<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1999
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: 0-25245
PRISON REALTY TRUST, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 62-1763875
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
10 BURTON HILLS BLVD., SUITE 100, NASHVILLE, TENNESSEE 37215
(ADDRESS AND ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)
(615) 263-0200
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
none
(FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR
IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
(Outstanding shares of the issuer's common stock, $0.01 par value per share, as
of August 11, 1999)
118,168,443
<PAGE> 2
PRISON REALTY TRUST, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
a) Condensed Consolidated Balance Sheets as of June 30, 1999
(Unaudited) and December 31, 1998......................................... 2
b) Condensed Consolidated Statements of Income (Unaudited) for
the three and six months ended June 30, 1999 and 1998..................... 4
c) Condensed Consolidated Statements of Cash Flows (Unaudited)
for the six months ended June 30, 1999 and 1998........................... 5
d) Notes to Condensed Consolidated Financial Statements...................... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................. 18
Item 3. Quantitative and Qualitative Disclosures About Market
Risk...................................................................... 35
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings......................................................... 36
Item 2. Changes in Securities and Use of Proceeds................................. 37
Item 3. Defaults Upon Senior Securities........................................... 37
Item 4. Submission of Matters to a Vote of Security Holders....................... 37
Item 5. Other Information......................................................... 37
Item 6. Exhibits and Reports on Form 8-K.......................................... 38
SIGNATURE........................................................................... 39
</TABLE>
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS.
PRISON REALTY TRUST, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (SEE NOTE 3)
JUNE 30, 1999 AND DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate properties, at cost:
Correctional and detention facilities $ 2,200,325 $ 637,640
Less accumulated depreciation (27,799) (10,251)
----------- ----------
Net real estate properties 2,172,526 627,389
Cash and cash equivalents 2,052 31,141
Restricted cash 38,870 --
Notes receivable 138,549 138,549
Investments in affiliates and others 129,975 127,691
Investments in direct financing leases 74,981 77,809
Deferred tax assets -- 51,200
Assets under lease arrangements, net 44,423 --
Receivable from New CCA 10,593 --
Other assets 41,607 36,658
----------- ----------
Total assets $ 2,653,576 $1,090,437
=========== ==========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
(Continued)
2
<PAGE> 4
PRISON REALTY TRUST, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (SEE NOTE 3)
JUNE 30, 1999 AND DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- ----------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Distributions payable $ 215,642 $ --
Bank credit facility 648,750 222,000
Notes payable 100,000 --
Convertible subordinated notes and other debt 70,796 77,833
Accounts payable and accrued expenses 99,373 81,200
Income taxes payable 5,746 14,966
Deferred gains on real estate transactions -- 125,751
Deferred gains on sales of contracts 110,996 116,701
Deferred tax liability 32,000 --
----------- ----------
Total liabilities 1,283,303 638,451
----------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 10,000,000 shares
authorized; 4,300,000 and 0 outstanding 43 --
Common stock, $.01 par value; 300,000,000 shares
authorized, 118,166,000 and 79,956,000 shares issued
and outstanding 1,182 800
Additional paid-in capital 1,378,922 398,493
Retained earnings -- 52,693
Cumulative net income 121,018 --
Accumulated distributions (130,892) --
----------- ----------
Total stockholders' equity 1,370,273 451,986
----------- ----------
Total liabilities and stockholders' equity $ 2,653,576 $1,090,437
=========== ==========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
3
<PAGE> 5
PRISON REALTY TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (SEE NOTE 3)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Rental revenues $ 65,828 $ -- $ 129,468 $ --
Interest income 5,827 -- 12,041 --
Licensing fees 2,186 -- 4,318 --
Management and other revenues -- 164,071 -- 305,369
--------- --------- --------- ---------
73,841 164,071 145,827 305,369
--------- --------- --------- ---------
EXPENSES:
Depreciation and amortization 10,502 3,899 20,419 7,287
General and administrative 1,725 5,510 2,607 10,463
Operating -- 114,623 -- 214,342
Lease -- 13,841 -- 24,936
--------- --------- --------- ---------
12,227 137,873 23,026 257,028
--------- --------- --------- ---------
OPERATING INCOME 61,614 26,198 122,801 48,341
Equity in earnings of subsidiaries and amortization
of deferred gains 7,476 -- 15,157 --
Interest expense (7,036) (1,785) (15,309) (3,276)
Interest income -- 4,205 -- 8,487
Loss on disposition of property (1,631) -- (1,631) --
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 60,423 28,618 121,018 53,552
Provision for change in tax status -- -- 83,200 --
Provision for income taxes -- 7,530 -- 14,021
--------- --------- --------- ---------
NET INCOME 60,423 21,088 37,818 39,531
DIVIDENDS TO PREFERRED SHAREHOLDERS (2,150) -- (4,300) --
--------- --------- --------- ---------
NET INCOME AVAILABLE FOR COMMON
SHARES $ 58,273 $ 21,088 $ 33,518 $ 39,531
========= ========= ========= =========
NET INCOME AVAILABLE PER COMMON
SHARE:
BASIC $ 0.50 $ 0.30 $ 0.30 $ 0.57
========= ========= ========= =========
DILUTED $ 0.50 $ 0.27 $ 0.30 $ 0.50
========= ========= ========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING, BASIC 116,421 70,312 111,871 69,934
========= ========= ========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING, DILUTED 117,763 78,806 112,687 78,971
========= ========= ========= =========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
4
<PAGE> 6
PRISON REALTY TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (SEE NOTE 3)
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED AND AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1999 1998
----------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 37,818 $ 39,531
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 20,419 7,287
Provision for change in tax status 83,200 --
Deferred and other noncash income taxes -- 1,818
Other noncash items 536 243
Loss on disposition of property 1,631 2
Equity in earnings of unconsolidated entities (9,819) (544)
Recognized gain on sales of contracts (5,338) --
Recognized gain on real estate transactions -- (5,070)
Changes in assets and liabilities, net
Accounts receivable (1,412) (24,253)
Prepaid expenses (120) (2,367)
Other current assets (9,285) (622)
Accounts payable (9,304) 31,248
Income taxes payable (9,220) (10,253)
Accrued expenses and other liabilities 5,460 1,705
----------- --------
Net cash provided by operating activities 104,566 38,725
----------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property and equipment (351,032) (189,225)
Increase in restricted cash and investments (21,682) --
Cash acquired in purchase of CCA Prison Realty Trust 21,894 --
Payments under lease arrangements (44,959) --
Increase in other assets (400) (12,414)
Proceeds from disposal of assets -- 36,132
Acquisition of USCC subsidiaries, net of cash acquired -- (9,341)
Payments from investment in affiliates, net 7,535 (157)
Payments received on direct financing leases and notes receivable 2,827 2,627
----------- --------
Net cash used in investing activities (385,817) (172,378)
----------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 40,000 --
Payments on long-term debt (1,286) (22)
Proceeds from line of credit, net 148,400 140,000
Proceeds from issuance of senior notes 100,000 --
Payment of debt issuance costs (12,290) (2,925)
Proceeds from issuance of common stock 119,672 --
Distributions paid on common shares (138,075) --
Distributions paid on preferred shares (4,300) --
Proceeds from exercise of stock options and warrants 41 1,508
Purchase of treasury stock -- (7,600)
----------- --------
Net cash provided by financing activities 252,162 130,961
----------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (29,089) (2,692)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 31,141 136,147
----------- --------
CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 2,052 $133,455
=========== ========
</TABLE>
(CONTINUED)
5
<PAGE> 7
PRISON REALTY TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (SEE NOTE 3)
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED AND AMOUNTS IN THOUSANDS)
(CONTINUED)
<TABLE>
<CAPTION>
1999 1998
----------- --------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of capitalized amounts) $ 984 $ 2,921
=========== ========
Income taxes $ 9,220 $ 22,231
=========== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES-
INCREASES (DECREASES) TO CASH:
Long-term debt was converted into common stock:
Other assets $ 1,161 $ 5
Long-term debt (47,000) (1,400)
Common stock 50 51
Additional paid-in capital 45,789 32
Treasury stock -- 32,812
Retained earnings -- (31,500)
----------- --------
$ -- $ --
=========== ========
The Company acquired treasury stock and issued common stock
through the exercise of stock options:
Common stock $ -- $ 398
Additional paid-in capital -- 3,331
Retained earnings -- (114)
Treasury stock, at cost -- (3,615)
----------- --------
$ -- $ --
=========== ========
The Company converted a facility from investment in direct
financing lease to property and equipment by acquiring the
equity in the facility from the leasing entity:
Accounts receivable $ -- $ 3,500
Property and equipment -- (16,207)
Investment in direct financing leases -- 12,707
----------- --------
$ -- $ --
=========== ========
The Company acquired CCA Prison Realty Trust's assets and
liabilities for stock:
Restricted cash $ (17,188) $ --
Property and equipment (1,323,100) --
Other assets (9,496) --
Accounts payable and accrued expenses 29,248 --
Line of credit 279,600 --
Distributions payable 2,150 --
Common stock 253 --
Preferred stock 43 --
Additional paid-in capital 1,081,161 --
Retained earnings 43,817 --
Accumulated distributions -- --
(64,594) --
----------- --------
Net cash acquired $ 21,894 $ --
=========== ========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
6
<PAGE> 8
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
1. ORGANIZATION AND OPERATIONS
BACKGROUND AND FORMATION TRANSACTIONS
Prison Realty Trust, Inc., formerly Prison Realty Corporation, a Maryland
corporation (the "Company"), was formed in September 1998. Corrections
Corporation of America, a Tennessee corporation ("Old CCA"), and CCA Prison
Realty Trust, a Maryland real estate investment trust ("Prison Realty"), merged
with and into the Company on December 31, 1998 and January 1, 1999, respectively
(collectively, the "Merger"), pursuant to an Amended and Restated Agreement and
Plan of Merger by and among Old CCA, Prison Realty and the Company, dated as of
September 29, 1998. Reference is made to the "Notes to the Condensed
Consolidated Financial Statements" for the Company included in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, filed with
the Commission on May 14, 1999 (File no. 0-25245), with respect to certain
Merger transactions and contractual relationships as well as other pertinent
information of the Company.
The Merger has been accounted for as a reverse acquisition of the Company by Old
CCA and the acquisition of Prison Realty by the Company. As such, Old CCA's
assets and liabilities have been carried forward at historical cost and the
provisions of reverse acquisition accounting prescribe that Old CCA's historical
financial statements be presented as the Company's historical financial
statements. The historical equity sections of the financial statements and
earnings per share have been retroactively restated to reflect the Company's
equity structure including the exchange ratio and the effects of the differences
in par values of the respective companies' common stock. Prison Realty's assets
and liabilities have been recorded at fair market value, as required by
Accounting Principles Board Opinion No. 16.
OPERATIONS
Prior to the Merger, Old CCA operated and managed prisons and other correctional
and detention facilities and provided prisoner transportation services for
governmental agencies. Old CCA also provided a full range of related services to
governmental agencies, including managing, financing, developing, designing and
constructing new correctional and detention facilities and redesigning and
renovating older facilities. Subsequent to the Merger, the Company specializes
in acquiring, developing and owning correctional and detention facilities. The
Company intends to operate so as to qualify as a real estate investment trust,
or REIT, for federal income tax purposes and intends to elect to qualify as a
REIT commencing with its taxable year ending December 31, 1999.
The Company's results of operations for all periods prior to January 1, 1999
reflect the operating results of Old CCA and the results of operations
subsequent to January 1, 1999 reflect the operating results of the Company as a
REIT. The accompanying unaudited condensed consolidated financial statements
compare the operating results of the Company for the three and six months ended
June 30, 1999 to the three and six months ended June 30, 1998. Management
believes the comparison between 1999 and 1998 is not meaningful because the 1998
results reflect the operations of Old CCA and the 1999 results of operations
reflect the operating results of the Company as a REIT.
7
<PAGE> 9
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(CONTINUED)
The following unaudited pro forma operating information presents a summary of
comparable consolidated results of combined operations as a REIT of the Company
and Prison Realty for the six months ended June 30, 1998, as if the Merger had
occurred as of January 1, 1998 and excluding the effect of any provision for the
change in tax status. The unaudited pro forma operating information is presented
for comparison purposes only and does not purport to represent what the
Company's results of operations actually would have been had the Merger, in
fact, occurred on January 1, 1998.
<TABLE>
<CAPTION>
PRO FORMA
SIX MONTHS ENDED
JUNE 30, 1998
-------------
<S> <C>
(amounts in thousands, except per share amounts)
Revenues $103,872
Operating income 84,389
Net income available to common shareholders 80,735
Net income per common share:
Basic $ 0.88
Diluted 0.80
</TABLE>
2. MERGER TRANSACTIONS AND RELATED CONTRACTUAL RELATIONSHIPS
On December 31, 1998, immediately prior to the Merger, Old CCA sold to
Corrections Corporation of America, formerly Correctional Management Services
Corporation, a privately-held Tennessee corporation formed in connection with
the Merger ("New CCA"), all of the issued and outstanding capital stock of
certain wholly-owned corporate subsidiaries of Old CCA, certain management
contracts and certain other assets and liabilities, and entered into a trade
name use agreement as described below. In exchange, Old CCA received an
installment note in the principal amount of $137.0 million (the "CCA Note") and
100% of the non-voting common stock of New CCA, representing a 9.5% economic
interest in New CCA valued at the implied fair market value of $4.8 million. The
CCA Note has a term of 10 years and bears interest at a rate of 12% per annum.
Interest only is generally payable for the first four years of the CCA Note, and
the principal will be amortized over the following six years. The sale to New
CCA generated a deferred gain of $62.2 million.
On December 31, 1998, immediately prior to the Merger and in connection with the
Merger, Old CCA sold to Prison Management Services, LLC, ("PMS") and Juvenile
and Jail Facility Management Services, LLC ("JJFMS"), two privately-held
Delaware limited liability companies formed in connection with the Merger,
certain management contracts and certain other assets and liabilities relating
to government-owned adult prison facilities and government-owned jails and
juvenile facilities managed by Old CCA. In exchange, Old CCA received 100% of
the non-voting membership interests in PMS and JJFMS which obligate PMS and
JJFMS to make distributions to Old CCA equal to 95% of each companies' net
income, as defined, and are valued at the combined implied fair market value of
$123.0 million. The Company succeeded to these interests as a result of the
Merger, and the Company's interests in PMS and JJFMS are included in
"Investments in affiliates and others" in the accompanying balance sheet. The
sales to PMS and JJFMS generated a combined deferred gain of $53.4 million. On
January 1, 1999, PMS merged with Prison Management Services, Inc., a
privately-held Tennessee corporation ("Service Company A") and JJFMS merged with
Juvenile and Jail Facility Management Services, Inc., a
8
<PAGE> 10
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(CONTINUED)
privately-held Tennessee corporation ("Service Company B," and collectively with
Service Company A, the "Service Companies").
The deferred gains from the sales of contracts to New CCA and the Service
Companies will be amortized into income over multi-year periods as specified by
the Securities and Exchange Commission's Staff Accounting Bulletin No. 81. The
Company's investments in the Service Companies are being accounted for under the
equity method of accounting. The Company's investment in New CCA is being
accounted for under the cost method of accounting.
Under a trade name use agreement with New CCA resulting from the Merger (the
"Trade Name Use Agreement"), New CCA pays a licensing fee to the Company for the
right to use the name "Corrections Corporation of America" and derivatives
thereof.
On January 1, 1999, immediately after the Merger, all existing leases between
Old CCA and Prison Realty were cancelled and the Company entered into a master
lease agreement and leases with respect to each leased property with New CCA
(the "New CCA Leases"). The terms of the New CCA Leases are twelve years which
may be extended at fair market rates for three additional five-year periods upon
the mutual agreement of the Company and New CCA.
On January 1, 1999, immediately after the Merger, the Company entered into a
services agreement (the "Services Agreement") with New CCA pursuant to which New
CCA agreed to serve as a facilitator of the construction and development of
additional facilities on behalf of the Company for a term of five years from the
date of the Services Agreement. In such capacity, New CCA will perform, at the
direction of the Company, such services as are customarily needed in the
construction and development of correctional and detention facilities, including
services related to construction of the facilities, project bidding, project
design, and governmental relations. In consideration for the performance of such
services by New CCA, the Company agreed to pay a fee equal to 5% of the total
capital expenditures (excluding the incentive fee discussed below and the 5% fee
referred to herein) incurred in connection with the construction and development
of a facility, plus an amount equal to approximately $560 per bed for facility
preparation services provided by New CCA prior to the date on which inmates are
first received at such facility. The Board of Directors of the Company has
authorized payments up to an additional 5% of the total capital expenditures (as
determined above) to New CCA if additional services are requested by the
Company. A majority of the Company's current development projects are subject to
a fee totaling 10%.
On January 1, 1999, immediately after the Merger, the Company entered into a
tenant incentive agreement (the "Tenant Incentive Agreement") with New CCA
pursuant to which the Company agreed to pay to New CCA an incentive fee to
induce New CCA to enter into New CCA Leases with respect to those facilities
developed and facilitated by New CCA. The amount of the incentive fee was set at
$840 per bed for each facility leased by New CCA for which New CCA served as
developer and facilitator. This $840 per bed incentive fee, however, did not
include an allowance for rental payments to be paid by New CCA. Therefore, on
May 4, 1999, the Company and New CCA entered into an amended and restated tenant
incentive agreement (the "Amended and Restated Tenant Incentive Agreement"),
effective as of January 1, 1999, providing for (i) a tenant incentive fee of up
to $4,000 per bed payable with respect to all future facilities developed and
facilitated by New CCA, as well as certain other facilities which, although
operational on January 1, 1999, had not achieved full occupancy, and (ii) an
9
<PAGE> 11
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(CONTINUED)
$840 per bed allowance for all beds in operation at the beginning of January
1999, approximately 21,500 beds, that were not subject to the tenant allowance
in the first quarter of 1999. The amount of the amended tenant incentive fee
includes an allowance for rental payments to be paid by New CCA prior to the
facility reaching stabilized occupancy. The term of the Amended and Restated
Tenant Incentive Agreement is four years unless extended upon the written
agreement of the Company and New CCA. The incentive fees with New CCA are being
deferred and amortized as a reduction to rental revenues over the respective
lease term.
Effective January 1, 1999, the Company entered into a four year business
development agreement (the "Business Development Agreement") with New CCA which
provides that New CCA will perform, at the direction of the Company, services
designed to assist the Company in identifying and obtaining new business.
Pursuant to the agreement, the Company has agreed to pay to New CCA a total fee
equal to 4.5% of the total capital expenditures (excluding the amount of the
tenant incentive fee and the services fee discussed above as well as the 4.5%
fee referred to herein) incurred in connection with the construction and
development of each new facility, or the construction and development of an
addition to an existing facility, for which New CCA performed business
development services.
3. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of the Company include all the accounts of
the Company and its subsidiaries subsequent to the Merger, including Prison
Realty Management, Inc., a Tennessee corporation and wholly-owned management
subsidiary. All significant intercompany balances and transactions have been
eliminated.
The accompanying interim consolidated financial statements are unaudited. The
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 United States Securities and Exchange
Commission (the "Commission"). Accordingly, they do not include all of the
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
solely of normal recurring matters) necessary for a fair presentation of the
financial statements for this interim period have been included. The results of
operations for the interim period are not necessarily indicative of the results
to be obtained for the full fiscal year. Reference is made to the audited
financial statements of the Company included in the Company's Annual Report on
Form 10-K for the fiscal year ending December 31, 1998, filed with the
Commission on March 30, 1999 (File no. 0-25245), with respect to certain
significant accounting and financial reporting policies as well as other
pertinent information of the Company. Since prior to the Merger Prison Realty
had operated so as to qualify as a REIT, the Company has adopted certain
significant accounting policies of Prison Realty. Reference is made to the
audited financial statements of Prison Realty included in Prison Realty's Annual
Report on Form 10-K for the fiscal year ending December 31, 1998, filed with the
Commission on March 30, 1999 (File no. 1-13049), with respect to certain
significant accounting and financial reporting policies as well as other
pertinent information of Prison Realty.
10
<PAGE> 12
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(CONTINUED)
4. REAL ESTATE PROPERTIES
As discussed previously, pursuant to the Merger, the Company acquired all of the
assets and liabilities of Prison Realty on January 1, 1999, including 23 leased
facilities and one real estate property under construction. The real estate
properties acquired by the Company in conjunction with the acquisition of Prison
Realty have been recorded at estimated fair market value in accordance with the
purchase method of accounting prescribed by Accounting Principles Board Opinion
No. 16.
At June 30, 1999, the Company owned 51 correctional and detention facilities, of
which 39 facilities were operating, nine were under construction or expansion
and three were in the planning stages, with a total aggregate cost of $2.2
billion. At June 30, 1999, New CCA leased 31 facilities from the Company,
governmental agencies leased five facilities from the Company, and private
operators leased three facilities from the Company. The Company expects to lease
11 of the facilities under development to New CCA.
In April 1999, the Company purchased the Eden Detention Center in Eden, Texas
for $28.0 million. The facility has a design capacity of 1,225 beds and is
managed by New CCA and leased to New CCA under lease terms substantially similar
to the New CCA leases.
5. LONG TERM DEBT
On January 1, 1999, in connection with the completion of the Merger, the Company
obtained a $650.0 million, secured credit facility (the "Credit Facility") from
NationsBank, N.A., as Administrative Agent and several U.S. and non-U.S. banks.
The Credit Facility includes up to a maximum of $250.0 million in tranche B term
loans and $400.0 million in revolving loans, including a $150.0 million
subfacility for letters of credit. The term loans require principal quarterly
payments of $625,000 throughout the term of the loan with the remaining balance
maturing on January 1, 2003 and the revolving loans maturing on January 1, 2002.
Interest rates, unused commitment fees, and letter of credit fees on the Credit
Facility are subject to change based on the Company's senior debt rating. The
Credit Facility is secured by mortgages on the Company's real property. At June
30, 1999, the weighted average borrowing rate under the Credit Facility was
7.89% and the outstanding borrowings thereunder were $648.8 million.
On August 4, 1999, the Company completed an amendment and restatement of the
Credit Facility (the "Amended Credit Facility") increasing amounts available to
the Company under the original Credit Facility to $1.0 billion through the
addition of $350.0 million tranche C term loans. The tranche C term loans will
be payable in equal quarterly installments in the amount of $875,000 through the
calendar quarter ending September 30, 2002 with the balance to be paid in full
on December 31, 2002. Under the Amended Credit Facility, Lehman Commercial
Paper, Inc. ("LCPI") replaced NationsBank, N.A., as Administrative Agent.
The Amended Credit Facility, similar to the Credit Facility, provides for
interest rates, unused commitment fees, and letter of credit fees to change
based on the Company's senior debt rating. As with the Credit Facility, the
Amended Credit Facility bears interest at variable rates of interest based on a
spread over the base rate or LIBOR (as elected by the Company), which spread is
determined by reference to the Company's credit rating. The revised spread
ranges from 0.50% to 2.25% for base rate loans and from 2.00% to 3.75% for LIBOR
rate loans. These ranges replace the original spread ranges of
11
<PAGE> 13
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(CONTINUED)
0.25% to 1.25% for base rate loans and 1.375% to 2.75% for LIBOR rate loans. The
term loan portions of the Amended Credit Facility bear interest at a variable
base rate equal to 4.0% in excess of LIBOR. This revised rate replaces the
variable base rate equal to 3.25% in excess of LIBOR in the Credit Facility.
The Amended Credit Facility, similar to the Credit Facility, is secured by
mortgages on the Company's real property. Borrowings are limited based on a
revised borrowing base formula which considers, among other things, eligible
real estate. The Amended Credit Facility contains certain revised financial
covenants, primarily: (a) maintenance of leverage, interest coverage, debt
service coverage and total indebtedness ratios, and (b) restrictions on the
incurrence of additional indebtedness. The Amended Credit Facility restricts the
Company's ability to make the 1999 cash payment of the Special Dividend (as
herein defined) unless (a) the Company has liquidity of at least $75.0 million
at the dividend declaration date and (b) the Company receives at least $100.0
million in cash proceeds for the issuance of equity or similar securities from a
new investor receiving representation on the Company's Board of Directors and
(c) New CCA receives at least $25.0 million in cash proceeds from the issuance
of any combination of equity securities and subordinated debt. The Company may,
however, pay up to $31.0 million in cash if only (a) and (c) above are achieved.
The Company was in compliance with all covenants under the Credit Facility
through August 4, 1999 and currently, is in compliance with all covenants under
the Amended Credit Facility. The Company expects to incur expenses of
approximately $40 million related to this amendment and restatement.
On June 11, 1999 the Company completed its offering of $100.0 million aggregate
principal amount of 12% Senior Notes due 2006 (the "Notes"). Interest on the
Notes will be paid semi-annually in arrears and the Notes have a seven year
non-callable term due June 1, 2006. Net proceeds from the offering were
approximately $95 million after deducting expenses payable by Prison Realty in
connection with the offering. The Company used the net proceeds from the sale of
the Notes for general corporate purposes and to repay revolving bank borrowings
under its Credit Facility.
On January 29, 1999, the Company issued $20.0 million of convertible
subordinated notes due in 2009 with interest payable semi-annually at 9.5%. The
notes are convertible into shares of the Company's common stock at a conversion
price of $28.00 per share. This issuance constituted the second tranche of a
commitment by the Company to issue an aggregate of $40.0 million of convertible
subordinated notes, with the first $20.0 million tranche issued in December,
1998 under substantially similar terms.
On March 8, 1999, the Company issued a $20.0 million convertible subordinated
note to Sodexho Alliance, S.A. ("Sodexho") pursuant to a forward contract
assumed by the Company from Old CCA in the Merger. The note bore interest at
LIBOR plus 1.35% and was convertible into shares of the Company's common stock
at a conversion price of $7.80 per share. On March 8, 1999, Sodexho converted
(i) $7.0 million of convertible subordinated notes bearing interest at 8.5% into
1.7 million shares of the Company's common stock at a conversion price of $4.09
per share, (ii) $20.0 million of convertible notes bearing interest at 7.5% into
700,000 shares of the Company's common stock at a conversion price of $28.53 and
(iii) $20.0 million of convertible subordinated notes bearing interest at LIBOR
plus 1.35% into 2.6 million shares of the Company's common stock at a conversion
price of $7.80 per share.
The $30.0 million of 7.5% convertible subordinated notes issued to PMI Mezzanine
Fund L.P. in connection with the Merger require that the Company revise the
conversion price as a result of the payment of a dividend or the issuance of
stock or convertible securities below market price. As of June
12
<PAGE> 14
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(CONTINUED)
30, 1999, the conversion price for the notes was $24.79 as compared to $27.42 at
issuance. This change in conversion price resulted from dividends paid by the
Company in 1999 and from the conversion of the Sodexho convertible subordinated
note on March 8, 1999 into 1.7 million shares of common stock at a conversion
price of $4.09 per share and 2.6 million shares of common stock at a conversion
price of $7.80 per share.
6. DISTRIBUTIONS TO STOCKHOLDERS
On March 4, 1999, the Company's Board of Directors declared a distribution of
$0.60 per share on the Company's common stock, comprised of a regular quarterly
dividend of $0.55 per share and a special dividend of $0.05 per share for the
quarter ended March 31, 1999, to common stockholders of record on March 19,
1999, payable on March 31, 1999. These distributions were paid on March 31,
1999. In addition, the Board of Directors declared a quarterly dividend on the
Company's 8.0% Series A Cumulative Preferred Stock of $0.50 per share to
preferred stockholders of record on March 31, 1999, payable on April 15, 1999.
These dividends were paid on April 15, 1999.
On May 11, 1999, the Company's Board of Directors declared a distribution of
$0.60 per share on the Company's common stock, comprised of a regular quarterly
dividend of $0.55 per share and a special dividend of $0.05 per share for the
quarter ended June 30, 1999, to common stockholders of record on June 18, 1999,
payable on June 30, 1999. These distributions were paid on June 30, 1999. In
addition, the Board of Directors declared a quarterly dividend on the Company's
8.0% Series A Cumulative Preferred Stock of $0.50 per share to preferred
stockholders of record on June 30, 1999, payable on July 15, 1999. These
dividends were paid on July 15, 1999.
The Company, as a REIT, cannot complete any taxable year with accumulated
earnings and profits from a taxable corporation. Accordingly, to preserve its
REIT status, the Company will distribute Old CCA's accumulated earnings and
profits to which it succeeded in the Merger (the "Special Dividend"). The
Company anticipates that it will make this distribution to all holders of shares
of its common stock in December 1999. This total distribution is estimated at
$225.0 million and has been accrued on the Company's balance sheet at June 30,
1999 net of a two quarterly prepayments totaling $11.5 million. These
prepayments represent $0.05 per share paid out in March 1999 and $0.05 per share
paid out in June 1999. At the time of payment, the Company intends to allocate
any overage between the Company's regular quarterly dividends paid and an amount
equal to 95% of the Company's taxable net income toward the payment of the
Special Dividend. Certain provisions of the Amended Credit Facility restrict the
Company's ability to make the 1999 cash payment of the Special Dividend in cash,
as described in Note 5, "Long Term Debt."
7. CONTINGENCIES
Since May 26, 1999, fifteen complaints have been filed in federal court in the
United States District Court for the Middle District of Tennessee, Nashville
Division, alleging securities fraud in connection with the agreements entered
into by the Company in May of this year to increase the tenant incentive and
other payments from the Company to New CCA, the Company's primary tenant. A
complaint substantially identical to the majority of those filed in federal
court in Tennessee has been filed in the United States District Court for the
Eastern District of New York. The Company believes it is likely that the
complaint filed in the United States District Court for the Eastern District of
New York will be transferred to the United States District Court for the Middle
13
<PAGE> 15
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(CONTINUED)
District of Tennessee and that all of the complaints will be consolidated into
one action. Additionally, a purported shareholders derivative complaint was
filed in the Chancery Court for Davidson County, Tennessee in Nashville against
the Company and the members of its board of directors regarding the increased
payments to New CCA. The Company is investigating the allegations in the
complaints, and although their outcome is not determinable, the Company intends
to defend these actions vigorously.
8. EARNINGS PER SHARE
SFAS 128, "Earnings per Share," has been issued effective for fiscal periods
ending after December 15, 1997. SFAS 128 establishes standards for computing and
presenting earnings per share. The Company adopted the provisions of SFAS 128 in
the fourth quarter of 1997. Under the standards established by SFAS 128,
earnings per share are measured at two levels: basic earnings per share and
diluted earnings per share. Basic earnings per share for the Company was
computed by dividing net income by the weighted average number of common shares
outstanding during the period. Diluted earnings per share was computed by
dividing net income (as adjusted) by the weighted average number of common
shares after considering the additional dilution related to convertible
preferred stock, convertible subordinated notes, options and warrants. For the
three and six months ended June 30, 1999, earnings per share for basic and
diluted were the same, respectively.
9. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income", effective for fiscal years beginning after
December 15, 1998. SFAS No. 130 requires that changes in the amounts of certain
items, including gains and losses on certain securities, be shown in the
Financial Statements. The Company adopted the provisions of SFAS No. 130 on
January 1, 1998. The Company's comprehensive income is equivalent to net income
for the six months ended June 30, 1999.
10. RELATIONSHIP WITH CORRECTIONS CORPORATION OF AMERICA
New CCA is a private prison management company which operates and manages the
substantial majority of facilities owned by the Company. As a result of the
Merger and certain contractual relationships existing between the Company and
New CCA, the Company has significant sources of income from New CCA. In
addition, the Company pays New CCA for services rendered to the Company in the
development of its correctional and detention facilities. As of June 30, 1999,
New CCA leased 31 of the 39 operating facilities owned by the Company.
INCOME
For the three and six months ended June 30, 1999, the Company recognized rental
revenue from New CCA of $63.2 million and $124.0 million, respectively.
For the three months and six months ended June 30, 1999, the Company recognized
interest income of $4.1 million and $8.2 million, respectively, on the CCA Note
in the principal amount of $137.0 million from New CCA. The interest is due from
New CCA by December 31, 1999.
14
<PAGE> 16
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(CONTINUED)
The Company also recognized $2.2 million and $4.3 million in licensing fee
revenues from New CCA for the use of the name "Corrections Corporation of
America" for the three and six months ended June 30, 1999, respectively.
TENANT INCENTIVE AGREEMENT
The Amended and Restated Tenant Incentive Agreement between the Company and New
CCA allows for Company payment of tenant incentive fees to induce New CCA to
enter into New CCA Leases with respect to those facilities developed and
facilitated by New CCA. The amount of the amended tenant incentive fee includes
an allowance for rental payments to be paid by New CCA prior to the facility
reaching stabilized occupancy. Pursuant to the Amended and Restated Tenant
Incentive Agreement the Company pays (i) a tenant incentive fee of up to $4,000
per bed payable with respect to all future facilities developed and facilitated
by New CCA, as well as certain other facilities which, although operational on
January 1, 1999, had not achieved full occupancy, and (ii) an $840 per bed
allowance for all beds in operation at the beginning of January 1999,
approximately 21,500 beds, that were not subject to the tenant allowance in the
first quarter of 1999. For the six months ended June 1999, the Company had paid
tenant incentive fees of $45.0 million of which $18.1 million related to the
$840 per bed allowance on the aforementioned 21,500 beds. These fees are being
amortized against rental revenues over the life of the leases. The amount of
unamortized incentives pursuant to the Amended and Restated Tenant Incentive
Agreement, as of June 30, 1999 is $44.4 million.
PAYMENT FOR SERVICES
The Company has entered into the Business Development Agreement and the Services
Agreement with New CCA, which provide for the Company to pay fees to New CCA for
services rendered to the Company for obtaining new construction projects (4.5%
of expected project expenditures) and facilitating the construction and
development of facilities (up to 10% of actual construction expenditures) and
facility preparation services ($560 per new bed) provided by New CCA prior to
the date on which inmates are first received at such facility. Costs incurred by
the Company under these construction and development agreements are capitalized
as part of the facilities' development cost. For the three and six months ended
June 30, 1999, costs incurred related to the Business Development Agreement were
$3.3 million and $11.9 million, respectively. Costs incurred related to the
Services Agreement for the three and six months ended June 30, 1999 were $14.4
million and $26.5 million, respectively.
15
<PAGE> 17
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(CONTINUED)
NEW CCA FINANCIAL INFORMATION
The following summarized unaudited operating information presents New CCA's
results of operations for the three and six months ended June 30, 1999:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1999 JUNE 30, 1999
------------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Revenues $ 127,617 $ 244,109
Net loss (22,492) (48,134)
</TABLE>
The following summarized unaudited balance sheet information presents New CCA's
financial position as of June 30, 1999:
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
(AMOUNTS IN THOUSANDS)
<S> <C>
Current assets $ 94,955
Total assets 224,995
Current liabilities 49,910
Deferred credits 64,479
Total liabilities 251,389
Stockholders' equity (26,394)
</TABLE>
The following summary presents New CCA's cash flows for the six months ended
June 30, 1999:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998
-------------
(AMOUNTS IN THOUSANDS)
<S> <C>
Cash flows provided by operating activities $ 3,091
Cash flows used in investing activities (1,256)
Cash flows used in financing activities (6,125)
-------
Net decrease in cash for the six months ended June 30, 1999 $(4,290)
=======
</TABLE>
New CCA has utilized cash from equity issuances and from payments from the
Company for tenant incentive arrangements and services provided to the Company
to offset its operating losses. New CCA expects to continue to use these sources
of cash and its availability under a line of credit to offset its anticipated
losses from operations. Cash used in investing activities consists of equipment
additions. Cash used in financing activities consists of line of credit issuance
fee.
The Company has included additional financial information of New CCA for the six
months ended June 30, 1999 herein under "Results of Operations" contained in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
16
<PAGE> 18
PRISON REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(CONTINUED)
The following unaudited operating information presents a combined summary of the
Service Companies' results of operations for the three and six months ended June
30, 1999:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1999 JUNE 30, 1999
------------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Revenues $70,596 $139,678
Net income 5,059 10,335
</TABLE>
The following unaudited balance sheet information presents a combined summary of
the Service Companies' financial position as of June 30, 1999:
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
(AMOUNTS IN THOUSANDS)
<S> <C>
Current assets $ 60,197
Total assets 156,345
Current liabilities 31,016
Total liabilities 32,586
Stockholders' equity 123,759
Total dividends accrued 7,381
Company share of dividends accrued 7,381
</TABLE>
17
<PAGE> 19
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.
This Quarterly Report on Form 10-Q, including "Management's Discussion and
Analysis of Financial Condition and Results of Operations," contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements reflect the Company's current views
with respect to future events and financial performance, and these statements
can be identified, without limitations, by the use of the words "anticipates,"
"believes", "estimates", "expects", "intends", "plans", "projects" and similar
expressions. Forward-looking statements are subject to risks, uncertainties and
other factors that may cause actual results or outcomes to differ materially
from future outcomes expressed or implied by the forward-looking statement. Such
factors include, but are not limited to, risks associated with the corrections
and detention industry, competitive market conditions, strength of the real
estate markets in which the Company operates and general economic conditions.
The Company disclosed such risks in detail in its Annual Report on Form 10-K for
the fiscal year ended December 31, 1998, filed with the Commission on March 30,
1999 (File No. 0-25245). Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances occurring after the date hereof or
to reflect the occurrence of unanticipated events.
OVERVIEW.
Reference is made to the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for the Company included in the Company's
Quarterly Report on Form 10-Q for the quarter ending March 31, 1999, filed with
the Commission on May 14, 1999 (File no. 0-25245), with respect to certain
Merger transactions and contractual relationships as well as other pertinent
information of the Company.
The Company was formed in September 1998 and commenced operations on January 1,
1999 after completion of the Merger. On December 31, 1998, immediately prior to
the Merger, and in connection with the Merger, Old CCA sold to New CCA all of
the issued and outstanding capital stock of certain wholly-owned corporate
subsidiaries of Old CCA, certain management contracts and certain other assets
and liabilities, and entered into the Trade Name Use Agreement, as described
below. In exchange, Old CCA received an installment note in the principal amount
of $137.0 million (the "CCA Note") and 100% of the non-voting common stock of
New CCA, representing a 9.5% economic interest. The CCA Note has a term of 10
years and bears interest at a rate of 12% per annum.
On December 31, 1998, immediately prior to the Merger and in connection with the
Merger, Old CCA sold to Prison Management Services, LLC, ("PMS") and Juvenile
and Jail Facility Management Services, LLC ("JJFMS"), two privately-held
Delaware limited liability companies formed in connection with the Merger,
certain management contracts and certain other assets and liabilities relating
to government-owned adult prison facilities and government-owned jails and
juvenile facilities managed by Old CCA. In exchange, Old CCA received 100% of
the non-voting membership interests in PMS and JJFMS which obligate PMS and
JJFMS to make distributions to Old CCA equal to 95% of each companies' net
income, as defined, and are valued at the combined implied fair market value of
$123.0 million. The Company succeeded to these interests as a result of the
Merger, and the Company's interests in PMS and JJFMS are included in
"Investments in affiliates and others" in the accompanying balance sheet. The
sales to PMS and JJFMS generated a combined deferred gain of $53.4 million. On
January 1,
18
<PAGE> 20
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
1999, PMS merged with Prison Management Services, Inc., a privately-held
Tennessee corporation ("Service Company A") and JJFMS merged with Juvenile and
Jail Facility Management Services, Inc., a privately-held Tennessee corporation
("Service Company B," and collectively with Service Company A, the "Service
Companies").
Under a trade name use agreement with New CCA resulting from the Merger (the
"Trade Name Use Agreement"), New CCA pays a licensing fee to the Company for the
right to use the name "Corrections Corporation of America" and derivatives
thereof.
The Merger has been accounted for as a reverse acquisition of the Company by Old
CCA and the acquisition of Prison Realty by the Company. As such, Old CCA's
assets and liabilities have been carried forward at historical cost and Old
CCA's historical financial statements are presented as the continuing accounting
entity's historical financial statements.
The Company's principal business strategy is to design, build and finance new
correctional and detention facilities and to lease these facilities under
long-term "triple net" leases to government entities and qualified private
prison managers, as well to expand its existing facilities. In addition, the
Company acquires existing facilities meeting certain investment criteria from
government and private prison owners.
Substantially all of the Company's revenues are derived from: (i) rents received
under triple net leases of correctional and detention facilities, (ii) dividends
from investments in the non-voting stock of certain subsidiaries, (iii) interest
income on the CCA Note, and (iv) license fees earned under the Trade Name Use
Agreement. New CCA currently leases 31 of the Company's 39 operating facilities
pursuant to the New CCA Leases and is the Company's primary tenant.
As New CCA is the lessee of a substantial majority of the Company's facilities,
the Company is dependent for its rental revenues upon New CCA's ability to make
the lease payments required under the New CCA Leases for such facilities. New
CCA's obligation to make payments under the New CCA Leases is not secured by any
of the assets of New CCA, although the obligations under the New CCA Leases are
cross-defaulted so that the Company could terminate all the leases if New CCA
fails to make required lease payments. If this were to happen, however, the
Company would be required to renegotiate existing leases or incentive fee
arrangements, to find other suitable lessees or to risk losing its ability to
elect or maintain REIT status, as applicable. New CCA experienced a net loss of
$22.5 million and $48.1 million for the three and six months ended June 30,
1999, respectively and had $3.1 million of cash flow provided by operating
activities for the first six months ended June 30, 1999. Net decrease in cash
and cash equivalents for the six months ended June 30, 1999 by New CCA was $4.3
million. New CCA has utilized cash from equity issuances and from payments from
the Company for tenant incentive arrangements and services provided to the
Company to offset its operating losses. New CCA expects to continue to use
these sources of cash and its availability under a line of credit to offset its
anticipated losses from operations.
In monitoring the ability of New CCA to satisfy its obligations under the lease
agreements, the Company reviews on a quarterly basis (i) the net increase or
decrease in cash of New CCA, (ii) the amount of available cash of New CCA (iii)
the amount of outstanding borrowings under New CCA's credit facility and (iv)
lease coverage ratios. On this basis, the Company believes that New CCA has
sufficient assets and borrowing capacity to enable it to satisfy its obligations
under such lease agreements at this time; however, there can be no assurance
that New CCA will have such assets, borrowing capacity or income
19
<PAGE> 21
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
in the future. A delay in payments from New CCA would likely require the Company
to borrow funds in order to continue its dividend policy. Moreover, while the
Company has leases with tenants other than New CCA, there can be no assurance
that the Company will be successful in obtaining lease agreements with lessees
other than New CCA to an extent such that the Company is not dependent on New
CCA as the primary source of its revenues. Due to the unique nature of
correctional and detention facilities, the Company may be unable to locate
suitable replacement lessees or to attract such lessees, and may, therefore, be
required to provide additional tenant incentives or reduce the amounts to be
received by the Company under its lease agreements. The Company will continue to
monitor the performance of New CCA, and, to the extent New CCA's financial
performance exceeds expectations, the Company will attempt to modify its
contractual relationships with New CCA to make them more favorable to the
Company.
The Company, together with its wholly owned management subsidiary, Prison Realty
Management, Inc., incurs operating and administrative expenses including,
principally, compensation expenses for its executive officers and other
employees, office rental and related occupancy costs and various expenses
incurred in the process of acquiring additional properties. The Company is
self-administered and managed by its executive officers and staff, and does not
engage a separate advisor or pay an advisory fee for administrative or
investment services, although the Company does procure property related services
from New CCA and 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 expects to leverage its portfolio of real estate equity investments
and will incur long and short-term indebtedness, and related interest expense,
from time to time.
The Company has made distributions to its stockholders in amounts not less than
the amounts required to maintain REIT status under the Code and, in general, in
amounts exceeding taxable income.
RESULTS OF OPERATIONS.
The Company commenced operations on January 1, 1999 as a result of the Merger.
The Merger was accounted for as a reverse acquisition of the Company by Old CCA
and the purchase of Prison Realty by the Company. As such, Old CCA was treated
as the acquiring company and Prison Realty was treated as the acquired company
for financial reporting purposes. The provisions of purchase method of
accounting prescribe that Old CCA's historical financial statements be presented
as the Company's historical financial statements. Management believes that
comparison of financial results between 1999 and 1998 is not meaningful because
the 1998 results reflect the operations of Old CCA and the 1999 results of
operations reflect the operating results of the Company as a REIT.
20
<PAGE> 22
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
To provide a more reasonable prior period comparison, the following table
presents the results of operations of the Company for the six months ended June
30, 1999 and the pro forma results of operations of the Company for the six
months ended June 30, 1998 as if the Merger had occurred on January 1, 1998.
<TABLE>
<CAPTION>
(UNAUDITED AND AMOUNTS IN THOUSANDS)
SIX MONTHS PROFORMA SIX
ENDED MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------- -------------
<S> <C> <C>
REVENUES:
Rental revenue $ 129,468 $ 83,406
Interest income 12,041 17,324
Licensing fees 4,318 3,142
--------- ---------
Total revenues 145,827 103,872
--------- ---------
EXPENSES:
Depreciation and amortization 20,419 17,733
General and administrative 2,607 1,750
--------- ---------
Total expenses 23,026 19,483
--------- ---------
OPERATING INCOME 122,801 84,389
Equity in earnings of subsidiaries and
amortization of deferred gains 15,157 13,529
Interest expense (15,309) (13,614)
Loss on disposition of property (1,631) --
---------
INCOME BEFORE TAX EFFECTS AND
DIVIDENDS TO PREFERRED
SHAREHOLDERS $ 121,018 $ 84,304
========= =========
</TABLE>
RENTAL REVENUES -- For the three and six months ended June 30, 1999, rental
revenues were $65.8 million and $129.5 million, respectively, and were generated
from the leasing of correctional and detention facilities. During the year, the
Company began leasing two new facilities, one in February 1999 and one in April
1999, respectively, in addition to the 37 facilities which were previously
leased as of the beginning of the year.
INTEREST INCOME -- For the three and six months ended June, 1999, interest
income was $5.8 million and $12.0 million, respectively. The $137.0 million CCA
Note bears interest at 12% and generated $4.1 million and $8.2 million in
interest income for the three and six months ended June 30, 1999. The remaining
$1.7 million and $3.8 million, respectively, was a result of interest earned on
cash used to collateralize letters of credit for certain construction projects,
direct financing leases and investments of cash prior to the funding of
construction projects.
LICENSING FEES -- For the three and six months ended June 30, 1999, licensing
fees were $2.2 million and $4.3 million, respectively. The licensing fees were
earned as a result of the Trade Name Use Agreement which granted New CCA the
right to use the name "Corrections Corporation of America" and derivatives
thereof subject to specified terms and conditions therein. The fee is based upon
gross revenues of New CCA, subject to a limitation of 2.75% of the gross
revenues of the Company.
DEPRECIATION AND AMORTIZATION-- For the three and six months ended June 30,
1999, depreciation expense was $10.5 million and $20.4 million, respectively.
Depreciation expense as a percentage of
21
<PAGE> 23
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
rental revenues for the three and six months ended June 30, 1999 was 16.0 % and
15.8%, respectively. The Company uses the straight-line depreciation method over
the 50 and five year lives of buildings and machinery and equipment,
respectively.
GENERAL AND ADMINISTRATIVE EXPENSES -- For the three and six months ended June
30, 1999, general and administrative expenses were $1.7 million and $2.6
million, respectively. General and administrative expenses were 2.6% and 2.0% of
total rental revenues for the three and six months ended June 30, 1999. General
and administrative expenses consist primarily of management salaries and
benefits, legal and other administrative costs.
LOSS ON DISPOSITION OF PROPERTY - During the second quarter, the Company
incurred a noncash loss of $1.6 million as a result of a settlement with the
State of South Carolina for property previously owned by Old CCA. Under the
settlement dated June 1999, the Company, as the successor to Old CCA, will
receive $6.5 million in three installments by June 30, 2001 for the transferred
assets. The net proceeds were approximately $1.6 million less than the
surrendered assets depreciated book value. As of June 30, 1999, the Company had
a receivable of $6.5 million related to this settlement of which $3.5 million
was received by the Company in July 1999.
EQUITY IN EARNINGS OF SUBSIDIARIES AND AMORTIZATION OF DEFERRED GAINS -- For the
three and six months ended June 30, 1999, equity in earnings of subsidiaries and
amortization of deferred gains were $7.5 million and $15.2 million,
respectively. The equity in earnings of the Service Companies were $4.8 million
and $9.8 million, respectively, for the three and six months ended June 30,
1999. The amortization of the deferred gain on the sales of contracts to the
Service Companies was $2.7 million and $5.4 million for the three and six months
ended June 30, 1999.
INTEREST EXPENSE -- For the three and six months ended June 30, 1999, interest
expense was $7.0 million and $15.3 million, respectively. Interest expense is
based on outstanding convertible notes payable balances and borrowings under the
Company's bank credit facility and 12% senior notes due 2006, including
amortization of loan costs and unused fees. Interest expense is reported net of
capitalized interest on construction in progress of $9.3 million and $16.4
million, respectively, for the three and six months ended June 30, 1999.
CHANGE IN TAX STATUS -- In connection with the Merger, the Company intends to
change its tax status from a C-Corporation to a REIT effective January 1, 1999.
As of December 31, 1998, the Company's balance sheet reflected $51.2 million in
deferred tax assets. In accordance with the provisions of Statement of Financial
Accounting Standards No. 109, the Company was required to provide a provision
for these deferred tax assets, excluding any tax liabilities required for
subsequent periods, upon completion of the Merger and the election to be taxed
as a REIT. As such, the Company's results of operations reflect a provision for
change in tax status of $83.2 million for the six months ended June 30, 1999.
22
<PAGE> 24
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
NEW CCA FINANCIAL INFORMATION
The following unaudited operating information presents New CCA's results of
operations for the six months ended June 30, 1999:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
-------------
<S> <C>
(UNAUDITED AND AMOUNTS IN THOUSANDS)
REVENUES $ 244,109
---------
EXPENSES:
Operating 168,502
Trade name use agreement 4,318
Lease 124,484
General and administrative 11,740
Depreciation and amortization 4,135
---------
313,179
---------
OPERATING LOSS (69,070)
Interest expense, net 10,870
---------
LOSS BEFORE INCOME TAXES (79,940)
BENEFIT FOR INCOME TAXES (31,806)
---------
NET LOSS $ (48,134)
=========
</TABLE>
The following unaudited balance sheet information presents New CCA's financial
position as of June 30, 1999:
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
(UNAUDITED)
<S> <C>
(AMOUNTS IN THOUSANDS)
CURRENT ASSETS:
Cash and cash equivalents $ 14,767
Accounts receivable, net of allowances 65,207
Prepaid expenses 5,366
Deferred tax assets 328
Other current assets 9,287
---------
Total current assets 94,955
PROPERTY AND EQUIPMENT, NET 23,456
OTHER LONG-TERM ASSETS:
Investment in contracts 65,320
Deferred tax assets 31,478
Other 9,786
---------
Total assets $ 224,995
=========
</TABLE>
(CONTINUED)
23
<PAGE> 25
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
The following unaudited balance sheet information presents New CCA's financial
position as of June 30, 1999 (Continued):
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
(UNAUDITED)
<S> <C>
(CONTINUED)
(AMOUNTS IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 13,370
Accrued salaries and wages 7,907
Accrued property taxes 4,741
Accrued interest 8,220
Deferred revenue 176
Other accrued expenses 15,496
---------
Total current liabilities 49,910
LONG-TERM DEBT 137,000
DEFERRED CREDITS 64,479
---------
Total liabilities 251,389
---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock- Class A; $0.01 (one cent) par value;
9,349 issued and outstanding; 100,000 shares
authorized 93
Common stock- Class B; $0.01 (one cent) par value;
981 issued and outstanding; 100,000 shares authorized 10
Additional paid-in capital 25,133
Deferred compensation (3,496)
Retained deficit (48,134)
---------
Total stockholders' equity (26,394)
---------
Total liabilities and stockholders' equity $ 224,995
=========
</TABLE>
24
<PAGE> 26
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
The following is the unaudited cash flow statement for New CCA for the six
months ended June 30, 1999:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
-------------
<S> <C>
(UNAUDITED AND AMOUNTS IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (48,134)
Adjustments to reconcile net loss to net cash provided by
operating activities
Depreciation and amortization 4,135
Amortization of deferred credits (1,763)
Deferred credit payments received from Prison Realty 66,242
Deferred income taxes (31,806)
Other noncash items 397
Write-off of debt issuance costs 2,706
Changes in assets and liabilities, net
Trade accounts receivable (1,130)
Prepaid expenses (763)
Other current assets (3,592)
Other long-term assets 2,591
Accounts payable (1,193)
Accrued salaries and wages 3,488
Accrued property taxes 440
Deferred revenue (3,598)
Accrued interest 8,220
Other accrued expenses 6,851
---------
Net cash provided by operating activities 3,091
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions, net (1,256)
---------
Net cash used in investing activities (1,256)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of debt issuance costs (6,125)
---------
Net cash used in financing activities (6,125)
---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,290)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 19,057
---------
CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 14,767
=========
</TABLE>
25
<PAGE> 27
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
The Company owns 100% of the non-voting stock of the Service Companies, which
manage certain government-owned prison and jail facilities under the
"Corrections Corporation of America" name. On a quarterly basis, the Company
receives 95% of the net income, as defined, of each Service Company through
ownership of the non-voting stock.
The following unaudited operating information presents a combined summary of the
Service Companies' results of operations for the three and six months ended June
30, 1999:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1999
-------------
(AMOUNTS IN THOUSANDS)
<S> <C>
Revenues $139,678
Net income 10,335
</TABLE>
The following unaudited balance sheet information presents a combined summary of
the Service Companies' financial position as of June 30, 1999:
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
(AMOUNTS IN THOUSANDS)
<S> <C>
Current assets $ 60,197
Total assets 156,345
Current liabilities 31,016
Total liabilities 32,586
Stockholders' equity 123,759
Total dividends accrued 7,381
Company share of dividends accrued 7,381
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES.
The Company's growth strategy includes acquiring, developing and expanding
correctional and detention facilities as well as other properties. The Company
expects that it generally will not be able to fund its growth with cash from its
operating activities because the Company will be required to distribute to its
stockholders at least 95% of its taxable income each year to qualify as a REIT.
Consequently, the Company will be required to rely primarily upon the
availability of debt or equity capital to fund the construction and acquisitions
of and improvements to correctional and detention facilities.
On January 1, 1999, in connection with the completion of the Merger, the Company
obtained a $650.0 million, secured credit facility (the "Credit Facility") from
NationsBank, N.A., as Administrative Agent and several U.S. and non-U.S. banks.
The Credit Facility includes up to a maximum of $250.0 million in tranche B term
loans and $400.0 million in revolving loans, including a $150.0 million
subfacility for letters of credit. The term loans require principal quarterly
payments of $625,000 throughout the term of the loan with the remaining balance
maturing on January 1, 2003 and the revolving loans maturing on January 1, 2002.
Interest rates, unused commitment fees, and letter of credit fees on the Credit
Facility are subject to change based on the Company's senior debt rating. The
Credit Facility is secured by
26
<PAGE> 28
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
mortgages on the Company's real property. At June 30, 1999, the weighted average
borrowing rate under the Credit Facility was 7.89% and the outstanding
borrowings thereunder were $648.8 million.
On August 4, 1999, the Company completed an amendment and restatement of the
Credit Facility (the "Amended Credit Facility") increasing amounts available to
the Company under the original Credit Facility to $1.0 billion through the
addition of $350.0 million tranche C term loans. The tranche C term loans will
be payable in equal quarterly installments in the amount of $875,000 through the
calendar quarter ending September 30, 2002 with the balance paid in full on
December 31, 2002. Under the Amended Credit Facility, Lehman Commercial Paper,
Inc. ("LCPI") replaced NationsBank, N.A., as Administrative Agent.
The Amended Credit Facility, similar to the original Credit Facility, provides
for interest rates, unused commitment fees, and letter of credit fees to change
based on the Company's senior debt rating. As with the Credit Facility, the
Amended Credit Facility bears interest at variable rates of interest based on a
spread over the base rate or LIBOR (as elected by the Company), which spread is
determined by reference to the Company's credit rating. The revised spread
ranges from 0.50% to 2.25% for base rate loans and from 2.00% to 3.75% for LIBOR
rate loans. These ranges replace the original spread ranges of 0.25% to 1.25%
for base rate loans and 1.375% to 2.75% for LIBOR rate loans. The term loan
portions of the Amended Credit Facility bear interest at a variable base rate
equal to 4.0% in excess of LIBOR. This revised rate replaces the variable base
rate equal to 3.25% in excess of LIBOR in the Credit Facility.
The Amended Credit Facility, similar to the original Credit Facility, is secured
by mortgages on the Company's real property. Borrowings are limited based on a
revised borrowing base formula which considers, among other things, eligible
real estate. The Amended Credit Facility contains certain revised financial
covenants, primarily: (a) maintenance of a leverage, interest coverage, debt
service coverage and total indebtedness ratios, and (b) restrictions on the
incurrence of additional indebtedness. The Amended Credit Facility restricts the
Company's ability to make the 1999 cash payment of the Special Dividend (as
herein defined) unless (a) the Company has liquidity of at least $75.0 million
at the dividend declaration date and (b) the Company receives at least $100.0
million in cash proceeds for the issuance of equity or similar securities from a
new investor receiving representation on the Company's Board of Directors and
(c) New CCA receives at least $25.0 million in cash proceeds from the issuance
of any combination of equity securities and subordinated debt. The Company may,
however, pay up to $31.0 million in cash if only (a) and (c) above are achieved.
The Company was in compliance with all covenants under the Credit Facility
through August 4, 1999 and currently, is in compliance with all covenants under
the Amended Credit Facility. The Company expects to incur expenses of
approximately $40 million related to this amendment and restatement.
On June 11, 1999 the Company completed its offering of $100.0 million aggregate
principal amount of 12% Senior Notes due 2006 (the "Notes"). Interest on the
Notes will be paid semi-annually in arrears and the Notes have a seven year
non-callable term due June 1, 2006. Net proceeds from the offering were
approximately $95 million after deducting expenses payable by Prison Realty in
connection with the offering. The Company intends to use the net proceeds from
the sale of the Notes for general corporate purposes and to repay revolving bank
borrowings under its Credit Facility. The Credit Facility repayments do not
permanently reduce the commitments under the credit facility.
On March 8, 1999, the Company issued a $20.0 million convertible subordinated
note to Sodexho pursuant to a forward contract assumed by the Company from Old
CCA in the Merger. Interest on the note was payable at LIBOR plus 1.35% and the
note was convertible into shares of the Company's
27
<PAGE> 29
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
common stock at a conversion price of $7.80 per share. On March 8, 1999, Sodexho
converted (i) $7.0 million of convertible subordinated notes bearing interest at
8.5% into 1.7 million shares of common stock at a conversion price of $4.09 per
share, (ii) $20.0 million of convertible notes bearing interest at 7.5% into
700,000 shares of common stock at a conversion price of $28.53 and (iii) $20.0
million of convertible subordinated notes bearing interest at LIBOR plus 1.35%
into 2.6 million shares of common stock at a conversion price of $7.80 per
share.
On January 29, 1999, the Company issued $20.0 million of convertible
subordinated notes due in 2009 with interest payable semi-annually at 9.5%. The
notes are convertible into shares of the Company's common stock at a conversion
price of $28.00 per share. This issuance constituted the second tranche of a
commitment by the Company to issue an aggregate of $40.0 million of convertible
subordinated notes, with the first $20.0 million tranche issued in December,
1998 under substantially similar terms.
The $30.0 million of 7.5% convertible subordinated notes issued to PMI Mezzanine
Fund L.P. in connection with the Merger require that the Company revise the
conversion price as a result of the payment of a dividend or the issuance of
stock or convertible securities below market price. As of June 30, 1999, the
conversion price for the notes was $24.79 as compared to $27.42 at issuance.
This change in conversion price resulted from dividends paid by the Company in
1999 and from the conversion of the Sodexho convertible subordinated note on
March 8, 1999 into 1.7 million shares of common stock at a conversion price of
$4.09 per share and 2.6 million shares of common stock at a conversion price of
$7.80 per share.
On January 11, 1999, the Company filed a Registration Statement on Form S-3 to
register an aggregate of $1.5 billion in value of its common stock, preferred
stock, common stock rights, warrants and debt securities for sale to the public
(the "Shelf Registration Statement"). Proceeds from sales under the Shelf
Registration Statement have been and will be used for general corporate
purposes, including the acquisition and development of correction and detention
facilities. During the six months ended June 30, 1999, the Company issued and
sold approximately 6.7 million shares of its common stock under the Shelf
Registration Statement, resulting in net proceeds to the Company of
approximately $120 million.
On May 14, 1999, the Company registered 10.0 million shares of the Company's
common stock for issuance under the Company's Dividend Reinvestment and Stock
Purchase Plan (the "Plan"). The Plan provides a method of investing cash
dividends in, and making optional monthly cash purchases of the Company's common
stock, at prices reflecting a discount between 0% and 5% from the market price
of the common stock on the NYSE. As of June 30, 1999, the Company has issued
1,039,025 shares under the Plan with 1,036,441 of these shares issued under the
Plan's optional cash feature resulting in proceeds of $10.0 million which were
received by the Company on July 1, 1999.
The Company expects to meet its short-term liquidity requirements generally
through cash provided by operations and borrowings provided from the Notes and
the Amended Credit Facility. The Company used the net proceeds from the sale of
the Notes for general corporate purposes and to repay revolving bank borrowings
under its Credit Facility The Credit Facility repayments did not permanently
reduce the commitments under the credit facility.
The Company, as a REIT, cannot complete any taxable year with accumulated
earnings and profits from a taxable corporation. Accordingly, to preserve its
REIT status, the Company will distribute Old CCA's accumulated earnings and
profits to which it succeeded in the Merger (the "Special Dividend"). The
Company anticipates that it will make this distribution to all holders of shares
of its common stock in
28
<PAGE> 30
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
December 1999. This total distribution is estimated at $225.0 million and has
been accrued on the Company's balance sheet at June 30, 1999 net of a two
quarterly prepayments totaling $11.5 million. These prepayments represent $0.05
per share paid out in March 1999 and $0.05 per share paid out in June 1999. At
the time of payment, the Company intends to allocate any overage between the
Company's regular quarterly dividends paid and an amount equal to 95% of the
Company's taxable net income toward the payment of the Special Dividend. Certain
provisions of the Amended Credit Facility restrict the Company's ability to make
the 1999 cash payment of the Special Dividend in cash, as previously described.
All facilities owned by the Company will be leased to third parties generally
under triple net leases, which require the lessee to pay substantially all
expenses associated with the operation of such facilities. As a result of these
arrangements, the Company does not believe it will be responsible for any
significant expenses in connection with the facilities during the terms of the
New Leases. The Company anticipates entering into similar leases with respect to
all properties acquired in the future.
The Company expects to meet its long-term liquidity requirements for the funding
of real estate property development and acquisitions (including fees for
property related services and tenant incentives to New CCA) by borrowing under
the Amended Credit Facility and by issuing equity or debt securities in public
or private transactions. For facilities to be owned by the Company and managed
by governmental entities, the Company may elect to finance some or all of the
total project cost through non-recourse long-term debt secured by the stream of
lease payments. The Company anticipates that as a result of its initially low
debt to total capitalization ratio and its intention to maintain a debt to total
capitalization ratio of 50% or less, it will be able to obtain financing for its
long-term capital needs. However, there can be no assurance that such additional
financing or capital will be available on terms acceptable to the Company. The
Company may, under certain circumstances, borrow additional amounts in
connection with the renovation or expansion of facilities, the acquisition of
additional properties, or as necessary, to meet certain distribution
requirements imposed on REITs under the Code.
On January 1, 1999, immediately after the Merger, the Company entered into the
Services Agreement with New CCA pursuant to which New CCA agreed to serve as a
facilitator of the construction and development of additional facilities on
behalf of the Company for a term of five years from the date of the Services
Agreement. In such capacity, New CCA agreed to perform, at the direction of the
Company, such services as are customarily needed in the construction and
development of correctional and detention facilities, including services related
to construction of the facilities, project bidding, project design, and
governmental relations. In consideration for the performance of construction and
development services by New CCA pursuant to the Services Agreement, the Company
agreed to pay a fee equal to 5% of the total capital expenditures (excluding the
incentive fee discussed below and the 5%
29
<PAGE> 31
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
fee herein referred to) incurred in connection with the construction and
development of a facility, plus an amount equal to approximately $560 per bed
for facility preparation services provided by New CCA prior to the date on which
inmates are first received at such facility. The Board of Directors of the
Company has authorized payments of up to an additional 5% of the total capital
expenditures (as determined above) to New CCA if additional services are
requested by the Company. A majority of the Company's current development
projects are subject to a fee totaling 10%. Costs incurred related to the
Services Agreement for the three and six months ended June 30, 1999 were $14.4
million and $26.5 million, respectively.
On January 1, 1999, immediately after the Merger, the Company entered into the
Tenant Incentive Agreement with New CCA pursuant to which the Company agreed to
pay to New CCA an incentive fee to induce New CCA to enter into New CCA Leases
with respect to those facilities developed and facilitated by New CCA. The
amount of the incentive fee was set at $840 per bed for each facility leased by
New CCA for which New CCA served as developer and facilitator. This $840 per bed
incentive fee, however, did not include an allowance for rental payments to be
paid by New CCA.
On May 4, 1999, the Company and New CCA entered into the Amended and Restated
Tenant Incentive Agreement, effective as of January 1, 1999, providing for (i) a
tenant incentive fee of up to $4,000 per bed payable with respect to all future
facilities developed and facilitated by New CCA, as well as certain other
facilities which, although operational on January 1, 1999, had not achieved full
occupancy and (ii) an $840 per bed allowance for all beds in operation at the
beginning of January 1999, approximately 21,500 beds, that were not subject to
the tenant allowance in the first quarter of 1999. The amount of the amended
tenant incentive fee includes an allowance for rental payments to be paid by New
CCA prior to the facility reaching stabilized occupancy. The term of the Amended
and Restated Tenant Incentive Agreement is four years unless extended upon the
written agreement of the Company and New CCA. The incentive fees with New CCA
are being deferred and amortized as a reduction to rental revenues over the
respective lease term. For the six months ended June 1999, the Company had paid
tenant incentive fees of $45.0 million of which $18.1 million related to the
$840 per bed allowance on the aforementioned 21,500 beds. These fees are being
amortized against rental revenues over the life of the leases. The amount of
unamortized incentives pursuant to the Amended and Restated Tenant Incentive
Agreement, as of June 30, 1999 is $44.4 million.
Effective January 1, 1999, the Company entered into a business development
agreement (the "Business Development Agreement") with New CCA which provides
that New CCA will perform, at the direction of the Company, services designed to
assist the Company in identifying and obtaining new business. Pursuant to the
agreement, the Company has agreed to pay to New CCA a total fee equal to 4.5% of
the total capital expenditures (excluding the amount of the tenant incentive fee
and the services fee discussed above as well as the 4.5% fee referred to herein)
incurred in connection with the construction and development of each new
facility, or the construction and development of an addition to an existing
facility, for which New CCA performed business development services. For the
three and six months ended June 30, 1999, costs incurred related to the Business
Development Agreement were $3.3 million and $11.9 million, respectively.
YEAR 2000 COMPLIANCE.
The Company has completed an initial assessment and remediation of its key
information technology systems including its client server and minicomputer
hardware and operating systems and critical financial and nonfinancial
applications. Based on this initial assessment, the Company believes that these
key information technology systems are Year 2000 compliant. However, there can
be no assurance that coding errors or other defects will not be discovered in
the future. The Company is in the process of evaluating the remaining
noncritical information technology systems for Year 2000 compliance.
The Company depends upon the proper functioning of third-party computer and
non-information technology systems. These third parties include commercial banks
and other lenders, construction contractors, architects and engineers and
vendors such as the providers of telecommunications and utilities. The Company
has initiated communications with third parties with whom it has important
financial or operational relationships to determine the extent to which they are
vulnerable to the Year 2000 issue. The Company has not yet received sufficient
information from all parties about their remediation plans to predict the
outcome of their efforts.
30
<PAGE> 32
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
The Company is currently developing a contingency plan that is expected to
address financial and operational problems that might arise on and around
January 1, 2000. This contingency plan would include establishing additional
sources of liquidity that could be drawn upon in the event of systems disruption
and identifying alternative vendors and back-up processes that do not rely on
computers, whenever possible. The Company's key information technology systems
were Year 2000 compliant when acquired in the Merger. As such, the Company has
incurred no expenses through June 30, 1999 and expects to incur no material
costs in the future on Year 2000 remediation efforts.
Because New CCA is the lessee of a substantial majority of the Company's
facilities, the Company may be vulnerable to New CCA's failure to remedy its
Year 2000 issues. The failure of New CCA to remedy its Year 2000 problems could
result in the delayed collection of lease payments by the Company, potentially
resulting in liquidity stress. New CCA's Year 2000 compliance program is focused
on addressing Year 2000 readiness in the following areas: (i) New CCA's
information technology hardware and software; (ii) material non-information
technology systems; (iii) Year 2000 compliance of third parties with which
Operating Company has a material relationship; (iv) systems used to track and
report assets not owned by New CCA (e.g. inmate funds and personal effects); and
(v) development of contingency plans.
New CCA has completed an initial assessment and remediation of its key
information technology systems including its client server and minicomputer
hardware and operating systems and critical financial and nonfinancial
applications. Remediation efforts as of the date hereof include upgrades of New
CCA's minicomputer hardware and critical financial applications. Based on this
initial assessment and remediation efforts, New CCA believes that these key
information technology systems are Year 2000 compliant. However, there can be no
assurance that coding errors or other defects will not be discovered in the
future. New CCA is in the process of evaluating the remaining noncritical
information technology systems for Year 2000 compliance.
New CCA manages facilities it leases from the Company, and facilities owned by
and leased from government entities. New CCA is currently evaluating whether the
material non-information technology systems such as security control equipment,
fire suppression equipment and other physical plant equipment at the facilities
it leases from the Company are Year 2000 compliant. New CCA also intends to
request that the owners of the government facilities it manages provide Year
2000 certification for material information technology and non-information
technology systems at those facilities. All of New CCA's managed correctional
facilities, as a part of general operating policy, have existing contingency
plans that are deployed in the event key operational systems, such as security
control equipment fail (e.g. when a power failure occurs). In addition, the
correctional facilities' key security systems are "fail secure" systems which
automatically "lock down" and are then operated manually should the related
electronic components fail. Therefore, New CCA management believes no additional
material risks associated with the physical operation of its correctional
facilities are created as a result of potential Year 2000 issues.
New CCA depends upon the proper functioning of third-party computer and non-
information technology systems. These third parties include government agencies
for which New CCA provides services, commercial banks and other lenders,
construction contractors, architects and engineers, and vendors such as
providers of food supplies and services, inmate medical services,
telecommunications and utilities. New CCA has initiated communications with
third parties with whom it has important financial or operational relationships
to determine the extent to which they are vulnerable to the Year 2000 issue.
31
<PAGE> 33
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
New CCA has not yet received sufficient information from all parties about their
remediation plans to predict the outcome of their efforts. If third parties with
whom New CCA interacts have Year 2000 problems that are not remedied, the
following problems could result: (i) in the case of construction contractors and
architects and engineers, in the delayed construction of correctional
facilities; (ii) in the case of vendors, in disruption of important services
upon which New CCA depends, such as medical services, food services and
supplies, telecommunications and electrical power, (iii) in the case of
government agencies, in delayed collection of accounts receivable potentially
resulting in liquidity stress, or (iv) in the case of banks and other lenders,
in the disruption of capital flows potentially resulting in liquidity stress.
New CCA is also evaluating Year 2000 compliance of other software applications
used to track and report assets that are not the property of New CCA. This
includes applications used to track and report inmate funds and the inmates'
personal effects.
New CCA is currently developing a contingency plan that is expected to address
financial and operational problems that might arise on and around January 1,
2000. This contingency plan would include establishing additional sources of
liquidity that could be drawn upon in the event of systems disruption and
identifying alternative vendors and back-up processes that do not rely on
computers, whenever possible. New CCA management expects to have the contingency
plan completed by fall 1999.
New CCA has incurred and expects to continue to incur expenses allocable to
internal staff, as well as costs for outside consultants, computer systems'
remediation and replacement and non-information technology systems' remediation
and replacement (including validation) in order to achieve Year 2000 compliance.
New CCA currently estimates that these costs will total approximately $4.0
million. Of this total, it is estimated that $2.5 million will be for the repair
of software problems and $1.5 million will be for the replacement of problem
systems and equipment. These costs are expensed as incurred. Management of New
CCA believes there will be no material impact on New CCA's financial condition
or results of operations resulting from other information technology projects
being delayed due to Year 2000 efforts.
The costs of New CCA's Year 2000 compliance program and the date on which New
CCA plans to complete it are based on current estimates, which reflect numerous
assumptions about future events, including the continued availability of certain
resources, the timing and effectiveness of third-party remediation plans and
other factors. New CCA can give no assurance that these estimates will be
achieved, and actual results could differ materially from New CCA's plans.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct relevant computer source codes and embedded
technology, the results of internal and external testing and the timeliness and
effectiveness of remediation efforts of third parties.
Management's estimate of the Company's most reasonably likely worst case
scenario involves the replacement of hardware, software or equipment if coding
errors or other defects are discovered in the future. The foregoing
notwithstanding, management does not currently believe that the costs of
assessment, remediation or replacement of the Company's systems, or the
potential failure of third parties' systems will have a material adverse effect
on the Company's business, financial condition, results of operations or
liquidity.
32
<PAGE> 34
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
FUNDS FROM OPERATIONS.
Management believes Funds from Operations is helpful to investors as a measure
of the performance of an equity REIT because, along with cash flows from
operating activities, financing activities and investing activities, it provides
investors with an understanding of the ability of the Company to incur and
service debt and make capital expenditures. The Company computes Funds from
Operations in accordance with standards established by the White Paper on Funds
from Operations approved by the Board of Governors of NAREIT in 1995, which may
differ from the methodology for calculating Funds from Operations utilized by
other equity REITs, and accordingly, may not be comparable to such other REITs.
The White Paper defines Funds from Operations as net income (loss), computed in
accordance with generally accepted accounting principles ("GAAP"), excluding
gains (or losses) from debt restructuring and sales of property, plus real
estate related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures. Further, Funds from Operations
does not represent amounts available for management's discretionary use because
of needed capital replacement or expansion, debt service obligations, or other
commitments and uncertainties. Funds from Operations should not be considered as
an alternative to net income (determined in accordance with GAAP) as an
indication of the Company's financial performance or to cash flows from
operating activities (determined in accordance with GAAP) as a measure of the
Company's liquidity, nor is it indicative of funds available to fund the
Company's cash needs, including its ability to make distributions. The Company
believes that in order to facilitate a clear understanding of the consolidated
operating results of the Company, Funds from Operations should be examined in
conjunction with net income as presented in the consolidated financial
statements.
The following table presents the Company's Funds from Operations for the three
and six months ended June 30, 1999:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1999 JUNE 30, 1999
------------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
FUNDS FROM OPERATIONS:
Net income available to common shareholders $ 58,273 $ 33,518
Plus: real estate depreciation 10,502 20,419
Add back non-recurring items:
Change in tax status -- 83,200
Loss on disposition of property 1,631 1,631
-------- --------
$ 70,406 $138,768
======== ========
</TABLE>
CASH FLOW FROM OPERATING, INVESTING AND FINANCING ACTIVITIES
The Company's cash flow provided by operating activities was $104.6 million for
the six months ended June 30, 1999 and represents net income plus depreciation
and amortization and changes in the various components of working capital. The
Company's cash flow used in investing activities was $385.8 million for the six
months ended June 30, 1999 and represents acquisitions of real estate properties
and payments made under lease arrangements. The Company's cash flow provided by
financing activities was $252.2 million for the six months ended June 30, 1999
and represents proceeds from the issuance of common
33
<PAGE> 35
PRISON REALTY TRUST, INC.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(CONTINUED)
stock, issuance of long-term debt, borrowings under the Credit Facility and the
Notes and payments of dividends on the preferred and common shares.
INFLATION
The Company does not believe that inflation has had or will have a direct
adverse effect on its operations. The New CCA Leases generally contain
provisions which will mitigate the adverse impact of inflation on net income.
These provisions include clauses enabling the Company to pass through to New CCA
certain operating costs, including real estate taxes, utilities and insurance,
thereby reducing the Company's exposure to increases in costs and operating
expenses resulting from inflation. Additionally, the New CCA Leases contain
provisions which provide the Company with the opportunity to achieve increases
in rental income in the future.
34
<PAGE> 36
PRISON REALTY TRUST, INC.
ITEM 3. -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's primary market risk exposure is to changes in U.S. interest rates.
The Company is exposed to market risk related to its Amended Credit Facility and
certain other indebtedness as discussed in "Management's Discussion and Analysis
of Financial Condition and Results of Operation -- Liquidity and Capital
Resources". The interest on the Amended Credit Facility and such other
indebtedness is subject to fluctuations in the market. If the interest rate for
the Credit Facility debt was 100 basis points higher or lower during the three
months and six ended June 30, 1999, the Company's interest expense net of
amounts capitalized would have been increased or decreased by approximately $0.6
million or $1.3 million, respectively.
As of June 30, 1999, the Company had outstanding $100.0 million of its senior
Notes with a fixed interest rate of 12.0%, $40.0 million of convertible notes
with a fixed interest rate of 9.5%, $30.0 million of convertible notes with a
fixed interest rate of 7.5% and $107.5 million of preferred stock with a fixed
dividend rate of 8%. Similarly, as of June 30, 1999, the Company had a note
receivable in the amount of $137.0 million with a fixed interest rate of 12%.
Because the interest and dividend rates with respect to these instruments are
fixed, a hypothetical 10% decrease in market interest rates would not have a
material impact on the Company. The Amended Credit Facility required the Company
to hedge $325.0 million of its floating rate debt on or before August 16, 1999.
The Company has entered into certain swap arrangements guaranteeing that it will
not pay an index rate greater than 6.51% on outstanding balances of at least (a)
$325.0 million through December 31, 2001 and (b) $200.0 million through December
31, 2002.
Additionally, the Company may, from time to time, invest its cash in a variety
of short-term financial instruments. These instruments generally consist of
highly liquid investments with original maturities at the date of purchase
between three and 12 months. While these investments are subject to interest
rate risk and will decline in value if market interest rates increase, a
hypothetical 10% increase in market interest rates would not materially affect
the value of these investments.
The Company also uses, or intends to use, long-term and medium-term debt as a
source of capital. These debt instruments, if issued, will typically bear fixed
interest rates. When these debt instruments mature, the Company may refinance
such debt at then-existing market interest rates which may be more or less than
the interest rates on the maturing debt. In addition, the Company may attempt to
reduce interest rate risk associated with a forecasted issuance of new debt. In
order to reduce interest rate risk associated with these transactions, the
Company may occasionally enter into interest rate protection agreements.
The Company does not believe it has any other material exposure to market risks
associated with interest rates.
The Company does not have a material exposure to risks associated with foreign
currency fluctuations related to its operations. The Company does not use
derivative financial instruments in its operations or investment portfolio.
35
<PAGE> 37
PRISON REALTY TRUST, INC.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
FEDERAL COURT LITIGATION
Since May 26, 1999, fifteen complaints have been filed in federal court in the
United States District Court for the Middle District of Tennessee, Nashville
Division, alleging securities fraud in connection with the agreements entered
into by the Company in May of this year to increase the tenant incentive and
other payments from the Company to New CCA, the Company's primary tenant.
Thirteen of these complaints name as defendants the Company, Doctor R. Crants
and D. Robert Crants, III. The remaining two complaints name as defendants the
Company, Doctor R. Crants, D. Robert Crants, III, Sodexho Alliance, S.A., all
current directors of the Company and all of the former directors of Old CCA. A
complaint substantially identical to the majority of those filed in federal
court in Tennessee has been filed in the United States District Court for the
Eastern District of New York. All of these complaints allege violations of
federal securities laws based on the allegation that the Company and the
individual defendants knew or should have known of the increased payments to New
CCA prior to the date on which they were disclosed to the public and that,
therefore, certain public filings and representations made by the Company and
certain individuals were false and misleading. All of the complaints purport to
be brought as class actions on behalf of one of two separate classes: (i) a
class of all persons who publicly acquired shares of the Company on the open
market from the time of the Merger through mid May of 1999, together with all
former shareholders of Prison Realty who acquired shares of the Company as a
result of the Merger, or (ii) a class of all persons who publicly acquired
shares of the Company on the open market from the time of the Merger through mid
May of 1999, together with all former shareholders of Prison Realty and
shareholders of Old CCA who acquired shares of the Company as a result of the
Merger. The Company believes it is likely that the complaint filed in the United
States District Court for the Eastern District of New York will be transferred
to the United States District Court for the Middle District of Tennessee and
that all of the complaints will be consolidated into one action. The Company is
investigating the allegations in the complaints, and although their outcome is
not determinable, the Company intends to defend these actions vigorously.
STATE COURT LITIGATION
A purported shareholders derivative complaint was filed in the Chancery Court
for Davidson County, Tennessee in Nashville against the Company, the current
directors of the Company, persons who were directors of the Company at the time
the agreements regarding the increased payments to New CCA were made, and New
CCA. The derivative action alleges, among other things, that the directors of
the Company violated their fiduciary duties in approving the increased payments
to New CCA. The Company also intends to defend this action vigorously.
MOTION TO SHOW CAUSE IN CCA SHAREHOLDER LITIGATION
The plaintiffs in the case In re Corrections Corporation of America Shareholder
Litigation, which was filed in 1998 challenging the Merger and was settled based
on certain revisions to the structure of the Merger, have filed a motion in the
Chancery Court for Davidson County, Tennessee in Nashville to show cause why the
defendants in that case are not in violation of the court order approving the
settlement and should not be held in contempt. The motion alleges that the
decisions in May, 1999, regarding the increased payments to New CCA violate the
terms of the Stipulation of Settlement reached in that case and, therefore, also
violate the order of the court of February 26, 1999, approving the settlement.
The Company believes the motion is without merit and has responded accordingly.
The matter is currently under advisement by the court.
36
<PAGE> 38
PRISON REALTY TRUST, INC.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company's 1999 Annual Meeting of Stockholders was held on May 11, 1999. A
total of 84,573,667 shares of the Company's common stock, constituting a quorum
of those shares entitled to vote, were represented at the meeting by
stockholders either present in person or by proxy. At such meeting the following
six (6) nominees for election as directors of the Company were elected without
opposition, no nominee for director receiving less than 84,108,356 votes, or
99.4% of the shares represented at the meeting: D. Robert Crants, III, John W.
Eakin, Jr., Ted Feldman, Ned Ray McWherter, and Jackson W. Moore as Class I
directors; and Jean-Pierre Cuny as a Class III director. The stockholders also
approved and/or ratified the following proposals presented to them pursuant to
the vote totals indicated next to each item:
<TABLE>
<CAPTION>
PROPOSAL VOTE (# OF SHARES)
FOR AGAINST ABSTAINED
<S> <C> <C> <C>
Approval of an amendment to the Company's
Charter to change the name of the Company to 84,088,478 386,643 98,546
Prison Realty Trust, Inc.
Ratification of the action of the Board of Directors
in selecting the firm of Arthur Andersen LLP
to be the independent auditors of the Company
for the fiscal year ending December 31, 1999 82,424,870 135,740 2,013,057
</TABLE>
ITEM 5. OTHER INFORMATION.
COMPLETION OF HIGH YIELD NOTE OFFERING
On June 11, 1999, the company completed the issuance and sale of $100.0 million
of its senior Notes, generating net proceeds to the Company, after the deduction
of offering expenses, of approximately $95.0 million. Lehman Brothers Inc. was
the underwriter of the offering. The Company used the net proceeds from the
offering for general corporate purposes and to repay revolving bank borrowing
under the Credit Facility. More detailed information regarding the Notes and the
related offering can be found herein under Note 5 to the Company's Condensed
Consolidated Financial Statements and under "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources."
AMENDMENT TO AND RESTATEMENT OF CREDIT FACILITY
On August 4, 1999, the Company completed the Amended Credit Facility, increasing
amounts available to the Company to $1.0 billion through the addition of a
$350.0 million term loan. Lehman Brothers
37
<PAGE> 39
PRISON REALTY TRUST, INC.
acted as advisor and lead arranger in connection with the expansion and Lehman
Commercial Paper, Inc. and serves as Administrative Agent of the amended and
restated facility. More detailed information regarding the Amended Credit
Facility can be found herein under Note 5 to the Company's Condensed
Consolidated Financial Statements and under "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
<TABLE>
<S> <C>
1.1 Amended and Restated Underwriting Agreement, dated June 11,
1999, by and between the Company and Lehman Brothers Inc.
4.1 Indenture dated as of June 10, 1999 by and between the Company
and State Street Bank and Trust Company, as trustee, relating
to the issuance of debt securities.
4.2 First Supplemental Indenture, by and between the Company and
State Street Bank and Trust Company, as trustee, dated as of
June 11, 1999 relating to the $100.0 million aggregate
principal amount of the Company's 12% Senior Notes due 2006.
10.1 Amended and Restated Credit Agreement, dated as of August 4,
1999, by and among the Company, as Borrower, certain
subsidiaries of the Company, as Guarantor, the several lenders
from time to time party thereto, Lehman Commercial Paper Inc.,
as Administrative Agent, Societe Generale, as Documentation
Agent, The Bank of Nova Scotia, as Syndication Agent,
SouthTrust Bank, N.A., as Co-Agent, and Lehman Brothers Inc.,
as Advisor, as Lead Arranger, and as Book Manager.
27.1 Financial Data Schedule (For SEC use only).
</TABLE>
(b). Reports on Form 8-K
The Company's Current Report on Form 8-K, as filed with the Commission
on May 25, 1999 (File no. 0-25245), relating to (i) the filing of a
Preliminary Prospectus to the Company's Registration Statement on Form
S-3 (Reg. no. 333-70419) covering the public offering of its senior
unsecured notes, and (ii) the levels of occupancy at the facilities
owned by the Company and New CCA, the Company's primary tenant.
The Company's Current Report on Form 8-K, as filed with the Commission
on June 4, 1999(File no. 0-25245) relating to certain litigation
commenced against the Company as the result of the disclosure of
increased payments by the Company to New CCA.
38
<PAGE> 40
PRISON REALTY TRUST, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRISON REALTY TRUST, INC.
Date: August 16, 1999
/s/ Vida H. Carroll
----------------------------------------
Vida H. Carroll
Chief Financial Officer/
Chief Accounting Officer
39
<PAGE> 1
EXHIBIT 1.1
EXECUTION COPY
$100,000,000
PRISON REALTY TRUST, INC.
12% SENIOR NOTES DUE 2006
AMENDED AND RESTATED UNDERWRITING AGREEMENT
June 11, 1999
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Prison Realty Trust, Inc., a Maryland corporation (the "Company"),
proposes, upon the terms and considerations set forth herein, to issue and sell
to you ("Lehman Brothers") $100,000,000 in aggregate principal amount of its 12%
Senior Notes due 2006 (the "Notes") pursuant to the terms of an indenture, as
supplemented by an indenture supplement, dated as of June 11, 1999
(collectively, the "Indenture"), between the Company and State Street Bank and
Trust Company, as trustee (the "Trustee"), relating to the Notes. This is to
confirm the agreement concerning the purchase of the Notes from the Company by
Lehman Brothers.
