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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: 1-14031
CORRECTIONAL PROPERTIES TRUST
(Exact name of Registrant as specified in its declaration of trust)
Maryland 65-0823232
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
3300 PGA Blvd., Suite 430, Palm Beach Gardens, Florida 33410 (Address
and zip code of principal executive offices)
(561)630-6336
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal
year if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
7,130,000
(Outstanding shares of the issuer's common shares,
$0.001 par value per share as of November 12, 1998)
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CORRECTIONAL PROPERTIES TRUST
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPYEMBER 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
b) Consolidated Statement of Income 4
for the period from July 1, 1998 to September 30, 1998
b) Consolidated Statement of Income 5
for the period from February 18, 1998 to September 30, 1998
c) Consolidated Statement of Cash Flows 6
for the period from February 18, 1998 to September 30, 1998
d) Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About 15
Market Risk
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 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 16
SIGNATURE
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS.
CORRECTIONAL PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
SEPTEMBER 30,
1998
ASSETS
REAL ESTATE PROPERTIES, AT COST
CORRECTIONAL AND DETENTION FACILITIES $ 113,041
LESS - ACCUMULATED DEPRECIATION AND AMORTIZATION (1,116)
---------
NET REAL ESTATE PROPERTIES 111,925
CASH AND CASH EQUIVALENTS 19,973
OTHER ASSETS 671
---------
TOTAL ASSETS $ 132,569
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 237
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TOTAL LIABILITIES 237
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SHAREHOLDERS' EQUITY
PREFERRED SHARES, $.001 PAR VALUE;
50,000,000 SHARES AUTHORIZED;
NONE OUTSTANDING --
COMMON SHARES, $.001 PAR VALUE;
150,000,000 SHARES AUTHORIZED;
7,130,000 AND 1,000 SHARES ISSUED AND OUTSTANDING,
RESPECTIVELY 7
CAPITAL IN EXCESS OF PAR VALUE 130,722
RETAINED EARNINGS 1,603
---------
TOTAL SHAREHOLDERS' EQUITY 132,332
---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 132,569
=========
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL
PART OF THESE STATEMENTS.
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CORRECTIONAL PROPERTIES TRUST
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
REVENUES
RENTAL $2,846
INTEREST 253
------
3,099
------
EXPENSES
DEPRECIATION AND AMORTIZATION 662
GENERAL AND ADMINISTRATIVE 357
------
1,019
------
NET INCOME $2,080
======
NET INCOME PER COMMON SHARE
BASIC $ 0.29
======
DILUTED $ 0.29
======
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC 7,130
======
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, DILUTED 7,130
======
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THIS STATEMENT.
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CORRECTIONAL PROPERTIES TRUST
CONSOLIDATED STATEMENT OF INCOME
PERIOD FROM FEBRUARY 18, 1998 (INCEPTION) TO SEPTEMBER 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
REVENUES
RENTAL $ 4,838
INTEREST 400
--------------
5,238
--------------
EXPENSES
DEPRECIATION AND AMORTIZATION 1,122
GENERAL AND ADMINISTRATIVE 731
--------------
1,853
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NET INCOME $ 3,385
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NET INCOME PER COMMON SHARE
BASIC $ 0.69
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DILUTED $ 0.69
==============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC 4,891
==============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, DILUTED 4,899
==============
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THIS STATEMENT.
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CORRECTIONAL PROPERTIES TRUST
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FEBRUARY 18, 1998 (INCEPTION) TO SEPTEMBER 30, 1998
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
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CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME $ 3,385
ADJUSTMENTS TO NET INCOME:
DEPRECIATION OF REAL ESTATE ASSETS 1,116
OTHER AMORTIZATION 6
CHANGES IN ASSETS AND LIABILITIES:
OTHER ASSETS (677)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 237
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NET CASH PROVIDED BY OPERATING ACTIVITIES 4,067
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CASH FLOWS FROM INVESTING ACTIVITIES
ACQUISITION OF REAL ESTATE INVESTMENTS (113,041)
---------
NET CASH USED IN INVESTING ACTIVITIES (113,041)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
INITIAL CAPITALIZATION 3
PROCEEDS FROM INITIAL PUBLIC OFFERING, NET OF OFFERING COSTS 130,726
DIVIDENDS PAID (1,782)
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 128,947
---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 19,973
CASH AND CASH EQUIVALENTS, BEGINNING OF OPERATIONS --
---------
CASH AND CASH EQUIVALENTS, END OF QUARTER $ 19,973
=========
</TABLE>
THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART
OF THIS STATEMENT.
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CORRECTIONAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
1. ORGANIZATION AND OPERATIONS
Correctional Properties Trust ("the "Company") was formed in February 1998 as a
Maryland real estate investment trust to capitalize on the growing trend toward
privatization in the corrections industry by acquiring correctional and
detention facilities from both private prison operators and governmental
entities.
On April 28, 1998, the Company commenced operations after completing its initial
public offering (the "IPO") of 6,200,000 common shares of beneficial interest.
Subsequently, on May 13, 1998 the underwriters involved in the IPO exercised
their over-allotment option for an additional 930,000 shares resulting in a
total of 7,130,000 shares of beneficial interest outstanding. The 7,130,000
common shares were issued at an IPO price of $20.00 generating gross proceeds of
$142,600,000. The aggregate proceeds to the Company, net of underwriters'
discount of $9,982,000 and offering costs of $1,892,000, were approximately
$130,726,000.
Simultaneous with the completion of the IPO, the Company acquired the following
eight correctional and detention facilities (the "Initial Facilities") located
in five states with an aggregate design capacity of 3,154 beds from Wackenhut
Corrections Corporation and certain of its subsidiaries (collectively, "WCC")
for an aggregate purchase price of $113.0 million (collectively, the "Formation
Transactions"):
(i) Aurora INS Processing Center (Aurora, Colorado);
(ii) McFarland Community Correctional Facility (McFarland, California);
(iii) Queens Private Correctional Facility (New York, New York);
(iv) Central Valley Community Correctional Facility (McFarland, California);
(v) Golden State Community Correctional Facility (McFarland, California);
(vi) Desert View Community Correctional Facility (Adelanto, California);
(vii) Broward County Work Release Center Center (Broward County, Florida);and
(viii) Karnes County Correctional Center (Karnes County, Texas).
As part of the Formation Transactions, the Company also entered into agreements
with WCC to lease the Initial Facilities back to WCC pursuant to long-term,
non-cancelable triple net leases (the "Leases") which require WCC to pay all
operating expenses, taxes, insurance and other costs. The Leases provide for
initial, annual base rents which aggregate $10.7 million, and provide for an
initial term of 10 years that may generally be extended by WCC for three
five-year terms at fair market rental rates. The Leases provide for a base rent
equal to 9.5% of the total purchase price of each Initial Facility and annual
rent escalations equal to the annual increase in the Consumer Price Index - All
Urban Consumers, as published by the Bureau of Statistics of the United States
Department of Labor (the "CPI"), subject to a minimum annual increase of 3%
during the first three years and a maximum annual increase of 4% throughout the
term of the Lease.
WCC is not prohibited under its arrangements with the Company from leasing
properties from parties other than the Company. The obligations of WCC under the
Leases are cross-defaulted to each of the other Leases with respect to certain
payment defaults and certain other defaults.
The Company has also entered into option agreements with WCC (the "Option
Agreements") pursuant to which the Company was granted the option to acquire and
leaseback to WCC three additional correctional and detention facilities
currently under development by WCC in three states that have an aggregate design
capacity of 2,256 beds (the "Option Facilities").
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The purchase price of each Option Facility will equal 105% (or such lower
percentage as may be agreed to with WCC) of the aggregate costs related to the
acquisition, development, design, construction, and equipment of such option
facility. If acquired, the Company will lease the Option Facilities to WCC (and
WCC will continue to operate such Option Facilities) pursuant to long-term,
non-cancelable, triple-net leases on substantially the same terms and conditions
as the Leases for the Initial Facilities.
Further, the Company has entered into a Right to Purchase Agreement with WCC,
pursuant to which the Company will have the right, during the 15 years following
the consummation of the Offering (so long as there are any leases in force
between the Company and WCC), to acquire and lease back to WCC any future
facilities subject to certain limited exceptions where the sale or transfer of
ownership of a facility is previously restricted.
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 wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated.
The accompanying interim consolidated financial statements are unaudited,
however, the financial statements 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. 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. These financial statements should be read in conjunction
with the prospectus filed as a part of the Company's Registration Statement
filed on Form S-11 pursuant to Rule 424(b) of the Securities Act of 1933
(Commission File No. 333-46681) (the "Prospectus"), and the pro forma financial
statements and notes thereto included therein.
Cash and Cash Equivalents
The Company considers all short-term, highly-liquid investments that are readily
convertible to cash and have an original maturity of three months or less at the
time of purchase to be cash equivalents.
Real Estate Properties
Real estate properties are recorded at cost. Acquisition costs and transaction
fees directly related to each property are capitalized as a cost of the
respective property. The cost of real estate properties acquired is allocated
between land, buildings and improvements, and machinery and equipment based upon
cost at the time of acquisition. Depreciation is provided for on a straight-line
basis over an estimated useful life of 40 years for building and improvements.
As of September 30, 1998, the Company had investments in 8 leased real estate
properties totaling $113.0 million. Components of these real estate investments
at cost are as follows: land and land improvements - $8.0 million; and building
and improvements - $105.0 million.
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Federal Income Taxes
The Company will seek qualification as a REIT under the Code commencing with its
taxable period ending December 31, 1998. As a result, management believes the
Company will generally not be subject to federal income tax on its taxable
income at corporate rates to the extent it distributes annually at least 95% of
its taxable income to its shareholders and complies with certain other
requirements. Accordingly, no provision has been made for federal income taxes
in the accompanying consolidated financial statements.
Leases and Rental Income
All Leases are accounted for as operating leases. Lease payments are recognized
as revenue as earned on a straight-line basis over the lease term including the
impact of the scheduled rent increases for the leases.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could vary from those estimates.
3. BANK CREDIT FACILITY
The Company has obtained a commitment for a $100 million line of credit (the
"Bank Credit Facility") which may be used to finance the acquisition of
additional correctional and detention facilities (including the option
facilities and future facilities), to expand the Facilities and for general
working capital requirements. The Company's ability to borrow under the Bank
Credit Facility is subject to closing on the facility and the Company's ongoing
compliance with several covenants. As of September 30, 1998, no funds had been
drawn on the Bank Credit Facility.
4. SHARE OPTION AND INCENTIVE PLANS
The Company has established share option and incentive plans for the purpose of
attracting and retaining qualified executive officers and key employees, as well
as non-employee trustees. In conjunction with the Offering, the Company granted
options with respect to 590,000 common shares to officers, employees and
trustees. The exercise price for such options is the initial public offering
price of $20.00. The term of such options is ten years from the date of grant.
In general, one-fourth of the 565,000 shares granted to executive officers and
employees vested immediately, with the remaining options becoming exercisable
ratably on the first, second, and third anniversary of the date of grant,
respectively. The 25,000 options granted to the non-employee trustees vested at
the date of grant. Shares remaining for issuance under the share incentive and
non-employeee trustees plans total 55,000 and 30,000, respectively.
5. EARNINGS PER SHARE
Statement of Financial Accounting Standards No. 128, Earnings per Share ("SFAS
128"), has been issued effective for fiscal periods ending after December 15,
1997. SFAS 128 establishes standards for computing and presenting earnings per
share. Under the standards established by SFAS 128, earnings per share is
measured at two levels: basic earnings per share and diluted earnings per share.
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during
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the year. Diluted earnings per share is computed by dividing net income by the
weighted average number of common shares after considering the additional
dilution. The following data show the amounts used in computing earnings per
share and the effects on income and the weighted-average number of shares of
potential dilutive common stock (in thousands, except share data):
<TABLE>
<CAPTION>
For the Three Months Ended February 18 -
September 30, 1998 September 30, 1998
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<S> <C> <C>
Basic EPS
Net income $2,080 $3,385
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Weighted average shares 7,130 4,891
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Per share - Basic $ 0.29 $ 0.69
====== ======
Diluted EPS
Net income $2,080 $3,385
------ ------
Weighted average shares 7,130 4,899
Effect of dilutive stock options 0 0
------ ------
7,130 4,899
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Per share - Diluted $ 0.29 $ 0.69
====== ======
</TABLE>
Options to purchase 590,000 shares of the Company's stock at $20.00 per share
have been outstanding since February 20, 1998 but were not included in the
computation of diluted EPS because their effect would be anti-dilutive. The
options expire in the year 2008 and were still outstanding at September 30,
1998.
6. COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting Standards No. 130
(SFAS 130"), "Reporting Comprehensive Income." SFAS 130 establishes standards
for reporting and display of comprehensive income and its components in
financial statements. This statement requires that all elements of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other financial statements. For the period ended September 30,
1998 the Company's comprehensive income equaled its net income as there were no
adjustments to net income under SFAS 130.
7. RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." The Statement establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or a liability measured at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. SFAS No. 133 is
effective for fiscal years beginning after June 15, 1999. Management believes
the impact of adopting this statement will not have a material impact upon the
Company's results of operations or financial position.
8. SUBSEQUENT EVENTS
On October 2, 1998 the Company entered into a $100 million Bank Credit Facility
expandable to $150 million at the election of the Company. The Bank Credit
Facility has a term of five years, and will be used primarily to finance the
acquisition of, and investment in, correctional and detention facilities,
expansion of existing facilities and for general working capital or corporate
needs. The Bank Credit Facility will be secured by the Company's facilities, and
will permit aggregate borrowings of up to 50% of the lesser of the aggregate of
the historical cost of the Company's facilities or the aggregate of the
appraised value of such facilities, subject to financial covenants.
On October 20, 1998, the Board of Trustees declared a distribution of $0.35 per
share for the quarter ended September 30, 1998, to shareholders of record on
November 3, 1998. The distribution will be paid on November 17, 1998 and
represents a distribution for the period from July 1, 1998 through September 30,
1998.
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On October 30, 1998, Correctional Properties Trust (the "Company") completed
the acquisition of the 600-bed medium security Lea County Correctional Facility
in Hobbs, New Mexico (the "Hobbs Facility") for approximately $26,500,000,
pursuant to that Agreement of Sale and Purchase date October 30, 1998 by and
between Wackenhut Corrections Corporation ("WCC"), a Florida corporation, and
CPT Operating Partnership L.P. ("CPT Operating Partnership"), a Delaware limited
partnership ("the Purchase Agreement"). The Company serves as the general
partner of CPT Operating Partnership. The Company has also agreed to pay WCC
approximately $22,000,000 for an expansion of the Hobbs Facility ("the Hobbs
Expansion"), pursuant to the Purchase Agreement. The Hobbs Expansion, which must
be completed by January 21, 1999, will add 600 beds to the Hobbs Facility,
resulting in a 1,200-bed facility at a total cost to the Company of
approximately $48,500,000. The purchase prices of the Hobbs Facility and the
Hobbs Expansion consisted of WCC's project costs. WCC will lease the Hobbs
Facility and the Hobbs Expansion from the Company for an initial term of ten
(10) years, with three (3) additional renewal options for terms of five (5)
years each. The annual lease payment for the Hobbs Facility and the Hobbs
Expansion during the initial ten (10) year term will be approximately
$4,600,000, subject to annual cost of living adjustments set forth in the
Purchase Agreement. The renewal terms will be determined by fair market rental
rates.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FINANCIAL CONDITION
The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.
FORWARD-LOOKING STATEMENTS: The management's discussion and analysis of
financial condition and results of operations contain forward-looking statements
that are based on current expectations, estimates and projections about the
segment in which Correctional Properties Trust (the "Company") operates. This
section of the quarterly report also includes management's beliefs and
assumptions made by management. Words such as "expects", "anticipates",
"intends", "plans", "believes", "seeks", "estimates", and variations of such
words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions ("Future Factors") which
are difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward-looking
statements. The Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Future Factors include increasing price and product/service competition by
foreign and domestic competitors, including new entrants; rapid technological
developments and changes; the ability to continue to introduce competitive new
products and services on a timely, cost effective basis; the mix of
products/services; the achievement of lower costs and expenses; domestic and
foreign governmental and public policy changes including environmental
regulations; protection and validity of patent and other intellectual property
rights; reliance on large customers; technological, implementation and
cost/financial risks in increasing use of large, multi-year contracts; the
outcome of pending and future litigation and governmental proceedings and
continued availability of financing; financial instruments and financial
resources in the amounts, at the times and on the terms required to support the
Company's future business. These are representative of the Future Factors that
could affect the outcome of the forward-looking statements. In addition, such
statements could be affected by general industry and market conditions and
growth rates, general domestic and international economic conditions including
interest rate and currency rate fluctuations and other future factors. The
Company discusses such risks in the Company's various reports filed with the
Securities & Exchange Commission.
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OVERVIEW
The Company was formed in February 1998 as a Maryland real estate investment
trust to capitalize on the growing trend toward privatization in the corrections
industry by acquiring correctional and detention facilities from both private
prison operators and governmental entities and to lease such facilities to
experienced correctional and detention facility operators under long-term,
non-cancelable, triple-net leases (leases where the tenant is required to pay
all operating expenses, taxes, insurance, structural and non-structural repairs
and other costs).
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. The Company's eight initial facilities (the "Initial
Facilities") are privately-managed facilities that are operated by Wackenhut
Corrections Corporation ("WCC"). However, the Company is pursuing other
acquisition opportunities, including correctional facilities owned and operated
by various government entities and private operators other than WCC.
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 incurs operating and administrative expenses including compensation
expense for its executive officers and other employees, office rental and
related occupancy costs and various expenses incurred in the process of
acquiring additional properties. The Company 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.
The Company anticipates having to leverage its portfolio of real estate equity
investments and expects to incur long and short-term indebtedness, and related
interest expense.
The Company intends to make distributions to its shareholders in amounts not
less than the amounts required to maintain REIT status under the Internal
Revenue Service Code.
On April 28, 1998, the Company completed its initial public offering (the "IPO)
of 6,200,000 common shares of beneficial interest. Subsequently, on May 13, 1998
the underwriters involved in the IPO exercised their over-allotment option for
an additional 930,000 shares outstanding resulting in a total of 7,130,000
shares of beneficial interest outstanding. The 7,130,000 common shares were
issued at an IPO price of $20.00, generating gross proceeds of $142,600,000. The
aggregate proceeds to the Company, net of underwriters' discount of $9,982,000
and offering costs of $1,892,000, were approximately $130,726,000 net proceeds.
RESULTS OF OPERATIONS
The Company consummated the IPO, purchased the eight Initial Facilities and
began operations on April 28, 1998. Accordingly, rental and interest revenue and
operating expenses including depreciation and amortization were generally
recognized by the Company beginning on April 28, 1998 through September 30,
1998.
For the period from July 1, 1998 to September 30, 1998, rental revenues of $2.8
million were generated from the leaseback to WCC of eight correctional and
detention facilities purchased April 28, 1998 with proceeds of the Offering.
Interest income of $.3 million was earned during the quarter by investing in
short-term instruments bearing interest between 5% and 6%.
Depreciation of real estate properties totaled $0.7 million for the quarter
ended September 30, 1998.
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General and administrative expenses incurred during the quarter ended September
30, 1998 were approximately $.4 million, or 10% of lease revenues. These
expenses consisted primarily of management salaries and benefits, accounting,
legal and other administrative costs.
LIQUIDITY AND CAPITAL RESOURCES
Upon completion of the IPO, the Company received approximately $132.6 million in
net proceeds. The Company used these funds to purchase the eight Initial
Facilities at a cost of $113.0 million.
The Company invested cash on hand in interest-bearing accounts and other
short-term, interest-bearing securities.
The Company expects to meet its short-term liquidity requirements generally
through its initial working capital and net cash provided by operations. 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
qualify as a REIT. All facilities owned by the Company are leased under triple
net leases, which require the lessee to pay substantially all expenses
associated with the operation of such facilities. As a result of these
arrangements, the Company does not believe it will be responsible for any major
expenses in connection with the facilities during the terms of the Leases.
On October 2, 1998 the Company entered into a $100 million Bank Credit Facility
expandable to $150 million at the election of the Company. The Bank Credit
Facility has a term of five years, and will be used primarily to finance the
acquisition of, and investment in, correctional and detention facilities,
expansion of existing facilities and for general working capital or corporate
needs. The Bank Credit Facility will be secured by the Company's facilities, and
will permit aggregate borrowings of up to 50% of the lesser of the aggregate of
the historical cost of the Company's facilities or the aggregate of the
appraised value of such facilities, subject to financial covenants.
In addition, the Company entered into option agreements with WCC (the "Option
Agreements") pursuant to which the Company was granted the option to acquire and
leaseback to WCC three additional correctional and detention facilities
currently under development by WCC having an aggregate design capacity of 2,256
beds (the "Option Facilities"). The purchase price of each Option Facility will
equal 105% (or such lower percentage as may be agreed to by WCC) of the
aggregate costs related to the acquisition, development, design, construction,
and equipment of such Option Facility. If acquired, the Company will lease the
option facilities to WCC (and WCC will continue to operate such option
facilities) pursuant to long-term, non-cancelable, triple-net leases on
substantially the same terms and conditions as the Leases for the Initial
Facilities. The total estimated aggregate purchase price and first-year rent for
the option facilities are estimated to be approximately $109.7 million and
approximately $10.4 million, respectively. Further, WCC granted the Company an
option to acquire, at up to 105% of cost, and lease back to WCC, any
correctional or detention facility acquired or developed and owned by WCC in the
future.
The Company has no commitments with respect to other capital expenditures.
However, the Company has options to purchase any or all of the three Option
Facilities from WCC for up to 105% of cost, aggregating approximately $109.7
million. In addition, the Company has an option to acquire, at a similar price
of up to 105% of cost, and lease back to WCC, any correctional or detention
facility acquired or developed and owned by WCC subject to certain limitations.
13
<PAGE> 14
While the Company has completed an assessment of its computer systems and
software applications and believes that both are "Year 2000" compliant, there
can be no assurance that coding errors or other defects will not be discovered
in the future. WCC has informed the Company that it has several information
system initiatives under way including the replacement of certain of WCC's
computer systems to be Year 2000 compliant. Any Year 2000 compliance problem of
the Company, its lessee or other third parties could result in a material
adverse effect on the Company's business, prospects, results of operations and
financial condition.
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 and its intention to maintain a moderate ratio of debt
to total capitalization, 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.
FUNDS FROM OPERATIONS
Management believes Funds from Operations is helpful to investors as a measure
of the performance of an equity REIT. Along with cash flows from operating
activities, financing activities and investing activities, funds from operations
("FFO") 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 the Natiional Association of Real Estate Investment Trusts
("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 period
from July 1, 1998 to September 30, 1998:
Funds from Operations
Net Income $ 2,080
Plus real estate depreciation and amortization 656
--------
$ 2,736
========
14
<PAGE> 15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The nature of the Company's business results in claims or litigation against the
Corporation for damages arising from the conduct of its employees or others.
Except for routine litigation incidental to the business of the Company,
there are no pending material legal proceedings to which the Company or any
of its subsidiaries is a party or to which any of their property is subject. The
Company believes that the outcome of the proceedings to which it is currently a
party will not have a material adverse effect upon its operations or financial
condition.
ITEM 2. CHANGES IN SECURITIES
(a) On April 22, 1998, the Company's Registration statement on Form S-11 was
declared effective in connection with the Company's IPO. The IPO commenced on
April 22, 1998 and closed on April 28, 1998. The IPO was underwritten by Salomon
Smith Barney, Prudential Securities Incorporated, SBC Warburg Dillon Reed Inc.,
Genesis Merchant Group, and SunTrust Equitable Securities. On April 28, 1998,
the Company commenced operations after completing the IPO of 6,200,000 common
shares of beneficial interest. Subsequently, on May 13, 1998 the underwriters
involved in the IPO exercised their over-allotment option for an additional
930,000 shares resulting in a total of 7,130,000 shares of beneficial interest
outstanding. The 7,130,000 common shares were issued at an IPO price of $20.00
generating gross proceeds of $142,600,000. The aggregate proceeds to the
Company, net of underwriters' discount of $9,982,000 and offering costs of
$1,892,000, were approximately $130,726,000.
Simultaneous with the completion of the IPO, the Company acquired the eight
Initial Facilities, which are located in five states with an aggregate design
capacity of 3,154 beds, from WCC and certain of its subsidiaries for an
aggregate purchase price of $113.0 million.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
On October 30, 1998, the Company completed the acquisition of the 600-bed medium
security Lea County Correctional Facility in Hobbs, New Mexico (the "Hobbs
Facility") for approximately $26,500,000, pursuant to that Agreement of Sale and
Purchase date October 30, 1998 by and between Wackenhut Corrections Corporation
("WCC"), a Florida corporation, and CPT Operating Partnership L.P. ("CPT
Operating Partnership"), a Delaware limited partnership ("the Purchase
Agreement"). The Company serves as the general partner of CPT Operating
Partnership. The Company has also agreed to pay WCC approximately $22,000,000
for an expansion of the Hobbs Facility ("the Hobbs Expansion"), pursuant to the
Purchase Agreement. The Hobbs Expansion, which must be completed by January 21,
1999, will add 600 beds to the Hobbs Facility, resulting in a 1,200-bed facility
at a total cost to the Company of approximately $48,500,000. The purchase prices
of the Hobbs Facility and the Hobbs Expansion consisted of WCC's project costs.
WCC will lease the Hobbs Facility and the Hobbs Expansion from the Company for
an initial term of ten (10) years, with three (3) additional renewal options for
terms of five (5) years each. The annual lease payment for the Hobbs Facility
and the Hobbs Expansion during the initial ten (10) year term will be
approximately $4,600,000, subject to annual cost of living adjustments set forth
in the Purchase Agreement. The renewal terms will be determined by fair market
rental rates.
15
<PAGE> 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - 2.1 Agreement of Sale and Purchase dated October 30, 1998
by and between Wackenhut Corrections Corporation, a
Florida corporation, and CPT Operating
Partnership L.P., a Delaware limited partnership.
4.1 Credit Agreement dated October 2, 1998 by and among
CPT Operating Partnership L.P., Correctional
Properties Trust, NationsBank National Association,
NationsBanc Montgomery Securities LLC, the Bank of
Nova Scotia and the Lenders parties thereto from time
to time.
27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K - The Company did not file a Form 8-K during the
quarter ending September 30, 1998.
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.
CORRECTIONAL PROPERTIES TRUST
/s/ Patrick T. Hogan
- --------------------------
Patrick T. Hogan
Vice President, Chief Financial Officer,
Secretary & Treasurer
(Principal Financial Officer)
Date: November 13, 1998
THIS DOCUMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CORRECTIONAL PROPERTIES TRUST FOR THE PERIOD ENDED
SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
16
<PAGE> 17
EXHIBIT INDEX
2.1 Agreement of Sale and Purchase dated October 30, 1998 by and between
Wackenhut Corrections Corporation, a Florida corporation, and CPT
Operating Partnership L.P., a Delaware limited partnership.
4.1 Credit Agreement dated October 2, 1998 by and among CPT Operating
Partnership L.P., Correctional Properties Trust, NationsBank National
Association, NationsBanc Montgomery Securities LLC, the Bank of Nova
Scotia and the Lenders parties thereto from time to time.
27.1 Financial Data Schedule (for SEC use only)
<PAGE> 1
EXHIBIT 2.1
AGREEMENT OF SALE AND PURCHASE
BY AND BETWEEN
WACKENHUT CORRECTIONS CORPORATION,
A FLORIDA CORPORATION
("SELLER")
AND
CPT OPERATING PARTNERSHIP L.P.,
A DELAWARE LIMITED PARTNERSHIP
("PURCHASER")
FOR THE
HOBBS, NEW MEXICO CORRECTIONAL AND DETENTION FACILITY
AS OF OCTOBER 30, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C> <C>
ARTICLE I
DEFINITIONS...............................................................1
AGREEMENTS TO SELL, PURCHASE AND LEASE....................................8
1.1 AGREEMENT TO SELL AND PURCHASE..........................8
1.2 AGREEMENT TO LEASE......................................8
ARTICLE II
PURCHASE PRICE............................................................8
2.1 PAYMENT OF PURCHASE PRICE...............................8
ARTICLE III
ITEMS TO BE FURNISHED TO PURCHASER BY SELLER..............................9
3.1 DUE DILIGENCE MATERIALS.................................9
3.2 DUE DILIGENCE REVIEW...................................10
3.3 ISSUANCE OF TITLE POLICY...............................10
ARTICLE IV
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS....................10
4.1 REPRESENTATIONS AND WARRANTIES OF SELLER...............10
4.2 COVENANTS AND AGREEMENTS OF SELLER.....................14
4.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER............16
ARTICLE V
CONDITIONS TO OBLIGATIONS................................................16
5.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS..............16
5.2 FAILURE OF CONDITIONS TO PURCHASER'S OBLIGATIONS.......18
5.3 CONDITIONS TO THE SELLER'S OBLIGATIONS.................18
5.4 FAILURE OF CONDITIONS TO SELLER'S OBLIGATIONS..........18
ARTICLE VI
PROVISIONS WITH RESPECT TO THE CLOSING...................................18
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C> <C>
6.1 SELLER'S CLOSING OBLIGATIONS...........................18
6.2 PURCHASER'S CLOSING OBLIGATIONS........................20
ARTICLE VII
EXPENSES OF CLOSING......................................................20
7.1 ADJUSTMENTS............................................20
7.2 CLOSING COSTS..........................................20
7.3 COMMISSIONS/BROKER'S FEES..............................21
ARTICLE VIII
DEFAULT AND REMEDIES.....................................................21
8.1 SELLER'S DEFAULT; PURCHASER'S REMEDIES.................21
8.2 PURCHASER'S DEFAULT; SELLER'S REMEDIES.................21
ARTICLE IX
MISCELLANEOUS............................................................22
9.1 CASUALTY...............................................22
9.2 CONDEMNATION...........................................22
9.3 SURVIVAL...............................................23
9.4 RIGHT OF ASSIGNMENT....................................23
9.5 NOTICES................................................23
9.6 ENTIRE AGREEMENT; MODIFICATIONS........................24
9.7 APPLICABLE LAW.........................................24
9.8 CAPTIONS...............................................24
9.9 BINDING EFFECT.........................................24
9.10 TIME IS OF THE ESSENCE.................................25
9.11 WAIVER OF CONDITIONS...................................25
9.12 LIABILITY OF GENERAL PARTNER OF PURCHASER..............25
LIST OF EXHIBITS..................................................................28
</TABLE>
ii
<PAGE> 4
AGREEMENT OF SALE AND PURCHASE
------------------------------
THIS AGREEMENT OF SALE AND PURCHASE (the "Agreement") is made and
entered into by and between WACKENHUT CORRECTIONS CORPORATION, a Florida
corporation (hereinafter referred to as "Seller"), and CPT OPERATING
PARTNERSHIP L.P., a Delaware limited partnership (hereinafter referred to as
"Purchaser"). Seller and Purchaser are sometimes collectively referred to
herein as the "Parties" and each of the Parties is sometimes singularly
referred to herein as a "Party".
R E C I T A L S
---------------
A. Seller has the right to acquire the Property (as hereinafter
defined) through a validly existing and enforceable purchase option between
Seller and the current owner of the Property, which Property consists of a
leasehold interest in certain real property and improvements now or hereafter
to be constructed on said real property which is more particularly described on
Exhibit A attached hereto and made a part hereof; and,
B. Seller desires to sell and Purchaser desires to purchase the
Property, and simultaneously therewith, to enter into a lease transaction
pursuant to which Purchaser shall lease to Seller, and Seller shall lease from
Purchaser, the Property.
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00),
the mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. DEFINITIONS
As used herein (including any Exhibits attached hereto), the following
terms shall have the meanings indicated:
"Accreditations" shall mean any and all accreditations and/or
certifications from any non-governmental entities required in connection with
the current or contemplated operation of the Property.
"Amendment to Lease" shall mean the amendment to the Lease to be
entered into between Seller and Purchaser at the Hobbs Expansion Closing with
respect to the Hobbs Expansion Improvements in the form set forth in Exhibit I
attached hereto.
"Applicable Notices" shall mean any reports, notices of violation, or
notices of compliance issued in connection with any Accreditations or Permits.
"Assignment of Leasehold Interest" shall mean the Assignment and
Conveyance of Leasehold Interest in 98 Year Lease in the form attached hereto
as Exhibit E executed by the Wackenhut
<PAGE> 5
Trustee in favor of Purchaser, conveying a leasehold estate in the Land and
Improvements to Purchaser, subject only to the Permitted Exceptions.
"Bill of Sale" shall mean a bill or bills of sale in substantially the
same form as Exhibit B, attached hereto, and sufficient to transfer to
Purchaser all Personal Property.
"Business Agreements" shall mean any leases, contract rights, loan
agreements, mortgages, easements, covenants, restrictions or other agreements
or instruments affecting all or a portion of the Property, to the extent the
same are assignable by Seller, but specifically excluding all of Seller's
Operating and Service Agreements.
"Business Day(s)" shall mean calendar days other than Saturdays,
Sundays and legal holidays.
"Certificate of Non-Foreign Status" shall mean a certificate dated as
of the Closing Date, addressed to Purchaser and duly executed by Seller, in
substantially the same form as Exhibit C, attached hereto.
"Claim" shall mean any obligation, liability, lien, encumbrance, loss,
damage, cost, expense or claim, including, without limitation, any claim for
damage to property or injury to or death of any person or persons.
"Closing" shall mean the consummation of each of the two (2)
applicable sale and purchase transactions provided for herein, to be held at
the offices of Akerman, Senterfitt & Eidson, P.A., One SE Third Avenue, Miami,
Florida, or such other place as the Parties may mutually agree.
"Closing Certificate" shall mean a certificate in substantially the
same form as Exhibit D, attached hereto, wherein Seller and Purchaser,
respectively, shall represent that the representations and warranties of Seller
and Purchaser, respectively, contained in this Agreement are true and correct
in all material respects as of the Closing Date as if made on and as of the
Closing Date.
"Closing Date" shall mean the actual day on which each of the two (2)
applicable sale and purchase transactions provided for herein are closed with
the transfer of title to the Property. The Parties agree that the closing date
for Hobbs I Closing shall be October 30, 1998 and the closing date for the
Hobbs Expansion Closing shall be January 5, 1999, or such earlier or later date
as shall be hereafter mutually agreed upon by the Parties, but in all events no
later than January 26, 1999.
"Construction Completion Indemnity" shall mean an agreement mutually
agreed to by Seller and Purchaser and entered into at the Hobbs I Closing for
the purpose of setting forth the obligations of Seller with respect to
completion of the Hobbs Expansion Improvements.
"Construction Cost Overruns" shall mean construction costs in excess
of $15,541,677 incurred by Seller in connection with completion of the Hobbs
Expansion Improvements.
2
<PAGE> 6
"Due Diligence Materials" shall mean the information to be provided by
Seller to Purchaser pursuant to the provisions of Section 4.1 hereof.
"Effective Date" shall mean the later of the two (2) dates on which
this Agreement is signed and all changes initialed by Seller and Purchaser, as
indicated by their signatures below; provided, that in the event only one Party
dates its signature, then the date of its signature shall be the Effective
Date.
"Engineering Documents" shall mean all site plans, surveys, soil and
substrata studies, architectural drawings, plans and specifications,
engineering plans and studies, floor plans, landscape plans, Americans with
Disabilities Act compliance reports, environmental reports and studies,
professional inspection reports, construction and/or architect's reports or
certificates, feasibility studies, appraisals, and other similar plans and
studies that relate to the Real Property or the Personal Property, to the
extent the same are assignable by Seller.
"Exception Documents" shall mean true, correct and legible copies of
each document listed as an exception to title in the Title Commitment.
"Excluded Personal Property" shall mean all those items of tangible
and intangible personal property described on Exhibit F attached hereto,
specifically excluding those items of intangible personal property set forth on
the Schedule of Excluded Proprietary Property attached hereto as Exhibit F-1.
"Existing Mortgage" shall mean the existing mortgage in favor of
NationsBank, National Association, encumbering the Property which mortgage
shall be assigned to the Seller at the Hobbs I Closing and except as provided
in Section 8.2(b) hereof, further assigned at the Hobbs Expansion Closing to
Purchaser's lender as additional security for that certain $150,000,000
revolving mortgage loan facility dated as of October 2, 1998 extended to
Purchaser by NationsBank, National Association, as the same may be hereafter
restated or amended from time to time. Notwithstanding anything to the contrary
set forth herein, provided Seller and Purchaser's lender enter into a
subordination, nondisturbance and attornment agreement ("SNDA") at the Hobbs
Expansion Closing in form substantially similar to the SNDA previously entered
into between Seller and Purchaser's lender with respect to the other leased
properties under the Master Lease, the Existing Mortgage shall constitute a
Permitted Exception under this Agreement.
"Fixtures" shall mean all those items of equipment, machinery,
fixtures, and other items of real and/or personal property, including all
components thereof, now or on the Closing Date located in, on or used in
connection with, and permanently affixed to or incorporated into the
Improvements as described on Exhibit G attached hereto, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, electronic
security equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, and similar systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the
3
<PAGE> 7
Parties to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but specifically excluding
all items included within the definition of Personal Property and Excluded
Personal Property and those items of excluded Fixtures set forth on Exhibit
G-1.
"Hazardous Materials" shall mean any substance, including without
limitation, asbestos or any substance containing asbestos and deemed hazardous
under any Hazardous Materials Law, the group of organic compounds known as
polychlorinated biphenyls, petroleum products, flammable explosives,
radioactive materials, infectious wastes, biomedical and medical wastes,
chemicals known to cause cancer or reproductive toxicity, pollutants,
effluents, contaminants, emissions or related materials and any items included
in the definition of hazardous or toxic wastes, materials or substances under
any Hazardous Materials Law.
"Hazardous Materials Law" shall mean any local, state or federal law
relating to environmental conditions and industrial hygiene, including, without
limitation, the Resource Conservation and Recovery Act of 1976 ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), the Hazardous Materials Transportation Act, the Federal Waste
Pollution Control Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, and all similar federal,
state and local environmental statutes, ordinances and the regulations, orders,
or decrees now or hereafter promulgated thereunder.
"Hobbs I Closing" shall mean the consummation of the purchase and sale
of the Hobbs I Improvements, the leasehold interest in the Land arising under
or by virtue of the Ground Lease, the Fixtures and the Personal Property in
accordance the provisions of this Agreement.
"Hobbs Expansion Closing" shall mean the consummation of the purchase
and sale of the Fixtures and the Personal Property (each to be scheduled and
mutually approved by Seller and Purchaser no later than 30 days prior to the
Hobbs Expansion Closing Date), and the Hobbs Expansion Improvements in
accordance the provisions of this Agreement.
"Hobbs I Improvements" shall mean the completed Improvements
constructed by Seller upon the Land as of the Hobbs I Closing which shall
consist of two (2) housing buildings containing a total of 600 inmate beds, an
activities building, a segregation/support building, an administration building
as generally depicted on the sketch attached hereto as Exhibit A-1 and all
related and associated landscaping, parking lots and structures, roads,
drainage and all above ground and underground utility structures, equipment
systems and other so-called "infrastructure" improvements necessary to the
operation thereof.
"Hobbs Expansion Improvements" shall mean the completed Improvements
to be constructed by Seller upon the Land following the purchase and sale of
the Hobbs I Improvements, which Hobbs Expansion Improvements shall consist of
two (2) additional housing buildings containing a total of an additional 600
inmate beds and an industry activities building as generally depicted on the
sketch
4
<PAGE> 8
attached hereto as Exhibit A-1 and all related and associated landscaping,
parking lots and structures, roads, drainage and all above ground and
underground utility structures, equipment systems and other so-called
"infrastructure" improvements necessary to the operation thereof.
"Ground Lease" shall mean the lease demising the land described on
Exhibit A attached hereto for a period of 98 years for the purpose of
development and operation of a county jail or prison thereon pursuant to the
terms and provisions of that certain Amended and Restated Lease dated as of
October 19, 1998 entered into by and between the County of Lea, New Mexico, as
lessor and First Security Bank, National Association, not individually but as
trustee under the Wackenhut Corrections Trust 1997-1, as lessee.
"Improvements" shall mean all buildings (including housing units for
an aggregate 1200 inmate beds), improvements, structures and Fixtures now or
hereafter located on the Land, including, without limitation, landscaping,
parking lots and structures, roads, drainage and all above ground and
underground utility structures, equipment systems and other so-called
"infrastructure" improvements.
"Intangible Property" means all Permits, Warranties, Engineering
Documents, Business Agreements and other intangible property or any interest
therein now or on the Closing Date owned or held by Seller in connection with
the Real Property, including all water rights and reservations, rights to use
the trade name applicable to the Property (but excluding the name "Wackenhut
Corrections" or any derivative thereof), and zoning rights related to the Real
Property, or any part thereof, to the extent the same are assignable by Seller;
provided, however, "Intangible Property" shall not include the general
corporate trademarks, trade names (except as set forth above), service marks,
logos or insignia or the books and records of Seller, Seller's accounts
receivable and Seller's business and operating licenses for the facilities on
the Real Property.
"Land" means all of Seller's (or the Wackenhut Trustee's, as
applicable), right, title and interest in and to the real property demised
under the Ground Lease, including, without limitation, all rights, titles,
appurtenant interests, covenants, licenses, privileges and benefits thereto
belonging and Seller's (or the Wackenhut Trustee's, as applicable) right, title
and interest in and to any easements, rights-of-way, rights of ingress or
egress or other interests in, on, or to any land, highway, street, road or
avenue, open or proposed, in, on, across, in front of, abutting or adjoining
such real property including, without limitation, any strips and gores adjacent
to or lying between such real property and any adjacent real property.
"Laws" means all federal, state and local laws, moratoria,
initiatives, referenda, ordinances, rules, regulations, standards, orders and
other governmental requirements, including, without limitation, those relating
to the environment, health and safety, disabled or handicapped persons.
