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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: September 30, 1998
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)
10 Burton Hills Blvd., Suite 100, Nashville, Tennessee 37215
(Address and zip code of principal executive offices)
(615) 263-0200
(Registrant's telephone number, including area code)
NONE
(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 X No
----- -----
21,945,569
(Outstanding shares of the issuer's common shares,
$0.01 par value per share as of October 31, 1998)
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CCA PRISON REALTY TRUST
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
INDEX
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<TABLE>
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PART I - FINANCIAL INFORMATION Page
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Item 1. Financial Statements
a) Consolidated Balance Sheets 3
as of September 30, 1998 and December 31, 1997
b) Consolidated Statements of Income 4
for the period from July 18, 1997 to September 30, 1997, the three months
ended September 30, 1998 and the nine months ended September 30, 1998
c) Consolidated Statement of Cash Flows 5
for the nine months ended September 30, 1998
d) Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About 14
Market Risk
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS.
CCA PRISON REALTY TRUST
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
September
30, 1998 December 31,
(Unaudited) 1997
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ASSETS
Real Estate Properties, at Cost:
Correctional and Detention Facilities $ 781,531 $ 458,360
Less - Accumulated Depreciation (18,271) (5,088)
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Net Real Estate Properties 763,260 453,272
Cash and Cash Equivalents 1,020 756
Other Assets 11,482 410
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TOTAL ASSETS $ 775,762 $ 454,438
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Distributions Payable $ 12,509 $ 9,170
Line of Credit 237,800 32,000
Accounts Payable and Accrued Expenses 15,190 519
--------- ---------
TOTAL LIABILITIES 265,499 41,689
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Commitments and Contingencies -- --
SHAREHOLDERS' EQUITY
Preferred Shares, $.01 par value; 10,000,000 shares
authorized; 4,300,000 and none outstanding, respectively 43 --
Common Shares, $.01 par value; 90,000,000 shares
authorized; 21,581,033 and 21,576,000 shares issued 216 216
and outstanding, respectively
Capital in Excess of Par Value 518,372 414,841
Accumulated Distributions in Excess of Net Income (8,368) (2,308)
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TOTAL SHAREHOLDERS' EQUITY 510,263 412,749
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 775,762 $ 454,438
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
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CCA PRISON REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the period For the Three For the Nine
from July 18 to Months ended Months Ended
September 30, September 30, September 30,
1997 1998 1998 (1)
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REVENUES
Rental $ 8,293 $ 18,654 $ 48,727
Interest 555 44 660
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8,848 18,698 49,387
------- -------- --------
EXPENSES
Depreciation and Amortization 2,131 4,589 13,183
Interest -- 2,821 5,750
General and Administrative 390 716 1,725
------- -------- --------
2,521 8,126 20,658
------- -------- --------
Net Income 6,327 10,572 28,729
Dividends to Preferred Shareholders -- (2,150) (5,719)
------- -------- --------
Net Income Available for Common Shares $ 6,327 $ 8,422 $ 23,010
======= ======== ========
Net Income Available Per Common Share:
Basic $ 0.29 $ 0.39 $ 1.07
======= ======== ========
Diluted $ 0.29 $ 0.39 $ 1.05
======= ======== ========
Weighted Average Number of Shares Outstanding, Basic 21,576 21,579 21,577
======= ======== ========
Weighted Average Number of Shares Outstanding, Diluted 21,965 21,683 21,929
======= ======== ========
</TABLE>
(1) As the company commenced operations on July 18, 1997, a nine months
comparison for the periods ending September 30, 1997 and 1998 is not
meaningful.
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
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CCA PRISON REALTY TRUST
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED AND AMOUNTS IN THOUSANDS)
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 28,729
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation of Real Estate Properties 13,183
Changes in Assets and Liabilities:
Increase in Other Assets (11,072)
Increase in Accounts Payable and Accrued Expenses 14,824
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Net Cash Provided by Operating Activities 45,664
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CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Real Estate Properties (323,171)
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Net Cash Used In Investing Activities (323,171)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Preferred Share Offering, net of Offering Costs 103,423
Borrowings under Line of Credit 205,800
Dividends paid on Preferred Shares (3,943)
Distributions paid on Common Shares (27,509)
---------
Net Cash Provided by Financing Activities 277,771
---------
Net Increase in Cash and Cash Equivalents 264
Cash and Cash Equivalents, Beginning of Period 756
---------
Cash and Cash Equivalents, End of Period $ 1,020
=========
Supplemental Disclosure of Noncash Transactions:
Increase in Distributions Payable $ 12,509
Reduction in Shareholders' Equity through Distributions to Shareholders (12,509)
=========
$ --
=========
Supplemental Disclosure of Cash Flow Information:
Cash paid for Interest $ 5,542
=========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of this statement.
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CCA PRISON REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
1. ORGANIZATION AND OPERATIONS
BACKGROUND AND FORMATION TRANSACTIONS
CCA Prison Realty Trust, a Maryland real estate investment trust (the
"Company"), was formed on April 23, 1997 to acquire, develop, and lease private
and public correctional and detention facilities. The Company has elected and
operates so as to qualify as a real estate investment trust (a "REIT") under the
Internal Revenue Code of 1986, as amended (the "Code").
On July 18, 1997, the Company commenced operations after completing an initial
public offering (the "Initial Offering") of 21,275,000 of its common shares,
$0.01 par value per share (the "Common Shares") (including 2,775,000 shares
issued as a result of the exercise of an over-allotment option by the
underwriters). The Common Shares were issued at an Initial Offering price of
$21.00 per share, generating gross proceeds to the Company of $446.8 million.
The aggregate proceeds to the Company, net of the underwriters' discount and
offering costs, were approximately $412.1 million.
The Company immediately used the Initial Offering proceeds to acquire nine
correctional and detention facilities (the "Initial Facilities") from
Corrections Corporation of America, a Tennessee corporation, and certain of its
subsidiaries (collectively, "CCA") for an aggregate purchase price of $308.1
million, payable in cash. The Company entered into agreements with CCA to lease
the Initial Facilities back to CCA pursuant to long-term, non-cancellable
"triple net" leases (the "Leases") which require CCA to pay all operating
expenses, taxes, insurance and other costs. All of the Leases have primary terms
ranging from 10-12 years which may be extended at fair market rental rates for
three additional five-year periods upon the mutual agreement of the Company and
CCA.
The Company also entered into option agreements with CCA (the "Option
Agreements") pursuant to which the Company was granted the option to acquire and
lease back to CCA any or all of five correctional and/or detention facilities
from CCA at any time during the three-year period following the acquisition of
the Initial Facilities for a purchase price generally equal to CCA's costs of
developing, constructing and equipping such facilities, plus 5% of such costs.
As of September 30, 1998, the Company has acquired two facilities pursuant to
the Option Agreements. In addition, the Company entered into an agreement (the
"Right to Purchase Agreement") with CCA whereby CCA granted the Company an
option to acquire, at fair market value, and lease back to CCA at fair market
rental rates, 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 of September 30, 1998, the Company
has purchased two facilities pursuant to the Right to Purchase Agreement.
Facilities available for purchase by the Company through the Option Agreements
and the Right to Purchase Agreement are collectively referred to herein as the
"Option Facilities."
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2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The consolidated financial statements of the Company include all the accounts of
the Company and its subsidiaries, including Prison Realty Management, Inc., a
Tennessee corporation and wholly-owned management subsidiary. All significant
intercompany balances and transactions have been eliminated.
The accompanying interim consolidated financial statements are unaudited. The
results of operations compares the period from July 18, 1997 to September 30,
1997, the three months ended September 30, 1998 and the nine months ended
September 30, 1998. As the Company commenced operations on July 18, 1997, a nine
months comparison for the periods ending September 30, 1997 and 1998 is not
meaningful. The financial statements, however, have been prepared in accordance
with generally accepted accounting principles for interim financial information
and in conjunction with the rules and regulations of the Securities and Exchange
Commission (the "Commission"). Accordingly, they do not include all of the
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
solely of normal recurring matters) necessary for a fair presentation of the
financial statements for this interim period have been included. The results of
operations for the interim period are not necessarily indicative of the results
to be obtained for the full fiscal year. Reference is made to the audited
financial statements of the Company filed with the Company's Annual Report on
Form 10-K/A for the period from July 18, 1997 to December 31, 1997, as filed
with the Commission on March 18, 1998 and as amended on March 30, 1998, with
respect to significant accounting and financial reporting policies as well as
other pertinent information of the Company.
3. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income", effective for fiscal years beginning after
December 15, 1998. SFAS No. 130 requires that changes in the amounts of certain
items, including gains and losses on certain securities, be shown in the
Financial Statements. The Company adopted the provisions of SFAS No. 130 on
January 1, 1998. The Company's comprehensive income is equivalent to net income
for the nine months ended September 30, 1998.
4. REAL ESTATE PROPERTIES
On January 5, 1998, the Company acquired from CCA the 960 bed Davis County
Correctional Center located in Holdenville, Oklahoma for a purchase price of
$36.1 million.
On April 17, 1998, the Company and its newly-formed, wholly-owned subsidiary
USCA Corporation ("USCA") and U.S. Corrections Corporation, a privately-held
owner and former operator of correctional and detention facilities ("USCC"),
entered into and completed an Agreement of Merger (the "USCC Merger
Agreement"), whereby USCA merged with and into USCC and the Company acquired all
of the outstanding capital stock and derivative securities of USCC (the "USCC
Merger"), in exchange for a cash payment to the shareholders of USCC of
approximately $157.0 million. As a result of the USCC Merger, the Company also
assumed certain liabilities of USCC consisting of a bank credit facility, two
subordinated loans, and obligations outstanding for convertible, redeemable
preferred stock totaling approximately $79.4 million. Immediately prior to the
USCC Merger, CCA purchased USCC's facility management contracts and the
corresponding enterprise value of operations from USCC for $10.0 million in
cash. Accordingly, as a result of the USCC Merger, the Company acquired only
real estate properties in substance.