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-3 (File No. 333-70419),
including a prospectus, with respect to the Notes has (i) been
prepared by the Company in conformity with the requirements of the
United States Securities Act of 1933, as amended (the "Securities
Act") and the rules and regulations (the "Rules and Regulations") of
the United States Securities and Exchange Commission (the
"Commission") promulgated thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under
the Securities Act; and a registration statement on Form S-3 (File No.
333-80413), including a prospectus, with respect to the Notes has (i)
been prepared by the Company in conformity with the requirements of
the Securities Act and the Rules and Regulations, (ii) been filed with
the Commission under the Securities Act and (iii) become effective
under the Securities Act; and the Indenture shall be qualified under
the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the
applicable rules and regulations thereunder. Copies of such
registration
<PAGE> 2
statements have been delivered by the Company to you. As used in this
Agreement, "Effective Time" means the date and the time as of which
each such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Preliminary
Prospectus" means each prospectus included in each such registration
statement, or amendments thereof, before it became effective under the
Securities Act and any prospectus filed with the Commission by the
Company with the consent of Lehman Brothers pursuant to Rule 424(a) of
the Rules and Regulations; "Registration Statement" means
collectively, each such registration statement, as amended at the
Effective Time, including all information contained in the final
prospectus filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations in accordance with Section 5 hereof and deemed
to be a part of each registration statement as of the Effective Time
pursuant to paragraph (b) of Rule 430A of the Rules and Regulations;
"Prospectus" means such final prospectus including any supplemental
prospectus, as first filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations, or if no such prospectus was so filed
the form of prospectus that was included in the Registration Statement
at the Effective Time; and references herein to the Registration
Statement, a Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents and financial statements
incorporated or deemed to be incorporated therein pursuant to Item 12
of Form S-3 which were filed under the United States Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (collectively, the "Exchange Act"), on or
before the Effective Date of the Registration Statement or the issue
date of such Preliminary Prospectus or Prospectus, as the case may be.
The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus or Prospectus; and no stop order
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or
the Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Securities Act and the Rules and Regulations and
do not and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that
no representation or warranty is made as to information contained in
or omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with written information furnished to
the Company by Lehman Brothers specifically for inclusion therein; and
the Indenture conforms in all material respects to the requirements of
the Trust Indenture Act and the applicable rules and regulations
thereunder; provided that
2
<PAGE> 3
no representation or warranty is made as to the statement of
eligibility and qualification on Form T-1 of the Trustee under the
Trust Indenture Act or as to information contained in or omitted from
the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company by Lehman
Brothers specifically for inclusion therein, which information is
described in Section 8(e) hereof.
(c) The market-related and industry-related data and estimates
included in the Prospectus are based on or derived from sources which
the Company believes to be reliable and accurate.
(d) The Company and each of its subsidiaries (as defined in
Section 14) have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business and
are in good standing as foreign corporations in each jurisdiction in
which their respective ownership or lease of property or the conduct
of their respective businesses requires such qualification, except to
the extent that the failure to be so qualified could not be reasonably
expected to have a material adverse effect on the general affairs,
management, consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), and have
all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged;
and none of the subsidiaries of the Company is a "significant
subsidiary," as such term is defined in Rule 405 of the Rules and
Regulations.
(e) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description thereof
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable and
(except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims other than liens or encumbrances in favor of the
lenders under the Company's Bank Credit Facility, dated as of January
1, 1999, as described in the Prospectus.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The Indenture has been duly authorized, and on the Delivery
Date (as defined below) when duly executed by the proper officers of
the Company (assuming due execution and delivery by the Trustee) and
delivered by the Company, will constitute a valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms, subject to the
3
<PAGE> 4
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law).
(h) The Notes have been duly and validly authorized by the
Company and when duly executed by the Company in accordance with the
terms of the Indenture and, assuming due authentication of the Notes
by the Trustee, upon delivery to Lehman Brothers against payment
therefor in accordance with the terms hereof, will constitute valid
and binding obligations of the Company entitled to the benefits of the
Indenture and enforceable in accordance with their terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law); and the
Notes, when issued and delivered, will conform in all material
respects to the description thereof contained in the Prospectus.
(i) The execution, delivery and performance of this Agreement and
the Indenture by the Company and the consummation of the transactions
contemplated hereby and thereby (including the issuance and sale of
the Notes and the use of the proceeds from the sale thereof as
described in the Prospectus under the caption "Use of Proceeds") will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, except for such conflicts, breaches,
violations or defaults as could not, in the aggregate, be reasonably
expected to have a Material Adverse Effect, nor will such actions
result in any violation of the provisions of the charter or by-laws of
the Company or any of its subsidiaries or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, except for such violations as could not,
in the aggregate, be reasonably expected to have a Material Adverse
Effect; and except for (i) the registration of the Notes under the
Securities Act, (ii) the qualification of the Indenture under the
Trust Indenture Act and (iii) such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Notes by Lehman
Brothers, no consent, approval, authorization or order of, or filing
or registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this
Agreement, or the Indenture by the Company and the consummation of the
transactions contemplated hereby and thereby.
4
<PAGE> 5
(j) With the exception of two Registration Rights Agreements,
each dated December 31, 1998, in connection with the Company's
issuance to PMI Mezzanine Fund, L.P. of its 7.5% convertible
subordinated notes in the aggregate principal amount of $30.0 million
and the Company's issuance to MDP Ventures IV LLC of its 9.5%
convertible subordinated notes in the aggregate principal amount of
$40.0 million, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act.
(k) Except as described in the Prospectus, the Company has not
sold or issued any securities with terms that are substantially
similar to the Notes during the six-month period preceding the date of
the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act.
(l) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since such
date, there has not been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations, business or
prospects of the Company and its subsidiaries (a "Material Adverse
Change"), otherwise than as set forth or contemplated in the
Prospectus.
(m) The financial statements (including the related notes and
supporting schedules) included or incorporated by reference in the
Prospectus present fairly the financial condition and results of
operations of the entities purported to be shown thereby, at the dates
and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principals applied on a consistent
basis throughout the periods involved.
(n) Arthur Andersen LLP, who has certified certain financial
statements of the Company, whose report appears in the Prospectus or
is incorporated by reference therein and who has delivered the initial
letter referred to in Section 7(h) hereof, are independent public
accountants as required by the Securities Act and the Rules and
Regulations.
(o) The Company and each of its subsidiaries have good and
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<PAGE> 6
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially affect
the value of such property and do not materially interfere with the
use made and proposed to be made of such property by the Company and
its subsidiaries; all real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries; neither the Company nor, to the best of the knowledge of
the Company, any lessee under a lease, relating to any of the real
property or facilities owned by the Company, is in default under or
has any rights to terminate any of the leases relating to the real
property or facilities owned by the Company and the Company does not
know of any event which, but for the passage of time or the giving of
notice, or both, would constitute a default or under or termination of
any of such leases, except such defaults or termination rights that
could not be reasonably expected to have a Material Adverse Effect on
the Company; and, except as disclosed in the Prospectus, neither the
Company nor, to the best of the knowledge of the Company, any other
party under a management contract, relating to any of the real
property or facilities owned by the Company, is in default under any
of the management contracts relating to the real property or
facilities owned by the Company, the Company has not received any
notice of any rights to terminate any of such management contracts and
the Company does not know of any event which, but for the passage of
time or the giving of notice, or both, would constitute a default or
under or termination of any of such management contracts, except such
defaults or termination rights that could not be reasonably expected
to have a Material Adverse Effect on the Company.
(p) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is
reasonably adequate for the conduct of their respective businesses and
the value of their respective properties and as is customary for
companies engaged in similar businesses in similar industries.
(q) Except as described in the Prospectus, the Company and each
of its subsidiaries own or possess adequate rights to use all material
trademarks, service marks, trade names, trademark registrations,
service mark registrations and licenses necessary for the conduct of
their respective businesses and have no reason to believe that the
conduct of their respective businesses will conflict with, and have
not received any notice of any claim of conflict with, any such rights
of others.
(r) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
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<PAGE> 7
subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, could be
reasonably expected to have a Material Adverse Effect; and to the best
of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(s) There are no contracts or other documents which are required
to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed
as exhibits to the Registration Statement incorporated therein by
reference as permitted by the Rules and Regulations.
(t) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand,
which is required to be described in the Prospectus which is not so
described.
(u) No labor disturbance by the employees of the Company exists
or, to the knowledge of the Company, is imminent which could be
reasonably expected to have a Material Adverse Effect.
(v) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and
each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
(w) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and
has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company or any of its subsidiaries which
has had (nor does the Company have any knowledge of any tax deficiency
which, if determined adversely to the Company or any of its
subsidiaries, could be reasonably expected to have) a Material Adverse
Effect.
(x) The Company has been organized in conformity with the
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<PAGE> 8
requirements for qualification as a real estate investment trust under
the Internal Revenue Code of 1986, as amended (the "Code"), and it has
operated and intends to continue to operate in such a manner as to
enable it to meet the requirements for taxation as a real estate
investment trust under the Code commencing with the Company's taxable
year ending December 31, 1999.
(y) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities, (ii) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction
not in the ordinary course of business or (iv) declared or paid any
dividend on its capital stock.
(z) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing
assets at reasonable intervals.
(aa) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any
material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets is
subject or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject or has failed to obtain any
material license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or
to the conduct of its business.
(ab) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries, has used
any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is
in violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
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<PAGE> 9
(ac) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of
toxic wastes, medical wastes, hazardous wastes or hazardous substances
by the Company or any of its subsidiaries (or, to the knowledge of the
Company, any of their predecessors in interest) at, upon or from any
of the property now or previously owned or leased by the Company or
its subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or
remedial action which could not be reasonably expected to have,
singularly or in the aggregate with all such violations and remedial
actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of
any kind onto such property or into the environment surrounding such
property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or any
of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release which could not
be reasonably expected to have, singularly or in the aggregate with
all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a Material Adverse Effect; and the terms
"hazardous wastes," "toxic wastes," "hazardous substances" and
"medical wastes" shall have the meanings specified in any applicable
local, state, federal and foreign laws or regulations with respect to
environmental protection.
(ad) Neither the Company nor any subsidiary is an "investment
company" within the meaning of such term under the United States
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
2. Purchase of the Notes by Lehman Brothers. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement, the Company agrees to sell to Lehman
Brothers, and Lehman Brothers agrees to purchase from the Company, all of the
Notes at an aggregate purchase price equal to 97.00% of the principal amount
thereof (the "Purchase Price").
The Company shall not be obligated to deliver any of the Notes, except
upon payment for all the Notes to be purchased pursuant to this Agreement as
provided herein.
3. Offering of Notes by Lehman Brothers. Upon authorization by Lehman
Brothers of the release of the Notes, Lehman Brothers proposes to offer the
Notes for sale upon the terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Notes. Delivery of and payment for
the Notes shall be made at the office of Latham & Watkins, 885 Third Avenue New
York, New York 10022 at 10:00 A.M., New York City time, on the third full
business day following the date of
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<PAGE> 10
this Agreement or at such other date or place as shall be determined by
agreement between Lehman Brothers and the Company. This date and time are
sometimes referred to as the "Delivery Date." On the Delivery Date, the Company
shall deliver or cause to be delivered certificates representing the Notes to
Lehman Brothers for the account of Lehman Brothers against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of Lehman Brothers hereunder. Upon delivery, the Notes shall be
registered in such names and in such denominations as may be set forth in the
Indenture. For the purpose of expediting the checking and packaging of the
certificates for the Notes, the Company shall make the certificates representing
the Notes available for inspection by Lehman Brothers in New York, New York, not
later than 2:00 P.M., New York City time, on the business day prior to the
Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by Lehman
Brothers and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than Commission's close of business on the
second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus
except as permitted herein; to advise Lehman Brothers, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish Lehman Brothers with copies thereof; to advise Lehman
Brothers, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of
the suspension of the qualification of the Notes for offering or sale
in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus or suspending
any such qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to Lehman Brothers and to counsel for
Lehman Brothers a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed
therewith;
(c) To deliver promptly to Lehman Brothers such number of the
following documents as Lehman Brothers shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits other than this
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<PAGE> 11
Agreement, the Indenture and the computation of per share earnings)
and (ii) each Preliminary Prospectus, the Prospectus and any amended
or supplemented Prospectus; and, if the delivery of a prospectus is
required at any time after the Effective Time in connection with the
offering or sale of the Notes or any other securities relating thereto
and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to comply
with the Securities Act, to notify Lehman Brothers and, upon their
request, to file such document and to prepare and furnish without
charge to Lehman Brothers and to any dealer in securities as many
copies as Lehman Brothers may from time to time reasonably request of
an amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or Lehman
Brothers, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to
furnish a copy thereof to Lehman Brothers and counsel for Lehman
Brothers and obtain the consent of Lehman Brothers to the filing;
(f) As soon as practicable, to make generally available to the
Company's security holders and to deliver to Lehman Brothers earnings
statements of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule
158);
(g) So long as any of the Notes are outstanding, to furnish to
Lehman Brothers copies of all materials furnished by the Company to
its shareholders and all public reports and all reports and financial
statements furnished by the Company to the principal national
securities exchange upon which the Common Stock may be listed pursuant
to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder;
(h) Promptly from time to time to take such action as Lehman
Brothers may reasonably request to qualify the Notes for offering and
sale under the securities laws of such jurisdictions as Lehman
Brothers may request and to
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<PAGE> 12
comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Notes;
(j) To apply the net proceeds from the sale of the Notes being
sold by the Company as set forth in the Prospectus;
(k) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment
company" within the meaning of such term under the United States
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder; and
(l) For a period of 90 days from the date of the Prospectus, not
to, directly or indirectly, sell, offer to sell, contract to sell,
grant any option to purchase, issue any instrument convertible or
exchangeable for, or otherwise transfer or dispose of (or enter into
any transaction or device which is designed to, or could be expected
to, result in the disposition in the future of), any debt securities
of the Company or any of its subsidiaries, except with the prior
consent of Lehman Brothers.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Notes and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus (including, without limitation, exhibits) and any amendment or
supplement to the Preliminary Prospectus and Prospectus, all as provided in this
Agreement; (d) the costs of reproducing and distributing this Agreement; (e) the
filing fees incident to securing any required review by the National Association
of Securities Dealers, Inc. of the terms of sale of the Notes; (f) any
applicable listing or other fees; (g) the fees and expenses of qualifying the
Notes under the securities laws of the several jurisdictions as provided in
Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of counsel to Lehman Brothers); (h) any
fees charged by securities rating services for rating the Notes; and (i) all
other costs and expenses incident to the performance of the obligations of the
Company under this Agreement; provided, that (x) the Company and Lehman Brothers
will bear their own "road show" expenses, (y) the Company, on the one hand, and
Lehman Brothers, on the other hand, will each bear one half of the cost of the
charter air craft used in connection with the "road show" relating to the
offering of the Notes and (z) the only legal expenses of Lehman Brothers to be
borne by the Company pursuant to this Section 6 are pursuant to clause (g) of
this Section 6.
7. Conditions of Lehman Brothers' Obligations. The obligations of
Lehman Brothers hereunder are subject to the accuracy, when made and on the
Delivery Date, of the representations and warranties of the Company contained
herein, to the performance by the
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<PAGE> 13
Company of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied
with.
(b) Lehman Brothers shall not have discovered and disclosed to
the Company on or prior to the Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of Latham
& Watkins, counsel for Lehman Brothers, is material or omits to state
a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Indenture,
the Notes, the Registration Statement and the Prospectus, and all
other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material
respects to counsel for Lehman Brothers, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Miles & Stockbridge P.C. shall have furnished to Lehman
Brothers its written opinion, as counsel to the Company, addressed to
Lehman Brothers and dated the Delivery Date, in form and substance
reasonably satisfactory to Lehman Brothers, to the effect that:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Maryland and has the corporate power and authority to own or hold
its properties and conduct the businesses in which it is engaged
as such properties and businesses are described in the
Prospectus;
(ii) The Company has authorized capital stock as described
under the caption "Description of Common Stock--General" set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company, comprising 117,076,081 shares of common
stock, $0.01 par value per share, and 4,300,000 shares of 8%
Series A Cumulative Preferred Stock, have been duly authorized
and validly issued and are fully paid and non-assessable, and the
description of the common stock, $0.01
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<PAGE> 14
par value per share, of the Company and the preferred stock of
the Company, consisting solely of the shares of preferred stock,
$0.01 par value, designated 8.0% Series A Cumulative Preferred
Stock, conform to the description thereof set forth under the
caption "Description of Capital Stock" in the Prospectus,
including under the caption "New Prison Realty Capital Stock" in
the prospectus that is incorporated therein by reference;
(iii) The execution and delivery of and the performance of
its obligations under each of the Underwriting Agreement and the
Indenture by the Company have been duly authorized by the
Company;
(iv) The issuance and sale of the Notes by the Company have
been duly authorized by the Company;
(v) The execution and delivery by the Company of this
Agreement and the Indenture and the consummation by the Company
of the transactions contemplated hereby and thereby will not
result in any violation of the provisions of the charter or
bylaws of the Company or, to the knowledge of such counsel, any
applicable law, rule or regulation of any Maryland court or
governmental agency having jurisdiction over the Company, except
for such violations that could not, singly or in the aggregate,
be reasonably expected to have a Material Adverse Effect; and
(vi) No consent, approval, authorization, order,
registration or qualification of or with any Maryland
governmental agency or body or, to our knowledge, any Maryland
court is required for the issue and sale of the Notes by the
Company and the compliance by the Company with the provisions of
this Agreement, except for such consents, approvals,
authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Notes by Lehman
Brothers.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the laws of the State of
Maryland.
(e) Stokes & Bartholomew, P.A. shall have furnished to Lehman
Brothers its written opinion, as counsel to the Company, addressed to
Lehman Brothers and dated the Delivery Date, in form and substance
reasonably satisfactory to Lehman Brothers, to the effect that:
(i) The Company has been duly formed and is validly existing
as a corporation under the laws of the State of Maryland, with
corporate power and authority to own its properties and conduct
its businesses as now conducted, and based solely upon
certificates from public officials, is duly qualified to do
business and is in good standing as a foreign
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<PAGE> 15
corporation in each jurisdiction in which its ownership or lease
of property or the conduct of its businesses requires such
qualification, except to the extent that the failure to be so
qualified could not be reasonably expected to have Material
Adverse Effect;
(ii) As of the dates specified therein, the Company had
authorized and issued capital stock as set forth under the
caption "Capitalization" in the Prospectus. All of the issued
shares of the capital stock of the Company have been duly
authorized and validly issued and conform to the description
thereof contained in the Prospectus;
(iii) The Indenture has been duly executed and delivered by
the Company, is duly qualified under the Trust Indenture Act and,
assuming that the Indenture is a valid and binding agreement of
the Trustee, constitutes a valid and binding agreement of the
Company;
(iv) The Notes have been duly executed and issued by the
Company and, assuming due authentication thereof by the Trustee
and upon payment delivery in accordance with the terms of this
Agreement, will constitute valid and binding obligations of the
Company;
(v) This Agreement has been duly executed and delivered by
the Company;
(vi) To such counsel's knowledge, there are no preemptive or
other rights to subscribe for or to purchase, nor any restriction
upon the transfer of, any Notes pursuant to the Company's charter
or by-laws or any agreement or other instrument known to such
counsel;
(vii) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property owned by
them, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as
do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries; and all real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries;
(viii) To the best of such counsel's knowledge, and other
than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property or assets of
the Company or any of its subsidiaries is
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<PAGE> 16
the subject of which, if determined adversely to the Company or
any of its subsidiaries, could be reasonably expected to have a
Material Adverse Effect; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(ix) To the best of such counsel's knowledge, and with the
exception of two Registration Rights Agreements, each dated
December 31, 1998, in connection with the Company's issuance to
PMI Mezzanine Fund, L.P. of its 7.5% convertible subordinated
notes in the aggregate principal amount of $30.0 million and the
Company's issuance to MDP Ventures IV LLC of its 9.5% convertible
subordinated notes in the aggregate principal amount of $40.0
million, there are no contracts, agreements or understandings
between the Company and any person granting such person the right
to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to
the Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company
under the Securities Act;
(x) The statements contained in the Prospectus under the
captions "Business-Relationship with CCA," "Business-CCA Leases,"
"Business-Other Agreements," "Business-CCA Note,"
"Business-License Fees," "Business-Relationship with the Service
Companies" and "Business-Governmental Regulation," insofar as
they describe charter documents, contracts, statutes, rules and
regulations and other legal matters, constitute an accurate
summary thereof in all material respects;
(xi) The statements contained in the Prospectus under the
caption "Material United States Federal Tax Considerations" or
"Material Federal Income Tax Consequences," insofar as they
purport to constitute summaries of matters of United States
federal tax law and regulations or legal conclusions with respect
thereto, constitute accurate summaries of the matters described
therein in all material respects;
(xii) All of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized
and issued and are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims other than liens or
encumbrances in favor of the lenders under the Company's Bank
Credit Facility, dated as of January 1, 1999, as described in the
Prospectus;
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(xiii) To such counsel's knowledge, there are no contracts
or documents of a character required by the Securities Act or by
the rules and regulations thereunder to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are not described or
filed as required by the Securities Act or by the rules and
regulations thereunder;
(xiv) The execution and delivery by the Company of this
Agreement and the Indenture and the consummation by the Company
of the other transactions contemplated hereby and thereby and by
the Prospectus will not (A) to the knowledge of such counsel,
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument
of the Company or any of its subsidiaries, except for such
breaches or violations that could not, singly or in the
aggregate, be reasonably expected to have a Material Adverse
Effect or (B) result in any violation of the provisions of the
charter or bylaws of the Company or any of its subsidiaries, or,
to the knowledge of such counsel, any applicable law, rule or
regulation with respect to the Company or any of its subsidiaries
or, to the knowledge of such counsel, any rule or regulation or
order of any court or governmental agency having jurisdiction
over the Company or any of its subsidiaries, except for such
violations that could not, singly or in the aggregate, be
reasonably expected to have a Material Adverse Effect; and, to
the knowledge of such counsel, except for such consents,
approvals or authorizations of, or filings, registrations or
qualifications with, governmental authorities as may be required
under the Securities Act and the rules and regulations
thereunder, the Trust Indenture Act and the rules and regulations
thereunder or applicable states securities or Blue Sky laws,
rules or regulations in connection with the purchase and
distribution of the Notes by Lehman Brothers, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required
in connection with the execution and delivery by the Company of
this Agreement or the Indenture or the consummation by the
Company of the other transactions contemplated hereby and thereby
and by the Prospectus and the issuance and sale of the Notes by
the Company; and
(xv) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company
prior to the Delivery Date (other than the financial statements
and related schedules therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the requirements of the Securities Act and the Rules and
Regulations.
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<PAGE> 18
In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the State of Tennessee and the
General Corporation Law of the State of Delaware and that such counsel
is not admitted in the State of Delaware; (ii) rely (to the extent
such counsel deems proper and specifies in its opinion), as to matters
involving the application of the laws of other jurisdictions upon the
opinion of other counsel of good standing, provided that such counsel
is satisfactory to counsel for Lehman Brothers and furnishes a copy of
its opinion to Lehman Brothers.
Such counsel shall also have furnished to Lehman Brothers a
written statement, addressed to Lehman Brothers and dated the Delivery
Date, in form and substance satisfactory to Lehman Brothers, to the
following effect: Such counsel has not independently verified the
accuracy, completeness or fairness of the statements made or included
in the Registration Statement or the Prospectus and does not take
responsibility therefor, except as and to the extent set forth in
paragraphs (xi) and (xii) above. In the course of the preparation by
the Company of the Registration Statement and the Prospectus, such
counsel participated in conferences with certain officers and
employees of the Company and with representatives of Arthur Andersen
LLP, the Company's independent auditors. Based upon such counsel's
examination of the Registration Statement and the Prospectus, suhc
counsel's investigations made in connection with the preparation of
the Registration Statement and the Prospectus and such counsel's
participation in the conferences referred to above, (i) such counsel
is of the opinion that the Registration Statement, as of its effective
date, and the Prospectus, as of June 4, 1999, complied as to form in
all material respects with the requirements of the Securities Act and
the applicable rules and regulations of the Commission thereunder,
except that in each case such counsel need not express an opinion with
respect to the financial statements or other financial data contained
or incorporated by reference in the Registration Statement or the
Prospectus, and (ii) such counsel has no reason to believe that the
Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading or that the Prospectus contains any
untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
except that in each case such counsel need not express an opinion with
respect to the financial statements or other financial data contained
or incorporated by reference in the Registration Statement or the
Prospectus.
In addition, Stokes & Bartholomew, P.A. shall have furnished to
Lehman Brothers its written opinion, as special tax counsel to the
Company, addressed to Lehman Brothers and dated the Delivery Date, in
form and substance reasonably satisfactory to Lehman Brothers.
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<PAGE> 19
(f) Simpson Thacher & Bartlett, special New York counsel for the
Company, shall have furnished to Lehman Brothers its written opinion
addressed to Lehman Brothers and dated the Delivery Date, in form and
substance reasonably satisfactory to Lehman Brothers, to the effect
that:
(i) The Indenture was duly qualified under the Trust
Indenture Act and, assuming the Indenture has been duly
authorized, executed and delivered by the Company and, assuming
that the Indenture is a valid and binding agreement of the
Trustee, the Indenture constitutes a valid and legally binding
instrument of the Company enforceable against the Company in
accordance with its terms;
(ii) Assuming the Notes have been duly authorized, executed
and issued by the Company and, assuming due authentication
thereof by the Trustee and upon payment and delivery in
accordance with the terms of this Agreement, the Notes will
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms and entitled to the
benefits of the Indenture;
(iii) No consent, approval, authorization, order,
registration or qualification of or with any Federal or New York
governmental agency or body or, to our knowledge, any Federal or
New York court is required for the issue and sale of the Notes by
the Company and the compliance by the Company with all of the
provisions of this Agreement, except for the registration under
the Securities Act and the Exchange Act of the Notes and such
consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Notes by Lehman Brothers;
(iv) The statements made in the Prospectus under the caption
"Description of Notes," insofar as they purport to constitute
summaries of the documents referred to therein, constitute
accurate summaries of the terms of such documents in all material
respects;
(v) The Registration Statement has become effective under
the Securities Act and the Prospectus was filed pursuant to Rule
424(b) of the Rules and Regulations and, to our knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued or proceeding for that purpose has been
instituted or threatened by the Commission; and
(vi) The Company is not an "investment company" within the
meaning of and subject to regulation under the Investment Company
Act of 1940, as amended.
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<PAGE> 20
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the Federal laws of the
United States of America and the laws of the State of New York.
(g) Lehman Brothers shall have received from Latham & Watkins,
counsel for Lehman Brothers, such opinion or opinions, dated the
Delivery Date, with respect to the issuance and sale of the Notes, the
Registration Statement, the Prospectus and other related matters as
Lehman Brothers may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably request
for the purpose of enabling them to pass upon such matters.
(h) At the time of execution of this Agreement, Lehman Brothers
shall have received from Arthur Andersen LLP a letter, in form and
substance satisfactory to Lehman Brothers, addressed to Lehman
Brothers and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities
Act and are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission and (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the
date hereof), the conclusions and findings of such firm with respect
to the financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(i) With respect to the letter of Arthur Andersen LLP referred to
in the preceding paragraph and delivered to Lehman Brothers
concurrently with the execution of this Agreement (the "initial
letter"), the Company shall have furnished to Lehman Brothers a letter
(the "bring-down letter") of such accountants, in form and substance
satisfactory to Lehman Brothers, addressed to Lehman Brothers and
dated the Delivery Date (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the
date of the bring-down letter), the conclusions and findings of such
firm with respect to the financial information and other matters
covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(j) The Company shall have furnished to Lehman Brothers a
certificate, dated the Delivery Date, of its Chairman of the Board,
its President or a Vice President and its chief financial officer
stating that:
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<PAGE> 21
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of the Delivery
Date; the Company has complied with all its agreements contained
herein; and the conditions set forth in Sections 7(a), 7(k), 7(l)
and 7(m) have been fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective
Date, the Registration Statement and Prospectus did not include
any untrue statement of a material fact and did not omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since the
Effective Date no event has occurred which should have been set
forth in a supplement or amendment to the Registration Statement
or the Prospectus.
(k) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of
Lehman Brothers, so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of
the Notes being delivered on the Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Company's debt securities by any "nationally recognized statistical
rating organization," as that term is defined by the Commission for
purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no
such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities.
(m) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices
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<PAGE> 22
shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United States or
there shall have been a declaration of a national emergency or war by
the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the judgment of
Lehman Brothers, impracticable or inadvisable to proceed with the
public offering or delivery of the Notes being delivered on the
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for Lehman Brothers.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless Lehman
Brothers, its officers and employees and each person, if any, who
controls Lehman Brothers within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases
and sales of Notes), to which Lehman Brothers, that officer, employee
or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (B) in any blue sky application or
other document prepared or executed by the Company (or based upon any
written information furnished by the Company) specifically for the
purpose of qualifying any or all of the Notes under the securities
laws of any state or other jurisdiction (any such application,
document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus,
or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any
act or failure to act or any alleged act or failure to act by Lehman
Brothers in connection with, or relating in any manner to, the Notes
or the offering contemplated hereby, and which is included as part of
or referred to in any loss, claim, damage, liability or action arising
out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company shall not be liable in the case of any
matter covered by this clause (iii) to the extent that it is
determined in a final judgment by a court of
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<PAGE> 23
competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by Lehman Brothers through its gross
negligence or willful misconduct), and shall reimburse Lehman Brothers
and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by Lehman
Brothers, that officer, employee or controlling person in connection
with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, or in any Blue Sky
Application, in reliance upon and in conformity with written
information concerning Lehman Brothers furnished to the Company by or
on behalf of Lehman Brothers specifically for inclusion therein and
described in Paragraph 8(e); and provided further that as to any
Preliminary Prospectus this indemnity agreement shall not inure to the
benefit of Lehman Brothers, its officers or employees or any person
controlling Lehman Brothers on account of any loss, claim, damage,
liability or action arising from the sale of Notes to any person by
Lehman Brothers if Lehman Brothers failed to send or give a copy of
the Prospectus, as the same may be amended or supplemented, to that
person within the time required by the Securities Act, and the untrue
statement or alleged untrue statement of any material fact or omission
or alleged omission to state a material fact in such Preliminary
Prospectus was corrected in the Prospectus, unless such failure
resulted from non-compliance by the Company with Section 5(c). For
purposes of the last proviso to the immediately preceding sentence,
the term "Prospectus" shall not be deemed to include the documents
incorporated therein by reference, and Lehman Brothers shall not be
obligated to send or give any supplement or amendment to any document
incorporated by reference in any Preliminary Prospectus or the
Prospectus to any person other than a person to whom Lehman Brothers
had delivered such incorporated document or documents in response to a
written request therefor. The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to
Lehman Brothers or to any officer, employee or controlling person of
Lehman Brothers.
(b) Lehman Brothers shall indemnify and hold harmless the
Company, its officers and employees, each of its directors, and each
person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the
Company or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any
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<PAGE> 24
amendment or supplement thereto, or (B) in any Blue Sky Application or
(ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information concerning Lehman Brothers furnished to the
Company by or on behalf of Lehman Brothers specifically for inclusion
therein, and shall reimburse the Company and any such director,
officer or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred. The foregoing indemnity
agreement is in addition to any liability which Lehman Brothers may
otherwise have to the Company or any such director, officer, employee
or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under
this Section 8 except to the extent it has been materially prejudiced
by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for
any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than reasonable
costs of investigation; provided however, that any indemnified party
shall have the right to employ separate counsel in any such action and
to participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless
(i) the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have
been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to
those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to
employ separate counsel or (iii) the indemnifying party has failed to
assume the defense of
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<PAGE> 25
such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies
the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action on
behalf of such indemnified party, it being understood, however, that
the indemnifying party shall not, in connection with any one such
action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for all such
indemnified parties, which firm shall be designated in writing by
Lehman Brothers, if the indemnified parties under this Section 8
consist of Lehman Brothers or any of their respective officers,
employees or controlling persons, or by the Company, if the
indemnified parties under this Section consist of the Company or any
of the Company's directors, officers, employees or controlling
persons. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld),
but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and Lehman Brothers on the
other from the offering of the Notes or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault
of the Company, on the one hand and Lehman Brothers on the other with
respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand and Lehman Brothers on the
other with respect
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<PAGE> 26
to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Notes purchased under this
Agreement (before deducting expenses) received by the Company, on the
one hand, and the total underwriting discounts and commissions
received by Lehman Brothers with respect to the Notes purchased under
this Agreement, on the other hand, bear to the total gross proceeds
from the offering of the Notes under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by
the Company or Lehman Brothers, the intent of the parties and their
relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and Lehman Brothers
agree that it would not be just and equitable if contributions
pursuant to this Section were to be determined by pro rata allocation
(even if Lehman Brothers were treated as one entity for such purpose)
or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this
Section shall be deemed to include, for purposes of this Section 8(d),
any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 8(d), Lehman
Brothers shall not be required to contribute any amount in excess of
the amount by which the total price at which the Notes underwritten by
it and distributed to the public was offered to the public exceeds the
amount of any damages which Lehman Brothers has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) Lehman Brothers confirms and the Company acknowledges that
the statements with respect to the public offering of the Notes by
Lehman Brothers set forth as the fifth paragraph, the first sentence
of the eighth paragraph, and the ninth paragraph under the caption
"Underwriting" in the Prospectus are correct and constitute the only
information concerning Lehman Brothers furnished in writing to the
Company by or on behalf of Lehman Brothers specifically for inclusion
in the Registration Statement and the Prospectus.
9. Termination. The obligations of Lehman Brothers hereunder may be
terminated by Lehman Brothers by notice given to and received by the Company
prior to delivery of and payment for the Notes if, prior to that time, any of
the events described in Sections 7(k), 7(l) or 7(m), shall have occurred or if
Lehman Brothers shall decline to purchase the Notes for any reason permitted
under this Agreement.
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<PAGE> 27
10. Reimbursement of Lehman Brothers' Expenses. If (a) the Company
shall fail to tender the Notes for delivery to Lehman Brothers by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
obligations hereunder required to be fulfilled by the Company is not fulfilled,
the Company will reimburse Lehman Brothers for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) incurred by Lehman
Brothers in connection with this Agreement and the proposed purchase of the
Notes, and upon demand the Company shall pay the full amount thereof to Lehman
Brothers. If this Agreement is terminated pursuant to Section 9 by reason of the
default of Lehman Brothers, the Company shall not be obligated to reimburse
Lehman Brothers on account of those expenses.
11. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to Lehman Brothers, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-526-6588), with a copy, in the case of any notice
pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th
Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in
the Registration Statement or Prospectus, Attention: Michael W. Devlin
(Fax: 615-263-0212), with a copy to Elizabeth E. Moore, Esq., Stokes &
Bartholomew, P.A., 424 Church Street, Suite 2800, Nashville, Tennessee
37219;
provided however, that any notice to Lehman Brothers pursuant to
Section 8(c) shall be delivered or sent by mail, telex or facsimile transmission
to Lehman Brothers at its address set forth in its acceptance telex to Lehman
Brothers, which address will be supplied to any other party hereto by Lehman
Brothers upon request. Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Company shall be entitled
to act and rely upon any request, consent, notice or agreement given or made by
Lehman Brothers Inc.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon Lehman Brothers, the Company and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control Lehman Brothers within the meaning of Section 15 of
the Securities Act and (B) the indemnity agreement of Lehman Brothers contained
in Section 8(c) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 12, any
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<PAGE> 28
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
13. Survival. The respective indemnities, representations, warranties
and agreements of the Company and Lehman Brothers contained in this Agreement or
made by or on behalf on them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Notes and shall remain in full force
and effect, regardless of any investigation made by or on behalf of any of them
or any person controlling any of them.
14. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF NEW YORK.
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Signature page follows]
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If the foregoing correctly sets forth the agreement among the Company and Lehman
Brothers, please indicate your acceptance in the space provided for that purpose
below.
Very Truly Yours,
PRISON REALTY TRUST, INC.
By /s/ Michael W. Devlin
---------------------------------
Name: Michael W. Devlin
Title: Chief Operating Officer
Accepted:
LEHMAN BROTHERS INC.
By /s/ Edward B. McGeough
------------------------------
Authorized Representative
29
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Exhibit 4.1
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PRISON REALTY TRUST, INC.
To
STATE STREET BANK AND TRUST COMPANY
Trustee
Indenture
Dated as of June 10, 1999
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION...............................................................1
Section 1.01. Definitions ..........................................................1
Section 1.02. Compliance Certificates and Opinions ................................11
Section 1.03. Form of Documents Delivered to Trustee...............................11
Section 1.04. Notices, etc., to Trustee and Company................................12
Section 1.05. Notice to Holders; Waiver............................................12
Section 1.06. Conflict with Trust Indenture Act ...................................13
Section 1.07. Effect of Headings and Table of Contents ............................13
Section 1.08. Successors and Assigns...............................................13
Section 1.09. Separability Clause..................................................13
Section 1.10. Benefits of Indenture................................................13
Section 1.11. Governing Law........................................................13
Section 1.12. Legal Holidays ......................................................14
Section 1.13. No Security Interest Created ........................................14
Section 1.14. Liability Solely Corporate...........................................14
ARTICLE II
DEBT SECURITY FORMS.................................................................15
Section 2.01. Forms Generally .....................................................15
Section 2.02. Form of Trustee's Certificate of Authentication .....................15
Section 2.03. Securities in Global Form ...........................................16
ARTICLE III
THE DEBT SECURITIES ................................................................16
Section 3.01. Amount Unlimited; Issuable in Series.................................16
Section 3.02. Denominations .......................................................20
Section 3.03. Execution, Authentication, Delivery and Dating.......................20
Section 3.04. Temporary Debt Securities; Exchange of Temporary Global Notes for
Definitive Bearer Securities ........................................22
Section 3.05. Registration, Transfer and Exchange .................................26
Section 3.06. Mutilated, Destroyed, Lost and Stolen Debt Securities................28
Section 3.07. Payment of Interest; Interest Rights Preserved ......................29
Section 3.08. Cancellation ........................................................31
Section 3.09. Computation of Interest..............................................31
Section 3.10. Currency of Payments in Respect of Debt .............................31
Section 3.11. Judgments............................................................34
Section 3.12. Exchange Upon Default................................................35
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ARTICLE IV
SATISFACTION AND DISCHARGE .........................................................35
Section 4.01. Satisfaction and Discharge of Indenture..............................35
Section 4.02. Application of Trust Money...........................................36
ARTICLE V
REMEDIES ...........................................................................37
Section 5.01. Events of Default....................................................37
Section 5.02. Acceleration of Maturity; Rescission and Annulment...................38
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee......39
Section 5.04. Trustee May File Proofs of Claim ....................................40
Section 5.05. Trustee May Enforce Claims Without Possession of Debt Securities.....40
Section 5.06. Application of Money Collected.......................................40
Section 5.07. Limitation on Suits .................................................41
Section 5.08. Unconditional Right of Holders to Receive Principal, Premium and
Interest ............................................................42
Section 5.09. Restoration of Rights and Remedies...................................42
Section 5.10. Rights and Remedies Cumulative.......................................42
Section 5.11. Delay or Omission Not Waiver ........................................42
Section 5.12. Control by Holders ..................................................42
Section 5.13. Waiver of Past Defaults..............................................43
Section 5.14. Undertaking for Costs ...............................................43
Section 5.15. Waiver of Stay or Extension Laws.....................................43
ARTICLE VI
THE TRUSTEE ........................................................................44
Section 6.01. Certain Duties and Responsibilities .................................44
Section 6.02. Notice of Defaults...................................................45
Section 6.03. Certain Rights of Trustee............................................45
Section 6.04. Not Responsible for Recitals or Issuance of Debt Securities..........46
Section 6.05. May Hold Debt Securities.............................................46
Section 6.06. Money Held in Trust..................................................47
Section 6.07. Compensation and Reimbursement.......................................47
Section 6.08. Disqualification; Conflicting Interests .............................47
Section 6.09. Corporate Trustee Required; Eligibility .............................52
Section 6.10. Resignation and Removal; Appointment of Successor....................53
Section 6.11. Acceptance of Appointment by Successor ..............................54
Section 6.12. Merger, Conversion, Consolidation or Succession to Business .........55
Section 6.13. Preferential Collection of Claims Against Company....................55
Section 6.14. Appointment of Authenticating Agent .................................58
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY...................................59
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Section 7.01. Company to Furnish Trustee Names and Addresses of Holders............59
Section 7.02. Preservation of Information; Communication to Holders................60
Section 7.03. Reports by Trustee ..................................................61
Section 7.04. Reports by Company...................................................63
ARTICLE VIII
CONCERNING THE HOLDERS..............................................................64
Section 8.01. Acts of Holders......................................................64
Section 8.02. Proof of Ownership; Proof of Execution of Instruments by Holder......64
Section 8.03. Persons Deemed Owners................................................65
Section 8.04. Revocation of Consents; Future Holders Bound.........................65
ARTICLE IX
HOLDERS' MEETINGS ..................................................................65
Section 9.01. Purposes of Meetings ................................................65
Section 9.02. Call of Meetings by Trustee..........................................66
Section 9.03. Call of Meetings by Company or Holders...............................66
Section 9.04. Qualifications for Voting............................................66
Section 9.05. Regulations..........................................................66
Section 9.06. Voting...............................................................67
Section 9.07. No Delay of Rights by Meeting .......................................67
ARTICLE X
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE................................68
Section 10.01. Company May Consolidate, etc., Only on Certain Terms................68
Section 10.02. Successor Corporation Substituted...................................68
ARTICLE XI
SUPPLEMENTAL INDENTURES ............................................................69
Section 11.01. Supplemental Indentures Without Consent of Holders .................69
Section 11.02. Supplemental Indentures With Consent of Holders.....................70
Section 11.03. Execution of Supplemental Indentures ...............................71
Section 11.04. Effect of Supplemental Indentures ..................................71
Section 11.05. Conformity with Trust Indenture Act.................................71
Section 11.06. Reference in Debt Securities to Supplemental Indentures ............71
Section 11.07. Notice of Supplemental Indenture ...................................72
ARTICLE XII
COVENANTS ..........................................................................72
Section 12.01. Payment of Principal, Premium and Interest..........................72
Section 12.02. Officer's Certificate as to Default.................................72
Section 12.03. Maintenance of Office or Agency.....................................72
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Section 12.04. Money for Debt Securities; Payments To Be Held in Trust.............73
Section 12.05. Corporate Existence ................................................75
Section 12.06. Purchase of Debt Securities by Company..............................75
Section 12.07. Waiver of Certain Covenants.........................................75
ARTICLE XIII
REDEMPTION OF DEBT SECURITIES.......................................................75
Section 13.01. Applicability of Article ...........................................75
Section 13.02. Election to Redeem; Notice to Trustee ..............................75
Section 13.03. Selection by Trustee of Debt Securities to Be Redeemed..............76
Section 13.04. Notice of Redemption ...............................................76
Section 13.05. Deposit of Redemption Price ........................................77
Section 13.06. Debt Securities Payable on Redemption Date..........................77
Section 13.07. Debt Securities Redeemed in Part ...................................78
ARTICLE XIV
SINKING FUNDS ......................................................................78
Section 14.01. Applicability of Article ...........................................78
Section 14.02. Satisfaction of Mandatory Sinking Fund Payments with Debt
Securities..........................................................79
Section 14.03. Redemption of Debt Securities for Sinking Fund .....................79
ARTICLE XV
DEFEASANCE .........................................................................81
Section 15.01. Applicability of Article ...........................................81
Section 15.02. Defeasance Upon Deposit of Moneys or U.S. Government Obligations....81
Section 15.03. Deposited Moneys and U.S. Government Obligations to Be Held in
Trust...............................................................82
Section 15.04. Repayment to Company................................................83
ARTICLE XVI
CONVERSION .........................................................................83
Section 16.01. Applicability; Conversion Privilege ................................83
Section 16.02. Conversion Procedure; Conversion Price; Fractional Shares...........83
Section 16.03. Adjustment of Conversion Price for Common Stock.....................84
Section 16.04 Consolidation or Merger of the Company..............................87
Section 16.05. Notice of Adjustment................................................87
Section 16.06. Notice in Certain Events ...........................................88
Section 16.07. Company to Reserve Stock; Registration; Listing.....................88
Section 16.08. Taxes on Conversion.................................................89
Section 16.09 Conversion After Record Date........................................89
Section 16.10. Company Determination Final.........................................89
Section 16.11 Trustee's Disclaimer ...............................................90
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Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of June 10, 1999
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Trust Indenture Act Section Indenture Section
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ss. 310 (a)(1) .................................. 6.09
(a)(2) .................................. 6.09
(a)(3) .................................. Not Applicable
(a)(4) .................................. Not Applicable
(a)(5) .................................. 6.09
(b) ..................................... 6.08, 6.10
(c) ..................................... Not Applicable
ss. 311 (a) ..................................... 6.13(a)
(b) ..................................... 6.13(b)
(c) ..................................... Not Applicable
ss. 312 (a) ..................................... 7.01, 7.02(a)
(b) ..................................... 7.02(b)
(c) ..................................... 7.02(c)
ss. 313 (a) ..................................... 7.03(a)
(b) ..................................... 7.03(b)
(c) ..................................... 7.03(a),
7.03(c)
(d) ..................................... 7.03(d)
ss. 314 (a) ..................................... 7.04,
........................................ 12.02
(b) ..................................... Not Applicable
(c)(1) .................................. 1.02
(c)(2) .................................. 1.02
(c)(3) .................................. Not Applicable
(d) ..................................... Not Applicable
(e) ..................................... 1.02
ss. 315 (a) ..................................... 6.01(a),
6.01(c)
(b) ..................................... 6.02,
7.03(a)(7)
(c) ..................................... 6.01(b)
(d)(1) .................................. 6.01(a)
(d)(2) .................................. 6.01(c)(2)
(d)(3) .................................. 6.01(c)(3)
(e) ..................................... 5.14
ss. 316 (a)(1)(A)................................ 5.02, 5.12
(a)(1)(B)................................ 5.13
(a)(2) .................................. Not Applicable
(b) ..................................... 5.08
(c) ..................................... Not Applicable
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ss. 317 (a)(1) .................................. 5.03
(a)(2) .................................. 5.04
(b) ..................................... 12.04
ss. 318 ....................................... 1.06
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Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE> 8
INDENTURE dated as of June 10, 1999, between PRISON REALTY TRUST,
INC., a Maryland corporation (hereinafter called the "Company"), having its
principal executive office at 10 Burton Hills Boulevard, Suite 100, Nashville,
Tennessee, 37215, and STATE STREET BANK AND TRUST COMPANY (hereinafter called
the "Trustee"), having its Corporate Trust Office at 225 Franklin Street,
Boston, Massachusetts, 02110.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its debentures,
notes, bonds or other evidences of indebtedness (herein generally called the
"Debt Securities"), to be issued in one or more series, as in this Indenture
provided.
All things necessary have been done to make this Indenture a valid
agreement of the Company, in accordance with its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of Debt
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of Debt Securities or of Debt
Securities of any series, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles or as provided with respect to any series of Debt Securities,
and, except as otherwise herein provided or as provided with respect to
any series of Debt Securities, the term "generally accepted accounting
principles" or "GAAP" with respect to any computation required or
permitted hereunder with respect to any series of Debt Securities, shall
mean such as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as have
been approved by a significant segment of the accounting profession which
are in effect as of the issuance date of such series of Debt Securities;
and
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(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Three or Article Six, are defined in
those respective Articles.
"Act" when used with respect to any Holder, has the meaning
specified in Section 8.01.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" as used with respect to any Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through
the ownership of voting securities, by agreement or otherwise, provided
that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control. For purposes of this definition, the
terms "controlling," "controlled by" and "under common control with" shall
have correlative meanings.
"Authenticating Agent" has the meaning specified in Section 6.14.
"Authorized Newspaper" means a newspaper in an official language of
the country of publication customarily published at least once a day, and
customarily published for at least five days in each calendar week, and of
general circulation in the place in connection with which the term is used
or in the financial community of such place. Where successive publications
are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different newspapers in the
same city meeting the foregoing requirements and in each case on any
Business Day in such city.
"Bearer Security" means any Debt Security (with or without
Coupons), in the form established pursuant to Section 2.01, which is
payable to bearer (including any Global Note payable to bearer) and title
to which passes by delivery only, but does not include any Coupons.
"Board of Directors" means either the board of directors of the
Company, or any committee of that board duly authorized to act hereunder
or any director or directors and/or officer or officers of the Company to
whom that board or committee shall have delegated its authority.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" when used with respect to any Place of Payment or
any other particular location referred to in this Indenture or in the Debt
Securities means any day which is not a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies in that
Place of Payment or other location are authorized or obligated by law to
close, except as otherwise specified pursuant to Section 3.01.
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"CEDEL" means Cedel S.A.
"Closing Price" of the Common Stock shall mean the last reported sale
price of such stock (regular way) as shown on the Composite Tape of the New York
Stock Exchange (or, if such stock is not listed or admitted to trading on the
New York Stock Exchange, on the principal national securities exchange on which
such stock is listed or admitted to trading), or, in case no such sale takes
place on such day, the average of the closing bid and asked prices on the New
York Stock Exchange (or, if such stock is not listed or admitted to trading on
the New York Stock Exchange, on the principal national securities exchange on
which such stock is listed or admitted to trading), or, if it is not listed or
admitted to trading on any national securities exchange, the average of the
closing bid and asked prices as reported by the National Association of
Securities Dealers Automated Quotation System (NASDAQ), or if such stock is not
so reported, the average of the closing bid and asked prices as furnished by any
member of the National Association of Securities Dealers, Inc., selected from
time to time by the Company for that purpose.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
"Common Stock" shall mean the class of Common Stock, par value $.01 per
share, of the Company authorized at the date of this Indenture as originally
signed, or any other class of stock resulting from successive changes or
reclassifications of such Common Stock, and in any such case including any
shares thereof authorized after the date of this Indenture, and any other shares
of stock of the Company which do not have any priority in the payment of
dividends or upon liquidation over any other class of stock.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by the Chairman, a Vice
Chairman, the President, the Chief Financial Officer, the Chief Operating
Officer or a Vice President and by the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
the Company, and delivered to the Trustee.
"Component Currency" has the meaning specified in Section 3.10(i).
"Conversion Agent" means any Person authorized by the Company to receive
Debt Securities to be converted into Common Stock on behalf of the Company. The
Company initially authorizes the Trustee to act as Conversion Agent for the Debt
Securities on its behalf. The Company may at any time from time to time
authorize one or more Persons to
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act as Conversion Agent in addition to or in place of the Trustee with respect
to any series of Debt Securities issued under this Indenture.
"Conversion Date" has the meaning specified in Section 3.10(e).
"Conversion Event" means the cessation of (i) a Foreign Currency to be
used both by the government of the country which issued such Currency and for
the settlement of transactions by public institutions of or within the
international banking community, (ii) the ECU to be used both within the
European Monetary System and for the settlement of transactions by public
institutions of or within the European Communities or (iii) any Currency unit
other than the ECU to be used for the purposes for which it was established.
Notwithstanding any term herein, or in any supplement hereto, to the contrary,
in no instance shall the Trustee be under any duty or obligation to determine or
monitor whether a Conversion Event has occurred. Upon receipt by the Trustee of
an Officers' Certificate of the Company certifying to the effect that a
Conversion Event has occurred, the Trustee shall be entitled to rely exclusively
thereon without independent investigation on its part.
"Conversion Price" means, with respect to any series of Debt Securities
which are convertible into Common Stock, the price per share of Common Stock at
which the Debt Securities of such series are so convertible pursuant to Section
3.01 with respect to such series, as the same may be adjusted from time to time
in accordance with Section 16.03.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this instrument is
located at 225 Franklin Street, Boston, Massachusetts, 02110, Attention:
Corporate Trust Department. .
"Corporation" includes corporations, associations, companies and business
trusts.
"Coupon" means any interest coupon appertaining to any Debt Security.
"Coupon Security" means any Bearer Security authenticated and delivered
with one or more Coupons appertaining thereto.
"Currency" means Dollars or Foreign Currency.
"Currency Determination Agent" means the New York Clearing House bank, if
any, from time to time selected by the Company for purposes of Section 3.10;
provided that such agent shall accept such appointment in writing and the terms
of such appointment shall be acceptable to the Company and shall, in the opinion
of the Company and the Trustee at the time of such appointment, require such
agent to make the determinations required by this Indenture by a method
consistent with the method provided in this Indenture for the making of such
decision or determination.
"Current Market Price" on any date shall mean the average of the daily
Closing Prices per share of Common Stock for any thirty (30) consecutive Trading
Days selected by the Company prior to the date in question, which thirty (30)
consecutive Trading Day period shall not commence more than forty-five (45)
Trading Days prior to the day in question; provided
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that with respect to Section 16.03(3), the "Current Market Price" of the Common
Stock shall mean the average of the daily Closing Prices per share of Common
Stock for the five (5) consecutive Trading Days ending on the date of the
distribution referred to in Section 16.03(3) (or if such date shall not be a
Trading Day, on the Trading Day immediately preceding such date).
"Debt Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Debt Securities (including any Global
Notes) authenticated and delivered under this Indenture.
"Defaulted Interest" has the meaning specified in Section 3.07.
"Discharged" has the meaning specified in Section 15.02.
"Discount Security" means any Debt Security which is issued with "original
issue discount" within the meaning of Section 1273(a) of the Code (or any
successor provision) and the regulations thereunder.
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States as at the time of payment is legal tender for the
payment of public and private debts.
"Dollar Equivalent of the Currency Unit" has the meaning specified in
Section 3.10(h).
"Dollar Equivalent of the Foreign Currency" has the meaning specified in
Section 3.10(g).
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Communities.
"Election Date" has the meaning specified in Section 3.10(i).
"Euro-clear Operator" means Morgan Guaranty Trust Company of New York,
Brussels office, or its successor as operator of the Euro-clear System.
"European Communities" means the European Economic Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System established
by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Rate Officer's Certificate" means a telex or a certificate
setting forth (i) the applicable Market Exchange Rate and (ii) the Dollar,
Foreign Currency or Currency unit amounts of principal, premium, if any, and any
interest respectively (on an aggregate basis and on the basis of a Debt Security
having the lowest denomination principal amount
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determined in accordance with Section 3.02 in the relevant Currency or Currency
unit), payable on the basis of such Market Exchange Rate sent (in the case of a
telex) or signed (in the case of a certificate) by the Treasurer or any
Assistant Treasurer of the Company.
"Fixed Rate Security" means a Debt Security which provides for the payment
of interest at a fixed rate.
"Floating Rate Security" means a Debt Security which provides for the
payment of interest at a variable rate determined periodically by reference to
an interest rate index or any other index specified pursuant to Section 3.01.
"Foreign Currency" means a currency issued by the government of any
country other than the United States or a composite currency or currency unit
the value of which is determined by reference to the values of the currencies of
any group of countries.
"Global Note" means a Registered or Bearer Security evidencing all or part
of a series of Debt Securities, including, without limitation, any temporary or
permanent Global Note.
"Holder" means, with respect to a Registered Security, the Registered
Holder, and with respect to a Bearer Security or a Coupon, the bearer thereof.
"Indenture" means this instrument as originally executed, or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and, unless the context otherwise requires, shall include the terms of a
particular series of Debt Securities as established pursuant to Section 3.01.
The term "interest," when used with respect to a Discount Security which
by its terms bears interest only on a certain date, means interest payable after
such date, and, when used with respect to a Bearer Security, includes any
additional amounts payable on such Bearer Security, if so provided pursuant to
Section 3.01.
"Interest Payment Date" with respect to any Debt Security means the Stated
Maturity of an installment of interest on such Debt Security.
"Market Exchange Rate" means (i) for any conversion involving a Currency
unit on the one hand and Dollars or any Foreign Currency on the other, the
exchange rate between the relevant Currency unit and Dollars or such Foreign
Currency calculated by the method specified pursuant to Section 3.01 for the
securities of the relevant series, (ii) for any conversion of Dollars into any
Foreign Currency, the noon (New York City time) buying rate for such Foreign
Currency for cable transfers quoted in New York City as certified for customs
purposes by the Federal Reserve Bank of New York and (iii) for any conversion of
one Foreign Currency into Dollars or another Foreign Currency, the spot rate at
noon local time in the relevant market at which, in accordance with normal
banking procedures, the Dollars or Foreign Currency into which conversion is
being made could be purchased with the Foreign Currency from which conversion is
being made from major banks located in either New York City, London or any other
principal market for Dollars or such purchased Foreign Currency. In the event of
the unavailability of any of the exchange rates provided for in the
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foregoing clauses (i), (ii) and (iii) the Currency Determination Agent, if any,
or if there shall not be a Currency Determination Agent, then the Trustee, shall
use, in its sole discretion and without liability on its part, such quotation of
the Federal Reserve Bank of New York as of the most recent available date, or
quotations from one or more major banks in New York City, London or other
principal market for such Currency or Currency unit in question, or such other
quotations as the Currency Determination Agent or the Trustee, as the case may
be, shall deem appropriate. Unless otherwise specified by the Currency
Determination Agent, if any, or if there shall not be a Currency Determination
Agent, then by the Trustee, if there is more than one market for dealing in any
Currency or Currency unit by reason of foreign exchange regulations or
otherwise, the market to be used in respect of such Currency or Currency unit
shall be that upon which a nonresident issuer of securities designated in such
Currency or Currency unit would purchase such Currency or Currency unit in order
to make payments in respect of such securities.
"Maturity" when used with respect to any Debt Security means the date on
which the principal of such Debt Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, call for redemption, repayment or repurchase at
the option of the Holder thereof or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman, a Vice
Chairman, the President, the Chief Financial Officer or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller,
the Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel to the Company (including an employee of the Company) and who shall be
satisfactory to the Trustee, which is delivered to the Trustee.
"Outstanding" when used with respect to Debt Securities, means, as of the
date of determination, all Debt Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Debt Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Debt Securities for whose redemption money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the Company (if
the Company shall act as its own Paying Agent) for the Holders of such Debt
Securities and any Coupons thereto pertaining; provided, however, that if such
Debt Securities are to be redeemed notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the Trustee has
been made and the date for such redemption has passed; and
(iii) Debt Securities which have been paid pursuant to Section 3.06 or in
exchange for or in lieu of which other Debt Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Debt Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Debt Securities are held by a bona fide purchaser
in whose hands such Debt Securities are valid obligations of the Company;
provided, however, that in determining whether
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the Holders of the requisite principal amount of Debt Securities Outstanding
have performed any Act hereunder, Debt Securities owned by the Company or any
other obligor upon the Debt Securities or any Affiliate of the Company or of
such other obligor shall be disregarded and deemed not to be Outstanding
(provided, that in connection with any offer by the Company or any obligor to
purchase Debt Securities, Debt Securities rendered by a Holder shall be
Outstanding until the date of purchase), except that, in determining whether the
Trustee shall be protected in relying upon any such Act, only Debt Securities
which the Trustee knows to be so owned shall be so disregarded. Debt Securities
so owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
to act with respect to such Debt Securities and that the pledgee is not the
Company or any other obligor upon the Debt Securities or any Affiliate of the
Company or of such other obligor. In determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities have performed any Act
hereunder, the principal amount of a Discount Security that shall be deemed to
be Outstanding for such purpose shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon a
declaration of acceleration of the Maturity thereof pursuant to Section 5.02 and
the principal amount of a Debt Security denominated in a Foreign Currency that
shall be deemed to be Outstanding for such purpose shall be the amount
calculated pursuant to Section 3.10(k).
"Overdue Rate" when used with respect to any series of the Debt
Securities, means the rate designated as such in or pursuant to the Board
Resolution or the supplemental indenture, as the case may be, relating to such
series as contemplated by Section 3.01.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debt Securities on behalf
of the Company.
"permanent Global Note" shall have the meaning given such term in Section
3.04(b).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof or any other entity.
"Place of Payment" when used with respect to the Debt Securities of any
series means the place or places where the principal of (and premium, if any)
and interest on the Debt Securities of that series are payable as specified
pursuant to Section 3.01.
"Predecessor Security" of any particular Debt Security means every
previous Debt Security evidencing all or a portion of the same debt as that
evidenced by such particular Debt Security; and, for the purposes of this
definition, any Debt Security authenticated and delivered under Section 3.06 in
lieu of a mutilated, lost, destroyed or stolen Debt Security or a Debt Security
to which a mutilated, lost, destroyed or stolen Coupon appertains shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Debt Security or the Debt Security to which the mutilated, lost, destroyed or
stolen Coupon appertains, as the case may be.
"Redemption Date" means the date fixed for redemption of any Debt Security
pursuant to this Indenture which, in the case of a Floating Rate Security,
unless otherwise specified pursuant to Section 3.01, shall be an Interest
Payment Date only.
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<PAGE> 16
"Redemption Price" means, in the case of a Discount Security, the amount
of the principal thereof that would be due and payable as of the Redemption Date
upon a declaration of acceleration of the Maturity thereof pursuant to Section
5.02, and in the case of any other Debt Security, the principal amount thereof,
plus, in each case, premium, if any, and accrued and unpaid interest, if any, to
the Redemption Date.
"Registered Holder" means the Person in whose name a Registered Security
is registered in the Security Register.
"Registered Security" means any Debt Security in the form established
pursuant to Section 2.01 which is registered as to principal and interest in the
Security Register.
"Regular Record Date" for the interest payable on the Registered
Securities of any series on any Interest Payment Date means the date specified
for the purpose pursuant to Section 3.01 for such Interest Payment Date.
"Responsible Officer" when used with respect to the Trustee means any vice
president, the secretary, any assistant secretary or any assistant vice
president or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.05(a).
"Senior Indebtedness" means the principal of (and premium, if any) and
unpaid interest on (i) Indebtedness of the Company, whether outstanding on the
date of this Indenture or thereafter created, incurred, assumed or guaranteed,
for money borrowed (other than the Indebtedness evidenced by the Debt Securities
of any series), unless in the instrument creating or evidencing the same or
pursuant to which the same is outstanding it is provided that such Indebtedness
is not senior or prior in right of payment to the Debt Securities, and (ii)
renewals, extensions, modifications and refundings of any such Indebtedness.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.07.
"Specified Amount" has the meaning specified in Section 3.10(i).
"Stated Maturity" when used with respect to any Debt Security or any
installment of principal thereof or premium thereon or interest thereon means
the date specified in such Debt Security or the Coupon, if any, representing
such installment of interest, as the date on which the principal of such Debt
Security or such installment of principal, premium or interest is due and
payable.
"Subsidiary" means, with respect to any specified Person, (i) any
corporation, association, or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote
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in the election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof) and (ii) any
partnership (a) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are such Person or one or more Subsidiaries of such Person (or
any combination thereof).
"temporary Global Note" shall have the meaning given such term in Section
3.04(b).
"Trading Day" shall mean, with respect to the Common Stock, so long as the
Common Stock is listed or admitted to trading on the New York Stock Exchange, a
day on which the New York Stock Exchange is open for the transaction of
business, or, if the Common Stock is not listed or admitted to trading on the
New York Stock Exchange, a day on which the principal national securities
exchange on which the Common Stock is listed is open for the transaction of
business, or, if the Common Stock is not so listed or admitted for trading on
any national securities exchange, a day on which NASDAQ is open for the
transaction of business.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Debt
Securities of any series shall mean the Trustee with respect to Debt Securities
of such series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as amended and
as in force at the date as of which this instrument was executed, except as
provided in Section 11.05.
"United States" means the United States of America (including the States
and the District of Columbia), and its possessions, which include Puerto Rico,
the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern
Mariana Islands.
"U.S. Depositary" means a clearing agency registered under the Securities
Exchange Act of 1934, as amended, or any successor thereto, which shall in
either case be designated by the Company pursuant to Section 3.01 until a
successor U.S. Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "U.S. Depositary" shall mean or
include each Person who is then a U.S. Depositary hereunder, and if at any time
there is more than one such Person, "U.S. Depositary" as used with respect to
the Debt Securities of any series shall mean the U.S. Depositary with respect to
the Debt Securities of that series.
"U.S. Government Obligations" has the meaning specified in Section 15.02.
"U.S. Person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States, or an estate or trust the income of which is subject
to United States Federal income taxation regardless of its source.
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"Valuation Date" has the meaning specified in Section 3.10(d).
"Vice President" includes with respect to the Company and the
Trustee, any Vice President of the Company or the Trustee, as the case may
be, whether or not designated by a number or word or words added before or
after the title "Vice President."
Section 1.02. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee an Officers' Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than certificates
provided pursuant to Section 12.02) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.04. Notices, etc., to Trustee and Company.
Any Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if made, given, furnished or filed in writing to or with the Trustee at
its Corporate Trust Office, Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid or airmail postage
prepaid if sent from outside the United States, to the Company addressed
to it at the address of its principal office specified in the first
paragraph of this instrument, to the attention of its Treasurer, or at any
other address previously furnished in writing to the Trustee by the
Company.
Any such Act or other document shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
Section 1.05. Notice to Holders; Waiver.
When this Indenture provides for notice to Holders of any event,
(1) such notice shall be sufficiently given to Registered Holders (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to such Registered Holders as their names and addresses appear
in the Security Register, within the time prescribed, and (2) such notice shall
be sufficiently given to Holders of Bearer Securities or Coupons (unless
otherwise herein expressly provided) if published at least twice in an
Authorized Newspaper or Newspapers in The City of New York and, if Debt
Securities of such series are then listed on The Stock Exchange of the United
Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, in a daily newspaper in London or Luxembourg or in such other
city or cities specified pursuant to Section 3.01 or in any Debt Security on
Business Days, the first such publication to be not earlier than the earliest
date and not later than two Business Days prior to the latest date prescribed
for the giving of such notice; provided, however, that, in any case, any notice
to Holders of Floating Rate Securities regarding the determination of a periodic
rate of interest, if such notice is required pursuant to Section 3.01, shall be
sufficiently given if given in the manner specified pursuant to Section 3.01.
In the event of suspension of regular mail service or by reason of
any other cause it shall be impracticable to give notice by mail, such
notification as shall be given with the approval of the Trustee shall constitute
sufficient notice for every purpose hereunder.
In the event of suspension of publication of any Authorized
Newspapers or by reason of any other cause it shall be impracticable to give
notice by publication, such notification as shall be given with the approval of
the Trustee shall constitute sufficient notice for every purpose hereunder.
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Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance on such waiver. In any case where notice to Holders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders, and any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given. In any case
where notice to Holders is given by publication, any defect in any notice so
published as to any particular Holder shall not affect the sufficiency of such
notice with respect to other Holders, and any notice which is published in the
manner herein provided shall be conclusively presumed to have been duly given.
Section 1.06. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with the
duties imposed on any person by the provisions of Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
Section 1.07. Effect of Headings and Table of Contents.
The Article and Section headings herein and in the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 1.08. Successors and Assigns.
All covenants and agreements in this Indenture by the parties
hereto shall bind their respective successors and assigns and inure to the
benefit of their permitted successors and assigns, whether so expressed or not.
Section 1.09. Separability Clause.
In case any provision in this Indenture or in the Debt Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 1.10. Benefits of Indenture.
Nothing in this Indenture or in the Debt Securities, express or
implied, shall give to any Person, other than the parties hereto, any Security
Registrar, any Paying Agent and their successors hereunder, and the Holders, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 1.11. Governing Law.
This Indenture, the Debt Securities and the Coupons shall be
governed by and construed in accordance with the internal laws of the State of
New York.
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Section 1.12. Legal Holidays.
Unless otherwise specified pursuant to Section 3.01 or in any Debt
Security, in any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Debt Security of any series shall not be a Business Day at any
Place of Payment for the Debt Securities of that series, then (notwithstanding
any other provision of this Indenture or of the Debt Securities or Coupons)
payment of principal (and premium, if any) or interest need not be made at such
Place of Payment on such date, but may be made on the next succeeding Business
Day at such Place of Payment with the same force and effect as if made on the
Interest Payment Date, Redemption Date or at the Stated Maturity, and no
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be, to such Business Day if such payment is made or duly provided for on such
Business Day.
Section 1.13. No Security Interest Created.
Nothing in this Indenture or in the Debt Securities or Coupons,
express or implied, shall be construed to constitute a security interest under
the Uniform Commercial Code or similar legislation, as now or hereafter enacted
and in effect in any jurisdiction where property of the Company or its
Subsidiaries is or may be located.
Section 1.14. Liability Solely Corporate.
No recourse shall be had for the payment of the principal of (or
premium, if any) or the interest on any Debt Securities or Coupons, or any part
thereof, or of the indebtedness represented thereby, or upon any obligation,
covenant or agreement of this Indenture, against any incorporator, or against
any stockholder, officer or director, as such, past, present or future, of the
Company (or any incorporator, stockholder, officer or director of any
predecessor or successor corporation), either directly or through the Company
(or any such predecessor or successor corporation), whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly agreed and understood that this
Indenture and all the Debt Securities and Coupons are solely corporate
obligations, and that no personal liability whatsoever shall attach to, or be
incurred by, any such incorporator, stockholder, officer or director, past,
present or future, of the Company (or any incorporator, stockholder, officer or
director of any such predecessor or successor corporation), either directly or
indirectly through the Company or any such predecessor or successor corporation,
because of the indebtedness hereby authorized or under or by reason of any of
the obligations, covenants, promises or agreements contained in this Indenture
or in any of the Debt Securities or Coupons or to be implied herefrom or
therefrom; and that any such personal liability is hereby expressly waived and
released as a condition of, and as part of the consideration for, the execution
of this Indenture and the issue of Debt Securities; provided, however, that
nothing herein or in the Debt Securities or Coupons contained shall be taken to
prevent recourse to and the enforcement of the liability, if any, of any
stockholder or subscriber to capital stock upon or in respect of the shares of
capital stock not fully paid.
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ARTICLE II
DEBT SECURITY FORMS
Section 2.01. Forms Generally.
The Debt Securities and the Coupons, if any, of each series shall
be substantially in one of the forms (including global form) established in or
pursuant to a Board Resolution or one or more indentures supplemental hereto,
and shall have such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements placed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Indenture, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any securities exchange on which any
series of the Debt Securities may be listed, or to conform to usage, all as
determined by the officers executing such Debt Securities and Coupons as
conclusively evidenced by their execution of such Debt Securities and Coupons.
If the form of a series of Debt Securities or Coupons (or any Global Note) is
established in or pursuant to a Board Resolution, a copy of such Board
Resolution shall be delivered to the Trustee, together with an Officers'
Certificate setting forth the form of such series, at or prior to the delivery
of the Company Order contemplated by Section 3.03 for the authentication and
delivery of such Debt Securities (or any such Global Note) or Coupons.
Unless otherwise specified as contemplated by Section 3.01, Debt
Securities in bearer form (other than in global form) shall have Coupons
attached.
The definitive Debt Securities and Coupons, if any, of each series
shall be printed, lithographed or engraved or produced by any combination of
these methods on steel engraved borders or may be produced in any other manner,
all as determined by the officers executing such Debt Securities and Coupons, as
conclusively evidenced by their execution of such Debt Securities and Coupons.
Section 2.02. Form of Trustee's Certificate of Authentication.
The form of the Trustee's certificate of authentication to be borne
by the Debt Securities shall be substantially as follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the series of Debt Securities issued under the
within mentioned Indenture.
--------------------------
--------------------------
By
--------------------------
Authorized Signatory
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<PAGE> 23
Section 2.03. Securities in Global Form.
If any Debt Security of a series is issuable in global form (a
"Global Note"), such Global Note may provide that it shall represent the
aggregate amount of Outstanding Debt Securities from time to time endorsed
thereon and may also provide that the aggregate amount of Outstanding Debt
Securities represented thereby may from time to time be reduced to reflect
exchanges. Any endorsement of a Global Note to reflect the amount, or any
increase or decrease in the amount, of Outstanding Debt Securities represented
thereby shall be made by the Trustee and in such manner as shall be specified in
such Global Note. Any instructions by the Company with respect to a Global Note,
after its initial issuance, shall be in writing but need not comply with Section
1.02.
Global Notes may be issued in either registered or bearer form and
in either temporary or permanent form. Permanent Global Notes will be issued in
definitive form.
ARTICLE III
THE DEBT SECURITIES
Section 3.01. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Debt Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Debt Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution and (subject to
Section 3.03) set forth in an Officers' Certificate, or established in one or
more indentures supplemental hereto, prior to the issuance of Debt Securities of
any series:
(1) the title of the Debt Securities of the series (which shall
distinguish the Debt Securities of such series from all other series of
Debt Securities);
(2) the aggregate principal amount of such series of Debt
Securities and any limit, on the aggregate principal amount of the Debt
Securities of the series which may be authenticated and delivered under
this Indenture (except for Debt Securities authenticated and delivered
upon transfer of, or in exchange for, or in lieu of, other Debt Securities
of such series pursuant to Sections 3.04, 3.05, 3.06, 11.06 or 13.07);
(3) the percentage of the principal amount at which the Debt
Securities of such series will be issued and, if other than the principal
amount thereof, the portion of the principal amount thereof payable upon
declaration of acceleration of the maturity or upon redemption thereof or
the method by which such portion shall be determined.
(4) the date or dates on which or periods during which the Debt
Securities of the series may be issued, and the date or dates or the
method by which such date or dates will be determined, on which the
principal of (and premium, if any, on) the Debt Securities of such series
are or may be payable (which, if so provided in such Board Resolution or
supplemental indenture, may be determined by the Company from time to time
as set forth in the Debt Securities of the series issued from time to
time);
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(5) the rate or rates (which may be variable or fixed) at which the
Debt Securities of the series shall bear interest, if any, or the method
by which such rate or rates shall be determined, the date or dates from
which such interest, if any, shall accrue or the method by which such date
or dates shall be determined (which, in either case or both, if so
provided in such Board Resolution or supplemental indenture, may be
determined by the Company from time to time and set forth in the Debt
Securities of the series issued from time to time); and the Interest
Payment Dates on which such interest shall be payable (or the method of
determination thereof), and the Regular Record Dates, if any, for the
interest payable on such Interest Payment Dates and the notice, if any, to
Holders regarding the determination of interest, the manner of giving such
notice, the basis upon which interest shall be calculated if other than
that of a 360-day year of twelve 30-day months and any conditions or
contingencies as to the payment of interest in cash or otherwise, if any;
(6) the place or places, if any, in addition to or instead of the
Corporate Trust Office of the Trustee (in the case of Registered
Securities) where the principal of (and premium, if any) and interest on
Debt Securities of the series shall be payable; the extent to which, or
the manner in which, any interest payable on any Global Note on an
Interest Payment Date will be paid, if other than in the manner provided
in Section 3.07; the extent, if any, to which the provisions of the last
sentence of Section 12.01 shall apply to the Debt Securities of the
series; and the manner in which any principal of, or premium, if any, on,
any Global Note will be paid, if other than as set forth elsewhere herein
and whether any Global Note will require any notation to evidence payment
of principal or interest;
(7) the obligation, if any, of the Company to redeem, repay,
purchase or offer to purchase Debt Securities of the series pursuant to
any mandatory redemption, sinking fund or analogous provisions or upon
other conditions or at the option of the Holder thereof and the period or
periods within which or the dates on which, the prices at which and the
terms and conditions upon which the Debt Securities of the series shall be
redeemed, repaid, purchased or offered to be purchased, in whole or in
part, pursuant to such obligation;
(8) the right, if any, of the Company to redeem the Debt Securities
of such series at its option and the period or periods within which, or
the date or dates on which, the price or prices at which, and the terms
and conditions upon which such Debt Securities may be redeemed, if any, in
whole or in part, at the option of the Company or otherwise;
(9) if the coin or Currency in which the Debt Securities shall be
issuable is in Dollars, the denominations of such Debt Securities if other
than denominations of $1,000 and any integral multiple thereof (except as
provided in Section 3.04);
(10) whether the Debt Securities of the series are to be issued as
Discount Securities and the amount of discount with which such Debt
Securities may be issued and, if other than the principal amount thereof,
the portion of the principal amount of Debt Securities of the series which
shall be payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 5.02;
(11) provisions, if any, for the defeasance or discharge of certain
of the Company's obligations with respect to Debt Securities of the
series;
(12) whether Debt Securities of the series are to be issued as
Registered Securities or Bearer Securities or both, and, if Bearer
Securities are issued, whether Coupons will be attached thereto, whether
such Bearer Securities of the series may be exchanged for Registered
Securities of
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the series, as provided in Section 3.05(b) or otherwise and the circumstances
under which and the place or places at which any such exchanges, if permitted,
may be made;
(13) whether provisions for payment of additional amounts or tax
redemptions shall apply and, if such provisions shall apply, such provisions;
and, if Bearer Securities of the series are to be issued, whether a procedure
other than that set forth in Section 3.04(b) shall apply and, if so, such other
procedure, and if the procedure set forth in Section 3.04(b) shall apply, the
forms of certifications to be delivered under such procedure;
(14) if other than Dollars, the Foreign Currency or Currencies in which
Debt Securities of the series shall be denominated or in which payment of the
principal of (and premium, if any) and interest on the Debt Securities of the
series may be made, and the particular provisions applicable thereto and, if
applicable, the amount of Debt Securities of the series which entitles the
Holder of a Debt Security of the series or its proxy to one vote for purposes of
Section 9.05;
(15) if the principal of (and premium, if any) or interest on Debt
Securities of the series are to be payable, at the election of the Company or a
Holder thereof, in a Currency other than that in which the Debt Securities are
denominated or payable without such election, in addition to or in lieu of the
provisions of Section 3.10, the period or periods within which and the terms and
conditions upon which, such election may be made and the time and the manner of
determining the exchange rate or rates between the Currency or Currencies in
which the Debt Securities are denominated or payable without such election and
the Currency or Currencies in which the Debt Securities are to be paid if such
election is made;
(16) the date as of which any Debt Securities of the series shall be
dated, if other than as set forth in Section 3.03;
(17) if the amount of payments of principal of (and premium, if any) or
interest on the Debt Securities of the series may be determined with reference
to an index, including, but not limited to, an index based on a Currency or
Currencies other than that in which the Debt Securities are denominated or
payable, or any other type of index, the manner in which such amounts shall be
determined;
(18) if the Debt Securities of the series are denominated or payable in a
Foreign Currency, any other terms concerning the payment of principal of (and
premium, if any) or any interest on such Debt Securities (including the Currency
or Currencies of payment thereof);
(19) the designation of the original Currency Determination Agent, if any;
(20) the applicable Overdue Rate, if any;
(21) if the Debt Securities of the series do not bear interest, the
applicable dates for purposes of Section 7.01;
(22) any addition to, or modification or deletion of, any Events of
Default, covenants or term of the subordination provided for with respect to
Debt Securities of the series;
(23) if Bearer Securities of the series are to be issued, (x) whether
interest in respect of any portion of a temporary Debt Security in global form
(representing all of the Outstanding Bearer
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Securities of the series) payable in respect of any Interest Payment Date
prior to the exchange of such temporary Debt Security for definitive Debt
Securities of the series shall be paid to any clearing organization with
respect to the portion of such temporary Debt Security held for its
account and, in such event, the terms and conditions (including any
certification requirements) upon which any such interest payment received
by a clearing organization will be credited to the Persons entitled to
interest payable on such Interest Payment Date, (y) the terms upon which
interests in such temporary Debt Security in global form may be exchanged
for interests in a permanent Global Note or for definitive Debt Securities
of the series and the terms upon which interests in a permanent Global
Note, if any, may be exchanged for definitive Debt Securities of the
series and (z) the cities and the Authorized Newspapers designated for the
purposes of giving notices to Holders;
(24) whether the Debt Securities of the series shall be issued in
whole or in part in the form of one or more Global Notes and, in such
case, the U.S. Depositary or any Common Depositary for such Global Note or
Notes; and if the Debt Securities of the series are issuable only as
Registered Securities, the manner in which and the circumstances under
which Global Notes representing Debt Securities of the series may be
exchanged for Registered Securities in definitive form, if other than, or
in addition to, the manner and circumstances specified in Section 3.04(c);
(25) The designation, if any, of any depositaries, trustees (other
than the applicable Trustee), Paying Agents, Authenticating Agents,
Security Registrars (other than the Trustee) or other agents with respect
to the Debt Securities of such series;
(26) If the Debt Securities of such series will be issuable in
definitive form only upon receipt of certain certificates or other
documents or upon satisfaction of certain conditions, the form and terms
of such certificates, documents or conditions;
(27) Whether the Debt Securities of such series will be convertible
into shares of Common Stock and, if so, the terms and conditions, which
may be in addition to or in lieu of the provisions contained in the
Indenture, upon which such Debt Securities will be so convertible,
including the conversion price and the conversion period;
(28) The portion of the principal amount of the Debt Securities
which will be payable upon declaration of acceleration of the maturity
thereof, if other than the principal amount thereof;
(29) The nature, content and date for reports by the Company to the
holders of the Offered Debt Securities; and
(30) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Debt Securities of any one series shall be substantially
identical except as to denomination, rate of interest, Stated Maturity and the
date from which interest, if any, shall accrue, which, as set forth above, may
be determined by the Company from time to time as to Debt Securities of a series
if so provided in or established pursuant to the authority granted in a Board
Resolution or in any such indenture supplemental hereto, and except as may
otherwise be provided in or pursuant to such Board Resolution and (subject to
Section 3.03) set forth in such Officers' Certificate, or in any such indenture
supplemental hereto. All Debt Securities of any one series need not be issued at
the same time, and unless otherwise provided, a series may be reopened for
issuance of additional Debt Securities of such series.
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If any of the terms of a series of Debt Securities is established
in or pursuant to a Board Resolution, a copy of such Board Resolution shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
Section 3.02. Denominations.
In the absence of any specification pursuant to Section 3.01 with
respect to the Debt Securities of any series, the Debt Securities of such series
shall be issuable only as Registered Securities in denominations of $1,000 and
any integral multiple thereof and shall be payable only in Dollars.
Section 3.03. Execution, Authentication, Delivery and Dating.
The Debt Securities and the Coupons, if any, of any series shall be
executed on behalf of the Company by its Chairman, a Vice Chairman, its
President, one of its Vice Presidents or its Treasurer, under its corporate seal
reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers may be manual or facsimile.
Debt Securities and Coupons bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Debt Securities and Coupons or did not hold such offices at the date of
such Debt Securities and Coupons.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Debt Securities, with appropriate
Coupons, if any, of any series, executed by the Company, to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Debt Securities and Coupons and the Trustee in accordance with
the Company Order shall authenticate and deliver such Debt Securities and
Coupons; provided, however, that, in connection with its sale during the
"restricted period" (as defined in Section 1.163-5(c)(2)(i)(D)(7) of the United
States Treasury Regulations), no Bearer Security shall be mailed or otherwise
delivered to any location in the United States; and provided, further, that a
Bearer Security (other than a temporary Global Note in bearer form) may be
delivered outside the United States in connection with its original issuance
only if the Person entitled to receive such Bearer Security shall have furnished
to the Euro-clear operator or to CEDEL a certificate substantially in the form
set forth in Exhibit A to this Indenture. If all the Debt Securities of any one
series are not to be issued at one time and if a Board Resolution or
supplemental indenture relating to such series shall so permit, such Company
Order may set forth procedures acceptable to the Trustee for the issuance of
such Debt Securities such as interest rate, Stated Maturity, date of issuance
and date from which interest, if any, shall accrue. If any Debt Security shall
be represented by a permanent Global Note, then, for purposes of this Section
and Section 3.04, the notation of a beneficial owner's interest therein upon
original issuance of such Debt Security or upon exchange of a portion of a
temporary Global Note shall be deemed to be delivery in connection with the
original issuance of such beneficial owner's interest in such permanent Global
Note. Except as permitted by Section 3.06 or 3.07, the Trustee shall not
authenticate and deliver any Bearer Security unless all Coupons for interest
then matured have been detached and canceled.
The Trustee shall be entitled to receive, and (subject to Section
6.01) shall be fully protected in relying upon, prior to the authentication and
delivery of the Debt Securities and Coupons of such series, (i)
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the supplemental indenture or the Board Resolution by or pursuant to which the
form and terms of such Debt Securities and Coupons have been approved and (ii)
an Opinion of Counsel substantially to the effect that:
(1) the authentication order furnished by the Company to the
Trustee in connection with the authentication and delivery of such Debt
Securities and Coupons conforms to the requirements of this Indenture and
constitutes sufficient authority hereunder for the Trustee to authenticate
and deliver such Debt Securities and Coupons;
(2) the forms and terms of such Debt Securities and Coupons are
consistent with the provisions of this Indenture;
(3) in the event that the forms or terms of such Debt Securities
and Coupons have been established in a supplemental indenture, the
execution and delivery of such supplemental indenture has been duly
authorized by all necessary corporate action of the Company, such
supplemental indenture has been duly executed and delivered by the Company
and, assuming due authorization, execution and delivery by the Trustee, is
a valid and binding obligation enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
(4) the execution and delivery of such Debt Securities and Coupons
have been duly authorized by all necessary corporate action of the Company
and such Debt Securities and Coupons have been duly executed by the
Company and, assuming due authentication by the Trustee and delivery by
the Company, are valid and binding obligations enforceable against the
Company in accordance with their terms, entitled to the benefit of the
Indenture, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to enforceability,
to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and subject to such other
exceptions as counsel shall request and as to which the Trustee shall not
reasonably object; and
(5) the amount of Debt Securities Outstanding of such series,
together with the amount of such Debt Securities, does not exceed any
limit established under the terms of this Indenture on the amount of Debt
Securities of such series that may be authenticated and delivered.
The Trustee shall not be required to authenticate such Debt
Securities and Coupons if the issuance of such Debt Securities and Coupons
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Debt Securities and this Indenture in a manner which is not
reasonably acceptable to the Trustee.
Each Registered Security shall be dated the date of its
authentication. Each Bearer Security (including any temporary or permanent or
other definitive Bearer Security in global form) shall be dated as of the date
of original issuance of the first Debt Security of such series to be issued,
except as otherwise provided pursuant to Section 3.01 with respect to the Bearer
Securities of any series.
No Debt Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Debt Security a certificate of authentication substantially in one of the forms
provided for herein duly executed by the Trustee or by an Authenticating Agent,
and such certificate upon any Debt Security shall be conclusive evidence, and
the only evidence, that such Debt Security
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has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture. Notwithstanding the foregoing, if any Debt Security
shall have been duly authenticated and delivered hereunder but never issued and
sold by the Company, and the Company shall deliver such Debt Security to the
Trustee for cancellation as provided in Section 3.08 together with a written
statement (which need not comply with Section 1.02) stating that such Debt
Security has never been issued and sold by the Company, for all purposes of this
Indenture such Debt Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.
Section 3.04. Temporary Debt Securities; Exchange of Temporary
Global Notes for Definitive Bearer Securities; Global Notes Representing
Registered Securities.
(a) Pending the preparation of definitive Registered Securities of
any series, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Registered Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination for Registered Securities of such series, substantially of the
tenor of the definitive Registered Securities in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Registered Securities may determine,
as conclusively evidenced by their execution of such Registered Securities.
Every such temporary Registered Security shall be executed by the Company and
shall be authenticated and delivered by the Trustee upon the same conditions and
in substantially the same manner, and with the same effect, as the definitive
Registered Securities in lieu of which they are issued. In the case of any
series issuable as Bearer Securities, such temporary Debt Securities may be in
global form, representing such of the Outstanding Debt Securities of such series
as shall be specified therein.
