PRISON REALTY CORP
S-3, 1999-05-07
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>   1
 
      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 7, 1999
 
                                                     REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
 
                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                             ---------------------
 
                           PRISON REALTY CORPORATION
             (Exact Name of Registrant as Specified in its Charter)
 
<TABLE>
<S>                                                          <C>
                          MARYLAND                                                    62-1763875
                      (State or Other                                              (I.R.S. Employer
               Jurisdiction of Incorporation)                                   Identification Number)
</TABLE>
 
                      10 BURTON HILLS BOULEVARD, SUITE 100
                           NASHVILLE, TENNESSEE 37215
                                 (615) 263-0200
  (Address, Including Zip Code, and Telephone Number, Including Area Code, of
                   Registrant's Principal Executive Offices)
                             ---------------------
                                DOCTOR R. CRANTS
                            CHIEF EXECUTIVE OFFICER
                           PRISON REALTY CORPORATION
                      10 BURTON HILLS BOULEVARD, SUITE 100
                           NASHVILLE, TENNESSEE 37215
                             PHONE: (615) 263-0200
                           FACSIMILE: (615) 263-0212
    (Name, Address, Including Zip Code, and Telephone and Facsimile Numbers,
                  Including Area Codes, of Agent for Service)
                             ---------------------
                                   COPIES TO:
                            ELIZABETH E. MOORE, ESQ.
                              ALBERT J. BART, ESQ.
                           STOKES & BARTHOLOMEW, P.A.
                         424 CHURCH STREET, SUITE 2800
                           NASHVILLE, TENNESSEE 37215
                             PHONE: (615) 259-1450
                           FACSIMILE: (615) 259-1470
                             ---------------------
   APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
   If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
   If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
   If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
   If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
   If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
                        CALCULATION OF REGISTRATION FEE
 
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
                                                                             PROPOSED        PROPOSED
                                                                AMOUNT       MAXIMUM         MAXIMUM       AMOUNT OF
             TITLE OF EACH CLASS OF SECURITIES                  TO BE     OFFERING PRICE    AGGREGATE     REGISTRATION
                      TO BE REGISTERED                        REGISTERED    PER SHARE     OFFERING PRICE      FEE
- ----------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>         <C>             <C>             <C>
Common Stock, $0.01 par value per share ("Common Stock"), to
 be issued under Corrections Corporation of America 1985
 Stock Option Plan..........................................  1,610(1)      $27.71(2)      $44,613.10        $12.40
- ----------------------------------------------------------------------------------------------------------------------
Common Stock to be issued under Amended and Restated
 Corrections Corporation of America 1989 Stock Bonus Plan...  154,897(3)    19.69(4)      3,049,921.93       847.88
- ----------------------------------------------------------------------------------------------------------------------
Common Stock to be issued under Corrections Corporation of
 America 1991 Flexible Stock Option Plan....................  68,250(5)      9.14(2)         623,805         173.41
- ----------------------------------------------------------------------------------------------------------------------
Common Stock to be issued under Corrections Corporation of
 America Non-Employee Directors' Stock Option Plan..........  474,688(1)    19.15(2)      9,090,275.20      2,527.10
- ----------------------------------------------------------------------------------------------------------------------
Common Stock to be issued under Corrections Corporation of
 America 1995 Employee Stock Incentive Plan.................  944,549(5)    33.39(2)      31,538,491.11     8,767.70
- ----------------------------------------------------------------------------------------------------------------------
Common Stock to be issued to Joseph F. Johnson, Jr. pursuant
 to an option agreement not granted under any plan..........  70,000(6)     20.86(7)        1,460,200        405.94
- ----------------------------------------------------------------------------------------------------------------------
Total.......................................................  1,713,994        N/A        $45,807,306.34   $12,734.43
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
 
(1) Represents the total number of shares of Common Stock to be issued by the
    Registrant pursuant to the exercise of stock options previously granted by
    Corrections Corporation of America ("Old CCA") under the plan and assumed by
    the Registrant in the merger of Old CCA and the Registrant (the "Merger").
(2) Pursuant to Rule 457(h)(1) promulgated under the Securities Act of 1933, as
    amended, the proposed maximum offering price per share has been calculated
    using the weighted average exercise price of options to purchase shares of
    Common Stock previously granted under the plan.
(3) Represents the total number of shares of Common Stock to be issued by the
    Registrant pursuant to the previous grant of deferred shares of Common Stock
    of Old CCA to persons other than Doctor R. Crants, Chairman and Chief
    Executive Officer of the Registrant.
(4) Calculated pursuant to Rule 457(c), as permitted by Rule 457(h)(1), based
    upon the average of the high and low prices of the Common Stock on the New
    York Stock Exchange on May 3, 1999.
(5) Represents the total number of shares of Common Stock to be issued by the
    Registrant to persons other than Doctor R. Crants, Chairman and Chief
    Executive Officer of the Registrant, pursuant to the exercise of stock
    options previously granted by Old CCA under the plan and assumed by the
    Registrant in the Merger.
(6) Represents the total number of shares of Common Stock to be issued to Mr.
    Johnson by the Registrant pursuant to the exercise of options previously
    granted by Old CCA outside of any stock option plan and assumed by the
    Registrant in the Merger.
(7) Pursuant to Rule 457(h)(1), the proposed maximum offering price per share
    has been calculated using the exercise price of options to purchase shares
    of Common Stock previously granted to Mr. Johnson.
 
                             ---------------------
   THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   2
 
                                EXPLANATORY NOTE
 
     This Registration Statement covers an aggregate of 1,713,994 shares of the
common stock, $0.01 par value per share (the "Common Stock"), of Prison Realty
Corporation, a Maryland corporation (the "Company"), issuable upon the exercise
of options previously granted to former employees of Corrections Corporation of
America, a Tennessee corporation ("Old CCA"), pursuant to the Plans (as
hereinafter defined). The Company commenced operations on January 1, 1999 as the
result of the completion of the mergers of each of Old CCA and CCA Prison Realty
Trust, a Maryland real estate investment trust ("Prison Realty"), with and into
the Company (the "Merger") pursuant to the terms and conditions of an Amended
and Restated Agreement and Plan of Merger, dated as of September 29, 1998, by
and among Old CCA, Prison Realty and the Company (the "Merger Agreement").
 
     1,559,097 shares of Common Stock being registered hereunder are issuable
pursuant to the exercise of options assumed by the Company in the merger of Old
CCA with and into the Company that were outstanding as of December 31, 1998 and
that were previously granted to officers, directors and employees of Old CCA,
under the (i) Corrections Corporation of America 1985 Stock Option Plan; (ii)
Corrections Corporation of America 1991 Flexible Stock Option Plan; (iii)
Corrections Corporation of America Non-Employee Directors' Stock Option Plan;
and (iv) Corrections Corporation of America 1995 Employee Stock Incentive Plan
(collectively, the "Old CCA Option Plans") and that were previously granted to
Joseph F. Johnson, Jr., a director of Old CCA, outside of any Old CCA Option
Plan (collectively, the "Old CCA Rollover Options"). The Old CCA Rollover
Options were converted according to the exchange ratio set forth in the Merger
Agreement, and the price of each Old CCA Rollover Option was adjusted to reflect
the conversion. In connection with the Merger, the Old CCA Rollover Options were
converted into options, or warrants, exercisable for shares of Common Stock.
Prior to December 31, 1998, the Old CCA Rollover Options were exercisable for
shares of Old CCA common stock, $1.00 par value per share (the "Old CCA Common
Stock"). The terms of the Old CCA Rollover Options are the same as before the
Merger, except that upon exercise of the Old CCA Rollover Options, a participant
shall receive shares of Common Stock rather than Old CCA Common Stock. Old CCA
Rollover Options granted to Doctor R. Crants, an employee of the Company, in his
capacity as an officer and director of Old CCA, which were converted into
options to purchase Common Stock, have been registered pursuant to a
Registration Statement on Form S-8 (Reg. no. 333-70625) filed by the Company
with the Securities and Exchange Commission (the "Commission") on January 15,
1999 (the "Company S-8").
 
     154,897 shares of Common Stock being registered hereunder are issuable
pursuant to the previous grant of deferred shares of Old CCA Common Stock to
Darrell K. Massengale and David L. Myers under the Amended and Restated
Corrections Corporation of America 1989 Stock Bonus Plan (the "Deferred
Shares"). In connection with the Merger, the Deferred Shares were converted into
deferred shares of Common Stock. The Deferred Shares were converted according to
the exchange ratio set forth in the Merger Agreement. The terms of the Deferred
Shares are the same as before the Merger, except that upon the issuance of
shares of stock pursuant thereto, a participant shall receive shares of Common
Stock rather than Old CCA Common Stock. Deferred Shares granted to Doctor R.
Crants, Chairman and Chief Executive Officer of the Company, which were
converted into deferred shares of Common Stock in the Merger, have been
registered under the Company S-8.
 
     The Company has previously registered 1,268,000 shares of Common Stock to
be issued pursuant to the exercise of options assumed by the Company in the
merger of
<PAGE>   3
 
Prison Realty with and into the Company that were outstanding as of January 1,
1999 and that were previously granted to trustees, officers and employees of
Prison Realty (the "Prison Realty Rollover Options") under the (i) CCA Prison
Realty Trust Employee Share Incentive Plan, and (ii) CCA Prison Realty Trust
Non-Employee Trustees' Share Option Plan, as amended, (collectively, the "Prison
Realty Option Plans") under the Company S-8. In connection with the Merger, the
Prison Realty Rollover Options were converted into options exercisable for
shares of Common Stock. The Prison Realty Rollover Options were converted
according to the exchange ratio set forth in the Merger Agreement, and the
exercise price of each Prison Realty Rollover Option was adjusted to reflect the
conversion. Prior to January 1, 1999, the Prison Realty Rollover Options were
exercisable for Prison Realty common shares, $0.01 par value per share (the
"Prison Realty Common Shares"). The terms of the Prison Realty Rollover Options
are the same as before the Merger, except that upon exercise of the Prison
Realty Rollover Options, a participant shall receive shares of Common Stock
rather than Prison Realty Common Shares.
 
     The Company has adopted the Prison Realty Option Plans and intends to make
grants and/or issuances to its directors, officers and employees under such
plans. In connection therewith, the Company has previously registered 182,000
shares of Common Stock available for issuance under the Prison Realty Option
Plans, as adopted by the Company, under the Company S-8.
<PAGE>   4
 
                    SUBJECT TO COMPLETION, DATED MAY  , 1999
 
                                   PROSPECTUS
 
                           PRISON REALTY CORPORATION
 
           CORRECTIONS CORPORATION OF AMERICA 1985 STOCK OPTION PLAN
 AMENDED AND RESTATED CORRECTIONS CORPORATION OF AMERICA 1989 STOCK BONUS PLAN
       CORRECTIONS CORPORATION OF AMERICA 1991 FLEXIBLE STOCK OPTION PLAN
  CORRECTIONS CORPORATION OF AMERICA NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
     CORRECTIONS CORPORATION OF AMERICA 1995 EMPLOYEE STOCK INCENTIVE PLAN
                  OPTION AGREEMENT WITH JOSEPH F. JOHNSON, JR.
                           (PRISON REALTY TRUST LOGO)
 
                        1,713,994 SHARES OF COMMON STOCK
 
     This prospectus applies to shares of the common stock of Prison Realty
Corporation to be offered and sold to former directors, officers and employees
of the old Corrections Corporation of America pursuant to the following stock
option and stock bonus plans and the following option agreement assumed by the
company in its merger with Corrections Corporation of America:
 
     - The Corrections Corporation of America 1985 Stock Option Plan;
 
     - The Amended and Restated Corrections Corporation of America 1989 Stock
       Bonus Plan;
 
     - The Corrections Corporation of America 1991 Flexible Stock Option Plan;
 
     - The Corrections Corporation of America Non-Employee Directors' Stock
       Option Plan;
 
     - The Corrections Corporation of America 1995 Employee Stock Incentive
       Plan; and
 
     - An Option Agreement with Joseph F. Johnson, Jr.
 
     Pursuant to the terms and conditions of Corrections Corporation of
America's merger with the company, the options and deferred shares previously
granted or issued under the plans and the option agreement by Corrections
Corporation of America were converted into options, or warrants, to purchase or
otherwise obtain shares of the company's common stock according to an
agreed-upon exchange ratio, and the price of each option was adjusted to reflect
the conversion. Prior to the completion of the merger on December 31, 1998, the
options were exercisable for shares of Corrections Corporation of America common
stock, and the deferred shares to be issued were to be shares of Corrections
Corporation of America common stock. The terms of the options and the deferred
share awards assumed by the company are the same as before the merger, except
that upon exercise of the options or the vesting of the deferred shares, a
recipient shall receive shares of company common stock rather than Corrections
Corporation of America common stock.
 
     The company's common stock is listed on the New York Stock Exchange under
the ticker symbol "PZN." The common stock issued pursuant to this prospectus
will be listed on the New York Stock Exchange, subject to official notice of
issuance. The last reported sales price of the common stock on the New York
Stock Exchange on Monday, May 3, 1999 was $19.81 per share.
 
     INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS.  SEE "RISK FACTORS"
BEGINNING ON PAGE 9 OF THIS PROSPECTUS FOR INFORMATION THAT YOU SHOULD CONSIDER.
 
     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
 
                  The date of this Prospectus is May   , 1999
 
     THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THE SECURITIES DESCRIBED IN THIS PROSPECTUS MAY NOT BE SOLD UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THE PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
<PAGE>   5
 
                               TABLE OF CONTENTS
 
<TABLE>
<S>                                                           <C>
Where You Can Find More Information.........................         1
Incorporation of Certain Documents by Reference.............         1
  The Company...............................................         1
  Old CCA...................................................         2
  Prison Realty.............................................         2
Cautionary Statement Concerning Forward-Looking
  Information...............................................         3
Information About the Company...............................         4
  General...................................................         4
  History and Operations....................................         4
  Recent Developments.......................................         5
Selected Unaudited Pro Forma Combined Financial
  Information...............................................         6
  Company Selected Pro Forma Combined Financial
     Information............................................         8
Risk Factors................................................         9
  Ownership of the Common Stock Involves Risks Associated
     with Outside Financing to Support the Company's
     Growth.................................................         9
  The Company Primarily Depends upon CCA, its Primary
     Tenant, for its Revenues and Ability to Make
     Distributions to its Stockholders......................        10
  Existing Conflicts of Interest May Have an Effect on the
     Company................................................        10
  Ownership of the Common Stock Involves Risks Associated
     with the Corrections and Detention Industry............        10
  Ownership of the Common Stock Involves Risks Inherent in
     Investment in Real Estate Properties...................        11
  The Company's Failure to Qualify as a REIT Could Adversely
     Affect Stockholders of the Company.....................        12
The Plans...................................................        12
  General...................................................        12
  Old CCA Options...........................................        13
  Old CCA Deferred Shares...................................        13
  Prison Realty Option and Share Compensation Plans.........        14
  Description of Common Stock...............................        14
Summary of the Plans........................................        15
  Old CCA 1985 Stock Option Plan............................        15
  Old CCA Deferred Share Plan...............................        18
  Old CCA 1991 Flexible Stock Option Plan...................        21
  Old CCA Directors' Option Plan............................        24
  Old CCA 1995 Employee Stock Incentive Plan................        28
  Johnson Option Agreement..................................        32
Use of Proceeds.............................................        34
Plan of Distribution........................................        34
Legal Matters...............................................        34
Experts.....................................................        35
Index to Financial Statements...............................       F-1
</TABLE>
 
                                        i
<PAGE>   6
 
                      WHERE YOU CAN FIND MORE INFORMATION
 
     Prison Realty Corporation, a Maryland corporation (the "Company"), is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). You may read and copy any of these materials at
the Commission's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You can request copies of these documents, upon payment of a
duplicating fee, by writing to the Commission. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the Public Reference
Room. You may also access our filings with the Commission at its Internet
address (http://www.sec.gov). In addition, the Company's common stock, $0.01 par
value per share (the "Common Stock"), is listed on the New York Stock Exchange
(the "NYSE"), and similar information concerning the Company can be inspected at
the offices of the NYSE, 20 Broad Street, New York, New York 10005.
 
     This prospectus (the "Prospectus") is part of a Registration Statement on
Form S-3 (the "Registration Statement") filed by the Company with the Commission
to register shares of Common Stock to be issued by the Company under the Plans,
as hereinafter defined, or pursuant to certain deferred share or option
agreements. It does not repeat important information that you can find in the
Registration Statement. Furthermore, the Commission allows the Company to
"incorporate by reference" certain information into this Prospectus. This means
that the Company can disclose important information to you by referring you to
another document filed separately with the Commission. The information
incorporated by reference is considered to be a part of this Prospectus, except
for any information that is updated and superseded by other information that is
set forth directly in this document.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The Company is the successor to each of Corrections Corporation of America,
a Tennessee corporation ("Old CCA"), and CCA Prison Realty Trust, a Maryland
real estate investment trust ("Prison Realty"). Pursuant to an Amended and
Restated Agreement and Plan of Merger, dated as of September 29, 1998 (the
"Merger Agreement"), Old CCA merged with and into the Company on December 31,
1998, and Prison Realty merged with and into the Company on January 1, 1999 (the
mergers of Old CCA and Prison Realty with and into the Company, collectively,
are referred to herein as the "Merger").
 
     The following documents that the Company, Old CCA and Prison Realty have
previously filed with the Commission are hereby incorporated by reference into
the Prospectus:
 
THE COMPANY
 
     - The Company's Annual Report in Form 10-K for the fiscal year ended
       December 31, 1998, as filed with the Commission on March 30, 1999 (File
       no. 0-25245).
 
     - The Company's definitive Proxy Statement filed with the Commission on
       March 30, 1999 pursuant to Regulation 14A of the Exchange Act, in
       connection with the
 
                                        1
<PAGE>   7
 
       Company's Annual Meeting of Stockholders, to be held in May 1999 (File
       no. 0-25245).
 
     - The Company's Registration Statement on Form S-3, filed with the
       Commission on January 11, 1999, as supplemented from time to time by the
       Company (Reg. no. 333-70419).
 
     - The Company's Current Report on Form 8-K, filed with the Commission on
       January 6, 1999 (File no. 0-25245).
 
     - The Company's Prospectus filed with the Commission on October 30, 1998
       pursuant to Rule 424(b)(4) promulgated under the Securities Act of 1933,
       as amended (the "Securities Act"), as supplemented on November 20, 1998,
       included in its Registration Statement on Form S-4, filed with the
       Commission on September 30, 1998, as subsequently amended.
 
OLD CCA
 
     - Old CCA's Quarterly Reports on Form 10-Q/A for the period ended March 31,
       1998, as filed with the Commission on May 15, 1998 and amended on June 5,
       1998 and September 28, 1998; for the period ended June 30, 1998, as filed
       with the Commission on August 14, 1998 and amended on September 28, 1998;
       and Form 10-Q for the period ended September 30, 1998, as filed with the
       Commission on November 16, 1998 (File no. 1-13560).
 