By virtue of the USCC Merger, the Company acquired four correctional and
detention facilities in Kentucky, one in Ohio and two in North Carolina. At the
time of the USCC merger, the two North Carolina facilities were under
construction. As of September 30, 1998, the Company had completed one of the
North Carolina facilities, with the second facility scheduled for completion in
November 1998. The Company does not operate the facilities acquired in the USCC
Merger but leases the Kentucky facilities to CCA; leases the completed North
Carolina facility to the State of North
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Carolina, which has contracted with CCA to operate the facility; and expects to
lease the North Carolina facility currently under construction to the State of
North Carolina, which will contract with CCA to operate the facility. The
Company leases the Ohio facility to Hamilton County, Ohio.
On May 4, 1998, the Company acquired the Leo Chesney Center, a 200 bed
correctional facility located in Live Oak, California. The facility, acquired
for a purchase price of approximately $5.1 million, is leased to and operated by
Cornell Corrections Corporation under contract with the California Department of
Corrections. The Company is currently expanding the facility to increase the
rated capacity by approximately 72 beds.
In June, 1998, the Company began development of two educational facilities, one
in Houston, Texas and one in Dallas, Texas, for Community Education Partners
("CEP"), which develops and operates publicly funded, privately operated
alternative education programs for at-risk youth. The Company intends to
renovate and lease the facilities to CEP pursuant to terms and conditions
materially consistent with the Company's current relationship with private
prison operators.
As of September 30, 1998, the Company had investments in 20 leased real estate
properties and three development properties that are currently under
construction, with a total aggregate cost of $781.5 million. Thirteen of these
correctional and detention facilities have been purchased from CCA and leased
back to CCA. CCA currently leases 17 real estate properties from the Company.
5. BANK CREDIT FACILITY
On April 17, 1998, the Company's $150.0 million revolving Bank Credit Facility
(as defined herein) was increased by $75.0 million to facilitate the acquisition
of real estate properties through the USCC Merger. On July 31, 1998, the Company
entered into an amendment and restatement of the Bank Credit Facility, maturing
July 2000, to increase the total available borrowings to $300.0 million. General
provisions of the Bank Credit Facility remained unchanged by the amendment and
restatement and are as follows: the effective interest rate is determined by
adding 1.50% to the LIBOR rate for the interest period selected by the Company.
The Company may specify LIBOR rate loans of one, two or three month maturities.
The Company may also borrow up to $5.0 million at the prime rate for working
capital purposes and repay such loans at any time. The Bank Credit Facility is
secured by all assets of the Company. The Company is subject to ongoing
compliance with a number of financial and other covenants under the Bank Credit
Facility, with which the Company is and has been in compliance. At September 30,
1998, $237.8 million was outstanding under the Bank Credit Facility.
6. DISTRIBUTIONS TO SHAREHOLDERS
On March 2, 1998, the Board of Trustees declared a distribution of $0.425 per
common share for the quarter ended March 31, 1998 to common shareholders of
record on March 31, 1998. In addition, the Board of Trustees declared an initial
prorated quarterly dividend for the 8.0% Series A Cumulative Preferred Shares of
$0.417 per share to preferred shareholders of record on March 31, 1998, for the
period from January 30, 1998 through the dividend payment date of April 15,
1998. These distributions were paid on April 15, 1998.
On June 26, 1998, the Board of Trustees declared a distribution of $0.425 per
common share for the quarter ended June 30, 1998 to common shareholders of
record on July 1, 1998. In addition, the Board of Trustees declared a quarterly
dividend for the 8.0% Series A Cumulative Preferred Shares of $0.50 per share to
preferred shareholders of record on July 1, 1998 through the dividend payment
date of July 15, 1998. These distributions were paid on July 15, 1998.
On August 24, 1998, the Board of Trustees declared a distribution of $0.48 per
common share for the quarter ended September 30, 1998 to common shareholders of
record on September 30, 1998. In addition, the Board of Trustees declared a
quarterly dividend for the 8.0% Series A Cumulative Preferred Shares of $0.50
per
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share to preferred shareholders of record on September 30, 1998 through the
dividend payment date of October 15, 1998. These distributions were paid on
October 15, 1998.
7. NET INCOME PER SHARE
SFAS 128, "Earnings per Share," has been issued effective for fiscal periods
ending after December 15, 1997. SFAS 128 establishes standards for computing and
presenting earnings per share. The Company adopted the provisions of SFAS 128 in
the fourth quarter of 1997. Under the standards established by SFAS 128,
earnings per share are measured at two levels: basic earnings per share and
diluted earnings per share. Basic earnings per share for the Company was
computed by dividing net income by the weighted average number of common shares
outstanding during the period, or 21,579,000 shares. Diluted earnings per share
was computed by dividing net income by the weighted average number of common
shares after considering the additional dilution related to the Company's
outstanding share options, after assuming a buyback of shares under the treasury
method.
8. PROPOSED MERGER WITH CORRECTIONS CORPORATION OF AMERICA
On September 29, 1998, the Company, CCA and Prison Realty Corporation, a newly
formed Maryland corporation ("New Prison Realty"), entered into an Amended and
Restated Agreement and Plan of Merger (the "Merger Agreement"), pursuant to
which the Company and CCA will both be merged with and into New Prison Realty,
with New Prison Realty as the surviving entity. Under the terms of the Merger
Agreement: (i) holders of the Company's Common Shares and the Company's 8.0%
Series A Cumulative Preferred Shares will continue to own 1.0 share of New
Prison Realty for each share of Company capital stock they currently own; and
(ii) holders of shares of CCA's common stock, par value $1.00 per share (the
"CCA Common Stock"), will obtain the right to receive 0.875 share of New Prison
Realty for each share of CCA Common Stock they currently own. New Prison Realty
will elect to be taxed and expects to operate so as to qualify as a REIT for
federal income tax purposes. The proposed merger is subject to certain
conditions, including approval by the shareholders of both the Company and CCA
and certain other conditions. Pending approval by the respective shareholders,
the Company expects that the merger will be completed on or about January 1,
1999. The Company expects to incur approximately $9,250,000 in expenses related
to the merger.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.
This quarterly report on Form 10-Q, including Management's Discussion and
Analysis of Financial Condition and Results of Operations, contains certain
forward-looking statements provided in reliance upon the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 (the
"PSLRA"), as set forth in Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements reflect the Company's current views with respect to
future events and financial performance, and these statements can be identified,
without limitation, by the use of the words "anticipates", "believes",
"estimates", "expects", "intends", "plans", "projects" and similar expressions.
Forward-looking statements are subject to risks, uncertainties and other factors
that may cause actual results or outcomes to differ materially from future
outcomes expressed or implied by the forward-looking statement. Such factors
include, but are not limited to risks associated with the corrections and
detention industry, competitive market conditions, strength of the real estate
markets in which the company operates and general economic conditions. The
company discloses such risks in detail in its Annual Report on Form 10-K/A for
the year ended December 31, 1997. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances occurring after
the date hereof or to reflect the occurrence of unanticipated events.
OVERVIEW.
The Company was formed on April 23, 1997 as a Maryland real estate investment
trust to capitalize on the opportunities created by the increased demand for
private correctional and detention facilities. The Company has elected to
qualify as a REIT for federal income tax purposes commencing with its taxable
year ended December 31, 1997.
On July 18, 1997, the Company commenced operations after completing the Initial
Offering of 21,275,000 of its Common Shares (including 2,775,000 shares issued
as a result of the exercise of an over-allotment option by the underwriters).
The Common Shares were issued at an Initial Offering price of $21.00 per share,
generating gross proceeds to the Company of $446.8 million. The aggregate
proceeds to the Company, net of the underwriters' discount and offering costs,
were approximately $412.1 million.
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's
initial investments were privately managed facilities that were owned and
operated by Corrections Corporation of America ("CCA"). However, the Company is
pursuing other opportunities, including acquisitions and leasebacks of, or
financings for, correctional facilities owned and operated by various government
entities and private operators other than CCA. Substantially all of the
Company's revenues are 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, together with its wholly owned management subsidiary, Prison Realty
Management, Inc., a Tennessee corporation, incurs operating and administrative
expenses including, principally, compensation expenses 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 is self-administered and managed by its executive officers and staff,
and does not engage a separate advisor or pay an advisory fee for administrative
or investment services, although the Company does engage legal, accounting, tax
and financial advisors from time to time. The primary non-cash expense of the
Company is depreciation of its correctional and detention facilities.
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The Company 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.
The Company has made distributions to its shareholders in amounts not less than
the amounts required to maintain REIT status under the Code and, in general, in
amounts exceeding taxable income.
On September 29, 1998, the Company, CCA, and Prison Realty Corporation, a newly
formed Maryland corporation ("New Prison Realty"), entered into an Amended and
Restated Agreement and Plan of Merger (the "Merger Agreement"), pursuant to
which the Company and CCA will both be merged with and into New Prison Realty,
with New Prison Realty as the surviving corporation. Under the terms of the
Merger Agreement: (i) holders of the Company's Common Shares and the Company's
8.0% Series A Cumulative Preferred Shares will continue to own 1.0 share of New
Prison Realty for each share of Company Common Stock they currently own; and
(ii) holders of shares of CCA's common stock, par value $1.00 per share (the
"CCA Common Stock"), will obtain the right to receive 0.875 share of New Prison
Realty for each share of CCA Common Stock they currently own. New Prison Realty
will elect to be taxed and expects to operate so as to qualify as REIT for
federal income tax purposes. The proposed merger is subject to certain
conditions, including approval by the shareholders of both the Company and CCA
and certain other conditions. Pending approval by the respective shareholders,
the Company expects that the merger will be completed on or about January 1,
1999. The Company expects to incur approximately $9,250,000 in expenses related
to the merger.
RESULTS OF OPERATIONS.
The Company commenced operations on July 18, 1997. The following analysis of the
results of operations compares the period from July 18, 1997 through September
30, 1997 to the period from July 1, 1998 through September 30, 1998. As the
Company commenced operations on July 18, 1997, a nine month comparison for the
periods ending September 30, 1997 and 1998 is not meaningful.
RENTAL REVENUES - For the three months ended September 30, 1997 and 1998, rental
revenues of $8.3 million and $18.7 million, respectively, were generated from
the leasing of correctional and detention facilities. The increase in rental
revenues of $10.4 million resulted from an increase of facilities leased to
third parties from ten for the three months ended September 30, 1997 to 20 for
the three months ended September 30, 1998. Lease rates for all correctional and
detention facilities were 11.0% based upon original acquisition costs.