Except in the case of temporary Debt Securities in global form
(which shall be exchanged in accordance with the provisions of the following
paragraphs), if temporary Debt Securities of any series are issued, the Company
will cause definitive Debt Securities of such series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of such
series, the temporary Debt Securities of such series shall be exchangeable for
definitive Debt Securities of such series, of a like Stated Maturity and with
like terms and provisions, upon surrender of the temporary Debt Securities of
such series at the office or agency of the Company in a Place of Payment for
such series, without charge to the Holder, except as provided in Section 3.05 in
connection with a transfer. Upon surrender for cancellation of any one or more
temporary Debt Securities of any series (accompanied by any unmatured Coupons),
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Debt Securities of the
same series of authorized denominations and of a like Stated Maturity and like
terms and provisions; provided, however, that no definitive Bearer Security
shall be delivered in exchange for a temporary Registered Security; and
provided, further, that a definitive Bearer Security (including a permanent
Bearer Security in global form) shall be delivered in exchange for a temporary
Bearer Security only in compliance with the conditions set forth in Section
3.03. Until so exchanged, the temporary Registered Securities of any series
shall in all respects be entitled to the same benefits under this Indenture as
definitive Registered Securities of such series.
(b) Unless otherwise specified pursuant to Section 3.01, all Bearer
Securities of a series shall be initially issued in the form of a single
temporary Bearer Security in global form (a "temporary Global Note"). The
Company shall execute, and upon Company Order the Trustee shall authenticate,
any temporary Global Note and any permanent Bearer Security in global form (as
described below, a "permanent Global Note") upon the same conditions and in
substantially the same manner, and with the same effect, as definitive Bearer
Securities, and the temporary or permanent Global Note, as the case may be,
shall, unless otherwise specified therein, be delivered by the Trustee to the
London office of a depositary or common depositary (the
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"Common Depositary"), for the benefit of the Euro-clear Operator or CEDEL, as
the case may be, for credit to the account of the Company (in the case of sales
of Bearer Securities by the Company directly to investors) or the managing
underwriter (in the case of sales of Bearer Securities by the Company to
underwriters) or such other accounts as the Company or the managing underwriter,
respectively, may direct.
On or after the date specified in or determined pursuant to the
terms of any temporary Global Note which (subject to any applicable laws and
regulations) shall be at least 40 days after the issue date of a temporary
Global Note (the "Exchange Date"), the Debt Securities represented by such
temporary Global Note may be exchanged for definitive Debt Securities (subject
to the second succeeding paragraph) or Debt Securities to be represented
thereafter by one or more permanent Global Notes in definitive form without
interest coupons. On or after the Exchange Date such temporary Global Note shall
be surrendered by the Common Depositary to the Trustee, as the Company's agent
for such purpose, at such address as the Trustee may specify and following such
surrender, the Trustee shall (1) endorse the temporary Global Note to reflect
the reduction of its principal amount by an equal aggregate principal amount of
such Debt Security, (2) endorse the applicable permanent Global Note, if any, to
reflect the initial amount, or an increase in the amount of Debt Securities
represented thereby, (3) manually authenticate such definitive Debt Securities
(including any permanent Global Note), (4) deliver such definitive Debt
Securities to the Holder thereof or, if such definitive Debt Security is a
permanent Global Note, deliver such permanent Global Note to the Common
Depositary to be held outside the United States for the accounts of the
Euro-clear Operator or CEDEL, as the case may be, for credit to the respective
accounts at Euro-clear Operator or CEDEL, as the case may be, designated by or
on behalf of the beneficial owners of such Debt Securities (or to such other
accounts as they may direct) and (5) redeliver such temporary Global Note to the
Common Depositary, unless such temporary Global Note shall have been canceled in
accordance with Section 3.08 hereof; provided, however, that, unless otherwise
specified in such temporary Global Note, upon such presentation by the Common
Depositary, such temporary Global Note shall be accompanied by a certificate
dated the Exchange Date or a subsequent date and signed by the Euro-clear
Operator, as to the portion of such temporary Global Note held for its account
then to be exchanged for definitive Debt Securities (including any permanent
Global Note), and a certificate dated the Exchange Date or a subsequent date and
signed by CEDEL, as to the portion of such temporary Global Note held for its
account then to be exchanged for definitive Debt Securities (including any
permanent Global Note), each substantially in the form set forth in Exhibit B to
this Indenture. Each certificate substantially in the form of Exhibit B hereto
of the Euro-clear Operator or CEDEL, as the case may be, shall be based on
certificates of the account holders listed in the records of the Euro-clear
Operator or CEDEL, as the case may be, as being entitled to all or any portion
of the applicable temporary Global Note. An account holder of the Euro-clear
Operator or CEDEL, as the case may be, desiring to effect the exchange of an
interest in a temporary Global Note for an interest in definitive Debt
Securities (including any permanent Global Note) shall instruct the Euro-clear
Operator or CEDEL, as the case may be, to request such exchange on its behalf
and shall deliver to the Euro-clear Operator or CEDEL, as the case may be, a
certificate substantially in the form of Exhibit A hereto and dated no earlier
than 10 days prior to the Exchange Date. Until so exchanged, temporary Global
Notes shall in all respects be entitled to the same benefits under this
Indenture as definitive Debt Securities (including any permanent Global Note) of
the same series authenticated and delivered hereunder, except as to payment of
interest, if any.
The delivery to the Trustee by the Euro-clear Operator or CEDEL of
any certificate substantially in the form of Exhibit B hereto may be relied upon
by the Company and the Trustee as conclusive evidence that a corresponding
certificate or certificates has or have been delivered to the Euro-clear
Operator or CEDEL, as the case may be, pursuant to the terms of this Indenture.
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On or prior to the Exchange Date, the Company shall deliver to the
Trustee definitive Debt Securities in an aggregate principal amount equal to the
principal amount of such temporary Global Note, executed by the Company. At any
time, on or after the Exchange Date, upon 30 days' notice to the Trustee by the
Euro-clear Operator or CEDEL, as the case may be, acting at the request of or on
behalf of the beneficial owner, a Debt Security represented by a temporary
Global Note or a permanent Global Note, as the case may be, may be exchanged, in
whole or from time to time in part, for definitive Debt Securities without
charge and the Trustee shall authenticate and deliver, in exchange for each
portion of such temporary Global Note or such permanent Global Note, an equal
aggregate principal amount of definitive Debt Securities of the same series of
authorized denominations and of a like Stated Maturity and with like terms and
conditions, as the portion of such temporary Global Note or such permanent
Global Note to be exchanged, which, unless the Debt Securities of the series are
not issuable both as Bearer Securities and as Registered Securities, as
contemplated by Section 3.01, shall be in the form of Bearer Securities or
Registered Securities, or any combination thereof, as shall be specified by the
beneficial owner thereof; provided, however, that definitive Bearer Securities
shall be delivered in exchange for a portion of the temporary Global Note or the
permanent Global Note only in compliance with the requirements of the second
preceding paragraph. On or prior to the forty-fifth day following receipt by the
Trustee of such notice with respect to a Debt Security, or, if such day is not a
Business Day, the next succeeding Business Day, the temporary Global Note or the
permanent Global Note, as the case may be, shall be surrendered by the Common
Depositary to the Trustee, as the Company's agent for such purpose, to be
exchanged, in whole or from time to time in part, for definitive Debt Securities
without charge following such surrender, upon the request of the Euro-clear
Operator or CEDEL, as the case may be, and the Trustee shall (1) endorse the
applicable temporary Global Note or the permanent Global Note to reflect the
reduction of its principal amount by the aggregate principal amount of such Debt
Security, (2) cause the terms of such Debt Security and Coupons, if any, to be
entered on a definitive Debt Security, (3) manually authenticate such definitive
Debt Security, and (4) if a Bearer Security is to be delivered, deliver such
definitive Debt Security to an address outside the United States to the
Euro-clear Operator or CEDEL, as the case may be, for or on behalf of the
beneficial owner thereof, in exchange for a portion of such temporary Global
Note or the permanent Global Note.
Unless otherwise specified in such temporary Global Note or the
permanent Global Note, any such exchange shall be made free of charge to the
beneficial owners of such temporary Global Note or the permanent Global Note,
except that a Person receiving definitive Debt Securities must bear the cost of
insurance, postage, transportation and the like in the event that such Person
does not take delivery of such definitive Debt Securities in person at the
offices of the Euro-clear Operator or CEDEL. Definitive Debt Securities in
bearer form to be delivered in exchange for any portion of a temporary Global
Note or the permanent Global Note shall be delivered only to an address outside
the United States. Notwithstanding the foregoing, in the event of redemption or
acceleration of all or any part of a temporary Global Note prior to the Exchange
Date, a permanent Global Note or definitive Bearer Securities, as the case may
be, will not be issuable in respect of such temporary Global Note or such
portion thereof, and payment thereon will instead be made as provided in such
temporary Global Note.
Until exchanged in full as hereinabove provided, any temporary
Global Note or the permanent Global Note shall in all respects be entitled to
the same benefits under this Indenture as definitive Debt Securities of the same
series and tenor authenticated and delivered hereunder, except that, unless
otherwise specified as contemplated by Section 3.01, interest payable on such
temporary Global Note on an Interest Payment Date for Debt Securities of such
series occurring prior to the applicable Exchange Date shall be payable to the
Euro-clear Operator or CEDEL on such Interest Payment Date upon delivery by the
Euro-clear Operator or CEDEL to the Trustee of a certificate or certificates
substantially in the form set forth in Exhibit B to this Indenture, for credit
without further interest on or after such Interest Payment Date to the
respective
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accounts of the Persons who are the beneficial owners of such temporary Global
Note on such Interest Payment Date and who have each delivered to the Euro-clear
Operator or CEDEL, as the case may be, a certificate substantially in the form
set forth in Exhibit A to this Indenture.
Any definitive Bearer Security authenticated and delivered by the
Trustee in exchange for a portion of a temporary Global Note or the permanent
Global Note shall not bear a coupon for any interest which shall theretofore
have been duly paid by the Trustee to the Euro-clear Operator or CEDEL, or by
the Company to the Trustee in accordance with the provisions of this Section
3.04.
With respect to Exhibits A and B to this Indenture, the Company
may, in its discretion and if required or desirable under applicable law or as
set forth in any Board Resolution or Supplemental Indenture with respect to any
Series of Debt Securities, substitute one or more other forms of such exhibits
for such exhibits, eliminate the requirement that any or all certificates be
provided, or change the time that any certificate may be required, provided that
such substitute form or forms or notice of elimination or change of such
certification requirement have theretofore been delivered to the Trustee with a
Company Request and such form or forms, elimination or change is reasonably
acceptable to the Trustee.
(c) If the Company shall establish pursuant to Section 3.01 that
the Registered Securities of a series are to be issued in whole or in part in
the form of one or more Global Notes, then the Company shall execute and the
Trustee shall, in accordance with Section 3.03 and the Company Order with
respect to such series, authenticate and deliver one or more Global Notes in
temporary or permanent form that (i) shall represent and shall be denominated in
an amount equal to the aggregate principal amount of the Outstanding Debt
Securities of such series to be represented by one or more Global Notes, (ii)
shall be registered in the name of the U.S. Depositary for such Global Note or
Notes or the nominee of such depositary, and (iii) shall bear a legend
substantially to the following effect: "This Debt Security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary, unless and until this Debt Security is
exchanged in whole or in part for Debt Securities in definitive form."
Notwithstanding any other provision of this Section or Section
3.05, unless and until it is exchanged in whole or in part for Registered
Securities in definitive form, a Global Note representing all or a portion of
the Registered Securities of a series may not be transferred except as a whole
by the U.S. Depositary for such series to a nominee of such depositary or by a
nominee of such depositary to such depositary or another nominee of such
depositary or by such depositary or any such nominee to a successor U.S.
Depositary for such series or a nominee of such successor depositary.
If at any time the U.S. Depositary for the Debt Securities of a
series notifies the Company that it is unwilling or unable to continue as U.S.
Depositary for the Debt Securities of such series or if at any time the U.S.
Depositary for Debt Securities of a series shall no longer be a clearing agency
registered and in good standing under the Securities Exchange Act of 1934, as
amended, or other applicable statute or regulation, the Company shall appoint a
successor U.S. Depositary with respect to the Debt Securities of such series. If
a successor U.S. Depositary for the Debt Securities of such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, the Company will execute, and the Trustee,
upon receipt of a Company Order for the authentication and delivery of
definitive Debt Securities of such series, will authenticate and deliver,
Registered Securities of such series in definitive form in an aggregate
principal amount equal to the principal amount of the Global Note or Notes
representing such series in exchange for such Global Note or Notes.
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The Company may at any time and in its sole discretion determine
that the Registered Securities of any series issued in the form of one or more
Global Notes shall no longer be represented by such Global Note or Notes. In
such event, the Company will execute, and the Trustee, upon receipt of a Company
Order for the authentication and delivery of definitive Debt Securities of such
series, will authenticate and deliver, Registered Securities of such series in
definitive form and in an aggregate principal amount equal to the principal
amount of the Global Note or Notes representing such series in exchange for such
Global Note or Notes.
If the Registered Securities of any series shall have been issued
in the form of one or more Global Notes and if an Event of Default with respect
to the Debt Securities of such series shall have occurred and be continuing, the
Company will promptly execute, and the Trustee, upon receipt of a Company Order
for the authentication and delivery of definitive Debt Securities of such
series, will authenticate and deliver, Registered Securities of such series in
definitive form and in an aggregate principal amount equal to the principal
amount of the Global Note or Notes representing such series in exchange for such
Global Note or Notes.
If specified by the Company pursuant to Section 3.01 with respect
to Registered Securities of a series, the U.S. Depositary for such series of
Registered Securities may surrender a Global Note for such series of Debt
Securities in exchange in whole or in part for Registered Securities of such
series in definitive form on such terms as are acceptable to the Company and
such depositary. Thereupon, the Company shall execute and the Trustee shall
authenticate and deliver, without charge:
(i) to each Person specified by the U.S. Depositary a new
Registered Security or Securities of the same series, of any authorized
denomination as requested by such Person in an aggregate principal amount
equal to and in exchange for such Person's beneficial interest in the
Global Note; and
(ii) to the U.S. Depositary a new Global Note in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Note and the aggregate principal amount of Registered
Securities delivered to Holders thereof.
Upon the exchange of a Global Note for Registered Securities in
definitive form, such Global Note shall be canceled by the Trustee. Debt
Securities issued in exchange for a Global Note pursuant to this subsection (c)
shall be registered in such names and in such authorized denominations as the
U.S. Depositary for such Global Note, pursuant to instructions from its direct
or indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Debt Securities to the Persons in whose names such Debt
Securities are so registered.
Section 3.05. Registration, Transfer and Exchange.
(a) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the registers maintained in such office and in
any other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Registered Securities and of transfers and exchanges of
Registered Securities. The Trustee is hereby appointed "Security Registrar" for
the purpose of registering Registered Securities and registering transfers and
exchanges of Registered Securities as herein provided; provided, however, that
the Company may appoint co-Security Registrars or the terms of any series of
Debt Securities may provide otherwise.
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Upon surrender for registration of transfer of any Registered
Security of any series at the office or agency of the Company maintained for
such purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee, one or more new Registered
Securities of the same series of like aggregate principal amount of such
denominations as are authorized for Registered Securities of such series and of
a like Stated Maturity and with like terms and conditions.
Except as otherwise provided in Section 3.04 and this Section 3.05,
at the option of the Holder, Registered Securities of any series may be
exchanged for other Registered Securities of the same series of like aggregate
principal amount and of a like Stated Maturity and with like terms and
conditions, upon surrender of the Registered Securities to be exchanged at such
office or agency. Whenever any Registered Securities are surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Registered Securities which the Holder making the exchange is
entitled to receive.
(b) If and to the extent specified pursuant to Section 3.01, the
provisions of this Section 3.05(b) shall be applicable to Debt Securities of any
series which are Bearer Securities. At the option of the Holder thereof, to the
extent permitted by law, any Bearer Security of any series which by its terms is
registrable as to principal and interest may be exchanged for a Registered
Security of such series of like aggregate principal amount and of a like Stated
Maturity and with like terms and conditions upon surrender of such Bearer
Security at the Corporate Trust Office or at any other office or agency of the
Company designated pursuant to Section 3.01 for the purpose of making any such
exchanges. Any Coupon Security surrendered for exchange shall be surrendered
with all unmatured Coupons and any matured Coupons in default attached thereto.
If the Holder of a Bearer Security is unable to produce any such unmatured
Coupon or Coupons or matured Coupon or Coupons in default, such exchange may be
effected if the Bearer Securities are accompanied by payment in funds acceptable
to the Company in an amount equal to the face amount of such missing Coupon or
Coupons, or the surrender of such missing Coupon or Coupons may be waived by the
Company and the Trustee if there is furnished to them such security or indemnity
as they may require to save each of them and any Paying Agent harmless. If
thereafter the Holder of such Bearer Security shall surrender to any Paying
Agent any such missing Coupon in respect of which such a payment shall have been
made, such Holder shall be entitled to receive the amount of such payment;
provided, however, that except as otherwise provided in Section 12.03, interest
represented by Coupons shall be payable only upon presentation and surrender of
those Coupons at an office or agency located outside the United States.
Notwithstanding the foregoing, in case a Bearer Security of any series is
surrendered at any such office or agency in exchange for a Registered Security
of the same series and of a like Stated Maturity and with like terms and
conditions after the close of business at such office or agency on (i) any
Regular Record Date and before the opening of business at such office or agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such office or agency on the related proposed
date for payment of Defaulted Interest, such Bearer Security shall be
surrendered without the Coupon relating to such Interest Payment Date or
proposed date for payment, as the case may be (or, if such Coupon is so
surrendered with such Bearer Security, such Coupon shall be returned to the
Person so surrendering the Bearer Security), and interest or Defaulted Interest,
as the case may be, will not be payable on such Interest Payment Date or
proposed date for payment, as the case may be, in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable only
to the Holder of such Coupon when due in accordance with the provisions of this
Indenture. The Company shall execute, and the Trustee shall authenticate and
deliver, the Registered Security or Securities which the Holder making the
exchange is entitled to receive.
Notwithstanding the foregoing, the exchange of Bearer Securities
for Registered Securities will be subject to the provisions of United States
income tax laws and regulations applicable to Debt Securities in effect at the
time of such exchange.
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(c) Except as otherwise specified pursuant to Section 3.01, in no
event may Registered Securities, including Registered Securities received in
exchange for Bearer Securities, be exchanged for Bearer Securities.
(d) All Debt Securities issued upon any transfer or exchange of
Debt Securities shall be valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Debt
Securities surrendered for such transfer or exchange.
Every Registered Security presented or surrendered for transfer or
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar, duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge will be made for any transfer or exchange of Debt
Securities except as provided in Section 3.04(b) or 3.06. The Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration, transfer or
exchange of Debt Securities, other than those expressly provided in this
Indenture to be made at the Company's own expense or without expense or without
charge to the Holders.
The Company shall not be required (i) to register, transfer or
exchange Debt Securities of any series during a period beginning at the opening
of business 15 days before the day of the transmission of a notice of redemption
of Debt Securities of such series selected for redemption under Section 13.03
and ending at the close of business on the day of such transmission, or (ii) to
register, transfer or exchange any Debt Security so selected for redemption in
whole or in part, except the unredeemed portion of any Debt Security being
redeemed in part.
Section 3.06. Mutilated, Destroyed, Lost and Stolen Debt
Securities.
If (i) any mutilated Debt Security or any mutilated Coupon with the
Coupon Security to which it appertains (and all unmatured Coupons attached
thereto) is surrendered to the Trustee at its Corporate Trust Office, or (ii)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Debt Security or any Coupon, and there is
delivered to the Company and the Trustee such security or indemnity as may be
required by them to save each of them and any Paying Agent harmless, and neither
the Company nor the Trustee receives notice that such Debt Security or Coupon
has been acquired by a bona fide purchaser, then the Company shall execute and
upon Company Request the Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Debt Security or in
exchange for the Coupon Security to which such mutilated, destroyed, lost or
stolen Coupon appertained, a new Debt Security of the same series of like Stated
Maturity and with like terms and conditions and like principal amount, bearing a
number not contemporaneously Outstanding, and, in the case of a Coupon Security,
with such Coupons attached thereto that neither gain nor loss in interest shall
result from such exchange or substitution.
In case any such mutilated, destroyed, lost or stolen Debt Security
or Coupon has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Debt Security, pay the amount due on
such Debt Security or Coupon in accordance with its terms; provided, however,
that principal of (and premium, if any) and any interest on Bearer Securities
shall, except as otherwise provided in Section 12.03, be payable only at an
office or agency located outside the United States and, unless otherwise
specified as contemplated by Section 3.01 or except as otherwise provided in
this Section 3.06, any interest
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on Bearer Securities shall be payable only upon presentation and surrender of
the Coupons appertaining thereto.
Upon the issuance of any new Debt Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in respect thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Debt Security or Coupon of any series issued pursuant to
this Section shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Debt Security or
Coupon shall be at any time enforceable by anyone, and shall be entitled to all
the benefits of this Indenture equally and proportionately with any and all
other Debt Securities or Coupons of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Debt Securities or Coupons.
Section 3.07. Payment of Interest; Interest Rights Preserved.
(a) Interest on any Registered Security which is payable and is
punctually paid or duly provided for on any Interest Payment Date shall be paid
to the Person in whose name such Registered Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest notwithstanding the cancellation of such Registered Security
upon any transfer or exchange subsequent to the Regular Record Date. Unless
otherwise specified as contemplated by Section 3.01 with respect to the Debt
Securities of any series, payment of interest on Registered Securities shall be
made at the place or places specified pursuant to Section 3.01 or, at the option
of the Company, by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register or, if provided pursuant to
Section 3.01, by wire transfer to an account designated by the Registered
Holder.
(b) Interest on any Coupon Security which is payable and is
punctually paid or duly provided for on any Interest Payment Date shall be paid
to the Holder of the Coupon which has matured on such Interest Payment Date upon
surrender of such Coupon on such Interest Payment Date at the Corporate Trust
Office of the Trustee or at such other Place of Payment outside the United
States specified pursuant to Section 3.01.
Interest on any Bearer Security (other than a Coupon Security)
which is payable and is punctually paid or duly provided for on any Interest
Payment Date shall be paid to the Holder of the Bearer Security upon
presentation of such Bearer Security and notation thereon on such Interest
Payment Date at the Corporate Trust Office of the Trustee or at such other Place
of Payment maintained by the Company outside the United States specified
pursuant to Section 3.01.
Unless otherwise specified pursuant to Section 3.01, at the
direction of the Holder of any Bearer Security or Coupon payable in Dollars,
payment on such Bearer Security or Coupon will be made by check drawn on a bank
in The City of Boston or, if agreeable to the Trustee, by wire transfer to a
Dollar account maintained by such Holder outside the United States. If such
payment at the offices of all Paying Agents outside the United States becomes
illegal or is effectively precluded because of the imposition of exchange
controls or similar restrictions on the full payment or receipt of such amounts
in Dollars, the Company will appoint an office or agent in the United States at
which such payment may be made. Unless
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otherwise specified pursuant to Section 3.01, at the direction of the Holder of
any Bearer Security or Coupon payable in a Foreign Currency, payment on such
Bearer Security or Coupon will be made by a check drawn on a bank outside the
United States or by wire transfer to an appropriate account maintained by such
Holder outside the United States. Except as provided in this paragraph, no
payment on any Bearer Security or Coupon will be made by mail to an address in
the United States or by wire transfer to an account in the United States.
(c) Any interest on any Debt Security which is payable but is not
punctually paid or duly provided for on any Interest Payment Date (herein called
"Defaulted Interest") shall, if such Debt Security is a Registered Security,
forthwith cease to be payable to the Registered Holder on the relevant Regular
Record Date by virtue of his having been such Registered Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names such Registered Securities (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each such Registered Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money in the Currency or Currency unit in which the Debt Securities of
such series are payable (except as otherwise specified pursuant to
Sections 3.01 or 3.10) equal to the aggregate amount proposed to be paid
in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which date shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to the Holders of such Registered Securities at their
addresses as they appear in the Security Register, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been mailed
as aforesaid, such Defaulted Interest shall be paid to the Persons in
whose names such Registered Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on
Registered Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Registered
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
(d) Any Defaulted Interest payable in respect of Bearer Securities
of any series shall be payable pursuant to such procedures as may be
satisfactory to the Trustee in such manner that there is no discrimination
between the Holders of Registered Securities (if any) and Bearer Securities of
such series, and notice of the payment date therefor shall be given by the
Trustee, in the name and at the expense of the Company, in the manner provided
in Section 1.05 not more than 25 days and not less than 20 days prior to the
date of the proposed payment.
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(e) Subject to the foregoing provisions of this Section, each Debt
Security delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Debt Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Debt Security.
Section 3.08. Cancellation.
Unless otherwise specified pursuant to Section 3.01 for Debt
Securities of any series, all Debt Securities surrendered for payment,
redemption, transfer, exchange or credit against any sinking fund and all
Coupons surrendered for payment or exchange shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee. All Registered Securities
and matured Coupons so delivered shall be promptly canceled by the Trustee. All
Bearer Securities and unmatured Coupons so delivered shall be held by the
Trustee and, upon instruction by the Company Order, shall be canceled or held
for reissuance. Bearer Securities and unmatured Coupons held for reissuance may
be reissued only in exchange for Bearer Securities of the same series and of
like Stated Maturity and with like terms and conditions pursuant to Section 3.05
or in replacement of mutilated, lost, stolen or destroyed Bearer Securities of
the same series and of like Stated Maturity and with like terms and conditions
or the related Coupons pursuant to Section 3.06. All Bearer Securities and
unmatured Coupons held by the Trustee pending such cancellation or reissuance
shall be deemed to be delivered for cancellation for all purposes of this
Indenture and the Securities. The Company may at any time deliver to the Trustee
for cancellation any Debt Securities or Coupons previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Debt Securities previously authenticated
hereunder which the Company has not issued, and all Debt Securities or Coupons
so delivered shall be promptly canceled by the Trustee. No Debt Securities or
Coupons shall be authenticated in lieu of or in exchange for any Debt Securities
or Coupons canceled as provided in this Section, except as expressly permitted
by this Indenture. All canceled Debt Securities and Coupons held by the Trustee
shall be delivered to the Company upon Company Request. The acquisition of any
Debt Securities or Coupons by the Company shall not operate as a redemption or
satisfaction of the indebtedness represented thereby unless and until such Debt
Securities or Coupons are surrendered to the Trustee for cancellation. In the
case of any temporary Global Note which shall be destroyed if the entire
aggregate principal amount of the Debt Securities represented thereby has been
exchanged, the certificate of destruction shall state that all certificates
required pursuant to Section 3.04 hereof and substantially in the form of
Exhibit B hereto, to be given by the Euro-clear Operator or CEDEL, have been
duly presented to the Trustee by the Euro-clear Operator or CEDEL, as the case
may be. Permanent Global Notes shall not be destroyed until exchanged in full
for definitive Debt Securities or until payment thereon is made in full.
Section 3.09. Computation of Interest.
Except as otherwise specified pursuant to Section 3.01 for Debt
Securities of any series, interest on the Debt Securities of each series shall
be computed on the basis of a 360-day year of twelve 30-day months.
Section 3.10. Currency of Payments in Respect of Debt Securities.
(a) Except as otherwise specified pursuant to Section 3.01 for
Bearer Securities of any series, payment of the principal of (and premium, if
any) and interest on Bearer Securities of such series denominated in any
Currency will be made in such Currency.
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(b) With respect to Registered Securities of any series not
permitting the election provided for in paragraph (c) below or the Holders of
which have not made the election provided for in paragraph (c) below, except as
provided in paragraph (e) below, payment of the principal of (and premium, if
any) and any interest on any Registered Security of such series will be made in
the Currency in which such Registered Security is payable.
(c) It may be provided pursuant to Section 3.01 with respect to the
Registered Securities of any series that Holders shall have the option, subject
to paragraphs (e) and (f) below (and provided that in no instance may such
election be made after a defeasance pursuant to Article XV or during the
continuance of an Event of Default), to receive payments of principal of (and
premium, if any) and any interest on such Registered Securities in any of the
Currencies which may be designated for such election in the applicable
supplemental indenture by delivering to the Trustee a written election, to be in
form and substance satisfactory to the Trustee, not later than the close of
business on the Election Date immediately preceding the applicable payment date.
If a Holder so elects to receive such payments in any such Currency, such
election will remain in effect for such Holder or any transferee of such Holder
until changed by such Holder or such transferee by written notice to the Trustee
(but any such change must be made not later than the close of business on the
Election Date immediately preceding the next payment date to be effective for
the payment to be made on such payment date and no such change or election may
be made with respect to payments to be made on any Registered Security of such
series with respect to which an Event of Default has occurred or notice of
redemption has been given by the Company pursuant to Article Thirteen). Any
Holder of any such Registered Security who shall not have delivered any such
election to the Trustee by the close of business on the applicable Election Date
will be paid the amount due on the applicable payment date in the relevant
Currency as provided in paragraph (b) of this Section 3.10.
(d) If the election referred to in paragraph (c) above has been
provided for pursuant to Section 3.01, then not later than the fourth Business
Day after the Election Date for each payment date, the Trustee will deliver to
the Company a written notice specifying, in the Currency in which each series of
the Registered Securities is payable, the respective aggregate amounts of
principal of (and premium, if any) and any interest on the Registered Securities
to be paid on such payment date, specifying the amounts so payable in respect of
the Registered Securities as to which the Holders of Registered Securities
denominated in any Currency shall have elected to be paid in another Currency as
provided in paragraph (c) above. If the election referred to in paragraph (c)
above has been provided for pursuant to Section 3.01 and if at least one Holder
has made such election, then, on the second Business Day preceding each payment
date, the Company will deliver to the Trustee an Exchange Rate Officer's
Certificate in respect of the Currency payments to be made on such payment date.
The Currency amount receivable by Holders of Registered Securities who have
elected payment in a Currency as provided in paragraph (c) above shall be
determined by the Company on the basis of the applicable Market Exchange Rate in
effect on the third Business Day (the "Valuation Date") immediately preceding
each payment date.
(e) If a Conversion Event occurs with respect to a Foreign
Currency, the ECU or any other Currency unit in which any of the Debt Securities
are denominated or payable other than pursuant to an election provided for
pursuant to paragraph (c) above, then with respect to each date for the payment
of principal of (and premium, if any) and any interest on the applicable Debt
Securities denominated or payable in such Foreign Currency, the ECU or such
other Currency unit occurring after the last date on which such Foreign
Currency, the ECU or such other Currency unit was used (the "Conversion Date"),
the Dollar shall be the Currency of payment for use on each such payment date.
The Dollar amount to be paid by the Company to the Trustee and by the Trustee or
any Paying Agent to the Holders of such Debt Securities with respect to such
payment date shall be the Dollar Equivalent of the Foreign Currency or, in the
case of a Currency unit,
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the Dollar Equivalent of the Currency Unit, in each case as determined by the
Currency Determination Agent, if any, or, if there shall not be a Currency
Determination Agent, then by the Trustee, in the manner provided in paragraph
(g) or (h) below.
(f) If the Holder of a Registered Security denominated in any
Currency shall have elected to be paid in another Currency as provided in
paragraph (c) above, and a Conversion Event occurs with respect to such elected
Currency, such Holder shall receive payment in the Currency in which payment
would have been made in the absence of such election. If a Conversion Event
occurs with respect to the Currency in which payment would have been made in the
absence of such election, such Holder shall receive payment in Dollars as
provided in paragraph (e) of this Section 3.10.
(g) The "Dollar Equivalent of the Foreign Currency" shall be
determined by the Currency Determination Agent, and shall be obtained for each
subsequent payment date by converting the specified Foreign Currency into
Dollars at the Market Exchange Rate on the Conversion Date.
(h) The "Dollar Equivalent of the Currency Unit" shall be
determined by the Currency Determination Agent, and subject to the provisions of
paragraph (i) below, shall be the sum of each amount obtained by converting the
Specified Amount of each Component Currency into Dollars at the Market Exchange
Rate for such Component Currency on the Valuation Date with respect to each
payment.
(i) For purposes of this Section 3.10 the following terms shall
have the following meanings:
A "Component Currency" shall mean any Currency which, on the
Conversion Date, was a component Currency of the relevant Currency unit,
including, but not limited to, the ECU.
A "Specified Amount" of a Component Currency shall mean the number
of units of such Component Currency or fractions thereof which were
represented in the relevant Currency unit, including, but not limited to,
the ECU, on the Conversion Date. If after the Conversion Date the official
unit of any Component Currency is altered by way of combination or
subdivision, the Specified Amount of such Component Currency shall be
divided or multiplied in the same proportion. If after the Conversion Date
two or more Component Currencies are consolidated into a single Currency,
the respective Specified Amounts of such Component Currencies shall be
replaced by an amount in such single Currency equal to the sum of the
respective Specified Amounts of such consolidated Component Currencies
expressed in such single Currency, and such amount shall thereafter be a
Specified Amount and such single Currency shall thereafter be a Component
Currency. If after the Conversion Date any Component Currency shall be
divided into two or more Currencies, the Specified Amount of such
Component Currency shall be replaced by amounts of such two or more
Currencies with appropriate Dollar equivalents at the Market Exchange Rate
on the date of such replacement equal to the Dollar equivalent of the
Specified Amount of such former Component Currency at the Market Exchange
Rate on such date, and such amounts shall thereafter be Specified Amounts
and such Currencies shall thereafter be Component Currencies. If after the
Conversion Date of the relevant Currency unit, including but not limited
to, the ECU, a Conversion Event (other than any event referred to above in
this definition of "Specified Amount") occurs with respect to any
Component Currency of such Currency unit, the Specified Amount of such
Component Currency shall, for purposes of calculating the Dollar
Equivalent of the Currency Unit, be converted into Dollars at the Market
Exchange Rate in effect on the Conversion Date of such Component Currency.
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"Election Date" shall mean the earlier of (i) the seventh Business
Day immediately preceding any payment date or (ii) the record date with
respect to any payment date, and with respect to the Maturity shall mean
the record date (if within 16 or fewer days prior to the Maturity)
immediately preceding the Maturity, and with respect to any series of Debt
Securities whose record date immediately preceding the Maturity is more
than 16 days prior to the Maturity or any series of Debt Securities for
which no record dates are provided with respect to interest payments,
shall mean the date which is 16 days prior to the Maturity.
(j) All decisions and determinations of the Trustee or the Currency
Determination Agent, if any, regarding the Dollar Equivalent of the Foreign
Currency, the Dollar Equivalent of the Currency Unit and the Market Exchange
Rate shall be in its sole discretion and shall, in the absence of manifest
error, be conclusive for all purposes and irrevocably binding upon the Company
and all Holders of the Debt Securities denominated or payable in the relevant
Currency. In the event of a Conversion Event with respect to a Foreign Currency,
the Company, after learning thereof, will immediately give written notice
thereof to the Trustee (and the Trustee will promptly thereafter give notice in
the manner provided in Section 1.05 to the Holders) specifying the Conversion
Date. In the event of a Conversion Event with respect to the ECU or any other
Currency unit in which Debt Securities are denominated or payable, the Company,
after learning thereof, will immediately give notice thereof to the Trustee (and
the Trustee will promptly thereafter give written notice in the manner provided
in Section 1.05 to the Holders) specifying the Conversion Date and the Specified
Amount of each Component Currency on the Conversion Date. In the event of any
subsequent change in any Component Currency as set forth in the definition of
Specified Amount above, the Company, after learning thereof, will similarly give
written notice to the Trustee. The Trustee shall be fully justified and
protected in relying and acting upon information received by it from the Company
and the Currency Determination Agent, if any, and shall not otherwise have any
duty or obligation to determine such information independently.
(k) For purposes of any provision of the Indenture where the
Holders of Outstanding Debt Securities may perform an Act which requires that a
specified percentage of the Outstanding Debt Securities of all series perform
such Act and for purposes of any decision or determination by the Trustee of
amounts due and unpaid for the principal (and premium, if any) and interest on
the Debt Securities of all series in respect of which moneys are to be disbursed
ratably, the principal of (and premium, if any) and interest on the Outstanding
Debt Securities denominated in a Foreign Currency will be the amount in Dollars
based upon the Market Exchange Rate for Debt Securities of such series, as of
the date for determining whether the Holders entitled to perform such Act have
performed it, or as of the date of such decision or determination by the
Trustee, as the case may be.
(l) The Company hereby appoints itself as the initial Currency
Determination Agent and the Company shall be entitled to remove such agent at
any time; provided, however, that such removal shall not be effective and the
agent may not resign until a successor has been appointed by the Company and the
successor has accepted such appointment. The Trustee is under no duty or
obligation to serve in the capacity of Currency Determination Agent.
Section 3.11. Judgments.
If for the purpose of obtaining a judgment in any court with
respect to any obligation of the Company hereunder or under any Debt Security,
it shall become necessary to convert into any other Currency any amount in the
Currency due hereunder or under such Debt Security, then such conversion shall
be made at the Market Exchange Rate as in effect on the date the Company shall
make payment to any Person in satisfaction of such judgment. If pursuant to any
such judgment, conversion shall be made on a date other than
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the date payment is made and there shall occur a change between such Market
Exchange Rate and the Market Exchange Rate as in effect on the date of payment,
the Company agrees to pay such additional amounts (if any) as may be necessary
to ensure that the amount paid is equal to the amount in such other Currency
which, when converted at the Market Exchange Rate as in effect on the date of
payment or distribution, is the amount then due hereunder or under such Debt
Security. Any amount due from the Company under this Section 3.11 shall be due
as a separate debt and is not to be affected by or merged into any judgment
being obtained for any other sums due hereunder or in respect of any Debt
Security. In no event, however, shall the Company be required to pay more in the
Currency or Currency unit due hereunder or under such Debt Security at the
Market Exchange Rate as in effect when payment is made than the amount of
Currency stated to be due hereunder or under such Debt Security so that in any
event the Company's obligations hereunder or under such Debt Security will be
effectively maintained as obligations in such Currency, and the Company shall be
entitled to withhold (or be reimbursed for, as the case may be) any excess of
the amount actually realized upon any such conversion over the amount due and
payable on the date of payment or distribution.
Section 3.12. Exchange Upon Default.
If default is made in the payments referred to in Section 12.01,
the Company hereby undertakes that upon presentation and surrender of a
permanent Global Note to the Trustee (or to any other Person or at any other
address as the Company may designate in writing), on any Business Day on or
after the maturity date thereof the Company will issue and the Trustee will
authenticate and deliver to the bearer of such permanent Global Note duly
executed and authenticated definitive Debt Securities with the same issue date
and maturity date as set out in such permanent Global Note.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture.
This Indenture, with respect to the Debt Securities of any series
(if all series issued under this Indenture are not to be affected), shall, upon
Company Request, cease to be of further effect (except as to any surviving
rights of registration of transfer or exchange of such Debt Securities herein
expressly provided for and rights to receive payments of principal (and premium,
if any) and interest on such Debt Securities) and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Debt Securities and the Coupons, if any, of such series
theretofore authenticated and delivered (other than (i) Debt Securities
and Coupons of such series which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 3.06, (ii) Coupons
appertaining to Bearer Securities surrendered for exchange for Registered
Securities and maturing after such exchange, whose surrender is not
required or has been waived under Section 3.05, (iii) Coupons appertaining
to Bearer Securities called for redemption and maturing after the relevant
Redemption Date, whose surrender has been waived as provided in Section
13.06, and (iv) Debt Securities and Coupons of such series for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or
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discharged from such trust, as provided in Section 12.04) have been
delivered to the Trustee for cancellation; or
(B) all Debt Securities and the Coupons, if any, of such series not
theretofore delivered to the Trustee for cancellation,
(i) have become due and payable by reason of the making of a
notice of redemption or otherwise, or
(ii) will become due and payable at their Stated Maturity
within one year,
and the Company, either complies with any other condition or terms
specified pursuant to Section 3.01, or if not so specified in the case of
(i), (ii) or (iii) of this subclause (B), has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust solely for
the benefit of the Holders, cash in United States Dollars, non-callable
government securities, or a combination thereof, in such amounts as will
be (except as otherwise provided pursuant to Section 3.01 or 3.10)
sufficient without consideration of any reinvestment of interest, to pay
and discharge the entire indebtedness on such Debt Securities not
delivered to the Trustee for cancellation for principal, premium, if any
and accrued interest to the date of such deposit (in the case of Debt
Securities which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture with respect to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07, the obligations of
the Trustee to any Authenticating Agent under Section 6.14, the obligations of
the Company under Section 12.01, and, if money shall have been deposited with
the Trustee pursuant to subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 4.02 and the last paragraph of Section
12.04, shall survive. If, after the deposit referred to in Section 4.01 has been
made, (x) the Holder of a Debt Security is entitled to, and does, elect pursuant
to Section 3.10(c), to receive payment in a Currency other than that in which
the deposit pursuant to Section 4.01 was made, or (y) if a Conversion Event
occurs with respect to the Currency in which the deposit was made or elected to
be received by the Holder pursuant to Section 3.10(c), then the indebtedness
represented by such Debt Security shall be fully discharged to the extent that
the deposit made with respect to such Debt Security shall be converted into the
Currency in which such payment is made.
Section 4.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 12.04,
all money deposited with the Trustee pursuant to Section 4.01 shall be held in
trust and applied by it, in accordance with the provisions of the Debt
Securities and Coupons, if any, and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee.
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ARTICLE V
REMEDIES
Section 5.01. Events of Default.
"Event of Default" wherever used herein with respect to Debt
Securities of any series means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law, pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest upon any Debt Security
or any payment with respect to the Coupons, if any, of such series when it
becomes due and payable, and continuance of such default for a period of
30 days; or
(2) default in the payment of the principal of (and premium, if
any, on) any Debt Security of such series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Debt Security of such series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which expressly has been included
in this Indenture solely for the benefit of Debt Securities of a series
other than such series), and continuance of such default or breach for a
period of 60 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in principal amount of the Outstanding Debt
Securities of such series, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(5) the entry of a decree or order for relief in respect of the
Company by a court having jurisdiction in the premises in an involuntary
case under the Federal bankruptcy laws, as now or hereafter constituted,
or any other applicable Federal or State bankruptcy, insolvency or other
similar law, or a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company under any applicable Federal or State law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law,
or the consent by it to the entry of an order for relief in an involuntary
case under any such law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of
the Company or of any substantial part of its property, or the making by
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it of an assignment for the benefit of its creditors, or the admission by
it in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Company in furtherance of
any such action; or
(7) any other Event of Default provided with respect to Debt
Securities of that series pursuant to Section 3.01.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Debt Securities of any
series at the time Outstanding occurs and is continuing, then in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of such series may declare the principal amount (or,
if any Debt Securities of such series are Discount Securities, such portion of
the principal amount of such Discount Securities as may be specified in the
terms of such Discount Securities) of all the Debt Securities of such series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), and upon any such declaration such principal
amount (or specified amount) plus accrued and unpaid interest (and premium, if
payable) shall become immediately due and payable. Upon payment of such amount
in the Currency in which such Debt Securities are denominated (except as
otherwise provided pursuant to Sections 3.01 or 3.10), all obligations of the
Company in respect of the payment of principal of the Debt Securities of such
series shall terminate.
At any time after such a declaration of acceleration with respect
to Debt Securities of any series has been made and before a judgment or decree
for payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding Debt Securities of such series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum in the
Currency in which such Debt Securities are denominated (except as
otherwise provided pursuant to Section 3.01 or 3.10) sufficient to pay
(A) all overdue installments of interest on all Debt Securities
or all overdue payments with respect to any Coupons of such
series,
(B) the principal of (and premium, if any, on) any Debt
Securities of such series which have become due otherwise
than by such declaration of acceleration and interest thereon
at the rate or rates prescribed therefor in such Debt
Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest on each Debt
Security of such series or upon overdue payments on any
Coupons of such series at the Overdue Rate, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; provided, however,
that all sums payable under this clause (D) shall be paid in
Dollars;
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and
(2) All Events of Default with respect to Debt Securities of such
series, other than the nonpayment of the principal of Debt Securities of
such series which has become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission and waiver shall affect any subsequent default or impair any
right consequent thereon.
Section 5.03. Collection of Indebtedness and Suits for Enforcement
by Trustee.
The Company covenants that if
(1) default is made in the payment of any installment of interest
on any Debt Security or any payment with respect to any Coupons when such
interest or payment becomes due and payable and such default continues for
a period of 30 days,
(2) default is made in the payment of principal of (or premium, if
any, on) any Debt Security at the Maturity thereof, or
(3) default is made in the making or satisfaction of any sinking
fund payment or analogous obligation when the same becomes due pursuant to
the terms of the Debt Securities of any series,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Debt Securities or of such Coupons, the amount then due and
payable on such Debt Securities or matured Coupons, for the principal (and
premium, if any) and interest, if any, and, to the extent that payment of such
interest shall be legally enforceable, interest upon the overdue principal (and
premium, if any) and upon overdue installments of interest, at the Overdue Rate;
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amount forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Debt Securities and Coupons,
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such Debt
Securities and Coupons wherever situated.
If an Event of Default with respect to Debt Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Debt Securities
and Coupons of such series by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
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Section 5.04. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceedings, or any voluntary or involuntary case under the
Federal bankruptcy laws, as now or hereafter constituted, relative to the
Company or any other obligor upon the Debt Securities and Coupons, if any, of a
particular series or the property of the Company or of such other obligor or
their creditors, the Trustee (irrespective of whether the principal of such Debt
Securities shall then be due and payable as therein expressed or by declaration
of acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of principal
(or, if the Debt Securities of such series are Discount Securities, such
portion of the principal amount as may be due and payable with respect to
such series pursuant to a declaration in accordance with Section 5.02)
(and premium, if any) and interest owing and unpaid in respect of the Debt
Securities and Coupons of such series and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders of such Debt Securities and Coupons allowed in
such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, custodian, liquidator, sequestrator (or
other similar official) in any such proceeding is hereby authorized by each such
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to such Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Debt
Securities and any Coupons of such series or the rights of any Holder thereof,
or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
Section 5.05. Trustee May Enforce Claims Without Possession of
Debt Securities.
All rights of action and claims under this Indenture or the Debt
Securities and the Coupons, if any, of any series may be prosecuted and enforced
by the Trustee without the possession of any of such Debt Securities or Coupons
or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name, as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Debt Securities or Coupons in respect of which such judgment
has been recovered.
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Section 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal (and
premium, if any) or interest, upon presentation of the Debt Securities or
Coupons of any series in respect of which money has been collected and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
6.07.
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Debt Securities or
Coupons of such series, in respect of which or for the benefit of which
such money has been collected ratably, without preference or priority of
any kind, according to the amounts due and payable on such Debt Securities
or Coupons for principal (and premium, if any) and interest, respectively;
and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
Section 5.07. Limitation on Suits.
No Holder of any Debt Security or Coupon of any series shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to such series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of such series shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Debt Securities of such
series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other such
Holders or of the Holders of Outstanding Debt Securities or Coupons of any other
series, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of such
Holders. For the protection and enforcement of the provisions of this Section
5.07, each and every Holder of Debt
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Securities or Coupons of any series and the Trustee for such series shall be
entitled to such relief as can be given at law or in equity.
Section 5.08. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder
of any Debt Security or of any Coupon shall have the right, which is absolute
and unconditional, to receive payment of the principal of (and premium, if any)
and (subject to Section 3.07) interest on such Debt Security or Coupon on the
respective Stated Maturity or Maturities expressed in such Debt Security or
Coupon (or, in the case of redemption, on the Redemption Date) and to institute
suit for the enforcement of any such payment and interest thereon, and such
right shall not be impaired without the consent of such Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise expressly provided elsewhere in this Indenture,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this Indenture or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Debt Securities of any series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee with respect to the
Debt Securities of such series, provided, that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
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(2) subject to the provisions of Section 6.01, the Trustee shall
have the right to decline to follow any such direction if the Trustee in
good faith shall, by a Responsible Officer or Responsible Officers of the
Trustee, determine that the proceeding so directed would be unjustly
prejudicial to the Holders of Debt Securities of such series not joining
in any such direction; and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Debt Securities of any series may on behalf of the
Holders of all the Debt Securities of any such series waive any past default
hereunder with respect to such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series, or in the payment of any
sinking fund installment or analogous obligation with respect to the Debt
Securities of such series, or
(2) in respect of a covenant or provision hereof which pursuant to
Article Eleven cannot be modified or amended without the consent of the
Holder of each Outstanding Debt Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of the Debt Securities of such series under this Indenture, but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Debt
Security or any Coupon by his acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement of
any right or remedy under this Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit other than the Trustee of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant, but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder or group of
Holders holding in the aggregate more than 10% in principal amount of the
Outstanding Debt Securities of any series, or to any suit instituted by any
Holder of a Debt Security or Coupon for the enforcement of the payment of the
principal of (or premium, if any) or interest on such Debt Security or the
payment of any Coupon on or after the respective Stated Maturity or Maturities
expressed in such Debt Security or Coupon (or, in the case of redemption, on or
after the Redemption Date).
Section 5.15. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the
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performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default with
respect to the Debt Securities of any series,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture; but
in the case of any such certificates or opinions which by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to Debt Securities of
any series has occurred and is continuing, the Trustee shall, with respect to
the Debt Securities of such series, exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it with respect to Debt
Securities of any series in good faith in accordance with the direction of
the Holders of a majority in principal amount of the Outstanding Debt
Securities of such series relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture;
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(4) the Trustee is under no obligation or duty to pay interest on
or invest any funds deposited with it except as specifically provided in
this Indenture, and all investment activities undertaken by the Trustee,
if any, shall be at and pursuant to the written instruction of the
Company; and
(5) the Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) Any opinion required or permitted to be delivered to the
Trustee hereunder may be addressed and delivered to the entity serving as
Trustee hereunder solely in its individual capacity and not in its capacity as
Trustee, fiduciary or as representative of the holders of such Debt Securities
and Coupons issued by the Company.
Section 6.02. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with
respect to Debt Securities or Coupons, if any, of any series, the Trustee shall
give notice to all Holders of Debt Securities and Coupons of such series of such
default hereunder known to the Trustee, unless such default shall have been
cured or waived; provided, however, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest on any Debt
Security or Coupon of such series or in the payment of any sinking fund
installment with respect to Debt Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Debt Securities and of Coupons of
such series; and provided, further, that in the case of any default of the
character specified in Section 5.01(4) with respect to Debt Securities of such
series no such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default with respect to Debt Securities of such series.
Notice given pursuant to this Section 6.02 shall be transmitted by
mail:
(1) to all Registered Holders, as the names and addresses of the
Registered Holders appear in the Security Register;
(2) to such Holders of Bearer Securities of any series as have
within two years preceding such transmission, filed their names and
addresses with the Trustee for such series for that purpose; and
(3) to each Holder of a Debt Security of any series whose name and
address appear in the information preserved at the time by the Trustee in
accordance with Section 7.02(a) of this Indenture.
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Section 6.03. Certain Rights of Trustee.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders of Debt Securities of any series pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent (including any agent appointed pursuant to
Section 3.10(j)) or attorney appointed with due care by it hereunder.
Section 6.04. Not Responsible for Recitals or Issuance of Debt
Securities.
The recitals contained herein and in the Debt Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Debt Securities or Coupons, if any, of any series. The
Trustee shall not be accountable for the use or application by the Company of
any Debt Securities or the proceeds thereof.
Section 6.05. May Hold Debt Securities.
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The Trustee, any Paying Agent, the Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Debt Securities or Coupons, and, subject to Sections 6.08
and 6.13, may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Paying Agent, Security Registrar or such other agent.
Section 6.06. Money Held in Trust.
Money in any Currency held by the Trustee or any Paying Agent in
trust hereunder need not be segregated from other funds except to the extent
required by law. Neither the Trustee nor any Paying Agent shall be under any
liability for (i) interest on any money received by it hereunder except as
otherwise agreed with the Company or (ii) losses resulting from currency
fluctuations or any investments made pursuant to 6.01(c)(4).
Section 6.07. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
in Dollars for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
trustee in Dollars upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify in Dollars the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with
the acceptance or administration of this trust or performance of its
duties hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a claim prior to the Debt Securities
and Coupons, if any, upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the payment of amounts due on
the Debt Securities and Coupons.
The obligations of the Company under this Section 6.07 to
compensate and indemnify the Trustee for expenses, disbursements and advances
shall constitute additional indebtedness under this Indenture and shall survive
the satisfaction and discharge of this Indenture.
Section 6.08. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest,
as defined in this Section with respect to the Debt Securities of any series,
then, within 90 days after ascertaining that it has such conflicting interest,
and if the default (as hereinafter defined) to which such conflicting interest
relates has not been cured or duly waived or otherwise eliminated before the end
of such 90-day period, the Trustee shall either
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eliminate such conflicting interest or, except as otherwise provided below,
resign with respect to the Debt Securities of such series, and the Company shall
take prompt steps to have a successor appointed, in the manner and with the
effect hereinafter specified in this Article.
(b) In the event that the Trustee shall fail to comply with the
provisions of subsection (a) of this Section with respect to the Debt Securities
of any series, the Trustee shall, within 10 days after the expiration of such
90-day period, transmit to all Holders of Debt Securities of such series notice
of such failure.
Notice given pursuant to this Section 6.08(b) shall be transmitted
by mail:
(1) to all Registered Holders, as the names and addresses of the
Registered Holders appear in the Security Register;
(2) to such Holders of Bearer Securities of any series as have,
within two years preceding such transmission, filed their names and
addresses with the Trustee for such series for that purpose; and
(3) to each Holder of a Debt Security of any series whose name and
address appear in the information preserved at the time by the Trustee in
accordance with Section 7.02(a) of this Indenture.
(c) For the purposes of this Section, the Trustee shall be deemed
to have a conflicting interest with respect to the Debt Securities of any
series, if there shall exist an Event of Default (as such term is defined
herein, but exclusive of any period of grace or requirement of notice) with
respect to such Debt Securities and
(1) the Trustee is trustee under this Indenture with respect to the
Outstanding Debt Securities of any series other than that series or is
trustee under another indenture under which any other securities, or
certificates of interest or participation in any other securities, of the
Company are outstanding, unless such other indenture is a collateral trust
indenture under which the only collateral consists of Debt Securities
issued under this Indenture, provided that there shall be excluded from
the operation of this paragraph this Indenture with respect to the Debt
Securities of any series other than that series and any other indenture or
indentures under which other securities, or certificates of interest or
participation in other securities, of the Company are outstanding, if
(i) this Indenture and such other indenture or indentures
(and all series of securities issuable thereunder) are wholly
unsecured and rank equally and such other indenture or indentures
are hereafter qualified under the Trust Indenture Act, unless the
Commission shall have found and declared by order pursuant to
Section 305(b) or Section 307(c) of the Trust Indenture Act that
differences exist between the provisions of this Indenture with
respect to the Debt Securities of such series and one or more other
series or the provisions of such other indenture or indentures
which are so likely to involve a material conflict of interest as
to make it necessary, in the public interest or for the protection
of investors to disqualify the Trustee from acting as such under
this Indenture with respect to the Debt Securities of such series
and such other series or under such other indenture or indentures,
or
(ii) the Company shall have sustained the burden of proving, on
application to the Commission and after opportunity for hearing
thereon, that trusteeship under this Indenture
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with respect to the Debt Securities of such series and such other series
or such other indenture or indentures is not so likely to involve a
material conflict of interest as to make it necessary in the public
interest or for the protection of investors to disqualify the Trustee from
acting as such under this Indenture with respect to the Debt Securities of
such series and such other series or under such other indenture or
indentures;
(2) the Trustee or any of its directors or executive officers is an
underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with an
underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the Company
who is currently engaged in the business of underwriting, except that (i) one
individual may be a director or an executive officer, or both, of the Trustee
and a director or an executive officer, or both, of the Company but may not be
at the same time an executive officer of both the Trustee and the Company; (ii)
if and so long as the number of directors of the Trustee in office is more than
nine, one additional individual may be a director or an executive officer, or
both, of the Trustee and a director of the Company; and (iii) the Trustee may be
designated by the Company or by any underwriter for the Company to act in the
capacity of transfer agent, registrar, custodian, paying agent, fiscal agent,
escrow agent, or depositary or in any other similar capacity, or, subject to the
provisions of paragraph (l) of this subsection, to act as trustee, whether under
an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is beneficially
owned either by the Company or by any director, partner or executive officer
thereof, or 20% or more of such voting securities is beneficially owned,
collectively, by any two or more of such persons; or 10% or more of the voting
securities of the Trustee is beneficially owned either by an underwriter for the
Company or by any director, partner or executive officer thereof or is
beneficially owned, collectively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
subsection defined), (i) 5% or more of the voting securities, or 10% or more of
any other class of security, of the Company not including the Debt Securities
issued under this Indenture and securities issued under any other indenture
under which the Trustee is also trustee, or (ii) 10% or more of any class of
security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of or holds as collateral security
for an obligation which is in default, 5% or more of the voting securities of
any person who, to the knowledge of the Trustee, owns 10% or more of the voting
securities of, or controls directly or indirectly or is under direct or indirect
common control with, the Company;
(8) the Trustee is the beneficial owner of or holds as collateral security
for an obligation which is in default, 10% or more of any class of security of
any person who, to the knowledge of the Trustee, owns 50% or more of the voting
securities of the Company;
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(9) the Trustee owns, on the date of such Event of Default or any
anniversary of such Event of Default while such Event of Default remains
outstanding, in the capacity of executor, administrator, testamentary or
inter vivos trustee, guardian, committee or conservator, or in any other
similar capacity, an aggregate of 25% or more of the voting securities, or
of any class of security, of any person, the beneficial ownership of a
specified percentage of which would have constituted a conflicting
interest under paragraph (6), (7) or (8) of this subsection. As to any
such securities of which the Trustee acquired ownership through becoming
executor, administrator or testamentary trustee of an estate which
included them, the provisions of the preceding sentence shall not apply,
for a period of not more than two years from the date of such acquisition,
to the extent that such securities included in such estate do not exceed
25% of such voting securities or 25% of any such class of security.
Promptly after the dates of any such Event of Default and annually in each
succeeding year that such Event of Default continues, the Trustee shall
make a check of its holdings of such securities in any of the
above-mentioned capacities as of such dates. If the Company fails to make
payment in full of the principal of (or premium, if any) or interest on
any of the Debt Securities when and as the same becomes due and payable,
and such failure continues for 30 days thereafter, the Trustee shall make
a prompt check of its holdings of such securities in any of the
above-mentioned capacities as of the date of the expiration of such 30-day
period, and after such date, notwithstanding the foregoing provisions of
this paragraph, all such securities so held by the Trustee, with sole or
joint control over such securities vested in it, shall be considered as
though beneficially owned by the Trustee for the purposes of paragraphs
(6), (7) and (8) of this subsection; or
(10) except under the circumstances described in paragraphs (1),
(3), (4), (5) or (6) of Section 6.13(b) of this Indenture, the Trustee
shall be or shall become a creditor of the Company.
For the purposes of paragraph (1) of this subsection, the term
"series of securities" or "series" means a series, class or group of securities
issuable under an indenture pursuant to whose terms holders of one such series
may vote to direct the Trustee, or otherwise take action pursuant to a vote of
such holders, separately from holders of another series; provided, that "series
of securities" or "series" shall not include any series of securities issuable
under an indenture if all such series rank equally and are wholly unsecured.
The specification of percentages in paragraphs (5) to (9),
inclusive, of this subsection shall not be construed as indicating that the
ownership of such percentages of the securities of a person is or is not
necessary or sufficient to constitute direct or indirect control for the
purposes of paragraph (3) or (7) of this subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this
subsection only, (i) the terms "security" and "securities" shall include only
such securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (ii) an obligation shall be deemed to
be "in default" when a default in payment of principal shall have continued for
30 days or more and shall not have been cured; and (iii) the Trustee shall not
be deemed to be the owner or holder of (A) any security which it holds as
collateral security, as trustee or otherwise, for an obligation which is not in
default as defined in clause (ii) above, or (B) any security which it holds as
collateral security under this Indenture, irrespective of any default hereunder,
or (C) any security which it holds as agent for collection, or as custodian,
escrow agent or depositary, or in any similar representative capacity.
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(d) For the purposes of this Section:
(1) The term "underwriter" when used with reference to the Company
means every person who, within one year prior to the time as of which the
determination is made, has purchased from the Company with a view to, or
has offered or sold for the Company in connection with, the distribution
of any security of the Company outstanding at such time, or has
participated or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the direct
or indirect underwriting of any such undertaking, but such term shall not
include a person whose interest was limited to a commission from an
underwriter or dealer not in excess of the usual and customary
distributors' or sellers' commission.
(2) The term "director" means any director of a corporation, or any
individual performing similar functions with respect to any organization
whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint stock company, a trust, an estate, an
unincorporated organization, or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangements whereby a trustee or
trustees or agent or agents for the owner or holder of such security are
presently entitled to vote in the direction or management of the affairs
of a person.
(5) The term "Company" means any obligor upon the Debt Securities
of any series.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary, and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization, whether incorporated
or unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities
specified in this Section shall be calculated in accordance with the following
provisions:
(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section (each of whom
is referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person
means such percentage of the aggregate amount of securities of the class
outstanding.
(3) The term "amount", when used with regard to securities means
the principal amount if relating to evidences of indebtedness, the number
of shares if relating to capital shares, and the number of units if
relating to any other kind of security.
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(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating
to another class of securities of the issuer, if the obligation
evidenced by such other class of securities is not in default as to
principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security for
an obligation of the issuer not in default as to principal or
interest or otherwise; and
(iv) securities held in escrow if placed in escrow by the
issuer thereof;
provided, however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise
the voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that, in
the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes; and provided, further, that, in
the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
(f) Except in the case of a default in the payment of the principal
of or interest on any Debt Security of any series, or in the payment of any
sinking or purchase fund installment, the Trustee shall not be required to
resign as provided by this Section if the Trustee shall have sustained the
burden of proving, on application to the Commission and after opportunity for
hearing thereon, that:
(1) the Event of Default may be cured or waived during a reasonable
period and under the procedures described in such application; and
(2) a stay of the Trustee's duty to resign will not be inconsistent
with the interests of Holders of the Debt Securities.
The filing of such an application shall automatically stay the performance of
the duty to resign until the Commission orders otherwise.
Section 6.09. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $75,000,000, subject to supervision or examination by Federal, State
or District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
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the aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. Neither the Company nor any person directly or
indirectly controlling, controlled by, or under common control with the Company
shall serve as Trustee upon any Debt Securities.
Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Debt
Securities of one or more series by giving written notice thereof to the
Company. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Debt
Securities of such series.
(c) The Trustee may be removed at any time with respect to the Debt
Securities of any series and a successor Trustee appointed by Act of the Holders
of a majority in principal amount of the Outstanding Debt Securities of such
series, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08(a) with
respect to the Debt Securities of any series after written request
therefor by the Company or by any Holder who has been a bona fide Holder
of a Debt Security of such series for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.09 with
respect to the Debt Securities of any series and shall fail to resign
after written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Debt Securities, or (ii) subject to Section 5.14,
any Holder who has been a bona fide Holder of a Debt Security of any series for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee for the Debt Securities of such series.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Debt Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Debt Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the Debt Securities of
one or more or all of such series and that at any time there shall be only
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one Trustee with respect to the Debt Securities of any particular series) and
shall comply with the applicable requirements of Section 6.11. If, within one
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Debt Securities of any series
shall be appointed by Act of the Holders of a majority in principal amount of
the Outstanding Debt Securities of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee with respect to the
Debt Securities of such series and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee with respect to the
Debt Securities of any series shall have been so appointed by the Company or the
Holders of such series and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Debt Security of such
series for at least six months may, subject to Section 5.14, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Debt
Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Debt Securities of any series and
each appointment of a successor Trustee with respect to the Debt Securities of
any series in the manner and to the extent provided in Section 1.05 to the
Holders of Debt Securities of such series. Each notice shall include the name of
the successor Trustee with respect to the Debt Securities of such series and the
address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
(a) In the case of an appointment hereunder of a successor Trustee
with respect to all Debt Securities, each such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee, but, on
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring
Trustee, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder, subject
nevertheless to its claim, if any, provided for in Section 6.07.
(b) In case of the appointment hereunder of a successor Trustee
with respect to the Debt Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Debt Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debt Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Debt Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Debt Securities of that or those
series as to which the retiring Trustee is not retiring shall continue to be
vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in any such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any other trust or trusts hereunder administered by any other such Trustee; and
upon the execution and delivery of any such supplemental indenture the
resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become
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vested with all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Debt Securities of that or those series to which the
appointment of such successor Trustee relates, but, on request of the Company or
any successor Trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Debt Securities of that or those series to
which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
Section 6.12. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Debt Securities shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Debt Securities so authenticated
with the same effect as if such successor Trustee had itself authenticated such
Debt Securities. In case any Debt Securities shall not have been authenticated
by such predecessor Trustee, any such successor Trustee may authenticate and
deliver such Debt Securities, in either its own name or that of its predecessor
Trustee, with the full force and effect which this Indenture provides for the
certificate of authentication of the Trustee.
Section 6.13. Preferential Collection of Claims Against Company.
(a) Subject to subsection (b) of this Section, if the Trustee shall
be or shall become a creditor, directly or indirectly, secured or unsecured, of
the Company within three months prior to a default, as defined in subsection (c)
of this Section, or subsequent to such default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the Debt
Securities and of the Coupons, if any, and the holders of other indenture
securities (as defined in subsection (c) of this Section):
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such three-month period and valid as
against the Company and its other creditors, except any such reduction
resulting from the receipt or disposition of any property described in
paragraph (2) of this subsection, or from the exercise of any right of
set-off which the Trustee could have exercised if a voluntary or
involuntary case had been commenced in respect of the Company under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law
upon the date of such default; and
(2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such
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three-month period, or an amount equal to the proceeds of any such
property, if disposed of, subject, however, to the rights, if any, of the
Company and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of
any such claim by any Person (other than the Company) who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim by
the Trustee to a third Person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings or reorganization
pursuant to the Federal bankruptcy laws, as now or hereafter constituted,
or any other applicable Federal or State bankruptcy, insolvency or other
similar law;
(B) to realize, for its own account, upon any property held by it
as security for any such claim, if such property was so held prior to the
beginning of such three-month period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such
three-month period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default, as defined in
subsection (c) of this Section, would occur within three months, or
(D) to receive payment on any claim referred to in paragraph (B) or
(C) against the release of any property held as security for such claim as
provided in paragraph (B) or (C), as the case may be, to the extent of the
fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property
substituted after the beginning of such three-month period for property held as
security at the time of such substitution shall, to the extent of the fair value
of the property released, have the same status as the property released, and, to
the extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned among
the Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
bankruptcy laws, as now or hereafter constituted or any other applicable Federal
or State bankruptcy, insolvency or other similar law, the same percentage of
their respective claims, figured before crediting to the claim of the Trustee
anything on account of the receipt by it from the Company of the funds and
property in such special account and before crediting to the respective claims
of the Trustee and the Holders and the holders of other indenture securities
dividends on claims filed against the Company in bankruptcy or receivership or
in proceedings for reorganization pursuant to the Federal bankruptcy laws, as
now or hereafter constituted, or any other applicable Federal or State
bankruptcy, insolvency or other similar law, but after crediting thereon
receipts on account of the indebtedness represented by their respective claims
from all sources other than from such dividends and from the funds and property
so held in such special account. As used in this paragraph, with respect to any
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claim, the term "dividends" shall include any distribution with respect to such
claim, in bankruptcy or receivership or proceedings for reorganization pursuant
to the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law, whether
such distribution is made in cash, securities, or other property, but shall not
include any such distribution with respect to the secured portion, if any, of
such claim. The court in which such bankruptcy, receivership or proceedings for
reorganization is pending shall have jurisdiction (i) to apportion among the
Trustee and the Holders and the holders of other indenture securities, in
accordance with the provisions of this paragraph, the funds and property held in
such special account and proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give to the provisions of this paragraph
due consideration in determining the fairness of the distributions to be made to
the Trustee and the Holders and the holders of other indenture securities with
respect to their respective claims, in which event it shall not be necessary to
liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claim, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee which has resigned or been removed after the beginning
of such three-month period shall be subject to the provisions of this subsection
as though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such three-month period, it
shall be subject to the provisions of this subsection if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account, if such Trustee had continued as
Trustee, occurred after the beginning of such three-month period; and
(ii) such receipt of property or reduction of claim occurred within
three months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of
this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the Lien of this
Indenture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advances and of the circumstances surrounding
the making thereof is given to the Holders at the time and in the manner
provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented, or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in subsection (c) of this
Section;
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(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve
Act, as amended, which is directly or indirectly a creditor of the
Company; and
(6) The acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within
the classification of self-liquidating paper as defined in subsection (c)
of this Section.
(c) for the purposes of this Section only:
(1) The term "default" means any failure to make payment in full of
the principal of or interest on any of the Debt Securities or upon the
other indenture securities when and as such principal or interest becomes
due and payable.
(2) The term "other indenture securities" means securities upon
which the Company is an obligor outstanding under any other indenture (i)
under which the Trustee is also trustee, (ii) which contains provisions
substantially similar to the provisions of this Section, and (iii) under
which a default exists at the time of the apportionment of the funds and
property held in such special account.
(3) The term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks and payable upon demand.
(4) The term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation.
(5) The term "Company" means any obligor upon the Debt Securities.
Section 6.14. Appointment of Authenticating Agent.
As long as any Debt Securities of a series remain Outstanding, upon
a Company Request, there shall be an authenticating agent (the "Authenticating
Agent") appointed, for such period as the Company shall elect, by the Trustee
for such series of Debt Securities to act as its agent on its behalf and subject
to its direction in connection with the authentication and delivery of each
series of Debt Securities for which it is serving as Trustee. Debt Securities of
each such series authenticated by such Authenticating Agent shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by such Trustee. Wherever reference is made in this
Indenture to the authentication and delivery of Debt Securities of any series by
the Trustee for such series or to the Trustee's Certificate of Authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee for such series by an Authenticating Agent for such series and a
Certificate of Authentication executed on behalf of such Trustee by such
Authenticating Agent, except that only the Trustee may authenticate Debt
Securities upon original issuance and pursuant to Section 3.06 hereof. Such
Authenticating Agent shall at all times be a corporation
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organized and doing business under the laws of the United States of America or
of any State, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $10,000,000 and subject to
supervision or examination by Federal or State authority. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which any Authenticating Agent may be merged
or converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency business
of any Authenticating Agent, shall continue to be the Authenticating Agent with
respect to all series of Debt Securities for which it served as Authenticating
Agent without the execution or filing of any paper or any further act on the
part of the Trustee for such series or such Authenticating Agent. Any
Authenticating Agent may at any time, and if it shall cease to be eligible
shall, resign by giving written notice of resignation to the applicable Trustee
and to the Company.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.14 with respect to
one or more or all series of Debt Securities, the Trustee for such series shall
upon Company Request appoint a successor Authenticating Agent, and the Company
shall provide notice of such appointment to all Holders of Debt Securities of
such series in the manner and to the extent provided in Section 1.05. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as Authenticating
Agent herein. The Trustee for the Debt Securities of such series agrees to pay
to the Authenticating Agent for such series from time to time reasonable
compensation for its services, and the Trustee shall be entitled to be
reimbursed for such payment, subject to the provisions of Section 6.07. The
Authenticating Agent for the Debt Securities of any series shall have no
responsibility or liability for any action taken by it as such at the direction
of the Trustee for such series.
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If an appointment with respect to one or more series is made
pursuant to this Section, the Debt Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:
This is one of the series of Debt Securities issued under the
within mentioned Indenture.
-----------------------------------
-----------------------------------
As Trustee
By:
--------------------------------
As Authenticating Agent
By:
--------------------------------
Authorized Signatory
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Company to Furnish Trustee Names and Addresses
of Holders.
The Company will furnish or cause to be furnished to the Trustee
with respect to Registered Securities of each series for which it acts as
Trustee:
(a) semi-annually on a date not more than 15 days after each
Regular Record Date with respect to an Interest Payment Date, if any, for the
Registered Securities of such series (or on semi-annual dates in each year to be
determined pursuant to Section 3.01 if the Registered Securities of such series
do not bear interest), a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Registered Holders as of the date 15
days next preceding each such Regular Record Date (or such semi-annual dates, as
the case may be); and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar for such series, no such list need be furnished.
The Company shall also be required to furnish to the Trustee at all
such times set forth above all information in the possession or control of the
Company or any of its Paying Agents other than the Trustee as to the names and
addresses of the Holders of Bearer Securities of all series; provided, however,
that the Company shall have no obligation to investigate any matter relating to
any Holders of Bearer Securities of any series.
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Section 7.02. Preservation of Information; Communication to
Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of Holders
contained in the most recent list furnished to the Trustee as provided in
Section 7.01 received by it in the capacity of Paying Agent (if so acting)
hereunder, and filed with it within the two preceding years pursuant to Section
7.03(c)(2).
The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished, destroy any information
received by it as Paying Agent (if so acting) hereunder upon delivering to
itself as Trustee, not earlier than 45 days after an Interest Payment Date, a
list containing the names and addresses of the Holders obtained from such
information since the delivery of the next previous list, if any, destroy any
list delivered to itself as Trustee which was compiled from information received
by it as Paying Agent (if so acting) hereunder upon the receipt of a new list so
delivered, and destroy not earlier than two years after filing, any information
filed with it pursuant to Section 7.03(c)(2).
(b) If three or more Holders (hereinafter referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Debt Security for a period
of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
of Debt Securities of a particular series (in which case the applicants must
hold Debt Securities of such series) or with all Holders of Debt Securities with
respect to their rights under this Indenture or under the Debt Securities and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, at its election, either
(i) afford such applicants access to the information preserved at
the time by the Trustee in accordance with Section 7.02(a), or
(ii) inform such applicants as to the approximate number of Holders
of Debt Securities of such series or of all Debt Securities, as the
case may be, whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with Section
7.02(a), and as to the approximate cost of mailing to such Holders the
form of proxy or other communication, specified in such application.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon written request of such applicants,
mail to the Holders of Debt Securities of such series or all Holders, as the
case may be, whose names and addresses appear in the information preserved at
the time by the Trustee in accordance with Section 7.02(a), a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender, the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interests of the Holders
of Debt Securities of such series or all Holders, as the case may be, or would
be in violation of applicable law. Such written statement shall specify the
basis of such opinion. If the Commission, after opportunity for a hearing upon
the objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of
such material to all such Holders with reasonable promptness after the entry of
such order and the
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renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Every Holder of Debt Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with
Section 7.02(b), regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
of any material pursuant to a request made under Section 7.02(b).
Section 7.03. Reports by Trustee.
(a) Within 60 days after January 15 of each year, commencing
January 15, 2000, the Trustee shall, to the extent required by the Trust
Indenture Act, transmit to all Holders of Debt Securities of any series with
respect to which it acts as Trustee, in the manner hereinafter provided in this
Section 7.03, a brief report dated such date with respect to any of the
following events which may have occurred within the previous 12 months (but if
no such event has occurred within such period no report need be transmitted):
(1) any change to its eligibility under Section 6.09 and its
qualifications under Section 6.08;
(2) the creation of or any material change to a relationship
specified in paragraph (1) through (10) of Section 6.08(c) of this
Indenture;
(3) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or
charge, prior to that of the Debt Securities of such series, on any
property or funds held or collected by it as Trustee, except that the
Trustee shall not be required (but may elect) to report such advances if
such advances so remaining unpaid aggregate not more than 1/2 of 1% of the
principal amount of the Outstanding Debt Securities of such series on the
date of such report;
(4) any change to the amount, interest rate and maturity date of
all other indebtedness owing by the Company (or any other obligor on the
Debt Securities of such series) to the Trustee in its individual capacity,
on the date of such report, with a brief description of any property held
as collateral security therefor, except an indebtedness based upon a
creditor relationship arising in any manner described in Section
6.13(b)(2), (3), (4) or (6);
(5) any change to the property and funds, if any, physically in the
possession of the Trustee as such on the date of such report;
(6) any additional issue of Debt Securities which the Trustee has
not previously reported; and
(7) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in its
opinion materially affects the Debt Securities of such series, except
action in respect of a default, notice of which has been or is to be
withheld by the Trustee in accordance with Section 6.02.
(b) The Trustee shall transmit by mail to all Holders of Debt
Securities of any series (whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with Section
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7.02 (a)) for which it acts as the Trustee, as hereinafter provided, a brief
report with respect to the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making thereof)
made by the Trustee (as such) since the date of the last report transmitted
pursuant to subsection (a) of this Section (or if no such report has yet been so
transmitted, since the date of execution of this instrument) for the
reimbursement of which it claims or may claim a lien or charge, prior to that of
the Debt Securities of such series, on property or funds held or collected by it
as Trustee, and which it has not previously reported pursuant to this
subsection, except that the Trustee for each series shall not be required (but
may elect) to report such advances if such advances remaining unpaid at any time
aggregate 10% or less of the principal amount of the Debt Securities of such
series Outstanding at such time, such report to be transmitted within 90 days
after such time.
(c) Reports pursuant to this Section 7.03 shall be transmitted by
mail:
(1) to all Holders of Registered Securities, as the names and
addresses of such Holders of Registered Securities appear in the Security
Register;
(2) to such Holders of Bearer Securities of any series as have,
within two years preceding such transmission, filed their names and
addresses with the Trustee for such series for that purpose; and
(3) except in the cases of reports pursuant to subsection (b) of
this Section 7.03, to each Holder of a Debt Security of any series whose
name and address appear in the information preserved at the time by the
Trustee in accordance with Section 7.02(a).
(d) A copy of each such report shall, at the time of such
transmission to Holders, be filed with the Company and the Company shall file
such report with each stock exchange upon which any Debt Securities of such
series are listed, with the Commission and also with the Company. The Company
will notify the Trustee when any series of Debt Securities are listed on any
stock exchange.
Section 7.04. Reports by Company.
Unless otherwise specified with respect to a particular series of
Debt Securities pursuant to Section 3.01, the Company will:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended. Notwithstanding that the
Company may not be required to remain subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, or otherwise report on an annual and quarterly basis on
forms provided for such annual and quarterly reporting pursuant to rules
and regulations promulgated by the Commission, the Company shall continue
to file with the Commission and provide the Trustee and the Holders of
each series of Debt Securities with, without cost to each Holder, (a)
within 90 days after the end of each fiscal year, annual reports on Form
10-K (or any successor or comparable form) containing the information
required to be contained therein (or required in such successor or
comparable form); (b) within 45 days after the end of each of the first
three fiscal quarters of each fiscal year, reports on Form 10-Q (or any
successor or comparable form); and (c)
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promptly from time to time after the occurrence of an event required to be
therein reported, such other reports on Form 8-K (or any successor or
comparable form) containing the information required to be contained
therein (or required in any successor or comparable form); provided,
however, that the Company shall not be obligated to file such reports with
the Commission if the Commission does not permit such filings. The Company
will in all cases, without cost to each recipient, provide copies of such
information to the Holders of the Debt Securities of each series and, if
they are not permitted to file such reports with the Commission, shall
make available information to prospective purchasers and to securities
analysts and broker-dealers upon their request;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Company with the conditions and covenants of this Indenture as may
be required from time to time by such rules and regulations; and
(3) transmit to all Holders of Debt Securities, in the manner and
to the extent provided in Section 7.03, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents and
reports required to be filed by the Company pursuant to paragraphs (1) and
(2) of this Section as may be required by rules and regulations prescribed
from time to time by the Commission.
ARTICLE VIII
CONCERNING THE HOLDERS
Section 8.01. Acts of Holders.
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent or
proxy duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Whenever in this Indenture it is
provided that the Holders of a specified percentage in aggregate principal
amount of the Outstanding Debt Securities of any series may take any Act, the
fact that the Holders of such specified percentage have joined therein may be
evidenced (a) by the instrument or instruments executed by Holders in person or
by agent or proxy appointed in writing, or (b) by the record of Holders voting
in favor thereof at any meeting of such Holders duly called and held in
accordance with the provisions of Article Nine, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of Holders.
Section 8.02. Proof of Ownership; Proof of Execution of
Instruments by Holder.
The ownership of Registered Securities of any series shall be
proved by the Security Register for such series or by a certificate of the
Security Registrar for such series.
The ownership of Bearer Securities shall be proved by production of
such Bearer Securities or by a certificate executed by any bank or trust
company, which certificate shall be dated and shall state that
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on the date thereof a Bearer Security bearing a specified identifying number or
other mark was deposited with or exhibited to the person executing such
certificate by the person named in such certificate, or by any other proof of
possession reasonably satisfactory to the Trustee. The holding by the person
named in any such certificate of any Bearer Security specified therein shall be
presumed to continue for a period of one year unless at the time of
determination of such holding (1) another certificate bearing a later date
issued in respect of the same Bearer Security shall be produced, (2) such Bearer
Security shall be produced by some other person, (3) such Bearer Security shall
have been registered on the Security Register, if, pursuant to Section 3.01,
such Bearer Security can be so registered, or (4) such Bearer Security shall
have been canceled or paid.
Subject to the provisions of Sections 6.01, 6.03 and 9.05, proof of
the execution of a writing appointing an agent or proxy and of the execution of
any instrument by a Holder or his agent or proxy shall be sufficient and
conclusive in favor of the Trustee and the Company if made in the following
manner:
The fact and date of the execution by any such person of any
instrument may be proved by the certificate of any notary public or other
officer authorized to take acknowledgements of deeds, that the person executing
such instrument acknowledged to him the execution thereof, or by an affidavit of
a witness to such execution sworn to before any such notary or other such
officer. Where such execution is by an officer of a corporation or association
or a member of a partnership on behalf of such corporation, association or
partnership, as the case may be, or by any other person acting in a
representative capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
The record of any Holders' meeting shall be proved in the manner
provided in Section 9.06.
The Trustee may in any instance require further proof with respect
to any of the matters referred to in this Section so long as the request is a
reasonable one.
Section 8.03. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Registered Security is registered
as the owner of such Registered Security for the purpose of receiving payment of
the principal of (and premium, if any) and (subject to Section 3.07) interest,
if any, on such Registered Security and for all other purposes whatsoever,
whether or not such Registered Security be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary. The Company, the Trustee, and any agent of the Company or the
Trustee may treat the Holder of any Bearer Security or of any Coupon as the
absolute owner of such Bearer Security or Coupon for the purposes of receiving
payment thereof or on account thereof and for all other purposes whatsoever,
whether or not such Bearer Security or Coupon be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary. All payments made to any Holder, or upon his
order, shall be valid, and, to the extent of the sum or sums paid, effectual to
satisfy and discharge the liability for moneys payable upon such Debt Security
or Coupon.
Section 8.04. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the Trustee,
as provided in Section 8.01, of the taking of any Act by the Holders of the
percentage in aggregate principal amount of the Outstanding Debt Securities
specified in this Indenture in connection with such Act, any Holder of a Debt
Security the number, letter or other distinguishing symbol of which is shown by
the evidence to be included in the Debt Securities the Holders of which have
consented to such Act may, by filing written notice with the Trustee at
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the Corporate Trust Office and upon proof of ownership as provided in Section
8.02, revoke such Act so far as it concerns such Debt Security. Except as
aforesaid, any such Act taken by the Holder of any Debt Security shall be
conclusive and binding upon such Holder and, subject to the provisions of
Section 5.08, upon all future Holders of such Debt Security and all past,
present and future Holders of Coupons, if any, appertaining thereto and of any
Debt Securities and Coupons issued on transfer or in lieu thereof or in exchange
or substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon such Debt Security or Coupons or such other Debt Securities
or Coupons.
ARTICLE IX
HOLDERS' MEETINGS
Section 9.01. Purposes of Meetings.
A meeting of Holders of any or all series may be called at any time
and from time to time pursuant to the provisions of this Article Nine for any of
the following purposes:
(1) to give any notice to the Company or to the Trustee for such
series, or to give any directions to the Trustee for such series, or to
consent to the waiving of any default hereunder and its consequences, or
to take any other action authorized to be taken by Holders pursuant to any
of the provisions of Article Five;
(2) to remove the Trustee for such series and appoint a successor
Trustee pursuant to the provisions of Article Six;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.02; or
(4) to take any other action authorized to be taken by or on behalf
of the Holders of any specified aggregate principal amount of the
Outstanding Debt Securities of any one or more or all series, as the case
may be, under any other provision of this Indenture or under applicable
law.
Section 9.02. Call of Meetings by Trustee.
The Trustee for any series may at any time call a meeting of
Holders of such series to take any action specified in Section 9.01, to be held
at such time or times and at such place or places as the Trustee for such series
shall determine. Notice of every meeting of the Holders of any series, setting
forth the time and the place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be given to Holders of such series
in the manner and to the extent provided in Section 1.05. Such notice shall be
given not less than 10 days nor more than 90 days prior to the date fixed for
the meeting.
Section 9.03. Call of Meetings by Company or Holders.
In case at any time the Company, pursuant to a Board Resolution, or
the Holders of at least 10% in aggregate principal amount of the Outstanding
Debt Securities of a series or of all series, as the case may be, shall have
requested the Trustee for such series to call a meeting of Holders of any or all
such series by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the
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Trustee shall not have given the notice of such meeting within 10 days after the
receipt of such request, then the Company or such Holders may determine the time
or times and the place or places for such meetings and may call such meetings to
take any action authorized in Section 9.01, by giving notice thereof as provided
in Section 9.02.
Section 9.04. Qualifications for Voting.
To be entitled to vote at any meeting of Holders a Person shall be
(a) a Holder of a Debt Security of the series with respect to which such meeting
is being held or (b) a Person appointed by an instrument in writing as agent or
proxy by such Holder. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders shall be the Persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee for the series
with respect to which such meeting is being held and its counsel and any
representatives of the Company and its counsel.
Section 9.05. Regulations.
Notwithstanding any other provisions of this Indenture, the Trustee
for any series may make such reasonable regulations as it may deem advisable for
any meeting of Holders of such series, in regard to proof of the holding of Debt
Securities of such series and of the appointment of proxies, and in regard to
the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of such series as provided in Section 9.03, in which case
the Company or the Holders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by a majority vote of the meeting.
Subject to the provisos in the definition of "Outstanding," at any
meeting each Holder of a Debt Security of the series with respect to which such
meeting is being held or proxy therefor shall be entitled to one vote for each
$1,000 principal amount (or such other amount as shall be specified as
contemplated by Section 3.01) of Debt Securities of such series held or
represented by him; provided, however, that no vote shall be cast or counted at
any meeting in respect of any Debt Security challenged as not Outstanding and
ruled by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote other than by virtue of Outstanding Debt
Securities of such series held by him or instruments in writing duly designating
him as the person to vote on behalf of Holders of Debt Securities of such
series. Any meeting of Holders with respect to which a meeting was duly called
pursuant to the provisions of Section 9.02 or 9.03 may be adjourned from time to
time by a majority of such Holders present and the meeting may be held as so
adjourned without further notice.
Section 9.06. Voting.
The vote upon any resolution submitted to any meeting of Holders
with respect to which such meeting is being held shall be by written ballots on
which shall be subscribed the signatures of such Holders or of their
representatives by proxy and the serial number or numbers of the Debt Securities
held or represented
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by them. The permanent chairman of the meeting shall appoint two inspectors of
votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their
verified written reports in duplicate of all votes cast at the meeting. A record
in duplicate of the proceedings of each meeting of Holders shall be taken and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was transmitted as provided in Section 9.02. The
record shall show the serial numbers of the Debt Securities voting in favor of
or against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee.
Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
Section 9.07. No Delay of Rights by Meeting.