"Lease" shall mean the Master Agreement to Lease dated April 28, 1998
between Seller and Purchaser and the Lease Agreement in substantially the same
form as Exhibit H, attached hereto and made a part hereof, which shall be
executed and delivered by Seller and Purchaser at the Closing, and pursuant to
the terms of which Purchaser shall lease the Property to Seller on the Closing
Date.
5
<PAGE> 9
"Material" and "materially" shall mean a condition, noncompliance,
defect or other fact which would: (a) cost, with respect to any individual
Property, in the aggregate, in excess of Five Hundred Thousand Dollars
($500,000.00) and, with respect to any single defect or fact, would cost, with
respect to any individual Property, in excess of One Hundred Thousand Dollars
($100,000.00), to correct or repair; or (b) in the aggregate, with respect to
any individual Property, result in a loss to Purchaser or a reduction in the
value of such Property in excess of Two Hundred Thousand Dollars ($200,000.00)
and, with respect to any single defect or fact, would, with respect to any
individual Property, result in a loss to Purchaser or a reduction in the value
of such Property in excess of Two Hundred Fifty Thousand Dollars ($250,000.00).
"Permits" shall mean all permits, licenses (but excluding Seller's
business and operating licenses), approvals, entitlements and other
governmental, quasi-governmental and nongovernmental authorizations including,
without limitation, certificates of use and occupancy, required in connection
with the ownership, planning, development, construction, use, operation or
maintenance of the Real Property, to the extent the same are assignable by
Seller. As used herein, "quasi-governmental" shall include the providers of all
utility services to the Real Property.
"Permitted Exceptions" shall mean those title exceptions which have
been approved in writing by Purchaser, or are deemed to have been approved by
Purchaser upon the expiration of the Review Period.
"Personal Property" shall mean all tangible personal property (other
than Fixtures, the Excluded Personal Property and the Excluded Proprietary
Property), now or on the Closing Date owned by Seller and located on or about
the Land or used in connection with the operation thereof (specifically
excluding personal property owned by employees of Seller and personal property
owned by inmates housed at the Real Property).
"Property" shall mean, collectively, all of the tenant's right, title
and interest under the Ground Lease with respect to the Land, the Improvements,
the Fixtures, and the Personal Property.
"Purchase Price" shall mean the aggregate sum of $48,388,364.00,
consisting of a purchase price of $26,446,624.00 to be paid at the Hobbs I
Closing for the Hobbs I Improvements and a purchase price of $21,941,740.00 to
be paid at the Hobbs Expansion Closing for the Hobbs Expansion Improvements,
subject to increase in the amount of verifiable Construction Cost Overruns
provided that any such increase in the Hobbs Expansion purchase price shall
result in a commensurate increase in the Base Rent payable under the Amendment
to Lease.
"Real Property" shall mean the Land, the Improvements and the
Fixtures.
"Review Period" means a period commencing on the Effective Date and
ending thirty (30) days from the date of Purchaser's receipt of the last of the
Due Diligence Materials; provided, should the Effective Date be less than
thirty (30) days prior to the Closing Date, the Review Period shall terminate
on the date which is five (5) days prior to the Closing Date.
6
<PAGE> 10
"Search Reports" shall mean reports of searches made of the Uniform
Commercial Code Records of the County in which the Property is located, and of
the office of the Secretary of State of the State in which the Property is
located and in the State in which the principal office of Seller is located,
which searches shall reflect that none of the Property is encumbered by liens
or security interests which will remain on the Property after the Closing. The
Search Reports shall be updated, at Seller's expense, at or within five (5)
days prior to Closing.
"Seller's Operating and Service Agreements" shall mean all management,
service and operating agreements and contracts entered into by Seller with
respect to the Property, including, but not limited to, agreements and
contracts to house inmates at the Property, food service and equipment
agreements, inmate pay telephone service agreements, medical and pharmaceutical
service and supply agreements, drug testing service agreements, public
performance and licensing agreements for motion picture video cassettes, inmate
educational and instructional service agreements, refuse service agreements,
pest control service agreements and machinery, equipment and uniform rental and
service agreements.
"Survey" shall mean a current "as-built" ALTA survey, certified to
ALTA requirements, prepared by an engineer or surveyor licensed in the State in
which the Land is located and reasonably acceptable to Purchaser, which shall:
(a) include a narrative legal description of the Land by metes and bounds
(which shall include a reference to the recorded plat, if any), and a
computation of the area comprising the Land in both acres and gross square feet
(to the nearest one-thousandth of said respective measurement); (b) accurately
show the location on the Land of all improvements (dimensions thereof at the
ground surface level and the distance therefrom to the facing exterior property
lines of the Land), building and set-back lines, parking spaces (including
number of spaces), fences, evidence of abandoned fences, ponds, creeks,
streams, rivers, officially designated 100-year flood plains and flood prone
areas, canals, ditches, easements, roads, rights-of-way and encroachments; (c)
location of encroachments, if any, upon adjoining property, or from adjoining
property, upon the Land; (d) state the zoning classification of the Land; (e)
be certified as of the date of the Survey to the Seller, the Purchaser, the
Title Company, and any third-party lender designated by Purchaser; (f) legibly
identify any and all recorded matters shown on said Survey by appropriate
volume and page recording references; (g) show the location and names of all
adjoining streets and the distance to the nearest streets intersecting the
streets that adjoin the Land; and (h) be satisfactory to (and updated from time
to time as may be required by) the Title Company so as to permit it to delete
the standard exception for survey matters and replace it with an exception for
the matters shown on the Survey.
"Title Commitment" shall mean a current commitment or current
commitments issued by the Title Company to the Purchaser pursuant to the terms
of which the Title Company shall commit to issue the Title Policy to Purchaser
in accordance with the provisions of this Agreement, and reflecting all matters
which would be listed as exceptions to coverage on the Title Policy.
"Title Company" shall mean First American Title Insurance Company.
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"Title Policy" shall mean an ALTA Extended Coverage Leasehold Owner's
Policy (or policies) of Title Insurance (10/17/70 Form), or comparable state
promulgated policies, with liability in the aggregate amount of the Purchase
Price, dated as of the Closing Date, issued by the Title Company, insuring
title to the fee interest in the Real Property in Purchaser, subject only to
the Permitted Exceptions and to the standard printed exceptions included in the
ALTA standard form owner's extended coverage policy of title insurance
including such other endorsements requested by Purchaser, with the following
modifications: (a) the exception for survey matters shall be deleted and
replaced by an exception for the matters shown on the Survey; (b) the exception
for ad valorem taxes shall reflect only taxes for the current and subsequent
years; (c) any exception as to parties in possession shall be limited to rights
of Seller in possession, as lessee only, pursuant to the Lease; and (d) there
shall be no general exception for visible and apparent easements or roads and
highways or similar items (with any exception for visible and apparent
easements or roads and highways or similar items to be specifically referenced
to and shown on the Survey and also identified by applicable recording
information).
"Wackenhut Trustee" shall mean First Security Bank, National
Association, not individually but solely as trustee under the Wackenhut
Corrections Trust 1997-1.
"Warranties" shall mean all warranties and guaranties with respect to
the Real Property or Personal Property, whether express or implied, which
Seller now holds or under which Seller is the beneficiary, to the extent the
same are assignable by Seller.
AGREEMENTS TO SELL, PURCHASE AND LEASE
1.1 AGREEMENT TO SELL AND PURCHASE. On the Closing Date, provided
Purchaser shall not have terminated this Agreement pursuant to the provisions
of Section 5.2 hereof, Seller shall, or shall cause the Wackenhut Trustee to
sell, convey, assign, transfer and deliver to Purchaser and Purchaser shall
purchase, acquire and accept from Seller, the Property, for the Purchase Price
and subject to the terms and conditions of this Agreement. Purchaser
acknowledges that Seller may elect to cause the transfer of some or all of the
Property directly from the Wackenhut Trustee to the Purchaser in connection
with the Seller's exercise of its option to purchase and right to designate the
Purchaser as its nominee or transferee to receive title to the Property. In the
event of any such transfer of some or all of the Property directly from the
Wackenhut Trustee to the Purchaser, Seller shall not be relieved of any of its
warranties, obligations or liability hereunder notwithstanding the fact that
the instruments of conveyance executed and delivered by the Wackenhut Trustee
may be in the form of a special or limited warranty deed, quitclaim deed or any
other similar instrument.
1.2 AGREEMENT TO LEASE. On the Closing Date, and subject to
performance by the Parties of the terms and provisions of this Agreement,
Purchaser shall lease to Seller and Seller shall lease
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from Purchaser, the Property at the rental and upon the terms and conditions
set forth in the Lease and the Amendment to Lease.
2. PURCHASE PRICE
2.1 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid by
Purchaser delivering to, or at the direction of, the Seller at each of the
Hobbs I Closing and the Hobbs Expansion Closing Federal Reserve wire transfer
funds or other immediately available collected funds payable to the order of
the Seller in the sum equal to the applicable Purchase Price payable at each
such closing, subject to adjustment as herein provided. On or before the each
of the Hobbs I Closing and the Hobbs Expansion Closing, the Parties shall agree
on an allocation of the applicable Purchase Price as between the Real Property
and the Personal Property being sold and transferred at the time of each such
closing in accordance with the provisions hereof.
3. ITEMS TO BE FURNISHED TO PURCHASER BY SELLER
3.1 DUE DILIGENCE MATERIALS. Seller previously has delivered to
Purchaser for its review, or, if not, within (i) five (5) days after the
Effective Date with respect to the Hobbs I Closing and (ii) fifteen (15) days
after the issuance of a final certificate of occupancy with respect to the
Hobbs Expansion Closing, Seller shall deliver to Purchaser for its review, the
following items:
a. True, correct, complete and legible copies of all Business
Agreements, Warranties, Permits, Accreditations, Applicable Notices,
Engineering Documents and Seller's Operating and Service Agreements (solely for
the purposes of this Section 4.1a., the terms Business Agreements, Warranties,
Permits, and Engineering Documents shall include all agreements, documents and
instruments otherwise included within such definitions, whether or not the same
are assignable by Seller);
b. True, correct, complete and legible copies of tax
statements or assessments for all real estate and personal property taxes
assessed against the Property for the current and the two prior calendar years,
if available;
c. True, correct, complete and legible listing of all
Fixtures, Personal Property and Excluded Property, including a current
depreciation schedule.
d. True, correct, complete and legible copies of all existing
fire and extended coverage insurance policies and any other insurance policies
pertaining to the Property, if any;
e. True, correct, complete and legible copies of all
instruments evidencing, governing or securing the payment of any loans secured
by the Property or related thereto. Seller
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may make such instruments available for inspection and copying by Purchaser at
Seller's principal office;
f. True, correct, complete and legible copies of any and all
environmental studies or impact reports relating to the Property, if any, and
any approvals, conditions, orders or declarations issued by any governmental
authority relating thereto (such studies and reports shall include, but not be
limited to, reports indicating whether the Property is or has been contaminated
by Hazardous Materials and whether the Property is in compliance with the
Americans with Disabilities Act and Section 504 of the Rehabilitation Act of
1973, as applicable);
g. True, correct, complete and legible copies of any and all
litigation files with respect to any pending litigation and claim files for any
claims made or threatened, the outcome of which might materially affect the
Property or the use and operation of the Property, together with summaries and
such other more detailed information as Purchaser may reasonably request with
respect to any other pending litigation or claim the outcome of which might
materially affect Seller or materially affect the Property. Seller may make
such files available for inspection and copying by Purchaser at Seller's
principal office.
h. The Title Commitment, Exception Documents, Survey and
Search Reports.
i. Actual operating statements for the Property or, if the
Property has not been operated by Seller for twelve months prior to the date of
this Agreement, projected operating results for the Property.
j. The Certificate of Occupancy, or its equivalent, for the
Hobbs I Improvements or the Hobbs Expansion Improvements, as applicable.
k. Fully executed change orders or other invoices acceptable
to Purchaser evidencing the amount of Construction Cost Overruns (if any) in
connection with the completion of the Hobbs Expansion Improvements.
3.2 DUE DILIGENCE REVIEW. During the Review Period, Purchaser shall be
entitled to review the Due Diligence Materials delivered by Seller to Purchaser
pursuant to the provisions of Section 3.1 above. Purchaser may give written
notice setting forth any defect, deficiency or encumbrance which is in
violation of Seller's warranties and representations set forth herein and shall
specify a time within which Seller shall remedy or cure such matter prior to
the Closing Date. If any defect, deficiency or encumbrance, so noticed, is not
satisfied or resolved to the reasonable satisfaction of Purchaser, within the
time period specified in the written notice, then Purchaser shall have the
right, at Purchaser's option, (i) to postpone the Closing Date until such time
as the defect, deficiency or encumbrance so notice has been satisfied or
resolved to the reasonable satisfaction of Purchaser or (ii) to proceed to
closing with an indemnification agreement acceptable to Purchaser, together
with, at Purchaser's sole option, a holdback of a portion of the Purchase Price
in an amount equal to the cost, as reasonably estimated by Purchaser acting in
good faith, to satisfy or resolve the
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defect, deficiency or encumbrance so noticed in accordance with the provisions
of an indemnity agreement to be approved and entered into between Seller and
Purchaser at the Closing.
3.3 ISSUANCE OF TITLE POLICY. Seller agrees to deliver to Purchaser
the Title Policy no later than thirty (30) days after the Closing.
4. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
4.1 REPRESENTATIONS AND WARRANTIES OF SELLER. To induce Purchaser to
enter into this Agreement and to purchase the Property, Seller represents and
warrants to Purchaser as follows:
a. Seller has the right to acquire and at the Closing, Seller
will cause the conveyance, transfer and assignment to Purchaser of, good,
indefeasible, marketable and insurable title to the leasehold estate arising
under or by virtue of the Ground Lease, free and clear of any deeds of trust,
mortgages, liens, encumbrances, leases, tenancies, licenses, chattel mortgages,
conditional sales agreements, security interests, covenants, conditions,
restrictions, judgments, rights-of-way, easements, encroachments, claims and
any other matters affecting title or use of the Property, except the Permitted
Exceptions.
b. Seller has duly and validly authorized and executed this
Agreement, and has full right, title, power and authority to enter into this
Agreement and to consummate the transactions provided for herein, and the
joinder of no person or entity will be necessary to convey the Property fully
and completely to Purchaser at Closing and to lease the Property from Purchaser
following Closing. Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida and is qualified to do
business in the state in which the Property is located. The consummation of the
transactions contemplated herein does not require the approval of Seller's
shareholders or any third party, except such third party approvals as Seller
has obtained or will obtain prior to the Closing Date. The execution by Seller
of this Agreement and the consummation by Seller of the transactions
contemplated hereby do not, and at the Closing will not, result in a breach of
any of the terms or provisions of, or constitute a default or a condition which
upon notice or lapse of time or both would ripen into a default under, Seller's
Bylaws or Certificate of Incorporation, any indenture, agreement, instrument or
obligation to which Seller is a party or by which the Property or any portion
thereof is bound; and does not constitute a violation of any Laws, order, rule
or regulation applicable to Seller or any portion of the Property of any court
or of any federal, state or municipal regulatory body or administrative agency
or other governmental body having jurisdiction over Seller or any portion of
the Property.
c. Except as may be disclosed in the Exception Documents,
there are no adverse or other parties in possession of the Property or of any
part thereof, and Seller has not granted to any party any license, lease or
other right relating to the use or possession of the Property.
d. No notice has been received from any insurance company
that has issued a policy with respect to any portion of the Property or from
any board of fire underwriters (or other
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body exercising similar functions), claiming any defects or deficiencies or
requiring the performance of any repairs, replacements, alterations or other
work and as of the Closing no such notice will have been received which shall
not have been cured. No notice has been received by Seller from any issuing
insurance company that any of such policies will not be renewed, or will be
renewed only at a higher premium rate than is presently payable therefor.
e. No pending condemnation, eminent domain, assessment or
similar proceeding or charge affecting the Property or any portion thereof
exists. Seller has not heretofore received any notice, and has no knowledge,
that any such proceeding or charge is contemplated. Seller has not received any
notice of a proposed increase in the assessed valuation of the Property.
f. All Improvements (including all utilities) have been, or
as of the applicable Closing will be, completed and installed in accordance
with the plans and specifications approved by the governmental authorities
having jurisdiction to the extent applicable and are transferable to Purchaser
without additional cost. Permanent certificates of occupancy, all licenses,
permits, authorizations and approvals required by all governmental authorities
having jurisdiction, and the requisite certificates of the local board of fire
underwriters (or other body exercising similar functions) have been, or as of
the applicable Closing will be, issued for the Improvements, and, as of the
applicable Closing, where required, all of the same will be in full force and
effect. The Improvements, as designed and constructed, comply or will comply
with all statutes, restrictions, regulations and ordinances applicable thereto,
including but not limited to the Americans with Disabilities Act and Section
504 of the Rehabilitation Act of 1973, as applicable.
g. The existing water, sewer, gas and electricity lines,
storm sewer and other utility systems on the Land are adequate to serve the
utility needs of the Property for operation as a correctional facility and
detention facility or other use set forth in the Permits. All utilities
required for the operation of the Improvements enter the Land through adjoining
public streets or through adjoining private land in accordance with valid
public or private easements that will inure to the benefit of Purchaser. All
approvals, licenses and permits required to fully operate said utilities have
been obtained and are in full force and effect. All of said utilities are
installed and operating, or will be, by the applicable Closing and all
installation and connection charges have been or will be paid in full.
h. The location, construction, occupancy, operation and use
of the Property (including the Improvements) do not violate any applicable law,
statute, ordinance, rule, regulation, order or determination of any
governmental authority or any board of fire underwriters (or other body
exercising similar functions), or any restrictive covenant or deed restriction
(recorded or otherwise) affecting the Property or the location, construction,
occupancy, operation or use thereof, including, without limitation, all
applicable zoning ordinances and building codes, flood disaster laws and health
and environmental laws and regulations, the Americans with Disabilities Act and
Section 504 of the Rehabilitation Act of 1973, as applicable.
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i. There are not any structural defects in any of the
buildings or other Improvements constituting the Property. The Improvements,
all heating, electrical, plumbing and drainage at, or servicing, the Property
and all facilities and equipment relating thereto are and, as of the Closing,
will be in good condition and working order and adequate in quantity and
quality for the normal operation of the Property as a correctional or detention
facility or other use set forth in the Permits. No part of the Property has
been destroyed or damaged by fire or other casualty. There are no unsatisfied
requests for repairs, restorations or alterations with regard to the Property
from any person, entity or authority, including but not limited to any lender,
insurance provider or governmental authority.
j. Except as previously disclosed by Seller pursuant to
contracts delivered to Purchaser with respect to the construction of the Hobbs
Expansion Improvements, all work in connection with Property, including,
without limitation, the completion of the Hobbs I Improvements has been
performed, and no materials will have been delivered to the Property with
respect to the Hobbs I Improvements that might provide the basis for a
mechanic's, materialmen's or other lien against the Property or any portion
thereof, or amounts due for such work and material shall have paid or
discharged to Purchaser's and Title Company's satisfaction as of Closing.
k. There exist no service contracts, management or other
agreements applicable to the Property, or amendments, modifications or
terminations thereof, to which Seller is a party or otherwise known to Seller,
other than Seller's Operating and Service Agreements, the Business Agreements
and those agreements furnished to Purchaser pursuant to Section 3.1.
l. Seller is not in default in any manner which would result
in a material adverse effect on Seller under any of the Business Agreements, or
Seller's Operating and Service Agreements or any of the covenants, conditions,
restrictions, rights-of-way or easements affecting the Property or any portion
thereof, and, to Seller's knowledge, no other party to any of the foregoing is
in default thereunder.
m. There are no actions, suits or proceedings pending or, to
Seller's knowledge, threatened against or affecting the Property or any portion
thereof, or relating to or arising out of the ownership or operation of the
Property, or by any federal, state, county or municipal department, commission,
board, bureau or agency or other governmental instrumentality.
n. The Property has free and unimpeded access to presently
existing public highways and/or roads (either directly or by way of perpetual
easements); and, all approvals necessary therefor have been obtained. To the
best of Seller's knowledge, no fact or condition exists which would result in
the termination of the current access from the Property to any presently
existing public highways and/or roads adjoining or situated on the Property.
o. There are no attachments, executions, assignments for the
benefit of creditors, or voluntary or involuntary proceedings in bankruptcy or
under any other debtor relief laws contemplated by or, to Seller's knowledge,
pending or threatened against Seller or the Property.
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p. Except as may be set forth in any of the Due Diligence
Materials, no Hazardous Materials have been installed, used, generated,
manufactured, treated, handled, refined, produced, processed, stored or
disposed of, or otherwise present in, on or under the Property by Seller or to
Seller's knowledge. No activity has been undertaken on the Property by Seller
or to Seller's knowledge which would cause (I) the Property to become a
hazardous waste treatment, storage or disposal facility within the meaning of,
or otherwise bring the Property within the ambit of RCRA or any Hazardous
Materials Law, (ii) a release or threatened release of Hazardous Materials from
the Property within the meaning of, or otherwise bring the Property within the
ambit of, CERCLA or SARA or any Hazardous Materials Law or (iii) the discharge
of Hazardous Materials into any watercourse, body of surface or subsurface
water or wetland, or the discharge into the atmosphere of any Hazardous
Materials which would require a permit under any Hazardous Materials Law. No
activity has been undertaken with respect to the Property by Seller or to
Seller's knowledge which would cause a violation or support a claim under RCRA,
CERCLA, SARA or any Hazardous Materials Law. No investigation, administrative
order, litigation or settlement with respect to any Hazardous Materials is in
existence with respect to the Property, nor, to Seller's knowledge, is any of
the foregoing threatened. No notice has been received by Seller from any
entity, governmental body or individual claiming any violation of any Hazardous
Materials Law, or requiring compliance with any Hazardous Materials Law, or
demanding payment or contribution for environmental damage or injury to natural
resources. Seller has not obtained and, to Seller's knowledge, is not required
to obtain, and Seller has no knowledge of any reason Purchaser will be required
to obtain, any permits, licenses, or similar authorizations to occupy, operate
or use the Improvements or any part of the Property by reason of any Hazardous
Materials Law. Notwithstanding the representations made herein, such
representations are and shall be deemed to be limited by the matters detailed
in any Phase I Preliminary Site Assessment or other Due Diligence Materials
obtained by or provided to Purchaser in connection herewith.
q. The Property includes or will include as of the applicable
Closing, all items of property, tangible and intangible, used by Seller in
connection with the operation of the Property, other than the Excluded Personal
Property, Seller's Operating and Service Agreements, and property expressly
excluded from the definition of the Property.
r. To the best of Seller's knowledge, the Due Diligence
Materials delivered to Purchaser are true, correct and complete in all material
respects.
Seller hereby agrees to indemnify and defend, at its sole cost and
expense, and hold Purchaser, its successors and assigns, harmless from and
against and to reimburse Purchaser with respect to any and all claims, demands,
actions, causes of action, losses, damages, liabilities, costs and expenses
(including, without limitation, reasonable attorney's fees and court costs)
actually incurred of any and every kind or character, known or unknown, fixed
or contingent, asserted against or incurred by Purchaser at any time and from
time to time by reason of or arising out of (a) the material breach of any
representation or warranty of Seller set forth in Section 5.1, (b) the failure
of Seller, in whole or in part, to perform any obligation required to be
performed by Seller pursuant to Section 5.1 or (c)
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the ownership, construction, occupancy, operation, use and maintenance by
Seller or its agents of the Property prior to the Closing Date. This indemnity
applies, without limitation, to the violation on or before the Closing Date of
any Hazardous Materials Law in effect on or before the Closing Date and any and
all matters arising out of any act, omission, event or circumstance existing or
occurring on or prior to the Closing Date (including, without limitation, the
presence on the Property or release from the Property of Hazardous Materials
disposed of or otherwise released prior to the Closing Date), regardless of
whether the act, omission, event or circumstance constituted a violation of any
Hazardous Materials Law at the time of its existence or occurrence. Subject to
the provisions of Section 10.1, the provisions of this Section 4.1 shall
survive the Closing of the transaction contemplated by this Agreement and shall
continue thereafter in full force and effect for the benefit of Purchaser, its
successors and assigns. Notwithstanding any provision of this Agreement to the
contrary, Purchaser may exercise any right or remedy Purchaser may have at law
or in equity should Seller fail to meet, comply with or perform its indemnity
obligations required by this Section 4.1. In the event a defect, claim or
deficiency is actually discovered by Purchaser prior to Closing or is noticed
in writing by Seller to Purchaser prior to Closing, Purchaser shall either
terminate the Agreement as provided herein or waive the defect, claim or
deficiency and proceed to Closing.
4.2 COVENANTS AND AGREEMENTS OF SELLER. Seller covenants and agrees
with Purchaser, from the Effective Date until the Closing or earlier
termination of this Agreement:
a. Seller shall: (i) operate the Property in the ordinary
course of Seller's business and in the same manner as currently operated; (ii)
fully maintain and repair the Hobbs I Improvements, the Fixtures, and the
Personal Property in good condition and repair; and (iii) complete the
construction of the Hobbs Expansion Improvements in accordance with the
provisions of this Agreement and the provisions of the Lease and Construction
Completion Indemnity Agreement to be executed and delivered at the Hobbs I
Closing.
b. Purchaser shall be entitled to make all inspections or
investigations desired by Purchaser with respect to the Property or any portion
thereof, and shall have complete physical access to the Property, which access
shall occur at such times and in such manner so as to not unreasonably
interfere with Seller's business operations or constitute a safety hazard, as
reasonably determined by Seller.
c. Prior to the Hobbs I Closing, Seller shall cause to be
maintained in full force and effect fire and extended coverage insurance upon
the Property and public liability insurance with respect to damage or injury to
persons or property occurring on or relating to operation of the Property in
commercially reasonable amounts, but no less than currently in effect and
following the Hobbs I Closing, as required under the Lease.
d. Seller shall pay when due all bills and expenses of the
Property, including all hard and soft costs in connection with the construction
of the Hobbs Expansion Improvements. Seller shall not enter into or assume any
new Business Agreements or modify, amend or terminate
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any existing Business Agreements with regard to the Property which are in
addition to or different from those furnished and disclosed to Purchaser and
reviewed and approved pursuant to Section 4.1.
e. Seller shall not create or permit to be created any liens,
easements or other conditions affecting any portion of the Property or the uses
thereof without the prior written consent of Purchaser.
f. Seller will pay, as and when due, all interest and
principal and all other charges payable under any indebtedness of Seller
secured by the Property from the date hereof until Closing, and will not suffer
or permit any default or amend or modify the documents evidencing or securing
any such indebtedness without the prior consent of Purchaser. Seller will,
subject to limitations provided by law with respect to privacy rights of
inmates, give to Purchaser, its attorneys, accountants and other
representatives, during normal business hours and as often as may be reasonably
requested, full access to all books, records and files relating to the Property
so long as the same does not unreasonably interfere with Seller's business
operations.
g. Seller shall not remove any Personal Property or Fixtures
from the Land or Improvements without replacing same with substantially similar
items of equal or greater value and repairing the damage, if any, to the
Property as a result of such removal.
h. During the pendency of this Agreement, Seller, its
corporate officers, directors, and agents shall not negotiate the sale or other
disposition of the Property with any person or entity other than Purchaser, and
shall not take any steps to initiate, consummate or document the sale or other
disposition of the Property, or any portion thereof, to any person or entity
other than Purchaser.
i. Seller agrees to notify Purchaser in writing within three
(3) Business Days of any offer received by, delivered to or communicated to
Seller for the purchase, sale, acquisition or other disposition of the
Property.
j. Seller shall provide representations, warranties and
consents as may be reasonably required in connection with any public offering
of stock or debt obligations by Purchaser, including, but not limited to,
inclusion of financial statements, summary financial information and other
required information concerning Seller, or Seller as lessee under the Lease, in
any Securities and Exchange Commission filings.
4.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER. To induce Seller to
enter into this Agreement and to sell the Property, Purchaser represents and
warrants to Seller as follows:
a. Purchaser has duly and validly authorized and executed
this Agreement, and has full right, title, power and authority to enter into
this Agreement and to consummate the transactions provided for herein, and the
joinder of no person or entity will be necessary to purchase the Property from
Seller at Closing, and to lease the Property to Seller following Closing.
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b. The execution by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby do not, and
at the Closing will not, result in a breach of any of the terms or provisions
of, or constitute a default or a condition which upon notice or lapse of time
or both would ripen into a default under, any indenture, agreement, instrument
or obligation to which Purchaser is a party; and does not, and at the Closing
will not, constitute a violation of any Laws, order, rule or regulation
applicable to Purchaser of any court or of any federal, state or municipal
regulatory body or administrative agency or other governmental body having
jurisdiction over Purchaser.
5. CONDITIONS TO OBLIGATIONS
5.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The obligations of
Purchaser to purchase the Property from Seller and to consummate the
transactions contemplated by this Agreement are subject to the satisfaction, at
all times prior to and as of the applicable Closing (or such other time period
specified below), of each of the following conditions:
a. All of the representations and warranties of Seller set
forth in this Agreement shall be true at all times prior to, at and as of, the
applicable Closing in all material respects and Seller shall deliver a Closing
Certificate in substantially the same form attached hereto as Exhibit D
updating such representations and warranties.
b. Seller shall have delivered, performed, observed and
complied with, all of the items, instruments, documents, covenants, agreements
and conditions required by this Agreement to be delivered, performed, observed
and complied with by it prior to, or as of, the applicable Closing.
c. Seller shall not be in receivership or dissolution or have
made any assignment for the benefit of creditors, or admitted in writing its
inability to pay its debts as they mature, or have been adjudicated a bankrupt,
or have filed a petition in voluntary bankruptcy, a petition or answer seeking
reorganization or an arrangement with creditors under the federal bankruptcy
law or any other similar law or statute of the United States or any state and
no such petition shall have been filed against it.
d. No material or substantial adverse change shall have
occurred with respect to the condition, financial or otherwise, of the Seller
or the Property.
e. Neither the Property nor any part thereof or interest
therein shall have been taken by execution or other process of law in any
action prior to Closing.
f. During the Review Period, Purchaser shall have
satisfactorily completed an inspection of the Property with respect to the
physical condition thereof by agents or contractors selected by Purchaser.
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g. During the Review Period, Purchaser shall have received,
in form acceptable to Purchaser, evidence of compliance by the Property with
all building codes, zoning ordinances and other governmental entitlements as
necessary for the operation of the Property for the current and intended use,
including, without limitation, certificates of occupancy and such other
permits, licenses, approvals, agreements and authorizations as are required for
the operation of the Property for the current and intended use and satisfactory
evidence of no violations of building or other codes or laws.
h. During the Review Period, all necessary approvals,
consents and the like of third parties to the validity and effectiveness of the
transactions contemplated hereby have been obtained.
i. During the Review Period, Purchaser is reasonably
satisfied that the Property is sufficient and adequate for Seller to carry on
the business now being conducted thereon and the Property is in good condition
and repair as reasonably required for the proper operation and use thereof in
compliance with applicable laws.
j. During the Review Period, Purchaser has reviewed and
satisfied itself with respect to the Due Diligence Materials.
k. No material portion of the Property shall have been
destroyed by fire or casualty.
l. No condemnation, eminent domain or similar proceedings
shall have been commenced or threatened with respect to any material portion of
the Property.
5.2 FAILURE OF CONDITIONS TO PURCHASER'S OBLIGATIONS. In the event any
one or more of the conditions to Purchaser's obligations are not satisfied or
waived in whole or in part at any time prior to Purchaser, at Purchaser's
option, shall be entitled to proceed as set forth in the Construction
Completion Indemnity Agreement executed of even date herewith as part of the
Hobb I Closing.
5.3 CONDITIONS TO THE SELLER'S OBLIGATIONS. The obligations of Seller
to sell the Property to Purchaser and to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, at all times
prior to or as of the Closing or in the event Purchaser fails to purchase the
Hobbs Expansion Improvements notwithstanding the fact that all of Purchaser's
conditions to Closing set forth in Section 5.1 have been satisfied, and as of
the Closing (or such other time period specified below), of each of the
following conditions:
a. All of the representations and warranties of Purchaser set
forth in this Agreement shall be true at all times prior to, at and as of, the
Closing in all material respects and Purchaser shall deliver a Closing
Certificate in substantially the same form attached hereto as Exhibit D
updating such representations and warranties.
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<PAGE> 22
b. Purchaser shall have delivered, performed, observed and
complied with, all of the items, instruments, documents, covenants, agreements
and conditions required by this Agreement to be delivered, performed, observed
and complied with by it prior to, or as of, the Closing.
c. Purchaser shall not be in receivership or dissolution or
have made any assignment for the benefit of creditors, or admitted in writing
its inability to pay its debts as they mature, or have been adjudicated a
bankrupt, or have filed a petition in voluntary bankruptcy, a petition or
answer seeking reorganization or an arrangement with creditors under the
federal bankruptcy law or any other similar law or statute of the United States
or any state and no such petition shall have been filed against it.
d. With respect to the Seller's obligation to sell and convey
the Hobbs Expansion Improvements, Purchaser shall have closed the acquisitions
of the Hobbs I Improvements in accordance with the terms and provisions hereof.
5.4 FAILURE OF CONDITIONS TO SELLER'S OBLIGATIONS. In the event any
one or more of the conditions to Seller's obligations are not satisfied or
waived in whole or in part at any time prior to or as of the Closing, Seller,
at Seller's option, shall be entitled to proceed as set forth in the
Construction Completion Indemnity Agreement executed of even date herewith as
part of the Hobb I Closing.
6. PROVISIONS WITH RESPECT TO THE CLOSING
6.1 SELLER'S CLOSING OBLIGATIONS. At the applicable Closing, Seller
shall furnish and deliver to the Purchaser, at Seller's expense, the following:
a. At the Hobbs I Closing: the Assignment of Leasehold
Interest, the Construction Completion Indemnity and Repurchase Agreement, the
Title Policy (or the Title Commitment marked-up and initialed by the Title
Company), Bill of Sale, Certificate of Non-Foreign Status, Closing Certificate
and Lease, each duly executed and acknowledged by Seller and, as appropriate,
in recordable form acceptable in the state and county in which the Property is
located.
b. At the Hobbs Expansion Closing: a Bill of Sale or other
instrument satisfactory to transfer and convey title to the Hobbs Expansion
Improvements to Purchaser, an assignment of the Existing Mortgage to
Purchaser's lender, such endorsements to the Title Policy as Purchaser or
Purchaser's lender may reasonably request, Certificate of Non-Foreign Status,
Closing Certificate and the Amendment to the Lease.
c. At both the Hobbs I and Hobbs Expansion Closings:
certificates of casualty and fire insurance for the Property and satisfactory
evidence of all other insurance coverages as required pursuant to the Lease
showing Purchaser as additional insured and loss payee thereunder, where
appropriate, with appropriate provisions for prior notice to Purchaser in the
event of
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<PAGE> 23
cancellation or termination of such policies and otherwise in form and
substance reasonably satisfactory to Purchaser.
d. At both the Hobbs I and Hobbs Expansion Closings: Search
Reports, dated not more than five (5) days prior to Closing, evidencing no
UCC-1 Financing Statements or other filings in the name of Seller (or if
applicable, the Wackenhut Trustee) with respect to the Property which will
remain on the Property after the Closing.
e. At both the Hobbs I and Hobbs Expansion Closings: such
affidavits or letters of indemnity as the Title Company shall require in order
to omit from the Title Insurance Policy all exceptions for unfiled mechanic's,
materialman's or similar liens.
f. At both the Hobbs I and Hobbs Expansion Closings: any and
all transfer declarations or disclosure documents, duly executed by the
appropriate parties, required in connection with the Deed by any state, county
or municipal agency having jurisdiction over the Property or the transactions
contemplated hereby.
g. At both the Hobbs I and Hobbs Expansion Closings: such
instruments or documents as are necessary, or reasonably required by Purchaser
or the Title Company, to evidence the status and capacity of Seller (and if
applicable, the Wackenhut Trustee) and the authority of the person or persons
who are executing the various documents on behalf of Seller (and if applicable,
the Wackenhut Trustee) in connection with the purchase and sale transaction
contemplated hereby.
h. At both the Hobbs I and Hobbs Expansion Closings: such
other documents as are reasonably required by Purchaser or Purchaser's lender
to carry out the terms and provisions of this Agreement.
6.2 PURCHASER'S CLOSING OBLIGATIONS. At each of the Closings
contemplated hereunder, Purchaser shall furnish and deliver to Seller, at
Purchaser's expense, the following:
a. Federal Reserve, wire transfer funds or other immediately
available collected funds payable to the order, or at the direction, of Seller
representing the cash portion of the Purchase Price due in accordance with
Section 2.1 herein for the applicable Closing.
b. The Closing Certificate, Construction Completion Indemnity
Agreement and Lease (or with respect to the Hobbs Expansion Closing, the
Amendment to Lease) duly executed and acknowledged by Purchaser.
c. Such instruments or documents as are necessary, or
reasonably required by Seller or the Title Company, to evidence the status and
capacity of Purchaser and the authority of the person or persons who are
executing the various documents on behalf of Purchaser in connection with the
purchase and sale transaction contemplated hereby.
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<PAGE> 24
d. Such other documents as are reasonably required by Seller
to carry out the terms and provisions of this Agreement.
e. All necessary approvals, consents, certificates and the
like of third parties to the validity and effectiveness of the transaction
contemplated hereby.
7. EXPENSES OF CLOSING
7.1 ADJUSTMENTS. There shall be no adjustment of taxes, assessments,
water or sewer charges, gas, electric, telephone or other utilities, operating
expenses, employment charges, premiums on insurance policies, rents or other
normally proratable items, it being agreed and understood by the Parties that
the Seller shall be obligated to pay such items under the terms of the Lease.
7.2 CLOSING COSTS. Seller shall pay (a) all title examination fees and
premiums for the Title Policy; (b) the cost of the Search Reports; (c) the cost
of the Survey; (d) Seller's legal, accounting and other professional fees and
expenses and the cost of all opinions, certificates, instruments, documents and
papers required to be delivered, or to cause to be delivered, by Seller
hereunder, including without limitation, the cost of performance by Seller of
its obligations hereunder; (e) all other costs and expenses which are required
to be paid by Seller pursuant to other provisions of this Agreement; (f) any
and all state, municipal or other documentary or transfer taxes payable in
connection with the delivery of any instrument or document provided in or
contemplated by this Agreement or any agreement or commitment described or
referred to herein; and (g) the charges for or in connection with the recording
and/or filing of any instrument or document provided herein or contemplated by
this Agreement or any agreement or document described or referred to herein.
Purchaser shall pay (a) Purchaser's legal, accounting and other professional
fees and expenses and the cost of all opinions, certificates, instruments,
documents and papers required to be delivered, or to cause to be delivered, by
Purchaser hereunder, including, without limitation, the cost of performance by
Purchaser of its obligations hereunder; and (b) all other costs and expenses
which are required to be paid by Purchaser pursuant to other provisions of this
Agreement. Purchaser and Seller shall each be responsible for other costs in
the usual and customary manner for this kind of transaction in the county where
the Property is located.
7.3 COMMISSIONS/BROKER'S FEES. Seller hereby represents and warrants
to Purchaser that it has not contacted any real estate broker, finder or any
other party in connection with this transaction, and that it has not taken any
action which would result in any real estate broker's, finder's or other fees
being due or payable to any party with respect to the transaction contemplated
hereby. Purchaser hereby represents and warrants to Seller that Purchaser has
not contacted any real estate broker, finder or any other party in connection
with this transaction, and that it has not taken any action which would result
in any real estate broker's, finder's or other fees being due or payable to any
party with respect to the transaction contemplated hereby. Each Party hereby
indemnifies and agrees to hold the other Party harmless from any loss,
liability, damage, cost or expenses (including reasonable attorneys' fees)
resulting to such other Party by reason of a breach of the representation and
warranty made by such Party herein.
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8. DEFAULT AND REMEDIES
8.1 ELLER'S DEFAULT; PURCHASER'S REMEDIES.
a. Seller shall be deemed to be in default hereunder upon the
occurrence of one of the following events: (i) any of Seller's warranties or
representations set forth herein shall be untrue in any material respect when
made or at Closing; or (ii) Seller shall fail to meet, comply with, or perform
any covenant, agreement or obligation on its part required within the time
limits and in the manner required in this Agreement, which, in either of such
events, is not cured by Seller within ten (10) days following receipt by Seller
of written notice of default from Purchaser.
b. In the event Seller shall be deemed to be in default
hereunder Purchaser may, at Purchaser's sole option, proceed as set forth in
the Construction Completion Indemnity Agreement executed of even date herewith
as part of the Hobb I Closing.
8.2 PURCHASER'S DEFAULT; SELLER'S REMEDIES.
a. Purchaser shall be deemed to be in default hereunder upon
the occurrence of one of the following events: (i) any of Purchaser's
warranties or representations set forth herein shall be untrue in any material
respect when made or at Closing; or (ii) Purchaser shall fail to meet, comply
with, or perform any covenant, agreement or obligation on its part required
within the time limits and in the manner required in this Agreement, which, in
either of such events, is not cured by Purchaser within ten (10) days following
receipt by Purchaser of written notice of default from Seller.
b. In the event Purchaser shall be deemed to be in default
hereunder Seller may, at Seller's sole option, proceed as set forth in the
Construction Completion Indemnity Agreement executed of even date herewith as
part of the Hobb I Closing.
9. MISCELLANEOUS
9.1 CASUALTY. Prior to the Closing Date, and notwithstanding the
pendency of this Agreement, the entire risk of loss or damage by fire or other
casualty shall be borne and assumed by Seller, except as otherwise provided in
this Section 9.1. Until the Closing has occurred, Seller shall keep all
insurance policies in effect. If, prior to the Closing Date, any part of the
Property is damaged or destroyed by fire or other casualty, Seller shall
immediately notify Purchaser of such fact. If such damage or destruction is
material (as defined below), Purchaser shall have the option to terminate this
Agreement upon written notice to Seller given not later than thirty (30) days
after receipt of Seller's notice. For purposes hereof "material" shall be
deemed to be any uninsured damage or destruction to the Property (except that a
casualty shall not be deemed uninsured solely because all, or a portion of, the
cost of the casualty is subject to a deductible) or any insured damage or
destruction (i) where
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<PAGE> 26
the cost of repair or replacement is estimated, in Purchaser's good faith
judgment, to be One Hundred Thousand and No/100 ($100,000.00) or more, (ii)
where the repair or replacement is estimated, in Purchaser's good faith
judgment, to require more than one hundred twenty (120) days to repair, or
(iii) which would result in an abatement of rent that would not be fully
covered by rent loss insurance (or its equivalent) to Seller upon the Closing.