For the nine months ended September 30, 1998, rental revenues of $48.7 million
were generated from the leasing of correctional and detention facilities.
INTEREST INCOME - For the three months ended September 30, 1997 and 1998,
interest income was $0.6 million and $44,000, respectively. Interest income was
earned through the investment of cash prior to the purchase of the real estate
properties.
For the nine months ended September 30, 1998, interest income was $0.7 million.
DEPRECIATION EXPENSE - For the three months ended September 30, 1997 and 1998,
depreciation expense was $2.1 million and $4.6 million, respectively. The
increase in depreciation expense of $2.5 million is a result of the increase in
the number of facilities leased to third-parties from ten for the three months
ended September 30, 1997 to 20 for the three months ended September 30, 1998.
For the nine months ended September 30, 1998, depreciation expense was $13.2
million.
INTEREST EXPENSE - For the three months ended September 30, 1997 and 1998,
interest expense was $0.0 million and $2.8 million, respectively. Interest
expense is based on borrowings under the Company's bank credit facility and
includes amortization of loan costs, net of capitalized interest on construction
in progress. The Company did not have outstanding borrowings under the bank
credit facility for the three months ended September 30, 1997.
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For the nine months ended September 30, 1998, interest expense was $5.8 million.
GENERAL AND ADMINISTRATIVE EXPENSES - For the three months ended September 30,
1997 and 1998, general and administrative expenses were $0.4 million and $0.7
million, respectively. General and administrative expenses were 4.7% and 3.8% of
rental revenues for the three months ended September 30, 1997 and 1998,
respectively. General and administrative expenses consist primarily of
management salaries and benefits, legal and other administrative costs.
LIQUIDITY AND CAPITAL RESOURCES.
By virtue of the USCC Merger, the Company acquired two correctional facilities
in North Carolina, which at the time of the USCC Merger were under construction.
As of September 30, 1998, the Company had completed one of the North Carolina
facilities, with the second facility scheduled for completion in November, 1998.
The Company expects to incur additional construction costs of approximately $6.0
million in the fourth quarter of 1998 related to the facility under construction
in North Carolina. In June, 1998, the Company began development of two
educational facilities, one in Houston, Texas and one in Dallas, Texas, for CEP,
which develops and operates publicly funded, privately operated alternative
education programs for at-risk youth. Amounts expended for CEP projects prior to
September 30, 1998 total $9.4 million, and total costs at completion are
expected to be $13.0 million. In addition, the Company has options with varying
terms to purchase any or all of 11 Option Facilities from CCA for CCA's costs
of developing, constructing and equipping the facilities, plus 5% of such costs,
aggregating approximately $487.6 million. The Company also 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.
In July 1998, the Company entered into an Agreement with CCA, whereby it agreed
to purchase from CCA, for approximately $80 million, all issued and outstanding
capital stock of Agecroft Properties, Inc. ("API"). API has entered into a
contract to design, develop, construct and finance an 800 bed medium-security
prison in Salford, England (the "Agecroft Prison"). Upon completion of
construction, API will lease the Agecroft Prison to Agecroft Prison Management
Limited ("APM"), an affiliate of CCA. APM has contracted with Her Majesty's
Principal Secretary of State for the Home Department for the design,
construction, management and financing of the Agecroft Prison under a
twenty-five year agreement. APM has also contracted with UK Detention Services
Limited, an affiliate of CCA, to manage the facility. The Agecroft Prison is
anticipated to open in January 2000.
Upon completion of the Initial Offering, the Company received approximately
$412.1 million in net proceeds. The Company used these funds, borrowings under
the Bank Credit Facility (as herein defined), and cash provided from operations
to purchase 13 correctional and detention facilities at an aggregate cost of
$491.5 million. Initially, cash on hand was invested by the Company in
interest-bearing accounts and other short-term, interest-bearing securities that
are consistent with the Company's election to seek qualification for taxation as
a REIT. After the Company began utilizing the Bank Credit Facility (as defined
herein), cash available was utilized to reduce outstanding borrowings.
The Company closed on a $150.0 million bank credit facility (the "Bank Credit
Facility"), maturing July 2000, contemporaneously with the closing of the
Initial Offering. On April 17, 1998, the Company increased the Bank Credit
Facility from $150.0 million to $225.0 million in connection with the USCC
Merger. On July 31, 1998, the Company entered into an amendment and restatement
of the Bank Credit Facility to increase the total available borrowings to $300.0
million. General provisions of the Bank Credit Facility remained unchanged by
the amendment and restatement and are as follows: the effective interest rate is
determined by adding 1.50% to the LIBOR rate for the interest period selected by
the Company. The Company may specify LIBOR rate loans of one, two or three month
maturities. The Company may also borrow up to $5.0 million at the prime rate for
working capital purposes and repay such loans at any time. The Bank Credit
Facility is secured by all assets of the Company. The Company is subject to
ongoing compliance with a number of financial and other covenants under the Bank
Credit Facility, with which the Company is and has been in compliance. At
September 30, 1998, $237.8 million was outstanding under the Bank Credit
Facility.
12
<PAGE> 13
On January 30, 1998, the Company received net proceeds of approximately $103.4
million through its offering of 4,300,000 8.0% Series A Cumulative Preferred
Shares, 0.01 par value per share (including 300,000 8% Series A Cumulative
Preferred Shares issued as a result of the exercise of an over-allotment option
by the underwriters), at a price of $25 per share. The Company used
approximately $72.7 million of the preferred share offering proceeds to repay
outstanding indebtedness under the Bank Credit Facility.
On September 16, 1998, the Company filed a Registration Statement on Form S-3 to
register an aggregate of $500.0 million in value of its common shares, preferred
shares, and common share rights and warrants for sale to the public. Proceeds
from sales under the Company's Registration Statement on Form S-3 will be used
for general corporate purposes. These general corporate purposes may include,
without limitation, repayment of maturing obligations, redemption of outstanding
indebtedness, financing (in whole or part) of future acquisitions (including
acquisitions of companies and/or other real estate properties in accordance with
the Company's business objectives and strategy), capital expenditures and
working capital. Subsequent to September 30, 1998 and as of November 12, 1998,
the Company had issued and sold 1,197,769 common shares under the Company's
Registration Statement on Form S-3. Of those shares, 314,100 shares were sold to
certain trustees and officers of the Company and a like number repurchased on
the open market. Net proceeds to the Company from this share issuance total
$19.0 million.
The Company expects to meet its short-term liquidity requirements generally
through cash provided by operations and borrowings under the Bank Credit
Facility. The Company believes that its net cash provided by operations will be
sufficient to allow the Company to make distributions necessary to enable the
Company to maintain qualification as a REIT. All facilities owned by the Company
will be leased to third parties 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 significant expenses in connection with the
facilities during the terms of the Leases. The Company anticipates entering into
similar leases with respect to all properties acquired in the future.
The Company expects to meet its long-term liquidity requirements for the funding
of real estate property development and acquisitions by borrowing under the Bank
Credit Facility and by issuing equity or debt securities in public or private
transactions. The Company anticipates that as a result of its initially low debt
to total capitalization ratio and its intention to maintain a debt to total
capitalization ratio 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 facilities, the acquisition of
additional properties, or, as necessary, to meet certain distribution
requirements imposed on REITs under the Code.
YEAR 2000 COMPLIANCE.
The Company has completed an assessment of its information technology hardware
and software and believes that both are Year 2000 compliant, and the Company
intends to test its Year 2000 compliance during calendar year 1999, although
there can be no assurance that coding errors or other defects will not be
discovered in the future. Because CCA manages 18 of the Company's 20 completed
facilities, the Company may be vulnerable to CCA's failure to remedy its Year
2000 issues. Management of the Company has initiated discussions with CCA
management concerning CCA's Year 2000 issues. CCA management has advised
management of the Company that Year 2000 problems could arise in connection with
CCA's information technology hardware and software. CCA's management has advised
management of the Company that CCA is undertaking attempts to remediate its Year
2000 problems. CCA's management has also advised the Company of the risk that
the computer and non-information technology systems of third parties, such as
government agencies for which CCA provides services, commercial banks and other
lenders, could have Year 2000 problems that are not remedied. The failure of CCA
or of these third parties to remedy their Year 2000 problems could result in the
delayed collection of accounts receivable by the Company from CCA or by CCA from
government agencies for which CCA provides services, as the case may be, and the
disruption of capital flows from third party lenders, potentially resulting in
liquidity stress. Such liquidity stress could adversely affect CCA's ability to
make timely lease payments to the Company. Although CCA cannot control its Year
2000 risks arising in connection with third parties, CCA has initiated
conversations with those third parties with whom it has important relationships
to determine the extent of their Year 2000 compliance problems.
13
<PAGE> 14
FUNDS FROM OPERATIONS.
Management believes Funds from Operations is helpful to investors as a measure
of the performance of an equity REIT because, along with cash flows from
operating activities, financing activities and investing activities, it provides
investors with an understanding of the ability of the Company to incur and
service debt and make capital expenditures. The Company computes Funds from
Operations in accordance with standards established by the White Paper on Funds
from Operations approved by the Board of Governors of NAREIT in 1995, which may
differ from the methodology for calculating Funds from Operations utilized by
other equity REITs, and, accordingly, may not be comparable to such other REITs.
The White Paper defines Funds from Operations as net income (loss), computed in
accordance with generally accepted accounting principles ("GAAP"), excluding
gains (or losses) from debt restructuring and sales of property, plus real
estate related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures. Further, Funds from Operations
does not represent amounts available for management's discretionary use because
of needed capital replacement or expansion, debt service obligations, or other
commitments and uncertainties. Funds from Operations should not be considered as
an alternative to net income (determined in accordance with GAAP) as an
indication of the Company's financial performance or to cash flows from
operating activities (determined in accordance with GAAP) as a measure of the
Company's liquidity, nor is it indicative of funds available to fund the
Company's cash needs, including its ability to make distributions. The Company
believes that in order to facilitate a clear understanding of the consolidated
operating results of the Company, Funds from Operations should be examined in
conjunction with net income as presented in the consolidated financial
statements.