PRISON REALTY
 
     - Prison Realty's Annual Report on Form 10-K for the fiscal year ended
       December 31, 1998, as filed with the Commission on March 30, 1999 (File
       no. 1-13049).
 
     - Prison Realty's Quarterly Reports on Form 10-Q for the period ended March
       31, 1998, as filed with the Commission on May 15, 1998; for the period
       ended June 30, 1998, as filed with the Commission on August 14, 1998; and
       for the period ended September 30, 1998, as filed with the Commission on
       November 17, 1998 (File no. 1-13049).
 
     All other documents and reports filed with the Commission by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date
of this Prospectus and prior to the termination of this offering shall be deemed
to be incorporated by reference herein and shall be deemed to be a part hereof
from the date of the filing of such reports and documents (provided, however,
that the information referred to in Item 402(a)(8) of Regulation S-K of the
Commission shall not be deemed specifically incorporated by reference herein).
 
                                        2
<PAGE>   8
 
     The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, on written or
oral request of such person, a copy of any or all documents which are
incorporated herein by reference (not including the exhibits to such documents,
unless such exhibits are specifically incorporated by reference in the
applicable document). Requests should be directed to the following:
 
                           Prison Realty Corporation
                      10 Burton Hills Boulevard, Suite 100
                           Nashville, Tennessee 37215
                           Telephone: (615) 263-0200
                             Attn: Vida H. Carroll
 
                        CAUTIONARY STATEMENT CONCERNING
                          FORWARD-LOOKING INFORMATION
 
     This Prospectus contains or incorporates by reference certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act which are intended to be covered by the
"safe harbors" created thereby. Those statements include, but may not be limited
to, the discussions of the Company's expectations concerning its future
profitability, operating performance, growth strategy and its assumptions
regarding other matters. Also, when any of the words "believes," "expects,"
"anticipates," "intends," "estimates," "plans," or similar terms or expressions
are used in this Prospectus, forward-looking statements are being made.
 
     You should be aware that, while the Company believes that the expectations
reflected in such forward-looking statements are reasonable, they are inherently
subject to risks and uncertainties which could cause the Company's future
results and stockholder values to differ materially from the Company's
expectations. These factors are disclosed under "Risk Factors" in this
Prospectus and in other documents incorporated by reference in this document.
Because of these factors, there can be no assurance that the forward-looking
statements included or incorporated by reference in this Prospectus and any
applicable supplement to the Prospectus (a "Prospectus Supplement") will prove
to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included or incorporated by reference herein, you
should not regard the inclusion of such information as a representation by the
Company or any other person that the objectives and plans of the Company will be
achieved. In addition, the Company does not intend to, and is not obligated to,
update these forward-looking statements after it distributes this Prospectus or
any applicable Prospectus Supplement, even if new information, future events or
other circumstances have made them incorrect or misleading as of any future
date.
 
                                        3
<PAGE>   9
 
                         INFORMATION ABOUT THE COMPANY
 
GENERAL
 
     The Company is the largest real estate investment trust, or REIT,
specializing in acquiring, developing and owning correctional and detention
facilities. As of April 30, 1999, the Company owned 50 correctional and
detention facilities, of which 11 new facilities were under construction, in 17
states, the District of Columbia and the United Kingdom, with a total design
capacity in excess of 49,000 beds. The Company's principal business strategy is
to design, build, finance and/or acquire and develop such facilities from and
for both government entities and private prison managers, to expand the design
capacity of its existing facilities, and to lease these facilities under
long-term "triple-net" leases. The Company intends to be taxed as a REIT under
the Internal Revenue Code of 1986, as amended (the "Code"), which requires that
substantially all of the Company's income be derived from rent payments from
leases of its correctional and detention facilities.
 
HISTORY AND OPERATIONS
 
     The Company is the successor to each of Old CCA and Prison Realty as the
result of the Merger. Corrections Corporation of America ("CCA" or "Operating
Company"), a privately-held Tennessee corporation formed in connection with the
Merger (formerly Correctional Management Services Corporation), leases a
substantial majority of the Company's correctional and detention facilities and
provides private prison management services to government entities not having
owned-bed capacity. The Company owns approximately 9.5% of the outstanding
capital stock of CCA, representing 9.5% of CCA's economic value. Additionally,
as a result of the Merger, the Company owns all of the non-voting common stock
of two privately-held service companies, Prison Management Services, Inc.
("Service Company A") and Juvenile and Jail Facility Management Services, Inc.
("Service Company B"), both Tennessee corporations (collectively, the "Service
Companies"), which provide private correctional management services to
government entities in government-owned facilities under the "Corrections
Corporation of America" name. The Service Companies are obligated to distribute
95% of their net income to the Company.
 
     The Company is the world's largest private owner of correctional and
detention facilities, and the prison management services provided under the
"Corrections Corporation of America" name comprise more than half of the
worldwide private prison management industry. As of April 30, 1999, the Company
leased approximately 32,000 beds under 39 operating leases. The Company is
currently developing approximately 17,000 beds through the construction of the
11 new facilities and the expansion of six currently operating facilities. The
Company currently leases 31 of its facilities to CCA and expects to lease 10 of
the 11 Company facilities currently under development to CCA. Three of the
Company's facilities are currently leased to other private operators, and five
of its facilities are leased directly to government entities. As of April 30,
1999, CCA, the Company's primary tenant, and the Service Companies operating
under the "Corrections Corporation of America" name met the correctional and
detention facility management needs of government entities under contracts for
81 correctional and detention facilities with a total design capacity of 71,851
beds, of which 67 facilities with a total design capacity of 50,005 beds are in
operation.
 
                                        4
<PAGE>   10
 
     The Company was incorporated as a Maryland corporation in September 1998
and is self-administered and self-managed. The Company's principal executive
offices are located at 10 Burton Hills Boulevard, Suite 100, Nashville,
Tennessee, and its telephone number is (615) 263-0200. For information or copies
of the documents incorporated by reference in this prospectus, please contact
the Company at this address.
 
     For unaudited pro forma combined financial information of the Company,
please refer to the Selected Unaudited Pro Forma Combined Financial Information
and the Unaudited Pro Forma Combined Financial Statements included elsewhere in
this Registration Statement. For historical financial information and management
discussion and analysis for the Company and Old CCA, and for historical
financial information for CCA, the Company's primary tenant, please refer to the
financial information contained in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 (File no. 0-25245), which is
incorporated herein by reference. For historical financial information and
management discussion and analysis for Prison Realty, please refer to the
financial information contained in Prison Realty's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 (File no. 1-13049), which is
incorporated herein by reference.
 
RECENT DEVELOPMENTS
 
SHELF REGISTRATION
 
     On January 11, 1999, the Company filed a Registration Statement on Form S-3
(Reg. no. 333-70419) with the Commission to register an aggregate of $1.5
billion in value of its Common Stock, preferred stock, Common Stock purchase
rights, debt securities and warrants for sale on a continuous or delayed basis.
As of May 3, 1999, the Company has sold 6,722,422 shares of Common Stock under
this Registration Statement on Form S-3, resulting in net proceeds of
approximately $120.4 million. These net proceeds, as well as the net proceeds
from future sales of securities under the Registration Statement on Form S-3,
will be used by the Company for general corporate purposes, including, among
others, repaying its obligations as they become due, redeeming its outstanding
indebtedness, financing, all or in part, future purchases of real estate
properties meeting its business objectives and strategies, capital expenditures
and working capital.
 
                                        5
<PAGE>   11
 
          SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
     On December 31, 1998, the Company merged with and into Old CCA, with the
Company as the surviving entity and on January 1, 1999, the Company merged with
Prison Realty, with the Company as the surviving entity. Additionally, on April
17, 1998, Prison Realty acquired all of the issued and outstanding capital stock
and derivative securities of U.S. Corrections Corporation ("USCC") for a cash
payment to USCC's shareholders of $157 million plus the assumption of certain
liabilities (the "USCC Merger").
 
     The Merger has been 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
has been treated as the acquiring company and Prison Realty has been treated as
the acquired company for financial reporting purposes. The general provisions of
the purchase method of accounting prescribe that: (i) Prison Realty's assets and
liabilities be recorded at fair market value, as required by Accounting
Principles Board Opinion No. 16; (ii) Old CCA's assets and liabilities be
carried forward at historical cost; (iii) Old CCA's historical financial
statements be presented as the continuing accounting entity's; and (iv) the
equity section of the balance sheet and earnings per share be retroactively
restated to reflect the effect of the exchange ratio established in the Merger
Agreement. The selected unaudited pro forma combined financial information has
been adjusted as necessary to reflect the above provisions. Accordingly, as of
January 1, 1999, the historical book basis of the assets, liabilities and
stockholders' equity of Old CCA has become the carrying value of the assets,
liabilities and stockholders' equity of the Company, and the assets and
liabilities of Prison Realty have been recorded on the books of the Company at
their estimated fair value.
 
     As stated above, the purchase method of accounting prescribes that the
assets and liabilities acquired from Prison Realty be adjusted to estimated fair
market value. Management does not anticipate that the preliminary allocation of
purchase costs based upon the estimated fair market value of the assets and
liabilities of Prison Realty will materially change; however, the allocation of
purchase costs is subject to final determination based upon estimates and other
evaluations of fair market value as of the close of the transactions. Therefore,
the allocations reflected in the following unaudited pro forma financial
information may differ from the amounts ultimately determined.
 
     The following selected unaudited pro forma combined financial information
is derived from and should be read in conjunction with the Unaudited Pro Forma
Combined Financial Statements included elsewhere in this Registration Statement.
The pro forma operating data for the year ended December 31, 1998 is presented
as if the Merger and the USCC Merger had occurred as of January 1, 1998 and
therefore incorporates certain assumptions that are included in the Notes to Pro
Forma Combined Statement of Operations. The pro forma balance sheet data is
presented as if the Merger had occurred on December 31, 1998 and therefore
incorporates certain assumptions that are included in the Notes to Pro Forma
Combined Balance Sheet. The pro forma information does not purport to represent
what the Company's financial position or results of operations actually would
have been had the Merger or the USCC Merger, in fact, occurred on such date or
at the beginning of the period indicated, or to project the Company's financial
positions or results of operations at any future date or for any future period.
 
     Please refer to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, as filed with the Commission on March 30, 1999 (File no.
0-25245),
 
                                        6
<PAGE>   12
 
which has been incorporated herein by reference, for selected financial
information of the Company. Please refer to Prison Realty's Annual Report on
Form 10-K for the year ended December 31, 1998, as filed with the Commission on
March 30, 1999 (File no. 1-13049), which has been incorporated herein by
reference, for selected financial information of Prison Realty.
 
                                        7
<PAGE>   13
 
                           PRISON REALTY CORPORATION
                                 (THE COMPANY)
 
               SELECTED PRO FORMA COMBINED FINANCIAL INFORMATION
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                               YEAR ENDED
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
<S>                                                           <C>
OPERATING DATA:
Revenues:
  Rental....................................................    $183,407
  Licensing Fees............................................       6,554
  Interest Income...........................................      28,626
                                                                --------
                                                                 218,587
                                                                --------
Expenses:
  General and administrative................................       3,500
  Depreciation and amortization.............................      33,849
                                                                --------
                                                                  37,349
                                                                --------
Operating income............................................     181,238
Equity in earnings of subsidiaries..........................     (26,285)
Interest expense............................................      19,150
                                                                --------
Net income..................................................     188,373
Dividends to Preferred Stockholders.........................       7,869
                                                                --------
Net income available for shares of Common Stock.............    $180,504
                                                                ========
Net income available per share of Common Stock:
  Basic.....................................................    $   1.94
                                                                ========
  Diluted...................................................    $   1.79
                                                                ========
Weighted average number of shares outstanding, basic........      93,198
                                                                ========
Weighted average number of shares outstanding, diluted......     101,042
                                                                ========
</TABLE>
 
<TABLE>
<CAPTION>
                                                                 AS OF
                                                              DECEMBER 31,
                                                                  1998
                                                              ------------
<S>                                                           <C>
BALANCE SHEET DATA:
Real estate, net of accumulated depreciation................   $1,851,360
Total assets................................................    2,276,341
Line of credit and current portion of long-term debt........      261,176
Long-term debt, net of current portion......................      318,257
Total liabilities, excluding deferred gain..................      955,174
Total stockholders' equity..................................    1,204,466
</TABLE>
 
                                        8
<PAGE>   14
 
                                  RISK FACTORS
 
     Ownership of Common Stock and, therefore, your exercise of options granted
under the Old CCA Option Plans, as herein defined, or your receipt of deferred
shares of Common Stock, involves various risks. In connection with your exercise
of options granted under the Old CCA Option Plans, as herein defined, or your
receipt of deferred shares of Common Stock, you should carefully consider the
following risk factors in addition to the other information contained in this
Prospectus and in other documents filed by the Company with the Commission which
are incorporated by reference in this Prospectus, including, but not limited to,
the more detailed information contained under the heading "Risk Factors"
included in the Company's Registration Statement on Form S-3, filed with the
Commission on January 11, 1999, as supplemented from time to time by the Company
(Reg. no. 333-70419), and in the Company's 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).
 
OWNERSHIP OF THE COMMON STOCK INVOLVES RISKS ASSOCIATED WITH OUTSIDE FINANCING
TO SUPPORT THE COMPANY'S GROWTH
 
     The Company's growth strategy includes acquiring, developing and expanding
correctional and detention facilities, as well as other properties meeting its
investment criteria. 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
acquisitions and improvements.
 
     There can be no assurance that the Company will continue to have access to
the debt markets to fund future growth at an acceptable cost. The incurrence of
additional indebtedness, and the potential issuance of additional debt
securities by the Company, may result in increased interest expense for the
Company and increase the Company's exposure to the risks associated with debt
financing. Currently, the Company has a $650.0 million credit facility (the
"Bank Credit Facility"), consisting of a $400.0 million revolving credit
facility and a $250.0 million credit facility, which bears interest at a
floating rate. The Bank Credit Facility contains restrictions upon the Company's
ability to incur additional debt and requires the Company to maintain certain
specified financial ratios and a minimum net worth. These provisions, and the
terms of any additional indebtedness incurred in the future, may restrict the
Company's ability to obtain additional debt capital or limit its ability to
engage in certain transactions. Moreover, any breach of these limitations could
result in the acceleration of the Company's outstanding indebtedness under the
Bank Credit Facility. The Company may not be able to refinance or repay this
indebtedness in full under such circumstances. In addition, the Board of
Directors of the Company has adopted a policy of limiting indebtedness to not
more than 50% of the Company's total capitalization, which could limit the
Company's ability to incur additional indebtedness to fund its continued growth.
 
     There can also be no assurance that the Company will have access to the
capital markets to fund future growth at an acceptable cost. To assist in the
financing of its future growth, the Company filed the Registration Statement on
Form S-3 (Reg. no. 333-70419) with the Commission on January 11, 1999. Pursuant
to this Registration Statement on Form S-3, the Company may sell or issue shares
of Common Stock, preferred stock or
 
                                        9
<PAGE>   15
 
other securities convertible into, or exchangeable for, Common Stock. The
Company's ability to fund its future growth through the sale of equity
securities may be impaired, however, if the Company is unable to issue
additional equity securities at a price acceptable to the Company. The market
price of the Company's equity securities may be adversely affected by various
factors, including the Company's results of operations, general economic
conditions and changes in market interest rates resulting in changes in yields
of other financial instruments. Additionally, the sale and issuance of any
shares of Common Stock under the Company's Registration Statement on Form S-3,
or the issuance of any shares of Common Stock upon the conversion of any
securities sold under the Registration Statement on Form S-3, will have the
effect of diluting the ownership interest of the stockholders of the Company,
possibly adversely affecting the market price of the Common Stock.
 
THE COMPANY PRIMARILY DEPENDS UPON CCA, ITS PRIMARY TENANT, FOR ITS REVENUES AND
ABILITY TO MAKE DISTRIBUTIONS TO ITS STOCKHOLDERS
 
     CCA is the lessee of a substantial majority of the Company's facilities.
Therefore, the Company's revenues depend upon CCA's ability to make the rental
payments required under the leases for such facilities (the "Leases"). If CCA
fails to make its required rental payments, the Company could terminate all of
the Leases. If this were to happen, or if CCA did not elect to renew the Leases
upon the expiration of their current terms, the Company would be required to
find other suitable lessees. In either circumstance, the amounts to be received
by CCA under the Leases would be reduced, which would in turn reduce amounts
available for distribution to the Company's stockholders and would jeopardize
the Company's ability to maintain its REIT status.
 
EXISTING CONFLICTS OF INTEREST MAY HAVE AN EFFECT ON THE COMPANY
 
     Some directors, officers and stockholders of the Company have relationships
with the Company, CCA and the Service Companies which may create a conflict of
interest with respect to business decisions affecting the Company. Some
directors, officers and stockholders of the Company also have ownership
interests in CCA which may create a conflict of interest with respect to
business decisions affecting the Company. In addition, the significant
contractual and other ongoing relationships between the Company, CCA and the
Service Companies may present conflicts of interest. These conflicts impose a
risk that some directors, officers and stockholders of the Company will favor
their own interests over the interests of the Company in connection with the
operations of the Company and CCA and their ongoing relationship. The Company
has adopted policies and procedures to address these conflicts of interest.
 
OWNERSHIP OF THE COMMON STOCK INVOLVES RISKS ASSOCIATED WITH THE CORRECTIONS AND
DETENTION INDUSTRY
 
     The Company owns correctional and detention facilities as well as interests
in CCA and the Service Companies, companies whose sole business is the operation
and management of these types of facilities. Its revenues and, therefore, its
ability to make distributions to its stockholders are dependent on the ability
of its tenants to make rental payments and upon the ability of CCA and the
Service Companies to make certain payments to the Company. Accordingly, the
Company, and its stockholders, are subject to certain operating risks inherent
in the corrections and detention industry. Private prison managers typically
enter into facility management contracts with government entities for
 
                                       10
<PAGE>   16
 
terms of up to five years, with one or more renewal options that may be
exercised only by the contracting government agency. Accordingly, a private
prison manager's contract with a government entity to operate a Company facility
may be terminated, or otherwise not renewed. A private prison manager's cash
flow is subject to the receipt of sufficient funding of and timely payment by
contracting government entities. If a government entity does not receive
sufficient appropriations to cover its contractual obligations, a contract may
be terminated or the management fee may be deferred or reduced. Private prison
managers are dependent on government agencies to supply their facilities with a
sufficient number of inmates to meet the facility's design capacity. A private
prison manager may not be able to obtain contracts sufficient to fully occupy
its facilities. The private corrections industry is subject to public scrutiny.
Negative publicity about an escape, riot or other disturbance at a privately
managed facility may result in publicity adverse to the Company and the private
corrections industry in general. Organized labor unions in many states have
increasingly opposed the awarding of contracts to private prison managers. In
addition, several states have enacted, or are considering, legislation imposing
restrictions upon private prison managers. Any of these occurrences could
adversely affect the ability of private prison managers which operate facilities
owned by the Company, including CCA, to make rental payments to the Company.
 
     Furthermore, the Company's ownership of correctional and detention
facilities and its ownership interest in companies which operate and manage such
facilities could expose it to potential third party claims or litigation by
prisoners or other persons, which, if resolved in a manner adverse to the
Company, could adversely affect the financial position of the Company.
 
