------------------------
3
<PAGE> 4
EXHIBIT A
Legal Description of Leased Property
PARCEL "A" - PRISON COMPOUND
A portion of the Northeast Quarter of Section 16, Township 7 South, Range 8
East, of the Gila and Salt River Base and Meridian, Pinal County, Arizona; using
a basis of bearing the East line of the Northeast corner of said Section 16,
using a bearing of North 00 degrees 00 minutes 07 seconds East and being more
particularly described as follows:
Commencing at the East quarter corner of said Section 16, being a brass cap in
handhole; thence South 89 degrees 47 minutes 31 seconds West, along the
East/West mid-section line of said Section 16, a distance of 735.00 feet to the
point of beginning; thence continuing South 89 degrees 47 minutes 31 seconds
West along said mid-section line 1907.59 feet to the center of said Section 16,
being a 3 inch aluminum monument; thence North 00 degrees 02 minutes 32 seconds
West along the North/South mid-section line of said Section 16, a distance of
2648.25 feet to the North quarter corner of said Section 16, being a G.L.O brass
cap; thence North 89 degrees 56 minutes 55 seconds East, along the north line of
said northeast quarter 1909.62 feet; thence South 00 degrees 00 minutes 07
seconds West, parallel to the East line of said Northeast quarter 2643.03 feet
to the point of beginning.
Except all coal, oil, gas and mineral deposits as reserved in instrument
recorded September 20, 1944 in Book 71 of Deeds, page 511.
Said parcel contains approximately 120 acres, more or less. This legal
description is recorded in Docket 1958, page 755, Records of Pinal County,
Arizona.
PARCEL "B" - WELL SITE AND INGRESS/EGRESS EASEMENT
A parcel of land situated in the Northeast Quarter of Section 16, Township 7
South, Range 8 East of the Gila and Salt River Base and Meridian, Pinal County,
Arizona; more particularly described as follows:
Beginning at the East quarter corner of said Section 16, measure westerly along
the mid-section line bearing South 89 degrees 47 minutes 31 seconds West, a
distance of 452.00 feet to the true point of beginning; thence continuing
westerly along the mid-section line bearing South 89 degrees 47 minutes 31
seconds West, a distance of 208.00 feet; thence northerly bearing North 00
degrees 00 minutes 07 seconds East, a distance of 208.00 feet; thence easterly
bearing North 89 degrees 47 minutes 31 seconds East, a distance of 208.00 feet;
thence southerly bearing South 00 degrees 00 minutes 07 seconds West, a distance
of 208.00 feet to the true point of beginning.
Except all coal, oil, gas and mineral deposits as reserved in instrument
recorded September 20, 1944 in Book 71 of Deeds, page 511.
<PAGE> 5
Said parcel contains approximately 1.0 acres more or less.
Together with and subject to an easement for ingress and egress more
particularly described as follows:
A 30 foot strip of land lying to the North of the following described line;
beginning at the East quarter corner of said Section 16, measuring westerly
along the mid-section line bearing South 89 degrees 47 minutes 31 seconds West,
a distance of 40.00 feet to the true point of beginning; thence continuing
westerly along the mid-section line bearing South 89 degrees 47 minutes 31
seconds West, a distance of 412.00 feet.
Except all gas, oil, metals and mineral rights as reserved in patent from State
of Arizona recorded in Book 32 of Deeds, page 325, Records of Pinal County,
Arizona.
This legal description is recorded in Docket 1999, page 997, Records of Pinal
County, Arizona.
PARCEL "C" - SEWAGE DISPOSAL BEDS
A parcel of land situated in the northwest corner of Section 16, Township 7
South, Range 8 East, of the Gila and Salt River Base and Meridian, Pinal County,
Arizona, more particularly described as follows:
Beginning at the North quarter corner of said Section 16, measure southerly
along the mid-section line bearing South 00 degrees 02 minutes 32 seconds East,
a distance of 600.00 feet to the true point of beginning; thence continuing
southerly along the mid-section line bearing South 00 degrees 02 minutes 32
seconds East, a distance of 600.00 feet; thence westerly bearing South 89
degrees 57 minutes 28 seconds West, a distance of 1815.00 feet; thence northerly
bearing North 00 degrees 02 minutes 32 seconds West, a distance of 600.00 feet;
thence Easterly bearing North 89 degrees 57 minutes 28 seconds East, a distance
of 1815.00 feet to the true point of beginning.
Except all gas, oil, metals and mineral rights as reserved in patent from State
of Arizona Recorded in Book 32 of Deeds, page 325, Records of Pinal County,
Arizona.
Said parcel contains approximately 25 acres, more or less. This legal
description is recorded in Docket 1999, page 997, Records of Pinal County,
Arizona.
Eloy Detention Center
Eloy, Pinal County, Arizona
<PAGE> 6
EXHIBIT B
Mortgage Debt
Property: Eloy Detention Center
This property is subject to the following Mortgage Debt:
That certain deed of trust of First Union National Bank of Tennessee,
as Administrative Agent, dated July 18, 1997.
6
<PAGE> 7
EXHIBIT C
Permitted Exceptions
Property: Eloy Detention Center
1. Taxes and assessments collectible by the County Treasurer not yet due
and payable for the year 1997.
2. Assessments, obligations and liabilities by reason of the property
described herein being included in any existing or proposed sewer
system, street, lighting or other assessment and/or improvement
district of the City of Eloy, if any.
3. Liabilities and obligations existing or which may arise against the
property by reason of its inclusion within Central Arizona Water
Conservation District, Pinal County Flood Control District and Central
Arizona Water Irrigation District.
4. Reservations contained in State of Arizona patent recorded in Book 32
of Deeds, page 325, reading as follows: The State of Arizona reserves
all rights to any and all minerals, ores, and metals of every kind and
character and all coal, asphaltum, oil, gases, fertilizers, fossils and
other like substances in or under said land and all the right of
ingress and egress for the purpose of mining, together with enough of
the surface of the land as may be necessary for the proper and
convenient working and extraction of such minerals and substances.
5. Water rights, claims or title to water, whether or not shown by the
public records.
6. The right of entry to prospect for, mine and remove the oil, gas and
other mineral deposits in said land as reserved in Deed recorded in
Book 71 of Deeds, Page 511.
7. Liabilities and obligations imposed upon said land by reason of its
inclusion within the Central Arizona Water Irrigation and Drainage
District as disclosed by instrument recorded on January 20, 1990, in
Docket 1580, page 919.
8. Easement for public highway purposes and rights incident thereto, as
set forth in instrument recorded in Book 85 of Deeds, page 243. (Parcel
A)
9. Resolution by the Board of Supervisors of Pinal County Arizona
purporting to establish a county roadway, 33 feet on each side of all
section lines, recorded February 21, 1964, in Docket 375, page 572.
(Parcel A)
10. Easement for electric transmission lines and rights incident thereto,
as set forth in instrument recorded in Docket 1301, page 452. (Parcel
A)
11. Easement for water distribution system canals, laterals and ditches and
rights incident thereto, as set forth in instrument recorded in Docket
1515, page 195. (Parcels A and B)
12. Easement for ingress, egress and irrigation purposes and rights
incident thereto, as set forth in instrument recorded in Docket 1568,
page 482. (Parcels A and C)
13. Easement for electric lines and appurtenant facilities and rights
incident thereto, as set forth in instrument recorded in Docket 2026,
page 456. (Parcel A)
<PAGE> 8
14. Easement for electric lines and appurtenant facilities and rights
incident thereto, as set forth in instrument recorded in Docket 2026,
page 458. (Parcel B)
15. Agreement for the operation, maintenance, repair and financing of an
irrigation distribution system according to the terms and conditions
contained therein, dated June 13,1984, between Central Arizona
Irrigation and Drainage District, an irrigation district, and B.K.W.
Farms, Inc., an Arizona corporation, recorded June 26,1985, in Docket
1295, page 47.
16. Agreement for irrigation and water use according to the terms and
conditions contained therein, dated December 1, 1989, between Central
Arizona Irrigation and Drainage District, an irrigation district, and
Lin & Sons, Enterprises, Inc., a California corporation, recorded March
26, 1990, in Docket 1665, page 684.
17. All matters shown on ALTA/ACSM Land Title Survey, dated June 20, 1997,
prepared by Robert B. Atherton, R.L.S. No. 16490, Atherton Engineering
Inc., 4620 N. 16th Street, Suite 108, Phoenix, AZ 85016-5148, Job No.
97-26.
<PAGE> 9
EXHIBIT D
Base Rent Schedule
Property: Eloy Detention Center
Tenant will pay to Landlord annual Base Rent of $6,000,000.00, payable
in equal monthly installments of $500,000.00.
Base Rent for the Extended Term, Second Extended Term and Third
Extended Term shall be equal to the fair market rental value of the Leased
Property as of the respective commencement dates thereof.
<PAGE> 1
EXHIBIT 10.14
LEASE AGREEMENT
(FLORENCE)
THIS LEASE AGREEMENT ("Lease") dated as of the 18th day of July, 1997,
by and between CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("Landlord") and CORRECTIONS CORPORATION OF AMERICA, a Tennessee corporation
("Tenant").
RECITALS
WHEREAS, Tenant (or one of Tenant's affiliates) has concurrently
conveyed to Landlord the property described in Exhibit A hereto, and Landlord
and Tenant desire that Landlord lease such property back to Tenant; and
WHEREAS, Landlord and Tenant have entered into a Master Agreement to
Lease of even date herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant leases
from Landlord the Land located in the City of Florence, Pinal County, State of
Arizona, described in Exhibit A hereto, and all Improvements, Fixtures, and
Personal Property thereon or thereto (each as defined in the Master Agreement,
and, together with said Land, the "Leased Property"); such Leased Property
collectively known and described at the date hereof as the Central Arizona
Detention Center;
SUBJECT, HOWEVER, to the lien of the mortgage debt described in Exhibit
B hereto, if any, and to all easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of the date hereof and listed in
Exhibit C hereto (collectively the "Permitted Exceptions").
1.2 Term. The initial term (the "Fixed Term") of the Lease shall be for
a fixed term of ten (10) years commencing on July 18, 1997 (the "Commencement
Date") and expiring on July 17, 2007 (the "Expiration Date"). The Term of this
Lease may be renewed on the mutual agreement of Landlord and Tenant as follows:
(i) provided that Tenant gives Landlord notice on or before the date which is
six (6) months prior to the Expiration Date, upon the mutual agreement of
Landlord and Tenant, the Lease shall be renewed for one (1) additional five (5)
year term (the "Extended Term") on the same terms and provisions (other than
with respect to renewal) as the Fixed Term, as set forth in the Lease; (ii)
provided that Tenant gives Landlord notice on or before the date which is six
(6) months prior to the expiration of the Extended Term, upon the mutual
agreement of Landlord and Tenant, the Lease shall be renewed for one (1)
additional five (5) year term (the "Second Extended Term") on the same terms and
provisions (other than with respect to renewal) as the Fixed Term, as
<PAGE> 2
set forth in the Lease; and (iii) provided that Tenant gives Landlord notice on
or before the date which is six (6) months prior to the expiration of the Second
Extended Term, upon the mutual agreement of Landlord and Tenant, the Lease shall
be renewed for one (1) additional five (5) year term (the "Third Extended Term")
on the same terms and provisions (other than with respect to renewal) as the
Fixed Term, as set forth in the Lease. Tenant's right to so extend the Term of
the Lease is conditioned on Landlord's prior approval of the Extended Term,
Second Extended Term, or Third Extended Term, as the case may be. The term
"Term" used in this Agreement means the Fixed Term, Extended Term, Second
Extended Term and Third Extended Term, as appropriate. The term "Lease Year"
means each twelve (12) month period during the Term commencing on January 1 and
ending on December 31, except the first Lease Year of each Lease shall be the
period from the Commencement Date through the following December 31, and the
last Lease Year shall end on the date of termination of the Lease if a day other
than December 31. Landlord may terminate this Lease prior to the expiration of
the Term hereof, at any time following the date which is five (5) years from the
date hereof, upon written notice to Tenant not less than eighteen (18) months
prior to the effective date of such termination.
ARTICLE II
RENT
2.1 Base Rent. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term and the Third
Extended Term, commencing on the Commencement Date, in accordance with the Base
Rent Schedule attached hereto as Exhibit D. If the Commencement Date or the
Expiration Date shall be other than on the first day of a calendar month, the
initial (or final, as appropriate) monthly installment of Base Rent payable
pursuant to the Lease shall be prorated for the number of days until, in the
case of the initial monthly installment, the first day of the calendar month
following the Commencement Date and, in the case of the final monthly
installment, the Expiration Date.
2.2 Additional Rent. The Base Rent shall be subject to such increases
over the Term as determined pursuant to Section 2.02 of the Master Agreement.
2.3 Other Additional Rent. Tenant shall also pay all Other Additional
Rent with respect to the Leased Property, as set forth in the Master Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.1 Master Agreement Incorporated Herein. All provisions of the Master
Agreement (except any provisions expressly therein not to be a part of an
individual lease of leased property) are hereby incorporated in and are a part
of this Lease of the Leased Property.
2
<PAGE> 3
3.2 Recordation. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
CCA PRISON REALTY TRUST
By:
-----------------------------------------
Title:
--------------------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
-----------------------------------------
Title:
--------------------------------------
3
<PAGE> 4
EXHIBIT A
Legal Description of Leased Property
A parcel of land located in the Northeast Quarter of Section 36, Township 4
South, Range 9 East of the Gila and Salt River Base and Meridian, Pinal County,
Arizona, more particularly described as follows:
The North 1100.00 feet of the Northeast Quarter of Section 36, Township 4 South,
Range 9 East of the Gila and Salt River Base and Meridian, Pinal County,
Arizona.
Central Arizona Detention Center
Florence, Pinal County, Arizona
<PAGE> 5
EXHIBIT B
Mortgage Debt
Property: Central Arizona Detention Center
This property is subject to the following Mortgage Debt:
That certain deed of trust of First Union National Bank of Tennessee,
as Administrative Agent, dated July 18, 1997.
<PAGE> 6
EXHIBIT C
Permitted Exceptions
Property: Central Arizona Detention Center
1. Taxes and assessments collectible by the County Treasurer not yet due
and payable for the year 1997.
2. Taxes, assessments, obligations and liabilities on the subject property
by reason of the City of Florence Sewer System, Revenue and General
Obligation Bonds.
3. Liabilities and obligations existing or which may arise against the
property by reason of its inclusion within COUNTY FIRE CONTRIBUTIONS
DISTRICT; ELECTRICAL DISTRICT NUMBER TWO; CENTRAL ARIZONA WATER
CONSERVATION DISTRICT; PINAL COUNTY LIBRARY DISTRICT; PINAL COUNTY
FLOOD CONTROL DISTRICT; FLORENCE FLOOD CONTROL DISTRICT; and SAN CARLOS
IRRIGATION DISTRICT.
4. Reservations contained in the Patent from the United States of America,
reading as follows:
"Subject to any vested and accrued water rights for mining,
agricultural, manufacturing, or other purposes, and rights to ditches
and reservoirs used in connection with such water rights, as may be
recognized and acknowledged by the local customs, laws, and decisions
of courts; and there is reserved from the lands hereby granted, a
right-of-way thereon for ditches or canals constructed by the authority
of the United States".
5. Water rights, claims or title to water, whether or not shown by the
public records.
6. Roadway right-of-way, 33 feet in width, along the section lines of said
section, as set forth in Minute Book 7, page 386, of the office of the
Board of Supervisors of Pinal County, Arizona, a certificate copy of
which was recorded February 21, 1964 in Docket 375, page 572.
7. An easement for highway and rights incident thereto as set forth in
instrument recorded January 12, 1931 in Book 49 of Deeds, page 187.
8. An easement for telephone and telegraph lines and rights incident
thereto as set forth in instrument recorded March 21, 1952 in Docket
58, page 227.
9. An easement for electrical transmission line and rights incident
thereto as set forth in instrument recorded November 12, 1980 in Docket
1035, page 607.
<PAGE> 7
10. The effect of a Map, Plat or Survey filed in Book 2 of Surveys, page
90, evidenced by a Notice of Recording Map or Plat recorded December
18, 1989, in Docket 1646, page 605.
11. The effect of a Map, Plat or Survey filed in Book 2 of Surveys, page
102, evidenced by a Notice of Recording Map or Plat recorded April 2,
1990, in Docket 1667, page 223.
12. The effect of a Map, Plat or Survey filed in Book 2 of Surveys, page
131, evidenced by a Notice of Recording Map or Plat recorded November
25, 1991, in Docket 1786, page 144.
13. The effect of a Map, Plat or Survey filed in Book 2 of Surveys, page
103.
14. An easement and rights incident thereto for installation of pipeline
and appurtenances over the property, as set forth in instrument
recorded September 28, 1994, in Docket 2045, page 192.
15. An easement and rights incident thereto for utility purposes over the
property, as set forth in instrument recorded February 22, 1995, in
Docket 2082, page 215.
16. An easement and rights incident thereto for utility purposes over the
property, as set forth in instrument recorded February 22, 1995, in
Document No. 1996-029763.
17. That portion of the premises located within the boundaries of any road
or roadway.
18. All matters shown on the ALTA/ACSM Land Title Survey, dated June 20,
1997, prepared by Robert B. Atherton, R.L.S. No. 16490, Atherton
Engineering Inc., 4620 N. 16th Street, Suite 108, Phoenix, Arizona
85016-5148, Job No. 97-25.
19. Canal and Irrigation Ditch within San Carlos Irrigation District Right
of Way.
<PAGE> 8
EXHIBIT D
Base Rent Schedule
Property: Central Arizona Detention Center
Tenant will pay to Landlord annual Base Rent of $12,300,000.00, payable
in equal monthly installments of $1,025,000.00.
Base Rent for the Extended Term, Second Extended Term and Third
Extended Term shall be equal to the fair market rental value of the Leased
Property as of the respective commencement dates thereof.
<PAGE> 1
EXHIBIT 10.15
LEASE AGREEMENT
(TAYLOR)
THIS LEASE AGREEMENT ("Lease") dated as of the 18th day of July, 1997,
by and between CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("Landlord") and CORRECTIONS CORPORATION OF AMERICA, a Tennessee corporation
("Tenant").
RECITALS
WHEREAS, Tenant (or one of Tenant's affiliates) has concurrently
conveyed to Landlord the property described in Exhibit A hereto, and Landlord
and Tenant desire that Landlord lease such property back to Tenant; and
WHEREAS, Landlord and Tenant have entered into a Master Agreement to
Lease of even date herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.1 Leased Property. Landlord hereby leases to Tenant and Tenant
leases from Landlord the Land located in the City of Taylor, Williamson County,
State of Texas, described in Exhibit A hereto, and all Improvements, Fixtures,
and Personal Property thereon or thereto (each as defined in the Master
Agreement, and, together with said Land, the "Leased Property"); such Leased
Property collectively known and described at the date hereof as the T. Don Hutto
Correctional Center;
SUBJECT, HOWEVER, to the lien of the mortgage debt described in Exhibit
B hereto, if any, and to all easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of the date hereof and listed in
Exhibit C hereto (collectively the "Permitted Exceptions").
1.2 Term. The initial term (the "Fixed Term") of the Lease shall be for
a fixed term of twelve (12) years commencing on July 18, 1997 (the "Commencement
Date") and expiring on July 17, 2009 (the "Expiration Date"). The Term of this
Lease may be renewed on the mutual agreement of Landlord and Tenant as follows:
(i) provided that Tenant gives Landlord notice on or before the date which is
six (6) months prior to the Expiration Date, upon the mutual agreement of
Landlord and Tenant, the Lease shall be renewed for one (1) additional five (5)
year term (the "Extended Term") on the same terms and provisions (other than
with respect to renewal) as the Fixed Term, as set forth in the Lease; (ii)
provided that Tenant gives Landlord notice on or before the date which is six
(6) months prior to the expiration of the Extended Term, upon the mutual
agreement of Landlord and Tenant, the Lease shall be renewed for one (1)
additional five (5) year term (the "Second Extended Term") on the same terms and
provisions (other than with respect to renewal) as
<PAGE> 2
the Fixed Term, as set forth in the Lease; and (iii) provided that Tenant gives
Landlord notice on or before the date which is six (6) months prior to the
expiration of the Second Extended Term, upon the mutual agreement of Landlord
and Tenant, the Lease shall be renewed for one (1) additional five (5) year term
(the "Third Extended Term") on the same terms and provisions (other than with
respect to renewal) as the Fixed Term, as set forth in the Lease. Tenant's right
to so extend the Term of the Lease is conditioned on Landlord's prior approval
of the Extended Term, Second Extended Term, or Third Extended Term, as the case
may be. The term "Term" used in this Agreement means the Fixed Term, Extended
Term, Second Extended Term and Third Extended Term, as appropriate. The term
"Lease Year" means each twelve (12) month period during the Term commencing on
January 1 and ending on December 31, except the first Lease Year of each Lease
shall be the period from the Commencement Date through the following December
31, and the last Lease Year shall end on the date of termination of the Lease if
a day other than December 31. Landlord may terminate this Lease prior to the
expiration of the Term hereof, at any time following the date which is five (5)
years from the date hereof, upon written notice to Tenant not less than eighteen
(18) months prior to the effective date of such termination.
ARTICLE II
RENT
2.1 Base Rent. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term and the Third
Extended Term, commencing on the Commencement Date, in accordance with the Base
Rent Schedule attached hereto as Exhibit D. If the Commencement Date or the
Expiration Date shall be other than on the first day of a calendar month, the
initial (or final, as appropriate) monthly installment of Base Rent payable
pursuant to the Lease shall be prorated for the number of days until, in the
case of the initial monthly installment, the first day of the calendar month
following the Commencement Date and, in the case of the final monthly
installment, the Expiration Date.
2.2 Additional Rent. The Base Rent shall be subject to such increases
over the Term as determined pursuant to Section 2.02 of the Master Agreement.
2.3 Other Additional Rent. Tenant shall also pay all Other Additional
Rent with respect to the Leased Property, as set forth in the Master Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.1 Master Agreement Incorporated Herein. All provisions of the Master
Agreement (except any provisions expressly therein not to be a part of an
individual lease of leased property) are hereby incorporated in and are a part
of this Lease of the Leased Property.
2
<PAGE> 3
3.2 Recordation. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
CCA PRISON REALTY TRUST
By:
-------------------------------
Title:
----------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
-------------------------------
Title:
----------------------------
3
<PAGE> 4
EXHIBIT A
Legal Description of Leased Property
Metes and Bounds Description
64.513 Acres
Wm. R. Williams Survey, A-665
James C. Eaves Survey, A-214
Williamson County, Texas
Being a tract containing 64.513 acres of land situated in the Wm. R. Williams
Survey, Abstract No. 665 and the James C. Eaves Survey, Abstract No. 214 in the
City of Taylor, Williamson County, Texas and being all of a called 64.537 acre
parcel described in deed to Corrections Corporation of America recorded in
Document Number 9639935 of the Official Records Williamson County, Texas
(O.R.W.C.T.). Said 64.513 acre tract being more particularly described by metes
and bounds with all bearings referenced to the aforementioned deed of record:
BEGINNING at a 1/2-inch iron rod found in a south right-of-way line of Welch
Street being the northwest corner of said Tract 1 and the northeast corner of a
called 16.16 acre tract described in deed to Our Lady of Gaudalupe Church
recorded in Volume 1482, page 866 of said O.R.W.C.T.;
THENCE, North 87 degrees 11 minutes 00 seconds East, along said Welch Street
right-of-way line, a distance of 1,623.43 feet to a 1/2-iron rod found in the
west right-of-way line of Park Street (60.00 feet wide) per the plat of Doak's
Addition to the Town of Taylor, a subdivision of record in Volume 56, page 483
of the Williamson County Deed Records (W.C.D.R.) and being the northeast corner
of said Tract 1;
THENCE, South 05 degrees 17 minutes 10 seconds East, departing said Welch Street
and along said Park Street right-of-way line, a distance of 1,708.31 feet to a
1/2-inch iron rod found for the northeast corner of a called 9.0 acre tract
described in deed to Mary Rundell and J. Sorenson recorded in Volume 270, page
54 of the Williamson County Probate Records and being the southeast corner of
said Tract 1;
THENCE, South 85 degrees 12 minutes 10 seconds West (called South 85 degrees 11
minutes 13 seconds West), departing said Park Street and along the north line of
said 9.00 acre tract and along the north line of a called 31.60 acre tract
described as Sixth Tract in deed to Wilhemie Sorenson recorded in Volume 1967,
page 117 of said O.R.W.C.T, a distance of 1,618.76 feet (called 1,618.44 feet)
to a 1/2-inch iron rod found for an interior corner of said 31.60 acre tract and
being the southwest corner of said Tract 1;
THENCE, North 04 degrees 48 minutes 00 seconds West (called North 04 degrees 55
minutes 32 seconds West), along the most northerly easterly line of said 31.60
acre tract, at a distance of 305.77 feet pass a found 3/4-inch iron rod, 0.12
feet left and continuing for a total distance of 355.87 feet
<PAGE> 5
(called 306.32 feet) to a 1/2-inch iron rod found for the most northerly corner
of said 31.60 acre tract and being the southeast corner of the aforementioned
16.16 acre tract;
THENCE, North 05 degrees 32 minutes 24 seconds West (called North 05 degrees 30
minutes 03 seconds West), along the easterly line of said 16.16 acre tract, a
distance of 1,408.61 feet (called 1,458.59 feet) to the POINT OF BEGINNING and
containing a computed area of 64.513 acres of land, more or less.
Prepared by:
SURVCON INC.
400 West 15th, Suite 500
Austin, Texas 78701
Job No. 4775-01
April 1997
Revised: June 1997
T. Don Hutto Correctional Center
Taylor, Williamson County, Texas
<PAGE> 6
EXHIBIT B
Mortgage Debt
Property: T. Don Hutto Correctional Center
This property is subject to the following Mortgage Debt:
That certain deed of trust of First Union National Bank of
Tennessee, as Administrative Agent, dated July 18, 1997.
6
<PAGE> 7
EXHIBIT C
Permitted Exceptions
Property: T. Don Hutto Correctional Center
1. Standby fees, taxes and assessments by any taxing authority for the
year 1997, and subsequent years.
2. An easement dated February 28, 1928, granted to Texas Power & Light
Company of Dallas, Texas by Nellie G. Bowers, individually and as
executrix of the Estate of A. L. Bowers, Deceased, et al., recorded in
Volume 235, page 534, Deed Records, Williamson County, Texas.
3. An undivided 1/8th interest in all oil, gas and other minerals on, in,
under or that may be produced from the subject property as set forth in
instrument recorded in Volume 238, Page 363, Deed Records, Williamson
County, Texas.
4. An undivided 1/8th interest of all oil, gas and other minerals on, in,
under or that may be produced from the subject property as set forth in
instrument recorded in Volume 299, Page 572, Deed Records, Williamson
County, Texas.
5. An undivided 1/2 interest in all oil, gas and other minerals on, in,
under or that may be produced from the subject property as set forth in
instrument recorded in Volume 544, Page 97, Deed Records, Williamson
County, Texas.
6. An undivided 1/6 interest in all oil, gas and other minerals on, in,
under or that may be produced from the subject property as set forth in
instrument recorded in Volume 544, Page 99, Deed Records, Williamson
County, Texas.
7. An undivided 1/2 interest in all oil, gas and other minerals on, in,
under or that may be produced from the subject property as set forth in
instrument recorded in Volume 1088, Page 309, Official Records,
Williamson County, Texas.
8. An undivided 1/2 interest in all oil, gas and other minerals on, in,
under or that may be produced from the subject property as set forth in
instrument recorded in Volume 1133, Page 880, Official Records,
Williamson County, Texas.
9. All matters shown on the ALTA/ACSM Land Title Survey, dated April 17,
1997, as revised June 24, 1997, prepared by Arthur W. Girts, Jr.,
R.P.L.S. No. 4741, Survcon Inc., 400 W. 15th, Suite 500, Austin, Texas
78701, Job #4775-01.
<PAGE> 8
EXHIBIT D
Base Rent Schedule
Property: T. Don Hutto Correctional Center
Tenant will pay to Landlord annual Base Rent of $2,500,000.00, payable
in equal monthly installments of $208,333.33.
Base Rent for the Extended Term, Second Extended Term and Third
Extended Term shall be equal to the fair market rental value of the Leased
Property as of the respective commencement dates thereof.
<PAGE> 1
Exhibit 10.17
TRADE NAME USE AGREEMENT
THIS AGREEMENT (the "Agreement") dated this day of July, 1997, by and
among Corrections Corporation of America ("Grantor"), a Delaware corporation,
and CCA Prison Realty Trust ("Grantee"), a Maryland real estate investment
trust.
W I T N E S S E T H:
WHEREAS, Grantor is the sole and exclusive owner of the corporate name
Corrections Corporation of America and its abbreviation "CCA" (the Trade Name).
NOW, THEREFORE, in consideration of the premises and the mutual promises
and undertakings herein contained, and for other good and valuable
consideration, the parties agree as follows:
1. Grant of Trade Name by Grantor. Grantor grants to Grantee the
non-exclusive, non-transferrable right to use the Trade Name in its corporate
name as follows: CCA Prison Realty Trust, subject to the provisions of this
Agreement.
2. Term. This Agreement shall commence on the date above written and
terminate on the date which Grantee ceases to own any correctional or detention
facility managed by Grantor (the "Term").
3. Termination. This Agreement may be terminated upon ten (10) days'
written notice from Grantor to Grantee upon occurrence of any of the following
events:
(a) A change in control of Grantee;
(b) Grantee goes into liquidation or bankruptcy or has a receiver or
trustee appointed to administer either its property or affairs, or makes a
general assignment of its property for the benefit of creditors or in any other
manner takes advantage of the laws of bankruptcy or insolvency or the like.
4. Reservation of Rights. Except for the limited rights herein expressly
granted to Grantee, all rights in the Trade Name are reserved to Grantor
throughout the world for the sale and exclusive use or other disposition by
Grantor at anytime, and from time to time, without any obligation to Grantee.
5. Maintenance of Quality Standards. Grantee agrees that the nature and
quality of: all services rendered by Grantee hereunder; all goods sold by
Grantee hereunder; and all related advertising, promotional, and other related
uses of the Trade Name by Grantee shall conform to standards reasonably set by
Grantor. Grantee agrees to cooperate with Grantor in facilitating Grantor's
control of such nature and quality, and to supply Grantor with specimens of all
uses of the Trade Name upon request.
<PAGE> 2
6. Transfer Prohibited. The Trade Name granted hereunder shall not be
assigned, sublicensed, or otherwise transferred without the prior written
consent of Grantor. In the event of a prohibited transfer, Grantor shall have
the right to terminate this Agreement forthwith by written notice to Grantee.
7. Rights Upon Termination. Upon the termination (by expiration or
otherwise) of this Agreement, for any reason, all rights granted to Grantee
hereunder shall automatically revert to Grantor for its use or disposition. Upon
termination, Grantee shall promptly cease use of the Trade Name, and shall
promptly deliver to Grantor all materials previously supplied by Grantor to
Grantee and all copies thereof, in whole or in part. At Grantor's option,
Grantor may, in lieu of return, require that Grantee destroy said materials and
copies and provide to Grantor satisfactory evidence of destruction. Grantor
shall not be liable to Grantee for damages of any kind on account of the
termination or expiration of this Agreement. Without limiting the foregoing,
upon termination or expiration of this Agreement for any reason, Grantor shall
have no liability for reimbursement or for damages for loss of goodwill, or on
account of any expenditures, investments, leases, or commitments made by
Grantee. Grantee acknowledges and agrees that Grantee has no expectation and has
received no assurances that its business relationship with Grantor will continue
beyond the stated term of this Agreement or its earlier termination, that any
investment by Grantee in the will be recovered or recouped, or that Grantee
shall obtain any anticipated amount of profits by virtue of this Agreement.
8. No Franchise or Joint Venture. The parties expressly acknowledge that
this Agreement shall not be deemed to create an agency, partnership, franchise,
employment, or joint venture relationship between Grantor and Grantee. Nothing
in this Agreement shall be construed as a grant of authority to Grantee to waive
any right, incur any obligation or liability, enter into any agreement, grant
any release or otherwise purport to act in the name of Grantor.
9. Indemnification.
9.1 The Grantee shall indemnify and hold harmless Grantor, its
affiliates, directors, officers, employees, representatives, agents, successors
and assigns from and against any and all losses, damages, costs and expenses,
including attorney's fees, resulting from, arising out of Grantee's breach of
the promises, covenants, representations and warranties made by it herein.
9.2 The Grantor shall indemnify and hold harmless Grantee, its
affiliates, directors, officers, employees, representatives, agents, successors
and assigns from and against any and all losses, damages, costs and expenses,
including attorney's fees, resulting from, arising out of Grantor's breach of
the promises, covenants, representations and warranties made by it herein.
2
<PAGE> 3
10. Representations and Warranties.
10.1 Grantee hereby represents and warrants that (a) it is a real
estate investment trust duly organized and validly existing under the laws of
Maryland; (b) the execution and delivery by the Grantee of this Agreement, the
performance by Grantee of all the terms and conditions thereof to be performed
by it and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action, and no other act or approval of any
person or entity is required to authorize such execution, delivery, and
performance; (c) the Agreement constitutes a valid and binding obligation of
Grantee, enforceable in accordance with its terms; (d) this Agreement and the
execution and delivery thereof by Grantee, does not, and the fulfillment and
compliance with the terms and conditions hereof and the consummation of the
transactions contemplated hereby will not, (i) conflict with any of, or require
the consent of any person or entity under, the terms, conditions or provisions
of the organizational documents of Grantee, (ii) violate any provision of, or
require any consent, authorization or approval under, any law or administrative
regulation or any judicial, administrative or arbitration order, award,
judgment, writ, injunction or decree applicable to Grantee, or (iii) conflict
with, result in a breach of, or constitute a default under, any material
agreement or obligation to which Grantee is a party.
10.2 Grantor hereby represents and warrants that (a) it is a
corporation duly organized and validly existing under the laws of Delaware; (b)
the execution and delivery by the Grantor of this Agreement, the performance by
Grantor of all the terms and conditions thereof to be performed by it and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action, and no other act or approval of any person or entity is
required to authorize such execution, delivery, and performance; (c) the
Agreement constitutes a valid and binding obligation of Grantor, enforceable in
accordance with its terms; (d) this Agreement and the execution and delivery
thereof by Grantor, does not, and the fulfillment and compliance with the terms
and conditions hereof and the consummation of the transactions contemplated
hereby will not, (i) conflict with any of, or require the consent of any person
or entity under, the terms, conditions or provisions of the organizational
documents of Grantor, (ii) violate any provision of, or require any consent,
authorization or approval under, any law or administrative regulation or any
judicial, administrative or arbitration order, award, judgment, writ, injunction
or decree applicable to Grantor, or (iii) conflict with, result in a breach of,
or constitute a default under, any material agreement or obligation to which
Grantor is a party; (e) to the best of Grantor's knowledge, it is the owner of
the Trade Name and has the right to grant the rights to use the Trade Name to
the Grantee under the terms of this Agreement; and (f) has not been subject to
any third party claims for infringement due to the use of the Trade Name.
11. Ownership; Form of Use. Grantee acknowledges that Grantor owns all
right, title, and interest in and to the Trade Name, agrees that it will do
nothing inconsistent with such ownership. Grantee agrees that nothing in this
Agreement shall give Grantee any right, title, or interest in the Trade Name
other than the right to use it in accordance with this Agreement, and Grantee
agrees that it will not attack the title of Grantor to the Trade Name or attack
the validity of this Agreement. Grantee agrees to use the Trade Name only in the
form and manner as prescribed from time to time by Grantor.
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<PAGE> 4
12. Waiver; Modification. No wavier or modification of any of the terms of
this Agreement shall be valid unless in writing. No waiver by either party of a
breach hereof or a default hereunder shall be deemed a waiver by such party of a
subsequent breach or default of like or similar nature.
13. Separability. If any provision in this Agreement contravenes or is
otherwise invalid under the law of any country or subdivision thereof, then such
provision insofar as such country or subdivision is concerned shall be deemed
eliminated from this Agreement and the Agreement shall, as so modified, remain
valid and binding on the parties hereto and in full force and effect.
14. Disclaimer of Warranties. EXCEPT AS MAY BE EXPRESSLY PROVIDED IN THIS
AGREEMENT, GRANTOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IN
RESPECT OF THE TRADE NAME, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
NON-INFRINGEMENT OR OF RESULTS TO BE OBTAINED FROM USE THEREOF.
15. Negation of Consequential Damages. IN NO EVENT SHALL GRANTOR BE LIABLE
FOR ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES WHATSOEVER HEREUNDER, REGARDLESS OF
WHETHER GRANTOR HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES.
16. Governmental Licenses, Permits and Approvals. Grantee, at its expense,
shall be responsible for obtaining and maintaining all licenses, permits,
approvals, authorizations, and clearances which are required by governmental
authorities with respect to this Agreement, and for compliance with any
requirements of governmental authorities for the registration or recordation of
this Agreement and for making any payments required in connection therewith.
Grantee shall furnish to Grantor, promptly upon Grantor's request, written
evidence from such governmental authorities of the due issuance and continuing
validity of any such licenses, permits, clearances, authorizations, approvals,
registration or recordation.
17. Notices.
17.1 Notices and other communications required or permitted to the
given under this Agreement shall be in writing and delivered by hand or
overnight delivery, or placed in certified or registered mail, return receipt
requested, at the addresses specified below or such other address as either
party may, by notice to the other, designate:
If to Grantor: Corrections Corporation of America
102 Woodmont Blvd., Suite 800
Nashville, Tennessee 37205
Attn: Doctor R. Crants
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with a copy to: Elizabeth E. Moore, Esq.
Stokes & Bartholomew, P.A.
424 Church Street, Suite 2800
Nashville, Tennessee 37219
If to Grantee: CCA Prison Realty Trust
2200 Abbott Martin Road, Suite 201
Nashville, Tennessee 37215
Attn: D. Robert Crants, III
17.2 Notices and other communications shall be deemed given when
delivered by hand or overnight delivery to the proper address or the date of the
return receipt, as provided above.
18. Governing Laws. This Agreement shall be construed in accordance with
the laws of Tennessee, excluding the choice of law provisions thereof. The
parties hereby submit to the jurisdiction of the courts of Tennessee in respect
to all disputes arising out of or in connection with this Agreement.
19. Enforcement. It is expressly understood, acknowledged, and agreed by
Grantee that (a) the restrictions contained in this Agreement represent a
reasonable and necessary protection of the legitimate interests of Grantor and
its affiliates, and that Grantee's failure to observe and comply with the
covenants and agreements in this Agreement will cause irreparable harm to
Grantor and its affiliates; (b) it is and will continue to be difficult to
ascertain the nature, scope, and extent of the harm; and (c) a remedy at law for
such failure by Grantee will be inadequate. Accordingly, it is the intention of
the parties that, in addition to any other rights and remedies which Grantor and
its affiliates may have in the event of any breach or threatened breach of the
Agreement, Grantor and its affiliates shall be entitled, and are expressly and
irrevocably authorized by Grantee, to demand and obtain specific performance,
including, without limitation, temporary and permanent injunctive relief and all
other appropriate equitable relief against Grantee in order to enforce against
Grantee the covenants and agreements contained in this Agreement. Such right to
obtain injunctive relief may be exercised concurrently with, prior to, after, or
in lieu of, any other rights resulting from any such breach or threatened
breach. Grantee shall account for and pay over to Grantor all compensation,
profits, and other benefits, after taxes, enuring to Grantee's benefit, which
are derived or received by Grantee or any person or business entity controlled
by Grantee resulting from any action or transaction constituting breach of the
Agreement.
20. Entire Agreement. This Agreement contains the entire understanding of
the parties. There are no representations, warranties, promises, covenants, or
undertakings other than those hereinabove contained.
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
signed by their duly authorized officers and their respective corporate seals to
be hereunto affixed on the date set forth above.
GRANTOR:
CORRECTIONS CORPORATION OF
AMERICA
By: ___________________________________
Its:___________________________________
GRANTEE:
CCA PRISON REALTY TRUST
By: ___________________________________
Its:___________________________________
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<PAGE> 1
EXHIBIT 10.19
CREDIT AGREEMENT
DATED AS OF JULY 18, 1997,
BY AND AMONG
CCA PRISON REALTY TRUST,
AND CERTAIN SUBSIDIARIES THEREOF,
AS BORROWERS,
THE LENDERS REFERRED TO HEREIN,
FIRST UNION NATIONAL BANK OF TENNESSEE,
AS ADMINISTRATIVE AGENT,
AND
SOUTHTRUST BANK, NATIONAL ASSOCIATION,
AS CO-AGENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS........................................................................... 1
SECTION 1.1. Definitions................................................................. 1
SECTION 1.2. General..................................................................... 16
SECTION 1.3. Other Definitions and Provisions............................................ 17
ARTICLE II REVOLVING CREDIT FACILITY............................................................. 17
SECTION 2.1. Revolving Credit Loans...................................................... 17
SECTION 2.2. Swingline Loans............................................................. 17
SECTION 2.3. Procedure for Advances of Revolving Credit and
Swingline Loans............................................................. 19
SECTION 2.4. Repayment of Loans.......................................................... 20
SECTION 2.5. Notes....................................................................... 21
SECTION 2.6. Permanent Reduction of the Aggregate Commitment............................. 21
SECTION 2.7. Revolving Termination Date.................................................. 22
SECTION 2.8. Use of Proceeds............................................................. 23
SECTION 2.9. Release of Security......................................................... 23
SECTION 2.10. Increase In Aggregate Commitment; Additional Lenders........................ 23
ARTICLE III LETTER OF CREDIT FACILITY............................................................. 24
SECTION 3.1. L/C Commitment.............................................................. 24
SECTION 3.2. Procedure for Issuance of Letters of Credit................................. 24
SECTION 3.3. Commissions and Other Charges............................................... 25
SECTION 3.4. L/C Participations.......................................................... 25
SECTION 3.5. Reimbursement Obligation of the Borrowers................................... 26
SECTION 3.6. Obligations Absolute........................................................ 27
SECTION 3.7. Effect of Application....................................................... 27
ARTICLE IV GENERAL LOAN PROVISIONS............................................................... 27
SECTION 4.1. Interest.................................................................... 27
SECTION 4.2. Notice and Manner of Conversion or Continuation
of Loans.................................................................... 30
SECTION 4.3. Fees........................................................................ 30
SECTION 4.4. Manner of Payment........................................................... 31
SECTION 4.5. Crediting of Payments and Proceeds.......................................... 31
SECTION 4.6. Adjustments................................................................. 32
SECTION 4.7. Nature of Obligations of Lenders Regarding
Extensions of Credit; Assumption by the
Administrative Agent........................................................ 32
SECTION 4.8. Changed Circumstances....................................................... 33
SECTION 4.9. Indemnity................................................................... 35
SECTION 4.10. Capital Requirements........................................................ 36
SECTION 4.11. Taxes....................................................................... 36
ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING.......................................... 38
SECTION 5.1. Closing..................................................................... 38
SECTION 5.2. Conditions to Closing and Initial Extensions of Credit...................... 38
SECTION 5.3. Conditions to All Loans and Letters of Credit............................... 43
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<TABLE>
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE
BORROWERS..................................................................................... 43
SECTION 6.1. Representations and Warranties.............................................. 43
SECTION 6.2. Survival of Representations and Warranties, Etc............................. 49
ARTICLE VII FINANCIAL INFORMATION AND NOTICES..................................................... 50
SECTION 7.1. Financial Statements and Projections........................................ 50
SECTION 7.2. Officer's Compliance Certificate............................................ 51
SECTION 7.3. Other Reports............................................................... 51
SECTION 7.4. Notice of Litigation and Other Matters...................................... 51
SECTION 7.5. Accuracy of Information..................................................... 52
ARTICLE VIII AFFIRMATIVE COVENANTS................................................................. 53
SECTION 8.1. Preservation of Corporate Existence and Related Matters..................... 53
SECTION 8.2. Maintenance of Property..................................................... 53
SECTION 8.3. Insurance................................................................... 53
SECTION 8.4. Accounting Methods and Financial Records.................................... 53
SECTION 8.5. Payment and Performance of Obligations...................................... 54
SECTION 8.6. Compliance With Laws and Approvals.......................................... 54
SECTION 8.7. Environmental Laws.......................................................... 54
SECTION 8.8. Compliance with ERISA....................................................... 54
SECTION 8.9. Compliance With Agreements.................................................. 55
SECTION 8.10. Conduct of Business......................................................... 55
SECTION 8.11. Visits and Inspections...................................................... 55
SECTION 8.12. Incarceration Agreements.................................................... 55
SECTION 8.13. Lease Terms and Conditions.................................................. 55
SECTION 8.14. Lease Revenues.............................................................. 56
SECTION 8.15. Hedging Agreement........................................................... 56
SECTION 8.16. Additional Borrowers........................................................ 56
SECTION 8.17. Further Assurances.......................................................... 56
ARTICLE IX FINANCIAL COVENANTS................................................................... 57
SECTION 9.1 Ratio of Total Liabilities to Total Capitalization.......................... 57
SECTION 9.2 Ratio of Total Funded Debt to Cash Flow..................................... 57
SECTION 9.3 Ratio of Dividends to Funds From Operations................................. 57
SECTION 9.4 Interest Coverage Ratio..................................................... 57
SECTION 9.5 Minimum Net Worth........................................................... 58
SECTION 9.6 Additional Secured Debt..................................................... 58
SECTION 9.7 Investment Grade Rating..................................................... 58
ARTICLE X NEGATIVE COVENANTS.................................................................... 58
SECTION 10.1. Limitations on Debt......................................................... 58
SECTION 10.2. Limitations on Contingent Obligations....................................... 59
SECTION 10.3. Limitations on Liens........................................................ 59
SECTION 10.4. Limitations on Loans, Advances, Investments and
Acquisitions................................................................ 60
SECTION 10.5. Limitations on Mergers and Liquidation...................................... 61
SECTION 10.6. Limitations on Sale of Assets............................................... 61
SECTION 10.7. Limitations on Dividends and Distributions.................................. 62
SECTION 10.8. Transactions with Affiliates................................................ 62
SECTION 10.9. Certain Accounting Changes.................................................. 62
SECTION 10.10. Amendment to Sale Leaseback Documents....................................... 62
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<TABLE>
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SECTION 10.11. Restrictions on Working Capital............................................. 63
SECTION 10.12. Restrictions on Use of Proceeds and Other Expenditures...................... 63
SECTION 10.13. Restrictive Agreements...................................................... 64
SECTION 10.14. Operating Leases............................................................ 64
ARTICLE XI DEFAULT AND REMEDIES................................................................. 64
SECTION 11.1. Events of Default........................................................... 64
SECTION 11.2. Remedies.................................................................... 67
SECTION 11.3. Rights and Remedies Cumulative; Non-Waiver; Etc............................. 67
ARTICLE XII THE ADMINISTRATIVE AGENT............................................................. 68
SECTION 12.1. Appointment................................................................. 68
SECTION 12.2. Delegation of Duties........................................................ 68
SECTION 12.3. Exculpatory Provisions...................................................... 68
SECTION 12.4. Reliance by the Administrative Agent........................................ 69
SECTION 12.5. Notice of Default........................................................... 69
SECTION 12.6. Non-Reliance on the Administrative Agent and
Other Lenders............................................................... 70
SECTION 12.7. Indemnification............................................................. 70
SECTION 12.8. The Administrative Agent in Its Individual Capacity......................... 71
SECTION 12.9. Resignation of the Administrative Agent; Successor
Administrative Agent........................................................ 71
SECTION 12.10 The Co-Agent................................................................ 71
ARTICLE XIII MISCELLANEOUS........................................................................ 72
SECTION 13.1. Notices..................................................................... 72
SECTION 13.2. Expenses; Indemnity......................................................... 73
SECTION 13.3. Set-off..................................................................... 74
SECTION 13.4. Governing Law............................................................... 74
SECTION 13.5. Consent to Jurisdiction..................................................... 74
SECTION 13.6. Binding Arbitration; Waiver of Jury Trial................................... 75
SECTION 13.7. Reversal of Payments........................................................ 76
SECTION 13.8. Accounting Matters.......................................................... 76
SECTION 13.9. Successors and Assigns; Participations...................................... 76
SECTION 13.10. Amendments, Waivers and Consents............................................ 79
SECTION 13.11. Performance of Duties....................................................... 80
SECTION 13.12. Joint and Several Liability; CCA Reit as Agent for
Borrowers................................................................... 80
SECTION 13.13. All Powers Coupled with Interest............................................ 80
SECTION 13.14. Survival of Indemnities..................................................... 80
SECTION 13.15. Titles and Captions......................................................... 80
SECTION 13.16. Severability of Provisions.................................................. 80
SECTION 13.17. Counterparts................................................................ 80
SECTION 13.18. Entire Agreement; Term of Agreement......................................... 81
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EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Swingline Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Prepayment
Exhibit D - Form of Notice of Account Designation
Exhibit E - Form of Notice of Conversion/
Continuation
Exhibit F - Form of Officer's Compliance Certificate
Exhibit G - Form of Assignment and Acceptance
Exhibit H - Form of Security Agreement
Exhibit I - Form of Deed of Trust
Exhibit J - Form Of Assignment of Lease
SCHEDULES
Schedule 1.1 - Lenders and Commitments
Schedule 6.1(a) - Jurisdictions of Organization and Qualification
Schedule 6.1(b) - Capitalization
Schedule 6.1(h) - Environmental Matters
Schedule 6.1(i) - ERISA Plans
Schedule 6.1(l) - Material Contracts
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<PAGE> 6
CREDIT AGREEMENT (as amended, restated or otherwise modified, this
"Agreement"), dated as of the 18th day of July, 1997, by and among CCA PRISON
REALTY TRUST, a Maryland real estate investment trust ("CCA REIT"), and any
Subsidiary of CCA REIT that is joined as Borrower pursuant to the terms hereof
(collectively with CCA REIT, the "Borrowers"), the financial institutions who
are or may become a party to this Agreement (the "Lenders"), and FIRST UNION
NATIONAL BANK OF TENNESSEE, as administrative agent for the Lenders (the
"Administrative Agent"), and SOUTHTRUST BANK, National Association, as Co-Agent.
STATEMENT OF PURPOSE
The Borrowers have requested, and the Lenders have agreed, to extend
certain credit facilities to the Borrowers on the terms and conditions of this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms when used in this
Agreement shall have the meanings assigned to them below:
"Affiliate" means, with respect to any Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such first Person or any of its Subsidiaries. The term "control" means (a) the
power to vote five percent (5%) or more of the securities or other equity
interests of a Person having ordinary voting power, or (b) the possession,
directly or indirectly, of any other power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Administrative Agent" means First Union in its capacity as
Administrative Agent hereunder, and any successor thereto appointed pursuant to
Section 12.9.
"Administrative Agent's Office" means the office of the Administrative
Agent specified in or determined in accordance with the provisions of Section
13.1.
"Aggregate Commitment" means the aggregate amount of the Lenders'
Commitments hereunder, as such amount may be reduced or modified at any time or
from time to time
<PAGE> 7
pursuant to the terms hereof. On the Closing Date, the Aggregate Commitment
shall be One Hundred and Fifty Million Dollars ($150,000,000).
"Agreement" means this Credit Agreement, as amended, restated or
otherwise modified.
"Annualized" means, with respect to any ratio set forth in Article
VIII, that each financial term included in the calculation of such ratio shall
be calculated by multiplying such financial term (a) for the quarter end
immediately following the Closing Date, by four, (b) for the period of two
consecutive fiscal quarters immediately following the Closing Date, by two and
(c) for the period of three consecutive fiscal quarters immediately following
the Closing Date, by four-thirds.
"Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, treaties, regulations and orders of all Governmental
Authorities and all orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
4.1(c).
"Application" means an application, in the form specified by the
Issuing Lender from time to time, requesting the Issuing Lender to issue a
Letter of Credit.
"Assignment and Acceptance" shall have the meaning assigned thereto in
Section 13.9.
"Assignments of Lease" means the collective reference to the
assignments of lease executed by any Borrower in favor of the Administrative
Agent, for the ratable benefit of itself and the Lenders, substantially in the
form of Exhibit J hereto, each as amended, restated or otherwise modified.
"Available Commitment" means, as to any Lender at any time, an amount
equal to the excess, if any, of (a) such Lender's Commitment over (b) such
Lender's Extensions of Credit.
"Base Rate" means, at any time, the higher of (a) the Prime Rate or (b)
the Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall take
effect simultaneously with the corresponding change or changes in the Prime Rate
or the Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based upon
the Base Rate as provided in Section 4.1(a).
"Borrowers" means the collective reference to CCA REIT and any
additional Subsidiary thereof joined as a Borrower hereunder pursuant to Section
8.16.
"Business Day" means (a) for all purposes other than as set forth in
clause (b) below, any day other than a Saturday, Sunday or legal holiday on
which banks in Charlotte, North Carolina and New York, New York are open for the
conduct of their commercial banking business, and
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<PAGE> 8
(b) with respect to all notices and determinations in connection with, and
payments of principal and interest on, any LIBOR Rate Loan, any day that is a
Business Day described in clause (a) and that is also a day for trading by and
between banks in Dollar deposits in the London interbank market.
"Capital Asset" means, with respect to the Borrowers and their
Subsidiaries, any asset that should, in accordance with GAAP, be classified and
accounted for as a capital asset on a Consolidated balance sheet of the
Borrowers and their Subsidiaries.
"Capital Expenditure" means, with respect to the Borrowers and their
Subsidiaries for any period, the aggregate cost of all Capital Assets acquired
by the Borrowers and their Subsidiaries during such period, as determined in
accordance with GAAP.
"Capital Lease" means, with respect to the Borrowers and their
Subsidiaries, any lease of any property that should, in accordance with GAAP, be
classified and accounted for as a capital lease on a Consolidated balance sheet
of the Borrowers and their Subsidiaries.
"Cash Flow" means, for any period, the sum of (a) Funds From Operations
less (b) Required Dividends less (c) Maintenance Capital Expenditures, in each
case for such period. For purpose of determining compliance with Section 10.4(b)
and Article IX for any quarter in which an acquisition of a Correctional
Facility is to occur, Cash Flow shall be adjusted in a manner satisfactory to
the Administrative Agent to include on a pro forma basis the projected first
year Cash Flow of such Correctional Facility.
"CCA" means Corrections Corporation of America, a Tennessee
corporation, and its successors and assigns.
"Change in Control" shall have the meaning assigned thereto in Section
11.1(i).
"Closing Date" means the date of this Agreement.
"Co-Agent" means SouthTrust Bank, National Association, in its capacity
as Co-Agent.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended or supplemented from time to time.
"Commitment" means, as to any Lender, the obligation of such Lender to
make Loans to and issue or participate in Letters of Credit issued for the
account of any Borrower hereunder in an aggregate principal or face amount at
any time outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule 1.1 hereto, as the same may be reduced or modified at any time
or from time to time pursuant to the terms hereof.
3
<PAGE> 9
"Commitment Percentage" means, as to any Lender at any time, the ratio
of (a) the amount of the Commitment of such Lender to (b) the Aggregate
Commitment of all of the Lenders.