If Purchaser does not exercise this option to terminate this Agreement, or if
the casualty is not material, neither party shall have the right to terminate
this Agreement, and the parties shall proceed to the Closing pursuant to the
terms hereof without modification of the terms of this Agreement and without
any reduction in the Purchase Price, and the repair and restoration of the
Property shall proceed in accordance with the terms and provisions of the Lease
to be entered into between Seller and Purchaser with the same effect as if such
casualty had occurred during the term of the Lease. If Purchaser does not elect
to terminate this Agreement by reason of any casualty, Purchaser shall have the
right to participate in any adjustment of the insurance claim and, in such
event, Purchaser and Seller shall cooperate each with the other in good faith.
9.2 CONDEMNATION. Prior to the Closing Date, if all or any portion of
the Property is taken, or if access thereto is reduced or restricted, by
eminent domain or otherwise (or if such taking, reduction or restriction is
pending, threatened or contemplated) (hereinafter a "Condemnation Proceeding"),
Seller shall immediately notify Purchaser of such fact. In the event that such
notice relates to the taking of a material (as defined below) portion of the
Property, Purchaser shall have the option, in its sole and absolute discretion,
to terminate this Agreement upon written notice to Seller given not later than
thirty (30) days after receipt of Seller's notice, whereupon neither party
shall have any rights, obligations or liabilities hereunder except with respect
to those rights, obligations or liabilities which expressly survive the
termination of this Agreement. For the purposes of this Section, and without
limiting the generality of the foregoing, a taking shall be deemed material if
it (i) restricts access to the Property (ii) reduces the parking available to
Property unless an equal or greater number of spaces may be created through a
reconfiguration of the parking facilities, or (iii) would, in the reasonable
estimation of Purchaser, cost more than $100,000 to restore the Property or
make alterations to the Property in order to maintain the Property as a fully
functioning correctional and detention facility comparable in all respects to
the condition of the Property absent such Condemnation Proceeding. If Purchaser
does not elect to terminate this Agreement as herein provided, the parties
shall proceed to the Closing pursuant to the terms hereof without modification
of the terms of this Agreement and without any reduction in the Purchase Price,
and any condemnation award and repair and restoration of the Property shall be
governed by the terms and provisions of the Lease to be entered into between
Seller and Purchaser at the Closing with the same effect as if such
Condemnation Proceeding had occurred during the term of the Lease. If Purchaser
does not elect to terminate this Agreement by reason of any Condemnation
Proceeding, Purchaser shall have the right to participate in any Condemnation
Proceeding with respect to the Property and, in such event, Purchaser and
Seller shall cooperate each with the other in good faith.
9.3 SURVIVAL. All of the representations, warranties, covenants,
agreements and indemnities of Seller and Purchaser contained in this Agreement,
to the extent not performed at the
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<PAGE> 27
Closing, shall survive the Closing for the period of one (1) year after the
Closing Date and shall not be deemed to merge upon the acceptance of the Deed
by Purchaser.
9.4 RIGHT OF ASSIGNMENT. Neither this Agreement nor any interest
herein may be assigned or transferred by Purchaser to any person, firm,
corporation or other entity without the prior written consent of Seller, which
consent may be given or withheld in the sole discretion of Seller.
9.5 NOTICES. All notices, requests and other communications under this
Agreement shall be in writing and shall be either (a) delivered in person, (b)
sent by certified mail, return-receipt requested or (c) delivered by a
recognized national delivery service addressed as follows:
If intended for Seller: Wackenhut Corrections Corporation
4200 Wackenhut Drive, Suite 100
Palm Beach Gardens, FL 33410-4243
Phone: (561) 622-5656
Attention: Dr. George C. Zoley
With a copy to: Akerman, Senterfitt & Eidson, P.A.
One SE Third Avenue
Miami, Florida 33131
Phone: (305) 374-5600
Attention: Janice L. Russell, Esq.
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<PAGE> 28
If intended for Purchaser: CPT Operating Partnership L.P.
Gardens Plaza, Suite 430
3300 PGA Boulevard
Palm Beach Gardens, Florida 33410-4243
Phone: (561) 691-6644
Attn: Mr. Charles R. Jones
With a copy to: Josias, Goren, Cherof, Doody and Ezrol, P.A.
3009 East Commercial Boulevard, Suite 200
Ft. Lauderdale, Florida 33308
Phone: (954) 771-4500
Attention: Donald J. Doody, Esq.
or at such other address, and to the attention of such other person, as the
parties shall give notice as herein provided. A notice, request and other
communication shall be deemed to be duly received if delivered in person or by
a recognized national delivery service, when delivered to the address of the
recipient, if sent by mail, on the date of receipt by the recipient as shown on
the return-receipt card; provided that if a notice, request or other
communication is served by hand on a day which is not a Business Day, or after
5:00 P.M. on any Business Day at the addressee's location, such notice or
communication shall be deemed to be duly received by the recipient at 9:00 A.M.
on the first Business Day thereafter.
9.6 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement embodies and
constitutes the entire understanding between the Parties with respect to the
transactions contemplated herein, and all prior or contemporaneous agreements,
understandings, representations and statements (oral or written) are merged
into this Agreement. Neither this Agreement nor any provision hereof may be
waived, modified, amended, discharged or terminated except by an instrument in
writing signed by the Party against whom the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.
9.7 APPLICABLE LAW. THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF FLORIDA. The Parties agree that jurisdiction and venue for any
litigation arising out of this Agreement shall be in the Courts of Palm Beach
County, Florida or the U.S. District Court for the Southern District of Florida
and, accordingly, consent thereto.
9.8 CAPTIONS. The captions in this Agreement are inserted for
convenience of reference only and in no way define, describe, or limit the
scope or intent of this Agreement or any of the provisions hereof.
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9.9 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, legal representatives, successors, and assigns.
9.10 TIME IS OF THE ESSENCE. With respect to all provisions of this
Agreement, time is of the essence. However, if the first date of any period
which is set out in any provision of this Agreement falls on a day which is not
a Business Day, then, in such event, the time of such period shall be extended
to the next day which is a Business Day.
9.11 WAIVER OF CONDITIONS. Any Party may at any time or times, at its
election, waive any of the conditions to its obligations hereunder, but any
such waiver shall be effective only if contained in a writing signed by such
Party. No waiver by a Party of any breach of this Agreement or of any warranty
or representation hereunder by the other Party shall be deemed to be a waiver
of any other breach by such other Party (whether preceding or succeeding and
whether or not of the same or similar nature), and no acceptance of payment or
performance by a Party after any breach by the other Party shall be deemed to
be a waiver of any breach of this Agreement or of any representation or
warranty hereunder by such other Party, whether or not the first Party knows of
such breach at the time it accepts such payment or performance. No failure or
delay by a Party to exercise any right it may have by reason of the default of
the other Party shall operate as a waiver of default or modification of this
Agreement or shall prevent the exercise of any right by the first Party while
the other Party continues to be so in default.
9.12 LIABILITY OF GENERAL PARTNER OF PURCHASER. Seller acknowledges
that Purchaser has disclosed that the general partner of Purchaser (the
"General Partner") is a Maryland business trust formed pursuant to a
Declaration of Trust, as amended, a copy of which is duly filed with the
Department of Assessments and Taxation of the State of Maryland, which provides
that no trustee, officer, shareholder, employee or agent of the General Partner
shall be held personally liable under any written instrument creating an
obligation of, or claim against, the General Partner and that all persons
dealing with the General Partner, in any way, shall look only to the assets of
the General Partner for the payment of any sum or the performance of any
obligation. Seller agrees that any liability of the General Partner or any
trustee, officer, shareholder, employee or agent acting on behalf of the
General Partner arising out of this Agreement or the performance by Purchaser
of its obligations hereunder is limited to the assets of the General Partner in
accordance with the above Declaration of Trust.
EXECUTED to be effective as of the Effective Date.
26
<PAGE> 30
SIGNATURE PAGE TO AGREEMENT OF SALE AND PURCHASE
PURCHASER:
CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, a Maryland real
estate investment trust, its General Partner
By: /s/ Charles R. Jones
------------------------------------------
Charles R. Jones, President
Dated: October 30, 1998
27
<PAGE> 31
SIGNATURE PAGE TO AGREEMENT OF SALE AND PURCHASE
SELLER:
WACKENHUT CORRECTIONS CORPORATION
By: /s/ John G. O'Rourke
------------------------------------------
John G. O'Rourke, Senior Vice President
Dated: October 30, 1998
28
<PAGE> 32
LIST OF EXHIBITS
Exhibit A - Legal Description of the Land
Exhibit A-1 - Sketch of the Hobb I Improvements and the Hobbs Expansion
Improvements
Exhibit B - Bill of Sale
Exhibit C - Certificate of Non-Foreign Status
Exhibit D - Closing Certificate
Exhibit E - Assignment of Leasehold Interest
Exhibit F - Excluded Personal Property
Exhibit F-1 - Excluded Proprietary Property
Exhibit G - Fixtures
Exhibit G-1 - Excluded Fixtures
Exhibit H - Lease Agreement
Exhibit I - Amendment to Lease
29
<PAGE> 33
EXHIBIT A
LEGAL DESCRIPTION - PRISON TRACT
A TRACT OF LAND located in part of the W1/2 of Section 11, Township 18 South,
Range 37 East, being part of a tract conveyed to the County of Lea, a political
subdivision of the State of New Mexico as recorded in Book 821, Page 485, of
the Lea County records, and being more particularly described as follows:
BEGINNING at a point on the east line of said County tract, from whence the
southwest corner of said County tract, which is also the southwest corner of
said Section 11, bears SO 02'42"E, a distance of 2302.95 feet and N89 53'24"W,
a distance of 2375.16 feet;
THENCE NO 02'42"W along the east line of said County tract, a distance of
2281.54 feet to a found 1/2" rebar with a plastic cap which is the northeast
corner of said County tract and the northeast corner of this survey;
THENCE N89 52'06"W along the north line of said County tract, a distance of
1290.03 feet to a 1/2" rebar with an aluminum cap for the northwest corner of
this survey;
THENCE SO 02'42"E parallel with the east line of said County tract, a distance
of 1720.01 feet to a 1/2" rebar with an aluminum cap, which is an angle point
on the west line of this survey;
THENCE S14 22'11"E, a distance of 580.00 to a 1/2" rebar with an aluminum cap
which is the southwest corner of this survey;
THENCE S89 52'06"E, parallel with the north line of said County tract, a
distance of 1146.53 feet to the point of beginning;
Said Tract CONTAINS 66.640 Acres, more or less.
<PAGE> 34
EXHIBIT A-1
Exhibit A-1 is a sketch of the overall plan/site layout for the Prison Tract.
<PAGE> 35
EXHIBIT "B"
BILL OF SALE
THIS BILL OF SALE dated ______________, 1998 is by and between
Wackenhut Corrections Corporation, a Florida corporation ("Seller") and CPT
Operating Partnership, L.P., a Delaware limited partnership ("Purchaser").
KNOW ALL MEN BY THESE PRESENTS, that Seller for and in consideration
of the payment by Purchaser of the purchase price as set forth in that certain
Agreement of Sale and Purchase by and between Wackenhut Corrections
Corporation, a Florida corporation and CPT Operating Partnership, L.P., a
Delaware limited partnership (the "Agreement"), and the mutual covenants and
other consideration recited therein, the receipt and sufficiency of which are
hereby acknowledged, hereby grants, conveys, sells, assigns, transfers and
delivers to the Purchaser, its successors and assigns, all of Seller's right,
title, interest and benefit, of whatever kind and nature, tangible and
intangible, in the following described property located at 6900 West Millen
Drive, Hobbs, NM 88244: (the "Facility") (All capitalized terms used but not
otherwise defined herein shall have the meaning given to such terms in the
Agreement):
(a) all items of Intangible Property, Warranties, and
Engineering Documents, and all those items of tangible personal
property described on Exhibit "J" attached to the Agreement now or on
the Closing Date owned by the Seller and located on or about the
Facility and used in connection with the operation thereof
(specifically excluding all items included within the definition of
Fixtures and Excluded Personal Property and all personal property
owned by employees of Seller and personnel property owned by inmates
housed at the Facility).
(b) all those items of equipment, machinery, fixtures and all
other items of real and/or personal property, including all components
thereof, described on Exhibit F attached to the Agreement and now or
on the Closing Date located in, or used in connection with, and
permanently affixed to or incorporated into the Improvements,
including, without limitation, all furnaces, boilers, heaters,
electrical equipment, electronic security equipment, heating,
plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and
theft protection equipment, and similar systems, all of which, to the
greatest extent permitted by law, are hereby deemed by the Parties to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto (specifically excluding all items
included within the definition of Personal Property and Excluded
Personal Property).
TO HAVE AND TO HOLD the same unto the Purchaser, its successors and
assigns forever.
AND the Seller, for itself and its successors and assigns, hereby
represents, warrants, covenants and agrees to and with the Purchaser, its
successors and assigns, that it is the lawful owner
<PAGE> 36
of the aforesaid assets; that they are free from all liens and encumbrances;
that it has good and valid right to sell, bargain, grant, transfer, convey and
deliver the same to the Purchaser; and that it will warrant and defend the sale
of the said assets, unto the Purchaser, its successors and assigns, against the
lawful claims and demands of all persons claiming by, through or under Seller
but against none other.
All of the terms and provisions of this Bill of Sale will be binding
upon the Seller and its successors and assigns and will inure to the benefit of
the Purchaser and its successors and assigns.
This Bill of Sale may be executed in one or more counterparts.
IN WITNESS WHEREOF, the Seller and the Purchaser have duly executed
this instrument on the date first above written.
PURCHASER:
CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, a Maryland real
estate investment trust, its General Partner
By: CHARLES R. JONES, PRESIDENT
----------------------------------------
Date:
--------------------------------------
SELLER:
Wackenhut Corrections Corporation
By: JOHN G. O'ROURKE, SENIOR VICE PRESIDENT
----------------------------------------
Date:
--------------------------------------
2
<PAGE> 37
STATE OF )
)ss:
COUNTY OF )
The foregoing instrument was acknowledged before me this 30 day of
October, 1998 by CHARLES R. JONES, as President of Correctional Properties
Trust, a Maryland real estate investment trust, as general partner of CPT
Operating Partnership L.P., a Deleware limited partnership. He is personally
known to me or has produced ____________________ (type of identification) as
identification.
---------------------------------------------------------
NOTARY PUBLIC
---------------------------------------------------------
(Print, Type or Stamp Commissioned Name of Notary Public)
STATE OF )
)ss:
COUNTY OF )
The foregoing instrument was acknowledged before me this 30 day of
October, 1998 by John G. O'Rourke, and as Senior Vice President of Wackenhut
Corrections Corporation, a Florida corporation, on behalf of the corporation.
He is personally known to me or has produced ____________________ (type of
identification) as identification.
---------------------------------------------------------
NOTARY PUBLIC
---------------------------------------------------------
(Print, Type or Stamp Commissioned Name of Notary Public)
3
<PAGE> 38
EXHIBIT "C"
CERTIFICATE OF NON-FOREIGN STATUS
John G. O'Rourke, (Affiant), being first duly sworn, states that:
1. He is an authorized representative of Wackenhut Corrections
Corporation, a Florida corporation ("Wackenhut"). He/She has been informed and
understands that Section 1445 of the Internal Revenue Service Code of the
United States provides that transferee (buyer) of a United States real property
interest must withhold tax if the transferor (seller) of such interest is a
foreign person.
2. Wackenhut will convey to CPT Operating Partnership, L.P., a
Delaware limited partnership, (the "Purchaser") the real property legally
described on Exhibit "A" attached hereto (hereinafter referred to as the
"Property").
3. For the purpose of informing the Purchaser that withholding tax is
not required from the purchase price for the sale of the above property,
Affiant hereby states that:
(a) Wackenhut is not a foreign corporation, foreign partnership,
foreign trust or foreign estate, as those terms are defined
in the Internal Revenue Code and applicable Treasury
Regulations;
(b) Wackenhut's federal tax identification number is 65-0043078
and its principal office address is 4200 Wackenhut Drive
#100, Palm Beach Gardens, Florida 33410-4243.
4. Affiant understands that this certification may be disclosed to the
Internal Revenue Service by Purchaser and that any false statement contained
herein could be punished by fine, imprisonment, or both.
5. Under penalties of perjury I declare that I have examined this
certificate and it is true, correct and complete. I further declare that I have
authority to sign this document on behalf of Wackenhut.
WACKENHUT CORRECTIONS
CORPORATION, a Florida corporation
By:
----------------------------------------
John G. O'Rourke, Senior Vice President
STATE OF FLORIDA )
) ss.
COUNTY OF ___________ )
Sworn to and subscribed before me this 30th day of October, 1998, by
John G. O'Rourke, Senior Vice President of Wackenhut Corrections Corporation, a
Florida corporation, who is personally known to me or produced
________________________ as identification.
--------------------------------------------
Notary Public State of Florida
My Name, Commission No. & Expiration:
<PAGE> 39
EXHIBIT D
CLOSING CERTIFICATE
The undersigned hereby certify pursuant to the terms of that certain
Agreement of Sale and Purchase by and between Wackenhut Corrections Corporation
("Seller") and CPT Operating Partnership L.P. ("Purchaser") dated October 30,
1998 (the "Agreement") with respect to the sale of the Hobbs, New Mexico
Correction and Detention Facility (Hobbs I Closing) as follows:
1. The Seller hereby certifies to Purchaser that the
representations, warranties and covenants of Seller contained
in Article 5.1 of the Agreement are true and correct in all
material respects as of the date hereof with the same force
and effect as if made on and as of the date hereof, except
that those representations and warranties which address
matters only as of a particular date remain true and correct
as of such date. Seller further warrants that Seller has
performed and complied with all its respective obligations
required by the terms of the Agreement prior to the date
hereof.
2. The Purchaser hereby certifies to Seller that the
representations, warranties and covenants of Purchaser
contained in Article 5.3 of the Agreement are true and
correct in all material respects as of the date hereof with
the same force and effect as if made on and as of the date
hereof, except that those representations and warranties
which address matters only as of a particular date remain
true and correct as of such date. Purchaser further warrants
that it has performed and complied with all of its respective
obligations required by the terms of the Agreement to be
performed or complied prior to date hereof.
The undersigned have executed this certificate as of October
30, 1998.
PURCHASER:
CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, a Maryland real
estate investment trust, its General Partner
By:
---------------------------------------------
Date:
-------------------------------------------
<PAGE> 40
SELLER:
WACKENHUT CORRECTIONS CORPORATION
By:
-------------------------------------------------
Date:
-----------------------------------------------
2
<PAGE> 41
EXHIBIT E
This Instrument Was Prepared by, Record and Return to:
Janice L. Russell, Esq.
Akerman, Senterfitt & Eidson, P.A.
One S.E. 3rd Avenue
28th Floor
Miami, Florida 33131
ASSIGNMENT AND CONVEYANCE
OF
LEASEHOLD INTEREST UNDER 98 YEAR LEASE
This Assignment and Conveyance of Leasehold Interest Under 98 Year
Lease ("this Assignment") is effective as of October 30, 1998 (the "Effective
Date"), by and between FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually but solely as Owner Trustee under the Wackenhut Corrections Trust
1997-1 ("Assignor"), and CPT OPERATING PARTNERSHIP L.P., a Delaware limited
partnership ("Assignee").
WHEREAS, Assignor is the lessee under that certain Lease Agreement
dated as of December 2, 1997 and recorded on April 17, 1998 Under File #24252,
Lea County Records, Lea County, New Mexico, as amended and restated by that
certain Amended and Restated Lease Agreement dated October 19, 1998 between Lea
County, New Mexico, a political subdivision of the State of New Mexico, as the
lessor thereunder and Assignee, as the lessee thereunder, recorded October 26,
1998 under File # 34206, Lea County Records, Lea County, New Mexico, pursuant
to which Lessor demised the real property described on Exhibit A attached
hereto (the "Leased Premises") to Lessee for a term of 98 Years, expiring
September 10, 2096 (the "98 Year Lease");
WHEREAS, Assignor and Assignee desire that all of Assignor's right,
title, estate and leasehold interest in, or by virtue of, the 98 Year Lease be
assigned and conveyed to Assignee and that Assignee assume Assignor's
obligations under the 98 Year Lease;
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Assignor and Assignee agree as
follows:
1. ASSIGNMENT AND CONVEYANCE OF LEASEHOLD INTEREST AND DELIVERY
OF THE LEASED PREMISES. Assignor hereby transfers, conveys
and assigns to Assignee, its successor and assigns, to have
and to hold, absolutely and forever, all of Assignor's right,
title, estate and leasehold interest now or hereafter
acquired in, to and under or by virture of, the 98 Year
Lease. The Leased Premises are hereby unconditionally
delivered to Assignee effective as of the Effective Date.
2. ASSUMPTION OF LEASE AND ACCEPTANCE OF THE LEASED PREMISES.
Assignee assumes and agrees to perform each and every
obligation of Assignor under the 98 Year Lease, effective as
of the Effective Date. Assignee hereby accepts the Leased
Premises in its existing condition as of the Effective Date.
3. BINDING EFFECT. The Assignment inures to the benefit of, and
will be binding upon, the successors and assigns of Assignor
and Assignee.
<PAGE> 42
IN WITNESS WHEREOF each of the parties hereby have caused this
Assignment to be duly executed by an officer thereunto duly authorized as of
the 30th day of October, 1998.
ASSIGNOR:
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF: FIRST SECURITY BANK, NATIONAL
ASSOCIATION not individually, but solely
as Owner Trustee under Wackenhut Corrections
Trust 1997-1
By:
- ----------------------------- ----------------------------------------
PRINT NAME OF WITNESS BELOW:
Name:
- ----------------------------- --------------------------------------
PRINT NAME OF WITNESS BELOW:
Title:
- ----------------------------- -------------------------------------
STATE OF UTAH )
)ss:
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of
____________, 1998 by ___________________, as ______________________ of First
Security Bank, National Association. He is personally known to me or has
produced ____________________ (type of identification) as identification.
---------------------------------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
---------------------------------------------------------
(Print, Type or Stamp Commissioned Name of Notary Public)
[SIGNATURE PAGE TO ASSIGNMENT OF LEASEHOLD INTEREST]
- 2 -
<PAGE> 43
SIGNED, SEALED AND DELIVERED ASSIGNEE:
IN THE PRESENCE OF:
CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, its
general partner
By:
- ---------------------------- ------------------------------
PRINT NAME OF WITNESS BELOW: Charles R. Jones, President
- ----------------------------
- ----------------------------
PRINT NAME OF WITNESS BELOW:
- ----------------------------
STATE OF FLORIDA )
) ss:
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of
____________, 1998 by Charles R. Jones, President of Correctional Properties
Trust, a Maryland real estate investment trust, General Partner of CPT
Operating Partnership, L.P. He is personally known to me or has produced
____________________ (type of identification) as identification.
---------------------------------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
---------------------------------------------------------
(Print, Type or Stamp Commissioned Name of Notary Public)
- 3 -
<PAGE> 44
[SIGNATURE PAGE TO ASSIGNMENT OF LEASEHOLD INTEREST]
EXHIBIT A
LEGAL DESCRIPTION OF LAND
- 4 -
<PAGE> 45
EXHIBIT "F"
EXCLUDED PERSONAL PROPERTY
(TO BE MUTUALLY APPROVED BY SELLER AND PURCHASER AND SCHEDULED
PRIOR TO THE HOBBS EXPANSION CLOSING)
<PAGE> 46
EXHIBIT F-1
EXCLUDED PROPRIETARY PROPERTY
1. All computer software programs, owned by or licensed to Tenant,
including any changes, modifications or improvements or enhancements
thereto, and all versions thereof, along with the source code and
object code thereof, source code in hard copy, ideas, routines,
specifications, flowcharts and other material and documentation
(including all user and/or technical manuals) related thereto,
together with all related information, data and know-how, technical or
otherwise.
2. All common law, statutory and other reserved rights, including the
copyright, in and to the architectural plans, drawings, renderings and
specifications (including any of the foregoing in CADD or other
electronic media format) for the design, development and construction
of correctional and detention facilities upon the Leased Property
prepared by or at the discretion of Tenant (the "Plans") except that
the Landlord and/or its successor or assigns shall be permitted to
retain copies, including reproducible copies, of the Plans for use in
connection with any modifications, alterations, repairs,
reconstruction or expansion of the Leased Property provided Landlord
shall not use, or permit others to use, the Plans on other projects.
3. All rights to the name "Wackenhut Corrections" or any combination or
derivative thereof.
4. All manuals, course books, charts, diagrams, visual aids and other
media acquired or developed by Tenant pertaining to inmate and
detainee orientation, rehabilitative educational and other such
programs at the Leased Property.
5. All financial and other books and records of Tenant except for the
copies and/or extracts thereof required to be provided to Landlord
under the terms and provisions of the Lease.
<PAGE> 47
EXHIBIT "G"
FIXTURES
(TO BE MUTUALLY APPROVED BY SELLER AND PURCHASER AND SCHEDULED
PRIOR TO THE HOBBS EXPANSION CLOSING)
<PAGE> 48
EXHIBIT "G-1"
EXCLUDED FIXTURES
(TO BE MUTUALLY APPROVED BY SELLER AND PURCHASER AND SCHEDULED
PRIOR TO THE HOBBS EXPANSION CLOSING)
<PAGE> 49
EXHIBIT "H"
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") dated as of the 30th day of October,
1998, by and between CPT OPERATING PARTNERSHIP L.P., a Delaware limited
partnership ("Landlord") and WACKENHUT CORRECTIONS CORPORATION, a Florida
corporation ("Tenant").
RECITALS
A. Tenant has concurrently caused to be conveyed to Landlord the
leasehold interest in and to the property described in Exhibit A hereto arising
under and by virtue of that certain Amended and Restated Lease dated October
19, 1998 wherein the property was demised by Lea County, New Mexico for a term
of 98 years, expiring September 10, 2096 (the "98 Year Lease"), and Landlord
and Tenant desire that Landlord lease such property back to Tenant; and
B. Landlord and Tenant have entered into a Master Agreement to Lease
dated April 28, 1988 herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.01 LEASED PROPERTY. Landlord hereby leases to Tenant and Tenant
leases from Landlord the Land located in Lea County, New Mexico, described in
Exhibit A hereto (subject to and in accordance with the provisions of the 98
Year Lease), and all Improvements, Fixtures, and Personal Property thereon or
thereto (each as defined in the Master Agreement and as more particularly set
forth on Exhibits B and C, respectively, attached hereto and, together with
said Land, the "Leased Property"); such Leased Property collectively known and
described at the date hereof as the Hobbs, New Mexico Correctional and
Detention Facility;
SUBJECT, HOWEVER, to the all easements, liens, encumbrances,
restrictions, agreements, and other title matters existing as of the date
hereof and listed in Exhibit D hereto (collectively "Permitted Exceptions").
1.02 TERM. The initial term (the "Fixed Term") of the Lease shall be
for a fixed term of ten (10) years commencing on October 30, 1998 (the
"Commencement Date") and expiring at midnight on October 29, 2008 (the
"Expiration Date"). The Term of this Lease may be renewed as follows:
<PAGE> 50
(i) Provided that Tenant gives Landlord notice on or before
the date which is six (6) months prior to the Expiration Date, the Lease shall
be renewed at fair market rental rates as determined upon the mutual agreement
of Landlord and Tenant in accordance with Subsection 1.02(ii) for one (1)
additional five (5) year term (the "Extended Term") on the same terms and
provisions (other than with respect to renewal) as the Fixed Term, as set forth
in this Lease; (b) provided that Tenant gives Landlord notice on or before the
date which is six (6) months prior to the expiration of the Extended Term, the
Lease shall be renewed at fair market rental rates as determined upon the
mutual agreement of Landlord and Tenant in accordance with Subsection 1.02(ii)
for one (1) additional five (5) year term (the "Second Extended Term") on the
same terms and provisions (other than with respect to renewal) as the Fixed
Term, as set forth in this Lease; and (c) provided that Tenant gives Landlord
notice on or before the date which is six (6) months prior to the expiration of
the Second Extended Term, the Lease shall be renewed at fair market rental
rates as determined upon the mutual agreement of Landlord and Tenant in
accordance with subsection 1.02(ii) for one (1) additional five (5) year term
(the "Third Extended Term") on the same terms and provisions (other than with
respect to renewal) as the Fixed Term, as set forth in this Lease.
(ii) After receipt by Landlord of a notice from Tenant
electing to extend the Term of the Lease under Subsections 1.02(i)(a), (b) and
(c) above, Landlord and Tenant shall thereafter negotiate in good faith a
mutually acceptable amendment to the Lease confirming the extension of the
Lease Term and the fair market Base Rent and Additional Rent to be applicable
thereto. If Landlord and Tenant fail to reach a mutual agreement as to the fair
market Base Rent and Additional Rent to be applicable to such extension of the
Lease Term within the forty-five (45) day period following the date Tenant's
notice of election to extend is received by Landlord, then either party may at
any time thereafter, by written notice to the other, demand arbitration in
accordance with this Subsection and the Landlord and Tenant shall attempt to
agree upon a single arbitrator to make such determination. If Landlord and
Tenant are unable to agree upon a single arbitrator within thirty (30) days
thereafter, then the party giving the notice of demand for arbitration shall
give notice to the other of a person selected to act as appraiser on its
behalf. Within ten (10) days after such notice, Landlord (or Tenant, as the
case may be) shall by notice to the Tenant (or Landlord, as the case may be)
appoint a second person as appraiser on its behalf. The appraisers thus
appointed, each of whom must be a member of the American Institute of Real
Estate Appraisers (or any successor organization thereto) and experienced in
appraising correctional and detention facilities (or reasonably similar
facilities), shall, within forty-five (45) days after the date of the notice
appointing the first appraiser, proceed to appraise the Leased Property to
determine the fair market rental thereof as of the relevant date (giving effect
to the impact, if any, of inflation from the date of their decision to the
relevant date); provided, however, that if only one appraiser has been so
appointed, or if two appraisers have been so appointed but only one such
appraiser has made such determination within the later of occur of 10 business
days following delivery of such appraisal to the other party or fifty (50) days
after the making of Tenant's or Landlord's request, then the determination of
such appraiser shall be final and binding upon the parties. If two appraisers
have been appointed and have made their determinations within the respective
requisite periods set forth above and if the difference between the amounts so
determined does not exceed ten percent (10%) of the lesser of such amounts,
then the fair market rental shall be an amount equal to fifty percent (50%) of
the sum of the amounts so determined. If the difference between the amounts so
determined exceeds ten percent (10%) of the lesser of such amounts, then such
two appraisers shall have twenty (20) days to appoint a third appraiser. If no
2
<PAGE> 51
such appraiser has been appointed within such twenty (20) days or within ninety
(90) days of the original request for a determination of fair market rental,
whichever is earlier, either Landlord or Tenant may apply to any court having
jurisdiction to have such appointment made by such court. Any appraiser
appointed by the original appraisers or by such court shall be instructed to
determine the Fair Market Rental within forty-five (45) days after appointment
of such appraiser. The determination of the appraiser which differs most in
terms of dollar amount from the determinations of the other two appraisers
shall be excluded, and the average of the sum of the remaining two
determinations shall be final and binding upon Landlord and Tenant as the fair
market rental of the Leased Property. This provision for determining by
appraisal shall be specifically enforceable to the extent such remedy is
available under applicable law, and any determination hereunder shall be final
and binding upon the parties and judgment may be entered upon such
determination in any court having jurisdiction of the matter. Landlord and
Tenant shall each pay the fees and expenses of the appraiser appointed by it
and each shall pay one-half (1/2) of the fees and expenses of the third
appraiser and one-half (1/2) of all other costs and expenses incurred in
connection with each appraisal.
(iii) Notwithstanding the options to extend granted to Tenant
in Subsections 1.O2(i)(a), (b) and (c) and above, if on the expiration of the
Fixed Term or on the expiration of the Extended Term, Second Extended Term or
any Subsequent Term (as defined below) of the Lease, there is in effect an
unexpired sublease approved by Landlord in accordance with Article XIII of the
Master Lease, then, in such event unless Landlord and Tenant have otherwise
mutually agreed in writing, the Term of this Lease shall be automatically
extended for one (1) additional five year term (a "Subsequent Term") on the
same terms and conditions and at the same Base Rent and Additional Rent
(including, without limitation, the method of determining any increases in
Additional Rent) in effect during the prior Lease Year.
(iv) The term "Term" used in this Agreement means the Fixed
Term, Extended Term, Second Extended Term, Third Extended Term, or any
Subsequent Term, as appropriate. The term "Lease Year" means each twelve (12)
month period during the Term commencing on the Commencement Date or, if the
Commencement Date is not the first day of a calendar month, commencing on the
first day of the first calendar month following the Commencement Date, and each
successive twelve month period thereafter during the Term.
ARTICLE II
RENT
2.01 BASE RENT. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term, the Third
Extended Term or any Subsequent Term, commencing on the Commencement Date
provided for in Section 1.03 of the Master Agreement, in accordance with the
Base Rent Schedule attached hereto as Exhibit E. Any Rent (as defined in
Section 2.04 of the Master Agreement) payable for a portion of a month shall be
prorated based upon the number of days in the applicable month and an
appropriate payment or refund, as the case may
3
<PAGE> 52
be, shall be made in accordance with the terms of the Master Agreement, so as
to charge Tenant only for the fractional month falling within the Term.
2.02 ADDITIONAL RENT. The Base Rent shall be subject to such increases
over the Term as determined pursuant to Section 2.02 of the Master Agreement.
2.03 OTHER ADDITIONAL RENT. Tenant shall also pay all Other Additional
Rent with respect to the Leased Property, as set forth in the Master Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.01 OBLIGATIONS OF TENANT WITH RESPECT TO 98 YEAR LEASE. Tenant
hereby agrees, at Tenant's sole cost and expense, (i) to perform and abide by
each and every of the obligations of the lessee under the 98 Year Lease; and
(ii) to indemnify, defend and hold harmless Landlord of and from any and all
claims, liabilities, costs, suits, causes of action and judgments, including
Landlord's attorneys and costs, arising out of or in connection with claims by
the lessor under the 98 Year Lease for breach of the lessee's obligations
thereunder, except for claims based solely upon Landlord's intentional breach
of the terms thereof.
3.02 MASTER AGREEMENT INCORPORATED HEREIN. All provisions of the
Master Agreement (except any provisions expressly therein not to be a part of
an individual lease of leased property) are hereby incorporated in and are a
part of this Lease of the Leased Property.
3.03 RECORDATION. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
SIGNATURES CONTINUED ON THE FOLLOWING PAGES
4
<PAGE> 53
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
WACKENHUT CORRECTIONS
CORPORATION
By:
- ---------------------------- ---------------------------------------
PRINT NAME OF WITNESS BELOW: John G. O'Rourke, Senior Vice President
- ----------------------------
- ----------------------------
PRINT NAME OF WITNESS BELOW:
- ----------------------------
5
<PAGE> 54
WITNESSES: CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, its
general partner
By:
- ---------------------------- ----------------------------------
PRINT NAME OF WITNESS BELOW: Charles R. Jones, President
- ----------------------------
- ----------------------------
PRINT NAME OF WITNESS BELOW:
- ----------------------------
6
<PAGE> 55
EXHIBIT A
LEGAL DESCRIPTION - PRISON TRACT
A TRACT OF LAND located in part of the W1/2 of Section 11, Township 18 South,
Range 37 East, being part of a tract conveyed to the County of Lea, a political
subdivision of the State of New Mexico as recorded in Book 821, Page 485, of
the Lea County records, and being more particularly described as follows:
BEGINNING at a point on the east line of said County tract, from whence the
southwest corner of said County tract, which is also the southwest corner of
said Section 11, bears SO 02'42"E, a distance of 2302.95 feet and N89 53'24"W,
a distance of 2375.16 feet;
THENCE NO 02'42"W along the east line of said County tract, a distance of
2281.54 feet to a found 1/2" rebar with a plastic cap which is the northeast
corner of said County tract and the northeast corner of this survey;
THENCE N89 52'06"W along the north line of said County tract, a distance of
1290.03 feet to a 1/2" rebar with an aluminum cap for the northwest corner of
this survey;
THENCE SO 02'42"E parallel with the east line of said County tract, a distance
of 1720.01 feet to a 1/2" rebar with an aluminum cap, which is an angle point
on the west line of this survey;
THENCE S14 22'11"E, a distance of 580.00 to a 1/2" rebar with an aluminum cap
which is the southwest corner of this survey;
THENCE S89 52'06"E, parallel with the north line of said County tract, a
distance of 1146.53 feet to the point of beginning;
Said Tract CONTAINS 66.640 Acres, more or less.
7
<PAGE> 56
EXHIBIT B
[Schedule of Fixtures]
8
<PAGE> 57
EXHIBIT C
[Schedule of Personal Property]
9
<PAGE> 58
EXHIBIT D
[Permitted Exceptions]
1. Taxes for the year 1998 and thereafter.
2. Title to all the oil, gas, minerals and mineral substances
within and underlying the premises, together with the
drilling rights thereto belonging as appearing of record.
3. Reservations, Restrictions and Covenants as contained in that
certain Quit Claim Deed dated December 23, 1948, filed
December 27, 1948, in Book 109, at Page 388, and amended in
that certain Deed of Release dated November 2, 1961, filed
November 22, 1961, in Book 260, at Page 200, and further
amended in that certain Deed of Release dated December 23,
1963, filed January 7, 1964, in Book 279, at Page 422, Deed
Records, Lea County, New Mexico. Said Deed executed by the
United States of America to the City of Hobbs.
4. Reservations, Restrictions and Covenants as contained in that
certain Special Warranty Deed dated September 10, 1997, filed
September 10, 1997, in Book 821, Page 485. Said Deeds
executed by the City of Hobbs, New Mexico to the County of
Lea, a Political Subdivision of the State of New Mexico.
5. Easement dated January 8, 1998, filed March 2, 1998, in Book
858, at Page 94, Deed Records, Lea County, New Mexico.
Executed by Lea County to Southwestwern Public Service
Company.
6. All of the terms, conditions and provisions of the Amended
and Restated Lease Agreement dated as of October 19, 1998 by
and between Lea County, New Mexico, a Political Subdivision
as Lessor and First Security Bank, National Association not
individually but solely as Owner Trustee under Wackenhut
Corrections Trust 1997-1, as Lessee, recorded October 26,
1998 under File No. 34206, Lea County Records, New Mexico.
7. Leasehold Mortgage, Assignment of Leases, Security Agreement
and Collateral Assignment of Mortgage dated April 17, 1998,
filed April 17, 1998 in Book 873, at Page 657, Lea County
Records, Lea County, New Mexico. Executed by First Security
Bank, National Association not individually but solely as
Owner Trustee under Wackenhut Corrections Trust 1997-1 to
NationsBank, National Association as assigned to Wackenhut
Corrections Corporation by Assignment of Leasehold Mortgage
dated as of October 30, 1998 and as amended and restated by
Amended and Restated Leasehold Mortgage dated as of October
30, 1998 given by CPT Operating Partnership, L.P. in favor of
Wackenhut Corrections Corporation. Said Leasehold Mortgage to
be further assigned at the Hobbs Expansion Closing as
provided by the Agreement of Sale and Purchase dated October
30, 1998 by and between Landlord and Tenant.
8. Notice of Right of First Refusal by and between Lea County,
New Mexico, Wackenhut Corrections Corporation and the
Wackenhut Trustee.
10
<PAGE> 59
EXHIBIT E
Base Rent Schedule
(Property: Hobbs, New Mexico Correctional and Detention Facility)
Tenant will pay to Landlord annual Base Rent of $2,512,429 payable in
equal monthly installments beginning on the Commencement Date of October 30,
1998.
Base Rent for any Subsequent Term shall be equal to the Base Rent and
Additional Rent (including, without limitation, the method of determining any
increases in Additional Rent) in effect during the prior Lease Year.
Base Rent for the Extended Term, Second Extended Term and Third Extended
Term shall be equal to the fair market rental value of the Leased Property as
of the respective commencement dates thereof.
11
<PAGE> 60
EXHIBIT "I"
FIRST AMENDMENT TO
LEASE AGREEMENT AND MEMORANDUM OF LEASE
THIS FIRST AMENDMENT TO LEASE AGREEMENT AND MEMORANDUM OF LEASE ("this
Amendment") dated as of the ______ day of January, 1999, by and between CPT
OPERATING PARTNERSHIP L.P., a Delaware limited partnership ("Landlord") and
WACKENHUT CORRECTIONS CORPORATION, a Florida corporation ("Tenant").
RECITALS
A. Landlord and Tenant entered into an Agreement of Sale and Purchase
dated as of October 30, 1998 ("Purchase Agreement") for the sale and conveyance
of a leasehold estate in the land described on Exhibit A attached hereto (the
"Land"), together with the improvements constructed thereon known as the Hobbs,
New Mexico Correctional and Detention Facility (the "Facility").
B. In accordance with the terms of the Purchase Agreement, the sale
transactions contemplated therein are to be consummated in two closings, with
the first closing (the "Hobbs I Closing") to take place on October 30, 1998
consisting of the sale and transfer of the leasehold estate in the Land
together with the completed improvements on such closing date consisting of two
inmate housing units containing 600 beds and related administration and support
buildings (the "Hobbs I Improvements"); and with the second closing (the "Hobbs
Expansion Closing") to take place on January 5, 1999, consisting of the sale
and transfer of certain additional improvements constructed by Tenant upon the
Land consisting of two additional inmate housing units containing an additional
600 beds and additional support buildings (the "Hobbs Expansion Improvements").