OWNERSHIP OF THE COMMON STOCK INVOLVES RISKS INHERENT IN INVESTMENT IN REAL
ESTATE PROPERTIES
 
     Investments in correctional and detention facilities and any additional
properties in which the Company may invest in the future are subject to risks
typically associated with investments in real estate. Such risks include the
possibility that correctional and detention facilities, and any additional
investment properties, will generate total rental revenues lower than those
anticipated or will yield returns lower than those available through investment
in comparable real estate or other investments. Furthermore, equity investments
in real estate are relatively illiquid and, therefore, the ability of the
Company to vary its portfolio promptly in response to changed conditions will be
limited. Moreover, eight of the facilities currently owned or under development
by the Company are or will be subject to an option to purchase by certain
government agencies. If any of these options are exercised, there exists the
risk that the Company will not recoup its full investment from the applicable
facility or that it will be otherwise unable to invest the proceeds from the
sale of the facility in one or more properties that yield as much revenue as the
property acquired by the government entity. In addition, ownership of three of
the Company's facilities currently owned or under development by the Company
will, upon the expiration of a specified time period, revert to the respective
government agency contracting with the Company or with CCA.
 
     Investments in correctional and detention facilities subject the Company to
risks involving potential exposure to environmental liability and uninsured
loss. The operating costs of the Company may be adversely affected by the
obligation to pay for the cost of complying with existing environmental laws,
ordinances and regulations, as well as the cost of complying with future
legislation. Additionally, although the Leases require CCA to
 
                                       11
<PAGE>   17
 
maintain insurance with respect to each of the Company's facilities leased to
CCA, there are certain types of losses, such as losses from earthquakes, which
may be either uninsurable or for which it may not be economically feasible to
obtain insurance coverage, in light of the substantial costs associated with
such insurance. Should an uninsured loss occur, the Company could lose both its
capital invested in, and anticipated profits from, one or more of the facilities
owned by the Company.
 
THE COMPANY'S FAILURE TO QUALIFY AS A REIT COULD ADVERSELY AFFECT STOCKHOLDERS
OF THE COMPANY
 
     The Company will elect to be taxed as a REIT for federal income tax
purposes beginning with its taxable year ending December 31, 1999. No assurance
can be made that the Company will qualify, or continue to qualify, as a REIT.
Qualification as a REIT involves the application of highly technical and complex
provisions of the Code for which there are only limited judicial or
administrative interpretations, as well as various factual matters and
circumstances not entirely within the Company's control. Application of these
provisions to the Company is even more difficult because of certain aspects of
the Company's organizational structure, including its relationships with CCA and
the Service Companies.
 
     If the Company fails to qualify as a REIT, it will be subject to federal
income tax, including any applicable alternative minimum tax, on its taxable
income at corporate rates. In addition, unless entitled to relief under certain
statutory provisions, the Company also would be disqualified from re-electing
REIT status for the four taxable years following the year during which
qualification is lost. Failure to qualify as a REIT would reduce the net
earnings of the Company available for distribution to its stockholders because
of the additional tax liability to the Company for the year or years involved.
To the extent that distributions to its stockholders would have been made in
reliance upon the Company's qualifying as a REIT, the Company might be required
to borrow funds or to liquidate certain of its investments to pay the applicable
tax. The failure to qualify as a REIT would also constitute a default under the
Company's current, and potentially its future, debt obligations.
 
                                   THE PLANS
 
GENERAL
 
     This Prospectus relates to an aggregate of 1,713,994 shares of Common Stock
issuable upon the exercise of all outstanding options or the vesting of all
deferred shares granted to former directors, officers and employees of Old CCA,
other than Doctor R. Crants, at various times prior to the Merger pursuant to
certain stock option and stock bonus plans and an option agreement (all as
described in more detail herein) assumed by the Company in the Merger.
Immediately prior to the Merger, all option holders and the deferred share
holders were either current or past employees of Old CCA or current or past
members of the Board of Directors of Old CCA. In connection with the Merger,
each director of Old CCA at the time of the Merger, as well as William F.
Andrews, a member of the Board of Directors of Old CCA until May 1998, became a
director of either CCA or one of the Service Companies, and each employee of Old
CCA at the time of the Merger became an employee of either CCA or one of the
Service Companies. With the exception of Doctor R. Crants, who currently serves
as Chairman of the Board of Directors
 
                                       12
<PAGE>   18
 
and Chief Executive Officer of the Company, and Jean-Pierre Cuny, who currently
serves as a director of the Company, no director, officer or employee of Old CCA
became, or currently is, a director, officer or employee of the Company as the
result of the Merger.
 
OLD CCA OPTIONS
 
     The shares of Common Stock issuable pursuant to the exercise of options
assumed by the Company in the Merger that were outstanding as of December 31,
1998 and that were previously granted to officers, directors and employees of
Old CCA were granted under the (i) Corrections Corporation of America 1985 Stock
Option Plan (the "Old CCA 1985 Stock Option Plan"); (ii) Corrections Corporation
of America 1991 Flexible Stock Option Plan (the "Old CCA 1991 Flexible Option
Plan"); (iii) Corrections Corporation of America Non-Employee Directors' Stock
Option Plan (the "Old CCA Directors' Plan"); and (iv) Corrections Corporation of
America 1995 Employee Stock Incentive Plan (the "Old CCA 1995 Incentive Plan")
(collectively, the "Old CCA Option Plans") and under an option agreement with
Joseph F. Johnson, Jr., a director of Old CCA, outside of any Old CCA Option
Plan (the "Johnson Option Agreement") (the options granted under the Old CCA
Option Plans, together with the options granted under the Johnson Option
Agreement, are known herein, collectively, as the "Old CCA Options"). The Old
CCA Options were converted from the right to purchase shares of Old CCA Common
Stock into the right to purchase shares of Common Stock according to the
exchange ratio (the "Conversion") set forth in the Merger Agreement. The
exercise price of each Option was adjusted to reflect the Conversion. The terms
of the options are the same as before the Merger, except that, upon their
exercise, a recipient shall receive shares of Common Stock rather than shares of
Old CCA Common Stock.
 
     Options granted to Doctor R. Crants in his capacity as an officer and
director of Old CCA, which were converted into options to purchase Common Stock,
have been registered pursuant to a Registration Statement on Form S-8 (Reg. no.
333-70625), filed by the Company with the Commission on January 15, 1999 (the
"Registration Statement on Form S-8").
 
OLD CCA DEFERRED SHARES
 
     The shares of Common Stock issuable pursuant to the award of deferred
shares of Old CCA Common Stock to Darrell K. Massengale and David L. Myers (the
"Deferred Shares") were issued under the Amended and Restated Corrections
Corporation of America 1989 Stock Bonus Plan (the "Old CCA Deferred Share Plan")
(the Old CCA Option Plans, together with the Old CCA Deferred Share Plan, are
known, collectively, as the "Plans"). In connection with the Merger, the right
to receive Deferred Shares of Old CCA Common Stock was converted into the right
to receive Deferred Shares of Common Stock. The Deferred Shares were converted
according to the exchange ratio set forth in the Merger Agreement, and the terms
of the Deferred Shares are the same as before the Merger, except that upon the
issuance of the Deferred Shares, the recipient will receive shares of Common
Stock rather than shares of Old CCA Common Stock.
 
     Deferred Shares granted to Doctor R. Crants as an employee of the Company
which were converted into Deferred Shares of Common Stock have been registered
with the Commission pursuant to the Company's Registration Statement on Form
S-8.
 
                                       13
<PAGE>   19
 
PRISON REALTY OPTION AND SHARE COMPENSATION PLANS
 
     In addition to the assumption of the Old CCA Options and the Deferred
Shares in the Merger, the Company also assumed certain outstanding obligations
of Prison Realty as of January 1, 1999 to issue its common shares, $0.01 par
value per share ("Prison Realty Common Shares"), to employees and trustees of
Prison Realty upon the exercise of options granted under the (i) CCA Prison
Realty Trust Employee Share Incentive Plan and (ii) CCA Prison Realty Trust
Non-Employee Trustees' Share Option Plan, as amended, (collectively, the "Prison
Realty Option Plans"). Pursuant to the terms of the Merger Agreement, Prison
Realty Common Shares to be issued under the Prison Realty Option Plans were
converted into the right to receive the same number of shares of Common Stock
under the same terms as before the Merger, except that upon exercise of the
Prison Realty options, a recipient shall receive shares of Common Stock rather
than Prison Realty Common Shares. All trustees, officers and employees of Prison
Realty at the time of the Merger currently serve as directors, officers or
employees of the Company, and the shares of Common Stock to be issued to these
individuals as a result of the Company's assumption of the Prison Realty Option
Plans have been registered with the Commission pursuant to the Company's
Registration Statement on Form S-8.
 
     The Company has adopted the Prison Realty Option Plans and has made and
presently intends to continue to make grants and/or issuances to its directors,
officers and employees under such plans. In connection therewith, the Company
has previously registered with the Commission shares of Common Stock available
for issuance under the Prison Realty Option Plans, as adopted by the Company,
pursuant to the Company's Registration Statement on Form S-8.
 
DESCRIPTION OF COMMON STOCK
 
     For a complete description of the Common Stock to be issued pursuant to the
exercise of the Old CCA Options and the award of the Deferred Shares, please
refer to the discussion under the heading "New Prison Realty Capital Stock"
included in the Company's Prospectus filed with the Commission on October 31,
1998 pursuant to Rule 424(b)(4) under the Securities Act, as supplemented on
November 20, 1998, included in its Registration Statement on Form S-4 filed with
the Commission on September 30, 1998, as subsequently amended (Reg. no.
333-65017), and under the heading "Description of Capital Stock -- Common Stock"
included in the Company's Registration Statement on Form S-3 (Reg. no.
333-70419), filed with the Commission on January 11, 1999.
 
     A maximum of 1,713,994 shares of Common Stock is available for issuance
under the Plans. Generally, no individual may own more than 9.8% of the
outstanding shares of Common Stock at any time. For a more detailed discussion
of the restrictions on ownership of the Common Stock, please refer to the
heading "Description of Capital Stock -- Restrictions on Ownership of Capital
Stock" included in the Company's Registration Statement on Form S-3 (Reg. no.
333-70419), filed with the Commission on January 11, 1999.
 
                                       14
<PAGE>   20
 
                              SUMMARY OF THE PLANS
 
     No additional awards will be made under any of the Plans. However, the
Company assumed the outstanding obligations of Old CCA under each of the Plans
in connection with the Merger and will continue their existence until all
outstanding options are either exercised in full or until the terms of such
options expire. The following summary describes the Plans, their administration,
characteristics of the awards made under each Plan and certain other relevant
provisions of each Plan.
 
OLD CCA 1985 STOCK OPTION PLAN
 
PURPOSE
 
     The Old CCA 1985 Stock Option Plan was designed to serve as an incentive
to, and to encourage stock ownership by, selected employees and directors of Old
CCA and its subsidiaries. The plan was designed to attract and retain highly
motivated executives and employees by enabling such persons to acquire a
proprietary interest in, or to increase their existing proprietary interest in,
Old CCA.
 
ADMINISTRATION
 
     The Old CCA 1985 Stock Option Plan provides that the plan must be
administered by a committee appointed by the Board of Directors of the Company,
consisting of not less than three members who are not, and have not at any time
within the preceding period of one year, been eligible to receive a stock option
grant pursuant to the plan or any other grant of stock, stock options or stock
appreciation rights under any other plan of Old CCA or its affiliates. The plan
is currently being administered by the Compensation Committee of the Board of
Directors of the Company (the "Compensation Committee"). The current members of
the Compensation Committee are Joseph V. Russell, C. Ray Bell, Jackson W. Moore
and Rusty L. Moore. Subject to the terms and conditions of the plan, the
Compensation Committee is authorized to interpret and construe any provision of
the plan and any provision of any option granted pursuant to the terms of the
plan. The plan provides that no member of the Compensation Committee will be
liable for any action or determination made in good faith with respect to the
plan or any option granted under it. Additionally, the plan provides that the
members of the Compensation Committee shall be indemnified by the Company
against the reasonable expenses incurred in connection with any action taken or
failure to act in connection with the plan or any option granted under the plan,
unless such Compensation Committee member is liable for negligence or misconduct
in the performance of his duties.
 
SHARES AVAILABLE; RESTRICTIONS ON TRANSFER OF AWARDS; LIMITATIONS ON RESALE OF
COMMON STOCK UPON EXERCISE
 
     The Company has assumed the obligation to issue 1,610 shares of Common
Stock under the Old CCA 1985 Stock Option Plan. No further option grants will be
made under the plan. The Common Stock to be delivered under the plan pursuant to
the exercise of an option shall be issued directly from the authorized, but
unissued, Common Stock which is held in reserve for such issuance by the
Company.
 
     The Compensation Committee is authorized by the terms of the Old CCA 1985
Stock Option Plan to make appropriate adjustments in the number of shares
covered by each option granted under the plan in the event that a dividend or
other distribution,
 
                                       15
<PAGE>   21
 
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, split-up, combination, repurchase, share exchange or
other similar corporate transaction or change in the capital structure of the
Company affects the Common Stock such that an adjustment is appropriate. A
dissolution or liquidation of the Company shall cause all options granted under
the plan to terminate as to any portion thereof not exercised as of the
effective date of such dissolution or liquidation.
 
     Options granted pursuant to the plan are generally non-transferable and may
be transferred only by will or the laws of descent and distribution applicable
to the participant, and such options are exercisable during a participant's
lifetime only by the participant; provided, however, that these restrictions on
transfer may have been modified or removed by the terms and provisions of the
stock option agreement entered into by the participant and Old CCA pursuant to
the grant of an option under the plan. Because options granted under the plan
are generally non-transferable, no liens may be created against a participant's
interest in the plan, as the options may not be assigned as a security interest.
 
     The plan does not impose any restriction on the resale of the Common Stock
acquired pursuant to the exercise of an option granted under the plan. However,
any "affiliate" of the Company (defined in Rule 405 under the Securities Act to
include persons who directly or indirectly, through one or more intermediaries,
control, or are controlled by, or are under common control with, the Company)
may not use this Prospectus to offer and sell shares of Common Stock they
acquire under the plan. They may, however, sell such shares:
 
          (1) pursuant to an effective registration statement under the
     Securities Act;
 
          (2) in compliance with Rule 144 under the Securities Act; or
 
          (3) in a transaction otherwise exempt from the registration
     requirements of the Securities Act.
 
     Each participant who is the beneficial owner of at least 10% of the
outstanding shares of the Common Stock and each participant who is a director or
a policy-making officer of the Company is subject to Section 16(b) of the
Exchange Act, which requires such persons to disgorge to the Company any
"profits" resulting from a sale and purchase (or purchase and sale) of shares of
the Common Stock within a six month period. For such participants, sales of
certain shares of Common Stock occurring within six months of the exercise of
options under the plan may result in Section 16(b) liability, unless one or both
of those transactions are exempt. However, even if a transaction is exempt under
Section 16(b), the general prohibition of federal and state securities laws on
trading securities while in possession of material non-public information
concerning the issuer continues to apply.
 
TERM; AMENDMENT
 
     The Old CCA 1985 Stock Option Plan provided for the grant of options from
time to time within a period of ten years from the date the plan was adopted. No
additional options will be granted under the plan. Any options which were
granted under the plan and which have not otherwise expired by their terms may
still be exercised by the holders thereof.
 
     Although the Board of Directors of the Company has authority under the Old
CCA 1985 Stock Option Plan to amend or revise the plan, it does not have
authority under the
 
                                       16
<PAGE>   22
 
plan to revoke or alter the terms of any option previously granted in accordance
with the terms of the plan. Additionally, the Board of Directors of the Company
may not remove the administration of the plan from the Compensation Committee or
decrease the price at which options previously granted may be exercised for
shares of Common Stock without the approval of the stockholders of the Company.
 
ELIGIBILITY
 
     The Old CCA 1985 Stock Option Plan provided that "key employees" (as
hereinafter defined) of Old CCA and directors of Old CCA who were not employees
of Old CCA, or its subsidiaries, and who did not serve on the Executive
Committee of the Board of Directors of Old CCA, were eligible to receive options
under the plan. The term "key employees" was defined in the plan to include
employees who were officers of Old CCA who did not serve on the Executive
Committee of the Board of Directors of Old CCA, department managers, facility
administrators and certain other persons designated by Old CCA. No member of the
committee of the Board of Directors of Old CCA which administered the plan prior
to the Merger was eligible to receive an option under the plan.
 
AWARDS OF STOCK OPTIONS UNDER THE PLAN
 
     The Old CCA 1985 Stock Option Plan authorized the grant of stock options,
including both incentive stock options ("ISOs") potentially resulting in
favorable tax treatment to the participant and non-qualified stock options
(i.e., options not qualifying as ISOs). The terms of any ISO granted under the
plan were intended to comply in all respects with the provisions of Code Section
422. Pursuant to the plan, the aggregate fair market value (determined at the
time an ISO was granted) of the CCA Common Stock with respect to which ISOs were
exercisable for the first time by any one participant during any calendar year
could not exceed $100,000. For purposes of this limitation, all of the
then-existing option plans of CCA and its subsidiaries were taken into account.
The plan also provided that no term of the plan relating to ISOs could be
interpreted, amended or altered, nor could any discretion or authority granted
under the plan be exercised, so as to disqualify either the plan or any ISO
under Code Section 422, unless first approved by the stockholders of the
Company.
 
PURCHASE OF AND PAYMENT FOR SHARES
 
     Generally, options were granted under the Old CCA 1985 Stock Option Plan to
eligible participants for no monetary consideration. However, participants in
the plan have been, and currently are, required to make payment for any shares
of stock which are purchased pursuant to the exercise of an option granted under
the plan. The payment for such shares shall be made in cash or, in the sole
discretion of the Compensation Committee, in shares of Common Stock. The price
to be paid for shares of Common Stock pursuant to the exercise of an option is
determined by the Compensation Committee, but the plan provides that such
exercise price may not be less than 100% of the fair market value of the
underlying Old CCA Common Stock, as adjusted to reflect the Merger, on the date
of the grant of the option, determined by reference to the closing price of such
shares on the date of the grant on the national securities exchange on which
such shares were then traded.
 
                                       17
<PAGE>   23
 
OTHER MATERIAL PROVISIONS
 
     The granting of an option pursuant to the terms of the plan does not
obligate the plan participant to exercise such option. Because a participant is
not bound to exercise an option, there is no provision in the plan regarding a
participant's withdrawal. However, upon the occurrence of certain events (e.g.
the expiration of the option's term, the termination of a participant's
employment with either Operating Company or one of the Service Companies, as the
case may be) the unexercised portion of any option may be terminated.
 
TAX EFFECTS OF PLAN PARTICIPATION
 
     The Old CCA 1985 Stock Option Plan is not qualified under Section 401(a) of
the Code. In the Merger, all ISOs granted under the plan became non-qualified
stock options. The following is a summary of the general tax treatment of plan
participants and the Company in connection with the options granted pursuant to
the plan.
 