The following table presents the Company's Funds from Operations for the three
months and nine months ended September 30, 1998:
<TABLE>
<CAPTION>
Funds from Operations: For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1998 1998
-------------------- -------------------
<S> <C> <C>
Net Income Available to Common $ 8,422 $ 23,010
Shareholders
Add back real estate depreciation 4,589 13,183
-------------------- -------------------
$ 13,011 $ 36,193
==================== ===================
</TABLE>
CASH FLOWS FROM OPERATING, INVESTING AND FINANCING ACTIVITIES.
The Company's cash flow provided from operating activities was $45.7 million for
the nine months ended September 30, 1998 and represents net income plus
depreciation and amortization and changes in the various components of working
capital. The Company's cash flow used in investing activities was $323.2 million
for the nine months ended September 30, 1998 and represents acquisitions of real
estate properties. The Company's cash flow provided by financing activities was
$277.8 million for the nine months ended September 30, 1998 and represents
proceeds from the preferred share offering, borrowings under the line of credit,
and payments of dividends on the preferred and common shares.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a). Exhibits
10.1 Amended and Restated Credit Agreement, dated as of
July 31, 1998 by and among CCA Prison Realty Trust
and various Lenders.
10.2 Amended and Restated Agreement and Plan of Merger,
dated as of September 29, 1998, by and among
Corrections Corporation of America, CCA Prison
Realty Trust and Prison Realty Corporation
(previously filed as Exhibit 2.1 to Prison Realty
Corporation's Registration Statement on Form S-4
filed with the Securities and Exchange Commission
on September 30, 1998).
27.1 Financial Data Schedule (for SEC use only).
27.2 Restated Financial Data Schedule (for SEC use
only).
(b). Reports on Form 8-K
Current Report on Form 8-K, dated September 30,
1998, relating to the execution of an Amended and
Restated Agreement and Plan of Merger by and among
CCA Prison Realty Trust, a Maryland real estate
investment trust (the "Company"), Corrections
Corporation of America, a Tennessee corporation
("CCA"), and Prison Realty Corporation, a newly
formed Maryland corporation ("New Prison Realty"),
relating to the merger of both CCA and the Company
with and into New Prison Realty (the "Merger") and
the filing of New Prison Realty's Registration
Statement on Form S-4 with respect to the Merger,
which contains the Joint Proxy Statement of the
Company and CCA (the "Registration Statement on
Form S-4"). In the Current Report on Form 8-K, the
Company included the following historical financial
statements of CCA:
(i) unaudited condensed consolidated financial
statements for the six month periods ended June
30, 1998 and June 30, 1997 (incorporated
therein by
15
<PAGE> 16
reference to CCA's Quarterly Report on Form
10-Q, as amended, for the quarter ended
June 30, 1998); and
(ii) audited consolidated financial statements for
the five years ended December 31, 1997
(incorporated therein by reference to CCA's
Annual Report on Form 10-K, as amended, for the
year ended December 31, 1997).
The Company also included the following pro forma
financial statements of Prison Realty Corporation:
(i) pro forma combined balance sheet as of June 30,
1998 (incorporated therein by reference to the
Registration Statement on Form S-4);
(ii) pro forma combined statement of operations for
the year ended December 31, 1997 (incorporated
therein by reference to the Registration
Statement on Form S-4); and
(iii) pro forma combined statement of operations
for the six months ended June 30, 1998
(incorporated therein by reference to the
Registration Statement on Form S-4).
16
<PAGE> 17
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Quarterly 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: November 16, 1998
17
<PAGE> 18
Exhibit Index
-------------
EX-10.1 Amended and Restated Credit Agreement dated as of July 31, 1998
EX-27.1 Financial Data Schedule (for SEC use only)
EX-27.2 Restated Financial Data Schedule (for SEC use only)
<PAGE> 1
EXHIBIT 10.1
================================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of July 31, 1998,
by and among
CCA Prison Realty Trust,
and certain Subsidiaries thereof,
as Borrowers,
the Lenders referred to herein,
FIRST UNION NATIONAL BANK,
as Administrative Agent,
CANADIAN IMPERIAL BANK OF COMMERCE,
as Documentation Agent,
and
NATIONSBANK, N.A.,
as Syndication 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............................................................16
ARTICLE II REVOLVING CREDIT FACILITY.......................................................................16
SECTION 2.1 Revolving Credit Loans......................................................................16
SECTION 2.2 Swingline Loans.............................................................................16
SECTION 2.3 Procedure for Advances of Revolving Credit and Swingline Loans..............................18
SECTION 2.4 Repayment of Loans..........................................................................19
SECTION 2.5 Notes.......................................................................................20
SECTION 2.6 Permanent Reduction of the Aggregate Commitment.............................................20
SECTION 2.7 Revolving Termination Date..................................................................21
SECTION 2.8 Release of Security.........................................................................21
ARTICLE III LETTER OF CREDIT FACILITY......................................................................21
SECTION 3.1. L/C Commitment..............................................................................21
SECTION 3.2. Procedure for Issuance of Letters of Credit.................................................22
SECTION 3.3. Commissions and Other Charges...............................................................22
SECTION 3.4. L/C Participations..........................................................................22
SECTION 3.5. Reimbursement Obligation of the Borrowers...................................................23
SECTION 3.6. Obligations Absolute........................................................................24
SECTION 3.7. Effect of Application.......................................................................24
ARTICLE IV GENERAL LOAN PROVISIONS.........................................................................25
SECTION 4.1. Interest....................................................................................25
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4.2. Notice and Manner of Conversion or Continuation of Loans....................................26
SECTION 4.3. Fees........................................................................................27
SECTION 4.4. Manner of Payment...........................................................................27
SECTION 4.5. Crediting of Payments and Proceeds..........................................................28
SECTION 4.6. Adjustments.................................................................................28
SECTION 4.7. Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the
Administrative Agent........................................................................29
SECTION 4.8. Changed Circumstances.......................................................................29
SECTION 4.9. Indemnity...................................................................................31
SECTION 4.10. Capital Requirements........................................................................32
SECTION 4.11. Taxes.......................................................................................32
SECTION 4.12. Use of Proceeds.............................................................................34
SECTION 4.13 Security....................................................................................34
ARTICLE V CLOSING; CONDITIONS OF CLOSING AND BORROWING.....................................................34
SECTION 5.1. Closing.....................................................................................34
SECTION 5.2. Conditions to Closing and Initial Extensions of Credit......................................34
SECTION 5.3. Conditions to All Loans and Letters of Credit...............................................38
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BORROWERS.................................................38
SECTION 6.1. Representations and Warranties..............................................................38
SECTION 6.2. Survival of Representations and Warranties, Etc.............................................44
ARTICLE VII FINANCIAL INFORMATION AND NOTICES..............................................................45
SECTION 7.1. Financial Statements and Projections........................................................45
SECTION 7.2. Officer's Compliance Certificate............................................................46
SECTION 7.3. Other Reports...............................................................................46
SECTION 7.4. Notice of Litigation and Other Matters......................................................46
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 7.5. Accuracy of Information.....................................................................47
ARTICLE VIII AFFIRMATIVE COVENANTS.........................................................................48
SECTION 8.1. Preservation of Corporate Existence and Related Matters.....................................48
SECTION 8.2. Maintenance of Property.....................................................................48
SECTION 8.3. Insurance...................................................................................48
SECTION 8.4. Accounting Methods and Financial Records....................................................48
SECTION 8.5. Payment and Performance of Obligations......................................................48
SECTION 8.6. Compliance With Laws and Approvals..........................................................49
SECTION 8.7. Environmental Laws..........................................................................49
SECTION 8.8. Compliance with ERISA.......................................................................49
SECTION 8.9. Compliance With Agreements..................................................................50
SECTION 8.10. Conduct of Business.........................................................................50
SECTION 8.11. Visits and Inspections......................................................................50
SECTION 8.12. Lease Terms and Conditions..................................................................50
SECTION 8.13. Lease Revenues..............................................................................50
SECTION 8.14. Additional Borrowers and Collateral.........................................................51
SECTION 8.16. Further Assurances..........................................................................52
ARTICLE IX FINANCIAL COVENANTS.............................................................................53
SECTION 9.1 Ratio of Total Liabilities to Total Capitalization..........................................53
SECTION 9.2 Ratio of Adjusted Funded Debt to Adjusted Cash Flow.........................................53
SECTION 9.3 Ratio of Dividends to Funds From Operations.................................................53
SECTION 9.4 Interest Coverage Ratio.....................................................................53
SECTION 9.5 Minimum Net Worth...........................................................................53
SECTION 9.6 Project Development Ratio...................................................................54
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE X NEGATIVE COVENANTS..............................................................................54
SECTION 10.1. Limitations on Debt........................................................................54
SECTION 10.2. Limitations on Contingent Obligations......................................................55
SECTION 10.3. Limitations on Liens.......................................................................55
SECTION 10.4. Limitations on Loans, Advances, Investments and Acquisitions...............................56
SECTION 10.5. Limitations on Mergers and Liquidation.....................................................57
SECTION 10.6. Limitations on Sale of Assets..............................................................57
SECTION 10.7. Limitations on Dividends and Distributions.................................................57
SECTION 10.8. Transactions with Affiliates...............................................................58
SECTION 10.9. Certain Accounting Changes.................................................................58
SECTION 10.10. Amendment to Sale Leaseback Documents......................................................58
SECTION 10.11. Restrictions on Working Capital............................................................58
SECTION 10.12. Restrictive Agreements.....................................................................58
SECTION 10.13. Operating Leases...........................................................................58
ARTICLE XI DEFAULT AND REMEDIES...........................................................................58
SECTION 11.1. Events of Default..........................................................................58
SECTION 11.2. Remedies...................................................................................61
SECTION 11.3. Rights and Remedies Cumulative; Non-Waiver; Etc............................................62
ARTICLE XII THE ADMINISTRATIVE AGENT......................................................................62
SECTION 12.1. Appointment................................................................................62
SECTION 12.2. Delegation of Duties.......................................................................63
SECTION 12.3. Exculpatory Provisions.....................................................................63
SECTION 12.4. Reliance by the Administrative Agent.......................................................63
SECTION 12.5. Notice of Default..........................................................................63
SECTION 12.6. Non-Reliance on the Administrative Agent and Other Lenders.................................64
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
SECTION 12.7. Indemnification...........................................................................64
SECTION 12.8. The Administrative Agent in Its Individual Capacity.......................................65
SECTION 12.9. Resignation of the Administrative Agent; Successor Administrative Agent...................65
SECTION 12.10. The Documentation Agent and Syndication Agent.............................................65
ARTICLE XIII MISCELLANEOUS...............................................................................66
SECTION 13.1. Notices...................................................................................66
SECTION 13.2. Expenses; Indemnity.......................................................................67
SECTION 13.3. Set-off...................................................................................67
SECTION 13.4. Governing Law.............................................................................68
SECTION 13.5. Consent to Jurisdiction...................................................................68
SECTION 13.6. Binding Arbitration; Waiver of Jury Trial.................................................68
SECTION 13.7. Reversal of Payments......................................................................69
SECTION 13.8. [Reserved]................................................................................70
SECTION 13.9. Accounting Matters........................................................................70
SECTION 13.10. Successors and Assigns; Participations....................................................70
SECTION 13.11. Amendments, Waivers and Consents..........................................................73
SECTION 13.12. Performance of Duties.....................................................................73
SECTION 13.13. Joint and Several Liability; PZN as Agent for Borrowers...................................73
SECTION 13.14. All Powers Coupled with Interest..........................................................73
SECTION 13.15. Survival of Indemnities...................................................................74
SECTION 13.16. Titles and Captions.......................................................................74
SECTION 13.17. Severability of Provisions................................................................74
SECTION 13.18. Counterparts..............................................................................74
SECTION 13.19. Entire Agreement; Term of Agreement.......................................................74
SECTION 13.20. Inconsistencies with Other Documents; Independent Effect of Covenants.....................74
</TABLE>
v
<PAGE> 7
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 Revolving Credit/Swingline 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
Exhibit K - Form of Pledge Agreement
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
vi
<PAGE> 8
AMENDED AND RESTATED CREDIT AGREEMENT (as amended, restated or
otherwise modified, this "Agreement"), dated as of the 31st day of July, 1998,
by and among CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("PZN"), the Subsidiaries of PZN identified on the signature pages hereto, and
any other direct or indirect Subsidiary of PZN that is joined as Borrower
pursuant to the terms hereof (collectively the "Borrowers"), the financial
institutions who are or may become a party to this Agreement (the "Lenders"),
FIRST UNION NATIONAL BANK, as administrative agent for the Lenders (the
"Administrative Agent"), CANADIAN IMPERIAL BANK OF COMMERCE, as Documentation
Agent (the "Documentation Agent") and NATIONSBANK, N.A., as Syndication Agent
(the "Syndication Agent").