C. At the Hobbs I Closing, Landlord leased back to Tenant the
leasehold estate in the Land and the Hobbs I Improvements pursuant to the terms
of the Lease Agreement between Landlord and Tenant dated as of October 30, 1998
(the "Lease"), a memorandum of which is recorded as Document No.
_______________ in Book ___ at Page ____ of the public records of Lea County,
New Mexico (the "Memorandum of Lease").
D. Concurrently with the sale and transfer on the date hereof by
Tenant to Landlord of the Hobbs Expansion Improvements, Landlord and Tenant
desire to enter into this Amendment to the Lease and Memorandum of Lease for
the purpose of amending both instruments to include the Hobbs Expansion
Improvements in the description of the Improvements, Property and Fixtures (as
such terms are defined in the Lease) demised by Landlord to Tenant under the
Lease and to provide for an increase in the rent and an extension of the term
of the Lease, all as hereinafter more particularly set forth.
<PAGE> 61
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.01 LEASED PROPERTY. Landlord hereby leases to Tenant and Tenant
leases from Landlord the Hobbs Expansion Improvements located upon the Land
located in Lea County, New Mexico, described in Exhibit A hereto, including all
Improvements, Fixtures, and Personal Property thereon or thereto (each as
defined in the Lease and as more particularly set forth on Exhibits B and C,
respectively, attached hereto and collectively referred to herein as, the
"Hobbs Expansion Leased Property"); such Hobbs Expansion Leased Property,
together with the Hobbs I Improvements collectively known and described at the
date hereof as the Hobbs, New Mexico Correctional and Detention Facility;
SUBJECT, HOWEVER, to the all easements, liens, encumbrances,
restrictions, agreements, and other title matters existing as of the date
hereof and listed in Exhibit D hereto (collectively "Permitted Exceptions").
The Lease is hereby amended to provide that the definition of the
term, "Leased Property" as used in the Lease and Memorandum of Lease shall
henceforth collectively mean and refer to the leasehold estate in the Land
together with the Improvements, Fixtures and Personal Property consisting of
the Hobbs I Improvements and the Hobbs Expansion Improvements.
1.02 TERM. The initial term (the "Fixed Term") of the Lease is hereby
amended to provide for an extension of the Fixed Term such that the Fixed Term
shall expire at midnight on January ___, 2009 and to further provide that the
definition of the term, "Expiration Date" as used in the Lease and Memorandum
of Lease shall henceforth mean and refer to January ___, 2009.
ARTICLE II
RENT
2.01 The Lease is hereby further amended by deleting the Base Rent
Schedule attached thereto as Exhibit E and substituting therefor the new Base
Rent Schedule attached to this Amendment as Exhibit E-1. Landlord and Tenant
agree that the term "Base Rent" as used in the Lease and Memorandum of Lease
shall henceforth mean and refer to the rental amount set forth in Exhibit E-1
attached to this Amendment.
2
<PAGE> 62
ARTICLE III
OTHER TERMS AND CONDITIONS
3.01 RATIFICATION. Except as expressly modified by this Amendment,
each and every of the terms and provisions of Lease shall be and remain in full
force and effect and binding upon and enforceable against each of the parties
in accordance with the terms and provisions thereof.
3.02 COUNTERPARTS. This Amendment may be executed in several
counterparts, each of which shall be considered an original, but all
nonetheless constituting but one and the same agreement.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Amendment or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
WACKENHUT CORRECTIONS
CORPORATION
By:
- ---------------------------- ---------------------------------------
PRINT NAME OF WITNESS BELOW: John G. O'Rourke, Senior Vice President
- ----------------------------
- ----------------------------
PRINT NAME OF WITNESS BELOW:
- ----------------------------
STATE OF FLORIDA )
)ss:
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of
____________, 1999, by John G. O'Rourke, Senior Vice President of WACKENHUT
CORRECTIONS CORPORATION. He is personally known to me or has produced
____________________ (type of identification) as identification.
---------------------------------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
---------------------------------------------------------
(Print, Type or Stamp Commissioned Name of Notary Public)
3
<PAGE> 63
WITNESSES:
CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, its
general partner
By:
- ---------------------------- ------------------------------
PRINT NAME OF WITNESS BELOW: Charles R. Jones, President
- ----------------------------
- ----------------------------
PRINT NAME OF WITNESS BELOW:
- ----------------------------
STATE OF FLORIDA )
) ss:
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of
____________, 1999, by Charles R. Jones, President of Correctional Properties
Trust, a Maryland real estate investment trust, General Partner of CPT
Operating Partnership, L.P. He is personally known to me or has produced
____________________ (type of identification) as identification.
---------------------------------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
---------------------------------------------------------
(Print, Type or Stamp Commissioned Name of Notary Public)
4
<PAGE> 64
EXHIBIT A
LEGAL DESCRIPTION - PRISON TRACT
A TRACT OF LAND located in part of the W1/2 of Section 11, Township 18 South,
Range 37 East, being part of a tract conveyed to the County of Lea, a political
subdivision of the State of New Mexico as recorded in Book 821, Page 485, of
the Lea County records, and being more particularly described as follows:
BEGINNING at a point on the east line of said County tract, from whence the
southwest corner of said County tract, which is also the southwest corner of
said Section 11, bears SO 02'42"E, a distance of 2302.95 feet and N89 53'24"W,
a distance of 2375.16 feet;
THENCE NO 02'42"W along the east line of said County tract, a distance of
2281.54 feet to a found 1/2" rebar with a plastic cap which is the northeast
corner of said County tract and the northeast corner of this survey;
THENCE N89 52'06"W along the north line of said County tract, a distance of
1290.03 feet to a 1/2" rebar with an aluminum cap for the northwest corner of
this survey;
THENCE SO 02'42"E parallel with the east line of said County tract, a distance
of 1720.01 feet to a 1/2" rebar with an aluminum cap, which is an angle point
on the west line of this survey;
THENCE S14 22'11"E, a distance of 580.00 to a 1/2" rebar with an aluminum cap
which is the southwest corner of this survey;
THENCE S89 52'06"E, parallel with the north line of said County tract, a
distance of 1146.53 feet to the point of beginning;
Said Tract CONTAINS 66.640 Acres, more or less.
5
<PAGE> 65
EXHIBIT B
[Schedule of Fixtures]
6
<PAGE> 66
EXHIBIT C
[Schedule of Personal Property]
7
<PAGE> 67
EXHIBIT D
[Permitted Exceptions]
8
<PAGE> 68
EXHIBIT E-1
Base Rent Schedule
(Property: Hobbs, New Mexico Correctional and Detention Facility)
Tenant will pay to Landlord annual Base Rent of $4,596,895.00 payable in
equal monthly instalments beginning on the Commencement Date of January ____,
1999.
Base Rent for any Subsequent Term shall be equal to the Base Rent and
Additional Rent (including, without limitation, the method of determining any
increases in Additional Rent) in effect during the prior Lease Year.
Base Rent for the Extended Term, Second Extended Term and Third Extended
Term shall be equal to the fair market rental value of the Leased Property as
of the respective commencement dates thereof.
9
<PAGE> 1
EXHIBIT 4.1
================================================================================
CREDIT AGREEMENT
by and among
CPT OPERATING PARTNERSHIP L.P.,
as Borrower
CORRECTIONAL PROPERTIES TRUST,
as Guarantor
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent and as Lender
NATIONSBANC MONTGOMERY SECURITIES LLC,
as Lead Arranger
THE BANK OF NOVA SCOTIA,
as Syndication Agent
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
October 2, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions and Terms
1.1. Definitions.................................................................................2
1.2. Rules of Interpretation....................................................................30
ARTICLE II
The Revolving Credit Facility
2.1. Revolving Loans............................................................................32
2.2. Payment of Interest........................................................................34
2.3. Payment of Principal.......................................................................34
2.4. Manner of Payment. ........................................................................35
2.5. Revolving Notes............................................................................35
2.6. Pro Rata Payments..........................................................................35
2.7. Reductions.................................................................................36
2.8. Conversions and Elections of Subsequent Interest Periods...................................36
2.9. Increase and Decrease in Amounts...........................................................37
2.10. Unused Fee.................................................................................37
2.11. Deficiency Advances; Failure to Purchase Participations....................................37
2.12. Use of Proceeds............................................................................38
2.13. Mandatory Prepayments of Revolving Loans...................................................38
2.14. Swing Line.................................................................................39
ARTICLE III
Letters of Credit
3.1. Letters of Credit..........................................................................41
3.2. Reimbursement..............................................................................41
3.3. Letter of Credit Facility Fees.............................................................44
3.4. Administrative Fees........................................................................45
ARTICLE IV
Security
4.1. Security...................................................................................46
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
4.2. Further Assurances.........................................................................46
4.3. Information Regarding Collateral...........................................................46
4.4. Pledge Pool................................................................................46
ARTICLE V
Facility Guaranty
5.1. Facility Guaranty..........................................................................49
5.2. Payment....................................................................................49
5.3. Guaranty Absolute..........................................................................49
5.4. Reinstatement..............................................................................50
5.5. Waiver; Subrogation........................................................................50
ARTICLE VI
Change in Circumstances
6.1. Increased Cost and Reduced Return..........................................................52
6.2. Limitation on Types of Loans...............................................................53
6.3. Illegality.................................................................................53
6.4. Treatment of Affected Loans................................................................54
6.5. Compensation...............................................................................54
6.6. Taxes......................................................................................55
ARTICLE VII
Conditions to Making Loans and Issuing Letters of Credit
7.1. Conditions of Initial Advance..............................................................57
7.2. Conditions of Loans and Letter of Credit...................................................60
ARTICLE VIII
Representations and Warranties
8.1. Organization and Authority.................................................................62
8.2. Loan Documents.............................................................................62
8.3. Solvency...................................................................................63
8.4. Subsidiaries and Stockholders..............................................................63
8.5. Ownership Interests........................................................................63
8.6. Financial Condition........................................................................63
8.7. Title to Properties........................................................................64
8.8. Taxes......................................................................................64
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
8.9. Other Agreements...........................................................................64
8.10. Litigation.................................................................................65
8.11. Margin Stock...............................................................................65
8.12. Investment Company.........................................................................65
8.13. Patents, Etc...............................................................................65
8.14. No Untrue Statement........................................................................65
8.15. No Consents, Etc...........................................................................66
8.16. Employee Benefit Plans.....................................................................66
8.17. No Default.................................................................................67
8.18. Environmental Laws.........................................................................67
8.19. Employment Matters.........................................................................67
8.20. RICO.......................................................................................68
8.21. REIT Status................................................................................68
8.22. Leases; Appraised Value....................................................................68
8.23. Registration Statement.....................................................................68
8.24. Year 2000 Compliance.......................................................................68
ARTICLE IX
Affirmative Covenants
9.1. Financial Reports, Etc.....................................................................70
9.2. Maintain Properties........................................................................71
9.3. Existence, Qualification, Etc..............................................................72
9.4. Regulations and Taxes......................................................................72
9.5. Insurance..................................................................................72
9.6. True Books.................................................................................72
9.7. Right of Inspection........................................................................72
9.8. Observe all Laws...........................................................................73
9.9. Governmental Licenses......................................................................73
9.10. Covenants Extending to Other Persons.......................................................73
9.11. Officer's Knowledge of Default.............................................................73
9.12. Suits or Other Proceedings.................................................................73
9.13. Notice of Environmental Complaint or Condition.............................................73
9.14. Environmental Compliance...................................................................74
9.15. Indemnification............................................................................74
9.16. Further Assurances.........................................................................74
9.17. Employee Benefit Plans.....................................................................74
9.18. Continued Operations.......................................................................75
9.19. New Subsidiaries...........................................................................75
9.20. REIT Status. .............................................................................76
9.21. Use of Proceeds. .........................................................................76
9.22. Ownership of Borrower. ...................................................................76
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
9.23. Year 2000 Compliance.......................................................................77
ARTICLE X
Negative Covenants
10.1. Financial Covenants........................................................................78
10.2. Acquisitions...............................................................................79
10.3. Capital Expenditures.......................................................................79
10.4. Liens......................................................................................79
10.5. Indebtedness...............................................................................80
10.6. Transfer of Assets.........................................................................81
10.7. Investments................................................................................81
10.8. Merger or Consolidation....................................................................82
10.9. Restricted Payments........................................................................82
10.10. Transactions with Affiliates...............................................................83
10.11. Compliance with ERISA......................................................................83
10.12. Fiscal Year................................................................................84
10.13. Dissolution, etc...........................................................................84
10.14. Limitations on Sales and Leasebacks........................................................84
10.15. Change of Control..........................................................................84
10.16. Rate Hedging Obligations...................................................................84
10.17. Negative Pledge Clauses....................................................................84
10.18. Unrestricted Subsidiaries..................................................................84
ARTICLE XI
Events of Default and Acceleration
11.1. Events of Default..........................................................................85
11.2. Agent to Act...............................................................................88
11.3. Cumulative Rights..........................................................................88
11.4. No Waiver..................................................................................88
11.5. Allocation of Proceeds.....................................................................89
ARTICLE XII
The Agent
12.1. Appointment, Powers, and Immunities........................................................90
12.2. Reliance by Agent..........................................................................90
12.3. Defaults...................................................................................91
12.4. Rights as Lender...........................................................................91
12.5. Indemnification............................................................................91
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
12.6. Non-Reliance on Agent and Other Lenders....................................................92
12.7. Resignation of Agent.......................................................................92
12.8. Sharing of Payments, etc...................................................................92
12.9. Fees.......................................................................................93
ARTICLE XIII
Miscellaneous
13.1. Assignments and Participations.............................................................94
13.2. Notices....................................................................................95
13.3. Right of Set-off; Adjustments..............................................................97
13.4. Survival...................................................................................97
13.5. Expenses...................................................................................98
13.6. Amendments and Waivers.....................................................................98
13.7. Counterparts...............................................................................99
13.8. Termination................................................................................99
13.9. Indemnification; Limitation of Liability...................................................99
13.10. Severability..............................................................................100
13.11. Entire Agreement..........................................................................100
13.12. Agreement Controls........................................................................100
13.13. Usury Savings Clause......................................................................100
13.14. Payments..................................................................................101
13.15. Confidentiality...........................................................................101
13.16. GOVERNING LAW; WAIVER OF JURY TRIAL.......................................................101
EXHIBIT A Applicable Commitment Percentages.................................................A-1
EXHIBIT B Form of Assignment and Acceptance.................................................B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative................C-1
EXHIBIT D-1 Form of Borrowing Notice........................................................D-1-1
EXHIBIT D-2 Form of Borrowing Notice--Swing Line Loans......................................D-2-1
EXHIBIT E Form of Interest Rate Selection Notice............................................E-1
EXHIBIT F-1 Form of Revolving Note..........................................................F-1-1
EXHIBIT F-2 Form of Swing Line Note.........................................................F-2-1
EXHIBIT G-1 Form of Opinion of Borrower's Counsel...........................................G-1-1
EXHIBIT G-2 Form of Opinion of Local Counsel................................................G-2-1
EXHIBIT H Compliance Certificate............................................................H-1
EXHIBIT I Form of Facility Guaranty.........................................................I-1
EXHIBIT J Form of Borrowing Base Certificate................................................J-1
EXHIBIT K-1 Form of Mortgage (Wackenhut)................................................... K-1-1
EXHIBIT K-2 Form of Mortgage (non-Wackenhut)................................................K-2-1
EXHIBIT L Eligible Property Compliance Certificate..........................................L-1
EXHIBIT M Form of Estoppel Certificate......................................................M-1
EXHIBIT N Form of Consent to Assignment.....................................................N-1
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
EXHIBIT O Form of Subordination, Non-Disturbance and Attornment Agreement...................O-1
EXHIBIT P Form of Amendment Agreement.......................................................P-1
Schedule 4.3 Information Regarding Collateral; Pledged Properties; Pledge Pool.................S-1
Schedule 4.4 Appraisal Requirements............................................................S-2
Schedule 8.4 Subsidiaries and Investments in Other Persons.....................................S-4
Schedule 8.6 Indebtedness......................................................................S-5
Schedule 8.7 Liens.............................................................................S-6
Schedule 8.8 Tax Matters.......................................................................S-7
Schedule 8.10 Litigation........................................................................S-8
Schedule 9.5 Insurance.........................................................................S-9
</TABLE>
vi
<PAGE> 8
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of October 2, 1998 (the "Agreement"),
is made by and among:
CPT OPERATING PARTNERSHIP L.P., a Delaware limited partnership having
its principal place of business in Palm Beach Gardens, Florida (the "Borrower");
and
CORRECTIONAL PROPERTIES TRUST, a Maryland real estate investment trust
having its principal place of business in Palm Beach Gardens, Florida ("CPV");
and
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States, in its capacity as a
Lender ("NationsBank"), and each other financial institution executing and
delivering a signature page hereto and each other financial institution which
may hereafter execute and deliver an instrument of assignment with respect to
this Agreement pursuant to SECTION 13.1 (hereinafter such financial institutions
may be referred to individually as a "Lender" or collectively as the "Lenders");
and
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States, in its capacity as
agent for the Lenders (in such capacity, and together with any successor agent
appointed in accordance with the terms of SECTION 12.7, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a revolving credit facility of up to $150,000,000, the proceeds of
which are to be used for working capital and general partnership purposes,
including the acquisition of correctional and detention facilities, and which
shall include a letter of credit facility of up to $10,000,000 for the issuance
of standby letters of credit and a swing line facility of up to $5,000,000;
WHEREAS, CPV has agreed to guaranty the obligations of the Borrower
arising hereunder in the manner described herein and to secure its Facility
Guaranty by a pledge of its Partnership Units, as defined herein, in the
Borrower; and
WHEREAS, the Lenders party hereto have agreed to make available to the
Borrower a revolving credit facility of up to $100,000,000, which includes a
letter of credit facility of up to $10,000,000 and a swing line facility of up
to $5,000,000 upon the terms and conditions set forth herein and hereby agree
that the revolving credit facility may be increased to $150,000,000 at any time
pursuant to SECTION 2.9, so long as no Default or Event of Default exists,
without further action or approval of the Lenders;
<PAGE> 9
NOW, THEREFORE, the Borrower, CPV, the Lenders and the Agent hereby
agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
1.1. DEFINITIONS. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling
equity interest in another Person (including the purchase of an option,
warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the holder
thereof), whether by purchase of such equity interest or upon exercise
of an option or warrant for, or conversion of securities into, such
equity interest, or (ii) assets of another Person or a line or lines of
business conducted by such Person so long as such Person is in the
business of owning or leasing or such assets are Qualifying Property.
"Additions or Enhancements" means with respect to any
Qualifying Property any improvements, expansions, additions,
alterations, betterments or appurtenances thereto.
"Adjusted CD Rate" means a rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Agent
according to the following formula:
Adjusted CD Rate = CD Rate + Assessment Rate + Applicable
Margin
"Advance" means a borrowing under the Revolving Credit
Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower or CPV; or (ii) which
beneficially owns or holds 5% or more of the Partnership Units of the
Borrower or 5% or more of any class of the outstanding voting stock of
CPV; or 5% or more of any class of the outstanding voting stock (or in
the case of a Person which is not a corporation, 5% or more of the
equity interest) of which is beneficially owned or held by the Borrower
and/or CPV. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of
partnership interests, voting stock, by contract or otherwise.
"Annualized EBITDA" means, with respect to any Qualifying
Property, the SUM of, without duplication, (i) net income, (ii)
interest expense, (iii) taxes on income, (iv) amortization and (v)
depreciation, all determined in accordance with GAAP applied on a
Consistent Basis, which amount shall be determined (a) if such
Qualifying Property has been owned by CPV, the Borrower or any
Subsidiary for at least four calendar quarters, on a four calendar
quarter basis, (b) if such Qualifying Property has been owned by CPV,
the Borrower or any Subsidiary for one quarter, such quarter's results
shall be multiplied
2
<PAGE> 10
by four; if owned for two quarters, such quarters' results shall be
multiplied by two; and if owned for three quarters, such quarters'
results shall be multiplied by 4/3 and (c) if such Qualifying Property
has been owned by the Borrower or any Subsidiary for less than one
quarter, based upon a pro forma annualized estimate of EBITDA prepared
by the Borrower, which, together with the assumptions upon which such
estimate is made is set forth on Schedule II to EXHIBIT H.
"Applicable Commitment Percentage" means, with respect to each
Lender at any time, a fraction, the numerator of which shall be such
Lender's Revolving Credit Commitment and the denominator of which shall
be the Total Revolving Credit Commitment, which Applicable Commitment
Percentage for each Lender as of the Closing Date is as set forth in
EXHIBIT A; PROVIDED that the Applicable Commitment Percentage of each
Lender shall be increased or decreased to reflect any assignments to or
by such Lender effected in accordance with SECTION 13.1.
"Applicable Lending Office" means, for each Lender and for
each Type of Loan, the "Lending Office" of such Lender (or of an
affiliate of such Lender) designated for such Type of Loan on the
signature pages hereof or such other office of such Lender (or an
affiliate of such Lender) as such Lender may from time to time specify
to the Agent and the Borrower by written notice in accordance with the
terms hereof as the office by which its Loans of such Type are to be
made and/or maintained.
"Applicable Margin" means that percent per annum set forth
below, which shall be based upon the ratio of Consolidated Total
Indebtedness to Consolidated Total Value for the most recently ended
quarter period as specified below:
<TABLE>
<CAPTION>
Applicable
Margin
-------------------------------
Pricing Consolidated Total Indebtedness To Base Eurodollar
Level Consolidated Total Value Rate Rate
------- ---------------------------------- ---- -----------
<S> <C> <C> <C>
I. Less than or equal to .25 to 1.00 .000% 1.250%
II. Less than or equal to .35 to 1.00 but .000% 1.500%
greater than .25 to 1.00
III. Less than or equal to .40 to 1.00 but .250% 1.750%
greater than .35 to 1.00
IV. Less than or equal to .50 to 1.00 but .500% 2.000%
greater than .40 to 1.00 *
</TABLE>
* If greater than .50 to 1.00, the Applicable Margin shall be Pricing Level IV
plus the Default Rate.
3
<PAGE> 11
; provided, however, that if CPV shall receive a rating from Standard &
Poor's and/or Moody's with respect to its senior, unsecured debt
obligations (a "Rating"), the Applicable Margin shall be that percent
per annum set forth below opposite the lower of such ratings:
<TABLE>
<CAPTION>
Applicable
Margin
------------------------------
Pricing Base Eurodollar
Level Rating Rate Rate
- ----- ------ ---- ----------
<S> <C> <C> <C>
I. Greater than or equal to .000% 1.125%
BBB+/Baa1
II. Greater than or equal to BBB/Baa2 .000% 1.250%
but less than BBB+/Baa1
III. Greater than or equal to BBB-/Baa3 .125% 1.375%
but less than BBB/Baa2
IV. Less than BBB-/Baa3 .500% 2.000%
</TABLE>
The Applicable Margin shall be established at the end of each fiscal
quarter of CPV (each, a "Determination Date"). Any change in the
Applicable Margin following each Determination Date shall be determined
either (i) based upon the computations set forth in the Compliance
Certificate furnished to the Agent pursuant to SECTION 9.1(A)(II) and
SECTION 9.1(B)(II), subject to review and approval of such computations
by the Agent, and shall be effective commencing on the first Business
Day following the date such certificate is received until the first
Business Day following the date on which a new certificate is delivered
or is required to be delivered, whichever shall first occur; PROVIDED
HOWEVER, if the Borrower shall fail to deliver any such Compliance
Certificate within the time period required by SECTION 9.1, then the
Applicable Margin shall be that shown for Pricing Level IV until the
appropriate Compliance Certificate is so delivered or (ii) the first
Business Day following a change in its Rating which would result in the
change in the Applicable Margin. From the Closing Date to the first
Determination Date, the Applicable Margin shall be that shown for
Pricing Level I.
"Applicable Unused Fee" means (i) .250% per annum for any day
that the sum of the Revolving Credit Outstandings (without giving
effect to Swing Line Outstandings) and Letter of Credit Outstandings as
of the close of business on such day equals or exceeds 50% of the Total
Revolving Credit Commitment, and (ii) .375% per annum for any day that
the sum of the Revolving Credit Outstandings (without giving effect to
Swing Line
4
<PAGE> 12
Outstandings) and Letter of Credit Outstandings as of the close of
business on such day is less than 50% of the Total Revolving Credit
Commitment.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of
Credit.
"Appraisal Requirements" means, collectively, those standards,
policies, requirements and provisions regarding valuation of Pledged
Properties set forth in SCHEDULE 4.4, as it may be amended from time to
time.
"Appraised Value" means, with respect to any Pledged Property,
the lesser of its (i) Leased Fee Value and (ii) Fee Simple Value, as
determined by a Qualified Appraiser.
"Assessment Rate" means, for any day, the annual assessment
rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) which
is payable by NationsBank to the Federal Deposit Insurance Corporation
(or any successor) for deposit insurance for Dollar time deposits with
NationsBank at the Principal Office as determined by NationsBank. The
Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of EXHIBIT B (with blanks appropriately filled
in) delivered to the Agent in connection with an assignment of a
Lender's interest under this Agreement pursuant to SECTION 13.1.
"Assignment of Leases" means, collectively, the Assignments of
Leases from CPV or any Subsidiary to the Agent for the benefit of the
Lenders pursuant to which CPV or any Subsidiary has assigned its rights
in the Security Leases to the Agent.
"Authorized Representative" means any Person expressly
designated by the Borrower (or the appropriate committee thereof) as an
Authorized Representative of the Borrower, as set forth from time to
time in a certificate in the form of EXHIBIT C.
"Base Rate" means, for any day, the rate per annum equal to
the sum of (a) the higher of (i) the Federal Funds Rate for such day
plus one-half of one percent (0.5%) and (ii) the Prime Rate for such
day plus (b) the Applicable Margin. Any change in the Base Rate due to
a change in the Prime Rate or the Federal Funds Rate shall be effective
on the effective date of such change in the Prime Rate or Federal Funds
Rate.
"Base Rate Loan" means a Loan for which the rate of interest
is determined by reference to the Base Rate.
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<PAGE> 13
"Base Rate Refunding Loan" means a Base Rate Loan or Swing
Line Loan made either to (i) satisfy Reimbursement Obligations arising
from a drawing under a Letter of Credit or (ii) pay NationsBank in
respect of Swing Line Outstandings.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrower's Account" means a demand deposit account number
375-104-2327 or any successor account with the Agent, which may be
maintained at one or more offices of the Agent or an agent of the
Agent.
"Borrowing Base" means, as of the date of determination
thereof, the lesser of (i) 45% of the Historical Cost of all Pledged
Properties in the Pledge Pool or (ii) 45% of the Appraised Value of all
Pledged Properties in the Pledge Pool.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility or a Swing Line Loan, in the forms of EXHIBITS D-1 AND D-2,
respectively.
"Business Day" means, (i) with respect to any Base Rate Loan,
any day which is not a Saturday, Sunday or a day on which banks in the
States of New York, Florida and North Carolina are authorized or
obligated by law, executive order or governmental decree to be closed
and, (ii) with respect to any Eurodollar Rate Loan, any day which is a
Business Day, as described above, and on which the relevant
international financial markets are open for the transaction of
business contemplated by this Agreement in London, England, New York,
New York, Miami, Florida and Charlotte, North Carolina.
"CD Rate" means, for any Swing Line Loan which bears interest
at the Adjusted CD Rate, the most recent weekly average dealer offering
rate for negotiable certificates of deposit with a three-month maturity
in the secondary market as published in the most recent Federal Reserve
System publication entitles "Select Interest Rates" published weekly on
Form H.15 as of the date hereof, or any successor publication thereof,
or if the foregoing publication or any successor or substitute thereof
shall not be published by the Federal Reserve System for any week, then
the weekly offering rate determined by NationsBank on the basis of
quotations for such certificates received by it from three certificate
of deposit dealers of recognized standing. Each change in the CD Rate
shall be effective on the date thereof, without notice to the Borrower.
"Capital Expenditures" means, with respect to CPV and its
Subsidiaries, for any period the SUM of (without duplication) (i) all
expenditures (whether paid in cash or accrued as liabilities) by CPV or
any Subsidiary during such period for items that would be classified as
"property, plant or equipment" or comparable items on the consolidated
balance sheet of CPV and its Subsidiaries, including without limitation
all transactional costs incurred in connection with such expenditures
provided the same have been
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<PAGE> 14
capitalized, excluding, however, the amount of any Capital Expenditures
paid for with proceeds of casualty insurance as evidenced in writing
and submitted to the Agent together with any compliance certificate
delivered pursuant to SECTION 9.1(A) or (B), and (ii) with respect to
any Capital Lease entered into by CPV or any Subsidiary during such
period, the present value of the lease payments due under such Capital
Lease over the term of such Capital Lease applying a discount rate
equal to the interest rate provided in such lease (or in the absence of
a stated interest rate, that rate used in the preparation of the
financial statements described in SECTION 9.1(A)), all the foregoing in
accordance with GAAP applied on a Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Cash Available for Distribution" means Funds from Operations,
adjusted (a) without giving effect to any changes in working capital
resulting from changes in current assets and current liabilities (which
changes are not anticipated to be material) or the amount of cash
estimated to be used for (i) development, acquisition or other
activities and (ii) financing activities, (b) for certain known events
and/or contractual commitments that may have occurred during the period
but would not have been in effect for the full Fiscal Year and (c) for
certain non-GAAP adjustments consisting of an estimate of amounts
anticipated for recurring tenant improvements and capital expenditures.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) either (A) becomes
the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act ), directly or indirectly, of Voting Stock of CPV
(or securities convertible into or exchangeable for such
Voting Stock) representing 10% or more of the combined voting
power of all Voting Stock of CPV (on a fully diluted basis) or
(B) otherwise has the ability, directly or indirectly, to
elect a majority of the board of trustees of CPV;
(ii) during any period of up to 24 consecutive
months, commencing on the Closing Date, individuals who at the
beginning of such 24-month period were trustees of CPV shall
cease for any reason (other than the death, disability or
retirement of an officer of CPV that is serving as a trustee
at such time so long as another officer of CPV replaces such
Person as a trustee) to constitute a majority of the board of
trustees of CPV;
(iii) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon
consummation thereof, will result in its or their acquisition
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<PAGE> 15
of the power to exercise, directly or indirectly, a
controlling influence on the management or policies of the
Borrower;
(iv) any Person other than CPV shall become the
general partner of the Borrower;
(v) CPV shall at any time be the beneficial owner,
directly or indirectly, of less than 66 2/3% of the
Partnership Units of the Borrower; or
(vi) CPT Limited Partner Inc. shall own less than 1%
of the Partnership Units of the Borrower.
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, CPV, the Lenders and the Agent and on which
the conditions set forth in SECTION 7.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
"Collateral" means, collectively, all property of CPV, the
Borrower, any Subsidiary or any other Person in which the Agent or any
Lender is granted a Lien as security for all or any portion of the
Obligations under any Security Instrument.
"Compliance Certificate" means a certificate of an Authorized
Representative demonstrating compliance with the covenants contained in
SECTIONS 10.1, 10.3, 10.5(F)-(H), 10.7(E), 10.9 AND 10.18, as of the
date of such certificate, substantially in the form of EXHIBIT H.
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the audited financial statements of CPV referred to in SECTION
8.6(A).
"Consolidated Adjusted EBITDA" means, with respect to CPV and
its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the SUM of, without duplication, (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) taxes on income,
(iv) amortization, and (v) depreciation, all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis LESS the amount of actual cash expenditures by CPV and its
Subsidiaries for maintenance-related Capital Expenditures during such
Four-Quarter Period; PROVIDED, however, with respect to a Qualifying
Property that is not owned by CPV, the Borrower or any Subsidiary for
such entire Four-Quarter Period, Consolidated Adjusted EBITDA shall be
based on Annualized EBITDA for such Qualifying Property; PROVIDED
further, however, that with respect to any Acquisition, Consolidated
Adjusted EBITDA includes the results of operations of such
8
<PAGE> 16
Person or assets so acquired, which amounts shall be determined on a
historical pro forma basis as if such Acquisition had been consummated
as a "pooling of interests".
"Consolidated Interest Coverage Ratio" means, as of the date
of computation thereof, the ratio of (i) Consolidated Adjusted EBITDA
(determined as at such date) to (ii) Consolidated Interest Expense (for
the Four-Quarter Period ending on (or most recently ended prior to)
such date) plus dividends paid in respect of any preferred stock of the
Borrower during such Four-Quarter Period.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of CPV and
its Subsidiaries, including without limitation (i) the current
amortized portion of debt discounts to the extent included in gross
interest expense, (ii) the current amortized portion of all fees
(including fees payable in respect of any Swap Agreement) payable in
connection with the incurrence of Indebtedness to the extent included
in gross interest expense, and (iii) the portion of any payments made
in connection with Capital Leases allocable to interest expense, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of CPV and its Subsidiaries
(including payments received by CPV and its Subsidiaries of (i)
interest income, and (ii) dividends and distributions made in the
ordinary course of their businesses by Persons in which investment is
permitted pursuant to this Agreement and not related to an
extraordinary event, less all operating and non-operating expenses of
CPV and its Subsidiaries including taxes on income all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis; but excluding (for all purposes other than compliance with
SECTION 10.1(A) hereof as income: (i) net gains on the sale, conversion
or other disposition of capital assets, (ii) net gains on the
acquisition, retirement, sale or other disposition of capital stock and
other securities of CPV or any Subsidiary, (iii) net gains on the
collection of proceeds of life insurance policies, (iv) any write-up of
any asset, and (v) any other net gain or credit of an extraordinary
nature as determined in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Net Worth" means, as of any date on which the
amount thereof is to be determined, Consolidated Shareholders' Equity
minus (without duplication of deductions in respect of items already
deducted in arriving at surplus and retained earnings) all reserves
(other than contingency reserves not allocated to any particular
purpose), including without limitation reserves for depreciation,
depletion, amortization, obsolescence, deferred income taxes, insurance
and inventory valuation, all as determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Secured Indebtedness" means, with respect to CPV
and its Subsidiaries, as of any date on which the amount thereof is to
be determined, all Indebtedness of CPV and its Subsidiaries at such
date that is secured by a Lien on any
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<PAGE> 17
property of CPV or any Subsidiary whether or not such Indebtedness is
assumed, all determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis.
"Consolidated Shareholders' Equity" means, as of any date on
which the amount thereof is to be determined, the sum of the following
in respect of CPV and its Subsidiaries (determined on a consolidated
basis and excluding any upward adjustment after the Closing Date due to
revaluation of assets): (i) the amount of issued and outstanding share
capital, plus (ii) the amount of additional paid-in capital and
retained earnings (or, in the case of a deficit, minus the amount of
such deficit), plus (iii) the amount of any foreign currency
translation adjustment (if positive, or, if negative, minus the amount
of such translation adjustment), minus (iv) the amount of any treasury
stock, all as determined in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Total Capitalization" means, as of any date on
which the amount thereof is to be determined, the sum of Consolidated
Total Indebtedness plus Consolidated Shareholders' Equity.
"Consolidated Total Indebtedness" means, with respect to CPV
and its Subsidiaries, as of any date on which the amount thereof is to
be determined, the SUM of (i) Indebtedness of CPV and its Subsidiaries
at such date (other than Indebtedness permitted under SECTION 10.5(E)
and (ii) the face amount of all outstanding Letters of Credit issued
for the account of CPV or any Subsidiary and all obligations arising
under such Letters of Credit, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Total Liabilities" means all liabilities of CPV
and its Subsidiaries (including all Indebtedness), all determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Total Value" means, as of any date on which the
amount thereof is to be determined, the lesser of (a) the Historical
Cost of the Pledged Properties in the Pledge Pool or (b) the Appraised
Value of the Pledged Properties in the Pledge Pool.
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof,
would be required) to be included in the financial statements
(including footnotes) of such Person in accordance with GAAP applied on
a Consistent Basis, including Statement No. 5 of the Financial
Accounting Standards Board, and any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including obligations of such
Person however incurred:
(1) to purchase such Indebtedness or other obligation
or any property or assets constituting security therefor;
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<PAGE> 18
(2) to advance or supply funds in any manner (i) for
the purchase or payment of such Indebtedness or other
obligation, or (ii) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement
condition of the primary obligor;
(3) to grant or convey any lien, security interest,
pledge, charge or other encumbrance on any property or assets
of such Person to secure payment of such Indebtedness or other
obligation;
(4) to lease property or to purchase securities or
other property or services primarily for the purpose of
assuring the owner or holder of such Indebtedness or
obligation of the ability of the primary obligor to make
payment of such Indebtedness or other obligation; or
(5) otherwise to assure the owner of the Indebtedness
or such obligation of the primary obligor against loss in
respect thereof.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to SECTION 2.8 hereof of a Eurodollar Rate Loan
of one Type as a Eurodollar Rate Loan of the same Type from one
Interest Period to the next Interest Period.
"Contract Party" means a Person who is a Governmental
Authority and who contracts with Wackenhut Corrections Corporation or
another Lease Party or the Borrower with respect to the management and
operation of a Pledged Property.
"Convert", "Conversion", and "Converted" shall refer to a
conversion pursuant to SECTION 2.8 or ARTICLE III of one Type of Loan
into another Type of Loan.
"Credit Party" means, collectively, the Borrower and each
Guarantor.
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate
of two percent (2%) above the Eurodollar Rate applicable to such Loan,
and thereafter at a rate of interest per annum which shall be two
percent (2%) above the Base Rate, (ii) with respect to Base Rate Loans
and Reimbursement Obligations, at a rate of interest per annum which
shall be two percent (2%) above the Base Rate and (iii) in any case,
the maximum rate permitted by applicable law, if lower.
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<PAGE> 19
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States
of America.
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of a
Lender, and (iii) any other Person approved by the Agent and, unless an
Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with SECTION 13.1, the Borrower,
such approval not to be unreasonably withheld or delayed by the
Borrower or the Agent, it being agreed that the Borrower may withhold
its approval if as a result of such assignment the Borrower would incur
increased costs under SECTION 6.5; PROVIDED, HOWEVER, that neither the
Borrower nor an affiliate of the Borrower shall qualify as an Eligible
Assignee.
"Eligible Property" means, as of any date of determination,
any Qualifying Property, including the real property upon which it is
situated, in which the Borrower or any Guarantor has a fee simple
interest or a leasehold interest for a term exceeding that of the
related Security Lease, and which, as evidenced in an Eligible Property
Compliance Certificate, is:
(a) located in the United States or one of its
territories; and
(b) unencumbered by any Liens, encumbrances,
easements, restrictions or other matters of
record except for Permitted Encumbrances and
the related Security Lease; and
(c) free of structural defects and has passed a
structural inspection by an architect or
engineer engaged by the Agent, the results
of which have been detailed in writing and
are satisfactory to the Agent in its
reasonable discretion; and
(d) in compliance with all Environmental Laws as
evidenced by Phase I environmental
assessment (and, if required or recommended
by the results of the Phase I environmental
assessment, a Phase II environmental
assessment) in form and substance
satisfactory to the Agent, addressed to the
Agent, and (i) dated not earlier than six
months prior to the date of such Eligible
Property Compliance Certificate or (ii)
supplemented by a "bring-down" letter dated
not earlier than six months prior to the
date of such Eligible Property Compliance
Certificate if such environmental assessment
is dated an earlier date; and
(e) subject to a Security Lease containing terms
and provisions acceptable to the Agent; and
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(f) in full compliance with the terms and
conditions contained in the related Security
Lease, which Security Lease is with a Lease
Party; and
(g) in full compliance with the material terms
and conditions contained in the management
or operating agreement, if any, relating to
such facility, between such Lease Party and
the related Contract Party; or
(h) otherwise acceptable to the Required Lenders
in their sole and absolute discretion.
"Eligible Property Compliance Certificate" means a certificate
of the Borrower, dated the date of submission to the Agent of the items
required thereby, evidencing the compliance by a particular Eligible
Property with items (a) through (g) of the definition of "Eligible
Property", or, with respect to an Eligible Property qualifying as such
under item (h) of the definition of "Eligible Property," evidencing
compliance with those items required by the Required Lenders, in the
form of EXHIBIT L.
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized under
the laws of any state of the United States of America or under
the laws of any other nation, payable in the United States of
America, expressed to mature not later than 92 days following
the date of issuance thereof and rated in an investment grade
rating category by S&P and Moody's;
(c) interest bearing demand or time deposits issued
by any Lender or certificates of deposit maturing within one
year from the date of issuance thereof and issued by a bank or
trust company organized under the laws of the United States or
of any state thereof having capital surplus and undivided
profits aggregating at least $400,000,000 and being rated "A-"
or better by S&P or "A-3" or better by Moody's;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
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<PAGE> 21
(g) shares of mutual funds which invest in
obligations described in paragraphs (a) through (f) above, the
shares of which mutual funds are at all times rated "AAA" by
S&P;
(h) tax-exempt or taxable adjustable rate preferred
stock issued by a Person having a rating of its long term
unsecured debt of "A-" or better by S&P or "A-3" or better by
Moody's; and
(i) asset-backed remarketed certificates of
participation representing a fractional undivided interest in
the assets of a trust, which certificates are rated at least
"A-1" by S&P and "P-1" by Moody's.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of the Borrower, CPV or any of its or their ERISA Affiliates
or is assumed by the Borrower, CPV or any of its or their ERISA
Affiliates in connection with any Acquisition or (ii) has at any time
been maintained for the Borrower, CPV or any current or former ERISA
Affiliate.
"Environmental Laws" means any federal, state or local
statute, law, ordinance, code, rule, regulation, order, decree, permit
or license regulating, relating to, or imposing liability or standards
of conduct concerning, any environmental matters or conditions,
environmental protection or conservation, including without limitation,
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended; the Superfund Amendments and Reauthorization
Act of 1986, as amended; the Resource Conservation and Recovery Act, as
amended; the Toxic Substances Control Act, as amended; the Clean Air
Act, as amended; the Clean Water Act, as amended; together with all
regulations promulgated thereunder, and any other "Superfund" or
"Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower and CPV, means
any Person or trade or business which is a member of a group which is
under common control with the Borrower or CPV, who together with the
Borrower or CPV, is treated as a single employer within the meaning of
Section 414(b) and (c) of the Code.