"Consolidated" means, when used with reference to financial statements
or financial statement items of the Borrowers and their Subsidiaries, such
statements or items on a consolidated basis in accordance with applicable
principles of consolidation under GAAP.
"Contingent Obligation" means, with respect to the Borrowers and their
Subsidiaries, without duplication, any obligation, contingent or otherwise, of
any such Person pursuant to which such Person has directly or indirectly
guaranteed any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of any such Person (a) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to keep
well, to purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement condition or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, that the term Contingent
Obligation shall not include endorsements for collection or deposit in the
ordinary course of business.
"Correctional Facility" means any correctional or detention facility
owned (or if the context requires to be acquired) by any Borrower, including,
without limitation, any real property associated therewith.
"Credit Facility" means the collective reference to the Revolving
Credit Facility and the L/C Facility.
"Debt" means, with respect to the Borrowers and their Subsidiaries at
any date and without duplication, the sum of the following calculated in
accordance with GAAP: (a) all liabilities, obligations and indebtedness for
borrowed money including but not limited to obligations evidenced by bonds,
debentures, notes or other similar instruments of any such Person, (b) all
obligations to pay the deferred purchase price of property or services of any
such Person, except trade payables arising in the ordinary course of business
not more than ninety (90) days past due, (c) all obligations of any such Person
as lessee under Capital Leases, (d) all Debt of any other Person secured by a
Lien on any asset of any such Person, (e) all Contingent Obligations of any such
Person, (f) all obligations, contingent or otherwise, of any such Person
relative to the face amount of letters of credit, whether or not drawn,
including without limitation any Reimbursement Obligation, and banker's
acceptances issued for the account of any such Person, (g) all obligations to
redeem, repurchase, exchange, defease or otherwise make payments in respect of
capital stock or other securities of such Person and (h) all termination
payments which would be due and payable by any such Person pursuant to a Hedging
Agreement.
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"Deeds of Trust" means the collective reference to the deeds of trust,
mortgages or similar real property security instruments executed by any Borrower
in favor of the Administrative Agent, for the ratable benefit of itself and the
Lenders, substantially in the form of Exhibit I hereto, each as amended,
restated or otherwise modified.
"Default" means any of the events specified in Section 11.1 which with
the passage of time, the giving of notice or any other condition, would
constitute an Event of Default.
"Dividends" means for any period all Required Dividends plus any other
dividend or distribution paid by any Borrower with respect to its capital stock.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
currency of the United States.
"Duff & Phelps" means Duff & Phelps Credit Rating Co.
"Eligible Assignee" means, with respect to any assignment of the
rights, interest and obligations of a Lender hereunder, a Person that is at the
time of such assignment (a) a commercial bank organized under the laws of the
United States or any state thereof, having combined capital and surplus in
excess of $1,000,000,000, (b) a finance company, insurance company, investment
bank or other financial institution which in the ordinary course of business
extends credit of the type extended hereunder and that has total assets in
excess of $3,000,000,000, (c) already a Lender hereunder (whether as an original
party to this Agreement or as the assignee of another Lender), (d) the successor
(whether by transfer of assets, merger or otherwise) to all or substantially all
of the commercial lending business of the assigning Lender, or (e) any other
Person that has been approved in writing as an Eligible Assignee by CCA REIT and
the Administrative Agent.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Borrower or any ERISA Affiliate or (b) has at any time within the preceding six
years been maintained for the employees of any Borrower or any current or former
ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the rules and regulations thereunder, each as amended or modified from time to
time.
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"ERISA Affiliate" means any Person who together with any Borrower is
treated as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Percentage" means, for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities or any similar category of liabilities for a
member bank of the Federal Reserve System in New York City.
"Event of Default" means any of the events specified in Section 11.1,
provided that any requirement for passage of time, giving of notice, or any
other condition, has been satisfied.
"Extensions of Credit" means, as to any Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Loans made by such
Lender then outstanding and (b) such Lender's Commitment Percentage of the L/C
Obligations then outstanding.
"Excess Cash" means as of any date, the aggregate amount of
unrestricted cash and cash equivalents set forth on a Consolidated balance sheet
of the Borrowers and their Subsidiaries as of such date, in excess of
$5,000,000.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the Administrative Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the Administrative Agent. If, for any reason,
such rate is not available, then "Federal Funds Rate" shall mean a daily rate
which is determined, in the opinion of the Administrative Agent, to be the rate
at which federal funds are being offered for sale in the national federal funds
market at 9:00 a.m. (Charlotte time). Rates for weekends or holidays shall be
the same as the rate for the most immediate preceding Business Day.
"First Union" means First Union National Bank of Tennessee, a national
banking association, and its successors.
"Fiscal Year" means the fiscal year of the Borrowers and their
Subsidiaries ending on December 31.
"Fitch" means Fitch Investors Service, L.P.
"Fixed Asset Book Value" means, with respect to the Borrowers and their
Subsidiaries at any date of determination, the book value of the fixed assets
thereof as set forth on a
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Consolidated balance sheet of the Borrowers and their Subsidiaries prepared in
accordance with GAAP.
"Funds From Operations" means, with respect to the Borrowers and their
Subsidiaries for any period, the following calculated on a Consolidated basis
without duplication for such period in accordance with GAAP: (a) Net Income,
plus (b) (to the extent deducted in the determination of Net Income),
depreciation and amortization minus (c) interest income.
"GAAP" means generally accepted accounting principles, as recognized by
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained on a consistent
basis for the Borrowers and their Subsidiaries throughout the period indicated
and consistent with the prior financial practice of the Borrowers and their
Subsidiaries.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means any substances or materials (a) which are
or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Environmental Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Environmental Law or common law, (d) the discharge or emission or release of
which requires a permit or license under any Environmental Law or other
Governmental Approval, (e) which are deemed to constitute a nuisance, a trespass
or pose a health or safety hazard to persons or neighboring properties, (f)
which are materials consisting of underground or aboveground storage tanks,
whether empty, filled or partially filled with any substance, or (g) which
contain, without limitation, asbestos, polychlorinated biphenyls, urea
formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived
substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.
"Hedging Agreement" means any agreement with respect to an interest
rate swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of any Borrower, and any confirming letter
executed pursuant to such hedging agreement, all as amended or supplemented from
time to time.
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"Incarceration Agreement" means any agreement, as amended, restated or
otherwise modified, pursuant to which a Governmental Authority has contracted to
incarcerate, detain or otherwise house inmates, prisoners or other detainees of
such Governmental Authority at a Correctional Facility.
"Initial Facilities" means the collective reference to the Houston
Processing Center, the Laredo Processing Center, the Bridgeport Pre-Parole
Transfer Facility, the Mineral Wells Pre-Parole Transfer Facility, the West
Tennessee Detention Facility, the Leavenworth Detention Center, the Eloy
Detention Center, the Central Arizona Detention Center and the T. Don Hutto
Correctional Center, all of which Correctional Facilities shall be acquired by
CCA REIT from CCA pursuant to the Sale Leaseback Documents.
"Interest Expense" means, with respect to the Borrowers and their
Subsidiaries for any period, the gross interest expense (including without
limitation, interest expense attributable to Capital Leases and all net
obligations pursuant to Hedging Agreements) of the Borrowers and their
Subsidiaries, determined for such period on a Consolidated basis in accordance
with GAAP.
"Interest Period" shall have the meaning assigned thereto in Section
4.1(b).
"Investment Grade Rating" means a Senior Debt Rating of at least (a)
BBB- by Standard & Poor's or (b) Baa3 by Moody's.
"Issuing Lender" means First Union in its capacity as issuer of any
Letter of Credit, or any successor thereto.
"L/C Commitment" means Five Million Dollars ($5,000,000).
"L/C Facility" means the letter of credit facility established pursuant
to Article III hereof.
"L/C Obligations" means at any time, an amount equal to the sum of (a)
the aggregate undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of all outstanding Reimbursement
Obligations.
"L/C Participants" means the collective reference to all the Lenders
other than the Issuing Lender.
"Lease" means the collective reference to the leases, each as amended,
restated or otherwise modified, between any Borrower and any Private
Counterparty or any Public Counterparty for the lease of any Correctional
Facility; "Lease" means any of such leases.
"Lender" means each Person executing this Agreement as a Lender set
forth on the signature pages hereto and each Person that hereafter becomes a
party to this Agreement as a Lender pursuant to Section 13.9.
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"Lending Office" means, with respect to any Lender, the office of such
Lender maintaining such Lender's Commitment Percentage of the Loans.
"Letters of Credit" shall have the meaning assigned thereto in Section
3.1.
"LIBOR" means the rate for deposits in Dollars for a period equal to
the Interest Period selected which appears on the Telerate Page 3750 at
approximately 11:00 a.m. London time, two (2) Business Days prior to the
commencement of the applicable Interest Period. If, for any reason, such rate is
not available, then "LIBOR" shall mean the rate per annum at which, as
determined by the Administrative Agent, Dollars in the amount of $5,000,000 are
being offered to leading banks at approximately 11:00 a.m. London time, two (2)
Business Days prior to the commencement of the applicable Interest Period for
settlement in immediately available funds by leading banks in the London
interbank market for a period equal to the Interest Period selected.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:
LIBOR Rate = LIBOR
----------------------------------
1.00-Eurodollar Reserve Percentage
"LIBOR Rate Loan" means any Loan bearing interest at a rate based upon
the LIBOR Rate as provided in Section 4.1(a).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement relating to such asset.
"Loans" means the collective reference to the Revolving Credit Loans
and the Swingline Loans and "Loan" means any of such Loans.
"Loan Documents" means, collectively, this Agreement, the Notes,
Security Documents, the Applications, the Letters of Credit, any Hedging
Agreement executed by any Lender or any Affiliate of any Lender in connection
with hedging the interest rate exposure of any Borrower under this Agreement and
each other document, instrument and agreement executed and delivered by any
Borrower, any Subsidiary thereof or their counsel in connection with this
Agreement or otherwise referred to herein or contemplated hereby, all as may be
amended, restated or otherwise modified.
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"Maintenance Capital Expenditures" means, with respect to the Borrowers
and their Subsidiaries for any period, the aggregate cost of maintaining any
Capital Assets of the Borrowers and their Subsidiaries during such period, as
determined in accordance with GAAP.
"Master Lease Agreement" means the master lease agreement, as amended,
restated or otherwise modified, between CCA REIT and CCA pertaining to all
Correctional Facilities leased from CCA REIT by CCA.
"Material Adverse Effect" means, with respect to any Borrower or any
Subsidiary thereof, a material adverse effect on the properties, business,
prospects, operations or condition (financial or otherwise) of any such Person,
the ability of any such Person to perform its obligations under the Loan
Documents, the Sale Leaseback Documents or any other material agreement of any
Borrower, in each case to which it is a party, or the ability of the
Administrative Agent or any Lender to enforce its respective rights and remedies
under the Loan Documents.
"Material Contract" means (a) any contract or other agreement, written
or oral, of any Borrower or any Subsidiary thereof involving monetary liability
of or to any such Person in an amount in excess of $250,000 per annum, or (b)
any other contract or agreement, written or oral, of any Borrower or any
Subsidiary thereof, the failure of any party to comply with which could
reasonably be expected to have a Material Adverse Effect.
"Moody's" means Moody's Investors Service, Inc., and its successors and
assigns.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which any Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions within the preceding six years.
"Net Cash Proceeds" means, as applicable, (a) with respect to any sale
or other disposition of assets, the gross cash proceeds received by any Borrower
or any Subsidiary thereof from such sale less the sum of (i) all income taxes
and other taxes assessed by a Governmental Authority as a result of such sale
and any other customary fees and expenses incurred in connection therewith and
(ii) the principal amount of, premium, if any, and interest on any Debt secured
by a Lien on the asset (or a portion thereof) sold, which Debt is required to be
and is repaid in connection with such sale, (b) with respect to any offering of
equity securities or issuance of Debt, the gross cash proceeds received by any
Borrower or any Subsidiary thereof less all legal, underwriting and other
reasonable fees and expenses incurred in connection therewith and (c) with
respect to any payment under an insurance policy or in connection with a
condemnation proceeding, the amount of cash proceeds received by any Borrower or
any Subsidiary thereof from an insurance company or Governmental Authority net
of all reasonable expenses of collection.
"Net Income" means, with respect to the Borrowers and their
Subsidiaries, the Consolidated net income (or loss) of the Borrowers and their
Subsidiaries for such period
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determined in accordance with GAAP; provided, that there shall be excluded from
net income (or loss): (a) the income (or loss) of any Person (other than a
Subsidiary of such Person) in which such Person has an ownership interest unless
received by such Person in a cash distribution, (b) the income (or loss) of any
Person accrued prior to the date it became a Subsidiary of such first Person or
is merged into or consolidated with such first Person, and (c) to the extent not
excluded from Net Income by clauses (a) and (b) above, any after-tax
extraordinary gains.
"Net Operating Income" means, for any period, the sum of the following
for such period (a) Funds From Operations plus (b) Interest Expense.
"Net Worth" means, with respect to any Person, at any date, the
stockholders' equity (including capital stock, additional paid-in capital and
retained earnings, after deducting treasury stock) of such Person on such date
determined in accordance with GAAP.
"Notes" means the collective reference to the Revolving Credit Notes
and the Swingline Notes and "Note" means any of such Notes.
"Notice of Account Designation" shall have the meaning assigned thereto
in Section 2.3(b).
"Notice of Borrowing" shall have the meaning assigned thereto in
Section 2.3(a).
"Notice of Conversion/Continuation" shall have the meaning assigned
thereto in Section 4.2.
"Notice of Prepayment" shall have the meaning assigned thereto in
Section 2.4(d).
"Obligations" means, in each case, whether now in existence or
hereafter arising: (a) the principal of and interest on (including interest
accruing after the filing of any bankruptcy or similar petition) the Loans, (b)
the L/C Obligations, (c) all payment and other obligations owing by any Borrower
to any Lender (or its Affiliate) or the Administrative Agent under any Hedging
Agreement required pursuant to Section 8.15 to which a Lender (or its Affiliate)
is a party and (d) all other fees and commissions (including attorney's fees),
charges, indebtedness, loans, liabilities, financial accommodations,
obligations, covenants and duties owing by any Borrower to the Lenders or the
Administrative Agent, of every kind, nature and description, direct or indirect,
absolute or contingent, due or to become due, contractual or tortious,
liquidated or unliquidated, and whether or not evidenced by any note, and
whether or not for the payment of money, under or in respect of this Agreement,
any Note, any Letter of Credit or any of the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning assigned
thereto in Section 7.2.
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"Offering" means the issuance of common stock of CCA REIT in a fully
underwritten initial public offering.
"Option Agreements" means the collective reference to the option
agreements, each as amended, restated or otherwise modified, between CCA REIT
and CCA granting CCA REIT the exclusive option to obtain any or all of the
Option Facilities.
"Option Facilities" means the collective reference to the Northeast
Ohio Correctional Center, the Torrance County Detention Facility, the Southern
Colorado Correctional Facility, the North Fork Correctional Facility and the
Whiteville Correctional Facility which CCA REIT shall have the option of
acquiring from CCA pursuant to the Option Agreements.
"Other Taxes" shall have the meaning assigned thereto in Section
4.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or
Section 412 of the Code and which (a) is maintained for employees of any
Borrower or any ERISA Affiliates or (b) has at any time within the preceding six
years been maintained for the employees of any Borrower or any of their current
or former ERISA Affiliates.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust, business trust, joint venture, joint
stock company, pool, syndicate, sole proprietorship, unincorporated
organization, Governmental Authority or any other form of entity or group
thereof.
"Preferred Stock" means any class of capital stock the terms of which
contain a preference over common stock in the payment of dividends or the
liquidation of assets, or is otherwise designated as preferred.
"Prime Rate" means, at any time, the rate of interest per annum
publicly announced from time to time by First Union as its prime rate. Each
change in the Prime Rate shall be effective as of the opening of business on the
day such change in the Prime Rate occurs. The parties hereto acknowledge that
the rate announced publicly by First Union as its Prime Rate is an index or base
rate and shall not necessarily be its lowest or best rate charged to its
customers or other banks.
"Private Counterparty" means any counterparty to a Lease that is not a
Public Counterparty.
"Public Counterparty" means any Governmental Authority that is a
counterparty to a Lease.
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"Purchase Agreements" means the collective reference to the Agreement
of Sale and Purchase, each as amended, restated or otherwise modified, between
CCA REIT and CCA for the purchase of the Initial Facilities.
"Register" shall have the meaning assigned thereto in Section 13.9(d).
"Reimbursement Obligation" means the obligation of the Borrowers to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Required Dividends" means for any period all dividends required to be
distributed by CCA REIT under the Code (and any other Applicable Law) with
respect to its capital stock to maintain its status as a qualified real estate
investment trust.
"Required Lenders" means, at any date, any combination of holders of at
least sixty-six and two-thirds percent (66-2/3%) of the aggregate Extensions of
Credit, or if no Extensions of Credit are outstanding, any combination of
Lenders whose Commitment Percentages aggregate at least sixty-six and two-thirds
percent (66-2/3%).
"Revolver Secured Cash Flow" means, for any period, the sum of the
following for such period (a) Net Operating Income less (b) Maintenance Capital
Expenditures, in each case with respect to properties on which there is a
perfected first priority Lien in favor of the Administrative Agent for the
ratable benefit of itself and the Lenders.
"Revolving Credit Facility" means the revolving credit facility
established pursuant to Article II hereof.
"Revolving Credit Loan" means any revolving loan made to any Borrower
pursuant to Section 2.1, and all such Loans collectively as the context
requires.
"Revolving Credit Notes" means the separate Revolving Credit Notes made
by the Borrowers payable to the order of each Lender, substantially in the form
of Exhibit A-1 hereto, evidencing the Revolving Credit Facility, and any
amendments and modifications thereto, any substitutes therefor, and any
replacements, restatements, renewals or extension thereof, in whole or in part;
"Revolving Credit Note" means any of such Notes.
"Revolving Termination Date" means the earliest of the dates referred
to in Section 2.7.
"Right to Purchase Agreement" means the right to purchase agreement, as
amended, restated or otherwise modified, between CCA REIT and CCA granting CCA
REIT an option to acquire, at fair market value, any correctional or detention
facility acquired or developed and owned by CCA at any time hereafter, for a
period of three (3) years after the date on which CCA first receives inmates at
such facility.
"Sale Leaseback Documents" means the collective reference to the
Leases for the Initial Facilities and the Option Facilities, the Master Lease,
the Purchase Agreements, the Option
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Agreements, the Right to Purchase Agreement, the Trade Name Use Agreement and
each other document executed by any Borrower pertaining to or evidencing any
transaction relating to the sale of correctional or detention facilities by CCA
to any Borrower and subsequent leasing of such facilities by any Borrower to
CCA.
"Sale Leaseback Transactions" means the collective reference to the
transactions contemplated, referred to or evidenced by the Sale Leaseback
Documents and as described in the S-11 Registration Statement (the "Registration
Statement"), as amended, restated or otherwise modified, filed with the
Securities and Exchange Commission on April 24, 1997.
"Security Agreement" means the reference to the security agreement
executed by the Borrowers and their Subsidiaries in favor of the Administrative
Agent, for the ratable benefit of itself and the Lenders, substantially in the
form of Exhibit H hereto, as amended, restated or otherwise modified.
"Security Documents" means the collective reference to the Assignments
of Lease, the Deeds of Trust, the Security Agreement and each other agreement or
writing pursuant to which any Borrower or any Subsidiary thereof pledges or
grants a security interest in any property or assets securing the Obligations or
any such Person guaranties the payment and/or performance of the Obligations.
"Senior Debt Rating" means the rating, as determined by either Moody's
or Standard & Poor's, of CCA REIT's senior unsecured non-credit enhanced long
term Debt; provided that, as long as the Borrowers lease all Correctional
Facilities to CCA, the applicable rating of CCA's senior unsecured non-credit
enhanced long term debt may be substituted in lieu thereof.
"Standard & Poor's" means Standard & Poor's Ratings Group, a Division
of McGraw-Hill Corporation, and its successors and assigns.
"Solvent" means, as to the Borrowers and their Subsidiaries on a
particular date, that any such Person (a) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage and is able to pay its debts as they mature, (b) owns property having
a value, both at fair valuation and at present fair saleable value, greater than
the amount required to pay its probable liabilities (including contingencies),
and (c) does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.
"Subsidiary" means as to any Person, any corporation, partnership or
other entity, domiciled within the United States, of which more than fifty
percent (50%) of the outstanding capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity is at the time,
directly or indirectly, owned by or the management is otherwise controlled by
such Person (irrespective of whether, at the time, capital stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any
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contingency). Unless otherwise qualified references to
"Subsidiary" or "Subsidiaries" herein shall refer to those of the Borrowers.
"Swingline Commitment" means Five Million Dollars ($5,000,000).
"Swingline Lender" means First Union in its capacity as swingline
lender hereunder.
"Swingline Loan" means any swingline loan made by the Swingline Lender
to any Borrower pursuant to Section 2.2, and all such Loans collectively as the
context requires.
"Swingline Note" means the Swingline Note made by the Borrowers payable
to the order of the Swingline Lender, substantially in the form of Exhibit A-2
hereto, evidencing the Swingline Loans, and any amendments and modifications
thereto, any substitutes therefor, and any replacements, restatements, renewals
or extension thereof, in whole or in part.
"Swingline Termination Date" means the earlier to occur of (a) the
resignation of First Union as Administrative Agent in accordance with Section
12.9 and (b) the Revolving Termination Date.
"Taxes" shall have the meaning assigned thereto in Section 4.11(a).
"Termination Event" means: (a) a "Reportable Event" described in
Section 4043 of ERISA, or (b) the withdrawal of any Borrower or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (c) the termination of a
Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA, or (d) the institution of proceedings to terminate, or the appointment of
a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event
or condition which would constitute grounds under Section 4042(a) of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan, or (f) the partial or complete withdrawal of any Borrower or any ERISA
Affiliate from a Multiemployer Plan, or (g) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA, or (h) any event or condition
which results in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"Total Liabilities" means, at any date, all liabilities, including
without limitation all Contingent Obligations and all obligations relative to
the face amount of Letters of Credit, whether or not drawn, any banker's
acceptances and Reimbursement Obligations, of the Borrowers and their
Subsidiaries, calculated on a Consolidated basis without duplication in
accordance with GAAP.
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"Total Capitalization" means, at any date, the sum of (a) Total
Liabilities plus (b) Net Worth of the Borrowers.
"Total Funded Debt" means, with respect to the Borrowers and their
Subsidiaries at any date and without duplication, the sum of the following
calculated in accordance with GAAP: (a) all liabilities, obligations and
indebtedness for borrowed money including but not limited to obligations
evidenced by bonds, debentures, notes or other similar instruments of any such
Person, (b) all obligations to pay the deferred purchase price of property or
services of any such Person, except trade payables arising in the ordinary
course of business not more than ninety (90) days past due, (c) all obligations
of any such Person as lessee under Capital Leases, (d) all Debt of any other
Person secured by a Lien on any asset of any such Person, (e) all Contingent
Obligations of any such Person, (f) all obligations, contingent or otherwise, of
any such Person relative to the face amount of letters of credit, whether or not
drawn and banker's acceptances issued for the account of any such Person.
"Total Secured Debt" means the aggregate principal amount of Total
Funded Debt secured by a Lien on any assets of any Borrower or any Subsidiary
thereof.
"Total Unsecured Debt" means the aggregate principal amount of Total
Funded Debt not secured by a Lien on any asset of any Borrower or any Subsidiary
thereof.
"Trade Name Use Agreement" means the trade name use agreement, as
amended, restated or otherwise modified, between CCA REIT and CCA, granting the
Borrowers the right to use the trade name "CCA" as part of their respective
names.
"Uniform Customs" the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500.
"UCC" means the Uniform Commercial Code as in effect in the State of
North Carolina.
"United States" means the United States of America.
"Unleveraged Cash Flow" means, for any period, the sum of the following
for such period (a) Net Operating Income less (b) Maintenance Capital
Expenditures, in each case with respect to Correctional Facilities which are not
subject to any Lien.
"Wholly-Owned" means, with respect to a Subsidiary, a Subsidiary all of
the shares of capital stock or other ownership interests of which are, directly
or indirectly, owned or controlled by any Borrower and/or one or more of the
Wholly-Owned Subsidiaries thereof.
SECTION 1.2. General. Unless otherwise specified, a reference in this
Agreement to a particular section, subsection, Schedule or Exhibit is a
reference to that section, subsection, Schedule or Exhibit of this Agreement.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns
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stated in the masculine, feminine or neuter gender shall include the masculine,
the feminine and the neuter. Any reference herein to "Charlotte time" shall
refer to the applicable time of day in Charlotte, North Carolina.
SECTION 1.3. Other Definitions and Provisions.
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT FACILITY
SECTION 2.1. Revolving Credit Loans. Subject to the terms and
conditions of this Agreement, each Lender severally agrees to make Revolving
Credit Loans to the Borrowers on a joint and several basis from time to time
from the Closing Date through, but not including, the Revolving Termination Date
as requested by CCA REIT on behalf of the Borrowers in accordance with the terms
of Section 2.3; provided, that (a) the aggregate principal amount of all
outstanding Revolving Credit Loans (after giving effect to any amount requested)
shall not exceed the Aggregate Commitment less the sum of all outstanding
Swingline Loans and the L/C Obligations and (b) the principal amount of
outstanding Revolving Credit Loans from any Lender to the Borrowers shall not at
any time exceed such Lender's Commitment less such Lender's Commitment
Percentage of the L/C Obligations and Swingline Loans then outstanding. Each
Revolving Credit Loan by a Lender shall be in a principal amount equal to such
Lender's Commitment Percentage of the aggregate principal amount of Revolving
Credit Loans requested on such occasion. Subject to the terms and conditions
hereof, the Borrowers may borrow, repay and reborrow Revolving Credit Loans
hereunder until the Revolving Termination Date.
SECTION 2.2. Swingline Loans.
(a) Availability. Subject to the terms and conditions of this
Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrowers
from time to time from the Closing Date through, but not including, the
Swingline Termination Date; provided, that the aggregate principal amount of all
outstanding Swingline Loans (after giving effect to any amount requested), shall
not exceed the lesser of (i) the Aggregate Commitment less the sum of all
outstanding Revolving Credit Loans and the L/C Obligations and (ii) the
Swingline Commitment.
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(b) Refunding.
(i) Swingline Loans (except with respect to any Swingline Loan
extended after the occurrence and during the continuance of an Event of Default
of which the Administrative Agent has received actual notice and which such
Event of Default has not been waived by the Required Lenders or the Lenders, as
applicable) shall be refunded by the Lenders on demand by the Swingline Lender.
Such refundings shall be made by the Lenders in accordance with their respective
Commitment Percentages and shall thereafter be reflected as Revolving Credit
Loans of the Lenders on the books and records of the Administrative Agent. Each
Lender shall fund its respective Commitment Percentage of Revolving Credit Loans
as required to repay Swingline Loans outstanding to the Swingline Lender upon
demand by the Swingline Lender but in no event later than 2:00 p.m. (Charlotte
time) on the next succeeding Business Day after such demand is made. No Lender's
obligation to fund its respective Commitment Percentage of a Swingline Loan
shall be affected by any other Lender's failure to fund its Commitment
Percentage of a Swingline Loan, nor shall any Lender's Commitment Percentage be
increased as a result of any such failure of any other Lender to fund its
Commitment Percentage.
(ii) The Borrowers shall pay to the Swingline Lender on demand
the amount of such Swingline Loans to the extent amounts received from the
Lenders are not sufficient to repay in full the outstanding Swingline Loans
requested or required to be refunded. In addition, each Borrower hereby
authorizes the Administrative Agent to charge any account maintained with the
Swingline Lender (up to the amount available therein) in order to immediately
pay the Swingline Lender the amount of such Swingline Loans to the extent
amounts received from the Lenders are not sufficient to repay in full the
outstanding Swingline Loans requested or required to be refunded. If any portion
of any such amount paid to the Swingline Lender shall be recovered by or on
behalf of the Borrowers from the Swingline Lender in bankruptcy or otherwise,
the loss of the amount so recovered shall be ratably shared among all the
Lenders in accordance with their respective Commitment Percentages (unless the
amounts so recovered by or on behalf of the Borrowers pertain to a Swingline
Loan extended after the occurrence and during the continuance of an Event of
Default of which the Administrative Agent has received actual notice and which
such Event of Default has not been waived by the Required Lenders or the
Lenders, as applicable).
(iii) Each Lender acknowledges and agrees that its obligation
to refund Swingline Loans (except any Swingline Loan extended after the
occurrence and during the continuance of an Event of Default which has not been
waived by the Required Lenders or the Lenders, as applicable) in accordance with
the terms of this Section 2.2 is absolute and unconditional and shall not be
affected by any circumstance whatsoever; provided, that if prior to the
refunding of any outstanding Swingline Loans pursuant to this Section 2.2, one
of the events described in Section 11.1(j) or (k) shall have occurred, each
Lender will, on the date the applicable Revolving Credit Loan would have been
made, purchase an undivided participating interest in the Swingline Loan to be
refunded in an amount equal to its Commitment Percentage of the aggregate amount
of such Swingline Loan. Each Lender will immediately transfer to the Swingline
Lender, in immediately available funds, the amount of its participation and upon
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receipt thereof the Swingline Lender will deliver to such Lender a certificate
evidencing such participation dated the date of receipt of such funds and for
such amount. Whenever, at any time after the Swingline Lender has received from
any Lender such Lender's participating interest in a Swingline Loan, the
Swingline Lender receives any payment on account thereof, the Swingline Lender
will distribute to such Lender its participating interest in such amount
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender's participating interest was outstanding and
funded).
SECTION 2.3. Procedure for Advances of Revolving Credit and Swingline
Loans.
(a) Requests for Borrowing. CCA REIT shall give the Administrative
Agent irrevocable prior written notice in the form attached hereto as Exhibit B
(a "Notice of Borrowing") not later than 12:00 noon (Charlotte time) (i) at
least one Business Day before each Base Rate Loan (other than a Swingline Loan),
(ii) on the same Business Day as each Swingline Loan and (iii) at least three
Business Days before each LIBOR Rate Loan, of its intention to borrow,
specifying (A) the date of such borrowing, which shall be a Business Day, (B)
the amount of such borrowing, which shall be in the full amount of the aggregate
Available Commitment of the Lenders, or, if less, shall be in a minimum
principal amount of $1,000,000 or an integral multiple of $100,000 in excess
thereof for Base Rate Loans, a minimum principal amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof for LIBOR Rate Loans and a
minimum principal amount of $100,000 or an integral multiple of $100,000 in
excess thereof for Swingline Loans, (C) whether such Loan is to be a Revolving
Credit Loan or a Swingline Loan, (D) in the case of a Revolving Credit Loan,
whether the Loans are to be LIBOR Rate Loans or Base Rate Loans, and (E) in the
case of a LIBOR Rate Loan, the duration of the Interest Period applicable
thereto. Notices received after 12:00 noon (Charlotte time) shall be deemed
received on the next Business Day. The Administrative Agent shall promptly
notify the Lenders of each Notice of Borrowing with respect to a Revolving
Credit Loan.
(b) Disbursement of Revolving Credit and Swingline Loans. Not later
than 2:00 p.m. (Charlotte time) on the proposed borrowing date, (i) each Lender
will make available to the Administrative Agent, for the account of the
Borrowers, at the office of the Administrative Agent in funds immediately
available to the Administrative Agent, such Lender's Commitment Percentage of
the Revolving Credit Loans to be made on such borrowing date and (ii) the
Swingline Lender will make available to the Administrative Agent, for the
account of the Borrowers, at the office of the Administrative Agent in funds
immediately available to the Administrative Agent, the Swingline Loans to be
made to the Borrower on such borrowing date. The Borrowers hereby irrevocably
authorize the Administrative Agent to disburse the proceeds of each borrowing
requested pursuant to this Section 2.3 in immediately available funds by
crediting or wiring such proceeds to the deposit account of the Borrowers
identified on the most recent Notice of Account Designation substantially in the
form of Exhibit D (a "Notice of Account Designation") or as otherwise agreed
upon by CCA REIT and the Administrative Agent from time to time. Subject to
Section 4.7 hereof, the Administrative Agent shall not be obligated to disburse
the proceeds of any Revolving Credit Loan requested pursuant to this Section 2.3
to the extent that any Lender has not made available to the Administrative Agent
its
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Commitment Percentage of such Loan. Revolving Credit Loans to be made for the
purpose of refunding Swingline Loans shall be made by the Lenders as provided in
Section 2.2(b) hereof.
SECTION 2.4. Repayment of Loans.
(a) Repayment on the Termination Date. The Borrowers shall repay the
outstanding principal amount of (i) all Revolving Credit Loans on the Revolving
Termination Date, if not sooner repaid, and (ii) all Swingline Loans in
accordance with Section 2.2(b), together, in each such case, with all accrued
but unpaid interest thereon.
(b) Mandatory Repayment of Excess Loans. If at any time the outstanding
principal amount of all Loans plus the L/C Obligations exceeds the Aggregate
Commitment, the Borrowers shall repay immediately upon notice from the
Administrative Agent, by payment to the Administrative Agent for the account of
the Lenders, Extensions of Credit in an amount equal to such excess with each
such repayment applied first to the principal amount of outstanding Swingline
Loans, second to the principal amount of outstanding Revolving Credit Loans, and
third, with respect to any Letters of Credit then outstanding, a payment of cash
collateral into a cash collateral account opened by the Borrowers with the
Administrative Agent for the benefit of the Lenders (such cash collateral to be
applied in accordance with Section 11.2(b)). Each such repayment shall be
accompanied by any amount required to be paid pursuant to Section 4.9 hereof.
(c) Other Mandatory Repayments. The Borrowers shall also be required to
make mandatory repayments of the Loans:
(i) with the Net Cash Proceeds received from the sale of any
Correctional Facility to CCA and from the refinancing of Debt of the Borrowers
relating to any Correctional Facility, in each case which results in a
corresponding release of any Lien of the Administrative Agent for the ratable
benefit of itself or the Lenders pursuant to Section 2.9; and
(ii) with respect to the Net Cash Proceeds arising from a
payment under an insurance policy or in connection with a condemnation
proceeding, to the extent required by the applicable Deed of Trust.
Each such repayment shall be made within three (3) Business Days of
receipt of the applicable Net Cash Proceeds and shall be applied first to the
principal amount of outstanding Swingline Loans and second to the principal
amount of outstanding Revolving Credit Loans. Each such repayment shall be
accompanied by any amount required to be paid pursuant to Section 4.9 hereof.
(d) Optional Repayments. The Borrowers may at any time and from time to
time repay the Revolving Credit Loans, in whole or in part, by providing
irrevocable prior written notice, in the form attached hereto as Exhibit C (a
"Notice of Prepayment"), to the
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Administrative Agent not later than 12:00 noon (Charlotte time) at least one (1)
Business Day prior to such repayment with respect to LIBOR Rate Loans repaid at
the maturity of such LIBOR Rate Loans, three (3) Business Days prior to such
repayment with respect to any other LIBOR Rate Loans and one (1) Business Day
prior to such repayment with respect to Base Rate Loans, specifying the date and
amount of repayment and whether the repayment is of LIBOR Rate Loans (and if so,
which LIBOR Rate Loans), Base Rate Loans or a combination thereof, and, if of a
combination thereof, the amount allocable to each. Upon receipt of such notice,
the Administrative Agent shall promptly notify each Lender. If any such notice
is given, the amount specified in such notice shall be due and payable on the
date set forth in such notice. Partial repayments shall be in a minimum
principal amount of $1,000,000 or an integral multiple of $100,000 in excess
thereof for Base Rate Loans, a minimum principal amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof for LIBOR Rate Loans and a
minimum principal amount of $100,000 or an integral multiple of $100,000 in
excess thereof for Swingline Loans. Each such repayment shall be accompanied by
any amount required to be paid pursuant to Section 4.9 hereof.
(e) Limitation on Repayment of LIBOR Rate Loans. Notwithstanding the
provisions of Section 2.4(d), the Borrowers may not repay any LIBOR Rate Loan on
any day other than on the last day of the Interest Period applicable thereto
unless such repayment is accompanied by any amount required to be paid pursuant
to Section 4.9 hereof.
SECTION 2.5. Notes.
(a) Revolving Credit Notes. Each Lender's Revolving Credit Loans and
the obligation of the Borrowers to repay such Revolving Credit Loans shall be
evidenced by a Revolving Credit Note executed by the Borrowers payable to the
order of such Lender representing the Borrowers' obligation to pay such Lender's
Commitment or, if less, the aggregate unpaid principal amount of all Revolving
Credit Loans made and to be made by such Lender to the Borrowers hereunder, plus
interest and all other fees, charges and other amounts due thereon. Each
Revolving Credit Note shall be dated the date hereof and shall bear interest on
the unpaid principal amount thereof at the applicable interest rate per annum
specified in Section 4.1.
(b) Swingline Notes. The Swingline Loans and the obligation of the
Borrowers to repay such Swingline Loans shall be evidenced by a Swingline Note
executed by the Borrowers payable to the order of the Swingline Lender
representing the Borrowers' obligation to pay the Swingline Lender's Swingline
Commitment or, if less, the aggregate unpaid principal amount of all Swingline
Loans made by the Swingline Lender to the Borrowers hereunder, plus interest on
such principal amounts and all other fees, charges and other amounts due
thereon. The Swingline Note shall be dated the date hereof and shall bear
interest on the unpaid principal amount thereof at the applicable interest rate
per annum specified in Section 4.1.
SECTION 2.6. Permanent Reduction of the Aggregate Commitment.
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(a) The Borrowers shall have the right at any time and from time to
time, upon at least five (5) Business Days prior written notice to the
Administrative Agent, to permanently reduce, in whole at any time or in part
from time to time, without premium or penalty, the Aggregate Commitment in a
minimum principal amount not less than $5,000,000 or any whole multiple of
$1,000,000 in excess thereof.
(b) Each permanent reduction permitted pursuant to this Section 2.6
shall be accompanied by a payment of principal (and with respect to L/C
Obligations, furnishing of cash collateral) sufficient to reduce the aggregate
outstanding Extensions of Credit of the Lenders after such reduction to the
Aggregate Commitment as so reduced. Any reduction of the Aggregate Commitment to
zero shall be accompanied by payment of all outstanding Obligations (and
furnishing of cash collateral satisfactory to the Administrative Agent for all
L/C Obligations) and, if such reduction is permanent, termination of the
Commitments and Credit Facility. Such cash collateral shall be applied in
accordance with Section 11.2(b). If the reduction of the Aggregate Commitment
requires the repayment of any LIBOR Rate Loan, such reduction may be made only
on the last day of the then current Interest Period applicable thereto unless
such repayment is accompanied by any amount required to be paid pursuant to
Section 4.9 hereof.
SECTION 2.7. Revolving Termination Date. The Credit Facility (subject
to Section 2.2(a) with respect to Swingline Loans) shall terminate on the
earliest of (a) July 18, 2000 (b) the date of termination by the Borrowers
pursuant to Section 2.6(a), and (c) the date of termination by the
Administrative Agent on behalf of the Lenders pursuant to Section 11.2(a);
provided, that not earlier than the ninetieth (90th) day and not later than the
sixtieth (60th) day prior to each of the first and second anniversaries of the
Closing Date (each, an "Extension Date"), CCA REIT may, by written notice (an
"Extension Request") given to the Administrative Agent, request that the date
set forth in clause (a) above be extended in each such instance to a date that
is one (1) year after such date then in effect. The Administrative Agent shall
promptly advise each Lender of its receipt of any Extension Request and furnish
each Lender with a copy thereof. Each Lender may, in its sole discretion,
consent to a requested extension by giving written notice thereof to the
Administrative Agent not later than the Business Day (the "Extension
Confirmation Date") immediately preceding the date which is thirty (30) days
after receipt of the Extension Request. No Lender shall be under any obligation
or commitment to extend such date and no such obligation or commitment on the
part of any Lender shall be inferred from the provisions of this Section 2.7.
Failure on the part of any Lender to respond to an Extension Request by the
applicable Extension Confirmation Date shall be deemed to be a denial of such
request by such Lender. The requested extension shall not be granted unless
Lenders holding Commitments aggregating at least 80% of the Aggregate Commitment
as of the date the Extension Request is given shall have consented in writing to
such extension. If Lenders holding Commitments aggregating less than 100% but
equal to or greater than 80% of such Aggregate Commitment so consent to such an
extension, CCA REIT may elect by written notice to the Administrative Agent and
Lenders to (i) continue the Credit Facility for such additional period with an
Aggregate Commitment equal to the then effective Aggregate Commitment less the
total Commitments of Lenders who have not consented to such an
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extension ("Non-Consenting Lenders") or (ii) require any such Non-Consenting
Lender to transfer and assign without recourse (in accordance with the
provisions of Section 13.9) its Commitment and other interests, rights and
obligations under this Agreement to an Eligible Assignee, which shall assume
such obligations; provided that (A) no such assignment shall conflict with any
Applicable Law, (B) such assignment shall be at the expense of the Borrowers and
(C) the purchase price to be paid to such Non-Consenting Lender shall be an
amount equal to the outstanding principal amount of Loans of such Non-Consenting
Lender plus all interest accrued and unpaid thereon and all other amounts owing
to such Non-Consenting Lender hereunder. Promptly following the applicable
Extension Confirmation Date and in any event within five (5) Business Days, the
Administrative Agent shall provide notice to CCA REIT in writing as to whether
the requested extension has been granted and, if applicable, the list of
Non-Consenting Lenders (an "Extension Confirmation Notice"). If granted, such
extension shall become effective with respect to each Lender consenting thereto
pursuant to the terms hereof upon the date of issuance of such Extension
Confirmation Notice. The Administrative Agent shall promptly thereafter provide
a copy of such Extension Confirmation Notice to each Lender.
SECTION 2.8. Use of Proceeds. Subject to Sections 10.11 and 10.12, the
Borrowers shall use the proceeds of the Loans (a) to fund the acquisition of
Correctional Facilities, (b) to fund construction and further development of
Correctional Facilities and (c) for working capital and general corporate
requirements of the Borrowers and their Subsidiaries, including the payment of
certain fees and expenses incurred in connection with the transactions.
SECTION 2.9. Release of Security. Upon (i) the sale of any Correctional
Facility to CCA permitted hereunder, or (ii) the refinancing of any Debt
relating to any Correctional Facility permitted hereunder, the Liens of the
Administrative Agent for the ratable benefit of itself and the Lenders arising
under the Security Document relating to the specific assets subject to such sale
or refinancing, shall be deemed released and at the expense of the Borrowers the
Administrative Agent and Lenders shall execute all release documentation
reasonably requested and delivered by the Borrowers in order to release such
Liens; provided that, (i) the aggregate proceeds received in connection with
such refinancing or sale are the greater of (A) the fair market value, as
determined by the Independent Committee of the Board of Trustees of CCA REIT, of
such Correctional Facility and (B) the amount equal to seventy five percent
(75%) of the initial purchase price of such Correctional Facility plus the
aggregate amount of all Capital Expenditures made by the Borrowers with respect
to such Correctional Facility and (ii) the Net Cash Proceeds of such refinancing
or sale are applied to reduce outstanding Extensions of Credit in the manner set
forth in Section 2.4(c).
SECTION 2.10. Increase In Aggregate Commitment; Additional Lenders. The
Aggregate Commitment may be increased and financial institutions added as
Lenders hereunder within forty-five (45) days after receipt by the
Administrative Agent of a written request therefor from CCA REIT on behalf of
the Borrowers; provided that (a) no Default or Event of Default exists at the
time of such request or the effective date of the amendment giving effect to
such request, (b) each Lender approves (in its sole discretion) and executes
such amendment and (c)
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any increase in the Aggregate Commitment shall first be offered to Lenders party
hereto at the time of such written request before any such offer is made to any
financial institution.
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.1. L/C Commitment. Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the other Lenders
set forth in Section 3.4(a), agrees to issue standby letters of credit ("Letters
of Credit") for the account of the Borrowers on any Business Day from the
Closing Date through but not including the Revolving Termination Date in such
form as may be approved from time to time by the Issuing Lender; provided, that
the Issuing Lender shall have no obligation to issue any Letter of Credit if,
after giving effect to such issuance, (a) the L/C Obligations would exceed the
L/C Commitment or (b) the Available Commitment of any Lender would be less than
zero. Each Letter of Credit shall (i) be denominated in Dollars in a minimum
amount of $250,000, (ii) be a standby letter of credit issued to support
obligations of any Borrower or any of Subsidiary thereof, contingent or
otherwise, incurred in the ordinary course of business, (iii) expire on a date
satisfactory to the Issuing Lender, which date shall be no later than the
Revolving Termination Date and (iv) be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of North Carolina.
The Issuing Lender shall not at any time be obligated to issue any Letter of
Credit hereunder if such issuance would conflict with, or cause the Issuing
Lender or any L/C Participant to exceed any limits imposed by, any Applicable
Law. References herein to "issue" and derivations thereof with respect to
Letters of Credit shall also include extensions or modifications of any existing
Letters of Credit, unless the context otherwise requires.
SECTION 3.2. Procedure for Issuance of Letters of Credit. The Borrowers
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at the Administrative Agent's Office an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
shall process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall, subject to Section 3.1 and Article V hereof,
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Lender and the Borrowers. The Issuing
Lender shall furnish to CCA REIT a copy of such Letter of Credit and furnish to
each Lender a copy of such Letter of Credit and the amount of each Lender's
participation therein pursuant to Section 3.4(a), all promptly following the
issuance of such Letter of Credit.
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SECTION 3.3. Commissions and Other Charges.
(a) The Borrowers shall pay to the Administrative Agent, for the
account of the Issuing Lender and the L/C Participants, a letter of credit fee
with respect to each Letter of Credit in an amount equal to the product of (i) a
per annum fee equal to the Applicable Margin in effect with respect to LIBOR
Rate Loans as set forth in Section 4.1(c) and (ii) the face amount of such
Letter of Credit on the corresponding payment date (or if sooner, the
termination date of the Letter of Credit). Such fee shall be payable quarterly
in arrears on the Business Day next succeeding the last Business Day of each
calendar quarter and on the Revolving Termination Date. The Administrative Agent
shall, promptly following its receipt thereof, distribute to the Issuing Lender
and L/C Participants all commissions received by the Administrative Agent in
accordance with their respective Commitment Percentages.
(b) The Borrowers shall pay to the Issuing Lender a fronting fee with
respect to each Letter of Credit in an amount equal to the product of (i) 0.125%
(on a per annum basis) and (ii) the face amount of such Letter of Credit. Such
fee shall be payable quarterly in arrears on the Business Day next succeeding
the last Business Day of each calendar quarter as long as such Letter of Credit
is outstanding.
(c) In addition to the foregoing fees, the Borrowers shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, effecting payment
under, amending or otherwise administering any Letter of Credit.
SECTION 3.4. L/C Participations.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Commitment Percentage in
the Issuing Lender's obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees with the Issuing
Lender that, if a draft is paid under any Letter of Credit for which the Issuing
Lender is not reimbursed in full by the Borrowers in accordance with the terms
of this Agreement, such L/C Participant shall pay to the Issuing Lender upon
demand at the Issuing Lender's address for notices specified herein an amount
equal to such L/C Participant's Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed and such payments shall
thereafter be reflected as Extensions of Credit of the Lenders on the books and
records of the Administrative Agent.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify
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each L/C Participant of the amount and due date of such required payment and
such L/C Participant shall pay to the Issuing Lender the amount specified on the
applicable due date. If any such amount is paid to the Issuing Lender after the
date such payment is due, such L/C Participant shall pay to the Issuing Lender
on demand, in addition to such amount, the product of (i) such amount, times
(ii) the daily average Federal Funds Rate as determined by the Administrative
Agent during the period from and including the date such payment is due to the
date on which such payment is immediately available to the Issuing Lender, times
(iii) a fraction the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. A certificate of the Issuing
Lender with respect to any amounts owing under this Section shall be conclusive
in the absence of manifest error. With respect to payment to the Issuing Lender
of the unreimbursed amounts described in this Section 3.4(b), if the L/C
Participants receive notice that any such payment is due (A) prior to 1:00 p.m.
(Charlotte time) on any Business Day, such payment shall be due that Business
Day, and (B) after 1:00 p.m. (Charlotte time) on any Business Day, such payment
shall be due on the following Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its
Commitment Percentage of such payment in accordance with this Section 3.4, the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrowers or otherwise), or any payment of interest on account
thereof, the Issuing Lender will distribute to such L/C Participant its pro rata
share thereof; provided, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
SECTION 3.5. Reimbursement Obligation of the Borrowers. The Borrowers
agree to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies CCA REIT of the date and amount of a draft paid under any Letter of
Credit for the amount of (a) such draft so paid and (b) any taxes, fees, charges
or other costs or expenses incurred by the Issuing Lender in connection with
such payment. Each such payment shall be made to the Issuing Lender at its
address for notices specified herein in lawful money of the United States and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrowers under this Article III from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Base Rate Loans which were then overdue. If the Borrowers fail to
timely reimburse the Issuing Lender on the date CCA REIT receives the notice
referred to in this Section 3.5, the Borrowers shall be deemed to have timely
given a Notice of Borrowing hereunder to the Administrative Agent requesting the
Lenders to make a Base Rate Loan on such date in an amount equal to the amount
of such drawing and, subject to the satisfaction or waiver of the conditions
precedent specified in Article V, the Lenders shall make Base Rate Loans in such
amount, the proceeds of which shall be applied to reimburse the Issuing Lender
for the amount of the related drawing and costs and expenses.
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SECTION 3.6. Obligations Absolute. The Borrowers' obligations under
this Article III (including without limitation the Reimbursement Obligation)
shall be joint and several and absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrowers may have or have had against the Issuing Lender, any
L/C Participant, the Administrative Agent or any beneficiary of a Letter of
Credit. Each Borrower also agrees with the Issuing Lender and each L/C
Participant that neither the Issuing Lender nor any L/C Participant shall be
responsible for, and the Borrowers' Reimbursement Obligation under Section 3.5
shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute between or among
any Borrower and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or any claims whatsoever of any
Borrower against any beneficiary of such Letter of Credit or any such
transferee. The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Lender's gross negligence or willful
misconduct. Each Borrower agrees that any action taken or omitted by the Issuing
Lender or any L/C Participant under or in connection with any Letter of Credit
or the related drafts or documents, if done in the absence of gross negligence
or willful misconduct and in accordance with the standards of care specified in
the Uniform Customs and, to the extent not inconsistent therewith, the UCC,
shall be binding on the Borrowers and shall not result in any liability of the
Issuing Lender or any L/C Participant to the Borrowers. The responsibility of
the Issuing Lender to the Borrowers in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
SECTION 3.7. Effect of Application. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent with the
provisions of this Article III, the provisions of this Article III shall apply.
ARTICLE IV
GENERAL LOAN PROVISIONS
SECTION 4.1. Interest.
(a) Interest Rate Options. Subject to the provisions of this Section
4.1, at the election of CCA REIT on behalf of the Borrowers, the aggregate
principal balance of the Revolving Credit Notes or any portion thereof shall
bear interest at the Base Rate or the LIBOR Rate plus, in each case, the
Applicable Margin as set forth below; provided that the LIBOR Rate shall not be
available until three Business Days after the Closing Date. CCA REIT on behalf
of the Borrowers shall select the rate of interest and Interest Period, if any,
applicable to any Loan at
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the time a Notice of Borrowing is given pursuant to Section 2.2 or at the time a
Notice of Conversion/Continuation is given pursuant to Section 4.2. Each Loan or
portion thereof bearing interest based on the Base Rate shall be a "Base Rate
Loan" and each Loan or portion thereof bearing interest based on the LIBOR Rate
shall be a "LIBOR Rate Loan." Any Swingline Loan shall bear interest at the Base
Rate. Any Loan or any portion thereof as to which CCA REIT on behalf of the
Borrowers has not duly specified an interest rate as provided herein shall be
deemed a Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan, CCA REIT
on behalf of the Borrowers, by giving notice at the times described in Section
4.1(a), shall elect an interest period (each, an "Interest Period") to be
applicable to such Loan, which Interest Period shall be a period of one (1), two
(2), three (3) or six (6) months; provided that:
(i) the Interest Period shall commence on the date of advance of
or conversion to any LIBOR Rate Loan and, in the case of immediately successive
Interest Periods, each successive Interest Period shall commence on the date on
which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided, that if any Interest Period with respect to a LIBOR Rate
Loan would otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the relevant calendar
month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the Revolving
Termination Date; and
(v) there shall be no more than six (6) Interest Periods
outstanding at any time.
(c) Applicable Margin. The Applicable Margin provided for in Section
4.1(a) with respect to the Loans (the "Applicable Margin") shall be (i) during
the period from the Closing Date through and including the date which is five
(5) Business Days following the date on which the Administrative Agent receives
notice that CCA REIT has received an Investment Grade Rating, 0.25% for Base
Rate Loans and 1.50% for LIBOR Rate Loans and (ii) thereafter shall be
determined by reference to the higher Senior Debt Rating announced by Standard &
Poor's or Moody's, as applicable, as follows:
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<TABLE>
<CAPTION>
=============================================================================================================================
Tier Senior Debt Rating Applicable Margin
=========================================================
LIBOR Base Rate
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
I GREATER THAN OR EQUAL TO = BBB+/Baa1 1.125% 0.000%
- -----------------------------------------------------------------------------------------------------------------------------
II GREATER THAN OR EQUAL TO = BBB/Baa2 1.250% 0.000%
- -----------------------------------------------------------------------------------------------------------------------------
III GREATER THAN OR EQUAL TO = BBB-/Baa3 1.375% 0.125%
- -----------------------------------------------------------------------------------------------------------------------------
IV LESS THAN BBB-/Baa3 1.750% 0.500%
=============================================================================================================================
</TABLE>
Adjustments, if any, in the Applicable Margin shall be made by the
Administrative Agent on the fifth (5th) Business Day after the Administrative
Agent has received notice of a change in the Senior Debt Rating. In the event
that the above referenced rating designations are replaced by Standard & Poor's
or Moody's, as applicable, the equivalent replacement rating designation shall
be deemed automatically substituted therefor. Subject to Section 4.1(d), in the
event that the Senior Debt Rating becomes unavailable, the Applicable Margin
shall be the highest Applicable Margin set forth above until the fifth (5th)
Business Day after the Senior Debt Rating once again becomes available.
(d) Default Rate. Upon the occurrence and during the continuance of an
Event of Default, (i) the Borrowers shall no longer have the option to request
LIBOR Rate Loans, (ii) all outstanding LIBOR Rate Loans shall bear interest at a
rate per annum two percent (2%) in excess of the rate then applicable to LIBOR
Rate Loans until the end of the applicable Interest Period and thereafter at a
rate equal to two percent (2%) in excess of the rate then applicable to Base
Rate Loans, and (iii) all outstanding Base Rate Loans shall bear interest at a
rate per annum equal to two percent (2%) in excess of the rate then applicable
to Base Rate Loans. Interest shall continue to accrue on the Notes after the
filing by or against any Borrower of any petition seeking any relief in
bankruptcy or under any act or law pertaining to insolvency or debtor relief,
whether state, federal or foreign.