Nothing contained in this Article Nine shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to any Holder under any of the provisions of this Indenture or of the
Debt Securities of any series.
ARTICLE X
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 10.01. Company May Consolidate, etc., Only on Certain
Terms.
The Company shall not consolidate with or merge with or into or
wind up into (whether or not the Company is the surviving corporation) or sell,
assign, convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as
an entirety (the "successor corporation") shall be a corporation organized
and existing under the laws of the United States or any State or territory
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Debt Securities
and coupons, if any, and the performance of every covenant of this
Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have happened and be continuing;
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(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance, transfer or lease and such supplemental
indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with;
and
(4) such other conditions as may be specified under Section 3.01
with respect to any series of Debt Securities.
Section 10.02. Successor Corporation Substituted.
Upon any consolidation with or merger into any other corporation,
or any conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 10.01, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company herein.
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ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.01. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to
the rights of the Company and the assumption by such successor of the
covenants of the Company contained herein and in the Debt Securities
and Coupons, if any; or
(2) to add to the covenants of the Company, for the
benefit of the Holders of all or any series of Debt Securities and the
Coupons, if any, appertaining thereto (and if such covenants are to be
for the benefit of less than all series, stating that such covenants
are expressly being included solely for the benefit of such series), or
to surrender any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default (and if such
Events of Default are to be applicable to less than all series, stating
that such Events of Default are expressly being included solely to be
applicable to such series); or
(4) to add or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate
the issuance of Debt Securities of any series in bearer form,
registrable or not registrable, and with or without Coupons, to permit
Bearer Securities to be issued in exchange for Registered Securities,
to permit Bearer Securities to be issued in exchange for Bearer
Securities of other authorized denominations or to permit the issuance
of Debt Securities of any series in uncertificated form, provided that
any such action shall not adversely affect the interests of the Holders
of Debt Securities of any series or any related Coupons in any material
respect; or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Outstanding Debt Security or Coupon of
any series created prior to the execution of such supplemental
indenture which is entitled to the benefit of such provision and as to
which such supplemental indenture would apply; or
(6) to secure the Debt Securities or to provide that any
of the Company's obligations under any series of the Debt Securities
shall be guaranteed and the terms and conditions for the release or
substitution of such security or guarantee; or
(7) to supplement any of the provisions of this Indenture
to such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Article Four or Fifteen, provided that any such action shall not
adversely affect the interests of the Holders of Debt Securities of
such series or any other series of Debt Securities or any related
Coupons in any material respect; or
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(8) to establish the form or terms of Debt Securities and
Coupons, if any, of any series as permitted by Sections 2.01 and 3.01;
or
(9) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to one or
more series of Debt Securities and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 6.11; or
(10) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, to eliminate any conflict between the terms hereof
and the Trust Indenture Act or to make any other provisions with
respect to matters or questions arising under this Indenture which
shall not be inconsistent with any provision of this Indenture;
provided such other provisions shall not adversely affect the interests
of the Holders of Outstanding Debt Securities or Coupons, if any, of
any series created prior to the execution of such supplemental
indenture in any material respect.
Section 11.02. Supplemental Indentures With Consent of
Holders.
With the written consent of the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of each series
affected by such supplemental indenture voting separately, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture of such
Debt Securities and Coupons, if any; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Debt Security of each such series affected thereby,
(1) conflict with the required provisions of the Trust
Indenture Act;
(2) except as specifically provided with respect to any
series of Debt Securities pursuant to Section 3.01, (a) change the
Stated Maturity of the principal of, or installment of interest, if
any, on, any Debt Security, or reduce the principal amount thereof or
the interest thereon or any premium payable upon redemption thereof
(provided that a requirement to offer to repurchase Debt Securities
shall not be deemed a redemption for this purpose), or change the
Stated Maturity of or reduce the amount of any payment to be made with
respect to any Coupon, or change the Currency or Currencies in which
the principal of (and premium, if any) or interest on such Debt
Security is denominated or payable, or reduce the amount of the
principal of a Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
5.02, or reduce the amount of, or postpone the date fixed for, any
payment under any sinking fund or analogous provisions for any Debt
Security, or impair the right to institute suit for the enforcement of
any payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or limit the obligation
of the Company to maintain a paying agency outside the United States
for payment on Bearer Securities as provided in Section 12.03, or
adversely affect the right to convert any Debt Security into shares of
Common Stock of the Company as may be provided pursuant to Section
3.01; or
(3) reduce the percentage in principal amount of the
Outstanding Debt Securities of any series, the consent of whose Holders
is required for any supplemental indenture, or the consent of
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whose Holders is required for any waiver of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture; or
(4) modify any of the provisions of this Section, Section
5.13 or Section 12.09, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Debt Security of each series affected thereby; provided,
however, that this clause shall not be deemed to require the consent of
any Holder with respect to changes in the references to "the Trustee"
and concomitant changes in this Section and Section 12.09, or the
deletion of this proviso, in accordance with the requirements of
Sections 6.11 and 11.01(7).
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture with respect to one or more
particular series of Debt Securities and Coupons, if any, or which modifies the
rights of the Holders of Debt Securities and Coupons of such series with respect
to such covenant or other provision, shall be deemed not to affect the rights
under this Indenture of the Holders of Debt securities and Coupons, if any, of
any other series.
Section 11.03. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 6.01) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture and that the supplemental
indenture conforms to the requirements of the Trust Indenture Act as then in
effect. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which adversely affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise in a material way.
Section 11.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Debt Securities and Coupons theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
Section 11.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 11.06. Reference in Debt Securities to Supplemental
Indentures.
Debt Securities and Coupons, if any, of any series
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If
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the Company shall so determine, new Debt Securities and Coupons of any series so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Debt Securities and Coupons of such series.
Section 11.07. Notice of Supplemental Indenture.
Promptly after the execution by the Company and the
appropriate Trustee of any supplemental indenture pursuant to Section 11.02, the
Company shall transmit, in the manner and to the extent provided in Section
1.05, to all Holders of any series of the Debt Securities affected thereby, a
notice setting forth in general terms the substance of such supplemental
indenture.
ARTICLE XII
COVENANTS
Section 12.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each
series of Debt Securities and Coupons, if any, that it will duly and punctually
pay the principal of (and premium, if any) and interest on the Debt Securities
in accordance with the terms of the Debt Securities, the Coupons and this
Indenture. Unless otherwise specified as contemplated by Section 3.01 with
respect to any series of Debt Securities or except as otherwise provided in
Section 3.06, any interest due on Bearer Securities on or before Maturity shall
be payable only upon presentation and surrender of the several Coupons for such
interest installments as are evidenced thereby as they severally mature. If so
provided in the terms of any series of Debt Securities established as provided
in Section 3.01, the interest, if any, due in respect of any temporary Global
Note or permanent Global Note, together with any additional amounts payable in
respect thereof, as provided in the terms and conditions of such Debt Security,
shall be payable only upon presentation of such Debt Security to the Trustee for
notation thereon of the payment of such interest.
Section 12.02. Officer's Certificate as to Default.
Unless otherwise specifically provided for with respect to any
series of Debt Securities under Section 3.01, the Company will deliver to the
Trustee, on or before a date not more than four months after the end of each
fiscal year of the Company (which on the date hereof is the calendar year)
ending after the date hereof, a certificate of the principal executive officer,
principal financial officer or principal accounting officer of the Company
stating whether or not to the best knowledge of the signer thereof the Company
is in compliance with all covenants and conditions under this Indenture, and, if
the Company shall be in default, specifying all such defaults and the nature
thereof of which such signer may have knowledge. For purposes of this Section,
such compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Indenture.
Section 12.03. Maintenance of Office or Agency.
If Debt Securities of a series are issuable only as Registered
Securities, the Company will maintain in each Place of Payment for such series
an office or agency where Debt Securities of that series may be presented or
surrendered for payment, where Debt Securities of that series may be surrendered
for
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registration of transfer or exchange, where Debt Securities of that series that
are convertible may be surrendered for conversion, if applicable, and where
notices and demands to or upon the Company in respect of the Debt Securities of
that series and this Indenture may be served. If Debt Securities of a series are
issuable as Bearer Securities, the Company will maintain (A) in the Borough of
Manhattan, The City and State of New York, an office or agency where any
Registered Securities of that series may be presented or surrendered for
payment, where any Registered Securities of that series may be surrendered for
registration of transfer, where Debt Securities of that series may be
surrendered for exchange or redemption, where notices and demands to or upon the
Company in respect of the Debt Securities of that series and this Indenture may
be served and where Bearer Securities of that series and related Coupons may be
presented or surrendered for payment in the circumstances described in the
following paragraph (and not otherwise), (B) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series which is located
outside the United States, an office or agency where Debt Securities of that
series and related Coupons may be presented and surrendered for payment
(including payment of any additional amounts payable on Debt Securities of that
series, if so provided pursuant to Section 3.01); provided, however, that if the
Debt Securities of that series are listed on The Stock Exchange of the United
Kingdom and the Republic of Ireland, the Luxembourg Stock Exchange or any other
stock exchange located outside the United States and such stock exchange shall
so require, the Company will maintain a Paying Agent for the Debt Securities of
that series in London, Luxembourg or any other required city located outside the
United States, as the case may be, so long as the Debt Securities of that series
are listed on such exchange, and (C) subject to any laws or regulations
applicable thereto, in a Place of Payment for that series located outside the
United States an office or agency where any Registered Securities of that series
may be surrendered for registration of transfer, where Debt Securities of that
series may be surrendered for exchange or redemption and where notices and
demands to or upon the Company in respect of the Debt Securities of that series
and this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency.
No payment of principal, premium or interest on Bearer
Securities shall be made at any office or agency of the Company in the United
States or by check mailed to any address in the United States or by transfer to
an account maintained with a bank located in the United States; provided,
however, that, if the Debt Securities of a series are denominated and payable in
Dollars, payment of principal of and any premium and interest on any Bearer
Security (including any additional amounts payable on Securities of such series,
if so provided pursuant to Section 3.01) shall be made at the office of the
Company's Paying Agent in the Borough of Manhattan, The City and State of New
York, if (but only if) payment in Dollars of the full amount of such principal,
premium, interest or additional amounts, as the case may be, at all offices or
agencies outside the United States maintained for the purpose by the Company in
accordance with this Indenture is illegal or effectively precluded by exchange
controls or other similar restrictions.
The Company may also from time to time designate different or
additional offices or agencies to be maintained for such purposes (in or outside
of such Place of Payment), and may from time to time rescind any such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligations described in the preceding
paragraph. The Company will give prompt written notice to the Trustee of any
such additional designation or rescission of designation and any change in the
location of any such different or additional office or agency.
Section 12.04. Money for Debt Securities; Payments To Be Held
in Trust.
If the Company shall at any time act as its own Paying Agent
with respect to any series of Debt Securities and Coupons, if any, it will, on
or before each due date of the principal of (and premium, if any) or interest on
any of the Debt Securities of such series, segregate and hold in trust for the
benefit of the
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Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided, and will promptly notify the
Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents with
respect to any series of Debt Securities and Coupons, it will, by 10:00 a.m.
(New York City time) or on each due date of the principal (and premium, if any)
or interest on any Debt Securities of such series, deposit with any such Paying
Agent a sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto, and (unless any such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its action or failure so to act.
Notwithstanding any term herein to the contrary, in no
instance shall the Trustee be under any duty or obligation (i) to maintain any
office or to act in any capacity as an agent for any purpose under this
Indenture (or any supplement hereto) outside the United States, or (ii) to act
as a Paying Agent in respect of any currency other than Dollars.
The Company will cause each Paying Agent with respect to any
series of Debt Securities other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Debt Securities of
such series in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of
as herein provided;
(2) give the Trustee notice of any default by the Company
(or any other obligor upon the Debt Securities of such series) in the
making of any payment of principal (and premium, if any) or interest on
the Debt Securities of such series; and
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any Debt Security of any series and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company upon Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Debt Security or Coupon shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be transmitted in the
manner and to the extent provided by Section 1.05, notice that such money
remains unclaimed and that, after a date specified therein,
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which shall not be less than 30 days from the date of such notification, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 12.05. Corporate Existence.
Subject to Article Ten, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such right or
franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.
Section 12.06. Purchase of Debt Securities by Company.
If the Debt Securities of a series are listed on The Stock
Exchange of the United Kingdom and the Republic of Ireland and such stock
exchange shall so require, the Company will not purchase any Debt Securities of
that series by private treaty at a price (exclusive of expenses and accrued
interest) which exceeds 120% of the mean of the nominal quotations of the Debt
Securities of that series as shown in The Stock Exchange Daily Official List for
the last trading day preceding the date of purchase.
Section 12.07. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision or condition set forth in Sections 12.05, 12.07 and 12.08
(and, if so specified pursuant to Section 3.01, any other covenant not set forth
herein and specified pursuant to Section 3.01 to be applicable to the Securities
of any series, except as otherwise provided pursuant to Section 3.01) with
respect to the Debt Securities of any series if before the time for such
compliance the Holders of at least a majority in principal amount of the
Outstanding Debt Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent expressly so waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
ARTICLE XIII
REDEMPTION OF DEBT SECURITIES
Section 13.01. Applicability of Article.
Debt Securities of any series which are redeemable before their
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified pursuant to Section 3.01 for Debt Securities of any series)
in accordance with this Article.
Section 13.02. Election to Redeem; Notice to Trustee.
The election of the Company to redeem (or, in the case of Discount
Securities, to permit the Holders to elect to surrender for redemption) any Debt
Securities shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company of less than all of the Debt Securities of any
series
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pursuant to Section 13.03, the Company shall, at least 30 days before the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Debt Securities of such series to be redeemed. In the
case of any redemption of Debt Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Debt Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restrictions.
Section 13.03. Selection by Trustee of Debt Securities to Be
Redeemed.
Except in the case of a redemption in whole of the Bearer
Securities or the Registered Securities of such series, if less than all the
Debt Securities of any series are to be redeemed at the election of the Company,
the particular Debt Securities to be redeemed shall be selected not more than 60
days prior to the Redemption Date by the Trustee, from the Outstanding Debt
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Debt Securities of such series or any integral multiple
thereof) of the principal amount of Debt Securities of such series in a
denomination larger than the minimum authorized denomination for Debt Securities
of such series pursuant to Section 3.02 in the Currency in which the Debt
Securities of such series are denominated. The portions of the principal amount
of Debt Securities so selected for partial redemption shall be equal to the
minimum authorized denominations for Debt Securities of such series pursuant to
Section 3.02 in the Currency in which the Debt Securities of such series are
denominated or any integral multiple thereof, except as otherwise set forth in
the applicable form of Debt Securities. In any case when more than one
Registered Security of such series is registered in the same name, the Trustee
in its discretion may treat the aggregate principal amount so registered as if
it were represented by one Registered Security of such series.
The Trustee shall promptly notify the Company in writing of
the Debt Securities selected for redemption and, in the case of any Debt
Securities selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Debt Securities
shall relate, in the case of any Debt Security redeemed or to be redeemed only
in part, to the portion of the principal amount of such Debt Security which has
been or is to be redeemed.
Section 13.04. Notice of Redemption.
Notice of redemption shall be given by the Company, or at the
Company's request, by the Trustee in the name and at the expense of the Company,
not less than 30 days and not more than 60 days prior to the Redemption Date to
the Holders of Debt Securities of any series to be redeemed in whole or in part
pursuant to this Article Thirteen, in the manner provided in Section 1.05. Any
notice so given shall be conclusively presumed to have been duly given, whether
or not the Holder receives such notice. Failure to give such notice, or any
defect in such notice to the Holder of any Debt Security of a series designated
for redemption, in whole or in part, shall not affect the sufficiency of any
notice of redemption with respect to the Holder of any other Debt Security of
such series.
All notices of redemption shall state:
(1) the Redemption Date,
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(2) the Redemption Price,
(3) that Debt Securities of such series are being
redeemed by the Company pursuant to provisions contained in this
Indenture or the terms of the Debt Securities of such series or a
supplemental indenture establishing such series, if such be the case,
together with a brief statement of the facts permitting such
redemption,
(4) if less than all Outstanding Debt Securities of any
series are to be redeemed, the identification (and, in the case of
partial redemption, the principal amounts) of the particular Debt
Securities to be redeemed,
(5) that on the Redemption Date the Redemption Price will
become due and payable upon each such Debt Security to be redeemed, and
that interest thereon, if any, shall cease to accrue on and after said
date,
(6) that, unless otherwise specified in such notice,
Coupon Securities of any series, if any, surrendered for redemption
must be accompanied by all Coupons maturing subsequent to the date
fixed for redemption, failing which the amount of any such missing
Coupon or Coupons will be deducted from the Redemption Price,
(7) the Place or Places of Payment where such Debt
Securities are to be surrendered for payment of the Redemption Price,
(8) if Bearer Securities of any series are to be redeemed
and any Registered Securities of such series are not to be redeemed,
and if such Bearer Securities may be exchanged for Registered
Securities not subject to redemption on this Redemption Date pursuant
to Section 3.05(b) or otherwise, the last date on which such exchanges
may be made, and
(9) that the redemption is for a sinking fund, if such is
the case.
Section 13.05. Deposit of Redemption Price.
On or prior to 10:00 a.m. (New York City time) on the
Redemption Date for any Debt Securities, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 12.04) an amount of
money in the Currency or Currencies in which such Debt Securities are
denominated (except as provided pursuant to Section 3.01) sufficient to pay the
Redemption Price of such Debt Securities or any portions thereof which are to be
redeemed on that date.
Section 13.06. Debt Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, any Debt
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price in the Currency in which the Debt Securities of
such series are payable (except as otherwise specified pursuant to Section 3.01
or 3.10), and from and after such date (unless the Company shall default in the
payment of the Redemption Price) such Debt Securities shall cease to bear
interest. Upon surrender of any such Debt Security for redemption in accordance
with said notice, such Debt Security shall be paid by the Company at the
Redemption Price; provided, however, that installments of interest on Bearer
Securities whose Stated Maturity is on or prior to the Redemption Date
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shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 12.03) and, unless otherwise specified
as contemplated by Section 3.01, only upon presentation and surrender of Coupons
for such interest; and provided, further, that, unless otherwise specified as
contemplated by Section 3.01, installments of interest on Registered Securities
which have a Stated Maturity on or prior to the Redemption Date for such Debt
Securities shall be payable according to the terms of such Debt Securities and
the provisions of Section 3.07.
If any Debt Security called for redemption shall not be so
paid upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Debt Security.
If any Coupon Security surrendered for redemption shall not be
accompanied by all Coupons appertaining thereto maturing on or after the
Redemption Date, the Redemption Price for such Coupon Security may be reduced by
an amount equal to the face amount of all such missing Coupons. If thereafter
the Holder of such Coupon shall surrender to any Paying Agent outside the United
States any such missing Coupon in respect of which a deduction shall have been
made from the Redemption Price, such Holder shall be entitled to receive the
amount so deducted. The surrender of such missing Coupon or Coupons may be
waived by the Company and the Trustee, if there be furnished to them such
security or indemnity as they may require to save each of them and any Paying
Agent harmless.
Section 13.07. Debt Securities Redeemed in Part.
Any Debt Security which is to be redeemed only in part shall
be surrendered at the Corporate Trust Office or such other office or agency of
the Company as is specified pursuant to Section 3.01 (in the case of Registered
Securities) and at an office of the Trustee, or at such other office or agency
of the Company outside the United States as is specified pursuant to Section
3.01 (in the case of Bearer Securities) with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing, and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Debt Security without service
charge, a new Debt Security or Debt Securities of the same series, of like tenor
and form, of any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Debt Security so surrendered, and, in the case of a
Coupon Security, with appropriate Coupons attached. In the case of a Debt
Security providing appropriate space for such notation, at the option of the
Holder thereof, the Trustee, in lieu of delivering a new Debt Security or Debt
Securities as aforesaid, may make a notation on such Debt Security of the
payment of the redeemed portion thereof.
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ARTICLE XIV
SINKING FUNDS
Section 14.01. Applicability of Article.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of Debt Securities of a series except as
otherwise specified pursuant to Section 3.01 for Debt Securities of such series.
The minimum amount of any sinking fund payment provided for by
the terms of Debt Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount provided
for by the terms of Debt Securities of any series is herein referred to as an
"optional sinking fund payment." If provided for by the terms of Debt Securities
of any series, the amount of any cash sinking fund payment may be subject to
reduction as provided in Section 14.02. Each sinking fund payment shall be
applied to the redemption of Debt Securities of any series as provided for by
the terms of Debt Securities of such series.
Section 14.02. Satisfaction of Mandatory Sinking Fund
Payments with Debt Securities.
In lieu of making all or any part of a mandatory sinking fund
payment with respect to any Debt Securities of a series in cash, the Company may
at its option, at any time no more than sixteen months and no less than 45 days
prior to the date on which such sinking fund payment is due, deliver to the
Trustee Debt Securities of such series (together with the unmatured Coupons, if
any, appertaining thereto) theretofore purchased or otherwise acquired by the
Company, except Debt Securities of such series which have been redeemed through
the application of mandatory sinking fund payments pursuant to the terms of the
Debt Securities of such series, accompanied by a Company Order instructing the
Trustee to credit such obligations and stating that the Debt Securities of such
series were originally issued by the Company by way of bona fide sale or other
negotiation for value, provided that such Debt Securities shall not have been
previously so credited. Such Debt Securities shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in such Debt
Securities for redemption through operation of the sinking fund and the amount
of such mandatory sinking fund payment shall be reduced accordingly.
Section 14.03. Redemption of Debt Securities for Sinking
Fund.
Not less than 60 days prior to each sinking fund payment date
for any series of Debt Securities (unless a shorter period shall be satisfactory
to the Trustee), the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash in the Currency or Currencies in
which the Debt Securities of such series are denominated (except as provided
pursuant to Section 3.01) and the portion thereof, if any, which is to be
satisfied by delivering and crediting Debt Securities of such series pursuant to
Section 14.02 and whether the Company intends to exercise its rights to make a
permitted optional sinking fund payment with respect to such series. Such
certificate shall be irrevocable and upon its delivery the Company shall be
obligated to make the cash payment or payments therein referred to, if any, on
or before the next succeeding sinking fund payment date. In the case of the
failure of the Company to deliver such certificate, the sinking fund payment due
on the next succeeding sinking fund payment date for such series shall be paid
entirely in cash and shall be sufficient to redeem the principal amount of the
Debt Securities of such series subject to a mandatory sinking fund payment
without the right to deliver or credit
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Debt Securities as provided in Section 14.02 and without the right to make any
optional sinking fund payment with respect to such series at such time.
Any sinking fund payment or payments (mandatory or optional)
made in cash plus any unused balance of any preceding sinking fund payments made
with respect to the Debt Securities of any particular series shall be applied by
the Trustee (to the extent it is acting as a Paying Agent with respect to
Dollars) or other Paying Agent appointed by the Company (or by the Company if
the Company is acting as its own Paying Agent) on the sinking fund payment date
on which such payment is made (or, if such payment is made before a sinking fund
payment date, on the sinking fund payment date immediately following the date of
such payment) to the redemption of Debt Securities of such series at the
Redemption Price specified in such Debt Securities with respect to the sinking
fund. Any sinking fund moneys not so applied or allocated by the Trustee (to the
extent it is acting as a Paying Agent with respect to Dollars) or other Paying
Agent appointed by the Company (or by the Company if the Company is acting as
its own Paying Agent) to the redemption of Debt Securities shall be added to the
next sinking fund payment received by the Trustee (to the extent it is acting as
a Paying Agent with respect to Dollars) or other Paying Agent appointed by the
Company (or if the Company is acting as its own Paying Agent, segregated and
held in trust as provided in Section 12.04) for such series and, together with
such payment (or such amount so segregated) shall be applied in accordance with
the provisions of this Section. Any and all sinking fund moneys with respect to
the Debt Securities of any particular series held by the Trustee (to the extent
it is acting as a Paying Agent with respect to Dollars) or other Paying Agent
appointed by the Company (or if the Company is acting as its own Paying Agent,
segregated and held in trust as provided in Section 12.04) on the last sinking
fund payment date with respect to Debt Securities of such series and not held
for the payment or redemption of particular Debt Securities of such series shall
be applied by the Trustee (to the extent it is acting as a Paying Agent with
respect to Dollars) or other Paying Agent appointed by the Company (or by the
Company if the Company is acting as its own Paying Agent), together with other
moneys, if necessary, to be deposited (or segregated) sufficient for the
purpose, to the payment of the principal of the Debt Securities of such series
at Maturity.
The Trustee shall select or cause to be selected the Debt
Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 13.03 and the Company shall cause notice of the redemption
thereof to be given in the manner provided in Section 13.04. Such notice having
been duly given, the redemption of such Debt Securities shall be made upon the
terms and in the manner stated in Section 13.06.
On or before 10:00 a.m. (New York City time) on each sinking
fund payment date, the Company shall pay to the Trustee (to the extent it is
acting as a Paying Agent with respect to Dollars) or other Paying Agent
appointed by the Company (or, if the Company is acting as its own Paying Agent,
the Company shall segregate and hold in trust as provided in Section 12.04) in
cash a sum, in the Currency or Currencies in which Debt Securities of such
series are denominated (except as provided pursuant to Sections 3.01 or 3.10),
equal to the principal and any interest accrued to the Redemption Date for Debt
Securities or portions thereof to be redeemed on such sinking fund payment date
pursuant to this Section.
Neither the Trustee, any Paying Agent nor the Company shall
redeem any Debt Securities of a series with sinking fund moneys or mail any
notice of redemption of Debt Securities of such series by operation of the
sinking fund for such series during the continuance of a default in payment of
interest, if any, on any Debt Securities of such series or of any Event of
Default (other than an Event of Default occurring as a consequence of this
paragraph) with respect to the Debt Securities of such series, except that if
the notice of redemption shall have been provided in accordance with the
provisions hereof, the Trustee or applicable Paying Agent (or the Company, if
the Company is then acting as its own Paying Agent) shall redeem such Debt
Securities if cash sufficient for that purpose shall be deposited with the
Trustee or such other Paying Agent as
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provided above (or segregated by the Company) for that purpose in accordance
with the terms of this Article. Except as aforesaid, any moneys in the sinking
fund for such series at the time when any such default or Event of Default shall
occur and any moneys thereafter paid into such sinking fund shall, during the
continuance of such default or Event of Default, be held as security for the
payment of the Debt Securities and Coupons, if any, of such series; provided,
however, that in case such default or Event of Default shall have been cured or
waived as provided herein, such moneys shall thereafter be applied on or prior
to the next sinking fund payment date for the Debt Securities of such series on
which such moneys may be applied pursuant to the provisions of this Section.
ARTICLE XV
DEFEASANCE
Section 15.01. Applicability of Article.
If, pursuant to Section 3.01, provision is made for the
defeasance of Debt Securities of a series, and if the Debt Securities of such
series are Registered Securities and denominated and payable only in Dollars
(except as provided pursuant to Section 3.01 and subject to the proviso in the
last sentence of this paragraph) then the provisions of this Article shall be
applicable except as otherwise specified pursuant to Section 3.01 for Debt
Securities of such series. Defeasance provisions, if any, for Debt Securities
denominated and/or payable in a Foreign Currency or Currencies or for Bearer
Securities may be specified pursuant to Section 3.01; provided, however, that
nothing herein or therein shall obligate the Trustee (without its consent, at
its sole option) to hold or maintain any account, or act as Paying Agent with
respect to, any Foreign Currency or Currencies.
Section 15.02. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations.
At the Company's option, either (a) the Company shall be
deemed to have been Discharged (as defined below) from its obligations with
respect to Debt Securities of any series ("legal defeasance option") or (b) the
Company shall cease to be under any obligation to comply with any term,
provision or condition set forth in Section 10.01 with respect to Debt
Securities of any series (and, if so specified pursuant to Section 3.01, any
other obligation of the Company or restrictive covenant added for the benefit of
such series pursuant to Section 3.01) ("covenant defeasance option") at any time
after the applicable conditions set forth below have been satisfied:
(1) the Company shall have deposited or caused to be
deposited irrevocably with the Trustee as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of the Debt Securities of such series (i) money
in an amount, or (ii) U.S. Government Obligations (as defined below)
which through the payment of interest and principal in respect thereof
in accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount, or (iii) a
combination of (i) and (ii), sufficient, in the opinion (with respect
to (i) and (ii)) of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge each installment of principal
(including any mandatory sinking fund payments) of and premium, if any,
and interest on, the Outstanding Debt Securities of such series on the
dates such installments of interest or principal and premium are due;
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(2) such deposit shall not cause the Trustee with respect
to the Debt Securities of that series to have a conflicting interest as
defined in Section 6.08 and for purposes of the Trust Indenture Act
with respect to the Debt Securities of any series;
(3) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other
agreement or instrument to which the Company is a party or by which it
is bound;
(4) if the Debt Securities of such series are then listed
on any national securities exchange, the Company shall have delivered
to the Trustee an Opinion of Counsel or a letter or other document from
such exchange to the effect that the Company's exercise of its option
under this Section would not cause such Debt Securities to be delisted;
(5) no Event of Default or event (including such deposit)
which, with notice or lapse of time or both, would become an Event of
Default with respect to the Debt Securities of such series shall have
occurred and be continuing on the date of such deposit and, with
respect to the legal defeasance option only, no Event of Default under
Section 5.01(7) or Section 5.01(8) or event which with the giving of
notice or lapse of time, or both, would become an Event of Default
under Section 5.01(7) or Section 5.01(8) shall have occurred and be
continuing on the 91st day after such date; and
(6) the Company shall have delivered to the Trustee an
Opinion of Counsel or a ruling from the Internal Revenue Service to the
effect that the Holders of the Debt Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a
result of such deposit, defeasance or Discharge.
Notwithstanding the foregoing, if the Company exercises its covenant defeasance
option and an Event of Default under Section 5.01(7) or Section 5.01(8) or event
which with the giving of notice or lapse of time, or both, would become an Event
of Default under Section 5.01(7) or Section 5.01(8) shall have occurred and be
continuing on the 91st day after the date of such deposit, the obligations of
the Company referred to under the definition of covenant defeasance option with
respect to such Debt Securities shall be reinstated.
"Discharged" means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by, and obligations
under, the Debt Securities of such series and to have satisfied all the
obligations under this Indenture relating to the Debt Securities of such series
(and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except (A) the rights of Holders of Debt
Securities of such series to receive, from the trust fund described in clause
(1) above, payment of the principal of (and premium, if any) and interest on
such Debt Securities when such payments are due, (B) the Company's obligations
with respect to the Debt Securities of such series under Sections 3.04, 3.05,
3.06, 12.03 and 15.03 and (C) the rights, powers, trusts, duties and immunities
of the Trustee hereunder.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States for the payment of which its full faith
and credit is pledged, or (ii) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States the payment
of which is unconditionally guaranteed as a full faith and credit obligation by
the United States, which, in either case under clauses (i) or (ii), are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligation or a specific payment of interest
on or principal of any such U.S. Government Obligation held by such custodian
for the account of the holder of a depository receipt; provided that (except as
required by law)
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such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.
Section 15.03. Deposited Moneys and U.S. Government
Obligations to Be Held in Trust.
All moneys and U.S. Government Obligations deposited with the
Trustee pursuant to Section 15.02 in respect of Debt Securities of a series
shall be held in trust and applied by it, in accordance with the provisions of
such Debt Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Debt Securities, of all
sums due and to become due thereon for principal (and premium, if any) and
interest, if any, but such money need not be segregated from other funds except
to the extent required by law.
Section 15.04. Repayment to Company.
The Trustee and any Paying Agent shall promptly pay
or return to the Company upon Company Request any moneys or U.S. Government
Obligations held by them at any time that are not required for the payment of
the principal of (and premium, if any) and interest on the Debt Securities of
any series for which money or U.S. Government Obligations have been deposited
pursuant to Section 15.02.
The provisions of the last paragraph of Section 12.04 shall
apply to any money held by the Trustee or any Paying Agent under this Article
that remains unclaimed for two years after the Maturity of any series of Debt
Securities for which money or U.S. Government Obligations have been deposited
pursuant to Section 15.02.
ARTICLE XVI
CONVERSION
Section 16.01. Applicability; Conversion Privilege.
Except as otherwise specified pursuant to Section 3.01 for
Debt Securities of any series, the provisions of this Article Sixteen shall be
applicable to any Debt Securities that are convertible into Common Stock. If so
provided pursuant to Section 3.01 with respect to the Debt Securities of any
series, the Holder of a Debt Security of such series shall have the right, at
such Holder's option, to convert, in accordance with the terms of such series of
Debt Securities and this Article Sixteen, all or any part (in a denomination of,
unless otherwise specified pursuant to Section 3.01 with respect to Securities
of such series, $1,000 in principal amount or any integral multiple thereof) of
such Debt Security into shares of Common Stock or, as to any Debt Securities
called for redemption, at any time prior to the time and date fixed for such
redemption (unless the Company shall default in the payment of the Redemption
Price, in which case such right shall not terminate at such time and date).
Section 16.02. Conversion Procedure; Conversion Price;
Fractional Shares.
(a) Each Debt Security to which this Article is
applicable shall be convertible at the office of the Conversion Agent, and at
such other place or places, if any, specified in pursuant to Section 3.01 with
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respect to the Debt Securities of such series, into fully paid and nonassessable
shares (calculated to the nearest 1/100th of a share) of Common Stock. The Debt
Securities will be converted into shares of Common Stock at the Conversion Price
therefor. No payment or adjustment shall be made in respect of dividends on the
Common Stock or accrued interest on a converted Debt Security except as
described in Section 16.09. The Company may, but shall not be required, in
connection with any conversion of Debt Securities, to issue a fraction of a
share of Common Stock and, if the Company shall determine not to issue any such
fraction, the Company shall, subject to Section 16.03(4), make a cash payment
(calculated to the nearest cent) equal to such fraction multiplied by the
Closing Price of the Common Stock on the last Trading Day prior to the date of
conversion.
(b) Before any Holder of a Debt Security shall be
entitled to convert the same into Common Stock, such Holder shall surrender such
Debt Security duly endorsed to the Company or in blank, or, in the case of
Bearer Securities, together with all unmatured Coupons and any matured Coupons
in default attached thereto, at the office of the Conversion Agent or at such
other place or places, if any, specified pursuant to Section 3.01 (in the case
of Registered Securities) and at an office of the Conversion Agent or at such
other place or places, if any, outside of the United States as is specified
pursuant to Section 3.01 (in the case of Bearer Securities), and shall give
written notice to the Company at said office or place that he elects to convert
the same and shall state in writing therein the principal amount of Debt
Securities to be converted and the name or names (with addresses) in which he
wishes the certificate or certificates for Common Stock to be issued; provided,
however, that no Debt Security or portion thereof shall be accepted for
conversion unless the principal amount of such Debt Security or such portion,
when added to the principal amount of all other Debt Securities or portions
thereof then being surrendered by the Holder thereof for conversion, exceeds the
then effective Conversion Price with respect thereto. If the Holder of a Bearer
Security is unable to produce any such unmatured Coupon or Coupons or matured
Coupon or Coupons in default, such conversion may be effected if the Bearer
Securities to be surrendered for conversion are accompanied by payment in funds
acceptable to the Company in an amount equal to the face amount of such missing
Coupon or Coupons, or the surrender of such missing Coupon or Coupons may be
waived by the Company and the Trustee if there is furnished to them such
security or indemnity as they may require to save each of them and any Paying
Agent harmless. If thereafter the Holder of such Bearer Security shall surrender
to any Paying Agent any such missing Coupon in respect of which such a payment
shall have been made, such Holder shall be entitled to receive the amount of
such payment; provided, however that except as otherwise provided in Section
12.03, interest represented by Coupons shall be payable only upon presentation
and surrender of those Coupons at an office or agency located outside the United
States. If more than one Debt Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares of Common Stock which
shall be deliverable upon conversion shall be computed on the basis of the
aggregate principal amount of the Debt Securities (or specified portions thereof
to the extent permitted thereby) so surrendered. Subject to the next succeeding
sentence, the Company will, as soon as practicable thereafter, issue and deliver
at said office or place to such Holder of a Debt Security, or to his nominee or
nominees, certificates for the number of full shares of Common Stock to which he
shall be entitled as aforesaid, together, subject to the last sentence of
paragraph (a) above, with cash in lieu of any fraction of a share to which he
would otherwise be entitled. The Company shall not be required to deliver
certificates for shares of Common Stock while the stock transfer books for such
stock or the Security Register are duly closed for any purpose, but certificates
for shares of Common Stock shall be issued and delivered as soon as practicable
after the opening of such books or Security Register. A Debt Security shall be
deemed to have been converted as of the close of business on the date of the
surrender of such Debt Security for conversion as provided above, and the Person
or Persons entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record Holder or Holders of such Common
Stock as of the close of business on such date. In case any Debt Security shall
be surrendered for partial conversion, the Company shall execute and the Trustee
shall authenticate and deliver
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to or upon the written order of the Holder of the Debt Securities so
surrendered, without charge to such Holder (subject to the provisions of Section
16.08), a new Debt Security or Securities in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Debt Security.
Section 16.03. Adjustment of Conversion Price for Common
Stock.
The Conversion Price with respect to any Debt Security which
is convertible into Common Stock shall be adjusted from time to time as follows:
(1) In case the Company shall, at any time or from time
to time while any of such Debt Securities are outstanding, (i) pay a
dividend in shares of its Common Stock to holders of Common Stock, (ii)
combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock, (iii) subdivide its outstanding shares of
Common Stock into a greater number of shares of Common Stock or (iv)
make a distribution in shares of Common Stock to holders of Common
Stock, then the Conversion Price in effect immediately before such
action shall be adjusted so that the Holders of such Debt Securities,
upon conversion thereof into Common Stock immediately following such
event, shall be entitled to receive the kind and amount of shares of
capital stock of the Company which they would have owned or been
entitled to receive upon or by reason of such event if such Debt
Securities had been converted immediately before the record dated (or,
if no record date, the effective date) for such event. An adjustment
made pursuant to this Section 16.03(1) shall become effective
retroactively immediately after the record date in the case of a
dividend or distribution and shall become effective retroactively
immediately after the effective date in the case of a subdivision or
combination. For the purposes of this Section 16.03(1), each Holder of
Debt Securities shall be deemed to have failed to exercise any right to
elect the kind or amount of securities receivable upon the payment of
any such dividend, subdivision, combination or distribution (provided
that if the kind or amount of securities receivable upon such dividend,
subdivision, combination or distribution is not the same for each
nonelecting share, then the kind and amount of securities or other
property receivable upon such dividend, subdivision, combination or
distribution for each nonelecting share shall be deemed to be the kind
and amount so receivable per share by a plurality of the nonelecting
shares).
(2) In case the Company shall, at any time or from time
to time while any of such Debt Securities are outstanding, issue rights
or warrants to all holders of shares of its Common Stock entitling them
(for a period expiring within 45 days after the record date for such
issuance) to subscribe for or purchase shares of Common Stock (or
securities convertible into shares of Common Stock) at a price per
share less than the Current Market Price of the Common Stock at such
record date (treating the price per share of the securities convertible
into Common Stock as equal to (x) the sum of (i) the price for a unit
of the security convertible into Common Stock and (ii) any additional
consideration initially payable upon the conversion of such security
into Common Stock divided by (y) the number of shares of Common Stock
initially underlying such convertible security), the Conversion Price
with respect to such Debt Securities shall be adjusted so that it shall
equal the price determined by dividing the Conversion Price in effect
immediately prior to the date of issuance of such rights or warrants by
a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered
for subscription or purchase (or into which the convertible securities
so offered are initially convertible), and the denominator of which
shall be the number of shares of Common Stock outstanding on the date
of issuance of securities which the aggregate offering price of the
total number of shares of securities so offered for subscription or
purchase (or the aggregate purchase price of the convertible securities
so offered plus the aggregate amount of any additional
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<PAGE> 94
consideration initially payable upon conversion of such securities into
Common Stock) would purchase at such Current Market Price of the Common
Stock. Such adjustment shall become effective retroactively immediately
after the record date for the determination of stockholders entitled to
receive such rights or warrants.
(3) In the case the Company shall, at any time or from
time to time while any of such Debt Securities are outstanding,
distribute to all holders of shares of its Common Stock (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation and the Common Stock is
not changed or exchanged) cash, evidences of its indebtedness,
securities or assets (excluding (i) regular periodic cash dividends in
amounts, if any, determined from time to time by the Board of
Directors, (ii) dividends payable in shares of Common Stock for which
adjustment is made under Section 16.03(1) or (iii) rights or warrants
to subscribe for or purchase securities of the Company (excluding those
referred to in Section 16.03(2))), then in each such case the
Conversion Price with respect to such Debt Securities determined by
dividing the Conversion Price in effect immediately prior to the date
of such distribution by a fraction, the numerator of which shall be the
Current Market Price of the Common Stock on the record date referred to
below, and the denominator of which shall be such Current Market Price
of the Common Stock less the then fair market value (as determined by
the Board of Directors of the Company, whose determination shall be
conclusive) of the portion of the cash or assets or evidences of
indebtedness or securities so distributed or of such subscription
rights or warrants applicable to one share of Common Stock (provided
that such denominator shall never be less than 1.0); provided however,
that no adjustment shall be made with respect to any distribution of
rights to purchase securities of the Company if a Holder of Debt
Securities would otherwise be entitled to receive such rights upon
conversion at any time of such Debt Securities into Common Stock unless
such rights are subsequently redeemed by the Company, in which case
such redemption shall be treated for purposes of this section as a
dividend on the Common Stock. Such adjustment shall become effective
retroactively immediately after the record date for the determination
of stockholders entitled to receive such distribution; and in the event
that such distribution is not so made, the Conversion Price shall again
be adjusted to the Conversion Price which would then be in effect if
such record date had not been fixed.
(4) The Company shall be entitled to make such additional
adjustments in the Conversion Price, in addition to those required by
subsections 16.03(1), 16.03(2), and 16.03(03), as shall be necessary in
order that any dividend or distribution of Common Stock, any
subdivision, reclassification or combination of shares of Common Stock
or any issuance of rights or warrants referred to above shall not be
taxable to the holders of Common Stock for United States Federal income
tax purposes.
(5) In any case in which this Section 16.03 shall require
that any adjustment be made effective as of or retroactively
immediately following a record date, the Company may elect to defer
(but only for five (5) Trading Days following the filing of the
statement referred to in Section 16.05) issuing to the Holder of any
Debt Securities converted after such record date the shares of Common
Stock and other capital stock of the Company issuable upon such
conversion over and above the shares of Common Stock and other capital
stock of the Company issuable upon such conversion on the basis of the
Conversion Price prior to adjustment; provided, however, that the
Company shall deliver to such Holder a due bill or other appropriate
instrument evidencing such Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(6) All calculations under this Section 16.03 shall be
made to the nearest cent or one-hundredth of a share of security, with
one-half cent and 0.005 of a share, respectively, being rounded
87
<PAGE> 95
upward. Notwithstanding any other provision of this Section 16.03, the
Company shall not be required to make any adjustment of the Conversion
Price unless such adjustment would require an increase or decrease of
at least 1% of such price. Any lessor adjustment shall be carried
forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment or
adjustments so carried forward, shall amount to an increase or decrease
of at least 1% in such price. Any adjustments under this Section 16.03
shall be made successively whenever an event requiring such an
adjustment occurs.
(7) In the event that at any time, as a result of an
adjustment made pursuant to this Section 16.03, the Holder of any Debt
Security thereafter surrendered for conversion shall become entitled to
receive any shares of stock of the Company other than shares of Common
Stock into which the Debt Securities originally were convertible, the
Conversion Price of such other shares so receivable upon conversion of
any such Debt Security shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in subparagraphs (1)
through (6) of this Section 16.03, and the provisions of Sections
16.01, 16.02 and 16.04 through 16.09 with respect to the Common Stock
shall apply on like or similar terms to any such other shares and the
determination of the Board of Directors as to any such adjustment shall
be conclusive.
(8) No adjustment shall be made pursuant to this Section:
(i) if the effect thereof would be to reduce the Conversion Price below
the par value (if any) of the Common Stock or (ii) subject to 16.03(5)
hereof, with respect to any Debt Security that is converted prior to
the time such adjustment otherwise would be made.
Section 16.04 Consolidation or Merger of the Company.
In case of either (a) any consolidation or merger to which the
Company is a party, other than a merger or consolidation in which the company is
the surviving or continuing corporation and which does not result in a
reclassification of, or change (other than a change in par value or from par
value to no par value or from no par value to par value, as a result of a
subdivision or combination) in, outstanding shares of Common Stock or (b) any
sale or conveyance of all or substantially all of the property and assets of the
Company to another Person, then each Debt Security then outstanding shall be
convertible from and after such merger, consolidation, sale or conveyance of
property and assets into the kind and amount of shares of stock or other
securities and property (including cash) receivable upon such consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
into which such Debt Securities would have been converted immediately prior to
such consolidation, merger, sale or conveyance, subject to adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article Sixteen (and assuming such holder of Common Stock failed to
exercise his rights of election, if any, as to the kind or amount of securities,
cash or other property (including cash) receivable upon such consolidation,
merger, sale or conveyance (provided that, if the kind or amount of securities,
cash or other property (including cash) receivable upon such consolidation,
merger, sale or conveyance is not the same for each nonelecting share, then the
kind and amount of securities, cash or other property (including cash)
receivable upon such consolidation, merger, sale or conveyance for each
nonelecting share shall be deemed to be the kind and amount so receivable per
share by a plurality of the nonelecting shares or securities)). The Company
shall not enter into any of the transactions referred to in clause (a) or (b) of
the preceding sentence unless effective provision shall be made so as to give
effect to the provisions set forth in this Section 16.04. The provisions of this
Section 16.04 shall apply similarly to successive consolidations, mergers, sales
or conveyances.
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<PAGE> 96
Section 16.05. Notice of Adjustment.
Whenever an adjustment in the Conversion Price with respect to
a series of Debt Securities is required:
(1) the Company shall forthwith place on file with the
Trustee and any Conversion Agent for such Securities a certificate of
the Treasurer of the Company, stating the adjusted Conversion Price
determined as provided herein and setting forth in reasonable detail
such facts as shall be necessary to show the reason for and the manner
of computing such adjustment, such certificate to be conclusive
evidence that the adjustment is correct; and
(2) a notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion Price shall
forthwith be given by the Company, or at the Company's request, by the
Trustee in the name and at the expense of the Company, in the manner
provided in Section 1.05. Any notice so given shall be conclusively
presumed to have been duly given, whether or not the Holder receives
such notice.
Section 16.06. Notice in Certain Events.
In case:
(1) of a consolidation or merger to which the Company is
a party and for which approval of any stockholders of the Company is
required, or of the sale or conveyance to another Person or entity or
group of Persons or entities acting in concert as a partnership,
limited partnership, syndicate or other group (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
all or substantially all of the property and assets of the Company; or
(2) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(3) of any action triggering an adjustment of the
Conversion Price pursuant to this Article Sixteen;
then, in each case, the Company shall cause to be filed with the Trustee and the
Conversion Agent for the applicable Debt Securities, and shall cause to be
given, to the Holders of record of applicable Debt Securities in the manner
provided in Section 1.05, at least fifteen (15) days prior to the applicable
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of any distribution or grant of rights or warrants
triggering an adjustment to the Conversion Price pursuant to this Article
Sixteen, or, if a record is not to be taken, the date as of which the holders of
record or Common Stock entitled to such distribution, rights or warrants are to
be determined, or (y) the date on which any reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up triggering an
adjustment to the Conversion Price pursuant to this Article Sixteen is expected
to become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up.
Failure to give such notice or any defect therein shall not
affect the legality or validity of the proceedings described in clause (1), (2),
or (3) of this Section.
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<PAGE> 97
Section 16.07. Company to Reserve Stock; Registration;
Listing.
(a) The Company shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
shares of Common Stock, for the purpose of effecting the conversion of the Debt
Securities, such number of its duly authorized shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all applicable
outstanding Debt Securities into such Common Stock at any time (assuming that,
at the time of the computation of such number of shares or securities, all such
Debt Securities would be held by a single holder); provided, however, that
nothing contained herein shall preclude the Company from satisfying its
obligations in respect of the conversion of the Debt Securities by delivery of
purchased shares of Common Stock which are held in the treasury of the Company.
The Company shall from time to time, in accordance with the laws of the State of
Delaware, use its best efforts to cause the authorized amount of the Common
Stock to be increased if the aggregate of the authorized amount of the Common
Stock remaining unissued and the issued shares of such Common Stock in its
treasury (other than any such shares reserved for issuance in any other
connection) shall not be sufficient to permit the conversion of all Debt
Securities.
(b) If any shares of Common Stock which would be issuable
upon conversion of Debt Securities hereunder require registration with or
approval of any governmental authority before such shares or securities may be
issued upon such conversion, the Company will in good faith and as expeditiously
as possible endeavor to cause such shares or securities to be duly registered or
approved, as the case may be. The Company will endeavor to list the shares of
Common Stock required to be delivered upon conversion of the Debt Securities
prior to such delivery upon the principal national securities exchange upon
which the outstanding Common Stock is listed at the time of such delivery.
Section 16.08. Taxes on Conversion.
The Company shall pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the issue or
delivery of shares of Common Stock on conversion of Debt Securities pursuant
hereto. The Company shall not, however, be required to pay any such tax which
may be payable in respect of any transfer involved in the issue or delivery of
shares of Common Stock or the portion, if any, of the Debt Securities which are
not so converted in a name other than that in which the Debt Securities so
converted were registered (in case of Registered Securities), and no such issue
or delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of such tax or has established to the
satisfaction of the Company that such tax has been paid.
Section 16.09 Conversion After Record Date.
If any Debt Securities are surrendered for conversion
subsequent to the record date preceding an Interest Payment Date but on or prior
to such Interest Payment Date (except Debt Securities called for redemption on a
Redemption Date between such record date and Interest Payment Date), the Holder
of such Debt Securities at the close of business on such record date shall be
entitled to receive the interest payable on such Debt Securities on such
Interest Payment Date notwithstanding the conversion thereof. Debt Securities
surrendered for conversion during the period from the close of business on any
record date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date to the opening of business on such Interest
Payment Date shall (except in the case of Debt Securities which have been called
for redemption on a Redemption Date within such period) be accompanied by
payment in New York Clearing House funds or other funds and in the Currency
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the Debt Securities being surrendered for conversion.
Except as provided in
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<PAGE> 98
this Section 16.09, no adjustments in respect of payments of interest on Debt
Securities surrendered for conversion or any dividends or distributions of
interest on the Common Stock issued upon conversion shall be made upon the
conversion of any Debt Securities.
Section 16.10. Company Determination Final.
Any determination that the Company or the Board of Directors
must make pursuant to this Article is conclusive.
Section 16.11 Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under
this Article should be made, how it should be made or what it should be. The
Trustee makes no representation as to the validity or value of any securities or
assets issued upon conversion of Debt Securities. The Trustee shall not be
responsible for the Company's failure to comply with this Article. Each
Conversion Agent other than the Company shall have the same protection under
this Section as the Trustee.
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<PAGE> 99
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
PRISON REALTY TRUST, INC.
By: /s/ Michael W. Devlin
---------------------------------------
Title: Chief Operating Officer
------------------------------------
Attest:
/s/ Jonathan T. Youse
- - -----------------------------
Title: Notary Public
Seal
STATE STREET BANK AND TRUST COMPANY
as Trustee
By: /s/ Robert J. Dunn
---------------------------------------
Title: Vice President
------------------------------------
Attest:
/s/ James M. Coolidge
- - -----------------------------
Title: Notary Public
Seal
92
<PAGE> 100
EXHIBIT A
[FORMS OF CERTIFICATION]
[FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY
OR INTEREST PRIOR TO AN EXCHANGE DATE]
CERTIFICATE
-------------------------
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that as of the date hereof and except as
set forth below principal amount of the above captioned Debt Securities
held by you for our account (i) is owned by person(s) that are not United States
person(s) (as defined below), (ii) is owned by United States person(s) that are
(a) foreign branches of United States financial institutions (as defined in
Section 1.165-12(c)(1)(v) of the United States Treasury regulations) ("financial
institutions") purchasing for their own account or for resale, or (b) United
States person(s) who acquired the Debt Securities through foreign branches of
United States financial institutions and who hold the Debt Securities through
such United States financial institutions on the date hereof (and in either case
(a) or (b), each such United States financial institution hereby agrees, on its
own behalf or through its agent, that you may advise the Company or the
Company's agent that it will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the United States Internal Revenue Code of 1986, as
amended, and the Treasury regulations thereunder), or (iii) is owned by United
States or foreign financial institution(s) for the purpose of resale during the
restricted period (as defined in Section 1.163-5(c)(2)(i)(D)(7) of the United
States Treasury regulations), and in addition if the owner of the Debt
Securities is a United States or foreign financial institution described in
clause (iii) above (whether or not also described in clause (i) or (ii)) this is
to further certify that such financial institution has not acquired the Debt
Securities for the purpose of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
We undertake to advise you promptly by tested telex on or
prior to the date on which you intend to submit your certification relating to
the beneficial interest in the temporary global Security held by you for our
account in accordance with your operating procedures if any applicable statement
herein is not correct on such date, and in the absence of any such notification
it may be assumed that this certification applies as of such date.
This certificate excepts and does not relate to ___________
principal amount of Debt Securities held by you for our account as to which we
are not able to provide a certificate in this form. We understand that exchange
of such portion of the temporary global Note for definitive Bearer Securities or
interests in a permanent global Note cannot be made until we are able to provide
a certificate in this form.
We understand that this certificate is required in connection
with certain tax laws and regulations of the United States. If administrative or
legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
"United States person" means any citizen or resident of the
United States, any corporation, partnership or other entity created or organized
in or under the laws of the United States and any estate or trust
<PAGE> 101
the income of which is subject to United States federal income taxation
regardless of its source. "United States" means the United States of America
(including the States and the District of Columbia) and its "possessions" which
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
Dated:_______________________________, 19__
[To be dated no earlier than the
10th day before the Exchange Date]
By:
---------------------------------
As, or as agent for, the
beneficial owner(s) of
the portion of the
temporary global Note
to which this
certificate relates.
2
<PAGE> 102
EXHIBIT B
[FORM OF CERTIFICATE TO BE GIVEN BY EURO-CLEAR AND
CEDEL, S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL NOTE]
CERTIFICATE
---------------------------
[Insert title or sufficient description
of Securities to be delivered]
The undersigned certifies that, based solely on certifications
we have received in writing, by tested telex or by electronic transmission from
member organizations appearing in our records as persons being entitled to a
portion of the principal amount set forth below (our "Member Organizations")
substantially to the effect set forth in the Indenture as of the date hereof, __
________ principal amount of the above-captioned Debt Securities (i) is owned by
person(s) that are not United States person(s) (as defined below), (ii) is owned
by United States person(s) that are (a) foreign branches of United States
financial institutions (as defined in Section 1.165-12(c)(1)(v) of the United
States Treasury regulations) ("financial institutions") purchasing for their own
account or for resale, or (b) United States person(s) who acquired the Debt
Securities through foreign branches of United States financial institutions and
who hold the Debt Securities through such United States financial institutions
on the date hereof (and in either case (a) or (b), each such United States
financial institution has agreed, on its own behalf or through its agent, that
we may advise the Company or the Company's agent that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the Treasury regulations thereunder), or (iii) is owned by
United States or foreign financial institution(s) for the purpose of resale
during the restricted period (as defined in Section 1.163-5(c)(2)(i)(D)(7) of
the United States Treasury regulations), and in addition United States or
foreign financial institutions described in clause (iii) above (whether or not
also described in clause (i) or (ii)) have certified that they have not acquired
the Debt Securities for the purpose of resale directly or indirectly to a United
States person or to a person within the United States or its possessions.
We further certify (i) that we are not making available for
exchange or collection of any interest any portion of the temporary Global Note
excepted in such certifications and (ii) that as of the date hereof we have not
received any notification from any of our Member Organizations to the effect
that the statements made by such Member Organizations with respect to any
portion of the part submitted herewith for exchange or collection of any
interest are no longer true and cannot be relied upon as of the date hereof.
We understand that this certificate is required in connection
with certain tax laws and regulations of the United States. If administrative or
legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
"United States person" means any citizen or resident of the
United States, any corporation, partnership or other entity created or organized
in or under the laws of the United States and any estate or trust the income of
which is subject to United States federal income taxation regardless of its
source. "United States" means the United States of America (including the States
and the District of Columbia) and its "possessions" which include Puerto Rico,
the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern
Mariana Islands.
<PAGE> 103
Dated:______________________________, 19__
[To be dated no earlier than the
Exchange Date]
By:
---------------------------
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
BRUSSELS OFFICE, as
Operator of the Euro-Clear
System] [CEDEL, S.A.]
2
<PAGE> 1
EXHIBIT 4.2
EXECUTION COPY
================================================================================
PRISON REALTY TRUST, INC.
12% SENIOR NOTES DUE 2006
-----------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 11, 1999
-----------------
STATE STREET BANK AND TRUST COMPANY
Trustee
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.....................................................................................1
Section 1.02. Other Definitions..............................................................................16
Section 1.03. Incorporation by Reference of Trust Indenture Act..............................................16
Section 1.04. Rules of Construction..........................................................................17
ARTICLE 2
REDEMPTION
Section 2.01. Selection of Securities to Be Redeemed.........................................................17
Section 2.02. Optional Redemption............................................................................18
Section 2.03. Offer to Purchase by Application of Excess Proceeds............................................18
ARTICLE 3
COVENANTS
Section 3.01. Reports........................................................................................21
Section 3.02. Taxes..........................................................................................21
Section 3.03. Stay, Extension and Usury Laws.................................................................21
Section 3.04. Restricted Payments............................................................................22
Section 3.05. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries......................25
Section 3.06. Incurrence of Indebtedness and Issuance of Disqualified Stock or Subsidiary Preferred Stock....26
Section 3.07. Asset Sales....................................................................................29
Section 3.08. Transactions with Affiliates...................................................................30
Section 3.09. Liens..........................................................................................31
Section 3.10. Offer to Repurchase Upon Change of Control.....................................................31
Section 3.11. Business Activities............................................................................32
Section 3.12. Subsidiary Guarantees..........................................................................32
Section 3.13. Designation of Restricted and Unrestricted Subsidiaries........................................32
Section 3.14. Transactions with CCA Entities.................................................................33
Section 3.15. Changes in Covenants when Securities Rated Investment Grade....................................34
ARTICLE 4
SUCCESSORS
Section 4.01. Merger, Consolidation, or Sale of Assets.......................................................34
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.01. Events of Default..............................................................................35
Section 5.02. Acceleration...................................................................................36
Section 5.03. Compliance Certificate; Notices of Default.....................................................37
ARTICLE 6
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 6.01. Option to Effect Legal Defeasance or Covenant Defeasance.......................................37
Section 6.02. Legal Defeasance and Discharge.................................................................37
</TABLE>
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<TABLE>
<S> <C> <C>
Section 6.03. Covenant Defeasance............................................................................38
Section 6.04. Conditions to Legal or Covenant Defeasance.....................................................38
ARTICLE 7
SATISFACTION AND DISCHARGE
Section 7.01. Satisfaction and Discharge of Indenture........................................................39
ARTICLE 8
AMENDMENT, SUPPLEMENT AND WAIVER
Section 8.01. Without Consent of Holders of Securities.......................................................40
Section 8.02. With Consent of Holders of Securities..........................................................40
Section 8.03. Revocation and Effect of Consents..............................................................42
Section 8.04. Notation on or Exchange of Securities..........................................................42
Section 8.05. Payments for Consent...........................................................................42
ARTICLE 9
SUBSIDIARY GUARANTEES
Section 9.01. Subsidiary Guarantee...........................................................................42
Section 9.02. Limitation on Guarantor Liability..............................................................43
Section 9.03. Execution and Delivery of Subsidiary Guarantee.................................................44
Section 9.04. Guarantors May Consolidate, etc., on Certain Terms.............................................44
Section 9.05. Releases Following Sale of Assets..............................................................45
ARTICLE 10
MISCELLANEOUS
Section 10.01. No Personal Liability of Directors, Officers, Employees and Stockholders.......................45
Section 10.02. Priority of Supplemental Indenture.............................................................45
Section 10.03. Governing Law..................................................................................46
Section 10.04. Appointment of Paying Agent, Etc...............................................................46
Section 10.05. Execution of the Notes.........................................................................46
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF SUBSIDIARY GUARANTEE
Exhibit C FORM OF SUPPLEMENTAL INDENTURE
</TABLE>
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FIRST SUPPLEMENTAL INDENTURE (the "Supplemental Indenture"), dated as
of June 11, 1999 between Prison Realty Trust, Inc., a Maryland corporation (the
"Company"), and State Street Bank and Trust Company, as trustee (the "Trustee"),
to the INDENTURE (the "Original Indenture"), dated as of June 10, 1999, between
the Company and the Trustee. Pursuant to Section 3.01 of the Original Indenture,
the Company desires to set forth the terms of a new series of securities.
Therefore, the Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of 12% Senior Notes
due 2006 (the "Securities").
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.01. Definitions.
Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Original Indenture.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Additional Securities" means up to $50.0 million in aggregate
principal amount of Securities (other than the Initial Securities) issued under
this Supplemental Indenture in accordance with Section 3.03 of the Original
Indenture and Section 3.06 hereof.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by," and "under common control
with" shall have correlative meanings.
"API" means Agecroft Properties, Inc.
"APM" means Agecroft Prison Management Limited.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights, other than sales of inventory consisting of
personal property in the ordinary course of business; provided that the sale,
conveyance or other disposition of all or substantially all of the assets of the
Company and its Restricted Subsidiaries taken as a whole will be governed by
Section 3.10 and/or Article 4 hereof and not by Sections 2.03 and 3.07 hereof
and (ii) the issuance of Equity Interests by any of the Company's Restricted
Subsidiaries or the sale of Equity Interests in any of its Restricted
Subsidiaries by the Company or any such Restricted Subsidiaries.
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Notwithstanding the preceding, the following items shall not be
deemed to be Asset Sales: (i) any single transaction or series of related
transactions that involves assets having a Fair Market Value of less than $5.0
million; (ii) a transfer of assets between or among the Company and its
Restricted Subsidiaries; (iii) an issuance of Equity Interests by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary; (iv) the sale or
lease of equipment, inventory, accounts receivable or other assets in the
ordinary course of business; (v) the sale or other disposition of cash or Cash
Equivalents; (vi) the sale of any of the Designated Assets pursuant to the terms
of the related lease; (vii) the sale of Cash Equivalents in the ordinary course
of business; (viii) the issuance of Equity Interests by the Company; (ix)
dispositions of any assets to a lender in connection with a foreclosure or in
lieu of a foreclosure so long as such lender has a Permitted Lien on any such
assets and, to the extent such Permitted Lien constituted Indebtedness, it was
permitted to be incurred by Section 3.06 hereof; and (x) a Restricted Payment or
Permitted Investment that is permitted by Section 3.04 hereof.
"Bank Credit Facility" means that certain Credit Agreement, dated as
of January 1, 1999, by and among the Company, Lehman Commercial Paper Inc., as
Documentation Agent, NationsBank, N.A., as Administrative Agent, The Bank of
Nova Scotia, as Syndication Agent, and the other parties thereto, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, restated, amended
and restated, modified, renewed, refunded, replaced or refinanced from time to
time (including, without limitation, any amendment, restatement, amendment and
restatement, modification, renewal, refunding, replacement or refinancing that
increases the maximum principal amount of loans made or to be made thereunder).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "Beneficially Owns" and "Beneficially Owned" shall have a
corresponding meaning.
"Board of Directors" means (i) with respect to a corporation, the
board of directors of the corporation, (ii) with respect to a partnership, the
board of directors of the general partner of the partnership and (iii) with
respect to any other Person, the board or committee of such Person serving a
similar function.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at that time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
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"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than twelve months from the date of acquisition, (iii)
certificates of deposit, time deposits and eurodollar time deposits with
maturities of twelve months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding twelve months and overnight bank
deposits, in each case, with any lender party to the Bank Credit Facility or
with any domestic commercial bank having capital and surplus in excess of $500.0
million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii)
above, (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in each case
maturing within six months after the date of acquisition and (vi) money market
funds at least 95% of the assets of which constitute Cash Equivalents of the
kinds described in clauses (i) through (v) of this definition.
"CCA Entities" means each of Corrections Corporation of America,
Prison Management Services, Inc. and Juvenile and Jail Facility Management
Services, Inc., any successor to each of the foregoing and any of their
respective Subsidiaries.
"Change of Control" means the occurrence of any of the following:
(i) the direct or indirect sale, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially all
of the properties or assets of the Company and its Restricted
Subsidiaries taken as a whole or of the Operating Company to any
"person" (as that term is used in Section 13(d)(3) of the Exchange
Act) other than the Principals and their Related Parties;
(ii) greater than 50% of the Company's aggregate amount of
facilities, measured by aggregate number of beds, are managed by any
one person or group of Persons other than the Operating Company or
any successor to the Operating Company (and where no Change of
Control otherwise occurs) or any affiliate of the Operating Company
or any company managed by substantially the same people as the
Operating Company or any governmental entity in the jurisdiction
where such facility is located;
(iii) the adoption of a plan relating to the liquidation
or dissolution of the Company or of the Operating Company;
(iv) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than the Principals
and their Related Parties, becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the Voting Stock of the Company or of
the Operating Company, measured by voting power rather than number of
shares; or
(v) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board
of Directors of the Company or of the Operating Company (together
with any new directors whose election by either such Board of
Directors or whose nomination for election by the stockholders of the
Company or the shareholders of Operating Company, as applicable, was
approved by a vote of at least a majority of the directors of the
Company or the Operating Company, as applicable, then still in office
who were either
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<PAGE> 7
directors at the beginning of such period or whose election or
nomination for election was previously so approved or is a designee
of the Principals and their Related Parties or was nominated or
elected by such Principals and their Related Parties or any of their
designees) cease for any reason to constitute a majority of the Board
of Directors of the Company or the Operating Company, as applicable,
then in office.
"Commission" means the Securities and Exchange Commission.
"Consolidated Adjusted Total Assets" means, with respect to the
Company as of any date, the sum of (i) Consolidated Undepreciated Real Estate
Assets on such date, (ii) the book value, determined under GAAP, of all other
tangible assets on such date of the Company and its Restricted Subsidiaries on a
consolidated basis and (iii) 50% of the book value, determined under GAAP, of
all intangible assets on such date of the Company and its Restricted
Subsidiaries on a consolidated basis; it being understood that for purposes of
this definition "intangible" and "tangible" will be defined by a responsible
officer of the Company in good faith.
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus
(i) an amount equal to any extraordinary loss plus any net loss realized by such
Person or any of its Restricted Subsidiaries in connection with an Asset Sale,
to the extent such losses were deducted in computing such Consolidated Net
Income, plus (ii) provision for taxes based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net Income
regardless of whether such taxes or payments are required to be remitted to any
governmental authority; plus (iii) Fixed Charges to the extent Fixed Charges
were deducted in calculating Consolidated Net Income, plus (iv) Consolidated
Depreciation and Amortization Expense to the extent deducted in computing
Consolidated Net Income, minus (v) non-cash items increasing such Consolidated
Net Income for such period, other than the accrual of revenue in the ordinary
course of business, in each case, on a consolidated basis and determined in
accordance with GAAP.
"Consolidated Debt" means, with respect to the Company at any date,
the aggregate principal amount of Indebtedness plus the aggregate liquidation
preference of Disqualified Stock and Subsidiary Preferred Stock outstanding on
such date of the Company and its Restricted Subsidiaries on a consolidated basis
determined in accordance with GAAP.
"Consolidated Depreciation and Amortization Expense" means, with
respect to any specified Person for any period, depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash charges (including any write-off of deferred tax assets, but
excluding any such non-cash expense to the extent that it represents an accrual
of or reserve for cash expenses in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person and its
Restricted Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income.
"Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that (i) the Net Income of any Person that is not
a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Restricted Subsidiary
thereof, (ii) the Net Income of any Restricted Subsidiary shall be
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<PAGE> 8
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
shareholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Undepreciated Real Estate Assets" means, as of any
date, the cost (being the original cost to the Company or any of its Restricted
Subsidiaries, plus capital improvements) of real estate assets of the Company
and its Restricted Subsidiaries on such date, before depreciation and
amortization of such real estate assets, determined on a consolidated basis in
conformity with GAAP.
"Covenant Amendment Date" means the first date on which the covenants
in the Bank Credit Facility are amended so that the prohibition on Liens
contained in the first paragraph of Section 3.09 hereof does not result in an
Event of Default under the Bank Credit Facility.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Designated Assets" means (i) Coffee Correctional Facility, Nicholls,
Georgia, (ii) Wheeler Correctional Facility, Alamo, Georgia, (iii) D.C.
Correctional Treatment Facility, Washington, D.C., (iv) Huerfano County
Correctional Center, Walsenburg, Colorado, (v) New Mexico Women's Correctional
Facility, Grants, New Mexico, (vi) Maurice H. Sigler Detention Center,
Frostproof, Florida, (vii) Shelby Training Center, Memphis, Tennessee, (viii)
Cimmaron Correctional Facility, Cushing, Oklahoma and (ix) Davis Correctional
Facility, Holdenville, Oklahoma.
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the notes mature; provided that only the portion of Capital Stock
which is so convertible or exchangeable or is so redeemable at the option of the
holder thereof or which so matures or is mandatorily redeemable prior to such
date will be deemed to be Disqualified Stock. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require the Company to repurchase
such Capital Stock upon the occurrence of a change of control or an asset sale
shall not constitute Disqualified Stock if the terms of such Capital Stock
provide that the Company may not repurchase or redeem any such Capital Stock
pursuant to such provisions prior to the Company's compliance with Section 3.04
hereof.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
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"Equity Offering" means any (i) underwritten public offering of
common stock (other than Disqualified Stock) of the Company, pursuant to an
effective registration statement filed with the Commission in accordance with
the Securities Act or (ii) private placement of at least $25.0 million of common
stock (other than Disqualified Stock) of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Agreements" means (i) Development Agreement, dated July 6,
1998, between API and APM, (ii) Construction Contract, dated July 6, 1998,
between API and Tilbury Douglas Construction Limited, (iii) Construction Direct
Agreement, dated July 6, 1998, among API, APM, Tilbury Douglas Construction
Limited and Tilbury Douglas PLC, (vi) Refinancing Agreement, dated July 6, 1998,
among API, APM, Old CCA and CCA Prison Realty Trust, (v) Sublease, to be
executed following completion of construction of Agecroft Prison, between API
and APM, (vi) Access Agreement, to be executed following completion of
construction of Agecroft Prison, between API and APM, (vii) Direct Agreement,
dated July 6, 1998, among API, APM, Old CCA, CCA Prison Realty Trust and H M
Principal Secretary of State for the Home Department and (viii) Step-In and
Collateral Agreement, dated July 6, 1998, between Old CCA, APM, H M Principal
Secretary of State for the Home Department and UK Detention Services.
"Existing CCA Entity Agreements" means agreements of the CCA Entities
in existence on the Issue Date and in the form in effect on the Issue Date.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Bank Credit Facility) in
existence on the Issue Date, until such amounts are repaid.
"Fair Market Value" means the fair market value as determined by an
officer of the Company for any Acquired Debt, Investment or Asset Sale of less
than $5.0 million and as determined by the Board of Directors of the Company for
any Acquired Debt, Investment or Asset Sale equal to or in excess of $5.0
million.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In the
event that the specified Person or any of its Restricted Subsidiaries incurs,
assumes, Guarantees, repays, repurchases or redeems any Indebtedness (other than
ordinary working capital borrowings) or issues, repurchases or redeems preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated and on or prior to the date on which the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable reference period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
(i) acquisitions of assets and Investments in Restricted
Subsidiaries of the Company that have been made by the specified
Person or any of its Restricted Subsidiaries, including through
mergers or consolidations and including any related financing
transactions, during the reference period or subsequent to such
reference period and on or prior to the
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Calculation Date shall be given pro forma effect as if they had
occurred on the first day of the reference period and Consolidated
Cash Flow for such reference period shall be calculated on a pro
forma basis, but without giving effect to clause (iii) of the proviso
set forth in the definition of Consolidated Net Income;
(ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation Date,
shall be excluded;
(iii) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to
such Fixed Charges will not be obligations of the specified Person or
any of its Restricted Subsidiaries following the Calculation Date;
and
(iv) if since the beginning of such period any Person
(that subsequently became a Restricted Subsidiary or was merged with
or into the Company or any Restricted Subsidiary since the beginning
of such period) will have made any Asset Sale or any Investment or
acquisition of assets that would have required an adjustment pursuant
to clause (i) above if made by the Company or a Restricted Subsidiary
during such period, Consolidated Cash Flow and Fixed Charges for such
period will be calculated after giving pro forma effect thereto as if
such Asset Sale or Investment or acquisition of assets occurred on
the first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to an Investment or an acquisition of assets, the amount of income or
earnings relating thereto and the amount of Fixed Charges associated with any
Indebtedness Incurred in connection therewith, or any other calculation under
this definition, the pro forma calculations will be determined in good faith by
a responsible financial or accounting officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness will be calculated as if the
rate in effect of the date of determination had been the applicable rate for the
entire period (taking into account any Hedging Obligation applicable to such
Indebtedness if such Hedging Obligation has a remaining term in excess of 12
months).
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued,
including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect
of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging
Obligations; plus
(ii) the consolidated interest of such Person and its
Restricted Subsidiaries that was capitalized during such period; plus
(iii) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person
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or one of its Restricted Subsidiaries, whether or not such Guarantee
or Lien is called upon; plus
(iv) the product of (A) all dividends, whether paid or
accrued and whether or not in cash, on any series of Disqualified
Stock of such Person, on any series of preferred stock of such Person
or any of its Restricted Subsidiaries, other than dividends on Equity
Interests payable solely in Equity Interests of the Company (other
than Disqualified Stock) or to the Company or a Restricted Subsidiary
of the Company, times (B) a fraction, the numerator of which is one
and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"Funds From Operations After Preferred Stock Dividends" means, with
respect to the Company for any period, Consolidated Net Income for such period
plus (i) an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing Consolidated Net Income), plus (ii) Consolidated Depreciation and
Amortization Expense for such period to the extent such expenses were deducted
in computing Consolidated Net Income, plus (iii) amortization of debt issuance
costs and deferred financing fees of the Company and its Restricted Subsidiaries
on a consolidated basis to the extent deducted in computing Consolidated Net
Income, minus (iv) non-cash items increasing such Consolidated Net Income for
such period, in each case, on a combined basis for the Company and its
Restricted Subsidiaries and determined in accordance with GAAP, minus (v) the
amount of any preferred stock dividends paid by the Company or any of its
Restricted Subsidiaries in respect of such period other than preferred stock
dividends paid in the form of Equity Interests that do not constitute
Disqualified Stock, only to the extent that such preferred stock dividends were
not deducted in computing Consolidated Net Income and plus (vi) the allocable
portion, based upon the ownership percentage, of funds from operations of
unconsolidated investments to the extent not otherwise included in Consolidated
Net Income.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the Issue Date.
"Government Securities" means securities that are (i) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such Government
Security or a specific payment of principal of or interest on any such
Government Security held by such custodian for the account of the holder of such
depository receipt; provided, that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Security or the specific payment of principal of or interest on
the Government Security evidenced by such depository receipt.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without
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limitation, through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantors" means each subsidiary of the Company that executes and
delivers a Subsidiary Guarantee in accordance with the provisions of the
Indenture and its respective successors and assigns.
"Hedging Obligations" means, with respect to any specified Person,
the obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements and foreign exchange
hedging agreements and (ii) other agreements or arrangements entered into in the
ordinary course of business designed to protect such Person against fluctuations
in interest rates and foreign exchange rates.
"Holder" means a registered holder of the Securities.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of (i)
borrowed money, (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect thereof
except to the extent that such reimbursement obligation relates to a trade
payable and such obligation is satisfied within 30 days of Incurrence), (iii)
banker's acceptances, (iv) representing Capital Lease Obligations, (v) the
balance deferred and unpaid of the purchase price of any property, except any
such balance that constitutes an accrued expense or trade payable or (vi) net
Obligations under Hedging Obligations (the amount of any such Hedging
Obligations to be equal at any time to the termination value of such agreement
or arrangement giving rise to such Hedging Obligation that would be payable by
such Person at such time), if and to the extent any of the preceding items
(other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of the specified Person prepared in accordance
with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of
others secured by a Lien on any asset of the specified Person (whether or not
such Indebtedness is assumed by the specified Person) and, to the extent not
otherwise included, the Guarantee by the specified Person of any indebtedness of
any other Person; provided, however, that the amount of such Indebtedness will
be the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness of such other Person.
Indebtedness shall not include the principal of, premium, if any, or interest on
any bonds, notes or other instruments to the extent that any such obligations
have been irrevocably and properly defeased by depositary cash, Cash Equivalents
or U.S. Government Securities into a trust for the benefit of the holders of
such obligations in accordance with Article 6 hereof (or any substantially
similar provision contained in the instruments governing such obligations).
The amount of any Indebtedness outstanding as of any date shall be
(i) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount and (ii) the principal amount thereof, together with any
interest thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Indenture" means the Original Indenture, as amended or supplemented
by this Supplemental Indenture and as it may from time to time be supplemented
or amended hereafter.
"Initial Securities" means $100.0 million in aggregate principal
amount of Securities issued under this Supplemental Indenture on the date
hereof.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of loans
(including Guarantees or other obligations), direct or
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<PAGE> 13
indirect advances or capital contributions (excluding commission, travel and
similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP; provided that (i) Hedging Obligations entered into in the ordinary course
of business and in compliance with the Indenture, (ii) endorsements of
negotiable instruments and documents in the ordinary course of business; and
(iii) an acquisition of assets, Equity Interests or other securities by the
Company for consideration consisting exclusively of common equity securities of
the Company, shall in each case not be deemed to be an Investment.
If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Company,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in Section 3.04(c) hereof.
"Issue Date" means June 11, 1999.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however (i) any
gain or loss, together with any related provision or benefit for taxes on such
gain or loss, realized in connection with (A) any Asset Sale or (B) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries, (ii) any extraordinary gain or loss, together with
any related provision or benefit for taxes on such extraordinary gain or loss
and (iii) special charges and write-offs incurred in connection with the
issuance of the Securities or the Bank Credit Facility.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale) or in
respect of the disposition of any Designated Assets, net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof, in each
case, after taking into account any available tax credits or deductions and any
tax sharing arrangements, or amounts required to be distributed by the Company
in order to maintain its status as a REIT under the Code that result from the
gain from such Asset Sale and amounts required to be applied to the repayment of
Indebtedness, other than Indebtedness under the Bank Credit Facility, secured by
a Lien on the asset or assets that were the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets
established by the Company in good faith (provided that after all post-closing
adjustments have been made the amount by which such reserve exceeds such
adjustments shall be Net Proceeds).
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<PAGE> 14
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (A) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (B) is directly or indirectly liable as a guarantor or
otherwise or (C) constitutes the lender, (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit upon notice, lapse of
time or both, any holder of any other Indebtedness of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated maturity
and (iii) the explicit terms of which provide, or as to which the lenders have
been notified in writing that, they will not have any recourse to the stock or
assets of the Company or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the sale by the Company of its 12% Senior Notes
due 2006.
"Officers' Certificate" means a certificate signed on behalf of the
Company or a Guarantor, as the case may be, by two officers of the Company or a
Guarantor, one of whom must be the principal executive officer, the principal
financial officer, the treasurer or the principal accounting officer of the
Company or a Guarantor, that meets the requirements set forth herein.
"Old CCA" means Corrections Corporation of America, as such entity
existed on and before December 31, 1998.
"Operating Company" means Corrections Corporation of America
(formerly Correctional Management Services Corporation).
"Permitted Business" means the business conducted by the Company and
its Restricted Subsidiaries on the Issue Date and businesses reasonably related
thereto or ancillary or incidental thereto or a reasonable extension thereof,
including the privatization of governmental services.
"Permitted Investments" means:
(i) any Investment in the Company or in a Restricted
Subsidiary of the Company;
(ii) any Investment in cash or Cash Equivalents;
(iii) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person, if as a result of such
Investment:
(A) such Person becomes a Restricted Subsidiary
of the Company; or
(B) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company;
(iv) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Sections 2.03 and 3.07 hereof;
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<PAGE> 15
(v) any acquisition of assets solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the
Company;
(vi) Hedging Obligations;
(vii) other Investments in any Person having an aggregate
fair market value (measured on the date each such Investment was made
and without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause
(vii) that are at the time outstanding, not to exceed $25.0 million;
(viii) receivables owing to the Company or any Restricted
Subsidiary of the Company created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include
such concessionary trade terms as the Company or any such Restricted
Subsidiary deems reasonable under the circumstances;
(ix) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the
ordinary course of business;
(x) loans or advances to employees made in the ordinary
course of business of the Company or any Restricted Subsidiary of the
Company not to exceed $3.0 million outstanding at any one time for
all loans or advances under this clause (x);
(xi) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and
owing to the Company or any Restricted Subsidiary of the Company or
in satisfaction of judgments or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or
insolvency of a debtor;
(xii) Investments in existence on the Issue Date; and
(xiii) Guarantees issued in accordance with Section 3.06
hereof.
"Permitted Liens" means:
(i) Liens on assets of the Company and any Guarantor
securing Indebtedness and other Obligations under the Bank Credit
Facility to the extent that such Indebtedness or other Obligations
were not prohibited by the terms of the Indenture to be incurred;
(ii) Liens in favor of the Company or any of its
Restricted Subsidiaries;
(iii) Liens on property of a Person existing at the time
such Person is merged with or into or consolidated with the Company
or any Restricted Subsidiary of the Company; provided that such Liens
were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company or the Restricted
Subsidiary;
(iv) Liens on property existing at the time of acquisition
thereof by the Company or any Restricted Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation
of such acquisition;
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<PAGE> 16
(v) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance, proposal or
completion bonds or other obligations of a like nature incurred in
the ordinary course of business;
(vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of Section 3.06(b) hereof
covering only the assets acquired with such Indebtedness;
(vii) Liens existing on the Issue Date;
(viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or
other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor;
(ix) Liens of the Company or any Subsidiary of the Company
with respect to obligations that do not exceed $10.0 million at any
one time outstanding;
(x) Liens to secure Indebtedness permitted to be incurred
under the Indenture and permitted to be secured by clause (iii) of
Section 3.06(a) hereof;
(xi) pledges or deposits by such Person under workmen's
compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits to secure public or
statutory obligations of such Person or deposits or cash or United
States government bonds to secure surety or appeal bonds to which
such Person is a party, or deposits as security for contested taxes
or import or customs duties or for the payment of rent, in each case
incurred in the ordinary course of business;
(xii) Liens imposed by law, including carriers',
warehousemen's and mechanics' Liens, in each case for sums not yet
due or being contested in good faith by appropriate proceedings if a
reserve or other appropriate provisions, if any, as shall be required
by GAAP shall have been made in respect thereof;
(xiii) encumbrances, easements or reservations of, or
rights of others for, licenses, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real properties or
liens incidental to the conduct of the business of such Person or to
the ownership of its properties which do not in the aggregate
materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such
Person;
(xiv) Liens securing Hedging Obligations so long as the
related Indebtedness is, and is permitted to be under the Indenture,
secured by a Lien on the same property securing such Hedging
Obligations;
(xv) leases and subleases of real property which do not
materially interfere with the ordinary conduct of the business of the
Company or any of its Restricted Subsidiaries;
(xvi) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the judgment
secured shall, within 30 days after the entry thereof,
13
<PAGE> 17
have been discharged or execution thereof stayed pending appeal, or
shall have been discharged within 30 days after the expiration of
such stay; and
(xvii) normal customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions.
"Permitted Refinancing Indebtedness" means (a) any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness) and (b) any Disqualified Stock of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Disqualified Stock of the Company or any of its Restricted
Subsidiaries; provided that:
(i) the principal amount (or liquidation preference or
accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount (or accreted value,
if applicable) of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus all accrued interest or
dividends thereon and the amount of all expenses and premiums
incurred in connection therewith);
(ii) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded;
(iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of
payment to the Securities, such Permitted Refinancing Indebtedness is
subordinated in right of payment to, the Securities on terms at least
as favorable to the holders of Securities as those contained in the
documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and
(iv) such Indebtedness is incurred either (A) by the
Company or (B) by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded.
"Permitted REIT Distributions" means a declaration or payment of any
dividend or the making of any distribution to the Company that is necessary to
maintain the Company's status as a REIT under the Code or to satisfy the
distributions required to be made by reason of the Company's making of the
election provided for in Notice 88-19 (or Treasury regulations issued pursuant
thereto).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company or government or other entity.
"Principals" means Doctor R. Crants.
"Qualified Capital Stock" means any Capital Stock of the Company that
is not Disqualified Stock and, when used in the definition of "Disqualified
Stock," also includes any Capital Stock of a Restricted Subsidiary of the
Company that is not Disqualified Stock.
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<PAGE> 18
"Related Party" with respect to any Principal means (i) any
controlling stockholder, 60% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (ii) any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding a 60% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (i).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Secured Indebtedness" means any Indebtedness secured by a Lien upon
the property or assets of the Company or any of its Restricted Subsidiaries.
"Securities" means the 12% Senior Notes due 2006 of the Company,
substantially in the form of Exhibit A hereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Special REIT Dividends" means the special dividends of up to an
aggregate amount of $225.0 million to be paid to holders of common stock of the
Company during 1999, which represent the accumulated tax earnings and profits of
Old CCA.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (A) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (B) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means the Guarantee by any Guarantor with
respect to the Company's obligations under the Indenture and the notes pursuant
to a supplemental indenture substantially in the form of Exhibit C hereto.
"Subsidiary Preferred Stock" means any preferred stock issued by a
Restricted Subsidiary of the Company.
"TIA" means the Trust Indenture Act of 1939, as amended.
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<PAGE> 19
"Total Unencumbered Assets" as of any date means the sum of (i) those
Consolidated Undepreciated Real Estate Assets not securing any portion of
Indebtedness that is subject to any Lien and (ii) all other assets (but
excluding intangibles and accounts receivable) of the Company and its Restricted
Subsidiaries not securing any portion of the Indebtedness that is subject to any
Lien, determined on a combined, consolidated basis in accordance with GAAP.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary has no
Indebtedness other than Non-Recourse Debt.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (A) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (B) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Affiliate Transaction".............................. 3.08
"Asset Sale Offer"................................... 2.03
"CCA Entity Transaction"............................. 3.14
"Change of Control Offer"............................ 3.10
"Change of Control Payment".......................... 3.10
"Change of Control Payment Date"..................... 3.10
"Covenant Defeasance"................................ 6.03
"Event of Default"................................... 5.01
"Excess Proceeds".................................... 3.07
"incur".............................................. 3.06
"Legal Defeasance"................................... 6.02
"Offer Amount"....................................... 2.03
"Offer Period"....................................... 2.03
"Payment Default".................................... 5.01
"Permitted Debt"..................................... 3.06
"Purchase Date"...................................... 2.03
"Rating Event Date".................................. 3.15
"Restricted Payments"................................ 3.04
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Supplemental Indenture refers to a provision of the
TIA, the provision is incorporated by reference in and made a part of the
Indenture. The defined terms in the Original Indenture are incorporated herein
by reference but notwithstanding the foregoing, in the event of a conflict
between the defined terms set forth herein and the defined terms set forth in
the Original Indenture, the defined terms set forth herein shall control.