STATEMENT OF PURPOSE
The Borrowers have requested and the Lenders have agreed to amend and
restate the Prior Credit Agreement referred to below, pursuant to which the
Lenders will extend certain credit facilities to the Borrowers on the terms and
subject to the conditions hereinafter set forth.
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:
"Adjusted Cash Flow" means, as of any date, Cash Flow for the calendar
month ending on or immediately prior to such date multiplied by twelve (12).
"Adjusted Funded Debt" means, as of any date, Total Funded Debt less
Excess Cash less forty-five percent (45%) of Expended Project Costs.
"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(c).
"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
<PAGE> 9
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.
"Agecroft Prison" means the correctional facility to be constructed in
the United Kingdom pursuant to certain agreements among API, Her Majesty's
Prison Service and other third parties.
"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 pursuant to the terms hereof. On the Closing Date, the
Aggregate Commitment shall be Three Hundred Million Dollars ($300,000,000).
"Agreement" means this Credit Agreement, as amended, restated or
otherwise modified.
"API" means Agecroft Properties, Inc., a Tennessee corporation.
"API Acquisition" means the planned acquisition by PZN or a Subsidiary
thereof from CCA of (i) all of the issued and outstanding capital stock of API
and (ii) the note evidencing the loan by CCA to API upon the completion of the
construction of Agecroft Prison.
"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 13.10.
"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 sum of (i) the Federal Funds Rate plus (ii) 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).
2
<PAGE> 10
"Borrowers" shall have the meaning assigned thereto in the preamble
hereof.
"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 (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
plus (b) Interest Expense plus (c) Dividends paid with respect to any class of
Preferred Stock (to the extent deducted in the calculation thereof) less (d)
Maintenance Capital Expenditures, in each case for such period.
"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.
"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.
"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.
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<PAGE> 11
"Completion Costs" means, as of any date, with regard to uncompleted
construction projects of the Borrowers and their subsidiaries, the aggregate
cost of completing such construction projects yet to be expended.
"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.
"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,
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<PAGE> 12
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.
"Development Costs" means, as of any date, the sum of (a) Expended
Project Costs plus (b) Completion Costs.
"Dividends" means for any period all dividends or distribution paid by
any Borrower with respect to its capital stock.
"Documentation Agent" means Canadian Imperial Bank of Commerce, in its
capacity as Documentation Agent hereunder.
"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 PZN 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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<PAGE> 13
"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 Revolving Credit
Loans made by such Lender then outstanding, (b) such Lender's Commitment
Percentage of the L/C Obligations then outstanding, and (c) such Lender's
Commitment Percentage of the Swingline Loans 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.
"Expended Project Costs" means, as of any date, with regard to
uncompleted construction projects of the Borrowers and their subsidiaries, the
aggregate development and construction costs expended, from the groundbreaking
through such date of determination, of such construction projects.
"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, 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.
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<PAGE> 14
"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 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, Net Income, excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related depreciation and
amortization and after adjustment for unconsolidated partnerships and joint
ventures, in each case as defined in NAREIT White Paper.
"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.
"Incarceration Agreement" means any agreement, as amended, restated or
otherwise modified, pursuant to which a Governmental Authority has contracted to
incarcerate, detain or
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<PAGE> 15
otherwise house inmates, prisoners or other detainees of such Governmental
Authority at a Correctional Facility.
"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).
"Issuing Lender" means First Union in its capacity as issuer of any
Letter of Credit, or any successor thereto.
"Justice Facility" means any law enforcement facility or other facility
used in connection with the administration of justice owned (or if the context
requires, to be acquired) by any Borrower, including without limitation, any
real property associated therewith.
"L/C Commitment" means the lesser of (a) Five Million Dollars
($5,000,000) and (b) the Aggregate Commitment.
"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 drawings under Letters of Credit which
have not then been reimbursed pursuant to Section 3.5.
"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 or Justice 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 13.10.
"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 of interest per annum determined on the basis of
the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a
period equal to the applicable Interest Period which appears on the Telerate
Page 3750 at approximately 11:00 a.m. (London time)
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<PAGE> 16
two (2) Business Days prior to the first day of the applicable Interest Period
(rounded upward, if necessary, to the nearest one-sixteenth of one percent
(1/16%)). If, for any reason, such rate does not appear on Telerate Page 3750,
then "LIBOR" shall be determined by the Administrative Agent to be the
arithmetic average (rounded upward, if necessary, to the nearest one-sixteenth
of one percent (1/16%)) of the rate per annum at which deposits in Dollars would
be offered by first class banks in the London interbank market to the
Administrative Agent approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of the applicable Interest Period for a period equal
to such Interest Period and in an amount substantially equal to the amount of
the applicable Loan.
"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.
"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 PZN and CCA pertaining to all
Correctional Facilities leased from PZN by CCA.
"Master Security Document Amendment" means the master security document
amendment executed by the Borrowers in favor of the Administrative Agent and
modifying the existing Security Agreement dated as of July 18, 1997 and the
existing Pledge Agreements dated as of April 17,
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<PAGE> 17
1998, in each case executed by the Borrowers and their Subsidiaries, as
applicable, in favor of the Administrative Agent.
"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 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.
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<PAGE> 18
"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 permitted pursuant to Section 10.1 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.
"Offering" means the issuance of common stock of PZN 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 PZN and CCA
granting PZN 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 PZN 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.
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<PAGE> 19
"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.
"Pledge Agreements" means the collective reference to the pledge
agreements dated as of April 17, 1998 executed by the Borrowers and their
Subsidiaries, as applicable, in favor of the Administrative Agent, for the
ratable benefit of itself and the Lenders, in each case as amended by the Master
Security Document Amendment and as further amended, restated or otherwise
modified. A copy of each such pledge agreement and all supplements thereto
executed prior to the Closing Date are attached as Exhibit K hereto, as amended,
restated or otherwise modified.
"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.
"Prior Credit Agreement" means the Credit Agreement dated as of July
18, 1997 by and among PZN and certain Subsidiaries thereof, as Borrowers, the
lenders party thereto (the "Prior Lenders"), First Union National Bank (formerly
known as First Union National Bank of Tennessee) as Administrative Agent and
Southtrust Bank, National Association, as Co-Agent (as amended).
"Prior Lenders" means the lenders party to the Prior Credit Agreement.
"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.
"Purchase Agreements" means the collective reference to the Agreement
of Sale and Purchase, each as amended, restated or otherwise modified, between
PZN and CCA for the purchase of the Initial Facilities.
"Register" shall have the meaning assigned thereto in Section 13.10(d).
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<PAGE> 20
"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 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%).
"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 Revolving Credit 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 PZN and CCA granting PZN 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 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.
"Security Agreement" means the reference to the security agreement
dated as of July 18, 1998, executed by the Borrowers and their Subsidiaries in
favor of the Administrative Agent, for the ratable benefit of itself and the
Lenders, as amended by the Master Security Document Amendment and as further
amended, restated or otherwise modified. A copy of such security agreement and
all supplements thereto executed prior to the Closing Date are attached hereto
as Exhibit H.
"Security Documents" means the collective reference to the Assignments
of Lease, the Deeds of Trust, the Security Agreement, the Pledge 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.
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"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 contingency). Unless otherwise qualified
references to "Subsidiary" or "Subsidiaries" herein shall refer to those of the
Borrowers.
"Swingline Commitment" means the lesser of (a) Five Million Dollars
($5,000,000) and (b) the Aggregate Commitment.
"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 swingline 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.
"Syndication Agent" means NationsBank, N.A., in its capacity as
Syndication Agent hereunder.
"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
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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.
"Total Capitalization" means, at any date, the sum of (a) Total
Liabilities plus (b) Net Worth of the Borrowers and their Subsidiaries.
"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.
"Trade Name Use Agreement" means the trade name use agreement, as
amended, restated or otherwise modified, between PZN 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 (1994 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.
"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.