     Regardless of whether the options granted under the plan were originally
ISOs or non-qualified stock options, plan participants generally did not
recognize income upon the grant of stock options under the plan and generally
will not recognize income at any other time prior to the exercise of the
options. Upon exercise, a participant will recognize compensation taxable as
ordinary income in an amount equal to the excess of the fair market value of the
Common Stock on the date the option is exercised over the sum of the exercise
price of the Common Stock plus the amount, if any, paid by such participant for
the option. The Company will then be entitled to a deduction in an amount equal
to the amount of compensation recognized by the participant. A subsequent
disposition of the Common Stock acquired upon exercise of an option and held as
a capital asset will result in a capital gain or loss measured by the difference
between the fair market value of the shares on the date the option was exercised
and the amount realized on later disposition. Such gain or loss will generally
be a long-term gain or loss if the stock is held for a period of one year or
more after the date of exercise.
 
     The preceding summary should not be construed as legal, tax or investment
advice. Each participant in the plan should consult his or her own counsel,
accountant or business or tax advisor as to the legal, tax and related
consequences of either the exercise of an option granted pursuant to the plan or
the transfer of Common Stock acquired as a result of the exercise of an option.
 
OLD CCA DEFERRED SHARE PLAN
 
PURPOSE
 
     The purpose of the Old CCA Deferred Share Plan was to advance the interests
of Old CCA by providing it with a method of compensating and rewarding key
employees and by providing an opportunity to selected key employees of Old CCA,
or its subsidiaries, to acquire shares of Old CCA Common Stock. The plan was
intended to incentivize key employees, aid Old CCA in retaining the services of
key employees and attract new management personnel.
 
                                       18
<PAGE>   24
 
ADMINISTRATION
 
     The Old CCA Deferred Share Plan was administered by the President of Old
CCA, who was empowered to, subject to the express provisions of the plan, (i)
issue Deferred Shares under the plan, (ii) set terms and conditions of
forfeiture for Deferred Shares and/or awards of Deferred Shares, (iii) restrict
transfers of the Deferred Shares, (iv) fix the time or times at which Deferred
Shares were to be issued, and (iv) establish contingencies to the vesting of
forfeitable Deferred Shares, including, without limitation, performance goals.
After completion of the Merger, the Compensation Committee assumed
administration of the plan. Although the Compensation Committee will not make
additional awards under the plan, the Compensation Committee will establish such
rules and regulations deemed necessary and advisable for the proper
administration of the plan.
 
SHARES AVAILABLE; RESTRICTIONS ON TRANSFER OF AWARDS; LIMITATIONS ON RESALE OF
COMMON STOCK UPON EXERCISE
 
     The Company has assumed the obligation to issue 154,897 shares of Common
Stock to former employees of Old CCA other than Doctor R. Crants under the Old
CCA Deferred Share Plan. No further grants of Deferred Shares will be made under
the plan. The Common Stock to be issued by the Company in satisfaction of its
outstanding obligations under the plan shall be issued directly from the
authorized, but unissued, Common Stock which is held in reserve for such
issuance by the Company.
 
     Prior to the Merger, the transferability of the Deferred Shares may have
been restricted by Old CCA's President, as administrator of the Old CCA Deferred
Share Plan, in such manner and upon such terms deemed necessary or desirable.
The Compensation Committee, as the current administrator of the Old CCA Deferred
Share Plan, may restrict the transferability of the Deferred Shares, in such
manner and upon such terms as the Compensation Committee deems necessary or
desirable.
 
     The Old CCA Deferred Share Plan does not impose any restrictions on the
resale of the Common Stock issued to plan participants upon the vesting of
Deferred Shares under the plan. However, any "affiliate" of the Company (defined
in Rule 405 under the Securities Act to include persons who directly or
indirectly, through one or more intermediaries, control, or are controlled by,
or are under common control with, the Company) may not use this Prospectus to
offer and sell shares of Common Stock they acquire under the plan. They may,
however, sell such shares:
 
          (1) pursuant to an effective registration statement under the
     Securities Act;
 
          (2) in compliance with Rule 144 under the Securities Act; or
 
          (3) in a transaction otherwise exempt from the registration
     requirements of the Securities Act.
 
     Each participant who is the beneficial owner of at least 10% of the
outstanding shares of the Common Stock and each participant who is a director or
a policy-making officer of the Company is subject to Section 16(b) of the
Exchange Act, which requires such persons to disgorge to the Company any
"profits" resulting from a sale and purchase (or purchase and sale) of shares of
the Common Stock within a six month period. For such participants, sales of
shares of Common Stock occurring within six months of the vesting of Deferred
Shares under the plan may result in such Section 16(b) liability, unless one or
both of those transactions are exempt. However, even if a transaction is exempt
under
 
                                       19
<PAGE>   25
 
Section 16(b), the general prohibition of federal and state securities laws on
trading securities while in possession of material non-public information
concerning the issuer continues to apply.
 
TERM; AMENDMENT
 
     Although the terms of the Old CCA Deferred Share Plan provide that
additional Deferred Shares may be awarded under the plan until June 8, 1999, no
further awards of Deferred Shares will be made by the Company pursuant to the
plan. However, the Company is obligated to issue Common Stock upon the vesting
of currently outstanding Deferred Shares previously awarded under the plan.
 
     Pursuant to the terms of the Old CCA Deferred Share Plan, the Board of
Directors of Old CCA could have, and the Board of Directors of the Company may,
at any time, terminate the plan or make such changes in or additions to the plan
as deemed advisable, unless such termination or amendment would adversely affect
or impair any executory agreements evidencing the grant of Deferred Shares.
 
ELIGIBILITY; AWARD CRITERIA
 
     Key employees of Old CCA (including all officers of Old CCA, with the
exception of Old CCA's President) and members of the Board of Directors of Old
CCA who were also employees of Old CCA were eligible to receive Deferred Shares
under the Old CCA Deferred Share Plan. The key employees to whom Deferred Shares
were awarded under the plan were determined by Old CCA's President in his sole
and absolute discretion, as administrator of the plan. Pursuant to the terms of
the plan, such determination could take into account the nature of the services
rendered to Old CCA by a key employee, contributions to the success of Old CCA
made by a participant and other relevant factors.
 
AWARDS OF DEFERRED SHARES UNDER THE PLAN
 
     Pursuant to the terms of the Old CCA Deferred Share Plan, the award of
Deferred Shares under the plan entitled the recipient of such award to receive,
without monetary consideration, a certain amount of Old CCA Common Stock if, and
only if, the recipient remained employed by Old CCA throughout a defined vesting
period. Upon the Company's assumption of Old CCA's obligations under the plan in
connection with the Merger, the Company became obligated to issue Common Stock
upon completion of these vesting periods.
 
TAX EFFECTS OF PARTICIPATION IN THE PLAN
 
     The Old CCA Deferred Share Plan is not qualified under Section 401(a) of
the Code. The following is a summary of the general tax treatment of plan
participants and the Company in connection with the Deferred Shares granted
pursuant to the plan.
 
     Generally, the Deferred Shares will become taxable to a recipient of
Deferred Shares in the taxable year of the recipient in which the Deferred
Shares are received, unless the Deferred Shares are substantially nonvested. The
Deferred Shares will be considered substantially nonvested if they are subject
to a substantial risk of forfeiture and are nontransferable. If Deferred Shares
are substantially nonvested when granted, the Deferred Shares will be subject to
federal income tax in the taxable year of the recipient in which
 
                                       20
<PAGE>   26
 
they become substantially vested. The fair market value of the Deferred Shares
at the time such Deferred Shares become substantially vested (or on the date on
which such Deferred Shares are granted, if they are substantially vested at such
time) will be considered compensation which is taxable as ordinary income to the
participant. The Deferred Shares are considered substantially vested when they
are either transferable or no longer subject to a substantial risk of
forfeiture. A substantial risk of forfeiture exists where rights to the Deferred
Shares are conditioned, directly or indirectly, upon the future performance of
substantial services by the participant, or are contingent on the satisfaction
of a condition related to a purpose for which the Deferred Shares were granted.
The Deferred Shares are not considered subject to a substantial risk of
forfeiture to the extent that the Company is required to pay the fair market
value of a portion of the Deferred Shares to the participant upon return of the
Deferred Shares. The rights of the participant with respect to the Deferred
Shares are considered transferable if the participant can transfer his interest
in such Deferred Shares to any person other than the Company, and the rights of
such transferee in the Deferred Shares are not themselves subject to a
substantial risk of forfeiture. (The Deferred Shares are not considered
transferable merely because the participant may designate a beneficiary to
receive the Deferred Shares in the event of his death). The Company will receive
a deduction equal to the amount includable in the participant's income, but only
if the Company deducts and withholds upon such amount. Such deduction is allowed
for the fiscal year of the Company which includes the end of the participant's
taxable year with respect to which the participant must report taxable income
related to the receipt of the Deferred Shares.
 
     A participant may have elected to include the fair market value of Deferred
Shares (as of the date on which he received such Deferred Shares) in his income
in the year in which the Deferred Shares were received by him, even if the
Deferred Shares were substantially nonvested. If this election was made by a
participant, the value of the Deferred Shares was considered compensation
taxable as ordinary income to the participant as of the time of receipt, even
though the Deferred Shares were subject to vesting conditions.
 
     The preceding summary should not be construed as legal, tax or investment
advice. Each participant in the plan should consult his or her own counsel,
accountant or business or tax advisor as to the legal, tax and related
consequences of the grant of Deferred Shares pursuant to the plan.
 
OLD CCA 1991 FLEXIBLE STOCK OPTION PLAN
 
PURPOSE
 
     The Old CCA 1991 Flexible Option Plan was intended to serve as an incentive
to, and to encourage stock ownership by, selected employees and directors of Old
CCA and its subsidiaries, so that they could acquire a proprietary interest, or
increase their existing proprietary interest, in Old CCA and share in its
success.
 
ADMINISTRATION
 
     The Old CCA 1991 Flexible Option Plan is currently being administered by
the Compensation Committee. Subject to the terms and conditions of the plan, the
Compensation Committee is authorized to interpret and construe any provision of
the plan and any provision of any option granted pursuant to the terms of the
plan.
 
                                       21
<PAGE>   27
 
SHARES AVAILABLE; RESTRICTIONS ON TRANSFER OF AWARDS; LIMITATIONS ON RESALE OF
COMMON STOCK UPON EXERCISE
 
     The Company has assumed the obligation to issue 68,250 shares of Common
Stock under the Old CCA 1991 Flexible Option Plan. No further option grants will
be made under the plan. The Common Stock to be delivered under the plan pursuant
to the exercise of an outstanding option shall be issued directly from the
authorized, but unissued, Common Stock which is held in reserve for such
issuance by the Company. Under the plan, the Compensation Committee is
authorized, in the event the number of shares of Common Stock are changed by
reason of stock splits, stock dividends, reverse stock splits, combinations of
shares or similar transactions, to proportionately adjust the number of shares
for which options may thereafter be granted under the plan, the number of shares
then subject to outstanding options and the price per share payable upon the
exercise of such options so as to reflect such change. Options granted under the
plan may also contain provisions for their continuation or for other equitable
adjustments after changes in shares of Common Stock resulting from the
reorganization, sale, merger or consolidation of the Company or similar
occurrences.
 
     Options granted pursuant to the Old CCA 1991 Flexible Option Plan are
generally non-transferable and may be transferred only by will or the laws of
descent and distribution applicable to the plan participant, and such options
are exercisable during a participant's lifetime only by the participant. These
restrictions on transfer, however, may have been modified or removed by the
terms and provisions of the stock option agreement entered into by the
participant and the Company pursuant to the grant of an option under the plan.
Because options granted under the plan are generally non-transferable, no liens
may be created against a participant's interest in the plan, as the options may
not be assigned as a security interest.
 
     Any "affiliate" of the Company (defined in Rule 405 under the Securities
Act to include persons who directly or indirectly, through one or more
intermediaries, control, or are controlled by, or are under common control with,
the Company) may not use this Prospectus to offer and sell shares of Common
Stock they acquire under the plan. They may, however, sell such shares:
 
          (1) pursuant to an effective registration statement under the
     Securities Act;
 
          (2) in compliance with Rule 144 under the Securities Act; or
 
          (3) in a transaction otherwise exempt from the registration
     requirements of the Securities Act.
 
     Each participant who is the beneficial owner of at least 10% of the
outstanding shares of the Common Stock and each participant who is a director or
a policy-making officer of the Company is subject to Section 16(b) of the
Exchange Act, which requires such persons to disgorge to the Company any
"profits" resulting from a sale and purchase (or purchase and sale) of shares of
the Common Stock within a six month period. For such participants, sales of
certain shares of Common Stock occurring within six months of the exercise of
options under the plan may result in Section 16(b) liability, unless one or both
of those transactions are exempt. However, even if a transaction is exempt under
Section 16(b), the general prohibition of federal and state securities laws on
trading securities while in possession of material non-public information
concerning the issuer continues to apply.
 
                                       22
<PAGE>   28
 
TERM; AMENDMENT
 
     Although the terms of the Old CCA 1991 Flexible Option Plan provide that
options may be granted under the plan until April 12, 2001, no further options
will be granted under the plan. Any unexercised options which were granted under
the plan and which have not otherwise expired by their terms may still be
exercised by the holders thereof.
 
     Although the Board of Directors of the Company has authority under the Old
CCA 1991 Flexible Option Plan to amend, revise or suspend the plan, it does not
have authority under the plan to revoke or alter the terms of any option
previously granted in accordance with the terms of the plan. Additionally, the
Board of Directors of the Company may not remove the administration of the plan
from the Compensation Committee or decrease the price at which options
previously granted may be exercised into shares of Common Stock without the
approval of the stockholders of the Company.
 
ELIGIBILITY
 
     The Old CCA 1991 Flexible Option Plan provided that the persons eligible to
participate in the plan were to be "key employees" (as hereinafter defined) of
Old CCA, or any of its subsidiaries, and directors of Old CCA who were not
employees of Old CCA, or any of its subsidiaries, and who did not serve on the
committee of the Board of Directors of Old CCA which administered the plan (the
"Old CCA Flexible Option Plan Committee"). The term "key employees" was defined
in the plan to include employees who were officers of the Company not serving on
the Old CCA Flexible Option Plan Committee, department managers, facility
administrators and certain other employees designated as "key employees" by the
CCA Flexible Option Plan Committee. No person was eligible to receive an option
for a larger number of shares than was recommended by the Old CCA Flexible
Option Plan Committee. No member of the Old CCA Flexible Option Plan Committee
was eligible to receive an option under the plan.
 
AWARD OF STOCK OPTIONS UNDER THE PLAN
 
     The Old CCA 1991 Flexible Option Plan authorized the Old CCA Flexible
Option Plan Committee to grant stock options, including both ISOs potentially
resulting in favorable tax treatment to the participant and non-qualified stock
options (i.e., options not qualifying as ISOs) to eligible participants. The
terms of any ISO granted under the plan were intended to comply in all respects
with the provisions of Code Section 422. Pursuant to the plan, the aggregate
fair market value (determined at the time an ISO was granted) of the Old CCA
Common Stock with respect to which ISOs were exercisable for the first time by
any one participant during any calendar year could not exceed $100,000. For
purposes of this limitation, all of the then-existing option plans of Old CCA
and its subsidiaries were taken into account. The plan also provided that no
term of the plan relating to ISOs could be interpreted, amended or altered, nor
could any discretion or authority granted under the plan be exercised, so as to
disqualify either the plan or any ISO under Code Section 422, unless first
approved by the stockholders of Old CCA.
 
PURCHASE OF AND PAYMENT FOR SHARES
 
     Generally, Old CCA granted options under the Old CCA 1991 Flexible Option
Plan to eligible participants for no monetary consideration. However,
participants in the plan have been, and currently are, required to make payment
for any shares of stock which are
 
                                       23
<PAGE>   29
 
purchased pursuant to the exercise of an option granted under the plan. The
payment for such shares shall be made in cash or, in the sole discretion of the
Compensation Committee, in shares of Common Stock. The price to be paid for
shares of Common Stock pursuant to the exercise of an option was determined by
the Old CCA Flexible Option Plan Committee, but the plan provides that such
exercise price may not be less than 100% of the fair market value of the
underlying Old CCA Common Stock, as adjusted to reflect the Merger, on the date
of the grant of the option, determined by reference to the closing price of such
shares on the date of the grant on the national securities exchange on which
such shares were then traded.
 
OTHER MATERIAL PROVISIONS
 
     The grant of an option pursuant to the terms of the plan does not obligate
a participant in the Old CCA 1991 Flexible Option Plan to exercise such option.
Because a participant in the plan is not bound to exercise an option, there is
no provision in the plan regarding a participant's withdrawal. However, upon the
occurrence of certain events (e.g., the expiration of the option's term), the
unexercised portion of any option may be terminated.
 
TAX EFFECTS OF PLAN PARTICIPATION
 
     The Old CCA 1991 Flexible Option Plan is not qualified under Section 401(a)
of the Code. In the merger, each ISO granted under the plan became a
non-qualified stock option. The following is a summary of the general tax
treatment of plan participants and the Company in connection with the options
granted pursuant to the plan.
 
     Generally, plan participants did not recognize income upon the grant of
options under the plan and generally will not recognize income at any other time
prior to the exercise of the options. Upon exercise, a participant will
recognize compensation taxable as ordinary income in an amount equal to the
excess of the fair market value of the Common Stock on the date the option is
exercised over the sum of the exercise price of the Common Stock plus the
amount, if any, paid by such participant for the option. The Company will then
be entitled to a deduction in an amount equal to the amount of compensation
recognized by the participant. A subsequent disposition of the Common Stock
acquired upon exercise of an option and held as a capital asset will result in a
capital gain or loss measured by the difference between the fair market value of
the shares on the date the option was exercised and the amount realized on later
disposition. Such gain or loss will generally be a long-term gain or loss if the
stock is held for a period of one year or more after the date of exercise.
 
     The preceding summary should not be construed as legal, tax or investment
advice. Each participant in the plan should consult his or her own counsel,
accountant or business or tax advisor as to the legal, tax and related
consequences of either the exercise of an option granted pursuant to the plan or
the transfer of Common Stock acquired as a result of the exercise of an option.
 
OLD CCA DIRECTORS' OPTION PLAN
 
PURPOSE
 
     The Old CCA Directors' Option Plan was adopted by Old CCA to advance the
interests of Old CCA and its stockholders by encouraging increased stock
ownership by the
 
                                       24
<PAGE>   30
 
members of the board of directors of Old CCA who were not employees of the
Company, or any of its subsidiaries, as a means of aligning their interests with
the interests of the stockholders, thereby enhancing long-term stockholder
value.
 