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<PAGE> 20
The following TIA terms used in this Supplemental Indenture have the
following meanings:
"indenture securities" means the Securities;
"indenture security Holder" means a Holder of a Security;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Securities means the Company and any successor
obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular; and
(e) provisions apply to successive events and transactions.
ARTICLE 2
REDEMPTION
Section 2.01. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed at any time,
selection of such Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Securities are listed or, if the Securities are not so
listed, on a pro rata basis, by lot or such other method as the Trustee shall
deem fair and appropriate (and in such manner as complies with applicable legal
requirements), provided that no Securities of less than $1,000 shall be redeemed
in part.
If the Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 2.02 hereof, it shall furnish to the Trustee,
at least 35 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Supplemental
Indenture or the Securities pursuant to which the redemption shall occur, (ii)
the redemption date, (iii) the principal amount of Securities to be redeemed,
(iv) the redemption price and (v) a statement to the effect that such redemption
will comply with the conditions contained herein.
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<PAGE> 21
Notices of redemption shall be mailed by first class mail, postage
prepaid, at least 30 but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed at such Holder's registered address.
Notices of redemption may not be conditional. If any Security is to be redeemed
in part only, any notice of redemption that relates to such Security shall state
the portion of the principal amount thereof that has been or is to be redeemed.
A new Security in principal amount equal to the unredeemed portion of
any Security redeemed in part will be issued in the name of the Holder thereof
upon cancellation of the original Security. Securities called for redemption
become due on the date fixed for redemption. On and after the redemption date,
interest shall cease to accrue on the Securities or portions thereof called for
redemption.
Section 2.02. Optional Redemption.
(a) At any time prior to June 1, 2002, the Company may, at its
option, on any one or more occasions redeem up to 35% of the aggregate principal
amount of Securities originally offered in the Offering at a redemption price
equal to 112.00% of the principal amount thereof, plus accrued and unpaid
interest to the redemption date, with the net cash proceeds of one or more
Equity Offerings; provided that:
(i) at least 65% of the original aggregate principal amount of
Securities remains outstanding immediately after the occurrence of such
redemption (excluding Securities held by the Company and its Restricted
Subsidiaries); and
(ii) the redemption shall occur within 45 days of the date of
the closing of such Equity Offering.
(b) Except pursuant to Section 2.02(a) hereof, the Securities will
not be redeemable at the Company's option.
Section 2.03. Offer to Purchase by Application of Excess Proceeds.
If at any time the aggregate amount of Excess Proceeds that have not
been applied in accordance with Section 3.07 hereof exceeds $10.0 million, the
Company shall make an offer to all Holders of Securities and all holders of
other Indebtedness that is pari passu with the Securities containing provisions
similar to those set forth in this Supplemental Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets, to the extent
required by the terms thereof (an "Asset Sale Offer") to purchase the maximum
principal amount of Securities and such other pari passu Indebtedness that may
be purchased out of such Excess Proceeds, at an offer price in cash in an amount
equal to 100% of principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase, in accordance with the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the maximum principal amount of Securities
and such other pari passu Indebtedness that may be purchased with such Excess
Proceeds (or such pro rata portion) (which maximum principal amount of
Securities shall be the "Offer Amount") or, if less than the Offer Amount has
been tendered, all Securities and such other pari passu Indebtedness tendered in
response to the Asset Sale Offer, subject to the provisions of Section 3.07
hereof.
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<PAGE> 22
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued interest shall be paid to
the Person in whose name a Security or such other pari passu Indebtedness is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Securities or such other pari
passu Indebtedness pursuant to the Asset Sale Offer on the portion of the
tendered Securities and such other pari passu Indebtedness purchased pursuant to
the Asset Sale Offer.
Upon the commencement of any Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders of
the Securities and such other pari passu Indebtedness, with a copy to the
Trustee. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Securities and such other pari passu Indebtedness
pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all
Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall
state:
(a) that the Asset Sale Offer is being made pursuant to this Section
2.03 and Section 3.07 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount (including the amount of accrued interest, if
any), the purchase price and the Purchase Date;
(c) that any Security and such other pari passu Indebtedness not
tendered or accepted for payment shall continue to accrue interest in accordance
with the terms thereof;
(d) that any Security and such other pari passu Indebtedness or
portion thereof accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest after the Purchase Date;
(e) that Holders electing to have a Security or such other pari passu
Indebtedness or portion thereof purchased pursuant to any Asset Sale Offer shall
be required to surrender the Security and/or such other pari passu Indebtedness,
with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Security or such other pari passu Indebtedness completed, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three Business Days before the Purchase Date
and must complete any form letter of transmittal proposed by the Company and
acceptable to the Trustee and the Paying Agent;
(f) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the fourth Business Day before the Purchase Date, a telegram,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Security or such other pari passu Indebtedness or
portion thereof the Holder delivered for purchase, the Security or and such
other pari passu Indebtedness certificate number and a statement that such
Holder is withdrawing his election to have the Security or such other pari passu
Indebtedness or portion thereof purchased;
(g) that, if the aggregate principal amount of Securities and such
other pari passu Indebtedness surrendered by Holders exceeds the Offer Amount,
the Company shall select the Securities and such other pari passu Indebtedness
to be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Trustee so that only Securities and such other pari passu
Indebtedness in denominations of $1,000, or integral multiples thereof, shall be
purchased); and
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(h) that Holders whose Securities or such other pari passu
Indebtedness were purchased only in part shall be issued new Securities or such
other pari passu Indebtedness equal in principal amount to the unpurchased
portion of the Securities or such other pari passu Indebtedness surrendered; and
(i) the instructions that Holders must follow to tender their
Securities and such other pari passu Indebtedness.
On or before 10:00 a.m. on the Purchase Date, the Company shall, to
the extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Offer Amount of Securities and such other pari passu Indebtedness
or portions thereof tendered pursuant to the Asset Sale Offer, or if less than
the Offer Amount has been tendered, all Securities and such other pari passu
Indebtedness or portions thereof tendered, and shall deliver to the Trustee an
Officers' Certificate stating that such Securities and such other pari passu
Indebtedness or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 2.03 and providing payment
instructions therefor (with a copy to the Paying Agent if applicable). The
Company, depositary or the Paying Agent, as the case may be, shall promptly (but
in any case not later than five days after the Purchase Date) mail or deliver to
each tendering Holder an amount equal to the purchase price of the Securities or
such other pari passu Indebtedness or portion thereof tendered by such Holder
and accepted by the Company for purchase, and the Company shall promptly issue a
new Security or such other pari passu Indebtedness, and the Trustee shall
authenticate and mail or deliver such new Security or any other series of Debt
Securities issued pursuant to the Original Indenture to such Holder equal in
principal amount equal to any unpurchased portion of the Security or such other
series of Debt Securities issued pursuant to the Original Indenture surrendered.
Any Security or such other pari passu Indebtedness not so accepted shall be
promptly mailed or delivered by the Company or at the Company's written
instruction to the Holder thereof. The Company shall publicly announce the
results of the Asset Sale Offer on the second Business Day following the
Purchase Date. In the event that the aggregate amount of Excess Proceeds exceeds
the aggregate principal amount of Securities and such other pari passu
Indebtedness or portion thereof surrendered by Holders thereof pursuant to an
Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not
otherwise prohibited by this Supplemental Indenture. If the aggregate principal
amount of Securities and such other pari passu Indebtedness tendered into such
Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select
the Securities and such other pari passu Indebtedness to be purchased on a pro
rata basis based on the principal amount of Securities and such other pari passu
Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.
The Company shall comply, to the extent applicable, with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder in connection with each repurchase of Securities
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the Asset Sales provisions of this
Section 2.03, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 2.03 or Article XIII of the Original Indenture by virtue thereof. The
Trustee shall have no duty or obligation to monitor or ensure compliance with
any such rules, laws or regulations.
The provisions set forth in Article XIII of the Original Indenture
shall not apply to Asset Sale Offers.
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ARTICLE 3
COVENANTS
Section 3.01. Reports.
Whether or not required by the rules and regulations of the
Commission, so long as any Securities are outstanding, the Company shall furnish
and shall cause the Operating Company to furnish to the Holders of Securities,
within the time periods specified in the Commission's rules and regulations, (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
and the Operating Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for the Company only that describes the financial condition and
results of operations of the Company and its Subsidiaries and, with respect to
the annual information only, a report on the annual financial statements by the
Company's and the Operating Company's certified independent accountants and (ii)
all current reports that would be required to be filed with the Commission on
Form 8-K if the Company and the Operating Company were required to file such
reports. If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph shall include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereto, and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company. In
addition, whether or not required by the Commission, the Company shall file and
shall cause the Operating Company to file a copy of all the information and
reports referred to in clauses (i) and (ii) above with the Commission for public
availability within the time periods specified in the Commission's rules and
regulations (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall also comply with the provisions of TIA ss. 314(a).
Section 3.02. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Securities.
Section 3.03. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Supplemental Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
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Section 3.04. Restricted Payments.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Securities, except
a payment of interest or principal at the Stated Maturity thereof; or (iv) make
any Restricted Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(A) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(B) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in Section 3.06(a)
hereof; and
(C) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (including all Restricted Payments
permitted by Section 3.04(b) hereof other than clauses (ii), (iii), (iv),
(vi), (viii), (ix), (x) and (xi)), is less than the sum, without
duplication, of:
(1) (x) for so long as the Company is a REIT under the
Code for Federal income tax purposes, 95% of the aggregate amount of
the Funds From Operations After Preferred Stock Dividends (or, if the
Funds from Operations After Preferred Stock Dividends is a loss,
minus 100% of the amount of such loss) accrued on a cumulative basis
during the period (taken as one accounting period) beginning on the
first day of the fiscal quarter in which the Issue Date occurs and
ending on the last day of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the
time of such Restricted Payment or (y) for so long as the Company is
not a REIT under the Code for Federal income tax purposes, 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the date the Company first ceased to be a
REIT under the Code to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment calculated as though the
Company had been a C-Corporation for Federal income tax purposes for
the entire period (or if, such Consolidated Net Income for such
period is a deficit, less 100% of such deficit);
(2) (x) 100% of the aggregate net cash proceeds received
by the Company since the Issue Date as a contribution to its common
equity capital or from the issue or sale of Equity Interests of the
Company (other than Disqualified Stock) or (y) 100% of the aggregate
net cash
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proceeds originally received by the Company from the issue or sale
of Disqualified Stock or debt securities of the Company that have
been converted or exchanged since the Issue Date into such Equity
Interests (other than Equity Interests (or Disqualified Stock
or convertible debt securities) sold to a Subsidiary of the Company);
(3) an amount equal to the net reduction in Investments
(other than Permitted Investments) in any Person other than a
Restricted Subsidiary after the Issue Date resulting from payments of
interest on Indebtedness, dividends, repayments of loans or advances,
or other transfers of assets, in each case to the Company or any of
its Restricted Subsidiaries or from the net cash proceeds from the
sale of any such Investment (except, in each case, to the extent any
such payment or proceeds are included in the calculation of Funds
From Operations After Preferred Stock Dividends), or Consolidated Net
Income, as applicable;
(4) the Fair Market Value of non-cash tangible assets or
Capital Stock (other than that of the Company) representing at least
the majority of Equity Interests in any Person acquired after the
Issue Date in exchange for an issuance of Capital Stock that is not
Disqualified Stock; and
(5) to the extent that any Unrestricted Subsidiary of the
Company is redesignated as a Restricted Subsidiary after the Issue
Date and to the extent not otherwise included in clauses (1) though
(4) above, the lesser of (x) the fair market value of the Company's
Investment in such Subsidiary as of the date of such redesignation or
(y) such fair market value as of the date on which such Subsidiary
was originally designated as an Unrestricted Subsidiary.
(b) The foregoing provisions in Section 3.04(a) hereof will not
prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment would
have complied with the provisions of this Supplemental Indenture;
(ii) the redemption, repurchase, retirement, defeasance or
other acquisition of any subordinated Indebtedness or Equity Interests of
the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary of
the Company) of, other Equity Interests of the Company (other than any
Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause
(C)(2) of Section 3.04(a) hereof;
(iii) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness with the net cash proceeds from
an incurrence or exchange of Permitted Refinancing Indebtedness;
(iv) the payment of any dividend or distribution by a
Restricted Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis;
(v) the Company from making Permitted REIT Distributions so
long as no Default or Event of Default shall have occurred and be
continuing immediately after any such distribution;
(vi) the Special REIT Dividends;
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(vii) so long as no Default or Event of Default has occurred
and is continuing,
(A) the purchase, redemption or other acquisition,
cancellation or retirement for value of Capital Stock, or options,
warrants, equity appreciation rights or other rights to purchase or
acquire Capital Stock of the Company or any Restricted Subsidiary of
the Company or any parent of the Company held by any existing or
former employees of the Company or any Subsidiary of the Company or
their assigns, estates or heirs, in each case in connection with the
repurchase provisions under employee stock option or stock purchase
agreements or other agreements to compensate management employees;
provided that such redemptions or repurchases pursuant to this clause
will not exceed $1.0 million in the aggregate during any calendar
year and $5.0 million in the aggregate for all such redemptions and
repurchases; provided further that such amount in any calendar year
may be increased by an amount not to exceed (1) the cash proceeds
from the sale of Capital Stock of the Company to existing or former
employees of the Company or any Subsidiary of the Company after the
Issue Date (to the extent the cash proceeds from the sale of such
Capital Stock have not otherwise been applied to the payment of
Restricted Payments by virtue of clause (C)(2) of Section 3.04(a)
hereof) plus (2) the cash proceeds of key man life insurance policies
received by the Company and its Subsidiaries after the Issue Date
less (3) the amount of any Restricted Payments previously made
pursuant to clause (1) and (2) of this clause (vii)(A); and
(B) loans or advances to employees or directors of the
Company or any Subsidiary of the Company the proceeds of which are
used to purchase Capital Stock of the Company, in an aggregate amount
not in excess of $10.0 million at any one time outstanding;
(viii) so long as no Default or Event of Default has occurred
and is continuing, the declaration and payment of dividends to holders of
any class or series of Preferred Stock of the Company issued in accordance
with the terms of the Indenture to the extent such dividends are included
in the definition of "Fixed Charges;"
(ix) repurchases of Equity Interests of the Company deemed to
occur upon the exercise of stock options if such Equity Interests
represent a portion of the exercise price thereof;
(x) the purchase, redemption, acquisition or retirement for
value of any Indebtedness that is subordinated to the Securities with
Excess Net Proceeds if required by the terms thereof; and
(xi) Restricted Payments not otherwise permitted in an amount
not to exceed $20.0 million.
(c) The amount of all Restricted Payments (other than cash) shall be
the Fair Market Value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
Not later than 10 days following the end of the fiscal quarter in which such
Restricted Payment was made, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
3.04 were computed, together with a copy of any fairness opinion or appraisal to
the extent required by this Supplemental Indenture.
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Section 3.05. Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(i) pay dividends or make any other distributions on its
Capital Stock to the Company or any of its Restricted Subsidiaries, or
with respect to any other interest or participation in, or measured by,
its profits, or pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries;
(ii) make loans or advances to the Company or any of its
Restricted Subsidiaries; or
(iii) transfer any of its properties or assets to the Company
or any of its Restricted Subsidiaries.
(b) However, the preceding restrictions will not apply to
encumbrances or restrictions existing under or by reason of:
(i) Existing Indebtedness and Existing Agreements as in effect
on the Issue Date and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
are no more restrictive, taken as a whole, with respect to such dividend
and other payment restrictions than those contained in such Existing
Indebtedness and Existing Agreements, as applicable, as in effect on the
Issue Date;
(ii) the Bank Credit Facility as in effect on the Issue Date
and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are no more
restrictive, taken as a whole, with respect to such dividend and other
payment restrictions than those contained in such Bank Credit Facility, as
in effect on the Issue Date;
(iii) the Indenture and the Securities;
(iv) applicable law, regulation or order;
(v) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person
and its Subsidiaries, or the property or assets of the Person and its
Subsidiaries, so acquired, provided that, in the case of Indebtedness,
such Indebtedness was permitted by the terms of the Indenture to be
incurred;
(vi) customary non-assignment provisions in leases entered into
in the ordinary course of business;
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(vii) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on the property so
acquired of the nature described in clause (iii) of Section 3.05(a)
hereof;
(viii) any agreement for the sale or other disposition of a
Restricted Subsidiary that restricts distributions by that Restricted
Subsidiary pending its sale or other disposition;
(ix) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole, than
those contained in the agreements governing the Indebtedness being
refinanced;
(x) Liens securing Indebtedness that limit the right of the
debtor to dispose of the assets subject to such Lien;
(xi) provisions with respect to the disposition or distribution
of assets or property in joint venture agreements, assets sale agreements,
stock sale agreements and other similar agreements entered into in the
ordinary course of business;
(xii) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course
of business; and
(xiii) in the case of clause (iii) of Section 3.05(a) hereof,
any encumbrance or restriction, pursuant to customary provisions
restricting dispositions of real property interests set forth in any
reciprocal easement agreements of the Company or any of its Restricted
Subsidiaries.
Section 3.06. Incurrence of Indebtedness and Issuance of Disqualified
Stock or Subsidiary Preferred Stock.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt), or issue any Disqualified Stock or Subsidiary Preferred Stock; provided,
however, that the Company or a Restricted Subsidiary may incur Indebtedness
(including Acquired Debt) or issue Disqualified Stock or Subsidiary Preferred
Stock, if:
(i) the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters (or, if such calculation is made
on or before March 31, 2000, for as many full fiscal quarters completed
that began on or after January 1, 1999) for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or
Subsidiary Preferred Stock is issued would have been at least 2.5 to 1.0,
determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been
incurred or the Disqualified Stock or Subsidiary Preferred Stock had been
issued, as the case may be, at the beginning of such four-quarter period;
(ii) Consolidated Debt is no greater than 65% of Consolidated
Adjusted Total Assets, determined on a pro forma basis after giving effect
to such incurrence; and
(iii) the aggregate principal amount of all Indebtedness of the
Company that is secured by any Lien on any property of the Company or any
of its Restricted Subsidiaries, excluding (A) Guarantees of Indebtedness
already included in secured Indebtedness and (B) any such Indebtedness
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that is owed to or held by the Company or any of its Restricted
Subsidiaries, does not exceed 45% of Consolidated Adjusted Total Assets,
determined on a pro forma basis after giving effect to such incurrence.
(b) Section 3.06(a) hereof shall not prohibit the incurrence of any
of the following items of Indebtedness (collectively, "Permitted Debt"):
(i) the incurrence by the Company or any Restricted Subsidiary
of Indebtedness under the Bank Credit Facility and any Guarantees thereof
in an aggregate principal amount not to exceed at any one time $1,000.0
million;
(ii) the incurrence by the Company or any Restricted Subsidiary
of the Existing Indebtedness;
(iii) the incurrence by the Company or any Restricted
Subsidiary of Indebtedness represented by the Securities issued on the
Issue Date and the incurrence by any Guarantors of Indebtedness
represented by their Subsidiary Guarantees;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case, incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount, including all Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (iv), not to exceed $10.0 million at any time
outstanding;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace
Indebtedness or Disqualified Stock (other than intercompany Indebtedness)
that was permitted by the Indenture to be incurred under Section 3.06(a)
hereof or clauses (ii), (iii), (iv), (v), or (x) of this Section 3.06(b);
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries; provided, however, that:
(A) if the Company is the obligor on such Indebtedness,
such Indebtedness must be expressly subordinated to the prior payment
in full in cash of all Obligations with respect to the Securities and
the Indenture; and
(B) (1) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a
Person other than the Company or a Restricted Subsidiary thereof and
(2) any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Restricted Subsidiary thereof
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the
case may be, that was not permitted by this clause (vi);
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to
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any floating rate Indebtedness that is permitted by the terms of the
Indenture to be outstanding or for the purpose of hedging foreign currency
exchange risk;
(viii) the guarantee by the Company or any Restricted
Subsidiary of Indebtedness of the Company or any Guarantor that was
permitted to be incurred by another provision of this Section 3.06;
(ix) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in
the form of additional Indebtedness with the same terms, and the payment
of dividends on Disqualified Stock in the form of additional shares of the
same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this
covenant; provided, in each such case, that the amount thereof is included
in Fixed Charges of the Company as accrued interest;
(x) Indebtedness of a Restricted Subsidiary of the Company
incurred and outstanding on the date on which such Restricted Subsidiary
was acquired by the Company (other than Indebtedness incurred (A) to
provide all or any portion of the funds utilized to consummate the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was otherwise
acquired by the Company or (B) otherwise in connection with, or in
contemplation of, such acquisition) and as to which the Company and its
other Restricted Subsidiaries were not obligated to become liable for such
Indebtedness;
(xi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness incurred in respect of workers' compensation
claims, self-insurance obligations, performance, proposal, completion,
surety and similar bonds and completion guarantees provided by the Company
or a Restricted Subsidiary of the Company in the ordinary course of
business; provided that the underlying obligation to perform is that of
the Company and its Restricted Subsidiaries and not that of the Company's
Unrestricted Subsidiaries;
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness arising from agreements of the Company or a
Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price or similar obligations, in each case,
incurred or assumed in connection with the disposition of any business,
assets or Equity Interests of a Restricted Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Equity Interests of a Restricted
Subsidiary for the purpose of financing such acquisition; provided that
the maximum assumable liability in respect of all such Indebtedness shall
at no time exceed the gross proceeds actually received by the Company and
its Restricted Subsidiaries in connection with such disposition;
(xiii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument (except in
the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business, provided, however, that such Indebtedness is
extinguished within five business days of incurrence; and
(xiv) the incurrence by the Company or any Guarantors of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (xiv), not to exceed $100.0
million.
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In addition, the Company shall not permit any of its Unrestricted
Subsidiaries to incur any Indebtedness (including Acquired Debt) or issue any
shares of Disqualified Stock, other than Non-Recourse Indebtedness. If at any
time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under this Section 3.06, the Company
shall be in Default of this Section 3.06).
The Company shall not incur any Indebtedness (including Permitted
Debt) that is contractually subordinated in right of payment to any other
Indebtedness of the Company unless such Indebtedness is also contractually
subordinated in right of payment to the Securities on substantially identical
terms; provided, however, that no Indebtedness of the Company shall be deemed to
be contractually subordinated in right of payment to any other Indebtedness of
the Company solely by virtue of being unsecured.
For purposes of determining compliance with this Section 3.06, (A) in
the event that an item of proposed Indebtedness meets the criteria of more than
one of the categories of Permitted Debt described in clauses (i) through (xiv)
above, or is entitled to be incurred pursuant to the first paragraph of this
Section 3.06, the Company will be permitted to classify or later reclassify such
item of Indebtedness in any manner that complies with this Section 3.06;
provided that Indebtedness under the Bank Credit Facility or any refinancing
thereof substantially concurrent therewith outstanding on the date on which the
Securities are first issued and authenticated under the Indenture shall be
deemed to have been incurred on such date in reliance on the exception provided
by clause (i) of the definition of "Permitted Debt;" and (B) the amount of
Indebtedness issued at a price less than the principal amount thereof will be
equal to the amount of the liability in respect thereof determined in accordance
with GAAP. Accrual of interest, accrual of dividends, the accretion of accreted
value and the payment of interest in the form of additional Indebtedness shall
not be deemed to be an incurrence of Indebtedness for purposes of this Section
3.06. The Trustee shall have no duty or obligation to determine compliance with
this Section 3.06.
Section 3.07. Asset Sales.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash or Cash Equivalents. For purposes of this provision, each of
the following shall be deemed to be cash:
(A) any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet) of the Company or
any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Securities or
any Subsidiary Guarantee) that are assumed by the transferee of any
such assets (1) pursuant to a customary novation agreement that
releases the Company or such Restricted Subsidiary from further
liability or (2) for which the Company and its Restricted
Subsidiaries are not directly liable; and
(B) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary from such transferee
that are contemporaneously (subject to ordinary
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settlement periods) converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received in that
conversion).
(b) Within 360 days after the receipt of any Net Proceeds from an
Asset Sale or the Net Proceeds from a disposition of Designated Assets pursuant
to the terms of its related lease, the Company may apply such Net Proceeds: (i)
to repay Indebtedness under the Bank Credit Facility, and if the Indebtedness
repaid is revolving credit Indebtedness, to correspondingly reduce commitments
with respect thereto; (ii) to acquire all or substantially all of the assets of,
or a majority of the Voting Stock of, another Permitted Business; (iii) to make
a capital expenditure in a Permitted Business; or (iv) to acquire other
long-term assets that are used or useful in a Permitted Business. Pending the
final application of any such Net Proceeds, the Company may temporarily reduce
revolving credit borrowings or otherwise invest such Net Proceeds in any manner
that is not prohibited by the Indenture. Any such Net Proceeds that are not
applied or invested as provided in Section 3.07(a) hereof will constitute
"Excess Proceeds."
Section 3.08. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with any Affiliate (each,
an "Affiliate Transaction"), unless:
(a) such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company
or such Restricted Subsidiary with an unrelated Person; and
(b) the Company delivers to the Trustee (i) with respect to any
Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, a resolution
of the Board of Directors set forth in an Officers' Certificate certifying
that such Affiliate Transaction complies with this Section 3.08 and that
such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (ii) with respect to
any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $15.0 million, an opinion
as to the fairness to the Company of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment
banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of the prior paragraph:
(i) any employment or indemnity agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or such Restricted Subsidiary; (ii)
transactions between or among the Company and/or its Restricted Subsidiaries;
(iii) transactions with a Person that is an Affiliate of the Company solely
because the Company owns an Equity Interest in such Person; (iv) payment of
reasonable directors fees to Persons who are not otherwise Affiliates of the
Company; (v) issuances or sales of Equity Interests (other than Disqualified
Stock) to Affiliates of the Company; (vi) Restricted Payments that are permitted
by Section 3.04 hereof and the definition of "Permitted Investments;" and (vii)
any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements,
stock options and stock ownership plans and other reasonable fees, compensation,
benefits and indemnities paid or entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business to or with officers,
directors or employees of the Company and its Restricted Subsidiaries.
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Section 3.09. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired, unless all payments
due under the Indenture and the Securities are secured on an equal and ratable
basis with the obligations so secured until such time as such obligations are no
longer secured by a Lien.
The limitations on Liens set forth in the preceding paragraph shall
not be effective until the Covenant Amendment Date. Prior to the Covenant
Amendment Date, the limitations on the incurrence of Secured Indebtedness set
forth in the following paragraph shall be effective. On the Covenant Amendment
Date, the limitations on the incurrence of Secured Indebtedness set forth in the
following paragraph shall cease to be effective.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to incur any Secured Indebtedness other than (a) Indebtedness
permitted by clause (i) of Section 3.06(b) hereof, (b) any portion of Existing
Indebtedness that constitutes Secured Indebtedness and (c) additional Secured
Indebtedness in an aggregate amount not to exceed $50.0 million at any one time
outstanding.
Section 3.10. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer (a "Change of Control Offer") to each Holder to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of each Holder's
Securities at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase ( the "Change of Control Payment"). Within 10 days following any Change
of Control, the Company shall mail a notice to each Holder stating: (i) that the
Change of Control Offer is being made pursuant to this Section 3.10 and that all
Securities tendered will be accepted for payment; (ii) the purchase price and
the purchase date, which shall be no earlier than 30 days and no later than 60
days from the date such notice is mailed (the "Change of Control Payment Date");
(iii) that any Security not tendered will continue to accrue interest; (iv)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Securities accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Change of Control Payment Date;
(v) that Holders electing to have any Securities purchased pursuant to a Change
of Control Offer will be required to surrender the Securities, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Securities
completed, to the Paying Agent specified in the notice at the address specified
in the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date; (vi) that Holders will be entitled to
withdraw their tendered Securities and their election to require the Company to
purchase such Securities, provided, that the Paying Agent receives, not later
than the close of business on the last day of the offer period, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of Securities tendered for purchase, the Security
certificate number and a statement that such Holder is withdrawing his tendered
Securities and his election to have the Securities purchased; and (vii) that
Holders whose Securities are being purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Securities as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with this Section 3.10, the Company shall comply with the
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applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 3.10 by virtue of such conflict. The
Trustee shall have no duty or obligation to monitor or determine compliance with
any such rule, law or regulation.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment all Securities or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
Securities or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Securities so accepted together with an Officers'
Certificate stating the aggregate principal amount of Securities or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
each Holder of Securities so tendered the Change of Control Payment for such
Securities, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Security equal in principal
amount to any unpurchased portion of the Securities surrendered by such Holder,
if any; provided, that each such new Security shall be in a principal amount of
$1,000 or an integral multiple thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this Section 3.10,
the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 3.10 and Section 2.03 hereof and all other provisions of the
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Securities validly tendered and not withdrawn under such Change of
Control Offer.
Section 3.11. Business Activities.
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than Permitted Businesses, except to such
extent as would not be material to the Company and its Restricted Subsidiaries
taken as a whole.
Section 3.12. Subsidiary Guarantees.
The Company shall not permit any of its Restricted Subsidiaries after
the Issue Date, directly or indirectly, to Guarantee or pledge any assets to
secure the payment of any other Indebtedness of the Company unless such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to the Indenture providing for the Guarantee of the payment of the
Securities by such Restricted Subsidiary, which Guarantee shall not be expressly
subordinated to such other Indebtedness.
Notwithstanding the preceding paragraph, any such Guarantee by a
Restricted Subsidiary of the Securities shall provide by its terms that it shall
be automatically and unconditionally released and discharged upon any sale,
exchange or transfer, to any Person not an Affiliate of the Company, of all of
the Company's stock in, or all or substantially all the assets of, such
Restricted Subsidiary, which sale, exchange or transfer is made in compliance
with the applicable provisions of the Indenture. The form of such supplemental
indenture is attached as Exhibit C hereto.
Section 3.13. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, all
outstanding Investments owned by the Company and its Restricted
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Subsidiaries in the Subsidiary so designated shall be deemed to be an Investment
made as of the time of such designation and shall reduce the amount available
for Restricted Payments under clause (C)(2) of Section 3.04(a) hereof or the
definition of "Permitted Investments," as applicable. All such outstanding
Investments shall be valued at their fair market value at the time of such
designation. That designation shall only be permitted if such Restricted Payment
would be permitted at that time and if such Restricted Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary.
The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (1) such Indebtedness
is permitted under Section 3.06 hereof, calculated on a pro forma basis as if
such designation had occurred at the beginning of the four-quarter reference
period; and (2) no Default or Event of Default would be in existence following
such designation. Any designation of a Subsidiary of the Company as an
Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the preceding conditions and was permitted by Section 3.04 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the preceding
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 3.06 hereof, the Company shall be in
default of such Section.
Section 3.14. Transactions with CCA Entities.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with any CCA Entity (each,
a "CCA Entity Transaction"), unless (i) such CCA Entity Transaction is on terms
that are no less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person and (ii) the
Company delivers to the Trustee (A) with respect to any CCA Entity Transaction
or series of related CCA Entity Transactions involving aggregate consideration
in excess of $5.0 million in any twelve-month period, a resolution of the Board
of Directors set forth in an Officers' Certificate certifying that such CCA
Entity Transaction complies with this Section 3.14 and that such CCA Entity
Transaction has been approved by a majority of the disinterested members of the
Board of Directors and (B) with respect to any CCA Entity Transaction or series
of related CCA Entity Transactions involving aggregate consideration in excess
of $15.0 million in any twelve-month period, an opinion as to the fairness to
the Company of such CCA Entity Transaction from a financial point of view issued
by an accounting, appraisal, consulting or investment banking firm of national
standing.
(b) The following items shall not be deemed to be CCA Entity
Transactions and, therefore, shall not be subject to the provisions of Section
3.14(a) hereof: (i) any new arrangement with respect to properties not under
lease with any of the CCA Entities as of the Issue Date entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of
business, which is fair to the Company and its Restricted Subsidiaries in the
reasonable opinion of a majority of the disinterested members of the Board of
Directors of the Company; (ii) amendments to lease agreements or management
contracts that
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do not materially alter the rent provisions or economic terms of such
agreements; and (iii) payments or transactions pursuant to the Existing CCA
Entity Agreements.
Section 3.15. Changes in Covenants when Securities Rated Investment Grade.
As monitored by the Company and reported to the Trustee in an
Officers' Certificate, following the first date upon which the Securities are
rated Baa3 or better by Moody's Investors Service, Inc. and BBB-- or better by
Standard & Poor's Ratings Service (or, in either case, if such person ceases to
rate the Securities for reasons outside of the control of the Company, the
equivalent investment grade credit rating from any other "nationally recognized
statistical rating organization" (within the meaning of Rule 15c3-1(c)(2)(vi)(F)
under the Exchange Act) selected by the Company as a replacement agency) (the
"Rating Event Date") (and provided no Event of Default or event that with notice
or the passage of time would constitute an Event of Default shall exist on the
Rating Event Date), Sections 3.04, 3.05, 3.07, 3.08, 3.09, 3.11, 3.12 and 3.13
hereof will no longer be applicable to the Securities. Following the Rating
Event Date, all Unrestricted Subsidiaries shall become Restricted Subsidiaries.
The Sections that cease to be applicable to the Securities after the
Rating Event Date shall not subsequently be reinstated.
ARTICLE 4
SUCCESSORS
Section 4.01. Merger, Consolidation, or Sale of Assets.
The Company shall not, directly or indirectly, (a) consolidate or
merge with or into another Person (whether or not the Company is the surviving
corporation), or (b) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries, taken as a whole, in one or more related transactions to, another
Person unless (i) either (A) the Company is the surviving corporation or (B) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia,
(ii) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or the Person to which such sale, assignment, transfer,
conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Securities and the Indenture pursuant to agreements
reasonably satisfactory to the Trustee, (iii) immediately after such
transaction, no Default or Event of Default exists and (iv) the Company or the
Person formed by or surviving any such consolidation or merger (if other than
the Company), or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made shall, on the date of such transaction after
giving pro forma effect thereto and any related financing transactions as if the
same had occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 3.06(a) hereof.
The provisions of this Section 4.01 shall not be applicable to a
sale, assignment, transfer, conveyance or other disposition of assets, or merger
or consolidation, between or among the Company and any of its Restricted
Subsidiaries.
Section 10.01 of the Original Indenture shall not apply to the
Securities and Section 12.05 of the Original Indenture shall be subject to the
provisions of this Section 4.01.
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ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on the
Securities and such default continues for a period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Securities when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to purchase) or
otherwise;
(c) the Company fails to comply for 10 days after written notice from
the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Securities with any of its obligations under Sections 2.03, 3.01,
3.04, 3.05, 3.06, 3.08, 3.09, 3.10, 3.11, 3.12, 3.13, 3.14 or 8.05 hereof or any
of the provisions of Article 4 hereof (in each case, other than a failure to
purchase Securities which will constitute an Event of Default under clause (b)
above);
(d) the Company or any of its Restricted Subsidiaries fails to
observe or perform any other covenant, representation, warranty or other
agreement in the Indenture or the Securities for 60 days after written notice to
the Company by the Trustee or the Holders of at least 25% in aggregate principal
amount of the then outstanding Securities;
(e) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there is secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or
is created after the Issue Date, which default (i) is caused by a failure is
caused by a failure to pay principal of, or interest or premium, if any, on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (ii) results
in the acceleration of such Indebtedness prior to its express maturity, and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$25.0 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Subsidiaries and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60 days,
provided that the aggregate of all such undischarged judgments exceeds $25.0
million;
(g) the Company or any of its Significant Subsidiaries or any group
of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
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(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any of its
Significant Subsidiaries or any group of Restricted Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Restricted Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
(j) except as permitted by the Indenture, any Subsidiary Guarantee
is held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Guarantor, or any Person
acting on behalf of any Guarantor, shall deny or disaffirm its obligations under
such Subsidiary Guarantee.
The Events of Default in this Section 5.01 replace and supersede in
full the Events of Default set forth in Section 5.01 of the Original Indenture.
Section 5.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 5.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Securities may declare all the Securities to be due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (g) or (h) of Section 5.01 hereof occurs with respect to the Company, any
of its Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, all outstanding Securities
shall be due and payable immediately without further action or notice. The
provisions set forth in the first paragraph of Section 5.02 of the Original
Indenture shall not apply to the Securities.
In the case of any Event of Default occurring by reason of any
willful action or inaction taken or not taken by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Securities
pursuant
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to the optional redemption provisions of the Indenture, an equivalent premium
shall also become and be immediately due and payable to the extent permitted by
law upon the acceleration of the Securities.
Section 5.03. Compliance Certificate; Notices of Default.
The Company shall deliver to the Trustee annually a statement
regarding compliance with the Indenture. Upon becoming aware of any Default or
Event of Default, the Company shall deliver to the Trustee a statement
specifying such Default or Event of Default. The Trustee may withhold from
Holders of the Securities notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
ARTICLE 6
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 6.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 6.02 or 6.03 hereof be applied to all outstanding Securities upon
compliance with the conditions set forth below in this Article 6. Sections 15.01
and 15.02 of the Original Indenture shall not apply to the Securities.
Section 6.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 6.01 hereof of the option
applicable to this Section 6.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 6.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Securities, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 15.03 of the Original Indenture and the other
Sections of the Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Securities and the Indenture and
cured all then existing Events of Default (and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of outstanding
Securities to receive, solely from the trust fund described in Section 6.04
hereof, and as more fully set forth in such Section, payments in respect of the
principal of, or interest or premium, if any, on such Securities when such
payments are due solely out of the trust created pursuant to the Indenture, (b)
the Company's obligations with respect to such Securities concerning issuing
temporary Securities, registration of such Securities, mutilated, destroyed,
lost or stolen Securities and the maintenance of an office or agency for payment
and money for security payments held in trust, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (d) this Article 6. Subject to compliance with this
Article 6, the Company may exercise its option under this Section 6.02
notwithstanding the prior exercise of its option under Section 6.03 hereof.
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Section 6.03. Covenant Defeasance.
Upon the Company's exercise under Section 6.01 hereof of the option
applicable to this Section 6.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 6.04 hereof, be released from its
obligations under the covenants contained in Sections 3.04, 3.05, 3.06, 3.07,
3.08, 3.09, 3.10, 3.11, 3.12, 3.13, 3.14 and 8.05 hereof with respect to the
outstanding Securities on and after the date the conditions set forth in Section
6.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and the
Securities shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Securities shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Securities, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Sections
5.01(c) through 5.01(f) hereof, but, except as specified above, the remainder of
the Indenture and such Securities shall be unaffected thereby. In addition, upon
the Company's exercise under Section 6.01 hereof of the option applicable to
this Section 6.03 hereof, subject to the satisfaction of the conditions set
forth in Section 6.04 hereof, Sections 5.01(c) through 5.01(f) hereof shall not
constitute Events of Default.
Section 6.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 6.02 or 6.03 hereof to the outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Securities, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, or interest and
premium, if any, on the outstanding Securities on the Stated Maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Securities are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 6.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel with customary or
reasonable assumptions reasonably acceptable to the Trustee confirming that (A)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the Issue Date, there has been a change in
the applicable federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 6.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel with customary or
reasonable assumptions reasonably acceptable to
38
<PAGE> 42
the Trustee confirming that the Holders of the outstanding Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing either (A) on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such deposit)
or (B) insofar as Sections 5.01(g) or 5.01(h) hereof is concerned, at any time
in the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under any material agreement
or instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) 91 days shall have passed between the date of deposit and no
intervening bankruptcy of the Company shall have occurred under applicable
bankruptcy law;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of defeating, hindering, delaying or defrauding creditors of the Company or
others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel with customary or reasonable assumptions,
each stating that all conditions precedent relating to the Legal Defeasance or
the Covenant Defeasance have been complied with.
ARTICLE 7
SATISFACTION AND DISCHARGE
Section 7.01. Satisfaction and Discharge of Indenture.
The Indenture shall be discharged and shall cease to be of further
effect as to all Securities issued thereunder, when: (a) either (i) all
Securities that have been authenticated (except lost, stolen or destroyed notes
that have been replaced or paid and Securities for whose payment money has
theretofore been deposited in trust and thereafter repaid to the Company) have
been delivered to the Trustee for cancellation or (ii) all Securities that have
not been delivered to the Trustee for cancellation have become due and payable
by reason of the making of a notice of redemption or otherwise or will become
due and payable within one year and the Company has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust solely for the
benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient
without consideration of any reinvestment of interest, to pay and discharge the
entire indebtedness on the notes not delivered to the trustee for cancellation
for principal, premium, if any, and accrued interest to the date of maturity or
redemption; (b) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company is a party
or by which the Company is bound; (c) the Company has paid or caused to be paid
all sums payable by it under the Indenture; and (d) the Company has delivered
irrevocable instructions to the trustee under the Indenture to apply the
deposited money toward the payment of the notes at maturity or the redemption
date, as the case may be. In addition, the Company must deliver an Officers'
Certificate and
39
<PAGE> 43
an Opinion of Counsel to the Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied. The provisions of Section 4.01
of the Original Indenture, except for the last paragraph thereof, shall not
apply to the Securities.
ARTICLE 8
AMENDMENT, SUPPLEMENT AND WAIVER
Section 8.01. Without Consent of Holders of Securities.
Notwithstanding Section 8.02 hereof, the Company, or any Guarantor,
with respect to its Subsidiary Guarantee or the Indenture, and the Trustee may
amend or supplement the Indenture or the Securities or any Subsidiary Guarantee
without the consent of any Holder of Securities:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Securities in the case of a merger or consolidation or sale of
all or substantially all of the Company's assets;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Securities, including providing for additional
Subsidiary Guarantees, or that does not adversely affect the legal rights under
the Indenture of any such Holder; or
(e) to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
11.03 of the Original Indenture, the Trustee shall join with the Company in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of the Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under the Indenture or otherwise. Section 11.01
of the Original Indenture shall not apply to the Securities.
Section 8.02. With Consent of Holders of Securities.
Except as provided below in this Section 8.02, the Company and the
Trustee may amend or supplement the Indenture and the Securities with the
consent of the Holders of at least a majority in principal amount of the
Securities (including Additional Securities, if any) then outstanding voting as
a single class (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Securities), and any
existing Default or compliance with any provision of the Indenture or the
Securities may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Securities (including Additional
Securities, if any) voting as a single class (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, the Securities).
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<PAGE> 44
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Securities as aforesaid, and upon
receipt by the Trustee of the documents described in Section 11.03 of the
Original Indenture, the Trustee shall join with the Company in the execution of
such amended or supplemental Indenture unless such amended or supplemental
Indenture directly affects the Trustee's own rights, duties or immunities under
the Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Securities under this Section 8.02 to approve the particular form of any
proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section 8.02
becomes effective, the Company shall mail to the Holders of Securities affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 5.08 and 5.13 of the
Original Indenture, the Holders of a majority in aggregate principal amount of
the Securities (including Additional Securities, if any) then outstanding voting
as a single class may waive compliance in a particular instance by the Company
with any provision of the Indenture or the Securities. However, without the
consent of each Holder affected, an amendment or waiver under this Section 8.02
may not (with respect to any Securities held by a non-consenting Holder):
(a) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Security or alter or the provisions with respect to the redemption of the
Securities (other than Sections 2.03, 3.07 and 3.10 hereof);
(c) reduce the rate of or change the time for payment of interest on
any Security;
(d) waive a Default or Event of Default in the payment of principal
of, or interest or premium, if any, on the Securities (except a rescission of
acceleration of the Securities by the Holders of at least a majority in
aggregate principal amount of the then outstanding Securities (including
Additional Securities, if any) and a waiver of the payment default that resulted
from such acceleration);
(e) make any Security payable in money other than that stated in the
Securities;
(f) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders of Securities to receive
payments of principal of, or interest or premium, if any, on the Securities;
(g) waive a redemption payment with respect to any Security (other
than a payment required by Sections 2.03, 3.07 and 3.10 hereof); or
(h) make any change in the foregoing amendment and waiver provisions.
Section 11.02 and Article XIV of the Original Indenture shall not
apply to the Securities.
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<PAGE> 45
Section 8.03. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Security is a continuing consent by the Holder of a
Security and every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent is not made on any Security. However, any such Holder of a Security
or subsequent Holder of a Security may revoke the consent as to its Security if
the Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every Holder
of a Security.
The Company may fix a record date for determining which Holders of
the Securities must consent to such amendment, supplement or waiver. If the
Company fixes a record date, the record date shall be fixed at (i) the later of
30 days prior to the first solicitation of such consent or (ii) such other date
as the Company shall designate.
Section 8.04. Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Security thereafter authenticated. The Company in
exchange for all Securities may issue and the Trustee shall authenticate new
Securities that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Security
shall not affect the validity and effect of such amendment, supplement or
waiver.
Section 8.05. Payments for Consent.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration to or for
the benefit of any Holder of Securities for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Indenture or the
Securities unless such consideration is offered to be paid and is paid to all
Holders of the Securities that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver
or agreement.
ARTICLE 9
SUBSIDIARY GUARANTEES
Section 9.01. Subsidiary Guarantee.
Subject to this Article 9, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Security authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Securities
or the obligations of the Company hereunder or thereunder, that: (a) the
principal of and interest on the Securities will be promptly paid in full when
due, whether at maturity, by acceleration, redemption or otherwise, and interest
on the overdue principal of and interest on the Securities, if any, if lawful,
and all other obligations of the Company to the Holders or the Trustee hereunder
or thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Securities or any of such other obligations, that same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so
42
<PAGE> 46
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same immediately. Each
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Securities or the Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Securities with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor, other than the defense
of payment. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenant that this Subsidiary
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Securities and the Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 5 hereof
for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 5 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.
Section 9.02. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Securities, each Holder,
hereby confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 9, result in the obligations of such Guarantor under its Subsidiary
Guarantee not constituting a fraudulent transfer or conveyance.
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<PAGE> 47
Section 9.03. Execution and Delivery of Subsidiary Guarantee.
To evidence its Subsidiary Guarantee set forth in Section 9.01, each
Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit B shall be endorsed by an Officer
of such Guarantor on each Security authenticated and delivered by the Trustee
and that the Indenture shall be executed on behalf of such Guarantor by its
President or one of its Vice Presidents and attested to by an Officer and
delivered to the Trustee.
Each Guarantor hereby agrees that its Subsidiary Guarantee set forth
in Section 9.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Security a notation of such Subsidiary Guarantee.
If an Officer whose signature is on the Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Security on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in the Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
3.15 hereof, the Company shall cause such Subsidiaries to execute supplemental
indentures to this Indenture and Subsidiary Guarantees in accordance with
Section 3.15 hereof and this Article 9, to the extent applicable.
Section 9.04. Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in Section 9.05, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:
(a) subject to Section 9.05 hereof, the Person formed by or surviving
any such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Securities, the Indenture and the Subsidiary Guarantee on the
terms set forth herein or therein; and
(b) immediately after giving effect to such transaction, no Default
or Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Securities and the due and punctual
performance of all of the covenants and conditions of the Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Subsidiary Guarantees to be endorsed upon all of the
Securities issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee. All the Subsidiary Guarantees so
issued shall in all respects have the same legal rank and benefit under the
Indenture as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of the Indenture as though all of such Subsidiary
Guarantees had been issued at the date of the execution hereof.
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<PAGE> 48
Except as set forth in Articles 3 and 4 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in the Indenture or in any of the
Securities shall prevent any consolidation or merger of a Guarantor with or into
the Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
Section 9.05. Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all to the capital stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transactions) a
Restricted Subsidiary of the Company, then such Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Subsidiary Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 3.07 hereof.
Upon delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of this Indenture, including
without limitation Section 3.07 hereof, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Subsidiary Guarantee.
Any Guarantor not released from its obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
on the Securities and for the other obligations of any Guarantor under the
Indenture as provided in this Article 9.
ARTICLE 10
MISCELLANEOUS
Section 10.01. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Securities, the Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder of Securities by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Securities.
Section 10.02. Priority of Supplemental Indenture.
In the event any conflict arises between the terms of the Original
Indenture and the terms of this Supplemental Indenture, the terms of this
Supplemental Indenture shall be controlling and superseded such conflicting
terms of the Original Indenture; provided that, in all circumstances, Section
1.06 of the Original Indenture shall control. Unless otherwise specifically
modified or amended hereby, the terms of the Original Indenture shall remain in
full force and effect with respect to the Securities.
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<PAGE> 49
Section 10.03. Governing Law.
This Supplemental Indenture shall be deemed to be a contract made and
to be performed entirely in the State of New York, and for all purposes shall be
governed by and construed in accordance with the internal laws of said State
without regard to the conflicts of law rules of said State.
Section 10.04. Appointment of Paying Agent, Etc.
The Company hereby appoints State Street Bank and Trust Company to be
Paying Agent, an Authenticating Agent and a Security Registrar with respect to
the Securities, pursuant to Section 3.01(25) of the Original Indenture and
agrees to pay the reasonable fees and expenses of State Street Bank and Trust
Company in connection with its duties as Paying Agent, Authenticating Agent and
Security Registrar.
Section 10.05. Execution of the Notes.
The Notes shall be executed on behalf of the Company by its Chairman,
a Vice Chairman, its President, one of its Vice Presidents or its Treasurer,
under its corporate seal and attested by any one of such officers.
[Signatures on following page]
46
<PAGE> 50
SIGNATURES
Dated as of June 11, 1999
PRISON REALTY TRUST, INC.
By: /s/ Michael W. Devlin
--------------------------------
Name: Michael W. Devlin
Title: Chief Operating Officer
Attest:
By: /s/ Vida H. Carroll
-------------------------------
Name: Vida H. Carroll
Title: Chief Financial Officer,
Secretary and Treasurer
STATE STREET BANK AND TRUST COMPANY
By: /s/ Robert J. Dunn
---------------------------------
Name: Robert J. Dunn
Title: Vice President
Attest:
By: /s/ Yvette Malavet
-------------------------------
Authorized Signatory
Title: Notary Public
47
<PAGE> 51
EXHIBIT A
[Face of Note]
- - --------------------------------------------------------------------------------
CUSIP 74264 NAB1
12% Senior Note due 2006
No. ___ $100,000,000.00
PRISON REALTY TRUST, INC.
promises to pay to Cede & Co., or registered assigns, the principal sum of One
Hundred Million Dollars ($100,000,000.00) on June 1, 2006.
Interest Payment Dates: June 1 and December 1, commencing on December 1, 1999
Record Dates: May 15 and November 15
PRISON REALTY TRUST, INC.
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
(SEAL)
This is one of the Securities referred to
in the within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
-------------------------------------
Authorized Signatory
Dated: June 11, 1999
- - --------------------------------------------------------------------------------
A-1
<PAGE> 52
[Back of Note]
12% Senior Note due 2006
This Security is a Global Security within the meaning of the
Indenture hereinafter referred to and registered to and registered in the name
of The Depository Trust Company (the "Depositary") or a nominee of the
Depositary. This Global Security is exchangeable for Securities registered in
the name of a Person other than the Depositary or its nominee only in the
limited circumstances described in the Indenture, and no transfer of this
Security (other than a transfer of this Security as a whole by the Depositary to
a nominee of the Depositary or by a nominee of the Depositary or another nominee
of the Depositary) may be registered except in such limited circumstances.
Unless this Security is presented by an authorized representative of
the Depositary (55 Water Street, New York, New York) to the Company or its agent
for registration of transfer, exchange or payment, and any Security issued upon
registration or transfer of, or in exchange for, or in lieu of, this Security is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of the Depositary and any payment hereon is made to
Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has
an interest herein.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Prison Realty Trust, Inc., a Maryland corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
the rate and the manner specified below. Interest will accrue at 12% per annum
and will be payable semi-annually in cash on each June 1 and December 1,
commencing December 1, 1999, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date") to Holders of
record of the Securities at the close of business on the immediately preceding
May 15 and November 15, whether or not a Business Day. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. Interest on the
Securities will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from June 11, 1999. To the extent lawful, the
Company shall pay interest on overdue principal at the rate the then applicable
interest on the Securities; it shall pay interest on overdue installments of
interest (without regard to any applicable grace periods) at the same rate to
the extent lawful.
2. METHOD OF PAYMENT. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the record date next preceding the
Interest Payment Date, even if such Securities are canceled after such record
date and on or before such Interest Payment Date. The Holder thereof must
surrender this Security to a Paying Agent to collect principal payments. The
Company will pay principal and interest in the money of the United States that
at the time of payment is legal tender for payment of public and private debts.
The Security will be payable as to principal, premium, if any, and interest at
the office or agency of the Company maintained for such purpose or, at the
option of the Company, payment of interest may be made by wire transfer to the
Holders of Securities at their respective addresses set forth in the register of
Holders of Securities. Unless otherwise designated by the Company, the Company's
office or agency will be the office of State Street Bank and Trust Company
maintained for such purpose.
3. PAYING AGENT AND REGISTRAR. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any
A-2
<PAGE> 53
Paying Agent or Registrar without notice to any Holder of a Security. The
Company may act in any such capacity.
4. INDENTURE. The Company issued the Securities as Registered
Securities under an Indenture, dated as of June 10, 1999, as amended and
supplemented by the First Supplemental Indenture, dated as of June 11, 1999
(collectively, the "Indenture") between the Company and the Trustee. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb), as in effect on the date of the Indenture. The
Securities are subject to all such terms, and Holders of Securities are referred
to the Indenture and such Act for a statement of such terms. The terms of the
Indenture shall govern any inconsistencies between the Indenture and the
Securities. The Securities are unsecured obligations of the Company limited to
$150,000,000 million in aggregate principal amount, of which $100,000,000 were
issued on June 11, 1999.
5. OPTIONAL REDEMPTION.
At any time prior to June 1, 2002, the Company may, at its option,
on any one or more occasions redeem up to 35% of the aggregate principal amount
Securities originally offered in the Offering at a redemption price equal to
112.00% of the principal amount thereof, plus accrued and unpaid interest to the
redemption date, with the net cash proceeds of one or more Equity Offerings;
provided that at least 65% in aggregate principal amount of the Securities
originally issued remain outstanding immediately after the occurrence of such
redemption and that such redemption occurs within 45 days of the date of the
closing of such Equity Offering.
Except pursuant to the preceding paragraph, the Securities will not
be redeemable at the Company's option.
6. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, the Company shall be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's
Securities at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase (the "Change of Control Payment"). Within 10 days following any Change
of Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
Holders of Securities may elect to have such Securities purchased by completing
the form entitled "Option of Holder to Elect Purchase" appearing below.
(b) When the aggregate amount of Excess Proceeds from Asset Sales
exceeds $10.0 million, the Company shall make an offer to all Holders of
Securities and all Holders of other Indebtedness that is pari passu with the
Securities (as "Asset Sale Offer") to purchase the maximum principal amount of
Securities and such other pari passu Indebtedness that may be purchased out of
the Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date fixed for the closing of such offer. If any Excess Proceeds remain
after consummation of an Asset Sale Offer, the Company may use such Excess
Proceeds for any purpose not otherwise prohibited by the Indenture. If the
aggregate principal amount of Securities and such other pari passu Indebtedness
tendered pursuant to such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Securities and such other pari passu
Indebtedness to be purchased on a pro rata basis, based on the principal amount
of Securities and such other pari passu Indebtedness
A-3
<PAGE> 54
tendered. Holders of Securities that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Securities purchased by completing the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Securities.
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Securities are to be redeemed at its registered address. Securities may be
redeemed in part but only in whole multiples of $1,000, unless all of the
Securities held by a Holder are to be redeemed. On and after the redemption
date, interest ceases to accrue on Securities or portions thereof called for
redemption.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and Securities
may be exchanged as provided in the Indenture. The Security Registrar and the
Trustee may require a Holder of a Security, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder of Securities to pay any taxes and fees required by law or permitted by
the Indenture. The Company need not exchange or register the transfer of any
Security or portion of a Security selected for redemption, except for the
unredeemed portion of any Security being redeemed in part. Also, it need not
exchange or register the transfer of any Securities for a period of 15 days
before a selection of Securities to be redeemed or during the period between a
record date and the corresponding Interest Payment Date.
9. PERSONS DEEMED OWNERS. Prior to due presentment to the Security
Registrar for registration of the transfer of this Security, the Trustee, any
Paying Agent, the Security Registrar and the Company may deem and treat the
Person in whose name this Security is registered as its absolute owner for the
purpose of receiving payment of principal of, premium, if any, and interest on
this Security for all other purposes whatsoever, whether or not this Security is
overdue, and neither the Trustee, any Paying Agent, the Security Registrar nor
the Company shall be affected by notice to the contrary. The registered Holder
of a Security shall be treated as its owner for all purposes.
10. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Securities may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of the then
outstanding Securities (and Additional Securities, if any) voting as a single
class, and any existing default or compliance with any provision of the
Indenture or the Securities may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Securities (and Additional
Securities, if any) voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for Securities). Without the
consent of any Holder of a Security, the Indenture, the Securities or the
Subsidiary Guarantees may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Securities in addition to
or in place of certificated Securities, to provide for the assumption of the
Company's obligations to Holders of the Securities in case of a merger or
consolidation or sale of all or substantially all of the Company's assets, to
make any change that would provide any additional rights or benefits to the
Holders of the Securities or that does not adversely affect the legal rights
under the Indenture of any such Holder or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
11. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest on the Securities; (ii) default in
payment when due of principal of or premium, if any, on the Securities, (iii)
failure by the Company to comply for 10 days after notice from
A-4
<PAGE> 55
the Trustee or the Holders of at least 25% in principal amount of the Securities
then outstanding with Sections 2.03, 3.01, 3.04, 3.05, 3.06, 3.08, 3.09, 3.10,
3.11, 3.12, 3.13, 3.14 or 8.05 or Article 4 of the Indenture; (iv) failure by
the Company for 60 days after notice to the Company by the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Securities
to comply with any other agreements in the Indenture; (v) default under certain
other agreements relating to Indebtedness of the Company which default is caused
by a Payment Default or results in the acceleration of such Indebtedness prior
to its express maturity; (vi) certain final judgments for the payment of money
that remain undischarged for a period of 60 days; (vii) except as permitted by
the Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding
to be unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Guarantor or any Person acting on its behalf shall deny or
disaffirm its obligations under such Guarantor's Subsidiary Guarantee; and
(viii) certain events of bankruptcy or insolvency with respect to the Company or
any of its Significant Subsidiaries. If any Event of Default occurs (other than
by reason of bankruptcy or insolvency) and is continuing under the Indenture,
the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Securities may declare all the Securities to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company, any
Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that,
taken together, would constitute a Significant Subsidiary, all outstanding
Securities will become due and payable without further action or notice. Holders
of the Securities may not enforce the Indenture or the Securities except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Securities may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of the
Securities notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Securities then outstanding by
notice to the Trustee may on behalf of the Holders of all of the Securities
waive any existing Default or Event of Default and its consequences under the
Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Securities. In the case of any Event of
Default occurring by reason of any willful action or inaction taken or not taken
by or on behalf of the Company with the intention of avoiding payment of the
premium that the Company would have had to pay if the Company then had elected
to redeem the Securities pursuant to the optional redemption provisions of the
Indenture, an equivalent premium shall also become and be immediately due and
payable to the extent permitted by law upon the acceleration of the Securities.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
12. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not the Trustee.
13. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES,
INCORPORATORS AND STOCKHOLDERS. No director, officer, employee, incorporator or
stockholder, of the Company, as such, shall have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Securities by accepting a Security waives and releases
all such liability. The waiver and release are part of the consideration for the
issuance of the Securities.
14. AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
A-5
<PAGE> 56
15. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder of a Security or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
16. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders of
Securities. No representation is made as to the accuracy of such numbers either
as printed on the Securities or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture. Requests may be made to:
Prison Realty Trust, Inc.
10 Burton Hills Boulevard, Suite 100
Nashville, Tennessee 37215
Attention: Chief Financial Officer
A-6
<PAGE> 57
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to:
-------------------------------
(Insert assignee's legal name)
- - --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Date:
-------------------
Your Signature:
---------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*:
--------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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<PAGE> 58
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 3.07 or 3.10 of the Supplemental Indenture, check the
appropriate box below:
[ ] ERROR! SWITCH ARGUMENT NOT SPECIFIED. Section 3.07
[ ] ERROR! SWITCH ARGUMENT NOT SPECIFIED. Section 3.10
If you want to elect to have only part of the Security purchased by
the Company pursuant to Section 2.03 or Section 3.10 of the Supplemental
Indenture, state the amount you elect to have purchased:
$
--------------
Date:
---------------
Your Signature:
---------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.:
------------------------------------
Signature Guarantee*:
---------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-8
<PAGE> 59
EXHIBIT B
FORM OF SUBSIDIARY GUARANTEE
The undersigned hereby unconditionally guarantees (a) the due and
punctual payment of the principal of, premium, if any, and interest on the
Securities (as defined in the First Supplemental Indenture, dated as of June 11,
1999 (the "First Supplemental Indenture") to the Indenture of even date
therewith between Prison Realty Trust, Inc. (the "Company") and State Street
Bank and Trust Company, as Trustee (as amended by the First Supplemental
Indenture, the "Indenture")), whether at maturity, by acceleration or otherwise,
the due and punctual payment of interest on the overdue principal of and
interest, if any, on the Securities, to the extent lawful, and the due and
punctual performance of all other obligations of the Company to the Holders (as
defined in the Indenture) or the Trustee all in accordance with the terms hereof
and as set forth in Article 9 of the First Supplemental Indenture, (b) in case
of any extension of time of payment or renewal of any Securities or any of such
other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise and (c) has agreed to pay any and
all costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Subsidiary Guarantee.
Capitalized terms used herein have the meanings assigned to them in the First
Supplemental Indenture unless otherwise indicated.
No stockholder, officer, director or incorporator, as such, past,
present or future, of any Guarantor shall have any personal liability under this
Subsidiary Guarantee by reason of his or its status as such stockholder,
officer, director or incorporator.
This Subsidiary Guarantee shall be binding upon each Guarantor and
its successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This Subsidiary Guarantee may be released in accordance with the provisions set
forth in Article 9 of the First Supplemental Indenture to the Indenture.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication of the Security with respect to
which this Subsidiary Guarantee relates shall have been executed by the Trustee
or an Authenticating Agent under the Indenture by the manual signature of one of
its authorized officers.
[NAME OF GUARANTOR]
By:
------------------------------------
Name:
Title:
Attest:
By:
-------------------------------
Name:
Title:
B-1
<PAGE> 60
EXHIBIT C
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Prison Realty Trust, Inc. (or its permitted successor), a Maryland
corporation (the "Company"), the Company and State Street Bank and Trust
Company, as trustee under the Indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture, dated as of June 10, 1999 (the "Original Indenture"), as
amended and supplemented by the First Supplemental Indenture, dated as of June
11, 1999 (the "First Supplemental Indenture" and together with the Original
Indenture, the "Indenture") providing for the issuance of an aggregate principal
amount of up to $150,000,000 of 12% Senior Notes due 2006 (the "Securities");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Securities and the
Indenture on the terms and conditions set forth herein (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Section 8.01 of the First Supplemental
Indenture, the Trustee is authorized to execute and deliver this Supplemental
Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Securities as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) To jointly and severally Guarantee to each Holder of a
Security authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, the Securities or the obligations of the
Company hereunder or thereunder, that:
(i) the principal of and interest on the Securities will
be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Securities, if any, if lawful, and
all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or
renewal of any Securities or any of such other obligations, that same
will be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed or any
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<PAGE> 61
performance so guaranteed for whatever reason, the Guarantors shall
be jointly and severally obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the
Securities or the Indenture, the absence of any action to enforce the
same, any waiver or consent by any Holder of the Securities with respect
to any provisions hereof or thereof, the recovery of any judgment against
the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense
of a guarantor, other than the defense of payment.
(c) The following is hereby waived: diligence presentment,
demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, protest, notice and all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Securities and
the Indenture, and the Guaranteeing Subsidiary accepts all obligations of
a Guarantor under the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any Custodian,
Trustee, liquidator or other similar official acting in relation to either
the Company or the Guarantors, any amount paid by either to the Trustee or
such Holder, this Subsidiary Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any
right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 5 of the
Indenture for the purposes of this Subsidiary Guarantee, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article 5
of the Indenture, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Subsidiary Guarantee.
(h) The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Guarantee.
(i) Pursuant to Section 9.02 of the First Supplemental
Indenture, after giving effect to any maximum amount and any other
contingent and fixed liabilities that are relevant under any applicable
Bankruptcy or fraudulent conveyance laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by
or on behalf of any other Guarantor in respect of the obligations of such
other Guarantor under Article 9 of the First Supplemental Indenture, this
new Subsidiary Guarantee shall be limited to the maximum amount
permissible such that the obligations of such Guarantor under this
Subsidiary Guarantee will not constitute a fraudulent transfer or
conveyance.
C-2
<PAGE> 62
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that
the Subsidiary Guarantees shall remain in full force and effect notwithstanding
any failure to endorse on each Security a notation of such Subsidiary Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) Except as otherwise provided in Section 9.05 of the First
Supplemental Indenture, the Guaranteeing Subsidiary may not consolidate with or
merge with or into (whether or not such Guarantor is the surviving Person)
another corporation, Person or entity whether or not affiliated with such
Guarantor unless:
(i) subject to Section 9.04 of the First Supplemental
Indenture, the Person formed by or surviving any such consolidation or
merger (if other than a Guarantor or the Company) unconditionally assumes
all the obligations of such Guarantor, pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the Trustee,
under the Securities, the Indenture and the Subsidiary Guarantee on the
terms set forth herein or therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Subsidiary Guarantee endorsed upon the Securities and the due and
punctual performance of all of the covenants and conditions of the Indenture to
be performed by the Guarantor, such successor corporation shall succeed to and
be substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Subsidiary Guarantees to be endorsed upon all of the
Securities issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Trustee. All the Subsidiary Guarantees so
issued shall in all respects have the same legal rank and benefit under the
Indenture as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of the Indenture as though all of such Subsidiary
Guarantees had been issued at the date of the execution hereof.
(c) Except as set forth in Articles 3 and 4 and Section 9.05 of
Article 9 of the First Supplemental Indenture, and notwithstanding clauses (a)
and (b) above, nothing contained in the Indenture or in any of the Securities
shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
5. RELEASES.
(a) In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all to the capital stock of any Guarantor, in each case to
a Person that is not (either before or after giving effect to such transaction)
a Restricted Subsidiary of the Company, then such Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Subsidiary Guarantee; provided that the Net Proceeds of
such sale or other disposition are applied in accordance
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<PAGE> 63
with the applicable provisions of the Indenture, including without limitation
Section 3.07 of the First Supplemental Indenture. Upon delivery by the Company
to the Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in accordance
with the provisions of the Indenture, including without limitation Section 3.07
of the First Supplemental Indenture, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Subsidiary Guarantee.
(b) Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Securities and for the other obligations of any Guarantor under
the Indenture as provided in Article 9 of the First Supplemental Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Securities, any Subsidiary Guarantees,
the Indenture or this Supplemental Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
the Securities by accepting a Security waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the
Securities. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
C-4
<PAGE> 64
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ,
------------- ------
[GUARANTEEING SUBSIDIARY]
By:
Name:
Title:
PRISON REALTY TRUST, INC.
By:
----------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
---------------------------------
Authorized Signatory
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<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
$1,000,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of August 4, 1999
among
PRISON REALTY TRUST, INC.
(formerly known as Prison Realty Corporation),
as Borrower,
AND
CERTAIN SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO,
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent,
SOCIETE GENERALE,
as Documentation Agent,
THE BANK OF NOVA SCOTIA,
as Syndication Agent
SOUTHTRUST BANK, N.A.,
as Co-Agent
AND
LEHMAN BROTHERS INC.
as Advisor, as Lead Arranger and as Book Manager
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. DEFINITIONS 2
1.1. Definitions 2
1.2. Computation of Time Periods 37
1.3. Accounting Terms 37
1.4. Interrelationship with Original Credit Agreement 38
1.5. Confirmation of Existing Obligations 39
Section 2. CREDIT FACILITIES 39
2.1. Revolving Loans 39
2.2. Letter of Credit Subfacility 41
2.3. Swingline Loan Subfacility 46
2.4. Term Loan 48
2.5. Tranche C Term Loan 50
Section 3. OTHER PROVISIONS RELATING TO CREDIT FACILITIES 52
3.1. Default Rate 52
3.2. Extension and Conversion 52
3.3. Prepayments 53
3.4. Termination and Reduction of Revolving Committed Amount 55
3.5. Fees 56
3.6. Capital Adequacy 57
3.7. Limitation on Eurodollar Loans 58
3.8. Illegality 58
3.9. Requirements of Law 59
3.10. Treatment of Affected Loans 60
3.11. Taxes 60
3.12. Compensation 62
3.13. Pro Rata Treatment 63
3.13A Tranche C Pro Rata Treatment 64
3.14. Sharing of Payments 64
3.15. Payments, Computations, Etc 65
3.16. Evidence of Debt 67
Section 4. GUARANTY 67
4.1. The Guaranty 67
4.2. Obligations Unconditional 68
4.3. Reinstatement 69
4.4. Certain Additional Waivers 69
4.5. Remedies 70
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
4.6. Rights of Contribution 70
4.7. Guarantee of Payment; Continuing Guarantee 71
Section 5. CONDITIONS 71
5.1. Conditions to Effectiveness 71
5.2. Conditions to all Extensions of Credit 77
Section 6. REPRESENTATIONS AND WARRANTIES 78
6.1. Financial Condition 78
6.2. No Material Change 78
6.3. Organization and Good Standing 79
6.4. Power; Authorization; Enforceable Obligations 79
6.5. No Conflicts 80
6.6. No Default 80
6.7. Ownership 80
6.8. Indebtedness 80
6.9. Litigation 80
6.10. Taxes 80
6.11. Compliance with Law 81
6.12. ERISA 81
6.13. Subsidiaries 82
6.14. Governmental Regulations, Etc 83
6.15. Purpose of Loans and Letters of Credit 84
6.16. Environmental Matters 84
6.17. Intellectual Property 85
6.18. Solvency 85
6.19. Investments 86
6.20. Location of Collateral 86
6.21. Disclosure 86
6.22. [Intentionally omitted.] 86
6.23. Labor Matters 86
6.24. Year 2000 Compliance 86
6.25. First Priority Lien 87
6.26. Leases 87
Section 7. AFFIRMATIVE COVENANTS 87
7.1. Information Covenants 87
7.2. Preservation of Existence and Franchises 91
7.3. Books and Records 91
7.4. Compliance with Law 92
7.5. Payment of Taxes and Other Indebtedness 92
7.6. Insurance 92
7.7. Maintenance of Property 93
7.8. Performance of Obligations 93
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
7.9. Use of Proceeds 94
7.10. Audits/Inspections 94
7.11. Financial Covenants 94
7.12. Additional Credit Parties 95
7.13. Environmental Laws 96
7.14. Collateral 97
7.15. Leases 97
7.16. Year 2000 Compliance 98
7.17. Appraisals 98
7.18. Hedging Agreements 98
Section 8. NEGATIVE COVENANTS 98
8.1. Indebtedness 98
8.2. Liens 100
8.3. Nature of Business 100
8.4. Consolidation, Merger, Dissolution, etc 100
8.5. Asset Dispositions 101
8.6. Investments 101
8.7. Restricted Payments 102
8.8. Prepayments of Indebtedness, etc 103
8.9. Transactions with Affiliates 103
8.10. Fiscal Year; Organizational Documents 104
8.11. Limitation on Restricted Actions 104
8.12. Ownership of Subsidiaries 104
8.13. Sale Leasebacks 105
8.14. No Further Negative Pledges 105
8.15. Transactions with CCA Entities 105
8.16. Speculative Transactions 106
Section 9. EVENTS OF DEFAULT 106
9.1. Events of Default 106
9.2. Acceleration; Remedies 109
Section 10. AGENCY PROVISIONS 110
10.1. Appointment, Powers and Immunities 110
10.2. Reliance by Administrative Agent 111
10.3. Defaults 111
10.4. Rights as a Lender 111
10.5. Indemnification 112
10.6. Non-Reliance on Agents and Other Lenders 112
10.7. Successor Administrative Agent 113
Section 11. MISCELLANEOUS 113
11.1. Notices 113
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
11.2. Right of Set-Off; Adjustments 114
11.3. Benefit of Agreement 115
11.3A Tranche C Assignments and Pledges 117
11.4. No Waiver; Remedies Cumulative 117
11.5. Expenses; Indemnification 117
11.6. Amendments, Waivers and Consents 118
11.6A Tranche C Amendments, Waivers and Consents 120
11.7. Counterparts 121
11.8. Headings 121
11.9. Survival 121
11.10. Governing Law; Submission to Jurisdiction; Venue 122
11.11. Severability 122
11.12. Entirety 123
11.13. Binding Effect; Termination 123
11.14. Confidentiality 123
11.15. Conflict 124
11.16. Existing Agreement Superseded 124
</TABLE>
5
<PAGE> 6
SCHEDULES
<TABLE>
<S> <C>
Schedule 1.1(a) Existing CCA Entity Agreements
Schedule 1.1(b) Investments
Schedule 1.1(c) Liens
Schedule 2.1(a) Lenders
Schedule 5.1(f)(i) Mortgaged Properties
Schedule 6.9 Certain Litigation
Schedule 6.13 Subsidiaries
Schedule 6.17 Intellectual Property
Schedule 6.20(a) Real Property Locations
Schedule 6.20(b) Personal Property Locations
Schedule 6.20(c) Chief Executive Offices/Principal Places of Business
Schedule 7.6 Insurance
Schedule 8.1 Indebtedness
EXHIBITS
Exhibit 1.1(a) Agecroft Charter
Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 2.3(d) Form of Swingline Note
Exhibit 2.4(d) Form of Term Note
Exhibit 2.5(f) Form of Tranche C Term Note
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 3.11(d) Form of Exemption Certificate
Exhibit 7.1(c) Form of Officer's Compliance Certificate
Exhibit 7.1(e) Form of Borrowing Base Certificate
Exhibit 7.12 Form of Joinder Agreement
Exhibit 11.3(b) Form of Assignment and Acceptance
</TABLE>
6
<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August 4, 1999,
by and among PRISON REALTY TRUST, INC. (formerly known as Prison Realty
Corporation), a Maryland corporation (the "Borrower"), the subsidiaries of the
Borrower from time to time party hereto (collectively, the "Subsidiary
Guarantors"), the Lenders (as defined herein), LEHMAN COMMERCIAL PAPER INC.
("LCPI"), as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"), SOCIETE GENERALE, as documentation agent (in such
capacity, the "Documentation Agent"), LEHMAN BROTHERS INC. ("LBI"), as advisor,
book manager and lead arranger (in such capacities, the "Lead Arranger"), THE
BANK OF NOVA SCOTIA, as syndication agent (the "Syndication Agent"), and
SOUTHTRUST BANK, N.A., as Co-Agent (the "Co-Agent"), AMENDS AND RESTATES IN FULL
the Credit Agreement dated as of January 1, 1999 (as heretofore amended,
modified, restated or supplemented from time to time, the "Original Credit
Agreement"), among the Borrower, the subsidiaries of the Borrower party thereto
(the "Original Subsidiary Guarantors"), the banks and other financial
institutions party thereto as lenders (the "Original Lenders"), NATIONSBANK,
N.A. (now known as Bank of America, N.A.), as Administrative Agent for the
Original Lenders (the "Original Administrative Agent"), LCPI, as documentation
agent (the "Original Documentation Agent") and THE BANK OF NOVA SCOTIA, as
syndication agent (the "Original Syndication Agent"); this amendment and
restatement of the Original Credit Agreement, as amended, supplemented, restated
or otherwise modified from time to time, is hereinafter referred to as this
"Credit Agreement."
W I T N E S S E T H
WHEREAS, the Original Lenders previously extended credit to the
Borrower under the Original Credit Agreement;
WHEREAS, the Borrower has requested that the Original Credit Agreement
be amended and restated in full as set forth herein; and
WHEREAS, the Required Lenders under and as defined in the Original
Credit Agreement (the "Amending Lenders") are willing so to amend and restate
the Original Credit Agreement and to continue to extend credit to the Borrower,
upon and subject to the terms and conditions set forth herein, and in connection
therewith (i) the Original Administrative Agent is being replaced by the
Administrative Agent and (ii) the Original Documentation Agent is being replaced
by the Documentation Agent;
WHEREAS, it is the intent of the Borrower, the Original Subsidiary
Guarantors, the Subsidiary Guarantors, the Amending Lenders, the Administrative
Agent, the Documentation Agent, the Syndication Agent, the Co-Agent and the Lead
Arranger that this Credit Agreement amend and restate in its entirety the
Original Credit Agreement and that, from and after the Restatement Effective
Date, the Original Credit Agreement shall be of no force and effect except to
evidence the terms and conditions under which the Borrower heretofore has
incurred obligations and liabilities to the Original Lenders and the Original
Administrative Agent (as evidenced by the Original Credit Agreement and the
Original Administrative Agent's books and records); and
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<PAGE> 8
WHEREAS, this Credit Agreement is made in renewal, amendment,
restatement and modification of, but not in extinguishment or novation of, the
obligations under the Original Credit Agreement.
NOW, THEREFORE, the parties hereto hereby agree to amend and restate
the Original Credit Agreement as follows:
SECTION 1.
DEFINITIONS
1.1. DEFINITIONS.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Additional Credit Party" means each Person that becomes a
Subsidiary Guarantor after the Restatement Effective Date by execution
of a Joinder Agreement.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage.
"Adjusted Cash Flow" means, with respect to any Real Property,
as of the end of each fiscal quarter of the Consolidated Parties for
the fiscal quarter ending on such date, the lesser of:
(a) the sum of (i) cash lease payments received with
respect to such Real Property for such period under all leases
that comply with Section 7.15 ("Gross Lease Revenues");
provided that, with respect to any Real Property that is not
wholly-owned by the Borrower, the cash lease payments with
respect to such Real Property included in the calculation of
Adjusted Cash Flow hereunder shall be limited to a percentage
of such cash lease payments equal to the lesser of (A) the
Borrower's percentage ownership in such Real Property and (B)
the percentage of such cash lease payments actually received
by the Borrower, less (ii) actual capital expenditures for
maintenance items for such period, with respect to such Real
Property, less (iii) actual management fees paid with respect
to such Real Property during such period, all as determined in
accordance with GAAP, and
(b) the sum of (i) operating income for such period
less (ii) non-cash operating income for such period after
giving effect to the deduction resulting from the
Straight-Lining of Rents less (iii) real estate taxes for such
period less (iv) property insurance premiums for such period
less (v) ground lease payments made with respect to such Real
Property for such period less (vi) a capital reserve equal to
actual capital expenditures for the maintenance, repair and
upkeep of existing properties for such period, less (vii) a
management fee equal to actual management fees paid with
respect to such Real Property during such period, all as
determined in accordance with GAAP.
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<PAGE> 9
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable Percentage.
"Administrative Agent" shall have the meaning assigned to such
term in the preamble hereto, together with any successors or assigns.
"Administrative Agent's Fees" shall have the meaning assigned
to such term in Section 3.5(d).
"Affiliate" means, with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly or
indirectly owning or holding five percent (5%) or more of the Capital
Stock in such Person. For purposes of this definition, "control" when
used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
"Agecroft" means Agecroft Properties, Inc., a Tennessee
corporation.
"Agecroft Charter" means the charter of Agecroft attached
hereto as Exhibit 1.1(a).
"Agecroft Investment" means that certain Investment by the
Borrower in Agecroft in connection with the Agecroft Transaction in an
aggregate amount not exceeding $81,000,000 consisting of a combination
of a loan (evidenced by the Agecroft Note) and an equity investment.
"Agecroft Note" means that certain promissory note, in a
maximum principal amount equal to $65,000,000 made by Agecroft in favor
of the Borrower and pledged to the Administrative Agent as Collateral
for the Credit Party Obligations.
"Agecroft Transaction" means the transactions in connection
with the design, development, construction, financing, leasing and
subleasing of a prison facility located in the United Kingdom pursuant
to the Agecroft Transaction Documents.
"Agecroft Transaction Documents" means those documents listed
in the Agecroft Charter and that certain Direct Agreement, dated as of
July 6, 1998, among Agecroft, the Borrower, CCA, Agecroft Prison
Management Limited ("APM") and Her Majesty's Principal Secretary of
State for the Home Department ("HMPS"), that certain Step-In and
Collateral Agreement, dated as of July 6, 1998, among CCA, APM, HMPS
and UK Detention Services Limited, and that certain Access Agreement to
be entered into by and between Agecroft, the Borrower and APM following
completion of construction of the prison facility, all as previously
provided to the Administrative Agent.
"Aggregate Committed Amount" means the aggregate of the
Revolving Committed Amount, the Term Loan Committed Amount and the
Tranche C Term Loan Committed Amount.
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<PAGE> 10
"Aggregate Required Lenders" means, at any time, the Required
Revolving Lenders, the Required Term Lenders and the Required Tranche C
Term Lenders, each voting as a separate class.
"Amending Lenders" shall have the meaning assigned to such
term in the recitals hereto.
"Applicable Lending Office" means, for each Lender, the office
of such Lender (or of an Affiliate of such Lender) as such Lender may
from time to time specify to the Administrative Agent and the Borrower
by written notice as the office by which its Eurodollar Loans are made
and maintained.
"Applicable Percentage" means, for purposes of calculating the
applicable interest rate for any day for any Revolving Loan, the
applicable rate of the Unused Fee for any day for purposes of Section
3.5(b), or the applicable rate of the Standby Letter of Credit Fee for
any day for purposes of Section 3.5(c)(i), the appropriate applicable
percentage set forth below opposite the applicable Senior Debt Rating
then in effect as of the most recent Ratings Date. The Applicable
Percentage shall be determined based on the Senior Debt Rating;
provided that (a) if the Borrower shall not have a rating for its
Senior Debt by S&P and Moody's, then the Applicable Percentages shall
be based on Pricing Level VI and (b) if the Borrower shall have a split
Senior Debt Rating the lower of the two ratings shall apply.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Applicable Percentage for Revolving Loans
-------------------------------------------------------------------------------------------------------------
Applicable Applicable
Pricing S&P Rating Moody's Rating Eurodollar Base Rate Percentage Percentage for
Level Loans Loans for Unused Fee Standby Letter
of Credit Fee
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
I > BBB+ > Baa1 2.00% .50% .50% 2.00%
- -
-------------------------------------------------------------------------------------------------------------
II > BBB > Baa2 2.25% .75% .55% 2.25%
- -
-------------------------------------------------------------------------------------------------------------
III > BBB- > Baa3 2.50% 1.00% .60% 2.50%
- -
-------------------------------------------------------------------------------------------------------------
IV > BB+ > Ba1 3.00% 1.50% .70% 3.00%
- -
-------------------------------------------------------------------------------------------------------------
V > BB > Ba2 3.25% 1.75% .75% 3.25%
- -
-------------------------------------------------------------------------------------------------------------
VI < BB < Ba2 3.75% 2.25% .80% 3.75%
-------------------------------------------------------------------------------------------------------------
</TABLE>
The Applicable Percentages for the Revolving Loans, Unused Fee and
Standby Letter of Credit Fee shall be determined and adjusted on the
date that the Senior Debt Rating changes (each a "Ratings Date"). Each
Applicable Percentage shall be effective from and including one Ratings
Date until but excluding the next Ratings Date. Any adjustment in the
Applicable Percentages for the Revolving Loans and Standby Letter of
Credit Fee shall be applicable to all existing Revolving Loans and
standby Letters of Credit as well as any new Revolving Loans and
standby Letters of Credit made or issued.
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<PAGE> 11
"Asset Disposition" means the disposition of any or all of the
assets (including without limitation the Capital Stock of a Subsidiary)
of any Consolidated Party whether by sale, lease, transfer or otherwise
(including pursuant to any casualty or condemnation event). The term
"Asset Disposition" shall not include (a) the sale of inventory in the
ordinary course of business and (b) any single disposition of assets
which does not yield Net Cash Proceeds of at least $1,000,000, provided
that all such dispositions excluded under this clause (b) shall not in
the aggregate yield Net Cash Proceeds exceeding $3,000,000 during any
fiscal year of the Borrower. Asset Dispositions shall not include (i)
any disposition of cash or Cash Equivalents in the ordinary course of
business, (ii) any lease of Real Property complying with Section 7.15
or (iii) any disposition of property by the Borrower to a Restricted
Subsidiary that is a Credit Party or by a Restricted Subsidiary to the
Borrower or to another Restricted Subsidiary that is a Credit Party.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from
time to time.
"Bankruptcy Event" means, with respect to any Person, the
occurrence of any of the following with respect to such Person: (i) a
court or governmental agency having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
ordering the winding up or liquidation of its affairs; or (ii) there
shall be commenced against such Person an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its
Property or for the winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty (60)
consecutive days; or (iii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment
or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or make any general assignment for the
benefit of creditors; or (iv) such Person shall be unable to, or shall
admit in writing its inability to, pay its debts generally as they
become due.
"Base Rate" means, for any day, the rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus one-half of
one percent (0.5%) and (b) the Prime Rate for such day. 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 any Loan bearing interest at a rate
determined by reference to the Base Rate.
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<PAGE> 12
"Borrower" means the Person identified as such in the preamble
hereto, together with any permitted successors and assigns.
"Borrowing Base" means, as of any day, the sum of the
Borrowing Base Values of each Borrowing Base Property, in each case as
set forth in the most recent Borrowing Base Certificate delivered to
the Administrative Agent and the Lenders in accordance with the terms
of Section 7.1(e); provided, however, so long as any First Union
Letters of Credit or NationsBank Letters of Credit are outstanding, the
Borrowing Base shall be deemed reduced by the aggregate face amount of
such First Union Letters of Credit and NationsBank Letters of Credit
that remain outstanding except to the extent any amount borrowed
hereunder (and not repaid) is used to cash collateralize the Borrower's
obligations under the First Union Letters of Credit or the NationsBank
Letters of Credit.
"Borrowing Base Certificate" means a Borrowing Base
Certificate substantially in the form of Exhibit 7.1(e).
"Borrowing Base Properties" means (i) each of the Existing
Properties identified on Schedule 5.1(f)(i) that satisfies each of the
following conditions and (ii) each New Property of a Credit Party that
satisfies each of the following conditions:
(a) The property shall qualify as Eligible Real
Estate.
(b) The Administrative Agent shall have received a
pro forma compliance certificate with respect to the property
which includes an annualized calculation of the projected
quarterly Consolidated Adjusted EBITDA of such property and
the projected quarterly Adjusted Cash Flow of such property in
form and substance satisfactory to the Lenders.
(c) The Administrative Agent shall have received and
be satisfied with, in its sole discretion, the lease or
sub-lease, as appropriate, entered into by the Borrower (as
lessor or sublessor, as applicable) in leasing such property.
(d) The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, a
fully executed and notarized Mortgage in favor of the
Administrative Agent encumbering the ownership interest of the
Borrower in the property, together with such UCC-1 financing
statements as the Administrative Agent shall deem appropriate
with respect to the property.
(e) The Administrative Agent shall have received, in
form and substance reasonably satisfactory to the
Administrative Agent, an opinion of counsel in the state in
which the property is located with respect to the
enforceability of the form of Mortgage and sufficiency of the
form of UCC-1 financing statements to be recorded or filed in
such state and such other matters as the Administrative Agent
may request, in form and substance reasonably satisfactory to
the Administrative Agent.