(e) Interest Payment and Computation. Interest on each Base Rate Loan
shall be payable in arrears on the Business Day next succeeding the last
Business Day of each calendar quarter commencing September 30, 1997; and
interest on each LIBOR Rate Loan shall be payable on the last day of each
Interest Period applicable thereto, and if such Interest Period extends over
three (3) months, at the end of each three (3) month interval during such
Interest Period. All interest on LIBOR Rate Loans shall be computed on the basis
of a 360-day year and assessed for the actual number of days elapsed and all
other interest rates, fees and commissions provided hereunder shall be computed
on the basis of an 365/366-day year and assessed for the actual number of days
elapsed.
(f) Maximum Rate. In no contingency or event whatsoever shall the
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to
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<PAGE> 35
the terms of this Agreement or pursuant to any of the Notes exceed the highest
rate permissible under any Applicable Law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that the Lenders have charged or received
interest hereunder in excess of the highest applicable rate, the rate in effect
hereunder shall automatically be reduced to the maximum rate permitted by
Applicable Law and the Lenders shall at the Administrative Agent's option
promptly refund to the Borrowers any interest received by Lenders in excess of
the maximum lawful rate or shall apply such excess to the principal balance of
the Obligations. It is the intent hereof that the Borrowers not pay or contract
to pay, and that neither the Administrative Agent nor any Lender receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by the Borrowers under Applicable Law.
SECTION 4.2. Notice and Manner of Conversion or Continuation of Loans.
Provided that no Event of Default has occurred and is then continuing, the
Borrowers shall have the option to (a) convert at any time all or any portion of
its outstanding Base Rate Loans (other than Swingline Loans) in a minimum
principal amount equal to $5,000,000 or any whole multiple of $1,000,000 in
excess thereof into one or more LIBOR Rate Loans; or (b) upon the expiration of
any Interest Period, (i) convert all or any part of its outstanding LIBOR Rate
Loans in a minimum principal amount equal to $1,000,000 or a whole multiple of
$100,000 in excess thereof into Base Rate Loans, or (ii) continue such LIBOR
Rate Loans as LIBOR Rate Loans. Whenever the Borrowers desire to convert or
continue Loans as provided above, CCA REIT on behalf of the Borrowers shall give
the Administrative Agent irrevocable prior written notice in the form attached
as Exhibit E (a "Notice of Conversion/ Continuation") not later than 12:00 noon
(Charlotte time) three (3) Business Days before the day on which a proposed
conversion or continuation of such Loan is to be effective specifying (A) the
Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to
be converted or continued, the last day of the Interest Period therefor, (B) the
effective date of such conversion or continuation (which shall be a Business
Day), (C) the principal amount of such Loans to be converted or continued, and
(D) the Interest Period to be applicable to such converted or continued LIBOR
Rate Loan. The Administrative Agent shall promptly notify the Lenders of such
Notice of Conversion/Continuation.
SECTION 4.3. Fees.
(a) Commitment Fee. Commencing on the Closing Date, the Borrowers shall
pay to the Administrative Agent, for the account of the Lenders, a
non-refundable commitment fee on the average daily unused portion of the
Aggregate Commitment at a rate per annum which shall be 0.25%. The commitment
fee shall be payable in arrears on the Business Day next succeeding the last
Business Day of each calendar quarter during the term of this Agreement
commencing September 30, 1997, and on the Revolving Termination Date. Such
commitment fee shall be distributed by the Administrative Agent to the Lenders
pro rata in accordance with the Lenders' respective Commitment Percentages.
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<PAGE> 36
(b) Administrative Agent's Fee. The Borrowers agree to pay to the
Administrative Agent, for its own account, an annual Administrative Agent's fee
as set forth in the separate fee letter agreement executed by CCA REIT and the
Administrative Agent dated May 2, 1997, payable in advance on the Closing Date
and on each anniversary of the Closing Date during the term of this Agreement
thereafter.
(c) Arrangement, Upfront and Other Fees. The Borrowers agree to pay to
the Administrative Agent, for the account of itself and the Lenders, the fees
set forth in such fee letter.
SECTION 4.4. Manner of Payment. Each payment by the Borrowers on
account of the principal of or interest on the Loans or of any fee, commission
or other amounts (including the Reimbursement Obligation) payable to the Lenders
under this Agreement or any Note shall be made not later than 2:00 p.m.
(Charlotte time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office, for the account of
the Lenders pro rata in accordance with their respective Commitment Percentages
(other than as specifically set forth below), in Dollars, in immediately
available funds and shall be made without any set-off, counterclaim or deduction
whatsoever. Any payment received after such time but before 3:00 p.m. (Charlotte
time) on such day shall be deemed a payment on such date for the purposes of
Section 11.1, but for all other purposes shall be deemed to have been made on
the next succeeding Business Day. Any payment received after 3:00 p.m.
(Charlotte time) shall be deemed to have been made on the next succeeding
Business Day for all purposes. Upon receipt by the Administrative Agent of each
such payment, the Administrative Agent shall distribute to each Lender at its
address for notices set forth herein its pro rata share of such payment in
accordance with this Section 4.4 and shall wire advice of the amount of such
credit to each Lender. All payments received on or before 12:00 Noon (Charlotte,
North Carolina time) shall be remitted by the Administrative Agent to each of
the Lenders in accordance with this Section 4.4 on the same Business Day that
such payments are received. Any payments received after 12:00 Noon (Charlotte,
North Carolina time) shall be remitted by the Administrative Agent to the
Lenders in accordance with this Section 4.4 on the next succeeding Business Day.
Each payment to the Administrative Agent of the Issuing Lender's fees or L/C
Participants' commissions shall be made in like manner, but for the account of
the Issuing Lender or L/C Participants, as the case may be. Each payment to the
Administrative Agent of Administrative Agent's fees or expenses shall be made
for the account of the Administrative Agent and any amount payable to any Lender
under Sections 4.8, 4.9, 4.10, 4.11 or 13.2 shall be paid to the Administrative
Agent for the account of the applicable Lender.
SECTION 4.5. Crediting of Payments and Proceeds. In the event that any
Borrower shall fail to pay any of the Obligations when due and the Obligations
have been accelerated pursuant to Section 11.2, all payments received by the
Lenders upon the Notes and the other Obligations and all net proceeds from the
enforcement of the Obligations shall be applied first to all expenses then due
and payable by any Borrower hereunder, then to all indemnity obligations then
due and payable by any Borrower hereunder, then to all Administrative Agent's
and Issuing Lender's fees then due and payable, then to all commitment
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<PAGE> 37
and other fees and commissions then due and payable, then to accrued and unpaid
interest on the Swingline Note to the Swingline Lender, then to the principal
amount outstanding under the Swingline Note to the Swingline Lender, then to
accrued and unpaid interest on the Revolving Credit Notes and the Reimbursement
Obligation (pro rata in accordance with all such amounts due), then to the
principal amount of the Revolving Credit Notes and Reimbursement Obligation (pro
rata in accordance with all such amounts due) and then to the cash collateral
account described in Section 11.2(b) hereof to the extent of any L/C Obligations
then outstanding, then to any termination payments due in respect of a Hedging
Agreement with any Lender or any Affiliate thereof required pursuant to Section
8.15, in that order.
SECTION 4.6. Adjustments. If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of its Extensions of Credit, or
interest thereon, or if any Lender shall at any time receive any collateral in
respect of its Extensions of Credit (whether voluntarily or involuntarily, by
set-off or otherwise) in a greater proportion than any such payment to and
collateral received by any other Lender, if any, in respect of such other
Lender's Extensions of Credit, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Extensions of Credit, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, that if all
or any portion of such excess payment or benefits is thereafter recovered from
such Benefitted Lender, such purchase shall be rescinded, and the purchase price
and benefits returned to the extent of such recovery, with interest (only if the
Benefitted Lender must pay interest) ratably, based on the amount which each
such Lender must return to the aggregate amount which must be returned by the
Benefitted Lender. Each Borrower agrees that each Lender so purchasing a portion
of another Lender's Extensions of Credit may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
SECTION 4.7. Nature of Obligations of Lenders Regarding Extensions of
Credit; Assumption by the Administrative Agent. The obligations of the Lenders
under this Agreement to make the Loans and issue or participate in Letters of
Credit are several and are not joint or joint and several. Unless the
Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Section 2.3(b) and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrowers on such date a
corresponding amount. If such amount is made available to the Administrative
Agent on a date after such borrowing date, such Lender shall pay to the
Administrative Agent on demand an amount, until paid, equal to the product of
(a) the amount of such Lender's Commitment Percentage of such borrowing, times
(b) the daily average Federal Funds Rate during such period as determined by the
Administrative Agent, times (c) a fraction the numerator of which
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<PAGE> 38
is the number of days that elapse from and including such borrowing date to the
date on which such Lender's Commitment Percentage of such borrowing shall have
become immediately available to the Administrative Agent and the denominator of
which is 360. A certificate of the Administrative Agent with respect to any
amounts owing under this Section shall be conclusive, absent manifest error. If
such Lender's Commitment Percentage of such borrowing is not made available to
the Administrative Agent by such Lender within three (3) Business Days of such
borrowing date, the Administrative Agent shall be entitled to recover such
amount made available by the Administrative Agent with interest thereon at the
rate per annum applicable to Base Rate Loans hereunder, on demand, from the
Borrowers. The failure of any Lender to make its Commitment Percentage of any
Loan available shall not relieve it or any other Lender of its obligation, if
any, hereunder to make its Commitment Percentage of such Loan available on such
borrowing date, but no Lender shall be responsible for the failure of any other
Lender to make its Commitment Percentage of such Loan available on the borrowing
date.
SECTION 4.8. Changed Circumstances.
(a) Circumstances Affecting LIBOR Rate Availability. If with respect to
any Interest Period the Administrative Agent or any Lender (after consultation
with Administrative Agent) shall determine that, by reason of circumstances
affecting the foreign exchange and interbank markets generally, deposits in
eurodollars, in the applicable amounts are not being quoted via Telerate Page
3750 or offered to the Administrative Agent or such Lender for such Interest
Period, then the Administrative Agent shall forthwith give notice thereof to CCA
REIT. Thereafter, until the Administrative Agent notifies CCA REIT that such
circumstances no longer exist, the obligation of the Lenders to make LIBOR Rate
Loans and the right of the Borrowers to convert any Revolving Credit Loan to or
continue any Revolving Credit Loan as a LIBOR Rate Loan shall be suspended, and
the Borrowers shall repay in full (or cause to be repaid in full) the then
outstanding principal amount of each such LIBOR Rate Loan together with accrued
interest thereon, on the last day of the then current Interest Period applicable
to such LIBOR Rate Loan or convert the then outstanding principal amount of each
such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest
Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date hereof,
the introduction of, or any change in, any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any of their respective Lending
Offices) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency, shall
make it unlawful or impossible for any of the Lenders (or any of their
respective Lending Offices) to honor its obligations hereunder to make or
maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to
the Administrative Agent and the Administrative Agent shall promptly give notice
to CCA REIT and the other Lenders. Thereafter, until the Administrative Agent
notifies CCA REIT that such circumstances no longer exist, (i) the obligations
of the Lenders to make LIBOR Rate Loans and the right of the Borrowers to
convert any Revolving Credit Loan to or continue any Revolving Credit Loan as a
LIBOR Rate Loan
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<PAGE> 39
shall be suspended and thereafter the Borrowers may select only Base Rate Loans
hereunder, and (ii) if any of the Lenders may not lawfully continue to maintain
a LIBOR Rate Loan to the end of the then current Interest Period applicable
thereto as a LIBOR Rate Loan, the applicable LIBOR Rate Loan shall immediately
be converted to a Base Rate Loan for the remainder of such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction of, or
any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Governmental
Authority, central bank or comparable agency:
(i) shall subject any of the Lenders or the Issuing Lender, as
Issuing Lender (or any of their respective Lending Offices) to any tax, duty or
other charge with respect to any Note, Letter of Credit or Application or shall
change the basis of taxation of payments to any of the Lenders (or any of their
respective Lending Offices) of the principal of or interest on any Note, Letter
of Credit or Application or any other amounts due under this Agreement in
respect thereof (except for changes in the rate of tax on the overall net income
of any of the Lenders or any of their respective Lending Offices imposed by the
jurisdiction in which such Lender is organized or is or should be qualified to
do business or such Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, insurance or capital or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any of the Lenders (or any of their respective Lending Offices) or
shall impose on any of the Lenders (or any of their respective Lending Offices)
or the foreign exchange and interbank markets any other condition affecting any
Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or issuing or participating in
Letters of Credit or to reduce the yield or amount of any sum received or
receivable by any of the Lenders under this Agreement or under the Notes in
respect of a LIBOR Rate Loan or Letter of Credit or Application, then such
Lender shall promptly notify the Administrative Agent, and the Administrative
Agent shall promptly notify CCA REIT of such fact and demand compensation
therefor and, within fifteen (15) days after such notice by the Administrative
Agent, the Borrowers shall pay to such Lender such additional amount or amounts
as will compensate such Lender or Lenders for such increased cost or reduction.
The Administrative Agent will promptly notify CCA REIT of any event of which it
has knowledge which will entitle such Lender to compensation pursuant to this
Section 4.8(c); provided, that the Administrative Agent shall incur no liability
whatsoever to the Lenders or the Borrowers in the event it fails to do so. The
amount of such compensation shall be determined, in the applicable Lender's sole
discretion, based upon the assumption that such Lender funded its Commitment
Percentage of the LIBOR Rate Loans in the London interbank market, and using any
reasonable attribution or
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<PAGE> 40
averaging methods which such Lender deems appropriate and practical. A
certificate of such Lender setting forth the basis for determining such amount
or amounts necessary to compensate such Lender shall be forwarded to CCA REIT
through the Administrative Agent and shall be conclusively presumed to be
correct save for manifest error.
SECTION 4.9. Indemnity. Each Borrower hereby indemnifies each of the
Lenders against any loss or expense (including, without limitation, any
administrative fees and expenses) which may arise or be attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired to
effect, fund or maintain any Loan (a) as a consequence of any failure by any
Borrower to make any payment when due of any amount due hereunder in connection
with a LIBOR Rate Loan, (b) due to any failure of any Borrower to borrow on a
date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation or (c) due to any payment, prepayment or conversion
(other than a conversion pursuant to Section 4.8(b)(ii)) of any LIBOR Rate Loan
on a date other than the last day of the Interest Period therefor. The amount of
such loss or expense shall be determined, in the applicable Lender's sole
discretion, based upon the assumption that such Lender funded its Commitment
Percentage of the LIBOR Rate Loans in the London interbank market, using any
reasonable attribution or averaging methods which such Lender deems appropriate
and practical, and pursuant to the following formula:
Indemnified Amount = (COFO-COFBD) times P times D
----------------------------
360
where:
"COFO" means the cost of deposits or funds in connection with any Loan
referred to in this Section 4.9 at the origination of such Loan, as
determined by the applicable Lender.
"COFBD" means the cost of deposits or funds in connection with any Loan
referred to in this Section 4.9 on the breakage date giving rise to the
compensation provided for in this Section 4.9 for the days remaining in
the Interest Period applicable to such Loan, as determined by the
applicable Lender.
"P" means the aggregate principal amount of such Loan subject to
compensation under this Section 4.9.
"D" means the number of days remaining in the original Interest Period
applicable to such Loan referred to in this Section 4.9.
A certificate of such Lender setting forth the basis for determining such amount
or amounts necessary to compensate such Lender shall be forwarded to CCA REIT by
the Administrative Agent and shall be conclusively presumed to be correct save
for manifest error.
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<PAGE> 41
SECTION 4.10. Capital Requirements. If either (a) the introduction of,
or any change in, or in the interpretation of, any Applicable Law or (b)
compliance with any guideline or request from any central bank or comparable
agency or other Governmental Authority (whether or not having the force of law),
has or would have the effect of reducing the rate of return on the capital of,
or has affected or would affect the amount of capital required to be maintained
by, any Lender or any corporation controlling such Lender as a consequence of,
or with reference to the Commitments and other commitments of this type, below
the rate which the Lender or such other corporation could have achieved but for
such introduction, change or compliance, then within five (5) Business Days
after written demand by any such Lender, the Borrowers shall pay to such Lender
from time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction. A certificate as
to such amounts submitted to CCA REIT and the Administrative Agent by such
Lender, shall, in the absence of manifest error, be presumed to be correct and
binding for all purposes.
SECTION 4.11. Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrowers
hereunder or under the Notes or the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender and the Administrative Agent,
income and franchise taxes imposed by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized or is
or should be qualified to do business or any political subdivision thereof and
(ii) in the case of each Lender, income and franchise taxes imposed by the
jurisdiction of such Lender's Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If any
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note or Letter of Credit to any Lender or the
Administrative Agent, (A) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.11) such Lender or the
Administrative Agent (as the case may be) receives an amount equal to the amount
such party would have received had no such deductions been made, (B) such
Borrower shall make such deductions, (C) such Borrower shall pay the full amount
deducted to the relevant taxing authority or other authority in accordance with
Applicable Law, and (D) such Borrower shall deliver to the Administrative Agent
evidence of such payment to the relevant taxing authority or other authority in
the manner provided in Section 4.11(d).
(b) Stamp and Other Taxes. In addition, the Borrowers shall pay any
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
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<PAGE> 42
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or security interest in respect thereto (hereinafter referred to as
"Other Taxes").
(c) Indemnity. Each Borrower shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.11) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Such indemnification shall be made within thirty (30) days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor.
(d) Evidence of Payment. Upon the request of the Administrative Agent,
the Borrowers shall furnish to the Administrative Agent evidence of the
Borrowers' payment of any Taxes or Other Taxes in the form of the original or a
certified copy of a receipt of payment thereof or other evidence of payment
satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of a
jurisdiction other than the United States or any state thereof shall deliver to
CCA REIT, with a copy to the Administrative Agent, on the Closing Date or
concurrently with the delivery of the relevant Assignment and Acceptance, as
applicable, (i) two United States Internal Revenue Service Forms 4224 or Forms
1001, as applicable (or successor forms) properly completed and certifying in
each case that such Lender is entitled to a complete exemption from withholding
or deduction for or on account of any United States federal income taxes, and
(ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form,
as the case may be, to establish an exemption from United States backup
withholding taxes. Each such Lender further agrees to deliver to CCA REIT, with
a copy to the Administrative Agent, a Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms or manner of certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to CCA REIT, certifying in the case of a Form 1001 or 4224 that
such Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes (unless in
any such case an event (including without limitation any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders such forms inapplicable or the exemption to
which such forms relate unavailable and such Lender notifies CCA REIT and the
Administrative Agent that it is not entitled to receive payments without
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
(f) Survival. Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this Section 4.11 shall survive the payment in full of the
Obligations and the termination of the Commitments.
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ARTICLE V
CLOSING; CONDITIONS OF CLOSING AND BORROWING
SECTION 5.1. Closing. The closing shall take place at the offices of
Kennedy Covington Lobdell & Hickman, L.L.P., 100 North Tryon Street, Charlotte,
North Carolina at 10:00 a.m. on July 18, 1997, or on such other date as the
parties hereto shall mutually agree.
SECTION 5.2. Conditions to Closing and Initial Extensions of Credit.
The obligation of the Lenders to close this Agreement and to make the initial
Loan or issue the initial Letter of Credit is subject to the satisfaction of
each of the following conditions:
(a) Executed Loan Documents. The following Loan Documents, in form and
substance satisfactory to the Administrative Agent and each Lender:
(i) this Agreement;
(ii) the Revolving Credit Notes;
(iii) the Swingline Note;
(iv) the Security Agreement;
(v) an Assignment of Lease for each Lease existing on the
Closing Date; and
(vi) a Deed of Trust for each parcel of real property owned by
any Borrower on the Closing Date;
shall have been duly authorized, executed and delivered by the Borrower party
thereto, shall be in full force and effect and no default shall exist
thereunder, and the Borrowers shall have delivered original counterparts thereof
to the Administrative Agent.
(b) Closing Certificates; etc.
(i) Officers's Certificate. The Administrative Agent shall
have received a certificate from the chief executive officer or chief financial
officer of CCA REIT, in form and substance satisfactory to the Administrative
Agent, to the effect that all representations and warranties of the Borrowers
contained in this Agreement and the other Loan Documents are true, correct and
complete in all material respects; that the Borrowers are not in violation of
any of the covenants contained in this Agreement and the other Loan Documents;
that, after giving effect to the transactions contemplated by this Agreement, no
Default or Event of Default has occurred and is continuing; and that each
Borrower has satisfied each of the closing conditions to be satisfied by it.
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(ii) Certificate of Secretary of the Borrowers. The
Administrative Agent shall have received a certificate of the secretary or
assistant secretary of each Borrower certifying that attached thereto is a true
and complete copy of the certificate of incorporation of such Borrower and all
amendments thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of incorporation; that attached
thereto is a true and complete copy of the bylaws of such Borrower as in effect
on the date of such certification; that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of such Borrower
authorizing the borrowings contemplated hereunder and the execution, delivery
and performance of this Agreement and the other Loan Documents to which it is a
party; and as to the incumbency and genuineness of the signature of each officer
of such Borrower executing the Loan Documents.
(iii) Certificates of Good Standing. The Administrative Agent
shall have received long-form certificates as of a recent date of the good
standing of each Borrower under the laws of its jurisdiction of organization and
each other jurisdiction where the Borrower is qualified to do business and a
certificate of the relevant taxing authorities of such jurisdictions certifying
that such Person has filed required tax returns and owes no delinquent taxes.
(iv) Opinions of Counsel. The Administrative Agent shall have
received favorable opinions of counsel to the Borrowers, including favorable
opinions of local counsel in jurisdictions where any Deed of Trust is to be
filed, addressed to the Administrative Agent and the Lenders with respect to the
Borrowers, the Loan Documents and such other matters as the Lenders shall
request.
(v) Tax Forms. The Administrative Agent shall have received
copies of the United States Internal Revenue Service forms required by Section
4.11(e) hereof.
(c) Collateral.
(i) Filings and Recordings. All filings and recordations
that are necessary to perfect the security interests of the Lenders in the
collateral described in the Security Documents shall have been forwarded for
filing in all appropriate locations and the Administrative Agent shall have
received evidence satisfactory to the Administrative Agent that such security
interests upon such filings constitute valid and perfected first priority Liens
therein.
(ii) Lien Search. The Borrowers shall have delivered the
results of a Lien search made against the Borrowers under the Uniform Commercial
Code as in effect in any state in which any of its assets are located,
indicating among other things that its assets are free and clear of any Lien
except for Liens permitted hereunder.
(iii) Hazard and Liability Insurance. The Administrative
Agent shall have received certificates of insurance, evidence of payment of all
insurance premiums for the current policy year of each, and, if requested by the
Administrative Agent, copies (certified by an officer of CCA REIT) of insurance
policies in the form required under Section 7.3 and the
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Security Documents and otherwise in form and substance reasonably satisfactory
to the Administrative Agent.
(iv) Title Insurance. The Administrative Agent shall
have received a marked-up commitment for a policy of title insurance, insuring
Lenders' first priority Liens and showing no Liens prior to Lenders' Liens other
than for ad valorem taxes not yet due and payable, with title insurance
companies acceptable to the Administrative Agent on the property subject to the
Deeds of Trust with the final title insurance policy, being delivered within
thirty (30) days after the Closing Date. Further, the Borrowers agree to provide
or obtain any customary affidavits and indemnities as may be required or
necessary to obtain title insurance satisfactory to the Administrative Agent.
(v) Title Exceptions. Copies of all recorded
documents creating exceptions to the title policy referred to in Section
5.2(c)(iv).
(vi) Matters Relating to Flood Hazard Properties.
Evidence, in the form of a certification by an insurance broker or a municipal
engineer, or other third party satisfactory to the Administrative Agent, stating
that each parcel of property subject to a Deed of Trust is not located in an
area having "special flood hazards."
(vii) Surveys. Copies of as-built surveys of a recent
date of each parcel of real property subject to a Deed of Trust certified as of
a recent date by a registered engineer or land surveyor. Each such survey with
an effective date of more than sixty (60) days prior to the Closing Date shall
be accompanied by an affidavit (a "Survey Affidavit") of an authorized signatory
of the owner of such property stating that there have been no improvements or
encroachments to the property since the date of the respective survey such that
the existing survey is no longer accurate. Such survey shall show the area of
such property, all boundaries of the land with courses and distances indicated,
including chord bearings and arc and chord distances for all curves, and shall
show dimensions and locations of all easements, private drives, roadways, and
other facts materially affecting such property, and shall show such other
details as the Administrative Agent may reasonably request, including without
limitation, any encroachment (and the extent thereof in feet and inches) onto
the property or by any of the improvements on the property upon adjoining land
or upon any easement burdening the property; any improvements, to the extent
constructed, and the relation of the improvements by distances to the boundaries
of the property, to any easements burdening the property, and to the established
building lines and the street lines; and if improvements are existing, (A) a
statement of the number of each type of parking space required by applicable
laws, ordinances, orders, rules, regulations, restrictive covenants and
easements affecting the improvement, and the number of each such type of parking
space provided, and (B) the locations of all utilities serving the improvement.
(viii) Environmental Assessments. A Phase I
environmental assessment of each parcel of real property subject to a Deed of
Trust by an environmental engineering firm acceptable to the Administrative
Agent showing no environmental conditions or liabilities in
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violation of Environmental Laws that could reasonably be expected to have a
Material Adverse Effect.
(ix) Other Real Property Information. The Administrative Agent
shall have received such other certificates, documents and information as are
reasonably requested by the Lenders, including, without limitation, engineering
and structural reports, permanent certificates of occupancy and evidence of
zoning compliance, each in form and substance satisfactory to the Administrative
Agent.
(d) Consents; Defaults.
(i) Governmental and Third Party Approvals. All necessary
approvals, authorizations and consents, if any be required, of any Person and of
all Governmental Authorities and courts having jurisdiction with respect to the
transactions contemplated by this Agreement and the other Loan Documents shall
have been obtained.
(ii) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of this
Agreement or the other Loan Documents or the consummation of the transactions
contemplated hereby or thereby, or which, in the Administrative Agent's
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement and such other Loan Documents.
(iii) No Event of Default. No Default or Event of Default shall have
occurred and be continuing.
(e) Financial Matters.
(i) Financial Statements. The Administrative Agent shall have
received recent annual and interim financial statements of the Borrowers and
their Subsidiaries and such other financial information with respect to the
Borrowers and their Subsidiaries as may be reasonably requested by the
Administrative Agent, all in form and substance satisfactory to the
Administrative Agent.
(ii) Financial Condition Certificate. CCA REIT shall have delivered
to the Administrative Agent a certificate, in form and substance satisfactory to
the Administrative Agent, and certified as accurate by the chief executive
officer or chief financial officer of CCA REIT, that (A) each Borrower and each
of its Subsidiaries are each Solvent, (B) each Borrower's payables are current
and not past due, (C) attached thereto is a pro forma balance sheet of the
Borrowers and their Subsidiaries setting forth on a pro forma basis the
financial condition of the Borrowers and their Subsidiaries on a Consolidated
basis as of that date, reflecting on a pro forma basis the effect of the
transactions contemplated herein, including all fees and expenses in connection
therewith, and evidencing compliance on a pro forma basis with the covenants
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contained in Articles IX and X hereof and (D) attached thereto are the financial
projections previously delivered to the Administrative Agent representing the
good faith opinions of the Borrowers and senior management thereof as to the
projected results contained therein.
(iii) Payment at Closing; Fee Letters. There shall have been paid by
the Borrowers to the Administrative Agent and the Lenders the fees set forth or
referenced in Section 4.3 and any other accrued and unpaid fees or commissions
due hereunder (including, without limitation, legal fees and expenses), and to
any other Person such amount as may be due thereto in connection with the
transactions contemplated hereby, including all taxes, fees and other charges in
connection with the execution, delivery, recording, filing and registration of
any of the Loan Documents. The Administrative Agent shall have received duly
authorized and executed copies of the fee letter agreement referred to in
Section 4.3(b).
(f) Offering and Sale Leaseback Transactions.
(i) Offering. CCA REIT shall have completed the Offering on
terms and conditions satisfactory to the Administrative Agent and shall have
received at least $300,000,000 of Net Cash Proceeds therefrom and Doctor R.
Crants shall have purchased no less than $7,500,000 and no more than $10,000,000
of common stock of CCA REIT pursuant to the Offering.
(ii) Acquisition of Correctional Facilities. CCA REIT shall
have acquired at least eight (8) of the Initial Facilities on the terms and
conditions contained in the Purchase Agreements delivered to the Administrative
Agent and obtained the option to acquire at least five (5) of the Option
Facilities on the terms and conditions contained in the Option Agreements
delivered to the Administrative Agent.
(iii) Sale Leaseback Transaction. The Administrative Agent
shall have received duly executed copies of the Sale Leaseback Documents and
shall be reasonably satisfied with the form and substance thereof. There shall
not have been any material change to the terms of the Sale Leaseback
Transactions as described in the Registration Statement and the Sale Leaseback
Transactions shall have been consummated pursuant to the terms of the Sale
Leaseback Documents as delivered to the Administrative Agent.
(g) Miscellaneous.
(i) Notice of Borrowing; Notice of Account
Designation and Application for Letter of Credit. The Administrative Agent shall
have received written instructions from CCA REIT to the Administrative Agent
directing the payment of any proceeds of Loans made under this Agreement that
are to be paid on the Closing Date. If a Letter of Credit is to be issued on the
Closing Date, CCA REIT shall have delivered an Application.
(ii) Proceedings and Documents. All opinions,
certificates and other instruments and all proceedings in connection with the
transactions contemplated by this
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Agreement shall be satisfactory in form and substance to the Lenders. The
Lenders shall have received copies of all other instruments and other evidence
as the Lender may reasonably request, in form and substance satisfactory to the
Lenders, with respect to the transactions contemplated by this Agreement and the
taking of all actions in connection therewith.
(iii) Due Diligence and Other Documents. Each
Borrower shall have delivered to the Administrative Agent such other documents,
certificates and opinions as the Administrative Agent reasonably requests,
certified by a secretary or assistant secretary of such Borrower as a true and
correct copy thereof.
SECTION 5.3. Conditions to All Loans and Letters of Credit. The
obligations of the Lenders to make any Loan or issues any Letter of Credit is
subject to the satisfaction of the following conditions precedent on the
relevant borrowing or issue date, as applicable:
(a) Continuation of Representations and Warranties. The
representations and warranties contained in Article VI shall be true and correct
on and as of such borrowing or issuance date with the same effect as if made on
and as of such date.
(b) No Existing Default. No Default or Event of Default shall
have occurred and be continuing hereunder (i) on the borrowing date with respect
to such Loan or after giving effect to the Loans to be made on such date or (ii)
the issue date with respect to such Letter of Credit or after giving affect to
such Letters of Credit on such date.
(c) Compliance with Use of Proceeds Restriction. CCA REIT
shall have delivered a certificate in form and substance reasonably satisfactory
to the Administrative Agent demonstrating pro forma compliance with Sections
10.11 and 10.12 of this Agreement.
(d) Officer's Compliance Certificate; Additional Documents.
The Administrative Agent shall have received the financial statements and
Officer's Compliance Certificate required pursuant to Sections 7.1 and 7.2
respectively and each additional document, instrument, legal opinion or other
item of information reasonably requested by it.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
SECTION 6.1. Representations and Warranties. To induce the
Administrative Agent to enter into this Agreement and the Lenders to make the
Loans or issue or participate in the Letters of Credit, the Borrowers hereby
represent and warrant to the Administrative Agent and Lenders that:
(a) Organization; Power; Qualification. Each Borrower and each
Subsidiary thereof is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its
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incorporation or formation, has the power and authority to own its properties
and to carry on its business as now being and hereafter proposed to be conducted
and is duly qualified and authorized to do business in each jurisdiction in
which the character of its properties or the nature of its business requires
such qualification and authorization, except in those jurisdictions in which the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect. CCA REIT was organized to be and is being operated in accordance
with the rules for qualification as a "real estate investment trust" under
Sections 856 through 860 of the Code. The jurisdictions in which the Borrowers
are organized and qualified to do business are described on Schedule 6.1(a).
(b) Ownership. Each Subsidiary of each Borrower is listed on Schedule
6.1(b). The capitalization of the Borrowers and their Subsidiaries consists of
the number of shares, authorized, issued and outstanding, of such classes and
series, with or without par value, described on Schedule 6.1(b). All outstanding
shares have been duly authorized and validly issued and are fully paid and
nonassessable. The shareholders of the Subsidiaries of the Borrowers and the
number of shares owned by each are described on Schedule 6.1(b). There are no
outstanding stock purchase warrants, subscriptions, options, securities,
instruments or other rights of any type or nature whatsoever, which are
convertible into, exchangeable for or otherwise provide for or permit the
issuance of capital stock of any Borrower or any Subsidiary thereof, except as
described on Schedule 6.1(b).
(c) Authorization of Agreement, Loan Documents and Borrowing. Each of
the Borrowers and their Subsidiaries has the right, power and authority and has
taken all necessary corporate and other action to authorize the execution,
delivery and performance of this Agreement and each of the other Loan Documents
to which it is a party in accordance with their respective terms. This Agreement
and each of the other Loan Documents have been duly executed and delivered by
the duly authorized officers of each Borrower and each of its Subsidiaries party
thereto, and each such document constitutes the legal, valid and binding
obligation of such Borrower or its Subsidiary party thereto, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar state or federal
debtor relief laws from time to time in effect which affect the enforcement of
creditors' rights in general and the availability of equitable remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with Laws,
Etc. The execution, delivery and performance by the Borrowers and their
Subsidiaries of the Loan Documents to which each such Person is a party, in
accordance with their respective terms, the borrowings hereunder and the
transactions contemplated hereby do not and will not, by the passage of time,
the giving of notice or otherwise, (i) require any Governmental Approval or
violate any Applicable Law relating to any Borrower or any Subsidiary thereof,
(ii) conflict with, result in a breach of or constitute a default under the
certificate of incorporation, bylaws or other organizational documents of any
Borrower or any Subsidiary thereof or any indenture, agreement or other
instrument to which such Person is a party or by which any of its properties may
be bound or any Governmental Approval relating to such Person, or (iii) result
in or require the
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creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by such Person other than Liens arising under the
Loan Documents.
(e) Compliance with Law; Governmental Approvals. Each of the Borrowers
and their Subsidiaries (i) has all Governmental Approvals required by any
Applicable Law for it to conduct its business, each of which is in full force
and effect, is final and not subject to review on appeal and is not the subject
of any pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, and (ii) is in compliance with each Governmental Approval
applicable to it and in compliance with all other Applicable Laws relating to it
or any of its respective properties.
(f) Tax Returns and Payments. Each of the Borrowers and their
Subsidiaries has duly filed or caused to be filed all federal, state, local and
other tax returns required by Applicable Law to be filed, and has paid, or made
adequate provision for the payment of, all federal, state, local and other
taxes, assessments and governmental charges or levies upon it and its property,
income, profits and assets which are due and payable. No Governmental Authority
has asserted any Lien or other claim against any Borrower or any Subsidiary
thereof with respect to unpaid taxes which has not been discharged or resolved.
The charges, accruals and reserves on the books of each Borrower and any of its
Subsidiaries in respect of federal, state, local and other taxes for all Fiscal
Years and portions thereof since the organization of such Borrower and any of
its Subsidiaries are in the judgment of such Borrower adequate, and such
Borrower does not anticipate any additional taxes or assessments for any of such
years.
(g) Intellectual Property Matters. Each of the Borrowers and their
Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name rights,
copyrights and rights with respect to the foregoing which are required to
conduct its business, except where the failure to so own or possess could not
reasonably be expected to have a Material Adverse Effect. No event has occurred
which permits, or after notice or lapse of time or both would permit, the
revocation or termination of any such rights, and neither any Borrower nor any
Subsidiary thereof is liable to any Person for infringement under Applicable Law
with respect to any such rights as a result of its business operations.
(h) Environmental Matters. Except those matters in existence on the
Closing Date and set forth on Schedule 6.1(h), to the best of any Borrower's
knowledge after due inquiry:
(i) The properties of the Borrowers and their Subsidiaries do not
contain, and have not previously contained, any Hazardous Materials in amounts
or concentrations which (A) constitute or constituted a violation of, or (B)
could give rise to liability under, applicable Environmental Laws;
(ii) Such properties and all operations conducted in connection
therewith are in compliance, and have been in compliance, with all applicable
Environmental Laws, and there
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is no contamination at, under or about such properties or such operations which
could interfere with the continued operation of such properties or impair the
fair saleable value thereof;
(iii) Neither the Borrowers nor any Subsidiary thereof has received
any notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of their properties or the operations
conducted in connection therewith, nor does any Borrower or any Subsidiary
thereof have knowledge or reason to believe that any such notice will be
received or is being threatened;
(iv) Hazardous Materials have not been transported or disposed of
from the properties of any Borrower or any Subsidiary thereof in violation of,
or in a manner or to a location which could give rise to liability under,
Environmental Laws, nor have any Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of such properties in violation of, or
in a manner that could give rise to liability under, any applicable
Environmental Laws;
(v) No judicial proceedings or governmental or administrative
action is pending, or, to the knowledge of any Borrower, threatened, under any
Environmental Law to which any Borrower or any Subsidiary thereof is or will be
named as a party with respect to such properties or operations conducted in
connection therewith, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect to
such properties or such operations; and
(vi) There has been no release, or threat of release, of Hazardous
Materials at or from such properties, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws.
(i) ERISA.
(i) Neither the Borrowers nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plans other
than those identified on Schedule 6.1(i);
(ii) each Borrower and each ERISA Affiliate is in compliance with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans except for
any required amendments for which the remedial amendment period as defined in
Section 401(b) of the Code has not yet expired. Each Employee Benefit Plan that
is intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified, and each trust related to
such plan has been determined to be exempt under Section 501(a) of the Code. No
liability has been incurred by any Borrower or any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan
or any Multiemployer Plan;
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(iii) No Pension Plan has been terminated, nor has any accumulated
funding deficiency (as defined in Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code), nor has
any funding waiver from the Internal Revenue Service been received or requested
with respect to any Pension Plan, nor has any Borrower or any ERISA Affiliate
failed to make any contributions or to pay any amounts due and owing as required
by Section 412 of the Code, Section 302 of ERISA or the terms of any Pension
Plan prior to the due dates of such contributions under Section 412 of the Code
or Section 302 of ERISA, nor has there been any event requiring any disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension
Plan;
(iv) Neither the Borrowers nor any ERISA Affiliate has: (A) engaged
in a nonexempt prohibited transaction described in Section 406 of the ERISA or
Section 4975 of the Code, (B) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium payments
which are due and unpaid, (C) failed to make a required contribution or payment
to a Multiemployer Plan, or (D) failed to make a required installment or other
required payment under Section 412 of the Code;
(v) No Termination Event has occurred or is reasonably expected to
occur; and
(vi) No proceeding, claim, lawsuit and/or investigation is existing
or, to the best knowledge of any Borrower after due inquiry, threatened
concerning or involving any (A) employee welfare benefit plan (as defined in
Section 3(1) of ERISA) currently maintained or contributed to by any Borrower or
any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan.
(j) Margin Stock. Neither the Borrowers nor any Subsidiary thereof is
engaged principally or as one of its activities in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each
such term is defined or used in Regulations G and U of the Board of Governors of
the Federal Reserve System). No part of the proceeds of any of the Loans or
Letters of Credit will be used for purchasing or carrying margin stock or for
any purpose which violates, or which would be inconsistent with, the provisions
of Regulation G, T, U or X of such Board of Governors.
(k) Government Regulation. Neither the Borrowers nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company" (as each such term is defined or used in the Investment Company Act of
1940, as amended) and neither the Borrowers nor any Subsidiary thereof is, or
after giving effect to any Extension of Credit will be, subject to regulation
under the Public Utility Holding Company Act of 1935 or the Interstate Commerce
Act, each as amended, or any other Applicable Law which limits its ability to
incur or consummate the transactions contemplated hereby.
(l) Material Contracts. Schedule 6.1(l) sets forth a complete and
accurate list of all Material Contracts of the Borrowers and their Subsidiaries
in effect as of the Closing Date not
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listed on any other Schedule hereto; other than as set forth in Schedule 6.1(l),
each such Material Contract is, and after giving effect to the consummation of
the transactions contemplated by the Loan Documents will be, in full force and
effect in accordance with the terms thereof.
(m) Burdensome Provisions. Neither the Borrowers nor any Subsidiary
thereof is a party to any indenture, agreement, lease or other instrument, or
subject to any corporate or partnership restriction, Governmental Approval or
Applicable Law which is so unusual or burdensome as in the foreseeable future
could be reasonably expected to have a Material Adverse Effect. The Borrowers
and their Subsidiaries do not presently anticipate that future expenditures
needed to meet the provisions of any statutes, orders, rules or regulations of a
Governmental Authority will be so burdensome as to have a Material Adverse
Effect.
(n) Financial Information. The financial information with respect to
the Borrowers which has been furnished to the Administrative Agent and each
Lender, is based on reasonable estimates and assumptions, all of which are fair
in light of the conditions which existed at the time the projections were made,
have been prepared on the basis of the assumptions stated therein, and reflect,
as of the time so furnished and the Closing Date, the reasonable estimate of
senior management of the Borrowers of the results of the operations and other
information projected therein. The Borrowers and their Subsidiaries have no
Debt, obligation or other unusual forward or long-term commitment which is not
fairly reflected in the foregoing financial information.
(o) No Material Adverse Change. Since the date hereof, there has been
no material adverse change in the properties, business, operations, prospects,
or condition (financial or otherwise) of the Borrowers and their Subsidiaries
and no event has occurred or condition arisen that could reasonably be expected
to have a Material Adverse Effect.
(p) Solvency. As of the Closing Date and after giving effect to each
Extension of Credit made hereunder, each Borrower and each Subsidiary thereof
will be Solvent.
(q) Titles to Properties. Each of the Borrowers and their Subsidiaries
has such title to the real property owned by it as is necessary or desirable to
the conduct of its business and valid and legal title to all of its personal
property and assets, including, but not limited to, those reflected on the
balance sheets of the Borrowers and their Subsidiaries delivered pursuant to
Section 6.1(n), except those which have been disposed of by the Borrowers or
their Subsidiaries subsequent to such date which dispositions have been in the
ordinary course of business or as otherwise expressly permitted hereunder.
(r) Liens. None of the properties and assets of any Borrower or any
Subsidiary thereof is subject to any Lien, except Liens permitted pursuant to
Section 10.3. No financing statement under the Uniform Commercial Code of any
state which names any Borrower or any Subsidiary thereof or any of their
respective trade names or divisions as debtor and which has not been terminated,
has been filed in any state or other jurisdiction and neither the Borrowers
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nor any Subsidiary thereof has signed any such financing statement or any
security agreement authorizing any secured party thereunder to file any such
financing statement, except to perfect those Liens permitted by Section 10.3
hereof.
(s) Debt and Contingent Obligations. The Borrowers and their
Subsidiaries have performed and are in compliance with all of the terms of such
Debt and Contingent Obligations and all instruments and agreements relating
thereto, and no default or event of default, or event or condition which with
notice or lapse of time or both would constitute such a default or event of
default on the part of any Borrower or any Subsidiary thereof exists with
respect to any such Debt or Contingent Obligation.
(t) Litigation. There are no actions, suits or proceedings pending nor,
to the knowledge of any Borrower, threatened against or in any other way
relating adversely to or affecting any Borrower or any Subsidiary thereof or any
of their respective properties in any court or before any arbitrator of any kind
or before or by any Governmental Authority the result of which could reasonably
be expected to have a Material Adverse Effect.
(u) Absence of Defaults. No event has occurred or is continuing which
constitutes a Default or an Event of Default, or which constitutes, or which
with the passage of time or giving of notice or both would constitute, a default
or event of default by any Borrower or any Subsidiary thereof under any Material
Contract or judgment, decree or order to which any Borrower or any Subsidiary
thereof is a party or by which any Borrower or any Subsidiary thereof or any of
their respective properties may be bound or which would require any Borrower or
any Subsidiary thereof to make any payment thereunder prior to the scheduled
maturity date therefor.
(v) Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by or on behalf of any Borrower or
any Subsidiary thereof and furnished to the Lenders were, at the time the same
were so furnished, complete and correct in all respects to the extent necessary
to give the recipient a true and accurate knowledge of the subject matter. No
document furnished or written statement made to the Administrative Agent or the
Lenders by any Borrower or any Subsidiary thereof in connection with the
negotiation, preparation or execution of this Agreement or any of the Loan
Documents contains or will contain any untrue statement of a fact material to
the creditworthiness of any Borrower or any Subsidiary thereof or omits or will
omit to state a fact necessary in order to make the statements contained therein
not misleading. No Borrower is aware of any facts which it has not disclosed in
writing to the Administrative Agent having a Material Adverse Effect, or insofar
as any Borrower can now foresee, could reasonably be expected to have a Material
Adverse Effect.
SECTION 6.2. Survival of Representations and Warranties, Etc. All
representations and warranties set forth in this Article VI and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including but not limited to any such representation or warranty made
in or in connection with any amendment thereto) shall constitute representations
and warranties made under this Agreement. All representations and warranties
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made under this Agreement shall be made or deemed to be made at and as of the
Closing Date, shall survive the Closing Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf
of the Lenders or any borrowing hereunder and shall continue until the
Obligations hereunder have been finally and indefeasibly paid and satisfied in
full and the Commitments terminated.
ARTICLE VII
FINANCIAL INFORMATION AND NOTICES
Until all the Obligations have been finally and indefeasibly paid and
satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.10 hereof, the Borrowers will
furnish or cause to be furnished to the Administrative Agent at the
Administrative Agent's Office at the address set forth in Section 13.1 hereof
and to each Lender at its respective address as set forth on Schedule 1.1, or
such other office as may be designated by the Administrative Agent or such
Lender from time to time:
SECTION 7.1. Financial Statements and Projections.
(a) Quarterly Financial Statements. As soon as practicable and in any
event within forty-five (45) days after the end of each fiscal quarter, an
unaudited Consolidated balance sheet of the Borrowers and their Subsidiaries as
of the close of such fiscal quarter and unaudited Consolidated statements of
income and cash flows for the fiscal quarter then ended and that portion of the
Fiscal Year then ended, including the notes thereto, all in reasonable detail
setting forth in comparative form the corresponding figures for the preceding
Fiscal Year and prepared by the Borrowers in accordance with GAAP and, if
applicable, containing disclosure of the effect on the financial position or
results of operations of any change in the application of accounting principles
and practices during the period, and certified by the chief financial officer of
CCA REIT to present fairly in all material respects the financial condition of
the Borrowers and their Subsidiaries as of their respective dates and the
results of operations of the Borrowers and their Subsidiaries for the respective
periods then ended, subject to normal year end adjustments.
(b) Annual Financial Statements. As soon as practicable and in any
event within ninety (90) days after the end of each Fiscal Year, an audited
Consolidated balance sheet of the Borrowers and their Subsidiaries as of the
close of such Fiscal Year and audited Consolidated statements of income,
retained earnings and cash flows for the Fiscal Year then ended, including the
notes thereto, all in reasonable detail setting forth in comparative form the
corresponding figures for the preceding Fiscal Year and prepared by an
independent certified public accounting firm acceptable to the Administrative
Agent in accordance with GAAP and, if applicable, containing disclosure of the
effect on the financial position or results of operation of any change in the
application of accounting principles and practices during the year, and
accompanied by a report thereon by such certified public accountants that is not
qualified with respect to scope
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or limitations imposed by any Borrower or any Subsidiary thereof or with respect
to accounting principles followed by any Borrower or any of Subsidiary thereof
not in accordance with GAAP.
(c) Business Plan and Financial Projections. As soon as practicable and
in any event within thirty (30) days prior to the beginning of each Fiscal Year
and such other times as the Administrative Agent shall reasonably request, a
business plan of the Borrowers and their Subsidiaries prepared in accordance
with GAAP for the ensuing Fiscal Year, such plan to be prepared on a quarterly
basis for such period, and to include the following for each applicable period:
an operating and capital budget, a projected income statement, statement of cash
flows and balance sheet and a report containing management's discussion and
analysis of such projections, accompanied by a certificate from the chief
financial officer of CCA REIT to the effect that, to the best of such officer's
knowledge, such projections are good faith estimates of the financial condition
and operations of the Borrowers and their Subsidiaries for such fiscal period.
SECTION 7.2. Officer's Compliance Certificate. At each time financial
statements are delivered pursuant to Sections 7.1(a) or (b) a certificate of the
chief financial officer or the treasurer of CCA REIT in the form of Exhibit F
attached hereto (an "Officer's Compliance Certificate").
SECTION 7.3. Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to any Borrower or its Board of Directors by its independent public
accountants in connection with their auditing function, including, without
limitation, any management report and any management responses thereto;
(b) As soon as practicable, copies of all financial statements and
reports that any Borrower shall send to its shareholders and copies of all
registration statements and all regular or periodic reports (including without
limitation the annual report on Form 10-K and quarterly report on Form 10-Q)
which any Borrower shall file with the Securities and Exchange Commission or any
successor commission;
(c) Promptly upon receipt by any Borrower, deliver to the
Administrative Agent and Lenders financial statements for each lessee party to
any such Lease in form and substance satisfactory to the Administrative Agent;
and
(d) Such other information regarding the operations, business affairs
and financial condition of the Borrowers or any of their Subsidiaries as the
Administrative Agent or any Lender may reasonably request.
SECTION 7.4. Notice of Litigation and Other Matters. Prompt (but in no
event later than ten (10) days after an officer of any Borrower obtains
knowledge thereof) telephonic and written notice of:
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(a) the commencement of all proceedings and investigations by or before
any Governmental Authority and all actions and proceedings in any court or
before any arbitrator against or involving any Borrower or any Subsidiary
thereof or any of their respective properties, assets or businesses, the result
of which could reasonably be expected to have a Material Adverse Effect;
(b) any notice of any violation received by any Borrower or any
Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of Environmental Laws which in any such case
could reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to result
in, a strike or other work action against any Borrower or any Subsidiary
thereof;
(d) any attachment, judgment, lien, levy or order exceeding $750,000
that may be assessed against or threatened against any Borrower or any
Subsidiary thereof;
(e) (i) any Default or Event of Default, (ii) any event which
constitutes or which with the passage of time or giving of notice or both would
constitute a default or event of default under any Incarceration Agreement or
Material Contract to which any Borrower or any Subsidiary thereof is a party or
by which any Borrower or any Subsidiary thereof or any of their respective
properties is bound or (iii) any termination prior to the stated termination
date under any Incarceration Agreement or Material Contract to which any
Borrower or any Subsidiary thereof is a party or by which any Borrower or any
Subsidiary thereof or any of their respective properties may be bound;
(f) (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code (along with a copy thereof), (ii) all notices received by any
Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension
Plan or to have a trustee appointed to administer any Pension Plan, (iii) all
notices received by any Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA and (iv) any Borrower obtaining knowledge or
reason to know that any Borrower or any ERISA Affiliate has filed or intends to
file a notice of intent to terminate any Pension Plan under a distress
termination within the meaning of Section 4041(c) of ERISA;
(g) any change in the Senior Debt Rating; and
(h) any event which makes any of the representations set forth in
Section 6.1 inaccurate in any material respect.
SECTION 7.5. Accuracy of Information. All written information, reports,
statements and other papers and data furnished by or on behalf of any Borrower
to the
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Administrative Agent or any Lender (other than financial forecasts) whether
pursuant to this Article VII or any other provision of this Agreement, or any of
the Security Documents, shall be, at the time the same is so furnished, complete
and correct in all material respects to the extent necessary to give the
Administrative Agent or any Lender complete, true and accurate knowledge of the
subject matter based on the Borrowers' knowledge thereof.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner provided for in Section 13.10, each Borrower will, and
will cause each of its Subsidiaries to:
SECTION 8.1. Preservation of Corporate Existence and Related Matters.
Preserve and maintain its separate corporate existence and all rights,
franchises, licenses and privileges necessary to the conduct of its business,
and qualify and remain qualified as a foreign corporation and authorized to do
business in each jurisdiction in which the failure to so qualify could
reasonably be expected to have a Material Adverse Effect, and maintain CCA
REIT's qualification as "real estate investment trust" under Sections 856
through 860 of the Code.
SECTION 8.2. Maintenance of Property. Protect and preserve (or cause
the applicable lessee to protect and preserve, in accordance with the terms of
the applicable Lease) all properties useful in and material to its business,
including copyrights, patents, trade names and trademarks; maintain (or cause
the applicable lessee to maintain, in accordance with the terms of the
applicable Lease) in good working order and condition all buildings, equipment
and other tangible real and personal property; and from time to time make (or
cause the applicable lessee to make, in accordance with the terms of the
applicable Lease) all renewals, replacements and additions to such property
necessary for the conduct of its business, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times.
SECTION 8.3. Insurance. Maintain (or cause the applicable lessee to
maintain, in accordance with the terms of the applicable Lease) insurance with
financially sound and reputable insurance companies against such risks and in
such amounts as are customarily maintained by similar businesses and as may be
required by the Security Documents and Applicable Law, and from time to time
deliver to the Administrative Agent upon its request a detailed list of the
insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
SECTION 8.4. Accounting Methods and Financial Records. Maintain a
system of accounting, and keep such books, records and accounts (which shall be
true and complete in all material respects) as may be required or as may be
necessary to permit the preparation of
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financial statements in accordance with GAAP and in compliance with the
regulations of any Governmental Authority having jurisdiction over it or any of
its properties.
SECTION 8.5. Payment and Performance of Obligations. Pay and perform
all Obligations under this Agreement and the other Loan Documents, and pay or
perform (a) all taxes, assessments and other governmental charges that may be
levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices; provided, that such Borrower or such Subsidiary may contest any item
described in this Section 8.5 in good faith so long as adequate reserves are
maintained with respect thereto in accordance with GAAP.
SECTION 8.6. Compliance With Laws and Approvals. Observe and remain in
compliance with all Applicable Laws and maintain in full force and effect all
Governmental Approvals, in each case applicable to the conduct of its business.
SECTION 8.7. Environmental Laws. In addition to and without limiting
the generality of Section 8.6, (a) comply with, and use its best efforts to
ensure such compliance by all agents, contractors, tenants and subtenants, if
any, with, all applicable Environmental Laws and obtain and comply with and
maintain, and use its best efforts to ensure that all agents, contractors,
tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws, (b) conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other actions
required under Environmental Laws, and promptly comply with all lawful orders
and directives of any Governmental Authority regarding Environmental Laws, and
(c) defend, indemnify and hold harmless the Administrative Agent and the
Lenders, and their respective parents, Subsidiaries, Affiliates, employees,
agents, officers and directors, from and against any claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of whatever kind or
nature known or unknown, contingent or otherwise, arising out of, or in any way
relating to the violation of, noncompliance with or liability under any
Environmental Laws applicable to any Correctional Facility or any property
subject to any Deed of Trust, any operations thereon by any Person, or the
operations of such Borrower or such Subsidiary, or any orders, requirements or
demands of Governmental Authorities related thereto, including, without
limitation, reasonable attorney's and consultant's fees, investigation and
laboratory fees, response costs, court costs and litigation expenses, except to
the extent that any of the foregoing directly result from the gross negligence
or willful misconduct of the party seeking indemnification therefor.