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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 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 PZN 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
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outstanding Revolving Credit Loans and the L/C Obligations and (ii) the
Swingline Commitment.
(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
receipt thereof the Swingline Lender will deliver to such
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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. PZN shall give the Administrative Agent
irrevocable prior written notice in the form attached hereto as Exhibit B (a
"Notice of Revolving Credit/Swingline 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 Revolving Credit/Swingline 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 PZN 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 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.
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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 Revolving Credit Loans plus the sum of all outstanding
Swingline Loans and 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 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 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
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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.
(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 sufficient to reduce the
aggregate outstanding Revolving Credit Loans, Swingline Loans and L/C
Obligations, as applicable, after such reduction to the Aggregate Commitment as
so reduced and if the Aggregate Commitment as so reduced is less than the
aggregate amount of all outstanding Letters of Credit, the Borrower shall be
required 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. Any reduction of the Aggregate Commitment to zero shall be
accompanied by payment of all outstanding Revolving Credit Loans and Swingline
Loans (and furnishing of cash collateral satisfactory to the Administrative
Agent for all L/C Obligations) and shall result in the termination of the
Aggregate Commitment and the
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Swingline Commitment and the Revolving 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
repayment shall be accompanied by any amount required to be paid pursuant to
Section 4.9 hereof.
SECTION 2.7. Revolving Termination Date. The Revolving Credit Facility
shall terminate on the earliest of (a) July 18, 2000, (b) the date of
termination by the Borrowers pursuant to Section 2.6(a) or (b), and (c) the date
of termination by the Administrative Agent on behalf of the Lenders pursuant to
Section 11.2(a).
SECTION 2.8. Release of Security. Upon the sale of any Correctional
Facility or Justice 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, 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 sale are the greater of (A) the fair market value, as determined by the
Independent Committee of the Board of Trustees of PZN, of such Correctional
Facility or Justice Facility, as applicable, and (B) the amount equal to seventy
five percent (75%) of the initial purchase price of such Correctional Facility
or Justice Facility, as applicable, plus the aggregate amount of all Capital
Expenditures made by the Borrowers with respect to such Correctional Facility.
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.
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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 PZN 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.
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
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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 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 3.4(b) 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 PZN 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
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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 PZN 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.
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.
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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 PZN on behalf of the Borrowers, the aggregate principal
balance of (i) any Revolving Credit Note shall bear interest at (A) the Base
Rate plus the Applicable Margin as set forth in Section 4.1(c)or (B) the LIBOR
Rate plus the Applicable Margin as set forth in Section 4.1(c); provided that
the LIBOR Rate shall not be available until three (3) Business Days after the
Closing Date and (ii) any Swingline Loan shall bear interest at the Base Rate
plus the Applicable Margin as set forth in Section 4.1(c). PZN on behalf of the
Borrowers shall select the rate of interest and Interest Period, if any,
applicable to any Loan at the time a Notice of Revolving Credit/Swingline
Borrowing is given pursuant to Section 2.3 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",
each Loan or portion thereof bearing interest based on the LIBOR Rate shall be a
"LIBOR Rate Loan." Any Loan or any portion thereof as to which PZN 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, PZN 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) or three (3) 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 seven (7) Interest Periods
outstanding at any time.
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(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 March 15, 1999, 0.00% for
Base Rate Loans and 1.50% for LIBOR Rate Loans and (ii) thereafter, 0.25% for
Base Rate Loans and 1.75% for LIBOR Rate Loans.
(d) Default Rate. At the discretion of the Administrative Agent and the
Required Lenders, 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, 1998; and
interest on each LIBOR Rate Loan shall be payable on the last day of each
Interest Period applicable thereto. 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 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
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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, PZN 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 and Facility Fee. Commencing on the Closing Date,
the Borrowers shall pay to the Administrative Agent, for the account of the
Lenders, (i) a non-refundable commitment fee on the average daily unused portion
of the Aggregate Commitment at a rate per annum which shall be 0.125% and (ii) a
non-refundable facility fee on the total amount of the Aggregate Commitment at a
rate per annum which shall be 0.25%. The commitment fee and facility 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, 1998, and on the Revolving Termination Date. Such commitment fee and
facility fee shall be distributed by the Administrative Agent to the Lenders pro
rata in accordance with the Lenders' respective Commitment Percentages.
(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 PZN and the
Administrative Agent dated June 23, 1998, 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 the
fees set forth in such fee letter executed by PZN, the Administrative Agent,
Canadian Imperial Bank of Commerce and NationsBank, N.A., dated as of June 23,
1998.
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
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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 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 permitted pursuant to Section
9.1, in that order.
SECTION 4.6. Adjustments. If any Lender (a "Benefited 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 Benefited 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 Benefited 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
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such excess payment or benefits is thereafter recovered from such Benefited
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned to the extent of such recovery, with interest (only if the Benefited
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 Benefited
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 Sections 2.3(b) and 4.2 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 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 4.7 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
PZN. Thereafter,
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until the Administrative Agent notifies PZN 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 PZN and the other Lenders. Thereafter, until the Administrative Agent
notifies PZN 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 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
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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 PZN 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 PZN 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 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 PZN 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.
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"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 PZN by the
Administrative Agent and shall be conclusively presumed to be correct save for
manifest error.
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 PZN 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
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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
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
PZN, 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 PZN, 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 PZN, 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
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notifies PZN 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.
SECTION 4.12. Use of Proceeds. The Borrowers shall use the proceeds of
the Loans (a) to fund the acquisition of Correctional Facilities and Justice
Facilities, (b) to fund construction and further development of Correctional
Facilities and Justice 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 4.13 Security. The Obligations of the Borrower shall be secured
as provided in the Security Documents.
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 31, 1998, 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; and
(iv) the Master Security Document Amendments;
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.
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(b) Closing Certificates; etc.
(i) Officer's Certificate. The Administrative Agent shall have
received a certificate from the chief executive officer or chief financial
officer of PZN, 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.
(ii) Secretary's Certificates. The Administrative Agent shall
have received a certificate of the secretary or assistant secretary of each
Borrower certifying that (A) the copy of the certificate of incorporation or
declaration of trust, as applicable, of such entity and all amendments thereto,
previously delivered to the Administrative Agent are true and complete (or
attaching all amendments or modifications thereto, certified as of a recent date
by the appropriate Governmental Authority in its jurisdiction of incorporation);
(B) the copy of the bylaws of such entity previously delivered to the
Administrative Agent are true and complete; (C) attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors of such
entity authorizing the transactions contemplated herein, the borrowings
contemplated hereunder and the execution, delivery and performance of this
Agreement and the other documents related thereto; and (D) as to the incumbency
and genuineness of the signature of each officer of such entity executing this
Agreement and the other documents related hereto.
(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
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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 PZN) of insurance
policies in the form required under Section 7.3 and the Security Documents and
otherwise in form and substance reasonably 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. PZN 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 PZN, 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
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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 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) Miscellaneous.
(i) Notice of Borrowing; Notice of Account Designation and
Application for Letter of Credit. The Administrative Agent shall have received
written instructions from PZN 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, PZN
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 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.
(g) Refinancing. On the Closing Date, (i) all loans under the Prior
Credit Agreement ("Existing Loans") made by any Prior Lender who is not a Lender
hereunder shall be repaid in full and the commitments and other obligations and
(except as expressly set forth in the Prior Credit Agreement) rights of such
Prior Lender shall be terminated, (ii) all outstanding Existing Loans shall be
deemed Loans hereunder and the Administrative Agent shall make such transfers of
funds as are necessary in order that the outstanding balance of such Loans,
together with any Loans funded on the Closing Date, reflect the Commitments of
the Lenders hereunder, (iii) all outstanding letters of credit issued pursuant
to the Prior Credit Agreement shall be deemed Letters of Credit hereunder and
each Lender shall purchase a participation therein pursuant to Section 3.4 in
accordance with its Commitment Percentage, (iv) there shall have been paid in
cash in full all accrued but unpaid
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interest due on the Existing Loans to but excluding the Closing Date, (v) there
shall have been paid in cash in full all accrued but unpaid fees under the Prior
Credit Agreement due to but excluding the Closing Date and all other amounts,
costs and expenses then owing to any of the Prior Lenders and/or any Agent, as
agent under the Prior Credit Agreement, in each case to the satisfaction of such
Agent or Prior Lender, as the case may be, regardless of whether or not such
amounts would otherwise be due and payable at such time pursuant to the terms of
the Prior Credit Agreement and (vi) all outstanding promissory notes issued by
the Borrower to the Prior Lenders under the Prior Credit Agreement shall be
deemed canceled and the originally executed copies thereof shall be promptly
returned to the Administrative Agent who shall forward such notes to the
Borrowers.
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. PZN shall have
delivered a certificate in form and substance reasonably satisfactory to the
Administrative Agent demonstrating pro forma compliance with Sections 10.11 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 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
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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. PZN 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 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
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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 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
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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;
(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
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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 Regulation 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 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 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
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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 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.
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(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
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.
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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
PZN 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 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
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projections, accompanied by a certificate from the chief financial officer of
PZN 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 PZN 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 which any Borrower
shall file with the Securities and Exchange Commission or any successor
commission;
(c) Within fifteen (15) days after the end of each fiscal quarter,
copies of each new Lease and each modification of an existing Lease executed
during such fiscal quarter; and
(d) Promptly upon receipt by any Borrower, deliver to the
Administrative Agent and Lenders annual financial statements for each lessee
party to any Lease, which lessee is a Private Counterparty and which Lease
generates more than five percent (5%) of the aggregate annual revenues from all
Leases, such financial statements to be in form and substance satisfactory to
the Administrative Agent; and
(e) 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:
(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
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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 (to the extent any Borrower has actual knowledge or notice
thereof), (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 or (iv) any lease default by
a counterparty to any Lease;
(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; and
(g) 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 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.
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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 PZN'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 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
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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 Justice
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 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.