ADMINISTRATION
 
     The Old CCA Directors' Option Plan provides that the Plan must be
administered by the Board of Directors of the Company, acting by a majority of
its members in office. Subject to the terms and conditions of the plan, the
Board of Directors of the Company has the exclusive power to interpret and
construe the terms and provisions of the plan and any provision of any option
granted pursuant to the terms of the plan, to determine all questions arising
thereunder and to adopt and amend such rules and regulations for the
administration of the plan as it may deem desirable. Any decision of the Board
of Directors of the Company in the administration of the plan shall be final and
conclusive. The plan provides that no member of the Board of Directors of the
Company will be liable for any action or determination made in good faith with
respect to the plan or any option granted under it. Additionally, the plan
provides that the members of the Board of Directors of the Company shall be
indemnified by the Company against the reasonable expenses incurred in
connection with any action taken or failure to act in connection with the plan
or any option granted under the plan, unless such member is liable for
negligence or misconduct in the performance of his duties.
 
SHARES AVAILABLE; RESTRICTIONS ON TRANSFER OF AWARDS; LIMITATIONS ON RESALE OF
COMMON STOCK UPON EXERCISE
 
     The Company has assumed the obligation to issue 474,688 shares of Common
Stock under the Old CCA Directors' Option Plan. No further option grants will be
made under the plan. The Common Stock to be delivered under the plan pursuant to
the exercise of an option shall be issued directly from the authorized, but
unissued, Common Stock which is held in reserve for such issuance by the
Company. The Board of Directors of the Company is authorized to make appropriate
adjustments in the number of shares covered by each option granted under the
plan, as well as to the price to be paid for shares upon exercise of any options
granted under the plan, in the event that a dividend or other distribution,
recapitalization, reorganization, merger, consolidation, liquidation or
dissolution of the Company, or any exchange of shares involving Common Stock
affecting the Common Stock such that an adjustment is appropriate.
 
     Options granted pursuant to the Old CCA Directors' Option Plan are
generally non-transferable and may be transferred only by will or the laws of
descent and distribution applicable to the participant, and such options are
exercisable during a participant's lifetime only by the participant; provided,
however, that these restrictions on transfer may have been modified or removed
by the terms and provisions of a stock option agreement entered into by the
participant and Old CCA pursuant to the grant of an option under the plan.
Because options granted under the plan are generally non-transferable, no liens
may be created against a participant's interest in the plan, as the options may
not be assigned as a security interest.
 
                                       25
<PAGE>   31
 
     The plan does not impose any restriction on the resale of the Common Stock
acquired pursuant to the exercise of an option granted under the plan. However,
any "affiliate" of the Company (defined in Rule 405 under the Securities Act to
include persons who directly or indirectly, through one or more intermediaries,
control, or are controlled by, or are under common control with, the Company)
may not use this Prospectus to offer and sell shares of Common Stock they
acquire under the plan. They may, however, sell such shares:
 
          (1) pursuant to an effective registration statement under the
     Securities Act;
 
          (2) in compliance with Rule 144 under the Securities Act; or
 
          (3) in a transaction otherwise exempt from the registration
     requirements of the Securities Act.
 
     Each participant who is the beneficial owner of at least 10% of the
outstanding shares of the Common Stock and each participant who is a director or
a policy-making officer of the Company is subject to Section 16(b) of the
Exchange Act, which requires such persons to disgorge to the Company any
"profits" resulting from a sale and purchase (or purchase and sale) of shares of
the Common Stock within a six month period. For such participants, sales of
certain shares of Common Stock occurring within six months of the exercise of
stock options granted under the plan may result in such Section 16(b) liability,
unless one or both of those transactions are exempt. However, even if a
transaction is exempt under Section 16(b), the general prohibition of federal
and state securities laws on trading securities while in possession of material
non-public information concerning the issuer continues to apply.
 
TERM; AMENDMENT
 
     Although the terms of the Old CCA Directors' Option Plan provide that the
plan was to remain in effect until June 4, 2003, no further grants of awards
will be made under the plan. Any outstanding unexercised options which were
granted under the plan and which have not otherwise expired by their terms may
still be exercised by the holders thereof.
 
     The plan may be amended at any time by the Board of Directors of the
Company as it shall deem advisable; provided, however, no amendment of the plan
may materially change or impair an option previously granted under the plan
without the consent of each affected participant. Additionally, the Board of
Directors of the Company may not reduce the exercise price of options granted
under the plan, or extend the exercise period of options granted under the plan,
without the approval of the Company's stockholders.
 
ELIGIBILITY
 
     The Old CCA Directors' Option Plan provided that each member of the Board
of Directors of Old CCA who was not an employee of Old CCA, or any of its
subsidiaries, was eligible to receive options under the plan.
 
AWARD OF STOCK OPTIONS UNDER THE PLAN
 
     All awards under the Old CCA Directors' Option Plan were non-qualified
stock options. Options were granted under the plan to eligible participants for
no monetary consideration. Each non-employee director initially elected to the
Board of Directors of
 
                                       26
<PAGE>   32
 
Old CCA subsequent to the adoption of the plan received non-qualified stock
options exercisable into shares of Old CCA Common Stock. Pursuant to the plan,
the Board of Directors of Old CCA awarded to all non-employee directors, on each
anniversary date of the adoption of the plan, additional non-qualified stock
options exercisable for shares of Old CCA Common Stock. The exercise price for
each outstanding option awarded pursuant to the plan is the fair market value of
the shares of Old CCA Common Stock on the date of the option grant, as adjusted
to reflect the Merger. Payment for shares of Common Stock purchased pursuant to
the exercise of an option must be made in cash or by tendering to the Company
shares of Common Stock owned by the person exercising the option having a fair
market value equal to the cash exercise price applicable to such option.
 
OTHER MATERIAL PROVISIONS
 
     The Company, during the term of the options granted under the Old CCA
Directors' Option Plan, reserves the authority to refuse to issue or sell any
shares of Common Stock under the plan to the extent that it receives an opinion
of counsel that the issuance or sale of such shares would not be lawful for any
reason. Additionally, it is a condition to the issuance of any shares upon the
exercise of an option that the participant pay to the Company, upon demand, such
amount as may be requested by the Company for the purpose of satisfying any
liability to withhold taxes of any nature.
 
     The granting of an option pursuant to the terms of the Old CCA Directors'
Option Plan does not obligate plan participants to exercise such option. Because
plan participants are not bound to exercise options, there is no provision in
the plan regarding a participant's withdrawal from the plan.
 
TAX EFFECTS OF PLAN PARTICIPATION
 
     The Old CCA Directors' Option Plan is not qualified under Section 401(a) of
the Code. All awards granted under the plan were originally non-qualified stock
options. Upon completion of the Merger, each non-qualified stock option granted
under the plan remained a non-qualified stock option. The following is a summary
of the general tax treatment of plan participants and the Company in connection
with the options granted pursuant to the plan.
 
     Generally, plan participants did not recognize income upon the grant of
options under the plan and generally will not recognize income at any other time
prior to the exercise of the options. Upon exercise, a participant will
recognize compensation taxable as ordinary income in an amount equal to the
excess of the fair market value of the Common Stock on the date the option is
exercised over the sum of the exercise price of the Common Stock plus the
amount, if any, paid by the participant for the option. The Company will then be
entitled to a deduction in an amount equal to the amount of compensation
recognized by the participant. A subsequent disposition of the Common Stock
acquired upon exercise of an option and held as a capital asset will result in a
capital gain or loss measured by the difference between the fair market value of
the shares on the date the option was exercised and the amount realized on later
disposition. Such gain or loss will generally be long-term if the stock is held
after the date of exercise for more than one year.
 
     The preceding summary should not be construed as legal, tax or investment
advice. Each participant in the plan should consult his or her own counsel,
accountant or business
 
                                       27
<PAGE>   33
 
or tax advisor as to the legal, tax and related consequences of either the
exercise of an option granted pursuant to the plan or the transfer of Common
Stock acquired as a result of the exercise of an option.
 
OLD CCA 1995 EMPLOYEE STOCK INCENTIVE PLAN
 
PURPOSE
 
     The Old CCA 1995 Incentive Plan was adopted by Old CCA to attract, retain
and reward certain key employees by offering these employees performance-based
stock incentives and/or other equity interests or equity-based incentives.
 
ADMINISTRATION
 
     The Old CCA 1995 Incentive Plan provided that the plan must be administered
by a committee of the board of directors consisting of not less than two
"disinterested persons" within the meaning of Rule 16b-3(c)(2)(i) promulgated
under the Exchange Act. The plan is currently administered by the Compensation
Committee. Subject to the terms and conditions of the plan, the Committee is
authorized to interpret the provisions of the plan; to adopt, amend and repeal
rules, guidelines and practices governing the plan; and to otherwise supervise
the administration of the plan in its full discretion.
 
SHARES AVAILABLE; RESTRICTIONS ON TRANSFER OF AWARDS; LIMITATIONS ON RESALE OF
COMMON STOCK UPON EXERCISE
 
     The Company has assumed the obligation to issue 944,549 shares of Common
Stock pursuant to the exercise of stock options previously granted under the Old
CCA 1995 Incentive Plan. No further option grants will be made under the plan.
The Common Stock to be delivered under the plan pursuant to the exercise of an
option shall be issued directly from the authorized, but unissued, Common Stock
which is held in reserve for such issuance by the Company. Pursuant to the Old
CCA 1995 Incentive Plan, the Compensation Committee is empowered to adjust the
number or exercise price of shares outstanding in the event of a merger,
reorganization, consolidation, recapitalization, stock dividend, stock split or
other change in corporate structure affecting the Common Stock.
 
     Stock options granted under the Old CCA 1995 Incentive Plan are
transferable only by will or by the laws of descent and distribution, and all
stock options shall be exercisable, during the lifetime of the participant, only
by the participant. Any unexercised stock options will terminate upon the
termination of that participant's employment with either Operating Company or
one of the Service Companies, as the case may be, subject to the exceptions set
forth below. If a participant's employment terminates by reason of death, such
options may be exercised by the legal representative of the participant's
estate, or by a legatee under a will, up to a period of one year from the date
of the participant's death. If a participant's employment is terminated by
reason of disability or retirement, such options may be exercised for a period
of up to three years from the date of such event (subject, however, to the
exercise limitations applicable in the event of a participant's death).
 
                                       28
<PAGE>   34
 
     The Old CCA 1995 Incentive Plan does not impose any restrictions on the
resale of Common Stock issued to plan participants pursuant to the exercise of
options granted under the plan. However, any "affiliate" of the Company (defined
in Rule 405 under the Securities Act to include persons who directly or
indirectly, through one or more intermediaries, control, or are controlled by,
or are under common control with, the Company) may not use this Prospectus to
offer and sell shares of Common Stock they acquire under the plan. They may,
however, sell such shares:
 
          (1) pursuant to an effective registration statement under the
     Securities Act;
 
          (2) in compliance with Rule 144 under the Securities Act; or
 
          (3) in a transaction otherwise exempt from the registration
     requirements of the Securities Act.
 
     Each participant who is the beneficial owner of at least 10% of the
outstanding shares of the Company's Common Stock and each participant who is a
director or a policy-making officer of the Company is subject to Section 16(b)
of the Exchange Act, which requires such persons to disgorge to the Company any
"profits" resulting from a sale and purchase (or purchase and sale) of shares of
the Common Stock within a six month period. For such participants, sales of
certain shares of Common Stock occurring within six months of the exercise of an
option awarded under the plan may result in such Section 16(b) liability, unless
one or both of those transactions are exempt, as described below in more detail.
However, even if a transaction is exempt under Section 16(b), the general
prohibition of federal and state securities laws on trading securities while in
possession of material non-public information concerning the issuer continues to
apply.
 
TERM; AMENDMENT
 
     Although the terms of the Old CCA 1995 Incentive Plan provide that awards
may be granted under the plan until March 20, 2005, the Company will not issue
additional awards under the plan. The plan will terminate at such time as the
Company has no further rights and obligations with respect to outstanding awards
under the plan.
 
     The Old CCA 1995 Incentive Plan provides that the Board of Directors of the
Company may amend, alter or discontinue the plan. However, the Board of
Directors of the Company may not amend, alter or discontinue the plan without
the written consent of a participant in the plan if such action would may impair
the rights of that participant. The Board of Directors of the Company may not
amend, alter or discontinue the plan, without the approval of the Company's
stockholders, if such action would change the pricing terms of stock options and
stock purchase rights granted under the plan or extend the maximum exercise term
for stock options granted under the plan. The plan also provides that the
Compensation Committee may amend the terms of any stock option or other award
granted to a participant under the plan prospectively or retroactively, if such
amendment would not impair the rights of such participant.
 
ELIGIBILITY
 
     Officers and other key employees of Old CCA and certain of its
subsidiaries, other than members of the committee of the Board of Directors of
Old CCA which administered the Old CCA 1995 Incentive Plan (the "Old CCA
Incentive Plan Committee") and individuals who served only as directors of Old
CCA, responsible for the
 
                                       29
<PAGE>   35
 
management, growth and/or profitability of the business of Old CCA, and/or
certain of its subsidiaries, were eligible to be granted awards under the plan.
 
AWARD OF STOCK OPTIONS UNDER THE PLAN
 
     The Old CCA 1995 Incentive Plan authorized the Old CCA Incentive Plan
Committee to grant stock options, including both ISOs and non-qualified stock
options. The terms of any ISO granted under the plan were intended to comply in
all respects with the provisions of Code Section 422. The exercise price of
options granted under the plan was determined by the Old CCA Incentive Plan
Committee, but in the case of an ISO, could not have been less than the fair
market value of a share of Old CCA Common Stock on the date of grant, and, in
the case of a non-qualified stock option, could not have been less than 50% of
the fair market value of the Old CCA Common Stock on the date of grant. The
maximum term of each option was fixed by the Old CCA Incentive Plan Committee,
but such terms could not exceed ten years.
 
     The times at which each option is exercisable were fixed by the Old CCA
Incentive Plan Committee, except that, unless otherwise provided, no stock
options granted under the plan may be exercised prior to the later of the first
anniversary of the date of grant of the stock option or the second anniversary
of the date the participant became employed by Old CCA. Stock options may be
exercised by payment in full of the purchase price to the Company in cash. In
the discretion of the Compensation Committee, payment in full or in part may
also be made in the form of stock options or unrestricted stock owned by the
participant or, in the case of a non-qualified stock option, restricted stock or
deferred stock subject to an award under the plan.
 
AWARD OF STOCK APPRECIATION RIGHTS UNDER THE PLAN
 
     The Old CCA 1995 Incentive Plan also authorized the Old CCA Incentive Plan
Committee to grant stock appreciation rights ("SARs") to participants in
conjunction with all or part of any stock option granted under the plan. An SAR
entitles the participant to receive, in cash or shares of Common Stock, an
amount determined by reference to the excess of the fair market value of one
share of stock on the date of exercise over the grant price of the SAR. The SARs
which were to be granted pursuant to the plan were to be exercisable only at
such time and to such extent that the stock options to which they related were
exercisable. In addition, the Old CCA Incentive Plan Committee was granted the
authority under the plan to grant a "Limited SAR," whereby a participant was
entitled to receive an amount, in cash or in shares of common stock, determined
by reference to the excess of the fair market value, determined by reference to
the "Change in Control Price" (as defined in the plan), over the grant price of
the Limited SAR. The grant price, terms and exercise time of any SAR were to be
determined by the Old CCA Incentive Plan Committee. At the time of the Merger,
no SARs were outstanding under the plan. Accordingly, the Company did not assume
any obligation to issue Common Stock upon exercise of SARs under the plan.
 
AWARD OF RESTRICTED STOCK UNDER THE PLAN
 
     The Old CCA 1995 Incentive Plan also authorized the Old CCA Incentive Plan
Committee to grant restricted stock, either alone, in addition to, or in tandem
with other awards under the plan. Restricted stock is a grant of Common Stock
which may not be sold or disposed of, and which may be forfeited in the event of
certain terminations of
 
                                       30
<PAGE>   36
 
employment and/or failure to meet certain performance requirements, prior to the
end of a specified restricted period. Upon expiration of such restricted period,
any restrictions placed upon the shares of Common Stock are removed. A
participant granted restricted stock generally would have had all of the rights
of a stockholder of the Company, including the right to vote the shares and to
receive dividends thereon, unless otherwise determined. Any award of restricted
stock pursuant to the plan was to have been conditioned upon the attainment of
specific performance goals or other factors determined by the Old CCA Incentive
Plan Committee. The plan provided that the provisions of such a grant could vary
from participant to participant. During the restriction period, a plan
participant could not sell, transfer, pledge or assign restricted stock awarded
pursuant to the plan. At the time of the Merger, no shares of restricted stock
were outstanding under the plan. Accordingly, the Company did not assume any
obligation to issue restricted shares of Common Stock, or remove restrictions
from outstanding shares of restricted Common Stock, pursuant to the plan.
 
AWARD OF DEFERRED STOCK UNDER THE PLAN
 
     The Old CCA 1995 Incentive Plan also authorized the Old CCA Incentive Plan
Committee to grant deferred stock to plan participants. Deferred stock is a
right to receive stock at the end of a specified vesting period, either alone or
in conjunction with other awards under the plan or cash awards outside the plan.
Under the plan, awards of deferred stock could have been conditioned upon the
attainment of specific performance goals or such other factors as determined by
the Old CCA Incentive Plan Committee. Under the plan, the provisions of such a
grant could vary from participant to participant. During the deferral period, a
participant awarded deferred stock could not have sold, transferred, pledged or
otherwise assigned the deferred stock award. At the time of the Merger, no
deferred stock awards were outstanding under the plan. Accordingly, the Company
did not assume any obligation to issue Common Stock in satisfaction of a vested
deferred stock award pursuant to the plan.
 
AWARD OF STOCK PURCHASE RIGHTS UNDER THE PLAN
 
     The 1995 Incentive Plan also provided that the Old CCA Incentive Plan
Committee was authorized to grant stock purchase rights to plan participants.
Such stock purchase rights would have enabled plan participants to purchase
shares of Old CCA Common Stock at either the fair market value of such stock as
of the date of such grant or at a discount from the fair market value of such
stock as of the date of such grant. The Old CCA Incentive Plan Committee could
have conditioned such rights, or their exercise, on such terms and conditions as
determined in its discretion. At the time of the Merger, no stock purchase
rights were outstanding under the plan. Accordingly, the Company did not assume
any obligation to issue Common Stock upon the exercise of stock purchase rights
pursuant to the plan.
 
AWARD OF OTHER STOCK-BASED AWARDS UNDER THE PLAN
 
     The Old CCA 1995 Incentive Plan also authorized the Old CCA Incentive Plan
Committee to grant other stock-based awards that were valued in whole or in part
by reference to, or otherwise based on or related to, shares of Old CCA Common
Stock. Such stock-based awards could have included performance shares,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into shares of Old CCA Common Stock, purchase rights for shares of
Old CCA Common Stock or awards
 
                                       31
<PAGE>   37
 
valued by reference to the book value of shares of Old CCA Common Stock or the
performance of specified subsidiaries. Under the terms of the plan, the Old CCA
Incentive Plan Committee was to have determined the terms and conditions of any
such awards, including consideration to be paid upon exercise, the period during
which awards were to be outstanding, forfeiture conditions and restrictions on
such awards. At the time of the Merger, no such awards were outstanding under
the plan. Accordingly, the Company did not assume any obligation to issue Common
Stock upon the vesting or conversion of any such awards under the plan.
 