(f) The Administrative Agent shall have received, in
form and substance reasonably satisfactory to the
Administrative Agent, a Mortgage Policy issued by the Title
Insurance Company in an amount satisfactory to the
Administrative
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<PAGE> 13
Agent with respect to the property, assuring the
Administrative Agent that the applicable Mortgage creates a
valid and enforceable first priority mortgage lien on the
property, free and clear of all defects and encumbrances
except Permitted Liens, which Mortgage Policy shall contain
such coverage and endorsements as shall be reasonably
satisfactory to the Administrative Agent and for any other
matters that the Administrative Agent may request and provide
affirmative insurance and such reinsurance as the
Administrative Agent may request, all of the foregoing in form
and substance reasonably satisfactory to the Administrative
Agent.
(g) The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, a
map or plat of a survey of the site of the property certified
to the Administrative Agent and the Title Insurance Company in
a manner satisfactory to them, dated a date satisfactory to
the Administrative Agent and the Title Insurance Company by an
independent professional licensed land surveyor reasonably
satisfactory to the Administrative Agent and the Title
Insurance Company, and otherwise in form and substance
satisfactory to the Administrative Agent.
(h) The Administrative Agent shall have received, in
form and substance reasonably satisfactory to the
Administrative Agent, a current certification from the
Borrower's registered engineer land surveyor in a form
acceptable to the Administrative Agent as to whether any of
the improvements on the property are located within any area
designated by the Director of the Federal Emergency Management
Agency as a "special flood hazard" area and if any
improvements on such parcel are located within a "special
flood hazard" area, evidence of a flood insurance policy from
a company and in an amount satisfactory to the Administrative
Agent for the applicable portion of the premises, naming the
Administrative Agent, for the benefit of the Lenders, as
mortgagee.
(i) The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, a
copy of the management agreement between the lessee (or
sublessee) of the property and the appropriate governmental
entity (if applicable).
(j) The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent,
(i) for the twelve month period preceding the date of such
property's admittance as a Borrowing Base Property (or if such
property has not been in operation for twelve months, for the
period from the date of its opening through the date of its
admittance as a Borrowing Base Property) historical operating
statements and occupancy reports with respect to such property
(and, if available, historical operating statements and
occupancy reports with respect to such property for the three
year period preceding the date of such property's admittance
as a Borrowing Base Property), together with (ii) operating
statements and occupancy reports with respect to such property
for the first projected year following the property's
admittance as a Borrowing Base Property.
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<PAGE> 14
(k) The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent,
an environmental site assessment report for the property dated
not more than twelve (12) months prior to the date of the date
of the admittance of such property as a Borrowing Base
Property.
(l) With respect to each Real Property owned by the
Borrower and leased to Management Opco, the Administrative
Agent shall have received, in form and substance satisfactory
to the Administrative Agent, a subordination of lease
agreement from Management Opco with respect to such property.
(m) With respect to each Real Property which has been
in operation for at least five (5) years, the Administrative
Agent shall have received, in form and substance satisfactory
to the Administrative Agent, a current engineering report for
the property.
(n) With respect to each New Property, the Borrower
shall, subject to the proviso below, provide the Lenders with
each of the items identified in subsections (b) through (m)
above and the Aggregate Required Lenders shall have approved
the admittance of such New Property as a Borrowing Base
Property; provided, however, a Lender's failure to notify the
Administrative Agent of its objection to the admittance of
such New Property as a Borrowing Base Property within fifteen
(15) days of such Lender's receipt of notice from the
Administrative Agent of its receipt of all of the items
identified in subsections (b) through (m) above shall be
deemed to constitute such Lender's consent to such New
Property's admittance as a Borrowing Base Property. The
Administrative Agent agrees to forward to any Lender copies of
the items identified in Subsections (b) through (m) above upon
the request of such Lender.
Notwithstanding the foregoing, the Credit Parties hereby
acknowledge and agree that (i) any property which fails to maintain an
occupancy rate of at least 75% for two consecutive fiscal quarters
shall no longer be considered a Borrowing Base Property; provided,
however, subject to satisfaction of the conditions set forth in
subsections (a) through (n) above, with respect to any New Property
that does not achieve at least a 75% occupancy level during the six
month period commencing on the date such New Property commences
operations, such New property shall constitute a Borrowing Base
Property during such six month period and 75% of such New Property's
Borrowing Base Value will be included in the Borrowing Base during such
six month period and (ii) the sum of the Borrowing Base Values of the
justice facilities of the Borrower shall not constitute more than five
percent (5%) of the sum of the Borrowing Base Values of the Borrowing
Base Properties. In the event the aggregate value of the justice
facilities of the Borrower included in the Borrowing Base exceeds five
percent (5%) of the Borrowing Base, the Borrowing Base will be reduced
by an amount equal to such excess.
"Borrowing Base Value" means, at any date of determination
with respect to each Borrowing Base Property, an amount for such
Borrowing Base Property equal to the lesser of:
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<PAGE> 15
(a) 45% of the Implied Value of such Borrowing Base
Property.
(b) the amount of indebtedness payments on which
could be covered 2 times by the Adjusted Cash Flow of such
Borrowing Base Property assuming (i) an interest rate equal to
the greater of (A) the Seven Year Treasury Rate plus two
percent (2%) per annum and (B) nine percent (9%) per annum and
(ii) a principal mortgage amortization of 20 years.
For purposes of determining the Borrowing Base Value of any
Borrowing Base Property which has not been operational for four full
fiscal quarters, the Adjusted Cash Flow attributable to such Borrowing
Base Property shall be deemed to be the result obtained by annualizing
the components of the actual Adjusted Cash Flow attributable to such
Borrowing Base Property for the period that such Borrowing Base
Property has been operational.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York are
authorized or required by law to close, except that, when used in
connection with a Eurodollar Loan, such day shall also be a day on
which dealings between banks are carried on in U.S. dollar deposits in
London, England.
"Business Development Agreement" means the Business
Development Agreement, dated as of May 4, 1999, between the Borrower
and Management Opco.
"Capitalization Rate" means eleven and one-half percent
(11.5%).
"Capital Lease" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"Capital Stock" means (i) in the case of a corporation,
capital stock, (ii) in the case of an association or business entity,
any and all shares, interests, participations, rights or other
equivalents (however designated) of capital stock, (iii) in the case of
a partnership, partnership interests (whether general or limited), (iv)
in the case of a limited liability company, membership interests and
(v) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions
of assets of, the issuing Person.
"Cash Collateral Account" shall have the meaning assigned to
such term in Section 3.3(b).
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and certificates
of deposit of (i) any Lender, (ii) any domestic commercial bank of
recognized standing having capital and
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surplus in excess of $500,000,000 or (iii) any Revolving Lender or any
bank whose short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Bank"), in each
case with maturities of not more than 270 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or
P-1 (or the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase agreements
entered into by any Person with a bank or trust company (including any
of the Lenders) or recognized securities dealer having capital and
surplus in excess of $500,000,000 for direct obligations issued by or
fully guaranteed by the United States of America in which such Person
shall have a perfected first priority security interest (subject to no
other Liens) and having, on the date of purchase thereof, a fair market
value of at least 100% of the amount of the repurchase obligations and
(e) Investments, classified in accordance with GAAP as current assets,
in money market investment programs registered under the Investment
Company Act of 1940, as amended, which are administered by reputable
financial institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a) through (d).
"CCA" means Corrections Corporation of America, a Tennessee
corporation, which was merged with and into the Borrower on December
31, 1998, pursuant to the Merger Agreement.
"CCA Entities" means each of Management Opco, Service Company
A and Service Company B and any Affiliate of any of them (other than
the Borrower or any of its Subsidiaries).
"CCA Entity Transaction" shall have the meaning assigned to
such term in Section 8.15.
"Change of Control" means the occurrence of any of the
following events: (i) any Person or two or more Persons acting in
concert shall have acquired "beneficial ownership," directly or
indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, control over,
Voting Stock of the Borrower (or other securities convertible into such
Voting Stock) representing 9% or more of the combined voting power of
all Voting Stock of the Borrower, (ii) during any period of up to 24
consecutive months (such period commencing at any time on or after the
Original Closing Date), individuals who at the beginning of such 24
month period were directors of the Borrower (together with any new
director whose election by the Borrower's Board of Directors or whose
nomination for election by the Borrower's shareholders was approved by
a vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any
reason to constitute a majority of the directors of the Borrower then
in office, (iii) there shall have occurred under any indenture or other
instrument evidencing any Indebtedness in excess of $1,000,000 any
"change of control" (as defined
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<PAGE> 17
in such indenture or other evidence of Indebtedness) obligating a
Credit Party to repurchase, redeem or repay (or offer to repurchase,
redeem or repay) all or part of the Indebtedness or capital stock
provided for therein, or (iv) any of the Chairman of the Board of
Directors, Chief Executive Officer, President or Chief Development
Officer of the Borrower as of the Original Closing Date ceases to
continue to hold such office or continue with management
responsibilities substantially similar to those existing on the
Original Closing Date and a replacement for such Person reasonably
satisfactory to the Aggregate Required Lenders and possessing
substantially similar qualifications and reputation to the Person being
replaced is not employed by the Borrower within ninety (90) days after
such first Person ceases to hold such office or continue to have such
management responsibilities. As used herein, "beneficial ownership"
shall have the meaning provided in Rule 13d-3 of the Securities and
Exchange Commission under the Securities Act of 1934.
"Closing Date" means the Original Closing Date.
"Co-Agent" shall have the meaning assigned to such term in the
preamble hereto, together with any successors and assigns.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute thereto, as interpreted by the rules and
regulations issued thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Collateral" means a collective reference to the collateral
which is identified in, and at any time will be covered by, the
Collateral Documents.
"Collateral Documents" means a collective reference to the
Security Agreement, the Pledge Agreement, the Mortgages and such other
documents executed and delivered in connection with the attachment and
perfection of the Administrative Agent's security interests and liens
arising thereunder, including, without limitation, UCC financing
statements and patent and trademark filings.
"Commitment" means the Revolving Commitment, the Swingline
Commitment, the LOC Commitment, the Term Loan Commitment and the
Tranche C Term Loan Commitment.
"Consolidated Adjusted EBITDA" means, for any period, the
amount equal to the sum of (a) Consolidated Net Income for such period,
plus (b) an amount which, in the determination of Consolidated Net
Income for such period, has been deducted for (i) Consolidated Interest
Expense, (ii) total federal, state, local and foreign income, value
added and similar taxes (including the write-off of deferred taxes) and
(iii) depreciation and amortization expense, all as determined in
accordance with GAAP less (c) actual management fees paid by the
Consolidated Parties during such period less (d) Consolidated Capital
Expenditures for such period with respect to Real Properties in
operation less (e) an amount which, in the determination of
Consolidated Net Income for such period, is attributable to interest
that has accrued and has not been paid in cash with
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<PAGE> 18
respect to the Management Opco Note less (f) an amount which, in the
determination of Consolidated Net Income for such period, is
attributable to rent payments earned under the Lease Agreements but not
yet paid in cash, all as determined in accordance with GAAP. For
purposes of calculating the Leverage Ratio, with respect to any Real
Property which has not been operational for an entire twelve month
period, Consolidated Adjusted EBITDA attributable to such Real Property
shall be deemed to be the result obtained by annualizing the components
of the actual Consolidated Adjusted EBITDA attributable to such Real
Property.
"Consolidated Capital Expenditures" means, for any period, all
capital expenditures of the Consolidated Parties for the maintenance,
repair and upkeep of existing properties, determined on a consolidated
basis for such period in accordance with GAAP.
"Consolidated Interest Expense" means, for any period,
interest expense (including the amortization of debt discount and
premium, the amortization of fees (including without limitation any
fees payable in respect of any Hedging Agreement), the interest
component under Capital Leases, the implied interest component under
Synthetic Leases and dividends paid on preferred stock) of the
Consolidated Parties on a consolidated basis for such period, as
determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, net income
(excluding extraordinary items) after taxes for such period of the
Consolidated Parties on a consolidated basis, as determined in
accordance with GAAP.
"Consolidated Net Worth" means, as of any date, shareholders'
equity or net worth of the Consolidated Parties minus the sum of (a)
interest that has accrued and has not been paid in cash on the
Management Opco Note (whether or not such accrued interest has been
added to the principal balance of the Management Opco Note) and (b) the
sum of all rent payments that have been earned under the Lease
Agreements but not paid in cash as a result of an agreement to defer
the payment of such rent until a later date.
"Consolidated Parties" means a collective reference to the
Borrower and its Restricted Subsidiaries, and "Consolidated Party"
means any one of them. For purposes of this Credit Agreement, Service
Company A, Service Company B, Management Opco and any Special
Affiliates of the Borrower shall not be considered a Consolidated
Party, notwithstanding the treatment of such Special Affiliates under
GAAP (including without limitation any requirement that such Special
Affiliates be accounted for as a Subsidiary for purposes of
consolidated financial statements under GAAP).
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, the LOC Documents, each Joinder Agreement, any
related commitment letters, the Collateral Documents and all other
related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto (in each case as the same may
be amended, modified, restated, supplemented, extended, renewed or
replaced from time to time), and "Credit Document" means any one of
them.
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"Credit Parties" means a collective reference to the Borrower
and the Guarantors, and "Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication, (i) all
of the obligations of the Credit Parties to the Lenders (including any
Issuing Lender), the Administrative Agent, the Documentation Agent, the
Syndication Agent, the Co-Agent and the Lead Arranger whenever arising,
under this Credit Agreement, the Notes, the Collateral Documents or any
of the other Credit Documents (including, but not limited to, any
interest accruing after the occurrence of a Bankruptcy Event with
respect to any Credit Party, regardless of whether such interest is an
allowed claim under the Bankruptcy Code) and (ii) all liabilities and
obligations, whenever arising, owing from any Credit Party to any
Lender, or any Affiliate of a Lender, arising under any Hedging
Agreement.
"Debt Service Coverage Ratio" means, as of the end of each
fiscal quarter of the Consolidated Parties for the fiscal quarter
ending on such date, the ratio of (a) the sum of the Adjusted Cash Flow
for each of the Borrowing Base Properties for the applicable period,
minus (in respect of any fiscal quarter ended after June 30, 1999) any
Tenant Incentive Fees incurred or paid by the Borrower during such
period, to (b) Implied Debt Service for the applicable period. The
Adjusted Cash Flow for any fiscal quarter for any Borrowing Base
Property that has been operational for less than the entire fiscal
quarter shall be determined by giving pro forma effect to the
components of Adjusted Cash Flow as if such Borrowing Base Property had
been operational from the first day of such fiscal quarter.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that (a)
has failed to make a Loan or purchase a Participation Interest required
pursuant to the terms of this Credit Agreement within one Business Day
of when due, (b) other than as set forth in (a) above, has failed to
pay to the Administrative Agent or any Lender an amount owed by such
Lender pursuant to the terms of this Credit Agreement within one
Business Day of when due, unless such amount is subject to a good faith
dispute or (c) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or with respect to which (or with
respect to any of assets of which) a receiver, trustee or similar
official has been appointed.
"Documentation Agent" shall have the meaning assigned to such
term in the preamble hereto, together with any successors and assigns.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Domestic Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the
laws of any State of the United States or the District of Columbia.
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"Duff & Phelps" means Duff & Phelps Credit Rating Co., or any
successor or assignee of the business of such entity in the business of
rating securities.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
Lender; and (iii) any other Person approved by the Administrative Agent
(such approval not to be unreasonably withheld or delayed) and, unless
an Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 11.3, the Borrower
(such approval not to be unreasonably withheld or delayed by the
Borrower and such approval to be deemed given by the Borrower if no
objection is received by the assigning Lender and the Administrative
Agent from the Borrower within two Business Days after notice of such
proposed assignment has been provided by the assigning Lender to the
Borrower); provided, however, that the approval of the Administrative
Agent and the Borrower with respect to any proposed Eligible Assignee
of a Term Loan or Tranche C Term Loan is not required and provided,
further, that neither the Borrower nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee.
"Eligible Real Estate" means, as of any date of determination,
any correctional, justice or detention property that satisfies the
following criteria: (a) except as provided in clause (c) below, the
property must be located in the United States or a United States
territory, (b) except as provided in clause (c) below, the property
must be wholly owned by the Borrower (which may include a leasehold
property of the Borrower subject to a lease acceptable to the Required
Lenders and the Required Tranche C Term Lenders in their reasonable
discretion), (c) with respect to any New Property, (i) if the property
is not wholly owned by the Borrower, it must be located in the United
States or a United States territory or (ii) if the property is not
located in the United States or a United States territory, it must be
wholly owned by the Borrower; provided that the value of all such
properties included in this clause (c) may not exceed five percent (5%)
of Total Value, (d) the property must be unencumbered other than any
lien securing the Credit Party Obligations, (e) the property must be
free of structural and title defects and have passed a structural
inspection conducted by an architect or engineer engaged by the
Administrative Agent or the Borrower shall have provided to the Lenders
other written evidence of structural integrity with respect to the
property reasonably acceptable in form and substance to the Required
Lenders and the Required Tranche C Term Lenders, (f) the Lenders must
have received an environmental site assessment report for the property
in form and substance reasonably satisfactory to the Required Lenders
and the Required Tranche C Term Lenders dated not more than twelve (12)
months prior to the acquisition of such property by the Borrower, (g)
the property must be fully operating and generating revenue, (h) the
lessee leasing the property from the Borrower must be in compliance
with all material terms of the facility management agreement between
such lessee and the appropriate governmental entity, (i) the Borrower
must have leased the property to a lessee or sublessee (where
applicable) reasonably acceptable to the Required Lenders and the
Required Tranche C Term Lenders pursuant to the terms and conditions of
a lease agreement reasonably acceptable in form and substance to the
Required Lenders and the Required Tranche C Lenders and (j) the
Borrower and lessee or sublessee (where applicable) of the property
must be in compliance with all material terms and conditions contained
in the lease or sublease (where applicable) agreement between the
Borrower and such lessee or sublessee (where applicable). For purposes
of this definition, the parties hereby agree that a Lender's failure to
notify the Administrative Agent of its
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objection to any of the items identified in this definition within
fifteen (15) days of notice from the Administrative Agent of its
receipt of all items identified in clauses (e), (f) and (i) of this
definition shall be deemed to constitute such Lender's approval of such
items. The Administrative Agent agrees to forward to any Lender copies
of the items identified in clauses (e), (f) and (i) upon the request of
such Lender.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any
debt security that is convertible into, or exchangeable for, Capital
Stock).
"Equity Issuance" means any issuance by any Consolidated Party
to any Person which is not a Credit Party of (a) shares of its Capital
Stock, (b) any shares of its Capital Stock pursuant to the exercise of
options or warrants or (c) any shares of its Capital Stock pursuant to
the conversion of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto, as interpreted by
the rules and regulations thereunder, all as the same may be in effect
from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Consolidated Party within the meaning of Section
4001(a)(14) of ERISA, or is a member of a group which includes any
Consolidated Party and which is treated as a single employer under
Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial cessation of
operations (within the meaning of Section 4062(e) of ERISA); (ii) the
withdrawal by any Consolidated Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a substantial
employer (as such term is defined in Section 4001(a)(2) of ERISA), or
the termination of a Multiple Employer Plan; (iii) the distribution of
a notice of intent to terminate or the actual termination of a Plan
pursuant to Section 4041(a)(2) or 4041A of ERISA; (iv) the institution
of proceedings to terminate or the actual termination of a Plan by the
PBGC under Section 4042 of ERISA; (v) any event or condition which
might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Plan; (vi) the complete or partial withdrawal of any Consolidated Party
or any ERISA Affiliate from a Multiemployer Plan; (vii) the conditions
for imposition of a
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lien under Section 302(f) of ERISA exist with respect to any Plan; or
(viii) the adoption of an amendment to any Plan requiring the provision
of security to such Plan pursuant to Section 307 of ERISA.
"Eurodollar Loan" means any Loan that bears interest at a rate
based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined by the Administrative
Agent to be equal to the quotient obtained by dividing (a) the
Interbank Offered Rate for such Eurodollar Loan for such Interest
Period by (b) 1 minus the Eurodollar Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"Eurodollar 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 "Eurodollar liabilities"
(as such term is used in Regulation D). Without limiting the effect of
the foregoing, the Eurodollar 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 Adjusted Eurodollar Rate is to be determined, or
(ii) any category of extensions of credit or other assets which include
Eurodollar Loans. The Adjusted Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Requirement.
"Event of Default" shall have the meaning assigned to such
term in Section 9.1.
"Executive Officer" of any Person means any of the chief
executive officer, chief operating officer, president, vice president,
chief financial officer or treasurer of such Person.
"Existing CCA Entity Agreements" means agreements of the CCA
Entities as in effect on the Restatement Effective Date and listed on
Schedule 1.1(a).
"Existing Properties" has the meaning assigned to such term in
Section 5.1(f)(i).
"Fees" means all fees payable pursuant to Section 3.5.
"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
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Day, the Federal Funds Rate for such day shall be the average rate
charged to the Administrative Agent (in its individual capacity) on
such day on such transactions as determined by the Administrative
Agent.
"First Union Letters of Credit" has the meaning assigned to
such term in clause (ix) of the definition of "Permitted Liens."
"Fitch" means Fitch Investors Service, or any successor or
assignee of the business of such entity in the business of rating
securities.
"Foreign Subsidiary" means, with respect to any Person, any
Subsidiary of such Person other than a Domestic Subsidiary; provided,
however, that a Foreign Subsidiary that is treated as a pass-through
entity for United States federal income tax purposes shall be deemed a
Domestic Subsidiary for purposes of this Credit Agreement and the other
Credit Documents while so treated.
"Funds from Operations" for any period, with respect to any
Person, shall have the meaning given to such term, and shall be
calculated in accordance with, standards promulgated by the Board of
Governors of the National Association of Real Estate Investment Trusts
in effect from time to time.
"GAAP" means generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of
Section 1.3.
"Governmental Authority" means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Gross Lease Revenue" shall have the meaning given to such
term in the definition of Adjusted Cash Flow.
"Guarantors" means a collective reference to each of the
Subsidiary Guarantors, together with their successors and permitted
assigns, and "Guarantor" means any one of them.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation keep
well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder
of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount
of any Guaranty Obligation hereunder shall (subject to any
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limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount of the Indebtedness in respect of which
such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection
agreement or foreign currency exchange agreement between the Borrower
and any Lender, or any Affiliate of a Lender.
"Implied Debt Service" means, the scheduled debt payments that
would have been due on the average outstanding loan balance under this
Credit Agreement for the prior fiscal quarter assuming a principal
mortgage amortization of 20 years and assuming an interest rate equal
to the greater of (i) nine percent (9%) per annum and (b) the Seven
Year Treasury Rate plus two percent (2.0%) per annum.
"Implied Value" means, with respect to any Real Property on
any date, an amount equal to the Adjusted Cash Flow of such Real
Property for the four full fiscal quarters most recently ended on or
prior to such date, divided by the Capitalization Rate. For purposes of
determining the Implied Value of any Real Property which has not been
operational for four full fiscal quarters, the Adjusted Cash Flow
attributable to such Real Property shall be deemed to be the result
obtained by annualizing the components of the actual Adjusted Cash Flow
attributable to such Real Property for the period that such Real
Property has been operational.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b)
all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, or upon which interest payments are customarily
made, (c) all obligations of such Person under conditional sale or
other title retention agreements relating to Property purchased by such
Person (other than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of
business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of Property or services purchased by such
Person (other than trade debt incurred in the ordinary course of
business and due within six months of the incurrence thereof) which
would appear as liabilities on a balance sheet of such Person, (e) all
obligations of such Person under take-or-pay or similar arrangements or
under commodities agreements, (f) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out
of the proceeds of production from, Property owned or acquired by such
Person, whether or not the obligations secured thereby have been
assumed, (g) all Guaranty Obligations of such Person, (h) the principal
portion of all obligations of such Person under Capital Leases, (i) all
obligations of such Person under Hedging Agreements and similar
arrangements whether or not permitted under this Credit Agreement and
whether or not any Lender or any Affiliate of any Lender is a party
thereto, (j) all obligations of such Person to repurchase any
securities which repurchase obligation is related to the issuance
thereof, (k) the undrawn face amount of all standby letters of credit
issued, trade letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed),
(l) all preferred Capital Stock issued by such
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Person and required by the terms thereof to be redeemed, or for which
mandatory sinking fund payments are due, by a fixed date occurring less
than twelve (12) years after the Restatement Effective Date, (m) all
other obligations of such person under any arrangement or financing
structure classified as debt (for tax purposes) by any nationally
recognized rating agency, (n) the principal portion of all obligations
of such Person under Synthetic Leases and (o) the Indebtedness of any
partnership in which such Person is a general partner, and the
Indebtedness of any unincorporated joint venture in which such Person
is a joint venturer, to the extent that such Person would, either
pursuant to contract or by operation of law, be liable for such
Indebtedness.
"Intellectual Property" shall have the meaning assigned to
such term in Section 6.17.
"Interbank Offered Rate" means, for any Eurodollar Loan for
any Interest Period therefor, 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. (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, for any
Eurodollar Loan for any Interest Period therefor, 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 Coverage Ratio" means, as of the end of each fiscal
quarter of the Consolidated Parties for the twelve month period ending
on such date, the ratio of Consolidated Adjusted EBITDA for such period
to Consolidated Interest Expense for such period. Notwithstanding the
foregoing, for purposes of calculating the Interest Coverage Ratio as
of the end of any fiscal quarter ending within twelve months of the
Original Closing Date, Interest Coverage Ratio shall mean, the ratio of
Consolidated Adjusted EBITDA for the period from the Original Closing
Date through such applicable fiscal quarter end to Consolidated
Interest Expense for the period from the Original Closing Date through
such applicable fiscal quarter end.
"Interest Payment Date" means (a) as to Base Rate Loans, the
last day of each calendar month, the date of repayment of principal of
such Loan and the Revolving Loan Maturity Date, Term Loan Maturity Date
or Tranche C Term Loan Maturity Date, as applicable, and (b) as to
Eurodollar Loans, the last day of each applicable Interest Period, the
date of repayment of principal of such Loan and the Revolving Loan
Maturity Date, Term Loan Maturity Date or Tranche C Term Loan Maturity
Date, as applicable, and in addition where the applicable Interest
Period for a Eurodollar Loan is greater than three months, then also
the date three months from the beginning of the Interest Period and
each three months thereafter.
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"Interest Period" means, as to Eurodollar Loans, a period of
one, two, three or six months' duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day),
(b) no Interest Period shall extend beyond the Revolving Loan Maturity
Date, Term Loan Maturity Date or Tranche C Term Loan Maturity Date, as
applicable, (c) with regard to the Term Loans, no Interest Period shall
extend beyond any Principal Amortization Payment Date unless the
portion of the Term Loans comprised of Base Rate Loans together with
the portion of the Term Loans comprised of Eurodollar Loans with
Interest Periods expiring on or prior to such Principal Amortization
Payment Date is at least equal to the amount of such Principal
Amortization Payment due on such date, (d) with regard to the Tranche C
Term Loans, no Interest Period shall extend beyond any Principal
Amortization Payment Date unless the portion of the Tranche C Term
Loans comprised of Base Rate Loans together with the portion of Tranche
C Term Loans comprised of Eurodollar Loans with Interest Periods
expiring on or prior to such Principal Amortization Payment Date is at
least equal to the amount of such Principal Amortization Payment due on
such date and (e) where an Interest Period begins on a day for which
there is no numerically corresponding day in the calendar month in
which the Interest Period is to end, such Interest Period shall end on
the last Business Day of such calendar month.
"Investment" means (a) the acquisition (whether for cash,
property, services, assumption of Indebtedness, securities or
otherwise) of assets, Capital Stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other
securities of any Person or (b) any deposit with, or advance, loan or
other extension of credit to, any Person (other than deposits made in
connection with the purchase of equipment or other assets in the
ordinary course of business) or (c) any other capital contribution to
or investment in any Person, including, without limitation, any
Guaranty Obligations (including any support for a letter of credit
issued on behalf of such Person) incurred for the benefit of such
Person.
"Issuing Lender" means any Revolving Lender selected by the
Borrower with the consent of such Revolving Lender and with the
approval of the Administrative Agent (such approval not to be
unreasonably withheld).
"Issuing Lender Fees" shall have the meaning assigned to such
term in Section 3.5(c)(ii).
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Exhibit 7.12 hereto, executed and delivered by an
Additional Credit Party in accordance with the provisions of Section
7.12.
"Lead Arranger" shall have the meaning assigned to such term
in the preamble hereto, together with any successors and assigns.
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"Lease Agreement" shall have the meaning assigned to such term
in Section 9.1(l).
"Lender" means any of the Persons identified as a "Lender" on
Schedule 2.1(a) hereto, and any Person which may become a Lender by way
of assignment in accordance with the terms hereof, together with their
successors and permitted assigns.
"Letter of Credit" means any letter of credit issued by an
Issuing Lender for the account of the Borrower in accordance with the
terms of Section 2.2.
"Leverage Ratio" means, with respect to the Consolidated
Parties on a consolidated basis as of the last day of any fiscal
quarter, the ratio of (a) Total Indebtedness on the last day of such
fiscal quarter to (b) Consolidated Adjusted EBITDA for the twelve month
period ending on the last day of such fiscal quarter; provided,
however, for purposes of calculating the Leverage Ratio as of the end
of any fiscal quarter ending within twelve months of the Original
Closing Date, Consolidated Adjusted EBITDA for the applicable period
shall be deemed to be the result obtained by annualizing the components
of Consolidated Adjusted EBITDA for the period commencing on the
Original Closing Date and ending as of the end of such fiscal quarter.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans, the Term Loans
and/or the Tranche C Term Loans (or a portion of any Revolving Loan,
Term Loan or Tranche C Term Loan bearing interest at the Adjusted Base
Rate or the Adjusted Eurodollar Rate) and/or any Swingline Loans
individually or collectively, as appropriate.
"LOC Commitment" means the commitment of the Issuing Lenders
to issue Letters of Credit, and to honor payment obligations under,
Letters of Credit hereunder in an aggregate face amount at any time
outstanding (together with the amounts of any unreimbursed drawings
thereon) of up to the LOC Committed Amount and with respect to each
Revolving Lender, the commitment of each Revolving Lender to purchase
participation interests in the Letters of Credit.
"LOC Committed Amount" shall have the meaning assigned to such
term in Section 2.2.
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered
in connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned
or at risk or (ii) any collateral security for such obligations.
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"LOC Obligations" means, at any time, the sum of (i) the
maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding,
assuming compliance with all requirements for drawings referred to in
such Letters of Credit plus (ii) the aggregate amount of all drawings
under Letters of Credit honored by an Issuing Lender but not
theretofore reimbursed by the Borrower.
"Management Opco" means Corrections Corporation of America
(formerly Correctional Management Services Corporation (and not CCA)),
a Tennessee corporation.
"Management Opco Credit Agreement" means that certain Loan and
Security Agreement, dated as of March 1, 1999, among Management Opco,
Foothill Capital Corporation and the other financial institutions party
thereto, as amended by that certain Amendment Number One to Loan and
Security Agreement, dated June 3, 1999, and as otherwise amended or
modified.
"Management Opco Note" means that certain promissory note
dated December 31, 1998 in the amount of $137,000,000 issued by
Management Opco in favor of CCA and now held by the Borrower as a
result of the Merger, as modified by that certain Note Modification
Agreement, dated March 1, 1999, among Management Opco, the Borrower and
the Original Administrative Agent.
"Master Lease" means that certain Master Agreement to Lease
dated January 1, 1999 between the Borrower and Management Opco, as
amended or modified from time to time as provided herein.
"Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations, business,
assets or liabilities of the Consolidated Parties taken as a whole or
(ii) the rights and remedies of the Administrative Agent or the other
Secured Parties under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Laws,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Merger" means, collectively, those certain mergers of each of
CCA and PZN with and into the Borrower pursuant to the terms and
conditions of the Merger Agreement, which were consummated on December
31, 1998, and January 1, 1999, respectively.
"Merger Agreement" means that certain Amended and Restated
Agreement and Plan of Merger among the Borrower, PZN and CCA dated
September 29, 1998.
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"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Mortgage" shall have the meaning given to such term in
Section 5.1(f).
"Mortgage Policy" shall have the meaning given to such term in
Section 5.1(f).
"Multiemployer Plan" means a Plan which is a multiemployer
plan as defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which any Consolidated
Party or any ERISA Affiliate and at least one employer other than the
Consolidated Parties or any ERISA Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. (now known as Bank of
America, N.A.), and its successors.
"NationsBank Letters of Credit" has the meaning assigned to
such term in clause (ix) of the definition of "Permitted Liens."
"Net Cash Proceeds" means (i) the aggregate cash proceeds
received by the Consolidated Parties in respect of any Equity Issuance
or Asset Disposition, net of (a) direct costs (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and (b) taxes paid or payable as a result thereof and (ii)
any cash amounts received (or deemed received) by the Borrower in
repayment of the Agecroft Note; it being understood that "Net Cash
Proceeds" shall include, without limitation, any cash received upon the
sale or other disposition of any non-cash consideration received by the
Consolidated Parties in any Equity Issuance, Asset Disposition or
repayment of the Agecroft Note.
"Net Worth" means, as of any date, shareholders' equity or net
worth of the Borrower minus the sum of (a) interest that has accrued
and has not been paid in cash on the Management Opco Note (whether or
not such accrued interest has been added to the principal balance of
the Management Opco Note) and (b) the sum of all rent payments that
have been earned under the Lease Agreements but not paid in cash as a
result of an agreement to defer the payment of such rent until a later
date.
"New Properties" means any real property asset owned by the
Borrower or any leasehold estate of the Borrower (in each case other
than those real property assets and leasehold estates listed on
Schedule 5.1(f)(i)) which, in either case, qualifies as a parcel of
Eligible Real Estate and satisfies each of the conditions identified in
the definition of "Borrowing Base Properties".
"Non-Conforming Investments" means Investments by a
Consolidated Party in undeveloped land, non-income producing
properties, properties not constituting correctional, detention or
justice facilities or any other investments not related to the
ownership of correctional, justice or detention facilities.
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"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Borrower nor any of its Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument
that would constitute Indebtedness) other than a pledge of the equity
interests of any Unrestricted Subsidiary, (b) is directly or indirectly
liable (as a guarantor or otherwise) other than by virtue of a pledge
of the equity interests of any Unrestricted Subsidiary, or (c)
constitutes the lender; (ii) no default with respect to which
(including any rights that the holders thereof may have to take
enforcement action against any Unrestricted Subsidiary) would permit
(upon notice, lapse of time or both) any holder of any other
Indebtedness (other than the Obligations) of the Borrower or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment thereof to be accelerated or payable prior to its
stated maturity; and (iii) as to which the lenders thereunder will not
have any recourse to the Capital Stock or assets of the Borrower or any
of its Restricted Subsidiaries (other than the equity interests of any
Unrestricted Subsidiary).
"Non-U.S. Lender" shall have the meaning assigned to such term
in Section 3.11(d).
"Note" or "Notes" means the Revolving Notes, the Swingline
Notes, the Term Notes and/or the Tranche C Term Notes, if any,
individually or collectively, as appropriate.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Exhibit 2.1(b)(i), as required by Section
2.1(b)(i) or Section 2.5(b).
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Exhibit 3.2, as
required by Section 3.2.
"Obligations" means, collectively, the Revolving Loans, the
Swingline Loans, the LOC Obligations, the Term Loans and the Tranche C
Term Loans.
"Opco License Agreement" means that certain Service Mark and
Trade Name Use Agreement dated as of December 31, 1998, between CCA (as
predecessor-in-interest to the Borrower) and Management Opco, as
amended or modified from time to time.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Original Administrative Agent" shall have the meaning
assigned to such term in the preamble hereto.
"Original Closing Date" shall mean January 1, 1999.
"Original Credit Agreement" shall have the meaning assigned to
such term in the preamble hereto.
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"Original Documentation Agent" shall have the meaning assigned
to such term in the preamble hereto.
"Original Lenders" shall have the meaning assigned to such
term in the preamble hereto.
"Original Subsidiary Guarantors" shall have the meaning
assigned to such term in the preamble hereto.
"Original Syndication Agent" shall have the meaning assigned
to such term in the heading hereof.
"Original Term Lenders" means the Term Lenders under the
Original Credit Agreement immediately prior to the Restatement
Effective Date.
"Other Taxes" shall have the meaning assigned to such term in
Section 3.11.
"Participation Interest" means a purchase by a Lender of a
participation in Letters of Credit or LOC Obligations as provided in
Section 2.2 or in any Loans as provided in Section 3.14.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereof.
"Permitted Investments" means Investments which are either (i)
cash and Cash Equivalents; (ii) accounts receivable created, acquired
or made by any Consolidated Party in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms;
(iii) Investments consisting of Capital Stock, obligations, securities
or other property received by any Consolidated Party in settlement of
accounts receivable (created in the ordinary course of business); (iv)
Investments existing as of the Restatement Effective Date and set forth
in Schedule 1.1(b); (v) Investments in any Credit Party; (vi)
Investments consisting of the acquisition of Real Properties, provided
that for any Real Properties located outside of the United States or a
United States territory, the provisions of clause (c) of the definition
of "Eligible Real Estate" are complied with and, if such Investment is
made through a Subsidiary of the Borrower (other than an Unrestricted
Subsidiary), the provisions of Section 7.12 are complied with respect
to such Subsidiary, (vii) Investments subsequent to the Original
Closing Date in Service Company A and Service Company B in an amount
not to exceed $5,000,000 in the aggregate during the term of this
Credit Agreement, (viii) payments to Management Opco arising from the
operation of the Tenant Incentive Agreement, to the extent such
payments would be classified as "Investments" hereunder and (ix) prior
to Agecroft's designation as an Unrestricted Subsidiary hereunder, the
Agecroft Investment.
"Permitted Liens" means:
(i) Liens in favor of the Administrative Agent for the benefit
of the Secured Parties to secure the Credit Party Obligations;
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<PAGE> 32
(ii) Liens (other than Liens created or imposed under ERISA)
for taxes, assessments or governmental charges or levies not yet due or
Liens for taxes being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with
GAAP have been established (and as to which the Property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account
thereof);
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other Liens
imposed by law or pursuant to customary reservations or retentions of
title arising in the ordinary course of business, provided that such
Liens secure only amounts not yet due and payable or, if due and
payable, are unfiled and no other action has been taken to enforce the
same or are being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have
been established (and as to which the Property subject to any such Lien
is not yet subject to foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by any Consolidated Party in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure
the performance of tenders, statutory obligations, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of
borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the judgments
secured shall, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall have
been discharged within 30 days after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect, impairing
the use of the encumbered Property for its intended purposes;
(vii) leases or subleases granted to others not interfering in
any material respect with the business of any Consolidated Party;
(viii) normal and customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions;
(ix) Liens on cash held by (i) NationsBank, as issuing lender
under the Original Credit Agreement, to secure the Borrower's
obligations in respect of letters of credit issued under the Original
Credit Agreement and outstanding on the Restatement Effective Date (the
"NationsBank Letters of Credit") and (ii) First Union National Bank, as
issuing lender under a predecessor credit agreement to the Original
Credit Agreement, to secure the Borrower's obligations in respect of
letters of credit issued under such predecessor credit agreement and
outstanding on the Restatement Effective Date (the "First Union Letters
of Credit"), in each case so long as such liens are released within
ninety (90) days of the Restatement Effective Date;
(x) Liens existing as of the Original Closing Date and set
forth on Schedule 1.1(c); provided that (a) no such Lien shall at any
time be extended to or cover any Property
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other than the Property subject thereto on the Original Closing Date
and (b) the principal amount of the Indebtedness secured by such Liens
shall not be increased, extended, renewed, refunded or refinanced; and
(xi) Liens on the assets or Capital Stock of any Unrestricted
Subsidiary securing the obligations of such Unrestricted Subsidiary or
any other Unrestricted Subsidiary that owns or is owned by such
Unrestricted Subsidiary.
"Permitted Unsecured Debt" means Indebtedness incurred after
the Restatement Effective Date pursuant to Section 8.1(e) and issued in
a public offering or Rule 144A transaction.
"Permitted Unsecured Debt Documents" means the indenture,
underwriting agreement, purchase agreement, registration rights
agreement and other documentation governing any Permitted Unsecured
Debt.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any Governmental
Authority.
"Plan" means any employee benefit plan (as defined in Section
3(3) of ERISA) which is covered by ERISA and with respect to which any
Consolidated Party or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the amended and restated pledge
agreement dated as of the Restatement Effective Date executed in favor
of the Administrative Agent by each of the Credit Parties, as amended,
modified, restated or supplemented from time to time.
"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 Amortization Payment" means a principal
amortization payment on the Term Loans or the Tranche C Term Loans, as
set forth in Sections 2.4(b) and 2.5(d), respectively.
"Principal Amortization Payment Date" means the date a
Principal Amortization Payment is due.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"PZN" means CCA Prison Realty Trust, a Maryland real estate
investment trust, which was merged with and into the Borrower on
January 1, 1999, pursuant to the Merger Agreement.
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"Real Properties" means each of the Existing Properties and
New Properties, and "Real Property" means any one of them.
"Register" shall have the meaning given such term in Section
11.3(c).
"Regulation T, U, or X" means Regulation T, U or X,
respectively, of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor to all or a portion
thereof.
"REIT" means a real estate investment trust as defined in
Sections 856-860 of the Code.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or
discarding of barrels, containers and other closed receptacles) of any
Materials of Environmental Concern.
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
notice requirement has been waived by regulation.
"Required Lenders" means, at any time, the Required Revolving
Lenders and the Required Term Lenders, each voting as a separate class.
"Required Revolving Lenders" means, at any time, the Revolving
Lenders which are then in compliance with their obligations hereunder
(as determined by the Administrative Agent) and holding in the
aggregate at least 66 2/3% of (i) the Revolving Commitments (and
Participation Interests therein) or (ii) if the Revolving Commitments
have been terminated, the outstanding Revolving Loans and Participation
Interests (including the Participation Interests of the Issuing Lender
in any Letters of Credit).
"Required Term Lenders" means, at any time, the Term Lenders
which are then in compliance with their obligations hereunder (as
determined by the Administrative Agent) and holding in the aggregate at
least 66 2/3% of the outstanding Term Loans.
"Required Tranche C Term Lenders" means, at any time, the
Tranche C Term Lenders which are then in compliance with their
obligations hereunder (as determined by the Administrative Agent) and
holding in the aggregate at least 66 2/3% of the outstanding Tranche C
Term Loans.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or any of its material property is subject.
"Restatement Effective Date" means the first date on which all
of the conditions precedent set forth in Section 5.1 have been
satisfied.
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"Restricted Payment" means (i) any dividend or other payment
or distribution, direct or indirect, on account of any shares of any
class of Capital Stock of any Consolidated Party, now or hereafter
outstanding (including without limitation any payment in connection
with any merger or consolidation involving any Consolidated Party), or
to the direct or indirect holders of any shares of any class of Capital
Stock of any Consolidated Party, now or hereafter outstanding, in their
capacity as such (other than dividends or distributions payable in the
same class of Capital Stock of the applicable Person or to any Credit
Party (directly or indirectly through Subsidiaries), (ii) any
redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any
class of Capital Stock of any Consolidated Party, now or hereafter
outstanding and (iii) 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 Capital Stock of any Consolidated Party,
now or hereafter outstanding.
"Restricted Subsidiary" means, with respect to any Person, any
Subsidiary of such Person that is not an Unrestricted Subsidiary.
"Revolving Commitment" means, with respect to each Revolving
Lender, the commitment of such Revolving Lender in an aggregate
principal amount at any time outstanding of up to such Revolving
Lender's Revolving Commitment Percentage of the Revolving Committed
Amount, (i) to make Revolving Loans in accordance with the provisions
of Section 2.1(a) and (ii) to purchase Participation Interests in
Letters of Credit in accordance with the provisions of Section 2.2(c).
"Revolving Commitment Percentage" means, for any Revolving
Lender, the percentage identified as its Revolving Commitment
Percentage on Schedule 2.1(a), as such percentage may be modified in
connection with any assignment made in accordance with the provisions
of Section 11.3.
"Revolving Committed Amount" means FOUR HUNDRED MILLION
DOLLARS ($400,000,000) or such lesser amount as the Revolving Committed
Amount may be reduced from time to time pursuant to Section 3.4.
"Revolving Lender" means Lenders holding Revolving
Commitments, as identified on Schedule 2.1(a) and their successors and
assigns.
"Revolving Loan Maturity Date" means January 1, 2002.
"Revolving Loans" shall have the meaning assigned to such term
in Section 2.1(a).
"Revolving Note" means a promissory note of the Borrower in
favor of a Revolving Lender evidencing the Revolving Loans provided by
such Lender pursuant to Section 2.1, as such promissory note may be
amended, modified, restated, supplemented, extended, renewed or
replaced from time to time.
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"Revolving Obligations" means, collectively, the Revolving
Loans, the Swingline Loans and the LOC Obligations.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party,
providing for the leasing to any Consolidated Party of any Property,
whether owned by such Consolidated Party as of the Original Closing
Date or later acquired, which has been or is to be sold or transferred
by such Consolidated Party to such Person or to any other Person from
whom funds have been, or are to be, advanced by such Person on the
security of such Property.
"Secured Parties" means, collectively, the Administrative
Agent, the Lenders (including, without limitation, any Issuing Lender
and any Affiliate of any Lender which has entered into a Hedging
Agreement with any Credit Party), the Documentation Agent, the
Syndication Agent, the Co-Agent and the Lead Arranger and "Secured
Party" means any one of them.
"Security Agreement" means the amended and restated security
agreement dated as of the Restatement Effective Date executed in favor
of the Administrative Agent by each of the Credit Parties, as amended,
modified, restated or supplemented from time to time.
"Senior Debt" shall have the meaning given such term in the
definition of Senior Debt Rating.
"Senior Debt Rating" means the publicly announced ratings by
S&P and Moody's for the senior secured (non-credit enhanced) long term
debt of the Borrower ("Senior Debt").
"Senior Notes" means the Borrower's $100,000,000 in principal
amount of 12% Senior Notes, due 2006 (the "Initial Senior Notes"), and
the senior notes of the Borrower, having the same terms as the Initial
Senior Notes, issued in exchange for the Initial Senior Notes as
contemplated by the Senior Notes Documents.
"Senior Notes Documents" means the Senior Notes Indenture, the
Underwriting Agreement and the Senior Notes, each as in effect on the
Restatement Effective Date.
"Senior Notes Indenture" means the Indenture, dated as of June
10, 1999, among the Borrower and State Street Bank and Trust Company,
as trustee (the "Trustee"), as supplemented by that certain First
Supplemental Indenture, dated as of June 11, 1999, among the Borrower
and the Trustee, pursuant to which the Senior Notes are issued.
"Service Company A" means Prison Management Services, Inc., a
Tennessee corporation.
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"Service Company A License Agreement" means that certain
Service Mark and Trade Name Use Agreement dated as of December 31, 1998
between Service Company A and Management Opco, as amended or modified
from time to time.
"Service Company B" means Juvenile and Jail Facility
Management Services, Inc., a Tennessee corporation.
"Service Company B License Agreement" means that certain
Service Mark and Trade Name Use Agreement dated as of December 31, 1998
between Service Company B and Management Opco, as amended or modified
from time to time.
"Services Agreement" means the Amended and Restated Services
Agreement, dated as of March 5, 1999, between the Borrower and
Management Opco.
"Seven Year Treasury Rate" means, for any date, a rate of
interest equal to the yield to maturity for actively traded U.S.
Treasury securities as determined by the Administrative Agent prior to
9:00 a.m. New York City time on such date (based on the offer price for
U.S. Treasury securities on such day as indicated on page 5 of the
so-called "Telerate Screen") having a term to maturity as closely
approximating seven (7) years as possible.
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan or a Multiple
Employer Plan.
"Solvent" or "Solvency" means, with respect to any Person as
of a particular date, that on such date (i) such Person is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person's Property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in
the industry in which such Person is engaged or is to engage, (iv) the
fair value of the Property of such Person is greater than the total
amount of liabilities, including, without limitation, contingent
liabilities, of such Person and (v) the present fair salable value of
the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Special Affiliate" means any corporation, association or
other business entity formed for the purpose of earning income not
qualified as "rents from real property" under applicable provisions of
the Code, in which the Borrower owns substantially all of the economic
interest but less than 10% of the voting interests, and the remaining
economic and voting interests are subject to restrictions requiring
that ownership of such interests be held by officers, directors or
employees of the Borrower or any non-affiliated
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third parties. Service Company A and Service Company B are each Special
Affiliates of the Borrower.
"Standby Letter of Credit Fee" shall have the meaning assigned
to such term in Section 3.5(c)(i).
"Straight-Lining of Rents" means, with respect to any lease,
the method by which rent received with respect to such lease is
considered earned equally over the term of such lease despite the
existence of (i) any free rent periods under such lease or (ii) any
rent step-up provisions under such lease.
"Subsidiary" means, as to any Person at any time, (a) any
corporation more than 50% of whose Capital Stock of any class or
classes having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of whether
or not at such time, any class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) is at such time owned by such Person directly or
indirectly through Subsidiaries, and (b) any partnership, association,
joint venture or other entity of which such Person directly or
indirectly through Subsidiaries owns at such time more than 50% of the
Capital Stock.
"Subsidiary Guarantor" means each of the Persons identified as
a "Subsidiary Guarantor" on the signature pages hereto and each
Additional Credit Party which may hereafter execute a Joinder
Agreement, together with their successors and permitted assigns, and
"Subsidiary Guarantor" means any one of them.
"Swingline Commitment" means the commitment of the Swingline
Lender to make Swingline Loans in an aggregate principal amount at any
time outstanding of up to the Swingline Committed Amount.
"Swingline Committed Amount" shall have the meaning assigned
to such term in Section 2.3(a).
"Swingline Lender" means Lehman Commercial Paper Inc.
"Swingline Loan" shall have the meaning assigned to such term
in Section 2.3(a).
"Swingline Note" means a promissory note of the Borrower in
favor of the Swingline Lender in the original principal amount of
$25,000,000, as such promissory note may be amended, modified, restated
or replaced from time to time.
"Syndication Agent" shall have the meaning assigned to such
term in the heading hereof, together with any successors and assigns.
"Synthetic Lease" means any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an Operating Lease
for purposes of GAAP.
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"Taxes" shall have the meaning assigned to such term in
Section 3.11.
"Tenant Incentive Agreement" means the Amended and Restated
Tenant Incentive Agreement, dated as of May 4, 1999, between the
Borrower and Management Opco.
"Tenant Incentive Fees" shall mean the fees payable by the
Borrower to Management Opco pursuant to the Tenant Incentive Agreement.
"Term Lenders" means Lenders holding Term Loan Commitments, as
identified on Schedule 2.1(a) and their successors and assigns.
"Term Loan" shall have the meaning assigned to such term in
Section 2.4(a).
"Term Loan Committed Amount" means TWO HUNDRED FIFTY MILLION
DOLLARS ($250,000,000).
"Term Loan Commitment" means, with respect to each Term
Lender, the commitment of such Term Lender to make its portion of the
Term Loan in a principal amount equal to such Lender's Term Loan
Commitment Percentage (if any) of the Term Loan Committed Amount.
"Term Loan Commitment Percentage" means, for any Term Lender,
the percentage identified as its Term Loan Commitment Percentage on
Schedule 2.1(a), as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section 11.3.
"Term Loan Maturity Date" means December 31, 2002.
"Term Loans" shall have the meaning assigned to such term in
Section 2.4(a).
"Term Note" means a promissory note of the Borrower in favor
of a Term Lender evidencing the Term Loans provided by such Lender
pursuant to Section 2.4, as such promissory note may be amended,
modified, restated, supplemented, extended, renewed or replaced from
time to time.
"Title Insurance Company" shall have the meaning given to such
term in Section 5.1(f).
"Total Assets" means the total assets of the Consolidated
Parties on a consolidated basis, as determined in accordance with GAAP.
"Total Capitalization" means, as of any date of determination,
the sum of (a) Total Indebtedness plus (b) the shareholders' equity or
net worth of the Consolidated Parties on a consolidated basis, as
determined in accordance with GAAP.
"Total Indebtedness" means, as of any date of determination,
all Indebtedness (other than under clause (i) of the definition
thereof) of the Consolidated Parties on a consolidated basis, as
determined in accordance with GAAP.
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"Total Value" means, as of any date of determination, an
amount equal to the sum of (a) the aggregate Implied Value of all Real
Properties plus (b) one hundred percent (100%) of all cash and Cash
Equivalents of the Consolidated Parties.
"Trade Letter of Credit Fee" shall have the meaning assigned
to such term in Section 3.5(c)(ii).
"Trade Name Use Agreement" means the Service Mark and Trade
Name Use Agreement, dated as of December 31, 1998, between the Borrower
(as successor-in-interest to CCA) and Management Opco.
"Tranche C Commitment Percentage" means, for any Tranche C
Term Lender, the percentage identified as its Tranche C Term Loan
Commitment Percentage on Schedule 2.1(a), as such percentage may be
modified in connection with any assignment made in accordance with the
provisions of Section 11.3.
"Tranche C Term Lenders" means Lenders holding Tranche C Term
Loan Commitments, as identified on Schedule 2.1(a), and their
successors and assigns.
"Tranche C Term Loan" shall have the meaning assigned to such
term in Section 2.5(a).
"Tranche C Term Loan Committed Amount" means THREE HUNDRED
FIFTY MILLION DOLLARS ($350,000,000).
"Tranche C Term Loan Commitment" means, with respect to each
Tranche C Term Lender, the commitment of such Tranche C Term Lender to
make its portion of the Tranche C Term Loan in a principal amount equal
to such Lenders' Tranche C Term Loan Commitment Percentage of the
Tranche C Term Loan Committed Amount.
"Tranche C Term Loan Maturity Date" means December 31, 2002.
"Tranche C Term Loans" shall have the meaning assigned to such
term in Section 2.5(a).
"Tranche C Term Note" means a promissory note of the Borrower
in favor of a Tranche C Term Lender evidencing the Tranche C Term Loans
provided by such Lender pursuant to Section 2.5, as such promissory
note may be amended, modified, restated, supplemented, extended,
renewed or replaced from time to time.
"Underwriting Agreement" means the Underwriting Agreement
among the Borrower and LBI.
"Unrestricted Subsidiary" means any Subsidiary of the Borrower
that the Borrower notifies the Administrative Agent in writing is an
"Unrestricted Subsidiary", but only to the extent that such Subsidiary
(a) has no Indebtedness other than Non-
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Recourse Debt; (b) is not a party to any agreement, contract,
arrangement or understanding with the Borrower or any Restricted
Subsidiary of the Borrower not permitted by Section 8.9; (c) is a
Person with respect to which neither the Borrower nor any of its
Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional equity interests in such Person, except with
respect to Investments permitted under Section 8.6(iii), (y) to
maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results or (z) to
otherwise guarantee performance or payment; and (d) has not guaranteed
or otherwise directly or indirectly provided credit support for any
Indebtedness of the Borrower or any of its Restricted Subsidiaries. If,
at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary (or is
redesignated by the Borrower as a Restricted Subsidiary), it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of this
Credit Agreement, any Indebtedness of such Subsidiary shall be deemed
to be incurred by a Restricted Subsidiary of the Borrower as of such
date and any Investments in such Subsidiary shall be deemed to be
Investments in a Restricted Subsidiary of the Borrower as of such date
(and, if such Indebtedness or Investments are not permitted to be
incurred hereunder the Borrower shall be in default under this Credit
Agreement). At the time of any designation by the Borrower of any
Restricted Subsidiary as an Unrestricted Subsidiary, such designation
shall be deemed (A) an Investment in an Unrestricted Subsidiary in an
amount equal to the sum of (i) the net worth of such Restricted
Subsidiary immediately prior to such designation (such net worth to be
calculated without regard to any Guarantee Obligation of such
Restricted Subsidiary with respect to the Obligations) and (ii) the
aggregate principal amount of any Indebtedness owed by such designated
Restricted Subsidiary to the Borrower or any other Restricted
Subsidiary immediately prior to such designation, all calculated,
except as set forth in the parenthetical to clause (i), on a
consolidated basis in accordance with GAAP and (B) an Asset Disposition
(unless the amount of such Investment would not constitute an Asset
Disposition because the amount thereof would be within the limitations
set forth in the second sentence of the definition of Asset Disposition
in this Section 1.1).
"Unused Fee" shall have the meaning assigned to such term in
Section 3.5(b).
"Unused Fee Calculation Period" shall have the meaning
assigned to such term in Section 3.5(b).
"Unused Revolving Committed Amount" means, for any period, the
amount by which (a) the then applicable Revolving Committed Amount
exceeds (b) the daily average sum for such period of (i) the
outstanding aggregate principal amount of all Revolving Loans plus (ii)
the outstanding aggregate principal amount of all LOC Obligations.
"Voting Stock" means, with respect to any Person, Capital
Stock issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such Person,
even though the right so to vote has been suspended by the happening of
such a contingency.
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"Wholly Owned Subsidiary" of any Person means any Subsidiary
100% of whose Voting Stock is at the time owned by such Person directly
or indirectly through other Wholly Owned subsidiaries.
1.2. COMPUTATION OF TIME PERIODS.
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.3. ACCOUNTING TERMS.
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made in accordance with GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements as at December 31, 1997); provided,
however, if there occurs any revision in GAAP or the rules promulgated
thereunder, then such calculations shall be made on a basis consistent with such
revision, unless the Borrower or the Required Lenders or the Required Tranche C
Term Lenders shall object in writing to the Administrative Agent not later than
60 days after delivery of the first financial statements pursuant to Section
7.1, after the effectiveness of such revision, in which case the Borrower shall
continue to make all calculations in accordance with GAAP and the rules and
regulations promulgated thereunder as in effect immediately prior to the
effectiveness of such revision.
1.4. INTERRELATIONSHIP WITH ORIGINAL CREDIT AGREEMENT.
(a) As stated in the preamble hereof, this Credit Agreement is
intended to amend and restate the provisions of the Original Credit
Agreement and, notwithstanding any substitution of Notes as of the
Restatement Effective Date, except as expressly modified herein, (x)
all of the terms and provisions of the Original Credit Agreement shall
continue to apply for the period prior to the Restatement Effective
Date, including any determinations of payment dates, interest rates,
Events of Default or any amount that may be payable to the Original
Administrative Agent or the Original Lenders (or their assignees or
replacements hereunder), and (y) the obligations under the Original
Credit Agreement shall continue to be paid or prepaid on or prior to
the Restatement Effective Date, and shall from and after the
Restatement Effective Date continue to be owing and be subject to the
terms of this Credit Agreement. All references in the Notes and the
other Credit Documents to (i) the Original Credit Agreement or the
"Credit Agreement" shall be deemed to include references to this Credit
Agreement and (ii) the "Lenders" or a "Lender" or to the
"Administrative Agent" shall mean such terms as defined in this Credit
Agreement. As to all periods occurring on or after the Restatement
Effective Date, all of the covenants set forth in the Original Credit
Agreement shall be of no further force and effect, it being understood
that all obligations of the Borrower under the Original Credit
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Agreement shall be governed by this Credit Agreement from and after the
Restatement Effective Date.
(b) The Borrower, the Agents and the Lenders acknowledge and
agree that all principal, interest, fees, costs and reimbursable
expenses accruing or arising under or in connection with the Original
Credit Agreement which remain unpaid and outstanding as of the
Restatement Effective Date shall be and remain outstanding and payable
as an obligation under this Credit Agreement and the other Credit
Documents; provided that no Lender hereunder which was not an Original
Lender shall be liable for any obligation or indemnification of Lenders
under the Original Credit Agreement.
1.5. CONFIRMATION OF EXISTING OBLIGATIONS.
The Borrower hereby reaffirms and admits the validity and
enforceability of this Credit Agreement and the other Credit Documents and all
of its obligations hereunder and thereunder and agrees and admits that, as of
the date hereof, it has no defenses to, or offsets or counterclaim against, any
of its obligations to the Agents or any Lender under the Credit Documents of any
kind whatsoever.
SECTION 2.
CREDIT FACILITIES
2.1. REVOLVING LOANS.
(a) Revolving Commitment. To the extent any Revolving Loans
(as defined below) are outstanding under the Original Credit Agreement
on the Restatement Effective Date, such Revolving Loans shall be deemed
to constitute Revolving Loans outstanding hereunder from and after the
Restatement Effective Date. In addition, subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein, each Revolving Lender severally agrees to
make available to the Borrower such Revolving Lender's Revolving
Commitment Percentage of revolving credit loans requested by the
Borrower in Dollars ("Revolving Loans") from time to time from the
Restatement Effective Date until the Revolving Loan Maturity Date, or
such earlier date on which the Revolving Commitments shall have been
terminated as provided herein; provided, however, that (i) with regard
to the Lenders collectively, the aggregate principal amount of the
Obligations outstanding shall not exceed the lesser of (A) the
Aggregate Committed Amount and (B) the Borrowing Base; and (ii) with
regard to each Revolving Lender individually, the amount of such
Revolving Lender's Revolving Commitment Percentage of the Revolving
Obligations outstanding shall not exceed such Revolving Lender's
Revolving Commitment Percentage of the Revolving Committed Amount.
Revolving Loans may consist of Base Rate Loans or Eurodollar Loans, or
a combination thereof, as the Borrower may request; provided, however,
that no more than six Eurodollar Loans shall be outstanding under this
Section 2.1 at any time (it being understood that, for purposes hereof,
Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date,
although borrowings, extensions and conversions may, in accordance with
the provisions
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hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period).
Revolving Loans hereunder may be repaid and reborrowed in accordance
with the provisions hereof.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by a written Notice of Borrowing (or
telephonic notice promptly confirmed by a Notice of Borrowing)
to the Administrative Agent not later than 11:00 A.M. (New
York City time) on the Business Day prior to the date of the
requested borrowing in the case of Base Rate Loans, and on the
third Business Day prior to the date of the requested
borrowing in the case of Eurodollar Loans. Each such Notice of
Borrowing shall be irrevocable and shall specify (A) that a
Revolving Loan is requested, (B) the date of the requested
borrowing (which shall be a Business Day), (C) the aggregate
principal amount to be borrowed, and (D) whether the borrowing
shall be comprised of Base Rate Loans, Eurodollar Loans or a
combination thereof, and if Eurodollar Loans are requested,
the Interest Period(s) therefor. If the Borrower shall fail to
specify in any such Notice of Borrowing (I) an applicable
Interest Period in the case of a Eurodollar Loan, then such
notice shall be deemed to be a request for an Interest Period
of one month, or (II) the type of Revolving Loan requested,
then such notice shall be deemed to be a request for a Base
Rate Loan hereunder. The Administrative Agent shall give
notice to each Revolving Lender promptly upon receipt of each
Notice of Borrowing pursuant to this Section 2.1(b)(i), the
contents thereof and each such Revolving Lender's share of any
borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Each Eurodollar Loan or Base
Rate Loan that is a Revolving Loan shall be in a minimum
aggregate principal amount of $10,000,000 and integral
multiples of $1,000,000 in excess thereof (or the remaining
amount of the Revolving Committed Amount, if less).
(iii) Advances. Each Revolving Lender will make its
Revolving Commitment Percentage of each Revolving Loan
borrowing available to the Administrative Agent for the
account of the Borrower as specified in Section 3.15(a), or in
such other manner as the Administrative Agent may specify in
writing, by 1:00 P.M. (New York City time) on the date
specified in the applicable Notice of Borrowing in Dollars and
in funds immediately available to the Administrative Agent.
Such borrowing will then be made available to the Borrower by
the Administrative Agent in accordance with the Borrower's
reasonable instructions and in like funds as received by the
Administrative Agent.
(c) Repayment. The principal amount of all Revolving Loans
shall be due and payable in full on the Revolving Loan Maturity Date,
unless accelerated sooner pursuant to Section 9.2.
(d) Interest. Subject to the provisions of Section 3.1,
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(i) Base Rate Loans. During such periods as Revolving
Loans shall be comprised in whole or in part of Base Rate
Loans, such Base Rate Loans shall bear interest at a per annum
rate equal to the Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as
Revolving Loans shall be comprised in whole or in part of
Eurodollar Loans, such Eurodollar Loans shall bear interest at
a per annum rate equal to the Adjusted Eurodollar Rate.
Interest on Revolving Loans shall be payable in arrears on
each applicable Interest Payment Date (or at such other times
as may be specified herein).
(e) Revolving Notes. If requested by a Revolving Lender, and
upon surrender to the Administrative Agent of any note issued to such
Lender under the Original Credit Facility, the Revolving Loans made by
such Revolving Lender shall be evidenced by a duly executed promissory
note of the Borrower to such Revolving Lender in an original principal
amount equal to such Revolving Lender's Revolving Commitment Percentage
of the Revolving Committed Amount and in substantially the form of
Exhibit 2.1(e).
2.2. LETTER OF CREDIT SUBFACILITY.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the relevant Issuing Lender may reasonably require and in reliance upon
the representations and warranties set forth herein, each Issuing
Lender agrees to issue, and each Revolving Lender severally agrees to
participate in the issuance by such Issuing Lender of Letters of Credit
in Dollars from time to time from the Restatement Effective Date until
the Revolving Loan Maturity Date as the Borrower may request, in a form
acceptable to the relevant Issuing Lender; provided, however, that (i)
the LOC Obligations outstanding shall not at any time exceed ONE
HUNDRED FIFTY MILLION DOLLARS ($150,000,000) (the "LOC Committed
Amount"), (ii) LOC Obligations with respect to trade or commercial
Letters of Credit shall not at any time exceed Ten Million Dollars
($10,000,000), (iii) with regard to the Lenders collectively, the
aggregate principal amount of the Obligations outstanding shall not
exceed the lesser of (A) the Aggregate Committed Amount and (B) the
Borrowing Base; provided, further, (iv) with regard to each Revolving
Lender individually, the amount of such Revolving Lender's Revolving
Commitment Percentage of the Revolving Obligations outstanding shall
not exceed such Revolving Lender's Revolving Commitment Percentage of
the Revolving Committed Amount. No Letter of Credit shall (x) have an
original expiry date more than one year from the date of issuance or
(y) as originally issued or as extended, have an expiry date extending
beyond a date five Business Days prior to the Revolving Loan Maturity
Date. Each Letter of Credit shall comply with the related LOC
Documents. The issuance and expiry dates of each Letter of Credit shall
be a Business Day.
(b) Notice and Reports. The request for the issuance of a
Letter of Credit shall be submitted by the Borrower to the relevant
Issuing Lender at least three (3) Business Days prior to the requested
date of issuance. Each Issuing Lender will, at least quarterly and more
frequently upon request, disseminate to the Administrative Agent and
each of the
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Revolving Lenders a detailed report specifying the Letters of Credit
issued by such Issuing Lender which are then outstanding and any
activity with respect thereto which may have occurred since the date of
the prior report, and including therein, among other things, the
beneficiary, the face amount and the expiry date, as well as any
payment or expirations which may have occurred. Each Issuing Lender
will notify the Administrative Agent of the issuance of any Letter of
Credit by such Issuing Lender prior to such issuance as well as each
payment under each such Letter of Credit at the time of such payment.
(c) Participation. Each Revolving Lender, upon issuance of a
Letter of Credit by an Issuing Lender, shall be deemed to have
purchased without recourse a Participation Interest from such Issuing
Lender in such Letter of Credit and the obligations arising thereunder
and any collateral relating thereto, in each case in an amount equal to
its pro rata share of the obligations under such Letter of Credit
(based on the respective Revolving Commitment Percentages of the
Revolving Lenders) and shall absolutely, unconditionally and
irrevocably assume and be obligated to pay to such Issuing Lender and
discharge when due, its pro rata share of the obligations arising under
such Letter of Credit. Without limiting the scope and nature of each
Revolving Lender's Participation Interest in any Letter of Credit, to
the extent that relevant Issuing Lender has not been reimbursed as
required hereunder or under any such Letter of Credit, each such
Revolving Lender shall pay to such Issuing Lender its pro rata share of
such unreimbursed drawing in same day funds on the day of notification
by such Issuing Lender of an unreimbursed drawing pursuant to the
provisions of subsection (d) below. The obligation of each Revolving
Lender to so reimburse the Issuing Lenders shall be absolute and
unconditional and shall not be affected by the occurrence of a Default,
an Event of Default or any other occurrence or event. Any such
reimbursement shall not relieve or otherwise impair the obligation of
the Borrower to reimburse the relevant Issuing Lender under any Letter
of Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any
Letter of Credit, the relevant Issuing Lender will promptly notify the
Borrower. Unless the Borrower shall immediately notify such Issuing
Lender that the Borrower intends to otherwise reimburse such Issuing
Lender for such drawing, the Borrower shall be deemed to have requested
that the Revolving Lenders make a Revolving Loan in the amount of the
drawing as provided in subsection (e) below on the related Letter of
Credit, the proceeds of which will be used to satisfy the related
reimbursement obligations. The Borrower promises to reimburse the
relevant Issuing Lender on the day of drawing under any Letter of
Credit (either with the proceeds of a Revolving Loan obtained hereunder
or otherwise) in same day funds. If the Borrower shall fail to
reimburse the relevant Issuing Lender as provided hereinabove, the
unreimbursed amount of such drawing shall bear interest at a per annum
rate equal to the Adjusted Base Rate plus 2%. The Borrower's
reimbursement obligations hereunder shall be absolute and unconditional
under all circumstances irrespective of any rights of setoff,
counterclaim or defense to payment the Borrower may claim or have
against the relevant Issuing Lender, the Administrative Agent, the
Revolving Lenders, the beneficiary of the Letter of Credit drawn upon
or any other Person, including without limitation any defense based on
any failure of the Borrower or any other Credit Party to receive
consideration or the legality, validity, regularity or
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unenforceability of the Letter of Credit. The relevant Issuing Lender
will promptly notify the other Revolving Lenders of the amount of any
unreimbursed drawing and each Revolving Lender shall promptly pay to
the Administrative Agent for the account of the Issuing Lender in
Dollars and in immediately available funds, the amount of such
Revolving Lender's pro rata share of such unreimbursed drawing. Such
payment shall be made on the day such notice is received by such
Revolving Lender from the relevant Issuing Lender if such notice is
received at or before 1:00 P.M. (New York City time) otherwise such
payment shall be made at or before 12:00 Noon (New York City time) on
the Business Day next succeeding the day such notice is received. If
such Revolving Lender does not pay such amount to such Issuing Lender
in full upon such request, such Revolving Lender shall, on demand, pay
to the Administrative Agent for the account of such Issuing Lender
interest on the unpaid amount during the period from the date of such
drawing until such Revolving Lender pays such amount to such Issuing
Lender in full at a rate per annum equal to, if paid within two (2)
Business Days of the date that such Revolving Lender is required to
make payments of such amount pursuant to the preceding sentence, the
Federal Funds Rate and thereafter at a rate equal to the Base Rate.
Each Revolving Lender's obligation to make such payment to the relevant
Issuing Lender, and the right of such Issuing Lender to receive the
same, shall be absolute and unconditional, shall not be affected by any
circumstance whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence of a
Default or Event of Default or the acceleration of the obligations of
the Borrower hereunder and shall be made without any offset, abatement,
withholding or reduction whatsoever. Simultaneously with the making of
each such payment by a Revolving Lender to the relevant Issuing Lender,
such Revolving Lender shall, automatically and without any further
action on the part of such Issuing Lender or such Revolving Lender,
acquire a Participation Interest in an amount equal to such payment
(excluding the portion of such payment constituting interest owing to
the Issuing Lender) in the related unreimbursed drawing portion of the
LOC Obligation and in the interest thereon and in the related LOC
Documents, and shall have a claim against the Borrower with respect
thereto.
(e) Repayment with Revolving Loans. On any day on which the
Borrower shall have requested, or been deemed to have requested, a
Revolving Loan advance to reimburse a drawing under a Letter of Credit,
the Administrative Agent shall give notice to the Revolving Lenders
that a Revolving Loan has been requested or deemed requested by the
Borrower to be made in connection with a drawing under a Letter of
Credit, in which case a Revolving Loan advance comprised of Base Rate
Loans (or Eurodollar Loans to the extent the Borrower has complied with
the procedures of Section 2.1(b)(i) with respect thereto) shall be
immediately made to the Borrower by all Revolving Lenders
(notwithstanding any termination of the Commitments pursuant to Section
9.2) pro rata based on the respective Revolving Commitment Percentages
of the Revolving Lenders (determined before giving effect to any
termination of the Commitments pursuant to Section 9.2) and the
proceeds thereof shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each such Revolving
Lender hereby irrevocably agrees to make its pro rata share of each
such Revolving Loan immediately upon any such request or deemed request
in the amount, in the manner and on the date specified in the preceding
sentence notwithstanding (i) the amount of such borrowing
47
<PAGE> 48
may not comply with the minimum amount for advances of Revolving Loans
otherwise required hereunder, (ii) whether any conditions specified in
Section 5.2 are then satisfied, (iii) whether a Default or an Event of
Default then exists, (iv) failure for any such request or deemed
request for a Revolving Loan to be made by the time otherwise required
hereunder, (v) whether the date of such borrowing is a date on which
Revolving Loans are otherwise permitted to be made hereunder or (vi)
any termination of the Commitments relating thereto immediately prior
to or contemporaneously with such borrowing. In the event that any
Revolving Loan cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to
the Borrower or any other Credit Party), then each such Revolving
Lender hereby agrees that it shall forthwith purchase (as of the date
such borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and prior to
such purchase) from the Issuing Lender such Participation Interests in
the outstanding LOC Obligations as shall be necessary to cause each
such Revolving Lender to share in such LOC Obligations ratably (based
upon the respective Revolving Commitment Percentages of the Revolving
Lenders (determined before giving effect to any termination of the
Commitments pursuant to Section 9.2)), provided that at the time any
purchase of Participation Interests pursuant to this sentence is
actually made, the purchasing Revolving Lender shall be required to pay
to the relevant Issuing Lender, to the extent not paid to such Issuing
Lender by the Borrower in accordance with the terms of subsection (d)
above, interest on the principal amount of Participation Interests
purchased for each day from and including the day upon which such
borrowing would otherwise have occurred to but excluding the date of
payment for such Participation Interests, at the rate equal to, if paid
within two (2) Business Days of the date of the Revolving Loan advance,
the Federal Funds Rate, and thereafter at a rate equal to the Base
Rate.
(f) Designation of Credit Parties as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation Section 2.2(a), a Letter of
Credit issued hereunder may contain a statement to the effect that such
Letter of Credit is issued for the account of a Credit Party other than
the Borrower, provided that notwithstanding such statement, the
Borrower shall be the actual account party for all purposes of this
Credit Agreement for such Letter of Credit and such statement shall not
affect the Borrower's reimbursement obligations hereunder with respect
to such Letter of Credit.
(g) Renewal, Extension. The renewal or extension of any Letter
of Credit shall, for purposes hereof, be treated in all respects the
same as the issuance of a new Letter of Credit hereunder.
(h) Indemnification; Nature of Issuing Lender's Duties.
(i) In addition to its other obligations under this
Section 2.2, the Borrower hereby agrees to pay, and protect,
indemnify and save each Revolving Lender harmless from and
against, any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
attorneys' fees) that such Revolving Lender may incur or be
subject to as a consequence, direct or
48
<PAGE> 49
indirect, of (A) the issuance of any Letter of Credit or (B)
the failure of such Revolving Lender to honor a drawing under
a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de
facto government or Governmental Authority (all such acts or
omissions, herein called "Government Acts").
(ii) As between the Borrower and the Revolving
Lenders (including the relevant Issuing Lender), the Borrower
shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. No Revolving
Lender (including the relevant Issuing Lender) shall be
responsible: (A) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for
and issuance of any Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) for the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or
in part, that may prove to be invalid or ineffective for any
reason; (C) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in
cipher; (D) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing
under a Letter of Credit or of the proceeds thereof; and (E)
for any consequences arising from causes beyond the control of
such Revolving Lender, including, without limitation, any
Government Acts. None of the above shall affect, impair, or
prevent the vesting of any Issuing Lender's rights or powers
hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth,
any action taken or omitted by any Revolving Lender (including
the relevant Issuing Lender), under or in connection with any
Letter of Credit or the related certificates, if taken or
omitted in good faith, shall not put such Revolving Lender
under any resulting liability to the Borrower or any other
Credit Party. It is the intention of the parties that this
Credit Agreement shall be construed and applied to protect and
indemnify each Revolving Lender (including each Issuing
Lender) against any and all risks involved in the issuance of
the Letters of Credit, all of which risks are hereby assumed
by the Borrower (on behalf of itself and each of the other
Credit Parties), including, without limitation, any and all
Government Acts. No Revolving Lender (including the relevant
Issuing Lender) shall, in any way, be liable for any failure
by such Revolving Lender or anyone else to pay any drawing
under any Letter of Credit as a result of any Government Acts
or any other cause beyond the control of such Revolving
Lender.
(iv) Nothing in this subsection (h) is intended to
limit the reimbursement obligations of the Borrower contained
in subsection (d) above. The obligations of the Borrower under
this subsection (h) shall survive the termination of this
Credit Agreement. No act or omission of any current or prior
beneficiary of a Letter of Credit shall in any way affect or
impair the rights of the Revolving Lenders
49
<PAGE> 50
(including the Issuing Lenders) to enforce any right, power or
benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (h), the Borrower shall have no
obligation to indemnify any Revolving Lender (including any
Issuing Lender) in respect of any liability incurred by such
Revolving Lender (A) arising solely out of the gross
negligence or willful misconduct of such Revolving Lender, as
determined by a court of competent jurisdiction, or (B) caused
by such Revolving Lender's failure to pay under any Letter of
Credit after presentation to it of a request strictly
complying with the terms and conditions of such Letter of
Credit, as determined by a court of competent jurisdiction,
unless such payment is prohibited by any law, regulation,
court order or decree.
(i) Responsibility of Issuing Lender. It is expressly
understood and agreed that the obligations of each Issuing Lender
hereunder to the Revolving Lenders are only those expressly set forth
in this Credit Agreement and that each Issuing Lender shall be entitled
to assume that the conditions precedent set forth in Section 5.2 have
been satisfied unless it shall have acquired actual knowledge that any
such condition precedent has not been satisfied; provided, however,
that nothing set forth in this Section 2.2 shall be deemed to prejudice
the right of any Revolving Lender to recover from the relevant Issuing
Lender any amounts made available by such Revolving Lender to such
Issuing Lender pursuant to this Section 2.2 in the event that it is
determined by a court of competent jurisdiction that the payment with
respect to a Letter of Credit constituted gross negligence or willful
misconduct on the part of the Issuing Lender.
(j) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document (including any
letter of credit application), this Credit Agreement shall control.
2.3. SWINGLINE LOAN SUBFACILITY.
(a) Swingline Commitment. Subject to the terms and conditions
hereof, the Swingline Lender, in its individual capacity, agrees to
make certain revolving credit loans to the Borrower (each a "Swingline
Loan" and, collectively, the "Swingline Loans") from time to time from
the Restatement Effective Date until the Revolving Loan Maturity Date
for the purposes hereinafter set forth; provided, however, (i) the
aggregate amount of Swingline Loans outstanding at any time shall not
exceed TWENTY FIVE MILLION DOLLARS ($25,000,000.00) (the "Swingline
Committed Amount"), and (ii) with regard to the Lenders collectively,
the aggregate principal amount of the Obligations outstanding shall not
exceed the lesser of (x) the Aggregate Committed Amount and (y) the
Borrowing Base. Swingline Loans hereunder shall be made in accordance
with the provisions of this Section 2.3, and may be repaid and
reborrowed in accordance with the provisions hereof.
(b) Swingline Loan Advances.
50
<PAGE> 51
(i) Notices; Disbursement. Whenever the Borrower
desires a Swingline Loan advance hereunder it shall give
written notice (or telephone notice promptly confirmed in
writing) to the Swingline Lender not later than 11:00 A.M.
(New York City time) on the Business Day of the requested
Swingline Loan advance. Each such notice shall be irrevocable
and shall specify (A) that a Swingline Loan advance is
requested, (B) the date of the requested Swingline Loan
advance (which shall be a Business Day) and (C) the principal
amount of the Swingline Loan advance requested. Each Swingline
Loan shall be made as a Base Rate Loan and shall have such
maturity date as the Swingline Lender and the Borrower shall
agree upon receipt by the Swingline Lender of any such notice
from the Borrower. The Swingline Lender shall initiate the
transfer of funds representing the Swingline Loan advance to
the Borrower by 3:00 P.M. (New York City time) on the Business
Day of the requested borrowing.
(ii) Minimum Amounts. Each Swingline Loan advance
shall be in a minimum principal amount of $1,000,000 and in
integral multiples of $1,000,000 in excess thereof.
(iii) Repayment of Swingline Loans. The principal
amount of all Swingline Loans shall be due and payable on the
Revolving Loan Maturity Date. The Swingline Lender may, at any
time, in its sole discretion, by written notice to the
Borrower and the Revolving Lenders, demand repayment of its
Swingline Loans by way of a Revolving Loan advance, in which
case the Borrower shall be deemed to have requested a
Revolving Loan advance comprised solely of Base Rate Loans in
the amount of such Swingline Loans; provided, however, that
any such demand shall be deemed to have been given one
Business Day prior to the Revolving Loan Maturity Date and on
the date of the occurrence of any Event of Default described
in Section 9.1 and upon acceleration of the indebtedness
hereunder and the exercise of remedies in accordance with the
provisions of Section 9.2. Each Revolving Lender hereby
irrevocably agrees to make its pro rata share of each such
Revolving Loan in the amount, in the manner and on the date
specified in the preceding sentence notwithstanding (I) the
amount of such borrowing may not comply with the minimum
amount for advances of Revolving Loans otherwise required
hereunder, (II) whether any conditions specified in Section
5.2 are then satisfied, (III) whether a Default or an Event of
Default then exists, (IV) failure of any such request or
deemed request for a Revolving Loan to be made by the time
otherwise required hereunder, (V) whether the date of such
borrowing is a date on which Revolving Loans are otherwise
permitted to be made hereunder or (VI) any termination of the
Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any
Revolving Loan cannot for any reason be made on the date
otherwise required above (including, without limitation, as a
result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any other
Credit Party), then each Revolving Lender hereby agrees that
it shall forthwith purchase (as of the date such borrowing
would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to
such purchase) from the Swingline Lender such participations
in the
51
<PAGE> 52
outstanding Swingline Loans ratably based upon its Revolving
Commitment Percentage of the Revolving Committed Amount
(determined before giving effect to any termination of the
Commitments pursuant to Section 3.4), provided that (A) all
interest payable on the Swingline Loans shall be for the
account of the Swingline Lender until the date as of which the
respective participation is purchased and (B) at the time of
any purchase of participations pursuant to this sentence is
actually made, the purchasing Revolving Lender shall be
required to pay to the Swingline Lender, to the extent not
paid to the Swingline Lender by the Borrower in accordance
with the terms of subsection (c) below, interest on the
principal amount of participation purchased for each day from
and including the day upon which such borrowing would
otherwise have occurred to but excluding the date of payment
for such participation, at the rate equal to the Federal Funds
Rate.
(c) Interest on Swingline Loans. Subject to the provisions of
Section 3.1, each Swingline Loan shall bear interest at per annum rate
equal to the Adjusted Base Rate. Interest on Swingline Loans shall be
payable in arrears on each applicable Interest Payment Date (or at such
other times as may be specified herein).
(d) Swingline Note. If requested by the Swingline Lender, and
upon surrender to the Administrative Agent of any note issued to such
Lender under the Original Credit Facility, the Swingline Loans shall be
evidenced by a duly executed promissory note of the Borrower to the
Swingline Lender in substantially the form of Exhibit 2.3(d).
2.4. TERM LOAN.
(a) Term Commitment. Without extinguishing the rights of the
Original Term Lenders to receive payment for interest accrued on the
Term Loans prior to the Restatement Effective Date, each Term Loan made
on the Original Closing Date pursuant to Section 2.4 of the Original
Credit Agreement (a "Term Loan" and collectively with the Term Loans of
each other Term Lender, the "Term Loans") (less any regularly-scheduled
Principal Amortization Payments under the Original Credit Agreement
made prior to the Restatement Effective Date) shall be deemed to be
outstanding as a Term Loan hereunder from and after the Restatement
Effective Date. The Term Loans may consist of Base Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may
request; provided, however, that no more than six Eurodollar Loans
shall be outstanding under this Section 2.4 at any time (it being
understood that, for purposes hereof, Eurodollar bb bLoans with
different Interest Periods shall be considered as separate Eurodollar
Loans, even if they begin on the same date, although borrowings,
extensions and conversions may, in accordance with the provisions
hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period).
Amounts repaid on the Term Loans may not be reborrowed. For the
avoidance of doubt, the Term Loans were initially made to the Borrower
on the Original Closing Date and have remained outstanding without
interruption (subject to any regularly-scheduled Principal Amortization
Payments under the Original Credit Agreement) through and including the
Restatement Effective Date, notwithstanding the amendment and
restatement of the Original Credit Agreement pursuant to this Credit
Agreement.
52
<PAGE> 53
(b) Repayment of Term Loans. The principal amount of the Term
Loans outstanding as of the Restatement Effective Date shall be repaid
in fourteen (14) consecutive quarterly installments as follows unless
accelerated sooner pursuant to Section 9.2:
<TABLE>
<CAPTION>
=======================================================================
PRINCIPAL TERM LOAN
AMORTIZATION PRINCIPAL AMORTIZATION
PAYMENT DATES PAYMENT
=======================================================================
<S> <C>
September 30, 1999 $ 625,000
-----------------------------------------------------------------------
December 31, 1999 $ 625,000
-----------------------------------------------------------------------
March 31, 2000 $ 625,000
-----------------------------------------------------------------------
June 30, 2000 $ 625,000
-----------------------------------------------------------------------
September 30, 2000 $ 625,000
-----------------------------------------------------------------------
December 31, 2000 $ 625,000
-----------------------------------------------------------------------
March 31, 2001 $ 625,000
-----------------------------------------------------------------------
June 30, 2001 $ 625,000
-----------------------------------------------------------------------
September 30, 2001 $ 625,000
-----------------------------------------------------------------------
December 31, 2001 $ 625,000
-----------------------------------------------------------------------
March 31, 2002 $ 625,000
-----------------------------------------------------------------------
June 30, 2002 $ 625,000
-----------------------------------------------------------------------
September 30, 2002 $ 625,000
-----------------------------------------------------------------------
December 31, 2002 $240,625,000
-----------------------------------------------------------------------
Total $248,750,000
=======================================================================
</TABLE>
(c) Interest. Subject to the provisions of Section 3.1,
Eurodollar Loans comprising all or a part of the Term Loans shall bear
interest at a per annum rate equal to the Eurodollar Rate plus 4.00%
and Base Rate Loans comprising all or part of the Term Loans shall bear
interest at a per annum rate equal to the Base Rate plus 2.50%;
provided, however, (i) if the Borrower shall have a Senior Debt Rating
by S&P greater than or equal to BBB- and a Senior Debt Rating by
Moody's greater than or equal to Baa3, the Term Loans shall bear
interest at a per annum rate equal to the Eurodollar Rate plus 3.75%
(in the case of Eurodollar Loans) or the Base Rate plus 2.25% (in the
case of Base Rate Loans). Interest in respect of Term Loans shall be
payable in arrears on each applicable Interest Payment Date (or at such
other times as may be specified herein).
(d) Term Notes. If requested by a Term Lender, and upon
surrender to the Administrative Agent of any note issued to such Lender
under the Original Credit Facility, the Term Loan made by such Term
Lender shall be evidenced by a duly executed promissory note of the
Borrower to such Term Lender in an original principal amount equal to
the principal amount of such Term Loan outstanding on the Original
Closing Date, substantially in the form of Exhibit 2.4(d).