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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 Justice 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. Lease Terms and Conditions. (a) Cause (i) each
Correctional Facility to be subject to either (A) a Lease with a minimum initial
lease term of (five) 5 years (provided that, subject to prior Required Lender
approval, Leases with a Public Counterparty may have a lease term of less than
five (5) years and be subject to appropriations limitations imposed by
Applicable Law) or (B) a development agreement, in form and substance
satisfactory to the Administrative Agent, Documentation Agent and Syndication
Agent, in the reasonable discretion of each such entity and (ii) each Justice
Facility to be subject to a Lease with a minimum initial lease term 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); provided, that
the Borrowers may maintain Correctional Facilities and Justice Facilities which
do not comply herewith to the extent that the book value of such facilities does
not exceed 7.5% of gross Fixed Asset Book Value and (b) cause each Lease entered
into by any Borrower or any Subsidiary thereof to be delivered to the
Administrative Agent within thirty (30) days following execution and delivery
thereof to the Borrower and cause each such Lease to contain the following terms
and conditions: (i) each such Lease will be a net lease, (ii) each such Lease
will be non-cancelable by the lessee, (iii) the lessee or lessees under each
such Lease will remain responsible for all operations and liabilities relating
to the operation, administration and maintenance of the Correctional Facility or
Justice Facility subject to such Lease and (iv) each Lease entered into after
the Closing Date with annual lease payments in excess of $500,000 contains such
other terms and conditions as the Administrative Agent shall reasonably request.
SECTION 8.13. 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) and ninety percent (90%) of lease revenues shall be
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derived from leases with (x) a counterparty whose debt is rated BBB- by Standard
& Poor's or Baa 3 by Moody's (or if unavailable the equivalent rating from
either Fitch of Duff & Phelps )or (y) with any other counterparty approved in
writing in advance by the Administrative Agent and Required Lenders.
SECTION 8.14. Additional Borrowers and Collateral.
(a) Within thirty (30) days after the creation or acquisition of any
additional Subsidiary of any Borrower (excluding the acquisition of API, until
such time as compliance with this Section 8.14 would be permitted by API's
organizational documents) in accordance with the terms hereof, cause to be
executed and delivered to the Administrative Agent (i) 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, (ii) 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, (iii) a Pledge Agreement executed by PZN (or other applicable
Subsidiary) or supplement thereto 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 (iv) 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 8.14,
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.
(b) Within thirty (30) days after the Closing Date, deliver to the
Administrative Agent the following, each in form and substance satisfactory
thereto (i) amendment to each existing Deed of Trust and/or Assignments of Lease
previously delivered in connection with the Prior Credit Agreement, (ii) a
confirmation of Subordination, Non-Disturbance and Attornment Agreement
previously delivered in connection with the Prior Credit Agreement, (iii) an
increase to all existing policies of title insurance previously delivered in
connection with the Prior Credit Agreement commensurate with the increase in the
Aggregate Commitment hereunder, (iv) legal opinions of local counsel with regard
to the foregoing, each in form and substance satisfactory to the Administrative
Agent and (v) such other certificates, documents and information as the
Administrative Agent may reasonably request.
(c) Subject to the proviso set forth in Section 10.4(b)(iii)(B), within
thirty (30) days after the acquisition of any real property (whether owned in
fee or leased) deliver to the Administrative Agent the following, each in form
and substance satisfactory thereto (i) such additional Assignments of Lease,
such additional Deeds of Trust, and 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 real property and related assets to be acquired, (ii) a marked-up
commitment for a policy of title insurance (and any customary affidavits and
indemnities as may be required or necessary to obtain title insurance
satisfactory to the Administrative Agent), insuring Lenders' first priority
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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 sixty (60) days after the
acquisition date, (iii) copies of all recorded documents creating exceptions to
the title policy referred to in clause (ii) above, (iv) 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 such acquired
parcel of property subject to a Deed of Trust and/or Assignment of Rents, Leases
and Profits is not located in an area having "special flood hazards", (v) 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 and, for each such survey with an effective date of more than sixty
(60) days prior to the acquisition date of such property 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, showing 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, (vi) a Phase I
environmental assessment of each such acquired parcel of real property subject
to a Deed of Trust and/or an Assignment of Rents, Leases and Profits by an
environmental engineering firm acceptable to the Administrative Agent showing no
environmental conditions or liabilities in violation of Environmental Laws that
could reasonably be expected to have a Material Adverse Effect, (vii) legal
opinions of local counsel with regard to the foregoing, each in form and
substance satisfactory to the Administrative Agent and (viii) 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.
SECTION 8.15. Year 2000 Compatibility. Take all actions reasonably
necessary to assure that Borrowers' computer based systems are able to operate
and effectively process data which includes dates on and after January 1, 2000.
At the request of the Administrative Agent, the Borrowers shall provide
reasonable assurances satisfactory to the Administrative Agent of the Borrowers'
Year 2000 compatibility.
SECTION 8.16. Further Assurances. Make, execute and deliver all such
additional and further acts, things, deeds and instruments as the Administrative
Agent or any Lender may
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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.
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 0.45 to 1.0.
SECTION 9.2 Ratio of Adjusted Funded Debt to Adjusted Cash Flow. As of
any fiscal quarter end, permit the ratio of (a) the Adjusted Funded Debt as of
such date to (b) Adjusted Cash Flow to exceed 4.0 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
12/31/98 0.95 to 1.00
Thereafter 0.90 to 1.00
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) Dividends
paid during such period with respect to any class of Preferred Stock (to the
extent deducted in the calculation thereof) plus (iii) Interest Expense for such
period less (iv) 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.
SECTION 9.5 Minimum Net Worth. As of any fiscal quarter end, permit Net
Worth to be less than the sum of (a) $500,000,000 plus (b) seventy five percent
(75%) of Net Income (to the extent Net Income is positive) after the Closing
Date determined on a cumulative basis less (c) Dividends paid after the Closing
Date plus (d) 100% of any Net Cash Proceeds received from
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the issuance of, or any Debt satisfied on the conversion into, any capital stock
of any Borrower during such fiscal quarter.
SECTION 9.6 Project Development Ratio. As of any fiscal quarter end,
permit the ratio of (a) Development Costs to (b) the sum of (i) Completion Costs
plus (ii) gross Fixed Asset Book Value, all calculated as of such date, to be
greater than 0.33 to 1.00; provided, that in addition to the foregoing, without
limitation thereof, Development Costs shall not exceed $400,000,000 as of such
date.
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) any 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 or (c) an Eligible Assignee) and upon terms
and conditions reasonably satisfactory to the Administrative Agent;
(c) Debt consisting of Contingent Obligations permitted by Section
10.2;
(d) 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; and
(e) intercompany Debt between PZN (or the applicable Subsidiary thereof
and API) as contemplated by the API Acquisition which intercompany Debt shall
not be required to be subordinated in right and time of payment to the
Obligations so long as such subordination would conflict with the charter or
articles of organization of API;
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.
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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;
(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; and
(f) Liens securing Capitalized Leases and purchase money Debt permitted
pursuant to Section 10.1(d); provided, that (i) such Liens shall be created
substantially simultaneously with the acquisition or lease of the related asset,
(ii) such Liens do not at any time encumber any property other than the property
financed 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 acquired or leased.
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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 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 (other than the API Acquisition) by any Borrower or any
Subsidiary thereof in the form of acquisitions of any Correctional Facility or
Justice 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, and (iii) the
Borrowers shall have delivered to the Administrative Agent in form and substance
satisfactory thereto instruments, documents, certificates and opinions required
pursuant to Section 8.14(c); provided, that the Borrowers shall not be required
to grant a security interest in any assets so acquired (the "Excluded Assets")
to the extent that the cost of such Excluded Assets is less than $5,000,000 for
each individual acquisition and the book value of all such Excluded Assets and
any other assets with regard to which the Required Lenders waive the
requirements of this Section 10.4(b) shall in the aggregate represents less than
five percent (5%) of the gross Fixed Asset Book Value.
(c) the API Acquisition pursuant to the Refinancing Agreement dated as
of July 6, 1998 among API, PZN, CCA and certain other third parties, a copy of
which has been previously delivered to the Administrative Agent; provided (i) no
Default or Event of Default has occurred and is continuing or would result
therefrom and (ii) within thirty (30) days after the closing of the API
Acquisition, PZN delivers to the Administrative Agent (A) a Pledge Agreement
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executed by PZN (or applicable Subsidiary thereof) or supplement thereto in form
and substance satisfactory to the Lenders such that the capital stock of API
shall become collateral for the Obligation, (B) a true and complete copy of the
final governing documents regarding the API Acquisition and (C) such other
documents, certificates and instruments, including, without limitation, legal
opinions, in each case relating to the API Acquisition and Pledge Agreement
referred to above as reasonably requested by the Administrative Agent or
Required Lenders.
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 or Justice 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 the
Borrowers (as of the Closing Date and (ii) 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;
(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; and
(d) leases and sublease pertaining to Agecroft Prison to be entered
into by API as contemplated in the Refinancing Agreement.
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.
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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.
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. 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 10.13. Operating Leases. The aggregate amount of annual lease
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).
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(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 a period of
thirty (30) days after written notice thereof has been given to PZN 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.
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(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 PZN entitled
to vote in the election of members of the board of directors of PZN 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
PZN 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 PZN within ninety
(90) days after such first Person ceases to hold such office or continue to have
such management responsibilities.
(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.
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(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 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. PZN 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 PZN:
(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
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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 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.
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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 (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
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unless it has received notice from a Lender or PZN 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
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
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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 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 PZN. 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 PZN, 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
PZN, 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 Documentation Agent and Syndication Agent. Neither
the Documentation Agent, nor the Syndication Agent, in their respective capacity
as such, shall have any 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
10 Burton Hills Boulevard, Suite 100
Nashville, Tennessee 37215
Attention: D. Robert Crants, III
Telephone No.: (615) 263-0200
Telecopy No.: (615) 263-0212
With copies to: Stokes and Bartholomew, P.A.
SunTrust Center, Suite 2800
424 Church Street
Nashville, Tennessee 37219
Attention: Robert R. Campbell, Jr.
Telephone No.: (615) 259-1450
Telecopy No.: (615) 259-1470
If to First Union as
Administrative Agent:
First Union National Bank
One First Union Center, TW-4
301 South College Street
Charlotte, North Carolina 28288
Attention: Syndication Agency
Services
Telephone No.: (704) 374-2791
Telecopy No.: (704) 383-0288
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and
First Union National Bank
150 Fourth Avenue North
Nashville, Tennessee 37219
Attention: Andy Tompkins
Telephone No.: (615) 251-9351
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, 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
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
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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 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 of 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.