TAX EFFECTS OF PLAN PARTICIPATION
 
     The Old CCA 1995 Incentive Plan is not qualified under Section 401(a) of
the Code. In the merger, each ISO granted under the plan became a non-qualified
stock option. The following is a summary of the general tax treatment of plan
participants and the Company in connection with the options granted pursuant to
the plan:
 
     Generally, plan participants did not recognize income upon the grant of
options under the plan and generally will not recognize income at any other time
prior to the exercise of the options. Upon exercise, the participant will
recognize compensation taxable as ordinary income in an amount equal to the
excess of the fair market value of the Common Stock on the date the option is
exercised over the sum of the exercise price of the Common Stock plus the
amount, if any, paid by the optionee for the option. The Company will then be
entitled to a deduction in an amount equal to the amount of compensation
recognized by the participant. A subsequent disposition of the Common Stock
acquired upon exercise of an option and held as a capital asset will result in a
capital gain or loss measured by the difference between the fair market value of
the shares on the date the option was exercised and the amount realized on later
disposition. Such gain or loss will generally be long-term if the stock is held
after the date of exercise for more than one year.
 
     The preceding summary should not be construed as legal, tax or investment
advice. Each participant should consult his or her own counsel, accountant or
business or tax advisor as to the legal, tax and related consequences of either
the exercise of an option granted pursuant to the plan or the transfer of Common
Stock acquired as a result of the exercise of an option.
 
JOHNSON OPTION AGREEMENT
 
PURPOSE
 
     The Johnson Option Agreement was adopted by the Board of Directors and
shareholders of Old CCA to compensate Mr. Johnson for his extensive efforts in
building and facilitating Old CCA's business relationship with certain
government departments, agencies and entities. Old CCA believed that Mr.
Johnson's efforts exceeded his duties and obligations to Old CCA as a member of
its Board of Directors, and, therefore, in order to adequately compensate Mr.
Johnson for his efforts and to incentivize his continued role in obtaining
business from certain governmental entities, Old CCA adopted the Johnson Option
Agreement.
 
ELIGIBILITY/SHARES AVAILABLE
 
     The Johnson Option Agreement granted an option to Joseph F. Johnson, Jr. to
purchase up to 80,000 shares of Old CCA Common Stock for a per share purchase
price
 
                                       32
<PAGE>   38
 
of $18.25. In the Merger, pursuant to an Option Assumption Agreement between the
Company and Mr. Johnson, the Company assumed the Johnson Option Agreement, and,
accordingly, Mr. Johnson now has an option, or warrant, to purchase up to 70,000
shares of Common Stock for a per share purchase price of $20.86. In the event of
a merger, reorganization, consolidation, share dividend, share split or other
change in corporate structure not constituting a "change in control" affecting
the Common Stock, an adjustment shall be made by the Company in the number and
option price of the shares of Common Stock subject to the option.
 
TERM
 
     Mr. Johnson may exercise his option to purchase shares of the Common Stock
at any time or from time to time before March 31, 2007, subject to earlier
termination in the event of Mr. Johnson's death or in the event of certain
"change in control" transactions, as defined in the Johnson Option Agreement, of
the Company. In the event of Mr. Johnson's death before exercise of the option,
the option may be exercised by the personal representative of Mr. Johnson's
estate at any time prior to the option's termination date. In the event of
certain "change in control" transactions, as defined in the Johnson Option
Agreement, the option granted to Mr. Johnson will terminate automatically. The
Company and Mr. Johnson mutually agreed that for the purposes of the Johnson
Option Agreement, the Merger did not constitute a "change in control."
 
METHOD OF EXERCISE
 
     The option may be exercised by giving written notice of exercise to the
Company, specifying the number of shares of Common Stock to be purchased
pursuant to the option. Payment for the shares of Common Stock may be made in
cash or, in the sole discretion of the Company, in the form of a Common Stock
option or unrestricted shares of Common Stock already owned by Mr. Johnson.
 
RESTRICTIONS ON TRANSFER
 
     The option is not transferable, except (a) by will or the laws of descent
and distribution, or (b) by Mr. Johnson to (i) his spouse, children or
grandchildren, or (ii) a trust or trusts for the exclusive benefit of such
individuals. Such excepted transfers, however, may not be in exchange for
consideration, and subsequent transfers of the option shall be prohibited except
in accordance with the Johnson Option Agreement. Any sale or other transfer of
the option or any shares of Common Stock subject to the option other than
pursuant to the Johnson Option Agreement shall be void and of no effect.
 
TAX EFFECTS
 
     The option granted to Mr. Johnson is not qualified under Section 401(a) of
the Code. The option granted to Mr. Johnson was, at the time of the grant, a
non-qualified stock option, and the option continued to be a non-qualified stock
option upon completion of the Merger. The following is a summary of the general
tax treatment of Mr. Johnson and the Company in connection with the option
granted pursuant to the plan.
 
     Mr. Johnson did not recognize income upon the grant of the option and
generally will not recognize income at any other time prior to the exercise of
the option. Upon exercise of the option, Mr. Johnson will recognize compensation
taxable as ordinary income in an
 
                                       33
<PAGE>   39
 
amount equal to the excess of the fair market value of the Common Stock on the
date the option is exercised over the sum of the exercise price of the Common
Stock. The Company will then be entitled to a deduction in an amount equal to
the amount of compensation recognized by Mr. Johnson. A subsequent disposition
of the Common Stock acquired upon exercise of the option and held as a capital
asset will result in a capital gain or loss measured by the difference between
the fair market value of the Common Stock on the date the option was exercised
and the amount realized on later disposition. Such gain or loss will generally
be a long-term gain or loss if the Common Stock is held for a period of one year
or more after the date of exercise.
 
     The preceding summary should not be construed as legal, tax or investment
advice. Each participant in the plan should consult his or her own counsel,
accountant or business or tax advisor as to the legal, tax and related
consequences of either the exercise of an option granted pursuant to the plan or
the transfer of Common Stock acquired as a result of the exercise of an option.
 
                                USE OF PROCEEDS
 
     The Company does not know the number of shares of Common Stock that will be
ultimately sold pursuant to the exercise of options under the Plans and assumed
by the Company. The Company intends to use the net proceeds from the sale of the
Common Stock for the general corporate purposes of the Company. These general
corporate purposes may include, without limitation, capital expenditures,
working capital, repayment of maturing obligations, redemption of outstanding
indebtedness and financing (in whole or part) for future acquisitions (including
acquisitions of real estate properties in accordance with the Company's business
objectives and strategy). Pending any such uses, the Company may invest the net
proceeds from the sale of any of the Common Stock in short-term investment grade
instruments, interest bearing bank accounts, certificates of deposit, money
market securities, U.S. Government securities or mortgage-backed securities
guaranteed by federal agencies or may use them to reduce short-term
indebtedness.
 
                              PLAN OF DISTRIBUTION
 
     Upon the exercise of Old CCA Options or the vesting of Deferred Shares
under the Plans, the Company will issue, directly to the participant, shares of
Common Stock from the authorized, but unissued, Common Stock which is held in
reserve for such issuance by the Company. The methods of payment, if any, by
plan participants for the shares of Common Stock issued by the Company upon the
exercise of Old CCA Options or the vesting of Deferred Shares are specified
under the summary description of each Plan contained herein.
 
                                 LEGAL MATTERS
 
     The legality of the Common Stock offered hereby will be passed upon by
Stokes & Bartholomew, P.A. As to matters of Maryland law contained in its
opinion, Stokes & Bartholomew, P.A. will rely on the opinion of Miles &
Stockbridge P.C. Elizabeth E. Moore, a shareholder of Stokes & Bartholomew,
P.A., is the spouse of a member of the Board of Directors of the Company.
 
                                       34
<PAGE>   40
 
                                    EXPERTS
 
     The financial statements included or incorporated by reference in this
Prospectus or elsewhere in this Registration Statement, to the extent and for
the periods indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports thereto, and
are included or incorporated by reference in reliance upon the authority of said
firm as experts in giving said reports.
 
                                       35
<PAGE>   41
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<S>                                                           <C>
Unaudited Pro Forma Combined Financial Statements...........  F-2
Prison Realty Corporation Pro Forma Combined Balance Sheet
  as of December 31, 1998...................................  F-4
Prison Realty Corporation Pro Forma Combined Statement of
  Operations for the Year Ended December 31, 1998...........  F-6
Prison Realty Corporation Pro Forma Combined Statement of
  Operations Adjustments for the Year Ended December 31,
  1998......................................................  F-9
</TABLE>
 
                                       F-1
<PAGE>   42
 
               UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
     On December 31, 1998, the Company merged with and into Old CCA, with the
Company as the surviving entity and on January 1, 1999, the Company merged with
Prison Realty, with the Company as the surviving entity. Additionally, on April
17, 1998, Prison Realty completed the USCC Merger, in which it acquired all of
the issued and outstanding capital stock and derivative securities of USCC for a
cash payment to USCC's shareholders of $157 million plus the assumption of
certain liabilities.
 
     The Merger has been 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
has been treated as the acquiring company and Prison Realty has been treated as
the acquired company for financial reporting purposes. The general provisions of
the purchase method of accounting prescribe that: (i) Prison Realty's assets and
liabilities be recorded at fair market value, as required by Accounting
Principles Board Opinion No. 16; (ii) Old CCA's assets and liabilities be
carried forward at historical cost; (iii) Old CCA's historical financial
statements be presented as the continuing accounting entity's; and (iv) the
equity section of the balance sheet and earnings per share be retroactively
restated to reflect the effect of the exchange ratio established in the Merger
Agreement. The unaudited Pro Forma Combined Financial Statements have been
adjusted as necessary to reflect the above provisions. Accordingly, as of
January 1, 1999, the historical book basis of the assets, liabilities and
shareholders' equity of Old CCA has become the carrying value of the assets,
liabilities and stockholders' equity of the Company, and the assets and
liabilities of Prison Realty have been recorded on the books of the Company at
their estimated fair value.
 
     As stated above, the purchase method of accounting prescribes that the
assets and liabilities acquired from Prison Realty be adjusted to estimated fair
market value. Management does not anticipate that the preliminary allocation of
purchase costs based upon the estimated fair market value of the assets and
liabilities of Prison Realty will materially change; however, the allocation of
purchase costs is subject to final determination based upon estimates and other
evaluations of fair market value as of the close of the transactions. Therefore,
the allocations reflected in the following unaudited pro forma financial
information may differ from the amounts ultimately determined.
 
     The audited historical financial statements of the Company as of and for
the year ended December 31, 1998 relate to a Maryland corporation formed in
September 1998 which began operations on January 1, 1999 as the result of the
completion of the mergers of Old CCA, and Prison Realty, a Maryland real estate
investment trust with and into the Company on December 31, 1998 and January 1,
1999, respectively. The historical information of the Company as of and for the
year ended December 31, 1998 presented in the pro forma financial statements
reflect the financial position and result of operations of the Company
subsequent to its merger with Old CCA on December 31, 1998, but prior to its
merger with Prison Realty on January 1, 1999. The Prison Realty historical
information as of and for the year ended December 31, 1998 presented in the pro
forma financial statements reflect the financial position and results of
operations of Prison Realty prior to its merger with the Company on January 1,
1999.
 
     In the USCC Merger, Prison Realty acquired the real estate assets of USCC
only. Old CCA purchased the enterprise value of USCC immediately prior to the
USCC merger by acquiring the management contracts for $10 million in cash. The
following
 
                                       F-2
<PAGE>   43
 
Unaudited Pro Forma Combined Statement of Operations reflects the pro forma
results of operations resulting from the real estate assets acquired by Prison
Realty in the USCC Merger as if the USCC Merger had occurred on January 1, 1998.
Pro forma results have been prorated for real estate assets becoming operational
during the year ended December 31, 1998.
 
     The following Unaudited Pro Forma Combined Financial Statements represent
the unaudited pro forma combined financial results for the Company as of
December 31, 1998 and for the year then ended. The Pro Forma Combined Statement
of Operations is presented as if the Merger and the USCC Merger had occurred as
of the beginning of the period indicated and therefore incorporates certain
assumptions that are included in the Notes to Pro Forma Combined Statement of
Operations. The Pro Forma Combined Balance Sheet is presented as if the Merger
had occurred on December 31, 1998 and therefore incorporates certain assumptions
that are included in the Notes to Pro Forma Combined Balance Sheet. The pro
forma information does not purport to represent what the Company's financial
position or results of operations actually would have been had the Merger or the
USCC Merger, in fact, occurred on such date or at the beginning of the period
indicated, or to project the Company's financial position or results of
operations at any future date or for any future period.
 
                                       F-3
<PAGE>   44
 
                           PRISON REALTY CORPORATION
                                 (THE COMPANY)
 
                        PRO FORMA COMBINED BALANCE SHEET
                            AS OF DECEMBER 31, 1998
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                 PRISON REALTY                                   ADJUSTED PRISON
                                  CORPORATION    PRISON REALTY    PRO FORMA     REALTY CORPORATION
                                 (HISTORICAL)    (HISTORICAL)    ADJUSTMENTS        PRO FORMA
                                 -------------   -------------   -----------    ------------------
<S>                              <C>             <C>             <C>            <C>
Current assets:
  Cash, cash equivalents and
    restricted cash............   $   31,141      $   39,082     $       --         $   70,223
  Prepaid expenses.............          134              --             --                134
  Deferred tax assets..........        5,846              --         (5,846)C               --
  Other current assets.........        6,022              --             --              6,022
                                  ----------      ----------     ----------         ----------
    Total current assets.......       43,143          39,082         (5,846)            76,379
                                  ----------      ----------     ----------         ----------
 
Property and equipment, net....      627,389         845,134        477,966A         1,851,360
                                                                   (131,647)B
                                                                     32,518D
Other long-term assets:
  Notes receivable.............      138,549              --             --            138,549
  Investment in direct
    financing leases...........       74,059              --             --             74,059
  Deferred tax assets..........       45,354              --        (77,354)C               --
                                                                     32,000C
  Investments in affiliates and
    others.....................      127,691              --             --            127,691
  Other assets.................       34,252           9,496        (35,445)D            8,303
                                  ----------      ----------     ----------         ----------
                                  $1,090,437      $  893,712     $  292,192         $2,276,341
                                  ==========      ==========     ==========         ==========
Current liabilities:
  Accounts payable.............   $   66,664      $   29,248     $   (2,927)D       $   92,985
  Line of credit...............           --         279,600        (28,000)F          251,600
  Distributions payable........           --           2,150        225,000E           227,150
  Income taxes payable.........       14,966              --             --             14,966
  Other accrued expenses.......       14,536              --         (5,896)B            8,640
  Current portion of long-term
    debt.......................        9,576              --             --              9,576
  Current portion of deferred
    gains on real estate
    transactions...............       13,294              --        (13,294)B               --
  Current portion of deferred
    gains on sales of
    contracts..................       10,677              --             --             10,677
                                  ----------      ----------     ----------         ----------
    Total current
      liabilities..............      129,713         310,998        174,883            615,594
Long-term debt, net of current
  portion......................      290,257              --         28,000F           318,257
Deferred gains on real estate
  transactions.................      112,457              --       (112,457)B                0
Deferred gains on sales of
  contracts....................      106,024              --             --            106,024
Deferred tax liabilities.......           --              --         32,000C            32,000
                                  ----------      ----------     ----------         ----------
    Total liabilities..........      638,451         310,998        122,426          1,071,875
                                  ----------      ----------     ----------         ----------
Stockholders' equity
  Preferred stock..............           --              43             --                 43
  Common stock.................          800             253             --              1,053
  Additional paid-in capital...      398,493         603,195        477,966A         1,203,370
                                                                   (225,000)E
                                                                    (20,777)G
                                                                    (30,507)H
  Retained earnings............       52,693         (20,777)       (83,200)C               --
                                                                     20,777G
                                                                     30,507H
                                  ----------      ----------     ----------         ----------
    Total stockholders'
      equity...................      451,986         582,714        169,766          1,204,466
                                  ----------      ----------     ----------         ----------
                                  $1,090,437      $  893,712     $  292,192         $2,276,341
                                  ==========      ==========     ==========         ==========
</TABLE>
 
                                       F-4
<PAGE>   45
 
                   NOTES TO PRO FORMA COMBINED BALANCE SHEET
 
A  To record the increase in Prison Realty's assets to fair market value
   resulting from the allocation of the purchase price. The estimated purchase
   price was calculated as follows:
 
<TABLE>
   <S>                                                           <C>
   Implied common stock value of Prison Realty based on average
     share price at announcement of Merger of $37.86 multiplied
     by the common shares outstanding of 25,315 at December 31,
     1998......................................................  $  958,426
   Implied preferred stock value of Prison Realty based on
     average share price at announcement of Merger of $23.78
     multiplied by the preferred shares outstanding of 4,300 at
     December 31, 1998.........................................     102,254
                                                                 ----------
     Total implied fair market value of Prison Realty..........   1,060,680
   Less net book value of net assets...........................    (582,714)
                                                                 ----------
   Asset basis adjustment......................................  $  477,966
                                                                 ==========
</TABLE>
 
B  To record reduction in basis of real estate assets related to the deferred
   gain carried on the books of Old CCA prior to the Merger. The deferred gain
   resulted from previous sales of real estate assets to Prison Realty.
 
C  To record adjustments to Old CCA's deferred tax assets and liabilities due to
   the tax status of the Company as a REIT subsequent to the Merger.
 
D  To record the increase in Prison Realty's assets resulting from the
   allocation of Merger costs to be capitalized in accordance with the purchase
   method of accounting as prescribed by APB Opinion No. 16.
 
E  To record the estimated required Earnings and Profits Distribution which will
   be paid in the calendar year of the completion of the Merger.
 
F  To reclassify outstanding debt to reflect the terms of the Company's new $650
   million revolving credit facility which was utilized to retire all pre-merger
   outstanding debt.
 
G  To eliminate the retained earnings of Prison Realty.
 
H  To eliminate the retained deficit resulting from the change in tax status of
   the Company to a REIT subsequent to the Merger.
 