SECTION 8.8. Compliance with ERISA. In addition to and without limiting
the generality of Section 8.6, (a) comply with all applicable provisions of
ERISA and the regulations and published interpretations thereunder with respect
to all Employee Benefit Plans, (b) not take any action or fail to take action
the result of which could be a liability to the PBGC or to a Multiemployer Plan,
(c) not participate in any prohibited transaction that could result in any civil
penalty under ERISA or tax under the Code, (d) operate each Employee Benefit
Plan in such a manner that will not incur any tax liability under Section 4980B
of the Code or any liability
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to any qualified beneficiary as defined in Section 4980B of the Code and (e)
furnish to the Administrative Agent upon the Administrative Agent's request such
additional information about any Employee Benefit Plan as may be reasonably
requested by the Administrative Agent.
SECTION 8.9. Compliance With Agreements. Comply in all respects with
each term, condition and provision of all leases, agreements and other
instruments entered into in the conduct of its business including, without
limitation, any Material Contract; provided, that such Borrower or such
Subsidiary may contest any such lease, agreement or other instrument in good
faith through applicable proceedings so long as adequate reserves are maintained
in accordance with GAAP.
SECTION 8.10. Conduct of Business. Engage only in the business of the
ownership of Correctional Facilities or any business reasonably related thereto
which such facilities shall be managed by their respective lessee or lessees (or
duly authorized agent of any such lessee in the event such lessee is a Public
Counterparty).
SECTION 8.11. Visits and Inspections. Permit representatives of the
Administrative Agent or any Lender, from time to time, to visit and inspect its
properties; inspect, audit and make extracts from its books, records and files,
including, but not limited to, management letters prepared by independent
accountants; and discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial condition, results of
operations and business prospects.
SECTION 8.12. Incarceration Agreements. Prior to the acquisition of any
Correctional Facility to be leased to a Private Counterparty, cause such Private
Counterparty to (a) obtain an Incarceration Agreement for such Correctional
Facility and (b) deliver to the Administrative Agent and Lenders a summary of
such Incarceration Agreement in form and substance reasonable satisfactory
thereto, or if so requested, provide a copy of such Incarceration Agreement to
the Administrative Agent and the Lenders.
SECTION 8.13. Lease Terms and Conditions. Cause each Lease entered into
by any Borrower or any Subsidiary thereof to be delivered to the Administrative
Agent and cause each such Lease to contain the following terms and conditions:
(a) each such Lease will be a triple net lease, (b) each such Lease will be
non-cancelable and not contingent on the maintenance of any Incarceration
Agreement relating to such Lease, (c) each such Lease will have a minimum
initial lease terms of (ten) 10 years (provided that, subject to prior Required
Lender approval, Leases with a Public Counterparty may have lease term of less
than ten (10) years and be subject to appropriations limitations imposed by
Applicable Law), (d) the lessee or lessees under each such Lease will remain
responsible for all prison operations and liabilities relating to the operation,
administration and maintenance of the Correctional Facility subject to such
Lease and (e) each such Lease (other than those governing the Initial
Facilities) contains such other terms and conditions as the Administrative Agent
shall reasonably request.
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SECTION 8.14. Lease Revenues. Cause at least seventy-five percent (75%)
of all Lease revenues to be derived from Leases where the lessee is either (a)
CCA or (b) a counterparty whose debt is rated at least A- by Standard & Poor's
or A3 by Moody's (or, if ratings for such counterparty are unavailable from both
Standard & Poor's and Moody's, rated at least A- by either Fitch or Duff &
Phelps); provided the remaining percentage (not to exceed 25%) of all lease
revenues shall be derived from leases with a counterparty (x) whose debt is
rated at least BBB- by Standard & Poor's or Baa3 by Moody's (or, if ratings for
such counterparty are unavailable from both Standard & Poor's and Moody's, rated
at least BBB- by either Fitch or Duff & Phelps) or (y) with any other
counterparty approved in writing in advance by the Administrative Agent and
Required Lenders.
SECTION 8.15. Hedging Agreement. Within eighteen (18) months of the
Closing Date, enter into and maintain a Hedging Agreement with a counterparty
acceptable to the Administrative Agent (unless the counterparty to such Hedging
Agreement is (a) a Lender, (b) an Affiliate of a Lender or (c) an Eligible
Assignee), and with interest rates and other terms and conditions satisfactory
to the Administrative Agent for a minimum notional amount equal to fifty percent
(50%) of Total Funded Debt.
SECTION 8.16. Additional Borrowers. Concurrently with the creation of
any additional Subsidiary of any Borrower in accordance with the terms hereof,
cause to be executed and delivered to the Administrative Agent (a) a joinder
agreement in form and substance satisfactory to the Lenders such that such
Subsidiary shall become a borrower hereunder and be bound by all of the terms
and conditions hereof, (b) supplements to the Security Documents (or additional
Security Documents) in each case in form and substance satisfactory to the
Lenders such that the assets of such Subsidiary shall become collateral security
for the Obligations, (c) a pledge agreement executed by CCA REIT (or other
applicable Subsidiary) in each case in form and substance satisfactory to the
Lenders such that the capital stock of such new Subsidiary shall become
collateral for the Obligations and (d) such other documents reasonably requested
by the Administrative Agent or Required Lenders consistent with the terms of
this Agreement which provide that such Subsidiary shall become bound by all of
the terms, covenants and agreements contained in the Loan Documents. Upon
satisfaction of the conditions set forth in this Section 8.16, each Subsidiary
shall become a Borrower hereunder and the other Loan Documents or a joint and
several basis to the same extent as if such Subsidiary had been a party hereto
and thereto on the Closing Date.
SECTION 8.17. Further Assurances. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Administrative
Agent or any Lender may reasonably require to document and consummate the
transactions contemplated hereby and to vest completely in and insure the
Administrative Agent and the Lenders their respective rights under this
Agreement, the Notes, the Letters of Credit and the other Loan Documents.
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ARTICLE IX
FINANCIAL COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.10 hereof, the Borrowers and
their Subsidiaries on a Consolidated basis will not:
SECTION 9.1 Ratio of Total Liabilities to Total Capitalization. As of
any fiscal quarter end, permit the ratio of (a) Total Liabilities as of such
date to (b) Total Capitalization as of such date to equal or exceed .45 to 1.0.
SECTION 9.2 Ratio of Total Funded Debt to Cash Flow. As of any fiscal
quarter end, permit the ratio of (a) the sum of Total Funded Debt as of such
date less Excess Cash as of such date to (b) the product of Cash Flow for such
fiscal quarter times four, to exceed 12.0 to 1.0.
SECTION 9.3 Ratio of Dividends to Funds From Operations. As of any
fiscal quarter end, for the four consecutive fiscal quarter period ending on
such date, permit the ratio of (a) Dividends paid during such period to (b)
Funds From Operations for such period, to exceed the corresponding ratio set
forth below:
Date Ratio
Closing Date through
9/30/97 1.00 to 1.00
12/31/97 through
12/31/98 .95 to 1.00
3/31/99 and
thereafter .90 to 1.00
; provided that, for each fiscal quarter ending after the Closing Date through
and including the fiscal quarter ending on March 31, 1998, this ratio shall be
calculated on an Annualized basis.
SECTION 9.4 Interest Coverage Ratio: As of any fiscal quarter end, for
the four consecutive fiscal quarter period ending on such date, permit the ratio
of (a) the sum of (i) Funds From Operations for such period plus (ii) Interest
Expense for such period less (iii) Maintenance Capital Expenditures made during
such period to (b) the sum of (i) Interest Expense for such period plus (ii)
Dividends paid during such period with respect to any class of Preferred Stock,
to be less than 3.0 to 1.0; provided that, for each fiscal quarter ending after
the Closing
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Date through and including the fiscal quarter ending on March 31, 1998, this
ratio shall be calculated on an Annualized basis.
SECTION 9.5 Minimum Net Worth. As of any fiscal quarter end, permit Net
Worth to be less than the sum of (a) ninety five percent (95%) of the Net Cash
Proceeds of the Offering plus (b) $3,000,000 (representing the accounting
treatment of the initial equity interests of CCA REIT purchased by D. Robert
Crants, III and Michael W. Devlin) plus (c) seventy five percent (75%) of Net
Income (to the extent Net Income is positive) after the Closing Date determined
on a cumulative basis less (d) Dividends paid after the Closing Date plus (e)
100% of any Net Cash Proceeds received from the issuance of, or any Debt
satisfied on the conversion into, any capital stock of any Borrower during such
fiscal quarter.
SECTION 9.6 Additional Secured Debt. Upon the incurrence of any secured
Debt permitted hereunder during such time as any Security Document continues to
secure the Obligations, as of any fiscal quarter end, permit the ratio of (a)
the aggregate principal amount of Loans outstanding on such fiscal quarter end
to (b) the product of Revolver Secured Cash Flow for such fiscal quarter times
four, to exceed 3.25 to 1.0.
SECTION 9.7 Investment Grade Rating. As of any fiscal quarter end after
such date as CCA REIT has obtained an Investment Grade Rating, permit:
(a) the ratio of (i) Total Unsecured Debt as of such fiscal quarter end
to (ii) the product of Unleveraged Cash Flow for such fiscal quarter times four,
to exceed 3.25 to 1.0; and
(b) the ratio of (i) Total Secured Debt as of such fiscal quarter end
to (ii) Fixed Asset Book Value as of such fiscal quarter end, to exceed .25 to
1.0.
ARTICLE X
NEGATIVE COVENANTS
Until all of the Obligations have been finally and indefeasibly paid
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 13.10 hereof, the Borrowers have not
and will not permit any of its Subsidiaries to:
SECTION 10.1. Limitations on Debt. Create, incur, assume or suffer to
exist any Debt except:
(a) the Obligations;
(b) Debt incurred in connection with the Hedging Agreement required by
Section 8.15 and any other Hedging Agreement with a counterparty satisfactory to
the Administrative Agent (unless the counterparty to such Hedging Agreement is
(a) a Lender, (b) an Affiliate of a Lender
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or (c) an Eligible Assignee) and upon terms and conditions reasonably
satisfactory to the Administrative Agent;
(c) Debt incurred in connection with the refinancing of Debt relating
to any Correctional Facility; provided that, the Borrowers comply with Section
2.9;
(d) Debt consisting of Contingent Obligations permitted by Section
10.2; and
(e) Debt of the Borrowers and their Subsidiaries (a) other than
provided for in clauses (a) through (d) of this Section, incurred in the
ordinary course of business of the Borrowers and their Subsidiaries not to
exceed $1,000,000 on any date of determination
; provided, that none of the Debt permitted to be incurred by this Section shall
restrict, limit or otherwise encumber (by covenant or otherwise) the ability of
any Subsidiary of any Borrower to make any payment to such Borrower or any of
its Subsidiaries (in the form of dividends, intercompany advances or otherwise)
for the purpose of enabling such Borrower to pay the Obligations.
SECTION 10.2. Limitations on Contingent Obligations. Create, incur,
assume or suffer to exist any Contingent Obligations except:
(a) Contingent Obligations in favor of the Administrative Agent for the
benefit of the Administrative Agent and the Lenders; and
(b) guaranties incurred in the ordinary course of business in an
aggregate amount not to exceed $250,000 at any time.
SECTION 10.3. Limitations on Liens. Create, incur, assume or suffer to
exist, any Lien on or with respect to any of its assets or properties (including
without limitation shares of capital stock or other ownership interests), real
or personal, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or
Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not expired or which are
being contested in good faith and by appropriate proceedings if adequate
reserves are maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen,
processors or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, (i) which are not overdue for a period of more
than thirty (30) days or (ii) which are being contested in good faith and by
appropriate proceedings;
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(c) Liens consisting of deposits or pledges made in the ordinary course
of business in connection with, or to secure payment of, obligations under
workers' compensation, unemployment insurance or similar legislation.
(d) Liens constituting encumbrances in the nature of zoning
restrictions, easements and rights or restrictions of record on the use of real
property, which in the aggregate are not substantial in amount and which do not,
in any case, detract from the value of such property or impair the use thereof
in the ordinary conduct of business;
(e) Liens in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders;
(f) Liens securing Debt permitted under Section 10.1(c) and Capitalized
Leases and purchase money Debt permitted pursuant to Section 10.1(e); provided,
that (i) such Liens shall be created substantially simultaneously with the
refinancing, acquisition or lease of the related asset, (ii) such Liens do not
at any time encumber any property other than the property financed or refinanced
by such Debt, (iii) the amount of Debt secured thereby is not increased and (iv)
the principal amount of Debt secured by any such Lien shall at no time exceed
one hundred percent (100%) of the original purchase or lease price of such
property at the time it was refinanced, acquired or leased; and
(g) Liens on any Correctional Facility acquired in an acquisition
permitted by Section 10.12(b)(iii).
SECTION 10.4. Limitations on Loans, Advances, Investments and
Acquisitions. Purchase, own, invest in or otherwise acquire, directly or
indirectly, any capital stock, interests in any partnership or joint venture
(including without limitation the creation or capitalization of any Subsidiary),
evidence of Debt or other obligation or security, substantially all of the
business or assets of any other Person or any other investment or interest
whatsoever in any other Person, or make or permit to exist, directly or
indirectly, any loans, advances or extensions of credit to, or any investment in
cash or by delivery of property in, any Person, or enter into, directly or
indirectly, any commitment or option in respect of the foregoing except:
(a) investments in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within 180 days from the date of acquisition thereof, (ii) commercial
paper maturing no more than 180 days from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's or
Moody's, (iii) certificates of deposit maturing no more than 180 days from the
date of creation thereof issued by commercial banks incorporated under the laws
of the United States of America, each having combined capital, surplus and
undivided profits of not less than $500,000,000 and having a rating of "A" or
better by a nationally recognized rating agency; provided, that the aggregate
amount invested in such certificates of deposit shall not at any time exceed
$5,000,000 for any one such certificate of deposit and $10,000,000 for any one
such bank, or (iv) time deposits maturing no more than 30 days from the date of
creation thereof
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with commercial banks or savings banks or savings and loan associations each
having membership either in the FDIC or the deposits of which are insured by the
FDIC and in amounts not exceeding the maximum amounts of insurance thereunder;
(b) investments by any Borrower or any Subsidiary thereof in the form
of acquisitions of any Correctional Facility and related assets if each such
acquisition meets all of the following requirements: (i) the total aggregate
consideration for any single acquisition shall not exceed thirty five percent
(35%) of the aggregate net Fixed Asset Book Value immediately prior to the
consummation of any such acquisition, (ii) the Borrowers shall have demonstrated
pro forma compliance with each covenant contained in Article IX hereof prior to
consummating the acquisition and no Default or Event of Default shall have
occurred and be continuing both before and after giving effect to the
acquisition, (iii) the Borrowers shall have delivered to the Administrative
Agent in form and substance satisfactory thereto (A) such additional Assignments
of Lease, such additional Deeds of Trust, such additional UCC-1 financing
statements and other documents as are necessary to ensure that the
Administrative Agent, on behalf of itself and the Lenders, is granted a first
priority security interest in all of the assets to be acquired pursuant to such
acquisition (or if such acquisition is permitted by Section 10.12, a second
priority security interest in all such property) and (B) such other documents,
certificate and opinions consistent with Article V as are reasonably requested
by the Administrative Agent or Required Lenders;
(c) loans from CCA REIT to CCA; provided that, (i) such loans are made
with Net Cash Proceeds of the Offering, (ii) the aggregate principal amount of
such loans do not exceed $40,000,000, (iii) the proceeds of such loans are used
solely for the construction and development of Option Facilities and (iv) each
such loan is repaid in full on the earlier of the closing of the sale of such
Option Facility to CCA REIT or January 31, 1998; and
(d) the creation of a wholly-owned Subsidiary of CCA REIT for the
purpose of providing management services to CCA REIT, including without
limitation, payroll administration; provided that, CCA REIT complies with the
applicable provision of Section 8.16.
SECTION 10.5. Limitations on Mergers and Liquidation. Merge,
consolidate or enter into any similar combination with any other Person or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution).
SECTION 10.6. Limitations on Sale of Assets. Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or
hereafter acquired except:
(a) the sale or other disposition of assets, including any Correctional
Facility; provided that (i) the aggregate amount of the sale price of all assets
sold or disposed of during the term of this Agreement shall not exceed twenty
percent (20%) of the net Fixed Asset Book Value of
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the Borrowers (as of the Closing Date), (ii) the Borrowers comply with Section
2.9 with respect to each such sale and (iii) the Borrowers shall have
demonstrated pro forma compliance with each covenant contained in Article IX
hereof;
(b) the sale of obsolete assets no longer used or usable in the
business of any Borrower or any Subsidiary thereof; and
(c) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the compromise or
collection thereof.
SECTION 10.7. Limitations on Dividends and Distributions. Declare or
pay any dividends upon any of its capital stock; purchase, redeem, retire or
otherwise acquire, directly or indirectly, any shares of its capital stock, or
make any distribution of cash, property or assets among the holders of shares of
its capital stock, or make any change in its capital structure that could
reasonably be expected to have a Material Adverse Effect; provided that:
(a) any Borrower or any Subsidiary thereof may pay dividends in shares
of its own capital stock;
(b) any Subsidiary may pay cash dividends to any Borrower; and
(c) any Borrower may pay Dividends as long as immediately prior to
making such Dividend and after giving pro forma effect to the payment of such
Dividends, no Default or Event of Default has occurred and is continuing.
SECTION 10.8. Transactions with Affiliates. Directly or indirectly: (a)
make any loan or advance to, or purchase or assume any note or other obligation
to or from, any of its officers, directors, shareholders or Affiliates, or to or
from any member of the immediate family of any of its officers, directors,
shareholders or Affiliates, or subcontract any operations to any of its
Affiliates, or (b) enter into, or be a party to, any transaction with any of its
Affiliates, except pursuant to the reasonable requirements of its business and
upon fair and reasonable terms that are no less favorable to it than it would
obtain in a comparable arm's length transaction with a Person not its Affiliate.
SECTION 10.9. Certain Accounting Changes. Change its Fiscal Year end,
or make any change in its accounting treatment and reporting practices except as
required by GAAP.
SECTION 10.10. Amendment to Sale Leaseback Documents. Without the prior
written consent of the Administrative Agent, amend any Lease or any Sale
Leaseback Document in a way that could be reasonably expected to have an adverse
effect (as reasonably determined by the Administrative Agent) on any Borrower.
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SECTION 10.11. Restrictions on Working Capital. At any time during the
term of this Agreement, allow more than $5,000,000 in the aggregate to be
outstanding under the Credit Facility for working capital and general corporate
purposes.
SECTION 10.12. Restrictions on Use of Proceeds and Other Expenditures.
With respect to the Dollar amounts set forth in clauses (i), (ii) and (iii)
below, (a) allow an aggregate amount in excess of such amounts to be outstanding
under the Credit Facility for the corresponding purpose at any time during the
term of the Agreement and (b) as of any fiscal quarter end, expend an aggregate
amount in excess of such amounts for the corresponding purpose during the
consecutive four fiscal quarter period ending on such date: (i) $90,000,000 less
all amounts expended during such period pursuant to Section 10.12(b)(ii) for
further development of existing Correctional Facilities which are subject to a
Lease and if such Lease is with a Private Counterparty, there is a corresponding
Incarceration Agreement for such facility; provided that with respect to further
development of existing Correctional Facilities leased to a Private Counterparty
for which no such Incarceration Agreement exists, such amount shall not exceed
$25,000,000, (ii) $90,000,000 less all amounts expended during such period
pursuant to Section 10.12(b)(i) for the construction of up to two new
Correctional Facilities at any one time; provided that, (A) at least
seventy-five percent (75%) of the amount outstanding under the Credit Facility
at any time pursuant to Section 10.12(b)(ii) is expended on the construction of
new Correctional Facilities that are subject to a Lease with a public
counterparty whose debt is rated at least A- by Standard & Poor's or A3 by
Moody's (or, if ratings for such public counterparty are unavailable from both
Standard & Poor's and Moody's, rated at least A- by either Fitch or Duff &
Phelps); provided further, that the remaining percentage (not to exceed 25%) of
the amount outstanding under the Credit Facility at any time pursuant to Section
10.12(b)(ii) is expended on the construction of new Correctional Facilities that
are subject to a Lease with a public counterparty (x) whose debt is rated at
least BBB- by Standard & Poor's or Baa3 by Moody's (or, if ratings for such
public counterparty are unavailable from both Standard & Poor's and Moody's,
rated at least BBB- by either Fitch or Duff & Phelps) or (y) with any other
public counterparty approved in writing in advance by the Administrative Agent
and Required Lenders, (B) all permits and licenses required by Applicable Law
pertaining to such construction shall have been obtained prior to and maintained
after the funding of any Loan to be used to finance such construction, (C)
payment and performance bonds shall have been obtained for all such construction
prior to and maintained after the funding of any Loan to be used to finance such
construction, (D) the Administrative Agent shall have approved the construction
manager for all such construction prior to the funding of any Loan to be used to
finance such construction, (E) the Administrative Agent has received a signed
development contract in form and substance satisfactory thereto including a
description of the nature and extent of such construction prior to the funding
of any Loan to be used to finance such construction and (F) the Borrowers and
their Subsidiaries shall have complied with Section 10.4(b)(iii) and (iii)
$30,000,000 to finance the acquisition of Correctional Facilities subject to an
existing first priority Lien in favor of a third party creditor; provided, that
the Borrowers and their Subsidiaries shall have complied with the provisions of
Section 10.4(b).
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SECTION 10.13. Restrictive Agreements. Enter into any Debt which
contains any negative pledge on assets or any covenants more restrictive than
the provisions of Articles VIII, IX and X hereof, or which restricts, limits or
otherwise encumbers its ability to incur Liens on or with respect to any of its
assets or properties other than the assets or properties securing such Debt.
SECTION 10.14. Operating Leases. The aggregate amount of annual base
payments under all lease agreements for personal property, other than Capital
Leases, shall not exceed $100,000 for any fiscal year.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.1. Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
(a) Default in Payment of Principal of Loans and Reimbursement
Obligations. Any Borrower shall default in any payment of principal of any Loan
or Note or Reimbursement Obligation when and as due (whether at maturity, by
reason of acceleration or otherwise).
(b) Other Payment Default. Any Borrower shall default in the payment
when and as due (whether at maturity, by reason of acceleration or otherwise) of
interest on any Loan or Note or Reimbursement Obligation or the payment of any
other Obligation, and such default shall continue unremedied for five (5)
Business Days.
(c) Misrepresentation. Any representation or warranty made (or deemed
to be made pursuant to Section 5.3(a)) by any Borrower or any of Subsidiary
thereof under this Agreement, any Loan Document or any amendment hereto or
thereto, shall at any time prove to have been incorrect or misleading in any
material respect when made (or deemed made pursuant to Section 5.3(a)).
(d) Default in Performance of Certain Covenants. Any Borrower shall
default in the performance or observance of any covenant or agreement contained
in Sections 7.4(e) or Articles IX or X of this Agreement.
(e) Default in Performance of Other Covenants and Conditions. Any
Borrower or any Subsidiary thereof shall default in the performance or
observance of any term, covenant, condition or agreement contained in this
Agreement (other than as specifically provided for otherwise in this Section
11.1) or any other Loan Document and such default shall continue for
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a period of thirty (30) days after written notice thereof has been given to CCA
REIT by the Administrative Agent.
(f) Hedging Agreement. Any termination payment shall be due by any
Borrower under any Hedging Agreement and such amount is not paid within five (5)
Business Days of the due date thereof.
(g) Debt Cross-Default. Any Borrower or any Subsidiary thereof shall
(i) default in the payment of any Debt (other than the Notes or any
Reimbursement Obligation) the aggregate outstanding amount of which is in excess
of $250,000 beyond the period of grace if any, provided in the instrument or
agreement under which such Debt was created, or (ii) default in the observance
or performance of any other agreement or condition relating to any Debt (other
than the Notes or any Reimbursement Obligation) the aggregate outstanding amount
of which is in excess of $250,000 or contained in any instrument or agreement
evidencing, securing or relating thereto or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Debt (or a trustee or agent on
behalf of such holder or holders) to cause, with the giving of notice if
required, any such Debt to become due prior to its stated maturity (any
applicable grace period having expired).
(h) Other Cross-Defaults. (i) Any Borrower or any Subsidiary thereof
shall default in the payment when due, or in the performance or observance, of
any material obligation or condition (as determined by the Administrative Agent)
of (A) any Material Contract unless, but only as long as, the existence of any
such default is being contested by such Borrower or such Subsidiary in good
faith by appropriate proceedings and adequate reserves in respect thereof have
been established on the books of such Borrower or such Subsidiary to the extent
required by GAAP or (B) any Lease or (ii) any other default under any Lease by
CCA or any other party thereto.
(i) Change in Control or Senior Management. (i) Any person or group of
persons (within the meaning of Section 13(d) of the Securities Exchange Act of
1934, as amended) shall obtain ownership or control in one or more series of
transactions of more than nine percent (9%) of the voting power of CCA REIT
entitled to vote in the election of members of the board of directors of CCA
REIT or there shall have occurred under any indenture or other instrument
evidencing any Debt in excess of $250,000 any "change in control" (as defined in
such indenture or other evidence of Debt) obligating any Borrower to repurchase,
redeem or repay all or any part of the Debt or capital stock provided for
therein (any such event, a "Change in Control") or (ii) any of the Chairman of
the Board of Directors, Chief Executive Officer, President or Chief Development
Officer of CCA REIT as of the Closing Date ceases to continue to hold such
office or continue with management responsibilities substantially similar to
those existing on the Closing Date and a replacement for such Person reasonably
satisfactory to the Administrative Agent and possessing substantially similar
qualifications and reputation to the Person being replaced is not employed by
CCA REIT within ninety (90) days after such first Person ceases to hold such
office or continue to have such management responsibilities.
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(j) Voluntary Bankruptcy Proceeding. Any Borrower or any Subsidiary
thereof shall (i) commence a voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), (ii) file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii) consent
to or fail to contest in a timely and appropriate manner any petition filed
against it in an involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign, (v) admit in writing its inability to pay its debts as they
become due, (vi) make a general assignment for the benefit of creditors, or
(vii) take any corporate action for the purpose of authorizing any of the
foregoing.
(k) Involuntary Bankruptcy Proceeding. A case or other proceeding shall
be commenced against any Borrower or any Subsidiary thereof in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for any Borrower or any Subsidiary thereof or for all or any
substantial part of their respective assets, domestic or foreign, and such case
or proceeding shall continue undismissed or unstayed for a period of sixty (60)
consecutive days, or an order granting the relief requested in such case or
proceeding (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.
(l) Failure of Agreements. Any provision of any Loan Document (other
than this Agreement) shall for any reason cease to be valid and binding on any
Borrower or any Subsidiary thereof party thereto or any such Person shall so
state in writing, or any Loan Document (other than this Agreement) shall for any
reason cease to create a valid and perfected first priority Lien on, or security
interest in, any of the collateral purported to be covered thereby, in each case
other than in accordance with the express terms hereof or thereof.
(m) Termination Event. The occurrence of any of the following events:
(i) any Borrower or any ERISA Affiliate fails to make full payment when due of
all amounts which, under the provisions of any Pension Plan or Section 412 of
the Code, any Borrower or any ERISA Affiliate is required to pay as
contributions thereto, (ii) an accumulated funding deficiency in excess of
$250,000 occurs or exists, whether or not waived, with respect to any Pension
Plan or (iii) any Borrower or any ERISA Affiliate as employers under one or more
Multiemployer Plan makes a complete or partial withdrawal from any such
Multiemployer Plan and the plan sponsor of such Multiemployer Plans notifies
such withdrawing employer that such employer has incurred a withdrawal liability
requiring payments in an amount exceeding $250,000.
(n) Judgment. A judgment or order for the payment of money which causes
the aggregate amount of such judgments to exceed $250,000 in any Fiscal Year
shall be entered
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against any Borrower or any Subsidiary thereof by any court and such judgment or
order shall continue undischarged or unstayed for a period of thirty (30) days.
(o) Failure to Maintain Stock Exchange Listing. CCA REIT shall fail to
maintain each class of its capital stock as eligible for listing for trading on
the New York Stock Exchange once any such class of capital stock is initially
listed thereon.
SECTION 11.2. Remedies. Upon the occurrence of an Event of Default,
with the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by notice
to CCA REIT:
(a) Acceleration; Termination of Facilities. Declare the principal of
and interest on the Loans, the Notes and the Reimbursement Obligations at the
time outstanding, and all other amounts owed to the Lenders and to the
Administrative Agent under this Agreement or any of the other Loan Documents
(including, without limitation, all L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) and all other Obligations, to be forthwith due
and payable, whereupon the same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all of which are
expressly waived, anything in this Agreement or the other Loan Documents to the
contrary notwithstanding, and terminate the Credit Facility and any right of any
Borrower to request borrowings or Letters of Credit thereunder; provided, that
upon the occurrence of an Event of Default specified in Section 11.1(j) or (k),
the Credit Facility shall be automatically terminated and all Obligations shall
automatically become due and payable.
(b) Letters of Credit. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding paragraph, require the Borrowers at such
time to deposit in a cash collateral account opened by the Administrative Agent
an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied
by the Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay the
other Obligations. After all such Letters of Credit shall have expired or been
fully drawn upon, the Reimbursement Obligation shall have been satisfied and all
other Obligations shall have been paid in full, the balance, if any, in such
cash collateral account shall be returned to the Borrowers or such other Person
which may be entitled thereto.
(c) Rights of Collection. Exercise on behalf of the Lenders all of its
other rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Borrowers' Obligations.
SECTION 11.3. Rights and Remedies Cumulative; Non-Waiver; Etc. The
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent
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and the Lenders of any right or remedy shall not preclude the exercise of any
other rights or remedies, all of which shall be cumulative, and shall be in
addition to any other right or remedy given hereunder or under the Loan
Documents or that may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Administrative
Agent or any Lender in exercising any right, power or privilege shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or the exercise of
any other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between any Borrower, the Administrative
Agent and the Lenders or their respective agents or employees shall be effective
to change, modify or discharge any provision of this Agreement or any of the
other Loan Documents or to constitute a waiver of any Event of Default.
ARTICLE XII
THE ADMINISTRATIVE AGENT
SECTION 12.1. Appointment. Each of the Lenders hereby irrevocably
designates and appoints First Union as Administrative Agent of such Lender under
this Agreement and the other Loan Documents and each such Lender irrevocably
authorizes First Union as Administrative Agent for such Lender, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents (with the consent of the Required Lenders or all of the Lenders as
required pursuant to Section 13.10) and to exercise such powers and perform such
duties as are expressly delegated to the Administrative Agent by the terms of
this Agreement and such other Loan Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement or such other Loan Documents, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein and therein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against the Administrative Agent. The Administrative Agent
agrees that it shall administer the Loans and the Loan Documents in a manner
consistent with that ordinarily employed by the Administrative Agent in the
administration of similar loans for its own account.
SECTION 12.2. Delegation of Duties. The Administrative Agent may
execute any of its respective duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by the Administrative Agent with
reasonable care.
SECTION 12.3. Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be
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(a) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or the other Loan Documents
(except for actions occasioned solely by its or such Person's own gross
negligence or willful misconduct), or (b) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
any Borrower or any of Subsidiary thereof or any officer thereof contained in
this Agreement or the other Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or the other
Loan Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the other Loan Documents or
for any failure of any Borrower or any Subsidiary thereof to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of any Borrower or any
Subsidiary thereof.
SECTION 12.4. Reliance by the Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation reasonably believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Borrowers), independent accountants and other experts selected by
the Administrative Agent. The Administrative Agent may deem and treat the payee
of any Note as the owner thereof for all purposes unless such Note shall have
been transferred in accordance with Section 13.9 hereof. The Administrative
Agent shall be fully justified in failing or refusing to take any action under
this Agreement and the other Loan Documents unless it shall first receive such
advice or concurrence of the Required Lenders (or, when expressly required
hereby or by the relevant other Loan Document, all the Lenders) as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action except as a result of its own
gross negligence or willful misconduct. The Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and the Notes in accordance with a request of the Required Lenders
(or, when expressly required hereby, all the Lenders), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
SECTION 12.5. Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless it has received notice from a Lender or CCA REIT
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, it shall promptly give notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided that unless and until the Administrative Agent
shall have received such directions, the
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Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
SECTION 12.6. Non-Reliance on the Administrative Agent and Other
Lenders. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates has made any representations or
warranties to it and that no act by the Administrative Agent hereinafter taken,
including any review of the affairs of any Borrower or any Subsidiary thereof,
shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own evaluation of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrowers and their Subsidiaries and made its own
decision to make its Loans and issue or participate in Letters of Credit
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, evaluation
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of the Borrowers and their Subsidiaries. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder or by the other Loan Documents,
the Administrative Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of any
Borrower or any Subsidiary thereof which may come into the possession of the
Administrative Agent or any of its respective officers, directors, employees,
agents, attorneys-in-fact, Subsidiaries or Affiliates.
SECTION 12.7. Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such and (to the extent not reimbursed
by the Borrowers and without limiting the obligation of the Borrowers to do so),
ratably according to the respective amounts of their Commitment Percentages,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Notes or any Reimbursement Obligations) be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's bad faith, gross negligence or willful misconduct. The
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agreements in this Section 12.7 shall survive the payment of the Notes any
Reimbursement Obligation and all other amounts payable hereunder and the
termination of this Agreement.
SECTION 12.8. The Administrative Agent in Its Individual Capacity. The
Administrative Agent and its respective Subsidiaries and Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the Borrowers as though the Administrative Agent were not an Administrative
Agent hereunder. With respect to any Loans made or renewed by it and any Note
issued to it and with respect to any Letter of Credit issued by it or
participated in by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
SECTION 12.9. Resignation of the Administrative Agent; Successor
Administrative Agent. Subject to the appointment and acceptance of a successor
as provided below, the Administrative Agent may resign at any time by giving
notice thereof to the Lenders and CCA REIT. Upon any such resignation, the
Required Lenders (and, so long as no Default or Event of Default has occurred
and is continuing, with the consent of CCA REIT, which consent shall not be
unreasonably withheld or delayed) shall have the right to appoint a successor
Administrative Agent, which successor shall have minimum capital and surplus of
at least $500,000,000. If no successor Administrative Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the Administrative Agent's giving of notice of
resignation, then the Administrative Agent may, on behalf of the Lenders (and,
so long as no Default or Event of Default has occurred and is continuing, with
the consent of CCA REIT, which consent shall not be unreasonably withheld or
delayed), appoint a successor Administrative Agent, which successor shall have
minimum capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
Section 12.9 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.
SECTION 12.10 The Co-Agent. The Co-Agent, in its capacity as Co-Agent,
shall have no duties or responsibilities and no liabilities under this Agreement
or any other Loan Document.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Notices.
(a) Method of Communication. Except as otherwise provided in this
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service (next day delivery requested) or certified mail, return receipt
requested, and shall be presumed to be received by a party hereto (i) on the
date of delivery if delivered by hand or sent by telecopy, (ii) on the next
Business Day if sent by recognized overnight courier service and (iii) on the
third Business Day following the date sent by certified mail, return receipt
requested. A telephonic notice to the Administrative Agent as understood by the
Administrative Agent will be deemed to be the controlling and proper notice in
the event of a discrepancy with or failure to receive a confirming written
notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at
the following addresses, or any other address as to which all the other parties
are notified in writing.
If to any Borrower: CCA Prison Realty Trust
2200 Abbott Martin Road, Suite 201
Nashville, Tennessee 37215
Attention: D. Robert Crants, III
Telephone No.: (615) 460-1220
Telecopy No.: (615) 460-1206
With copies to: Stokes and Barthelomew, P.A.
SunTrust Center, Suite 2800
424 Church Street
Nashville, Tennessee 37219
Attention: Elizabeth E. Moore
Telephone No.: (615) 259-1450
Telecopy No.: (615) 259-1470
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If to First Union as
Administrative Agent:
First Union National Bank of
Tennessee
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina
28288-0608
Attention: Syndication Agency
Services
Telephone No.: (704) 383-0281
Telecopy No.: (704) 383-0288
and
First Union National Bank
of Tennessee
150 Fourth Avenue North
Nashville, Tennessee 37219
Attention: Tim Fouts
Telephone No.: (615) 251-9243
Telecopy No.: (615) 251-9461
If to any Lender: To the Address set forth on
Schedule 1.1 hereto
(c) Administrative Agent's Office. The Administrative Agent hereby
designates its office located at the address set forth above for First Union
National Bank of North Carolina, or any subsequent office which shall have been
specified for such purpose by written notice to the Borrowers and Lenders, as
the Administrative Agent's Office referred to herein, to which payments due are
to be made and at which Loans will be disbursed and Letters of Credit issued.
SECTION 13.2. Expenses; Indemnity. The Borrowers will (a) pay all
out-of-pocket expenses of the Administrative Agent in connection with: (i) the
preparation, execution and delivery of this Agreement and each other Loan
Document, whenever the same shall be executed and delivered, including without
limitation all out-of-pocket syndication and due diligence expenses and
reasonable fees and disbursements of counsel for the Administrative Agent and
(ii) the preparation, execution and delivery of any waiver, amendment or consent
by the Administrative Agent or the Lenders relating to this Agreement or any
other Loan Document, including without limitation reasonable fees and
disbursements of counsel for the Administrative Agent, (b) pay all out-of-pocket
expenses of the Administrative Agent and each Lender in connection with the
administration and enforcement of any rights and remedies of the Administrative
Agent and Lenders under the Credit Facility, including consulting with
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appraisers, accountants, engineers, attorneys and other Persons concerning the
nature, scope or value of any right or remedy of the Administrative Agent or any
Lender hereunder or under any other Loan Document or any factual matters in
connection therewith, which expenses shall include without limitation the
reasonable fees and disbursements of such Persons, and (c) defend, indemnify and
hold harmless the Administrative Agent and the Lenders, and their respective
parents, Subsidiaries, Affiliates, employees, agents, officers and directors,
from and against any losses, penalties, fines, liabilities, settlements,
damages, costs and expenses, suffered by any such Person in connection with any
claim, investigation, litigation or other proceeding (whether or not the
Administrative Agent or any Lender is a party thereto) and the prosecution and
defense thereof, arising out of or in any way connected with the Agreement, any
other Loan Document or the Loans, including without limitation reasonable
attorney's and consultant's fees, except to the extent that any of the foregoing
directly result from the gross negligence or willful misconduct of the party
seeking indemnification therefor.
SECTION 13.3. Set-off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the continuance
thereof, the Lenders and any assignee or participant of a Lender in accordance
with Section 13.9 are hereby authorized by the Borrowers at any time or from
time to time, without notice to any Borrower or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, time or demand, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured) and any other indebtedness at any time held or owing by the
Lenders, or any such assignee or participant to or for the credit or the account
of the Borrowers against and on account of the Obligations irrespective of
whether or not (a) the Lenders shall have made any demand under this Agreement
or any of the other Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 11.2 and although such Obligations shall be contingent or unmatured.
SECTION 13.4. Governing Law. This Agreement, the Notes and the other
Loan Documents, unless otherwise expressly set forth therein, shall be governed
by, construed and enforced in accordance with the laws of the State of North
Carolina, without reference to the conflicts or choice of law principles
thereof.
SECTION 13.5. Consent to Jurisdiction. Each Borrower hereby irrevocably
consents to the personal jurisdiction of the state and federal courts located in
Mecklenburg County, North Carolina, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, the Notes and the
other Loan Documents, any rights or obligations hereunder or thereunder, or the
performance of such rights and obligations. Each Borrower hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Administrative Agent or any Lender in
connection with this Agreement, the Notes or the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations, on behalf of itself or its property, in the manner specified in
Section 13.1. Nothing in this Section 13.5 shall affect the right of the
Administrative Agent or any Lender to serve legal process in any
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other manner permitted by Applicable Law or affect the right of the
Administrative Agent or any Lender to bring any action or proceeding against any
Borrower or its properties in the courts of any other jurisdictions.
SECTION 13.6. Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to the Notes or any other
Loan Documents ("Disputes"), between or among parties to the Notes or any other
Loan Document shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right of that
party to demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, claims brought as class actions, claims arising from
Loan Documents executed in the future, or claims concerning any aspect of the
past, present or future relationships arising out or connected with the Loan
Documents. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Charlotte, North Carolina. The expedited procedures set
forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation shall apply to
any Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted. Notwithstanding the foregoing, this paragraph shall not apply to any
Hedging Agreement that is a Loan Document.
(B) JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
ADMINISTRATIVE AGENT, EACH LENDER AND EACH BORROWER HEREBY IRREVOCABLY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR
OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT,
THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or personal property or
other security by exercising a power of sale granted in the Loan Documents or
under applicable law or by judicial foreclosure and sale, (ii) all rights of
self help including peaceful occupation of property, collection of rents and set
off, (iii) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and in
filing
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an involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
SECTION 13.7. Reversal of Payments. To the extent any Borrower makes a
payment or payments to the Administrative Agent for the ratable benefit of the
Lenders or the Administrative Agent receives any payment or proceeds of the
collateral which payments or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.
SECTION 13.8. Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by any
Borrower or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Administrative Agent to the
contrary agreed to by CCA REIT, be performed in accordance with GAAP as in
effect on the Closing Date. In the event that changes in GAAP shall be mandated
by the Financial Accounting Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by the Borrowers' certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Borrowers and
the Lenders shall have amended this Agreement to the extent necessary to reflect
any such changes in the financial covenants and other terms and conditions of
this Agreement.
SECTION 13.9. Successors and Assigns; Participations.
(a) Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the Borrowers, the Administrative Agent and the Lenders,
all future holders of the Notes, and their respective successors and assigns,
except that the Borrowers shall not assign or transfer any of their rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Assignment by Lenders. Each Lender may, with the consent of the
Administrative Agent and, so long as no Default or Event of Default has occurred
and is continuing (provided that no consents shall be required for assignments
to any Affiliate of such Lender or any other Lender), CCA REIT, which consents
shall not be unreasonably withheld, assign to one or more Eligible Assignees all
or a portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of the Extensions of Credit at
the time owing to it and the Notes held by it); provided that:
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(i) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and
obligations under this Agreement;
(ii) if less than all of the assigning Lender's Commitment is
to be assigned, the Commitment so assigned shall not be less than
$5,000,000;
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording
in the Register, an Assignment and Acceptance in the form of Exhibit G
attached hereto (an "Assignment and Acceptance"), together with any
Note or Notes subject to such assignment;
(iv) such assignment shall not, without the consent of CCA
REIT, require the Borrowers to file a registration statement with the
Securities and Exchange Commission or apply to or qualify the Loans or
the Notes under the blue sky laws of any state; and
(v) the assigning Lender shall pay to the Administrative Agent
an assignment fee of $2,500 upon the execution by such Lender of the
Assignment and Acceptance; provided that no such fee shall be payable
upon any assignment by a Lender to an Affiliate thereof.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) Rights and Duties Upon Assignment. By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
set forth in such Assignment and Acceptance.
(d) Register. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the amount of the Extensions of
Credit with respect to each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrowers, the Administrative Agent and the Lenders may treat each
person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Issuance of New Notes. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an Eligible Assignee together
with any Note or Notes subject to such assignment and the written consent to
such assignment, the Administrative Agent
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shall, if such Assignment and Acceptance has been completed and is substantially
in the form of Exhibit G:
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the Register;
(iii) give prompt notice thereof to the Lenders and CCA REIT;
and
(iv) promptly deliver a copy of such Assignment and Acceptance
to CCA REIT.
Within five (5) Business Days after receipt by CCA REIT of notice, the Borrowers
shall execute and deliver to the Administrative Agent, in exchange for the
surrendered Note or Notes, a new Note or Notes to the order of such Eligible
Assignee in amounts equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and a new Note or Notes to the order of the assigning
Lender in an amount equal to the Commitment retained by it hereunder. Such new
Note or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of the assigned Notes delivered to the assigning Lender. Each
surrendered Note or Notes shall be canceled and returned to CCA REIT.
(f) Participations. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Extensions of Credit and the Notes held by it); provided that:
(i) each such participation shall be in an amount not less
than $5,000,000;
(ii) such Lender's obligations under this Agreement
(including, without limitation, its Commitment) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by
it for all purposes of this Agreement;
(v) the Borrowers, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement;
(vi) such Lender shall not permit such participant the right
to approve any waivers, amendments or other modifications to this
Agreement or any other Loan
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Document other than waivers, amendments or modifications which would
reduce the principal of or the interest rate on any Loan or
Reimbursement Obligation, extend the term or increase the amount of the
Commitment, reduce the amount of any fees to which such participant is
entitled, extend any scheduled payment date for principal of any Loan
or, except as expressly contemplated hereby or thereby, release
substantially all of the collateral described in the Security
Documents; and
(vii) any such disposition shall not, without the consent of
CCA REIT, require the Borrowers to file a registration statement with
the Securities and Exchange Commission to apply to qualify the Loans or
the Notes under the blue sky law of any state.
(g) Disclosure of Information; Confidentiality. The Administrative
Agent and the Lenders shall hold all non-public information with respect to the
Borrowers obtained pursuant to the Loan Documents in accordance with their
customary procedures for handling confidential information. Any Lender may, in
connection with any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 13.9, disclose to the assignee,
participant, proposed assignee or proposed participant, any information relating
to the Borrowers furnished to such Lender by or on behalf of the Borrowers;
provided, that prior to any such disclosure, each such assignee, proposed
assignee, participant or proposed participant shall agree with the Borrowers or
such Lender to preserve the confidentiality of any confidential information
relating to the Borrowers received from such Lender.
(h) Certain Pledges or Assignments. Nothing herein shall prohibit any
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 13.10. Amendments, Waivers and Consents. Except as set forth
below, any term, covenant, agreement or condition of this Agreement or any of
the other Loan Documents may be amended or waived by the Lenders, and any
consent given by the Lenders, if, but only if, such amendment, waiver or consent
is in writing signed by the Required Lenders (or by the Administrative Agent
with the consent of the Required Lenders) and delivered to the Administrative
Agent and, in the case of an amendment, signed by the Borrowers; provided, that
no amendment, waiver or consent shall (a) increase the amount or extend the time
of the obligation of the Lenders to make Loans or issue or participate in
Letters of Credit (including without limitation pursuant to Section 2.7), (b)
extend the originally scheduled time or times of payment of the principal of any
Loan or Reimbursement Obligation or the time or times of payment of interest or
any fee on any Loan, Letter of Credit or Reimbursement Obligations, (c) reduce
the rate of interest or fees payable on any Loan or Reimbursement Obligations,
(d) permit any subordination of the principal or interest on any Loan or
Reimbursement Obligation, (e) extend the expiration date of any Letter of Credit
beyond the Revolving Termination Date, (f) release any material portion of the
collateral or release any Security Document (other than as specifically
permitted in this Agreement or the applicable Security Document), (g) amend
clause (i) of the proviso to Section 2.9 or (h) amend the provisions of this
Section 13.10 or the definition of Required Lenders, without the prior written
consent of each Lender. In addition, no amendment, waiver or consent to the
provisions of (a) Article XII shall be made without the
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written consent of the Administrative Agent and (b) Article III without the
written consent of the Issuing Lender.
SECTION 13.11. Performance of Duties. The Borrowers' obligations under
this Agreement and each of the Loan Documents shall be performed by the
Borrowers at their sole cost and expense.
SECTION 13.12. Joint and Several Liability; CCA Reit as Agent for
Borrowers.
(a) The Obligations of the Borrowers under this Agreement, the
Applications and the Notes shall be joint and several.
(b) Each Borrower hereby irrevocably appoints and authorizes CCA Reit
(i) to provide the Administrative Agent with all notices with respect to
Extensions of Credit obtained for the benefit of any Borrower and all other
notices and instructions under this Agreement and (ii) to take such action on
behalf of the Borrowers as CCA Reit deems appropriate on its behalf to obtain
Extensions of Credit and to exercise such other powers as are reasonably
incidental thereto to carry out the purposes of this Agreement.
SECTION 13.13. All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lenders, the Administrative Agent and
any Persons designated by the Administrative Agent or any Lender pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or the Credit Facility has not been
terminated.
SECTION 13.14. Survival of Indemnities. Notwithstanding any termination
of this Agreement, the indemnities to which the Administrative Agent and the
Lenders are entitled under the provisions of this Article XIII and any other
provision of this Agreement and the Loan Documents shall continue in full force
and effect and shall protect the Administrative Agent and the Lenders against
events arising after such termination as well as before.
SECTION 13.15. Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 13.16. Severability of Provisions. Any provision of this
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 13.17. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so
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executed shall be deemed to be an original and shall be binding upon all
parties, their successors and assigns, and all of which taken together shall
constitute one and the same agreement.
SECTION 13.18. Entire Agreement; Term of Agreement. This Agreement,
together with the other Loan Documents, constitutes the entire agreement with
respect to the subject matter hereof and supersedes all prior agreements with
respect to the subject matter hereof. This Agreement shall remain in effect from
the Closing Date through and including the date upon which all Obligations shall
have been indefeasibly and irrevocably paid and satisfied in full and the
Commitments terminated. No termination of this Agreement shall affect the rights
and obligations of the parties hereto arising prior to such termination.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, all as of the day and year first
written above.
[SEAL] CCA PRISON REALTY TRUST
By:________________________
Name:___________________
Title:__________________
[ADMINISTRATIVE AGENT AND LENDER SIGNATURES TO FOLLOW]
[Credit Agreement]
<PAGE> 88
EXHIBIT A-1
TO
CREDIT AGREEMENT DATED AS OF JULY 18, 1997
BY AND AMONG
CCA PRISON REALTY TRUST,
AND
CERTAIN SUBSIDIARIES THEREOF,
AS BORROWERS,
THE LENDERS PARTY THERETO,
FIRST UNION NATIONAL BANK OF TENNESSEE,
AS ADMINISTRATIVE AGENT,
AND
SOUTHTRUST BANK, N.A.,
AS CO-AGENT
FORM OF
REVOLVING CREDIT NOTE
<PAGE> 89
REVOLVING CREDIT NOTE
$ ________________ July ____, 1997
FOR VALUE RECEIVED, the undersigned, CCA PRISON REALTY TRUST, a
Maryland real estate investment trust ("CCA REIT"), and any Subsidiary of CCA
REIT that is joined as Borrower pursuant to the terms of the Credit Agreement
hereinafter referred to the "Borrowers"), hereby promise to pay to the order
of ______________________________________ (the "Bank"), at the times, at the
place and in the manner provided in the Credit Agreement hereinafter referred
to, the principal sum of up to ______________ Dollars ($_____________) or,
if less, the aggregate unpaid principal amount of all Revolving Credit Loans
disbursed by the Bank under the Credit Agreement referred to below, together
with interest at the rates as in effect from time to time with respect to each
portion of the principal amount hereof, determined and payable as provided in
Article IV of the Credit Agreement.
This Note is one of the Revolving Credit Notes referred to in, and is
entitled to the benefits of, the Credit Agreement dated as of July 18, 1997 (as
amended, restated or otherwise modified, the "Credit Agreement") by and among
the Borrowers, the lenders (including the Bank) who are or may become party
thereto (the "Lenders"), First Union National Bank of Tennessee, as
administrative agent for the Lenders (the "Administrative Agent") and SouthTrust
Bank, N.A., as Co-Agent. The Credit Agreement contains, among other things,
provisions for the time, place and manner of payment of this Note, the
determination of the interest rate borne by and fees payable in respect of this
Note, acceleration of the payment of this Note upon the happening of certain
stated events and the mandatory repayment of this Note under certain
circumstances.
The Borrowers agree to pay on demand all costs of collection, including
reasonable attorneys' fees, if any part of this Note, principal or interest, is
collected after maturity with the aid of an attorney.
Presentment for payment, notice of dishonor, protest and notice of protest
are hereby waived.
THIS NOTE IS MADE AND DELIVERED IN THE STATE OF NORTH CAROLINA AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NORTH CAROLINA.
[Signature page follows]
<PAGE> 90
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
under seal by a duly authorized officer as of the day and year first above
written.
CCA PRISON REALTY TRUST
[SEAL]
By:______________________
Name:_________________
Title:________________
<PAGE> 91
EXHIBIT A-2
TO
CREDIT AGREEMENT DATED AS OF JULY 18, 1997
BY AND AMONG
CCA PRISON REALTY TRUST,
AND
CERTAIN SUBSIDIARIES THEREOF,
AS BORROWERS,
THE LENDERS PARTY THERETO,
FIRST UNION NATIONAL BANK OF TENNESSEE,
AS ADMINISTRATIVE AGENT,
AND
SOUTHTRUST BANK, N.A.,
AS CO-AGENT
FORM OF
SWINGLINE NOTE
<PAGE> 92
SWINGLINE NOTE
$5,000,000 July ___, 1997
FOR VALUE RECEIVED, the undersigned, CCA PRISON REALTY TRUST, a
Maryland real estate investment trust ("CCA REIT"), and any Subsidiary of CCA
REIT that is joined as Borrower pursuant to the terms of the Credit Agreement
hereinafter referred to the "Borrowers"), hereby promise to pay to the order of
FIRST UNION NATIONAL BANK OF TENNESSEE (the "Bank"), at the times, at the place
and in the manner provided in the Credit Agreement hereinafter referred to, the
principal sum of up to Five Million Dollars ($5,000,000), or, if less, the
aggregate unpaid principal amount of all Swingline Loans disbursed by the Bank
under the Credit Agreement referred to below, together with interest at the
rates as in effect from time to time with respect to each portion of the
principal amount hereof, determined and payable as provided in Article IV of the
Credit Agreement.
This Note is the Swingline Note referred to in, and is entitled to the
benefits of, the Credit Agreement dated as of July 18, 1997 (as amended,
restated or otherwise modified, the "Credit Agreement") by and among the
Borrowers, the lenders (including the Bank) who are or may become party thereto
(the "Lenders"), First Union National Bank of Tennessee, as administrative agent
for the Lenders (the "Administrative Agent") and SouthTrust Bank, N.A., as
Co-Agent. The Credit Agreement contains, among other things, provisions for the
time, place and manner of payment of this Note, the determination of the
interest rate borne by and fees payable in respect of this Note, acceleration of
the payment of this Note upon the happening of certain stated events and the
mandatory repayment of this Note under certain circumstances.
The Borrowers agree to pay on demand all costs of collection, including
reasonable attorneys' fees, if any part of this Note, principal or interest, is
collected after maturity with the aid of an attorney.
Presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived.
THIS NOTE IS MADE AND DELIVERED IN THE STATE OF NORTH CAROLINA AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NORTH CAROLINA.
[Signature page follows]
<PAGE> 93
IN WITNESS WHEREOF, the Borrowers have caused this Note to be executed
under seal by a duly authorized officer as of the day and year first above
written.