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
Rate ------------------------ Margin
1- Reserve Requirement
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<PAGE> 22
"Event of Default" means any of the occurrences set forth as
such in SECTION 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Facility Guaranty" means the guaranty by CPV of the
Borrower's Obligations set forth in ARTICLE V and each Guaranty
Agreement in the form of EXHIBIT I between one or more Guarantors and
the Agent for the benefit of the Agent and the Lenders, delivered as of
the Closing Date and otherwise pursuant to SECTION 9.19, as the same
may be amended, modified or supplemented.
"Facility Termination Date" means such date as all of the
following shall have occurred: (a) the Borrower shall have permanently
terminated the Revolving Credit Facility by payment in full of all
Revolving Credit Outstandings and Letter of Credit Outstandings,
together with all accrued and unpaid interest thereon, except for such
issued and undrawn Letters of Credit as have been fully cash
collateralized in a manner consistent with the terms of SECTION
12.1(L)(B), (b) all Swap Agreements shall have been terminated, expired
or cash collateralized, (c) all Revolving Credit Commitments and Letter
of Credit Commitments shall have terminated or expired and (d) the
Borrower shall have fully, finally and irrevocably paid and satisfied
in full all Obligations (other than Obligations consisting of
continuing indemnities and other contingent Obligations of the Borrower
or any Guarantor that may be owing to the Lenders pursuant to the Loan
Documents and expressly survive termination of this Agreement);
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; PROVIDED
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate
charged to the Agent (in its individual capacity) on such day on such
transactions as determined by the Agent.
"Fee Simple Value" means the appraised value of a property for
which the owner has absolute ownership, unencumbered by any other
interest or estate subject only to the limitations imposed by the
governmental powers of taxation, eminent domain, police power and
escheat.
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<PAGE> 23
"Fiscal Year" means the twelve month fiscal period of CPV and
its Subsidiaries commencing on January 1 of each calendar year and
ending on December 31 of each calendar year.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of CPV and its Subsidiaries, taken together as one
accounting period.
"Funds from Operations" means Consolidated Net Income or loss,
excluding significant non-recurring items, gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization
on real estate assets, and after adjustments for unconsolidated
partnerships and joint ventures.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants
or which have other substantial authoritative support and are
applicable in the circumstances as of the date of a report.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government.
"Guaranties" means all obligations of CPV or any Subsidiary
directly or indirectly guaranteeing, or in effect guaranteeing, any
Indebtedness or other obligation of any other Person.
"Guarantors" means, at any date, CPV, CPT Limited Partner,
Inc. and each Subsidiary now or hereafter existing, which has executed
a Facility Guaranty as required by SECTION 9.19.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or
material (including without limitation petroleum products,
asbestos-containing materials and lead), the generation, handling,
storage, transportation, disposal, treatment, release, discharge or
emission of which is subject to any Environmental Law.
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<PAGE> 24
"Historical Cost" means with respect to any Pledged Property,
the SUM of (i) the purchase price of such Pledged Property, PLUS (ii)
reasonable pre-acquisition due diligence expenditures, PLUS (iii)
reasonable and customary closing costs and real estate commissions paid
to third parties with respect to such Pledged Property, PLUS (iv) any
other reasonable and customary expenses incurred in connection with the
acquisition of such Pledged Property, all incurred by the Borrower or
other Credit Party with respect to such Pledged Property and all
verified in writing to the Agent; PROVIDED, HOWEVER, that the SUM of
the amounts described in (ii), (iii) and (iv) above may not exceed 5%
of the amount described in (i) above; PROVIDED, FURTHER, that with
respect to any Pledged Property purchased from Wackenhut Corrections
Corporation the Historical Cost of such Pledged Property may not exceed
105% of the purchase price paid to Wackenhut Corrections Corporation,
as verified in writing to the Agent.
"Increase Amount" means an amount of up to $50,000,000 or such
lesser amount as the Borrower, the Guarantors, the Agent and a lender
or lenders may agree by execution of one or more Amendment Agreements
in the form of EXHIBIT P.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property or arising under Rate
Hedging Obligations, all indebtedness secured by any Lien on the
property of such Person whether or not such indebtedness is assumed,
all liability of such Person by way of endorsements (other than for
collection or deposit in the ordinary course of business), all
Contingent Obligations and Guaranties, that portion of obligations with
respect to Capital Leases and other items which in accordance with GAAP
are required to be classified as a liability on a balance sheet; and
any other items which are treated as debt by Moody's or S&P but
excluding all accounts payable in the ordinary course of business so
long as payment therefor is due within one year; provided that in no
event shall the term Indebtedness include surplus and retained
earnings, lease obligations (other than pursuant to Capital Leases),
reserves for deferred income taxes and investment credits, other
deferred credits or reserves.
"Indebtedness for Money Borrowed" means with respect to any
Person, without duplication, all indebtedness in respect of money
borrowed, including without limitation all Capital Leases and the
deferred purchase price of any property or asset, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money (including conditional sales or similar title
retention agreements), other than trade payables incurred in the
ordinary course of business.
"Initial Properties" means those properties identified as such
in SCHEDULE 4.3.
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the rate per
annum (rounded upwards, if necessary), to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00
A.M.
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<PAGE> 25
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason
such rate is not available, the term "Interbank Offered Rate" shall
mean, with respect to any Eurodollar Rate Loan for the Interest Period
applicable thereto, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such
Interest Period, PROVIDED, HOWEVER; if more than one rate is specified
on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to
the nearest 1/100 of 1%).
"Interest Period" means, for each Eurodollar Rate Loan, a
period commencing on the date such Eurodollar Rate Loan is made or
Converted and ending, at the Borrower' option, on the date one, two,
three, six or nine months thereafter as notified to the Agent by the
Authorized Representative three (3) Business Days prior to the
beginning of such Interest Period; PROVIDED, that,
(i) if the Authorized Representative fails to notify
the Agent of the length of an Interest Period three (3)
Business Days prior to the first day of such Interest Period,
the Eurodollar Rate Loan for which such Interest Period was to
be determined shall be deemed to be a Base Rate Loan as of the
first day thereof;
(ii) if an Interest Period for a Eurodollar Rate Loan
would end on a day which is not a Business Day, such Interest
Period shall be extended to the next Business Day (unless such
extension would cause the applicable Interest Period to end in
the succeeding calendar month, in which case such Interest
Period shall end on the next preceding Business Day);
(iii) any Interest Period which 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 a calendar month;
(iv) no Interest Period shall extend past the Stated
Termination Date; and
(v) there shall not be more than eight (8) Interest
Periods in effect on any day.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the
election of a subsequent Interest Period for any Eurodollar Rate Loan
or the Conversion of any Eurodollar Rate Loan into a Base Rate Loan or
the Conversion of any Base Rate Loan into a Eurodollar Rate Loan, in
the form of EXHIBIT E.
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<PAGE> 26
"Issuing Bank" means initially NationsBank and thereafter any
Lender which is successor to NationsBank as issuer of Letters of Credit
under ARTICLE III.
"LC Account Agreement" means the LC Account Agreement dated as
of the date hereof between the Borrower and the Agent, as amended,
modified or supplemented from time to time.
"Lease Party" means any Person who is a lessee of a Pledged
Property pursuant to a Security Lease; PROVIDED that any such Person,
other than a Pre-Approved Lessee, must be approved by the Required
Lenders in their discretion; PROVIDED, further, that (i) no Lease Party
that is not a Pre-Approved Lessee shall be a lessee with respect to
Pledged Properties having Appraised Values aggregating more than 20% of
Consolidated Total Value, and (ii) no Person that is not a Pre-
Approved Lessee shall be approved by the Required Lenders if such
approval would result in the aggregate Appraised Value of all Pledged
Properties which are leased to Persons other than Pre-Approved Lessees
exceeding 50% of Consolidated Total Value
"Lease Party Documents" means, with respect to any Pledged
Property constituting a part of the Pledge Pool, an Estoppel
Certificate in the form attached hereto as EXHIBIT M, a Consent to
Assignment in the form attached hereto as EXHIBIT N, and a
Subordination, Non-Disturbance and Attornment Agreement in the form
attached hereto as EXHIBIT O.
"Leased Fee Value" means the appraised value of a property for
which the owner has conveyed by lease the rights of use and occupancy
of such property to others.
"Letter of Credit" means a standby letter of credit issued by
the Issuing Bank pursuant to ARTICLE III hereof for the account of the
Borrower in favor of a Person advancing credit or securing an
obligation on behalf of such Borrower.
"Letter of Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to acquire Participations in
respect of Letters of Credit and Reimbursement Obligations up to an
aggregate amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Letter of Credit
Commitment as the same may be increased or decreased from time to time
pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in
ARTICLE III hereof providing for the issuance by the Issuing Bank for
the account of the Borrower of Letters of Credit in an aggregate stated
amount at any time outstanding not exceeding the Total Letter of Credit
Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount available to be drawn under all
Letters of Credit plus Reimbursement Obligations then outstanding.
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<PAGE> 27
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, CPV and any Subsidiary
shall be deemed to be the owner of any property which it has acquired
or holds subject to a conditional sale agreement, financing lease, or
other arrangement pursuant to which title to the property has been
retained by or vested in some other Person for security purposes.
"Loan" or "Loans" means any Revolving Loan made under the
Revolving Credit Facility and any such Swing Line Loan made under the
Swing Line Facility.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the Lease Party Documents, the
Owner's Affidavits delivered for each Pledged Property, the LC Account
Agreement, the Applications and Agreements for Letters of Credit, and
all other instruments and documents heretofore or hereafter executed or
delivered to or in favor of any Lender or the Agent in connection with
the Loans made and transactions contemplated under this Agreement, as
the same may be amended, supplemented or replaced from the time to
time.
"Majority Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating at least 51% of
the aggregate Credit Exposures of all the Lenders on such date. For
purposes of the preceding sentence, the amount of the "CREDIT EXPOSURE"
of each Lender shall be equal at all times (a) other than following the
occurrence and during the continuance of an Event of Default, to the
sum of its Revolving Credit Commitment, and (b) following the
occurrence and during the continuance of an Event of Default, to the
sum of (i) the amount of such Lender's Applicable Commitment Percentage
of Revolving Credit Outstandings plus (ii) the amount of such Lender's
Applicable Commitment Percentage of Letter of Credit Outstandings plus
(iii) the amount of such Lender's Applicable Commitment Percentage of
Swing Line Outstandings; PROVIDED that, for the purpose of this
definition only, (A) if any Lender shall have failed to fund its
Applicable Commitment Percentage of any Advance, the Revolving Credit
Commitment of such Lender shall be deemed reduced by the amount it so
failed to fund for so long as such failure shall continue and such
Lender's Credit Exposure attributable to such failure shall be deemed
held by any Lender making more than its Applicable Commitment
Percentage of such Advance to the extent it covers such failure, (B) if
any Lender shall have failed to pay to the Issuing Bank upon demand its
Applicable Commitment Percentage of any drawing under any Letter of
Credit resulting in an outstanding Reimbursement Obligation, such
Lender's Credit Exposure attributable to such Letter of Credit
Outstandings shall be deemed to be held by the Issuing Bank and (C) if
any Lender shall have failed to pay to NationsBank its Applicable
Commitment Percentage of any Swing Line Loan, such Lender's Credit
Exposure attributable to all Swing Line Outstandings shall be deemed to
be held by NationsBank for purposes of this definition.
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<PAGE> 28
"Market Equity Capitalization" means, as of any date on which
the amount thereof is to be determined, the sum of the following in
respect of the Borrower and CPV: (i) the fair market value of the
issued and outstanding common stock of CPV, based upon the average
closing price of such stock for the preceding twenty (20) Business
Days, (ii) the fair market value of the issued and outstanding
preferred stock of CPV, based upon the average closing price of such
stock for the preceding twenty (20) Business Days and (iii) the value
of the Partnership Units of the Borrower if each such Partnership Unit
were converted to a share of the common stock of CPV, based upon the
average closing price of the outstanding common stock of CPV for the
preceding 20 Business Days.
"Master Lease" means that certain Master Agreement to Lease
dated April 28, 1998 between the Borrower, as landlord, and Wackenhut,
as tenant, as the same may be amended, supplemented or replaced from
time to time, as approved by the Agent.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations, condition or prospects,
financial or otherwise, of CPV and its Subsidiaries taken as a whole,
(ii) the ability of any Credit Party to pay or perform its respective
obligations, liabilities and indebtedness under the Loan Documents as
such payment or performance becomes due in accordance with the terms
thereof, or (iii) the rights, powers and remedies of the Agent or any
Lender under any Loan Document or the validity, legality or
enforceability thereof.
"Mortgage" means, collectively, each of the instruments
entitled Credit Line Deed of Trust, Mortgage, Open-End Mortgage, Deed
of Trust, Deed to Secure Debt, Leasehold Mortgage, Open-End Leasehold
Mortgage, Leasehold Deed of Trust, Leasehold Deed to Secure Debt,
Security Agreement, Fixture Filing, Assignment of Leases and Rents and
Financing Statement in substantially the form of EXHIBIT K-1, in the
case of a lease to Wackenhut or a subsidiary of Wackenhut, or EXHIBIT
K-2 in all other cases, and such other mortgages, deeds of trust and
deeds to secure debt executed by the Borrower, CPV, or any other
Guarantor granting a Lien to the Agent (or a trustee for the benefit of
the Agent) for the benefit of the Lenders in the Pledged Properties, as
such documents may be amended, modified, supplemented or restated from
time to time.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) Fiscal Years.
"Municipal Obligations" means general obligations issued by,
and supported by the full taxing authority of, any state of the United
States of America or of any municipal corporation or other public body
organized under the laws of any such state which are rated in the
highest investment rating category by both S&P and Moody's.
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<PAGE> 29
"NAREIT" means the National Association of Real Estate Trusts.
"NationsBank" means NationsBank, National Association and its
successors.
"Net Proceeds" (a) from any equity offering means cash
payments received therefrom as and when received, net of all legal,
accounting, banking and underwriting fees and expenses, commissions,
discounts and other issuance expenses incurred in connection therewith
and all taxes required to be paid or accrued as a consequence of such
issuance; and (b) from any disposition of a Pledged Property means cash
payments received by the Borrower or other Credit Party therefrom
(including any cash payments received pursuant to any note or other
debt security received in connection with such disposition) as and when
received, net of (i) all legal fees and expenses and other commissions
and fees and expenses paid to third parties and incurred in connection
therewith and (ii) all taxes required to be paid or accrued as a
consequence of such sale.
"NMS" means NationsBanc Montgomery Securities LLC and its
successors.
"Non-Conforming Investments" means any of the following:
(a) undeveloped real property;
(b) non-income producing real property; and
(c) real property that is not a Qualifying
Property.
"Non-Recourse Indebtedness" means Indebtedness for which the
recourse for payment is limited to the asset securing such
Indebtedness, with no liability of any Person other than the maker of
such Indebtedness for any deficiency between the proceeds derived from
liquidation of such asset and the amount owed.
"Notes" means, collectively, the Revolving Notes and the Swing
Line Notes.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Revolving Loans and Swing Line Loans as evidenced by
the Notes, (ii) the Reimbursement Obligations and otherwise in respect
of the Letters of Credit, (iii) all liabilities of the Borrower to any
Lender or an affiliate of a Lender which arise under a Swap Agreement,
and (iv) the payment and performance of all other obligations,
liabilities and Indebtedness of the Borrower to the Lenders, the Agent
or NMS hereunder, under any one or more of the other Loan Documents or
with respect to the Loans.
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement,
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<PAGE> 30
partnership agreement, limited partnership agreement or other
applicable documents relating to the operation, governance or
management of such entity.
"Organizational Action" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, any corporate, organizational or partnership
action (including any required shareholder, member or partner action),
or other similar official action, as applicable, taken by such entity.
"Organizational Documents" means with respect to any
corporation, limited liability company, partnership, limited
partnership, limited liability partnership or other legally authorized
incorporated or unincorporated entity, the articles of incorporation,
certificate of incorporation, articles of organization, certificate of
limited partnership or other applicable organizational or charter
documents relating to the creation of such entity.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings, Swing Line Outstandings, and Revolving Credit
Outstandings on such date.
"Participation" means, (i) with respect to any Lender (other
than the Issuing Bank) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the
liability of the Issuing Bank in respect of a Letter of Credit issued
by the Issuing Bank in accordance with the terms hereof and (ii) with
respect to any Lender (other than NationsBank) and a Swing Line Loan,
the extension of credit represented by the participation of such Lender
hereunder in the liability of NationsBank in respect of a Swing Line
Loan made by NationsBank in accordance with the terms hereof.
"Partnership Interests" shall have the meaning therefor
provided in the Pledge Agreement.
"Partnership Units" means with respect to the Borrower, and
with respect to each class of partnership, those units representing an
equal undivided factional share of each item of the Borrower's income,
gain and loss and in distribution of the Borrower's assets.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of the Borrower
or CPV or any of its or their ERISA Affiliates or is assumed by the
Borrower or CPV or any of its or their ERISA Affiliates in connection
with any Acquisition or (ii) has at any time been maintained for the
employees of the Borrower or CPV or any current or former ERISA
Affiliate.
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<PAGE> 31
"Permitted Encumbrances" means with respect to each Eligible
Property such title exceptions which are shown on the title commitment
for such Eligible Property and which have been reviewed and approved by
the Agent in its sole discretion.
"Person" means an individual, partnership, corporation,
limited liability company, limited liability partnership, trust,
unincorporated organization, association, joint venture or a government
or agency or political subdivision thereof.
"Pledge Agreement" means that certain Collateral Assignment of
Partnership Interests dated as of the date hereof between CPV and the
Agent for the benefit of the Agent and the Lenders, as hereafter
amended, supplemented or replaced from time to time.
"Pledge Pool" means, collectively, those Pledged Properties
identified as constituting the Pledge Pool on SCHEDULE 4.3 as it may be
amended or replaced from time to time.
"Pledged Property" or "Pledged Properties" means individually
or collectively as the context indicates, any Eligible Property or
Properties subject to the Mortgage.
"Pledged Stock" has the meaning given to such term in the
Pledge Agreement.
"Pre-Approved Lessee" means Wackenhut or a Governmental
Authority whose unsecured long-term Indebtedness is rated A or better
by S&P and Moody's.
"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation
or other public body organized under the laws of any such state which
are rated, based on the escrow, in the highest investment rating
category by both S&P and Moody's and which have been irrevocably called
for redemption and advance refunded through the deposit in escrow of
Government Securities or other debt securities which are (i) not
callable at the option of the issuer thereof prior to maturity, (ii)
irrevocably pledged solely to the payment of all principal and interest
on such obligations as the same becomes due and (iii) in a principal
amount and bear such rate or rates of interest as shall be sufficient
to pay in full all principal of, interest, and premium, if any, on such
obligations as the same becomes due as verified by a nationally
recognized firm of certified public accountants.
"Prime Rate" means the per annum rate of interest established
from time to time by NationsBank as its prime rate, which rate may not
be the lowest rate of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of NationsBank,
presently located at Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services, or such
other office and address as the Agent may from time to time designate.
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<PAGE> 32
"Qualified Appraiser" means an MAI appraiser selected by the
Agent.
"Qualifying Property" means any correctional or detention
facility or other improved real property used for any other purpose
approved by the Required Lenders as to which a final certificate of
occupancy has been issued by the applicable Governmental Authority, if
such real property is located in a jurisdiction where such certificates
are issued, or if not so located, an equivalent certificate relating to
such real property's fitness for occupancy or use as a correctional or
detention facility or other approved purpose, as applicable, has been
issued by the applicable Governmental Authority.
"Rate Hedging Obligations" means any and all obligations of
CPV or any Subsidiary, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts, warrants and
those commonly known as interest rate "swap" agreements; and (ii) any
and all cancellations, buybacks, reversals, terminations or assignments
of any of the foregoing.
"Registration Statement" means the Registration Statement of
CPV on Form S-11, Registration No. 333-46681, as filed by CPV with the
Securities and Exchange Commission on February 20, 1998, together with
any amendments thereto.
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"Regulatory Change" means any change effective after the
Closing Date in United States federal or state laws or regulations
(including Regulation D and capital adequacy regulations) or foreign
laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States federal or
state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with
the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy,
including those relating to "highly leveraged transactions," whether or
not having the force of law, and whether or not failure to comply
therewith would be unlawful and whether or not published or proposed
prior to the date hereof.
"Reimbursement Obligation" shall mean at any time, the
obligation of the Borrower with respect to any Letter of Credit to
reimburse the Issuing Bank and the Lenders to the extent of their
respective Participations (including by the receipt by the Issuing Bank
of
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<PAGE> 33
proceeds of Loans pursuant to SECTION 3.2) for amounts theretofore paid
by the Issuing Bank pursuant to a drawing under such Letter of Credit.
"REIT" means a real estate investment trust qualified for
treatment as such for federal income tax purposes under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended.
"Repurchase Agreement" means a repurchase agreement entered
into with any financial institution whose debt obligations or
commercial paper are rated "A" by either of S&P or Moody's or "A-1" by
S&P or "P-1" by Moody's.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating at least 662/3%
of the aggregate Credit Exposures of all the Lenders on such date. For
purposes of the preceding sentence, the amount of the "CREDIT EXPOSURE"
of each Lender shall be equal at all times to the sum of its Revolving
Credit Commitment; PROVIDED that, for the purpose of this definition
only, (A) if any Lender shall have failed to fund its Applicable
Commitment Percentage of any Advance, the Revolving Credit Commitment
of such Lender shall be deemed reduced by the amount it so failed to
fund for so long as such failure shall continue and such Lender's
Credit Exposure attributable to such failure shall be deemed held by
any Lender making more than its Applicable Commitment Percentage of
such Advance to the extent it covers such failure, (B) if any Lender
shall have failed to pay to the Issuing Bank upon demand its Applicable
Commitment Percentage of any drawing under any Letter of Credit
resulting in an outstanding Reimbursement Obligation, such Lender's
Credit Exposure attributable to such Letter of Credit Outstandings
shall be deemed to be held by the Issuing Bank and (C) if any Lender
shall have failed to pay to NationsBank its Applicable Commitment
Percentage of any Swing Line Loan, such Lender's Credit Exposure
attributable to all Swing Line Outstandings shall be deemed to be held
by NationsBank for purposes of this definition.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained
under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) by member banks of the
Federal Reserve System against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the
Eurodollar Rate is to be determined, or (ii) any category of extensions
of credit or other assets which include Eurodollar Rate Loans. The
Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of CPV or any of its Subsidiaries
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<PAGE> 34
(other than those payable or distributable solely to CPV, the Borrower
or to any Subsidiary other than an Unrestricted Subsidiary) now or
hereafter outstanding, except a dividend payable solely in shares of a
class of stock to the holders of that class; (b) any redemption,
conversion, exchange, retirement or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class
of stock of CPV or any of its Subsidiaries (other than those payable or
distributable solely to CPV) now or hereafter outstanding; (c) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of
stock of CPV or any of its Subsidiaries now or hereafter outstanding;
and (d) any issuance and sale of capital stock of any Subsidiary of CPV
(or any option, warrant or right to acquire such stock) other than to
CPV.
"Revolving Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to make Revolving Loans to the
Borrower up to an aggregate principal amount at any one time
outstanding equal to such Lender's Applicable Commitment Percentage of
the Total Revolving Credit Commitment.
"Revolving Credit Facility" means the facility described in
ARTICLE II hereof providing for Revolving Loans to the Borrower by the
Lenders in the aggregate principal amount of the Total Revolving Credit
Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Revolving Loans
then outstanding.
"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lenders'
obligations pursuant to SECTION 11.1 upon the occurrence of an Event of
Default, or (iii) such date as the Borrower may voluntarily and
permanently terminate the Revolving Credit Facility by payment in full
of all Revolving Credit Outstandings, Swing Line Outstandings and
Letter of Credit Outstandings and cancellation of all Letters of
Credit, together with all accrued and unpaid interest thereon.
"Revolving Loan" or "Revolving Loans" means any borrowing made
pursuant to an Advance under the Revolving Credit Facility.
"Revolving Notes" means the promissory notes of the Borrower
evidencing Revolving Loans executed and delivered to the Lenders
substantially in the form of EXHIBIT F-1.
"S&P" means Standard & Poor's Ratings Group, a division of the
McGraw-Hill Companies, Inc.
"Security Instruments" means, collectively, the Pledge
Agreement, the Mortgage, the Assignments of Leases, related UCC
financing statements and fixture filings and all other agreements,
instruments and other documents, whether now existing or hereafter in
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<PAGE> 35
effect, pursuant to which the Borrower or any Credit Party shall grant
or convey to the Agent or the Lenders a Lien in property as security
for all or any portion of the Obligations, as any of them may be
amended, modified or supplemented from time to time.
"Security Leases" means, collectively, those leases indicated
as such on SCHEDULE 4.3 as it may exist from time to time, which are
leases relating to Pledged Properties and subject to the Assignment of
Leases.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which the Borrower, CPV or
any Subsidiary is an "employer" as described in Section 4001(b) of
ERISA and which is not a Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including Contingent Obligations; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Stated Termination Date" means October 1, 2003.
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding voting stock or more than 50% of all
equity interests is owned directly or indirectly by CPV and/or by one
or more CPV's Subsidiaries.
"Swap Agreement" means one or more agreements between the
Borrower and any Person with respect to Indebtedness evidenced by any
or all of the Notes, on terms mutually acceptable to the Borrower and
such Person which agreements create Rate Hedging Obligations.
"Swing Line" means the revolving line of credit established by
NationsBank in favor of the Borrower pursuant to SECTION 2.14.
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"Swing Line Loans" means loans made by NationsBank to the
Borrower pursuant to SECTION 2.14.
"Swing Line Note" means the promissory note of the Borrower
evidencing Swing Line Loans executed and delivered to the Lenders
substantially in the form of EXHIBIT F-2.
"Swing Line Outstandings" means, as of any date of
determination, the aggregate principal amount of all Swing Line Loans
then outstanding.
"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of the Borrower, CPV or any of its or their ERISA
Affiliates 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 was
deemed such under Section 4068(f) of ERISA; or (iii) the termination of
a Pension Plan, the filing of a notice of intent to terminate a Pension
Plan or the treatment of a Pension Plan amendment as a termination
under Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) 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 (vi) the partial or complete withdrawal of the
Borrower, CPV or any of its or their ERISA Affiliates from a
Multiemployer Plan; or (vii) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA; or (viii) any event or
condition which results in the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (ix) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA.
"Total Letter of Credit Commitment" means an amount not to
exceed $10,000,000.
"Total Revolving Credit Commitment" means a principal amount
equal to (i) $100,000,000 or (ii) at such time or times as EXHIBIT A
hereto is amended by the entering into of an Amendment Agreement in the
form of EXHIBIT P by the Borrower, the Guarantors, the Agent and any
lender or lenders agreeing to provide additional Loans of up to
$50,000,000, an amount equal to the sum of $100,000,000 and the
Increase Amount, as reduced from time to time in accordance with
SECTIONS 2.7 AND 2.13.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or
a Eurodollar Rate Loan).
"Unrestricted Subsidiary" means a Subsidiary of the Borrower
that has not executed a Facility Guaranty that is in full force and
effect and with respect to which the Borrower has provided a notice as
required by SECTION 9.19.
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
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functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
"Wackenhut" means Wackenhut Corrections Corporation, a Florida
corporation.
1.2. RULES OF INTERPRETATION.
(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in
accordance with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the Florida Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code
of another jurisdiction is controlling, in which case such terms shall
have the meaning given in the Uniform Commercial Code of the applicable
jurisdiction.
(c) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references herein
to articles, sections, paragraphs, clauses, annexes, appendices,
exhibits and schedules are references to articles, sections,
paragraphs, clauses, annexes, appendices, exhibits and schedules in or
to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and VICE VERSA, as the
context may require.
(f) When used herein or in any other Loan Document, words such
as "hereunder", "hereto", "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary,
refer to the whole of the applicable document and not to any particular
article, section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting
the generality of any description preceding such term, and for purposes
hereof the rule of EJUSDEM GENERIS shall not be applicable to limit a
general statement, followed by or referable to an enumeration of
specific matters, to matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to
such dates and times at Charlotte, North Carolina.
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(i) Each of the parties to the Loan Documents and their
counsel have reviewed and revised, or requested (or had the opportunity
to request) revisions to, the Loan Documents, and any rule of
construction that ambiguities are to be resolved against the drafting
party shall be inapplicable in the construing and interpretation of the
Loan Documents and all exhibits, schedules and appendices thereto.
(j) Any reference to an officer of the Borrower or any other
Person by reference to the title of such officer shall be deemed to
refer to each other officer of such Person, however titled, exercising
the same or substantially similar functions.
(k) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such
document or agreement, as the case may be, as amended, modified or
supplemented from time to time only as and to the extent permitted
therein and in the Loan Documents.
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ARTICLE II
THE REVOLVING CREDIT FACILITY
2.1. REVOLVING LOANS.
(a) COMMITMENT. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower under
the Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Revolving Credit Commitment of
such Lender, PROVIDED, however, that the Lenders will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing or (ii) if the Agent has accelerated
the maturity of any of the Revolving Notes as a result of an Event of Default;
PROVIDED further, however, that immediately after giving effect to each such
Advance, the amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings plus Swing Line Outstandings shall not exceed the lesser of (A) the
Total Revolving Credit Commitment or (B) the Borrowing Base. Within such limits,
the Borrower may borrow, repay and reborrow under the Revolving Credit Facility
on a Business Day from the Closing Date until, but (as to borrowings and
reborrowings) not including, the Revolving Credit Termination Date; PROVIDED,
however, that (y) no Revolving Loan that is a Eurodollar Rate Loan shall be made
which has an Interest Period that extends beyond the Stated Termination Date and
(z) each Revolving Loan that is a Eurodollar Rate Loan may, subject to the
provisions of SECTION 2.7, be repaid only on the last day of the Interest Period
with respect thereto unless such payment is accompanied by the additional
payment, if any, required by SECTION 6.5.
(b) AMOUNTS. Except as otherwise permitted by the Lenders from
time to time, the amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings plus Swing Line Outstandings shall not exceed at any time the
lesser of (A) the Total Revolving Credit Commitment or (B) the Borrowing Base,
and, in the event there shall be outstanding any such excess, the Borrower shall
immediately make such payments and prepayments as shall be necessary to comply
with this restriction. Each Revolving Loan hereunder, other than Base Rate
Refunding Loans, and each Conversion under SECTION 2.8, shall be in an amount of
at least $2,000,000, and, if greater than $2,000,000, an integral multiple of
$100,000.
(c) ADVANCES. (i) An Authorized Representative shall give the
Agent (1) at least three (3) Business Days' irrevocable written notice by
telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt, of
each Revolving Loan that is a Eurodollar Rate Loan (whether representing an
additional borrowing hereunder or the Conversion of a borrowing hereunder from
Base Rate Loans to Eurodollar Rate Loans) prior to 11:00 A.M. and (2)
irrevocable written notice by telefacsimile transmission of a Borrowing Notice
or Interest Rate Selection Notice (as applicable) with appropriate insertions,
effective upon receipt, of each Revolving Loan (other than Base Rate Refunding
Loans to the extent the same are effected without notice pursuant to SECTION
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2.1(C)(IV)) that is a Base Rate Loan (whether representing an additional
borrowing hereunder or the Conversion of borrowing hereunder from Eurodollar
Rate Loans to Base Rate Loans) prior to 11:00 A.M. on the day of such proposed
Revolving Loan. Each such notice shall specify the amount of the borrowing, the
Type of Revolving Loan (Base Rate or Eurodollar Rate), the date of borrowing
and, if a Eurodollar Rate Loan, the Interest Period to be used in the
computation of interest. Notice of receipt of such Borrowing Notice or Interest
Rate Selection Notice, as the case may be, together with the amount of each
Lender's portion of an Advance requested thereunder, shall be provided by the
Agent to each Lender by telefacsimile transmission with reasonable promptness,
but (provided the Agent shall have received such notice by 11:00 A.M.) not later
than 1:00 P.M. on the same day as the Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified for each borrowing
under this SECTION 2.1, each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Advance or Advances to
be made by it on such day available by wire transfer to the Agent in the amount
of its pro rata share, determined according to such Lender's Applicable
Commitment Percentage of the Revolving Loan or Revolving Loans to be made on
such day. Such wire transfer shall be directed to the Agent at the Principal
Office and shall be in the form of Dollars constituting immediately available
funds. The amount so received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Borrower by delivery of
the proceeds thereof to the Borrower's Account or otherwise as shall be directed
in the applicable Borrowing Notice by the Authorized Representative and
reasonably acceptable to the Agent.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to Convert the Revolving Loans
in accordance with SECTION 2.8. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, PROVIDED, HOWEVER, there shall not be outstanding
at any one time Eurodollar Rate Loans having more than eight (8) different
Interest Periods. If the Agent does not receive a Borrowing Notice or an
Interest Rate Selection Notice giving notice of election of the duration of an
Interest Period or of Conversion of any Revolving Loan to or Continuation of a
Revolving Loan as a Eurodollar Rate Loan by the time prescribed by SECTION
2.1(C) OR 2.8, the Borrower shall be deemed to have elected to Convert such
Revolving Loan to (or Continue such Revolving Loan as) a Base Rate Loan until
the Borrower notifies the Agent in accordance with SECTION 2.8.
(iv) Notwithstanding the foregoing, if a drawing is made under any
Letter of Credit, such drawing is honored by the Issuing Bank prior to the
Stated Termination Date, and the Borrower shall not immediately fully reimburse
the Issuing Bank in respect of such drawing, (A) provided that the conditions to
making a Loan as herein provided shall then be satisfied, the Reimbursement
Obligation arising from such drawing shall be paid to the Issuing Bank by the
Agent without the requirement of notice to or from the Borrower from immediately
available funds which shall be advanced as a Base Rate Refunding Loan by each
Lender under the Revolving Credit Facility in an amount equal to such Lender's
Applicable Commitment Percentage of such Reimbursement Obligation, and (B) if
the conditions to making a Loan as herein provided shall not then be satisfied,
each of the Lenders shall fund by payment to the Agent
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(for the benefit of the Issuing Bank) in immediately available funds the
purchase from the Issuing Bank of their respective Participations in the related
Reimbursement Obligation based on their respective Applicable Commitment
Percentages of the Total Letter of Credit Commitment. If a drawing is presented
under any Letter of Credit in accordance with the terms thereof and the Borrower
shall not immediately reimburse the Issuing Bank in respect thereof, then notice
of such drawing or payment shall be provided promptly by the Issuing Bank to the
Agent and the Agent shall provide notice to each Lender by telephone or
telefacsimile transmission. If notice to the Lenders of a drawing under any
Letter of Credit is given by the Agent at or before 12:00 noon on any Business
Day, each Lender shall, pursuant to the conditions specified in this SECTION
2.1(C)(IV), either make a Base Rate Refunding Loan or fund the purchase of its
Participation in the amount of such Lender's Applicable Commitment Percentage of
such drawing or payment and shall pay such amount to the Agent for the account
of the Issuing Bank at the Principal Office in Dollars and in immediately
available funds before 2:30 P.M. on the same Business Day. If notice to the
Lenders of a drawing under a Letter of Credit is given by the Agent after 12:00
noon on any Business Day, each Lender shall, pursuant to the conditions
specified in this SECTION 2.1(C)(IV), either make a Base Rate Refunding Loan or
fund the purchase of its Participation in the amount of such Lender's Applicable
Commitment Percentage of such drawing or payment and shall pay such amount to
the Agent for the account of the Issuing Bank at the Principal Office in Dollars
and in immediately available funds before 12:00 noon on the next following
Business Day. Any such Base Rate Refunding Loan shall be advanced as, and shall
Continue as, a Base Rate Loan unless and until the Borrower Converts such Base
Rate Loan in accordance with the terms of SECTION 2.8.
2.2. PAYMENT OF INTEREST. (a) The Borrower shall pay interest to the
Agent for the account of each Lender on the outstanding and unpaid principal
amount of each Revolving Loan made by such Lender for the period commencing on
the date of such Revolving Loan until such Revolving Loan shall be due at the
then applicable Base Rate for Base Rate Loans or applicable Eurodollar Rate for
Eurodollar Rate Loans, as designated by the Authorized Representative pursuant
to SECTION 2.1; PROVIDED, however, that if any Event of Default shall occur and
be continuing, all amounts outstanding hereunder shall bear interest thereafter
at the Default Rate.
(b) Interest on each Revolving Loan shall be computed on the basis of
a year of 360 days and calculated in each case for the actual number of days
elapsed. Interest on each Revolving Loan shall be paid (i) quarterly in arrears
on the last Business Day of each March, June, September and December, commencing
December 31, 1998, with respect to Base Rate Loans (ii) on the last day of an
Interest Period, with respect to Eurodollar Loans, if such Interest Period
extends for more than three (3) months, at intervals of three (3) months after
the first day of such Interest Period, and (iii) upon payment in full of the
principal amount of such Revolving Loan.
2.3. PAYMENT OF PRINCIPAL. The principal amount of each Revolving Loan
shall be due and payable to the Agent for the benefit of each Lender in full on
the Revolving Credit Termination Date, or earlier as specifically provided
herein. The principal amount of any Base Rate Loan may be prepaid in whole or in
part at any time. The principal amount of any
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Eurodollar Rate Loan may be prepaid only at the end of the applicable Interest
Period unless the Borrower shall pay to the Agent for the account of the Lenders
the additional amount, if any, required under SECTION 6.5. All prepayments of
Revolving Loans made by the Borrower shall be in the amount of $5,000,000 or
such greater amount which is an integral multiple of $1,000,000, or the amount
equal to all Revolving Credit Outstandings, or such other amount as necessary to
comply with SECTION 2.1(B) or SECTION 2.8.
2.4. MANNER OF PAYMENT. (a) Each payment of principal (including any
prepayment) and payment of interest and fees, and any other amount required to
be paid to the Lenders with respect to the Loans, shall be made to the Agent at
the Principal Office, for the account of each Lender, in Dollars and in
immediately available funds without setoff, deduction or counterclaim before
12:30 P.M. on the date such payment is due. The Agent may, but shall not be
obligated to, debit the amount of any such payment which is not made by such
time to any ordinary deposit account, if any, of the Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately available
funds and prior to 12:30 P.M. to be a non-conforming payment. Any such payment
shall not be deemed to be received by the Agent until the later of (i) the time
such funds become available funds and (ii) the next Business Day. Any
non-conforming payment may constitute or become a Default or Event of Default.
Interest shall continue to accrue on any principal as to which a non-conforming
payment is made until the later of (x) the date such funds become available
funds or (y) the next Business Day at the Default Rate from the date such amount
was due and payable.
(c) In the event that any payment hereunder or under the Revolving
Notes becomes due and payable on a day other than a Business Day, then such due
date shall be extended to the next succeeding Business Day unless provided
otherwise under clause (ii) of the definition of "Interest Period"; PROVIDED
that interest shall continue to accrue during the period of any such extension
and PROVIDED further, that in no event shall any such due date be extended
beyond the Revolving Credit Termination Date.
2.5. REVOLVING NOTES. Revolving Loans made by each Lender shall be
evidenced by the Revolving Note payable to the order of such Lender in the
respective amount of its Applicable Commitment Percentage of the Revolving
Credit Commitment, which Revolving Note shall be dated the Closing Date or a
later date pursuant to the entering into of an Amendment Agreement in the form
of EXHIBIT P to give effect to an Increase Amount or pursuant to an Assignment
and Acceptance and shall be duly completed, executed and delivered by the
Borrower.
2.6. PRO RATA PAYMENTS. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Revolving Loans and
the fees described in SECTION 2.10 shall be made to the Agent for the account of
the Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by the Borrower for the account of each of the Lenders on
account of principal, interest and fees, shall be made without diminution,
setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute
to the Lenders in
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immediately available funds payments received in fully collected, immediately
available funds from the Borrower.
2.7. REDUCTIONS. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than three (3) Business Days' written
notice to the Agent, effective upon receipt, to reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business Day
of receipt of such notice, telefacsimile notice, or telephonic notice (confirmed
in writing), of such reduction. Each such reduction shall be in the aggregate
amount of $5,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total Revolving Credit Commitment. Each reduction of the
Total Revolving Credit Commitment shall be accompanied by payment of the
Revolving Loans to the extent that the principal amount of Revolving Credit
Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings
exceeds the lesser of (A) the Total Revolving Credit Commitment and (B) the
Borrowing Base, after giving effect to such reduction, together with accrued and
unpaid interest on the amounts prepaid. No such reduction shall result in the
payment of any Eurodollar Rate Loan other than on the last day of the Interest
Period of such Eurodollar Rate Loan unless such prepayment is accompanied by
amounts due, if any, under SECTION 6.5.
2.8. CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS. Subject
to the limitations set forth below and in ARTICLE VI, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 11:00 A.M. on
any Business Day, Convert all or a part of Eurodollar Rate Loans to Base Rate
Loans on the last day of the Interest Period for such Eurodollar Rate Loans; and
(b) provided that no Default or Event of Default shall have
occurred and be continuing upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 11:00 A.M.
three (3) Business Days' prior to the date of such election or Conversion:
(i) elect a subsequent Interest Period for all or a
portion of Eurodollar Rate Loans to begin on the last day of
the then current Interest Period for such Eurodollar Rate
Loans; and
(ii) Convert Base Rate Loans to Eurodollar Rate Loans
on any Business Day.
Each election and Conversion pursuant to this SECTION 2.8 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the definition
of "Interest Period" herein and in SECTIONS 2.1, 2.3 and ARTICLE VI. The Agent
shall give written notice to each Lender of such notice of election or
Conversion prior to 3:00 P.M. on the day such notice of election or Conversion
is received.
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All such Continuations or Conversions of Revolving Loans shall be effected pro
rata based on the Applicable Commitment Percentages of the Lenders.