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Notwithstanding anything foregoing to the contrary, any arbitration proceeding
demanded hereunder shall begin within ninety (90) days after such demand thereof
and shall be concluded within one hundred and twenty (120) days after such
demand. These time limitations may not be extended unless a party hereto shows
cause for extension and then such extension shall not exceed a total of sixty
(60) days. 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. The parties hereto
do not waive any applicable Federal or state substantive law except as provided
herein. Notwithstanding the foregoing, this paragraph shall not apply to any
Hedging Agreement that is a Loan Document.
(b) Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH BORROWER
HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY
WAIVED 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 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.
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SECTION 13.8. [Reserved].
SECTION 13.9. 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 PZN, 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 13.10. 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), PZN, 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:
(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 PZN,
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
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(v) the assigning Lender shall pay to the Administrative Agent
an assignment fee of $3,000 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 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 PZN; and
(iv) promptly deliver a copy of such Assignment and Acceptance
to PZN.
Within five (5) Business Days after receipt by PZN 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
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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 PZN.
(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 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
PZN, 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; provided, that the
Administrative Agent may disclose information relating to this Agreement to Gold
Sheets and other similar bank trade publications, such information to consist of
deal terms and other information customarily found in such publications and
provided further, that the Administrative Agent and Lenders may disclose any
such information to the extent such disclosure is required by law or requested
by any regulatory authority.. 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,
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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 13.11. 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 (other than any Hedging Agreement, the terms and
conditions of which may be amended, modified or waived by the parties thereto)
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, (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) waive any
Default or Event of Default with respect to non-compliance with Section 10.5 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 written consent of the Administrative Agent and (b) Article III
without the written consent of the Issuing Lender.
SECTION 13.12. 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 13.13. Joint and Several Liability; PZN 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 PZN (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 PZN 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 13.14. 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
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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 13.15. 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 13.16. 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 13.17. 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 13.18. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so 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 13.19. 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. The Administrative Agent is hereby permitted to release
all Liens on the Collateral in favor of the Administrative Agent, for the
ratable benefit of itself and the Lenders, upon repayment of the outstanding
principal of and all accrued interest on the Loans, payment of all outstanding
fees and expenses hereunder and the termination of the Lender's Commitments. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
SECTION 13.20. Inconsistencies with Other Documents; Independent Effect
of Covenants.
(a) In the event there is a conflict or inconsistency between this
Agreement and any other Loan Document, the terms of this Agreement shall
control; provided, that any provision of the Security Documents which imposes
additional burdens on the Borrowers or their Subsidiaries or further restricts
the rights of the Borrowers or their Subsidiaries or gives the Administrative
Agent or Lenders additional rights shall not be deemed to be in conflict or
inconsistent with this Agreement and shall be given full force and effect.
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(b) The Borrowers expressly acknowledge and agree that each covenant
contained in Articles VIII, IX or X hereof shall be given independent effect.
Accordingly, the Borrower shall not engage in any transaction or other act
otherwise permitted under any covenant contained in Articles VIII, IX or X if,
before or after giving effect to such transaction or act, the Borrowers shall or
would be in breach of any other covenant contained in Articles VIII, IX or X.
[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: /s/ Vida H. Carroll
---------------------------------
Name: Vida H. Carroll
---------------------------------
Title: Secretary
---------------------------------
[CORPORATE SEAL] U.S. CORRECTIONS CORPORATION
By: /s/ Vida H. Carroll
---------------------------------
Name: Vida H. Carroll
---------------------------------
Title: Secretary
---------------------------------
[CORPORATE SEAL] USCC, INC.
By: /s/ Vida H. Carroll
---------------------------------
Name: Vida H. Carroll
---------------------------------
Title: Secretary
---------------------------------
[CORPORATE SEAL] U.S. CORRECTIONS LEASING (NC)
AVERY/MITCHELL FACILITY, INC.
By: /s/ Vida H. Carroll
---------------------------------
Name: Vida H. Carroll
---------------------------------
Title: Secretary
---------------------------------
[CORPORATE SEAL] U.S. CORRECTIONS LEASING (NC)
PAMLICO FACILITY, INC.
By: /s/ Vida H. Carroll
---------------------------------
Name: Vida H. Carroll
---------------------------------
Title: Secretary
---------------------------------
[Signature Page Follows]
<PAGE> 84
[CORPORATE SEAL] QUEENSGATE CORRECTIONAL CENTER, INC.
By: /s/ Vida H. Carroll
---------------------------------
Name: Vida H. Carroll
---------------------------------
Title: Secretary
---------------------------------
[CORPORATE SEAL] PRISON REALTY MANAGEMENT, INC.
By: /s/ Vida H. Carroll
---------------------------------
Name: Vida H. Carroll
---------------------------------
Title: Secretary
---------------------------------
[Signature Pages Continue]
<PAGE> 85
FIRST UNION NATIONAL BANK, as
Administrative Agent, Swingline Lender
and Lender
By: /s/ William M. Bateman
---------------------------------
Name: William M. Bateman
---------------------------------
Title: Senior Vice President
---------------------------------
[Signature Pages Continue]
<PAGE> 86
CANADIAN IMPERIAL BANK OF COMMERCE, as
Documentation Agent and Lender
By: /s/ Katherine Bass
---------------------------------
Name: Katherine Bass
---------------------------------
Title: Executive Director
---------------------------------
CIBC Oppenheimer Corp.,
AS AGENT
[Signature Pages Continue]
<PAGE> 87
NATIONSBANK, N.A., as Syndication Agent
and Lender
By: /s/ Richard G. Parkhurst, Jr.
---------------------------------
Name: Richard G. Parkhurst, Jr.
---------------------------------
Title: Senior Vice President
---------------------------------
[Signature Pages Continue]
<PAGE> 88
COMERICA BANK, as Lender
By: /s/ Kristine L. Andersen
---------------------------------
Name: Kristine L. Andersen
---------------------------------
Title: Account Officer
---------------------------------
[Signature Pages Continue]
<PAGE> 89
AMSOUTH BANK, as Lender
By: /s/ Cort Fontenot
---------------------------------
Name: Cort Fontenot
---------------------------------
Title: Relationship Manager
---------------------------------
[Signature Pages Continue]
<PAGE> 90
MERCANTILE BANK NATIONAL ASSOCIATION, as
Lender
By: /s/ Donald A. Adam
---------------------------------
Name: Donald A. Adam
---------------------------------
Title: Vice President
---------------------------------
[Signature Pages Continue]
<PAGE> 91
BANK HAPOALIM, B. M., as Lender
By: /s/ Amram Lador By: /s/ Ellen Frank
---------------------------- --------------------------------
Name: Amram (Rami) Lador Name: Ellen Frank
---------------------------- --------------------------------
Title: First Vice President Title: Vice President
---------------------------- --------------------------------
and Branch Manager
----------------------------
[Signature Pages Continue]
<PAGE> 92
SOUTHTRUST BANK, N.A., as Lender
By: /s/ Rett Dallas
---------------------------------
Name: Rett Dallas
---------------------------------
Title: Vice President
---------------------------------
[Signature Pages Continue]
<PAGE> 93
FIRST TENNESSEE BANK, as Lender
By: /s/ Malinda J. Browne
---------------------------------
Name: Malinda J. Browne
---------------------------------
Title: Commercial Loan Officer
---------------------------------
[Signature Pages Continue]
<PAGE> 94
UNION PLANTERS NATIONAL BANK, as Lender
By: /s/ Victoria E. Docauer
---------------------------------
Name: Victoria E. Docauer
---------------------------------
Title: Vice President
---------------------------------
<PAGE> 95
NOTICE TO BORROWER
THIS WRITTEN CREDIT AGREEMENT IS THE FINAL EXPRESSION OF THE CREDIT
AGREEMENT BETWEEN BORROWERS, THE LENDERS, THE ADMINISTRATIVE AGENT, THE
DOCUMENTATION AGENT AND THE SYNDICATION AGENT. THIS WRITTEN CREDIT AGREEMENT MAY
NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR ORAL CREDIT AGREEMENT OR OF A
CONTEMPORANEOUS ORAL CREDIT AGREEMENT BETWEEN BORROWERS, THE LENDERS, THE
ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT AND THE SYNDICATION AGENT.
NONSTANDARD TERMS OR PREVIOUS ORAL CREDIT AGREEMENTS. Any nonstandard
terms or previous oral credit agreements between Borrowers, the Lenders, the
Administrative Agent, the Documentation Agent and the Syndication Agent must be
inserted here to be enforceable.
[None]
AFFIRMATION OF NO UNWRITTEN ORAL CREDIT AGREEMENTS. Each Borrower and
the Administrative Agent, on behalf of itself and the Lenders affirm by their
signatures below that no unwritten, oral credit agreement exists between them.
BORROWERS:
CCA PRISON REALTY TRUST
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
ADMINISTRATIVE AGENT:
FIRST UNION NATIONAL BANK
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CCA PRISON REALTY TRUST FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,020
<SECURITIES> 0
<RECEIVABLES> 308
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,782
<PP&E> 781,531
<DEPRECIATION> (18,271)
<TOTAL-ASSETS> 775,762
<CURRENT-LIABILITIES> 27,699
<BONDS> 237,800
0
43
<COMMON> 216
<OTHER-SE> 510,004
<TOTAL-LIABILITY-AND-EQUITY> 775,762
<SALES> 48,727
<TOTAL-REVENUES> 49,387
<CGS> 13,183
<TOTAL-COSTS> 20,658
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,750
<INCOME-PRETAX> 23,010
<INCOME-TAX> 0
<INCOME-CONTINUING> 23,010
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,010
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CCA PRISON REALTY TRUST FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-18-1997
<PERIOD-END> SEP-30-1997
<CASH> 41,714
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 41,714
<PP&E> 381,539
<DEPRECIATION> 2,110
<TOTAL-ASSETS> 421,568
<CURRENT-LIABILITIES> 7,649
<BONDS> 0
0
0
<COMMON> 216
<OTHER-SE> 413,703
<TOTAL-LIABILITY-AND-EQUITY> 421,568
<SALES> 8,293
<TOTAL-REVENUES> 8,848
<CGS> 2,131
<TOTAL-COSTS> 2,521
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,327
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,327
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,327
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