CCA PRISON REALTY TRUST
[SEAL]
By: _______________________
Name:__________________
Title:_________________
<PAGE> 94
EXHIBIT B
to
Credit Agreement dated as of July 18, 1997,
by and among
CCA Prison Realty Trust,
and
certain Subsidiaries thereof,
as Borrowers,
the Lenders party thereto,
First Union National Bank of Tennessee,
as Administrative Agent,
and
SouthTrust Bank, N.A.,
as Co-Agent
FORM OF
NOTICE OF BORROWING
<PAGE> 95
NOTICE OF BORROWING
First Union National Bank
of Tennessee, As Administrative Agent
One First Union Center, TW-10
301 South College Street
Charlotte, NC 28288-0608
Attention: Syndication Agency
Services
Ladies and Gentlemen:
This irrevocable Notice of Borrowing is delivered to you under Section
2.3(a) of the Credit Agreement dated as of July 18, 1997 (as amended, restated
or otherwise modified, the "Credit Agreement"), by and among CCA Prison Realty
Trust ("CCA REIT") and any Subsidiary of CCA REIT that is joined as Borrower
pursuant to the terms of the Credit Agreement hereinafter referred to
(collectively, "the Borrowers"), the lenders who are or may become party
thereto (the "Lenders"), First Union National Bank of Tennessee, as
administrative agent for the Lenders (the "Administrative Agent") and SouthTrust
Bank, N.A., as Co-Agent.
1. CCA REIT, on behalf of the Borrowers hereby requests that the
Lenders make a Loan in the aggregate principal amount of $ (the
"Loan").(1)
2. CCA REIT, on behalf of the Borrowers hereby requests that the
Loan be made on the following Business Day: .(2)
3. CCA REIT, on behalf of the Borrowers hereby requests that the
Loan bear interest at the following interest rate, plus the Applicable Margin,
as set forth below:
Termination
Date for
Interest
Principal Period
Component of Interest Interest Period (if
Loan Rate (if applicable) applicable)
- ------------ -------- --------------- -----------
- --------------
(1) Complete with an amount in accordance with Section 2.3 of the
Credit Agreement.
(2) Complete with a Business Day in accordance with Section 2.3 of the
Credit Agreement.
<PAGE> 96
4. The principal amount of all Loans and L/C Obligations
outstanding as of the date hereof (including the requested Loan) does not
exceed the maximum amount permitted to be outstanding pursuant to the terms of
the Credit Agreement.
5. All of the conditions applicable to the Loan requested herein
as set forth in the Credit Agreement have been satisfied as of the date hereof
and will remain satisfied to the date of such Loan.
6. All capitalized undefined terms used herein have the meanings
assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Notice of
Borrowing this day of , .
CCA PRISON REALTY TRUST
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 97
EXHIBIT C
to
Credit Agreement dated as of July 18, 1997,
by and among
CCA Prison Realty Trust,
and
certain Subsidiaries thereof,
as Borrowers,
the Lenders party thereto,
First Union National Bank of Tennessee,
as Administrative Agent,
and
SouthTrust Bank, N.A.,
as Co-Agent
FORM OF
NOTICE OF PREPAYMENT
<PAGE> 98
NOTICE OF PREPAYMENT
First Union National Bank
of Tennessee, As Administrative Agent
One First Union Center, TW-10
301 South College Street
Charlotte, NC 28288-0608
Attention: Syndication Agency
Services
Ladies and Gentlemen:
This irrevocable Notice of Prepayment is delivered to you by CCA Prison
Realty Trust ("CCA REIT") and any Subsidiary of CCA REIT that is joined as
Borrower pursuant to the terms of the Credit Agreement hereinafter referred to
(collectively, the "Borrowers") under Section 2.4(d) of the Credit Agreement
dated as of July 18, 1997 (together with all amendments and other
modifications, if any, from time to time made thereto, the "Credit Agreement"),
by and among the Borrowers, the lenders who are or may become party thereto
(the "Lenders"), First Union National Bank of Tennessee, as administrative
agent for the Lenders (the "Administrative Agent") and SouthTrust Bank, N.A.,
as Co-Agent.
1. CCA REIT, on behalf of the Borrowers hereby provides notice to the
Administrative Agent that the Borrowers shall repay the following [Base Rate
Loans] and/or (LIBOR Rate Loans]: . (Complete in accordance with
---------
Section 2.4(d) of the Credit Agreement.)
2. CCA REIT, on behalf of the Borrower, hereby provides notice that
the Borrower shall repay the above referenced Loans on the following Business
Day: __________. (Complete in accordance with Section 2.4(d) of the Credit
Agreement.)
3. All capitalized undefined terms used herein have the meanings
assigned thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Prepayment this day of , .
------ ---------------- ------
CCA Prison Realty Trust
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 99
EXHIBIT D
to
Credit Agreement dated as of July 18, 1997,
by and among
CCA Prison Realty Trust,
and
certain Subsidiaries thereof,
as Borrowers,
the Lenders party thereto,
First Union National Bank of Tennessee,
as Administrative Agent,
and
SouthTrust Bank, N.A.,
as Co-Agent
FORM OF
NOTICE OF ACCOUNT DESIGNATION
<PAGE> 100
FORM OF
NOTICE OF ACCOUNT DESIGNATION
Dated ________
First Union National Bank
of Tennessee, as Administrative Agent
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you by CCA Prison
Realty Trust ("CCA REIT") and any Subsidiary of CCA REIT that is joined as
Borrower pursuant to the terms of the Credit Agreement hereinafter referred to
(collectively, the "Borrowers"), under Section 2.3 (b) of the Credit Agreement
dated as of July 18, 1997 (as amended, restated or otherwise modified, the
"Credit Agreement") by and among the Borrowers, the lenders who are or may
become party thereto (collectively, the "Lenders"), First Union National Bank
of Tennessee, as administrative agent for the Lenders (the "Administrative
Agent") and SouthTrust Bank, N.A., as Co-Agent.
The Administrative Agent is hereby authorized to disburse all Loan
proceeds into the following account(s):
[Insert name of bank/
ABA routing Number/
and Account Number]
IN WITNESS WHEREOF, the undersigned has executed this Notice of Account
Designation this ____ day of _____________, _____.
CCA PRISON REALTY TRUST
By: ________________________
Name: __________________
Title: _________________
<PAGE> 101
EXHIBIT E
to
Credit Agreement dated as of July 18, 1997,
by and among
CCA Prison Realty Trust,
and
CCA Prison Realty Trust Management Company,
as Borrowers,
the Lenders party thereto,
First Union National Bank of Tennessee,
as Administrative Agent,
and
SouthTrust Bank, N.A.,
as Co-Agent
FORM OF
NOTICE OF CONVERSION/CONTINUATION
<PAGE> 102
FORM OF
NOTICE OF CONVERSION/CONTINUATION
First Union National Bank
of Tennessee, Administrative Agent
One First Union Center, TW-10
301 S. College Street
Charlotte, NC 28288-0608
Attention: Syndication Agency Services
Ladies and Gentlemen:
This irrevocable Notice of Conversion/Continuation (the "Notice") is
delivered to you under Section 4.2 of the Credit Agreement dated as of July 18,
1997 (as amended, restated or otherwise modified, the "Credit Agreement"), by
and among CCA Prison Realty Trust ("CCA REIT") and any Subsidiary of CCA REIT
that is joined as Borrower pursuant to the terms of the Credit Agreement
hereinafter referred to (collectively, the "Borrowers"), the lenders who are or
may become party thereto (the "Lenders"), First Union National Bank of
Tennessee, as administrative agent for the Lenders (the "Administrative Agent")
and SouthTrust Bank, N.A., as Co-Agent.
1. This Notice of Conversion/Continuation is submitted for the
purpose of: (Complete applicable information.)
(a) [Converting] [continuing] a ________________ Loan [into]
[as] a __________________ Loan.(1)
(b) The aggregate outstanding principal balance of such Loan is
$__________.(2)
(c) The last day of the current Interest Period for such Loan is
______________.
(d) The principal amount of such Loan to be [converted] [continued]
is $_____________.(3)
(e) The requested effective date of the [conversion] [continuation]
of such Loan is _______________.(4)
(f) The requested Interest Period applicable to the [converted]
[continued] Loan is _________________.(5)
2. No Default or Event of Default exists, and none will exist upon
the conversion or continuation of the Loan requested herein.
<PAGE> 103
3. All capitalized undefined terms used herein have the meanings assigned
thereto in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Conversion/Continuation this ____ day of _________, 19__.
CCA Prison Realty Trust
By: _______________________________
Name: _________________________
Title: ________________________
1. Delete the bracketed language and insert "Base Rate", or "LIBOR Rate",
as applicable, in each blank.
2. Insert applicable date for any LIBOR Rate Loan being converted or
continued.
3. Complete with an amount in compliance with Section 4.2 of the Credit
Agreement.
4. Complete with a Business Day at least three (3) Business Days after the
date of this Notice.
5. Complete for any LIBOR Rate Loan with an Interest Period in compliance
with Section 4.1(b) of the Credit Agreement.
<PAGE> 104
EXHIBIT F
to
Credit Agreement dated as of July 18, 1997
by and among
CCA Prison Realty Trust,
and
certain Subsidiaries thereof,
as Borrowers,
the Lenders party thereto,
First Union National Bank of Tennessee,
as Administrative Agent,
and
SouthTrust Bank, N.A.,
as Co-Agent
FORM OF
OFFICER'S COMPLIANCE CERTIFICATE
<PAGE> 105
OFFICER'S COMPLIANCE CERTIFICATE
The undersigned, on behalf of CCA Prison Realty Trust, a Maryland real
estate investment trust ("CCA REIT"), and any Subsidiary of CCA REIT that is
joined as Borrower pursuant to the terms of the Credit Agreement hereinafter
referred to (collectively, the "Borrowers"), hereby certifies to First Union
National Bank of Tennessee, as administrative agent (the "Administrative Agent")
under the Credit Agreement referred to below, as follows:
1. This Certificate is delivered to you pursuant to Section 7.2 of the
Credit Agreement dated as of July 18, 1997 (as amended, restated or otherwise
modified, the "Credit Agreement"), by and among the Borrower, the lenders who
are or may become party thereto (the "Lenders"), the Administrative Agent and
SouthTrust Bank, N.A., as Co-Agent. Capitalized terms used herein and not
defined herein shall have the meanings assigned thereto in the Credit Agreement.
2. I have reviewed the financial statements of the Borrowers and their
Subsidiaries dated as of __________________ and for the ______________________
period[s] then ended and such statements fairly present the financial condition
of the Borrowers and their Subsidiaries as of the dates indicated and the
results of its operations and cash flows for the period[s] indicated.
3. I have reviewed the terms of the Credit Agreement, the Notes and the
related Loan Documents and have made, or caused to be made under my supervision,
a review in reasonable detail of the transactions and the condition of the
Borrowers and their Subsidiaries during the accounting period covered by the
financial statements referred to in Paragraph 2 above. Such review has not
disclosed the existence during or at the end of such accounting period of any
condition or event that constitutes a Default or an Event of Default, nor do I
have any knowledge of the existence of any such condition or event as at the
date of this Certificate [except, [if such condition or event existed or exists,
describe the nature and period of existence thereof and what action the
Borrowers have taken, are taking and propose to take with respect thereto]].
4. The Borrowers and their Subsidiaries are in compliance with the
covenants contained in Article IX of the Credit Agreement as shown on the
attached Schedule 1 and the Borrowers and their Subsidiaries are in compliance
with the other covenants and restrictions contained in Articles VIII and X of
the Credit Agreement.
[Signature page follows]
<PAGE> 106
WITNESS the following signatures as of the ____ day of _________, ____.
CCA Prison Realty Trust
By: _______________________________
Name: _________________________
Title: ________________________
<PAGE> 107
EXHIBIT G
to
Credit Agreement dated as of July 18, 1997
by and among
CCA Prison Realty Trust,
and
certain Subsidiaries thereof,
as Borrowers,
the Lenders party thereto,
First Union National Bank of Tennessee,
as Administrative Agent,
and
SouthTrust Bank, N.A.,
as Co-Agent
FORM OF
ASSIGNMENT AND ACCEPTANCE
<PAGE> 108
ASSIGNMENT AND ACCEPTANCE
Dated __________
Reference is made to the Credit Agreement dated as of July 18, 1997 (as
amended, restated or otherwise modified, the "Credit Agreement"), by and among
CCA Prison Realty Trust, a Maryland real estate investment trust ("CCA REIT"),
and any Subsidiary of CCA REIT that is joined as Borrower pursuant to the terms
of the Credit Agreement hereinafter referred to, (collectively, the
"Borrowers"), the lenders who are or may become party thereto (the "Lenders"),
First Union National Bank of Tennessee, as administrative agent for the Lenders
(the "Administrative Agent") and SouthTrust Bank, N.A., as Co-Agent.
Capitalized terms which are defined in the Credit Agreement and which are used
herein without definition shall have the same meanings herein as in the Credit
Agreement.
_______________________ (the "Assignor") and _________________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse, representation or warranty of any kind other than as specifically set
forth herein, and the Assignee hereby purchases and assumes from the Assignor,
as of the Effective Date (as defined below), a ____% interest (the "Assigned
Interest") in and to all of the Assignor's interests, rights and obligations
under the Credit Agreement and the Assignor thereby retains ____% of its
interest therein (the "Retained Interest"). This Assignment and Acceptance is
entered pursuant to, and authorized by, Section 13.9 of the Credit Agreement.
2. The Assignor (a) represents that, as of the date hereof, (i) its
Commitment Percentage (without giving effect to assignments thereof which have
not yet become effective) under the Credit Agreement, (ii) the outstanding
balance of its Loans (unreduced by any assignments thereof which have not yet
become effective) under the Credit Agreement, and (iii) the outstanding balance
of its Commitment Percentage of the L/C Obligations (unreduced by any
assignments thereof which have not yet become effective), are each set forth in
Section 2 of Schedule I hereto; (b) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto, other than that the Assignor
is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim; (c)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrowers or their Subsidiaries or the
performance or
<PAGE> 109
observance by the Borrowers or their Subsidiaries of any of their obligations
under the Credit Agreement or any other Loan Document; and (d) attaches the
Revolving Credit Note delivered to it under the Credit Agreement and requests
that the Borrowers exchange such Note for new Notes payable to each of the
Assignor and the Assignee as follows:
Revolving Credit Note
Payable to the order of: Principal Amount of Note:
------------------------ -------------------------
$
------------------------ ----------
$
------------------------ ----------
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 7.1 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (c)
agrees that it will, independently and without reliance upon the Assignor or
any other Lender or the Administrative Agent and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; (d)
in taking or not taking action under the Credit Agreement; (d) confirms that it
is an Eligible Assignee; (e) appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers under
the Credit Agreement and the other Loan Documents as are delegated to the agent
by the terms thereof, together with such powers as are reasonably incidental
thereto; (f) agrees that it will perform in accordance with their terms all the
obligations which by the terms of the Credit Agreement and the other Loan
Documents are required to be performed by it as a Lender; and (g) agrees that
it will keep confidential all non-public information with respect to the
Borrower obtained pursuant to the Loan Documents in accordance with Section
13.9(g) of the Credit Agreement.
4. The effective date for this Assignment and Acceptance shall be as
set forth in Section 1 of Schedule I hereto (the "Effective Date"). Following
the execution of this Assignment and Acceptance, it will be delivered to the
Administrative Agent for consent thereby and acceptance and recording in the
Registrar.
5. Upon such consents, acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and
the other Loan Documents to which Lenders are parties and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of
a Lender under each such agreement, and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
2
<PAGE> 110
released from its obligations under the Credit Agreement and the other Loan
Documents.
6. Upon such consents, acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the interest assigned hereby (including payments of principal, interest, fees
and other amounts) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE DEEMED TO BE A CONTRACT
UNDER SEAL AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
ASSIGNOR
-------------------------------------
COMMITMENT PERCENTAGE %
-------------
By:
----------------------------------
Title:
-------------------------------
ASSIGNEE
-------------------------------------
COMMITMENT PERCENTAGE %
-------------
By:
----------------------------------
Title:
-------------------------------
3
<PAGE> 111
ACKNOWLEDGED AND CONSENTED TO:
CCA PRISON REALTY TRUST
By:
----------------------------------
NAME:
--------------------------------
Title:
-------------------------------
CONSENTED TO AND ACCEPTED:
FIRST UNION NATIONAL BANK OF TENNESSEE,
AS ADMINISTRATIVE AGENT
By:
----------------------------------
NAME:
--------------------------------
Title:
-------------------------------
4
<PAGE> 112
Schedule I
----------
to
Assignment and Acceptance
-------------------------
1. Effective Date
-------------- ---------------, ----
2. Assignor's Interest
Prior to Assignment
-------------------
(a) Commitment Percentage %
of Assignor ---------
(b) Outstanding balance $
of Assignor's Loans ---------
(c) Outstanding balance of
Assignor's Commitment
Percentage of the L/C $
Obligations ---------
3. Assigned Interest
(from Section 1) %
----------------- ---------
4. Assignee's Extensions of Credit
After Effective Date
-------------------------------
(a) Outstanding balance of
Assignee's Loans $
(line 2(b) times lines 3) ---------
(b) Outstanding balance of Assignee's
Commitment Percentage of L/C
Obligations (line 2(c) times $
line 3) ---------
(c) Assignee's Extensions of Credit
After Effective Date
5. Retained Interest of Assignor after
Effective Date
-----------------------------------
(a) Retained Interest (from Section 1) %
---------
(b) Outstanding balance of Assignor's $
Loans (line 2(b) times line 5(a)) ---------
6. Payment Amounts
---------------
(a) Payable by Assignee to Assignor $
---------
(b) Payable by Assignor to Assignee $
---------
5
<PAGE> 113
7. Payment Instructions
--------------------
(a) If payable to Assignor,
to the account of Assignor to:
_______________________________
_______________________________
_______________________________
Routing No.:___________________
Account No.:___________________
Attn:__________________________
Reference:_____________________
(b) If payable to Assignee, to the account
of Assignee to:
_______________________________
_______________________________
_______________________________
Routing No.:___________________
Account No.:___________________
Attn:__________________________
Reference:_____________________
6
<PAGE> 114
with respect to any of the foregoing, including, without limitation, damages or
payments for past or future infringements of any of the foregoing; (d) the
right to sue for past, present and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of North Carolina; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than North Carolina, "UCC"
means the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect or
perfection or non-perfection.
"Vehicles" means all cars, trucks, trailers, construction and earth
moving equipment of any Grantor and other vehicles covered by a certificate of
title law of any state, and all tires and other appurtenances to any of the
foregoing.
SECTION 2. The Security Interests.
(a) In order to secure the Credit Agreement in accordance with the
terms thereof, and to secure the payment and performance of all of the Secured
Obligations, each Grantor hereby grants to the Administrative Agent, for the
ratable benefit of itself and the Lenders, a continuing security interest in
and to all of such Grantor's estate, right, title and interest in and to all of
the following property, whether now or hereafter owned or acquired by such
Grantor or in which such Grantor now have or hereafter have or acquire any
estate right, title or interest, and wherever located (collectively, along with
any other property of such Grantor which may from time to time secure the
Secured Obligations, the "Collateral"):
(i) Accounts;
(ii) Inventory;
(iii) Documents;
(iv) Equipment;
(v) Fixtures;
(vi) Instruments;
(vii) General Intangibles;
(viii) Vehicles;
6
<PAGE> 115
(ix) The Collateral Account, all cash deposited therein from
time to time, the investments made pursuant to Section 6 and other
monies and property of any kind of any Grantor in the possession or
under the control of the Administrative Agent or any Lender;
(x) All books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and other
computer materials and records) of the Grantor pertaining to any of the
Collateral;
(xi) All other goods and personal property of any Grantor,
whether tangible or intangible; and
(xii) All products and Proceeds of all or any of the Collateral
described in clauses (i) through (xi) hereof.
(b) The Security Interests are granted as security only and shall not
subject the Administrative Agent or any Lender to, or transfer to the
Administrative Agent or any Lender, or in any way affect or modify, any
obligation or liability of the Grantor with respect to any of the Collateral
or any transaction in connection therewith.
SECTION 3. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) Such Grantor has the corporate power and authority and the legal
right to execute and deliver, to perform its obligations under, and to grant
the Security Interests in the Collateral pursuant to, this Agreement and has
taken all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the Security interests on the Collateral pursuant
to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding and
obligation of such Grantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally.
(c) The execution, delivery and performance of this Agreement will not
violate any provision of any Applicable Law or contractual obligation of such
Grantor and will not result in the creation or imposition of any Lien on any of
the properties or revenues of such Grantor pursuant to any Applicable Law or
contractual obligation of such Grantor, except as contemplated hereby.
(d) No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any
other person (including, without limitation, any stockholder or creditor of
such Grantor), is required in connection
7
<PAGE> 116
with the execution, delivery, performance, validity or enforceability of this
Agreement, except those which have been obtained, UCC filings and required
notices under the Federal Assignment of Claims Act or any corresponding state
law.
(e) No actions, suits or proceedings are pending nor, to the knowledge
of such Borrower, are threatened against or in any other way relate adversely
to or affect such Grantor or any of its properties in any court or before any
arbitrator of any kind or before or by any Governmental Authority, which, if
adversely determined, are reasonably likely to have a Material Adverse Effect.
(f) Such Grantor has good and marketable title to all of its
respective collateral, free and clear of any Liens other than Permitted Liens
and as otherwise permitted by the Credit Agreement.
(g) Such Grantor has not performed any acts that would prevent or
hinder the Administrative Agent from enforcing any of the terms of this
Agreement. Other than financing statements or other similar or equivalent
documents or instruments with respect to Permitted Liens, no financing
statement, mortgage, security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral is on file or of record
in any jurisdiction. No Collateral is in the possession of any Person (other
than such Grantor) asserting any claim thereto or security interest therein,
except that the Administrative Agent or its designee may have possession of
Collateral as contemplated hereby.
(h) All of the information set forth in the Perfection Certificate is
true and correct in all material respects as of the Closing Date.
(i) With respect to the Intellectual Property of such Grantor which is
material to the conduct of its business:
(i) such Intellectual Property is subsisting and has not been
adjudged invalid or unenforceable, in whole or in part;
(ii) such Intellectual Property is valid and enforceable;
(iii) such Grantor has made all necessary filings and
recordations to protect its interest in such Intellectual Property,
including, without limitation, recordations of all of its interests in
the Patents and Trademarks in the United States Patent and Trademark
Office and its claims to the Copyrights in the United States Copyright
Office;
(iv) such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property and such Grantor has not received any
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written claim that the use of such Intellectual Property does not or
may violate the asserted rights of any third party; and
(v) such Grantor has performed all acts and has paid all
required fees and taxes to maintain each and every item of Intellectual
Property in full force and effect.
(j) The Financing Statements are in appropriate form and when filed in
the offices specified in the Perfection Certificate and upon payment of the
filing fees, the Security Interests will constitute valid and perfected
security interests in the Collateral, prior to all other Liens and rights of
others therein except for the Permitted Liens (to the extent that a security
interest therein may be perfected by filing pursuant to the UCC) and all
filings and other actions necessary or desirable to perfect and protect such
Security Interests have been duly taken.
(k) The Inventory, Fixtures, Equipment and Vehicles are insured in
accordance with the requirements hereof and of the Credit Agreement.
(l) All Inventory, if any, has or will have been produced in
substantial compliance in all material respects with the applicable
requirements of the Fair Labor Standards Act, as amended.
SECTION 4. Further Assurances; Covenants.
(a) General.
(i) No Grantor shall change the location of its chief
executive office or principal place of business in any state unless it shall
have given the Administrative Agent thirty (30) days prior written notice
thereof and executed and delivered to the Administrative Agent all financing
statements and financing statement amendments which the Administrative Agent
may reasonably request in connection therewith. No Grantor shall change the
locations where it keeps or holds any Collateral or any records relating
thereto from the applicable location described in the Perfection Certificate
unless such Grantor shall have given the Administrative Agent thirty (30) days
prior written notice of such change of location and executed and delivered to
the Administrative Agent all financing statements and financing statement
amendments which the Administrative Agent may reasonably request in connection
therewith; provided, however, that such Grantor may keep Inventory at, or in
transit to, any location described in the Perfection Certificate. No Grantor
shall in any event change the location of any Collateral if such change would
cause the Security Interests in such Collateral to lapse or cease to be
perfected.
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financing statements with respect to any consigned Inventory showing such
Grantor as debtor and the Administrative Agent as secured party; (D) after all
financing statements referred to in clauses (B) and (C) above shall have been
filed, conduct a search of all filings made against the Consignee in all
jurisdictions in which the Inventory to be consigned is to be located while on
consignment, and deliver to the Administrative Agent copies of the results of
all such searches; (E) notify, in writing, all creditors of the Consignee which
would be holders of security interests in the Inventory to be consigned that
such Grantor expects to deliver certain Inventory to the Consignee, all of
which Inventory shall be described in such notice by item or type, and (F) if
requested by the Administrative Agent, deliver an opinion of counsel to the
effect that all financing statements and amendments or supplements thereto,
continuation statements and other documents required to be recorded or filed in
order to perfect and protect the Security Interests and priority thereof
against all creditors of and purchasers of such Grantor and such Consignee have
been filed in each filing office necessary or desirable for such purposes and
that all filing fees and taxes, if any, payable in connection with such filings
have been paid in full.
(d) Equipment, Etc. With the exception of Equipment disposed of in accordance
with Section 10.6 of the Credit Agreement, each Grantor will maintain each item
of Equipment in the same condition, repair and working order as when acquired,
ordinary wear and tear excepted, and will provide all maintenance, service and
repairs necessary for such purpose and will promptly furnish to the
Administrative Agent a statement respecting any material loss or damage to any
of the Equipment in an amount in excess of $250,000.
(e) Intellectual property.
(i) Each Grantor shall notify the Administrative Agent promptly (a) of
its acquisition after the Closing Date of any Patent, Patent License, Trademark
or Trademark License and (b) if it knows, or has reason to know of any adverse
determination or development (including, without limitation, the institution
of, or any such determination or development in, any proceeding in the United
States Patent and Trademark Office or any court) regarding such Grantor's
ownership of any Patent or Trademark, its right to register the same, or to
keep and maintain the same. In no event shall any Grantor, either itself or
through any agent, employee or licensee, file an application for the
registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, unless promptly thereafter it informs the
Administrative Agent, and, promptly after issuance of such
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EXHIBIT I
to
Credit Agreement dated as of July 18, 1997
by and among
CCA prison Realty Trust,
and
certain Subsidiaries there,
as Borrowers,
the Lenders party thereto,
First Union National Bank of Tennessee,
as Administrative Agent,
and
SouthTrust Bank, N.A.,\as Co-Agent
FORM OF
DEED OF TRUST
<PAGE> 120
STATE OF
COUNTY OF
DEED OF TRUST
AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust") is
made and entered into as of the ______ day of July, 1997, by and among
CCA PRISON REALTY TRUST, a Maryland real estate investment trust, whose
address is 2200 Abbott Martin Road, Suite 201, Nashville, Tennessee
37215 ("Grantor");
_______________________, whose address is __________________________
("Trustee"); and
FIRST UNION NATIONAL BANK OF TENNESSEE, a national banking association,
as Administrative Agent for Lenders (as hereinafter defined), whose
address is 150 Fourth Avenue North, Nashville, Tennessee 37219
("Administrative Agent").
Statement of Purpose
Pursuant to the terms of that certain Credit Agreement of even date
herewith, as amended, restated or otherwise modified (the "Credit Agreement")
among the Grantor and any subsidiary thereof that is joined as a borrower
pursuant to the terms thereof (collectively with the Grantor, the "Borrowers"),
Administrative Agent, SouthTrust Bank, N.A., as Co-Agent and the lenders who are
or may become a party to the Credit Agreement (as therein defined, "Lenders"),
Lenders have agreed to extend certain credit facilities to Borrowers of up to
One Hundred Fifty Million Dollars ($150,000,000.00) as evidenced by the Notes
executed by Borrowers and payable to the order of Lenders. All of the promises,
terms, conditions, agreements and obligations imposed on Borrowers under the
Notes, the Letters of Credit, the Credit Agreement and the other Loan Documents
are to be secured by this Deed of Trust. Defined terms used herein, as indicated
by the initial capitalization thereof, shall have the meanings
<PAGE> 121
ascribed to such terms in the Credit Agreement, unless otherwise provided
herein.
NOW, THEREFORE, in order to secure the Obligations, and in
consideration of Lenders' agreement under the Credit Agreement to make the
Extensions of Credit to Borrowers and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
Borrower by these presents does (i) give, grant, bargain, sell, alienate,
remise, warrant, convey, release, confirm, assign, transfer and set over unto
Trustee, his heirs, successors and assigns, IN TRUST, WITH POWER OF SALE, for
the benefit and security of Administrative Agent, for the ratable benefit of
itself and Lenders, all of Grantor's right, title and interest in and to the
"Land" and the "Improvements" (collectively, the "Premises"), as described below
and any real or mixed property referred to in Paragraph E below, TO HAVE AND TO
HOLD same unto Trustee, and its successors and assigns forever and (ii) convey
and grant a security interest unto Administrative Agent, for the ratable benefit
of itself and Lenders, and their successors and assigns in all of Grantor's
right, title and interest in and to the "Equipment", the "Proceeds" and any
personal property referred to in Paragraph E below. The property and rights
(collectively, the "Property") subject to this Deed of Trust are as follows:
COLLATERAL IS OR INCLUDES FIXTURES
A. All of the right, title and interest of Grantor in and to the real
estate, as more specifically described in EXHIBIT A attached hereto, together
with all of Grantor's rights, title and interest under all easements, rights of
way, restrictive covenants, parking agreements, encroachment agreements,
licenses, streets, alleys, passages, walkways, strips of land, sewer rights,
waters, water courses, water privileges, tenements, hereditaments and other
appurtenances and rights, including, but not limited to, air rights, surface
rights and subsurface rights relating or appertaining to such real estate
(collectively, the "Land").
B. All facilities, buildings, structures, fixtures, improvements and
parking areas now or hereafter located on the Land and all replacements thereof
and additions thereto (collectively, the "Improvements"); without limiting the
foregoing, the term "Improvements" shall include: all buildings, components of
buildings, roads, streets, curbs, gutters,
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<PAGE> 122
sidewalks and pedestrian ways; all storm drainage, water systems, sewer systems,
electrical systems, gas systems and other utilities equipment; and all
improvements relating to easements appurtenant to the Land and landscaping,
whether or not located on the Land, which are necessary or appropriate to fully
benefit and serve the Improvements located on the Land.
C. All chattels, machinery, equipment, goods, construction materials
and articles of personal property now or hereafter attached to, incorporated in,
or located on the Premises or on appurtenant easements and used or usable in
connection with any present or future construction, operation or letting of the
Property or the activities at any time conducted therein or thereon which are
owned by Grantor (collectively, the "Equipment"), including, but not limited to,
any and all types of machinery and equipment, heating, venting and
air-conditioning, lighting, laundry, incinerating and power equipment and
machinery, plumbing, cleaning, smoke detention, fire prevention and fire
extinguishing systems, communications apparatus, sprinkler systems, gas and
electric fixtures, awnings, screens, window shades, storm doors and windows,
cabinets, ducts and compressors, rugs, carpets, draperies and linens, elevators,
escalators, pumps, motors, engines, conduits, dynamos, refrigerators, freezers,
incinerators, plants, flowers and shrubbery, and all other machinery, equipment,
appliances, fittings, furniture, furnishings, chattels and articles of
personalty of every kind and nature used in the operation of the Improvements
and structures now or hereafter situated on and constituting part of the
Property or on appurtenant easements, together with any and all replacements
thereof and additions thereto;
D. Any unearned insurance premiums and any insurance proceeds realized
from or as a result of Grantor's ownership or operation of any Property and any
and all awards, including interest thereon, heretofore and hereafter made to
Grantor for any taking by eminent domain, or by any proceeding or purchase in
lieu thereof, of the whole or any part of the Property, including any awards for
changes of grade of streets, which awards are hereby assigned to Administrative
Agent, for the ratable benefit of itself and Lenders, who is hereby authorized
to collect and receive the proceeds of such awards and to give proper receipts
and acquittances therefor and to apply the same to the Obligations, to the
extent hereinafter provided (all of the foregoing being referred to herein as
the "Proceeds");
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E. All the property of every kind and description, whether real,
personal or mixed, which at any time hereafter, by indenture or indentures
supplemental hereto, and by other instruments of transfer, may be expressly
conveyed, mortgaged or pledged, delivered, assigned or transferred to
Administrative Agent, for the ratable benefit of itself and Lenders, by or on
behalf of Grantor, as and for additional or substitute security for the
Obligations.
PROVIDED, HOWEVER, if the Obligations shall be paid and performed when
due and if Grantor shall keep, perform and observe each of the covenants,
agreements and provisions in this Deed of Trust to be kept, performed and
observed by Grantor, then this Deed of Trust and the estate and rights hereby
granted shall terminate and be of no further force and effect and the lien
created by this Deed of Trust shall be released, any and all costs associated
with such release to be borne by Grantor.
ARTICLE I
Representations, Warranties and
Covenants of Grantor
Grantor represents, warrants, and covenants with Trustee,
Administrative Agent and Lenders as follows
Section 1.01. Payment and Performance of Obligations. Grantor will pay
and perform when due the Obligations.
Section 1.02. Priority of Lien. This Deed of Trust is and, prior to the
performance and payment of the Obligations in full, shall remain a [first](1)
Lien on all of the Property, subject only to those matters in the title
insurance policy insuring the lien of the Deed of Trust as delivered as of the
date hereof which Administrative Agent has agreed to accept, excepting therefrom
all preprinted and/or standard exceptions (the "Permitted Exceptions") or
otherwise approved by Administrative Agent in advance. Grantor shall pay or
cause to be discharged within twenty (20) days after they shall be payable, or
shall make adequate provisions for the satisfaction or discharge of, all lawful
claims and demands of mechanics, laborers and materialmen
- --------------------
(1) To permit a second priority Lien where allowed under the Credit Agreement.
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which, if unpaid, might be a lien or charge on the Property (or any part
thereof) or the income therefrom.
Pursuant to the terms of the Credit Agreement, Lenders may be required
to make Extensions of Credit from time to time. This Deed of Trust secures the
payment of all present and future disbursements, including, without limitation,
any future loans, advances or readvances on a revolving basis which may be made
by Lenders pursuant to the Credit Agreement, and all of which disbursements
shall be equally secured with and of the same priority as any amounts advanced
on the date hereof. Although the amount of the Extensions of Credit, including
present and future obligations, which Lenders may make to Borrowers may decrease
or increase from time to time, the maximum amount which may be outstanding at
any time is One Hundred Fifty Million Dollars ($150,000,000.00) plus interest
thereon and any other charges, in addition to any disbursements made for the
payment of taxes, levies, or insurance on the Property, whether or not such
payments are obligatory or are made at the option of Administrative Agent on
behalf of Lenders, and any amounts owed to Lenders as a result of any Hedging
Agreement required pursuant to Section 8.15 of the Credit Agreement or for other
purposes as permitted by the terms of the Loan Documents, together with interest
on such disbursements as may be provided herein or therein. The period within
which such future advances may be made does not extend more than ten (10) years
beyond the date of this Deed of Trust.
Section 1.03. Intentionally Deleted.
Section 1.04. Adequate Access. The Improvements have adequate rights of
access to public ways.
Section 1.05. Parking. Parking sufficient to satisfy zoning
requirements for the utilization of the Improvements as intended and all
requirements of any Lease is available to the Premises by permanent easement or
otherwise and is encumbered by this Deed of Trust.
Section 1.06. Expenses. If any action or proceeding is commenced to
which Trustee, Administrative Agent or Lenders (or any of them) become or are
made a party arising out of or in connection with any of the Loan Documents or
the Extensions of Credit, or in which it becomes necessary to enforce, defend or
uphold the lien of this Deed of Trust, all court costs and
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<PAGE> 125
litigation costs (including, without limitation, attorneys' fees and expenses)
incurred by Trustee, Administrative Agent and Lenders shall be paid by
Borrowers, and any such sum shall be a lien on the Property, prior to any right,
or title to, interest in, or claim upon the Property attaching or accruing
subsequent to the lien of this Deed of Trust, and shall be deemed to be secured
by this Deed of Trust. In any action or proceeding to foreclose the lien of this
Deed of Trust or to recover, collect or compel the performance of the
Obligations, the provisions of law respecting the recovery of costs,
disbursements and allowances shall prevail unaffected by this covenant.
Section 1.07. Insurance.
(a) Grantor will maintain, or cause to be maintained, in full
force and effect all insurance coverage and policies required
to be maintained under the terms of the Credit Agreement or
any other Loan Document and as set forth herein. Insurance
coverage shall include:
(i) insurance against loss or damage to the Property
by fire, windstorm, tornado and hail and against
loss or damage by such other, further and
additional risks as may be now or hereafter
embraced by an "all risk" form insurance policy
with Extended Coverage Endorsement and
replacement cost broad form fire and collapse
insurance on the Property with a company or
companies approved by Administrative Agent and
with coverages and in form, content and amount
reasonably acceptable to Administrative Agent.
Such policy shall also extend coverage for acts
of vandalism and malicious mischief, without co-
insurance, in an amount equal to 100% of the
replacement cost of the Improvement. For
buildings equipped with automatic sprinkler
systems designed to discharge an extinguishing
agent, including, but not limited to, water,
chemicals or gas, such policy shall include
Sprinkler Leakage as a covered cause of loss;
(ii) for buildings equipped with boilers, heating and
ventilating systems, refrigeration equipment,
air conditioning units, pumps, compressors,
motors, blowers, generators, transformers and
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other types of heavy equipment, Administrative
Agent shall require Boiler and Machinery
Insurance to cover the sudden and accidental
breakdown of such equipment;
(iii) if any Improvements (now or hereafter existing)
on the Land are or will be located in an area
identified by the U.S. Department of Housing and
Urban Development or Federal Emergency
Management Agency as an area having "special
flood hazards", Grantor shall also furnish flood
insurance in the amount which is the lesser of
(A) the outstanding balance of the Extensions of
Credit or (B) the maximum limited of coverage
available under the National Flood Insurance Act
of 1968, the Flood Disaster Protection Act of
1973, and the Housing and Community Development
Acts of 1974 and 1977, all as amended;
(iv) such worker's compensation insurance as is
required by Applicable Law;
(v) rental loss insurance or loss of business income
insurance in an amount sufficient to compensate for
all rents or income at the Property and real estate
taxes and insurance premiums for a period of at
least (6) six months;
(vi) single limit comprehensive general public
liability insurance against claims for bodily
injury, death or property affording protection
in respect of injury or death to any person or
damage to property of any one owner, and in
respect of injury or death to more than one
person or damage to property of more than one
owner arising from any one accident or
occurrence, each to the limit required by
Administrative Agent; and
(vii) such other insurance on the Property or on any
replacements or substitutions thereof or
additions thereto as may from time to time be
required by Administrative Agent against other
insurable hazards or casualties which at the
time are commonly insured against in the case of
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<PAGE> 127
property similarly situated, including, without
limitation, Sinkhole, Mine Subsidence and
Earthquake insurance, due regard being given to
the height and type of buildings, their
construction, location, use and occupancy.
(b) During the term of the Credit Agreement, the premium on each
insurance policy described above shall be prepaid and the
policy term renewed annually in the same form and with at
least the same coverage as the preceding year, with
Administrative Agent to receive notice of renewal at least
thirty (30) days prior to expiration. Further, no such policy
shall be subject to cancellation, nonrenewal or reduction of
coverage unless the insurer has given Administrative Agent at
least thirty (30) days' prior written notice of such action.
All policies described herein must be issued by insurance
companies and agencies licensed by the Insurance Commission of
the State in which the Property is located to conduct business
in said State and approved by Administrative Agent.
Administrative Agent shall have the right to approve each and
every insurance carrier and policy.
(c) All policies shall include a standard, non-contributory
mortgagee clause naming Administrative Agent and/or Lenders
(as may be required) as additional insured under all liability
insurance policies, as [FIRST] mortgagee on all property
insurance policies and as the loss payee on all loss of rents
insurance policies. All policies shall be in form and content
as approved by Administrative Agent.
(d) All Insurance Proceeds under any insurance policies which are
payable by reason of damage, loss or destruction to any
portion of the Improvements during the term of the Credit
Agreement will be paid directly to Administrative Agent and
applied in accordance with Section 1.12 hereof.
Section 1.08. Removal of Improvements. No Improvements shall be
removed, demolished or materially altered without Administrative Agent's prior
written consent.
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Section 1.09. Security Interest. Grantor shall promptly execute and
cause to be filed (as directed by Administrative Agent) any and all documents,
including UCC Financing Statements (the "Financing Statements") pursuant to the
Uniform Commercial Code of the State in which the Property is located as now
enacted and subsequently amended from time to time (the "Code"), as may be
necessary, or as Administrative Agent may reasonably request, to preserve and
maintain the [first] lien priority of the interest created hereby on all
fixtures and personal property constituting part of the Property. Such Financing
Statements shall be filed in such places as Administrative Agent reasonably
determines. Grantor hereby authorizes and empowers Administrative Agent to
execute and file, on Grantor's behalf, all Financing Statements and refilings
and continuations thereof as Administrative Agent deems reasonably necessary or
advisable to perfect, preserve and protect Trustee's, Administrative Agent's and
Lenders' interest in such fixtures and personal property, and Grantor hereby
irrevocably appoints Administrative Agent as Grantor's agent and
attorney-in-fact (such appointment being coupled with an interest) so to do.
This Deed of Trust is deemed a "Security Agreement" (as defined in the Code)
and, with respect to the personal property encumbered by this Deed of Trust, the
remedies for any violation of the covenants, terms and conditions and agreements
contained in the Loan Documents shall be as prescribed (i) herein (Grantor
agreeing that all such personal property may be sold by Trustee as part of any
sale under his power of sale or any foreclosure sale provided for in Section
3.01(d) hereof), (ii) by Applicable Law or (iii) by the Code, all at
Administrative Agent's sole election.
Section 1.10. Sale; Liens; Subdivision. Except as permitted under the
Credit Agreement, any other Loan Document or in this Section, Grantor shall not,
directly or indirectly, sell, transfer, convey, lease or further encumber or
mortgage, whether voluntary, involuntary or by operation of law, or suffer or
permit the same, all or any part of the Property or any interest therein or in
Grantor. A taking of a portion of the Property by eminent domain (or a
conveyance in lieu thereof) will not be considered a violation of this Section
so long as (a) no portion of any Improvements are taken (or so conveyed); (b)
after such taking (or such conveyance) the Property still complies with all
Applicable Law (including all zoning and parking requirements); (c)
Administrative Agent, in the exercise of its reasonable judgment, determines
that such taking (or such conveyance) will not have a material adverse effect on
the operation or leasing of
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the Property; and (d) such taking (or such conveyance) will not give any tenant
the right to terminate its lease or abate its rent.
Except as otherwise provided in the Credit Agreement or any other Loan
Document, Grantor may sell, transfer, convey or otherwise dispose of obsolete,
damaged or dilapidated Equipment from time to time without Lender's prior
written consent, provided that such obsolete, damaged or dilapidated Equipment
is promptly replaced with new Equipment of like kind and number and being of a
quality and having a value comparable to the original (i.e., new) quality and
value of the Equipment disposed of.
Grantor shall not subdivide the Property, submit the Property, or any
portion thereof, to multiple form of ownership, or dedicate any portion of the
Property to public ownership, without the prior written consent of
Administrative Agent.
Section 1.11. Eminent Domain. Administrative Agent is hereby authorized
and empowered to settle, adjust or compromise any and all claims and rights
arising from any eminent domain or condemnation action relating to part or all
of the Property (or any interest therein) and to collect and receive the
proceeds relating to or arising therefrom (collectively, the "Condemnation
Proceeds"). Each entity which may hereafter exercise a power of eminent domain
or condemnation with respect to part or all of the Property is hereby authorized
and directed to pay Condemnation Proceeds directly to Administrative Agent, for
the ratable benefit of itself and Lenders, instead of to Grantor and
Administrative Agent jointly. In the event any entity which may hereafter
exercise a power of eminent domain or condemnation with respect to part or all
of the Property fails to disburse Condemnation Proceeds directly and solely to
Administrative Agent but disburses such Condemnation Proceeds instead either
solely to Grantor or to Grantor and Administrative Agent jointly, Grantor agrees
to immediately endorse and transfer such Condemnation Proceeds to Administrative
Agent. Upon the failure of Grantor to immediately endorse and transfer such
Condemnation Proceeds as aforesaid, Administrative Agent may execute such
endorsements or transfers for and in the name of Grantor, and Grantor hereby
irrevocably appoints Administrative Agent as Grantor's agent and
attorney-in-fact (such appointment being coupled with an interest) so to do. The
Condemnation Proceeds shall be applied to the Obligations in the manner set
forth in Section 4.5 of the Credit Agreement. If such taking by exercise of a
power of
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eminent domain or condemnation is not a violation of Section 1.10, then
Administrative Agent will disburse from that portion of the Condemnation
Proceeds, if any, remaining after the application of such proceeds pursuant to
the preceding sentence, an amount which it determines in its reasonable
discretion shall be necessary to allow Grantor to repair or restore the
Improvements to the condition (as near as possible) it was in prior to such
taking or conveyance, and Grantor shall promptly do so. In the event the
Condemnation Proceeds remaining after the application of such proceeds pursuant
to Section 4.5 of the Credit Agreement are not sufficient to fully restore the
Improvements to such condition, Grantor shall immediately upon demand by
Administrative Agent promptly deposit any such deficiency with Administrative
Agent to be disbursed in connection with such restoration. Such proceeds and
additional funds as supplied by Grantor will be disbursed in accordance with
procedures substantially similar to those set forth in the Credit Agreement for
the disbursement of the original proceeds of the Extensions of Credit. The
repair or restoration will be in accordance with plans and specifications
subject to Administrative Agent's reasonable approval and in compliance with all
Applicable Laws and in accordance with the timetable reasonably approved by
Administrative Agent.
Section 1.12. Insurance Proceeds.
(a) Administrative Agent is hereby authorized and empowered to
settle, adjust or compromise any claims or rights under any
insurance policies maintained pursuant to this Deed of Trust
and to collect and receive the proceeds from any such policy
or policies (collectively, the "Insurance Proceeds"). Each
insurance company is hereby authorized and directed to pay all
Insurance Proceeds directly to Administrative Agent, for the
ratable benefit of itself and Lenders, instead of to Grantor
and Administrative Agent jointly. In the event any insurance
company fails to disburse Insurance Proceeds directly and
solely to Administrative Agent but disburses such Insurance
Proceeds instead either solely to Grantor or to Grantor and
Administrative Agent jointly, Grantor agrees to immediately
endorse and transfer such Insurance Proceeds to Administrative
Agent. Upon the failure of Grantor to endorse and transfer
such Insurance Proceeds as aforesaid, Administrative Agent may
execute such
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endorsements or transfers for and in the name of Grantor, and
Grantor hereby irrevocably appoints Administrative Agent as
Grantor's agent and attorney-in-fact (such appointment being
coupled with an interest) so to do. The Insurance Proceeds
shall be applied to the Obligations in the manner set forth in
Section 4.5 of the Credit Agreement. If Administrative Agent
elects, in its sole discretion, to make the proceeds available
to Grantor in order to restore the Improvements, the
disbursement of such proceeds will be subject to such
reasonable restrictions and requirements as Administrative
Agent shall impose.
(b) Notwithstanding the provisions of Section 1.12(a) above,
so long as (i) that certain Master Agreement to Lease
dated ________, 1997 (the "Master Lease") and that
certain Lease Agreement dated _________, 1997 relating
to the Property (the "Supplemental Lease") (the Master
Agreement and the Supplemental Lease collectively
referred to as the "Leases") between Grantor and
Corrections Corporation of America, a Tennessee
corporation ("CCA"), are in full force and effect, (ii)
there has been no default under the Leases which was not
cured within any applicable cure period under the
Leases, (iii) CCA is unconditionally obligated to
restore the Property after the occurrence of the
applicable casualty, taking by right of eminent domain
or condemnation and to continue to lease the Property
without a permanent reduction in rent and (iv)
Administrative Agent determines in the exercise of its
reasonable discretion that CCA is financially able to
bear any costs of such rebuilding which are not covered
by the insurance proceeds or condemnation awards, then
if:
(i) no Default or Event of Default has occurred and is
continuing beyond any applicable grace period
under the Loan Documents; and
(ii) the Property can, in Administrative Agent's
judgment, with diligent restoration and repair, be
returned to a condition at least equal to the
condition thereof that existed prior to the
casualty or taking causing the loss or damage from
the earlier to occur of (1) six (6) months
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after receipt of insurance proceeds or condemnation
awards by either Grantor or Administrative Agent,
and (2) the Revolving Termination Date; and
(iii) all necessary Governmental Approvals can be
obtained to allow the rebuilding and the re-
occupancy of the Property as described in Section
(b)(ii) above; and
(iv) there are sufficient sums available through
insurance proceeds or condemnation awards and
contributions by Grantor or CCA, the full amount
of which shall at Administrative Agent's option
have been deposited with Administrative Agent, for
such restoration and repair (including, without
limitation, for any costs and expenses incurred by
Administrative Agent in administering said
restoration or repair); and
(v) Grantor so elects by written notice delivered to
Administrative Agent within five (5) days after
settlement of the aforesaid insurance or
condemnation claim,
then, Administrative Agent shall, solely for the
purposes of such restoration and repair, advance so
much of the remainder of such sums as may be
required for such restoration or repair and to
comply with Grantor's obligations under the terms
of Section 10.01 of the Master Lease, and any funds
deposited by Grantor or CCA therefore, to Grantor
in the manner and upon such terms and conditions as
would be required by a prudent interim construction
lender (but nevertheless in accordance with the
terms of Section 10.01 of the Master Lease),
including, but not limited to, the prior approval
by Administrative Agent of plans and
specifications, contractors and form of
construction contracts and the furnishing to
Administrative Agent of permits, bonds, lien
waivers, invoices, receipts and affidavits from
contractors and subcontractors in form and
substance satisfactory to Administrative Agent in
its discretion, with any remainder being distrib-
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uted to Grantor (except as otherwise provided in
the Master Lease). In addition, to the extent that
Administrative Agent receives any rental loss or
loss of business income insurance proceeds in
excess of amounts required to ensure no Default
occurs with respect to any payment becoming due and
payable under the Extensions of Credit for any
period of time in which CCA is not required to pay
rent due to the casualty or condemnation, and
provided further that all operating expenses of the
Property have been paid in full, then any such
excess shall be distributed by Administrative Agent
to Grantor (except as otherwise provided in the
Master Lease).
ARTICLE II
Possession and Administration
of the Property
Section 2.01. Impositions. (a) Grantor will pay or cause to be paid in
a timely manner all taxes, assessments and other charges now or hereafter levied
against the Property, or any part thereof, and also any and all license fees or
similar charges which may be imposed by the municipality in which the Premises
are situated for the use of walks, areas, air space, parking areas and other
space or facilities beyond the lot line and on or abutting the public sidewalks
in front of or adjoining the Premises, together with any penalties or interest
on any of the foregoing; and in the case of default in the payment thereof,
Administrative Agent may (but shall not be obligated to) pay the same and
Grantor will repay or cause to be repaid such sum with interest at the Default
Rate under the Credit Agreement, and such sum shall be added to the indebtedness
secured by this Deed of Trust.
(b) Grantor will not claim any credit on or make any deduction
from the interest or principal of the Obligations by reason of the payment of
any taxes levied or to be levied on the Property, or any part thereof, during
the continuance of the lien of this Deed of Trust.
Section 2.02. Warranty of Title. Grantor warrants that Grantor is
indefeasibly seized of the Property in fee simple absolute, free and clear from
all encumbrances (subject only to
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the Permitted Exceptions), and that Grantor has full power and lawful authority
to convey and encumber the same; that Grantor shall and will make, execute,
acknowledge and deliver all such further or other deeds, instruments or
assurances as may at any time hereafter be reasonably desired or required by
Administrative Agent to more fully and effectually convey the Property for the
purposes aforesaid unto the Trustee and his successors or assigns and unto all
and every person or persons deriving any estate, right, title or interest
therein under this Deed of Trust; and that Grantor will warrant and defend the
Property against all persons whomsoever, except for claims arising pursuant to
the Permitted Exceptions.
Section 2.03. Waste. Grantor will cause the Improvements now or
hereafter constructed on, and constituting part of, the Property to be protected
and to be kept in good order and repair and will not commit or suffer any waste,
deterioration or impairment of the Property whereby the value of the Property
might be materially impaired. In the event that such waste, deterioration or
impairment of the Property shall occur, which such waste, deterioration or
impairment is not promptly cured by Grantor, Administrative Agent may (but shall
not be obligated to) take such action as may be necessary to remedy such
condition and Grantor shall repay or cause to be repaid all costs and expenses
associated with such remedy with interest at the Default Rate under the Credit
Agreement, and such sum shall be added to the indebtedness secured by this Deed
of Trust.
Section 2.04. Inspection. Administrative Agent and any persons
authorized by Administrative Agent shall have the right to enter and inspect the
Property at all reasonable times.
Section 2.05. Compliance with Governmental Authorities. Grantor will
comply with or cause to be complied with, all statutes, ordinances and
requirements of any governmental authority relating to the Property. Grantor
will not initiate, join in, or consent to any change in any private restrictive
covenant, zoning ordinance or other public or private restrictions, limiting or
defining the uses which may be made of the Premises, or any part thereof,
without the prior written consent of Administrative Agent.
ARTICLE III
Remedies
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Section 3.01. Remedies. Upon the occurrence of an Event of Default, and
at any time thereafter during the continuance of such Event of Default, to the
extent permitted by Applicable Law, Administrative Agent may, and upon the
request of the Required Lenders shall, exercise any or all of the following
remedies:
(a) Administrative Agent may enter into and upon all or any
part of the Property and may exclude Grantor and its agents and servants wholly
therefrom, and having and holding the same may use, operate, develop, manage and
control the Property, or any part thereof, and conduct the business of Grantor,
including, without limitation, exercising any and all rights of Grantor under
the Leases (as defined in that certain Assignment of Rents, Leases and Profits
of even date herewith, as amended, restated or otherwise modified (the
"Assignment of Leases")) either personally, or by Administrative Agent's agents,
attorneys, receivers or trustees, in such manner as Administrative Agent may
deem to be to Administrative Agent's best advantage. To the extent permitted by
Applicable Law, Administrative Agent, or at Administrative Agent's direction,
Trustee, shall be entitled to collect and receive all Rents (as defined in the
Assignment of Leases), for the ratable benefit of itself and Lenders, or to
otherwise exercise all of Grantor's rights with respect to the Rents after
deducting all associated expenses, and all necessary repairs, maintenance,
renewals, replacements, alterations, additions, betterments and improvements,
and all payments which may be made for taxes, assessments, insurance and other
charges creating liens on the Property, or any part thereof, as well as
reasonable compensation for their own services and for the services of their
counsel, agents, clerks, servants and other employees by them properly engaged
and employed. Administrative Agent or Trustee, as the case may be, shall apply
the balance of the money derived from the operation and management of the
Property and business towards payment in full of the balance due on the
Obligations in the manner set forth in Section 4.5 of the Credit Agreement. The
surplus, if any, shall be paid to Grantor, its successors or assigns, or to
whomsoever as shall be lawfully entitled to receive same, or as a court of
competent jurisdiction may direct.
(b) Administrative Agent may bring an appropriate action to
recover any sums required to be paid by Grantor under the terms of the Loan
Documents, as they become due, without regard to whether or not the principal
indebtedness or any other sums evidenced by the Notes and secured by this Deed
of Trust
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<PAGE> 136
shall be due, and without prejudice to the right of Administrative Agent or
Trustee thereafter to bring an action of foreclosure, or any other action, for
any Event of Default by Grantor existing at the time the earlier action was
commenced.