2.9. INCREASE AND DECREASE IN AMOUNTS. The amount of the Total
Revolving Credit Commitment which shall be available to the Borrower as Advances
shall be reduced by the aggregate amount of Revolving Credit Outstandings,
Letters of Credit Outstandings and Swing Line Outstandings. The Total Revolving
Credit Commitment which shall be available to the Borrower as Advances shall be
increased without the consent of the Lenders by the entering into of an
Amendment Agreement in the form of EXHIBIT P in order to give effect to an
Increase Amount. Nothing in this Agreement shall require any Lender to increase
its Dollar amount of its Revolving Credit Commitment.
2.10. UNUSED FEE. For the period beginning on the Closing Date and
ending on the Revolving Credit Termination Date, the Borrower agrees to pay to
the Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, an unused fee equal to the Applicable Unused Margin,
multiplied by the daily amount by which the Total Revolving Credit Commitment
exceeds the sum of (i) Revolving Credit Outstandings (without giving effect to
Swing Line Outstandings) plus (ii) Letter of Credit Outstandings at the close of
business on each day during each calendar quarter. Such fees shall be due in
arrears on the last Business Day of each March, June, September and December
commencing December 31, 1998 to and on the Revolving Credit Termination Date.
Notwithstanding the foregoing, so long as any Lender fails to make available any
portion of its Revolving Credit Commitment when requested, such Lender shall not
be entitled to receive payment of its pro rata share of such fee until such
Lender shall make available such portion. Such fee shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed.
2.11. DEFICIENCY ADVANCES; FAILURE TO PURCHASE PARTICIPATIONS. No
Lender shall be responsible for any default of any other Lender in respect to
such other Lender's obligation to make any Revolving Loan hereunder or fund its
purchase of any Participation hereunder nor shall the Revolving Credit
Commitment of any Lender hereunder be increased as a result of such default of
any other Lender. Without limiting the generality of the foregoing, in the event
any Lender shall fail to advance funds to the Borrower as herein provided, the
Agent may in its discre tion, but shall not be obligated to, advance under the
applicable Revolving Note in its favor as a Lender all or any portion of such
amount or amounts (each, a "deficiency advance") and shall thereafter be
entitled to payments of principal of and interest on such deficiency advance in
the same manner and at the same interest rate or rates to which such other
Lender would have been entitled had it made such Advance under its Revolving
Note; provided that, (i) such defaulting Lender shall not be entitled to receive
payments of principal, interest or fees with respect to such deficiency advance
until such deficiency advance shall be paid by such Lender and (ii) upon payment
to the Agent from such other Lender of the entire outstanding amount of each
such deficiency advance, together with accrued and unpaid interest thereon, from
the most recent date or dates interest was paid to the Agent by the Borrower on
each Loan comprising the deficiency advance at the interest rate per annum for
overnight borrowing by the Agent from the Federal Reserve Bank, then such
payment shall be credited against the applicable Revolving Note of the
Borrower in full payment
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of such deficiency advance and the Borrower shall be deemed to have borrowed the
amount of such deficiency advance from such other Lender as of the most recent
date or dates, as the case may be, upon which any payments of interest were made
by such Borrower thereon. In the event any Lender shall fail to fund its
purchase of a Participation after notice from the Issuing Bank or NationsBank,
as the Swing Line lender, as applicable, such Lender shall pay to the Issuing
Bank or NationsBank, as the Swing Line lender, as applicable, interest on the
amount so due from the date of such notice at the interest rate per annum for
overnight borrowing by the Agent from the Federal Reserve Bank to the date such
purchase price is received by the Issuing Bank or NationsBank, as the Swing Line
lender, as applicable.
2.12. USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower for general
working capital needs and other partnership purposes, including the making of
acquisitions of Qualifying Properties.
2.13. MANDATORY PREPAYMENTS OF REVOLVING LOANS. In addition to the
required payments of principal of the Revolving Loans set forth in SECTION 2.3
and any optional payments of principal of the Revolving Loans effected under
SECTIONS 2.3 AND 2.7, the Borrower shall make the following required
prepayments, which prepayments shall not result in a permanent reduction of the
Total Revolving Credit Commitment, each such prepayment to be made to the Agent
for the benefit of the Lenders within the time period specified below:
(a) In the event that the Borrower determines to dispose of a Pledged
Property constituting a part of the Pledge Pool, in accordance with the
provisions of SECTION 4.4(B), and (A) fails to provide a substitute
Pledged Property or (B) provides a substitute Pledged Property having
an Appraised Value that is less than the Appraised Value of the Pledged
Property being disposed, then the Borrower shall make, or shall cause
any Guarantor, as applicable, to make, a payment from the Net Proceeds
of the disposition of such Pledged Property in an amount equal (i) 100%
of such Net Proceeds, in the case of (A) above, or (ii) the difference
between the Appraised Value of the disposed Pledged Property and the
substitute Pledged Property, in the case of (B) above, PLUS, in either
case, any other amount necessary to cause the amount of Outstandings
not to exceed the Borrowing Base as of the date of such disposition.
Each such payment shall be made within 15 Business Days of receipt of
such Net Proceeds and upon not less than three Business Days' written
notice to the Agent, which notice shall include a certificate of an
Authorized Representative setting forth in reasonable detail the
calculations utilized in computing the amount of Net Proceeds.
(b) The Borrower shall make, or shall cause each applicable Guarantor,
to make, a payment from the Net Proceeds from each private or public
offering of the equity securities of the Borrower or such Guarantor in
an amount equal to 100% of such Net Proceeds, each such payment to be
made within ten Business Days of receipt of such Net Proceeds and upon
not less than three Business Days' written notice to the Agent, which
notice shall include a certificate of an Authorized Representative
setting forth in reasonable detail the calculations used in computing
the amount of such payment.
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(c) In the event (i) of damage, destruction or condemnation of any
Pledged Property or portion thereof for which the Borrower reasonably
estimates the cost of rebuilding, restoration or repair of such Pledged
Property to be $250,000 or more, (ii) the Agent shall not have received
from the Borrower a certificate satisfying the requirements of either
SECTION 4.7(A) through (D) or SECTION 7.2(A) through (G) of the
Mortgage, and (iii) there shall not have been deposited with the Agent
the amounts necessary to fully pay for the restoration, repair or
replacement of the Mortgaged Property, then the Agent shall have the
right, at its option, to order an appraisal by a Qualified Appraiser
(or other evidence of value acceptable in the Agent's sole discretion)
of such Pledged Property, in the Borrower's name and at its sole
expense. Within 15 Business Days of the Agent's receipt of such
appraisal, the Borrower shall make, or shall cause any Guarantor, as
applicable, to make, a payment of principal of the Loans to the Agent
in an amount equal to the difference, if any, between the Borrowing
Base adjusted to give effect to the Appraised Value of such Pledged
Property giving effect to such damage, destruction or condemnation, and
the Outstandings, to the extent the Outstandings shall exceed the
adjusted Borrowing Base.
2.14. SWING LINE. (a) Notwithstanding any other provision of this
Agreement to the contrary, in order to administer the Revolving Credit Facility
in an efficient manner and to minimize the transfer of funds between the Agent
and the Lenders, NationsBank shall make available Swing Line Loans to the
Borrower prior to the Revolving Credit Termination Date. NationsBank shall not
be obligated to make any Swing Line Loan pursuant hereto (i) if to the actual
knowledge of NationsBank the Borrower is not in compliance with all the
conditions to the making of Loans set forth in this Agreement, (ii) if after
giving effect to such Swing Line Loan, the Swing Line Outstandings exceed
$5,000,000, or (iii) if after giving effect to such Swing Line Loan, the sum of
the Swing Line Outstandings, Revolving Credit Outstandings and Letter of Credit
Outstandings exceeds the lesser of (A) the Total Revolving Credit Commitment or
(B) the Borrowing Base. Swing Line Loans shall bear interest at the Base Rate or
Adjusted CD Rate, as selected by the Borrower in a Borrowing Notice. The
Borrower may borrow, repay and reborrow under this SECTION 2.14. Unless notified
to the contrary by NationsBank, borrowings under the Swing Line shall be made in
the minimum amount of $200,000 or in the amount necessary to effect a Base Rate
Refunding Loan, upon written request by telefacsimile transmission, effective
upon receipt, by an Authorized Representative of the Borrower made to
NationsBank not later than 12:30 P.M. on the Business Day of the requested
borrowing. Each such Borrowing Notice shall specify the amount of the borrowing,
the interest rate selected (Base Rate or Adjusted CD Rate) and the date of
borrowing, and shall be in the form of EXHIBIT D-2, with appropriate insert
ions. Unless notified to the contrary by NationsBank, each repayment of a Swing
Line Loan shall be in an amount which is an integral multiple of $200,000 or the
aggregate amount of all Swing Line Outstandings. If the Borrower instructs
NationsBank to debit any demand deposit account of the Borrower in the amount of
any payment with respect to a Swing Line Loan, or NationsBank otherwise receives
repayment, after 12:30 P.M. on a Business Day, such payment shall be deemed
received on the next Business Day.
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(b) Swing Line Loans shall bear interest at the Base Rate or the
Adjusted CD Rate, the interest payable on Swing Line Loans is solely for the
account of NationsBank, and all accrued and unpaid interest on Swing Line Loans
shall be payable on the dates and in the manner provided in SECTIONS 2.2(B) AND
2.4 with respect to interest on Revolving Loans. The Swing Line Outstandings
shall be evidenced by the Swing Line Note.
(c) Upon the making of a Swing Line Loan, each Lender shall be deemed
to have purchased from NationsBank a Participation therein in an amount equal to
that Lender's Applicable Commitment Percentage of such Swing Line Loan. Upon
demand made by NationsBank, each Lender shall, according to its Applicable
Commitment Percentage of such Swing Line Loan, promptly provide to NationsBank
its purchase price therefor in an amount equal to its Participation therein. Any
Advance made by a Lender pursuant to demand of NationsBank of the purchase price
of its Participation shall be deemed (i) provided that the conditions to making
Loans shall be satisfied, a Base Rate Refunding Loan under SECTION 2.1 until the
Borrower Converts such Base Rate Loan in accordance with the terms of SECTION
2.8, and (ii) in all other cases, the funding by each Lender of the purchase
price of its Participation in such Swing Line Loan. The obligation of each
Lender to so provide its purchase price to NationsBank shall be absolute and
unconditional and shall not be affected by the occurrence of an Event of Default
or any other occurrence or event.
The Borrower, at its option and subject to the terms hereof, may
request an Advance pursuant to SECTION 2.1 in an amount sufficient to repay
Swing Line Outstandings on any date and the Agent shall provide from the
proceeds of such Advance to NationsBank the amount necessary to repay such Swing
Line Outstandings (which NationsBank shall then apply to such repayment) and
credit any balance of the Advance in immediately available funds in the manner
directed by the Borrower pursuant to SECTION 2.1(C)(II). The proceeds of such
Advances shall be paid to NationsBank for application to the Swing Line
Outstandings and the Lenders shall then be deemed to have made Revolving Loans
in the amount of such Advances. The Swing Line shall continue in effect until
the Revolving Credit Termination Date, at which time all Swing Line Outstandings
and accrued interest thereon shall be due and payable in full.
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ARTICLE III
LETTERS OF CREDIT
3.1. LETTERS OF CREDIT. The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of the Borrower to issue from
time to time for the account of the Borrower Letters of Credit upon delivery to
the Issuing Bank of an Application and Agreement for Letter of Credit relating
thereto in form and content acceptable to the Issuing Bank; PROVIDED, that (i)
the Letter of Credit Outstandings shall not exceed the Total Letter of Credit
Commitment and (ii) no Letter of Credit shall be issued if, after giving effect
thereto, Letter of Credit Outstandings plus Revolving Credit Outstandings plus
Swing Line Outstandings shall exceed the lesser of (A) the Total Revolving
Credit Commitment or (B) the Borrowing Base. No Letter of Credit shall have an
expiry date (including all rights of the Borrower or any beneficiary named in
such Letter of Credit to require renewal) or payment date occurring later than
the earlier to occur of one year after the date of its issuance or the fifth
Business Day prior to the Stated Termination Date.
3.2. REIMBURSEMENT.
(a) The Borrower hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts required
to pay all drafts drawn or purporting to be drawn under the Letters of Credit
and all reasonable expenses incurred by the Issuing Bank in connection with the
Letters of Credit, and in any event and without demand to place in possession of
the Issuing Bank (which shall include Advances under the Revolving Credit
Facility if permitted by SECTION 2.1 and Swing Line Loans if permitted by
SECTION 2.14) sufficient funds to pay all debts and liabilities arising under
any Letter of Credit. The Issuing Bank agrees to give the Borrower prompt notice
of any request for a draw under a Letter of Credit. The Issuing Bank may charge
any account the Borrower may have with it for any and all amounts the Issuing
Bank pays under a Letter of Credit, plus charges and reasonable expenses as from
time to time agreed to by the Issuing Bank and the Borrower; provided that to
the extent permitted by SECTION 2.1(C)(IV) and SECTION 2.14, amounts shall be
paid pursuant to Advances under the Revolving Credit Facility or, if the
Borrower shall elect, by Swing Line Loans. The Borrower agrees to pay the
Issuing Bank interest on any Reimbursement Obligations not paid when due
hereunder at the Default Rate, such rate to be calculated on the basis of a year
of 360 days for actual days elapsed, commencing on the date of such drawing
until such Reimbursement Obligation is so paid by direct reimbursement by the
Borrower or by a Base Rate Refunding Loan.
(b) In accordance with the provisions of SECTION 2.1(C), the
Issuing Bank shall notify the Agent of any drawing under any Letter of Credit
promptly following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall
automatically acquire on the date of issuance thereof, a Participation in the
liability of the Issuing Bank in respect of each
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Letter of Credit in an amount equal to such Lender's Applicable Commitment
Percentage of such liability, and to the extent that the Borrower is obligated
to pay the Issuing Bank under SECTION 3.2(A), each Lender (other than the
Issuing Bank) thereby shall absolutely, unconditionally and irrevocably assume,
and shall be unconditionally obligated to pay to the Issuing Bank as hereinafter
described, its Applicable Commitment Percentage of the liability of the Issuing
Bank under such Letter of Credit.
(i) Each Lender (including the Issuing Bank in its
capacity as a Lender) shall, subject to the terms and
conditions of ARTICLE II, pay to the Agent for the account of
the Issuing Bank at the Principal Office in Dollars and in
immediately available funds, an amount equal to its Applicable
Commitment Percentage of any drawing under a Letter of Credit,
such funds to be provided in the manner described in SECTION
2.1(C)(IV).
(ii) Simultaneously with the making of each payment
by a Lender to the Issuing Bank pursuant to SECTION
2.1(C)(IV)(B), such Lender shall, automatically and without
any further action on the part of the Issuing Bank or such
Lender, acquire a Participation in an amount equal to such
payment (excluding the portion thereof constituting interest
accrued prior to the date the Lender made its payment) in the
related Reimbursement Obligation of the Borrower. The
Reimbursement Obligations of the Borrower shall be immediately
due and payable whether by Advances made in accordance with
SECTION 2.1(C)(IV), Swing Line Loans made in accordance with
SECTION 2.14, or otherwise.
(iii) Each Lender's obligation to make payment to the
Agent for the account of the Issuing Bank pursuant to SECTION
2.1(C)(IV) and this SECTION 3.2(C), and the right of the
Issuing Bank to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance
whatsoever and shall be made without any offset, abatement,
withholding or reduction whatsoever. If any Lender is
obligated to pay but does not pay amounts to the Agent for the
account of the Issuing Bank in full upon such request as
required by SECTION 2.1(C)(IV) or this SECTION 3.2(C), such
Lender shall, on demand, pay to the Agent for the account of
the Issuing Bank interest on the unpaid amount for each day
during the period commencing on the date of notice given to
such Lender pursuant to SECTION 2.1(C) until such Lender pays
such amount to the Agent for the account of the Issuing Bank
in full at the interest rate per annum for overnight borrowing
by the Agent from the Federal Reserve Bank.
(iv) In the event the Lenders have purchased
Participations in any Reimbursement Obligation as set forth in
clause (ii) above, then at any time payment (in fully
collected, immediately available funds) of such Reimbursement
Obligation, in whole or in part, is received by Issuing Bank
from the Borrower, Issuing Bank shall promptly pay to each
Lender an amount equal to its Applicable Commitment Percentage
of such payment from the Borrower.
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(d) Promptly following the end of each calendar quarter, the
Issuing Bank shall deliver to the Agent a notice describing the aggregate
undrawn amount of all Letters of Credit at the end of such quarter. Upon the
request of any Lender from time to time, the Issuing Bank shall deliver to the
Agent, and the Agent shall deliver to such Lender, any other information
reasonably requested by such Lender with respect to each Letter of Credit
outstanding.
(e) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in ARTICLE VII, be
subject to the conditions that such Letter of Credit be in such form and contain
such terms as shall be reasonably satisfactory to the Issuing Bank consistent
with the then current practices and procedures of the Issuing Bank with respect
to similar letters of credit, and the Borrower shall have executed and delivered
such other instruments and agreements relating to such Letters of Credit as the
Issuing Bank shall have reasonably requested consistent with such practices and
procedures and shall not be in conflict with any of the express terms herein
contained. All Letters of Credit shall be issued pursuant to and subject to the
Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 and all subsequent
amendments and revisions thereto.
(f) The Borrower agrees that the Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of
SECTION 13.9, the Borrower hereby agrees to indemnify and hold harmless the
Issuing Bank, each other Lender and the Agent from and against any and all
claims and damages, losses, liabilities, reasonable costs and expenses which the
Issuing Bank, such other Lender or the Agent may incur (or which may be claimed
against the Issuing Bank, such other Lender or the Agent) by any Person by
reason of or in connection with the issuance or transfer of or payment or
failure to pay under any Letter of Credit; provided that the Borrower shall not
be required to indemnify the Issuing Bank, any other Lender or the Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, (i) caused by the willful misconduct or gross negligence of the
party to be indemnified or (ii) caused by the failure of the Issuing Bank to pay
under any Letter of Credit after the presentation to it of a request for payment
strictly complying with the terms and conditions of such Letter of Credit,
unless such payment is prohibited by any law, regulation, court order or decree.
The indemnification and hold harmless provisions of this SECTION 3.2(G) shall
survive repayment of the Obligations, occurrence of the Revolving Credit
Termination Date and expiration or termination of this Agreement.
(h) Without limiting the Borrower's rights as set forth in
SECTION 3.2(G), the obligation of the Borrower to immediately reimburse the
Issuing Bank for drawings made under
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Letters of Credit and the Issuing Bank's right to receive such payment shall be
absolute, unconditional and irrevocable, and that such obligations of the
Borrower shall be performed strictly in accordance with the terms of this
Agreement and such Letters of Credit and the related Applications and Agreement
for any Letter of Credit, under all circumstances whatsoever, including the
following circumstances:
(i) any lack of validity or enforceability of the
Letter of Credit, the obligation supported by the Letter of
Credit or any other agreement or instrument relating thereto
(collectively, the "Related LC Documents");
(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense
(other than the defense of payment in accordance with the
terms of this Agreement) or other rights which the Borrower
may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting), the
Agent, the Lenders or any other Person, whether in connection
with the Loan Documents, the Related LC Documents or any
unrelated transaction;
(iv) any breach of contract or other dispute between
the Borrower and any beneficiary or any transferee of a Letter
of Credit (or any persons or entities for whom such
beneficiary or any such transferee may be acting), the Agent,
the Lenders or any other Person;
(v) any draft, statement or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever;
(vi) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or
agreed to by the Agent, with or without notice to or approval
by the Borrower in respect of any of the Borrower's
Obligations under this Agreement; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
3.3. LETTER OF CREDIT FACILITY FEES. The Borrower shall pay to (i) the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee on the aggregate amount available to be drawn on
each outstanding Letter of Credit at a rate equal to the Applicable Margin for
Eurodollar Rate Loans and (ii) the Issuing Bank, 0.125% based on the aggregate
amount available to be drawn on each outstanding Letter of Credit. Such fees
shall be
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due with respect to each Letter of Credit quarterly in arrears on the last
Business Day of each March, June, September and December, the first such payment
to be made on the first such date occurring after the date of issuance of a
Letter of Credit. The fees described in this SECTION 3.3 shall be calculated on
the basis of a year of 360 days for the actual number of days elapsed.
3.4. ADMINISTRATIVE FEES. The Borrower shall pay to the Issuing Bank
such other administrative fee and other fees, if any, in connection with the
Letters of Credit in such amounts and at such times as the Issuing Bank and the
Borrower shall agree from time to time.
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ARTICLE IV
SECURITY
4.1. SECURITY. As security for the full and timely payment and
performance of all Obligations, the Credit Parties shall on or before the
Closing Date do or cause to be done all things necessary in the opinion of the
Agent and its counsel to grant to the Agent for the benefit of the Lenders a
duly perfected first priority mortgage and/or security interest in all
Collateral subject to no prior Lien or other encumbrance or restriction on
transfer (other than restrictions on transfer imposed by applicable securities
laws).
4.2. FURTHER ASSURANCES. At the request of the Agent, the Borrower will
or will cause any Guarantor, as the case may be to execute, by its duly
authorized officers, alone or with the Agent, any certificate, instrument,
statement or document, or to procure any such certificate, instrument, statement
or document, or to take such other action (and pay all connected costs) which
the Agent reasonably deems necessary from time to time to create, continue or
preserve the liens and security interests in Collateral (and the perfection and
priority thereof) of the Agent contemplated hereby and by the other Loan
Documents and specifically including all Collateral acquired by the Borrower or
any Guarantor after the Closing Date.
4.3. INFORMATION REGARDING COLLATERAL. The Borrower represents,
warrants and covenants that (i) the chief executive office of the Borrower and
each other Person providing Collateral pursuant to a Security Instrument (each,
a "Grantor") at the Closing Date is located at the address or addresses
specified on SCHEDULE 4.3, and (ii) SCHEDULE 4.3 contains a true and complete
list of (a) the name and address of each Grantor and of each other Person that
has effected any merger or consolidation with a Grantor or contributed or
transferred to a Grantor any property constituting Collateral at any time since
January 1, 1998, (b) each location of the chief executive office of each Grantor
at any time since January 1, 1998, (c) the street address and legal description
of each Initial Property, (d) the street address and legal description of each
Pledged Property, (e) the street address of each Pledged Property included in
the Pledge Pool, and (f) the Security Leases. The Borrower shall not change, or,
permit any other Grantor to change, the location of its chief executive office
except upon giving not less than thirty (30) days' prior written notice to the
Agent and taking or causing to be taken all such action at the Borrower's or
such other Grantor's expense as may be reasonably requested by the Agent to
perfect or maintain the perfection of the Lien of the Agent in Collateral.
4.4. PLEDGE POOL. (a) Upon the request of the Borrower, any Eligible
Property may become a Pledged Property and be included in the Pledge Pool upon
receipt by the Agent of (A) a pro forma Compliance Certificate giving effect to
the inclusion of such Eligible Property in the Pledged Pool with respect to such
Eligible Property, including a calculation of Annualized EBITDA; (B) a Borrowing
Base Certificate in the form of EXHIBIT J; (C) historical (to extent such
Property has been operational for a calendar quarter or more) and pro forma
operating statements and occupancy reports (to the extent such statements or
reports exist, the Borrower hereby acknowledging that the absence of such
statements or reports may impair the ability to obtain
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Required Lender approval) with respect to such Eligible Property (unless such
Property is subject to a Lease with a Pre-Approved Lessee); (D) a Phase I
environmental assessment (and, if required or recommended by the results of the
Phase I environmental assessment, a Phase II environmental assessment) with
respect to such Eligible Property; (E) a site plan and as-built survey and
certificates as to federally designated flood zones with respect to such
Eligible Property; (F) a title insurance commitment for an ALTA Lender's title
insurance policy with respect to such Eligible Property in an amount acceptable
to the Agent insuring fee simple title to such Eligible Property and reflecting
no title exceptions other than Permitted Encumbrances; (G) an appraisal by a
Qualified Appraiser of such Eligible Property, meeting the requirements set
forth in SCHEDULE 4.4 hereto ordered by the Agent (in the name of and at the
sole expense of the Borrower); (H) the Security Lease for such Eligible Property
and any sublease of the same in form and substance satisfactory to the Agent;
(I) the management or operating agreement, if any, with the Contract Party for
such Eligible Property, in form and substance satisfactory to the Agent; (J) an
Eligible Property Compliance Certificate for such Eligible Property,
satisfactory to the Agent; (K) evidence of insurance for such Eligible Property
as required by SECTION 9.5 and by the Mortgage; and (L) a general description of
such Eligible Property's location and features. The Agent shall make its
determination as to the inclusion in the Pledge Pool of any Eligible Property
qualifying as such by compliance with items (a)-(g) of the definition of
"Eligible Property" within 10 Business Days of receipt by the Agent of the
Borrower's request therefor together with the documentation described in this
SECTION 4.4. The Required Lenders shall make their determination as to the
inclusion in the Pledge Pool of any Eligible Property qualifying as such under
item (h) of the definition of "Eligible Property" within 15 Business Days of
receipt by the Agent of the Borrower's request therefor together with the
documentation described in this SECTION 4.4. Upon the approval by the Agent of
the inclusion of such Eligible Property in the Pledge Pool, the Borrower or
applicable Credit Party shall execute or cause to be executed a Mortgage with
respect to such Eligible Property, and, if such Eligible Property is subject to
a lease, an Assignment of Leases. Upon execution, delivery and recordation, as
applicable, of the Mortgage, the Assignment of Leases and the Lease Party
Documents relating to such Eligible Property and any other documents required by
the Agent and delivery of the title policy insuring the lien of the Mortgage as
described above and an opinion of special local counsel in the form of EXHIBIT
G-2, such Eligible Property shall become a part of the Pledge Pool and the
Borrower shall deliver to the Agent an updated SCHEDULE 4.3 reflecting such
additional Pledged Property.
(b) Upon request of the Borrower, any Pledged Property may be released
from the Pledge Pool and the Mortgage provided: (i) the Borrower provides
evidence to the Agent that such Pledged Property will be sold by the Borrower or
other Credit Party on an "arm's length" basis; (ii) either (A) the Borrower
causes another Eligible Property of equal or greater Appraised Value to become
included in the Pledge Pool in substitution for such released Pledged Property,
(B) the Borrower causes another Eligible Property of lesser Appraised Value to
become included in the Pledge Pool and Net Proceeds from the sale of such
Pledged Property in the amount of the difference in such Appraised Values,
together with any other funds necessary, are delivered to the Agent for the
prepayment of Revolving Loans as provided in SECTION 2.13, or (C) 100% of the
Net Proceeds from the sale of such Pledged Property, together with any other
funds necessary, are delivered to the Agent for the prepayment of Revolving
Loans as provided in SECTION 2.13;
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(iii) the Borrower delivers to the Agent a pro forma Compliance Certificate
giving effect to such disposition; (iv) the Borrower delivers to the Agent an
updated SCHEDULE 4.3 reflecting the release of such Pledged Property; and (v) no
Default or Event of Default has occurred or is continuing. All costs, expenses
and attorneys' fees incurred by the Agent or the Trustee under the Mortgage in
connection with the release of any Pledged Property pursuant to this SECTION
4.4(B) shall be reimbursed by the Borrower pursuant to SECTION 13.5 hereof. No
Pledged Property will be released from the Pledge Pool until the Agent has
received the amount of funds, if any, required by this SECTION 4.4(B), together
with any amounts required, if any, owing under SECTION 6.5.
(c) In the event that there shall be made any Addition or Enhancement
to a Pledged Property, the Borrower shall deliver to the Agent (A) an appraisal
by a Qualified Appraiser of such Pledged Property, including the Addition or
Enhancement thereto, (B) if the Addition or Enhancement includes additional real
property (either leased or in fee), a modification to the related Mortgage
amending the legal description of such Pledged Property to include such
additional real property; (C) an endorsement to the existing title insurance
policy covering such Pledged Property adding the Addition or Enhancement to the
description of the insured property (if the Addition or Enhancement includes
additional real property), increasing the amount of such title insurance to
reflect the increase in value and updating the time and date of such policy to
the time and date of recording of the modification to the related Mortgage
described in (B) above and reflecting no title exceptions other than Permitted
Encumbrances, (D) an amendment to the related Security Lease to include the
Addition or Enhancement and increasing the base rental payments as required
under SECTION 10.2, in form and content acceptable to the Agent, and (E) a copy
of any amendment to the related management or operating agreement, if any.
(d) For purposes of calculating the Appraised Value of the Pledged
Properties included in the Pledge Pool, the Borrower shall comply with the
Appraisal Requirements set forth in SCHEDULE 4.4 attached hereto. The Lenders
agree that the Agent and the Borrower may from time to time modify or amend the
Appraisal Requirements so long as such modification or amendment does not
adversely affect the interest of the Lenders hereunder.
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ARTICLE V
FACILITY GUARANTY
5.1. FACILITY GUARANTY. CPV hereby unconditionally, absolutely,
continually and irrevocably guarantees to the Agent and the Lenders
(collectively, the "Secured Parties") the payment and performance in full of (a)
the Borrower's prompt payment in full, when due or declared due and at all such
times, of all Obligations and all other amounts pursuant to the terms hereof,
the Notes, and all other Loan Documents and all Rate Hedging Obligations
heretofore, now or at any time or times hereafter owing, arising, due or payable
from the Borrower to any one or more of the Secured Parties, including without
limitation principal, interest, premium or fee (including, but not limited to,
loan fees and attorneys' fees and expenses); and (b) the Borrower's prompt, full
and faithful performance, observance and discharge of each and every agreement,
undertaking, covenant and provision to be performed, observed or discharged by
the Borrower hereunder and all other Loan Documents; and (c) the Borrower's
prompt payment in full, when due or declared due and at all such times, of Rate
Hedging Obligations arising under Swap Agreements (collectively, the
"Guarantor's Obligations"); PROVIDED, HOWEVER, that the liability of CPV with
respect to the Guarantors' Obligations shall be limited to an aggregate amount
equal to the largest amount that would not render its obligations hereunder
subject to avoidance under Section 548 of the United States Bankruptcy Code or
any comparable provisions of any applicable state law.
5.2. PAYMENT. If the Borrower shall default in payment or performance
of any of the Obligations, whether principal, interest, premium, fee (including,
but not limited to, loan fees and attorneys' fees and expenses), or otherwise,
when and as the same shall become due, whether according to the terms hereof, by
acceleration, or otherwise, or upon the occurrence of any Event of Default
hereunder that has not been cured or waived, then CPV shall, upon demand thereof
by the Agent or its successors or assigns AS OF THE DATE OF SUCH DEMAND, fully
pay to the Agent, for the benefit of the Secured Parties, subject to any
restriction set forth in SECTION 5.1, an amount equal to all of the Guarantor's
Obligations then due and owing.
5.3. GUARANTY ABSOLUTE. The guaranty made under this ARTICLE V is a
guaranty of payment and not of collection. The Guarantor's Obligations shall be
absolute and unconditional irrespective of the validity, legality or
enforceability of this Credit Agreement, the Notes or any other Loan Document or
any other guaranty of the Borrower's Obligations, and shall not be affected by
any action taken under this Credit Agreement, the Notes or any other Loan
Document, any other guaranty of the Borrower's Obligations, or any other
agreement between any Secured Party and the Borrower or any other Person, in the
exercise of any right or power therein conferred, or by any failure or omission
to enforce any right conferred thereby, or by any waiver of any covenant or
condition therein provided, or by any acceleration of the maturity of any of the
Borrower's Obligations, or by the release or other disposal of any security for
any of the Borrower's Obligations, or by the dissolution of the Borrower or the
combination or consolidation of the Borrower into or with another entity or any
transfer or disposition of any assets of the Borrower or by any extension or
renewal of this Credit Agreement, any of the Notes or any other
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Loan Document, in whole or in part, or by any modification, alteration,
amendment or addition of or to this Credit Agreement, any of the Notes or any
other Loan Document, any other guaranty of the Borrower's Obligations, or any
other agreement between any Secured Party and the Borrower or any other Person,
or by any other circumstance whatsoever (with or without notice to or knowledge
of CPV) which may or might in any manner or to any extent vary the risks of CPV,
or might otherwise constitute a legal or equitable discharge of a surety or a
guarantor; it being the purpose and intent of the parties hereto that the
guaranty made under this ARTICLE V shall be absolute and unconditional under any
and all circumstances and shall not be discharged except by payment as herein
provided.
5.4. REINSTATEMENT. CPV agrees that the guaranty made under this
ARTICLE V shall continue to be effective or be reinstated, as the case may be,
at any time payment received by the Agent under this Credit Agreement is
rescinded or must be restored for any reason.
5.5. WAIVER; SUBROGATION.
(a) CPV hereby waives notice of the following events or occurrences:
(i) the Lenders' heretofore, now or from time to time hereafter making Advances
and issuing Letters of Credit and otherwise loaning monies or giving or
extending credit to or for the benefit of the Borrower, whether pursuant to this
Credit Agreement or the Notes or any other Loan Document or any amendments,
modifications, or supplements thereto, or replacements or extensions thereof;
(ii) the Secured Parties or the Borrower heretofore, now or at any time
hereafter, obtaining, amending, substituting for, releasing, waiving or
modifying this Credit Agreement, the Notes or any other Loan Documents; (iii)
presentment, demand, default, non-payment, partial payment and protest; (iv) any
Secured Party heretofore, now or at any time hereafter granting to the Borrower
(or any other party liable to the Secured Parties on account of the Borrower's
Obligations) or to any other Guarantor any indulgence or extensions of time of
payment of the Borrower's Obligations, and (v) any Secured Party heretofore, now
or at any time hereafter accepting from the Borrower, any other Guarantor or any
other Person, any partial payment or payments on account of the Borrower's
Obligations or any collateral securing the payment thereof or the Agent
settling, subordinating, compromising, discharging or releasing the same.
(b) CPV hereby agrees that payment or performance by CPV of the
guaranty made under this ARTICLE V may be enforced by the Agent on behalf of the
Secured Parties upon demand by the Agent to CPV without the Agent being
required, CPV expressly waiving any right it may have to require the Agent, to
(i) prosecute collection or seek to enforce or resort to any remedies against
the Borrower or any other Guarantor, or (ii) seek to enforce or resort to any
remedies with respect to any security interests, Liens or encumbrances granted
to the Agent by the Borrower, any other Guarantor or any other Person on account
of the Borrower's Obligations or any guaranty thereof, IT BEING EXPRESSLY
UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY CPV THAT DEMAND UNDER THIS ARTICLE V
MAY BE MADE BY THE AGENT, AND THE PROVISIONS HEREOF ENFORCED BY THE AGENT,
EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF DEFAULT OCCURS AND IS CONTINUING
UNDER THIS CREDIT AGREEMENT. Neither the Agent nor any Lender shall have any
obligation to
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protect, secure or insure any of the foregoing security interests, Liens or
encumbrances on the properties or interests in properties subject thereto.
(c) CPV further agrees that it shall have no right of subrogation
(unless and until the occurrence of the Facility Termination Date),
reimbursement or indemnity, nor any right of recourse to security for the
Borrower's Obligations. This agreement is expressly intended to prevent the
existence of any claim in respect to such reimbursement by CPV against the
estate of the Borrower within the meaning of Section 101 of the Bankruptcy Code,
and to prevent CPV from constituting a creditor of the Borrower in respect of
such reimbursement within the meaning of Section 547(b) of the Bankruptcy Code
in the event of a subsequent case involving the Borrower. If an amount shall be
paid to CPV on account of such subrogation rights at any time prior to
termination of this Credit Agreement in accordance with the provisions of
SECTION 13.8, such amount shall be held in trust for the benefit of the Secured
Parties and shall forthwith be paid to the Agent, for the benefit of the Secured
Parties, to be credited and applied upon the Guarantor's Obligations, whether
matured or unmatured, in accordance with the terms of this Credit Agreement.
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ARTICLE VI
CHANGE IN CIRCUMSTANCES
6.1. INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or regulation,
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 its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such governmental authority, central bank, or
comparable agency:
(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty, or other charge with respect to any
Eurodollar Rate Loans, its Revolving Note, or its obligation to make
Eurodollar Rate Loans, or change the basis of taxation of any amounts
payable to such Lender (or its Applicable Lending Office) under this
Agreement or its Revolving Note in respect of any Eurodollar Rate Loans
(other than taxes imposed on the overall net income of such Lender by
the jurisdiction in which such Lender has its principal office or such
Applicable Lending Office and franchise taxes);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement (other
than the Reserve Requirement utilized in the determination of the
Eurodollar Rate) relating to any extensions of credit or other assets
of, or any deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the Revolving
Credit Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or on the London interbank market any other condition
affecting this Agreement or its Revolving Note or any of such
extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Loans or to reduce any sum received or receivable by such Lender
(or its Applicable Lending Office) under this Agreement or its Revolving Note
with respect to any Eurodollar Rate Loans, then the Borrower shall pay to such
Lender on demand such amount or amounts as will compensate such Lender for such
increased cost or reduction. If any Lender requests compensation by the Borrower
under this SECTION 6.1(A), the Borrower may, by notice to such Lender (with a
copy to the Agent), suspend the obligation of such Lender to make or Continue
Loans of the Type with respect to which such compensation is requested, or to
Convert Loans of any other Type into Loans of such Type, until the event or
condition giving rise to such request ceases to be in effect (in which case the
provisions of SECTION 6.4 shall be applicable); PROVIDED that such suspension
shall not affect the right of such Lender to receive the compensation so
requested.
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(b) If, after the date hereof, any Lender shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this SECTION 6.1 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this SECTION 6.1 shall furnish to the Borrower and the Agent
a statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
6.2. LIMITATION ON TYPES OF LOANS. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Majority Lenders determine (which determination shall
be conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
6.3. ILLEGALITY. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund
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Eurodollar Rate Loans hereunder, then such Lender shall promptly notify the
Borrower thereof and such Lender's obligation to make or Continue Eurodollar
Rate Loans and to Convert other Types of Loans into Eurodollar Rate Loans shall
be suspended until such time as such Lender may again make, maintain, and fund
Eurodollar Rate Loans (in which case the provisions of SECTION 6.4 shall be
applicable).
6.4. TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to
make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to SECTION 6.1
OR 6.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by SECTION 6.3 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
SECTION 6.1 OR 6.3 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been
so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as Loans of the Affected Type shall be made or Continued
instead as Base Rate Loans, and all Loans of such Lender that would
otherwise be Converted into Loans of the Affected Type shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in SECTION 6.1 OR 6.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this SECTION 6.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.
6.5. COMPENSATION. Upon the request of any Lender, the Borrower shall
pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar
Rate Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to SECTION 11.1) on a date other
than the last day of the Interest Period for such Loan; or
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(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
ARTICLE VII to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, Continuation, or Conversion under this
Agreement.
Any Lender claiming compensation under this SECTION 6.5 shall furnish
the Borrower and the Agent a statement setting forth in reasonable detail the
amounts to be paid to it hereunder and the determination thereof shall be
conclusive absent manifest error.
6.6. TAXES. (a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, EXCLUDING, in the case of each Lender and
the Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Lender (or its Applicable Lending
Office) or the Agent (as the case may be) is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable under this Agreement or any other Loan Document
to any Lender or the Agent, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this SECTION 6.6) such Lender or the Agent
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, and (iv) the Borrower
shall furnish to the Agent, at its address referred to in SECTION 13.2, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this Agreement
or any other Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for the
full amount of Taxes and Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this SECTION 6.6) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the
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Borrower or the Agent (but only so long as such Lender remains lawfully able to
do so), shall provide the Borrower and the Agent with (i) Internal Revenue
Service Form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender is entitled to
benefits under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or certifying that
the income receivable pursuant to this Agreement is effectively connected with
the conduct of a trade or business in the United States, (ii) Internal Revenue
Service Form W-8 or W-9, as appropriate, or any successor form prescribed by the
Internal Revenue Service, and (iii) any other form or certificate required by
any taxing authority (including any certificate required by Sections 871(h) and
881(c) of the Internal Revenue Code), certifying that such Lender is entitled to
an exemption from or a reduced rate of tax on payments pursuant to this
Agreement or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed to provide
the Borrower and the Agent with the appropriate form pursuant to SECTION 6.6(D)
(unless such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under SECTION 6.6(A) OR
6.6(B) with respect to Taxes imposed by the United States; PROVIDED, HOWEVER,
that should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this SECTION 6.6, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this SECTION 6.6 shall survive the termination of the Revolving Credit
Commitments and the payment in full of the Notes.