2.5. TRANCHE C TERM LOAN.
(a) Tranche C Term Commitment. Subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein each Tranche C Term
53
<PAGE> 54
Lender severally agrees to make available to the Borrower on the
Restatement Effective Date a term loan in Dollars (a "Tranche C Term
Loan" and collectively with the Tranche C Term Loans of each other
Tranche C Term Lender, the "Tranche C Term Loans") in an amount equal
to the Tranche C Term Loan Commitment of such Tranche C Term Lender and
in an aggregate principal amount for all Tranche C Term Lenders equal
to the Tranche C Term Loan Committed Amount; provided, however, that
with regard to the Lenders collectively, the sum of the aggregate
principal amount of the Obligations outstanding shall not exceed the
lesser of (A) the Aggregate Committed Amount and (B) the Borrowing
Base. The Tranche C Term Loans may initially consist only of Base Rate
Loans. Subsequent to the Restatement Effective Date, Tranche C Term
Loans may be converted to Eurodollar Loans pursuant to Section 3.2 as
the Borrower may request; provided, however, that no more than six
Tranche C Term Loans that are Eurodollar Loans shall be outstanding at
any time (it being understood that, for purposes hereof, Eurodollar
Loans with different Interest Periods shall be considered as separate
Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods
to constitute a new Eurodollar Loan with a single Interest Period).
Amounts repaid on the Tranche C Term Loans may not be reborrowed.
(b) Borrowing Procedures. The entire amount of the Tranche C
Term Loans shall be made in a single borrowing on the Restatement
Effective Date. The Borrower shall submit an appropriate Notice of
Borrowing to the Administrative Agent not later than 11:00 A.M. (New
York City time) on the Business Day prior to the Restatement Effective
Date, which Notice of Borrowing shall be irrevocable and shall specify
that the funding of the Tranche C Term Loans is requested. Each Tranche
C Term Lender shall make its Tranche C Term Loan Commitment Percentage
of the Tranche C Term Loan available to the Administrative Agent for
the account of the Borrower at the office of the Administrative Agent
specified in Schedule 2.1(a), or at such other office as the
Administrative Agent may designate in writing, by 1:00 P.M. (New York
City time) on the Restatement Effective Date in Dollars and in funds
immediately available to the Administrative Agent.
(c) Minimum Amounts. Eurodollar Loans having the same Interest
Period and Base Rate Loans that comprise parts of the Tranche C Term
Loan shall be in an aggregate principal amount that is not less than
$10,000,000 and integral multiples of $1,000,000 (or the then remaining
principal balance of the Tranche C Term Loans, if less).
(d) Repayment of Tranche C Term Loans. The principal amount of
the Tranche C Term Loans shall be repaid in fourteen (14) consecutive
quarterly installments as follows unless accelerated sooner pursuant to
Section 9.2:
54
<PAGE> 55
<TABLE>
<CAPTION>
=======================================================================
PRINCIPAL TRANCHE C TERM LOAN
AMORTIZATION PRINCIPAL AMORTIZATION
PAYMENT DATES PAYMENT
=======================================================================
<S> <C>
September 30, 1999 $ 875,000
-----------------------------------------------------------------------
December 31, 1999 $ 875,000
-----------------------------------------------------------------------
March 31, 2000 $ 875,000
-----------------------------------------------------------------------
June 30, 2000 $ 875,000
-----------------------------------------------------------------------
September 30, 2000 $ 875,000
-----------------------------------------------------------------------
December 31, 2000 $ 875,000
-----------------------------------------------------------------------
March 31, 2001 $ 875,000
-----------------------------------------------------------------------
June 30, 2001 $ 875,000
-----------------------------------------------------------------------
September 30, 2001 $ 875,000
-----------------------------------------------------------------------
December 31, 2001 $ 875,000
-----------------------------------------------------------------------
March 31, 2002 $ 875,000
-----------------------------------------------------------------------
June 30, 2002 $ 875,000
-----------------------------------------------------------------------
September 30, 2002 $ 875,000
-----------------------------------------------------------------------
December 31, 2002 $338,625,000
-----------------------------------------------------------------------
Total $350,000,000
=======================================================================
</TABLE>
(e) Interest. Subject to the provisions of Section 3.1,
Eurodollar Loans comprising all or a part of the Tranche C Term Loans
shall bear interest at a per annum rate equal to the Eurodollar Rate
plus 4.00% and Base Rate Loans comprising all or part of the Tranche C
Term Loans shall bear interest at a per annum rate equal to the Base
Rate plus 2.50%; provided, however, (i) if the Borrower shall have a
Senior Debt Rating by S&P greater than or equal to BBB- and a Senior
Debt Rating by Moody's greater than or equal to Baa3, the Tranche C
Term Loans shall bear interest at a per annum rate equal to the
Eurodollar Rate plus 3.75% (in the case of Eurodollar Loans) or the
Base Rate plus 2.25% (in the case of Base Rate Loans). Interest in
respect of Tranche C Term Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein).
(f) Tranche C Term Notes. If requested by a Tranche C Term
Lender, the portion of the Tranche C Term Loan made by such Tranche C
Term Lender shall be evidenced by a duly executed promissory note of
the Borrower to such Tranche C Term Lender in an original principal
amount equal to the original principal amount of such Tranche C Term
Lender's Tranche C Commitment Percentage of the Tranche C Term Loan,
and substantially in the form of Exhibit 2.5(f).
SECTION 3.
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1. DEFAULT RATE.
Upon the occurrence, and during the continuance, of an Event of
Default, the principal of and, to the extent permitted by law, interest on the
Loans and any other amounts owing hereunder or under the other Credit Documents
shall bear interest, payable on demand, at a per annum rate 2% greater than the
rate which would otherwise be applicable (or if no rate is applicable, whether
in respect of interest, fees or other amounts, then the Adjusted Base Rate plus
2%).
55
<PAGE> 56
3.2. EXTENSION AND CONVERSION.
The Borrower shall have the option, on any Business Day, to extend
existing Loans into a subsequent permissible Interest Period or to convert
Revolving Loans, Term Loans or Tranche C Term Loans, as the case may be, to
Revolving Loans, Term Loans or Tranche C Term Loans, respectively, of another
interest rate type; provided, however, that (i) except as provided in Section
3.8, Eurodollar Loans may be converted into Base Rate Loans or extended as
Eurodollar Loans for new Interest Periods only on the last day of the Interest
Period applicable thereto, (ii) no Loans may be converted into, or continued as,
Eurodollar Loans if a Default or Event of Default is in existence and the
Aggregate Required Lenders or the Administrative Agent shall have determined
that such conversion or continuation is inappropriate, (iii) Loans extended as,
or converted into, Eurodollar Loans shall be subject to the terms of the
definition of "Interest Period" set forth in Section 1.1 and shall be in such
minimum amounts as provided in, with respect to the Revolving Loans, Section
2.1(b)(ii), with respect to the Term Loans, Section 2.4(c) or with respect to
the Tranche C Term Loans, Section 2.5(c), (iv) no more than 10 Eurodollar Loans
shall be outstanding under this Credit Agreement at any time (it being
understood that, for purposes hereof, Eurodollar Loans with different Interest
Periods shall be considered as separate Eurodollar Loans, even if they begin on
the same date, although borrowings, extensions and conversions may, in
accordance with the provisions hereof, be combined at the end of existing
Interest Periods to constitute a new Eurodollar Loan with a single Interest
Period) and (v) any request for extension or conversion of a Eurodollar Loan
which shall fail to specify an Interest Period shall be deemed to be a request
for an Interest Period of one month. Each such extension or conversion shall be
effected by the Borrower by giving a Notice of Extension/Conversion (or
telephonic notice promptly confirmed in writing) to the office of the
Administrative Agent specified in specified in Schedule 2.1(a), or at such other
office as the Administrative Agent may designate in writing, prior to 11:00 A.M.
(New York City time) on the Business Day of, in the case of the conversion of a
Eurodollar Loan into a Base Rate Loan, and on the third Business Day prior to,
in the case of the extension of a Eurodollar Loan as, or conversion of a Base
Rate Loan into, a Eurodollar Loan, the date of the proposed extension or
conversion, specifying the date of the proposed extension or conversion, the
Loans to be so extended or converted, the types of Loans into which such Loans
are to be converted and, if appropriate, the applicable Interest Periods with
respect thereto. Each request for extension or conversion shall be irrevocable.
In the event the Borrower fails to request extension or conversion of any
Eurodollar Loan in accordance with this Section, or any such conversion or
extension is not permitted or required by this Section, then such Eurodollar
Loan shall be automatically converted into a Base Rate Loan at the end of the
Interest Period applicable thereto. The Administrative Agent shall give each
affected Lender notice as promptly as practicable of any such proposed extension
or conversion affecting any Loan.
3.3. PREPAYMENTS.
(a) Voluntary Prepayments. The Borrower shall have the right
to prepay any Loans in whole or in part from time to time as it may
select; provided, however, that (i) each partial prepayment of Loans
shall be in a minimum principal amount of $10,000,000 and integral
multiples of $5,000,000 (provided that Revolving Loans that are Base
Rate Loans may be prepaid in minimum principal amounts of $1,000,000
and integral multiples of $100,000) and (ii) any voluntary prepayment
of the Term Loans and/or Tranche C Term Loans shall be subject to the
prepayment penalty provisions of Section 3.3(c). Subject to the
foregoing terms, amounts prepaid under this Section 3.3(a) shall be
56
<PAGE> 57
applied as the Borrower may elect; provided that if the Borrower elects
to make a voluntary prepayment with respect to the Term Loans or the
Tranche C Term Loans, the Borrower shall be required to make a pro rata
voluntary prepayment (and corresponding permanent reduction in the
Revolving Committed Amount) with respect to the Revolving Loans. Any
amounts so prepaid shall be applied, in the case of the Term Loans and
the Tranche C Term Loans, in the inverse order of maturity thereof, and
in the case of all Loans, first to Base Rate Loans and then to
Eurodollar Loans in direct order of Interest Period maturities. All
prepayments under this Section 3.3(a) shall be subject to Section 3.12
and all prepayments of Term Loans and Tranche C Term Loans shall be
subject to Section 3.3(c), but otherwise prepayments shall be made
without premium or penalty.
(b) Mandatory Prepayments.
(i) Committed Amounts. If at any time, (A) the sum of
the aggregate principal amount of the Obligations outstanding
shall exceed the lesser of (x) the Aggregate Committed Amount
and (y) the Borrowing Base, (B) the amount of LOC Obligations
outstanding shall exceed the LOC Committed Amount or (C) the
amount of Swingline Loans outstanding shall exceed the
Swingline Committed Amount, the Borrower shall immediately
make payment on the Revolving Loans, the Swingline Loans
and/or to a cash collateral account (any such account into
which cash collateral is deposited by the Borrower, a "cash
collateral account") in respect of the LOC Obligations, in an
amount sufficient to eliminate the deficiency; provided,
however, to the extent payment on the Revolving Loans and/or
to a cash collateral account in respect of the LOC Obligations
is not sufficient to eliminate such deficiency, the Borrower
shall make payment on the Term Loans in an amount sufficient
to eliminate the deficiency and a corresponding permanent
reduction in the Revolving Committed Amount. The Borrower
hereby grants to the Administrative Agent, for the ratable
benefit of the Secured Parties, a continuing security interest
in all amounts at any time on deposit in any and all cash
collateral accounts to secure all LOC Obligations from time to
time outstanding and all other Credit Party Obligations
hereunder.
(ii) Asset Disposition; Etc. Immediately upon receipt
by any Consolidated Party of proceeds from any Asset
Disposition or repayment of the Agecroft Note, the Borrower
shall prepay the Loans in an aggregate amount equal to the Net
Cash Proceeds of the related Asset Disposition or repayment
(such prepayment to be applied as set forth in clause (iii)
below).
Notwithstanding the foregoing, the Borrower
shall not be required to make a prepayment pursuant to this
Section 3.3(b)(ii) with respect to (A) up to $42,000,000 of
Net Cash Proceeds from the sale of the Polk County, Florida,
correctional facility, (B) up to $25,000,000 per annum of Net
Cash Proceeds from any Asset Dispositions and (C) any amounts
received in repayment of the Agecroft Note; provided, that, in
the case of (A), (B) and (C) above, the Borrower advises the
Administrative Agent at the time the Net Cash Proceeds from
such Asset Dispositions or repayment are received that it
intends to reinvest such Net Cash Proceeds into replacement
assets (including pursuant to any acquisition)
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within 360 days after such Asset Disposition or repayment and
such Net Cash Proceeds are applied to repay the Revolving
Loans (or, if no Revolving Loans are outstanding, to provide
cash collateral for the Credit Party Obligations by deposit in
a cash collateral account) until such time as such
reinvestment occurs (or such 360 day period expires);
provided, however, if such Net Cash Proceeds are not so
reinvested within such 360 day period, the Borrower shall be
obligated to apply such Net Cash Proceeds to the prepayment of
the Loans at the end of such 360 day period in accordance with
the terms of Section 3.3(b)(iii).
(iii) Application of Mandatory Prepayments. All
amounts required to be paid pursuant to Section 3.3(b)(ii)
shall be applied ratably to the Revolving Obligations, the
Term Loans and the Tranche C Term Loans in accordance with the
respective outstanding amounts thereof as follows: (A) to the
Revolving Obligations (first to Revolving Loans and second to
Swingline Loans and (after all Revolving Loans and Swingline
Loans have been repaid) then to a cash collateral account to
secure LOC Obligations) (with a corresponding reduction in the
Revolving Committed Amount in an amount equal to all amounts
applied to the Revolving Obligations pursuant to this Section
(b)(iii)) and (B) to the Term Loans and the Tranche C Term
Loans, in the inverse order of maturity thereof, allocated
ratably between the Term Loans and the Tranche C Term Loans in
accordance with the respective outstanding amounts thereof.
One or more holders of the Term Loans or the Tranche C Term
Loans may decline to accept a mandatory prepayment under
Section 3.3(b)(ii) to the extent there are sufficient
Revolving Loans or Term Loans, as applicable, outstanding to
be paid with such prepayment. In the event one or more holders
of the Term Loans declines such a prepayment, such declined
prepayments shall be split evenly, with fifty percent (50%) of
such declined prepayment allocated toward a prepayment of the
Revolving Loans (with a corresponding reduction in the
Revolving Committed Amount in an amount equal to the amount
prepaid pursuant to such prepayment) and fifty percent (50%)
of such declined prepayment being returned to the Borrower. In
the event one or more holders of the Tranche C Term Loans
declines such a prepayment, such declined prepayments shall be
split as follows: twenty-five percent (25%) of such declined
prepayment shall be allocated toward a prepayment of the
Revolving Loans (with a corresponding reduction in the
Revolving Committed Amount in an amount equal to the amount
prepaid pursuant to such prepayment), twenty-five percent
(25%) of such declined prepayment shall be allocated toward a
prepayment of the Term Loans (subject to the right of the
holders of the Term Loans to decline such prepayment as
provided above), and fifty percent (50%) of such declined
prepayment shall be returned to the Borrower; provided that,
in no event shall the Borrower receive greater than fifty
percent (50%) of the aggregate declined portions of any
prepayment (with any excess being allocated toward a
prepayment of the Revolving Loans (with a corresponding
reduction in the Revolving Committed Amount in an amount equal
to the amount prepaid pursuant to such prepayment)). Within
the parameters of the applications set forth above,
prepayments shall be applied first to Base Rate Loans and then
to Eurodollar Loans in direct order of Interest Period
maturities. All prepayments under this Section 3.3(b) shall be
subject to Section 3.12.
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(c) Prepayment Penalty. In the event the Borrower voluntarily
elects to prepay the Term Loan and/or the Tranche C Term Loan within
one year of the Original Closing Date as permitted by Section 3.3(a),
the Borrower shall be obligated to pay a prepayment fee equal to two
percent (2.0%) of the principal amount prepaid. In the event the
Borrower voluntarily elects to prepay the Term Loan and/or the Tranche
C Term Loan between December 31, 1999 and December 31, 2000 as
permitted by Section 3.3(a), the Borrower shall be obligated to pay a
prepayment fee equal to one percent (1.0%) of the principal amount
prepaid. After two years from the Original Closing Date, the Borrower
may prepay the Term Loan and/or the Tranche C Term Loan without a
prepayment penalty or fee.
3.4. TERMINATION AND REDUCTION OF REVOLVING COMMITTED AMOUNT.
The Borrower may from time to time permanently reduce or terminate the
Revolving Committed Amount in whole or in part (in minimum aggregate amounts of
$10,000,000 or in integral multiples of $5,000,000 in excess thereof (or, if
less, the full remaining amount of the then applicable Revolving Committed
Amount)) upon five Business Days' prior written notice to the Administrative
Agent; provided, that, (i) no such termination or reduction shall be made which
would cause the sum of the aggregate outstanding principal amount of the
Obligations to exceed the lesser of (A) the Aggregate Committed Amount and (B)
the Borrowing Base, unless, concurrently with such termination or reduction, the
Loans are repaid to the extent necessary to eliminate such excess and (ii) no
such termination or reduction shall be made which would cause the sum of the
aggregate outstanding principal amount of the Revolving Obligations to exceed
the Revolving Committed Amount. The Administrative Agent shall promptly notify
each affected Lender of receipt by the Administrative Agent of any notice from
the Borrower pursuant to this Section 3.4.
3.5. FEES.
(a) [Intentionally omitted].
(b) Unused Fee. In consideration of the Revolving Commitments
of the Revolving Lenders hereunder, the Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Lender a fee
(the "Unused Fee") on the Unused Revolving Committed Amount computed at
a per annum rate for each day during the applicable Unused Fee
Calculation Period (hereinafter defined) equal to the Applicable
Percentage in effect from time to time. The Unused Fee shall begin
accruing on the Restatement Effective Date and shall be due and payable
in arrears on the last business day of each March, June, September and
December (and any date that the Revolving Committed Amount is reduced
as provided in Section 3.4 and the Revolving Loan Maturity Date) for
the immediately preceding quarter (or portion thereof) (each such
quarter or portion thereof for which the Unused Fee is payable
hereunder being herein referred to as an "Unused Fee Calculation
Period"), beginning with the first of such dates to occur after the
Restatement Effective Date. For purposes of computation of the Unused
Fee, the Swingline Loans shall not be counted toward or considered
usage under the Revolving Loan Facility.
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(c) Letter of Credit Fees.
(i) Letter of Credit Issuance Fee. In consideration
of the issuance of standby or any other performance related
Letters of Credit hereunder, the Borrower promises to pay to
the Administrative Agent for the account of each Revolving
Lender a fee (the "Standby Letter of Credit Fee") on such
Revolving Lender's Revolving Commitment Percentage of the
average daily maximum amount available to be drawn under each
such standby Letter of Credit computed at a per annum rate for
each day from the date of issuance to the date of expiration
equal to the Applicable Percentage for Eurodollar Loans. The
Standby Letter of Credit Fee will be payable quarterly in
arrears on the last Business Day of each March, June,
September and December for the immediately preceding quarter
(or a portion thereof).
(ii) Trade Letter of Credit Fee. In consideration of
the issuance of trade Letters of Credit hereunder, the
Borrower promises to pay to the Administrative Agent for the
account of each Revolving Lender a fee (the "Trade Letter of
Credit Fee") on such Revolving Lender's Revolving Commitment
Percentage of the amount of each drawing under any such trade
Letter of Credit equal to .125%. The Trade Letter of Credit
Fee will be payable on each date of drawing under a trade
Letter of Credit.
(iii) Issuing Lender Fees. In addition to the Standby
Letter of Credit Fee payable pursuant to clause (i) above and
the Trade Letter of Credit Fee payable pursuant to clause (ii)
above, the Borrower promises to pay to the Issuing Lender for
its own account without sharing by the other Revolving Lenders
(A) a letter of credit fronting fee of one-eighth percent
(1/8%) per annum on the average daily maximum amount available
to be drawn under outstanding Letters of Credit payable
quarterly in arrears with the Standby Letter of Credit Fee and
the Trade Letter of Credit Fee, and (B) customary charges from
time to time of the Issuing Lender with respect to the
issuance, amendment, transfer, administration, cancellation
and conversion of, and drawings under, such Letters of Credit
(collectively, the "Issuing Lender Fees").
(d) Administrative Fees. The Borrower agrees to pay to the
Administrative Agent, for its own account, an administrative fee in an
amount previously agreed between the Borrower and the Administrative
Agent (the "Administrative Agent's Fees"), on the Restatement Effective
Date and annually in advance prior to the date on which all Commitments
under this Credit Agreement have terminated and no Credit Party
Obligations are outstanding.
(e) Other Fees. The Borrower agrees to pay to LCPI, in
immediately available funds on the Restatement Effective Date, the
other fees referred to in the Commitment Letter (and related Fee
Letter), each dated as of April 26, 1999, and as amended, among the
Borrower, LCPI and LBI and as further agreed among the Borrower, LCPI
and LBI.
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3.6. CAPITAL ADEQUACY.
If any Lender has determined, after the date hereof, that the adoption
or the becoming effective of, or any change in, or any change by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital adequacy, or
compliance by such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on such Lender's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrower, the Borrower shall be obligated to
pay to such Lender such additional amount or amounts as will compensate such
Lender for such reduction. Each determination by any such Lender of amounts
owing under this Section shall, absent manifest error, be conclusive and binding
on the parties hereto.
3.7. LIMITATION ON EURODOLLAR LOANS.
If on or prior to the first day of any Interest Period for any
Eurodollar Loan:
(a) the Administrative 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 Required Lenders determine (which determination shall
be conclusive) and notify the Administrative Agent that the Eurodollar
Rate will not adequately and fairly reflect the cost to the Lenders of
funding Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, the Lenders shall be under no
obligation to make additional Eurodollar Loans, continue Eurodollar Loans, or to
convert Base Rate Loans into Eurodollar Loans and the Borrower shall, on the
last day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans, either prepay such Eurodollar Loans or convert such Eurodollar
Loans into Base Rate Loans in accordance with the terms of this Credit
Agreement.
3.7A LIMITATION ON TRANCHE C EURODOLLAR LOANS.
If on or prior to the first day of any Interest Period for any
Eurodollar Loan the Required Tranche C Lenders determine (which determination
shall be conclusive) and notify the Administrative Agent that the Eurodollar
Rate will not adequately and fairly reflect the cost to the Tranche C Lenders of
funding Eurodollar Loans to be held by such Tranche C Lenders during such
Interest Period, then the Administrative Agent shall give the Borrower prompt
notice thereof, and so long as such condition remains in effect, the Tranche C
Lenders shall be under no obligation to make additional Eurodollar Loans,
continue Eurodollar Loans, or to convert Base Rate Loans into Eurodollar Loans
and the Borrower shall, on the last day(s) of the then current Interest
Period(s) for the outstanding Eurodollar Loans, either prepay such Eurodollar
Loans or convert such Eurodollar Loans into Base Rate Loans in accordance with
the terms of this Credit Agreement.
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3.8. ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
occurring after the Closing Date shall make it unlawful for any Lender to make
or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such
Lender shall promptly give written notice of such circumstances to the Borrower
and the Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender hereunder to
make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate
Loan to Eurodollar Loans, shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Base Rate Loan
when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.13.
3.9. REQUIREMENTS OF LAW.
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 Loans, its Notes, or its obligation to make
Eurodollar Loans, or change the basis of taxation of any
amounts payable to such Lender (or its Applicable Lending
Office) under this Credit Agreement or its Notes in respect of
any Eurodollar 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);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than the Eurodollar Reserve Requirement utilized in the
determination of the Adjusted 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 Commitment of such
Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or the London interbank market any other
condition affecting this Credit Agreement or its Notes or any
of such extensions of credit or liabilities or commitments;
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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 Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Credit Agreement or
its Notes with respect to any Eurodollar 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 3.9, the Borrower may, by notice to such Lender
(with a copy to the Administrative Agent), suspend the obligation of such Lender
to make or continue Eurodollar Loans, or to convert Base Rate Loans into
Eurodollar Loans, until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of Section 3.10 shall be
applicable); provided that such suspension shall not affect the right of such
Lender to receive the compensation so requested. Each Lender shall promptly
notify the Borrower and the Administrative 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 3.9 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 3.9 shall furnish to the Borrower and the Administrative 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.
3.10. TREATMENT OF AFFECTED LOANS.
If the obligation of any Lender to make any Eurodollar Loan or to
continue, or to convert Base Rate Loans into, Eurodollar Loans shall be
suspended pursuant to Section 3.8 or 3.9 hereof, such Lender's Eurodollar Loans
shall be automatically converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for such Eurodollar Loans (or, in the case of a
conversion required by Section 3.8 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Administrative Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 3.8 or 3.9 hereof that gave rise to such conversion no
longer exist:
(a) to the extent that such Lender's Eurodollar Loans have
been so converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Eurodollar 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 Eurodollar Loans shall be made or continued instead as
Base Rate Loans, and all Base Rate Loans of such Lender that would
otherwise be converted into Eurodollar Loans shall remain as Base Rate
Loans.
If such Lender gives notice to the Borrower (with a copy to the Administrative
Agent) that the circumstances specified in Section 3.8 or 3.9 hereof that gave
rise to the conversion of such Lender's Eurodollar Loans pursuant to this
Section 3.10 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be
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automatically converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Loans, to the extent necessary so
that, after giving effect thereto, all Loans held by the Lenders holding
Eurodollar Loans and by such Lender are held pro rata (as to principal amounts,
interest rate basis, and Interest Periods) in accordance with their respective
Commitments.
3.11. TAXES.
(a) Any and all payments by any Credit Party to or for the
account of any Lender or the Administrative Agent hereunder or under
any other Credit 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
Administrative 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 Administrative 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 any Credit Party shall be required by law to deduct any
Taxes from or in respect of any sum payable under this Credit Agreement
or any other Credit Document to any Lender or the Administrative 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 3.11) such Lender or the
Administrative Agent receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Credit Party shall
make such deductions, (iii) such Credit Party shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) such Credit Party shall
furnish to the Administrative Agent, at its address referred to in
Section 11.1, 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 Credit Agreement or any other Credit Document
or from the execution or delivery of, or otherwise with respect to,
this Credit Agreement or any other Credit Document (hereinafter
referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the
Administrative 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
3.11) paid by such Lender or the Administrative Agent (as the case may
be) and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto.
(d) Each Lender that is not a United States person under
Section 7701(a)(30) of the Code (a "Non-U.S. Lender"), on or prior to
the date of its execution and delivery of this Credit 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 Borrower or the Administrative
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Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Administrative 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 Credit Agreement is effectively connected
with the conduct of a trade or business in the United States or (ii)
with respect to any Non-U.S. Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code claiming exemption from
U.S. withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest," a statement substantially
in the form of Exhibit 3.11(d) or a Form W-8 certifying, in the case of
(i) or (ii) above, that such Lender is entitled to an exemption from or
a reduced rate of tax on payments pursuant to this Credit Agreement or
any of the other Credit Documents.
(e) For any period with respect to which a Lender has failed
to provide the Borrower and the Administrative Agent with the
appropriate form pursuant to Section 3.11(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 3.11(a)
or 3.11(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 any Credit Party is required to pay additional amounts
to or for the account of any Lender pursuant to this Section 3.11, 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 applicable Credit Party shall furnish to the Administrative
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 Credit Parties hereunder, the agreements and obligations of the
Credit Parties contained in this Section 3.11 shall survive the
repayment of the Loans, LOC Obligations and other obligations under the
Credit Documents and the termination of the Commitments hereunder.
3.12. 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
Loan for any reason (including, without limitation, the acceleration of
the Loans pursuant to Section 9.2) 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
Section 5 to be satisfied) to borrow, convert, continue, or prepay a
Eurodollar Loan on the date for such borrowing, conversion,
continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, continuation, or conversion under this Credit
Agreement.
With respect to Eurodollar Loans, such indemnification may include an
amount equal to the excess, if any, of (a) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of the applicable Interest Period
(or, in the case of a failure to borrow, convert or continue, the Interest
Period that would have commenced on the date of such failure) in each case at
the applicable rate of interest for such Eurodollar Loans provided for herein
(excluding, however, the Applicable Percentage included therein, if any) over
(b) the amount of interest (as reasonably determined by such Lender) which would
have accrued to such Lender on such amount by placing such amount on deposit for
a comparable period with leading banks in the interbank Eurodollar market. The
covenants of the Borrower set forth in this Section 3.12 shall survive the
repayment of the Loans, LOC Obligations and other obligations under the Credit
Documents and the termination of the Commitments hereunder.
3.13. PRO RATA TREATMENT.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan, each payment or (subject to
the terms of Section 3.3) prepayment of principal of any Revolving Loan
(other than Swingline Loans) or reimbursement obligations arising from
drawings under Letters of Credit, each payment of interest on the
Revolving Loans or reimbursement obligations arising from drawings
under Letters of Credit, each payment of Unused Fees, each payment of
the Standby Letter of Credit Fee, each payment of the Trade Letter of
Credit Fee, each reduction in Revolving Commitments and LOC Commitments
and each conversion or extension of any Revolving Loan, shall be
allocated pro rata among the Revolving Lenders in accordance with the
respective principal amounts of their outstanding Revolving Loans or
Swingline Loans and Participation Interests. With respect to the Term
Loan, each payment or prepayment of principal on the Term Loan, each
payment of interest thereon, and each conversion or extension of any
Loan comprising the Term Loan, shall be allocated pro rata among the
Term Lenders in accordance with the respective principal amounts of
their outstanding Term Loan and Participation Interests therein.
(b) Advances. No Lender shall be responsible for the failure
or delay by any other Lender in its obligation to make its ratable
share of a borrowing hereunder; provided, however, that the failure of
any Lender to fulfill its obligations hereunder shall not relieve any
other Lender of its obligations hereunder. Unless the Administrative
Agent shall have been notified in writing by any Lender prior to the
date of any requested borrowing
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that such Lender does not intend to make available to the
Administrative Agent its ratable share of such borrowing to be made on
such date, the Administrative Agent may assume that such Lender has
made such amount available to the Administrative Agent on the date of
such borrowing, and the Administrative Agent in reliance upon such
assumption, may (in its sole discretion but without any obligation to
do so) make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the
Administrative Agent, the Administrative Agent shall be able to recover
such corresponding amount from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Administrative Agent's
demand therefor, the Administrative Agent will promptly notify the
Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also
be entitled to recover from the Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding
amount is recovered by the Administrative Agent at a per annum rate
equal to (i) from the Borrower at the applicable rate for the
applicable borrowing pursuant to the Notice of Borrowing and (ii) from
a Lender at the Federal Funds Rate.
3.13A TRANCHE C PRO RATA TREATMENT.
With respect to the Tranche C Term Loans, each payment or prepayment of
principal on the Tranche C Term Loans, each payment of interest thereon and each
conversion or extension of any Loan comprising the Tranche C Term Loans, shall
be allocated pro rata among the Tranche C Term Lenders in accordance with the
respective principal amounts of their outstanding Tranche C Term Loans and
Participation Interests therein.
3.14. SHARING OF PAYMENTS.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a Participation Interest in such Loans, LOC
Obligations and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
Participation Interest theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise restored.
The Borrower agrees that any Lender so purchasing such a Participation Interest
may, to the
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fullest extent permitted by law, exercise all rights of payment, including
setoff, banker's lien or counterclaim, with respect to such Participation
Interest as fully as if such Lender were a holder of such Loan, LOC Obligations
or other obligation in the amount of such Participation Interest. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or the
Administrative Agent shall fail to remit to the Administrative Agent or any
other Lender an amount payable by such Lender or the Administrative Agent to the
Administrative Agent or such other Lender pursuant to this Credit Agreement on
the date when such amount is due, such payments shall be made together with
interest thereon for each date from the date such amount is due until the date
such amount is paid to the Administrative Agent or such other Lender at a rate
per annum equal to the Federal Funds Rate. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section 3.14 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders under this Section 3.14 to share in
the benefits of any recovery on such secured claim.
3.15. PAYMENTS, COMPUTATIONS, ETC.
(a) Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Administrative Agent in Dollars
in immediately available funds, without setoff, deduction, counterclaim
or withholding of any kind, at the Administrative Agent's office
specified in Schedule 2.1(a) not later than 2:00 P.M. (Charlotte, North
Carolina time) on the date when due. Payments received after such time
shall be deemed to have been received on the next succeeding Business
Day. The Administrative 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 of the Borrower or any other Credit Party
maintained with the Administrative Agent (with notice to the Borrower
or such other Credit Party). The Borrower shall, at the time it makes
any payment under this Credit Agreement, specify to the Administrative
Agent the Loans, LOC Obligations, Fees, interest or other amounts
payable by the Borrower hereunder to which such payment is to be
applied (and in the event that it fails so to specify, or if such
application would be inconsistent with the terms hereof, the
Administrative Agent shall distribute such payment to the Lenders in
such manner as the Administrative Agent may determine to be appropriate
in respect of obligations owing by the Borrower hereunder, subject to
the terms of Section 3.13(a)). The Administrative Agent will distribute
such payments to such Lenders, if any such payment is received prior to
12:00 Noon (Charlotte, North Carolina time) on a Business Day in like
funds as received prior to the end of such Business Day and otherwise
the Administrative Agent will distribute such payment to such Lenders
on the next succeeding Business Day. Whenever any payment hereunder
shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day
(subject to accrual of interest and Fees for the period of such
extension), except that in the case of Eurodollar Loans, if the
extension would cause the payment to be made in the next following
calendar month, then such payment shall instead be made on the next
preceding Business Day. Except as expressly provided otherwise herein,
all computations of interest and fees shall be made on the basis of
actual number of days elapsed over a year of 360 days, except with
respect to computation of interest on Base Rate Loans which (unless the
Base Rate is determined by reference to the Federal Funds Rate) shall
be calculated based on a year of 365 or 366
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days, as appropriate. Interest shall accrue from and include the date
of borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, after the occurrence and during the continuance of an Event
of Default, all amounts collected or received by the Administrative
Agent or any Lender on account of the Credit Party Obligations or any
other amounts outstanding under any of the Credit Documents or in
respect of the Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation reasonable attorneys' fees)
of the Administrative Agent in connection with enforcing the rights of
the Lenders under the Credit Documents and any protective advances made
by the Administrative Agent with respect to the Collateral under or
pursuant to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to the Administrative
Agent;
THIRD, to the payment of all reasonable out-of-pocket costs
and expenses (including without limitation, reasonable attorneys' fees)
of each of the Lenders in connection with enforcing its rights under
the Credit Documents or otherwise with respect to the Credit Party
Obligations owing to such Lender;
FOURTH, to the payment of all of the Credit Party Obligations
consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal amount of
the Credit Party Obligations (including the payment or cash
collateralization of the outstanding LOC Obligations);
SIXTH, to all other Credit Party Obligations and other
obligations which shall have become due and payable under the Credit
Documents or otherwise and not repaid pursuant to clauses "FIRST"
through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whoever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in
the numerical order provided until exhausted prior to application to
the next succeeding category; (ii) each of the Lenders shall receive an
amount equal to its pro rata share (based on the proportion that the
then outstanding Loans and LOC Obligations held by such Lender bears to
the aggregate then outstanding Loans and LOC Obligations) of amounts
available to be applied pursuant to clauses "THIRD", "FOURTH", "FIFTH"
and "SIXTH" above; and (iii) to the extent that any amounts available
for distribution pursuant to clause "FIFTH" above are attributable to
the issued but undrawn amount of outstanding Letters of Credit, such
amounts shall be held by the Administrative Agent in a cash collateral
account and applied (A) first, to reimburse the Issuing Lender from
time to time for any drawings under such Letters of Credit and (B)
then, following the expiration of all Letters of
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Credit, to all other obligations of the types described in clauses
"FIFTH" and "SIXTH" above in the manner provided in this Section
3.15(b).
3.16. EVIDENCE OF DEBT.
(a) Each Lender shall maintain an account or accounts
evidencing each Loan made by such Lender to the Borrower from time to
time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Credit Agreement. Each
Lender will make reasonable efforts to maintain the accuracy of its
account or accounts and to promptly update its account or accounts from
time to time, as necessary.
(b) The Administrative Agent shall maintain the Register
pursuant to Section 11.3(c), and a subaccount for each Lender, in which
Register and subaccounts (taken together) shall be recorded (i) the
amount, type and Interest Period of each such Loan hereunder, (ii) the
amount of any principal or interest due and payable or to become due
and payable to each Lender hereunder and (iii) the amount of any sum
received by the Administrative Agent hereunder from or for the account
of any Credit Party and each Lender's share thereof. The Administrative
Agent will make reasonable efforts to maintain the accuracy of the
subaccounts referred to in the preceding sentence and to promptly
update such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.16 (and, if
consistent with the entries of the Administrative Agent, subsection
(a)) shall be prima facie evidence of the existence and amounts of the
obligations of the Credit Parties therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain
any such account, such Register or such subaccount, as applicable, or
any error therein, shall not in any manner affect the obligation of the
Credit Parties to repay the Credit Party obligations owing to such
Lender.
SECTION 4.
GUARANTY
4.1. THE GUARANTY.
The Guarantors hereby jointly and severally guarantee to each Secured
Party, as primary obligor and not as surety, the prompt payment of the Credit
Party Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Credit Party Obligations are not paid in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice whatsoever, and
that in the case of any extension of time of payment or renewal of any of the
Credit Party Obligations, the same will be promptly paid in full when due
(whether at extended maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) in accordance with the terms of
such extension or renewal.
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Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents or Hedging Agreements, the obligations of each
Guarantor hereunder 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 Bankruptcy Code or any comparable provisions of any
applicable state law.
4.2. OBLIGATIONS UNCONDITIONAL.
The obligations of the Guarantors under Section 4.1 are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release, impairment or exchange of any Guarantor or other
guarantee of or security for any of the Credit Party Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 4.2 that the obligations of the Guarantors hereunder shall be absolute
and unconditional under any and all circumstances. Each Guarantor agrees that
such Guarantor shall have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor for amounts paid under
this Section 4 until such time as the Secured Parties have been paid in full,
all Commitments under this Credit Agreement have been terminated and no Person
or Governmental Authority shall have any right to request any return or
reimbursement of funds from the Secured Parties in connection with monies
received under the Credit Documents or Hedging Agreements. Without limiting the
generality of the foregoing, it is agreed that, to the fullest extent permitted
by law, the occurrence of any one or more of the following shall not alter or
impair the liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
(a) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of
the Credit Party Obligations shall be extended, or such performance or
compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of any
of the Credit Documents, any Hedging Agreement or any other agreement
or instrument referred to in the Credit Documents or Hedging Agreements
shall be done or omitted;
(c) the maturity of any of the Credit Party Obligations shall
be accelerated, or any of the Credit Party Obligations shall be
modified, supplemented or amended in any respect, or any right under
any of the Credit Documents, any Hedging Agreement or any other
agreement or instrument referred to in the Credit Documents or Hedging
Agreements shall be waived or any other guarantee of any of the Credit
Party Obligations or any security therefor shall be released, impaired
or exchanged in whole or in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Administrative
Agent or any Secured Party as security for any of the Credit Party
Obligations shall fail to attach or be perfected;
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(e) any of the Credit Party Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit of
any creditor of any Guarantor) or shall be subordinated to the claims
of any Person (including, without limitation, any creditor of any
Guarantor); or
(f) the occurrence of any Bankruptcy Event with respect to any
Consolidated Party.
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Administrative Agent or any other
Secured Party exhaust any right, power or remedy or proceed against any Person
under any of the Credit Documents, any Hedging Agreement or any other agreement
or instrument referred to in the Credit Documents or Hedging Agreements, or
against any other Person under any other guarantee of, or security for, any of
the Credit Party Obligations.
4.3. REINSTATEMENT.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each other Secured Party on demand for all
reasonable costs and expenses (including, without limitation, fees and expenses
of counsel) incurred by the Administrative Agent or such other Secured Party in
connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
4.4. CERTAIN ADDITIONAL WAIVERS.
Each Guarantor agrees that such Guarantor shall have no right of
recourse to security for the Credit Party Obligations, except through the
exercise of rights of subrogation pursuant to Section 4.2 and through the
exercise of rights of contribution pursuant to Section 4.6.
4.5. REMEDIES.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Administrative Agent and the
other Secured Parties, on the other hand, the Credit Party Obligations may be
declared to be forthwith due and payable as provided in Section 9.2 (and shall
be deemed to have become automatically due and payable in the circumstances
provided in said Section 9.2) for purposes of Section 4.1 notwithstanding any
stay, injunction or other prohibition preventing such declaration (or preventing
the Credit Party Obligations from becoming automatically due and payable) as
against any other Person and that, in the event of such declaration (or the
Credit Party Obligations being deemed to have become automatically due and
payable), the Credit Party Obligations (whether or not due and payable by any
other Person) shall forthwith become due and payable by the Guarantors for
purposes of Section 4.1. The Guarantors acknowledge and agree that their
obligations hereunder are secured
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in accordance with the terms of the Security Agreement and the other Collateral
Documents and that the Secured Parties may exercise their remedies thereunder in
accordance with the terms thereof.
4.6. RIGHTS OF CONTRIBUTION.
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this Section 4.6 shall be subordinate
and subject in right of payment to the prior payment in full to the
Administrative Agent and the other Secured Parties of the Guaranteed
Obligations, and none of the Guarantors shall exercise any right or remedy under
this Section 4.6 against any other Guarantor until payment and satisfaction in
full of all of such Guaranteed Obligations. For purposes of this Section 4.6,
(a) "Guaranteed Obligations" shall mean any obligations arising under the other
provisions of this Section 4; (b) "Excess Payment" shall mean the amount paid by
any Guarantor in excess of its Pro Rata Share of any Guaranteed Obligations; (c)
"Pro Rata Share" shall mean, for any Guarantor in respect of any payment of
Guaranteed Obligations, the ratio (expressed as a percentage) as of the date of
such payment of Guaranteed Obligations of (i) the amount by which the aggregate
present fair salable value of all of its assets and properties exceeds the
amount of all debts and liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of such Guarantor hereunder) to (ii) the amount by which the
aggregate present fair salable value of all assets and other properties of all
of the Credit Parties exceeds the amount of all of the debts and liabilities
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of the Credit Parties hereunder) of the Credit
Parties; provided, however, that, for purposes of calculating the Pro Rata
Shares of the Guarantors in respect of any payment of Guaranteed Obligations,
any Guarantor that became a Guarantor subsequent to the date of any such payment
shall be deemed to have been a Guarantor on the date of such payment and the
financial information for such Guarantor as of the date such Guarantor became a
Guarantor shall be utilized for such Guarantor in connection with such payment;
and (d) "Contribution Share" shall mean, for any Guarantor in respect of any
Excess Payment made by any other Guarantor, the ratio (expressed as a
percentage) as of the date of such Excess Payment of (i) the amount by which the
aggregate present fair salable value of all of its assets and properties exceeds
the amount of all debts and liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of such Guarantor hereunder) to (ii) the amount by which the
aggregate present fair salable value of all assets and other properties of the
Credit Parties other than the maker of such Excess Payment exceeds the amount of
all of the debts and liabilities (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of the Credit
Parties) of the Credit Parties other than the maker of such Excess Payment;
provided, however, that, for purposes of calculating the Contribution Shares of
the Guarantors in respect of any Excess Payment, any Guarantor that became a
Guarantor subsequent to the date of any such Excess Payment shall be deemed to
have been a Guarantor on the date of such Excess Payment and the financial
information for such Guarantor as of the date such Guarantor became a Guarantor
shall be utilized for such Guarantor in connection with such Excess Payment.
This Section 4.6 shall not be deemed to affect any right of subrogation,
indemnity, reimbursement or contribution that
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any Guarantor may have under applicable law against the Borrower in respect of
any payment of Guaranteed Obligations.
4.7. GUARANTEE OF PAYMENT; CONTINUING GUARANTEE.
The guarantee in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Credit Party
Obligations whenever arising.
SECTION 5.
CONDITIONS
5.1. CONDITIONS TO EFFECTIVENESS.
The effectiveness of this amendment and restatement of the Original
Credit Agreement is subject to satisfaction of each of the following conditions:
(a) Executed Credit Documents. Receipt by the Administrative
Agent of: (i) this Credit Agreement, duly executed by the Borrower, the
Subsidiary Guarantors, the Amending Lenders, the Tranche C Term
Lenders, the Administrative Agent, the Documentation Agent, the
Syndication Agent, Co-Agent and the Lead Arranger, (ii) any Notes
requested by the applicable Lender (against return of any notes issued
to such Lender under the Original Credit Agreement), duly executed by
the Borrower, (iii) the Security Agreement, duly executed by each
Credit Party and the Administrative Agent, (iv) the Pledge Agreement,
duly executed by each Credit Party and the Administrative Agent and (v)
all other Credit Documents, duly executed by the parties thereto, each
in form and substance acceptable to the Administrative Agent.
(b) Corporate Documents. Receipt by the Administrative Agent
of the following:
(i) Charter Documents. Copies of the articles or
certificates of incorporation or other charter documents of
each Credit Party certified to be true and complete as of a
recent date by the appropriate Governmental Authority of the
state or other jurisdiction of its incorporation and certified
by a secretary or assistant secretary of such Credit Party to
be true and correct as of the Restatement Effective Date.
(ii) Bylaws. A copy of the bylaws of each Credit
Party certified by a secretary or assistant secretary of such
Credit Party to be true and correct as of the Restatement
Effective Date.
(iii) Resolutions. Copies of resolutions of the Board
of Directors of each Credit Party approving and adopting the
Credit Documents to which it is a party, the transactions
contemplated therein and authorizing execution and delivery
thereof, certified by a secretary or assistant secretary of
such Credit Party to be true and correct and in force and
effect as of the Restatement Effective Date.
(iv) Good Standing. Copies of certificates of good
standing, existence or its equivalent with respect to each
Credit Party certified as of a recent date by the
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appropriate Governmental Authorities of the state or other
jurisdiction of incorporation and each other jurisdiction in
which the failure to so qualify and be in good standing could
have a Material Adverse Effect.
(v) Incumbency. An incumbency certificate of each
Credit Party certified by a secretary or assistant secretary
to be true and correct as of the Restatement Effective Date.
(vi) Mergers; Name Change. Evidence from the
applicable Governmental Authorities as to (a) the due and
proper merger with and into the Borrower of those Subsidiary
Guarantors party to the Original Credit Agreement on the
Original Closing Date which are not party to this Credit
Agreement and (b) the due and proper name change of the
Borrower from "Prison Realty Corporation" to "Prison Realty
Trust, Inc."
(c) Financial Forecasts. The Administrative Agent shall have
received detailed financial forecasts for the Borrower, Management
Opco, Service Company A and Service Company B for the fiscal periods
1999-2003, including income statements, balance sheets and cash flow
statements, in each case based on (and including) reasonable operating
and accounting assumptions and otherwise in form and substance
reasonably satisfactory to the Administrative Agent.
(d) Opinions of Counsel. The Administrative Agent shall have
received legal opinions from (i) Simpson Thacher & Bartlett, (ii) Miles
& Stockbridge, (iii) Stokes & Bartholomew and (iv) North Carolina
counsel, each in form and substance reasonably satisfactory to the
Administrative Agent, dated the Restatement Effective Date and
addressed to each of the Administrative Agent, the Documentation Agent,
the Syndication Agent, the Co-Agent, the Lead Arranger and each of the
Lenders.
(e) Personal Property Collateral. The Administrative Agent
shall have received (either from the Borrower or from the Original
Administrative Agent, as appropriate):
(i) duly-executed UCC financing statement amendments
and/or assignments with respect to all UCC-1 financing
statements and fixture filings originally executed and
delivered on the Original Closing Date by the Credit Parties
under the Original Credit Agreement who are parties to this
Credit Agreement and the Original Administrative Agent, as
applicable, in each case reflecting the assignment of such
financing statements to the Administrative Agent by the
Original Administrative Agent, reflecting the recent name
change of the Borrower and, if necessary, reflecting the
amendment and restatement of the Original Credit Agreement by
this Credit Agreement, as well as any other instruments and
documents in form and substance reasonably satisfactory to the
Administrative Agent necessary or, in the opinion of the
Administrative Agent, desirable to continue the perfection and
priority of the Administrative Agent's (as assignee of the
Original Administrative Agent) security interest in any
Collateral granted by any Credit Party on the Original Closing
Date pursuant to the Collateral Documents (as defined in the
Original Credit Agreement).
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(ii) all stock certificates evidencing the Capital
Stock pledged to the Administrative Agent pursuant to the
Pledge Agreement, together with duly executed in blank,
undated stock powers attached thereto (unless, with respect to
the pledged Capital Stock of any Foreign Subsidiary, such
stock powers are deemed unnecessary by the Administrative
Agent in its reasonable discretion under the law of the
jurisdiction of incorporation of such Person);
(iii) such patent/trademark/copyright filings (or
amendments thereto) as requested by the Administrative Agent
in order to perfect or continue the perfection of the
Administrative Agent's security interest in such Collateral
after giving effect to this Credit Agreement;
(iv) all instruments and chattel paper in the
possession of any of the Credit Parties or the Original
Administrative Agent (including, without limitation, the
Management Opco Note and the Agecroft Note), together with
allonges or assignments as may be necessary or appropriate to
perfect or continue the perfection of the Administrative
Agent's security interest in such Collateral after giving
effect to this Credit Agreement;
(v) duly executed consents as are necessary, in the
Administrative Agent's reasonable judgment, to perfect or
continue the perfection of the Administrative Agent's security
interest in the Collateral after giving effect to this Credit
Agreement;
(vi) in the case of any personal property Collateral
located at a premises leased to a Credit Party, such estoppel
letters, consents and waivers (or amendments to any of the
foregoing) from the landlords on such real property as may be
required by the Administrative Agent; and
(vii) duly-executed termination statements or other
releases for any Liens (other than Permitted Liens) existing
on the Restatement Effective Date.
(f) Real Property Collateral. The Administrative Agent shall
have received, in form and substance satisfactory to the Administrative
Agent:
(i) fully executed and notarized amendments or
amendments and restatements of all mortgages, deeds of trust
or deeds to secure debt granted in connection with the
Original Credit Agreement or, in the Administrative Agent's
sole discretion, mortgages, deeds of trust or deeds to secure
debt in favor of the Administrative Agent (each such
amendment, restatement, mortgage, deed of trust and deed to
secure debt, a "Mortgage" and collectively as "Mortgages") for
(a) the real property assets owned by the Borrower set forth
on Schedule 5.1(f)(i) and (b) each leasehold estate of the
Borrower set forth on Schedule 5.1(f)(i) (each of those real
property assets and leasehold estates on Schedule 5.1(f)(i),
an "Existing Property" and collectively, the "Existing
Properties"), together with such UCC-1 financing statements
(or UCC-3 amendments and/or assignments of financing
statements
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filed in connection with the Original Credit Agreement), as
the Administrative Agent shall deem appropriate with respect
to each such Existing Property;
(ii) (A) Endorsements (the "Title Endorsements") to
all Mortgage Policies (as defined in the Original Credit
Agreement) that were issued pursuant to the terms of the
Original Credit Agreement, which Title Endorsements shall be
issued by the title insurer that issued such Mortgage Policies
and which shall specifically insure the priority of the lien
of the Mortgages (as defined in the Original Credit Agreement)
as amended by the Mortgages contemplated hereby, and (B) with
respect to any Existing Property that was acquired after the
date of the Original Credit agreement or that for any other
reason does not have in place a "Mortgage Policy" (as defined
in the Original Credit Agreement) in accordance with the terms
of the Original Credit Agreement, ALTA or other appropriate
form mortgagee title insurance policies (the "Mortgage
Policies") issued by a title insurer satisfactory to the
Administrative Agent (the "Title Insurance Company"), in an
amount satisfactory to the Administrative Agent with respect
to each Existing Property, assuring the Administrative Agent
that the applicable Mortgages create valid and enforceable
first priority mortgage liens on the respective Existing
Properties, free and clear of all defects and encumbrances
except Permitted Liens, which Title Endorsements or Mortgage
Policies shall be in form and substance satisfactory to the
Administrative Agent and contain such endorsements as shall be
satisfactory to the Administrative Agent and for any other
matters that the Administrative Agent may request, and
providing affirmative insurance and such reinsurance as the
Administrative Agent may request, all of the foregoing in form
and substance reasonably satisfactory to the Administrative
Agent;
(iii) maps or plats of a survey of the sites of the
Existing Properties certified to the Administrative Agent and
the Title Insurance Company in a manner reasonably
satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an
independent professional licensed land surveyor reasonably
satisfactory to the Administrative Agent and the Title
Insurance Company, and otherwise in form and substance
satisfactory to the Administrative Agent;
(iv) (A) an opinion of counsel (which counsel shall
be satisfactory to the Administrative Agent) in the states of
Tennessee, Arizona, California, Colorado, Oklahoma, Texas and
North Carolina with respect to the enforceability of the
Mortgages, standard remedies with respect thereto, the
sufficiency of the form of UCC-1 financing statements or UCC-3
amendments and/or assignments to be recorded or filed in such
state, the continued perfection and priority of the Liens
evidenced thereby and such other matters as the Administrative
Agent may request, in form and substance satisfactory to the
Administrative Agent and (B) reliance letters in favor of the
Administrative Agent, as agent for the Secured Parties, from
counsel in the states of Florida, Georgia, Kansas, Kentucky,
Minnesota, Montana, New Mexico, Nevada and Ohio with respect
to the legal opinions delivered by such counsel in connection
with the Original Credit Agreement;
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(v) with respect to any Existing Property for which
such a certification was not delivered pursuant to the
Original Credit Agreement, certification from Bankers Hazard
Determination Services or Borrower's land surveyor in a form
reasonably satisfactory to the Administrative Agent or other
evidence acceptable to the Administrative Agent that none of
the improvements on the Existing Properties are located within
any area designated by the Director of the Federal Emergency
Management Agency as a "special flood hazard" area; and,
regardless of any deliveries made pursuant to the Original
Credit Agreement, if any improvements on the Existing
Properties are located within a "special flood hazard" area,
evidence of a flood insurance policy from a company and in an
amount satisfactory to the Administrative Agent for the
applicable portion of the premises, naming the Administrative
Agent, for the benefit of the Secured Parties, as mortgagee,
provided, that delivery of such certifications and flood
insurance may be made within 90 days after the Restatement
Effective Date.;
(g) Subordination. With respect to each of the Existing
Properties owned by the Borrower and leased to Management Opco, the
Administrative Agent shall have received, in form and substance
satisfactory to the Administrative Agent, an amended and restated
subordination of lease agreement from Management Opco with respect to
all such Existing Properties.
(h) Environmental Reports. Except for those Existing
Properties identified on Schedule 7.19, for which environmental site
assessment reports were previously delivered to the Original
Administrative Agent, the Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent,
environmental site assessment reports and related documents with
respect to all Existing Properties.
(i) Priority of Liens. The Administrative Agent shall have
received such other satisfactory evidence as it may reasonably require
that, after giving effect to this Credit Agreement, (i) the
Administrative Agent, on behalf of the Secured Parties, holds a
perfected, first priority Lien on all Collateral and (ii) none of the
Collateral is subject to any other Liens other than Permitted Liens.
(j) Opening Borrowing Base. Receipt by the Administrative
Agent of a Borrowing Base Certificate as of the Closing Date,
substantially in the form of Exhibit 7.1(e), and certified by the chief
financial officer of the Borrower to be true and correct as of the
Restatement Effective Date.
(k) Evidence of Insurance. Receipt by the Administrative Agent
of copies of insurance policies or certificates of insurance of the
Consolidated Parties evidencing liability and casualty insurance
meeting the requirements set forth in the Credit Documents, including,
but not limited to, naming the Administrative Agent as sole loss payee
on behalf of the Secured Parties and the Administrative Agent and the
other Secured Parties as additional insureds, each as appropriate.
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(l) Approval of Amendment. This Credit Agreement shall have
been consented to in writing by the requisite lenders under the
Original Credit Agreement.
(m) Senior Notes Documents. The Administrative Agent shall
have received from the Borrower (and certified thereto by an Executive
Officer of the Borrower as to authenticity) duly executed copies of
each of the Senior Notes Documents.
(n) No Default. On the Restatement Effective Date, no Default
or Event of Default shall have occurred and be continuing.
(o) Representations and Warranties True. On the Restatement
Effective Date, the representations and warranties set forth in Section
6 and in the other Credit Documents shall be true and correct in all
material respects as of such date (except for those which expressly
relate to an earlier date).
(p) Officer's Certificates. The Administrative Agent shall
have received a certificate or certificates executed by an Executive
Officer of the Borrower as of the Restatement Effective Date stating
that (A) each Credit Party is in compliance with all existing material
financial obligations, (B) all material governmental, shareholder and
third party consents and approvals, if any, with respect to the Credit
Documents and the transactions contemplated thereby have been obtained,
(C) no action, suit, investigation or proceeding is pending or, to the
knowledge of the Borrower, threatened in any court or before any
arbitrator or governmental instrumentality that purports to affect any
Credit Party or any transaction contemplated by the Credit Documents,
if such action, suit, investigation or proceeding could reasonably be
expected to have a Material Adverse Effect, and (D) immediately after
giving effect to this Credit Agreement, the other Credit Documents and
all the transactions contemplated therein to occur on such date, (1)
each of the Credit Parties is Solvent, (2) no Default or Event of
Default exists, (3) all representations and warranties contained herein
and in the other Credit Documents are true and correct in all material
respects, and (4) the Credit Parties are in compliance with each of the
financial covenants set forth in Section 7.11.
(q) Compliance Certificate. The Administrative Agent shall
have received a certificate executed by the chief financial officer of
the Borrower, demonstrating compliance with the financial covenants
contained in Section 7.11 (based on the projections (and annualized,
where appropriate) of the Borrower for the first fiscal quarter
following the Restatement Effective Date).
(r) Fees and Expenses. Payment by the Credit Parties of all
fees and expenses owed by them to the Lenders and the Administrative
Agent.
(s) Other Collateral. The Administrative Agent shall have
received (i) from the Original Administrative Agent and/or the
Borrower, a full and complete set of closing documents in connection
with the Original Credit Agreement and (ii) from the Original
Administrative Agent, any other Collateral delivered to it in
connection with the Original Credit Agreement.
(t) Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by any
Lender.
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5.2. CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligations of each Lender to make any Loan and of the Issuing
Lender to issue or extend any Letter of Credit are subject to satisfaction of
the following conditions in addition to satisfaction on the Restatement
Effective Date of the conditions set forth in Section 5.1:
(a) The Borrower shall have delivered (i) to the
Administrative Agent, in the case of any Revolving Loan or the Tranche
C Term Loans, a Notice of Borrowing or (ii) to the relevant Issuing
Lender, in the case of any Letter of Credit, an appropriate request for
issuance in accordance with the provisions of Section 2.2(b);
(b) The representations and warranties set forth in Section 6
shall, subject to the limitations set forth therein, be true and
correct in all material respects as of such date (except for those
which expressly relate to an earlier date);
(c) There shall not have been commenced against any
Consolidated Party an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or any
case, proceeding or other action for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
for the winding up or liquidation of its affairs, and such involuntary
case or other case, proceeding or other action shall remain
undismissed, undischarged or unbonded;
(d) No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto;
(e) No circumstances, events or conditions shall have occurred
since December 31, 1998, which would have a Material Adverse Effect;
and
(f) Immediately after giving effect to the making of such Loan
(and the application of the proceeds thereof) or to the issuance of
such Letter of Credit, as the case may be, (i) the sum of the aggregate
principal amount of outstanding Obligations shall not exceed the lesser
of (A) the Aggregate Committed Amount and (B) the Borrowing Base and
(ii) the LOC Obligations shall not exceed the LOC Committed Amount.
The delivery of each Notice of Borrowing, each request for a Swingline Loan
pursuant to Section 2.3(b) and each request for a Letter of Credit pursuant to
Section 2.2(b) shall constitute a representation and warranty by the Credit
Parties of the correctness as of the date of such delivery of the matters
specified in subsections (b), (c), (d), (e) and (f) above.
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SECTION 6.
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Administrative Agent and
each Lender that:
6.1. FINANCIAL CONDITION.
The financial statements delivered to the Lenders pursuant to Section
5.1(c) and Section 7.1(a) and (b), (i) have been prepared in accordance with
GAAP and (ii) present fairly (on the basis disclosed in the footnotes to such
financial statements) the consolidated financial condition, results of
operations and cash flows of the Consolidated Parties and Unrestricted
Subsidiaries as of such date and for such periods.
6.2. NO MATERIAL CHANGE.
Since December 31, 1998 (a) there has been no development or event
relating to or affecting a Consolidated Party or Unrestricted Subsidiary which
has had or could reasonably be expected to have a Material Adverse Effect and
(b) except as otherwise permitted under this Credit Agreement, no dividends or
other distributions have been declared, paid or made upon the Capital Stock in a
Consolidated Party nor has any of the Capital Stock in a Consolidated Party been
redeemed, retired, purchased or otherwise acquired for value.
6.3. ORGANIZATION AND GOOD STANDING.
Each of the Consolidated Parties and Unrestricted Subsidiaries (a) is
duly organized, validly existing and is in good standing under the laws of the
jurisdiction of its incorporation or organization, except, with respect to any
Unrestricted Subsidiary, to the extent the failure to be so organized, existing
or in good standing could not reasonably be expected to have a Material Adverse
Effect, (b) has the corporate or other necessary power and authority, and the
legal right, to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently engaged, except,
with respect to any Unrestricted Subsidiary, to the extent the failure to have
such power, authority or right could not reasonably be expected to have a
Material Adverse Effect and (c) is duly qualified as a foreign entity and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, other than in such jurisdictions where the failure to be so
qualified and in good standing could have a Material Adverse Effect.
Furthermore, the Borrower has conducted its business so as to qualify as a REIT
in 2000, and subsequent to qualifying as a REIT in 2000 the Borrower will
maintain its status as a REIT.
6.4. POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each of the Credit Parties has the corporate or other necessary power
and authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party, and in the case of the Borrower, to obtain
extensions of credit hereunder, and has taken all necessary corporate action to
authorize the borrowings and other extensions of credit on the terms and
conditions of this Credit Agreement and to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in respect
of, any Governmental Authority or any other Person is required to be obtained or
made by or on behalf of any Credit Party in connection with the borrowings or
other extensions of credit hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents to which such
Credit Party is a party, except for filings to perfect the Liens created by the
Collateral Documents, and except for consents,
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authorizations, filings or notices which have been obtained or made. This Credit
Agreement has been, and each other Credit Document to which any Credit Party is
a party will be, duly executed and delivered on behalf of the Credit Parties.
This Credit Agreement constitutes, and each other Credit Document to which any
Credit Party is a party when executed and delivered will constitute, a legal,
valid and binding obligation of such Credit Party enforceable against such party
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law). The amendments of the Original Credit Agreement reflected herein have
been validly approved as required under Section 11.6 of the Original Credit
Agreement and such amendments are binding on the Lenders.
6.5. NO CONFLICTS.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws or other organizational or governing documents of such
Person, (b) violate, contravene or materially conflict with any Requirement of
Law or any other law, regulation (including, without limitation, Regulation U or
Regulation X), order, writ, judgment, injunction, decree or permit applicable to
it, except for any violation, contravention or conflict which could not
reasonably be expected to have a Material Adverse Effect, (c) violate,
contravene or conflict with contractual provisions of, or cause an event of
default under, any indenture, loan agreement, mortgage, deed of trust, contract
or other agreement or instrument to which it is a party or by which it may be
bound, except for any violation, contravention or conflict which could not
reasonably be expected to have a Material Adverse Effect, or (d) result in or
require the creation of any Lien (other than those contemplated in or created in
connection with the Credit Documents) upon or with respect to its properties.
6.6. NO DEFAULT.
No Consolidated Party or Unrestricted Subsidiary is in default in any
respect under any contract, lease, loan agreement, indenture, mortgage, security
agreement or other agreement or obligation to which it is a party or by which
any of its properties is bound which default could reasonably be expected to
have a Material Adverse Effect.
6.7. OWNERSHIP.
Each Consolidated Party is the owner of, and has good and marketable
title to, all of its respective material assets, and none of such assets is
subject to any Lien other than Permitted Liens.
6.8. INDEBTEDNESS.
Except as otherwise permitted under Section 8.1, none of the
Consolidated Parties or Unrestricted Subsidiaries have any Indebtedness.
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6.9. LITIGATION.
Subject to Schedule 6.9, there are no actions, suits or legal,
equitable, arbitration or administrative proceedings, pending or, to the
knowledge of any Credit Party, threatened against any Consolidated Party or
Unrestricted Subsidiary which could reasonably be expected to have a Material
Adverse Effect.
6.10. TAXES.
Each Consolidated Party and Unrestricted Subsidiary has filed, or
caused to be filed, all tax returns (federal, state, local and foreign) required
to be filed and paid (a) all amounts of taxes shown thereon to be due (including
interest and penalties), and (b) all other taxes, fees, assessments and other
governmental charges (including mortgage recording taxes, documentary stamp
taxes and intangibles taxes) owing by it, except for such taxes (i) which are
not yet delinquent, (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in
accordance with GAAP or (iii) that if unpaid could not reasonably be expected to
have a Material Adverse Effect. No Credit Party is aware as of the Restatement
Effective Date of any proposed tax assessments against it, any other
Consolidated Party or any Unrestricted Subsidiary, except to the extent such tax
assessment could not reasonably be expected to have a Material Adverse Effect.
6.11. COMPLIANCE WITH LAW.
Each Consolidated Party and Unrestricted Subsidiary is in compliance
with all Requirements of Law and all other laws, rules, regulations, orders and
decrees (including without limitation Environmental Laws) applicable to it, or
to its properties, unless such failure to comply could not reasonably be
expected to have a Material Adverse Effect.
6.12. ERISA.
(a) During the five-year period prior to the date on which
this representation is made or deemed made: (i) no ERISA Event has
occurred, and, to the best knowledge of the Credit Parties, no event or
condition has occurred or exists as a result of which any ERISA Event
could reasonably be expected to occur, with respect to any Plan; (ii)
no "accumulated funding deficiency," as such term is defined in Section
302 of ERISA and Section 412 of the Code, whether or not waived, has
occurred with respect to any Plan; (iii) each Plan has been maintained,
operated, and funded in compliance with its own terms and in material
compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor of the PBGC
or a Plan has arisen or is reasonably likely to arise on account of any
Plan.
(b) The actuarial present value of all "benefit liabilities"
(as defined in Section 4001(a)(16) of ERISA), whether or not vested,
under each Single Employer Plan, as of the last annual valuation date
prior to the date on which this representation is made or deemed made
(determined, in each case, in accordance with Financial Accounting
Standards Board Statement 87, utilizing the actuarial assumptions used
in such Plan's most recent actuarial valuation report), did not exceed
as of such valuation date the fair market value of the assets of such
Plan.
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(c) Neither any Consolidated Party nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Credit Parties, could be
reasonably expected to incur, any withdrawal liability under ERISA to
any Multiemployer Plan or Multiple Employer Plan. Neither any
Consolidated Party nor any ERISA Affiliate would become subject to any
withdrawal liability under ERISA if any Consolidated Party or any ERISA
Affiliate were to withdraw completely from all Multiemployer Plans and
Multiple Employer Plans as of the valuation date most closely preceding
the date on which this representation is made or deemed made. Neither
any Consolidated Party nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization (within
the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the meaning
of Title IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected
or may subject any Consolidated Party or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or
Section 4975 of the Code, or under any agreement or other instrument
pursuant to which any Consolidated Party or any ERISA Affiliate has
agreed or is required to indemnify any Person against any such
liability.
(e) Neither any Consolidated Party nor any ERISA Affiliates
has any material liability with respect to "expected post-retirement
benefit obligations" within the meaning of the Financial Accounting
Standards Board Statement 106. Each Plan which is a welfare plan (as
defined in Section 3(1) of ERISA) to which Sections 601-609 of ERISA
and Section 4980B of the Code apply has been administered in compliance
in all material respects of such sections.
(f) Neither the execution and delivery of this Credit
Agreement nor the consummation of the financing transactions
contemplated thereunder will involve any transaction which is subject
to the prohibitions of Sections 404, 406 or 407 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975
of the Code. The representation by the Credit Parties in the preceding
sentence is made in reliance upon and subject to the accuracy of the
Lenders' representation in Section 11.15 with respect to their source
of funds and is subject, in the event that the source of the funds used
by the Lenders in connection with this transaction is an insurance
company's general asset account, to the application of Prohibited
Transaction Class Exemption 95-60, 60 Fed. Reg. 35,925 (1995),
compliance with the regulations issued under Section 401(c)(1)(A) of
ERISA, or the issuance of any other prohibited transaction exemption or
similar relief, to the effect that assets in an insurance company's
general asset account do not constitute assets of an "employee benefit
plan" within the meaning of Section 3(3) of ERISA of a "plan" within
the meaning of Section 4975(e)(1) of the Code.
6.13. SUBSIDIARIES.
Set forth on Schedule 6.13 is a complete and accurate list as of the
Restatement Effective Date of all Restricted Subsidiaries of each Consolidated
Party and all Unrestricted Subsidiaries
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of each Consolidated Party (listed separately). The information on Schedule 6.13
includes jurisdiction of incorporation, the number of shares of each class of
Capital Stock outstanding, the number and percentage of outstanding shares of
each class owned (directly or indirectly) by such Consolidated Party or
Unrestricted Subsidiary, and the number and effect, if exercised, of all
outstanding options, warrants, rights of conversion or purchase and all other
similar rights with respect thereto. The outstanding Capital Stock of all such
Subsidiaries is validly issued, fully paid and non-assessable and is owned by
each such Consolidated Party or Unrestricted Subsidiary, directly or indirectly,
free and clear of all Liens (other than those arising under or contemplated in
connection with the Credit Documents and Liens on the Capital Stock of
Unrestricted Subsidiaries permitted under clause (xi) of the definition of
Permitted Liens). Other than as set forth in Schedule 6.13, no Consolidated
Party or Unrestricted Subsidiary has outstanding any securities convertible into
or exchangeable for its Capital Stock nor does any such Person have outstanding
any rights to subscribe for or to purchase or any options for the purchase of,
or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to its Capital Stock.
6.14. GOVERNMENTAL REGULATIONS, ETC.
(a) No part of the Letters of Credit or proceeds of the Loans
will be used, directly or indirectly, for the purpose of purchasing or
carrying any "margin stock" within the meaning of Regulation U, or for
the purpose of purchasing or carrying or trading in any securities. If
requested by any Lender or the Administrative Agent, the Borrower will
furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1
referred to in Regulation U. No indebtedness being reduced or retired
out of the proceeds of the Loans was or will be incurred for the
purpose of purchasing or carrying any margin stock within the meaning
of Regulation U or any "margin security" within the meaning of
Regulation T. "Margin stock" within the meaning of Regulation U does
not constitute more than 25% of the value of the consolidated assets of
the Consolidated Parties. None of the transactions contemplated by this
Credit Agreement (including, without limitation, the direct or indirect
use of the proceeds of the Loans) will violate or result in a violation
of the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, or regulations issued pursuant thereto, or
Regulation T, U or X.
(b) No Consolidated Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act or
the Investment Company Act of 1940, each as amended. In addition, no
Consolidated Party is (i) an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as
amended, and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary" of a "holding
company", within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
(c) Each Consolidated Party has obtained and holds in full
force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of
way and other rights, consents and approvals which are necessary for
the ownership of its respective Property and to the conduct of its
respective businesses as
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presently conducted, and which failure to obtain or hold could not
reasonably be expected to have a Material Adverse Effect.
(d) No Consolidated Party or Unrestricted Subsidiary is in
violation of any applicable statute, regulation or ordinance of the
United States of America, or of any state, city, town, municipality,
county or any other jurisdiction, or of any agency thereof (including
without limitation, environmental laws and regulations), which
violation could reasonably be expected to have a Material Adverse
Effect.
(e) Each Consolidated Party and Unrestricted Subsidiary is
current with all material reports and documents, if any, required to be
filed with any state or federal securities commission or similar agency
and is in full compliance in all material respects with all applicable
rules and regulations of such commissions, except to the extent such
noncompliance could not reasonably be expected to have a Material
Adverse Effect.
6.15. PURPOSE OF LOANS AND LETTERS OF CREDIT.
The proceeds of the Loans hereunder shall be used solely by the
Borrower (i) for working capital, (ii) to provide funds for the development and
construction of correctional, justice and detention centers, (iii) for
refinancing existing Indebtedness of the Borrower, (iv) to acquire Real
Properties, (v) for general corporate purposes and (vi) to make dividend
payments to its shareholders necessary to maintain its status as a REIT;
provided, however, that proceeds of the Tranche C Term Loan shall be used only
for the purposes set forth in clauses (iii) and (v) above, and for payment of
the one-time special dividend in fiscal year 1999, as described in, and subject
to, Section 8.7. The Letters of Credit shall be used only for or in connection
with appeal bonds, reimbursement obligations arising in connection with surety
and reclamation bonds, reinsurance, domestic or international trade
transactions, bid or proposal bonds and obligations not otherwise aforementioned
relating to transactions entered into by the applicable account party in the
ordinary course of business, including credit enhancement for financing incurred
by the Borrower in connection with the acquisition, construction and development
of real property.
6.16. ENVIRONMENTAL MATTERS.
(a) (i) Each of the facilities and properties owned, leased or
operated by the Consolidated Parties and any Unrestricted Subsidiaries
(the "Properties") and all operations at the Properties are in
compliance with all applicable Environmental Laws, (ii) there is no
violation of any Environmental Law with respect to the Properties or
the businesses operated by the Consolidated Parties (the "Businesses"),
and (iii) there are no conditions relating to the Businesses or
Properties that, in the case of the foregoing clauses (i), (ii) and
(iii) could reasonably be expected to have a Material Adverse Effect.
(b) None of the Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or under the
Properties in amounts or concentrations that could reasonably be
expected to have a Material Adverse Effect.
(c) No Consolidated Party or Unrestricted Subsidiary has
received any written or verbal notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental
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matters or compliance with Environmental Laws with regard to any of the
Properties or the Businesses, nor does any Consolidated Party or
Unrestricted Subsidiary have knowledge or reason to believe that any
such notice will be received or is being threatened, if such violation,
alleged violation, non-compliance, liability or potential liability
could reasonably be expected to have a Material Adverse Effect.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties, or generated, treated,
stored or disposed of at, on or under any of the Properties or any
other location, in each case by or on behalf of any Consolidated Party
or Unrestricted Subsidiary in a manner that could reasonably be
expected to have a Material Adverse Effect.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of any Credit Party, threatened,
under any Environmental Law to which any Consolidated Party or
Unrestricted Subsidiary is or will be named as a party, nor are there
any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to
the Consolidated Parties, the Properties or the Businesses, except to
the extent that each of the foregoing could not, individually or
collectively, reasonably be expected to have a Material Adverse Effect
(f) There has been no release, or threat of release, of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations (including, without
limitation, disposal) of any Consolidated Party or Unrestricted
Subsidiary in connection with the Properties or otherwise in connection
with the Businesses, in a manner that could reasonably be expected to
have a Material Adverse Effect.
6.17. INTELLECTUAL PROPERTY.
Each Consolidated Party owns, or has the legal right to use, all
trademarks, tradenames, copyrights, technology, know-how and processes (the
"Intellectual Property") necessary for each of them to conduct its business as
currently conducted except for those the failure to own or have such legal right
to use could not reasonably be expected to have a Material Adverse Effect. Set
forth on Schedule 6.17 is a list of all material Intellectual Property owned by
each Consolidated Party or that any Consolidated Party has the right to use.
Except as provided on Schedule 6.17, no claim has been asserted and is pending
by any Person challenging or questioning the use of any such Intellectual
Property or the validity or effectiveness of any such Intellectual Property, nor
does any Credit Party know of any such claim, and to the Credit Parties'
knowledge the use of such Intellectual Property by any Consolidated Party does
not infringe on the rights of any Person, except for such claims and
infringements that, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
6.18. SOLVENCY.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
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6.19. INVESTMENTS.
All Investments of each Consolidated Party and Unrestricted Subsidiary
are Permitted Investments or otherwise permitted under Section 8.6.
6.20. LOCATION OF COLLATERAL.
Set forth on Schedule 6.20(a) is a list of all Real Properties with
street address, county and state where located. Set forth on Schedule 6.20(b) is
a list of all locations where any material personal property of a Consolidated
Party is located, including county and state where located. Set forth on
Schedule 6.20(c) is the chief executive office and principal place of business
of each Consolidated Party. Schedules 6.20(a), 6.20(b) and 6.20(c) may be
updated from time to time by the Borrower by giving written notice to the
Administrative Agent.
6.21. DISCLOSURE.
Neither this Credit Agreement nor any financial statements delivered to
the Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Consolidated Party or Unrestricted Subsidiary in
connection with the transactions contemplated hereby (other than projections and
pro forma financial information) contained as of the date such statement,
information, document or certificate was so furnished, any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements contained herein or therein not misleading. The projections and pro
forma financial information contained in the materials referenced above are
based upon good faith estimates and assumptions believed by management of the
Borrower to be reasonable at the time made, it being recognized by the Lenders
that such financial information as it relates to future events is not to be
viewed as fact and that actual results during the period or periods covered by
such financial information may differ from the projected results set forth
therein by a material amount.
6.22. [Intentionally omitted.]
6.23. LABOR MATTERS.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of a Consolidated Party as of the Restatement Effective
Date and none of the Consolidated Parties has suffered any strikes, walkouts,
work stoppages or other material labor difficulty within the last five years.
6.24. YEAR 2000 COMPLIANCE.
Each Credit Party has (i) initiated a review and assessment of all
areas within its and each of its Subsidiaries' business and operations that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by such Credit Party or any of its Subsidiaries 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 the timetable. Based on
the foregoing, each Credit Party believes that all computer applications that
are material to its and 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
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extent that a failure to do so could not reasonably be expected to have Material
Adverse Effect.
6.25. FIRST PRIORITY LIEN.
Both before and after giving effect to the amendment of the Original
Credit Agreement pursuant to this Credit Agreement, the Administrative Agent, on
behalf of the Secured Parties, holds a first priority lien, subject to no other
liens other than Permitted Liens, in the Collateral.
6.26. LEASES.
Each of the leases entered into between a Credit Party and any lessee
of real property owned by a Credit Party (a) has a minimum initial lease term of
five years (except for leases entered into with a governmental entity) and (b)
requires that the lessee remain solely responsible for all operations and other
liabilities with respect to the applicable property. Furthermore, (i) eighty
percent (80%) of all lease revenues of the Credit Parties are derived from
leases with Management Opco and with lessees (other than Management Opco) having
a senior unsecured non-credit enhanced long term debt rating of at least BBB+
(or higher) from S&P or Baa1 (or higher) from Moody's or if such ratings from
S&P and Moody's are unavailable, an equivalent rating from Fitch or Duff &
Phelps, (ii) at least ninety percent (90%) of all lease revenues of the Credit
Parties are derived from leases with Management Opco and with lessees (other
than Management Opco) having a senior unsecured non-credit enhanced long term
debt rating of at least BBB- (or higher) from S&P or Baa3 (or higher) from
Moody's or if such ratings from S&P and Moody's are unavailable, an equivalent
rating from Fitch or Duff & Phelps, and (iii) at least ninety percent (90%) of
all lease revenues of the Credit Parties are derived from triple net leases that
are noncancelable by the lessee.
SECTION 7.
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
7.1. INFORMATION COVENANTS.
The Credit Parties will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in
any event within 90 days after the close of each fiscal year of the
Consolidated Parties, Management Opco, Service Company A, Service
Company B and each Unrestricted Subsidiary of the Borrower, a
consolidated balance sheet and income statement of the Consolidated
Parties, Management Opco, Service Company A, Service Company B and each
such Unrestricted Subsidiary, as of the end of such fiscal year,
together with related consolidated statements of operations and
retained earnings and of cash flows for such fiscal year, setting forth
in comparative form consolidated figures for the preceding fiscal year,
all such financial information described above to be in reasonable form
and detail and audited by
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independent certified public accountants of recognized national
standing reasonably acceptable to the Administrative Agent and whose
opinion shall be to the effect that such financial statements have been
prepared in accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope of the
audit or qualified as to the status of the Consolidated Parties,
Management Opco, Service Company A or Service Company B as a going
concern.
(b) Quarterly Financial Statements. As soon as available, and
in any event within 45 days after the close of each fiscal quarter of
the Consolidated Parties, Management Opco, Service Company A, Service
Company B and each Unrestricted Subsidiary (other than the fourth
fiscal quarter, in which case 90 days after the end thereof) a
consolidated balance sheet and income statement of the Consolidated
Parties, Management Opco, Service Company A, Service Company B and each
such Unrestricted Subsidiary, as of the end of such fiscal quarter,
together with related consolidated statements of operations and
retained earnings and of cash flows for such fiscal quarter, in each
case setting forth in comparative form consolidated figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Administrative Agent, and accompanied by a
certificate of the chief financial officer of the Borrower to the
effect that such quarterly financial statements fairly present in all
material respects the financial condition of the Consolidated Parties,
Management Opco, Service Company A, Service Company B and the
Unrestricted Subsidiaries, as applicable, and have been prepared in
accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments.
(c) Officer's Certificate. At the time of delivery of the
financial statements provided for in Sections 7.1(a) and 7.1(b) above,
a certificate of the chief financial officer of the Borrower
substantially in the form of Exhibit 7.1(c), (i) demonstrating
compliance with the financial covenants contained in Section 7.11 by
calculation thereof as of the end of each such fiscal period, (ii)
stating that no Default or Event of Default exists, or if any Default
or Event of Default does exist, specifying the nature and extent
thereof and what action the Credit Parties propose to take with respect
thereto and (iii) stating that such person has reviewed Sections 8.1,
8.5 and 8.6 and detailing the Borrower's compliance therewith.
(d) Annual Business Plan and Budgets. At least 30 days prior
to the end of each fiscal year of the Borrower, beginning with the
fiscal year ending December 31, 1999, an annual business plan and
budget of the Consolidated Parties and each of Management Opco, Service
Company A and Service Company B, in each case containing, among other
things, pro forma financial statements for the next fiscal year.
(e) Borrowing Base Certificates. Within 15 days after the end
of each fiscal quarter of the Consolidated Parties (or more frequently
if elected by the Borrower), a Borrowing Base Certificate as of the end
of the immediately preceding fiscal quarter, substantially in the form
of Exhibit 7.1(e) and certified by the chief financial officer of the
Borrower to be true and correct as of the date thereof.
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(f) Auditor's Reports. Promptly upon receipt thereof, a copy
of any other report or "management letter" submitted by independent
accountants to any Consolidated Party or Unrestricted Subsidiary or any
of Management Opco, Service Company A or Service Company B, in each
case in connection with any annual, interim or special audit of the
books of such Consolidated Party or Unrestricted Subsidiary or of
Management Opco, Service Company A or Service Company B, as applicable
(g) Reports. Promptly upon transmission or receipt thereof,
(i) copies of any filings and registrations with, and reports to or
from, the Securities and Exchange Commission, or any successor agency,
and copies of all financial statements, proxy statements, notices and
reports as any Consolidated Party, Unrestricted Subsidiary, Management
Opco, Service Company A or Service Company B shall send to its
shareholders or to a holder of any Indebtedness owed by any
Consolidated Party or Unrestricted Subsidiary or Management Opco,
Service Company A or Service Company B, as applicable, in each case in
its capacity as such a holder and (ii) upon the request of the
Administrative Agent, all reports and written information to and from
the United States Environmental Protection Agency, or any state or
local agency responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or local
agency responsible for health and safety matters, or any successor
agencies or authorities concerning environmental, health or safety
matters.
(h) Notices. Upon obtaining knowledge thereof, the Credit
Parties will give written notice to the Administrative Agent
immediately of (i) the occurrence of an event or condition consisting
of a Default or Event of Default, specifying the nature and existence
thereof and what action the Credit Parties propose to take with respect
thereto and (ii) the occurrence of any of the following with respect to
any Consolidated Party or Unrestricted Subsidiary (A) the pendency or
commencement of any litigation, arbitral or governmental proceeding
against such Person which could reasonably be expected to have a
Material Adverse Effect, (B) the institution of any proceedings against
such Person with respect to, or the receipt of notice by such Person of
potential liability or responsibility for violation, or alleged
violation of any federal, state or local law, rule or regulation,
including but not limited to, Environmental Laws, the violation of
which could reasonably be expected to have a Material Adverse Effect,
or (C) any notice or determination concerning the imposition of any
withdrawal liability by a Multiemployer Plan against such Person or any
ERISA Affiliate, the determination that a Multiemployer Plan is, or is
expected to be, in reorganization within the meaning of Title IV of
ERISA or the termination of any Plan.
(i) ERISA. Upon obtaining knowledge thereof, the Credit
Parties will give written notice to the Administrative Agent promptly
(and in any event within five business days) of: (i) of any event or
condition, including, but not limited to, any Reportable Event, that
constitutes, or might reasonably lead to, an ERISA Event; (ii) with
respect to any Multiemployer Plan, the receipt of notice as prescribed
in ERISA or otherwise of any withdrawal liability assessed against the
Credit Parties or any ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both within the
meaning of Title IV of ERISA); (iii) the failure to make full payment
on or before the due date (including extensions) thereof of all amounts
which any Consolidated Party or any ERISA Affiliate is required to
contribute to each Plan pursuant to its terms and as required to meet
the minimum funding standard set forth in ERISA and the Code with
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respect thereto; or (iv) any change in the funding status of any Plan
that could have a Material Adverse Effect, together with a description
of any such event or condition or a copy of any such notice and a
statement by the chief financial officer of the Borrower briefly
setting forth the details regarding such event, condition, or notice,
and the action, if any, which has been or is being taken or is proposed
to be taken by the Credit Parties with respect thereto. Promptly upon
request, the Credit Parties shall furnish the Administrative Agent and
the Lenders with such additional information concerning any Plan as may
be reasonably requested, including, but not limited to, copies of each
annual report/return (Form 5500 series), as well as all schedules and
attachments thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and the Code,
respectively, for each "plan year" (within the meaning of Section 3(39)
of ERISA).
(j) Environmental. Upon the reasonable written request of the
Administrative Agent, the Credit Parties will furnish or cause to be
furnished to the Administrative Agent, at the Credit Parties' expense,
a report of an environmental assessment of reasonable scope, form and
depth, (including, where appropriate, invasive soil or groundwater
sampling) by a consultant reasonably acceptable to the Administrative
Agent as to the nature and extent of the presence of any Materials of
Environmental Concern on any Properties (as defined in Section 6.16)
and as to the compliance by any Consolidated Party or Unrestricted
Subsidiary with Environmental Laws at such Properties. If the Credit
Parties fail to deliver such an environmental report within
seventy-five (75) days after receipt of such written request then the
Administrative Agent may arrange for same, and the Consolidated Parties
hereby grant to the Administrative Agent and their representatives
access to the Properties to reasonably undertake such an assessment
(including, where appropriate, invasive soil or groundwater sampling).
The reasonable cost of any assessment arranged for by the
Administrative Agent pursuant to this provision will be payable by the
Credit Parties on demand and added to the obligations secured by the
Collateral Documents.
(k) Additional Patents and Trademarks. At the time of delivery
of the financial statements and reports provided for in Section 7.1(a),
the Credit Parties will deliver to the Administrative Agent, a report
signed by the chief financial officer or treasurer of the Borrower
setting forth (i) a list of registration numbers for all patents,
trademarks, service marks, tradenames and copyrights awarded to any
Consolidated Party since the last day of the immediately preceding
fiscal year and (ii) a list of all patent applications, trademark
applications, service mark applications, trade name applications and
copyright applications submitted by any Consolidated Party since the
last day of the immediately preceding fiscal year and the status of
each such application, all in such form as shall be reasonably
satisfactory to the Administrative Agent.