                                       F-5
<PAGE>   46
 
                           PRISON REALTY CORPORATION
                                 (THE COMPANY)
 
                   PRO FORMA COMBINED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                             PRISON REALTY                     PRISON REALTY
                              CORPORATION    PRISON REALTY    CORPORATION PRO                        ADJUSTED
                              HISTORICAL      HISTORICAL     FORMA ADJUSTMENTS   PRISON REALTY PRO     PRO
                                   A               B                 C           FORMA ADJUSTMENTS    FORMA
                             -------------   -------------   -----------------   -----------------   --------
<S>                          <C>             <C>             <C>                 <C>                 <C>
Rental revenues............    $662,059         $69,867          $(662,059)          $ (66,716)D     $183,407
                                                                                       180,256E
Licensing fees.............          --              --                 --               6,554K         6,554
Interest income............          --             796                 --              16,440L        28,626
                                                                                        11,390N
                               --------         -------          ---------           ---------       --------
                                662,059          70,663           (662,059)            147,924        218,587
                               --------         -------          ---------           ---------       --------
Expenses:
  Operating................     496,522              --           (496,522)                 --             --
  Lease....................      58,018              --            (58,018)                 --             --
  General and
    administrative.........      28,628           2,648            (28,276)                500F         3,500
  Loan costs writeoff......       2,043           2,559             (2,043)             (2,559)G           --
  Merger costs.............          --           8,530                 --              (8,530)H           --
  CCA compensation charge..      22,850              --            (22,850)                 --             --
  Depreciation and
    amortization...........      15,973          17,609             (9,454)              9,721I        33,849
                               --------         -------          ---------           ---------       --------
                                624,034          31,346           (617,163)               (868)        37,349
                               --------         -------          ---------           ---------       --------
Operating income...........      38,025          39,317            (44,896)            148,792        181,238
Equity in earnings of
  subsidiaries.............          --              --                 --             (26,285)J      (26,285)
Interest (income)
  expense..................      (4,380)          9,827                114               2,199M        19,150
                                                                                        11,390N
                               --------         -------          ---------           ---------       --------
Income before income
  taxes....................      42,405          29,490            (45,010)            161,488        188,373
Provision for income
  taxes....................      15,424              --            (15,424)                 --             --
                               --------         -------          ---------           ---------       --------
Net income before
  cumulative effect of
  accounting change........      26,981          29,490            (29,586)            161,488        188,373
Cumulative effect of
  accounting change, net of
  tax......................      16,145              --            (16,145)                 --             --
                               --------         -------          ---------           ---------       --------
Net income.................      10,836          29,490            (13,441)            161,488        188,373
Dividends to preferred
  shareholders.............          --           7,869                 --                  --          7,869
                               --------         -------          ---------           ---------       --------
Net income available to
  common...................    $ 10,836         $21,621          $ (13,441)          $ 161,488       $180,504
                               ========         =======          =========           =========       ========
Net income per common
  share:
  Basic....................    $   0.15         $  0.99                                              $   1.94
  Diluted..................    $   0.14         $  0.98                                              $   1.79
Weighted average common
  shares outstanding,
  Basic....................      71,380          21,818                                                93,198
Weighted average common
  shares outstanding,
  Diluted..................      78,939          22,103                                               101,042
</TABLE>
 
                                       F-6
<PAGE>   47
 
              NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
 
A  Represents the audited historical consolidated statement of operations of the
   Company for the year ended December 31, 1998.
 
B  Represents the audited historical consolidated statement of operations of
   Prison Realty for the year ended December 31, 1998.
 
C  Represents the sum of the pro forma adjustments which remove the historical
   results of operations related to the management contracts sold as presented
   in the following Schedule of Prison Realty Corporation Pro Forma Statement of
   Operations Adjustments.
 
D  Represents adjustments to remove historical rental revenues based on leases
   previously existing between Old CCA and Prison Realty.
 
E  To record rental revenue from CCA based upon leases entered into immediately
   following the Merger as if the Merger and the USCC Merger had occurred as of
   January 1, 1998. Rental revenues are not included in the pro forma income
   statement for periods prior to the date a facility began operations.
 
F  To record anticipated additional general and administrative expenses assuming
   a full year of operations. All expenses are considered normal and recurring.
 
G  To remove the effect of non-recurring expenses related to loan costs writeoff
   recorded in the statement of operations of Prison Realty.
 
H  To remove the effect of nonrecurring expenses related to the Merger recorded
   in the statement of operations of Prison Realty.
 
I  To record additional depreciation expense on real estate assets of Prison
   Realty, including assets acquired from USCC, based on the application of the
   purchase method of accounting as if the Merger and the USCC Merger had
   occurred as of January 1, 1998. Depreciation expense was pro rated for
   properties becoming operational during the year. The increase in Prison
   Realty's assets to fair market value was allocated to buildings and
   improvements, machinery and equipment and land in accordance with Prison
   Realty's historical net book values of each asset category. The resulting
   increases to buildings and improvements and machinery and equipment has been
   depreciated (on a pro forma basis) over 50 years and 5 years, respectively,
   utilizing the straight line depreciation method.
 
                                       F-7
<PAGE>   48
                          NOTES TO PRO FORMA COMBINED
                     STATEMENT OF OPERATIONS -- (CONTINUED)
 
J  To record equity in earnings (under the equity method of accounting) of
   Service Company A and Service Company B based on the Company's 95% equity
   interest in accordance with EITF 95-6, "Accounting by a Real Estate
   Investment Trust for an Investment in a Service Corporation." The calculation
   of the pro forma earnings amount is as follows:
 
<TABLE>
<S>                                                           <C>
     Historical annual income before income taxes of Service
      Company A.............................................  $ 21,754
     Historical annual income before income taxes of Service
      Company B.............................................    23,604
                                                              --------
                                                                45,358
     Less income taxes at the statutory rate................   (17,690)
                                                              --------
     Adjusted aggregate annual net income of Service Company
      A and Service Company B...............................    27,668
     The Company's equity interest..........................        95%
                                                              --------
     The Company's earnings in equity interests.............  $ 26,285
                                                              ========
</TABLE>
 
   The Company's earnings in the equity interests of Service Company A and
   Service Company B have not been adjusted for the additional
   depreciation/amortization to be recorded by Service Company A and Service
   Company B resulting from the increase in the service companies' assets to
   fair market value because the expected depreciation/ amortization to be
   recognized by Service Company A and Service Company B will approximate the
   expected recognition of the deferred gain on sale of contracts by the
   Company.
 
K  To record income from licensing fees to be paid by CCA for the use of the
   Corrections Corporation of America name.
 
L  To record interest income on the $137,000 installment note receivable from
   CCA.
 
M  To record the effects of interest expense on debt incurred in conjunction
   with the USCC Merger as if the USCC Merger had occurred as of January 1,
   1998, net of capitalized interest on real estate assets acquired while
   construction was in process.
 
N  To reclassify the Company's historical interest income to conform with the
   adjusted pro forma presentation.
 
                                       F-8
<PAGE>   49
 
                           PRISON REALTY CORPORATION
                                 (THE COMPANY)
 
                SCHEDULE OF PRISON REALTY CORPORATION PRO FORMA
                      STATEMENT OF OPERATIONS ADJUSTMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                            SERVICE     SERVICE        OPERATING       SUM OF PRISON REALTY
                           COMPANY A   COMPANY B        COMPANY          CORPORATION PRO
                              AA          BB              CC            FORMA ADJUSTMENTS
                           ---------   ---------   -----------------   --------------------
<S>                        <C>         <C>         <C>                 <C>
Revenues.................  $(138,158)  $(150,587)      $(373,314)           $(662,059)
Expenses:
  Operating..............  (108,204)   (115,266)        (273,052)            (496,522)
  Lease..................      (132)     (3,445)         (54,441)             (58,018)
  General and
    administrative.......    (4,000)FF   (4,000)FF       (20,276)             (28,276)
  Loan costs writeoff....        --          --           (2,043)DD            (2,043)
  CCA compensation
    charge...............        --          --          (22,850)EE           (22,850)
  Depreciation and
    amortization.........    (4,085)     (4,369)          (1,000)              (9,454)
                           ---------   ---------       ---------            ---------
                           (116,421)   (127,080)        (373,662)            (617,163)
                           ---------   ---------       ---------            ---------
Operating income.........   (21,737)    (23,507)             348              (44,896)
Interest (income)
  expense................        17          97               --                  114
                           ---------   ---------       ---------            ---------
Income before income
  taxes..................   (21,754)    (23,604)             348              (45,010)
Provision for income
  taxes..................    (6,634)     (7,022)          (1,768)             (15,424)
                           ---------   ---------       ---------            ---------
  Net income before
    cumulative effect of
    accounting change....   (15,120)    (16,582)           2,116              (29,586)
                           ---------   ---------       ---------            ---------
  Cumulative effect of
    accounting change,
    net of tax...........    (3,369)     (3,672)          (9,104)             (16,145)
                           ---------   ---------       ---------            ---------
  Net income.............  $(11,751)   $(12,910)       $  11,220            $ (13,441)
                           =========   =========       =========            =========
</TABLE>
 
                                       F-9
<PAGE>   50
 
            NOTES TO SCHEDULE OF PRISON REALTY CORPORATION PRO FORMA
                      STATEMENT OF OPERATIONS ADJUSTMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 1998
 
AA   Immediately prior to the Merger, the Company and Old CCA, through a series
     of transactions, sold to Service Company A certain management contracts
     relating to government-owned prison facilities and certain other net assets
     in exchange for shares of non-voting common stock of Service Company A.
     This adjustment removes the historical results of operations related to the
     management contracts sold to Service Company A as if the Merger and sale
     had occurred as of January 1, 1998.
 
BB   Immediately prior to the Merger, the Company and Old CCA, through a series
     of transactions, sold to Service Company B certain management contracts
     relating to government-owned prison facilities and certain other net assets
     in exchange for shares of non-voting common stock of Service Company B.
     This adjustment removes the historical results of operations related to the
     management contracts sold to Service Company B as if the Merger and sale
     had occurred as of January 1, 1998.
 
CC   Immediately prior to the Merger, Old CCA sold to CCA certain management
     contracts relating to Prison Realty-owned prison facilities, certain
     management contracts relating to government owned prison facilities and
     certain other net assets in exchange for an installment note in the
     principal amount of $137,000 and 9.5% of the common stock of CCA. This
     adjustment removes the historical results of operations related to the
     management contracts sold to CCA as if the Merger and sale had occurred as
     of January 1, 1998.
 
DD   To remove the effect of nonrecurring expenses related to loan costs
     writeoff recorded in the statement of operations of the Company.
 
EE   To remove the effect of nonrecurring compensation expense recognized by Old
     CCA during the fourth quarter of 1998 related to the issuance of 4,999,996
     shares of CCA voting common stock issued by CCA prior to the Merger.
 
FF   Includes the pro forma aggregate annual payments to be paid by Service
     Companies A and B to CCA for general and administrative services. Each
     service company is expected to pay approximately $3,000 to CCA on an annual
     basis.
 
                                      F-10
<PAGE>   51
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table itemizes the expenses incurred, or to be incurred, by
the Registrant in connection with the registration and issuance of the Common
Stock being registered hereunder. As indicated below, all amounts shown are
estimates except for the Commission registration fee.
 
<TABLE>
<S>                                                           <C>
Registration Fee -- Securities and Exchange Commission......  $12,734.43
Printing and Engraving Expenses.............................    5,000.00*
Accounting Fees and Expenses................................   10,000.00*
Legal Fees and Expenses.....................................   15,000.00*
Blue Sky Fees and Expenses..................................    1,000.00*
Miscellaneous (including listing fees)......................    5,000.00*
  Total.....................................................  $48,734.43
</TABLE>
 
- -------------------------
 
* Estimated
 
ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     The Charter of the Company provides for indemnification of directors and
executive officers to the full extent permitted by the laws of the State of
Maryland.
 
     Section 2-418 of the Maryland General Corporation Law (the "MGCL")
generally permits indemnification of any director made a party to any
proceedings by reason of service as a director unless it is established that:
(i) the act or omission of such person was material to the matter giving rise to
the proceedings and was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) such person actually received an improper personal
benefit in money, property or services; or (iii) in the case of any criminal
proceedings, such person had reasonable cause to believe that the act or
omission was unlawful. The indemnity may include judgments, penalties, fines,
settlements and reasonable expenses (including attorneys' fees) actually
incurred by the director in connection with the proceeding; but, if the
proceeding is one by, or in the right of, the corporation, indemnification is
not permitted with respect to any proceeding in which the director has been
adjudged to be liable to the corporation, or if the proceeding is one charging
improper personal benefit to the director, whether or not involving action in
the director's official capacity, indemnification of the director is not
permitted if the director was adjudged to be liable on the basis that personal
benefit was improperly received. The termination of any proceeding by conviction
or upon a plea of nolo contendere or its equivalent, or any entry of an order of
probation prior to judgment, creates a rebuttable presumption that the director
did not meet the requisite standard of conduct required for permitted
indemnification. The termination of any proceeding by judgment, order or
settlement, however, does not create a presumption that the director failed to
meet the requisite standard of conduct for permitted indemnification.
 
     Indemnification under the provisions of the MGCL is not deemed exclusive of
any other rights, by indemnification or otherwise, to which a director may be
entitled under the
 
                                      II-1
<PAGE>   52
 
Charter of the Company, Bylaws of the Company, any resolution of stockholders or
directors, any agreement or otherwise.
 
     The Company's Charter provides for indemnification of its officers,
employees or agents to the fullest extent permitted by law. The Company has also
entered into indemnification agreements ("the Indemnification Agreements") with
its directors and certain of its executive officers. The Indemnification
Agreements are intended to provide indemnification to the maximum extent
allowable by or not in violation of any law of the State of Maryland. Each
Indemnification Agreement provides that the Company shall indemnify a director
or officer who is a party to the agreement (the "Indemnitee") if he or she was
or is a party to or otherwise involved in any proceeding (other than a
derivative proceeding) by reason of the fact that he or she was or is a director
or officer of the Company, against losses incurred in connection with the
defense or settlement of such proceeding. The indemnification provided under
each Indemnification Agreement is limited to instances where the act or omission
giving rise to the claim for which indemnification is sought was not otherwise
indemnified by the Company or insurance maintained by the Company, was not
established to have been committed in bad faith or the result of active and
deliberate dishonesty, did not involve receipt of improper personal benefit, did
not result in a judgment of liability to the Company in a proceeding by or in
the right of the Company, did not involve an accounting of profits pursuant to
Section 16(b) of the Exchange, and, with respect to any criminal proceeding, the
Indemnitee had no reasonable cause to believe his or her conduct was unlawful.
 
     The Company has obtained directors and officers liability insurance.
 
     The Company may enter into underwriting agreements or other sales
agreements which contain provisions pursuant to which certain officers and
directors may be entitled to indemnification.
 
ITEM 16.  EXHIBITS
 
<TABLE>
<CAPTION>
NUMBER                                DESCRIPTION
- ------                                -----------
<C>      <C>  <S>
 2.1      --  Amended and Restated Agreement and Plan of Merger, dated as
              of September 29, 1998, by and among Old CCA, Prison Realty
              and the Company (included as Appendix A to the Prospectus
              filed with the Commission on October 30, 1998 pursuant to
              Rule 424(b)(4) promulgated under the Securities Act, as
              supplemented on November 20, 1998, included in the Company's
              Registration Statement on Form S-4 filed with the Commission
              on September 30, 1998 and declared effective on October 16,
              1998 (Reg. no. 333-65017)(the "Registration Statement")(as
              directed by Item 601(b)(1) of Regulation S-K, certain
              schedules and exhibits to this document are omitted from
              this filing, and the Registrant agrees to furnish
              supplementally a copy of any omitted schedule or exhibit to
              the Commission upon request) and incorporated herein by
              reference)
 4.1      --  Provisions defining the rights of stockholders of the
              Company are found in Section SIXTH through SEVENTH and
              Article II in the Charter and Bylaws, respectively, of the
              Company (previously filed as Exhibit 3.1 to the Registration
              Statement and Exhibit 3.2 to the Company's Current Report on
              Form 8-K filed with the Commission on January 6, 1999 (File
              no. 0-25245), respectively, and incorporated herein by
              reference)
</TABLE>
 
                                      II-2
<PAGE>   53
 
<TABLE>
<CAPTION>
NUMBER                                DESCRIPTION
- ------                                -----------
<C>      <C>  <S>
 4.2      --  Specimen of certificate representing shares of Common Stock
              of the Company (previously filed as Exhibit 4.2 to the
              Registration Statement and incorporated herein by reference)
 4.3      --  The Corrections Corporation of America Option Plan, dated
              January 23, 1985, as amended by First Amendment to the
              Corrections Corporation of America Stock Option Plan,
              together with forms of Incentive Stock Option Agreement and
              Non-Qualified Stock Option Agreement (previously filed as
              Exhibit 10(c) to Old CCA's Registration Statement on Form
              S-1, filed August 15, 1986 (Reg. no. 33-8052), and
              incorporated herein by reference)
 4.4      --  Second Amendment to the Corrections Corporation of America
              Stock Option Plan, dated March 27, 1987, together with form
              of Incentive Stock Option Agreement (previously filed as
              Exhibit 10(cc) to Old CCA's Annual Report on Form 10-K for
              the fiscal year ended December 31, 1986 (File no. 0-15719)
              and incorporated herein by reference)
 4.5      --  Third Amendment to the Corrections Corporation of America
              Stock Option Plan, dated March 18, 1988 (included as Exhibit
              B to Old CCA's Definitive Proxy Statement relating to the
              1988 Annual Meeting of Stockholders of Old CCA (File no.
              0-15719) and incorporated herein by reference)
 4.6      --  Amended and Restated Corrections Corporation of America 1989
              Stock Bonus Plan, dated February 20, 1995 (previously filed
              as Exhibit 10.138 to Old CCA's Annual Report on Form 10-K
              with respect to the fiscal year ended December 31, 1994
              (File no. 1-13560) and incorporated herein by reference)
 4.7      --  First Amendment to Amended and Restated Corrections
              Corporation of America 1989 Stock Bonus Plan, dated November
              3, 1995 (previously filed as Exhibit 10.153 to Old CCA's
              Annual Report on Form 10-K for the fiscal year ended
              December 31, 1995 (File no. 1-13560) and incorporated herein
              by reference)
 4.8      --  Corrections Corporation of America 1991 Flexible Stock
              Option Plan (previously filed as Exhibit 28(a) to Old CCA's
              Registration Statement on Form S-8, filed with the
              Commission on August 6, 1991 (Reg. no. 33-42068) and
              incorporated herein by reference)
 4.9      --  First Amendment to Corrections Corporation of America 1991
              Flexible Stock Option Plan, dated March 11, 1994 (previously
              filed as Exhibit 10.102 to Old CCA's Annual Report on Form
              10-K with respect to the fiscal year ended December 31, 1994
              (File no. 1-13560) and incorporated herein by reference)
 4.10     --  Corrections Corporation of America Non-Employee Director
              Stock Option Plan (previously filed as Exhibit 10(yyy) to
              Old CCA's Annual Report on Form 10-K for the fiscal year
              ended December 31, 1993 (File no. 0-15719) and incorporated
              herein by reference).
 4.11     --  Corrections Corporation of America 1995 Employee Stock
              Incentive Plan, effective as of March 20, 1995 (previously
              filed as Exhibit 4.3 to Old CCA's Registration Statement on
              Form S-8, filed July 20, 1995 (Reg. no. 33-61173), and
              incorporated herein by reference)
</TABLE>
 
                                      II-3
<PAGE>   54
 
<TABLE>
<CAPTION>
NUMBER                                DESCRIPTION
- ------                                -----------
<C>      <C>  <S>
 4.12     --  First Amendment to the Corrections Corporation of America
              Non-Employee Directors' Stock Ownership Plan, dated November
              1, 1996 (included as Appendix A(2) to CCA's Definitive Proxy
              Statement relating to the 1997 Annual Meeting of
              Shareholders of Old CCA filed on March 31, 1997 (File. no.
              1-13560) and incorporated herein by reference)
 4.13     --  Option Agreement, dated March 31, 1997, by and between Old
              CCA and Joseph F. Johnson, Jr. relating to the grant of an
              option to purchase 80,000 shares of Old CCA Common Stock
              (included as Appendix B to Old CCA's Definitive Proxy
              Statement relating to the 1998 Annual Meeting of
              Shareholders of CCA filed on March 31, 1998 (File no.
              1-13560) and incorporated herein by reference)
 5.1*     --  Opinion of Stokes & Bartholomew, P.A. regarding the validity
              of the Common Stock being registered
 5.2*     --  Opinion of Miles & Stockbridge P.C. regarding the validity
              of the Common Stock being registered
23.1      --  Consent of Stokes & Bartholomew, P.A. (included as part of
              Exhibit 5.1)
23.2      --  Consent of Miles & Stockbridge P.C. (included as part of
              Exhibit 5.2)
23.3*     --  Consent of Arthur Andersen LLP (with respect to the Company)
23.4*     --  Consent of Arthur Andersen LLP (with respect to Prison
              Realty)
23.5*     --  Consent of Arthur Andersen LLP (with respect to CCA)
25        --  Power of Attorney (included on signature page)
</TABLE>
 
- -------------------------
 
* Included with this filing.
 