(c) Administrative Agent may declare the Obligations to be
immediately due and payable, and unless same are paid or performed on demand,
Administrative Agent and Trustee may resort to any and all remedies provided in
any Loan Document or by law and in equity.
(d) Administrative Agent may cause the Trustee to foreclose
the lien of this Deed of Trust or to cause the Trustee to sell the Property by
power of sale.
Should Administrative Agent or the Required Lenders elect to have
Trustee foreclose the lien of this Deed of Trust or to sell the Property under
the power of sale herein contained, Administrative Agent shall so notify Trustee
and shall deposit with Trustee this Deed of Trust, the Notes, the Letters of
Credit and such receipts and evidence of expenditures as have been made and
secured hereby. Upon the direction of Administrative Agent, it shall be lawful
for and the duty of Trustee, and Trustee is hereby authorized and empowered, to
expose to sale and to sell the Property or any part thereof, at public auction
for cash, after having first complied with all applicable requirements of the
laws of the State in which the Property is located as may be in effect on the
date of commencement of said proceeding with respect to the exercise of powers
of sale contained in deeds of trust; and upon such sale, Trustee, or any officer
of any court empowered to do so, shall convey title to the purchaser in fee
simple. After retaining from the proceeds of such sale reasonable compensation
for Trustee's services and all expenditures incurred by Trustee, Trustee shall
apply the residue of the proceeds in the manner set forth in Section 4.5 of the
Credit Agreement. Grantor agrees that in the event of sale hereunder,
Administrative Agent, Lenders, or any of them shall be entitled to bid at such
sale. In the event a foreclosure is commenced under the power of sale contained
herein but such foreclosure is not completed, Grantor shall pay all expenses
incurred by Trustee, including attorneys' fees.
To the extent permitted by Applicable Law, the Property may be sold as
a whole or as separate parcels, and such sales may be conducted simultaneously
or otherwise, all as the Trustee, in its
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<PAGE> 137
reasonable discretion, deems to be in the best interest of the parties. To the
extent permitted by Applicable Law, should Trustee elect to sell the Property as
separate parcels, the exercise of the power of sale with respect to one or more
of such parcels shall not extinguish or otherwise affect the right to exercise
the power of sale with respect to the remainder of the Property. Further, in the
event the Property, or any portion thereof, is sold pursuant to any writ of
execution on a judgment obtained by virtue of any Loan Document or pursuant to
any other judicial proceedings under any Loan Document, the Property may be sold
as a whole or as separate parcels and in such manner or order as Administrative
Agent in its reasonable discretion may elect.
To the extent permitted by Applicable Law, any sale or sales made under
or by virtue of this Deed of Trust, whether under the power of sale hereby
granted or under or by virtue of any judicial proceedings, shall operate to
divest all right, title, interest, claim and demand whatsoever, either at law on
in equity, of Grantor in and with respect to the Property sold and shall be a
perpetual bar, both at law and in equity, against Grantor, its successors and
assigns, and against any and all persons claiming the Property, or any part
thereof, through or under Grantor.
(e) Administrative Agent may (and may cause Trustee to)
exercise any or all of the remedies available to a secured party under the Code,
including, but not limited to, selling, leasing or otherwise disposing of any
fixtures and personal property which is encumbered hereby at public sale, with
or without having such fixtures or personal property at the place of sale, and
upon such terms and in such manner as Administrative Agent may determine.
Administrative Agent and Lenders, or any of them, may be a purchaser at any such
sale of such fixtures or personal property.
(f) Administrative Agent may proceed to protect and enforce
Administrative Agent's and Lenders' rights under this Deed of Trust and any
other Loan Document by a suit or suits in equity or at law, whether for the
specific performance of any covenant or agreement, assistance in connection with
the execution of any power granted herein or other appropriate legal or
equitable remedy.
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<PAGE> 138
(g) Administrative Agent may apply to an appropriate court for
the appointment of a receiver of the Rents of the Property, and Administrative
Agent shall be entitled to the appointment of such a receiver as a matter of
right without consideration of the value of the Property as security for the
amounts due Administrative Agent and the Lenders or the solvency of any person
or entity liable for the payment of such amounts.
Section 3.02. Remedies Not Exclusive. Trustee, Administrative Agent and
Lenders, and each of them, shall be entitled to enforce payment and performance
of the Obligations secured hereby and to exercise all rights and powers under
this Deed of Trust or any other Loan Document or any laws now or hereafter
enforced, notwithstanding that some of the Obligations may now or hereafter be
otherwise secured. Neither the acceptance of this Deed of Trust nor its
enforcement, whether by court action or pursuant to the power of sale contained
herein or other powers set forth herein, shall prejudice or in any manner affect
Trustee's, Administrative Agent's or Lenders' right to realize upon or enforce
any other security now or hereafter held by Trustee, Administrative Agent or by
Lenders, it being agreed that Trustee, Administrative Agent and Lenders, and
each of them, shall be entitled to enforce this Deed of Trust and any other
security now or hereafter held by Administrative Agent, Lenders or Trustee in
such order and manner as they or either of them may in their absolute discretion
determine. No remedy herein conferred upon or reserved to Trustee,
Administrative Agent or Lenders is intended to be exclusive of any other remedy
herein or by Applicable Law provided or to preclude any other remedy herein or
by Applicable Law provided or permitted, but each such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity. Every power or remedy given by any of
the Loan Documents to Trustee, Administrative Agent or Lenders, or to which
either of them may be otherwise entitled, may be exercised concurrently or
independently from time to time and as often as may be deemed expedient by
Trustee, Administrative Agent or Lenders.
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<PAGE> 139
Section 3.03. Powers and Rights Not Waived. Any failure by
Administrative Agent or Lenders to insist upon the strict performance by Grantor
of any of the terms and provisions hereof shall not be deemed to be a waiver of
any of the terms and provisions hereof, and Administrative Agent and Lenders,
notwithstanding any such failure, shall have the right thereafter to insist upon
the strict performance by Grantor of any and all of the terms and provisions of
this Deed of Trust to be performed by Grantor. Neither Grantor nor any other
person now or hereafter obligated for the payment of the whole or any part of
the sums now or hereafter secured by this Deed of Trust shall be relieved of
such obligation by reason of the failure of Administrative Agent or Lenders to
comply with any request of Grantor, or of any other person so obligated, to take
action to foreclose this Deed of Trust or otherwise enforce any of the
provisions of this Deed of Trust or any obligations secured by this Deed of
Trust, or by reason of the release, regardless of consideration, of the whole or
any part of the security held for the indebtedness secured by this Deed of
Trust, or by reason of any agreement or stipulation between any subsequent owner
or owners of the Property and Administrative Agent extending the time of payment
or modifying the terms of the Obligations or of this Deed of Trust without first
having obtained the consent of Grantor or such other person, and in the latter
event, Grantor and all such other persons shall continue to be liable to make
such payments according to the terms of any such agreement of extension or
modification unless expressly discharged in writing by Administrative Agent.
Regardless of consideration, Administrative Agent may, or at the request of the
Required Lenders shall, release the obligation of any party at any time liable
for any of the Obligations without in any way impairing or affecting the lien
hereof, and Administrative Agent and Lenders may resort for the payment of the
Obligations to any other security therefor held by Administrative Agent and
Lenders in such order and manner as it may elect.
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<PAGE> 140
ARTICLE IV
Miscellaneous
Section 4.01. Notices. Any notice, demand or other communication which,
by any provision of this Deed of Trust, is required or permitted to be given or
served by or to Trustee, Administrative Agent, Lenders or Grantor shall be
conclusively deemed to have been properly given or served by the sending party
and to be effective if made in compliance with Section 13.1 of the Credit
Agreement.
Section 4.02. Severability. To the extent any provision of this Deed of
Trust may be deemed invalid or unenforceable under any Applicable Law, such
provision shall be deemed void and inoperative and shall not form part of this
Deed of Trust, but the remainder of this Deed of Trust shall remain in full
force and effect. The parties hereto specifically declare that they would have
entered into this Deed of Trust if any such void provisions had been omitted
herefrom.
Section 4.03. Governing Law. This Deed of Trust shall be deemed to be a
contract entered into pursuant to the laws of the State of North Carolina and
shall in all respects be governed by, construed and enforced in accordance with
the laws of the State of North Carolina, without reference to the conflicts or
choice of law principles thereof; provided, however, that with respect to the
creation, perfection, priority and enforcement of the lien or interest of this
Deed of Trust, the laws of the State where the Property is located shall apply.
Section 4.04. Stamp Tax Indemnity. Except as may be prohibited by
Applicable Law, if at any time the United States of America, any state thereof
or any governmental subdivision of such state having jurisdiction, shall require
revenue, excise or documentary stamps to be affixed to this Deed of Trust, or
other tax to be paid on or in connection therewith, Grantor will pay the same
with any interest or penalties imposed in connection therewith.
Section 4.05. Credit Agreement. The terms and provisions of the Credit
Agreement are incorporated in this Deed of Trust by reference.
Section 4.06. Successor Trustee. Administrative Agent shall at any time
have the irrevocable right to remove Trustee
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<PAGE> 141
herein named without notice or cause and to appoint a successor thereto by an
instrument in writing, duly acknowledged, in such form as may be required or by
law in the State in which the Property is located as to entitle such written
instrument to be recorded, if required; and in the event of the death,
incapacity or resignation of Trustee herein named, Administrative Agent shall
have the right to appoint a successor thereto by such written instrument, and
any Trustee so appointed shall be vested with title to the Property and shall
possess all the powers, duties and obligations herein conferred on Trustee in
the same manner and to the same extent as if originally named herein as Trustee.
Section 4.07. Binding Arbitration. Upon demand of any party, whether
made before or after institution of any judicial proceeding, any dispute, claim
or controversy arising out of, connected with or relating to the Notes, this
Deed of Trust or any other Loan Document ("Disputes"), between or among parties
to the Notes, this Deed of Trust or any other Loan Document shall be resolved by
binding arbitration as provided herein. Institution of a judicial proceeding by
a party does not waive the right of that party to demand arbitration hereunder.
Disputes may include, without limitation, tort claims, counterclaims, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims concerning any aspect of the past, present or future
relationships arising out or connected with the Loan Documents. Arbitration
shall be conducted under and governed by the Commercial Financial Disputes
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association and Title 9 of the U.S. Code. All arbitration hearings shall be
conducted in Charlotte, North Carolina. The expedited procedures set forth in
Rule 51, et seq. of the Arbitration Rules shall be applicable to claims of less
than $1,000,000. All applicable statutes of limitation shall apply to any
Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted. Notwithstanding the foregoing, this paragraph shall not apply to any
Hedging Agreement that is a Loan Document.
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<PAGE> 142
Section 4.08. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, GRANTOR HEREBY IRREVOCABLY WAIVES ITS RIGHTS TO A JURY TRIAL
WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS DEED OF TRUST, ANY RIGHTS OR OBLIGATION HEREUNDER OR
UNDER ANY OF THE LOAN DOCUMENTS, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. THIS WAIVER IS A MATERIAL INDUCEMENT TO ADMINISTRATIVE AGENT AND
LENDERS IN MAKING THE EXTENSIONS OF CREDIT.
23
<PAGE> 143
IN WITNESS WHEREOF, Grantor has caused this Deed of Trust to be
executed, sealed and delivered by its duly authorized representative all as of
the day and year first above written.
"GRANTOR"
CCA PRISON REALTY TRUST,
a Maryland real estate
investment trust [SEAL]
By:_____________________________________
Name:________________________________
Title:_______________________________
24
<PAGE> 144
[ADD APPROPRIATE NOTARY CLAUSE]
25
<PAGE> 145
EXHIBIT A
TO
DEED OF TRUST AND SECURITY AGREEMENT
* * * * * * * * * *
[Description of the real property]
<PAGE> 146
EXHIBIT J
to
Credit Agreement dated as of July 18, 1997
by and among
CCA Prison Realty Trust,
and
certain Subsidiaries thereof,
as Borrowers,
the Lenders party thereto,
First Union National Bank of Tennessee,
as Administrative Agent,
and
SouthTrust Bank, N.A.,
as Co-Agent
FORM OF
ASSIGNMENT OF RENTS, LEASES AND PROFITS
<PAGE> 147
ASSIGNMENT OF RENTS, LEASES AND PROFITS
THIS ASSIGNMENT OF RENTS, LEASES AND PROFITS (this
"Assignment") is executed and delivered as of the ____ day of July, 1997, by CCA
PRISON REALTY TRUST, a Maryland real estate investment trust, whose address is
2200 Abbott Martin Road, Suite 201, Nashville, Tennessee 37215 ("Assignor"), to
and in favor of FIRST UNION NATIONAL BANK OF TENNESSEE, a national banking
association, as Administrative Agent for Lenders (as hereinafter defined), whose
address is 150 Fourth Avenue North, Nashville, Tennessee 37219, its successors
or assigns ("Administrative Agent");
STATEMENT OF PURPOSE
Pursuant to the terms of that certain Credit Agreement among the
Assignor, Administrative Agent, SouthTrust Bank, N.A., as Co-Agent and the
lenders who are or may become a party to the Credit Agreement (as therein
defined, "Lenders") of even date herewith, as amended, restated or otherwise
modified (the "Credit Agreement"), Lenders have agreed to extend certain credit
facilities to the Borrowers of up to One Hundred Fifty Million Dollars
($150,000,000.00) as evidenced by the Notes executed by Borrowers and payable to
the order of Lenders. All of the defined terms used herein, as indicated by the
initial capitalization thereof, shall have the meanings ascribed to such terms
in the Credit Agreement unless otherwise provided herein. Repayment of Notes and
the Reimbursement Obligation is secured by, among other things, a certain
Deed of Trust and Security Agreement of even date herewith from the Assignor to
Trustee for the ratable benefit of Administrative Agent and Lenders (together
with any future restatements, amendments or modifications thereof, the "Deed
of Trust") which is a first Lien against the Land of the Assignor more
particularly described on EXHIBIT A attached hereto and incorporated herein by
reference.
Lenders, as a condition to making the Extensions of Credit and to
obtain additional security therefor, have required the Assignor to make the
assignment of certain additional property on the terms and conditions contained
herein.
<PAGE> 148
NOW THEREFORE, in order to further secure the payment of the
Obligations and in further consideration of the sum of TEN AND 00/l00 DOLLARS
($10.00) in hand paid to Assignor, the receipt and sufficiency of which are
hereby acknowledged, Assignor does hereby sell, assign, transfer and set over
unto Administrative Agent, for the ratable benefit of itself and Lenders, all of
its right, title and interest in and to and under (i) all leases, subleases, and
any other agreements however characterized and whether oral or in writing
pertaining to the occupancy or the use of all or any part of the Property (as
defined in the Deed of Trust) whether now in existence or arising hereafter
including all renewals, extensions and modifications of any of the foregoing
(collectively, the "Leases") and (ii) all income, accounts, cash, rents, issues,
profits, royalties, general intangibles, escrows, reserves, receivables,
deposits, concessions, rebates and other benefits from or pertaining to the
Property or related to the operation thereof, together with any and all other
amounts due or to become to Assignor with respect to the Property including all
payments and fees received or receivable from concessionaires operating on or in
the Property (collectively, the "Rents"). Assignor hereby agrees to execute and
deliver such further assignments of said Leases as Administrative Agent may from
time to time request.
This Assignment is absolute and effective immediately and without
possession; however, Assignor shall have a revocable license to receive, collect
and enjoy the Rents accruing from the Property until an Event of Default has
occurred. Upon the occurrence of an Event of Default, the license shall be
revoked automatically, without need of notice, possession, foreclosure or any
other act or procedure, and all Rents assigned hereby shall thereafter be
payable to Administrative Agent, for the ratable benefit of itself and Lenders.
PROVIDED ALWAYS, however, that if Assignor shall pay unto
Administrative Agent and Lenders the Obligations, and if Assignor shall duly,
promptly and fully perform, discharge, execute, effect, complete, comply with
and abide by each of the agreements, conditions and covenants of the Loan
Documents, then this Assignment and the estates and interests hereby granted and
created shall terminate.
1. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. In furtherance of the
foregoing assignment, Assignor:
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<PAGE> 149
A. represents and warrants that it is the owner in fee simple
of the Property and has good title to the Leases and Rents hereby assigned and
good right to assign the same, and that no other person, entity, firm or
corporation has any right, title or interest therein; that Assignor has not
previously sold, assigned, transferred, mortgaged or pledged said Leases and
Rents of the Property; and that payment of any of the same has not otherwise
been anticipated, waived, released, discounted, set off or otherwise discharged
or compromised;
B. agrees and warrants that, without the prior written consent
of Administrative Agent, the terms of any and all Leases will not be amended,
altered, modified or changed in a way that could be reasonably expected to have
an adverse effect (as determined by Administrative Agent) on Assignor, nor will
they be surrendered or canceled, nor will any proceedings for dispossession or
eviction of any lessee under said Leases be instituted by Assignor;
C. agrees and warrants that no request will be made of any
lessee to pay any Rent, and no rent will be accepted by Assignor, for more than
one (1) month in advance of the date such rent becomes due and payable under the
terms of any and all Leases, it being agreed by Assignor that rent shall be paid
as provided in said Leases and not otherwise;
D. authorizes Administrative Agent, by and through its
employees or agents or a duly appointed receiver, at its option, after the
occurrence of an Event of Default, to enter upon the Property and to collect, in
the name of Assignor, as its lawful attorney, or in its own name, for the
ratable benefit of itself and Lenders, any Rents accrued but unpaid or in
arrears at the date of such Event of Default, as well as the Rents thereafter
accruing and becoming payable during the period of the continuance of the said
Default or any other Event of Default; and to this end, Assignor further agrees
that it will cooperate with and facilitate, in all reasonable ways,
Administrative Agent's collection of said Rents and will, upon request by
Administrative Agent or the Required Lenders, execute a written notice to each
tenant, occupant or licensee directing said tenant, occupant or licensee to pay
directly to Administrative Agent on behalf of Lenders all Rents due and payable
under said Leases; provided, however, that such notice to said tenant, occupant
or licensee of the effectiveness of this Assignment may be provided without
giving notice to Assignor or requesting Assignor to give such notice or join in
such notice;
E. authorizes Administrative Agent, upon such entry, at its
option, to take over and assume the management, operation and maintenance of the
Property and to perform all acts necessary
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<PAGE> 150
and proper and to expend such sums out of the Rents of the Property as in
Administrative Agent's sole discretion may be reasonable or necessary in
connection therewith, in the same manner and to the same extent as Assignor
theretofore might do; Assignor hereby releases all claims against Administrative
Agent and Lenders arising out of such management, operation and maintenance;
F. agrees to execute, upon the request of Administrative
Agent, any and all other instruments requested by Administrative Agent to
effectuate this Assignment or to accomplish any other purpose deemed by
Administrative Agent to be necessary or appropriate in connection with this
Assignment; and
G. agrees and acknowledges that nothing in this Assignment
shall be construed to limit or restrict in any way the rights and powers granted
to Administrative Agent and Lenders in the other Loan Documents; and agrees that
the collection and application of the Rents as described herein shall not
constitute a waiver of any default which might at the time of application or
thereafter exist under any of the other Loan Documents, and the exercise by
Administrative Agent and Lenders, or any of them, of the rights herein provided
shall not prevent Administrative Agent's or Lenders', or any of their, exercise
of any rights provided under any of the other Loan Documents.
2. RIGHTS FOLLOWING DEFAULT BY BORROWERS. Administrative Agent may, and
upon the request of the Required Lenders shall, after the occurrence of an Event
of Default, from time to time, appoint and dismiss such agents or employees as
shall be necessary or reasonable for the collection of the Rents derived from
the Property and for the proper care and operation of the Property, and Assignor
hereby grants to Administrative Agent the authority to give such agents or
employees so appointed full and irrevocable authority on Assignor's behalf to
manage the Property and to do all acts relating to such management, including,
without limitation, the entry into and execution of new leases in the name of
Assignor or otherwise, the alteration or amendment of existing leases, the
authorization to repair or replace any items necessary in order to maintain the
building or buildings and chattels incidental thereto in good and tenantable
condition, and the effectuation of such alterations or improvements as in the
judgment of Administrative Agent may be reasonable or necessary to maintain or
increase the income from the Property. Administrative Agent shall have the sole
control of such agents or employees, whose remuneration shall be paid out of the
Rents as hereinabove provided, at the rate of compensation accepted in the
community wherein the Property is situated.
4
<PAGE> 151
3. APPLICATION BY ADMINISTRATIVE AGENT OF NET INCOME FROM THE PROPERTY.
Administrative Agent shall, after payment of all proper charges and expenses
enumerated under Paragraph 2 above, credit the net income received by
Administrative Agent from the Property, by virtue of this Assignment, to any
amounts due and owing to Administrative Agent and Lenders by the Borrowers under
and pursuant to the terms of the Loan Documents in the manner set forth in
Section 4.5 of the Credit Agreement. Administrative Agent shall make a
reasonable effort to collect Rents, reserving, however, within its sole
discretion, the right to determine the method of collection and the extent to
which enforcement of the collection of delinquent Rents shall be prosecuted.
Notwithstanding the foregoing, no such credit shall be given by Administrative
Agent for any sum or sums received from the Rents until the sums collected are
actually received by Administrative Agent at its principal office as stated
above (or at such other place as Administrative Agent shall designate in
writing), and no credit shall be given for any uncollected Rents nor shall
credit be given for any Rents under any order of court or by operation of law
until such amounts are actually received by Administrative Agent at its
principal offices as stated above. The net amount of Rents received by
Administrative Agent hereunder and applied by Administrative Agent to the
amounts due and owing by the Borrowers shall not serve to cure any default under
any of the other Loan Documents, nor shall any amounts received by
Administrative Agent hereunder be in full satisfaction of the Obligations unless
such amounts are sufficient to pay such Obligations in full (including any
prepayment premiums, late payment charges and advancements) in accordance with
the terms of the other Loan Documents.
4. LIMITATION OF LIABILITY. Neither Administrative Agent or Lenders
shall be obligated to perform or discharge any obligation under the Leases
hereby assigned or under or by reason of this Assignment, and Assignor hereby
agrees to indemnify and hold Administrative Agent and Lenders harmless against
any and all liability, loss or damage which Administrative Agent and Lenders, or
any of them, might incur under the Leases or under or by reason of this
Assignment and of and from any and all claims and demands whatsoever which may
be asserted against Administrative Agent and Lenders, or any of them, by reason
of any alleged obligation or undertaking on Administrative Agent's, Lenders' or
any of their part to perform or discharge any of the terms of such Leases,
except for claims and demands arising by reason of Administrative Agent's,
Lenders' or any of their gross negligence or willful misconduct.
5. REINSTATEMENT AFTER DEFAULT. In the event that Borrowers shall, with
the consent of Administrative Agent, reinstate the Obligations completely in
good standing, having
5
<PAGE> 152
complied with all the terms, covenants and conditions of the Loan Documents,
then, in such event, Administrative Agent or Lenders, as the case may be, shall
return possession of the Property to Assignor, and Assignor shall remain in
possession of the Property unless and until another Event of Default occurs, at
which time Administrative Agent may, or at the request of the Required Lenders
shall, again take possession of the Property under authority of and pursuant to
the terms and provisions of this Assignment.
6. TENANT'S NOTIFICATION OF ASSIGNMENT. Upon request by Administrative
Agent, at any time, Assignor will deliver a written notice to each of the
tenants and lessees of the Property, which notice shall inform such tenants and
lessees of this Assignment and instruct them that upon receipt of notice by them
from Administrative Agent of the existence of an Event of Default, all Rent due
thereafter shall be paid directly to Administrative Agent, for the ratable
benefit of itself and Lenders.
7. SATISFACTION OF DEED OF TRUST; SATISFACTION OF ASSIGNMENT. This
Assignment shall remain in full force and effect as long as the Obligations
remain unpaid in whole or in part. A complete release or satisfaction of the
Deed of Trust shall operate as a complete release or satisfaction of all of
Administrative Agent's and Lenders' rights and interest hereunder.
8. CAPTIONS. The captions set forth at the beginning of the various
paragraphs of this Assignment are for convenience only and shall not be used to
interpret or construe the provisions of this Assignment.
9. MISCELLANEOUS.
A. The provisions of this Assignment shall inure to the
benefit of Administrative Agent and Lenders, and their respective successors and
assigns, and shall be binding upon Assignor, its heirs, personal
representatives, successors and assigns. The creation of rights and powers under
this Assignment in favor of, or available to, Administrative Agent and Lenders,
or any of them, shall, in no way whatsoever, be construed to impose concomitant
duties or obligations on Administrative Agent and Lenders, or any of them, in
favor of Assignor except as expressly set forth herein.
B. This Assignment shall be deemed to be a contract entered
into pursuant to the laws of the State of North Carolina and shall in all
respects be governed by, construed and enforced in accordance with the laws of
the State of North Carolina,
6
<PAGE> 153
without reference to the conflicts or choice of law principles thereof;
provided, however, that with respect to the creation, perfection priority and
enforcement of this Assignment, the laws of the state where the Property is
located shall apply.
C. Upon demand of any party, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to the Notes, this Assignment or any
other Loan Document ("Disputes"), between or among parties to the Notes, this
Assignment or any other Loan Document shall be resolved by binding arbitration
as provided herein. Institution of a judicial proceeding by a party does not
waive the right of that party to demand arbitration hereunder. Disputes may
include, without limitation, tort claims, counterclaims, claims brought as class
actions, claims arising from Loan Documents executed in the future, or claims
concerning any aspect of the past, present or future relationships arising out
or connected with the Loan Documents. Arbitration shall be conducted under and
governed by the Commercial Financial Disputes Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association and Title 9 of the
U.S. Code. All arbitration hearings shall be conducted in Charlotte, North
Carolina. The expedited procedures set forth in Rule 51, et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted. Notwithstanding the foregoing, this paragraph
shall not apply to any Hedging Agreement that is a Loan Document.
D. TO THE EXTENT PERMITTED BY APPLICABLE LAW, ASSIGNOR HEREBY
IRREVOCABLY WAIVES ITS RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM
OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
ASSIGNMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR UNDER ANY OF THE LOAN
DOCUMENTS, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THIS WAIVER IS A
MATERIAL INDUCEMENT TO ADMINISTRATIVE AGENT AND LENDERS IN MAKING THE EXTENSIONS
OF CREDIT.
7
<PAGE> 154
IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed,
sealed and delivered by its duly authorized representative all as of the day and
year first above written.
"ASSIGNOR"
CCA PRISON REALTY TRUST, a Maryland real
estate investment trust
[SEAL]
By:_____________________________________
Name:___________________________________
Title:__________________________________
8
<PAGE> 155
[ADD APPROPRIATE NOTARY CLAUSE]
9
<PAGE> 156
EXHIBIT A
TO
ASSIGNMENT OF RENTS, LEASES AND PROFITS
BY
CCA PRISON REALTY TRUST
IN FAVOR OF
FIRST UNION NATIONAL BANK OF TENNESSEE, AS ADMINISTRATIVE AGENT
**********
[Description of the real property]
10
<PAGE> 157
SCHEDULE 1.1(b)
<TABLE>
<CAPTION>
Revolving
Credit Commitment
Lender Commitment Percentage
- ------ ----------- ----------
<S> <C> <C>
First Union National Bank $30,000,000 20.000000000%
of Tennessee
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attn: Syndication Agency Services
Telephone: (704) 383-0281
Telecopy: (704) 383-0288
and
First Union National Bank
Of Tennessee
150 Fourth Avenue North
Nashville, Tennessee 37219
Attn: Tim Fouts
Telephone: (615) 251-9243
Telecopy: (615) 251-9461
SouthTrust Bank, National Association $25,000,000 16.6666666667%
420 North 20th Street
Birmingham, Alabama 35203
Attn: Jim Sloan
Telephone: (205) 254-5870
Telecopy: (205) 254-8270
AmSouth Bank $20,000,000 13.3333333333%
333 Union Street, #200
Nashville, Tennessee 37201
Attn: Dan Andrews
Telephone: (615) 291-5259
Telecopy: (615) 291-5257
</TABLE>
[Credit Agreement]
<PAGE> 158
<TABLE>
<CAPTION>
<S> <C> <C>
CIBC Inc. $15,000,000 10.0000000000%
Two Paces West
2727 Paces Ferry Road, Ste. 1200
Atlanta, Georgia 30339
Attn: Roger Colden
Telephone: (770) 319-4902
Telecopy: (770) 319-4954
Comerica Bank $15,000,000 10.0000000000%
9th Floor MC 3280
500 Woodward Avenue
Detroit, Michigan 48226
Attn: Kristine L. Andersen
Telephone: (313) 222-3648
Telecopy: (313) 222-3330
First Tennessee Bank $10,000,000 6.6666666667%
511 Union Street
2nd Floor
Nashville, Tennessee 37219
Attn: Laurie D. Gilreath
Telephone: (615) 734-6216
Telecopy: (615) 734-6148
Mercantile Bank, National Association $10,000,000 6.6666666667%
721 Locust Street, TRAM 12-3
St. Louis, Missouri 63101
Attn: Donald A. Adam
Telephone: (314) 425-2420
Telecopy: (314) 425-3859
Union Planters National Bank $10,000,000 6.6666666667%
620 Poplar Avenue, 4th Floor
Memphis, Tennessee 38119
Attn: Victoria E. Docauer
Telephone: (901) 580-5507
Telecopy: (901) 580-5451
</TABLE>
[Credit Agreement]
<PAGE> 159
<TABLE>
<CAPTION>
<S> <C> <C>
Bank Hapoalim, B.M. $10,000,000 6.6666666667%
1515 Market Street
Philadelphia, Pennsylvania 19102
Attn: Ellen Frank
Telephone: (215) 665-2200
Telecopy: (215) 665-2217
Bank of Scotland $5,000,000 3.3333333333%
111 Riverside Avenue, Suite 230
Jacksonville, Florida 32202
Attn: Hugh Van Seaton
Telephone: (904) 353-7766
Telecopy: (904) 353-7833
------------ ------------
$150,000,000 100%
</TABLE>
[Credit Agreement]
<PAGE> 160
SCHEDULE 6.1(a)
Jurisdictions of Organization and Qualification
(CCA Prison Realty Trust)
Organization: Maryland
Qualification: Tennessee
Kansas
<PAGE> 161
SCHEDULE 6.1(b)
Subsidiaries and Capitalization
Subsidiaries: None
Capitalization:
As Adjusted(2)
(dollars in thousands)
Preferred Shares, $0.01 par value, 10,000,000 shares
authorized, no shares issued and outstanding $ -0-
Common Shares, $0.01 par value, 90,000,000 shares
authorized, 1,000 shares issued and outstanding;
18,801,000 shares, as adjusted, issued and
outstanding(1) 188
Additional paid-in capital 361,017
========
Total shareholders' equity 361,205
--------
Total capitalization $361,205
========
(1) Does not include 1,850,000 Common Shares reserved for issuance pursuant to
the Company's Share Incentive Plan or the Company's Non-Employee Trustees'
Plan of which 1,075,000 shares will be outstanding upon consummation of
the Offering.
(2) Includes (i) 1,000 founder's shares, and (ii) 300,000 shares issued to D.
Robert Crants, III and Michael W. Devlin as a development fee and as
reimbursement for certain expenses incurred in connection with the
promotion and formation of the Company and the consummation of the
offering which are valued based upon the initial public offering price.
<PAGE> 162
SCHEDULE 6.1(b)
Environmental Matters
Matters shown on the following reports and all amendments and supplements
thereto:
1. Project: Laredo Processing Center, Laredo, Texas
Date: April, 1997
Prepared By: Resources Consultants
2. Project: Central Arizona Detention Center, Florence, Arizona
Date: April 12, 1997
Prepared By: Continental Envirotech, Inc. and signed by
Chad VanMoorlehem, Director of Operations
3. Project: Mineral Wells, Texas Facility
Date: April, 1997
Prepared By: LCA Environmental, Inc. and executed by Y. Lynn Clark,
REM and Greg D. Dixon
4. Project: T. Don Hutto Correctional Center, Taylor, Texas
Date: May, 1995 ESA, updated April 16, 1997, and May, 1995
Wetlands Study
Prepared By: Update: Rust Environment & Infrastructure, Inc. and
executed by Charles E. Hall, Project Manager
5. Project: Houston Processing Center, Houston, Texas
Date: April, 1997
Prepared By: Resource Consultants
6. Project: West Tennessee Detention Facility, Mason, Tennessee
Date: April, 1997
Prepared By: Resource Consultants, Inc.
<PAGE> 163
7. Project: Bridgeport, Texas Facility, Bridgeport, Texas
Date: April, 1997
Prepared by: LCA Environmental, Inc., executed by Y. Lynn Clark,
REM and Greg D. Dixon
8. Project: Correctional Facility, Youngstown, Ohio
Date: April 16, 1997
Prepared by: Resource International Engineering Consultants and
executed by Michelle L. Jones, Staff Geologist and
Christopher Merklin, P.E., Director-Geotechnical/
Environmental Engineering
9. Project: CCA Eloy Detention Center, Eloy, Arizona
Date: April 16, 1997
Prepared by: Continental Envirotech, Inc.
10. Project: Leavenworth Correctional Facility, Leavenworth, Kansas
Date: April 18, 1997
Prepared by: Terracon Environmental, Inc. and executed by Brian A.
Huff, Project Geologist and Douglas L. Lemley, CHMM,
Project Manager
<PAGE> 164
SCHEDULE 6.1(I)
ERISA Plans
None.
<PAGE> 165
SCHEDULE 6.1(l)
Material Contracts
None.
<PAGE> 1
EXHIBIT 10.20
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of July 18, 1997
is executed by CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("CCA REIT"), and any Subsidiary of CCA REIT that is joined as Borrower pursuant
to the terms of the Credit Agreement hereinafter referred to (collectively, the
"Grantors"), in favor of FIRST UNION NATIONAL BANK OF TENNESSEE, a national
banking association organized under the laws of the United States, as
administrative agent (the "Administrative Agent") for the benefit of itself and
the financial institutions (the "Lenders") as are, or may from time to time
become, parties to the Credit Agreement referred to below.
STATEMENT OF PURPOSE
Pursuant to the Credit Agreement of even date (as amended, restated or
otherwise modified the "Credit Agreement"), by and among the Grantors, as
Borrowers, the Lenders party thereto, the Administrative Agent and SouthTrust
Bank, N.A., as Co-Agent, such Lenders have agreed to extend certain credit
facilities to the Borrowers.
The extensions of credit provided for under the Credit Agreement have
been and will be made for the purposes of, among other things, financing
certain acquisitions of certain Correctional Facilities as described in the
Credit Agreement, and funding ongoing working capital and general corporate
requirements, and paying approved fees and expenses related to the transactions
contemplated in the Credit Agreement.
In order to induce the Lenders and the Administrative Agent to enter
into the Credit Agreement, and as a condition to the making of any extensions of
credit thereunder, the Lenders require that the Grantors grant a continuing
security interest in and to the "Collateral" (as hereinafter defined) to secure
the "Secured Obligations" (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein, when used in this Agreement including its preamble and
recitals, shall have the respective meanings provided for in the Credit
Agreement. The following additional terms, when used in this Agreement, shall
have the following meanings:
"Account Debtor" means any Person who is or may become obligated to any
Grantor under, with respect to, or on account of, an Account.
<PAGE> 2
"Accounts" means all "accounts" (as defined in the UCC) now or
hereafter owned or acquired by any Grantor or in which any Grantor now or
hereafter has or acquires any right or interest, and, in any event, shall also
include, without limitation, all accounts receivable, contract rights, book
debts, notes, drafts and other obligations or indebtedness owing to any Grantor
arising from the sale, lease, consignment or exchange of goods or other property
by it or property to be sold, leased, consigned or exchanged, or the performance
of services by it, or to be performed, and all of such Grantor's rights to any
goods, services or other property represented by any of the foregoing (including
returned or repossessed goods and unpaid sellers' rights of rescission,
replevin, reclamation and rights to stoppage in transit) and all monies due to
or to become due to such Grantor under all contracts for the sale, lease,
consignment or exchange of goods or other property or the performance of
services by it (whether or not yet earned by performance on the part of such
Grantor), in each case whether now in existence or hereafter arising or
acquired, including, without limitation, the right to receive the proceeds of
such contracts and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.
"Accounts Aging Report" means a detailed aged trial balance of all
Accounts existing as of a specified date, specifying the names, addresses, face
value and dates of invoices of each Account Debtor obligated on any Accounts so
listed, delivered pursuant to Section 4(b)(vi) hereof.
"Collateral" shall have the meaning given thereto in Section 2(a)
hereof.
"Collateral Account" means a cash collateral account established by the
Grantors with the Administrative Agent, in the name and under the exclusive
dominion and control of the Administrative Agent, pursuant to Section 6.
"Copyright License" means any written agreement now or hereafter in
existence granting to any Grantor any right to use any Copyright.
"Copyrights" means, collectively, all of the following of any Grantor:
(a) all copyrights, rights and interests in copyrights, works protectable by
copyright, copyright registrations and copyright applications, including without
limitation any thereof referred to on Schedule II hereto; (b) all renewals of
any of the foregoing; (c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing or with respect to any
of the foregoing, including, without limitation, damages or payments for past or
future infringements of any of the foregoing; (d) the right to sue for past,
present and future infringements of any of the foregoing; and (e) all rights
corresponding to any of the foregoing throughout the world.
2
<PAGE> 3
"Documents" means all "documents" (as defined in the UCC) or other
receipts of any Grantor covering, evidencing or representing goods.
"Equipment" means all "equipment" (as defined in the UCC) of any
Grantor and all other machinery, equipment and goods (other than Inventory) of
any Grantor used or bought for use primarily in the business of such Grantor,
including all accessions, additions, attachments, improvements, substitutions
and replacements thereto and therefor.
"Financing Statements" shall mean the Uniform Commercial Code Form
UCC-1 Financing Statements executed by the Grantor with respect to the
Collateral and to be filed in the jurisdictions set forth in the Perfection
Certificate.
"Fixtures" shall mean all "fixtures" (as defined in the UCC) of any
Grantor.
"General Intangibles" means all "general intangibles" (as defined in
the UCC) of any Grantor, including without limitation, all rights to
indemnification, and all rights, title and interest which any Grantor may now or
hereafter have in or under all contracts (other than contracts described in the
definition of Accounts), agreements (including without limitation, all
agreements executed by the Grantor in connection with or relating to any
acquisition permitted under the Credit Agreement), permits, licenses, causes of
action, franchises, tax refund claims, customer lists, Intellectual Property,
license royalties, goodwill, trade secrets, data bases, business records, and
all other intangible property of every kind and nature.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the UCC) of any Grantor, including, without
limitation, instruments, chattel paper and letters of credit evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts, including (but not
limited to) promissory notes, drafts, bills of exchange and trade acceptances.
"Intellectual Property" means, collectively, all of the following of
any Grantor: (a) all systems software and applications software, including, but
not limited to, screen displays and formats, program structures, sequence and
organization, all documentation for such software, including, but not limited
to, user manuals, flowcharts, programmer's notes, functional specifications, and
operations manuals, all formulas, processes, ideas and know-how embodied in any
of the foregoing, and all program materials, flowcharts, notes and outlines
created in connection with any of the foregoing, whether or not patentable or
copyrightable, (b) concepts, discoveries, improvements and ideas, (c)
3
<PAGE> 4
any useful information relating to the items described in clause (a) or (b),
including know-how, technology, engineering drawings, reports, design
information, trade secrets, practices, laboratory notebooks, specifications,
test procedures, maintenance manuals, research, development, manufacturing,
marketing, merchandising, selling, purchasing and accounting, (d) Patents,
Patent rights and Patent applications, Copyrights and Copyright applications,
Trademarks, Trademark rights, trade names, trade name rights, service marks,
service mark rights, applications for registration of Trademarks, trade names
and service marks, and Trademark, trade name and service mark registrations and
Patent Licenses, Trademark Licenses, Copyright Licenses, and (e) other licenses
to use any of the items described in the foregoing clauses (a), (b), (c) and (d)
or any other similar items of any Grantor necessary for the conduct of its
business.
"Inventory" means all "inventory" (as defined in the UCC) of any
Grantor, including without limitation, all raw materials, inventory and other
materials and supplies, work-in-process, finished goods, all accessions thereto,
documents therefor and any products made or processed therefrom and all
substances, if any, commingled therewith or added thereto.
"Patent License" means any written agreement now or hereafter in
existence granting to any Grantor any right to use any invention on which a
Patent is in existence.
"Patents" means, collectively, all of the following of any Grantor: (a)
all patents and patent applications including all patentable inventions; (b) all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing; (c) all income, royalties,
damages or payments now or hereafter due and/or payable under any of the
foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing; (d) the right to sue for past, present and future infringements of
any of the foregoing; and (e) all rights corresponding to any of the foregoing
throughout the world.
"Perfection Certificate" means a certificate dated as of even date
herewith, setting forth the corporate names, chief executive office or principal
place of business in each state and other current locations of each Grantor
(including each manufacturing plant, if applicable) and such other information
as the Administrative Agent deems pertinent to the perfection of security
interests, completed and supplemented with the schedules and attachments
contemplated thereby to the reasonable satisfaction of the Administrative Agent,
and duly certified by the chief executive, chief financial officer of the
Borrower.
"Permitted Investments" means investments described in Section 10.4
of the Credit Agreement.
4
<PAGE> 5
"Permitted Liens" means all such Liens respecting the Collateral
permitted pursuant to Section 10.3 of the Credit Agreement.
"Proceeds" means all proceeds (as defined by the UCC) of, and all other
profits, rentals or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or
realization upon, Collateral, including, without limitation, all claims of the
Grantor against third parties for loss of, damage to or destruction of, or for
proceeds payable under, or unearned premiums with respect to, policies of
insurance in respect of, any Collateral, and any condemnation or requisition
payments with respect to any Collateral and the following types of property
acquired with cash proceeds: Accounts, Inventory, Documents, Fixtures,
Instruments, General Intangibles, Equipment and Vehicles.
"Secured Obligations" means the Obligations as defined in the Credit
Agreement and any renewals or extensions of any of the Obligations.
"Security Interests" means the security interests granted pursuant to
Section 2, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"Schedule of Inventory" means a schedule of Inventory based upon each
Grantor's most recent physical inventory and its perpetual inventory records,
showing each Grantor's cost of all such Inventory with a monthly reconciliation
to the general ledger inventory account of such Grantor, as may be requested by
the Administrative Agent or the Required Lenders pursuant to Section 4(c)(i)
hereof.
"Trademark License" means any written agreement now or hereafter in
existence granting to any Grantor any right to use any Trademark.
"Trademarks" means, collectively, all of the following of any Grantor:
(a) all Trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, other business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any state thereof or any other country or any political
subdivision of any thereof, including without limitation any thereof referred to
on Schedule I hereto; (b) all reissues, extensions and renewals of any of the
foregoing; (c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing or
5
<PAGE> 6
with respect to any of the foregoing, including, without limitation, damages or
payments for past or future infringements of any of the foregoing; (d) the right
to sue for past, present and future infringements of any of the foregoing; and
(e) all rights corresponding to any of the foregoing throughout the world.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of North Carolina; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than North Carolina, "UCC"
means the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
"Vehicles" means all cars, trucks, trailers, construction and earth
moving equipment of any Grantor and other vehicles covered by a certificate of
title law of any state, and all tires and other appurtenances to any of the
foregoing.
SECTION 2. The Security Interests.
(a) In order to secure the Credit Agreement in accordance with the
terms thereof, and to secure the payment and performance of all of the Secured
Obligations, each Grantor hereby grants to the Administrative Agent, for the
ratable benefit of itself and the Lenders, a continuing security interest in and
to all of such Grantors' estate, right, title and interest in and to all of the
following property, whether now or hereafter owned or acquired by the Grantor or
in which such Grantor now have or hereafter have or acquire any estate right,
title or interest, and wherever located (collectively, along with any other
property of such Grantor which may from time to time secure the Secured
Obligations, the "Collateral"):
(i) Accounts;
(ii) Inventory;
(iii) Documents;
(iv) Equipment;
(v) Fixtures;
(vi) Instruments;
(vii) General Intangibles;
(viii) Vehicles;
6
<PAGE> 7
(ix) The Collateral Account, all cash deposited therein from time to
time, the investments made pursuant to Section 6 and other monies and
property of any kind of any Grantor in the possession or under the control
of the Administrative Agent or any Lender;
(x) All books and records (including, without limitation, customer
lists, credit files, computer programs, printouts and other computer
materials and records) of any Grantor pertaining to any of the Collateral;
(xi) All other goods and personal property of any Grantor, whether
tangible or intangible; and
(xii) All products and Proceeds of all or any of the Collateral
described in clauses (i) through (xi) hereof;
(b) The Security Interests are granted as security only and shall not
subject the Administrative Agent or any Lender to, or transfer to the
Administrative Agent or any Lender, or in any way affect or modify, any
obligation or liability of the Grantor with respect to any of the Collateral
or any transaction in connection therewith.
SECTION 3. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) Such Grantor has the corporate power and authority and the legal
right to execute and deliver, to perform its obligations under, and to grant the
Security Interests in the Collateral pursuant to, this Agreement and has taken
all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the Security Interests on the Collateral pursuant
to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding obligation of
such Grantor enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally.
(c) The execution, delivery and performance of this Agreement will not
violate any provision of any Applicable Law or contractual obligation of such
Grantor and will not result in the creation or imposition of any Lien on any of
the properties or revenues of such Grantor pursuant to any Applicable Law or
contractual obligation of such Grantor, except as contemplated hereby.
(d) No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any other
Person (including, without limitation, any stockholder or creditor of such
Grantor), is required in connection
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with the execution, delivery, performance, validity or enforceability of this
Agreement, except those which have been obtained, UCC filings and required
notices under the Federal Assignment of Claims Act or any corresponding state
law.
(e) No actions, suits or proceedings are pending nor, to the knowledge
of such Borrower, are threatened against or in any other way relate adversely to
or affect such Grantor or any of its properties in any court or before any
arbitrator of any kind or before or by any Governmental Authority, which, if
adversely determined, are reasonably likely to have a Material Adverse Effect.
(f) Such Grantor has good and marketable title to all of its respective
collateral, free and clear of any Liens other than Permitted Liens and as
otherwise permitted by the Credit Agreement.
(g) Such Grantor has not performed any acts that would prevent or
hinder the Administrative Agent from enforcing any of the terms of this
Agreement. Other than financing statements or other similar or equivalent
documents or instruments with respect to Permitted Liens, no financing
statement, mortgage, security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral is on file or of record in
any jurisdiction. No Collateral is in the possession of any Person (other than
such Grantor) asserting any claim thereto or security interest therein, except
that the Administrative Agent or its designee may have possession of Collateral
as contemplated hereby.
(h) All of the information set forth in the Perfection Certificate is
true and correct in all material respects as of the Closing Date.
(i) With respect to any Intellectual Property of such Grantor which is
material to the conduct of its business:
(i) such Intellectual Property is subsisting and has not been
adjudged invalid or unenforceable, in whole or in part;
(ii) such Intellectual Property is valid and enforceable;
(iii) such Grantor has made all necessary filings and recordations
to protect its interest in such Intellectual Property, including,
without limitation, recordations of all of its interests in the Patents
and Trademarks in the United States Patent and Trademark Office and its
claims to the Copyrights in the United States Copyright Office;
(iv) such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property and such Grantor has not received any
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written claim that the use of such Intellectual Property does not or
may violate the asserted rights of any third party; and
(v) such Grantor has performed all acts and has paid all required
fees and taxes to maintain each and every item of Intellectual Property
in full force and effect.
(j) The Financing Statements are in appropriate form and when filed in
the offices specified in the Perfection Certificate and upon payment of the
filing fees, the Security Interests will constitute valid and perfected security
interests in the Collateral, prior to all other Liens and rights of others
therein except for the Permitted Liens (to the extent that a security interest
therein may be perfected by filing pursuant to the UCC) and all filings and
other actions necessary or desirable to perfect and protect such Security
Interests have been duly taken.
(k) The Inventory, Fixtures, Equipment and Vehicles are insured in
accordance with the requirements hereof and of the Credit Agreement.
(l) All Inventory, if any, has or will have been produced in
substantial compliance in all material respects with the applicable requirements
of the Fair Labor Standards Act, as amended.
SECTION 4. Further Assurances; Covenants.
(a) General.
(i) No Grantor will change the location of its chief executive
office or principal place of business in any state unless it shall have
given the Administrative Agent thirty (30) days prior written notice
thereof and executed and delivered to the Administrative Agent all
financing statements and financing statement amendments which the
Administrative Agent may reasonably request in connection therewith. No
Grantor shall change the locations where it keeps or holds any
Collateral or any records relating thereto from the applicable location
described in the Perfection Certificate unless such Grantor shall have
given the Administrative Agent thirty (30) days prior written notice of
such change of location and executed and delivered to the
Administrative Agent all financing statements and financing statement
amendments which the Administrative Agent may reasonably request in
connection therewith; provided, however, that such Grantor may keep
Inventory at, or in transit to, any location described in the
Perfection Certificate. No Grantor shall in any event change the
location of any Collateral if such change would cause the Security
Interests in such Collateral to lapse or cease to be perfected.
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(ii) No Grantor will change its name, identity or corporate
structure in any manner unless it shall have given the Administrative
Agent thirty (30) days prior written notice thereof and executed and
delivered to the Administrative Agent all financing statements and
financing statement amendments which the Administrative Agent may
reasonably request in connection therewith.
(iii) Each Grantor will maintain the Administrative Agent's Lien on
the Collateral as a first priority perfected Lien thereon. Each Grantor
will, from time to time, at its expense, execute, deliver, file and
record any statement, assignment, instrument, document, agreement or
other paper and take any other action (including without limitation any
filings of financing or continuation statements under the UCC and any
filings with the United States Patent and Trademark Office and United
States Copyright Office) that from time to time may be necessary, or
that the Administrative Agent may reasonably request, in order to
create, preserve, perfect or validate the Security Interests or to
enable the Administrative Agent and the Lenders to obtain the full
benefits of this Agreement, or to enable the Administrative Agent to
exercise and enforce any of its rights, powers and remedies hereunder
with respect to any of the Collateral. Prior to the irrevocable payment
in full of the Secured Obligations, each Grantor hereby authorizes the
Administrative Agent, upon the failure of any Grantor to so do within
five (5) Business Days after receipt of notice from the Administrative
Agent, to execute and file financing statements, financing statement
amendments or continuation statements without any Grantor's signature
appearing thereon. Each Grantor agrees that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement. The Grantors shall
pay the reasonable costs of, or incidental to, any recording or filing
of the Financing Statements and any other financing statements,
financing statement amendments or continuation statements concerning
the Collateral.
(iv) The Grantors shall bear the full risk of any loss of any nature
whatsoever with respect to its respective Collateral. At the Grantors'
own cost and expense in amounts and with carriers acceptable to the
Administrative Agent, the Grantors shall (a) keep the Collateral
insured against such hazards, and for such amounts,as is customary in
the case of companies engaged in businesses similar to the Grantors
including, without limitation, business interruption insurance
satisfactory to the Administrative Agent; and (b) furnish to the
Administrative Agent loss payable endorsements in form and substance
reasonably satisfactory to the Administrative Agent, naming the
Administrative Agent as loss payee, on behalf of itself and the Lenders
with respect to all insurance coverage
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referred to above, and providing (i) that all proceeds thereunder shall be
payable to the Administrative Agent, on behalf of itself and the Lenders and
(ii) that such policy and loss payable clauses may not be canceled, amended or
terminated unless at least thirty (30) days' prior written notice is sent to
the Administrative Agent. The Grantors shall furnish to the Administrative
Agent evidence of the maintenance of such policies by the renewal thereof at
least thirty (30) days before any expiration date. In the event of any loss
thereunder, the carriers named therein hereby are directed by the
Administrative Agent and the Grantors to make payment for such loss to the
Administrative Agent, on behalf of itself and the Lenders, and not to any
Grantor and the Administrative Agent jointly. The Administrative Agent is
hereby authorized in its good faith discretion to adjust and compromise claims
under insurance coverage referred to above after notifying and consulting with
the Grantors with respect thereto.
(v) Each Grantor will, promptly upon request, provide to the
Administrative Agent all information the Administrative Agent may reasonably
request concerning the Collateral, and in particular the Accounts, to enable the
Administrative Agent to enforce the provisions of this Agreement.
(vi) Each Grantor will, upon request by the Administrative Agent,
deliver to the Administrative Agent possession of all originals of all
negotiable Instruments, documents and chattel paper constituting Collateral
currently owned or held by such Grantor, if any (duly endorsed in blank, if
requested by the Administrative Agent).
(vii) Each Grantor will observe and remain in compliance with all
Applicable Laws and maintain in full force and effect all Governmental
Approvals, in each case applicable to the Collateral and the conduct of its
business, except to the extent failure to do so is not reasonably likely to
have a Material Adverse Effect.
(viii) Each Grantor will pay promptly when due all taxes, assessments
and governmental charges or levies imposed upon the Collateral or in respect of
its income or profits therefrom, as well as all claims of any kind (including,
without limitation, claims for labor, materials and supplies) against or with
respect to the Collateral, except that no such charge need be paid if (A) the
validity thereof is being contested in good faith by appropriate proceedings and
(B) such charge is adequately reserved against such Grantor's books in
accordance with GAAP.
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(ix) No Grantor shall
(1) sell, assign (by operation of law or otherwise)
or otherwise dispose of any of the Collateral, except as
permitted by the Credit Agreement; or
(2) create or suffer to exist any Lien or other
charge or encumbrance upon or with respect to any of the
Collateral to secure indebtedness of any Person or entity,
except as permitted by the Credit Agreement.
(b) Accounts, Etc.
(i) Each Grantor shall use all reasonable efforts to cause to
be collected from its Account Debtors, as and when due, any and all
amounts owing under or on account of each Account (including, without
limitation, Accounts which are delinquent, such Accounts to be
collected in accordance with lawful collection procedures) and to apply
forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Account. The reasonable costs and
expenses (including, without limitation, attorney's fees), of
collection of Accounts incurred by any Grantor or the Administrative
Agent shall be borne by the Grantor.
(ii) Upon the occurrence and during the continuance of any
Event of Default, upon request of the Administrative Agent or the
Required Lenders, each Grantor will promptly notify (and such Grantor
hereby authorizes the Administrative Agent so to notify) each Account
Debtor in respect of any Account that such Account has been assigned to
the Administrative Agent hereunder and that any payments due or to
become due in respect of such Account are to be made directly to the
Administrative Agent or its designee.
(iii) Each Grantor will perform and comply with all of its
obligations in respect of Accounts and General Intangibles and the
exercise by the Administrative Agent of any of its rights hereunder
shall not release any Grantor from any of its duties or obligations.
(iv) No Grantor shall (A) amend, modify, terminate or waive
any provision of any agreement giving rise to an Account in any manner
which could reasonably be expected to materially adversely affect the
value of such Account as Collateral or (B) fail to exercise promptly
and diligently its material rights which it may have under each
agreement giving rise to an Account (other than any right of
termination).