(l) Leases. At the time of delivery of the financial
statements provided for in Sections 7.1(a) and (b) above, the Credit
Parties will deliver to the Administrative Agent, copies of all new
leases and/or modifications to existing leases for all of those Real
Properties for which any Credit Party receives annual rent payments
equal to or in excess of $1,500,000, and at the time of delivery of the
financial statements provided for in Section 7.1(a) above, copies of
the annual financial statements of each lessee which (i) is
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not a governmental entity or public company and (ii) accounts for at
least five percent (5%) of the annual rent payments made to any Credit
Party.
(m) Construction Budget. Within fifteen (15) days after the
close of each fiscal quarter of the Borrower, the Borrower shall
deliver to the Administrative Agent, a construction budget detailing
the construction planned by the Borrower or its Subsidiaries with
respect to each of the Real Properties for the succeeding fiscal year,
together with information detailing the amount of expenditures of the
Borrower and its Subsidiaries for construction year to date.
(n) Other Information. With reasonable promptness upon any
such request, such other information regarding the business, properties
or financial condition of any Consolidated Party as the Administrative
Agent, the Required Lenders, the Required Tranche C Term Lenders or any
Lender may reasonably request.
7.2. PRESERVATION OF EXISTENCE AND FRANCHISES.
Except as a result of or in connection with a merger of a Subsidiary
permitted under Section 8.4, each Credit Party will, and will cause each of its
Restricted Subsidiaries to, do all things necessary to preserve and keep in full
force and effect its existence, rights, franchises and authority. Subject to the
provisions of Section 8.7, the Borrower will conduct its business so as to
qualify as a REIT in 2000 and subsequent to qualifying as a REIT in 2000, will
maintain its status as a REIT.
7.3. BOOKS AND RECORDS.
Each Credit Party will, and will cause each of its Subsidiaries to,
keep complete and accurate books and records of its transactions in accordance
with good accounting practices on the basis of GAAP (including the establishment
and maintenance of appropriate reserves).
7.4. COMPLIANCE WITH LAW.
Each Credit Party will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders, and all applicable
restrictions imposed by all Governmental Authorities, applicable to it and its
Property if noncompliance with any such law, rule, regulation, order or
restriction could reasonably be expected to have a Material Adverse Effect.
7.5. PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Each Credit Party will, and will cause each of its Subsidiaries to, pay
and discharge (a) all taxes, assessments and governmental charges or levies
imposed upon it, or upon its income or profits, or upon any of its properties,
before they shall become delinquent, (b) all lawful claims (including claims for
labor, materials and supplies) which, if unpaid, could reasonably be expected to
give rise to a Lien upon any of its properties, and (c) except as prohibited
hereunder, all of its other Indebtedness as it shall become due; provided,
however, that no Consolidated Party or Unrestricted Subsidiary shall be required
to pay any such tax, assessment, charge, levy, claim or Indebtedness which is
being contested in good faith by appropriate proceedings and as to which
adequate reserves therefor have been established in accordance with GAAP, unless
the
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failure to make any such payment (i) could reasonably be expected to give rise
to an immediate right to foreclose on a Lien securing such amounts or (ii) could
reasonably be expected to have a Material Adverse Effect.
7.6. INSURANCE.
(a) Each Credit Party will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect
insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption insurance) in
such amounts, covering such risks and liabilities and with such
deductibles or self-insurance retentions as are in accordance with
normal industry practice (or as otherwise required by the Collateral
Documents). The Administrative Agent shall be named as loss payee or
mortgagee, as its interest may appear, and/or additional insured (along
with the other Secured Parties) with respect to any such insurance
providing general liability coverage or coverage in respect of any
Collateral, and each provider of any such insurance shall agree, by
endorsement upon the policy or policies issued by it or by independent
instruments furnished to the Administrative Agent, that it will give
the Administrative Agent thirty (30) days prior written notice before
any such policy or policies shall be altered or canceled, and that no
act or default of any Consolidated Party or any other Person shall
affect the rights of the Administrative Agent or the other Secured
Parties under such policy or policies. The present insurance coverage
of the Consolidated Parties is outlined as to carrier, policy number,
expiration date, type and amount on Schedule 7.6.
(b) In case of any material loss, damage to or destruction of
any material item of the Collateral of any Credit Party, such Credit
Party shall promptly give written notice thereof to the Administrative
Agent generally describing the nature and extent of such damage or
destruction. In case of any loss, damage to or destruction any material
portion of the Collateral of any Credit Party, such Credit Party,
whether or not the insurance proceeds, if any, received on account of
such damage or destruction shall be sufficient for that purpose, at
such Credit Party's cost and expense, will promptly repair or replace
the Collateral of such Credit Party so lost, damaged or destroyed. In
the event a Credit Party shall receive any insurance proceeds as a
result of any loss, damage or destruction with respect to the
Collateral, such Credit Party will immediately pay over such proceeds
to the Administrative Agent, as cash collateral for the Credit Party
Obligations. The Administrative Agent agrees to release such insurance
proceeds to such Credit Party for replacement or restoration of the
portion of the Collateral of such Credit Party lost, damaged or
destroyed if, but only if, (A) the value of the Borrowing Base
Properties (not including the value of any Borrowing Base Property that
was a part of the Collateral that was lost, damaged or destroyed)
exceeds the lesser of (i) the Revolving Committed Amount and (ii) the
Borrowing Base, (B) within 30 days from the date the Administrative
Agent receives such insurance proceeds, the Administrative Agent has
received written application for such release from such Credit Party,
together with evidence reasonably satisfactory to it that the
Collateral lost, damaged or destroyed has been or will be replaced or
restored to its condition immediately prior to the loss, destruction or
other event giving rise to the payment of such insurance proceeds and
(C) on the date of such release no Default or Event of Default exists.
If the conditions in the preceding sentence are not met, the
Administrative Agent shall, on the first Business Day subsequent to the
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date 30 days after it received such insurance proceeds, apply such
insurance proceeds as a mandatory prepayment of the Credit Party
Obligations for application in accordance with the terms of Section
3.3(b). All insurance proceeds shall be subject to the security
interest of the Administrative Agent, for the benefit of the Secured
Parties, under the Collateral Documents.
7.7. MAINTENANCE OF PROPERTY.
Each Credit Party will, and will cause each of its Restricted
Subsidiaries to, maintain and preserve its properties and equipment material to
the conduct of its business in good repair, working order and condition, normal
wear and tear and casualty and condemnation excepted, and will make, or cause to
be made, to such properties and equipment from time to time all repairs,
renewals, replacements, extensions, additions, betterments and improvements
thereto as may be needed or proper, to the extent and in the manner customary
for companies in similar businesses.
7.8. PERFORMANCE OF OBLIGATIONS.
Each Credit Party will, and will cause each of its Subsidiaries to,
perform in all material respects all of its obligations under the terms of all
material agreements, indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound (including, without
limitation, the Agecroft Transaction Documents); provided, however, that no
Credit Party nor any of their respective Subsidiaries shall be required to
perform any such obligation which is being contested in good faith by
appropriate proceedings and as to which adequate reserves therefor have been
established in accordance with GAAP, unless the failure to perform such
obligation (i) could reasonably be expected to give rise to an immediate right
to foreclose on a Lien securing such obligation or (ii) could reasonably be
expected to have a Material Adverse Effect. The Borrower will at all times
ensure that Agecroft complies with the Agecroft Charter.
7.9. USE OF PROCEEDS.
The Borrower will use the proceeds of the Loans and will use the
Letters of Credit solely for the purposes set forth in Section 6.15.
7.10. AUDITS/INSPECTIONS.
Upon reasonable notice and during normal business hours, each Credit
Party will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Administrative Agent, including, without limitation,
independent accountants, agents, attorneys, and appraisers to visit and inspect
its property, including its books and records, its accounts receivable and
inventory, its facilities and its other business assets, and to make photocopies
or photographs thereof and to write down and record any information such
representative obtains and shall permit the Administrative Agent or its
representatives to investigate and verify the accuracy of information provided
to the Lenders and to discuss all such matters with the officers, employees and
representatives of such Person. The Credit Parties agree that the Administrative
Agent, and its representatives, may conduct an annual audit of the Collateral,
at the expense of the Credit Parties.
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7.11. FINANCIAL COVENANTS.
(i) Debt Service Coverage Ratio. The Debt Service
Coverage Ratio, as of the last day of each fiscal quarter of
the Consolidated Parties, shall be greater than or equal to
2.0 to 1.0.
(ii) Interest Coverage Ratio. The Interest Coverage
Ratio, as of the last day of each fiscal quarter of the
Consolidated Parties, shall be greater than or equal to 3.0 to
1.0.
(iii) Leverage Ratio. The Leverage Ratio, as of the
last day of each fiscal quarter of the Consolidated Parties,
shall be less than or equal to 3.5 to 1.0.
(iv) Total Indebtedness to Total Value. The ratio of
Total Indebtedness to Total Value, as of the last day of each
fiscal quarter of the Consolidated Parties, shall be less than
or equal to 0.50 to 1.0.
(v) Net Worth. At all times Net Worth shall be
greater than or equal to the sum of an amount equal to 95% of
the Net Worth of the Borrower (based on the audited December
31, 1998 financial statements of the Borrower), increased on a
cumulative basis as of the end of each fiscal quarter of the
Borrower, commencing with the fiscal quarter ending March 31,
1999 by an amount equal to 85% of the Net Cash Proceeds from
any Equity Issuance subsequent to the Original Closing Date
less an amount equal to the dividends paid by the Borrower
during the first twelve months subsequent to the Merger which
are (i) based solely on the retained earnings of CCA prior to
the Merger and (ii) required by the Borrower to be paid to
maintain its status as a real estate investment trust;
provided, however, notwithstanding the foregoing, at no time
shall the Net Worth of the Borrower be less than
$1,200,000,000.
(vi) Non-Conforming Investments. The Consolidated
Parties shall at no time have Non-Conforming Investments which
in the aggregate constitute more than 5% of Total Assets.
(vii) Total Indebtedness to Total Capitalization. At
all times the ratio of Total Indebtedness to Total
Capitalization shall be equal to or less than .50 to 1.0.
7.12. ADDITIONAL CREDIT PARTIES.
As soon as practicable and in any event within 30 days after any Person
becomes a Subsidiary (or ceases to be an Unrestricted Subsidiary (but remains a
Subsidiary)) of any Credit Party, the Borrower shall provide the Administrative
Agent with written notice thereof setting forth information in reasonable detail
describing all of the assets of such Person and shall (a) if such Person is a
Domestic Subsidiary (other than an Unrestricted Subsidiary) of a Credit Party,
cause such Person to execute a Joinder Agreement in substantially the same form
as Exhibit 7.12, (b) except to the extent set forth in Section 8.6(iii)(b) with
respect to Unrestricted Subsidiaries, cause the following to be delivered to the
Administrative Agent pursuant to an appropriate pledge agreement in form
acceptable to the Administrative Agent: (i) 100% (or, if less, the full amount
owned by such Credit Party) of the issued and outstanding shares of Capital
Stock owned by such Credit Party of each Domestic Subsidiary of such Credit
Party and (ii) 65% (or, if less, the full
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amount owned by such Credit Party) of the issued and outstanding shares of each
class of Capital Stock or other ownership interests entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% (or, if less, the full
amount owned by such Credit Party) of the issued and outstanding shares of each
class of Capital Stock or other ownership interests not entitled to vote (within
the meaning of Treas. Reg. Section 1.956-2(c)(2)) owned by such Credit Party of
each Foreign Subsidiary together with, in each case included in (i) or (ii)
above, the certificates (or other agreements or instruments), if any,
representing such shares, and all options and other rights, contractual or
otherwise, with respect thereto, and undated stock powers signed in blank
(unless, with respect to a Foreign Subsidiary, such stock powers are deemed
unnecessary by the Administrative Agent in its reasonable discretion under the
law of the jurisdiction of incorporation of such Person) and (c) cause such
Person to deliver such other documentation as the Administrative Agent may
reasonably request in connection with the foregoing, including, without
limitation, appropriate UCC-1 financing statements, real estate title insurance
policies, environmental reports, landlord's waivers, certified resolutions and
other organizational and authorizing documents of such Person, and favorable
opinions of counsel to such Person all in form, content and scope reasonably
satisfactory to the Administrative Agent. Notwithstanding the foregoing, (i) for
so long as such actions are prohibited under the Agecroft Transaction Documents,
the provisions of this Section 7.12 shall not apply to Agecroft and Agecroft
shall not be considered a "Credit Party" hereunder or under the other Credit
Documents, (ii) until designated as an "Unrestricted Subsidiary" hereunder,
Agecroft shall otherwise be deemed to be a "Restricted Subsidiary" and (iii) at
all times, all of the requirements set forth in the definitions of "Unrestricted
Subsidiary" and "Non-Recourse Debt" shall apply to Agecroft, regardless of
whether it has been designated as an Unrestricted Subsidiary hereunder; provided
that the Agecroft Transaction shall be permitted.
7.13. ENVIRONMENTAL LAWS.
(a) The Consolidated Parties shall, and shall cause the
Unrestricted Subsidiaries to, comply in all material respects with, and
take reasonable actions to ensure compliance in all material respects
by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply in all material respects with
and maintain, and take reasonable actions to ensure that all tenants
and subtenants obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications, registrations
or permits required by applicable Environmental Laws except to the
extent that failure to do so would not reasonably be expected to have a
Material Adverse Effect;
(b) The Consolidated Parties shall, and shall cause the
Unrestricted Subsidiaries to, conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other
actions required under Environmental Laws and promptly comply in all
material respects with all lawful orders and directives of all
Governmental Authorities regarding Environmental Laws except to the
extent that the same are being contested in good faith by appropriate
proceedings and the failure to do or the pendency of such proceedings
would not reasonably be expected to have a Material Adverse Effect; and
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(c) The Consolidated Parties shall defend, indemnify and hold
harmless the Administrative Agent, the Documentation Agent, the
Syndication Agent, the Co-Agent, the Lead Arranger and the Lenders
(including, without limitation, any Issuing Lender), and their
respective employees, agents, officers and directors, from and against
any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature
known or unknown, contingent or otherwise, arising out of, or in any
way relating to the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the
Borrower or any of its Subsidiaries or the Properties, or any orders,
requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorney's and consultant's
fees, investigation and laboratory fees, response costs, court costs
and litigation expenses, except to the extent that any of the foregoing
arise out of the gross negligence or willful misconduct of the party
seeking indemnification therefor; provided that -------- the provisions
of this subsection (c) shall apply to Agecroft only to the extent not
prohibited by the Agecroft Charter. The agreements in this paragraph
shall survive repayment of the Loans and all other amounts payable
hereunder, and termination of the Commitments.
7.14. COLLATERAL.
If, subsequent to the Restatement Effective Date, any Credit Party
shall acquire (a) any real property having a book value in excess of $500,000 or
(b) any intellectual property, securities instruments, chattel paper or other
personal property required to be delivered to the Administrative Agent as
Collateral hereunder or under any of the Collateral Documents, the Borrower
shall notify the Administrative Agent of same in each case as soon as
practicable after the acquisition thereof. Each Credit Party shall take such
action as requested by the Administrative Agent and at its own expense, to
ensure that the Administrative Agent shall have a first priority perfected Lien
in (i) all owned and developed real property of the Credit Parties (whether now
owned or hereafter acquired) having a book value in excess of $1,000,000, (ii)
to the extent deemed to be material by the Administrative Agent and either the
Required Lenders or the Aggregate Required Lenders in their sole discretion, all
owned and undeveloped real property of the Credit Parties (whether now owned or
hereafter acquired) and (iii) all personal property of the Credit Parties
(whether now owned or hereafter acquired), subject in each case only to
Permitted Liens. In addition, upon the request of the Administrative Agent, the
Borrower will assist the Administrative Agent with such post-closing lien
searches (conducted at the Borrower's expense) as the Administrative Agent shall
deem necessary or desirable to confirm the perfection and priority of the
Administrative Agent's Lien on the Collateral.
7.15. LEASES.
The Credit Parties hereby agree that all leases entered into between
the Credit Party and any lessee of real property owned by the Credit Party will
(a) have a minimum initial lease term of five years (provided any leases entered
into with a governmental entity may have a lease term of less than five years
and be subject to other appropriate limitations satisfactory to the Required
Lenders and the Required Tranche C Term Lenders) and (b) require that the lessee
remain solely responsible for all operations and other liabilities with respect
to the applicable property; provided, however, with respect to all leases having
annual rent payments (whether at the inception of such lease or otherwise) in
excess of $1,500,000, such leases shall be provided to the
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Administrative Agent in accordance with Section 7.1(k) and be satisfactory in
form and substance to the Administrative Agent. The Credit Parties also agree
that, at all times, (i) at least eighty percent (80%) of all lease revenues of
the Credit Parties shall be derived from leases with Management Opco and with
lessees other than Management Opco having a senior unsecured non-credit enhanced
long term debt rating of at least BBB+ (or higher) from S&P or Baa1 (or higher)
from Moody's (or if such ratings are unavailable from S&P and Moody's, an
equivalent rating from either Fitch or Duff & Phelps), (ii) at least ninety
percent (90%) of all lease revenues of the Credit Parties shall be derived from
leases with Management Opco and with lessees other than Management Opco having a
senior unsecured non-credit enhanced long term debt rating of at least BBB- (or
higher) from S&P and Baa3 (or higher) from Moody's (or if such ratings are
unavailable from S&P and Moody's, an equivalent rating from either Fitch or Duff
& Phelps), and (iii) at least ninety percent (90%) of all lease revenues of the
Credit Parties are derived from triple-net leases that are noncancelable by the
lessee.
7.16. YEAR 2000 COMPLIANCE.
Each Credit Party will promptly notify the Administrative Agent in the
event such Credit Party discovers or determines that any computer application
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.
7.17. APPRAISALS.
If the Administrative Agent, the Required Lenders or the Aggregate
Required Lenders determine that applicable law or regulation requires that
appraisals of each Real Property be prepared for the benefit of the
Administrative Agent, the Credit Parties agree that the Administrative Agent may
(after notice to and consultation with the Borrower) order appraisals of each
Real Property (at the expense of the Credit Parties). Such appraisals shall (i)
be performed by a qualified appraiser engaged by the Administrative Agent, (ii)
indicate a fair market value for each such Real Property and otherwise be in
form and substance satisfactory to the Administrative Agent and (iii) be
delivered to the Administrative Agent within 120 days of such determination that
such appraisals are necessary under applicable law or regulation. The Credit
Parties further agree that if the Administrative Agent, the Required Lenders or
the Aggregate Required Lenders make the determination that appraisals of each
Real Property are required by applicable law or regulation, the Credit Parties
shall, upon the purchase of a Real Property subsequent to the Restatement
Effective Date, provide the Administrative Agent with a current appraisal of
such Real Property (at the expense of the Credit Parties), which appraisals
shall be prepared by a qualified appraiser engaged by the Administrative Agent,
indicate a fair market value for each such Real Property and otherwise be in
form and substance satisfactory to the Administrative Agent.
7.18. HEDGING AGREEMENTS.
The Borrower shall, not later than August 16, 1999, enter into and
maintain Hedging Agreements in a notional amount of at least $325,000,000 and
otherwise in form and substance acceptable to the Administrative Agent, all
pursuant to a hedging strategy reasonably acceptable to any two of the
Administrative Agent, the Syndication Agent and the Documentation Agent.
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SECTION 8.
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
8.1. INDEBTEDNESS.
The Credit Parties will not permit any Consolidated Party or
Unrestricted Subsidiary to contract, create, incur, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower set forth in Schedule 8.1
(and renewals, refinancings and extensions thereof on terms and
conditions no less favorable to the obligor than such existing
Indebtedness);
(c) obligations of the Borrower in respect of Hedging
Agreements entered into in order to manage existing or anticipated
interest rate or exchange rate risks and not for speculative purposes;
(d) Indebtedness owing by a Credit Party to another Credit
Party;
(e) unsecured Indebtedness of the Borrower provided that (i)
no part of the principal part of such Indebtedness shall have a
maturity date earlier than the final maturity of the Loans hereunder,
(ii) after giving effect to the incurrence of any such Indebtedness on
a pro forma basis, as if such incurrence of Indebtedness had occurred
on the first day of the twelve month period ending on the last day of
the Borrower's most recently completed fiscal quarter, the Borrower and
its Subsidiaries would have been in compliance with all the financial
covenants set forth in Section 7.11 and the Borrower shall have
delivered to the Administrative Agent a certificate of its chief
financial officer to such effect setting forth in reasonable detail the
computations necessary to determine such compliance and (iii) at the
time of the issuance of such Indebtedness and after giving effect
thereto, no Default or Event of Default shall exist or be continuing;
(f) purchase money Indebtedness of the Borrower not exceeding
$1,000,000 in aggregate principal amount at any time outstanding;
(g) Indebtedness of any Unrestricted Subsidiary consisting
entirely of Non-Recourse Debt; provided, however, that (i) the
aggregate amount of all such Indebtedness that may be incurred or be
owing by all Unrestricted Subsidiaries may not at any time exceed
twenty percent (20%) of Total Value and (ii) if any such Indebtedness
ceases to be Non-Recourse Debt of such Unrestricted Subsidiary, such
event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Borrower that was not permitted by this
Section 8.1(g);
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(h) Indebtedness of the Borrower in respect of the Senior
Notes and the unsecured guarantee by any Subsidiary of the Borrower
that is a Subsidiary Guarantor hereunder of the Borrower's obligations
under (i) the Senior Notes (pursuant to the Senior Notes Indenture as
in effect on the Restatement Effective Date) and (ii) the Permitted
Unsecured Debt; provided that such guarantee is not senior to the
Guarantee Obligations of such Subsidiary Guarantor hereunder;
(i) Indebtedness of a Restricted Subsidiary of the Borrower
that is a Credit Party incurred and outstanding on the date on which
such Restricted Subsidiary was acquired by the Company (provided that
such Indebtedness shall not be incurred (i) to provide all or any
portion of the funds utilized to consummate the transaction or series
of related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was otherwise acquired by the
Borrower or (ii) otherwise in connection with, or in contemplation of,
such acquisition) and as to which the Borrower and its other Restricted
Subsidiaries are not obligated to become liable for such Indebtedness;
(j) Indebtedness incurred by the Borrower or any of its
Restricted Subsidiaries in respect of workers' compensation claims,
self-insurance obligations, performance, proposal, completion, surety
and similar bonds and completion guarantees provided by the Borrower or
a Restricted Subsidiary of the Borrower in the ordinary course of
business; provided that the underlying obligation to perform is that of
the Borrower and its Restricted Subsidiaries and not that of the
Company's Unrestricted Subsidiaries or any other Person; and
(k) prior to Agecroft's designation as an Unrestricted
Subsidiary hereunder, Indebtedness owing by Agecroft to the Borrower
pursuant to the Agecroft Note.
8.2. LIENS.
The Credit Parties will not permit any Consolidated Party or
Unrestricted Subsidiary to contract, create, incur, assume or permit to exist
any Lien with respect to any of its Property, whether now owned or after
acquired, except for Permitted Liens.
8.3. NATURE OF BUSINESS.
The Credit Parties will not permit any Consolidated Party or any other
Subsidiary to substantively alter the character or conduct of the business
conducted by such Person as of the Original Closing Date. Specifically, neither
the Borrower nor any Subsidiary of the Borrower shall engage in any business
other than the ownership of correctional, justice and/or detention facilities
(which may include secured charter schools) that are managed by the lessees of
the Borrower or such Subsidiary, as the case may be (or agent of any such lessee
in the event any lessee is a governmental entity).
8.4. CONSOLIDATION, MERGER, DISSOLUTION, ETC.
The Credit Parties will not permit any Consolidated Party to enter into
any transaction of merger or consolidation or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution); provided that,
notwithstanding the foregoing provisions of this Section 8.4, (a) the
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Borrower may merge or consolidate with any of its Restricted Subsidiaries
provided that (i) the Borrower shall be the continuing or surviving corporation,
(ii) the Credit Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Administrative Agent may request in order to
maintain the perfection and priority of the Administrative Agent's liens on the
assets of the Credit Parties as required by Section 7.14 after giving effect to
such transaction and (iii) after giving effect to such transaction, no Default
or Event of Default exists, (b) any Credit Party other than the Borrower may
merge or consolidate with any other Credit Party other than the Borrower
provided that (i) the Credit Parties shall cause to be executed and delivered
such documents, instruments and certificates as the Administrative Agent may
request in order to maintain the perfection and priority of the Administrative
Agent's liens on the assets of the Credit Parties as required by Section 7.14
after giving effect to such transaction and (ii) after giving effect to such
transaction, no Default or Event of Default exists, (c) any Consolidated Party
which is not a Credit Party may be merged or consolidated with or into any
Credit Party provided that (i) such Credit Party shall be the continuing or
surviving corporation, (ii) the Credit Parties shall cause to be executed and
delivered such documents, instruments and certificates as the Administrative
Agent may request in order to maintain the perfection and priority of the
Administrative Agent's liens on the assets of the Credit Parties as required by
Section 7.14 after giving effect to such transaction and (iii) after giving
effect to such transaction, no Default or Event of Default exists, and (d) any
Consolidated Party which is not a Credit Party may be merged or consolidated
with or into any other Consolidated Party which is not a Credit Party provided
that, after giving effect to such transaction, no Default or Event of Default
exists.
8.5. ASSET DISPOSITIONS.
The Credit Parties will not permit any Consolidated Party to make any
Asset Disposition (including, without limitation, any Sale and Leaseback
Transaction) unless no later than the date of consummation of such Asset
Disposition, the Administrative Agent shall have received a certificate of an
officer of the Borrower briefly describing the assets sold or otherwise disposed
of, and setting forth the net book value of such assets, and the aggregate
consideration and Net Cash Proceeds received for such assets in connection with
such Asset Disposition, and the Credit Parties shall on the date of the
consummation of such Asset Disposition, apply (or cause to be applied) an amount
equal to the Net Cash Proceeds of such Asset Disposition to prepay the Loans
(and to cash collateralize the LOC Obligations) in accordance with the terms of
Section 3.3(b)(ii) and (iii) (except as expressly provided therein).
Notwithstanding the foregoing, the Borrower agrees that it shall not
sell a Borrowing Base Property unless each of the following conditions is
satisfied: (i) no Default or Event of Default exists, (ii) such Borrowing Base
Property is sold pursuant to the terms and conditions of an arms length contract
and on terms reasonably satisfactory to the Administrative Agent, (iii) either
(a) the Borrower replaces such Borrowing Base Property with a substitute
Borrowing Base Property acceptable to the Lenders or (b) the Obligations
outstanding shall not exceed the lesser of the Aggregate Committed Amount and
the Borrowing Base after giving effect to such disposition and (iv) after giving
effect to such disposition, on a pro forma basis as if such disposition had
occurred on the first day of the twelve month period ending on the last day of
the Borrower's most recently completed fiscal quarter, the Consolidated Parties
would have been in compliance with all the financial covenants set forth in
Section 7.11.
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8.6. INVESTMENTS.
The Credit Parties will not permit any Consolidated Party to make
Investments in or to any Person, except for (i) Permitted Investments, (ii) so
long as no Event of Default has occurred and is continuing, Investments not
otherwise prohibited under this Credit Agreement (other than in Unrestricted
Subsidiaries) in an amount not to exceed $3,000,000 in any fiscal year of the
Borrower and $15,000,000 in the aggregate, and (iii) so long as no Event of
Default has occurred and is continuing, Investments in Unrestricted
Subsidiaries; provided that, with respect to this clause (iii), (a) the
aggregate amount of all Investments by the Credit Parties in Unrestricted
Subsidiaries may not exceed at any time the lesser of (A) ten percent (10%) of
Consolidated Net Worth and (B) the sum of (1) $25,000,000, plus (2) cumulative
retained earnings (but not less than zero) of the Borrower for periods after the
Restatement Effective Date, plus (3) the Net Cash Proceeds of any Equity
Issuance (other than any Equity Issuance the proceeds of which are used to
satisfy the requirements of clause (ii)(B) in the proviso to Section 8.7(c))
consummated after the Restatement Effective Date and (b) the provisions of
Section 7.12(b) are complied with (unless at the time of such Investment in such
Unrestricted Subsidiary compliance with Section 7.12(b) is prohibited by any
financing arrangements of such Unrestricted Subsidiary and such prohibition was
not created in contemplation of the requirements of such Section 7.12(b)).
8.7. RESTRICTED PAYMENTS.
The Credit Parties will not permit any Consolidated Party to, directly
or indirectly, declare, order, make or set apart any sum for or pay any
Restricted Payment, except (a) to make dividends payable solely in the same
class of Capital Stock of such Person, (b) to make dividends or other
distributions payable to the Borrower (directly or indirectly through
Subsidiaries), (c) the Borrower may make a one-time dividend payment (currently
estimated by the Borrower to be approximately $180,000,000, but in no event to
exceed $225,000,000 less the aggregate amount of all distributions made in
fiscal year 1999 in excess of ninety-five percent (95%) of real estate
investment trust taxable income (determined without regard to the deduction for
dividends paid and excluding any net capital gain), as described in Section
857(a)(1)(A)(i) of the Code (which distributions the Borrower currently expects
to equal approximately $45,000,000)) in fiscal year 1999 based solely on the
retained earnings of CCA prior to the Merger necessary to maintain the
Borrower's status as a REIT if, but only if, the Borrower is able to provide the
Administrative Agent prior to the time such dividend is declared with evidence
(in form and substance satisfactory to the Administrative Agent) indicating (i)
that the Borrower has sufficient cash or availability under this Credit
Agreement to make such dividend payment at the time such payment is required)
and (ii) that the Borrower shall have liquidity of at least $75 million (which
liquidity may include any amounts available to be drawn under the Credit
Agreement) after giving effect to such one-time dividend payment; provided,
however, that (i) no such one-time dividend shall be paid in cash unless and
until Management Opco has received at least $25,000,000 in cash proceeds (which
proceeds must not be used to make a prepayment and corresponding permanent
commitment reduction under the Management Opco Credit Agreement) from the
issuance by Management Opco of any combination of Capital Stock and subordinated
debt (which debt must be permitted to be issued under the Management Opco Credit
Agreement) to one or more independent third-party investors (other than the
investors referred to in clause (ii) below), all on terms approved by Management
Opco's Board of Directors (ii) no such one-time
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dividend in excess of $31,000,000 shall be paid in cash unless and until (A) the
condition set forth in clause (i) above is met and (B) the Borrower has received
at least $100,000,000 in cash proceeds from the issuance by the Borrower of any
combination of Capital Stock to one or more independent third-party investors
whose investment entitles them to, and results in their, representation on the
Board of Directors of the Borrower, all on terms approved by the Borrower's
independent directors, (d) so long as no Default or Event of Default exists or
would result therefrom, the Borrower may make distributions on common or
preferred stock in an aggregate amount not to exceed during any calendar year
ninety five percent (95%) of Funds from Operations attributable to such calendar
year period; provided, however, the Borrower may pay dividends or distributions
that exceed the amount permitted by the preceding clause (d) if (i) such larger
distribution is required in order for the Borrower to maintain its status as a
REIT and (ii) no Default or Event of Default exists or would result therefrom
and (e) the Borrower may repurchase Equity Interests of the Borrower to the
extent such repurchases are deemed to occur upon the exercise of stock options
if such Equity Interests represent a portion of the exercise price thereof.
8.8. PREPAYMENTS OF INDEBTEDNESS, ETC.
The Credit Parties will not permit any Consolidated Party to (a) after
the issuance thereof, amend, modify or refinance (or permit the amendment,
modification or refinancing of) any other Indebtedness if such amendment,
modification or refinancing would add or change any terms in a manner adverse to
the issuer of such Indebtedness, or shorten the final maturity or average life
to maturity or require any payment to be made sooner than originally scheduled
or increase the interest rate applicable thereto or change any subordination
provision thereof; provided that the restrictions of this clause (a) shall not
apply to any Indebtedness to the extent (i) such Indebtedness, as so amended or
modified, or (ii) the Indebtedness refinancing such Indebtedness, as applicable,
in each case could be incurred under Section 8.1(e) hereof at the time of such
amendment, modification or refinancing, (b) except in connection with a
refinancing of Indebtedness permitted under clause (a) hereof, make (or give any
notice with respect thereto) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including without limitation, by way of
depositing money or securities with the trustee with respect thereto before due
for the purpose of paying when due) any other Indebtedness (other than
Indebtedness owed to the Borrower), or (c) except in connection with a
refinancing of Indebtedness permitted under clause (a) hereof, refund or
exchange (except as provided in clause (a) above) any other Indebtedness (or
offer to do so).
8.9. TRANSACTIONS WITH AFFILIATES.
Except for transactions permitted under Section 8.15, the Credit
Parties will not permit any Consolidated Party to enter into or permit to exist
any transaction or series of transactions with or for the benefit of any
officer, director, shareholder, Unrestricted Subsidiary or Affiliate of such
Person other than (i) normal compensation and reimbursement of expenses of
officers and directors and (ii) except as otherwise specifically limited in this
Credit Agreement, other transactions which are entered into in the ordinary
course of such Person's business on terms and conditions substantially as
favorable to such Person as would be obtainable by it in a comparable
arms-length transaction with a Person other than an officer, director,
shareholder, Unrestricted Subsidiary or Affiliate.
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8.10. FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
The Credit Parties will not permit any Consolidated Party to (a) change
its fiscal year without the prior written consent of the Required Lenders and
the Required Tranche C Term Lenders or (b) amend, modify or change its articles
of incorporation (or corporate charter or other similar organizational document)
or bylaws (or other similar document) in any manner that would reasonably be
likely to adversely affect the Lenders.
8.11. LIMITATION ON RESTRICTED ACTIONS.
The Credit Parties will not permit any Consolidated Party to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to any Credit Party on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) make loans or advances to any Credit Party, (d) sell, lease or
transfer any of its properties or assets to any Credit Party, or (e) act as a
Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing under or by reason of (i) this Credit
Agreement and the other Credit Documents, (ii) applicable law, (iii) the Senior
Notes Documents, (iv) the Permitted Unsecured Debt Documents and (v) the
Agecroft Transaction Documents.
8.12. OWNERSHIP OF SUBSIDIARIES.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, the Credit Parties will not permit (A) any Consolidated Party to (i)
permit any Person (other than the Borrower or any Wholly-Owned Subsidiary of the
Borrower) to own any Capital Stock of any Restricted Subsidiary of the Borrower
(provided that no Capital Stock of any Restricted Subsidiary of the Borrower may
be owned by an Unrestricted Subsidiary) or (ii) permit any Restricted Subsidiary
of the Borrower to issue Capital Stock (except to the Borrower or to a
Wholly-Owned Subsidiary of the Borrower; provided that no Capital Stock of any
Restricted Subsidiary of the Borrower may be owned by an Unrestricted
Subsidiary), in each case except to qualify directors where required by
applicable law or to satisfy other requirements of applicable law with respect
to the ownership of Capital Stock of Foreign Subsidiaries and (iii)
notwithstanding anything to the contrary contained in clause (ii) above, permit
any Subsidiary of the Borrower to issue any shares of preferred Capital Stock or
(B) any Person other than the Borrower or its Restricted Subsidiaries to own any
Capital Stock of any Unrestricted Subsidiary; provided that the provisions of
this clause (B) shall not apply to any Capital Stock of an Unrestricted
Subsidiary owned by a governmental or quasi-governmental entity in a
partnership, joint-venture or other cooperative arrangement with the Borrower or
any of its Restricted Subsidiaries.
8.13. SALE LEASEBACKS.
The Credit Parties will not permit any Consolidated Party to, directly
or indirectly, become or remain liable as lessee or as guarantor or other surety
with respect to any lease,
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whether an Operating Lease or a Capital Lease, of any Property (whether real,
personal or mixed), whether now owned or hereafter acquired, (a) which such
Consolidated Party has sold or transferred or is to sell or transfer to a Person
which is not a Consolidated Party or (b) which such Consolidated Party intends
to use for substantially the same purpose as any other Property which has been
sold or is to be sold or transferred by such Consolidated Party to another
Person which is not a Consolidated Party in connection with such lease.
8.14. NO FURTHER NEGATIVE PLEDGES.
The Credit Parties will not permit any Consolidated Party to enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security for such obligation if security is given for some other obligation,
except pursuant to (1) provided the provisions thereof do not prohibit the Liens
created under the Loan Documents, (a) the Senior Notes Documents and the
Permitted Unsecured Debt Documents and any refinancing of any thereof otherwise
permitted under this Credit Agreement that, with respect to the matters referred
to in this Section 8.14, contain provisions no more restrictive on the Borrower
and its Subsidiaries than the Indebtedness being refinanced and (b) the Agecroft
Transaction Documents, and (2) this Credit Agreement and the other Credit
Documents.
8.15. TRANSACTIONS WITH CCA ENTITIES.
Notwithstanding the provisions of Section 8.9, the Credit Parties will
not permit any Consolidated Party to make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make, amend or modify any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, any CCA Entity (each, a "CCA Entity Transaction"), unless: (a) such CCA
Entity Transaction is on terms that are no less favorable to such Credit Party
or the relevant Consolidated Party than those that would have been obtained in a
comparable transaction by the Credit Party or such Consolidated Party with an
unrelated Person and (b) prior to the consummation of any CCA Entity Transaction
or series of related CCA Entity Transactions involving aggregate consideration
in excess of $5,000,000, the Aggregate Required Lenders shall have consented in
writing to such CCA Entity Transaction or CCA Entity Transactions; provided,
however, that the following transactions shall be deemed not to be CCA Entity
Transactions: (i) amendments to any agreements with Management Opco that do not
increase the total payments to be due to Management Opco thereunder by more than
$5,000,000 in the aggregate for all such amended agreements, (ii) other
amendments to lease agreements or management contracts that do not alter the
rent provisions or economic terms of such agreements (including providing for
any rent deferrals), (iii) payments or transactions pursuant to Existing CCA
Entity Agreements and (iv) any new arrangement with respect to properties not
under lease with any of the CCA Entities as of the Restatement Effective Date
entered into by the Borrower or any of its Restricted Subsidiaries in the
ordinary course of business, which is fair to the Borrower and its Restricted
Subsidiaries in the reasonable opinion of a majority of the disinterested
members of the Board of Directors of the Borrower. For the avoidance of doubt,
the term "CCA Entity Transaction" shall include, without limitation, any
amendment or modification of any of the Existing CCA Entity Agreements.
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8.16. SPECULATIVE TRANSACTIONS.
The Credit Parties will not permit any Consolidated Party to enter into
any speculative hedging or similar transaction (such as a forward equity
purchase agreement).
SECTION 9.
EVENTS OF DEFAULT
9.1. EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal
of any of the Loans or of any reimbursement obligations
arising from drawings under Letters of Credit, or
(ii) default, and such default shall continue for
three (3) or more Business Days, in the payment when due of
any interest on the Loans or on any reimbursement obligations
arising from drawings under Letters of Credit, or of any Fees
or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein, in any
of the other Credit Documents, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was
deemed to have been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.2,
7.4, 7.9, 7.11, 7.12, 7.14, 7.15, 7.16, 7.17, 7.18 or 8.1
through 8.15, inclusive;
(ii) default in the due performance or observance of
any term, covenant or agreement contained in Sections 7.1(a),
(b), (c), (e) or (l) and such default shall continue
unremedied for a period of at least 5 days after the earlier
of a responsible officer of a Credit Party becoming aware of
such default or notice thereof by the Administrative Agent; or
(iii) default in the due performance or observance by
it of any term, covenant or agreement (other than those
referred to in subsections (a), (b), (c)(i) or (c)(ii) of this
Section 9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at least 30
days after the earlier of a
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responsible officer of a Credit Party becoming aware of such
default or notice thereof by the Administrative Agent; or
(d) Other Credit Documents. (i) Any Credit Party shall default
in the due performance or observance of any term, covenant or agreement
in any of the other Credit Documents (subject to applicable grace or
cure periods, if any), or (ii) except as a result of or in connection
with a merger of a Subsidiary permitted under Section 8.4, any Credit
Document shall fail to be in full force and effect or to give the
Administrative Agent and/or the Lenders the Liens, rights, powers and
privileges purported to be created thereby, or any Credit Party shall
so state in writing; or
(e) Guaranties. Except as the result of or in connection with
a merger of a Subsidiary permitted under Section 8.4, the guaranty
given by any Guarantor hereunder (including any Additional Credit
Party) or any provision thereof shall cease to be in full force and
effect, or any Guarantor (including any Additional Credit Party)
hereunder or any Person acting by or on behalf of such Guarantor shall
deny or disaffirm such Guarantor's obligations under such guaranty, or
any Guarantor shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed
pursuant to any guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with
respect to any Consolidated Party; or
(g) Defaults under Other Agreements. With respect to any
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) in excess of $1,000,000 in the aggregate for the
Consolidated Parties taken as a whole, (A)(1) any Consolidated Party
shall default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Indebtedness, or (2)
a default in the observance or performance relating to such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or condition shall
occur and continue or condition exist, the effect of which default or
other event or condition is to cause, or permit the holder or holders
of such Indebtedness (or trustee or agent on behalf of such holders) to
cause (determined without regard to whether any notice or lapse of time
is required), any such Indebtedness to become due prior to its stated
maturity; or (B) any such Indebtedness shall be declared due and
payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall be
entered against one or more of the Consolidated Parties involving a
liability of $1,000,000 or more in the aggregate (to the extent not
paid or fully covered by insurance provided by a carrier who has
acknowledged coverage and has the ability to perform) and any such
judgments or decrees shall not have been vacated, discharged or stayed
or bonded pending appeal within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions shall
occur, if such event or condition could reasonably be expected to have
a Material Adverse Effect: (i) any "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and
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Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of any
Consolidated Party or any ERISA Affiliate in favor of the PBGC or a
Plan; (ii) an ERISA Event shall occur with respect to a Single Employer
Plan, which is, in the reasonable opinion of the Administrative Agent,
likely to result in the termination of such Plan for purposes of Title
IV of ERISA; (iii) an ERISA Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is, in the
reasonable opinion of the Administrative Agent, likely to result in (A)
the termination of such Plan for purposes of Title IV of ERISA, or (B)
any Consolidated Party or any ERISA Affiliate incurring any liability
in connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency or (within the meaning
of Section 4245 of ERISA) such Plan; or (iv) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the
Code) or breach of fiduciary responsibility shall occur which may
subject any Consolidated Party or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of
the Code, or under any agreement or other instrument pursuant to which
any Consolidated Party or any ERISA Affiliate has agreed or is required
to indemnify any person against any such liability;
(j) [Intentionally Omitted.]
(k) Management Opco Credit Agreement. There shall occur an
Event of Default (as defined in the Management Opco Credit Agreement)
under the Management Opco Credit Agreement;
(l) Lease Agreements. There shall occur (i) an event of
default under the Master Lease (subject to applicable grace or cure
periods, if any), (ii) any payment default (beyond any applicable grace
period) under any lease agreement (not including the Master Lease)
between the Borrower and Management Opco (each such lease agreement
(including the Master Lease), a "Lease Agreement") or (iii) any
shortening or limitation on the term of any Lease Agreement if, after
giving effect thereto, such Lease Agreement would not comply with
Section 7.15;
(m) License Agreements. Any of the Opco License Agreement, the
Service Company A License Agreement or the Service Company B License
Agreement shall be terminated or canceled; or
(n) Ownership. There shall occur a Change of Control.
(o) Amendments. Management Opco shall (a) enter into any
amendment of the Management Opco Credit Agreement which would (i)
reduce the committed amount of financing available under the Management
Opco Credit Agreement, (ii) decrease or shorten the maturity date of
the loans under the Management Opco Credit Agreement, (iii) increase
the rate at which interest is payable on the loans under the Management
Opco Credit Agreement, (iv) cause the financial covenants in the
Management Opco Credit Agreement to be more restrictive with respect to
Management Opco than those financial covenants in effect as of the
Closing Date, or (b) refinance the indebtedness under the Management
Opco Credit Agreement on terms and conditions less favorable to
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Management Opco or the Borrower than such existing indebtedness under
the Management Opco Credit Agreement.
9.2. ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6 and Section 11.6A, as applicable), the Administrative Agent shall,
upon the request and direction of the Required Lenders or the Aggregate Required
Lenders, by written notice to the Credit Parties, take one or more of the
following actions:
(a) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately terminated.
(b) Acceleration. Declare the unpaid principal of and any
accrued interest in respect of all Loans, any reimbursement obligations
arising from drawings under Letters of Credit and any and all other
indebtedness or obligations of any and every kind owing by the Credit
Parties to the Administrative Agent and/or any of the other Secured
Parties hereunder to be due whereupon the same shall be immediately due
and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Credit Parties.
(c) Cash Collateral. Direct the Credit Parties to pay (and the
Credit Parties agree that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), they will
immediately pay) to the Administrative Agent additional cash, to be
held by the Administrative Agent, for the benefit of the Revolving
Lenders, in a cash collateral account as additional security for the
LOC Obligations in respect of subsequent drawings under all then
outstanding Letters of Credit in an amount equal to the maximum
aggregate amount which may be drawn under all Letters of Credits then
outstanding.
(d) Enforcement of Rights. Enforce any and all rights and
interests created and existing under the Credit Documents including,
without limitation, all rights and remedies existing under the
Collateral Documents, all rights and remedies against a Guarantor and
all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(f) shall occur with respect to the Borrower, then the Commitments
shall automatically terminate and all Loans, all reimbursement obligations
arising from drawings under Letters of Credit, all accrued interest in respect
thereof, all accrued and unpaid Fees and other indebtedness or obligations owing
to the Administrative Agent and/or any of the other Secured Parties hereunder
automatically shall immediately become due and payable without the giving of any
notice or other action by the Administrative Agent or the other Secured Parties.
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SECTION 10.
AGENCY PROVISIONS
10.1. APPOINTMENT, POWERS AND IMMUNITIES.
(a) Each Secured Party (other than the Administrative Agent) hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
under this Credit Agreement and the other Credit Documents with such powers and
discretion as are specifically delegated to the Administrative Agent by the
terms of this Credit Agreement and the other Credit Documents, together with
such other powers as are reasonably incidental thereto. The Administrative Agent
(which term as used in this sentence and in Section 10.5 and the first sentence
of Section 10.6 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 Credit
Agreement and shall not be a trustee or fiduciary for any other Secured Party;
(b) shall not be responsible to the other Secured Parties for any recital,
statement, representation, or warranty (whether written or oral) made in or in
connection with any Credit Document or any certificate or other document
referred to or provided for in, or received by any of them under, any Credit
Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Credit 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) shall not be required to initiate or conduct any litigation or collection
proceedings under any Credit Document; and (e) shall not be responsible for any
action taken or omitted to be taken by it under or in connection with any Credit
Document, except for its own gross negligence or willful misconduct. The
Administrative 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. For the avoidance of
doubt, LCPI is the successor Administrative Agent to the Original Administrative
Agent as provided in Section 10.7 of the Original Credit Agreement and this
Credit Agreement.
10.2. RELIANCE BY ADMINISTRATIVE AGENT.
The Administrative Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telecopy) 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 Administrative Agent. The Administrative Agent may deem
and treat the payee of any Note as the holder thereof for all purposes hereof
unless and until the Administrative Agent receives and accepts an Assignment and
Acceptance executed in accordance with Section 11.3(b) hereof. As to any matters
not expressly provided for by this Credit Agreement, the Administrative 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 Required Lenders
and/or the Aggregate Required Lenders and such instructions shall be binding on
all of the Lenders; provided, however, that the Administrative Agent shall not
be required to take any action that exposes the Administrative Agent to personal
liability or that is contrary to any Credit 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.
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10.3. DEFAULTS.
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the
Administrative Agent has received written notice from a Lender or a Credit Party
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default". In the event that the Administrative Agent receives such a
notice of the occurrence of a Default or Event of Default, the Administrative
Agent shall give prompt notice thereof to the Lenders. The Administrative Agent
shall (subject to Section 10.2 hereof) take such action with respect to such
Default or Event of Default as shall reasonably be directed by the Required
Lenders and/or the Aggregate Required Lenders, provided that, unless and until
the Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interest of the Lenders.
10.4. RIGHTS AS A LENDER.
With respect to its Commitment and the Loans made by it, LCPI (and any
successor acting as Administrative 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 Administrative Agent, and
the term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Administrative Agent in its individual capacity. LCPI (and any
successor acting as Administrative Agent) and its Affiliates may (without having
to account therefor to any Lender) 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 Administrative Agent, and
LCPI (and any successor acting as Administrative 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 Credit Agreement
or otherwise without having to account for the same to the Lenders.
10.5. INDEMNIFICATION.
The Lenders agree to indemnify the Administrative Agent (to the extent
not reimbursed under Section 11.5 hereof, but without limiting the obligations
of the Credit Parties under such Section) ratably in accordance with their
respective 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 Administrative Agent (including
by any Lender) in any way relating to or arising out of any Credit Document or
the transactions contemplated thereby or any action taken or omitted by the
Administrative Agent under any Credit Document (including any of the foregoing
arising from the negligence of the Administrative Agent); provided that no
Lender shall 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
Administrative Agent promptly upon demand for its ratable share
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of any costs or expenses payable by the Credit Parties under Section 11.5, to
the extent that the Administrative Agent is not promptly reimbursed for such
costs and expenses by the Credit Parties. The agreements in this Section 10.5
shall survive the repayment of the Loans, LOC Obligations and other obligations
under the Credit Documents and the termination of the Commitments hereunder and
shall be subject to the proviso in Section 1.4(b).
10.6. NON-RELIANCE ON AGENTS AND OTHER LENDERS.
Each Lender agrees that it has, independently and without reliance on
the Administrative Agent, the Documentation Agent, the Syndication Agent, the
Co-Agent, the Lead Arranger or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Credit Parties and their Subsidiaries and decision to enter into this Credit
Agreement and that it will, independently and without reliance upon the
Administrative Agent, the Documentation Agent, the Syndication Agent, the
Co-Agent, the Lead Arranger 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 Credit
Documents. Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative 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 any Credit Party or any of its Subsidiaries
or Affiliates that may come into the possession of the Administrative Agent or
any of its Affiliates.
10.7. SUCCESSOR ADMINISTRATIVE AGENT.
(a) The Administrative Agent may resign at any time by giving notice
thereof to the Lenders and the Credit Parties. Upon any such resignation, the
Aggregate Required Lenders shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Aggregate Required Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's
giving of notice of resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent which shall be a
commercial bank or financial organization organized under the laws of the United
States of America or any state thereof having combined capital and surplus of at
least $100,000,000. Upon the acceptance of any appointment as Administrative
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 Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Section 10 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
(b) Societe Generale, in its capacity as Documentation Agent, The Bank
of Nova Scotia, in its capacity as Syndication Agent, SouthTrust Bank, N.A., in
its capacity as Co-Agent, and Lehman Brothers Inc., in its capacity as Lead
Arranger shall have no duties or responsibilities and shall incur no liability
under this Credit Agreement or any of the other Credit Documents.
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(c) The Aggregate Required Lenders may elect to remove LCPI, as
Administrative Agent, in the event LCPI fails to maintain a Revolving Commitment
in an amount equal to Ten Million Dollars ($10,000,000); provided that such
Aggregate Required Lenders shall have appointed a successor Administrative
Agent.
SECTION 11.
MISCELLANEOUS
11.1. NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications shall be in writing and shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) to the number set out below or on Schedule 2.1(a), as
applicable, (c) the Business Day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (d)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case to the respective parties at
the address, in the case of the Credit Parties and the Administrative Agent, set
forth below, and, in the case of the Lenders, set forth on Schedule 2.1(a), or
at such other address as such party may specify by written notice to the other
parties hereto:
if to any Credit Party:
Prison Realty Trust, Inc.
10 Burton Hills Boulevard, Suite 100
Nashville, Tennessee 37215
Attn: Doctor R. Crants
Telephone: (615) 263-0200
Telecopy: (615) 263-0212
if to the Administrative Agent:
Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attn: Michael O'Brien
Telephone: (212) 526-0437
Telecopy: (212) 526-7691
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attn: Christopher R. Plaut
Telephone: (212) 906-1262
Telecopy: (212) 751-4864
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11.2. RIGHT OF SET-OFF; ADJUSTMENTS.
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 any Credit Party
against any and all of the obligations of such Person now or hereafter existing
under this Credit Agreement, under the Notes, under any other Credit Document or
otherwise, irrespective of whether such Lender shall have made any demand
hereunder or thereunder and although such obligations may be unmatured. Each
Lender agrees promptly to notify any affected Credit Party 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 11.2 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.
11.3. BENEFIT OF AGREEMENT.
(a) This Credit Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that none of the Credit Parties
may assign or transfer any of its interests and obligations without
prior written consent of the Lenders; provided further that the rights
of each Lender to transfer, assign or grant participations in its
rights and/or obligations hereunder shall be limited as set forth in
this Section 11.3.
(b) Each Lender may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Credit
Agreement (including, without limitation, all or a portion of its
Loans, its Notes, and its 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 Credit Agreement, any such partial
assignment shall be in an amount at least equal to $5,000,000
(or, if less, the remaining amount of the Commitment being
assigned by such Lender) 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 Credit Agreement and the Notes; and
(iv) the parties to such assignment shall execute and
deliver to the Administrative Agent for its acceptance an
Assignment and Acceptance in the form of Exhibit 11.3(b)
hereto, together with any Note subject to such assignment and
a processing fee of $3,500 (except that no processing fee
shall be payable (y) in connection with an assignment of the
Term Loan by or to Lehman Commercial Paper Inc. or any
Affiliate thereof or (z) with respect to any assignment of the
Term Loan, in the case of an Assignee that is already a Term
Lender or is an
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Affiliate of a Term Lender or a Person under common management
with a Term Lender).
Upon execution, delivery, acceptance and recording (as provided in
paragraph (c) below) 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 Credit Agreement. Upon the consummation of any assignment
pursuant to this Section 11.3(b), the assignor, the Administrative
Agent and the Credit Parties shall make appropriate arrangements so
that, if required, new Notes are issued to the assignor and the
assignee. If the assignee is not a United States person under Section
7701(a)(30) of the Code, it shall deliver to the Credit Parties and the
Administrative Agent certification as to exemption from deduction or
withholding of Taxes in accordance with Section 3.11.
(c) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 11.1 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 Commitment of, and principal amount of the 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 Credit Parties, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Credit Agreement. Any
assignment of any Loan, whether or not evidenced by a Note, shall be
effective only upon appropriate entries with respect thereto being made
in the Register (and each Note shall expressly so provide). The
Register shall be available for inspection by the Credit Parties or any
Lender at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed
by the parties thereto, together with any Note subject to such
assignment and payment of the processing fee, the Administrative Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit 11.3(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.
(e) 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 Credit Agreement (including all or a portion of
its Commitment or its Loans); provided, however, that (i) such Lender's
obligations under this Credit 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
Sections 3.7 through 3.12, inclusive, and the right of set-off
contained in Section 11.2, and (iv) the Credit Parties shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Credit Agreement, and such
Lender shall retain the sole right to enforce the obligations of the
Credit Parties relating to the Credit Party Obligations owing to such
Lender and to approve any amendment, modification, or waiver of any
provision of this
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Credit Agreement (other than amendments, modifications, or waivers
decreasing the amount of principal of or the rate at which interest is
payable on such Loans or Notes, extending any scheduled principal
payment date or date fixed for the payment of interest on such Loans or
Notes, or extending its Commitment).
(f) Notwithstanding any other provision set forth in this
Credit Agreement, any Lender may at any time assign and pledge all or
any portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank, and any Term Lender may otherwise
create security interests in any Term Loan or Term Note in accordance
with applicable law. No such assignment shall release the assigning
Lender from its obligations hereunder.
(g) Any Lender may furnish any information concerning the
Consolidated Parties 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 11.14
hereof.
11.3A TRANCHE C ASSIGNMENTS AND PLEDGES.
(a) No processing fee shall be payable to the Administrative
Agent (y) in connection with an assignment of the Tranche C Term Loan
by or to Lehman Commercial Paper Inc. or any Affiliate thereof or (z)
with respect to any assignment of the Tranche C Term Loan, in the case
of an Assignee that is already a Tranche C Term Lender or is an
Affiliate of a Tranche C Term Lender or a Person under common
management with a Tranche C Term Lender or a fund advised by the same
investment advisor as a Tranche C Term Lender (or an Affiliate
thereof).
(b) Any Tranche C Term Lender may create security interests in
any Tranche C Term Loan or Tranche C Term Note in accordance with
applicable law.
11.4. NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Administrative Agent or any
other Secured Party in exercising any right, power or privilege hereunder or
under any other Credit Document and no course of dealing between the
Administrative Agent or any other Secured Party and any of the Credit Parties
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Administrative Agent or any other Secured Party would otherwise have. No
notice to or demand on any Credit Party in any case shall entitle the Credit
Parties to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Administrative Agent
or the other Secured Parties to any other or further action in any circumstances
without notice or demand.
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<PAGE> 118
11.5. EXPENSES; INDEMNIFICATION.
(a) The Credit Parties jointly and severally agree to pay on demand all
costs and expenses of the Administrative Agent in connection with the
syndication, preparation, execution, delivery, administration, modification, and
amendment of this Credit Agreement, the other Credit Documents, and the other
documents to be delivered hereunder, including, without limitation, the
reasonable fees and expenses of counsel for the Administrative Agent with
respect thereto and with respect to advising the Administrative Agent as to its
rights and responsibilities under the Credit Documents. The Credit Parties
further jointly and severally agree to pay on demand all costs and expenses of
the Administrative Agent and the Lenders, if any (including, without limitation,
reasonable attorneys' fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings, or otherwise) of the Credit
Documents and the other documents to be delivered hereunder.
(b) The Credit Parties jointly and severally agree to indemnify and
hold harmless the Administrative 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 Credit Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans (including any
of the foregoing arising from the negligence of the Indemnified Party), 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 11.5 applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by any of
the Credit Parties, their respective 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 Credit Parties agree not to assert any claim against the
Administrative 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 Credit Documents, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Credit Parties hereunder, the agreements and obligations of the Credit Parties
contained in this Section 11.5 shall survive the repayment of the Loans, LOC
Obligations and other obligations under the Credit Documents and the termination
of the Commitments hereunder.
11.6. AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, however, that:
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<PAGE> 119
(i) without the consent of the Required Lenders and each other
Lender affected thereby, neither this Credit Agreement nor any other
Credit Document may be amended to
(a) extend the final maturity of any Loan or of any
reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(b) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability
of any post-default increase in interest rates) thereon or
Fees hereunder,
(c) reduce or waive the principal amount of any Loan
or of any reimbursement obligation, or any portion thereof,
arising from drawings under Letters of Credit,
(d) increase the Commitment of a Lender over the
amount thereof in effect (it being understood and agreed that
a waiver of any Default or Event of Default or mandatory
reduction in the Commitments shall not constitute a change in
the terms of any Commitment of any Lender),
(e) release all or substantially all of the
Collateral securing the Credit Party Obligations hereunder
(provided that the Administrative Agent may, without consent
from any other Lender, release any Collateral that is sold or
transferred by a Credit Party in conformance with Section
8.5),
(f) release the Borrower or substantially all of the
other Credit Parties from its or their obligations under the
Credit Documents,
(g) amend, modify or waive any provision of this
Section 11.6 or Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12,
3.13, 3.14, 3.15, 9.1(a), 11.2, 11.3, 11.5 or 11.9,
(h) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders, or
(i) consent to the assignment or transfer by the
Borrower of all or substantially all of the other Credit
Parties of any of its or their rights and obligations under
(or in respect of) the Credit Documents except as permitted
thereby;
(ii) without the consent of the Administrative Agent, no
provision of Section 10 may be amended;
(iii) without the consent of the Issuing Lender, no provision
of Section 2.2 may be amended; and without the consent of the Swingline
Lender, no provision of Section 2.3 may be amended; and
(iv) with the consent of the Borrower and either the Required
Term Lenders or the Required Revolving Lenders, increase the rate of
interest applicable to the Loans
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<PAGE> 120
(such increase to be in an equal amount for the Term Loans and the
Revolving Loans).
Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (x) each Lender
is entitled to vote as such Lender sees fit on any bankruptcy
reorganization plan that affects the Loans, and each Lender
acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code supersedes the unanimous consent provisions set forth herein and
(y) the Required Lenders may consent to allow a Credit Party to use
cash collateral in the context of a bankruptcy or insolvency
proceeding.
11.6A TRANCHE C AMENDMENTS, WAIVERS AND CONSENTS.
Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged
or terminated unless such amendment, change, waiver, discharge or
termination is in writing entered into by, or approved in writing by,
the Required Tranche C Term Lenders, provided, however, that:
(i) without the consent of the Required Tranche C Term Lenders
and each other Tranche C Term Lender affected thereby, neither this
Credit Agreement nor any other Credit Document may be amended to
(a) extend the final maturity of any Tranche C Term
Loan,
(b) reduce the rate or extend the time of payment of
interest in respect of Tranche C Term Loans (other than as a
result of waiving the applicability of any post-default
increase in interest rates) thereon or Fees with respect to
Tranche C Term Loan Commitments hereunder,
(c) reduce or waive the principal amount of any
Tranche C Term Loan,
(d) increase the Tranche C Term Loan Commitment of a
Lender over the amount thereof in effect (it being understood
and agreed that a waiver of any Default or Event of Default or
mandatory reduction in the Commitments shall not constitute
such an increase in the Commitment of any Lender),
(e) release all or substantially all of the
Collateral securing the Credit Party Obligations hereunder
(provided that the Administrative Agent may, without consent
from any other Lender, release any Collateral that is sold or
transferred by a Credit Party in conformance with Section
8.5),
(f) release the Borrower or substantially all of the
other Credit Parties from its or their obligations under the
Credit Documents,
(g) amend, modify or waive any provision of this
Section 11.6A or Section 3.6, 3.7, 3.7A, 3.8, 3.9, 3.10, 3.11,
3.12, 3.13, 3.13A, 3.14, 3.15, 9.1(a), 11.2, 11.3, 11.3A, 11.5
or 11.9,
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<PAGE> 121
(h) reduce any percentage specified in, or otherwise
modify, the definition of Required Tranche C Term Lenders, or
(i) consent to the assignment or transfer by the
Borrower or all or substantially all of the other Credit
Parties of any of its or their rights and obligations under
(or in respect of) the Credit Documents except as permitted
thereby;
(ii) with the consent of the Borrower, the Required Tranche C
Term Lenders and either the Required Term Lenders or the Required
Revolving Lenders, this Credit Agreement may be amended to increase the
rate of interest applicable to the Loans (such increase to be in an
equal amount for the Term Loans, the Tranche C Term Loans and the
Revolving Loans).
Notwithstanding the fact that the consent of all the Tranche C Term
Lenders is required in certain circumstances as set forth above, (x)
each Tranche C Term Lender is entitled to vote as such Tranche C Term
Lender sees fit on any bankruptcy reorganization plan that affects the
Tranche C Term Loans, and each Tranche C Term Lender acknowledges that
the provisions of Section 1126(c) of the Bankruptcy Code supersedes the
unanimous consent provisions set forth herein and (y) the Required
Tranche C Term Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding,
provided that the Required Lenders consent as well; provided that, the
Required Lenders, on the one hand, and the Required Tranche C Term
Lenders, on the other hand, each agree not to consent to such use of
cash collateral without the affirmative consent of the other.
The definition of Aggregate Required Lenders may not be amended without
the consent of all Lenders.
11.7. COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any of
the parties hereto of an executed counterpart of this Credit Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
11.8. HEADINGS.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9. SURVIVAL.
All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.11, 3.12, 10.5 or 11.5 shall survive the execution and
delivery of this Credit Agreement, the making
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<PAGE> 122
of the Loans, the issuance of the Letters of Credit, the repayment of the Loans,
LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder, and all representations and warranties
made by the Credit Parties herein shall survive delivery of the Notes and the
making of the Loans hereunder.
11.10. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(a) THIS CREDIT AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY
PROVIDED THEREIN, THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. Any legal action or proceeding with respect to this
Credit Agreement or any other Credit Document may be brought in the
courts of the State of New York in New York County, or of the United
States for the Southern District of New York, and, by execution and
delivery of this Credit Agreement, each of the Credit Parties hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the nonexclusive jurisdiction of such
courts. Each of the Credit Parties further irrevocably consents to the
service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set out for
notices pursuant to Section 11.1, such service to become effective
three (3) days after such mailing. Nothing herein shall affect the
right of the Administrative Agent or any other Secured Party to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Credit Party in any
other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in
connection with this Credit Agreement or any other Credit Document
brought in the courts referred to in subsection (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE ADMINISTRATIVE
AGENT, THE DOCUMENTATION AGENT, THE SYNDICATION AGENT, THE CO-AGENT,
THE LEAD ARRANGER, THE LENDERS AND EACH OF THE CREDIT PARTIES HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT,
ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
11.11. SEVERABILITY.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain
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<PAGE> 123
in full force and effect and shall be construed without giving effect to the
illegal, invalid or unenforceable provisions.
11.12. ENTIRETY.
This Credit Agreement (including the provisions of Sections 1.4 and
11.16 hereof) together with the other Credit Documents represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters or
correspondence relating to the Credit Documents or the transactions contemplated
herein and therein.
11.13. BINDING EFFECT; TERMINATION.
(a) This Credit Agreement shall become effective at such time
when all of the conditions set forth in Section 5.1 have been satisfied
or waived by the Aggregate Required Lenders and it shall have been
executed by each Credit Party and the Administrative Agent, and the
Administrative Agent shall have received copies hereof (telefaxed or
otherwise) which, when taken together, bear the signatures of each
Amending Lender and each Tranche C Term Lender, and thereafter this
Credit Agreement shall be binding upon and inure to the benefit of each
Credit Party, the Administrative Agent and each Lender and their
respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans,
LOC Obligations or any other amounts payable hereunder or under any of
the other Credit Documents shall remain outstanding, no Letters of
Credit shall be outstanding, all of the Credit Party Obligations have
been irrevocably satisfied in full and all of the Commitments hereunder
shall have expired or been terminated.
11.14. CONFIDENTIALITY.
The Administrative Agent and each Lender (each, a "Lending Party")
agrees to keep confidential any information furnished or made available to it by
the Credit Parties pursuant to this Credit 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 Lending Party, or any officer, director, employee, agent, or advisor of any
Lending 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 Credit 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 Credit Agreement or any other Credit Document,
(i) subject to provisions substantially similar to those contained in this
Section 11.14, to any actual or proposed participant or assignee and (j) to any
financial institution which is a direct or indirect contractual counterparty in
swap agreements or such contractual counterparty's professional advisors (so
long as any such contractual counterparty or professional advisor agrees to be
bound by the provisions of this Section 11.14).
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<PAGE> 124
11.15. CONFLICT.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any other Credit
Document, on the other hand, this Credit Agreement shall control.
11.16. EXISTING AGREEMENT SUPERSEDED.
As set forth in Section 1.4, the Original Credit Agreement is
superseded by this Credit Agreement, which has been executed in amendment,
restatement and modification, but not in extinguishment of, the obligations
under the Original Credit Agreement.
[Signature Pages Follow]
124
<PAGE> 125
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: PRISON REALTY TRUST, INC.
(formerly known as Prison Realty
Corporation), a Maryland corporation
By: /s/ Vida H. Carroll
Name: Vida H. Carroll
Title: Chief Financial Officer,
Secretary and Treasurer
SUBSIDIARY
GUARANTORS:
PRISON REALTY MANAGEMENT, INC.,
a Tennessee corporation
By: /s/ Vida H. Carroll
Name: Vida H. Carroll
Title: Secretary
of each of the foregoing
Subsidiary Guarantors
(SIGNATURES CONTINUE)
<PAGE> 126
LENDERS: LEHMAN COMMERCIAL PAPER INC.,
individually in its capacity as a
Lender and in its capacity as
Administrative Agent
By: /s/ Michael E. O'Brien
Name: Michael E. O'Brien
Title: Authorized Secretary
(SIGNATURES CONTINUE)
<PAGE> 127
SOCIETE GENERALE,
individually in its capacity as a
Lender and in its capacity as
Documentation Agent
By: /s/ Elizabeth R. Peck
Name: Elizabeth Peck
Title: Director - European Corporate
Group
(SIGNATURES CONTINUE)
<PAGE> 128
THE BANK OF NOVA SCOTIA,
individually in its capacity as a
Lender and in its capacity
as Syndication Agent
By: /s/ Barbara J. Brown
Name: Barbara J. Brown
Title: Sr. Relationship Manager
(SIGNATURES CONTINUE)
<PAGE> 129
SOUTHTRUST BANK, N.A.,
individually in its capacity as a
Lender and in its capacity
as Co-Agent
By: /s/ Marcy A. Harris
Name: Marcy A. Harris
Title: Vice President
(SIGNATURES CONTINUE)
<PAGE> 130
LEHMAN BROTHERS INC.,
in its capacity as Advisor,
Lead Arranger and Book Manager
By: /s/ William J. Gallagher
-----------------------------
Name: William J. Gallagher
Title: Authorized Signatory
(SIGNATURES CONTINUE)
<PAGE> 131
PRISON REALTY TRUST, INC.
Amended and Restated Credit Agreement #1
NATIONAL WESTMINSTER BANK PLC
By: NatWest Capital Markets Limited, its Agent
By: Greenwich Capital Markets, Inc., its Agent
By: /s/ Richard J. Jacoby
-----------------------------------------
Name: Richard J. Jacoby
Title: Assistant Vice President
National Westminster Bank PLC ("NatWest")
c/o Greenwich Capital Markets, Inc.
600 Steamboat Rd.
Greenwich, CT 06830
<PAGE> 132
Pacific Redwood CBO Limited
as a Lender
By: /s/ Michael Long
----------------------------------
Name: Michael Long
Title: Assistant Vice President
Address: 700 Newport Center Drive
Newport Beach, CA 92660
Telephone: (949) 219-3745
Fax: (949) 219-3199
Ref: Prison Realty Trust, Inc. Amended and restated credit agreement dated
August 4, 1999.
<PAGE> 133
MOUNTAIN CAPITAL CLO I, LTD.
as a Lender
By: /s/ Darren P. Riley
--------------------------------
Name: Darren P. Riley
Title: Director
<PAGE> 134
VAN KAMPEN
PRIME RATE INCOME TRUST
By: Van Kampen Investment Advisory Corp.
By: /s/ Darvin D. Pierce
-------------------------------------
Name: Darvin D. Pierce
Title: Vice President
One Parkview Plaza
Oakbrook Terrace, IL 60181
Telephone: 630-684-6438
Fax: 630-684-6740
<PAGE> 135
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By: /s/ Abigail Wolf
-----------------------------------
Name: Abigail Wolf
Title: Duly Authorized Signatory
Address: 10 South LaSalle Street
Suite 2700
Chicago, IL 60603
<PAGE> 136
SENIOR DEBT PORTFOLIO,
as a Lender
by: Boston Management and Research,
as investment advisor
By: /s/ Scott Page
----------------------------------
Name: Scott Page
Title
Address:
<PAGE> 137
STANFIELD CLO, LTD.
by Stanfield Capital Partners LLC
as Collateral Manager
By: /s/ Gregory L. Smith
-------------------------------------
Name: Gregory L. Smith
Title: Partner
Address: 330 Madison Avenue, 27th Floor
New York, New York 10017
Telephone: 212-284-4311
Telecopy: 212-284-4325
<PAGE> 138
FRANKLIN FLOATING RATE TRUST,
as a Lender
By: /s/ Chauncey Lufkin
-------------------------------------
Name: Chauncey Lufkin
Title Vice President
Address: 777 Mariners Island Boulevard
3rd Floor
San Mateo, CA 94404
Telephone: 650-525-7424
Telecopy: 650-312-3346
<PAGE> 139
CYPRESSTREE INVESTMENT
PARTNERS I, LTD.,
as a Lender
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By: /s/ Jeffrey W. Heuer
------------------------------------
Name: Jeffrey W. Heuer
Title: Principal
Address: 125 High Street, 14th Floor
Boston, MA 02110
Telephone: 617-646-0637
Telecopy: 617-946-5681
<PAGE> 140
CYPRESSTREE INSTITUTIONAL FUND, LLC,
as a Lender
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By: /s/ Jeffrey W. Heuer
-------------------------------------
Name: Jeffrey W. Heuer
Title: Principal
Address: 125 High Street, 14th Floor
Boston, MA 02110
Telephone: 617-646-0637
Telecopy: 617-946-5681
<PAGE> 141
CYPRESS INVESTMENT FUND, LLC,
as a Lender
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By: /s/ Jeffrey W. Heuer
-------------------------------------
Name: Jeffrey W. Heuer
Title: Principal
Address: 125 High Street, 14th Floor
Boston, MA 02110
Telephone: 617-646-0637
Telecopy: 617-946-5681
<PAGE> 142
CYPRESSTREE SENIOR FLOATING RATE FUND,
as a Lender
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By: /s/ Jeffrey W. Heuer
-------------------------------------
Name: Jeffrey W. Heuer
Title: Principal
Address: 125 High Street, 14th Floor
Boston, MA 02110
Telephone: 617-646-0637
Telecopy: 617-946-5681
<PAGE> 143
NORTH AMERICAN SENIOR FLOATING RATE FUND,
as a Lender
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
By: /s/ Jeffrey W. Heuer
-------------------------------------
Name: Jeffrey W. Heuer
Title: Principal
Address: 125 High Street, 14th Floor
Boston, MA 02110
Telephone: 617-646-0637
Telecopy: 617-946-5681
<PAGE> 144
ALLIANCE INVESTMENT OPPORTUNITIES FUND, L.L.C.
By: ALLIANCE INVESTMENT OPPORTUNITIES
MANAGEMENT, L.L.C., as Managing Member
By: ALLIANCE CAPITAL MANAGEMENT L.P., as
Managing Member
By: ALLIANCE CAPITAL MANAGEMENT CORPORATION,
as General Partner
By: /s/ Nelson Jantzen
------------------------------------------------
Name: Nelson Jantzen
Title: Senior Vice President
Address: Alliance Investment Opportunities, L.L.C.
c/o Alliance Capital Management, LP
1345 Avenue of the Americas - 37th Floor
New York, NY 10105
Attn: Kenneth Ostmann
Tel: (212) 969-1576
Fax: (212) 969-1466
<PAGE> 145
Monument Capital Ltd., as Assignee
By: Alliance Capital Management L.P., as
Investment Manager
By: Alliance Capital Management Corporation,
as General Partner
By: /s/ Kenneth G. Ostmann
--------------------------------------------
Name: Kenneth G. Ostmann
Title: Vice President
Address: Monument Capital Ltd.
c/o Alliance Capital Management, LP
1345 Avenue of the Americas - 37th Floor
New York, NY 10105
Attn: Kenneth Ostmann
Tel: (212) 969-1576
Tax: (212) 969-1466
<PAGE> 146
Oak Mountain Limited, as Assignee
By: Alliance Capital Management L.P., as
Investment Manager
By: Alliance Capital Management Corporation, as
General Partner
By: /s/ Kenneth G. Ostmann
----------------------------------------------
Name: Kenneth G. Ostmann
Title: Vice President
Address: Oak Mountain Limited
c/o Alliance Capital Management, LP
1345 Avenue of the Americas - 37th Floor
New York,NY 10105
Attn: Kenneth Ostmann
Tel: (212) 969-1576
Fax: (212) 969-1466
<PAGE> 147
Alliance Capital Management L.P., as
Manager on behalf of ALLIANCE CAPITAL
FUNDING, L.L.C., as Assignee
by: ALLIANCE CAPITAL MANAGEMENT CORPORATION,
General Partner of Alliance Capital
Management L.P.
By: /s/ Kenneth G. Ostmann
----------------------------------------------
Name: Kenneth G. Ostmann
Title: Vice President
Address: Alliance Capital Management, LP
1345 Avenue of the Americas - 37th Floor
New York, NY 10105
Attn: Kenneth Ostmann
Tel: (212) 969-1576
Fax: (212) 969-1466
<PAGE> 148
MERCANTILE BANK NATIONAL ASSOCIATION
as a Lender
By: /s/ Donald A. Adam
----------------------------------------------
Name: Donald A. Adam
Title: Vice President
Address: One Mercantile Center
7th & Washington, Tram 12-3
Saint Louis, Missouri 63101
<PAGE> 149
CIBC Inc.
as a Lender
By: /s/ John Livingston
----------------------------------------------
Name: John Livingston
Title: Executive Director
Address: 425 Lexington Avenue
New York, NY 10017
Telephone: 212-856-3581
Telecopy: 212-856-3761
<PAGE> 150
OCTAGON LOAN TRUST
BY: Octagon Credit Investors as manager,
as a Lender
By: /s/ Andrew D. Gordon
----------------------------------------------
Name: Andrew D. Gordon
Title: Portfolio Manager
Address: 380 Madison Avenue - 9th Floor
New York, NY 10017
Telephone: (212) 622-3064
Telecopy: (212) 622-3797
<PAGE> 151
OCTAGON INVESTMENT PARTNERS II, LLC
BY: Octagon Credit Investors, LLC
as sub-investment manager,
as a Lender
By: /s/ Andrew D. Gordon
----------------------------------------------
Name: Andrew D. Gordon
Title: Portfolio Manager
Address: 380 Madison Avenue - 9th Floor
New York,NY 10017
Telephone: (212) 622-3064
Telecopy:(212) 622-3797
<PAGE> 152
Compagnie Financiere de CIC et
de l'Union Europeenne,
as a Lender
By: /s/ Brian O'Leary
----------------------------------------------
Name: Brian O'Leary
Title: Vice President
By: /s/ Marcus Edward
----------------------------------------------
Name: Marcus Edward
Title: Vice President
Address: 520 Madison Avenue
Floor 37
Telephone: (212) 715-4422
Telecopy: (212) 715-4535
<PAGE> 153
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc.
as its investment manager
By: /s/ Daniel A. Norman
----------------------------------------------
Name: Daniel A. Norman
Title: Senior Vice President
Address: Two Renaissance Square
40 N. Central Ave., Suite 1200
Phoenix, AZ 85004-4424
Telephone: 602-417-8112
Telecopy: 602-417-8327
<PAGE> 154
ML CBO IV (Cayman) Ltd.
By Highland Capital Management, L.P.
As Collateral Manager
By: /s/ Todd Travers
----------------------------------------------
Name: Todd Travers
Title: Portfolio Manager
Address: 13455 Noel Road
Suite 1150
Dallas, TX 75240
Telephone: 972-233-4300
Telecopy: 972-233-4343
<PAGE> 155
BANK HAPOALIM B.M.,
as a Lender
By: /s/ Shlomo Braun
----------------------------------------------
Name: Shlomo Braun
Title: Senior Vice President
By: /s/ Shaun Breidbart
----------------------------------------------
Name: Shaun Breidbart
Title: Vice President
Address: 1177 Avenue of the Americas
New York, NY 10036
Telephone: (212) 782-2186
Telecopy:(212) 782-2187
<PAGE> 156
Goldman Sachs Credit Partners L.P.
By: /s/ Mark DeNatale
----------------------------------------------
Address: 85 Broad Street
6th Floor
New York, NY 10004
Telephone: 212/902-4425
Telecopy: 212/902-3757
<PAGE> 157
INDOSUEZ CAPITAL FUNDING IV, L.P.,
as a Lender
By: Indosuez Capital,
as portfolio advisor
By: /s/ Melissa Marano
----------------------------------------------
Name: Melissa Marano
Title: Vice President
Address:
<PAGE> 158
INDOSUEZ CAPITAL FUNDING IIA, LIMITED,
as a Lender
By: Indosuez Capital,
as portfolio advisor
By: /s/ Melissa Marano
----------------------------------------------
Name: Melissa Marano
Title: Vice President
Address:
<PAGE> 159
Comerica Bank,
as a Lender
By: /s/ Kristine L. Andersen
----------------------------------------------
Name: Kristine L. Andersen
Title: Assistant Vice President
Address: 500 Woodward Avenue
9th Floor, MC 3280
Detroit, MI 48226
Telephone: (313) 222-3648
Telecopy: (313) 222-3330
<PAGE> 160
First American National Bank
As a Lender
By: /s/ Corey Napier
----------------------------------------------
Name: Corey Napier
Title: Sr. Vice President
Address: 315 Deaderick Street
Nashville, TN 37237
(615) 748-1429
(615) 748-2812 (Fax)
<PAGE> 161
UNION PLANTERS BANK. N.A.,
as a Lender
By: /s/ John L. Burton
----------------------------------------------
Name: John L. Burton
Title: Senior Vice President
Address: 401 Union Street
Nashville, TN 37219
Telephone: 615-726-4383
Telecopy: 615-726-4274
<PAGE> 162
KZH CRESCENT LLC,
as a Lender
By: /s/ Peter Chin
----------------------------------------------
Name: Peter Chin
Title: Authorized Agent
Address: c/o The Chase Manhattan Bank
450 West 33rd Street, 14th Floor
New York, NY 10001
<PAGE> 163
KZH CRESCENT-2 LLC,
as a Lender
By: /s/ Peter Chin
----------------------------------------------
Name: Peter Chin
Title: Authorized Agent
Address: c/o The Chase Manhattan Bank
450 West 33rd Street, 14th Floor
New York, NY 10001
<PAGE> 164
KZH CRESCENT-3 LLC,
as a Lender
By: /s/ Peter Chin
----------------------------------------------
Name: Peter Chin
Title: Authorized Agent
Address: c/o The Chase Manhattan Bank
450 West 33rd Street, 14th Floor
New York, NY 10001
<PAGE> 165
KZH CYPRESSTREE-1 LLC,
as a Lender
By: /s/ Peter Chin
----------------------------------------------
Name: Peter Chin
Title: Authorized Agent
Address: c/o The Chase Manhattan Bank
450 West 33rd Street, 14th Floor
New York, NY 10001
<PAGE> 166
KZH ING-2 LLC,
as a Lender
By: /s/ Peter Chin
----------------------------------------------
Name: Peter Chin
Title: Authorized Agent
Address: c/o The Chase Manhattan Bank
450 West 33rd Street, 14th Floor
New York, NY 10001
<PAGE> 167
SRV-Highland, Inc.
By: /s/ Kelly C. Walker
----------------------------------------------
Name: Kelly C. Walker
Title: Vice President
Address: 101 N. Tryon Street
NC1-007-06-07
Charlotte, NC 28255
Telephone: 704/388-8943
Telecopy: 704/388-0648
<PAGE> 168
BALANCED HIGH-YIELD FUND I,
as a Lender
By: BHF (USA) Capital Corporation,
acting as attorney-in-fact
By: /s/ Jeffrey N. Frost
----------------------------------------------
Name: Jeffrey N. Frost
Title: Vice President
By: /s/ Patrick S. Marsh
----------------------------------------------
Name: Patrick S. Marsh
Title: Associate
Address:
BHF (USA) Capital Corporation
590 Madison Avenue, 30th Floor
New York, NY 10025
<PAGE> 169
BALANCED HIGH-YIELD FUND II,
as a Lender
By: BHF (USA) Capital Corporation,
acting as attorney-in-fact
By: /s/ Jeffrey N. Frost
----------------------------------------------
Name: Jeffrey N. Frost
Title: Vice President
By: /s/ Patrick S. Marsh
----------------------------------------------
Name: Patrick S. Marsh
Title: Associate
Address:
BHF (USA) Capital Corporation
590 Madison Avenue, 30th Floor
New York, NY 10025
<PAGE> 170
Toronto Dominion (New York), Inc.
As a Lender
By: /s/ Jorge A. Garcia
----------------------------------------------
Name: Jorge A. Garcia
Title: Vice President
Address: 909 Fannin, Suite 1700
Houston, Texas 77010
(713) 653-8242
(713) 652-0914 Fax
<PAGE> 171
United Of Omaha Life Insurance Company
By: TCW Asset Management Company,
its Investment Advisor
By: /s/ Justin L. Driscoll
----------------------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
By: /s/ Mark L. Gold
----------------------------------------------
Name: Mark L. Gold
Title: Managing Director
<PAGE> 172
SYNDICATED LOAN FUNDING TRUST,
as a Lender
By: Lehman Commercial Paper Inc.,
not in its individual capacity but solely as
Asset Manager
By: /s/ Michael E. O'Brien
----------------------------------------------
Name: Michael E. O'Brien
Title: Authorized Signatory
Address: 3 World Financial Center, 11th Floor
New York, NY 10285
Telephone: 212-526-0437
Telecopy: 212-526-7691
<PAGE> 173
OASIS COLLATERIZED HIGH INCOME
PORTFOLIOS-1, LTD
as a Lender
By: /s/ Andrew Ian Wignall
----------------------------------------------
Name: Andrew Ian Wignall
Title: Director
Address: c/o Stanfield Capital Partners
330 Madison Avenue - 27th Fl.
New York, NY 10017
Tel: 212-284-4306
Fax: 212-284-4315
<PAGE> 174
AMARA-2 FINANCE, LTD.
as a Lender
By: /s/ Andrew Ian Wignall
----------------------------------------------
Name: Andrew Ian Wignall
Title: Director
Address: C/o Stanfield Capital Partners
330 Madison Avenue - 27th Fl.
New York, NY 10017
Tel: 212-284-4306
Fax: 212-284-4315
<PAGE> 175
FIRST DOMINION FUNDING I,
as a Lender
By: /s/ Michael A. Monteleone
---------------------------------
Name: Michael A. Monteleone
Title: Authorized Signatory
Address: 1330 Avenue of the Americas
New York, NY 10019
Telephone: 212-603-8555
Facsimile: 212-603-8505
FIRST DOMINION FUNDING II,
as a Lender
By: /s/ Michael A. Monteleone
---------------------------------
Name: Michael A. Monteleone
Title: Authorized Signatory
Address: 1330 Avenue of the Americas
New York, NY 10019
Telephone: 212-603-8555
Facsimile: 212-603-8505
<PAGE> 176
MORGAN STANLEY SENIOR FUNDING, INC.
as a Lender
By: /s/ Christopher A. Pucillo
----------------------------------
Name: Christopher A. Pucillo
Title: Vice President
Address: 1585 Broadway
10th Floor
New York, NY 10036
Attn: Richard Biggica
Telephone: (212) 761-4838
Telefax: (212) 761-0592
<PAGE> 177
(Schedules and exhibits to this document are omitted from this filing.
Registrant agrees to furnish the Commission with a copy of any omitted schedule
or exhibit upon request.)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CCA PRISON REALTY TRUST FOR THE SIX MONTHS ENDED JUNE
30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 40,922
<SECURITIES> 0
<RECEIVABLES> 171,618
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 77,214
<PP&E> 2,200,325
<DEPRECIATION> 27,799
<TOTAL-ASSETS> 2,653,576
<CURRENT-LIABILITIES> 334,019
<BONDS> 819,546
0
43
<COMMON> 1,182
<OTHER-SE> 1,369,048
<TOTAL-LIABILITY-AND-EQUITY> 2,653,576
<SALES> 129,468
<TOTAL-REVENUES> 160,984
<CGS> 20,419
<TOTAL-COSTS> 39,966
<OTHER-EXPENSES> 83,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,309
<INCOME-PRETAX> 33,518
<INCOME-TAX> 0
<INCOME-CONTINUING> 33,518
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,518
<EPS-BASIC> 0.30
<EPS-DILUTED> 0.30
</TABLE>