ITEM 17.  UNDERTAKINGS
 
     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company,
or the Registrant, pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
 
     The undersigned Registrant hereby undertakes that:
 
          (1) For purposes of determining any liability under the Securities
     Act, the information omitted from the form of prospectus filed as part of
     this Registration Statement in reliance upon Rule 430A and contained in a
     form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act
 
                                      II-4
<PAGE>   55
 
     shall be deemed to be part of this Registration Statement as of the time it
     was declared effective.
 
          (2) For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.
 
          (3) For purposes of determining any liability under the Securities
     Act, each filing of the Registrant's annual report pursuant to Section
     13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
     filing of an employee benefit plan's annual report pursuant to Section
     15(d) of the Exchange Act) that is incorporated by reference in the
     registration statement shall be deemed to be a new registration statement
     relating to the securities offered therein, and the offering of such
     securities at that time shall be deemed to be the initial bona fide
     offering thereof.
 
     The undersigned Registrant hereby undertakes:
 
          (1) To file, during any period in which offers or sales are being made
     of the securities offered hereby, a post-effective amendment to this
     Registration Statement:
 
             (i) to include any prospectus required by Section 10(a)(3) of the
        Securities Act;
 
             (ii) to reflect in the prospectus any facts or events arising after
        the effective date of this Registration Statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information set forth
        in this Registration Statement; and
 
             (iii) to include any material information with respect to the plan
        of distribution not previously disclosed in this Registration Statement
        or any material change to such information in this Registration
        Statement;
 
     provided, however, that the undertakings in paragraphs (i) and (ii) above
     do not apply if the information required to be included in a post-effective
     amendment by those paragraphs is contained in periodic reports filed by the
     Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that
     are incorporated by reference in this Registration Statement;
 
          (2) That, for the purpose of determining any liability under the
     Securities Act, each such post-effective amendment shall be deemed to be a
     new registration statement relating to the securities offered therein, and
     the offering of such securities at that time shall be deemed to be the
     initial bona fide offering thereof.
 
          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.
 
                                      II-5
<PAGE>   56
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, Tennessee, on the 7th day of May, 1999.
 
                                          PRISON REALTY CORPORATION
                                          Registrant
 
                                          By:      /s/ DOCTOR R. CRANTS
                                             -----------------------------------
                                                      Doctor R. Crants
                                                   Chief Executive Officer
 
                               POWER OF ATTORNEY
 
     Each person whose signature appears below hereby constitutes and appoints
Doctor R. Crants, D. Robert Crants, III and Vida H. Carroll, and each of them,
the true and lawful attorneys-in-fact and agents of the undersigned, with full
power of substitution and resubstitution, for and in the name, place and stead
of the undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and any
registration statement relating to the same offering as the Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Commission, and hereby grants to
such attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
 
     Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
 
<TABLE>
<CAPTION>
                     SIGNATURE                                 TITLE               DATE
                     ---------                                 -----               ----
<C>                                                  <S>                        <C>
 
               /s/ DOCTOR R. CRANTS                  Chief Executive Officer    May 7, 1999
- ---------------------------------------------------    (Principal Executive
                 Doctor R. Crants                      Officer), Chairman and
                                                       Director
 
              /s/ J. MICHAEL QUINLAN                 Vice-Chairman and          May 7, 1999
- ---------------------------------------------------    Director
                J. Michael Quinlan
 
             /s/ D. ROBERT CRANTS, III               President and Director     May 7, 1999
- ---------------------------------------------------
               D. Robert Crants, III
</TABLE>
 
                                      II-6
<PAGE>   57
 
<TABLE>
<CAPTION>
                     SIGNATURE                                 TITLE               DATE
                     ---------                                 -----               ----
<C>                                                  <S>                        <C>
 
               /s/ MICHAEL W. DEVLIN                 Chief Operating Officer    May 7, 1999
- ---------------------------------------------------    and Director
                 Michael W. Devlin
 
                /s/ VIDA H. CARROLL                  Chief Financial Officer    May 7, 1999
- ---------------------------------------------------    (Principal Financial
                  Vida H. Carroll                      and Accounting
                                                       Officer), Secretary and
                                                       Treasurer
 
                  /s/ C. RAY BELL                    Director                   May 7, 1999
- ---------------------------------------------------
                    C. Ray Bell
 
               /s/ RICHARD W. CARDIN                 Director                   May 7, 1999
- ---------------------------------------------------
                 Richard W. Cardin
 
                                                     Director                   May  , 1999
- ---------------------------------------------------
               Monroe J. Carell, Jr.
 
               /s/ JEAN-PIERRE CUNY                  Director                   May 7, 1999
- ---------------------------------------------------
                 Jean-Pierre Cuny
 
              /s/ JOHN W. EAKIN, JR.                 Director                   May 7, 1999
- ---------------------------------------------------
                John W. Eakin, Jr.
 
                  /s/ TED FELDMAN                    Director                   May 7, 1999
- ---------------------------------------------------
                    Ted Feldman
 
               /s/ JACKSON W. MOORE                  Director                   May 7, 1999
- ---------------------------------------------------
                 Jackson W. Moore
 
                                                     Director                   May  , 1999
- ---------------------------------------------------
                  Rusty L. Moore
 
               /s/ JOSEPH V. RUSSELL                 Director                   May 7, 1999
- ---------------------------------------------------
                 Joseph V. Russell
 
           /s/ CHARLES W. THOMAS, PH.D.              Director                   May 7, 1999
- ---------------------------------------------------
             Charles W. Thomas, Ph.D.
</TABLE>
 
                                      II-7
<PAGE>   58
 
                                 EXHIBIT INDEX
 
                       REGISTRATION STATEMENT ON FORM S-3
 
<TABLE>
<CAPTION>
NUMBER                                DESCRIPTION
- ------                                -----------
<C>      <C>  <S>
 2.1      --  Amended and Restated Agreement and Plan of Merger, dated as
              of September 29, 1998, by and among Old CCA, Prison Realty
              and the Company (included as Appendix A to the Prospectus
              filed with the Commission on October 30, 1998 pursuant to
              Rule 424(b)(4) promulgated under the Securities Act, as
              supplemented on November 20, 1998, included in the Company's
              Registration Statement on Form S-4 filed with the Commission
              on September 30, 1998 and declared effective on October 16,
              1998 (Reg. no. 333-65017)(the "Registration Statement")(as
              directed by Item 601(b)(1) of Regulation S-K, certain
              schedules and exhibits to this document are omitted from
              this filing, and the Registrant agrees to furnish
              supplementally a copy of any omitted schedule or exhibit to
              the Commission upon request) and incorporated herein by
              reference)
 4.1      --  Provisions defining the rights of stockholders of the
              Company are found in Section SIXTH through SEVENTH and
              Article II in the Charter and Bylaws, respectively, of the
              Company (previously filed as Exhibit 3.1 to the Registration
              Statement and Exhibit 3.2 to the Company's Current Report on
              Form 8-K filed with the Commission on January 6, 1999 (File
              no. 0-25245), respectively, and incorporated herein by
              reference)
 4.2      --  Specimen of certificate representing shares of Common Stock
              of the Company (previously filed as Exhibit 4.2 to the
              Registration Statement and incorporated herein by reference)
 4.3      --  The Corrections Corporation of America Option Plan, dated
              January 23, 1985, as amended by First Amendment to the
              Corrections Corporation of America Stock Option Plan,
              together with forms of Incentive Stock Option Agreement and
              Non-Qualified Stock Option Agreement (previously filed as
              Exhibit 10(c) to Old CCA's Registration Statement on Form
              S-1, filed August 15, 1986 (Reg. no. 33-8052), and
              incorporated herein by reference)
 4.4      --  Second Amendment to the Corrections Corporation of America
              Stock Option Plan, dated March 27, 1987, together with form
              of Incentive Stock Option Agreement (previously filed as
              Exhibit 10(cc) to Old CCA's Annual Report on Form 10-K for
              the fiscal year ended December 31, 1986 (File no. 0-15719)
              and incorporated herein by reference)
 4.5      --  Third Amendment to the Corrections Corporation of America
              Stock Option Plan, dated March 18, 1988 (included as Exhibit
              B to Old CCA's Definitive Proxy Statement relating to the
              1988 Annual Meeting of Stockholders of Old CCA (File no.
              0-15719) and incorporated herein by reference)
 4.6      --  Amended and Restated Corrections Corporation of America 1989
              Stock Bonus Plan, dated February 20, 1995 (previously filed
              as Exhibit 10.138 to Old CCA's Annual Report on Form 10-K
              with respect to the fiscal year ended December 31, 1994
              (File no. 1-13560) and incorporated herein by reference)
 4.7      --  First Amendment to Amended and Restated Corrections
              Corporation of America 1989 Stock Bonus Plan, dated November
              3, 1995 (previously filed as Exhibit 10.153 to Old CCA's
              Annual Report on Form 10-K for the fiscal year ended
              December 31, 1995 (File no. 1-13560) and incorporated herein
              by reference)
</TABLE>
<PAGE>   59
 
<TABLE>
<CAPTION>
NUMBER                                DESCRIPTION
- ------                                -----------
<C>      <C>  <S>
 4.8      --  Corrections Corporation of America 1991 Flexible Stock
              Option Plan (previously filed as Exhibit 28(a) to Old CCA's
              Registration Statement on Form S-8, filed with the
              Commission on August 6, 1991 (Reg. no. 33-42068) and
              incorporated herein by reference)
 4.9      --  First Amendment to Corrections Corporation of America 1991
              Flexible Stock Option Plan, dated March 11, 1994 (previously
              filed as Exhibit 10.102 to Old CCA's Annual Report on Form
              10-K with respect to the fiscal year ended December 31, 1994
              (File no. 1-13560) and incorporated herein by reference)
 4.10     --  Corrections Corporation of America Non-Employee Director
              Stock Option Plan (previously filed as Exhibit 10(yyy) to
              Old CCA's Annual Report on Form 10-K for the fiscal year
              ended December 31, 1993 (File no. 0-15719) and incorporated
              herein by reference).
 4.11     --  Corrections Corporation of America 1995 Employee Stock
              Incentive Plan, effective as of March 20, 1995 (previously
              filed as Exhibit 4.3 to Old CCA's Registration Statement on
              Form S-8, filed July 20, 1995 (Reg. no. 33-61173), and
              incorporated herein by reference)
 4.12     --  First Amendment to the Corrections Corporation of America
              Non-Employee Directors' Stock Ownership Plan, dated November
              1, 1996 (included as Appendix A(2) to Old CCA's Definitive
              Proxy Statement relating to the 1997 Annual Meeting of
              Shareholders of Old CCA filed on March 31, 1997 (File. no.
              1-13560) and incorporated herein by reference)
 4.13     --  Option Agreement, dated March 31, 1997, by and between Old
              CCA and Joseph F. Johnson, Jr. relating to the grant of an
              option to purchase 80,000 shares of Old CCA Common Stock
              (included as Appendix B to Old CCA's Definitive Proxy
              Statement relating to the 1998 Annual Meeting of
              Shareholders of CCA filed on March 31, 1998 (File no.
              1-13560) and incorporated herein by reference)
 5.1*     --  Opinion of Stokes & Bartholomew, P.A. regarding the validity
              of the Common Stock being registered
 5.2*     --  Opinion of Miles & Stockbridge P.C. regarding the validity
              of the Common Stock being registered
23.1      --  Consent of Stokes & Bartholomew, P.A. (included as part of
              Exhibit 5.1)
23.2      --  Consent of Miles & Stockbridge P.C. (included as part of
              Exhibit 5.2)
23.3*     --  Consent of Arthur Andersen LLP (with respect to the Company)
23.4*     --  Consent of Arthur Andersen LLP (with respect to Prison
              Realty)
23.5*     --  Consent of Arthur Andersen LLP (with respect to CCA)
25        --  Power of Attorney (included on signature page)
</TABLE>
 
- -------------------------
 
* Included with this filing.

<PAGE>   1



                                                                     EXHIBIT 5.1

                    [STOKES & BARTHOLOMEW, P.A. LETTERHEAD]

           
                                  May 7, 1999

Prison Realty Corporation
10 Burton Hills Boulevard, Suite 100
Nashville, Tennessee 37215

Ladies and Gentlemen:

         We have acted as counsel to Prison Realty Corporation, a Maryland
corporation (the "Company"), in connection with the Registration Statement on
Form S-3, filed on May 7, 1999 (the "Registration Statement"), by the Company
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to the issuance of up to 1,713,994 shares of its common stock,
$0.01 par value per share (the "Common Stock"), pursuant to the exercise of
options, or warrants, to purchase shares of Common Stock assumed by the Company
from Corrections Corporation of America, in connection with its Merger with the
Company as set forth in the prospectus which forms a part of the Registration
Statement (the "Prospectus"). This opinion is being provided to you in
connection with the filing of the Registration Statement.

         We have examined the originals or copies, certified or otherwise
identified to our satisfaction, of all such records of the Company and all such
agreements, certificates of public officials, certificates of officers or other
representatives of the Company, and such other documents, certificates and
other records as we have deemed necessary or appropriate as a basis for the
opinions set forth herein, including (i) the Charter of the Company (the
"Charter"), (ii) the Amended and Restated Bylaws of the Company (the "Bylaws"),
and (iii) certified copies of certain resolutions duly adopted by the Board of
Directors of the Company. As to factual matters material to the opinions set
forth below we have relied, without investigation, upon the representations and
statements of the Company in the Registration Statement and in such
certificates of government officials and officers of the Company as we have
deemed necessary for the purpose of the opinions expressed herein.

         We have assumed that: (i) prior to the issuance of any Common Stock
pursuant to the exercise of any options, or warrants, the Company will have a
sufficient number of authorized but unissued shares of Common Stock authorized
under its Charter and will comply with all other applicable requirements of
Maryland law; and (ii) the issuance of the Common Stock pursuant to the exercise
of any options, or warrants, will be authorized by action of the Board of
Directors of the Company (the "Resolutions") and in accordance with its Charter,
Bylaws and applicable Maryland law.

         The opinions stated herein are limited to the federal laws of the
United States, the laws of the State of Tennessee and the General Corporation
Law of the State of Maryland. With respect to the opinions below that relate to
the laws of the State of Maryland, we have relied upon that certain opinion of
Miles & Stockbridge P.C., special Maryland counsel to the Company.



<PAGE>   2



Prison Realty Corporation
May 7, 1999
Page 2


         Based upon and subject to the conditions and limitation set forth
herein, we are of the opinion that when the Registration Statement has become
effective under the Act and following issuance and delivery of any such shares
of Common Stock in the manner and on the terms described in the Registration
Statement and the plans governing the option, or warrant, exercises such shares
of Common Stock will be validly issued, fully paid and non-assessable by the
Company.

         We hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement and to the use of our name as it
appears under the caption "Legal Matters" in the Prospectus contained in such
Registration Statement.

                                               Very truly yours,

                                               Stokes & Bartholomew, P.A.



<PAGE>   1



                                                                     EXHIBIT 5.2



                     [MILES & STOCKBRIDGE P.C. LETTERHEAD]

                                 May 7, 1999

Prison Realty Corporation
10 Burton Hills Boulevard, Suite 100
Nashville, Tennessee 37215

Ladies and Gentlemen:

         We have acted as counsel to Prison Realty Corporation, a Maryland
corporation (the "Company"), in connection with the Registration Statement on
Form S-3, filed on May 7, 1999 (the "Registration Statement"), by the Company
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to the issuance of up to 1,713,994 shares of its common stock,
$0.01 par value per share (the "Common Stock"), which may be issued by the
Company from time to time as set forth in the prospectus which forms a part of
the Registration Statement (the "Prospectus") pursuant to the exercise of
options, or warrants, to purchase shares of Common Stock assumed by the Company
from Corrections Corporation of America in connection with its merger with the
Company. We have examined the originals or copies, certified or otherwise
identified to our satisfaction, of all such records of the Company and all such
agreements, certificates of public officials, certificates of officers or other
representatives of the Company, and such other documents, certificates and other
records as we have deemed necessary or appropriate as a basis for the opinions
set forth herein. Based on that examination, we advise you that in our opinion
the Common Stock has been duly and validly authorized and, when issued in the
manner and on the terms described in the Prospectus and the plans governing the
option, or warrant, exercises, will be legally issued, fully paid and
non-assessable.


<PAGE>   2
         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Securities and Exchange Commission
thereunder. Additionally we understand that Stokes & Bartholomew, P.A. will rely
on our opinion in giving its opinion letter to you on the date hereof and we
consent to that reliance. The opinion expressed herein is limited to the matters
set forth in this letter and no other opinion should be inferred beyond the
matters expressly stated.

                                                     Very truly yours,

                                                     Miles & Stockbridge P.C.



<PAGE>   1



                                                                    EXHIBIT 23.3

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

         As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-3 of Prison
Realty Corporation of our report dated March 15, 1999 relating to the
consolidated financial statements of Prison Realty Corporation and Subsidiaries
included in Prison Realty Corporation's Form 10-K for the year ended December
31, 1998 and to all references to our Firm included in this registration
statement.

                                                       ARTHUR ANDERSEN LLP

Nashville, Tennessee
May 3, 1999



<PAGE>   1

                                                                    EXHIBIT 23.4

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

         As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-3 of Prison
Realty Corporation of our reports dated January 22, 1999 and March 25, 1999
relating to the consolidated financial statements and financial statement
schedules of CCA Prison Realty Trust and subsidiaries included in CCA Prison
Realty Trust's Form 10-K for the year ended December 31, 1998 and to all
references to our Firm included in this registration statement.

                                                      ARTHUR ANDERSEN LLP

Nashville, Tennessee
May 3, 1999



<PAGE>   1

                                                                    EXHIBIT 23.5

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

         As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-3 of Prison
Realty Corporation of our report dated March 15, 1999 relating to the
consolidated financial statements of Correctional Management Services
Corporation and Subsidiaries included in Prison Realty Corporation's Form 10-K
for the year ended December 31, 1998 and to all references to our Firm included
in this registration statement.

                                                 ARTHUR ANDERSEN LLP

Nashville, Tennessee
May 3, 1999



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