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ARTICLE VII
CONDITIONS TO MAKING LOANS AND ISSUING LETTERS OF CREDIT
7.1. CONDITIONS OF INITIAL ADVANCE. The obligation of the Lenders to
make the initial Advance under the Revolving Credit Facility, and of the Issuing
Bank to issue any Letter of Credit, and of NationsBank to make any Swing Line
Loan, is subject to the conditions precedent that:
(a) the Agent shall have received on the Closing Date, in form
and substance satisfactory to the Agent and Lenders, the following:
(i) executed originals of each of this Agreement,
the Notes, the initial Facility Guaranties, the Security
Instruments, the Lease Party Documents, the LC Account
Agreement the other Loan Documents, together with all
schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to the Loan Documents and the transactions
contemplated thereby of special Florida counsel and special
Maryland counsel to the Credit Parties dated the Closing Date,
addressed to the Agent and the Lenders and satisfactory to
Smith Helms Mulliss & Moore, L.L.P., special counsel to the
Agent, substantially in the form of EXHIBIT G-1;
(iii) the favorable written opinions with respect to
the Mortgages and related Security Documents for each of the
Initial Properties of special local counsel to the Credit
Parties dated the Closing Date, addressed to the Agent and the
Lenders and satisfactory to Smith Helms Mulliss & Moore,
L.L.P., special counsel to the Agent, substantially in the
form of EXHIBIT G-2;
(iv) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee
thereof) of each Credit Party certified by its secretary or
assistant secretary as of the Closing Date, approving and
adopting the Loan Documents to be executed by such Person, and
authorizing the execution and delivery thereof;
(v) specimen signatures of officers of each of the
Credit Parties executing the Loan Documents on behalf of such
Credit Party, certified by the secretary or assistant
secretary of such Credit Party;
(vi) the Organizational Documents of each of the
Credit Parties certified as of a recent date by the Secretary
of State of its state of organization;
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(vii) Operating Documents of each of the Credit
Parties certified as of the Closing Date as true and correct
by its secretary or assistant secretary;
(viii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of
formation of each of the Credit Parties as to the due
existence and good standing of such Person;
(ix) appropriate certificates of qualification to do
business, good standing and, where appropriate, authority to
conduct business under assumed name, issued in respect of each
of the Credit Parties as of a recent date by the Secretary of
State or comparable official of each jurisdiction in which the
failure to be qualified to do business or authorized so to
conduct business could have a Material Adverse Effect;
(x) notice of appointment of the initial Authorized
Representative(s);
(xi) a Compliance Certificate dated the Closing Date;
(xii) evidence of all insurance required by the Loan
Documents;
(xiii) an initial Borrowing Notice, if any, and, if
elected by the Borrower, Interest Rate Selection Notice;
(xiv) an initial Borrowing Base Certificate, dated as
of the Closing Date in the form of EXHIBIT J acceptable to the
Agent and the Lenders;
(xv) evidence of the filing of Uniform Commercial
Code financing statements reflecting the filing in all places
required by applicable law to perfect the Liens of the Agent
under the Security Instruments as a first priority Lien as to
items of Collateral in which a security interest may be
perfected by the filing of financing statements, and such
other documents and/or evidence of other actions as may be
necessary under applicable law to perfect the Liens of the
Agent under the Security Instruments as a first priority Lien
in and to such other Collateral as the Agent may require,
including without limitation the delivery by CPV of a
certificate of the Registrar of the Borrower evidencing the
due registration on the registration books of the Borrower of
the Lien in favor of the Agent conferred under the Security
Instruments;
(xvi) evidence of the ownership by CPV, as a limited
partner, of not less than 662/3% of the Partnership Units of
the Borrower;
(xvii) fully executed counterparts of each of the
Security Leases;
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(xviii) a Phase I environmental assessment (and, if
required or recommended by the results of the Phase I
environmental assessment, a Phase II environmental assessment)
in form and substance acceptable to the Agent with respect to
each of the Initial Properties;
(xix) an as-built survey and certifications as to
federally designated flood zones, in form and substance
acceptable to the Agent as to each of the Initial Properties;
(xx) an appraisal for each of the Pledged Properties
in form and substance acceptable to the Agent and dated not
earlier than one year prior to the Closing Date;
(xxi) an ALTA Lender's title policy with respect to
each of the Initial Properties insuring the first lien status
of the Mortgage and reflecting only such title exceptions as
are Permitted Encumbrances together with a true copy of any
instrument giving rise to any exceptions;
(xxii) evidence that all fees payable by the Borrower
on the Closing Date to the Agent, NMS and the Lenders have
been paid in full;
(xxiii) Uniform Commercial Code search results
showing only those Liens as are acceptable to the Lenders; and
(xxiv) such other documents, instruments,
certificates and opinions as the Agent or any Lender may
reasonably request on or prior to the Closing Date in
connection with the consummation of the transactions
contemplated hereby; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) there shall not have occurred or become known to
the Agent or the Lenders any event, condition, situation or
status since the date of the information contained in the
financial and business projections, budgets, pro forma data
and forecasts concerning the Credit Parties delivered to the
Agent prior to the Closing Date that has had or could
reasonably be expected to result in a Material Adverse Effect;
(ii) no litigation, action, suit, investigation or
other arbitral, administrative or judicial proceeding shall be
pending or threatened which could reasonably be likely to
result in a Material Adverse Effect; and
(iii) the Credit Parties shall have received all
approvals, consents and waivers, and shall have made or given
all necessary filings and notices as shall be required to
consummate the transactions contemplated hereby without the
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occurrence of any default under, conflict with or violation of
(A) any applicable law, rule, regulation, order or decree of
any Governmental Authority or arbitral authority or (B) any
agreement, document or instrument to which any of the Credit
Parties is a party or by which any of them or their properties
is bound.
7.2. CONDITIONS OF LOANS AND LETTER OF CREDIT. The obligations of the
Lenders to make any Revolving Loans, and the Issuing Bank to issue Letters of
Credit and NationsBank to make Swing Line Loans, hereunder on or subsequent to
the Closing Date are subject to the satisfaction of the following conditions:
(a) the Agent or, in the case of Swing Line Loans, NationsBank
shall have received a Borrowing Notice if required by ARTICLE II and a
Borrowing Base Certificate as of the last day of the immediately
preceding month in the form of EXHIBIT J;
(b) the representations and warranties of the Loan Parties set
forth in ARTICLE VIII and in each of the other Loan Documents shall be
true and correct in all material respects on and as of the date of such
Advance, Swing Line Loan or Letter of Credit issuance or renewal, with
the same effect as though such representations and warranties had been
made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that the financial statements referred to in SECTION 8.6(A)(I)
shall be deemed to be those financial statements most recently
delivered to the Agent and the Lenders pursuant to SECTION 9.1 from the
date financial statements are delivered to the Agent and the Lenders in
accordance with such Section;
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with a Borrowing Base
Certificate as of the last day of the immediately preceding month in
the form of EXHIBIT J, together with such other instruments and
documents as it shall request;
(d) at the time of (and after giving effect to) each Advance,
Swing Line Loan or the issuance of a Letter of Credit, no Default or
Event of Default specified in ARTICLE XI shall have occurred and be
continuing; and
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal balance
of all outstanding Revolving Loans for each Lender shall not
exceed such Lender's Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the
aggregate principal balance of all outstanding Participations
in Letters of Credit and Reimbursement Obligations (or in the
case of the Issuing Bank, its remaining interest after
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deduction of all Participations in Letters of Credit and
Reimbursement Obligations of other Lenders) for each Lender
and in the aggregate shall not exceed, respectively, (X) such
Lender's Letter of Credit Commitment or (Y) the Total Letter
of Credit Commitment;
(iii) a Swing Line Loan, the Swing Line Outstandings
shall not exceed $5,000,000; and
(iv) a Revolving Loan, Swing Line Loan or a Letter of
Credit or renewal thereof, the sum of Letter of Credit
Outstandings plus Revolving Credit Outstandings plus Swing
Line Outstandings shall not exceed the lesser of (A) the Total
Revolving Credit Commitment or (B) the Borrowing Base.
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Each of CPV and the Borrower represent and warrant with respect to
itself and each of its Subsidiaries (which representations and warranties shall
survive the delivery of the documents mentioned herein and the making of Loans),
that:
8.1. ORGANIZATION AND AUTHORITY.
(a) Each Credit Party is a corporation, partnership or real
estate investment trust, as applicable, duly organized and validly
existing under the laws of the jurisdiction of its formation;
(b) Each Credit Party (x) has the requisite power and
authority to own its properties and assets and to carry on its business
as now being conducted and as contemplated in the Loan Documents, and
(y) is qualified to do business in every jurisdiction in which failure
so to qualify would have a Material Adverse Effect;
(c) The Borrower and CPV have the power and authority to
execute, deliver and perform this Agreement and each of the other Loan
Documents to which it is a party, and the Borrower has the power and
authority to execute, deliver and perform the Notes and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party;
(d) Each Credit Party has the power and authority to execute,
deliver and perform the Facility Guaranty and each of the other Loan
Documents to which it is a party; and
(e) When executed and delivered, each of the Loan Documents to
which any Credit Party is a party will be the legal, valid and binding
obligation or agreement, as the case may be, of such Credit Party,
enforceable against such Credit Party in accordance with its terms,
subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the effect of
general principles of equity (whether considered in a proceeding at law
or in equity);
8.2. LOAN DOCUMENTS. The execution, delivery and performance by each
Credit Party of each of the Loan Documents to which it is a party:
(a) have been duly authorized by all requisite Organizational
Action of such Credit Party required for the lawful execution, delivery
and performance thereof;
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(b) do not violate any provisions of (i) applicable law, rule
or regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority
binding on such Credit Party or its properties, or (iii) the
Organizational Documents or Operating Documents of such Credit Party;
(c) does not and will not be in conflict with, result in a
breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event of default,
under any contract, indenture, agreement or other instrument or
document to which such Credit Party is a party, or by which the
properties or assets of such Credit Party are bound; and
(d) does not and will not result in the creation or imposition
of any Lien upon any of the properties or assets of such Credit Party
except any Liens in favor of the Agent and the Lenders created by the
Security Instruments;
8.3. SOLVENCY. Each Credit Party is Solvent after giving effect to the
transactions contemplated by the Loan Documents;
8.4. SUBSIDIARIES AND STOCKHOLDERS. CPV has no Subsidiaries other than
those Persons listed as Subsidiaries in SCHEDULE 8.4 and additional Subsidiaries
created or acquired after the Closing Date in compliance with SECTION 9.19;
SCHEDULE 8.4 states as of the date hereof the organizational form of each
entity, the authorized and issued capitalization of each Subsidiary listed
thereon, the number of shares, Partnership Units or other equity interests of
each class of capital stock or interest issued and outstanding of each such
Subsidiary and the number and/or percentage of outstanding shares or other
equity interest (including options, warrants and other rights to acquire any
interest) of each such class of capital stock, Partnership Units or other equity
interest owned by CPV or by any such Subsidiary; the outstanding shares,
Partnership Units or other equity interests of each such Subsidiary have been
duly authorized and validly issued and are fully paid and nonassessable; and CPV
and each such Subsidiary owns beneficially and of record all the shares and
other interests it is listed as owning in SCHEDULE 8.4, free and clear of any
Lien other than the Lien of the Pledge Agreement.
8.5. OWNERSHIP INTERESTS. The CPV and its Subsidiaries own no interest
in any Person other than the Persons listed in SCHEDULE 8.4, equity investments
in Persons not constituting Subsidiaries permitted under SECTION 8.7 and
additional Subsidiaries created or acquired after the Closing Date in compliance
with SECTION 9.19;
8.6. FINANCIAL CONDITION.
(a) The audited pro forma financial statements of CPV and its
Subsidiaries set forth in the Registration Statement present fairly the
financial condition of CPV and its Subsidiaries for the periods
described therein and the unaudited interim financial statements,
including the balance sheet as of June 30,1998 and the statement of
operations for the period ended June 30,1998, are true and accurate;
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(b) since the later of (i) the date of the pro forma financial
statements delivered pursuant to SECTION 8.6(A) hereof or (ii) the date
of the audited financial statements most recently delivered pursuant to
SECTION 9.1(A) hereof, there has been no material adverse change in the
condition, financial or otherwise, of CPV or any of its Subsidiaries or
in the businesses, properties, performance, prospects or operations of
CPV or its Subsidiaries, nor have such businesses or properties been
materially adversely affected as a result of any fire, explosion,
earthquake, accident, strike, lockout, combination of workers, flood,
embargo or act of God; and
(c) except as set forth in the financial statements referred
to in SECTION 8.6(A) or in SCHEDULE 8.6 or permitted by SECTION 8.5,
neither CPV nor any Subsidiary has incurred, other than in the ordinary
course of business, any material Indebtedness, Contingent Obligation or
other commitment or liability which remains outstanding or unsatisfied;
8.7. TITLE TO PROPERTIES.
(a) CPV, the Borrower and each other Credit Party has good and
marketable title to all its real and personal properties, subject to no
transfer restrictions or Liens of any kind, except for the transfer
restrictions and Liens described in SCHEDULE 8.7 and Liens permitted by
SECTION 10.4.
(b) CPV, the Borrower and each other Credit Party has fee
simple, and good and marketable title to each of the Initial
Properties, as applicable, and will have fee simple (or a leasehold
interest of a term exceeding that of the related Security Lease) and
good marketable title to each of the Pledged Properties, as applicable,
subject to no Liens, easement, encumbrances, restrictions or other
matters of record other than Permitted Encumbrances.
8.8. TAXES. Except as set forth in SCHEDULE 8.8, CPV, the Borrower and
each other Credit Party has filed or caused to be filed all federal, state and
local tax returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves reflected in the financial statements
described in SECTION 8.6(A) and satisfactory to CPV's independent certified
public accountants have been established, have paid or caused to be paid all
taxes as shown on said returns or on any assessment received by either of them,
to the extent that such taxes have become due;
8.9. OTHER AGREEMENTS. No Credit Party is
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
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(b) in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any
agreement or instrument to which such Credit Party is a party, which
default has, or if not remedied within any applicable grace period
could reasonably be likely to have, a Material Adverse Effect;
8.10. LITIGATION. Except as set forth in SCHEDULE 8.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of CPV, threatened by or against the Borrower or any other Credit
Party or affecting the Borrower or any other Credit Party or any properties or
rights of the Borrower or any other Credit Party, which could reasonably be
likely to have a Material Adverse Effect;
8.11. MARGIN STOCK. The proceeds of the borrowings made hereunder will
be used by the Borrower only for the purposes expressly authorized herein. None
of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any
agent acting in its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof;
8.12. INVESTMENT COMPANY. No Credit Party is an "investment company,"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. ss. 80a-1, ET SEQ.). The application of the proceeds
of the Loans and repayment thereof by the Borrower and the performance by the
Borrower and the other Credit Parties of the transactions contemplated by the
Loan Documents will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder,
in each case as in effect on the date hereof;
8.13. PATENTS, ETC. The Borrower and each other Credit Party owns or
has the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights necessary to or used in the conduct of
its businesses as now conducted and as contemplated by the Loan Documents,
without known conflict with any patent, license, franchise, trademark, trade
secret, trade name, copyright, other proprietary right of any other Person;
8.14. NO UNTRUE STATEMENT. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of the Borrower or any other Credit Party in accordance with or pursuant to any
Loan Document nor (b) any statement, representation, or warranty provided to the
Agent in connection with the negotiation or preparation
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of the Loan Documents contains any misrepresentation or untrue statement of
material fact or omits to state a material fact necessary, in light of the
circumstance under which it was made, in order to make any such warranty,
representation or statement contained therein not misleading;
8.15. NO CONSENTS, ETC. Neither the respective businesses or properties
of the any Credit Parties, nor any relationship among the Credit Parties and any
other Person, nor any circumstance in connection with the execution, delivery
and performance of the Loan Documents and the transactions contemplated thereby,
is such as to require a consent, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority or any other
Person on the part of any Credit Party as a condition to the execution, delivery
and performance of, or consummation of the transactions contemplated by the Loan
Documents, which, if not obtained or effected, would be reasonably likely to
have a Material Adverse Effect, or if so, such consent, approval, authorization,
filing, registration or qualification has been duly obtained or effected, as the
case may be;
8.16. EMPLOYEE BENEFIT PLANS.
(a) The Borrower and CPV and each ERISA Affiliate is in
compliance with all applicable provisions of ERISA and the regulations
and published interpretations thereunder and in compliance with all
Foreign Benefit Laws 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 material
liability has been incurred by CPV or any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Employee
Benefit Plan or any Multiemployer Plan;
(b) Neither the Borrower, CPV nor any ERISA Affiliate has (i)
engaged in a nonexempt prohibited transaction described in Section 4975
of the Code or Section 406 of ERISA affecting any of the Employee
Benefit Plans or the trusts created thereunder which could subject any
such Employee Benefit Plan or trust to a material tax or penalty on
prohibited transactions imposed under Internal Revenue Code Section
4975 or ERISA, (ii) incurred any accumulated funding deficiency with
respect to any Employee Benefit Plan, whether or not waived, or any
other liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due and
unpaid, (iii) failed to make a required contribution or payment to a
Multiemployer Plan, or (iv) failed to make a required installment or
other required payment under Section 412 of the Code, Section 302 of
ERISA or the terms of such Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer
Plan, and neither the Borrower, CPV nor
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any ERISA Affiliate has incurred any unpaid withdrawal liability with
respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits under
each Employee Benefit Plan which is subject to Title IV of ERISA, did
not, as of the most recent valuation date for each such plan, exceed
the then current value of the assets of such Employee Benefit Plan
allocable to such benefits;
(e) To the best of CPV's knowledge, each Employee Benefit Plan
subject to Title IV of ERISA, maintained by the Borrower, CPV or any
ERISA Affiliate, has been administered in accordance with its terms in
all material respects and is in compliance in all material respects
with all applicable requirements of ERISA and other applicable laws,
regulations and rules;
(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of CPV after due
inquiry, is threatened concerning or involving any Employee Benefit
Plan;
8.17. NO DEFAULT. As of the date hereof, there does not exist any
Default or Event of Default hereunder;
8.18. ENVIRONMENTAL LAWS. Except as listed on SCHEDULE 8.18, CPV and
each Subsidiary is in compliance with all applicable Environmental Laws and has
been issued and currently maintains all required federal, state and local
permits, licenses, certificates and approvals. Except as listed on SCHEDULE
8.18, neither CPV nor any Subsidiary has been notified of any pending or
threatened action, suit, proceeding or investigation, and neither CPV nor any
Subsidiary is aware of any facts, which (a) calls into question, or could
reasonably be expected to call into question, compliance by either CPV or any
Subsidiary with any Environmental Laws, (b) seeks, or could reasonably be
expected to form the basis of a meritorious proceeding, to suspend, revoke or
terminate any license, permit or approval necessary for the operation of CPV's
or any Subsidiary's business or facilities or for the generation, handling,
storage, treatment or disposal of any Hazardous Materials, or (c) seeks to
cause, or could reasonably be expected to form the basis of a meritorious
proceeding to cause, any property of CPV or any Subsidiary to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Law;
8.19. EMPLOYMENT MATTERS. (a) None of the employees of CPV or any
Subsidiary is subject to any collective bargaining agreement and there are no
strikes, work stoppages, election or decertification petitions or proceedings,
unfair labor charges, equal opportunity proceedings, or other material
labor/employee related controversies or proceedings pending or, to the best
knowledge of CPV and the Borrower, threatened against CPV or any Subsidiary or
between CPV
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or any Subsidiary and any of its employees, other than employee grievances
arising in the ordinary course of business which could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
and
(b) Except to the extent a failure to maintain compliance would not
have a Material Adverse Effect, CPV and each Subsidiary is in compliance in all
respects with all applicable laws, rules and regulations pertaining to labor or
employment matters, including without limitation those pertaining to wages,
hours, occupational safety and taxation and there is neither pending or
threatened any litigation, administrative proceeding nor, to the knowledge of
CPV and the Borrower, any investigation, in respect of such matters which, if
decided adversely, could reasonably be likely, individually or in the aggregate,
to have a Material Adverse Effect;
8.20. RICO. Neither CPV nor any Subsidiary is engaged in or has engaged
in any course of conduct that could subject any of their respective properties
to any Lien, seizure or other forfeiture under any criminal law, racketeer
influenced and corrupt organizations law, civil or criminal, or other similar
laws;
8.21. REIT STATUS. CPV has done all things necessary to qualify as a
REIT, has been organized in conformity with the requirements for qualification
as a REIT and its method of operation as described in the Registration Statement
will permit it to meet the requirements for qualification and taxation as an
REIT;
8.22. LEASES; APPRAISED VALUE. Each of the Security Leases is in full
force and effect and the Borrower, CPV and each Guarantor are in compliance with
all of the terms and conditions of such Security Lease; none of the Security
Leases has been amended or modified, except as required under SECTION 10.2 or
except as otherwise permitted by the Agent, since the date of the Eligible
Property Compliance Certificate for the Pledged Property to which it relates;
and neither the Borrower nor CPV has any information which leads it to believe
that the Appraised Value of the Pledged Properties as set forth on SCHEDULE 4.3
is not correct;
8.23. REGISTRATION STATEMENT. The statements and information in the
Registration Statement are true, correct and complete and the Registration
Statement does not contain any untrue statement of a material fact or omit to
state a material fact that is necessary to make the statements and information
therein not misleading;
8.24. YEAR 2000 COMPLIANCE. CPV has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by suppliers, vendors and customers) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by CPV or any of its Subsidiaries (or suppliers,
vendors and customers) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), (ii) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. Based on the foregoing, CPV believes that all
computer applications (including those of its suppliers, vendors and customers)
that are material
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to its or any of its Subsidiaries' business and operations are reasonably
expected on a timely basis to be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be "Year 2000
compliant"), except to the extent that a failure to do so could not reasonably
be expected to have Material Adverse Effect.
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ARTICLE IX
AFFIRMATIVE COVENANTS
Until the Facility Termination Date, unless the Majority Lenders shall
otherwise consent in writing, CPV and the Borrower shall, and where applicable
shall cause each Subsidiary to:
9.1. FINANCIAL REPORTS, ETC. (a) As soon as practical and in any event
within 93 days after the end of each Fiscal Year of CPV, deliver or cause to be
delivered to the Agent and each Lender (i) consolidated and consolidating
balance sheets of CPV and its Subsidiaries as at the end of such Fiscal Year,
and the notes thereto, and the related consolidated and consolidating statements
of income, stockholders' equity and cash flows, and the respective notes
thereto, for such Fiscal Year, setting forth (other than for consolidating
statements) comparative financial statements for the preceding Fiscal Year, all
prepared in accordance with GAAP applied on a Consistent Basis and containing,
with respect to the consolidated financial statements, opinions of Arthur
Andersen LLP, or other such independent certified public accountants selected by
CPV and approved by the Agent, which are unqualified as to the scope of the
audit performed and as to the "going concern" status of CPV and without any
exception not acceptable to the Lenders, and (ii) a Compliance Certificate dated
as of the end of such Fiscal Year;
(b) as soon as practical and in any event within 48 days after the end
of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
deliver to the Agent and each Lender (i) consolidated and consolidating balance
sheets of CPV and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flows for such fiscal quarter and for the period from the
beginning of the then current Fiscal Year through the end of such reporting
period, and accompanied by a certificate of an Authorized Representative to the
effect that such financial statements present fairly the financial position of
CPV and its Subsidiaries as of the end of such fiscal period and the results of
their operations and the changes in their financial position for such fiscal
period, in conformity with the standards set forth in SECTION 8.6(A) with
respect to interim financial statements, and (ii) a Compliance Certificate
containing computations for such fiscal quarter and dated as of the end of such
fiscal quarter;
(c) together with each delivery of the financial statements required by
SECTION 9.1(A)(I), deliver to the Agent and each Lender a letter from CPV's
accountants specified in SECTION 9.1(A)(I) stating that in performing the audit
necessary to render an opinion on the financial statements delivered under
SECTION 9.1(A)(I), they obtained no knowledge of any Default or Event of Default
by the Borrower in the fulfillment of the terms and provisions of this Agreement
insofar as they relate to financial matters (which at the date of such statement
remains uncured); or if the accountants have obtained knowledge of such Default
or Event of Default, a statement specifying the nature and period of existence
thereof;
(d) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Agent and each Lender a copy of (i) all regular or
special reports or effective registration
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statements which either the Borrower, CPV or any Subsidiary shall file with the
Securities and Exchange Commission (or any successor thereto) or any securities
exchange, (ii) any proxy statement distributed by the Borrower, CPV or any
Subsidiary to its shareholders, bondholders or the financial community in
general, and (iii) any management letter or other report submitted to the
Borrower, CPV or any Subsidiary by independent accountants in connection with
any annual, interim or special audit of the Borrower, CPV or any Subsidiary;
(e) not later than the last Business Day of each Fiscal Year, deliver
to the Agent and each Lender a consolidated balance sheet, income statement and
statement of cash flows for CPV and its Subsidiaries for the next Fiscal Year,
prepared in accordance with GAAP applied on a Consistent Basis;
(f) as soon as practicable and in any event within 10 days following
the end of each fiscal month, deliver to the Agent and each Lender a Borrowing
Base Certificate prepared as of the last day of such month in the form of
EXHIBIT J and certified to be true, correct and complete by an Authorized
Representative;
(g) as soon as practical and in any event within 93 days after the end
of each fiscal year of Wackenhut Corrections Corporation deliver to the Agent
and each Lender the audited financial statements of Wackenhut Corrections
Corporation, and as soon as practical and in any event within 48 days after the
end of each fiscal quarter (except the last fiscal quarter of each fiscal year)
of Wackenhut Corrections Corporation, the unaudited financial statements of
Wackenhut Corrections Corporation, all prepared in accordance with GAAP applied
on a Consistent Basis;
(h) promptly, from time to time, deliver or cause to be delivered to
the Agent and each Lender such other information regarding CPV's and any
Subsidiary's operations, business affairs and financial condition, including tax
returns, asset business plans and specific cash flow information, as the Agent
or such Lender may reasonably request;
(i) promptly upon their being delivered to the Borrower or any
Guarantor, deliver to the Agent and each Lender each notice of termination or
default from any Contract Party delivered to the Borrower or any Guarantor by a
Lease Party pursuant to the terms of the Master Lease or any other Security
Lease;
The Agent and the Lenders are hereby authorized to deliver a copy of
any such financial or other information delivered hereunder to the Lenders (or
any affiliate of any Lender) or to the Agent, to any Governmental Authority
having jurisdiction over the Agent or any of the Lenders pursuant to any written
request therefor or in the ordinary course of examination of loan files, or to
any other Person who shall acquire or consider the assignment of, or acquisition
of any participation interest in, any Obligation permitted by this Agreement;
9.2. MAINTAIN PROPERTIES. Maintain all properties necessary to its
operations including, without limitation, each of the Pledged Properties, in
good working order and condition, make all needed repairs, replacements and
renewals to such properties, and maintain free from Liens
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all trademarks, trade names, patents, copyrights, trade secrets, know-how, and
other intellectual property and proprietary information (or adequate licenses
thereto), in each case as are reasonably necessary to conduct its business as
currently conducted or as contemplated hereby, all in accordance with customary
and prudent business practices;
9.3. EXISTENCE, QUALIFICATION, ETC. Except as otherwise expressly
permitted under SECTION 10.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary except where the failure to so qualify would not have
a Material Adverse Effect;
9.4. REGULATIONS AND TAXES. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to CPV's independent certified public accountants have been established unless
and until any Lien resulting therefrom attaches to any of its property and
becomes enforceable against its creditors;
9.5. INSURANCE. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning such properties similarly situated
and, with respect to the Pledged Properties, as otherwise required by the
Security Instruments, (b) maintain general public liability insurance at all
times with responsible insurance carriers against liability on account of damage
to persons and property and (c) maintain insurance under all applicable workers'
compensation laws (or in the alternative, maintain required reserves if
self-insured for workers' compensation purposes) and against loss by reason by
business interruption such policies of insurance to have such limits,
deductibles, exclusions, co-insurance and other provisions providing no less
coverages than are maintained by similar businesses that are similarly situated,
such insurance policies to be in form reasonably satisfactory to the Agent. Each
of the policies of insurance described in this SECTION 9.5 shall provide that
the insurer shall give the Agent not less than thirty (30) days' prior written
notice before any such policy shall be terminated, lapse or be altered in any
manner;
9.6. TRUE BOOKS. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions,
and set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements;
9.7. RIGHT OF INSPECTION. Permit any Person designated by the Agent, at
the Agent's or designated Person's expense, to visit and inspect any of the
properties, corporate books and financial reports of CPV or any Subsidiary and
to discuss its affairs, finances and accounts with
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its principal officers and independent certified public accountants, all at
reasonable times, at reasonable intervals and with reasonable prior notice and
permit any Lender to discuss the Borrower's or CPV's affairs, finances and
accounts with its principal officers at all reasonable times, at reasonable
intervals and with reasonable prior notice;
9.8. OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business;
9.9. GOVERNMENTAL LICENSES. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents;
9.10. COVENANTS EXTENDING TO OTHER PERSONS. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, of the
things required of CPV or the Borrower in SECTIONS 9.2 through 9.9, 9.13, 9.14,
9.18 and 9.23 inclusive;
9.11. OFFICER'S KNOWLEDGE OF DEFAULT. Upon any officer of the Borrower
or CPV obtaining knowledge of any Default or Event of Default hereunder or under
any other obligation of the Borrower or other Credit Party to any Lender, or any
event, development or occurrence which could reasonably be expected to have a
Material Adverse Effect, cause such officer or an Authorized Representative to
promptly notify the Agent of the nature thereof, the period of existence
thereof, and what action the Borrower or other Credit Party proposes to take
with respect thereto;
9.12. SUITS OR OTHER PROCEEDINGS. Upon any officer of the Borrower or
CPV obtaining knowledge of any litigation or other proceedings being instituted
against the Borrower or any other Credit Party, or any attachment, levy,
execution or other process being instituted against any assets of the Borrower
or any other Credit Party, making a claim or claims in an aggregate amount
greater than $500,000 not otherwise covered by insurance, promptly deliver to
the Agent written notice thereof stating the nature and status of such
litigation, dispute, proceeding, levy, execution or other process;
9.13. NOTICE OF ENVIRONMENTAL COMPLAINT OR CONDITION. Immediately
provide notice to the Agent of, and promptly provide to the Agent true, accurate
and complete copies of, any and all notices, complaints, orders, directives,
claims or citations received by the Borrower or any other Credit Party relating
to any (a) violation or alleged violation by the Borrower or any other Credit
Party of any applicable Environmental Law; (b) release or threatened release by
the Borrower or any other Credit Party, or by any Person handling, transporting
or disposing of any Hazardous Material on behalf of the Borrower or any other
Credit Party, or at any facility or property owned or leased or operated by the
Borrower or any other Credit Party, of any Hazardous Material, except where
occurring legally pursuant to a permit or license; or (c) liability or alleged
liability of the Borrower or any other Credit Party for the costs of cleaning
up,
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removing, remediating or responding to a release of Hazardous Materials. Such
notice shall comply with Section 4.23 of the Mortgage;
9.14. ENVIRONMENTAL COMPLIANCE. If the Borrower or any other Credit
Party shall receive any letter, notice, complaint, order, directive, claim or
citation alleging that the Borrower or any other Credit Party has violated any
Environmental Law, has released any Hazardous Material, or is liable for the
costs of cleaning up, removing, remediating or responding to a release of
Hazardous Materials, the Borrower and any other Credit Party shall, within the
time period permitted and to the extent required by the applicable Environmental
Law or the Governmental Authority responsible for enforcing such Environmental
Law, remove or remedy, or cause the applicable Subsidiary to remove or remedy,
such violation or release or satisfy such liability;
9.15. INDEMNIFICATION. Without limiting the generality of SECTION 13.9,
jointly and severally indemnify and hold the Agent and the Lenders and their
respective officers, directors, employees and agents, harmless from and against
any and all claims, costs, expenses, losses, penalties, liabilities and damages
(including, without limitation, assessment and cleanup costs and reasonable
attorneys', consultants' or other expert fees, expenses and disbursements) and
all judgments, fines and penalties incurred, entered or levied against the
Agent, the Lenders or any of their respective officers, directors, employees and
agents, by any governmental agency or authority arising directly or indirectly
from, or as a result of or in connection with (a) the use of any Pledged
Property; (b) the use of the facilities thereon; (c) the use, generation,
storage, transportation, treatment, emission, discharge, disposal, release or
handling of any Hazardous Materials at, upon or from any Pledged Property; or
(d) the violation or alleged violation of any Environmental Law by CPV or any
Subsidiary. The foregoing indemnity shall include without limitation of the
foregoing indemnity, the indemnity of each of the parties indemnified herein
with respect to claims, demands, losses, damages (including consequential
damages) liabilities, causes of action, judgments, penalties, costs and expenses
(including reasonable attorneys' fees and court costs) and matters which in
whole or in part are caused by or arise out of the negligence (whether sole,
contributory, comparative, or otherwise) of such and/or any other indemnified
party or for which such indemnified party may have strict liability. The
provisions of this SECTION 9.15 shall survive the Facility Termination Date and
expiration or termination of this Agreement;
9.16. FURTHER ASSURANCES. At its cost and expense, upon request of the
Agent, duly execute and deliver or cause to be duly executed and delivered, to
the Agent such further instruments, documents, certificates, financing and
continuation statements, and do and cause to be done such further acts that may
be reasonably necessary or advisable in the reasonable opinion of the Agent to
carry out more effectively the provisions and purposes of this Agreement, the
Security Instruments and the other Loan Documents;
9.17. EMPLOYEE BENEFIT PLANS.
(a) With reasonable promptness, and in any event within thirty
(30) days thereof, give notice to the Agent of (a) the establishment of
any new Pension Plan (which notice shall include a copy of such plan),
(b) the commencement of contributions to any
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Employee Benefit Plan to which the Borrower, CPV or any of its or their
ERISA Affiliates was not previously contributing, (c) any material
increase in the benefits of any existing Employee Benefit Plan, (d)
each funding waiver request filed with respect to any Employee Benefit
Plan and all communications received or sent by the Borrower, CPV or
any of its or their ERISA Affiliates with respect to such request and
(e) the failure of the Borrower, CPV or any of its or their ERISA
Affiliates to make a required installment or payment under Section 302
of ERISA or Section 412 of the Code by the due date;
(b) Promptly and in any event within fifteen (15) days of
becoming aware of the occurrence or forthcoming occurrence of any (a)
Termination Event or (b) nonexempt "prohibited transaction," as such
term is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Pension Plan or any trust created thereunder,
deliver to the Agent a notice specifying the nature thereof, what
action the Borrower, CPV or any of its or their ERISA Affiliates has
taken, is taking or proposes to take with respect thereto and, when
known, any action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto; and
(c) With reasonable promptness but in any event within fifteen
(15) days for purposes of clauses (a), (b) and (c), deliver to the
Agent copies of (a) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code, (b) all notices received
by the Borrower, CPV or any of its or their ERISA Affiliates of the
PBGC's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan, (c) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed
by CPV or any ERISA Affiliate with the Internal Revenue Service with
respect to each Pension Plan and (d) all notices received by the
Borrower, CPV or any of its or their ERISA Affiliates from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA. The Borrower
will notify the Agent in writing within five (5) Business Days of the
Borrower, CPV or any of its or their ERISA Affiliates obtaining
knowledge or reason to know that the Borrower, CPV 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;
9.18. CONTINUED OPERATIONS. Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted;
9.19. NEW SUBSIDIARIES. Within thirty (30) days of the acquisition or
creation of any Subsidiary but in any event prior to the acquisition by such
Subsidiary of any Qualifying Property, other than a Subsidiary, that the
Borrower has elected by notice in writing to the Agent to treat as an
Unrestricted Subsidiary, cause to be delivered to the Agent for the benefit of
the Lenders each of the following:
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of EXHIBIT I;
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(b) an opinion of counsel to the Subsidiary dated as of the
date of delivery of the Facility Guaranty provided for in this SECTION
9.19 and addressed to the Agent and the Lenders, in form and substance
reasonably acceptable to the Agent (which opinion may include
assumptions and qualifications of similar effect to those contained in
the opinions of counsel delivered pursuant to SECTION 7.1(A)), to the
effect that:
(A) such Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its
formation, has the requisite power and authority to own its
properties and conduct its business as then owned and then
conducted and proposed to be conducted, and is duly qualified
to transact business and is in good standing as a foreign
corporation or partnership in each other jurisdiction in which
the character of the properties owned or leased, or the
business carried on by it, requires such qualification and the
failure to be so qualified would reasonably be likely to
result in a Material Adverse Effect; and
(B) the execution, delivery and performance of the
Facility Guaranty described in this SECTION 9.19 to which such
Subsidiary is a signatory have been duly authorized by all
requisite corporate or partnership action (including any
required shareholder or partner approval), such agreement has
been duly executed and delivered and constitutes the valid and
binding agreement of such Subsidiary, enforceable against such
Subsidiary in accordance with its terms, subject to the effect
of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the
effect of general principles of equity (whether considered in
a proceeding at law or in equity);
(c) current copies of the charter documents, including
partnership agreements and certificate of limited partnership, if
applicable, and bylaws of such Subsidiary, minutes of duly called and
conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if
required by such charter documents, bylaws or by applicable law, of the
shareholders) of such Subsidiary authorizing the actions and the
execution and delivery of documents described in this SECTION 9.19.
9.20. REIT STATUS. With respect to CPV, do all things required or
necessary to qualify as and maintain its status as a REIT and obtain, at the
Agent's request an opinion of counsel acceptable to the Agent as to CPV's status
as a REIT and as to CPV's power and authority to conduct its business as a REIT.
9.21. USE OF PROCEEDS. Use the proceeds of the Loans solely for the
purposes specified in SECTION 2.12.
9.22. OWNERSHIP OF BORROWER. With respect to CPV, remain the sole
general partner of the Borrower and own not less than 662/3% of the Partnership
Units of the Borrower and 100%
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of the stock of CPT Limited Partner Inc. Any dilution of CPV's ownership of the
Borrower from its 99% interest on the Closing Date shall be solely related to
the issuance of Partnership Units by the Borrower in connection with
Acquisitions of Qualifying Properties. The Borrower shall at all times
constitute 100% of the combined book value of CPV and CPT Limited Partner, Inc,.
and the revenues of the Borrower for each Fiscal Year shall constitute 100% of
the combined total revenues of CPV and CPT Limited Partner Inc. for such Fiscal
Year.
9.23. YEAR 2000 COMPLIANCE. CPV shall promptly notify the Agent in the
event that the Borrower, CPV or any Subsidiary discovers or determines that any
computer application (including those of its suppliers, vendors and customers)
that is material to its or any of its Subsidiaries' business and operations will
not be Year 2000 compliant, except to the extent that such failure could not
reasonably be expected to have a Material Adverse Effect.
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ARTICLE X
NEGATIVE COVENANTS
Until the Obligations have been paid and satisfied in full, no Letters
of Credit remain outstanding and this Agreement has been terminated in
accordance with the terms hereof, unless the Majority Lenders shall otherwise
consent in writing, CPV and the Borrower shall not, nor shall they permit any
Subsidiary to:
10.1. FINANCIAL COVENANTS.
(a) CONSOLIDATED NET WORTH. Permit Consolidated Net Worth to be less
than $118,000,000 plus 85% of the aggregate amount of all increases in the
stated capital and additional paid-in capital accounts of CPV and its
Subsidiaries resulting from the issuance of equity securities or other capital
investments.
(b) CONSOLIDATED INTEREST COVERAGE RATIO. Permit at any time the
Consolidated Interest Coverage Ratio to be less than 3.00 to 1.00.
(c) TOTAL INDEBTEDNESS.
(i) Permit at any time the ratio of Consolidated
Total Indebtedness (excluding Non-Recourse Indebtedness of
Unrestricted Subsidiaries) to Consolidated Total Value to be
greater than .50 to 1.00.
(ii) Permit at any time Consolidated Total
Indebtedness (excluding Non- Recourse Indebtedness of
Unrestricted Subsidiaries) to exceed the lesser of (A) 4.00
times Consolidated Adjusted EBITDA (excluding EBITDA relating
to properties which are subject to Non-Recourse Indebtedness
of Unrestricted Subsidiaries) or (B) 50% of the Historical
Cost of the Pledged Properties and other Qualifying Properties
(the historical cost of other Qualifying Properties (excluding
EBITDA relating to properties which are subject to
Non-Recourse Indebtedness of Unrestricted Subsidiaries) to be
determined in the same manner as the Historical Cost of
Pledged Properties).
(iii) Permit at any time Consolidated Total
Indebtedness to exceed the lesser of (A) 50% of the sum of
Consolidated Total Liabilities and Market Equity
Capitalization or (B) 50% of the sum of Consolidated Total
Liabilities and Consolidated Shareholders' Equity.
(d) CONSOLIDATED SECURED INDEBTEDNESS. Permit at any time the ratio of
Consolidated Secured Indebtedness (excluding Non-Recourse Indebtedness of
Unrestricted Subsidiaries) to Consolidated Total Value to be greater than .45 to
1.00.
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(e) BORROWING BASE. At all times the amount of the Borrowing Base must
be greater than or equal to the sum of the aggregate amount of Revolving Credit
Outstandings, Letter of Credit Outstandings and Swing Line Outstandings, or if
not, the Borrower must immediately comply with SECTION 2.1(B).
10.2. ACQUISITIONS. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition (other than an
Acquisition of an Eligible Property), or take any action to solicit the tender
of securities or proxies in respect thereof in order to effect any Acquisition
(other than an Acquisition of an Eligible Property), unless (i) the Person to be
(or whose assets are to be) acquired does not oppose such Acquisition and the
line or lines of business of the Person or assets to be acquired are
substantially the same as one or more line or lines of business conducted by CPV
and its Subsidiaries, (ii) no Default or Event of Default shall have occurred
and be continuing either immediately prior to or immediately after giving effect
to such Acquisition and the Borrower shall have furnished to the Agent (A) pro
forma historical financial statements as of the end of the most recently
completed Fiscal Year of CPV and most recent interim fiscal quarter, if
applicable, giving effect to such Acquisition and (B) a proforma Compliance
Certificate prepared on a historical pro forma basis giving effect to such
Acquisition, which certificate shall demonstrate that no Default or Event of
Default would exist immediately after giving effect thereto, (iii) the Person
acquired shall be a wholly-owned Subsidiary, or be merged into CPV, the Borrower
or a wholly-owned Subsidiary, immediately upon consummation of the Acquisition
(or if assets are being acquired, the acquiror shall be either CPV, the Borrower
or a wholly-owned Subsidiary), and (iv) the Majority Lenders shall consent to
such Acquisition in their discretion. Enter into any agreement, contract,
binding commitment or other arrangement providing for any Acquisition of
Additions or Enhancements unless there is a commensurate increase in the base
rental payments due under the related Security Lease for the Qualifying Property
for which such Additions or Enhancements are made.
10.3. CAPITAL EXPENDITURES. Make or become committed to make Capital
Expenditures other than those necessary to maintain in good condition and repair
any Qualifying Property; PROVIDED, HOWEVER, that expenditures incurred in
connection with the Acquisition of a Qualifying Property (i.e. not made in
connection with renovations or improvements to a Qualifying Property) shall not
be deemed to be Capital Expenditures; PROVIDED FURTHER, HOWEVER, that
expenditures incurred by the Borrower in connection with Additions or
Enhancements shall not be deemed to be Capital Expenditures to the extent there
is a commensurate increase in the base rental payments under the related
Security Lease.