(v) Other than in the ordinary course of business as generally
conducted by the Grantor over a period of time and subject to Section
4(b)(iv), no Grantor will compromise,
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compound or settle any Account for less than the full amount thereof,
release, wholly or partially, any Person liable for the payment
thereof, or allow any credit or discount whatsoever thereon; provided,
however, that after an Event of Default, no Grantor will settle or
compromise its any Accounts without the prior written consent of the
Administrative Agent.
(vi) From time to time, at the request of the Administrative
Agent or Required Lenders, each Grantor shall deliver to the
Administrative Agent and each Lender an Accounts Aging Report.
(c) Inventory, Etc.
(i) Not more than once each month, at the request of the
Administrative Agent or Required Lenders, the Grantor shall deliver to
the Administrative Agent with a copy for each Lender a Schedule of
Inventory. Unless otherwise indicated in writing by the Grantor, each
Schedule of Inventory delivered by such Grantor to the Administrative
Agent shall constitute a representation with respect to the Inventory
listed thereon or referred to therein that: (A) all such Inventory is
located at places of business listed in the Perfection Certificate or
as to which the applicable Grantor has complied with the provisions of
Section 4(a)(i) hereof or on the premises identified on the then
current Schedule of Inventory or is Inventory in transit from one such
location to another such location; (B) no such Inventory is subject to
any Lien whatsoever, except for Permitted Liens; (C) no such Inventory
in aggregate value exceeding $50,000 at any time is, nor shall at any
time or times be, kept, stored or maintained with a bailee,
warehouseman, carrier or similar party (other than a carrier delivering
Inventory to a purchaser in the ordinary course of such Grantor's
business) unless the Required Lenders have given their prior written
consent and the applicable Grantor has delivered to the Administrative
Agent a Letter satisfactory thereto acknowledging the priority of its
security interest.
(ii) If at any time during the term of this Agreement, any
Inventory is placed by any Grantor on consignment with any Consignee,
such Grantor shall, prior to the delivery of any such consigned
Inventory: (A) provide the Administrative Agent with all consignment
agreements and other instruments and documentation to be used in
connection with such consignment, all of which agreements, instruments
and documentation shall be reasonably acceptable in form and substance
to the Administrative Agent; (B) prepare, execute and file appropriate
financing statements with respect to any consigned Inventory showing
the Consignee as debtor, such Grantor as secured party and the
Administrative Agent as assignee of secured party; (C) prepare, execute
and file appropriate
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financing statements with respect to any consigned Inventory showing
such Grantor as debtor and the Administrative Agent as secured party;
(D) after all financing statements referred to in clauses (B) and (C)
above shall have been filed, conduct a search of all filings made
against the Consignee in all jurisdictions in which the Inventory to be
consigned is to be located while on consignment, and deliver to the
Administrative Agent copies of the results of all such searches; (E)
notify, in writing, all creditors of the Consignee which would be
holders of security interests in the Inventory to be consigned that
such Grantor expects to deliver certain Inventory to the Consignee, all
of which Inventory shall be described in such notice by item or type,
and (F) if requested by the Administrative Agent, deliver an opinion of
counsel to the effect that all financing statements and amendments or
supplements thereto, continuation statements and other documents
required to be recorded or filed in order to perfect and protect the
Security Interests and priority thereof against all creditors of and
purchasers of such Grantor and such Consignee have been filed in each
filing office necessary or desirable for such purposes and that all
filing fees and taxes, if any, payable in connection with such filings
have been paid in full.
(d) Equipment, Etc. With the exception of Equipment disposed of in
accordance with Section 10.6 of the Credit Agreement, each Grantor will
maintain each item of Equipment in the same condition, repair and
working order as when acquired, ordinary wear and tear excepted, and
will provide all maintenance, service and repairs necessary for such
purpose and will promptly furnish to the Administrative Agent a
statement respecting any material loss or damage to any of the
Equipment in an amount in excess of $250,000.
(e) Intellectual Property.
(i) Each Grantor shall notify the Administrative Agent
promptly (a) of its acquisition after the Closing Date of any Patent,
Patent License, Trademark or Trademark License and (b) if it knows, or
has reason to know of any adverse determination or development
(including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States
Patent and Trademark Office or any court) regarding such Grantor's
ownership of any Patent or Trademark, its right to register the same,
or to keep and maintain the same. In no event shall any Grantor, either
itself or through any agent, employee or licensee, file an application
for the registration of any Patent or Trademark with the United States
Patent and Trademark Office or any similar office or agency in any
other country or any political subdivision thereof, unless promptly
thereafter it informs the Administrative Agent, and, promptly after
issuance of such
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patent or Trademark, executes and delivers any and all agreements,
instrument, documents and papers the Administrative Agent may
reasonably request to evidence the Security Interests in such Patent or
Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby. Each Grantor hereby
constitutes the Administrative Agent its attorney-in-fact to execute
and file all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed, and such power, being
coupled with an interest, shall be irrevocable until the Commitment has
terminated and the Secured Obligations are paid in full.
(ii) Each Grantor shall: (a) preserve and maintain in all
material respects rights in the Intellectual Property; and (b) upon and
after the occurrence of an Event of Default, use its best efforts to
obtain any consents, waivers or agreements necessary to enable
Administrative Agent to exercise its remedies with respect to the
Intellectual Property. No Grantor shall abandon any right to file a
Copyright, Patent or Trademark application that is necessary to the
business of such Grantor nor shall such Grantor abandon any such
necessary pending Copyright, Patent or Trademark application, or
Copyright, Copyright License, Patent, Patent License, Trademark or
Trademark License without the prior written consent of Administrative
Agent.
(iii) Each Grantor hereby assigns, transfers and conveys to
Administrative Agent, effective upon the occurrence and during the
continuance of any Event of Default, the nonexclusive right and license
to use all Intellectual Property owned or used by such Grantor,
together with any goodwill associated therewith, all to the extent
necessary to enable Administrative Agent to realize on the Collateral
(including, without limitation, completing production of, advertising
for sale and selling the Collateral) and any successor or assign to
enjoy the benefits of the Collateral. This right and license shall
inure to the benefit of all successors, assigns and transferees of
Administrative Agent and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such
right and license is granted free of charge, without requirement that
any monetary payment whatsoever be made to such Grantor by
Administrative Agent.
(f) Vehicles. With the exception of Vehicles disposed of in accordance
with Section 10.6 of the Credit Agreement, the Grantors will maintain each
Vehicle in good operating condition, ordinary wear and tear excepted, and will
provide all maintenance, service and repairs necessary for such purpose. Upon
the request of the Administrative Agent, all applications for certificates of
title or ownership indicating the Administrative Agent's first priority Lien
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on the Vehicle covered by such certificate, and any other necessary
documentation, shall be filed in each office in each jurisdiction which the
Administrative Agent shall deem advisable to perfect its Liens on the Vehicles.
Prior thereto, each certificate of title or ownership relating to each Vehicle
shall be maintained by the applicable Grantor in accordance with Applicable Law
to reflect the ownership interest of such Grantor.
(g) Indemnification. Each Grantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities, costs and expenses
(including, without limitation, reasonable legal fees and expenses) (i) with
respect to, or resulting from, any and all excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, complying with any
Applicable Law applicable to any of the Collateral or (iii) in connection with
any of the transactions contemplated by this Agreement (except to the extent any
such liabilities, costs and expenses result from the gross negligence or willful
misconduct of the Administrative Agent or Lenders). In any suit, proceeding or
action brought by the Administrative Agent under any Account for any sum owing
thereunder, or to enforce any provisions of any Account, each Grantor will save,
indemnify and keep the Administrative Agent and the Lenders harmless from and
against all expense, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever of the Account
Debtor or any other obligor thereunder, arising out of a breach by any Grantor
of any obligation thereunder or arising out of any other agreement, indebtedness
or liability at any time owing to or in favor of such Account Debtor or obligor
or its successors from any Grantor (except to the extent any such expense, loss
or damage results from the gross negligence or willful misconduct of the
Administrative Agent or Lenders). The obligations of the Grantors under this
Section 4(g) shall survive the termination of the other provisions of this
Agreement.
SECTION 5. Reporting and Recordkeeping. Each Grantor respectively
covenants and agrees with the Administrative Agent and the Lenders that from and
after the date of this Agreement and until the Commitments have terminated and
all Secured Obligations have been fully satisfied:
(a) Maintenance of Records Generally. Each Grantor will keep and
maintain at its own cost and expense complete and accurate records of the
Collateral, including, without limitation, a record of all payments received
and all credits granted with respect to the Collateral and all other dealings
with the Collateral. All chattel paper given to any Grantor with respect to any
Accounts will be marked with the following legend: "This writing and the
obligations evidenced or secured hereby are subject to the security interest of
First Union National Bank of Tennessee, as Administrative Agent", and, if
requested thereby or the Required Lenders,
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delivered to the Administrative Agent to be held as Collateral. For the
Administrative Agent's and the Lenders' further security, each Grantor agrees
that upon the occurrence and during the continuation of any Default or Event of
Default and upon foreclosure by the Administrative Agent on any property of any
Grantor, such Grantor shall deliver and turn over any such books and records
directly to the Administrative Agent or its designee. Each Grantor shall permit
any representative of the Administrative Agent to inspect such books and records
in accordance with Section 8.11 of the Credit Agreement and will provide
photocopies thereof to the Administrative Agent upon its reasonable request.
(b) Certain Provisions Regarding Maintenance of Records and Reporting
Re: Accounts. Schedule IV hereto sets forth the contract number, date,
applicable grantor and Governmental Authority with respect to each Account
arising out of a contract with the United States of America, or any department,
agency, subdivision or instrumentality thereof, or of any state (or department,
agency, subdivision or instrumentality thereof) where such state has a state
assignment of claims act or other law comparable to the Federal Assignment of
Claims Act. Each Grantor will deliver to the Administrative Agent along with the
Officer's Compliance Certificate delivered pursuant to Section 7.2 of the Credit
Agreement a revised Schedule VI hereto including all applicable information with
respect to each such Account originated during the applicable quarter and (ii)
take any other action required or requested by the Administrative Agent or give
notice of the Administrative Agent's Security Interest in such Accounts under
the provisions of the Federal Assignment of Claims Act or any comparable law or
act enacted by any state or local Governmental Authority. Any notifications or
other documents executed and delivered to the Administrative Agent in connection
with the Federal Assignment of Claims Act or any comparable state law may be
promptly filed with the appropriate Governmental Authority by the Administrative
Agent or held by the Administrative Agent until the Administrative Agent or the
Required Lenders decide in its or their sole discretion to make any such filing.
(c) Further Identification of Collateral. Each Grantor will, if so
requested by the Administrative Agent, furnish to the Administrative Agent
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Administrative Agent
may reasonably request, all in reasonable detail.
(d) Notices. In addition to the notices required by Section 5(b)
hereof, the Grantors will advise the Administrative Agent promptly, in
reasonable detail, (i) of any material Lien or claim made or asserted against
any of the Collateral, (ii) of any adverse change in the composition of the
Collateral which is reasonably likely to have a Material Adverse Effect, and
(iii) of the
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occurrence of any other event which is reasonably likely to have a Material
Adverse Effect.
SECTION 6. Collateral Account.
(a) There is hereby established with the Administrative Agent a
Collateral Account in the name and under the exclusive dominion and control of
the Administrative Agent. There shall be deposited from time to time into such
account, after the occurrence of and during the continuation of an Event of
Default, the cash proceeds of the Collateral required to be delivered to the
Administrative Agent pursuant to Section 6(b) or any other provision of this
Agreement. Any income received by the Administrative Agent with respect to the
balance from time to time standing to the credit of the Collateral Account,
including any interest or capital gains on investments of amounts on deposit in
the Collateral Account, shall remain, or be deposited, in the Collateral Account
together with any investments from time to time made pursuant to subsection (c)
of this Section 6, shall vest in the Administrative Agent, shall constitute part
of the Collateral hereunder and shall not constitute payment of the Secured
Obligations until applied thereto as hereinafter provided.
(b) Upon the occurrence and during the continuance of an Event of
Default, if requested by the Administrative Agent, the Grantors shall instruct
all Account Debtors and other Persons obligated in respect of all Accounts to
make all payments in respect of the Accounts either (i) directly to the
Administrative Agent (by instructing that such payments be remitted to a post
office box which shall be in the name and under the exclusive dominion and
control of the Administrative Agent) or (ii) to one or more other banks in any
state in the United States (by instructing that such payments be remitted to a
post office box which shall be in the name and under the exclusive dominion and
control of such bank) under a Lockbox Letter substantially in the form of Annex
I hereto duly executed by the Grantors and such bank or under other
arrangements, in form and substance reasonably satisfactory to the
Administrative Agent, pursuant to which the Grantors shall have irrevocably
instructed such other bank (and such other bank shall have agreed) to remit all
proceeds of such payments directly to the Administrative Agent for deposit into
the Collateral Account or as the Administrative Agent may otherwise instruct
such bank, and thereafter if the proceeds of any Collateral shall be received by
any Grantor, such Grantor will promptly deposit such proceeds into the
Collateral Account and until so deposited, all such proceeds shall be held in
trust by such Grantor for and as the property of the Administrative Agent, for
the benefit of itself and the Lenders and shall not be commingled with any other
funds or property of such Grantor. At any time after the occurrence and during
the continuance of an Event of Default, the Administrative Agent may itself so
instruct the Grantors' Account Debtors. All such
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payments made to the Administrative Agent shall be deposited in the
Collateral Account.
(c) Amounts on deposit in the Collateral Account shall be promptly
liquidated and applied to the payment of the Secured Obligations in the manner
specified in Section 10 hereof.
SECTION 7. General Authority.
(a) The Grantors hereby irrevocably appoint the Administrative Agent
their true and lawful attorney, with full power of substitution, in the name
of each Grantor, the Administrative Agent, the Lenders or otherwise, for the
sole use and benefit of the Agent and the Lenders, but at the Grantors'
expense, to exercise, at any time from time to time all or any of the
following powers:
(i) to file the Financing Statements and any financing
statements, financing statement amendments and continuation statements
referred to in Sections 4(a)(i), 4(a)(ii), 4(a)(iii) and 4(c)(ii)
hereof,
(ii) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due with respect to any
Collateral or by virtue thereof,
(iii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect to any Collateral,
(iv) to sell, transfer, assign or otherwise deal in or with
the Collateral and the Proceeds thereof, as fully and effectually as if
the Agent were the absolute owner thereof, and
(v) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference to the
Collateral;
provided that the Administrative Agent shall not take any of the actions
described in this Section 7 except those described in clause (i) above unless
an Event of Default shall have occurred and be continuing and the
Administrative Agent shall give the Grantors not less than ten (10) days'
prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral which is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. Each Grantor agrees that any such
notice constitutes "reasonable notification" within the meaning of Section
9-504(3) of the UCC (to the extent such Section is applicable).
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(b) Ratification. Each Grantor hereby ratifies all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
is a power coupled with an interest and shall be irrevocable.
(c) Other Powers. Each Grantor also authorizes the Administrative
Agent at any time and from time to time, to execute, in connection with the
sale provided for in Section 8 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
SECTION 8. Remedies Upon Event of Default.
(a) If any Event of Default has occurred and is continuing, the
Administrative Agent may exercise on behalf of itself and Lenders all rights
of a secured party under the UCC (whether or not in effect in the
jurisdiction where such rights are exercised) and, in addition, the Agent may
(i) withdraw all cash, if any, in the Collateral Account and investments made
with amounts on deposit in the Collateral Account, and apply such monies,
investments and other cash, if any, then held by it as Collateral as
specified in Section 10 hereof and (ii) if there shall be no such monies,
investments or cash or if such monies, investments or cash shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral
or any part thereof at public or private sale, for cash, upon credit or for
future delivery, and at such price or prices as the Agent may deem
satisfactory. The Administrative Agent or any Lender may be the purchaser of
any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market or is of a
type which is the subject of widely distributed standard price quotations or
if otherwise permitted under applicable law, at any private sale) and
thereafter hold the same, absolutely, free from any right or claim of
whatsoever kind. Each Grantor will execute and deliver such documents and
take such other action as the Administrative Agent deems reasonably necessary
or advisable in order that any such sale may be made in compliance with law.
Upon any such sale the Administrative Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral so sold (without
warranty). Each purchaser at any such sale shall hold the Collateral so sold
to it absolutely, free from any claim or right of whatsoever kind, including
any equity or right of redemption of any Grantor. To the extent permitted by
law, each Grantor hereby specifically waives all rights of redemption, stay
or appraisal which it has or may have under any law now existing or hereafter
adopted. The notice of such sale shall be given to the Grantors ten (10) days
prior to such sale and (A) in case of a public sale, state the time and place
fixed for such sale, and (B) in the case of a private sale, state the day
after which sale may be consummated. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or places
as the Administrative Agent may fix in the notice of such sale. At
20
<PAGE> 21
any such sale the Collateral may be sold in one lot as an entirety or in
separate parcels, as the Administrative Agent may determine. The
Administrative Agent shall not be obligated to make any such sale pursuant to
any such notice. The Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for the sale, and
such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the
Administrative Agent until the selling price is paid by the purchaser
thereof, but the Administrative Agent shall not incur any liability in case
of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Administrative Agent, instead of exercising the power of
sale herein conferred upon it, may proceed by a suit or suits at law or in
equity to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction. The Grantors shall remain liable for any deficiency.
(b) For the purpose of enforcing any and all rights and remedies under
this Agreement, the Administrative Agent may (i) require the Grantors to, and
each Grantor agrees that it will, at its expense and upon the request of the
Administrative Agent, forthwith assemble all or any part of the Collateral as
directed by the Administrative Agent and make it available at a place
designated by the Administrative Agent which is, in the Agent's opinion,
reasonably convenient to the Agent and such Grantor, whether at the premises
of such Grantor or otherwise, (ii) to the extent permitted by applicable law,
enter, with or without process of law and without breach of the peace, any
premise where any of the Collateral is or may be located and, without charge or
liability to the Administrative Agent, seize and remove such Collateral from
such premises, (iii) have access to and use such Grantor's books and records
relating to the Collateral and (iv) prior to the disposition of the
Collateral, store or transfer such Collateral without charge in or by means
of any storage or transportation facility owned or leased by such Grantor,
process, repair or recondition such Collateral or otherwise prepare it for
disposition in any manner and to the extent the Administrative Agent deems
appropriate and, in connection with such preparation and disposition, use
without charge any Trademark, trade name, Copyright, Patent or technical
process used by such Grantor.
(c) Without limiting the generality of the foregoing, if any Event of
Default has occurred and is continuing,
(i) the Administrative Agent may license, or sublicense,
whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any Patents or Trademarks
21
<PAGE> 22
included in the Collateral throughout the world for such term or terms,
on such conditions and in such manner as the Administrative Agent shall
in its sole discretion determine;
(ii) the Administrative Agent may (without assuming any
obligations or liability thereunder), at any time and from time to
time, enforce (and shall have the exclusive right to enforce) against
any licensee or sublicensee all rights and remedies of the Grantors in,
to and under any Patent Licenses or Trademark Licenses and take or
refrain from taking any action under any thereof, provided, however,
that no such actions shall result in the failure of such Patent
Licenses or Trademark Licenses to remain in compliance with all
Applicable Law, and each Grantor hereby releases the Administrative
Agent and each of the Lenders free and harmless from and against any
claims arising out of, any lawful action so taken or omitted to be
taken with respect thereto except with respect to the gross negligence
or willful misconduct of the Administrative Agent or the Lenders; and
(iii) upon request by the Administrative Agent, each Grantor
will execute and deliver to the Administrative Agent a power of
attorney, in form and substance satisfactory to the Administrative
Agent, for the implementation of any lease, assignment, license,
sublicense, grant or option, sale or other disposition of a Patent or
Trademark. In the event of any such disposition pursuant to this
Section, the Grantors shall supply their know-how and expertise
relating to the manufacture and sale of the products bearing Trademarks
or the products or services made or rendered in connection with
Patents, and its customer lists and other records relating to such
Patents or Trademarks and to the distribution of said products, to the
Administrative Agent.
SECTION 9. Limitation on Duty of Administrative Agent in Respect of
Collateral. Beyond reasonable care in the custody thereof, the Administrative
Agent shall have no duty as to any Collateral in its possession or control or in
the possession or control of any agent or bailee or any income thereon or as to
the preservation of rights against prior parties or any other rights pertaining
thereto. The Administrative Agent shall be deemed to have exercised reasonable
care in the custody of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own
property, and the Administrative Agent shall not be liable or responsible for
any loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by the
Administrative Agent in good faith.
SECTION 10. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any
22
<PAGE> 23
sale of, or other realization upon, all or any part of the Collateral shall be
applied by the Administrative Agent as follows:
first, to payment of the out-of-pocket expenses of such sale
or other realization, including all reasonable out-of-pocket expenses,
liabilities and advances incurred or made by the Administrative Agent
in connection therewith, and any other unreimbursed expenses for which
the Administrative Agent or any Lender is to be reimbursed pursuant to
Section 13.2 of the Credit Agreement, or Section 4(g) or 13 hereof or
any corresponding provision of any of the other Loan Documents;
second, to ratable payment of accrued but unpaid interest
(including post-petition interest) on the Secured Obligations and of
any unpaid fees owing to the Administrative Agent or any Lender under
the Credit Agreement in accordance with the provisions of the Credit
Agreement;
third, to the ratable payment of unpaid principal of
the Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the Grantors or their successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
The Administrative Agent may make distribution hereunder in cash or in kind or,
on a ratable basis, in any combination thereof.
SECTION 11. Concerning the Administrative Agent. The provisions of
Article XII of the Credit Agreement shall inure to the benefit of the
Administrative Agent in respect of this Agreement and shall be binding upon the
parties to the Credit Agreement in such respect. In furtherance and not in
derogation of the rights, privileges and immunities of the Administrative Agent
therein set forth:
(a) The Administrative Agent is authorized to take all such
action as is provided to be taken by it as Administrative Agent
hereunder and all other action incidental thereto. As to any matters
not expressly provided for herein, the Administrative Agent may request
instructions from the Lenders and shall act or refrain from acting in
accordance with written instructions from the Required Lenders (or,
when expressly required by this Agreement or the Credit Agreement, all
the Lenders) or, in the absence of such instructions, in accordance
with its discretion.
23
<PAGE> 24
(b) The Administrative Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Security
Interests, whether impaired by operation of law or by reason of any
action or omission to act on its part (other than any such action or
inaction constituting gross negligence or willful misconduct. The
Administrative Agent shall have no duty to ascertain or inquire as to
the performance or observance of any of the terms of this Agreement by
the Grantors.
SECTION 12. Appointment of Collateral Agents. At any time or times, in
order to comply with any legal requirement in any jurisdiction or in order to
effectuate any provision of the Loan Documents, the Administrative Agent may
appoint another bank or trust company or one or more other Persons, either to
act as collateral agent or agents, jointly with the Administrative Agent or
separately, on behalf of the Administrative Agent and the Lenders with such
power and authority as may be necessary for the effectual operation of the
provisions hereof and specified in the instrument of appointment (which may, in
the discretion of the Administrative Agent, include provisions for the
protection of such collateral agent similar to the provisions of Section 11
hereof).
SECTION 13. Expenses. In the event that the Grantor fail to comply with
the provisions of the Credit Agreement, this Agreement or any other Loan
Document, such that the value of any Collateral or the validity, perfection,
rank or value of the Security Interests are thereby diminished or potentially
diminished or put at risk, the Administrative Agent if requested by the Required
Lenders may, but shall not be required to, effect such compliance on behalf of
such Grantor, and the Grantors shall reimburse the Administrative Agent for the
costs thereof on demand. All insurance expenses and all expenses of protecting,
storing, warehousing, appraising, insuring, handling, maintaining and shipping
the Collateral, any and all excise, stamp, intangibles, transfer, property,
sales, and use taxes imposed by any state, federal, or local authority or any
other Governmental Authority on any of the Collateral, or in respect of the sale
or other disposition thereof, shall be borne and paid by the Grantors; and if
the Grantor fail promptly to pay any portion thereof when due, the
Administrative Agent or any Lender may, at its option, but shall not be required
to, pay the same and charge the Grantors' account therefor, and each Grantor
agrees to reimburse the Administrative Agent or such Lender therefor on demand.
All sums so paid or incurred by the Administrative Agent or any Lender for any
of the foregoing and any and all other sums for which the Grantors may become
liable hereunder and all costs and expenses (including reasonable attorneys'
fees, legal expenses and court costs) incurred by the Administrative Agent or
any Lender in enforcing or protecting the Security Interests or any of their
rights or remedies thereon shall be payable by the Grantors on demand and
24
<PAGE> 25
shall bear interest (after as well as before judgment) until paid at the rate
then applicable to Base Rate Loans under the Credit Agreement and shall be
additional Secured Obligations hereunder.
SECTION 14. Notices. All notices, communications and distributions
hereunder shall be given or made in accordance with Section 13.1 of the Credit
Agreement.
SECTION 15. Waivers, Non-Exclusive Remedies. No failure on the part of
the Agent or any Lender to exercise, and no delay in exercising and no course of
dealing with respect to, any right under the Credit Agreement, this Agreement or
any other Loan Document shall operate as a waiver thereof or hereof; nor shall
any single or partial exercise by the Agent or any Lender of any right under the
Credit Agreement, this Agreement or any other Loan Document preclude any other
or further exercise thereof, and the exercise of any rights in this Agreement,
the Credit Agreement and the other Loan Documents are cumulative and are not
exclusive of any other remedies provided by law. This Agreement is a Loan
Document executed pursuant to the Credit Agreement.
SECTION 16. Successors and Assigns. This Agreement is for the benefit
of the Agent and the Lenders and their successors and assigns (as permitted by
the Credit Agreement), and in the event of an assignment of all or any of the
Secured Obligations, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Agreement shall be binding on the Grantors and their successors and assigns;
provided that the Grantors may not assign any of their rights or obligations
hereunder without the prior written consent of the Agent and the Lenders.
SECTION 17. Changes in Writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Grantors and the Agent with the consent of the
Required Lenders (or, when expressly required by this Agreement or the Credit
Agreement, all of the Lenders).
SECTION 18. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
25
<PAGE> 26
SECTION 20. Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether made before or
after institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Security Agreement
("Disputes"), between or among parties to this Security Agreement shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, claims brought as class actions, claims arising from Loan
Documents executed in the future, or claims concerning any aspect of the past,
present or future relationships arising out of or connected with this Security
Agreement. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Charlotte, North Carolina. The expedited procedures set
forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation shall apply to
any Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted. Notwithstanding the foregoing, this paragraph shall not apply to any
Hedging Agreement that is a Loan Document.
(b) Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE AGENT, EACH LENDER
AND EACH GRANTOR HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or personal property or
other security by exercising a power of sale granted in the Loan Documents or
under applicable law or by judicial foreclosure and sale, (ii) all rights of
self help including peaceful occupation of property and collection of rents, set
off, and peaceful possession of property, (iii) obtaining provisional or
ancillary remedies including injunctive relief,
26
<PAGE> 27
sequestration, garnishment, attachment, appointment of receiver and in filing an
involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
SECTION 21. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Agent and the
Lenders in order to carry out the intentions of the parties hereto as nearly as
may be possible; and (b) the invalidity or unenforceability of any provisions
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
SECTION 22. 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.
SECTION 23. Counterparts. This Agreement may be executed 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.
[Signature page follows]
27
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
GRANTOR:
[CORPORATE SEAL] CCA Prison Realty Trust
Attest: By: /s/ Michael W. Devlin
/s/ Vida H. Carroll ________________________________
_______________________ Name: Michael W. Devlin
Secretary Title: Chief Development Officer
STATE OF Tennessee
_________________________
COUNTY OF Davidson
________________________
This 17th day of July, 1997, personally came before me Michael W.
Devlin, who, being by me duly sworn, says that he is Chief Development Officer
of CCA Prison Realty Trust, that the seal affixed to the foregoing instrument in
writing is the corporate seal of said Corporation, and that said writing was
signed and sealed by him, in behalf of said Corporation, by its authority duly
given. And the said Michael W. Devlin acknowledged the said writing to be the
act and deed of said Corporation.
/s/ Linda J. Boggess
______________________________
NOTARY PUBLIC
My Commission Expires: 7-25-98
<PAGE> 29
Administrative Agent:
FIRST UNION NATIONAL BANK OF
TENNESSEE, as Administrative Agent
By: /s/ Timothy B. Fouts
----------------------------------
Name: Timothy B. Fouts
-----------------------------
Title: Vice President
----------------------------
[Security Agreement]
<PAGE> 30
ANNEX I
(to Security Agreement)
[FORM OF LOCKBOX LETTER]
_______________, 19___
[Name and Address of Lockbox Bank)
Re: [CORPORATION]
Ladies and Gentlemen:
We hereby notify you that effective ________________ 19__, we have
transferred exclusive ownership and control of our lock-box account(s) no[s].
_____________________ (the "Lockbox Account[s]") maintained with you under the
terms of the [Lockbox Agreement] attached hereto as Exhibit A (the "Lockbox
Agreement[s]") to First Union National Bank of North Carolina, as Administrative
Agent (the "Agent").
We hereby irrevocably instruct you to make all payments to be made by
you out of or in connection with the Lockbox Account(s) (i) to the
Administrative Agent for credit to account no. ________ maintained by it at its
office at ________________________ or (ii) as you may otherwise be instructed by
the Administrative Agent.
We also hereby notify you that the Administrative Agent shall be
irrevocably entitled to exercise any and all rights in respect of or in
connection with the Lockbox Account(s), including, without limitation, the right
to specify when payments are to be made out of or in connection with the Lockbox
Account(s).
All funds deposited into the Lockbox Account(s) will not be subject to
deduction, set-off, banker's lien or any other right in favor of any other
person than the Administrative Agent, except that you may set-off against the
Lockbox Account(s) the face amount of any check deposited in and credited to
such Lockbox Account(s) which is subsequently returned for any reason. Your
compensation for providing the service contemplated herein shall be mutually
agreed between you and us from time to time and we will continue to pay such
compensation.
<PAGE> 31
Please confirm your acknowledgment of and agreement to the
foregoing instructions by signing in the space provided below
Very truly yours,
___________________________________
By:________________________________
Name:___________________________
Title:__________________________
Acknowledged and agreed
to as of this _____ day of
__________________, 19___.
[LOCKBOX BANK]
By:_______________________
Name: ____________________
Title:____________________
<PAGE> 32
SCHEDULE I
(to Security Agreement)
Trademarks and Related Rights
None.
<PAGE> 33
SCHEDULE II
(to Security Agreement)
Copyrights and Related Rights
None.
<PAGE> 34
Schedule III
(to Security Agreement)
Government Contracts
None.
<PAGE> 1
EXHIBIT 10.21
OFFICER AND TRUSTEE INDEMNIFICATION AGREEMENT
This Agreement is made as of the 18th day of July, 1997, by and between
CCA Prison Realty Trust, a Maryland real estate investment trust (the
"Company"), and the undersigned Officer or Trustee of the Company (the
"Indemnitee").
WHEREAS, Indemnitee is currently serving as an Officer or Trustee of
the Company and the Company wishes the Indemnitee to continue in such capacity.
The Indemnitee is willing, under certain circumstances, to continue serving as
an Officer Trustee of the Company;
WHEREAS, Maryland Code Annotated, Courts of Judicial Proceeding,
Article 5-350, provides that a real estate investment trust's Declaration of
Trust may include any provision limiting the liability of its officers or
trustees to the trust or its shareholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action.
WHEREAS, the Company's Amended and Restated Declaration of Trust
provides that to the fullest extent allowed by Maryland law, no officer trustee
of the Company shall be liable to the Company or its shareholders for money
damages;
WHEREAS, in addition, the Bylaws of the Company provide that the
officer trustees of the Company shall be entitled to indemnification on the
terms and conditions set forth therein; and
WHEREAS, Indemnitee has indicated that he does not regard the foregoing
provisions of the Company's Declaration of Trust and Bylaws as adequate to
protect him against the risks associated with his service to the Company and has
noted that the Company's directors' and officers' liability insurance policy has
numerous exclusions and a deductible and thus does not adequately protect
Indemnitee. In this connection the Company and the Indemnitee now agree they
should enter into this Indemnification Agreement in order to provide greater
protection to Indemnitee against such risks of service to the Company.
NOW, THEREFORE, in order to induce the Indemnitee to continue to serve
as a Trustee of the Company and in consideration of his continued service, the
Company hereby agrees to indemnify the Indemnitee as follows:
1. Indemnity. The Company will indemnify the Indemnitee, his
executors, administrators or assigns, for any Expenses (as
defined below) which the Indemnitee is or becomes legally
obligated to pay in connection with any Proceeding. As used in
this Agreement the term "Proceeding" shall include any
threatened, pending or completed claim, action, suit or
proceeding, whether brought by or in the right of the Company
or otherwise and whether of a civil, criminal, administrative
or investigative nature, in which the Indemnitee may be or may
have been involved as a party or otherwise, by
<PAGE> 2
reason of the fact that Indemnitee is or was a director or
officer of the Company, by reason of any actual or alleged
error or misstatement or misleading statement made or suffered
by the Indemnitee, by reason of any action taken by him or of
any inaction on his part while acting as such director or
officer, or by reason of the fact that he was serving at the
request of the Company as a director, trustee, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise; provided, that in each
such case Indemnitee acted in good faith and in a manner which
he reasonably believed to be in or not opposed to the best
interests of the Company, and, in the case of a criminal
proceeding, in addition had no reasonable cause to believe
that his conduct was unlawful. As used in this Agreement, the
term "other enterprise" shall include (without limitation)
employee benefit plans and administrative committees thereof,
and the term "fines" shall include (without limitations) any
excise tax assessed with respect to any employee benefit plan.
2. Expenses. As used in this Agreement, the term "Expenses" shall
include, without limitation, damages, judgments, fines,
penalties, settlements and costs, attorneys' fees and
disbursements and costs of attachment or similar bonds,
investigations, and any expenses of establishing a right to
indemnification under this Agreement.
3. Enforcement. If a claim or request under this Agreement is not
paid by the Company, or on its behalf, within thirty days
after a written claim or request has been received by the
Company, the Indemnitee may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim
or request and if successful in whole or in part, the
Indemnitee shall be entitled to be paid also the Expenses of
prosecuting such suit. The Company shall have the right to
recoup from the Indemnitee the amount of any item or items of
Expenses theretofore paid by the Company pursuant to this
Agreement, to the extent such Expenses are not reasonable in
nature or amounts; provided, however, that the Company shall
have the burden of proving such Expenses to be unreasonable.
The burden of proving that the Indemnitee is not entitled to
indemnification for any other reason shall be upon the
Company.
4. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to
all of the rights of recovery of the Indemnitee, who shall
execute all papers required and shall do everything that may
be necessary to secure such rights, including the execution of
such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
5. Exclusions. The Company shall not be liable under this
Agreement to pay any Expenses in connection with any claim
made against the Indemnitee:
<PAGE> 3
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible
insurance policy;
(b) to the extent that the Indemnitee is indemnified and
actually paid otherwise than pursuant to this
Agreement;
(c) in connection with a judicial action by or in the
right of the Company, in respect of any claim, issue
or matter as to which the Indemnitee shall have been
adjudged to be liable for gross negligence or
intentional misconduct in the performance of his duty
to the Company unless and only to the extent that any
court in which such action was brought shall
determine upon application that, despite the
adjudication of liability but in view of all the
circumstances of the case, the Indemnitee is fairly
and reasonably entitled to indemnity for such
expenses as such court shall deem proper;
(d) if it is proved by final judgment in a court of law
or other final adjudication to have been based upon
or attributable to the Indemnitee's in fact having
gained any personal profit or advantage to which he
was not legally entitled;
(e) for a disgorgement of profits made from the purchase
and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto or similar provisions of any
state statutory law or common law;
(f) brought about or contributed to by the dishonesty of
the Indemnitee seeking payment hereunder; however,
notwithstanding the foregoing, the Indemnitee shall
be protected under this Agreement as to any claims
upon which suit may be brought against him by reason
of any alleged dishonesty on his part, unless a
judgment or other final adjudication thereof adverse
to the Indemnitee shall establish that he committed
(i) acts of active and deliberate dishonesty, (ii)
with actual dishonest purpose and intent, (iii) which
acts were material to the cause of action so
adjudicated; or
(g) for any judgment, fine or penalty which the Company
is prohibited by applicable law from paying as
indemnity or for any other reason.
6. Indemnification of Expenses or Successful Party.
Notwithstanding any other provision of this Agreement, to the
extent that the Indemnitee has been
<PAGE> 4
successful on the merits or otherwise in defense of any
Proceeding or in defense of any claim, issue or matter
therein, including dismissal without prejudice, Indemnitee
shall be indemnified against any and all Expenses incurred in
connection therewith.
7. Partial Indemnification. If the Indemnitee is entitled under
any provision of this Agreement to indemnification by the
Company for some or a portion of Expenses, but not for the
total amount thereof, the Company shall nevertheless indemnify
the Indemnitee for the portion of such Expenses to which the
Indemnitee is entitled.
8. Advance of Expenses. Expenses incurred by the Indemnitee in
connection with any Proceeding, except the amount of any
settlement, shall be paid by the Company in advance upon
request of the Indemnitee that the Company pay such Expenses.
The Indemnitee hereby undertakes to repay to the Company the
amount of any Expenses theretofore paid by the Company to the
extent that it is ultimately determined that such Expenses
were not reasonable or that the Indemnitee is not entitled to
indemnification.
9. Approval of Expenses. No Expenses for which indemnity shall be
sought under this Agreement, other than those in respect of
judgments and verdicts actually rendered, shall be incurred
without the prior consent of the Company, which consent shall
not be unreasonably withheld.
10. Notice of Claim. The Indemnitee, as a condition precedent to
his right to be indemnified under this Agreement, shall give
to the Company notice in writing as soon as practicable of any
claim made against him for which indemnity will or could be
sought under this Agreement. Notice to the Company shall be
given at its principal office and shall be directed to the
Secretary (or such other address as the Company shall
designate in writing to the Indemnitee); notice shall be
deemed received if sent by prepaid mail properly addressed,
the date of such notice being the date postmarked. In
addition, the Indemnitee shall give the Company such
information and cooperation as it may reasonable require and
as shall be within the Indemnitee's power.
11. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
instrument.
12. Indemnification Hereunder Not Exclusive. Nothing herein shall
be deemed to diminish or otherwise restrict the Indemnitee's
right to indemnification under any provision of the
Declaration of Trust or Bylaws of the Company and amendments
thereto or under law.
13. Governing Law. This Agreement shall be governed by and
construed in
<PAGE> 5
accordance with the internal laws of the State of Maryland.
14. Saving Clause. Wherever there is conflict between any
provision of this Agreement and any applicable present or
future statute, law or regulations contrary to which the
Company and the Indemnitee have no legal right to contract,
the latter shall prevail, but in such event the affected
provisions of this Agreement shall be curtailed and restricted
only to the extent necessary to bring them within applicable
legal requirements.
15. Coverage. The provisions of this Agreement shall apply with
respect to the Indemnitee's service as an Officer or Trustee
of the Company prior to the date of this Agreement and with
respect to all periods of such service after the date of this
Agreement, even though the Indemnitee may have ceased to be an
Officer or Trustee of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
CCA PRISON REALTY TRUST
By:
------------------------------------
Its:
-----------------------------------
OFFICER OR TRUSTEE
--------------------------------------
<PAGE> 1
EXHIBIT 10.22
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made on this 1st day of June, 1997, by and between CCA
PRISON REALTY TRUST, a Maryland real estate investment trust (the "Company"),
and J. MICHAEL QUINLAN (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to retain the services of the Employee,
and the Employee desires to be employed by the Company, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and conditions set forth below, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Employee as its
Chief Executive Officer, and the Employee hereby accepts such employment upon
the terms and conditions of this Agreement. In such capacity, the Employee shall
have such duties, functions, responsibilities and authority as are consistent
with the Employee's position, subject to the general direction, approval and
control of the Board of Trustees of the Company (the "Board"). The duties of the
Employee may be expanded, restricted or otherwise altered from time to time by
the Board, consistent with the general duties, authority, and responsibilities
set forth herein.
2. Compensation.
(a) Base Salary. In consideration of the services rendered by the
Employee pursuant to Section 1 hereof, the Company shall pay the Employee a base
salary (the "Base Salary") of $150,000 per annum payable in accordance with the
Company's normal payment practices but in no event less frequently than monthly.
At the end of each year during the term hereof, the Base Salary shall be
reviewed by the Compensation Committee of the Board (the "Compensation
Committee") and may be increased (but not decreased) in the Compensation
Committee's absolute discretion.
(b) Bonus. In the absolute discretion of the Compensation
Committee, the Employee may receive a bonus in an amount to be determined by the
Compensation Committee.
(c) Benefits. The Employee shall also be entitled:
(i) to receive upon closing of the initial public
offering of the Common Shares (as herein defined) an "incentive stock
option" (as defined in Section 422 of the Internal Revenue Code of
1986, as amended) to purchase up to 350,000 common shares, $.01 par
value, of the Company (the "Common Shares") under the CCA Realty Trust
1997 Employee Share Incentive Plan (the "Share Incentive Plan"), such
option to vest in annual increments of 87,500 shares beginning on the
date hereof and to be exercisable during the ten-year period beginning
on the date of grant;
<PAGE> 2
(ii) to receive, in the absolute discretion of the
Compensation Committee, additional share options (incentive or
non-qualified), restricted shares, deferred shares and other awards
under the Share Incentive Plan;
(iii) to participate in any executive deferred compensation
plan or qualified retirement plan adopted by the Company, subject to
and on a basis consistent with the terms, conditions and overall
administration of such plans; and
(iv) to participate in or receive benefits under any
employee benefit plan or other arrangement including, but not limited
to, any medical, dental, retirement, disability, life insurance, sick
leave and vacation plans or arrangements made available by the Company
to any of its employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans or
arrangements.
(d) Expenses. The Company shall promptly reimburse the Employee
for all reasonable travel and other business expenses incurred by the Employee
in the performance of his duties under this Agreement upon evidence of receipt.
3. Covenants of Employee.
(a) Non-Competition. The Company and the Employee recognize and
acknowledge that the Company's business has a national scope and the Company is
contemplating doing business in every state in the United States and that it is
reasonably anticipated that the Employee will perform his duties under this
Agreement in every state in the United States. During the term of this Agreement
(and thereafter for a period of three (3) years), the Employee will not, within
the United States, directly or indirectly, own, manage, operate, control, be
employed by, participate in, or be connected in any manner with the ownership,
management, operation, or control of a prison real estate investment trust or
compete, directly or indirectly, with the Company. The Employee acknowledges
that the provisions of this paragraph are essential to the continued goodwill
and profitability of the Company. Should any court determine that the provisions
of this paragraph shall be unenforceable in respect to scope, duration, or
geographic area, such court may substitute to the extent enforceable, provisions
similar hereto or other provisions so as to provide the Company, to the fullest
extent permitted by applicable law, the benefits intended by this paragraph.
(b) Non-Disclosure. The Employee acknowledges that the Company's
knowledge of its business, its development plans, its method of operation and
managing the business, its cost control methods, its financial or other
performance data, its trade secrets, it methods for bidding on projects,
confidential information of the Company, its subsidiaries, affiliates, and
franchises and the Company's list of customers and prospective customers (as it
may exist from time to time) are valuable, special, and unique assets of the
Company and are proprietary to the Company. The Employee will not, during or
after the term of his employment, disclose any part thereof to any person, firm,
corporation, association, or other entity for any reason or purpose whatsoever.
2
<PAGE> 3
(c) Remedies. In addition to any other rights and remedies
available under this Agreement, at law or otherwise, the Company shall be
entitled to an injunction to be issued by any court of competent jurisdiction
enjoining and restraining the Employee from committing any violation of
subsections (a) and (b) above. Any provisions of subsections (a) and (b) above
which are deemed invalid, illegal or unenforceable in any jurisdiction shall, as
to that jurisdiction and subject to this paragraph be ineffective to the extent
of such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provisions of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.
4. Working Facilities. The Employee shall have such facilities
and services as are suitable to his position and appropriate for the performance
of his duties, as the Company may determine.
5. Term and Termination.
(a) Term. The term of this Agreement shall begin on the date first
written above, and shall terminate on the fourth anniversary date thereof. The
term of this Agreement may be extended for an additional period of time by
mutual written agreement of the Company and the Employee.
(b) Termination. The Company may terminate the Employee's
employment upon thirty (30) days prior written notice to the Employee upon the
happening of any of the following events: (i) any act of the Employee which
constitutes fraud, gross misconduct, gross negligence or a material breach of
this Agreement, (ii) frequent and repeated failure to perform services which
have been reasonably requested of the Employee by the Board and which are
consistent with the terms of this Agreement, (iii) the death of the Employee,
(iv) disability by the Employee (as determined under the Share Incentive Plan),
or (v) a decision by the Company to terminate its business and liquidate;
provided, however, that the Company shall not terminate the employment of the
Employee pursuant to clause (i) or (ii) hereof unless the Company (A) provides
the Employee with at least 15 days' prior written notice of its intention to
terminate the Employee's employment hereunder, which notice shall describe the
reasons for such termination, and (B) allows the Employee a reasonable
opportunity and a reasonable period of time to cure any curable acts or
omissions on which its decision to terminate is based.
6. Notices. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing sent by certified mail to his
residence in the case of the Employee, or to its principal office in the case of
the Company.
3
<PAGE> 4
7. Waiver of Breach. The waiver by the Company of a breach of any
provision of this Agreement by the Employee shall not operate or be construed as
a waiver of any subsequent breach by the Employee. No waiver shall be valid
unless in writing and signed by an authorized officer of the Company.
8. Assignment. The Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Employee may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Company.
9. Entire Agreement. This Agreement contains the entire
understanding of the parties. It may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension, or discharge is sought.
10. Counterparts. This Agreement may be executed in two
counterparts, each of which may be considered an original but which taken
together shall constitute the same instrument.
11. Controlling Law. This Agreement shall be governed and
interpreted under the laws of the State of Tennessee.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement this the
same day and date first written above.
COMPANY:
CCA PRISON REALTY TRUST
By:
------------------------------------
Its:
-----------------------------------
EMPLOYEE:
---------------------------------------
J. Michael Quinlan
5
<PAGE> 1
EXHIBIT 10.23
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made on this 1st day of June, 1997, by and between CCA
PRISON REALTY TRUST, a Maryland real estate investment trust (the "Company"),
and D. ROBERT CRANTS III (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to retain the services of the Employee,
and the Employee desires to be employed by the Company, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and conditions set forth below, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Employee as its
President, and the Employee hereby accepts such employment upon the terms and
conditions of this Agreement. In such capacity, the Employee shall have such
duties, functions, responsibilities and authority as are consistent with the
Employee's position, subject to the general direction, approval and control of
the Board of Trustees of the Company (the "Board"). The duties of the Employee
may be expanded, restricted or otherwise altered from time to time by the Board,
consistent with the general duties, authority, and responsibilities set forth
herein.
2. Compensation.
(a) Base Salary. In consideration of the services rendered by the
Employee pursuant to Section 1 hereof, the Company shall pay the Employee a base
salary (the "Base Salary") of $100,000 per annum payable in accordance with the
Company's normal payment practices but in no event less frequently than monthly.
At the end of each year during the term hereof, the Base Salary shall be
reviewed by the Compensation Committee of the Board (the "Compensation
Committee") and may be increased (but not decreased) in the Compensation
Committee's absolute discretion.
(b) Bonus. In the absolute discretion of the Compensation
Committee, the Employee may receive a bonus in an amount to be determined by the
Compensation Committee.
(c) Benefits. The Employee shall also be entitled:
(i) to receive upon closing of the initial public
offering of the Common Shares (as herein defined) an "incentive stock
option" (as defined in Section 422 of the Internal Revenue Code of
1986, as amended) to purchase up to 200,000 common shares, $.01 par
value, of the Company (the "Common Shares") under the CCA Realty Trust
1997 Employee Share Incentive Plan (the "Share Incentive Plan"), such
option to vest in annual increments of 50,000 Common Shares beginning
on the date hereof, and to be exercisable during the ten-year period
beginning on the date of grant;
<PAGE> 2
(ii) to receive, in the absolute discretion of the
Compensation Committee, additional share options (incentive or
non-qualified), restricted shares, deferred shares and other awards
under the Share Incentive Plan;
(iii) to participate in any executive deferred compensation
plan or qualified retirement plan adopted by the Company, subject to
and on a basis consistent with the terms, conditions and overall
administration of such plans; and
(iv) to participate in or receive benefits under any
employee benefit plan or other arrangement including, but not limited
to, any medical, dental, retirement, disability, life insurance, sick
leave and vacation plans or arrangements made available by the Company
to any of its employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans or
arrangements.
(d) Expenses. The Company shall promptly reimburse the Employee
for all reasonable travel and other business expenses incurred by the Employee
in the performance of his duties under this Agreement upon evidence of receipt.
3. Covenants of Employee.
(a) Non-Competition. The Company and the Employee recognize and
acknowledge that the Company's business has a national scope and the Company is
contemplating doing business in every state in the United States and that it is
reasonably anticipated that the Employee will perform his duties under this
Agreement in every state in the United States. During the term of this Agreement
(and thereafter for a period of three (3) years), the Employee will not, within
the United States, directly or indirectly, own, manage, operate, control, be
employed by, participate in, or be connected in any manner with the ownership,
management, operation, or control of a prison real estate investment trust or
compete, directly or indirectly, with the Company. The Employee acknowledges
that the provisions of this paragraph are essential to the continued goodwill
and profitability of the Company. Should any court determine that the provisions
of this paragraph shall be unenforceable in respect to scope, duration, or
geographic area, such court may substitute to the extent enforceable, provisions
similar hereto or other provisions so as to provide the Company, to the fullest
extent permitted by applicable law, the benefits intended by this paragraph.
(b) Non-Disclosure. The Employee acknowledges that the Company's
knowledge of its business, its development plans, its method of operation and
managing the business, its cost control methods, its financial or other
performance data, its trade secrets, it methods for bidding on projects,
confidential information of the Company, its subsidiaries, affiliates, and
franchises and the Company's list of customers and prospective customers (as it
may exist from time to time) are valuable, special, and unique assets of the
Company and are proprietary to the Company. The Employee will not, during or
after the term of his employment, disclose any part thereof to any person, firm,
corporation, association, or other entity for any reason or purpose whatsoever.
2
<PAGE> 3
(c) Remedies. In addition to any other rights and remedies
available under this Agreement, at law or otherwise, the Company shall be
entitled to an injunction to be issued by any court of competent jurisdiction
enjoining and restraining the Employee from committing any violation of
subsections (a) and (b) above. Any provisions of subsections (a) and (b) above
which are deemed invalid, illegal or unenforceable in any jurisdiction shall, as
to that jurisdiction and subject to this paragraph be ineffective to the extent
of such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provisions of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.
4. Working Facilities. The Employee shall have such facilities
and services as are suitable to his position and appropriate for the performance
of his duties, as the Company may determine.
5. Term and Termination.
(a) Term. The term of this Agreement shall begin on the date first
written above, and shall terminate on the fourth anniversary date thereof. The
term of this Agreement may be extended for an additional period of time by
mutual written agreement of the Company and the Employee.
(b) Termination. The Company may terminate the Employee's
employment upon thirty (30) days prior written notice to the Employee upon the
happening of any of the following events: (i) any act of the Employee which
constitutes fraud, gross misconduct, gross negligence or a material breach of
this Agreement, (ii) frequent and repeated failure to perform services which
have been reasonably requested of the Employee by the Board and which are
consistent with the terms of this Agreement, (iii) the death of the Employee,
(iv) disability by the Employee (as determined under the Share Incentive Plan),
or (v) a decision by the Company to terminate its business and liquidate;
provided, however, that the Company shall not terminate the employment of the
Employee pursuant to clause (i) or (ii) hereof unless the Company (A) provides
the Employee with at least 15 days' prior written notice of its intention to
terminate the Employee's employment hereunder, which notice shall describe the
reasons for such termination, and (B) allows the Employee a reasonable
opportunity and a reasonable period of time to cure any curable acts or
omissions on which its decision to terminate is based.
6. Notices. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing sent by certified mail to his
residence in the case of the Employee, or to its principal office in the case of
the Company.
7. Waiver of Breach. The waiver by the Company of a breach of any
provision of this Agreement by the Employee shall not operate or be construed as
a waiver of any subsequent breach
3
<PAGE> 4
by the Employee. No waiver shall be valid unless in writing and signed by an
authorized officer of the Company.
8. Assignment. The Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Employee may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Company.
9. Entire Agreement. This Agreement contains the entire
understanding of the parties. It may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension, or discharge is sought.
10. Counterparts. This Agreement may be executed in two
counterparts, each of which may be considered an original but which taken
together shall constitute the same instrument.
11. Controlling Law. This Agreement shall be governed and
interpreted under the laws of the State of Tennessee.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement this the
same day and date first written above.
COMPANY:
CCA PRISON REALTY TRUST
By:
-----------------------------------
Its:
----------------------------------
EMPLOYEE:
--------------------------------------
D. Robert Crants III
5
<PAGE> 1
EXHIBIT 10.24
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made on this 1st day of June, 1997, by and between CCA
PRISON REALTY TRUST, a Maryland real estate investment trust (the "Company"),
and MICHAEL W. DEVLIN (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to retain the services of the Employee,
and the Employee desires to be employed by the Company, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and conditions set forth below, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Employee as its
Chief Development Officer, and the Employee hereby accepts such employment upon
the terms and conditions of this Agreement. In such capacity, the Employee shall
have such duties, functions, responsibilities and authority as are consistent
with the Employee's position, subject to the general direction, approval and
control of the Board of Trustees of the Company (the "Board"). The duties of the
Employee may be expanded, restricted or otherwise altered from time to time by
the Board, consistent with the general duties, authority, and responsibilities
set forth herein.
2. Compensation.
(a) Base Salary. In consideration of the services rendered by the
Employee pursuant to Section 1 hereof, the Company shall pay the Employee a base
salary (the "Base Salary") of $100,000 per annum payable in accordance with the
Company's normal payment practices but in no event less frequently than monthly.
At the end of each year during the term hereof, the Base Salary shall be
reviewed by the Compensation Committee of the Board (the "Compensation
Committee") and may be increased (but not decreased) in the Compensation
Committee's absolute discretion.
(b) Bonus. In the absolute discretion of the Compensation
Committee, the Employee may receive a bonus in an amount to be determined by the
Compensation Committee.
(c) Benefits. The Employee shall also be entitled:
(i) to receive upon closing of the initial public
offering of the Common Shares (as herein defined) an "incentive stock
option" (as defined in Section 422 of the Internal Revenue Code of
1986, as amended) to purchase up to 200,000 common shares, $.01 par
value, of the Company (the "Common Shares") under the CCA Realty Trust
1997 Employee Share Incentive Plan (the "Share Incentive Plan"), such
option to vest in annual increments of 50,000 Common Shares beginning
on the date hereof and to be exercisable during the ten-year period
beginning on the date of grant;
<PAGE> 2
(ii) to receive, in the absolute discretion of the
Compensation Committee, additional share options (incentive or
non-qualified), restricted shares, deferred shares and other awards
under the Share Incentive Plan;
(iii) to participate in any executive deferred compensation
plan or qualified retirement plan adopted by the Company, subject to
and on a basis consistent with the terms, conditions and overall
administration of such plans; and
(iv) to participate in or receive benefits under any
employee benefit plan or other arrangement including, but not limited
to, any medical, dental, retirement, disability, life insurance, sick
leave and vacation plans or arrangements made available by the Company
to any of its employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans or
arrangements.
