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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 23, 2000
Prison Realty Trust, Inc.
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(Exact name of registrant as specified in its charter)
Maryland 0-25245 62-1763875
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
10 Burton Hills Boulevard, Suite 100, Nashville, Tennessee 37215
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (615) 263-0200
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On August 23, 2000, Prison Realty Trust, Inc. (the "Company") entered
into a memorandum of understanding (the "Memorandum of Understanding") regarding
the settlement of all outstanding stockholder litigation against the Company and
certain of its existing and former directors and executive officers. The
Memorandum of Understanding, which is subject to the execution of a definitive
stipulation of settlement by the parties, subsequent court approval and other
customary conditions, provides for the "global" settlement of a series of
purported class action and derivative lawsuits brought against the Company by
current and former stockholders of the Company and its predecessors, the old
Corrections Corporation of America and CCA Prison Realty Trust. These lawsuits
were brought as the result of, among other things, agreements entered into by
the Company and its primary tenant, Corrections Corporation of America ("CCA"),
in May 1999 to increase payments made by the Company to CCA under the terms of
certain agreements and previously announced transactions relating to the
restructuring of the Company and CCA led by the Fortress/Blackstone investment
group and Pacific Life Insurance Company. Specifically, the Memorandum of
Understanding relates to the following previously disclosed actions:
- Bernstein v. Prison Realty Trust, et. al. (including Hardee v.
Prison Realty Trust, et. al. and Holle v. Prison Realty Trust,
et. al. which were consolidated with Bernstein);
- Neiger v. Doctor Crants, et. al. (including Anderson v. Doctor
Crants, et. al. and Brody v. Prison Realty Trust, Inc., et.
al. which were consolidated with Neiger);
- Buchanan and Unger v. Prison Realty Trust, Inc. et. al.;
- In re Old CCA Securities Litigation;
- In re Prison Realty Securities Litigation;
- Milkovits v. Prison Realty Trust, et. al.
- Wanstrath v. Crants, et.al.; and
- Dasburg, S.A. v. Corrections Corporation of America, et. al.
The Memorandum of Understanding provides that Prison Realty will pay or
issue the plaintiffs:
- approximately $48 million in cash payable solely from the
proceeds under the Company's and CCA's insurance policies; and
- approximately $72.4 million in shares of common stock of the
Company (or 16,550,000 shares at an agreed value of $4.375 per
share).
The shares of common stock to be issued by the Company in accordance
with the agreement will be subject to a stock price guarantee of $4.375 per
share, which will require the Company to pay or issue, at its option, cash or
additional shares of common stock to the plaintiffs if the trading price of the
Company common stock does not reach $4.375 per share for a specified number of
trading
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days during the period from the completion of the settlement through August 31,
2001. In addition, shares issued in the settlement are subject to certain
anti-dilution adjustments if the Company undertakes certain transactions
(generally, raising equity capital in excess of $110.0 million at less than the
stock price guarantee) during the period from August 31, 2001 through December
31, 2001.
In addition to the payments of amounts specified above, the Company and
the plaintiffs have agreed to certain other matters in connection with the
memorandum of understanding, including:
- restrictions on the form and amount of payments that may be made
by the Company to certain affiliates of the Company and CCA and
certain third parties in connection with the proposed
restructuring of the companies;
- restrictions on the Company's ability to reprice stock options
previously issued to directors or executive officers of the
Company for a period of 24 months; and
- the requirement that each committee of the Company's board of
directors consist of a majority of directors which were not
directors of Prison Realty or its affiliates as of December 1,
1999.
The full text of the Memorandum of Understanding containing the terms of
the proposed settlement is filed herewith as Exhibit 10.1 and is incorporated
herein in its entirety.
The press release issued by Prison Realty on August 24, 2000 with respect
to the execution of the Memorandum of Understanding is filed herewith as Exhibit
99.1 and is incorporated herein in its entirety.
This Form 8-K contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Prison Realty's actual results
could differ materially from those set forth in the forward-looking statements.
ITEM 7(C). EXHIBITS.
The following exhibit is filed as part of this Current Report:
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<CAPTION>
Exhibit
Number Description of Exhibits
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10.1 Memorandum of Understanding, dated August 23, 2000, by and among
attorneys for the Company and the Plaintiffs.
99.1 Company Press Release, dated August 24, 2000, regarding the execution
of the Memorandum of Understanding.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the undersigned Registrant has duly caused this Current Report on Form
8-K to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 28, 2000 PRISON REALTY TRUST, INC.
By: /s/ Darrell K. Massengale
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Its: Secretary
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EXHIBIT INDEX
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<CAPTION>
Exhibit
Number Description of Exhibits
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<S> <C>
10.1 Memorandum of Understanding, dated August 23, 2000, by and among
attorneys for Prison Realty Trust, Inc. (the "Company") and
certain individual defendants and the plaintiffs in outstanding
stockholder litigation brought against the Company (the
"Memorandum of Understanding").
99.1 Company Press Release, dated August 24, 2000, regarding the
execution of the Memorandum of Understanding.
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