10.4. LIENS. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets now
owned or hereafter acquired by CPV or any Subsidiary, other than
(a) Liens created under the Security Instruments in favor of
the Agent and the Lenders, and otherwise existing as of the date hereof
and as set forth in SCHEDULE 8.7;
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(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP and which Liens
are not yet enforceable against other creditors;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
90 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP and which Liens are not yet enforceable against other creditors;
(d) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds)
in connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations or
arising as a result of progress payments under government contracts;
(e) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of CPV or any
Subsidiary and which do not materially detract from the value of the
property to which they attach or materially impair the use thereof to
CPV or any Subsidiary;
(f) purchase money Liens to secure Indebtedness permitted
under SECTION 10.5(F ) and incurred to purchase fixed assets, provided
such Indebtedness represents not less than 75% of the purchase price of
such assets as of the date of purchase thereof and no property other
than the assets so purchased secures such Indebtedness;
(g) Liens to secure Non-Recourse Indebtedness permitted under
SECTION 10.5(G); and
(h) Permitted Encumbrances.
10.5. INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness of CPV, the Borrower or any Subsidiary, howsoever evidenced,
except:
(a) Indebtedness existing as of the Closing Date as set forth
in SCHEDULE 8.6; PROVIDED, none of the instruments and agreements
evidencing or governing such Indebtedness shall be amended, modified or
supplemented after the Closing Date to change
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any terms of subordination, repayment or rights of conversion, put,
exchange or other rights from such terms and rights as in effect on the
Closing Date;
(b) Indebtedness owing to the Agent or any Lender in
connection with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) Indebtedness arising from Rate Hedging Obligations
permitted under SECTION 10.16;
(e) unsecured intercompany Indebtedness for loans and advances
made by CPV, the Borrower or any Guarantor to CPV, the Borrower or any
Guarantor, provided that such intercompany Indebtedness is evidenced by
a promissory note or similar written instrument acceptable to the Agent
which provides that such Indebtedness is subordinated to obligations,
liabilities and undertakings of the holder or owner thereof under the
Loan Documents on terms acceptable to the Agent;
(f) purchase money Indebtedness described in SECTION 10.4(F)
not to exceed an aggregate outstanding amount at any time of
$1,000,000;
(g) additional Non-Recourse Indebtedness not otherwise covered
by clauses (a) through (f) above, provided that the aggregate
outstanding principal amount of all such additional Non-Recourse
Indebtedness permitted under this clause (g) shall in no event exceed
20% of Consolidated Total Value at any time;
(h) additional unsecured Indebtedness for Money Borrowed not
otherwise covered by clauses (a) through (g) above, provided that the
aggregate outstanding principal amount of all such other Indebtedness
permitted under this clause (h) shall in no event exceed 5% of
Consolidated Total Value at any time.
10.6. TRANSFER OF ASSETS. Sell, lease, transfer or otherwise dispose of
any assets of CPV or any Subsidiary other than (a) dispositions of Pledged
Properties permitted under SECTION 4.4(B), (b) the lease of a Pledged Property
pursuant to a Security Lease, (c) transfers of assets necessary to give effect
to merger or consolidation transactions permitted by SECTION 10.8, (d) the
disposition of Eligible Securities or Non-Conforming Investments in the ordinary
course of management of the investment portfolio of CPV and its Subsidiaries and
(e) dispositions of personal property that is substantially worn, damaged,
obsolete or, in the judgment of CPV or the Borrower, as the case may be, no
longer best used or useful in its business or that of any Subsidiary.
10.7. INVESTMENTS. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other
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Person or permit to exist any loans or advances to any Person, except that CPV
and the Borrower may maintain investments or invest in:
(a) Eligible Securities;
(b) investments existing as of the date hereof and as set
forth in SCHEDULE 8.4;
(c) investments in Guarantors;
(d) loans between the Borrower, CPV and the Guarantors
described in SECTION 10.5(E); and
(e) Non-conforming Investments and loans and investments in
Unrestricted Subsidiaries; provided, however, that the aggregate
principal amount at any time outstanding of such Non-Conforming
Investments and loans and investments in Unrestricted Subsidiaries
shall not exceed the sum of $5,000,000 plus 5% of Consolidated Total
Value at any time.
10.8. MERGER OR CONSOLIDATION. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales permitted under SECTIONS
10.6(C) AND (D); PROVIDED, HOWEVER, (i) any Subsidiary may merge or transfer all
or substantially all of its assets into or consolidate with CPV, the Borrower or
any wholly-owned Subsidiary, and (ii) any other Person may merge into or
consolidate with CPV, the Borrower or any wholly-owned Subsidiary and any
Subsidiary may merge into or consolidate with any other Person in order to
consummate an Acquisition permitted by SECTION 10.2; PROVIDED FURTHER, that any
resulting or surviving entity shall execute and deliver such agreements and
other documents, including a Facility Guaranty, and take such other action as
the Agent may require to evidence or confirm its express assumption of the
obligations and liabilities of its predecessor entities under the Loan
Documents.
10.9. RESTRICTED PAYMENTS. Make any Restricted Payment or apply or set
apart any of their assets therefor or agree to do any of the foregoing;
PROVIDED, however, in any fiscal period CPV may if immediately prior to and
immediately after giving effect thereto no Default or Event of Default shall
exist or occur and be continuing, pay dividends on the common or preferred stock
of CPV and make similar distributions in an amount not to exceed the lesser of
(i) 100% of Cash Available for Distribution and (ii) 95% of Funds from
Operations; PROVIDED, FURTHER, however, that if a larger distribution is
necessary for CPV to maintain its status as a REIT and if immediately prior to
and immediately after giving effect thereto no Default or Event of Default shall
exist or occur and be continuing, CPV may pay dividends or make similar
distributions in such greater amount equal to the minimum distribution necessary
for CPV to maintain such status; PROVIDED, FURTHER, however, that CPV may not
pay any such dividends or make any such payments in the aggregate for any
calendar year exceeding the lesser of (i) 100% of Cash Available for
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Distribution and (ii) 95% of Funds from Operations and the Borrower shall make
no distribution if before or after giving effect thereto there exists a Default
or Event of Default.
10.10. TRANSACTIONS WITH AFFILIATES. Other than transactions permitted
under SECTIONS 10.7 and 10.8, enter into any transaction after the Closing Date,
including, without limitation, the purchase, sale, lease or exchange of
property, real or personal, or the rendering of any service, with any Affiliate
of CPV or the Borrower, except (a) that such Persons may render services to CPV
or the Borrower or any Subsidiary for compensation at the same rates generally
paid by Persons engaged in the same or similar businesses for the same or
similar services, (b) that CPV or the Borrower or any Subsidiary may render
services to such Persons for compensation at the same rates generally charged by
CPV or the Borrower or such Subsidiary and (c) in either case in the ordinary
course of business and pursuant to the reasonable requirements of CPV or the
Borrower's (or any Subsidiary's) business and upon fair and reasonable terms no
less favorable to CPV or the Borrower (or any Subsidiary) than would be obtained
in a comparable arm's-length transaction with a Person not an Affiliate.
10.11. COMPLIANCE WITH ERISA. With respect to any Pension Plan,
Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a liability on the part of CPV, the Borrower or any of its or
their ERISA Affiliates to the PBGC; or
(b) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which CPV, the Borrower or any of its or their ERISA
Affiliates may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto; or
(e) engage, or permit CPV, the Borrower or any of its or their
ERISA Affiliates to engage, in any prohibited transaction under Section
406 of ERISA or Sections 4975 of the Code for which a civil penalty
pursuant to Section 502(I) of ERISA or a tax pursuant to Section 4975
of the Code may be imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to CPV, the Borrower or any of its
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or their ERISA Affiliates or increase the obligation of CPV, the
Borrower or any of its or their ERISA Affiliates to a Multiemployer
Plan; or
(g) fail, or permit CPV, the Borrower or any of its or their
ERISA Affiliates to fail, to establish, maintain and operate each
Employee Benefit Plan in compliance in all material respects with the
provisions of ERISA, the Code, all applicable Foreign Benefit Laws and
all other applicable laws and the regulations and interpretations
thereof.
10.12. FISCAL YEAR. Change its Fiscal Year.
10.13. DISSOLUTION, ETC. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to SECTION 10.8.
10.14. LIMITATIONS ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by CPV, the Borrower or any Subsidiary
of real or personal property, whether now owned or hereafter acquired in a
related transaction or series of related transactions, which has been or is to
be sold or transferred by CPV, the Borrower or any Subsidiary to such Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of CPV, the Borrower or
any Subsidiary.
10.15. CHANGE OF CONTROL. Cause, suffer or permit to exist or occur any
Change of Control.
10.16. RATE HEDGING OBLIGATIONS. Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to Rate
Hedging Obligations, except pursuant to Swap Agreements in an aggregate notional
amount not to exceed at any time 50% of the Total Revolving Credit Commitment or
as otherwise agreed by the Borrower and the Agent.
10.17. NEGATIVE PLEDGE CLAUSES. Enter into or cause, suffer or permit
to exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or limits
the ability of the Borrower, CPV or any Subsidiary to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired.
10.18. UNRESTRICTED SUBSIDIARIES. Cause, suffer or permit any
Unrestricted Subsidiary to incur any Indebtedness whatsoever except for
Non-Recourse Indebtedness, which Non-Recourse Indebtedness, together with all
other Non-Recourse Indebtedness of such Unrestricted Subsidiary, is owed to a
single creditor or an agent for more than one creditor so long as such creditors
have provided such Non-Recourse Indebtedness.
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ARTICLE XI
EVENTS OF DEFAULT AND ACCELERATION
11.1. EVENTS OF DEFAULT. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan, Reimbursement Obligation or other
Obligation, when and as the same shall be due and payable whether
pursuant to any provision of ARTICLE II or ARTICLE III, at maturity, by
acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan, Reimbursement Obligation or
other Obligation or of any fees or other amounts payable to any of the
Lenders or the Agent on the date on which the same shall be due and
payable and such default shall continue for three days or more; or
(c) if default shall be made in the performance or observance
of any covenant set forth in SECTIONS 4.4(C), 9.7, 9.11, 9.12, 9.19
through 9.22 or ARTICLE X;
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for 30 or more days after the earlier of receipt of notice of
such default by the Authorized Representative from the Agent or an
officer of the Borrower becomes aware of such default, or if a default
shall be made in the performance or observance of, or shall occur
under, any covenant, agreement or provision contained in any of the
other Loan Documents (beyond any applicable grace period, if any,
contained therein) or in any instrument or document evidencing or
creating any obligation, guaranty, or Lien in favor of the Agent or any
of the Lenders or delivered to the Agent or any of the Lenders in
connection with or pursuant to this Agreement or any of the
Obligations, or if any Loan Document ceases to be in full force and
effect (other than by reason of any action by the Agent), or if without
the written consent of the Lenders, this Agreement or any other Loan
Document shall be disaffirmed or shall terminate, be terminable or be
terminated or become void or unenforceable for any reason whatsoever
(other than in accordance with its terms in the absence of default or
by reason of any action by the Lenders or the Agent); or
(e) if there shall occur (i) a default, which is not waived,
in the payment of any principal, interest, premium or other amount with
respect to any Indebtedness (other than the Loans and other
Obligations) of CPV or any Subsidiary in an amount not less than
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$500,000 in the aggregate outstanding, or (ii) a default, which is not
waived, in the performance, observance or fulfillment of any term or
covenant contained in any agreement or instrument under or pursuant to
which any such Indebtedness may have been issued, created, assumed,
guaranteed or secured by CPV, the Borrower or any Subsidiary, or (iii)
any other event of default as specified in any agreement or instrument
under or pursuant to which any such Indebtedness may have been issued,
created, assumed, guaranteed or secured by CPV, the Borrower or any
Subsidiary, and such default or event of default shall continue for
more than the period of grace, if any, therein specified, or such
default or event of default as specified in clauses (i), (ii) or (iii)
shall permit the holder of any such Indebtedness (or any agent or
trustee acting on behalf of one or more holders) to accelerate the
maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report
or statement at any time furnished to the Agent or any Lender by or on
behalf of CPV, the Borrower or any other Credit Party pursuant to or in
connection with any Loan Document, or otherwise, shall be false or
misleading in any material respect when given; or
(g) if CPV, the Borrower or any Subsidiary shall be unable to
pay its debts generally as they become due; file a petition to take
advantage of any insolvency statute; make an assignment for the benefit
of its creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole
or any substantial part of its property; file a petition or answer
seeking liquidation, reorganization or arrangement or similar relief
under the federal bankruptcy laws or any other applicable law or
statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of CPV, the Borrower, any other Credit Party
or Wackenhut Corrections Corporation or the whole or any substantial
part of its properties or of any Pledge Property and such order,
judgment or decree continues unstayed and in effect for a period of
sixty (60) days, or approve a petition filed against CPV, the Borrower,
any other Credit Party or Wackenhut Corrections Corporation seeking
liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state, which petition is not dismissed
within sixty (60) days; or if, under the provisions of any other law
for the relief or aid of debtors, a court of competent jurisdiction
shall assume custody or control of CPV, the Borrower, any other Credit
Party or Wackenhut Corrections Corporation or of the whole or any
substantial part of its properties, or of any Pledge Property which
control is not relinquished within sixty (60) days; or if there is
commenced against CPV, the Borrower, any other Credit Party or
Wackenhut Corrections Corporation any proceeding or petition seeking
reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state which proceeding or petition remains
undismissed for a period of sixty (60) days; or if CPV, the Borrower,
any other
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Credit Party or Wackenhut Corrections Corporation takes any action to
indicate its consent to or approval of any such proceeding or petition;
or
(i) if (i) one or more judgments or orders where the amount
not covered by insurance (or the amount as to which the insurer is
found not to be liable) is in excess of $500,000 is rendered against
CPV, the Borrower or any Subsidiary, or (ii) there is any attachment,
injunction or execution against any of CPV, the Borrower's or any
Subsidiary's properties for any amount in excess of $500,000 in the
aggregate; and such judgment, attachment, injunction or execution
remains unpaid, unstayed, undischarged, unbonded or undismissed for a
period of thirty (30) days; or
(j) if CPV, the Borrower or any Subsidiary shall, other than
in the ordinary course of business (as determined by past practices),
suspend all or any part of its operations material to the conduct of
the business of CPV, the Borrower or such Subsidiary for a period of
more than 60 days; or
(k) if CPV, the Borrower or any Subsidiary shall breach any of
the material terms or conditions of any agreement under which any Rate
Hedging Obligations permitted hereby is created and such breach shall
continue beyond any grace period, if any, relating thereto pursuant to
the terms of such agreement, or if CPV, the Borrower or any Subsidiary
shall disaffirm or seek to disaffirm any such agreement or any of its
obligations thereunder; or
(l) if there shall occur and not be waived an Event of Default
as defined in any of the other Loan Documents;
(m) if there shall occur a default (which is not cured within
the applicable cure period therein provided) under, of the breach,
withdrawal, cancellation, rescission, termination, alteration (without
the Agent's consent) of any Security Lease or Security Leases or a
sublease with respect to any Security Lease or Security Leases the
result of which is to cause a termination or reduction of rental
payments under such Security Lease or Security Leases in an amount
exceeding 5% of the total amount of rental payments due during the then
current Fiscal Year under all of the Security Leases then in effect;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be
taken: (i) the Agent, with the consent of the Majority
Lenders, may, and at the direction of the Majority Lenders
shall, declare any obligation of the Lenders and the Issuing
Bank to make further Revolving Loans and Swing Line Loans or
to issue additional Letters of Credit terminated, whereupon
the obligation of each Lender to make further Revolving Loans,
of NationsBank to make further Swing Line Loans, and of the
Issuing Bank to issue additional Letters of Credit, hereunder
shall terminate
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immediately, and (ii) the Agent shall at the direction of the
Majority Lenders, at their option, declare by notice to the
Borrower any or all of the Obligations to be immediately due
and payable, and the same, including all interest accrued
thereon and all other obligations of the Borrower to the Agent
and the Lenders, shall forthwith become immediately due and
payable without presentment, demand, protest, notice or other
formality of any kind, all of which are hereby expressly
waived, anything contained herein or in any instrument
evidencing the Obligations to the contrary notwithstanding;
PROVIDED, however, that notwithstanding the above, if there
shall occur an Event of Default under clause (g) or (h) above,
then the obligation of the Lenders to make Revolving Loans, of
NationsBank to make Swing Line Loans, and of the Issuing Bank
to issue Letters of Credit hereunder shall automatically
terminate and any and all of the Obligations shall be
immediately due and payable without the necessity of any
action by the Agent or the Majority Lenders or notice to the
Agent or the Lenders;
(B) The Borrower shall, upon demand of the Agent or
the Majority Lenders, deposit cash with the Agent in an amount
equal to the amount of any Letter of Credit Outstandings, as
collateral security for the repayment of any future drawings
or payments under such Letters of Credit, and such amounts
shall be held by the Agent pursuant to the terms of the LC
Account Agreement; and
(C) the Agent and each of the Lenders shall have all
of the rights and remedies available under the Loan Documents
or under any applicable law.
11.2. AGENT TO ACT. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Majority Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
11.3. CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
11.4. NO WAIVER. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
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11.5. ALLOCATION OF PROCEEDS. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
ARTICLE XI hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder, shall be applied by the Agent in the following order:
(a) amounts due to the Lenders pursuant to SECTIONS 2.10, 3.3,
3.4 AND 13.5;
(b) amounts due to the Agent pursuant to SECTION 12.9;
(c) payments of interest on Revolving Loans, Swing Line Loans
and Reimbursement Obligations, to be applied for the ratable benefit of
the Lenders (with amounts payable in respect of Swing Line Outstandings
being included in such calculation and paid to NationsBank);
(d) payments of principal of Revolving Loans, Swing Line Loans
and Reimbursement Obligations, to be applied for the ratable benefit of
the Lenders (with amounts payable in respect of Swing Line Outstandings
being included in such calculation and paid to NationsBank);
(e) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to SECTION 11.1(B);
(f) amounts due to the Lenders pursuant to SECTIONS 3.2(G),
9.15 and 13.9;
(g) payments of all other amounts due under any of the Loan
Documents, if any, to be applied for the ratable benefit of the
Lenders;
(h) amounts due to any of the Lenders in respect of
Obligations consisting of liabilities under any Swap Agreement with any
of the Lenders on a pro rata basis according to the amounts owed; and
(i) any surplus remaining after application as provided for
herein, to the Borrower or otherwise as may be required by applicable
law.
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ARTICLE XII
THE AGENT
12.1. APPOINTMENT, POWERS, AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in SECTION 12.5 and
the first sentence of SECTION 12.6 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents):
(a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee
or fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made
in or in connection with any Loan Document or any certificate or other
document referred to or provided for in, or received by any of them
under, any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Document, or
any other document referred to or provided for therein or for any
failure by any Credit Party or any other Person to perform any of its
obligations thereunder;
(c) shall not be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Credit Party or the satisfaction of any
condition or to inspect the property (including the books and records)
of any Credit Party or any of its Subsidiaries or affiliates;
(d) except as provided in this Agreement, shall not be
required to initiate or conduct any litigation or collection
proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or omitted
to be taken by it under or in connection with any Loan Document, except
for its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
12.2. RELIANCE BY AGENT. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telefacsimile) believed by it to
be genuine and correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements of legal counsel
(including counsel for any Credit Party), independent accountants, and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the holder thereof
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for all purposes hereof unless and until the Agent receives and accepts an
Assignment and Acceptance executed in accordance with SECTION 13.1 hereof. As to
any matters not expressly provided for by this Agreement, the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding on all of the Lenders; PROVIDED, HOWEVER, that the
Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to any Loan Document or applicable law or
unless 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 any such action.
12.3. DEFAULTS. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to SECTION 12.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Majority
Lenders, PROVIDED that, unless and until the Agent shall have received such
directions, the 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 interest of the Lenders.
12.4. RIGHTS AS LENDER. With respect to its Revolving Credit Commitment
and the Revolving Loans made by it, NationsBank (and any successor acting as
Agent) in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting as the Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Agent in its individual capacity.
NationsBank (and any successor acting as Agent) and its affiliates may (without
having to account therefor to any Lender) and any Lender may accept deposits
from, lend money to, make investments in, provide services to, and generally
engage in any kind of lending, trust, or other business with any Credit Party or
any of its Subsidiaries or affiliates as if it were not acting as Agent, and
NationsBank (and any successor acting as Agent) and its affiliates may accept
fees and other consideration from any Credit Party or any of its Subsidiaries or
affiliates for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
12.5. INDEMNIFICATION. The Lenders agree to indemnify the Agent (to the
extent not reimbursed under SECTION 13.9 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the Agent
(including by any Lender) in any way relating to or arising out of any Loan
Document or the transactions contemplated thereby or any action taken or omitted
by the Agent under any Loan Document; PROVIDED that no Lender shall
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be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs or expenses payable by the
Borrower under SECTION 13.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements contained
in this SECTION 12.5 shall survive payment in full of the Loans and all other
amounts payable under this Agreement.
12.6. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of CPV, the Borrower and their Subsidiaries and decision to
enter into this Agreement and that it will, independently and without reliance
upon the 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 analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition, or business of CPV, the
Borrower or any Subsidiaries or affiliates that may come into the possession of
the Agent or any of its affiliates.
12.7. RESIGNATION OF AGENT. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Majority Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America having combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this ARTICLE XII 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 Agent. In the event NationsBank shall cease to be a Lender
hereunder it shall resign within sixty (60) days as Agent hereunder.
12.8. SHARING OF PAYMENTS, ETC. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, set-off, counterclaim or
otherwise, obtain payment with respect to its Obligations (other than pursuant
to ARTICLE VI) which results in its receiving more than its pro rata share of
the aggregate payments with respect to all of the Obligations (other than any
payment expressly provided hereunder to be distributed on other than a pro rata
basis and payments pursuant to ARTICLE VI), then (a) such Lender shall be deemed
to have simultaneously purchased from the other Lenders a share in their
Obligations so that the amount of the Obligations held by each of the Lenders
shall be pro rata and (b) such other adjustments shall be made from time to
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time as shall be equitable to insure that the Lenders share such payments
ratably; PROVIDED, however, that for purposes of this SECTION 12.8 the term "pro
rata" shall be determined with respect to the Revolving Credit Commitment of
each Lender and to the Total Revolving Credit Commitments after subtraction of
amounts, if any, by which any such Lender has not funded its share of the
outstanding Loans and Obligations. If all or any portion of any such excess
payment is thereafter recovered from the Lender which received the same, the
purchase provided in this SECTION 12.8 shall be rescinded to the extent of such
recovery, without interest. The Borrower expressly consents to the foregoing
arrangements and agree that each Lender so purchasing a portion of the other
Lenders' Obligations may exercise all rights of payment (including, without
limitation, all rights of set-off, banker's lien or counterclaim) with respect
to such portion as fully as if such Lender were the direct holder of such
portion.
12.9. FEES. The Borrower agrees to pay to the Agent, for its individual
account, an annual Agent's fee as from time to time agreed to by the Borrower
and the Agent in writing.
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ARTICLE XIII
MISCELLANEOUS
13.1. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may assign to one
or more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Revolving
Loans, its Revolving Note, and its Revolving Credit Commitment); PROVIDED,
HOWEVER, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or
an assignment of all of a Lender's rights and obligations under this Agreement,
any such partial assignment shall be in an amount at least equal to $10,000,000
or an integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under this
Agreement and the Revolving Note; and
(iv) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the form of
EXHIBIT B hereto, together with any Revolving Note subject to such assignment
and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Revolving Notes are issued to the assignor and the assignee. If the assignee is
not incorporated under the laws of the United States of America or a state
thereof, it shall deliver to the Borrower and the Agent certification as to
exemption from deduction or withholding of Taxes in accordance with SECTION 6.6.
(b) The Agent shall maintain at its address referred to in SECTION 13.2
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Revolving Credit Commitment of, and principal amount of the Revolving Loans
owing to, each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the 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 Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
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(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Revolving Note subject to such assignment and
payment of the processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of EXHIBIT B
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
(d) Each Lender may sell participations to one or more Persons in all
or a portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Revolving Credit Commitment or its
Revolving Loans); PROVIDED, HOWEVER, that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participant shall be entitled to the benefit of the yield protection
provisions contained in ARTICLE VI and the right of set-off contained in SECTION
13.3, and (iv) the Borrower shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Revolving Loans and its Revolving
Note and to approve any amendment, modification, or waiver of any provision of
this Agreement (other than amendments, modifications, or waivers decreasing the
amount of principal of or the rate at which interest is payable on such
Revolving Loans or Revolving Note, extending any scheduled principal payment
date or date fixed for the payment of interest on such Revolving Loans or
Revolving Note, or extending its Revolving Credit Commitment to the extent the
Lender shall grant such rights).
(e) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its Revolving
Loans and its Revolving Note to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from its
obligations hereunder.
(f) Any Lender may furnish any information concerning the Borrower or
any of their Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of SECTION 13.15 hereof.
13.2. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor) (provided that if such day is not a Business Day, such date of
delivery or receipt shall be deemed to be the next following Business Day), (ii)
on the day of receipt (provided that if such day is not a Business Day, such
date of delivery or receipt shall be deemed to be the next following Business
Day) at such address, telefacsimile number or telex number as may from time to
time be specified by such party in written notice to the other parties hereto or
otherwise received, in the case of notice by telegram, telefacsimile or telex,
respectively (where the receipt of such message is verified by return), or (iii)
on the fifth Business Day after the day on which mailed, if sent prepaid by
certified or registered mail, return receipt requested, in each case delivered,
transmitted or mailed, as the case
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may be, to the address, telex number or telefacsimile number, as appropriate,
set forth below or such other address or number as such party shall specify by
notice hereunder:
(a) if to the Borrower or Guarantor:
c/o CPT Operating Partnership L.P.
3300 PGA Boulevard, Suite 430
Palm Beach Gardens, Florida 33410
Attn: Patrick T. Hogan
Telephone: (516) 630-6336
Telefacsimile: (561) 630-6311
with a copy to:
Akerman, Senterfitt & Eidson, P.A.
Las Olas Centre
Suite 950
450 East Las Olas Boulevard
Ft. Lauderdale, Florida 33301-2227
Attn: Bruce I. March, Esq.
Telephone: (954) 463-2700
Telefacsimile: (954) 463-2224
(b) if to the Agent:
NationsBank, National Association
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 386-9371
Telefacsimile: (704) 386-9923
with a copy to:
NationsBank, National Association
100 S.E. 2nd Street, 14th Floor
Miami, Florida 33131
Attention: Allison Freeland
Telephone: (305) 533-2421
Telefacsimile: (305) 533-2437
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(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance;
(d) if to any other Credit Party, at the address set
forth on the signature page of the Facility Guaranty
or Security Instrument executed by such Credit Party,
as the case may be.
13.3. RIGHT OF SET-OFF; ADJUSTMENTS. (a) Upon the occurrence and during
the continuance of any Event of Default, each Lender (and each of its
affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its affiliates)
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement and
the Note held by such Lender, irrespective of whether such Lender shall have
made any demand under this Agreement or such Note and although such obligations
may be unmatured. Each Lender agrees promptly to notify the Borrower after any
such set-off and application made by such Lender; PROVIDED, HOWEVER, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this SECTION 13.3 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.
(b) If any Lender (a "benefited Lender") shall at any time receive any
payment of all or part of the Revolving Loans owing to it, or interest thereon,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in respect of
such other Lender's Revolving Loans owing to it, or interest thereon, such
benefitted Lender shall purchase for cash from the other Lenders a participating
interest in such portion of each such other Lender's Revolving Loans owing to
it, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; PROVIDED, HOWEVER, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Borrower agrees that any Lender so purchasing a participation from a Lender
pursuant to this SECTION 13.3 may, to the fullest extent permitted by law,
exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Person were the direct
creditor of the Borrower in the amount of such participation.
13.4. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
97
<PAGE> 105
Eurodollar Rate Loan hereunder or the Borrower have continuing obligations
hereunder unless otherwise provided herein. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and permitted assigns of such party and all covenants, provisions and
agreements by or on behalf of the Borrower which are contained in the Loan
Documents shall inure to the benefit of the successors and permitted assigns of
the Lenders or any of them.
13.5. EXPENSES. The Borrower agrees to pay on demand all costs and
expenses of the Agent in connection with the syndication, preparation,
execution, delivery, administration, modification, and amendment of this
Agreement, the other Loan Documents, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and expenses of
counsel for the Agent (including the cost of internal counsel) with respect
thereto and with respect to advising the Agent as to its rights and
responsibilities under the Loan Documents. The Borrower further agrees to pay on
demand all costs and expenses of the Agent and the Lenders, if any (including,
without limitation, reasonable attorneys' fees and expenses and the cost of
internal counsel), in connection with the enforcement (whether through
negotiations, legal proceedings, or otherwise) of the Loan Documents and the
other documents to be delivered hereunder.
13.6. AMENDMENTS AND WAIVERS. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower and the Majority Lenders
(and, if ARTICLE XII or the rights or duties of the Agent are affected thereby,
by the Agent); PROVIDED that no such amendment or waiver shall, unless signed by
all the Lenders, (i) increase the Revolving Credit Commitment of the Lenders,
(ii) reduce the principal of or rate of interest on any Loan or any fees or
other amounts payable hereunder, (iii) postpone any date fixed for the payment
of any scheduled installment of principal of or interest on any Loan or any fees
or other amounts payable hereunder or for termination of any Revolving Credit
Commitment, or (iv) change the percentage of the Revolving Credit Commitment or
of the unpaid principal amount of the Notes, or the definition of "Majority
Lenders", or the number of Lenders, which shall be required for the Lenders or
any of them to take any action under this SECTION 13.6 or any other provision of
this Agreement or (v) release any Guarantor or all or substantially all of the
Collateral; and PROVIDED, FURTHER, that no such amendment or waiver that affects
the rights, privileges or obligations of NationsBank as provider of Swing Line
Loans, shall be effective unless also signed in writing by NationsBank or that
affects the rights, privileges or obligations of the Issuing Bank as issuer of
Letters of Credit, shall be effective unless also signed in writing by the
Issuing Bank;
No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances, except as otherwise expressly provided herein. No delay or
omission on any Lender's or the Agent's part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.
98
<PAGE> 106
13.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully- executed counterpart.
13.8. TERMINATION. The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower or CPV, the Lenders or the Agent, arising prior to the effective date
of such termination, and the provisions hereof shall continue to be fully
operative until all transactions entered into or rights created or obligations
incurred prior to such termination have been fully disposed of, concluded or
liquidated and the Obligations arising prior to or after such termination have
been irrevocably paid in full. The rights granted to the Agent for the benefit
of the Lenders under the Loan Documents shall continue in full force and effect,
notwithstanding the termination of this Agreement, until all of the Obligations
have been paid in full after the termination hereof (other than Obligations in
the nature of continuing indemnities or expense reimbursement obligations not
yet due and payable, which shall continue) or the Borrower have furnished the
Lenders and the Agent with an indemnification satisfactory to the Agent and each
Lender with respect thereto. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until payment
in full of the Obligations unless otherwise provided herein. Notwithstanding the
foregoing, if after receipt of any payment of all or any part of the
Obligations, any Lender is for any reason compelled to surrender such payment to
any Person because such payment is determined to be void or voidable as a
preference, impermissible setoff, a diversion of trust funds or for any other
reason, this Agreement shall continue in full force and the Borrower shall be
liable to, and shall indemnify and hold the Agent or such Lender harmless for,
the amount of such payment surrendered until the Agent or such Lender shall have
been finally and irrevocably paid in full. The provisions of the foregoing
sentence shall be and remain effective notwithstanding any contrary action which
may have been taken by the Agent or the Lenders in reliance upon such payment,
and any such contrary action so taken shall be without prejudice to the Agent or
the Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
13.9. INDEMNIFICATION; LIMITATION OF LIABILITY. (a) The Borrower agrees
to indemnify and hold harmless the Agent and each Lender and each of their
affiliates and their respective officers, directors, employees, agents, and
advisors (each, an "Indemnified Party") from and against any and all claims,
damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation, or proceeding or preparation of defense in
connection therewith) the Loan Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans, except to the
extent such claim, damage, loss, liability, cost, or expense is found in a
final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
In the case of an investigation, litigation or other proceeding to which the
indemnity in this SECTION 13.9 applies, such indemnity shall be effective
whether or not such
99
<PAGE> 107
investigation, litigation or proceeding is brought by the Borrower, their
directors, shareholders or creditors or an Indemnified Party or any other Person
or any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. The Borrower agrees that no
Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to them, any Subsidiary, any Guarantor, or any
security holders or creditors thereof arising out of, related to or in
connection with the transactions contemplated herein, except to the extent that
such liability is found in a final non-appealable judgment by a court of
competent jurisdiction to have directly resulted from such Indemnified Party's
gross negligence or willful misconduct. The Borrower agrees not to assert any
claim against the Agent, any Lender, any of their affiliates, or any of their
respective directors, officers, employees, attorneys, agents, and advisers, on
any theory of liability, for special, indirect, consequential, or punitive
damages arising out of or otherwise relating to the Loan Documents, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Loans.
(b) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 13.9 shall survive the payment in full of the Loans and all other
amounts payable under this Agreement.
13.10. SEVERABILITY. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
13.11. ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, Eurodollar Rate Loans and other communications between or among
the parties, both oral and written, with respect thereto.
13.12. AGREEMENT CONTROLS. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
13.13. USURY SAVINGS CLAUSE. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if when the Loans made hereunder are repaid
in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this
100
<PAGE> 108
Agreement had at all times been in effect, then to the extent permitted by law,
the Borrower shall pay to the Agent an amount equal to the difference between
the amount of interest paid and the amount of interest which would have been
paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding
the foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be canceled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
13.14. PAYMENTS. All principal, interest, and other amounts to be paid
by the Borrower under this Agreement and the other Loan Documents shall be paid
to the Agent at the Principal Office in Dollars and in immediately available
funds, without setoff, deduction or counterclaim. Subject to the definition of
"Interest Period" herein, whenever any payment under this Agreement or any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time in such case shall be included in the computation of interest and fees,
as applicable, and as the case may be.
13.15. CONFIDENTIALITY. The Agent and each Lender (each, a "LENDING
PARTY') agrees to keep confidential any information furnished or made available
to it by the Borrower pursuant to this Agreement that is marked confidential;
PROVIDED that nothing herein shall prevent any Lending Party from disclosing
such information (a) to any other Lending Party or any affiliate of any Party or
affiliate of any Lending Party, (b) to any other Person if reasonably incidental
to the administration of the credit facility provided herein, (c) as required by
any law, rule, or regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to any Lending Party other than as a result of a disclosure by any Lending Party
prohibited by this Agreement, (g) in connection with any litigation to which
such Lending Party or any of its affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any remedy under this Agreement or
any other Loan Document, and (i) subject to provisions substantially similar to
those contained in this SECTION 13.15, to any actual or proposed participant or
assignee.
13.16. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND
CONSTRUED IN
101
<PAGE> 109
ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) THE BORROWER AND CPV HEREBY EXPRESSLY AND IRREVOCABLY
AGREE AND CONSENT THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY
BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTIES OF
DADE, BROWARD OR PALM BEACH, STATE OF FLORIDA, UNITED STATES OF AMERICA
AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER AND
CPV EXPRESSLY WAIVE ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT
AND ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING, AND THE BORROWER AND CPV HEREBY IRREVOCABLY SUBMIT
GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) THE BORROWER AND CPV AGREE THAT SERVICE OF PROCESS MAY BE
MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR
OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY
REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE
BORROWER PROVIDED IN SECTION 13.2, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF
FLORIDA.
(d) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
COURTS OF ANY JURISDICTION WHERE THE BORROWER OR CPV OR ANY OF THE
BORROWER'S OR CPV'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE
EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE
BORROWER AND CPV HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY
SUCH COURT AND EXPRESSLY WAIVE, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER THEM AND
THEIR PROPERTY BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER
MAY BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR
102
<PAGE> 110
AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, THE BORROWER, CPV, THE AGENT AND THE LENDERS
HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY
SUCH ACTION OR PROCEEDING.
[Signatures on following pages]
103
<PAGE> 111
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
CPT OPERATING PARTNERSHIP L.P.,
as Borrower
By: Correctional Properties Trust, General Partner
WITNESS:
/s/ Rebecca Chaffin By: /s/ Charles R. Jones
- --------------------------- --------------------------------------------
Name: Charles R. Jones
Title: President & Chief Executive Officer
/s/ Patrick T. Hogan
- ---------------------------
CORRECTIONAL PROPERTIES TRUST,
as Guarantor
WITNESS:
/s/ Rebecca Chaffin By: /s/ Charles R. Jones
- --------------------------- --------------------------------------------
Name: Charles R. Jones
Title: President & Chief Executive Officer
/s/ Patrick T. Hogan
- ---------------------------
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By: /s/ Allison S. Freeland
--------------------------------------------
Name: Allison S. Freeland
Title: Senior Vice President
CREDIT AGREEMENT
SIGNATURE PAGE 1 OF 10
<PAGE> 112
NATIONSBANK, NATIONAL ASSOCIATION
By: /s/ Allison S. Freeland
Name: Allison S. Freeland
Title: Senior Vice President
Lending Office for Base Rate Loans:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 386-9371
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, National Association
ABA# 053000196
Account No.: ____________________________
Reference: Correctional Properties Trust
Attention: Agency Services
Lending Office for Eurodollar Rate Loans:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 386-9371
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, National Association
ABA# 053000196
Account No.: ____________________________
Reference: Correctional Properties Trust
Attention: Agency Services
CREDIT AGREEMENT
SIGNATURE PAGE 2 OF 10
<PAGE> 113
THE BANK OF NOVA SCOTIA
By: /s/ Barbara J. Brown
------------------------------------
Name: Barbara J. Brown
Title: Senior Relationship Manager
Lending Office:
1 Liberty Plaza
New York, New York 10006
Wire Transfer Instructions:
The Bank of Nova Scotia
New York, New York
ABA #026002532
Account #NCB New York 6086-37
Attention: Nadine Bell
Reference: Correctional Properties Trust
CREDIT AGREEMENT
SIGNATURE PAGE 3 OF 10
<PAGE> 114
FIRST UNION NATIONAL BANK
By: /s/ Mareen Walker Duvall
------------------------------------
Name: Maureen Walker Duvall
Title: Senior Vice President
Lending Office:
77 E. Camino Real, 2nd Floor
Boca Raton, Florida 33432
Wire Transfer Instructions:
First Union National Bank
Jacksonville, Florida
ABA #063000021
Account #______________________________
Account Name: Correctional Properties Trust
Attention: Cindy Petry
CREDIT AGREEMENT
SIGNATURE PAGE 4 OF 10
<PAGE> 115
PNC BANK, N.A.
By: /s/ James D. Neil
------------------------------------
Name: James D. Neil
Title: Vice President
Lending Office:
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
Wire Transfer Instructions:
PNC Bank, N.A.
Pittsburgh, Pennsylvania
ABA #043-000-096
Account #196030010890
Attention: Commercial Loan Operations
Reference: Correctional Properties Trust
CREDIT AGREEMENT
SIGNATURE PAGE 5 OF 10
<PAGE> 116
SOUTHTRUST BANK, NATIONAL ASSOCIATION
By: /s/ Steven W. Davis
------------------------------------------------
Name: Steven W. Davis
Title: Vice President
Lending Office:
420 N. 20th Street
Southeastern Banking, 9th Floor
Birmingham, Alabama 35203
Wire Transfer Instructions:
SouthTrust Bank, National Association
Birmingham, Alabama
ABA #062-000080
Account #131009
Attention: Joanne Gundling (813) 825-2733
upon receipt
CREDIT AGREEMENT
SIGNATURE PAGE 6 OF 10
<PAGE> 117
SUNTRUST BANK, SOUTH FLORIDA, N.A.
By: /s/ Jeffrey S. Wolfe
-------------------------------------
Name: Jeffrey S. Wolfe
Title: Vice President
Lending Office:
222 Lakeview Avenue
Suite 305
West Palm Beach, Florida 33401
Wire Transfer Instructions:
SunTrust Bank, South Florida, N.A.
Fort Lauderdale, Florida
ABA #067006076
Account #9607004110
Account Name: Corporate Loan Operations
Attention: Jennifer Campbell
Reference: Correctional Properties Trust
CREDIT AGREEMENT
SIGNATURE PAGE 7 OF 10
<PAGE> 118
BANKATLANTIC
By: /s/ Ana C. Bolduc
----------------------------------------
Name: Ana C. Bolduc
Title: Senior Vice President
Lending Office:
100 N. Biscayne Boulevard
Miami, Florida 33132
Wire Transfer Instructions:
BankAtlantic
Ft. Lauderdale, Florida
ABA #267083763
Account #12017547
Account Name: CPT Operating Partnership L.P.
Attention: Maria Cerdeiras
Vice President Commercial Loan Operations
CREDIT AGREEMENT
SIGNATURE PAGE 8 OF 10
<PAGE> 119
BANK ONE, OKLAHOMA, N.A.
By: /s/ Mary Lynn McManus
-------------------------------------
Name: Mary Lynn McManus
Title: Vice President
Lending Office:
100 N. Broadway
Oklahoma City, Oklahoma 73102
Wire Transfer Instructions:
Bank One, Oklahoma, N.A.
Oklahoma City, Oklahoma
ABA #103000648
GL Account #151010-0780
Attention: Commercial Loans
Reference: Correctional Properties Trust
CREDIT AGREEMENT
SIGNATURE PAGE 9 OF 10
<PAGE> 120
BANK AUSTRIA CREDITANSTALT CORPORATE
FINANCE, INC.
By: /s/ Stephen W. Hipp
----------------------------------------
Name: Stephen W. Hipp
Title: Associate
By: /s/ Robert M. Biringer
----------------------------------------
Name: Robert M. Biringer
Title: Executive Vice President
Lending Office:
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Wire Transfer Instructions:
Chase NY
ABA #021000021
Account: Bank Austria
Account #400921944
Reference: Correctional Properties Trust
CREDIT AGREEMENT
SIGNATURE PAGE 10 OF 10
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
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<COMMON> 130,729
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