(d) Expenses. The Company shall promptly reimburse the Employee
for all reasonable travel and other business expenses incurred by the Employee
in the performance of his duties under this Agreement upon evidence of receipt.
3. Covenants of Employee.
(a) Non-Competition. The Company and the Employee recognize and
acknowledge that the Company's business has a national scope and the Company is
contemplating doing business in every state in the United States and that it is
reasonably anticipated that the Employee will perform his duties under this
Agreement in every state in the United States. During the term of this Agreement
(and thereafter for a period of three (3) years), the Employee will not, within
the United States, directly or indirectly, own, manage, operate, control, be
employed by, participate in, or be connected in any manner with the ownership,
management, operation, or control of a prison real estate investment trust or
compete, directly or indirectly, with the Company. The Employee acknowledges
that the provisions of this paragraph are essential to the continued goodwill
and profitability of the Company. Should any court determine that the provisions
of this paragraph shall be unenforceable in respect to scope, duration, or
geographic area, such court may substitute to the extent enforceable, provisions
similar hereto or other provisions so as to provide the Company, to the fullest
extent permitted by applicable law, the benefits intended by this paragraph.
(b) Non-Disclosure. The Employee acknowledges that the Company's
knowledge of its business, its development plans, its method of operation and
managing the business, its cost control methods, its financial or other
performance data, its trade secrets, it methods for bidding on projects,
confidential information of the Company, its subsidiaries, affiliates, and
franchises and the Company's list of customers and prospective customers (as it
may exist from time to time) are valuable, special, and unique assets of the
Company and are proprietary to the Company. The Employee will not, during or
after the term of his employment, disclose any part thereof to any person, firm,
corporation, association, or other entity for any reason or purpose whatsoever.
2
<PAGE> 3
(c) Remedies. In addition to any other rights and remedies
available under this Agreement, at law or otherwise, the Company shall be
entitled to an injunction to be issued by any court of competent jurisdiction
enjoining and restraining the Employee from committing any violation of
subsections (a) and (b) above. Any provisions of subsections (a) and (b) above
which are deemed invalid, illegal or unenforceable in any jurisdiction shall, as
to that jurisdiction and subject to this paragraph be ineffective to the extent
of such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provisions of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction. If any covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.
4. Working Facilities. The Employee shall have such facilities
and services as are suitable to his position and appropriate for the performance
of his duties, as the Company may determine.
5. Term and Termination.
(a) Term. The term of this Agreement shall begin on the date first
written above, and shall terminate on the fourth anniversary date thereof. The
term of this Agreement may be extended for an additional period of time by
mutual written agreement of the Company and the Employee.
(b) Termination. The Company may terminate the Employee's
employment upon thirty (30) days prior written notice to the Employee upon the
happening of any of the following events: (i) any act of the Employee which
constitutes fraud, gross misconduct, gross negligence or a material breach of
this Agreement, (ii) frequent and repeated failure to perform services which
have been reasonably requested of the Employee by the Board and which are
consistent with the terms of this Agreement, (iii) the death of the Employee,
(iv) disability by the Employee (as determined under the Share Incentive Plan),
or (v) a decision by the Company to terminate its business and liquidate;
provided, however, that the Company shall not terminate the employment of the
Employee pursuant to clause (i) or (ii) hereof unless the Company (A) provides
the Employee with at least 15 days' prior written notice of its intention to
terminate the Employee's employment hereunder, which notice shall describe the
reasons for such termination, and (B) allows the Employee a reasonable
opportunity and a reasonable period of time to cure any curable acts or
omissions on which its decision to terminate is based. On any termination
pursuant to this paragraph, the Employee shall be entitled to full compensation
through the date of his termination.
6. Notices. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing sent by certified mail to his
residence in the case of the Employee, or to its principal office in the case of
the Company.
7. Waiver of Breach. The waiver by the Company of a breach of any
provision of this Agreement by the Employee shall not operate or be construed as
a waiver of any subsequent breach
3
<PAGE> 4
by the Employee. No waiver shall be valid unless in writing and signed by an
authorized officer of the Company.
8. Assignment. The Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Employee may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Company.
9. Entire Agreement. This Agreement contains the entire
understanding of the parties. It may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension, or discharge is sought.
10. Counterparts. This Agreement may be executed in two
counterparts, each of which may be considered an original but which taken
together shall constitute the same instrument.
11. Controlling Law. This Agreement shall be governed and
interpreted under the laws of the State of Tennessee.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement this the
same day and date first written above.
COMPANY:
CCA PRISON REALTY TRUST
By:
---------------------------------------
Its:
---------------------------------------
EMPLOYEE:
-------------------------------------------
Michael W. Devlin
5
<PAGE> 1
EXHIBIT 10.25
CCA PRISON REALTY TRUST
1997 EMPLOYEE SHARE INCENTIVE PLAN
SECTION 1. Purpose; Definitions.
The purpose of the CCA Realty Trust 1997 Employee Share Incentive Plan
(the "Plan") is to enable CCA Realty Trust (the "Company") to attract, retain
and reward key employees of the Company and the Chairman of the Company's Board
of Trustees (the "Board"), and strengthen the mutuality of interests between
such individuals and the Company's shareholders, by offering such individuals
performance-based share incentives and/or other equity interests or
equity-based incentives in the Company, as well as performance-based incentives
payable in cash.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least 20% of
the combined voting power of all classes of stock of such entity or at least
20% of the ownership interests in such entity.
b. "Board" means the Board of Trustees of the Company.
c. "Book Value" means, as of any given date, on a per share basis (i) the
shareholders' equity in the Company as of the end of the immediately preceding
fiscal year as reflected in the Company's consolidated balance sheet, subject
to such adjustments as the Committee shall specify at or after grant, divided
by (ii) the number of then outstanding Shares as of such year-end date (as
adjusted by the Committee for subsequent events).
d. "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
e. "Committee" means the Committee referred to in Section 2 of the Plan.
If at any time no Committee shall be in office, then the functions of the
Committee specified in the Plan shall be exercised by the Board.
f. "Company" means CCA Prison Realty Trust, a Maryland real estate
investment trust, or any successor trust or corporation.
g. "Deferral Period" means the period described in Section 8(a) below.
h. "Deferred Shares" means an award made pursuant to Section 8 below of
the right to receive Shares at the end of a specified Deferral Period.
<PAGE> 2
i. "Disability" means disability as determined under procedures
established by the Committee for purposes of this Plan.
j. "Early Retirement" means retirement, with the express consent for
purposes of this Plan of the Company at or before the time of such retirement,
from active employment with the Company and any Subsidiary or Affiliate on or
after attainment of age sixty-two (62) but before attainment of age sixty-five
(65).
k. "Fair Market Value" means, as of any given date, unless otherwise
determined by the Committee in good faith, the reported closing price of the
Shares on the New York Stock Exchange or, if no such sale of Shares is reported
on the New York Stock Exchange on such date, the fair market value of the
Shares as determined by the Committee in good faith.
l. "Immediate Family Member" means a person described in Section 5(e)
below.
m. "Incentive Option" means any Share Option intended to be and designated
as an "Incentive Stock Option" within the meaning of Section 422 of the Code.
n. "Non-Qualified Option" means any Share Option that is not an Incentive
Option.
o. "Normal Retirement" means retirement from active employment with the
Company and any Subsidiary or Affiliate on or after age 65.
p. "Other Share-Based Award" means an award under Section 10 below that is
valued in whole or in part by reference to, or is otherwise based on, Shares.
q. "Plan" means this CCA Realty Trust 1997 Employee Share Incentive Plan,
as hereinafter amended from time to time.
r. "Restricted Shares" means an award of Shares that is subject to
restrictions under Section 7 below.
s. "Restriction Period" means the period described in Section 7(c) below.
t. "Retirement" means Normal or Early Retirement.
u. "Shares" means the Common Shares, $.01 par value per share, of the
Company.
v. "Share Appreciation Right" means the right pursuant to an award granted
under Section 6 below to receive upon exercise an amount equal to the excess of
the Fair Market Value of one Share over the price per share specified in the
award agreement multiplied by the number of Shares in respect of which a Share
Appreciation Right has been exercised.
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<PAGE> 3
w. "Share Option" or "Option" means any option to purchase Shares
(including Restricted Shares and Deferred Shares, if the Committee so
determines) granted pursuant to Section 5 below.
x. "Share Purchase Right" means the right to purchase Shares pursuant to
Section 9.
y. "Subsidiary" means any corporation (or other entity) in an unbroken
chain of corporations and other entities beginning with the Company if each of
the corporations and other entities (other than the last corporation or other
entity in the unbroken chain) owns equity interests possessing more than 50% of
the total combined voting power of all classes of equity interests in one of
the other corporations or entities in the chain.
In addition, the terms "Change in Control", "Potential Change in Control"
and "Change in Control Price" shall have meanings set forth, respectively, in
Sections 11(b), (c) and (d) below.
SECTION 2. Administration.
The Plan shall be administered by the Compensation Committee of the Board.
The functions of the Committee specified in the Plan shall be exercised by the
Board, if and to the extent that no Committee exists which has the authority to
so administer the Plan.
The Committee shall have full authority to grant, pursuant to the terms of
the Plan, to officers and other key employees eligible under Section 4: (i)
Share Options, (ii) Share Appreciation Rights, (iii) Restricted Shares, (iv)
Deferred Shares, (v) Share Purchase Rights and/or (vi) Other Share-Based
Awards.
In particular, the Committee shall have the authority:
(i) to select the officers and other key employees of the Company
and its Subsidiaries and Affiliates to whom Share Options, Share
Appreciation Rights, Restricted Shares, Deferred Shares, Share Purchase
Rights and/or Other Share-Based Awards may from time to time be granted
hereunder;
(ii) to determine whether and to what extent Incentive Options,
Non-Qualified Options, Share Appreciation Rights, Restricted Shares,
Deferred Shares, Share Purchase Rights and/or Other Share-Based Awards, or
any combination thereof, are to be granted hereunder to one or more
eligible employees;
(iii) to determine the number of shares to be covered by each such
award granted hereunder;
(iv) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any
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<PAGE> 4
restriction or limitation, or any vesting acceleration or waiver of
forfeiture restrictions regarding any Share Option or other award and/or
the Shares relating thereto, based in each case on such factors as the
Committee shall determine, in its sole discretion);
(v) to determine whether and under what circumstances a Share
Option may be settled in cash, Restricted Shares and/or Deferred Shares
under Section 5(k) or (l), as applicable, instead of Shares that are
neither Restricted Shares nor Deferred Shares;
(vi) to determine whether, to what extent and under what
circumstances Option grants and/or other awards under the Plan and/or
other cash awards made by the Company are to be made, and operate, on a
tandem basis vis-a-vis other awards under the Plan and/or cash awards made
outside of the Plan, or on an additive basis;
(vii) to determine whether, to what extent and under what
circumstances Shares and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election
of the participant (including providing for and determining the amount (if
any) of any deemed earnings on any deferred amount during any deferral
period); and
(viii) to determine the terms and restrictions applicable to Share
Purchase Rights and the Shares purchased by exercising such rights.
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan
shall be made in the Committee's sole discretion and shall be final and binding
on all persons, including the Company and Plan participants.
SECTION 3. Shares Subject to Plan.
The total number of Shares reserved and available for distribution under
the Plan shall be 1,300,000 shares. Such Shares may consist, in whole or in
part, of authorized and unissued Shares or treasury Shares.
Subject to Section 6(b)(iv) below, if any Shares that have been optioned
cease to be subject to a Share Option, or if any such Shares that are subject
to any Restricted Shares or Deferred Shares award, Share Purchase Right or
Other Share-Based Award granted hereunder are forfeited or any such award
otherwise terminates without a payment being made to the participant in the
form of Shares, such shares shall again be available for distribution in
connection with future awards under the Plan.
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<PAGE> 5
In the event of any merger, reorganization, consolidation,
recapitalization, Share dividend, Share split or other change in corporate
structure affecting the Shares, an adjustment shall be made in the aggregate
number of shares reserved for issuance under the Plan, in the number and option
price of Shares subject to outstanding Options granted under the Plan, in the
number and purchase price of Shares subject to outstanding Share Purchase
Rights under the Plan, and in the number of Shares subject to other outstanding
awards granted under the Plan as may be determined to be appropriate by the
Committee, in its sole discretion, provided that the number of shares subject
to any award shall always be a whole number. Such adjusted option price shall
also be used to determine the amount payable by the Company upon the exercise
of any Share Appreciation Right associated with any Share Option.
SECTION 4. Eligibility.
The Chairman of the Board, all Officers and other key employees of the
Company and its Subsidiaries and Affiliates (but excluding members of the
Committee) who are responsible for or contribute to the management, growth
and/or profitability of the business of the Company and/or its Subsidiaries and
Affiliates are eligible to be granted awards under the Plan; provided, however,
that the Chairman of the Board shall not be eligible to receive Incentive
Options hereunder. Except as provided in the preceding sentence, any reference
herein to "employees" and their employment by the Company shall be deemed to
include the Chairman of the Board and his service as a trustee of the Company,
unless otherwise determined by the Committee. Without limiting the generality
of the foregoing, the Committee shall have the full authority to interpret the
provisions of the Plan as they may apply (or may not apply) to the Chairman of
the Board, and any determination by the Committee in this regard shall be final
and conclusive.
SECTION 5. Share Options.
Share Options may be granted alone, in addition to or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan. Any
Share Option granted under the Plan shall be in such form as the Committee may
from time to time approve.
Share Options granted under the Plan may be of two types: (i) Incentive
Options and (ii) Non-Qualified Options.
The Committee shall have the authority to grant to any optionee Incentive
Options, Non-Qualified Options, or both types of Share Options (in each case
with or without Share Appreciation Rights).
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
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<PAGE> 6
(a) Option Price. The option price per Share purchasable under a Share
Option shall be determined by the Committee at the time of grant but shall be
not less than 100% of the Fair Market Value of the Shares at grant, in the case
of Incentive Options, and not less than 50% of the Fair Market Value of the
Shares at grant, in the case of Non-Qualified Options.
(b) Option Term. The term of each Share Option shall be fixed by the
Committee, but no Share Option shall be exercisable more than ten years after
the date the Option is granted.
(c) Exercisability. Share Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at or after grant; provided, however, that, except as provided in
Section 5(f) and (g) and Section 11, unless otherwise determined by the
Committee at or after grant, no Share Option shall be exercisable prior to the
later of (i) the first anniversary date of the granting of the Option or (ii)
the second anniversary date of employment of the employee by the Company. If
the Committee provides, in its sole discretion, that any Share Option is
exercisable only in installments, the Committee may waive such installment
exercise provisions at any time at or after grant in whole or in part, based on
such factors as the Committee shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise
provisions apply under Section 5(c), Share Options may be exercised in whole or
in part at any time during the option period, by giving written notice of
exercise to the Company specifying the number of shares to be purchased.
Such notice shall be accompanied by payment in full of the purchase price,
either by check, note or such other instrument as the Committee may accept. As
determined by the Committee, in its sole discretion, at or after grant, payment
in full or in part may also be made in the form of a Share Option or
unrestricted Shares already owned by the optionee or, in the case of the
exercise of a Non-Qualified Option, Restricted Shares or Deferred Shares
subject to an award hereunder (based, in each case, on the Fair Market Value of
the Share Option or the Shares on the date the option is exercised, as
determined by the Committee).
If payment of the option exercise price of a Non-Qualified Option is made
in whole or in part in the form of Restricted Shares or Deferred Shares, such
Restricted Shares or Deferred Shares (and any replacement shares relating
thereto) shall remain (or be) restricted or deferred, as the case may be, in
accordance with the original terms of the Restricted Shares award or Deferred
Shares award in question, and any additional Shares received upon the exercise
shall be subject to the same forfeiture restrictions or deferral limitations,
unless otherwise determined by the Committee, in its sole discretion, at or
after grant.
No Shares shall be issued until full payment therefor has been made. An
optionee shall generally have the rights to dividends or other rights of a
shareholder with respect to shares subject to the Option when the optionee has
given written notice of exercise, has paid in full for such shares, and, if
requested, has given the representation described in Section 14(a).
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<PAGE> 7
(e) Transferability of Options. Incentive Options shall be transferable
by the optionee only by will or by the laws of descent and shall be
exercisable, during the optionee's lifetime, only by the optionee.
Non-Qualified Options shall be transferable by the optionee by will or by the
laws of descent or to (i) the spouse, children or grandchildren of the optionee
("Immediate Family Members"), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members, (iii) a partnership in which such Immediate
Family Members are the only partners, or (iv) one or more entities in which the
optionee has a 10% or greater equity interest, provided that (y) the share
option agreement pursuant to which such Non-Qualified Options are granted must
be approved by the Committee, and (z) subsequent transfers of transferred
Non-Qualified Options shall be prohibited except those in accordance with this
subparagraph (e). Following transfer, any such Non-Qualified Options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of this Plan or the
option agreement executed pursuant hereto, the term "optionee" shall be deemed
to refer to the transferee.
(f) Termination by Death. Subject to Section 5(j), if an optionee's
employment by the Company and any Subsidiary or Affiliate terminates by reason
of death, any Share Option held by such optionee may thereafter be exercised,
to the extent such option was exercisable at the time of death or on such
accelerated basis as the Committee may determine at or after grant (or as may
be determined in accordance with procedures established by the Committee), by
the legal representative of the estate or by the legatee of the optionee under
the will of the optionee, for a period of one year (or such other period as the
Committee may specify at grant) from the date of such death or until the
expiration of the stated term of such Share Option, whichever period is the
shorter.
(g) Termination by Reason of Disability. Subject to Section 5(j), if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
by reason of Disability, any Share Option held by such optionee may thereafter
be exercised by the optionee, to the extent it was exercisable at the time of
termination or on such accelerated basis as the Committee may determine at or
after grant (or as may be determined in accordance with procedures established
by the Committee), for a period of three years (or such other period as the
Committee may specify at grant) from the date of such termination of employment
or until the expiration of the stated term of such Share Option, whichever
period is the shorter; provided, however, that, if the optionee dies within
such three-year period (or such other period as the Committee shall specify at
grant), any unexercised Share Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for
a period of one year from the date of such death or until the expiration of the
stated term of such Share Option, whichever period is the shorter. In the event
of termination of employment by reason of Disability, if an Incentive Option is
exercised after the expiration of the exercise periods that apply for purposes
of Section 422 of the Code, such Share Option will thereafter be treated as a
Non-Qualified Option.
(h) Termination by Reason of Retirement. Subject to Section 5(j),
if an optionee's employment by the Company and any Subsidiary or Affiliate
terminates by reason of Normal or Early Retirement, any Share Option held by
such optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of such Retirement or on such accelerated basis
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<PAGE> 8
as the Committee may determine at or after grant (or as may be determined in
accordance with procedures established by the Committee), for a period of three
years (or such other period as Committee may specify at grant) from the date of
such termination of employment or the expiration of the stated term of such
Share Option, whichever period is the shorter; provided, however, that, if the
optionee dies within such three-year period (or such other period as the
Committee may specify at grant), any unexercised Share Option held by such
optionee shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of one year from the date of
such death or until the expiration of the stated term of such Share Option,
whichever period is the shorter. In the event of termination of employment by
reason of Retirement, if an Incentive Option is exercised after the expiration
of the exercise periods that apply for purposes of Section 422 of the Code, the
option will thereafter be treated as a Non-Qualified Option.
(i) Other Termination. Unless otherwise determined by the Committee (or
pursuant to procedures established by the Committee) at or after grant, if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
for any reason other than death, Disability or Normal or Early Retirement, the
Share Option shall thereupon terminate.
(j) Incentive Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of the optionee(s) affected, to disqualify
any Incentive Option under such Section 422.
If an Incentive Option granted under this Plan is first exercisable in any
calendar year to obtain Shares having a fair market value (determined at the
time of grant) in excess of $100,000, the option is treated as an Incentive
Option for Shares having a fair market value (determined at the time of grant)
equal to $100,000 and as a Non-Qualified Option for the remaining Shares. In
making this determination, the rules specified in Section 422(d) of the Code
shall be determinative, including the aggregate of all Incentive Options which
are first exercisable in that calendar year under any plan of the Company.
To the extent permitted under Section 422 of the Code or the applicable
regulations thereunder or any applicable Internal Revenue Service
pronouncement:
(i) if (x) a participant's employment is terminated by reason of
death, Disability or Retirement and (y) the portion of any Incentive
Option that is otherwise exercisable during the post-termination period
specified under Section 5(f), (g) or (h), applied without regard to the
$100,000 limitation contained in Section 422(b)(7) of the Code, is greater
than the portion of such option that is immediately exercisable as an
"Incentive Stock Option" during such post-termination period under Section
422, such excess shall be treated as a Non-Qualified Option; and
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(ii) if the exercise of an Incentive Option is accelerated by
reason of a Change in Control, any portion of such option that is not
exercisable as an Incentive Option by reason of the $100,000 limitation
contained in Section 422(b)(7) of the Code shall be treated as a
Non-Qualified Option.
An employee who owns Shares representing more than ten percent (10%) of
the total combined voting power of all classes of shares of the Company shall
not be eligible to receive an Incentive Option.
(k) Buyout Provisions. The Committee may at any time offer to buy out for
a payment in cash, Shares, Deferred Shares or Restricted Shares an option
previously granted, based on such terms and conditions as the Committee shall
establish and communicate to the optionee at the time that such offer is made.
(l) Settlement Provisions. If the option agreement so provides at grant or
is amended after grant and prior to exercise to so provide (with the optionee's
consent), the Committee may require that all or part of the shares to be issued
with respect to the spread value of an exercised Option take the form of
Deferred or Restricted Shares, which shall be valued on the date of exercise on
the basis of the Fair Market Value (as determined by the Committee) of such
Deferred or Restricted Shares determined without regard to the deferral
limitations and/or forfeiture restrictions involved.
SECTION 6. Share Appreciation Rights.
(a) Grant and Exercise. Share Appreciation Rights may be granted either
alone, in addition to or in conjunction with other awards granted under the
Plan.
A Share Appreciation Right may be exercised by a right holder, subject to
Section 6(b), in accordance with the procedures established by the Committee
for such purpose. Upon such exercise, the right holder shall be entitled to
receive an amount determined in the manner prescribed in Section 6(b).
(b) Terms and Conditions. Share Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the
following:
(i) Share Appreciation Rights shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Committee at or after grant; provided, however, that, except as
provided in Section 6(b)(iv) and (v) and Section 11, unless otherwise
determined by the Committee at or after grant, no Share Appreciation Right
shall be exercisable prior to the later of (i) the first anniversary date
of the granting of the Share Appreciation Right or (ii) the second
anniversary date of employment of the employee by the Company. The
exercise of Share Appreciation Rights held by right holders who are
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<PAGE> 10
subject to Section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") shall comply with Rule 16b-3 thereunder, to the extent
applicable.
(ii) Upon the exercise of a Share Appreciation Right, a right holder
shall be entitled to receive an amount in cash (or, if expressly provided
in the award agreement, an amount in cash and/or Shares) equal in value to
the excess of the Fair Market Value of one Share over the price per share
specified in the award agreement multiplied by the number of Shares in
respect of which the Share Appreciation Right shall have been exercised.
The amount of cash and, if applicable, the number of Shares to be paid
shall be calculated on the basis of the Fair Market Value of the Shares on
the date of exercise.
(iii) Share Appreciation Rights shall be transferable by the right
holder by will or by the laws of descent or to (A) the Immediate Family
Members of the right holder, (B) a trust or trusts for the exclusive
benefit of such Immediate Family Members, (C) a partnership in which such
Immediate Family Members are the only partners, or (D) one or more
entities in which the right holder has a 10% or greater equity interest,
provided that (y) the award agreement pursuant to which such Share
Appreciation Rights are granted must be approved by the Committee, and (z)
subsequent transfers of transferred Share Appreciation Rights shall be
prohibited except those in accordance with this subparagraph (iii).
Following transfer, any such Share Appreciation Rights shall continue to
be subject to the same terms and conditions as were applicable immediately
prior to transfer, provided that for purposes of this Plan or the award
agreement executed pursuant hereto, the term "right holder" shall be
deemed to refer to the transferee.
(iv) Except as otherwise provided in the award agreement, if a right
holder's employment by the Company and any Subsidiary or Affiliate
terminates by reason of death, any Share Appreciation Right held by such
right holder may thereafter be exercised, to the extent such right was
exercisable at the time of death or on such accelerated basis as the
Committee may determine at or after grant (or as may be determined in
accordance with procedures established by the Committee), by the legal
representative of the estate or by the legatee of the right holder under
the will of the right holder, for a period of one year (or such other
period as the Committee may specify at grant) from the date of such death
or until the expiration of the stated term of such Share Appreciation
Right, whichever period is the shorter.
(v) Except as otherwise provided in the award agreement, if a right
holder's employment by the Company and any Subsidiary or Affiliate
terminates by reason of Disability, any Share Appreciation Right held by
such right holder may thereafter be exercised by the right holder, to the
extent it was exercisable at the time of termination or on such
accelerated basis as the Committee may determine at or after grant (or as
may be determined in accordance with procedures established by the
Committee), for a period of three years (or such other period as the
Committee may specify at grant) from the date of such termination of
employment or until the expiration of the stated term of such Share
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<PAGE> 11
Appreciation Right, whichever period is the shorter; provided, however,
that, if the right holder dies within such three-year period (or such
other period as the Committee shall specify at grant), any unexercised
Share Appreciation Right held by such right holder shall thereafter be
exercisable to the extent to which it was exercisable at the time of death
for a period of one year from the date of such death or until the
expiration of the stated term of such Share Appreciation Right, whichever
period is the shorter.
(vi) Except as otherwise provided in the award agreement, if a
right holder's employment by the Company and any Subsidiary or Affiliate
terminates by reason of Normal or Early Retirement, any Share Appreciation
Right held by such right holder may thereafter be exercised by the right
holder, to the extent it was exercisable at the time of such Retirement or
on such accelerated basis as the Committee may determine at or after grant
(or as may be determined in accordance with procedures established by the
Committee), for a period of three years (or such other period as Committee
may specify at grant) from the date of such termination of employment or
the expiration of the stated term of such Share Appreciation Right,
whichever period is the shorter; provided, however, that, if the right
holder dies within such three-year period (or such other period as the
Committee may specify at grant), any unexercised Share Appreciation Right
held by such right holder shall thereafter be exercisable, to the extent
to which it was exercisable at the time of death, for a period of one year
from the date of such death or until the expiration of the stated term of
such Share Appreciation Right, whichever period is the shorter.
(vii) In its sole discretion, the Committee may grant "Limited"
Share Appreciation Rights under this Section 6, i.e., Share Appreciation
Rights that become exercisable only in the event of a Change in Control
and/or a Potential Change in Control, subject to such terms and conditions
as the Committee may specify at grant. Such Limited Share Appreciation
Rights shall be settled solely in cash.
(viii) The Committee, in its sole discretion, may also provide that,
in the event of a Change in Control and/or a Potential Change in Control,
the amount to be paid upon the exercise of a Share Appreciation Right or
Limited Share Appreciation Right shall be based on the Change in Control
Price, subject to such terms and conditions as the Committee may specify
at grant.
SECTION 7. Restricted Shares.
(a) Administration. Restricted Shares may be issued either alone, in
addition to or in tandem with other awards granted under the Plan and/or cash
awards made outside the Plan. The Committee shall determine the eligible
persons to whom, and the time or times at which, grants of Restricted Shares
will be made, the number of shares to be awarded, the price (if any) to be paid
by the recipient of Restricted Shares (subject to Section 7(b)), the time or
times within which such awards may be subject to forfeiture, and all other
terms and conditions of the awards.
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The Committee may condition the grant of Restricted Shares upon the
attainment of specified performance goals or such other factors as the
Committee may determine, in its sole discretion.
The provisions of Restricted Shares awards need not be the same with
respect to each recipient.
(b) Awards and Certificates. The prospective recipient of a Restricted
Shares award shall not have any rights with respect to such award, unless and
until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Company, and has otherwise
complied with the applicable terms and conditions of such award.
(i) The purchase price for Restricted Shares shall be equal to or
less than their par value and may be zero.
(ii) Awards of Restricted Shares must be accepted within a period
of 60 days (or such shorter period as the Committee may specify at grant)
after the award date, by executing a Restricted Shares Award Agreement and
paying whatever price (if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted Shares award shall be
issued a Share certificate in respect of such Restricted Shares. Such
certificate shall be registered in the name of such participant, and shall
bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award.
(iv) The Committee shall require that the share certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Shares award, the participant shall have delivered a share
power, endorsed in blank, relating to the Shares covered by such award.
(c) Restrictions and Conditions. The Restricted Shares awarded pursuant
to this Section 7 shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the date
of such award (the "Restriction Period"), the participant shall not be
permitted to sell, transfer, pledge or assign Restricted Shares awarded
under the Plan. Within these limits, the Committee, in its sole
discretion, may provide for the lapse of such restrictions in installments
and may accelerate or waive such restrictions in whole or in part, based
on service, performance and/or such other factors or criteria as the
Committee may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i),
the participant shall have, with respect to the Restricted Shares, all of
the rights of a shareholder of the Company, including the right to vote
the shares, and the right to receive any cash dividends.
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The Committee, in its sole discretion, as determined at the time of award,
may permit or require the payment of cash dividends to be deferred and, if
the Committee so determines, reinvested, subject to Section 14(e), in
additional Restricted Shares to the extent shares are available under
Section 3, or otherwise reinvested. Pursuant to Section 3 above, Share
dividends issued with respect to Restricted Shares shall be treated as
additional restricted Shares that are subject to the same restrictions and
other terms and conditions that apply to the shares with respect to which
such dividends are issued.
(iii) Subject to the applicable provisions of the award agreement
and this Section 7, upon termination of a participant's employment with
the Company and any Subsidiary or Affiliate for any reason during the
Restriction Period, all shares still subject to restriction will vest, or
be forfeited, in accordance with the terms and conditions established by
the Committee at or after grant.
(iv) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Shares, certificates for an appropriate
number of unrestricted shares shall be delivered to the participant
promptly.
(d) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Shares to the recipient of a Restricted Shares award, subject to
such performance, future service, deferral and other terms and conditions as
may be specified by the Committee.
SECTION 8. Deferred Shares.
(a) Administration. Deferred Shares may be awarded either alone, in
addition to or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. The Committee shall determine the eligible
persons to whom and the time or times at which Deferred Shares shall be
awarded, the number of Deferred Shares to be awarded to any person, the
duration of the period (the "Deferral Period") during which, and the conditions
under which, receipt of the Shares will be deferred, and the other terms and
conditions of the award in addition to those set forth in Section 8(b).
The Committee may condition the grant of Deferred Shares upon the
attainment of specified performance goals or such other factors or criteria as
the Committee shall determine, in its sole discretion.
The provisions of Deferred Shares awards need not be the same with respect
to each recipient.
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(b) Terms and Conditions. The Deferred Shares awarded pursuant to this
Section 8 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award agreement
referred to in Section 8(b)(vi) below, Deferred Shares awards may not be
sold, assigned, transferred, pledged or otherwise encumbered during the
Deferral Period. At the expiration of the Deferral Period (or the Elective
Deferral Period referred to in Section 8(b)(v), where applicable), share
certificates shall be delivered to the participant, or his legal
representative, in a number equal to the shares covered by the Deferred
Shares award.
(ii) Unless otherwise determined by the Committee at grant, amounts
equal to any dividends declared during the Deferral Period with respect to
the number of shares covered by a Deferred Shares award will be paid to
the participant currently, or deferred and deemed to be reinvested in
additional Deferred Shares, or otherwise reinvested, all as determined at
or after the time of the award by the Committee, in its sole discretion.
(iii) Subject to the provisions of the award agreement and this
Section 8, upon termination of a participant's employment with the Company
and any Subsidiary or Affiliate for any reason during the Deferral Period
for a given award, the Deferred Shares in question will vest, or be
forfeited, in accordance with the terms and conditions established by the
Committee at or after grant.
(iv) Based on service, performance and/or such other factors or
criteria as the Committee may determine, the Committee may, at or after
grant, accelerate the vesting of all or any part of any Deferred Shares
award and/or waive the deferral limitations for all or any part of such
award.
(v) A participant may elect to further defer receipt of an award
(or an installment of an award) for a specified period or until a
specified event (the "Elective Deferral Period"), subject in each case to
the Committee's approval and to such terms as are determined by the
Committee, all in its sole discretion. Subject to any exceptions adopted
by the Committee, such election must generally be made at least 12 months
prior to completion of the Deferral Period for such Deferred Shares award
(or such installment).
(vi) Each award shall be confirmed by, and subject to the terms of,
a Deferred Shares agreement executed by the Company and the participant.
(c) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and the service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Shares to the recipient of a Deferred Shares award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.
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SECTION 9. Share Purchase Rights.
(a) Awards and Administration. Subject to Section 3 above, the
Committee may grant eligible participants Share Purchase Rights which shall
enable such participants to purchase Shares (including Deferred Shares and
Restricted Shares):
(i) at its Fair Market Value on the date of grant;
(ii) at 50% or more of such Fair Market Value on such date;
(iii) at an amount equal to Book Value on such date; or
(iv) at an amount equal to the par value of such Shares on such
date.
The Committee shall also impose such deferral, forfeiture and/or other
terms and conditions as it shall determine, in its sole discretion, on such
Share Purchase Rights or the exercise thereof.
The terms of Share Purchase Rights awards need not be the same with
respect to each participant.
Each Share Purchase Right award shall be confirmed by, and be subject to
the terms of, a Share Purchase Rights Agreement.
(b) Exercisability. Share Purchase Rights shall generally be
exercisable for such period after grant as is determined by the Committee not
to exceed 30 days. However, the Committee may provide, in its sole discretion,
that the Share Purchase Rights of persons potentially subject to Section 16(b)
of the Securities Exchange Act of 1934 shall not become exercisable until six
months and one day after the grant date, and shall then be exercisable for 10
trading days at the purchase price specified by the Committee in accordance
with Section 9(a).
SECTION 10. Other Share-Based Awards.
(a) Administration. Other awards of Shares and other awards that are
valued in whole or in part by reference to, or are otherwise based on, Shares
("Other Share-Based Awards"), including, without limitation, performance
shares, convertible preferred stock, convertible debentures, exchangeable
securities and Share awards or options valued by reference to Book Value or
subsidiary performance, may be granted either alone or in addition to or in
tandem with Share Options, Share Appreciation Rights, Restricted Shares,
Deferred Shares or Share Purchase Rights granted under the Plan and/or cash
awards made outside of the Plan.
Subject to the provisions of the Plan, the Committee shall have authority
to determine the persons to whom and the time or times at which such awards
shall be made, the number of Shares
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to be awarded pursuant to such awards, and all other conditions of the awards.
The Committee may also provide for the grant of Shares upon the completion of a
specified performance period.
The provisions of Other Share-Based Awards need not be the same with
respect to each recipient.
(b) Terms and Conditions. Other Share-Based Awards made pursuant to this
Section 10 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award
agreement referred to in Section 10(b)(v) below, shares subject to awards
made under this Section 10 may not be sold, assigned, transferred,
pledged or otherwise encumbered prior to the date on which the shares are
issued, or, if later, the date o n which any applicable restriction,
performance or deferral period lapses.
(ii) Subject to the provisions of this Plan and the award agreement
and unless otherwise determined by the Committee at grant, the recipient
of an award under this Section 10 shall be entitled to receive, currently
or on a deferred basis, interest or dividends or interest or dividend
equivalents with respect to the number of shares covered by the award, as
determined at the time of the award by the Committee, in its sole
discretion, and the Committee may provide that such amounts (if any) shall
be deemed to have been reinvested in additional Shares or otherwise
reinvested.
(iii) Any award under Section 10 and any Shares covered by any such
award shall vest or be forfeited to the extent so provided in the award
agreement, as determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability or
death, or in cases of special circumstances, the Committee may, in its
sole discretion, waive in whole or in part any or all of the remaining
limitations imposed hereunder (if any) with respect to any or all of an
award under this Section 10.
(v) Each award under this Section 10 shall be confirmed by, and
subject to the terms of, an agreement or other instrument by the Company
and by the participant.
(vi) Shares (including securities convertible into Shares) issued on
a bonus basis under this Section 10 may be issued for no cash
consideration. Shares (including securities convertible into Shares)
purchased pursuant to a purchase right awarded under this Section 10 shall
be priced at least 50% of the Fair Market Value of the Shares on the date
of grant.
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SECTION 11. Change in Control Provisions.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 11(b), or
(2) a "Potential Change in Control" as defined in section 11(c), but only
if and to the extent so determined by the Committee or the Board at or after
grant (subject to any right of approval expressly reserved by the Committee or
the Board at the time of such determination), the following acceleration and
valuation provisions shall apply:
(i) Any Share Appreciation Rights (including, without limitation,
any Limited Share Appreciation Rights) outstanding for at least six months
and any Share Option awarded under the Plan not previously exercisable and
vested shall become fully exercisable and vested.
(ii) The restrictions and deferral limitations applicable to any
Restricted Shares, Deferred Shares, Share Purchase Rights and Other
Share-Based Awards, in each case to the extent not already vested under
the Plan, shall lapse and such shares and awards shall be deemed fully
vested.
(iii) The value of all outstanding Share Options, Share Appreciation
Rights, Restricted Shares, Deferred Shares, Share Purchase Rights and
Other Share-Based Awards, in each case to the extent vested, shall, unless
otherwise determined by the Committee in its sole discretion at or after
grant but prior to any Change in Control, be cashed out on the basis of
the "Change in Control Price" as defined in Section 11(d) as of the date
such Change in Control or such Potential Change in Control is determined
to have occurred or such other date as the Committee may determine prior
to the Change in Control.
(b) Definition of "Change in Control". For purposes of Section 11(a), a
"Change in Control" means the happening of any of the following:
(i) any person or entity, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, other than the Company or
a wholly-owned subsidiary thereof or any employee benefit plan of the
Company or any of its Subsidiaries, becomes the beneficial owner of the
Company's securities having 20% or more of the combined voting power of
the then outstanding securities of the Company that may be cast for the
election of trustees of the Company (other than as a result of an issuance
of securities initiated by the Company in the ordinary course of
business); or
(ii) as the result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions less
than a majority of the combined voting power
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of the then outstanding securities of the Company or any successor
corporation or entity entitled to vote generally in the election of the
trustees of the Company or such other corporation or entity after such
transaction are held in the aggregate by the holders of the Company's
securities entitled to vote generally in the election of trustees of the
Company immediately prior to such transaction; or
(iii) during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Board cease for any reason
to constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's shareholders, of each trustee of
the Company first elected during such period was approved by a vote of at
least two-thirds of the trustees of the Company then still in office who
were trustees of the Company at the beginning of any such period.
(c) Definition of Potential Change in Control. For purposes of Section
11(a), a "Potential Change in Control" means the happening of any one of the
following:
(i) The approval by shareholders of an agreement by the Company, the
consummation of which would result in a Change in Control of the Company
as defined in Section 11(b); or
(ii) The acquisition of beneficial ownership, directly or indirectly,
by any entity, person or group (other than the Company or a Subsidiary or
any Company employee benefit plan (including any trustee of such plan
acting as such trustee)) of securities of the Company representing 10% or
more of the combined voting power of the Company's outstanding securities
and the adoption by the Board of Trustees of a resolution to the effect
that a Potential Change in Control of the Company has occurred for
purposes of this Plan.
(d) Definition of Change in Control Price. For purposes of this Section
11, "Change in Control Price" means the highest price per share paid in any
transaction reported on the New York Stock Exchange or paid or offered in any
bona fide transaction related to a potential or actual Change in Control of the
Company at any time during the 60 day period immediately preceding the
occurrence of the Change in Control (or, where applicable, the occurrence of
the Potential Change in Control event), in each case as determined by the
Committee except that, in the case of Incentive Options and Share Appreciation
Rights relating to Incentive Options, such price shall be based only on
transactions reported for the date on which the optionee exercises such Share
Appreciation Rights (or Limited Share Appreciation Rights) or, where
applicable, the date on which a cashout occurs under Section 11(a)(2)(iii).
SECTION 12. Ownership Limitation.
All awards hereunder shall be subject to the ownership limitations set
forth in the Declaration of Trust of the Company. Without limiting the
generality of the foregoing, any award which causes a recipient, or any
constructive or beneficial owner of Shares (as determined under Sections 318
and
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544, respectively, of the Code), to own or be deemed to own shares in excess of
such ownership limitations shall be void ab initio.
SECTION 13. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of
an optionee or participant under a Share Option, Share Appreciation Right (or
Limited Share Appreciation Right), Restricted or Deferred Shares award, Share
Purchase Right or Other Share-Based Award theretofore granted, without the
optionee's or participant's consent, or which, without the approval of the
Company's shareholders, would:
(a) except as expressly provided in this Plan, increase the total number
of shares reserved for the purpose of the Plan; or
(b) change the employees or class of employees eligible to participate in
the Plan.
The Committee may amend the terms of any Share Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Share Options for
previously granted Share Options (on a one for one or other basis), including
previously granted Share Options having higher option exercise prices.
Subject to the above provisions, the Board shall have broad authority to
amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
SECTION 14. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a
general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Shares or payments in lieu of or with respect
to awards hereunder; provided, however, that, unless the Committee otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.
SECTION 15. General Provisions.
(a) The Committee may require each person purchasing shares pursuant to a
Share Option or other award under the Plan to represent to and agree with the
Company in writing that the optionee or participant is acquiring the shares
without a view to distribution thereof. The certificates
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for such shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.
All certificates for Shares or other securities delivered under the Plan
shall be subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends to be put on
any such certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee of the
Company or any Subsidiary or Affiliate any right to continued employment with
the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary or Affiliate
to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includable
in the gross income of the participant for Federal income tax purposes with
respect to any award under the Plan, the participant shall pay to the Company,
or make arrangements satisfactory to the Committee regarding the payment of,
any Federal, state, or local taxes of any kind required by law to be withheld
with respect to such amount. Unless otherwise determined by the Committee,
withholding obligations may be settled with Shares, including Shares that are
part of the award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements and the Company and its Subsidiaries or Affiliates shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend equivalents
in additional Restricted Shares (or in Deferred Shares or other types of Plan
awards) at the time of any dividend payment shall only be permissible if
sufficient Shares are available under Section 3 for such reinvestment (taking
into account then outstanding Share Options, Share Purchase Rights and other
Plan awards).
(f) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Maryland.
SECTION 16. Effective Date of Plan.
The Plan shall be effective as of April 21, 1997, subject to the approval
of the Company's shareholders.
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SECTION 17. Term of Plan.
No Share Option, Share Appreciation Right, Restricted Shares award,
Deferred Shares award, Share Purchase Right or Other Share-Based Award shall be
granted pursuant to the Plan on or after the tenth anniversary of the date of
shareholder approval, but awards granted prior to such tenth anniversary may
extend beyond that date.
SECTION 18. Restrictions on Transfer.
Awards of derivative securities (as defined in Rule 16a-1(c) under the
Securities Exchange Act of 1934 or any successor definition adopted by the
Securities and Exchange Commission) granted under the Plan shall not be
transferable except (a) by will or the laws of descent and distribution, or (b)
as provided in Sections 5(e) and 6(b)(iii) of the Plan.
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EXHIBIT 10.26
CCA PRISON REALTY TRUST
NON-EMPLOYEE TRUSTEES' SHARE OPTION PLAN
1. Purpose. The purpose of the CCA Prison Realty Trust Non-Employee
Trustees' Share Option Plan (the "Plan") is to advance the interests of
CCA Prison Realty Trust (the "Company") and its shareholders by
encouraging increased share ownership by members of the Board of Trustees
(the "Board") of the Company who are not employees of the Company, any
subsidiary of the Company, Corrections Corporation of America ("CCA"), or
any subsidiary of CCA to enhance long-term shareholder value through
continuing ownership of the Company's common shares.
2. Administration.
(a) The Plan shall be administered by the Compensation Committee
of the Board. The Compensation Committee shall have all the powers
vested in it by the terms of the Plan, which shall include the
authority (within the limitations described herein) to prescribe the
form of the agreements embodying awards of non-qualified options (the
"Options"). The Compensation Committee, subject to the provisions of
the Plan, shall grant Options under the Plan and shall have the power
to construe the Plan, to determine all questions arising hereunder,
and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable. Any decision of
the Compensation Committee in the administration of the Plan shall be
final and conclusive. The Compensation Committee may act only by a
majority of its members in office, except that the members of the
Compensation Committee may authorize any one or more of their members
or the Secretary or any other officer of the Company to execute and
deliver documents on behalf of the Compensation Committee.
(b) Each person who is or shall have been a member of the
Compensation Committee shall be indemnified and held harmless by the
Company against and from any and all loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him in
connection with or resulting from any claim, action, suit, or
proceeding to which he may be or become involved by reason of any
action taken or failure to act under the Plan and against and from
any and all amounts paid by him in settlement thereof (with the
Company's written approval) or paid by him in satisfaction of a
judgment in any such action, suit, or proceeding, except a judgment
in favor of the Company based upon a finding of his lack of good
faith; subject, however, to the conditions that upon the institution
of any claim, action, suit, or proceeding against him, he shall in
writing give the Company an opportunity, at its expense, to handle
and defend the same before he undertakes to handle and defend it on
such person's own behalf. The foregoing right of indemnification
shall not be exclusive of any other right to which such person may be
entitled as a matter of law or otherwise, or any power that the
Company may have to indemnify him or hold him harmless. Each member
of the Compensation Committee and each officer and employee of the
Company shall be fully justified in relying or acting in good faith
upon any information furnished in connection with the administration
of the Plan by an appropriate person or persons other than himself.
In no event shall any person who is or shall have been a member of
the Compensation
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Committee or an officer or employee of the Company be held liable for
any determination made or other action taken or any omission to act in
reliance upon any such information as referred to in the preceding
sentence, or for any action (including the furnishing of information)
taken or any omission to act, when such determination, action, or omission
is made in good faith.
3. Participation. Each member of the Board of the Company who is not an
employee of the Company, any subsidiary of the Company, CCA or any subsidiary
of CCA (a "Non-Employee Trustee") shall receive Options in accordance with
Section 5 below. As used herein, the term "subsidiary" means any corporation at
least 40% of the outstanding voting stock of which is owned, directly or
indirectly, by the Company or CCA, as the case may be.
4. Awards Under the Plan.
(a) Type of Awards. Awards under the Plan shall include only Options,
which are rights to purchase common shares of the Company having a par
value of $.01 per share (the "Shares"). All Options are subject to the
terms, conditions, and restrictions specified in Paragraph 5 below.
(b) Maximum Number of Shares That May Be Issued. No more than 150,000
Shares, subject to adjustment as provided in Paragraph 6 below, may be
issued under the Plan pursuant to the exercise of Options.
(c) Rights with Respect to Shares. A Non-Employee Trustee to whom an
Option is granted (and any person succeeding to such a Non-Employee
Trustee rights pursuant to the Plan) shall have no rights as a shareholder
with respect to any Shares issuable pursuant to any such Option until the
date of the issuance of a share certificate to him for such Shares. Except
as provided in Paragraph 6 below, no adjustment shall be made for
dividends, distributions, or other rights (whether ordinary or
extraordinary, and whether in cash, securities, or other property) for
which the record date is prior to the date such share certificate is
issued.
5. Non-Qualified Options. All Options shall be options which are not
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). Each Option shall be evidenced
by an agreement in such form as the Board shall prescribe from time to time in
accordance with the Plan and shall be subject to the following terms and
conditions:
(a) The option price per Share shall be 100% of the fair market value
per Share at grant. The fair market value per Share on any given date,
unless otherwise determined by the Compensation Committee in good faith,
shall be the reported closing price of a Share on the New York Stock
Exchange or, if no such sale of Shares is reported on the New York Stock
Exchange on such date, the fair market value of the Share as determined by
the Board
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in good faith. The options granted to Founding Trustees (as defined
below) upon effectiveness of the Registration Statement (as defined below)
will have an exercise price equal to the initial public offering price.
(b) Each Non-Employee Trustee as of the date the initial Registration
Statement on Form S-11(the "Registration Statement") is declared effective
by the Securities and Exchange Commission relating to the offering of
18,500,000 Shares will receive an Option to purchase 5,000 Shares on the
date of the Registration Statement (each such trustee, a "Founding
Trustee"). Each Non-Employee Trustee who is not a Founding Trustee (a
"NonFounding Trustee") will receive an Option to purchase 5,000 Shares on
the date the NonFounding Trustee is first elected or appointed to the
Board of Trustees. In addition to the foregoing, each Non-Employee Trustee
will receive an Option to purchase 5,000 Shares on each of the nine
anniversary dates of the adoption of the Plan.
(c) The term of each Option shall be fixed by the Compensation
Committee, but no Option shall be exercisable more than ten years after
the date the Option is granted.
(d) Options shall be exercisable at such time or times and subject to
such terms and conditions as shall be determined by the Board at or after
grant. If the Compensation Committee provides, in its sole discretion,
that any Option is exercisable only in installments, the Compensation
Committee may waive such installment exercise provisions at any time at or
after grant in whole or in part, based on such factors as the Compensation
Committee shall determine, in its sole discretion.
(e) Subject to whatever installment exercise provisions apply under
subparagraph (d), Options may be exercised in whole or in part at any time
during the option period, by giving written notice of exercise to the
Company specifying the number of Shares to be purchased. Such notice shall
be accompanied by payment in full of the purchase price either by check,
note or such other instrument as the Compensation Committee may accept. As
determined by the Compensation Committee in its sole discretion, at or
after grant, payment in full or in part may also be made in the form of a
share option or Shares already owned by the Non-Employee Trustee (based,
in each case, on the fair market value of the share option or the Shares
on the date the Option is exercised, as determined by the Compensation
Committee in accordance with subparagraph (a)). No Shares shall be issued
until full payment therefor has been made. Upon purchase of Shares, an
optionee shall make such representations, warranties and covenants as the
Compensation Committee may request.
(f) The Compensation Committee may, in its discretion, authorize all
or a portion of the Options to be granted to a Non-Employee Trustee to be
on terms which permit transfer by such optionee to (i) the spouse,
children or grandchildren of the Non-Employee Trustee ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefit of such
Immediate Family Members, (iii) a partnership in which such Immediate
Family Members are the only partners, or (iv) certain affiliates of the
Non-Employee Trustee, as determined
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by the Compensation Committee, provided that (x) there may be no
consideration for any such transfer, (y) the share option agreement
pursuant to which such Options are granted must be approved by the
Compensation Committee, and must expressly provide for transferability in
a manner consistent with this Section, and (z) subsequent transfers of
transferred Options shall be prohibited except those in accordance with
this subparagraph (f). Following transfer, any such Options shall continue
to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of this Plan or
the option agreement executed pursuant hereto, the term "optionee" or
"Non-Employee Trustee" shall be deemed to refer to the transferee.
6. Capital Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, share dividend, share split or other change in
corporate structure affecting the Shares, an adjustment shall be made in the
aggregate number of Shares reserved for issuance under the Plan and in the
number and price of Shares subject to outstanding Options granted under the
Plan, as may be determined to be appropriate by the Compensation Committee, in
its sole discretion, provided that the number of Shares subject to an Option
shall always be a whole number.
7. Authority to Issue Shares. The Company, during the term of the Options
granted hereunder, will at all times reserve and keep available, and will seek
to obtain from any regulatory body having jurisdiction, any requisite authority
in order to issue and sell such number of Shares as shall be sufficient to
satisfy the requirements of the Options granted under the Plan. If in the
opinion of its counsel the issuance or sale of any Shares hereunder shall not
be lawful for any reason, including the inability of the Company to obtain from
any regulatory body having jurisdiction, authority deemed by such counsel to be
necessary to such issuance or sale, the Company shall not be obligated to issue
or sell any such Shares.
8. Ownership Limitation. All Options shall be subject to the ownership
limitations set forth in the Declaration of Trust of the Company. Without
limiting the generality of the foregoing, any Option which causes a
Non-Employee Trustee, or any constructive or beneficial owner of Shares subject
to such Option (as determined under Sections 318 and 544, respectively, of the
Code), to own or be deemed to own Shares in excess of such ownership
limitations shall be void ab initio.
9. Miscellaneous Provisions.
(a) No Non-Employee Trustee or other person shall have any claim or
right to be granted an Option under the Plan. Neither the Plan nor any
action taken hereunder shall be construed as giving a Non-Employee Trustee
any right to be retained in the service of the Company.
(b) Except as provided in Section 5 (f), an optionee's rights and
interests under the Plan may not be assigned or transferred in whole or in
part either directly or by operation of law or otherwise (except in the
event of a optionee's death, by will or the laws of descent and
distribution), including, but not by way of limitation, execution, levy,
garnishment,
4
<PAGE> 5
attachment, pledge, bankruptcy, or in any manner, and no such right
or interest of any participant in the Plan shall be subject to any
obligation or liability of such participant.
(c) No Shares shall be issued hereunder unless counsel for the
Company shall be satisfied that such issuance will be in compliance with
applicable federal, state, and other securities laws.
(d) The expenses of administration of the Plan shall be borne by the
Company.
(e) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to ensure the issuance of Shares upon exercise of any Option under
the Plan and issuance of Shares upon exercise of Options shall be
subordinate to the claims of the Company's general creditors.
(f) By accepting any Option or other benefit under the Plan, each
optionee and each person claiming under or through an optionee shall be
conclusively deemed to have indicated his or her acceptance and
ratification of, and consent to, any action taken under the Plan by the
Company or the Compensation Committee.
(g) The appropriate officers of the Company shall cause to be filed
any reports, returns, or other information regarding Options hereunder or
any Shares issued pursuant hereto as may be required by the Securities
Exchange Act of 1934, as amended, the Securities Act of 1933, as amended,
or any other applicable statute, rule, or regulation (excluding reports
pursuant to Section 16 of the Securities Exchange Act of 1934, which shall
be the sole responsibility of a Non-Employee Trustee who exercises an
Option).
10. Amendment. The Plan may be amended at any time and from time to time
by the Board as the Board shall deem advisable. No amendment of the Plan shall
materially and adversely affect any right of any optionee with respect to any
Option theretofore granted without such optionee's written consent.
11. Effective Date. This Plan shall be effective on Monday, April 21,
1997.
12. Termination. This Plan shall terminate upon the earlier of the
following dates or events to occur:
(a) the adoption of a resolution of the Board terminating the Plan;
or
(b) December 31, 2007.
No termination of the Plan shall materially and adversely affect any of
the rights or obligations of any person, without his consent, under any Option
theretofore granted under the Plan.
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CCA PRISON REALTY TRUST FOR THE OTHER ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-23-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,000
<CURRENT-LIABILITIES> 1,250,000
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> (1,250,000)
<TOTAL-LIABILITY-AND-EQUITY> 1,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
